KNOT Offshore Partners LP(KNOP) - 2022 Q4 - Annual Report

FORM 20-F Filing Information Form Type and Period This Annual Report on Form 20-F for the fiscal year ended December 31, 2022, is filed by KNOT Offshore Partners LP - The report is an Annual Report on Form 20-F for the fiscal year ended December 31, 2022[3] - The registrant is KNOT Offshore Partners LP, incorporated in the Republic of the Marshall Islands[3][4] Securities Information The company's common units are registered on the NYSE under KNOP, with various classes of units outstanding as of the reporting period Outstanding Securities (as of December 31, 2022) | Security Type | Number Outstanding | | :-------------- | :----------------- | | Common units | 34,045,081 | | Series A Convertible Preferred Units | 3,541,666 | | Class B Units | 252,405 | - Common units representing limited partner interests are traded on the New York Stock Exchange under the symbol KNOP[5] Filer Status and Accounting Standards KNOT Offshore Partners LP is an accelerated filer, uses U.S. GAAP, and has filed all required reports and Interactive Data Files - The registrant is an accelerated filer[7] - Financial statements are prepared in accordance with U.S. GAAP[8] - The registrant has filed all required reports and submitted all Interactive Data Files during the preceding 12 months[6] Forward-Looking Statements Nature and Cautionary Note This Annual Report contains forward-looking statements on future operations and market trends, subject to inherent risks and uncertainties - The Annual Report contains forward-looking statements about future operations, economic performance, plans, strategies, and market trends[15] - Unitholders are cautioned not to rely on these statements, as they reflect management's current views and are subject to risks and uncertainties[15][20] Key Areas of Forward-Looking Statements Forward-looking statements cover market trends, vessel acquisition, refinancing, distribution policy, and regulatory compliance, with actual results potentially differing - Market trends in shuttle tanker and general tanker industries, including hire rates and supply/demand factors[16] - Ability to build and acquire vessels, and enter into long-term charters[16] - Refinancing indebtedness, distribution policy, and ability to make distributions[16] - Impacts of supply chain disruptions, inflation, interest rates, and global economic slowdowns[16] - Changes in operating expenses, drydocking costs, and recoveries under insurance policies[16] - Compliance with governmental and maritime regulations, including climate change concerns[16] - Geopolitical events like the Russian war with Ukraine, and potential disruptions from piracy or terrorism[16] - Risks related to the Marshall Islands economic substance requirements and ability to retain key employees[16] - Forward-looking statements are not guarantees, and actual results could differ materially due to significant uncertainties and contingencies[20] PART I Item 1. Identity of Directors, Senior Management and Advisers This item is not applicable to the report Item 2. Offer Statistics and Expected Timetable This item is not applicable to the report Item 3. Key Information This section provides key information about the Partnership, including capitalization, indebtedness, and a comprehensive list of risk factors A. Reserved This sub-item is reserved and not applicable B. Capitalization and Indebtedness This sub-item is not applicable to the report C. Reasons for the Offer and Use of Proceeds This sub-item is not applicable to the report D. Risk Factors The Partnership faces numerous risks including insufficient cash for distributions, debt refinancing, operational issues, customer concentration, and regulatory changes - Risk of insufficient cash from operations to pay distributions on common units, exacerbated by a reduction in quarterly distribution to $0.026 per unit[31] - Substantial capital expenditures are required to maintain the fleet, reducing cash available for distributions[35] - High debt levels (approximately $1,062.6 million as of December 31, 2022) limit financial flexibility and require significant refinancing in 2023 and early 2024[37] - Dependence on nine customers for all time charter and bareboat revenues, with the top five accounting for 17%, 14%, 14%, 6%, and 5% respectively in 2022[40] - Macroeconomic