U.S. Investors Boost Canadian Oil Firms Despite Falling Prices

Investment dynamics are shifting in the energy sector as U.S. investors increasingly target Canadian oil and gas companies, even as global oil prices decline. According to McCrea, U.S. funds now hold approximately 59% of Canadian oil and gas firms, a notable rise from 56% at the end of 2024. In contrast, Canadian investments in these sectors have dropped to 34% from 37%. This trend highlights a significant rotation in investment strategies.

Some Canadian companies are experiencing particularly pronounced changes in ownership. Brian Schmidt, CEO of Tamarack Valley Energy (OTCPK:TNEYF), reported that U.S. ownership of the company has surged to 40%, doubling from 20% before the pandemic. Similarly, Americans now own nearly two-thirds of Whitecap Resources (OTCPK:WCPRF), compared to 60% at the end of last year.

Several factors are driving this investment shift. A key element is the current Canadian leadership’s openness to fossil fuel investments. Prime Minister Mark Carney has positioned Canada as an emerging energy superpower, a stark contrast to the previous administration under Justin Trudeau, who focused more on clean energy initiatives. Trudeau’s government allocated funds for electric vehicle infrastructure and implemented a national carbon tax, alongside a five-year moratorium on oil and gas drilling in the Arctic.

Another important contributor is the completion of the Trans Mountain Pipeline expansion, which has significantly enhanced confidence in Canada’s oil and gas sector. The expanded pipeline can transport up to 890,000 barrels of oil per day, nearly tripling its previous capacity. Since commencing commercial operations in May 2024, the pipeline has been operating at approximately 82% of its maximum capacity, facilitating the transport of crude oil from Edmonton, Alberta, to the Westridge Marine Terminal in Burnaby, British Columbia. The pipeline’s reach extends to global markets, particularly in the Asia-Pacific region, and supports local refineries in Washington State.

Additionally, the financial viability of Canada’s oil sands plays a crucial role in attracting investment. The breakeven point for Canadian oil sands is significantly lower, allowing profitability even when prices would typically lead U.S. shale producers to operate at a loss. Current estimates place the average breakeven price for Canada’s oil sands between $40 and $57 per barrel, with some large producers achieving even lower costs. Recent technological advancements and debt reductions have further improved the competitiveness of Canadian oil sands on the global stage.

The performance of the Canadian energy sector reflects these dynamics. The TSX Energy Index has risen by 19.5% year-to-date, outpacing the S&P 500 Energy Index, which has gained only 6.0% in the same period.

Prominent Canadian energy stocks have demonstrated remarkable growth as a result of these trends.

Top Canadian Energy Stocks Outpacing the Market

**1. Falcon Oil & Gas**
– Market Cap: $150.1 million
– Year-to-Date Returns: 147.2%
Falcon Oil & Gas Ltd. (OTCPK: FOLGF) focuses on acquiring, exploring, and developing both conventional and unconventional oil and gas assets across various regions, including Australia, South Africa, and Hungary. Its strong performance is attributed to significant progress on the Shenandoah South Pilot Project in Australia, which is expected to commence gas sales by mid-2026.

**2. Tamarack Valley Energy**
– Market Cap: $2.7 billion
– Year-to-Date Returns: 66.0%
Tamarack Valley Energy’s focus on responsible energy development has yielded strong operational results. The company owns a portfolio of high-quality, low-cost assets in Alberta, contributing to increased production and free cash flow. Strategic share buybacks and divestments of non-core assets have further strengthened its market position.

**3. Imperial Oil Ltd.**
– Market Cap: $49.0 billion
– Year-to-Date Returns: 61.9%
Imperial Oil Ltd. (NYSE: IMO) operates across the entire energy value chain, from exploration to refining. The company has achieved its highest quarterly crude production in three decades, averaging 462,000 oil-equivalent barrels per day. This success is driven by operational efficiencies and a commitment to shareholder returns.

**4. NuVista Energy Corp.**
– Market Cap: $2.6 billion
– Year-to-Date Returns: 38.6%
NuVista Energy Corp. (OTCPK: NUVSF) focuses on oil and natural gas exploration in the Western Canadian Sedimentary Basin, primarily within the Montney formation. Its stock performance reflects strong operational execution and strategic financial management, including share buybacks.

**5. Peyto Exploration & Development Corp.**
– Market Cap: $3.2 billion
– Year-to-Date Returns: 34.7%
Peyto Exploration & Development Corp. (OTCPK: PEYUF) specializes in natural gas and oil production in Alberta’s Deep Basin. The company has experienced robust performance due to its operational efficiency and strategic natural gas hedging, leading to significant margins and increased funds from operations.

The current landscape for Canadian energy companies appears favorable, particularly as U.S. investor interest continues to grow amid fluctuating global oil prices. The developments in Canada’s energy policy and infrastructure signal a potential shift that could reshape the future of the sector.