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Knot Offshore Partners LP Earnings Release—Interim Results for the Period Ended June 30, 2024

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KNOT Offshore Partners LP reported its Q2 2024 financial results, generating total revenues of $74.4 million and a net loss of $12.9 million. The loss includes a $16.4 million non-cash impairment for two vessels. Adjusted for this, net income was $3.5 million. Key highlights:

- Adjusted EBITDA of $45.5 million
- Available liquidity of $66.6 million
- Fleet utilization of 98.8%
- Declared quarterly distribution of $0.026 per common unit
- Executed new time charters for multiple vessels
- Acquired Tuva Knutsen and sold Dan Cisne in a vessel swap

The Partnership reports 93% charter coverage for 2024 from fixed contracts, rising to 95% with options. Management sees improving market conditions in Brazil and anticipates offshore oil production growth to outpace shuttle tanker supply in coming years.

KNOT Offshore Partners LP ha riportato i suoi risultati finanziari per il secondo trimestre del 2024, generando un fatturato totale di 74,4 milioni di dollari e una perdita netta di 12,9 milioni di dollari. La perdita include una svalutazione non monetaria di 16,4 milioni di dollari per due navi. Rettificata per questo, l'utile netto è stato di 3,5 milioni di dollari. Punti salienti:

- EBITDA rettificato di 45,5 milioni di dollari
- Liquidità disponibile di 66,6 milioni di dollari
- Utilizzo della flotta del 98,8%
- Distribuzione trimestrale dichiarata di 0,026 dollari per unità comune
- Nuovi contratti di noleggio a lungo termine eseguiti per più navi
- Acquisita Tuva Knutsen e venduta Dan Cisne in uno scambio di navi

La Partnership riporta una copertura del noleggio del 93% per il 2024 da contratti fissi, che sale al 95% con opzioni. La direzione prevede condizioni di mercato in miglioramento in Brasile e si aspetta che la crescita della produzione di petrolio offshore superi l'offerta di navi shuttle nei prossimi anni.

KNOT Offshore Partners LP informó sus resultados financieros del segundo trimestre de 2024, generando ingresos totales de 74,4 millones de dólares y una pérdida neta de 12,9 millones de dólares. La pérdida incluye un deterioro no monetario de 16,4 millones de dólares para dos buques. Ajustando esto, el ingreso neto fue de 3,5 millones de dólares. Puntos destacados:

- EBITDA ajustado de 45,5 millones de dólares
- Liquidez disponible de 66,6 millones de dólares
- Utilización de la flota del 98,8%
- Distribución trimestral declarada de 0,026 dólares por unidad común
- Nuevos contratos de tiempo firmados para múltiples buques
- Adquirido Tuva Knutsen y vendido Dan Cisne en un intercambio de buques

La Sociedad informa una cobertura de alquiler del 93% para 2024 a partir de contratos fijos, subiendo al 95% con opciones. La dirección ve condiciones de mercado mejorando en Brasil y anticipa que el crecimiento de la producción de petróleo en alta mar superará el suministro de buques de shuttle en los próximos años.

KNOT Offshore Partners LP는 2024년 2분기 재무 결과를 보고하며 총 수익이 7440만 달러, 순손실이 1290만 달러라고 발표했습니다. 이 손실에는 두 선박에 대한 비현금 손상으로 1640만 달러가 포함됩니다. 이를 조정하면 순이익은 350만 달러입니다. 주요 하이라이트:

- 조정된 EBITDA는 4550만 달러
- 사용 가능한 유동성은 6660만 달러
- 함대 활용률은 98.8%
- 공통 단위당 분기 배당금 0.026달러 선언
- 여러 선박에 대한 새로운 시간 차터 체결
- Tuva Knutsen을 인수하고 Dan Cisne를 선박 교환으로 판매

파트너십은 2024년 고정 계약에서 93%의 차터 커버리지를 보고하며, 옵션이 포함될 경우 95%로 증가합니다. 경영진은 브라질의 시장 상황이 개선되고 있으며 향후 몇 년 동안 해양 석유 생산의 성장이 셔틀 탱커 공급을 초과할 것으로 예상하고 있습니다.

KNOT Offshore Partners LP a annoncé ses résultats financiers pour le deuxième trimestre de 2024, générant des revenus totaux de 74,4 millions de dollars et une perte nette de 12,9 millions de dollars. La perte comprend une dépréciation non monétaire de 16,4 millions de dollars pour deux navires. Ajusté pour cela, le revenu net était de 3,5 millions de dollars. Points saillants :

- EBITDA ajusté de 45,5 millions de dollars
- Liquidité disponible de 66,6 millions de dollars
- Taux d'utilisation de la flotte de 98,8%
- Distribution trimestrielle déclarée de 0,026 dollar par unité ordinaire
- Exécution de nouveaux contrats de location à long terme pour plusieurs navires
- Acquisition de Tuva Knutsen et vente de Dan Cisne dans le cadre d'un échange de navires

Le partenariat rapporte une couverture de location de 93 % pour 2024 à partir de contrats fixes, passant à 95 % avec des options. La direction observe des conditions de marché s'améliorant au Brésil et anticipe une croissance de la production pétrolière offshore dépassant l'offre de pétroliers de navette dans les années à venir.

KNOT Offshore Partners LP hat seine finanziellen Ergebnisse für das zweite Quartal 2024 bekannt gegeben und dabei Gesamteinnahmen von 74,4 Millionen Dollar und einen Nettverlust von 12,9 Millionen Dollar erzielt. Der Verlust beinhaltet eine nicht zahlungswirksame Abschreibung von 16,4 Millionen Dollar für zwei Schiffe. Bereinigt davon lag der Nettogewinn bei 3,5 Millionen Dollar. Wichtige Höhepunkte:

- Bereinigtes EBITDA von 45,5 Millionen Dollar
- Verfügbare Liquidität von 66,6 Millionen Dollar
- Flottenauslastung von 98,8%
- Erklärte vierteljährliche Ausschüttung von 0,026 Dollar pro Stammaktie
- Neuzeitverträge für mehrere Schiffe abgeschlossen
- Tuva Knutsen erworben und Dan Cisne im Rahmen eines Schiffs tausches verkauft

Die Partnerschaft berichtet von einer Charterdeckung von 93% für 2024 aus festen Verträgen, die auf 95% mit Optionen steigt. Das Management sieht sich verbesserten Marktbedingungen in Brasilien gegenüber und erwartet, dass das Wachstum der Offshore-Ölproduktion das Angebot an Shuttle-Tankern in den kommenden Jahren übersteigen wird.

