Q4 2024 KNOT Offshore Partners LP Earnings Call
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Unnamed Moderator: Good morning and thank you all for attending Knot Offshore Partners' fourth quarter 2024 earnings call. My name is Brieke and I will be your moderator for today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end.
Good morning, and thank you for attending email offshore partners fourth quarter 'twenty 'twenty four earnings calls.
breaker: My name is breaker and I will be your moderator for today.
breaker: All lines will be muted during the presentation portion of the cool with an opportunity for questions and answers at the end.
Derek Lowe: I would now like to pass the call over to your host, Derek Lowe, Chief Executive Officer and Chief Financial Officer of Knot Offshore Partners. Thank you. You may proceed, Derek. Thank you, Brika. 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.
Derek Lowe: I would now like to pass the call over to your host Derek Lowe, Chief Executive Officer, and Chief Financial Officer, those knot offshore partners. Thank you you May proceed garik.
Derek Lowe: Thank you, Greg and good morning, Ladies and gentlemen, my name is Derrick I'm, the chief executives and Chief Financial Officer, Scott Offshore partners welcome to the Partnership's earnings call for the fourth quarter of 2024.
Derek Lowe: Welcome to the Partnerships Earnings Call for the fourth quarter of 2024. Our website is knotoffshorepartners.com and you can find the earnings released there along with this presentation. On slide two, you will 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 significant uncertainties and contingencies, many of which are beyond our control. Actual results may differ materially from those expressed or implied in forward-looking statements, and the Partnership does not have or undertake a duty to update any such forward-looking statements made as of the date of this presentation.
Speaker Change: Well when scientists cannot offshore partners Dot com and you can find the earnings release that along with this presentation.
Speaker Change: On slide two you will find guidance on the inclusion of forward looking statements in today's presentation. These amazing goodbye and reflect management's current views known and unknown risks and are based on assumptions and estimates, which are inherently subject to significant uncertainties and contingencies.
Speaker Change: Any of which are beyond our control.
Speaker Change: Actual results may differ materially from those expressed or implied in forward looking statements.
Jussi: The partnership does not have to answer thank you jussi to update any such forward looking statements made as of the site.
Speaker Change: This presentation.
Derek Lowe: For further information, please consult our SEC filings, especially in relation to our annual and quarterly results. Today's presentation also includes non-U.S. GAAP measures and our earnings release includes a reconciliation of these to the most directly comparable GAAP measures.
Speaker Change: For further information please consult our SEC filings, especially in relation to our annual and quarterly results.
Speaker Change: Today's presentation also includes certain non U S GAAP measures.
Speaker Change: Our earnings release includes a reconciliation of these to the most directly comparable GAAP measures.
Derek Lowe: On slide three we have the financial and operational headlines for Q4. Revenues were $91.3 million, operating income $34.7 million, net income $23.3 million. adjusted EBITDA was $63.1 million. We closed Q4 with $90 million in available liquidity made up of $67 million in cash and cash equivalents plus $23 million in undrawn capacity on our credit facility. We operated with 98.3% utilisation and the vessel time available for scheduled operations was not impacted by any planned dry docking. Following the end of Q4, we declared a cash distribution of US$0.06 per common unit, which was paid in early February.
Speaker Change: On slide three we have the financial and operational headlines for Q4.
Speaker Change: Revenues were $91 3 million operating income $34 7 million net income $23 3 million.
Speaker Change: Adjusted EBITDA was $63 1 million, we closed Q4 with $19 million in available liquidity made up of $67 million in cash and cash equivalents plus $23 million in undrawn capacity on our credit facilities.
Speaker Change: We operated with 98, 3% utilization on the vessel time available for scheduled operations was not impacted by any clients drydocking.
Speaker Change: Following the end of Q4, we decided the cash distribution of $2 six U S cents per common unit, which was paid in early February.
Derek Lowe: on slide four. Our outlook remains positive on both industry dynamics and the partnership's positioning to participate fruitfully in our markets. Significant growth is anticipated in production in fields which rely on service by shuttle tanks. In particular, we've seen Brazilian FBSOs delivering and starting up ahead of schedule, with quite a few still to come. In the North Sea, the long-awaited Johan Casberg FBSO is expected to start production shortly, while the Penguins FBSO began production recently. Penguins is Shell's first new operated platform in the North Sea in over 20 years, bringing production back to a field that's been offline since the decommissioning of the prior generation platform in 2021.
Speaker Change: On slide four.
Speaker Change: Our outlook remains positive on both industry dynamics and the partnerships positioning to participate frequently in our markets.
Significant growth is anticipated in production and sales with your loan service by shuttle tankers and <unk>.
Speaker Change: Particularly we've seen Brazilian Fas is delivering and starting up ahead of schedule with quite a few still to come.
Speaker Change: In the North sea the long awaited Jan Caspar I guess DSO is expected to start production shortly while the penguins at PSA began production recently.
Speaker Change: Penguins shallow so asking you operated platform in the North sea in over 20 years is bringing production back to a field spinoff lines since the decommissioning project duration platform in 2021.
Derek Lowe: On Johan Casberg, we're aware of some media speculation that a KNOP vessel has already offloaded cargoes, but I can clarify that this operation was our vessel coming alongside still as part of the commissioning process. Nonetheless, the picture of Johan Casberg is positive and we look forward to operations there. On the vessel supply front, we're seeing continued new build orders placed in order to service the large new production volumes coming online in the years ahead, including for our sponsor Knitson MYK. A measured amount of new shuttle tanker ordering is unavoidable and in fact necessary as a shortage of shuttle tanker capacity remains projected in the coming years.
Speaker Change: On Johan <unk>, we were aware of some media speculation. This occasion, if a vessel is already offloaded cargos.
Speaker Change: But I can clarify that this operation is all vessel coming alongside still as part of the commissioning process. Nonetheless, the picture of gallon gasoline get positive and we look forward to operations there.
Speaker Change: On the vessel supply fronts, we're seeing continued new build orders placed in order to service the large new production volumes coming online in the years ahead, including for our sponsor.
Hey.
Speaker Change: A measured amount of new shuttle tanker ordering is unavoidable and in fact necessary.
Speaker Change: There is a shortage of shuttle tanker capacity remains projected in the coming years.
Derek Lowe: As usual for the shuttle market, we believe that all known new-build orders are backed by firm-client charters, which minimises or even eliminates the dynamic of speculation around anticipated supply into the global fleet in two to three years' time.
Speaker Change: As usual for the chocolate market, we believe that all known Newbuild orders are backed by firm time charters, which minimizes or even eliminates the dynamic the speculation around anticipated supply into the global fleet in two three years' time.
Derek Lowe: The partnership remains financially resilient. strong contracted revenue position of $870 million at the end of Q4 on fixed contracts which averaged 2.4 years in duration. Chancellor's options are additional to this and average a further 4.8 years. with the market having strengthened and given expectations for tightness in the years ahead. The economic rationale for exercising these options has been strengthening and we increasingly expect these options to be taken up.
Speaker Change: The partnership remains financially resilient.
Speaker Change: Strong contracted revenue position of $870 million at the end of Q4 and fixed contracts, which averaged $2 four years in duration.
Speaker Change: So there is options are additional to this on average a further four to eight years.
Speaker Change: With the market having strengthened give.
Speaker Change: Given expectations for tightness in the years ahead.
Speaker Change: The economic rationale for exercising these options has been strengthening and we increasingly expect these options to be taken up.
Derek Lowe: Our near-term charting exposure has been addressed by a swap of the Dan Sabia for the Lever Knudsen, which we announced on the 27th of February. and our passion for cash generation and liquidity balance is sufficient for our operations and the significant pay down rate for our debt, which is in the region of $90 million per year for instalment payments. The debt on the lever acquisition fits in with this repayment profile also.
Speaker Change: Our near term chartering exposure is being addressed by swap with Dan Sabia, Lipa commitment, which we announced on the 27th of February.
