KNOT Offshore Partners LP Earnings Release—interim Results for the Period Ended December 31, 2025

KNOT Offshore Partners LP Earnings Release—interim Results for the Period Ended December 31, 2025 ABERDEEN, Scotland--( BUSINESS WIRE)--KNOT Offshore Partners LP (NYSE:KNOP):

Financial Highlights

For the three months ended December 31, 2025 (“Q4 2025”), KNOT Offshore Partners LP (“KNOT Offshore Partners” or the “Partnership”; NYSE:KNOP):

Other Partnership Highlights and Events

1 EBITDA and Adjusted EBITDA are non-GAAP financial measures used by management and external users of the Partnership’s financial statements. Please see Appendix A for definitions of EBITDA and Adjusted EBITDA and a reconciliation to net income, the most directly comparable GAAP financial measure.

Derek Lowe, Chief Executive Officer and Chief Financial Officer of KNOT Offshore Partners LP, stated, “We are pleased to report another strong performance in Q4 2025, marked by safe operation at 99.5% from scheduled operations, 96.4% utilization when including drydockings, consistent revenue and operating income generation, and material progress in the charter coverage outlook for our fleet.

As of the date of this release and including contractual updates since December 31, 2025, we have now secured 98% of charter coverage for the first half of 2026, and approximately 88% for the second half of 2026, in both cases after allowing for scheduled dry dockings. We remain focused on further strengthening our fleetwide charter coverage and seizing those periodic opportunities that exist to re-charter vessels in the current tight market environment.

In Brazil, the main offshore oil market where we operate, Petrobras exceeded the upper end of its oil production targets for 2025. This was driven primarily by the successful deployment of FPSOs focused in shuttle tanker-serviced fields, in multiple instances taking place ahead of schedule and reaching production levels in excess of their anticipated maximums. As a result, the world’s biggest shuttle tanker market is both growing and materially tightening. The North Sea, our secondary geography, has also established some positive momentum as projects ramp up production in both the UK North Sea and, most significantly, the Barents Sea. While less dynamic than is the case in Brazil, these positive developments in the wider North Sea region are a welcome and notable change after a protracted period of relatively slack shuttle tanker demand.

Against this backdrop, we continue to believe that growth of offshore oil production in shuttle tanker-serviced fields across both Brazil and the North Sea is on track to outpace shuttle tanker supply growth throughout the coming years. We are aware of newbuild shuttle tanker orders, including eight for Knutsen NYK, all of which are scheduled for delivery over 2026‑2028. We anticipate that all these new orders are backed by charters to clients in Brazil, and see this as a sign of confidence in the medium-to-long term demand for the global shuttle tanker fleet. Particularly when considered in the context of the increasing numbers of shuttle tankers reaching or exceeding typical retirement age, as well as yard capacity constraints limiting material new orders into at least 2028, we anticipate that these newbuild deliveries will be readily absorbed by the expanding market for shuttle tankers.

As the largest global owner of shuttle tankers, along with our Sponsor, and with a market-leading position in the fastest-growing shuttle tanker region of offshore Brazil, KNOP is well positioned to benefit from these trends throughout the coming years. Accordingly, our Board of Directors is keenly focused on optimizing the Partnership’s value creation strategy and is actively weighing the available capital allocation alternatives with the intention of maximizing unitholder value in a sustainable manner over the long term.”

Financial Results Overview

Results for Q4 2025 (compared to those for the three months ended September 30, 2025 (“Q3 2025”)) included:

By comparison with the three months ended December 31, 2024 (“Q4 2024”), results for Q4 2025 included:

Financing and Liquidity

As of December 31, 2025, the Partnership had $137.0 million in available liquidity, which was comprised of cash and cash equivalents of $89.0 million and $48.0 million of capacity under its revolving credit facilities. The Partnership’s revolving credit facilities mature in August 2027 and November 2027 respectively.

