Weighted Average Cost of Capital (WACC) Report

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BX2014 Financial Management

Assessment Task 2

Santos Limited

Prepared for: Dr T Y Thong

Prepared by: René Geipel

Student ID: 13512847

Due date: 26/01/18

This assignment is an application of

the weighted average cost of capital (WACC, Topic 6).

Table of Contents

AN AUSTRALIAN ENERGY PIONEER …………………………………………………………………………… 3

WEIGHTED AVERAGE COST OF CAPITAL (WACC) ……………………………………………………. 3

THE CALCULATION OF WACC …………………………………………………………………………………………. 4

TOTAL MARKET VALUE OF EQUITY “E” ……………………………………………………………………………… 4

TOTAL MARKET VALUE OF DEBT “D” ………………………………………………………………………………… 4

TOTAL MARKET VALUE “V” …………………………………………………………………………………………….. 5

COST OF EQUITY “RE” …………………………………………………………………………………………………….. 5

COST OF DEBT “RD” ……………………………………………………………………………………………………….. 6

GEARING RATIOS ………………………………………………………………………………………………………… 6

CAPITAL STRUCTURE ANALYSIS……………………………………………………………………………………….. 6

DEBT-TO-EQUITY RATIO …………………………………………………………………………………………………. 7

INTEREST COVERAGE RATIO ……………………………………………………………………………………………. 8

ECONOMIC VALUE ADDED (EDV) ……………………………………………………………………………….. 9

FROM RECESSION TO RECOVERY ……………………………………………………………………………. 10

REDUCING THE WACC …………………………………………………………………………………………………. 10

INCREASING THE ROIC …………………………………………………………………………………………………. 11

REFLECTION ………………………………………………………………………………………………………………. 11

MARKET OR BOOK VALUE …………………………………………………………………………………………….. 11

BETA IN CAPM ……………………………………………………………………………………………………………. 12

RISK-FREE RATE OF RETURN ………………………………………………………………………………………….. 12

REFERENCES ……………………………………………………………………………………………………………… 13

APPENDICES ……………………………………………………………………………………………………………….. 14

An Australian Energy Pioneer Santos is one of the leading oil and gas producers in the Asia-Pacific region. Established in 1954, the company delivers the economic and environmental benefits of natural gas and oil to homes and businesses throughout Australia and Asia. Beyond that, Santos conducts major onshore and offshore petroleum exploration and production activities in Australia, Papua New Guinea, Indonesia and Vietnam. Furthermore, as an independent exploration and production firm, Santos has the largest exploration and production acreage position in Australia, with proved reserves of about 622 million barrels of oil, and annual production of 54 million barrels of oil equivalent of gas, ethane and natural gas liquids. However, after a huge drop of the oil prices in 2014 caused by a worldwide oversupply and decreasing demand, Santos was extremely harmed in its operations. Therefore, the company initiated a turnaround to follow a different strategy concentrating on the exploration, development, production and sale of natural gas. As a whole, Santos focuses on driving sustainable shareholder value by becoming a low- cost, reliable and high-performance business with the financial flexibility to build and grow the business through the oil price cycle.

Weighted Average Cost of Capital (WACC) Given that a firm uses both debt and equity capital, the WACC´s purpose is to find the average cost rate that a company must pay for its debt and equity capital borrowed from creditors and investors. Hence, it reflects the overall return a company must earn on its existing assets to maintain the value of its shares and the satisfaction of its shareholders as well as creditors. This information can also be utilised in assessing investments that deal in the same risk class as the company (Ross et. al., 2008, p. 370). Therefore, the formula is calculated by summarising the corporation’s debt and equity weighted by their capital structure and multiplied by their costs respectively. Since Santos has not issued preferred shares, these are not considered in this calculation. Before each part of the formula is explained in detail, Santos´s WACC is calculated in reference to the appendix. The formula is described as follows:

???? = % ? ? × ??* + (%

? ? × ??* × (? − ?))

in which E: Market value of the company’s equity D: Market value of the company’s debt

V: Total market value of the company (E+D) (E/V): Percentage of financing that is equity (D/V): Percentage of financing that is debt

RE: Cost of equity RD: Cost of debt Tc: Corporate tax rate in Australia

The Calculation of WACC Santos´s WACC is calculated in association with its latest Annual Report 2016. Given the data from Bloomberg, all numbers below which are not reported in the company’s annual report are labelled in USD millions.

