SBOW WACC - Weighted Average Cost of Capital
The WACC of SilverBow Resources Inc (SBOW) is 8.7%.
| Range | Selected | |
| Cost of equity | 11.7% - 16.6% | 14.15% |
| Tax rate | 7.1% - 13.1% | 10.1% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 7.8% - 9.7% | 8.7% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.71 | 2.1 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.7% | 16.6% |
| Tax rate | 7.1% | 13.1% |
| Debt/Equity ratio | 1.28 | 1.28 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 7.8% | 9.7% |
| Selected WACC | 8.7% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| SBOW | SilverBow Resources Inc | 1.28 | 0.73 | 0.33 |
| AMPY | Amplify Energy Corp | 1.1 | 0.93 | 0.46 |
| BATL | Battalion Oil Corp | 8.52 | 1.86 | 0.21 |
| CJ.TO | Cardinal Energy Ltd (Alberta) | 0.09 | 1.29 | 1.19 |
| KEL.TO | Kelt Exploration Ltd | 0.08 | 1.33 | 1.24 |
| PNRG | Primeenergy Resources Corp | 0.01 | 1.48 | 1.46 |
| SD | SandRidge Energy Inc | 0 | 0.84 | 0.84 |
| SGY.TO | Surge Energy Inc | 0.44 | 1.42 | 1.01 |
| SRX.TO | Storm Resources Ltd | 0.18 | 1.44 | 1.24 |
| TVE.TO | Tamarack Valley Energy Ltd | 0.35 | 1.74 | 1.32 |
| Low | High | |
| Unlevered beta | 0.94 | 1.21 |
| Relevered beta | 2.06 | 2.64 |
| Adjusted relevered beta | 1.71 | 2.1 |
SBOW'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 SBOW:
cost_of_equity (14.15%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.71) + 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.