NYSE:KNOP KNOT Offshore Partners Q1 2024 Earnings Report $6.50 -0.04 (-0.57%) Closing price 05/2/2025 03:59 PM EasternExtended Trading$6.46 -0.05 (-0.74%) As of 04:36 AM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast KNOT Offshore Partners EPS ResultsActual EPS$0.22Consensus EPS -$0.07Beat/MissBeat by +$0.29One Year Ago EPSN/AKNOT Offshore Partners Revenue ResultsActual Revenue$76.63 millionExpected Revenue$70.66 millionBeat/MissBeat by +$5.97 millionYoY Revenue GrowthN/AKNOT Offshore Partners Announcement DetailsQuarterQ1 2024Date5/22/2024TimeN/AConference Call DateThursday, May 23, 2024Conference Call Time9:30AM ETUpcoming EarningsKNOT Offshore Partners' Q1 2025 earnings is scheduled for Wednesday, May 21, 2025, with a conference call scheduled at 9:30 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q1 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by KNOT Offshore Partners Q1 2024 Earnings Call TranscriptProvided by QuartrMay 23, 2024 ShareLink copied to clipboard.There are 6 speakers on the call. Operator00:00:00Welcome to the KNOP First Quarter 20 24 Earnings Call. My name is Carla, and I will be coordinating your call today. I would now like to hand you over to Derek Lohrey to begin. Derek, please go ahead. Speaker 100:00:26Thank you, and good morning, ladies and gentlemen. My name is Derek Lowy, and I'm the Chief Executive and Chief Financial Officer of Connaught Offshore Partners. Welcome to the partnership's earnings call for the Q1 of 2024. Our website is khanopsoffshorepartners.com, and you can find the earnings release there along with this presentation. On slide 2, you will find guidance on the inclusion of forward looking statements in today's presentation. Speaker 100:00:50These are made in good faith and reflect management's current views, known and unknown risks, and are based on assumptions and estimates that are inherently subject to significant uncertainties and contingencies, many of which are beyond our control. Actual results may differ materially from those expressed or implied in forward looking statements, and the partnership does not have or undertake a duty to update any such forward looking statements made as of the date of this presentation. For further information, please consult our SEC filings, especially in relation to our annual and quarterly results. Today's presentation also includes certain non U. S. Speaker 100:01:23GAAP measures, and our earnings release includes a reconciliation of these to the most directly comparable GAAP measures. On Slide 3, we have the financial and operational headlines for Q1. Revenues were $76,600,000 operating income $19,700,000 net income was $7,400,000 and adjusted EBITDA of $47,500,000 We closed Q1 with $55,000,000 in available liquidity made up of $50,000,000 in cash and cash equivalents, plus $5,000,000 in undrawn capacity on our credit facilities. We operated with 97.6 utilization and the vessel time available for scheduled operations was not impacted by any planned drydocking. Following the end of Q1, we declared a cash distribution of US0.02 dollars 6 per common unit, which was paid in early May. Speaker 100:02:15On Slide 4, we have the headlines of the contractual and operational developments since our last results call, which was on February 27. In our major market, Brazil, Vychtesk Knutsen was delivered to Shell in March for a 3 year time charter. Anak Knutsen sought exercise of an option by Total Energies, extending the current charter to April 2026. And by the time of the last results call, Dansabia's charter to Transpetro had been extended to early June this year. In the North Sea, Hilda Knutsen, Torill Knutsen and Bodel Knutsen have continued to operate under time charters to our sponsor Knutsen NYK. Speaker 100:02:51For Bodo Knutsen, this charter lasted as planned until delivery to Equinor at the end of March on a charter of 2 years fixed plus 2 years options. For Hilder Knutsen and Torok Knutsen, the charter is for rolling 1 month terms up to January 2025. Ingrid Knutsen was redelivered by Alterra at the end of March as anticipated and has since gone on to time charter with Knutsen NYK. Both Ingrid Knutsen and Torill Knutsen will commence charters with ENI in Q4 this year. For Ingrid Knutsen, this was a deferral to October from a previously contracted April delivery. Speaker 100:03:28This deferral is on terms that are no less favorable to us than applied previously. That charter is the 2 years fixed, plus 2 options each of 1 year. For Toll Knutsen, the new time charter with ENI is a 3 years fixed, plus 3 options each of 1 year. In the meantime, Toll Knutsen is undergoing repairs to a broken generator rotor, which has limited the range of client facilities, which this vessel is able to serve. We expect repair to be completed later in Q2 or into Q3, and both the repair costs and some loss of hire are expected to be covered by insurance subject to the relevant policy terms. Speaker 100:04:05After we received redelivery of dansysna in December 2023, we have deployed our own short term conventional tanker work, while also assessing the upgrades required for compatibility with shuttle tanker work in the North Sea. Those upgrades are due to be carried out in the coming weeks. Dansavia is due for redelivery to us in June, which is the extended expiry date of our charter to TransPetro. The continuing area of focus for our contracting team is on Dansysna, Dansarbia and Hilde Knutsen. For near term deployment, focus also remains on Ingrid Knutsen and Tor Knutsen until each of them is delivered to ENI in Q4 this year. Speaker 100:04:46On slide 5, our outlook remains positive on both industry dynamics and the partnership's positioning to participate fruitfully in our markets. Significant growth is anticipated in production in fields, which rely on service by shuttle tankers. We see reported orders from earlier this year of around 6 vessels as an endorsement of confidence in the sector. 3 of these vessels have been ordered by our sponsor for delivery over 20262027. Each of these sponsor vessels has a 10 year fixed contract with Petrobras along with a client option to extend by further 5 years. Speaker 100:05:19We would expect to see further newbuild orders placed in order to service the large new production volumes coming online in the years ahead. A measured amount of new shuttle tanker ordering is imperative, It should not be understood as some sort of negative development for the sector. The material shortage of shuttle tank capacity remains projected in the coming years. We also remain mindful of near term market conditions, where we're particularly focused on marketing with Dansysna, Dansarbeit and Hilderk Knutsen as well as seeking third party employment of Ingrid Knutsen and Torok Knutsen until commencement in Q4 of their next long term charters. In the meantime, the partnership remains financially resilient with a strong contracted revenue position of $683,000,000 at the end of Q1 on fixed contracts, which averaged 2 years in duration. Speaker 100:06:05Charterless options are additional to this and average a further 2 years. Our pattern of cash generation and liquidity balance is sufficient for our operations and the significant paid out rates for our debt. Mean, we've demonstrated the strength of our relationships with Lending Bank by several refinancings completed over the last year. Finally, the average age of our vessels at 9.9 years places us well when compared with the useful life model at 23 years. On to Slide 6, you can see the consistency of revenues and operating income when comparing between quarters and also between 12 month periods. Speaker 100:06:42Slide 7 similarly reflects the consistency of our adjusted EBITDA and you can find the definition of this non GAAP measure in the appendix. On