Canadian Overseas Petroleum Ltd (XOP.CN) WACC Analysis

As of June 13, 2025, Canadian Overseas Petroleum Ltd (XOP.CN) carries a Weighted Average Cost of Capital (WACC) of 5.0%. WACC reflects the blended rate Canadian Overseas Petroleum Ltd must pay to both equity and debt holders.

Within that, the cost of equity is 6.0%, the cost of debt is 6.3%, and the effective tax rate is 25.9%.

Breakdown of WACC Components

• Long-term bond rate: 3.2% – 3.7%
• Equity market risk premium: 5.1% – 6.1%
• Adjusted beta: 0.57 – 1.25
• Additional risk adjustment: 0.0% – 0.5%
• Debt-to-equity ratio: 9.65

What It Means for Investors

With a selected WACC of 5.0%, Canadian Overseas Petroleum Ltd must ensure any new investment returns exceed this threshold to generate shareholder value. This level reflects an attractive low cost of capital.