Ladies and gentlemen, thank you for standing by for the KNOT Offshore Partners First Quarter 2023 Earnings Results Conference Call. My name is Candice, and I will be your moderator for today's call. All lines have been placed on mute during the presentation portion of the call for an opportunity to question and answer at the end. If you'd like to ask a question, please press star followed by one on your telephone keypad. I would now like to hand the conference call over to our host, Gary Chapman, CEO and CFO, to begin.
Thank you. Welcome to our First Quarter 2023 Earnings Call. The earnings release in this presentation are available on our website at knotoffshorepartners.com. Slide two gives guidance on the inclusion of forward-looking statements in today's presentation that are made in good faith and reflect management's current view, involve known and unknown risks, and are based upon 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 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 annual and quarterly SEC filings. Today's presentation also includes certain non-U.S. GAAP measures, and our earnings release includes a reconciliation of these to the most directly comparable GAAP measures.
On slides three, four, and five, are highlights from the first quarter of 2023 and subsequent. We announced our 40th consecutive quarterly cash distribution since our IPO in respect to the first quarter of 2023, and which was paid in May 2023 under our 1099 structure. Our fleet in the first quarter operated with 100% utilization for scheduled operations and 96.6% utilization, taking into account the scheduled dry docking of the Carmen Knutsen. We secured credit approval on similar terms for the $320 million senior secured credit facility and the $55 million revolving credit facility, which mature in September 2023, and which debt finances 6 of the partnership's vessels. We're anticipating to close this in June 2023, subject only to execution of documentation and other customary closing conditions.
It's worth noting that the $172.5 million senior secured loan facilities maturing in September 2023 and January 2024, secured by the Dan Cisne and Dan Sabia, respectively, will be fully repaid on maturity. There is no need for a refinance plan at this stage, and we have no immediate plans to incur additional borrowings secured by these two vessels until such time as the partnership has better visibility on their future employment. Finally, we're discussing with our lenders concerning the two $25 million unsecured revolving credit facilities that mature in August, 2023 and November, 2023. Based on conversations so far, we believe that both facilities will be refinanced on acceptable and similar terms prior to maturity. We would expect to provide further news on these in our second quarter 2023 earnings release.
In terms of charter and contract developments, we have now signed and closed new three-year time charter contracts for both the Fortaleza Knutsen and the Recife Knutsen with Transpetro, meaning these vessels are now contracted to March and August, 2026 respectively. Following, for the recent vessel developments listed on slide four, I don't plan to read through this. I'm sure you can all do that for yourself. What I can say is that the combination of all of these charter developments has left us almost entirely covered in 2023, and for several vessels, we have now achieved charter coverage well beyond this year, and we'll see that when we look at the charter diagram shortly.
Finally, on this slide, the Carmen Knutsen successfully completed her 10-year dry dock, taking a total of 74 days, spread across the end of the fourth quarter of 2022 and into February, 2023. On slide 5, the partnership had $52.4 million in available liquidity at the end of the first quarter, $688 million of remaining contracted forward revenue, excluding charters options, but including the new charter for the Recife Knutsen, which was signed on April 11, 2023. Our fleet had an average age of 8.9 years, with each vessel having an estimated useful life of 23 years. We saw great utilization for scheduled operations in the first quarter at 100%. The trends and shuttle tanker long-term fundamentals assisted us in securing the credit approvals we needed for the refinancing.
The encouraging trends that we have previously highlighted in Brazil, where 14 of our 18 vessels operate, are continuing to exert positive pressure on the shuttle tanker charter market. We expect that the limited global fleet order book of only five vessels between now and 2026, combined with significant new offshore oil production volumes coming online, will drive charters and rates, both in Brazil and in the North Sea. We do recognize that the North Sea market, where currently four of our 18 vessels operate, may still take longer to rebalance, meaning it may yet take several more quarters to filter into the partnership's results.