conditions, including rising inflation, interest rates, and supply chain constraints, negatively impact operating costs[42] - Climate change concerns and greenhouse gas restrictions (e.g., IMO GHG Strategy, MARPOL Annex VI amendments) may increase operating costs and require vessel upgrades[43] - International operations expose the Partnership to political, governmental, and economic instability, including the impact of the Russian war with Ukraine[44] - Limited voting rights for unitholders, with restrictions on Norwegian Resident Holders and those owning over 4.9% of units, and potential conflicts of interest with KNOT and its affiliates[45] - Exposure to market risks from the phase-out of LIBOR, potentially increasing interest expenses and amendment costs for debt instruments[49] Item 4. Information on the Partnership This section details the Partnership's history, business operations, organizational structure, and property, covering fleet, strategies, and regulatory environment A. History and Development of the Partnership KNOT Offshore Partners LP formed in February 2013, IPO'd in April 2013, and expanded its fleet to eighteen shuttle tankers by March 30, 2023 - KNOT Offshore Partners LP was formed on February 21, 2013, and completed its IPO on April 18, 2013[203] - Acquired initial fleet (Recife Knutsen, Fortaleza Knutsen, Windsor Knutsen, Bodil Knutsen) in connection with IPO (April 2013)[203] - Acquired Carmen Knutsen (August 2013), Hilda Knutsen and Torill Knutsen (June 2014), Dan Cisne (December 2014), Dan Sabia (June 2015), Ingrid Knutsen (October 2015), Raquel Knutsen (December 2016), Tordis Knutsen (March 2017), Vigdis Knutsen (June 2017), Lena Knutsen (September 2017), Brasil Knutsen (December 2017), Anna Knutsen (March 2018), Tove Knutsen (December 2020), and Synnøve Knutsen (July 2022)[205][206][207][208][209][210][211] - As of March 30, 2023, the fleet consists of eighteen shuttle tankers[213] Capital Expenditures on Drydocks (2020-2022) | Year Ended December 31 | Capital Expenditures (in millions USD) | | :----------------------- | :----------------------------------- | | 2020 | $2.7 | | 2021 | $4.2 | | 2022 | $17.6 | B. Business Overview The Partnership's core business is owning and operating shuttle tankers under long-term charters for stable cash flows, with its eighteen-vessel fleet subject to extensive regulations - Primary business objective: generate stable cash flows and provide sustainable quarterly distributions through owning and operating shuttle tankers under long-term charters[217] - Growth strategy: accretive acquisitions of shuttle tankers on long-term, fixed-rate charters and expansion in high-growth offshore production regions like the North Sea and Brazil[219][220] - Shuttle tankers are specialized vessels for crude oil transport from offshore installations, offering advantages over pipelines such as flexibility and unblended crude qualities[222] - As of March 30, 2023, the fleet comprises eighteen shuttle tankers, with an average remaining charter term of 2.3 years (including options and extensions signed after Dec 31, 2022)[224] - Key customers for 2022 included Transpetro (17%), Eni (14%), Repsol (14%), Galp (6%), and Shell (5%)[225] - Vessels operate under time charters (owner provides crewing, customer pays voyage expenses) and bareboat charters (customer responsible for all operating and voyage expenses)[226] - KNOT Management and its affiliates provide technical, commercial, and crew management services for the fleet, ensuring compliance with safety and environmental standards (e.g., ISM Code, ISO certifications)[231] - The Partnership maintains comprehensive insurance coverage, including hull and machinery, loss of hire, and protection and indemnity (pollution coverage up to $1 billion per incident)[245] - Operations are subject to extensive environmental regulations from IMO (MARPOL, SOLAS, BWM Convention), EU/UK, North Sea, Brazil, and the United States (OPA 90, CERCLA, CWA, NISA, Clean Air Act), with ongoing efforts to reduce greenhouse gas emissions[252] - The Partnership is organized under Marshall Islands law and its Norwegian subsidiaries are subject to the Norwegian tonnage tax regime, with efforts to minimize tax liabilities in various jurisdictions[319] C. Organizational Structure KNOT Offshore Partners LP is a publicly traded limited