ABERDEEN, Scotland--(BUSINESS WIRE)--March 25, 2026--
KNOT Offshore Partners LP $(KNOP)$:
Financial Highlights
For the three months ended December 31, 2025 ("Q4 2025"), KNOT Offshore Partners LP ("KNOT Offshore Partners" or the "Partnership"; NYSE:KNOP):
-- Generated total revenues of $96.5 million, operating income of $8.4
million and a net loss of $6.2 million, after recording a $20.3 million
non-cash impairment in respect of the vessel Bodil Knutsen. When adjusted
to remove the impact of the impairment, operating income for the quarter
was $28.6 million and net income was $14.0 million.
-- Generated Adjusted EBITDA1 of $59.3 million.
-- Reported $137.0 million in available liquidity at December 31, 2025,
which was comprised of cash and cash equivalents of $89.0 million and
undrawn revolving credit facility capacity of $48.0 million.
Other Partnership Highlights and Events
-- Fleet operated with 99.5% utilization for scheduled operations in Q4
2025, and 96.4% utilization taking into account the scheduled drydocking
of the Synnøve Knutsen, for which the relevant off-hire period
occurred during Q4 2025.
-- On January 7, 2026, the Partnership declared a quarterly cash
distribution of $0.026 per common unit with respect to Q4 2025, which was
paid on February 5, 2026, to all common unitholders of record on January
26, 2026. 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 Q4 2025 in an aggregate amount of
$1.7 million.
-- On July 2, 2025, the Board approved the establishment of a buyback
program for up to $10 million of the Partnership's common units. The
program was concluded in October 2025. During the entire period of the
program, the Partnership repurchased a total of 384,739 common units for
an aggregate purchase cost of $3.03 million (including aggregate
commissions of $0.01 million), at an average cost of $7.87 per common
unit. Common units repurchased under the program were cancelled;
-- On October 20, 2025, Knutsen Shuttle Tankers 35 AS, the Partnership's
wholly-owned subsidiary which owns the vessel Synnøve Knutsen,
entered into a new $71.1 million senior secured term loan facility with
MUFG Bank (Europe) N.V.. This new facility replaced the previous facility
secured by the Synnøve Knutsen.
-- In late October 2025, the Synnøve Knutsen commenced a scheduled
drydocking, following completion of a conventional tanker charter which
utilised her voyage to Europe. This drydocking completed in mid December
2025;
____________________
(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.
-- On October 31, 2025, the Partnership received an unsolicited
non-binding proposal from Knutsen NYK Offshore Tankers AS ("Knutsen NYK"
or "KNOT"), pursuant to which KNOT proposed to acquire through a
wholly-owned subsidiary all publicly held common units of the Partnership
in exchange for $10 in cash per unit (the "KNOT Offer"). The Conflicts
Committee of the Partnership's Board, which is comprised of only
non-KNOT-affiliated directors, retained Evercore Group L.L.C., Richards,
Layton & Finger, P.A. and IGB Group as independent advisors to assist it
in evaluating the KNOT Offer. The Conflicts Committee and its independent
advisors reviewed the KNOT Offer carefully and held a series of
discussions with KNOT regarding the potential transaction since receiving
the proposal. Following such discussions, on March 19, 2026, the parties
announced that they were not able to reach an agreement and have
therefore terminated discussions regarding the KNOT Offer.
-- On November 4, 2025, the Vigdis Knutsen began operating under a
bareboat charter, following the previously-announced exercise of an
option held by Shell to switch from the previous time charter operation.
This bareboat charter is for a fixed period expiring in 2030 plus a
charterer's option for a further two years;
-- On November 17, 2025, the Partnership closed the refinancing of the
second of its two $25 million revolving credit facilities, with the
facility being rolled over with SBI Shinsei Bank, Limited;
-- On November 21, 2025, a time charter for the Fortaleza Knutsen was
executed with KNOT, to commence in Q2 2026 for a fixed period of one year
plus two charterer's options each for one additional year. It is
anticipated that the Fortaleza Knutsen will operate in the North Sea;
-- On each of December 15, 2025, December 22, 2025 and January 5, 2026,
the Partnership sought to convene the 2025 Annual Meeting of Unitholders.
However, on each of these occasions, an insufficient number of
unitholders were represented for the required quorum to be met, and so no
business was conducted.
