KNOT Offshore Partners LP (NYSE: NYSE:KNOP), a global provider of shuttle tanker services, has announced its financial results for the first quarter of 2024. The company reported revenues of $76.6 million and a net income of $7.4 million. Adjusted EBITDA stood at $47.5 million, with an operating income of $19.7 million.
KNOT closed the quarter with a solid liquidity position of $55 million and paid a cash distribution of $0.026 per common unit in May. The company's CEO, Derek Lowe, discussed the strong demand in the Brazilian market and the company's success in securing new contracts and maintaining high utilization rates for its fleet.
Key Takeaways
- Revenues for Q1 2024 were $76.6 million.
- Net income reached $7.4 million, with an operating income of $19.7 million.
- Adjusted EBITDA reported at $47.5 million.
- The company declared a cash distribution of $0.026 per common unit paid in May.
- KNOT Offshore Partners maintains $55 million in available liquidity.
- New vessel charters were delivered to Shell (LON:SHEL) and TotalEnergies (EPA:TTEF) in Brazil.
- Upcoming charters with Eni were discussed.
- The company is focused on securing additional contract coverage and maintaining liquidity.
Company Outlook
- KNOT Offshore Partners expects strong demand to cover available capacity.
- The company is focused on securing additional contracts for its fleet and maintaining its liquidity position.
- The Torill is set to begin a charter with Eni in Q4, and the Cisne is in the North Sea (NYSE:SE) for upgrades.
- The Dan Sabia is currently being marketed in Brazil as it is not contracted after early June.
Bearish Highlights
- The company discussed the impact of downtime on the Torill and the costs associated with the Dan Cisne's upgrade.
- There is competing capacity in the North Sea which may affect pricing and demand.
Bullish Highlights
- High utilization rates and new contracts and extensions secured.
- Strong demand dynamics in the Brazilian market.
- Potential increase in demand for shuttle tankers in the North Sea due to upcoming projects.
Misses
- The Dan Sabia is uncontracted after early June and is currently being marketed in Brazil.
Q&A Highlights
- CEO Derek Lowe addressed the possibility of share buybacks, stating the board would consider it in the future.
- Lowe acknowledged a shareholder's suggestion to keep the dividend stable and focus on reducing debt.
- Repsol (OTC:REPYY) has a one-year option on the Carmen vessel starting next year, with a notice period of one to three months.
- The short to medium-term demand for North Sea vessels is a greater driver of pricing than the value of new builds.
KNOT Offshore Partners LP (NYSE: KNOP) has showcased a robust financial performance in the first quarter of 2024, with a focus on expanding its vessel charters and maintaining a strong liquidity position. The company's efforts to secure new contracts and navigate the market dynamics in Brazil and the North Sea reflect a strategic approach to growth and stability. As KNOT Offshore Partners continues to optimize its fleet utilization and manage its debt, investors and stakeholders anticipate the next earnings call for further updates on the company's progress.
InvestingPro Insights
KNOT Offshore Partners LP (NYSE: KNOP) has presented a solid financial report for the first quarter of 2024, with a focus on strategic growth and maintaining liquidity. The company's commitment to securing new contracts and managing market dynamics is evident in its recent performance. To further understand KNOT Offshore Partners' financial health and market position, key metrics and insights from InvestingPro are essential.
InvestingPro Data highlights include a Market Cap of $201.24 million, indicating the company's size and market value. The Revenue Growth for the last twelve months as of Q1 2024 stands at 7.49%, which is a healthy sign of the company's ability to increase its income over time. Additionally, the Operating Income Margin for the same period is 24.99%, showcasing the company's efficiency in converting revenues into actual profit.
An InvestingPro Tip that is particularly relevant given the company's reported financials is the maintenance of dividend payments for 12 consecutive years. This reflects a commitment to shareholder returns, despite the company not being profitable over the last twelve months and analysts not expecting profitability this year. This tip, coupled with the fact that short-term obligations exceed liquid assets, may be of interest to investors considering the company's ability to sustain dividends in the future.
