(UPDATE) Arc Resources buys Montney oil and natural gas assets in $1.6b deal

Updated, May 15th, 12:30 p.m.: A previous version of this story contained an error. The deal was worth $1.6 billion, not $1.6 million. Energeticcity.ca is happy to set the record straight.

MONTNEY, B.C. – A $1.6 billion deal has seen the ownership of Montney oil and natural gas assets change hands between energy companies. 

Arc Resources acquired condensate-rich Montney assets in Alberta’s Kakwa region from Strathcona Resources in a deal which is expected to be finalized in early July 2025, subject to customary closing conditions. 

The assets, which are directly adjacent to Arc’s Kakwa development, are expected to yield 40,000 boe per day – half being crude oil and liquids and half natural gas – including approximately 11,000 barrels of condensate daily. 

Arc expects this to increase its Kakwa production by 24 per cent to greater than 210,000 boe per day, and lengthen the duration of its expected Montney inventory at Kakwa from 12 years to more than 15 years. 

As part of the transaction, Arc has also bought two natural gas processing and condensate handling facilities, and a 19 per cent interest in third-party deep-cut natural gas processing infrastructure.

“The acquisition of these premium Montney assets aligns with Arc’s strategy to grow free funds flow per share and achieve a strong return on invested capital,” a statement released by Arc on May 14th says. 

This means it expects an extra $200 million of free funds flow in 2026 at current strip prices.

The deal is being funded through a new $1 billion two-year loan and existing credit facilities, but Arc also estimates net debt of approximately $2.8 billion when it closes. 

This is one of three transactions Strathcona has made to offload all of its Montney assets for approximately $2.84 billion.

Another deal saw Groundbirch assets sold to Tourmaline Oil in exchange for $291.5 million in common shares of that company, and a third saw assets in Grande Prairie sold for about $850 million to an unnamed party.

Strathcona reports all the assets generated $149 million of operating earnings in 2024. 

The sales combined represent about 33 per cent of Strathcona’s current value.

“Strathcona would also like to congratulate each of the purchasers, each of whom are well positioned to maximize value for the assets going forward given the hand-in-glove fit with each of their existing operations and their long track records of first-class operations in the surrounding areas,” says a press release issued by Strathcona on May 14th.