partnership formed in February 2013, with common units listed on the NYSE under 'KNOP', and an organizational structure including KNOT UK - KNOT Offshore Partners LP is a publicly traded limited partnership formed on February 21, 2013[336] - Common units are listed on the New York Stock Exchange (NYSE) under the ticker symbol 'KNOP' since April 2013[338] - The organizational structure includes KNOT UK (Marshall Islands holding company) and various Norwegian vessel-owning subsidiaries[337][340][798] D. Property, Plants and Equipment The Partnership's primary material property consists of the vessels in its current fleet - The vessels in the current fleet constitute the Partnership's only material property[341] Item 4A. Unresolved Staff Comments This item is not applicable to the report Item 5. Operating and Financial Review and Prospects This section reviews the Partnership's financial performance, liquidity, capital resources, and critical accounting estimates, highlighting 2022-2023 developments - The Partnership was formed in February 2013 to own and operate shuttle tankers under long-term charters, leveraging its relationship with KNOT[344] - As of March 30, 2023, KNOT and its general partner owned 28.6% of common units, 208,333 Series A Preferred Units, and 252,405 Class B Units[345] - Significant developments include the Torill sale and leaseback (June 2022, $112.0 million gross sales price), Synnøve Knutsen acquisition (July 2022, $119.0 million purchase price), and various charter updates for vessels[346][347][348][349][350][351][352][353][354][355][356][357][358][359][360][361][362][363][364][365][366] - On January 11, 2023, the quarterly common unit distribution was reduced to $0.026 per unit to strengthen the balance sheet and reduce debt[369] - The shuttle tanker market is driven by offshore oilfield development, with Brazil showing strengthening demand and the North Sea market dampened but expected to rebalance[370] - COVID-19 has caused operational challenges, increased costs, and delays in new capital expenditures, impacting demand and pricing for shuttle tankers[371] - The Partnership's liquidity as of December 31, 2022, was $47.6 million, with $1,062.6 million in consolidated debt, and significant debt maturities in 2023 and early 2024 requiring refinancing[372] - Estimated drydocking and classification survey expenditures are $17.6 million for 2023, with an additional $2.2 million for ballast water treatment system installation on Carmen Knutsen[373] - Critical accounting estimates include vessel lives and impairment (23-year useful life, impairment testing based on undiscounted cash flows), drydocking costs, purchase price allocation for acquisitions, and income taxes (valuation allowance for deferred tax assets)[374] A. Operating Results For 2022, net income increased by 9% to $58.7 million due to derivative gains, despite decreased revenues and increased operating and interest expenses Consolidated Statements of Operations (2022 vs. 2021) | Metric (USD in thousands) | 2022 | 2021 | Change | % Change | | :------------------------ | :--- | :--- | :----- | :------- | | Time charter and bareboat revenues | $262,797 | $269,306 | $(6,509) | (2)% | | Voyage revenues | $4,689 | $0 | $4,689 | 100% | | Loss of hire insurance recoveries | $758 | $11,450 | $(10,692) | (93)% | | Vessel operating expenses | $86,032 | $72,114 | $13,918 | 19% | | Depreciation | $107,419 | $99,559 | $7,860 | 8% | | Impairment | $0 | $29,421 | $(29,421) | (100)% | | Interest expense | $(42,604) | $(28,065) | $(14,539) | 52% | | Realized and unrealized gain (loss) on derivative instruments | $35,510 | $9,960 | $25,550 | 257% | | Net income | $58,667 | $53,876 | $4,791 | 9% | - Time charter and bareboat revenues decreased by $6.5 million (2%) due to off-hire days for scheduled drydockings, reduced earnings from Windsor Knutsen due to a hydraulic leak, decreased earnings from Carmen Knutsen, and reduced hire rates on certain vessels, partially offset by the Synnøve Knutsen acquisition[404] - Vessel operating expenses increased by $13.9 million (19%) primarily due to bunker costs for vessels undergoing drydocking voyages and the inclusion of Synnøve Knutsen's operations[408] - Depreciation increased by $7.8 million (8%) due to a change in the estimated useful life of vessels from 25 to 23 years and the Synnøve