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One of every five merger and acquisition deals in the world's oil patch in the first half of the year was done in Canada.

That stat, from a report this week by the consulting firm Deloitte, is remarkable considering the starting point. It followed a lengthy dry spell in industry activity that forced cutbacks in energy-focused dealers in Calgary.

By the end of 2013, transactions started to rebound. Few predicted the intensity at which the deal flow picked up, with such big transactions as Canadian Natural Resources Ltd.'s $3.1-billion acquisition of Devon Energy Corp.'s conventional assets and, more recently, Jupiter Resources Inc.'s $2-billion purchase of Encana Corp.'s Bighorn properties in Alberta.

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According to the Deloitte report, the industry logged 54 deals in the first half, up from 44 a year earlier.

Here are some other things in play that few people saw coming:

IPO-rama

Like the merger market, oil and gas initial public offerings suffered a slowdown before Cardinal Energy Ltd. went public in December, raising nearly $250-million. It turned out to be the beginning of a trend, as investors, including those from the United States who had turned their backs on Canuck exploration and production, placed their bets on new issues.

Journey Energy Inc. and Northern Blizzard Inc. have since completed IPOs. The big kahuna was PrairieSky Royalty Ltd., which Encana spun off in the spring in a $1.7-billion offering, the richest Canadian stock-market debut in 14 years. The stock was priced at $28, a level that attracted brisk business in the shares, which have sold for much more in the after-market.

There are signs that investors are sharpening their pencils, however. Northern Blizzard, which closed its $500-million deal last week, cut the share price from initial expectations.

That's a cautionary tale for some of the other private oil and gas entities said to be plotting IPOs in the coming months, including Seven Generations Energy Ltd., Teine Energy Ltd., and Petrus Resources Ltd.

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Natural gas

I, and several much smarter people, totally called the runup in gas markets that lifted stock prices throughout the industry for most of the first half. Bone-chilling winter weather throughout North America drained inventories and pushed up prices to levels not seen in years.

What I failed so miserably to predict was the expiry date. By mid-June the market began to twig to the fact that the industry, helped by mild temperatures that kept air-conditioning demand in check, was refilling storage facilities in grand style. Companies turned on the taps in major U.S. production regions, such as the Marcellus in the Northeast, showing just how resilient shale-gas plays are.

Prices for the fuel have not crashed, but they've weakened considerably.

In its Short-term Energy Outlook this week, the U.S. Energy Information Administration pointed out inventories at the start of this month were 20 per cent below the five-year average. That compares with a 55-per-cent deficit at the end of March.

If the EIA's forecast holds, the gap will be more than halved again to 9 per cent less than the average by the start of the winter heating season on Nov. 1.

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West Coast LNG

Here's something that many experts called for, and has indeed come to pass. Or rather, hasn't.

There are still 4 1/2 months left in the year, but none of the more than 15 proponents of liquefied natural gas projects on the Pacific Coast has made a final decision to proceed, as competition from other countries, such as Australia and the U.S., heats up and pricing deals get tougher.

B.C. Premier Christy Clark's Liberals have staked a lot on building an industry of multibillion-dollar projects from scratch to boost the value of massive gas reserves in the province. In fact, the government set a target of three plants up and running by the end of the decade.

The goal, already very ambitious, has just become tougher to hit. Houston-based Apache Corp., an early promoter of the industry in British Columbia, said in late July it will sell its entire stake in the proposed Kitimat LNG project, a joint venture with Chevron Corp., raising questions about the plant's future.

Here's a prediction: It won't be long before some of the other proponents start teaming up and consolidating projects as a way to cut their respective financial risk.

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