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KNOT Offshore Partners LP Earnings Release—Interim Results for the Period Ended March 31, 2019

May 23, 2019

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

For the three months ended March 31, 2019, KNOT Offshore Partners LP (“KNOT Offshore Partners” or the “Partnership”):

  • Generated total revenues of $70.5 million, operating income of $32.4 million and net income of $12.9 million
  • Generated quarterly Adjusted EBITDA of $54.8 million1
  • Generated quarterly distributable cash flow of $25.7 million1
  • Reported a distribution coverage ratio of 1.432
  • Fleet operated with 99.8% utilization for scheduled operations

Other events:

  • On May 14, 2019, the Partnership obtained approval to extend the maturity of its $25 million unsecured revolving credit facility maturing in August 2019 with the same commercial terms. The refinancing is expected to close in June, 2019.
  • On May 15, 2019, the Partnership paid a cash distribution of $0.52 per common unit with respect to the quarter ended March 31, 2019 to all common unitholders of record on May 2, 2019. On May 15, 2019, the Partnership also paid a cash distribution to the Series A Preferred unitholders with respect to the quarter ended March 31, 2019 in an aggregate amount equal to $1.8 million.

Financial Results Overview

Total revenues were $70.5 million for the three months ended March 31, 2019 (the “first quarter”) compared to $70.9 million for the three months ended December 31, 2018 (the “fourth quarter”). The decrease was mainly related to two less operational earnings days for the fleet in first quarter. The decrease was partly offset by the full earnings for the first quarter for both Ingrid KnutsenandTorill Knutsenas a result of the completion of their scheduled first special survey drydockings during the fourth quarter.

Vessel operating expenses for the first quarter of 2019 were $14.5 million, an increase of $0.3 million from $14.2 million in the fourth quarter of 2018. The increase was mainly due higher operating costs on average for the fleet due to the strengthening of the Norwegian Kroner (NOK) against the U.S Dollar. The increase was partially offset by decreased costs for the Ingrid Knutsen, which finished its scheduled drydocking in the end of the fourth quarter.

General and administrative expenses were $1.3 million for the first quarter of 2019, which is unchanged from the fourth quarter of 2018.

Depreciation was $22.4 million for the first quarter of 2019, a decrease of $0.1 million from $22.5 million in the fourth quarter of 2018. The decrease is mainly due to decreased depreciation for the Ingrid Knutsen and the Torill Knutsen due to drydock additions in the fourth quarter of 2018.

As a result, operating income for the first quarter of 2019 was $32.4 million compared to $33.0 million in the fourth quarter of 2018.

Interest expense for the first quarter of 2019 was $13.7 million, an increase of $0.3 from $13.4 million for the fourth quarter of 2018 due to higher LIBOR on average for all credit facilities.

As a result, net income for the first quarter of 2019 was $12.9 million compared to $8.8 million for the fourth quarter of 2018.

Net income for the first quarter of 2019 decreased by $17.8 million from net income of $30.7 million for the three months ended March 31, 2018 to net income of $12.9 million for the three months ended March 31, 2019. The operating income for the first quarter of 2019 increased by $0.5 million compared to operating income of $31.9 million in the first quarter of 2018, mainly due to increased earnings from the Anna Knutsenbeing included in the Partnership’s results of operations from March 1, 2018. Total finance expense for the first quarter of 2019 increased by $18.4 million compared to finance expense $1.1 million for the first quarter of 2018. The increase was mainly due to increased loss on realized and unrealized loss on derivative instruments and increased interest expense due to additional debt in connection with the acquisitions of the Anna Knutsenand a higher LIBOR on average.

Realized and unrealized loss on derivative instruments was $5.9 million in the first quarter of 2019, compared to a loss of $10.9 million in the fourth quarter of 2018. The unrealized non-cash element of the mark-to-market loss was $6.2 million for the first quarter of 2019 compared to a loss of $11.3 million for the fourth quarter of 2018. Of the unrealized loss for the first quarter of 2019, $7.1 million is related to a mark-to-market loss on interest rate swaps and a gain of $0.9 million is related to foreign exchange contracts.

Distributable cash flow was $25.7 million for the first quarter of 2019 compared to $27.3 million for the fourth quarter of 2018. The decrease in distributable cash flow is mainly due to two less operational earnings days and higher operating expenses on average for the fleet during the first quarter of 2019. After review there was also a small upward adjustment made to the annual estimated maintenance and replacement capital expenditures.

The distribution declared for the first quarter of 2019 was $0.52 per common unit, equivalent to an annualized distribution of $2.08.

Operational review

The Partnership’s vessels operated throughout the first quarter of 2019 with 99.8% utilization for scheduled operations.

Financing and Liquidity

As of March 31, 2019, the Partnership had $71.8 million in available liquidity, which consisted of cash and cash equivalents of $43.1 million and $28.7 million of capacity under its revolving credit facilities. The revolving credit facilities mature in August 2019 and September 2023. The Partnership’s total interest-bearing debt outstanding as of March 31, 2019 was $1,069.0 million ($1,059.6 million net of debt issuance cost). The average margin paid on the Partnership’s outstanding debt during the first quarter of 2019 was approximately 2.1% over LIBOR.

