Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2022 shares | |
Document And Entity Information | |
Document Type | 20-F |
Document Period End Date | Dec. 31, 2022 |
Entity File Number | 001-35866 |
Entity Registrant Name | KNOT Offshore Partners LP |
Entity Central Index Key | 0001564180 |
Document Registration Statement | false |
Document Fiscal Year Focus | 2022 |
Document Fiscal Period Focus | FY |
Title of 12(b) Security | Common units representing limited partner interests |
Trading Symbol | KNOP |
Security Exchange Name | NYSE |
Document Annual Report | true |
Document Transition Report | false |
Document Shell Company Report | false |
Entity Incorporation, State or Country Code | 1T |
Entity Address, Address Line One | 2 Queens Cross |
Entity Address, City or Town | Aberdeen |
Entity Address, Postal Zip Code | AB15 4YB |
Entity Address, Country | GB |
Current Fiscal Year End Date | --12-31 |
Entity Common Stock, Shares Outstanding | 34,045,081 |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Accelerated Filer |
Entity Emerging Growth Company | false |
ICFR Auditor Attestation Flag | true |
Document Accounting Standard | U.S. GAAP |
Entity Shell Company | false |
Amendment Flag | false |
Auditor Name | Ernst & Young AS |
Auditor Firm ID | 1572 |
Auditor Location | Oslo, Norway |
Business Contact | |
Document And Entity Information | |
Contact Personnel Name | Gary Chapman |
Contact Personnel Email Address | E-mail: gch@knotoffshorepartners.com |
City Area Code | 44 (0) |
Local Phone Number | 1224 618420 |
Entity Address, Address Line One | 2 Queens Cross |
Entity Address, City or Town | Aberdeen |
Entity Address, Postal Zip Code | AB15 4YB |
Entity Address, Country | GB |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | ||
Operating revenues: | ||||
Loss of hire insurance recoveries | $ 758,000 | $ 11,450,000 | ||
Other income | 341,000 | 373,000 | $ 641,000 | |
Total revenues | 268,585,000 | 281,129,000 | 279,222,000 | |
Operating expenses: | ||||
Vessel operating expenses | 86,032,000 | 72,114,000 | 61,005,000 | |
Voyage expenses and commission | 2,814,000 | |||
Depreciation | 107,419,000 | 99,559,000 | 89,743,000 | |
Impairment | 29,421,000 | |||
General and administrative expenses | 6,098,000 | 6,461,000 | 5,392,000 | |
Total operating expenses | 202,363,000 | 207,555,000 | 156,140,000 | |
Operating income | 66,222,000 | 73,574,000 | 123,082,000 | |
Finance income (expense): | ||||
Interest income | 822,000 | 2,000 | 125,000 | |
Interest expense | (42,604,000) | (28,065,000) | (31,645,000) | |
Other finance expense | (628,000) | (1,011,000) | (705,000) | |
Realized and unrealized gain (loss) on derivative instruments | 35,510,000 | 9,960,000 | (25,679,000) | |
Net gain (loss) on foreign currency transactions | 220,000 | (96,000) | 57,000 | |
Total finance expense | (6,680,000) | (19,210,000) | (57,847,000) | |
Income before income taxes | 59,542,000 | 54,364,000 | 65,235,000 | |
Income tax benefit | (875,000) | (488,000) | (10,000) | |
Net income | [1] | 58,667,000 | 53,876,000 | 65,225,000 |
Series A Preferred unitholders' interest in net income | 6,800,000 | 6,900,000 | 7,200,000 | |
General Partner's interest in net income | 951,000 | 862,000 | 1,072,000 | |
Limited Partners' interest in net income | $ 50,916,000 | $ 46,114,000 | $ 56,953,000 | |
Earnings per unit (Basic): | ||||
General Partner unit (basic & diluted) | $ 1.48 | $ 1.38 | $ 1.74 | |
Earnings per unit (Diluted): | ||||
General Partner unit (basic & diluted) | 1.48 | 1.38 | 1.74 | |
Common unit | ||||
Earnings per unit (Basic): | ||||
Common unit (basic) | 1.48 | 1.38 | 1.74 | |
Earnings per unit (Diluted): | ||||
Common unit (diluted) | 1.48 | 1.38 | $ 1.74 | |
Class B unit | ||||
Earnings per unit (Basic): | ||||
Common unit (basic) | 1.48 | 2.62 | ||
Earnings per unit (Diluted): | ||||
Common unit (diluted) | $ 1.48 | $ 2.62 | ||
Time charter and bareboat revenues | ||||
Operating revenues: | ||||
Revenue from contract with customers | $ 262,797,000 | $ 269,306,000 | $ 278,581,000 | |
Voyage revenues | ||||
Operating revenues: | ||||
Revenue from contract with customers | $ 4,689,000 | |||
[1] Included in net income is interest paid amounting to $37.3 million, $25.1 million and $31.0 million for the years ended December 31, 2022, 2021 and 2020, respectively. |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | ||
Consolidated Statements of Comprehensive Income | ||||
Net income | [1] | $ 58,667 | $ 53,876 | $ 65,225 |
Other comprehensive income, net of tax | 0 | 0 | 0 | |
Comprehensive income | $ 58,667 | $ 53,876 | $ 65,225 | |
[1] Included in net income is interest paid amounting to $37.3 million, $25.1 million and $31.0 million for the years ended December 31, 2022, 2021 and 2020, respectively. |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 47,579 | $ 62,293 |
Amounts due from related parties | 1,998 | 2,668 |
Inventories | 5,759 | 3,306 |
Derivative assets | 15,070 | |
Other current assets | 15,528 | 5,626 |
Total current assets | 85,934 | 73,893 |
Long-term assets: | ||
Vessels, net of accumulated depreciation | 1,631,380 | 1,598,106 |
Right-of-use assets | 2,261 | 2,742 |
Intangible assets, net | 75 | |
Derivative assets | 14,378 | 1,015 |
Accrued income | 1,450 | |
Total Long-term assets | 1,648,019 | 1,603,388 |
Total assets | 1,733,953 | 1,677,281 |
Current liabilities: | ||
Trade accounts payable | 4,268 | 3,872 |
Accrued expenses | 10,651 | 6,429 |
Current portion of long-term debt | 369,787 | 88,578 |
Current lease liabilities | 715 | 648 |
Current portion of derivative liabilities | 6,754 | |
Income taxes payable | 699 | 548 |
Current portion of contract liabilities | 651 | 1,518 |
Prepaid charter | 1,504 | 6,186 |
Amount due to related parties | 1,717 | 1,424 |
Total current liabilities | 389,992 | 115,957 |
Long-term liabilities: | ||
Long-term debt | 686,601 | 878,548 |
Lease liabilities | 1,546 | 2,093 |
Derivative liabilities | 4,260 | |
Contract liabilities | 651 | |
Deferred tax liabilities | 424 | 228 |
Deferred revenues | 3,178 | 2,529 |
Total long-term liabilities | 691,749 | 888,309 |
Total liabilities | 1,081,741 | 1,004,266 |
Commitments and contingencies | ||
Series A Convertible Preferred Units | 84,308 | 84,308 |
Partners' capital: | ||
General partner interest | 10,111 | 10,492 |
Total partners' capital | 567,904 | 588,707 |
Total liabilities and equity | 1,733,953 | 1,677,281 |
Common unit | ||
Partners' capital: | ||
Common unitholders | 553,922 | 568,762 |
Class B unit | ||
Partners' capital: | ||
Common unitholders | $ 3,871 | $ 9,453 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - shares | Dec. 31, 2022 | Dec. 31, 2021 |
General partners' capital account, units issued | 640,278 | 640,278 |
General partners' capital account, units outstanding | 640,278 | 640,278 |
Common unit | ||
Limited partners' capital account, units issued | 34,045,081 | 33,708,541 |
Limited partners' capital account, units outstanding | 34,045,081 | 33,708,541 |
Class B unit | ||
Limited partners' capital account, units issued | 252,405 | 588,945 |
Limited partners' capital account, units outstanding | 252,405 | 588,945 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Partners' Capital - USD ($) $ in Thousands | General Partner Unit Accumulated Other Comprehensive Income (Loss) | General Partner Unit | Common Units ATM | Common Units | Class B Units | Accumulated Other Comprehensive Income (Loss) ATM | Accumulated Other Comprehensive Income (Loss) | ATM | Total | |
Beginning balance at Dec. 31, 2019 | $ 11,155 | $ 611,241 | $ 0 | $ 622,396 | ||||||
Net income (loss) | 1,072 | 56,953 | 0 | 58,025 | ||||||
Other comprehensive income | 0 | 0 | $ 0 | 0 | 0 | |||||
Cash distributions | (1,332) | (70,804) | 0 | (72,136) | ||||||
Ending balance at Dec. 31, 2020 | 10,895 | 597,390 | 0 | 608,285 | ||||||
Convertible preferred units, beginning balance at Dec. 31, 2019 | 89,264 | |||||||||
Net income | 7,200 | |||||||||
Cash distributions | (7,200) | |||||||||
Convertible preferred units, ending balance at Dec. 31, 2020 | 89,264 | |||||||||
Net income (loss) | 862 | 45,466 | 648 | 0 | 46,976 | |||||
Conversion of preferred units to common units | 4,856 | 0 | 4,856 | |||||||
Partners' Capital Account, Sale of Units | $ 0 | 451 | $ 525 | $ 0 | $ 525 | |||||
IDR Exchange | [1] | (384) | (10,079) | 10,463 | 0 | |||||
Conversion of Class B units to common units | [1] | 1,308 | (1,308) | 0 | ||||||
Other comprehensive income | 0 | 0 | 0 | 0 | 0 | |||||
Cash distributions | (1,332) | (70,704) | (350) | 0 | (72,386) | |||||
Ending balance at Dec. 31, 2021 | 10,492 | 568,762 | 9,453 | 0 | 588,707 | |||||
Net income | 6,900 | |||||||||
Conversion of preferred units to common units | (4,856) | |||||||||
Cash distributions | (7,000) | |||||||||
Convertible preferred units, ending balance at Dec. 31, 2021 | 84,308 | |||||||||
Net income (loss) | 951 | 50,297 | 619 | 0 | 51,867 | |||||
Conversion of Class B units to common units | 5,238 | (5,238) | 0 | |||||||
Other comprehensive income | 0 | 0 | ||||||||
Cash distributions | (1,332) | (70,375) | (963) | 0 | (72,670) | |||||
Ending balance at Dec. 31, 2022 | $ 10,111 | $ 553,922 | $ 3,871 | $ 0 | 567,904 | |||||
Net income | 6,800 | |||||||||
Cash distributions | (6,800) | |||||||||
Convertible preferred units, ending balance at Dec. 31, 2022 | $ 84,308 | |||||||||
[1] On September 7, 2021, the Partnership entered into an exchange agreement with Knutsen NYK and the Partnership’s general partner whereby Knutsen NYK contributed to the Partnership all of Knutsen NYK’s IDRs, in exchange for the issuance by the Partnership to Knutsen NYK of 673,080 common units and 673,080 Class B Units, whereupon the IDRs were cancelled. As of December 31, 2021, 84,135 of the Class B Units had been converted to common units. As of December 31, 2022, an additional 336,540 of the Class B Units had been converted to common units. |
Consolidated Statements of Ch_2
Consolidated Statements of Changes in Partners' Capital (Parenthetical) - shares | 3 Months Ended | 12 Months Ended | ||||
Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Sep. 07, 2021 | |
Number of units converted | (208,334) | |||||
Common unit | ||||||
Number of units in exchange of IDRs | 673,080 | 673,080 | ||||
Number of units converted | 215,292 | |||||
Partners Capital Account Sale of Units [Member] | ||||||
Number of units in exchange of IDRs | 673,080 | |||||
Number of units converted | 336,540 | 84,135 | 84,135 | 84,135 | 84,135 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | ||
OPERATING ACTIVITIES | ||||
Net income | [1] | $ 58,667,000 | $ 53,876,000 | $ 65,225,000 |
Adjustments to reconcile net income to cash provided by operating activities: | ||||
Depreciation | 107,419,000 | 99,559,000 | 89,743,000 | |
Impairment | 29,421,000 | |||
Amortization of contract intangibles / liabilities | (1,442,000) | (912,000) | (912,000) | |
Amortization of deferred debt issuance cost | 2,692,000 | 3,519,000 | 2,503,000 | |
Drydocking expenditure | (17,614,000) | (4,235,000) | (2,724,000) | |
Income tax expense | 875,000 | 488,000 | 10,000 | |
Income taxes paid | (422,000) | (83,000) | (87,000) | |
Unrealized (gain) loss on derivative instruments | (38,490,000) | (20,054,000) | 22,042,000 | |
Unrealized (gain) loss on foreign currency transactions | 49,000 | 13,000 | (507,000) | |
Changes in operating assets and liabilities: | ||||
Decrease (increase) in amounts due from related parties | 723,000 | 3,058,000 | (3,039,000) | |
Decrease (increase) in inventories | (2,163,000) | (653,000) | (225,000) | |
Decrease (increase) in other current assets | (9,689,000) | (117,000) | (1,865,000) | |
Decrease (increase) in accrued revenue | 1,450,000 | 1,418,000 | 1,108,000 | |
Increase (decrease) in trade accounts payable | 251,000 | 18,000 | 700,000 | |
Increase (decrease) in accrued expenses | 3,528,000 | 1,048,000 | (1,859,000) | |
Increase (decrease) prepaid charter | (4,682,000) | 763,000 | (1,469,000) | |
Increase (decrease) in amounts due to related parties | (210,000) | (716,000) | 597,000 | |
Net cash provided by operating activities | 100,942,000 | 166,411,000 | 169,241,000 | |
INVESTING ACTIVITIES | ||||
Additions to vessel and equipment | (3,309,000) | (11,536,000) | (339,000) | |
Net cash used in investing activities | (35,514,000) | (11,536,000) | (21,433,000) | |
FINANCING ACTIVITIES | ||||
Proceeds from long-term debt | 167,000,000 | 444,300,000 | 33,000,000 | |
Repayment of long-term debt | (166,609,000) | (505,822,000) | (92,834,000) | |
Payment of debt issuance cost | (889,000) | (5,215,000) | (90,000) | |
Cash distributions | (79,470,000) | (79,386,000) | (79,336,000) | |
Net cash used in financing activities | (79,968,000) | (145,147,000) | (139,260,000) | |
Effect of exchange rate changes on cash | (174,000) | (18,000) | 510,000 | |
Net increase (decrease) in cash and cash equivalents | (14,714,000) | 9,710,000 | 9,058,000 | |
Cash and cash equivalents at the beginning of the period | 62,293,000 | 52,583,000 | 43,525,000 | |
Cash and cash equivalents at the end of the period | 47,579,000 | 62,293,000 | 52,583,000 | |
Limited Partner [Member] | ||||
FINANCING ACTIVITIES | ||||
Net proceeds from issuance of stock | 525,000 | |||
General Partner units | ||||
FINANCING ACTIVITIES | ||||
Net proceeds from issuance of stock | $ 451,000 | |||
Synnve Knutsen | ||||
INVESTING ACTIVITIES | ||||
Acquisition of Synnve & Tove Knutsen (net of cash acquired) | $ (32,205,000) | |||
Tove Knutsen | ||||
INVESTING ACTIVITIES | ||||
Acquisition of Synnve & Tove Knutsen (net of cash acquired) | $ (21,094,000) | |||
[1] Included in net income is interest paid amounting to $37.3 million, $25.1 million and $31.0 million for the years ended December 31, 2022, 2021 and 2020, respectively. |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Consolidated Statements of Cash Flows | |||
Amount of interests paid | $ 37.3 | $ 25.1 | $ 31 |
Description of Business
Description of Business | 12 Months Ended |
Dec. 31, 2022 | |
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. As of December 31, 2022, the Partnership had a fleet of eighteen 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 Tove Knutsen Synnøve Knutsen, The consolidated financial statements have been prepared assuming that the Partnership will continue as a going concern. On July 1, 2022, the Partnership's wholly owned subsidiary, KNOT Shuttle Tankers AS, acquired KNOT Shuttle Tankers 35 AS, the company that owns the Synnøve Knutsen Synnøve Knutsen Synnøve Knutsen 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 debt or equity financings, including net proceeds from sales under its ATM program. The Partnership believes that these sources of funds (assuming the current rates earned from existing charters) will be sufficient to cover operational cash outflows, working capital requirements and ongoing obligations under the Partnership’s lease obligations and financing commitments to pay loan interest and make scheduled loan repayments and to make distributions on its outstanding units assuming the Partnership is able to timely refinance its maturing credit facilities on similar terms as its existing facilities. Accordingly, as of March 30, 2023, the Partnership believes that its current resources are sufficient to meet working capital requirements and other cash requirements for its current business for at least the next twelve months. See Note 17—Long-Term Debt. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2) Summary of Significant Accounting Policies (a) Basis of Preparation The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). All intercompany balances and transactions are eliminated on consolidation. The consolidated financial statements include the financial statements of the entities listed in Note 4—Subsidiaries. (b) Business Combinations and Asset Acquisitions Business combinations are accounted for under the purchase method of accounting. On acquisition, the identifiable assets, liabilities and contingent liabilities are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognized as goodwill. The consideration transferred for an acquisition is measured at fair value of the consideration given. Acquisition related costs are expensed as incurred. The results of operations of the acquired businesses are included in the consolidated results as of the date of the applicable acquisition. Dependent on the facts and circumstances, the assessment of a transaction may be considered the acquisition of an asset, when substantially all of the fair value of assets acquired is concentrated in a single identifiable asset, rather than a business combination. Asset acquisitions are accounted for by allocating the cost of the acquisition to the individual assets acquired and liabilities assumed on a relative fair value basis. Acquisition related costs are capitalized as a component of the assets acquired. See Note 23—Acquisitions. (c) Reporting Currency The consolidated financial statements are prepared in the reporting currency of U.S. Dollars. The functional currency of the vessel-owning Partnership subsidiaries is the U.S. Dollar, because the subsidiaries operate in the international shipping market, in which all revenues are U.S. Dollar-denominated and the majority of expenditures are made in U.S. Dollars. Transactions involving other currencies during the year are converted into U.S. Dollars using the exchange rates in effect at the time of the transactions. As of the balance sheet dates, monetary assets and liabilities that are denominated in currencies other than the U.S. Dollar are translated to reflect the year-end exchange rates. Resulting gains or losses are reflected separately in the accompanying consolidated statements of operations. (d) Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the useful lives and impairment of Vessels, drydocking, purchase price allocation and income taxes. (e) Revenues and Operating Expenses The Partnership’s time charter contracts include both a lease component, consisting of the lease of the vessel, and non-lease component, consisting of operation of the vessel for the customers. The lease element is accounted for as an operating lease on a straight-line basis over the term of the charter, while the non-lease service element consisting of the operation of the vessel is recognized over time as the services are delivered. Revenue from time charters is not recognized during days the Vessel is off-hire. Revenue is recognized from delivery of the Vessel to the charterer, until the end of the contract period. Under bareboat charters, the Partnership provides a specified Vessel for a fixed period of time at a specified day rate and the Partnership recognizes revenues from bareboat charters as operating leases on a straight-line basis over the term of the charter. Where the term of the contract is based on the duration of a single voyage, the Partnership evaluates whether the voyage contain leases and, if so, recognizes lease revenue as described above, and if not, recognizes revenue in accordance with ASC 606 upon the satisfaction of the performance obligations in the contract on a load-to-discharge basis. In connection with the installation of the volatile organic compound emissions ("VOC") control equipment on the Bodil Knutsen Voyage expenses are all expenses unique to a particular voyage, including commissions to third parties, bunker fuel expenses, port fees, cargo loading and unloading expenses, canal tolls and agency fees. Voyage expenses are paid by the customer under time charter and bareboat charters. Voyage expenses are paid by the Partnership for spot contracts and during periods of off-hire and are recognized when incurred. Vessel operating expenses include commissions, crewing, repairs and maintenance, insurance, stores, lube oils and communication expenses. Vessel operating expenses are paid by the Partnership for time charters, spot contracts and during off-hire and are recognized when incurred. The Partnership directly employs one onshore employee and no seagoing employees. Related parties have provided the management services for the Vessels and employ the crews that work on the Vessels. The Partnership is not liable for any pension or post-retirement benefits. See Note 19—Related Party Transactions. (f) Financial Income (Expense) Other finance expense includes external bank fees and commitment fees paid on undrawn revolving credit facility. (g) Cash and Cash Equivalents The Partnership considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. (h) Trade Accounts Receivable Accounts receivable are recorded at the invoiced amount and do not bear interest. Time charter and bareboat charter contracts require customers to pay in advance of the period of hire. See Note 2(s)—Prepaid Charter. The allowance for expected credit losses is the Partnership’s best estimate of the expected credit losses over the remaining lives of the assets. Expected credit losses are estimated using historical credit loss experience, relevant available information, from internal and external sources, relating to current conditions and reasonable and supportable forecasts of economic conditions impacting the collectability of the assets. There was no allowance for expected credit loss or amounts written off against the allowance as of December 31, 2022 and 2021. The Partnership does not have any off-balance-sheet credit exposure related to its customers. (i) Inventories Inventories, which are comprised of lubricating oils and, for vessels not operating on time charter or bareboat charter, also bunkers, are stated at the lower of cost or net realizable value. For vessels on time charters or bareboat charters, there are no bunkers, as the charterer supplies the bunkers, which principally consist of fuel oil. Cost is determined using the first-in, first-out method for all inventories. (j) Other Current Assets Other current assets principally consist of prepaid expenses and other receivables. (k) Vessels and Equipment Vessels and equipment are stated at the historical acquisition or construction cost, including capitalized interest, supervision and technical and delivery cost, net of accumulated depreciation and impairment loss, if any. Expenditures for subsequent conversions and major improvements are capitalized, provided that such costs increase the earnings capacity or improve the efficiency or safety of the vessels. Generally, the Partnership drydocks each vessel every 60 months until the vessel is 15 years old and every 30 months thereafter, as required for the renewal of certifications issued by classification societies. For vessels operating on time charters, the Partnership capitalizes the costs directly associated with the classification and regulatory requirements for inspection of the vessels and improvements incurred during drydocking. Drydock cost is depreciated on a straight-line basis over the period until the next planned drydocking takes place. The Partnership expenses costs related to routine repairs and maintenance performed during drydocking or as otherwise incurred. For vessels that are newly built or acquired, an element of the cost of the vessel is initially allocated to a drydock component and depreciated on a straight-line basis over the period until the next planned drydocking. When significant dry-docking expenditures occur prior to the expiration of this period, the Partnership expenses the remaining balance of the original drydocking cost in the month of the subsequent drydocking. For vessels operating on bareboat charters, the charter-party bears the cost of any drydocking. Depreciation on vessels and equipment is calculated on a straight-line basis over the asset’s estimated useful life, less an estimated residual value, as follows: Useful Life Hull 23 years Anchor-handling, loading and unloading equipment 23 years Main/auxiliary engine 23 years Thruster, dynamic positioning systems, cranes and other equipment 23 years Drydock costs 2.5 – 5 years A Vessel is depreciated to its estimated residual value, which is calculated based on the weight of the ship and estimated steel price. Any cost related to the disposal is deducted from the residual value. Historically, the useful life of the Partnership’s vessels and equipment was assessed as 25 years commencing from the date the vessel and equipment were delivered from the shipyard. As of June 30, 2021, the Partnership considered factors related to the ongoing use of the vessels and equipment, gradual shifts in market conditions and other long-term factors associated with the global oil and maritime transportation industries and based on this has reassessed the useful life as being 23 years. (l) Right-of-use assets and lease liabilities The Partnership assesses whether a contract contains a lease at inception of the contract. The assessment involves the exercise of judgement about whether it depends on a specified asset, whether the Partnership obtains substantially all the economic benefits from the use of that asset, and whether the Partnership has the right to direct the use of the asset. The Partnership does not separate lease components from non-lease components as lessee. The Partnership recognizes a right-of-use asset and a lease liability at the lease commencement date, except for short-term leases of 12 months or less, which are expensed on a straight-line basis over the lease term. (m) Capitalized Interest Interest expense incurred on the Partnership’s debt during the construction of the Vessels exceeding one year is capitalized during the construction period. (n) Impairment of Long-Lived Assets Vessels and equipment, vessels under construction and intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group to be tested for possible impairment, the Partnership first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. (o) Intangibles Intangible assets represent contractual rights for charters obtained in connection with business and asset acquisitions that have favorable contractual terms relative to market as of the acquisition dates. Contract liabilities represent contractual rights obtained in connection with business acquisitions that have unfavorable contractual terms relative to market as of the acquisition dates. The favorable and unfavorable contract rights have definite lives and are amortized to revenues over the period of the related contracts. Intangible assets with a definite life are tested for impairment whenever events or circumstances indicate that their carrying amount may not be recoverable. An impairment loss is recognized if the carrying amount exceeds the estimated fair value of the asset. The contract related intangible assets and liabilities and their amortization periods at acquisition dates are as follows: Amortization Intangible category Period Above market time charter— Tordis Knutsen 4.8 years Above market time charter— Vigdis Knutsen 4.9 years Unfavorable contractual rights— Fortaleza Knutsen 12 years Unfavorable contractual rights— Recife Knutsen 12 years The intangible for the above market value of the time charter contract associated with the Tordis Knutsen Vigdis Knutsen The unfavorable contractual rights for charters associated with Foraleza Knutsen Recife Knutsen Fortaleza Knutsen Recife Knutsen Fortaleza Knutsen Recife Knutsen (p) Debt Issuance Costs Debt issuance costs, including fees, commissions and legal expenses, are deferred and presented net of debt. Debt issuance costs of term loans are amortized over the term of the relevant