EGY WACC - Weighted Average Cost of Capital

The WACC of VAALCO Energy Inc (EGY) is 9.5%.

The Cost of Equity of VAALCO Energy Inc (EGY) is 10.85%.

The Cost of Debt of VAALCO Energy Inc (EGY) is 4.80%.

	Range	Selected
Cost of equity	9.20% - 12.50%	10.85%
Tax rate	26.20% - 27.00%	26.60%
Cost of debt	4.80% - 4.80%	4.80%
WACC	8.2% - 10.9%	9.5%

WACC

EGY WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	1.17	1.37

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.20%	12.50%

Tax rate	26.20%	27.00%
Debt/Equity ratio	0.23	0.23
Cost of debt	4.80%	4.80%

After-tax WACC	8.2%	10.9%


Selected WACC	9.5%

EGY'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 EGY:

cost_of_equity (10.85%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.17) + 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.