Slide 8, the most notable change in the balance sheet over the Q1 has come from refinancing of the loan secured by Hilder Knutsen, the balance of which has moved from current liabilities into long term debt. The overall change in the Partnership's liabilities has been a reduction by $42,000,000 which is reflective of our debt repayment schedule. On Slide 9, we've expanded on the terms of the Partnership's debt facilities to provide added color around the dynamics of debt repayment. The highlighted column shows how the outstanding balances of each facility have been reducing because of the repayments we've been making in line with scheduled repayment terms. Speaker 100:07:28The current installments are the amounts of capital repayments due over the next year, which do not include interest. And the balloon payments are the final amounts of principal, which will be due on the maturity dates. Of note, dollars 91,000,000 is due to be paid on these debt facilities over the 12 months following 31st March. Completion of the Hilda loan refinancing is due imminently, following which no further balloon repayments or refinancings are due within that 12 month period. Our typical pattern is for our vessels to provide security for our debt facilities, and that applies to 16 out of 18 vessels. Speaker 100:08:03At present, the exceptions of the Dansysna and Anssaabia are free of debt and we do not have plans to incur additional borrowings secured by these vessels until we have better visibility on their future employment. Dollars $880,000,000 out of $925,000,000 in debt facilities are secured by vessels, while the 2 revolving credit facilities totaling $50,000,000 of capacity are unsecured. Slide 10 shows the contracted pipeline in chart formats reflecting the developments I set out earlier. Similarly, Slide 11 highlights the focus of our commercial efforts on adding near term contracts particularly for Dansysna, PanSarbeit and Hildegnudsen and in the near term also for Ingrid Knutsen and Torok Knutsen. On Slide 12, we see our sponsor's inventory vessels which are eligible for purchase by the partnership. Speaker 100:08:57This applies to any vessel owned by or an order for our sponsor, where the vessel has a firm contract period at least 5 years in length. The present 5 existing vessels and 5 under construction fall into this category. There's no assurance that any further acquisitions will be made by the partnership and any transaction will be subject to the Board approval of both parties, which includes the partnership's Independent Conflicts Committee. As we have said, our top priorities remain securing additional contract coverage for our existing fleet and fostering our liquidity position. On slides 13 to 15, we provided some useful illustrations of the strong demand dynamics in the Brazilian market as published by Petrobras. Speaker 100:09:37We encourage you to review Petrobras' materials directly. The primary takeaway from each of these slides is consistent. There's very significant committed demand growth coming in the Brazilian market in the form of new FPSOs that will require regular service from shuttle tankers. We believe that reports earlier this year of up to 6 vessel construction contracts are an endorsement of the strong anticipated market conditions in the medium and longer term. I mentioned earlier, 3 of these recent newbuild contracts are for our sponsor, Kirtzen MYK, and are due for delivery over 20262027. Speaker 100:10:11We would expect to see further newbuild orders placed in order to service the large new production volumes coming online in the years ahead. And a material shortage of shuttle tanker capacity remains projected in the coming years. On Slide 16, we provide information relevant to our U. S. Unitholders, in particular those seeking a Form 1099. Speaker 100:10:32Those holding units by their custodians or brokers should approach those parties directly. Those with directly registered holdings should contact our transfer agent, Equiniti Trust Company, whose details are shown there. On Slide 17, we include some reminders of the strong fundamentals of our business in the market we serve, our assets, competitive landscape, robust contractual footprint and resilient finances. I'll finish with slide 18, recapping our financial and operational performance in Q1 2024 and the subsequent time and our outlook for the remainder of 2024. We are glad to have delivered high and safe utilization, which have generated consistent financial performance. Speaker 100:11:14We are pleased with the new contracts and extensions we have secured during the quarter and since, along with our ability to navigate our refinancing needs and periodic capital expenditure. And our continued commercial focus remains on filling up 3rd party utilization for 2024, while looking further forward to longer term charter visibility and liquidity generation. Thank you for listening. And with that, I'll hand back the call back to the operator for any questions. Operator00:11:41Thank And our first question comes from Liam Burke, from B. Riley. Speaker 200:12:03Thank you. Hi, Derek. How are you today? Speaker 100:12:05Hi, Liam. Good to talk to you. Speaker 200:12:09Thank you. Gerrick, could you give us a little more color on the macro side, specifically the activity in the North Sea? I mean, it's pretty well known that the step up investment on offshore in Latin America is pretty high. We're not hearing much on the North Sea. Speaker 100:12:31Sure. Well, we I mean the main developments we're looking to are the Johan Castberg and the Penguins FPSOs coming online with production either late this year or early next year. And we think there's going to be significant increase in demand for the whole of the North Sea shuttle fleets once those come along. And the question in the meantime is at what stage do clients want to start entering into contracts in anticipation of that? Speaker 200:13:06So everyone is anticipating the actual projects coming to fruition. Does that make sense to just keep the Hilton Toro busy until you could charter it? I mean, are they good candidates to be chartered into this market? Speaker 100:13:27Toll has a charter from Q4 this year with Eni. So the total use in perhaps the COA pool until delivered into that contract, that's certainly relevant point for us, but not after that. Speaker 200:13:46Okay. And on the Sesne and Sabia, it I mean, they're in a good market, but just not the right size. Do you have any more alternatives rather than just running them into the traditional market? Speaker 100:14:09Well, Cisner, as I think be aware, is that we brought over to the North Sea and are going to put the upgrades in place for North Sea work because we think Cessna is much better suited to North Sea because of the size than the Brazilian than to the Brazilian market. So she'll be exposed to the same dynamics in the North Sea as we have with the other vessels as well, which is why she's got probably the greatest amount of focus from the contracting team of all of our vessels. And Savya, we are we expect redelivery in early June and she's subject to all the normal and energetic marketing efforts as you might imagine, given that she's not contracted after this. Speaker 200:15:00Great. Well, thank you, Derek. Speaker 100:15:03Thank you. Operator00:15:09Our next question comes from Poy Frat from AGP. Speaker 300:15:16Hi, Derek. Speaker 100:15:18Hi, Tay. How are you, Derek? Speaker 300:15:20Very well. How about you? Speaker 100:15:22Very good. Thanks. Speaker 300:15:24Congrats on closing some of the holds. I'm especially surprised about the Toro just because as you just mentioned, the North Sea market could be very tight as you have the 2 FPSOs coming on later this year. Do you your market intelligence, what do you understand