Hello, and welcome to today's KNOT First Quarter 2022 Earnings Results Conference Call. My name is Jordan, and I'll be coordinating your call today. [Operator Instructions] I'm now going to hand over to Gary Chapman, CEO to begin. Gary, please go ahead.

Thank you and welcome everybody to our 2022 first quarter earnings call. The earnings release and this presentation are already available on our website at knotoffshorepartners.com. Slide 2, as always, provides an important notice about the nature of our presentation today, and in particular that we include forward-looking statements made in good faith, but which contain risks and uncertainties, such that actual results may be materially different. The partnership does not have or undertake a duty to update any such forward-looking statements, and for further information, you may wish to read our annual and quarterly SEC filings. Please also be aware that our presentation includes certain non-US GAAP measures of distributable cash flow and adjusted EBITDA, although our earnings release does include the reconciliation of these non-GAAP measures to the most directly comparable GAAP measures. On to slide 3, highlights of the first quarter and subsequent. We announced a further cash distribution of $0.52 for the 27th consecutive time at this level under our 1099 structure, which was the 36th consecutive distribution made since the partnership first listed in 2013, and indeed this should be received by our unitholders today, in fact. We maintained very high scheduled fleet utilization during the first quarter of 99.7% and 92.8% taking into account the scheduled dry docking of the Tordis Knutsen, Anna Knutsen and Vigdis Knutsen. We continue to make good progress in agreeing both interim and longer-term employment contracts for a number of our vessels coming into the charter market. The Tordis Knutsen commenced on new time charter to Petrobras in February 2022 after successfully completing their drydock. We have a new two-year time charter for the Anna Knutsen with TotalEnergies, which commenced immediately after the vessel returned to Brazil, following successful completion of the drydock. TotalEnergies had an option to take…

[Operator Instructions] Our first question comes from Robert Silvera of R.E. Silvera & Associates. Robert, the line is yours.

All right Gary, thank you very much for taking my question and for doing a good steady job. I do like some explanation, please, on the cash and cash equivalents over the last three months dropped by $21 million. Can you give me some understanding as to where most of that $21 million win?

Yes, hi Robert. Yes, I mean, the dry docks, obviously, have had a big impact, but they're not -- it's not a surprise development for us. They're scheduled and budgeted and they're expensive. And I think that's probably the simple answer.

Okay. So there's only one more to do this year, right?

No, like I said, they are up to six. So, actually, they're mostly spread between first quarter and second quarter. So, we're expecting to see a similar position for the second quarter in terms of the coverage ratio, for example.

Okay. So, we have -- clear up for me, we have three done already, and we have three more to go.

Well, some are in progress. So, I guess, it depends at what point you're talking. So, for example, the Tordis started in December of last year and finished in January of this year. Like I said, the Anna has started in 2022 and finished already. The winds that has yet to go, but they should all be close to being done by the end of the second quarter.

They should all be done by the end of the second quarter. Okay.

The current timing suggests that they'll all be done around the end of the second -- by the end of the second quarter. It's possible that, for example, the winds that might fall a little bit into the third quarter. But as we tried to make clear in the prepared remarks earlier, most of the effects are going to be in the first and second quarter of the year.

Okay. Where would you -- at our current run rate, where would you envision us being cash-wise at the end of the year? Last year, 2 million, where would we be at the end of this year at this current run rate with the drydocking?

Yes, I think the – the liquidity that we've got at the end of the first quarter was 96.3 million. And obviously, we're going to use up some of that on the drydocks. But notwithstanding, we're obviously going to be earning more through the charters and the new charters that we also hope to get in the near future. So it's a little bit difficult for us to predict the end of the year at the moment, Robert. But as we said, these dry docks and this reduction in cash, if you like, as a result of the drydocks are scheduled and budgeted. So we're kind of trying not to read more into this than is really necessary, if you see it to me.

Okay. I'm trying to see it through the lens of what you said about future and perhaps taking a drop down from the parent and how much cash would do to be, or do you really feel that we could do it all without issuance of new equity, et cetera. That's what the lens I'm trying to look through.

Yes. I mean…

How much cash...

That's really what -- those are the things that we're analyzing right now in terms of – is it the right timing for us to do it. And also bearing in mind that we prioritize our distribution. So we're already going to make that drop-down decision if it's right for us to do it.

