Canada’s newest oil tycoon shakes up sector with bold expansion plan

Canada’s oil sands industry is emerging from a decade of downturn caused by low prices and political and regulatory uncertainty. (Source: Avery MacRae/CTV News Atlantic)

Canadian banker-turned-oil-tycoon Adam Waterous, an industry outsider who lives in a Rocky Mountain tourist town, not energy hub Calgary, has a plan to cement his company’s status as one of North America’s fastest-growing oil companies.

Waterous intends to more than double crude production by Strathcona Resources and expand more aggressively than any of its rivals after the company’s hostile bid for MEG Energy failed.

He also wants Canada, the fourth-biggest oil producer, to double oil and gas output to unlock economic growth during a time of trade tensions with the U.S.

‘Do my share’

“If I’m saying a whole country should increase oil production by two times, well, what am I doing? I’m trying to do my share,” Waterous, 64, Strathcona’s executive chairman, said in an interview, his first since announcing the strategy.

Waterous, the former head of global investment banking for Scotiabank, is doubling down on oil as Canadian public sentiment shifts in favor of fossil fuel development. Prime Minister Mark Carney is counting on oil and gas to help Canada weather U.S. President Donald Trump’s tariffs on other Canadian goods, and recently rolled back certain climate rules in an effort to boost the industry’s growth.

The plan will see Strathcona — which Waterous built from scratch to Canada’s fifth-largest oil producer — expand from 125,000 barrels per day in 2026 to up to 300,000 bpd by 2035.

At a compound annual rate of 10 per cent, the plan would cement Strathcona as one of North America’s fastest-growing oil companies.

Aggressive pursuit of growth

Canada’s oil sands industry is emerging from a decade of downturn caused by low prices and political and regulatory uncertainty. While domestic producers such as Canadian Natural Resources and Suncor Energy weathered the tough times by slashing expenses and funneling profits to shareholders, Strathcona bought multiple small producers since 2017 at distressed prices.

Waterous — who as founder and managing partner of Calgary-based private equity firm Waterous Energy Fund controls a C$6.5 billion (U$4.69 billion) stake in Strathcona, based on securities filings — made his most aggressive move with his bid for MEG, which turned into a six-month battle with larger competitor Cenovus Energy.

While Cenovus emerged in October as the winning suitor, Strathcona struck a side deal that enabled it to purchase some of Cenovus’ heavy oil assets in exchange for voting its MEG shares in support of Cenovus’ offer. The newly acquired assets underpin Strathcona’s production forecast.

“Sometimes it looks like we had a master plan, and I don’t want to give that impression, but I knew all along that there were several ways for us to win in this,” Waterous said.

“Fortune favors the bold.”

An outsider’s view

Raised in Ontario and educated at Harvard University, Waterous views himself as an outsider in the chummy Canadian oilpatch. He does not live in Calgary, the corporate heart of the country’s oil and gas sector, but in the Rocky Mountain resort town of Banff, where he and his wife own a ski resort.

They are the proponents behind a plan to build a 150-km (93-mile), C$2.6 billion rail line that would connect Calgary to Banff and offer hydrogen-powered passenger train service to commuters and tourists.

When Waterous came to Calgary from Toronto in 1991 to co-found an energy-focused investment bank, he knew little about the industry that would make his fortune.

“I knew that oil came out of the ground and it went to a refinery and it ended up in your car. That was it,” he said.

But Waterous said his outsider status gives him an advantage.

“There’s a groupthink that happens in the oil and gas industry. It’s natural, but it’s good to have this different perspective,” he said.

Being involved in energy sector transactions for years as a banker gives Waterous a unique insight into the country’s oil-and-gas assets, said Brian Porter, the former CEO of Scotiabank who worked closely with Waterous for years.

“He knows the properties in the Western Canadian Sedimentary Basin, and throughout North America for that matter, probably better than anybody else,” Porter said. “That might make some people bristle, but I believe that.”

Brash style

In a country where corporate executives are usually publicly reserved, Waterous became known during the MEG fight for his verbal volleys. He accused Cenovus of resorting to “fear and misrepresentation to keep an upstart at bay” as well as “preying” on MEG’s “weak” board.

The discourse grew so heated that at one point Cenovus CEO Jon McKenzie declared the situation had become a “circus.”

Waterous said he’s not a “spoiler” or a “muckraker” but will not hesitate to call out “poor corporate governance.”

Waterous prides himself on independent thinking, which is why he said he is confident in laying out an expansion plan for Strathcona that runs contrary to popular wisdom.

“People will be like, ‘no, no, you shouldn’t do that, what you’re supposed to be really focused on is just buying back shares and shareholder returns,” he said.

“But this is what I think makes sense.”

(Reporting by Amanda Stephenson in Calgary; Editing by Caroline Stauffer and Rod Nickel)