1) NG supplies and inventory levels are high and they will grow and reach capacity ~Sep/Oct even assuming a large 4% increase in demand. This implies a larger production decline than XCO states like down to 470Mcfe/day reducing revenue and cash-flow.
2) Their pricing assumptions are overly optimistic. Price of NG probably won't rebound from ~2.25 until Nov, when demand finally starts reducing bloated inventory. Once again this will reduce EBITDA and cash-flow
3) Their EBITDA will come dangerously close to covenant limits putting pressure on them to sell assets and raise cash
4) Banks will redetermine them come April and Nov to 1.2 to 1.4
5) Book value will take a $500-$800 bn hit by the end of year when they perform ceiling tests at the end of each quarter and the effect of low NG prices take hold
6) Dividend has to be cut
all thought out responses/counterarguments welcome
The bull argument is that everything you say is well known; and the only issue for XCO is trying to lay low until natural gas prices recover as all the smart money (PE and Hedge funds) thinks it will. Moreover with Wilber Ross and Howard Marks owning over 30% of the company you can be sure they are doing what needs to be done so that XCO can ride out the storm and get safely to the other side.
I, for one, seriously doubt that all the "news" is in the price - i agree with you on the second point, however, but I am not sure you will be in the boat when they get there....also, don't get to excited about Oaktree...they are 75bn and their stake is only .3% of their capital. That would be like you owning 500 shares.