As of March 31, 2019, the Partnership had entered into foreign exchange forward contracts, selling a total notional amount of $25.0 million against the NOK at an average exchange rate of NOK 8.28 per 1.00 U.S. Dollar. These foreign exchange forward contracts are economic hedges for certain vessel operating expenses and general expenses in NOK.

As of March 31, 2019, the Partnership had entered into various interest rate swap agreements for a total notional amount of $552.4 million to hedge against the interest rate risks of its variable rate borrowings. As of March 31, 2019, the Partnership receives interest based on three or six-month LIBOR and pays a weighted average interest rate of 1.86% under its interest rate swap agreements, which have an average maturity of approximately 4.7 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 March 31, 2019, the Partnership’s net exposure to floating interest rate fluctuations on its outstanding debt was approximately $473.5 million based on total interest-bearing debt outstanding of $1,069.0 million, less interest rate swaps of $552.4 million and less cash and cash equivalents of $43.1 million. The Partnership’s outstanding interest-bearing debt of $1,069.0 million as of March 31, 2019 is repayable as follows:

(U.S. Dollars in thousands) Period repayment Balloon repayment
Remainder of 2019 $ 66,203 $ 25,000
2020   85,945   
2021   86,545   70,811
2022   71,210   236,509
2023   55,535   202,185
2024 and thereafter   15,181   153,893
Total $ 380,619 $ 688,398

On May 14, 2019, the Partnership obtained approval to extend the maturity of its $25 million unsecured revolving credit facility maturing in August 2019 with the same commercial terms. The refinancing is expected to close in June 2019.

Distributions

On May 15, 2019, the Partnership paid a cash distribution of $0.52 per common unit with respect to the quarter ended March 31, 2019 to all common unitholders of record on May 2, 2019. On May 15, 2019, the Partnership also paid a cash distribution to the Series A Preferred unitholders with respect to the quarter ended March 31, 2019 in an aggregate amount equal to $1.8 million.

Outlook

There are no dry dockings scheduled for any of the Partnership’s fleet during the remainder of 2019.

As of March 31, 2019, the Partnership’s fleet of sixteen vessels had an average remaining fixed contract duration of 3.4 years. In addition, the charterers of the Partnership’s time charter vessels have options to extend their charters by an additional 4.4 years on average.

In September 2018, Knutsen NYK, the owner of the Partnership’s general partner, entered into new long- term charters with Equinor for two Suezmax DP2 shuttle tanker newbuildings to be constructed by Hyundai Heavy Industries in South Korea with delivery scheduled in the second half of 2020. In December 2018, Knutsen NYK ordered a new Suexmax DP2 shuttle tanker newbuilding to be constructed by Cosco Shipyard in China and to be delivered in early 2021. This shuttle tanker is a replacement vessel for the Knutsen NYK fleet and will be operating in its COA pool if it is not contracted under a long-term charter before delivery. 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.

The Board believes that demand for newbuild offshore shuttle tankers will continue to be driven over time based on the requirement to replace older tonnage in the North Sea and Brazil and further expansion into deep water offshore oil production areas such as in Pre-salt Brazil and the Barents Sea. The Board further believes that significant growth in demand exists and that this will continue for new shuttle tankers as the availability of existing vessels has reduced and modern operational demands have increased. Consequently, there should be opportunities to further grow the Partnership.

About KNOT Offshore Partners LP

KNOT Offshore Partners owns operates and acquires shuttle tankers under long-term charters in the offshore oil production regions of the North Sea and Brazil. KNOT Offshore Partners owns and operates a fleet of sixteen offshore shuttle tankers with an average age of 5.7 years.

KNOT Offshore Partners is structured as a publicly traded master limited partnership. KNOT Offshore Partners’ common units trade on the New York Stock Exchange under the symbol “KNOP.”

The Partnership plans to host a conference call on Friday, May 24, 2019 at noon (Eastern Time) to discuss the results for the first quarter of 2019, and invites all unitholders and interested parties to listen to the live conference call by choosing from the following options:

  • By dialing 1-855-209-8259 or 1-412-542-4105, if outside North America.
  • By accessing the webcast, which will be available for the next seven days on the Partnership’s website: www.knotoffshorepartners.com.

May 23, 2019
KNOT Offshore Partners L.P.
Aberdeen, United Kingdom

Questions should be directed to:
John Costain (+44 7496 170 620)

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KNOT Offshore Partners LP Announces Second Quarter 2019 Cash Distribution

July 16, 2019

ABERDEEN, Scotland--(BUSINESS WIRE)-- KNOT Offshore Partners LP (NYSE:KNOP) (“The Partnership”)

Distribution

The Partnership announced today that its Board of Directors has declared a quarterly cash distribution with respect to the quarter ended June 30, 2019, of $0.52 per unit.

This corresponds to $2.08 per outstanding unit on an annualized basis.

This cash distribution will be paid on August 14, 2019 to all unitholders of record as of the close of business on July 26, 2019.

