In the Aug. 18, 2010, issue of The Energy Strategist, A Tale of Two Industries, I recommended buying Penn Virginia GP Holdings LP (NYSE: PVG) as an alternative to Portfolio holding Penn Virginia Partners LP (NYSE: PVR).

My rationale: Penn Virginia GP Holdings is the MLP’s general partner (GP) and offered a yield roughly equivalent to Penn Virginia Resource Partners–and significantly higher distribution growth potential.

This morning Proven Reserves recommendation Penn Virginia Resource Partners announced that it will acquire its GP.

Under the terms of this morning’s merger announcement, investors Penn Virginia GP Holdings will receive 0.98 shares of Penn Virginia Resources for each unit held. Based on Monday’s closing prices, that represents a roughly 9.5 percent premium for the GP.

This is good news regardless of whether you own the limited partner or the general partner. If you bought the GP as I recommended in August, you’re getting an immediate premium from the deal.

In the June 23, 2010, issue, A Full Tank of Oil, I explained incentive distribution rights (IDR)–a fee paid by the LP to the GP. This deal will eliminate the LP’s IDR payments to its GP, lowering the MLP’s cost of capital.

The effect of this deal is much the same as Enterprise Product Partner LP’s (NYSE: EPD) decision to buy its general partner, Enterprise GP Holdings (NYSE: EPE), earlier this month. I discussed that deal at some length in a Sept. 7, 2010, Flash Alert, Buying Opportunity.

If you bought Penn Virginia GP Holdings LP, hold your position; it’s a discounted way to gain exposure to Penn Virginia Resource Partners LP, a top-notch coal and midstream gas services MLP. Penn Virginia Resource Partners LP remains a buy on dips under 24.