Royal Dutch Shell has agreed to buy Alberta-based Duvernay Oil for around C$5.9 billion ($5.9 billion), as oil majors' boost investment in tight or hard to extract natural gas.
Shell and Duvernay said in statements on Monday that Shell had made a cash offer of C$83 per share, which was unanimously accepted by Duvernay's board.
Duvernay shares closed at C$58.44 on Friday.
Duvernay has 1,800 square kilometers (450,000 acres) of land holdings and Shell hopes this could add to its portfolio of tight gas interests.
Tight gas is gas contained in difficult reservoirs and was once considered uneconomic to extract.
However, high gas prices and advances in technology have led to a surge of investment in such reserves.
"Shell has a proven track record in North America tight gas activities. Duvernay could become a valuable part of the Shell portfolio," Shell's Chief Executive Jeroen van der Veer said in a statement.
Shell's offer is conditional on holder of at least 66-2/3 percent of the outstanding common shares of Duvernay accepting it.
Duvernay directors have committed to selling their own shares, representing 18.1 percent of the company.
Duvernay has reported over 25,000 barrels oil equivalent per day (boepd) of production, predominantly in natural gas, with plans to increase production to around 70,000 boepd by 2012, Shell said.
Shell is the world's second-largest non-government controlled oil and gas company by market value and is a major player in Canada's oil sands.
It has North American tight gas production of some 80,000 boepd.
Rivals including British oil major BP have also been investing heavily in tight gas in North America and elsewhere.