§ E = shares outstanding * price per share (Market Cap, See Appendix A0) = 5,896.40

§ D = Commercial paper + Bonds + Other financial debt

= Short-term + long-term debt (See A0) = 5,239.00

§ V = 11,135.40 (See A0) § (E/V) = 53% § (D/V) = 47%

§ RE = Cost of Equity (CAPM Method)

= Risk-free rate + beta of asset * market premium (See A3) = 2.77% + 1.82 * 6.73% = 15.03%

§ RD = Net interest expenses / total debt (See A4)

= 254.61 / 5,239.00 = 4.86%

§ Tc = 0% (caused by suffering losses in 2016, See A4)

WACC2016 = 10.20%

For Santos, this means that the company must earn a higher return than 10.20% on its assets to create value for the company. Otherwise, more value is destroyed than created. Total market value of equity “E” The company´s market value of equity is the total value of all outstanding shares or stock multiplied by their current market prices. In comparison, the market value of equity differs from its book value of equity, because the book value of equity does not consider the company´s growth potential (Investopedia, n.d.). In Santos´s case, the market value of equity is equal to its market capitalisation (market cap.) which lies at USD 5,896.40 million at the end of 2016. Total market value of debt “D” A firm’s debt consists of money it has borrowed such as bonds and loans. Therefore, the company lists its debt value on the balance sheet, which can also differ from its markets value, the price an investor would pay for debt on the open market (Sapling, n.d.). According to Bloomberg, Santos´s market value of debt in 2016 is comprised of its short-term & long-term debt equating to a total debt of USD 5,239.00 million.

Total market value “V” Santos´s total market value is simply calculated by adding up the total debt and the total equity. In numbers, USD 5,896.40 million + USD 5,239.00 million, which results in a total market value of USD 11,135.40 million in 2016. Cost of Equity “RE” The cost of equity is the return that investors require on their investment in the company. However, its value needs to be estimated because the return that the firm´s investors require cannot directly be observed (Ross et. al., 2008, p. 363). In order to calculate the required return, two methods of calculation may be utilised:

– the dividend growth model and – the capital asset pricing model (CAPM).

1) Dividend growth model: This model is used when companies are paying current dividends at a reasonably constant rate and when the dividends grow at a constant rate. The model is illustrated below:

?? = ?? ??

+ ?

in which RE = Cost of equity D1 = Expected dividend in a single period P0 = Current share price g = dividend growth rate The primary advantage of this model is its simplicity if a reasonable steady growth of the company´s dividend is likely to expect. However, this model does not consider risk in its calculation and so it does not show any adjustment for the riskiness of investments. 2) CAPM (Capital Asset Pricing Model): This model solves the risk level problem and it is useful for all companies delivering the beta value. The formula for this model is shown below:

?? = ?? + ?? × (?(??) − ??) in which RE = Cost of equity RF = Risk-free rate βE = Beta E(RM) = Expected return on market E(RM) – RF = Market risk premium (Corporate Finance Institute, n.d.) In Santos´s case, the risk component is essential for our calculations. Therefore, we use the CAPM method, also known as the SML (Security Market Line) model. In detail, the calculation is given on the next page:

Risk-free rate (RF) = 2.77 (See A3) Beta value (βE) = 1.82 (See A3) Implied Market Return (E(RM)) = 9.49 (See A3) Market risk premium = E(RM) – Rf = 9.49 – 2.77 = 6.73 (See A3) Plugging in these values to the given equation yields a cost of equity equivalent to 15.03%. Cost of Debt “RD” In contrast, the cost of debt is the return that the firm´s creditors demand. In principle, the company´s cost of debt can be observed directly in the financial market because it is simple the interest-rate the firm must pay on new borrowing (Ross et. al., 2008, p. 369). To calculate Santos´s cost of debt, only the total amount of debt and the interests paid for this debt are necessary. Hence in 2016, the net interest expenses of USD 254.61 million are divided by the total debt of USD 5,239.00 million. In result, the cost of debt is 4.86% (See A4). Obviously, the cost of debt is smaller than the cost of equity. This is often the case since investors require a higher return than creditors, at least, as long as the company´s credit rating is still reliable. Furthermore, a company is mainly concerned with after-tax cash flows. So, there is a difference between the pre-tax and the after-tax cost of debt, which must be distinguished. The reason for this calculation is because the interests paid by a corporation for debts are tax-deductible, meaning the government actually pays some of the firm´s interest (Ross et. al., 2008, p. 369). Therefore, cost of debt is multiplied by one minus the company´s tax rate (1-TC) to obtain the after-tax cost of debt. In Santos´s case, the company still suffers tremendous losses since the oil-prices nosedived in 2014, so they were no longer required to pay taxes. In return, the government no longer supports the company by subsidising their interest expense. Therefore, the effective deductible tax rate refers to 0% (See A4).

