BreitBurn Energy Partners (NASDAQ: BBEP) spent the past couple of months solidifying its balance sheet after making a big oil deal earlier this summer. Today, we find the company putting its balance sheet back to work as it's buying $282 million worth of oil and gas properties in Texas' Permian Basin. Let's take a closer look at the deal and what it means for investors.

The Permian is the place to be
Oil and gas partnerships like BreitBurn Energy Partners have been actively acquiring oil and gas properties in the Permian Basin over the past few years. The legacy oil basin has been producing since the 1920s, but it still has a lot of oil left.

LINN Energy (NASDAQ: LINE) has been especially active in the basin. It's nearing completion of its deal for Berry Petroleum (NYSE: BRY), which would double its position in the Permian. That's in addition to LINN's half billion dollar deal a few months ago for some bold-on properties in the Permian. We have even seen Vanguard Natural Resources (NASDAQ: VNR) acquire assets in the Permian Basin this year.

The reason for these deals is quite simple: The Permian Basin is one of America's premier oil basins. The conventional oil and natural gas properties that are available tend to be very low declining assets that are rich in oil production. That leads to stable, high margin cash flows that these MLPs love to buy.

What's BreitBurn buying?
BreitBurn Energy Partners is picking up daily production of 2,900 barrels of oil equivalent. This production is about 60% oil and is produced from 93 wells. There is, however, the potential for more as BreitBurn is also picking up more than 300 potential drilling locations. The company estimates that there are about 16.6 million barrels of oil equivalent reserves still in the ground giving the company an estimated reserve life index of 15 years. Another way to look at the deal is that BreitBurn is picking up what could amount to more than a billion dollars worth of recoverable oil and gas in the ground, but it's paying just $282 million for those rights. While it will have to spend money to extract that oil, it is picking up substantial recoverable resources.

These oily assets are adjacent to some of the company's current Permian Basin assets. BreitBurn is actually acquiring these assets from a seller that it has dealt with before as this is the third deal the two have completed. This is also important because its enabling the company to add scale in the region, which should enable it to keep its costs low. 

What does the deal mean for BreitBurn investors?
BreitBurn believes this deal will be immediately accretive to its distributable cash flow, which is important for future distribution raises. BreitBurn currently has the strongest distribution coverage ratio of its peer group as its oil rich drilling program has its ratio well above LINN Energy's projected 1.1 times and Vanguard Natural Resources' current 1.09 times ratio.

The deal also gives BreitBurn a number of oil-rich-drilling opportunities that it can use to continue to grow its production organically. BreitBurn has had tremendous success this year adding high-margin oil production through the drill bit. In fact, its oil-rich-drilling program really saved its distribution earlier this year.

Investor takeaway
BreitBurn Energy Partners looks to have picked up another solid oil-rich asset with this latest deal. It's really more of a bolt-on acquisition as it adds to the company's Permian Basin properties. The key to the deal is that it adds an asset with a lot of oil still in place while the deal is expected to be immediately accretive to its distribution, both of which BreitBurn investors want to see anytime the company makes a deal. Bottom line here is this deal should keep the company's solid distribution well oiled, enabling the company to continue to grow its payout to investors in the future.

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Fool contributor Matt DiLallo owns shares of Linn Energy, LLC. The Motley Fool recommends BreitBurn Energy Partners L.P.. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.