Boardwalk Pipeline Partners LP (NYSE: BWP) is making good on its pledge to use cash freed-up by a massive distribution cut in February to fund growth.

The Houston-based MLP announced Sept. 3 plans to buy the Evangeline ethylene pipeline system from Chevron Corp. (NYSE: CVX) for $295 million. The acquisition would add 176 miles of interstate pipeline capable of moving about 2.6 billion pounds of ethylene every year.

After closing, Evangeline would be operated by Boardwalk’s subsidiary Boardwalk Louisiana Midstream LLC (BLM).

“Evangeline is a great strategic fit with BLM, which currently has one of the most extensive ethylene distribution systems in Louisiana,” said BLM’s president, Kevin Miller, in a statement. “The acquisition of Evangeline will further enhance our ability to provide reliable and flexible ethylene transportation and storage services to petrochemical customers in the growing Gulf Coast market.”

Similar to other Boardwalk pipes, the Evangeline line is supported by long-term, fee-based contracts. The system transports ethylene between Port Neches, Texas, and Baton Rouge, La., where it connects with Boardwalk’s ethylene distribution system.

Boardwalk already owns and operates about 14,450 miles of natural gas and liquids pipelines and underground storage caverns with a total working gas capacity of 207 billion cubic feet. Liquids capacity is close to 18 million barrels.

Analysts at Raymond James said in a Sept. 4 note to investors that the Evangeline system should be a strategic fit within Boardwalk's already extensive ethylene distribution system, while further diversifying away from dry natural gas transportation and increasing leverage to wet gas demand by petrochemicals along the Gulf Coast should benefit the bottom line.

Based on the strategic nature of the asset as well as the fee-based composition of cash flows, Raymond James analysts believe the transaction may reflect a 10-to-12-times multiple on EBITDA, or a mid-to-high single digits cash-on-cash return.

But earlier this year, Boardwalk was the source of profound investor anxiety. CEO Stan Horton told analysts on a fourth-quarter earnings call that the company would slash its quarterly distribution a full 81%. The market’s response was swift. By the end of the day, unit prices had plummeted 46%.

Recent months, however, have shown that Boardwalk has rebounded. After unit prices tanked in February from $24 per unit to $13 per unit, they had grown to $19.29 each by mid-day on Sept. 4—a whopping 48% climb.

Takover Target

Boardwalk has made such strides, in fact, that CNBC’s Jim Cramer said in August that the restructured Kinder Morgan Inc. (NYSE: KMI) may see a valuable target in the acquisition of Boardwalk.

“Boardwalk is a $4.75 billion company that owns three interstate natural gas pipelines and 11 underground natural gas storage stations that span some of the country’s top oil and gas plays,” Cramer said. “In other words, the pipeline business is all about location, location, location. And Boardwalk has some of the best locations in the business.”

Like Houston-based pipeline titan Kinder Morgan, Cramer said Boardwalk operates like a giant toll road. It gets 81% of its revenue from fixed-fee contracts, which means even if the client doesn’t ship any natural gas, they’ve reserved the pipeline space so they still need to pay up. Last year, Boardwalk carried about 12% of the U.S. average daily natural gas consumption, Cramer noted.

What’s more, Cramer said Boardwalk made the right decision back in February.

“The main reason I like Boardwalk Pipeline Partners is very simple. This is a growth pipeline stock right now. The company has a number of projects underway, which should lead to higher earnings and larger dividend payouts down the road. By investing in growth, they’ll be able to boost the distribution much more dramatically once these investments start paying off,” he said.

“Boardwalk Pipeline Partners saw so many growth opportunities for itself that it did the unthinkable: It eviscerated its distribution in order to invest in that growth. That was an incredibly bold move.”

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