Monday Morning Montney M&A – asset maps, comparable transactions and random musings – StackDX Intel

Massive news in the WCSB yesterday morning as Shell and ARC Resources announced an agreement whereby Shell will acquire ARC Resources in a cash and share transaction valued at approximately C$ 22 billion.

See Shell’s press release here: Shell announces agreement to acquire Canadian energy company, ARC Resources Ltd (“ARC”).

See ARC Resources’ press release here: ARC Resources Ltd. announces agreement to be acquired by Shell plc

See Shell acquisition presentation here: Delivering more value, with less emissions

While it had been speculated for years that Shell would need additional resource to fulfill its LNG ambitions in Canada, it is nonetheless exciting and always a surprise when the day actually comes.

There are numerous thoughts that one might have in response to this transaction. Mine are as follows, in no particular order:

• LNG Canada phase 2 FID is closer to a “when” than an “if”. It would be logical to expect more news on this front in the wake of Shell’s large resource acquisition, with FID expected this year.
• Flowing barrel transaction metrics of ~$53,000/BOE/d (depends on exactly what production figure you use for ARC) is a premium to the average Montney transaction over the last few years of ~$43,000/BOE/d. Of course not all Montney is comparable and flowing barrel metrics have their flaws…keep in mind ARC Resources is (was?) Canada’s largest condensate producer, and as a result has higher netbacks and condensate weighting than other Montney peers. Higher netbacks equals higher flowing barrel metrics all else being equal.
• On that note, the number one condensate producer in Canada and the number 6 producer (NuVista) have now been acquired in recent months. Secure your supply while you can!
• On the natural gas side, ARC Resources was the 4th largest licensee on a gross basis while Shell was the 8th largest. The combined company will produce more than 2.3 BCF/d of gross licensed volumes….good for number 4 in Canada behind Tourmaline, Canadian Natural Resources and Ovintiv (after NuVista acquisition) on a gross basis.
• While Shell is one of the few international supermajor E&Ps that never completely left Canada – it’s nonetheless a vote of confidence in the ability for Canada to attract investment. It’s been over a decade of non-stop divestment from US/International/Super Major E&Ps. Can we officially say the tide has turned? Probably not but it’s nice to see investment coming in rather than going out. I’m all for Canadian companies controlling Canadian resource but in reality we need the investment from larger international companies to really become an energy superpower.
• The timing of last week’s Sunrise expansion approval announcement followed immediately by Shell’s commitment to further investment in Canada is not lost on me. It’s likely just coincidental timing given large deals take a long time to complete but you also wonder if it may have been a nice to have item on the checklist and a vote of confidence for future project approvals. Removing regulatory barriers increases the willingness for companies to invest. Period.

With those thoughts out of the way, let’s move on to the asset maps from StackDX Maps.

Figure 1 – Alberta mineral rights + Montney wells for ARC and Shell

Figure 2 – BC mineral rights + Montney wells for ARC and Shell

Below in Figure 3 are some comparable transactions that involved Montney production over the last few years. The consolidation of the Montney is something that has been written about lots in previous articles, and it continues to be a dominant them in the WCSB.

Figure 3 – Montney M&A Comparables – StackDX Intel (turn sideways to view on mobile)

*2026 production guidance from Ovintiv acquisition press release

**Shell quoted “post royalty burden” volumes of 370,000 BOE/d for the ARC acquisition. This table uses 410,000 BOE/d in line with ARC 2026 guidance of 405,000-420,000 BOE/d.