KNOT Offshore Partners has snapped up a shuttle tanker from its parent at an attractive price.
The New York-listed partnership is paying $119m, less $87.7m of debt, for the 153,000-dwt Synnove Knutsen (built 2020) from sponsor Knutsen NYK Offshore Tankers.
VesselsValue rates the specialist ship as worth $133m.
The deal is being financed using borrowings under a new and separate sale-and-leaseback agreement with respect to the 123,200-dwt shuttle vessel Torill Knutsen (built 2013).
The DP2 suezmax Synnove Knutsen was built by Hyundai Heavy Industries in South Korea.
The ship is operating in Brazil under a five-year time charter with Norway’s Equinor, providing fixed-rate firm employment through to at least the first quarter of 2027.
The charterer has options to extend the deal for up to 15 more years.
The purchase brings the KNOT Offshore fleet to 18 ships.
The Torill Knutsen has been sold to a Japanese financier, named by VesselsValue as Doun Kisen, with a charter back for 10 years.
The price was $112m and part of the proceeds were used to repay the outstanding loan on the ship.
There is a fixed-price purchase obligation at maturity.
Liquidity boosted
The partnership realised net proceeds of $40m from this sale, and then used $31m towards the Synnove Knutsen.
Gary Chapman, chief executive of KNOT Offshore, which is based in Aberdeen, Scotland, said the dropdown lengthens the average remaining charter duration, while also “meaningfully reducing our medium-term refinancing needs and adding the surplus proceeds raised to our pool of liquidity”.
“This dropdown demonstrates not only our ability to deliver accretive fleet growth, but also our commitment to acting in the best interests of our unitholders keeping the priority of our distribution in mind,” he added.
Chapman believes the current shuttle tanker charter market continues to reflect the effects of temporary capital expenditure pauses by the oil majors at the onset of the pandemic.
But he said: “We are increasingly seeing a catch-up in offshore development activity in the form of both floating production, storage and offloading vessel orders and deliveries, and a marked increase in inbound shuttle tanker chartering inquiries for the quarters and years ahead in our main market of Brazil.”
Additional discoveries in shuttle tanker-reliant deepwater regions, substantial committed development capex from customers and a rapidly dwindling shuttle tanker orderbook give the company confidence that the medium and long-term prospects for the business are promising, Chapman added.