For those looking to delve deeper into KNOT Offshore Partners' financials and market position, InvestingPro offers additional insights. There are currently 5 more InvestingPro Tips available at https://www.investing.com/pro/KNOP, which can provide a more comprehensive understanding of the company's performance and outlook. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and access these valuable insights for informed investment decisions.
Full transcript - KNOT Offshore Partners LP (KNOP) Q1 2024:
Operator: Welcome to the KNOP first quarter 2024 earnings call. My name is Carla and I will be coordinating your call today. During the presentation, you can register to ask a question by pressing star followed by one on your telephone keypad, and if you change your mind, please press star followed by two. I would now like to hand you over to Derek Lowe to begin. Derek, please go ahead.
Derek Lowe: Thank you and good morning ladies and gentlemen. My name is Derek Lowe, and I’m the Chief Executive and Chief Financial Officer of KNOT Offshore Partners. Welcome to the Partnership’s earnings call for the first quarter of 2024. Our website is knotoffshorepartners.com and you can find the earnings release there, along with this presentation. On Slide 2, you will find guidance on the inclusion of forward-looking statements in today’s presentation. These are made in good faith and reflect management’s current views, known and unknown risks, and are based on assumptions and estimates that are inherently subject to significant uncertainties and contingencies, many of which are beyond our control. Actual results may differ materially from those expressed or implied in forward-looking statements, and the partnership does not have or undertake a duty to update any such forward-looking statements made as of the date of this presentation. For further information, please consult our SEC filings, especially in relation to our annual and quarterly results. Today’s presentation also includes certain non-U.S. GAAP measures, and our earnings release includes a reconciliation of these to the most directly comparable GAAP measures. On Slide 3, we have the financial and operational headlines for Q1: revenues of $76.6 million, operating income $19.7 million, net income of $7.4 million, and adjusted EBITDA of $47.5 million. We closed Q1 with $55 million in available liquidity, made up of $50 million in cash and cash equivalents plus $5 million in undrawn capacity on our credit facilities. We operated with 97.6% utilization and the vessel time available for scheduled operations was not impacted by any planned drydocking. Following the end of Q1, we declared a cash distribution of US $0.026 per common unit, which was paid in early May. On Slide 4, we have the headlines of the contractual and operational developments since our last results call, which was on February 27. In our major market, Brazil, Vigdis Knutsen was delivered to Shell in March for a three-year time charter, Anna Knutsen saw exercise of an option by TotalEnergies extending the current charter to April 2026, and by the time of the last results call, Dan Sabia’s charter to Transpetro had been extended to early June this year. In the North Sea, Hilda Knutsen, Torill Knutsen, and Bodil Knutsen have continued to operate under time charters to our sponsor, Knutsen NYK. For Bodil Knutsen, this charter lasted as planned until delivery to Equinor at the end of March on a charter of two years fixed plus two years options. For Hilda Knutsen and Torill Knutsen, the charter is for rolling one-month terms up to January 2025. Ingrid Knutsen was redelivered by Altera at the end of March as anticipated and has since gone onto time charter with Knutsen NYK. Both Ingrid Knutsen and Torill Knutsen will commence charters with Eni in Q4 this year. For Ingrid Knutsen, this was a deferral to October from a previously contracted April delivery. This deferral is on terms that are no less favorable to us than applied previously. That charter is for two years fixed plus two options, each of one year. For Torill Knutsen, the new time charter with Eni is for three years fixed plus three options, each of one year. In the meantime, Torill Knutsen is undergoing repairs to a broken generator rotor, which has limited the range of [indiscernible] facilities which this vessel is able to serve. We expect the repair to be completed later in Q2 or into Q3, and both the repair costs and some loss of hire are expected to be covered by insurance, subject to the relevant policy terms. After we received redelivery of Dan Cisne is December 2023, we had deployed her on short term conventional tanker work while also assessing the upgrades required for compatibility with shuttle tanker work in the North Sea. Those upgrades are due to be carried out in the coming weeks. Dan Sabia is due for redelivery to us in June, which is the extended expiry date of