Oil industry experts anticipate a continuation of merger and acquisition activities following a series of significant Canadian deals last year. The interest in consolidating companies stems from the desire to enhance shareholder returns amid stagnant oil prices, regulatory uncertainties, and challenges in global market access. Grant Zawalsky, a senior partner at Burnet, Duckworth and Palmer LLP in Calgary, highlighted that M&A provides a growth avenue when traditional investments yield subpar returns.
Major energy transactions in 2025 included the successful bid by Cenovus Energy Inc. for MEG Energy Inc., Whitecap Resources Inc.’s merger with Veren Inc. valued at $15 billion, and Ovintiv Inc.’s acquisition of NuVista Energy Ltd. for $3.8 billion. Domestic deals predominated, with Ovintiv standing out due to its Denver headquarters, TSX listing, and substantial Canadian presence as the rebranded Encana. Burnet, Duckworth and Palmer played a pivotal role in eight of the top ten energy producer transactions last year.
Tom Pavic, president of Sayer Energy Advisors, foresees heightened activity in 2026, albeit possibly at a smaller scale compared to the previous year. The prevailing “buyer’s market” trend reflects companies seeking cost-effective ways to expand their drilling portfolios. While the investment landscape has improved following energy agreements between Ottawa and Alberta, global interest in Canadian acquisitions remains subdued.
Potential buyers are evaluating Canadian assets’ value against regulatory complexities and export infrastructure challenges for overseas markets. Despite this, U.S. private equity firms are eyeing Canadian assets for development, leveraging lower costs and regulatory risk tolerance for profitable opportunities. Hostile takeover bids, like the one involving Strathcona Resources Ltd. and MEG Energy, are anticipated to be exceptions due to their legal complexities and uncertainties.
ATB Capital Markets’ 2026 outlook suggests a modest slowdown in consolidation activities within the exploration and production sector. Factors such as the scarcity of high-quality targets and volatile oil prices may dampen deal-making momentum, creating a challenging environment for transactions. The report forecasts a widening gap between opportunistic buyers and sellers awaiting better valuations amidst the commodity price cycle fluctuations.