KNOT Offshore Partners expands fleet, launches $10 million buyback program

ABERDEEN - KNOT Offshore Partners LP (NYSE:KNOP), a maritime transportation company with a market capitalization of $218 million, announced Wednesday it will acquire the 2022-built DP2 Suezmax shuttle tanker Daqing Knutsen for $95 million, while simultaneously launching a $10 million common unit buyback program. According to InvestingPro analysis, the stock is currently trading below its Fair Value, suggesting potential upside opportunity.

The Partnership will purchase the vessel from Knutsen NYK Offshore Tankers AS for a net cost of approximately $24.8 million after accounting for $70.5 million in outstanding debt and $0.3 million in capitalized fees. The Daqing Knutsen currently operates in Brazil under charter to PetroChina through July 2027, with KNOT guaranteeing the hire rate until 2032.

In a separate transaction, KNOP expects to generate approximately $32 million through a sale and leaseback arrangement for its vessel Tove Knutsen. The company has agreed to sell the vessel to a Japanese-based lessor for $100 million and lease it back for 10 years, with closing anticipated by September 16.

"Having made significant progress against our strategic priorities over recent quarters, and with shuttle tanker charter market conditions continuing to improve, we are pleased to have reached a point where we can once again take affirmative, value-creating action on multiple fronts," said Derek Lowe, CEO of the Partnership, in a press release statement.

The Board has also authorized a $10 million common unit repurchase program over the next 12 months, citing the current market valuation as "a substantial discount to our net asset value."

Additionally, the Partnership announced it will maintain its quarterly distribution at $0.026 per common unit for the second quarter of 2025, payable on August 7 to unitholders of record as of July 28.

Other operational updates include Repsol Sinopec exercising an option to extend the time charter on the Raquel Knutsen for three years until June 2028, and the Windsor Knutsen commencing operations for ExxonMobil on June 4 following scheduled maintenance.

The company reported approximately $104 million in available liquidity as of June 30, including about $66 million in cash and cash equivalents. InvestingPro analysis indicates positive net income growth expectations for this year, with analysts forecasting continued profitability. The company has also maintained its dividend payments for 13 consecutive years, demonstrating consistent shareholder returns. For detailed analysis and more insights, investors can access KNOP’s comprehensive Pro Research Report, part of InvestingPro’s coverage of over 1,400 US equities.

In other recent news, KNOT Offshore Partners announced a significant change in its board of directors. The company has appointed Masami Okubo, a seasoned executive from Nippon Yusen Kabushiki Kaisha (NYK), to its Board of Directors. Mr. Okubo is currently the Managing Director of NYK Energy Transport (Atlantic) Ltd. and has a long-standing history with NYK, having held various management roles since 1999. His appointment reflects the ongoing relationship between KNOT Offshore Partners and the Japanese shipping company NYK. Mr. Okubo will replace Yasuhiro Fukuda, who was also affiliated with NYK. This development highlights KNOT Offshore Partners’ continued focus on strengthening its leadership with experienced industry professionals. The company operates shuttle tankers primarily under long-term charters in regions like Brazil and the North Sea. This strategic move is expected to support KNOT Offshore Partners’ operations and growth objectives.

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