-- Prospectively from January 1, 2026, the Partnership changed the useful
life estimate of each of the vessels in its fleet from 23 years to 20
years due to prevailing longer term market trends. This change will
increase the non-cash accounting depreciation charge in all future
quarters, beginning in the first quarter of 2026. However, this change
does not prevent vessels from being utilized beyond 20 years, should a
market opportunity arise;
-- On January 5, 2026, we exercised our option to continue the time
charter of the Hilda Knutsen with Shell through to March 2027;
-- In early January 2026, the Tuva Knutsen commenced a scheduled
drydocking, following completion of a conventional cargo voyage which
utilized her voyage to Europe. This drydocking completed in early March
2026;
-- In mid-February 2026, the Bodil Knutsen commenced a scheduled
drydocking, following completion of a conventional cargo voyage which
utilized her voyage to the yard. This drydocking completed in late March
2026;
-- On February 16, 2026, the Tordis Knutsen experienced a breakdown of its
diesel generator, which has required the vessel to go off-hire until
repairs are completed, which is expected to be in May 2026. Under its
loss of hire insurance policies, the Partnership anticipates being
compensated by insurance for the extent to which, as a consequence of
this breakage, the Tordis Knutsen's earnings fall short of a contractual
hire rate, commencing 14 days after the date of the breakage. The
Partnership also anticipates that the repair cost will be covered by
insurance, in excess of a deductible of $150,000; and
-- In March 2026, the final insurance claim payment in the amount of $1.8
million was received in respect of loss of hire for the Windsor Knutsen,
which had arisen from required thruster repairs carried out over March --
May 2025.
Derek Lowe, Chief Executive Officer and Chief Financial Officer of KNOT Offshore Partners LP, stated, "We are pleased to report another strong performance in Q4 2025, marked by safe operation at 99.5% from scheduled operations, 96.4% utilization when including drydockings, consistent revenue and operating income generation, and material progress in the charter coverage outlook for our fleet.
As of the date of this release and including contractual updates since December 31, 2025, we have now secured 98% of charter coverage for the first half of 2026, and approximately 88% for the second half of 2026, in both cases after allowing for scheduled dry dockings. We remain focused on further strengthening our fleetwide charter coverage and seizing those periodic opportunities that exist to re-charter vessels in the current tight market environment.
In Brazil, the main offshore oil market where we operate, Petrobras exceeded the upper end of its oil production targets for 2025. This was driven primarily by the successful deployment of FPSOs focused in shuttle tanker-serviced fields, in multiple instances taking place ahead of schedule and reaching production levels in excess of their anticipated maximums. As a result, the world's biggest shuttle tanker market is both growing and materially tightening. The North Sea, our secondary geography, has also established some positive momentum as projects ramp up production in both the UK North Sea and, most significantly, the Barents Sea. While less dynamic than is the case in Brazil, these positive developments in the wider North Sea region are a welcome and notable change after a protracted period of relatively slack shuttle tanker demand.
Against this backdrop, 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. We are aware of newbuild shuttle tanker orders, including eight for Knutsen NYK, all of which are scheduled for delivery over 2026--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 at least 2028, we anticipate that these newbuild deliveries will be readily absorbed by the expanding market for shuttle tankers.
As the largest global owner of shuttle tankers, along with our Sponsor, and with a market-leading position in the fastest-growing shuttle tanker region of offshore Brazil, KNOP is well positioned to benefit from these trends throughout the coming years. Accordingly, our Board of Directors is keenly focused on optimizing the Partnership's value creation strategy and is actively weighing the available capital allocation alternatives with the intention of maximizing unitholder value in a sustainable manner over the long term."
Financial Results Overview
Results for Q4 2025 (compared to those for the three months ended September 30, 2025 ("Q3 2025")) included:
-- Revenues of $96.5 million in Q4 2025 ($96.9 million in Q3 2025),
reflecting the stability of our commercial model.
-- Vessel operating expenses of $34.7 million in Q4 2025 ($33.7 million in
Q3 2025). The increase is primarily due to bunker fuel costs related to
one vessel in dry dock.
-- Depreciation of $30.6 million in Q4 2025 ($30.9 million in Q3 2025).
