Canada’s energy sector, especially oil and gas, is under pressure in January amid changing dynamics, including a potential new competitor. However, Canadian Prime Minister Mark Carney expressed confidence that the country will remain competitive even with a resurgent Venezuelan oil.
Carney said, “Canadian oil will be competitive because it is low-risk, clearly low-risk, low cost.” Canadian crude makes up most of U.S. imports, but volume could fall if the Trump administration succeeds in taking over Venezuela’s oil industry and expanding production. Part of the plan is to bring down global oil prices to below US$50 per barrel.
Despite the uncertainty and, to some extent, panic, Suncor Energy (TSX:SU) and Cenovus Energy (TSX:CVE) are worth watching in 2026. Like Venezuela, Canada’s oil sands produce heavy crude. Both Canadian oil and gas companies own refineries designed for heavy crude. The advantage is that they can capture the full value chain and sustain dividend payments.
Source: Getty Images
Improved financial strength
Suncor Energy boasts an integrated business model that helps mitigate crude oil price volatility and provides earnings stability. The $78 billion fully integrated energy company also has a large refining scale, which is one-third of its diversified cash flow base. Petro-Canada retail and upstream production are the other two.
According to management, Suncor achieved a record operational performance in Q4 and full-year 2025. Its President and CEO, Rich Kruger, added, “We achieved our ambitious 2024 Investor Day three-year targets a full year ahead of schedule while setting new records in personnel and process safety, upstream production (909,000 barrels per day) and refining utilization (108%).”
Because of significantly improved financial strength, Suncor returned around $11.5 billion (share buybacks and dividends) to shareholders over the last two years. If you invest today, the share price is $64.63, and the dividend yield is 3.7%.
Stronger growth and scale
Cenovus Energy operates high-quality oil sands projects and benefits from a strong, low-cost asset base. The $43.1 billion company strengthened its oil sands portfolio following the acquisition of MEG Energy in late November 2025.
Management expects upstream production growth of 4% in 2026 to 945,000–985,000 barrels of oil equivalent per day (boe/d). The integration with MEG Energy will also capture value across the chain and minimize pure production exposure. For 2026, Cenovus projects a throughput of 430,000 to 450,000 barrels per day, with a utilization rate of 91–95%.
Cenovus will focus on the U.S. refining portfolio with physical access to Canadian crude. Also, the company will prioritize heavy conversion capacity to serve large, liquid product sales markets. Even if the price drops to US$45 per barrel (WTI), the adjusted funds flow can cover the 2026 sustaining capital and base dividend.
CVE trades at $23.09 per share and pays a 3.5% dividend. Many market analysts are bullish on MEG Energy’s strategic fit and maintain a constructive outlook.
Strong Buys
While the situation is fluid, U.S. President Donald Trump faces a monumental challenge in restoring Venezuela’s oil infrastructure, not to mention the scale of investment required and security risks.
Meanwhile, TSX’s energy sector, up 0.13% year-to-date, has yet to experience a sharp decline. Suncor Energy and Cenovus Energy are strong buys, given their integrated business models and structural advantage.
