OBE.TO WACC - Weighted Average Cost of Capital

The WACC of Obsidian Energy Ltd (OBE.TO) is 6.2%.

The Cost of Equity of Obsidian Energy Ltd (OBE.TO) is 7.30%.

The Cost of Debt of Obsidian Energy Ltd (OBE.TO) is 5.75%.

	Range	Selected
Cost of equity	5.40% - 9.20%	7.30%
Tax rate	14.10% - 24.10%	19.10%
Cost of debt	4.40% - 7.10%	5.75%
WACC	4.8% - 7.7%	6.2%

WACC

OBE.TO WACC calculation

Category	Low	High

Long-term bond rate	3.2%	3.7%
Equity market risk premium	5.1%	6.1%
Adjusted beta	0.44	0.83

Additional risk adjustments	0.0%	0.5%
Cost of equity	5.40%	9.20%

Tax rate	14.10%	24.10%
Debt/Equity ratio	0.61	0.61
Cost of debt	4.40%	7.10%

After-tax WACC	4.8%	7.7%


Selected WACC	6.2%

OBE.TO'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 OBE.TO:

cost_of_equity (7.30%) = risk_free_rate (3.45%) + equity_risk_premium (5.60%) * adjusted_beta (0.44) + 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.