Knot Offshore Partners Lp · NYSE:KNOP

Knot Offshore Partners Lp — Investor Day (February 2016)

26 slides from Knot Offshore Partners Lp's investor day presentation, Feb 18, 2016

  1. Slide 1: Investor Day

    Investor Day New York City, February 18, 2016

  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: Agenda

    Agenda 1. Overview of Knutsen Group 2. KNOT Offshore Partners LP 3. The shuttle tanker market by Fearnleys 4. Panel discussion and Q&A 3

  4. Slide 4: Where KNOP fits into the Knutsen sphere

    Where KNOP fits into the Knutsen sphere 8+2 LNG carriers 16+4 shuttle tankers KBAL®+KVOC®+PNG®+PCO2® 1 LNG “bunkering” vessel 2 shuttle tanker pools 5 Product/chemical tankers 1+1 FSO 33% inc GP33% NYSE ticker: KNOP 10 shuttle tankers *The definition of Knutsen Offshore Tankers AS (“KNOT”) will on a

  5. Slide 5: Fully integrated shipping company with worldwide footprint

    Fully integrated shipping company with worldwide footprint KNOT Technology and Product development (KBAL®+KVOC®+PNG®+PCO2®) Tecnical & Project Building Ship design Chartering Crewing commercial development supervision mgt & conversions Finance & Treasury Accounting and Tax IT and Reporting Procureme

  6. Slide 6: Strategy has stayed firm for more than 30 years

    Strategy has stayed firm for more than 30 years ADVANCED LONG TERM VESSELS CONTRACTS FIRST CLASS SAFETY CHARTERERS COMMITMENT 6

  7. Slide 7: Pillar one: Advanced vessels

    * Pillar one: Advanced vessels Shuttle Tanker Fleet Average Age² 12,6 12,5 11,5 11,8 10,8 10,6 4,1 4,4 4,5 3,7 3,4 3,0 IPO 01.01.2014 01.01.2015 01.01.2016 01.01.2017* 01.01.2018 ** Bodil Knutsen loading from FSO Jorunn Knutsen in North Sea Rest of fleet ex KNOP KNOP Fleet Insurance value of Knutsen

  8. Slide 8: Pillar two: Long term contracts

    Pillar two: Long term contracts KNOP fleet: Name Area 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Knutsen managed fleet has $ 7bn of firm backlog¹ and $ 4.4bn in optional backlog¹ Windsor Knutsen Brazil Average no Bodil Knutsen N. Sea of years2: Fortaleza Knutsen Brazi

  9. Slide 9: Pillar three: First class charterers

    Pillar three: First class charterers Cost for field operator Revenue for field operator Seismic Drilling Subsea Production Storage Transport Charter split by revenues as of December 31, 2015: Charter split by revenues assuming all drop-downs have occurred: 7% 10% 12% 6% 31% 13% 27% 17% 26% 8% 11% 14

  10. Slide 10: Pillar four: Safety Commitment

    Pillar four: Safety Commitment 2015 2014 2013 2015 2014 2013 Industry average 2015 (1) LTIF 0 0,68 0 0,43 0,52 0,57 0,94 (2) TRCF 0,96 1,35 0,94 0,86 1,04 1,72 2,39 Number of major accidents 0 0 0 0 0 0 N/A Port State Detention 0 0 0 0 0 0 N/A Sick leave 1,0 % 0,7 % 0,9 % 1,2 % 1,2 % 1,5 % N/A “Give

  11. Slide 11: The Knutsen sphere has extensive banking relationships

    The Knutsen sphere has extensive banking relationships 11

  12. Slide 12: "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 12

  13. Slide 13: Experienced KNOT management with >200yrs experience

    Experienced KNOT management with >200yrs experience  Joined Knutsen Group in 1983  Joined Knutsen Group in 2014  Majority shareholder in TSSI and 50% owner  Joined NYK Group in 1982 Trygve Seglem of Knutsen NYK offshore Tankers  34 years experience from the shipping and (President & CEO)  Prev

