Good day and welcome to the KNOT First Quarter 2021 Earnings Results Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. I would now like to turn the conference over to Gary Chapman, Company's CEO. Please go ahead.

Thank you and welcome everybody to our first quarter earnings call for 2021. You can as always find our earnings release and this presentation on our website at knotoffshorepartners.com. Our call today includes certain non-U.S. GAAP measures of distributable cash flow and adjusted EBITDA, and although our earnings include the reconciliation of those non-GAAP measures to the most directly comparable GAAP measures. Please remember that any forward-looking statements made during today's call are subject to risks and uncertainties. This presentation and other publicly available information contain forward-looking statements. Actual events and results can materially differ from those statements and the partnership does not have or undertake a duty to update any forward-looking statement. I refer to slide two in our annual and quarterly SEC filings which refer to the details. Slide three. First quarter and subsequent highlights. The partnership is able to report another strong and stable set of quarterly results. Total revenues in the first quarter were $71.5 million, operating income $27.6 million, and net income $28.1 million. Adjusted EBITDA was $51.3 million, distributable cash flow was $21.7 million, and our coverage ratio is 1.20. Available liquidity at the end of the first quarter was $115 million, which included cash and cash equivalents of $60 million. Scheduled fleet utilization was 91.6% in the quarter, noting that if we were to include the Windsor Knutsen that received insurance proceeds equivalent to hire during the quarter then that utilization figure increases to 97.5%. We announced our 23rd consecutive quarterly distribution of $0.52 per common unit, which was in fact paid today. Our crew and our operations have remained materially unaffected by the COVID-19 pandemic to date, and we continue to establish and maintain strict procedures and protocols around our operations to do all we can to keep our colleagues safe, despite the many challenges that have arisen and are continuing. At the end of the quarter, the Partnership had $670 million of remaining firm contracted forward revenue excluding options. In respect to the Windsor Knutsen, you may recall we explained previously that the vessel was found to have a crack in her main engine block back in December 2020 when she was placed off hire. The Partnership's insurance is covering the cost of repairs and providing income at approximately the level earned during the vessel's prior long-term charter, excepting the 14-day deductible period under the policy. Until such time as the vessel is repaired and fully operational, which is expected to be in or around June 2021, the incident and the repair are not expected to result in any future loss of hire and the repairs are progressing well, on time, and on budget. We closed the sale and leaseback agreement for the Raquel Knutsen in January 2020 and further details on this transaction can be found in our fourth quarter 2020 earnings release. Slide four. In March, the Tove Knutsen developed a technical fault due to leakage from its controllable pitch propeller. The vessel was repaired and returned to operation on April 15, 2021, and net insurance recoveries, the Partnership currently estimates that the aggregate cost of this incident will be approximately $0.3 million. During the first quarter, the Bodil Knutsen successfully completed its scheduled second renewal survey drydocking and the Partnership took advantage of the drydocking to also install a ballast water treatment system on the vessel, which further enhances the vessel's green credentials. Based on the timing and sequencing of events, the Bodil Knutsen was effectively redelivered to the Partnership from Equinor on February 22, 2021, at the start of the vessel’s drydock. We are now actively marketing the vessel for new time charter employment. In the interim period and to provide support to the Partnership, our sponsor Knutsen NYK Offshore Tankers AS (KNOT) have agreed to time charter the Bodil Knutsen from the Partnership on a flexible rolling three months basis, possibly for the remainder of 2021, commencing on a date to be agreed in May 2021. The charter rate payable will be lower than the rate that the Partnership would normally wish to achieve in the market, reflecting the short-term situation in the North Sea at this time, yet providing the Partnership valuable support and certainty of income. As a related market transaction, this charter proposal has been reviewed and approved by the Partnership's Independent Conflicts Committee. In May 2021, the Partnership reached an agreement with VOC Industry Corporation Norwegian Sector or VOCIC Norway, whereby VOCIC Norway agreed to fund loss of hire at a reduced rate during the costs related to the installation of a VOC, Volatile Organic Compound recovery plant on the Bodil Knutsen. The work is expected to be carried out in the third or fourth quarter of 2021 and take around one month. This will be the second material improvement made to the vessel in 2021 after the addition of the ballast water treatment system. The VOC system will significantly improve the operational