U.S. Funds Tighten Grip on Canada’s Oil Patch

By Alex Kimani - Oct 23, 2025

Previously, we reported that the Trump administration has lately been taking over Canada’s rare earths companies as Washington looks to counter Beijing’s dominance in the sector. To wit, Canadian rare earths developer, Trilogy Metals (NYSE:TMQ), more than tripled three weeks ago after the U.S. government purchased a 10% stake in the company with warrants to purchase an additional 7.5% stake. The Trump administration announced that it will reverse a ban on the construction of the Ambler Road project in Alaska by the Biden administration and will start to reissue the necessary permits to construct the road.

The U.S. Department of Energy cut a similar deal with Canada’s Lithium Americas (NYSE:LAC) a few weeks ago while the Department of Defense bought a stake in Las Vegas, Nevada-based MP Materials (NYSE:MP) in July. The DoD-backed investment package will see the Nevada-based producer build out a fully domestic magnet supply chain and lock in long-term pricing support for neodymium-praseodymium, the critical alloy used in everything from fighter jets to iPhones.

However, it appears that Washington is not the only U.S. party that’s interested in Canada’s strategic sectors of the economy. Reports have emerged that private U.S.  investors are increasingly buying Canadian OIl & Gas companies, even as global oil prices move lower.

“You are seeing more U.S. investors saying, ‘If we have to hold energy, we'd rather hold Canadian energy here today,’’ Jeremy McCrea, managing director at BMO Capital Markets, said.

According to McCrea, U.S. funds now own about 59% of Canadian oil and gas companies, up from 56% at the end of 2024, while investments by Canadians have declined to 34% from 37%. The shift in investments has been even more dramatic for some Canadian companies, with Brian Schmidt, CEO of Tamarack Valley Energy (OTCPK:TNEYF), revealing that U.S. ownership of his company has doubled to 40%, up from 20% before the pandemic while Americans own nearly two thirds of Whitecap Resources (OTCPK:WCPRF) compared to 60% at the end of last year.

There are several reasons behind this “rotation.” First off, Canada’s top leadership is now much open to fossil fuel investments, with Prime Minister Mark Carney promising to make Canada an energy superpower.  In contrast, former Canadian PM Justin Trudeau was more friendly to clean energy, managing to provide money to build electric vehicles and charging stations, committing $2 billion for clean water and wastewater funds for cities, introduced a national carbon tax, allocating infrastructure funds for local governments to deal with climate change and imposed a five-year moratorium on oil and gas drilling in the Arctic in the first two years after he was elected.

Second, the completion of the Trans Mountain Pipeline expansion has bolstered confidence in Canada’s oil and gas sector. The expanded pipeline has a total capacity of 890,000 barrels of oil per day, representing a nearly threefold increase from the previous system's capability. Since its commercial operation began in May 2024, TMX has been running at ~82% of its maximum capacity. TMX carries crude from Edmonton, Alberta, to the Westridge Marine Terminal in Burnaby, British Columbia. From there, it is shipped to global markets, primarily in the Asia-Pacific region. The pipeline also delivers oil to Washington State for local refineries and has terminals in locations like Kamloops and Burnaby for regional distribution.

Third, Canada’s Oil Sands have a significantly lower breakeven point, and can still eke out a profit at oil prices that would make the majority of U.S. Shale Patch companies print red. The average breakeven oil price for Canada's oil sands is approximately $40–$57 per barrel of crude, with recent estimates suggesting even lower costs for some large producers. Half-cycle breakeven prices can go even lower, ranging from about $18 to $45 per barrel. Recent cost reductions are due to technological improvements and debt reduction, making Canadian oil sands production cost-competitive globally.

In contrast, U.S. shale production costs have been rising, driven by the depletion of prime resources and the need to drill in more speculative, complex areas and formations. Analysts at Enverus have predicted that the marginal cost to produce oil in the U.S. Shale Patch could increase from ~$70 per barrel to $95 per barrel by the mid-2030s.

This shift is happening as the industry moves from easily accessible core inventory to less proven resources, leading to higher costs. Many U.S. oil producers, particularly smaller ones and those in regions like the Permian Basin, need oil prices above $65 a barrel to turn a profit on new drilling, a figure that has been rising due to inflation. Larger producers may have a lower breakeven point, sometimes in the high $50s, while older, existing wells can still be cash-flow positive at lower prices because initial drilling costs have already been covered.

By Alex Kimani for Oilprice.com