Oil Is Surging Again: 2 Canadian Stocks to Watch Closely

Oil can turn sleepy markets into loud ones very quickly. Prices jumped again as investors worried about prolonged Middle East supply disruptions, deadlocked U.S.-Iran talks, and larger-than-expected draws in crude and fuel inventories. Add into this that President Trump announced a new Canada-U.S. oil pipeline. That combination matters for Canada as energy still plays a huge role on the TSX. When oil rises, investors often take another look at companies tied to production, storage, terminals, and cash flow from the broader energy system.

GEI

Gibson Energy (TSX:GEI) is one of those names worth watching closely. It’s not a classic oil producer, but owns and operates energy infrastructure, including storage terminals, pipelines, processing assets, and marketing operations. That makes it more of a toll-road-style energy company than a pure bet on the daily oil price. Gibson Energy stock becomes more interesting when oil markets get tight as higher activity can support demand for storage, logistics, and related infrastructure.

The last year gave investors a lot to chew on. Gibson Energy stock completed key capital projects, expanded its Duvernay infrastructure partnership with Baytex, and announced the $400 million acquisition of Teine Energy’s Chauvin infrastructure assets. It also extended two major Edmonton contracts for 20 years and 10 years. Those moves add stability, which investors tend to appreciate when commodity markets look jumpy.

The numbers also looked solid where it counts. Gibson Energy stock delivered record fourth-quarter infrastructure adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $160 million, while full-year infrastructure adjusted EBITDA reached $622 million. Net income came in at $198 million for 2025, up $45 million from the year before. It also raised its dividend by 5%, marking its seventh straight annual increase.

The valuation looks more income-focused than bargain-bin cheap, with Gibson Energy stock recently carrying a market cap near $5 billion, a trailing price-to-earnings (P/E) ratio around 25, and a dividend yield at 5.9% at writing. The risk is that debt sits higher than some investors may like, and marketing earnings can swing. Still, Gibson Energy stock fits this oil surge because it offers energy exposure with a steadier infrastructure backbone.

KEL

Kelt Exploration (TSX:KEL) is an oil and gas producer focused on the Montney, one of Western Canada’s most important energy regions. It produces natural gas, oil, and liquids, so it can benefit when commodity prices improve. That makes it more sensitive to oil and gas swings than Gibson Energy stock, but also gives it more upside if the current energy rally lasts.

Recent news points to growth. Kelt increased average production by 22% in 2025 to 40,397 barrels of oil equivalent per day (boe/d). In the fourth quarter, production rose 24% year over year to 45,102 boe/d. The company also said production for 2026 should average between 50,000 and 52,000 boe/d. That’s a strong growth target, especially after 2025 included shut-ins tied to third-party gas plant construction delays.

The earnings picture backs up the growth story. Fourth-quarter petroleum and natural gas sales rose 15% to $143.8 million, while full-year sales climbed 10% to $513.1 million. Adjusted funds from operations (AFFO) rose 18% for the year to $261.5 million. Net income reached $63.1 million, or $0.31 per diluted share, compared with $45.4 million the year before. Kelt also kept net debt low at 0.7 times 2025 adjusted funds from operations.

The valuation looks reasonable for a growing producer, with a market cap around $2 billion and a trailing P/E ratio around 31, though no dividend. The risk is simple. If oil or gas prices reverse, Kelt feels it faster than a midstream name.

Bottom line

Oil spikes can make investors excited, but they can also create traps. Gibson Energy stock offers a steadier infrastructure and dividend angle. Kelt offers more direct production growth and commodity upside. Investors watching oil closely may want both on the radar, but for different reasons. Gibson Energy stock looks built for income and stability, while Kelt looks built for growth if energy prices stay firm.

The post Oil Is Surging Again: 2 Canadian Stocks to Watch Closely appeared first on The Motley Fool Canada.

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More reading

• 2 High-Yield Dividend Stocks That Look Built to Hold for 10 Years or More
• Oil Shock, Rate Decision Ahead: 3 TSX Stocks Built for Both
• 3 Safer TSX Stocks to Buy as Oil Breaks $100 Again

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Gibson Energy. The Motley Fool has a disclosure policy.