Document and Entity Information
Document and Entity Information | 6 Months Ended |
Jun. 30, 2020 | |
Document And Entity Information | |
Document Type | 6-K |
Amendment Flag | false |
Document Period End Date | Jun. 30, 2020 |
Document Fiscal Year Focus | 2020 |
Document Fiscal Period Focus | Q2 |
Entity File Number | 001-35866 |
Entity Address, Address Line One | 2 Queen’s Cross, |
Entity Address, Postal Zip Code | AB15 4YB |
Entity Address, City or Town | Aberdeen, Aberdeenshire |
Entity Address, Country | GB |
Entity Registrant Name | KNOT Offshore Partners LP |
Entity Central Index Key | 0001564180 |
Current Fiscal Year End Date | --12-31 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Operating revenues: (Notes 3, 4 and 12) | ||||
Time charter and bareboat revenues | $ 70,250 | $ 70,908 | $ 137,476 | $ 141,456 |
Other income | 9 | 14 | 607 | 15 |
Total revenues | 70,259 | 70,922 | 138,083 | 141,471 |
Operating expenses: (Note 12) | ||||
Vessel operating expenses | 13,112 | 15,301 | 28,746 | 29,757 |
Depreciation (Note 9) | 22,451 | 22,429 | 44,824 | 44,860 |
General and administrative expenses | 1,337 | 1,264 | 2,724 | 2,561 |
Total operating expenses | 36,900 | 38,994 | 76,294 | 77,178 |
Operating income | 33,359 | 31,928 | 61,789 | 64,293 |
Finance income (expense): | ||||
Interest income | 3 | 233 | 121 | 471 |
Interest expense (Note 5) | (8,512) | (13,186) | (18,974) | (26,844) |
Other finance expense (Note 5) | (199) | (286) | (307) | (404) |
Realized and unrealized gain (loss) on derivative instruments (Note 6) | (3,092) | (10,318) | (26,782) | (16,247) |
Net gain (loss) on foreign currency transactions | 127 | (192) | (297) | (218) |
Total finance expense | (11,673) | (23,749) | (46,239) | (43,242) |
Income before income taxes | 21,686 | 8,179 | 15,550 | 21,051 |
Income tax expense (Note 8) | (3) | (3) | (6) | (6) |
Net income | 21,683 | 8,176 | 15,544 | 21,045 |
Series A Preferred unitholders' interest in net income | 1,800 | 1,800 | 3,600 | 3,600 |
General Partner's interest in net income | 368 | 118 | 221 | 322 |
Limited Partners' interest in net income | $ 19,515 | $ 6,258 | $ 11,723 | $ 17,123 |
Earnings per unit (Basic): (Note 14) | ||||
General Partner unit (diluted) | $ 0.597 | $ 0.191 | $ 0.359 | $ 0.524 |
Earnings per unit (Diluted): (Note 14) | ||||
General Partner unit (diluted) | 0.597 | 0.191 | 0.359 | 0.524 |
Common Units [Member] | ||||
Earnings per unit (Basic): (Note 14) | ||||
Common unit (basic) | 0.597 | 0.191 | 0.359 | 0.524 |
Earnings per unit (Diluted): (Note 14) | ||||
Common unit (diluted) | $ 0.582 | $ 0.191 | $ 0.359 | $ 0.524 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Condensed Consolidated Statements of Comprehensive Income | ||||
Net income | $ 21,683 | $ 8,176 | $ 15,544 | $ 21,045 |
Comprehensive income | $ 21,683 | $ 8,176 | $ 15,544 | $ 21,045 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents (Note 7) | $ 41,436 | $ 43,525 |
Amounts due from related parties (Note 12) | 1,728 | 2,687 |
Inventories | 2,242 | 2,292 |
Derivative assets (Notes 6 and 7) | 39 | 920 |
Other current assets | 4,072 | 3,386 |
Total current assets | 49,517 | 52,810 |
Long-term assets: | ||
Vessels, net of accumulated depreciation (Note 9) | 1,635,546 | 1,677,488 |
Right-of-use assets (Note 4) | 1,516 | 1,799 |
Intangible assets, net (Notes 10) | 983 | 1,286 |
Derivative assets (Notes 6 and 7) | 648 | |
Accrued income | 3,424 | 3,976 |
Total long term assets | 1,641,469 | 1,685,197 |
Total assets | 1,690,986 | 1,738,007 |
Current liabilities: | ||
Trade accounts payable (Note 12) | 2,496 | 2,730 |
Accrued expenses (Note 15) | 4,755 | 6,617 |
Current portion of long-term debt (Notes 7 and 11) | 83,523 | 83,453 |
Current lease liabilities (Note 4) | 585 | 572 |
Current portion of derivative liabilities (Notes 6 and 7) | 7,211 | 910 |
Income taxes payable | 18 | 98 |
Current portion of contract liabilities | 1,518 | 1,518 |
Prepaid charter | 3,776 | 6,892 |
Amount due to related parties (Note 12) | 1,250 | 1,212 |
Total current liabilities | 105,132 | 104,002 |
Long-term liabilities: | ||
Long-term debt (Notes 7 and 11) | 870,150 | 911,943 |
Lease liabilities (Note 4) | 931 | 1,227 |
Derivative liabilities (Notes 6 and 7) | 23,987 | 5,133 |
Contract liabilities | 2,927 | 3,685 |
Deferred tax liabilities (Note 8) | 323 | 357 |
Total long-term liabilities | 898,318 | 922,345 |
Total liabilities | 1,003,450 | 1,026,347 |
Commitments and contingencies (Note 13) | ||
Series A Convertible Preferred Units | 89,264 | 89,264 |
Partners' capital: | ||
Common unitholders | 587,562 | 611,241 |
General partner interest | 10,710 | 11,155 |
Total partners' capital | 598,272 | 622,396 |
Total liabilities and equity | $ 1,690,986 | $ 1,738,007 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Partners' Capital - USD ($) $ in Thousands | General Partner Unit [Member] | Common Units [Member] | Total |
Beginning balance at Dec. 31, 2018 | $ 11,531 | $ 631,244 | $ 642,775 |
Net income | 322 | 17,123 | 17,445 |
Cash distributions | (666) | (35,402) | (36,068) |
Ending balance at Jun. 30, 2019 | 11,187 | 612,965 | 624,152 |
Convertible preferred units, beginning balance at Dec. 31, 2018 | 89,264 | ||
Net income | 3,600 | ||
Cash distributions | (3,600) | ||
Convertible preferred units, ending balance at Jun. 30, 2019 | 89,264 | ||
Beginning balance at Mar. 31, 2019 | 11,402 | 624,408 | 635,810 |
Net income | 118 | 6,258 | 6,376 |
Cash distributions | (333) | (17,701) | (18,034) |
Ending balance at Jun. 30, 2019 | 11,187 | 612,965 | 624,152 |
Convertible preferred units, beginning balance at Mar. 31, 2019 | 89,264 | ||
Net income | 1,800 | ||
Cash distributions | (1,800) | ||
Convertible preferred units, ending balance at Jun. 30, 2019 | 89,264 | ||
Beginning balance at Dec. 31, 2019 | 11,155 | 611,241 | 622,396 |
Net income | 221 | 11,723 | 11,944 |
Cash distributions | (666) | (35,402) | (36,068) |
Ending balance at Jun. 30, 2020 | 10,710 | 587,562 | 598,272 |
Convertible preferred units, beginning balance at Dec. 31, 2019 | 89,264 | ||
Net income | 3,600 | ||
Cash distributions | (3,600) | ||
Convertible preferred units, ending balance at Jun. 30, 2020 | 89,264 | ||
Beginning balance at Mar. 31, 2020 | 10,675 | 585,748 | 596,423 |
Net income | 368 | 19,515 | 19,883 |
Cash distributions | (333) | (17,701) | (18,034) |
Ending balance at Jun. 30, 2020 | $ 10,710 | $ 587,562 | 598,272 |
Convertible preferred units, beginning balance at Mar. 31, 2020 | 89,264 | ||
Net income | 1,800 | ||
Cash distributions | (1,800) | ||
Convertible preferred units, ending balance at Jun. 30, 2020 | $ 89,264 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
OPERATING ACTIVITIES | |||||
Net income | $ 21,683 | $ 8,176 | $ 15,544 | $ 21,045 | |
Adjustments to reconcile net income to cash provided by operating activities: | |||||
Depreciation | 22,451 | 22,429 | 44,824 | 44,860 | $ 89,844 |
Amortization of contract intangibles / liabilities | (456) | (456) | |||
Amortization of deferred debt issuance cost | 626 | 657 | 1,262 | 1,314 | |
Drydocking expenditure | (2,666) | 69 | |||
Income tax expense | 3 | 3 | 6 | 6 | |
Income taxes paid | (78) | (121) | |||
Unrealized (gain) loss on derivative instruments | 26,685 | 17,047 | |||
Unrealized (gain) loss on foreign currency transactions | (56) | 30 | |||
Changes in operating assets and liabilities | |||||
Decrease (increase) in amounts due from related parties | 959 | (363) | |||
Decrease (increase) in inventories | 50 | 4 | |||
Decrease (increase) in other current assets | (699) | (71) | |||
Decrease (increase) in accrued revenue | 551 | (567) | |||
Increase (decrease) in trade accounts payable | (198) | (1,843) | |||
Increase (decrease) in accrued expenses | (1,861) | (173) | |||
Increase (decrease) prepaid charter | (3,116) | 1,121 | |||
Increase (decrease) in amounts due to related parties | 38 | 119 | |||
Net cash provided by operating activities | 80,789 | 82,021 | |||
INVESTING ACTIVITIES | |||||
Net cash used in investing activities | (216) | ||||
FINANCING ACTIVITIES | |||||
Repayment of long-term debt | (42,973) | (41,661) | |||
Payment of debt issuance cost | (13) | 21 | |||
Cash distributions | (39,668) | (39,668) | |||
Net cash used in financing activities | (82,654) | (81,308) | |||
Effect of exchange rate changes on cash | (8) | 4 | |||
Net increase (decrease) in cash and cash equivalents | (2,089) | 717 | |||
Cash and cash equivalents at the beginning of the period | 43,525 | 41,712 | 41,712 | ||
Cash and cash equivalents at the end of the period | $ 41,436 | $ 42,429 | 41,436 | $ 42,429 | $ 43,525 |
Property, Plant and Equipment, Excluding Acquired Vessels | |||||
INVESTING ACTIVITIES | |||||
Disposals (additions) to vessel and equipment | $ (216) |
Description of Business
Description of Business | 6 Months Ended |
Jun. 30, 2020 | |
Description of Business | |
Description of Business | 1) Description of Business KNOT Offshore Partners LP (the “Partnership”) was formed as a limited partnership under the laws of the Republic of the Marshall Islands. The Partnership was formed for the purpose of acquiring 100% ownership interests in four shuttle tankers owned by Knutsen NYK Offshore Tankers AS (“KNOT”) in connection with the Partnership’s initial public offering of its common units (the “IPO”), which was completed on April 15, 2013. Pursuant to the Partnership’s Amended and Restated Agreement of Limited Partnership (the “Partnership Agreement”), KNOT Offshore Partners GP LLC, a wholly owned subsidiary of KNOT, and the general partner of the Partnership (the “General Partner”), has irrevocably delegated to the Partnership’s board of directors (the “Board”) the power to oversee and direct the operations of, manage and determine the strategies and policies of the Partnership. During the period from the Partnership’s IPO until the time of the Partnership’s first annual general meeting (“AGM”) on June 25, 2013, the General Partner retained the sole power to appoint, remove and replace all members of the Board. From the first AGM, four of the seven Board members became electable by the common unitholders and accordingly, from this date, KNOT, as the owner of the General Partner, no longer retained the power to control the Board and, hence, the Partnership. As a result, the Partnership is no longer considered to be under common control with KNOT and as a consequence, the Partnership accounts for acquisitions of businesses and assets under the purchase method of accounting and not as transfers of equity interests between entities under common control. All acquisitions have been consolidated into the Partnership’s results as of the date of acquisition. Please read Note 2—Summary of Significant Accounting Policies. As of June 30, 2020, the Partnership had a fleet of sixteen shuttle tankers, the Windsor Knutsen Bodil Knutsen Recife Knutsen Fortaleza Knutsen Carmen Knutsen, Hilda Knutsen, Torill Knutsen Dan Cisne Dan Sabia, Ingrid Knutsen Raquel Knutsen, Tordis Knutsen, Vigdis Knutsen, Lena Knutsen Brasil Knutsen Anna Knutsen The consolidated financial statements have been prepared assuming that the Partnership will continue as a going concern. The Partnership expects that its primary future sources of funds will be available cash, cash from operations, borrowings under any new loan agreements and the proceeds of any equity financings. The Partnership believes that these sources of funds (assuming the current rates earned from existing charters) will be sufficient to cover operational cash outflows and ongoing obligations under the Partnership’s financing commitments to pay loan interest and make scheduled loan repayments and to make distributions on its outstanding units. Accordingly, as of August 27, 2020, the Partnership believes that its current resources, including the undrawn portion of its revolving credit facilities of $28.7 million, are sufficient to meet working capital requirements for its current business for at least the next twelve months. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2020 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2) Summary of Significant Accounting Policies (a) Basis of Preparation The accompanying unaudited condensed consolidated interim financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) for interim financial information. In the opinion of management of the Partnership, all adjustments considered necessary for a fair presentation, which are of normal recurring nature, have been included. All intercompany balances and transactions are eliminated. The unaudited condensed consolidated financial statements do not include all the disclosures and information required for a complete set of annual financial statements; and, therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the Partnership’s audited consolidated financial statements for the year ended December 31, 2019, which are included in the Partnership’s Annual Report on Form 20-F (the “2019 20-F”). (b) Significant Accounting Policies Except as described below under (c) Recent Accounting Pronouncements - Adoption of new accounting standards ”, the accounting policies adopted in the preparation of the unaudited condensed consolidated interim financial statements are consistent with those followed in the preparation of the Partnership’s audited consolidated financial statements for the year ended December 31, 2019, as contained in the Partnership’s 2019 20-F. (c) Recent Accounting Pronouncements Adoption of new accounting standards In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (or ASU 2016- 13). ASU 2016-13 replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to estimate credit losses. The new guidance is applicable to financial assets measured at amortized cost, including trade receivables, contract assets and net investment in financing leases and was effective for the Partnership from January 1, 2020, with a modified-retrospective approach. The adoption of ASU 2016-13 did not have a material impact on the consolidated financial statements. Accounting pronouncements not yet adopted In March 2020, the FASB issued ASU 2020-04 Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The update provides temporary optional expedients and exceptions to the guidance in US GAAP on contract modifications and hedge accounting, to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. For all types of hedging relationships, the guidance allows an entity to change the reference rate and other critical terms related to reference rate reform without having to dedesignate the relationship. The guidance is effective upon issuance through December 31, 2022. Although the Partnership does not apply hedge accounting, the Partnership has debt and interest rate swaps that reference LIBOR. The Partnership is evaluating the impact of the guidance on the consolidated financial statements. Other recently issued accounting pronouncements are not expected to materially impact the Partnership. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2020 | |