as far as the incremental demand that could be generated from those 2 FPSOs? And then is there it seems like there won't be any available capacity ex the Hilda at that point in time. Is that a fair statement? Speaker 100:16:08Well, we think there's more than enough incremental demand to come through to cover the short the I guess underemployed or underutilized vessels that we've got potentially that others have as well. So this North Sea has always been a timing issue. And obviously, the longer it goes, the more frustrating it is. But it's a timing issue rather than anything worse than that. So the vessels that we would have available for that because the Toril and Ingrid have both been contracted to Eni from Q4. Speaker 100:16:38They won't be in the question for that. But Hilda will and Dan Cissner, as she's been set up for the North Sea, will be as well. Speaker 300:16:52But if you could would answer the question of what do you think the incremental demand of those 2 FBOs could be? Speaker 100:17:03I don't have a figure to hand, I'm afraid, but certainly more than enough to soak up the capacity that we've got. Speaker 300:17:10Would it be fair to say that 2 to 4 for each FPSO or maybe 2 so that you have incremental demand developing into 2025 for shuttle tankers in the North Sea? Speaker 100:17:25Yes. I'm afraid I don't have that to hand, so I can look at that and maybe we can discuss offline. Speaker 300:17:31Okay. And my understanding is that neither of those projects have lined up any capacity. Is that what you understand? Speaker 100:17:43As far as I know, they haven't lined any up, yes. Speaker 300:17:47Okay, great. And then if you could just talk about the Dan Cythmia, how much was the upgrade, the cost of the upgrade? And then will there be any downtime on that vessel in the Q2? Speaker 100:18:05Well, she's currently not contracted. So downtime is perhaps a slightly moot point. We think it's around a month of both the work and the testing and C trials and so on that will go on afterwards, maybe a month to 6 weeks. And visualization is not on contract in any case during that time. We haven't published the cost, but it's not material in the context of the financial results we've produced, but we haven't produced a figure. Speaker 300:18:40Okay. Maybe you could describe the upgrade that was required? Speaker 100:18:47Yes. It's some harsh weather facilities. Speaker 300:18:57Okay. And then do you think that Dansavio will stay in Brazil? It seems like there's strong enough demand there. And I guess what's your sort of working assumption on the Dan Sabi at this point in time? Speaker 100:19:17Well, we are very mindful that she's got the size that is ideal in Brazil, but there's enough demand that potentially a client might want to take her in any case. So we continue to market in Brazil given that that's where she is. Speaker 300:19:32Okay. When you look at the impact of the Toro on the Q1, the what was it broken motor rotor, can you just quantify the number of days? Will it just be that the deductible the loss the higher deductible of 14 days that was in the Q1? Speaker 100:19:57Well, we certainly will be subject to that 14 days deductible. It's not straightforward because she's able to serve some client facilities, but not others. So she's got some earnings. So it's not a classic loss of higher where she's completely out and the calculation involved is actually relatively simple in those cases. This is going to be more complicated. Speaker 300:20:22Got you. So was she down at all in the Q1? And then if you could quantify any other idle days that you might have had in the Q1 to sort of get to that utilization number that you published? Speaker 100:20:36Sure. Something like a month in the Q1. I need to check the exact figures, but order of magnitude a month. Speaker 300:20:48And was there any other downtime or idle dates in the Q1? It sounded like you worked at Cinthian, the conventional tanker market, so that was more of a more on voyages, right? Speaker 100:21:03That's right. I mean, she had downtime between those as well. But I think total employment for the Cessna is this isn't a Q1 comment because her work has continued since then, but something like 80 days in the last 5 months. Speaker 300:21:27Sorry, would you clarify that? 80 days, she's worked 80 days over the last 5 months? Speaker 100:21:32Something like that, yes. Speaker 300:21:35Okay. Got it. So 80 of the 150 if you look at it, okay. And then They Speaker 100:21:42may straddle 3 different quarters of performance as well. So it's not easy to fit into quarterly results. Speaker 300:21:51Understood. And when I combine your or just look at your OpEx, it looks like the OpEx in the Q1 might have gone up just slightly on a daily basis. Is that accurate? And could you just comment on looking forward OpEx and G and A? Speaker 100:22:14Sure. G and A has been pretty stable. Main difference in OpEx is voyage expenses. Bear in mind also, of course, we have voyage revenues to offset that as well. And that's a classification issue relating to I expect that's Rodan Zysna because of the nature of our volumes in that time. Speaker 300:22:40Got you. So that was mainly absorbing the bumper parts and the wages and other potential fees? Speaker 400:22:47Yes. Speaker 300:22:48And then just one nitpicky one. It looks like you might have layered on some interest rate hedges in the Q1, the overall notional amount of the swap went up. Can you just talk about that? Speaker 100:23:05Yes, we did a small amount of additional fixing. We are at the moment, we're well within our policy range of the amount of debt that is either fixed rate or effectively fixed through hedges. And in due course, as those hedges come off, we'll need to put some more in place. And so we did a small amount of that quite early in Q1. So we're fairly pleased with the rate that we got at that stage, even though rates have moved a little bit since then. Speaker 300:23:32Yes. It looks like you still were able to fix in the low 2% range because your average interest rate costs fixed wise only went up to 2% from 1.9%, right? Speaker 100:23:47Sure. It's as low as 2 for the new fix, but it certainly was a break that we were happy with. Speaker 300:23:53Yes. Just yes, okay. And then it looks like other than the 3 that you talked about the Hilda Torrell I'm sorry, the Hilda Dan Sisney and Dan Stabia with open windows, and no longer term work. Can you just talk about the Carmen? It looks like Repsol has a year option at the start of next year. Speaker 300:24:19When would the notice period be on that option before it moves to the major oil company for what is it 4 years or 3 years? Speaker 100:24:33We would generally expect that to be within something like 1 to 3 months of the start of the optional period. I don't have the exact terms for that particular one in front of me, but that sort of period we'd expect it would be the latest we'd expect to know. Speaker 300:24:48Okay, great. Well, congratulations, Derek, on the contracting chartering during the quarter. Speaker 100:24:55All right. Thank you, Barry. Speaker 300:24:56And look forward to you're welcome. Speaker 100:24:59Yes. Bye. Operator00:25:04And our next question comes from Pavel Oliver from Rock Hill Global. Speaker 500:25:12Hi, good morning. Congratulations on a great quarter. I had a few questions, that the prices of new builds are around $160,000,000 for the North Sea and $140,000,000 for Brazil $1,000,000 and that there are really no new builds for North Sea. Does the value of the new builds impact pricing daily pricing of the existing fleet? Speaker 100:25:59I wouldn't say so. Certainly not in the North Sea. I mean, we're aware of the short to medium term issues around when demand for those for North Sea vessels doesn't come in and