ATB Capital Markets Fall 2025 Energy Sector Survey Reveals Gas-Focused Growth Amid Tepid Industry Sentiment

• 88% of E&P companies expect to grow production over the next 12 months, with weighted average growth of ~5%  (6-7% for gas-weighted vs. 4-5% for oil-weighted).
• Gas-weighted producers lead the growth story, underpinned by at least 3.2 bcf/d of incremental LNG export capacity expected to be green-lit before 2027. West Coast LNG expansion continues to stand out as the sector's top growth opportunity.
• Energy services outlook weakens, with margin pressures mounting even as modest activity growth is expected in 2026.
• Federal energy policy remains the #1 risk, ranked as the top concern for the seventh consecutive survey; while a change in federal policy is also viewed as the second most prominent opportunity.
• Investor sentiment remains positive but moderate, with fewer respondents seeing energy equities as undervalued, while a wedge persists between investors that prefer share buybacks and E&Ps that remain focused on growth.

CALGARY, AB, Sept. 29, 2025 /CNW/ - ATB Capital Markets' Fall 2025 Energy Sector Survey (the "Energy Survey" or "Survey") reveals a lukewarm outlook for the Canadian energy sector, with cautious optimism from producers, growing challenges for energy services, and a more measured stance from investors following a strong first half of the year.

"Our fall survey reveals a new phase for the industry; one marked by optimism in natural gas alongside caution in oil and energy services. This presents both challenges and opportunities for our clients. Our team is committed to partnering with clients to navigate these dynamics, providing the right insights, strategies, and capital solutions to turn this transition into opportunities for success," said Darren Eurich, CEO of ATB Capital Markets.

Survey findings indicate that gas-weighted producers are leading growth expectations, supported by LNG expansion, while oil-weighted producers remain more cautious and focused on balance sheet strength. At the same time, energy services companies face challenging conditions as margins face increasing pressure. Investors remain supportive but are becoming more selective, placing greater emphasis on capital discipline.

Patrick O'Rourke, Managing Director at ATB Capital Markets, added, "Natural gas is becoming the primary demand growth engine for the industry, while producers continue to grapple with near-term commodity price headwinds and investors turn more selective. The survey shows a sector positioning for growth, but doing so cautiously in the face of ongoing headwinds."

Led by ATB Capital Markets' Managing Director, Tim Monachello, the Fall 2025 Survey gathered responses from 91 participants—including 26 energy services, 33 exploration and production companies, and 32 institutional investors—between August 28 and September 11, 2025.

Among the survey findings:

2026 outlook points to modest production and spending growth – Looking ahead, respondents expect mid-single-digit production growth, gas-weighted producers targeting 6–7% growth and oil producers closer to 4–5%, on a weighted average basis. Exploration and development spending is projected to rise modestly by about 2%, led mainly by gas producers. Energy services companies anticipate flat to slightly higher activity levels, but their outlook remains challenged by cost inflation and limited pricing power. Well costs are expected to be flat to slightly lower, reflecting easing tariff-related pressures and lower steel costs. Importantly, 88% of E&Ps plan to grow production in the next 12 months, the strongest growth sentiment since 2022.

Commodity price expectations remain strong near term, but soften longer term – In the short term, most respondents expect oil and gas prices to rise, with 61% bullish on natural gas and 41% bullish on oil. Over a three- to five-year horizon, however, expectations have moderated. Only 38% believe WTI crude will average above US$75 per barrel, down from 75% a year ago, and just 45% expect Henry Hub gas to average above US$3.50 per mcf, compared to 64% in spring 2025. The WTI-WCS differential is expected to remain in the US$10–16 per barrel range, while AECO natural gas basis is expected to tighten, supporting stronger Canadian gas pricing.

Natural gas growth supported by LNG expansion plans – Natural gas is clearly the sector's growth driver. LNG Canada Phase 1, with a capacity of 1.8 bcf/d, is expected to reach full capacity in the first half of 2026. Both LNG Canada Phase 2 (1.6 bcf/d) and Ksi Lisims LNG (1.6 bcf/d) are widely expected to receive positive final investment decisions before 2027. This outlook underpins aggressive growth plans for gas-weighted producers, who rank growth capital spending as their top priority.

Federal policy is seen as more supportive, though skepticism persists – The Carney Liberal government is viewed as more supportive than its predecessor, but skepticism persists that it will actively promote oil and gas growth. Bill C-5, aimed at streamlining regulatory approvals, is seen as marginally to moderately positive. Despite these developments, federal energy policies remain the top-ranked risk for the industry for the seventh consecutive survey. Respondents largely doubt the revival of major oil pipeline projects, though LNG projects are expected to proceed.

West Coast LNG and AI-driven gas demand viewed as key opportunities, while federal policy and global oversupply viewed as key risks – Respondents see the largest opportunities in West Coast LNG expansion, potential changes to federal energy policy, and growing natural gas demand from AI data centers. The revival of a major oil pipeline is also mentioned, although few consider it likely. On the risk side, federal energy and environmental policies continue to rank as the industry's primary concern, followed by the threat of global oil oversupply from OPEC+ and potential pipeline constraints later this decade. Tariffs, once a major risk, have largely faded from concern.

Capital allocation priorities diverge across the sector– Gas-weighted producers are focused on growth spending, while oil-weighted peers are prioritizing debt repayment in light of price uncertainty and limited pipeline capacity. Investors prefer share buybacks and debt reduction over reinvestment in growth, creating a gap between producer ambitions and investor expectations. Energy services companies, under continued margin pressure, are increasingly focused on debt repayment and financial discipline, with growth taking a back seat.

ESG disclosure and transition investments continue to decline – ESG disclosure and investment intentions are trending lower. Few companies plan to increase spending on carbon capture, utilization and storage (CCUS), hydrogen, or other transition-related projects. Overall, energy transition remains at the bottom of industry priorities.

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