Positive
  • Generated total revenues of $74.4 million and Adjusted EBITDA of $45.5 million
  • High fleet utilization of 98.8% for scheduled operations
  • 93% charter coverage for 2024 from fixed contracts, rising to 95% with options
  • Executed new time charters for multiple vessels, improving future contract coverage
  • Acquired newer Tuva Knutsen vessel in exchange for older Dan Cisne, improving fleet age profile
  • Management sees improving market conditions in Brazil with tightening shuttle tanker demand
Negative
  • Reported net loss of $12.9 million, including $16.4 million non-cash impairment on two vessels
  • Total interest-bearing obligations of $901.0 million as of June 30, 2024
  • Net exposure to floating interest rate fluctuations of approximately $283.7 million
  • Subdued shuttle tanker demand in the North Sea market
  • Smaller Dan Sabia vessel facing challenges for optimal deployment in Brazilian market

Insights

KNOT Offshore Partners' Q2 2024 results show a mixed financial picture. Total revenues of $74.4 million and Adjusted EBITDA of $45.5 million indicate stable operations. However, the net loss of $12.9 million is concerning, primarily due to a $16.4 million non-cash impairment on two vessels.

Positively, the Partnership has 93% charter coverage for 2024, rising to 95% if options are exercised, providing revenue stability. The acquisition of Tuva Knutsen and sale of Dan Cisne is a strategic move to modernize the fleet without new funding requirements.

The available liquidity of $66.6 million and a well-structured debt repayment schedule provide financial flexibility. However, investors should monitor the $901 million in interest-bearing obligations and the Partnership's ability to refinance or repay these debts, especially given the current high-interest rate environment.

The shuttle tanker market outlook appears positive, particularly in Brazil. Petrobras' high production levels and new FPSO start-ups in pre-salt fields are driving demand. This tightening market could benefit KNOT Offshore Partners, potentially leading to higher charter rates and improved utilization.

The North Sea market remains challenging but shows signs of improvement with the Johan Castberg FPSO deployment. The orderbook of 11 new shuttle tankers over the next three years suggests industry confidence in long-term demand, but it's important to monitor how this supply increase aligns with production growth.

KNOT's position as the largest shuttle tanker operator, combined with its sponsor Knutsen NYK's newbuild orders, positions it well to capitalize on market growth. However, the smaller size of vessels like Dan Sabia in the evolving Brazilian market highlights the need for fleet optimization and potential challenges in redeployment or sale of less optimal assets.

The Partnership's omnibus agreement with Knutsen NYK provides a potential growth pipeline through vessel acquisition options. However, the lack of guarantees and requirement for Conflicts Committee approval introduces uncertainty and potential conflicts of interest that investors should be aware of.

The Tuva Knutsen acquisition includes a 7-year hire rate guarantee from Knutsen NYK, effectively mitigating charter rate risk until 2031. This arrangement demonstrates strong sponsor support but also highlights the interconnected nature of the Partnership's operations with its parent company.

The impairment charges on Dan Cisne and Dan Sabia reflect adherence to US GAAP accounting standards. While this impacts short-term profitability, it represents a prudent approach to asset valuation in changing market conditions. Investors should monitor future impairment risks, especially for older or less optimally sized vessels in the fleet.

ABERDEEN, Scotland--(BUSINESS WIRE)-- Financial Highlights

For the three months ended June 30, 2024 (“Q2 2024”), KNOT Offshore Partners LP (“KNOT Offshore Partners” or the “Partnership”):

  • Generated total revenues of $74.4 million, operating income of $1.3 million and net loss of $12.9 million, after recording a combined $16.4 million non-cash impairment in respect of the vessels Dan Cisne and Dan Sabia. When adjusted to remove the impact of the impairment, operating income for the quarter was $17.7 million and net income was $3.5 million.
  • Generated Adjusted EBITDA1 of $45.5 million.
  • Reported $66.6 million in available liquidity at June 30, 2024, which was comprised of cash and cash equivalents of $56.6 million and undrawn revolving credit facility capacity of $10 million.

Other Partnership Highlights and Events

  • Fleet operated with 98.8% utilization for scheduled operations in Q2 2024.
  • On July 9, 2024, the Partnership declared a quarterly cash distribution of $0.026 per common unit with respect to Q2 2024, which was paid on August 8, 2024, to all common unitholders of record on July 29, 2024. On the same day, the Partnership declared a quarterly cash distribution to holders of Series A Convertible Preferred Units (“Series A Preferred Units”) with respect to Q2 2024 in an aggregate amount of $1.7 million.
  • On April 12, 2024, an agreement was reached with Eni, on terms no less favourable to the Partnership than applied previously, to delay delivery of Ingrid Knutsen until October 2024 for a time charter for a fixed period of two years plus two charterer’s options each of one year. In connection therewith, on July 25, 2024, a time charter due to commence Q4 2024 was executed with Eni in respect of the Torill Knutsen for a fixed period of three years plus three charterer’s options each of one year.
  • On April 17, 2024 a time charter for the Carmen Knutsen was executed with an oil major, to commence Q1 2026 for a fixed period of four years plus a charterer’s option for one additional year.
  • On April 22, 2024, the Ingrid Knutsen began operating under a rolling monthly time charter with our sponsor Knutsen NYK Offshore Tankers AS (“Knutsen NYK”) at a reduced charter rate, to expire upon her delivery to Eni in October 2024.
  • On May 22, 2024, Knutsen Shuttle Tankers 14 AS, the Partnership’s wholly-owned subsidiary which owns the vessel Hilda Knutsen, closed a new $60 million senior secured term loan facility with DNB and Nordea, which is secured by the Hilda Knutsen. This new facility replaced the facility with Mitsubishi UFJ Lease & Finance (Hong Kong) Limited, which also was secured by the Hilda Knutsen and was repaid on the closing date with a balloon payment of $58.5 million.
  • On July 10, 2024, the Partnership received the Dan Sabia back via redelivery, following expiry of its bareboat charter party to Transpetro. The Dan Sabia is being marketed for shuttle tanker operation principally in Brazil and remains available also for charter to Knutsen NYK (subject to negotiation and approvals) and short-term conventional tanker contracts.
  • On August 15, 2024, repair work on the Torill Knutsen was completed following the breakage of a generator rotor in January 2024. The Torill Knutsen remained able to serve a limited range of client facilities, and the Partnership expects to be compensated by insurance for the extent to which, as a consequence of this breakage, the Torill Knutsen’s earnings have fallen short of a contractual hire rate, commencing 14 days after the date of the breakage. The Partnership also expects that the repair cost will be covered by insurance, in excess of a deductible of $150,000.
  • On August 22, 2024, the Partnership agreed with Shell to extend by 1 year the charters for Tordis Knutsen and Lena Knutsen and to provide Shell with options to extend each of these charters by up to 3 periods of 1 year each. Thus, the fixed charter period for each charter will extend until 2028 and the option periods will extend until 2031.
  • On September 3, 2024, the Partnership’s wholly owned subsidiary, KNOT Shuttle Tankers AS (“KST”), acquired KNOT Shuttle Tankers 31 AS, the company that owns the shuttle tanker Tuva Knutsen, from Knutsen NYK (the “Tuva Knutsen Acquisition”). Simultaneously, KST sold KNOT Shuttle Tankers 20 AS, the company that owns the shuttle tanker Dan Cisne, to Knutsen NYK (the “Dan Cisne Sale”). The purchase price for the Tuva Knutsen Acquisition was $97.5 million less $69.0 million of outstanding debt plus $0.4 million of capitalized fees related to the credit facility secured by the Tuva Knutsen. The sale price for the Dan Cisne Sale was $30 million and there was no related debt. The combination of the Tuva Knutsen Acquisition and the Dan Cisne Sale was settled by a net cash payment from Knutsen NYK to KST of $1.1 million (relating to the difference between the prices of the respective transactions). Customary adjustments relating to working capital and an associated interest rate swap will also be made following the closing.