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KNOT Offshore Partners LP Announces 2019 Annual Meeting

July 16, 2019

ABERDEEN, Scotland--(BUSINESS WIRE)-- KNOT Offshore Partners LP advises that its 2019 Annual Meeting will be held on August 28, 2019. The record date for voting at the Annual Meeting is set to July 26, 2019. The notice, agenda and associated material will be distributed prior to the meeting.

The 2019 Annual Meeting will be held at 2 Queen’s Cross, Aberdeen, Aberdeenshire AB15 4YB, United Kingdom at 12:00 noon UK time.

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KNOT Offshore Partners LP Earnings Release—Interim Results for the Period Ended June 30, 2019

August 28, 2019

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

For the three months ended June 30, 2019, KNOT Offshore Partners LP (“KNOT Offshore Partners” or the “Partnership”):

  • Generated total revenues of $70.9 million, operating income of $31.9 million and net income of $8.2 million
  • Generated Adjusted EBITDA of $54.4 million1
  • Generated distributable cash flow of $26.1 million1
  • Reported a distribution coverage ratio of 1.452
  • Fleet operated with 100% utilization for scheduled operations

Other events:

  • On June 28, 2019, the Partnership extended the maturity of its $25 million unsecured revolving credit facility with NTT Finance Corporation to August 2021.
  • On July 16, 2019, a subsidiary of Royal Dutch Shell (“Shell”) exercised its option to extend the time charter of the Windsor Knutsen by one additional year until October 2020.
  • On August 14, 2019, the Partnership paid a quarterly cash distribution of $0.52 per common unit with respect to the quarter ended June 30, 2019 to all common unitholders of record on July 26, 2019. On August 14, 2019, the Partnership paid a cash distribution to holders of Series A Preferred Units with respect to the quarter ended June 30, 2019 in an aggregate amount equal to $1.8 million.

Financial Results Overview

Total revenues were $70.9 million for the three months ended June 30, 2019 (the “second quarter”) compared to $70.5 million for the three months ended March 31, 2019 (the “first quarter”). The increase was mainly related to one more operational earning day for the fleet in the second quarter of 2019 compared to the first quarter. The increase was partly offset by reduced earnings from the Bodil Knutsendue to its reduced daily rate from May 2019 when the vessel began operating under its new time charter option.

Vessel operating expenses for the second quarter of 2019 were $15.3 million, an increase of $0.8 million from $14.5 million in the first quarter of 2019. The increase was mainly due higher operating costs on average for the fleet due to periodical purchasing and higher operational activities.

General and administrative expenses were $1.3 million for the second quarter of 2019, which is unchanged from the first quarter of 2019.

Depreciation was $22.4 million for the second quarter of 2019, which is unchanged from the first quarter of 2019.

As a result, operating income for the second quarter of 2019 was $31.9 million compared to $32.4 million in the first quarter of 2019.

Interest expense for the second quarter of 2019 was $13.2 million, a decrease of $0.5 from $13.7 million for the first quarter of 2019. The decrease was mainly due to lower LIBOR on average for all credit facilities.

Realized and unrealized loss on derivative instruments was $10.3 million in the second quarter of 2019, compared to $5.9 million in the first quarter of 2019. The unrealized non-cash element of the mark-to-market loss was $10.8 million for the second quarter of 2019 compared to $6.2 million for the first quarter of 2019. Of the unrealized loss for the second quarter of 2019, $11.5 million is related to a mark-to-market loss on interest rate swaps due to a decrease in the US swap rate which was partially offset by a $0.7 million gain related to foreign exchange contracts.

As a result, net income for the second quarter of 2019 was $8.2 million compared to $12.9 million for the first quarter of 2019.

Net income of $8.2 million for the second quarter of 2019 decreased by $13.5 million from net income of $21.7 million for the three months ended June 30, 2018. The operating income of $31.9 million for the second quarter of 2019 decreased by $0.2 million compared to operating income of $32.1 million in the second quarter of 2018, mainly due to loss of hire insurance recoveries for the Carmen Knutsenreceived in the second quarter of 2018. The decrease was partly offset by full earnings from the Brasil Knutsen which had its scheduled first special survey drydocking in the second quarter of 2018. Total finance expense for the second quarter of 2019 increased by $13.3 million compared to finance expense of $10.4 million for the second quarter of 2018. The increase was mainly due to increased unrealized loss on derivative instruments mainly due to a lower US swap rate.

Distributable cash flow was $26.1 million for the second quarter of 2019 compared to $25.7 million for the first quarter of 2019. The increase in distributable cash flow is mainly due to one more operational earnings day.

The distribution declared for the second quarter of 2019 was $0.52 per common unit, equivalent to an annualized distribution of $2.08.

Operational review

The Partnership’s vessels operated throughout the second quarter of 2019 with 100% utilization for scheduled operations.

On December 17, 2018, the Partnership’s subsidiary that owns the Windsor Knutsen and Shell agreed to suspend the vessel’s time charter contract. The suspension period commenced March 4, 2019 and will last between a minimum period of 10 months and a maximum period of 12 months. During the suspension period, the Windsor Knutsen has been operating under a time charter contract with Knutsen Shuttle Tankers Pool AS, on the same terms as the existing time charter contract with Shell.