Nonetheless, as stated, we continue to believe that the overall supportive fundamentals of vessel supply set against the faster pace of new offshore oil production implied by continuing FPSO ordering for shuttle tanker serviced fields, will leave the partnership well-placed over the coming years. Slide six, seven, and eight are our summary of financial results, and as usual, I will just mention a few points. Combined with voyage revenues, our total revenues were strong in the first quarter, and this was further boosted by over $900,000 in loss of higher insurance claims related to issues that occurred in prior quarters. Operating expenses were broadly in line with both our expectations and the fourth quarter of 2022, and voyage expenses, being the other side of voyage revenues, also remained consistent.
As we had mentioned before, with a wide and geographically spread crew and supplier base to draw upon, we believe we have some protection against the inflationary pressures that are occurring in many places. This is something that we, like all companies, are keeping under close review. Higher LIBOR and higher utilization of our revolving credit facilities have all increased interest expenses in recent quarters. This first quarter of 2023 is no different. This has not had any impact on our operations or on our continuing and scheduled debt repayments. On slide seven, you can see our cash and cash equivalence balance at the end of the quarter of $52.4 million. The current portion of long-term debt is naturally elevated as this relates to the ongoing refinancing that we have already spoken about.
On slide eight, you can see the overall adjusted EBITDA for the first quarter was again, solid and consistent. Slide nine shows how a significant portion of our total debt is hedged through to the end of 2024 and into 2025, meaning that the majority of our debt during that period is not affected by changes in interest rates, as we have swapped a portion of our variable interest rate debt for fixed interest payments, therefore, providing greater certainty of interest expense and cash flow. At March 31, 2023, the partnership's net exposure to floating interest rate debt was approximately $353 million, or around 34% of our total interest-bearing debt. In other words, 66% was fixed by our interest rate swaps or effectively fixed via our two sale and leaseback financings.
You will see that we anticipate that more than 50% of our debt will remain fixed or effectively fixed for the next few years, and we're always monitoring the situation to look for new opportunities that could allow us to benefit. On to slide 10. As we have seen, many of the contractual updates already, and they are also set out in the earnings release. I won't repeat them here, but as at March 31, 2023, excluding charters options, but including the new charter for the Recife Knutsen signed on April 11, 2023, we had $688 million of forward contracted revenue. Of our firm charters, these had 2.2 years remaining on average, and charters had options to extend these charters by a further 2.2 years on average.
On slide 11, you will see that we have now contract coverage for almost the entirety of 2023, and several vessels are now under contract for much longer periods, as you could see on slide 10. As a result, most of our focus has moved on to the vessels that are yet to be fixed in 2024, and this is where our efforts are being directed. We believe it helps that only five new shuttle tankers are expected to come into the market between now and 2026. Therefore, the total supply of shuttle tankers is likely to become tight, and with new build shuttle tanker prices remaining elevated, this all helps the competitiveness of our existing fleet. Just before we move on, please do, be reminded that this slide does not talk to vessel utilization. It refers to future charter contract coverage.
On slide 12, we list the potential drop-down vessels currently owned by our sponsor, KNOT. As stated, the acquisition by the partnership of any such vessel in the future would be subject to approval of the partnership's independent conflicts committee, as well as the board of directors of each of KNOP and KNOT, and there can be no assurance that any potential acquisitions will actually occur. As we have said, our top priorities are securing additional contract coverage, forward visibility of our existing fleet, and rebuilding our liquidity position. Slide 13. We have kept this slide in our presentation from previous quarters, given we have a lot of new investors, and as we continue to believe, this remains a very valuable source of independent information that speaks to the future growth of shuttle tanker demand in Brazil.
The number of new FPSOs to be deployed in Brazil through to 2027 equates to approximately 50% of the world's total FPSOs. With a low carbon score and low marginal cost of oil production, we remain very positive with respect to the mid to long-term outlook here. We have also retained a further slide in the appendix to this presentation that gives some more detail. In summary for this quarter on Slide 14, we had excellent utilization of 100% for scheduled operations. We paid a quarterly distribution for the 40th consecutive quarter, albeit at a reduced level. We have secured credit approval for $375 million of refinancing due later this year, and we concluded two new three-year time charters for two of our vessels.
