Third, the entire exploration and production sector is shifting gears to the search for liquids as a result of the low natural has pricing -- natural gas liquids and oil most importantly. Yet the horizontal well drilling techniques enabling the search for liquids find a lot of what is referred to as "associated gas" as part of the hunt for oil. According to one Wall Street estimate of the Eagle Ford drilling region -- one of the most popular liquids rich plays right now -- an Eagle Ford well produces 4 times the gas of a conventional Barnett vertical well. In effect, this means it would take a crash in oil prices to slow the production of natural gas. The decline in natural gas prices alone won't do it.

So what does the E&P stock investor do to limit the pain if he has been invested in exploration and production stocks?

The chart above provides a superficial view of the most important data points to review in terms of assessing the risk of prolonged weakness in natural gas prices to your energy stock holdings, and related to the drilling market dynamics discussed above. There are three key data points to assess stock risk at the most basic level in a low natural gas pricing environment.

First, look at the total gas production of an E&P stock first. Even more important, look at the percentage of total production that is natural gas. Sure, "Cabot Oil & Gas" sounds good and balanced as a brand name, but the company is 96% natural gas production.

One important caveat is that Cabot operates in the Marcellus shale, where natural gas production continues to be economic. That's a far cry from the Haynesville, where it costs more to take natural gas out of the ground than a company can sell it for now. The rig count in the Haynesville is down 35% year over year, as of January, and the rig count in the Barnett is down 20% year over year. The rig count decline for both nat gas plays has declined by a similar percentage since year-end 2010, the biggest declines in any U.S. drilling region, with the total U.S. rig count up 13% since the end of 2012.

For TheStreet Ratings take on Cabot Oil & Gas, click here .

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