Q1 2026 Knot Offshore Partners LP Earnings Call

May 29, 2026

Speaker #1: Ladies and gentlemen, thank you for joining us and welcome to the not-first quarter 2026 earnings call. After today's prepared remarks, we will host a question-and-answer session.

Operator: Ladies and gentlemen, thank you for joining us and welcome to the KNOT Q1 2026 Earnings Call. After today's prepared remarks, we will host a question and answer session with an opportunity for equity research analysts to ask questions. I will now hand the conference over to Derek Lowe. Please go ahead.

Operator: Ladies and gentlemen, thank you for joining us and welcome to the KNOT Q1 2026 Earnings Call. After today's prepared remarks, we will host a question-and-answer session with an opportunity for equity research analysts to ask questions. If you would like to ask a question, please raise your hand. If you're dialed in to today's call, please press star to raise your hand. I will now hand the conference over to Derek Lowe. Please go ahead.

Speaker #1: With an opportunity for equity research analysts to ask questions. If you would like to ask a question, please raise your hand. If you had dialed into today's call, please press star 1 to raise your hand.

Speaker #1: I will now hand the conference over to Derek Lowe. Please go ahead.

Speaker #2: Thank you, Jade, and good morning, ladies and gentlemen. My name is Derek Lowe, and I'm the Chief Executive and Chief Financial Officer of Knott's Offshore Partners.

Derek Lowe: Thank you, Jade, 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 Q1 2026. 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 statements made as of the date of this presentation.

Speaker #2: Welcome to the partnership's earnings call for the first quarter of 2026. Our website is knottoffshorepartners.com, and you can find the earnings release 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.

Speaker #2: 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 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-US gap measures, and our earnings release includes a reconciliation of these to the most directly comparable gap 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-US GAAP measures, and our earnings release includes a reconciliation of these to the most directly comparable GAAP measures. We begin on slide four with the Q1 financial and operational headlines. Revenues were $92 million, operating income was $14.7 million, net income was $2.6 million. Adjusted EBITDA was $56.5 million, and as of 31 March 2026, we had $140.7 million in available liquidity, made up of $92.7 million in cash and cash equivalents, plus $48 million in undrawn capacity. This available liquidity was $3.7 million higher than at 31 December. We operated at a 97.2% utilization, taking into account scheduled dry docking, which amounts to 92% utilization overall following the dry dockings of two vessels.

Speaker #2: We begin on slide 4 with the Q1 financial and operational headlines. Revenues for 92 million dollars, operating income of 14.7 million, net income was 2.6 million, adjusted EV was 56.5 million, and as of March 31st, 2026, we had 140.7 million dollars in available liquidity, made up of 92.7 million in cash and cash equivalents, plus 48 million in undrawn capacity.

Speaker #2: This available liquidity was 3.7 million dollars higher than at December 31st. We operated the 97.2% utilization taking into account scheduled dry docking, which amounts to 92% utilization overall following the dry dockings of two vicarets and boat organs.

Speaker #2: Following the end of the quarter, we declared a cash distribution of 5 cents per common unit, which was paid in May under the 1099 structure, and which represented an increase from the previous level.

Derek Lowe: Following the end of the quarter, we declared a cash distribution of $0.05 per common unit, which was paid in May under the 1099 structure, which represented an increase from the previous level. We are pleased to have initiated the process of increasing the distribution after an extended period of low payouts, during which we restored our charter coverage, improved our liquidity position, addressed multiple refinancings and dry dockings. On slide five, we have developments during the quarter. Prospectively from 1 January 2026, we changed the useful life estimates of our vessels from 23 years to 20 years, reflecting longer-term market trends. This will increase future depreciation quarter by quarter, that is not a cash item. This step also does not prevent vessels from operating beyond 20 years. On slide six, we have commercial developments.

Speaker #2: We are pleased to have initiated the process of increasing the distribution after an extended period of low payouts during which we restored our charter coverage, improved our liquidity position, and addressed multiple refinancings and dry dockings.

Speaker #2: On slide 5, we have developments during the quarter. Prospectively, from January 1st, 2026, we change the useful up estimates for our vessels from 23 years to 20 years, reflecting longer-term market trends.