-- Impairment in respect of the Bodil Knutsen of $20.3 million was
recognized in Q4 2025, while there were no impairments in Q3 2025. 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.
-- General and administrative expenses of $2.5 million in Q4 2025 ($1.5
million in Q3 2025). The increase is primarily due to professional fees
relating to the KNOT Offer.
-- Operating income consequently of $8.4 million in Q4 2025 ($30.7 million
in Q3 2025). When adjusted to remove the impact of the impairment,
operating income for Q4 2025 was $28.6 million.
-- Interest expense of $15.3 million in Q4 2025 ($16.5 million in Q3
2025).
-- Realized (i.e. cash) gain on derivative instruments of $1.7 million in
Q4 2025 (gain of $2.2 million in Q3 2025), and unrealized (i.e. non-cash)
loss of $1.3 million in Q4 2025 (unrealized loss of $1.8 million in Q3
2025). Together, there was a realized and unrealized gain on derivative
instruments of $0.4 million in Q4 2025 (gain of $0.4 million in Q3
2025).
-- A net loss consequently of $6.2 million in Q4 2025 (net income of $15.1
million in Q3 2025). When adjusted to remove the impact of the impairment,
net income in Q4 2025 was $14.0 million.
By comparison with the three months ended December 31, 2024 ("Q4 2024"), results for Q4 2025 included:
-- A decrease of $26.3 million in operating income (to $8.4 million in Q4
2025 from operating income of $34.7 million in Q4 2024). When adjusted to
remove the impact of the impairment, operating income in Q4 2025 was
$28.6 million, representing a decrease of $6.1 million from Q4 2024,
primarily due to extraordinary loss of hire insurance recoveries of $5.9
million in Q4 2024.
-- An increase of $2.8 million in finance expense (to finance expense of
$14.2 million in Q4 2025 from finance expense of $11.4 million in Q4
2024), primarily due to a reduction in the unrealized and realized gain
on derivative instruments in Q4 2025 compared to that in Q4 2024, albeit
somewhat offset by lower interest expense in Q4 2025 compared to that in
Q4 2024.
-- A decrease of $29.5 million in net income (to a net loss of $6.2
million in Q4 2025 from net income of $23.3 million in Q4 2024). When
adjusted to remove the impact of the impairment, net income in Q4 2025
was $14.0 million, representing a decrease of $9.3 million from Q4 2024.
Financing and Liquidity
As of December 31, 2025, the Partnership had $137.0 million in available liquidity, which was comprised of cash and cash equivalents of $89.0 million and $48.0 million of capacity under its revolving credit facilities. The Partnership's revolving credit facilities mature in August 2027 and November 2027 respectively.
The Partnership's total interest-bearing obligations outstanding as of December 31, 2025 were $959.6 million ($955.1 million net of debt issuance costs). The average margin paid on the Partnership's outstanding debt during Q4 2025 was approximately 2.22% over SOFR. These obligations are repayable as follows:
Sale & Period
(U.S.
Dollars in Balloon
thousands) Leaseback repayment repayment Total
----------- ----------- ----------- ---------------- --------
2026 $ 20,258 $ 78,685 $ 284,203 $383,146
2027 21,246 38,613 156,679 216,538
2028 22,345 17,979 78,824 119,148
2029 23,373 4,738 -- 28,111
2030 24,515 4,738 47,387 76,640
2031 and
thereafter 136,050 -- -- 136,050
------- ------- --- ----------- -------
Total $ 247,787 $ 144,753 $ 567,093 $959,633
------- ------- --- ----------- -------
As of December 31, 2025, the Partnership had entered into various interest rate swap agreements for a total notional amount outstanding of $325.0 million, to hedge against the interest rate risks of its variable rate borrowings. As of December 31, 2025, the Partnership receives interest based on SOFR and pays a weighted average interest rate of 2.72% under its interest rate swap agreements, which have an average maturity of approximately 1.58 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 December 31, 2025, the Partnership's net exposure to floating interest rate fluctuations was approximately $297.8 million based on total interest-bearing contractual obligations of $959.6 million, less the sale and leaseback facilities for Raquel Knutsen, Torill Knutsen and Tove Knutsen totaling $247.8 million, less interest rate swaps of $325.0 million, and less cash and cash equivalents of $89.0 million.
