KNOT Offshore Partners (KNOP) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenues were $74.4 million, with operating income at $1.3 million and a net loss of $12.9 million due to vessel impairments; adjusted operating income was $17.7 million and adjusted net income $3.5 million.

• Adjusted EBITDA for the quarter was $45.5 million.

• Fleet utilization was 98.8%, with no planned dry docking impacting operations.

• A cash distribution of $0.026 per common unit was declared and paid in August 2024.

• Fleet expanded and average age reduced via a swap: Dan Cisne sold and Tuva Knutsen acquired, with Tuva Knutsen under a long-term charter and hire rate guaranteed for seven years.

Financial highlights

• Available liquidity at quarter-end was $66.6 million, including $56.6 million in cash and $10 million in undrawn credit.

• $901 million in total interest-bearing obligations as of June 30, 2024, with $91 million due within 12 months.

• $68 million reduction in liabilities in H1 2024, with $52 million from long-term debt and $10 million from debt due within a year.

• $861 million of $901 million in debt facilities are vessel-secured; $50 million in revolving credit is unsecured.

• Convertible preferred units at $84.3 million; partners' capital at $512.6 million.

Outlook and guidance

• Positive outlook driven by anticipated production growth in shuttle tanker-served fields and strong sector confidence.

• Projected shortage of shuttle tanker capacity due to limited newbuild orderbook; focus on marketing available vessels and securing new contracts.

• 2024 charter coverage stands at 93% from fixed contracts, increasing to 95% with options.

• No significant changes expected in OpEx or G&A for the remainder of the year, though inflationary pressures persist.

• North Sea demand expected to recover as new oil projects come online.