TLW.L WACC - Weighted Average Cost of Capital
The WACC of Tullow Oil PLC (TLW.L) is 8.8%.
| Range | Selected | |
| Cost of equity | 36.3% - 52.3% | 44.3% |
| Tax rate | 19.0% - 19.0% | 19% |
| Cost of debt | 5.7% - 6.6% | 6.15% |
| WACC | 7.7% - 9.9% | 8.8% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 5.4 | 6.77 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 36.3% | 52.3% |
| Tax rate | 19.0% | 19.0% |
| Debt/Equity ratio | 9.27 | 9.27 |
| Cost of debt | 5.7% | 6.6% |
| After-tax WACC | 7.7% | 9.9% |
| Selected WACC | 8.8% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| TLW.L | Tullow Oil PLC | 9.27 | 1.8 | 0.21 |
| EC.PA | Total Gabon SA | 0.05 | 0.4 | 0.39 |
| ENQ.L | EnQuest PLC | 3.32 | 0.71 | 0.19 |
| GKP.L | Gulf Keystone Petroleum Ltd | 0 | 1.88 | 1.88 |
| HUR.L | Hurricane Energy PLC | 0.08 | 1.9 | 1.79 |
| IPEKE.IS | Ipek Dogal Enerji Kaynaklari Arastirma ve Uretim AS | 0 | 1.06 | 1.05 |
| MAU.PA | Etablissements Maurel et Prom SA | 0.15 | 0.9 | 0.8 |
| OKEA.OL | Okea ASA | 0.17 | 1.57 | 1.38 |
| PEN.OL | Panoro Energy ASA | 0.31 | 1.55 | 1.24 |
| PNOR.OL | Petronor E&P Ltd | 0.83 | 0.97 | 0.58 |
| Low | High | |
| Unlevered beta | 0.71 | 1.13 |
| Relevered beta | 7.57 | 9.61 |
| Adjusted relevered beta | 5.4 | 6.77 |
TLW.L'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 TLW.L:
cost_of_equity (44.30%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (5.4) + 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.