Shell Plc (LON:SHEL) has secured overwhelming shareholder approval for its $16.4 billion acquisition of ARC Resources Ltd (TSE:ARX), with 99.54% of votes cast in favor. The deal, which will increase Shell's daily production by approximately 13.4%, also paves the way for the resumption of share buybacks following a temporary pause.
Deal Details and Timeline
The transaction, which involves Shell issuing 228 million new shares—representing about 4.1% of its June share count—is now awaiting a final court hearing in Alberta scheduled for Wednesday. The Court of King's Bench of Alberta will review the approval at 10 a.m. Mountain Time, with closing expected in the second half of 2026. Regulatory clearances from competition and transport authorities in Canada and the U.S. have already been secured.
Production and Financial Impact
Based on figures from when the deal was announced, ARC's production of 374,000 barrels of oil equivalent per day (boe/d) in 2025 will boost Shell's output base from roughly 2.8 million boe/d to about 3.174 million boe/d. This represents a 13.4% increase in total production. On a per-share basis, production per 1,000 ordinary shares will rise to 0.547 boe/d from 0.503 boe/d, an 8.9% improvement before accounting for any additional buybacks.
Shell projects the acquisition will generate approximately $1.5 billion in annual free cash flow (FCF), implying an enterprise value to FCF multiple of roughly 10.9x and a 9.1% FCF yield. The company also expects to achieve $250 million in annualized savings within one year of closing, with double-digit returns and FCF per share accretion anticipated from 2027.
Buyback Strategy and Share Count
Shell paused its share buyback program around the shareholder vote, having repurchased 32.63 million shares for approximately £1.04 billion at an average price of 3,189 pence between May 7 and June 11. That represents 14.3% of the shares to be issued to ARC holders. A Shell spokesperson confirmed that the paused buybacks will be made up in the remainder of 2026, pending board approval.
The June share count of 5.571 billion ordinary shares already includes the 32.6 million shares bought back. After the deal closes, the total share count will increase to 5.799 billion shares, a 4.1% net increase on the base. However, delayed buybacks could further reduce the eventual dilution.
Asset Integration and Market Context
ARC's production is approximately 60% natural gas and 40% liquids, with the liquids portion contributing nearly 70% of projected 2025 revenue. Shell plans to integrate the assets into its Integrated Gas division, where it recently raised Q2 production guidance to 610,000–650,000 boe/d and indicated trading results will be significantly higher than Q1. CEO Wael Sawan has described Canada as "a heartland for Shell."
Shell's London shares traded 0.45% higher at 3,161 pence in late morning trade on the day of the vote announcement. The company is set to report Q2 results on July 30, where investors will focus on whether improved gas trading and working capital provide room to resume buybacks while maintaining balance sheet strength.
Risks and Considerations
The final outcome remains subject to court approval and certain regulatory clearances, while the planned buybacks require board authorization. The $1.5 billion FCF projection depends on commodity prices, drilling performance, and integration execution. Reserve figures should be treated with caution, as ARC uses Canada's NI 51-101 standards while Shell follows SEC rules, and Shell notes that differences between the two methodologies can be material.
