The slowdown in domestic drilling and energy production has finally gotten the best of compression contractor Archrock Partners (NASDAQ: APLP) and its general partner Archrock (NYSE: AROC).

On May 2, both entities announced a 50% distribution cut after suffering their steepest revenue loss of the downturn during the first quarter.

On a consolidated basis sales declined 7% over that recent three-month stretch. Owners of the increasingly unprofitable aging gas wells have begun to shut them in, while many shale drillers throttled rapid growth plans that also relied on Archrock machinery.

Distributable cash flow dipped 5%, and while that would have been enough to maintain the prior distribution, Archrock could not be sure how much longer that might remain the case, citing “challenging industry conditions and limited visibility on the timing of a recovery.”

The MLP’s debt-to-EBITDA ratio has already crept up to 4.7, closing in on the 5.25 credit agreement limit. So management bit the bullet and lopped the payouts in half, pushing the coverage on the reduced APLP distribution to 2.51x for the first quarter. The excess will be used in the near term to pay down debt, and then possibly for growth opportunities once business starts to recover.

The distribution cut should be sufficient to see the partnership through the remainder of this slump, and it’s unlikely that the payouts will grow again until worst has clearly passed. Further revenue slippage is expected in the months ahead, its extent unclear but likely tolerable given the reduced distributions drain.

APLP units slumped as much as 20% the morning after the announcement but reclaimed the preceding six-month high within days and are now higher still. They yield 8% based on the new annual payout of $1.14 per unit.

In contrast, shares of general partner AROC plunged 37% after it halved its quarterly dividend to 9.5 cents. They are still down 28 since the announcement, yielding a reduced 5.5%. The steeper loss stems from the fact that, in addition to reduced distributions on its limited partner units, Archrock has at least temporarily given up its incentive distribution rights. Its total receipts from the MLP affiliate fell 63% as a result, providing a cushion of just 5% above the reduced dividend.

In addition to curbing leverage amid current uncertainty, reducing the payouts allowed Archrock to avoid equity dilution at recent prices, something management deemed even less desirable. That’s a bet that there’s a lot of value to be recouped in the next industry recovery, and there are reasons for optimism on this score.

The current revenue squeeze on Archrock is a symptom of the now declining domestic energy production, and with demand for crude and gas continuing to grow the output rollover will hasten the market rebalancing. That in turn should push up energy prices and bolster demand for gas compressors.

Although APLP and AROC yield less than they did before the cuts, it’s important to understand that the excess cash flow will be paying down debt to the ultimate benefit of limited partners. And the general partner will retain upside exposure to an industry rebound by means of its incentive distribution rights, which should begin flowing again in a recovery. The resilience of the APLP units in the wake of the bad news is a hopeful near-term sign for AROC.

There could be some more turbulence ahead if the troubled Energy Transfer Equity (NYSE: ETE) merger with Williams (NYSE; WMB) actually closes against all odds. That’s because key Williams affiliate Williams Partners (NYSE: WPZ) accounted for 16% of Archrock’s recent revenue, while Energy Transfer plans to shift at least some of that business to its own in-house compression unit.

But even in the worst-case scenario is likely to leave APLP with twice as much cash flow as it needs to pay its distributions, which in turn suggests that AROC’s incentive distribution rights retain more value than the market is currently willing to credit.

If you wait for management to signal that the coast is clear the current discount will be long gone. The time to buy this dog is while insiders can offer little comfort.

We’re upgrading Aggressive Portfolio pick AROC to a Buy below $9. APLP remains a Hold in the Growth Portfolio.