DEAL ALERT (SHELL BUYS ARC)

Energy Advisors issued a Deal Alert, Shell's $16B Montney buy of ARC establishes Canada Heartland, analyzing Shell's largest deal since its $82B buy of BG in 2015.

The deal broke the pause in O/G M&A since Iran conflict started on February 28 and highlights the Montney resource play that crosses Alberta and British Columbia in Canada. The Montney is North America's biggest gas growth story and has decades of inventory.

Contents and Insights:

------ Deal Stats: $16.4B, incl. $2.8B debt assumed, paid with 75% stock and 25% cash. ARC shareholders recieve 27% premium to prior day closing price. 370,000 Boepd, 1,500,000 net acres.

------ Deal Metrics: Unadjusted $44,000 per daily Boepd (59% gas, 13% NGLs, 28% oil).

------ Shell Impact: Sets Canada's vast Montney resource play as low-cost gas supply source to integrate with Global Gas & LNG business. Increases Shell's commercial 2P+2C resources by 33% or 2 billion BOE.

------ Canada Impact: Validates Canada as a long-term secure and growing source for global natural gas needs.

Here some quick quotes:

Quick Quotes:

------- Transformative. "Shell stunned the patch with a $16.4B buy of ARC. It is Canada's third largest deal on record and Canada's largest deal excluding oilsands."

-------- Reversal. "For Shell, the deal marks a strategic reversal after using its capital to buy back $60B of stock in the last 4 years. The deal leverages Shell's 20+% stock price YTD (vs.flat for ARC) and is Shell's first major upstream purchase since 2015's $82B BG buy."

------- Montney. "A massive gas resource base in the early innings of development and advantaged with rich gas and condensate. The play is North America's biggest gas growth story and accounts for 11% of Canada's gas volumes."

------- Who's Next. "The deal likely kicks off a wave of buying of Canadian independents with strong economics and long dated inventory. The buyers are likely Majors, IOCs and even European and Asian firms seeking secure long term gas."

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