In talks with executives from nine exploration and production (E&P) companies, analysts at Friedman, Billings, Ramsey & Co. Inc. found that the drop in commodity prices is “being taken in stride but caution abounds.”

While none of the companies the analysts spoke with recently showed any immediate plans for meaningful cuts to drilling activity, it was clear that, at least for some companies, futures gas prices below $6 for 2007 and 2008 would be cause for action, the analysts wrote in a note pulished last week. “Also, the likes of CRK [Comstock Resources] management felt that the current $4 spot gas price through the end of the year could lead to a rethinking of next year’s capital budget.”

While the industry’s fears of another hurricane season like last year’s have not been realized, the worry now is that Old Man Winter won’t show up either. If that’s the case then “next year’s $7.71/Mcf futures gas price will be materially at risk,” FBR analysts said. “Accordingly, we believe that the energy complex in general will remain range-bound until either risk is reduced or valuation indicates that the risk/reward profile for the group has become extremely compelling.” FBR advises investors to consider companies that have a story to tell that goes beyond merely commodity prices.

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