NGL WACC - Weighted Average Cost of Capital

The WACC of NGL Energy Partners LP (NGL) is 14.7%.

The Cost of Equity of NGL Energy Partners LP (NGL) is 18.80%.

The Cost of Debt of NGL Energy Partners LP (NGL) is 14.15%.

	Range	Selected
Cost of equity	16.30% - 21.30%	18.80%
Tax rate	0.50% - 0.50%	0.50%
Cost of debt	7.40% - 20.90%	14.15%
WACC	8.6% - 20.8%	14.7%

WACC

NGL WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	2.71	2.94

Additional risk adjustments	0.0%	0.5%
Cost of equity	16.30%	21.30%

Tax rate	0.50%	0.50%
Debt/Equity ratio	6.19	6.19
Cost of debt	7.40%	20.90%

After-tax WACC	8.6%	20.8%


Selected WACC	14.7%

NGL'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 NGL:

cost_of_equity (18.80%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (2.71) + 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.