Oil and gas industry experts anticipate an ongoing trend of consolidation following a series of significant Canadian deals last year. However, the participation of foreign buyers in this trend remains uncertain. The rationale behind this consolidation wave includes companies seeking growth opportunities amidst stagnant oil prices, shareholder demands for improved returns, and challenges in accessing global markets for selling output.
Grant Zawalsky, a senior partner at the law firm Burnet, Duckworth and Palmer LLP in Calgary, highlighted the role of mergers and acquisitions (M&A) as a strategy for growth without heavy investments in drilling. He emphasized that until market fundamentals change, the industry is likely to witness more of the same trend.
Zawalsky was involved in key energy transactions in the past year, including the MEG Energy Inc. bidding war, Whitecap Resources Inc.’s merger with Veren Inc., and Ovintiv Inc.’s acquisition of NuVista Energy Ltd. Notably, Burnet, Duckworth and Palmer played a significant role in eight of the top 10 energy producer transactions in the previous year.
While most deals were domestic, Ovintiv, headquartered in Denver but with a strong Canadian presence, stood out as an exception. Experts like Tom Pavic, president of Sayer Energy Advisors, anticipate a busy year ahead, albeit with potentially smaller-scale activities compared to the billion-dollar deals seen in 2025. Pavic described the current market as favorable for buyers looking to enhance their drilling portfolios cost-effectively.
Although the investment environment has improved with recent energy agreements, global interest in Canadian acquisitions has not seen a significant surge according to Pavic. Zawalsky noted that potential buyers are evaluating the value of Canadian assets against regulatory challenges and export infrastructure requirements. However, U.S. private equity firms are increasingly interested in acquiring Canadian assets, leveraging cost advantages and risk appetite.
Looking ahead, experts foresee hostile bids, like the one involving Strathcona Resources Ltd. and MEG Energy, to be uncommon. ATB Capital Markets’ 2026 outlook predicts a modest slowdown in consolidation among exploration and production companies due to various economic and structural factors. This includes the scarcity of high-quality targets and challenges posed by oil price fluctuations, creating a complex landscape for M&A transactions in the industry.