The Partnership’s total interest-bearing obligations outstanding as of December 31, 2025 were $959.6 million ($955.1 million net of debt issuance costs). The average margin paid on the Partnership’s outstanding debt during Q4 2025 was approximately 2.22% over SOFR. These obligations are repayable as follows:

Sale &

Period

(U.S. Dollars in thousands)

Leaseback

repayment

Balloon repayment

Total

2026

20,258

78,685

284,203

383,146

2027

21,246

38,613

156,679

216,538

2028

22,345

17,979

78,824

119,148

2029

23,373

4,738

—

28,111

2030

24,515

4,738

47,387

76,640

2031 and thereafter

136,050

—

136,050

Total

247,787

144,753

567,093

959,633

As of December 31, 2025, the Partnership had entered into various interest rate swap agreements for a total notional amount outstanding of $325.0 million, to hedge against the interest rate risks of its variable rate borrowings. As of December 31, 2025, the Partnership receives interest based on SOFR and pays a weighted average interest rate of 2.72% under its interest rate swap agreements, which have an average maturity of approximately 1.58 years. The Partnership does not apply hedge accounting for derivative instruments, and its financial results are impacted by changes in the market value of such financial instruments.

As of December 31, 2025, the Partnership’s net exposure to floating interest rate fluctuations was approximately $297.8 million based on total interest-bearing contractual obligations of $959.6 million, less the sale and leaseback facilities for Raquel Knutsen, Torill Knutsen and Tove Knutsen totaling $247.8 million, less interest rate swaps of $325.0 million, and less cash and cash equivalents of $89.0 million.

On October 20, 2025, Knutsen Shuttle Tankers 35 AS, the Partnership’s wholly-owned subsidiary which owns the vessel Synnøve Knutsen, entered into a new $71.1 million senior secured term loan facility with MUFG Bank (Europe) N.V.. This new facility replaced the previous facility secured by the Synnøve Knutsen. The new facility is repayable in quarterly installments, bears interest at a rate per annum equal to SOFR plus a margin of 2.01% and will mature in October 2030, at which point the outstanding amount following quarterly repayments is due to be $48.6 million. The terms of the facility are substantially unchanged from the facility entered into in July 2019 with MUFG Bank, Ltd..

On November 17, 2025, the Partnership closed the refinancing of the second of its two $25 million revolving credit facilities, with the facility being rolled over with SBI Shinsei Bank, Limited. The new facility will mature in November 2027, bears interest at a rate per annum equal to SOFR plus a margin of 2.18%, and has a commitment fee on any undrawn portion of the facility of 0.80% per annum. The terms of the facility are substantially unchanged from the facility entered into in November 2023.

Assets Owned by Knutsen NYK

Pursuant to the omnibus agreement the Partnership entered into with Knutsen NYK at the time of its initial public offering, the Partnership has the option to acquire from Knutsen NYK any offshore shuttle tankers that Knutsen NYK acquires or owns that are employed under charters for periods of five or more years.

There can be no assurance that the Partnership will acquire any additional vessels from Knutsen NYK. Any such acquisition would be subject to the approval of the Conflicts Committee of the Partnership’s Board of Directors.

As of the date of this release, Knutsen NYK owns, or has ordered, the following vessels and has entered into the following charters:

Outlook

As at December 31, 2025: (i) the Partnership had charters with an average remaining fixed duration of 2.6 years, with the charterers of the Partnership’s vessels having options to extend their charters by an additional 4.1 years on average and (ii) the Partnership had $929.8 million of remaining contracted forward revenue, excluding charterers’ options and charters agreed or signed after that date. As at December 31, 2025, the nineteen vessels which comprised the Partnership’s fleet had an average age of 10.2 years. During Q4 2025, fifteen of the vessels in our fleet operated in Brazil. The market for shuttle tankers in Brazil has continued to tighten, in particular for the Suezmax vessel class around which that market has increasingly consolidated, driven by a significant pipeline of new production growth over the coming years, a limited newbuild order book, and typical long-term project viability requiring a Brent oil price of only $35 per barrel.

Following a protracted period of muted demand in the North Sea region, positive momentum has been regained with the 2025 activation and ramp-up of multiple FPSOs spanning from the UK North Sea to the Barents Sea. The North Sea development pipeline continues to expand as well, with the announcement of new discoveries and multi-year projects intended to further augment production across the region, including at both the Goliat FPSO and Johan Castberg FPSO.

