KNOT Offshore Partners has walked away with a larger, newer shuttle tanker in a sale-and-purchase swap with its parent.
The company, a New York-listed master limited partnership-structured spin-off of Knutsen NYK Offshore Tankers, has purchased the 153,000-dwt Tuva Knutsen (built 2021).
The suezmax shuttle tanker came at a gross price of $97.5m, but that involved taking on $69m in outstanding debt on the ship and the $400,000 in fees associated with a credit facility that comes with the ship.
As part of the deal, the Knutsen NYK bought the 59,300-dwt Dan Cisne (built 2011) for $30m.
The two sales mostly cancel each other out from a cash perspective, and KNOT Offshore will make a net payment of $1.1m to its parent, a shuttle tanker joint venture of Norway’s Knutsen Group and Japan’s NYK Group.
KNOT Offshore chief executive Derek Lowe said the swap provides growth for the partnership, without the need for funding.
And it increases the New York-listed company’s contract pipeline, since the Tuva Knutsen comes with a charter attached.
“This swap reduces our average fleet age and increases our fleet’s concentration in the most in-demand shuttle tanker class,” he said in a statement.
‘Generating certainty
“We remain focused on generating certainty and stability of cashflows from long-term employment with high-quality counterparties, and are confident that continued operational performance and execution of our strategy can create unitholder value in the quarters and years ahead.”
He said the swap “decisively addresses a long-standing challenge” for KNOT Offshore.
Transpetro, the shipping arm of Brazilian oil company Petrobras, returned the Dan Cisne to KNOT Offshore at the end of a charter.
No longer of an ideal size for work in Brazil, the ship had been carrying out short-term conventional tanker work as the partnership assessed whether to upgrade it for the North Sea market.
The Tuva Knutsen brings a more standard-size shuttle tanker into the KNOT Offshore fleet. Built at China’s Cosco Shipping Heavy Industry, the vessel has DP2 dynamic positioning capabilities.
It is operating in Brazil as part of a charter with TotalEnergies with a fixed period that lasts until February 2026. The French energy giant also has renewal options stretching out another 10 years.
And even if TotalEnergies chooses not to renew that contract when it expires, Knutsen NYK has guaranteed the charter rate for the ship until August 2031, giving KNOT Offshore seven years of guaranteed fixed employment.
The swap deal was approved by the KNOT Offshore board and its conflicts committee, which is made up of independent directors supported by outside financial and legal advisors.