that's a far greater driver than anything else. Speaker 500:26:16I see. So the charters that are on those new ships, for example, in Brazil, would be similar to what they are now? Or they would reflect the new cost and the new cost of capital? Speaker 100:26:36They will reflect the terms or market conditions at the time they were entered into. So the newest ones obviously you'd expect to be, let's say, recognizably current, but some of the other vessels that aren't yet delivered, obviously, were contracted some time ago and would be on different terms. Speaker 500:26:53Right. So if I have a ship that's coming off hire and I have to recharter it, is it fair to say that, for example, in Brazil, the rates would be a lot higher than they were at the historical charter? Speaker 100:27:16We are seeing them firming up, if anything. So we clearly welcome the direction that's going in. Speaker 500:27:22And can I ask in the North Sea, besides your ships, are there any other ships like Alterra ships that may be available for those projects? Or are these ships sort of it? Speaker 100:27:45I understand there is competing capacity. I don't have figures to hand on that. And I wouldn't want to comment on another operator's contractual profile anyway. But yes, we understand there is capacity aside from our own. Speaker 500:28:00I see. Okay. And you had really good results in terms of free cash flow generation in the Q1 and that's with without a lot of the charters. Have you guys considered potentially buying some shares back at this point given what the NAV is in light of the new ships that are being built in Brazil and sort of the values or replacement value of the fleet as well as just the ability by lowering the number of shares to potentially increase the dividend when and if you're ready to reinstate that dividend? Speaker 100:28:58Yes. Well, we certainly understand and appreciate the value of that strategy and that's a question for the board to be addressing in due course. And their greatest priority is actually that we continue to make progress on visibility of our contracting schedule. And at the moment, clearly, there are 2 or 3 vessels that remain uncontracted, which is quite a rare position for us to be in. And they're more concerned that, that capacity is filled first before looking at anything else. Speaker 100:29:30We certainly look forward to the point where that is a really good use of capital. I would also say, if you look at our liquidity position, which we are certainly content with, we had 50 $5,000,000 I think. So we had $50,000,000 of cash equivalent Speaker 500:29:53Cash. Speaker 100:29:55Cash and cash equivalents at the end of March. But we also had €45,000,000 of drawn down revolving credit facility. And so the net liquidity, if you look at the difference between those is rather less and we wouldn't feel I expect the Board wouldn't feel able to invest cash in buying back units when that's the position. Speaker 500:30:20Understood. Understood. So but as you kind of get to that more comfortable position and you have repaid a lot of debt so far, you would it's something that the board will certainly consider, right? Speaker 100:30:44Yes. It's only one of the options. Speaker 500:30:47Okay. Awesome. Very good. Congratulations on a great quarter and terrific performance. Thank you. Speaker 100:30:58Thanks, Pavel. Appreciate it. Operator00:31:02And our next question comes from Robert Silvera from R. E. Silvera Associates Marine. Speaker 200:31:13Hello. Derek? Hello, Speaker 300:31:16Wes. Speaker 400:31:17Yes. Derek, thank you for taking my call. And, yes, we're marine surveyors, by the way. She dropped the word, surveyors. In any case, thank you for taking the call and I'd like to congratulate you on improving the company's situation considerably versus the past. Speaker 400:31:39Our input is that we would love to because we own thousands of shares, we would love to see you keep the dividend about where it is for an extended period of time and aggressively continue your move toward reducing debt. Don't take any more drop downs for the time being because the fleet is fairly young. And let's fill the gaps as you've been saying and get to the position where we have significantly continued to reduce the debt. You have some of the ships already debt free and that's really great. So that's our position as shareholders and we hope you will take that into consideration. Speaker 100:32:27Sure. Thank you very much. I would just show you again Slide 9, if you want to go back to it. The current installments figure is basically a 12 month look forward from the balance sheet date of the debt repayments that are coming due by amortizations. And that $91,000,000 over the 12 months starting 1st April this year is very recognizable on a year by year basis for the amount we repay in our debt in cash purely on the scheduled repayment terms. Speaker 100:33:04So points very well taken and I hope you're also pleased with the amount of debt repayment we're managing to do already. Speaker 400:33:12Yes, very pleased with that. And I'm saying our point is I'm not interested in getting the dividend raise back $0.52 right away, but rather continuously, aggressively continue to pay down the debt, don't take any drop downs for at least a year at this point and filling the gaps on where we are with our ships, putting us in a very, very solid position. And I think the share price will reflect it. And the future with the market in Brazil looking as good as it is, given that much time that I'm talking about a year, we will know the market a lot better by then and we can make very judicious decisions on what to add to the fleet in the future. Speaker 100:34:06Yes. Speaker 400:34:07Thank you, Derek. Speaker 100:34:08Yes, understood. Thank you. Thanks, Oliver. Speaker 200:34:11Bye bye. Bye. Operator00:34:25We currently have no further questions. I will hand back over to Derek for any final remarks. Speaker 100:34:32Thank you all again for joining this earnings call for Copp Offshore Partners Q1 in 2024. And I look forward to speaking with you again following the 2nd quarter results. Operator00:34:43And this concludes today's conference call. Thank you for joining. You may now disconnect your lines.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallKNOT Offshore Partners Q1 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K) KNOT Offshore Partners Earnings HeadlinesWhy KNOT Offshore Partners (KNOP) Is Up the Most So Far in 2025April 26, 2025 | msn.comKNOT Offshore Partners LP Announces 1st Quarter 2025 Earnings Results Conference Call | KNOP ...April 23, 2025 | gurufocus.comShocking AI play that’s beats Nvidia by a country mileYou’ve seen the headlines about Nvidia. Now Tim Sykes is sounding the alarm — because what CEO Jensen Huang is about to announce could change the AI market once again. Experts already predict the total addressable market could climb past $20 trillion. But Sykes believes most investors have missed what’s coming next. He’s tracking a new shift — and says the biggest gains are still ahead.May 5, 2025 | Timothy Sykes (Ad)KNOT Offshore Partners LP Announces 1st Quarter 2025 Earnings Results Conference CallApril 23, 2025 | businesswire.comKNOT Offshore Partners LP Announces 1st Quarter 2025 Cash Distribution | KNOP Stock NewsApril 9, 2025 | gurufocus.comKNOT Offshore Partners appoints new board memberApril 6, 2025 | uk.investing.comSee More KNOT Offshore Partners Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like KNOT Offshore Partners? Sign up for Earnings360's daily newsletter to receive timely earnings updates on KNOT Offshore Partners and other key companies, straight to your email. Email Address About KNOT Offshore PartnersKNOT Offshore Partners (NYSE:KNOP) acquires, owns, and operates shuttle tankers