  14. Slide 14: Agenda

    Agenda 1. Overview of Knutsen Group 2. KNOT Offshore Partners LP 3. The shuttle tanker market by Fearnleys 4. Panel discussion and Q&A 14

  15. Slide 15: Reiterate

    Reiterate For the quarter ended December 31, 2015:  Highest quarterly revenues of $42.4 million  Highest quarterly Adjusted EBITDA(1) of $33.8 million  Highest quarterly net income of $17.6 million  Highest quarterly EPU of $0.62: P/E of 5.5x in Q/E @ $14 (annualized)  Highest quarterly distrib

  16. Slide 16: Have we delivered on expectation?

    Have we delivered on expectation? IPO Guidance: Status 2016: Fleet has grown 150% since IPO. Fleet growth: Drop-down inventory is still five vessels representing growth potential of 275% since IPO In addition to securing six new drop-down vessels since IPO, we have also entered into Chartering: new

  17. Slide 17: Relative evaluation

    Relative evaluation  Yes, leverage is higher than some perceived peers, but we have a very solid interest coverage ratio NIBD(1) / EBITDA EBITDA(1) / Interest expense 8,0x 8,0x 6,0x 6,0x 4,0x 4,0x 2,0x 2,0x 0,0x 0,0x Teekay Teekay KNOP Golar Dynagas Golar KNOP Teekay Teekay Dynagas LNG Offshore LNG

  18. Slide 18: Steady financial performance

    Steady financial performance Revenues Adjusted EBITDA* (In million of US dollars) 42,5 39,3 0,510 0,510 0,52 0,52 37,0 0,490 0,490 36,2 34,3 34,7 0,435 0,435 0,435 0,435 0,314 33,8 32,2 28,3 28,8 22,2 21,8 22,1 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 20,5 25,7 26,5 (1) DCF

  19. Slide 19: Current Contracts overall very profitable

    Current Contracts overall very profitable : Significant surplus generated over current enterprise value and WACC  The Dollar has strengthened against JPY, KRW and CNY by around 20% in the last 2 years  Steel prices have dropped in 2015 by 30%  Substantial yard losses in 2015  Charter free market

  20. Slide 20: Charter Free Valuation + Projected Earnings basis

    Charter Free Valuation + Projected Earnings basis current EBITDA for Unit Valuation  The NAV assumes 2016 estimate EBITDA continues throughout fleet life.  Contracts structured for minimal changes in pricing at extension option exercise.  The fleet has average remaining contract length of 5.6 yea

  21. Slide 21: How is the MLP Performing?

    How is the MLP Performing?  Average Net Proceeds from units issued $21.89  Solid Performance, Business Very Sound, Excellent Investment Cover  Current unit value is in line with issuance cost at $22.93 21

  22. Slide 22: Economies of Scale: We are thrifty and lean

    Economies of Scale: We are thrifty and lean 35000 12% 30000 10% 25000 IPO 1st 8% Follow-on 20000 6% 15000 4% 10000 2nd Follow-on 2% 5000 0 0% Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 (1) (2) Adjusted EBITDA G&A G&A/EBITDA Peer Group Peer Group is: TOO, TGP, GMLP, DLNG, GLOP,

  23. Slide 23: 2016 Financial Guidance for existing vessels

    2016 Financial Guidance for existing vessels  Revenues of ≈ $167-170m  EBITDA of ≈ $128-132m  Distributable cash flow of ≈ $75-79m  Distribution at $ 2.08 p.a. gives total distribution of ≈ $60m(1)  Coverage ratio of ≈ 1.25 (1) Assume no unit issuance and no unit buyback 23

  24. Slide 24: What to do next

    What to do next  We will continue to run our business like we always have done  Opportunistic repurchasing of units according to buyback program announced and initiated  Drop-downs will only occur if deemed accretive to our unitholders  Continued balance sheet optimization 24

  25. Slide 25: Appendix

    KNOT Offshore Partners LP Appendix

  26. Slide 26: 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

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