Q4 2025 KNOT Offshore Partners LP Earnings Call

March 26, 2026

Operator: Q1 2025 Earnings Call. After today's prepared remarks, we will host a question and answer session with an opportunity for equity research analysts to ask questions. If you'd like to ask a question, please raise your hand. If you have dialed in to today's call, please press star nine to raise your hand and star six to unmute when prompted. I will now hand the conference over to Derek Lowe. Please go ahead, sir.

Operator: [Quarter] 2025 Earnings Call. After today's prepared remarks, we will host a question and answer session with an opportunity for equity research analysts to ask questions. If you'd like to ask a question, please raise your hand. If you have dialed in to today's call, please press star nine to raise your hand and star six to unmute when prompted. I will now hand the conference over to Derek Lowe. Please go ahead, sir.

Speaker #1: Porter, 2025 earnings call. After today's prepared remarks, we will host a question-and-answer session with an opportunity for equity research analysts to ask questions. If you'd like to ask a question, please raise your hand.

Speaker #1: If you have dialed into today's call, please press star 9 to raise your hand and star 6 to unmute when prompted. I will now hand the conference over to Derek Lowe. Please go ahead, sir.

Speaker #2: Thank you, Tyler, 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: Thank you, Tyler, and good morning, ladies and gentlemen. My name is Derek Lowe, and I'm the Chief Executive and Chief Financial Officer of KNOT Offshore Partners. Welcome to the partnership's earnings call for Q4 2025. Our website is knotoffshorepartners.com, and you can find the earnings release there along with this presentation. On slide 2, 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.

Derek Lowe: Thank you, Tyler, and good morning, ladies and gentlemen. My name is Derek Lowe, and I'm the Chief Executive and Chief Financial Officer of KNOT Offshore Partners. Welcome to the partnership's earnings call for Q4 2025. Our website is knotoffshorepartners.com, and you can find the earnings release 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 #2: Welcome to the partnership's earnings call for the fourth quarter of 2025. Our website is KNOT Offshore Partners dot com, and you can find the earnings released there along with this presentation.

Speaker #2: On slide 2, 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.

Speaker #2: 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 #2: For further information, please consult our SEC filings, especially in relation to our annual and quarterly results. Today's presentation also includes certain non-U.S. GAAP measures, and our earnings release includes a reconciliation of those to the most directly comparable GAAP measures.

Derek Lowe: For further information, please consult our SEC filings, especially in relation to our annual and quarterly results. Today's presentation also includes certain non-GAAP measures, and our earnings release includes a reconciliation of these to the most directly comparable GAAP measures. We begin on slide three with comments on the unsolicited and non-binding offer from our sponsor, KNOT, to buy the publicly owned common units for $10 per common unit, which we received during Q4. As announced in a press release on 19 March, the mutual decision was made by the independent KNOP Conflicts Committee and the sponsor to conclude those discussions with no transaction recommended. All information provided by KNOP's Conflicts Committee about that process was included within the 19 March press release, and I'll not be able to comment any further during today's call.

Speaker #2: We begin on slide 3 with the comments on the unsolicited and non-binding offer from our sponsor, KNOT, to buy the publicly owned common units for $10 per common unit, which we received during the fourth quarter.

Speaker #2: As announced in a press release on the March the 19th, the mutual decision was made by the independent KNOP Complex Committee and the sponsor to conclude those discussions with no transaction recommended.

Speaker #2: All information provided by KNOP's Complex Committee about that process was included within the March 19th press release, and I'll not be able to comment any further, during today's call.

Speaker #2: On slide 4, we have the Q4 financial and operational headlines. Certain of which reflect the impact of the non-cash impairment related to the BODOL commission.