under long-term charters in the North Sea and Brazil. The company provides loading, transportation, and discharge of crude oil under time charters and bareboat charters. The company was founded in 2013 and is headquartered in Aberdeen, the United Kingdom.View KNOT Offshore Partners ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Amazon Earnings: 2 Reasons to Love It, 1 Reason to Be CautiousMeta Takes A Bow With Q1 Earnings - Watch For Tariff Impact in Q2Palantir Earnings: 1 Bullish Signal and 1 Area of ConcernVisa Q2 Earnings Top Forecasts, Adds $30B Buyback PlanMicrosoft Crushes Earnings, What’s Next for MSFT Stock?Qualcomm's Earnings: 2 Reasons to Buy, 1 to Stay AwayAMD Stock Signals Strong Buy Ahead of Earnings Upcoming Earnings Advanced Micro Devices (5/6/2025)American Electric Power (5/6/2025)Constellation Energy (5/6/2025)Marriott International (5/6/2025)Energy Transfer (5/6/2025)Mplx (5/6/2025)Brookfield Asset Management (5/6/2025)Arista Networks (5/6/2025)Duke Energy (5/6/2025)Zoetis (5/6/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. Start Your 30-Day Trial MarketBeat All Access Features Best-in-Class Portfolio Monitoring Get personalized stock ideas. Compare portfolio to indices. Check stock news, ratings, SEC filings, and more. Stock Ideas and Recommendations See daily stock ideas from top analysts. Receive short-term trading ideas from MarketBeat. Identify trending stocks on social media. Advanced Stock Screeners and Research Tools Use our seven stock screeners to find suitable stocks. Stay informed with MarketBeat's real-time news. Export data to Excel for personal analysis. Sign in to your free account to enjoy these benefits In-depth profiles and analysis for 20,000 public companies. Real-time analyst ratings, insider transactions, earnings data, and more. Our daily ratings and market update email newsletter. Sign in to your free account to enjoy all that MarketBeat has to offer. Sign In Create Account Your Email Address: Email Address Required Your Password: Password Required Log In or Sign in with Facebook Sign in with Google Forgot your password? Your Email Address: Please enter your email address. Please enter a valid email address Choose a Password: Please enter your password. Your password must be at least 8 characters long and contain at least 1 number, 1 letter, and 1 special character. Create My Account (Free) or Sign in with Facebook Sign in with Google By creating a free account, you agree to our terms of service. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
There are 6 speakers on the call. Operator00:00:00Welcome to the KNOP First Quarter 20 24 Earnings Call. My name is Carla, and I will be coordinating your call today. I would now like to hand you over to Derek Lohrey to begin. Derek, please go ahead. Speaker 100:00:26Thank you, and good morning, ladies and gentlemen. My name is Derek Lowy, and I'm the Chief Executive and Chief Financial Officer of Connaught Offshore Partners. Welcome to the partnership's earnings call for the Q1 of 2024. Our website is khanopsoffshorepartners.com, and you can find the earnings release there along with this presentation. On slide 2, you will find guidance on the inclusion of forward looking statements in today's presentation. Speaker 100:00:50These are made in good faith and reflect management's current views, known and unknown risks, and are based on assumptions and estimates that are inherently subject to significant uncertainties and contingencies, many of which are beyond our control. Actual results may differ materially from those expressed or implied in forward looking statements, and the partnership does not have or undertake a duty to update any such forward looking statements made as of the date of this presentation. For further information, please consult our SEC filings, especially in relation to our annual and quarterly results. Today's presentation also includes certain non U. S. Speaker 100:01:23GAAP measures, and our earnings release includes a reconciliation of these to the most directly comparable GAAP measures. On Slide 3, we have the financial and operational headlines for Q1. Revenues were $76,600,000 operating income $19,700,000 net income was $7,400,000 and adjusted EBITDA of $47,500,000 We closed Q1 with $55,000,000 in available liquidity made up of $50,000,000 in cash and cash equivalents, plus $5,000,000 in undrawn capacity on our credit facilities. We operated with 97.6 utilization and the vessel time available for scheduled operations was not impacted by any planned drydocking. Following the end of Q1, we declared a cash distribution of US0.02 dollars 6 per common unit, which was paid in early May. Speaker 100:02:15On Slide 4, we have the headlines of the contractual and operational developments since our last results call, which was on February 27. In our major market, Brazil, Vychtesk Knutsen was delivered to Shell in March for a 3 year time charter. Anak Knutsen sought exercise of an option by Total Energies, extending the current charter to April 2026. And by the time of the last results call, Dansabia's charter to Transpetro had been extended to early June this year. In the North Sea, Hilda Knutsen, Torill Knutsen and Bodel Knutsen have continued to operate under time charters to our sponsor Knutsen NYK. Speaker 100:02:51For Bodo Knutsen, this charter lasted as planned until delivery to Equinor at the end of March on a charter of 2 years fixed plus 2 years options. For Hilder Knutsen and Torok Knutsen, the charter is for rolling 1 month terms up to January 2025. Ingrid Knutsen was redelivered by Alterra at the end of March as anticipated and has since gone on to time charter with Knutsen NYK. Both Ingrid Knutsen and Torill Knutsen will commence charters with ENI in Q4 this year. For Ingrid Knutsen, this was a deferral to October from a previously contracted April delivery. Speaker 100:03:28This deferral is on terms that are no less favorable to us than applied previously. That charter is the 2 years fixed, plus 2 options each of 1 year. For Toll Knutsen, the new time charter with ENI is a 3 years fixed, plus 3 options each of 1 year. In the meantime, Toll Knutsen is undergoing repairs to a broken generator rotor, which has limited the range of client facilities, which this vessel is able to serve. We expect repair to be completed later in Q2 or into Q3, and both the repair costs and some loss of hire are expected to be covered by insurance subject to the relevant policy terms. Speaker 100:04:05After we received redelivery of dansysna in December 2023, we have deployed our own short term conventional tanker work, while also assessing the upgrades required for compatibility with shuttle tanker work in the North Sea. Those upgrades are due to be carried out in the coming weeks. Dansavia is due for redelivery to us in June, which is the extended expiry date of our charter to TransPetro. The continuing area of focus for our contracting team is on Dansysna, Dansarbia and Hilde Knutsen. For near term deployment, focus also remains on Ingrid Knutsen and Tor Knutsen until each of them is delivered to ENI in Q4 this year. Speaker 100:04:46On slide 5, our outlook remains positive on both industry dynamics and the partnership's positioning to participate fruitfully in our markets. Significant growth is anticipated in production in fields, which rely on service by shuttle tankers. We see reported orders from earlier this year of around 6 vessels as an endorsement of confidence in the sector. 