Canadian energy companies are preparing to increase production and capital spending in 2027, while institutional investors are shifting their priorities toward business growth, according to a survey by ATB Cormark Capital Markets.
The Fall 2026 Energy Sector Survey found that 96 per cent of exploration and production (E&P) companies expect to increase production over the next year, while 90 per cent of energy services respondents anticipate higher customer activity in 2027. Growth spending has also become investors’ preferred use of capital for the first time since the survey began in 2021.
The findings signal a shift from the more cautious outlook recorded a year earlier, with respondents reporting improved expectations for energy services demand, Canadian energy equities and major infrastructure projects. However, federal energy and environmental policies remain the industry's leading risk.
Production and capital spending outlook improves
The survey projects growth of approximately five to 10 per cent in Canadian field activity and E&P capital spending in 2027, despite expectations that oil prices will decline over the next year.
Among E&P respondents, 96 per cent expect production to increase, up from 88 per cent in fall 2025. Oil-weighted producers anticipate production growth of approximately 10 per cent, while gas-weighted producers expect an increase of about five per cent. More than half, or 56 per cent, of E&P respondents also expect higher exploration and development spending in 2027.
"A year ago, the industry was much more cautious. Today, we're seeing producers plan for higher output, service companies anticipate more activity, and investors put growth back at the top of their priorities," said Darren Eurich, CEO of ATB Cormark Capital Markets. "The outlook for major infrastructure projects is also improving, which matters for an industry that needs access to more markets."
Energy services companies are also reporting stronger expectations for the coming year. While 81 per cent of respondents expect activity to increase from current levels, 90 per cent anticipate higher average customer activity in 2027 than in 2026.
The survey found that 71 per cent of energy services respondents reported an improved business outlook over the previous three months, with none reporting a deterioration. A majority, or 57 per cent, expect margins to improve over the next six months.
For the first time since fall 2022, more respondents in the energy services sector reported excess demand than excess capacity. Higher activity is expected to support pricing and margins, although rising input costs remain a concern.
Investors shift toward growth
Institutional investors are showing stronger sentiment toward the energy sector, with 76 per cent reporting a more bullish outlook over the previous six months. In addition, 61 per cent said they had increased their net exposure to energy.
Nearly four in five institutional investors consider Canadian energy equities undervalued, while 63 per cent expect the sector to outperform the S&P/TSX Composite over the next year. That compares with 76 per cent who anticipated outperformance in the spring 2026 survey.
The survey found a notable change in investor preferences for how energy companies allocate capital. Growth spending ranked first among 41 per cent of institutional investors, compared with 18 per cent in spring 2026, placing it ahead of share repurchases and debt repayment.
"What's notable is that companies are planning to grow even with an expectation that oil prices will normalize into a lower range over the next year," said Tim Monachello, managing director of institutional research at ATB Cormark Capital Markets. "Institutional investors are also becoming less defensive, preferring growth spending over buybacks and debt repayment for the first time in the Survey's history. This meaningful shift both validates the strengthening outlook for the sector, and signals the market's support for the industry's pursuit of growth."
Long-term oil price expectations strengthen
Although most respondents expect oil prices to ease over the next year, their longer-term outlook has improved. Among E&P companies and institutional investors, 53 per cent expect West Texas Intermediate crude to average more than US$75 per barrel over the next three to five years, up from 43 per cent in spring 2026 and 38 per cent in fall 2025.
In the near term, 61 per cent expect oil prices to decline over the next year from an average of approximately US$98 per barrel during the survey period.
Natural gas price expectations are more positive in the short term, with 42 per cent anticipating higher prices and six per cent expecting a decline. Longer-term expectations for natural gas prices have softened.
The survey also found that disruptions to Middle Eastern crude oil and liquefied natural gas exports are influencing investment decisions. Among institutional investors, 79 per cent said constraints on Middle Eastern exports had made them more likely to invest in Canadian energy companies. Across all respondent groups, 72 per cent expect long-term global crude supply and demand balances to be tighter than they anticipated before the conflict.
Infrastructure prospects improve, policy remains a risk
Respondents have become more positive about the prospects for major Canadian energy infrastructure projects, including additional oil and LNG export capacity. The federal government's approach to expanding the Canadian energy industry was viewed positively by 89 per cent of respondents.
Strong majorities also expect positive final investment decisions for Pacific Link/Pathways, Prairie Connector and Ksi Lisims. West Coast LNG expansion remained the industry's leading opportunity, reflecting respondents' emphasis on improving access to international markets.
Despite the improved outlook, federal energy and environmental policies remain the top-ranked risk for the industry, although concerns have moderated compared with previous surveys.