Investing.com -- Institutional investors showed renewed interest in Canadian exploration and production companies in the third quarter of 2025, despite volatile crude prices and mixed sentiment across the energy complex, according to a new note from BMO Capital Markets.
Drawing on both 13F and AMR ownership filings, BMO analyzed every global fund reporting a position in at least one Canadian-listed E&P since 2022, a universe spanning roughly 4,300 mutual funds across 2,600 institutions. The data shows that mid-cap E&Ps attracted $316 million of net buying from mutual funds in Q3, and $590 million at the institutional-account level. But the firm warns that the buying was far from broad-based, with several fund categories still net sellers during the quarter.
Against that backdrop, BMO highlights four emerging trends that may hint at where institutional money is headed next.
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Energy-specialized funds keep gravitating toward the same core names
Funds that are heavily weighted toward energy, typically early movers with direct ties to management teams and field-level operations, remained concentrated in a familiar cluster of companies. ARC Resources Ltd . (TSX:ARX), Tourmaline Oil Corp . (TSX:TOU), Tamarack Valley Energy Ltd (TSX:TVE) and Whitecap Resources Inc . (TSX:WCP) continued to dominate their portfolios, with Athabasca Oil Corp (TSX:ATH) newly entering the group’s top holdings compared with last quarter.
BMO notes that more than 80% of energy-focused mutual funds now hold ARC, while Tourmaline and Tamarack remain close behind. At the institutional level, PrairieSky Royalty Ltd (TSX:PSK) joined the list as a top name in place of Tamarack.
Funds that bought Q2’s “winners” are now rotating into Whitecap, Peyto and Athabasca
BMO also examined the best-performing mid-cap E&Ps in Q3, Spartan Delta Corp (TSX:SDE) (+42%), Logan Energy Corp (TSXV:LGN) (+34%), Baytex Energy Corp (TSX:BTE) (+34%), Parex Resources Inc (TSX:PXT) (+31%) and Cenovus Energy Inc (TSX:CVE) (+28%), and identified the institutional buyers that accumulated them in the prior quarter.
A total of 183 mutual funds had positions in those winners during Q2. Their activity in Q3 offers clues about where momentum-focused or prescient buyers are rotating next. According to the note, these funds most actively added shares of Whitecap, followed by Peyto Exploration&Development Corp (TSX:PEY) and Athabasca in the latest quarter.
Existing shareholders are quietly signaling which companies they trust most
Another key sign BMO tracks is what it calls the “happy vs. unhappy shareholder” ratio, essentially, whether existing holders are adding to or trimming their positions. Because these investors tend to be closest to the companies and have more visibility into operations and expectations, their trading patterns are often considered an early confidence gauge.
In Q3, the strongest buyer-to-seller ratios among existing shareholders appeared in Cardinal Energy Ltd (TSX:CJ), Paramount Resources Ltd . (TSX:POU), and Kelt Exploration Ltd. (TSX:KEL). BMO argues that such patterns typically precede broader institutional inflows as new investors look for confirmation signals.
New accounts are showing broad early interest in three names
Finally, BMO highlights the companies drawing the widest influx of new investors, a precursor, the analysts say, to potential involvement from much larger asset managers.
This quarter’s standouts were Whitecap, Strathcona Resources Ltd (TSX:SCR), and Surge Energy Inc . (TSX:SGY), each of which saw meaningful breadth of first-time buyers across mutual funds and institutional accounts.
U.S. investors return; generalists and value funds step in
Beyond the four main themes, BMO points to several notable macro trends shaping sector positioning. U.S. institutions, largely absent in earlier quarters, returned aggressively in Q3, accounting for $378 million of mid-cap buying, while Canadian investors were net sellers. Generalist funds with minimal energy exposure also showed strong interest, suggesting improving sentiment toward the sector.
Value-oriented investors were another bright spot, outpacing growth funds, which collectively saw $388 million in net outflows from mid-cap E&Ps. Meanwhile, low-turnover funds continued to dominate the shareholder base, now representing 85% of reported holdings, a dynamic BMO views as supportive in a choppy commodity environment.
While institutional appetite for Canadian oil and gas equities strengthened in several corners of the market, BMO emphasizes that the buying remains selective and guided by a handful of decisive trends. Among them: energy specialists sticking with their core convictions, early-winning funds rotating into a new set of mid-cap names, existing shareholders signaling where confidence is deepest, and broadening interest beginning to form behind a few emerging favorites.