Gearing Ratios Gearing ratios or financial gearing, as better said in this case, refers to the relative proportions of debt and equity that a company uses to support its operations. Thus, these ratios can be useful to evaluate the risk associated with a business (Accountingtools, n.d). For example, companies with lower debt-to-equity ratios, which will be discussed specifically in this chapter, have more equity to rely upon when financing is needed during economic recessions or even strategical miscalculations. However, the judgement about gearing ratios depends always on the industry and the competitors in the market, since not every industry requires the same level of capital intensity. Capital structure Analysis In references to the capital structure, a company´s target should always be the perfect balance between debt and equity that a company can have in order to minimize the cost of capital and maximize the market value of the corporation. However, it is well known that the oil and gas industry is an extremely capital-intensive market where high level of debt can put a strain on a company´s credit rating (Dumont, 2017). In other words, investors should keep an eye on the debt levels on a company´s balance sheets. Therefore, this chapter is focusing on the debt- to-equity ratio and the interest-coverage ratio, which will be compared with an Australian

competitor. With a better knowledge of these ratios, it will be easier to analyse these energy stocks in reference to the capital structure theory. Debt-to-equity Ratio In detail, the debt-to-equity ratio is a financial ratio indicating the relative proportion of the market value of debt and equity. In Santos´s case, the company is financed by 47% with debt and by 53% with equity in 2016 (See WACC Calculation). Hence, the company´s debt-to- equity ratio should be slightly below one (1). Whereas, if the ratio surpasses the proportion of one (1), the company is being financed rather by creditors than from its own financial sources. For that reason, lenders and investors usually prefer low debt-to-equity ratios because their interests are better protected in the event of a business decline. (Investopedia, n.d.). The formula is given below:

Debt-to-equity ratio = ????? ????????? ?????? Given the data from Bloomberg, Santos´s debt-to-equity ratio between 2014 and 2016, is calculated as follows: 2014 (See A2) 2015 (See A1) 2016 (See A0) Total Debt (USD in millions) 6,737.80 5,398.00 5,239.00 Total Equity (USD in millions) 6,626.70 4,738.20 5,896.40 Gearing 1.016 1.139 0.888

In 2016, this means that for every dollar Santos owns by the shareholders, it owns 0.89 US Dollar to creditors, which is an improvement to the years before. From 2014 to 2015, the company owned more debt than equity which is a dangerous development that reduces the trust of its shareholders, leading to a decreasing market value. However, debt is not inherently bad. Using leverage can increase shareholder returns, as the cost of debt is lower than the cost of equity (Investopedia, n.d.). But in this case, raising more credit may either lead to more discouragement of more investors or makes the company even more vulnerable to economic interest rate hikes as well as further fluctuations in the oil market (Dumont, 2017). Nevertheless, it is only possible to evaluate Santos´s calculations well by comparing them to other competitors. Therefore, Caltex Australia Ltd (following Caltex) will be taken into consideration. Given the data from Bloomberg, Caltex´s debt-to-equity ratio between 2014 and 2016, is calculated as follows: 2014 (See A10) 2015 (See A9) 2016 (See A8) Total Debt (USD in millions) 692.30 695.30 698.40 Total Equity (USD in millions) 9,236.70 10,179.00 7,944.30 Gearing 0.075 0.068 0.087

By comparison, Caltex owns for every dollar by its shareholders only 0.09 US Dollar to creditors in 2016, which positions the company as appropriately stable against upcoming threats. Obviously, Santos vouches a higher potential risk of default. But in reference to the oil and gas industry, where high level of debt financing is a common practice due to its capital-

intensive structure, low debt-to-equity ratios may also indicate that a company is not taking advantage of the profits that financial leverage may bring. Thus, Caltex could definitely benefit from its Cost of debt “RD” rate, since it is generally cheaper than its counterpart “RE”. It will decrease the proportion of the shareholder´s equity leading to a higher return on its capital that attracts more value and shareholders. However, this will not work for Santos. According to Bloomberg, the company´s credit rating was already at BBB- in 2016 (See A4), which exacerbates further debt financing since creditors demand more return on higher risk. Going one step further, this risk should be investigated more in detail and therefore another essential gearing ratio will be discussed. Interest Coverage Ratio The interest coverage ratio helps to determine how easily a company can pay interests on its outstanding debt (InvestingAnswers, n.d.). Additionally, it reflects the company´s current standing, enabling a quick view of the company’s capability to deal with forthcoming payments. The formula is calculated as below:

Interest Coverages Ratio = ????