On October 31, 2025, the Partnership received an unsolicited non-binding proposal from KNOT, pursuant to which KNOT proposed to acquire through a wholly-owned subsidiary all publicly held common units of the Partnership in exchange for $10 in cash per unit (the “KNOT Offer”). The Conflicts Committee of the Partnership’s Board, which is comprised of only non-KNOT-affiliated directors, retained Evercore Group L.L.C., Richards, Layton & Finger, P.A. and IGB Group as independent advisors to assist it in evaluating the KNOT Offer. The Conflicts Committee and its independent advisors reviewed the KNOT Offer carefully and held a series of discussions with KNOT regarding the potential transaction since receiving the proposal. Following such discussions, on March 19, 2026, the parties announced that they were not able to reach an agreement and have therefore terminated discussions regarding the KNOT Offer.

Looking ahead, based on supply and demand factors with significant forward visibility and committed capital from industry participants, we believe that the overall medium and long-term outlook for the shuttle tanker market remains favourable.

In the meantime, the Partnership intends to pursue long-term visibility from its charter contracts, build its liquidity, pursue accretive dropdown transactions supportive of long-term cash flow generation, and position itself to benefit from its market-leading role in an improving shuttle tanker market. The Partnership continues to believe that key components of its strategy and value proposition are accretive investment in the fleet and a long-term sustainable distribution.

The Partnership’s financial information for the year ended December 31, 2025 included in this press release is preliminary and unaudited and is subject to change in connection with the completion of the Partnership’s year end closing procedures and further financial review. Actual results may differ as a result of the completion of the Partnership’s year end closing procedures, review adjustment and other developments that may arise between now and the time the audit for the year ended December 31, 2025 is finalized.

About KNOT Offshore Partners LP

KNOT Offshore Partners LP owns, operates and acquires shuttle tankers primarily under long-term charters in the offshore oil production regions of Brazil and the North Sea.

KNOT Offshore Partners LP is structured as a publicly traded master limited partnership but is classified as a corporation for U.S. federal income tax purposes, and thus issues a Form 1099 to its unitholders, rather than a Form K‑1. KNOT Offshore Partners LP’s common units trade on the New York Stock Exchange under the symbol “KNOP”.

The Partnership plans to host a conference call on March 26, 2026 at 9:30 AM (Eastern Time) to discuss the results for Q4 2025. All unitholders and interested parties are invited to join via the live webcast link on the Partnership’s website: www.knotoffshorepartners.com. A replay of the webcast will be available at the same link following the conclusion of the live call.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

Year Ended

December 31,

September 30,

December 31,

(U.S. Dollars in thousands)

2025

2024

2025

2024

Time charter and bareboat revenues

95,945

96,329

84,434

361,185

306,915

Voyage revenues (1)

—

438

466

3,628

Loss of hire insurance recoveries

—

5,892

607

5,970

Other income

542

538

491

2,185

2,086

Total revenues

96,487

96,867

91,255

364,443

318,599

Gain from disposal of vessel

—

1,342

703

Vessel operating expenses

34,693

33,724

26,205

132,030

108,519

Voyage expenses and commission (2)

—

430

1,746

3,600

Depreciation

30,627

30,940

28,425

119,703

111,817

Impairment (3)

20,259

—

20,259

16,384

General and administrative expenses

2,507

1,540

1,530

7,398

6,067

Total operating expenses

88,121

66,204

56,590

281,136

246,387

Operating income (loss)

8,366

30,663

34,665

84,649

72,915

Finance income (expense):

Interest income

1,088

832

1,055

3,571

3,636

Interest expense

(15,328

)

(16,484

)

(16,167

)

(62,030

)

(67,352

)

Other finance expense

(257

)

(147

)

(87

)

(755

)

(358

)

Realized and unrealized gain (loss) on derivative instruments (4)

414

376

4,560

(924

)

6,798

Net gain (loss) on foreign currency transactions

(109

)