On October 20, 2025, Knutsen Shuttle Tankers 35 AS, the Partnership's wholly-owned subsidiary which owns the vessel Synnøve Knutsen, entered into a new $71.1 million senior secured term loan facility with MUFG Bank (Europe) N.V.. This new facility replaced the previous facility secured by the Synnøve Knutsen. The new facility is repayable in quarterly installments, bears interest at a rate per annum equal to SOFR plus a margin of 2.01% and will mature in October 2030, at which point the outstanding amount following quarterly repayments is due to be $48.6 million. The terms of the facility are substantially unchanged from the facility entered into in July 2019 with MUFG Bank, Ltd..
On November 17, 2025, the Partnership closed the refinancing of the second of its two $25 million revolving credit facilities, with the facility being rolled over with SBI Shinsei Bank, Limited. The new facility will mature in November 2027, bears interest at a rate per annum equal to SOFR plus a margin of 2.18%, and has a commitment fee on any undrawn portion of the facility of 0.80% per annum. The terms of the facility are substantially unchanged from the facility entered into in November 2023.
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. Any such acquisition would be subject to the approval of the Conflicts Committee of the Partnership's Board of Directors.
As of the date of this release, Knutsen NYK owns, or has ordered, the following vessels and has entered into the following charters:
1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.
7. In August 2025, Knutsen NYK entered into a new seven-year charter
contract with Repsol for one vessel firm with an option to charter one
further vessel, both to operate in Brazil. The firm vessel has already
been ordered, while the optional vessel remains subject to declaration by
the charterer. The charterer has an option to extend the firm charter by
up to five additional years. The vessel(s) will be built in China and the
firm vessel is expected to be delivered in early 2028.
8. In September 2025, Eli Knutsen was delivered to Knutsen NYK from the
yard in China and commenced in October 2025 on a fifteen-year time
charter contract with Petrobras for operation in Brazil. Petrobras has
the option to extend the charter by up to five further years.
9. In December 2025, Knutsen NYK entered into a new ten-year time charter
contract with an oil major 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 early in 2028.
10. In January 2026, Knutsen NYK entered into a new five-year time charter
contract with an oil major 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 early in 2028.
Outlook
As at December 31, 2025: (i) the Partnership had charters with an average remaining fixed duration of 2.6 years, with the charterers of the Partnership's vessels having options to extend their charters by an additional 4.1 years on average and (ii) the Partnership had $929.8 million of remaining contracted forward revenue, excluding charterers' options and charters agreed or signed after that date. As at December 31, 2025, the nineteen vessels which comprised the Partnership's fleet had an average age of 10.2 years. During Q4 2025, fifteen of the vessels in our fleet operated in Brazil. The market for shuttle tankers in Brazil has continued to tighten, in particular for the Suezmax vessel class around which that market has increasingly consolidated, 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.
Following a protracted period of muted demand in the North Sea region, positive momentum has been regained with the 2025 activation and ramp-up of multiple FPSOs spanning from the UK North Sea to the Barents Sea. The North Sea development pipeline continues to expand as well, with the announcement of new discoveries and multi-year projects intended to further augment production across the region, including at both the Goliat FPSO and Johan Castberg FPSO.
On October 31, 2025, the Partnership received an unsolicited non-binding proposal from KNOT, pursuant to which KNOT proposed to acquire through a wholly-owned subsidiary all publicly held common units of the Partnership in exchange for $10 in cash per unit (the "KNOT Offer"). The Conflicts Committee of the Partnership's Board, which is comprised of only non-KNOT-affiliated directors, retained Evercore Group L.L.C., Richards, Layton & Finger, P.A. and IGB Group as independent advisors to assist it in evaluating the KNOT Offer. The Conflicts Committee and its independent advisors reviewed the KNOT Offer carefully and held a series of discussions with KNOT regarding the potential transaction since receiving the proposal. Following such discussions, on March 19, 2026, the parties announced that they were not able to reach an agreement and have therefore terminated discussions regarding the KNOT Offer.
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.