The Tuva Knutsen is operating in Brazil on a charter contract with TotalEnergies, for which the current fixed period expires in February 2026, and for which the charterer holds options for a further 10 years. As part of the Tuva Knutsen Acquisition, Knutsen NYK has agreed that if at any time during the seven years following the closing date of the Tuva Knutsen Acquisition the Tuva Knutsen is not receiving from any charterer a rate of hire that is equal to or greater than the rate of hire then in effect and payable under the TotalEnergies charter, then Knutsen NYK shall pay the Partnership such rate of hire that would have been in effect and payable under the TotalEnergies charter; provided, however, that in the event that for any period during such seven years the Tuva Knutsen is chartered under a charter other than the TotalEnergies charter and the rate of hire being paid under such charter is lower than the rate of hire that would have been in effect and payable under the TotalEnergies charter during any such period, then Knutsen NYK shall pay the Partnership the difference between the rate of hire that would have been in effect and payable under the TotalEnergies charter during such period and the rate of hire that is then in effect and payable under such other charter. Thus, Knutsen NYK has effectively guaranteed the hire rate for the Tuva Knutsen until September 3, 2031 on the same basis as if TotalEnergies had exercised its options through such date.

 

1 EBITDA and Adjusted EBITDA are non-GAAP financial measures used by management and external users of the Partnership’s financial statements. Please see Appendix A for definitions of EBITDA and Adjusted EBITDA and a reconciliation to net income, the most directly comparable GAAP financial measure.

Derek Lowe, Chief Executive Officer and Chief Financial Officer of KNOT Offshore Partners LP, stated, “We are pleased to report another strong performance in Q2 2024, marked by safe operation at over 98% fleet utilization, consistent revenue and operating income generation, and material progress in securing additional charter coverage for our fleet.

"Including the swap of the Dan Cisne for the Tuva Knutsen and those contracts signed since June 30, 2024, we now have 93% of charter coverage for the whole of 2024 from fixed contracts, which rises to 95% if charterers’ options are exercised. Having executed a number of new contracts this year, we have established good momentum in a strengthening market and remain focused on filling the remaining gaps in our charter portfolio.

"In Brazil, the main offshore oil market where we operate, the outlook is continuing to improve, with robust demand and increasing charter rates. Driven by Petrobras’ continued high production levels and FPSO start-ups in the pre-salt fields that rely upon shuttle tankers, we believe the world’s biggest shuttle tanker market is tightening materially. Our secondary geography, in the North Sea, is taking longer to re-balance, but we welcome the recent news of the long-anticipated Johan Castberg FPSO having recently set sail for the Barents Sea, where it is scheduled to begin production later this year.

"We are aware that Knutsen NYK has ordered three new shuttle tankers to be chartered to Petrobras with delivery over 2026-2027; and we note reports of another operator ordering three new shuttle tankers, with delivery by early 2027. We anticipate that all these new orders are backed by charters to clients in Brazil, and see this as a sign of confidence in the medium-to-long term demand for the global shuttle tanker fleet. These new orders bring anticipated deliveries to a total of eleven, spread over the coming three years. We continue to believe that growth of offshore oil production in shuttle tanker-serviced fields across both Brazil and the North Sea is on track to outpace shuttle tanker supply growth in the coming years, particularly as increasing numbers of shuttle tankers reach or exceed typical retirement age.

As the largest owner and operator of shuttle tankers (together with our sponsor, Knutsen NYK), we believe we are well positioned to benefit from such an improving charter market. We are pleased to have agreed the swap of the Dan Cisne for the Tuva Knutsen, which provides growth for the fleet without a requirement for new funding, while also increasing our pipeline of long-term contracts, reducing our average fleet age, and concentrating our fleet in the most in-demand shuttle tanker class. We remain focused on generating certainty and stability of cashflows from long-term employment with high quality counterparties, and are confident that continued operational performance and execution of our strategy can create unitholder value in the quarters and years ahead.”

Financial Results Overview

Results for Q2 2024 (compared to those for the three months ended March 31, 2024 (“Q1 2024”)) included:

  • Revenues of $74.4 million in Q2 2024 ($76.6 million in Q1 2024), with the decrease due to lower revenues related to spot voyages compared with those performed in Q1 2024.
  • Vessel operating expenses of $27.0 million in Q2 2024 ($25.9 million in Q1 2024), with the increase due to higher vessel service and repair related cost, in addition to an increase in port expenses and IT related costs.
  • Depreciation of $27.7 million in Q2 2024 ($27.7 million in Q1 2024).
  • Impairments in respect of the Dan Cisne and Dan Sabia of $5.8 million and $10.6 million, respectively, were recognized in Q2 2024, while there were no impairments in Q1 2024. In accordance with US GAAP, the Partnership’s fleet is regularly assessed for impairment as events or changes in circumstances may indicate that a vessel’s net carrying value exceeds the net undiscounted cash flows expected to be generated over its remaining useful life, and in such situation the carrying amount of the vessel is reduced to its estimated fair value. This exercise in Q2 2024 resulted in an impairment in respect of these vessels owing to their lack of long-term charters in a context where their smaller size is not optimal for the Brazilian market and affects the outlook for future employment.
  • General and administrative expenses of $1.4 million in Q2 2024 ($1.6 million in Q1 2024).
  • Operating income consequently of $1.3 million in Q2 2024 ($19.7 million in Q1 2024). When adjusted to remove the impact of the impairment, operating income for Q2 2024 was $17.7 million.
  • Interest expense of $16.9 million in Q2 2024 ($17.5 million in Q1 2024) with the decrease due to outstanding debt decreasing and lower interest rates.
  • Realized and unrealized gain on derivative instruments of $1.8 million in Q2 2024 (gain of $5.0 million in Q1 2024), including unrealized loss (i.e. non-cash) elements of $2.2 million in Q2 2024 (gain of $0.9 million in Q1 2024).
  • Net loss consequently of $12.9 million in Q2 2024 (net income of $7.4 million in Q1 2024). When adjusted to remove the impact of the impairment, net income in Q2 2024 was $3.5 million.

