Canadian oil and gas M&A: what comes next for Canada as an energy superpower
Canada’s oil and gas industry is at an inflection point, as geopolitical developments continue to impact energy supply chains globally and as the federal government introduces a series of initiatives to secure the country’s role as an energy superpower. Canada is experiencing a political shift to reposition itself on the global stage, attract new investment and capitalize on the country’s significant resources.
As we move into the second quarter of 2026, we examine key trends in Canadian oil and gas M&A, with a view toward the forces shaping resource development and dealmaking in the coming months.
A robust year for oil and gas
2025 was a robust year for M&A activity in Canadian oil and gas. Total deal value reached C$48 billion, the highest in eight years. Deal value in 2025 was more than four times higher than the previous year as deal count declined (see Figure 1).
Figure 1: M&A deal value with Canadian oil and gas targets
As we described in our previous article, “Is 2026 the year of Canadian infrastructure and energy M&A?”, deal activity in the energy sector has been driven primarily by strategic consolidation transactions, as companies look to achieve synergies and scale. Following recent years of consolidation in the sector, five companies now account for 85% of Alberta’s oilsands production1.
Geopolitical pressures reshape energy strategy
Ongoing geopolitical volatility continues to shape the future of resource development and the dealmaking environment for Canada’s oil and gas sector. Escalating 2025 trade tensions with the US prompted Ottawa to commit to doubling all non‑US exports by 2035. Given that the majority of Canada’s fossil fuel exports have historically flowed south and the oil and gas industry accounts for roughly a quarter of Canada’s total exports, diversifying fossil fuel trading partners has become a national priority.
In an effort to address domestic energy security and sovereignty, federal and provincial governments have released a suite of initiatives to streamline project timelines, encourage private investment, and bring more national priority projects to fruition, such as through the Building Canada Act and Budget 2025.
In the face of these geopolitical factors and recognition of the opportunity presented by the resource sector, Canada is reshaping the way it markets and moves its energy. Canadian oil and liquefied natural gas (LNG) are increasingly flowing toward Asian markets, and Canada has pursued deeper engagement with key Asian economies. We take a detailed look at these dynamics in our article on Canada’s LNG opportunity.
Recent announcements include Canada’s March 2026 strategic partnership with India that includes an intensified engagement on liquefied petroleum gas (LPG)2. In January 2026, Canada and China signed a Memorandum of Understanding (MOU), committing both countries to strengthen cooperation on oil and gas development and increase trade in crude oil, LNG, and LPG3.
As well, Alberta plans to build a world‑class Indigenous co‑owned pipeline to the west coast of BC, aimed at opening access to Asian markets and strengthening Canada’s energy sovereignty. In a highly publicized MOU with Alberta, the federal government has agreed to consider designating the pipeline a project of national interest4. At the same time, the importance of the US market is not being overlooked, and there is a proposal to potentially revive parts of the former Keystone XL pipeline5.
Challenges remain, however, when it comes to balancing major project development with Canada’s climate agenda. As part of the Canada-Alberta MOU, the province is expected to increase its industrial carbon tax and commit to the development of the Pathways Plus carbon capture and sequestration project. These commitments are currently being negotiated by the federal and provincial governments, and industry is awaiting the results of these negotiations before producers make investment decisions, as these will be dependent on a better understanding of their cost structure and potential returns. The tanker ban under Bill C-48, the Oil Tanker Moratorium Act, also serves as an impediment on the ability to export oil to Asian markets and the viability of a new oil pipeline. The future of the bill remains uncertain.
What’s next for M&A
Deal activity is expected to remain consistent in the Canadian oil and gas sector, although it remains to be seen whether megadeals over $1 billion will continue to dominate. Larger M&A deals could be tempered, as there are fewer high-profile targets after years of consolidation transactions and commodity price uncertainty over the long term.
Western Canada continues to be a leader in Canadian oil and gas exports, and we anticipate this region to attract increased foreign investor interest throughout 2026. In particular, the Montney basin has been a prime target for recent M&A activity and accounted for about 30% of Canadian oil and gas deal activity in 2025. Reuters reported that US producers in search of fresh drilling territory are looking to expand in the Montney, where acquiring land costs less than in the Permian6.
Indigenous equity ownership in Canadian energy projects is transforming the deal and investment landscape. In addition to upholding the Duty to Consult and promoting economic reconciliation, Canada is supporting the meaningful participation of Indigenous groups in major project ownership through the $10 billion Indigenous Loan Guarantee Program7, with further support under provincial loan guarantee programs. We take a close look at these partnerships in Indigenous equity participation and major project success in Canada.
Looking further ahead
Recent geopolitical developments are highlighting the attractiveness of Canada’s stable, long-term supply of oil and gas to global markets. The opportunities to vastly expand the country’s energy production and exports through investment and dealmaking are immense.
With our wealth of resources, coupled with concern about Canada’s low GDP growth, the country now appears to have the political momentum and international interest to capitalize on the opportunities presented at this inflection point. The path forward will depend on creating a stable regulatory environment with more cost certainty for investors, partnerships that recognize Indigenous groups as full participants and sustained international engagement. By aligning these priorities, Canada can respond to the global urgency to meet energy demand and establish itself as a stable global supplier of oil and gas and a true energy superpower.
- The Globe and Mail, “Canada’s second chance in the global LNG race” March 13, 2026.
- Prime Minister of Canada, “Prime Minister Carney secures ambitious new partnership with India focused on energy, talent, and technology”, March 2, 2026.
- Government of Alberta, West Coast Oil Pipeline.
- BOE Report, “Canadian oil tycoon backs South Bow pipeline to boost US exports” March 9, 2026.
- Reuters, “Why Canada’s hottest shale play is catching the eye of US producers” December 18, 2025.
- The Government of Canada, One Canadian Economy: An Act to enact the Free Trade and Labour Mobility in Canada Act and the Building Canada Act June 2025.