6-K

Table of Contents ​

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 6-K

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REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

Commission File Number: 001-35866

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KNOT Offshore Partners LP

(Translation of registrant’s name into English)

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2 Queen’s Cross,

Aberdeen, Aberdeenshire

AB15 4YB

United Kingdom

(Address of principal executive office)

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Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

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Form 20-F ☒ Form 40-F ☐

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Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

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Yes ☐ No ☒

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Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

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Yes ☐ No ☒

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Table of Contents KNOT OFFSHORE PARTNERS LP

REPORT ON FORM 6-K FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2022

Table of Contents

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Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2022 and 2021	3
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Unaudited Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2022 and 2021	4
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Unaudited Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021	5
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Unaudited Condensed Consolidated Statements of Changes in Partners’ Capital for the Three and Six Months Ended June 30, 2022 and 2021	6
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Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021	7
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Notes to Unaudited Condensed Consolidated Financial Statements	8
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Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
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Forward-Looking Statements	39
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Exhibits	42
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Signature	43

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THIS REPORT ON FORM 6-K IS HEREBY INCORPORATED BY REFERENCE INTO THE FOLLOWING REGISTRATION STATEMENTS:

●	FORM F-3 (NO. 333-248518) ORIGINALLY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (“SEC”) ON SEPTEMBER 1, 2020; AND
●	FORM F-3 (NO. 333-227942) ORIGINALLY FILED WITH THE SEC ON OCTOBER 23, 2018.
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Table of Contents

Unaudited Condensed Consolidated Statements of Operations

For the Three and Six Months Ended June 30, 2022 and 2021

(U.S. Dollars in thousands, except per unit amounts)

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​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended					​	Six Months Ended
​	​	June 30,					​	June 30,
​		2022			2021			2022			2021
Operating revenues: (Notes 3,4 and 13)	​	​	​	​	​	​	​	​	​	​	​	​
Time charter and bareboat revenues	​	$	63,788	​	$	66,513	​	$	128,975	​	$	132,111
Loss of hire insurance recoveries (Note 5)	​		—	​		4,397	​		—	​		10,279
Other income	​	​	171	​	​	27	​	​	180	​	​	28
Total revenues	​		63,959	​		70,937	​		129,155	​		142,418
Operating expenses: (Note 13)	​		​	​		​	​		​	​		​
Vessel operating expenses	​		23,024	​		17,394	​		43,085	​		35,954
Depreciation (Note 10)	​		26,059	​		23,831	​		51,996	​		47,515
Impairment (Note 19)	​	​	—	​	​	29,421	​	​	—	​	​	29,421
General and administrative expenses	​		1,428	​		1,492	​		3,126	​		3,113
Total operating expenses	​		50,511	​		72,138	​		98,207	​		116,003
Operating income (loss)	​		13,448	​		(1,201)	​		30,948	​		26,415
Finance income (expense):	​			​			​		​	​		​
Interest income	​		59	​		—	​		61	​		—
Interest expense (Note 6)	​		(8,301)	​		(6,804)	​		(15,026)	​		(14,176)
Other finance expense (Note 6)	​		(103)	​		(250)	​		(312)	​		(409)
Realized and unrealized gain (loss) on derivative instruments (Note 7)	​		5,116	​		(2,265)	​		21,473	​		5,746
Net gain (loss) on foreign currency transactions	​		(165)	​		(144)	​		(98)	​		(96)
Total finance expense	​		(3,394)	​		(9,463)	​		6,098	​		(8,935)
Income before income taxes	​		10,054	​		(10,664)	​		37,046	​		17,480
Income tax benefit (Note 9)	​		(166)	​		(261)	​		(378)	​		(264)
Net income (loss)	​	$	9,888	​	$	(10,925)	​	$	36,668	​	$	17,216
Series A Preferred unitholders’ interest in net income	​	$	1,700	​	$	1,759	​	$	3,400	​	$	3,559
General Partner’s interest in net income	​		150	​		(233)	​		610	​		253
Limited Partners’ interest in net income	​		8,038	​		(12,451)	​		32,658	​		13,404
Earnings per unit (Basic): (Note 15)	​		​	​		​	​		​	​		​
Common unit (basic)	​	$	0.23	​	$	(0.38)	​	$	0.95	​	$	0.41
Class B unit (basic)	​	$	0.19	​	​	—	​	$	0.87	​	​	—
General Partner unit (basic)	​	$	0.23	​	$	(0.38)	​	$	0.95	​	$	0.41
Earnings per unit (Diluted): (Note 15)	​		​	​		​	​		​	​		—
Common unit (diluted)	​	$	0.23	​	$	(0.38)	​	$	0.94	​	$	0.41
Class B unit (diluted)	​	$	0.19	​	​	—	​	$	0.87	​	​	—
General Partner unit (diluted)	​	$	0.23	​	$	(0.38)	​	$	0.95	​	$	0.41

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The accompanying notes are an integral part of the unaudited condensed consolidated interim financial statements.

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Table of Contents Unaudited Condensed Consolidated Statements of Comprehensive Income

For the Three and Six Months Ended June 30, 2022 and 2021

(U.S. Dollars in thousands)

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​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended					​	Six Months Ended
​	​	June 30,					​	June 30,
​		2022			2021			2022		****	2021
Net income (loss)	​	$	9,888	​	$	(10,925)	​	$	36,668	​	$	17,216
Other comprehensive income, net of tax	​		—	​		—	​		—	​	​	—
Comprehensive income	​	$	9,888	​	$	(10,925)	​	$	36,668	​	$	17,216

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The accompanying notes are an integral part of the unaudited condensed consolidated interim financial statements.

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Table of Contents Unaudited Condensed Consolidated Balance Sheets

As of June 30, 2022, and December 31, 2021

(U.S. Dollars in thousands)

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​	​	​	​	​	​	​
(U.S. Dollars in thousands)	****	At June 30, 2022		****	At December 31, 2021
ASSETS		​			​
Current assets:		​			​
Cash and cash equivalents (Note 8)	​	$	88,474	​	$	62,293
Amounts due from related parties (Note 13)	​		1,561	​		2,668
Inventories	​		3,647	​		3,306
Derivative assets (Notes 7 and 8)	​		4,480	​		—
Other current assets (Note 17)	​		11,632	​		5,626
Total current assets	​		109,794	​		73,893
​	​	​	​	​	​	​
Long-term assets:	​		​	​
Vessels, net of accumulated depreciation (Notes 10 and 19)	​		1,558,650	​		1,598,106
Right-of-use assets (Note 4)	​	​	2,419	​	​	2,742
Intangible assets, net (Note 11)	​		—	​		75
Derivative assets (Notes 7 and 8)	​		11,019	​		1,015
Accrued income	​		668	​		1,450
Total Long-term assets	​		1,572,756	​		1,603,388
Total assets	​	$	1,682,550	​	$	1,677,281
​	​	​	​	​	​	​
LIABILITIES AND EQUITY	​		​	​
Current liabilities:	​		​	​
Trade accounts payable (Note 13)	​	$	5,675	​	$	3,872
Accrued expenses (Note 18)	​		9,082	​		6,429
Current portion of long-term debt (Notes 8 and 12)	​		90,522	​		88,578
Current lease liabilities (Note 4)	​	​	656	​	​	648
Current portion of derivative liabilities (Notes 7 and 8)	​		624	​		6,754
Income taxes payable	​		812	​		548
Current portion of contract liabilities (Note 11)	​		1,342	​		1,518
Prepaid charter	​		6,933	​		6,186
Amount due to related parties (Note 13)	​		1,133	​		1,424
Total current liabilities	​		116,779	​		115,957
​	​	​	​	​	​	​
Long-term liabilities:	​		​	​
Long-term debt (Notes 8 and 12)	​		891,091	​		878,548
Lease liabilities (Note 4)	​	​	1,763	​	​	2,093
Derivative liabilities (Notes 7 and 8)	​		—	​		4,260
Contract liabilities (Note 11)	​		68	​		651
Deferred tax liabilities (Note 9)	​		203	​		228
Deferred revenues	​		2,698	​	​	2,529
Total long-term liabilities	​		895,823	​		888,309
Total liabilities	​		1,012,602	​		1,004,266
Commitments and contingencies (Note 14)	​		​	​
Series A Convertible Preferred Units	​		84,308	​	****	84,308
Equity:	​		​	​		​
Partners’ capital:	​		​	​		​
Common unitholders	​		568,515	​		568,762
Class B unitholders (1)	​	​	6,689	​	​	9,453
General partner interest	​		10,436	​		10,492
Total partners’ capital	​		585,640	​		588,707
Total liabilities and equity	​	$	1,682,550	​	$	1,677,281

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The accompanying notes are an integral part of the unaudited condensed consolidated interim financial statements.

(1)

On September 7, 2021, the Partnership entered into an exchange agreement with Knutsen NYK and the Partnership’s general partner whereby Knutsen NYK contributed to the Partnership all of Knutsen NYK’s IDRs, in exchange for the issuance by the Partnership to Knutsen NYK of 673,080 common units and 673,080 Class B Units, whereupon the IDRs were cancelled. As of June 30, 2022, 252,405 of the Class B Units had been converted to common units.

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Table of Contents Unaudited Condensed Consolidated Statements of Changes in Partners’ Capital

for the Three and Six Months Ended June 30, 2022 and 2021

(U.S. Dollars in thousands)

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​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Partners’ Capital								​	Accumulated		​	​	​	​	Series A
​	​	​	​	​	​	​	​	General		​	Other		​	Total		​	Convertible
(U.S. Dollars in thousands)	​	Common		​	Class B		​	Partner		​	Comprehensive		​	Partners’		​	Preferred
Three Months Ended June 30, 2021 and 2022	****	Units		****	Units		****	Units		****	Income (Loss)		****	Capital		****	Units
Consolidated balance at March 31, 2021	​	$	605,544	​	$	—	​	$	11,048	​	$	—	​	$	616,592	​	$	89,264
Net income (loss)	​	​	(12,451)	​	​	—	​	​	(233)	​	​	—	​	​	(12,684)	​	​	1,759
Conversion of preferred units to common units (1)	​	​	4,856	​	​	—	​	​	—	​	​	—	​	​	4,856	​	​	(4,856)
Other comprehensive income	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—
Cash distributions	​	​	(17,701)	​	​	—	​	​	(333)	​	​	—	​	​	(18,034)	​	​	(1,800)
Consolidated balance at June 30, 2021	​	$	580,248	​	$	—	​	$	10,482	​	$	—	​	$	590,730	​	$	84,367
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Consolidated balance at March 31, 2022	​	$	576,811	​	$	8,190	​	$	10,619	​	$	—	​	$	595,620	​	$	84,308
Net income	​	​	7,950	​	​	87	​	​	150	​	​	—	​	​	8,188	​	​	1,700
Conversion of Class B (one-eighth) to common units (2)	​	​	1,325	​	​	(1,325)	​	​	—	​	​	—	​	​	—	​	​	—
Other comprehensive income	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—
Cash distributions	​	​	(17,572)	​	​	(263)	​	​	(333)	​	​	—	​	​	(18,168)	​	​	(1,700)
Consolidated balance at June 30, 2022	​	$	568,515	​	$	6,689	​	$	10,436	​	$	—	​	$	585,640	​	$	84,308
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Six Months Ended June 30, 2021 and 2022	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Consolidated balance at December 31, 2020	​	$	597,390	​	$	—	​	$	10,895	​	$	—	​	$	608,285	​	$	89,264
Net income	​		13,404	​		—	​		253	​		—	​		13,657	​		3,559
Conversion of preferred units to common units (1)	​	​	4,856	​	​	—	​	​	—	​	​	—	​	​	4,856	​	​	(4,856)
Other comprehensive income	​		—	​		—	​		—	​		—	​		—	​		—
Cash distributions	​		(35,402)	​		—	​		(666)	​		—	​		(36,068)	​		(3,600)
Consolidated balance at June 30, 2021	​	$	580,248	​	$	—	​	$	10,482	​	$	—	​	$	590,730	​	$	84,367
​	​	​	**** ​	​	​	​	​	​	**** ​	​	​	​	​	​	**** ​	​	​	**** ​
Consolidated balance at December 31, 2021	​	$	568,762	​	$	9,453	​	$	10,492	​	$	—	​	$	588,707	​	$	84,308
Net income	​		32,201	​		457	​		610	​		—	​		33,268	​		3,400
Conversion of Class B (one-fourth) to common units (2)	​	​	2,652	​	​	(2,652)	​	​	—	​	​	—	​	​	—	​	​	—
Other comprehensive income	​		—	​		—	​		—	​		—	​		—	​		—
Cash distributions	​		(35,100)	​		(569)	​		(666)	​		—	​		(36,335)	​		(3,400)
Consolidated balance at June 30, 2022	​	$	568,515	​	$	6,689	​	$	10,436	​	$	—	​	$	585,640	​	$	84,308

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(1)	On May 27, 2021, Tortoise Direct Opportunities Fund LP, the holder of 416,677 of the Partnership’s Series A Convertible Preferred Units (“Series A Preferred Units”), sold 208,333 of its Series A Preferred Units to KNOT and converted 208,334 Series A Preferred Units to 215,292 common units based on a conversion rate of 1.0334.
(2)	On September 7, 2021, the Partnership entered into an exchange agreement with Knutsen NYK and the Partnership’s general partner whereby Knutsen NYK contributed to the Partnership all of Knutsen NYK’s IDRs, in exchange for the issuance by the Partnership to Knutsen NYK of 673,080 common units and 673,080 Class B Units, whereupon the IDRs were cancelled. As of June 30, 2022, 252,405 of the Class B Units had been converted to common units.
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The accompanying notes are an integral part of the unaudited condensed consolidated interim financial statements.

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Table of Contents Unaudited Condensed Consolidated Statements of Cash Flows

For the Six Months Ended June 30, 2022 and 2021

(U.S. Dollars in thousands)

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​	​	​	​	​	​	​
​	​	Six Months Ended June 30,
(U.S. Dollars in thousands)	****	2022		****	2021
OPERATING ACTIVITIES	​	​	****	​	​	****
Net income (1)	​	$	36,668	​	$	17,216
Adjustments to reconcile net income to cash provided by operating activities:	​		​	​		​
Depreciation	​		51,996	​		47,515
Impairment	​	​	—	​	​	29,421
Amortization of contract intangibles / liabilities	​		(683)	​		(456)
Amortization of deferred debt issuance cost	​		1,452	​		1,758
Drydocking expenditure	​		(11,339)	​		(3,428)
Income tax expense	​		378	​		264
Income taxes paid	​		(66)	​		(74)
Unrealized (gain) loss on derivative instruments	​		(24,875)	​		(11,742)
Unrealized (gain) loss on foreign currency transactions	​		42	​		27
Changes in operating assets and liabilities:	​		​	​		​
Decrease (increase) in amounts due from related parties	​		1,107	​		3,964
Decrease (increase) in inventories	​		(341)	​		(613)
Decrease (increase) in other current assets	​		(6,007)	​		(8,929)
Decrease (increase) in accrued revenue	​		782	​		703
Increase (decrease) in trade accounts payable	​		1,889	​		(8)
Increase (decrease) in accrued expenses	​		2,654	​		487
Increase (decrease) prepaid charter	​		746	​		2,399
Increase (decrease) in amounts due to related parties	​		(292)	​		1,310
Net cash provided by operating activities	​	****	54,111	​	****	79,814
​	​	​	​	​	​	​
INVESTING ACTIVITIES	​		​	​		​
Additions to vessel and equipment	​		(1,030)	​		(6,748)
Net cash used in investing activities	​	****	(1,030)	​		(6,748)
​	​	​	​	​	​	​
FINANCING ACTIVITIES	​		​	​		​
Proceeds from long-term debt	​		132,000	​		99,300
Repayment of long-term debt	​		(118,137)	​		(132,208)
Payment of debt issuance cost	​		(828)	​		(1,478)
Cash distributions	​		(39,735)	​		(39,668)
Net cash used in financing activities	​	****	(26,700)	​	****	(74,054)
Effect of exchange rate changes on cash	​		(200)	​		(6)
Net increase (decrease) in cash and cash equivalents	​		26,181	​		(994)
Cash and cash equivalents at the beginning of the period	​		62,293	​		52,583
Cash and cash equivalents at the end of the period	​	$	88,474	​	$	51,589

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(1)	Included in net income is interest paid amounting to $13.3 million and $12.6 million for the six months ended June 30, 2022 and 2021, respectively

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The accompanying notes are an integral part of the unaudited condensed consolidated interim financial statements.

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Table of Contents Notes to Unaudited Condensed Consolidated Financial Statements

1) Description of Business

KNOT Offshore Partners LP (the “Partnership”) was formed as a limited partnership under the laws of the Republic of the Marshall Islands. The Partnership was formed for the purpose of acquiring 100% ownership interests in four shuttle tankers owned by Knutsen NYK Offshore Tankers AS (“KNOT” or “Knutsen NYK”) in connection with the Partnership’s initial public offering of its common units (the “IPO”), which was completed on April 15, 2013.

As of June 30, 2022, the Partnership had a fleet of seventeen shuttle tankers, the Windsor Knutsen, the Bodil Knutsen, the Recife Knutsen, the Fortaleza Knutsen, the Carmen Knutsen, the Hilda Knutsen, the Torill Knutsen, the Dan Cisne, the Dan Sabia, the Ingrid Knutsen, the Raquel Knutsen, the Tordis Knutsen, the Vigdis Knutsen, the Lena Knutsen, the Brasil Knutsen, the Anna Knutsen and the Tove Knutsen, each referred to as a “Vessel” and, collectively, as the “Vessels”. The Vessels operate under fixed charter contracts to charterers, with expiration dates between 2022 and 2027. Please see Note 4—Operating Leases.

The consolidated financial statements have been prepared assuming that the Partnership will continue as a going concern.

The Partnership expects that its primary future sources of funds will be available cash, cash from operations, borrowings under any new loan agreements and the proceeds of any equity financings. The Partnership believes that these sources of funds (assuming the current rates earned from existing charters) will be sufficient to cover operational cash outflows and ongoing obligations under the Partnership’s financing commitments to pay loan interest and make scheduled loan repayments. Accordingly, as of September 2, 2022, the Partnership believes that its current resources, including the undrawn portion of its revolving credit facilities of $35 million, are sufficient to meet working capital requirements for its current business for at least the next twelve months.

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2) Summary of Significant Accounting Policies

(a) Basis of Preparation

The accompanying unaudited condensed consolidated interim financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) for interim financial information. In the opinion of management of the Partnership, all adjustments considered necessary for a fair presentation, which are of normal recurring nature, have been included. All intercompany balances and transactions are eliminated. The unaudited condensed consolidated financial statements do not include all the disclosures and information required for a complete set of annual financial statements; and, therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the Partnership’s audited consolidated financial statements for the year ended December 31, 2021, which are included in the Partnership’s Annual Report on Form 20-F (the “2021 20-F”).

(b) Significant Accounting Policies

The accounting policies adopted in the preparation of the unaudited condensed consolidated interim financial statements are consistent with those followed in the preparation of the Partnership’s audited consolidated financial statements for the year ended December 31, 2021, as contained in the Partnership’s 2021 20-F. 8

Table of Contents

(c) Recent Accounting Pronouncements

Adoption of new accounting standards

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2020-06 Debt-Debt with conversion and other options (subtopic 470-20) and Derivatives and Hedging-contracts in entity’s own equity (subtopic 815-40): Accounting for convertible instruments and contracts in an entity’s own equity simplifies an issuer’s accounting for convertible instruments and its application of the derivatives scope exception for contracts in its own equity. The new guidance eliminates two of the three models in ASC 470-20 that require separate accounting for embedded conversion features with respect to accounting for convertible instruments. Further the ASU simplifies the settlement assessment that entities are required to perform to determine whether a contract qualifies for equity classification. Entities are required to use the if-converted method for all convertible instruments in the diluted EPS calculation and include the effect of potential share settlement for instruments that may be settled in cash or shares, except for certain liability-classified share-based payment awards. The new guidance did not materially impact the Partnership.

Accounting pronouncements not yet adopted

In March 2020, the FASB issued ASU 2020-04 Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The update provides temporary optional expedients and exceptions to the guidance in US GAAP on contract modifications and hedge accounting, to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. For all types of hedging relationships, the guidance allows an entity to change the reference rate and other critical terms related to reference rate reform without having to dedesignate the relationship. The guidance is effective upon issuance through December 31, 2022. Although the Partnership does not apply hedge accounting, the Partnership has debt and interest rate swaps that reference LIBOR. The Partnership continues to evaluate the impact of the guidance on the consolidated financial statements as well as the commercial implications for the transition away from LIBOR, in particular through discussions with lenders and other market participants.

Other recently issued accounting pronouncements are not expected to materially impact the Partnership.

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3) Segment Information

The Partnership has not presented segment information as it considers its operations to occur in one reportable segment, the shuttle tanker market. As of June 30, 2022 and 2021, the Partnership’s fleet consisted of seventeen vessels, and operated under time charters and bareboat charters. In both time charters and bareboat charters, the charterer, not the Partnership, controls the choice of which trading areas the Vessels will serve. Accordingly, the Partnership’s management, including the chief operating decision makers, does not evaluate performance according to geographical region.

The following table presents time charter and bareboat revenues and percentages of revenues for material customers that accounted for more than 10% of the Partnership’s consolidated revenues during the three and six months ended June 30, 2022 and 2021. All of these customers are subsidiaries of major international oil companies.

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended June 30,									​	Six Months Ended June 30,									​
(U.S. Dollars in thousands)		2022					2021					2022					2021				​
Eni Trading and Shipping S.p.A.	​	$	11,057		17	%	$	10,915		16	%	$	21,992		17	%	$	21,748		16	%
Fronape International Company, a subsidiary of Petrobras Transporte S.A.	​		11,463		18	%		11,249		17	%		22,805		18	%		22,378		17	%
Repsol Sinopec Brasil, S.A., a subsidiary of Repsol Sinopec Brasil, B.V.	​		9,693		15	%		9,282		14	%		19,031		15	%		18,075		14	%
Brazil Shipping I Limited, a subsidiary of Royal Dutch Shell	​		3,460		5	%		16,168		24	%		12,286		10	%		32,156		24	%
Galp Sinopec Brasil Services B.V.	​		4,176		7	%		8,881		13	%		10,652		8	%		17,665		13	%

​

The Partnership has financial assets that expose it to credit risk arising from possible default by a counterparty. The Partnership considers its counterparties to be creditworthy banking and financial institutions and does not expect any significant loss to result from non-performance by such counterparties. The maximum loss due to credit risk that the Partnership would incur if counterparties failed completely to perform would be the carrying value of cash and cash equivalents, and derivative assets. The Partnership, in the normal course of business, does not demand collateral from its counterparties. 9

Table of Contents 4) Operating Leases

Revenues

The Partnership’s primary source of revenues is chartering its shuttle tankers to its customers. The Partnership uses two types of contracts, time charter contracts and bareboat charter contracts. The Partnership’s time-charter contracts include both a lease component, consisting of the bareboat element of the contract, and non-lease component, consisting of operation of the Vessel for the customers, which includes providing the crewing and other services related to the Vessel’s operations, the cost of which is included in the daily hire rate.

The following table presents the Partnership’s revenues by time charter and bareboat charters and other revenues for the three and six months ended June 30, 2022 and 2021:

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended June 30,					​	Six Months Ended June 30,
(U.S. Dollars in thousands)		2022			2021			2022			2021
Time charter revenues (service element included)	​	$	52,324	​	$	55,264	​	$	106,170	​	$	109,733
Bareboat revenues	​	​	11,463	​	​	11,249	​	​	22,805	​	​	22,378
Other revenues (loss of hire insurance recoveries and other income)	​		172	​		4,424	​		180	​		10,307
Total revenues	​	$	63,959	​	$	70,937	​	$	129,155	​	$	142,418

​

As of June 30, 2022, the minimum contractual future revenues to be received from time charters and bareboat charters during the next five years and thereafter are as follows (including service element of the time charter, but excluding unexercised customer option periods):

​

​	​	​	​
(U.S. Dollars in thousands)	****	​	​
2022 (excluding the six months ended June 30, 2022)	​	$	93,758
2023	​	​	99,530
2024	​	​	106,541
2025	​	​	115,272
2026	​	​	52,405
2027 and thereafter	​	​	15,034
Total		$	482,540

​

The minimum contractual future revenues should not be construed to reflect total charter hire revenues for any of the years. Minimum contractual future revenues are calculated based on certain assumptions such as operating days per year. In addition, minimum contractual future revenues presented in the table above have not been reduced by estimated off-hire time for periodic maintenance. The amounts may vary given unscheduled future events such as vessel maintenance.

The Partnership’s fleet as of June 30, 2022 consisted of:

●	the Fortaleza Knutsen, a shuttle tanker built in 2011 that is currently operating under a bareboat charter that expires in March 2023 with Fronape International Company, a subsidiary of Petrobras Transporte S.A. (“Transpetro”);
●	the Recife Knutsen, a shuttle tanker built in 2011 that is currently operating under a bareboat charter that expires in August 2023 with Transpetro;
---	---
●	the Bodil Knutsen, a shuttle tanker built in 2011 that is currently operating under a rolling time charter contract with Knutsen Shuttle Tankers Pool AS, a subsidiary of KNOT, which currently expires in September 2022, with options for KNOT to extend until June 2023. The vessel will commence on a new time charter contract with Equinor in the fourth quarter of 2023 or the first quarter of 2024. The new charter is for a fixed period, at the charterer’s option, of either one year or two years with options for the charterer to extend the charter, in either case, by two further one-year periods;
---	---

​ 10

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●	the Windsor Knutsen, a conventional oil tanker built in 2007 and retrofitted to a shuttle tanker in 2011. The Partnership has agreed the commercial terms for a new time charter contract for the Windsor Knutsen with a major oil company to commence in or around January 2023 for a fixed period of one year with a charterer’s option to extend the charter by one further year. Until commencement of this new contract the vessel will seek further short-term employment. The vessel will then enter into a new time charter contract with Equinor, to commence in the fourth quarter of 2024 or the first quarter of 2025 for a fixed period, at the charterer’s option, of either one year or two years, with options for the charterer to extend the charter, in either case, by two further one-year periods;
●	the Carmen Knutsen, a shuttle tanker built in 2013 that is currently operating under a time charter that expires in January 2023, with Repsol Sinopec Brasil, B.V. a subsidiary of Repsol Sinopec Brasil, S.A. (“Repsol”), with charterer’s options to extend until January 2026;
---	---
●	the Hilda Knutsen, a shuttle tanker built in 2013 that is currently operating under a time charter with Eni Trading and Shipping S.p.A. (“ENI”). The charterer has notified the Partnership of its intention to redeliver the vessel and, as a consequence, the vessel is currently expected to be returned to the Partnership in or around September 2022. The Partnership is now marketing the vessel for new employment;
---	---
●	the Torill Knutsen, a shuttle tanker built in 2013 that is currently operating under a time charter that expires in November 2022 with ENI, with charterer’s options to extend until November 2024;
---	---
●	the Dan Cisne, a shuttle tanker built in 2011 that is currently operating under a bareboat charter that expires in September 2023 with Transpetro;
---	---
●	the Dan Sabia, a shuttle tanker built in 2012 that is currently operating under a bareboat charter that expires in January 2024 with Transpetro;
---	---
●	the Ingrid Knutsen, a shuttle tanker built in 2013 that is currently operating under a time charter with Vår Energi Marine AS, a Norwegian subsidiary of Vår Energi AS. The charterer will redeliver the vessel in around November 2022. The vessel will be open for employment until January 2024 when the vessel will commence on a three year fixed time charter contract with ENI, with the charterer having options to extend the charter by up to three further years;
---	---
●	the Raquel Knutsen, a shuttle tanker built in 2015 that is currently operating under a time charter that expires in June 2025 with Repsol, with charterer’s options to extend until June 2030;
---	---
●	the Tordis Knutsen, a shuttle tanker built in 2016. The Partnership has agreed the commercial terms for a new time charter contract for the vessel with a subsidiary of the French oil major TotalEnergies to commence in September 2022 for a fixed period of three months, with charterer’s options to extend the charter by up to nine further months. The vessel will commence operating under a three-year time charter contract with Shell in 2023;
---	---
●	the Vigdis Knutsen, a shuttle tanker built in 2017 is currently operating under a time charter with PetroChina which expires in September 2023, with charterer’s option to extend by six further months. The vessel will commence operating under a new three-year time charter contract with Shell in 2023;
---	---
●	the Lena Knutsen, a shuttle tanker built in 2017 that is currently operating under a time charter with a subsidiary of TotalEnergies for a fixed period of six months with charterer’s options to extend the charter by up to six further months. The vessel will commence operating under a new three-year time charter contract with Shell in 2023;
---	---
●	the Brasil Knutsen, a shuttle tanker built in 2013 that is currently operating under a time charter that expires in September 2022 with Galp Sinopec Brazil Services B.V. (“Galp”). The Partnership is currently negotiating a new proposed one-year time charter contract, with options to extend, with an oil major, to commence in or around September 2022;
---	---
●	the Anna Knutsen, a shuttle tanker built in 2017 that is currently operating under a time charter that expires in April 2024 with a wholly owned subsidiary of TotalEnergies with charterer’s options to extend the time charter by up to three further one-year periods; and
---	---

11

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●	the Tove Knutsen, a shuttle tanker built in 2020 that is currently operating under a time charter that expires in October 2027 with Equinor, with charterer’s options to extend until October 2040.

