Oil and gas industry experts anticipate a continuation of the trend towards consolidation following a series of significant Canadian deals last year. The desire to enhance market presence through mergers and acquisitions has been driven by factors such as stagnant oil prices, shareholder demands for improved returns, and uncertainties surrounding global market access for oil producers. Grant Zawalsky, a senior partner at Burnet, Duckworth and Palmer LLP in Calgary, emphasized the role of M&A in facilitating growth amid challenging investment conditions.
Zawalsky highlighted the increasing M&A activity in the energy sector, citing notable transactions from the previous year, including Cenovus Energy Inc.’s successful bid for MEG Energy Inc., Whitecap Resources Inc.’s merger with Veren Inc., and Ovintiv Inc.’s acquisition of NuVista Energy Ltd. The majority of deals have involved domestic companies, with Ovintiv being a notable exception due to its significant Canadian presence despite being headquartered in Denver.
Tom Pavic, President of Sayer Energy Advisors, foresees a busy year ahead for the industry, albeit with a focus on smaller-scale transactions compared to the billion-dollar deals of 2025. He described the current market conditions as favorable for buyers seeking cost-effective opportunities to expand their drilling portfolios. Despite positive developments in the investment landscape, such as the energy agreement between Ottawa and Alberta, there has been limited international interest in Canadian acquisitions.
Potential buyers evaluating Canadian assets are weighing the appeal of these assets against concerns related to regulatory complexities and export infrastructure requirements. While global interest remains subdued, U.S. private equity firms have shown interest in acquiring Canadian assets at lower costs, with a willingness to navigate regulatory challenges. Zawalsky noted that such investors are inclined to capitalize on value differentials and are more inclined to take regulatory risks compared to traditional oil and gas producers.
Looking ahead, experts anticipate a slight slowdown in consolidation activities among exploration and production companies, citing challenges related to the scarcity of high-quality targets and the impact of oil price fluctuations on deal valuations. Despite these factors, the industry remains dynamic, with ongoing strategic evaluations and potential opportunities for growth and development.