her charter to Transpetro. The continuing area of focus for our contracting team is on Dan Cisne, Dan Sabia, and Hilda Knutsen. For near term deployment, focus also remains on Ingrid Knutsen and Torill Knutsen until each of them is delivered to Eni in Q4 this year. On Slide 5, our outlook remains positive on both industry dynamics and the partnership’s positioning to participate fruitfully in our markets. Significant growth is anticipated in production and fields which were long serviced by shuttle tankers. We see reported orders from early this year of around six vessels as an endorsement of confidence in the sector. Three of these vessels have been ordered by our sponsor for delivery over 2026 and 2027. Each of these sponsor vessels has a 10-year fixed contract with Petrobras along with a client option to extend by a further five years. We would expect to see further new build orders placed in order to service the large new production volumes coming online in the years ahead. A measured amount of new shuttle tanker ordering is imperative. It should not be understood as some sort of negative development for the sector. A material shortage of shuttle tanker capacity remains projected in the coming years. We also remain mindful of near term market conditions, where we were particularly focused on marketing the Dan Cisne, Dan Sabia, and Hilda Knutsen as well as seeking third party employments of Ingrid Knutsen and Torill Knutsen until commencement in Q4 of their next long term charters. In the meantime, the partnership remains financially resilient with a strong contracted revenue position of $683 million at the end of Q1 on fixed contracts, which average two years in duration. Charterers options are additional to this and average a further two years. Our pattern of cash generation and liquidity balance is sufficient for our operations and the significant pay down rate for our debt, and we have demonstrated the strength of our relationships with [indiscernible] via several re-financings completed over the last year. Finally, the average age of our vessels at 9.9 years places us well when compared to the useful life model at 23 years. Onto Slide 6, you can see the consistency of revenues and operating income when comparing between quarters and also between 12-month periods. Slide 7 reflects the consistency of our adjusted EBITDA, and you can find the definition of this non-GAAP measure in the appendix. On Slide 8, the most notable change in the balance sheet over the first quarter has come from refinancing of the loan secured by Hilda Knutsen, the balance of which has moved from current liabilities into long term debt. The overall change in the partnership’s liabilities has been a reduction by $42 million, which is reflective of our debt repayment schedule. On Slide 9, we have expanded on the terms of the partnership’s debt facilities to provide added color around the dynamics of debt repayment. The highlighted column shows how the outstanding balances of each facility have been reducing because of repayments we’ve been making in line with scheduled repayment terms. The current installments are the amounts of capital repayments due over the next year, which do not include interest, and the balloon payments are the final amounts of principal which will be due on the maturity date. Of note, $91 million is due to be paid on these debt facilities over the 12 months following March 31. Completion of the Hilda loan refinancing is due imminently, following which no further balloon repayments or re-financings are due within that 12-month period. Our typical pattern is for our vessels to provide security for our debt facilities, and this applies to 16 out of 18 vessels. At present, the exceptions are that Dan Cisne and Dan Sabia are free of debt and we do not have plans to incur additional borrowings secured by these vessels until we have better visibility on their future employment. $880 million out of $925 million in debt facilities are secured by vessels, while the two revolving credit facilities totaling $50 million of capacity are unsecured. Slide 10 shows the contracted pipeline in chart format, reflecting the developments I set out earlier. Similarly, Slide 11 highlights the focus of our commercial efforts on adding near term contracts specifically for Dan Cisne, Dan Sabia, and Hilda Knutsen, and in the near term also for Ingrid Knutsen and Torill Knutsen. On Slide 12, we see our sponsor’s inventory of vessels which are eligible for purchase by the partnership. This applies to any vessel owned by or on order for our sponsor, where the vessel has a firm contract period at least five years in length. At present, five existing vessels and five under construction fall into this category. There’s no assurance that any further acquisitions will be made by the partnership, and any transaction would be subject to the board approval of both parties, which