Semi-annually in the spring and fall, ATB Capital Markets executes an Energy Sector Survey to gauge current industry sentiment. The Fall 2025 Survey gathered responses from 91 participants, including 26 energy services companies, 33 exploration and production companies, and 32 institutional investors, and was led by Tim Monachello, ATB Capital Markets’ Managing Director, Institutional Research, Energy and Industrial Services and Technology.

ATB’s Economics team has invited Tim to guest-author today’s Twenty-Four to share key insights from the results.

The latest edition of the ATB Capital Markets’ Fall 2025 Energy Sector Survey reveals a lukewarm outlook for the Canadian energy sector, with divergent sentiment between segments of the sector.

There is cautious optimism from energy producers. The survey shows a sector positioning for growth, but doing so cautiously in the face of ongoing headwinds. Natural gas is becoming the primary growth engine for the industry, with gas-weighted producers leading growth plans, underpinned by expectations for significant liquefied natural gas (LNG) export capacity expansion.

Meanwhile, despite optimism that activity will improve over the next year, energy services companies are facing tougher conditions with margins feeling increasing pressure.

Institutional investors reported a positive outlook towards energy investment, though they are less optimistic than they were in the spring of 2025 that energy stocks will outperform the rest of the market and continue to value capital discipline ahead of growth.

Among the survey findings:

2026 outlook points to modest production and spending growth 

Looking ahead, respondents expect mid-single-digit production growth, on average. Exploration and Production (E&P) spending is projected to rise modestly by about 2% in 2026, led mainly by gas producers. Energy services companies anticipate flat to slightly higher activity levels, but are expecting margin pressures to persist. 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 the next 3-5 years, however, expectations have moderated.

Natural gas growth supported by LNG expansion plans 

Natural gas is clearly the sector’s growth driver. LNG Canada Phase 1 is expected to reach full capacity in the first half of 2026. Both LNG Canada Phase 2 and Ksi Lisims LNG 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 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 centres. 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 among respondents.

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 with growth taking a back seat.

Answer to the previous trivia question: The first National Day for Truth and Reconciliation was recognized in Canada on September 30, 2021.

Today’s trivia question: What is October’s birthstone?