KNOT Offshore Partners LP Stock

KNOT Offshore Partners LP (KNOT) owns, operates, and acquires shuttle tankers under long-term charters. KNOT Offshore Partners GP LLC operates as the general partner of the company.

On July 1, 2022, the company acquired KNOT Shuttle Tankers 35 AS, the company that owns the shuttle tanker, the Synnøve Knutsen, from KNOT.

As of March 30, 2023, the company had a fleet of eighteen shuttle tankers.

The vessels in the company’s fleet are chartered to Equinor, Transpetro, Repsol, Shell, Galp, Altera, China Offshore Oil (Singapore), International Pte. Ltd., TotalEnergies and KNOT, and the company’s charters have an average remaining term excluding options of 1.9 years as of December 31, 2022 and 2.3 years excluding options but including contracts and extensions signed after December 31, 2022 but before March 30, 2023.

The company intends to leverage the relationships, expertise and reputation of KNOT, a leading independent owner and operator of shuttle tankers, to pursue potential growth opportunities and to attract and retain high-quality, creditworthy customers. KNOT intends to utilize the company as its primary growth vehicle to pursue the acquisition of long-term, stable cash-flow-generating shuttle tankers.

Business Strategies

The company’s strategies are to manage its fleet and deepen its customer relationships; pursue strategic and accretive acquisitions of shuttle tankers on long-term, fixed-rate charters; and expand global operations in high-growth regions.

Customers

For the year ended December 31, 2022, Transpetro, Eni, Repsol, Galp, and Shell accounted for approximately 17%, 14%, 14%, 6% and 5%, respectively, of the company’s revenues. Equinor, Vår, TotalEnergi, PetroChina, China Offshore Oil (Singapore), International Pte. Ltd. Petrobras and KNOT accounted for the company’s remaining revenues.

Charters

The company generates revenues by charging customers for the hire of the company’s vessels and for services related to the loading, transportation, discharge and storage of their crude oil using the vessels in the company’s fleet. The company mainly provides all of these services under time charters and bareboat charters, however, some of the company’s vessels operated on spot voyages in 2022.

As of March 30, 2023, fifteen of the company’s shuttle tankers were chartered under time charters and three of the company’s shuttle tankers are chartered under bareboat charters.

Ship Management and Maintenance

Under the company’s time charters, the shipowner is responsible for the technical management of the vessel and for maintaining the vessel, periodic drydocking, cleaning and painting and performing work required by regulations. KNOT Management and KNOT Management Denmark provide these services to the company’s subsidiaries for all the company’s vessels under time charters. Under the company’s bareboat charters, the shipowner is not responsible for providing crewing or other operational services and the customer is responsible for all vessel operating expenses and voyage expenses. However, as of December 31, 2022, Transpetro had elected to subcontract the technical operation and management of the Fortaleza Knutsen, the Recife Knutsen, the Dan Cisne and the Dan Sabia to an affiliate of KNOT.

Safety, Management of Ship Operations and Administration

KNOT, through certain of its subsidiaries, assists the company and its operating subsidiaries in managing the company’s ship operations. DNV GL, a Norwegian classification society, has approved KNOT’s safety management system, which has been implemented on all the company’s ships, as complying with the IMO’s International Management Code for the Safe Operation of Ships and Pollution Prevention (the ‘ISM Code’), International Standards Organization (‘ISO’) 9001 for Quality Assurance, ISO 14001 for Environment Management Systems and OHSAS 18001, for Occupational Health and Safety Management System. As part of KNOT’s ISM Code compliance, all the vessels’ safety management certificates are being maintained through ongoing internal audits performed by KNOT’s certified internal auditors and external audits performed by DNV GL or the respective flag state.

KNOT has achieved certification under the standards reflected in ISO 9001 for quality assurance, ISO 14001 for environment management systems and the ISM Code on a fully integrated basis.

Environmental and Other Regulation

IMO regulations relating to pollution prevention for oil tankers have been adopted by many of the jurisdictions in which the company’s tanker fleet operates. All of the company’s tankers are of double-hull construction.

SOLAS and other IMO regulations concerning safety, including those relating to treaties on training of shipboard personnel, lifesaving appliances, radio equipment and the global maritime distress and safety system, are applicable to the company’s operations.

The requirements contained in the ISM Code govern the company’s operations. Each of the existing vessels in the company’s fleet is MLC 2006-certified, and the company expects to obtain MLC 2006 certificates for each newbuild upon delivery. MARPOL Annex VI also establishes three tiers of stringent nitrogen oxide emissions standards for new marine engines, depending on their date of installation. All of the company’s vessels are in compliance with these requirements.

The company has installed ballast water treatment systems on all the company’s vessels to comply with the requirements of the BWM Convention.

All of the company’s vessels have received ‘Blue Cards’ from their P&I club and are in possession of a CLC State-issued certificate attesting that the required insurance coverage is in force.

The company’s shuttle tankers operate in the North Sea and Brazil.

In addition to the regulations imposed by the IMO those countries having jurisdiction over North Sea areas impose further regulatory requirements on operations in those areas, including Maritime and Coastguard Agency regulations in the United Kingdom and Norwegian Maritime Directorate regulations in Norway.

The company has installed the VOC control equipment required to operate on the Norwegian continental shelf on each of the Fortaleza Knutsen, the Recife Knutsen, the Windsor Knutsen, the Hilda Knutsen, the Torill Knutsen and the Ingrid Knutsen. The company has installed an advanced VOC recovery system on the Bodil Knutsen.

The company has complied with the U.S. Coast Guard regulations by using self-insurance for certain vessels and obtaining financial guaranties from a third party for the remaining vessels.

In addition, the company conducts regular oil spill response drills in accordance with the guidelines set out in OPA 90.

KNOT has implemented the various security measures addressed by the MTSA, SOLAS and the ISPS.

History

KNOT Offshore Partners LP, a publicly traded limited partnership, was founded in 2013.