Derek Lowe: On slide four, we have the Q4 financial and operational headlines, certain of which reflect the impact of the non-cash impairment related to the Bodil Knutsen. Revenues were $96.5 million. Operating income was $8.4 million on a fully reported basis, or $28.6 million when excluding the impact of the impairment on Bodil. Similarly, net income on a fully reported basis was a loss of $6.2 million, whereas it was net income of $14 million when we exclude the impact of the impairment. Adjusted EBITDA was $59.3 million. As of 31 December 2025, we had $137 million in available liquidity, made up of $89 million in cash and cash equivalents, plus $48 million in undrawn capacity on our credit facilities. That was $11.8 million higher than 30 September.

Speaker #2: Revenues for 96.5 million dollars, operating income was 8.4 million on a fully reported basis, or 28.6 when excluding the impact of the impairment on BODOL.

Speaker #2: Similarly, net income on a fully reported basis was a loss of 6.2 million, whereas it was net income of 14 million dollars when we exclude the impact of the impairment.

Speaker #2: Adjusted EBITDA was 59.3 million. And as of December 31st, 2025, we had 137 million dollars in available liquidity, made up of 89 million in cash and cash equivalents, plus 48 million in undrawn capacity on our credit facilities.

Speaker #2: And that was $11.8 million higher than September 30th. We operated at 99.5% utilization, taking into account the scheduled dry docking of Synovial Connection, which amounts to 96.4% utilization overall.

Derek Lowe: We operated with 99.5% utilization, taking into account the scheduled dry docking of Danica Knutsen, which amounts to 96.4% utilization overall. Following the end of Q4, we declared a cash distribution of $0.026 per common unit, which was paid in February. On slide 5, we have the developments during Q4. Early in the quarter, we entered into a $71.1 million senior secured term loan facility to refinance Danica Knutsen. On 4 November, the Vigdis Knutsen transitioned from a time charter contract to a bareboat charter with the same customer, Shell, extending until at least 2030. We completed our second of two RCF refinancings, rolled over on similar terms. Our next refinancings are in the late Q3 and early Q4 of this year.

Speaker #2: Following the end of Q4, we declared a cash distribution of 2.6 US cents per common unit, which was paid in February. On slide 5, we have the developments during Q4.

Speaker #2: Early in the quarter, we entered into a 71.1 million senior execute term loan facility to refinance the synovial connection. On November 4th, the VIC disconnection transitioned from a time chart to contract to a bareboat charter with the same customer, Shell, extending until at least 2030.

Speaker #2: We completed our second of two, RCF refinancings, rolled over on similar terms. Our next refinancings are in the late third and early fourth quarter of this year.

Speaker #2: And on November 21st, we agreed a time charter for 40 laser connection with KNOT to commence during the second quarter of 2026 and lasting between 1 and 3 years.

Derek Lowe: On November 21, we agreed a time charter for Portel Knutsen with KNOT to commence during Q2 2026 and lasting between 1 and 3 years. Given the vessel's smaller size relative to the Suezmax that has become standard in the Brazilian offshore segment, the vessel is expected to transition to the much more diversified North Sea. On slide 6, the principal development in Q1 has been the termination of discussions around the offer from KNOT, which I described earlier. Turning to slide 7 for a high-level summary of our positive momentum coming into the spring of 2026 with a tightening market, expanding backlog, and the balance sheet continuing to strengthen.

Speaker #2: Given the vessel's smaller size relative to the Suezmax that has become standard in the Brazilian offshore segment, the vessel is expected to transition to the much more diversified North Sea.

Speaker #2: Then on slide 6, the principal developments in the first quarter have been the termination of discussions around the offer from KNOT, which I described earlier.

Speaker #2: Turning to slide 7 for a high-level summary of our positive momentum coming into the spring of 2026 with a tightening market and expanding backlog.

Speaker #2: And the balance sheet continuing to strengthen. In both Brazil and the North Sea, we continue to see tightening markets driven by FPSO startups, ramp-ups, expansions, new discoveries, and in a number of cases, technology-driven increases in production beyond nameplate capacity.