Speaker #2: This will increase future depreciation quarter by quarter, but that is not a cash item. This step also does not prevent vessels from operating beyond 20 years.

Speaker #2: And on slide 6, we have commercial developments. We exercised our option to continue the time charter of Hilde Knutson with Shell through March 2027, and subsequently agreed a new time charter with E&I commencing in Q3 2027 for three years fixed, plus options up to a further three years.

Derek Lowe: We exercised our option to continue the time charter of Hilda Knutsen with Shell through March 2027 and subsequently agreed a new time charter with Eni commencing in Q3 2027 for three years fixed plus options up to a further three years. TotalEnergies exercised their option to extend the charter of Anna Knutsen for one year until May 2027, and we agreed a time charter for Recife Knutsen with Transpetro to commence in Q3 2026 for a fixed period of two years. Turning to slide seven for a high-level summary of our operating momentum. In both Brazil and the North Sea, we continue to see tightening markets driven by FPSO startups, ramp-ups, expansions, and new developments. This increase in shuttle tanker service volumes across both markets has been sustained and sufficient to tighten the supply-demand balance.

Speaker #2: Total Energies exercised their option to extend the charter of Anna Knutson for one year until May 2027. And we agreed a time charter for Recife Knutson with Transpetra to commence in Q3 2026 for a fixed period of two years.

Speaker #2: Turning to slide 7 for a high-level summary of our operating momentum, in both Brazil and the North Sea, we continue to see tightening markets driven by FPSO startups, ramp-ups, expansions, and new developments.

Speaker #2: This increase in shuttle tanker service volumes across both markets has been sustained and sufficient to tighten the supply-demand balance. We have sustained a strong backlog with 858 million of fixed contracts averaging 2.4 averaging 2.4 years, and rather more if all options are exercised.

Derek Lowe: We have sustained a strong backlog with 858 million of fixed contracts, averaging 2.4 years, and rather more if all options are exercised. At quarter end, our fleet of 19 vessels had an average age of 10.5 years, and we are continuing to repay debt at around $90 million per year, which we consider prudent with a depreciating asset base. Having addressed prior refinancing activity, we now look ahead to a $220 million facility in September 2026 and a $65 million facility in October. Over slides nine to 12, we provide the financials for Q1, the highlights which we have covered already. On slide 13 is our debt maturity profile.

Speaker #2: At quarter end, our fleet of 19 vessels had an average age of 10.5 years. And we're continuing to repay debt at around 90 million dollars per year, which we consider prudent with a depreciating asset base.

Speaker #2: And having addressed prior refinancing activity, we now look ahead to a 220 million dollar facility in September 2026. And the 65 million dollar facility in October.

Derek Lowe: Plus expansions and new developments. This increase in shuttle tanker service volumes across both markets has been sustained and sufficient to tighten the supply-demand balance. We have sustained a strong backlog, with $858 million of fixed contracts averaging 2.4 years, and rather more if all options are exercised. At quarter end, our fleet of 19 vessels had an average age of 10.5 years, and we are continuing to repay debt at around $90 million per year, which we consider prudent with a depreciating asset base. Having addressed prior refinancing activity, we now look ahead to a $220 million facility in September 2026 and a $65 million facility in October 2026. Over slides nine to 12, we provide the financials for Q1, the highlights which we have covered already. On slide 13 is our debt maturity profile.

Speaker #1: Up expansions and new developments. This increase in shuttle tanker service volumes across both markets has been sustained and sufficient to tighten the supply-demand balance.

Speaker #1: We have sustained a strong backlog with $858 million of fixed contracts averaging 2.4 years, and rather more if all options are exercised.

Speaker #2: Over slides 9 to 12, we provide the financials for Q1, the highlights for which we have covered already. On slide 13 is our debt maturity profile.

Speaker #2: While no guarantees can be made, we have historically benefited from access to a wide pool of lenders and attractive bank finance. And we've been encouraged by our refinancing experience in recent years, including during significant weaker shuttle tanker markets than the current one.

Speaker #1: At quarter end, our fleet of 19 vessels had an average age of 10.5 years. And we're continuing to repay debt at around $90 million per year, which we consider prudent with a depreciating asset base.

