WTI WACC - Weighted Average Cost of Capital
The WACC of W&T Offshore Inc (WTI) is 7.6%.
| Range | Selected | |
| Cost of equity | 8.3% - 12.9% | 10.6% |
| Tax rate | 17.8% - 32.9% | 25.35% |
| Cost of debt | 7.0% - 9.1% | 8.05% |
| WACC | 6.7% - 8.5% | 7.6% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.97 | 1.44 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.3% | 12.9% |
| Tax rate | 17.8% | 32.9% |
| Debt/Equity ratio | 1.82 | 1.82 |
| Cost of debt | 7.0% | 9.1% |
| After-tax WACC | 6.7% | 8.5% |
| Selected WACC | 7.6% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| WTI | W&T Offshore Inc | 1.82 | 1.23 | 0.49 |
| ATH.TO | Athabasca Oil Corp | 0.07 | 1.73 | 1.63 |
| BATL | Battalion Oil Corp | 8.9 | 2.09 | 0.25 |
| CNE.TO | Canacol Energy Ltd | 10.49 | 1.23 | 0.13 |
| GPRK | GeoPark Ltd | 1.53 | 0.9 | 0.4 |
| GTE | Gran Tierra Energy Inc | 4.32 | 0.65 | 0.14 |
| NVA.TO | Nuvista Energy Ltd | 0.1 | 1.4 | 1.29 |
| OBE.TO | Obsidian Energy Ltd | 0.71 | 1.86 | 1.18 |
| PEY.TO | Peyto Exploration & Development Corp | 0.36 | 1.2 | 0.93 |
| SBOW | SilverBow Resources Inc | 1.28 | 0.73 | 0.36 |
| Low | High | |
| Unlevered beta | 0.38 | 0.67 |
| Relevered beta | 0.96 | 1.66 |
| Adjusted relevered beta | 0.97 | 1.44 |
WTI'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 WTI:
cost_of_equity (10.60%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (0.97) + 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.