In terms of going forward, we continue our absolute focus on safe operations, both on board and onshore, and to taking care of our crew whilst maintaining our high standards and utilization statistics. We're working to close out the refinancings as set out, planning for the remaining dry docks this year, three of which are for vessels that are European-based, so mobilization costs will be lower than for the recent Brazil-based vessels. Of course, we're working towards securing charter coverage for all of our fleet in 2024 and beyond. Finally, and whilst it is not written on the slide, I do want to point out our press releases of April 5 and April 10, which give details of the changes and upcoming changes to our board of directors and also to my own position within the partnership.
The same details are also contained within the earnings release issued after closing yesterday. Finally, slide 15, we again want to promote our newly refreshed website, where you can find more information on the shuttle tanker market, our fleet, and of course, investor-related information, including a frequently asked questions section. Hopefully, people will find this a useful resource. Thank you very much for listening, and following this, I'll be happy to answer any questions.
Thank you, Gary. If you'd like to ask a question, please press star followed by one on your telephone keypad. If you'd like to withdraw your question at any time, it is star followed by two. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking your question. Our first question comes from the line of Liam Burke of B. Riley. Your line is now open. Please go ahead.
Thank you. Hi, Gary. How are you?
Hello, Liam. I'm very well, thanks. How are you?
I'm fine, thank you. You successfully rechartered the Cisne and, I am sorry, the Fortaleza and the Recife with Transpetro. You have two more vessels that are up for recharter. Do you anticipate the recharter timeline to be similar as the first two vessels? Do you anticipate any problems on the recharter?
Yeah, you're talking about the Cisne and Sabia, I guess.
Right. Yes.
Yeah. I mean, it's difficult for us to predict. Obviously, to come to a contractual agreement requires both parties to work towards that, and, you know, we're not in control of Transpetro and Petrobras' timeframe there. Obviously, the first vessel runs through to September, so we've got some time. I guess history may suggest that they perhaps leave it down, you know, down to the wire a little bit. That is also possible. You know, we are trying to talk to them, as we always do, to, you know, move it on and do it as early as we can. It's a distinct possibility that those conversations may go right down to the wire.
In terms of where we finish up with them, you know, at this stage, you know, I can't say anything really. We don't have anything to report. Given perhaps the history that we saw on the Fortaleza and the Recife, at this stage, you know, we believe we've still got plenty of time.
Okay, fair enough. I mean, yes, they did push the other ones down to the wire. You talked about the $172 and a half million that's up for that's due on Cisne and Sabia. Where is the source of the debt pay down there? I know you have, you know, $54+ million in cash, but where would the rest of the capital come from to repay that loan?
The balloons on those are only $8 million, they're pretty small, and we've factored those into our cash flow forecast. Those are kind of naturally maturing, if you like, rather than being a significant balloon, if that answers your question.
Yes, it does. Thank you, Gary.
Thank you. Our next question comes from the line of Poe Fratt of Alliance Global Partners. Your line is now open. Please go ahead.
Good morning or good afternoon, Gary.
Hi, Poe.
I was wondering if you could. Hi. I was wondering if you could help us understand, you know, that you've chosen to move on, and there's a search underway. Would we anticipate the dual roles of the CEO and CFO staying, remaining sort of under the current structure, or can you talk about whether there's going to be a separate CFO and CEO?
To the best of my knowledge, Poe, I think I believe the board are looking for a like for like replacement. That's my understanding. I'll be totally honest, I've not been kept in, fully in the loop, in terms of the recruitment process, I think that's natural. Yeah, I'm not aware of any move to sort of restructure my role, as things stand. As I said, I'm not fully in the loop with all of the discussions, but I do know that the board has already, you know, started a process. And that, you know, there's progress being made in that respect already. That's probably as much as I actually know and I'm able to tell you, Poe. Sorry.
No, that's all right. I'll miss working with you. When you look at the first quarter revenue number, it's 100% utilization with the exception of the, you know, the, I guess, the 55 days of downtime on the, on the survey. Can you just talk about sort of the direction of revenue for the second quarter, the potential impact of, you know, the shift from the bareboat charters to, you know, time charters? Also, if you could give us any color on the cost level of, you know, what we should anticipate for the costs. I've been looking at trying to forecast costs using not only the OpEx, but also the voyage expenses, too, as sort of your all-in costs. Should those change much going forward?
