KNOT Offshore Partners said it struck deals locking up or extending the employment of four of its shuttle tankers.
The New York-listed shipowner also said it was in talks for charters of several more vessels coming open as the company reported a dip in third-quarter profits but offered optimism for the market ahead.
KNOT Offshore, a spin-off of Norway’s Knutsen NYK Offshore Tankers, said an oil major has signed a deal to charter the 160,000-dwt Windsor Knutsen (built 2007) for two years starting between February and May 2025.
The agreement came after Shell exercised an option to continue its charter of the deal until the first quarter of 2025.
The Windsor Knutsen already had a deal with Equinor to charter the vessel starting in the fourth quarter of next year, but the Norwegian energy giant agreed to take the 154,000-dwt Brasil Knutsen (built 2013) in its place.
That means the Windsor Knutsen is locked up until the first half of 2017 and the Brasil Knutsen is employed until the end of 2025 at the earliest, with options that could extend Equinor’s charter until the end of 2028.
And KNOT Offshore said it struck a deal in October with Shell for year-long extensions that will see the energy major charter the 157,000-dwt Tordis Knutsen (built 2016) and Lena Knutsen (built 2017) until mid-2027.
The company did not reveal the rates on the charters, but chief executive Derek Lowe said the shipowner now has 70% charter coverage for 2024 and 79% if options are exercised.
‘Filling the remaining gaps’
“Having executed a number of new contracts, we remain focused on filling the remaining gaps in our charter portfolio,” he said in an earnings release.
Lowe added that the supply-demand balance is improving in its core market of Brazil,, leading to robust demand and better charter rates.
“Driven by Petrobras’ continued high production levels and FPSO start-ups in the pre-salt fields that rely upon shuttle tankers, we believe the world’s biggest shuttle tanker market is tightening materially,” he said.
“Our secondary geography, in the North Sea, is taking longer to re-balance, where we anticipate progressive improvement during and beyond 2024.”
Transpetro charters ending
Aberdeen-based KNOT Offshore said it is in talks to find new employment for the 59,300-dwt Dan Cisne (built 2011) and Dan Sabia (built 2012), which are expected to come off bareboat charter with Brazil’s Transpetro over the next two months.
KNOT Offshore said Transpetro and parent Knutsen NYK are among the suitors.
Also being marketed for new charters are the 123,000-dwt Hilda Knutsen and Torill Knutsen (both built 2013), which are on rolling charters to Knutsen NYK at a reduced rate.
“The partnership is continuing to market both vessels for new, third-party time charter employment and is in active discussions with potential charterers, including Knutsen NYK,” said KNOT Offshore, which is a master limited partnership.
The company also said it is in talks with Repsol of Spain over whether the oil company will extend its year-long charter of the 156,000-dwt Carmen Knutsen (built 2013). The base period of the contract starts next month.
The company reported net income of $12.6m for the third quarter, a dip from nearly $16m a year earlier.
That came despite a rise in revenue, which jumped to $72.7m from $67.8m a year earlier.
But operating expenses also grew, rising to $20.6m in the quarter ending 30 September from $15.7m in the same period of 2022.
The results also included a $5.47m income tax benefit, reversing an expense of $180,000 per year earlier.
The quarterly profit was not enough to prevent a bottom-line loss of $29m for the first nine months of this year, reversing a $52.6m profit in the same period of 2022.
But Lowe struck an upbeat tone for the future.
“With only five new shuttle tankers set to deliver globally, and currently none after 2025, we believe that growth of offshore oil production in shuttle tanker-serviced fields across both Brazil and the North Sea is on track to outpace shuttle tanker supply growth in the coming years,” he said.
“As the largest owner and operator of shuttle tankers (together with our sponsor, Knutsen NYK), we believe we are well positioned to benefit from such an improving charter market.”
