The revenue growth and distribution increase are positive, but the sharp drop in net income due to non-cash depreciation and rising operating costs creates a mixed picture. The successful refinancing and Hedda acquisition support the credit story, but watch for margin pressure and the ability to maintain charter rates. The terminated $10/unit offer removes a near-term catalyst; the stock may trade on the underlying cash flow and refinancing progress.
Price Chart
Executive Summary
KNOT Offshore Partners reported Q2 2026 revenue growth of 7% to $92.1M in time charter and bareboat revenues, but net income fell 50% to $3.4M due to a sharp increase in depreciation from a change in useful life estimates and higher vessel operating expenses. The partnership raised its quarterly distribution to $0.075/unit and completed a $225M refinancing in August 2026, while also acquiring the Hedda Knutsen shuttle tanker in September 2026. The earnings decline is largely non-cash, but operating cash flow remained stable at $66.6M for the first half.
Key Facts
- Q2 2026 time charter and bareboat revenues rose 7% to $92.1M (from $85.9M in Q2 2025)
- Net income dropped 50% to $3.4M (from $6.8M), driven by depreciation increase to $42.1M (from $29.4M) due to useful life estimate change from 23 to 20 years
- EPS (common unit basic) fell to $0.05 from $0.15 year-over-year
- Quarterly common distribution raised to $0.075/unit (from $0.05 prior quarter)
- New $225M senior secured credit facility closed August 25, 2026, refinancing five vessels' existing loans due September 2026
- Acquired Hedda Knutsen on September 1, 2026 for net ~$24.4M (against $113M purchase price less $89.4M debt assumed)
- KNOT NYK purchased 1.25M Series A Preferred Units at $20/unit in June 2026; discussions on $10/unit acquisition offer terminated in March 2026
- Operating cash flow for H1 2026 was $66.6M, broadly stable vs $68.0M in H1 2025
- Total liquidity as of June 30, 2026: $143.3M including $95.3M cash and $48.0M undrawn RCF
Financial Impact
Revenue growth offset by non-cash depreciation increase; net income halved; cash flow stable; distribution increased by 50% from prior quarter.
Risk Factors
- Non-cash depreciation charges mask earnings; net income decline could weigh on sentiment
- $242.2M net current liability position requires ongoing refinancing success
- Upcoming maturities on Live Knutsen ($65.9M Oct 2026) and other facilities need to be addressed
- Customer concentration (Equinor 21%, Shell 19% of H1 revenues) exposes to single-customer risk
- EU ETS costs phased in at 100% in 2026, adding to operating expenses
Market Snapshot
Investment Themes
Documents Analyzed
This report is based on 2 SEC documents filed with EDGAR.
| Document | Accession Number |
|---|---|
| 6-K Filing (Primary) | 0001104659-26-106128 |
| Document: knop-20260630xex4d2.htm | 0001104659-26-106128 |
Track record builds as more directional reports settle.
Filters
| Type | Now | ||||
|---|---|---|---|---|---|
Sep 9, 2026 6w ago | 6-K | $11.48 $10.34 | ▼ −9.93% | ▼ −11.87% | $9.96 (−13.24%) |
Aug 26, 2026 8w ago | 6-K | $10.66 $11.18 | ▲ +4.88% | ▲ +3.67% | $9.96 (−6.57%) |
Jun 16, 2026 18w ago | Insider Buy | $10.23 $10.54 | ▲ +3.03% | ▲ +1.71% | $9.96 (−2.64%) |
Jun 10, 2026 19w ago | 6-K | $10.71 $10.64 | ▼ −0.65% | ▼ −4.28% | $9.96 (−7.00%) |
May 28, 2026 21w ago | 6-K | $11.00 $9.91 | ▼ −9.91% | ▼ −8.12% | $9.96 (−9.45%) |
Apr 17, 2026 27w ago | 20-F | $10.07 $10.88 | ▲ +8.02% | ▲ +2.65% | $9.96 (−1.11%) |
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