Knutsen acquisition[410] - Interest expense increased by $14.5 million (52%) driven by higher LIBOR rates, interest on the Synnøve Knutsen credit facility, and increased interest for the Torill Knutsen sale and leaseback[414] - Realized and unrealized gain on derivative instruments significantly increased by $25.5 million (257%) to $35.5 million, mainly from mark-to-market gains on interest rate swaps[416] B. Liquidity and Capital Resources The Partnership's liquidity was $47.6 million with $1,062.6 million in debt as of December 31, 2022, requiring refinancing for significant 2023-2024 maturities - Primary future sources of funds: available cash, cash from operations, new loan agreements, and debt/equity financings[420] - As of December 31, 2022, available liquidity was $47.6 million (cash and cash equivalents)[421] - Total interest-bearing obligations outstanding as of December 31, 2022, were $1,062.6 million[422] - Approximately $409.7 million of total outstanding obligations mature during the year ending December 31, 2023[423] - Key credit facilities maturing in 2023 and early 2024 include a $320 million senior secured credit facility, a $55 million revolving credit facility (both September 2023), a $172.5 million senior secured loan facility (September 2023 and January 2024), and two $25 million unsecured revolving credit facilities (August 2023 and November 2023)[424] - The Partnership is actively discussing and negotiating refinancing for these maturing credit facilities[425] - Net cash provided by operating activities decreased by $65.5 million to $100.9 million in 2022, primarily due to lower utilization, reduced time charter revenue, and increased operating expenses[426] - Net cash used in investing activities increased to $35.5 million in 2022, mainly due to the Synnøve Knutsen acquisition[427] - Net cash used in financing activities decreased to $80.0 million in 2022, reflecting proceeds from the Torill sale and leaseback and revolving credit facility drawdowns, offset by debt repayments and cash distributions[428] - The Partnership uses interest rate swap contracts to hedge floating interest rate exposure, with a notional amount of $451.2 million as of December 31, 2022[430] C. Research and Development, Patents and Licenses, Etc. This item is not applicable to the report D. Trend Information Trend information is discussed in the 'Market Overview and Trends' section within Item 5 - Trend information is covered in the 'Market Overview and Trends' section[464] E. Critical Accounting Estimates Financial statement preparation requires significant estimates for vessel lives, impairment, drydocking, purchase price allocation, and income taxes, which can materially impact results - Vessel Lives and Impairment: Vessels are depreciated over an estimated useful life of 23 years. Impairment reviews compare undiscounted cash flows to carrying value, with fair value determined by discounted cash flow models and market data, relying on future hire rates, utilization, operating expenses, and residual values[464][465][466][467][468][469][470] - Vessel Market Values: Market values are monitored for compliance with credit facilities, but fluctuations are generally not included in financial statements unless impairment is triggered[471][472][473] - Drydocking: Costs directly associated with classification, regulatory requirements, and major improvements are capitalized and amortized over the period until the next planned drydocking (typically 60 months, then 30 months after 15 years)[475][476][477][478](index=478&type=chunk][479][480][481][482] - Purchase Price Allocation, Including Goodwill and Intangible Assets: Acquisition costs are allocated to identifiable tangible and intangible assets (e.g., above-market contracts) and liabilities (e.g., unfavorable contracts), with remaining amounts as goodwill, and their amortization and potential impairment affect future operating results[483][484] - Taxes: A valuation allowance is recorded for deferred tax assets when it is more likely than not that the benefit will not be realized, based on estimates of future taxable income and tax-planning strategies[486] - Recently Adopted Accounting Standards: ASU 2020-06 (convertible instruments) did not materially impact the Partnership[488] - New Accounting Standards Not Yet Adopted: ASU 2020-04 (Reference Rate