Derek Lowe: While no guarantees can be made, we have historically benefited from access to a wide pool of lenders and attractive bank finance, and we've been encouraged by our refinancing experience in recent years, including during significantly weaker shuttle tanker markets than the current one. Notably, the average margin on our floating rate debt during Q1 was 2.22% over SOFR. Moving on to slide 15 and our charter portfolio. I believe this remains a very useful resource for investors looking to track the primary movements where change can occur in a highly stable portfolio of cash flows. Based on current charter rates, we believe charterers' options are likely to be exercised given the strength of the charter market. On slide 16, you can see our strong coverage through the coming quarters.

Speaker #1: And having addressed primary financing activity, we now look ahead to a $220 million facility in September 2026, and the $65 million facility in October.

Speaker #2: Notably, the average margin on our floating rate debt during the first quarter was 2.22% over sofa. Moving on to slide 15 and our charter portfolio, I believe this remains a very useful resource for investors looking to track the primary movements where change can occur in a highly stable portfolio of cash flows.

Speaker #1: Over slides 9 to 12, we provide the financials for Q1, the highlights for which we have covered already. On slide 13 is our debt maturity profile.

Speaker #2: Based on current charter rates, we believe charterers' options are likely to be exercised given the strength of the charter market. On slide 16, you can see our strong coverage through the coming quarters.

Speaker #1: While no guarantees can be made, we have historically benefited from access to a wide pool of lenders and attractive bank finance. And we've been encouraged by our refinancing experience in recent years, including during significantly weaker shuttle tanker markets than the current one.

Derek Lowe: While no guarantees can be made, we have historically benefited from access to a wide pool of lenders and attractive bank finance, and we've been encouraged by our refinancing experience in recent years, including during significant weaker shuttle tanker markets than the current one. Notably, the average margin on our floating rate debt during Q1 was 2.22% over SOFR. Moving on to slide 15 and our charter portfolio. I believe this remains a very useful resource for investors looking to track the primary movements where change can occur in a highly stable portfolio of cash flows. Based on current charter rates, we believe charterers options are likely to be exercised given the strength of the charter market. On slide 16, you can see our strong coverage through the coming quarters.

Speaker #2: Some charterers' options that we believe have a good likelihood of being exercised and a small amount of open time. On slide 17, you can see the dropdown inventory held at the sponsor.

Derek Lowe: Some charterers' options that we believe have a good likelihood of being exercised and a small amount of open time. 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 remain the means of replenishing and rejuvenating the fleet. As mentioned in the earnings release, we anticipate pursuing these acquisitions over the next four to five years to the extent that the relevant terms are attractive and are approved by our conflicts committee. At the same time, we believe that the combination of accretive drop-downs and improving charter market should support multiple gradual distribution increases over the coming quarters and years. In addition to materially extending our long-term cash generation runway, a certain of our vessels begin to age out in the years ahead.

Speaker #1: Notably, the average margin on our floating rate debt during the first quarter was 2.22% over SOFR. Moving on to slide 15 and our charter portfolio, I believe this remains a very useful resource for investors looking to track the primary movements where change can occur in a highly stable portfolio of cash flows.

Speaker #2: Dropdowns have been the route to growth in the fleets throughout the life of the partnership, and remain the means of replenishing and rejuvenating the fleet.

Speaker #2: As mentioned in the earnings release, we anticipate pursuing these acquisitions over the next four to five years to the extent that the relevant terms are attractive and are approved by our conflicts committee.

Speaker #1: Based on current charter rates, we believe charterers' options are likely to be exercised given the strength of the charter market. On slide 16, you can see our strong coverage through the coming quarters.

Speaker #2: At the same time, we believe that the combination of accretive dropdowns and improving charter market should support multiple gradual distribution increases over the coming quarters and years.

Speaker #1: Some charters' options that we believe have a good likelihood of being exercised, and a small amount of open time. On slide 17, you can see the dropdown inventory held at the sponsor.

