Shell is doubling down on North American gas in a major bet on long-term LNG demand, agreeing to buy Canada’s ARC Resources in a $16.4-billion deal that will add roughly 370,000 barrels of oil equivalent per day to production and strengthen the supermajor’s position in one of the continent’s most strategic gas corridors.
The acquisition gives Shell access to roughly 2 billion barrels of reserves while bolstering supply feeding LNG Canada, the export project Shell operates with a 40% stake and increasingly views as a cornerstone of its Asia growth strategy. With ARC’s assets adjoining Shell’s Canadian operations that feed LNG Canada, the deal boosts Shell’s LNG supply position while also replenishing reserves.
The move also addresses a growing concern hanging over Shell’s long-term production outlook. Analysts had warned earlier this year that the company faced a potential production gap of 350,000 to 800,000 boed by the middle of the next decade as mature fields decline. ARC’s output, which averaged a record 374,000 boed last year, effectively plugs much of that hole while allowing Shell to lift its compound annual production growth target for the decade to 4% from 1%.
Shell said the transaction, structured as roughly 25% cash and 75% shares, values ARC at a 20% premium to its 30-day average share price. Including assumed debt, Shell will take on an enterprise value of $16.4 billion, one of the biggest upstream deals since Chevron Corporation acquired Hess Corporation.
Beyond adding volumes, the deal deepens Shell’s tilt toward gas at a time LNG is emerging as one of the sector’s tightest long-term growth markets. Canadian gas has become especially attractive because Pacific Coast exports can reach Asian buyers faster than U.S. Gulf Coast cargoes while avoiding some shipping chokepoints.
The acquisition also extends Shell’s reserve life, which had fallen below eight years at the end of 2025, and is expected to boost free cash flow per share from 2027 without changing the company’s $20 billion to $22 billion investment budget through 2028.
By Charles Kennedy for Oilprice.com
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