KNOT Offshore Partners LP Earnings Release—Interim Results for the Period Ended June 30, 2026

ABERDEEN, Scotland--(BUSINESS WIRE)--KNOT Offshore Partners LP (NYSE:KNOP): Financial Highlights For the three months ended June 30, 2026 (“Q2 2026”), KNOT Offshore Partners LP (“KNOT Offshore Partners,” “we” or the “Partnership”; NYSE:KNOP): Generated total revenues of $96.8 million, operating income of $15.6 million and net income of $3.4 million; Generated Adjusted EBITDA1 of $57.6 million; and Reported available liquidity of $143.3 million at June 30, 2026, which was comprised of cash and cash equivalents of $95.3 million and undrawn revolving credit facility capacity of $48.0 million. This $2.6 million increase in the amount of reported available liquidity at June 30, 2026, by comparison with that at March 31, 2026, is broadly consistent with the reducing trend of recent quarters. Other Partnership Highlights and Events Fleet operated with 96.8% utilization for scheduled operations in Q2 2026, and 92.4% utilization taking into account the scheduled drydocking of the Fortaleza Knutsen. On July 7, 2026, the Partnership declared a quarterly cash distribution of $0.075 per common unit with respect to Q2 2026, which was paid on August 13, 2026, to all common unitholders of record on July 27, 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 Q2 2026 in an aggregate amount of $1.7 million. From February 16, 2026 until May 21, 2026, the Tordis Knutsen was off-hire due to a breakdown of its diesel generator. The vessel was successfully repaired during that period and put back into service thereafter. The Partnership received loss-of-hire insurance, including a payment-on-account of $1.8 million in April 2026 relating to Q1 2026, and another $1.9 million payment-on-account in August 2026 relating to Q2 2026. Following the vessel’s return to service, charterer Shell exercised their right to extend the current charter by the amount of the related off-hire time, the firm portion of which consequently ends on September 29, 2028. In mid-April 2026, the Fortaleza Knutsen commenced a drydocking in Europe, following redelivery in Europe from Transpetro. Following completion of this drydocking, the Fortaleza Knutsen carried an interim cargo in late June 2026 and thereafter commenced operations in early August 2026 in the North Sea pursuant to a time charter to Knutsen NYK Offshore Tankers AS (“Knutsen NYK”) for a fixed period of one year plus two charterer’s options each for one additional year. _________________________ 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 April 22, 2026, a time charter for the Hilda Knutsen was executed with Eni, to commence in June 2027 for a fixed period of three years plus three charterer’s options each for one additional year. In early June 2026, Knutsen NYK sought the interest of KNOP in purchasing the shuttle tankers Frida Knutsen, Sindre Knutsen and Hedda Knutsen, pursuant to the omnibus agreement entered into between KNOP and Knutsen NYK at the time of our initial public offering. The Conflicts Committee of our Board of Directors, which is comprised only of directors who are not affiliated with Knutsen NYK, decided not to pursue negotiations in respect of the Frida Knutsen and Sindre Knutsen. These vessels have been in operation in the North Sea since late 2022 and fall outside our business model as they do not have fixed or guaranteed charter contracts of sufficient duration. As a result, Knutsen NYK has no further obligation to offer the Frida Knutsen or the Sindre Knutsen to KNOP unless in the future either vessel secures a charter of at least five years of fixed duration. The Conflicts Committee engaged in negotiations with Knutsen NYK in respect of the Hedda Knutsen. As previously disclosed on Form 13D, on June 15, 2026, Knutsen NYK purchased 1,250,000 of our Series A Preferred Units from Pierfront Capital Mezzanine Fund Pte. Ltd. at a price of $20 per Series A Preferred Unit. KNOP was not a party to this transaction, as the purchase was of existing Series A Preferred Units from a third-party holder. No common units were purchased or sold pursuant to this transaction. On June 30, 2026, Galp Sinopec exercised their option to extend their time charter for the Live Knutsen for three years, until December 2029. On July 3, 2026, Equinor exercised their option to extend their time charter for the Synnøve Knutsen for two years, until February 2029. In late July 2026, the Recife Knutsen commenced a scheduled drydocking, which is due to complete in early October 2026. Thereafter, the