The Partnership's financial information for the year ended December 31, 2025 included in this press release is preliminary and unaudited and is subject to change in connection with the completion of the Partnership's year end closing procedures and further financial review. Actual results may differ as a result of the completion of the Partnership's year end closing procedures, review adjustment and other developments that may arise between now and the time the audit for the year ended December 31, 2025 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 March 26, 2026 at 9:30 AM (Eastern Time) to discuss the results for Q4 2025. All unitholders and interested parties are invited to join via the live webcast link on the Partnership's website: www.knotoffshorepartners.com. A replay of the webcast will be available at the same link following the conclusion of the live call.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Year Ended
------------------------------- ----------------------
December September December December December
31, 30, 31, 31, 31,
(U.S. Dollars
in thousands) 2025 2025 2024 2025 2024
--------------- --------- --------- --------- --------- -----------
Time charter and
bareboat
revenues $ 95,945 $ 96,329 $ 84,434 $361,185 $306,915
Voyage revenues
(1) -- -- 438 466 3,628
Loss of hire
insurance
recoveries -- -- 5,892 607 5,970
Other income 542 538 491 2,185 2,086
------- ------- ------- ------- -------
Total revenues 96,487 96,867 91,255 364,443 318,599
------- ------- ------- ------- -------
Gain from
disposal of
vessel -- -- -- 1,342 703
Vessel operating
expenses 34,693 33,724 26,205 132,030 108,519
Voyage expenses
and commission
(2) 35 -- 430 1,746 3,600
Depreciation 30,627 30,940 28,425 119,703 111,817
Impairment (3) 20,259 -- -- 20,259 16,384
General and
administrative
expenses 2,507 1,540 1,530 7,398 6,067
------- ------- ------- ------- -------
Total operating
expenses 88,121 66,204 56,590 281,136 246,387
------- ------- ------- ------- -------
Operating income
(loss) 8,366 30,663 34,665 84,649 72,915
------- ------- ------- ------- -------
Finance income
(expense):
Interest income 1,088 832 1,055 3,571 3,636
Interest expense (15,328) (16,484) (16,167) (62,030) (67,352)
Other finance
expense (257) (147) (87) (755) (358)
Realized and
unrealized gain
(loss) on
derivative
instruments
(4) 414 376 4,560 (924) 6,798
Net gain (loss)
on foreign
currency
transactions (109) (87) (772) (89) (943)
------- ------- ------- ------- -------
Total finance
expense (14,192) (15,510) (11,411) (60,227) (58,219)
------- ------- ------- ------- -------
Income (loss)
before income
taxes (5,826) 15,153 23,254 24,422 14,696
Income tax
expense (420) (39) (3) (1,163) (631)
------- ------- ------- ------- -------
Net income
(loss) $ (6,246) $ 15,114 $ 23,251 $ 23,259 $ 14,065
------- ------- ------- ------- -------
Weighted
average units
outstanding (in
thousands of
units):
Common units 33,688 33,899 34,045 33,918 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 the Bodil Knutsen was written down to its
estimated fair value as of December 31, 2025. 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, 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 Year Ended
--------------------------------- ---------------------
December September December December December
31, 30, 31, 31, 31,
(U.S. Dollars
in
thousands) 2025 2025 2024 2025 2024
------------- -------- ----------- ---------- --------- ----------
Realized gain
(loss):
Interest rate
swap
contracts $ 1,694 $ 2,183 $ 3,698 $ 9,508 $15,518
Total realized
gain (loss): 1,694 2,183 3,698 9,508 15,518
------ ------ ------ ------- ------
Unrealized
gain (loss):
Interest rate
swap
contracts (1,280) (1,807) 862 (10,432) (8,720)
Total
unrealized
gain (loss): (1,280) (1,807) 862 (10,432) (8,720)
------ ------ ------ ------- ------
Total realized
and
unrealized
gain (loss)
on derivative
instruments: $ 414 $ 376 $ 4,560 $ (924) $ 6,798
====== ====== ====== ======= ======
____________________
(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
December 31, 2025, 420,675 of the Class B Units had been converted to
common units.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
