AXAS WACC - Weighted Average Cost of Capital
The WACC of Abraxas Petroleum Corp (AXAS) is 7.8%.
| Range | Selected | |
| Cost of equity | 9.9% - 15.0% | 12.45% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 4.0% - 4.9% | 4.45% |
| WACC | 6.4% - 9.3% | 7.8% |
| Category | Low | High |
| Long-term bond rate | 4.2% | 4.7% |
| Equity market risk premium | 5.0% | 6.0% |
| Adjusted beta | 1.14 | 1.63 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 9.9% | 15.0% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 4.0% | 4.9% |
| After-tax WACC | 6.4% | 9.3% |
| Selected WACC | 7.8% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| AXAS | Abraxas Petroleum Corp | 1.06 | 2.58 | 1.45 |
| BNE.TO | Bonterra Energy Corp | 1.31 | 1.5 | 0.77 |
| CR.TO | Crew Energy Inc | 0.06 | 2.72 | 2.59 |
| CRBO | Carbon Energy Corp | 2.9 | -0.43 | -0.14 |
| GDP | Goodrich Petroleum Corp | 0.35 | 1.62 | 1.28 |
| NSLPQ | New Source Energy Partners LP | 3991083.8 | 35.12 | 0 |
| PIPE.TO | Pipestone Energy Corp | 0.39 | 1.39 | 1.08 |
| PNRG | Primeenergy Resources Corp | 0.01 | 1.5 | 1.49 |
| SD | SandRidge Energy Inc | 0 | 0.85 | 0.85 |
| SGY.TO | Surge Energy Inc | 0.47 | 1.32 | 0.98 |
| SRX.TO | Storm Resources Ltd | 0.18 | 1.44 | 1.27 |
| Low | High | |
| Unlevered beta | 0.98 | 1.27 |
| Relevered beta | 1.21 | 1.94 |
| Adjusted relevered beta | 1.14 | 1.63 |
AXAS's CAPM model and how its cost of Equity is calculated
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for AXAS:
cost_of_equity (12.45%) = risk_free_rate (4.45%) + equity_risk_premium (5.50%) * adjusted_beta (1.14) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.