Lease obligations

The Partnership does not have any material leased assets but has some leased equipment on operational leases on the various ships operating on time charter contracts. As of June 30, 2022, the right-of-use asset and lease liability for operating leases was $2.4 million and these are presented as separate line items on the balance sheets. The operating lease cost and corresponding cash flow effect for the three and six months ended June 30, 2022, was $0.2 million and $0.4 million respectively. As of June 30, 2022, the weighted average discount rate for the operating leases was 2.3% and was determined using the expected incremental borrowing rate for a loan facility of similar term. As of June 30, 2022, the weighted average remaining lease terms are 3.6 years.

A maturity analysis of the Partnership’s lease liabilities from leased-in equipment as of June 30, 2022 is as follows:

​

​	​	​	​
(U.S. Dollars in thousands)			​
2022 (excluding the six months ended June 30, 2022)	​	​	352
2023	​	$	703
2024	​		703
2025	​		703
2026	​	​	59
2027 and thereafter	​	​	—
Total	​	$	2,520
Less imputed interest	​		101
Carrying value of operating lease liabilities	​	$	2,419

​

​

5) Insurance proceeds

Windsor Knutsen

In December 2020, the Windsor Knutsen reported a crack in its main engine block. As a result, the Vessel was off-hire from December 12, 2020 to June 10, 2021 for repairs. Under the Partnership’s loss of hire policies, its insurer will pay the Partnership the hire rate agreed in respect of each vessel for each day, in excess of 14 deductible days, for the time that a vessel is out of service as a result of damage, for a maximum of 180 days. For the three and six months ended June 30, 2021, the Partnership recorded $3.7 million and $8.7 million, respectively, for loss of hire proceeds which were recorded as a component of total revenues since day rates are recovered under the terms of the policy.

In addition, as of December 31, 2021, the Partnership had claimed and received payments of $4.1 million (net of deductible amounts) for hull and machinery recoveries.

Tove Knutsen

In March 2021, the Tove Knutsen reported a leakage from its controllable pitch propeller. As a result, the Vessel was off-hire from March 1, 2021 to April 15, 2021 for repairs. For the three and six months ended June 30, 2021, the Partnership recorded $0.7 million and $1.5 million, respectively, for loss of hire proceeds which were recorded as a component of total revenues since day rates are recovered under the terms of the policy.

In addition, as of June 30, 2022, the Partnership had claimed and received payments of $0.1 million (net of deductible amounts) for hull and machinery recoveries.

Bodil Knutsen

In April 2021, the Bodil Knutsen reported damage on the azimuth thruster. As a result, the Vessel was off-hire from April 17, 2021 to April 29, 2021 for repairs. As of December 31, 2021, the Partnership had claimed and received payments of $0.1 million (net of deductible amounts) for hull and machinery recoveries. 12

Table of Contents

Vigdis Knutsen

In April 2022, the Vigdis Knutsen reported damage on its steering gear. The damage was repaired during the Vessel’s scheduled dry dock. The Partnership has claimed $0.4 million (net of deductible amounts) for hull and machinery recoveries. As of June 30, 2022, the Partnership had not received payment for this claim, resulting in an open insurance claim of $0.4 million.

6) Other Finance Expenses

(a) Interest Expense

The following table presents the components of interest cost as reported in the consolidated statements of operations for the three and six months ended June 30, 2022 and 2021:

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended					​	Six Months Ended
​	​	June 30,					​	June 30,
(U.S. Dollars in thousands)	****	2022		****	2021		****	2022		****	2021
Interest expense	​	$	7,449	​	$	6,148	​	$	13,574	​	$	12,418
Amortization of debt issuance cost and fair value of debt assumed	​		852	​		656	​		1,452	​		1,758
Total interest cost	​	$	8,301	​	$	6,804	​	$	15,026	​	$	14,176

​

(b) Other Finance Expense

The following table presents the components of other finance expense for three and six months ended June 30, 2022 and 2021:

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended					​	Six Months Ended
​	​	June 30,					​	June 30,
(U.S. Dollars in thousands)		2022			2021			2022			2021
Bank fees, charges	​	$	(3)	​	$	132	​	$	89	​	$	215
Commitment fees	​		106			118	​		223	​		194
Total other finance expense	​	$	103		$	250	​	$	312	​	$	409

​

​

7) Derivative Instruments

The unaudited condensed consolidated interim financial statements include the results of interest rate swap contracts to manage the Partnership’s exposure related to changes in interest rates on its variable rate debt instruments and the results of foreign exchange forward contracts to manage its exposure related to changes in currency exchange rates on its operating expenses, mainly crew expenses, in currency other than the U.S. Dollar and on its contract obligations. The Partnership does not apply hedge accounting for derivative instruments. The Partnership does not speculate using derivative instruments.

By using derivative financial instruments to economically hedge exposures to changes in interest rates, the Partnership exposes itself to credit risk and market risk. Derivative instruments that economically hedge exposures are used for risk management purposes, but these instruments are not designated as hedges for accounting purposes. Credit risk is the failure of the counterparty to perform under the terms of the derivative instrument. When the fair value of a derivative instrument is positive, the counterparty owes the Partnership, which creates credit risk for the Partnership. When the fair value of a derivative instrument is negative, the Partnership owes the counterparty, and, therefore, the Partnership is not exposed to the counterparty’s credit risk in those circumstances. The Partnership minimizes counterparty credit risk in derivative instruments by entering into transactions with major banking and financial institutions. The derivative instruments entered into by the Partnership do not contain credit risk-related contingent features. The Partnership has not entered into master netting agreements with the counterparties to its derivative financial instrument contracts.

Market risk is the adverse effect on the value of a derivative instrument that results from a change in interest rates, currency exchange rates or commodity prices. The market risk associated with interest rate contracts is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken.

The Partnership assesses interest rate risk by monitoring changes in interest rate exposures that may adversely impact expected future cash flows and by evaluating economical hedging opportunities. 13

Table of Contents The Partnership has historically used variable interest rate mortgage debt to finance its vessels. The variable interest rate mortgage debt obligations expose the Partnership to variability in interest payments due to changes in interest rates. The Partnership believes that it is prudent to limit the variability of a portion of its interest payments. To meet this objective, the Partnership has entered into London Interbank Offered Rate (“LIBOR”)-based interest rate swap contracts to manage fluctuations in cash flows resulting from changes in the benchmark interest rate of LIBOR. These swaps change a portion of the Partnership’s total variable rate cash flow exposure on the mortgage debt obligations to fixed cash flows. Under the terms of the interest rate swap contracts, the Partnership receives LIBOR-based variable interest rate payments and makes fixed interest rate payments, thereby creating the equivalent of fixed rate debt for the notional amount of its debt hedged.

As of June 30, 2022, and December 31, 2021, the total notional amount of the Partnership’s outstanding interest rate swap contracts that were entered into in order to hedge outstanding or forecasted debt obligations were $415.8 million and $462.3 million, respectively. As of June 30, 2022, and December 31, 2021, the carrying amount of the interest rate swap contracts was a net asset of $15.3 million and a net liability of $10.0 million, respectively. See Note 8—Fair Value Measurements.

Changes in the fair value of interest rate swap contracts are reported in realized and unrealized gain (loss) on derivative instruments in the same period in which the related interest affects earnings.

The Partnership and its subsidiaries utilize the U.S. Dollar as their functional and reporting currency, because all of their revenues and the majority of their expenditures, including the majority of their investments in vessels and their financing transactions, are denominated in U.S. Dollars. Payment obligations in currencies other than the U.S. Dollar, and in particular operating expenses in NOK, expose the Partnership to variability in currency exchange rates. The Partnership believes that it is prudent to limit the variability of a portion of its currency exchange exposure. To meet this objective, the Partnership entered into foreign exchange forward contracts to manage a portion of the fluctuations in cash flows resulting from changes in the exchange rates towards the U.S. Dollar. The agreements change the variable exchange rate to fixed exchange rates at agreed dates.

As of June 30, 2022 and December 31, 2021, the total contract amount in foreign currency of the Partnership’s outstanding foreign exchange forward contracts that were entered into to economically hedge outstanding future payments in currencies other than the U.S. Dollar were NOK 0.4 million and NOK nil, respectively. As of June 30, 2022, and December 31, 2021, the carrying amount of the Partnership’s foreign exchange forward contracts was a net liability of $0.4 million and $nil, respectively. See Note 8-Fair Value Measurements.

The following table presents the realized and unrealized gains and losses that are recognized in earnings as net gain (loss) on derivative instruments for the three and six months ended June 30, 2022 and 2021:

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended					​	Six Months Ended
​	​	June 30,					​	June 30,
(U.S. Dollars in thousands)		2022			2021			2022			2021
Realized gain (loss):		​			​			​		​	​
Interest rate swap contracts	​	$	(1,550)	​	$	(2,087)	​	$	(3,402)	​	$	(5,996)
Foreign exchange forward contracts	​		—	​		—	​		—	​		—
Total realized gain (loss):	​		(1,550)	​		(2,087)	​		(3,402)	​		(5,996)
Unrealized gain (loss):	​		​	​		​	​		​	​		​
Interest rate swap contracts	​		7,080	​		(178)	​		25,289	​		11,742
Foreign exchange forward contracts	​		(414)	​		—	​		(414)	​		—
Total unrealized gain (loss):	​		6,666	​		(178)	​		24,875	​		11,742
Total realized and unrealized gain (loss) on derivative instruments:	​	$	5,116	​	$	(2,265)	​	$	21,473	​	$	5,746

​

​ 14

Table of Contents 8) Fair Value Measurements

(a) Fair Value of Financial Instruments

The following table presents the carrying amounts and estimated fair values of the Partnership’s assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2022 and December 31, 2021. Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	June 30, 2022					​	December 31, 2021
​		Carrying			Fair			Carrying			Fair
(U.S. Dollars in thousands)		Amount			Value			Amount			Value
Financial assets:	​	​	​	​	​	​	​	​	​	​	​	​
Cash and cash equivalents	​	$	88,474	​	$	88,474	​	$	62,293	​	$	62,293
Current derivative assets:	​	​	​	​	​	​	​	​	​	​	​	​
Interest rate swap contracts	​	​	4,480	​	​	4,480	​	​	—	​	​	—
Non-current derivative assets:	​		​	​		​	​		​	​		​
Interest rate swap contracts	​		11,019	​		11,019	​		1,015	​		1,015
Financial liabilities:	​		​	​		​	​		​	​		​
Current derivative liabilities:	​		​	​		​	​		​	​		​
Interest rate swap contracts	​		210	​		210	​		6,754	​		6,754
Foreign exchange forward contracts	​		414	​		414	​		—	​		—
Non-current derivative liabilities:	​		​	​		​	​		​	​		​
Interest rate swap contracts	​		—	​		—	​		4,260	​		4,260
Long-term debt, current and non-current	​		988,458	​		988,458	​		974,596	​		974,596

​

The carrying amounts shown in the table above are included in the consolidated balance sheets under the indicated captions. Carrying amount of long-term debt, current and non-current, above excludes capitalized debt issuance cost of $6.8 million and $7.5 million as of June 30, 2022 and December 31, 2021, respectively. The carrying value of trade accounts receivable, trade accounts payable and receivables/payables to owners and affiliates approximate their fair value.

The fair values of the financial instruments shown in the above table as of June 30, 2022 and December 31, 2021 represent the amounts that would be received to sell those assets or that would be paid to transfer those liabilities in an orderly transaction between market participants at that date. Those fair value measurements maximize the use of observable inputs. However, in situations where there is little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects the Partnership’s own judgment about the assumptions that market participants would use in pricing the asset or liability. Those judgments are developed by the Partnership based on the best information available in the circumstances, including expected cash flows, appropriately risk-adjusted discount rates and available observable and unobservable inputs.

The following methods and assumptions were used to estimate the fair value of each class of financial instruments:

●	Cash and cash equivalents and restricted cash: The fair value of the Partnership’s cash balances approximates the carrying amounts due to the current nature of the amounts. As of June 30, 2022 and December 31, 2021 there is no restricted cash.
●	Interest rate swap contracts: The fair value of interest rate swap contracts is determined using an income approach using the following significant inputs: (1) the term of the swap contract (weighted average of 3.2 years and 3.4 years, as of June 30, 2022 and December 31, 2021, respectively), (2) the notional amount of the swap contract (ranging from $4.4 million to $35.0 million as of June 30,2022 and ranging from $5.3 million to $37.5 million as of December 31, 2021), discount rates interpolated based on relevant LIBOR swap curves; and (3) the rate on the fixed leg of the swap contract (rates ranging from 0.71% to 2.90% as of June 30, 2022 and from 0.71% to 2.90% as of December 31, 2021).
---	---
●	Foreign exchange forward contracts: The fair value is calculated using mid-rates (excluding margins) as determined by counterparties based on available market rates as of the balance sheet date. The fair value is discounted from the value at expiration to the current value of the contracts.
---	---

​ 15

Table of Contents

●

Long-term debt: With respect to long-term debt measurements, the Partnership uses market interest rates and adjusts for risks, such as its own credit risk. In determining an appropriate spread to reflect its credit standing, the Partnership considered interest rates currently offered to KNOT for similar debt instruments of comparable maturities by KNOT’s and the Partnership’s bankers as well as other banks that regularly compete to provide financing to the Partnership.

(b) Fair Value Hierarchy

The following table presents the placement in the fair value hierarchy of assets and liabilities that are measured at fair value on a recurring basis (including items that are required to be measured at fair value or for which fair value is required to be disclosed) as of June 30, 2022 and December 31, 2021:

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	Fair Value Measurements
​	​	​	​	at Reporting Date Using
​	​	​	​	​	Quoted Price		​	​	​	​	​	​
​	​	​	​	​	in Active		​	Significant		​	​	​
​	​	Carrying		​	Markets for		​	Other		​	Significant
​	​	Value		​	Identical		​	Observable		​	Unobservable
​	​	June 30,		​	Assets		​	Inputs		​	Inputs
(U.S. Dollars in thousands)		2022			(Level 1)			(Level 2)			(Level 3)
Financial assets:	​	​		​	​		​	​		​	​
Cash and cash equivalents	​	$	88,474	​	$	88,474	​	$	—	​	$	—
Current derivative assets:	​		​	​		​	​		​	​
Interest rate swap contracts	​		4,480	​		—	​		4,480	​		—
Non-current derivative assets:	​		​	​		​	​		​	​
Interest rate swap contracts	​		11,019	​		—	​		11,019	​		—
Financial liabilities:	​		​	​		​	​		​	​
Current derivative liabilities:	​		​	​		​	​		​	​
Interest rate swap contracts	​		210	​		—	​		210	​		—
Foreign exchange forward contracts	​		414	​		—	​		414	​		—
Long-term debt, current and non-current	​		988,458	​		—	​		988,458	​		—

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	Fair Value Measurements
​	​	​	​	at Reporting Date Using
​	​	​	​	​	Quoted Price		​	​	​	​	​	​
​	​	​	​	​	in Active		​	Significant		​	​	​
​	​	Carrying		​	Markets for		​	Other		​	Significant
​	​	Value		​	Identical		​	Observable		​	Unobservable
​	​	December 31,		​	Assets		​	Inputs		​	Inputs
(U.S. Dollars in thousands)		2021			(Level 1)			(Level 2)			(Level 3)
Financial assets:	​	​	​	​	​	​	​	​	​	​	​	​
Cash and cash equivalents	​	$	62,293	​	$	62,293	​	$	—	​	$	—
Non-current derivative assets:	​		​	​		​	​		​	​
Interest rate swap contracts	​		1,015	​		—	​		1,015	​		—
Financial liabilities:	​		​	​		​	​		​	​
Current derivative liabilities:	​		​	​		​	​		​	​
Interest rate swap contracts	​		6,754	​		—	​		6,754	​		—
Non-current derivative liabilities:	​		​	​		​	​		​	​
Interest rate swap contracts	​		4,260	​		—	​		4,260	​		—
Long-term debt, current and non-current	​		974,596	​		—	​		974,596	​		—

​

The Partnership’s accounting policy is to recognize transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer. There were no transfers into or out of Level 1 and Level 2 as of June 30, 2022 and December 31, 2021.

​

​ 16

Table of Contents 9) Income Taxes

Components of Current and Deferred Tax Expense

After the reorganization of the Partnership’s predecessor’s activities into the new group structure in February 2013, all profit from continuing operations in Norway is taxable within the tonnage tax regime. The consequence of the reorganization is a one-time entrance tax into the Norwegian tonnage tax regime due to the Partnership’s acquisition of the shares in the subsidiary that owns the Fortaleza Knutsen and the Recife Knutsen.

The total amount of the entrance tax was estimated to be $3.0 million, which was recognized in the three months ended March 31, 2013. At September 30, 2017 the Partnership acquired the shares in the subsidiary that owns the Lena Knutsen, and recognized an additional entrance tax of $0.1 million. The entrance tax on this gain is payable over several years and is calculated by multiplying the Norwegian tax rate by the declining balance of the gain, which will decline by 20% each year.

The taxes payable are calculated based on the Norwegian corporate tax rate of 22% for 2022 and 2021, and the deferred tax liabilities are also calculated based on a tax rate of 22% effective as from January 1, 2022 and January 1, 2021, respectively. $0.1 million of the entrance tax was paid both during the first quarter of 2022 and 2021. As of June 30, 2022 and December 31, 2021, UK income tax is presented as income taxes payable, while $0.2 million and $0.2 million is presented as non-current deferred taxes payable, respectively.

Significant components of current and deferred income tax expense attributable to income from continuing operations for the three and six months ended June 30, 2022 and 2021 were as follows:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended					​	Six Months Ended
​	​	June 30,					​	June 30,					​
(U.S. Dollars in thousands)		2022			2021			2022			2021
Income before income taxes	​	$	10,054	​	$	(10,664)	​	$	37,046	​	$	17,480	​
Income tax (expense)	​	​	(166)	​	​	(261)	​	​	(378)	​	​	(264)	​
Effective tax rate	​	$	(2)	%	$	2	%	$	(1)	%	$	(2)	%

​

Income tax expenses for the three and six months ended June 30, 2022 and 2021 consist of the following:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended					​	Six Months Ended					​
​	​	June 30,					​	June 30,					​
(U.S. Dollars in thousands)	​	2022		​	2021		​	2022		​	2021		​
Income tax benefit (expense) within Norway		$	(163)	****	$	(258)		$	(375)		$	(258)	​
Income tax benefit (expense) within UK	​	​	(3)	​	​	(3)	​	​	(3)	​	​	(6)	​
Income tax benefit (expense)		$	(166)		$	(261)		$	(378)		$	(264)	​
Effective tax rate	​	​	(2)	%	​	2	%	​	(1)	%	​	(2)	%

​

The Partnership records a valuation allowance for deferred tax assets when it is more likely than not that some of or all of the benefit from the deferred tax assets will not be realized. In assessing the realizability of deferred tax assets, which relates to financial loss carry forwards and other deferred tax assets within the tonnage tax regime, the Partnership considers whether it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized taking into account all the positive and negative evidence available. As of June 30, 2022 and December 31, 2021, there are no deferred tax assets recognized.

​ 17

Table of Contents 10) Vessels and Equipment

As of June 30, 2022 and December 31, 2021, Vessels with a book value of $1,559 million and $1,598 million, respectively, are pledged as security for the Partnership’s long-term debt. See Note 12—Long-term debt.

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Vessels &		​	Accumulated		​	Accumulated		​	​	​
(U.S. Dollars in thousands)	****	equipment		​	depreciation		​	impairment		​	Net Vessels
Vessels, December 31, 2020	​	$	2,250,053	****	$	(541,267)	****	$	—	****	$	1,708,786
Additions (1)	​		14,065	​		—	​	​	—	​		14,065
Drydock costs	​		4,235	​		—	​	​	—	​		4,235
Disposals	​		(2,641)	​		2,641	​	​	—	​		—
Depreciation and impairment for the period (2)	​		—	​		(99,559)	​	​	(29,421)	​		(128,980)
Vessels, December 31, 2021	​	$	2,265,712	​	$	(638,185)	​	$	(29,421)	​	$	1,598,106
Additions	​		1,201	​		—	​	​	—	​		1,201
Drydock costs	​		11,339	​		—	​	​	—	​		11,339
Disposals	​		(14,678)	​		14,678	​	​	—	​		—
Depreciation and impairment for the period	​		—	​		(51,996)	​	​	—	​		(51,996)
Vessels, June 30, 2022	​	$	2,263,573	​	$	(675,503)	​	$	(29,421)	​	$	1,558,650
(1)	During the scheduled second renewal survey drydocking of the Bodil Knutsen a ballast water treatment system was installed on the vessel. A Volatile Organic Compounds (VOC) recovery system was installed on the Bodil Knutsen during the fourth quarter of 2021.
---	---
(2)	The carrying value of the Windsor Knutsen was written down to its estimated fair value as of June 30, 2021 see Note 19 - Impairment of long-lived assets.
---	---

​

Drydocking activity as of June 30, 2022 and December 31, 2021 is summarized as follows:

​

​	​	​	​	​	​	​
(U.S. Dollars in thousands)	****	At June 30, 2022		****	At December 31, 2021
Balance at the beginning of the year	​	$	13,458	​	$	17,106
Costs incurred for dry docking	​		11,339	​		4,235
Costs allocated to drydocking as part of acquistion of asset	​		—	​		—
Drydock amortization	​		(3,864)	​		(7,883)
Balance at period end	​	$	20,933	​	$	13,458

​

​

11) Intangible Assets and Contract Liabilities

**(a)**Intangible assets

​

​	​	​	​	​	​	​	​	​	​
​	​	Above market		​	Above market		​	​	​
​	****	time charter		****	time charter		****	Total
(U.S. Dollars in thousands)	​	Tordis Knutsen		​	Vigdis Knutsen		​	intangibles
Intangibles, December 31, 2020	​	$	305	​	$	376	​	$	681
Amortization for the period		​	(305)		​	(301)		​	(606)
Intangibles, December 31, 2021	​	$	—	​	$	75	​	$	75
Amortization for the period	​		—	​		(75)	​		(75)
Intangibles, June 30, 2022	​	$	—	​	$	—	​	$	—

​

The intangible for the above-market value of the time charter contract associated with the Tordis Knutsen is amortized to time charter revenue on a straight-line basis over the remaining term of the contract of 4.8 years as of the acquisition date and expired in December 2021. The intangible for the above-market value of the time charter contract associated with the Vigdis Knutsen is amortized to time charter revenue on a straight-line basis over the remaining term of the contract of 4.9 years as of the acquisition date and expired in March 2022. 18

Table of Contents **(b)**Contract Liabilities

The unfavorable contractual rights for charters associated with Fortaleza Knutsen and Recife Knutsen were obtained in connection with a step acquisition in 2008 that had unfavorable contractual terms relative to market as of the acquisition date. The Fortaleza Knutsen and the Recife Knutsen commenced on their 12 years’ fixed bareboat charters in March 2011 and August 2011, respectively. The unfavorable contract rights related to Fortaleza Knutsen and Recife Knutsen are amortized to bareboat revenues on a straight-line basis over the 12 years’ contract period that expires in March 2023 and August 2023, respectively.

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	​		****	Amortization for		****	​		****	Amortization for		****	​
​	​	Balance as of		​	the year ended		​	Balance as of		​	the six Months		​	Balance as of
​	​	December 31,		​	December 31,		​	December 31,		​	ended June 30,		​	June 30,
(U.S. Dollars in thousands)	​	2020		​	2021		​	2021		​	2022		​	2022
Contract liabilities:		​			​			​			​			​
Unfavourable contract rights	​	$	(3,686)	​	$	1,517	​	$	(2,169)	​	$	759	​	$	(1,410)
Total amortization income	​			​	$	1,517	​			​	$	759	​

​

Accumulated amortization for contract liabilities was $16.8 million and $16.0 million as of June 30, 2022 and December 31, 2021, respectively. The amortization of contract liabilities that is classified under time charter and bareboat revenues for the next five years is expected to be as follows:

​

​	​	​	​
(U.S. Dollars in thousands)			​
Remainder of 2022		$	759
2023		​	651
2024		​	—
2025		​	—
2026		​	—
2027		​	—
Total	​	$	1,410

​

​ 19

Table of Contents 12) Long-Term Debt

As of June 30, 2022 and December 31, 2021, the Partnership had the following debt amounts outstanding:

​

​	​	​	​	​	​	​	​
​	​	​	June 30,		​	December 31,
(U.S. Dollars in thousands)	Vessel		2022			2021
345 million loan facility	Anna Knutsen, Tordis Knutsen, Vigdis Knutsen, Brasil Knutsen, Lena Knutsen	​	$	326,178	​	$	338,726
320 million loan facility	Windsor Knutsen, Bodil Knutsen, Carmen Knutsen, Fortaleza Knutsen, Recife Knutsen, Ingrid Knutsen	​	​	207,077	​	​	222,133
55 million revolving credit facility	​	​	​	20,000		​	—
Hilda loan facility	Hilda Knutsen	​		69,231	​		72,308
Torill loan facility	Torill Knutsen	​		—	​		75,000
172.5 million loan facility	Dan Cisne, Dan Sabia	​		38,540	​		45,340
Tove loan facility	Tove Knutsen	​	​	79,699	​	​	81,883
25 million revolving credit facility with NTT		​		25,000	​		25,000
25 million revolving credit facility with Shinsei	​	​	​	25,000	​	​	25,000
Raquel Sale & Leaseback	Raquel Knutsen	​	​	86,783	​	​	89,206
Torill Sale & Leaseback	Torill Knutsen	​	​	110,950	​	​	—
Total long-term debt		​	$	988,458	​	$	974,596
Less: current installments		​		92,847	​		90,956
Less: unamortized deferred loan issuance costs		​		2,325	​		2,378
Current portion of long-term debt	****	​	****	90,522	​	****	88,578
Amounts due after one year		​		895,611	​		883,640
Less: unamortized deferred loan issuance costs		​		4,520	​		5,092
Long-term debt, less current installments, and unamortized deferred loan issuance costs		​	$	891,091	​	$	878,548

All values are in US Dollars.

