01/06/26
Foreign buyers lured back to Canada’s upstream
New York, 1 June (Argus) — After rushing to the exits just a few years ago,
international buyers are returning to Canada's oil and gas patch, drawn by a
deep pool of untapped reserves on offer as growth slows elsewhere. A pivot back
to oil and gas under Canadian prime minister Mark Carney, driven in part by a
desire to diversify exports given trade tensions with the US, has seen moves to
fast-track pipeline projects and ease some environmental regulations. Overseas
investors are also increasingly turning to Canada as a relatively safe haven at
a time of geopolitical uncertainty, in a marked shift after some of the largest
majors scaled back exposure to the oil sands following investor pressure.
Mergers and acquisitions (M&A) have largely centred upon the Montney shale basin
in British Columbia and Alberta, as well as the Duvernay in west-central
Alberta. A slowing US shale sector that has seen the best remaining acreage
already exchange hands is also spurring greater interest in Canadian inventory
that offers a cheaper cost of entry. "These Canadian plays — the Montney and
Duvernay — offer a good blend of high-quality resource and duration, and that's
something that some US operators lack today," says energy consultancy Enverus'
senior analyst Michael Berger. "There is an incentive to look north of the
border." While Alberta's oil sector has been boosted by this year's rally in
crude prices, there has also been a growing recognition of its outsized role
against a backdrop of elevated trade tensions with the US. To that end, Carney
has backed plans to increase LNG and oil exports from British Columbia to deepen
trade ties with Asia and Europe, and pledged faster approvals to ease
bottlenecks. In announcing its initial foray into Canada last week, US
independent Northern Oil and Gas (NOG) cited the Duvernay's "high-quality,
low-cost, long-life inventory with meaningful upside that remains largely
untapped". NOG, which bought a 25pc stake in assets from Parallax Energy for
$259mn, is following other US firms. Ovintiv doubled down on the Montney last
year, acquiring NuVista Energy for $2.7bn, to gain control of 140,000 net acres
and 100,000 b/d of oil equivalent. US private equity has also been keen, with
Carlyle Group and NGP Energy Capital Management funding privately held Cygnet
Energy's takeover of Kiwetinohk Energy in October. Parallax is backed by
Carnelian Energy Capital. Vote of confidence In April Shell acquired ARC
Resources in a $13.6bn deal that establishes Canada as a "heartland" for the
major, chief executive Wael Sawan said. The purchase will also support Shell's
growing LNG footprint in Canada. Calgary-based Whitecap Resources says the
transaction has put a spotlight on the Canadian energy sector and "people are
hyper-focused" on the Montney and Duvernay. The size and quality of inventory in
Canada's hottest plays will continue to drive deals, but bigger acquisitions may
be limited. "There are fewer and fewer candidates out there for large-scale M&A
activity," Whitecap chief executive Grant Fagerheim says. A referendum scheduled
for October over whether Alberta should remain part of Canada could cast a
shadow over the investment outlook, but analysts said it was too early to say
whether it could slow deal-making. The total value of Canadian upstream deals is
running at $17bn so far this year, Enverus says, compared with $19.5bn in 2025
and $12.9bn the year before. For now, analysts see further foreign interest in
Canada's upstream, encouraged by a more supportive federal government and new
pipeline projects that are easing concerns about getting supplies to market.
"All of these factors combined with inventory pressures elsewhere have seen
capital re-emerge and new buyers come back to Canada," TD Securities senior
research analyst Aaron Bilkoski says. By Brett Holmes and Stephen Cunningham
Send comments and request more information at feedback@argusmedia.com Copyright
© 2026. Argus Media group . All rights reserved.