(U.S. Dollars in
thousands) At December 31, 2025 At December 31, 2024
------------------------- ---------------------- ----------------------
ASSETS
Current assets:
Cash and cash equivalents $ 88,983 $ 66,933
Amounts due from related
parties 705 2,230
Inventories 4,288 3,304
Derivative assets 2,276 8,112
Other current assets 15,192 14,793
------------------ ------------------
Total current assets 111,444 95,372
------------------ ------------------
Long-term assets:
Vessels, net of
accumulated depreciation 1,557,021 1,462,192
Right-of-use assets 875 1,269
Deferred tax assets 2,662 3,326
Derivative assets 1,908 5,189
Accrued income 10,927 4,817
------------------ ------------------
Total Long-term assets 1,573,393 1,476,793
------------------ ------------------
Total assets $ 1,684,837 $ 1,572,165
================== ==================
LIABILITIES AND EQUITY
Current liabilities:
Trade accounts payable $ 9,607 $ 5,766
Accrued expenses 18,428 11,465
Current portion of
long-term debt 381,126 256,659
Current lease liabilities 406 1,172
Current portion of
derivative liabilities 247 --
Income taxes payable 46 60
Current portion of
contract liabilities 9,024 2,889
Prepaid charter 5,650 7,276
Amount due to related
parties 2,392 1,835
------------------ ------------------
Total current liabilities 426,926 287,122
------------------ ------------------
Long-term liabilities:
Long-term debt 573,974 648,075
Lease liabilities 469 97
Derivative liabilities 909 --
Contract liabilities 60,102 23,776
Deferred tax liabilities 82 91
Deferred revenues 1,402 1,869
------------------ ------------------
Total long-term
liabilities 636,938 673,908
------------------ ------------------
Total liabilities 1,063,864 961,030
------------------ ------------------
Commitments and
contingencies
Series A Convertible
Preferred Units 84,308 84,308
Equity:
Partners' capital:
Common unitholders 523,205 513,603
Class B unitholders 3,871 3,871
General partner interest 9,589 9,353
------------------ ------------------
Total partners' capital 536,665 526,827
------------------ ------------------
Total liabilities and
equity $ 1,684,837 $ 1,572,165
================== ==================
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL
Partners' Capital Accumulated Series A
--------------------------
General Other Total Convertible
Class
Common B Partner Comprehensive Partners' Preferred
(U.S. Dollars
in thousands) Units Units Units Income (Loss) Capital Units
--------- ------ ------- --------------- --------- ---------------
Three Months
Ended December
31, 2024 and
2025
Consolidated
balance at
September 30,
2024 $493,336 $3,871 $8,971 $ -- $506,178 $ 84,308
------- ----- ----- ---- --------- ------- -------
Net income
(loss) 21,152 -- 399 -- 21,551 1,700
Other
comprehensive
income -- -- -- -- -- --
Cash
distributions (885) -- (17) -- (902) (1,700)
------- ----- ----- ---- --------- ------- -------
Consolidated
balance at
December 31,
2024 $513,603 $3,871 $9,353 $ -- $526,827 $ 84,308
------- ----- ----- ---- --------- ------- -------
Consolidated
balance at
September 30,
2025 $533,262 $3,871 $9,754 $ -- $546,887 $ 84,308
------- ----- ----- ---- --------- ------- -------
Net income
(loss) (7,798) -- (148) -- (7,946) 1,700
Other
comprehensive
income -- -- -- -- -- --
Repurchase of
Common Units (1,380) -- -- -- (1,380) --
Cash
distributions (879) -- (17) -- (896) (1,700)
------- ----- ----- ---- --------- ------- -------
Consolidated
balance at
December 31,
2025 $523,205 $3,871 $9,589 $ -- $536,665 $ 84,308
------- ----- ----- ---- --------- ------- -------
Year Ended
December 31,
2024 and 2025
Consolidated
balance at
December 31,
2023 $510,013 $3,871 $9,285 $ -- $523,169 $ 84,308
------- ----- ----- ---- --------- ------- -------
Net income
(loss) 7,131 -- 134 -- 7,265 6,800
Other
comprehensive
income -- -- -- -- -- --
Cash
distributions (3,541) -- (66) -- (3,607) (6,800)
------- ----- ----- ---- --------- ------- -------
Consolidated
balance at
December 31,
2024 $513,603 $3,871 $9,353 $ -- $526,827 $ 84,308
------- ----- ----- ---- --------- ------- -------
Consolidated
balance at
December 31,
2024 $513,603 $3,871 $9,353 $ -- $526,827 $ 84,308
------- ----- ----- ---- --------- ------- -------