includes the partnership’s independent complex committee. As we have said, our top priorities remain securing additional contract coverage for our existing fleet and fostering our liquidity position. On Slides 13 to 15, we have provided some useful illustrations of the strong demand dynamics in the Brazilian market, as published by Petrobras. We encourage you to review Petrobras’ materials directly. The primary takeaway from each of these slides is consistent: there is very significant committed demand growth coming from the Brazilian market in the form of new FPSOs that will require regular service from shuttle tankers. We believe the reports earlier this year of up to six vessel construction contracts are an endorsement of the strong anticipated market conditions in the medium and longer term. As I mentioned earlier, three of these recent new build contracts are for our sponsor, Knutsen NYK, and they’re due for delivery over 2026 and 2027. We would expect to see further new build orders placed in order to service the large new production volumes coming online in years ahead, and a material shortage of shuttle tanker capacity remains projected in the coming years. On Slide 16, we provide information relevant to our U.S. unit holders and particularly those seeking a Form 1099. Those holdings units via their custodians or brokers should approach those parties directly. Those with directly registered holdings should contact our transfer agent, Equiniti Trust Company, whose details are shown there. On Slide 17, we include some reminders of the strong fundamentals in our business in the market we serve, our assets, competitive landscape, robust contractual footprint, and resilient finances. I will finish with Slide 18, recapping our financial and operational performance in Q1 2024 and the subsequent time, and our outlook for the remainder of 2024. We are glad to have delivered high and safe utilization which have generated consistent financial performance. We are pleased with the new contracts and extensions we have secured during the quarter and since, along with our ability to navigate our refinancing needs and periodic capital expenditures, and our continued commercial focus remains on filling up third party utilization for 2024 while looking further forward to longer term charter visibility and liquidity generation. Thank you for listening, and with that, I’ll hand the call back to the Operator for any questions.
Operator: Thank you. [Operator instructions] Our first question comes from Liam Burke from B. Riley.
Liam Burke: Thank you. Hi Derek, how are you today?
Derek Lowe: Hi Liam, good to talk to you.
Liam Burke: Thank you. Derek, could you give us a little more color on the macro side, specifically the activity in the North Sea? I mean, it’s pretty well known that the step-up investment on offshore in Latin America is pretty high, but we’re not hearing much on the North Sea.
Derek Lowe: Sure. Well, the main developments we’re looking to are the [indiscernible] and the Penguins and FPSOs coming online with production, either late this year or early next year, and we think there’s going to be a significant increase in demand for the whole of the North Sea shuttle fleet once those come along. The question in the meantime is at what stage do clients want to start entering into contracts in anticipation of that.
Liam Burke: So everybody is anticipating the actual projects coming to fruition. Does that make sense to just keep the Hilda and Torill busy until you can charter it? I mean, are they good candidates to be chartered into this market?
Derek Lowe: Torill has a charter from Q4 this year with Eni, and so--
Liam Burke: Okay.
Derek Lowe: Torill is used in perhaps the CLA pool until delivered into that contract - that’s certainly a relevant point for us, but not after that.
Liam Burke: Okay. On the Cisne and Sabia, they’re in a good market but just not the right size. Do you have any more alternatives, rather than just running them in the traditional market?
Derek Lowe: The Cisne, as I think you’re aware, we brought over to the North Sea and are going to put the upgrades in place for North Sea work, because we think Cisne is much better suited to the North Sea because of the size, than to the Brazilian market. She’ll be exposed to the same dynamics in the North Sea as we have with the other vessels as well, which is why she’s got probably the greatest amount of focus from the contracting team of all of our vessels. Sabia, we expect redelivery in early June, and she’s subject to all the normal and energetic marketing efforts, as you might imagine, given that she’s not contracted after that.
Liam Burke: Great, well thank you, Derek.
Derek Lowe: Thank you.
Operator: Our next question comes from Poe Fratt from AGP.
Poe Fratt: Hi Derek.
Derek Lowe: Hi Poe, how are you doing?
Poe Fratt: Very well, how about you?
Derek Lowe: Very good, thanks.