Okay. You didn't really address how you will over the next few years stop the diminishment in book value for the business in total. How do you plan to at least stabilize book value or increase it?

Well, obviously, increasing through acquisitions. But over time, of course, the book value will naturally fall, if we have a fixed number of vessels. So the exact – the second purpose of the MLP is growth after distribution. So growth is the solution to that.

Right. That's what I am trying to figure out how it's going to be funded.

Yes. Well, that's -- as I say, the MLP structure typically is new equity to finance growth. Obviously, that's been a difficult situation for us and for many other companies in recent times. So for the time being, we were able last year to do one drop-down with internal funding and still maintain our distribution and maintain our stability. So, in the short term, perhaps we're able to do that again, it may not be an answer for all of the vessels that the sponsor currently has. But certainly, we want to keep this MLP moving and growing in any way that we can.

All right. Okay. Well, that's it. Question wise for me. Thank you very much, Gary.

Thank you.

Our next question comes from Liam Burke of B. Riley Securities. Liam, the line is yours.

Thank you. Gary, how are you on?

Hi, Liam. I'm very well. Thanks. How are you?

We have the Tordis, Lena and Windsor sitting on gaps without even in the short-term market. Now obviously, the Windsor has got a ways to go before any long-term contracts kick in, but how is the short-term market to bridge those the vessels?

Yes. As I alluded to in the formal comments, we've seen a marked upturn in inquiries this quarter or first quarter, should I say. And I think that's continued up to today. So we feel that there are opportunities there for us. And obviously, as we sit here today, we're disclosing all that we can, but there are many discussions with multiple customers going on in the background. So, we're optimistic that things are moving in the right direction for us and that we'll be able to secure what we need to. On the back of that extra activity.

Okay. So, their short-term market or the non-long-term charter market is still – or is more active, it's still very active. My concern is, how much can you bridge between once the longer-term contracts do kick-in?

Yes. Look, we're optimistic we can fill most of those gaps. It's easy for obviously, for me to say that sitting here, but that's where we sit today in terms of the inquiries that we're getting. And bearing in mind that, there aren't actually that many shuttle tankers available at any point in time. And to the extent that you're seeing production growth in Brazil, it really doesn't take very much at all for the market to tighten right up, remembering that the vast majority of shuttle tankers are on contracts already. So – and it's a big cost for our customers to not have tonnage when they need it. It's millions of dollars of costs. So, to the extent that we're seeing production going up and the market going in the direction that we think it's going in particularly in Brazil, it brings us extra confidence that we will be able to fix what we need to fix in a profitable manner.

Thank you, Gary.

Thank you, Liam.

Our next question comes from Climent Molins of Value Investor's Edge. Climent, please go ahead. Q – Climent Molins: Good morning. Thank you for taking my questions. The outlook for the offshore sector has improved notably over the past year. And as you mentioned, Brazil has been no exception in the trend. You have several vessels coming open throughout 2023. So this definitely a welcome development, you mentioned you have seen an increasing number of inquiries for your vessels. And I was wondering, could you provide some commentary on the rate environment? Is this increasing interest leading to higher rates?

Thank you, Climent. I think, generally speaking, we don't talk too much as you probably already know about specific rates for our shuttle tankers. The market is very small in terms of the number of suppliers of shuttle tankers and also our customers. Of course, if the market is tightening up and that we're getting more inquiries, then that's obviously helpful in terms of competition and charter rates that we can get. So I think on the whole, the rate environment, as you described, it is certainly moving in our favor, we think.

Right. That's helpful. And regarding the steps racking scale you faced during Q1. You mentioned in the press release you had 104 of hire days during the quarter, and you estimate an increase to closer to 166 days in the second quarter. Thus, the estimate of hard include re-positioning gains?

Yes, I believe it does. I believe it does. If you want me to – but I think it does. I think it includes an estimate of repositioning, because typically, a drydock would not – even if you took a 156 million and divided it by three or four vessels, drydocks don't take that long. So yes, I'm pretty sure it does of.

Yeah. I was wondering that same thing. That's all for me. Thank you very much for taking my questions.

Thank you, Climent, any time.

We have no further questions on the phone line. So I'll hand back for any closing remarks.

Yeah. Thank you very much, everybody, for joining. We much appreciate it and look forward to talking to you about Q2. Have a good day.

This concludes today's call. Thank you for joining. You may now disconnect your lines.