Canada’s Oil & Gas Mergers Hit Record $18 Billion So Far This Year
Canada’s energy industry saw a record US$18 billion worth of mergers and acquisitions year to date, data showed on Tuesday, while analysts predict 2021 will be a bumper year for M&A in the Canadian oil and gas industry.
According to data from Dealogic, cited by Reuters, energy deals in Canada between the start of 2021 and March 18 totaled US$18 billion, the highest combined value of energy deals in more than 25 years. Moreover, Canadian energy deals accounted for 16.2 percent of the global M&As between January 1 and March 18, the highest share since 2002, Dealogic data quoted by Reuters showed.
Canada’s oil patch saw last year a number of M&A deals in the wake of the oil price crash, including a blockbuster all-stock deal between two of the biggest companies, Cenovus Energy and Husky Energy. Last year, the driving force of the mergers and acquisitions was the long-awaited consolidation in Canada’s oil and gas industry in light of the collapse in oil prices.
“There will continue to be some consolidation here over the next year,” Tim McKay, President at Canadian Natural Resources, said on the earnings call in November 2020, adding that “we probably are in a time of consolidation.”
Thanks to the Cenovus Energy-Husky Energy deal, all M&A transactions in Canada in the fourth quarter of 2020 were worth US$10.01 billion, soaring by 468.3 percent from the previous quarter and surging by 504.2 percent compared to the last four-quarter average of US$1.66 billion, according to data from GlobalData.
This year, the leading factor would be the higher oil prices which have made funding markets open to deals as oil prices rallied some 20 percent this year, analysts say.