The oil and gas advisory sector anticipates a continued trend of consolidation following a series of significant Canadian deals last year. However, the participation of foreign buyers remains uncertain. Companies recognize the benefits of expanding through mergers and acquisitions amid stagnant oil prices, increasing shareholder demands for better returns, and ongoing market uncertainties. According to Grant Zawalsky, a senior partner at Burnet, Duckworth and Palmer LLP in Calgary, mergers and acquisitions offer growth opportunities when traditional investments may not yield expected returns.
Last year saw significant energy transactions, including the bidding war for MEG Energy Inc., the $15 billion merger between Whitecap Resources Inc. and Veren Inc., and Ovintiv Inc.’s $3.8 billion acquisition of NuVista Energy Ltd. Burnet, Duckworth and Palmer LLP played a role in eight of the top ten energy producer transactions. While most deals involved domestic players, Ovintiv, though based in Denver, maintains a significant Canadian presence.
Tom Pavic, president of Sayer Energy Advisors, foresees a busy year ahead, with a focus on smaller-scale deals compared to the billion-dollar transactions of 2025. He describes the current market as favorable to buyers seeking cost-effective opportunities to expand drilling inventories. Despite an improved investment climate following agreements supporting energy projects, global interest in Canadian acquisitions has not seen a notable increase yet.
Zawalsky mentioned that potential buyers are evaluating Canadian assets’ value against regulatory challenges and export infrastructure requirements. U.S. private equity firms are showing interest in acquiring Canadian assets, leveraging cost advantages to develop and potentially sell companies or take them public. Although regulatory risks are a concern, these firms are more inclined to take such risks compared to established oil and gas producers.
While hostile bids, like the one by Strathcona Resources Ltd. for MEG last year, are expected to be infrequent, they require substantial legal resources and financial commitment. Looking ahead, ATB Capital Markets projects a modest slowdown in consolidation activities among exploration and production companies due to various economic and structural factors. These include a limited number of high-quality targets with sufficient scale and inventory depth, as well as challenges posed by oil price fluctuations and differing valuation expectations between buyers and sellers.