Speaker Change: And I'll pass on cash generation and liquidity balance of sufficient for all of operations and the significant paydown breakthrough all debt, which is in the region of $90 million per year for installment payments.
Speaker Change: A desk on the lever acquisition fits into this repayment profiles.
Derek Lowe: On slide 5, a number of developments in Q4 were announced already on the previous earnings call, including a new charter for Hildegard Knutsen, which is about to begin.
Speaker Change: On slide five a number of developments in Q4 were announced already on the previous earnings call, including a new charter by Hilda Knutsen, which is about to begin.
Derek Lowe: on slide six. Our most recent developments include close out of the insurance claim for Toral Knutsen dating back to January 2024, totalling a bit less than $6 million. A brief option exercise for Brasil Knudsen and for Vigdis Knudsen, a switch to bare boat and extension of fixed duration by three years out to 2030, along with an option for a further two years.
Speaker Change: On slide six I'll.
Speaker Change: Our most recent developments include Closeouts with insurance claim to Telecommute and dating back to January 2024, talking about SM $6 million.
Speaker Change: A brief option exercise for <unk> and Vigdis knutsen are switched to bareboat and extension of fixed duration of about three years out to 2030, along with an option for a further two years.
Derek Lowe: The most important recent development is on slide 7, showing a swap of the Dan Sabia for Leverknecht's Leiva has brought nearly five years of fixed or guaranteed future charter revenue, and this swap was a significant step in fleet and pipeline growth without the need for new funding. Additionally, this transaction leaves our fleet wholly concentrated in the most in-demand shuttle tanker class. On to slide eight, you can see consistent and growing revenues over the quarters and years, along with improving profitability. Slide 9 similarly reflects consistent and growing adjusted EBITDA and you can find the definition of this non-GAAP measure in the appendix.
Speaker Change: The most important recent development is on slide seven showing a swap of Dan sabia lever commencing.
Speaker Change: David has brought in 85 years of fixed or guaranteed future charter revenue and the swap was a significant step in fleets and pipeline growth without the need for new funding.
Speaker Change: Latest transaction. These are fleet totally concentrated in the most in demand shuttle tanker classes.
Speaker Change: On to slide eight you can see consistent and growing revenues over the quarters and years, along with improving profitability.
Speaker Change: Slide nine similarly reflects consistent and growing adjusted EBITDA and you can find the definition of this non-GAAP measure in the appendix.
Derek Lowe: On slide 10, there are two notable points in the balance sheet over 2024. First is that four of our debt facilities have moved up from long-term to current liabilities because of their upcoming maturities. The second is that even after the assumption of debt involved in the Tuber acquisition in September, our overall liabilities decreased by $29 million in 2024, as we continue to make contractual debt repayments in the area of $90 million per year.
Speaker Change: On slide 10, there are two notable points of the balance sheet to April 2024, first is that four of our debt facilities that moved up from long term to current liabilities because of their upcoming maturities.
Speaker Change: The second is that even after the assumption of debt is involved in the <unk> acquisition in September.
Speaker Change: Liabilities decreased by $29 billion in 2024, as we continue to make contractual debt repayments in the area of $92 million per year.
Derek Lowe: The debt facilities can be seen on slide 11, which sets out the maturity profile. On line one, the first of our evolving credit facilities is due to mature in August 2025. And on line two, the loan secured by Toverknutsen and Snovaknutsen matures over September and October 2025. The second revolver matures in November 2025. We typically seek to refinance such facilities on very comparable terms and we have a good track record of refinancing success even in less favourable market environments. The highlighted column shows how the outstanding balances of each facility have been reducing because of the repayments we've been making in line with scheduled repayment terms. The current instalments are the amount of capital repayment due over the next year, which do not include interest or the final balloon payments due on the maturity date.
Speaker Change: The debt facilities can be seen on slide 11, which sets out the maturity profile.
Speaker Change: On line one.
Speaker Change: Our revolving credit facilities is due to mature in August 2025.
Speaker Change: And online to the loan secured by <unk> matures over September and October 2025, the second revolver matures in November 2025.
Speaker Change: We typically seek to refinance such facilities on very comparable terms and we have a good track record of refinancing success, even in a less favorable market environment.
Speaker Change: The whole logic column shows how the outstanding balances of exclusivity you've been reducing because the repayments, we'd be making inline with scheduled repayment terms.
Speaker Change: The current installments of the amount of capital repayment due over the next year, which do not include interest or the final balloon payments due on the maturity dates.
Derek Lowe: Of note, $93 million in current instalments is due to be paid during 2025. Our typical pattern is for our vessels to provide security for our debt facilities and that applies to 17 out of the 18 vessels in the fleet out of the 31st of December with the one exception being Damsabia which is the vessel we sold earlier this month. $883 million out of $910 million in debt facilities at 31st of December are secured by vessels while the two revolving credit facilities totalling $50 million of capacity are unsecured. The Lever Knudsen, which we acquired earlier this month, has 73 million of secured debts attached maturing in October 26, and on very similar terms and conditions to the other secured loans shown here.
Speaker Change: Of note $93 million in current installments at GSV paid during 2025.
Speaker Change: Our typical pattern is for our vessels to provide security for our debt facilities and.
Speaker Change: And that applies to 17 out of the 18 vessels in our fleet as of the 31st of December.
Speaker Change: With the one exception being done Salvia, which is the vessel we sold earlier this month.
Speaker Change: $883 million as of $910 million in debt facilities at 30 <unk> of December are secured by vessels while.
Speaker Change: While the two revolving credit facilities totaling $50 million of capacity are unsecured.
Speaker Change: The <unk>, which we acquired earlier this month, a $73 million of secured debt attached maturing in October 2006 and on.
Speaker Change: Some of the terms and conditions to the other secured loans shown here.
Derek Lowe: The maturity profile of these debts is set out graphically on slide 12. As you can see, repayments have spread out over the coming years, which include material balloons in each of 2025 and 2026.
Speaker Change: The maturity profile of these debts such that graphically on slide 12 as.
Speaker Change: As you can see repayments are spread out over the coming years, particularly material balloons in each year 2025 and 2026.
Derek Lowe: Slide 13 shows the contracted pipeline in chart format, reflecting the developments I set out earlier, as well as the fact that Raquel Knutson's option period is the only material outstanding period for the year, as well as the possibility of brief off-hire as the Brazil-Knutson transitions between charters. While nothing is certain until it's formally in place, we are cautiously optimistic about securing that additional coverage in the current tight market, either as an extension or under a new charter. Similarly, slide 14 highlights an encouraging 94% of fixed charter coverage for 2025. We currently have 75% of 2026 fixed as well, although the open percentage does rise materially over the course of the year, which demonstrates the need for our continuing commercial effort.
Speaker Change: Slide 13 shows the contracted pipeline in chart format without seeing the developments that stands out earlier as well as the fact that Rocco Calypso option period is there any material outstanding periods of the year as well as the possibility of brief off higher as the Brazil commit some transitions between charters.
Speaker Change: While nothing assessments at its formally in place we are cautiously optimistic about securing those additional coverage in the current tight market or there was an extension or under the new charter.
Speaker Change: Similarly, slide 14 highlights an encouraging 94% of fixed charter coverage for 2025.
Speaker Change: When you have 75% of 2026 fixed as well, although the open percentage does rise materially over the course of the year, which demonstrates the need for our continuing commercial efforts.
Derek Lowe: On slide 15, we see our sponsor's inventory of vessels which are eligible for purchase by the partnership. This applies to any vessel owned by or on order for our sponsor, where the vessel has secured a firm contract period of at least five years in length. At present, four existing vessels and five under construction fall into this category. There is no assurance that any further acquisitions will be made by the Partnership, and any transaction will be subject to the Board approval of both parties, which includes the Partnership's independent Conflicts Committee.
Speaker Change: On slide 15, we see all sponsors inventory vessels, which are eligible for purchase by the partnership.