loan. Amortization of debt issuance costs is included in interest expense. These costs are presented as a deduction from the corresponding liability, consistent with debt discount. (q) Derivative Instruments The Partnership uses derivatives to reduce market risks associated with its operations. The Partnership uses interest rate swaps for the management of interest risk exposure. The interest rate swaps effectively convert a portion of the Partnership’s debt from a floating to a fixed rate over the life of the transactions without an exchange of underlying principal. The Partnership seeks to reduce its exposure to fluctuations in foreign exchange rates through the use of foreign currency forward contracts. All derivative instruments are initially recorded at fair value as either assets or liabilities in the accompanying consolidated balance sheets and subsequently measured to fair value. The Partnership does not apply hedge accounting to its derivative instruments. Changes in the fair value of the derivative instruments are recognized in earnings. Gains and losses from the interest rate swap contracts of the Partnership related to long-term mortgage debt and foreign exchange forward contracts are recorded in realized and unrealized gain (loss) on derivative instruments in the consolidated statements of operations. Cash flows related to interest rate swap contracts are presented as cash flows provided by operating activities. Cash flows related to foreign exchange forward contracts entered into to economically hedge operating expenses in currencies other than U.S. Dollars are presented as cash flows provided by operating activities in the consolidated statements of cash flows, while cash flows related to foreign exchange forward contracts entered into to hedge contractual obligations to pay the shipyard in currencies other than functional currency of U.S. Dollars are presented as cash flows used in investing activities in the consolidated statements of cash flows. (r) Income Taxes Historically, part of the Partnership’s activities were subject to ordinary taxation and taxes were paid on taxable income (including operating income and net financial income and expense), while part of the activities were subject to the Norwegian Tonnage Tax Regime (the “tonnage tax regime”). Under the tonnage tax regime, tax is based on the tonnage of the vessel, and not operating income. Net financial income and expense remain taxable as ordinary income at the regular corporate income tax rate. Income taxes arising from the part of activities subject to ordinary taxation are included in income tax expense in the consolidated statements of operations. For the portion of activities subject to the tonnage tax regime, tonnage taxes are classified as vessel operating expenses, while the current and deferred taxes arising on net financial income and expense are reflected as income tax expense in the consolidated statements of operations. See Note 18—Income Taxes. The Partnership accounts for deferred income taxes using the liability method. Under the liability method, deferred tax assets and liabilities are recognized for the anticipated future tax effects of temporary differences between the financial statement basis and the tax basis of the Partnership’s assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. A valuation allowance for deferred tax assets is recorded when it is more likely than not that some or all of the benefit from the deferred tax asset will not be realized. Recognition of uncertain tax positions is dependent upon whether it is more-likely-than-not that a tax position taken or expected to be taken in a tax return will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. If a tax position meets the more-likely-than-not recognition threshold, it is measured to determine the amount of benefit to recognize in the financial statements based on U.S. GAAP guidance. The Partnership recognizes interest and penalties related to uncertain tax positions in income tax expense. (s) Prepaid Charter Under terms of the time charters and bareboat charters, the customer pays for the month’s charter the first day of each month that is recorded as prepaid charter revenues. (t) Commitments, Contingencies and Insurance Proceeds Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. See Note 20—Commitments and Contingencies. Insurance claims for property damage for recoveries up to the amount of loss recognized are recorded when the claims submitted to insurance carriers are probable of recovery. Claims for property damage in excess of the loss recognized and for loss of hire are considered gain contingencies, which are generally recognized when the proceeds are received. (u) Fair Value Measurements The Partnership utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Partnership determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels: ● Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date. ● Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. ● Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. (v) Recently Adopted Accounting Standards In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2020-06 Debt-Debt with conversion and other options (subtopic 470-20) and Derivatives and Hedging-contracts in entity’s own equity (subtopic 815-40): Accounting for convertible instruments and contracts in an entity’s own equity (w) New Accounting Standards 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 objective of the guidance in Topic 848 is to provide temporary relief during the transition period. The FASB included a sunset provision within Topic 848 based on expectations of when the LIBOR would cease being published. At the time that Update 2020-04 was issued, the UK Financial Conduct Authority (“FCA”) had established its intent that it would no longer be necessary to persuade, or compel, banks to submit to LIBOR after December 31, 2021. As a result, the sunset provision was set for December 31, 2022 – 12 months after the expected cessation date of all currencies and tenors of LIBOR. In March 2021, the FCA announced that the intended cessation date of the overnight 1-, 3-, 6-, and 12-months tenors of USD LIBOR would be June 30, 2023, which is beyond the current sunset date of Topic 848. Because of the current relief in Topic 848 may not cover a period of time during which a significant number of modifications may take place, the amendments in Update 2022-06 defer the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. Although the Partnership does not apply hedge accounting, the Partnership has debt and interest rate swap contracts that reference LIBOR. The Partnership has determined that the reference rate reforms will primarily impact its floating rate debt facilities and the interest rate derivatives to which it is a party. For existing contracts, the Partnership is currently having discussions with its lending banks and the counterparties to the Partnership’s interest rate swap contracts to ensure that its contracts are renegotiated in time for the LIBOR discontinuation date of June 30, 2023. It is the Partnership’s view, that the Partnership will transition to the alternative reference rate, the Secured Overnight Financing Rate (“SOFR”), in accordance with the LIBOR discontinuation date. As of December 31, 2022, the Partnership has not made any contract modifications to replace the reference rate in any of its agreements and concluded that there was no impact to its consolidated financial statements. Other recently issued accounting pronouncements are not expected to materially impact the Partnership. |
Formation Transactions and Init
Formation Transactions and Initial Public Offering | 12 Months Ended |
Dec. 31, 2022 | |
Formation Transactions and Initial Public Offering | |
Formation Transactions and Initial Public Offering | 3) Formation Transactions and Initial Public Offering During April 2013, the following transactions occurred in connection with KNOT’s transfer of the interests in KNOT Shuttle Tankers AS and the subsequent IPO: Capital Contribution (i) KNOT contributed to the Partnership’s subsidiary KNOT Offshore Partners UK LLC (“KNOT UK”) its 100% interest in KNOT Shuttle Tankers AS, which directly or indirectly owned (1) Knutsen Shuttle Tankers XII KS, the owner of the Recife Knutsen and the Fortaleza Knutsen , (2) Knutsen Shuttle Tankers XII AS, the general partner of Knutsen Shuttle Tankers XII KS, and (3) the Windsor Knutsen and the Bodil Knutsen and all of their related charters, inventory and long-term debt. This was accounted for as a capital contribution by KNOT to the Partnership. Recapitalization of the Partnership (ii) The Partnership issued to KNOT 8,567,500 subordinated units, representing a 49.0% limited partner interest in the Partnership, and 100% of the incentive distribution rights (“IDRs”), which entitled KNOT to increasing percentages of the cash the Partnership distributed in excess of $0.43125 per unit per quarter. (iii) The Partnership issued 349,694 general partner units to the General Partner representing a 2.0% general partner interest in the Partnership. Initial Public Offering (iv) In connection with the IPO, the Partnership issued and sold to the public, through the underwriters, 8,567,500 common units (including 1,117,500 common units sold pursuant to the full exercise of the underwriters’ option to purchase additional units), representing a 49.0% limited partner interest in the Partnership. The price per common unit in the IPO was $21.00 . The Partnership received gross proceeds of approximately $179.9 million in connection with the IPO. Expenses relating to the IPO, including, among other things, incremental costs directly attributable to the IPO, were deferred and charged against the gross proceeds of the IPO, whereas other costs were expensed as incurred. The net proceeds of the IPO (approximately $160.7 million, after deducting underwriting discounts, commissions and structuring fees and offering expenses payable by the Partnership) were used by the Partnership to make a cash distribution to KNOT of approximately $21.95 million (which equals net proceeds from the underwriters’ option exercised in full after deducting the underwriting discounts and commissions), to repay approximately $118.9 million of outstanding debt and pre-fund approximately $3.0 million of the Partnership’s one-time entrance tax into the Norwegian tonnage tax regime. The remainder of the net proceeds was made available for general partnership purposes. Agreements In connection with the IPO, at or prior to the closing of the IPO, the Partnership entered into several agreements, including: ● An Administrative Services Agreement with KNOT UK, pursuant to which: ● KNOT UK agreed to provide to the Partnership administrative services; and ● KNOT UK is permitted to subcontract certain of the administrative services provided under the administrative services agreement to Knutsen OAS (UK) Ltd. (“KOAS UK”) and Knutsen OAS Shipping AS (“KOAS”), both wholly owned subsidiaries of TS Shipping Invest AS (“TSSI”); ● Amended Technical Management Agreements with KNOT Management AS (“KNOT Management”), a wholly owned subsidiary of KNOT, that govern the crew, technical and commercial management of the vessels in the fleet; ● A Contribution and Sale Agreement with KNOT pursuant to which the Partnership acquired the entities that comprised its initial fleet; ● Amendments to certain of the Partnership’s existing vessel financing agreements to permit the transactions pursuant to which the Partnership acquired its initial fleet in connection with the IPO and to include a $20.0 million revolving credit facility; and ● An Omnibus Agreement with KNOT, the General Partner and the other parties thereto governing, among other things: ● To what extent the Partnership and KNOT may compete with each other; ● The Partnership’s option to purchase the Carmen Knutsen, the Hilda Knutsen , the Torill Knutsen , the Ingrid Knutsen and the Raquel Knutsen from KNOT; ● Certain rights of first offer on shuttle tankers operating under charters of five or more years; ● The provision of certain indemnities to the Partnership by KNOT; and ● KNOT’s guarantee of the payment of the hire rate under the original Bodil Knutsen and Windsor Knutsen charters for a period of five years following the closing date of the IPO. |
Subsidiaries
Subsidiaries | 12 Months Ended |
Dec. 31, 2022 | |
Subsidiaries | |
Subsidiaries | 4) Subsidiaries The following table lists the Partnership’s subsidiaries and their purpose as of December 31, 2022. Company Name Jurisdiction of Formation Purpose KNOT Offshore Partners UK LLC Marshall Islands Holding Company KNOT Shuttle Tankers AS Norway Holding Company KNOT Shuttle Tankers 12 AS Norway Majority owner of Knutsen Shuttle Tankers XII KS KNOT Shuttle Tankers 17 AS Norway Owner of the Bodil Knutsen KNOT Shuttle Tankers 18 AS Norway Owner of the Windsor Knutsen Knutsen Shuttle Tankers XII KS Norway Owner of the Fortaleza Knutsen Recife Knutsen Knutsen Shuttle Tankers XII AS Norway General partner of Knutsen Shuttle Tankers XII KS Knutsen Shuttle Tankers 13 AS Norway Owner of the Carmen Knutsen Knutsen Shuttle Tankers 14 AS Norway Owner of the Hilda Knutsen Knutsen Shuttle Tankers 15 AS Norway Owner of the Torill Knutsen KNOT Shuttle Tankers 20 AS Norway Owner of the Dan Cisne KNOT Shuttle Tankers 21 AS Norway Owner of the Dan Sabia Knutsen NYK Shuttle Tankers 16 AS Norway Owner of the Ingrid Knutsen Knutsen Shuttle Tankers 19 AS Norway Owner of the Raquel Knutsen KNOT Shuttle Tankers 24 AS Norway Owner of the Tordis Knutsen KNOT Shuttle Tankers 25 AS Norway Owner of the Vigdis Knutsen KNOT Shuttle Tankers 26 AS Norway Owner of the Lena Knutsen KNOT Shuttle Tankers 32 AS Norway Owner of the Brasil Knutsen KNOT Shuttle Tankers 30 AS Norway Owner of the Anna Knutsen KNOT Shuttle Tankers 34 AS Norway Owner of the Tove Knutsen KNOT Shuttle Tankers 35 AS Norway Owner of the Synnøve Knutsen |
Significant Risks and Uncertain
Significant Risks and Uncertainties Including Business and Credit Concentrations | 12 Months Ended |
Dec. 31, 2022 | |
Significant Risks and Uncertainties Including Business and Credit Concentrations | |
Significant Risks and Uncertainties Including Business and Credit Concentrations | 5) Significant Risks and Uncertainties Including Business and Credit Concentrations The Partnership’s operational results are dependent on the worldwide market for shuttle tankers and the ability of the Partnership to timely enter into customer charters. Market conditions for shipping activities are typically volatile, and, as a consequence, the hire rates we may be able to achieve might vary over time. The market today is mainly dependent upon four factors: the supply of vessels, the demand for vessels and oil, the long-term oil price outlook and overall growth in the world economy. The general supply of vessels is impacted by the number of newbuilds, the removal of older vessels from the market and legislation that may limit the use of older vessels or new standards for vessels used in specific trades. As of December 31, 2022, all of the Partnership’s Vessel crews, which are employed through KOAS were represented by collective bargaining agreements that are renegotiated annually, or bi-annually. The Partnership did not incur any loss relating to its trade receivables during the years ended December 31, 2022, 2021 and 2020. The following table presents time charter and bareboat revenues and percentage of revenues for material customers that accounted for more than 10% of the Partnership’s revenues during the years ended December 31, 2022, 2021 and 2020. All of these customers are subsidiaries of major international oil companies. Year Ended December 31, (U.S. Dollars in thousands) 2022 2021 2020 Eni Trading and Shipping S.p.A. $ 36,256 14 % $ 43,823 16 % $ 44,175 16 % Fronape International Company, a subsidiary of Petrobras Transporte S.A. 45,975 17 % 45,115 17 % 45,235 16 % Repsol Sinopec Brasil, B.V., a subsidiary of Repsol Sinopec Brasil, S.A. 37,571 14 % 37,030 14 % 33,947 12 % Brazil Shipping I Limited, a subsidiary of Royal Dutch Shell 12,546 5 % 59,825 22 % 76,959 28 % Galp Sinopec Brasil Services BV $ 16,621 6 % $ 35,622 13 % $ 35,684 13 % 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 | 12 Months Ended |
Dec. 31, 2022 | |
Operating Leases | |
Operating Leases | 6) 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, bareboat charters and other revenues for the years ended December 31, 2022, 2021 and 2020: Year Ended December 31, (U.S. Dollars in thousands) 2022 2021 2020 Time charter revenues (service element included) $ 216,822 $ 224,191 $ 233,346 Bareboat revenues 45,975 45,115 45,235 Total time charter and bareboat revenues 262,797 269,306 278,581 Other revenues (voyage revenues, loss of hire insurance recoveries and other income) 5,788 11,823 641 Total revenues $ 268,585 $ 281,129 $ 279,222 See Note 2(l)—Right-of-use assets and lease liabilities. As of December 31, 2022, the minimum contractual future revenues to be received from time charters and bareboat charters during the next five years and thereafter are as follows (including the service element of time charters, but excluding unexercised customer option periods and excluding any contracted revenues signed after December 31, 2022): (U.S. Dollars in thousands) 2023 $ 183,049 2024 142,357 2025 131,472 2026 72,342 2027 and thereafter 14,536 Total $ 543,756 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 December 31, 2022 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 Partnership agreed commercial terms for a new three-year time charter contract for the vessel with the existing charterer to commence directly upon expiration of the existing bareboat charter. The new charter was signed on March 28, 2023 and commenced on March 30, 2023. The vessel is now fixed until March 2026; ● 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 Partnership agreed commercial terms for a new three-year time charter contract for the vessel with the existing charterer to commence directly upon expiration of the existing bareboat charter. The new charter is expected to be signed in April 2023 and commence on or around August 3, 2023. Once signed, the vessel will be fixed until August 2026; ● the Bodil Knutsen , a shuttle tanker built in 2011 that is currently operating under a time charter contract with Knutsen Shuttle Tankers Pool AS, a subsidiary of KNOT, that expires on or around December 31, 2023, or at such time as the vessel is to be delivered to Equinor, if earlier. The vessel will commence on a new time charter contract with Equinor in the fourth quarter of 2023 or the first quarter of 2024. The new charter is for a fixed period of two years with options for the charterer to extend the charter by two further one-year periods; ● the Windsor Knutsen , a conventional oil tanker built in 2007 and retrofitted to a shuttle tanker in 2011 that is currently operating under a time charter with Brazil Shipping I Limited, a subsidiary of Royal Dutch Shell (“Shell”), that expires in January 2024 , with a charterer’s option to extend one year. The vessel will commence on a new time charter contract with Equinor in fourth quarter of 2024 or the first quarter of 2025. The new charter is for a fixed period, at the charterer’s option, of either one year or two years , with options for the charterer to extend the charter, in either case, by two further one-year periods; ● the Carmen Knutsen , a shuttle tanker built in 2013 that is currently operating under a time charter that expires in January 2024 , 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 rolling charter contract with Knutsen Shuttle Tankers Pool AS, a subsidiary of KNOT and which expires in January 2024 unless terminated by either party on giving not less than 30 days ’ notice ; ● the Torill Knutsen , a shuttle tanker built in 2013 that is currently operating under a time charter contract with Knutsen Shuttle Tankers Pool AS, a subsidiary of KNOT, that expires on or around December 31, 2023; ● 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 contract with Altera that expires in January 2024 . The vessel has a time charter contract with Eni that will commence in January 2024 for a fixed period of three years , with Eni having options to extend the charter by up to three further years ; ● 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 with a subsidiary of the French oil major TotalEnergies that expires in June 2023 , at which time the vessel is expected to be delivered to Shell to commence on a three-year time charter contract; ● the Vigdis Knutsen , a shuttle tanker built in 2017 that is operating under a time charter with China Offshore Oil (Singapore) that expires in the third quarter of 2023, at which time the vessel is expected to be delivered to Shell to commence on a three-year time charter contract; ● the Lena Knutsen , a shuttle tanker built in 2017 that is currently operating under a time charter with TotalEnergies that expires in August 2023 , at which time the vessel is expected to be delivered to Shell to commence on a three-year time charter contract; ● the Brasil Knutsen , a shuttle tanker built in 2013 that is currently operating under a time charter with Petrogal S.A. that expires in November 2023 ; ● the Anna Knutsen , a shuttle tanker built in 2017 that is currently operating under a time charter with TotalEnergies that expires in April 2024 with options to extend for up to one two-year period and one one-year period; ● the Tove Knutsen , a shuttle tanker built in 2020 that is currently operating under a time charter that expires in November 2027 with Equinor, with options to extend until November 2040 ; and ● the Synnøve Knutsen , a shuttle tanker built in 2020 that is currently operating under a time charter that expires in February 2027 with Equinor, with options to extend until February 2042 . 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 December 31, 2022, the right-of-use asset and lease liability Synnøve Knutsen Synnøve Knutsen A maturity analysis of the Partnership’s lease liabilities from leased-in equipment as of December 31, 2022 is as follows: (U.S. Dollars in thousands) 2023 $ 762 2024 762 2025 762 2026 62 2027 and thereafter — Total $ 2,348 Less imputed interest 87 Carrying value of operating lease liabilities $ 2,261 |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2022 | |
Segment Information | |
Segment Information | 7) Segment Information The Partnership has one reportable segment, the shuttle tanker market. At December 31, 2022 the Partnership’s fleet operated under twelve time charters and four bareboat charters. At December 31, 2021, the Partnership’s fleet operated under thirteen time charters and four bareboat charters. See Note 5—Significant Risks and Uncertainties Including Business and Credit Concentrations for revenues from customers accounting for over 10% of the Partnership’s consolidated revenue. In both time charters and bareboat charters, the charterer, not the Partnership, controls the choice of which trading areas the Vessels will serve. Accordingly, the Partnership’s management, including the chief operating decision makers, does not evaluate performance according to geographical region. |
Insurance Proceeds
Insurance Proceeds | 12 Months Ended |
Dec. 31, 2022 | |
Insurance Proceeds | |
Insurance Proceeds | 8) Insurance Proceeds Insurance claims for property damage for recoveries up to the amount of loss recognized are recorded when the claims submitted to insurance carriers are probable of recovery. Claims for property damage in excess of the loss recognized and for loss of hire are recognized when the proceeds are received. As of December 31, 2022 and 2021, the Partnership had open insurance claims for hull and machinery recoveries of $2.1 million and $0.1 million, respectively, which were recorded as part of Other current asset. See Note 12(b)—Other Current Asset. As of December 31, 2021, loss of hire proceeds of $11.5 million related to the Windsor Knutsen Tove Knutsen Tordis Knutsen As of December 31, 2022, loss of hire proceeds of $0.8 million related to the Vigdis Knutsen |
Other Finance Expenses
Other Finance Expenses | 12 Months Ended |
Dec. 31, 2022 | |
Other Finance Expenses | |
Other Finance Expenses | 9) Other Finance Expenses (a) Interest Expense The following table presents the components of interest expense as reported in the consolidated statements of operations for the years ended December 31, 2022, 2021 and 2020: Year Ended December 31, (U.S. Dollars in thousands) 2022 2021 2020 Interest expense $ 39,912 $ 24,546 $ 29,142 Amortization of debt issuance cost and fair value of debt assumed 2,692 3,519 2,503 Total interest expense $ 42,604 $ 28,065 $ 31,645 (b) Other Finance Expense The following table presents the components of other finance expense for the years ended December 31, 2022, 2021 and 2020: Year Ended December 31, (U.S. Dollars in thousands) 2022 2021 2020 Bank fees, charges $ 294 $ 463 $ 441 Commitment fees 334 548 264 Total other finance expense $ 628 $ 1,011 $ 705 |
Derivative Instruments
Derivative Instruments | 12 Months Ended |
Dec. 31, 2022 | |
Derivative Instruments | |
Derivative Instruments | 10) Derivative Instruments Interest Rate Risk Management The consolidated 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 a portion of the Partnership's total 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 December 31, 2022 and 2021, 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 $451.2 million and $462.3 million, respectively. As of December 31, 2022 and 2021, the carrying amount of the interest rate swap contracts was a net asset of $29.4 million and a net liability of $10.0 million, respectively. See Note 11—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 where possible. To meet this objective, the Partnership at times has 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. 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 years ended December 31, 2022, 2021 and 2020: Year Ended December 31, (U.S. Dollars in thousands) 2022 2021 2020 Realized gain (loss): Interest rate swap contracts $ (2,478) $ (10,094) $ (3,528) Foreign exchange forward contracts (502) — (109) Total realized gain (loss): (2,980) (10,094) (3,637) Unrealized gain (loss): Interest rate swap contracts 38,490 20,054 (21,795) Foreign exchange forward contracts — — (247) Total unrealized gain (loss): 38,490 20,054 (22,042) Total realized and unrealized gain (loss) on derivative instruments: $ 35,510 $ 9,960 $ (25,679) |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Measurements | |
