[xtravistx]

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Secondly, when an analyst starts talking about "forward PE", I immediately regard them as a retarted moran. They are putting a ratio on something that hasn't happened yet.

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This isn't always applicable with stocks that are so heavily dependent on commodity prices, especially ones with a defined forward curve such as natural gas. It doesn't make sense to value XTO (or CHK for that matter) on what they did last year (when gas prices were 1/2 to 1/3rd of what they are now). You buy/value stocks based on their future earnings potential, not their past earnings. In this case, the forward curve it the BEST indicator of their future earnings potential. If you don't agree with how natural gas prices are priced in currently in the future, then play the natural gas futures speculative game and don't invest in this stock, but if you believe the market has priced in the future expectations of natural gas prices, then the forward P/E makes sense (even though P/06E CF and EV/06E Cash flow are the main metrics used valuing E&P companies right now other than Firm value/reserves).

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But I can't figure out how much of that $2.2B in investment is required, and how much is discretionary. I'm not sure the company wants me to figure it out, either.


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You aren't even trying to value an E&P company which are different from other companies you might be looking at. Asset intensity is a measure of the % of capex used to maintain FLAT production, and is mentioned by some analysts, and XTO ranks well there. A quick and dirty way to figure out how much they spend on maintenance capex is to take the 3-year avg (or the last year, but less sampling data) all-in F&D costs (how much it costs to find and develop reserves) and multiply this by their production last year to get a mainentance capex cost.