US funds boost Canadian energy stakes, seeking steady returns as global demand patterns evolve
US institutional investors are showing unprecedented interest in Canadian oil assets. They now own nearly 60 percent of the country’s oil and gas companies.
This shift is reshaping capital flows and return expectations in the energy sector, according to BMO Capital Markets managing director Jeremy McCrea, as cited by CBC News.
This “rotation” of capital is being driven by a combination of friendlier federal government rhetoric, improved export capacity, and the perception that Canadian energy companies are more likely to return cash to shareholders in the years ahead, McCrea explained.
He noted that, while lower oil prices have generally dampened enthusiasm, US portfolio managers increasingly prefer Canadian energy stocks over their domestic options: “You are seeing more US investors saying, ‘If we have to hold energy, we'd rather hold Canadian energy here today.’”
The trend is visible at the company level.
Grant Fagerheim, CEO of Whitecap Resources, reported that US institutional holders now make up about 66 percent of his company’s base, up from 60 percent at the end of last year.
Brian Schmidt, CEO of Tamarack Valley Energy, observed that US ownership of his firm has doubled since before the pandemic, rising to 40 percent, and that American investors show far more willingness to engage than their Canadian counterparts, particularly pension funds.
A shift in tone from Ottawa has also played a role.
McCrea pointed out that the investment uptick accelerated about a year ago, when federal Conservatives were leading in the polls and promising major policy changes to support the oil and gas sector.
Even after the Liberals’ re-election, Prime Minister Mark Carney’s pledge to make Canada an energy “superpower” has contributed to a more welcoming climate for investors.
Structural advantages further underpin the appeal of Canadian energy.
Oilsands projects, while costly to build, offer decades of low-cost production and have recently focused on returning capital to shareholders rather than expansion.
“We see these companies generating a lot of cash and returning almost all of it to the shareholders,” said David Samra, a portfolio manager at Artisan Partners, which invests in Suncor Energy. “That's the future that we see, and we find that future to be very attractive.”
Meanwhile, Canadian oil exports to China are surging, with nearly 5 million barrels shipped from Vancouver in the first half of October—a record pace, according to Vortexa ship tracking data.
Bloomberg reports that the majority of these shipments are destined for China, as the country pivots away from US crude amid escalating trade tensions and new port fees on American-linked vessels.
For the first time since at least September 2024, Vancouver crude is trading at a premium to Canadian barrels sent to Texas, reported Argus.
With US oilfields facing diminishing returns and Canadian companies prioritizing shareholder payouts, the Canadian oilpatch is increasingly positioned as a stable, cash-generating asset class for global institutional investors.
As Fagerheim observed, “The world has taken notice as well.”