Fair Value Measurements | 11) Fair Value Measurements (a) Fair Value of Financial Instruments The following table presents the carrying amounts and estimated fair values of the Partnership’s assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2022 and December 31, 2021. 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. December 31, 2022 December 31, 2021 Carrying Fair Carrying Fair (U.S. Dollars in thousands) Amount Value Amount Value Financial assets: Cash and cash equivalents $ 47,579 $ 47,579 $ 62,293 $ 62,293 Current derivative assets: Interest rate swap contracts 15,070 15,070 — — Non-current derivative assets: Interest rate swap contracts 14,378 14,378 1,015 1,015 Financial liabilities: Current derivative liabilities: Interest rate swap contracts — — 6,754 6,754 Non-current derivative liabilities: Interest rate swap contracts — — 4,260 4,260 Long-term debt, current and non-current $ 1,062,647 $ 1,035,740 $ 974,596 $ 974,596 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 $6.3 million and $7.5 million as of December 31, 2022 and 2021, 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 December 31, 2022 and 2021 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 December 31, 2022 and 2021 there is no restricted cash. ● 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 2.7 years and 3.4 years, as of December 31, 2022 and 2021, respectively), (2) the notional amount of the swap contract (ranging from $3.6 million to $33.6 million as of December 31, 2022 and ranging from $5.2 million to $37.5 million as of December 31, 2021), 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% for the contracts as of December 31, 2022 and 2021). ● 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 December 31, 2022 and December 31, 2021: 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) 2022 (Level 1) (Level 2) (Level 3) Financial assets: Cash and cash equivalents $ 47,579 $ 47,579 $ — $ — Current derivative assets: Interest rate swap contracts 15,070 — 15,070 — Non-current derivative assets: Interest rate swap contracts 14,378 — 14,378 — Financial liabilities: Non-current derivative liabilities: Long-term debt, current and non-current $ 1,062,647 $ — $ 1,035,740 $ — 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) 2021 (Level 1) (Level 2) (Level 3) Financial assets: Cash and cash equivalents $ 62,293 $ 62,293 $ — $ — Non-current derivative assets: Interest rate swap contracts 1,015 — 1,015 — Financial liabilities: Current derivative liabilities: Interest rate swap contracts 6,754 — 6,754 — Non-current derivative liabilities: Interest rate swap contracts 4,260 — 4,260 — Long-term debt, current and non-current $ 974,596 $ — $ 974,596 $ — 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 and Level 2 as of December 31, 2022 and December 31, 2021. |
Trade Accounts Receivable and O
Trade Accounts Receivable and Other Current Assets | 12 Months Ended |
Dec. 31, 2022 | |
Trade Accounts Receivable and Other Current Assets | |
Trade Accounts Receivable and Other Current Assets | 12) Trade Accounts Receivable and Other Current Assets (a) Trade Accounts Receivable Trade accounts receivable are presented as part of Other current assets, see Note 12(b)—Other Current Assets. Trade accounts receivable are presented net of provisions for expected credit loss. As of December 31, 2022 and 2021, there was no provision for expected credit loss. (b) Other Current Assets Other current assets consist of the following: (U.S. Dollars in thousands) At December 31, 2022 At December 31, 2021 Trade receivables $ 7,662 $ — Trade receivables due from KNOT and affiliates (see Note 19(d)) 1,405 — Insurance claims for recoveries (see Notes 8 and 20) 2,112 124 Refund of value added tax 1,173 1,805 Prepaid expenses 1,311 1,158 Other receivables 1,865 2,539 Total other current assets $ 15,528 $ 5,626 |
Inventory
Inventory | 12 Months Ended |
Dec. 31, 2022 | |
Inventory | |
Inventory | 13) Inventory The following table presents the inventory as of December 31, 2022 and December 31, 2021: (U.S. Dollars in thousands) At December 31, 2022 At December 31, 2021 Lubricating oil $ 3,245 $ 2,683 Bunkers 2,514 623 Total inventory $ 5,759 $ 3,306 |
Vessels and Equipment
Vessels and Equipment | 12 Months Ended |
Dec. 31, 2022 | |
Vessels and Equipment | |
Vessels and Equipment | 14) Vessels and Equipment Vessels & Accumulated Accumulated (U.S. Dollars in thousands) equipment depreciation write down Net Vessels Vessels, December 31, 2020 $ 2,250,053 $ (541,267) $ — $ 1,708,786 Additions(1) 14,065 — — 14,065 Drydock costs 4,235 — — 4,235 Disposals (2,641) 2,641 — — Depreciation and write down for the period (2) — (99,559) (29,421) (128,980) Vessels, December 31, 2021 $ 2,265,712 $ (638,185) $ (29,421) $ 1,598,106 Additions (3) 120,946 — — 120,946 Drydock costs 19,747 — — 19,747 Disposals (17,790) 17,790 — — Depreciation and write down for the period — (107,419) — (107,419) Vessels, December 31, 2022 $ 2,388,615 $ (727,814) $ (29,421) $ 1,631,380 As of December 31, 2022 and 2021, Vessels with a book value of $1,631 million and $1,598 million, respectively, are pledged as security for the Partnership’s long-term debt. See Note 17—Long-Term Debt. (1) During the scheduled second renewal survey drydocking of the Bodil Knutsen a ballast water treatment system was installed on the vessel at a cost $6.7 million. An advanced Volatile Organic Compounds (VOC) recovery system was also installed on the Bodil Knutsen during the fourth quarter of 2021 at a cost of $7.3 million. Although the Partnership initially funded the installation costs of the VOC recovery system, such costs are expected to be recoverable by the Partnership up to an agreed budget, with interest, from the VOC Industry Co-operation Norwegian Sector (“VOCIC Norway”) over a seven-year period. A separate agreement is also in place that allows the Partnership to recover costs from VOCIC Norway related to the ongoing operation of the VOC plant onboard the vessel. (2) The carrying value of the Windsor Knutsen was written down to its estimated fair value as of June 30, 2021. (3) On July 1, 2022, the Partnership acquired KNOT's 100% interest in KNOT Shuttle Tankers 35 AS, the company that owns and operates the Synnøve Knutsen . This acquisition was accounted for as an acquisition of assets. See Note 23—Acquisitions. Drydocking activity for the years ended December 31, 2022 and 2021 is summarized as follows: (U.S. Dollars in thousands) At December 31, 2022 At December 31, 2021 Balance at the beginning of the year $ 13,458 $ 17,106 Costs incurred for dry docking 17,614 4,235 Costs allocated to drydocking as part of acquisition of asset 2,133 — Drydock amortization (8,610) (7,883) Balance at the end of the year $ 24,595 $ 13,458 The carrying value of the Partnership’s fleet is regularly assessed as events or changes in circumstances may indicate that a vessel’s net carrying value exceeds the net undiscounted cash flows expected to be generated over its remaining useful life, and in such situation the carrying amount of the vessel is reduced to its estimated fair value. The Partnership considers factors related to vessel age, expected residual value, ongoing use of the vessels and equipment, shifts in market conditions and other impacting factors associated with the global oil and maritime transportation industries. As of December 31, 2022, this exercise was performed which resulted in no impairment. This exercise in the second quarter of 2021 resulted in an impairment in respect of the Windsor Knutsen Windsor Knutsen Windsor Knutsen |
Intangible Assets and Contract
Intangible Assets and Contract Liabilities | 12 Months Ended |
Dec. 31, 2022 | |
Intangible Assets and Contract Liabilities | |
Intangible Assets and Contract Liabilities | 15) Intangible Assets and Contract Liabilities (a) Intangible Assets Above Above market time market time charter charter Tordis Vigdis Total (U.S. Dollars in thousands) Knutsen Knutsen intangibles Intangibles, December 31, 2020 $ 305 $ 376 $ 681 Additions — — — Amortization for the year (305) (301) (606) Intangibles, December 31, 2021 $ — $ 75 $ 75 Additions — — — Amortization for the period — (75) (75) Intangibles, December 31, 2022 $ — $ — $ — The intangible for the above market value of time charter contract associated with the Tordis Knutsen - Vigdis Knutsen - (b) Contract Liabilities The unfavorable contractual rights for charters associated with Fortaleza Knutsen Recife Knutsen Fortaleza Knutsen Recife Knutsen Fortaleza Knutsen Recife Knutsen Balance of Amortization for Balance of Amortization for Balance of December 31, the year ended December 31, the year ended December 31, (U.S. Dollars in thousands) 2020 December 31, 2021 2021 December 31, 2022 2022 Contract liabilities: Unfavourable contract rights $ (3,686) $ 1,517 $ (2,169) $ 1,518 $ (651) Total amortization income $ 1,517 $ 1,518 Accumulated amortization for contract liabilities was $17.6 million and $16.0 million as of December 31, 2022 and 2021, respectively. The amortization of contract liabilities that is classified under time charter and bareboat revenues for the next five years is expected to be as follows: (U.S. Dollars in thousands) 2023 $ 651 2024 — 2025 — 2026 — 2027 and thereafter — Total $ 651 |
Accrued expenses
Accrued expenses | 12 Months Ended |
Dec. 31, 2022 | |
Accrued expenses | |
Accrued expenses | 16) Accrued expenses The following table presents accrued expenses as of December 31, 2022 and December 31, 2021: (U.S. Dollars in thousands) At December 31, 2022 At December 31, 2021 Operating expenses $ 1,125 $ 559 Interest expenses 4,805 1,719 Other expenses 4,721 4,151 Total accrued expenses $ 10,651 $ 6,429 |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Dec. 31, 2022 | |
Long-Term Debt | |
Long-Term Debt | 17) Long-Term Debt Long-term debt as of December 31, 2022 and 2021, consisted of the following: December 31, December 31, (U.S. Dollars in thousands) Vessel 2022 2021 $345 million loan facility Anna Knutsen, Tordis Knutsen, Vigdis Knutsen, Brasil Knutsen, Lena Knutsen $ 313,630 $ 338,726 $320 million loan facility Windsor Knutsen, Bodil Knutsen, Carmen Knutsen, Fortaleza Knutsen, Recife Knutsen, Ingrid Knutsen 192,021 222,133 $55 million revolving credit facility with DNB 55,000 — Hilda loan facility Hilda Knutsen 66,154 72,308 Torill loan facility Torill Knutsen — 75,000 $172.5 million loan facility Dan Cisne, Dan Sabia 31,739 45,340 Tove loan facility Tove Knutsen 77,516 81,883 Synnøve loan facility Synnøve Knutsen 85,292 — $25 million revolving credit facility with NTT 25,000 25,000 $25 million revolving credit facility with Shinsei 25,000 25,000 Raquel Sale & Leaseback Raquel Knutsen 84,247 89,206 Torill Sale & Leaseback Torill Knutsen 107,048 — Total long-term debt $ 1,062,647 $ 974,596 Less: current installments 371,906 90,956 Less: unamortized deferred loan issuance costs 2,119 2,378 Current portion of long-term debt 369,787 88,578 Amounts due after one year 690,741 883,640 Less: unamortized deferred loan issuance costs 4,140 5,092 Long-term debt, less current installments, and unamortized deferred loan issuance costs $ 686,601 $ 878,548 The Partnership’s outstanding debt of $1,062.6 million as of December 31, 2022 is repayable as follows : (U.S. Dollars in thousands) Sale & Leaseback Period repayment Balloon repayment Total 2023 $ 13,161 $ 77,839 $ 280,906 $ 371,906 2024 13,804 41,179 63,393 118,376 2025 14,399 33,109 136,583 184,091 2026 15,060 18,822 219,521 253,403 2027 and thereafter 134,871 — — 134,871 Total $ 191,295 $ 170,949 $ 700,403 $ 1,062,647 As of December 31, 2022, the interest rates on the Partnership’s loan agreements were LIBOR plus a fixed margin ranging from 1.75% to 2.4%. As shown on the balance sheet at December 31, 2022 and as disclosed in the table above, the Partnership has significant debt coming due within one year. The Partnership has commenced discussions and negotiations with its lending group and other institutions and advisors concerning the refinancing of all of its credit facilities that mature in 2023 and early 2024. Although there is some judgement required in assessing this risk, given the negotiations that are already underway and given the Partnership’s history of successfully obtaining financing or refinancing its debt, management believes that it will be able to conclude a refinancing of all such facilities on similar terms (including that no re-leverage is required) prior to maturity. However, no assurance can be given that all such facilities will be timely refinanced on acceptable terms. $345 Million Term Loan Facility In September 2021, the Partnership’s subsidiaries which own the Tordis Knutsen Vigdis Knutsen Lena Knutsen Anna Knutsen Brasil Knutsen The $345 Million Loan Facility contains the following financial covenants: ● Each borrower shall at all times maintain Liquidity equal to or greater than $250,000 ; ● Positive working capital of the Partnership; ● Minimum liquidity of the Partnership of $15 million plus increments of $1.5 million for each owned vessel with less than 12 months remaining tenor on its employment contract up to 8 vessels and $1 million for each owned vessel with less than 12 months remaining tenor on its employment contract up to 12 additional vessels in excess of 8 vessels; ● Minimum book equity ratio for the Partnership of 30% ; and ● Minimum EBITDA to interest ratio for the Partnership of 2.50 . The $345 Million Loan Facility also identifies various events that may trigger mandatory reduction, prepayment, and cancellation of the facility, including if the aggregate market value of the vessels is less than 125% of the outstanding balance under the facility, upon a total loss or sale of a vessel and customary events of default. As of December 31, 2022, the borrowers and the guarantors were in compliance with all covenants under this facility. $320 Million Term Loan Facility and $55 Million Revolving Credit Facility with DNB In September 2018, the Partnership’s subsidiaries which own the Windsor Knutsen Bodil Knutsen Fortaleza Knutsen the Recife Knutsen Carmen Knutsen Ingrid Knutsen The Vessels, assignments of earnings, charterparty contracts and insurance proceeds are pledged as collateral for the Multi-vessel facility. The Partnership and the borrowers (except for the Partnership’s subsidiary that owns the Recife Knutsen Fortaleza Knutsen Windsor Knutsen Bodil Knutsen Fortaleza Knutsen Recife Knutsen Carmen Knutsen Ingrid Knutsen. The Multi-vessels Facility contains the following financial covenants: ● Positive working capital of the borrowers and the Partnership; ● Minimum liquidity of the Partnership of $15 million plus increments of $1.5 million for each owned vessel with less than 12 months remaining tenor on its employment contract up to 8 vessels and $1 million for each owned vessel with less than 12 months remaining tenor on its employment contract up to 12 additional vessels in excess of 8 vessels; ● Minimum book equity ratio for the Partnership of 30% ; and ● Minimum EBITDA to interest ratio for the Partnership of 2.50 . The Multi-vessels Facility also identifies various events that may trigger mandatory reduction, prepayment and cancellation of the facility, including if the aggregate market value of the vessels is less than 125% of the outstanding balance under the Multi Vessel Facility, upon a total loss or sale of a vessel and customary events of default. As of December 31, 2022, the borrowers and the guarantors were in compliance with all covenants under this facility. Hilda Loan Facility In May 2017, the Partnership’s subsidiary, Knutsen Shuttle Tankers 14 AS, which owns the vessel Hilda Knutsen The Hilda Facility contains the following primary financial covenants: ● Positive working capital of the borrower and the Partnership; ● Minimum liquidity of the Partnership of $15 million plus increments of $1 million for each additional vessel acquired by the Partnership in excess of eight vessels and $1.5 million for each owned vessel with less than 12 months remaining tenor on its employment contract; ● Minimum book equity ratio for the Partnership of 30% ; and ● Minimum EBITDA to interest ratio for the Partnership of 2.50 . The Hilda Facility also identifies various events that may trigger mandatory reduction, prepayment and cancellation of the facility, including if the market value of the Hilda Knutsen of the outstanding loan under the Hilda Facility for the first two years, Hilda Knutsen $172.5 Million Secured Loan Facility In April 2014, KNOT Shuttle Tankers 20 AS and KNOT Shuttle Tankers 21 AS, the subsidiaries owning the Dan Cisne Dan Sabia Dan Cisne Dan Cisne Dan Sabia The Dan Cisne Facility and the Dan Sabia Facility are guaranteed by the Partnership and secured by a vessel mortgage on the Dan Cisne Dan Sabia The Dan Cisne Facility and Dan Sabia Facility contain the following financial covenants: ● Minimum liquidity of the Partnership of $15 million plus increments of $1 million for each additional vessel acquired by the Partnership in excess of eight vessels and $1.5 million for each owned vessel with less than 12 months remaining tenor on its employment contract; and ● Minimum book equity ratio for the Partnership of 30% . The facility also identifies various events that may trigger mandatory reduction, prepayment and cancellation of the facility, including if the market value of either of the vessels are less than 125% of the respective loan, upon a total loss or sale of a vessel and customary events of default. As of December 31, 2022, the borrowers and the guarantor were in compliance with all covenants under this facility. Tove Loan Facility In July 2019, KNOT Shuttle Tankers 34 AS, the subsidiary owning the Tove Knutsen Tove Knutsen The Tove Facility contains the following financial covenants: ● Positive working capital of the Partnership; ● Minimum liquidity of the Partnership of $15 million plus increments of $1.5 million for each owned vessel with less than 12 months remaining tenor on its employment contract up to 8 vessels and $1 million for each owned vessel with less than 12 months remaining tenor on its employment contract in excess of 8 vessels; ● Minimum book equity ratio for the Partnership of 30% ; and ● Minimum EBITDA to interest ratio for the Partnership of 2.50 . The Tove Facility also identifies various events that may trigger mandatory reduction, prepayment and cancellation of the facility, including if the market value the Tove Knutsen Synnøve Loan Facility In July 2019, KNOT Shuttle Tankers 35 AS, the subsidiary owning the Synnøve Knutsen Synnøve Knutsen The Synnøve Facility contains the following financial covenants: ● Positive working capital of the Partnership; ● Minimum liquidity of the Partnership of $15 million plus increments of $1.5 million for each owned vessel with less than 12 months remaining tenor on its employment contract up to 8 vessels and $1 million for each owned vessel with less than 12 months remaining tenor on its employment contract in excess of 8 vessels; ● Minimum book equity ratio for the Partnership of 30 %; and ● Minimum EBITDA to interest ratio for the Partnership of 2.50 . The Synnøve Facility also identifies various events that may trigger mandatory reduction, prepayment and cancellation of the facility, including if the market value of the Synnøve Knutsen $25 Million Revolving Credit Facility with NTT In June 2021, KNOT Shuttle Tankers AS extended the maturity of its $25 million unsecured revolving credit facility with NTT Finance Corporation. The extended facility will mature in August 2023, bears interest at LIBOR plus a margin of 1.8% and has a commitment fee of 0.5% on the undrawn portion of the facility. The commercial terms of the facility are unchanged from the facility entered into in June 2017 with NTT Finance Corporation. $25 Million Revolving Credit Facility with Shinsei In November 2020, KNOT Shuttle Tankers AS entered into an unsecured revolving credit facility with Shinsei Bank. The facility will mature in November 2023, bears interest at LIBOR plus a margin of 1.75% and has a commitment fee of 0.7% on the undrawn portion of the facility. Raquel Sale and Leaseback On December 30, 2020, the Partnership through its wholly owned subsidiary, Knutsen Shuttle Tankers 19 AS, which owned the Raquel Knutsen Torill Sale and Leaseback On June 30, 2022, the Partnership through its wholly owned subsidiary, Knutsen Shuttle Tankers 15 AS, which owned the Torill Knutsen Torill Loan Facility In January 2018, the Partnership's subsidiary, Knutsen Shuttle Tankers 15 AS, which owned the vessel Torill Knutsen |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Income Taxes | 18) Income Taxes (a) Components of Current and Deferred Tax Expense All of the income from continuing operations before income taxes was taxable in Norway for the years ended December 31, 2022, 2021 and 2020. Our Norwegian subsidiaries are subject to Norwegian tonnage tax rather than ordinary corporate taxation. Under the tonnage tax regime, tax is payable based on the tonnage of the vessel, not on operating income, and is included within operating expenses. Net financial income and expense remain taxable as ordinary income at the regular corporate income tax rate of 22% and is recorded as an income tax expense. The amount of tonnage tax included in operating expenses for each of the years ended December 31, 2022, 2021 and 2020 was $0.2 million, $0.3 million and $0.2 million respectively. See Note 2(r)—Income Taxes. The activities taxable in the UK relate to KNOT UK and are based on the operating income for the entity. The significant components of current and deferred income tax expense attributable to income from continuing operations for the years ended December 31, 2022, 2021 and 2020 are as follows: Year Ended December 31, (U.S. Dollars in thousands) 2022 2021 2020 Current tax benefit (expense) $ (878) $ (488) $ (10) Deferred tax benefit (expense) 3 — — Income tax benefit (expense) $ (875) $ (488) $ (10) (b) Taxation Income taxes attributable to income from continuing operations was an income tax expense of $875,000 for the year ended December 31, 2022, an income tax expense of $488,000 for the year ended December 31, 2021 and an income tax expense of $10,000 for the year ended December 31, 2020, and differed from the amounts computed by applying the Norwegian and the UK ordinary income tax rate of 22% and 19% in for each of the years ended December 31, 2022, 2021 and 2020, to tonnage tax and pretax net income, respectively, as a result of the following: Year Ended December 31, (U.S. Dollars in thousands) 2022 2021 2020 Income tax benefit (expense) at Norwegian tonnage tax regime $ (866) $ (479) $ — Income tax benefit (expense) within UK (9) (9) (10) Income tax benefit (expense) $ (875) $ (488) $ (10) Effective tax rate -1 % -1 % 0 % (c) Components of Deferred Tax Assets and Liabilities The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31, 2022 and 2021 are presented below: As of December 31, (U.S. Dollars in thousands) 2022 2021 Deferred tax assets: Financial derivatives $ — $ — Financial loss carry forwards for tonnage tax 25,657 23,485 Total deferred tax asset 25,657 23,485 Less valuation allowance (25,657) (23,485) Net deferred tax asset — — Deferred tax liabilities: Entrance tax 164 228 Deferred tax related to long-term debt 260 — Total deferred tax liabilities 424 228 $ 424 $ 228 The net deferred tax liability is classified in the consolidated balance sheets as follows: As of December 31, (U.S. Dollars in thousands) 2022 2021 Current deferred tax asset $ — $ — Non-current deferred tax liabilities 424 228 Net deferred tax liabilities $ 424 $ 228 Changes in the net deferred tax liabilities at December 31, 2022 and 2021 are presented below: As of December 31, (U.S. Dollars in thousands) 2022 2021 Net deferred tax liabilities at January 1, $ 228 $ 295 Change in temporary differences 219 (58) Translation differences (23) (9) Net deferred tax liabilities at December 31, $ 424 $ 228 The Partnership records a valuation allowance for deferred tax assets when it is more likely than not that some or all of the benefit from the deferred tax asset will not be realized. The valuation allowances were $25.7 million and $23.5 million as of December 31, 2022 and 2021, respectively. The valuation allowances relate to the financial loss carry forwards and other deferred tax assets for tonnage tax that, in the judgment of the Partnership, are more-likely-than not to be realized reflecting the Partnership’s cumulative loss position for tonnage tax. In assessing the realizability of deferred tax assets, 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 December 31, 2022, the Partnership determined that the deferred tax assets are likely to not be realized, and the booked value was, therefore, zero. There is no expiration date for losses carried forward. 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 Lena Knutsen due to paid entrance tax and translation effects. The taxes payable are calculated based on the Norwegian corporate tax rate of 22% for 2022 and 2021, and the deferred tax liabilities are also calculated based on a tax rate of 22% effective for 2022 and 2021. Income tax expense within the UK of $8,722 and $8,997 for 2022 and 2021, respectively, was calculated by multiplying the tax basis with the UK tax rate of 19% in each of 2022 and 2021. As of December 31, 2022, the total income taxes payable are estimated to be $0.7 million and consist primarily of net financial income and expense taxable in Norway at the normal corporate income tax rate, payable Norwegian entrance tax and ordinary UK corporation tax. As of December 31, 2021, the total income taxes payable are estimated to be $0.6 million and consist primarily of net financial income and expense taxable in Norway at the normal corporate income tax rate, payable Norwegian entrance tax and ordinary UK corporation tax. The tax loss carry forward from ordinary taxation and financial loss carry forwards for tonnage tax have no expiration dates. The Partnership’s Norwegian income tax returns are subject to examination by Norwegian tax authorities going back ten years. The Partnership had no unrecognized tax benefits as of December 31, 2022 and 2021. During the years ended December 31, 2022 and 2021, the Partnership did not incur any interest or penalties on its tax returns. On December 14, 2017, the Norwegian government concluded the negotiations with the EFTA Surveillance Authority regarding the Norwegian tonnage tax regime, which has been approved for another ten years, until 2027. Pursuant to the approval, Norway has introduced restrictions that eliminates the ability of companies that own vessels under certain bareboat charters to qualify for the Norwegian tonnage tax regime. Companies that no longer qualify for the Norwegian tonnage tax regime will instead be subject to Norwegian corporate income tax. However, there are no limitations on intra-group bareboat chartering, as well as bareboat charters where crewing services are carried out by a related party. In order to constitute a related party, a minimum of 25% ownership/control is required, according to the “associated enterprise” definition in the ATAD directive (Council Directive EU 2016/1164.) Due to the fact that KNOT has an ownership interest in the Partnership that exceeds 25% as well as an ownership interest of 100% in KNOT Management and KNOT Management Denmark AS |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions | |
Related Party Transactions | 19) Related Party Transactions (a) Related Parties Prior to the IPO, the Partnership’s predecessor operated as an integrated part of KNOT. KNOT is owned 50% by TSSI and 50% by NYK Europe. The Partnership’s vessels that operate under time charters are subject to technical management agreements pursuant to which certain crew, technical and commercial management services are provided by KNOT Management or KNOT Management Denmark, each of which is The Partnership is a party to an administrative services agreement with KNOT UK, pursuant to which KNOT UK provides administrative services, and KNOT UK is permitted to subcontract certain of the administrative services provided under the administrative services agreement to KOAS UK and KOAS. On May 7, 2015, the Partnership entered into an amendment to the administrative services agreement, which allows KNOT UK to also subcontract administrative services to KNOT Management. The amounts of such costs and expenses included in the consolidated statements of operations for the years ended December 31, 2022, 2021 and 2020 are as follows: Year Ended December 31, (U.S. Dollars in thousands) 2022 2021 2020 Statements of operations: Time charter and bareboat revenues: Time charter income from KNOT (1) $ 14,531 $ 6,427 $ 4,883 Operating expenses: Vessel operating expenses (2) 15,828 16,812 14,693 Voyage expenses and commissions (3) 59 — — Technical and operational management fee from KNOT to Vessels (4) 9,265 8,429 7,342 Operating expenses from other related parties (5) 799 866 515 General and administrative expenses: Administration fee from KNOT Management (6) 1,356 1,277 1,131 Administration fee from KOAS (6) 699 780 654 Administration fee from KOAS UK (6) 76 80 118 Administration and management fee from KNOT (7) 59 58 49 Total income (expenses) $ (13,610) $ (21,875) $ (19,619) At December 31, At December 31, At December 31, (U.S. Dollars in thousands) 2022 2021 2020 Balance Sheet: Vessels: Drydocking supervision fee from KNOT (8) $ 156 $ 134 $ 47 Drydocking supervision fee from KOAS (8) 96 — — Equipment purchased from KOAS (9) 1,148 1,840 — Total $ 1,400 $ 1,974 $ 47 (1) Time charter income from KNOT: The Bodil Knutsen has operated under a time charter with Knutsen Shuttle Tankers Pool AS, a subsidiary of KNOT, since the second quarter of 2021. The Hilda Knutsen commenced a time charter with Knutsen Shuttle Tankers Pool AS in the third quarter of 2022 and which now expires in January 2024 unless terminated by either party on giving not less than 30 days ’ notice. (2) Vessel operating expenses: KNOT Management or KNOT Management Denmark provides technical and operational management of the vessels on time charter including crewing and crew training services. (3) Voyage expenses and commissions: The Windsor Knutsen and the Torill Knutsen have completed spot voyages where Knutsen Shuttle Tankers Pool AS has earned a 1.25% commission. (4) 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. (5) Operating expenses from other related parties : Simsea Real Operations AS, a company jointly owned by the Partnership’s Chairman of the Board, Trygve Seglem, and by other third-party 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 member onboard the vessel. Level Power & Automation AS, a company that provides automation and control systems for the martime industry, offshore and land-based industry is owned by Level Group AS, where Trygve Seglem, his family and members of TSSI management have significant influence. The cost is related to equipment and inspection to the Partnership’s vessels. (6) Administration fee from KNOT Management, Knutsen OAS Shipping AS (“KOAS”) and Knutsen OAS (UK) Ltd. (“KOAS UK”) : Administration costs include 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. (7) 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. (8) Drydocking supervision fee from KNOT Management, KNOT Management Denmark and KOAS : KNOT Management, KNOT Management Denmark and KOAS provide supervision and hire out service personnel during drydocking of the vessels. The fee is calculated as a daily fixed fee. (9) As part of the scheduled drydocking of the Windsor Knutsen and the Carmen Knutsen that commenced in the second quarter and the fourth quarter of 2022, respectively, ballast water treatment systems were installed on the vessels. As of December 31, 2022, parts of the systems had been purchased from Knutsen Ballast Water AS, a subsidiary of TSSI, for $1.15 million. During the scheduled second renewal survey drydocking of the Bodil Knutsen in 2021, a ballast water treatment system was installed on the vessel. Parts of the system were purchased from Knutsen Ballast Water AS for $1.84 million. (b) Transactions with Management and Directors Trygve Seglem, the Chairman of the Partnership’s board of directors and the President and CEO of KNOT, controls Seglem Holding AS, which owns 100% of the equity interest in TSSI, which controls KOAS. TSSI owns 50% of the equity interest in KNOT. NYK, which owns 50% of the equity interest in KNOT, has management and administrative personnel on secondment to KNOT. Mr. Seglem, along with other third-party shipping companies in Haugesund, also jointly owns Simsea Real Operations AS. See the footnotes to Note 19(a)—Related Party Transactions—Related Parties 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 and Due to Related Parties Balances with related parties consisted of the following: At December 31, At December 31, (U.S. Dollars in thousands) 2022 2021 Balance Sheet: Trading balances due from KOAS $ 118 $ 290 Trading balances due from KNOT and affiliates 1,880 2,378 Amount due from related parties $ 1,998 $ 2,668 Trading balances due to KOAS $ 1,398 $ 1,205 Trading balances due to KNOT and affiliates 319 219 Amount due to related parties $ 1,717 $ 1,424 Amounts due from and due 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 and other current assets Trade accounts payable to related parties are included in total trade accounts payables in the balance sheet. The balances to related parties consisted of the following: At December 31, At December 31, (U.S. Dollars in thousands) 2022 2021 Balance Sheet: Trading balances due to KOAS $ 824 $ 813 Trading balances due to KNOT and affiliates 998 783 Trade accounts payables to related parties $ 1,822 $ 1,596 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 December 31, At December 31, (U.S. Dollars in thousands) 2022 2021 Balance Sheet: Trade receivables due from KNOT and affiliates (See Note 12 (b)) $ 1,405 $ — Other trading balances due from KOAS 645 687 Other trading balances due from KNOT and affiliates 353 543 Other current assets from related parties $ 2,403 $ 1,230 (e) Acquisitions from KNOT On July 1, 2022, the Partnership acquired KNOT’s 100% interest in KNOT Shuttle Tankers 35 AS, the company that owns and operates the Synnøve Knutsen On December 31, 2020, the Partnership acquired KNOT's 100% interest in KNOT Shuttle Tankers 34 AS, the company that owns and operates the Tove Knutsen The board of directors of the Partnership (the “Board”) and the Conflicts Committee of the Board approved the purchase price for the transactions described above. The Conflicts Committee retained a financial advisor to assist with its evaluation of each of the transactions. See Note 23—Acquisitions. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies | |
Commitments and Contingencies | 20) Commitments and Contingencies Assets Pledged As of December 31, 2022 and 2021, Vessels with a book value of $1,631 million and $1,598 million, respectively, were pledged as security held as guarantee for the Partnership’s long-term debt and interest rate swap obligations. See Note 10—Derivative Instruments, Note 14—Vessels and Equipment and Note 17—Long-Term Debt. Claims and Legal Proceedings Under the Partnership’s time charters, claims to reduce the hire rate payments can be made if the Vessel does not perform to certain specifications in the agreements. No accrual for possible claims was recorded for the years ended December 31, 2022, 2021 and 2020. 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 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. See Note 8—Insurance Proceeds. |
Earnings per Unit and Cash Dist
Earnings per Unit and Cash Distributions | 12 Months Ended |
Dec. 31, 2022 | |
Earnings per Unit and Cash Distributions | |
Earnings per Unit and Cash Distributions | 21) Earnings per Unit and Cash Distributions The calculations of basic and diluted earnings per unit (1) are presented below: Year Ended December 31, (U.S. Dollars in thousands, except per unit data) 2022 2021 2020 Net income $ 58,667 $ 53,876 $ 65,225 Less: Series A Preferred unitholders’ interest in net income 6,800 6,900 7,200 Net income attributable to the unitholders of KNOT Offshore Partners LP 51,867 46,976 58,025 Less: Distributions (2) 55,404 72,520 72,136 Under (over) distributed earnings (3,537) (25,544) (14,111) Under (over) distributed earnings attributable to: Common unitholders (3) (3,430) (24,927) (13,851) Class B unitholders (42) (147) — General Partner (65) (470) (261) Weighted average units outstanding (basic) (in thousands): Common unitholders 33,882 33,050 32,694 Class B unitholders 416 195 — General Partner 640 623 615 Weighted average units outstanding (diluted) (in thousands): Common unitholders (4) 37,919 37,064 32,694 Class B unitholders 416 195 — General Partner 640 623 615 Earnings per unit (basic) Common unitholders $ 1.48 $ 1.38 $ 1.74 Class B unitholders 1.48 2.62 — General Partner 1.48 1.38 1.74 Earnings per unit (diluted): Common unitholders (4) $ 1.48 $ 1.38 $ 1.74 Class B unitholders 1.48 2.62 — General Partner 1.48 1.38 1.74 Cash distributions declared and paid in the period per unit (5) $ 2.08 $ 2.08 $ 2.08 Subsequent event: Cash distributions declared and paid per unit relating to the period (6) $ 0.03 $ 0.52 $ 0.52 (1) Earnings per unit have been calculated in accordance with the cash distribution provisions set forth in the Partnership’s agreement of limited partnership (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 included cash distributions to the IDR holder (KNOT) for the years ended December 31, 2021 and 2020 of $2.1 million and $2.8 million, respectively. There were no payments to the IDR holder (KNOT) for the year ended December 31, 2022. (3) This included net income that was attributable to the IDR holder for the years ended December 31, 2021 and 2020 of $2.1 million and $2.8 million, respectively. (4) Diluted weighted average units outstanding and earnings per unit diluted for the years ended December 2022, 2021 and 2020 does not reflect any potential common units relating to the convertible preferred units since the assumed issuance of any additional units 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 December 31. On May 27, 2021, Tortoise Direct Opportunities Fund LP, the holder of 416,677 of the Partnership's Series A Convertible Preferred Units ("Series A Preferred Units"), sold 208,333 of its Series A Preferred Units to KNOT and converted 208,334 Series A Preferred Units to 215,292 common units based on a conversion rate of 1.0334. The Series A Preferred Units rank senior to the common units and Class B Units as to the payment of distributions and amounts payable upon liquidation, dissolution or winding up. The Series A Preferred Units have a liquidation preference of $24.00 per unit, plus any Series A unpaid cash distributions, plus all accrued but unpaid distributions on such Series A Preferred Unit with respect to the quarter in which the liquidation occurs to the date fixed for the payment of any amount upon liquidation. The Series A Preferred Units are entitled to cumulative distributions from their initial issuance date, with distributions being calculated at an annual rate of 8.0% on the stated liquidation preference and payable quarterly in arrears within 45 days after the end of each quarter, when, as and if declared by the Board. The Series A Preferred Units are generally convertible, at the option of the holders of the Series A Preferred Units, into common units at the applicable conversion rate. The conversion rate will be subject to adjustment under certain circumstances. In addition, the conversion rate will be redetermined on a quarterly basis, such that the conversion rate will be equal to $24.00 (the "Issue Price") divided by the product of (x) the book value per common unit at the end of the immediately preceding quarter (pro-forma for per unit cash distributions payable with respect to such quarter) multiplied by (y) the quotient of (i) the Issue Price divided by (ii) the book value per common unit on February 2, 2017. In addition, the Partnership may redeem the Series A Preferred Units at any time until February 2, 2027 at the redemption price specified in the Partnership Agreement, provided, however, that upon notice from the Partnership to the holders of Series A Preferred Units of its intent to redeem, such holders may elect, instead, to convert their Series A Preferred Units into common units at the applicable conversion rate. Upon a change of control of the Partnership, the holders of Series A Preferred Units will have the right to require cash redemption at 100% of the Issue Price. In addition, the holders of Series A Preferred Units will have the right to cause the Partnership to redeem the Series A Preferred Units on February 2, 2027 in, at the option of the Partnership, (i) cash at a price equal to 70% of the Issue Price or (ii) common units such that each Series A Preferred Unit receives common units worth 80% of the Issue Price (based on the volume-weighted average trading price, as adjusted for splits, combinations and other similar transactions, of the common units as reported on the NYSE for the 30 trading day period ending on the fifth trading day immediately prior to the redemption date) plus any accrued and unpaid distributions. In addition, subject to certain conditions, the Partnership has the right to convert the Series A Preferred Units into common units at the applicable conversion rate if the aggregate market value (calculated as set forth in the partnership agreement) of the common units into which the outstanding Series A Preferred Units are convertible, based on the applicable conversion rate, is greater than 130% of the aggregate Issue Price of the outstanding Series A Preferred Units. The Series A Preferred Units have voting rights that are identical to the voting rights of the common units and Class B Units, except they do not have any right to nominate, appoint or elect any of the directors of the Board, except whenever distributions payable on the Series A Preferred Units have not been declared and paid for four consecutive quarters (a "Trigger Event"). Upon a Trigger Event, holders of Series A Preferred Units, together with the holders of any other series of preferred units upon which like rights have been conferred and are exercisable, may replace one of the members of the Board appointed by the General Partner with a person nominated by such holders, such nominee to serve until all accrued and unpaid distributions on the preferred units have been paid. The Series A Preferred Units are entitled to vote with the common units and Class B Units as a single class so that the Series A Preferred Units are entitled to one vote for each common unit into which the Series A Preferred Units are convertible at the time of voting. On September 7, 2021, the Partnership entered into an exchange agreement with its general partner and KNOT whereby KNOT contributed to the Partnership all of KNOT’s IDRs in exchange for the issuance by the Partnership to KNOT of 673,080 common units and 673,080 Class B Units, whereupon the IDRs were cancelled (the “IDR Exchange”). The IDR Exchange closed on September 10, 2021. The Class B Units are a new class of limited partner interests which are not entitled to receive cash distributions in any quarter unless common unitholders receive a distribution of at least $0.52 for such quarter (the “Distribution Threshold”). When common unitholders receive a quarterly distribution at least equal to the Distribution Threshold, then Class B unitholders will be entitled to receive the same distribution as common unitholders. For each quarter (starting with the quarter ended September 30, 2021) that the Partnership pays distributions on the common units that are at or above the Distribution Threshold, one After the payment of the Partnership's quarterly cash distribution on February 12, 2022, with respect to the fourth quarter of 2021, 84,135 of the Class B Units converted to common units on a one-to-one basis. After the payment of the Partnership's quarterly cash distribution on May 12, 2022, with respect to the first quarter of 2022, 84,135 of the Class B Units converted to common units on a one-to-one basis. After the payment of the Partnership's quarterly cash distribution on August 11, 2022, with respect to the second quarter of 2022, 84,135 of the Class B Units converted to common units on a one-to-one basis. After the payment of the Partnership's quarterly cash distribution on November 9, 2022 with respect to the third quarter of 2022, 84,135 of the Class B Units converted to common units on a one-to-one basis. On January 11, 2023, the Partnership declared a quarterly cash distribution with respect to the fourth quarter of 2022 of $0.026 per common unit and, after the payment of this quarterly cash distribution on February 9, 2023, no Class B Units converted to common units. As of December 31, 2022, 71.4% of the Partnership’s total number of common units outstanding representing limited partner interests were held by the public (in the form of 24,293,458 common units) and 28.4% of such units were held directly by KNOT (in the form of 9,661,255 common units). In addition, KNOT, through its ownership of the General Partner, held a 1.83% general partner interest (in the form of 640,278 general partner units) and a 0.3% limited partner interest (in the form of 90,368 common units). As of December 31, 2022, KNOT also held 208,333 Series A Preferred Units and 252,405 Class B 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 3,541,666 Series A Preferred Units and 252,405 Class B Units as of December 31, 2022. 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 and Class B 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 and Class B Units if the effect would be anti-dilutive. The General Partner’s, Class B unitholders’ 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 future capital expenditures, anticipated credit needs and capital requirements and any accumulated distributions on, or redemptions of, the Series A Preferred Units. 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. |
Unit Activity
Unit Activity | 12 Months Ended |
Dec. 31, 2022 | |
Unit Activity | |
Unit Activity | 22) Unit Activity The following table shows the movement in number of common units, Class B Units, general partner units and Series A Preferred Units from December 31, 2020 until December 31, 2022: General Partner Convertible (in units) Common Units Class B Units Units Preferred Units December 31, 2020 32,694,094 — 615,117 3,750,000 May 27, 2021: Conversion of Series A Preferred Units 215,292 — — (208,334) September 7, 2021: IDR elimination 673,080 673,080 — — September 10, 2021: Issue of General Partner Units — — 25,161 — October 25, 2021: ATM program issue of common units 10,902 — — — October 26, 2021: ATM program issue of common units 31,038 — — — November 10, 2021: Quarterly conversion of Class B Units 84,135 (84,135) — — December 31, 2021 33,708,541 588,945 640,278 3,541,666 February 10, 2022: Quarterly conversion of Class B Units 84,135 (84,135) — — May 12, 2022: Quarterly conversion of Class B Units 84,135 (84,135) — — August 11, 2022: Quarterly conversion of Class B Units 84,135 (84,135) — — November 9, 2022: Quarterly conversion of Class B Units 84,135 (84,135) — — December 31, 2022 34,045,081 252,405 640,278 3,541,666 On May 27, 2021 Tortoise Direct Opportunities Fund LP, the holder of 416,677 of the Partnership’s Series A Preferred Units sold 208,333 of its Series A Preferred Units to KNOT and converted 208,334 Series A Preferred Units to 215,292 common units based on a Series A conversion rate of 1.0334. On September 7, 2021, the Partnership entered into an exchange agreement with KNOT and the Partnership’s general partner whereby KNOT contributed to the Partnership all of KNOT’s IDRs, in exchange for the issuance by the Partnership to KNOT of 673,080 common units and 673,080 Class B Units, whereupon the IDRs were cancelled. The IDR Exchange closed on September 10, 2021. On September 10, 2021, the Partnership’s general partner contributed $0.45 million to the Partnership in exchange for the issuance of 25,161 general partner units in order to maintain its 1.83% general partner interest in the Partnership in connection with the IDR Exchange. In October 2021, the Partnership sold 41,940 common units under the ATM Program at an average gross sales price of $20.06 per unit and received net proceeds, after sale commissions, of $0.83 million. The Partnership paid an aggregate of $0.01 million in sales commissions to the Agent in connection with such sales. On November 10, 2021, 84,135 Class B units were converted to common units on a one-to-one basis pursuant to the Partnership Agreement. On February 12, 2022, 84,135 Class B units were converted to common units on a one-to-one basis pursuant to the Partnership Agreement. On May 12, 2022, 84,135 Class B units were converted to common units on a one-to-one basis pursuant to the Partnership Agreement. On August 11, 2022, 84,135 Class B units were converted to common units on a one-to-one basis pursuant to the Partnership Agreement. On November 9, 2022, 84,135 Class B units were converted to common units on a one-to-one basis pursuant to the Partnership Agreement. |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2022 | |
Acquisitions | |
Acquisitions | 23) Acquisitions During the year ended December 31, 2022 and 2020 the Partnership acquired from KNOT equity interests in the subsidiaries which own and operate the Synnøve Knutsen Tove Knutsen, . The board of directors of the Partnership and the Conflicts Committee approved the purchase price for each transaction. The Conflicts Committee retained a financial advisor to assist with its evaluation of the transactions. The cost of the fee paid to the financial advisor was divided equally between the Partnership and KNOT. Acquisition related costs of $0.04 million and $0.06 million as of December 31, 2022 and 2020, respectively, were capitalized as a component of the assets acquired. The allocation of the purchase price to acquired identifiable assets was based on their estimated fair values at the date of acquisition. The purchase price of each acquisition has been allocated to the identifiable assets acquired. The details of each transaction are as follows: Final Final Synnøve Knutsen Tove Knutsen July 1, December 31, (U.S. Dollars in thousands) 2022 2020 Purchase consideration (1) $ 37,907 $ 21,898 Less: Fair value of net assets acquired: Vessels and equipment (2) 119,119 117,978 Cash 5,702 804 Inventories 291 136 Derivatives assets (liabilities) 958 (3,537) Others current assets 211 270 Amounts due from related parties 53 — Long-term debt (87,661) (93,139) Deferred debt issuance 592 769 Trade accounts payable (160) (430) Accrued expenses (694) (622) Amounts due to related parties (503) (331) Income tax payable (1) — Subtotal 37,907 21,898 Difference between the purchase price and fair value of net assets acquired $ — $ — (1) The purchase consideration comprises the following: Final Final Synnøve Knutsen Tove Knutsen July 1, December 31, (U.S. Dollars in thousands) 2022 2020 Cash consideration paid to KNOT (from KNOP) $ 31,931 $ 25,430 Purchase price adjustments 5,937 (3,596) Acquisition-related costs 39 64 Purchase price $ 37,907 $ 21,898 (2) Vessel and equipment includes allocation to drydocking for the following vessels (in thousands): Synnøve Knutsen of $2,133 and Tove Knutsen of $3,040 . Synnøve Knutsen On July 1, 2022, the Partnership’s wholly owned subsidiary, KNOT Shuttle Tankers AS, acquired KNOT Shuttle Tankers 35 AS (“KNOT 35”), the company that owns and operates the Synnøve Knutsen. Synnøve Knutsen Tove Knutsen On December 31, 2020, the Partnership’s wholly owned subsidiary, KNOT Shuttle Tankers AS, acquired KNOT’s 100% interest in KNOT Shuttle Tankers 34 AS (“KNOT 34”), the company that owns and operates the Tove Knutsen. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events | |
Subsequent Events | 24) Subsequent Events The Partnership has evaluated subsequent events from the balance sheet date through March 30, 2023, the date at which the audited consolidated financial statements were available to be issued, and determined that there are no other items to disclose, except as follows: On January 11, 2023, the Partnership declared a quarterly cash distribution of $0.026 per common with respect to the quarter ended December 31, 2022 paid on February 9, 2023, to all common unitholders of record on January 26, 2023. On the same day, the Partnership declared a quarterly cash distribution to holders of Series A Preferred Units with respect to the quarter ended December 31, 2022 in an aggregate amount equal to $1.7 million. The Windsor Knutsen In January 2023, TotalEnergies exercised the option for an additional six months under the Lena Knutsen On February 9, 2023, TotalEnergies exercised the second option to extend the charter with the Tordis Knutsen The Carmen Knutsen The Torill Knutsen In accordance with the time charter agreement with Eni for the Ingrid Knutsen The current bareboat charters of the Fortaleza Knutsen Recife Knutsen Fortaleza Knutsen Recife Knutsen |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Summary of Significant Accounting Policies | |
Basis of Preparation | (a) Basis of Preparation The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). All intercompany balances and transactions are eliminated on consolidation. The consolidated financial statements include the financial statements of the entities listed in Note 4—Subsidiaries. |
Business Combinations and Asset Acquisitions | (b) Business Combinations and Asset Acquisitions Business combinations are accounted for under the purchase method of accounting. On acquisition, the identifiable assets, liabilities and contingent liabilities are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognized as goodwill. The consideration transferred for an acquisition is measured at fair value of the consideration given. Acquisition related costs are expensed as incurred. The results of operations of the acquired businesses are included in the consolidated results as of the date of the applicable acquisition. Dependent on the facts and circumstances, the assessment of a transaction may be considered the acquisition of an asset, when substantially all of the fair value of assets acquired is concentrated in a single identifiable asset, rather than a business combination. Asset acquisitions are accounted for by allocating the cost of the acquisition to the individual assets acquired and liabilities assumed on a relative fair value basis. Acquisition related costs are capitalized as a component of the assets acquired. See Note 23—Acquisitions. |
Reporting Currency | (c) Reporting Currency The consolidated financial statements are prepared in the reporting currency of U.S. Dollars. The functional currency of the vessel-owning Partnership subsidiaries is the U.S. Dollar, because the subsidiaries operate in the international shipping market, in which all revenues are U.S. Dollar-denominated and the majority of expenditures are made in U.S. Dollars. Transactions involving other currencies during the year are converted into U.S. Dollars using the exchange rates in effect at the time of the transactions. As of the balance sheet dates, monetary assets and liabilities that are denominated in currencies other than the U.S. Dollar are translated to reflect the year-end exchange rates. Resulting gains or losses are reflected separately in the accompanying consolidated statements of operations. |
Use of Estimates | (d) Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the useful lives and impairment of Vessels, drydocking, purchase price allocation and income taxes. |
