KNOT Offshore Partners Posts Strong Q1 Results, Eyes Future Growth
The offshore energy industry has seen significant developments in recent years, and KNOT Offshore Partners is no exception. The company recently reported its first quarter 2026 earnings, showcasing a strong performance that sets the tone for future growth.
Revenues for Q1 came in at $92 million, with operating income reaching $14.7 million and net income of $2.6 million. Adjusted EBITDA was even more impressive, totaling $56.5 million.
The company's Chief Executive and Chief Financial Officer, Derek Lowe, highlighted the quarter's financial and operational highlights on slide four of the earnings presentation. One notable point is that the partnership operated a 97.2% utilization rate, taking into account scheduled dry docking. This impressive level of efficiency resulted in an overall utilization rate of 92% following the dry dockings of Tuva Knutsen and Bodil Knutsen.
Another significant development was the declaration of a cash distribution of $0.05 per common unit, which represented an increase from the previous level. This move is a clear sign that the company has restored its charter coverage, improved its liquidity position, and addressed multiple refinancings and dry dockings.
The partnership also initiated the process of increasing the distribution after an extensive period of low payouts. As Derek Lowe noted, "We are pleased to have initiated the process of increasing the distribution after an extensive period of low payouts, during which we restored our charter coverage, improved our liquidity position, and addressed multiple refinancings and dry dockings."
Looking ahead, KNOT Offshore Partners is well-positioned for future growth. The company has sustained a strong backlog with $858 million in fixed contracts averaging 2.4 years, and rather more if all options are exercised. At quarter end, the fleet of 19 vessels had an average age of 10.5 years, demonstrating the company's efforts to maintain its assets.
The partnership's commercial developments were also noteworthy. The exercise of the option to continue the time charter of Hilda Knutsen with Shell through March 2027 was followed by a new time charter agreement with Eni commencing in Q3 2027 for three years fixed, plus options up to a further three years. Additionally, TotalEnergies exercised their option to extend the charter of Anna Knutsen for one year until May 2027, and KNOT Offshore Partners agreed a time charter for Raquel Knutsen with Transpetrol commencing Q3 2026 for a fixed period of two years.
As Derek Lowe noted on slide seven, both Brazil and the North Sea continue to see tightening markets driven by FPSO startups, ramp-ups, expansions, and new developments. This increase in shuttle tanker service volumes across both markets has been sustained and sufficient to tighten the supply-demand balance. The company's average margin on floating rate debt during Q1 was a notable 2%, demonstrating its access to attractive bank finance.