(87

)

(772

)

(89

)

(943

)

Total finance expense

(14,192

)

(15,510

)

(11,411

)

(60,227

)

(58,219

)

Income (loss) before income taxes

(5,826

)

15,153

23,254

24,422

14,696

Income tax expense

(420

)

(39

)

(1,163

)

(631

)

Net income (loss)

(6,246

)

15,114

23,251

23,259

14,065

Weighted average units outstanding (in thousands of units):

Common units

33,688

33,899

34,045

33,918

34,045

Class B units (5)

252

General Partner units

640

(1)

Voyage revenues are revenues unique to spot voyages.

(2)

Voyage expenses and commission are expenses unique to spot voyages, including bunker fuel expenses, port fees, cargo loading and unloading expenses, agency fees and commission.

(3)

The carrying value of the Bodil Knutsen was written down to its estimated fair value as of December 31, 2025. The carrying value of each of the Dan Cisne and the Dan Sabia was written down to its estimated fair value as of June 30, 2024.

(4)

Realized gain (loss) on derivative instruments relates to amounts the Partnership actually received (paid) to settle derivative instruments, and the unrealized gain (loss) on derivative instruments relates to changes in the fair value of such derivative instruments, as detailed in the table below.

Three Months Ended

Year Ended

December 31,

September 30,

December 31,

(U.S. Dollars in thousands)

2025

2024

2025

2024

Realized gain (loss):

Interest rate swap contracts

1,694

2,183

3,698

9,508

15,518

Total realized gain (loss):

1,694

2,183

3,698

9,508

15,518

Unrealized gain (loss):

Interest rate swap contracts

(1,280

)

(1,807

)

862

(10,432

)

(8,720

)

Total unrealized gain (loss):

(1,280

)

(1,807

)

862

(10,432

)

(8,720

)

Total realized and unrealized gain (loss) on derivative instruments:

414

376

4,560

(924

)

6,798

(5)

On September 7, 2021, the Partnership entered into an exchange agreement with Knutsen NYK, and the Partnership’s general partner whereby Knutsen NYK contributed to the Partnership all of Knutsen NYK’s incentive distribution rights (“IDRs”), in exchange for the issuance by the Partnership to Knutsen NYK of 673,080 common units and 673,080 Class B Units, whereupon the IDRs were cancelled (the “IDR Exchange”). As of December 31, 2025, 420,675 of the Class B Units had been converted to common units.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET

(U.S. Dollars in thousands)

At December 31, 2025

At December 31, 2024

ASSETS

Current assets:

Cash and cash equivalents

88,983

66,933

Amounts due from related parties

705

2,230

Inventories

4,288

3,304

Derivative assets

2,276

8,112

Other current assets

15,192

14,793

Total current assets

111,444

95,372

Long-term assets:

Vessels, net of accumulated depreciation

1,557,021

1,462,192

Right-of-use assets

875

1,269

Deferred tax assets

2,662

3,326

Derivative assets

1,908

5,189

Accrued income

10,927

4,817

Total Long-term assets

1,573,393

1,476,793

Total assets

1,684,837

1,572,165

LIABILITIES AND EQUITY

Current liabilities:

Trade accounts payable

9,607

5,766

Accrued expenses

18,428

11,465

Current portion of long-term debt

381,126

256,659

Current lease liabilities

406

1,172

Current portion of derivative liabilities

247

—

Income taxes payable

Current portion of contract liabilities

9,024

2,889

Prepaid charter

5,650

7,276

Amount due to related parties

2,392

1,835

Total current liabilities

426,926

287,122

Long-term liabilities:

Long-term debt

573,974

648,075

Lease liabilities

469

Derivative liabilities

909

—

Contract liabilities

60,102

23,776

Deferred tax liabilities

Deferred revenues

1,402

1,869

Total long-term liabilities

636,938

673,908

Total liabilities

1,063,864

961,030

Commitments and contingencies

Series A Convertible Preferred Units

84,308

Equity:

Partners’ capital:

