Strategic Performance and Market Dynamics

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• Performance was anchored by 96.8% operational utilization, with overall results slightly impacted by the scheduled drydocking of the Fortaleza Knutsen.

• The acquisition of the Hilda Knutsen for $113 million serves as a strategic pivot to reduce average fleet age and secure long-term cash flow through a charter extending to 2034.

• Management attributed the tightening supply-demand balance in Brazil and the North Sea to robust multiyear FPSO production growth and sustained shuttle tanker service volumes.

• Strategic positioning was bolstered by refinancing $225 million in debt at a meaningfully reduced interest rate of SOFR plus 1.65%, improving the partnership's cost of capital.

• The decision to increase the quarterly distribution to $0.075 reflects management's confidence in a reliable, diversified long-term cash flow and a strengthening balance sheet.

• The partnership opted not to pursue the Fredrik and Synnøve Knutsen vessels, removing them from the dropdown inventory to focus on more accretive growth opportunities.

• Market dominance is maintained by the niche nature of shuttle tankers, which management notes remain more cost-effective than new pipeline construction for offshore extraction.

Outlook and Strategic Guidance

• Management anticipates multiple gradual distribution increases in coming quarters, supported by accretive dropdowns and an improving charter market environment.

• Forward coverage is highly visible with 92% firm coverage for 2027, rising to 96% when including expected charterer's options.

• Guidance assumes that most charterer's options will be exercised by clients due to the current strength and tightening of the global shuttle tanker market.

• The partnership plans to continue a debt repayment cadence of approximately $95 million per year to align with its depreciating asset base.

• Refinancing of the $65 million Lena Knutsen facility is well advanced and expected to conclude by late October 2026.

Significant Transactions and Risk Factors

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• The Hilda Knutsen acquisition involved a net cash cost of $24.4 million after assuming $89.4 million in existing debt, a structure management considers a standard growth model.

• Average fleet age was reduced by nearly half a year following the integration of the newly delivered Hilda Knutsen.

• Management highlighted that the shuttle tanker order book remains non-speculative and currently insufficient to meet anticipated demand levels, posing a potential supply risk for the industry.

• Liquidity increased by $2.6 million sequentially to $143.3 million, maintaining a level largely in line with the reducing trend in available capital.