​

The Partnership’s outstanding debt of $988.5 million as of June 30, 2022 is repayable as follows:

​

​	​	​	​	​	​	​	​	​	​	​	​	​
(U.S. Dollars in thousands)	****	​	Sale & Leaseback	****	Period repayment		****	Balloon repayment		****	Total
Remainder of 2022		$	6,439	​	$	39,664		$	—	​	$	46,103
2023		​	13,161	​	​	73,101		​	245,906	​	​	332,168
2024		​	13,804	​	​	36,440		​	63,393	​	​	113,637
2025		​	14,399	​	​	28,372		​	65,506	​	​	108,277
2026		​	15,059	​	​	18,822		​	219,521	​	​	253,402
2027 and thereafter		​	134,871	​	​	—		​	—	​	​	134,871
Total	​	$	197,733	​	$	196,399	​	$	594,326	​	$	988,458

​

As of June 30, 2022, the interest rates on the Partnership’s loan agreements were LIBOR plus a fixed margin ranging from 1.75% to 2.40%.

Torill Sale and Leaseback

On June 30, 2022, the Partnership through its wholly-owned subsidiary, Knutsen Shuttle Tankers 15 AS, which owned the Torill Knutsen, closed a sale and leaseback agreement with a Japanese-based lessor for a lease period of ten years. The gross sales price was $112.0 million, and a portion of the proceeds was used to repay the outstanding loan related to the vessel. The bareboat rate under the lease consists of a fixed element per day and there is a fixed-price purchase obligation at maturity. After repayment of the previously existing loan, the Partnership realized net proceeds of $39 million after fees and expenses.

​ 20

Table of Contents 13) Related Party Transactions

(a) Related Parties

Net income (expense) from related parties included in the unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2022 and 2021 are as follows:

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	Three Months Ended						Six Months Ended
​	​	June 30,					​	June 30,
(U.S. Dollars in thousands)	​	2022		​	2021		​	2022		​	2021
Statements of operations:	​	​	​	​	​	​	​	​	​	​	​	​
Time charter and bareboat revenues:		​			​			​			​
Time charter income from KNOT (1)		$	2,717		$	1,866		$	5,417		$	1,866
Operating expenses:		​			​			​			​
Vessel operating expenses (2)		​	5,053		​	5,000		​	8,153		​	7,752
Technical and operational management fee from KNOT to Vessels (3)		​	2,230		​	2,106		​	4,460		​	4,214
Operating expenses from other related parties (4)		​	180		​	172		​	367		​	299
General and administrative expenses:		​			​			​			​
Administration fee from KNOT Management (5)		​	360		​	379		​	719		​	666
Administration fee from KOAS (5)		​	173		​	201		​	368		​	395
Administration fee from KOAS UK (5)		​	19		​	19		​	38		​	37
Administration and management fee from KNOT (6)		​	15		​	20		​	30		​	29
Total income (expenses)	​	$	(5,313)	​	$	(6,031)	​	$	(8,718)	​	$	(11,526)

​

​	​	​	​	​	​	​
​	​	​	At June 30,	​	At December 31,
(U.S. Dollars in thousands)	****	2022		****	2021
Balance Sheet:		​			​
Vessels:		​			​
Drydocking supervision fee from KNOT (7)	​	$	95	​	$	134
Equipment purchased from KOAS (8)	​		565	​		1,840
Total	​	$	660	​	$	1,974
(1)	Time charter income from KNOT: After completing its drydock in the second quarter of 2021, the Bodil Knutsen has operated under a time charter with Knutsen Shuttle Tankers Pool AS. The charter expires in September 2022, with options to extend the time charter until June 2023.
---	---
(2)	Vessel operating expenses: KNOT Management or KNOT Management Denmark provides technical and operational management of the vessels on time charter including crewing and crew training services.
---	---
(3)	Technical and operational management fee, from KNOT Management or KNOT Management Denmark to Vessels: KNOT Management or KNOT Management Denmark provides technical and operational management of the vessels on time charter including crewing, purchasing, maintenance and other operational service. In addition, there is also a charge for 24-hour emergency response services provided by KNOT Management for all vessels managed by KNOT Management.
---	---
(4)	Operating expenses from other related parties: Simsea Real Operations AS, a company jointly owned by the Partnership’s Chairman of the Board, Trygve Seglem, and by other third-party shipping companies in Haugesund, provides simulation, operational training assessment and other certified maritime courses for seafarers. The cost is course fees for seafarers. Knutsen OAS Crewing AS, a subsidiary of TSSI, provides administrative services related to East European crew on vessels operating on time charter contracts. The cost is a fixed fee per each month per East European crew member onboard the vessel.
---	---
(5)	Administration fee from KNOT Management, Knutsen OAS Shipping AS (“KOAS”) and Knutsen OAS (UK) Ltd. (“KOAS UK”): Administration costs include compensation and benefits of KNOT Management’s management and administrative staff as well as other general and administration expenses. Some benefits are also provided by KOAS and KOAS UK. Net administration costs are total administration cost plus a 5% margin, reduced for the total fees for services delivered by the administration staffs and the estimated shareholder costs for KNOT that have not been allocated. As such, the level of net administration costs as a basis for the allocation can vary from year to year based on the administration and financing services offered by KNOT to all the vessels in its fleet each year. KNOT Management also charges each subsidiary a fixed annual fee for the preparation of the statutory financial statement.
---	---
(6)	Administration and management fee from KNOT Management and KNOT Management Denmark: For bareboat charters, the shipowner is not responsible for providing crewing or other operational services and the customer is responsible for all vessel
---	---

21

Table of Contents

operating expenses and voyage expenses. However, each of the vessels under bareboat charters is subject to a management and administration agreement with either KNOT Management or KNOT Management Denmark, pursuant to which these companies provide general monitoring services for the vessels in exchange for an annual fee.
(7)	Drydocking supervision fee from KNOT and KOAS : KNOT and KOAS provide supervision and hire out service personnel during drydocking of the vessels. The fee is calculated as a daily fixed fee.
---	---
(8)	During the scheduled 15-year special survey drydocking of the Windsor Knutsen, a ballast water treatment system is being installed on the vessel. As per June 30, 2022 parts of the system were purchased from Knutsen Ballast Water AS, a subsidiary of TSSI, for $0.6 million. During the scheduled second renewal survey drydocking of the Bodil Knutsen a ballast water treatment system was installed on the vessel during the second quarter of 2021. Parts of the system were purchased from Knutsen Ballast Water AS, a subsidiary of TSSI, for $1.84 million.
---	---

(b) Transactions with Management and Directors

See the footnotes to Note 13(a)—Related Party Transactions for a discussion of transactions with management and directors included in the consolidated statements of operations.

(c) Amounts Due from (to) Related Parties

Balances with related parties consisted of the following:

​

​	​	​	​	​	​	​
​	​	At June 30,		​	At December 31,
(U.S. Dollars in thousands)	****	2022		****	2021
Balance Sheet:	****	​	****	****	​	****
Trading balances due from KOAS	​	$	16	​	$	290
Trading balances due from KNOT and affiliates	​		1,545	​		2,378
Amount due from related parties	​	$	1,561	​	$	2,668
Trading balances due to KOAS	​	$	1,075	​	$	1,205
Trading balances due to KNOT and affiliates	​		58	​		219
Amount due to related parties	​	$	1,133	​	$	1,424

​

Amounts due from (to) related parties are unsecured and intended to be settled in the ordinary course of business.The majority of these related party transactions relate to vessel management and other fees due to KNOT, KNOT Management, KOAS UK and KOAS.

(d) Trade accounts payable

Trade accounts payable to related parties are included in total trade accounts payable in the balance sheet. The balances to related parties consisted of the following:

​

​	​	​	​	​	​	​
​	​	At June 30,		​	At December 31,
(U.S. Dollars in thousands)	****	2022		****	2021
Balance Sheet:	​	​	****	​	​	****
Trading balances due to KOAS	​	$	763	​	$	813
Trading balances due to KNOT and affiliates	​		641	​		783
Trade accounts payables to related parties	​	$	1,404	​	$	1,596

​

Trading balances from KNOT and affiliates are included in other current assets in the balance sheet. The balances from related parties consisted of the following:

​

​	​	​	​	​	​	​
​	****	At June 30,		****	At December 31,
(U.S. Dollars in thousands)	​	2022		​	2021
Balance Sheet:		​			​
Trading balances due from KOAS		$	761	​	$	687
Trading balances due from KNOT and affiliates		​	392	​		543
Other current assets from related parties	​	$	1,153	​	$	1,230

​

​ 22

Table of Contents 14) Commitments and Contingencies

Assets Pledged

As of June 30, 2022 and December 31, 2021, Vessels with a book value of $1,559 million and $1,598 million, respectively, were pledged as security held as guarantee for the Partnership’s long-term debt and interest rate swap obligations. See Note 7 - Derivative Instruments, Note 10 - Vessels and Equipment and Note 12 - Long-Term Debt.

Claims and Legal Proceedings

Under the Partnership’s time charters, claims to reduce the hire rate payments can be made if the Vessel does not perform to certain specifications in the agreements. No accrual for possible claims was recorded for the period ended June 30, 2022 or the year ended December 31, 2021.

From time to time, the Partnership is involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the consolidated financial position, results of operations or cash flows.

Insurance

The Partnership maintains insurance on all the Vessels to insure against marine and war risks, which include damage to or total loss of the Vessels, subject to deductible amounts that average $0.15 million per Vessel, and loss of hire.

Under the loss of hire policies, the insurer will pay compensation for the lost hire rate agreed in respect of each Vessel for each day, in excess of 14 deductible days, for the time that the Vessel is out of service as a result of damage, for a maximum of 180 days. In addition, the Partnership maintains protection and indemnity insurance, which covers third-party legal liabilities arising in connection with the Vessels’ activities, including, among other things, the injury or death of third-party persons, loss or damage to cargo, claims arising from collisions with other vessels and other damage to other third-party property, including pollution arising from oil or other substances. This insurance is unlimited, except for pollution, which is limited to $1 billion per vessel per incident. The protection and indemnity insurance is maintained through a protection and indemnity association, and as a member of the association, the Partnership may be required to pay amounts above budgeted premiums if the member claims exceed association reserves, subject to certain reinsured amounts. If the Partnership experiences multiple claims each with individual deductibles, losses due to risks that are not insured or claims for insured risks that are not paid, it could have a material adverse effect on the Partnership’s results of operations and financial condition. See Note 5 - Insurance proceeds. 23

Table of Contents 15) Earnings per Unit and Cash Distributions

The calculations of basic and diluted earnings per unit (1) are presented below:

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended					​	Six Months Ended
​	​	June 30,					​	June 30,
(U.S. Dollars in thousands, except per unit data)	****	2022		****	2021		****	2022		****	2021
Net income (loss)	​	$	9,888	​	$	(10,925)	​	$	36,668	​	$	17,216
Less: Series A Preferred unitholders’ interest in net income	​	​	1,700	​	​	1,759	​	​	3,400	​	​	3,559
Net income attributable to the unitholders of KNOT Offshore Partners LP	​	​	8,188	​	​	(12,684)	​	​	33,268	​	​	13,657
Less: Distributions (2)	​	​	18,168	​	​	18,150	​	​	36,335	​	​	36,184
Under (over) distributed earnings	​	​	(9,980)	​	​	(30,834)	​	​	(3,067)	​	​	(22,527)
Under (over) distributed earnings attributable to:	​	​	​	​	​	​	​	​	​	​	​	​
Common unitholders (3)	​	​	(9,665)	​	​	(30,268)	​	​	(2,967)	​	​	(22,114)
Class B unitholders	​	​	(131)	​	​	—	​	​	(44)	​	​	—
General Partner	​	​	(183)	​	​	(566)	​	​	(56)	​	​	(413)
Weighted average units outstanding (basic) (in thousands):	​	​		​	​		​	​	​	​	​
Common unitholders	​	​	33,838	​	​	32,782	​	​	33,796	​	​	32,738
Class B unitholders	​	​	460	​	​	—	​	​	501	​	​	—
General Partner	​	​	640	​	​	615	​	​	640	​	​	615
Weighted average units outstanding (diluted) (in thousands):	​	​	​	​	​		​	​	​	​	​
Common unitholders (4)	​	​	37,772	​	​	36,619	​	​	37,730	​	​	36,594
Class B unitholders	​	​	460	​	​	—	​	​	501	​	​	—
General Partner	​	​	640	​	​	615	​	​	640	​	​	615
Earnings per unit (basic)	​	​	​	​	​		​	​	​	​	​
Common unitholders	​	$	0.23	​	$	(0.38)	​	$	0.95	​	$	0.41
Class B unitholders	​	​	0.19	​	​	—	​	​	0.87	​	​	—
General Partner	​	​	0.23	​	​	(0.38)	​	​	0.95	​	​	0.41
Earnings per unit (diluted):	​	​	​	​	​	​	​	​		​	​
Common unitholders (4)	​	$	0.23	​	$	(0.38)	​	$	0.94	​	$	0.41
Class B unitholders	​	​	0.19	​	​	—	​	​	0.87	​	​	—
General Partner	​	​	0.23	​	​	(0.38)	​	​	0.95	​	​	0.41
Cash distributions declared and paid in the period per unit (5)	​	​	0.52	​	​	0.52	​	​	1.04	​	​	1.04
Subsequent event: Cash distributions declared and paid per unit relating to the period (6)	​	​	0.52	​	​	0.52	​	​	1.04	​	​	1.04
(1)	Earnings per unit have been calculated in accordance with the cash distribution provisions set forth in the Partnership’s agreement of limited partnership (the “Partnership Agreement”).
---	---
(2)	This refers to distributions made or to be made in relation to the period irrespective of the declaration and payment dates and based on the number of units outstanding at the record date. This included cash distributions to the IDR holder (KNOT) of $0.7 million and $1.4 million for three and six months ended June 30, 2021, respectively. There were no payments to the IDR holder (KNOT) for the three and six months ended June 30, 2022.
---	---
(3)	For the three and six months ended June 30, 2021, this included net income attributable to IDRs of $0.7 million and $1.4 million, respectively.
---	---
(4)	Diluted weighted average units outstanding and earnings per unit diluted for the three and six months ended June 30, 2022 and 2021 does not reflect any potential common shares relating to the convertible preferred units since the assumed issuance of any additional shares would be anti-dilutive.
---	---
(5)	Refers to cash distributions declared and paid during the period.
---	---
(6)	Refers to cash distributions declared and paid subsequent to the period end.
---	---

On May 27, 2021, Tortoise Direct Opportunities Fund LP, the holder of 416,677 of the Partnership’s Series A Preferred Units, sold 208,333 of its Series A Preferred Units to KNOT and converted 208,334 Series A Preferred Units to 215,292 common units based on a conversion rate of 1.0334. 24

Table of Contents The Series A Preferred Units rank senior to the common units and Class B Units as to the payment of distributions and amounts payable upon liquidation, dissolution or winding up. The Series A Preferred Units have a liquidation preference of $24.00 per unit, plus any Series A unpaid cash distributions, plus all accrued but unpaid distributions on such Series A Preferred Unit with respect to the quarter in which the liquidation occurs to the date fixed for the payment of any amount upon liquidation. The Series A Preferred Units are entitled to cumulative distributions from their initial issuance date, with distributions being calculated at an annual rate of 8.0% on the stated liquidation preference and payable quarterly in arrears within 45 days after the end of each quarter, when, as and if declared by the Board.

The Series A Preferred Units are generally convertible, at the option of the holders of the Series A Preferred Units, into common units at the applicable conversion rate. The conversion rate will be subject to adjustment under certain circumstances. In addition, the conversion rate will be redetermined on a quarterly basis, such that the conversion rate will be equal to $24.00 (the “Issue Price”) divided by the product of (x) the book value per common unit at the end of the immediately preceding quarter (pro-forma for per unit cash distributions payable with respect to such quarter) multiplied by (y) the quotient of (i) the Issue Price divided by (ii) the book value per common unit on February 2, 2017. In addition, the Partnership may redeem the Series A Preferred Units at any time until February 2, 2027 at the redemption price specified in the Partnership Agreement, provided, however, that upon notice from the Partnership to the holders of Series A Preferred Units of its intent to redeem, such holders may elect, instead, to convert their Series A Preferred Units into common units at the applicable conversion rate.

Upon a change of control of the Partnership, the holders of Series A Preferred Units will have the right to require cash redemption at 100% of the Issue Price. In addition, the holders of Series A Preferred Units will have the right to cause the Partnership to redeem the Series A Preferred Units on February 2, 2027 in, at the option of the Partnership, (i) cash at a price equal to 70% of the Issue Price or (ii) common units such that each Series A Preferred Unit receives common units worth 80% of the Issue Price (based on the volume-weighted average trading price, as adjusted for splits, combinations and other similar transactions, of the common units as reported on the NYSE for the 30 trading day period ending on the fifth trading day immediately prior to the redemption date) plus any accrued and unpaid distributions. In addition, subject to certain conditions, the Partnership has the right to convert the Series A Preferred Units into common units at the applicable conversion rate if the aggregate market value (calculated as set forth in the partnership agreement) of the common units into which the outstanding Series A Preferred Units are convertible, based on the applicable conversion rate, is greater than 130% of the aggregate Issue Price of the outstanding Series A Preferred Units.

The Series A Preferred Units have voting rights that are identical to the voting rights of the common units and Class B Units, except they do not have any right to nominate, appoint or elect any of the directors of the Board, except whenever distributions payable on the Series A Preferred Units have not been declared and paid for four consecutive quarters (a “Trigger Event”). Upon a Trigger Event, holders of Series A Preferred Units, together with the holders of any other series of preferred units upon which like rights have been conferred and are exercisable, may replace one of the members of the Board appointed by the General Partner with a person nominated by such holders, such nominee to serve until all accrued and unpaid distributions on the preferred units have been paid. The Series A Preferred Units are entitled to vote with the common units and Class B Units as a single class so that the Series A Preferred Units are entitled to one vote for each common unit into which the Series A Preferred Units are convertible at the time of voting.

On September 7, 2021, the Partnership entered into an exchange agreement with its general partner and KNOT whereby KNOT contributed to the Partnership all of KNOT’s IDRs in exchange for the issuance by the Partnership to KNOT of 673,080 common units and 673,080 Class B Units, whereupon the IDRs were cancelled (the “IDR Exchange”). The IDR Exchange closed on September 10, 2021. The Class B Units are a new class of limited partner interests which are not entitled to receive cash distributions in any quarter unless common unitholders receive a distribution of at least $0.52 for such quarter (the “Distribution Threshold”). When common unitholders receive a quarterly distribution at least equal to the Distribution Threshold, then Class B unitholders will be entitled to receive the same distribution as common unitholders.

For each quarter (starting with the quarter ended September 30, 2021) that the Partnership pays distributions on the common units that are at or above the Distribution Threshold, one-eighth of the Class B Units will be converted to common units on a one-for-one basis until such time as no further Class B Units exist. The Class B Units will generally vote together with the common units as a single class. After the payment of the Partnership’s quarterly cash distribution on February 12, 2022, with respect to the fourth quarter, 84,135 of the Class B Units converted to common units on a one-to-one basis. After the payment of the Partnership’s quarterly cash distribution on May 12, 2022, with respect to the first quarter, 84,135 of the Class B Units converted to common units on a one-to-one basis. 25

Table of Contents After the payment of the Partnership’s quarterly cash distribution on August 11, 2022, with respect to the second quarter, 84,135 of the Class B Units converted to common units on a one-to-one basis.

As of June 30, 2022, 71.7% of the Partnership’s total number of common units outstanding representing limited partner interests were held by the public (in the form of 24,293,458 common units) and 28.02% of such units were held directly by KNOT (in the form of 9,492,985 common units). In addition, KNOT, through its ownership of the General Partner, held a 1.8% general partner interest (in the form of 640,278 general partner units) and a 0.3% limited partner interest (in the form of 90,368 common units). As of June 30, 2022, KNOT also held 208,333 Series A Preferred Units and 420,675 Class B Units.

Earnings per unit – basic is determined by dividing net income, after deducting the amount of net income attributable to the Series A Preferred Units and the distribution paid or to be made in relation to the period, by the weighted-average number of units outstanding during the applicable period.

The computation of limited partners’ interest in net income per common unit – diluted assumes the issuance of common units for all potentially dilutive securities consisting of 3,541,666 Series A Preferred Units and 420,675 Class B Units as of June 30, 2022. Consequently, the net income attributable to limited partners’ interest is exclusive of any distributions on the Series A Preferred Units. In addition, the weighted average number of common units outstanding has been increased assuming the Series A Preferred Units and Class B Units have been converted to common units using the if-converted method. The computation of limited partners’ interest in net income per common unit – diluted does not assume the issuance of Series A Preferred Units and Class B Units if the effect would be anti-dilutive.

The General Partner’s, Class B unitholders’ and common unitholders’ interest in net income was calculated as if all net income was distributed according to the terms of the Partnership Agreement, regardless of whether those earnings would or could be distributed. The Partnership Agreement does not provide for the distribution of net income. Rather, it provides for the distribution of available cash, which is a contractually defined term that generally means all cash on hand at the end of each quarter less the amount of cash reserves established by the Board to provide for the proper conduct of the Partnership’s business, including reserves for future capital expenditures, anticipated credit needs and capital requirements and any accumulated distributions on, or redemptions of, the Series A Preferred Units. Unlike available cash, net income is affected by non-cash items, such as depreciation and amortization, unrealized gains and losses on derivative instruments and unrealized foreign currency gains and losses.

​

​

16) Unit Activity

The following table shows the movement in number of common units, Class B Units, general partner units and Series A Preferred Units from December 31, 2021 until June 30, 2022:

​	​	​	​	​	​	​	​	​
​	​	​	****	​	​	​	****	Series A
​	​	​	​	​	​	General	​	Convertible
(in units)	****	Common Units	****	Class B Units	****	Partner Units	****	Preferred Units
December 31, 2021	****	33,708,541	****	588,945	​	640,278	****	3,541,666
February 12, 2022: Quarterly conversion of Class B Units	​	84,135	​	(84,135)	​	—	​	—
May 12, 2022: Quarterly conversion of Class B Units		84,135		(84,135)	​	—		—
June 30, 2022		33,876,811		420,675	​	640,278		3,541,666

​

On February 12, 2022, 84,135 Class B units were converted to common units on a one-to-one basis pursuant to the Partnership’s agreement.

On May 12, 2022, 84,135 Class B units were converted to common units on a one-to-one basis pursuant to the Partnership’s agreement. 26

Table of Contents 17) Trade Accounts Receivable and Other Current Assets

(a) Trade Accounts Receivable

Trade accounts receivables are presented net of provisions for expected credit loss. As of June 30, 2022 and December 31, 2021, there were no provision for expected credit loss.

(b) Other Current Assets

The following table presents other currents assets of June 30, 2022 and December 31, 2021:

​

​	​	​	​	​	​	​
(U.S. Dollars in thousands)	****	At June 30, 2022		****	At December 31, 2021
Insurance claims for recoveries		$	412		$	124
Refund of value added tax		​	1,890		​	1,805
Prepaid expenses		​	1,452		​	1,158
Other receivables		​	7,878		​	2,539
Total other current assets	​	$	11,632	​	$	5,626

​

​

​

18) Accrued expenses

The following table presents accrued expenses as of June 30, 2022 and December 31, 2021:

​

​	​	​	​	​	​	​
​	****	At June 30,		****	At December 31,
(U.S. Dollars in thousands)	​	2022		​	2021
Operating expenses	​	$	6,865	​	$	4,290
Interest expenses	​		1,988	​		1,719
Other expenses	​		229	​		420
Total accrued expenses	​	$	9,082	​	$	6,429

​

​

19) Impairment of Long-Lived Assets

The carrying value of the Partnership’s fleet is regularly assessed as events or changes in circumstances may indicate that a vessel’s net carrying value exceeds the net undiscounted cash flows expected to be generated over its remaining useful life, and in such situation the carrying amount of the vessel is reduced to its estimated fair value. The Partnership considers factors related to vessel age, expected residual value, ongoing use of the vessels and equipment, shifts in market conditions and other impacting factors associated with the global oil and maritime transportation industries.

This exercise in the second quarter of 2021 resulted in an impairment in respect of the Windsor Knutsen principally as a result of the vessel’s high carrying value which in turn arose due to the cost of both the purchase and the conversion of the vessel to a shuttle tanker from a conventional tanker. The carrying value of the Windsor Knutsen was written down to its estimated fair value, using a discounted cash flow valuation. Our estimates of future cash flows involve assumptions about future hire rates, vessel utilization, operating expenses, drydocking expenditures, vessel residual values, the remaining estimated life of our vessels and discount rates. The Partnership’s consolidated statement of operations for the six months ended June 30, 2021 includes a $29.4 million impairment charge related to this vessel. The impairment of the Windsor Knutsen is included in the Partnership’s only segment, the shuttle tanker segment. 27

Table of Contents 20) Subsequent Events

The Partnership has evaluated subsequent events from the balance sheet date through September 2, 2022, the date at which the unaudited condensed consolidated interim financial statements were available to be issued, and determined that there are no other items to disclose, except as follows:

On July 1, 2022, the Partnership’s wholly owned subsidiary, KNOT Shuttle Tankers AS, acquired KNOT Shuttle Tankers 35 AS (“KNOT 35”), the company that owns the shuttle tanker, Synnøve Knutsen, from Knutsen NYK (the “Synnøve Acquisition”). The purchase price was $119.0 million, less approximately $87.7 million of outstanding indebtedness related to the Synnøve Knutsen plus approximately $0.6 million for certain capitalized fees related to the financing of the vessel. The purchase price will be adjusted for post-closing working capital adjustments. The secured credit facility related to the vessel (the “Synnøve Facility”) is repayable in quarterly instalments with a final balloon payment of $71.1 million due at maturity in October 2025. The Synnøve Facility bears interest at an annual rate equal to LIBOR plus a margin of 1.75%. The purchase price was settled in cash.

The Synnøve Knutsen is operating in Brazil under a time charter with Equinor, which will expire in February 2027. The charterer has options to further extend the charter for up to three two-year periods and nine one-year periods. The Partnership’s board of directors (the “Board”) and the conflicts committee of the Board (the “Conflicts Committee”) approved the purchase price of the Synnøve Acquisition. The Conflicts Committee retained an outside financial advisor and outside legal counsel to assist with its evaluation of the Synnøve Acquisition.

On July 6, 2022, the charterer of the Hilda Knutsen, ENI, notified the Partnership of its intention to redeliver the vessel and, as a consequence, the vessel is currently expected to be returned to the Partnership in or around September 2022. The Partnership is now marketing the vessel for new time charter employment.

On August 11, 2022, the Partnership paid a quarterly cash distribution of $0.52 per unit with respect to the quarter ended June 30, 2022 to all common unitholders and Class B Unitholders of record on July 28, 2022. On August 11, 2022, the Partnership paid a cash distribution to holders of Series A Preferred Units with respect to the quarter ended June 30, 2022 in an aggregate amount equal to $1.7 million. After the payment of the Partnership’s quarterly cash distribution on August 11, 2022 with respect to the second quarter, 84,135 of the Class B Units converted to common units on a one-to-one basis.

​

​

​

​ 28

Table of Contents MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless the context otherwise requires, references in this report to the “Partnership,” “we,” “our,” “us” or like terms, refer to KNOT Offshore Partners LP and its subsidiaries. Those statements in this section that are not historical in nature should be deemed forward-looking statements that are inherently uncertain. See “Forward-Looking Statements” for a discussion of the factors that could cause actual results to differ materially from those projected in these statements.

