It's been a bumpy ride for Canada's oil and gas sector in 2024. While this heavyweight sector still accounts for over 18% of the TSX Composite Index, many energy stocks struggled, pulled lower by falling commodity prices and fears of cooling demand.

Despite these sector-wide declines, some energy stocks still outperformed the broader market in 2024 as their financial results continued to beat market expectations. In this article, I'll highlight two of the best Canadian oil and gas stocks that are worth watching for 2025 and discuss why they could continue to thrive in the year ahead.

TC Energy stock

TC Energy (TSX:TRP) is the first Canadian oil and gas stock in this list that has seen strong 40% gains despite sector-wide challenges so far in 2024. Currently trading at $65.79 per share with a market cap of $68.3 billion, TRP stock also offers an attractive 5% annualized dividend yield right now.

The Calgary-headquartered energy infrastructure firm recently completed the spinoff of its liquids pipelines business into a standalone entity, South Bow. This move should help TC Energy sharpen its focus on natural gas infrastructure and power solutions.

In the quarter that ended in September 2024, TC Energy delivered strong comparable earnings of $1.1 billion, up from $1.0 billion in the same period in 2023, as it continued to focus on cost reduction measures. For example, the Southeast Gateway pipeline project, one of the company's important infrastructure projects, has recently seen its capital cost estimates revised downward by 11%, now expected to remain in the range of $3.9 billion and $4.1 billion. As this project approaches its mid-2025 commercial in-service date, it's expected to significantly improve TC Energy's natural gas transportation capacity and help it meet growing demand in key markets across North America.

In addition, TC Energy's repositioning as a pure-play natural gas and power infrastructure firm is likely to pay off in the coming years by streamlining its operations and concentrating resources on its core areas of strength, which could help its share prices surge.

Keyera stock

Keyera (TSX:KEY) could be another attractive Canadian oil and gas stock to watch for 2025 that outperformed the market in 2024. Currently trading with 34% year-to-date gains, KEY stock is priced at $42.81 per share, with a market cap of $9.8 billion and a strong annualized dividend yield of 4.9%.

In the third quarter, Keyera's total revenue rose 34.2% year over year to $1.96 billion due mainly to strong performance across all of its business segments. Its adjusted quarterly earnings also more than tripled from a year ago to $0.82 per share as its Gathering & Processing segment witnessed near-record processing volumes.

In the coming years, Keyera plans to prioritize growth through projects like the Fort Saskatchewan Fractionation Unit II debottlenecking, which is expected to expand its capacity by 8,000 barrels per day by 2026. These fundamental growth initiatives could help this oil and gas stock benefit from rising demand and allow it to keep returning value to shareholders through its reliable dividends.