By comparison with the three months ended June 30, 2023 (“Q2 2023”), results for Q2 2024 included:

  • an increase of $32.5 million in operating income (to $1.3 million in Q2 2024 from a loss of $31.2 million in Q2 2023), driven primarily by a reduction in the impairments of the Dan Cisne and Dan Sabia of $16.4 million in Q2 2024 compared with impairments of $49.6 million in Q2 2023; and driven also by higher time charter and bareboat revenues partly offset by higher vessel operating expenses;
  • an increase of $4.9 million in finance expense (to finance expense of $14.0 million in Q2 2024 from finance expense of $9.1 million in Q2 2023), due to lower realized and unrealized gain on derivative instruments, partly offset by lower interest expenses.
  • a reduction of $27.5 million in net loss (to a net loss of $12.9 million in Q2 2024 from a net loss of $40.4 million in Q2 2023).

Financing and Liquidity

As of June 30, 2024, the Partnership had $66.6 million in available liquidity, which was comprised of cash and cash equivalents of $56.6 million and $10 million of capacity under one of the revolving credit facilities. The Partnership’s revolving credit facilities mature between August 2025 and November 2025.

The Partnership’s total interest-bearing obligations outstanding as of June 30, 2024 were $901.0 million ($895.4 million net of debt issuance costs). The average margin paid on the Partnership’s outstanding debt during Q2 2024 was approximately 2.26% over SOFR. These obligations are repayable as follows:

 

(U.S. Dollars in thousands)

 

 

Sale &
Leaseback

 

 

Period repayment

 

 

Balloon repayment

 

 

Total

 

Remainder of 2024

 

 

$

7,038

 

 

$

38,587

 

 

$

 

 

$

45,625

 

2025

 

 

 

14,399

 

 

 

76,081

 

 

 

176,583

 

 

 

267,063

 

2026

 

 

 

15,060

 

 

 

59,096

 

 

 

219,521

 

 

 

293,677

 

2027

 

 

 

15,751

 

 

 

30,231

 

 

 

37,500

 

 

 

83,482

 

2028

 

 

 

16,520

 

 

 

13,240

 

 

 

78,824

 

 

 

108,585

 

2029 and thereafter

 

 

 

102,602

 

 

 

 

 

 

 

 

 

102,602

 

Total

 

 

$

171,370

 

 

$

217,235

 

 

$

512,429

 

 

$

901,034

 

 

As of June 30, 2024, the Partnership had entered into various interest rate swap agreements for a total notional amount outstanding of $389.3 million, to hedge against the interest rate risks of its variable rate borrowings. As of June 30, 2024, the Partnership receives interest based on SOFR and pays a weighted average interest rate of 1.82% under its interest rate swap agreements, which have an average maturity of approximately 1.4 years. The Partnership does not apply hedge accounting for derivative instruments, and its financial results are impacted by changes in the market value of such financial instruments.

As of June 30, 2024, the Partnership’s net exposure to floating interest rate fluctuations was approximately $283.7 million based on total interest-bearing contractual obligations of $901.0 million, less the Raquel Knutsen and Torill Knutsen sale and leaseback facilities of $171.4 million, less interest rate swaps of $389.5 million, and less cash and cash equivalents of $56.6 million.

On May 22, 2024, Knutsen Shuttle Tankers 14 AS, the Partnership’s wholly-owned subsidiary which owns the vessel Hilda Knutsen, closed a new $60 million senior secured term loan facility secured by the Hilda Knutsen, which replaced and financed repayment of the existing loan facility secured by the Hilda Knutsen. This new facility carries terms and conditions similar to those in the facility it replaced, including an interest rate per annum equal to SOFR plus a margin of 2.25%.

Assets Owned by Knutsen NYK

Pursuant to the omnibus agreement the Partnership entered into with Knutsen NYK at the time of its initial public offering, the Partnership has the option to acquire from Knutsen NYK any offshore shuttle tankers that Knutsen NYK acquires or owns that are employed under charters for periods of five or more years.

There can be no assurance that the Partnership will acquire any additional vessels from Knutsen NYK. Given the relationship between the Partnership and Knutsen NYK, any such acquisition would be subject to the approval of the Conflicts Committee of the Partnership’s Board of Directors.

Knutsen NYK owns with effect on the date of this release, or has ordered, the following vessels and has entered into the following charters:

1.

In November 2021, Live Knutsen was delivered to Knutsen NYK from the yard in China and commenced on a five-year time charter contract with Galp Sinopec for operation in Brazil. Galp has options to extend the charter for up to a further six years.

 
2.

In June 2022, Daqing Knutsen was delivered to Knutsen NYK from the yard in China and commenced on a five-year time charter contract with PetroChina International (America) Inc for operation in Brazil. The charterer has options to extend the charter for up to a further five years.

 
3.

In July 2022, Frida Knutsen was delivered to Knutsen NYK from the yard in Korea and commenced in December 2022 on a seven-year time charter contact with Eni for operation in North Sea. The charterer has options to extend the charter for up to a further three years.

 
4.

In August 2022, Sindre Knutsen, was delivered to Knutsen NYK from the yard in Korea and commenced in September 2023 on a five-year time charter contract with Eni for operation in the North Sea. The charterer has options to extend the charter for up to a further five years.

 
5.

In May 2022, Knutsen NYK entered into a new ten-year time charter contract with Petrobras for a vessel to be constructed and which will operate in Brazil where the charterer has the option to extend the charter by up to five further years. The vessel will be built in China and is expected to be delivered in late 2024.

 
6.

In November 2022, Knutsen NYK entered into a new fifteen-year time charter contract with Petrobras for a vessel to be constructed and which will operate in Brazil where the charterer has an option to extend the charter by up to five further years. The vessel will be built in China and is expected to be delivered in late 2025.

 
7.

In February 2024, Knutsen NYK entered into a new ten-year time charter contract with Petrobras for each of three vessels to be constructed and which will operate in Brazil, where the charterer has an option to extend each charter by up to five further years. The vessels will be built in China and are expected to be delivered over 2026 - 2027.