This section should be read in conjunction with our unaudited condensed consolidated financial statements for the interim periods presented elsewhere in this report, as well as our historical consolidated financial statements and notes thereto included in our Annual Report on Form 20-F for the year ended December 31, 2021 (the “2021 20-F”). Under our Partnership Agreement, KNOT Offshore Partners GP LLC, the general partner of the Partnership (the “General Partner”), has irrevocably delegated to the Partnership’s board of directors the power to oversee and direct the operations of, and to manage and determine the strategies and policies of, the Partnership. During the period from the Partnership’s initial public offering (“IPO”) in April 2013 until the time of the Partnership’s first annual general meeting (“AGM”) on June 25, 2013, the General Partner retained the sole power to appoint, remove and replace all members of the Partnership’s board of directors. From the first AGM, four of the seven board members became electable by the common unitholders and accordingly, from this date, the General Partner no longer retained the power to control the Partnership’s board of directors and, hence, the Partnership. As a result, the Partnership is no longer considered to be under common control with Knutsen NYK Offshore Tankers AS (“KNOT” or “Knutsen NYK”) and as a consequence, the Partnership no longer accounts for any vessel acquisitions from KNOT as transfer of a business between entities under common control.

General

We are a limited partnership formed to own, operate and acquire shuttle tankers primarily under long-term charters, which we define as charters of five years or more. Our fleet of shuttle tankers has been contributed to us by KNOT or purchased by us from KNOT. KNOT is jointly owned by TS Shipping Invest AS (“TSSI”) and Nippon Yusen Kaisha (“NYK”). TSSI is controlled by our Chairman and is a private Norwegian company with ownership interests in shuttle tankers, LNG tankers and product/chemical tankers. NYK is a Japanese public company with a fleet of approximately 650 vessels, including bulk carriers, containerships, tankers and specialized vessels.

As of June 30, 2022, we had a modern fleet of seventeen shuttle tankers that operate under charters with major oil and gas companies engaged in offshore production. Our primary business objective is to generate stable cash flows and provide a sustainable quarterly distribution per unit to our unitholders by managing our fleet and deepening our customer relationships, pursuing strategic and accretive acquisitions of shuttle tankers on long-term, fixed-rate charters, leveraging our relationship with KNOT, and expanding our global operations in high-growth regions. Pursuant to the Omnibus Agreement we have entered into with KNOT in connection with the IPO (the “Omnibus Agreement”), we have the right to purchase from KNOT any shuttle tankers operating under charters of five or more years. This right will continue throughout the entire term of the Omnibus Agreement.

Recent Developments

Cash Distributions

On August 11, 2022, the Partnership paid a quarterly cash distribution of $0.52 per common unit and Class B unit with respect to the quarter ended June 30, 2022 to all common unitholders and Class B Unitholders of record on July 28, 2022. On August 11, 2022, the Partnership paid a cash distribution to holders of Series A Convertible Preferred Units (the “Series A Preferred Units”) with respect to the quarter ended June 30, 2022 in an aggregate amount equal to $1.7 million. 29

Table of Contents

Synnøve Knutsen Acquisition

On July 1, 2022, the Partnership’s wholly owned subsidiary, KNOT Shuttle Tankers AS, acquired KNOT Shuttle Tankers 35 AS (“KNOT 35”), the company that owns the shuttle tanker, Synnøve Knutsen, from Knutsen NYK (the “Synnøve Acquisition”). The purchase price was $119.0 million, less approximately $87.7 million of outstanding indebtedness related to the Synnøve Knutsen plus approximately $0.6 million for certain capitalized fees related to the financing of the vessel. The purchase price will be adjusted for post-closing working capital adjustments. The secured credit facility related to the vessel (the “Synnøve Facility”) is repayable in quarterly instalments with a final balloon payment of $71.1 million due at maturity in October 2025. The Synnøve Facility bears interest at an annual rate equal to LIBOR plus a margin of 1.75%. The purchase price was settled in cash.

The Synnøve Knutsen is operating in Brazil under a time charter with Equinor, which will expire in February 2027. The charterer has options to further extend the charter for up to three two-year periods and nine one-year periods. The Partnership’s board of directors (the “Board”) and the conflicts committee of the Board (the “Conflicts Committee”) approved the purchase price of the Synnøve Acquisition. The Conflicts Committee retained an outside financial advisor and outside legal counsel to assist with its evaluation of the Synnøve Acquisition.

Lena Knutsen Charter

The Lena Knutsen was redelivered to the Partnership on June 2, 2022 in advance of the commencement of the vessel’s planned five-year special survey drydocking in Europe. After drydocking, the vessel returned to Brazil in early August. The Partnership entered into a new time charter agreement for the Lena Knutsen with a subsidiary of TotalEnergies which commenced on August 21, 2022. The charter is for a fixed period of six months with charterer’s options to extend the charter by up to six further months.

Tordis Knutsen Charter

The Tordis Knutsen was redelivered from Petrobras on August 24, 2022. The Partnership has agreed the commercial terms for a new time charter contract with a subsidiary of TotalEnergies to commence in September 2022 for a fixed period of three months, with charterer’s options to extend the charter by up to nine further months. The signing of the time charter contract remains subject to the agreement of customary operational terms which are expected to be resolved shortly.

Windsor Knutsen Charter

In September 2021, the Windsor Knutsen commenced on a one-year time charter contract with PetroChina. The Windsor Knutsen was redelivered from her time charter with PetroChina on June 14, 2022 to start on her mobilization trip to Europe for her planned 15-year special survey drydocking. On the same date, the Vigdis Knutsen, having successfully completed her own drydocking, replaced the Windsor Knutsen on the time charter contract for PetroChina. PetroChina has also exercised its first extension option for an additional period of 12 months, extending the firm period of the charter to September 2023.

The Windsor Knutsen successfully completed her drydock, departing the yard in early August bound for Brazil. In August 2022, the Partnership agreed the commercial terms for a new time charter contract for the Windsor Knutsen with a major oil company to commence in or around January 2023 for a fixed period of one year with a charterer’s option to extend the charter by one further year. The signing of the time charter contract remains subject to the agreement of customary operational terms which are expected to be resolved shortly

Hilda Knutsen Charter

On July 6, 2022, the charterer of the Hilda Knutsen, Eni, notified the Partnership of its intention to redeliver the vessel and, as a consequence, the vessel is currently expected to be returned to the Partnership in or around September 2022. The Partnership is now marketing the vessel for new employment.

Brasil Knutsen Charter

The current time charter for the Brasil Knutsen is expected to end in or around September 2022; however the Partnership is currently negotiating a new proposed one-year time charter contract, with options to extend, with an oil major, to commence in or around September 2022. 30

Table of Contents

Partnership Matters

COVID-19

The Partnership has continued to date to avoid any serious or sustained operational impacts from the coronavirus (“COVID-19”) pandemic, and there have been no effects on the Partnership’s contractual position. Enhanced protocols remain in place with a focus on ensuring the health and safety of our employees and crew onboard, while providing safe and reliable operations for our customers.

Travel restrictions and shortening of quarantine periods continue to ease in various places around the world; however costs related to the movement of maritime personnel and vessel operational logistics, including repairs and maintenance, remain above their historical average and the Partnership expects these higher costs to persist for some time into the future. Although the Partnership is negatively affected by such higher costs, they are not considered a material threat to the Partnership’s business.

Results of Operations

Three Months Ended June 30, 2022 Compared with the Three Months Ended June 30, 2021

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended					​	​	​	​	​	​
​	​	June 30,					​	​	​	​	​	​
(U.S. Dollars in thousands)	​	2022		​	2021		​	Change		​	% Change
Time charter and bareboat revenues		$	63,788		$	66,513		$	(2,725)	​		(4)	%
Loss of hire insurance recoveries	​	​	—	​	​	4,397	​	​	(4,397)	​	​	(100)	%
Other income	​		171	​		27	​		144	​		533	%
Vessel operating expenses	​		23,024	​		17,394	​		5,630	​		32	%
Depreciation	​		26,059	​		23,831	​		2,228	​		9	%
Impairment	​	​	—	​	​	29,421	​	​	(29,421)	​	​	(100)	%
General and administrative expenses	​		1,428	​		1,492	​		(64)	​		(4)	%
Interest income	​		59	​		—	​		59	​		100	%
Interest expense	​		(8,301)	​		(6,804)	​		1,497	​		22	%
Other finance expense	​		(103)	​		(250)	​		(147)	​		(59)	%
Realized and unrealized gain (loss) on derivative instruments	​		5,116	​		(2,265)	​		(7,381)	​		(326)	%
Net gain (loss) on foreign currency transactions	​		(165)	​		(144)	​		21	​		15	%
Income tax benefit (expense)	​		(166)	​		(261)	​		(95)	​		(36)	%
Net income (loss)	​	​	9,888	​	​	(10,925)	​	​	20,813	​	​	(191)	%

​

Time charter and bareboat revenues: Time charter and bareboat revenues decreased by $2.7 million to $63.8 million for the three months ended June 30, 2022 compared to $66.5 million for the three months ended June 30, 2021. The decrease was mainly due to increased off hire in connection with the scheduled drydockings.

Loss of hire insurance recoveries: Loss of hire insurance recoveries for the three months ended June 30, 2022, were $nil, compared to $4.4 million for the three months ended June 30, 2021. The loss of hire insurance recoveries in the three months ended June 30, 2021, were related to Windsor Knutsen in connection with repairs to her main engine block. The Windsor Knutsen was off hire from December 12, 2020, to June 10, 2021 for repairs. For the three months ended June 30, 2021, the Partnership recorded $3.7 million in loss of hire recoveries with respect to the Windsor Knutsen. In addition, the Tove Knutsen reported a leakage from its controllable pitch propeller and as a result the vessel was off hire from March 1, 2021, to April 15, 2021, for repairs. For the three months ended June 30, 2021, the Partnership recorded $0.7 million in loss of hire recoveries with respect to the Tove Knutsen.

Other income: Other income for the three months ended June 30, 2022 was $171,000 compared to $27,000 for the three months ended June 30, 2021.

Vessel operating expenses: Vessel operating expenses for the three months ended June 30, 2022 were $23.0 million, an increase of $5.6 million from $17.4 million in the three months ended June 30, 2021. The increase is mainly related to bunker costs for the Windsor Knutsen, the Lena Knutsen, the Anna Knutsen and the Vigdis Knutsen in connection with their voyages to drydock and increased crewing and logistics costs.

Depreciation: Depreciation expense for the three months ended June 30, 2022 was $26.1 million, an increase of $2.3 million from $23.8 million for the three months ended June 30, 2021. The increase is mainly related to the change by the Partnership of the useful 31

Table of Contents life estimate of each of the vessels in its fleet from 25 years to 23 years due to prevailing longer-term market trends, which increased the non-cash accounting depreciation charge starting July 1, 2021.

Impairment: Impairment charge for the three months ended June 30, 2022 was $nil compared to $29.4 million for the three months ended June 30, 2021. The impairment charge for the three months ended June 30, 2021, was related to the Windsor Knutsen. The carrying value of the Windsor Knutsen was written down to its estimated fair value using a discounted cash flow valuation.

General and administrative expenses: General and administrative expenses for the three months ended June 30, 2022 were $1.4 million compared to $1.5 million for the same period in 2021.

Interest income: Interest income for the three months ended June 30, 2022 was $59,000 compared to $nil for the three months ended June 30, 2021. The increase is mainly due to increased interest rates on our bank deposits.

Interest expense: Interest expense for the three months ended June 30, 2022 was $8.3 million, an increase of $1.5 million from $6.8 million for the three months ended June 30, 2021. The increase was mainly due to an increase in the US dollar LIBOR rate.

Other finance expense: Other finance expense was $0.1 million for the three months ended June 30, 2022, a decrease of $0.2 million from $0.3 million for the three months ended June 30, 2021. Other finance expense is primarily related to bank fees and guarantee commissions.

Realized and unrealized gain (loss) on derivative instruments: Realized and unrealized gain on derivative instruments for the three months ended June 30, 2022 was $5.1 million, compared to a loss of $2.3 million for the three months ended June 30, 2021, as set forth in the table below:

​

​	​	​	​	​	​	​
​	​	Three Months Ended
​	​	June 30,
(U.S. Dollars in thousands)	​	2022		​	2021
Realized gain (loss):		​			​
Interest rate swap contracts	​	$	(1,550)	​	$	(2,087)
Foreign exchange forward contracts	​		—	​		—
Total realized gain (loss):	​		(1,550)	​		(2,087)
Unrealized gain (loss):	​		​	​		​
Interest rate swap contracts	​		7,080	​		(178)
Foreign exchange forward contracts	​		(414)	​		—
Total unrealized gain (loss):	​		6,666	​		(178)
Total realized and unrealized gain (loss) on derivative instruments:	​	$	5,116	​	$	(2,265)

​

As of June 30, 2022, the total notional amount of the Partnership’s outstanding interest rate swap contracts that were entered into in order to hedge outstanding or forecasted debt obligations was $415.8 million. The unrealized gain in the three months ended June 30, 2022 was related to mark-to-market gain on interest rate swaps of $7.1 million and a loss of $0.4 million on foreign exchange contracts.

Net gain (loss) on foreign currency transactions: Net loss on foreign currency transactions for the three months ended June 30, 2022 was $0.2 million compared to a loss of $0.1 million for the three months ended June 30, 2021.

Income tax expense: Income tax expense for the three months ended June 30, 2022 was $0.2 million compared to $0.3 million for the three months ended June 30, 2021.

Net income (loss): As a result of the foregoing, the Partnership recorded net income of $9.9 million for the three months ended June 30, 2022, compared to net loss of $10.9 million for the three months ended June 30, 2021. 32

Table of Contents Six Months Ended June 30, 2022 Compared with the Six Months Ended June 30, 2021

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Six Months Ended					​	​	​	​	​
​	​	June 30,					​	​	​	​	​
(U.S. Dollars in thousands)	​	2022		​	2021		​	Change		​	% Change
Time charter and bareboat revenues		$	128,975		$	132,111		$	(3,136)		(2)	%
Loss of hire insurance recoveries	​	​	—	​	​	10,279	​	​	(10,279)	​	(100)	%
Other income	​		180	​		28	​		152		543	%
Vessel operating expenses	​		43,085	​		35,954	​		7,131		20	%
Depreciation	​		51,996	​		47,515	​		4,481		9	%
Impairment	​	​	—	​	​	29,421	​	​	(29,421)	​	(100)	%
General and administrative expenses	​		3,126	​		3,113	​		13		0	%
Interest income	​		61	​		—	​		61		(100)	%
Interest expense	​		(15,026)	​		(14,176)	​		850		6	%
Other finance expense	​		(312)	​		(409)	​		(97)		(24)	%
Realized and unrealized gain (loss) on derivative instruments	​		21,473	​		5,746	​		(15,727)		274	%
Net gain (loss) on foreign currency transactions	​		(98)	​		(96)	​		2		2	%
Income tax benefit (expense)	​		(378)	​		(264)	​		114		43	%
Net income	​	​	36,668	​	​	17,216	​	​	19,452	****	113	%

​

Time charter and bareboat revenues: Time charter and bareboat revenues decreased by $3.1 million to $129.0 million for the six months ended June 30, 2022, compared to $132.1 million for the six months ended June 30, 2021. This was mainly due to increased off hire in connection with scheduled drydocks in the first half of 2022.

Loss of hire insurance recoveries: Loss of hire insurance recoveries for the six months ended June 30, 2022, were $nil compared to $10.3 million for the six months ended June 30, 2021. The loss of hire insurance recoveries for the six months ended June 30, 2021, were related to the Windsor Knutsen in connection with repairs to her main engine block. The Windsor Knutsen was off hire from December 12, 2020 to June 10, 2021, for repairs. For the six months ended June 30, 2021, the Partnership recorded $8.7 million in loss of hire recoveries with respect to the Windsor Knutsen. In addition, the Tove Knutsen reported a leakage from its controllable pitch propeller and as a result the vessel was off hire from March 1, 2021 to April 15, 2021 for repairs. For the six months ended June 30, 2021, the Partnership recorded $1.5 million in loss of hire recoveries with respect to the Tove Knutsen.

Other income: Other income for the six months ended June 30, 2022 was $180,000 compared to $28,000 for the six months ended June 30, 2021.

Vessel operating expenses: Vessel operating expenses for the six months ended June 30, 2022 were $43.1 million, an increase of $7.1 million from $36.0 million in the six months ended June 30, 2021. The increase is mainly related to bunker costs for the Windsor Knutsen, the Lena Knutsen, the Anna Knutsen and the Vigdis Knutsen in connection with their voyages to drydock and increased crewing and logistics costs.

Depreciation: Depreciation expense for the six months ended June 30, 2022 was $52.0 million, an increase of $4.5 million from $47.5 million in the six months ended June 30, 2021. The increase is mainly related to the change by the Partnership of the useful life estimate of each of the vessels in its fleet from 25 years to 23 years due to prevailing longer-term market trends, which increased the non-cash accounting depreciation charge starting July 1, 2021.

Impairment: Impairment charge for the six months ended June 30, 2022, were $nil compared to $29.4 million for the six months ended June 30, 2021. The Impairment charge for the six months ended June 30, 2021 was related to the Windsor Knutsen. The carrying value of the Windsor Knutsen was written down to its estimated fair value, using a discounted cash flow valuation.

General and administrative expenses: General and administrative expenses for the six months ended June 30, 2022 were $3.1 million, compared to $3.1 million for the six months ended June 30, 2021.

Interest income: Interest income for the six months ended June 30, 2022 was $61,000 compared to $nil for the six months ended June 30, 2021. The increase is mainly due to increased interest rates on our bank deposits.

Interest expense: Interest expense for the six months ended June 30, 2022 was $15.0 million, an increase of $0.8 million from $14.2 million in the six months ended June 30, 2021. The increase was mainly due to an increase in the US dollar LIBOR rate. 33

Table of Contents Other finance expense: Other finance expense was $0.3 million for the six months ended June 30, 2022, compared to $0.4 million for the six months ended June 30, 2021. Other finance expense is primarily related to bank fees and guarantee commissions.

Realized and unrealized gain (loss) on derivative instruments: Realized and unrealized gain on derivative instruments for the six months ended June 30, 2022, was $21.5 million, compared to a gain of $5.7 million for the six months ended June 30, 2021 as set forth in the table below:

​

​	​	​	​	​	​	​
​	​	Six Months Ended
​	​	June 30,
(U.S. Dollars in thousands)	​	2022		​	2021
Realized gain (loss):		​			​
Interest rate swap contracts	​	$	(3,402)	​	$	(5,996)
Foreign exchange forward contracts	​		—	​		—
Total realized gain (loss):	​		(3,402)	​		(5,996)
Unrealized gain (loss):	​		​	​		​
Interest rate swap contracts	​		25,289	​		11,742
Foreign exchange forward contracts	​		(414)	​		—
Total unrealized gain (loss):	​		24,875	​		11,742
Total realized and unrealized gain (loss) on derivative instruments:	​	$	21,473	​	$	5,746

​

As of June 30, 2022, the total notional amount of the Partnership’s outstanding interest rate swap contracts that were entered into in order to hedge outstanding or forecasted debt obligations was $415.8 million. The unrealized gain in the six months ended June 30, 2022 was related to mark-to-market gain on interest rate swaps of $25.3 million and a loss of $0.4 million on foreign exchange contracts.

Net loss on foreign currency transactions: Net loss on foreign currency transactions for the six months ended June 30, 2022 was $98,000, compared to $96,000 from the six months ended June 30, 2021.

Income tax expense: Income tax expense for the six months ended June 30, 2022 was $0.4 million compared to $0.3 million for the six months ended June 30, 2021.

Net income: As a result of the foregoing, we earned net income of $36.7 million for the six months ended June 30, 2022, compared to net income of $17.2 million for the six months ended June 30, 2021.

Liquidity and Capital Resources

Liquidity and Cash Needs

We operate in a capital-intensive industry, and we expect to finance the purchase of additional vessels and other capital expenditures through a combination of borrowings from commercial banks, cash generated from operations and debt and equity financings, including net proceeds from sales under the ATM program. In addition to paying distributions, our other liquidity requirements relate to servicing our debt, funding investments (including the equity portion of investments in vessels), funding working capital and maintaining cash reserves against fluctuations in operating cash flows. We believe our current resources are sufficient to meet our working capital requirements for our current business. Generally, our long-term sources of funds are cash from operations, long-term bank borrowings and other debt and equity financings. Because we distribute our available cash, we expect to rely upon external financing sources, including bank borrowings and the issuance of debt and equity securities, to fund acquisitions and other expansion capital expenditures.

Our funding and treasury activities are intended to maximize investment returns while maintaining appropriate liquidity. Cash and cash equivalents are held primarily in U.S. Dollars with some balances held in NOK, British Pounds and Euros. We have not made use of derivative instruments other than for interest rate and currency risk management purposes, and we expect to continue to economically hedge our exposure to interest rate fluctuations in the future by entering into new interest rate swap contracts. 34

Table of Contents We estimate that we will spend in total approximately $51.5 million for drydocking and classification surveys for the thirteen vessels under time charters in our fleet as of June 30, 2022, between 2022 and 2026, with approximately $9.7 million of this amount to be spent in the twelve months ending June 30, 2023. As our fleet matures and expands, our drydocking expenses will likely increase. Ongoing costs for compliance with environmental regulations are primarily included as part of our drydocking and society classification survey costs or are a component of our vessel operating expenses. We are not aware of any regulatory changes or environmental liabilities that we anticipate will have a material impact on our current or future operations. There will be further costs related to voyages to and from the drydocking yard that will depend on the distance from the vessel’s ordinary trading area.

As of June 30, 2022, the Partnership had available liquidity of $123.5 million, which consisted of cash and cash equivalents of $88.5 million and undrawn capacity under the revolving credit facilities of $35 million, part of which was used to purchase the Synnøve Knutsen on July 1, 2022. As of September 2, 2022, the revolving credit facilities had an undrawn capacity of $35 million. The revolving credit facilities mature between August 2023 and November 2023. The Partnership’s total interest-bearing obligations outstanding as of June 30, 2022 were $988.5 million ($981.6 million net of debt issuance costs). The average margin paid on the Partnership’s outstanding debt during the second quarter of 2022 was approximately 2.05% over LIBOR.

As of June 30, 2022, the Partnership had $1,072.1 million in outstanding obligations, which include installments and interest on long-term debt, sale and leaseback commitments in respect of the Raquel Knutsen and the Torill Knutsen, interest commitments on interest rate swaps and operating lease commitments. Of the total outstanding obligations, $123.9 million matures within one year and $948.2 million matures after one year.

The consolidated financial statements have been prepared assuming that the Partnership will continue as a going concern. As of June 30, 2022, the Partnership’s net current liabilities were $7.0 million. Included in current liabilities are $90.5 million of short-term loan obligations that mature before June 30, 2023 and are therefore presented as current debt.

The Partnership expects that its primary future sources of funds will be available cash, cash from operations, borrowings under any new loan agreements and the proceeds of any equity financings, including net proceeds from sales under the ATM program. The Partnership believes that these sources of funds (assuming the current rates earned from existing charters) will be sufficient to cover operational cash outflows and ongoing obligations under the Partnership’s financing commitments to pay loan interest and make scheduled loan repayments and to make distributions on its outstanding units. Accordingly, the Partnership believes that its current resources, including amounts available to be drawn under the revolving credit facilities of $35 million as of September 2, 2022, are sufficient to meet working capital requirements for its current business for at least the next twelve months.

Currently, we do not have any off-balance sheet arrangements.

The following table summarizes our net cash flows from operating, investing and financing activities and our cash and cash equivalents for the periods presented:

Six Months Ended June 30, 2022 Compared with the Six Months Ended June 30, 2021

​	​	​	​	​	​	​
​	​	Six Months Ended June 30,
(U.S. Dollars in thousands)	****	2022		****	2021
Net cash provided by (used in) operating activities	​	$	54,111	​	$	79,814
Net cash provided by (used in) investing activities	​		(1,030)	​		(6,748)
Net cash provided by (used in) financing activities	​		(26,700)	​		(74,054)
Effect of exchange rate changes on cash	​		(200)	​		(6)
Net increase in cash and cash equivalents	​		26,181	​		(994)
Cash and cash equivalents at the beginning of the period	​		62,293	​		52,583
Cash and cash equivalents at the end of the period	​	$	88,474	​	$	51,589

​ 35

Table of Contents

Net cash provided by operating activities

Net cash provided by operating activities decreased by $25.7 million to $54.1 million in the six months ended June 30, 2022, compared to $79.8 million in the six months ended June 30, 2021. The decrease was primarily due to lower utilization and reduced time charter revenue for the fleet, including due to off-hires in connection with scheduled drydocks.

Net cash used in investing activities

Net cash used in investing activities was $1.0 million in the six months ended June 30, 2022, compared to $6.7 million in the six months ended June 30, 2021. The decrease is mainly related to installation of a Ballast Water Treatment System (BWTS) on the Bodil Knutsen in the first half of 2021.

Net cash used in financing activities

Net cash used in financing activities during the six months ended June 30, 2022 of $26.7 million was mainly related to the following:

●	Proceeds of $112.0 million from the sale & leaseback transaction of the Torill Knutsen; and
●	Proceeds from two drawdowns under one of the revolving credit facilities of $10 million each ($20 million total).
---	---

This was offset by the following:

●	Repayment of long-term debt of $118.1 million, of which $71.7 million was repaid in connection with the refinancing of the Torill Knutsen;
●	Payment of cash distributions of $39.7 million; and
---	---
●	Payment of debt issuance costs of $0.8 million in connection with the financing of the Torill Knutsen sale & leaseback.
---	---

Net cash used in financing activities during the six months ended June 30, 2021 of $74.1 million was mainly related to the following:

●	Proceeds of $94.3 million from the sale & leaseback transaction of the Raquel Knutsen; and
●	Proceeds from the drawdown under the revolving credit facilities of $5 million.
---	---

This was offset by the following:

●	Repayment of long-term debt of $132.2 million, of which $52.7 million was repaid in connection with the refinancing of the Raquel Knutsen facility; and
●	Payment of cash distributions of $39.7 million.
---	---

36

Table of Contents Borrowing Activities

Long-Term Debt

As of June 30, 2022, and December 31, 2021, the Partnership had the following debt amounts outstanding:

​	​	​	​	​	​	​	​
​	​	****	June 30,		****	December 31,
(U.S. Dollars in thousands)	Vessel	​	2022		​	2021
345 million loan facility	Anna Knutsen, Tordis Knutsen, Vigdis Knutsen, Brasil Knutsen, Lena Knutsen	​	$	326,178	​	$	338,726
320 million loan facility	Windsor Knutsen, Bodil Knutsen, Carmen Knutsen, Fortaleza Knutsen, Recife Knutsen, Ingrid Knutsen	​	​	207,077	​	​	222,133
55 million revolving credit facility	​	​		20,000	​		—
Hilda loan facility	Hilda Knutsen	​		69,231	​		72,308
Torill loan facility	Torill Knutsen	​		—	​		75,000
172.5 million loan facility	Dan Cisne, Dan Sabia	​		38,540	​		45,340
Tove loan facility	Tove Knutsen	​		79,699	​		81,883
25 million revolving credit facility with NTT	​	​		25,000	​		25,000
25 million revolving credit facility with Shinsei	​	​		25,000	​		25,000
Raquel Sale & Leaseback	Raquel Knutsen	​		86,783	​		89,206
Torill Sale & Leaseback	Torill Knutsen	​		110,950	​		—
Total long-term debt	​	​	$	988,458	​	$	974,596
Less: current installments	​	​	​	92,847	​	​	90,956
Less: unamortized deferred loan issuance costs	​	​		2,325	​		2,378
Current portion of long-term debt	​	​	​	90,522	​	​	88,578
Amounts due after one year	​	​	​	895,611	​	​	883,640
Less: unamortized deferred loan issuance costs	​	​	​	4,520	​	​	5,092
Long-term debt, less current installments, and unamortized deferred loan issuance costs	​	​	$	891,091	​	$	878,548

All values are in US Dollars.