Revenues and Operating Expenses | (e) Revenues and Operating Expenses The Partnership’s time charter contracts include both a lease component, consisting of the lease of the vessel, and non-lease component, consisting of operation of the vessel for the customers. The lease element is accounted for as an operating lease on a straight-line basis over the term of the charter, while the non-lease service element consisting of the operation of the vessel is recognized over time as the services are delivered. Revenue from time charters is not recognized during days the Vessel is off-hire. Revenue is recognized from delivery of the Vessel to the charterer, until the end of the contract period. Under bareboat charters, the Partnership provides a specified Vessel for a fixed period of time at a specified day rate and the Partnership recognizes revenues from bareboat charters as operating leases on a straight-line basis over the term of the charter. Where the term of the contract is based on the duration of a single voyage, the Partnership evaluates whether the voyage contain leases and, if so, recognizes lease revenue as described above, and if not, recognizes revenue in accordance with ASC 606 upon the satisfaction of the performance obligations in the contract on a load-to-discharge basis. In connection with the installation of the volatile organic compound emissions ("VOC") control equipment on the Bodil Knutsen Voyage expenses are all expenses unique to a particular voyage, including commissions to third parties, bunker fuel expenses, port fees, cargo loading and unloading expenses, canal tolls and agency fees. Voyage expenses are paid by the customer under time charter and bareboat charters. Voyage expenses are paid by the Partnership for spot contracts and during periods of off-hire and are recognized when incurred. Vessel operating expenses include commissions, crewing, repairs and maintenance, insurance, stores, lube oils and communication expenses. Vessel operating expenses are paid by the Partnership for time charters, spot contracts and during off-hire and are recognized when incurred. The Partnership directly employs one onshore employee and no seagoing employees. Related parties have provided the management services for the Vessels and employ the crews that work on the Vessels. The Partnership is not liable for any pension or post-retirement benefits. See Note 19—Related Party Transactions. |
Financial Income (Expense) | (f) Financial Income (Expense) Other finance expense includes external bank fees and commitment fees paid on undrawn revolving credit facility. |
Cash and Cash Equivalents | (g) Cash and Cash Equivalents The Partnership considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. |
Trade Accounts Receivable | (h) Trade Accounts Receivable Accounts receivable are recorded at the invoiced amount and do not bear interest. Time charter and bareboat charter contracts require customers to pay in advance of the period of hire. See Note 2(s)—Prepaid Charter. The allowance for expected credit losses is the Partnership’s best estimate of the expected credit losses over the remaining lives of the assets. Expected credit losses are estimated using historical credit loss experience, relevant available information, from internal and external sources, relating to current conditions and reasonable and supportable forecasts of economic conditions impacting the collectability of the assets. There was no allowance for expected credit loss or amounts written off against the allowance as of December 31, 2022 and 2021. The Partnership does not have any off-balance-sheet credit exposure related to its customers. |
Inventories | (i) Inventories Inventories, which are comprised of lubricating oils and, for vessels not operating on time charter or bareboat charter, also bunkers, are stated at the lower of cost or net realizable value. For vessels on time charters or bareboat charters, there are no bunkers, as the charterer supplies the bunkers, which principally consist of fuel oil. Cost is determined using the first-in, first-out method for all inventories. |
Other Current Assets | (j) Other Current Assets Other current assets principally consist of prepaid expenses and other receivables. |
Vessels and Equipment | (k) Vessels and Equipment Vessels and equipment are stated at the historical acquisition or construction cost, including capitalized interest, supervision and technical and delivery cost, net of accumulated depreciation and impairment loss, if any. Expenditures for subsequent conversions and major improvements are capitalized, provided that such costs increase the earnings capacity or improve the efficiency or safety of the vessels. Generally, the Partnership drydocks each vessel every 60 months until the vessel is 15 years old and every 30 months thereafter, as required for the renewal of certifications issued by classification societies. For vessels operating on time charters, the Partnership capitalizes the costs directly associated with the classification and regulatory requirements for inspection of the vessels and improvements incurred during drydocking. Drydock cost is depreciated on a straight-line basis over the period until the next planned drydocking takes place. The Partnership expenses costs related to routine repairs and maintenance performed during drydocking or as otherwise incurred. For vessels that are newly built or acquired, an element of the cost of the vessel is initially allocated to a drydock component and depreciated on a straight-line basis over the period until the next planned drydocking. When significant dry-docking expenditures occur prior to the expiration of this period, the Partnership expenses the remaining balance of the original drydocking cost in the month of the subsequent drydocking. For vessels operating on bareboat charters, the charter-party bears the cost of any drydocking. Depreciation on vessels and equipment is calculated on a straight-line basis over the asset’s estimated useful life, less an estimated residual value, as follows: Useful Life Hull 23 years Anchor-handling, loading and unloading equipment 23 years Main/auxiliary engine 23 years Thruster, dynamic positioning systems, cranes and other equipment 23 years Drydock costs 2.5 – 5 years A Vessel is depreciated to its estimated residual value, which is calculated based on the weight of the ship and estimated steel price. Any cost related to the disposal is deducted from the residual value. Historically, the useful life of the Partnership’s vessels and equipment was assessed as 25 years commencing from the date the vessel and equipment were delivered from the shipyard. As of June 30, 2021, the Partnership considered factors related to the ongoing use of the vessels and equipment, gradual shifts in market conditions and other long-term factors associated with the global oil and maritime transportation industries and based on this has reassessed the useful life as being 23 years. |
Right-of-use assets and lease liabilities | (l) Right-of-use assets and lease liabilities The Partnership assesses whether a contract contains a lease at inception of the contract. The assessment involves the exercise of judgement about whether it depends on a specified asset, whether the Partnership obtains substantially all the economic benefits from the use of that asset, and whether the Partnership has the right to direct the use of the asset. The Partnership does not separate lease components from non-lease components as lessee. The Partnership recognizes a right-of-use asset and a lease liability at the lease commencement date, except for short-term leases of 12 months or less, which are expensed on a straight-line basis over the lease term. |
Capitalized Interest | (m) Capitalized Interest Interest expense incurred on the Partnership’s debt during the construction of the Vessels exceeding one year is capitalized during the construction period. |
Impairment of Long-Lived Assets | (n) Impairment of Long-Lived Assets Vessels and equipment, vessels under construction and intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group to be tested for possible impairment, the Partnership first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. |
Intangibles | (o) Intangibles Intangible assets represent contractual rights for charters obtained in connection with business and asset acquisitions that have favorable contractual terms relative to market as of the acquisition dates. Contract liabilities represent contractual rights obtained in connection with business acquisitions that have unfavorable contractual terms relative to market as of the acquisition dates. The favorable and unfavorable contract rights have definite lives and are amortized to revenues over the period of the related contracts. Intangible assets with a definite life are tested for impairment whenever events or circumstances indicate that their carrying amount may not be recoverable. An impairment loss is recognized if the carrying amount exceeds the estimated fair value of the asset. The contract related intangible assets and liabilities and their amortization periods at acquisition dates are as follows: Amortization Intangible category Period Above market time charter— Tordis Knutsen 4.8 years Above market time charter— Vigdis Knutsen 4.9 years Unfavorable contractual rights— Fortaleza Knutsen 12 years Unfavorable contractual rights— Recife Knutsen 12 years The intangible for the above market value of the time charter contract associated with the Tordis Knutsen Vigdis Knutsen The unfavorable contractual rights for charters associated with Foraleza Knutsen Recife Knutsen Fortaleza Knutsen Recife Knutsen Fortaleza Knutsen Recife Knutsen |
Debt Issuance Costs | (p) Debt Issuance Costs Debt issuance costs, including fees, commissions and legal expenses, are deferred and presented net of debt. Debt issuance costs of term loans are amortized over the term of the relevant loan. Amortization of debt issuance costs is included in interest expense. These costs are presented as a deduction from the corresponding liability, consistent with debt discount. |
Derivative Instruments | (q) Derivative Instruments The Partnership uses derivatives to reduce market risks associated with its operations. The Partnership uses interest rate swaps for the management of interest risk exposure. The interest rate swaps effectively convert a portion of the Partnership’s debt from a floating to a fixed rate over the life of the transactions without an exchange of underlying principal. The Partnership seeks to reduce its exposure to fluctuations in foreign exchange rates through the use of foreign currency forward contracts. All derivative instruments are initially recorded at fair value as either assets or liabilities in the accompanying consolidated balance sheets and subsequently measured to fair value. The Partnership does not apply hedge accounting to its derivative instruments. Changes in the fair value of the derivative instruments are recognized in earnings. Gains and losses from the interest rate swap contracts of the Partnership related to long-term mortgage debt and foreign exchange forward contracts are recorded in realized and unrealized gain (loss) on derivative instruments in the consolidated statements of operations. Cash flows related to interest rate swap contracts are presented as cash flows provided by operating activities. Cash flows related to foreign exchange forward contracts entered into to economically hedge operating expenses in currencies other than U.S. Dollars are presented as cash flows provided by operating activities in the consolidated statements of cash flows, while cash flows related to foreign exchange forward contracts entered into to hedge contractual obligations to pay the shipyard in currencies other than functional currency of U.S. Dollars are presented as cash flows used in investing activities in the consolidated statements of cash flows. |
Income Taxes | (r) Income Taxes Historically, part of the Partnership’s activities were subject to ordinary taxation and taxes were paid on taxable income (including operating income and net financial income and expense), while part of the activities were subject to the Norwegian Tonnage Tax Regime (the “tonnage tax regime”). Under the tonnage tax regime, tax is based on the tonnage of the vessel, and not operating income. Net financial income and expense remain taxable as ordinary income at the regular corporate income tax rate. Income taxes arising from the part of activities subject to ordinary taxation are included in income tax expense in the consolidated statements of operations. For the portion of activities subject to the tonnage tax regime, tonnage taxes are classified as vessel operating expenses, while the current and deferred taxes arising on net financial income and expense are reflected as income tax expense in the consolidated statements of operations. See Note 18—Income Taxes. The Partnership accounts for deferred income taxes using the liability method. Under the liability method, deferred tax assets and liabilities are recognized for the anticipated future tax effects of temporary differences between the financial statement basis and the tax basis of the Partnership’s assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. A valuation allowance for deferred tax assets is recorded when it is more likely than not that some or all of the benefit from the deferred tax asset will not be realized. Recognition of uncertain tax positions is dependent upon whether it is more-likely-than-not that a tax position taken or expected to be taken in a tax return will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. If a tax position meets the more-likely-than-not recognition threshold, it is measured to determine the amount of benefit to recognize in the financial statements based on U.S. GAAP guidance. The Partnership recognizes interest and penalties related to uncertain tax positions in income tax expense. |
Prepaid Charter | (s) Prepaid Charter Under terms of the time charters and bareboat charters, the customer pays for the month’s charter the first day of each month that is recorded as prepaid charter revenues. |
Commitments, Contingencies and Insurance Proceeds | (t) Commitments, Contingencies and Insurance Proceeds Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. See Note 20—Commitments and Contingencies. Insurance claims for property damage for recoveries up to the amount of loss recognized are recorded when the claims submitted to insurance carriers are probable of recovery. Claims for property damage in excess of the loss recognized and for loss of hire are considered gain contingencies, which are generally recognized when the proceeds are received. |
Fair Value Measurements | (u) Fair Value Measurements The Partnership utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Partnership determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels: ● Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date. ● Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. ● Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. |
Recent Accounting Pronouncements | (v) Recently Adopted Accounting Standards In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2020-06 Debt-Debt with conversion and other options (subtopic 470-20) and Derivatives and Hedging-contracts in entity’s own equity (subtopic 815-40): Accounting for convertible instruments and contracts in an entity’s own equity (w) New Accounting Standards 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 objective of the guidance in Topic 848 is to provide temporary relief during the transition period. The FASB included a sunset provision within Topic 848 based on expectations of when the LIBOR would cease being published. At the time that Update 2020-04 was issued, the UK Financial Conduct Authority (“FCA”) had established its intent that it would no longer be necessary to persuade, or compel, banks to submit to LIBOR after December 31, 2021. As a result, the sunset provision was set for December 31, 2022 – 12 months after the expected cessation date of all currencies and tenors of LIBOR. In March 2021, the FCA announced that the intended cessation date of the overnight 1-, 3-, 6-, and 12-months tenors of USD LIBOR would be June 30, 2023, which is beyond the current sunset date of Topic 848. Because of the current relief in Topic 848 may not cover a period of time during which a significant number of modifications may take place, the amendments in Update 2022-06 defer the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. Although the Partnership does not apply hedge accounting, the Partnership has debt and interest rate swap contracts that reference LIBOR. The Partnership has determined that the reference rate reforms will primarily impact its floating rate debt facilities and the interest rate derivatives to which it is a party. For existing contracts, the Partnership is currently having discussions with its lending banks and the counterparties to the Partnership’s interest rate swap contracts to ensure that its contracts are renegotiated in time for the LIBOR discontinuation date of June 30, 2023. It is the Partnership’s view, that the Partnership will transition to the alternative reference rate, the Secured Overnight Financing Rate (“SOFR”), in accordance with the LIBOR discontinuation date. As of December 31, 2022, the Partnership has not made any contract modifications to replace the reference rate in any of its agreements and concluded that there was no impact to its consolidated financial statements. Other recently issued accounting pronouncements are not expected to materially impact the Partnership. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Summary of Significant Accounting Policies | |
Schedule of estimated useful life of vessels and equipment | Useful Life Hull 23 years Anchor-handling, loading and unloading equipment 23 years Main/auxiliary engine 23 years Thruster, dynamic positioning systems, cranes and other equipment 23 years Drydock costs 2.5 – 5 years |
Summary of contract related intangible assets and liabilities and their amortization periods at acquisition dates | Amortization Intangible category Period Above market time charter— Tordis Knutsen 4.8 years Above market time charter— Vigdis Knutsen 4.9 years Unfavorable contractual rights— Fortaleza Knutsen 12 years Unfavorable contractual rights— Recife Knutsen 12 years |
Significant Risks and Uncerta_2
Significant Risks and Uncertainties Including Business and Credit Concentrations (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Significant Risks and Uncertainties Including Business and Credit Concentrations | |
Schedule consolidated revenues and percentages of revenues for customers | Year Ended December 31, (U.S. Dollars in thousands) 2022 2021 2020 Eni Trading and Shipping S.p.A. $ 36,256 14 % $ 43,823 16 % $ 44,175 16 % Fronape International Company, a subsidiary of Petrobras Transporte S.A. 45,975 17 % 45,115 17 % 45,235 16 % Repsol Sinopec Brasil, B.V., a subsidiary of Repsol Sinopec Brasil, S.A. 37,571 14 % 37,030 14 % 33,947 12 % Brazil Shipping I Limited, a subsidiary of Royal Dutch Shell 12,546 5 % 59,825 22 % 76,959 28 % Galp Sinopec Brasil Services BV $ 16,621 6 % $ 35,622 13 % $ 35,684 13 % |
Operating Leases (Tables)
Operating Leases (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Operating Leases | |
Schedule of Partnership's revenues by time charter and bareboat charters and other revenues | Year Ended December 31, (U.S. Dollars in thousands) 2022 2021 2020 Time charter revenues (service element included) $ 216,822 $ 224,191 $ 233,346 Bareboat revenues 45,975 45,115 45,235 Total time charter and bareboat revenues 262,797 269,306 278,581 Other revenues (voyage revenues, loss of hire insurance recoveries and other income) 5,788 11,823 641 Total revenues $ 268,585 $ 281,129 $ 279,222 |
Schedule of minimum contractual future revenues | (U.S. Dollars in thousands) 2023 $ 183,049 2024 142,357 2025 131,472 2026 72,342 2027 and thereafter 14,536 Total $ 543,756 |
Schedule of maturity analysis of partnership's lease liabilities | (U.S. Dollars in thousands) 2023 $ 762 2024 762 2025 762 2026 62 2027 and thereafter — Total $ 2,348 Less imputed interest 87 Carrying value of operating lease liabilities $ 2,261 |
Other Finance Expenses (Tables)
Other Finance Expenses (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Other Finance Expenses | |
Schedule of components of interest expense | Year Ended December 31, (U.S. Dollars in thousands) 2022 2021 2020 Interest expense $ 39,912 $ 24,546 $ 29,142 Amortization of debt issuance cost and fair value of debt assumed 2,692 3,519 2,503 Total interest expense $ 42,604 $ 28,065 $ 31,645 |
Schedule of components of other finance expense | Year Ended December 31, (U.S. Dollars in thousands) 2022 2021 2020 Bank fees, charges $ 294 $ 463 $ 441 Commitment fees 334 548 264 Total other finance expense $ 628 $ 1,011 $ 705 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Derivative Instruments | |
Schedule of realized and unrealized gains and losses recognized in earnings as net gain (loss) on derivative instruments | Year Ended December 31, (U.S. Dollars in thousands) 2022 2021 2020 Realized gain (loss): Interest rate swap contracts $ (2,478) $ (10,094) $ (3,528) Foreign exchange forward contracts (502) — (109) Total realized gain (loss): (2,980) (10,094) (3,637) Unrealized gain (loss): Interest rate swap contracts 38,490 20,054 (21,795) Foreign exchange forward contracts — — (247) Total unrealized gain (loss): 38,490 20,054 (22,042) Total realized and unrealized gain (loss) on derivative instruments: $ 35,510 $ 9,960 $ (25,679) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Measurements | |
Schedule of carrying amounts and estimated fair values of financial instruments | December 31, 2022 December 31, 2021 Carrying Fair Carrying Fair (U.S. Dollars in thousands) Amount Value Amount Value Financial assets: Cash and cash equivalents $ 47,579 $ 47,579 $ 62,293 $ 62,293 Current derivative assets: Interest rate swap contracts 15,070 15,070 — — Non-current derivative assets: Interest rate swap contracts 14,378 14,378 1,015 1,015 Financial liabilities: Current derivative liabilities: Interest rate swap contracts — — 6,754 6,754 Non-current derivative liabilities: Interest rate swap contracts — — 4,260 4,260 Long-term debt, current and non-current $ 1,062,647 $ 1,035,740 $ 974,596 $ 974,596 |
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 December 31, Assets Inputs Inputs (U.S. Dollars in thousands) 2022 (Level 1) (Level 2) (Level 3) Financial assets: Cash and cash equivalents $ 47,579 $ 47,579 $ — $ — Current derivative assets: Interest rate swap contracts 15,070 — 15,070 — Non-current derivative assets: Interest rate swap contracts 14,378 — 14,378 — Financial liabilities: Non-current derivative liabilities: Long-term debt, current and non-current $ 1,062,647 $ — $ 1,035,740 $ — 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) 2021 (Level 1) (Level 2) (Level 3) Financial assets: Cash and cash equivalents $ 62,293 $ 62,293 $ — $ — Non-current derivative assets: Interest rate swap contracts 1,015 — 1,015 — Financial liabilities: Current derivative liabilities: Interest rate swap contracts 6,754 — 6,754 — Non-current derivative liabilities: Interest rate swap contracts 4,260 — 4,260 — Long-term debt, current and non-current $ 974,596 $ — $ 974,596 $ — |
Trade Accounts Receivable and_2
Trade Accounts Receivable and Other Current Assets (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Trade Accounts Receivable and Other Current Assets | |
Schedule of Other Current Assets | (U.S. Dollars in thousands) At December 31, 2022 At December 31, 2021 Trade receivables $ 7,662 $ — Trade receivables due from KNOT and affiliates (see Note 19(d)) 1,405 — Insurance claims for recoveries (see Notes 8 and 20) 2,112 124 Refund of value added tax 1,173 1,805 Prepaid expenses 1,311 1,158 Other receivables 1,865 2,539 Total other current assets $ 15,528 $ 5,626 |
Inventory (Tables)
Inventory (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Inventory | |
Schedule of inventory | (U.S. Dollars in thousands) At December 31, 2022 At December 31, 2021 Lubricating oil $ 3,245 $ 2,683 Bunkers 2,514 623 Total inventory $ 5,759 $ 3,306 |
Vessels and Equipment (Tables)
Vessels and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Vessels and Equipment | |
Schedule of vessels and equipment | Vessels & Accumulated Accumulated (U.S. Dollars in thousands) equipment depreciation write down Net Vessels Vessels, December 31, 2020 $ 2,250,053 $ (541,267) $ — $ 1,708,786 Additions(1) 14,065 — — 14,065 Drydock costs 4,235 — — 4,235 Disposals (2,641) 2,641 — — Depreciation and write down for the period (2) — (99,559) (29,421) (128,980) Vessels, December 31, 2021 $ 2,265,712 $ (638,185) $ (29,421) $ 1,598,106 Additions (3) 120,946 — — 120,946 Drydock costs 19,747 — — 19,747 Disposals (17,790) 17,790 — — Depreciation and write down for the period — (107,419) — (107,419) Vessels, December 31, 2022 $ 2,388,615 $ (727,814) $ (29,421) $ 1,631,380 (1) During the scheduled second renewal survey drydocking of the Bodil Knutsen a ballast water treatment system was installed on the vessel at a cost $6.7 million. An advanced Volatile Organic Compounds (VOC) recovery system was also installed on the Bodil Knutsen during the fourth quarter of 2021 at a cost of $7.3 million. Although the Partnership initially funded the installation costs of the VOC recovery system, such costs are expected to be recoverable by the Partnership up to an agreed budget, with interest, from the VOC Industry Co-operation Norwegian Sector (“VOCIC Norway”) over a seven-year period. A separate agreement is also in place that allows the Partnership to recover costs from VOCIC Norway related to the ongoing operation of the VOC plant onboard the vessel. (2) The carrying value of the Windsor Knutsen was written down to its estimated fair value as of June 30, 2021. (3) On July 1, 2022, the Partnership acquired KNOT's 100% interest in KNOT Shuttle Tankers 35 AS, the company that owns and operates the Synnøve Knutsen . This acquisition was accounted for as an acquisition of assets. See Note 23—Acquisitions. |
Schedule of drydocking activity | (U.S. Dollars in thousands) At December 31, 2022 At December 31, 2021 Balance at the beginning of the year $ 13,458 $ 17,106 Costs incurred for dry docking 17,614 4,235 Costs allocated to drydocking as part of acquisition of asset 2,133 — Drydock amortization (8,610) (7,883) Balance at the end of the year $ 24,595 $ 13,458 |
Intangible Assets and Contrac_2
Intangible Assets and Contract Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Intangible Assets and Contract Liabilities | |
Schedule of intangible assets | Above Above market time market time charter charter Tordis Vigdis Total (U.S. Dollars in thousands) Knutsen Knutsen intangibles Intangibles, December 31, 2020 $ 305 $ 376 $ 681 Additions — — — Amortization for the year (305) (301) (606) Intangibles, December 31, 2021 $ — $ 75 $ 75 Additions — — — Amortization for the period — (75) (75) Intangibles, December 31, 2022 $ — $ — $ — |
Schedule of contract liabilities | Balance of Amortization for Balance of Amortization for Balance of December 31, the year ended December 31, the year ended December 31, (U.S. Dollars in thousands) 2020 December 31, 2021 2021 December 31, 2022 2022 Contract liabilities: Unfavourable contract rights $ (3,686) $ 1,517 $ (2,169) $ 1,518 $ (651) Total amortization income $ 1,517 $ 1,518 |
