KNOT Offshore Partners LP(KNOP) - 2024 Q3 - Quarterly Report

Financial Performance - Generated total revenues of $76.3 million in Q3 2024, an increase from $74.4 million in Q2 2024, driven by higher charter and bareboat revenues[10] - Adjusted EBITDA for Q3 2024 was $45.1 million, with a net loss of $3.8 million compared to a net loss of $12.9 million in Q2 2024[4][10] - Total revenues for Q3 2024 reached $76.292 million, compared to $72.683 million in Q3 2023, marking a year-over-year increase of 4.5%[27] - Net income for the three months ended September 30, 2024, was a loss of $3,773,000 compared to a profit of $12,641,000 for the same period in 2023[39] - Net income for the nine months ended September 30, 2024, was a loss of $9,185 thousand, compared to a loss of $29,046 thousand for the same period in 2023, indicating an improvement in performance[36] - Adjusted EBITDA for the nine months ended September 30, 2024, was $138,025,000, slightly down from $139,992,000 in the same period of 2023[39] Operational Performance - Fleet utilization was 98.8% for scheduled operations in Q3 2024, maintaining strong operational performance[5] - The average margin paid on outstanding debt during Q3 2024 was approximately 2.26% over SOFR, with total interest-bearing obligations of $947.3 million[12] - Vessel operating expenses increased to $29.453 million in Q3 2024 from $23.164 million in Q3 2023, reflecting a rise of 27.1% year-over-year[27] - Depreciation expenses remained stable at approximately $27,902,000 for the three months ended September 30, 2024, compared to $27,472,000 in 2023[39] Liquidity and Capital Structure - As of September 30, 2024, the Partnership had $77.2 million in available liquidity, including $67.2 million in cash and cash equivalents[11] - Cash and cash equivalents increased from $63,921 thousand at the beginning of the period to $67,225 thousand at the end, reflecting a growth of approximately 3.8%[36] - Long-term debt decreased from $857,829 thousand to $766,895 thousand, a reduction of approximately 10.6%[33] - Current liabilities increased significantly from $127,577 thousand to $209,889 thousand, marking an increase of approximately 64.4%[33] - The total partners' capital decreased from $523,169 thousand at December 31, 2023, to $506,178 thousand at September 30, 2024, a decline of approximately 3.2%[34] Market Outlook - The outlook for the offshore oil market in Brazil is improving, with robust demand and increasing charter rates driven by Petrobras' high production levels[7] - The medium and long-term outlook for the shuttle tanker market remains favorable, supported by committed capital from industry participants and supply-demand factors[22] - Shuttle tanker demand in the North Sea has been subdued due to COVID-19-related project delays, with expectations for improvement as new oil production projects come online[21] Charter Contracts and Fleet Management - The Partnership has secured just under 96% of charter coverage for the whole of 2024, indicating strong demand in the market[6] - The charters for Tordis Knutsen and Lena Knutsen were extended by one year, with options to extend for up to three additional years, now running until 2028[4] - The Partnership has entered into multiple long-term charter contracts with Petrobras, including a new fifteen-year contract for a vessel to be delivered in late 2025 and three ten-year contracts for vessels expected to be delivered between 2026 and 2027[25] - The Partnership plans to build liquidity and maintain long-term visibility from its charter contracts to capitalize on an improving shuttle tanker market[22] Impairment and Expenses - The company recorded an impairment of $16,384 thousand for the nine months ended September 30, 2024, compared to $49,649 thousand for the same period in 2023, indicating a significant reduction in impairment losses[36] - Interest expense decreased to $16,857,000 for the three months ended September 30, 2024, from $18,493,000 in the same period of 2023[39] - Impairment charges for the nine months ended September 30, 2024, were $16,384,000, down from $49,649,000 in the same period of 2023[39] Future Strategies - The company anticipates growth strategies focused on expanding its market presence and enhancing operational efficiencies[43] - KNOT Offshore Partners is exploring opportunities for long-term charters of five years or more to stabilize revenue streams[43] - Future capital expenditures are planned to enhance fleet capabilities and operational capacity[44] - KNOT Offshore Partners is committed to maintaining long-term relationships with major users of shuttle tonnage to ensure consistent demand[44]