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.