Poe Fratt: Congrats on closing some of the holes. I’m especially surprised about the Torill, just because, as you just mentioned, the North Sea market could be very tight as you have the two FPSOs coming on later this year. Your market intelligence, what do you understand as far as the incremental demand that could be generated from those two FPSOs, and then is there--it seems like there won’t be any available capacity ex-the Hilda at that point in time. Is that a fair statement?
Derek Lowe: Well, we think there’s more than enough incremental demand to come through to cover the, I guess, under-employed or under-utilized vessels that we’ve got, potentially that others have as well. Lost days has always been a timing issue, and obviously the longer it goes, the more frustrating it is; but it’s a timing issue rather than anything worse than that. The vessels that we would have available for that, because the Torill and Ingrid have both been contracted to Eni from Q4, they won’t be in the question for that, but Hilda will and Dan Cisne, as she’s being set up for the North Sea, will be as well.
Poe Fratt: But if you would answer the question, what do you think the incremental demand of those two FPSOs could be?
Derek Lowe: I don’t have a figure to hand, I’m afraid, but certainly more than enough to soak up the capacity that we’ve got.
Poe Fratt: Would it be fair to say that two to four for each FPSO, or maybe two, so that you have incremental demand developing into 2025 of four shuttle tankers in the North Sea?
Derek Lowe: Yes, I’m afraid I don’t have that to hand, so I can look at that and maybe we can discuss it offline.
Poe Fratt: Okay. My understanding is that neither of those projects have lined up any capacity. Is that what you understand?
Derek Lowe: As far as I know, they haven’t lined any up, yes.
Poe Fratt: Okay, great. Then if you could just talk about the Dan Cisne, how much was the upgrade, the cost of the upgrade, and then will there be any downtime on that vessel in the second quarter?
Derek Lowe: Well, she’s currently not contracted, so downtime is perhaps a slightly moot point. We think it’s around a month of both the work and the testing and sea trials and so on, that would go on afterwards, maybe a month to six weeks. As I say, she’s not on contract in any case during that time. We haven’t published the costs, but it’s not material in the context of the financial results we’ve produced, but we haven’t produced a figure.
Poe Fratt: Okay, maybe you could describe the upgrade that’s required?
Derek Lowe: Yes, it’s some harsh weather facilities.
Poe Fratt: Okay, and then do you think the Dan Sabia will stay in Brazil? It seems like there’s strong enough demand there, and I guess, what’s your sort of working assumption on the Dan Sabia at this point in time?
Derek Lowe: Well, we are very mindful that she’s not the size that is ideal in Brazil, but there’s enough demand that potentially a client might want to take her in any case, so we continue to market in Brazil, given that that’s where she is.
Poe Fratt: Okay. When you look at the impact of the Torill on the first quarter, you know, what with the broken motor rotor, can you just quantify the number of days? Will it just be the deductible, the higher deductible of 14 days that was in the first quarter?
Derek Lowe: Well, we certainly will be subject to that 14 days deductible. It’s not straightforward, because she’s able to serve some client facilities but not others, so she’s got some earnings, so it’s not a classic loss of hire where she’s completely out and the calculation involved is actually relatively simple in those cases. This is going to be more complicated.
Poe Fratt: Got you, so was she down at all in the first quarter, and then if you could quantify any other idle days that you might have had in the first quarter to get to that utilization number that you published?
Derek Lowe: Sure. Something like a month in the first quarter - I’d need to check the exact figures, but order of magnitude a month.
Poe Fratt: And was there any other downtime or idle days in the first quarter? It sounded like you worked the Cisne in the conventional tanker market, so that was more of a--you know, more in voyages, right?
Derek Lowe: That’s right. She had downtime between those as well, but I think total employment for the Cisne is--this isn’t a Q1 comment because her work has continued since then, but something like 80 days in the last five months.
Poe Fratt: Sorry - would you clarify that? Eighty days, she’s worked 80 days over the last five months?
Derek Lowe: Something like that, yes.
Poe Fratt: Okay, got it, so 80 of the 150, if you look at it--okay.
