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An oil worker holds raw tar sand near Fort McMurray, on July 9, 2008.JEFF McINTOSH/The Canadian Press

The value of corporate mergers and acquisitions in the energy industry has already left last year's figure in the dust, but deal activity is still expected to lag the 15-year average in the absence of big oil sands transactions, according to a U.S. consultancy and research firm.

IHS Energy said it expects the 15 corporate deals in Canadian exploration and production sector valued at $6-billion (U.S.), or $6.6-billion (Canadian), for the full year. That is up from the 10-year-low tally of 11 deals worth $2-billion (U.S.) in 2013.

The number of takeovers is not expected to reach the average of 35 over the last 1-1/2 decades, said the report's author, IHS principal analyst Anna Wuchek.

The biggest years for corporate takeovers were 2005, 2006 and 2007, when national oil companies from Asia and elsewhere bought up developers with positions in the oil sands. That activity has been squelched by Ottawa's restrictions effectively barring state-owned enterprises from buying control of oil sands assets imposed in late 2012.

"We think that has had, and in fact will continue to have, an impact," Ms. Wuchek said.

So far this year, the industry has logged seven transactions valued at a total of $2.5-billion, not including asset deals, as small and medium-size companies have responded to a combination of strong oil and natural gas prices and a return of the availability of capital.

Some recent deals have included Crescent Point Energy Corp.'s takeover of CanEra Energy Corp., Surge Energy Inc.'s takeout of Longview Oil Corp. and Alexander Energy's acquisition of Renegade Petroleum to form Spartan Energy Corp.

The top targets for suitors are oil-weighted and unconventional plays such as the Cardium and Viking formations in Alberta, and those are fetching top dollar, Ms. Wuchek said. As companies get more experienced in those prospects, and liquids-rich plays such as the Duvernay, takeover activity should accelerate, she 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 27/03/24 4:00pm EDT.

SymbolName% changeLast
CPG-N
Crescent Pt Energy
+1.51%8.06
CPG-T
Crescent Point Energy Corp
+1.3%10.95
SGY-T
Surge Energy Inc
+0.4%7.62

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