KNOT Makes Tanker Swap

KNOT Offshore Partners announced that its wholly owned subsidiary, KNOT Shuttle Tankers, has entered into agreements with parent ocompany Knutsen NYK Offshore Tankers AS (KNOT), to simultaneously acquire from KNOT the 2021-built, industry-standard Suezmax shuttle tanker Tuva Knutsen and sell to KNOT the smaller-scale, 2011-built shuttle tanker Dan Cisne.

These transactions will be effected by the purchase and sale of the entities which own the respective vessels. The purchase price for the Tuva Knutsen Acquisition is $97.5 million less $69 million of outstanding debt plus $0.4 million of capitalized fees related to the credit facility secured by the Tuva Knutsen. The sale price for the Dan Cisne Sale is $30 million. These purchase and sale prices are due to be set off, with the result that a net payment of $ 1.1 million is due to be paid by KNOT to the partnership, subject to customary adjustments relating to working capital.

The Tuva Knutsen, a 153,000-deadweight ton DP2 Suezmax class shuttle tanker, was built by COSCO Shipping Heavy Industry and delivered in 2021. The vessel is operating in Brazil on a charter contract with TotalEnergies, for which the current fixed period expires in February 2026, and for which the charterer holds options for a further 10 years. As a term of the Transaction, KNOT has effectively guaranteed the hire rate for the vessel until August 2031 on the same basis as if TotalEnergies had exercised its options through such date, thus providing the Partnership with 7 years of fixed employment for Tuva Knutsen.

Derek Lowe, CEO of the Partnership, said, “We are pleased to have agreed the swap of the Dan Cisne for the Tuva Knutsen, which provides growth for the fleet without a requirement for new funding, while also increasing our pipeline of long-term contracts. This swap reduces our average fleet age and increases our fleet’s concentration in the most in-demand shuttle tanker class. We remain focused on generating certainty and stability of cashflows from long-term employment with high-quality counterparties, and are confident that continued operational performance and execution of our strategy can create unitholder value in the quarters and years ahead. This vessel swap decisively addresses a long-standing challenge for the Partnership and represents an important milestone on KNOP’s path forward.”