Speaker Change: This applies to any vessel owned by on order for our sponsor.
Speaker Change: The vessel has secured a firm contract periods at least five years.
Speaker Change: Our present for existing vessels and five under construction fall into this category.
Speaker Change: There is no assurance that any further acquisitions, we made by the partnership and any transaction would be subject to the board's approval of both parties, which includes the partnership's independent complex Committee.
Derek Lowe: We continue to believe that key components of KNFE's strategy and value proposition are creative investment in the fleet and a long-term sustainable distribution. As such, we intend to pursue long-term charter visibility and accretive drop-down supportive of long-term cash flow generation.
Speaker Change: We continue to believe that key components of <unk> strategy and value proposition are accretive investments in fleet and a long term sustainable distribution.
Speaker Change: As such we intend to pursue long term charter visibility and accretive dropdown supportive of long term cash flow generation.
Derek Lowe: On slide 16 to 18, we provided some useful illustrations of the strong demand dynamics in the Brazilian market as published by Petrobras. We encourage you to review Petrobras' materials directly at the webpage as shown there. The primary takeaway from each of these slides is consistent, there's very significant committed demand growth coming in the Brazilian market in the form of new FPSOs that will require regular service from shuttle tankers. We believe that recent reports of additional vessel construction contracts are an endorsement of the strong anticipated market conditions in the medium and longer term. Five outstanding new build contracts are for our sponsor Knutson MYK and are due for delivery by the end of 2027.
Speaker Change: On slide 16 to 18, we provided some useful illustrations of the strong demand dynamics in the Brazilian market as published by Petrobras. We encourage you to review Petrobras is materials directly at the web pages China.
Speaker Change: The primary takeaway from each of these slides is consistent.
Speaker Change: Significant committed demand growth coming in the Brazilian market in the form of new <unk> that will require regular service from shuttle tankers.
Speaker Change: We believe that recent reports of additional vessel construction contracts are an endorsement of the strong anticipated market conditions in the medium and longer term.
Speaker Change: Five outstanding Newbuild contracts off for our sponsor <unk> and the G for delivery by the end of 2027.
Derek Lowe: We would not be surprised to see further new build orders placed in order to service the large new production volumes coming online in the years ahead. In a trend that also applies to oil production globally, you'll see that even in the years ahead where aggregate production growth slows, deep offshore production, in this case the Brazilian pre-salt, continues to outpace the overall market and take market share.
Speaker Change: We would not be surprised to see further new build orders placed in order to service the large new production volumes coming online in the years ahead.
Speaker Change: And the trend at all surprised oil production globally, you'll see that even in the years ahead, where aggregate production growth slows.
Speaker Change: Deep offshore production in this case, the Brazilian pre salt continues to outpace the overall market and take market share.
Derek Lowe: On slide 19, we provide information relevant to our US unit holders and particularly those seeking a Form 1099. Those holding units via their custodians or brokers should approach those parties directly. Those with directly registered holdings should contact our transfer agent at Trinity Trust Company whose details are shown there.
Speaker Change: On slide 19, we provide information relevant to our U S unit holders and particularly those seeking a form 10 99 that was holding units from other custodians or breakfast should approach those policies directly.
Speaker Change: Basically directly registered holdings should contact our transfer agent Equiniti Trust company, whose details are shown there.
Derek Lowe: On slide 20 we include some reminders of the strong fundamentals of our business in the market we serve, our assets, competitive landscape, robust contractual footprint and resilient finance.
Speaker Change: On Slide 20, we include some reminders of the strong fundamentals of our business and the market we serve.
Speaker Change: Assets competitive landscape robust contractual footprint and Brazilian finances.
Derek Lowe: I'll finish with slide 21, recapping our financial and operational performance in Q4 2024 and the subsequent time and our current outlook. We're glad to have delivered high and safe utilisation, which have generated consistent financial performance. We're delighted to have taken the further growth step by swapping Dan Sarby for Liva Knutsen. Our continued commercial focus remains on adding to our longer-term charter visibility and the cash flows that provide us with the capacity for both accretive investment in the fleet and a long-term sustainable distribution. And in the coming months, we will also be addressing the four refinancings which are coming due this year.
Speaker Change: I'll finish with slide 21, recapping, our financial and operational performance in Q4, 2024, and the subsequent time.
Speaker Change: And our current outlook.
Speaker Change: We are glad to have delivered high and safety utilization, which has generated consistent financial performance, which allows you to have taken a further growth step by swapping tonnes southeast deliver connection.
Speaker Change: Our continued commercial focus remains on adding to our longer term charter visibility and the cash flows that provide us with the capacity for both accretive investments in the fleet and a long term sustainable distribution.
Speaker Change: And in the coming months, we will also be addressing the full refinancings coming due this year.
Derek Lowe: In total, though, we are making good progress and are pleased to have established positive momentum against an improving market backdrop.
Speaker Change: In total they were making good progress and are pleased to have established positive momentum against an improving market backdrop.
Unnamed Moderator: Thank you for listening and with that I'll hand the call back to Brieke for any questions. Thank you Derek. We will now begin the question and answer session. If you would like to ask a question you can do so by pressing star followed by one on your telephone keypad and if for any reason you would like to remove that question please press star followed by two. And again, to ask a question, please press star 1. And as a reminder, if you're using a speakerphone, please remember to pick up your handset before asking a question.
Speaker Change: Thank you for listening and with that I'll hand, the call back to breaker for any questions.
Speaker Change: Thank you Derek we will now begin the question and answer.
Speaker Change: Ian.
Speaker Change: If you would like to ask a quick can you can do so by pressing star followed by one on your telephone keypad.
Speaker Change: And if any reason you would like to meet that question. Please press star followed by Keith and.
Dan Sabia: Hey, Dan.
Speaker Change: I'll ask a question please press star one.
Speaker Change: And as a reminder, if anything speakerphone, please pick up your handset.
Unnamed Moderator: We will pause here briefly whilst questions are answered.
Speaker Change: Ask your question.
Speaker Change: Rotate briefly Welles' question al Thank you Scott.
Liam Burke: We have the first question on the line from Liam at that would be Riley security. You may proceed. Thank you. Hi, Derek. How are you today? Hi Liam, good thanking you. I'm doing just great, thank you. Derek, you've got a long history of being able to refinance high quality assets. You're improving, your liquidity is improving, your cash flow is up year over year, up nicely.
Speaker Change: We have the first question on the line from Liam Burke with B Riley Securities You May proceed.
Speaker Change: Thank you Hi, Derik how are you today.
Speaker Change: Hi, I'm good thank you.
Speaker Change: Im doing just great. Thank you.
Speaker Change: Eric.
Speaker Change: <unk> got a long history of being able to refinance high quality assets.
Speaker Change: Yes.
Speaker Change: Improving liquidity is improving cash flow is up year over year.
Derek Lowe: How do you think about allocation of capital now that you've got a fairly safe lease book here? Thank you. We are pleased with the way things are going. I mean, I would say at the moment that we do count in our freely available liquidity $50 million worth of RCF capacity. So 90 isn't 90 of cash without other considerations. That's probably the first thing to be mindful of as you look at those balances. We don't take anything for granted in our debt renegotiations. And the world is perhaps a slightly more volatile place now than it has been in the last couple of years.
Speaker Change: Up nicely.
Speaker Change: How do you think about allocation of capital now that you've got a fairly size.
Speaker Change: Lease book here.
Speaker Change: While we are pleased thank you we're pleased with that.
Speaker Change: The way things are going I mean, I would say at the moment.
Speaker Change: We do count in a freely available liquidity of $50 million worth of <unk>.
Speaker Change: So you have capacity.
Speaker Change: So 90 is 90.
Speaker Change: Cash without all the considerations and Thats, probably the first thing to be mindful of as you look at those balances.
Speaker Change: We don't take anything for granted.
