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ABERDEEN, Scotland--(BUSINESS WIRE)-- KNOT Offshore Partners LP (NYSE:KNOP):

Financial Highlights

For the three months ended March 31, 2025 (鈥淨1 2025鈥�), KNOT Offshore Partners LP (鈥淜NOT Offshore Partners鈥� or the 鈥淧artnership鈥�):

• Generated total revenues of $84.0 million, operating income of $23.4 million and net income of $7.6 million.
• Generated Adjusted EBITDA¹ of $52.2 million.
• Reported $100.8 million in available liquidity at March 31, 2025, which was comprised of cash and cash equivalents of $67.3 million and undrawn revolving credit facility capacity of $33.5 million.

Other Partnership Highlights and Events

• Fleet operated with 96.9% utilization for scheduled operations in Q1 2025, and 99.5% utilization taking into account the scheduled drydockings of the Raquel Knutsen and the Windsor Knutsen, for which the relevant off-hire periods commenced late in Q1 2025.
• On April 9, 2025, the Partnership declared a quarterly cash distribution of $0.026 per common unit with respect to Q1 2025, which was paid on May 8, 2025, to all common unitholders of record on April 28, 2025. On the same day, the Partnership declared a quarterly cash distribution to holders of Series A Convertible Preferred Units (鈥淪eries A Preferred Units鈥�) with respect to Q1 2025 in an aggregate amount of $1.7 million.
• In January 2025, the final insurance claim payment was received in respect of repair work and loss of hire for the Torill Knutsen, which had arisen from the breakage of a generator rotor in January 2024.
• On January 21, 2025, Petrorio exercised its option to extend the contract of the Brasil Knutsen for two periods of 30 days from May 1, 2025. Redelivery will be July 1, 2025. The vessel will commence on a new time charter with Equinor in the third quarter of 2025 for a fixed period of two years, with options for the charterer to extend the charter by two further one-year periods.
• On January 24, 2025, Shell exercised its option to switch from a time charter on the Vigdis Knutsen to a bareboat charter. This change will take effect during or after July 2025. At the same time, the fixed duration of this charter was extended from 2027 to 2030, with an option for the charterer to extend the charter by a further two years.
• On March 3, 2025, the Partnership鈥檚 wholly owned subsidiary, KNOT Shuttle Tankers AS (鈥淜ST鈥�), acquired from Knutsen NYK Offshore Tankers AS (鈥淜nutsen NYK鈥�), KNOT Shuttle Tankers 27 AS, the company that owns the shuttle tanker Live Knutsen (the 鈥淟ive Knutsen Acquisition鈥�). Simultaneously, KST sold KNOT Shuttle Tankers 21 AS, the company that owns the shuttle tanker Dan Sabia, to Knutsen NYK. This effected a swap of these two vessels, the terms of which were set out in our press release of February 27, 2025.
• On March 23, 2025, the Hilda Knutsen began operating under a time charter with Shell for a fixed period of one year.
• On April 15, 2025, Petrorio extended the redelivery timing for the Brasil Knutsen to September 2025, following which the time charter to Equinor will commence.

Derek Lowe, Chief Executive Officer and Chief Financial Officer of KNOT Offshore Partners LP, stated, 鈥淲e are pleased to report another strong performance in Q1 2025, marked by safe operation at more than 99% fleet utilization from scheduled operations, consistent revenue and operating income generation, and material progress in securing additional charter coverage for our fleet.

As of the date of this release and including contractual updates since March 31, 2025, we have now secured approximately 96% of charter coverage for the final three quarters of 2025, and approximately 75% for 2026. Having executed a number of new contracts and extensions over the last year, we have established good momentum in a strengthening market and remain focused on strengthening and extending our fleetwide charter coverage.

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鈥� continued high production levels and FPSO start-ups in the pre-salt fields that rely upon shuttle tankers, we believe the world鈥檚 biggest shuttle tanker market is tightening materially. Our secondary geography, in the North Sea, has taken longer to re-balance, but we welcome the news of the new FPSO production starts for both the UK North Sea-based Penguins and Barents Sea-based Johan Castberg.

