KNOT Offshore Partners LP Earnings Release—interim Results for the Period Ended December 31, 2025

ABERDEEN, Scotland--(BUSINESS WIRE)--KNOT Offshore Partners LP (NYSE:KNOP): Financial Highlights For the three months ended December 31, 2025 (“Q4 2025”), KNOT Offshore Partners LP (“KNOT Offshore Partners” or the “Partnership”; NYSE:KNOP): Generated total revenues of $96.5 million, operating income of $8.4 million and a net loss of $6.2 million, after recording a $20.3 million non-cash impairment in respect of the vessel Bodil Knutsen. When adjusted to remove the impact of the impairment, operating income for the quarter was $28.6 million and net income was $14.0 million. Generated Adjusted EBITDA1 of $59.3 million. Reported $137.0 million in available liquidity at December 31, 2025, which was comprised of cash and cash equivalents of $89.0 million and undrawn revolving credit facility capacity of $48.0 million. Other Partnership Highlights and Events Fleet operated with 99.5% utilization for scheduled operations in Q4 2025, and 96.4% utilization taking into account the scheduled drydocking of the Synnøve Knutsen, for which the relevant off-hire period occurred during Q4 2025. On January 7, 2026, the Partnership declared a quarterly cash distribution of $0.026 per common unit with respect to Q4 2025, which was paid on February 5, 2026, to all common unitholders of record on January 26, 2026. On the same day, the Partnership declared a quarterly cash distribution to holders of Series A Convertible Preferred Units (“Series A Preferred Units”) with respect to Q4 2025 in an aggregate amount of $1.7 million. On July 2, 2025, the Board approved the establishment of a buyback program for up to $10 million of the Partnership’s common units. The program was concluded in October 2025. During the entire period of the program, the Partnership repurchased a total of 384,739 common units for an aggregate purchase cost of $3.03 million (including aggregate commissions of $0.01 million), at an average cost of $7.87 per common unit. Common units repurchased under the program were cancelled; On October 20, 2025, Knutsen Shuttle Tankers 35 AS, the Partnership’s wholly-owned subsidiary which owns the vessel Synnøve Knutsen, entered into a new $71.1 million senior secured term loan facility with MUFG Bank (Europe) N.V.. This new facility replaced the previous facility secured by the Synnøve Knutsen. In late October 2025, the Synnøve Knutsen commenced a scheduled drydocking, following completion of a conventional tanker charter which utilised her voyage to Europe. This drydocking completed in mid December 2025; ____________________ 1 EBITDA and Adjusted EBITDA are non-GAAP financial measures used by management and external users of the Partnership’s financial statements. Please see Appendix A for definitions of EBITDA and Adjusted EBITDA and a reconciliation to net income, the most directly comparable GAAP financial measure. On October 31, 2025, the Partnership received an unsolicited non-binding proposal from Knutsen NYK Offshore Tankers AS (“Knutsen NYK” or “KNOT”), pursuant to which KNOT proposed to acquire through a wholly-owned subsidiary all publicly held common units of the Partnership in exchange for $10 in cash per unit (the “KNOT Offer”). The Conflicts Committee of the Partnership’s Board, which is comprised of only non-KNOT-affiliated directors, retained Evercore Group L.L.C., Richards, Layton & Finger, P.A. and IGB Group as independent advisors to assist it in evaluating the KNOT Offer. The Conflicts Committee and its independent advisors reviewed the KNOT Offer carefully and held a series of discussions with KNOT regarding the potential transaction since receiving the proposal. Following such discussions, on March 19, 2026, the parties announced that they were not able to reach an agreement and have therefore terminated discussions regarding the KNOT Offer. On November 4, 2025, the Vigdis Knutsen began operating under a bareboat charter, following the previously-announced exercise of an option held by Shell to switch from the previous time charter operation. This bareboat charter is for a fixed period expiring in 2030 plus a charterer’s option for a further two years; On November 17, 2025, the Partnership closed the refinancing of the second of its two $25 million revolving credit facilities, with the facility being rolled over with SBI Shinsei Bank, Limited; On November 21, 2025, a time charter for the Fortaleza Knutsen was executed with KNOT, to commence in Q2 2026 for a fixed period of one year plus two charterer’s options each for one additional year. It is anticipated that the Fortaleza Knutsen will operate in the North Sea; On each of December 15, 2025, December 22, 2025 and January 5, 2026, the Partnership sought to convene the 2025 Annual Meeting of Unitholders. However, on each of these occasions, an insufficient number of unitholders were represented for the required quorum to be met, and so no business was conducted. Prospectively from January 1, 2026, the Partnership changed the useful life estimate of