Derek Lowe: Some charterers options that we believe have a good likelihood of being exercised and a small amount of open time. 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 remain a means of replenishing and rejuvenating the fleet. As mentioned in the earnings release, we anticipate pursuing these acquisitions over the next four to five years to the extent that the relevant terms are attractive and are approved by our conflicts committee. At the same time, we believe that the combination of accretive drop-downs and improving charter market should support multiple gradual distribution increases over the coming quarters and years. In addition to materially extending our long-term cash generation runway, as certain of our vessels begin to age out in the years ahead.

Speaker #2: In addition to materially extending our long-term cash generation runway a certain of our vessels begin to age out in the years ahead. On slides 18 to 20, we include market commentary particularly from Petrobras, which continues to highlight a strong and expanding offshore production outlook and continued FPSO deployment.

Speaker #1: Dropdowns have been the route to growth in the fleets throughout the life of the partnership and remain the means of replenishing and rejuvenating the fleet.

Derek Lowe: On slides 18 to 20, we include market commentary, particularly from Petrobras, which continues to highlight a strong and expanding offshore production outlook and continued FPSO deployments. We would encourage you to review this as well as the copious materials that Petrobras publishes as the largest player in the Brazilian market, where we primarily operate. To summarize on slide 21, during Q1, we had strong utilization and solid financial results. We secured additional charter coverage across key vessels. We maintained a constructive backlog and market outlook, and we paid a quarterly distribution of $0.05 per unit. Looking ahead to the coming quarters and years, we believe the successful execution of accretive drop-down transactions, combined with rechartering of vessels into a strong market environment, should create the conditions for multiple gradual increases to our sustainable distribution.

Speaker #1: As mentioned in the earnings release, we anticipate pursuing these acquisitions over the next four to five years, to the extent that the relevant terms are attractive and approved by our Conflicts Committee.

Speaker #2: We would encourage you to review this as well as the copious materials that Petrobras publishes as the largest player in the Brazilian market where we primarily operate.

Speaker #1: At the same time, we believe that the combination of accretive dropdowns and an improving charter market should support multiple, gradual distribution increases over the coming quarters and years.

Speaker #2: To summarize on slide 21, during the first quarter, we have strong utilization and solid financial results. We secured additional charter coverage across key vessels.

Speaker #1: In addition to materially extending our long-term cash generation runway, as certain of our vessels begin to age out in the years ahead, on slides 18 to 20, we include market commentary, particularly from Petrobras, which continues to highlight a strong and expanding offshore production outlook and continued FPSO deployment.

Speaker #2: We maintained a constructive backlog and market outlook. And we paid a quarterly distribution of 5 cents per unit. Looking ahead to the coming quarters and years, we believe the successful execution of accretive dropdown transactions combined with rechartering of vessels into a strong market environment should create the conditions for multiple gradual increases to our sustainable distribution.

Derek Lowe: On slides 18 to 20, we include market commentary, particularly from Petrobras, which continues to highlight a strong and expanding offshore production outlook and continued FPSO deployment. We would encourage you to review this as well as the copious materials that Petrobras publishes as the largest player in the Brazilian market where we primarily operate. To summarize, on slide 21, during Q1, we had strong utilization and solid financial results. We secured additional charter coverage across key vessels. We maintained a constructive backlog and market outlook, and we paid a quarterly distribution of $0.05 per unit. Looking ahead to the coming quarters and years, we believe the successful execution of accretive drop-down transactions, combined with rechartering of vessels into a strong market environment, should create the conditions for multiple gradual increases to our sustainable distribution. With that, I'll hand the call back to Jade for any questions.

Speaker #1: We would encourage you to review this, as well as the copious materials that Petrobras publishes as the largest player in the Brazilian market where we primarily operate.

Speaker #1: To summarize on slide 21, during the first quarter we had strong utilization and solid financial results. We secured additional charter coverage across key vessels.

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

Derek Lowe: With that, I will hand the call back to Jade 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 press star, followed by the number one on your telephone keypad.

Operator: Thank you. We will now begin the question and answer session, which is open to equity research analysts. If you would like to ask a question, please press star followed by the number one on your telephone keypad. To withdraw your question, press star one again. Please pick up your handset when asking a question, and if you are muted locally, please remember to unmute your device. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Fredrik Dybwad from Fearnleys. Please go ahead.