Outlook

At June 30, 2024, the Partnership’s fleet of eighteen vessels had an average age of 10.2 years, and the Partnership had charters with an average remaining fixed duration of 2.3 years, with the charterers of the Partnership’s vessels having options to extend their charters by an additional 2.3 years on average. The Partnership had $773 million of remaining contracted forward revenue at June 30, 2024, excluding charterers’ options and excluding contracts agreed or signed after that date. The combined effect of the Tuva Knutsen Acquisition and the Dan Cisne Sale will first be reflected in the equivalent measures for September 30, 2024.

The market for shuttle tankers in Brazil, where thirteen of our vessels operated during Q2 2024, has continued to tighten, driven by a significant pipeline of new production growth over the coming years, a limited newbuild order book, and typical long-term project viability requiring a Brent oil price of only $35 per barrel. While the Dan Sabia stands out among the Partnership’s fleet as being of a smaller size than is optimal in today’s Brazilian market, we remain in discussions with our customers and continue to evaluate all our options for the Dan Sabia, including but not limited to redeployment in the tightening Brazilian market, deployment to the North Sea, charter to Knutsen NYK (subject to negotiation and approvals), short term conventional tanker work and sale.

Shuttle tanker demand in the North Sea has remained subdued, driven by the impact of COVID-19-related project delays. We expect these conditions to persist for several more quarters until new oil production projects that are anticipated come on stream, most notably the long-anticipated Johan Castberg field in the Barents Sea, which is scheduled to come online later this year.

Looking ahead, based on supply and demand factors with significant forward visibility and committed capital from industry participants, we believe that the overall medium and long-term outlook for the shuttle tanker market remains favourable.

In the meantime, the Partnership intends to pursue long-term visibility from its charter contracts, build its liquidity, and position itself to benefit from its market-leading position in an improving shuttle tanker market.

The Partnership’s financial information for the quarter ended June 30, 2024 included in this press release is preliminary and unaudited and is subject to change in connection with the completion of the Partnership’s quarter end close procedures and further financial review. Actual results may differ as a result of the completion of the Partnership’s quarter end closing procedures, review adjustments and other developments that may arise between now and the time such financial information for the quarter ended June 30, 2024 is finalized.

About KNOT Offshore Partners LP

KNOT Offshore Partners LP owns, operates and acquires shuttle tankers primarily under long-term charters in the offshore oil production regions of Brazil and the North Sea.

KNOT Offshore Partners LP is structured as a publicly traded master limited partnership but is classified as a corporation for U.S. federal income tax purposes, and thus issues a Form 1099 to its unitholders, rather than a Form K-1. KNOT Offshore Partners LP’s common units trade on the New York Stock Exchange under the symbol “KNOP”.

The Partnership plans to host a conference call on Wednesday September 4, 2024 at 9:30 AM (Eastern Time) to discuss the results for Q2 2024. All unitholders and interested parties are invited to listen to the live conference call by choosing from the following options:

  • By dialing 1-833-470-1428 from the US, dialing 1-833-950-0062 from Canada or 1-404-975-4839 if outside North America – please join the KNOT Offshore Partners LP call using access code 889208.
  • By accessing the webcast on the Partnership’s website: www.knotoffshorepartners.com.
 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

Three Months Ended

 

Six Months Ended

(U.S. Dollars in thousands)

 

June 30,
2024

 

March 31,
2024

 

June 30,
2023

 

June 30,
2024

 

June 30,
2023

Time charter and bareboat revenues

 

$

73,437

 

 

$

73,362

 

 

$

69,924

 

 

$

146,799

 

 

$

132,857

 

Voyage revenues (1)

 

 

351

 

 

 

2,715

 

 

 

1,585

 

 

 

3,066

 

 

 

8,839

 

Loss of hire insurance recoveries

 

 

78

 

 

 

 

 

 

1,424

 

 

 

78

 

 

 

2,335

 

Other income

 

 

554

 

 

 

555

 

 

 

891

 

 

 

1,109

 

 

 

973

 

Total revenues

 

 

74,420

 

 

 

76,632

 

 

 

73,824

 

 

 

151,052

 

 

 

145,004

 

Vessel operating expenses

 

 

26,952

 

 

 

25,909

 

 

 

25,287

 

 

 

52,861

 

 

 

44,730

 

Voyage expenses and commission (2)

 

 

584

 

 

 

1,635

 

 

 

159

 

 

 

2,219

 

 

 

4,855

 

Depreciation

 

 

27,748

 

 

 

27,742

 

 

 

28,107

 

 

 

55,490

 

 

 

55,836

 

Impairment (3)

 

 

16,384

 

 

 

 

 

 

49,649

 

 

 

16,384

 

 

 

49,649

 

General and administrative expenses

 

 

1,426

 

 

 

1,637

 

 

 

1,838

 

 

 

3,063

 

 

 

3,488

 

Total operating expenses

 

 

73,094

 

 

 

56,923

 

 

 

105,040

 

 

 

130,017

 

 

 

158,558

 

Operating income (loss)

 

 

1,326

 

 

 

19,709

 

 

 

(31,216

)

 

 

21,035

 

 

 

(13,554

)

Finance income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

897

 

 

 

828

 

 

 

861

 

 

 

1,725

 

 

 

1,544

 

Interest expense

 

 

(16,863

)

 

 

(17,465

)

 

 

(18,107

)

 

 

(34,328

)

 

 

(35,476

)

Other finance income/(expense)

 

 

177

 

 

 

(269

)

 

 

(112

)

 

 

(92

)

 

 

(184

)

Realized and unrealized gain (loss) on derivative instruments (4)

 

 

1,797

 

 

 

5,002

 

 

 

8,124

 

 

 

6,799

 

 

 

5,814

 

Net gain (loss) on foreign currency transactions

 

 

28

 

 

 

(226

)

 

 

109

 

 

 

(198

)

 

 

(27

)

Total finance income (expense)

 

 

(13,964

)

 

 

(12,130

)

 

 

(9,125

)

 

 

(26,094

)

 

 

(28,329

)

Income (loss) before income taxes

 

 

(12,638

)

 

 

7,579

 

 

 

(40,341

)

 

 

(5,059

)

 

 

(41,883

)

Income tax benefit (expense)

 

 

(213

)

 

 

(141

)

 

 

(49

)

 

 

(354

)

 

 

196

 

Net income (loss)

 

$

(12,851

)

 

$

7,438

 

 

$

(40,390

)

 

$

(5,413

)

 

$

(41,687

)

Weighted average units outstanding (in thousands of units):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common units

 

 

34,045

 

 

 

34,045

 

 

 

34,045

 

 

 

34,045

 

 

 

34,045

 

Class B units (5)

 

 

252

 

 

 

252

 

 

 

252

 

 

 

252

 

 

 

252

 

General Partner units

 

 

640

 

 

 

640

 

 

 

640

 

 

 

640

 

 

 

640

 

(1) Voyage revenues are revenues unique to spot voyages.

