Shell said on Monday that the boards of both companies have unanimously supported the transaction, which is expected to close in the second half of 2026, subject to ARC shareholder, court, and regulatory approvals.
The transaction combines ARC’s more than 1.5 million net acres with Shell’s 440 thousand net acres in the Montney formation and adds 2 billion barrels of oil equivalent proved plus probable reserves at the end of 20254.
Last year, approximately 40 percent of ARC’s production was liquids, which accounted for 70 percent of its revenues.
In addition, ARC’s proved plus probable gas reserves have the potential to support Shell’s growth in LNG in Canada, Shell said.
Under the terms of the agreement, ARC’s shareholders will receive C$8.20 in cash and 0.40247 ordinary shares of Shell for each ARC share, representing approximately 25 percent cash and 75 percent shares as of the 24th April 2026 market closing.
Based on Shell’s closing share price on this date, this translates to a consideration of C$32.80 per share, which represents a 20 percent premium to ARC’s 30-day VWAP.
Shell said this equates to an equity value of approximately $13.6 billion.
$2.8 billion debt
The company will take on approximately $2.8 billion in net debt and leases resulting in an enterprise value of approximately $16.4 billion.
Shell said the equity value of $13.6 billion will be funded via $3.4 billion in cash and $10.2 billion in Shell shares, the latter valued based on Shell’s closing price on April 24 and the issuance of approximately 228 million ordinary shares.
Shell expects to absorb the additional organic cash capital expenditure within its existing cash capex ceiling, post 2026.
The cash capex range for 2027 to 2028 will remain unchanged at $20–22 billion.
According to Shell, the transaction is expected to bring annualized synergies of around $250 million within a year of closing.
“ARC is a high-quality, low-cost, and top quartile low carbon intensity producer operating in the Montney shale basin that complements our existing footprint in Canada and strengthens our resource base for decades to come,” said Shell’s chief executive officer, Wael Sawan.
“We are accessing uniquely positioned assets and welcoming colleagues that bring deep expertise which, combined with Shell’s strong basin level performance, provides a compelling proposition for shareholders,” he said.
Sawan added that this establishes Canada as a “heartland for Shell while furthering our strategy to deliver more value with less emissions.”
LNG Canada
Last year, ARC reported production of 374 thousand barrels of oil equivalent per day (before royalty burdens).
Its operations are situated in the same region as Shell’s existing Groundbirch asset in British Columbia and the Gold Creek project in neighboring Alberta, Shell said.
Shell’s Groundbirch assets supply gas to the LNG Canada liquefaction plant, in which Shell has a 40 percent operating stake, and the domestic gas market.
ARC’s business will therefore also be reported as part of Shell’s integrated gas division.
In November last year, Shell and its partners in LNG Canada launched the second liquefaction train at the LNG export plant in Kitimat.
LNG Canada is a joint venture between Shell, Petronas, PetroChina, Mitsubishi Corporation, and Kogas.
MidOcean Energy, the LNG unit of US-based energy investor EIG, recently also entered into definitive agreements to buy a 20 percent interest in Petronas’ entities in Canada, including a stake in LNG Canada.
LNG Canada is Canada’s first large LNG export facility and the first phase of the project has a capacity of 14 mtpa.
With a planned Phase 2, which includes two new trains, the capacity will rise to 28 mtpa.
Linking gas production to international pricing
Over the past three years, ARC has also entered into three long-term agreements that will provide exposure to international LNG pricing.
Most recently, the firm signed a long-term sale and purchase agreement with a unit of US energy giant ExxonMobil for volumes from the Cedar LNG project in Canada.
Under the SPA, ExxonMobil LNG Asia Pacific (EMLAP) will purchase all of ARC’s LNG offtake from the Cedar LNG project – about 1.5 million tonnes per annum – at international LNG pricing.
The agreement starts with commercial operations at the Cedar LNG facility, expected late 2028, and continues for the term of ARC’s liquefaction tolling services agreement with Cedar LNG Partners.
In 2022, ARC announced an agreement to supply 140,000 MMBtu/day of natural gas to Cheniere’s Corpus Christi Stage III expansion with pricing linked to Platts JKM.
In 2023, the company announced its second agreement with Cheniere to supply 140,000 MMBtu/day to Cheniere’s SPL expansion project with pricing linked to the Dutch TTF.
