Do you anticipate a higher-than-normal increase in offshore oil production development post-Strait of Hormuz reopening, and how might this change your markets?

Management expressed no specific view on the medium to longer-term impact of geopolitical events on offshore oil production, acknowledging that market developments are subject to various factors. “Well, I don't particularly have a view over the medium to longer term. I can understand people being quite cautious in the nearer term as developments come along because the news flow varies from one day to the next.”

Considering the reduction in useful life, what is the status of the global shuttle tanker order book and the aging of the fleet, and could this further tighten supply?

Management noted the aging of their own vessels and that new build inventory is primarily intended to serve new volumes, implying that an aging global fleet could indeed lead to further supply tightening. “But clearly, with the ramp-up, particularly in Brazil, the new build inventory is clearly in excess of what's going to retire from the market. It's intended to serve new volumes that are coming online.”

What caused the sequential decline in revenues, was it solely due to downtime or also time charter rollovers?

Management confirmed that the sequential decline in revenues was related to the dry dock schedule and the specific terms of outstanding contracts. “Yes, it will relate to the dry dock schedule. And also simply the terms of the contracts or that are outstanding between different period.”

KNOP

KNOT Offshore Partners (KNOP) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Industrials· May 29, 2026

Source: earnings call transcript

Executive summary

KNOT Offshore Partners Q1 FY26 – Increased Distribution and Strong Charter Backlog

KNOT Offshore Partners delivered solid Q1 FY26 results, marked by an increase in cash distribution and robust operational utilization. The company is benefiting from tightening shuttle tanker markets in Brazil and the North Sea, driven by increased offshore production. Management is focused on future accretive drop-downs and rechartering vessels to support further gradual distribution increases.

Highlights

Revenues were $92 million for the quarter.
Adjusted EBITDA reached $56.5 million.
Available liquidity stood at $140.7 million, an increase of $3.7 million from the prior quarter.
The fleet achieved 97.2% utilization, taking into account scheduled dry docking.
A cash distribution of $0.05 per common unit was declared, representing an increase from the previous level.
The company maintained a strong backlog of $858 million in fixed contracts, averaging 2.4 years.

Concerns

Operating income was $14.7 million for the quarter.
Net income was $2.6 million.
Revenues experienced a sequential decline due to the dry dock schedule and contract terms.
The company faces upcoming debt refinancings of $220 million in September 2026 and $65 million in October 2026.

Guidance & targets

Category	Target	Timeline	Confidence
Distribution increases	multiple gradual increases medium materiality	coming quarters and years	Medium
Drop-down acquisitions	pursuing these acquisitions medium materiality	next 4 to 5 years	Medium

KNOP operating KPIs by quarter

KNOP operating KPIs stated on its earnings calls, by fiscal quarter
KPI	This call Mar 2026 Q1 FY26	Jun 2026 Q2 FY26	Change vs prior quarter
Utilization rate Taking into account scheduled dry docking	97.2% We operated the 97.2% utilization taking into account scheduled dry docking, which amounts to 92% utilization overall following the dry dockings of Synnove Knutsen. Source: earnings call transcript	96.8% We operated with 96.8% utilization, taking into account scheduled dry docking, which amounts to 92.4% utilization overall following the dry docking of Fortaleza. Source: earnings call transcript	-0.4 pt
Utilization rate Overall	92% We operated the 97.2% utilization taking into account scheduled dry docking, which amounts to 92% utilization overall following the dry dockings of Synnove Knutsen. Source: earnings call transcript	92.4% We operated with 96.8% utilization, taking into account scheduled dry docking, which amounts to 92.4% utilization overall following the dry docking of Fortaleza. Source: earnings call transcript	+0.4 pt
Backlog	$858M We have sustained a strong backlog with $858 million of fixed contracts, averaging 2.4 years. Source: earnings call transcript	$881.2M We have expanded our strong backlog with $881.2 million of fixed contracts at quarter end, which average 2.5 years in duration, and chartered options averaging further four years. Source: earnings call transcript	+2.7%
Fleet	19 At quarter end, our fleet of 19 vessels had an average age of 10.5 years, and we're continuing to repay debt at around $90 million per year, which we consider prudent with the depreciating asset base. Source: earnings call transcript	19 At quarter end, our fleet of 19 vessels had an average age of 10.7 years. Source: earnings call transcript	0%
Average fleet age	10.5 years At quarter end, our fleet of 19 vessels had an average age of 10.5 years, and we're continuing to repay debt at around $90 million per year, which we consider prudent with the depreciating asset base. Source: earnings call transcript	10.7 years At quarter end, our fleet of 19 vessels had an average age of 10.7 years. Source: earnings call transcript	+1.9%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Deals & partnerships