Derek Lowe: Yes, [indiscernible] and three different courses of performance as well, so it’s not easy to fit into a quarterly result.
Poe Fratt: Understood. When I combine your--or just look at your opex, it looks like the opex in the first quarter might have gone up just slightly on a daily basis. Is that accurate, and can you just comment on looking forward, opex and G&A?
Derek Lowe: Sure. G&A has been pretty stable. The main difference in opex is voyage expenses, and bear in mind also, of course, we have voyage revenues to offset that as well, and that’s a classification issue relating to--I expect that for Dan Cisne, because of the nature of her employment in that time.
Poe Fratt: Got you, so that was mainly absorbing the bunker cost on the voyages and other potential fees?
Derek Lowe: Yes.
Poe Fratt: Then just one nitpicky one, it looks like you might have layered on some interest rate hedges in the first quarter. The overall notional amount of the swap went up. Could you just talk about that?
Derek Lowe: Yes, we did a small amount of additional fixing. We are--at the moment, we’re well within our policy range of the amount of debt that is either fixed rate or effectively fixed through hedges. In due course as those hedges come off, we’ll need to put some more in place, and so we did a small amount of that quite early in Q1. We were fairly pleased with the rate that we got at that stage, even though rates have moved a bit since then.
Poe Fratt: Yes, it looked like you still were able to fix in the low-2 range, because your average interest rate [indiscernible] fixed-wise only went up to 2, from 1.9, right?
Derek Lowe: [Indiscernible] as low as 2 for the new fixed, but it certainly was a rate that we were happy with.
Poe Fratt: Yes, okay. Then it looks like other than the three that you talked about - the Hilda, Torill--I’m sorry, the Hilda, Dan Cisne and Dan Sabia with open windows and no longer work. Can you just talk about the Carmen? It looks like Repsol has a year option at the start of next year. When would the notice period be on that option before it moves to the major oil company for, what is it, four years, or three years?
Derek Lowe: We would generally expect that to be within something like one to three months of the start of the optional period. I don’t have the exact term for that particular one in front of me, but that sort of period, we would expect to--would be the latest we’d expect there.
Poe Fratt: Okay, great. Well, congratulations Derek on the contracting and chartering during the quarter. Look forward to--
Derek Lowe: Thank you Poe.
Poe Fratt: You’re welcome.
Operator: Our next question comes from Pavel Oliva from Rockhill Global.
Pavel Oliva: Hi, good morning. Congratulations on a great quarter. I had a few questions, if you don’t mind. One is my understanding is that the new builds--that the prices of new builds are around $160 million for the North Sea and $140 million for Brazil, and that there are really no new builds for North Sea. Does the value of the new builds impact pricing, daily pricing of the existing fleet?
Derek Lowe: I wouldn’t say so, certainly not in the North Sea. We’re aware of the short to medium term issues around when demand for those four North Sea vessels can come in, and that’s a far greater driver than anything else.
Pavel Oliva: I see, so--okay. So the charters that are on those new ships, for example in Brazil, would be similar to what they are now, or they would reflect the new cost and the new cost of capital?
Derek Lowe: They will reflect the terms--the market conditions at the time they were entered into, so the newest ones, obviously, you’d expect to be, let’s say, recognizably current, but some of the other vessels that aren’t yet delivered obviously were contracted some time ago and would be on different terms.
Pavel Oliva: Right, so if I have a ship that’s coming off hire and I have to re-charter it, is it fair to say that, for example in Brazil, the rates would be a lot higher than they were at the historical charter?
Derek Lowe: We are seeing them firming up, if anything, so we clearly welcome the direction that’s going.
Pavel Oliva: Can I ask, in the North Sea, besides your ships, are there any other ships, like Altera ships that may be available for those projects, or are these ships sort of it?
Derek Lowe: I understand there is competing capacity. I don’t have figures to hand on that, and I wouldn’t want to comment on another operator’s contractual profile anyway. But yes, we understand there is capacity aside from our own.