Derek Lowe: In both Brazil and the North Sea, we continue to see tightening markets driven by FPSO startups, ramp ups, expansions, new discoveries, and in a number of cases, technology-driven increases in production beyond nameplate capacity. In each instance, these increased volumes are the outcome of lengthy, often CapEx-intensive projects, such that there are not typically sudden unanticipated step changes in shuttle tanker demand that catch the market off guard. Nevertheless, the increase in shuttle tanker service volumes across both markets has been both sustained and sufficient to tighten the supply-demand balance. Petrobras will continue to deploy its long committed pipeline of FPSOs and to expand production capacity across its existing fleet. We've sustained our backlog as of 31 December 2025, with $929 million of fixed contracts averaging 2.6 years, and rather more if all the options are exercised.

Speaker #2: In each instance, these increased volumes are the outcome of lengthy, often capex-intensive projects such that there are not typically sudden, unanticipated step changes in shuttle tanker demand that catch the market off guard.

Speaker #2: Nevertheless, the increase in shuttle tanker service volumes across both markets has been both sustained and sufficient to tighten the supply-demand balance. Petrobras will continue to deploy its long-committed pipeline of FPSOs and to expand production capacity across its existing fleet.

Speaker #2: We've sustained our backlog as of December 31st, 2025, with a 929 million dollars of fixed contracts averaging 2.6 years and rather more if all the options are exercised.

Speaker #2: At year-end, our fleet of 19 vessels had an average age of 10.2 years. We are continuing to repay debt at $90 million or more per year, which we think is prudent with a depreciating asset base.

Derek Lowe: At year-end, our fleet of 19 vessels had an average age of 10.2 years. We are continuing to repay debt at $90 million or more per year, which we think is prudent with a depreciating asset base. Having reliably addressed our refinancing needs, typically on very consistent terms, we now look to a $220 million 5-ship facility in September 2026 and a $65 million single ship facility in October 2026 secured by Lena Knutsen. Over slides 9 to 12, we provide the financials for Q4, the highlights which we have covered already. On slide 13 is our debt maturity profile, on which you can see we have material repayment obligations later this year.

Speaker #2: Having reliably addressed our refinancing needs, typically on very consistent terms, we now look to a 220 million five-ship facility in September 2026. And a 65 million single-ship facility in October 2026 secured by lever connection.

Speaker #2: Over slides 9 to 12, we provide the financials for Q4, the highlights for which we have covered already. On slide 13 is our debt maturity profile, on which you can see we have material repayment obligations later this year.

Speaker #2: While no guarantees can be made, we have historically benefited from our access to a wide pool of lenders, attractive bank finance, and several key lender relationships with major players.

Derek Lowe: While no guarantees can be made, we have historically benefited from our access to a wide pool of lenders, attractive bank finance, and several key lender relationships with major players. Moreover, we've been encouraged by our refinancing experiences in recent years and the strong signal they provide regarding lenders' continued appetite. Notably, the average margin on our floating rate debt during Q4 was 2.2% over SOFR. Moving on to slide 15 of our charter portfolio. I've covered most of the updates here, but I believe this is a very useful resource for investors looking to track the primary movements where a change can occur in a highly stable portfolio of cash flows. That is when charters turn over and when there are dry docks that will cause off-hire and incur some CapEx costs.

Speaker #2: Moreover, we've been encouraged by our refinancing experiences in recent years and the strong signal they provide regarding lenders' continued appetite. Notably, the average margin on our floating rate debt during the fourth quarter was 2.2% over SOFA.

Speaker #2: Moving on to slide 15 of our charter portfolio, I've covered most of the updates here. But I believe this is a very useful resource for investors looking to track the primary movements where a change can occur in a highly stable portfolio of cash flows.

Speaker #2: that is when charters turn over and when there are dry docks that will cause off-fire and incurrence of capex costs. Based on current charter rates, we believe charterers' options are likely to be taken up given the strength of the charter market.