Speaker #1: We maintained a constructive backlog and market outlook, and we paid a quarterly distribution of $0.05 per unit. Looking ahead to the coming quarters and years, we believe the successful execution of accretive dropdown transactions, combined with rechartering of vessels into a strong market environment, should create the conditions for multiple gradual increases to our sustainable distribution.

Speaker #1: To withdraw your question, press star one again. Please pick up your handset when asking a question, and if you're muted locally, please remember to unmute your device.

Speaker #1: We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Frederick Dibod from Fernley's. Please go ahead.

Speaker #1: With that, I'll hand the call back to Jade for any questions.

Speaker #2: Thank you. We will now begin the question and answer session, which is open to equity research analysts. If you would like to ask a question, please press star, followed by the number one on your telephone keypad.

Speaker #3: Thank you, hello, Derek. Congratulations with the results. Theory, have a pretty robust cash position, even more robust liquidity position. I'm happy to hear that you are talking about modestly increasing the dividends or distributions going forward in addition to be able to take the potential dropdowns as well.

Fredrik Dybwad: Thank you. Hello, Derek.

Derek Lowe: Hello.

Fredrik Dybwad: Congratulations with the results. You have a pretty robust cash position, even more robust, the liquidity position. I'm happy to hear that you are talking about modestly increasing the dividends or distributions going forward, in addition to be able to take the potential drop-downs as well. How should we think about when you say modest gradual increases in the dividend, in terms of magnitude, how should we think about this?

Speaker #2: To withdraw your question, press star one again. Please pick up your handset when asking a question, and if you're muted locally, please remember to unmute your device.

Speaker #2: We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Frederick Dibod from Fernley's. Please go ahead.

Speaker #3: But how should we think about when you say modest, gradual increases in the dividend, in what in terms of magnitude, how should we think about this?

Speaker #3: Thank you, hello, Derek. congratulations with the results. They are, you know, have a pretty, pretty robust cash position, even more robust, liquidity position. I'm happy to hear that you are this, you know, talking about Modus Link increasing the dividends or distributions going forward.

Fredrik Dybwad: Thank you. Hello, Derek.

Derek Lowe: Hello.

Speaker #2: Well, that's something that gets decided on by the board each time they make a dividend or distribution declaration. And that can only follow the end of each respective quarter.

Derek Lowe: Well, that's something that gets decided on by the board each time they make a dividend or distribution declaration, and that can only follow the end of each respective quarter. We don't have specific guidance on numbers that may be coming. The board will make their decision following the end of Q2 for the next distribution.

Speaker #2: So we don't have specific guidance on numbers that may be coming. And the board will make their decision following the end of first quarter for the sorry, the end of second quarter for the next distribution.

Speaker #3: In addition to be able to, to take the, potential dropdowns as well. And but how should we, think about when you say Modus gradual increases in the dividend, in what, in terms of magnitude, how should we think about this?

Speaker #3: But if you can provide some color about if you look at your backlog and cash or cash generation going forward, you can sustain the dividend much higher than 5 cents per unit.

Fredrik Dybwad: If you can provide some color about if you look at the backlog or cash generation going forward, you can sustain the dividend much higher than $0.05 per unit. Should we think about when you say modest increases, should we think about an increase similar to the one you did this time, or should it be more? That's just for in terms of how we should think about it as investors.

Speaker #1: Well, that's something that gets decided on by the Board each time they make a dividend or distribution declaration, and that can only follow the end of each respective quarter.

Derek Lowe: Well, that's something that gets decided on by the board each time they make a dividend or distribution declaration, and that can only follow the end of each respective quarter. We don't have specific guidance on numbers that may be coming, and the board will make their decision following the end of Q2 for the next distribution.

Speaker #3: Should we think about when you say modest increases, should we think about an increase similar to the one you did this time? Or should it be more?

Speaker #1: so we don't have specific guidance on, numbers that may be coming. And, the board will make their, decision, following the end of first quarter for the, sorry, the end of second quarter for the next distribution.

Speaker #3: That's just for in terms of how we should think about it.

