Knot Offshore Partners Lp · NYSE:KNOP
Knot Offshore Partners Lp — EIC 2021 Investor Conference
30 slides from Knot Offshore Partners Lp's conference presentation, May 19, 2021
Slide 1: Investor Presentation
Investor Presentation May 2021 NYSE:KNOP 1
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains certain forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) that reflect management’s current view and involve known and unknown risks and are based upon assumptions and estimates that are inh
Slide 3: KNOP Attributes
KNOP Attributes ▪ We are a market leader in the operation of shuttle tankers with more than 30 years continuous experience and investment in this business. ▪ KNOP is classified as a corporation for U.S. federal income tax purposes. A U.S. holder of KNOP common units will receive a Form 1099 to repor
Slide 4: Shuttle Tankers Are a Critical Component of Offshore Oil Infrastructure
Shuttle Tankers Are a Critical Component of Offshore Oil Infrastructure SHUTTLE TANKER or PIPELINE OFFSHORE OIL FIELD INSTALLATION OIL REFINERY / TERMINAL Advantages vs. Pipelines Key Differences vs. Conventional Tankers ▪ More economical alternative with lower initial ▪ Specially designed, advanced
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Slide 6: Critical Service to Top-Tier Customers on Stable, Fixed-Rate Contracts
Critical Service to Top-Tier Customers on Stable, Fixed-Rate Contracts Integral to operation of long-term offshore projects Contracts provide stability and insulation Offshore oil production projects typically have high upfront Firm charter periods typically 5 to 7 years for newbuild costs to co
Slide 7: Global Fleet Consists of 75 vessels Serving Two Major Offshore Geographies
Global Fleet Consists of 75 vessels Serving Two Major Offshore Geographies North Sea / Barents Sea Offshore Brazil Shuttle tankers currently in operation Shuttle tankers currently in operation 29 37 Primary characteristics Primary characteristics Stable production High growth expected High specifica
Slide 8: Concentrated Global Fleet, Anticipated Scrapping and No Speculative Orders
Concentrated Global Fleet, Anticipated Scrapping and No Speculative Orders Shuttle tanker supply in the North Sea and Brazil highly concentrated among largest players Existing vessels Vessels on order KNOP + KNOT 28 5 Altera 25 3 AET 11 6 Viken MOL 5 Tsakos 3 1 Elka 2 Shanghai North Sea Shipping 1 0
Slide 9: Our Sponsors Are Established Market Leaders With Scale and Track Record
Our Sponsors Are Established Market Leaders With Scale and Track Record ▪ With origin dating to 1896 and headquartered in ▪ Established in 1885 and headquartered in Japan, Norway, the Knutsen Group is a fully integrated Nippon Yusen Kabushiki Kaisha (“NYK”) is a c. $4B shipping company controlled by
Slide 10: Fixed-Rate Contracts Provide Stable Cashflow Despite Oil Price Fluctuation
Fixed-Rate Contracts Provide Stable Cashflow Despite Oil Price Fluctuation 60 90 Adj. EBITDA 50 Brent 75 Adjusted EBITDA (USD million) Brent Crude Spot (USD) 40 60 30 45 20 30 10 15 0 0 ▪ Fixed-rate charter contracts are unaffected by changes in oil price, once in place. ▪ Fuel costs are paid by the
Slide 11: Stable Operational and Financial Results Over Time…
Stable Operational and Financial Results Over Time… Vessel scheduled utilisation (%) Revenue (USD million) Average of 99.6% since IPO in 2013 100% 75 80% 60 60% 45 40% 30 20% 15 0% 0 Adjusted EBITDA (USD million) Distributable Cashflow (USD million) 30.0 60 50 25.0 40 20.0 30 15.0 20 10.0 10 5.0 0 0
Slide 12: …Enabling an Attractive Distribution, Robust Coverage and Debt Reduction
…Enabling an Attractive Distribution, Robust Coverage and Debt Reduction Stable distribution with consistently robust Utilizing cashflows to consistently reduce coverage leverage(1) Distribution Coverage Total Debt / EBITDA 1.8x 6.0 1.6x 5.5 Accelerated debt repayment of c. $90M per year 1.4x 5.0 1.
Slide 13: Refinancing Schedule and Status Update
Refinancing Schedule and Status Update 350 300 250 2020 Adjusted EBITDA: $213M $millions 200 150 100 50 0 2021 2022 2023 2024 2025 2026 and thereafter Period Repayment Balloon Repayment ▪ Access to wide pool of lenders, attractive bank finance and several key lender relationships with major players.