attractiveness of the vessel in the North Sea and Norwegian sectors going forward, as well as virtually eliminate the non-methane VOC released into the atmosphere arising from the vessel’s cargo. Finally, the Tordis Knutsen is due to undergo her first planned five-year special survey drydocking in the fourth quarter of 2021, which is expected to be carried out in Europe. The vessel is expected to be off-hire for approximately 50 to 55 days, including mobilization to and from Europe. This is expected to have a scheduled impact on our fourth quarter earnings. The slide five, where we set out some of the unique aspects of our business. In brief, we are a market leader with more than 30 years of experience. We are classified as a corporation for U.S. federal income tax purposes and issue 1099. Our vessels are specialized assets with limited replacement risk. Most of our vessels have operational flexibility and are capable of servicing many different fields. There are high barriers to entry due to the specialist nature of our vessels and crew. We have a diverse set of financially strong contractual counterparties. Our contracts are fixed rate and typically one to seven years, and once in operation they don't depend on oil prices. Our customers bear the risk of vessel utilization and operational field costs. Our management strategy remains to operate the business with a focus on long-term stability as far as possible. As we have seen in 2021 so far, our combination of strong coverage and diversification is serving us well, as we maintain good coverage even as more vessels transition between contracts than has been the case historically. Finally, our debt repayment profile means we expect to pay down around $90 million this year. Slides six through nine are our main financial results and I will highlight just a few relevant points. For the first quarter of 2021, we were able to maintain revenues broadly in line with previous quarters at $71.5 million, notwithstanding the Bodil Knutsen drydock and some of the one-off technical issues already outlined. Vessel operating expenses for the quarter were slightly higher, partly due to bunker costs related to the Bodil Knutsen drydock and also due to higher crew costs arising from COVID-related issues. We do expect some of this crew cost overshoot to fall back over the course of the year. Adjusted EBITDA on slide seven came in at $51.3 million, marking another very consistent quarter. Distributable cash flow on slide eight was 1.2 times in the quarter, reflecting slightly lower fleet utilization mainly related to the Bodil Knutsen drydock and expected increase in our estimated maintenance and replacement CapEx adjustments. The impact of an increased realized loss arising from our interest rate swap contracts was also due to lower LIBOR and the non-recurring item related to the Raquel Knutsen sale and leaseback refinance. We’ve spoken previously about targeting stability and we consider this to be an example whereby our strong coverage has given us room to maneuver when we have experienced a degree of turbulence. Maintaining our coverage at 1.2 times despite that turbulence shows the extent to which our current contracts and diversification of revenue streams have provided us with depth of cover. We currently expect our contract portfolio to continue to provide cover throughout this current year. On slide nine, I will just note here the increase in our current liabilities, which principally represents the refinancings we have due in the coming year, with the first significant tranche due in November 2021. We're already in detailed negotiations with our lending group in relation to this, and all indications so far are very positive. We plan to report more on this in the next quarter. Slide 10 gives an update on our contracted revenue charter portfolio. At the end of the quarter, we had $670 million of contracted forward revenue remaining to the Partnership and an average remaining charter period of 2.5 years, with our customers having options to extend these charters by a further 2.8 years on average. For the Windsor Knutsen, we're showing here the small gap around the end of the second quarter 2021 where there could be a small open period between the end of the repairs and the anticipated commencement of the new charter. Ultimately, this may not occur, but until we get closer to the time and agree on a precise delivery date with the charterer, there is this possibility. The Bodil Knutsen is showing the time charter to KNOT in the middle of the year, which is on a rolling three-month basis to allow flexibility for when a third-party time charter is found. Thereafter, you will see that our remaining fleet is contracted for the remainder of the year. As mentioned, the Tordis Knutsen is scheduled for its first planned five-year special survey drydocking in the fourth quarter. As disclosed in our fourth quarter 2020 results, the Partnership secured new fixed contracts for the vessels Tordis, Vigdis, and Lena Knutsen that will commence between May and December 2023. On slide 11, our sponsor KNOT continues to have six vessels that could be acquired by the Partnership with an average fixed contract period of 5.3 years, with an average of a further 7.3 years extension options. Although we have seen a welcomed increase in our unit price, still today, we have no firm