With money tight at Breitburn Energy Partners LP (NASDAQ: BBEP), the company got a much needed $1 billion relief package March 30 from investment firm EIG Global Energy Partners.

In a private equity placement and other moves, Breitburn generated net proceeds of $938 million.

Hal Washburn, Breitburn CEO, said the transaction provides access to pro forma liquidity and the ability to opportunistically pursue strategic acquisitions in the current depressed commodity price environment.

Breitburn is an MLP focused on production, development and acquisition of oil and gas properties in the U.S. In November, the company closed on the acquisitions of QR Energy and strategic bolt-on acreage in the Permian Basin for $2.7 billion, including assumed debt.

Net proceeds from EIG and other parties will partially repay Breitburn’s borrowings, reducing debt to $1.24 billion. At the end of February, the company had far less wiggle room, with about $2.2 billion on a credit facility of $2.5 billion.

The company said it is amending its credit facility to allow for the issuance of the senior notes and to establish a revised borrowing base of $1.8 billion through April 2016. The MLP also said it is reducing its unit distributions to $0.50 from $1.

Under the revised credit facility, Breitburn has freed up about 31% of its balance sheet liquidity from roughly 12%.

“Breitburn took the necessary steps to improve its balance sheet and financial liquidity by issuing preferred equity, terming out debt, and, for the second time in three months, cutting its distribution,” said Kevin Smith, senior vice president, Raymond James and Associates. “These maneuvers allowed the company to avoid a potential liquidity crisis, as its borrowing base was revised meaningfully lower.”

Smith said the company could possibly have eliminated its distribution in 2015 but it has squelched those fears. Nonetheless, based on strip pricing the partnership’s ratio of debt to EBITDA has increased to more than five times in 2016, likely resulting in additional equity financing to repay debt over the next 12 months, Smith said.

After its distribution cut, Breitburn is yielding 8.5% at a premium to its peer group average of 15%.

Breitburn obtained the $938 million proceeds in additional financing through the private placement of $350 million convertible preferred equity units at a price of $7.50 per unit, a 27% premium to the common share price. It also paid a distribution of 8%, as well as $650 million in senior notes at a rate of 9.25%.

Breitburn will save more than $50 million annually following its distribution cut and offerings. The distribution cut generates an additional $13 million per quarter in quarterly cash flow, after netting out incremental increases in financing costs, Smith said.

“Based on the reduced distribution and the minimal capital budget, we forecast Breitburn will generate roughly $130 million in free cash flow after deducting for the distribution payment in 2015,” Smith said.

The company expects to use the net proceeds from the private offerings of about $938 million to repay borrowings under its credit facility, resulting in net borrowings, at closing, of about $1.24 billion.

In conjunction with the private offerings, Breitburn is amending its credit facility to allow for the issuance of the senior notes and to establish a revised borrowing base of $1.8 billion through April 2016, subject to limited exceptions.

Sunil Sibal, senior analyst, Global Hunter Securities, said the deal adds $500 million in liquidity and takes pressure off the company’s borrowing base.

However, the cost is that the company now must pay EIG its due.

“We estimate that the deal will be dilutive to the partnership's distributable cash flow and likely to cap upside potential unless the new liquidity helps the partnership pursue additional accretive projects,” Sibal said.