On April 27 Shell and ARC Resources announced that Shell would be acquiring ARC, in a deal valued at about USD $16.4 billion (CAD $22 billion) inclusive of about USD $2.8 billion of debt.
ARC's Montney production (374 MBoe/d before royalties in 2025, 41% crude oil, condensate, and NGLs) and land base (>1.5 million net acres) are both about four times the size of Shell's Montney position in Western Canada, bolstering Shell's production and drilling inventory not only for dry gas wells to feed its 40% share of the LNG Canada export facility in Kitimat, BC, but also boosting Shell's production and inventory of condensate-rich wells in Alberta and British Columbia. As shown in the image below, ARC's Montney assets are adjacent or proximal to Shell's legacy Montney position.
Many will assume that Shell acquiring ARC would put the LNG Canada consortium, of which Shell is 40% owner and operator, a big step closer to sanctioning Phase 2 of LNG Canada, which would double the project's capacity and add another ~2.1 Bcf/d of natural gas demand to the Western Canadian Sedimentary Basin. ARC's natural gas production in British Columbia averaged over 800 MMcf/d in Q4 2025, which would be over 650 MMcf/d of incremental supply potentially available for Shell to send to LNG Canada, as ARC was already providing Shell with 150 MMcf/d of natural gas under a long-term supply agreement to help fill Shell's 40% equity feedstock requirements for LNG Canada Phase 1 (about 840 MMcf/d).
This news comes about a month after TC Energy, the operator of the Coastal GasLink pipeline (CGL) that delivers natural gas to LNG Canada, announced a new commercial arrangement that, among other things, put the LNG Canada consortium in charge of construction of a Phase 2 expansion of CGL, and put limits on the CGL owners' capital commitments and overall liability for construction cost and schedule risks (AIMCo and KKR are the other two CGL owners).
The equity transaction is to be funded 75% with Shell shares, and only about 25% by cash (approximately USD $3.4 billion), so the transaction would not be a massive drain on Shell's financial capacity to fund LNG Canada Phase 2. ARC's shareholders are expected to vote on the deal in July.