Recife Knutsen is due to commence operations in Brazil for a fixed period of two years, pursuant to the time charter to Transpetro that had been executed on April 24, 2026. On August 7, 2026, the Partnership’s subsidiaries that own the Tordis Knutsen, the Vigdis Knutsen, the Lena Knutsen, the Anna Knutsen and the Brasil Knutsen, entered into a new $225 million senior secured credit facility, with DNB Bank ASA as Agent on behalf of the relevant lenders, in order to refinance their existing term loans in the amount of $225.8 million. The credit facility consists of a term loan repayable in 20 consecutive quarterly installments, with a balloon payment of $111.1 million due at maturity in June 2031. The credit facility bears interest at a rate per annum equal to SOFR plus a margin of 1.65%. The credit facility will be guaranteed by the Partnership and secured by mortgages on the five vessels. The new senior secured credit facility will refinance the previously existing term loans related to these vessels which were due to mature in September 2026. Closing of this senior secured credit facility took place on August 25, 2026. On September 1, 2026, the Partnership’s subsidiary, KNOT Shuttle Tankers AS, acquired Knutsen Canadian Chartering AS, the company that owns the 2024-built DP2 shuttle tanker Hedda Knutsen from Knutsen NYK (the “Hedda Acquisition”). The purchase price was $113.0 million, less $89.4 million of outstanding indebtedness under the secured credit facility related to the Hedda Knutsen (the “Hedda Facility”), plus $0.8 million of capitalized fees. The initial cost of the Hedda Acquisition will therefore be approximately $24.4 million, and is subject to customary post-closing adjustments for working capital and an interest rate swap. The vessel is on time charter to Petrobras in Brazil through November 2034, where Petrobras has the option to extend the time charter by a further five years. On September 2, 2026, agreement was reached with Eni for a time charter on the Ingrid Knutsen commencing early October 2026 for three years fixed plus three options each of one year. This is in direct continuation of the existing time charter to Eni and replaces their existing options. Derek Lowe, Chief Executive Officer and Chief Financial Officer of KNOT Offshore Partners LP, stated, “We are pleased to report another strong performance in Q2 2026, marked by safe operation at 96.8% from scheduled operations, 92.4% utilization when including drydockings, consistent revenue and operating income generation, opportunistic fleet management, and continued progress in extending our long-term charter coverage. As of the date of this release and including contractual updates since June 30, 2026, we are fully contracted for the second half of 2026, and have secured approximately 97% coverage for the first half of 2027 and approximately 87% coverage for the second half of 2027, in each case 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. We continue to see expansion of offshore oil production volumes and shuttle tanker demand in Brazil and the North Sea. Brazil, in particular, has set new records for both overall volumes and for the pace of production ramp-up at its newly deployed FPSOs. In the North Sea region, which importantly includes the Barents Sea, we have continued to see investment into both the development of newer projects and into the expansion of production capacity in existing fields, even where the specific energy majors developing those fields are changing. In terms of shuttle tanker supply, we are aware of newbuild shuttle tanker orders, including nine 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 expect that the expanding demand of shuttle tankers – driven most notably by a robust FPSO delivery schedule through at least the medium term in Brazil – will readily absorb the entire shuttle tanker orderbook. 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, the Partnership is well positioned to benefit from these trends throughout the coming years. The Partnership continues to believe that long-term unitholder value can best be achieved through the generation of stable, long-term cash flows from owning and operating a fleet of shuttle tankers and the prudent allocation of those cash flows across both fleet growth and the sustainable return of capital to unitholders. As the shuttle tanker market has continued to improve alongside the Partnership’s own financial position and forward visibility, the Partnership anticipates that it will seek to acquire from Knutsen NYK over the next four