On July 16, 2019, Shell exercised its option to extend the time charter of the Windsor Knutsen by one additional year until October 2020. Following the exercise of the option, Shell has four one-year options to extend the time charter until October 2024.

Financing and Liquidity

As of June 30, 2019, the Partnership had $71.1 million in available liquidity, which consisted of cash and cash equivalents of $42.4 million and $28.7 million of capacity under its revolving credit facilities. The revolving credit facilities mature in August 2021 and September 2023. The Partnership’s total interest-bearing debt outstanding as of June 30, 2019 was $1,045.7 million ($1,037.0 million net of debt issuance cost). The average margin paid on the Partnership’s outstanding debt during the second quarter of 2019 was approximately 2.1% over LIBOR.

As of June 30, 2019, the Partnership had entered into foreign exchange forward contracts, selling a total notional amount of $20.0 million against the NOK at an average exchange rate of NOK 8.45 per 1.00 U.S. Dollar. These foreign exchange forward contracts are economic hedges for certain vessel operating expenses and general expenses in NOK.

As of June 30, 2019, the Partnership had entered into various interest rate swap agreements for a total notional amount of $571.5 million to hedge against the interest rate risks of its variable rate borrowings. As of June 30, 2019, the Partnership receives interest based on three or six-month LIBOR and pays a weighted average interest rate of 1.88% under its interest rate swap agreements, which have an average maturity of approximately 4.4 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, 2019, the Partnership’s net exposure to floating interest rate fluctuations on its outstanding debt was approximately $431.8 million based on total interest-bearing debt outstanding of $1,045.7 million, less interest rate swaps of $571.5 million and less cash and cash equivalents of $42.4 million. The Partnership’s outstanding interest-bearing debt of $1,045.7 million as of June 30, 2019 is repayable as follows:

(U.S. Dollars in thousands)

Period repayment

 

Balloon repayment

Remainder of 2019

$42,873

 

$ —

 

 

2020

85,945

 

 

 

2021

86,545

 

95,811 

 

2022

71,210

 

236,509

 

 

2023

55,535

 

202,185 

 

2024 and thereafter

15,180

 

153,893

 

 

Total

$357,288

 

$688,398

 

 

On June 28, 2019, the Partnership extended the maturity of its $25 million unsecured revolving credit facility with NTT Finance Corporation. The extended facility matures in August 2021. The commercial terms of the facility are unchanged from the facility entered into in June 2017 with NTT Finance Corporation.

Distributions

On August 14, 2019, the Partnership paid a cash distribution of $0.52 per common unit with respect to the quarter ended June 30, 2019 to all common unitholders of record on July 26, 2019. On August 14, 2019, the Partnership also paid a cash distribution to the Series A Preferred unitholders with respect to the quarter ended June 30, 2019 in an aggregate amount equal to $1.8 million.

Outlook

There are no dry dockings scheduled for any of the Partnership’s vessels during the remainder of 2019.

As of June 30, 2019, the Partnership’s fleet of sixteen vessels had an average remaining fixed contract duration of 3.2 years. In addition, the charterers of the Partnership’s time charter vessels have options to extend their charters by an additional 4.3 years on average.

In September 2018, Knutsen NYK Offshore Tankers AS, the owner of the Partnership’s general partner (“Knutsen NYK”), entered into new long- term charters with Equinor for two Suezmax DP2 shuttle tanker newbuildings to be constructed by Hyundai Heavy Industries in South Korea with delivery scheduled for the second half of 2020. The vessels are expected to operate in Brazil under time charter contracts with a term of 5 and 7 years fixed period with option up to 20 years.

In August 2019, Knutsen NYK was awarded one new long-term charter with a subsidiary of Total S.A.. The new DP2 shuttle tanker will be built by COSCO shipyard in China, with delivery scheduled for early 2021. The vessel is expected to operate in Brazil under a time-charter contract for a maximum 15 year period.

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.

The Board believes that demand for newbuild offshore shuttle tankers will continue to be driven over time based on the requirement to replace older tonnage in the North Sea and Brazil and further expansion into deep water offshore oil production areas such as in Pre-salt Brazil and the Barents Sea. The Board further believes that significant growth in demand exists and that this will continue for new shuttle tankers as the availability of existing vessels has reduced and modern operational demands have increased. Consequently, there should be opportunities to further grow the Partnership.

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The heading of this news release is:

"KNOT Offshore Partners LP Announces Third Quarter 2019 Cash Distribution"

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The heading of this news release is: "KNOT Offshore Partners LP Earnings Release—Interim Results for the Period Ended September 30, 2019"

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The heading of this news release is:"KNOT Offshore Partners LP Announces Fourth Quarter 2019 Cash Distribution"

FYI - another 52 cents per share

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Q4-2019 earnings announced before the market opens 03/12/2020 - conference call noon ET the same day.