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 throughout the coming years, driven most notably by the aggressive expansion of Brazilian deepwater production capacity, particularly as increasing numbers of shuttle tankers reach or exceed typical retirement age. We are aware of newbuild shuttle tanker orders, including six for Knutsen NYK, all of which are scheduled for delivery over 2025鈥�2028. 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. Particularly when considered in the context of the increasing numbers of shuttle tankers reaching or exceeding typical retirement age, as well as yard capacity constraints limiting material new orders into late 2027 or thereafter, we anticipate that these newbuild deliveries will be readily absorbed by the expanding market for shuttle tankers.

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 remain focused on generating certainty and stability of cash flows from long-term employment with high-quality counterparties, both through continued chartering and through the consummation of accretive dropdown transactions. We are confident that continued operational performance and the successful execution of our strategy in an improving market environment can increase our cash flow generation, strengthen our forward visibility, and create sustainable unitholder value in the quarters and years ahead.鈥�

Financial Results Overview

Results for Q1 2025 (compared to those for the three months ended December 31, 2024 (鈥淨4 2024鈥�)) included:

• Revenues of $84.0 million in Q1 2025 ($91.3 million in Q4 2024), where Q4 2024 had included one-off insurance proceeds of $5.9 million.
• Gain from disposal of vessel of $1.3 million in Q1 2025 ($0 in Q4 2024).
• Vessel operating expenses of $30.6 million in Q1 2025 ($26.2 million in Q4 2024), with the increase due primarily to higher maintenance and provisioning costs and the EU ETS costs.
• Depreciation of $28.8 million in Q1 2025 ($28.4 million in Q4 2024).
• General and administrative expenses of $1.8 million in Q1 2025 ($1.5 million in Q4 2024).
• Operating income consequently of $23.4 million in Q1 2025 ($34.7 million in Q4 2024).
• Interest expense of $14.9 million in Q1 2025 ($16.2 million in Q4 2024)
• AG真人官方ized (i.e. cash) gain on derivative instruments of $3.1 million in Q1 2025 (gain of $3.7 million in Q4 2024), and unrealized (i.e. non-cash) loss of $4.5 million in Q1 2025 (unrealized gain of $0.9 million in Q4 2024). Together, there was a realized and unrealized loss on derivative instruments of $1.3 million in Q1 2025 (gain $4.6 million in Q4 2024).
• Net income consequently of $7.6 million in Q1 2025 (net income of $23.3 million in Q4 2024).

By comparison with the three months ended March 31, 2024 (鈥淨1 2024鈥�), results for Q1 2025 included:

• an increase of $3.7 million in operating income (to $23.4 million in Q1 2025 from operating income of $19.7 million in Q1 2024), driven primarily by higher utilization of the fleet, greater charter revenues and gain from disposal of vessel.
• an increase of $3.2 million in finance expense (to finance expense of $15.3 million in Q1 2025 from finance expense of $12.1 million in Q1 2024), due primarily to an unrealized loss on derivative instruments in Q1 2025 compared to an unrealized gain in Q1 2024.
• an increase of $0.2 million in net income (to a net income of $7.6 million in Q1 2025 from net income of $7.4 million in Q1 2024).

Financing and Liquidity

As of March 31, 2025, the Partnership had $100.8 million in available liquidity, which was comprised of cash and cash equivalents of $67.3 million and $33.5 million of capacity under its revolving credit facilities. The Partnership鈥檚 revolving credit facilities mature between August 2025 and November 2025.

