The oil and gas industry is anticipated to witness a continued wave of consolidation following a series of significant Canadian transactions last year. While domestic companies have been embracing mergers and acquisitions to strengthen their positions amidst stagnant oil prices and shareholder demands for better returns, the participation of foreign buyers remains uncertain.
Grant Zawalsky, a senior partner at Burnet, Duckworth and Palmer LLP in Calgary, highlighted that M&A activities offer growth opportunities without the need for heavy investments in drilling. He emphasized that until market conditions change, the trend of consolidation is likely to persist.
Zawalsky was actively involved in notable energy deals in 2025, including the MEG Energy Inc. bidding war, Whitecap Resources Inc.’s merger with Veren Inc., and Ovintiv Inc.’s acquisition of NuVista Energy Ltd. The law firm as a whole played a key role in eight of the top 10 energy producer transactions last year.
Most deals have been transacted among Canadian players, with Ovintiv being an exception due to its substantial presence in Canada despite being headquartered in Denver. Tom Pavic, the president of Sayer Energy Advisors, expects a busy year ahead in 2026, with a focus on smaller-scale transactions compared to the billion-dollar deals witnessed in the past.
Pavic noted that the current market favors buyers seeking cost-effective ways to expand their drilling inventories. While the investment environment has improved following energy agreements between Ottawa and Alberta, global interest in Canadian acquisitions remains subdued.
Zawalsky mentioned that potential buyers are evaluating the value of Canadian assets against regulatory concerns and infrastructure requirements for international exports. He observed an interest from U.S. private equity firms in acquiring Canadian assets, leveraging cost differentials for profitable opportunities.
Despite instances of hostile bids, such as the one involving Strathcona Resources Ltd. and MEG Energy, Zawalsky expects such occurrences to be rare. ATB Capital Markets forecasts a modest slowdown in consolidation among exploration and production companies in 2026, attributing it to various economic factors and challenges in the current commodity price cycle.