Common unitholders

523,205

513,603

Class B unitholders

3,871

General partner interest

9,589

9,353

Total partners’ capital

536,665

526,827

Total liabilities and equity

1,684,837

1,572,165

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS’ CAPITAL

Partners’ Capital

Accumulated

Series A

General

Other

Total

Convertible

Common

Class B

Partner

Comprehensive

Partners’

Preferred

(U.S. Dollars in thousands)

Units

Income (Loss)

Capital

Units

Three Months Ended December 31, 2024 and 2025

Consolidated balance at September 30, 2024

493,336

3,871

8,971

—

506,178

84,308

Net income (loss)

21,152

—

399

—

21,551

1,700

Other comprehensive income

—

Cash distributions

(885

)

—

(17

)

—

(902

)

(1,700

)

Consolidated balance at December 31, 2024

513,603

3,871

9,353

—

526,827

84,308

Consolidated balance at September 30, 2025

533,262

3,871

9,754

—

546,887

84,308

Net income (loss)

(7,798

)

—

(148

)

—

(7,946

)

1,700

Other comprehensive income

—

Repurchase of Common Units

(1,380

)

—

(1,380

)

—

Cash distributions

(879

)

—

(17

)

—

(896

)

(1,700

)

Consolidated balance at December 31, 2025

523,205

3,871

9,589

—

536,665

84,308

Year Ended December 31, 2024 and 2025

Consolidated balance at December 31, 2023

510,013

3,871

9,285

—

523,169

84,308

Net income (loss)

7,131

—

134

—

7,265

6,800

Other comprehensive income

—

Cash distributions

(3,541

)

—

(66

)

—

(3,607

)

(6,800

)

Consolidated balance at December 31, 2024

513,603

3,871

9,353

—

526,827

84,308

Consolidated balance at December 31, 2024

513,603

3,871

9,353

—

526,827

84,308

Net income (loss)

16,157

—

302

—

16,459

6,800

Other comprehensive income

—

Repurchase of Common Units

(3,020

)

—

(3,020

)

—

Cash distributions

(3,535

)

—

(66

)

—

(3,601

)

(6,800

)

Consolidated balance at December 31, 2025

523,205

3,871

9,589

—

536,665

84,308

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

Year Ended December 31,

(U.S. Dollars in thousands)

2025

2024

OPERATING ACTIVITIES

Net income (1)

23,259

14,065

Adjustments to reconcile net income to cash provided by operating activities:

Depreciation

119,703

111,817

Impairment

20,259

16,384

Amortization of contract intangibles / liabilities

(6,756

)

(963

)

Amortization of deferred revenue

(467

)

(467

)

Amortization of deferred debt issuance cost

2,391

2,221

Drydocking expenditure

(14,690

)

(553

)

Income tax (benefit)/expense

1,163

631

Income taxes paid

(127

)

(41

)

Unrealized (gain) loss on derivative instruments

10,432

8,720

Unrealized (gain) loss on foreign currency transactions

(609

)

776

Net gain from disposal of vessel

(1,342

)

(703

)

Changes in operating assets and liabilities:

Decrease (increase) in amounts due from related parties

3,198

(10,445

)

Decrease (increase) in inventories

(1,066

)

583

Decrease (increase) in other current assets

1,300

(4,371

)

Decrease (increase) in accrued income

(6,110

)

(4,817

)

Increase (decrease) in trade accounts payable

4,263

(4,379

)

Increase (decrease) in accrued expenses

4,006

(4,176

)

Increase (decrease) prepaid charter

(1,626

)

6,809

Increase (decrease) in amounts due to related parties

(1,445

)

6,054

Net cash provided by operating activities

155,736

137,145

INVESTING ACTIVITIES

Additions to vessel and equipment

(281

)

(945

)

Proceeds from asset swap (net cash)

1,040

607

Acquisition of Daqing Knutsen (net of cash acquired)

(26,049

)

—

Net cash provided by (used in) investing activities

(25,290

)

(338

)

FINANCING ACTIVITIES

Proceeds from long-term debt

117,000

60,000

Repayment of long-term debt

(210,887

)