​

The Partnership’s outstanding debt of $988.5 million as of June 30, 2022, is repayable as follows:

​	​	​	​	​	​	​	​	​	​	​	​	​
(U.S. Dollars in thousands)	****	Sale & Leaseback		****	Period repayment		****	Balloon repayment		****	Total
Remainder of 2022	​	$	6,439		$	39,664		$	—		$	46,103
2023	​		13,161			73,101		​	245,906		​	332,168
2024	​		13,804			36,440		​	63,393		​	113,637
2025	​		14,399			28,372		​	65,506		​	108,277
2026	​		15,059			18,822		​	219,521		​	253,402
2027 and thereafter	​		134,871			—		​	—		​	134,871
Total	​	$	197,733	​	$	196,399	​	$	594,326	​	$	988,458

​

As of June 30, 2022, the interest rates on our loan agreements were LIBOR plus a fixed margin ranging from 1.75% to 2.4%.

For more information regarding the Partnership’s credit facilities outstanding as of December 31, 2021, please read Note 15—Long-Term Debt in our consolidated financial statements included in our 2021 20-F. Please see below for a description of additional credit facilities or amendments to existing credit facilities entered into by the Partnership since December 31, 2021. As of June 30, 2022, the Partnership was in compliance with all covenants under its credit facilities.

Torill Sale and Leaseback

On June 30, 2022, the Partnership through its wholly-owned subsidiary, Knutsen Shuttle Tankers 15 AS, which owned the Torill Knutsen, closed a sale and leaseback agreement with a Japanese-based lessor for a lease period of ten years. The gross sales price was $112.0 million, and a portion of the proceeds was used to repay the outstanding loan related to the vessel. The bareboat rate under the lease consists of a fixed element per day and there is a fixed-price purchase obligation at maturity. After repayment of the previously existing loan, the Partnership realized net proceeds of $39 million after fees and expenses. 37

Table of Contents Derivative Instruments and Hedging Activities

We use derivative instruments to reduce the risks associated with fluctuations in interest rates. We have a portfolio of interest rate swap contracts that exchange or swap floating rate interest to fixed rates, which, from a financial perspective, hedges our obligations to make payments based on floating interest rates. As of June 30, 2022, the Partnership’s net exposure to floating interest rate fluctuations on its outstanding debt was $286.5 million based on total interest-bearing debt outstanding of $988.5 million, less the Raquel Knutsen and the Torill Knutsen sale/leaseback facility of $197.7 million, less interest rate swaps with a notional amount of $415.8 million and less cash and cash equivalents of $88.5 million. Our interest rate swap contracts mature between September 2023 and February 2032 and have an average maturity of approximately 3.2 years. Under the terms of the interest rate swap agreements, we will receive from the counterparty interest on the notional amount based on three-month and six-month LIBOR and will pay to the counterparty a fixed rate. For the interest rate swap agreements above, we will pay to the counterparty a weighted average interest rate of 1.85%. The Partnership does not apply hedge accounting for derivative instruments, and its financial results are impaired by changes in the market value of such financial instruments.

Critical Accounting Estimates

The preparation of the unaudited condensed consolidated interim financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures about contingent assets and liabilities. We base these estimates and assumptions on historical experience and on various other information and assumptions that we believe to be reasonable. Our critical accounting estimates are important to the portrayal of both our financial condition and results of operations and require us to make subjective or complex assumptions or estimates about matters that are uncertain. For a description of our material accounting policies that involve higher degree of judgment, please read Note 2—Summary of Significant Accounting Policies of our consolidated financial statements included in our 2021 20-F filed with the SEC.

​ 38

Table of Contents FORWARD-LOOKING STATEMENTS

This Report on Form 6-K contains certain forward-looking statements concerning future events and our operations, performance and financial condition and assumptions related thereto. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain the words “believe,” “anticipate,” “expect,” “estimate,” “project,” “will be,” “will continue,” “will likely result,” “plan,” “intend” or words or phrases of similar meanings. These statements involve known and unknown risks and are based upon a number of assumptions and estimates that are inherently subject to significant uncertainties and contingencies, many of which are beyond our control. Actual results may differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements include statements with respect to, among other things:

●	the length and severity of the outbreak of COVID-19, including its impact on our business, cash flows and operations as well as the business and operations of our customers, suppliers and lenders;
●	market trends in the shuttle tanker or general tanker industries, including hire rates, factors affecting supply and demand, and opportunities for the profitable operations of shuttle tankers;
---	---
●	KNOT’s and our ability to build shuttle tankers and the timing of the delivery and acceptance of any such vessels by their respective charterers;
---	---
●	our ability to purchase vessels from KNOT in the future;
---	---
●	our continued ability to enter into long-term charters, which we define as charters of five years or more, or otherwise, shorter-term charters;
---	---
●	forecasts of our ability to make or increase distributions on our common units and Class B Units and to make distributions on the Series A Preferred Units and the amount of any such distributions;
---	---
●	our ability to integrate and realize the expected benefits from acquisitions.
---	---
●	our anticipated growth strategies;
---	---
●	the effects of a worldwide or regional economic slowdown;
---	---
●	turmoil in the global financial markets;
---	---
●	fluctuations in currencies and interest rates;
---	---
●	fluctuations in the price of oil;
---	---
●	general market conditions, including fluctuations in hire rates and vessel values;
---	---
●	changes in our operating expenses, including drydocking and insurance costs and bunker prices;
---	---
●	the length and cost of drydocking;
---	---
●	our future financial condition or results of operations and future revenues and expenses;
---	---
●	the repayment of debt and settling of any interest rate swaps;
---	---
●	our ability to make additional borrowings and to access debt and equity markets;
---	---
●	planned capital expenditures and availability of capital resources to fund capital expenditures;
---	---
●	our ability to maintain long-term relationships with major users of shuttle tonnage;
---	---

39

Table of Contents

●	our ability to leverage KNOT’s relationships and reputation in the shipping industry;
●	our ability to maximize the use of our vessels, including the re-deployment or disposition of vessels no longer under charter;
---	---
●	the financial condition of our existing or future customers and their ability to fulfill their charter obligations;
---	---
●	timely purchases and deliveries of newbuilds;
---	---
●	future purchase prices of newbuilds and secondhand vessels;
---	---
●	any impairment of the value of our vessels;
---	---
●	our ability to compete successfully for future chartering and newbuild opportunities;
---	---
●	acceptance of a vessel by its charterer;
---	---
●	the impact of the Russian invasion of Ukraine;
---	---
●	termination dates and extensions of charters;
---	---
●	the expected cost of, and our ability to comply with, governmental regulations and maritime self-regulatory organization standards, as well as standard regulations imposed by our charterers applicable to our business;
---	---
●	availability of skilled labor, vessel crews and management, including possible disruptions due to the COVID-19 outbreak;
---	---
●	our general and administrative expenses and fees and expenses payable under the technical management agreements, the management and administration agreements and the administrative services agreement;
---	---
●	the anticipated taxation of KNOT Offshore Partners and distributions to our unitholders;
---	---
●	estimated future capital expenditures;
---	---
●	Marshall Islands economic substance requirements;
---	---
●	our ability to retain key employees;
---	---
●	customers’ increasing emphasis on climate, environmental and safety concerns;
---	---
●	potential liability from any pending or future litigation;
---	---
●	potential disruption of shipping routes due to accidents, political events, piracy or acts by terrorists;
---	---
●	future sales of our securities in the public market;
---	---
●	our business strategy and other plans and objectives for future operations; and
---	---
●	other factors listed from time to time in the reports and other documents that we file with the SEC, including our 2021 20-F.
---	---

40

Table of Contents Forward-looking statements in this Report on Form 6-K are based upon management’s current plans, expectations, estimates, assumptions and beliefs concerning future events impacting us and therefore involve a number of risks and uncertainties, including those risks discussed in this Form 6-K and our 2021 20-F. New factors emerge from time to time, and it is not possible for us to predict all of these factors. Further, we cannot assess the impact of each such factor on our business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward-looking statement. We do not intend to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based.

​ 41

Table of Contents ​

EXHIBITS

The following exhibits are filed as part of this report:

Exhibit Number		Exhibit Description
4.1	​	Share Purchase Agreement, dated June 28, 2022, between Knutsen NYK Offshore Tankers AS and KNOT Shuttle Tankers AS
4.2	​	Memorandum of Agreement, dated June 20, 2022, between Knutsen Shuttle Tankers 15 AS and Four Land (Panama) S.A.
4.3*	​	Bareboat Charter, dated June 20, 2022, between Four Land (Panama) S.A. and Knutsen Shuttle Tankers 15 AS
101.INS	​	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH	​	Inline XBRL Taxonomy Extension Schema
101.CAL	​	Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF	​	Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB	​	Inline XBRL Taxonomy Extension Label Linkbase
101.PRE	​	Inline XBRL Taxonomy Extension Presentation Linkbase

*   Certain identified information has been excluded from the exhibit because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

​

​ 42

Table of Contents SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	KNOT OFFSHORE PARTNERS LP
Date: September 2, 2022	By:	/s/ Gary Chapman
		Name:	Gary Chapman
		Title:	Chief Executive Officer and Chief Financial Officer

​

​ 43

Exhibit 4.1

​

​

SHARE PURCHASE AGREEMENT

Between

Knutsen NYK Offshore Tankers AS

(as Seller)

And

KNOT Shuttle Tankers AS

(as Buyer)

---

for the sale and purchase of the shares in

KNOT Shuttle Tankers 35 AS

---

​

​ ​

​ SHARE PURCHASE AGREEMENT

This agreement (this “Agreement”) is entered into on the 28 June 2022 between:

(1)	Knutsen NYK Offshore Tankers AS, company registration no. 995 221 713

(the “Seller”), and

(2)	KNOT Shuttle Tankers AS, company registration no. 998 942 829

(the “Buyer”).

The Seller and the Buyer are hereinafter individually referred to as a “Party” and jointly the “Parties”.

1	RECITALS

WHEREAS:

a)	KNOT Shuttle Tankers 35 AS, company registration no. 821 065 852, is a private limited liability company that has as its purpose to engage in shipowning activities, is duly incorporated under Norwegian law and has its registered place of business in Haugesund, Norway (the “Company”);
b)	The Seller is the sole owner of the ownership interest in the Company, with a share capital of NOK 30,000;
---	---
c)	The Company is the owner of the MT “Synnøve Knutsen”, having IMO No. 9868388 (the “Vessel”);
---	---
d)	The Company is the owner of all shares in KNOT Shuttle Tankers 28 GP AS, company registration no. 914 450 160, is a private limited liability company that has as its purpose to engage in shipowning activities, is duly incorporated under Norwegian law and has its registered place of business in Haugesund, Norway. The Company are in a process of a tax-free merger with KNOT Shuttle Tankers 28 GP AS with the Company as the surviving entity;
---	---
e)	The Company is the limited partner with an ownership interest of 90% and KNOT Shuttle Tankers 28 GP AS is the general partner with an ownership interest of 10% in Luky KS. Luky KS, company registration no. 993 469 203, is a private limited liability partnership that has as its purpose to engage in shipowning activities, is duly incorporated under Norwegian law and has its registered place of business in Haugesund, Norway. Luky KS is a partnership under deletion; and
---	---
f)	The Seller and the Buyer have agreed that the Buyer shall acquire 100% of the shares in the Company (the “Shares”) on the terms and conditions set forth in this Agreement.
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2	DEFINITIONS

In this Agreement, the following definitions shall have the following meanings:

a)	Accounting Principles	means the applicable Norwegian generally accepted accounting principles as defined by Norwegian law and regulations and accounting standards issued by the Norwegian Accounting Standards Board (Nw: Norsk Regnskapsstiftelse/NRS), applied on a consistent basis;
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b)	Accounts	means, in respect of the Company Entities, each of their audited profit and loss and balance sheet statement as per the Accounts Date attached as Appendix 2;
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c)	Accounts Date	means 31 December 2021;
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d)	Agreement	shall have the meaning ascribed to such term in the preamble to this Agreement;
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e)	Business	means the current business of the Company, being to own the Vessel, and charter the same under the Charter, and to own the shares in KNOT Shuttle Tankers 28 GP AS and 90% of the interest as limited partner in Luky KS;
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f)	Business Day	means a day on which banks are open for general banking business in Norway;
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g)	Buyer	shall have the meaning ascribed to such term in the preamble to this Agreement;
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h)	Buyer Indemnitees	shall have the meaning ascribed to such term in Clause 12.1;
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i)	Capitalized Fees	means capitalized fees and transaction costs related to the financing of the Vessel as of the Closing Date. Provided the Closing Date occurs on 01 July, 2022, the Capitalized Fees will be USD 592,207.
​	​	​
j)	Charter	means the time charterparty dated 26 September 2018, as amended, entered into between the Company as owner and the Charterer as charterer in respect of the Vessel;
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k)	Charterer	means Equinor Shipping Inc.;
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l)	Closing	shall have the meaning ascribed to such term in Clause 5.1;
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m)	Closing Date	means the date when the Closing actually takes place according to Clause 5.1;
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n)	Companies Act	means the Norwegian Limited Liability Companies Act of 1997

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​ ​

​

o)	Company	means KNOT Shuttle Tankers 35 AS, Norwegian organization no.: 821 065 852;
​	​	​
p)	Company Entities	means, collectively, the Company, KNOT 28 and Luky;
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q)	Encumbrance	means any mortgage, charge, pledge, lien, option or other security interest or restriction of any kind;
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r)	Governmental Authority	means any domestic or foreign government, including federal, provincial, state, municipal, county or regional government or governmental or regulatory authority, domestic or foreign, and includes any department, commission, bureau, board, administrative agency or regulatory body of any of the foregoing and any multinational or supranational organization;
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s)	Indemnified Party	shall have the meaning ascribed to such term in Clause 12.3;
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t)	Indemnifying Party	shall have the meaning ascribed to such term in Clause 12.3;
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u)	KNOT 28	means KNOT Shuttle Tankers 28 GP AS, Norwegian organization no.: 914 450 160;
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v)	Losses	means any loss, liability, claim, damage, expense (including costs of investigation and defence and reasonable attorneys’ fees) or diminution of value, whether or not involving a third-party claim;
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w)	Luky	means Luky KS, Norwegian organization no.: 993 469 203;
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x)	Material Adverse Effect	means a material adverse effect on the condition (financial, commercial, technical, legal or otherwise) of the Business, assets, results of operations or prospects of the Company Entities;
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y)	Material Agreement	shall have the meaning ascribed to such term in Clause 8.11;
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z)	Party	shall have the meaning ascribed to such term in the preamble to this Agreement;
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aa)	Parties	shall have the meaning ascribed to such term in the preamble to this Agreement;
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bb)	Partnership	means KNOT Offshore Partners LP, a Marshall Islands limited partnership;
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cc)	Purchase Price	shall have the meaning ascribed to such term in Clause 4;
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dd)	Purchase Price Adjustments	shall have the meaning ascribed to such term in Clause 5.4;

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​ ​

​

ee)	Seller	shall have the meaning ascribed to such term in the preamble to this Agreement;
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ff)	Seller Indemnities	shall have the meaning ascribed to such term in Clause 12.2;
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gg)	Shares	shall have the meaning ascribed to such term in Clause 1;
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hh)	Signing Date	means the date of this Agreement;
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ii)	Swap Agreements	means the 2002 ISDA master agreements entered into between the Company and Mizuho Bank, Ltd. and the Schedule thereto, dated 29 May 2019 and with MUFG Securities EMEA plc in connection with Novation Agreement dated 19 May 2020 among the Company as Transferee, Knutsen NYK Offshore Tanker AS as Transferor and MUFG Securities EMEA plc as Remaining Party, and the Schedule thereto, each relating to the Synnøve Facility;
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jj)	Swap Balance	means the balance under the Swap Agreements as determined according to a mark-to-market determination as of the Closing Date and applying the middle rate for USD/NOK as published by DNB Markets on the Closing Date, adjusted by USD 80,363 in favour of the Seller to cover the hedging margin compared to the rate at which the Swap Agreements were entered into*.* As of 31 May, 2022 the Swap Balance (being the balance under swaps entered into with MUFG Securities EMEA plc was USD 818,474 ex accrued interest (against the Company);
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kk)	Taxes	means all taxes (including value-added tax and similar taxes), however denominated, including interest, penalties and other additions to tax that may become payable or imposed by any applicable statute, rule or regulation or any governmental agency, including all taxes, withholdings and other charges in respect of income, profits, gains, payroll, social security or other social benefit taxes, sales, use, excise, real or personal property, stamps, transfers and workers’ compensation, which the Company is required to pay, withhold or collect; and
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ll)	Third-Party Claim	shall have the meaning ascribed to such term in Clause 12.3; and
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mm)	Synnøve Facility	means the USD 192,100,000 Term Loan Facility in respect of the Vessel and the sister vessel MT Tove Knutsen, dated 2 July 2019, and made between (i) the Company and KNOT Shuttle Tankers 34 AS as joint and several borrowers, (ii) the Seller as original guarantor (iii) the financial institutions listed in Schedule 1 thereto as lenders, (iv) MUFG Bank, Ltd. as mandated lead arranger and bookrunner, (v) the financial

​

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​

​	​	institutions listed in Schedule 2 thereto as hedging banks and (vi) MUFG Bank, Ltd. as agent;
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nn)	Vessel	shall have the meaning ascribed to such term in Clause 1.

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3	SALE AND PURCHASE

Subject to the terms and conditions set forth in this Agreement, the Seller agrees to sell, and the Buyer agrees to purchase, the Shares, together with all rights attached to them.

The Shares shall be transferred to the Buyer on the Closing Date, free and clear from any Encumbrances, other than pursuant to the Synnøve Facility.

4	PURCHASE PRICE

The Seller agrees to sell and transfer to the Buyer, and the Buyer agrees to purchase from the Seller the Shares for USD 119,000,000, less USD 87,660,996 of outstanding principal under the Synnøve Facility at Closing, plus the Capitalized Fees in the amount of USD 592,207 (the “Purchase Price”), plus the Purchase Price Adjustments, all in accordance with and subject to the terms and conditions set forth in this Agreement.

The Purchase Price is to be settled by way of cash payment on the Closing Date in the amount of USD 31,931,211 from the Buyer to the Seller, subject to the subsequent Purchase Price Adjustments in accordance with Clause 5.4 below.

The Purchase Price as calculated above is based on the assumption that Closing occurs on 1 July, 2022 at 00:01 CET. If Closing should occur at another time the Parties shall agree on an adjusted Purchase Price to be paid on Closing, to reflect accrued interest, currency fluctuations and paid instalments (as applicable) in respect of the Synnøve Facility and the Capitalized Fees.

5	CLOSING
5.1	Time and place
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Subject to the satisfaction or waiver of the conditions set forth in Clause 6, the completion of the transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of the Seller at 1 July 2022 or such other time as the Parties agree.

5.2	The Seller’s Closing obligations

At the Closing, the Seller shall:

a)	deliver to the Buyer a copy of the minutes of the meeting of the board of directors of the Seller authorising the execution of, and the consummation of the transaction contemplated by, this Agreement; and
b)	in exchange for the payment of the Purchase Price, transfer the Shares to the Buyer and deliver to the Buyer the share register of the Company with the Buyer duly registered as the owner of the Shares, as well as the related notices according to Sections 4-7 and 4-10 of the Companies Act.
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​

5.3	The Buyer’s Closing obligations

At the Closing, the Buyer shall

a)	settle the Purchase Price in accordance with Clause 4.
5.4	Post-Closing Adjustment
---	---
a)	Within 60 days following the Closing Date, the Buyer and the Seller shall agree on the amount of the post-Closing adjustments to the Purchase Price based on:
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(i)	the Company’s working capital, including the amounts owed to KNOT Management AS pursuant to Clause 8.8b), of this Agreement as of 00:00 hours CET on the Closing Date;
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(ii)	KNOT 28’s working capital, of this Agreement as of 00:00 hours CET on the Closing Date; and
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(iii)	Luky’s working capital, of this Agreement as of 00:00 hours CET on the Closing Date; and
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(iv)	the Swap Balance;<br>(the “Purchase Price Adjustments”).
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b)	Within 3 business days following the date on which the Purchase Price Adjustments have been agreed pursuant to Clause 5.4 a) above, the Buyer or the Seller (as the case may be) shall pay to the other Party an amount, in cash, equal to the net Purchase Price Adjustments. Any amounts other than those covered by the Purchase Price Adjustments varying in the period between the Signing Date and the Closing Date shall be for Seller’s account.
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6	CLOSING CONDITIONS
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6.1	Conditions to the Buyer’s Closing obligations
---	---

The obligations of the Buyer to purchase the Shares and to take the other actions required to be taken by it at the Closing are subject to the satisfaction of each of the following conditions (any of which may be waived in whole or in part by the Buyer) on or before the Closing Date:

a)	that the Vessel has been delivered to the Charterer and operated in accordance with the provisions of the Charter and that all costs and expenses related thereto have been settled by the Seller;
b)	there is no material breach of any of the representations and warranties of the Seller set forth in Clause 8 and Clause 9;
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c)	the Buyer shall have obtained the funds necessary to consummate the purchase of the Shares, and to pay all related fees and expenses;
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d)	in all respects material to the transactions contemplated hereby, the Seller shall have performed or complied with all of its obligations pursuant to this Agreement to be performed or complied with by the Seller at or prior to the Closing Date and shall have
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​ ​

​ delivered each document or instrument to be delivered by it pursuant to this Agreement; and

e)	the results of the searches, surveys, tests and inspections of the Vessel referred to in Clause 10.1 h) are reasonably satisfactory to the Buyer.
6.2	Conditions to the Seller’s Closing obligations
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The obligations of the Seller to sell the Shares and to take the other actions required to be taken by it at the Closing are subject to the satisfaction of each of the following conditions (any of which may be waived in whole or in part by the Seller) on or before the Closing Date:

a)	there is no material breach of any of the representations and warranties of the Buyer set forth in Clause 7;
b)	At Closing, the Buyer shall procure that the Partnership accede to the Synnøve Facility as “Guarantor” for the debt thereunder pertaining to the Vessel (only) by way of an “Accession Letter” set out therein, and that the Shares are pledged as contemplated by the Synnøve Facility, and procure that relevant conditions precedent under the Synnøve Facility relating to the Partnership and/or the Buyer have been satisfied. At Closing, the Seller shall be released from its guarantee obligations under the Synnøve Facility with respect to outstanding amounts relating to the Vessel; and
---	---
c)	in all respects material to the transactions contemplated hereby, the Buyer shall have performed or complied with all of its obligations pursuant to this Agreement to be performed or complied with by the Buyer at or prior to the Closing Date and shall have delivered each document or instrument to be delivered by it pursuant to this Agreement.
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6.3	Conditions of the Parties.
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The obligations of Seller to sell the Shares and the obligations of Buyer to purchase the Shares are subject to the satisfaction (or waiver by each of Seller and Buyer) on or prior to the Closing Date of the following conditions:

a)	The Seller shall have received any and all written consents, permits, approvals or authorizations of any Governmental Authority or any other Person (including, but not limited to, with respect to the Charter, the Synnøve Facility and the Swap Agreements) and shall have made any and all notices or declarations to or filing with any Governmental Authority or any other Person, including those related to any environmental laws or regulations, required in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereunder, including the transfer of the Shares; and
b)	No legal or regulatory action or proceeding shall be pending or threatened by any Governmental Authority to enjoin, restrict or prohibit the purchase and sale of the Shares.
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7	REPRESENTATIONS AND WARRANTIES OF THE BUYER
---	---

The Buyer represents and warrants to the Seller that as of the Signing Date and on the Closing Date, unless otherwise expressly stated:

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​

7.1	Corporate existence and power

The Buyer is duly incorporated, validly existing and in good standing under the laws of Norway.

The Buyer has not been declared insolvent; become the subject of a petition in bankruptcy; had a receiver appointed with respect to it or to the business of the Buyer or part thereof; entered into any arrangement with, or made an assignment for the benefit of, its creditors; or ceased to function as a going concern.

7.2	Corporate authorisation and non-contravention

This Agreement and each other document or instrument delivered or to be delivered in connection with this Agreement has been duly authorised by all necessary corporate action(s) of the Buyer and constitutes or will, when executed, constitute valid and binding obligations of the Buyer enforceable in accordance with its respective terms.

The execution by the Buyer of this Agreement and each other document or instrument delivered or to be delivered in connection with it, and the performance by the Buyer of its obligations under this Agreement and the consummation of the transactions provided for in this Agreement, do not and will not result in a breach of any provision of the articles of association of the Buyer or of any applicable law, order, judgment or decree of any court or Governmental Authority or of any agreement to which the Buyer is bound.

The Buyer is not required to obtain any authorisations, consents, approvals or exemptions by any Governmental Authority in connection with the entering into or performance of its obligations under this Agreement.

8	REPRESENTATIONS AND WARRANTIES OF THE SELLER

The Seller represents and warrants to the Buyer as of the Signing Date and on the Closing Date, unless otherwise expressly stated:

8.1	Corporate existence and power

Each of the Company Entities and the Seller is duly incorporated, validly existing and in good standing under the laws of Norway.

Each of the Company Entities and the Seller has not been declared insolvent; become the subject of a petition in bankruptcy; had a receiver appointed with respect to it or to the Business or part thereof; entered into any arrangement with, or made an assignment for the benefit of, its creditors; or ceased to function as a going concern.

Other than its interests in KNOT 28 and Luky, the Company does not own, directly or indirectly, any equity or long-term debt securities of any corporation, partnership, limited liability company or other entity.

8.2	Corporate authorisation and non-contravention

This Agreement and each other document or instrument delivered or to be delivered in connection with this Agreement has been duly authorised by all necessary corporate action(s) of each of the Company and the Seller, as appropriate, and constitutes or will, when executed, constitute valid and

​ ​

​ binding obligations of each of the Company and the Seller, as appropriate, enforceable in accordance with its respective terms.

The execution by each of the Company and the Seller, as appropriate, of this Agreement and each other document or instrument delivered or to be delivered in connection with it, and the performance by each of the Company and the Seller, as appropriate, of its obligations under this Agreement and the consummation of the transactions provided for in this Agreement, do not and will not result in a breach of any provision of the articles of association of each of the Company and the Seller, as appropriate, or of any applicable law, order, judgment or decree of any court or Governmental Authority or of any agreement to which each of the Company and the Seller, as appropriate, is bound.

Each of the Company and the Seller, as appropriate, is not required to obtain any authorisations, consents, approvals or exemptions by any Governmental Authority in connection with the entering into or performance of its obligations under this Agreement.

8.3	Capitalisation and title

The Seller has full ownership to the Shares. The Shares are duly authorised, validly issued and fully paid and at Closing, will be free and clear from any Encumbrances, other than pursuant to the Synnøve Facility. The Company has full ownership of its interests in the other Company Entities and such interests are duly authorised, validly issued and fully paid and at Closing, will be free and clear from any Encumbrances, other than pursuant to the Synnøve Facility.

There is no outstanding subscription, option or similar rights relating to the Shares or the interests of the Company in the other Company Entities.

8.4	Records

The Company Entities’ articles of association, shareholders’ register and other organizational documents are true, accurate, up-to-date and complete.

8.5	Charter documents; validity of the Charter

The Seller has supplied to the Buyer true and correct copies of the Charter and any related documents, as amended to the Closing Date. The Charter is a valid and binding agreement of the Company enforceable against the Company in accordance with its terms and, to the knowledge of the Seller, the Charter is a valid and binding agreement of all other parties thereto enforceable against such parties in accordance with its terms.

8.6	Accounts

The Accounts have been prepared in accordance with the Accounting Principles and in accordance with the books and records of the Company Entities. The Accounts give a true and accurate view of the financial position, solvency, assets, liabilities, liquidity, cash flow and the result of the operations of each of the Company Entities as of the Accounts Date.

