The oil and gas industry is poised for continued consolidation following a series of significant Canadian deals last year. However, the participation of foreign buyers remains uncertain, according to industry experts.
With oil prices stagnating around $60 US per barrel, companies are turning to mergers and acquisitions to boost growth and meet shareholder expectations for better returns. Grant Zawalsky, a senior partner at Burnet, Duckworth and Palmer LLP in Calgary, emphasized that M&A activity allows companies to expand without heavy investments in drilling.
Last year, Zawalsky was involved in three major energy transactions, including the successful bid for MEG Energy Inc. by Cenovus Energy Inc., Whitecap Resources Inc.’s $15-billion merger with Veren Inc., and Ovintiv Inc.’s $3.8-billion acquisition of NuVista Energy Ltd.
While most deals were domestic, Ovintiv, headquartered in Denver but with a significant Canadian presence, was an exception. Industry insiders anticipate a busy year ahead, albeit with smaller-scale transactions compared to the billion-dollar deals of 2025.
Tom Pavic, president of Sayer Energy Advisors, described the current market as favorable for buyers seeking cost-effective ways to enhance their drilling inventories. Despite positive developments like the energy accord between Ottawa and Alberta, there has been limited global interest in Canadian acquisitions.
Potential buyers are evaluating Canadian assets for their value and quality, balancing them against regulatory concerns and infrastructure needs for international exports. U.S. private equity firms are showing interest in acquiring Canadian assets, leveraging lower costs and regulatory risks for potential opportunities.
Hostile takeover bids, such as the one that targeted MEG Energy last year, are expected to be rare occurrences, characterized by significant legal complexities and expenses for bidders. ATB Capital Markets forecasts a modest slowdown in industry consolidation, citing challenges related to valuation premiums, oil price weakness, and cautious market sentiment.
Overall, the industry anticipates a nuanced landscape for mergers and acquisitions in the coming months, influenced by a variety of economic and structural factors.