Derek Lowe: Based on current charter rates, we believe charterers options are likely to be taken up given the strength of the charter market. On slide 16, you can see our strong coverage through the coming quarters. Some charterers options that market conditions suggest have a good likelihood of being exercised and a small amount of open time. In all, we have 93% of vessel time in 2026 covered by fixed contracts and 69% in 2027. If all relevant options are exercised, this rises to 98% in 2026 and 88% in 2027. On slide 17, you can see the drop-down inventory held at the sponsor. Drop-downs have been the route to growth in the fleet throughout the life of the partnership and are the means of replenishing and rejuvenating the fleet, given the depreciation in our assets.

Speaker #2: On slide 16, you can see our strong coverage through the coming quarters. Some charterers' options that market conditions suggest have a good likelihood of being exercised and a small amount of open time.

Speaker #2: In all, we have 93% of vessel time in 2026 covered by fixed contracts and 69% in 2027. If all relevant options are exercised, this rises to 98% in 2026 and 88% in 2027.

Speaker #2: On slide 17, you can see the dropdown inventory held at the sponsor. Dropdowns have been the route to growth in the fleet throughout the life of the partnership, and other means of replenishing and rejuvenating the fleets, given the depreciation in our assets.

Speaker #2: I would underscore both that our board has consistently acknowledged the importance of dropdowns for the partnership and also that any consummated dropdown would first have to be approved by the independent conflicts committee.

Derek Lowe: I would underscore both that our board has consistently acknowledged the importance of drop-downs for the partnership and also that any consummated drop-downs would first have to be approved by the independent Conflicts Committee. On slides 18 to 20, we include again some commentary from Petrobras with relevant highlights from a five-year plan they have released for 2026 through to 2030, as well as a useful overview of their significant 2025 progress from their recently reported full year 2025 results. We believe that these materials from Petrobras provide a useful insight into the Brazilian offshore market. We'd encourage you to review the extensive materials that Petrobras regularly publishes.

Speaker #2: On slides 18 to 20, we include again some commentary from Petrobras, with relevant highlights from a five-year plan they have released for 2026 through to 2030.

Speaker #2: As well as a useful overview of their significant 2025 progress from their recently reported full-year 2025 results. We believe that these materials from Petrobras provide a useful insight into the Brazilian offshore market, and we'd encourage you to review the extensive materials that Petrobras regularly publishes.

Speaker #2: In short, though, from the shuttle tanker owner's perspective, Petrobras continues to deploy significant capex into a long-term FPSO pipeline in shuttle tanker service areas, to find new ways to increase volumes from the existing fleet, and, overall, to continue expanding its aggregate production on time or, in a number of instances, ahead of schedule.

Derek Lowe: In short, though, from the shuttle tanker owner's perspective, Petrobras continues to deploy significant CapEx into a long-term FPSO pipeline in shuttle tanker serviced areas to find new ways to increase volumes from existing fleet and overall to continue expanding its aggregate production on time or in a number of instances ahead of schedule. As with the development we're seeing in the North Sea, this gives us comfort that shuttle tanker demand should readily absorb the current order book. Further, we believe that the current order book still trends towards a medium-term shortage of shuttle tankers when set against the forthcoming production. To summarize on slide 21, during Q4, we have strong utilization and financial results. We refinanced the Synnøve Knutsen facility and the second RCF. We secured additional charter cover and paid a quarterly distribution.

Speaker #2: As with the development that we're seeing in the North Sea, this gives us comfort that shuttle tanker demand should readily absorb the current order book.

Speaker #2: Further, we believe that the current order book still trends towards a medium-term shortage of shuttle tankers when set against the forthcoming production. To summarize on slide 21, during Q4, we had strong utilization and financial results.

Speaker #2: We refinanced the Sonova connection facility and the second RCF. We secured additional charter cover, and paid a quarterly distribution. And in Q1, we've seen the termination of the discussions around the offer from KNOT.

Derek Lowe: In Q1, we've seen the termination of the discussions around the offer from KNOP. With that, I'll hand the call back to Tyler for any questions.