to five years the additional ‘dropdown’ vessels described later in this release. The Partnership believes that the combination of accretive dropdowns and ongoing improvements from rechartering should support both an increase in the Partnership’s cash flow and multiple, gradual distribution increases over the coming quarters and years." Financial Results Overview Results for Q2 2026 (compared to those for the three months ended March 31, 2026 (“Q1 2026”)) included: Revenues of $96.8 million in Q2 2026 ($92.0 million in Q1 2026), reflecting both the stability of our commercial model and an increase due principally to $1.9 million extra in loss of hire recoveries and fewer off hire days as only one vessel was in drydock during Q2 2026 compared to two vessels in Q1 2026. Vessel operating expenses of $36.4 million in Q2 2026 ($33.0 million in Q1 2026). The increase is primarily due to insurance settlements related to Hull & Machinery claims in Q1 2026. Depreciation is a non-cash cost, which in Q2 2026 was $42.1 million ($41.9 million in Q1 2026). There were no impairments in either Q2 2026 or Q1 2026. 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 $1.7 million in Q2 2026 ($2.5 million in Q1 2026). The decrease was primarily driven by higher administrative costs in Q1 2026 associated with Knutsen NYK’s offer to purchase the Partnership’s common units. Operating income consequently of $15.6 million in Q2 2026 ($14.7 million in Q1 2026). Interest expense of $13.8 million in Q2 2026 ($13.9 million in Q1 2026). Realized (i.e. cash) gain on derivative instruments of $0.6 million in Q2 2026 (gain of $1.0 million in Q1 2026), and unrealized (i.e. non-cash) gain of $0.8 million in Q2 2026 (unrealized gain of $0.4 million in Q1 2026). Together, there was a realized and unrealized gain on derivative instruments of $1.4 million in Q2 2026 (gain of $1.4 million in Q1 2026). Net income consequently of $3.4 million in Q2 2026 (net income of $2.6 million in Q1 2026). By comparison with the three months ended June 30, 2025 (“Q2 2025”), results for Q2 2026 included: A decrease of $6.6 million in operating income (to $15.6 million in Q2 2026 from operating income of $22.2 million in Q2 2025), primarily due to an increase in depreciation, offset by increased revenue due to higher time charter rates and higher loss of hire insurance recoveries in Q2 2026. A decrease of $3.2 million in finance expense (to finance expense of $12.0 million in Q2 2026 from finance expense of $15.2 million in Q2 2025), primarily due to an unrealized and realized gain on derivative instruments in Q2 2026 compared to a loss in Q2 2025, and lower interest expense in Q2 2026 compared to Q2 2025 as a result of repayment of outstanding debt and a lower SOFR rate. A decrease of $3.4 million in net income (to a net income of $3.4 million in Q2 2026 from net income of $6.8 million in Q2 2025). Financing and Liquidity As of June 30, 2026, the Partnership had $143.3 million in available liquidity, which was comprised of cash and cash equivalents of $95.3 million and $48.0 million of capacity under its revolving credit facilities. This amount of reported available liquidity was $2.6 million higher than reported available liquidity at March 31, 2026. The Partnership’s revolving credit facilities mature in August 2027 and November 2027 respectively. The Partnership’s total interest-bearing obligations outstanding as of June 30, 2026, were $905.9 million ($902.5 million net of debt issuance costs). The average margin paid on the Partnership’s outstanding debt during Q2 2026 was approximately 2.21% over SOFR. These obligations are repayable as follows: (U.S. Dollars in thousands) Sale & Leaseback Period repayment Balloon repayment Total Remainder of 2026 $ 10,365 $ 40,772 $ 64,682 $ 115,819 2027 21,246 61,388 156,678 239,312 2028 22,345 40,754 78,825 141,924 2029 23,373 27,513 — 50,886 2030 24,515 27,513 47,384 99,412 2031 and thereafter 136,050 11,387 111,125 258,562 Total $ 237,894 $ 209,327 $ 458,694 $ 905,915 As of June 30, 2026, the Partnership had entered into various interest rate swap agreements for a total notional amount outstanding of $272.4 million, to hedge against the interest rate risks of its variable rate borrowings. As of June 30, 2026, the Partnership receives interest based on SOFR and pays a weighted average interest rate of 2.94% under its interest rate swap agreements, which have an average maturity of approximately 1.4 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 June 30, 2026, the Partnership’s net exposure to floating interest