Heavily indebted oil and gas producer BreitBurn Energy Partners L.P. announced Monday that it had paid down $150 million of its debt, sparking its shares to rally.

The Los Angeles company got into trouble after it borrowed money to purchase new oil fields and expand existing ones when oil prices skyrocketed in recent years – only to see prices collapse later amid the recession.

In response, the master limited partnership announced in April it would suspend partnership distributions, the equivalent of dividends, until its debt situation improved. BreitBurn said in its announcement that it has since been able to pay down $150 million of its debt, leaving it with $585 million still drawn on a $732 million credit facility as of Sept. 30.

“As we begin the 2010 planning process, our improved liquidity position will allow us the flexibility to further accelerate capital spending to levels that should enable us to hold production flat and subsequently re-establish distributions when leverage has been reduced to acceptable levels,” Chief Financial Officer Jim Jackson, in a statement.

BreitBurn owns oilfields in Michigan, Wyoming, Florida, Indiana, Kentucky and California.

Share of Breitburn closed up 79 cents, or 7 percent, to close Monday at $11.76. on the Nasdaq.

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