Speaker #2: With that, I'll hand the call back to Tyler for any questions.

Speaker #1: Thank you. We will now begin the question and answer session, which is open to equity research analysts. If you'd like to ask a question, please raise your hand now.

Operator: Thank you. We will now begin the question and answer session, which is open to equity research analysts. If you'd like to ask a question, please raise your hand now. If you have dialed in to today's call, please press star nine to raise your hand and star six to unmute. Please stand by while we compile the Q&A roster. Your first question comes from the line of Climent Molins with Value Investor's Edge. Your line is now open. Please go ahead.

Operator: Thank you. We will now begin the question and answer session, which is open to equity research analysts. If you'd like to ask a question, please raise your hand now. If you have dialed in to today's call, please press star nine to raise your hand and star six to unmute. Please stand by while we compile the Q&A roster. Your first question comes from the line of Fredrik Dybwad with Fearnley Securities. Your line is now open. Please go ahead.

Speaker #1: If you have dialed in to today's call, please press star 9 to raise your hand and star 6 to unmute. Please stand by while we compile the Q&A roster.

Speaker #1: And your first question comes from the line of Frederick Dubois with Fernley Securities. Your line is now open. Please go ahead.

Climent Molins: Hey, guys. Climent Molins here. Hello? Can you hear me?

Fredrik Dybwad: Hey, guys. Climent Molins here. Hello? Can you hear me?

Speaker #3: Hey, guys. Kendall here. Hello. Can you hear me?

Derek Lowe: Hey, Climent Molins. Can't hear you that well.

Speaker #4: Hi, Frederick. I hear you well.

Climent Molins: Okay. Is this better?

Fredrik Dybwad: Okay. Is this better?

Speaker #3: Okay. Is this better?

Derek Lowe: Just do try us. Yeah.

Speaker #4: Just do try us. Yeah.

Climent Molins: Okay. I forgot to speak a bit loud. Yeah, congratulations. Good quarter. Solid cash flow. New reinvesting. Market, as you say, is very firm. Since last time around, I have noted that the Knutsen on the holding level issued a bond. You know, in connection with that bond issue, has there been a valuation of KNOP?

Fredrik Dybwad: Okay. I forgot to speak a bit loud. Yeah, congratulations. Good quarter. Solid cash flow. New reinvesting. Market, as you say, is very firm. Since last time around, I have noted that the Knutsen on the holding level issued a bond. You know, in connection with that bond issue, has there been a valuation of KNOP?

Speaker #3: Okay, a bit loud. So, we have congratulations—good quarter, solid cash flow. You're doing everything. Market, as you say, is very firm. Since last time around, I have noted that the Knudsen, at the holding level, issued a bond.

Speaker #3: Have in connection with that bond issue, has there been a value valuation of KNOT?

Derek Lowe: To repeat for anyone who didn't hear that clearly, Climent Molins, I think you're referring to the TSI bond, which is I think two corporate levels above KNOP. I think anyone interested in the circumstances around that bond would need to look at the offering materials, and the disclosure related to it there. I'm not directly aware of valuation exercises on KNOP, at least as far as the partnership was directly involved. The offering materials will contain the disclosure related to that transaction.

Speaker #4: There's a to repeat for anyone who didn't hear that clearly. Frederick, I think you're referring to the TSSI bond, which is, I think, two corporate levels above KNOP.

Speaker #4: I think anyone interested in the circumstances around that bond would need to look at the offering materials and the disclosure related to it there.

Speaker #4: I'm not directly aware of a valuation exercise on KNOP at least as far as the partnership was directly involved. But the offering materials will contain the disclosure related to that transaction.

Climent Molins: Okay. Got it. Thank you. I also noted that you reduced the useful life of your vessels from 23 to 20 years. Could you shed some light on the rationale behind that? I thought it was a bit, you know, surprised me a bit. Yeah.