Slide 14: Forward Contracted Revenue Backed by Leading Energy Companies
Forward Contracted Revenue Backed by Leading Energy Companies At March 31, 2021: Remaining forward contracted revenue of $670 million (exc. options) and average remaining charter of 2.5 years Charterers also have the option to extend these charters by a further 2.8 years on average Charterer's Age C
Slide 15: Dropdown Inventory at Sponsor – Potential Acquisitions
Dropdown Inventory at Sponsor – 6 Potential Acquisitions(1) At March 31, 2021: Average contracted charter length of 5.3 years Charterers also have the option to extend these charters by a further 7.3 years on average Fixed contract Expected period Vessel 2020 2021 2022 2023 2024 2025 Charterer (year
Slide 16: Scheduled Start-Ups To Outpace Declines
Scheduled Start-Ups To Outpace Declines Oil production in shuttle tanker-serviced fields Petrobras lifting cost for offshore Brazil deep-water oil in pre-salt areas in 4Q 2020 was US$4.47 / boe (exc. taxes) Source: Petrobras S.A. Operational and Financial Indicators report 4Q2020 16
Slide 17: Vessel Demand Set To Exceed Supply From 2024
Vessel Demand Set To Exceed Supply From 2024 Global shuttle tanker supply / demand 90 80 Shuttle Tankers 70 60 50 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Vessel Supply (20 yr Scrapping) Vessel Demand ▪ Shuttle tankers often recycled or repurposed from around 20 years old ▪ 8 active ve
Slide 18: ESG: Improving Efficiency, Reducing Emissions, and Driving Progress
ESG: Improving Efficiency, Reducing Emissions, and Driving Progress ▪ KNOP is dedicated to upholding Environmental, Social, and Governmental (“ESG”) principles and driving progress in the shipping industry and beyond. ▪ Inaugural ESG report published for 2019, providing transparency on performance a
Slide 19: Near-Term Priorities
Near-Term Priorities ▪ Continue to operate our vessels safely and efficiently and ensure the health and safety of our crew and employees. ▪ Continue to progress discussions with lenders for refinancings due in August and November 2021. All early indications are positive and timing is on track. Expec
Slide 20: KNOT Offshore Partners: Key takeaways
KNOT Offshore Partners: Key takeaways ▪ Pioneer and largest player(1) in niche, high-barrier-to-entry shuttle tanker market. ▪ Shuttle tankers are critical infrastructure for offshore oil production where KNOP operates. ▪ 1099 Filer: KNOP is classified as a corporation for U.S. federal income tax pu
Slide 21: Shuttle Tanker Market Overview Appendix
Shuttle Tanker Market Overview Appendix 21
Slide 22: First Quarter 2021 and Subsequent Highlights - 1
First Quarter 2021 and Subsequent Highlights - 1 First Quarter Results ▪ Total revenues of $71.5 million, operating income of $27.6 million and net income of $28.1 million. ▪ Quarterly Adjusted EBITDA of $51.3 million. ▪ Distributable Cash Flow of $21.7 million, with a coverage ratio of 1.20. ▪ At M
Slide 23: First Quarter 2021 and Subsequent Highlights - 2
First Quarter 2021 and Subsequent Highlights - 2 Raquel Knutsen ▪ In January, the Partnership closed a sale and leaseback agreement for the Raquel Knutsen with a Japanese-based lessor for a lease period of ten years. Tove Knutsen ▪ In March, the Tove Knutsen developed a technical fault due to a leak
Slide 24: First Quarter 2021 and Subsequent Highlights - 3
First Quarter 2021 and Subsequent Highlights - 3 Tordis Knutsen ▪ Tordis Knutsen is due for her first planned 5-year special survey drydocking in the fourth quarter of 2021, which is expected to be carried out in Europe. The vessel is expected to be off-hire for approximately 50-55 days, including m
Slide 25: Tove Knutsen Acquisition in December 2020
Tove Knutsen Acquisition in December 2020 ▪ 153,000 DWT DP2 shuttle tanker. ▪ Vessel delivered from shipyard September 28, 2020, sailed to Brazil and undertook series of Equinor and Petrobras (for Brazil operations) approval tests. ▪ Commenced 7-year fixed charter to Equinor on November 27, 2020, wi
Slide 26: Income Statement
Income Statement Unaudited, USD thousands 1Q 2021 4Q 2020 3Q 2020 2Q 2020 1Q 2020 FY 2020 Time charter and bareboat revenues (1) 65,598(1) 69,864 71,241 70,250 67,226 278,581 Loss of hire insurance recoveries 5,882 — — — — — Other income(2) 1 (5) 39 9 598(2) 641 Total revenues 71,481 69,859 71,280 7
Slide 27: Adjusted EBITDA
Adjusted EBITDA Unaudited, USD thousands 1Q 2021 4Q 2020 3Q 2020 2Q 2020 1Q 2020 FY 2020 Net income (loss) 28,141 24,605 25,076 21,683 (6,139) 65,225 Interest income — (4) — (3) (118) (125) Interest expense 7,372 6,113 6,558 8,512 10,462 31,645 Depreciation 23,684 22,466 22,453 22,451 22,373 89,743
Slide 28: Distributable Cash Flow
Distributable Cash Flow Unaudited, USD thousands 1Q 2021 4Q 2020 3Q 2020 2Q 2020 1Q 2020 FY 2020 Net income (loss) 28,141 24,605 25,076 21,683 (6,139) 65,225 Add: Depreciation 23,684 22,466 22,453 22,451 22,373 89,743 Other non-cash items; amortization of deferred debt 1,102 617 624 626 636 2,503 is
Slide 29: Balance Sheet
Balance Sheet At Mar 31, At Dec 31, At Mar 31, At Dec 31, Unaudited, USD thousands 2021 2020 2021 2020 Current assets: Current liabilities: Cash and cash equivalents 60,019 52,583 Current portion of long-term debt 310,468 184,188 Inventories 2,612 2,652 Derivative liabilities 9,486 10,695 Amounts du
Slide 30: Non-GAAP Financial Measures
Non-GAAP Financial Measures Adjusted EBITDA Adjusted EBITDA refers to earnings before interest, depreciation, taxes, goodwill impairment charge and other financial items. Adjusted EBITDA is a non-GAAP financial measure used by investors to measure our performance. Adjusted EBITDA is used as a supple
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