KNOT Offshore Partners (KNOP) 4 Sep 24 2024 Q2 Earnings call transcript

Daily EarningsWednesday, Sep 4, 2024 8:13 pm ET

1min read

KNOT Offshore Partners, a leading player in the offshore shipping sector, held its second quarter 2024 earnings call, highlighting the company's strategic moves and positive outlook for the future. The call, led by CEO and CFO, Derek Lowe, provided insights into the company's financial performance, operational developments, and market dynamics.

Strategic Acquisition and Vessel Swap

A significant highlight of the earnings call was the acquisition of the Tuva Knutsen and the subsequent swap with Dan Cisne. This strategic move, which was completed on the same day, is expected to enhance the company's fleet, increase long-term contracts, and reduce fleet age. The Tuva Knutsen, which comes with an existing contract with TotalEnergies, will add to the company's revenue streams and provide a stable revenue base for the future.

Financial Performance and Liquidity

Despite the impact of vessel impairments, KNOT Offshore Partners reported a net loss of $12.9 million for Q2 2024. However, when excluding the impairments, the operating income stood at $17.7 million, and net income was $3.5 million. The company ended the quarter with $66 million in available liquidity, a testament to its strong financial position.

Market Outlook and Contractual Developments

KNOT Offshore Partners expects significant growth in production fields that rely on shuttle tankers, driven by the deployment of FPSOs in Brazil. The company has secured several long-term contracts and extensions in Brazil, including for the Carmen Knutsen, Tordis, and Lena Knutsen. These contracts, coupled with the addition of the Tuva Knutsen, strengthen the company's position in the Brazilian market.

Investor Questions and Management's Response

During the Q&A session, analysts probed KNOT Offshore Partners' management on various aspects, including the company's plans for the Dan Sabia, the dynamics of the North Sea market, and the financial implications of the Tuva Knutsen acquisition. Management provided insights into the company's strategic thought process and financial projections, offering a comprehensive understanding of the company's future plans.

Looking Ahead

The earnings call underscored KNOT Offshore Partners' strategic moves, financial strength, and positive outlook for the future. The company's focus on securing long-term contracts, fleet expansion, and market diversification positions it well for the future. With a robust financial position and a strong pipeline of contracts, KNOT Offshore Partners is poised for growth and stability in the evolving offshore shipping sector.

In conclusion, KNOT Offshore Partners' Q2 2024 earnings call provided a comprehensive overview of the company's financial performance, operational developments, and strategic initiatives. With a focus on long-term contractual stability, fleet expansion, and market diversification, KNOT Offshore Partners is well-positioned to capitalize on the growing demand for shuttle tanker services and navigate the challenges of the offshore shipping sector.

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