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Shares of oil and gas companies tend to rise and fall with oil prices, which have been on a wild ride since the Iran war started in late February.

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Before the conflict, West Texas Intermediate, North America’s benchmark price for crude oil, hovered around US$60 a barrel. Since then, it has surpassed the US$100 mark, though not without considerable volatility.

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“If you look at Tamarack’s Headwater deal, they did that as a share exchange,” said Tom Pavic, president of Sayer Energy Advisors. “Tamarack’s share price is up this year which gave them a stronger currency, so to speak, to go out and do a deal.”

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Shares as currency aside, Tamarack’s Headwater deal also made strategic sense. You don’t see Tamarack buying shares of Lululemon Athletica Inc.

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“Their merger created Canada’s only publicly traded pure-play producer focused on the Clearwater play,” Pavic said. “It just made sense.”

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So did the Shell-ARC deal. Shell needs natural gas to supply LNG Canada, its joint venture that could be on the verge of a massive expansion. In ARC they found a top-performing natural gas producer.

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Pavic says when companies like Tamarack are looking for investors with especially deep pockets, being bigger is better.

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“There are a bunch of big institutional investors who can only invest in companies with a certain market cap size,” he said. “If a company can get past that number, that means they now meet certain institutional investment criteria. And that means more opportunities to raise capital.”

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In a recent research note, analysts at BMO Capital Markets said the uptick in mergers and acquisitions reinforces a theme they’ve highlighted for years.

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“Scale continues to matter. The improvements with the federal government in terms of regulation, egress and overall tone has seemingly sparked interest from a number of operators, both domestic and international.”

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BMO’s analysts believe more consolidation is to come. They suggest companies like Whitecap Resources Inc., Spartan Delta Corp., Kelt Exploration Ltd., Surge Energy Inc. and Obsidian Energy Ltd. are leading candidates.

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Take Whitecap Resources, for example. With a market cap of roughly $20 billion, BMO believes it’s just the right size for a super major looking for exposure to Canadian energy.

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“For a buyer seeking immediate scale, condensate growth, free cash flow, and 40-plus years of inventory in one of Canada’s premier resource plays, Whitecap checks nearly every box we would expect to see in a future large-cap acquisition candidate.”

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Singh said consolidation isn’t about getting bigger for its own sake. “Teams work hard, rather, to get to a size where the cost of capital, counterparty terms and funds flowing into the name all start improving,” he said.

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Singh is also careful not to give too much credit to war in the Middle East.

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“It’s tempting to credit geopolitics for the deal activity, and it’s certainly not hurting,” he said. But for him, the real driver is an industry-wide desire to grow and boost financial performance, with acquisitions being the method of choice.

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Still, a company that shrinks after selling assets may have improved its financial position, said Kyla Lawson, managing director at Calgary-based StackDX, an oil and gas software firm. “Nonetheless, we see consolidation as a major theme in today’s industry,” she said.

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So, too, is the emergence of new companies.