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KNOT Offshore Partners LP Announces First Quarter 2020 Cash Distribution and Provides Update on Business Operations

 

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KNOT Offshore Partners LP Announces Extension of Charter of Torill Knutsen and Change to Board

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KNOT Offshore Partners LP Announces First Quarter 2020 Earnings Results Conference Call

The important information in this release is "KNOT Offshore Partners LP (NYSE:KNOP) (“the Partnership”) plans to release its financial results for the First Quarter of 2020 before opening of the market on Thursday, May 28, 2020" 

 

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KNOT Offshore Partners LP: Earnings Release—Interim Results for the Period Ended March 31, 2020

They took a huge unrealized loss on their derivative investments during the quarter. From the earnings release:

"Realized and unrealized loss on derivative instruments was $23.7 million in the first quarter, compared to a gain of $4.2 million in the fourth quarter. The unrealized non-cash element of the mark-to-market loss was $23.9 million for the first quarter of 2020 compared to a gain of $4.9 million for the fourth quarter of 2019. Of the unrealized loss for the first quarter of 2020, $23.0 million is related to a mark-to-market loss on interest rate swaps due to a decrease in the US swap rate and $0.9 million is related to foreign exchange contracts."

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Cushing® Asset Management and Swank Capital Announce Rebalancing of the Cushing® MLP High Income Index

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KNOT Offshore Partners LP Announces 2020 Annual Meeting

ABERDEEN, Scotland--(BUSINESS WIRE)-- KNOT Offshore Partners LP (NYSE:KNOP) (“the Partnership”) advises that its 2020 Annual Meeting will be held on August 28, 2020. The record date for voting at the Annual Meeting is set to July 24, 2020. The notice, agenda and associated material will be distributed prior to the meeting.

The 2020 Annual Meeting will be held at One Elmfield Park, Bromley, BR1 1LU, United Kingdom at 12:00 noon UK time.1

_________________________________

1 Based on any regulations or recommendations by local public health authorities, the Annual Meeting location may be changed, or the Annual Meeting may be held by means of remote communication. We will announce any alternative arrangements for the Annual Meeting by press release in advance of the Annual Meeting.

View source version on businesswire.comhttps://www.businesswire.com/news/home/20200713005514/en/

KNOT Offshore Partners LP
Gary Chapman
Chief Executive Officer and Chief Financial Officer
Email: ir@knotoffshorepartners.com
Tel: +44 1224 618 420
http://knotoffshorepartners.com/

Source: Knot Offshore Partners LP

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KNOT Offshore Partners LP Announces Second Quarter 2020 Cash Distribution

No change in the dividend.

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KNOT Offshore Partners LP Announces Second Quarter 2020 Earnings Results Conference Call

 

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KNOT Offshore Partners LP Announces Second Quarter 2019 Cash Distribution

July 16, 2019

ABERDEEN, Scotland--(BUSINESS WIRE)-- KNOT Offshore Partners LP (NYSE:KNOP) (“The Partnership”)

Distribution

The Partnership announced today that its Board of Directors has declared a quarterly cash distribution with respect to the quarter ended June 30, 2019, of $0.52 per unit.

This corresponds to $2.08 per outstanding unit on an annualized basis.

This cash distribution will be paid on August 14, 2019 to all unitholders of record as of the close of business on July 26, 2019.

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KNOT Offshore Partners LP Announces 2019 Annual Meeting

July 16, 2019

ABERDEEN, Scotland--(BUSINESS WIRE)-- KNOT Offshore Partners LP advises that its 2019 Annual Meeting will be held on August 28, 2019. The record date for voting at the Annual Meeting is set to July 26, 2019. The notice, agenda and associated material will be distributed prior to the meeting.

The 2019 Annual Meeting will be held at 2 Queen’s Cross, Aberdeen, Aberdeenshire AB15 4YB, United Kingdom at 12:00 noon UK time.

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KNOT Offshore Partners LP Earnings Release—Interim Results for the Period Ended June 30, 2019

August 28, 2019

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

For the three months ended June 30, 2019, KNOT Offshore Partners LP (“KNOT Offshore Partners” or the “Partnership”):

  • Generated total revenues of $70.9 million, operating income of $31.9 million and net income of $8.2 million
  • Generated Adjusted EBITDA of $54.4 million1
  • Generated distributable cash flow of $26.1 million1
  • Reported a distribution coverage ratio of 1.452
  • Fleet operated with 100% utilization for scheduled operations

Other events:

  • On June 28, 2019, the Partnership extended the maturity of its $25 million unsecured revolving credit facility with NTT Finance Corporation to August 2021.
  • On July 16, 2019, a subsidiary of Royal Dutch Shell (“Shell”) exercised its option to extend the time charter of the Windsor Knutsen by one additional year until October 2020.
  • On August 14, 2019, the Partnership paid a quarterly cash distribution of $0.52 per common unit with respect to the quarter ended June 30, 2019 to all common unitholders of record on July 26, 2019. On August 14, 2019, the Partnership paid a cash distribution to holders of Series A Preferred Units with respect to the quarter ended June 30, 2019 in an aggregate amount equal to $1.8 million.

