It may be a busy marketplace for mergers and acquisitions in Canada’s oilpatch later this yr, provided the geopolitical mayhem eases enough for buyers and sellers to search out common ground on price, says a partner at consulting firm Deloitte.
In a report published Wednesday, Deloitte said deal activity appeared to be on the upswing heading into this yr after a decade-long lull. But with the U.S.-Israel war on Iran shaking global oil markets, the outlook now’s rather more hazy.
“It’s really hard for a deal to get done” with the US$115-a-barrel price West Texas Intermediate was hovering around earlier this week, said Andrew Botterill, partner for energy, resources and industrials at Deloitte Canada. “Buyers and sellers are only too far apart.”
WTI plummeted 17 per cent to trade at about US$96 per barrel in late-morning trading Wednesday after the U.S., Iran and Israel agreed to a two-week ceasefire, heading off U.S. President Donald Trump’s threats to destroy Iranian civilization.
The present crude price continues to be about 40 per cent higher than where it was trading before the conflict began in late February, spilling over to several countries within the region and choking off 20 per cent of the world’s oil and liquefied natural gas supplies.
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But when the volatility blows over — as futures market trading seems to suggest might occur later this yr — Canada’s energy sector can be ripe for an acceleration in merger and acquisition activity.
“Individuals are starting to actually come to the popularity that Canada may be very investable right away and it’s a spot to deploy capital and we should always expect to see more deals,” said Botterill.
The oilsands are already dominated by a handful of massive players, so there are few opportunities in that space, he said.
However the Montney and Duvernay areas of northeastern B.C. and northwestern Alberta are a few of “the world’s highest-quality assets on the market” and are more likely to see more consolidation. Those rocks are wealthy in natural gas liquids, whose prices are inclined to track those of crude oil.
“The repeatability economics are so strong, the technology is so consistent and Canadian producers have just done such an incredible job at managing costs alongside that and continuing to make large swaths of resource highly profitable,” said Botterill.
In its latest forecast, Deloitte predicted a mean 2026 WTI price of US$85 per barrel, however the closure of the Strait of Hormuz has been driving prices significantly higher than that, but oil traders appear to be betting on a more mellow market within the latter half of this yr.
Contracts for delivery in August and beyond have been sinking below US$80 per barrel. For 2027, Deloitte is forecasting a drop in WTI to US$76.50. For 2028, it sees a return to the prewar level of US$67.65.
Meanwhile, the benchmark for Alberta natural gas is forecast to average $2.15 per mmBTU in 2026, climbing to $3.20 in 2028.
A balmy winter in much of Canada coupled with a slower-than-expected ramp-up of the LNG Canada export terminal on the B.C. coast put pressure on the worth of the home-heating fuel, Botterill said.
He’s never felt so positively concerning the prospects for Canada’s liquefied natural gas export ambitions.
The war has knocked out LNG production from Qatar, one among the world’s biggest players, sending Asian and European power prices soaring and highlighting Canada as a comparatively stable global supplier.
“These are hard projects to get approved and it’s a variety of money, so I believe there’s still a variety of work to get done to maneuver particular projects forward,” Botterill said.
“But at the tip of the day, Canada is seen as an actual protected place for capital and it’s seen as much more investable now than it was just a few years ago. We’re going to be talking about one or two or three more projects off the West Coast over the approaching years.”
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