Speaker Change: Debt renegotiations and.
Speaker Change: The world is perhaps a slightly more volatile price now than it has been in the last couple of years.
Derek Lowe: And so we're going to proceed with those debt renegotiations in good time, well ahead of maturity dates, as we usually do. I agree our track record on that is good and we don't see any particular obstacles there. But nonetheless, that is a more immediate priority.
Speaker Change: And so we're going to proceed with those.
Speaker Change: Those debt renegotiations in good time, well ahead of the maturity dates.
Speaker Change: As we usually do.
Speaker Change: I agree all track record on that is good and we don't see any particular obstacles that but nonetheless that is.
Derek Lowe: And then into the medium term, we are still looking to fill continues to think it's in the long-term interests of the unit holders to both to consider accretive acquisitions and the long-term sustainable distribution and they have both of those things in mind as they look at decisions that they make. Okay, fair enough.
Speaker Change: A more immediate priority and then.
Speaker Change: And into the medium term, we are still looking to fill.
Sure.
Speaker Change: Spaces in our charter coverage.
Speaker Change: Next year, if you saw.
Speaker Change: Slide 14, I think the coverage average is 75% fixed.
Speaker Change: Next year, but clearly it drops away.
Speaker Change: Over the course of the year.
Speaker Change: Something that from some of our chartering team, particularly concern to fill up say theres a number of priorities there already.
Speaker Change: In terms of use of capital, which I think was your.
Speaker Change: Basic question, there and the boards.
Speaker Change: To think it's in the long term interests.
Speaker Change: At the unit holders to.
Speaker Change: Both to consider accretive acquisitions, and the long term sustainable distribution and they have both of those things in mind.
Speaker Change: They look at decisions that they make.
Derek Lowe: On the charter coverage, obviously... mentioned 75% covered in the next year. If you're looking at the amount of FPSO or production activity coming online, either in the North Sea or in Latin America, Are you comfortable that your available vessels will fit into that demand profile? Yeah, we don't have any, we don't have any signals that they won't be and they're all of a specification that fits. Okay, all right. Thank you, Derek. Thanks, Liam. Thank you.
Speaker Change: Okay fair enough.
Speaker Change: On the charter coverage.
Speaker Change: Obviously.
Speaker Change: You mentioned, 75% covered into next year.
Speaker Change: If youre looking at the amount of Fps so.
Speaker Change: Our production activity coming online.
Speaker Change: Either in the North sea or in Latin America.
Speaker Change: Do you are you comfortable that you are available vessels will fit into that demand profile.
Speaker Change: Yes, we don't have any we don't have any signals that they won't be.
Speaker Change: And then all of a specification that.
Speaker Change: Right.
Speaker Change: Okay, Alright, thank you Dara.
Speaker Change: Thanks Sam.
Charles Fratt: We now have Poe Fratt with Alliance Global Partners. Your line is open.
Speaker Change: Thank you.
Speaker Change: Now have fracked.
Speaker Change: <unk> with Alliance Global Partners. Your line is open.
Derek Lowe: Dare, can you address the open windows for 2026 for the Fort Elisa and is it the Recife or Recife?
Speaker Change: Okay.
Speaker Change: Derek can you address the open windows for 2026.
Speaker Change: The forward leasing is it receive fee or receive.
Derek Lowe: Are we potentially facing the same situation we had with the Dan Sabia and the other smaller shuttle tanker that was on the airboat charter to Transpetro? Can you just sort of the specs of those vessels and you know how you're looking at rechartering at this point in time? Sure, yes, Fortaleza and Recife, and you're looking at page 13, I think, aren't you, where those charges expire outside the middle of next year? I think the main difference is between those and the two dams, the size. I mean, the Fortaleza and Recife are approximately double the capacity that Cisner and Sabia have.
Speaker Change: Are we potentially facing the same situation, we had with the Dan Sabia.
Speaker Change: And the other smaller.
Speaker Change: Shuttle tanker that baton airboat charter to transplant true can.
Speaker Change: Can you just address so did the spectra those vessels and how.
Speaker Change: How youre looking at re chartering at this point in time.
Speaker Change: So, yes, both laser and Vascepa.
Speaker Change: Looking at page 13, I think you were they in.
Speaker Change: Yes, it does expire.
Speaker Change: The middle of next year.
Speaker Change: I think the main difference is.
Speaker Change: I mean, those and the two times the size.
Speaker Change: The Fortaleza and Recife, approximately double the capacity that <unk> have.
Derek Lowe: So we're far less concerned about the ability to continue deploying them than we were with Cisner and Sabia. That's helpful.
Speaker Change: So.
Speaker Change: We are far less concerned about the ability to continue deploying them to me.
Speaker Change: Sure.
Speaker Change: With systems.
Derek Lowe: But there isn't any option there.
Derek Lowe: You know, when are you currently trying to, you know, line up time charters for those? Or is it too early to, you know, work on those? Oh, we work on all open periods all the time.
Speaker Change: That's helpful.
Speaker Change: But there isn't any option there.
Speaker Change: Are you currently.
Speaker Change: Brian to lineup time charters for those or is it too early to.
Speaker Change: Work on those.
Speaker Change: How do we work on all open periods all the time.
Derek Lowe: Okay, any interest in those, or can you give us a flavor for, you know, the, your concept? You said you were confident.
Speaker Change: Okay any interest in out your can you give us a flavor for.
Speaker Change: Yes.
Derek Lowe: So what kind of confidence interval should I use?
Speaker Change: You said you were confident so what kind of confidence interval should I use.
Derek Lowe: Well that's a market conditions observation and we don't comment on individual negotiations until we've got something that's signed and announceable.
Speaker Change: So that's a market conditions observation.
Speaker Change: Don't comment on individual negotiations until we've got something that's at the signs in.
Derek Lowe: Okay, what, can you just address the shift in, with Shell on the Vignes, Vignes, or Vignes, you know, why did they decide to flip over to bare boat chartering. the shuttle tanker and, you know, can you just give us the dynamics of that decision?
Speaker Change: Announcer.
Speaker Change: Okay.
Speaker Change: Can you just address the shift in with shell on the Big Big desk.
Speaker Change: Or dig this.
Speaker Change: Why did they.
Speaker Change: Decide to flip over to bareboat chartering.
Speaker Change: The shuttle tanker and <unk>.
Derek Lowe: And then also, is there an impact to the net cash flow that will be generated from that shuttle tank? Yeah, I mean the first, I'll answer your last point first. The bare boat terms are commercially comparable to the terms that would have applied under the previous time charter. So from a financial point of view, we are obviously content with that switch. It's also been extended as well. So we've got fixed coverage for that vessel for longer as part of that negotiation process, which obviously is welcome too. In terms of shelves and tensions, there are benefits of an oil major operating their own fleet rather than putting them out on management contracts and That's what I expect Shell were looking at.
Speaker Change: Can you just give us the dynamics of that decision and then also is there any impact.
Speaker Change: Impact that net cash flow.
Speaker Change: Will be generated from that shuttle tanker.
Speaker Change: Yes, I mean, the first I'll answer your last 0.1st.
Speaker Change: <unk>.
Speaker Change: Bareboat terms are commercially comparable to the terms that.
Speaker Change: That would have applied under the previous time charter.
Speaker Change: So from a financial point of view.
Speaker Change: We are obviously content with.
Speaker Change: That's not switch.
Speaker Change: It's also been extended as well so we've got.
Speaker Change: Our fixed coverage for that vessel for longer response about that.
Speaker Change: That negotiation process, which obviously is welcome to add.
Speaker Change: In terms of shelf intentions there are.
Speaker Change: The benefits of.
Speaker Change: <unk>.
Speaker Change: And oil major Brian.
Speaker Change: Pricing around fleet rather than.
Speaker Change: Because the amount of our management contracts in.
Derek Lowe: I mean, they've had that be an option to make that switch in place since the original time charters were put in place. So that option, they've had, they've contemplated that for some time.
