CLR WACC - Weighted Average Cost of Capital
The WACC of Continental Resources Inc (CLR) is 7.9%.
| Range | Selected | |
| Cost of equity | 7.6% - 10.4% | 9% |
| Tax rate | 22.9% - 23.7% | 23.3% |
| Cost of debt | 4.4% - 4.5% | 4.45% |
| WACC | 6.8% - 9.0% | 7.9% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.82 | 0.99 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.6% | 10.4% |
| Tax rate | 22.9% | 23.7% |
| Debt/Equity ratio | 0.26 | 0.26 |
| Cost of debt | 4.4% | 4.5% |
| After-tax WACC | 6.8% | 9.0% |
| Selected WACC | 7.9% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| CLR | Continental Resources Inc | 0.26 | 2.31 | 1.93 |
| APA | APA Corp (US) | 1 | 1.07 | 0.61 |
| AR | Antero Resources Corp | 0.12 | 1.13 | 1.03 |
| COG | Cabot Oil & Gas Corp | 0.13 | -0.04 | -0.03 |
| EQT | EQT Corp | 0.28 | 1.13 | 0.93 |
| FANG | Diamondback Energy Inc | 0.32 | 0.96 | 0.77 |
| MRO | Marathon Oil Corp | 0.34 | 0.32 | 0.25 |
| MUR | Murphy Oil Corp | 0.4 | 0.79 | 0.61 |
| RRC | Range Resources Corp | 0.19 | 1.01 | 0.89 |
| SWN | Southwestern Energy Co | 0.5 | 0.63 | 0.45 |
| TOU.TO | Tourmaline Oil Corp | 0.06 | 0.93 | 0.89 |
| Low | High | |
| Unlevered beta | 0.61 | 0.89 |
| Relevered beta | 0.73 | 0.99 |
| Adjusted relevered beta | 0.82 | 0.99 |
CLR'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 CLR:
cost_of_equity (9.00%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.82) + 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.