each of the vessels in its fleet from 23 years to 20 years due to prevailing longer term market trends. This change will increase the non-cash accounting depreciation charge in all future quarters, beginning in the first quarter of 2026. However, this change does not prevent vessels from being utilized beyond 20 years, should a market opportunity arise; On January 5, 2026, we exercised our option to continue the time charter of the Hilda Knutsen with Shell through to March 2027; In early January 2026, the Tuva Knutsen commenced a scheduled drydocking, following completion of a conventional cargo voyage which utilized her voyage to Europe. This drydocking completed in early March 2026; In mid-February 2026, the Bodil Knutsen commenced a scheduled drydocking, following completion of a conventional cargo voyage which utilized her voyage to the yard. This drydocking completed in late March 2026; On February 16, 2026, the Tordis Knutsen experienced a breakdown of its diesel generator, which has required the vessel to go off-hire until repairs are completed, which is expected to be in May 2026. Under its loss of hire insurance policies, the Partnership anticipates being compensated by insurance for the extent to which, as a consequence of this breakage, the Tordis Knutsen’s earnings fall short of a contractual hire rate, commencing 14 days after the date of the breakage. The Partnership also anticipates that the repair cost will be covered by insurance, in excess of a deductible of $150,000; and In March 2026, the final insurance claim payment in the amount of $1.8 million was received in respect of loss of hire for the Windsor Knutsen, which had arisen from required thruster repairs carried out over March – May 2025. Derek Lowe, Chief Executive Officer and Chief Financial Officer of KNOT Offshore Partners LP, stated, “We are pleased to report another strong performance in Q4 2025, marked by safe operation at 99.5% from scheduled operations, 96.4% utilization when including drydockings, consistent revenue and operating income generation, and material progress in the charter coverage outlook for our fleet. As of the date of this release and including contractual updates since December 31, 2025, we have now secured 98% of charter coverage for the first half of 2026, and approximately 88% for the second half of 2026, in both cases after allowing for scheduled dry dockings. We remain focused on further strengthening our fleetwide charter coverage and seizing those periodic opportunities that exist to re-charter vessels in the current tight market environment. In Brazil, the main offshore oil market where we operate, Petrobras exceeded the upper end of its oil production targets for 2025. This was driven primarily by the successful deployment of FPSOs focused in shuttle tanker-serviced fields, in multiple instances taking place ahead of schedule and reaching production levels in excess of their anticipated maximums. As a result, the world’s biggest shuttle tanker market is both growing and materially tightening. The North Sea, our secondary geography, has also established some positive momentum as projects ramp up production in both the UK North Sea and, most significantly, the Barents Sea. While less dynamic than is the case in Brazil, these positive developments in the wider North Sea region are a welcome and notable change after a protracted period of relatively slack shuttle tanker demand. Against this backdrop, we continue to believe that growth of offshore oil production in shuttle tanker-serviced fields across both Brazil and the North Sea is on track to outpace shuttle tanker supply growth throughout the coming years. We are aware of newbuild shuttle tanker orders, including eight for Knutsen NYK, all of which are scheduled for delivery over 2026‑2028. We anticipate that all these new orders are backed by charters to clients in Brazil, and see this as a sign of confidence in the medium-to-long term demand for the global shuttle tanker fleet. Particularly when considered in the context of the increasing numbers of shuttle tankers reaching or exceeding typical retirement age, as well as yard capacity constraints limiting material new orders into at least 2028, we anticipate that these newbuild deliveries will be readily absorbed by the expanding market for shuttle tankers. As the largest global owner of shuttle tankers, along with our Sponsor, and with a market-leading position in the fastest-growing shuttle tanker region of offshore Brazil, KNOP is well positioned to benefit from these trends throughout the coming years. Accordingly, our Board of Directors is keenly focused on optimizing the Partnership’s value creation strategy and is actively weighing the available capital allocation alternatives with the intention of maximizing unitholder value in a sustainable manner over the long term.” Financial Results Overview Results for Q4 2025 (compared to those for the three months ended September 30, 2025 (“Q3 2025”)) included: Revenues of $96.5 million in Q4 2025 ($96.9 million in Q3 2025), reflecting the stability