??? ???????? ????????

According to Santos´s and Caltex´s annual reports, their interest coverage ratios between 2014 and 2016 are calculated as follows: Santos 2014 (See A5) 2015 (See A5) 2016 (See A5) EBIT (USD in millions) – 1,378.00 – 3,598.00 – 1,485.00 Net Interest Expenses (USD in millions) 97.00 290.00 281.00 Ratio – 14.21 – 12.41 – 5.28

Caltex 2014 (See A11) 2015 (See A11) 2016 (See A11) EBIT (USD in millions) 301.87 784.34 936.34 Net Interest Expenses (USD in millions) 111.37 76.71 72.57 Ratio 2.71 10.22 12.90

In 2016, Santos´s interest-coverage ratio was -5.28 (-12.41 in 2015) indicating that its net interest expenses overweight the company earnings before taxes by around five times (twelve times in 2015). Consequently, Santos was not able to satisfy its creditor payments without resulting to its savings. According to Santos´s consolidated Income Statements, the company has been suffering huge impairments of non-current assets. These impairments were caused by the oversupply and decreasing demand for oil leading to a negative EBIT since 2014. Hence, the dropping oil price affected Santos´s capability to pay its creditors in all three years. Nevertheless, what is relevant is that the company is on the road to recovery, even if its ratio is still negative in 2016. In comparison, Caltex´s ability to cover its net interests was raising constantly from 2.71 in 2014 to 12.90 in 2016, which is because that this company´s revenue consists of marketing petroleum in equal parts to its production. Hence, Caltex was less affected by the dropping oil price. Therefore, and only in consideration to this ratio – as an investor –

Caltex might be the better choice for playing investments safe. However, the investors may still deem Santos´s stocks more reliable since it owns one of the largest exploration and production acreages in Australia and exhibits an extensive infrastructure supplying the domestic markets. Hence, Santos will benefit greater from the current economic recovery and the thirst for oil from the construction industries (Santos Limited, n.d.). Nonetheless, the interpretation of Santos´s interest coverage ratio depends mainly on how much risk the creditor or investor is willing to take. A risk that can also be reflected in the company´s return on invested capital.

Economic Value Added (EDV) As aforementioned, companies operating in the oil & gas industry normally require huge investments due to its capital-intensive structure. The return on this invested capital (ROIC) is an important indicator of a company´s performance and its future returns which may be utilised by investors and creditors to identify whether the company creates value or not. Therefore, the company´s weighted average cost of capital “WACC” – as calculated before – reflects the needed rate of return on any kind of investments appearing in the same risk class as the company (Ross et. al., 2008, p. 369). Combining ROIC and WAAC, an economic value is added for the percentage amount that a company is making for every percentage point over its WACC (Strategiccfo, n.d.). In other words, if the ROIC is greater than the company´s WAAC, then value is created. Otherwise, value is destroyed. The ROIC´s Formula is applied as follows:

ROIC = ?????

???????? ???????

Given the data from Bloomberg, Santos’s and Caltex’s “Economic Value Added” (EVA) is calculated respectively below: Santos 2014 (See A2 & A6) 2015 (See A1 & A6) 2016 (See A0 & A6) ROIC (%) – 8.58 – 21.14 – 11.56 – WAAC (%) 8.10 9.40 10.20 = EVA (%) – 16.68 – 30.54 – 21.76

Caltex 2014 (See A10 & A12) 2015 (See A9 & A12) 2016 (See A8 & A12) ROIC (%) 5.14 23.06 21.06 – WAAC (%) 7.50 8.70 7.40 = EVA (%) – 2.36 14.36 13.66

