Knot Offshore Partners Lp · NYSE:KNOP

Knot Offshore Partners Lp — Investor Day (February 2017)

34 slides from Knot Offshore Partners Lp's investor day presentation, Feb 15, 2017

  1. Slide 1: Investor Day

    Investor Day New York City, February 15, 2017

  2. Slide 2: Notice to Recipients

    Notice to Recipients This presentation is not a prospectus and is not an offer to sell, nor a solicitation of an offer to buy, securities. Except for the historical information contained herein, the matters discussed in this presentation include forward-looking statements that involve risks and unce

  3. Slide 3: Investor Day is Pay Day

    Investor Day is Pay Day  Today KNOP paid out its 15th consecutive distribution since IPO in April 2013  The distribution with respect to 4Q16 was $0.52 per unit and results in total pay-out of $16.4m  KNOP has paid $180m in aggregate distributions - same amount as raised in our IPO Quarterly Dist

  4. Slide 4: What’s happened since last Investor Day?

    What’s happened since last Investor Day? 60% Unit Price Appreciation and 75% Total Return for KNOP Investors in period 1 Feb 2016 to 1 Feb 2017 $26,00 2/17/16: $ 13.27 $24,00 Market Cap: $368mm 5 7 Yield: ~15.7% $22,00 4 $21.80 $20,00 8 1/31/17 2 6 $18,00 Market Cap: ~$660mm $13.69 3 Yield: ~9.5% $1

  5. Slide 5: Where KNOP fits into the Knutsen sphere

    Where KNOP fits into the Knutsen sphere 10+1 LNG carriers 14+2 shuttle tankers KBAL®+KVOC®+PNG®+PCO2® 1 LNG “bunkering” vessel 1+1 FSO 5 Product/chemical tankers 2 shuttle tanker pools 30.4% inc GP 33% NYSE ticker: KNOP 12 shuttle tankers(1) (1) Assumed closing of Tordis Knutsen March 1, 2017 5

  6. Slide 6: 253 years of shipping experience

    253 years of shipping experience Sponsor is a Joint Venture between TS Shipping Invest and Tokyo-listed NYK Group  Knutsen Group is a fully integrated shipping company  Nippon Yusen Kabushiki Kaisha (“NYK”) is a global with operations in multiple shipping segments logistics enterprise centered on

  7. Slide 7: Knutsen Group

    Knutsen Group Fully integrated shipping business operating a fleet of high quality and technically advanced vessels, with key customers consisting of leading energy companies on long- term contracts  Provides full in-house management including chartering, commercial and technical management as well

  8. Slide 8: Knutsen Group: Four Pillar Strategy

    Knutsen Group: Four Pillar Strategy 1 Advanced Vessels 2 Long-term Contracts  KNOP’s fleet of DP2 shuttle tankers has a average age of 4.7  Knutsen managed fleet has $6.9 billion of firm backlog and years vs. industry average of 11.5 years $4.9 billion of optional backlog(1) Average Number of Year

  9. Slide 9: Reliable and Safe Operation Creates Reliable Cash Flow

    Reliable and Safe Operation Creates Reliable Cash Flow Last LTI in Knutsen Group: 11,496,672 hours ago ...and counting Shuttle tankers Shuttle tankers and FSO 2016 2015 2014 2016 2015 2014 Loss Time Injury Frequency (LTIF) 0,00 0,00 0,68 0,00 0,43 0,52 Total Recorded Case Frequency (TRCF) 0,48 0,96

  10. Slide 10: Knutsen’s Global Presence

    Knutsen’s Global Presence Knutsen is a fully integrated shipping company with a worldwide footprint Technology and Product development (KBAL® + KVOC® + PNG® + PCO2®) Project Technical and Building Development Ship Design Chartering Crewing Commercial Supervision and Management Conversions Finance an

