KNOT Offshore Partners (KNOP) 5 Dec 24 2024 Q3 Earnings call transcript
AInvestThursday, Dec 5, 2024 6:10 pm ET
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In the recently concluded earnings call for the third quarter of 2024, KNOT Offshore Partners showcased a solid financial performance and highlighted promising growth opportunities in the offshore oil and gas sector. The call, led by Derek Lowe, the Chief Executive and Chief Financial Officer, provided insights into the company's strategic initiatives, financial health, and market outlook.

Financial Performance and Liquidity

KNOT Offshore Partners reported revenues of $76.3 million for Q3, with an operating income of $17.2 million and a net loss of $3.8 million. Adjusted EBITDA stood at $45.1 million, demonstrating the company's operational efficiency and financial resilience. The partnership ended the quarter with $77 million in available liquidity, a testament to its strong financial position.

Growth Opportunities and Market Outlook

The call underscored the significant growth prospects in the offshore oil and gas sector, particularly in production fields that rely on Shell tankers. With around 11 new builds on order, including for the company's sponsor, Knutsen NYK, KNOT Offshore Partners is well-positioned to capitalize on these opportunities. The partnership's contracted revenue position of $980 million, with an average duration of 2.8 years, further strengthens its financial stability.

Strategic Developments and Challenges

Key developments in Q3 included the swap of Dansys for Tuva Knutsen, which brought in 7 years of fixed or guaranteed future charter revenue and a significant step in fleet and pipeline growth. However, challenges remain, with two of the partnership's debt facilities due to mature in the next few years, highlighting the need for strategic refinancing and debt management.

Shareholder and Investor Interactions

Shareholders and investors raised concerns about the company's operating expenses, particularly in relation to the repair of the Dan Sabia vessel. Management acknowledged these concerns, assuring investors that they are actively seeking insurance reimbursement for the repair costs. Additionally, shareholders expressed their appreciation for the company's performance and urged the Board to consider restarting dividends and buybacks to reward shareholders.

Looking Ahead

As KNOT Offshore Partners moves into the fourth quarter of 2024, the focus remains on securing additional contract coverage for its existing fleet and fostering liquidity. The company's strong financial position, strategic initiatives, and positive market outlook position it well for future growth and success in the offshore oil and gas sector.

In conclusion, KNOT Offshore Partners' third-quarter earnings call highlighted a robust financial performance and promising growth opportunities in the offshore oil and gas sector. The company's strategic initiatives, financial resilience, and market outlook underscore its strong position in the industry and its ability to navigate challenges and capitalize on opportunities. Investors and stakeholders will be closely watching the company's progress in the coming quarters as it continues to execute its growth strategy.

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