In both cases, the ROIC indicates huge slopes during the three years, which might be triggered by the fluctuation in the oil market. In Santos´s case, it reveals that, in all three years, the WACC is higher than the ROIC demonstrating that the invested capital is not being used effectively. In other words, for each dollar of investment, the company pays out more than it earns (Goldberg, 2009). Thus, for each US Dollar that Santos invested in 2016, the company paid USD 0.22 on top showing a trend of destroying the invested capital by 21.76%. Furthermore, it can be seen

that Santos´s WACC increases from 8.10% to 10.20% during the three years indicating higher financial costs while its market cap even decreased (See A0-A2). By comparison, Caltex did not suffer financially. Hence, it only lost 2.36% on its investments while Santos lost 16.66% in 2014. At the end of 2016, the gap between both companies widened even further, when Caltex created value of 13.66% (14.36% in 2015) while Santos´s lost further value by 21.76% (-30.54% in 2015) on its investments. Furthermore, in contrast to Santos, Caltex was able to decrease its WACC from 8.70% (2015) to 7.40% (2016), which is a respectable improvement. Summing up, it becomes clear that a company´s profitability may be identified by two factors; WACC and ROIC. Therefore, the succeeding part will discuss how Santos can change these values in order to influence its long-term success.

From Recession to Recovery OIL – after its exceptional rise to record heights of almost USD 150 per barrel, it nosedived into free fall caused by the financial crises in 2008, where it had bottomed out at USD 40 per barrel. The economic recovery then began to send it back to over USD 125 per barrel when it experienced another steep drop in the second half of 2014 (Investopedia, n.d.). Finally, it reached its lowest at USD 30 per barrel in January 2016 (Macrotrends, n.d.). In the end, much of the oil and gas industry has survived especially tough years with weak demand and low prices. It has been difficult to make strategic decisions and plans for the future and only now the industry starts to emerge from its upheaval (Strategyand, n.d.). In Santos´s case, several projects and further investments which did not meet profitability criteria were either cancelled or deferred in order to survive these challenging times. Furthermore, Santos´s high level of debt financing, as was illustrated by the debt-to-equity ratio before, was responsible for the abrupt loss of trust from its shareholders, which led also to a distinct fall in the share price. Now the question is how Santos can find its way back to old strengths. Reducing the WACC As discussed before, Santos´s WACC increased from 8.10% (2014) to 10.20% (2016). Hence, Santos´s EVA is predicted to decline, when its WACC rises continuously. That said, Santos must concentrate either on cutting down its debts or its equity to recover. According to Santos´s annual reports, Santos posted in 2014 a net loss of USD 935 million relating to impairments of certain oil producing assets of USD 2,356 million (See A5). In 2015, the company announced an even higher net loss of USD 2,698 million, also caused by raising impairments of non-current assets, which forced Santos to consider selling some of its major assets to pay down debt (See A5). Considering the company´s net loss of USD 1,047 million in 2016, this could also lead to selling further oil-producing assets to be capable of paying debts (See A5). The problem is, before Santos can even focus on long-term sustainable profitability, short-term financing – without raising more credit – is key to surviving. Thus, a positive Cash Flow is necessary and can be reached by selling assets, factoring or selling parts of the company and renting them back later. Considering that long-term debt is more important for calculating the WACC, Santos must keep an eye on shortening this debt by either cutting it or by stopping further debt investments.

Another way of reducing Santos´s WACC includes the idea of reducing equity portion of the equation by either dropping the number of outstanding shares or by decreasing the share-price – which is not commonly intended by most corporations. Still, it might be smart to reduce the number of outstanding shares since the cost of equity causes higher costs than the cost of debt to lower Santos´s WACC. A third option includes a cost-cutting campaign reducing Santos´s fixed costs and the need of further borrowing, and even if internal cost-cutting is not as effective as stopping huge pipeline projects it lessens the need for more debt. Following this, the dismissal of staff will also bring the operating cost further down. For example, according to Santos´s annual report 2015, a recruitment freeze was announced, and approximately 500 positions were removed from the company. But in general, Santos´s target should be to lower the company´s bottom-line cost to a level that it can even earn profits once the oil price drops below USD 30 per barrel, which would lessen the need of further borrowing in the future and enables more financial flexibility. Increasing the ROIC On the other side, the economy’s recovery brings new customers and full order books, even if the oil price has not found its way back to old heights yet. Still, Santos should be focused on utilizing oil-producing assets to its full capacity by increasing the selling volume, hence the company´s ROIC. If the quantity of orders increases due to the current market growth, the oil price will rise again, and Santos will be able to bear fruits from its contracts. Furthermore, it is even more essential to focus on differentiated capabilities like natural gas to reposition Santos on the market. For example, Santos stated on their Annual Report 2016, that the company entered a contract to supply natural gas to Australia´s biggest alumina producer Alcoa of Australia Limited. The contract starts at the beginning of 2018, which will increase Santos selling volume and therefore the ROIC. That said, in combination with a lower cost structure, Santos will appear more attractive for investors in the future.