(2) Voyage expenses and commission are expenses unique to spot voyages, including bunker fuel expenses, port fees, cargo loading and unloading expenses, agency fees and commission.

(3) The carrying value of each of the Dan Cisne and the Dan Sabia was written down to its estimated fair value as of June 30, 2023 and 2024.

(4) Realized gain (loss) on derivative instruments relates to amounts the Partnership actually received (paid) to settle derivative instruments, and the unrealized gain (loss) on derivative instruments relates to changes in the fair value of such derivative instruments, as detailed in the table below.

 

 

 

Three Months Ended

 

Six Months Ended

(U.S. Dollars in thousands)

 

June 30,
2024

 

March 31,
2024

 

June 30,
2023

 

June 30,
2024

 

June 30,
2023

Realized gain (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swap contracts

 

$

3,987

 

 

$

4,063

 

$

3,538

 

 

$

8,050

 

 

$

6,543

 

Total realized gain (loss):

 

 

3,987

 

 

 

4,063

 

 

3,538

 

 

 

8,050

 

 

 

6,543

 

Unrealized gain (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swap contracts

 

 

(2,190

)

 

 

939

 

 

4,667

 

 

 

(1,251

)

 

 

(604

)

Foreign exchange forward contracts

 

 

 

 

 

 

 

(81

)

 

 

 

 

 

(125

)

Total unrealized gain (loss):

 

 

(2,190

)

 

 

939

 

 

4,586

 

 

 

(1,251

)

 

 

(729

)

Total realized and unrealized gain (loss) on derivative instruments:

 

$

1,797

 

 

$

5,002

 

$

8,124

 

 

$

6,799

 

 

$

5,814

 

 
(5) On September 7, 2021, the Partnership entered into an exchange agreement with Knutsen NYK, and the Partnership’s general partner whereby Knutsen NYK contributed to the Partnership all of Knutsen NYK’s incentive distribution rights (“IDRs”), in exchange for the issuance by the Partnership to Knutsen NYK of 673,080 common units and 673,080 Class B Units, whereupon the IDRs were cancelled (the “IDR Exchange”). As of June 30, 2024, 420,675 of the Class B Units had been converted to common units.
 

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET

 

 

 

 

(U.S. Dollars in thousands)

At June 30, 2024

At December 2023

ASSETS

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

$

56,619

$

63,921

Amounts due from related parties

 

784

 

348

Inventories

 

3,717

 

3,696

Derivative assets

 

12,593

 

13,019

Other current assets

 

10,698

 

8,795

Total current assets

 

84,411

 

89,779

 

 

 

 

 

Long-term assets:

 

 

 

 

Vessels, net of accumulated depreciation

 

1,421,256

 

1,492,998

Right-of-use assets

 

1,730

 

2,126

Deferred tax assets

 

3,812

 

4,358

Derivative assets

 

6,406

 

7,229

Total Long-term assets

 

1,433,204

 

1,506,711

Total assets

$

1,517,615

$

1,596,490

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Trade accounts payable

$

5,475

$

10,243

Accrued expenses

 

9,717

 

14,775

Current portion of long-term debt

 

89,157

 

98,960

Current lease liabilities

 

1,096

 

982

Income taxes payable

 

25

 

44

Prepaid charter and deferred revenue

 

2,354

 

467

Amount due to related parties

 

3,859

 

2,106

Total current liabilities

 

111,683

 

127,577

 

 

 

 

 

Long-term liabilities:

 

 

 

 

Long-term debt

 

806,214

 

857,829

Lease liabilities

 

634

 

1,144

Deferred tax liabilities

 

121

 

127

Deferred revenues

 

2,102

 

2,336

Total long-term liabilities

 

809,071

 

861,436

Total liabilities

 

920,754

 

989,013

Commitments and contingencies

 

 

 

 

Series A Convertible Preferred Units

 

84,308

 

84,308

Equity:

 

 

 

 

Partners’ capital:

 

 

 

 

Common unitholders

 

499,593

 

510,013

Class B unitholders

 

3,871

 

3,871

General partner interest

 

9,089

 

9,285

Total partners’ capital

 

512,553

 

523,169

Total liabilities and equity

$

1,517,615

$

1,596,490

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS’ CAPITAL

 

 

 

 

Partners’ Capital

 

 

 

 

 

 

 

 

 

(U.S. Dollars in thousands)
Three Months Ended June 30, 2023 and 2024

 

 

Common
Units

 

 

Class B
Units

 

 

General
Partner
Units

 

 

Accumulated
Other
Comprehensive
Income (Loss)

 

 

Total
Partners’
Capital

 

 

Series A
Convertible
Preferred
Units

Consolidated balance at March 31, 2023

 

$

550,095

 

 

$

3,871

 

$

10,039

 

 

$

 

$

564,005

 

 

$

84,308

 

Net income (loss)

 

 

(41,313

)

 

 

 

 

(777

)

 

 

 

 

(42,090

)

 

 

1,700

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash distributions

 

 

(885

)

 

 

 

 

(16

)

 

 

 

 

(901

)

 

 

(1,700

)

Consolidated balance at June 30, 2023

 

$

507,897

 

 

$

3,871

 

$

9,246

 

 

$

 

$

521,014

 

 

$

84,308

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated balance at March 31, 2024

 

$

514,760

 

 

$

3,871

 

$

9,374

 

 

$

 

$

528,005

 

 

$

84,308

 

Net income (loss)

 

 

(14,282

)

 

 

 

 

(269

)

 

 

 

 

(14,551

)

 

 

1,700

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash distributions

 

 

(885

)

 

 

 

 

(16

)

 

 

 

 

(901

)

 

 

(1,700

)

Consolidated balance at June 30, 2024

 

$

499,593

 

 

$

3,871

 

$

9,089

 

 

$

 

$

512,553

 

 

$

84,308

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2023 and 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated balance at December 31, 2022

 

$

553,922

 

 

$

3,871

 

$

10,111

 

 

$

 

$

567,904

 

 

$

84,308

 

Net income (loss)

 

 

(44,255

)

 

 

 

 

(832

)

 

 

 

 

(45,087

)

 

 

3,400

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash distributions

 

 

(1,770

)

 

 

 

 

(33

)

 

 

 

 

(1,803

)

 

 

(3,400

)

Consolidated balance at June 30, 2023

 

$

507,897

 

 

$

3,871

 

$

9,246

 

 

$

 

$

521,014

 

 

$

84,308

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated balance at December 31, 2023

 

$

510,013

 

 

$

3,871

 

$

9,285

 

 

$

 

$

523,169

 

 

$

84,308

 

