The Rising Influence of Rising Affluence

[DewDiligence]

but my main concern was how to value a CFE? Are they normalizing to the energy value of a CF of NG?

I think you’re asking two separate questions: the first one is about valuation and the second one is about conversion of units between oil and gas. The answer to your conversion question is that one converts between barrels of oil equivalent and cubic feet of NG equivalent using the standard caloric conversion between a unit of oil and a unit of NG. As investors, we rarely if ever need to perform these kinds of conversion calculations unless we are trying to verify numbers in somebody’s report that don’t look kosher.

The answer to your valuation question (How much is a unit of NG produced at some future date worth?) is for us as investors to ascertain. Oil & gas companies do not typically disclose the detailed pricing assumptions that underpin their investment decisions, and XOM is no exception in this regard. It’s a safe bet, however, that XOM thinks the price of US NG is going considerably higher in the next decade or so.