  11. Slide 11: Offshore vs. Onshore Production

    Offshore vs. Onshore Production 2016 offshore production levels increased due to new projects in areas such as off the coast of Brazil and in the Gulf of Mexico (Kb / d) 100 000 92 000 92 000 89 000 90 000 86 000 87 000 84 000 80 000 70 000 60 000 64 000 64 000 60 000 61 000 63 000 57 000 50 000 40

  12. Slide 12: Midstream Energy is a Stable Segment

    Midstream Energy is a Stable Segment Midstream assets, like our shuttle tankers, are regarded as “mission-critical” or “must- run” components of the energy market Sector Overview Low Risk Profile  Midstream assets serve to gather, store, transport and process oil,  Long-lived, high quality physica

  13. Slide 13: Very tight market for shuttle tankers

    Very tight market for shuttle tankers  The market for shuttle tankers is very tight  Fairly old fleet with average age of ~11 years  Favourable supply side  Attrition and conversion of shuttle tankers for FSO/FPSO means few available vessels  24 months since last order of a shuttle tanker  Tig

  14. Slide 14: Developing a Broad & Balanced Fee-based Contract Portfolio

    Developing a Broad & Balanced Fee-based Contract Portfolio Cost for field operator Revenue for field operator Seismic Drilling Subsea Production Storage Transport Charter split by revenues at IPO Charter split by revenues as of Charter split by revenues including all December 31, 2016: drop-down can

  15. Slide 15: The Knutsen sphere has extensive banking relationships

    The Knutsen sphere has extensive banking relationships Lenders of potential drop- down candidates 15

  16. Slide 16: Worldwide sourcing of attractive and flexible capital

    Worldwide sourcing of attractive and flexible capital 2 LNG carriers for GasNatural 3 Shuttle tankers for Shell Existing $380m loan for 5 vessels $380m Secured Term Loan Facility $ 353m Secured Term Loan Facility $15m Secured Revolving Credit due 2026 due 2021/2022 @ L+190bps Facility due 2019 @ L+2

  17. Slide 17: Potential dropdown vessels are fully financed at attractive terms by Sponsor

    Potential dropdown vessels are fully financed at attractive terms by Sponsor Vessel MT Tordis Knutsen MT Vigdis Knutsen MT Lena Knutsen MT Anna Knutsen Expected delivery 28 November 2016 7 February 2017 June 2017 22 February 2017 Yard Hyundai Heavy Industries (HHI) Hyundai Heavy Industries (HHI) Hyu

  18. Slide 18: Knowledgeable mgt in Sponsor with >200yrs experience

    Knowledgeable mgt in Sponsor with >200yrs experience No Change in Management But eight years of additional experience in top management  Joined Knutsen Group in 1983  Joined Knutsen Group in 2014 Trygve  Majority shareholder in TSSI and 50%  Joined NYK Group in 1982 Seglem owner of Knutsen NYK o

  19. Slide 19: It's tough to make predictions, especially about the future

    “It's tough to make predictions, especially about the future” 1999: 2001: 2003: 2005: 2008: 2011: 2013: 2014: 2016: 2017 / 2018: Quote: NY Yankees legend Yogi Berra 19

  20. Slide 20: For the quarter ended December 31, 2016: In Review

    In Review For the quarter ended December 31, 2016:  Highest quarterly revenues of $45.0 million  Highest quarterly Adjusted EBITDA(1) of $36.1 million  Highest quarterly net income of $19.5 million  Highest quarterly distributable cash flow(1) of $20.8 million  Distribution of $0.52 or $2.08 an

  21. Slide 21: Unit price recovery – but still significant value vs. Alerian

    Unit price recovery – but still significant value vs. Alerian KNOP still offers an attractive value compared to Alerian MLP index on all measurements Current Current EV/EBITDA EV/EBITDA distribution yield: distribution yield: 9.7% 9.1 6.7% 16.6 Price/Earnings: Price/Book Price/Earnings: Price/Book 1

  22. Slide 22: Unit price recovery – but still significant yield premium

    Unit price recovery – but still significant yield premium KNOP still offers an attractive yield pick-up relative to other investments and our assets also gives better inflation protection than 10 year government bonds Current Current dividend yield: distribution yield: Current distribution yield: 2.

