TPL.V WACC - Weighted Average Cost of Capital
The WACC of Tethys Petroleum Ltd (TPL.V) is 6.5%.
| Range | Selected | |
| Cost of equity | 7.6% - 11.2% | 9.4% |
| Tax rate | 26.2% - 27.0% | 26.6% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.6% - 7.4% | 6.5% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.73 | 1.03 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 7.6% | 11.2% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 1 | 1 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.6% | 7.4% |
| Selected WACC | 6.5% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| TPL.V | Tethys Petroleum Ltd | 0.82 | 2.05 | 1.28 |
| ALV.V | Alvopetro Energy Ltd | 0.05 | 0.36 | 0.35 |
| HME.V | Hemisphere Energy Corp | 0.02 | 0.54 | 0.53 |
| JEC.V | Jura Energy Corp | 2.59 | -0.74 | -0.26 |
| KEI.TO | Kolibri Global Energy Inc | 0.14 | 0.79 | 0.72 |
| PHX | PHX Minerals Inc | 0.18 | 0.37 | 0.33 |
| POG.V | Perisson Petroleum Corp | 0.24 | -0.62 | -0.53 |
| QEC.TO | Questerre Energy Corp (Canada) | 0 | 1.67 | 1.67 |
| RSRV | Reserve Petroleum Co | 0.05 | 0.14 | 0.13 |
| SOIL.V | Saturn Oil & Gas Inc | 0.67 | 1.75 | 1.17 |
| VLE.TO | Valeura Energy Inc | 0.13 | 1.03 | 0.94 |
| Low | High | |
| Unlevered beta | 0.35 | 0.72 |
| Relevered beta | 0.6 | 1.04 |
| Adjusted relevered beta | 0.73 | 1.03 |
TPL.V'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 TPL.V:
cost_of_equity (9.40%) = risk_free_rate (4.15%) + equity_risk_premium (5.60%) * adjusted_beta (0.73) + 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.