3 of these vessels have been ordered by our sponsor for delivery over 20262027. Each of these sponsor vessels has a 10 year fixed contract with Petrobras along with a client option to extend by further 5 years. Speaker 100:05:19We would expect to see further newbuild orders placed in order to service the large new production volumes coming online in the years ahead. A measured amount of new shuttle tanker ordering is imperative, It should not be understood as some sort of negative development for the sector. The material shortage of shuttle tank capacity remains projected in the coming years. We also remain mindful of near term market conditions, where we're particularly focused on marketing with Dansysna, Dansarbeit and Hilderk Knutsen as well as seeking third party employment of Ingrid Knutsen and Torok Knutsen until commencement in Q4 of their next long term charters. In the meantime, the partnership remains financially resilient with a strong contracted revenue position of $683,000,000 at the end of Q1 on fixed contracts, which averaged 2 years in duration. Speaker 100:06:05Charterless options are additional to this and average a further 2 years. Our pattern of cash generation and liquidity balance is sufficient for our operations and the significant paid out rates for our debt. Mean, we've demonstrated the strength of our relationships with Lending Bank by several refinancings completed over the last year. Finally, the average age of our vessels at 9.9 years places us well when compared with the useful life model at 23 years. On to Slide 6, you can see the consistency of revenues and operating income when comparing between quarters and also between 12 month periods. Speaker 100:06:42Slide 7 similarly reflects the consistency of our adjusted EBITDA and you can find the definition of this non GAAP measure in the appendix. On Slide 8, the most notable change in the balance sheet over the Q1 has come from refinancing of the loan secured by Hilder Knutsen, the balance of which has moved from current liabilities into long term debt. The overall change in the Partnership's liabilities has been a reduction by $42,000,000 which is reflective of our debt repayment schedule. On Slide 9, we've expanded on the terms of the Partnership's debt facilities to provide added color around the dynamics of debt repayment. The highlighted column shows how the outstanding balances of each facility have been reducing because of the repayments we've been making in line with scheduled repayment terms. Speaker 100:07:28The current installments are the amounts of capital repayments due over the next year, which do not include interest. And the balloon payments are the final amounts of principal, which will be due on the maturity dates. Of note, dollars 91,000,000 is due to be paid on these debt facilities over the 12 months following 31st March. Completion of the Hilda loan refinancing is due imminently, following which no further balloon repayments or refinancings are due within that 12 month period. Our typical pattern is for our vessels to provide security for our debt facilities, and that applies to 16 out of 18 vessels. Speaker 100:08:03At present, the exceptions of the Dansysna and Anssaabia are free of debt and we do not have plans to incur additional borrowings secured by these vessels until we have better visibility on their future employment. Dollars $880,000,000 out of $925,000,000 in debt facilities are secured by vessels, while the 2 revolving credit facilities totaling $50,000,000 of capacity are unsecured. Slide 10 shows the contracted pipeline in chart formats reflecting the developments I set out earlier. Similarly, Slide 11 highlights the focus of our commercial efforts on adding near term contracts particularly for Dansysna, PanSarbeit and Hildegnudsen and in the near term also for Ingrid Knutsen and Torok Knutsen. On Slide 12, we see our sponsor's inventory vessels which are eligible for purchase by the partnership. Speaker 100:08:57This applies to any vessel owned by or an order for our sponsor, where the vessel has a firm contract period at least 5 years in length. The present 5 existing vessels and 5 under construction fall into this category. There's no assurance that any further acquisitions will be made by the partnership and any transaction will be subject to the Board approval of both parties, which includes the partnership's Independent Conflicts Committee. As we have said, our top priorities remain securing additional contract coverage for our existing fleet and fostering our liquidity position. On slides 13 to 15, we provided some useful illustrations of the strong demand dynamics in the Brazilian market as published by Petrobras. Speaker 100:09:37We encourage you to review Petrobras' materials directly. The primary takeaway from each of these slides is consistent. There's very significant committed demand growth coming in the Brazilian market in the form of new FPSOs that will require regular service from shuttle tankers. We believe that reports earlier this year of up to 6 vessel construction contracts are an endorsement of the strong anticipated market conditions in the medium and longer term. I mentioned earlier, 3 of these recent newbuild contracts are for our sponsor, Kirtzen MYK, and are due for delivery over 20262027. Speaker 100:10:11We would expect to see further newbuild orders placed in order to service the large new production volumes coming online in the years ahead. And a material shortage of shuttle tanker capacity remains projected in the coming years. On Slide 16, we provide information relevant to our U. S. Unitholders, in particular those seeking a Form 1099. Speaker 100:10:32Those holding units by their custodians or brokers should approach those parties directly. Those with directly registered holdings should contact our transfer agent, Equiniti Trust Company, whose details are shown there. On Slide 17, we include some reminders of the strong fundamentals of our business in the market we serve, our assets, competitive landscape, robust contractual footprint and resilient finances. I'll finish with slide 18, recapping our financial and operational performance in Q1 2024 and the subsequent time and our outlook for the remainder of 2024. We are glad to have delivered high and safe utilization, which have generated consistent financial performance. Speaker 100:11:14We are pleased with the new contracts and extensions we have secured during the quarter and since, along with our ability to navigate our refinancing needs and periodic capital expenditure. And our continued commercial focus remains on filling up 3rd party utilization for 2024, while looking further forward to longer term charter visibility and liquidity generation. Thank you for listening. And with that, I'll hand back the call back to the operator for any questions. Operator00:11:41Thank And our first question comes from Liam Burke, from B. Riley. Speaker 200:12:03Thank you. Hi, Derek. How are you today? Speaker 100:12:05Hi, Liam. Good to talk to you. Speaker 200:12:09Thank you. Gerrick, could you give us a little more color on the macro side, specifically the activity in the North Sea? I mean, it's pretty well known that the step up investment on offshore in Latin America is pretty high. We're not hearing much on the North Sea. Speaker 100:12:31Sure. Well, we I mean the main developments we're looking to are the Johan Castberg and the Penguins FPSOs coming online with production either late this year or early next year. And we think there's going to be significant increase in demand for the whole of the North Sea shuttle fleets once those come along. And the question in the meantime is at what stage do clients want to start entering into contracts in anticipation of that? Speaker 200:13:06So everyone is anticipating the actual projects coming to fruition. Does that make sense to just keep the Hilton Toro busy until you could charter it? I mean, are they good candidates to be chartered into this market? Speaker 100:13:27Toll has a charter from Q4 this year with Eni. So the total use in perhaps the COA pool until