  23. Slide 23: Our contracts are fixed price - not fixed to price of oil

    Our contracts are fixed price - not fixed to price of oil Brent Crude KNOP Unit Oil Price Price ($/bbl) $105.25 $21.00 $21.80 $55.25 KNOP EBITDA Brent Crude Oil Price KNOP Unit Price Margin ($/bbl) 23 Source: BofA – data range 4/10/13 to 2/1/2017

  24. Slide 24: Steady financial performance

    Steady financial performance 24

  25. Slide 25: Have we delivered on promises?

    Have we delivered on promises? IPO Guidance: 2017 Hindsight: Fleet has grown 200% since IPO Three vessels in drop-down dowry representing Fleet growth: growth potential of 275% since IPO Sponsor currently chasing new contracts In addition to securing six new drop-down vessels since IPO, we have exte

  26. Slide 26: We have delivered on 2016 financial guidance

    We have delivered on 2016 financial guidance Unaudited, USD in 2016 Guidance 1Q 2016 2Q 2016 3Q 2016 4Q 2016 FY 2016 Achievement thousands Guidance (mid-level) Total revenues(1) 42 026 43 063 43 587 44 995 173 671 167-170m 168 500 103 % Adjusted EBITDA 33 071 34 141 35 092 36 094 138 398 128-132m 13

  27. Slide 27: Financial guidance for 2017

    Financial guidance for 2017 Unaudited, USD in 2013 201 4 2015 2016 2017 Guidance thousands Total revenues $73 401 $112 841 $155 024 $173 671 ≈$210m Adjusted EBITDA(1) $53 752 $84 639 $116 974 $138 398 $160m-165m DCF(1) $26 262 $46 826 $66 906 $77 414 $85-90m Distribution $20 770 $40 480 $56 921 $61

  28. Slide 28: What to do next

    What to do next  We will continue to run our business like we always have done  Drop-down of Tordis Knutsen anticipated in March 2017  Financial capacity for drop-down of sister vessel Vigdis Knutsen in second quarter  Drop-downs will only occur if approved by KNOP’s conflicts committee and deem

  29. Slide 29: Appendix

    Appendix APPENDIX

  30. Slide 30: Non-GAAP Financial Measures

    Non-GAAP Financial Measures Adjusted EBITDA Adjusted EBITDA refers to earnings before interest, other financial items, taxes, non-controlling interest, depreciation and amortization. Adjusted EBITDA is a non-GAAP financial measure used by investors to measure our performance. The Partnership believe

  31. Slide 31: Non-GAAP Financial Measures

    Non-GAAP Financial Measures Distributable Cash Flow Distributable cash flow represents net income adjusted for depreciation and amortization, unrealized gains and losses from derivatives, unrealized foreign exchange gains and losses, other non-cash items and estimated maintenance and replacement cap

  32. Slide 32: Non-GAAP Financial Measures

    Non-GAAP Financial Measures . The reconciliation of Distributable Cash flow is set forth in the table below: For the Quarter Ended (USD in thousands) 31-Mar-15 30-Jun-15 30-Sep-15 31-Dec-15 31-Mar-16 30-Jun-16 30-Sep-16 31-Dec-16 Net income 7,186 6,887 8,802 17,567 10,663 11,578 19,357 19,505 Add: D

  33. Slide 33: Guidance for the year ending December 31, 2017

    Guidance for the year ending December 31, 2017 The following tables set forth our projected range of net income, EBITDA, Adjusted EBITDA, distributable cash flow and distribution coverage ratio for the year ending December 31, 2017, as well as a reconciliation of such projected EBITDA, Adjusted EBIT

  34. Slide 34: Guidance for the year ending December 31, 2017

    Guidance for the year ending December 31, 2017 The projected amounts set forth in the tables above exclude the impact of any acquisitions other than the Acquisition and are based on the following assumptions:  closing of the Acquisition on March 1, 2017;  no dispositions of vessels;  no impairmen

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