British oil major Shell on Monday said it agreed a deal to buy Canadian energy company ARC Resources in a deal valued at $16.4 billion.

The transaction will add roughly 370,000 barrels of oil equivalent per day to Shell’s portfolio and is designed to boost the London-listed firm’s long-term oil and gas production.

Shell CEO Wael Sawan described ARC Resources, which is focused on the Montney shale basin in British Columbia and Alberta, Canada, as “a high-quality, low-cost and top quartile low carbon intensity producer” that will strengthen the firm’s resource base for decades.

“We are accessing uniquely positioned assets and welcoming colleagues that bring deep expertise which, combined with Shell’s strong basin level performance, provides a compelling proposition for shareholders,” Sawan said in a statement.

ARC Resources president and CEO Terry Anderson welcomed the announcement, saying that the firm’s assets and staff “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 the deal would generate double-digit returns and boost free cash flow per share from 2027. The company is expected to pay ARC Resources’ shareholders 8.20 Canadian dollars ($6.03) in cash and 0.40247 ordinary shares for each ARC Resources share.

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