Speaker #2: Yeah, I appreciate. I appreciate the question, but until we have a distribution decision from the directors over the after the end of the second quarter, we don't have a number to provide you with.

Derek Lowe: Yeah, I appreciate the question, but until we have a distribution decision from the directors after the end of Q2, we don't have a number to provide you with.

Speaker #3: Yeah, but if you can provide some color about, you know, if you look at your backlog and cash, or cash generation going forward, you can sustain the dividend much higher than $0.05 per unit.

Fredrik Dybwad: Yeah, if you can provide some color about if you look at your backlog and cash generation going forward, you can sustain the dividend much higher than $0.05 per unit. When you say modest increases, should we think about an increase similar to the one you did this time, or should it be more? That's just in terms of how we should think about it as investors.

Speaker #3: Okay. Thank you. That was all I had in terms of questions.

Fredrik Dybwad: Okay. Thank you. That was all I had in terms of questions.

Speaker #3: Should we think about, when you say Modus increases, should we expect an increase similar to the one you did this time, or should it be more?

Speaker #2: Thanks, Patrick. Yeah.

Derek Lowe: Thanks, Fredrik.

Speaker #1: Your next question comes from the line of Liam Burke from B Riley Securities. Please go ahead.

Operator: Your next question comes from the line of Liam Burke from B. Riley Securities. Please go ahead.

Speaker #3: That's just, just for, you know, in terms of how we should think about it as investors.

Speaker #4: Thank you. Hi, Derek. How are you today?

Derek Lowe: Yeah, I appreciate the question, until we have a distribution decision from the directors after the end of Q2, we don't have a number to provide you with.

Speaker #1: Yeah, I appreciate, I appreciate the, the question. But until we, have a distribution, decision from the directors over the, after the end of the second quarter, we don't have, a number to provide you with.

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

Speaker #2: Hi, Liam. Good. Thank you. And you?

Derek Lowe: Hi, Liam. Good, thank you. You?

Speaker #4: I'm fine. Thanks. Derek, I had a macro question for you. There's more oil, obviously, being sourced out of the non-Gulf areas due to the conflict in the Mideast.

Liam Burke: I'm fine, thanks. Derek, I had a macro question for you. There's more oil obviously being sourced out of the non-Gulf area due to the conflict in the Middle East. Now, eventually, the Strait of Hormuz will be reopened. Do you anticipate even post Strait of Hormuz opening, a higher than normal increase in offshore oil production development? Does it change your markets for the better?

Speaker #4: Now, eventually, the Strait of Hormuz will be reopened. But do you anticipate even post-Strait of Hormuz opening, an increase higher than normal increase in offshore oil production development?

Speaker #3: Okay, thank you. That was all I had in terms of questions.

Fredrik Dybwad: Okay. Thank you. That was all I had in terms of questions.

Speaker #1: Thanks, Patrick. Yeah.

Derek Lowe: Thanks, Fredrik.

Speaker #2: Your next question comes from the line of Liam Burke from B. Riley Securities. Please go ahead.

Operator: Your next question comes from the line of Liam Burke from B. Riley Securities. Please go ahead.

Speaker #4: Thank you. Hi, Derek. How are you today?

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

Speaker #4: Or does it change your markets for the better?

Speaker #1: Hi, Liam. Good, thank you. And you?

Derek Lowe: Hi, Liam. Good, thank you. You?

Speaker #4: I'm fine, thanks. Derek, I had a macro question for you. There's more oil, obviously, being sourced out of the non-Gulf areas due to the conflict in the Middle East.

Liam Burke: I'm fine, thanks. Derek, I had a macro question for you. There's more oil obviously being sourced out of the non-Gulf area due to the conflict in the Middle East. Now, eventually, the Strait of Hormuz will be reopened, but do you anticipate even post Strait of Hormuz opening, a higher than normal increase in offshore oil production development? Does it change your markets for the better?

Speaker #2: Well, I don't particularly have a view over the medium to longer term. I can understand people being quite cautious in the nearer term as developments come along.

