The oil and gas industry is poised for continued consolidation following a series of major deals in Canada last year. The trend towards mergers and acquisitions is driven by factors such as stagnant oil prices, shareholder demands for better returns, and uncertainties in global markets. Experts predict that companies will continue to pursue M&A activities as a strategic way to grow amidst challenging market conditions.
Grant Zawalsky, a senior partner at Burnet, Duckworth and Palmer LLP in Calgary, highlighted the appeal of M&A as a means of expansion without the need for heavy investment in drilling activities. He anticipates that the industry will see more consolidation as long as the underlying market conditions persist.
Zawalsky was involved in notable energy transactions in the past year, including the bidding war for MEG Energy Inc., Whitecap Resources Inc.’s merger with Veren Inc., and Ovintiv Inc.’s acquisition of NuVista Energy Ltd. Domestic deals have been prevalent, with some exceptions like Ovintiv, which has a significant Canadian presence despite being headquartered in Denver.
Tom Pavic, president of Sayer Energy Advisors, foresees a busy year ahead for the industry, albeit with a shift towards smaller-scale deals compared to the billion-dollar transactions seen in 2025. He described the current market as a “buyer’s market,” with companies seeking cost-effective ways to enhance their drilling portfolios.
Despite positive developments in the investment climate, including an energy agreement between Ottawa and Alberta, there has been limited international interest in Canadian acquisitions. Potential buyers are evaluating Canadian assets against regulatory challenges and export infrastructure requirements. However, U.S. private equity firms have shown interest in acquiring Canadian assets, leveraging cost differentials and risk appetite to drive investment decisions.
Hostile takeover attempts, like the one experienced by MEG Energy, are expected to be rare occurrences. The industry is also projected to experience a modest slowdown in consolidation, influenced by factors such as the scarcity of premium targets and challenges posed by oil price fluctuations.
Overall, the oil and gas sector remains dynamic, with ongoing M&A activities shaping the industry landscape in response to market conditions and strategic imperatives.