KNOT Offshore buys new shuttle tanker operating in Brazil

Shuttle tanker operator KNOT Offshore Partners has agreed to acquire KNOT Shuttle Tankers 34, the company that owns the shuttle tanker Tove Knutsen, from Knutsen NYK Offshore Tankers (KNOT).

The acquisition is being done through KNOT Offshore Partners’ wholly-owned subsidiary, KNOT Shuttle Tankers.

The purchase price of the acquisition is $117.8 million, less $93.1 million of outstanding indebtedness and will be financed on a non-dilutive basis using cash on hand and borrowings under KNOP’s existing revolving credit facility, KNOT Offshore said on Tuesday.

The Tove Knutsen is a 153,000-deadweight ton DP2 Suezmax class shuttle tanker, built by Hyundai Heavy Industries and delivered in September 2020.

The vessel is operating in Brazil under a seven-year time charter with Equinor Shipping, providing fixed-rate firm employment through to at least the fourth quarter of 2027.

The charterer has options to further extend the charter for up to 13 additional years. On closing, the Tove Knutsen will become the Partnership’s seventeenth vessel.

The acquisition is expected to close by 31 December 2020, subject to customary closing conditions.

KNOT Offshore has also entered into a new $25 million revolving credit facility with Shinsei Bank, Limited.

The facility will be available to the company until November 2023 and can be prepaid at any time.

The margin payable on the facility is lower than the company’s current average margin of 2.1% over LIBOR.

Gary Chapman, CEO of the Partnership, commented, “The cashflow from this newly acquired vessel provides significant forward visibility and will help support distribution coverage for our unitholders in the years ahead”.

Chapman added: “Looking forward, with visibility on large, multi-year oil major capex commitments principally in offshore Brazil and the North Sea, a global order book for new shuttle tankers that is fully contracted and high barriers to entry for any potential new competitors, we believe that the Partnership is well-positioned to benefit from the long-term growth prospects in this niche market segment where KNOP and our sponsor, KNOT, are together the market leader”.