Canadian Energy Sector Shifts to Growth, Expansion

Canadian energy producers are planning to increase output in 2027, while institutional investors prioritize growth spending over share buybacks for the first time since 2021, according to the ATB Cormark Capital Markets’ Fall 2026 Energy Sector Survey. This builds on momentum from earlier this year, when E&P survey data showed 95 percent of respondents already anticipated higher production.

The survey reveals a shift from caution to expansion in the Canadian energy sector. 96% of exploration and production (E&P) respondents expect higher production next year, up from 88% in fall 2025. This optimism is further reflected in the services sector, where firms report more excess demand than excess capacity for the first time since fall 2022.

Production and spending on the rise

Oil-weighted producers target roughly 10% growth, while gas-weighted producers anticipate approximately 5%. Capital expenditures are also expected to rise, with a projected 5% to 10% increase in field activity and E&P spending in 2027. This increased activity is supported by a positive outlook on commodity prices, with 42% of respondents expecting higher natural gas prices in the near term and only 6% expecting a decline.

The services sector is equally optimistic, with 90% of respondents forecasting higher customer activity than in 2026. 71% report an improved three-month outlook, and 57% expect margin expansion within six months.

Investors turn bullish on Canadian energy

76% of institutional investors have turned more bullish on the sector over the past six months, with 61% increasing their net exposure. 41% now prioritize growth spending, a significant jump from 18% in spring 2026. This bullish sentiment is further reinforced by the fact that nearly 80% of respondents describe Canadian energy equities as undervalued.

This shift is influenced by macro factors, including constraints on Middle Eastern exports and a positive view of Ottawa’s approach to energy expansion. 89% of respondents see the federal government’s stance as favorable. Additionally, strong majorities expect positive investment decisions on key projects like Pacific Link/Pathways, Prairie Connector, and Ksi Lisims.

Caution remains despite optimism

Despite the bullish sentiment, caution persists. Only 63% of investors expect energy equities to outperform the S&P/TSX Composite, down from 76%. Federal energy and environmental policy remains a primary concern. Longer-term expectations for natural gas have softened, and while 53% of respondents expect WTI to average above USD75 over three to five years, this is up from 43% in spring 2026, indicating a gradual shift in sentiment. ATB Cormark found 61 percent of respondents expect crude to fall over the next year from about USD98 per barrel.