Net income
(loss) 16,157 -- 302 -- 16,459 6,800
Other
comprehensive
income -- -- -- -- -- --
Repurchase of
Common Units (3,020) -- -- -- (3,020) --
Cash
distributions (3,535) -- (66) -- (3,601) (6,800)
------- ----- ----- ---- --------- ------- -------
Consolidated
balance at
December 31,
2025 $523,205 $3,871 $9,589 $ -- $536,665 $ 84,308
------- ----- ----- ---- --------- ------- -------
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
Year Ended December 31,
-----------------------------
(U.S. Dollars in thousands) 2025 2024
-------------------------------------- -------------- -------------
OPERATING ACTIVITIES
Net income (1) $ 23,259 $ 14,065
Adjustments to reconcile net income
to cash provided by operating
activities:
Depreciation 119,703 111,817
Impairment 20,259 16,384
Amortization of contract
intangibles / liabilities (6,756) (963)
Amortization of deferred revenue (467) (467)
Amortization of deferred debt
issuance cost 2,391 2,221
Drydocking expenditure (14,690) (553)
Income tax (benefit)/expense 1,163 631
Income taxes paid (127) (41)
Unrealized (gain) loss on
derivative instruments 10,432 8,720
Unrealized (gain) loss on foreign
currency transactions (609) 776
Net gain from disposal of vessel (1,342) (703)
Changes in operating assets and
liabilities:
Decrease (increase) in amounts
due from related parties 3,198 (10,445)
Decrease (increase) in
inventories (1,066) 583
Decrease (increase) in other
current assets 1,300 (4,371)
Decrease (increase) in accrued
income (6,110) (4,817)
Increase (decrease) in trade
accounts payable 4,263 (4,379)
Increase (decrease) in accrued
expenses 4,006 (4,176)
Increase (decrease) prepaid
charter (1,626) 6,809
Increase (decrease) in amounts
due to related parties (1,445) 6,054
--------- ---------
Net cash provided by operating
activities 155,736 137,145
--------- ---------
INVESTING ACTIVITIES
Additions to vessel and equipment (281) (945)
Proceeds from asset swap (net
cash) 1,040 607
Acquisition of Daqing Knutsen
(net of cash acquired) (26,049) --
--------- ---------
Net cash provided by (used in)
investing activities (25,290) (338)
--------- ---------
FINANCING ACTIVITIES
Proceeds from long-term debt 117,000 60,000
Repayment of long-term debt (210,887) (182,392)
Payment of debt issuance cost (1,322) (521)
Cash distributions (10,401) (10,407)
Repurchase of common units (3,020) --
--------- ---------
Net cash used in financing
activities (108,630) (133,320)
--------- ---------
Effect of exchange rate changes
on cash 234 (475)
Net increase (decrease) in cash
and cash equivalents 22,050 3,012
Cash and cash equivalents at the
beginning of the period 66,933 63,921
--------- ---------
Cash and cash equivalents at the end of
the period $ 88,983 $ 66,933
--------- ---------
____________________
(1) Included in net income (loss) is interest paid amounting to $60.4
million and $65.7 million in 2025 and 2024, 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, Year Ended
-------------------------------- ------------------------------
December 31, December 31, December 31, December 31,
2025 2024 2025 2024
(U.S. Dollars
in
thousands) (unaudited) (unaudited) (unaudited) (unaudited)
------------- --------------- --------------- ------------- ---------------
Net income
(loss) $ (6,246) $ 23,251 $ 23,259 $ 14,065
Interest
income (1,088) (1,055) (3,571) (3,636)
Interest
expense 15,328 16,167 62,030 67,352
Depreciation 30,627 28,425 119,703 111,817
Impairment 20,259 -- 20,259 16,384
Income tax
expense 420 3 1,163 631
EBITDA 59,300 66,791 222,843 206,613
Other
financial
items (a) (48) (3,701) 1,768 (5,497)
Adjusted
EBITDA $ 59,252 $ 63,090 $ 224,611 $ 201,116
____________________
(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 and
Venezuela;
-- 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, 2024 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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20260325178717/en/
CONTACT: KNOT Offshore Partners LP
Aberdeen, United Kingdom
Questions should be directed to:
Derek Lowe via email at ir@knotoffshorepartners.com
(END) Dow Jones Newswires
March 25, 2026 07:00 ET (11:00 GMT)
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