Fredrik Dybwad: Okay. Got it. Thank you. I also noted that you reduced the useful life of your vessels from 23 to 20 years. Could you shed some light on the rationale behind that? I thought it was a bit, you know, surprised me a bit. Yeah.

Speaker #3: Okay, got it. Thank you. And I'll also note that you reduced the useful life of your vessels from 23 to 20 years. Could you shed some light on the rationale behind that?

Speaker #3: I thought it was a bit—surprised me a bit. Yeah.

Derek Lowe: Yeah. Useful life is a measure of how long a vessel is expected to stay in the hands of a current owner. It's not directly a measure of the economic life of a vessel, per se. In some instances, we see shuttle tankers being deployed commercially beyond 20 years, but quite often it's outside the sector, so as conventional floating storage or FPSO. What we are seeing is the typical scenario is clients will wish to see vessels that are under 20 years, and we'll seek those out before seeking to contract those that are older. It's a judgment around that overall situation, particularly operation in shuttle tanker form, that led us to take that view that 20 years was a better judgment on that than 23.

Speaker #4: Yeah. So useful life is a measure of how long a vessel is expected to stay in the hands of a current owner. It's not directly a measure of the economic life of a vessel.

Speaker #4: Per se. So in some instances, we see shuttle tankers being deployed commercially beyond 20 years. But quite often, it's outside the sector. So it's conventional floating storage or FPSO.

Speaker #4: What we are seeing is the typical scenario is clients will wish to see vessels that are under 20 years and will seek those out before seeking to contract those that are older.

Speaker #4: And so it's a judgment around that overall situation, particularly operation in shuttle tanker form. That led us to take that view that 20 years was a better judgment on that than 23.

Climent Molins: Okay. Thank you. You know, this is a bit limited visibility just for my own modeling. What do you price a newbuilding Suezmax currently for a shuttle tanker?

Fredrik Dybwad: Okay. Thank you. You know, this is a bit limited visibility just for my own modeling. What do you price a newbuilding Suezmax currently for a shuttle tanker?

Speaker #3: Okay. Thank you. And this is a bit limited visibility just for my own modeling. What do you price a new building's used max currently on a shuttle tanker?

Derek Lowe: I think that's too commercially sensitive for us to disclose at the moment. We don't discuss our new build contract pricing.

Speaker #4: I think that's too commercially sensitive for us to disclose at the moment. We don't discuss our new build contract pricing.

Climent Molins: No, not necessarily yours, but generically, how much would it cost to build a tanker in, for instance, China?

Fredrik Dybwad: No, not necessarily yours, but generically, how much would it cost to build a tanker in, for instance, China?

Speaker #3: No, not necessarily yours, but generically, how much would it cost to build a shuttle tanker in, for instance, China?

Derek Lowe: Well, given that our sponsor is quite active in the new build space, I think generically and commercially, specifically, it's pretty much the same thing, so I don't have any comments on it, I'm afraid.

Speaker #4: Well, given that our sponsor's quite active in the new build space, I think generically and commercially specifically, pretty much the same thing. So I don't have any comments on it, I'm afraid.

Climent Molins: Okay. Around $100 million would be fair from my end, as an assumption.

Fredrik Dybwad: Okay. Around $100 million would be fair from my end, as an assumption.

Speaker #3: Okay. So around 140 million. Would be fair from my end as an assumption.

Derek Lowe: As I say, I don't have any direct comment on that, I'm afraid.

Speaker #4: As I say, I don't have any direct comment on that, I'm afraid.

Climent Molins: Okay. Yeah, just a final one. Sorry, I had a bit of saturated on the question side, but last one. Back in 2023, when you cut the dividend, I can quote you that you said that until you have reestablished a greater degree of forward visibility and on earnings and on liquidity, the quarterly distribution is reduced, but will be increased once this is in place. Hearing what you are saying now on the outlook for diesel tankers, your balance is rock solid, and you're, you know, generating a significant cash flow every quarter. What will it take for the dividend to come back when it seems like everything is in place for it to happen?