delivered into that contract, that's certainly relevant point for us, but not after that. Speaker 200:13:46Okay. And on the Sesne and Sabia, it I mean, they're in a good market, but just not the right size. Do you have any more alternatives rather than just running them into the traditional market? Speaker 100:14:09Well, Cisner, as I think be aware, is that we brought over to the North Sea and are going to put the upgrades in place for North Sea work because we think Cessna is much better suited to North Sea because of the size than the Brazilian than to the Brazilian market. So she'll be exposed to the same dynamics in the North Sea as we have with the other vessels as well, which is why she's got probably the greatest amount of focus from the contracting team of all of our vessels. And Savya, we are we expect redelivery in early June and she's subject to all the normal and energetic marketing efforts as you might imagine, given that she's not contracted after this. Speaker 200:15:00Great. Well, thank you, Derek. Speaker 100:15:03Thank you. Operator00:15:09Our next question comes from Poy Frat from AGP. Speaker 300:15:16Hi, Derek. Speaker 100:15:18Hi, Tay. How are you, Derek? Speaker 300:15:20Very well. How about you? Speaker 100:15:22Very good. Thanks. Speaker 300:15:24Congrats on closing some of the holds. I'm especially surprised about the Toro just because as you just mentioned, the North Sea market could be very tight as you have the 2 FPSOs coming on later this year. Do you your market intelligence, what do you understand as far as the incremental demand that could be generated from those 2 FPSOs? And then is there it seems like there won't be any available capacity ex the Hilda at that point in time. Is that a fair statement? Speaker 100:16:08Well, we think there's more than enough incremental demand to come through to cover the short the I guess underemployed or underutilized vessels that we've got potentially that others have as well. So this North Sea has always been a timing issue. And obviously, the longer it goes, the more frustrating it is. But it's a timing issue rather than anything worse than that. So the vessels that we would have available for that because the Toril and Ingrid have both been contracted to Eni from Q4. Speaker 100:16:38They won't be in the question for that. But Hilda will and Dan Cissner, as she's been set up for the North Sea, will be as well. Speaker 300:16:52But if you could would answer the question of what do you think the incremental demand of those 2 FBOs could be? Speaker 100:17:03I don't have a figure to hand, I'm afraid, but certainly more than enough to soak up the capacity that we've got. Speaker 300:17:10Would it be fair to say that 2 to 4 for each FPSO or maybe 2 so that you have incremental demand developing into 2025 for shuttle tankers in the North Sea? Speaker 100:17:25Yes. I'm afraid I don't have that to hand, so I can look at that and maybe we can discuss offline. Speaker 300:17:31Okay. And my understanding is that neither of those projects have lined up any capacity. Is that what you understand? Speaker 100:17:43As far as I know, they haven't lined any up, yes. Speaker 300:17:47Okay, great. And then if you could just talk about the Dan Cythmia, how much was the upgrade, the cost of the upgrade? And then will there be any downtime on that vessel in the Q2? Speaker 100:18:05Well, she's currently not contracted. So downtime is perhaps a slightly moot point. We think it's around a month of both the work and the testing and C trials and so on that will go on afterwards, maybe a month to 6 weeks. And visualization is not on contract in any case during that time. We haven't published the cost, but it's not material in the context of the financial results we've produced, but we haven't produced a figure. Speaker 300:18:40Okay. Maybe you could describe the upgrade that was required? Speaker 100:18:47Yes. It's some harsh weather facilities. Speaker 300:18:57Okay. And then do you think that Dansavio will stay in Brazil? It seems like there's strong enough demand there. And I guess what's your sort of working assumption on the Dan Sabi at this point in time? Speaker 100:19:17Well, we are very mindful that she's got the size that is ideal in Brazil, but there's enough demand that potentially a client might want to take her in any case. So we continue to market in Brazil given that that's where she is. Speaker 300:19:32Okay. When you look at the impact of the Toro on the Q1, the what was it broken motor rotor, can you just quantify the number of days? Will it just be that the deductible the loss the higher deductible of 14 days that was in the Q1? Speaker 100:19:57Well, we certainly will be subject to that 14 days deductible. It's not straightforward because she's able to serve some client facilities, but not others. So she's got some earnings. So it's not a classic loss of higher where she's completely out and the calculation involved is actually relatively simple in those cases. This is going to be more complicated. Speaker 300:20:22Got you. So was she down at all in the Q1? And then if you could quantify any other idle days that you might have had in the Q1 to sort of get to that utilization number that you published? Speaker 100:20:36Sure. Something like a month in the Q1. I need to check the exact figures, but order of magnitude a month. Speaker 300:20:48And was there any other downtime or idle dates in the Q1? It sounded like you worked at Cinthian, the conventional tanker market, so that was more of a more on voyages, right? Speaker 100:21:03That's right. I mean, she had downtime between those as well. But I think total employment for the Cessna is this isn't a Q1 comment because her work has continued since then, but something like 80 days in the last 5 months. Speaker 300:21:27Sorry, would you clarify that? 80 days, she's worked 80 days over the last 5 months? Speaker 100:21:32Something like that, yes. Speaker 300:21:35Okay. Got it. So 80 of the 150 if you look at it, okay. And then They Speaker 100:21:42may straddle 3 different quarters of performance as well. So it's not easy to fit into quarterly results. Speaker 300:21:51Understood. And when I combine your or just look at your OpEx, it looks like the OpEx in the Q1 might have gone up just slightly on a daily basis. Is that accurate? And could you just comment on looking forward OpEx and G and A? Speaker 100:22:14Sure. G and A has been pretty stable. Main difference in OpEx is voyage expenses. Bear in mind also, of course, we have voyage revenues to offset that as well. And that's a classification issue relating to I expect that's Rodan Zysna because of the nature of our volumes in that time. Speaker 300:22:40Got you. So that was mainly absorbing the bumper parts and the wages and other potential fees? Speaker 400:22:47Yes. Speaker 300:22:48And then just one nitpicky one. It looks like you might have layered on some interest rate hedges in the Q1, the overall notional amount of the swap went up. Can you just talk about that? Speaker 100:23:05Yes, we did a small amount of additional fixing. We are at the moment, we're well within our policy range of the amount of debt that is either fixed rate or effectively fixed through hedges. And in due course, as those hedges come off, we'll need to put some more in place. And so we did a small amount of that quite early in Q1. So we're fairly pleased with the rate that we got at that stage, even though rates have moved a little bit since then. Speaker 300:23:32Yes. It looks like you still were able to fix in the low 2% range because your average interest rate costs fixed wise only went up to 2% from 1.9%, right? Speaker 100:23:47Sure. It's as low as 2 for the new fix, but it certainly was a break that we were happy with. Speaker 300:23:53Yes. Just yes, okay. And