Ann: Investor Presentation, page-127

I think we could be saying the same thing here, just with slightly different assumptions.

My very simplified assumption is WACC is 10% (which I agree seems low, but to simplify I have simply assume kd = ke = 10% assuming PV10 is based on pre tax cash flows). I'll circle back to this point and implied ke later.

Assuming PV10 is based on pre-tax cash flows:

The 10% in PV10 represents the discount rate applied in the NPV valuation. So the 1100 valuation is based on being able to return 10% to all project holders (debt/equity).

The 1100 less 340 = 760 is then equity valuation assuming the cost of equity (ke) of 10%, which I think is your point (as it is too low).

I would agree here, ke of 10% is too low, and therefore if pv10 of equity is 760M, pv15 or pv20 would be discounted.

Assuming PV10 is based on post-tax cash flows:

Now circling back to my original point.
Equity value is 0.2x700/1.4= US $100M
Debt value is $US340M

Pre tax Cost of debt = 10%
After tax cost of debt = 7% (based on 30% corporate tax rate)

10% = 100/440 × ke + 340/440 × 7%
Which gives an implied cost of equity of 20% (which may well still be too low, as beta asset would need to be levered to reflect risk of an asset with a D/E ratio of 340%!)

From my quick research the PV10 is based on after tax cash flows to the project (but am not 100% on this as was not able to find a SEC based reference).

But assuming PV10 is based on post-tax cash flows then the 10% discount rate/WACC ensures that debt holders recover 10% pre-tax (and 7% post tax) and equity holders receive 20% return - that is the value of equity appreciates at 20% ceteris paribus.

All comes down to the million dollar question - what is the appropriate ke ?