Segment Information | |
Segment Information | 3) Segment Information The Partnership has not presented segment information as it considers its operations to occur in one reportable segment, the shuttle tanker market. As of June 30, 2020 and 2019, the Partnership’s fleet consisted of sixteen vessels and operated under twelve time charters and four bareboat charters. Under the time charters and bareboat charters, the charterer, not the Partnership, controls the choice of which trading areas the applicable Vessel will serve. Accordingly, the Partnership’s management, including the chief operating decision makers, does not evaluate performance according to geographical region. The following table presents consolidated revenues and percentages of revenues for customers that accounted for more than 10% of the Partnership’s consolidated revenues during the three and six months ended June 30, 2020 and 2019. All of these customers are subsidiaries of major international oil companies. Three Months Ended June 30, Six Months Ended June 30, (U.S. Dollars in thousands) 2020 2019 2020 2019 Eni Trading and Shipping S.p.A. $ 10,953 16 % $ 11,134 16 % $ 22,088 16 % $ 22,146 16 % Fronape International Company, a subsidiary of Petrobras Transporte S.A. 11,249 16 % 11,249 16 % 22,498 16 % 22,378 16 % Repsol Sinopec Brasil, S.A., a subsidiary of Repsol Sinopec Brasil, B.V. 9,285 13 % 9,282 13 % 15,178 11 % 18,463 13 % Brazil Shipping I Limited, a subsidiary of Royal Dutch Shell 20,512 29 % 20,606 29 % 41,236 30 % 40,889 29 % Galp Sinopec Brasil Services B.V. 8,881 13 % 8,881 13 % 17,763 13 % 17,584 12 % The Partnership has financial assets that expose it to credit risk arising from possible default by a counterparty. The Partnership considers its counterparties to be creditworthy banking and financial institutions and does not expect any significant loss to result from non-performance by such counterparties. The maximum loss due to credit risk that the Partnership would incur if counterparties failed completely to perform would be the carrying value of cash and cash equivalents, and derivative assets. The Partnership, in the normal course of business, does not demand collateral from its counterparties. |
Operating Leases
Operating Leases | 6 Months Ended |
Jun. 30, 2020 | |
Operating Leases | |
Operating Leases | 4) Operating Leases Revenues The Partnership's primary source of revenues is chartering its shuttle tankers to its customers. The Partnership uses two types of contracts, time charter contracts and bareboat charter contracts. The Partnership's time-charter contracts include both a lease component, consisting of the bareboat element of the contract, and non-lease component, consisting of operation of the vessel for the customers, which includes providing the crewing and other services related to the Vessel's operations, the cost of which is included in the daily hire rate, except when off hire. The following table presents the Partnership's revenues by time charter and bareboat charters and other revenues for the three and six months ended June 30, 2020 and 2019: Three Months Ended June 30, Six Months Ended June 30, (U.S. Dollars in thousands) 2020 2019 2020 2019 Time charter revenues (service element included) $ 59,001 $ 59,659 $ 114,978 $ 119,078 Bareboat revenues 11,249 11,249 22,498 22,378 Other revenues 9 14 607 15 Total revenues $ 70,259 $ 70,922 $ 138,083 $ 141,471 As of June 30, 2020, the minimum contractual future revenues to be received from time charters and bareboat charters during the next five years and thereafter are as follows (service element of the time charter included): (U.S. Dollars in thousands) 2020 (excluding the six months ended June 30, 2020) $ 136,220 2021 248,418 2022 167,739 2023 63,918 2024 20,093 2025 8,581 Total $ 644,969 The minimum contractual future revenues should not be construed to reflect total charter hire revenues for any of the years. Minimum contractual future revenues are calculated based on certain assumptions such as operating days per year. In addition, minimum contractual future revenues presented in the table above have not been reduced by estimated off-hire time for periodic maintenance. The amounts may vary given unscheduled future events such as vessel maintenance. The Partnership’s fleet as of June 30, 2020 consisted of: ● the Fortaleza Knutsen , a shuttle tanker built in 2011 that is currently operating under a bareboat charter that expires in March 2023 with Fronape International Company, a subsidiary of Petrobras Transporte S.A. (“Transpetro”); ● the Recife Knutsen , a shuttle tanker built in 2011 that is currently operating under a bareboat charter that expires in August 2023 with Transpetro; ● the Bodil Knutsen , a shuttle tanker built in 2011 that is currently operating under a time charter that expires in May 2021 with Equinor Shipping Inc., a subsidiary of Equinor ASA, with options to extend until May 2024 ; ● the Windsor Knutsen , a conventional oil tanker built in 2007 and retrofitted to a shuttle tanker in 2011. The vessel operated under a time charter with Brazil Shipping I Limited, a subsidiary of Shell, until July 2014. From July 2014 until October 2015, the vessel was employed under a time charter with KNOT. Beginning in October 2015, the vessel commenced operations under a two-year time charter with Shell, with options to extend until 2023 . In March 2019, the time charter contract was suspended until April 2020 . During the suspension period, the Windsor Knutsen operated under a time charter contract with Knutsen Shuttle Tankers Pool AS on the same terms as the existing contract with Shell. Shell did not notify the Partnership by the due date of its intention to exercise its option to extend the time charter for the vessel. The charter will therefore expire in or around October 2020 , the precise date to be fixed in accordance with the redelivery window as specified in the charter. ● the Carmen Knutsen , a shuttle tanker built in 2013 that is currently operating under a time charter that expires in January 2023 , with Repsol Sinopec Brasil, B.V. a subsidiary of Repsol Sinopec Brasil, S.A. (“Repsol”), with options to extend until January 2026 ; ● the Hilda Knutsen , a shuttle tanker built in 2013 that is currently operating under a time charter that expires in August 2022 with Eni Trading and Shipping S.p.A. (“ENI”), with options to extend until August 2025 ; ● the Torill Knutsen , a shuttle tanker built in 2013 that is currently operating under a time charter that expires in November 2022 with ENI, with options to extend until November 2024 ; ● the Dan Cisne , a shuttle tanker built in 2011 that is currently operating under a bareboat charter that expires in September 2023 with Transpetro; ● the Dan Sabia , a shuttle tanker built in 2012 that is currently operating under a bareboat charter that expires in January 2024 with Transpetro; ● the Ingrid Knutsen , a shuttle tanker built in 2013 that is currently operating under a time charter that expires in February 2024 with Standard Marine Tønsberg AS, a Norwegian subsidiary of ExxonMobil (“ExxonMobil”), with options to extend until February 2029 ; ● the Raquel Knutsen , a shuttle tanker built in 2015 that is currently operating under a time charter that expires in June 2025 with Repsol, with options to extend until June 2030 ; ● the Tordis Knutsen , a shuttle tanker built in 2016 that is currently operating under a time charter that expires in January 2022 with a subsidiary of Shell, with options to extend until January 2032 ; ● the Vigdis Knutsen , a shuttle tanker built in 2017 that is currently operating under a time charter that expires in April 2022 with a subsidiary of Shell, with options to extend until April 2032 ; ● the Lena Knutsen , a shuttle tanker built in 2017 that is currently operating under a time charter that expires in September 2022 with a subsidiary of Shell, with options to extend until September 2032 ; ● the Brasil Knutsen , a shuttle tanker built in 2013 that is currently operating under a time charter that expires in September 2022 with Galp Sinopec Brazil Services B.V. (“Galp”), with options to extend until September 2028 ; and ● the Anna Knutsen , a shuttle tanker built in 2017 that is currently operating under a time charter that expires in March 2022 with Galp, with options to extend until March 2028 . Lease obligations The Partnership does not have any material leased assets but has some leased equipment on operational leases on the various ships operating on time charter contracts. As of June 30, 2020, the right-of-use asset and lease liability for operating leases A maturity analysis of the Partnership’s lease liabilities from leased-in equipment as of June 30, 2020 is as follows: (U.S. Dollars in thousands) 2020 (excluding the six months ended June 30, 2020) $ 322 2021 644 2022 644 Total $ 1,610 Less imputed interest 94 Carrying value of operating lease liabilities $ 1,516 |
Other Finance Expenses
Other Finance Expenses | 6 Months Ended |
Jun. 30, 2020 | |
Other Finance Expenses | |
Other Finance Expenses | 5) Other Finance Expenses (a) Interest Expense The following table presents the components of interest cost as reported in the consolidated statements of operations for the three and six months ended June 30, 2020 and 2019: Three Months Ended Six Months Ended June 30, June 30, (U.S. Dollars in thousands) 2020 2019 2020 2019 Interest expense $ 7,886 $ 12,529 $ 17,712 $ 25,530 Amortization of debt issuance cost and fair value of debt assumed 626 657 1,262 1,314 Total interest cost $ 8,512 $ 13,186 $ 18,974 $ 26,844 (b) Other Finance Expense The following table presents the components of other finance expense for three and six months ended June 30, 2020 and 2019: Three Months Ended Six Months Ended June 30, June 30, (U.S. Dollars in thousands) 2020 2019 2020 2019 Bank fees, charges $ 137 $ 224 $ 184 $ 281 Commitment fees 62 62 123 123 Total other finance expense $ 199 $ 286 $ 307 $ 404 |
Derivative Instruments
Derivative Instruments | 6 Months Ended |
Jun. 30, 2020 | |
Derivative Instruments | |
Derivative Instruments | 6) Derivative Instruments The unaudited condensed consolidated interim financial statements include the results of interest rate swap contracts to manage the Partnership’s exposure related to changes in interest rates on its variable rate debt instruments and the results of foreign exchange forward contracts to manage its exposure related to changes in currency exchange rates on its operating expenses, mainly crew expenses, in currency other than the U.S. Dollar and on its contract obligations. The Partnership does not apply hedge accounting for derivative instruments. The Partnership does not speculate using derivative instruments. By using derivative financial instruments to economically hedge exposures to changes in interest rates, the Partnership exposes itself to credit risk and market risk. Derivative instruments that economically hedge exposures are used for risk management purposes, but these instruments are not designated as hedges for accounting purposes. Credit risk is the failure of the counterparty to perform under the terms of the derivative instrument. When the fair value of a derivative instrument is positive, the counterparty owes the Partnership, which creates credit risk for the Partnership. When the fair value of a derivative instrument is negative, the Partnership owes the counterparty, and, therefore, the Partnership is not exposed to the counterparty’s credit risk in those circumstances. The Partnership minimizes counterparty credit risk in derivative instruments by entering into transactions with major banking and financial institutions. The derivative instruments entered into by the Partnership do not contain credit risk-related contingent features. The Partnership has not entered into master netting agreements with the counterparties to its derivative financial instrument contracts. Market risk is the adverse effect on the value of a derivative instrument that results from a change in interest rates, currency exchange rates or commodity prices. The market risk associated with interest rate contracts is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken. The Partnership assesses interest rate risk by monitoring changes in interest rate exposures that may adversely impact expected future cash flows and by evaluating economical hedging opportunities. The Partnership has historically used variable interest rate mortgage debt to finance