KNOT bullish on shuttle tanker future

May 31 2019


KNOT Offshore Partners reported total revenues of $70.5 mill for the three months ended 31st March, 2019, compared to $70.9 mill for 4Q18.

The decrease was mainly due to two less operational earnings days in 1Q19 but partly offset by the full earnings for both ‘Ingrid Knutsen’ and ‘Torill Knutsen’, due to their completion of scheduled first special survey drydockings during 4Q18.

Operating income for 1Q19 was $32.4 mill, compared to $33 mill in the previous quarter. Net income was $12.9 mill, compared to $8.8 mill for 4Q18.

The first quarter 2019 net income decreased by $17.8 mill from $30.7 mill received for 1Q18 to $12.9 mill for 1Q19. The operating income for the first quarter of 2019 increased by $0.5 mill, compared to $31.9 mill in 1Q18, mainly due to increased earnings from the ‘Anna Knutsen’ being included in the Partnership’s results from 1st March, 2018.

Total finance expense for the first quarter of 2019 increased by $18.4 million compared to finance expense $1.1 million for the first quarter of 2018. The increase was mainly due to increased loss on realized and unrealized loss on derivative instruments and increased interest expense due to additional debt in connection with the acquisitions of the Anna Knutsen and a higher LIBOR on average.

Distributable cash flow was $25.7 mill for 1Q19, compared to $27.3 mill for 4Q18. The distribution declared for the quarter was $0.52 per common unit, equivalent to an annualised distribution of $2.08.

On 14th May, 2019, the Partnership obtained approval to extend the maturity of its $25 mill unsecured revolving credit facility maturing in August, 2019 with the same commercial terms. The refinancing is expected to close in June, 2019.

As of 31st March, 2019, the Partnership had $71.8 mill in available liquidity, which consisted of cash and cash equivalents of $43.1 mill and $28.7 mill of capacity under its revolving credit facilities.

The Partnership’s total interest-bearing debt outstanding at the same date was $1,069 mill ($1,059.6 mill net of debt issuance cost).

There are no dry dockings scheduled for any of the Partnership’s fleet during the remainder of this year.

As of 31st March, 2019, the Partnership’s fleet of 16 vessels had an average remaining fixed contract duration of 3.4 years. In addition, the charterers of the Partnership’s timecharter vessels have options to extend their charters by an additional 4.4 years on average.

In September, 2018, Knutsen NYK, the owner of the Partnership’s general partner, entered into new long- term charters with Equinor for two Suezmax DP2 shuttle tanker newbuildings to be constructed by Hyundai Heavy Industries with delivery scheduled in the second half of 2020.

In December, 2018, Knutsen NYK ordered a new Suexmax DP2 shuttle tanker at Cosco Shipyard in China and to be delivered in early 2021.

This shuttle tanker is a replacement vessel for the Knutsen NYK fleet and will be operating in its COA pool if it is not contracted under a long-term charter before delivery.

The board said that it believed that demand for newbuilding offshore shuttle tankers will continue to be driven over time based on the requirement to replace older tonnage in the North Sea and Brazil and further expansion into deepwater offshore oil production areas, such as in Pre-salt Brazil and the Barents Sea.

A significant growth in demand exists and that this will continue for new shuttle tankers as the availability of existing vessels has reduced and modern operational demands have increased. Consequently, there should be opportunities to further grow the Partnership, the board said.

 



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Jul-Aug 19

Greece, alarm fatigue, Fujairah explosions, scrubbers, tank cleaning