Shell customer contract through March 2027

Exercised option to continue the time charter of Fortaleza Knutsen.

ENI customer contract 3 years fixed plus options up to a further 3 years

Agreed a new time charter for Fortaleza Knutsen commencing in Q3 2027.

Total Energies customer contract 1 year until May 2027

Exercised their option to extend the charter of Alecensa.

[indiscernible] customer contract 2 years fixed

Agreed to time charter for Receivers.

Risks & headwinds

Upcoming debt refinancings September 2026, October 2026

$220 million facility in September 2026 and $65 million facility in October 2026

Mitigation:Historically benefited from access to a wide pool of lenders and attractive bank finance; encouraged by refinancing experience in recent years.

Increased future depreciation prospectively from January 1, 2026

Increase due to change in useful life estimates from 23 years to 20 years

Mitigation:This is a non-cash item and does not prevent vessels from operating beyond 20 years.

Sequential revenue decline Q1 FY26

Not quantified, but noted as a decline

Mitigation:Attributed to scheduled dry dockings and specific contract terms, implying it is part of normal operational cycles.

Q&A highlights

Can you provide color on the magnitude of future 'modest gradual' dividend increases, similar to the recent one or more?

Management stated that the specific numbers for future distribution increases are decided by the Board after each quarter and cannot be provided in advance.

“I appreciate the question, but until we have a distribution decision from the directors over the -- after the end of the second quarter, we don't have a number to provide you with.”

asked by Fredrik Dybwad · answered by Derek Lowe

2 min read 5 chapters

Detailed narrative

Market Conditions and Outlook

The company observes tightening markets in both Brazil and the North Sea, driven by increased FPSO start-ups, ramp-ups, expansions, and new developments. This sustained increase in shuttle tanker service volumes has tightened the supply-demand balance, contributing to a constructive market outlook. The company also noted that the aging of the global fleet could further tighten supply.

Charter Portfolio and Backlog

KNOT Offshore Partners maintains a strong backlog with $858 million in fixed contracts, averaging 2.4 years, with potential for more if all options are exercised. Given the current strength of the charter market, the company believes that charter options are likely to be exercised. Key charter extensions include Fortaleza Knutsen with Shell and ENI, and Alecensa with Total Energies.

Distribution Policy and Growth

Following an extended period of low payouts, the company has initiated the process of increasing its distribution, declaring $0.05 per common unit for Q1 FY26. This move follows successful efforts to restore charter coverage, improve liquidity, and address refinancings and dry dockings. Management anticipates that accretive drop-downs and a strong rechartering environment will support multiple gradual distribution increases in the future.

Fleet Management and Useful Life

Effective January 1, 2026, the company changed the useful life estimates of its vessels from 23 years to 20 years, reflecting longer-term market trends. This change will increase future depreciation but is a non-cash item and does not preclude vessels from operating beyond 20 years. The fleet's average age is 10.5 years, and the company continues to repay debt at approximately $90 million per year.

Refinancing Activities

The company has historically benefited from access to a wide pool of lenders and attractive bank finance, with positive refinancing experiences even during weaker market conditions. The average margin on its floating rate debt during Q1 FY26 was 2.22% over SOFR. The company is preparing for upcoming refinancings of a $220 million facility in September 2026 and a $65 million facility in October 2026.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.