Reform) addresses the LIBOR phase-out, with the Partnership evaluating its impact on debt and interest rate swaps, expecting to transition to SOFR[489] Item 6. Directors, Senior Management and Employees This section details the Partnership's directors, executive officer, compensation, board practices, and employee structure, outlining board composition and reliance on KNOT affiliates for staff Directors and Senior Management | Name | Age | Position | | :------------------ | :-- | :--------------------------------------------------- | | Trygve Seglem | 72 | Chairman of the Board of Directors | | Gary Chapman | 48 | Chief Executive Officer and Chief Financial Officer | | Hans Petter Aas | 77 | Director, Chairman of Audit Committee, Member of Conflicts Committee | | Edward A. Waryas, Jr. | 75 | Director, Chairman of Conflicts Committee, Member of Audit Committee | | Andrew Beveridge | 75 | Director and Member of the Audit Committee | | Richard Beyer | 53 | Director | | Junya Omoto | 53 | Director | | Simon Bird | 63 | Director and Member of the Conflicts Committee | - Gary Chapman serves as CEO and CFO, with an annualized base salary of 267,120 British Pounds in 2022, receiving $311,311 in total compensation[499] - Directors receive $95,000 in aggregate compensation annually, with additional fees for committee chairs and members[501] - The board consists of seven members: three appointed by the general partner (KNOT) and four elected by common unitholders on a staggered basis[502] - The Partnership has an Audit Committee (Hans Petter Aas, Andrew Beveridge, Edward A. Waryas, Jr.) and a Conflicts Committee (Edward A. Waryas, Jr., Hans Petter Aas, Simon Bird), both composed of independent directors[503] - The Partnership directly employs one onshore employee and no seagoing employees, relying on KNOT and its affiliates for approximately 694 seagoing staff and onshore support services[509] - No common units, Class B Units, or Series A Preferred Units are beneficially owned by current directors or executive officers, except for those indirectly held by Trygve Seglem through KNOT[510] Item 7. Major Unitholders and Related Party Transactions This section details major unitholders and significant related party transactions, highlighting KNOT's substantial ownership, key agreements, and financial distributions Major Unitholders (as of March 30, 2023) | Name of Beneficial Owner | Number of Common Units | Percent | | :----------------------- | :--------------------- | :------ | | KNOT | 9,989,115 | 29.1% | | Offshore Merchant Partners Asset Yield Fund L.P. | 2,323,541 | 6.4% | | Invesco Ltd. | 1,776,804 | 5.2% | - KNOT and its affiliates own a substantial interest, including 28.4% of common units, all Class B Units (252,405 outstanding as of March 30, 2023), and the general partner interest[514] - The Omnibus Agreement includes noncompetition provisions, generally restricting KNOT from acquiring or operating Five-Year Vessels (long-term charters) unless offered to the Partnership, and grants reciprocal rights of first offer on vessel dispositions[515] - The IDR Exchange (September 2021) cancelled KNOT's incentive distribution rights in exchange for 673,080 common units and 673,080 Class B Units[520] - Administrative services are provided by KNOT UK, with subcontracts to KOAS UK, KOAS, and KNOT Management, for which the Partnership reimburses costs plus a 5% service fee[523] - Technical management services for time-chartered vessels are provided by KNOT Management, with an annual fee of $0.74 million per vessel for 2023[530] - Management and administration services for bareboat-chartered vessels are provided by KNOT Management or KNOT Management Denmark for an annual fee of $0.08 million or $0.04 million per vessel[538] - Acquisitions of Tove Knutsen (December 2020) and Synnøve Knutsen (July 2022) from KNOT were approved by the Conflicts Committee[546] - Distributions to KNOT were $22.5 million in 2022 and $22.3 million in 2021[563] Item 8. Financial Information This section refers to consolidated financial statements, outlines the Partnership's cash distribution policy, and details distribution rights for Class B and Series A Preferred Units - The Partnership reduced its quarterly common unit distribution to $0.026 per unit on January 11, 2023, to support working capital, debt reduction, and balance sheet