Canadian oil patch merger and acquisition activity expected to decrease

The Canadian oil and gas industry experienced a significant uptick in mergers and acquisitions in 2025, creating a surge in consolidation activity. However, experts predict a slowdown in the pace of M&A deals in the sector over the next year. Although many analysts and industry experts anticipated increased interest from U.S. buyers and more favorable government policies fueling a wave of acquisitions in 2026, a report from Calgary-based Sayer Energy Advisors has painted a more tempered outlook for the Canadian energy industry.

According to the report highlighted by the Calgary Herald, the 2025 landscape saw a staggering $31.2 billion in mergers and acquisitions in Canada’s upstream oil and gas sector. A notable 53% increase from the previous year, this marked a significant year for deal-making, culminating in the most substantial M&A activity since 2017. The notable deals of the year included a $15 billion merger between Whitecap Resources and Veren Inc. in March, as well as Cenovus Energy’s $8.6 billion takeover of MEG Energy in November. Additional transactions included Sunoco LP’s $9.1 billion acquisition of Parkland Corp., Keyera Corp.’s $5.1 billion purchase of Plains All American Pipeline’s NGL division, Ovintiv Inc.’s $3.8 billion acquisition of NuVista Energy, and Canadian Natural Resources’ $1.0 billion purchase of Chevron’s Oilsands and Duvernay assets.

Firms engaged in the acquisition spree primarily aimed for improved returns and operational efficiencies amidst a challenging oil price environment, as opposed to investing in fresh drilling ventures. The report emphasized that approximately 30% of the M&A activity honed in on assets within the Montney formation in northeastern British Columbia and northwestern Alberta, regions renowned for their natural gas, condensate, and NGLs. Domestic players spearheaded most major acquisitions, with an uptick in interest from U.S. buyers as shale production in the U.S. plateaued over time.

On the flip side, a separate report from ATB Capital Markets highlighted the robust financial positions maintained by most producers, implying fewer opportunities for prospective acquisitions in 2026. The scarcity of high-quality targets boasting adequate scale and portfolio depth to justify premium valuations is anticipated to curb the momentum of M&A activity in the sector moving forward. Grant Zawalsky, senior partner and vice-chair at law firm Burnet, Duckworth, and Palmer LLP, noted that M&A remains a viable avenue for growth when drilling investments do not yield desired returns, indicating that the current industry dynamics are likely to persist in the short term. He underscored his firm’s involvement in some of the sector’s most significant transactions in 2025, emphasizing a notable trend towards consolidation.

While both optimistic and cautious outlooks permeate the industry following a surge in 2025 M&A activity, industry experts are bracing for structural and economic realities that could temper the pace of consolidation in the Canadian oil and gas sector in the near future.