Stuck on Empty: How M&A Could Jumpstart Canada’s Oil & Gas Sector

The oil and gas sector is facing a less visible but increasingly important challenge to long-term growth: involution. This occurs when companies focus too heavily on internal complexity, operational fine-tuning, and self-reinforcing behaviors. These efforts often demand more input without delivering greater strategic value. While regulatory delays, limited pipeline approvals, and political uncertainty are valid external constraints, they can also cause organizations to turn inward.

The result is an emphasis on short-term efficiency, compliance, and cost control rather than broader innovation or long-term competitiveness. Companies are drilling faster, monitoring more key performance indicators, and extracting more from legacy systems, but breakthrough progress is often limited. Involution is more than inefficiency. It is a form of structural stagnation, where activity increases but forward motion does not. Common signs include small process gains, siloed research and development, and cautious decision-making.

This pattern mirrors trends in other industries and regions. In China, the “996” work culture—working from 9 a.m. to 9 p.m., six days a week—has led to exhaustion without meaningful career advancement. The “lying flat” movement has emerged as a reaction, with individuals stepping back from constant competition. Similar dynamics appear in Japan’s “karoshi,” or death from overwork, and in the United Kingdom’s “presenteeism,” where people work while unwell due to job pressure. Globally, “quiet quitting” reflects a growing unwillingness to contribute beyond minimum expectations, while moonlighting and gig work increase due to financial strain and stagnant wages.

These examples highlight how involution can take root when systems offer few clear paths for growth. When individuals or companies see no progress, motivation declines. But when growth is possible, it builds morale, reinforces purpose, and drives forward-looking effort. Without it, even high-functioning teams can lose momentum. Oil and gas companies face a similar risk. Unless they take deliberate steps to break the cycle, they may be outpaced by competitors that are more outward-looking and better prepared for what’s next. But this is also a national opportunity.

Western provinces needs this momentum. Canada needs this momentum. A more dynamic, growth-oriented energy sector can do more than strengthen balance sheets — it can drive investment, inspire innovation, support communities, and help lead the country into its next chapter of economic renewal.

Mergers and acquisitions are among the most direct tools to reset organizations caught in inward-focused cycles, and activity in Canada’s oil and gas sector has already begun. Key players like Veren Energy, MEG Energy, Canadian Natural Resources, Shell, and Tamarack Valley are leading the charge, using deals to reposition, refocus, and inject new momentum into their operations.

When executed with a clear purpose, a well-structured deal can introduce new leadership, shift outdated practices, and bring in external knowledge and capabilities. Many companies that are caught in involution operate in closed systems where existing processes and internal metrics reinforce the status quo. Acquiring or combining with a more agile or technologically advanced company can prompt a reassessment of operating models, roles, and long-term strategy. These transactions also help reframe what success looks like by shifting teams away from narrow key performance indicators and toward broader goals like return on capital employed across the entire portfolio.Importantly, mergers and acquisitions appear not only during market upswings. They often emerge at inflection points, either as firms look to expand or as they reposition in response to market pressure. The current wave of deal-making in oil and gas may reflect both motivations. Regardless of timing, the best deals are those that help organizations rethink where they fit in the value chain. These may involve new geographic exposure, service integration, or capabilities in areas such as digital technology and data analytics. They also offer opportunities to realign incentives and reset organizational momentum.However, not all mergers and acquisitions solve the problem. Without careful integration, combining two complex organizations can reinforce existing inefficiencies. But when thoughtfully executed, they can provide the kind of external shock that prompts realignment, restores direction, and supports a return to broader growth objectives.

The effects of involution often appear in financial markets before they are fully visible inside a company. Firms that appear active operationally but fail to deliver long-term gains may see their valuations stall or decline. Over time, investors begin to view these companies as low-growth or structurally constrained. Even stable earnings may not prevent falling share prices if strategic direction is unclear. As key performance indicators replace clear forward strategy, share multiples tend to compress. These firms may underperform during broader sector rallies, drawing less investor attention and sometimes facing pressure from activist shareholders.In contrast, when a company begins to move away from involution—often through clear actions such as a strategic merger, leadership change, or a portfolio shift—investors typically respond early. Share prices often rise in anticipation of improved capital allocation and future returns. The belief that an organization is willing to evolve can be enough to shift sentiment. Return on capital employed becomes more relevant as investors track not just cost savings but the broader deployment of assets. Trading volumes may increase and analyst coverage can return as the company’s strategic clarity improves. These early market signals suggest that the organization is entering a new phase, focused less on internal optimization and more on outward growth.