Fredrik Dybwad: Okay. Yeah, just a final one. Sorry, I had a bit of saturated on the question side, but last one. Back in 2023, when you cut the dividend, I can quote you that you said that until you have reestablished a greater degree of forward visibility and on earnings and on liquidity, the quarterly distribution is reduced, but will be increased once this is in place. Hearing what you are saying now on the outlook for diesel tankers, your balance is rock solid, and you're, you know, generating a significant cash flow every quarter. What will it take for the dividend to come back when it seems like everything is in place for it to happen?

Speaker #3: Yeah, okay. Yeah, just the final one. Sorry, I had a bit of saturation on the question side, but last one. Back in 2023, when you cut the dividend, you—I can quote you that you said that until you have reestablished a greater degree of forward visibility on earnings and on liquidity, the quarterly distribution is reduced.

Speaker #3: What will be increased once this is in place? And hearing what you are saying now on the outlook for shuttle tankers, your balance is rock solid.

Speaker #3: And you are generating a significant cash flow over the quarter. What will it take for the dividend to come back when it seems like everything is in place for it to happen?

Derek Lowe: Yeah. Thank you. I think capital allocation is very much in the minds of directors on a continual basis. And whether it's distributions, buybacks, or investment in the fleet, so drop-downs, that's something that they're assessing on a continual basis and will continue to do so. We don't have a direct formula that says there's a given time for one or other of those aspects to be selected, but it does remain under active review by the directors.

Speaker #4: Yeah. Thank you. I mean, capital allocation is very much in the minds of directors on a continual basis. And whether it's distributions buybacks or investment in the fleets or dropdowns, that's something that they're assessing on a continual basis and will continue to do so.

Speaker #4: We don't have a direct formula that says there's a given time for one or other of those aspects to be selected. But it does remain under active review by the directors.

Climent Molins: Yeah. Would you say that your view on dividend distribution is changed from 2022 to today or is it the same the way you look at it?

Fredrik Dybwad: Yeah. Would you say that your view on dividend distribution is changed from 2022 to today or is it the same the way you look at it?

Speaker #3: Yeah. So you would you say that your view on dividend distributions is changed from 2022 to today? Or is it the same? The way you look at it?

Derek Lowe: Well, we're clearly pleased with a stronger financial position now than back then. That's certainly the case. The choice of how, where, and when to allocate capital is something, as I say, that the directors keep under continual review.

Speaker #4: Well, we clearly pleased with a stronger financial position now than back then. That's certainly the case. But the choice of how and where to and when to allocate capital is something, as I say, that the directors keep under continual review.

Climent Molins: Okay. I understand. I appreciate your comments there, Rick. Final question. You tried to do the annual general meeting last year without success. Are you going to schedule it again for this year or how should we think about that?

Fredrik Dybwad: Okay. I understand. I appreciate your comments there, Derek. Final question. You tried to do the annual general meeting last year without success. Are you going to schedule it again for this year or how should we think about that?

Speaker #3: Okay. Okay. I understand. I understand. I appreciate your comments, Frederick. And final question. You tried to do the annual general meeting last year. That success.

Speaker #3: Are you going to schedule it again for this year? Or how should we think about that?

Derek Lowe: Well, we do obviously have a standing obligation to seek to hold a meeting each year, and we intend to satisfy that obligation during 2026 as well.

Speaker #4: Well, we do obviously have a standing obligation to seek to hold a meeting each year. And we intend to satisfy that obligation during 2026 as well.

Climent Molins: Thank you. That's it for me.

Fredrik Dybwad: Thank you. That's it for me.

Speaker #3: Thank you. That's it for me.

Operator: Thank you.

Operator: Thank you. [crosstalk]

Derek Lowe: Thank you.

Operator: Next question. Apologies. Your next question comes from the line of Liam Burke with B. Riley Securities. Your line is now open. Please go ahead.

Speaker #1: Thank you. Next question.

