British oil and gas giant Shell announced Monday an agreement to acquire ARC Resources, a Canadian energy company focused on the Montney shale basin in British Columbia and Alberta, in a deal with a total enterprise value of about $16.4 billion.
Baker Botts is acting as U.S. regulatory counsel to Calgary-based ARC Resources. The Baker Botts team includes Houston partners David Jetter and Natasha Khan, Washington, D.C., partners Emil Barth, Ted Posner and Michael Bodosky, and Dallas special counsel David Schiller.
Travis Torrence is head of legal for Shell USA. Torrence told The Texas Lawbook that the Shell legal team that worked on this deal included Robin Phillips and Joel Talley in Houston, as well as Nina Mojiri-Azad in Washington, D.C., with Lindsay Grice, Nathaniel Gordon and Emily Barlass in the U.K.
Shell said its agreed to pay ARC shareholders about $6 cash and 0.40247 shares of Shell for each ARC share held, representing a 20 percent premium to the ARC 30-day average stock price and an equity value of about $13.6 billion. Shell will also assume about $2.8 billion in debt and leases.
Shell CEO Wael Sawan said the ARC deal “establishes Canada as a heartland for Shell while furthering our strategy to deliver more value with less emissions.”
“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,” Sawan said.
Bloomberg reported that this is Shell’s largest deal since Sawan took over three years ago and the largest oil and gas deal in Canada since 2012. In September 2021, The Texas Lawbook reported on Shell’s sale of about 225,000 acres in the Permian Basin to ConocoPhillips for $9.5 billion cash. More recently in early March, The Lawbook reported that Pennzoil Quaker State, the lubricants business of Shell USA, sold Jiffy Lube to an affiliate of middle-market PE firm Monomoy Capital Partners for $1.3 billion.
ARC President and CEO Terry Anderson said his company “will play an important role in helping Shell to further strengthen Canada’s resource landscape, whilst also providing the secure energy that the world needs.”
Shell said ARC reported production of 374,000 barrels of oil equivalent per day last year, and the firm complements its existing LNG footprint and downstream businesses including refining, chemicals, fuel retail, aviation, lubricants and low-carbon services. Shell expects the acquisition to bring annualized synergies of around $250 million within a year of closing, which is expected by Dec. 31.
Goldman Sachs is exclusive financial advisor to Shell, and RBC Capital Markets is exclusive financial advisor to ARC Resources.