strengthening[570] - Cash distribution policy is subject to restrictions from financing agreements, Marshall Islands law (liabilities not exceeding fair value of assets), and board discretion[571] - Common units are subordinated to Series A Preferred Units regarding distribution rights[573] - Class B Units are entitled to distributions only when common unitholders receive at least $0.52 per unit per quarter (Distribution Threshold); one-eighth of Class B Units convert to common units quarterly if this threshold is met[575] - Series A Preferred Units rank senior to common and Class B units for distributions and liquidation, with cumulative distributions at an 8.0% annual rate on a $24.00 liquidation preference[577] Cash Distributions Paid (2022) | Recipient | Amount (in millions USD) | | :-------------------- | :----------------------- | | Common unitholders | $70.4 | | Class B Units holders | $1.0 | | Series A Preferred Units holders | $6.8 | Item 9. The Offer and Listing This section confirms the Partnership's common units are traded on the NYSE under 'KNOP' since April 9, 2013, with other offer-related sub-items not applicable - Common units are traded on the NYSE under the symbol 'KNOP'[580] - Trading commenced on April 9, 2013[582] Item 10. Additional Information This section provides additional information, including material contracts, exchange controls, and U.S. and non-U.S. tax considerations - Material contracts include the Omnibus Agreement, IDR Exchange Agreement, Administrative Services Agreement, Technical Management Agreements, various loan facilities, and sale & leaseback agreements[588] - The Marshall Islands has no governmental laws affecting capital import/export or remittance of distributions[591] - U.S. Federal Income Tax Considerations: The Partnership elected to be treated as a corporation for U.S. federal income tax purposes; U.S. Holders are taxed on distributions and capital gains, and while the Partnership believes it is not a Passive Foreign Investment Company (PFIC), this is subject to interpretation and potential adverse tax consequences[592][596][598][601][603][604][605][606] - Non-U.S. Tax Considerations: Non-U.S. Holders are generally not subject to Marshall Islands, Norwegian, or United Kingdom taxes on income or gains from common units, provided certain conditions are met, though these conclusions are based on current interpretations and could change[614][615][616][621][622][624][625][627][628] Item 11. Quantitative and Qualitative Disclosures About Market Risk The Partnership is exposed to interest rate, foreign currency, and credit risks, managed through interest rate swaps and creditworthy customer dealings - Interest Rate Risk: A portion of debt obligations are subject to variable interest rates (LIBOR); the Partnership uses interest rate swap contracts to convert floating rates to fixed rates, with a combined notional amount of approximately $451.2 million as of December 31, 2022[635][636][637][638] - Foreign Currency Exchange Rate Risk: The functional and reporting currency is the U.S. Dollar, with exposure arising from monetary assets/liabilities in foreign currencies (e.g., NOK operating expenses)[639][640] - Concentration of Credit Risk: Customers are primarily major oil and gas companies, with credit risk managed through ongoing evaluations and advance payments, incurring no significant losses[641][642] - Retained Risk: Insurance coverage includes hull and machinery, loss of hire, and protection and indemnity (pollution coverage up to $1 billion per incident), with certain deductible amounts retained by the Partnership[643][644] Item 12. Description of Securities Other than Equity Securities This item is not applicable to the report PART II Item 13. Defaults, Dividend Arrearages and Delinquencies As of December 31, 2022, the Partnership was in compliance with all covenants under its debt agreements - The Partnership was in compliance with all covenants under its debt agreements as of December 31, 2022[646] Item 14. Material Modifications to the Rights of Securities Holders and Use of Proceeds This item is not applicable to the report Item 15. Controls and Procedures The Partnership maintains effective disclosure controls and internal control over financial reporting as of December 31, 2022, with management concluding reasonable assurance - Disclosure controls and