Yeah, well, I think, second quarter and beyond, you know, we don't now have, today, as we speak, we don't have any vessels doing voyages anymore. They're all on charters now. I think going forward, unless things change, the voyage revenues and voyage expenses line will probably disappear or go down to zero in terms of Q2 and beyond. When you look at slide 11, which shows you the forward contract coverage, you know, Q2, Q3, and actually the vast majority of Q4, is pretty much fixed now. In terms of, you know, where we're looking, you know, a lot of the numbers are fixed now for the rest of the year. You know, to the extent that
Q1 is not quite representative because we had some of the voyage revenues and voyage expenses in there. I am, you know, expecting, given that contract position, that the rest of the year should be, hopefully, subject to operational things and everything going as planned, should be fairly predictable.
Okay. There will be a little bit of a change because the previously bareboated.
Yeah
charters,
I think.
Yeah
transfer will change a little bit.
You're going to have higher revenue and higher vessel operating expenses, both as a result of us receiving a time charter rate and incurring OpEx costs. Whereas obviously, previously, we had a bareboat rate, which was lower, but no operating expenses. You know, the operating income line effect should be marginally positive. It's that change from bareboat to time charter, you know, probably isn't going to make a huge difference quarter by quarter. Over time, yes, it's positive, but I think, you know, Q2 isn't going to be dramatically different from Q1 at the operating income level. From that.
Okay
from that issue.
Great. Yeah, because I've asked you in the past about the net impact of the bareboat charter shifting to time charter, so that the impact shouldn't be, you know, should be fairly minimal. In other words, the cash flow should stay recently close to the previous level.
Yeah. I mean, obviously, you know, the, the income that we get from the customer is CapEx plus OpEx. Obviously, our cost base is linked to that, but is independent. There is the opportunity for us to run our company efficiently and, you know, profit from that, and that's what we hope to do, obviously. I think in this case, we've got just two vessels moving from bareboat to time charter, so you're not going to see across the whole company's results. You're not going to see a sudden, you know, big jump in operating income just because those two vessels have gone from bareboats to time charters.
Okay. Then congrats on, you know, the preliminary refinancing. Can you just talk about the impact of the refinancing on your liquidity? It looks like the balance on the previous term loan, you know, that you're refinancing, I'm calculating close to $177 million.
Yeah. The $375 million was the original notional number. Obviously, since that, we've paid it down. The simple answer to your question is that this refinancing is almost like for like. It's a continuation of the finance, that it's replacing in terms of the profile, the tenor, and even the margin. We said in the earnings release, and I've said in the presentation today, that it's on similar terms. You can think of it like just a continuation of the finance that is already in place.
Just to be, you know, clear, so the term loan from here on out will be roughly call it $175 million, and then will you have a credit revolver of $55 million going forward?
No, we've put the two together into one facility. Essentially, the $55 million was largely treated as a, historically, this goes back a few years now, but I can't recall the exact reasons off the top of my head why it was separated out, but we put them two back together, and so it's going to be one facility going forward.
That one facility, Gary, Would it be the $175 million plus the $55 million, or would it just be $175 million? I'm just trying to figure out sort of, you know.
Yeah
how your debt goes.
Yeah. If you look at the 20-F, which is the most recent that we've put out, in terms of detail, it's the page F-31. That sets out the breakdown of the debt, and at December 2022, the $320 million was paid down to $192 million, and the $55 million was sitting at $55 million. Obviously, since then, we'll have done another rollover or two in terms of quarters, so it'll be a little bit less than that.
Yeah,
it, there.
Thinking $175 million -
A lot-
Plus the $55 million. Oh, sorry.
Yeah. Yeah, yeah. If you want to take a look at the detail, it's on F-31 in the 20-F, which shows you all of the various facilities that we've got.
Okay. Then are you at the point where you can talk about the, you know, the tenor, meaning how far out it's been extended, and then also the amortization and, you know, balloon payments that are associated with the new term loan?
The tenor is going to stay, or the profile, should I say, is going to stay at the 19 years, which I believe is what it was to start with. This is another five-year arrangement. There'll be another balloon payment in five years.
The amortization? It's still going to be the same amortization going forward, just for another five years or so?