Net income (loss)

 

 

(8,650

)

 

 

 

 

(163

)

 

 

 

 

(8,813

)

 

 

3,400

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash distributions

 

 

(1,770

)

 

 

 

 

(33

)

 

 

 

 

(1,803

)

 

 

(3,400

)

Consolidated balance at June 30, 2024

 

$

499,593

 

 

$

3,871

 

$

9,089

 

 

$

 

$

512,553

 

 

$

84,308

 

 

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

 

 

 

Six Months Ended June 30,

(U.S. Dollars in thousands)

 

2024

 

2023

OPERATING ACTIVITIES

 

 

 

 

 

 

Net income (loss) (1)

 

$

(5,413

)

 

$

(41,687

)

Adjustments to reconcile net income to cash provided by operating activities:

 

 

 

 

 

 

Depreciation

 

 

55,490

 

 

 

55,836

 

Impairment

 

 

16,384

 

 

 

49,649

 

Amortization of contract intangibles / liabilities

 

 

 

 

 

(583

)

Amortization of deferred revenue

 

 

(234

)

 

 

(234

)

Amortization of deferred debt issuance cost

 

 

1,089

 

 

 

1,355

 

Drydocking expenditure

 

 

(58

)

 

 

(10,701

)

Income tax (benefit)/expense

 

 

354

 

 

 

(196

)

Income taxes paid

 

 

(23

)

 

 

(414

)

Unrealized (gain) loss on derivative instruments

 

 

1,251

 

 

 

729

 

Unrealized (gain) loss on foreign currency transactions

 

 

148

 

 

 

(43

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Decrease (increase) in amounts due from related parties

 

 

(436

)

 

 

(430

)

Decrease (increase) in inventories

 

 

(20

)

 

 

2,663

 

Decrease (increase) in other current assets

 

 

(1,907

)

 

 

6,904

 

Increase (decrease) in trade accounts payable

 

 

(4,636

)

 

 

2,626

 

Increase (decrease) in accrued expenses

 

 

(5,058

)

 

 

3,226

 

Increase (decrease) prepaid charter

 

 

1,887

 

 

 

3,318

 

Increase (decrease) in amounts due to related parties

 

 

1,754

 

 

 

43

 

Net cash provided by operating activities

 

 

60,572

 

 

 

72,061

 

 

 

 

 

 

 

 

INVESTING ACTIVITIES

 

 

 

 

 

 

(Additions) to vessel and equipment

 

 

(75

)

 

 

(2,744

)

Net cash used in investing activities

 

 

(75

)

 

 

(2,744

)

 

 

 

 

 

 

 

FINANCING ACTIVITIES

 

 

 

 

 

 

Proceeds from long-term debt

 

 

60,000

 

 

 

240,000

 

Repayment of long-term debt

 

 

(121,971

)

 

 

(286,078

)

Payment of debt issuance cost

 

 

(536

)

 

 

(2,466

)

Cash distributions

 

 

(5,203

)

 

 

(5,203

)

Net cash used in financing activities

 

 

(67,710

)

 

 

(53,747

)

Effect of exchange rate changes on cash

 

 

(89

)

 

 

(25

)

Net increase (decrease) in cash and cash equivalents

 

 

(7,302

)

 

 

15,545

 

Cash and cash equivalents at the beginning of the period

 

 

63,921

 

 

 

47,579

 

Cash and cash equivalents at the end of the period

 

$

56,619

 

 

$

63,124

 
(1) Included in net income (loss) is interest paid amounting to $33.6 million and $34.0 million for the six months ended June 30, 2024 and 2023, respectively.

APPENDIX A—RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

EBITDA and Adjusted EBITDA

EBITDA is defined as earnings before interest, depreciation, impairments and taxes. Adjusted EBITDA is defined as earnings before interest, depreciation, impairments, taxes and other financial items (including other finance expenses, realized and unrealized gain (loss) on derivative instruments and net gain (loss) on foreign currency transactions). EBITDA is used as a supplemental financial measure by management and external users of financial statements, such as the Partnership’s lenders, to assess its financial and operating performance and compliance with the financial covenants and restrictions contained in its financing agreements. Adjusted EBITDA is used as a supplemental financial measure by management and external users of financial statements, such as investors, to assess the Partnership’s financial and operating performance. The Partnership believes that EBITDA and Adjusted EBITDA assist its management and investors by increasing the comparability of its performance from period to period and against the performance of other companies in its industry that provide EBITDA and Adjusted EBITDA information. This increased comparability is achieved by excluding the potentially disparate effects between periods or companies of interest, other financial items, taxes, impairments and depreciation, as applicable, which items are affected by various and possibly changing financing methods, capital structure and historical cost basis and which items may significantly affect net income between periods. The Partnership believes that including EBITDA and Adjusted EBITDA as financial measures benefits investors in (a) selecting between investing in the Partnership and other investment alternatives and (b) monitoring the Partnership’s ongoing financial and operational strength in assessing whether to continue to hold common units. EBITDA and Adjusted EBITDA are non-GAAP financial measures and should not be considered as alternatives to net income or any other indicator of Partnership performance calculated in accordance with GAAP.

The table below reconciles EBITDA and Adjusted EBITDA to net income, the most directly comparable GAAP measure.

 

 

 

Three Months Ended,

 

Six Months Ended,

(U.S. Dollars in thousands)

 

June 30,
2024
(unaudited)

 

June 30,
2023
(unaudited)

 

June 30,
2024
(unaudited)

 

June 30,
2023
(unaudited)

Net income (loss)

 

$

(12,851

)

 

$

(40,390

)

 

$

(5,413

)

 

$

(41,687

)

Interest income

 

 

(897

)

 

 

(861

)

 

 

(1,725

)

 

 

(1,544

)

Interest expense

 

 

16,863

 

 

 

18,107

 

 

 

34,328

 

 

 

35,476

 

Depreciation

 

 

27,748

 

 

 

28,107

 

 

 

55,490

 

 

 

55,836

 

Impairment

 

 

16,384

 

 

 

49,649

 

 

 

16,384

 

 

 

49,649

 

Income tax expense

 

 

213

 

 

 

49

 

 

 

354

 

 

 

(196

)

EBITDA

 

 

47,460

 

 

 

54,661

 

 

 

99,418

 

 

 

97,534

 

Other financial items (a)

 

 

(2,002

)

 

 

(8,121

)

 

 

(6,509

)

 

 

(5,603

)

Adjusted EBITDA

 

$

45,458

 

 

$

46,540

 

 

$

92,909

 

 

$

91,931

 

 
(a) Other financial items consist of other finance income (expense), realized and unrealized gain (loss) on derivative instruments and net gain (loss) on foreign currency transactions.

