摘要：
The objective of this study was to determine the best way to
quantify the political and regulatory risks in the oil
industry. To analyze if these risks should be included in
the cash flow or quantified in the WACC (weighted average
cost of capital), we used real case studies of exploration
and production (E&P) and refining in Latin America. The oil
industry is a good case study for this type of analysis
because it is more susceptible to government interventions.
Our findings indicate that, in general, changes in oil rules
cause only small increases in the country risk and beta
(therefore in the WACC) but generate great volatility in the
cash flow. Although the political and regulatory risks are
considered market risk (i.e. have the potential to affect
the whole economy) and should be quantified in the WACC
equation, our results indicate that the option to insert
these risks directly in the cash flow produce better results
when compared to adding a spread in the WACC.
