KNOT Offshore Partners LP (KNOP) reported its fourth‑quarter 2025 financial results on March 25 2026, posting revenue of $96.5 million, up 0.4% from the $96.9 million reported in Q3 2025. The partnership generated operating income of $8.4 million, a decline of $26.3 million versus the $34.7 million earned in Q4 2024, largely due to a $20.3 million non‑cash impairment of the vessel Bodil Knutsen.
The impairment pushed the partnership into a net loss of $6.2 million for the quarter. Excluding the one‑time charge, adjusted operating income rose to $28.6 million and adjusted net income reached $14.0 million, reflecting the underlying strength of the charter portfolio. Earnings per share of $0.41 beat the consensus estimate of $0.39, a $0.02, or 5.1%, margin that was driven by disciplined cost management and high fleet utilization of 99.5% for scheduled operations.
Management emphasized that the impairment was a one‑time event and that underlying operations remain robust. The partnership highlighted tightening shuttle‑tanker markets, especially in Brazil where Petrobras’ FPSO ramp‑ups have increased demand, and a rebound in the North Sea market driven by new U.K. projects. Charter coverage for 2026 is projected at approximately 98% for the first half and 88% for the second half, underscoring near‑term revenue visibility.
Despite the earnings beat, the market reacted negatively, with the partnership’s shares falling roughly 10.6% in after‑hours trading. Analysts cited the termination of a $10‑per‑unit take‑private offer from Knutsen NYK Offshore Tankers AS on March 19 2026 as a key driver of the sell‑off, as the collapse of the potential acquisition removed a valuation premium that investors had been pricing in.
The results also highlight a liquidity challenge, with an Altman Z‑Score of 0.43 placing KNOP in the distress zone and current and quick ratios below 0.30. Management remains focused on maintaining high charter coverage and leveraging its strong backlog to navigate the asset‑specific risks highlighted by the Bodil Knutsen impairment.
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