Q2 FY2026
Filed Sep 3, 2026Q2 2026 revenue was $96.8 million and Adjusted EBITDA was $57.6 million; operating income and net income increased sequentially but declined from Q2 2025.
Q2 revenue, operating income and net income improved from Q1 2026, supported by loss-of-hire recoveries and fewer vessels in drydock. However, operating income declined by $6.6 million and net income declined by $3.4 million from Q2 2025, principally reflecting higher depreciation.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q2 2026 time charter and bareboat revenuesGAAP | $92.08M | – | – |
| Q2 2026 loss of hire insurance recoveriesGAAP | $4.13M | $1.9 million extra in loss of hire recoveries | – |
| Q2 2026 other incomeGAAP | $564K | – | – |
| Q2 2026 total revenuesGAAP | $96.78M | – | – |
| Q2 2026 vessel operating expensesGAAP | $36.45M | – | – |
| Q2 2026 voyage expenses and commissionGAAP | $986K | – | – |
| Q2 2026 depreciationGAAP | $42.09M | – | – |
| Q2 2026 general and administrative expensesGAAP | $1.70M | – | – |
| Q2 2026 total operating expensesGAAP | $81.22M | – | – |
| Q2 2026 operating incomeGAAP | $15.56M | – | A decrease of $6.6 million |
| Q2 2026 interest incomeGAAP | $965K | – | – |
| Q2 2026 interest expenseGAAP | −$13.80M | – | – |
| Q2 2026 other finance expenseGAAP | −$235K | – | – |
| Q2 2026 realized and unrealized gain on derivative instrumentsGAAP | $1.41M | – | – |
| Q2 2026 net loss on foreign currency transactionsGAAP | −$323K | – | – |
| Q2 2026 total finance expenseGAAP | −$11.99M | – | A decrease of $3.2 million |
| Q2 2026 income before income taxesGAAP | $3.57M | – | – |
| Q2 2026 income tax expenseGAAP | −$158K | – | – |
| Q2 2026 net incomeGAAP | $3.41M | – | A decrease of $3.4 million |
| Q2 2026 EBITDAnon-GAAP | $58.49M | – | – |
| Q2 2026 Adjusted EBITDAnon-GAAP | $57.64M | – | – |
| Six months ended June 30, 2026 total revenuesGAAP | $188.8M | – | – |
| Six months ended June 30, 2026 operating incomeGAAP | $30.25M | – | – |
| Six months ended June 30, 2026 net incomeGAAP | $6.04M | – | – |
| Six months ended June 30, 2026 EBITDAnon-GAAP | $116.4M | – | – |
| Six months ended June 30, 2026 Adjusted EBITDAnon-GAAP | $114.2M | – | – |
| Six months ended June 30, 2026 net cash provided by operating activitiesGAAP | $66.64M | – | – |
| Six months ended June 30, 2026 additions to vessel and equipmentGAAP | −$569K | – | – |
| Cash and cash equivalents at June 30, 2026GAAP | $95.25M | – | – |
| Total interest-bearing obligations outstanding at June 30, 2026other | $905.9M | – | – |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
Second half of 2026, first half of 2027 and second half of 2027 outlook
- NoteFully contracted for the second half of 2026
- NoteApproximately 97% coverage for the first half of 2027
- NoteApproximately 87% coverage for the second half of 2027
- NoteIn each case after allowing for scheduled dry dockings
Capital returns
- Quarterly cash distribution of $0.075 per common unit with respect to Q2 2026, paid on August 13, 2026, to common unitholders of record on July 27, 2026.
- Quarterly cash distribution to holders of Series A Preferred Units with respect to Q2 2026 in an aggregate amount of $1.7 million.
- Six months ended June 30, 2026 cash distributions of $(6,006) (U.S. Dollars in thousands).
- The Partnership anticipates multiple, gradual distribution increases over the coming quarters and years.
What drove it
- Q2 2026 revenues reflected $1.9 million extra in loss-of-hire recoveries and fewer off-hire days, with one vessel in drydock in Q2 2026 compared with two vessels in Q1 2026.
- Fleet utilization was 96.8% for scheduled operations and 92.4% including the scheduled drydocking of the Fortaleza Knutsen.
- Q2 2026 operating income versus Q2 2025 was affected by increased depreciation, partly offset by increased revenue from higher time charter rates and higher loss-of-hire insurance recoveries.
- Finance expense declined from Q2 2025 as Q2 2026 included realized and unrealized derivative gains, rather than a loss, and lower interest expense due to debt repayment and a lower SOFR rate.
- Galp Sinopec extended the Live Knutsen charter for three years until December 2029, and Equinor extended the Synnøve Knutsen charter for two years until February 2029.
- The Hilda Knutsen has a charter with Eni commencing in June 2027 for three years fixed plus three charterer options of one year each.
- The Ingrid Knutsen reached agreement with Eni on September 2, 2026 for a charter commencing early October 2026 for three years fixed plus three options of one year each.
Concerns
- Operating income decreased by $6.6 million from Q2 2025 to $15.6 million, primarily due to increased depreciation.
- Net income decreased by $3.4 million from Q2 2025 to $3.4 million.
- The Tordis Knutsen was off-hire from February 16, 2026 until May 21, 2026 because of a diesel-generator breakdown.
- The Recife Knutsen commenced a scheduled drydocking in late July 2026 that is due to complete in early October 2026.
- The Live Knutsen secured loan facility is due to mature in October 2026.