plans for acquiring another vessel. However, at this time, we are actively considering our options for later in the year. New vessels that provide further diversification and cash flow coverage would further insulate the partnership from any headwinds. Our sponsor KNOT continues to provide flexibility with respect to the timing of any acquisitions. We will continue to take a prudent approach, taking into consideration the long term interests of the business. As always, the acquisition by KNOP of any drop-down vessels in the future would be subject to the approval of our Independent Conflicts Committee, as well as the Board of Directors of both KNOP and our sponsor KNOT. Slide 12 is to demonstrate how our stable fixed-rate businesses performed over the last several years, particularly in the face of volatile oil prices. Slide 13 includes this slide in our fourth quarter presentation just recently. But I wanted to keep it in here to reiterate that with our customers' CapEx schedule shifting to the right, we see the headwinds we're now facing very much as a timing issue. We continue to expect the market overall to normalize and grow substantially. We see both Brazil and the North Sea markets not only maintaining but growing in the coming years. On slide 14, we’re looking at the same time, but with a focus on shuttle tankers. Although we've plotted the supply/demand on here, and it looks very precise, actually, the picture changes a little all the time, but there are two messages we'd like to present. The first is that the market is still relatively balanced, even over the next year or more, as the vast majority of shuttle tankers are on long-term contracts, and therefore it never takes much for the market to tighten up. Secondly, we then expect to see growth in the many and very sizable FPSO activities announced by Petrobras in Brazil, which is one source that evidences this assumption. With oil prices rebounding faster than predicted and showing less volatility, that growth may yet come earlier than we are anticipating and showing on this slide today. Slide 15, ESG. The first thing to say is that we're committed to playing our part in driving each of the E, S, and G headings. One way that we demonstrate that is to report on those new initiatives and our progress on the many others that we are already undertaking. We published our first ESG report in respect of 2019, and we are working on our 2020 report just now. You can find the 2019 reports on our website. I've already mentioned the ballast water treatment system installed on the Bodil Knutsen and the VOC plant that will be installed later this year. Moreover, our sponsors have ordered two next-generation LNG field shuttle tankers. These are just a couple of the most obvious items, but there are many others. We also take health, safety, and quality very seriously, and we regularly monitor a large number of operational KPIs to maintain and understand how our fleet is operating and constantly improve where we can. One outcome is that throughout 2020 and to-date in 2021, our fleet has experienced no serious incidents or casualties. Finally, but not least, as our ESG activities could be a presentation in themselves, we have robust anti-corruption practices and policies and a supplier code of conduct in place among several other governance documents. Slide 16. So our near-term priorities for this coming quarter and beyond are to continue to operate our vessels safely and efficiently and ensure the health and safety of our crew and employees. We make no apology for repeating this statement every quarter. Continue to progress ongoing discussions with our lenders for refinancings during August and November 2021. We anticipate we will give an update on that as part of our second quarter. All indications so far are positive and progress has been made in line with our timeline and expectations. Of course, we are working to secure new long-term employment for the Bodil Knutsen following the KNOT charter, and we expect to finalize our 2020 ESG report shortly. We continue to explore options and possibilities for a further internally financed dropdown later in 2021, possibly in the fourth quarter. We are continuously maintaining our ongoing close dialogue with our customers regarding operations, chartering, and rechartering options and opportunities. Slide 17. So, in summary, we believe we have delivered another strong quarter with high utilization, strong cash flow, and good coverage, which has enabled us to maintain our distribution. We had $670 million of forward contracted revenue at the end of the quarter and we are not exposed to short term or price fluctuations. The repercussions of COVID on our customers' callback schedules have created near-term headwinds for shuttle tanker demand. Other than the specific vessels listed, our fleet is fully contracted for the remainder of 2021. We believe we can deliver solid coverage throughout the remainder of the year. In the mid to long term, as shown in the presentation, oil production in Brazil and the North Sea area from shuttle tanker service fields is expected to grow significantly. As a result, we believe the shuttle tanker market fundamentals and growth prospects overall continue to remain strong. Thank you very much for listening. That concludes the presentation, and I'll be happy to take questions.