Derek Lowe: Well, I don't particularly have a view over the medium to longer term. I can understand people being quite cautious in the nearer term as developments come along, because the news flow varies from one day to the next, and I'm sure people will be seeking to interpret that as best as they can and even remain cautious once the Straits are open again. I don't really have a view on whether it would change what will otherwise happen in the medium to long term, because there could be other factors relating to that as well.

Speaker #2: Because when the news flow varies from one day to the next, and I'm sure people will be seeking to interpret that as best they can.

Speaker #4: Now, eventually, the Strait of Hormuz will be reopened. But do you anticipation even post Strait of Hormuz opening, incre an increase, higher than normal increase in offshore, oil production development?

Speaker #2: And even remain cautious once the straits are open again. But I don't really have a view on whether it would change what will otherwise happen in the medium to long term.

Speaker #4: Or does it change your markets for the better?

Speaker #2: Because there could be other factors relating to that as well.

Speaker #4: Okay. Fair enough. And on the supply side, I mean, just in the vein where you reduce the useful life of the asset, could you give me a sense as to where we are in terms of the order book and the aging of the shuttle tanker fleet?

Liam Burke: Okay, fair enough. On the supply side, just in the vein where you reduce the useful life of the asset, could you give me a sense as to where we are in terms of the order book and the aging of the shuttle tanker fleet globally?

Speaker #1: Well, I don't particularly have a view over the medium to longer term. I can understand people being quite cautious in the nearer term, as developments come along.

Derek Lowe: Well, I don't particularly have a view over the medium to longer term. I can understand people being quite cautious in the nearer term as developments come along, because the news flow varies from one day to the next. I'm sure people will be seeking to interpret that as best they can and even remain cautious once the Straits are open again. I don't really have a view on whether it would change what will otherwise happen in the medium to long term, because there could be other factors relating to that as well.

Speaker #1: Because when the news flow varies from one day to the next—and I'm sure people will be seeking to interpret that as best they can.

Speaker #4: Globally?

Speaker #1: And even remain cautious once the straits are open again. But I—I don't really have a view on whether it would change what will otherwise happen in the medium to long term.

Speaker #2: Well, you can see the aging of our vessels. And I guess the 20F is the best place to look at that to get that listed out.

Derek Lowe: Well, you can see the aging of our vessels.

Liam Burke: Right

Derek Lowe: I guess the 20th is the best place to look at that to get that listed out. I don't particularly have a comment on the aging of other ship owners' fleets. Clearly with the ramp up, particularly in Brazil, the new build inventory is clearly in excess of what's going to retire from the market. It's intended to serve new volumes that are coming online.

Speaker #1: Because there could be other factors related to that as well.

Speaker #2: I don't particularly have a comment on the aging of other ship owners' fleets. But clearly, with the ramp-up, particularly in Brazil, the new build inventory is clearly in excess of what's going to retire from the market.

Speaker #4: Okay, fair enough. And on the supply side, I mean, just in the vein where you reduce the useful life of the asset, could you give me a sense as to where we are in terms of the order book and the aging of the shuttle tanker fleet?

Speaker #4: Globally?

Speaker #2: It's intended to serve new volumes that are coming online.

Derek Lowe: Well, you can see the aging of our vessels.

Speaker #1: well, you can, you can see the a the aging of our vessels, and, I guess the 20F is the best place to look at that to, to, to get that listed out.

Liam Burke: Okay. There is an aging of the fleet on the other end of it that could further tighten supply.

Speaker #4: Okay. But there is an aging of the fleet on the other end of it that could further tighten supply.

Liam Burke: Right.

Derek Lowe: I guess the 20F is the best place to look at that to get that listed out. I don't particularly have a comment on the aging of other ship owners' fleets. Clearly with the ramp up, particularly in Brazil, the new build inventory is clearly in excess of what's going to retire from the market. It's intended to serve new volumes that are coming online.

Speaker #2: That's right. Yeah.

Speaker #1: Although I don't particularly have a comment on the aging of other ship owners' fleets, clearly with the ramp-up, particularly in Brazil, the newbuild inventory is clearly in excess of what's going to retire from the market.

Derek Lowe: That's right. Yeah.

Speaker #4: Okay. Great. Thank you, Derek.

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

Speaker #2: Thank you.