FORWARD-LOOKING STATEMENTS

This press release contains certain forward-looking statements concerning future events and KNOT Offshore Partners’ operations, performance and financial condition. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain the words “believe,” “anticipate,” “expect,” “estimate,” “project,” “will be,” “will continue,” “will likely result,” “plan,” “intend” or words or phrases of similar meanings. These statements involve known and unknown risks and are based upon a number of assumptions and estimates that are inherently subject to significant uncertainties and contingencies, many of which are beyond KNOT Offshore Partners’ control. Actual results may differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements include statements with respect to, among other things:

  • market trends in the shuttle tanker or general tanker industries, including hire rates, factors affecting supply and demand, and opportunities for the profitable operations of shuttle tankers and conventional tankers;
  • market trends in the production of oil in the North Sea, Brazil and elsewhere;
  • Knutsen NYK’s and KNOT Offshore Partners’ ability to build shuttle tankers and the timing of the delivery and acceptance of any such vessels by their respective charterers;
  • KNOT Offshore Partners’ ability to purchase vessels from Knutsen NYK in the future;
  • KNOT Offshore Partners’ ability to enter into long-term charters, which KNOT Offshore Partners defines as charters of five years or more, or shorter- term charters or voyage contracts;
  • KNOT Offshore Partners’ ability to refinance its indebtedness on acceptable terms and on a timely basis and to make additional borrowings and to access debt and equity markets;
  • KNOT Offshore Partners’ distribution policy, forecasts of KNOT Offshore Partners’ ability to make distributions on its common units, Class B Units and Series A Preferred Units, the amount of any such distributions and any changes in such distributions;
  • KNOT Offshore Partners’ ability to integrate and realize the expected benefits from acquisitions;
  • impacts of supply chain disruptions and the resulting inflationary environment;
  • KNOT Offshore Partners’ anticipated growth strategies;
  • the effects of a worldwide or regional economic slowdown;
  • turmoil in the global financial markets;
  • fluctuations in currencies, inflation and interest rates;
  • fluctuations in the price of oil;
  • general market conditions, including fluctuations in hire rates and vessel values;
  • changes in KNOT Offshore Partners’ operating expenses, including drydocking and insurance costs and bunker prices;
  • recoveries under KNOT Offshore Partners’ insurance policies;
  • the length and cost of drydocking;
  • KNOT Offshore Partners’ future financial condition or results of operations and future revenues and expenses;
  • the repayment of debt and settling of any interest rate swaps;
  • planned capital expenditures and availability of capital resources to fund capital expenditures;
  • KNOT Offshore Partners’ ability to maintain long-term relationships with major users of shuttle tonnage;
  • KNOT Offshore Partners’ ability to leverage Knutsen NYK’s relationships and reputation in the shipping industry;
  • KNOT Offshore Partners’ ability to maximize the use of its vessels, including the re-deployment or disposition of vessels no longer under charter;
  • the financial condition of KNOT Offshore Partners’ existing or future customers and their ability to fulfill their charter obligations;
  • timely purchases and deliveries of newbuilds;
  • future purchase prices of newbuilds and secondhand vessels;
  • any impairment of the value of KNOT Offshore Partners’ vessels;
  • KNOT Offshore Partners’ ability to compete successfully for future chartering and newbuild opportunities;
  • acceptance of a vessel by its charterer;
  • the impacts of the Russian war with Ukraine, the conflict between Israel and Hamas and the other conflicts in the Middle East;
  • termination dates and extensions of charters;
  • the expected cost of, and KNOT Offshore Partners’ ability to, comply with governmental regulations (including climate change regulations) and maritime self-regulatory organization standards, as well as standard regulations imposed by its charterers applicable to KNOT Offshore Partners’ business;
  • availability of skilled labor, vessel crews and management;
  • the effects of outbreaks of pandemics or contagious diseases, including the impact on KNOT Offshore Partners’ business, cash flows and operations as well as the business and operations of its customers, suppliers and lenders;
  • KNOT Offshore Partners’ general and administrative expenses and its fees and expenses payable under the technical management agreements, the management and administration agreements and the administrative services agreement;
  • the anticipated taxation of KNOT Offshore Partners and distributions to its unitholders;
  • estimated future capital expenditures;
  • Marshall Islands economic substance requirements;
  • KNOT Offshore Partners’ ability to retain key employees;
  • customers’ increasing emphasis on climate, environmental and safety concerns;
  • the impact of any cyberattack;
  • potential liability from any pending or future litigation;
  • potential disruption of shipping routes due to accidents, political events, piracy or acts by terrorists;
  • future sales of KNOT Offshore Partners’ securities in the public market;
  • KNOT Offshore Partners’ business strategy and other plans and objectives for future operations; and
  • other factors listed from time to time in the reports and other documents that KNOT Offshore Partners files with the U.S. Securities and Exchange Commission, including its Annual Report on Form 20-F for the year ended December 31, 2023 and subsequent reports on Form 6-K.

All forward-looking statements included in this release are made only as of the date of this release. New factors emerge from time to time, and it is not possible for KNOT Offshore Partners to predict all of these factors. Further, KNOT Offshore Partners cannot assess the impact of each such factor on its business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward- looking statement. KNOT Offshore Partners does not intend to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in KNOT Offshore Partners’ expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based.

KNOT Offshore Partners LP

Derek Lowe

ir@knotoffshorepartners.com

Source: KNOT Offshore Partners LP

FAQ

What were KNOT Offshore Partners' (KNOP) key financial results for Q2 2024?

KNOT Offshore Partners reported total revenues of $74.4 million, operating income of $1.3 million, and a net loss of $12.9 million for Q2 2024. Adjusted for a $16.4 million non-cash impairment, net income was $3.5 million. The company generated Adjusted EBITDA of $45.5 million.

What was KNOP's fleet utilization rate in Q2 2024?

KNOT Offshore Partners' fleet operated with 98.8% utilization for scheduled operations in Q2 2024.

How much available liquidity did KNOP have as of June 30, 2024?

KNOT Offshore Partners reported $66.6 million in available liquidity as of June 30, 2024, consisting of $56.6 million in cash and cash equivalents and $10 million in undrawn revolving credit facility capacity.

What significant vessel transaction did KNOP complete in September 2024?

On September 3, 2024, KNOP acquired the shuttle tanker Tuva Knutsen from Knutsen NYK and simultaneously sold the Dan Cisne to Knutsen NYK, effectively swapping an older vessel for a newer one.

What is KNOP's charter coverage for 2024?

KNOT Offshore Partners reports 93% charter coverage for the whole of 2024 from fixed contracts, which rises to 95% if charterers' options are exercised.

KNOT OFFSHORE PARTNERS LP

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