Speaker Change: And.
Speaker Change: That's what I expect shell, we're looking at I mean, they've had that.
Speaker Change: An option to make that switch in place since the original time charters were put in place so that option they contemplate that for some time.
Derek Lowe: It does lower your operating risk on that shuttle tanker, And then can you highlight whether any other time charters have the same option to shift to bare boat? Yeah I don't think any come to mind at the moment, and if that's incorrect we'll get back to you, but none come to mind at the moment.
Speaker Change: It does lower your operating risk on that that shuttle tanker correct.
Speaker Change: Can you highlight whether any other time charters have the same.
Speaker Change: Option to the shift to bareboat.
Speaker Change: Yes, I don't think any come to mind at the moment.
Speaker Change: And if that's if that's incorrect, we'll get back to you, but none come to mind at the moment.
Derek Lowe: Yeah, it's interesting too, because, you know, I'm not sure if you saw the recent award of, of, you know, I think it was nine shuttle tankers where Petrobras or Transpetro intends to bareboat charter the vessels, which seems, I'm just trying to figure out, you know, why the shift to potentially bareboating instead of, you know, just straight time charter.
Speaker Change: Yes, it's interesting too because I am not sure. If you saw the recent award.
Speaker Change: I think it was nine shuttle tankers, where tap.
Speaker Change: Petrol bunks are transparent trop intends to bareboat charter.
Speaker Change: The vessels, which seems I'm just trying to figure out.
Speaker Change: Why the shift to potentially bare boat instead of.
Speaker Change: Just straight time chartering.
Derek Lowe: Yeah, that's probably a question for the, for that pest learner.
Speaker Change: Yes, that's probably a question for them for that vessel.
Derek Lowe: Okay, and then, you know, we always play a game of cat and mouse with the time charter rates.
Alex: Okay, and then Alex.
Derek Lowe: and, you know, the renewals and extensions and, you know, it's always interesting and, you know, you never give sort of specific guidance, but can you just highlight the large jump sequentially in time charter revenue? You know, you seem to be all of a sudden hitting a new level, and can you talk about the forward looking time charter book?
Alex: Play a game cat and mouse with the time charter rates.
Alex: And the renewals and extensions in.
Alex: Charlie It's interesting you can never forgive sort of specific guidance, but can you just highlight the large jump sequentially in time charter revenue.
Alex: You seem to be all of a sudden hitting a new level.
Derek Lowe: Is $84 million in time charter revenue a reasonable expectation going forward, or was there something in the fourth quarter, maybe bonuses or? Other things that would have pushed that number up that won't recur in the first half of 2025? Yeah, I appreciate the question and the reason for it. We have the same competitive issue that we don't think it makes sense to expand on day rates too much. There weren't any bonus type elements in that number. So one-offs, for example, the insurance payment you can see was received and accountable separately. So it's not as if that's included.
Alex: Can you talk about the forward looking.
Alex: Time charter book.
Alex: Is $84 million and time charter revenue.
Alex: <unk> expectation going forward.
Alex: Was there something in the fourth quarter.
Speaker Change: Bonuses or.
Speaker Change: Other things that would have pushed that number up that won't recur in the first half of 2025.
Speaker Change: Yes.
Speaker Change: I appreciate the question and the reason for it and we have the same competitive issue that we don't think it makes sense to.
Speaker Change: Expand on on day rates too much.
Speaker Change: They werent any bonus type elements.
Speaker Change: In that number.
Speaker Change: So one offs for example, the insurance payments you can see that was received.
Derek Lowe: The biggest difference is that we had some new operations starting in the fourth quarter. So if you go back to, I think it's slide five, and those were developments that we discussed on the last call actually, because they happened already by that stage.
Speaker Change: Accounts those separately so.
Speaker Change: As most diverse ingredients.
Speaker Change: The biggest difference is that we had.
Speaker Change: Some new operation starting in fourth quarter. So if you go back to I think it's slide five.
Speaker Change: And those are the developments that we discussed.
Derek Lowe: We've got He is angry at this whole thing. Yeah, so the Ingrid & Toll were new operational starts and the others were news about future contracts, but they sort of don't count in that, on that point. In terms of...
Speaker Change: On the last call it six eight.
Speaker Change: Profitability by that stage.
Speaker Change: We've got.
Speaker Change: Okay great.
Speaker Change: All right.
Speaker Change: Yes, yes.
Speaker Change: But in total the new operator professional starts and the others read news about future contracts.
Speaker Change: Don't counting that.
Derek Lowe: What will happen to that line, that 84 line in the future? Well, that comes back to what are the new operations?
Speaker Change: On that point in terms of.
Speaker Change: What will happen to that line by 84 line in future wells.
Derek Lowe: Well, question, are there new operations that come through in Q1, Q2 and so on, which would impact that? And the answer to that is yes. So we've got particularly the swap out of the SARB and swap in of the lever, which obviously was closed on the 3rd of March and therefore will apply to a small extent to Q1 and then in full in Q2. And as you're aware, we've got the HILDA due to go on hire by the end of this month. And so minimal impact from that in Q1, but the Q2 figures should reflect a full quarter of that HILDA commercial contract as well.
Speaker Change: That comes back to what are the new operations.
Welcome question all of the new operations that come through in Q1, Q2, and so on.
Speaker Change: Which was impacted after the answer Thats, yes, so we've got.
Speaker Change: Particularly the.
Speaker Change: Swap outs of the Sop, even swapping as the lever which.
Speaker Change: Obviously this was closed.
Speaker Change: Closed on Thursday March and therefore will apply to a small extent to Q1.
Speaker Change: And then info.
Speaker Change: Q2.
Speaker Change: And as you're aware, we've got the Hilda due to go on higher by the end of this month.
Speaker Change: And so minimal impact from that in Q1, but Q2 figures should reflect a full quarter of.
Derek Lowe: So it's down to I'd say the more notable changes won't be particularly down to rate, which I understand is what you're looking for as well, but simply the fact of chance of starting. But we have hit a new level, and as you mentioned, that new level was driven by pretty much the Ingrid and the Hilda. early in the quarter, and then, you know, the Toro later in the quarter. Yeah.
Speaker Change: Hilda commercial contracts as well so it sounds too.
Speaker Change: I would say the more notable changes won't be particularly down to Reits, which johnstone is what youre looking for as well, but simply the fact of charter starting.
Speaker Change: But we have hit a new level.
Speaker Change: And.
Speaker Change: As you mentioned that new level was driven by pretty much the Ingrid and the Hilda.
Speaker Change: Early in the quarter and then the tour later in the quarter.
Derek Lowe: Okay, and then can you Can you share with us the potential impact, the backlog of the liver? Acquisition.
Speaker Change: Yes.
Speaker Change: Okay, and then can you.
Speaker Change: Can you.
Speaker Change: Share with us the potential impact to your backlog.
Derek Lowe: because that potentially, I assume that's not in the stated backlog of $870 million. Can you give me a ballpark on, you know, how that will change the contract backlog? Yeah, I mean we, um... We can't give specific numbers on that, but what you would want to look at is when was it that that rate was set, because... The market really is around when you contract a rate rather than when the rate is being earned once the vessel is on hire. for the vessel that's on her first charter after delivery, that rate was set at the point when the new build order was made for her.
Speaker Change: <unk>.
Speaker Change: Acquisition.
Speaker Change: Potentially I assume thats not in the stated backlog of $870 million can you give me a ballpark on how that will change the backlog the contract backlog.
Speaker Change: Yes.
Speaker Change:
Speaker Change: We can't give specific numbers on that.
Speaker Change: What you would want to look at is when was it that rate was set.
Speaker Change: And because of that.
Speaker Change: Yeah.
Speaker Change: The market really is around when you said when you contracts right rather than when the REIT is being and once the vessels on higher and of course.
Speaker Change: <unk>.