Schedule of expected amortization of contract liabilities | (U.S. Dollars in thousands) 2023 $ 651 2024 — 2025 — 2026 — 2027 and thereafter — Total $ 651 |
Accrued expenses (Tables)
Accrued expenses (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accrued expenses | |
Schedule of accrued expenses | (U.S. Dollars in thousands) At December 31, 2022 At December 31, 2021 Operating expenses $ 1,125 $ 559 Interest expenses 4,805 1,719 Other expenses 4,721 4,151 Total accrued expenses $ 10,651 $ 6,429 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Long-Term Debt | |
Schedule of long-term debt | December 31, December 31, (U.S. Dollars in thousands) Vessel 2022 2021 $345 million loan facility Anna Knutsen, Tordis Knutsen, Vigdis Knutsen, Brasil Knutsen, Lena Knutsen $ 313,630 $ 338,726 $320 million loan facility Windsor Knutsen, Bodil Knutsen, Carmen Knutsen, Fortaleza Knutsen, Recife Knutsen, Ingrid Knutsen 192,021 222,133 $55 million revolving credit facility with DNB 55,000 — Hilda loan facility Hilda Knutsen 66,154 72,308 Torill loan facility Torill Knutsen — 75,000 $172.5 million loan facility Dan Cisne, Dan Sabia 31,739 45,340 Tove loan facility Tove Knutsen 77,516 81,883 Synnøve loan facility Synnøve Knutsen 85,292 — $25 million revolving credit facility with NTT 25,000 25,000 $25 million revolving credit facility with Shinsei 25,000 25,000 Raquel Sale & Leaseback Raquel Knutsen 84,247 89,206 Torill Sale & Leaseback Torill Knutsen 107,048 — Total long-term debt $ 1,062,647 $ 974,596 Less: current installments 371,906 90,956 Less: unamortized deferred loan issuance costs 2,119 2,378 Current portion of long-term debt 369,787 88,578 Amounts due after one year 690,741 883,640 Less: unamortized deferred loan issuance costs 4,140 5,092 Long-term debt, less current installments, and unamortized deferred loan issuance costs $ 686,601 $ 878,548 |
Schedule of partnership's outstanding debt repayable | The Partnership’s outstanding debt of $1,062.6 million as of December 31, 2022 is repayable as follows : (U.S. Dollars in thousands) Sale & Leaseback Period repayment Balloon repayment Total 2023 $ 13,161 $ 77,839 $ 280,906 $ 371,906 2024 13,804 41,179 63,393 118,376 2025 14,399 33,109 136,583 184,091 2026 15,060 18,822 219,521 253,403 2027 and thereafter 134,871 — — 134,871 Total $ 191,295 $ 170,949 $ 700,403 $ 1,062,647 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Schedule of significant components of current and deferred Income tax expense attributable to Income from continuing operations | Year Ended December 31, (U.S. Dollars in thousands) 2022 2021 2020 Current tax benefit (expense) $ (878) $ (488) $ (10) Deferred tax benefit (expense) 3 — — Income tax benefit (expense) $ (875) $ (488) $ (10) |
Schedule of taxation | Year Ended December 31, (U.S. Dollars in thousands) 2022 2021 2020 Income tax benefit (expense) at Norwegian tonnage tax regime $ (866) $ (479) $ — Income tax benefit (expense) within UK (9) (9) (10) Income tax benefit (expense) $ (875) $ (488) $ (10) Effective tax rate -1 % -1 % 0 % |
Schedule of components of deferred tax assets and liabilities | The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31, 2022 and 2021 are presented below: As of December 31, (U.S. Dollars in thousands) 2022 2021 Deferred tax assets: Financial derivatives $ — $ — Financial loss carry forwards for tonnage tax 25,657 23,485 Total deferred tax asset 25,657 23,485 Less valuation allowance (25,657) (23,485) Net deferred tax asset — — Deferred tax liabilities: Entrance tax 164 228 Deferred tax related to long-term debt 260 — Total deferred tax liabilities 424 228 $ 424 $ 228 The net deferred tax liability is classified in the consolidated balance sheets as follows: As of December 31, (U.S. Dollars in thousands) 2022 2021 Current deferred tax asset $ — $ — Non-current deferred tax liabilities 424 228 Net deferred tax liabilities $ 424 $ 228 Changes in the net deferred tax liabilities at December 31, 2022 and 2021 are presented below: As of December 31, (U.S. Dollars in thousands) 2022 2021 Net deferred tax liabilities at January 1, $ 228 $ 295 Change in temporary differences 219 (58) Translation differences (23) (9) Net deferred tax liabilities at December 31, $ 424 $ 228 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions | |
Schedule of Related Party Costs and Expenses | Year Ended December 31, (U.S. Dollars in thousands) 2022 2021 2020 Statements of operations: Time charter and bareboat revenues: Time charter income from KNOT (1) $ 14,531 $ 6,427 $ 4,883 Operating expenses: Vessel operating expenses (2) 15,828 16,812 14,693 Voyage expenses and commissions (3) 59 — — Technical and operational management fee from KNOT to Vessels (4) 9,265 8,429 7,342 Operating expenses from other related parties (5) 799 866 515 General and administrative expenses: Administration fee from KNOT Management (6) 1,356 1,277 1,131 Administration fee from KOAS (6) 699 780 654 Administration fee from KOAS UK (6) 76 80 118 Administration and management fee from KNOT (7) 59 58 49 Total income (expenses) $ (13,610) $ (21,875) $ (19,619) At December 31, At December 31, At December 31, (U.S. Dollars in thousands) 2022 2021 2020 Balance Sheet: Vessels: Drydocking supervision fee from KNOT (8) $ 156 $ 134 $ 47 Drydocking supervision fee from KOAS (8) 96 — — Equipment purchased from KOAS (9) 1,148 1,840 — Total $ 1,400 $ 1,974 $ 47 (1) Time charter income from KNOT: The Bodil Knutsen has operated under a time charter with Knutsen Shuttle Tankers Pool AS, a subsidiary of KNOT, since the second quarter of 2021. The Hilda Knutsen commenced a time charter with Knutsen Shuttle Tankers Pool AS in the third quarter of 2022 and which now expires in January 2024 unless terminated by either party on giving not less than 30 days ’ notice. (2) Vessel operating expenses: KNOT Management or KNOT Management Denmark provides technical and operational management of the vessels on time charter including crewing and crew training services. (3) Voyage expenses and commissions: The Windsor Knutsen and the Torill Knutsen have completed spot voyages where Knutsen Shuttle Tankers Pool AS has earned a 1.25% commission. (4) 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. (5) Operating expenses from other related parties : Simsea Real Operations AS, a company jointly owned by the Partnership’s Chairman of the Board, Trygve Seglem, and by other third-party 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 member onboard the vessel. Level Power & Automation AS, a company that provides automation and control systems for the martime industry, offshore and land-based industry is owned by Level Group AS, where Trygve Seglem, his family and members of TSSI management have significant influence. The cost is related to equipment and inspection to the Partnership’s vessels. (6) Administration fee from KNOT Management, Knutsen OAS Shipping AS (“KOAS”) and Knutsen OAS (UK) Ltd. (“KOAS UK”) : Administration costs include 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. (7) 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. (8) Drydocking supervision fee from KNOT Management, KNOT Management Denmark and KOAS : KNOT Management, KNOT Management Denmark and KOAS provide supervision and hire out service personnel during drydocking of the vessels. The fee is calculated as a daily fixed fee. (9) As part of the scheduled drydocking of the Windsor Knutsen and the Carmen Knutsen that commenced in the second quarter and the fourth quarter of 2022, respectively, ballast water treatment systems were installed on the vessels. As of December 31, 2022, parts of the systems had been purchased from Knutsen Ballast Water AS, a subsidiary of TSSI, for $1.15 million. During the scheduled second renewal survey drydocking of the Bodil Knutsen in 2021, a ballast water treatment system was installed on the vessel. Parts of the system were purchased from Knutsen Ballast Water AS for $1.84 million. |
Schedule of amounts due from and due to related parties | At December 31, At December 31, (U.S. Dollars in thousands) 2022 2021 Balance Sheet: Trading balances due from KOAS $ 118 $ 290 Trading balances due from KNOT and affiliates 1,880 2,378 Amount due from related parties $ 1,998 $ 2,668 Trading balances due to KOAS $ 1,398 $ 1,205 Trading balances due to KNOT and affiliates 319 219 Amount due to related parties $ 1,717 $ 1,424 |
Schedule of Trade accounts payable and other current assets | At December 31, At December 31, (U.S. Dollars in thousands) 2022 2021 Balance Sheet: Trading balances due to KOAS $ 824 $ 813 Trading balances due to KNOT and affiliates 998 783 Trade accounts payables to related parties $ 1,822 $ 1,596 |
Schedule of other current asset balances from related parties | At December 31, At December 31, (U.S. Dollars in thousands) 2022 2021 Balance Sheet: Trade receivables due from KNOT and affiliates (See Note 12 (b)) $ 1,405 $ — Other trading balances due from KOAS 645 687 Other trading balances due from KNOT and affiliates 353 543 Other current assets from related parties $ 2,403 $ 1,230 |
Earnings per Unit and Cash Di_2
Earnings per Unit and Cash Distributions (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Earnings per Unit and Cash Distributions | |
Schedule of calculations of basic and diluted earnings per unit | Year Ended December 31, (U.S. Dollars in thousands, except per unit data) 2022 2021 2020 Net income $ 58,667 $ 53,876 $ 65,225 Less: Series A Preferred unitholders’ interest in net income 6,800 6,900 7,200 Net income attributable to the unitholders of KNOT Offshore Partners LP 51,867 46,976 58,025 Less: Distributions (2) 55,404 72,520 72,136 Under (over) distributed earnings (3,537) (25,544) (14,111) Under (over) distributed earnings attributable to: Common unitholders (3) (3,430) (24,927) (13,851) Class B unitholders (42) (147) — General Partner (65) (470) (261) Weighted average units outstanding (basic) (in thousands): Common unitholders 33,882 33,050 32,694 Class B unitholders 416 195 — General Partner 640 623 615 Weighted average units outstanding (diluted) (in thousands): Common unitholders (4) 37,919 37,064 32,694 Class B unitholders 416 195 — General Partner 640 623 615 Earnings per unit (basic) Common unitholders $ 1.48 $ 1.38 $ 1.74 Class B unitholders 1.48 2.62 — General Partner 1.48 1.38 1.74 Earnings per unit (diluted): Common unitholders (4) $ 1.48 $ 1.38 $ 1.74 Class B unitholders 1.48 2.62 — General Partner 1.48 1.38 1.74 Cash distributions declared and paid in the period per unit (5) $ 2.08 $ 2.08 $ 2.08 Subsequent event: Cash distributions declared and paid per unit relating to the period (6) $ 0.03 $ 0.52 $ 0.52 (1) Earnings per unit have been calculated in accordance with the cash distribution provisions set forth in the Partnership’s agreement of limited partnership (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 included cash distributions to the IDR holder (KNOT) for the years ended December 31, 2021 and 2020 of $2.1 million and $2.8 million, respectively. There were no payments to the IDR holder (KNOT) for the year ended December 31, 2022. (3) This included net income that was attributable to the IDR holder for the years ended December 31, 2021 and 2020 of $2.1 million and $2.8 million, respectively. (4) Diluted weighted average units outstanding and earnings per unit diluted for the years ended December 2022, 2021 and 2020 does not reflect any potential common units relating to the convertible preferred units since the assumed issuance of any additional units 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 December 31. |
Unit activity (Tables)
Unit activity (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Unit Activity | |
Schedule of movement in number of common units, general partner units and Series A Preferred Units | General Partner Convertible (in units) Common Units Class B Units Units Preferred Units December 31, 2020 32,694,094 — 615,117 3,750,000 May 27, 2021: Conversion of Series A Preferred Units 215,292 — — (208,334) September 7, 2021: IDR elimination 673,080 673,080 — — September 10, 2021: Issue of General Partner Units — — 25,161 — October 25, 2021: ATM program issue of common units 10,902 — — — October 26, 2021: ATM program issue of common units 31,038 — — — November 10, 2021: Quarterly conversion of Class B Units 84,135 (84,135) — — December 31, 2021 33,708,541 588,945 640,278 3,541,666 February 10, 2022: Quarterly conversion of Class B Units 84,135 (84,135) — — May 12, 2022: Quarterly conversion of Class B Units 84,135 (84,135) — — August 11, 2022: Quarterly conversion of Class B Units 84,135 (84,135) — — November 9, 2022: Quarterly conversion of Class B Units 84,135 (84,135) — — December 31, 2022 34,045,081 252,405 640,278 3,541,666 |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Acquisitions | |
Schedule of purchase price for the transaction | Final Final Synnøve Knutsen Tove Knutsen July 1, December 31, (U.S. Dollars in thousands) 2022 2020 Purchase consideration (1) $ 37,907 $ 21,898 Less: Fair value of net assets acquired: Vessels and equipment (2) 119,119 117,978 Cash 5,702 804 Inventories 291 136 Derivatives assets (liabilities) 958 (3,537) Others current assets 211 270 Amounts due from related parties 53 — Long-term debt (87,661) (93,139) Deferred debt issuance 592 769 Trade accounts payable (160) (430) Accrued expenses (694) (622) Amounts due to related parties (503) (331) Income tax payable (1) — Subtotal 37,907 21,898 Difference between the purchase price and fair value of net assets acquired $ — $ — (1) The purchase consideration comprises the following: Final Final Synnøve Knutsen Tove Knutsen July 1, December 31, (U.S. Dollars in thousands) 2022 2020 Cash consideration paid to KNOT (from KNOP) $ 31,931 $ 25,430 Purchase price adjustments 5,937 (3,596) Acquisition-related costs 39 64 Purchase price $ 37,907 $ 21,898 (2) Vessel and equipment includes allocation to drydocking for the following vessels (in thousands): Synnøve Knutsen of $2,133 and Tove Knutsen of $3,040 . |
Description of Business (Detail
Description of Business (Details) - item | 1 Months Ended | |
Apr. 30, 2013 | Dec. 31, 2022 | |
Description of Business | ||
Ownership interest in shuttle tankers acquired at formation (as a percent) | 100% | |
Number of shuttle tankers acquired at formation | 4 | |
Number of operating vessels | 18 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Revenues and Operating Expenses (Details) | 12 Months Ended |
Dec. 31, 2022 employee | |
Summary of Significant Accounting Policies | |
Number of onshore employees | 1 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Trade Accounts Receivable (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Summary of Significant Accounting Policies | ||
Allowance for expected credit loss or written off | $ 0 | $ 0 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Vessels and Equipment (Details) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Dec. 31, 2022 | |
Vessels and Equipment | ||
Drydocking interval until a vessel is 15 years old | 60 months | |
Age of vessels to switch from 60 to 30 month drydocking interval | 15 years | |
Drydocking interval after a vessel is 15 years old | 30 months | |
Asset's estimated useful life | 25 years | |
Vessels and equipment useful life period | ||
Vessels and Equipment | ||
Asset's estimated useful life | 23 years | |
Hull | ||
Vessels and Equipment | ||
Asset's estimated useful life | 23 years | |
Anchor-handling, loading and unloading equipment | ||
Vessels and Equipment | ||
Asset's estimated useful life | 23 years | |
Main/auxiliary engine | ||
Vessels and Equipment | ||
Asset's estimated useful life | 23 years | |
Thruster, dynamic positioning systems, cranes and other equipment | ||
Vessels and Equipment | ||
Asset's estimated useful life | 23 years | |
Drydock costs | Minimum | ||
Vessels and Equipment | ||
Asset's estimated useful life | 2 years 6 months | |
Drydock costs | Maximum | ||
Vessels and Equipment | ||
Asset's estimated useful life | 5 years |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Intangibles (Details) | 1 Months Ended | 12 Months Ended | |
Aug. 31, 2011 | Mar. 31, 2011 | Dec. 31, 2022 | |
Fortaleza Knutsen | |||
Intangible Assets | |||
Amortization Period, Unfavorable contractual rights | 12 years | ||
Term of bareboat charter | 12 years | ||
Recife Knutsen | |||
Intangible Assets | |||
Amortization Period, Unfavorable contractual rights | 12 years | ||
Term of bareboat charter | 12 years | ||
Above market time charter | Tordis Knutsen | |||
Intangible Assets | |||
Amortization Period, Above market time charter | 4 years 9 months 18 days | ||
Above market time charter | Vigdis Knutsen | |||
Intangible Assets | |||
Amortization Period, Above market time charter | 4 years 10 months 24 days | ||
Unfavorable contractual rights | Fortaleza Knutsen | |||
Intangible Assets | |||
Amortization Period, Unfavorable contractual rights | 12 years | ||
Unfavorable contractual rights | Recife Knutsen | |||
Intangible Assets | |||
Amortization Period, Unfavorable contractual rights | 12 years | 12 years |
Formation Transactions and In_2
Formation Transactions and Initial Public Offering (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | |
Apr. 30, 2013 | Dec. 31, 2022 | Dec. 31, 2021 | |
Formation Transactions and Initial Public Offering | |||
Number of general partner units issued | 640,278 | 640,278 | |
Repayment of outstanding debt | $ 118,900 | ||
One-time entrance tax into Norwegian tonnage tax regime | 3,000 | ||
Revolving credit facility, outstanding | $ 20,000 | ||
KNOT. | Bodil Knutsen [Member] | |||
Formation Transactions and Initial Public Offering | |||
Period of related party guarantee of payment of hire rate | 5 years | ||
IPO [Member] | |||
Formation Transactions and Initial Public Offering | |||
Gross proceeds received | $ 179,900 | ||
Net proceeds from the offering | 160,700 | ||
KNOT. | |||
Formation Transactions and Initial Public Offering | |||
Cash distribution | $ 21,950 | ||
General Partner | |||
Formation Transactions and Initial Public Offering | |||
Number of general partner units issued | 349,694 | ||
Subordinated Units [Member] | KNOT. | |||
Formation Transactions and Initial Public Offering | |||
Limited partners' capital account, units issued | 8,567,500 | ||
Common Units [Member] | |||
Formation Transactions and Initial Public Offering | |||
Limited partners' capital account, units issued | 34,045,081 | 33,708,541 | |
Limited Partner [Member] | Common Units [Member] | IPO [Member] | |||
Formation Transactions and Initial Public Offering | |||
Common units sold and issued | 8,567,500 | ||
Common unit, per share amount | $ 21 | ||
Limited Partner [Member] | Common Units [Member] | Underwriters' option to purchase additional units | |||
Formation Transactions and Initial Public Offering | |||
Common units sold and issued | 1,117,500 | ||
IDR Holders | |||
Formation Transactions and Initial Public Offering | |||
Threshold quarterly distribution for increasing percentages allocated to the IDRs | $ 0.43125 | ||
KNOT Offshore Partners UK LLC | KNOT Shuttle Tankers AS | |||
Formation Transactions and Initial Public Offering | |||
Percentage of contribution to subsidiary | 100% | ||
KNOT. | Partnership | |||
Formation Transactions and Initial Public Offering | |||
Percentage of limited partner interest | 49% | 28.40% | |
KNOT. | Incentive Distribution Rights [Member] | |||
Formation Transactions and Initial Public Offering | |||
Percentage of limited partner interest | 100% | ||
General Partner | Partnership | |||
Formation Transactions and Initial Public Offering | |||
Percentage of partnership interest held by General Partner | 2% | ||
Public | Partnership | |||
Formation Transactions and Initial Public Offering | |||
Percentage of limited partner interest | 49% | 71.40% |
Significant Risks and Uncerta_3
Significant Risks and Uncertainties Including Business and Credit Concentrations (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Significant Risks and Uncertainties Including Business and Credit Concentrations | |||
Revenues | $ 268,585 | $ 281,129 | $ 279,222 |
Customer concentration risk | Revenues | Eni Trading and Shipping S.p.A. | |||
Significant Risks and Uncertainties Including Business and Credit Concentrations | |||
Revenues | $ 36,256 | $ 43,823 | $ 44,175 |
Percentage of partnership's consolidated revenues | 14% | 16% | 16% |
Customer concentration risk | Revenues | Fronape International Company, a subsidiary of Petrobras Transporte S.A. | |||
Significant Risks and Uncertainties Including Business and Credit Concentrations | |||
Revenues | $ 45,975 | $ 45,115 | $ 45,235 |
Percentage of partnership's consolidated revenues | 17% | 17% | 16% |
Customer concentration risk | Revenues | Repsol Sinopec Brasil, B.V., a subsidiary of Repsol Sinopec Brasil, S.A. | |||
Significant Risks and Uncertainties Including Business and Credit Concentrations | |||
Revenues | $ 37,571 | $ 37,030 | $ 33,947 |
Percentage of partnership's consolidated revenues | 14% | 14% | 12% |
Customer concentration risk | Revenues | Brazil Shipping I Limited, a subsidiary of Royal Dutch Shell | |||
Significant Risks and Uncertainties Including Business and Credit Concentrations | |||
Revenues | $ 12,546 | $ 59,825 | $ 76,959 |
Percentage of partnership's consolidated revenues | 5% | 22% | 28% |
Customer concentration risk | Revenues | Galp Sinopec Brasil Services BV | |||
Significant Risks and Uncertainties Including Business and Credit Concentrations | |||
Revenues | $ 16,621 | $ 35,622 | $ 35,684 |
Percentage of partnership's consolidated revenues | 6% | 13% | 13% |
Operating Leases (Details)
Operating Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Operating Leases | |||
Other revenues (voyage revenues, loss of hire insurance recoveries and other income) | $ 5,788 | $ 11,823 | $ 641 |
Total | 268,585 | 281,129 | 279,222 |
Time charter revenues (service element included) | |||
Operating Leases | |||
Revenue from contract with customers | 216,822 | 224,191 | 233,346 |
Bareboat revenues | |||
Operating Leases | |||
Revenue from contract with customers | 45,975 | 45,115 | 45,235 |
Time charter and bareboat revenues | |||
Operating Leases | |||
Revenue from contract with customers | $ 262,797 | $ 269,306 | $ 278,581 |
Operating Leases - Minimum Cont
Operating Leases - Minimum Contractual Future Revenues (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Minimum contractual future revenues | |
2023 | $ 183,049 |
2024 | 142,357 |
2025 | 131,472 |
2026 | 72,342 |
2027 and thereafter | 14,536 |
Total | $ 543,756 |
Operating Leases - Additional I
Operating Leases - Additional Information (Details) | 12 Months Ended |
Dec. 31, 2022 period Options | |
Fortaleza Knutsen | |
Operating Leases | |
Current bareboat charter expiration year | 2023 |
Fixed term of contract | 3 years |
Fortaleza Knutsen | Vessel | |
Operating Leases | |
Fixed term of contract | 3 years |
Recife Knutsen | |
Operating Leases | |
Current bareboat charter expiration year | 2023 |
Fixed term of contract | 3 years |
Recife Knutsen | Vessel | |
Operating Leases | |
Fixed term of contract | 3 years |
Bodil Knutsen | |
Operating Leases | |
Option to extend term | one-year |
Number of options to extend one year periods | Options | 2 |
Bodil Knutsen | Vessel | |
Operating Leases | |
Fixed term of contract | 2 years |
Windsor Knutsen | |
Operating Leases | |
Current bareboat charter expiration year | 2024 |
Option to extend term | one-year |
Number of options to extend one year periods | Options | 2 |
Carmen Knutsen | |
Operating Leases | |
Current time charter expiration year | 2024 |
Time charter expiration year under options to extend | 2026 |
Hilda Knutsen | |
Operating Leases | |
Current time charter expiration year | 2024 |
Period of notice for termination of agreement | 30 days |
Dan Cisne | |
Operating Leases | |
Current bareboat charter expiration year | 2023 |
Dan Sabia | |
Operating Leases | |
Current bareboat charter expiration year | 2024 |
Ingrid Knutsen | |
Operating Leases | |
Fixed term of contract | 3 years |
Option to extend term | three |
Current time charter expiration year | 2024 |
Time charter expiration year under options to extend | 2024 |
Raquel Knutsen | |
Operating Leases | |
Current time charter expiration year | 2025 |
Time charter expiration year under options to extend | 2030 |
Tordis Knutsen | |
Operating Leases | |
Option to extend term | three-year |
Current time charter expiration year | 2023 |
Vigdis Knutsen | |
Operating Leases | |
Fixed term of contract | 3 years |
Lena Knutsen | |
Operating Leases | |
Fixed term of contract | 3 years |
Current time charter expiration year | 2023 |
Brasil Knutsen | |
Operating Leases | |
Current time charter expiration year | 2023 |
Anna Knutsen | |
Operating Leases | |
Current time charter expiration year | 2024 |
Tove Knutsen | |
Operating Leases | |
Current time charter expiration year | 2027 |
Time charter expiration year under options to extend | 2040 |
Synnve Knutsen | |
Operating Leases | |
Current time charter expiration year | 2027 |
Time charter expiration year under options to extend | 2042 |
Minimum | Windsor Knutsen | Vessel | |
Operating Leases | |
Fixed term of contract | 1 year |
Minimum | Anna Knutsen | |
Operating Leases | |
Option to extend term | two-year |
Number of options to extend two year periods | period | 1 |
Maximum | Windsor Knutsen | Vessel | |
Operating Leases | |
Fixed term of contract | 2 years |
Maximum | Anna Knutsen | |
Operating Leases | |
Option to extend term | one-year |
Number of options to extend one year periods | period | 1 |
Operating Leases - Lease obliga
Operating Leases - Lease obligations (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Operating Leases | ||
Right-of-use assets | $ 2,261 | $ 2,742 |
Lease liability | 2,261 | |
Lease cost | $ 700 | |
Weighted average discount rate (as a percent) | 2.30% | |
Partnership's lease liabilities from leased-in equipment | ||
2023 | $ 762 | |
2024 | 762 | |
2025 | 762 | |
2026 | 62 | |
Total | 2,348 | |
Less imputed interest | 87 | |
Carrying value of operating lease liabilities | $ 2,261 | |
Tove Knutsen | ||
Operating Leases | ||
Weighted average remaining lease term | 3 years 1 month 6 days | |
Synnve Knutsen | ||
Operating Leases | ||
Weighted average discount rate for the operating leases determined using the expected incremental borrowing rate for a loan facility of similar term | 4.30% |
Segment Information (Details)
Segment Information (Details) | 12 Months Ended | |
Dec. 31, 2022 item segment | Dec. 31, 2021 item | |
Segment Information | ||
Number of reportable segments | segment | 1 | |
Number of time charters | 12 | 13 |
Number of bareboat charters | 4 | 4 |
Minimum | Revenues | Customer concentration risk | ||
Segment Information | ||
Benchmark percentage of revenues and combined revenues concentration | 10% |
Insurance Proceeds (Details)
Insurance Proceeds (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Insurance Proceeds | ||
Open insurance claim amount | $ 2,100 | $ 100 |
Loss of hire insurance payments recorded as a component of total revenues | 758 | 11,450 |
Windsor Knutsen | Loss of hire proceeds | ||
Insurance Proceeds | ||
Loss of hire insurance payments recorded as a component of total revenues | $ 11,500 | |
Vigdis Knutsen | Loss of hire proceeds | ||