Correct.
You know, your balloon payment would be, you know, just rolled out. Okay.
Correct. Correct.
Any change on the pricing of the term loan?
no, the, we've moved from LIBOR to a SOFR-based interest calculation, given LIBOR is obviously being replaced, the net impact is practically zero, actually, in the margin and interest rate that we're expecting. Sorry, in the margin, obviously not the total interest rate, because that's it's variable based on... Yeah, we're expecting a like for like continuation. We've been able to secure good terms here.
Okay. Then, just can you on the two, you know, $25 million credit facilities, or, you know, you've sort of used those as working lines, can you help us understand, will the terms change there, or, you know, is it too soon to talk about, you know, the actual details of that refinancing?
It's too soon for me to be sure, but what we've asked for is again a rollover of the same. That's our request to the lenders. The feedback that we've received so far is positive, but, you know, we've still got some work to do to get them to get that credit approved, et cetera. We obviously wanted to focus on this big one first, and get that sorted out, and we'll now turn to looking at these two $25 millions.
Great. That's all I have. Thank you, Gary, and good luck in your next venture.
Yeah, thanks, Mike. Thank you. Have a good day.
Thank you. Our next question comes on the line of Jim Altschul of Aviation Advisors. Your line is now open. Please go ahead.
Good afternoon. First of all, I want to express my appreciation to you for your service to the company, and it's really been a pleasure working with you, and you've always been exceptionally responsive to my questions and everyone else's. Got a few questions relating to the financing. First of all, or the financing issues, if you look at the income statement, you see a pretty substantial increase in interest expense, particularly year on year. You also said that, I believe it was 2/3 of the debt is fixed by means of swaps. What accounts for this interest, big increase in the interest expense, and are we likely to see further increases in the next couple of quarters?
Hi, Jim. Yeah, I think the interest expense is probably accounted for by two things. First of all, we've purchased a vessel, so there's one extra vessel, 18 vessels now. If you look back, previously, that obviously wasn't there, so that accounts for a chunk of interest expense. Plus, you know, 1/3, approximately 34% at March, is not hedged, is not linked to swaps, so it's variable. Obviously, LIBOR has gone from, you know, crazy low to quite high recently. When you're looking at, as at today, $350 million that is exposed to that LIBOR increase, yeah, of course, you're going to see a significant increase in quarterly and annual interest expenses.
Where that goes from here, you know, I think the jury is still out on whether the Fed will increase rates anymore. We've obviously got a fair amount of debt that is fixed, and as we're paying that down, you see on the diagram that the proportion that's swapped compared to total debt actually increases for the next few years. We're going to be slightly better off in that respect. Yes, I think to the extent that, you know, U.S. interest rates don't go higher, then yes, we've probably topped out in terms of interest expense. Perhaps the third element is as well, obviously, we've increasingly drawn on our revolving credit facilities, and that obviously has also added to our overall interest expense.
Again, that's one of the reasons why our key focus is on our visible liquidity going forward to allow us to perhaps use those revolvers less and reduce that borrowing in that respect as well. I think it's a combination of things, and possibly it's topped out, but it depends on what the U.S. Fed does going forward.
Okay. Next question. You make reference to the $172.5 million senior secured loan facilities, maturing in September and next January, that are secured by the Dan Cisne and the Dan Sabia. You said they're going to be fully repaid on maturity. You don't have $172 million or anywhere near it in cash sitting on your balance sheet. How are you going to repay them at maturity without doing a refinancing?
Yeah, well, the $172 million is an original notional debt. Obviously, since we took it out, that has been paid down. The balance today is around $8 million on each. We've factored that $8 million.
Oh, wow.
Yeah. We don't need to find $172 million.
Oh, good. Okay. When I saw in the news release, the reference to those two ships, I didn't recognize them from the prior years, prior quarters, releases. Am I just overlooking something? I mean, were they new to the fleet, or?
No, no, they've always been there, Jim. I have to say. I pretty much guarantee they've always been there.
Okay. Which is the new ship that you took on and for which you added debt? When did you take it on?
Sorry, which new ship?
