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Several recent transactions by energy companies including Ovintiv and Baytex Energy show the industry may be looking to focus more on Canada.Angus Mordant

Ovintiv Inc. OVV-T, once known as Encana, spent the past decade running away from Calgary.

Originally a lion of Canada’s energy sector, the natural-gas giant tapped an American, Doug Suttles, to be its chief executive officer in 2013, and amid a natural gas downturn he quickly repositioned the company away from its home base and toward U.S. assets. Within a year, Mr. Suttles spent $10-billion on assets in regions like the Eagle Ford shale fields and the oil-rich Permian Basin in Texas, then went on to change the company’s name and move its headquarters to Denver.

A decade on, and a halving of Ovintiv’s share price later, the company is buying back into Canada. In early November Ovintiv’s current CEO, Brendan McCracken​​, announced the acquisition of Calgary-based NuVista Energy Ltd. NVA-T for $3.5-billion, a deal that will add to Ovintiv’s existing exposure in the Montney formation that spans the Alberta and British Columbia border.

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The transaction isn’t a one-off. On Wednesday Calgary’s Baytex Energy Corp. BTE-T said it would sell all of its U.S. assets as part of a new strategy to focus on its “higher-return Canadian core portfolio.” The repositioning comes only two years after Baytex spent US$1.9-billion to expand in Texas’s Eagle Ford region.

And then there’s the** **MEG Energy Corp. MEG-T takeover, with Cenovus Energy Inc. CVE-T closing its $8.6-billion acquisition of the oil-sands producer this week.

It is still too early to declare this a significant shift in Canada’s favour. There are other variables that factor into these deals – Baytex needed to pay down debt, for example** – and an economic downturn arising **from U.S. President Donald Trump’s trade war could send energy prices tumbling, killing deal activity. ** **

But the latest transactions are a welcome sign for the new government in Ottawa, which has an ambitious agenda to attract international investors to Canada’s natural resource sectors.

Prime Minister Mark Carney has set up the Major Projects Office to fast-track approvals for energy and infrastructure projects deemed to be** **of national importance, and these include LNG Canada Phase 2, which would expand the liquefied natural gas export facility at Kitimat, B.C. One of the hopes is that by making it easier to develop such projects, international producers and investors will realize Canadian energy can be more easily extracted and exported.

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“Over the last decade, there was always a new law or ruling that penalized oil and gas, and it scared off a lot of international investors,” said Jeremy McCrea, an energy analyst at BMO Nesbitt Burns in Calgary.

Lately, though, “we’ve seen more operators take an interest in Canadian oil and gas,” he added, some of which stems from “a federal government that’s looking to be more workable with the oil and gas industry and more keen to get our product to market here.”

But there are other factors at play, including troubling production** **decline rates in U.S. shale oil and gas wells. Over the last 15 years, shale producers such as Pioneer Natural Resources Co. PXD-N and EOG Resources Inc. EOG-N became masters of fracking – shooting sand, water and chemicals into rock and forcing it to fracture, allowing oil or gas to escape through the cracks – and this new form of production attracted heavy institutional investor demand. Out of nowhere, the U.S. became the world’s largest oil producer.

Yet from the start of this revolution there were fears that shale wells would deplete quickly. This very problem is now playing out. EOG was a shale pioneer, and it is now estimated to have only three or four years of quality locations left to drill. The company’s share price is down 10 per cent this year.

In Canada, meanwhile, many international players retreated during the shale boom, impressed by the U.S. opportunity and also worried there wasn’t ample infrastructure here to export increased production.

At the same time, the Canadian government added regulations and laws that made it harder to expand fossil fuel production, and environment, social and governance (ESG) guidelines started to dominate, making it harder for** **institutional investors to put money into energy-intensive assets, such as Canada’s oil sands.

In retrospect, the retreat is now looking like a bit of a blessing, because Canadian companies often have ample amounts of attractive undeveloped assets.

When marketing its acquisition of NuVista last week, Ovintiv’s CEO told analysts and investors on a conference call that NuVista’s Montney portfolio “is one of the highest quality undeveloped acreage positions in North America and the overlap with our existing land makes us the natural owner.”