ConocoPhillips WACC - Weighted Average Cost of Capital
The WACC of ConocoPhillips (COP) is 7.6%.
| Range | Selected | |
| Cost of equity | 7.6% - 9.6% | 8.6% |
| Tax rate | 32.6% - 33.2% | 32.9% |
| Cost of debt | 4.5% - 4.7% | 4.6% |
| WACC | 6.8% - 8.4% | 7.6% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.81 | 0.84 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.6% | 9.6% |
| Tax rate | 32.6% | 33.2% |
| Debt/Equity ratio | 0.23 | 0.23 |
| Cost of debt | 4.5% | 4.7% |
| After-tax WACC | 6.8% | 8.4% |
| Selected WACC | 7.6% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| COP | ConocoPhillips | 0.23 | 0.71 | 0.62 |
| APA | APA Corp (US) | 0.99 | 1.05 | 0.63 |
| CNQ.TO | Canadian Natural Resources Ltd | 0.23 | 1.08 | 0.93 |
| DVN | Devon Energy Corp | 0.46 | 0.73 | 0.56 |
| EOG | EOG Resources Inc | 0.08 | 0.73 | 0.7 |
| FANG | Diamondback Energy Inc | 0.32 | 0.94 | 0.77 |
| HES | Hess Corp | 0.21 | 0.72 | 0.63 |
| MRO | Marathon Oil Corp | 0.34 | 0.32 | 0.26 |
| OVV | Ovintiv Inc | 0.58 | 1.11 | 0.8 |
| PXD | Pioneer Natural Resources Co | 0.08 | 0.34 | 0.32 |
| Low | High | |
| Unlevered beta | 0.63 | 0.66 |
| Relevered beta | 0.72 | 0.76 |
| Adjusted relevered beta | 0.81 | 0.84 |
ConocoPhillips'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 ConocoPhillips:
cost_of_equity (8.60%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.81) + 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.