its vessels. The variable interest rate mortgage debt obligations expose the Partnership to variability in interest payments due to changes in interest rates. The Partnership believes that it is prudent to limit the variability of a portion of its interest payments. To meet this objective, the Partnership has entered into London Interbank Offered Rate (“LIBOR”)-based interest rate swap contracts to manage fluctuations in cash flows resulting from changes in the benchmark interest rate of LIBOR. These swaps change the variable rate cash flow exposure on the mortgage debt obligations to fixed cash flows. Under the terms of the interest rate swap contracts, the Partnership receives LIBOR-based variable interest rate payments and makes fixed interest rate payments, thereby creating the equivalent of fixed rate debt for the notional amount of its debt hedged. As of June 30, 2020 and December 31, 2019, the total notional amount of the Partnership’s outstanding interest rate swap contracts that were entered into in order to hedge outstanding or forecasted debt obligations were $627.1 million and $561.8 million, respectively. As of June 30, 2020 and December 31, 2019, the carrying amount of the interest rate swaps contracts was a net liability of $31.2 million and $4.7 million, respectively. See Note 7—Fair Value Measurements. Changes in the fair value of interest rate swap contracts are reported in realized and unrealized gain (loss) on derivative instruments in the same period in which the related interest affects earnings. The Partnership and its subsidiaries utilize the U.S. Dollar as their functional and reporting currency, because all of their revenues and the majority of their expenditures, including the majority of their investments in vessels and their financing transactions, are denominated in U.S. Dollars. Payment obligations in currencies other than the U.S. Dollar, and in particular operating expenses in NOK, expose the Partnership to variability in currency exchange rates. The Partnership believes that it is prudent to limit the variability of a portion of its currency exchange exposure. To meet this objective, the Partnership entered into foreign exchange forward contracts to manage fluctuations in cash flows resulting from changes in the exchange rates towards the U.S. Dollar. The agreements change the variable exchange rate to fixed exchange rates at agreed dates As of June 30, 2020 and December 31, 2019, the total contract amount in foreign currency of the Partnership’s outstanding foreign exchange forward contracts that were entered into to economically hedge outstanding future payments in currencies other than the U.S. Dollar were NOK nil million and NOK 46.1 million, respectively. As of June 30, 2020 and December 31, 2019, the carrying amount of the Partnership’s foreign exchange forward contracts was a net liability of $nil million and net asset of $0.2 million, respectively. See Note 7—Fair Value Measurements. The following table presents the realized and unrealized gains and losses that are recognized in earnings as net gain (loss) on derivative instruments for the three and six months ended June 30, 2020 and 2019: Three Months Ended Six Months Ended June 30, June 30, (U.S. Dollars in thousands) 2020 2019 2020 2019 Realized gain (loss): Interest rate swap contracts $ (191) $ 1,168 $ 12 $ 2,246 Foreign exchange forward contracts (109) (658) (109) (1,446) Total realized gain (loss): (300) 510 (97) 800 Unrealized gain (loss): Interest rate swap contracts (3,457) (11,521) (26,438) (18,619) Foreign exchange forward contracts 665 693 (247) 1,572 Total unrealized gain (loss): (2,792) (10,828) (26,685) (17,047) Total realized and unrealized gain (loss) on derivative instruments: $ (3,092) $ (10,318) $ (26,782) $ (16,247) |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Measurements | |
Fair Value Measurements | 7) Fair Value Measurements (a) Fair Value of Financial Instruments The following table presents the carrying amounts and estimated fair values of the Partnership’s financial instruments as of June 30, 2020 and December 31, 2019. Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. June 30, 2020 December 31, 2019 Carrying Fair Carrying Fair (U.S. Dollars in thousands) Amount Value Amount Value Financial assets: Cash and cash equivalents $ 41,436 $ 41,436 $ 43,525 $ 43,525 Current derivative assets: Interest rate swap contracts 39 39 674 674 Foreign exchange forward contracts — — 246 246 Non-current derivative assets: Interest rate swap contracts — — 648 648 Financial liabilities: Current derivative liabilities: Interest rate swap contracts 7,211 7,211 910 910 Non-current derivative liabilities: Interest rate swap contracts 23,987 23,987 5,133 5,133 Long-term debt, current and non-current 959,842 959,842 1,002,813 1,002,813 The carrying amounts shown in the table above are included in the consolidated balance sheets under the indicated captions. Carrying amount of long-term debt, current and non-current, above excludes capitalized debt issuance cost of $6.2 million and $7.4 million as of June 30, 2020 and December 31, 2019 , respectively. The carrying value of trade accounts receivable, trade accounts payable and receivables/payables to owners and affiliates approximate their fair value. The fair values of the financial instruments shown in the above table as of June 30, 2020 and December 31, 2019 represent the amounts that would be received to sell those assets or that would be paid to transfer those liabilities in an orderly transaction between market participants at that date. Those fair value measurements maximize the use of observable inputs. However, in situations where there is little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects the Partnership’s own judgment about the assumptions that market participants would use in pricing the asset or liability. Those judgments are developed by the Partnership based on the best information available in the circumstances, including expected cash flows, appropriately risk-adjusted discount rates and available observable and unobservable inputs. The following methods and assumptions were used to estimate the fair value of each class of financial instruments: ● Cash and cash equivalents and restricted cash : The fair value of the Partnership’s cash balances approximates the carrying amounts due to the current nature of the amounts. As of June 30, 2020 and December 31, 2019 there is no restricted cash. ● Foreign exchange forward contracts : The fair value is calculated using mid-rates (excluding margins) as determined by counterparties based on available market rates as of the balance sheet date. The fair value is discounted from the value at expiration to the current value of the contracts. ● Interest rate swap contracts : The fair value of interest rate swap contracts is determined using an income approach using the following significant inputs: (1) the term of the swap contract (weighted average of 3.6 years and 4.0 years, as of June 30, 2020 and December 31, 2019 , respectively), (2) the notional amount of the swap contract (ranging from $7.7 million to $50.0 million as of June 30,2020 and ranging from $8.5 million to $50.0 million as of December 31, 2019), discount rates interpolated based on relevant LIBOR swap curves; and (3) the rate on the fixed leg of the swap contract (rates ranging from 0.71% to 2.90% as of June 30, 2020 and from 1.38% to 2.90% as of December 31, 2019). ● Long-term debt : With respect to long-term debt measurements, the Partnership uses market interest rates and adjusts for risks, such as its own credit risk. In determining an appropriate spread to reflect its credit standing, the Partnership considered interest rates currently offered to KNOT for similar debt instruments of comparable maturities by KNOT’s and the Partnership’s bankers as well as other banks that regularly compete to provide financing to the Partnership. (b) Fair Value Hierarchy The following table presents the placement in the fair value hierarchy of assets and liabilities that are measured at fair value on a recurring basis (including items that are required to be measured at fair value or for which fair value is required to be disclosed) as of June 30, 2020 and December 31, 2019: Fair Value Measurements at Reporting Date Using Quoted Price in Active Significant Carrying Markets for Other Significant Value Identical Observable Unobservable June 30, Assets Inputs Inputs (U.S. Dollars in thousands) 2020 (Level 1) (Level 2) (Level 3) Financial assets: Cash and cash equivalents $ 41,436 $ 41,436 $ — $ — Current derivative assets: Interest rate swap contracts 39 — 39 — Financial liabilities: Current derivative liabilities: Interest rate swap contracts 7,211 — 7,211 — Non-current derivative liabilities: Interest rate swap contracts 23,987 — 23,987 — Long-term debt, current and non-current 959,842 — 959,842 — Fair Value Measurements at Reporting Date Using Quoted Price in Active Significant Carrying Markets for Other Significant Value Identical Observable Unobservable December 31, Assets Inputs Inputs (U.S. Dollars in thousands) 2019 (Level 1) (Level 2) (Level 3) Financial assets: Cash and cash equivalents $ 43,525 $ 43,525 $ — $ — Current derivative assets: Interest rate swap contracts 674 — 674 — Foreign exchange forward contracts 246 — 246 — Non-current derivative assets: Interest rate swap contracts 648 — 648 — Financial liabilities: Current derivative liabilities: Interest rate swap contracts 910 — 910 — Non-current derivative liabilities: Interest rate swap contracts 5,133 — 5,133 — Long-term debt, current and non-current 1,002,813 — 1,002,813 — The Partnership’s accounting policy is to recognize transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer. There were no transfers into or out of Level 1 , Level 2 or Level 3 as of June 30, 2020 and December 31, 2019 . |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2020 | |
Income Taxes | |
Income Taxes | 8) Income Taxes Components of Current and Deferred Tax Expense After the reorganization of the Partnership’s predecessor’s activities into the new group structure in February 2013, all profit from continuing operations in Norway is taxable within the tonnage tax regime. The consequence of the reorganization is a one-time entrance tax into the Norwegian tonnage tax regime due to the Partnership’s acquisition of the shares in the subsidiary that owns the Fortaleza Knutsen Recife Knutsen The total amount of the entrance tax was estimated to be approximately $3.0 million, which was recognized in the three months ended March 31, 2013. At September 30, 2017 the Partnership acquired the shares in the subsidiary that owns the Lena Knutsen The taxes payable, mainly related to the entrance tax, are calculated based on the Norwegian corporate tax rate of 22% for 2020 and 2019, and the deferred tax liabilities, also mainly related to the entrance tax, are calculated based on a tax rate of 22% effective as from January 1, 2020 and January 1, 2019, respectively. Approximately $0.1 million of the entrance tax was paid both during the first quarter of 2020 and 2019. As of June 30, 2020 and December 31, 2019, UK income tax is presented as income taxes payable, while $0.3 million and $0.4 million is presented as non-current deferred taxes payable, respectively. Significant components of current and deferred income tax expense attributable to income from continuing operations for the three and six months ended June 30, 2020 and 2019 were as follows: Three Months Ended Six Months Ended June 30, June 30, (U.S. Dollars in thousands) 2020 2019 2020 2019 Income before income taxes $ 21,686 $ 8,179 $ 15,550 $ 21,051 Income tax (expense) (3) (3) (6) (6) Effective tax rate $ 0 % $ 0 % $ 0 % $ 0 % The Partnership records a valuation allowance for deferred tax assets when it is more likely than not that some of or all of the benefit from the deferred tax assets will not be realized. In assessing the realizability of deferred tax assets, which relates to financial loss carry forwards and other deferred tax assets within the tonnage tax regime, the Partnership considers whether it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized taking into account all the positive and negative evidence available. As of June 30, 2020 and December 31, 2019 there are no deferred tax assets recognized. |
Vessels and Equipment
Vessels and Equipment | 6 Months Ended |
Jun. 30, 2020 | |
Vessels and Equipment | |
Vessels and Equipment | 9) Vessels and Equipment As of June 30, 2020 and December 2019, Vessels with a book value of $1,636 million and $1,677 million, respectively, are pledged as security held as a guarantee for the Partnership’s long-term debt. See Note 11—Long-term debt. Vessels & Accumulated (U.S. Dollars in thousands) equipment depreciation Net Vessels Vessels, December 31, 2018 $ 2,130,423 $ (363,343) $ 1,767,080 Drydock costs 252 — 252 Disposals (1,663) 1,663 — Depreciation for the year — (89,844) (89,844) Vessels, December 31, 2019 $ 2,129,012 $ (451,524) $ 1,677,488 Additions 216 — 216 Drydock costs 2,666 — 2,666 Depreciation for the period — (44,824) (44,824) Vessels, June 30, 2020 $ 2,131,894 $ (496,348) $ 1,635,546 |
Intangible Assets
Intangible Assets | 6 Months Ended |
Jun. 30, 2020 | |
Intangible Assets | |
Intangible Assets | 10) Intangible Assets Above market Above market time charter time charter Total (U.S. Dollars in thousands) Tordis Knutsen Vigdis Knutsen intangibles Intangibles, December 31, 2018 $ 911 $ 980 $ 1,891 Amortization for the year (303) (302) (605) Intangibles, December 31, 2019 $ 608 $ 678 $ 1,286 Amortization for the period (152) (151) (303) Intangibles, June 30, 2020 $ 456 $ 527 $ 983 The intangible for the above-market value of the time charter contract associated with the Tordis Knutsen Vigdis Knutsen |