Speaker Change: For the vessel that's on the first chart.
Speaker Change: Charles.
Speaker Change: After delivery.
Speaker Change: Rate was set.
Derek Lowe: So if you backdate from the delivery date by a reasonable period to allow for construction, you're looking at market levels that were contracted around then. I can't guide you as to what those were specifically, but that will give you an idea. So the fact that the vessels newly arrived in March of 25 doesn't make it a March 25 sort of rate.
Speaker Change: At the point when the Newbuild order was made for US. So if you back date from.
Speaker Change: The delivery dates by reasonable period to allow for construction youll looking at market levels.
Speaker Change: Contracted around then.
Speaker Change: Guide you as to what those were specifically.
Speaker Change: Specifically, but that will give you an idea so the fact that the vessels newly arrived.
Speaker Change: <unk>.
Speaker Change: In March of 'twenty, five doesn't make it a march 25 sort of right.
Derek Lowe: understood but it will have a you know it'll it'll add what five and a half six years of contract backlog or contracted revenue to that contracted backlog number so in the second quarter of November.
Speaker Change: Understood.
Speaker Change: Have a.
Speaker Change: It'll add what 556 years of contract backlog.
Speaker Change: Contracted revenue to that contracted backlog number so.
Speaker Change: In the quarter on the fiber when a member.
Derek Lowe: Okay, can we talk about OPEX? There was a big drop in OPEX in the fourth quarter versus the third quarter. You highlighted the impact of what was it the I think the, you know, the return of the. One of the Dan's, right?
Speaker Change: Yeah.
Speaker Change: Okay can.
Speaker Change: Can we talk about Opex, there was a big drop in Opex in the fourth quarter versus the third quarter you highlighted the.
Speaker Change: The impact of what was it.
Speaker Change: I think the.
Speaker Change: The return of the.
Derek Lowe: Can you just talk about sort of the run rate for OPEX in the first half of 2025? Yeah, well, you should see. a similar impact of the other dam coming out of the fleet. a very close equivalent because The sale of each of those vessels was just two months into the half-year, so you should find that the further impact on off-ex of the Sarvia being sold should be fairly similar.
Speaker Change: One of the dance right.
Can you just talk about sort of the run rate for Opex in the first half of 2025.
Speaker Change: Okay.
Speaker Change: Yeah, well you should see.
Speaker Change: A similar impact so if the other time coming out of the fleet.
Speaker Change: And in fact.
Speaker Change: Very close equivalents because.
Speaker Change: The sale of each of those vessels was just two months into the quarter into the into the half year.
Speaker Change: And so you should find that.
Speaker Change: The further impact of.
Speaker Change: On Opex.
Derek Lowe: Can you quantify the impact of the Danstavia, you know, in the third quarter? Because I don't recall that you actually, you know, talked about that on the, you know, the December call. If you look at a a fairly reasonable OPEX rate assumption and then look at the times when she was on contract versus not, that would give you a good guide.
Speaker Change: Some of it being cells should.
Speaker Change: To be fair.
Speaker Change: Can you quantify the impact of the Dan Chard.
Speaker Change: In the third quarter, because I don't recall that you actually.
Speaker Change: Talked about that on the.
Speaker Change: December call.
Speaker Change:
Speaker Change: If you look at say.
Speaker Change: Fairly reasonable Opex rate assumption and then look at the times when she was on contract versus not and that would give you that will give you a good guide.
Derek Lowe: Okay, and just to summarize, so the first quarter will be impacted from a cost standpoint, but then the second quarter of 2025 shouldn't see a similar impact. Not for those reasons, no, because the... We won't have had any vessels off fire that we'd be paying for.
Speaker Change: Okay, and just to summarize the first quarter will be impacted from a cost standpoint, but then the second quarter 2025, Shouldnt see a similar impact.
Speaker Change: No not for those reasons now because the.
Derek Lowe: Okay, and is there any outstanding off hire, you know, receivable any, you know, at this point in time is that all cleared up and you have nothing, you know, nothing in negotiations as far as off hire, you know, reimbursement or anything like that, Derek? No, nothing significant. The biggest one was for the Toral claim, which we've discussed on a number of quarters, I think, and that completed in January. Yeah, that was a pleasant surprise.
Speaker Change: We went without any vessels off hire.
Speaker Change: Rifle.
Speaker Change: Okay and is there any outstanding off higher receivable any at this point in time, which is that all cleared up and you have nothing.
Speaker Change: Not being in negotiations as far as off hire.
Reimbursement or anything like that Derek.
Speaker Change: No nothing significant that the biggest one is the for the total.
Speaker Change: Claim, which we've discussed on a number of quarters I think as Scott.
Unnamed Moderator: Thanks for your time.
Speaker Change: Police it in January.
Unnamed Moderator: Great, thanks, bye. Thank you.
Speaker Change: Yes that was a pleasant surprise.
Speaker Change: Thanks for your time.
Unnamed Moderator: Just as a quick reminder, if you would like to ask any further questions, you can do so by pressing star followed by one on your telephone keypad.
Mike: Great. Thanks, Mike.
Speaker Change: Thank you.
Just as a quick reminder, if you would like to ask any further questions. You can do so by pressing star followed by one on your telephone keypad.
Mario Epburn: And we now have the next question from Mario Epburn with First New York. Please go ahead. Ladies and gentlemen, thank you very much for the opportunity to ask questions. I think my first question is to see if I'm thinking about this right. I take a quarter like this and A full year of a quarter like this, you would probably have like cash flow before that amortization of about $160 million a year. and if you have $90 million a year of amortization. We're talking about almost $70 million of cash. and what decisions per year. Am I wrong in my analysis?
Speaker Change: And we now have the next question from Larry.
Larry: With first New York. Please go ahead.
Speaker Change: Hi, gentlemen.
Speaker Change: Thank you very much for the opportunity to ask questions.
Speaker Change: I guess my first question is to see if I'm thinking of buckets right.
Speaker Change: I think a quarter like this.
Speaker Change: A full year of a quarter like this you would probably have less cash flow before debt.
Speaker Change: Amortization of about $160 million a year.
Speaker Change: And if you have $90 million a year of amortization youre talking about almost $700 million of cash flow.
Speaker Change: Jim what gas stations per year right.
Derek Lowe: If you included interest in the first line you gave us, did you do that? Yeah, yeah, of course I did. I did, yes. I subtracted the interest and the insurance. from this quarter and you're like a 40 million. on Cashflow. You had a 63 of Ibeda, something like that, take 6, and then the 16 of Ubex. and that's where you learn. So this is more than $2 per share of cashflow after amortizations. And so it's quite a hefty number. Now, I understand that you. and that you want to be secure with your, you want it to be recurring in order.
Speaker Change: Am I wrong my analysis.
Speaker Change: If you include its interest in the first line you gave US did you do that.
Speaker Change: Yes.
Speaker Change: Yes of course.
Speaker Change: Yes.
Speaker Change: Yes, a subtracted the interest and insurance.
Speaker Change: From this quarter and you get like a $40 million.
Speaker Change: Our cash flow.
Speaker Change: We had a 63 of EBITDA something like that takes six in 2016 level interest.
Speaker Change: That's right.
Speaker Change: This is more than $2 per share of cash flow last year Amortizations.
Speaker Change: And so it's quite a hefty number.
Speaker Change: Thank you.
Derek Lowe: to pay your dividend or not, but there's a lot of recurring cash flow. that is already there. So do you think you have to have 100% charter coverage in order to increase the distribution to match it a little bit to the? with the $2. change per year. And this is before the increases that you just described that are likely to come. Well, I'm just a question of how, how. I mean, but we see maybe a little bit more dividend because there's a big difference between paying all the cash flow and some of the cash. If you could give us a little bit more.
Speaker Change: Did you want to be secure.
Speaker Change: Not to be recurring order too.
Speaker Change: The dividend or not but there's a lot of recurring cash flow.