Financial Results Overview

Total revenues were $70.9 million for the three months ended June 30, 2019 (the “second quarter”) compared to $70.5 million for the three months ended March 31, 2019 (the “first quarter”). The increase was mainly related to one more operational earning day for the fleet in the second quarter of 2019 compared to the first quarter. The increase was partly offset by reduced earnings from the Bodil Knutsendue to its reduced daily rate from May 2019 when the vessel began operating under its new time charter option.

Vessel operating expenses for the second quarter of 2019 were $15.3 million, an increase of $0.8 million from $14.5 million in the first quarter of 2019. The increase was mainly due higher operating costs on average for the fleet due to periodical purchasing and higher operational activities.

General and administrative expenses were $1.3 million for the second quarter of 2019, which is unchanged from the first quarter of 2019.

Depreciation was $22.4 million for the second quarter of 2019, which is unchanged from the first quarter of 2019.

As a result, operating income for the second quarter of 2019 was $31.9 million compared to $32.4 million in the first quarter of 2019.

Interest expense for the second quarter of 2019 was $13.2 million, a decrease of $0.5 from $13.7 million for the first quarter of 2019. The decrease was mainly due to lower LIBOR on average for all credit facilities.

Realized and unrealized loss on derivative instruments was $10.3 million in the second quarter of 2019, compared to $5.9 million in the first quarter of 2019. The unrealized non-cash element of the mark-to-market loss was $10.8 million for the second quarter of 2019 compared to $6.2 million for the first quarter of 2019. Of the unrealized loss for the second quarter of 2019, $11.5 million is related to a mark-to-market loss on interest rate swaps due to a decrease in the US swap rate which was partially offset by a $0.7 million gain related to foreign exchange contracts.

As a result, net income for the second quarter of 2019 was $8.2 million compared to $12.9 million for the first quarter of 2019.

Net income of $8.2 million for the second quarter of 2019 decreased by $13.5 million from net income of $21.7 million for the three months ended June 30, 2018. The operating income of $31.9 million for the second quarter of 2019 decreased by $0.2 million compared to operating income of $32.1 million in the second quarter of 2018, mainly due to loss of hire insurance recoveries for the Carmen Knutsenreceived in the second quarter of 2018. The decrease was partly offset by full earnings from the Brasil Knutsen which had its scheduled first special survey drydocking in the second quarter of 2018. Total finance expense for the second quarter of 2019 increased by $13.3 million compared to finance expense of $10.4 million for the second quarter of 2018. The increase was mainly due to increased unrealized loss on derivative instruments mainly due to a lower US swap rate.

Distributable cash flow was $26.1 million for the second quarter of 2019 compared to $25.7 million for the first quarter of 2019. The increase in distributable cash flow is mainly due to one more operational earnings day.

The distribution declared for the second quarter of 2019 was $0.52 per common unit, equivalent to an annualized distribution of $2.08.

Operational review

The Partnership’s vessels operated throughout the second quarter of 2019 with 100% utilization for scheduled operations.

On December 17, 2018, the Partnership’s subsidiary that owns the Windsor Knutsen and Shell agreed to suspend the vessel’s time charter contract. The suspension period commenced March 4, 2019 and will last between a minimum period of 10 months and a maximum period of 12 months. During the suspension period, the Windsor Knutsen has been operating under a time charter contract with Knutsen Shuttle Tankers Pool AS, on the same terms as the existing time charter contract with Shell.

On July 16, 2019, Shell exercised its option to extend the time charter of the Windsor Knutsen by one additional year until October 2020. Following the exercise of the option, Shell has four one-year options to extend the time charter until October 2024.

Financing and Liquidity

As of June 30, 2019, the Partnership had $71.1 million in available liquidity, which consisted of cash and cash equivalents of $42.4 million and $28.7 million of capacity under its revolving credit facilities. The revolving credit facilities mature in August 2021 and September 2023. The Partnership’s total interest-bearing debt outstanding as of June 30, 2019 was $1,045.7 million ($1,037.0 million net of debt issuance cost). The average margin paid on the Partnership’s outstanding debt during the second quarter of 2019 was approximately 2.1% over LIBOR.

As of June 30, 2019, the Partnership had entered into foreign exchange forward contracts, selling a total notional amount of $20.0 million against the NOK at an average exchange rate of NOK 8.45 per 1.00 U.S. Dollar. These foreign exchange forward contracts are economic hedges for certain vessel operating expenses and general expenses in NOK.

As of June 30, 2019, the Partnership had entered into various interest rate swap agreements for a total notional amount of $571.5 million to hedge against the interest rate risks of its variable rate borrowings. As of June 30, 2019, the Partnership receives interest based on three or six-month LIBOR and pays a weighted average interest rate of 1.88% under its interest rate swap agreements, which have an average maturity of approximately 4.4 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, 2019, the Partnership’s net exposure to floating interest rate fluctuations on its outstanding debt was approximately $431.8 million based on total interest-bearing debt outstanding of $1,045.7 million, less interest rate swaps of $571.5 million and less cash and cash equivalents of $42.4 million. The Partnership’s outstanding interest-bearing debt of $1,045.7 million as of June 30, 2019 is repayable as follows:

(U.S. Dollars in thousands)

Period repayment

 

Balloon repayment

Remainder of 2019

$42,873

 

$ —

 

 

2020

85,945

 

 

 

2021

86,545

 

95,811 

 

2022

71,210

 

236,509

 

 

2023

55,535

 

202,185 

 

2024 and thereafter

15,180

 

153,893

 

 

Total

$357,288

 

$688,398

 

 

On June 28, 2019, the Partnership extended the maturity of its $25 million unsecured revolving credit facility with NTT Finance Corporation. The extended facility matures in August 2021. The commercial terms of the facility are unchanged from the facility entered into in June 2017 with NTT Finance Corporation.

