KNOT Offshore Partners LP(US:KNOP)2021-03-11 21:25Financial Data and Key Metrics Changes - Total revenues for Q4 2020 were $69.9 million, operating income was $30.4 million, and net income was $24.6 million, with adjusted EBITDA at $52.9 million and distributable cash flow at $28.6 million, resulting in a coverage ratio of 1.58 [6][20][45] - The partnership had $738 million of remaining firm contracted forward revenue at the end of the quarter, up from $585 million in the previous quarter [8][46] Business Line Data and Key Metrics Changes - Fleet utilization was reported at 98.6% for the quarter, allowing the company to maintain its distribution of $0.52 per common unit for the 22nd consecutive quarter [7][45] - Vessel operating expenses were slightly better than Q3, with full-year costs remaining on budget despite higher crew costs due to COVID-19 [17] Market Data and Key Metrics Changes - The company operates in a niche market with a total global fleet of 75 shuttle tankers, primarily in the North Sea and offshore Brazil [38] - The average remaining charter period for contracted revenue is 2.9 years, with options to extend by an average of 3.1 years [28] Company Strategy and Development Direction - The management strategy focuses on long-term stability and providing attractive distributions to unitholders, with diversified revenue streams to mitigate dependency on any single contract [16] - The company is considering options for further internally financed dropdowns later in 2021, emphasizing a prudent approach to acquisitions [34][58] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about the prospects for 2021, despite challenges posed by COVID-19 and lower oil prices, indicating that stronger oil prices could lead to increased commitments from customers [52][53] - The company anticipates significant growth in oil production in Brazil and the North Sea over the coming years, despite short-term delays due to the pandemic [41][86] Other Important Information - The partnership completed a sale and leaseback transaction for the Raquel Knutsen, contributing $38 million in cash to the partnership [9] - The company has entered into various interest rate swap agreements to hedge against interest rate risks, with a notional amount of $516 million [22] Q&A Session Summary Question: What are the plans for the Bodil Knutsen after drydock? - The company is exploring all options, including short-term charters and a preference for long-term contracts, with optimism about securing commitments [50][51] Question: How does the company view the refinancing of current debt? - Management indicated that early discussions with lenders are progressing well, with no new issues anticipated [54][55] Question: What is the strategy regarding dropdowns and cash usage? - The company prefers to use cash on hand for dropdowns rather than issuing new equity, focusing on maintaining sensible leverage [57][60] Question: What is the status of the sale leaseback of the Raquel Knutsen? - The transaction was entered into in January, with accounting disclosures expected in Q1 numbers [63][68] Question: How does the company anticipate savings through refinancing? - Management expects to maintain similar margins on new debt, with potential savings from lower LIBOR rates [70][72] Question: Is there any liability from Shell regarding the Windsor? - The company clarified that it holds responsibility for the vessel's condition and is claiming insurance for repairs [75] Question: How does the company view future dropdowns and their costs? - The estimated cost for a basic shuttle tanker is around $100 million, with the Tove Knutsen acquired for $117.8 million [81][84] Question: What is the outlook for covering debt with contracted revenue? - Management is optimistic about covering debt, citing strong forecasts for demand growth in shuttle tankers over the next decade [86][89]