Long-Term Debt
Long-Term Debt | 6 Months Ended |
Jun. 30, 2020 | |
Long-Term Debt | |
Long-Term Debt | 11) Long-Term Debt As of June 30, 2020 and December 31, 2019, the Partnership had the following debt amounts outstanding: June 30, December 31, (U.S. Dollars in thousands) Vessel 2020 2019 $320 million loan facility Windsor Knutsen, Bodil Knutsen, Carmen Knutsen, Fortaleza Knutsen, Recife Knutsen, Ingrid Knutsen $ 267,305 $ 282,360 $55 million revolving credit facility 26,279 26,279 Hilda loan facility Hilda Knutsen 81,538 84,615 Torill loan facility Torill Knutsen 85,000 88,333 $172.5 million loan facility Dan Cisne, Dan Sabia 64,539 70,739 Raquel loan facility Raquel Knutsen 55,340 57,955 Tordis loan facility Tordis Knutsen 78,401 80,931 Vigdis loan facility Vigdis Knutsen 79,666 82,196 Lena loan facility Lena Knutsen 78,400 80,850 Brasil loan facility Brasil Knutsen 54,139 57,281 Anna loan facility Anna Knutsen 64,235 66,274 $25 million revolving credit facility 25,000 25,000 Total long-term debt $ 959,842 $ 1,002,813 Less: current installments 85,945 85,945 Less: unamortized deferred loan issuance costs 2,422 2,492 Current portion of long-term debt 83,523 83,453 Amounts due after one year 873,897 916,868 Less: unamortized deferred loan issuance costs 3,747 4,925 Long-term debt, less current installments, and unamortized deferred loan issuance costs $ 870,150 $ 911,943 The Partnership’s outstanding debt of $959.8 million as of June 30, 2020 is repayable as follows: (U.S. Dollars in thousands) Period repayment Balloon repayment Remaining 2020 $ 42,973 — 2021 86,546 95,811 2022 71,210 236,509 2023 55,535 202,185 2024 13,873 123,393 2025 and thereafter 1,307 30,500 Total $ 271,444 $ 688,398 As of June 30, 2020, the interest rates on the Partnership’s loan agreements were LIBOR plus a fixed margin ranging from 1.8% to 2.4%. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2020 | |
Related Party Transactions | |
Related Party Transactions | 12) Related Party Transactions (a) Related Parties Net income (expense) from related parties included in the unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2020 and 2019 are as follows: Three Months Ended Six Months Ended June 30, June 30, (U.S. Dollars in thousands) 2020 2019 2020 2019 Statements of operations: Time charter and bareboat revenues: Time charter income from KNOT (1) $ 105 — $ 4,883 — Operating expenses: Technical and operational management fee from KNOT Management to Vessels (2) 1,703 1,736 3,406 3,479 Operating expenses from other related parties (3) 66 — 229 — General and administrative expenses: Administration fee from KNOT Management (4) 244 314 474 648 Administration fee from KOAS (4) 165 174 323 345 Administration fee from KOAS UK (4) 31 30 61 60 Administration and management fee from KNOT (5) 40 42 85 85 Total income (expense) $ (2,144) $ (2,296) $ 305 $ (4,617) At June 30, At December 31, (U.S. Dollars in thousands) 2020 2019 Balance Sheet: Vessels: Drydocking supervision fee from KNOT (6) $ 47 $ — Total $ 47 $ — (1) Time charter income from KNOT: On December 17, 2018, the Partnership's subsidiary that owns the Windsor Knutsen and Royal Dutch Shell ("Shell") agreed to suspend the vessel's time charter contract. The suspension period commenced March 4, 2019 and ended April 5, 2020, when the vessel was redelivered to Shell. During the suspension period, the Windsor Knutsen has been operating under a time charter contract with Knutsen Shuttle Tankers Pool AS on the same terms as the existing time charter contract with Shell. (2) Technical and operational management fee from KNOT Management or KNOT Management Denmark to Vessels : KNOT Management or KNOT Management Denmark provides technical and operational management of the vessels on time charter including crewing, purchasing, maintenance and other operational service. In addition, there is also a charge for 24-hour emergency response services provided by KNOT Management for all vessels managed by KNOT Management. (3) Operating expenses from other related parties : Simsea Real Operations AS, a company jointly owned by Trygve Seglem and by other shipping companies in Haugesund, provides simulation, operational training assessment and other certified maritime courses for seafarers. The cost is course fees for seafarers. Knutsen OAS Crewing AS, a subsidiary of TSSI, provides administrative services related to East European crew on vessels operating on time charter contracts. The cost is a fixed fee per month per East European crew onboard the vessel. AS Marin Elektro, a company that delivers electro installations on ships, offshore installations and thermophotgraphy. Marine Elektro is owned by Level Group AS, where Trygve Seglem and family together with members of the Group Management have significant influence. The transactions relates to drydocking and MSB service and thermophoto/IR inspections. (4) Administration fee from KNOT Management, Knutsen OAS Shipping AS (“KOAS”) and Knutsen OAS (UK) Ltd. (“KOAS UK”) : Administration costs include the compensation and benefits of KNOT Management’s management and administrative staff as well as other general and administration expenses. Some benefits are also provided by KOAS and KOAS UK . Net administration costs are total administration cost plus a 5% margin, reduced for the total fees for services delivered by the administration staffs and the estimated shareholder costs for KNOT that have not been allocated. As such, the level of net administration costs as a basis for the allocation can vary from year to year based on the administration and financing services offered by KNOT to all the vessels in its fleet each year. KNOT Management also charges each subsidiary a fixed annual fee for the preparation of the statutory financial statement. (5) Administration and management fee from KNOT Management and KNOT Management Denmark : For bareboat charters, the shipowner is not responsible for providing crewing or other operational services and the customer is responsible for all vessel operating expenses and voyage expenses. However, each of the vessels under bareboat charters is subject to a management and administration agreement with either KNOT Management or KNOT Management Denmark, pursuant to which these companies provide general monitoring services for the vessels in exchange for an annual fee. (6) Drydocking supervision fee from KNOT and KOAS : KNOT and KOAS provide supervision and hire out service personnel during drydocking of the vessels. The fee is calculated as a daily fixed fee. (b) Transactions with Management and Directors See the footnotes to Note 12(a)—Related Party Transactions for a discussion of the allocation principles for KNOT’s administrative costs, including management and administrative staff, included in the consolidated statements of operations. (c) Amounts Due from (to) Related Parties Balances with related parties consisted of the following: At June 30, At December 31, (U.S. Dollars in thousands) 2020 2019 Balance Sheet: Trading balances due from KOAS $ 372 $ 687 Trading balances due from KNOT and affiliates 1,356 2,000 Amount due from related parties $ 1,728 $ 2,687 Trading balances due to KOAS $ (907) $ (840) Trading balances due to KNOT and affiliates (343) (372) Amount due to related parties $ (1,250) $ (1,212) Amounts due from (to) related parties are unsecured and intended to be settled in the ordinary course of business. The majority of these related party transactions relate to vessel management and other fees due to KNOT, KNOT Management, KOAS UK and KOAS. (d) Trade accounts payable Trade accounts payable to related parties are included in total trade accounts payable in the balance sheet. The balances to related parties consisted of the following: At June 30, At December 31, (U.S. Dollars in thousands) 2020 2019 Balance Sheet: Trading balances due to KOAS $ 290 $ 216 Trading balances due to KNOT and affiliates 732 685 Trade accounts payables to related parties $ 1,022 $ 901 Trading balances from KNOT and affiliates are included in other current assets in the balance sheet. The balances from related parties consisted of the following: At June 30, At December 31, (U.S. Dollars in thousands) 2020 2019 Balance Sheet: Trading balances due from KNOT and affiliates $ 353 $ 105 Trading balances due from KOAS 674 — Other current assets from related parties $ 1,027 $ 105 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies | |
Commitments and Contingencies | 13) Commitments and Contingencies Assets Pledged As of June 30, 2020 and December 31, 2019, Vessels with a book value of $1,636 million and $1,677 million, respectively, were pledged as security held as guarantee for the Partnership’s long-term debt and interest rate swap obligations. See Note 6—Derivative Instruments, Note 9 - Vessels and Equipment and Note 11—Long-Term Debt. Claims and Legal Proceedings From time to time, the Partnership is involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the consolidated financial position, results of operations or cash flows. Insurance The Partnership maintains insurance on all the Vessels to insure against marine and war risks, which include damage to or total loss of the Vessels, subject to deductible amounts that average $0.15 million per Vessel, and loss of hire. Under the loss of hire policies, the insurer will pay a compensation for the lost hire rate agreed in respect of each Vessel for each day, in excess of 14 deductible days, for the time that the Vessel is out of service as a result of damage, for a maximum of 180 days. In addition, the Partnership maintains protection and indemnity insurance, which covers third-party legal liabilities arising in connection with the Vessels’ activities, including, among other things, the injury or death of third-party persons, loss or damage to cargo, claims arising from collisions with other vessels and other damage to other third-party property, including pollution arising from oil or other substances. This insurance is unlimited, except for pollution, which is limited to $1 billion per vessel per incident. The protection and indemnity insurance is maintained through a protection and indemnity association, and as a member of the association, the Partnership may be required to pay amounts above budgeted premiums if the member claims exceed association reserves, subject to certain reinsured amounts. If the Partnership experiences multiple claims each with individual deductibles, losses due to risks that are not insured or claims for insured risks that are not paid, it could have a material adverse effect on the Partnership’s results of operations and financial condition. |
Earnings per Unit and Cash Dist
Earnings per Unit and Cash Distributions | 6 Months Ended |
Jun. 30, 2020 | |
Earnings per Unit and Cash Distributions | |
Earnings per Unit and Cash Distributions | 14) Earnings per Unit and Cash Distributions The calculations of basic and diluted earnings per unit (1) are presented below: Three Months Ended Six Months Ended June 30, June 30, (U.S. Dollars in thousands, except per unit data) 2020 2019 2020 2019 Net income $ 21,683 $ 8,176 $ 15,544 $ 21,045 Less: Series A Preferred unitholders’ interest in net income 1,800 1,800 3,600 3,600 Net income attributable to the unitholders of KNOT Offshore Partners LP 19,883 6,376 11,944 17,445 Less: Distributions (2) 18,034 18,034 36,068 36,068 Under (over) distributed earnings 1,849 (11,658) (24,124) (18,623) Under (over) distributed earnings attributable to: Common unitholders (3) 1,815 (11,442) (23,679) (18,279) General Partner 34 (215) (445) (344) Weighted average units outstanding (basic) (in thousands): Common unitholders 32,694 32,694 32,694 32,694 General Partner 615 615 615 615 Weighted average units outstanding (diluted) (in thousands): Common unitholders (4) 36,596 32,694 36,648 32,694 General Partner 615 615 615 615 Earnings per unit (basic) Common unitholders $ 0.597 $ 0.191 $ 0.359 $ 0.524 General Partner 0.597 0.191 0.359 0.524 Earnings per unit (diluted): Common unitholders (4) $ 0.582 $ 0.191 $ 0.359 $ 0.524 General Partner 0.597 0.191 0.359 0.524 Cash distributions declared and paid in the period per unit (5) 0.520 0.520 1.040 1.040 Subsequent event: Cash distributions declared and paid per unit relating to the period (6) 0.520 0.520 1.040 1.040 (1) Earnings per unit have been calculated in accordance with the cash distribution provisions set forth in the Partnership Agreement. (2) This refers to distributions made or to be made in relation to the period irrespective of the declaration and payment dates and based on the number of units outstanding at the record date. This includes cash distributions to the IDR holder (KNOT) for the three months ended June 30, 2020 and 2019 of $0.7 million and for the six months ended June 30, 2020 and 2019 of $1.4 million. (3) This includes the net income attributable to the IDR holder. The net income attributable to IDRs for the three months ended June 30, 2020 and 2019 was $0.7 million and for the six months ended June 30, 2020 and 2019 was $1.4 . (4) Diluted weighted average units outstanding and earnings per unit diluted for the three and six months ended June 30, 2020 and 2019 does not reflect any potential common shares relating to the convertible preferred units since the assumed issuance of any additional shares would be anti-dilutive. (5) Refers to cash distributions declared and paid during the period. (6) Refers to cash distributions declared and paid subsequent to the period end. As of June 30, 2020, 73.5% of the Partnership’s total number of common units outstanding representing limited partner interests were held by the public (in the form of 