procedures were evaluated and deemed effective as of December 31, 2022, ensuring timely and accurate reporting[648] - Management is responsible for establishing and maintaining adequate internal controls over financial reporting, which were concluded to be effective as of December 31, 2022, based on the COSO framework[649] - The effectiveness of internal control over financial reporting was audited by Ernst & Young AS, who expressed an unqualified opinion[651] - No material changes in internal control over financial reporting occurred during the year ended December 31, 2022[653] Item 16A. Audit Committee Financial Expert Hans Petter Aas has been identified as an audit committee financial expert and is independent under NYSE and SEC standards - Hans Petter Aas qualifies as an audit committee financial expert and is independent under NYSE and SEC standards[659] Item 16B. Code of Ethics The KNOT Offshore Partners LP Code of Business Conduct and Ethics applies to all employees, officers, and directors, with any waivers or amendments disclosed on the company's website - The KNOT Offshore Partners LP Code of Business Conduct and Ethics applies to all employees, officers, and directors[660] - Any waivers or amendments to the Code for directors and executive officers are disclosed on the company's website[660] Item 16C. Principal Accountant Fees and Services Ernst & Young AS served as principal accountant for 2022, with all audit and tax services pre-approved, incurring $602,064 in fees, a decrease from $690,786 in 2021 - Ernst & Young AS was the principal accountant for 2022[661] - All engagements and fees for audit-related and non-audit services were pre-approved by the audit committee[662] Principal Accountant Fees (2022 vs. 2021) | Fee Type | 2022 (USD) | 2021 (USD) | | :--------------- | :--------- | :--------- | | Audit Fees | $598,344 | $687,309 | | Audit-Related Fees | $0 | $0 | | Tax Fees | $3,720 | $3,476 | | Total | $602,064 | $690,786 | Item 16D. Exemptions from the Listing Standards for Audit Committees This item is not applicable to the report Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers This item is not applicable to the report Item 16F. Change in Registrants' Certifying Accountant This item is not applicable to the report Item 16G. Corporate Governance As a foreign private issuer, the Partnership is exempt from certain NYSE corporate governance requirements, following Marshall Islands law, with differences in board composition and committee structure - The Partnership qualifies as a foreign private issuer, allowing it to follow Marshall Islands corporate governance practices instead of certain NYSE standards[670] - Differences from NYSE standards include: no requirement for a board majority of independent directors (though four directors are independent), no regular executive sessions for non-management directors, and no separate compensation or nominating/corporate governance committees[671] - The established corporate governance practices are believed to be in line with the spirit of NYSE standards and provide adequate protection to unitholders[672] Item 16H. Mine Safety Disclosure This item is not applicable to the report PART III Item 17. Financial Statements This item is not applicable to the report Item 18. Financial Statements This section lists the consolidated financial statements included in the Annual Report, along with related reports from Ernst & Young AS - Consolidated Statements of Operations for the Years Ended December 31, 2022, 2021 and 2020[681] - Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2022, 2021 and 2020[681] - Consolidated Balance Sheets as of December 31, 2022 and 2021[681] - Consolidated Statements of Changes in Partners' Capital for the Years Ended December 31, 2022, 2021 and 2020[681] - Consolidated Statements of Cash Flows for the Years Ended December 31, 2022, 2021 and 2020[681] - Notes to Consolidated Financial Statements[681] Item 19. Exhibits This section provides a comprehensive list of exhibits filed as part of the Annual Report, including organizational documents, key agreements, and certifications - The report includes a list of exhibits covering organizational documents, key agreements (Omnibus, IDR Exchange, Administrative Services, Technical Management, Loan Facilities, Sale & Leaseback), and certifications[683][684][686][689]