of our commercial model. Vessel operating expenses of $34.7 million in Q4 2025 ($33.7 million in Q3 2025). The increase is primarily due to bunker fuel costs related to one vessel in dry dock. Depreciation of $30.6 million in Q4 2025 ($30.9 million in Q3 2025). Impairment in respect of the Bodil Knutsen of $20.3 million was recognized in Q4 2025, while there were no impairments in Q3 2025. In accordance with US GAAP, the Partnership’s fleet is regularly assessed for impairment as events or changes in circumstances may indicate that a vessel’s net carrying value exceeds the net undiscounted cash flows expected to be generated over its remaining useful life, and in such situation the carrying amount of the vessel is reduced to its estimated fair value. General and administrative expenses of $2.5 million in Q4 2025 ($1.5 million in Q3 2025). The increase is primarily due to professional fees relating to the KNOT Offer. Operating income consequently of $8.4 million in Q4 2025 ($30.7 million in Q3 2025). When adjusted to remove the impact of the impairment, operating income for Q4 2025 was $28.6 million. Interest expense of $15.3 million in Q4 2025 ($16.5 million in Q3 2025). Realized (i.e. cash) gain on derivative instruments of $1.7 million in Q4 2025 (gain of $2.2 million in Q3 2025), and unrealized (i.e. non-cash) loss of $1.3 million in Q4 2025 (unrealized loss of $1.8 million in Q3 2025). Together, there was a realized and unrealized gain on derivative instruments of $0.4 million in Q4 2025 (gain of $0.4 million in Q3 2025). A net loss consequently of $6.2 million in Q4 2025 (net income of $15.1 million in Q3 2025). When adjusted to remove the impact of the impairment, net income in Q4 2025 was $14.0 million. By comparison with the three months ended December 31, 2024 (“Q4 2024”), results for Q4 2025 included: A decrease of $26.3 million in operating income (to $8.4 million in Q4 2025 from operating income of $34.7 million in Q4 2024). When adjusted to remove the impact of the impairment, operating income in Q4 2025 was $28.6 million, representing a decrease of $6.1 million from Q4 2024, primarily due to extraordinary loss of hire insurance recoveries of $5.9 million in Q4 2024. An increase of $2.8 million in finance expense (to finance expense of $14.2 million in Q4 2025 from finance expense of $11.4 million in Q4 2024), primarily due to a reduction in the unrealized and realized gain on derivative instruments in Q4 2025 compared to that in Q4 2024, albeit somewhat offset by lower interest expense in Q4 2025 compared to that in Q4 2024. A decrease of $29.5 million in net income (to a net loss of $6.2 million in Q4 2025 from net income of $23.3 million in Q4 2024). When adjusted to remove the impact of the impairment, net income in Q4 2025 was $14.0 million, representing a decrease of $9.3 million from Q4 2024. Financing and Liquidity As of December 31, 2025, the Partnership had $137.0 million in available liquidity, which was comprised of cash and cash equivalents of $89.0 million and $48.0 million of capacity under its revolving credit facilities. The Partnership’s revolving credit facilities mature in August 2027 and November 2027 respectively. The Partnership’s total interest-bearing obligations outstanding as of December 31, 2025 were $959.6 million ($955.1 million net of debt issuance costs). The average margin paid on the Partnership’s outstanding debt during Q4 2025 was approximately 2.22% over SOFR. These obligations are repayable as follows: Sale & Period (U.S. Dollars in thousands) Leaseback repayment Balloon repayment Total 2026 $ 20,258 $ 78,685 $ 284,203 $ 383,146 2027 21,246 38,613 156,679 216,538 2028 22,345 17,979 78,824 119,148 2029 23,373 4,738 — 28,111 2030 24,515 4,738 47,387 76,640 2031 and thereafter 136,050 — — 136,050 Total $ 247,787 $ 144,753 $ 567,093 $ 959,633 As of December 31, 2025, the Partnership had entered into various interest rate swap agreements for a total notional amount outstanding of $325.0 million, to hedge against the interest rate risks of its variable rate borrowings. As of December 31, 2025, the Partnership receives interest based on SOFR and pays a weighted average interest rate of 2.72% under its interest rate swap agreements, which have an average maturity of approximately 1.58 years. The Partnership does not apply hedge accounting for derivative instruments, and its financial results are impacted by changes in the market value of such financial instruments. As of December 31, 2025, the Partnership’s net exposure to floating interest rate fluctuations was approximately $297.8 million based on total interest-bearing contractual obligations of $959.6 million, less the sale and leaseback facilities for Raquel Knutsen, Torill Knutsen and Tove Knutsen totaling $247.8 million, less interest rate swaps of $325.0 million, and less cash and cash equivalents of $89.0 million. On October 20, 2025, Knutsen Shuttle Tankers 35 AS, the Partnership’s wholly-owned subsidiary which owns the vessel Synnøve Knutsen, entered into a new $71.1 million senior secured term