PXP was recently sold for $6.9 billion. NFX is currently trading at $3.3 billion.
Here is the comparison (2011 figures):
PXP - NFX
Oil Reserves: 244 million barrels - 263 million
Gas Reserves: 1 tcf - 2.3 tcf
Oil production: 17.8 million barrels - 19.65 million
Gas production: 111.5 bcf - 175.2 bcf
Equity: $3.2 billion - $3.9 billion
Debt: $3.7 billion - $3 billion
Net income: $206 million - $539 million
NFX is currently trading for about 2.2 times cash flow. At the current price, they can retire 30% of the stock if they can put about $1 billion of capital spending on hold for a year. If they do this for 2-3 years and the only outstanding shares are the ones I hold, I can become a billionaire in 3 years.
Not only is every number you point out true, but more importantly, NFX holds valuable shale oil fields in the Bakken, Eagle Ford, Granite Wash, Unita and Cana Woodford. These are the best shale plays in the world.
PXP is largely GOM, which I believe is not as attractive give all the risks and unpredictably of producing oil.
NFX could also sell its Bakken leases or Malaysia fields generate a couple of Billion dollars and buy back half the stock or more.
Some argument as to whether the purchase of PXP was an arm’s length purchase. Still good points though. I can't figure this company out. I am starting to think shale producers have to spend $2 to make $1. It would be interesting to see what would happen to cashflow if they stopped drilling for a year.