As expected, Penn Virginia Resource Partners LP (NYSE: PVR) completed the acquisition of its general partner (GP), Aggressive Portfolio holding Penn Virginia GP Holdings (NYSE: PVG). Investors in the GP received 0.98 units of Penn Virginia Resource Partners for each unit of the GP. Fractional shares were paid out in cash

Units of Penn Virginia Resource Partners are down roughly 10 percent from their recent high, a knee-jerk reaction to the dilution of existing unitholders’ stake in the firm. Such temporary selloffs are common when a master limited partnership (MLP) issues additional equity to fund an acquisition or growth project, though they typically prove short-lived.

That’s because these investments boost distributable cash flow and the potential for growth in the MLP’s quarterly payouts. One of the most consistently profitable strategies is to buy our favorite MLPs when they dip below our buy targets.

In this case, Penn Virginia Resource Partners didn’t issue units to fund expansion, but the acquisition of its GP should boost its cash flow. GPs collect a fee, an incentive distribution right (IDR), from the limited partners they manage. IDRs are typically based on the distributions paid to LP unitholders; as the payout to unitholders rises, the GP’s percentage take of the cash flow also increases. By acquiring its GP, Penn Virginia Resource Partners has eliminated those IDRs, freeing up additional capital to pay out as distributions each quarter.

This deal means higher distributions and faster distribution growth for investors in Penn Virginia Resource Partners.

Penn Virginia Resource Partners isn’t the first limited partnership to acquire its GP. Proven Reserves Portfolio holding Enterprise Product Partners LP (NYSE: EPD) and Magellan Midstream Partners LP (NYSE: MMP) have closed similar deals. GP acquisitions tend to reduce an LP’s cost of capital and accelerate distribution growth.

Penn Virginia Resource Partners also boasts strong fundamentals. The MLP’s coal royalties division has benefited from significant volume growth over the past year, coupled with rising coal prices. That trend should continue: Metallurgical coal prices have climbed because of rising Asian demand and supply disruptions caused by severe floods in Australia.

The MLP’s midstream natural gas business focuses on gathering and processing. The gas division has exposure to commodity prices, but gas processing margins have improved lately and the company reported better-than-expected midstream results in the fourth quarter. Better still, the firm’s massive midstream project in the Marcellus Shale is starting to come onstream. The deal is supported by a long-term contract with Range Resources Corp (NYSE: RRC) and increases Penn-Virginia’s low-risk fee-based revenue base.

Buy Penn Virginia Resources Partners LP under 29.