Q2 2026 Knot Offshore Partners LP Earnings Call Transcript
Key Points
- KNOT Offshore Partners LP (KNOP) increased its quarterly cash distribution to $0.075 per common unit, up from $0.05 in the prior quarter, marking a continued trend of gradual increases.
- The acquisition of the Hedda Knutsen for a net cash cost of $24.4 million adds a modern vessel (delivered in 2024) with a long-term charter to Petrobras through 2034, reducing the fleet's average age.
- The company secured new time charters for the Hedda, Recife, and Ingrid Knutsen vessels, extending its contract backlog and forward revenue coverage.
- KNOP successfully refinanced a $225 million loan facility, reducing the interest rate to SOFR plus 165 basis points, which will lower future financing costs.
- The company maintains a strong liquidity position of $143.3 million and reports high fleet utilization of 96.8%, excluding scheduled dry docking, with a positive outlook on tightening shuttle tanker markets.
- Net income for the second quarter was relatively low at $3.4 million, despite revenues of $96.8 million, indicating high operational or financing costs.
- Overall fleet utilization dropped to 92.4% when accounting for scheduled dry docking, which can impact short-term revenue generation.
- The partnership decided not to pursue the acquisition of the Frida Knutsen and Sindre Knutsen, removing them from its drop-down inventory and limiting potential near-term fleet growth options.
- The company faces a significant debt repayment schedule, with plans to repay around $95 million per year, which could limit cash available for other uses.
- The refinancing of the $65 million facility secured by the Live Knutsen is still in progress and due in October, creating potential near-term financial uncertainty.
Ladies and gentlemen, thank you for joining us and welcome to the KNOP second-quarter 2026 earnings call. After today's prepared remarks, we will host a question-and-answer session with an opportunity for equity research analysts to ask questions. (Operator Instructions)
I will now hand the conference over to Derek Lowe. Please go ahead, sir.
Thank you, Leo, and good morning, ladies and gentlemen. My name is Derek Lowe and I'm the Chief Executive and Chief Financial Officer of KNOT Offshore Partners. Welcome to the partnership's earnings call for the second quarter of 2026. Our website is knotoffshorepartners.com, and you can find the earnings release there along with this presentation.
On slide 2, you'll find guidance on the inclusion of forward-looking statements in today's presentation. These are made in good faith and reflect management's current views, known and unknown risks, and are based on assumptions and estimates that are inherently subject to
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