Pavel Oliva: I see, okay. You had really good results in terms of free cash flow generation in the first quarter, and that’s without a lot of the charters. Have you guys considered potentially buying some shares back at this point, given what the NAV is in light of the new ships that are being built in Brazil and the values--replacement value of the fleet, as well as just the ability, you know, by lowering the number of shares to potentially increase the dividend, when and if you’re ready to reinstate that dividend?
Derek Lowe: Yes, we certainly understand and appreciate the value of that strategy, and that’s a question for the board to be addressing in due course. The greatest priorities actually that we continue to make progress on is the visibility of our contracting schedule, and at the moment clearly there are two or three vessels that remain un-contracted, which is quite a rare position for us to be in, and they’re more concerned that that capacity is filled first before looking at anything else. We certainly look forward to the point where that is a really good use of capital. I would also say if you look at our liquidity position, which we are certainly content with, we had 55, I think--we had $50 million of cash equivalents--
Pavel Oliva: Cash.
Derek Lowe: -cash and cash equivalents at the end of March, but we also had $45 million of drawn down revolving credit facility, and so the net liquidity, if you look at the difference between those, is rather less, and we wouldn’t feel and I expect the board wouldn’t feel able to invest cash in buying back units when that’s the position.
Pavel Oliva: Understood, understood. But as you kind of get to that more comfortable position, and you have repaid a lot of debt so far, you would--it’s something that the board will certainly consider, right?
Derek Lowe: Yes, it’s certainly one of the options.
Pavel Oliva: Okay, awesome. Very good. Congratulations on a great quarter and terrific performance. Thank you.
Derek Lowe: Thanks Pavel, appreciate it.
Operator: Our next question comes from Robert Silvera with R.E. Silvera & Associates Marine.
Robert Silvera: Hello Derek.
Derek Lowe: Hi Robert.
Robert Silvera: Yes, Derek, thank you for taking my call. We’re marine surveyors, by the way - she dropped the word, surveyors. In any case, thank you for taking the call, and I’d like to congratulate you on improving the company’s situation considerably versus the past. Our input is that we would love to--because we own thousands of shares, we would love to see you keep the dividend about where it is for an extended period of time, and aggressively continue your move toward reducing debt. Don’t take any more drop downs for the time being, because the fleet is fairly young, and let’s fill the gaps, as you’ve been saying, and get to the position where we have significantly continued to reduce the debt. You have some of the ships already debt-free, and that’s really great. That’s our position as shareholders, and we hope you will take that into consideration.
Derek Lowe: Sure, thank you very much. I would just show you again Slide 9, if you want to go back to it, the current installments figure is basically a 12-month look forward from the balance sheet date of the debt repayments that are coming due via amortizations, and that $91 million over the 12 months starting April 1 this year is very recognizable on a year-by-year basis for the amount we repay in our debt in cash, and purely on the scheduled repayment terms. Point very well taken, and I hope you’re also pleased with the amount of debt repayment we’re managing to do already.
Robert Silvera: Yes, very pleased with that, and I’m saying our point is, I’m not interested in getting the dividend raised back to $0.52 right away, but rather continuously aggressively continue to pay down the debt, don’t take any drop downs for at least a year at this point, and filling the gaps on where we are with our ships, putting us in a very, very solid position. I think the share price will reflect it. The future with the market in Brazil, looking as good as it is, given that much time that I’m talking about, a year, we will know the market a lot better by then and we can make very judicious decisions on what to add to the fleet in the future.
Derek Lowe: Yes.
Robert Silvera: Thank you Derek.
Derek Lowe: Thank you, thanks Robert.
Robert Silvera: Bye bye.
Derek Lowe: Bye.
Operator: As a reminder, to ask a question, please press star followed by one on your telephone keypad. We currently have no further questions. I will hand back over to Derek for any final remarks.
Derek Lowe: Thank you all again for joining this earnings call for KNOT Offshore Partners first quarter 2024. I look forward to speaking with you again following the second quarter results.
Operator: This concludes today’s conference call. Thank you for joining. You may now disconnect your lines.
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