The Partnership鈥檚 total interest-bearing obligations outstanding as of March 31, 2025 were $949 million ($944.3 million net of debt issuance costs). The average margin paid on the Partnership鈥檚 outstanding debt during Q1 2025 was approximately 2.23% over SOFR. These obligations are repayable as follows:

As of March 31, 2025, the Partnership had entered into various interest rate swap agreements for a total notional amount outstanding of $462.3 million, to hedge against the interest rate risks of its variable rate borrowings. As of March 31, 2025, the Partnership receives interest based on SOFR and pays a weighted average interest rate of 2.38% under its interest rate swap agreements, which have an average maturity of approximately 1.53 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, 2025, the Partnership鈥檚 net exposure to floating interest rate fluctuations was approximately $258.6 million based on total interest-bearing contractual obligations of $949 million, less the Raquel Knutsen and Torill Knutsen sale and leaseback facilities of $160.8 million, less interest rate swaps of $462.3 million, and less cash and cash equivalents of $67.3 million.

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.

While the Partnership continues to believe that key components of its strategy and value proposition are accretive investment in the fleet and a long-term, sustainable distribution, 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鈥檚 Board of Directors.

Knutsen NYK owns, or has ordered, the following vessels and has entered into the following charters:

1. 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 by up to a further five years.
2. 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 contract with Eni for operation in North Sea. The charterer has options to extend the charter by up to a further three years.
3. 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 by up to a further five years.
4. 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.
5. 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.
6. In August 2024, Knutsen NYK entered into a new seven-year time charter contract with Petrorio 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 eight further years. The vessel will be built in China and is expected to be delivered early in 2027.
7. In October 2024, Hedda Knutsen was delivered to Knutsen NYK from the yard in China and commenced in December 2024 on a ten-year time charter contract with Petrobras for operation in Brazil. Petrobras has the option to extend the charter by up to five further years.
8. In March 2025, Knutsen NYK entered into a new seven-year time charter contract with Equinor 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 thirteen further years. The vessel will be built in China and is expected to be delivered early in 2028.

Board of Directors Change

Effective April 1, 2025, the Partnership鈥檚 general partner appointed Mr. Masami Okubo to replace Mr. Yasuhiro Fukuda, both of whom are employees of Nippon Yusen Kabushiki Kaisha (鈥淣YK鈥�), on the Partnership鈥檚 Board of Directors.

Outlook

As at March 31, 2025: (i) the Partnership had charters with an average remaining fixed duration of 2.3 years, with the charterers of the Partnership鈥檚 vessels having options to extend their charters by an additional 4.7 years on average and (ii) the Partnership had $853.8 million of remaining contracted forward revenue, excluding charterers鈥� options and charters agreed or signed after that date. As at March 31, 2025, the eighteen vessels which comprise the Partnership鈥檚 fleet had an average age of 9.8 years. The market for shuttle tankers in Brazil, where fourteen of our current fleet operated during Q1 2025, 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.

Shuttle tanker demand in the North Sea has remained subdued for some years, driven by the impact of COVID鈥�19鈥憆elated project delays. These conditions persisted into recent quarters, awaiting anticipated new oil production starts. Most notably, the long-anticipated Johan Castberg field in the Barents Sea and the new Penguins FPSO in the North Sea entered production recently.

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, pursue accretive dropdown transactions supportive of long-term cash flow generation, and position itself to benefit from its market-leading role in an improving shuttle tanker market. The Partnership continues to believe that key components of its strategy and value proposition are accretive investment in the fleet and a long-term, sustainable distribution.

In the near term, the Partnership believes that there are compelling opportunities to deploy a material portion of its cash flow to facilitate dropdown transactions. The Partnership believes that dropdowns will lead to an increase in the Partnership鈥檚 capital value, with growth in contractual backlog leading to increasing cash flow over time. Together with reductions in the average age of the fleet, this increased cash flow should also facilitate refinancings. Combined with strong market fundamentals, this should provide for the opportunity to increase sustainable distribution levels in the future.

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鈥�1. KNOT Offshore Partners LP鈥檚 common units trade on the New York Stock Exchange under the symbol 鈥淜NOP鈥�.