Distributions

On August 14, 2019, the Partnership paid a cash distribution of $0.52 per common unit with respect to the quarter ended June 30, 2019 to all common unitholders of record on July 26, 2019. On August 14, 2019, the Partnership also paid a cash distribution to the Series A Preferred unitholders with respect to the quarter ended June 30, 2019 in an aggregate amount equal to $1.8 million.

Outlook

There are no dry dockings scheduled for any of the Partnership’s vessels during the remainder of 2019.

As of June 30, 2019, the Partnership’s fleet of sixteen vessels had an average remaining fixed contract duration of 3.2 years. In addition, the charterers of the Partnership’s time charter vessels have options to extend their charters by an additional 4.3 years on average.

In September 2018, Knutsen NYK Offshore Tankers AS, the owner of the Partnership’s general partner (“Knutsen NYK”), entered into new long- term charters with Equinor for two Suezmax DP2 shuttle tanker newbuildings to be constructed by Hyundai Heavy Industries in South Korea with delivery scheduled for the second half of 2020. The vessels are expected to operate in Brazil under time charter contracts with a term of 5 and 7 years fixed period with option up to 20 years.

In August 2019, Knutsen NYK was awarded one new long-term charter with a subsidiary of Total S.A.. The new DP2 shuttle tanker will be built by COSCO shipyard in China, with delivery scheduled for early 2021. The vessel is expected to operate in Brazil under a time-charter contract for a maximum 15 year period.

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.

The Board believes that demand for newbuild offshore shuttle tankers will continue to be driven over time based on the requirement to replace older tonnage in the North Sea and Brazil and further expansion into deep water offshore oil production areas such as in Pre-salt Brazil and the Barents Sea. The Board further believes that significant growth in demand exists and that this will continue for new shuttle tankers as the availability of existing vessels has reduced and modern operational demands have increased. Consequently, there should be opportunities to further grow the Partnership.

Capital

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(U.S. Dollars in thousands, except per unit
Three Months Ended June 30,2019      2018                  Six Months Ended June 30,data) 2019              2018
Net income                 $ 8,176           $ 21,681                                                                     $ 21,045       $ 52,405

Less: Series A Preferred unit holders’ interest in net income

                                   $1,800               $1,800                                                                       $3,600          $3,600
Net income attributable to the unit holders of KNOT Offshore Partners LP

                                   $6,376               $19,881                                                                    $17,445         $48,805                         

Less: Distributions     $18,034             $18,034                                                                    $36,068          $36,068

Under (over) distributed earnings

                                  $(11,658)           $1,847                                                                      $(18,623)        $12,737

@Capital  does it bother you that their net income decreased by over 50% compared to 2018?

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@MNfish wrote:

(U.S. Dollars in thousands, except per unit
Three Months Ended June 30,2019      2018                  Six Months Ended June 30,data) 2019              2018
Net income                 $ 8,176           $ 21,681                                                                     $ 21,045       $ 52,405

Less: Series A Preferred unit holders’ interest in net income

                                   $1,800               $1,800                                                                       $3,600          $3,600
Net income attributable to the unit holders of KNOT Offshore Partners LP

                                   $6,376               $19,881                                                                    $17,445         $48,805                         

Less: Distributions     $18,034             $18,034                                                                    $36,068          $36,068

Under (over) distributed earnings

                                  $(11,658)           $1,847                                                                      $(18,623)        $12,737

@Capital  does it bother you that their net income decreased by over 50% compared to 2018?


http://www.knotoffshorepartners.com/investor-relations/investor-information/news/press-release-detai...

@MNfish - When I saw their last quarterly report it did cause alarm. When I looked at their Quarterly and Semiannual Comparisons I found that operations was not the problem. The change in net income really boils down to 2 items - (1) $3,000k increase in Interest Expense and a (2) $21,045k swing in Realized and unrealized gain (loss) on derivative instruments.  There is a presentation in the statements that shows that the culprit is Interest Rate Swaps. I understand why they are engaging in this; however, in an economy of falling interest rates this has been a killer to their operations. Concerned yes -ready to leave, not yet. If it had been operational I would have been long gone. Looking at the Balance Sheet I see a slight increase in cash or current assets from 12/312018. Looking at liabilities for the same period I see an overall decrease. All of this leads me to think this is temporary. 

What are your thoughts?  

Capital
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 I have no dog in this fight. I noticed on the B/S/W thread that someone had bought it and decided to look into it and noticed the 11% div. I always look at Net Income because even though divs are paid from cash flow it takes income to make cash, unless you borrow more, at least that's the way I look at it.

