Advantage Oil & Gas Ltd (AAV.TO) WACC Analysis

As of June 8, 2025, Advantage Oil & Gas Ltd (AAV.TO) carries a Weighted Average Cost of Capital (WACC) of 8.1%. WACC reflects the blended rate Advantage Oil & Gas Ltd must pay to both equity and debt holders.

Within that, the cost of equity is 6.5%, the cost of debt is 7.4%, and the effective tax rate is 23.3%.

Breakdown of WACC Components

• Long-term bond rate: 3.2% – 3.7%
• Equity market risk premium: 5.1% – 6.1%
• Adjusted beta: 0.65 – 1.05
• Additional risk adjustment: 0.0% – 0.5%
• Debt-to-equity ratio: 0.4

What It Means for Investors

With a selected WACC of 8.1%, Advantage Oil & Gas Ltd must ensure any new investment returns exceed this threshold to generate shareholder value. This level reflects a moderate financing cost structure.