Insurance Proceeds | ||
Loss of hire insurance payments recorded as a component of total revenues | $ 800 |
Other Finance Expenses - Compon
Other Finance Expenses - Components interest cost (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Other Finance Expenses | |||
Interest expense | $ 39,912 | $ 24,546 | $ 29,142 |
Amortization of debt issuance cost and fair value of debt assumed | 2,692 | 3,519 | 2,503 |
Total interest expense | $ 42,604 | $ 28,065 | $ 31,645 |
Other Finance Expenses - Comp_2
Other Finance Expenses - Components of other finance expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Other Finance Expenses | |||
Bank fees, charges | $ 294 | $ 463 | $ 441 |
Commitment fees | 334 | 548 | 264 |
Total other finance expense | $ 628 | $ 1,011 | $ 705 |
Derivative Instruments (Details
Derivative Instruments (Details) - Interest rate swap contracts - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Derivative Instruments | ||
Notional amount | $ 451.2 | $ 462.3 |
Carrying amount of derivative asset | 29.4 | 29.4 |
Carrying amount of derivative liabilities | $ 10 | $ 10 |
Derivative Instruments - Realiz
Derivative Instruments - Realized and unrealized gain (loss) on derivative instruments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Net gain (loss) on derivative instruments | |||
Realized gain (loss): | $ (2,980) | $ (10,094) | $ (3,637) |
Unrealized gain (loss): | 38,490 | 20,054 | (22,042) |
Total realized and unrealized gain (loss) on derivative instruments: | 35,510 | 9,960 | (25,679) |
Interest rate swap contracts | |||
Net gain (loss) on derivative instruments | |||
Realized gain (loss): | (2,478) | (10,094) | (3,528) |
Unrealized gain (loss): | 38,490 | $ 20,054 | (21,795) |
Foreign exchange forward contracts | |||
Net gain (loss) on derivative instruments | |||
Realized gain (loss): | $ (502) | (109) | |
Unrealized gain (loss): | $ (247) |
Fair Value Measurements - Carry
Fair Value Measurements - Carrying amounts and estimated fair values of the Partnership's assets and liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Financial assets: | ||
Current derivative assets | $ 15,070 | |
Non-current derivative assets | 14,378 | $ 1,015 |
Financial liabilities: | ||
Current derivative liabilities | 6,754 | |
Non-current derivative liabilities | 4,260 | |
Carrying Amount | ||
Financial assets: | ||
Cash and cash equivalents | 47,579 | 62,293 |
Financial liabilities: | ||
Long-term debt, current and non-current | 1,062,647 | 974,596 |
Carrying Amount | Interest rate swap contracts | ||
Financial assets: | ||
Current derivative assets | 15,070 | |
Non-current derivative assets | 14,378 | 1,015 |
Financial liabilities: | ||
Current derivative liabilities | 6,754 | |
Non-current derivative liabilities | 4,260 | |
Fair Value | ||
Financial assets: | ||
Cash and cash equivalents | 47,579 | 62,293 |
Financial liabilities: | ||
Long-term debt, current and non-current | 1,035,740 | 974,596 |
Fair Value | Interest rate swap contracts | ||
Financial assets: | ||
Current derivative assets | 15,070 | |
Non-current derivative assets | $ 14,378 | 1,015 |
Financial liabilities: | ||
Current derivative liabilities | 6,754 | |
Non-current derivative liabilities | $ 4,260 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional information (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Fair Value Measurements | ||
Deferred debt issuance cost | $ 6.3 | $ 7.5 |
Restricted cash | $ 0 | $ 0 |
Interest rate swap contracts | ||
Fair Value Measurements | ||
Weighted average remaining terms | 2 years 8 months 12 days | 3 years 4 months 24 days |
Interest rate swap contracts | Minimum | ||
Fair Value Measurements | ||
Notional amount per contract | $ 3.6 | $ 5.2 |
Fixed interest rate | 0.71% | 0.71% |
Interest rate swap contracts | Maximum | ||
Fair Value Measurements | ||
Notional amount per contract | $ 33.6 | $ 37.5 |
Fixed interest rate | 2.90% | 2.90% |
Fair Value Measurements - Fair
Fair Value Measurements - Fair value hierarchy (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Financial assets: | ||
Current derivative assets | $ 15,070 | |
Non-current derivative assets | 14,378 | $ 1,015 |
Financial liabilities: | ||
Current derivative liabilities | 6,754 | |
Non-current derivative liabilities | 4,260 | |
Carrying Value | ||
Financial assets: | ||
Cash and cash equivalents | 47,579 | 62,293 |
Financial liabilities: | ||
Long-term debt, current and non-current | 1,062,647 | 974,596 |
Fair Value | ||
Financial assets: | ||
Cash and cash equivalents | 47,579 | 62,293 |
Financial liabilities: | ||
Long-term debt, current and non-current | 1,035,740 | 974,596 |
Interest rate swap contracts | Carrying Value | ||
Financial assets: | ||
Current derivative assets | 15,070 | |
Non-current derivative assets | 14,378 | 1,015 |
Financial liabilities: | ||
Current derivative liabilities | 6,754 | |
Non-current derivative liabilities | 4,260 | |
Interest rate swap contracts | Fair Value | ||
Financial assets: | ||
Current derivative assets | 15,070 | |
Non-current derivative assets | 14,378 | 1,015 |
Financial liabilities: | ||
Current derivative liabilities | 6,754 | |
Non-current derivative liabilities | 4,260 | |
Recurring | Carrying Value | ||
Financial assets: | ||
Cash and cash equivalents | 47,579 | |
Financial liabilities: | ||
Long-term debt, current and non-current | 1,062,647 | |
Recurring | Interest rate swap contracts | Carrying Value | ||
Financial assets: | ||
Current derivative assets | 15,070 | |
Non-current derivative assets | 14,378 | |
Quoted Price in Active Markets for Identical Assets (Level 1) | Fair Value | ||
Financial assets: | ||
Cash and cash equivalents | 62,293 | |
Quoted Price in Active Markets for Identical Assets (Level 1) | Recurring | Fair Value | ||
Financial assets: | ||
Cash and cash equivalents | 47,579 | |
Significant Other Observable Inputs (Level 2) | Fair Value | ||
Financial liabilities: | ||
Long-term debt, current and non-current | 974,596 | |
Significant Other Observable Inputs (Level 2) | Interest rate swap contracts | Fair Value | ||
Financial assets: | ||
Non-current derivative assets | 1,015 | |
Financial liabilities: | ||
Current derivative liabilities | 6,754 | |
Non-current derivative liabilities | $ 4,260 | |
Significant Other Observable Inputs (Level 2) | Recurring | Fair Value | ||
Financial liabilities: | ||
Long-term debt, current and non-current | 1,035,740 | |
Significant Other Observable Inputs (Level 2) | Recurring | Interest rate swap contracts | Fair Value | ||
Financial assets: | ||
Current derivative assets | 15,070 | |
Non-current derivative assets | $ 14,378 |
Fair Value Measurements - Fai_2
Fair Value Measurements - Fair value transfers into or out of Level 1, Level 2 or Level 3 (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Fair Value Measurements | ||
Transfers amount Fair value assets level 1 to level 2 | $ 0 | $ 0 |
Trade Accounts Receivable and_3
Trade Accounts Receivable and Other Current Assets - Trade accounts receivable (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Trade Accounts Receivable and Other Current Assets | ||
Provision for doubtful accounts | $ 0 | $ 0 |
Trade Accounts Receivable and_4
Trade Accounts Receivable and Other Current Assets - Other current assets (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Trade Accounts Receivable and Other Current Assets | ||
Trade receivables | $ 7,662 | |
Trade receivables due from KNOT and affiliates | 1,405 | |
Insurance claims for recoveries | 2,112 | $ 124 |
Refund of value added tax | 1,173 | 1,805 |
Prepaid expenses | 1,311 | 1,158 |
Other receivables | 1,865 | 2,539 |
Total other current assets | $ 15,528 | $ 5,626 |
Inventory (Details)
Inventory (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Inventory | ||
Total inventory | $ 5,759 | $ 3,306 |
Lubricating oil | ||
Inventory | ||
Total inventory | 3,245 | 2,683 |
Bunkers | ||
Inventory | ||
Total inventory | $ 2,514 | $ 623 |
Vessels and Equipment - Long-te
Vessels and Equipment - Long-term debt (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | ||
Vessels & equipment - Activity | ||||
Vessels and equipment, beginning balance | $ 2,265,712 | $ 2,250,053 | ||
Additions | 120,946 | [1] | 14,065 | |
Drydock costs | 19,747 | 4,235 | ||
Disposals | (17,790) | (2,641) | ||
Vessels and equipment, ending balance | 2,388,615 | 2,265,712 | $ 2,250,053 | |
Accumulated depreciation - Activity | ||||
Accumulated depreciation, beginning balance | (638,185) | (541,267) | ||
Accumulated depreciation, disposals | 17,790 | 2,641 | ||
Accumulated depreciation for the year | (107,419) | (99,559) | (89,743) | |
Accumulated depreciation, ending balance | (727,814) | (638,185) | (541,267) | |
Accumulated write down - Activity | ||||
Accumulated write down, beginning balance | (29,421) | |||
Depreciation and write down for the period | (29,421) | |||
Accumulated write down, ending balance | (29,421) | (29,421) | ||
Net Vessels - Activity | ||||
Net Vessels, beginning balance | 1,598,106 | 1,708,786 | ||
Additions | 120,946 | [1] | 14,065 | |
Drydock costs | 19,747 | 4,235 | ||
Depreciation and write down for the period | (107,419) | (128,980) | ||
Net Vessels, ending balance | $ 1,631,380 | $ 1,598,106 | $ 1,708,786 | |
[1] During the scheduled second renewal survey drydocking of the Bodil Knutsen a ballast water treatment system was installed on the vessel at a cost $6.7 million. An advanced Volatile Organic Compounds (VOC) recovery system was also installed on the Bodil Knutsen during the fourth quarter of 2021 at a cost of $7.3 million. Although the Partnership initially funded the installation costs of the VOC recovery system, such costs are expected to be recoverable by the Partnership up to an agreed budget, with interest, from the VOC Industry Co-operation Norwegian Sector (“VOCIC Norway”) over a seven-year period. A separate agreement is also in place that allows the Partnership to recover costs from VOCIC Norway related to the ongoing operation of the VOC plant onboard the vessel. |
Vessels and Equipment - Pledged
Vessels and Equipment - Pledged assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | ||
Vessels and Equipment | |||
Book value of assets pledged as security for long-term debt | $ 1,631,000 | $ 1,598,000 | |
Cost of the vessel installed | $ 120,946 | [1] | 14,065 |
Recovery period of installation costs | 7 years | ||
Percentage on partnership acquired | 100% | ||
Impairment charges | 29,421 | ||
Bodil Knutsen ballast water treatment system installed | |||
Vessels and Equipment | |||
Cost of the vessel installed | $ 6,700 | ||
Installation of Volatile Organic Compounds | |||
Vessels and Equipment | |||
Cost of the vessel installed | 7,300 | ||
Windsor Knutsen | |||
Vessels and Equipment | |||
Impairment charges | $ 0 | $ 29,400 | |
[1] During the scheduled second renewal survey drydocking of the Bodil Knutsen a ballast water treatment system was installed on the vessel at a cost $6.7 million. An advanced Volatile Organic Compounds (VOC) recovery system was also installed on the Bodil Knutsen during the fourth quarter of 2021 at a cost of $7.3 million. Although the Partnership initially funded the installation costs of the VOC recovery system, such costs are expected to be recoverable by the Partnership up to an agreed budget, with interest, from the VOC Industry Co-operation Norwegian Sector (“VOCIC Norway”) over a seven-year period. A separate agreement is also in place that allows the Partnership to recover costs from VOCIC Norway related to the ongoing operation of the VOC plant onboard the vessel. |
Vessels and Equipment - Drydock
Vessels and Equipment - Drydocking activity (Details) - Vessels & Equipment - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Drydocking activity | ||
Balance at the beginning of the year | $ 13,458 | $ 17,106 |
Costs incurred for dry docking | 17,614 | 4,235 |
Costs allocated to drydocking as part of acquisition of asset | 2,133 | |
Drydock amortization | (8,610) | (7,883) |
Balance at the end of the year | $ 24,595 | $ 13,458 |
Intangible Assets and Contrac_3
Intangible Assets and Contract Liabilities - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Intangible Assets | ||
Intangibles assets, beginning balance | $ 75 | $ 681 |
Amortization for the period | (75) | (606) |
Intangibles assets, ending balance | 75 | |
Above market value of time charter | Tordis Knutsen | ||
Intangible Assets | ||
Intangibles assets, beginning balance | 305 | |
Amortization for the period | (305) | |
Above market value of time charter | Vigdis Knutsen | ||
Intangible Assets | ||
Intangibles assets, beginning balance | 75 | 376 |
Amortization for the period | $ (75) | (301) |
Intangibles assets, ending balance | $ 75 |
Intangible Assets and Contrac_4
Intangible Assets and Contract Liabilities - Additional information (Details) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | ||
Aug. 31, 2011 | Mar. 31, 2011 | Dec. 31, 2022 | Dec. 31, 2021 | |
Intangible Assets | ||||
Accumulated amortization for contract liabilities | $ 17.6 | $ 16 | ||
Tordis Knutsen | Above market value of time charter | ||||
Intangible Assets | ||||
Remaining term of the contract | 4 years 9 months 18 days | |||
Vigdis Knutsen | Above market value of time charter | ||||
Intangible Assets | ||||
Remaining term of the contract | 4 years 10 months 24 days | |||
Fortaleza Knutsen | ||||
Intangible Assets | ||||
Period for amortization of unfavorable contractual rights | 12 years | |||
Recife Knutsen | ||||
Intangible Assets | ||||
Period for amortization of unfavorable contractual rights | 12 years |
Intangible Assets and Contrac_5
Intangible Assets and Contract Liabilities - Schedule of Contract Liabilities (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Contract liabilities: | ||
Unfavorable contract rights, Beginning Balance | $ (2,169) | $ (3,686) |
Amortization income | 1,518 | 1,517 |
Unfavorable contract rights, Ending Balance | $ (651) | $ (2,169) |
Intangible Assets and Contrac_6
Intangible Assets and Contract Liabilities - Amortization of Contract Liabilities Classified Under Time Charter and Bareboat Revenues (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Amortization of contract liabilities | |||
2023 | $ 651 | ||
Total | $ 651 | $ 2,169 | $ 3,686 |
Accrued expenses (Details)
Accrued expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Accrued expenses | ||
Operating expenses | $ 1,125 | $ 559 |
Interest expenses | 4,805 | 1,719 |
Other expenses | 4,721 | 4,151 |
Total accrued expenses | $ 10,651 | $ 6,429 |
Long-Term Debt - Components (De
Long-Term Debt - Components (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Sep. 30, 2018 | May 31, 2017 | Dec. 31, 2014 | Apr. 30, 2014 |
Long-Term Debt | |||||||
Long-term debt | $ 1,062,647 | $ 974,596 | |||||
Less: current installments | 371,906 | 90,956 | |||||
Less: unamortized deferred loan issuance costs | 2,119 | 2,378 | |||||
Current portion of long-term debt | 369,787 | 88,578 | |||||
Amounts due after one year | 690,741 | 883,640 | |||||
Less: unamortized deferred loan issuance costs | 4,140 | 5,092 | |||||
Long-term debt, less current installments, and unamortized deferred loan issuance costs | 686,601 | 878,548 | |||||
$345 million loan facility | |||||||
Long-Term Debt | |||||||
Long-term debt | 313,630 | 338,726 | |||||
Debt instrument face amount | 345,000 | 345,000 | $ 345,000 | ||||
$320 million loan facility | |||||||
Long-Term Debt | |||||||
Long-term debt | 192,021 | 222,133 | |||||
Debt instrument face amount | 320,000 | 320,000 | $ 320,000 | ||||
$55 million revolving credit facility with DNB | |||||||
Long-Term Debt | |||||||
Long-term debt | 55,000 | ||||||
Debt instrument face amount | 55,000 | 55,000 | |||||
Hilda Loan Facility | |||||||
Long-Term Debt | |||||||
Long-term debt | 66,154 | 72,308 | |||||
Debt instrument face amount | $ 100,000 | ||||||
Torill Loan Facility | |||||||
Long-Term Debt | |||||||
Long-term debt | 75,000 | ||||||
$172.5 million loan facility | |||||||
Long-Term Debt | |||||||
Long-term debt | 31,739 | 45,340 | |||||
Debt instrument face amount | 172,500 | 172,500 | $ 172,500 | $ 172,500 | |||
Tove loan facility | |||||||
Long-Term Debt | |||||||
Long-term debt | 77,516 | 81,883 | |||||
Synnve loan facility | |||||||
Long-Term Debt | |||||||
Long-term debt | 85,292 | ||||||
$25 million revolving credit facility | |||||||
Long-Term Debt | |||||||
Debt instrument face amount | 25,000 | 25,000 | |||||
$25 million revolving credit facility | NTT Finance Corporation | |||||||
Long-Term Debt | |||||||
Long-term debt | 25,000 | 25,000 | |||||
$25 million revolving credit facility | Shinsei | |||||||
Long-Term Debt | |||||||
Long-term debt | 25,000 | 25,000 | |||||
Raquel Sale & Leaseback | |||||||
Long-Term Debt | |||||||
Long-term debt | 84,247 | $ 89,206 | |||||
Torill Sale & Leaseback | |||||||
Long-Term Debt | |||||||
Long-term debt | $ 107,048 |
Long-Term Debt - Summary of Par
Long-Term Debt - Summary of Partnership's Outstanding Debt Repayable (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Debt Instrument, Redemption | ||
2023 | $ 371,906 | |
2024 | 118,376 | |
2025 | 184,091 | |
2026 | 253,403 | |
2027 and thereafter | 134,871 | |
Total | 1,062,647 | $ 974,596 |
Sale & Leaseback | ||
Debt Instrument, Redemption | ||
2023 | 13,161 | |
2024 | 13,804 | |
2025 | 14,399 | |
2026 | 15,060 | |
2027 and thereafter | 134,871 | |
Total | 191,295 | |
Periodic repayment | ||
Debt Instrument, Redemption | ||
2023 | 77,839 | |
2024 | 41,179 | |
2025 | 33,109 | |
2026 | 18,822 | |
Total | 170,949 | |
Balloon Repayment | ||
Debt Instrument, Redemption | ||
2023 | 280,906 | |
2024 | 63,393 | |
2025 | 136,583 | |
2026 | 219,521 | |
Total | $ 700,403 |
Long-Term Debt - Additional Inf
Long-Term Debt - Additional Information (Details) - Partnership's Loan Agreements - London Interbank Offered Rate (LIBOR) | 12 Months Ended |
Dec. 31, 2022 | |
Minimum | |
Long-Term Debt | |
Long-term debt, fixed margin percentage | 1.75% |
Maximum [Member] | |
Long-Term Debt | |
Long-term debt, fixed margin percentage | 2.40% |
Long-Term Debt - 345 Million Te
Long-Term Debt - 345 Million Term Loan Facility (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Sep. 30, 2021 USD ($) item | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Apr. 30, 2013 USD ($) | |
Long-Term Debt | ||||
Credit facility amount | $ 20,000 | |||
$345 million loan facility | ||||
Long-Term Debt | ||||
Loan facility amount | $ 345,000 | $ 345,000 | $ 345,000 | |
Number of consecutive quarterly installments | item | 20 | |||
Balloon payment to be paid | $ 220,000 | |||
Minimum liquidity of Partnership | 15,000 | |||
Credit facility amount | 250,000 | |||
Incremental minimum liquidity, first 8 vessels with less than 12 months employment contract remaining | 1,500 | |||
Incremental minimum liquidity, next 12 vessels with less than 12 months employment contract remaining | $ 1,000 | |||
Minimum book equity ratio for Partnership | 30% | |||
Minimum EBITDA to interest ratio for Partnership | 2.50% | |||
Maximum market value of vessels as percentage of outstanding loan (in percent) | 125% | |||
$345 million loan facility | London Interbank Offered Rate (LIBOR) | ||||
Long-Term Debt | ||||
Interest margin percentage | 2.05% |
Long-Term Debt - 320 Million Te
Long-Term Debt - 320 Million Term Loan Facility and 55 Million Revolving Credit Facility with DNB (Details) $ in Millions | 1 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 USD ($) item | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Apr. 30, 2013 USD ($) | |
Long-Term Debt | ||||
Credit facility amount | $ 20 | |||
Multi-Vessels Facility | ||||
Long-Term Debt | ||||
Minimum liquidity of Partnership | $ 15 | |||
Incremental minimum liquidity, first 8 vessels with less than 12 months employment contract remaining | 1.5 | |||
Incremental minimum liquidity, next 12 vessels with less than 12 months employment contract remaining | $ 1 | |||
Minimum book equity ratio for Partnership | 30% | |||
Minimum EBITDA to interest ratio for Partnership | 2.50% | |||
Maximum market value of vessels as percentage of outstanding loan (in percent) | 125% | |||
$320 million loan facility | ||||
Long-Term Debt | ||||
Loan facility amount | $ 320 | $ 320 | $ 320 | |
Number of consecutive quarterly installments | item | 20 | |||
Balloon payment to be paid | $ 177 | |||
$320 million loan facility | London Interbank Offered Rate (LIBOR) | ||||
Long-Term Debt | ||||
Interest margin percentage | 2.125% | |||
$55 million revolving credit facility with DNB | ||||
Long-Term Debt | ||||
Loan facility amount | $ 55 | $ 55 | ||
Credit facility amount | $ 55 | |||
Commitment fee percentage | 0.85% | |||
$55 million revolving credit facility with DNB | London Interbank Offered Rate (LIBOR) | ||||
Long-Term Debt | ||||
Interest margin percentage | 2.125% |
Long-Term Debt - Hilda Loan Fac
Long-Term Debt - Hilda Loan Facility (Details) - Hilda Loan Facility $ in Millions | 1 Months Ended | 12 Months Ended |
May 31, 2017 USD ($) item | Dec. 31, 2022 USD ($) | |
Long-Term Debt | ||
Loan facility amount | $ 100 | |
Amount of previous loan facility, replaced by new facility | $ 117 | |
Number of consecutive quarterly installments | item | 28 | |
Balloon payment to be paid | $ 58.5 | |
Minimum liquidity of Partnership | $ 15 | |
Incremental minimum liquidity, in excess of 8 vessels with less than 12 months employment contract remaining | 1 | |
Incremental minimum liquidity, first 8 vessels with less than 12 months employment contract remaining | $ 1.5 | |
Minimum book equity ratio for Partnership | 30% | |
Minimum EBITDA to interest ratio for Partnership | 2.50% | |
First Two Years | ||
Long-Term Debt | ||
Maximum market value of vessels as percentage of outstanding loan for first two years (in percent) | 110% | |
Third and Fourth Years | ||
Long-Term Debt | ||
Maximum market value of vessels as percentage of outstanding loan for third and fourth years (in percent) | 120% | |
Thereafter | ||
Long-Term Debt | ||
Maximum market value of vessels as percentage of outstanding loan thereafter (in percent) | 125% | |
London Interbank Offered Rate (LIBOR) | ||
Long-Term Debt | ||
Interest margin percentage | 2.20% |
Long-Term Debt - 172.5 Million
Long-Term Debt - 172.5 Million Secured Loan Facility (Details) - USD ($) $ in Millions | 12 Months Ended | ||||
Apr. 01, 2014 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2014 | Apr. 30, 2014 | |
$172.5 million loan facility | |||||
Long-Term Debt | |||||
Loan facility amount | $ 172.5 | $ 172.5 | $ 172.5 | $ 172.5 | |
$172.5 million loan facility | London Interbank Offered Rate (LIBOR) | |||||
Long-Term Debt | |||||
Interest margin percentage | 2.40% | ||||
Raquel Loan Facility | |||||
Long-Term Debt | |||||
Minimum liquidity of Partnership | 15 | ||||
Incremental minimum liquidity, in excess of 8 vessels with less than 12 months employment contract remaining | 1 | ||||
Incremental minimum liquidity, first 8 vessels with less than 12 months employment contract remaining | $ 1.5 | ||||
Minimum book equity ratio for Partnership | 30% | ||||
Raquel Loan Facility | First Three Years | |||||
Long-Term Debt | |||||
Maximum market value of vessels as percentage of outstanding loan for first three years (in percent) | 125% |
Long-Term Debt - Tove Loan Faci
Long-Term Debt - Tove Loan Facility (Details) - Tove loan facility - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended |
Jul. 31, 2019 | Dec. 31, 2022 | |
Long-Term Debt | ||
Final balloon payment to be paid | $ 66.6 | |
Minimum liquidity of Partnership | $ 15 | |
Incremental minimum liquidity, first 8 vessels with less than 12 months employment contract remaining | 1.5 | |
Incremental minimum liquidity, in excess of 8 vessels with less than 12 months employment contract remaining | $ 1 | |
Minimum book equity ratio for Partnership | 30% | |
Minimum EBITDA to interest ratio for Partnership | 2.50% | |
Maximum market value of vessels as percentage of outstanding loan (in percent) | 110% | |
London Interbank Offered Rate (LIBOR) | ||
Long-Term Debt | ||
Interest margin percentage | 1.75% |
Long-Term Debt - Synnove Loan F
Long-Term Debt - Synnove Loan Facility (Details) - Synnove Loan Facility [Member] $ in Millions | 1 Months Ended |
Jul. 31, 2019 USD ($) | |
Long-Term Debt | |
Final balloon payment to be paid | $ 72.3 |
Minimum liquidity of Partnership | 15 |
Incremental minimum liquidity, first 8 vessels with less than 12 months employment contract remaining | 1.5 |
Incremental minimum liquidity, in excess of 8 vessels with less than 12 months employment contract remaining | $ 1 |
Minimum book equity ratio for Partnership | 30% |
Minimum EBITDA to interest ratio for Partnership | 2.50% |
Maximum market value of vessels as percentage of outstanding loan (in percent) | 110% |
London Interbank Offered Rate (LIBOR) | |
Long-Term Debt | |
Interest margin percentage | 1.75% |
Long-Term Debt - 25 Million Rev
Long-Term Debt - 25 Million Revolving Credit Facility (Details) - USD ($) $ in Millions | 1 Months Ended | |||
Nov. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2021 | Apr. 30, 2013 | |
Long-Term Debt | ||||
Credit facility amount | $ 20 | |||
$25 million revolving credit facility | NTT Finance Corporation | ||||
Long-Term Debt | ||||
Credit facility amount | $ 25 | |||
Interest margin percentage | 1.80% | |||
Commitment fee percentage | 0.50% | |||
$25 million revolving credit facility | Shinsei | ||||
Long-Term Debt | ||||
Interest margin percentage | 1.75% | |||
Commitment fee percentage | 0.70% |
Long-Term Debt - Raquel Sale an
Long-Term Debt - Raquel Sale and Leaseback (Details) - Knutsen Shuttle Tankers 19 AS - Raquel Sale & Leaseback $ in Millions | 1 Months Ended |
Dec. 31, 2020 USD ($) | |
Long-Term Debt | |
Lease period | 10 years |
Gross sales price | $ 94.3 |
Net proceeds | $ 38 |
Long-Term Debt - Torill Sale an
Long-Term Debt - Torill Sale and Leaseback (Details) - Knutsen Shuttle Tankers 15 AS - Torill Sale & Leaseback $ in Millions | 1 Months Ended |
Jun. 30, 2022 USD ($) | |
Long-Term Debt | |
Lease period | 10 years |
Gross sales price | $ 112 |
Net proceeds | $ 39 |
Long-Term Debt - Torill Loan Fa
Long-Term Debt - Torill Loan Facility (Details) - USD ($) $ in Millions | 1 Months Ended | |
Jan. 31, 2018 | Apr. 30, 2013 | |
Long-Term Debt | ||
Credit facility amount | $ 20 | |
Repayment of outstanding debt | $ 118.9 | |
Torill Loan Facility | ||
Long-Term Debt | ||
Credit facility amount | $ 100 | |
Repayment of outstanding debt | $ 60 | |
Interest margin percentage | 2.10% |
Income Taxes - Significant Comp
Income Taxes - Significant Components of Current and Deferred Income Tax Expense Attributable to Income from Continuing Operations (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Taxes | |||
Current tax benefit (expense) | $ (878,000) | $ (488,000) | $ (10,000) |
Deferred tax benefit (expense) | 3,000 | ||
Income tax benefit (expense) | $ (875,000) | $ (488,000) | $ (10,000) |
Income Taxes - Additional infor
Income Taxes - Additional information (Details) - USD ($) | 12 Months Ended | ||||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2017 | Mar. 31, 2013 | |
Income Tax Rate Reconciliation | |||||
Ordinary income tax rate | 22% | ||||
Tonnage tax included in operating expenses | $ 200,000 | $ 300,000 | $ 200,000 | ||
Valuation allowances | 25,657,000 | 23,485,000 | |||
Deferred tax assets | 0 | ||||
Entrance tax | $ 164,000 | 228,000 | $ 3,000,000 | ||
Entrance tax payable related to acquisition | $ 100,000 | ||||