Speaker #5: Apologies. Your next question comes from the line of Liam Burke with B. Riley Securities. Your line is now open. Please go ahead.

Liam Burke: Hi, Rick. How are you today?

Liam Burke: Hi, Derek. How are you today?

Speaker #6: Hi, Derek. How are you today?

Derek Lowe: Hi, Liam. Good, thanks. You?

Speaker #4: Hi, Liam. Good. Thanks. And you?

Liam Burke: I'm fine, thank you. Whatever happened to two questions per customer? Anyway, you've got your sponsor has quite a list of drop-downs which create nice opportunity considering you've got a very healthy end market there. Could you give us a sense on how you're prioritizing or any kind of timing or how you're thinking about adding vessels to the fleet?

Speaker #6: I'm fine, thank you. Whatever happened to two questions per customer? Anyway, your sponsor has quite a list of dropdowns, which creates a nice opportunity, considering you have a very healthy end market there.

Speaker #6: Could you give us a sense on how you're prioritizing or any kind of timing or how you're thinking about adding vessels to the fleet?

Derek Lowe: Well, that's that leads to the capital allocation topic that we discussed just now. Directors are well aware of a range of potential deployments of capital, whether it's distributions, buybacks, or drop-downs. They will keep that continually in mind, noting the financial position of the partnership and also the outlook from a chartering point of view as well. There's no direct formula as to which of those will be chosen, which combination, and when and so on.

Speaker #4: Well, it's better leads to the capital allocation topic that we discussed just now. So directors are well aware of a range of potential deployments of capital, whether it's distributions buybacks or dropdowns.

Speaker #4: And they will keep that continually in mind, noting the financial position of the partnership and also the outlook from a chartering point of view as well.

Speaker #4: So there's no direct formula as to which of those will be chosen which combination and when and so on.

Liam Burke: Okay. That's fair. I mean, we're looking at your liquidity position strengthening. Your operating cash flow is up 13.5% this year. You've had a long history of successfully refinancing balloon payments, and those balloon payments are coming down as we saw in one of the slides. I mean, and drop-downs in this market look to be very good considering we're looking at the long-term contracts. Is there any priority to the drop-downs vis-à-vis dividends or accelerated debt repayment?

Speaker #6: Okay, that's fair. But I mean, we're looking at your liquidity position strengthening. Your operating cash flow is up 13.5% this year.

Speaker #6: You've had a long history of successfully refinancing balloon payments. And those balloon payments are coming down, as we saw in one of the slides.

Speaker #6: So, I mean, how would we end dropdowns in this market? It looks to be very good, considering we're looking at the long-term contracts. Is there any priority to the dropdowns?

Speaker #6: Are you referring to dividends, or to accelerated debt repayment?

Derek Lowe: No. There's no working priority as between those different places that the capital could be allocated.

Speaker #4: No, there's no working priority as between those different places that the capital could be allocated.

Liam Burke: Okay.

Derek Lowe: The directors look at all of them at the same time.

Speaker #6: Okay.

Speaker #4: The directors look at all of them at the same time.

Liam Burke: Great. Okay. Thank you, Derek.

Speaker #6: Great. Okay. Thank you, Derek.

Derek Lowe: Great. Thanks, Liam.

Speaker #4: Great. Thanks, Liam.

Operator: Okay. There are no further questions at this time, so I will turn it back to Derek for closing remarks.

Speaker #1: Okay. And there are no further questions at this time. So I will turn it back to Derek for closing remarks.

Derek Lowe: Thank you, Tyler, and thank you all again for joining this earnings call for the KNOT Offshore Partners Q4 in 2025. I look forward to speaking with you again following the Q1 results.

Speaker #4: Thank you, Tyler. And thank you all again for joining this earnings call for the KNOT Offshore Partners fourth quarter in 2025. I look forward to speaking with you again following the first quarter results.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.

Q4 2025 KNOT Offshore Partners LP Earnings Call

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