What to watch
- Completion of the refinancing of the Live Knutsen facility before its October 2026 maturity.
- Integration of the Hedda Knutsen following the September 1, 2026 acquisition and its Petrobras charter through November 2034.
- Completion of the Recife Knutsen drydocking and commencement of its Brazil operations under the Transpetro charter.
- Charter coverage after the second half of 2027 and progress toward further long-term re-chartering.
- Potential acquisitions from Knutsen NYK under the omnibus agreement.
Balance sheet and cash flow
- Available liquidity at June 30, 2026 was $143.3 million, comprising cash and cash equivalents of $95.3 million and undrawn revolving credit facility capacity of $48.0 million.
- Reported available liquidity at June 30, 2026 was $2.6 million higher than at March 31, 2026.
- Total interest-bearing obligations outstanding at June 30, 2026 were $905.9 million ($902.5 million net of debt issuance costs).
- The average margin paid on outstanding debt during Q2 2026 was approximately 2.21% over SOFR.
- Interest rate swaps had a total notional amount outstanding of $272.4 million, a weighted average interest rate of 2.94%, and an average maturity of approximately 1.4 years as of June 30, 2026.
- Net exposure to floating interest rate fluctuations was approximately $300.3 million as of June 30, 2026.
- Six months ended June 30, 2026 repayment of long-term debt was $(53,721) (U.S. Dollars in thousands).
- On August 25, 2026, the Partnership closed a new $225 million senior secured credit facility to refinance term loans that were due to mature in September 2026.
- The Hedda Acquisition closed on September 1, 2026. The purchase price was $113.0 million, less $89.4 million of outstanding indebtedness, plus $0.8 million of capitalized fees; the initial cost was stated as approximately $24.4 million.
- The senior secured loan facility secured by the Live Knutsen is due to mature in October 2026 with a repayment due at the time of $65.9 million.
Analysis
KNOT Offshore Partners reported Q2 2026 total revenues of $96.8 million, operating income of $15.6 million and net income of $3.4 million. Revenue increased from $92.0 million in Q1 2026, with management attributing the increase principally to $1.9 million extra in loss-of-hire recoveries and fewer off-hire days as one vessel was in drydock during Q2 versus two in Q1. Fleet utilization was 96.8% for scheduled operations and 92.4% including the Fortaleza Knutsen drydocking. Adjusted EBITDA was $57.6 million, compared with $51.6 million in Q2 2025.
The year-on-year earnings comparison was weaker on a GAAP basis. Operating income decreased by $6.6 million to $15.6 million from $22.2 million in Q2 2025, primarily because of increased depreciation, although higher time charter rates and loss-of-hire insurance recoveries supported revenue. Net income decreased by $3.4 million to $3.4 million. Finance expense fell by $3.2 million to $12.0 million, supported by realized and unrealized derivative gains and lower interest expense resulting from debt repayment and a lower SOFR rate.
Liquidity was $143.3 million at June 30, 2026, including $95.3 million of cash and cash equivalents and $48.0 million of revolving-credit capacity. Total interest-bearing obligations were $905.9 million. The Partnership completed a $225 million senior secured refinancing on August 25, 2026 for five vessels, while the Live Knutsen facility remains due in October 2026 with a $65.9 million repayment due at maturity. Subsequent to quarter-end, the Partnership acquired the Hedda Knutsen through an acquisition with an initial cost stated as approximately $24.4 million.
Forward charter visibility is the central operating support. The Partnership stated it was fully contracted for the second half of 2026, with approximately 97% coverage for the first half of 2027 and approximately 87% coverage for the second half of 2027, after scheduled drydockings. It also reported $881.2 million of remaining contracted forward revenue as of June 30, 2026, excluding charterers' options and charters agreed or signed after that date. Charter extensions for the Live Knutsen and Synnøve Knutsen, alongside new or continuing Eni charter arrangements for the Hilda Knutsen and Ingrid Knutsen, extend fleet coverage.
Capital allocation remained directed toward distributions, debt management and fleet growth. The Partnership paid a quarterly cash distribution of $0.075 per common unit for Q2 2026 and a $1.7 million quarterly distribution to Series A Preferred Unit holders. Management identified prospective dropdown acquisitions from Knutsen NYK as a potential source of future cash-flow growth, while the principal near-term operational items are the Recife Knutsen drydocking, the Hedda Knutsen integration and refinancing of the Live Knutsen facility.
Management, verbatim
We are pleased to report another strong performance in Q2 2026, marked by safe operation at 96.8% from scheduled operations, 92.4% utilization when including drydockings, consistent revenue and operating income generation, opportunistic fleet management, and continued progress in extending our long-term charter coverage.
Derek Lowe, Chief Executive Officer and Chief Financial Officer of KNOT Offshore Partners LP
As of the date of this release and including contractual updates since June 30, 2026, we are fully contracted for the second half of 2026, and have secured approximately 97% coverage for the first half of 2027 and approximately 87% coverage for the second half of 2027, in each case after allowing for scheduled dry dockings.
Derek Lowe, Chief Executive Officer and Chief Financial Officer of KNOT Offshore Partners LP
Not in the filing
stated, not guessed- GAAP and non-GAAP earnings per unit or EPS
- Gross profit and gross margin
- Free cash flow
- Share repurchases
- Formal revenue, gross-margin, operating-expense or tax-rate financial guidance
- Reportable segment revenue
- Q2 2026 cash flow from operations
- Q2 2026 free cash flow
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.