The WACC of Bonterra Energy Corp (BNE.TO) is 8.9%.
Range | Selected | |
Cost of equity | 10.8% - 13.7% | 12.25% |
Tax rate | 23.8% - 24.4% | 24.1% |
Cost of debt | 6.8% - 9.5% | 8.15% |
WACC | 7.7% - 10.1% | 8.9% |
Category | Low | High |
Long-term bond rate | 3.2% | 3.7% |
Equity market risk premium | 5.1% | 6.1% |
Adjusted beta | 1.5 | 1.56 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 10.8% | 13.7% |
Tax rate | 23.8% | 24.4% |
Debt/Equity ratio | 1.2 | 1.2 |
Cost of debt | 6.8% | 9.5% |
After-tax WACC | 7.7% | 10.1% |
Selected WACC | 8.9% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
BNE.TO | Bonterra Energy Corp | 1.2 | 1.45 | 0.76 |
EGY | VAALCO Energy Inc | 0.21 | 1.15 | 0.99 |
GDP | Goodrich Petroleum Corp | 0.35 | 1.62 | 1.27 |
GXE.TO | Gear Energy Ltd | 0.17 | 1.71 | 1.51 |
PNE.TO | Pine Cliff Energy Ltd | 0.27 | 1.13 | 0.94 |
PNRG | Primeenergy Resources Corp | 0.02 | 1.4 | 1.38 |
PSTRQ | PostRock Energy Corp | 8.06 | 0.64 | 0.09 |
SD | SandRidge Energy Inc | 0 | 0.9 | 0.9 |
SNM.V | ShaMaran Petroleum Corp | 0.52 | 1.28 | 0.92 |
YGR.TO | Yangarra Resources Ltd | 1.15 | 1.05 | 0.56 |
Low | High | |
Unlevered beta | 0.91 | 0.96 |
Relevered beta | 1.75 | 1.84 |
Adjusted relevered beta | 1.5 | 1.56 |
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 BNE.TO:
cost_of_equity (12.25%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (1.5) + 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.