24,036,226 common units) and 26.2% of such units were held directly by KNOT (in the form of 8,567,500 common units). In addition, KNOT, through its ownership of the General Partner, held a 1.85% general partner interest (in the form of 615,117 general partner units) and a 0.3% limited partner interest (in the form of 90,368 common units). Earnings per unit – basic is determined by dividing net income, after deducting the amount of net income attributable to the Series A Preferred Units and the distribution paid or to be made in relation to the period, by the weighted-average number of units outstanding during the applicable period. The computation of limited partners’ interest in net income per common unit – diluted assumes the issuance of common units for all potentially dilutive securities consisting of 3,750,000 Series A Convertible Preferred Units (“Series A Preferred Units”). Consequently, the net income attributable to limited partners’ interest is exclusive of any distributions on the Series A Preferred Units. In addition, the weighted average number of common units outstanding has been increased assuming the Series A Preferred Units have been converted to common units using the if-converted method. The computation of limited partners’ interest in net income per common unit – diluted does not assume the issuance of Series A Preferred Units if the effect would be anti-dilutive. The General Partner’s and common unitholders’ interest in net income was calculated as if all net income was distributed according to the terms of the Partnership Agreement, regardless of whether those earnings would or could be distributed. The Partnership Agreement does not provide for the distribution of net income. Rather, it provides for the distribution of available cash, which is a contractually defined term that generally means all cash on hand at the end of each quarter less the amount of cash reserves established by the Board to provide for the proper conduct of the Partnership’s business, including reserves for maintenance and replacement capital expenditures, anticipated credit needs and capital requirements and any accumulated distributions on, or redemptions of, the Series A Preferred Units. In addition, KNOT, as the initial holder of all IDRs, has the right, at the time when it has received incentive distributions at the highest level to which it is entitled (48.0% for each of the prior four consecutive fiscal quarters), to reset the initial cash target distribution levels at higher levels based on the distribution at the time of the exercise of the reset election. Unlike available cash, net income is affected by non-cash items, such as depreciation and amortization, unrealized gains and losses on derivative instruments and unrealized foreign currency gains and losses. |
Accrued Expenses
Accrued Expenses | 6 Months Ended |
Jun. 30, 2020 | |
Accrued Expenses | |
Accrued Expenses | 15) Accrued Expenses The following table presents accrued expenses as of June 30, 2020 and December 31, 2019: At June 30, At December 31, (U.S. Dollars in thousands) 2020 2019 Operating expenses $ 1,186 $ 855 Interest expenses 2,873 4,049 Other expenses 696 1,713 Total accrued expenses $ 4,755 $ 6,617 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2020 | |
Subsequent Events | |
Subsequent Events | 16) Subsequent Events The Partnership has evaluated subsequent events from the balance sheet date through August 27, 2020, the date at which the unaudited condensed consolidated interim financial statements were available to be issued, and determined that there are no other items to disclose, except as follows: On August 13, 2020, the Partnership paid a quarterly cash distribution of $0.52 per common unit with respect to the quarter ended June 30, 2020 to all common unitholders of record on July 30, 2020. On August 13, 2020, the Partnership paid a cash distribution to holders of Series A Preferred Units with respect to the quarter ended June 30, 2020 in an aggregate amount equal to $1.8 million. The charterer of the Windsor Knutsen After the balance sheet date, there continues to be significant macroeconomic uncertainty as a result of the Coronavirus (COVID-19) outbreak. The scale and duration of this development remains uncertain and could materially impact the Partnership's earnings and cash flow. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Summary of Significant Accounting Policies | |
Basis of Preparation | (a) Basis of Preparation The accompanying unaudited condensed consolidated interim financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) for interim financial information. In the opinion of management of the Partnership, all adjustments considered necessary for a fair presentation, which are of normal recurring nature, have been included. All intercompany balances and transactions are eliminated. The unaudited condensed consolidated financial statements do not include all the disclosures and information required for a complete set of annual financial statements; and, therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the Partnership’s audited consolidated financial statements for the year ended December 31, 2019, which are included in the Partnership’s Annual Report on Form 20-F (the “2019 20-F”). |
Significant Accounting Policies | (b) Significant Accounting Policies Except as described below under (c) Recent Accounting Pronouncements - Adoption of new accounting standards ”, the accounting policies adopted in the preparation of the unaudited condensed consolidated interim financial statements are consistent with those followed in the preparation of the Partnership’s audited consolidated financial statements for the year ended December 31, 2019, as contained in the Partnership’s 2019 20-F. |
Recent Accounting Pronouncements | (c) Recent Accounting Pronouncements Adoption of new accounting standards In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (or ASU 2016- 13). ASU 2016-13 replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to estimate credit losses. The new guidance is applicable to financial assets measured at amortized cost, including trade receivables, contract assets and net investment in financing leases and was effective for the Partnership from January 1, 2020, with a modified-retrospective approach. The adoption of ASU 2016-13 did not have a material impact on the consolidated financial statements. Accounting pronouncements not yet adopted In March 2020, the FASB issued ASU 2020-04 Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The update provides temporary optional expedients and exceptions to the guidance in US GAAP on contract modifications and hedge accounting, to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. For all types of hedging relationships, the guidance allows an entity to change the reference rate and other critical terms related to reference rate reform without having to dedesignate the relationship. The guidance is effective upon issuance through December 31, 2022. Although the Partnership does not apply hedge accounting, the Partnership has debt and interest rate swaps that reference LIBOR. The Partnership is evaluating the impact of the guidance on the consolidated financial statements. Other recently issued accounting pronouncements are not expected to materially impact the Partnership. |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Segment Information | |
Schedule consolidated revenues and percentages of revenues for customers | Three Months Ended June 30, Six Months Ended June 30, (U.S. Dollars in thousands) 2020 2019 2020 2019 Eni Trading and Shipping S.p.A. $ 10,953 16 % $ 11,134 16 % $ 22,088 16 % $ 22,146 16 % Fronape International Company, a subsidiary of Petrobras Transporte S.A. 11,249 16 % 11,249 16 % 22,498 16 % 22,378 16 % Repsol Sinopec Brasil, S.A., a subsidiary of Repsol Sinopec Brasil, B.V. 9,285 13 % 9,282 13 % 15,178 11 % 18,463 13 % Brazil Shipping I Limited, a subsidiary of Royal Dutch Shell 20,512 29 % 20,606 29 % 41,236 30 % 40,889 29 % Galp Sinopec Brasil Services B.V. 8,881 13 % 8,881 13 % 17,763 13 % 17,584 12 % |
Operating Leases (Tables)
Operating Leases (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Operating Leases | |
Schedule of Partnership's revenues by time charter and bareboat charters and other revenues | Three Months Ended June 30, Six Months Ended June 30, (U.S. Dollars in thousands) 2020 2019 2020 2019 Time charter revenues (service element included) $ 59,001 $ 59,659 $ 114,978 $ 119,078 Bareboat revenues 11,249 11,249 22,498 22,378 Other revenues 9 14 607 15 Total revenues $ 70,259 $ 70,922 $ 138,083 $ 141,471 |
Schedule of minimum contractual future revenues | (U.S. Dollars in thousands) 2020 (excluding the six months ended June 30, 2020) $ 136,220 2021 248,418 2022 167,739 2023 63,918 2024 20,093 2025 8,581 Total $ 644,969 |
Schedule of maturity analysis of partnership's lease liabilities | A maturity analysis of the Partnership’s lease liabilities from leased-in equipment as of June 30, 2020 is as follows: (U.S. Dollars in thousands) 2020 (excluding the six months ended June 30, 2020) $ 322 2021 644 2022 644 Total $ 1,610 Less imputed interest 94 Carrying value of operating lease liabilities $ 1,516 |
Other Finance Expenses (Tables)
Other Finance Expenses (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Other Finance Expenses | |
Summary of components of interest cost | Three Months Ended Six Months Ended June 30, June 30, (U.S. Dollars in thousands) 2020 2019 2020 2019 Interest expense $ 7,886 $ 12,529 $ 17,712 $ 25,530 Amortization of debt issuance cost and fair value of debt assumed 626 657 1,262 1,314 Total interest cost $ 8,512 $ 13,186 $ 18,974 $ 26,844 |
Summary of components of other finance expense | Three Months Ended Six Months Ended June 30, June 30, (U.S. Dollars in thousands) 2020 2019 2020 2019 Bank fees, charges $ 137 $ 224 $ 184 $ 281 Commitment fees 62 62 123 123 Total other finance expense $ 199 $ 286 $ 307 $ 404 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Derivative Instruments | |
Schedule of realized and unrealized gains and losses recognized in earnings | Three Months Ended Six Months Ended June 30, June 30, (U.S. Dollars in thousands) 2020 2019 2020 2019 Realized gain (loss): Interest rate swap contracts $ (191) $ 1,168 $ 12 $ 2,246 Foreign exchange forward contracts (109) (658) (109) (1,446) Total realized gain (loss): (300) 510 (97) 800 Unrealized gain (loss): Interest rate swap contracts (3,457) (11,521) (26,438) (18,619) Foreign exchange forward contracts 665 693 (247) 1,572 Total unrealized gain (loss): (2,792) (10,828) (26,685) (17,047) Total realized and unrealized gain (loss) on derivative instruments: $ (3,092) $ (10,318) $ (26,782) $ (16,247) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Measurements | |
Carrying amounts and estimated fair values of financial instruments | June 30, 2020 December 31, 2019 Carrying Fair Carrying Fair (U.S. Dollars in thousands) Amount Value Amount Value Financial assets: Cash and cash equivalents $ 41,436 $ 41,436 $ 43,525 $ 43,525 Current derivative assets: Interest rate swap contracts 39 39 674 674 Foreign exchange forward contracts — — 246 246 Non-current derivative assets: Interest rate swap contracts — — 648 648 Financial liabilities: Current derivative liabilities: Interest rate swap contracts 7,211 7,211 910 910 Non-current derivative liabilities: Interest rate swap contracts 23,987 23,987 5,133 5,133 Long-term debt, current and non-current 959,842 959,842 1,002,813 1,002,813 |
Schedule of assets and liabilities measured at fair value on recurring basis | Fair Value Measurements at Reporting Date Using Quoted Price in Active Significant Carrying Markets for Other Significant Value Identical Observable Unobservable June 30, Assets Inputs Inputs (U.S. Dollars in thousands) 2020 (Level 1) (Level 2) (Level 3) Financial assets: Cash and cash equivalents $ 41,436 $ 41,436 $ — $ — Current derivative assets: Interest rate swap contracts 39 — 39 — Financial liabilities: Current derivative liabilities: Interest rate swap contracts 7,211 — 7,211 — Non-current derivative liabilities: Interest rate swap contracts 23,987 — 23,987 — Long-term debt, current and non-current 959,842 — 959,842 — Fair Value Measurements at Reporting Date Using Quoted Price in Active Significant Carrying Markets for Other Significant Value Identical Observable Unobservable December 31, Assets Inputs Inputs (U.S. Dollars in thousands) 2019 (Level 1) (Level 2) (Level 3) Financial assets: Cash and cash equivalents $ 43,525 $ 43,525 $ — $ — Current derivative assets: Interest rate swap contracts 674 — 674 — Foreign exchange forward contracts 246 — 246 — Non-current derivative assets: Interest rate swap contracts 648 — 648 — Financial liabilities: Current derivative liabilities: Interest rate swap contracts 910 — 910 — Non-current derivative liabilities: Interest rate swap contracts 5,133 — 5,133 — Long-term debt, current and non-current 1,002,813 — 1,002,813 — |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Income Taxes | |
Significant Components of Current and Deferred Income Tax Expense Attributable to Income from Continuing Operations | Three Months Ended Six Months Ended June 30, June 30, (U.S. Dollars in thousands) 2020 2019 2020 2019 Income before income taxes $ 21,686 $ 8,179 $ 15,550 $ 21,051 Income tax (expense) (3) (3) (6) (6) Effective tax rate $ 0 % $ 0 % $ 0 % $ 0 % |
Vessels and Equipment (Tables)
Vessels and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Vessels and Equipment | |
