Good morning. And welcome to the KNOT Offshore Partners’ Fourth Quarter Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Arild Vik, CEO and CFO. Please go ahead, sir.

Thank you very much. Good morning. And welcome to KNOT Offshore Partners’ fourth quarter results presentation and I would like to go through the presentation that we -- that’s online. And I think, let’s just go straight into, well, page two is the Notice to Recipients in relation to forward-looking statements. And I will go straight into page three which is the highlights and recent events for the fourth quarter. The fourth quarter has been strong quarter for the Partnership. We generated net income of $5.9 million. That is affected by $4.2 million of unrealized derivative losses. So you will see in our numbers that all the topline results are well in line with and actually above expectations. So we generated operating income than $15.9 million, which is strong result. We generated adjusted EBITDA of $26.5 million and we generated distributable cash flow of $15.1 million. During this quarter we have completed refinancing of Fortaleza Knutsen and Recife Knutsen reducing low margins. And we have acquired Dan Cisne vessel both by KNOT our sponsor from Lauritzen in Denmark. This vessel is operating under a 12-year bareboat contract with Transpetro and this acquisition has taken place without taking up any new equity, was fully debt financed, although there is a $12 million seller credit from KNOT. In terms of market activity, shuttle tanker market continues to be active, you must remember that it’s a small market, so its not that many contracts is done every month, but our sponsor has been made one long-term contract with an international oil company to be disclosed and the build -- the vessel will be build at Cosco Zhousan in China. So we will after this have six defined vessels eligible for acquisition. We further informed the market that myself the CEO will step down…

[Operator Instructions] And our first question comes from Spiro Dounis of UBS. Please go ahead.

Hey. Good afternoon, Arild. Sorry to see you go, but just want to wish you best of luck in whatever you end up doing.

Thank you. Thank you.

So, first question, just wondering if you could talk to the tendering activity and maybe frame it relative to the level of activity that you saw before the global E&P CapEx cuts, so I realize that your business is largely locked in. But just trying to get a sense of how quickly the dropdown inventory can grow in this current market?

Well, I think that if we look at the projects that we were expecting to bid for the next couple of years, they’re already ongoing. So I don’t really see that there is a huge difference in what’s going to happen over the next couple of years. It’s more, of course, the long-term growth that is to be affected if the oil price should stay at low levels. I’m not really sure if current, which is that low anymore, I think, we are expecting fairly -- we are expecting some volatility on the oil price, obviously, the oil companies would then spend some time thinking through this. So but really in terms of what we would expect for the next couple of years. I don’t really see that this will affect us substantially, but then obviously, we’ll need to see what -- where the offshore oil business goes over the years. But even the replacement requirement is quite substantial and remembering that this is a small market. It --we are pretty confident that the growth in new project will be sufficient to sustain the good size growth here.

Great. Make sense. And I was just wondering, how should we be thinking about the timing and pace of dropdowns. Realizing it's somewhat unit-price dependent, unit price with the oil price drop took a hit, but now has bounced back pretty nicely. Just wondering if it's come back to a level where you'd feel comfortable issuing equity again to find drop-downs? And maybe how aggressive you'd be and how many drop downs you do per year at the current price or unit price environment?

Well I think there is a something we follow closely. We do -- lets say unless we step backwards in terms of pricing, we do envisage that something will happen during this year. But it’s obviously a continuing assessment that we are making. And I think that if you look at the six that’s now there, I suppose the best way of looking at that is that it will be spaced over the next couple of years.

Yeah. Thanks Arild.

[Operator Instructions] Our next question comes from Theresa Chen of Barclays Capital. Please go ahead.

Hi Arild. Just also wanted to echo and say thank you for your service and partnership and I wish you luck on all your future endeavors.

Thank you.

Going back to slide 16 of your presentation, when you talk about revising your long-term growth scenario, when do you think you’ll have an update more quantitatively on your growth projection for cash distribution?

Well, I think the issue now is that since the oil price move came pretty quickly or moved quite quickly end of last year. We’re seeing that the oil companies are now sort of reassessing their -- meaning that’s okay. For the next couple of years, I don’t see a lot of change. But obviously I think if the oil price stabilizes at levels 70 plus just to pick a number and then we will not really be that affected. And we are counting through now the number of vessels that we believe will -- we can rely on based -- using same methodology as we used when we did the IPO. And so far the number doesn’t look that different to us, but of course there are -- there is some more uncertainties especially when it -- you come to the oilfield that are far north and is more expensive to take out. So we don’t see any as I said any -- there is not a whole in the activity for the next couple of years. I think that’s the most important thing to say. And then, we will be -- based on when we get feel for what the oil companies are thinking in terms of their longer -- in the longer view, we will come up with that. And I would imagine we would come up with something within summer or something like that.

Got it. That’s very helpful. And then in the same line of thought, with backdrop of lower crude price environment, has this affected the market for third-party acquisitions at all?

That’s a good question. There are only a few -- we would be on the buying side, I think, something like that.

Okay.

We are not on the selling side. And basically, you have to ask the other guys. As you can see, when you look through the market space, there are very few there and whether they feel now that is going to take a longer for them to actually gain traction in this space. I really don’t know, I mean -- I think that’s the best answer I can give you.

Hi, Theresa. This is Bjorn. I just want to add that based on the review that we are not really hit by this oil price. We see activity continuing as normal. We see the next couple of years expanding as expected and when we say, we are going to revise our projections going forward that’s more to do with the growth from 2018 and onwards, how large the growth will be. We are quite sure there will be growth. So, we don’t see that this will tilt in the oil price. It really opens up lot of discussions in the market. Of course, we will always be interested as stated earlier.

Understood. Thank you very much, gentlemen.

Thank you.

At this time, I see no further questions. I would like to turn the conference back over to Arild Vik for any closing remarks.

Yes. Thank you very much. We appreciate that you have taken your time to be with us to go through our fourth quarter results. And we remain, as Bjorn says, we remain very confident that the shuttle tanker market is going to stay reasonably strong. In the short-run, we don’t see any major issues. In the longer term, we are also -- it is more the level of growth than anything else that we would be looking at. And again, thank you very much and we look forward to talking to you all again in three months time.

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