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Oil and gas companies are returning to the capital markets after a drought of energy deals weighed on investment bankers last year.

Improving commodity prices, an unseasonably cold winter and a weaker Canadian dollar are pumping life back into the energy sector. Deals worth more than $1-billion have begun to flow again.

One of the big beneficiaries has been Bank of Nova Scotia. Its investment banking arm, Scotia Capital, advised on several big mergers and acquisitions, propelling it to the top of the M&A deal-making table in the first three months of the year.

"This quarter has been especially busy. There was a dramatic jump in transaction volumes," said Adam Waterous, Scotia Capital's head of global investment banking. "The Canadian energy companies did as many transactions in the first quarter in 2014 as closed in [all of] 2013."

Scotia Capital's oil-and-gas M&A arm, Scotia Waterous, also run by Mr. Waterous, advised on two of the three largest M&A deals in the quarter. The largest was Canadian Natural Resources Ltd.'s purchase of natural gas assets from Devon Energy Corp. for $3.1-billion.

The natural gas business looked more attractive after an unusually cold winter swept through North America.

The other mega-oil deal was done by Calgary's Baytex Energy Corp. It acquired shale oil assets in Texas from Australia-based Aurora Oil and Gas Ltd. for $1.8-billion.

The months leading up to the two deals in February were bleak for the industry and reflected a painful period in which prices for oil and gas assets came back to earth after reaching a peak and cracking in the summer of 2012. Toward the end of 2013 prices finally adjusted, and the pipeline of deals refilled.

Mr. Waterous expects to see more activity both in conventional assets, which generally use vertical wells to extract oil, as well as unconventional assets, which are made up of tighter reservoirs and employ other methods such as fracking to get product out of the ground.

"Where interest remains muted is in the oil sands in non-producing assets," said Mr. Waterous said.

To capture a high market share of energy deals an investment bank has to have a strong global presence, Mr. Waterous said. One third of Scotia Waterous's transactions in oil and gas are in Canada, another third comes from the U.S. and the remainder are from outside North America.

Many of the big energy deals that came through in the quarter involved companies that either had headquarters or significant operations outside of Canada.

Caracal Energy Inc. has extensive operations in Chad, and in the quarter it bought up TransGlobe Energy Corp. to access the Egyptian market.

The resurgence of energy deals is especially beneficial since the real estate and retail sector transactions that buoyed the banks last year have declined in the first quarter of this year.

The long-awaited consolidation in the property and casualty insurance sector helped pick up some of the slack. Foreign investment banks were big beneficiaries of the trend. BNP Paribas SA and Barclays, for example, benefited from advising on the acquisition of State Farm Insurance's Canadian business by Desjardins Group.

And when the Canada Pension Plan Investment Board bought life insurer Wilton Re Holdings Ltd. for $1.8-billion, the lead advisers were Milliman and Barclays.

RBC Dominion Securities narrowly beat out Scotia Capital for the top spot in the equity deal table, which excludes deals the banks led for their own companies. The bank raised $1.2-billion for clients.

Both investment banks were lead book runners on one of the largest equity deals in the period: Baytex Energy's $1.5-billion financing of its shale oil acquisition in Texas.

RBC Dominion Securities continued to facilitate the most deals in the bond business, with $9.0-billion worth of debt raised for clients, excluding self-led deals. TD Securities brought in $8.7-billion for clients.

One difficult spot for banks this quarter were initial public offerings, of which there were none on the Toronto Stock Exchange.

A rebound may not come swiftly given the state of the mining sector, according to Dean Braunsteiner, leader of national IPO services at PwC. "With a damper on commodity prices and a big question mark over China, the extractive industries aren't in a position to pick up the slack," he said.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 11:16am EDT.

SymbolName% changeLast
BNS-N
Bank of Nova Scotia
+0.9%51.62
BNS-T
Bank of Nova Scotia
+0.84%70
BTE-N
Baytex Energy Corp
+2.57%3.59
BTE-T
Baytex Energy Corp
+1.89%4.86
CNQ-N
Canadian Natural Resources
+0.69%75.99
CNQ-T
Canadian Natural Resources Ltd.
+0.42%102.87
DVN-N
Devon Energy Corp
+1.11%50.01
TGL-Q
Treasure Global Inc
+1.72%4.14

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