Six Years In, The Clock Is Still Running
When David Szybunka, portfolio manager at Canoe Financial, last appeared on In the Money with Amber Kanwar in November 2025, he told viewers they were five years into a fifteen-year energy cycle. Since then, the TSX energy sector has risen nearly 30% and energy equities broadly are up 40%. The thesis is intact. The positioning, however, is changing.1
"We're a little more pointed in the portfolios," Szybunka says, "because there's some areas that have done pretty darn well and there's others that we still think have a lot of room to go."
Szybunka frames the current moment against the three stages he maps across every energy cycle: disbelief, optimism, and parabolic euphoria. The disbelief phase, he argues, has ended. "We were in the later stages of that disbelief stage," he says. The question now is how to position within optimism, and his answer is both more selective and more contrarian than the obvious trade.
Two Structural Themes That Don't Go Away
Behind the cycle framework sit two macro forces Szybunka treats as durable. The first is geopolitical risk. The disruption at the Strait of Hormuz, he contends, is not a transient headline event but a structural rupture. "This is the biggest energy shock since World War II," he says, "and that theme doesn't go away just because the strait moves kind of goes back to somewhat normal." He points to a Bernstein research piece noting that in the last century, three major conflicts produced lasting reorganizations of global energy and capital flows that never reversed.
The second theme is AI-driven power demand. Energy, he argues, is the bottleneck on the technology buildout, and that connection is now multi-year and structural. Against that backdrop, energy remains only 3.8% of the S&P 500, up from just over 3% in November. "We haven't had our multi-year thematic day in the sun," Szybunka says.
Supply Shock vs. Demand Push: Why the Back End Matters
One of the more technically precise observations in the conversation involves the shape of the commodity curve. In a demand-push environment, like the China-driven super-cycle of the 2000s, both the front end and back end of the oil curve rose together, year after year, drawing in capital investment. Today, Szybunka notes, the dynamic is different. "We are in supply shock. Front end prices up a lot, back end quite structurally anchored." The implication for equity investors is significant: in a supply shock market, patience is not a strategy. "This is not where you sit on your hands," he says.
The opposite condition holds for natural gas. There, Szybunka sees what he explicitly calls a demand-push setup, with power, AI infrastructure, and LNG export demand creating the kind of multi-year pull that produces sustained re-ratings. "I don't know where we're going to get all the power from," he says. "A large portion of that is natural gas. The natural gas resource for the big boys is massively priced in the hole relative to what's going on."
The Unloved Trade: Large-Cap Gas and Lagging Intermediates
Canoe has been trimming oil and integrated names that have led the year and redeploying into natural gas and selected oil intermediates. Szybunka is explicit about the preference: he wants large-scale, long-life natural gas resource with LNG takeaway and multi-decade contracted revenues. He is not chasing small AECO-exposed producers. "We like big boy natural gas resource on the gas side," he says, not "a bunch of small intermediate companies in the middle of Alberta selling into AECO."
Tourmaline Oil is the centerpiece of that Canadian gas call. The company has grown from 100,000 barrels of oil equivalent per day at the end of 2014 to 650,000 today, yet its market cap has only moved from $12 billion to $24 billion in the same period. Szybunka is unambiguous about what that math implies. "I think they've never been this vulnerable right now to a bid." With global gas prices at $25 per MMBtu while North American prices sit near $1 to $3, he argues the investment community is making a category error by evaluating Tourmaline through the lens of AECO economics alone. The company is signing twenty-year take-or-pay agreements into Asian markets, co-owning LNG Canada alongside global majors, and sitting on inventory that stretches decades. "Quit looking at the AECO economics," he says. "Look at drill the well, put it on a ship, have a stake in Cedar LNG, and send it off to another place that is actually experiencing higher prices."
In US gas, EQT mirrors the thesis in a different jurisdiction, with the same contracted multi-year revenue structure and the same compressed valuation.
On the oil side, Szybunka has moved down the cap structure. Athabasca Oil sits as Canoe's largest oil-side weighting. Since April, the stock is down roughly 10% while peers like Whitecap gained 25%. That divergence, in Szybunka's framework, is precisely the signal. "This is some of the best resource in Western Canada," he says. Athabasca holds 50 to 70 years of resource life versus a peer group median of 10 to 20. He believes the market is mispricing that longevity. "That arb will get closed over time."
The M&A Thesis Is Everywhere
Running through every position is a common thread: the conditions for an M&A wave are assembling. Canadian energy sector cash flows are up 77% year-to-date. Sector debt has fallen from $80 billion at the start of 2020 to approximately $40 billion today. Large-cap companies are fully valued relative to their last-cycle peaks, and valuation divergence across the sector is widening.
"Cash flow's up, debt is down, valuations are expanding, performance is diverging from each other," Szybunka says. "We are teeing up for more M&A." The buyers, he suggests, will include super-majors pivoting back to hydrocarbons, national oil companies from energy-importing nations, and large Canadian producers using their strengthened cost of capital offensively.
On the services side, Schlumberger (SLB) captures the same thesis globally. Szybunka argues the capital spending cycle is broadening well beyond North America, into the UAE, Argentina, Venezuela, and Iraq, and SLB sits at the centre of that expansion. He notes the company also carries an AI data center business with contracted revenues, which he treats as a free option embedded in a multiple the market is assigning entirely to rig count. "Go pull a relative performance of SLB versus the S&P," he says. "The party hasn't started."
5 Key Takeaways for Advisors and Investors
- The energy cycle is real and still early in its optimism phase. With energy at only 3.8% of the S&P 500 and Canadian energy equities still under-owned relative to historical cycle peaks, the macro backdrop supports continued sector exposure, but active selection now matters far more than blanket ownership did in the disbelief phase.
- Natural gas is the most mispriced subsector in energy today. With global gas at $25 MMBtu and North American spot prices near $1 to $3, the dislocation between physical global markets and equity valuations of large-cap gas producers like Tourmaline and EQT is historically unusual. Advisors with long-enough time horizons should evaluate whether that gap is reflected in current client allocations.
- Trim what has worked; rotate toward what has not. Large-cap integrated names and oil producers have led the year. The incremental opportunity, in Szybunka's framework, now sits in intermediates like Athabasca, large-scale gas names, and global oilfield services. Going against recent momentum is uncomfortable; it is also where Szybunka argues the risk-reward is most asymmetric.
- M&A is not a theme to discount. The combination of surging cash flows, rapidly declining sector debt, widening valuation dispersions, and returning pools of international capital creates a setup Szybunka describes as the most M&A-conducive he has seen in this cycle. Names with long-life resource and relatively compressed valuations carry optionality on this outcome whether or not a deal actually materializes.
- Policy tailwinds in Canada are real and investable. The rate of change in Canadian energy policy, from the Carney government's declared support for energy superpowerdom to active pipeline and LNG project advancement, represents a durable shift after more than a decade of headwinds. Investors who waited for certainty before returning to Canadian energy have already absorbed significant opportunity cost.
Footnote:
1 "The Energy Trade Isn’t Over, It’s Changing: What to Buy Now - In the Money with Amber Kanwar." In the Money with Amber Kanwar, 29 Sept. 2026, inthemoneypod.com/podcast/david-szybunka-2.