8.7	No undisclosed liabilities

Neither the Company Entities nor the Vessel has any Encumbrances, or other liabilities or obligations of any nature, whether absolute, accrued, contingent or otherwise, and whether due or to become due (including, without limitation, any liability for Taxes and interest, penalties and other charges payable with respect to any such liability or obligation), except for such liabilities or obligations

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​ arising under the Charter, the Synnøve Facility, the Swap Agreements, the management agreement relating to the Vessel with KNOT Management AS, the inter-company balances described in Clause 8.8 c) and the Encumbrances appearing in the ship registry of the Vessel and arising under the Synnøve Facility and the Swap Agreements.

8.8	Loans and other financial facilities

All loans and other financial facilities available to the Company Entities have been made available for review by the Buyer.

a)	As of the Signing Date, the principal outstanding amount under the Synnøve Facility in respect of the Vessel is USD 87,660,996 where the next instalments of USD 1,184,608 is due 21 July, 2022.
b)	As of 31 May 2022, the non-interest bearing inter-company balance between the Company (as lender) and KNOT Management AS (as borrower) was NOK 2,472,710.89.
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No event has occurred which gives, or after notice or lapse of time, or both, would give any third party the right to call for repayment from any Company Entity prior to normal maturity of any loan or other financial facility. The Company Entities shall not be indebted, directly or indirectly, to any person who is an officer, director, stockholder or employee of any of the Seller or any spouse, child or other relative or any affiliate of any such person, nor shall any such officer, director, stockholder, employee, relative or affiliate be indebted to the Company Entities.

8.9	Assets

At the Closing Date, no Company Entity shall be using assets in the Business that such Company Entity neither owns nor has the right to use pursuant to written agreements with third parties. At the Closing Date, the assets of the Company Entities will comprise all the assets necessary for carrying on the Business fully and effectively to the extent to which it is conducted at the Signing Date.

8.10	Absence of certain changes or events

Since the Accounts Date, there has not occurred or arisen:

a)	any change of accounting methods, principles or practices, accounting, invoicing and supplier practice or procedures for the Company Entities;
b)	any acquisition or disposal of, or the entering into any agreement to acquire or dispose of, any asset, other than the sale of products in the ordinary course of business;
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c)	the termination of any Material Agreement, other than the Commercial Management Agreement dated 26 September 2018 between the Company and KNOT Management AS pursuant to the Agreement on Termination of the Commercial Management Agreement dated [28] June 2022;
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d)	any obligations, commitments or liabilities, contingent or otherwise, whether for Taxes or otherwise, except obligations, commitments and liabilities arising in the ordinary course of business;
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​

e)	any event or condition, whether covered by insurance or not, which has resulted in or may result in a Material Adverse Effect; or
f)	the entering into of any agreements or commitments other than on customary terms.
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8.11	Agreements
---	---

Each Material Agreement is in full force and effect. No other Material Agreements will be entered into by the Company Entities prior to the Closing Date without the prior consent of the Buyer (such consent not to be unreasonably withheld). The Company Entities have fulfilled all material obligations required pursuant to the Material Agreements to have been performed by each of them prior to the Signing Date and have not waived any material rights thereunder.

There has not occurred any material default on the part of the Company Entities under any of the Material Agreements, or to the knowledge of the Seller, on the part of any other party thereto, nor has any event occurred that with the giving of notice or the lapse of time, or both, would constitute any material default on the part of any Company Entity under any of the Material Agreements nor, to the knowledge of the Seller, has any event occurred that with the giving of notice or the lapse of time, or both, would constitute any material default on the part of any other party to any of the Material Agreements.

The term “Material Agreement” means each agreement, contract or other undertaking by or of any Company Entity (a) that is of material importance to the Business or (b) the value of which, in respect of total turnover during one year, is not less than NOK 500,000, provided, however, that such term includes the Charter, the Synnøve Facility and the Swap Agreements.

8.12	Insurance

The Company Entities maintain insurance policies on fire, theft, loss, disruption, product and general liability and other forms of insurance with reputable insurers that would reasonably be judged to be sound and required for the Business.

The Company Entities’ insurance policies do not contain any provisions regarding a change of control or ownership of the insured.

The Company Entities are in compliance with all terms and conditions contained in the insurance policies, and nothing has been done or omitted to be done that would make any insurance policy or insurance void or voidable or that would result in a reduction of the coverage (No: avkortning).

8.13	Environmental matters

The Company Entities are not and have not been in breach of any applicable laws (whether civil, criminal or administrative), statutes, regulations, directives, codes, judgments, orders or any other measures imposed by any governmental, statutory or regulatory body with regard to the pollution or the protection of the environment or to the protection of human health or human safety, or any other living organisms supported by the environment.

There is no current governmental investigation or disciplinary proceeding relating to any alleged breach of any law or permit by the Company Entities, and none is pending, nor threatened.

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​ The Company Entities have not, other than as permitted under applicable permits or applicable laws or regulations held from time to time, disposed of, discharged, released, placed, dumped or emitted any hazardous substances, such as pollutants, contaminants, hazardous or toxic materials, wastes or chemicals. Neither the Seller nor the Company Entities have received any formal or informal notice or other communication from which it appears that any of the Company Entities may be or have been in violation of any laws or permits. There are no actual or contingent obligations on the Company Entities to pay money or carry out any work in order to keep or be granted an extension or renewal of any existing permit. There are no facts or circumstances that could result in such an obligation. The properties used by the Company Entities are not made of or do not contain any form of asbestos or any other toxic substance that may cause damage to the health of the persons working or visiting the premises.

8.14	Compliance with laws

The Company Entities have at all times conducted the Business in accordance with and have complied with any applicable laws in Norway and in any other relevant countries relating to each of their operations and the Business.

All necessary licences, consents, permits and authorisations have been obtained by the Company Entities to enable the Company Entities to carry on the Business in the places and in the manner in which such Business is now conducted and all such licences, consents, permits and authorisations are valid and subsisting and have been complied with in all respects.

8.15	Litigation

There are no claims, actions, lawsuits, administrative, governmental, arbitration or other legal proceedings (including but not limited to proceedings related to Taxes) pending or threatened against or involving the Company Entities, the Business or properties or assets of the Company Entities and which would result in a Material Adverse Effect if adversely determined.

8.16	Taxes

The Company Entities have properly filed with the appropriate Tax authorities all Tax returns and reports required to be filed for all Tax periods ending prior to the Closing Date. Such filings are true, correct and complete. All information required for a correct assessment of Taxes has been provided.

The Tax returns of the Company Entities have been assessed and approved by the Tax authorities through the Tax years up to and including the years for which such assessment and approval is required, and the Company Entities are not subject to any dispute with any such authority.

All Taxes that have become due have been fully paid or fully provided for in the Accounts, and the Company Entities shall not be liable for any additional Tax pertaining to the period before the Accounts Date. All Taxes for the period after the Accounts Date have been fully paid when due.

There are no Tax audits, Tax disputes or Tax litigation pending or threatened against or involving the Company Entities. There is no basis for assessment of any deficiency in any Taxes against the Company Entities that has not been provided for in the Accounts or that has not been paid.

The Company Entities are not and have not been involved in any transaction that could be considered as Tax-evasive. All losses for Tax purposes incurred by the Company Entities are trading

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​ losses and are available to be carried forward and set off against income in succeeding periods without limitation and have been accepted by the relevant Tax authorities.

The Company Entities are not and have not been subject to any Tax outside each of their respective country of fiscal residence.

8.17	Relationship with the Seller

Except as disclosed to the Buyer, there are no written or oral agreements or arrangements between any Company Entity, on the one hand, and the Seller, on the other hand, and no liabilities or obligations (contingent or otherwise) owed by any Company Entity to the Seller.

No services provided by the Seller to any Company Entity are necessary in the ordinary course of business.

No payments of any kind, including, but not limited to management charges, have been made by any Company Entity to the Seller, save for payments under agreements or arrangements made on an arm’s-length basis in accordance with applicable law and regulations.

8.18	Information

All documents provided to the Buyer by or on behalf of the Seller or the Company Entities are true and correct, and no document provided to the Buyer by or on behalf of the Seller or the Company Entities contains any untrue statement of a relevant fact or omits to state a relevant fact necessary to make the statements contained in the document not misleading.

There are no facts or circumstances known to the Seller, relating to the affairs of the Company Entities, that have not been disclosed to the Buyer, which, if disclosed, reasonably could have been expected to influence the decision of the Buyer to purchase the Shares on the terms of this Agreement.

The Seller confirms that the Seller, prior to the Signing Date, has made, and until the Closing Date, shall continue to make, all investigations necessary in order to ensure that the statements in Clauses 8 and 9 are correct.

9	REPRESENTATIONS AND WARRANTIES OF THE SELLER REGARDING THE VESSEL

The Seller represents and warrants to the Buyer as of the Signing Date and on the Closing Date, unless otherwise expressly stated:

9.1	Flag and title

The Company is the registered owner of the Vessel and has good and marketable title to the Vessel, free and clear of any and all Encumbrances, other than those arising under the Synnøve Facility and the Swap Agreements. The Vessel is properly registered in the name of the Seller under and pursuant to the flag and law of Norway, and all fees due and payable in connection with such registration have been paid.

9.2	Classification

The Vessel is entered with the DNV GL and has the highest classification rating. The Vessel is in class without any recommendations or notation as to class or other requirement of the relevant classification society, and if the Vessel is in a port, it is in such condition that it

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​ cannot be detached by any port state authority or the flag state authority for any deficiency.

9.3	Maintenance

The Vessel has been maintained in a proper and efficient manner in accordance with internationally accepted standards for good ship maintenance, is in good operating order, condition and repair and is seaworthy, and all repairs made to the Vessel during the period from delivery from newbuilding yard and all known scheduled repairs due to be made and all known deficiencies have been disclosed to the Buyer.

9.4	Liens

The Vessel is not (a) under arrest or otherwise detained, (b) other than in the ordinary course of business, in the possession of any person (other than her master and crew) or (c) subject to a possessory lien.

9.5	Safety

The Vessel is supplied with valid and up-to-date safety, safety construction, safety equipment, radio, loadline, health, tonnage, trading and other certificates or documents as may for the time being be prescribed by the law of Norway or of any other pertinent jurisdiction, or that would otherwise be deemed necessary by a shipowner acting in accordance with internationally accepted standards for good ship management and operations.

9.6	No blacklisting or boycotts

No blacklisting or boycotting of any type has been applied or currently exists against or in respect of the Vessel.

9.7	No options

There are not outstanding any options or other rights to purchase the Vessel.

9.8	Insurance

The insurance policies relating to the Vessel are as set forth on Appendix 1 hereto, each of which is in full force and effect and, to the Seller’s knowledge, not subject to being voided or terminated for any reason.

10	COVENANTS PRIOR TO THE CLOSING
10.1	Covenants of the Seller Prior to the Closing
---	---

From the Signing Date to the Closing Date, the Seller shall cause the Company Entities to conduct their business in the usual, regular and ordinary course in substantially the same manner as previously conducted. The Seller shall not permit any of the Company Entities to enter into any contracts or other written or oral agreements prior to the Closing Date, other than such contracts and agreements as have been disclosed to the Buyer prior to the Signing Date, without the prior consent of the Buyer (such consent not to be unreasonably withheld). In addition, the Seller shall not permit any of the Company Entities to take any action that would result in any of the conditions to the purchase and sale of the Shares set forth in Clause 6 not being satisfied. Furthermore, the Seller hereby agrees and covenants that it:

​ ​

​

a)	shall use its best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary to consummate and make effective as promptly as possible the transactions contemplated by this Agreement and to co-operate with the Buyer and others in connection with the foregoing;
b)	shall use its best efforts to obtain the authorisations, consents, orders and approvals of regulatory bodies and officials that may be or become necessary for the performance of its obligations pursuant to this Agreement and the completion of the transactions contemplated by it;
---	---
c)	shall co-operate with the Buyer and promptly seek to obtain such authorisations, consents, orders and approvals as may be necessary for the performance of the Parties’ respective obligations pursuant to this Agreement;
---	---
d)	shall not amend, alter or otherwise modify or permit any amendment, alteration or modification of any material provision of or terminate the Charter or any other contract prior to the Closing Date without the prior written consent of the Buyer, such consent not to be unreasonably withheld or delayed;
---	---
e)	shall not exercise or permit any exercise of any rights or options contained in the Charter, without the prior written consent of the Buyer, not to be unreasonably withheld or delayed;
---	---
f)	shall observe and perform in a timely manner, all of its covenants and obligations under the Charter, the Synnøve Facility and the Swap Agreements, if any, and in the case of a default by another party thereto, it shall forthwith advise the Buyer of such default and shall, if requested by the Buyer, enforce all of its rights under such Charter, the Synnøve Facility or the Swap Agreements, as applicable, in respect of such default;
---	---
g)	shall not cause or, to the extent reasonably within its control, permit any Encumbrances to attach to the Vessel other than in connection with the Synnøve Facility and the Swap Agreements; and
---	---
h)	shall permit representatives of the Buyer to make, prior to the Closing Date, at the Buyer’s risk and expense, such surveys, tests and inspections of the Vessel as the Buyer may deem desirable, so long as such surveys, tests or inspections do not damage the Vessel or interfere with the activities of the Seller, the Company or the Charterer thereon and so long as the Buyer shall have furnished the Seller with evidence that adequate liability insurance is in full force and effect.
---	---
10.2	Covenants of the Buyer Prior to the Closing
---	---

The Buyer hereby agrees and covenants that during the period of time after the Signing Date and prior to the Closing Date, the Buyer shall, in respect of the Shares to be transferred on the Closing Date, take, or cause to be taken, all necessary company action, steps and proceedings to approve or authorize validly and effectively the purchase and sale of the Shares and the execution and delivery of this Agreement and the other agreements and documents contemplated hereby.

​ ​

​

11	TERMINATION
11.1	Termination
---	---

This Agreement may be terminated, and the transactions contemplated by this Agreement may be abandoned, at any time prior to the Closing Date:

a)	by either Party if a breach of any provision of this Agreement has been committed by the other Party, such breach has not been waived and such breach is material to the transactions contemplated hereby, the Business or the assets, financial condition or prospect of the Company Entities;
b)	by the Buyer if satisfaction of any of the conditions in Clause 6.1 is or becomes impossible (other than through the failure of the Buyer to comply with its obligations under this Agreement) and the Buyer has not waived such condition;
---	---
c)	by the Seller if satisfaction of any of the conditions in Clause 6.2 is or becomes impossible (other than through the failure of the Seller to comply with its obligations under this Agreement) and the Seller has not waived such condition;
---	---
d)	by either Party if satisfaction of any of the conditions in Clause 6.3 is or becomes impossible and Buyer and Seller have not waived such condition;
---	---
e)	by the Buyer due to a change having occurred that has resulted or may result in a Material Adverse Effect; or
---	---
f)	by mutual written consent of the Seller and the Buyer.
---	---
11.2	Rights on termination
---	---

If this Agreement is terminated pursuant to Clause 11.1, all further obligations of the Parties pursuant to this Agreement shall terminate without further liability of a Party to the other, provided, however, that the obligations of the Parties contained in Clause 13 (Costs) and Clause 17 (Governing Law and arbitration) shall survive such termination, and further provided, that if this Agreement is terminated by a Party because of the breach of this Agreement by the other Party or because one or more of the conditions to the terminating Party’s obligations under this Agreement is not satisfied as a result of the other Party’s failure to comply with its obligations under this Agreement, the terminating Party’s right to pursue all legal remedies will survive such termination unimpaired.

12	INDEMNIFICATION
12.1	Indemnity by the Seller
---	---

Following the Closing, the Seller shall be liable for, and shall indemnify, defend and hold harmless the Buyer and its respective officers, directors, employees, agents and representatives (the “Buyer Indemnitees”) from and against, any Losses, suffered or incurred by such Buyer Indemnitees:

a)	by reason of, arising out of or otherwise in respect of any inaccuracy in, breach of any representation or warranty, or a failure to perform or observe fully any covenant, agreement or obligation of, the Seller in or under this Agreement or in or under any document, instrument or agreement delivered pursuant to this Agreement by the Seller;

​ ​

​

b)	subject to Clause 13 b), any fees, expenses or other payments incurred or owed by the Seller to any brokers, financial advisors or comparable other persons retained or employed by it in connection with the transaction contemplated by this Agreement;
c)	any Losses of the Company Entities or the Vessel or any other vessel chartered or owned by the Company Entities incurred prior to or on the Closing Date arising from any violation of any applicable law or regulation relating to protection of natural resources, health and safety and the environment;
---	---
d)	all federal, state, foreign and local income tax liabilities attributable to the Company Entities or operation of the Vessel prior to the Closing Date; or
---	---
e)	any Losses suffered or incurred by such Buyer Indemnitees in connection with any claim for the repayment of hire or Losses in relation to the Vessel or any other vessel chartered or owned by the Company Entities for periods prior to the Closing.
---	---

12.2****Indemnity by the Buyer

Following the Closing, the Buyer shall be liable for, and shall indemnify, defend and hold harmless the Seller and its respective officers, directors, employees, agents and representatives (the “Seller Indemnitees”) from and against, any Losses, suffered or incurred by such Seller Indemnitees by reason of, arising out of or otherwise in respect of any inaccuracy in, breach of any representation or warranty, or a failure to perform or observe fully any covenant, agreement or obligation of, the Buyer in or under this Agreement or in or under any document, instrument or agreement delivered pursuant to this Agreement by the Buyer.

12.3	Indemnification procedures with respect to third-party claims

If the Seller or the Buyer, as the case may be (an “Indemnified Party”), shall receive notice of any claim by a third party that is or may be subject to indemnification or compensation from the other Party pursuant to this Agreement (a “Third-Party Claim”), the Indemnified Party shall give the other Party (the “Indemnifying Party”) prompt written notice of such Third-Party Claim and the Indemnifying Party shall, at the Indemnifying Party’s option, have the right to participate in the defence thereof by counsel at the Indemnifying Party’s own cost and expense. If the Indemnifying Party acknowledges within 30 days from such written notice in writing its obligation to indemnify the Indemnified Party against all Losses that may result from such Third-Party Claim, the Indemnifying Party shall be entitled, at the Indemnifying Party’s option, to assume and control the defence of such Third-Party Claim at the Indemnifying Party’s cost and expense and through counsel of the Indemnifying Party’s choice. No such Third-Party Claim may be settled by the Indemnifying Party without the written consent of the Indemnified Party, unless the settlement involves only the payment of money by the Indemnifying Party. No Third-Party Claim that is being defended in good faith by the Indemnifying Party shall be settled by the Indemnified Party without the written consent of the Indemnifying Party. The Indemnifying Party shall have no obligation to indemnify the Indemnified Party for any losses resulting from the settlement of Third-Party Claims in violation of the provisions of this Clause 12.3.

13	COSTS
a)	Subject to Clause 13b) and 13c), each party shall pay its own costs and expenses in connection with the preparation for and completion of the transactions contemplated by this Agreement, including but not limited to all fees and expenses of its own
---	---

​ ​

​ representatives, agents, brokers, legal and financial advisers and authorities and no such costs or expenses shall be charged to or paid by, neither directly or indirectly, the Company.

b)	The fees and expenses related to the fairness opinion of AMA Capital Partners LLC dated 27 June 2022 will be divided equally between the Buyer and the Seller.
c)	Legal fees to US, Norwegian and UK legal counsel related to the transactions contemplated by this Agreement and the related and financing arrangements will be divided equally between the Buyer and the Seller.
---	---
14	NOTICES
---	---

All notices, requests, demands, approvals, waivers and other communications required or permitted under this Agreement must be in writing in the English language and shall be deemed to have been received by a Party when:

a)	delivered by post, unless actually received earlier, on the third Business Day after posting, if posted within Norway, or the fifth Business Day, if posted to or from a place outside Norway;
b)	delivered by hand, on the day of delivery; or
---	---
c)	delivered by fax, on the day of dispatch if supported by a written confirmation from the sender’s fax machine that the message has been properly transmitted.
---	---

All such notices and communications shall be addressed as set forth below or to such other addresses as may be given by written notice in accordance with this Clause 14.

If to the Seller:

Knutsen NYK Offshore Tankers AS

Attention: President & CEO

Smedasundet 40, Postboks 2017, 5504 Haugesund, Norway ​

If to the Buyer:

KNOT Shuttle Tankers AS

Attention: Chairman of the Board

Smedasundet 40, Postboks 2017, 5504 Haugesund, Norway

15	ASSIGNMENT

This Agreement shall be binding upon and inure to the benefit of the successors of the Parties, but shall not be assignable by any of the Parties without the prior written consent of the other Party. The benefit of this Agreement may, however, be assigned by either of the Parties to any group directly or indirectly controlling, controlled by or under common control of the assignor, provided that the assignor shall remain liable for its own debt and for all obligations under this Agreement.

​ ​

​

16	MISCELLANEOUS
16.1	Further Assurances
---	---

From time to time after the Signing Date, and without any further consideration, the Parties agree to execute, acknowledge and deliver all such additional deeds, assignments, bills of sale, conveyances, instruments, notices, releases, acquittances and other documents, and shall do all such other acts and things, all in accordance with applicable law, as may be necessary or appropriate (a) more fully to assure that the applicable Parties own all of the properties, rights, titles, interests, estates, remedies, powers and privileges granted by this Agreement, or which are intended to be so granted, (b) more fully and effectively to vest in the applicable Parties and their respective successors and assigns beneficial and record title to the interests contributed and assigned by this Agreement or intended so to be and (c) more fully and effectively to carry out the purposes and intent of this Agreement.

16.2	Integration

This Agreement, the Appendices hereto and the instruments referenced herein supersede all previous understandings or agreements among the Parties, whether oral or written, with respect to its subject matter hereof. This Agreement, the Appendices hereto and the instruments referenced herein contain the entire understanding of the Parties with respect to the subject matter hereof and thereof. No understanding, representation, promise or agreement, whether oral or written, is intended to be or shall be included in or form part of this Agreement unless it is contained in a written amendment hereto executed by the Parties hereto after the Signing Date.

16.3	No Broker’s Fees

No one is entitled to receive any finder’s fee, brokerage or other commission in connection with the purchase of the Shares or the consummation of the transactions contemplated by this Agreement.

17	GOVERNING LAW AND ARBITRATION

This Agreement shall be governed by and construed in accordance with Norwegian law.

The Parties shall seek to solve through negotiations any dispute, controversy or claim arising out of or relating to this Agreement, or the breach, termination or invalidity hereof. If the Parties fail to solve such dispute, controversy or claim by a written agreement within 60 days after one of the Parties has requested such negotiations by notice to the other Party, such dispute, controversy or claim shall be finally settled by arbitration in Haugesund in the English language in accordance with the Norwegian Arbitration Act. The arbitration tribunal shall consist of three arbitrators, of which the Buyer shall appoint one arbitrator and the Seller shall appoint one arbitrator. The arbitrators so appointed shall appoint the third arbitrator, who shall be the chairman of the arbitration tribunal. In the event of failure by a Party to appoint its arbitrator within 30 days after the request for arbitration first is given, or the failure by the first two arbitrators to appoint the third arbitrator within 30 days after appointment of the last of the first two arbitrators to be appointed, such arbitrator or arbitrators shall be appointed by the district judge (No: “Sorenskriver”) of Haugesund District Court. Any Party may seek judgement upon any award in any court having jurisdiction, or an application may be made to such court for the judicial acceptance of the award and for an order of enforcement.

​ ​

​ Notwithstanding the above, either Party may bring an action in any court of competent jurisdiction (a) for provisional relief pending the outcome of arbitration, including, without limitation, provisional injunctive relief or pre-judgement attachment of assets, or (b) to compel arbitration or enforce any arbitral award. For purposes of any proceeding authorised by this Clause 17, each Party hereby consents to the non-exclusive jurisdiction of Haugesund, Norway.

* * *

​ ​

​ This Agreement has been executed in two original copies, of which each Party has retained one copy.

​

​			​	​			​	​	​			​	​			​
Knutsen NYK Offshore Tankers AS								****	KNOT Shuttle Tankers AS
By:	/s/ Trygve Seglem							​	By:	/s/ Øystein Emberland
Name:			​	Trygve Seglem			​	​	Name:			​	Øystein Emberland			​
Title:		​			CEO	​		​	Title:		​			Attorney-in-Fact	​

​

​ ​

​ Appendix 1

​

INSURANCES

​

​
Insurance Policies (all quoted values are USD)

​

Hull & Machinery	​	​
Hull	Insured Value:	$110,000,000
​	Policy Renewal:	01.11.2021-31.10.2022
Hull Interest	Insured Value:	$ 27,500,000
​	Policy Renewal:	01.11.2021-31.10.2022
Freight Interest	Insured Value:	$ 27,500,000
​	Policy Renewal:	01.11.2021-31.10.2022

​

P&I Insurance	​
Gross Tonnage:	84666
Policy Renewal:	20.02.2022-20.02.2023
​	​
War Risk	​
Insured Value:	$165,000,000
Policy Renewal:	01.01.2022-31.12.2022

​

​		​
18,0%	Aon London Broking Center Allianz
​	10%	Allianz Global Corporate & Speciality SE, London
​	5%	Lloyds Syndicate 1036 COF
​	3%	Markel Insurance SE
4,0%	Aon London Broking Center Arch
​	4%	Arch Insurance Comp. (Europe) Ltd.
3,0%	Aon London Broking Center BRT 2987
​	3%	Lloyds Syndicate 2987 BRT
5,0%	Aon London Broking Center CUL 3010
​	5%	Lloyds Syndicate 3010 CUL
3,5%	Aon London Broking Center SCOR
​	3,5%	SCOR UK Company Limited
8,5%	Aon London Broking Center XLC 2003
​	8,5%	Lloyds Syndicate 2003 XLC
7,5%	Codan Forsikring NUF
9,0%	Gard AS, as agents only for Gard M&E Ltd
9,0%	Norwegian Hull Club
7,5%	The Swedish Club
25,0%	Tokio Marine & Nichido Fire Insurance Co., Ltd.
100,0%	Total

​

​ ​

​ Appendix 2

ACCOUNTS

​

[Separate attachment] ​

​ Exhibit 4.2

​

​	​<br><br>​<br><br>​
MEMORANDUM OF AGREEMENT	SALEFORM 2012<br><br>Norwegian Shlpbrokers’ Association’s<br><br>Memorandum of Agreement for sale and purchase of ships

​

Dated: 1620th June, 2022

Knutsen Shuttle Tankers 15 AS (Name of sellers), Performance to be Guaranteed by Knutsen Offshore partners LP as per performance guaranteee hereinafter called the “Sellers”, have agreed to sell, and

FOUR LAND (PANAMA) S.A. (Name of buyers), Performance to be Guaranteed by Doun Kisen Co. Ltd as per performance guaranteee,  hereinafter called the “Buyers”, have agreed to buy:

​	​
Name of vessel:	Torill Knutsen
​	​
IMO **** Number:	9630030
​	​
Classification Society:	Det Norske Veritas

​

Class Notation: +1A1 Tanker for oil BIS Bow loading CCO Clean(Design) COAT-PSPC(B) COMF(C-3, V-3) CSA(FLS2) CSR DYNPOS(AUTR) E0 ESP ESV(DP[HIL-IS]) F{A, M, C) HELDK(S, H, CAA-N) Ice(1c) NAUT(AW) OPP-F Plus SPM TMON VCS(2) Winterized(Cold, -35°C, -15°C)

​	​
Year of Build:	2013
​	​
Builder/Yard:	Hyundal Heavy Industries
​	​
Flag:	NIS
​	​
Place of Registration:	Haugesund
​	​
GT/NT:	80,85080,850/36,065

​

hereinafter called the “Vessel”, on the following terms and conditions:

Definitions

“Banking Days” are days on which banks are open both in the country of the currency stipulated for the Purchase Price in Clause 1 (Purchase Price) and in the place of closing stipulated in Clause 8 (Documentation) and Tokyo, New York, Valletta and Oslo (add additional jurisdictions as appropriate).

“Buyers’ Nominated Flag State” means Malta (state flag state).

“Class” means the class notation referred to above.