Derek Lowe: Thank you.

Speaker #1: Your next question comes from the line of Po Frat from Alliance Global Partners. Please go ahead.

Operator: Your next question comes from the line of Poe Fratt from Alliance Global Partners. Please go ahead.

Speaker #5: Here, Derek. I apologize. I logged in a little late. And you may have addressed this on your prepared in your prepared remarks. But could you just talk about the sequential decline in revenues?

Poe Fratt: Hey, Derek. I apologize. I logged in a little late, and you may have addressed this in your prepared remarks. Could you just talk about the sequential decline in revenues, and was that totally associated with the downtime you experienced, or were there some time charter rollovers that impacted revenues?

Speaker #1: It's intended to serve new volumes that are coming online.

Speaker #4: Okay. But there is an aging of the fleet on the other end of it that could further tighten supply.

Liam Burke: Okay. There is an aging of the fleet on the other end of it that could further tighten supply.

Speaker #5: And was that totally associated with the downtime you experienced? Or were there some time chart or rollovers that impacted revenues?

Speaker #1: That's right, yeah.

Derek Lowe: That's right, yeah.

Speaker #4: Okay, great. Thank you, Derek.

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

Speaker #1: Thank you.

Derek Lowe: Thank you.

Speaker #2: Your next question comes from the line of Paul Fratt from Alliance Global Partners. Please go ahead.

Operator: Your next question comes from the line of Poe Fratt from Alliance Global Partners. Please go ahead.

Speaker #2: Yeah. Thanks, Tony. And no problem. We didn't address that at the time earlier on. Yes, it will relate to the dry dock schedule. And also simply the terms of the contracts that are outstanding between the different periods.

Derek Lowe: Yeah, thanks, Poe, and no problem we didn't address that at the time earlier on. Yes, it will relate to the dry dock schedule, and also simply the terms of the contracts that are outstanding between the different periods.

Speaker #5: Here, Derek. I apologize. I logged in a little late. And you may have dealt, you know, addressed this on your prepared mem in your prepared remarks.

Speaker #5: But could you just talk about the sequential decline in revenues? And was that totally associated with the downtime you experienced, or were there some time charter rollovers that impacted revenues?

Speaker #5: Great. Thank you.

Poe Fratt: Great. Thank you.

Speaker #2: Thanks. Thanks.

Derek Lowe: Thanks. Bye.

Speaker #1: At this time, there are no further questions. I will now turn the call back to Derek for closing remarks.

Operator: At this time, there are no further questions. I will now turn the call back to Derek for closing remarks.

Speaker #1: Yeah, thanks, Paul. And, no problem. We didn't stress that at the time, earlier on. Yes, it will relate to the dry dock schedule.

Derek Lowe: Yeah. Thanks, Poe. No problem we didn't stress that at the time earlier on. Yes, it will relate to the dry dock schedule, also simply the terms of the contracts that are outstanding between different periods.

Speaker #2: Thanks, Jason. Thank you all again for joining this earnings call for cut-offshore partners' first quarter of 2026. We look forward to speaking with you again following the second quarter results.

Derek Lowe: Thank you, Jade, and thank you all again for joining this earnings call for KNOT Offshore Partners' Q1 of 2026. We look forward to speaking with you again following the Q2 results. Thank you.

Speaker #1: And also, simply the terms of the contracts that are outstanding between the different periods.

Speaker #2: Thank you.

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

Speaker #5: Great. Thank you.

Poe Fratt: Great. Thank you.

Speaker #1: Great, thanks.

Derek Lowe: Thanks.

Operator: At this time, there are no further questions. I will now turn the call back to Derek for closing remarks.

Speaker #2: At this time, there are no further questions. I will now turn the call back to Derek for closing remarks.

Speaker #1: Thanks, Jason. Thank you all again for joining this earnings call for KNOT Offshore Partners’ first quarter of 2026. We look forward to speaking with you again following the second quarter results.

Derek Lowe: Thanks, Jade. Thank you all again for joining this earnings call for KNOT Offshore Partners' Q1 2026. We look forward to speaking with you again following the Q2 results. Thank you.

Speaker #1: Thank you.

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