The Partnership plans to host a conference call on Wednesday May 21, 2025 at 9:30 AM (Eastern Time) to discuss the results for Q1 2025. All unitholders and interested parties are invited to listen to the live conference call by choosing from the following options:

• By dialing 1鈥�833鈥�470鈥�1428 from the US, dialing 1鈥�833鈥�950鈥�0062 from Canada or 1鈥�404鈥�975鈥�4839 if outside North America 鈥� please join the KNOT Offshore Partners LP call using access code 259019.
• By accessing the webcast on the Partnership鈥檚 website: .

APPENDIX A鈥擱ECONCILIATION 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鈥檚 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鈥檚 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鈥檚 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.

FORWARD-LOOKING STATEMENTS

This press release contains certain forward-looking statements concerning future events and KNOT Offshore 笔补谤迟苍别谤蝉鈥� 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 鈥渂elieve,鈥� 鈥渁nticipate,鈥� 鈥渆xpect,鈥� 鈥渆stimate,鈥� 鈥減roject,鈥� 鈥渨ill be,鈥� 鈥渨ill continue,鈥� 鈥渨ill likely result,鈥� 鈥減lan,鈥� 鈥渋ntend鈥� 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 笔补谤迟苍别谤蝉鈥� 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鈥檚 and KNOT Offshore 笔补谤迟苍别谤蝉鈥� ability to build shuttle tankers and the timing of the delivery and acceptance of any such vessels by their respective charterers;
• KNOT Offshore 笔补谤迟苍别谤蝉鈥� ability to purchase vessels from Knutsen NYK in the future;
• KNOT Offshore 笔补谤迟苍别谤蝉鈥� 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 笔补谤迟苍别谤蝉鈥� 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 笔补谤迟苍别谤蝉鈥� distribution policy, forecasts of KNOT Offshore 笔补谤迟苍别谤蝉鈥� 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 笔补谤迟苍别谤蝉鈥� ability to integrate and realize the expected benefits from acquisitions;
• impacts of supply chain disruptions and the resulting inflationary environment;
• KNOT Offshore 笔补谤迟苍别谤蝉鈥� 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 笔补谤迟苍别谤蝉鈥� operating expenses, including drydocking and insurance costs and bunker prices;
• recoveries under KNOT Offshore 笔补谤迟苍别谤蝉鈥� insurance policies;
• the length and cost of drydocking;
• KNOT Offshore 笔补谤迟苍别谤蝉鈥� 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 笔补谤迟苍别谤蝉鈥� ability to maintain long-term relationships with major users of shuttle tonnage;
• KNOT Offshore 笔补谤迟苍别谤蝉鈥� ability to leverage Knutsen NYK鈥檚 relationships and reputation in the shipping industry;
• KNOT Offshore 笔补谤迟苍别谤蝉鈥� 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 笔补谤迟苍别谤蝉鈥� 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 笔补谤迟苍别谤蝉鈥� vessels;
• KNOT Offshore 笔补谤迟苍别谤蝉鈥� 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 笔补谤迟苍别谤蝉鈥� 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 笔补谤迟苍别谤蝉鈥� business;
• availability of skilled labor, vessel crews and management;
• the effects of outbreaks of pandemics or contagious diseases, including the impact on KNOT Offshore 笔补谤迟苍别谤蝉鈥� business, cash flows and operations as well as the business and operations of its customers, suppliers and lenders;
• KNOT Offshore 笔补谤迟苍别谤蝉鈥� 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 笔补谤迟苍别谤蝉鈥� ability to retain key employees;
• customers鈥� 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 笔补谤迟苍别谤蝉鈥� securities in the public market;
• KNOT Offshore 笔补谤迟苍别谤蝉鈥� 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鈥慒 for the year ended December 31, 2024 and subsequent reports on Form 6鈥慘.

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 笔补谤迟苍别谤蝉鈥� expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based.

View source version on businesswire.com:

Questions should be directed to:

Derek Lowe via email at [email protected]

Source: KNOT Offshore Partners LP