(182,392

)

Payment of debt issuance cost

(1,322

)

(521

)

Cash distributions

(10,401

)

(10,407

)

Repurchase of common units

(3,020

)

—

Net cash used in financing activities

(108,630

)

(133,320

)

Effect of exchange rate changes on cash

234

(475

)

Net increase (decrease) in cash and cash equivalents

22,050

3,012

Cash and cash equivalents at the beginning of the period

66,933

63,921

Cash and cash equivalents at the end of the period

88,983

66,933

(1)

Included in net income (loss) is interest paid amounting to $60.4 million and $65.7 million in 2025 and 2024, respectively.

APPENDIX A—RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

EBITDA and Adjusted EBITDA

EBITDA is defined as earnings before interest, depreciation, impairments and taxes. Adjusted EBITDA is defined as earnings before interest, depreciation, impairments, taxes and other financial items (including other finance expenses, realized and unrealized gain (loss) on derivative instruments and net gain (loss) on foreign currency transactions). EBITDA is used as a supplemental financial measure by management and external users of financial statements, such as the Partnership’s lenders, to assess its financial and operating performance and compliance with the financial covenants and restrictions contained in its financing agreements. Adjusted EBITDA is used as a supplemental financial measure by management and external users of financial statements, such as investors, to assess the Partnership’s financial and operating performance. The Partnership believes that EBITDA and Adjusted EBITDA assist its management and investors by increasing the comparability of its performance from period to period and against the performance of other companies in its industry that provide EBITDA and Adjusted EBITDA information. This increased comparability is achieved by excluding the potentially disparate effects between periods or companies of interest, other financial items, taxes, impairments and depreciation, as applicable, which items are affected by various and possibly changing financing methods, capital structure and historical cost basis and which items may significantly affect net income between periods. The Partnership believes that including EBITDA and Adjusted EBITDA as financial measures benefits investors in (a) selecting between investing in the Partnership and other investment alternatives and (b) monitoring the Partnership’s ongoing financial and operational strength in assessing whether to continue to hold common units. EBITDA and Adjusted EBITDA are non-GAAP financial measures and should not be considered as alternatives to net income or any other indicator of Partnership performance calculated in accordance with GAAP.

The table below reconciles EBITDA and Adjusted EBITDA to net income, the most directly comparable GAAP measure.

Three Months Ended,

Year Ended

December 31,

2025

2024

2025

2024

(U.S. Dollars in thousands)

(unaudited)

Net income (loss)

(6,246

)

23,251

23,259

14,065

Interest income

(1,088

)

(1,055

)

(3,571

)

(3,636

)

Interest expense

15,328

16,167

62,030

67,352

Depreciation

30,627

28,425

119,703

111,817

Impairment

20,259

—

20,259

16,384

Income tax expense

420

1,163

631

EBITDA

59,300

66,791

222,843

206,613

Other financial items (a)

(48

)

(3,701

)

1,768

(5,497

)

Adjusted EBITDA

59,252

63,090

224,611

201,116

(a)

Other financial items consist of other finance income (expense), realized and unrealized gain (loss) on derivative instruments and net gain (loss) on foreign currency transactions.

FORWARD-LOOKING STATEMENTS

This press release contains certain forward-looking statements concerning future events and KNOT Offshore Partners’ operations, performance and financial condition. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain the words “believe,” “anticipate,” “expect,” “estimate,” “project,” “will be,” “will continue,” “will likely result,” “plan,” “intend” or words or phrases of similar meanings. These statements involve known and unknown risks and are based upon a number of assumptions and estimates that are inherently subject to significant uncertainties and contingencies, many of which are beyond KNOT Offshore Partners’ control. Actual results may differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements include statements with respect to, among other things:

All forward-looking statements included in this release are made only as of the date of this release. New factors emerge from time to time, and it is not possible for KNOT Offshore Partners to predict all of these factors. Further, KNOT Offshore Partners cannot assess the impact of each such factor on its business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward- looking statement. KNOT Offshore Partners does not intend to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in KNOT Offshore Partners’ expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based.