KNOP also reported its highest quarterly adjusted EBITDA of $34.1 mill and the largest quarterly distributable cash flow of $18.5 mill with a distribution coverage ratio of 1.23.
In addition, on 30th June, 2016, the Partnership entered into an amended senior secured credit facility, which includes a new revolver facility tranche of $15 mill, in order to further strengthen the balance sheet and increase financial flexibility.
On 18th May, 2016, the Partnership’s subordinated units, all of which were held by Knutsen NYK Offshore Tankers (KNOT), were converted to common units on a one-for one basis.
The total revenues of $43.1 mill for 2Q16 were compared to $42 mill for 1Q16, an increase of $1.1 million, which was mainly due to a full quarter of earnings from the ‘Bodil Knutsen’, as the vessel incurred 21 days of offhire during the first quarter in connection with its scheduled drydocking.
The operating income of $20.2 mill, was higher than the $19.2 mill reported in 1Q16.
Net income was $11.6 mill, compared to $10.7 mill in the previous quarter. The net income was impacted by the recognition of realised and unrealised losses on derivative instruments of $3.2 mill, the same as in 1Q16.
In addition, the net income for 2Q16 increased by $4.7 mill, compared to 2Q15. The increase was primarily due to (i) an increase in operating income of $2.8 mill, due to earnings from the ‘Dan Sabia’ and ‘Ingrid Knutsen’ being included in the Partnership’s results of operations from 15th June, 2015 and 15th October, 2015, respectively, (ii) a $6.2 mill goodwill impairment charge during 2Q15 and (iii) a $4.5 mill increase in total finance expense primarily caused by the $3.2 mill realised and unrealised loss on derivative instruments in 2Q16, compared to a $0.3 mill in 2Q15.
Distributable cash flow was $18.5 mill, compared to $17.9 mill for 1Q16, again mainly due to increased earnings from the ‘Bodil Knutsen’, as a result of its drydocking during the first quarter.
On 30th June, 2016, the Partnership’s subsidiaries KNOT Shuttle Tankers 18 AS, KNOT Shuttle Tankers 17 AS and Knutsen Shuttle Tankers 13 AS, as borrowers, entered into an amended and restated senior secured credit facility, which amended the Partnership’s original $240 mill senior syndicated secured loan facility secured by the shuttle tankers ‘Bodil Knutsen’, ‘Carmen Knutsen’ and ‘Windsor Knutsen’.
The amended loan facility included a new revolving credit facility tranche of $15 mill, bringing the total revolving credit commitments under the facility to $35 mill.
As of 30th June, 2016, the Partnership had $55.7 mill in available liquidity, which consisted of cash and cash equivalents of $25.7 mill and an undrawn revolving credit facility of $30 mill, which is available until 10th June, 2019.
The Partnership’s total interest bearing debt outstanding was $648.5 mill ($652 mill net of debt issuance cost).
As of 30th June, 2016, the Partnership’s net exposure to floating interest rate fluctuations on its outstanding debt was around $218.6 mill, based on total interest bearing debt outstanding of $652 mill, less interest rate swaps of $407.7 mill and less cash and cash equivalents of $25.7 mill.
KNOP said that it has or expects to receive options to acquire five vessels controlled by KNOT under the omnibus agreement entered into in connection with the Partnerships initial public offering.
One of the vessels, ‘Raquel Knutsen’, delivered last year, is chartered to Repsol Sinopec Brazil under a timecharter that expires in 2025, with options to extend until 2030. Four vessels are under construction in South Korea and China. As of June 30, 2016, the average remaining fixed contract duration for these five vessels is 5.8 years. In addition, the charterers have options to extend these charters by 11.2 years on average.