What are we looking for?
Canadian upstream oil producers that will benefit from rising crude oil prices amid escalating Middle Eastern conflict.
The screen
Oil markets often react sharply when investors perceive a risk of supply disruption, and the Strait of Hormuz remains one of the most important chokepoints in global energy trade. In 2024, oil flows through the strait averaged roughly 20 million barrels per day, representing about 20 per cent of global petroleum consumption. War in the Middle East has raised concerns about potential disruptions to this route, contributing to higher crude prices. Brent crude oil recently traded at US$78.07 per barrel, up from US$70.79 on Feb. 26.
Upstream producers explore for and extract crude oil and natural gas, and their revenues move directly with the price received for each barrel produced, making them substantial beneficiaries of higher prices. Higher-margin producers may be especially well positioned, as lower production costs per barrel allow incremental price increases to translate more efficiently into profits.
Within upstream, our screen favoured oil over natural gas producers, as crude markets are more internationally integrated and could subsequently boost Canadian companies, while gas prices are often more regionally driven.
Using FactSet’s screening tool, I identified Canadian oil companies poised to benefit from rising prices by applying the following criteria:
- traded on the S&P/TSX Composite;
- market capitalization greater than $1-billion;
- classified within upstream energy subsector;
- oil production as a percentage of total production over 70 per cent;
- oil production greater than 10,000 b/d.
The seven companies that passed were ranked by their EBITDA margins.
What we found
Tamarack Valley Energy Ltd. TVE-T, an Albertan upstream oil producer, ranked first on the screen with a 72-per-cent EBITDA margin. The company reported full year 2025 results on Feb. 25, 2026, highlighting a 17-per-cent reduction in net operating expenses, driven by higher production volumes and improved operating efficiency. Moreover, it returned $262.3-million to shareholders in 2025 through dividends and buybacks, signaling that management has ample cash flow, even at lower crude prices. With production heavily weighted toward oil and a competitive cost structure, Tamarack is well positioned to translate higher crude prices into incremental free cash flow if geopolitical disruptions push oil higher.
Headwater Exploration Inc. HWX-T, a heavy oil developer in Alberta, ranked second on the screen with an EBITDA margin of 69.2 per cent. The company reported one of the lowest operating costs in the group at $7.40 per barrel-of-oil equivalent (BOE), underscoring its low-cost structure. (BOE is a standard measure that converts oil and natural gas production into a common unit.) In the fourth quarter of 2025, production per share increased 12 per cent year-over-year and total proved reserves rose 59 per cent, reflecting continued drilling success. With a strong oil weighting and expanding reserve base, Headwater appears well positioned to benefit from higher crude prices. The company is scheduled to report full year 2025 results on March 5.
The information in this article is not investment advice. The author assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained above.
Arjun Deiva, CFA, is an MBA Candidate at the University of California, Berkeley, Haas School of Business.