Speaker Change: That's already there so.
Speaker Change: When you think you have to have 100% charter coverage in order to increase the distribution to match it a little bit to be.
Speaker Change: So the $2.
Speaker Change: Change gear.
Speaker Change: And this is before the increases that you just described we are likely to come.
Speaker Change: Just a question of how are you.
Speaker Change: I mean.
Speaker Change: Maybe a little bit more dividend because.
Speaker Change: There's a big difference between paying almost all the cash flow and some other cash flow.
Derek Lowe: more color and how you think, how you're thinking about it. would appreciate. Yeah, thank you. Thank you for the question. Well, the board's view is that the long-term interest of unit holders are served both through accretive investment and the long-term sustainable distribution. And we think those things come together. The partnership started with four vessels 12 years ago and is now at 18 vessels through that combination. So we expect that balance to continue in the minds of the board as they look forward. You annualise some figures. Obviously, we've had one quarter that you've used for that basis and that time needs to pass and the new charters that are starting need to feed through to the results, I think, to get to the position that you were describing.
Speaker Change: If you could give us a little bit more.
Speaker Change: More color on how the shrink.
Speaker Change: Are you thinking about it.
Speaker Change: I would appreciate it.
Speaker Change: Yes.
Speaker Change: Yes. Thank you. Thank you for the question.
Speaker Change: <unk> view.
Speaker Change: Is that the.
Speaker Change: Long term interest of unit holders.
Speaker Change: Served both food.
Speaker Change: Accretive investments and the long term sustainable distribution.
Speaker Change: And those we think those things come together.
Speaker Change: The partnership started with four vessels 12 years ago.
Speaker Change: <unk>.
Speaker Change: It is now at 18 vessels through that without combination.
Speaker Change: So we expect that balance to continue in the minds of the board as they.
Speaker Change: Look forward.
Speaker Change: Yes.
Speaker Change: You annualize some figures.
Speaker Change: Obviously that we've had one quarter.
Speaker Change: You have used for that basis in that time needs to.
Speaker Change: To Pos and the new charters that are starting in.
Derek Lowe: So that in itself is some way off. The last point you say, would there be some sort of threshold passed if we had 100% charter coverage? Well, the thing is that there's a continuing, there's a rolling need to renew charters and so a high 90s percentage for a foreseeable period is not going to last simply with the passage of time. So clearly a good level of coverage is always going to be sought and welcome, but there's a lot of optionality in the charter outlook, as you can on slides, I think, 13 and 14, especially 14, you can see the fixed periods dropping away during the course of next year.
Speaker Change: I need to feed through to the results I think to get to the position that you were describing slips best in itself with somebody else.
Speaker Change: The last the last point, you say would that be some sort of.
Speaker Change: Threshold past, if we had.
Speaker Change: 100% charter coverage.
Speaker Change: Thank you.
Speaker Change: There is a continuing that's a rolling need to renew.
Speaker Change: Charters.
Speaker Change: And so to the high <unk>.
Speaker Change: <unk> percentage for April favorable.
Speaker Change: Periods is not going to last simply with the passage of time so clear.
Speaker Change: Clearly a good level of coverage is always going to be.
Speaker Change: And welcome.
Speaker Change: But there is a lot of optionality in the.
Speaker Change: And the charter outlook as you can see.
Derek Lowe: So that's why there's a continuing rolling commercial focus on filling out the charter schedule. Thank you for that and I agree with that. There is some sense of a connection between your decision to pay more dividends and the Charter. and as we just said you always have some charges rolling off so that would mean that you perhaps would never want to pay a dividend. Are using that logic I'm not suggesting the natural point of view, but I'm just sort of Troubling. as unit holders. Yes, I appreciate that. Bye. Apologies, do go ahead, sorry. No, no, that was it.
Speaker Change: Slides I think 13 and 14, especially 14, you can see the fixed period dropping away during the course of next year.
Speaker Change: So that's why there is a continuing.
Speaker Change: Rolling commercial focus on setting up the charter schedule.
Speaker Change: We thank you for that and I agree with that.
Speaker Change: Yeah.
Speaker Change: There is some sense of a connection between the decision to obtain more game event and the charterers.
Speaker Change: And as I, just said, we will always have some charters rolling off so that would mean that you perhaps would never wanted to pay a dividend.
Speaker Change: Okay.
Speaker Change: Using that logic, I'm, not suggesting that that to your point of view, but I'm just sort of.
Speaker Change: Extrapolating logic.
Speaker Change: Unit holders so I appreciate that.
Speaker Change: Yes.
Mario Epburn: I guess let me, let me, let me move on. I understand what you're saying. I wanted to sort of, I think that as a unit holder, there's quite a bit of room now to pay dividends. You could pay maybe, you could have a policy where you pay 40 or 50 percent of the cash after, after, after amortization. and that might be the beginning of their enumerated. So let me ask another question in terms of.
Speaker Change: Apologies did you go ahead sorry.
Speaker Change: No that was it I guess, let me let me, let me move on and I understand what Youre, saying I wanted to touch on it.
As a unit holder theres quite a beautiful now they.
Speaker Change: They do that.
Speaker Change: They maybe.
Speaker Change: Have a policy where you page.
Speaker Change: <unk> 40, or 50% of the cash I'm sure.
Speaker Change: After.
Speaker Change: Thermal applications.
Speaker Change: And that might be.
Derek Lowe: When you imagine that there's four vessels now that you may purchase that are now actually out there on the water, two of them are in Brazil and two of them are in the North Sea. Would you buy some in the North Sea, given the long-term outlook for that? Oh, that market is smaller and the growth rate is not so. not as secure as in Brazil. Yeah, that's a question that our Conflicts Committee would be looking at, definitely, when we're looking at drop loans. Some listeners may not be aware, we have a committee of the independent members of our board who look at any transaction that is contemplated with our sponsor, so it's called the Conflicts Committee, and they take independent financial and legal advice when any potential transaction comes along, and that's exactly the type of question that they would be considering.
Speaker Change: Beginning of January renewal motivated.
Speaker Change: Another question in.
Speaker Change: Sure.
Speaker Change: When you when you.
Speaker Change: Imagine that there's four vessels now would you make purchasing.
Speaker Change: That are now actually out there on the water two of them are in Brazil.
Speaker Change: And two of them.
Speaker Change: In the North Sea.
Speaker Change: By solving the North sea, given Betsy long term outlook for that.
Speaker Change: What was that market the smaller and the growth of what is not so.
Speaker Change: Not as secure as in Brazil.
Speaker Change: Yes, that's the question.
Speaker Change: The <unk>.
Speaker Change: Conflicts committee will be looking at definitely when we're looking at the dropdown. So we have a.
Speaker Change: Some of this may not be where we have a.
Speaker Change: A committee of the independent members of our board.
Speaker Change: Who looked at the transaction that is contemplated with our sponsor.
Speaker Change: The conflicts committee.
Speaker Change: They take independent financial and legal advice when any.
Derek Lowe: Is any given vessel and the associated commercial exposure of that vessel the right thing to look at? It's not simply the terms of a transaction. Okay, and then the final question is like... I understand that the drop downs with the CISNAS makes a lot of sense. But now, if you do drop downs, it's likely to do them with CAS. How would you look at the difference between the child? deployed to buying back shares versus a drop-down. I would think the cash to the shares. There's a lot higher return on investment right now than doing an additional job.
Speaker Change: Potential transaction comes along and that is exactly the type of.
Speaker Change: A question that they would be considering.
Speaker Change: Is any given vessel and the associated commercial exposure of that vessel the right thing to look at.
Speaker Change: Not simply at the terms of a transaction.
Speaker Change: Okay, and then final question, we'll take.
Speaker Change: Great.
Speaker Change: I understand that the.
Speaker Change: Dropdowns.
Speaker Change: Sameness, which makes a lot of sense, but now if you do dropdowns likely to doing with cash.
