Canada’s promising oil and gas sector fuelling M&A activity

Continuing world demand, high prices, vast reserves, a stable geo-economic climate and a resident pool of skilled, experienced technicians and professionals means mergers and acquisitions are bound to continue in the Canadian West, say two of the region’s top legal experts.

“While there are some factors that might suggest a slowing of the pace, I believe there will continue to be growth in M&A activity in the West,” says Stan Magidison, a partner at Osler Hoskin & Harcourt LLP in Calgary. At Bennett Jones LLP, Calgary managing partner Perry Spitznagel points out that a small portion of the world’s proven reserves are readily available to multinational energy companies. The remainder is controlled by governments or their state-owned oil companies.

“Our oil sands account for a large chunk of freely accessible reserves” he says. “That is an enormous draw for multinationals. At the same time, our domestic companies have accumulated enormous pools of expertise needed to find, develop, extract and service oil and gas fields around the world. There are significant international opportunities for those companies as well.”

While foreign ventures such as Royal Dutch Shell, Total, Sinopec and others continue to invest in or acquire Canadian energy companies, domestic counterparts have also started to expand through acquisitions both domestically and abroad, adds Mr. Magidison.

“The high point for activity was 2006 and 2007. Deals today require sharper pencils to offset the enormous costs of production at the oil sands. But in the end, the lure is very great indeed.”