The bear stalking the U.S. markets has chewed up oil and gas stocks in December, leaving Wall Street analysts looking for crumbs of hope amid a large drop in crude oil prices and the exploration and production stocks shackled to the commodity.

In the six months through Christmas Eve, the S&P 500 Oil & Gas Exploration & Production Index nosedived right along with crude's nearly 40% decline, losing 34% of its value. Over the same time, the broader S&P 500 Index lost 14%, according to S&P Global Market Intelligence data.

"The last few days of selling pressure in the crude markets has felt less fundamentally driven and more a function of the overall market meltdown as increased equity volatility and growing macro concerns have weighed on a number of asset classes," analysts at energy investment bank Tudor Pickering Holt & Co. said Dec. 26.

The good news, according to Tudor Pickering Holt and others, is that the downturn in crude prices will keep E&P spending under control as drillers build their 2019 spending plans. "The investor push for discipline has truly worked its way into the upstream culture," Tudor Pickering Holt said. "The November and December drop off in completions activity due to 2018 budget exhaustion meant that many upstream producers were already coming into early 2019 at lower activity levels (it's easier to hit the brakes at 25 than at 100)."

Further, when oil prices rise again, the free cash investors want to see should start flowing from E&P companies, several analysts said. "We could finally start seeing the big free cash flow inflection and it would likely come with higher margins," Wolfe Research LLC oil and gas analyst Josh Silverstein told his clients Dec. 23.

For shale gas drillers, the knock-on effect of lower crude prices will be less shale oil drilling with less associated gas coming to the market, keeping natural gas prices stable through 2019, several analysts said. "Structurally, the impact of lower oil prices on the associated gas growth rate (Permian production growth could be 2.0 Bcf/d lower longer term) and commencement of scheduled new LNG exports (expected to grow by YE 2019 to nearly 7.0 Bcf/d, from an average of about 4.0 Bcf/d in 4Q18) will be key themes to watch," B. Riley FBR Inc. oil and gas analyst Rehan Rashid told his clients Dec. 21.

Rashid has a bullish $3.50/Mcf gas price forecast for 2019, saying the lack of gas in storage combined with LNG export growth will keep pressure on the natural gas market. The Henry Hub forward strip averaged $2.98/Mcf as of Dec. 24.

Rashid said crude will stop sinking by the second half of 2019 and stabilize around $50 per barrel. West Texas Intermediate crude settled at $42.53 on Dec. 24. "U.S. supply growth rate of change could slow down meaningfully by 2H19," Rashid told his clients Dec. 21. "As public U.S. shale producers exhibit discipline, U.S. private E&Ps' lack of access to growth capital forces discipline, global demand growth slows down but adherence to announced OPEC cuts stabilizes markets, and Iranian sanctions resume headline status. As such, we assume $50/bbl price average for next year and $55/bbl long term."

"The collapse, while painful, couldn't have come at a better time as operators were in the process of setting spending plans for 2019," Tudor Pickering Holt said. "If this had happened in March or April, it may have taken longer for industry to respond as budgets would have just been approved and announced to the market."