ATB Financial spots new energy companies forming as oil sector rebounds

After a $31 billion year of mergers and acquisitions across Canada's energy sector, a new generation of smaller companies is forming in the wake of consolidation, according to ATB Financial's leadership.

Chris Turchansky, chief executive of the Edmonton-based bank, said more energy firms have approached ATB with expansion opportunities. "After a cycle of consolidation, you see new companies start to form," Turchansky said. "We're in the early stages of that, which is really exciting for the energy sector." The companies approaching the bank have boards with prior experience navigating industry cycles, he added.

Sentiment around Canadian energy has shifted dramatically since Turchansky took the helm in January. An effective closure of the Strait of Hormuz—a vital shipping route for global oil—has sent energy prices surging and renewed attention to Canada's position as a secure, reliable crude supplier. A landmark deal between Alberta and Ottawa to advance a new pipeline to Canada's west coast has also advanced significantly, though the exact route and operator remain undetermined.

ATB's most recent quarterly results reflect the optimism. Profits at the crown corporation rose more than 19 percent compared to the same period last year, totalling over $160 million. Business banking profits—which include real estate, agriculture and energy—jumped 29 percent to $75 million. Customers took out more loans and made larger deposits, signalling confidence in the province's economy.

Turchansky acknowledged headwinds remain. Inflation and elevated interest rates are taking a toll on some companies. Funds set aside to cover potential loan losses more than doubled to $29.5 million, suggesting more loans are at risk of default. Still, he described the bank's position as "very strong" and on the low end historically. "What you're seeing is optimism come back, which is critical for growth and speaks to a great future here in the province," Turchansky said.