rate fluctuations was approximately $300.3 million based on total interest-bearing contractual obligations of $905.9 million, less the sale and leaseback facilities for Raquel Knutsen, Torill Knutsen and Tove Knutsen totaling $237.9 million, less interest rate swaps of $272.4 million, and less cash and cash equivalents of $95.3 million. On June 28, 2024, Knutsen Canadian Charting AS, the subsidiary that owns the Hedda Knutsen, as borrower, entered into a $99 million term loan facility with MUFG Bank (Europe) N.V. and other lenders (the “Hedda Facility”). The Hedda Facility became one of the Partnership’s debt obligations upon closing of the acquisition of the Hedda Knutsen on September 1, 2026, and is therefore not included in the Partnership’s outstanding debt as of June 30, 2026. Following repayment of the quarterly installments due prior to September 1, 2026, the outstanding amount of the Hedda Facility had been reduced to $89.4 million. The Hedda Facility is repayable in quarterly installments with a final payment due at maturity on October 24, 2031 of $61.9 million, which includes the balloon payment and last quarterly installment. The facility bears interest at a rate per annum equal to SOFR plus a margin of 1.6%. In connection with the Hedda Acquisition, the Partnership and KNOT Shuttle Tankers AS became the sole guarantors. The facility is secured by a mortgage on the Hedda Knutsen. On August 7, 2026, the Partnership’s subsidiaries that own the Tordis Knutsen, the Vigdis Knutsen, the Lena Knutsen, the Anna Knutsen and the Brasil Knutsen, entered into a new $225 million senior secured credit facility, with DNB Bank ASA as Agent on behalf of the relevant lenders, in order to refinance their existing term loans. The credit facility consists of a term loan repayable in 20 consecutive quarterly installments, with a balloon payment of $111.1 million due at maturity in June 2031. The credit facility bears interest at a rate per annum equal to SOFR plus a margin of 1.65%. The credit facility is guaranteed by the Partnership and secured by mortgages on the five vessels. The new senior secured credit facility will refinance the previously existing term loans related to these vessels which were due to mature in September 2026. Closing of this senior secured credit facility took place on August 25, 2026. In October 2026, the senior secured loan facility secured by the Live Knutsen is due to mature with a repayment due at the time of $65.9 million. Based on the Partnership’s repeated experience of refinancings and following productive discussions and negotiations with its lending group and other institutions and advisors, Management believes that it will be able to conclude a refinancing of this facility on similar terms prior to maturity. 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. Any such acquisitions, and the terms thereof, are 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 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 were built in China. The first two vessels, Janeiro Knutsen and Turid Knutsen, were delivered to Knutsen NYK from the yard in May 2026 and August 2026, respectively, and the third vessel is anticipated to be delivered by the end of 2026. In August 2024, Knutsen NYK entered into a new seven-year time charter contract with PRIO 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 later in 2026. 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 a vessel to be constructed and which will operate in Brazil. 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 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 late in 2027. 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. In March 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 options to extend the charter up to five further years. The vessel will be built in China and is expected to be delivered in mid 2027. In June 2026, Knutsen NYK entered into a new seven-year time charter contract with an oil major for a vessel to be constructed and which will operate in Brazil, where the charterer has options to extend the charter up to thirteen further years. The vessel will be built in China and is expected to be delivered in mid-2028. In July 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 options to extend the charter up to ten further years. The vessel will be built in China and is expected to be delivered in late-2028. OutlookRead the full story here

KNOT Offshore Partners LP Earnings Release—Interim Results for the Period Ended June 30, 2026

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