Schedule of vessels and equipment | Vessels & Accumulated (U.S. Dollars in thousands) equipment depreciation Net Vessels Vessels, December 31, 2018 $ 2,130,423 $ (363,343) $ 1,767,080 Drydock costs 252 — 252 Disposals (1,663) 1,663 — Depreciation for the year — (89,844) (89,844) Vessels, December 31, 2019 $ 2,129,012 $ (451,524) $ 1,677,488 Additions 216 — 216 Drydock costs 2,666 — 2,666 Depreciation for the period — (44,824) (44,824) Vessels, June 30, 2020 $ 2,131,894 $ (496,348) $ 1,635,546 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Intangible Assets | |
Schedule of intangible assets | Above market Above market time charter time charter Total (U.S. Dollars in thousands) Tordis Knutsen Vigdis Knutsen intangibles Intangibles, December 31, 2018 $ 911 $ 980 $ 1,891 Amortization for the year (303) (302) (605) Intangibles, December 31, 2019 $ 608 $ 678 $ 1,286 Amortization for the period (152) (151) (303) Intangibles, June 30, 2020 $ 456 $ 527 $ 983 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Long-Term Debt | |
Schedule of Long-Term Debt | June 30, December 31, (U.S. Dollars in thousands) Vessel 2020 2019 $320 million loan facility Windsor Knutsen, Bodil Knutsen, Carmen Knutsen, Fortaleza Knutsen, Recife Knutsen, Ingrid Knutsen $ 267,305 $ 282,360 $55 million revolving credit facility 26,279 26,279 Hilda loan facility Hilda Knutsen 81,538 84,615 Torill loan facility Torill Knutsen 85,000 88,333 $172.5 million loan facility Dan Cisne, Dan Sabia 64,539 70,739 Raquel loan facility Raquel Knutsen 55,340 57,955 Tordis loan facility Tordis Knutsen 78,401 80,931 Vigdis loan facility Vigdis Knutsen 79,666 82,196 Lena loan facility Lena Knutsen 78,400 80,850 Brasil loan facility Brasil Knutsen 54,139 57,281 Anna loan facility Anna Knutsen 64,235 66,274 $25 million revolving credit facility 25,000 25,000 Total long-term debt $ 959,842 $ 1,002,813 Less: current installments 85,945 85,945 Less: unamortized deferred loan issuance costs 2,422 2,492 Current portion of long-term debt 83,523 83,453 Amounts due after one year 873,897 916,868 Less: unamortized deferred loan issuance costs 3,747 4,925 Long-term debt, less current installments, and unamortized deferred loan issuance costs $ 870,150 $ 911,943 |
Schedule of Partnership's Outstanding Debt Repayable | The Partnership’s outstanding debt of $959.8 million as of June 30, 2020 is repayable as follows: (U.S. Dollars in thousands) Period repayment Balloon repayment Remaining 2020 $ 42,973 — 2021 86,546 95,811 2022 71,210 236,509 2023 55,535 202,185 2024 13,873 123,393 2025 and thereafter 1,307 30,500 Total $ 271,444 $ 688,398 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Related Party Transactions | |
Schedule of Related Party Costs and Expenses | Net income (expense) from related parties included in the unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2020 and 2019 are as follows: Three Months Ended Six Months Ended June 30, June 30, (U.S. Dollars in thousands) 2020 2019 2020 2019 Statements of operations: Time charter and bareboat revenues: Time charter income from KNOT (1) $ 105 — $ 4,883 — Operating expenses: Technical and operational management fee from KNOT Management to Vessels (2) 1,703 1,736 3,406 3,479 Operating expenses from other related parties (3) 66 — 229 — General and administrative expenses: Administration fee from KNOT Management (4) 244 314 474 648 Administration fee from KOAS (4) 165 174 323 345 Administration fee from KOAS UK (4) 31 30 61 60 Administration and management fee from KNOT (5) 40 42 85 85 Total income (expense) $ (2,144) $ (2,296) $ 305 $ (4,617) At June 30, At December 31, (U.S. Dollars in thousands) 2020 2019 Balance Sheet: Vessels: Drydocking supervision fee from KNOT (6) $ 47 $ — Total $ 47 $ — (1) Time charter income from KNOT: On December 17, 2018, the Partnership's subsidiary that owns the Windsor Knutsen and Royal Dutch Shell ("Shell") agreed to suspend the vessel's time charter contract. The suspension period commenced March 4, 2019 and ended April 5, 2020, when the vessel was redelivered to Shell. During the suspension period, the Windsor Knutsen has been operating under a time charter contract with Knutsen Shuttle Tankers Pool AS on the same terms as the existing time charter contract with Shell. (2) Technical and operational management fee from KNOT Management or KNOT Management Denmark to Vessels : KNOT Management or KNOT Management Denmark provides technical and operational management of the vessels on time charter including crewing, purchasing, maintenance and other operational service. In addition, there is also a charge for 24-hour emergency response services provided by KNOT Management for all vessels managed by KNOT Management. (3) Operating expenses from other related parties : Simsea Real Operations AS, a company jointly owned by Trygve Seglem and by other shipping companies in Haugesund, provides simulation, operational training assessment and other certified maritime courses for seafarers. The cost is course fees for seafarers. Knutsen OAS Crewing AS, a subsidiary of TSSI, provides administrative services related to East European crew on vessels operating on time charter contracts. The cost is a fixed fee per month per East European crew onboard the vessel. AS Marin Elektro, a company that delivers electro installations on ships, offshore installations and thermophotgraphy. Marine Elektro is owned by Level Group AS, where Trygve Seglem and family together with members of the Group Management have significant influence. The transactions relates to drydocking and MSB service and thermophoto/IR inspections. (4) Administration fee from KNOT Management, Knutsen OAS Shipping AS (“KOAS”) and Knutsen OAS (UK) Ltd. (“KOAS UK”) : Administration costs include the compensation and benefits of KNOT Management’s management and administrative staff as well as other general and administration expenses. Some benefits are also provided by KOAS and KOAS UK . Net administration costs are total administration cost plus a 5% margin, reduced for the total fees for services delivered by the administration staffs and the estimated shareholder costs for KNOT that have not been allocated. As such, the level of net administration costs as a basis for the allocation can vary from year to year based on the administration and financing services offered by KNOT to all the vessels in its fleet each year. KNOT Management also charges each subsidiary a fixed annual fee for the preparation of the statutory financial statement. (5) Administration and management fee from KNOT Management and KNOT Management Denmark : For bareboat charters, the shipowner is not responsible for providing crewing or other operational services and the customer is responsible for all vessel operating expenses and voyage expenses. However, each of the vessels under bareboat charters is subject to a management and administration agreement with either KNOT Management or KNOT Management Denmark, pursuant to which these companies provide general monitoring services for the vessels in exchange for an annual fee. (6) Drydocking supervision fee from KNOT and KOAS : KNOT and KOAS provide supervision and hire out service personnel during drydocking of the vessels. The fee is calculated as a daily fixed fee. |
Schedule of amounts due from and due to related parties | At June 30, At December 31, (U.S. Dollars in thousands) 2020 2019 Balance Sheet: Trading balances due from KOAS $ 372 $ 687 Trading balances due from KNOT and affiliates 1,356 2,000 Amount due from related parties $ 1,728 $ 2,687 Trading balances due to KOAS $ (907) $ (840) Trading balances due to KNOT and affiliates (343) (372) Amount due to related parties $ (1,250) $ (1,212) |
Schedule of other current asset balances from related parties | At June 30, At December 31, (U.S. Dollars in thousands) 2020 2019 Balance Sheet: Trading balances due from KNOT and affiliates $ 353 $ 105 Trading balances due from KOAS 674 — Other current assets from related parties $ 1,027 $ 105 |
Schedule of Trade Accounts Payable to Related Parties | At June 30, At December 31, (U.S. Dollars in thousands) 2020 2019 Balance Sheet: Trading balances due to KOAS $ 290 $ 216 Trading balances due to KNOT and affiliates 732 685 Trade accounts payables to related parties $ 1,022 $ 901 |
Earnings per Unit and Cash Di_2
Earnings per Unit and Cash Distributions (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Earnings per Unit and Cash Distributions | |
Schedule of calculations of basic and diluted earnings per unit | Three Months Ended Six Months Ended June 30, June 30, (U.S. Dollars in thousands, except per unit data) 2020 2019 2020 2019 Net income $ 21,683 $ 8,176 $ 15,544 $ 21,045 Less: Series A Preferred unitholders’ interest in net income 1,800 1,800 3,600 3,600 Net income attributable to the unitholders of KNOT Offshore Partners LP 19,883 6,376 11,944 17,445 Less: Distributions (2) 18,034 18,034 36,068 36,068 Under (over) distributed earnings 1,849 (11,658) (24,124) (18,623) Under (over) distributed earnings attributable to: Common unitholders (3) 1,815 (11,442) (23,679) (18,279) General Partner 34 (215) (445) (344) Weighted average units outstanding (basic) (in thousands): Common unitholders 32,694 32,694 32,694 32,694 General Partner 615 615 615 615 Weighted average units outstanding (diluted) (in thousands): Common unitholders (4) 36,596 32,694 36,648 32,694 General Partner 615 615 615 615 Earnings per unit (basic) Common unitholders $ 0.597 $ 0.191 $ 0.359 $ 0.524 General Partner 0.597 0.191 0.359 0.524 Earnings per unit (diluted): Common unitholders (4) $ 0.582 $ 0.191 $ 0.359 $ 0.524 General Partner 0.597 0.191 0.359 0.524 Cash distributions declared and paid in the period per unit (5) 0.520 0.520 1.040 1.040 Subsequent event: Cash distributions declared and paid per unit relating to the period (6) 0.520 0.520 1.040 1.040 (1) Earnings per unit have been calculated in accordance with the cash distribution provisions set forth in the Partnership Agreement. (2) This refers to distributions made or to be made in relation to the period irrespective of the declaration and payment dates and based on the number of units outstanding at the record date. This includes cash distributions to the IDR holder (KNOT) for the three months ended June 30, 2020 and 2019 of $0.7 million and for the six months ended June 30, 2020 and 2019 of $1.4 million. (3) This includes the net income attributable to the IDR holder. The net income attributable to IDRs for the three months ended June 30, 2020 and 2019 was $0.7 million and for the six months ended June 30, 2020 and 2019 was $1.4 . (4) Diluted weighted average units outstanding and earnings per unit diluted for the three and six months ended June 30, 2020 and 2019 does not reflect any potential common shares relating to the convertible preferred units since the assumed issuance of any additional shares would be anti-dilutive. (5) Refers to cash distributions declared and paid during the period. (6) Refers to cash distributions declared and paid subsequent to the period end. |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Accrued Expenses | |
Schedule of accrued expenses | At June 30, At December 31, (U.S. Dollars in thousands) 2020 2019 Operating expenses $ 1,186 $ 855 Interest expenses 2,873 4,049 Other expenses 696 1,713 Total accrued expenses $ 4,755 $ 6,617 |
Description of Business (Detail
Description of Business (Details) $ in Millions | 1 Months Ended | |||
Apr. 30, 2013item | Aug. 20, 2020USD ($) | Jun. 30, 2020directoritem | Jun. 30, 2019item | |
Description of Business | ||||
Ownership interest in shuttle tankers acquired at formation (as a percent) | 100.00% | |||
Number of shuttle tankers acquired at formation | item | 4 | |||
Number of operating vessels | item | 16 | 16 | ||
Undrawn portion of revolving credit facilities | $ | $ 28.7 | |||
Number of members on board of directors electable by common unitholders | director | 4 | |||
Total number of board members | director | 7 |
Segment Information (Details)
Segment Information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020USD ($)itemsegment | Jun. 30, 2019USD ($)item | Jun. 30, 2020USD ($)item | Jun. 30, 2019USD ($)item | |
Segment Information | ||||
Number of reportable segments | segment | 1 | |||
Number of vessels | item | 16 | 16 | 16 | 16 |
Number of time charters | item | 12 | 12 | 12 | 12 |
Number of bareboat charters | item | 4 | 4 | 4 | 4 |
Revenues | $ 70,259 | $ 70,922 | $ 138,083 | $ 141,471 |
Eni Trading and Shipping S.p.A. | ||||
Segment Information | ||||
Revenues | 10,953 | 11,134 | 22,088 | 22,146 |
Fronape International Company, a subsidiary of Petrobras Transporte S.A. | ||||
Segment Information | ||||
Revenues | 11,249 | 11,249 | 22,498 | 22,378 |
Repsol Sinopec Brasil, S.A., a subsidiary of Repsol Sinopec Brasil, B.V. | ||||
Segment Information | ||||
Revenues | 9,285 | 9,282 | 15,178 | 18,463 |
Brazil Shipping I Limited, a subsidiary of Royal Dutch Shell | ||||
Segment Information | ||||
Revenues | 20,512 | 20,606 | 41,236 | 40,889 |
Galp Sinopec Brasil Services B.V. | ||||
Segment Information | ||||
Revenues | $ 8,881 | $ 8,881 | $ 17,763 | $ 17,584 |
Revenues [Member] | Eni Trading and Shipping S.p.A. | Customer Concentration Risk [Member] | ||||
Segment Information | ||||
Benchmark percentage of revenues and combined revenues concentration | 16.00% | 16.00% | 16.00% | 16.00% |
Revenues [Member] | Fronape International Company, a subsidiary of Petrobras Transporte S.A. | Customer Concentration Risk [Member] | ||||
Segment Information | ||||
Benchmark percentage of revenues and combined revenues concentration | 16.00% | 16.00% | 16.00% | 16.00% |
Revenues [Member] | Repsol Sinopec Brasil, S.A., a subsidiary of Repsol Sinopec Brasil, B.V. | Customer Concentration Risk [Member] | ||||
Segment Information | ||||
Benchmark percentage of revenues and combined revenues concentration | 13.00% | 13.00% | 11.00% | 13.00% |