In response to my first question. Yeah. Well, yeah, you said that one of the reasons the interest rate, the interest expense increased was because you added a new ship, a ship to the fleet and was financed partly with debt, so there's interest expense, really. I'm looking at now, it's slide 10. Which ship is that for which you began incurring?
The last...
interest expense in the book?
Yeah, the last ship that we purchased.
The Synnøve Knutsen.
was the Synnøve on the first of July, 2022.
Oh, okay. Okay. Okay, just one more thing. You, you've pretty much completed the refinancing of the $320 million facility. Was the previous facility covered by a swap? If so, will its replacement also have a swap in place, or is there going to be any impact in that area?
No. The majority of, I think if not all of that, particular facility wasn't matched with any swaps. To the extent that any of it was, sorry, I don't have that list in front of me, the swaps would roll over onto the new debt anyway, so it would literally be a like for like. The answer to your question is no impact.
Okay, great. Thank you very much.
No problem, Jim. Thank you.
Thank you. Our next question comes from the line of Ronald Silvera of R.E. SILVERA & ASSOCIATES, MARINE SURVEYORS. Your line is now open. Please go ahead.
Hi. Good afternoon, Gary.
Hello
the previous caller was just talking a lot about the tremendous climb, probably $2 million, approximately, in interest expense from fourth quarter 2022 to first quarter 2023. I would, as I have said many times in the past conference calls, that the debt is the killer for our business. You know, it's a simple business. It's a mobile pipeline. You move oil from one location to another location, take specialized equipment, et cetera, which has to be maintained properly, which you do a reasonably good job, although it seems like some of these ships are having problems lately, breakdown problems. My question is: how do you anticipate correcting the share price?
Five years ago, when we were buying the shares, we were paying in the 20s, low 20s for the shares, and we've held them through all your trials and troubles. It's coming clear to me that as the analyst for our company, that the business model, that we take these drop-downs, incur more debt, and depending on variables like interest rates, we survive or suffer, and now, you know, the price of the stock is down five years later with depreciated dollars to $5 from $20, where we bought it. We're looking not too good. I would like to know how you're going to attack getting the debt down on an accelerated basis. Can you do that?
Well, we're paying down a very significant amount of debt every year already in the region of $80 million-$90 million a year. If you look at the slide that's in the deck, you can see that that's happening. I think, you know, that in terms of what we're doing is, and where the value is in this business, is trying to sign new charters at good rates, and that's what will get us the revenue, that's what will get us the liquidity, and ultimately, that is what will get all of our unitholders the value. You know, we keep coming back to that same point.
I think when you look at the way in which we run the business, you know, we paid out a very good distribution for a very long time, until such point as the board felt that they couldn't do that anymore, for the reasons that, you know, we've been over before around the postponements of certain projects that came about as a result of COVID, from our customers' point of view. All of those projects are back online now. We're expecting a strong market in the mid and long term. You know, we've said several times that we're going through a difficult period right now. There's a little bit of softness in the, particularly the North Sea market.
You know, the sponsors and the management team here, we've run this business for the long term, and we think, you know, the market was good, and it will become good again. To come back and answer your question, you know, what are we doing? Well, it's all about signing good charters at good rates. You know, that's exactly what we're working on.
Can I ask, the new charter rates that you are employing at this point versus the ones that have faded away, are we equal to, better than, or worse than?
I think over the last couple of years, we've seen a dip in the rates that we've been able to achieve, but we think that will come back, and I think we're seeing that activity in Brazil already. Given the niche market that shuttle tanker operate in, it's a very small market. You know, there are only 75, 76-
I know.
vessels in the world, et cetera. You know, rates don't fluctuate wildly like they do in many other areas of shipping. Yes, our rates have dipped over this period of softness, and we've accepted rates that, you know, perhaps normally we wouldn't like. You know, that is coming back. We're seeing the market in Brazil tightening a lot, and we think that will also happen in the North Sea. As we've said, the North Sea is just taking longer.