“Classification Society” means the Society referred to above.

“Deposit” shall have the meaning given Clause 2 (Deposit).

“Deposit Holder” means       (state name and location of Deposit Holder) or, if left blank, the Sellers’ Bank, which shall hold and release the Deposit in accordance with this Agreement.

“In writing” or “written” means a letter handed over from the Sellers to the Buyers or vice versa, a registered letter, email or telefax.

“Parties” means the Sellers and the Buyers.

“Purchase Price” means the price for the Vessel as stated in Clause 1 (Purchase Price).

​

op

Copyright © 2012 Norwegian Shlpbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed In any form without the prior written permission of the Norwegian Shlpbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.	​
	​

​

​ “Sellers’ Account” means DNB Bank ASA / SWIFT : DNBANOKKXXX / USD Acc : 1250.04.73523 (state details of bank account) at the Sellers’ Bank.

“Sellers’ Bank” means DNB Bank ASA (state name of bank, branch and details) or, if left blank, the bank notified by the Sellers to the Buyers for receipt of the balance of the Purchase Price.

“BBCP” means Bareboat Charter Party dated on the same date as the MOA agreed between Knutsen Shuttle Tankers 1549 AS and FOUR LAND (PANAMA) MI-DAS-LINE, S.A., together with any addenda thereto.

“Charterer” means charterer as per BBCP dated on the same date as the MOA.

“Owner” means owner as per BBCP dated on the same date as the MOA.

1.	Purchase Price

The Purchase Price is USD112,000,000 (United States Dollars One Hundred Twelve Million ninety four million three hundred thousand only) (state currency and amount both in words and figures).

**2.**Deposit

As security for the correct fulfilment of this Agreement the Buyers shall lodge a deposit of         % (       per cent) or, if left blank,10% (ten per cent), of the Purchase Price (the “Deposit”) in an interest bearing account for the parties with the Deposit Holder within three (3) Banking Days after the date that:

(i) this Agreement has been signed by the Parties and exchanged in original or by e-mail or telefax; and

(ii) the Deposit Holder has confirmed in writing to the Parties that the account has been opened.

The Deposit shall be released in accordance with joint written instructions of the Parties. Interest, if any, shall be credited to the Buyers. Any fee charged for holding and releasing the Deposit shall be borne equally by the Parties. The Parties shall provide to the Deposit Holder all necessary documentation to open and maintain the account without delay.

**3.**Payment

On delivery of the Vessel, but not later than three (3) Banking Days after the date that Notice of Readiness has been given in accordance with Clause 5 (Time and place of delivery and notices):

(i) the Deposit shall be released to the Sellers; and

(ii) the balance of tThe Purchase Price and all other sums payable on delivery by the Buyers to the Sellers under this Agreement shall be remitted by the Buyers to the Sellers’ bank by an interbank swift message (SWIFT MT 103) not later than two (2) Banking days prior to the expected date of delivery of the Vessel, accompanied by an interbank swift message (SWIFT MT 199) confirming that the Purchase Price is to be held by th Sellers’ Bank on suspense (such SWIFT MT 199 to be agreed between the Buyers and the Sellers not less than five (5) Banking Days prior to expected date of delivery of the Vessel. The said Purchase Price shall be unconditionally released/paid to the Sellers by the Sellers’ presentation to the Sellers’ Bank of either an original or fax-copypdf or photocopy of “Protocol of Delivery and Acceptance” in respect of the Vessel duly signed by both the Sellers’ and the Buyers’ authorized representatives only. paid in full free of bank charges to the Sellers’ Account.

**4.**Inspection

(a)*	The Buyers have inspected and accepted the Vessel’s classification records online and have waived physical inspection and the sale is outright and definite, subject only to the terms and conditions of this Agreement.. The Buyers have also inspected the Vessel at/in         (state place) on             (state date) and have accepted the vessel following this inspection and the sale is outright and definite, subject only to the terms and conditions of this Agreement.
(b)*	The Buyers shall have the right to inspect the Vessel’s classification records and declare whether same are accepted or not within N/A (state date/period).
---	---

​

op

Copyright © 2012 Norwegian Shlpbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed In any form without the prior written permission of the Norwegian Shlpbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.	​
	​

​

​ The Sellers shall make the Vessel available for inspection at/in                (state place/range) within (state date/period).

The Buyers shall undertake the inspection without undue delay to the Vessel. Should the Buyers cause undue delay they shall compensate the Sellers for the losses thereby incurred.

The Buyers shall inspect the Vessel without opening up and without cost to the Sellers.

During the inspection, the Vessel’s deck and engine log books shall be made available for examination by the Buyers.

The sale shall become outright and definite, subject only to the terms and conditions of this Agreement, provided that the Sellers receive written notice of acceptance of the Vessel from the Buyers within seventy two (72) hours after completion of such inspection or after the date/last day of the period stated in Clause 4(b)(ii), whichever is earlier.

Should the Buyers fail to undertake the inspection as scheduled and/or notice of acceptance of the Vessel’s classification records and/or of the Vessel not be received by the Sellers as aforesaid, the Deposit together with interest earned, if any, shall be released immediately to the Buyers, whereafter this Agreement shall be null and void.

*4(a) and 4(b) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 4(a) shall apply.

**5.**Time and place of delivery and notices

(a)	The Vessel shall be delivered and taken over safely afloat at a safe and accessible berth or anchorage at/in worldwide in one safe port/anchorage or at sea in the Sellers’ option (state place/range) in the Sellers’ option. Delivery port to be free of any sales tax, duties ewhatsoever nature.

Notice of Readiness shall not be tendered before: 30th June, 2022 (date)

Cancelling Date (see Clauses 5(c), 6 (a)(i), 6 (a)(iii) and 14): 31st August, 2022

(b)	The Sellers shall keep the Buyers well informed of the Vessel’s itinerary and shall provide the Buyers with twenty (20), ten (10), five (5) and three (3) days’ notice of the date the Sellers intend to tender Notice of Readiness and of the intended place of delivery.

When the Vessel is at the place of delivery and physically ready for delivery in accordance with this Agreement, the Sellers shall give the Buyers a written Notice of Readiness for delivery.

(c)

If the Sellers anticipate that, notwithstanding the exercise of due diligence by them, the Vessel will not be ready for delivery by the Cancelling Date they may notify the Buyers in writing stating the date when they anticipate that the Vessel will be ready for delivery and proposing a new Cancelling Date. Upon receipt of such notification the Buyers shall have the option of either cancelling this Agreement in accordance with Clause 14 (Sellers’ Default) within three (3) Banking Days of receipt of the notice or of accepting the new date as the new Cancelling Date. If the Buyers have not declared their option within three (3) Banking Days of receipt of the Sellers’ notification or if the Buyers accept the new date, the date proposed in the Sellers’ notification shall be deemed to be the new Cancelling Date and shall be substituted for the Cancelling Date stipulated in Clause 5(a).

If this Agreement is maintained with the new Cancelling Date all other terms and conditions hereof Including those contained in Clauses 5(b) and 5(d) shall remain unaltered and in full force and effect.

(d)	Cancellation, failure to cancel or acceptance of the new Cancelling Date shall be entirely without prejudice to any claim for damages the Buyers may have under Clause 14 (Sellers’ Default) for the Vessel not being ready by the original Cancelling Date.
(e)	Should the Vessel become an actual, constructive or compromised total loss before delivery the Deposit together with interest earned, if any, shall be released Immediately to the Buyers whereafter this Agreement shall be null and void.
---	---

​

op

Copyright © 2012 Norwegian Shlpbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed In any form without the prior written permission of the Norwegian Shlpbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.	​
	​

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​

6.	Divers InspectIon / Drydocking
(a)*	(i) The Buyers shall have the option at their cost and expense to arrange for an underwater inspection by a driver approved by the Classification Society prior to the delivery of the Vessel. Such option shall be declared latest nine(9) days prior to the Vessel’s intended date of readiness for delivery as notified by the Sellers pursuant to Clause 5(b) of this Agreement. The Sellers shall at their cost and expense make the Vessel avaliable for such inspection. This inspection shall be carried out without undue delay and in the presence of a classification Soceity surveyor arranged for by the Sellers and paid for by the Buyers. The Buyer’s representative(s) shall have the right to be present at the diver’s inspection as observer(s) only without interfering with the work or decisions of the Classification Soceity surveyor. The extent of the inspection and the conditions under which it is performed shall be to the satisfaction of the Classification Soceity. If the conditions at the place of delivery are unsuitable for such inspection, the Sellers shall at their cost and expense make the Vessel available at a suitable alernative place near to the delivery port, in which event the Cancelling Date shall be extended by the additional time required for such positioning and the subsequent re-positioning. The Sellers may not tender Notice of Readiness prior to completion of the underwater inspection.
---	---

(ii) If the rudder, propeller, bottom or other underwater parts below the deepest load line are found broken; damaged or defective so as to affect the Vessels class, then (1) unless repairs can be carried out afloat to the satisfaction of the Classification Soceity, the Sellers shall arrange for the Vessel to be drydocked at their expense for inspection by the Classification Society of the Vessel’s underwater parts below the deepest load line, the extent of the inspection being in accordance with the Classification Soceity’s rules (2) such defects shall be made good by the Sellers at their cost and expense to the satisfaction of the Classification Society without condition/recommendation** and (3) the Sellers shall pay for the underwater inspection and the Classification Society’s attendance.

Notwithstanding anything to the contrary in this Agreement, if the Classification Society do not require the aforementioned defects to be rectified before the next class drydocking survey, the Sellers shall be entitled to deliver the Vessel with these defects against a deduction from the Purchase Price of the estimated direct cost (of labour and materials) of carrying out the repairs to the satisfaction of the Classification Soceity, whereafter the Buyers shall have no further rights whatsoever in respect of the defects and/or repairs. The estimated direct cost of the repairs shall be the average of quotes for the repair work obtained from two reputable independent shipyards at or in the vicinity of the port of delivery, one to be obtained by each of the Parties within two (2) Banking Days from the date of the imposition of the condition/recommendation, unless the Parties agree otherwise. Should either of the Parties fail to obtain such a quote within the stipulated time then the quote duly obtained by the other Party shall be the sole basis for the estimate of the direct repair costs. The Sellers may not tender Notice of Readiness prior to such estimate having been established.

(iii) If the Vessel is to be drydocked pursuant to Clause 6(a)(ii) and no suitable dry docking facilities are available at the port of delivery, the Sellers shall take the Vessel to a port where suitable drydocking facilities are available, whether within or outside the delivery range as per Clause 5(a). Once drydocking has taken place the Sellers shall deliver the Vessel at a port within the delivery range as per Clause 5(a) which shall, for the purpose of this Clause, become the new port of delivery. In such event the Cancelling Date shall be extended by the additional time requied for the drydocking and extra steaming, but limited to a maximum of fourteen (14) days.

(b)*

The Sellers shall place the Vessel in drydock at the port of delivery for inspection by the Classification Society of the Vessel’s underwater parts below the deepest load line, the extent of the inspection being in accordance with the Classification Society’s rules. If the rudder, propeller, bottom or other underwater parts below the deepest load line are found broken, damaged or defective so as to affect the Vessel’s class, such defects shall be made good at the Sellers’ cost and expense to the satisfaction of the Classification Soceity without condition/recommendation**. In such event the Sellers are also to pay for the costs and expenses in connection with putting the Vessel in and taking her out of drydock, including the drydock dues and the Classification Society’s fees. The Sellers shall also pay for these costs and expenses if parts of the tailshaft system are condemned or found defective or broken so as to affect the Vessel’s class. In all other cases, the Buyers shall pay the aforesaid costs and expenses, dues and fees.

(c)If the Vessel is drydocked pursuant to Clause 6 (a)(ii) or 6 (b) above:

(i) The Classification Soceity may require survey of the tailshaft system, the extent of the survey being to the satisfaction of the Classification surveyor. If such survey is not required by the Classification Society, the Buyers shall have the option to require the tailshaft to be drawn and surveyed by the Classification Society, the extent of the survey being in accordance with the Classification Society’s rules for tailshaft survey and consistent with

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Copyright © 2012 Norwegian Shlpbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed In any form without the prior written permission of the Norwegian Shlpbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.	​
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​ the current stage of the Vessel’s survey cycle. The Buyers shall declare whether they require the tailshaft to be drawn and surrveyed not later than by the completion of the inspection by the Classification Soceity. The drawing and refitting of the tailshaft shall be arranged by the Sellers. Should any parts of the tailshaft system be condemned or found defective so as to affect the Vessel’s class, those parts shall be renewed or made good at the Sellers’ cost and expense to the satisfaction of Classification Soceity without condition/recommendation**.

(ii) The costs and expenses relating to the survey of the tailshaft system shall be borne by the Buyers unless the Classification Soceity requires such survey to be carried out or if parts of the system are condemned or found defective or broken so as to affect the Vessel’s class, in which case the Sellers shall pay these costs and expenses.

(iii) The Buyers’ representative(s) shall have the right to be present in the drydock, as observer(s) only without interfering with the work or decisions of the Classification Soceity surveyor.

(iv) The Buyers shall have the right to have the underwater parts of the Vessel cleaned and painted at their risk, cost and expense without interfering with the Sellers’ or the Classification Soceity surveyor’s work, if any, and without affecting the Vessel’s timely delivery. If, however, the Buyers’ work in drydock is still in progress when the Sellers have completed the work which the Sellers are required to do, the additional docking time needed to complete the Buyers’ work shall be for the Buyers’ risk, cost and expense. In the event that the Buyers’work requires such additional time, the Sellers may upon completion of the Sellers’ work tender Notice of Readiness for delivery whilst the Vessel is still in drydock and, notwithstanding Clause 5(a), the Buyers shall be obliged to take delivery in accordance with Clause 3 (Payment), whether the Vessel is in drylock or not.

*6 (a) and 6 (b) are alernatives; delete whichever is not applicable. In the absence of deletions, alternatives 6 (a) shall apply.

**Notes or memoranda, if any, in the surveyor’s report which are accepted by the Classification Soceity without condition/recommendation are not to be taken into account.

7. ​ ​Spares, bunkers and other items **7.**SparesTbunlier-s-and-other items

The Seller shall deliver the Vessel to the Buyers with everything belonging to her on board and on shore. All spare parts and spare equipment including spare tail end shaft(s) and/or spare propeller(s)/propeller blade(s), if any, belonging to the Vessel at the time of inspection used or unused, whether onboard or not shall become the Buyers’ property, but spares on order are excluded. Forwarding charges, if any, shall be for the Buyers’ account. The Sellers are not required to replace spare parts including spare tail end shaft(s) and spare propeller(s)/propeller blade(s) which are taken out of spare and used as replacement prior to delivery, but the replaced items shall be the property of the Buyers. Unused stores and provisions shall be included in the sale and be taken over by the Buyers without extra payment.

Library and forms exclusively for use in the Sellers’ vessel(s) and captain’s, officers’ and crew’s personal belongings including the slop chest are excluded from the sale without compensation, as well as the following additions items:       (include list)

Items on board which are on hire or owned by third parties, listed as follows, are excluded from the sale without compensation:        (include list)

Items on board at the time of inspection delivery which are on hire or owned by third parties, not listed above, shall remain with be replaced or procured by the Sellers prior to delivery at their cost and expense. The Buyers shall take over remaining bunkers and unused lubricating and hydraulic oils and greases in storage tanks and unopened drums and pay either:

Any remaining bunkers and unuesd lubricating and hydraulic oils and greases in storage tanks and unopened  drums and spare parts shall remain the property of the Sellers.

(a)*	the actual net price (excluding barging expenses) as evidenced by invoices or vouchers; or
(b)*	the current net market price (excluding barging expenses) at the port and date of delivery of the Vessel or, if unavailable, at the nearest bunkering port,
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for the quantities taken over.

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Copyright © 2012 Norwegian Shlpbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed In any form without the prior written permission of the Norwegian Shlpbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.	​
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Payment under this Clause shall be made at the same time and place and in the same currency as the Purchase Price.

“inspection” in this Clause  7, shall mean the Buyers’ inspection according to Clause 4(a) or 4(b) (inspection), if applicable. If the Vessel is taken over without inspection, the date of this Agreement shall be the relevant date.

*(a) and (b) are-alternatives, delete whichever is not applicable. In the absence of deletions alternative(a) shall apply.

8.	Documentation

The place of closing: to be mutually agreed

(a)	In exchange for payment of the Purchase Price the Sellers shall provide the Buyers with the following delivery documents that shall be listed in an addendum to this agreement, namely “Addendum No.1: list of delivery documents”:

(i) Legal Bill(s) of Sale in a form recordable in the Buyers’ Nominated Flag State, transferring title of the Vessel and stating that the Vessel is free from all mortgages, encumbrances and maritime liens or any other debts whatsoever, duly notarially attested and legalised or apostilled, as required by the Buyers’ Nominated Flag State;

(ii) Evidence that all necessary corporate, shareholder and other action has been taken by the Sellers to authorise the execution, delivery and performance of this Agreement;

(iii) Power of Attorney of the Sellers appointing one or more representatives to act on behalf of the Sellers in the performance of this Agreement, duly notarially attested and legalized or apostilled (as appropriate);

(iv) Certificate or Transcript of Registry issued by the competent authorities of the flag state on the date of delivery evidencing the Sellers’ ownership of the Vessel and that the Vessel is free registered encumbrances and mortgages, to be faxed or e-mailed by such authority to the closing meeting with the original to be sent to the Buyers as soon as possible after delivery of the Vessel;

(v) Declaration of Class or (depending on the Classification Society) a Class Maintenance Certificate issued within three (3) Banking Days prior to delivery confirming that the Vessel is in Class free of condition/recommendation;

(vi) Certificate of Deletion of the Vessel from the Vessel’s registry or other official evidence of deletion appropriate to the Vessel’s registry at the time of delivery, or, in the event that the registry does not as a matter of practice issue such documentation immediately, a written undertaking by the Sellers to effect deletion from the Vessel’s registry forthwith and provide a certificate or other official evidence of deletion to the Buyers promptly and latest within four (4) weeks after the Purchase Price has been paid and the Vessel has been delivered;

(vii) A copy of the Vessel’s Continous Synopsis Record certifying the date on which the Vessel ceased to be registered with the Vessel’s registry, or, in the event that the registry does not as a matter of practice issue such certificate immediately, a written undertaking from the Sellers to provide the copy of this certificate promptly upon it being issued together with evidence of submission by the Sellers of a duly executed Form 2 stating the date on which the Vessel shall cease to be registered with the Vessel’s registry;

(viii) Commercial Invoice for the Vessel;

(ix) Commercial Invoice(s) for bunkers, lubricating and hydraulic oils and greases;

(x) A copy of the Sellers’ letter to their satellite communication provider cancelling the Vessel’s communications contract which is to be sent immediately after delivery of the Vessel;

(xi) Any additional documents as may reasonably be required by the competent authorities of the Buyers’ Nominated Flag State for the purpose of registering the Vessel, provided the Buyers notify the Sellers of any such documents as soon as possible after the date of his Agreement; and

(xii) The Sellers’ letter of confirmation that to the best of their knowledge, the Vessel is not black listed by any nation or international organisation.

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Copyright © 2012 Norwegian Shlpbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed In any form without the prior written permission of the Norwegian Shlpbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.	​
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(b)	At the time of delivery the Buyers shall provide the Sellers with: the delivery documents that shall be listed in an addendum to this Agreement, namely "Addendum No.1:list of delivery documents".

(i) Evidence that all necessary corporate, shareholder and other action has been taken by the Buyers to authorise the execution, delivery and performance of this Agreement; and

(ii) Power of Attorney of the Buyers appointing one or more representatives to act on behalf of the Buyers in the performance of this Agreement, duly notarially attested and legalised or apostilled (as appropriate).

(c)	If any of the documents referred tolisted in Sub clauses (a) and (b) above are not in the English language they shall be accompanied by an English translation by an authorised translator or certified by a lawyer qualified to practice in the country of the translated language.
(d)	The Parties shall to the extent possible exchange copies, drafts or samples of the documents listed in sub clause (a) and Sub clause (b) above for review and comment by the other party not later than       (state number of days), or if left blank, nine (9) days prior to the Vessel’s intended date of readiness for delivery as notified by the Sellers pursuant to Clause 5(b) of this Agreement.
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(e)	Concurrent with the exchange of documents in Sub clause (a) and Sub clause (b) above, the Sellers shall also hand to the Buyers the classification certificate(s) as well as all plans, drawings and manuals, (excluding ISM/ISPS manuals), which are on board the Vessel. Other certificates which are on board the Vessel shall also be handed over to the Buyers unless the Sellers are required to retain same, in which case the Buyers have the right to take copies.
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(f)	Other technical documentation which may be in the Sellers’ possession shall promptly after delivery be forwarded to the Buyers at their expense, if they so request. The Sellers may keep the Vessel’s log books but the Buyers have the right to take copies of same.
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(g)	The Parties shall sign and deliver to each other a Protocol of Delivery and Acceptance confirming the date and time of delivery of the Vessel from the Sellers to the Buyers.
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9.	Encumbrances
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The Sellers warrant that the Vessel, at the time of delivery, is free from all charters, encumbrances, mortgages and maritime liens or any other debts whatsoever, and is not subject to Port State or other administrative detentions. The Sellers hereby undertake to indemnify the Buyers against all consequences of claims made against the Vessel which have been incurred prior to the time of delivery.

10.	Taxes, fees and expenses

Any taxes, fees and expenses in connection with the purchase and registration in the Buyers' Nominated Flag State shall be for the Buyers' account, whereas similar charges in connection with the closing of the Sellers' register shall be for the Sellers' account.

11.	Condition on delivery

The Vessel with everything belonging to her shall be at the Sellers' risk and expense until she is delivered to the Buyers, but subject to the terms and conditions of this Agreement she shall be delivered and taken over as is, where ius at the delivery, notwithstanding any term or condition to the contrary in this Agreement. she was at the time of inspection, fair wear and tear excepted.

However, the Vessel shall be delivered free of cargo and free of stowaways with her Class maintained without condition/recommendation*, free of average damage affecting the Vessel’s class, and with her classification certificates and national certificates, as well as all other certificates the Vessel had at the time of inspection, valid and unextended without condition/recommendation* by the Classification Society or the relevant authorities at the time of delivery.

“Inspection” in this Clause 11, shall mean the Buyers’ inspection according to Clause 4(a) or 4(b) (Inspections), if applicable. If the Vessel is taken over without inspection, the date of this Agreement shall be the relevant date.

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Copyright © 2012 Norwegian Shlpbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed In any form without the prior written permission of the Norwegian Shlpbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.	​
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​ *Notes and memoranda, if any, in the surveyor’s report which are accepted by the Classification Society without condition/recommendation are not to be taken into account.

12.	Name/markings

Upon delivery the Buyers undertake to change the name of the Vessel and alter funnel markings.

13.	Buyers’ default

Should the Deposit not be lodged in accordance with Clause 2 (Deposit), the Sellers have the right to cancel this Agreement, and they shall be entitled to claim compensation for their losses and for all expenses incurred together with interest.

Should the Purchase Price not be paid in accordance with Clause 3 (Payment), the Sellers have the right to cancel this Agreement and, in which case the Deposit together with interest earned, if any, shall be released to the Sellers. If the Deposit does not cover their loss, the Sellers shall be entitled to claim further compensation for their losses and for all expenses incurred together with interest.

14.	Sellers' default

Should the Sellers fail to give Notice of Readiness in accordance with Clause 5(b) or fail to be ready to validly complete a legal transfer by the Cancelling Date the Buyers shall have the option of cancelling this Agreement. If after Notice of Readiness has been given but before the Buyers have taken delivery, the Vessel ceases to be physically ready for delivery and is not made physically ready again by the Cancelling Date and new Notice of Readiness given, the Buyers shall retain their option to cancel. In the event that the Buyers elect to cancel this Agreement, the Deposit together with interest earned, if any, shall be released to them immediately.

Should the Sellers fail to give Notice of Readiness by the Cancelling Date or fail to be ready to validly complete a legal transfer as aforesaid they shall make due compensation to the Buyers for their loss and for all expenses together with interest if their failure is due to proven negligence and whether or not the Buyers cancel this Agreement.

15.	Buyers’ representatives

After this Agreement has been signed by the Parties and the Deposit has been lodged, the Buyers have the right to place two (2) representatives on board the Vessel at their sole risk and expense.

These representatives are on board for the purpose of familiarisation and in the capacity of observers only, and they shall not interfere in any respect with the operation of the Vessel. The Buyers and the Buyers’ representatives shall sign the Sellers’ P&I Club’s standard letter of indemnity prior to their embarkation.

16.	Law and Arbitration
(a)*	This Agreement shall be governed by and construed in accordance with English law and any dispute arising out of or in connection with this Agreement shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause.
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The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced.

The reference shall be to three arbitrators. A party wishing to refer a dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other party requiring the other party to appoint its own arbitrator within fourteen (14) calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the fourteen (14) days specified. If the other party does not appoint its own arbitrator and give notice that it has done so within the fourteen (14) days specified, the party referring a dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on both Parties as if the sole arbitrator had been appointed by agreement.

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Copyright © 2012 Norwegian Shlpbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed In any form without the prior written permission of the Norwegian Shlpbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.	​
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​ In cases where neither the claim nor any counterclaim exceeds the sum of US$100,000 the arbitration shall be conducted In accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced.

(b)*

This Agreement shall be governed by and construed in accordance with Title 9 of the United States Code and the substantive law (not including the choice of law rules) of the State of New York and any dispute arising out of or in connection with this Agreement shall be referred to three (3) persons at New York, one to be appointed by each of the parties hereto, and the third by the two so chosen; their decision or that of any two of them shall be final, and for the purposes of enforcing any award, judgment may be entered on an award by any court of competent jurisdiction. The proceedings shall be conducted in accordance with the rules of the Society of Maritime Arbitrators, Inc.

In cases where neither the claim nor any counterclaim exceeds the sum of US$100,000 the arbitration shall be conducted in accordance with the Shortened Arbitration Procedure of the Society of Maritime Arbitrators, Inc.

(c)	This Agreement shall be governed by and construed in accordance with the laws of (state place) and any dispute arising out of or in connection with this Agreement shall be referred to arbitration at (state place), subject to the procedures applicable there.

*16(a), 16(b) and 16(c) are alternatives; delete whichever is not applicable. In the absence of deletions, alternative 16(a) shall apply.

17.	Notices

All notices to be provided under this Agreement shall be in writing.

Contact details for recipients of notices are as follows:

For the Buyers: FOUR LAND (PANAMA) S.A., Panama,   : 31st Street, No.3-80, P.O.Box 7412, Panama City, Panama, c/o DounKisen Co., Ltd, 1307-8 Koh Goh Namikata-cho, Imabari-city, Ehime Pref, Japan

Att: Takeomi Yagi /Tel +81-898-41-7733, Fax: +81-898-41-6011, E-mail: sale-purchase@doun.co.ip

For the Sellers: Øystein Emberland, Chief Financial Officer (CFO) / Knutsen NYK Offshore Tankers AS Smedasundet 40, P.O.Box 2017, 5504 Haugesund, Norway, Tel: +47 52 70 40 13, Cel: +47 95 20 05 14, E-mail: oem@knotgroup.com

18.	Entire Agreement

The written terms of this Agreement comprise the entire agreement between the Buyers and the Sellers in relation to the sale and purchase of the Vessel and supersede all previous agreements whether oral or written between the Parties in relation thereto.

Each of the Parties acknowledges that in entering into this Agreement it has not relied on and shall have no right or remedy in respect of any statement, representation, assurance or warranty (whether or not made negligently) **** other than as is expressly set out in this Agreement.

Any terms implied into this Agreement by any applicable statute or law are hereby excluded to the extent that such exclusion can legally be made. Nothing in this Clause shall limit or exclude any liability for fraud.