Revenues [Member] | Brazil Shipping I Limited, a subsidiary of Royal Dutch Shell | Customer Concentration Risk [Member] | ||||
Segment Information | ||||
Benchmark percentage of revenues and combined revenues concentration | 29.00% | 29.00% | 30.00% | 29.00% |
Revenues [Member] | Galp Sinopec Brasil Services B.V. | Customer Concentration Risk [Member] | ||||
Segment Information | ||||
Benchmark percentage of revenues and combined revenues concentration | 13.00% | 13.00% | 13.00% | 12.00% |
Minimum | Revenues [Member] | Customer Concentration Risk [Member] | ||||
Segment Information | ||||
Benchmark percentage of revenues and combined revenues concentration | 10.00% | 10.00% | 10.00% | 10.00% |
Operating Leases (Details)
Operating Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Operating Leases | ||||
Revenue from contract with customers | $ 70,250 | $ 70,908 | $ 137,476 | $ 141,456 |
Other revenues | 9 | 14 | 607 | 15 |
Total revenues | 70,259 | 70,922 | 138,083 | 141,471 |
Time charter revenues (service element included) | ||||
Operating Leases | ||||
Revenue from contract with customers | 59,001 | 59,659 | 114,978 | 119,078 |
Bareboat revenues | ||||
Operating Leases | ||||
Revenue from contract with customers | $ 11,249 | $ 11,249 | $ 22,498 | $ 22,378 |
Operating Leases - Minimum Cont
Operating Leases - Minimum Contractual Future Revenues (Details) $ in Thousands | Jun. 30, 2020USD ($) |
Minimum contractual future revenues | |
2020 (excluding the six months ended June 30, 2020) | $ 136,220 |
2021 | 248,418 |
2022 | 167,739 |
2023 | 63,918 |
2024 | 20,093 |
2025 | 8,581 |
Total | $ 644,969 |
Operating Leases - Additional I
Operating Leases - Additional Information (Details) | 6 Months Ended |
Jun. 30, 2020 | |
Fortaleza Knutsen | |
Operating Leases | |
Current bareboat charter expiration year | 2023 |
Recife Knutsen | |
Operating Leases | |
Current bareboat charter expiration year | 2023 |
Bodil Knutsen | |
Operating Leases | |
Current time charter expiration year | 2021 |
Time charter expiration year under options to extend | 2024 |
Windsor Knutsen | |
Operating Leases | |
Time charter expiration year under options to extend | 2023 |
Date of suspension of time charter | 2020-04 |
Windsor Knutsen | Vessel | |
Operating Leases | |
Time charter expiration year under options to extend | 2020 |
Carmen Knutsen | |
Operating Leases | |
Current time charter expiration year | 2023 |
Time charter expiration year under options to extend | 2026 |
Hilda Knutsen | |
Operating Leases | |
Current time charter expiration year | 2022 |
Time charter expiration year under options to extend | 2025 |
Torill Knutsen | |
Operating Leases | |
Current time charter expiration year | 2024 |
Dan Cisne | |
Operating Leases | |
Current bareboat charter expiration year | 2023 |
Dan Sabia | |
Operating Leases | |
Current bareboat charter expiration year | 2024 |
Ingrid Knutsen | |
Operating Leases | |
Current time charter expiration year | 2024 |
Time charter expiration year under options to extend | 2029 |
Raquel Knutsen | |
Operating Leases | |
Current time charter expiration year | 2025 |
Time charter expiration year under options to extend | 2030 |
Tordis Knutsen | |
Operating Leases | |
Current time charter expiration year | 2022 |
Time charter expiration year under options to extend | 2032 |
Vigdis Knutsen | |
Operating Leases | |
Current time charter expiration year | 2022 |
Time charter expiration year under options to extend | 2032 |
Lena Knutsen | |
Operating Leases | |
Current time charter expiration year | 2022 |
Time charter expiration year under options to extend | 2032 |
Brasil Knutsen | |
Operating Leases | |
Current time charter expiration year | 2022 |
Time charter expiration year under options to extend | 2028 |
Anna Knutsen | |
Operating Leases | |
Current time charter expiration year | 2022 |
Time charter expiration year under options to extend | 2028 |
Operating Leases - Lease obliga
Operating Leases - Lease obligations (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2020 | Dec. 31, 2019 | |
Operating Leases | |||
Right-of-use asset | $ 1,516 | $ 1,516 | $ 1,799 |
Lease liability | 1,516 | 1,516 | |
Operating lease payments | $ 200 | $ 300 | |
Weighted average discount rate (as a percent) | 4.80% | 4.80% | |
Weighted average remaining lease term | 2 years 6 months | 2 years 6 months | |
Partnership's lease liabilities from leased-in equipment | |||
2020 (excluding the six months ended June 30, 2020) | $ 322 | $ 322 | |
2021 | 644 | 644 | |
2022 | 644 | 644 | |
Total | 1,610 | 1,610 | |
Less imputed interest | 94 | 94 | |
Carrying value of operating lease liabilities | $ 1,516 | $ 1,516 |
Other Finance Expenses - Compon
Other Finance Expenses - Components Interest Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Other Finance Expenses | ||||
Interest expense | $ 7,886 | $ 12,529 | $ 17,712 | $ 25,530 |
Amortization of debt issuance cost and fair value of debt assumed | 626 | 657 | 1,262 | 1,314 |
Total interest cost | $ 8,512 | $ 13,186 | $ 18,974 | $ 26,844 |
Other Finance Expenses - Comp_2
Other Finance Expenses - Components of other finance expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Other Finance Expenses | ||||
Bank fees, charges | $ 137 | $ 224 | $ 184 | $ 281 |
Commitment fees | 62 | 62 | 123 | 123 |
Total other finance expense | $ 199 | $ 286 | $ 307 | $ 404 |
Derivative Instruments - Additi
Derivative Instruments - Additional Information (Details) $ in Thousands, kr in Millions | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2020USD ($) | Jun. 30, 2020NOK (kr) | Dec. 31, 2019USD ($) | Dec. 31, 2019NOK (kr) | |
Interest Rate Swap Contracts [Member] | ||||
Derivative Instruments | ||||
Carrying amount of derivative liabilities | $ 31,200 | $ 4,700 | ||
Notional amount | $ 627,100 | 561,800 | ||
Foreign Exchange Forward Contracts [Member] | ||||
Derivative Instruments | ||||
Notional amount | kr | kr 0 | kr 46.1 | ||
Carrying amount of derivative asset | $ 200 |
Derivative Instruments - Realiz
Derivative Instruments - Realized and Unrealized Gains and Losses Recognized in Earnings (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Net gain (loss) on derivative instruments | ||||
Realized gain (loss) | $ (300) | $ 510 | $ (97) | $ 800 |
Unrealized gain (loss) | (2,792) | (10,828) | (26,685) | (17,047) |
Total realized and unrealized gain (loss) on derivative instruments | (3,092) | (10,318) | (26,782) | (16,247) |
Interest Rate Swap Contracts [Member] | ||||
Net gain (loss) on derivative instruments | ||||
Realized gain (loss) | (191) | 1,168 | 12 | 2,246 |
Unrealized gain (loss) | (3,457) | (11,521) | (26,438) | (18,619) |
Foreign Exchange Forward Contracts [Member] | ||||
Net gain (loss) on derivative instruments | ||||
Realized gain (loss) | (109) | (658) | (109) | (1,446) |
Unrealized gain (loss) | $ 665 | $ 693 | $ (247) | $ 1,572 |
Fair Value Measurements - Carry
Fair Value Measurements - Carrying Amounts and Estimated Fair Values of Partnership 's Financial Instruments (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Financial assets: | ||
Current derivative assets | $ 39 | $ 920 |
Non-current derivative assets | 648 | |
Financial liabilities: | ||
Current derivative liabilities | 7,211 | 910 |
Non-current derivative liabilities | 23,987 | 5,133 |
Carrying Amount [Member] | ||
Financial assets: | ||
Cash and cash equivalents | 41,436 | 43,525 |
Financial liabilities: | ||
Long-term debt, current and non-current | 959,842 | 1,002,813 |
Carrying Amount [Member] | Interest Rate Swap Contracts [Member] | ||
Financial assets: | ||
Current derivative assets | 39 | 674 |
Non-current derivative assets | 648 | |
Financial liabilities: | ||
Current derivative liabilities | 7,211 | 910 |
Non-current derivative liabilities | 23,987 | 5,133 |
Carrying Amount [Member] | Foreign Exchange Forward Contracts [Member] | ||
Financial assets: | ||
Current derivative assets | 246 | |
Fair Value [Member] | ||
Financial assets: | ||
Cash and cash equivalents | 41,436 | 43,525 |
Financial liabilities: | ||
Long-term debt, current and non-current | 959,842 | 1,002,813 |
Fair Value [Member] | Interest Rate Swap Contracts [Member] | ||
Financial assets: | ||
Current derivative assets | 39 | 674 |
Non-current derivative assets | 648 | |
Financial liabilities: | ||
Current derivative liabilities | 7,211 | 910 |
Non-current derivative liabilities | $ 23,987 | 5,133 |
Fair Value [Member] | Foreign Exchange Forward Contracts [Member] | ||
Financial assets: | ||
Current derivative assets | $ 246 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Fair Value, assets and liabilities measured on recurring and nonrecurring basis | ||
Deferred debt issuance cost | $ 6,200,000 | $ 7,400,000 |
Restricted cash | $ 0 | $ 0 |
Interest Rate Swap Contracts [Member] | ||
Fair Value, assets and liabilities measured on recurring and nonrecurring basis | ||
Weighted average remaining terms | 3 years 7 months 6 days | 4 years |
Interest Rate Swap Contracts [Member] | Minimum | ||
Fair Value, assets and liabilities measured on recurring and nonrecurring basis | ||
Notional amount per contract | $ 7,700,000 | $ 8,500,000 |
Fixed interest rate | 0.71% | 1.38% |
Interest Rate Swap Contracts [Member] | Maximum | ||
Fair Value, assets and liabilities measured on recurring and nonrecurring basis | ||
Notional amount per contract | $ 50,000,000 | $ 50,000,000 |
Fixed interest rate | 2.90% | 2.90% |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value Hierarchy (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Financial assets: | ||
Current derivative assets | $ 39 | $ 920 |
Non-current derivative assets | 648 | |
Financial liabilities: | ||
Current derivative liabilities | 7,211 | 910 |
Non-current derivative liabilities | 23,987 | 5,133 |
Carrying Amount [Member] | ||
Financial assets: | ||
Cash and cash equivalents | 41,436 | 43,525 |
Financial liabilities: | ||
Long-term debt, current and non-current | 959,842 | 1,002,813 |
Fair Value [Member] | ||
Financial assets: | ||
Cash and cash equivalents | 41,436 | 43,525 |
Financial liabilities: | ||
Long-term debt, current and non-current | 959,842 | 1,002,813 |
Foreign Exchange Forward Contracts [Member] | Carrying Amount [Member] | ||
Financial assets: | ||
Current derivative assets | 246 | |
Foreign Exchange Forward Contracts [Member] | Fair Value [Member] | ||
Financial assets: | ||
Current derivative assets | 246 | |
Interest Rate Swap Contracts [Member] | Carrying Amount [Member] | ||
Financial assets: | ||
Current derivative assets | 39 | 674 |
Non-current derivative assets | 648 | |
Financial liabilities: | ||
Current derivative liabilities | 7,211 | 910 |
Non-current derivative liabilities | 23,987 | 5,133 |
Interest Rate Swap Contracts [Member] | Fair Value [Member] | ||
Financial assets: | ||
Current derivative assets | 39 | 674 |
Non-current derivative assets | 648 | |
Financial liabilities: | ||
Current derivative liabilities | 7,211 | 910 |
Non-current derivative liabilities | 23,987 | 5,133 |
Quoted Price in Active Markets for Identical Assets (Level 1) [Member] | Fair Value [Member] | ||
Financial assets: | ||
Cash and cash equivalents | 41,436 | 43,525 |
Significant Other Observable Inputs (Level 2) [Member] | Fair Value [Member] | ||
Financial liabilities: | ||
Long-term debt, current and non-current | 959,842 | 1,002,813 |
Significant Other Observable Inputs (Level 2) [Member] | Foreign Exchange Forward Contracts [Member] | Fair Value [Member] | ||
Financial assets: | ||
Current derivative assets | 246 | |
Significant Other Observable Inputs (Level 2) [Member] | Interest Rate Swap Contracts [Member] | Fair Value [Member] | ||
Financial assets: | ||
Current derivative assets | 39 | 674 |
Non-current derivative assets | 648 | |
Financial liabilities: | ||
Current derivative liabilities | 7,211 | 910 |
Non-current derivative liabilities | $ 23,987 | $ 5,133 |
Fair Value Measurements - Fai_2
Fair Value Measurements - Fair Value transfers into or out of Level 1, Level 2 or Level 3 (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Fair Value Measurements | ||
Transfers amount Fair value assets level 1 to level 2 | $ 0 | $ 0 |
Transfers amount Fair value assets level 2 to level 1 | 0 | 0 |
Transfers amount Fair value liabilities level 1 to level 2 | 0 | 0 |
Transfers amount Fair value liabilities level 2 to level 1 | 0 | 0 |
Transfers amount Fair value assets level 3 to level 1 | 0 | 0 |
Transfers amount Fair value assets level 3 to level 2 | 0 | 0 |
Transfers amount Fair value liabilities level 3 to level 1 | 0 | 0 |
Transfers amount Fair value liabilities level 3 to level 2 | $ 0 | $ 0 |
Income Taxes - Significant Comp
Income Taxes - Significant Components of Current and Deferred Income Tax Expense Attributable to Income from Continuing Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Income Taxes | |||||
Income before income taxes | $ 21,686 | $ 8,179 | $ 15,550 | $ 21,051 | |
Income tax expense (Note 8) | $ (3) | $ (3) | $ (6) | $ (6) | |
Effective tax rate | 0.00% | 0.00% | 0.00% | 0.00% | |
Deferred tax assets recognized | $ 0 | $ 0 | $ 0 |
Income Taxes - Additional infor
Income Taxes - Additional information (Details) - USD ($) $ in Millions | Jan. 01, 2020 | Jan. 01, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Jun. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2017 | Mar. 31, 2013 |
Income Taxes | ||||||||
Entrance tax | $ 3 | |||||||
Entrance tax, annual decline in gain | 20.00% | |||||||
Ordinary income tax rate | 22.00% | 22.00% | ||||||
Income tax rate, deferred tax liabilities | 22.00% | 22.00% | ||||||
Entrance tax payable, current | $ 0.1 | $ 0.1 | ||||||
Entrance tax payable, non current | $ 0.3 | $ 0.4 | ||||||
Entrance tax payable related to acquisition | $ 0.1 |