We will now begin the question and answer session. The first question comes from Liam Burke with B. Riley. Please go ahead.

Thank you. Hi, Gary. How are you today?

Hello. Liam, I'm well. Thank you.

You mentioned the Bodil Knutsen would be chartered by your sponsor on a rolling 90-day period. And then you touched on the fact that there are challenges related to the North Sea? Can I get some clarification on how the North Sea ties into this?

Yes, sure. The Bodil is an ice-class vessel and is suited for North Sea operations as opposed to Brazil. At the moment, with the vessel coming off charter, we're looking for various options for the vessel to seek new employment. Currently, there is a bit of softness in the market, as we've explained previously. Various projects have been shifting to the right, and that has meant that we've been discussing with the team how we can deal with that in the immediate term until we find alternative employment. The solution we've found gives KNOP what it needs, which is certainty of income, and that's really what we've been focused on.

Okay. That's fair. You mentioned the prepared comments about four new builds on the dropdown schedule. In 2021, you're looking at one. How many realistically could you look at over a period of time? Or could you actually drop down over a period of time?

Yes. There are actually six sitting at the sponsor at the moment. We're looking at plans to purchase a vessel if possible in Q4, as I mentioned. At this stage, the traditional equity issuance is perhaps still not there for us. We are likely to implement an ATM facility such that if an opportunity arises for us to go down the equity issuance path, we would have that option available. However, an ATM or any equity issuance is only useful if we have a prudent use for those funds. For now, we're targeting one possibly two dropdowns. Realistically, this year, our primary target is one. We can reassess as we move forward through the year.

Great. Thank you, Gary.

Thank you, Liam.

The next question comes from Richard Diamond with Castlewood. Please go ahead.

Yes. Good morning, Gary, and appreciate the steady hand. According to TradeWinds news this morning, steel prices and newbuilds are up 11%. The price has risen from $90 million to $100 million in the last two months. Assuming the price of shuttle tankers is also going up, can you discuss the implications of higher newbuild prices on rates and any other implications for KNOP?

Thank you, Richard. Good question. In terms of higher newbuild prices for us and new projects, there are no speculative orders for shuttle tankers. So, to the extent that newbuild prices go up, those changes would be reflected in our financial modeling regarding tenders for new business and ultimately passed on to our charterers. Importantly, what's interesting is when newbuild prices increase, it allows our existing fleet to become more competitive during rechartering. So when newbuild prices rise, existing vessels can command higher rates at the time of rechartering. Therefore, for us, as vessels come off charter in the next 12 to 18 months, we actually welcome higher newbuild prices as they are beneficial for us as existing vessel owners.

Alright. Given the shortage of berths now until 2024, because of all the container ship and other types of vessel ordering, will that cause charterers who want new vessels to look more aggressively to make sure that they secure slots?

I'm sure it will. It may very well prompt some of our customers' decision-making if they look around at available slots and realize that if they don't act soon, they might miss the opportunity. However, that’s primarily an issue for KNOT, our sponsor, but it ultimately has implications for us as well. Our primary focus remains on rechartering rates. We hope that the rise in newbuild prices will positively affect those rates, which is the main benefit for us. As a sponsor already has six vessels with contracts that are either delivered or being constructed that we can purchase, I think it can definitely spur new business and growth for us as the MLP.

Thank you very much, Gary.

Thank you, Richard.

As we have no further questions, this concludes our question and answer session. I would now like to turn the conference back over to Gary Chapman for any closing remarks.

Thank you very much everybody for your time, and have a good day.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.