What is the Cost of Equity and WACC for each division of Midland?

i) Estemate asset(unlevered) beta for teh E&P and R&M divisions using the comparable firms

Balance Sheet
Assets:				2005	2006
Cash & Cash equivalents				16,707	19,206
Restricted Cash				3,131	3,131
Notes Receivable				18,689	19,681
Inventory				6,338	7,286
Prepaid Expenses				2,218	2,226
Total Current Assets				47,083	51,528
Investments & Advances				30,140	34,205
Net Property, Plant & Equipment				156,630	167,350
Other Assets				10,818	9,294
Total Assets				244,671	262,378
Liabilities & Owners' Equity:
Accounts Payable & Accrued Liabilities				24,562	26,576
Current Portion of Long Term Debt				26,534	20,767
Taxes Payable				5,723	5,462
Total Current Liabilities				56,819	52,805
Long Term Debt				82,414	81,078
Post Retirement Benefit Obligations				6,950	9,473
Accrued Liabilities				4,375	4,839
Deferred Taxes				14,197	14,179
Other Long Term Liabilities				2,423	2,725
Total Shareholders' Equity				77,493	97,280
Total Liabilities & Owners' Equity				244,671	262,378

Business Segments
Exploration & Production:			2004	2005	2006
Operating Revenue			15,931	20,870	22,357
After-Tax Earnings			6,781	13,349	12,556
Capital Expenditures			6,000	7,180	7,940
Depreciation			4,444	4,790	5,525
Total Assets			76,866	125,042	140,100
Refining & Marketing:			2004	2005	2006
Operating Revenue			166,280	206,719	202,971
After-Tax Earnings			2,320	4,382	4,047
Capital Expenditures			1,455	1,550	1,683
Depreciation			1,620	1,591	1,596
Total Assets			60,688	91,629	93,829
Petrochemicals:			2004	2005	2006
Operating Revenue			19,215	21,657	23,189
After-Tax Earnings			1,394	2,162	2,097
Capital Expenditures			305	330	436
Depreciation			578	591	642
Total Assets			19,943	28,000	28,450

Income Statement
Operating Results:				2004	2005	2006
Operating Revenues				201,425	249,246	248,518
Plus: Other Income				1,239	2,817	3,524
Total Revenue & Other Income				202,664	252,062	252,042
Less: Crude Oil & Product Purchases				94,672	125,949	124,131
Less: Production & Manufacturing				15,793	18,237	20,079
Less: Selling, General & Administrative				9,417	9,793	9,706
Less: Depreciation & Depletion				6,642	6,972	7,763
Less: Exploration Expense				747	656	803
Less: Sales Based Taxes				18,539	20,905	20,659
Less: Other Taxes & Duties				27,849	28,257	26,658
Operating Income				29,005	41,294	42,243
Less: Interest Expense				10,568	8,028	11,081
Less: Other Non-Operating Expenses				528	543	715
Income Before Taxes				17,910	32,723	30,447
Less: Taxes				7,414	12,830	11,747
Net Income				10,496	19,893	18,701

Stock and Dividend Data
Stock Prices:			2001	2002	2003	2004	2005	2006
Fourth Quarter			$27.16	$31.29	$32.59	$34.37	$38.32	$44.11
Third Quarter			$27.90	$30.41	$29.42	$35.78	$40.29	$39.75
Second Quarter			$28.33	$27.80	$32.45	$36.98	$37.52	$46.32
First Quarter			$24.13	$26.85	$31.57	$31.28	$34.58	$38.81
Dividends Per Share:
Fourth Quarter			$0.28	$0.29	$0.30	$0.31	$0.34	$0.36
Third Quarter			$0.28	$0.29	$0.29	$0.31	$0.34	$0.36
Second Quarter			$0.28	$0.29	$0.29	$0.31	$0.34	$0.36
First Quarter			$0.28	$0.29	$0.29	$0.31	$0.34	$0.36
Annual Dividend			$1.11	$1.14	$1.17	$1.24	$1.35	$1.46
Selected Financial Data:
Net Income			15,303	11,448	11,848	0	0	0
Shares Outstanding			2,049	2,025	2,035	2,055	2,945	2,951
EPS			7.47	5.65	5.82	0.00	0.00	0.00
Payout Ratio			14.8%	20.2%	19.9%	#DIV/0!	#DIV/0!	23.0%
DPS			1.11	1.14	1.16	1.24	1.35	1.46

Comparable Companies
				Equity	Net		Equity	LTM	LTM
Exploration & Production:				Market Value	Debt	D/E	Beta	Revenue	Earnings
Jackson Energy, Inc.				57,931	6,480	11.2%	0.89	18,512	4,981
Wide Palin Petroleum				46,089	39,375	85.4%	1.21	17,827	8,495
Corsicana Energy Corp.				42,263	6,442	15.2%	1.11	14,505	4,467
Worthington Petroleum				27,591	13,098	47.5%	1.39	12,820	3,506
Average						39.8%	1.15
Refining & Marketing:
Bexar Energy, Inc.				60,356	6,200	10.3%	1.70	160,708	9,560
Kirk Corp.				15,567	3,017	19.4%	0.94	67,751	1,713
White Point Energy				9,204	1,925	20.9%	1.78	31,682	1,402
Petrarch Fuel Services				2,460	(296)	-12.0%	0.24	18,874	112
Arkana Petroleum Corp.				18,363	5,931	32.3%	1.25	49,117	3,353
Beaumont Energy, Inc.				32,662	6,743	20.6%	1.04	59,989	1,467
Dameron Fuel Services				48,796	24,525	50.3%	1.42	58,750	4,646
Average						20.3%	1.20
Midland Energy Resources				134,114	79,508	59.3%	1.25	251,003	18,888