Vessels and Equipment - Pledged
Vessels and Equipment - Pledged Assets (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Vessels and Equipment | ||
Book value of assets pledged as security for long-term debt | $ 1,636 | $ 1,677 |
Vessels and Equipment - Schedul
Vessels and Equipment - Schedule of Property Plant and Equipment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Vessels & equipment - Activity | |||||
Vessels and equipment, beginning balance | $ 2,129,012 | $ 2,130,423 | $ 2,130,423 | ||
Additions | 216 | ||||
Drydock costs | 2,666 | 252 | |||
Disposals | (1,663) | ||||
Vessels and equipment, ending balance | $ 2,131,894 | 2,131,894 | 2,129,012 | ||
Accumulated depreciation - Activity | |||||
Accumulated depreciation, beginning balance | (451,524) | (363,343) | (363,343) | ||
Accumulated depreciation, disposals | 1,663 | ||||
Depreciation for the period | (22,451) | $ (22,429) | (44,824) | (44,860) | (89,844) |
Accumulated depreciation, ending balance | (496,348) | (496,348) | (451,524) | ||
Net Vessels - Activity | |||||
Net vessel, beginning balance | 1,677,488 | 1,767,080 | 1,767,080 | ||
Additions | 216 | ||||
Drydock costs | 2,666 | 252 | |||
Depreciation for the period | (22,451) | $ (22,429) | (44,824) | $ (44,860) | (89,844) |
Net vessel, ending balance | $ 1,635,546 | $ 1,635,546 | $ 1,677,488 |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Intangible Assets | ||
Intangibles assets, beginning balance | $ 1,286 | $ 1,891 |
Amortization for the year | (303) | (605) |
Intangibles assets, ending balance | 983 | 1,286 |
Above Market Value Of Time Charter [Member] | Tordis Knutsen | ||
Intangible Assets | ||
Intangibles assets, beginning balance | 608 | 911 |
Amortization for the year | (152) | (303) |
Intangibles assets, ending balance | 456 | 608 |
Above Market Value Of Time Charter [Member] | Vigdis Knutsen | ||
Intangible Assets | ||
Intangibles assets, beginning balance | 678 | 980 |
Amortization for the year | (151) | (302) |
Intangibles assets, ending balance | $ 527 | $ 678 |
Intangible Assets - Additional
Intangible Assets - Additional information (Details) - Above Market Value Of Time Charter [Member] | 6 Months Ended |
Jun. 30, 2020 | |
Tordis Knutsen | |
Intangible Assets | |
Remaining term of the contract | 4 years 9 months 18 days |
Vigdis Knutsen | |
Intangible Assets | |
Remaining term of the contract | 4 years 10 months 24 days |
Long-Term Debt - Components (De
Long-Term Debt - Components (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Long-Term Debt | ||
Long-term debt | $ 959,842 | $ 1,002,813 |
Less: current installments | 85,945 | 85,945 |
Less: unamortized deferred loan issuance costs | 2,422 | 2,492 |
Current portion of long-term debt | 83,523 | 83,453 |
Amounts due after one year | 873,897 | 916,868 |
Less: unamortized deferred loan issuance costs | 3,747 | 4,925 |
Long-term debt, less current installments, and unamortized deferred loan issuance costs | 870,150 | 911,943 |
$320 million loan facility | ||
Long-Term Debt | ||
Long-term debt | 267,305 | 282,360 |
Debt instrument face amount | 320,000 | 320,000 |
$55 million revolving credit facility | ||
Long-Term Debt | ||
Long-term debt | 26,279 | 26,279 |
Debt instrument face amount | 55,000 | 55,000 |
Hilda Loan Facility [Member] | ||
Long-Term Debt | ||
Long-term debt | 81,538 | 84,615 |
Torill Loan Facility [Member] | ||
Long-Term Debt | ||
Long-term debt | 85,000 | 88,333 |
$172.5 million loan facility | ||
Long-Term Debt | ||
Long-term debt | 64,539 | 70,739 |
Debt instrument face amount | 172,500 | 172,500 |
Raquel Loan Facility [Member] | ||
Long-Term Debt | ||
Long-term debt | 55,340 | 57,955 |
Tordis Loan Facility [Member] | ||
Long-Term Debt | ||
Long-term debt | 78,401 | 80,931 |
Vigdis Loan Facility [Member] | ||
Long-Term Debt | ||
Long-term debt | 79,666 | 82,196 |
Lena Loan Facility [Member] | ||
Long-Term Debt | ||
Long-term debt | 78,400 | 80,850 |
Brasil Loan Facility [Member] | ||
Long-Term Debt | ||
Long-term debt | 54,139 | 57,281 |
Anna loan facility | ||
Long-Term Debt | ||
Long-term debt | 64,235 | 66,274 |
$25 million revolving credit facility | ||
Long-Term Debt | ||
Long-term debt | 25,000 | 25,000 |
Debt instrument face amount | $ 25,000 | $ 25,000 |
Long-Term Debt - Summary of Par
Long-Term Debt - Summary of Partnership's Outstanding Debt Repayable (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Debt Instrument, Redemption [Line Items] | ||
Total long-term debt | $ 959,842 | $ 1,002,813 |
Periodic repayment | ||
Debt Instrument, Redemption [Line Items] | ||
Remaining 2020 | 42,973 | |
2021 | 86,546 | |
2022 | 71,210 | |
2023 | 55,535 | |
2024 | 13,873 | |
2025 and thereafter | 1,307 | |
Total long-term debt | 271,444 | |
Balloon Repayment [Member] | ||
Debt Instrument, Redemption [Line Items] | ||
2021 | 95,811 | |
2022 | 236,509 | |
2023 | 202,185 | |
2024 | 123,393 | |
2025 and thereafter | 30,500 | |
Total long-term debt | $ 688,398 |
Long-Term Debt - Additional Inf
Long-Term Debt - Additional Information (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Long-Term Debt | |
Outstanding debt | $ 959.8 |
Partnership's Loan Agreements [Member] | London Interbank Offered Rate (LIBOR) [Member] | Minimum | |
Long-Term Debt | |
Long-term debt, fixed margin percentage | 1.80% |
Partnership's Loan Agreements [Member] | London Interbank Offered Rate (LIBOR) [Member] | Maximum | |
Long-Term Debt | |
Long-term debt, fixed margin percentage | 2.40% |
Related Party Transactions - Re
Related Party Transactions - Related Party Costs and Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Related Party Transaction | ||||
Operating expenses from other related parties | $ 66 | $ 229 | ||
Total income (expenses) | (2,144) | $ (2,296) | 305 | $ (4,617) |
KNOT Management | ||||
Related Party Transaction | ||||
Administration fee | 244 | 314 | 474 | 648 |
KOAS [Member] | ||||
Related Party Transaction | ||||
Administration fee | 165 | 174 | $ 323 | 345 |
Margin rate on administration cost | 5.00% | |||
KOAS UK [Member] | ||||
Related Party Transaction | ||||
Administration fee | 31 | 30 | $ 61 | 60 |
Margin rate on administration cost | 5.00% | |||
KNOT [Member] | ||||
Related Party Transaction | ||||
Time charter income from KNOT | 105 | $ 4,883 | ||
Technical and operational management fee from KNOT Management to Vessels | 1,703 | 1,736 | 3,406 | 3,479 |
Administration fee | $ 40 | $ 42 | $ 85 | $ 85 |
Related Party Transactions - Sc
Related Party Transactions - Schedule of Dues Payables to Related Party (Detail) $ in Thousands | Jun. 30, 2020USD ($) |
Related Party Transaction | |
Drydocking supervision fee | $ 47 |
KNOT [Member] | |
Related Party Transaction | |
Drydocking supervision fee | $ 47 |
Related Party Transactions - Am
Related Party Transactions - Amounts Due from and Due to Related Parties (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Related Party Transaction | ||
Amount due from related parties | $ 1,728 | $ 2,687 |
Amount due to related parties | (1,250) | (1,212) |
KOAS [Member] | ||
Related Party Transaction | ||
Amount due from related parties | 372 | 687 |
Amount due to related parties | (907) | (840) |
KNOT and affiliates | ||
Related Party Transaction | ||
Amount due from related parties | 1,356 | 2,000 |
Amount due to related parties | $ (343) | $ (372) |
Related Party Transactions - Tr
Related Party Transactions - Trade Accounts Payable (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Related Party Transaction | ||
Trade accounts payables to related parties | $ 1,022 | $ 901 |
KOAS [Member] | ||
Related Party Transaction | ||
Trade accounts payables to related parties | 290 | 216 |
KNOT and affiliates | ||
Related Party Transaction | ||
Trade accounts payables to related parties | $ 732 | $ 685 |
Related Party Transactions - Ot
Related Party Transactions - Other current assets (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Related Party Transaction [Line Items] | ||
Other current assets from related parties | $ 1,027 | $ 105 |
KNOT and affiliates | ||
Related Party Transaction [Line Items] | ||
Trading balances | 353 | $ 105 |
KOAS [Member] | ||
Related Party Transaction [Line Items] | ||
Trading balances | $ 674 |
Commitments and Contingencies -
Commitments and Contingencies - Assets Pledged, Claims and Legal Proceedings (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Commitments and Contingencies | ||
Book value of assets pledged as security for long-term debt and interest rate swap obligations | $ 1,636 | $ 1,677 |
Commitments and Contingencies_2
Commitments and Contingencies - Insurance (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Commitments and Contingencies | |
Insurance coverage deductible amount per vessel | $ 150 |
Deductible period under business interruption insurance | 14 days |
Period of coverage under business interruption insurance | 180 days |
Limit of protection and indemnity insurance for pollution, per vessel per incident | $ 1,000,000 |
Earnings per Unit and Cash Di_3
Earnings per Unit and Cash Distributions - Calculations of Basic and Diluted Earnings per Unit (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Earnings per Unit and Cash Distributions | ||||
Net income | $ 21,683 | $ 8,176 | $ 15,544 | $ 21,045 |
Less: Series A Preferred unitholders' interest in net income | 1,800 | 1,800 | 3,600 | 3,600 |
Net income attributable to the unitholders of KNOT Offshore Partners LP | 19,883 | 6,376 | 11,944 | 17,445 |
Less: Distributions | 18,034 | 18,034 | 36,068 | 36,068 |
Under (over) distributed earnings | $ 1,849 | $ (11,658) | $ (24,124) | $ (18,623) |
Weighted average units outstanding (basic): | ||||
General Partner | 615 | 615 | 615 | 615 |
Weighted average units outstanding (diluted): | ||||
General Partner | 615 | 615 | 615 | 615 |
Earnings per unit (basic): | ||||
General Partner | $ 0.597 | $ 0.191 | $ 0.359 | $ 0.524 |
Earnings per unit (diluted): | ||||
General Partner | 0.597 | 0.191 | 0.359 | 0.524 |
Cash distributions declared and paid in the period per unit | 0.520 | 0.520 | 1.040 | 1.040 |
Subsequent event: Cash distributions declared and paid per unit relating to the period | $ 0.520 | $ 0.520 | $ 1.040 | $ 1.040 |
Common Units [Member] | ||||
Earnings per Unit and Cash Distributions | ||||
Net income attributable to the unitholders of KNOT Offshore Partners LP | $ 19,515 | $ 6,258 | $ 11,723 | $ 17,123 |
Weighted average units outstanding (basic): | ||||
Weighted average units outstanding, basic | 32,694 | 32,694 | 32,694 | 32,694 |
Weighted average units outstanding (diluted): | ||||
Weighted average units outstanding, diluted | 36,596 | 32,694 | 36,648 | 32,694 |
Earnings per unit (basic): | ||||
Earnings per unit (basic) | $ 0.597 | $ 0.191 | $ 0.359 | $ 0.524 |
Earnings per unit (diluted): | ||||
Earnings per unit (diluted) | $ 0.582 | $ 0.191 | $ 0.359 | $ 0.524 |
Limited Partner [Member] | Common Units [Member] | ||||
Earnings per Unit and Cash Distributions | ||||
Under (over) distributed earnings | $ 1,815 | $ (11,442) | $ (23,679) | $ (18,279) |
General Partner Unit [Member] | ||||
Earnings per Unit and Cash Distributions | ||||
Net income attributable to the unitholders of KNOT Offshore Partners LP | 368 | 118 | 221 | 322 |
Under (over) distributed earnings | 34 | (215) | (445) | (344) |
IDR Holders | ||||
Earnings per Unit and Cash Distributions | ||||
Net income | 700 | 700 | 1,400 | 1,400 |
Less: Distributions | $ 700 | $ 700 | $ 1,400 | $ 1,400 |
Earnings per Unit and Cash Di_4
Earnings per Unit and Cash Distributions - Additional Information (Details) - shares | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2020 | |
Series A Preferred Stock | |||||
Distribution Made to Limited Partner | |||||
Potentially dilutive preferred units | 3,750,000 | ||||
IDR Holders | Maximum | |||||
Distribution Made to Limited Partner | |||||
Required percentage of operating surplus distribution | 48.00% | 48.00% | 48.00% | 48.00% | |
Common Units [Member] | Public | |||||
Distribution Made to Limited Partner | |||||
Number of common units and subordinated units outstanding | 24,036,226 | 24,036,226 | |||
Common Units [Member] | KNOT [Member] | |||||
Distribution Made to Limited Partner | |||||
Number of common units and subordinated units outstanding | 8,567,500 | 8,567,500 | |||
Public | Partnership [Member] | |||||
Distribution Made to Limited Partner | |||||
Percentage of limited partner interest | 73.50% | ||||
KNOT [Member] | Partnership [Member] | |||||
Distribution Made to Limited Partner | |||||
Percentage of limited partner interest | 26.20% | ||||
KNOT [Member] | KNOT [Member] | |||||
Distribution Made to Limited Partner | |||||
Number of general partner units outstanding | 615,117 | 615,117 | |||
KNOT [Member] | Common Units [Member] | KNOT [Member] | |||||
Distribution Made to Limited Partner | |||||
Number of common units and subordinated units outstanding | 90,368 | 90,368 | |||
KNOT [Member] | Partnership [Member] | |||||
Distribution Made to Limited Partner | |||||
Percentage of limited partner interest | 0.30% | ||||
Percentage of general partner interest | 1.85% |
Accrued Expenses - Schedule of
Accrued Expenses - Schedule of Accrued Expenses (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Accrued Expenses | ||
Operating expenses | $ 1,186 | $ 855 |
Interest expenses | 2,873 | 4,049 |
Other expenses | 696 | 1,713 |
Total accrued expenses | $ 4,755 | $ 6,617 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event [Member] $ / shares in Units, $ in Millions | Aug. 13, 2020USD ($)$ / shares |
Subsequent Events | |
Cash distributions paid in the period per unit | $ / shares | $ 0.52 |
Series A Preferred Unit [Member] | |
Subsequent Events | |
Cash distributions | $ | $ 1.8 |
Cash distribution paid date | Aug. 13, 2020 |