Good morning, everyone. Welcome to KNOP Second Quarter 2024 Earnings Call. My name is Kiki and I will be your conference operator today [Operator Instructions]. I will now hand you over to your host, Derek Lowe, Chief Executive Officer and Chief Financial Officer. Derek, please go ahead.

Thank you, Kiki. And good morning, ladies and gentlemen. My name is Derek Lowe, and I'm the Chief Executive and Chief Financial Officer of KNOT Offshore Partners. Welcome to the partnership's earnings call for the second quarter of 2024. Our website is knotoffshorepartners.com, and you can find the earnings release there along with this presentation. On Slide 2, you will find guidance on the inclusion of forward-looking statements in today's presentation. These are made in good faith and reflect management's current views, known and unknown risks and are based on 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 in forward-looking statements. And the partnership does not have or undertake a duty to update any such forward-looking statements made as of the date of this presentation. For further information, please consult our SEC filings, especially in relation to our annual and quarterly results. Today's presentation also includes certain non-US GAAP measures, and our earnings release includes a reconciliation of these to the most directly comparable GAAP measures. On Slide 3, we have the financial and operational headlines for Q2. Revenues were $74.4 million, operating income $1.3 million, and there was a net loss of $12.9 million. However, these figures notably include the effect of vessel impairments on our two Panamax vessels, the Dans. And if those are excluded, then operating income would be $17.7 million and net income $3.5 million. Adjusted EBITDA was $45.5 million. We closed Q2 with $66 million in available liquidity, made up of $56 million in cash and cash equivalents plus $10 million in undrawn capacity on our credit facilities. We operated with 98.8% utilization and the vessel time available for scheduled operations was not impacted…

[Operator Instructions] The first question we received is from Liam Burke from B. Riley.

On the Dan Sabia, is that potentially an asset that can be redeployed at a favorable long term contract based on the end market or do you see possibly an alternative way to essentially divest the asset?

We're actually looking at both. I mean, the market is strengthening so there's always the potential for, as it were, a routine contract over the longer term. But we're open minded as to what the best way to get value from Dan Sabia is going to be.

And then it looks like the Brazilian market is starting to really step up in terms of the deployment of FPSOs. North Sea is obviously lagging there but are you satisfied enough that there'll be enough activity in the North Sea to keep your vessel utilizations up?

We do expect so, yes.

And then just very quickly, you have $176 million balloon next year. You've had a long history based on the quality of your assets of just refinancing. Is it all right to just presume that these things are already in process and you're working with your banks on these?

Well, I think you need to make your own assumptions based on information available to you and particularly our track record. I would say it's quite a long time out until the first of those three refinancings, so 11 months, isn't it? So it would be unusual to start that sort of negotiation 11 months out. But we do have a practice of negotiating those a decent amount of time ahead of the refinancing.

The next question is from Poe Fratt from AGP.

Derek, can you just highlight on the Tuva what the balloon payments, how much the balloon payment is when it's due in -- what is it January of 2027, and then how much amortization you're going to see annually?

The amortization schedule will look in line with what you're used to seeing on other debt. We expect to provide more information in our own Form 6-K in a few weeks' time, so the best place to look will be in there.

If you look at sequentially, your OpEx was down -- or maybe G&A was down, OpEx was up. Can you just give me some color on how OpEx and G&A look for the rest of the year?

We're not expecting material changes. I mean, there is generally an inflationary environment in much of the expenditure that we're exposed to and similarly for our peers in the market as well. But we're not expecting significant changes.

Help me understand the dynamic of agreeing to the one year extensions on the Tordis and the Lena and then giving three year options or three one year options behind those one year extensions. Given the outlook for Brazil, it seemed like maybe waiting a little bit for the market to really tighten up and availability to really decline but your leverage might have been higher doing that next year or the year after. Can you just help me just understand the thinking behind that and whether these options are also priced at higher rates than what the extensions were priced at?

We don't comment on pricing of specific contracts and further I can't expand on that. I would say that, of course, it's a negotiation. And when your existing client is asking for terms, it will be on for time periods, which suit the production that they're expecting.

And it looks like obviously, you have two right now, the Sabia, which you just talked about and then the Torill. I think the Torill's up, the one that's coming up in the North Sea, right or has availability. When do you expect to lock in something on that Torill?

I think you mean been the Hilda…

Yes, the Hilda…

We are pretty active in marketing and negotiation on both those vessels all the time. So they haven't resulted yet in announceable transactions or announceable contracts, but we are working on those all the time.

[Operator Instructions] The next question is from Jim Altschul from Aviation Advisory Service.

Two questions, if I may. First of all, with regard to the Carmen, if I'm reading the chart correctly, the current term ends, I guess, at the end of the year or beginning of next year, and there is an option period for the first part of next year. By when does the charter need to notify you whether they're going to exercise that option?

That's going to be late in this year. I mean, the typical period can be as short as 30 days. I don't have the exact figure at hand but it can be as short as that.

So that means -- if they don't exercise the option then you'll have to make an alternate arrangement, right?

That's right, yes.

The next thing. Can you summarize your current interest rate swap arrangements, do you have any swaps that are rolling off and ending in the near future?

In terms of size?

If you just look -- can you summarize how many swaps you have in place and what those sizes and whether them are due to end in the near future?

Well, we actually have several of them and they tend to come in layers, so multiple tranches for each company or vessel that they relate to. And so at the moment, as we've disclosed, we're paying just under 2% fixed on average on the swaps that are outstanding. And the maturity is -- average maturity of those is 1.4 years. So if you look at what's listed as Page 5 on our filing, you'll be able to see the figures there.

Thank you. As we currently have no further questions, I will now hand back to Derek for closing remarks.

Thank you again for joining this earnings call for KNOT Offshore Partners second quarter and 2024, and I look forward to speaking with you again following the third quarter results…

I'm sorry, Derek. We just received another question from -- would you like to take the question? So the next question is from Poe Fratt from AGP. He just dismissed his question, I'm afraid.

No problem. Okay. And are there any further questions?

No further questions.

Great. Thank you. Well, thank you, everybody, for joining. And I look forward to speaking with you again in about three months' time. Thank you.

Thank you so much. This concludes today's conference call. You may now disconnect your lines.