Ultra Resources Inc. agreed to a seven-year transportation agreement with Rockies Express Pipeline LLC (REX) as part of the settlement of a $303 million breach of contract claim brought by the pipeline company and Tallgrass Energy Partners LP (NYSE: TEP).

The deal calls for west-to-east service of 200,000 dekatherms per day at a rate of $0.37, or about $26.8 million annually. Ultra will also pay REX $150 million within six months of emerging from bankruptcy, according to the agreement, which is on its way to U.S. Bankruptcy Court for approval.

“TEP worked closely with Ultra’s management to resolve REX’s claim and assist in Ultra’s restructuring efforts to emerge from bankruptcy,” David G. Dehaemers Jr., Tallgrass’ president and CEO, said in a statement. “This settlement helps provide clarity to all parties involved.”

Baird Equity Research said in a report that it expects REX to distribute the $150 million to its partners—Tallgrass Energy Partners, 50%; Tallgrass Development LP, 25%; and P66REX LLC, a Phillips 66 (NYSE: PSX) subsidiary, 25%. That would result in a one-time, $75 million cash infusion for Tallgrass in third-quarter 2017.

Baird had some ideas on what to do with the cash.

“A one-time special distribution to TEP unitholders may ward off short sellers for a short period of time (5.9% current short interest of float),” the analysts wrote. “However, we believe a better move for long-term TEP value creation would be to put that cash toward paying down credit facility debt and/or 2017 capex.”

Baird described its feeling toward Tallgrass as “incrementally bullish” following announcement of the settlement. It lauded the company’s management team as solid and demonstrating “excellent execution” to go with its resilient business model.

Joseph Markman can be reached at jmarkman@hartenergy.com and @JHMarkman.