BATL WACC - Weighted Average Cost of Capital
The WACC of Battalion Oil Corp (BATL) is 8.1%.
| Range | Selected | |
| Cost of equity | 15.4% - 26.4% | 20.9% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 7.0% - 11.1% | 9.05% |
| WACC | 6.2% - 10.0% | 8.1% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 2.51 | 3.84 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 15.4% | 26.4% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 8.7 | 8.7 |
| Cost of debt | 7.0% | 11.1% |
| After-tax WACC | 6.2% | 10.0% |
| Selected WACC | 8.1% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| BATL | Battalion Oil Corp | 8.7 | 1.93 | 0.26 |
| AMPY | Amplify Energy Corp | 1.17 | 0.9 | 0.49 |
| CJ.TO | Cardinal Energy Ltd (Alberta) | 0.09 | 1.3 | 1.22 |
| CRBO | Carbon Energy Corp | 2.9 | -0.43 | -0.14 |
| KRP | Kimbell Royalty Partners LP | 0.17 | 0.73 | 0.65 |
| REI | Ring Energy Inc | 2.37 | 1.04 | 0.38 |
| SBOW | SilverBow Resources Inc | 1.28 | 0.73 | 0.38 |
| SD | SandRidge Energy Inc | 0 | 0.82 | 0.82 |
| SGY.TO | Surge Energy Inc | 0.44 | 1.43 | 1.08 |
| SRX.TO | Storm Resources Ltd | 0.18 | 1.44 | 1.27 |
| Low | High | |
| Unlevered beta | 0.44 | 0.71 |
| Relevered beta | 3.25 | 5.24 |
| Adjusted relevered beta | 2.51 | 3.84 |
BATL'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 BATL:
cost_of_equity (20.90%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (2.51) + 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.