Oil industry experts anticipate that the trend of mergers and acquisitions will persist following a series of major Canadian deals last year. The potential involvement of foreign buyers in this trend remains uncertain. Companies are increasingly recognizing the benefits of expanding through mergers and acquisitions as oil prices remain around $60 US per barrel, shareholders demand improved returns, and uncertainties persist in global markets. According to Grant Zawalsky, a senior partner at Burnet, Duckworth and Palmer LLP in Calgary, mergers and acquisitions offer a growth opportunity when drilling investments may not yield expected returns.
Last year, Zawalsky was involved in significant energy transactions, including the MEG Energy Inc. bidding war won 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. Burnet, Duckworth and Palmer participated in eight of the top 10 energy producer transactions. While most deals were among domestic companies, Ovintiv, based in Denver but with a strong Canadian presence, was an exception.
Tom Pavic, president of Sayer Energy Advisors, expects a busy year ahead, although possibly with smaller-scale activities compared to the billion-dollar deals seen in 2025. He describes the current market as favorable to buyers seeking cost-effective ways to expand drilling inventories. Despite improvements in the investment environment following energy agreements between Ottawa and Alberta, Pavic notes a lack of significant global interest in Canadian acquisitions.
Zawalsky highlights that potential buyers are evaluating the value and quality of Canadian assets against regulatory concerns and export infrastructure requirements. While global interest in Canadian acquisitions remains limited, U.S. private equity firms are showing interest in acquiring Canadian assets, increasing production, and potentially selling or taking companies public. Hostile bids, like the one that targeted MEG Energy last spring, are expected to be uncommon.
ATB Capital Markets forecasts a modest slowdown in consolidation within the exploration and production sector in 2026, citing factors such as the scarcity of high-quality acquisition targets and challenges posed by oil price fluctuations. This outlook suggests a challenging landscape for transactions, emphasizing the gap between buyers seeking opportunities and sellers awaiting higher valuations.