A wave of consolidation has swept through Canada's oil and gas industry, driving merger and acquisition activity to its highest level in eight years. However, a new analysis suggests this frenetic pace is poised to moderate in the coming year.
Record-Breaking Year for Deals
Preliminary data from Calgary-based Sayer Energy Advisors reveals that the upstream oil and gas sector in Canada saw an estimated $31.2 billion in M&A activity during 2025. This figure represents a staggering 53 per cent increase from the previous year's total.
The monumental sum was propelled by several blockbuster corporate transactions. The tally includes about $24.3 billion from corporate deals and roughly $7 billion from asset sales.
Two of the most significant deals that defined the year were Whitecap Resources' merger with Veren in March, valued by Sayer at nearly $10 billion, and Cenovus Energy's $8.4-billion takeover of oilsands producer MEG Energy in November.
"These consolidation deals are ones that might have made sense at any point in the past few years," noted Ben Rye, a vice-president with Sayer Energy Advisors. "But when you get stability in the commodity prices, I think that makes it a time when they can actually occur."
Factors Behind the Surge and the Coming Cooldown
The pursuit of high-quality assets with scale and deep inventory was a primary driver for acquirers in 2025. A period of relative stability in oil prices earlier in the year provided the confidence needed to execute these large-scale transactions.
However, the landscape is shifting. According to a separate report from ATB Capital Markets, a "modest slowdown" in Canadian exploration and production M&A is anticipated through 2026.
ATB analyst Patrick O'Rourke points to several converging factors for the expected decline. A key reason is the scarcity of remaining high-quality targets that justify premium valuations. Furthermore, most producers now have strong balance sheets, reducing the number of companies feeling pressured to sell.
Market conditions are also expected to play a role. ATB projects West Texas Intermediate crude will average $60 per barrel throughout 2026, while AECO natural gas prices are forecast to strengthen to an average of $3.30 per thousand cubic feet. An expected period of weaker global oil prices could initially dampen the appetite for major deals.
Looking Ahead to 2026 and Beyond
Despite the forecast for a near-term deceleration, industry executives and analysts see potential for a resurgence in activity later in 2026. Two significant catalysts are on the horizon.
First, there is an expectation of increased interest from U.S. buyers searching for prime Canadian properties. Second, the potential for more favourable government policies toward the oil and gas sector could spur renewed investment and deal-making.
The record-setting consolidation of 2025 has reshaped the Canadian energy landscape, creating larger, more resilient entities. While the breakneck speed of deals is likely to ease, the underlying strategic drivers for mergers—scale, efficiency, and access to the best assets—remain firmly in place, setting the stage for the next chapter in the sector's evolution.