Speaker Change: How would you look at the difference between the cash.
Speaker Change: Applause to buying back shares versus a dropdown.
Speaker Change: I would think the cash too.
Speaker Change: Sure.
Mario Epburn: Would that be something that you would consider when you make a decision? Well, the board's looking at the long-term interests of unit holders, and so they look at the two together, not necessarily regarding them as in some way competing with each other. So, yes, those two factors are always considered, but on the distribution side, particularly the sustainability office, is very much in the board's minds. Okay, all right. Thank you very much for your facility last question. Great, thank you. Congratulations. That's a very good report. Thank you very much. Thank you.
Speaker Change: So it's a lot higher on return on investment right now.
Speaker Change: At Dropbox.
Speaker Change: Or would that be something that you would consider major position.
Speaker Change: Well look.
Speaker Change: The board is looking at the long term interest of unit holders.
Speaker Change: They look at the two together not necessarily regarding envision somebody competing with each other.
Speaker Change: So yes, those two factors are always considered.
Speaker Change: But the sustainability on the distribution side, particularly the sustainability office is very much in the board's minds.
Speaker Change: Okay, Alright, thank you very much for you to ask questions.
Speaker Change: Great. Thank you.
Charles Fratt: We have a follow-up from Pearl Fratt from Alliance Global Partners. Please go ahead when you're ready. Please ensure your line is unmuted before speaking.
Speaker Change: Gratulation, who has agreed with <unk>.
Speaker Change: Sure.
Speaker Change: Thank you very much.
Speaker Change: Thank you we have a follow up from <unk> <unk> from Alliance Global Partners. Please go ahead when you're ready.
Derek Lowe: I apologize. Yeah, you probably didn't think I had another question, Derek, but I do. Can you look at first quarter utilization and how has utilization been this quarter? And can you highlight any dry docking activity that you know about for the either the first quarter or the rest of the year?
Speaker Change: Hello. Please ensure your line is <unk> <unk> speaking.
Speaker Change: I apologize.
Derek Lowe: Yes, you probably didn't think I had another question Derik, but thank you.
Speaker Change: Can you look at the first quarter utilization.
Derek Lowe: And how has utilization been this quarter.
Derek Lowe: Ed can you highlight any drydocking activity that you know about for the either the first quarter or the rest of the year.
Derek Lowe: Sure, I don't have any specific disclosures to keep you on. Utilization during the first quarter, but we haven't had any issues that we'd like to disclose to you. Let's put it in those terms. The dry docks, I appreciate the chart's a bit small, but on page 13 we've highlighted when in the year the dry docks are appearing and also which dry dock it is in case you want to make different assumptions about the dry docks that happen at different stages in a vessel's life. So you can see those figures there, we are looking at four vessels during the course of this period.
Derek Lowe: Sure.
Derek Lowe: I don't have any specific disclosures.
Derek Lowe: <unk>.
Derek Lowe: Utilization during the first quarter, but we have been tied to any.
Derek Lowe: Issues that we'd like to disclose to you, let's put it as a nice event.
Derek Lowe: The.
Derek Lowe: Okay.
Speaker Change: The dry docks I appreciate the charts a bit small but on page 13, we highlight it.
Derek Lowe: When in the year the dry docks.
Speaker Change: Hearing and also which Drydock days.
Derek Lowe: You want to make different assumptions about.
Derek Lowe: On the dry docks that happen at different stages in the vessel's life. So you can see those figures.
Derek Lowe: I think I did the Windsor, the Raquel, the Tobay, and the Tuba, correct? Yeah, I think Tuva might be slightly later into... Uh, it's 26. Okay, yeah, great. That's helpful.
Derek Lowe: We are looking at four vessels during the course of this year.
Derek Lowe: In the winter.
Rick Hill.
Derek Lowe: Kobe.
Derek Lowe: And the tuba.
Derek Lowe: Correct.
Derek Lowe: Thank you.
Derek Lowe: Yes, I think to that might be slightly later into them.
Unnamed Moderator: Bye.
Unnamed Moderator: Thank you.
Ed: Thanks, Ed.
Clement Mullins: Just a final reminder is star 1 to register for a question and we now have Clement Mullins with Value Investing. Please go ahead. Hi, thank you for taking my question. I wanted to start by asking about your debt repayment schedule pro forma for the recent swap of the Dan Sabia for the Leaf Canute. Could you talk about how much the facility on the Leif Knudsen adds to the scheduled debt repayment for 2025? Yeah, we will be disclosing more details of the debt facility on that when we file our 20th. And as we've not expanded on that detail in this disclosure, I think it's probably best if you wait for that.
Derek Lowe: Okay, Great. That's helpful. Thank you.
Ed: Alright, thank you.
Speaker Change: Thank you just a final reminder, is star one to register for a question.
Ed: Hi, Ken good.
Speaker Change: Mornings Mays value Investor's edge. Please go ahead.
Ed: Hi, Thank you for taking my questions.
Speaker Change: I wanted to step asking about your debt repayment scheduled pro forma for the recent swap of the Dan Sabia further lift.
Ed: Could you talk about how much the facility under lease.
Speaker Change: To the scheduled debt repayments for 2025.
Ed: Yes.
Ed: We'll be disclosing more details of the.
Ed: That facility on that vessel when we file our 20-F.
Derek Lowe: But you'll find it highly recognisable by comparison with other debt facilities. Makes sense.
Ed: And as we have not.
Ed: Expanded T cell and this disposal things probably best if you wait for that but it's you'll you'll find it highly recognizable by capacity.
Derek Lowe: And this one is more market related. Over the past couple of years, the North Sea has lagged behind the Brazilian market. Does the Penguins and Johan Castelberg's startup have the potential to, let's call it, close the gap? Well, they are, um... We're not necessarily seeing the comparison in that way, I mean, they're clearly extremely welcome and long-awaited production starts in the North Sea and they are... The key difference to pick up in the North Sea market that's been anticipated for some time. Aside from that, I mean, clearly, we welcome...
Ed: The debt facilities.
Ed: Makes sense and this one is more market related over the past couple of years, the North Sea had lagged behind the Brazilian market.
Ed: Does the Penguins and Joanne Costa Verde startup have the potential to let's call it close the gap.
Ed: While they are.
Ed: Consolidated we're just not we're not necessarily seeing it seeing the comparison in that way I mean.
Ed: Extremely welcome and long awaited production starts in the North Sea and they are.
Ed: The key difference to pick up in the North Sea market, that's been anticipated for some time.
Clement Mullins: Strengthening in both markets, but it's quite hard to make a comparison as if one is catching up with the other and so on All right, thanks for the cover. Thank you for taking my question. Thank you. Thanks.
Ed: But the.
Ed: Aside from that I mean, clearly we welcome.
Ed: Strengthening in both markets.
Speaker Change: As Carl how to make a comparison because if one is catching up with the other and so on.
Unnamed Moderator: Thank you.
Derek Lowe: I can confirm we have no more questions in the queue, so I would now like to hand it back to Derek for some final closing comments. Thank you, Brieke, and everyone again for joining this earnings call for Knot Offshore Partners' fourth quarter in 2024. And I look forward to speaking with you again following the first quarter results.
Speaker Change: Alright, thanks for the color. Thank you for taking my questions. Thank you.
Speaker Change: Yes.
Speaker Change: Thank you I can confirm we have.
Keith: My question, Keith I would now like to hand, it back to Gary for some final closing comments.
Speaker Change: Thank you Brie current everyone again for joining this earnings call for cannot offshore partners fourth quarter, and 2000 and Stifel and political to speaking with you again following the first quarter results.
Unnamed Moderator: Thank you all for attending today's earnings call.
Unnamed Moderator: I can confirm today's call has now concluded, you may now disconnect and thank you all for your participation.
Okay.
Speaker Change: Thank you all for attending today's earnings call I can conclude todays call has now concluded you may now disconnect and thank you for your participation.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Yes.