The post-November OPEC meeting swoon in oil prices has deflated the market value of many midstream players and darkened the 2015 outlook for three in particular—Breitburn Energy Partners LP, Midcoast Energy Partners LP and Targa Resources Partners LP.

That’s the assessment of Global Hunter Securities following its year-end visit with executives. While many midstream players expressed confidence to GHS analysts that production of crude and NGL would continue to grow, the company’s recently released report reflected concern that weak global demand growth could persist in rattling commodity markets.

“We are moving to the sideline for both [Breitburn] and [Midcoast],” Sunil Sibal, New York-based director and senior MLP/energy infrastructure analyst, wrote in explanation of his downgrades from “accumulate” to “neutral.” “For [Breitburn] we believe that the distribution levels are unsustainable in the current commodity price environment and are modeling a ~40% distribution cut from current levels which we believe will allow the management to work through the weak commodity price cycle. For MEP, our move to the sidelines is driven by the expectation that the management’s distribution growth guidance will likely prove aggressive due to commodity price headwinds.”

While Sibal believes that Targa will meet its 2015 distribution growth guidance of 11% to 13%, his downgrade from “buy” to “accumulate” reflects the possibility of continued weakness in commodity markets, which GHS expects.

“Our models incorporate an average WTI [West Texas Intermediate] and natural gas price of $67 per barrel [/bbl] and $3.76 per thousand cubic feet [/Mcf] for 2015 per our E&P team expectations,” Sibal wrote. “We are modeling an average NGL/WTI crude price ratio of ~40.0% in 2015, which results in a price of $0.65/gal for the composite NGL barrel. For 2016, our estimates incorporate $69.50/bbl WTI, $3.80/Mcf natural gas and $0.69/gal for the composite NGL bbl.”

If that price outlook appears to be bleak, it’s sunshine and rainbows compared to the potential of a trading range between $20/bbl and $50/bbl for crude, as presented by Anatole Kaletsky, chief economist of Hong Kong-based GaveKal Dragonomics, in a Reuters blog.

“Technological and environmental pressures are reducing long-term oil demand and threatening to turn much of the high-cost oil outside the Middle East into a ‘stranded asset’ similar to the earth’s vast unwanted coal reserves,” Kaletsky wrote. “Additional pressures for low oil prices in the long term include the possible lifting of sanctions on Iran and Russia and the ending of civil wars in Iraq and Libya, which between them would release additional oil reserves bigger than Saudi Arabia’s on to the world markets.”

The GHS report also listed MLPs boasting traits that it favors heading into 2015:

  • Higher cash flow contribution from fee-based activities: Enterprise Product Partners LP, Western Gas Partners LP, Enbridge Energy Partners LP;
  • Low direct sensitivity to crude oil price changes in 2015 and 2016: Enterprise, Plains All American Pipeline LP, Enbridge;
  • High distribution coverage: Enterprise, Western Gas; and
  • Exiting 2014 with low leverage: Enterprise, Targa.