Reflection Market or Book Value for Equity Calculating Santos´s WACC raises the question of whether to choose the market or book value of equity. The market value of equity reflects the investor´s opinion of the company adjusted by the stock market. In contrast, book value is the value that is announced in the annual report (Investopedia, n.d.). Furthermore, the market value reflects the current share price that investors are willing to pay regardless of what book value is published. Drawing up this report, I noticed that the WACC should be calculated by using the market value, even if the result represents only a one-day period WACC analysis. But at least, this method reflects the real current standing of Santos. Especially, in the oil & gas industry, the oil price fluctuates all the time and so the company´s market value constantly changes. In order to reinforce my decision of choosing the market value rather than the book value, the following table briefly illustrates why the market value of equity is the better choice.

Given the data from Bloomberg and Santos´s Annual Report 2016, the proportion of the equity´s market and book value are calculated as follows: Equity 2014 (See A2 & A7) 2015 (See A1 & A7) 2016 (See A0 & A7)

Market Value (USD in millions) 6,626.70 4,738.20 5,896.40 Book Value (USD in millions) 7,701.00 7,421.00 7,080.00 P/B Ratio (Price-to-Book Ratio) 0.86 0.64 0.83

All three years indicate that the company´s shares are under-priced. Obviously, the financial market values the company for less than its net worth. In Santos´s case, this is typical because the market has lost confidence in the ability of Santos´s assets to generate future profits and cash flows (Investopedia, n.d.). Hence, the market is more inclined to buy Santos´s shares for less than their stated net worth. In other words, the market does not believe that the Santos is worth the value on its books – reason enough for me to take the market value rather than Santos´s book value for calculating the WACC. Additional, 2015 and 2016 might be the right time to invest in the company considering that Santos will directly benefit from the rising market demand for oil and gas as well as the the recovery of these prices. Beta in CAPM While calculating Santos´s WACC, especially the cost of equity, beta explains the tendency of a security´s return to respond to swings in the market. In other words, it is a measure of how volatile an investment or project is, in comparison to the overall market (Russell, 2014).

To calculate the beta of a security, the covariance between the return of the security and the return of market must be known, as well as the variance of the market returns (Nickolas, 2017). Following, the covariance is divided by the variance. If the result is greater than one, investors can suppose that their investment is more volatile than the considered market. If the beta is less than one, the investment is less volatile than the considered market. However, the result of beta depends on what index is taken into consideration. In Santos´s case, the company belongs to the fifty biggest corporations in Australia, so the overall market index was applied. Theoretically, Santos´s beta of 1.82 indicates that the company´s share price is 82% more volatile than the overall market index (See A7).

Risk-free rate of return In theory, the risk-free rate is the minimum return an investor can expect for any investment that does not incur risk over a specified period of time (Investopedia, n.d.). However, there is no such investment that does not include risk, since even the safest investment carries some form of risk. Usually, the risk-free rate is retrieved from government bonds as they are regarded as risk-free. This is because, theoretically, a government cannot run out of money since it can create more when necessary. According to Bloomberg, the risk-free rate that has been applied for this report reflects the 10-year government bond rate (Finance&Career, n.d.). This is also because 10-year government bond rates are more available than 30-year rates which makes it easier to find information about them.

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Appendices

Appendix – A0 – Santos Limited – WACC 2016 (Bloomberg, n.d.)

Appendix – A1 – Santos Limited – WACC 2015 (Bloomberg, n.d.)

Appendix – A2 – Santos Limited – WACC 2014 (Bloomberg, n.d.)

Appendix – A3 – Santos Limited – Cost of Equity (Bloomberg, n.d.)

Appendix – A4 – Santos Limited – Cost of Debt (Bloomberg, n.d.)

Appendix – A5 – Santos Limited – Financial Statements (Annual Reports, n.d.)

Net Finance costs

Appendix – A6 – Santos Limited – WACC & ROIC (Bloomberg, n.d.)

Appendix – A7 – Santos Limited – Balance Sheet (Financial Report 2016)

Appendix – A8 –Caltex Australia Limited – WACC 2016 (Bloomberg, n.d.)

Appendix – A9 –Caltex Australia Limited – WACC 2016 (Bloomberg, n.d.)

Appendix – A10 –Caltex Australia Limited – WACC 2016 (Bloomberg, n.d.)

Appendix – A11 – Caltex Australia Limited – Fin. State. (Annual Reports, n.d.)

Appendix – A12 –Caltex Australia Ltd – WACC & ROIC (Bloomberg, n.d.)

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