Well, we looked at the forward schedule you have of possible drop-downs. From our viewpoint, with the age of our vessels being just over eight years, we don't see that we should be taking any drop-downs till at least 2027. In the meantime, we can, if at all possible, figure out ways to attack the debt and get the debt down so significantly that we're not really working for the bankers, rather, we're working for the stockholders, which have not had a good time in the last five years, obviously. That's our input. We would really like to see you stay away from drop-downs till at least 2027, when fleet renewal and the market has changed, that it will be much more beneficial to run our business.
The current business model, let's face it, over the last five years, has not been successful. Given all the different things, COVID, et cetera, the things that happen in the world, that's all part of running a business. The business model as we've run it, has not been successful from a shareholder standpoint. All the nice $0.52 dividends that we've gotten have been wiped out in the share value. I hope you will have that same kind of feelings, although I know you're leaving, I hope you'll leave with the advice to the rest of the individuals involved in decision-making, like the board, et cetera. Will.
Yeah, well, I think the.
be encouraged not to do drop-downs.
I think that obviously the, you know, how much somebody has gained or lost, you know, really does depend on when they bought and how long they held for. You know, we've paid out a huge amount of distribution since we listed. You know.
Yeah, our cost was $20. Now it's $5. All the dividend benefits have been wiped.
Yeah. I'm not saying that that's not the case, I do think, you know, not everybody has lost, not everybody has gained. I think the point that I'm trying to make is that, you know, this is a long-term business. We've tried to be very transparent about the issues and why they're there and what we're doing about it, importantly, and where we think the business is going. you know, we've-
Well, how do you feel...
... obviously-
How do you feel personally on the idea of further drop-downs within the next two years? Standing where you are now in this position.
I think it's obviously been difficult because otherwise, we would have done more by now. I think it's a question for the board to answer, and if the board think that the timing is right, then they will ask the independent conflicts committee to assess it. It needs to be right. You know, we've said before, you know.
I know. I'm asking, what?
doing the best.
what is your position on that question right now, your personal position?
I think the current unit price prevents us from doing it from an equity perspective. You know, the last two drop-downs we've done have been internally financed through sale and leaseback. You know, to say that we won't ever do a drop-down, there might be alternative methods to get value into the business, and we're always looking at those. I think it would be wrong to make any firm judgments on what we should and shouldn't do. Besides, you know, it's a question that the board will look at and do look at every quarter, because they're trying to maximize the value of the business. I think it would be wrong to rule anything in or rule anything out.
I understand what you're saying, and certainly, you know, the board are aware of the position that we're in.
Okay. Well, thank you very much for your efforts. I'm sure they were totally sincere over the years that I've talked to you. We've been shareholders actually longer than you've been the head of the business.
Yeah, well, I may-
Good luck in your future endeavors.
Yeah. I may still be here for the second quarter. I'm not sure yet, but, we'll see.
Okay. Well, God bless you. Bye-bye now.
Okay. Thank you.
There has been a follow-up question from Poe Fratt of Alliance Global Partners. Your line is now open. Please go ahead.
Hey, Gary. Just to confirm, did the balance on the revolver, the $55 million revolver? According to my records, it was $30 million was drawn on that at year-end. Did that change at all in the first quarter? You know, I guess an easier way to say it is, how much of the $55 million revolver will be rolled into that term loan on the six vessels going forward?
Yeah, no, I mean, disclosed in our 20-F, at December 2022, $55 million was fully drawn, so it will all be rolled.
Okay, great. Sorry, I had it broken out into two different ones, so thanks for your help.
Yeah, no problem.
Oh, Gary, just to confirm.
Yep.
Gary, if you wouldn't mind, on the $55 million revolver, there was no amortization, but the amortization on the previous term loan was about $7.5 million. Essentially, you're saying that the amortization of $7.5 million will be the go-forward amortization, but the loan will be, you know, essentially that much bigger than the, I guess, is that the right way to look at it?
Poe, can I come back to you on that detail? I don't want to tell you the wrong thing. I need to double-check which way around that is.
Okay, great. Thank you.
Thanks.
Thank you. As there are no additional questions by us at this time, I'll hand the conference back over to Gary for closing remarks.
Thank you, everybody else, for listening, please do have a good day. Thank you.
Ladies and gentlemen, this concludes today's KNOT Offshore Partners first quarter 2023 earnings results conference call. Thank you for joining. You may now disconnect.