19.	Confidentially

This Agreement and all details contained therein are to be kept strictly private and confidential by the Parties.

20.

This Agreement is subiect to the parties entering into a quiet enjoyment agreement (the "QEL") on the same terms and conditions as the quiet enjoyment agreement entered into in relation to the vessel named "Raquel Knutsen" with IMO no 9685396 with only logical adjustments being made therefrom and the Barecon 2001 on terms to be agreed. The Barecon 2001 for the Chartering back of the Vessel and the QEL shall form an integral part of this Agreement. Should the parties for any reason whatsoever not enter into the Barecon 2001 or the QEL, or if the said Barecon2001 or QEL does not become effective or become null and void prior to delivery of the Vessel, this Agreement shall terminate and

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Copyright © 2012 Norwegian Shlpbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed In any form without the prior written permission of the Norwegian Shlpbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.	​
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​ become null and void and neither party shall have any claims of whatsoever nature against the other in respect of this Agreement or otherwise.

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For and on behalf of the Sellers			For and on behalf of the Buyers
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/s/ Yuji Tsuboi		​	/s/ Genji Ohkouchi
Name:	Yuji Tsuboi	​	Name:	Genji Ohkouchi
Title:	Attorney-in-fact	​	Title:	President

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Copyright © 2012 Norwegian Shlpbrokers’ Association. All rights reserved. Published by BIMCO. No part of this BIMCO SmartCon document may be copied, reproduced or distributed In any form without the prior written permission of the Norwegian Shlpbrokers’ Association. Explanatory notes are available from BIMCO at www.bimco.org. Adopted by BIMCO in 1956, revised 1966, 1983, 1986/87, 1993 and 2012.	​
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Exhibit 4.3

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SPECIFIC TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE THEY ARE BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH FIVE ASTERISKS (*****).

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​	STANDARD BAREBOAT CHARTER	PART I

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1.   Shipbroker<br><br>Japan Shipping Services Co., Ltd.	2.   Place and date<br><br>Haugesund, 20th June, 2022
3.   Owners/Place of business (CI. 1)<br><br>FOUR LAND (PANAMA) S.A. 31st Street, No.3-80, P.O.Box 7412, Panama City, Panama Performance to be guaranteed by Doun Kisen Co., Ltd as per performance guarantee	4.   Bareboat Charterers/Place of business (CI. 1)<br><br>Knutsen Shuttle Tankers 15 AS Smedasundet 40 Postbox 2017 N-5504 Haugesund, Norway Performance to be guaranteed by KNOT Offshore Partners LP as per performance guarantee
5.   Vessel’s name, call sign and flag (Cl. 1 and 3)<br><br>Name: M.T. Torill Knutsen Flag: NIS IMO: 9630030
6.   Type of Vessel<br><br>Crude oil/ Shuttle tanker	7.   GT/NT<br><br>GT: 80,850 NT: 36,065
8.   When/Where built<br><br>November 2013 HYUNDAI HEAVY INDUSTRIES	9.   Total DWT (abt.) in metric tons on summer<br>freeboard<br><br>123,166DWT
10. Classification Society (Cl. 3)<br><br>DNV (Det Norske Veritas)	11. Date of last special survey by the Vessel’s<br>classification society<br><br>N/A
12. Further particulars of Vessel (also indicate minimum number of months’ validity of class certificates agreed acc. To Cl. 3)<br><br>N/A
13. Port or Place of delivery (Cl. 3)<br><br>See Clause 32	14. Time for delivery (Cl. 4)<br><br>See Clause 32	15. Cancelling date (Cl. 5)<br><br>See Clause 32
16. Port or Place of redelivery (Cl. 15)	17. No. of months’ validity of trading and class<br>certificates upon redelivery (Cl. 15)
Worldwide always within Institute Warranty Limits(IWL)	Three (3) months, or less where part of customary renewal procedures
18. Running days’ notice if other than stated in Cl. 4	19. Frequency of dry-docking (Cl. 10(g))
See Clause 32	As required by class
20. Trading limits (Cl. 6)<br><br>Worldwide Trading always within Institute Warranty Limits (IWL). However, any country designated pursuant to any International (including United nations, or United States or European Union or member state of European Union or United Kingdom or Japan, Panama, Malta) or regulation imposing trade and economic sanctions, prohibitions or restrictions (which may be amended from time to time during the Charter Period), North Korea, Israel, and other countries sanctioned / boycotted / banned by UN or USA, Japan, Panama, Malta, to be excluded from trading. If the situation of the country(ies) or a country not including in trading is changed, both parties will discuss. War or warlike zone to be excluded. Charterers may breach IWL against payment of additional premium/expense prior to Charterers’ written notice to the Owners.
21. Charter period (Cl. 2)	22. Charter hire (CI. 11)
Ten (10) years from the time of delivery	*****
23. New class and other safety requirements (state percentage of Vessel’s insurance value acc. To Box 29)(Cl. 10(a)(ii))<br><br>See Clause 40

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Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org. First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.

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24. Rate of interest payable acc. To CI. 11 (f) and, if applicable, acc. To PART IV	25. Currency and method of payment (Cl. 11)
2.00%	United States Dollars (see also clause 11)
26. Place of payment; also state beneficiary and bank account (CI. 11)	27. Bank guarantee/bond (sum and place) (Cl. 24) (optional)
FOUR LAND (PANAMA) S.A.	N/A
28. Mortgage(s), if any (state whether 12(a) or (b) applies; if 12(b) applies state date of Financial Instrument and name of Mortgagee(s)/Place of business) (Cl. 12)	29. Insurance (hull and machinery and war risks) (state value acc. To Cl. 13(f) or, if applicable, acc. To Cl. 14(k)) (also state if Cl. 14 applies)
See Clause 36	Se Clause 37
30. Additional insurance cover, if any, for Owners’ account limited to (Cl. 13(b) or, if applicable, Cl. 14(g))	31. Additional insurance cover, if any, for Charterers’ account limited to (Cl. 13(b) or, if applicable, Cl. 14(g))
N/A	N/A
32. Latent defects (only to be filled in if period other than stated in Cl. 3)	33. Brokerage commission and to whom payable (Cl. 27)
N/A	N/A
34. Grace period (state number of clear banking days) (CI. 28)	35. Dispute Resolution (state 30(a), 30(b) or 30(c); if 30(c) agreed Place of Arbitration must be stated (CI. 30)
Three (3) banking days (as defined in clause 1)	(a) English law, London arbitration clause 30(a)
36. War cancellation (indicate countries agreed) (Cl. 26(f))
N/A
37. Newbuilding Vessel (indicate with “yes” or “no” whether PART III applies) (optional)	38. Name and place of Builders (only to be filled in if PART III applies)
N/A	N/A
39. Vessel’s Yard Building No. (only to be filled in if PART III applies)	40. Date of Building Contract (only to be filled in if PART III applies)
N/A	N/A
41. Liquidated damages and costs shall accrue to (state party acc. To CI. 1)
**a)**N/A<br><br>**b)**N/A<br><br>**c)**N/A
42. Hire/Purchase agreement (indicate with “yes” or “no” whether PART IV applies) (optional)	43. Bareboat Charter Registry (indicate with “yes” or “no” whether PART V applies) (optional)
See Clause 39	Yes
44. Flag and Country of the Bareboat Charter Registry (only to be filled in if PART V applies)	45. Country of the Underlying Registry (only to be filled in if PART V applies)
Norwegian International ship registry (NIS), Norway	Malta ship registry, Malta
46. Number of additional clauses covering special provisions, if agreed
Clause 32 to 47

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PREAMBLE - It is mutually agreed that this Contract shall be performed subject to the conditions contained in this Charter which shall include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further. It is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and only form part of this Charter if expressly agreed and stated in Boxes 37, 42 and 43. If PART III and/or PART IV and/or PART V apply, it is further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III and/or PART IV and/or PART V to the extent of such conflict but no further.

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​

Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org. First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.

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Signature (Owners)		Signature (Charterers)
FOUR LAND (PANAMA) S.A.		Knutsen Shuttle Tankers 15 AS
​	/s/ Genji Ohkouchi	​	/s/ Yuji Tsuboi
Name:	Genji Ohkouchl	Name:	Yuji Tsuboi
Title:	President	Title:	Attorney-in-fact

​

​

​ Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org. First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.

(c)	If for any reason the Owners become entitled under the Building Contract to reject the Vessel the Owners shall, before exercising such right of rejection, consult the Charterers and thereupon
(i)	if the Charterers do not wish to take delivery of the Vessel they shall inform the Owners within seven (7) running days by notice in writing and upon receipt by the Owners of such notice this Charter shall cease to have effect; or
---	---
(ii)	if the Charterers wish to take delivery of the Vessel they may by notice in writing within seven (7) running days require the Owners to negotiate with the Builders as to the terms on which delivery should be taken and/or refrain from exercising their right to rejection and upon receipt of such notice the Owners shall commence such negotiations and/or take delivery of the Vessel from the Builders and deliver her to the Charterers;
---	---
(iii)	in no circumstances shall the Charterers be entitled to reject the Vessel unless the Owners are able to reject the Vessel from the Builders;
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(iv)	if this Charter terminates under sub clause (b) or (c) of this Clause, the Owners shall thereafter not be liable to the Charterers for any claim under or arising out of this Charter or its termination.
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(d)	Any liquidated damages for delay in delivery under the Building Contract and any costs incurred in pursuing a claim therefor shall accrue to the account of the party stated in Box 41(c) or if not filled in shall be shared equally between the parties.
---	---
3.	Guarantee Works
---	---

if not otherwise agreed, the Owners authorise the Charterers to arrange for the guarantee works to be performed in accordance with the building contract terms, and hire to continue during the period of guarantee works. The Charterers have to advise the Owners about the performance to the extent the Owners may request.

**4.**Name of Vessel

The name of the Vessel shall be mutually agreed between the Owners and the Charterers and the Vessel shall be painted in the colours, display the funnel insignia and fly the house flag as required by the Charterers.

**5.**Survey on Redelivery

The Owners and the Charterers shall appoint surveyors for the purpose of determining and agreeing in writing the condition of the Vessel at the time of redelivery.

Without prejudice to Clause 15 (Part II), the Charterers shall bear all survey expenses and all other costs, if any, including the cost of docking and undocking, if required, as well as all repair costs incurred. The Charterers shall also bear all loss of time spent in connection with any docking and undocking as well as repairs, which shall be paid at the rate of hire per day or pro rata.

​

Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.

First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.

​

​

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ADDITIONAL CLAUSES TO M/V “TORILL KNUTSEN” BAREBOAT CHARTER PARTY DATED 20TH JUNE, 2022

32.	MOA and Delivery

The Vessel shall be delivered from the Owners to the Charterers, and delivery shall take place on the place, date and hour at which the Vessel is delivered to, and taken over by, the Owners pursuant to the MoA.

In the event the Vessel is not delivered to and taken over by the Owners pursuant to the MoA for any reason whatsoever, this Charter shall terminate and be considered as null and void between the parties, **** and neither of the parties shall be liable towards, or be entitled to make any claims of whatsoever nature against the other Party hereunder. Provided the Vessel has been delivered to the Owners in accordance with the terms of the MOA, the Charterers shall not be entitled to refuse terms of acceptance of delivery of the Vessel under this Charter.

The condition of the Vessel upon delivery shall be identical to that in which the Vessel is delivered to the Owners pursuant to the MoA. Upon and after delivery of the Vessel, the Owners shall have no liability whatsoever for any fault or deficiency in their description of the Vessel or for any defeats in the Vessel regardless of whether such defect were apparent or latent at the time of delivery and the Charterers shall not be entitled to make any claim against the Owners in respect of any conditions, representations or warranties whether express or implied as to the condition for the Vessel or the seaworthiness of the Vessel.

In the event that the Owners, as the Buyers in the MOA, exercise their right of cancellation of the MOA under and pursuant to any provisions therein specially permitting the Owners, to do so, then this Charter shall be terminated without any further liability between the Parties under this Charter.

33.	Flag and Name

The Charterers shall, subject only to prior notification to the relevant authorities of the jurisdiction in which for the time being the Vessel is registered, be entitled from time to time to change the name of the Vessel. During the Charter period, the Charterers shall have the liberty to paint the Vessel in their own colors, install and display their funnel insignia and fly their own house flag. Painting and installment shall be at Charterers’ expenses and time including the cost incurred by the Owners.

The Owners shall have no right to change the name and the flag of the Vessel during the Charter Period.

34.	Flag State and Class

The Vessel shall upon the Delivery Date and during the Charter be registered in the name of the Owners under the Maltese flag at Charterers’ expense. The Owners shall have no right either to transfer the flag of the Vessel from Maltese flag to any other registry or to require the Charterers to transfer the Vessel’s classification society.

The Charterers shall, at any time after the Delivery Date and at the Charterers’ expense, have the right to transfer the Vessel’s classification society from Det Norske Veritas to any other classification society being a member of the International Association of Classification Societies.

Furthermore, in the event that the Charterers need to change the flag of the Vessel, the Charterers can change the flag to a flag acceptable to the Owners (acting reasonably) and with the Owners’ consent (such consent not to be unreasonably withheld or delayed), provided however that any expenses (including, but not limited to, legal charges in respect of relevant finance documents for the Mortgagee relating to the flag change) shall be for the Charterers’ account.

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ADDITIONAL CLAUSES TO M/V “TORILL KNUTSEN” BAREBOAT CHARTER PARTY DATED 20TH JUNE, 2022

35.	Transfer of Ownership

The Owners undertake that there will be no change in the legal or beneficial ownership of the Owners nor the Guarantor during the duration of the Charter without Charterers prior written approval, which is not to be unreasonably withheld or delayed.

Any change in the legal ownership of the Charterers without the Owners’ prior written approval, which not to be unreasonably withheld or delayed, shall entitle the Owners to terminate the Charter with immediate effect however intragroup restructuring is allowed provided the charterer is a, directly or indirectly, wholly owned or a controlled subsidiary of KNOT Offshore Partners L.P.

36.	Mortgage and Assignment

Excepting that the Owners shall be entitled to assign their rights, title and interest in and to this Charter by way of security to The Iyo Bank, Ltd. (the Mortgagee), neither Party shall assign its right or obligations or any part thereof to any third parties without the written consent of the other.

The Owners have the right to register a first priority mortgage on the Vessel in favor of the Mortgagee securing a loan under the relevant loan agreement (the “Loan Agreement”) under standard mortgage and security documentation but on the basis that the Owners undertake to procure from the Mortgagee a letter of quiet enjoyment in a form and substance satisfactory to the Charterers (the Letter of Quiet Enjoyment). Such loan amount and-mortgage amount shall never exceed the Outstanding BBC Principal Balance as per Schedule A as attached.

The Charterers agree to sign an acknowledgement of the Owners’ charter hire assignment (in form and substance satisfactory to the Charterers acting reasonably) or any other comparable document reasonably required by the Mortgagee, in favor of the Mortgagee (on the basis that this does not impose any greater liability to the Charterers than the liabilities they have under this Charter).

37.	Insurance

For Hull insurance purposes, the insured amount shall be an amount determined by the Charterers but shall from Delivery Date not be less than 110% of the Outstanding BBC Principal Balance (as set out in schedule A) at any time.

In respect of partial losses, any payment by Underwriters not exceeding USD 3,000,000 shall be paid directly to the Charterers who shall apply the same to effect the repairs in respect of which payment is made. Any moneys in excess of USD 3,000,000 payable under such insurance other than Total Loss shall be paid to the Charterers subject to the prior written consent of the Owners or the Owners’ bank but such consent shall not be unreasonably withheld or delayed. Such consent to be granted if the Owners are satisfied (acting reasonably) that all damage resulting from the partial loss will be made good and repaired and all liabilities in respect of repairing such damage will be discharged. If the Charterers or the Vessel's insurers request the Owners consent or authority to the insurers making payment to a ship repairer on account of repairs being made to the Vessel as a result of it suffering such a partial loss, then, the Owners shall not unreasonably withheld or delay giving such consent or authority. In the absence of such prior written consent the money shall be paid to the Owners or the Owners' bank. In case of repair work being expected within a range of USD 3,000,000 to USD 10,000,000, **** the Charters will inform the Owners of details in a timely manner

The Charterers shall upon the request of the Owners provide such information as may be reasonably requested by the Owners in relation to the insurances of the Vessel.

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​

SPECIFIC TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE THEY ARE BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH FIVE ASTERISKS (*****).

ADDITIONAL CLAUSES TO M/V “TORILL KNUTSEN” BAREBOAT CHARTER PARTY DATED 20TH JUNE, 2022

The Charters shall, not later than the Delivery Date, either take out and effect or procure that the Charterers take out and effect the following insurance at the Charters’ expense on and in respect of the Vessel and shall, throughout the Charter Period, maintain the said insurances effective with such reputable insurer or insurers at the Charterers' own expense.

(a)	Hull and Machinery insurance shall be taken out and maintained to be effective in the joint names of both the Charterers and the Owners as co-assured with the insurers against such fire and usual marine risks; and
(b)	P&I Club insurance shall be effected by an entry or entries of the Vessel with or in any P&I Club to protect and indemnify the Owners as co-assured and the Vessel against all P&I risks (including, but not limited to, pollution spillage and leakage risks).
---	---
38.	Optional Periods
---	---

There are no options to extend the Charter.

39.	Purchase of the Vessel by the Charterers
(a)	The Charterers (or their guaranteed nominee) may exercise their purchase option (each purchase option of the Vessel set out herein being referred to as the “Purchase Option”) to purchase the Vessel from the Owners at the end of the Charter Period, for a purchase price of ***** (*****).
---	---
(b)	If any event of default under the Loan Agreement (an “Event of Default”) occurs and is continuing under the Loan Agreement, the Owner shall notify the Charterer in writing that an Event of Default has occurred (such notice being called the “EoD Notice”) and within one (1) months after receipt of the EoD Notice, the Charterer shall have the **** option to purchase the Vessel at the purchase option price of the outstanding bareboat charter balance indicated against the relevant time set out in in the “Outstanding BBC Principal Balance as per Schedule A attached hereto, (initially being USD 112,000,000 on delivery date and ending with ***** at the end of the bareboat charter **** after 120 months), to be settled within six (6) months or any longer period accepted by the Mortgagee in writing (each purchase price set out in this paragraph (a) and (b) being called the “Purchase Option Price”) on a strictly “as is where is” basis. The Charterers shall pay such Purchase Option Price in cash to the Owners upon transfer of title to the Vessel pursuant to the Sale Contract under clause (c) below.
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(c)	A separate sale and purchase contract (the “Sale Contract”) shall be agreed and executed between the Charterers (or the buyer nominated by the Charterers), the Mortgagee in case of (b) above) and the Owners as seller on standard Norwegian Saleform 2012 terms.
---	---
(d)	Notwithstanding the provisions of Clause 44(b) any Sale Contract shall include the following provisions:
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​

ADDITIONAL CLAUSES TO M/V “TORILL KNUTSEN” BAREBOAT CHARTER PARTY DATED 20TH JUNE, 2022

(i)	the Owners guarantee that the Vessel, at the time of delivery, is free from all charters, encumbrances, mortgages, maritime liens or other debts or liabilities whatsoever. Should any claims which have been incurred prior to the time of delivery be made against the Vessel, the Owners shall indemnify the buyer against all consequences of such claims;
(ii)	the Owners shall furnish the buyer with documentation requested by the buyer including but not limited to:
---	---
a.	evidence of the authorisation and capacity for the Owners to sell the Vessel and enter into all documentation in connection with such sale including but not limited to resolutions of the shareholders of the Owners, resolutions of the board of directors of the Owners and any power of attorney under which the Owners' representatives sign any of the delivery documents (in each case notarised and apostilled or legalised), original certificates of good standing in respect of the Owners and certified true copies of the certificate of incorporation and articles of association (or equivalent) of the Owner;
---	---
b.	documentation validly transferring title to the Vessel to the buyer;
---	---
c.	any documentation required for the registration of the Vessel on the buyer's chosen flag under the name of the buyer;
---	---
d.	evidence that the Vessel is free from all registered encumbrances and has been (or will be shortly after delivery) deleted from its current Flag State registry;
---	---
e.	evidence that the Vessel has class maintained status with the Classification Society;
---	---
f.	documentation usually provided by a seller to a buyer in a second hand vessel sale and purchase transaction including but not limited to letters undertaking the vessel is not boycotted or blacklisted by any nation or organisation, undertakings to deliver deletion certificates and closed CSR forms within four (4) weeks of the delivery if not provided at delivery and commercial invoices for the Vessel and all other items purchased by the buyer at delivery; and
---	---
g.	all classification, technical and other documents in the possession of the Owners in relation to the Vessel;
---	---
(iii)	any taxes, notarial, consular and other charges and expenses connected with the purchase and registration under buyer's flag shall be for buyer's account. Any taxes, consular and other charges and expenses connected with closing of the Vessels current flag, shall be for sellers' account; and
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ADDITIONAL CLAUSES TO M/V “TORILL KNUTSEN” BAREBOAT CHARTER PARTY DATED 20TH JUNE, 2022

(iv)	all spares, bunkers and lubricants oils on board and on order shall be included in the Purchase Option Price.
(e)	If following the expiry of the Charter Period, the Owners from its act or omission fails to transfer title to the Vessel to the Charterers, the Owners shall within 10 days of the Charterers' written demand:
---	---
(i)	pay to the Charterers the amount by which the fair market value of the Vessel (as determined by a broker appointed by the Charterers) exceeds the Purchase Option Price; and
---	---
(ii)	keep the Charterers indemnified for all documented losses and expenses incurred by the Charterers due to the failure to transfer title.
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40.	Improvements and Additions
---	---

The Charterers shall maintain, equip and operate the Vessel so as to comply in all mutual respects with the provisions of all laws and regulations of the Vessels flag country and of any other country or jurisdiction within which the vessel may operate.

The Charterers shall have the right to fit additional equipment to the Vessel and to make one or more improvements and additions to the Vessel at their expense and risk.

The Charterers shall also have the right to make structural or non–severable improvements and additions to the Vessel at their own cost, expense and risk provided that such improvements and additions shall not, or be reasonably likely to, diminish the market value of the Vessel or prejudice its marketability, in either case, in a material way.

With reference to the above second and third paragraphs, in the event that the Charterers fit additional equipment and/or make improvement, the Charterers shall give notice to the Owners of its details in order to secure Owners approval thereof which not to be unreasonable withheld or delayed before completion of such fitting and/or improvement.

In the event of any structural changes to the Vessel or installation of new equipment becoming necessary for the continued operation of the Vessel by reason of new class requirements or by compulsory legislation, such as but not limited to Ballast Water Treatment System, the cost of measures needed for compliance shall be for the Charterers' account

41.	Quiet Enjoyment
(a)	As long as the Charter is in full force and effect and no default has occurred thereunder which entitle the Owner to lawfully terminate the Charter and withdraw the Vessel from service under the Charter, Owners agree and undertake that during the period of the Charter they will not interfere with the quiet use, possession and enjoyment of the Vessel by the Charterers and, if required, their sub-charterers.
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(b)	The Owners shall ensure that on entering into any Financial Instrument, the prospective Mortgagee of the Vessel provides the Charterers and, if required, their sub-charterers, with a Letter of Quiet Enjoyment in accordance with the terms of Clause 36, always provided that such quiet enjoyment letters shall be in a form and substance satisfactory to the Charterer, sub-charterer (if it requires) and Mortgagee and the Charterers undertake to use reasonable efforts to avoid the requirement for
---	---

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ADDITIONAL CLAUSES TO M/V “TORILL KNUTSEN” BAREBOAT CHARTER PARTY DATED 20TH JUNE, 2022

quiet enjoyment letters. In addition to the provisions of Clause 36, the Quiet Enjoyment Letter will confirm that to the extent that the Charterers have paid to the Owners the Outstanding BBC Principal Balance as per Schedule A attached hereto, payable on such date, the Mortgagee will immediately release and discharge the mortgages and all Financial Instrument.

**42.**Total Loss Proceeds

Upon the occurrence of a total loss of the type referred to in clause 13(d) of this Charter all insurance proceeds in respect of that loss shall be paid to the Mortgagee to apply towards the Outstanding BBC Principal Balance as per Schedule A attached hereto or if such amount is fully repaid, to the Owners who shall apply such proceeds, as follows;

(a)	Firstly, in payment of all the Owners’ and Charterers’ reasonable, properly incurred and documented costs incidental to the collection of the total loss proceeds;
(b)	Secondly, in retention by the Owners of all amounts of outstanding hire and interest due and owing to the Owners by the Charterers under this Charter at such time;
---	---
(c)	Thirdly, in retention by the Owners of an amount equal to the Outstanding BBC Principal Balance of the Owners at the relevant time of receipt of the total loss proceeds; and
---	---
(d)	Fourthly, any balance shall be promptly paid by the Owners to the Charterers.
---	---

For the purpose of this clause, Outstanding BBC Principal Balance means, at any relevant date, the amount set out in appendix 1 attached to this Charter during the period in which the date of receipt of the total loss proceeds occurs.

**43.**Familiarization

In the event that the Charterers have not exercised their purchase option and Charter Period expires, the Owners shall have the right to place two representatives onboard the Vessel prior to redelivery once the Charterers have given their thirty (30) days preliminary notice.

**44.**Extra Payments

In addition to above payments, the following costs are payable by the Charterers:

(a)	Any fees and expenses for flag registration of the Vessel in Malta and deletion of the flag registration of the Vessel in Malta.
(b)	Annual flag maintenance fees including tonnage tax of Malta are the Charterers account.
---	---
(c)	all other documentation and works required due to flag and ownership change, including change of DOC/SMC/ISSC/MLC/CLC, class certificates, change of country name on hull, change of radio and navigational aids registration, Annual Tonnage Tax of the flag country throughout the Charter period shall be for the Charterers' time and cost including agent fees. In case of a change of Ownership after delivery under this Charter for Owners matter or reason, these costs to be for Owners, account.
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**45.**Representations and Warranties

Each Party represents and warrants to the other Party that:

(a)	it is duly incorporated and validly existing and in good standing under the laws of its place of

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ADDITIONAL CLAUSES TO M/V “TORILL KNUTSEN” BAREBOAT CHARTER PARTY DATED 20TH JUNE, 2022

incorporation;

(b)	it has the corporate capacity, and has taken all corporate action and obtained all consents necessary for it, to execute and to comply with this Charter;
(c)	all the consents referred to in paragraph (b) above remain in force and nothing has occurred which makes any of them liable to revocation;
---	---
(d)	this Charter constitutes legal, valid and binding obligations enforceable against it in accordance with its terms;
---	---
(e)	The execution by it of this Charter and its compliance with this Charter will not involve or lead to a contravention of:
---	---

(i)any law or regulation;

(ii)its constitutional documents; or

(iii)any material contractual or other material obligation or material restriction which is binding on it or any of its assets.

**46.**General

(a)	The terms and conditions of this Charter shall not be varied otherwise than by an instrument in writing executed by or on behalf of the Owners and the Charterers.
(b)	If, at any time, any provision of this Charter is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions under the law of that jurisdiction nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.
---	---
(c)	This Charter may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of the Charter.
---	---
(d)	This Charter constitutes the entire agreement between the Parties and supersedes and extinguishes all previous agreements, promises, assurances, warranties, representations and understandings between them, whether written or oral, relating to its subject matter.
---	---
(e)	A person who is not a Party has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Charter.
---	---

**47.**Best Endeavour Clause

In the event of detrimental or unexpected considerable changes in the tax-laws, grossly and negatively effecting either the Owner and/or Charterer in the Ownership/Bareboat-chartering of the Vessel under this particular charter, both Owner and Charterer will with best endeavor and effort, be willing to sit down and discuss solutions that could remedy the situation. This would constitute no legal obligation on either part but be based on mutual respect and understanding of possible unexpected hardship endured by either party and to seek alternatives if both parties mutually give their consent.

*** End ***