KNOT Offshore Partners LP Q1 FY2026 earnings call

• Financial and Distribution Update • Q1 2026 delivered solid financial results with strong vessel utilization after scheduled dry dockings for two vessels, Tuva Knudsen and Bodal Knudsen • After quarter-end, the partnership declared an increased cash distribution of 5 cents per common unit, paid in May 2026; this marks the first distribution increase after an extended period of low payouts, during which the firm restored charter coverage, improved liquidity, completed multiple refinancings, and finished required dry dockings • Available liquidity increased by $3.7 million from the end of 2025, with the average margin on floating rate debt at 2.22% over SOFA for the quarter

• Operational and Commercial Updates • Effective January 1, 2026, the useful life estimate for the partnership's vessels was revised from 23 years to 20 years to reflect long-term market trends; this will increase quarterly depreciation (a non-cash expense) but does not prevent vessels from operating beyond 20 years • Multiple new and extended charters were secured: Hilde Knudsen's time charter with Shell was extended through March 2027, followed by a new 3-year fixed (plus up to 3 additional years of options) time charter with ENI starting Q3 2027; Total Energies extended Anna Knudsen's charter by one year to May 2027; a 2-year fixed time charter for Recife Knudsen with Transpetro was agreed to start Q3 2026 • The partnership's total 19-vessel fleet has an average age of 10.5 years as of quarter-end, with a current fixed contract backlog of $858 million averaging 2.4 years; the backlog grows longer if all charterer options are exercised • Management expects most charterer options to be exercised given current strong market conditions, with very limited open vessel time booked through coming quarters

• Balance Sheet and Debt Strategy • The partnership continues to repay roughly $90 million in debt per year, a pace management considers prudent for a depreciating asset base • Upcoming upcoming debt maturities are a $220 million facility in September 2026 and a $65 million facility in October 2026; management notes it has historically had access to a wide pool of lenders and attractive bank financing even during weaker market conditions

• Strategic Growth Plan • Drop-down acquisitions from the partnership's sponsor have been the primary growth path historically, and will continue to be used to replenish and rejuvenate the fleet as older vessels age out of service • Management expects to pursue accretive drop-down acquisitions over the next 4-5 years, subject to attractive terms and approval from the conflicts committee

• Market Outlook • Management reports sustained tightening in both the Brazilian and North Sea shuttle tanker markets, driven by new FPSO startups, project ramp-ups, expansions, and new offshore developments; sustained growth in shuttle tanker service demand has tightened the overall supply-demand balance

This earning call does not break down financial performance into separate product segments. Consolidated firm-level results for Q1 2026 are: total revenues of $92 million, operating income of $14.7 million, net income of $2.6 million, and adjusted EBITDA of $56.5 million. As of March 31, 2026, total available liquidity was $140.7 million, consisting of $92.7 million in cash and cash equivalents and $48 million in undrawn credit capacity, which is $3.7 million higher than the December 31, 2025 level. Overall vessel utilization was 92% after accounting for scheduled dry docking, or 97.2% excluding scheduled dry docking downtime.

• Management did not provide specific numerical guidance for future distributions, but reaffirmed that accretive drop-down acquisitions combined with the current strong charter market environment are expected to support multiple gradual, sustainable distribution increases over coming quarters and years
• The partnership expects to continue pursuing accretive drop-down growth from its sponsor over the next 4 to 5 years, contingent on attractive transaction terms and conflicts committee approval
• Management maintains the view that most outstanding charterer options are likely to be exercised due to the current strength of the shuttle tanker market
• No upward or downward revisions to prior broad market or financial guidance were provided in this call

• All forward-looking statements (including those related to future distributions, refinancing success, drop-down transactions, and market conditions) are inherently based on assumptions that are subject to significant uncertainties and contingencies, many of which are outside of the partnership's control; actual results may differ materially from implied or stated forward-looking projections, and the partnership does not undertake an obligation to update forward-looking statements after the call date
• Refinancing of upcoming debt maturities cannot be guaranteed, even with the partnership's positive historical experience accessing bank financing
• Geopolitical uncertainty (such as the Mideast conflict affecting the Strait of Hormuz) creates near-term caution for offshore development projects, with unpredictable impacts on medium and long-term market demand
• Global shuttle tanker supply levels depend on retirement rates of aging fleets owned by third parties, which create uncertainty for future supply-demand balance

Q: With the partnership's strong cash and liquidity position, what magnitude of gradual distribution increases should investors expect going forward, beyond the current 5 cent per unit increase? / A: Distribution levels are determined by the board of directors quarterly, after the end of each fiscal quarter. Management cannot provide a specific number for future distribution increases ahead of the board's decision following Q2 2026 results.

Q: Given current Mideast conflict shifting oil sourcing away from the Gulf region, do you expect permanently higher offshore production development even after the Strait of Hormuz reopens, and will this improve your market dynamics? / A: Management does not have a specific view on medium to long-term impacts, and notes that near-term caution is widespread among industry participants amid volatile daily news flow. Other unrelated market factors will also impact long-term development trajectories, so no definitive outlook can be given.

Q: How does the change to vessel useful life estimates align with global shuttle tanker fleet aging and order book trends, and could aging fleets further tighten supply? / A: Management notes the new-build order book is sized to meet new demand growth from expanding offshore projects, rather than just replacing retiring vessels. Management confirmed that widespread aging of third-party fleets does support further tightening of global shuttle tanker supply.

Q: What caused the sequential decline in revenues, was it only from scheduled dry docking downtime or also from charter rollovers? / A: The sequential revenue decline is attributable to the planned dry docking schedule, combined with differences in contract terms between the comparison periods.