loan facility with MUFG Bank (Europe) N.V.. This new facility replaced the previous facility secured by the Synnøve Knutsen. The new facility is repayable in quarterly installments, bears interest at a rate per annum equal to SOFR plus a margin of 2.01% and will mature in October 2030, at which point the outstanding amount following quarterly repayments is due to be $48.6 million. The terms of the facility are substantially unchanged from the facility entered into in July 2019 with MUFG Bank, Ltd.. On November 17, 2025, the Partnership closed the refinancing of the second of its two $25 million revolving credit facilities, with the facility being rolled over with SBI Shinsei Bank, Limited. The new facility will mature in November 2027, bears interest at a rate per annum equal to SOFR plus a margin of 2.18%, and has a commitment fee on any undrawn portion of the facility of 0.80% per annum. The terms of the facility are substantially unchanged from the facility entered into in November 2023. Assets Owned by Knutsen NYK Pursuant to the omnibus agreement the Partnership entered into with Knutsen NYK at the time of its initial public offering, the Partnership has the option to acquire from Knutsen NYK any offshore shuttle tankers that Knutsen NYK acquires or owns that are employed under charters for periods of five or more years. There can be no assurance that the Partnership will acquire any additional vessels from Knutsen NYK. Any such acquisition would be subject to the approval of the Conflicts Committee of the Partnership’s Board of Directors. As of the date of this release, Knutsen NYK owns, or has ordered, the following vessels and has entered into the following charters: In July 2022, Frida Knutsen was delivered to Knutsen NYK from the yard in Korea and commenced in December 2022 on a seven-year time charter contract with Eni for operation in North Sea. The charterer has options to extend the charter by up to a further three years. In August 2022, Sindre Knutsen was delivered to Knutsen NYK from the yard in Korea and commenced in September 2023 on a five-year time charter contract with Eni for operation in the North Sea. The charterer has options to extend the charter by up to a further five years. In February 2024, Knutsen NYK entered into a new ten-year time charter contract with Petrobras for each of three vessels to be constructed and which will operate in Brazil, where the charterer has an option to extend each charter by up to five further years. The vessels will be built in China and are expected to be delivered over 2026 - 2027. In August 2024, Knutsen NYK entered into a new seven-year time charter contract with Petrorio for a vessel to be constructed and which will operate in Brazil, where the charterer has an option to extend the charter by up to eight further years. The vessel will be built in China and is expected to be delivered early in 2027. In October 2024, Hedda Knutsen was delivered to Knutsen NYK from the yard in China and commenced in December 2024 on a ten-year time charter contract with Petrobras for operation in Brazil. Petrobras has the option to extend the charter by up to five further years. In March 2025, Knutsen NYK entered into a new seven-year time charter contract with Equinor for a vessel to be constructed and which will operate in Brazil, where the charterer has an option to extend the charter by up to thirteen further years. The vessel will be built in China and is expected to be delivered early in 2028. In August 2025, Knutsen NYK entered into a new seven-year charter contract with Repsol for one vessel firm with an option to charter one further vessel, both to operate in Brazil. The firm vessel has already been ordered, while the optional vessel remains subject to declaration by the charterer. The charterer has an option to extend the firm charter by up to five additional years. The vessel(s) will be built in China and the firm vessel is expected to be delivered in early 2028. In September 2025, Eli Knutsen was delivered to Knutsen NYK from the yard in China and commenced in October 2025 on a fifteen-year time charter contract with Petrobras for operation in Brazil. Petrobras has the option to extend the charter by up to five further years. In December 2025, Knutsen NYK entered into a new ten-year time charter contract with an oil major for a vessel to be constructed and which will operate in Brazil, where the charterer has an option to extend the charter by up to five further years. The vessel will be built in China and is expected to be delivered early in 2028. In January 2026, Knutsen NYK entered into a new five-year time charter contract with an oil major for a vessel to be constructed and which will operate in Brazil, where the charterer has an option to extend the charter by up to five further years. The vessel will be built in China and is expected to be delivered early in 2028. OutlookRead the full story here

KNOT Offshore Partners LP Earnings Release—interim Results for the Period Ended December 31, 2025

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