T. Boone Pickens, dressed in an army-green hunting jacket with fluorescent orange patches, raises a shotgun to his shoulder. A pair of bright-red clay pigeons shoot skyward and Pickens blasts one, exploding it into a million pieces. The preeminent corporate raider and oilman is warming up with guests before they head out for the morning's quail hunt.

After shooting, Pickens, hiking along a stone path at his Texas panhandle ranch, is literally walking on his next fortune--that is, if he turns out to be right, as he has so often been in his life. "The hydrocarbon era is ending," the 78-year-old tycoon says. The hottest commodity of the next century? Water. Pickens not only owns the abundant groundwater under him, but he controls the rights to 320,000 acre-feet of it in the area.Water may be his latest venture, but Pickens's enormous (and growing) fortune comes mostly from energy. In 2005 BP Capital--his private investment firm, which invests billions of dollars in alternative energy, energy-related companies and oil, natural-gas and petroleum product futures--did so well, claims Pickens, that his staff of 25, including 10 traders and analysts, split $50 million in bonuses. According to Forbes magazine, Pickens's personal worth has reached $2.7 billion.Pickens has been a business legend since the 1980s, when he became notorious as a corporate raider. Fortune called him "the most hated man in corporate America" during the period when his former company Mesa Petroleum made hostile takeover bids for Gulf Oil, Phillips Petroleum, Unocal and other companies. His efforts often turned his quarry around and in the process made Pickens rich.A Republican, Pickens twice explored running for governor of Texas. In the most recent presidential election he gave more than $5 million to conservative groups including the one behind the infamous Swift-boat ads against John Kerry. Pickens has recently emerged as a leading philanthropist, ranking fifth in the nation in 2005 in individual generosity, according to The Chronicle of Philanthropy. He made one of the largest individual donations to Hurricane Katrina relief.Pickens is from Holdenville, Oklahoma, and his father gambled on oil leases. The family moved to Amarillo, Texas, where Boone was a high school basketball star. In 1951 he graduated from college with a degree in geology and went to work for Phillips Petroleum. In 1956, with $2,500, he started Mesa.Thrice divorced, Pickens has five children. In 2005 he married Madeleine Paulson. In November it was reported that Pickens's son Michael, 52, had pleaded guilty to stock fraud and was facing jail time. Though in our interview Pickens agreed to generally discuss his relationships with his children, he declined to comment about the incident.With gasoline prices hovering around $3 a gallon and oil passing $50 a barrel--which Pickens predicted when most analysts said it was improbable--we sent Contributing Editor David Sheff to meet with the tycoon. Sheff reports, "The interview took place in Pickens's Dallas office, on his jet and at Mesa Vista Ranch. He gave a tour of the place, which includes seven miles of lakes and streams he has dug, a pair of mansions (one incorporates a hunting lodge), two gyms and roaming deer, quail, elk, turkeys and antelope. During construction, Pickens didn't like seeing a road from a porch so he diverted it with a $1 million bridge, yet as we left each room he was preoccupied with turning out the lights."A fitness nut--he often travels with a personal trainer--Pickens, though silver haired, looks a decade or two younger than his years and maintains a schedule that would exhaust most teenagers. Throughout the interview he frequently checked a nearby computer monitor flashing with his company's equity and commodities portfolio."

Playboy: Overall, how are you doing this year?

T. Boone Pickens: [Checking the computer screen] The equity fund is up 24.23 percent. We have made $243 million. The commodity fund is up 124.97 percent. That's up $492 million. Of funds of more than $500 million we're probably number one in the United States in the hedge-fund business. We've been in business for more than five years, and we're up 687 percent.

Playboy: Do you invest only in energy?

T. Boone Pickens: We're 100 percent energy. Our commodities are all oil, gasoline, natural gas and heating oil. The equities are all listed high- and mid-cap energy companies. Energy is what we know. We're about five feet wide and 50 feet deep.

Playboy: Are you currently bullish on oil?

Pickens: Uh-huh. We have capped out on the oil supply. Meanwhile the market continues to grow. If the market grows, the price goes up. I'm not an economist, but I can understand that much.

Playboy: But are we capped out? What about untapped reserves?

Pickens: What untapped reserves? We're currently getting 85 million barrels of oil a day worldwide and using it all. We won't be getting more.

Playboy: Are you saying there are no new sources of oil?

Pickens: You'll find more oil, but you'll also have declines in older fields. Eighty-five million barrels is about it.

Playboy: Where is the price of oil going?

Pickens: I don't think we'll ever see $50-a-barrel oil again.

Playboy: How high will it go?