The all-shares deal by Cenovus Energy Inc. to buy Husky Energy Inc. for about $3.8 billion will likely spark more mega-mergers among Canadian oil and gas majors, according to a veteran oilsands analyst.

“This is likely just the start of big deals in Canadian energy land and thus it begs the question of who is next?” said analyst Phil Skolnick of Eight Capital in a report on Monday.

“As seen in the U.S. with the accelerated M&A activity, when there’s one meaningful transaction, there’s likely more to come.”

Several industry observers point to Calgary-based oilsands producer MEG Energy Inc. as the leading potential target, noting Husky’s failed $3.3-billion hostile takeover attempt of its smaller rival two years ago.

In his report, Skolnick presents scenarios where Canadian Natural Resources Ltd. (CNQ) or Imperial Oil Ltd. buy MEG, while also outlining the numbers involved if Canadian Natural combines with Imperial or Suncor Energy Inc., and if Suncor was to merge with Imperial.

“Some [scenarios] have been asked about before and I was just bringing up some new ones — like a CNQ and Suncor merger is not something I’ve heard out there, but nor was Cenovus-Husky,” he said in an interview.

“I’m not going to give zero chance to anything anymore.”

Analysts generally applauded the surprise Cenovus-Husky hookup announced Sunday for its operational advantages, but criticized the plus-20% premium in the price for Husky.

“The deal does makes strategic sense,” said Manav Gupta of Credit Suisse in a note to investors.

“Like U.S. E&P [exploration and production companies], Canadian energy companies also need to come together, cut costs and become leaner to better adapt to lower energy demand in post-pandemic world.”

He said Cenovus’s reputation as an efficient operator in its steam-driven oilsands projects will help Husky overcome its struggles with operational issues, including higher operating and administrative costs.

The companies have identified $1.2 billion in annual potential cost savings, which will include workforce reductions.

But Gupta added the premium is “excessive” and joined other observers in predicting Cenovus shares would trade lower, as they did, falling by as much as 15% or 73 cents to $4.15 in Monday morning trading in Toronto.

Husky, meanwhile, gained as much as 44 cents or 13.9% to $3.61.

Husky shareholders are to receive 0.7845 of a Cenovus share plus 0.0651 of a Cenovus share purchase warrant in exchange for each Husky common share if the deal is concluded.

Cenovus shareholders would own about 61% of the combined company and Husky shareholders about 39%.

The transaction must be approved by at least two-thirds of Husky’s shareholders but Hong Kong billionaire Li Ka-Shing controls 70% of Husky’s shares and has agreed to vote them in favour of the deal.

The announcement Sunday came just as Calgary’s oilsands companies are about to start rolling out third-quarter financial results, with Suncor Energy Inc. set to report Wednesday and both Cenovus and Husky scheduled to report on Thursday.