I will say that it's somewhat impressive that even with the hit they took via the interest rate swap they still had a positive net income.

 

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www.knotoffshorepartners.com/investor-relations/investor-information/news/press-release-details/2019...

The heading of this news release is:

"KNOT Offshore Partners LP Announces Third Quarter 2019 Cash Distribution"

Capital

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0.52 in line with the previous 16 quarters according to M*

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http://www.knotoffshorepartners.com/investor-relations/investor-information/news/press-release-detai...

The heading of this news release is: "KNOT Offshore Partners LP Earnings Release—Interim Results for the Period Ended September 30, 2019"

Capital

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http://www.knotoffshorepartners.com/investor-relations/investor-information/news/press-release-detai...

The heading of this news release is:"KNOT Offshore Partners LP Announces Fourth Quarter 2019 Cash Distribution"

FYI - another 52 cents per share

Capital

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http://www.knotoffshorepartners.com/investor-relations/investor-information/news/press-release-detai...

Q4-2019 earnings announced before the market opens 03/12/2020 - conference call noon ET the same day.

Capital

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I will be watching earnings this time. If they are not satisfactory I will probably bail. I have other places to invest the money I have here. Last quarter they took a big hit on their hedging. This time we will see if that continues. I have two positions this stock-different accounts. The first bought at the  worst possible time 04/27/2017 and averaged down with subsequent buys to $22/share and a second bought 08/2019 at $18.50/share. Wish I had bought all at the $18.50 price. Dividend has remained steady at 52 cents per quarter. This is a very small player in a very small niche market.

Capital
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https://finance.yahoo.com/news/knot-offshore-partners-lp-announces-210000272.html

KNOT Offshore Partners LP Announces First Quarter 2020 Cash Distribution and Provides Update on Business Operations

 

Capital

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@Capital wrote:

I will be watching earnings this time. If they are not satisfactory I will probably bail. I have other places to invest the money I have here. Last quarter they took a big hit on their hedging. This time we will see if that continues. I have two positions this stock-different accounts. The first bought at the  worst possible time 04/27/2017 and averaged down with subsequent buys to $22/share and a second bought 08/2019 at $18.50/share. Wish I had bought all at the $18.50 price. Dividend has remained steady at 52 cents per quarter. This is a very small player in a very small niche market.


After reading their update on their business operations especially wrt oil prices and the virus, I'm seriously thinking about taking a position in it, especially below $10!  Thanks for keeping up with this guy, Capital.

ElLobo, de la casa de la toro caca grande
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@ElLobo wrote:

@Capital wrote:

I will be watching earnings this time. If they are not satisfactory I will probably bail. I have other places to invest the money I have here. Last quarter they took a big hit on their hedging. This time we will see if that continues. I have two positions this stock-different accounts. The first bought at the  worst possible time 04/27/2017 and averaged down with subsequent buys to $22/share and a second bought 08/2019 at $18.50/share. Wish I had bought all at the $18.50 price. Dividend has remained steady at 52 cents per quarter. This is a very small player in a very small niche market.


After reading their update on their business operations especially wrt oil prices and the virus, I'm seriously thinking about taking a position in it, especially below $10!  Thanks for keeping up with this guy, Capital.


Hey @ElLobo  how ya doing.  The only thing I have been unhappy about with KNOP is my original purchase price. It seems stable, even with COVAD-19 raging. I'm watching their time charters right now. They have a few renewals toward the end of this year that I find bothersome. They have quite a few that come up for renewal in 2022. While oil prices do not directly affect their revenues, it does affect their customers who are drilling for offshore oil.

Capital
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@Capital wrote:

@ElLobo wrote:

@Capital wrote:

I will be watching earnings this time. If they are not satisfactory I will probably bail. I have other places to invest the money I have here. Last quarter they took a big hit on their hedging. This time we will see if that continues. I have two positions this stock-different accounts. The first bought at the  worst possible time 04/27/2017 and averaged down with subsequent buys to $22/share and a second bought 08/2019 at $18.50/share. Wish I had bought all at the $18.50 price. Dividend has remained steady at 52 cents per quarter. This is a very small player in a very small niche market.


After reading their update on their business operations especially wrt oil prices and the virus, I'm seriously thinking about taking a position in it, especially below $10!  Thanks for keeping up with this guy, Capital.


Hey @ElLobo  how ya doing.  The only thing I have been unhappy about with KNOP is my original purchase price. It seems stable, even with COVAD-19 raging. I'm watching their time charters right now. They have a few renewals toward the end of this year that I find bothersome. They have quite a few that come up for renewal in 2022. While oil prices do not directly affect their revenues, it does affect their customers who are drilling for offshore oil.


Yup, that niche thingie again!  It's been so long since I did any DD on individual stocks, but with last month's market tank, it might be time to rethink things a bit.  A 22% yield supported by a cash flow that has been steady for so long with their symbiotic business model has some appeal!

ElLobo, de la casa de la toro caca grande
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I still have a few shares.    I took some losses dumping half my position a while back, intending to return.   The stock is lower now (but may leap higher tomorrow, we'll see).   If there's no serious spike at the open I may add a couple of shares tomorrow morning.

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