KNOT Offshore Partners LP

What they do

KNOT Offshore Partners LP is a master limited partnership engaged in the water transportation of oil through shuttle tankers. The partnership primarily operates vessels under long-term time charters and bareboat charters, with additional voyage revenues. It is sponsored by Knutsen NYK Offshore Tankers AS and managed by KNOT Management AS.

Revenue drivers

• Time charter revenues — Revenues from vessels contracted under time charters where the partnership provides the vessel and crew for a fixed daily rate. This is the largest revenue source, contributing to total annual revenue of $364.4 million in 2025.
• Bareboat revenues — Revenues from vessels leased to customers on a bareboat basis where the charterer assumes operational control. This segment represents a significant portion of the partnership's revenue mix.
• Voyage revenues — Revenues from spot voyages and other short-term contracts. This is a smaller and more variable revenue stream compared to long-term charters.
• Related party revenues — A portion of revenues is generated from related parties, including Knot Management, under time charter and bareboat agreements, indicating operational integration with the sponsor group.

Recent performance

Total revenue increased to $364.4 million in 2025, up from $318.6 million in 2024, according to reported financials. Net income was $23.3 million in 2025, a significant improvement from $14.1 million in 2024 but still below the $53.9 million earned in 2021. Operating cash flow remained solid at $155.7 million in 2025, compared to $137.1 million in 2024. The most recent quarterly revenue for the period ending June 30, 2026 was $96.8 million, showing continued top-line growth.

Strategy

The partnership focuses on operating shuttle tankers under long-term contracts with major oil companies and traders. It has engaged in sale-leaseback transactions for vessels such as the Tove and Torill to manage financing. The fleet includes vessels like Anna Knutsen, Fortaleza Knutsen, and Recife Knutsen, with ongoing investments in ballast water treatment systems. The partnership's strategy emphasizes maintaining a modern fleet and extending contract coverage.

Risks

• Concentration of customers — A significant portion of revenues is derived from related parties such as Knot Management and Knutsen NYK Offshore Tankers AS, creating counterparty concentration risk.
• Debt and leverage — Total liabilities were $1.02 billion as of June 30, 2026, with long-term debt of $588.7 million, exposing the partnership to interest rate and refinancing risks.
• Volatility in oil markets — Demand for shuttle tanker services is tied to offshore oil production and oil prices, which can fluctuate and affect charter rates and vessel utilization.
• Vessel impairment — The partnership carries significant vessel assets and may face impairment charges if market conditions or charter rates decline, as indicated by fair value measurements.

Outlook

Management does not provide specific public guidance in the excerpted materials. The partnership's performance will depend on the renewal and extension of long-term charters, particularly with related parties, and its ability to manage debt maturities. The recent revenue growth suggests improving market conditions, but net income remains below historical highs. Future results will be influenced by offshore oil production trends and the partnership's financing activities.