The oil and gas industry is anticipated to see continued consolidation following a series of significant Canadian deals last year. Shareholders are seeking enhanced returns amid stagnant oil prices, prompting companies to pursue mergers and acquisitions as a strategic growth avenue, according to Grant Zawalsky, a senior partner at Burnet, Duckworth and Palmer LLP. Zawalsky highlighted that M&A activity offers a viable alternative for growth in a challenging investment landscape.
Last year witnessed notable energy transactions, including the successful MEG Energy Inc. acquisition by Cenovus Energy Inc., Whitecap Resources Inc.’s $15 billion merger with Veren Inc., and Ovintiv Inc.’s $3.8 billion purchase of NuVista Energy Ltd. Burnet, Duckworth and Palmer played a significant role in eight of the top 10 energy producer deals in 2025.
While domestic transactions dominated the scene, Ovintiv, though based in Denver, has a strong Canadian presence with its listing on the TSX and historical ties to Calgary as Encana. Analysts like Tom Pavic, president of Sayer Energy Advisors, foresee a bustling year ahead, albeit with a focus on smaller-scale deals. Pavic noted the current market favors buyers looking to bolster their drilling portfolios efficiently.
Despite positive developments like the recent energy accord between Ottawa and Alberta, attracting global interest in Canadian acquisitions remains a challenge. Potential buyers are evaluating Canadian assets against regulatory uncertainties and export infrastructure requirements. However, U.S. private equity firms are eyeing Canadian assets for their value proposition and cost advantages, demonstrating a willingness to navigate regulatory risks for lucrative investments.
Zawalsky emphasized that while hostile bids, such as the one from Strathcona Resources Ltd. targeting MEG, are expected to be infrequent, they entail significant legal complexities. ATB Capital Markets’ 2026 outlook anticipates a gradual slowdown in consolidation within the exploration and production sector due to various economic and structural factors impacting deal dynamics.