then it looks like other than the 3 that you talked about the Hilda Torrell I'm sorry, the Hilda Dan Sisney and Dan Stabia with open windows, and no longer term work. Can you just talk about the Carmen? It looks like Repsol has a year option at the start of next year. Speaker 300:24:19When would the notice period be on that option before it moves to the major oil company for what is it 4 years or 3 years? Speaker 100:24:33We would generally expect that to be within something like 1 to 3 months of the start of the optional period. I don't have the exact terms for that particular one in front of me, but that sort of period we'd expect it would be the latest we'd expect to know. Speaker 300:24:48Okay, great. Well, congratulations, Derek, on the contracting chartering during the quarter. Speaker 100:24:55All right. Thank you, Barry. Speaker 300:24:56And look forward to you're welcome. Speaker 100:24:59Yes. Bye. Operator00:25:04And our next question comes from Pavel Oliver from Rock Hill Global. Speaker 500:25:12Hi, good morning. Congratulations on a great quarter. I had a few questions, that the prices of new builds are around $160,000,000 for the North Sea and $140,000,000 for Brazil $1,000,000 and that there are really no new builds for North Sea. Does the value of the new builds impact pricing daily pricing of the existing fleet? Speaker 100:25:59I wouldn't say so. Certainly not in the North Sea. I mean, we're aware of the short to medium term issues around when demand for those for North Sea vessels doesn't come in and that's a far greater driver than anything else. Speaker 500:26:16I see. So the charters that are on those new ships, for example, in Brazil, would be similar to what they are now? Or they would reflect the new cost and the new cost of capital? Speaker 100:26:36They will reflect the terms or market conditions at the time they were entered into. So the newest ones obviously you'd expect to be, let's say, recognizably current, but some of the other vessels that aren't yet delivered, obviously, were contracted some time ago and would be on different terms. Speaker 500:26:53Right. So if I have a ship that's coming off hire and I have to recharter it, is it fair to say that, for example, in Brazil, the rates would be a lot higher than they were at the historical charter? Speaker 100:27:16We are seeing them firming up, if anything. So we clearly welcome the direction that's going in. Speaker 500:27:22And can I ask in the North Sea, besides your ships, are there any other ships like Alterra ships that may be available for those projects? Or are these ships sort of it? Speaker 100:27:45I understand there is competing capacity. I don't have figures to hand on that. And I wouldn't want to comment on another operator's contractual profile anyway. But yes, we understand there is capacity aside from our own. Speaker 500:28:00I see. Okay. And you had really good results in terms of free cash flow generation in the Q1 and that's with without a lot of the charters. Have you guys considered potentially buying some shares back at this point given what the NAV is in light of the new ships that are being built in Brazil and sort of the values or replacement value of the fleet as well as just the ability by lowering the number of shares to potentially increase the dividend when and if you're ready to reinstate that dividend? Speaker 100:28:58Yes. Well, we certainly understand and appreciate the value of that strategy and that's a question for the board to be addressing in due course. And their greatest priority is actually that we continue to make progress on visibility of our contracting schedule. And at the moment, clearly, there are 2 or 3 vessels that remain uncontracted, which is quite a rare position for us to be in. And they're more concerned that, that capacity is filled first before looking at anything else. Speaker 100:29:30We certainly look forward to the point where that is a really good use of capital. I would also say, if you look at our liquidity position, which we are certainly content with, we had 50 $5,000,000 I think. So we had $50,000,000 of cash equivalent Speaker 500:29:53Cash. Speaker 100:29:55Cash and cash equivalents at the end of March. But we also had €45,000,000 of drawn down revolving credit facility. And so the net liquidity, if you look at the difference between those is rather less and we wouldn't feel I expect the Board wouldn't feel able to invest cash in buying back units when that's the position. Speaker 500:30:20Understood. Understood. So but as you kind of get to that more comfortable position and you have repaid a lot of debt so far, you would it's something that the board will certainly consider, right? Speaker 100:30:44Yes. It's only one of the options. Speaker 500:30:47Okay. Awesome. Very good. Congratulations on a great quarter and terrific performance. Thank you. Speaker 100:30:58Thanks, Pavel. Appreciate it. Operator00:31:02And our next question comes from Robert Silvera from R. E. Silvera Associates Marine. Speaker 200:31:13Hello. Derek? Hello, Speaker 300:31:16Wes. Speaker 400:31:17Yes. Derek, thank you for taking my call. And, yes, we're marine surveyors, by the way. She dropped the word, surveyors. In any case, thank you for taking the call and I'd like to congratulate you on improving the company's situation considerably versus the past. Speaker 400:31:39Our input is that we would love to because we own thousands of shares, we would love to see you keep the dividend about where it is for an extended period of time and aggressively continue your move toward reducing debt. Don't take any more drop downs for the time being because the fleet is fairly young. And let's fill the gaps as you've been saying and get to the position where we have significantly continued to reduce the debt. You have some of the ships already debt free and that's really great. So that's our position as shareholders and we hope you will take that into consideration. Speaker 100:32:27Sure. Thank you very much. I would just show you again Slide 9, if you want to go back to it. The current installments figure is basically a 12 month look forward from the balance sheet date of the debt repayments that are coming due by amortizations. And that $91,000,000 over the 12 months starting 1st April this year is very recognizable on a year by year basis for the amount we repay in our debt in cash purely on the scheduled repayment terms. Speaker 100:33:04So points very well taken and I hope you're also pleased with the amount of debt repayment we're managing to do already. Speaker 400:33:12Yes, very pleased with that. And I'm saying our point is I'm not interested in getting the dividend raise back $0.52 right away, but rather continuously, aggressively continue to pay down the debt, don't take any drop downs for at least a year at this point and filling the gaps on where we are with our ships, putting us in a very, very solid position. And I think the share price will reflect it. And the future with the market in Brazil looking as good as it is, given that much time that I'm talking about a year, we will know the market a lot better by then and we can make very judicious decisions on what to add to the fleet in the future. Speaker 100:34:06Yes. Speaker 400:34:07Thank you, Derek. Speaker 100:34:08Yes, understood. Thank you. Thanks, Oliver. Speaker 200:34:11Bye bye. Bye. Operator00:34:25We currently have no further questions. I will hand back over to Derek for any final remarks. Speaker 100:34:32Thank you all again for joining this earnings call for Copp Offshore Partners Q1 in 2024. And I look forward to speaking with you again following the 2nd quarter results. Operator00:34:43And this concludes today's conference call. Thank you for joining. You may now disconnect your lines.Read morePowered by