Entrance tax, annual decline in gain | 20% | ||||
Entrance tax payable | $ 300,000 | ||||
Income tax rate, deferred tax liabilities | 22% | 22% | |||
Payment of entrance tax and translation effects | $ 200,000 | ||||
Estimated income tax payable | $ 700,000 | $ 600,000 | |||
Period for income tax returns | 10 years | ||||
Unrecognized tax benefits | $ 0 | 0 | |||
Interest or penalties on tax return | $ 0 | $ 0 | |||
Minimum percentage of ownership/control required to constitute a related party | 25% | ||||
KNOT. | |||||
Income Tax Rate Reconciliation | |||||
Ownership interest in partnership | 25% | ||||
Norwegian Ordinary Tax Regime | |||||
Income Tax Rate Reconciliation | |||||
Ordinary income tax rate | 22% | 22% | |||
Period for income tax returns | 10 years | ||||
UK tax | |||||
Income Tax Rate Reconciliation | |||||
Ordinary income tax rate | 19% | 19% | |||
Income tax expense | $ 8,722,000 | $ 8,997,000 |
Income Taxes - Summary of Taxat
Income Taxes - Summary of Taxation (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Rate Reconciliation | |||
Income tax benefit (expense) | $ (875,000) | $ (488,000) | $ (10,000) |
Effective tax rate | (1.00%) | (1.00%) | 0% |
Norwegian Tonnage Tax Regime | |||
Income Tax Rate Reconciliation | |||
Income tax benefit (expense) | $ (866,000) | $ (479,000) | |
Effective tax rate | 22% | 22% | 22% |
UK tax | |||
Income Tax Rate Reconciliation | |||
Income tax benefit (expense) | $ (9,000) | $ (9,000) | $ (10,000) |
Effective tax rate | 19% | 19% | 19% |
Income Taxes - Components of De
Income Taxes - Components of Deferred Tax Assets and Liabilities (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2013 |
Deferred tax assets: | ||||
Financial derivatives | $ 0 | $ 0 | ||
Financial loss carry forwards for tonnage tax | 25,657,000 | 23,485,000 | ||
Total deferred tax asset | 25,657,000 | 23,485,000 | ||
Less valuation allowance | (25,657,000) | (23,485,000) | ||
Net deferred tax asset | 0 | |||
Deferred tax liabilities: | ||||
Entrance tax | 164,000 | 228,000 | $ 3,000,000 | |
Deferred tax related to long-term debt | 260,000 | |||
Total deferred tax liabilities | 424,000 | 228,000 | ||
Net deferred tax liabilities | $ 424,000 | $ 228,000 | $ 295,000 |
Income Taxes - Classification o
Income Taxes - Classification of Net Deferred Tax Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Income Taxes | |||
Non-current deferred tax liabilities | $ 424 | $ 228 | |
Net deferred tax liabilities | $ 424 | $ 228 | $ 295 |
Income Taxes - Changes in Net D
Income Taxes - Changes in Net Deferred Tax Liabilities (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Taxes | ||
Net deferred tax liabilities at January 1, | $ 228 | $ 295 |
Change in temporary differences | 219 | (58) |
Translation differences | (23) | (9) |
Net deferred tax liabilities at December 31, | $ 424 | $ 228 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Details) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2020 | |
Related Party Transaction | ||
Percentage on partnership acquired | 100% | |
Hilda Knutsen | ||
Related Party Transaction | ||
Period of notice for termination of agreement | 30 days | |
KNOT Shuttle Tankers AS | ||
Related Party Transaction | ||
Percentage of voyage commission earned | 1.25% | |
Percentage on partnership acquired | 100% | |
TSSI | ||
Related Party Transaction | ||
Percentage ownership in joint venture | 50% | |
TSSI | KNOT. | ||
Related Party Transaction | ||
Percentage ownership in joint venture | 50% | |
NYK | KNOT. | ||
Related Party Transaction | ||
Percentage ownership in joint venture | 50% | |
KNOT. | KNOT Management | ||
Related Party Transaction | ||
Ownership percentage acquired | 100% | |
KNOT. | KNOT Management Denmark AS | ||
Related Party Transaction | ||
Ownership percentage acquired | 100% | |
Seglem Holding AS | TSSI | ||
Related Party Transaction | ||
Ownership percentage acquired | 100% |
Related Party Transactions - Re
Related Party Transactions - Related Party Costs and Expenses (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Related Party Transaction | |||
Operating expenses from other related parties | $ 799 | $ 866 | $ 515 |
Total income (expenses) | (13,610) | (21,875) | (19,619) |
KNOT Shuttle Tankers AS | |||
Related Party Transaction | |||
Voyage expenses and commissions | 59 | ||
KNOT Management | |||
Related Party Transaction | |||
Administration fee | 1,356 | 1,277 | 1,131 |
KOAS | |||
Related Party Transaction | |||
Administration fee | 699 | 780 | 654 |
KOAS | Equipment purchased | |||
Related Party Transaction | |||
Amount of parts purchased | 1,840 | ||
KOAS UK | |||
Related Party Transaction | |||
Administration fee | 76 | 80 | 118 |
KNOT. | |||
Related Party Transaction | |||
Time charter income from KNOT | 14,531 | 6,427 | 4,883 |
Vessel operating expenses | 15,828 | 16,812 | 14,693 |
Technical and operational management fee from KNOT to Vessels | 9,265 | 8,429 | 7,342 |
Administration fee | 59 | $ 58 | $ 49 |
KNOT and affiliates | |||
Related Party Transaction | |||
Amount of parts purchased | $ 1,150 |
Related Party Transactions - Sc
Related Party Transactions - Schedule of Dues Payables to Related Party (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Related Party Transaction | |||
Total | $ 1,400 | $ 1,974 | $ 47 |
KNOT | Drydocking supervision fee | |||
Related Party Transaction | |||
Total | $ 156 | 134 | $ 47 |
KOAS | |||
Related Party Transaction | |||
Margin rate on administration cost | 5% | ||
KOAS | Drydocking supervision fee | |||
Related Party Transaction | |||
Total | $ 96 | ||
KOAS | Equipment purchased | |||
Related Party Transaction | |||
Total | $ 1,148 | $ 1,840 |
Related Party Transactions - Am
Related Party Transactions - Amounts Due from and Due to Related Parties (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Related Party Transaction | ||
Amounts due from related parties | $ 1,998 | $ 2,668 |
Amount due to related parties | 1,717 | 1,424 |
KOAS | ||
Related Party Transaction | ||
Amounts due from related parties | 118 | 290 |
Amount due to related parties | 1,398 | 1,205 |
KNOT and affiliates | ||
Related Party Transaction | ||
Amounts due from related parties | 1,880 | 2,378 |
Amount due to related parties | $ 319 | $ 219 |
Related Party Transactions - Tr
Related Party Transactions - Trade Accounts Payable (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Related Party Transaction | ||
Trade accounts payables to related parties | $ 1,822 | $ 1,596 |
KOAS | ||
Related Party Transaction | ||
Trade accounts payables to related parties | 824 | 813 |
KNOT and affiliates | ||
Related Party Transaction | ||
Trade accounts payables to related parties | $ 998 | $ 783 |
Related Party Transactions - Ot
Related Party Transactions - Other current assets (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Related Party Transaction | ||
Trade receivables due from KNOT and affiliates | $ 1,405 | |
Other current assets from related parties | 2,403 | $ 1,230 |
KOAS | ||
Related Party Transaction | ||
Other trading balances | 645 | 687 |
KNOT and affiliates | ||
Related Party Transaction | ||
Trade receivables due from KNOT and affiliates | 1,405 | |
Other trading balances | $ 353 | $ 543 |
Related Party Transactions - Ac
Related Party Transactions - Acquisitions from KNOT (Details) | Jul. 01, 2022 | Dec. 31, 2020 |
Acquisitions From KNOT | Synnve Knutsen [Member] | ||
Related Party Transaction | ||
Percentage of interest acquired | 100% | 100% |
Commitments and Contingencies -
Commitments and Contingencies - Assets Pledged, Claims and Legal Proceedings (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Commitments and Contingencies | |||
Book value of assets pledged as security | $ 1,631,000,000 | $ 1,598,000,000 | |
Accrued claim | $ 0 | $ 0 | $ 0 |
Commitments and Contingencies_2
Commitments and Contingencies - Insurance (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Insurance Proceeds | |
Insurance coverage deductible amount per vessel | $ 150 |
Deductible period under business interruption insurance | 14 days |
Limit of protection and indemnity insurance for pollution, per vessel per incident | $ 1,000,000 |
Maximum | |
Insurance Proceeds | |
Deductible period under business interruption insurance | 180 days |
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 | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | ||
Earnings per Unit and Cash Distributions | ||||
Net income | [1] | $ 58,667 | $ 53,876 | $ 65,225 |
Less: Series A Preferred unitholders' interest in net income | 6,800 | 6,900 | 7,200 | |
Net income attributable to the unitholders of KNOT Offshore Partners LP | 51,867 | 46,976 | 58,025 | |
Less: Distributions | 55,404 | 72,520 | 72,136 | |
Under (over) distributed earnings | $ (3,537) | $ (25,544) | $ (14,111) | |
Weighted average units outstanding (basic): | ||||
General Partner | 640 | 623 | 615 | |
Weighted average units outstanding (diluted): | ||||
General Partner | 640 | 623 | 615 | |
Earnings per unit (basic): | ||||
General Partner | $ 1.48 | $ 1.38 | $ 1.74 | |
Earnings per unit (diluted): | ||||
General Partner | 1.48 | 1.38 | 1.74 | |
Cash distributions declared and paid in the period per unit | 2.08 | 2.08 | 2.08 | |
Subsequent event: Cash distributions declared and paid per unit relating to the period | $ 0.03 | $ 0.52 | $ 0.52 | |
Common Units | ||||
Earnings per Unit and Cash Distributions | ||||
Net income attributable to the unitholders of KNOT Offshore Partners LP | $ 50,297 | $ 45,466 | $ 56,953 | |
Weighted average units outstanding (basic): | ||||
Common unitholders | 33,882 | 33,050 | 32,694 | |
Weighted average units outstanding (diluted): | ||||
Common unitholders | 37,919 | 37,064 | 32,694 | |
Earnings per unit (basic): | ||||
Earnings per unit (basic) | $ 1.48 | $ 1.38 | $ 1.74 | |
Earnings per unit (diluted): | ||||
Earnings per unit (diluted) | $ 1.48 | $ 1.38 | $ 1.74 | |
Class B Units | ||||
Weighted average units outstanding (basic): | ||||
Common unitholders | 416 | 195 | ||
Weighted average units outstanding (diluted): | ||||
Common unitholders | 416 | 195 | ||
Earnings per unit (basic): | ||||
Earnings per unit (basic) | $ 1.48 | $ 2.62 | ||
Earnings per unit (diluted): | ||||
Earnings per unit (diluted) | $ 1.48 | $ 2.62 | ||
Limited Partner | Common Units | ||||
Earnings per Unit and Cash Distributions | ||||
Under (over) distributed earnings | $ (3,430) | $ (24,927) | $ (13,851) | |
Limited Partner | Class B Units | ||||
Earnings per Unit and Cash Distributions | ||||
Under (over) distributed earnings | (42) | (147) | ||
General Partner | ||||
Earnings per Unit and Cash Distributions | ||||
Net income attributable to the unitholders of KNOT Offshore Partners LP | 951 | 862 | 1,072 | |
Under (over) distributed earnings | (65) | (470) | (261) | |
IDR Holders | ||||
Earnings per Unit and Cash Distributions | ||||
Net income | 2,100 | 2,800 | ||
Less: Distributions | $ 0 | $ 2,100 | $ 2,800 | |
[1] Included in net income is interest paid amounting to $37.3 million, $25.1 million and $31.0 million for the years ended December 31, 2022, 2021 and 2020, respectively. |
Earnings per Unit and Cash Di_4
Earnings per Unit and Cash Distributions - Additional Information (Details) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||||||
Jan. 11, 2023 shares | Dec. 31, 2022 $ / shares shares | Sep. 10, 2021 | May 27, 2021 shares | Oct. 31, 2021 shares | Apr. 30, 2013 | Dec. 31, 2022 $ / shares shares | Sep. 30, 2022 shares | Jun. 30, 2022 shares | Mar. 31, 2022 shares | Dec. 31, 2021 shares | Sep. 30, 2021 shares | Dec. 31, 2022 Vote $ / shares shares | Dec. 31, 2021 shares | Sep. 07, 2021 shares | |
Distribution Made to Limited Partner | |||||||||||||||
Number of units converted | (208,334) | ||||||||||||||
Units conversion ratio | 1 | ||||||||||||||
Number of general partner units outstanding | 640,278 | 640,278 | 640,278 | 640,278 | 640,278 | ||||||||||
Series A Preferred Stock | |||||||||||||||
Distribution Made to Limited Partner | |||||||||||||||
Potentially dilutive preferred units | 208,333 | ||||||||||||||
Potentially dilutive preferred units | 3,541,666 | ||||||||||||||
Series A Convertible Preferred Units | |||||||||||||||
Distribution Made to Limited Partner | |||||||||||||||
Percentage of annual rate | 8% | ||||||||||||||
Subsequent event | |||||||||||||||
Distribution Made to Limited Partner | |||||||||||||||
Conversion price (in per unit) | 0.026 | ||||||||||||||
General Partner Unit | |||||||||||||||
Distribution Made to Limited Partner | |||||||||||||||
Issue of Units | 25,161 | ||||||||||||||
Common Units | |||||||||||||||
Distribution Made to Limited Partner | |||||||||||||||
Issue of Units | 41,940 | ||||||||||||||
Number of units converted | 215,292 | ||||||||||||||
Number of units in exchange of IDRs | 673,080 | 673,080 | 673,080 | ||||||||||||
Number of common units and subordinated units outstanding | 34,045,081 | 34,045,081 | 33,708,541 | 34,045,081 | 33,708,541 | ||||||||||
Common Units | KNOT. | |||||||||||||||
Distribution Made to Limited Partner | |||||||||||||||
Number of common units and subordinated units outstanding | 9,661,255 | 9,661,255 | 9,661,255 | ||||||||||||
Class B Units | |||||||||||||||
Distribution Made to Limited Partner | |||||||||||||||
Number of units converted | 336,540 | 84,135 | 84,135 | 84,135 | 84,135 | ||||||||||
Number of units in exchange of IDRs | 673,080 | ||||||||||||||
Units to be converted into common units for distribution that are at or above the Distribution Threshold | 0.125 | ||||||||||||||
Units conversion ratio | 1 | 1 | 1 | 1 | |||||||||||
Potentially dilutive preferred units | 252,405 | ||||||||||||||
Potentially dilutive preferred units | 252,405 | ||||||||||||||
Class B Units | Minimum | |||||||||||||||
Distribution Made to Limited Partner | |||||||||||||||
Number of units converted | 84,135 | ||||||||||||||
Class B Units | Subsequent event | |||||||||||||||
Distribution Made to Limited Partner | |||||||||||||||
Conversion price (in per unit) | 0 | ||||||||||||||
Series A Preferred unit | |||||||||||||||
Distribution Made to Limited Partner | |||||||||||||||
Preferred units liquidation preference | $ / shares | $ 24 | $ 24 | $ 24 | ||||||||||||
Cash redemption rate as percentage of Issue Price, upon redemption eligibility date | 100% | 100% | 100% | ||||||||||||
Percentage of Cash issue price | 70% | ||||||||||||||
Percentage of common unit issue price | 80% | ||||||||||||||
Aggregate issue price of outstanding | 130% | ||||||||||||||
Preferred units number of votes for each units | Vote | 1 | ||||||||||||||
Partnership | General Partner Unit | |||||||||||||||
Distribution Made to Limited Partner | |||||||||||||||
Percentage of general partner interest | 1.83% | ||||||||||||||
Tortoise Direct Opportunities Fund LP | Series A Preferred Stock | |||||||||||||||
Distribution Made to Limited Partner | |||||||||||||||
Shares held | 416,677 | ||||||||||||||
Issue of Units | 208,333 | ||||||||||||||
Number of units converted | 208,334 | ||||||||||||||
Conversion rate | 1.0334 | ||||||||||||||
Tortoise Direct Opportunities Fund LP | Series A Convertible Preferred Units | |||||||||||||||
Distribution Made to Limited Partner | |||||||||||||||
Shares held | 416,677 | ||||||||||||||
Issue of Units | 208,333 | ||||||||||||||
Number of units converted | 208,334 | ||||||||||||||
Tortoise Direct Opportunities Fund LP | Common Units | |||||||||||||||
Distribution Made to Limited Partner | |||||||||||||||
Number of units converted | 215,292 | ||||||||||||||
Conversion rate | 1.0334 | ||||||||||||||
Public | Partnership | |||||||||||||||
Distribution Made to Limited Partner | |||||||||||||||
Percentage of limited partner interest | 49% | 71.40% | |||||||||||||
Number of common units and subordinated units outstanding | 24,293,458 | 24,293,458 | 24,293,458 | ||||||||||||
KNOT. | Partnership | |||||||||||||||
Distribution Made to Limited Partner | |||||||||||||||
Percentage of limited partner interest | 49% | 28.40% | |||||||||||||
KNOT | Partnership | Limited Partner | |||||||||||||||
Distribution Made to Limited Partner | |||||||||||||||
Percentage of limited partner interest | 0.30% | ||||||||||||||
Number of general partner units outstanding | 90,368 | 90,368 | 90,368 | ||||||||||||
KNOT | Partnership | General Partner Unit | |||||||||||||||
Distribution Made to Limited Partner | |||||||||||||||
Percentage of general partner interest | 1.83% | ||||||||||||||
Number of general partner units outstanding | 640,278 | 640,278 | 640,278 | ||||||||||||
General Partner | Partnership | |||||||||||||||
Distribution Made to Limited Partner | |||||||||||||||
Percentage of general partner interest | 2% |
Unit activity (Details)
Unit activity (Details) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||
Nov. 09, 2022 shares | Aug. 11, 2022 shares | May 12, 2022 shares | Feb. 12, 2022 shares | Nov. 10, 2021 shares | Oct. 31, 2021 shares | Sep. 30, 2021 | Dec. 31, 2022 shares | Dec. 31, 2021 shares | Sep. 07, 2021 shares | |
Unit activity | ||||||||||
Conversion of Units | (208,334) | |||||||||
Units conversion ratio | 1 | |||||||||
Convertible Preferred Units, Beginning balance | 3,541,666 | 3,750,000 | ||||||||
Convertible Preferred Units, End balance | 3,541,666 | 3,541,666 | ||||||||
General Partner Unit | ||||||||||
Unit activity | ||||||||||
Units, Beginning balance | 640,278 | 615,117 | ||||||||
Number of units sold | 25,161 | |||||||||
Units, Ending balance | 640,278 | 640,278 | ||||||||
Common Units [Member] | ||||||||||
Unit activity | ||||||||||
Units, Beginning balance | 33,708,541 | 32,694,094 | ||||||||
Conversion of Units | 215,292 | |||||||||
Number of units in exchange of IDRs | 673,080 | 673,080 | ||||||||
Number of units sold | 41,940 | |||||||||
Units, Ending balance | 34,045,081 | 33,708,541 | ||||||||
Common Units [Member] | February 10, 2022: Quarterly conversion of Class B Units | ||||||||||
Unit activity | ||||||||||
Partners Capital Account Conversion Units Sale Of Units | 84,135 | |||||||||
Common Units [Member] | August 11, 2022: Quarterly conversion of Class B Units | ||||||||||
Unit activity | ||||||||||
Partners Capital Account Conversion Units Sale Of Units | 84,135 | |||||||||
Common Units [Member] | November 9, 2022: Quarterly conversion of Class B Units | ||||||||||
Unit activity | ||||||||||
Partners Capital Account Conversion Units Sale Of Units | 84,135 | |||||||||
Common Units [Member] | November 10, 2021: Quarterly conversion of Class B Units | ||||||||||
Unit activity | ||||||||||
Partners Capital Account Conversion Units Sale Of Units | 84,135 | |||||||||
Common Units [Member] | May 12, 2022: Quarterly conversion of Class B Units | ||||||||||
Unit activity | ||||||||||
Partners Capital Account Conversion Units Sale Of Units | 84,135 | |||||||||
Common Units [Member] | ATM October 25 2021 | ||||||||||
Unit activity | ||||||||||
Number of units sold | 10,902 | |||||||||
Common Units [Member] | ATM October 26 2021 | ||||||||||
Unit activity | ||||||||||
Number of units sold | 31,038 | |||||||||
Class B Units [Member] | ||||||||||
Unit activity | ||||||||||
Units, Beginning balance | 588,945 | |||||||||
Conversion of Units | 84,135 | 84,135 | 84,135 | 84,135 | 84,135 | |||||
Number of units in exchange of IDRs | 673,080 | 673,080 | ||||||||
Units conversion ratio | 1 | 1 | 1 | 1 | 1 | |||||
Units, Ending balance | 252,405 | 588,945 | ||||||||
Class B Units [Member] | February 10, 2022: Quarterly conversion of Class B Units | ||||||||||
Unit activity | ||||||||||
Partners Capital Account Conversion Units Sale Of Units | (84,135) | |||||||||
Class B Units [Member] | August 11, 2022: Quarterly conversion of Class B Units | ||||||||||
Unit activity | ||||||||||
Partners Capital Account Conversion Units Sale Of Units | (84,135) | |||||||||
Class B Units [Member] | November 9, 2022: Quarterly conversion of Class B Units | ||||||||||
Unit activity | ||||||||||
Partners Capital Account Conversion Units Sale Of Units | (84,135) | |||||||||
Class B Units [Member] | November 10, 2021: Quarterly conversion of Class B Units | ||||||||||
Unit activity | ||||||||||
Partners Capital Account Conversion Units Sale Of Units | (84,135) | |||||||||
Class B Units [Member] | May 12, 2022: Quarterly conversion of Class B Units | ||||||||||
Unit activity | ||||||||||
Partners Capital Account Conversion Units Sale Of Units | (84,135) |
Unit Activity - Additional info
Unit Activity - Additional information (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||||
Nov. 09, 2022 shares | Aug. 11, 2022 shares | May 12, 2022 shares | Feb. 12, 2022 shares | Nov. 10, 2021 shares | Sep. 10, 2021 USD ($) shares | May 27, 2021 shares | Oct. 31, 2021 USD ($) $ / shares shares | Sep. 30, 2021 | Dec. 31, 2021 USD ($) shares | Dec. 31, 2022 shares | Sep. 07, 2021 shares | |
Unit activity | ||||||||||||
Number of general partner units issued | 640,278 | 640,278 | ||||||||||
Number of units converted | (208,334) | |||||||||||
Units conversion ratio | 1 | |||||||||||
Tortoise Direct Opportunities Fund LP | Series A Convertible Preferred Units | ||||||||||||
Unit activity | ||||||||||||
Shares held | 416,677 | |||||||||||
Number of units sold | 208,333 | |||||||||||
Number of units converted | 208,334 | |||||||||||
General Partner Unit | ||||||||||||
Unit activity | ||||||||||||
Amount of contribution | $ | $ 450 | |||||||||||
Number of general partner units issued | 25,161 | |||||||||||
Number of units sold | 25,161 | |||||||||||
Amount of net proceeds, after sale commissions | $ | $ 451 | |||||||||||
General Partner Unit | Partnership | ||||||||||||
Unit activity | ||||||||||||
Ownership interest (in percent) | 1.83% | |||||||||||
Common Units [Member] | ||||||||||||
Unit activity | ||||||||||||
Number of units in exchange of IDRs | 673,080 | 673,080 | ||||||||||
Number of units sold | 41,940 | |||||||||||
Average gross sales price per unit | $ / shares | $ 20.06 | |||||||||||
Amount of net proceeds, after sale commissions | $ | $ 830 | |||||||||||
Amount of sales commissions paid | $ | $ 10 | |||||||||||
Number of units converted | 215,292 | |||||||||||
Common Units [Member] | ATM October 25 2021 | ||||||||||||
Unit activity | ||||||||||||
Number of units sold | 10,902 | |||||||||||
Common Units [Member] | ATM October 26 2021 | ||||||||||||
Unit activity | ||||||||||||
Number of units sold | 31,038 | |||||||||||
Common Units [Member] | Tortoise Direct Opportunities Fund LP | ||||||||||||
Unit activity | ||||||||||||
Partners' Capital Account, Units, Conversion Rate | 1.0334 | |||||||||||
Number of units converted | 215,292 | |||||||||||
Class B Units [Member] | ||||||||||||
Unit activity | ||||||||||||
Number of units in exchange of IDRs | 673,080 | 673,080 | ||||||||||
Number of units converted | 84,135 | 84,135 | 84,135 | 84,135 | 84,135 | |||||||
Units conversion ratio | 1 | 1 | 1 | 1 | 1 |
Acquisitions - Purchase Price A
Acquisitions - Purchase Price Allocation (Details) - USD ($) $ in Thousands | Jul. 01, 2022 | Dec. 31, 2020 |
Tove Knutsen | ||
Acquisitions | ||
Purchase consideration | $ 21,898 | |
Less: Fair value of net assets acquired: | ||
Vessels and equipment | 117,978 | |
Cash | 804 | |
Inventories | 136 | |
Derivatives assets (liabilities) | (3,537) | |
Others current assets | 270 | |
Long-term debt | (93,139) | |
Deferred debt issuance | 769 | |
Trade accounts payable | (430) | |
Accrued expenses | (622) | |
Amounts due to related parties | (331) | |
Subtotal | $ 21,898 | |
Synnve Knutsen | ||
Acquisitions | ||
Purchase consideration | $ 37,907 | |
Less: Fair value of net assets acquired: | ||
Vessels and equipment | 119,119 | |
Cash | 5,702 | |
Inventories | 291 | |
Derivatives assets (liabilities) | 958 | |
Others current assets | 211 | |
Amounts due from related parties | 53 | |
Long-term debt | (87,661) | |
Deferred debt issuance | 592 | |
Trade accounts payable | (160) | |
Accrued expenses | (694) | |
Amounts due to related parties | (503) | |
Income tax payable | (1) | |
Subtotal | $ 37,907 |
Acquisitions - Purchase Conside
Acquisitions - Purchase Consideration (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Jul. 01, 2022 | Dec. 31, 2020 | Dec. 31, 2022 | Dec. 31, 2020 | |
Acquisitions | ||||
Acquisition-related costs | $ 40 | $ 60 | ||
Tove Knutsen | ||||
Acquisitions | ||||
Cash consideration paid to KNOT (from KNOP) | $ 25,430 | |||
Purchase price adjustments | (3,596) | |||
Acquisition-related costs | 64 | |||
Purchase price | $ 21,898 | |||
Allocation to drydocking included in property, plant and equipment | 3,040 | |||
Synnve Knutsen | ||||
Acquisitions | ||||
Cash consideration paid to KNOT (from KNOP) | $ 31,931 | |||
Purchase price adjustments | 5,937 | |||
Acquisition-related costs | 39 | |||
Purchase price | $ 37,907 | |||
Allocation to drydocking included in property, plant and equipment | $ 2,133 |
Acquisitions - Additional Infor
Acquisitions - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Jul. 01, 2022 | Dec. 31, 2020 | Dec. 31, 2022 | Dec. 31, 2020 | |
Additional information | ||||
Acquisition related costs | $ 40 | $ 60 | ||
Synnve Knutsen | ||||
Additional information | ||||
Purchase price | $ 119,000 | |||
Outstanding indebtedness | 87,700 | |||
Certain capitalized financing fees | 600 | |||
Customary working capital purchase price adjustments | $ 5,900 | |||
Synnve Knutsen | Acquisitions from KNOT | ||||
Additional information | ||||
Percentage of interest acquired | 100% | 100% | ||
Tove Knutsen | Acquisitions from KNOT | ||||
Additional information | ||||
Percentage of interest acquired | 100% | |||
Tove Knutsen | Non-Recurring | ||||
Additional information | ||||
Purchase price | $ 117,800 | 117,800 | ||
Outstanding indebtedness | 93,100 | 93,100 | ||
Certain capitalized financing fees | 800 | $ 800 | ||
Customary working capital purchase price adjustments | $ 3,600 |
Subsequent Events (Details)
Subsequent Events (Details) $ / shares in Units, $ in Millions | 12 Months Ended | |||||
Feb. 09, 2023 $ / shares | Jan. 11, 2023 Options | Sep. 07, 2021 $ / shares | Dec. 31, 2022 USD ($) Options | Feb. 24, 2023 | Jan. 31, 2023 | |
Windsor Knutsen | ||||||
Subsequent Events | ||||||
Number of options to extend one year periods | Options | 2 | |||||
Lena Knutsen | ||||||
Subsequent Events | ||||||
Fixed term of contract | 3 years | |||||
Fortaleza Knutsen | ||||||
Subsequent Events | ||||||
Fixed term of contract | 3 years | |||||
Fortaleza Knutsen | Vessel | ||||||
Subsequent Events | ||||||
Fixed term of contract | 3 years | |||||
Recife Knutsen | ||||||
Subsequent Events | ||||||
Fixed term of contract | 3 years | |||||
Recife Knutsen | Vessel | ||||||
Subsequent Events | ||||||
Fixed term of contract | 3 years | |||||
Series A Preferred unit | ||||||
Subsequent Events | ||||||
Cash distributions | $ | $ 1.7 | |||||
Common Units | ||||||
Subsequent Events | ||||||
Cash distributions paid in the period per unit | $ / shares | $ 0.52 | |||||
Subsequent event | Windsor Knutsen | ||||||
Subsequent Events | ||||||
Fixed term of contract | 1 year | |||||
Number of options to extend one year periods | Options | 1 | |||||
Subsequent event | Lena Knutsen | ||||||
Subsequent Events | ||||||
Fixed term of contract | 3 years | |||||
Subsequent event | Tordis Knutsen | Vessel | ||||||
Subsequent Events | ||||||
Fixed term of contract | 3 years | |||||
Subsequent event | Carmen Knutsen | Vessel | ||||||
Subsequent Events | ||||||
Fixed term of contract | 1 year | |||||
Subsequent event | Common Units | ||||||
Subsequent Events | ||||||
Cash distributions paid in the period per unit | $ / shares | $ 0.026 |