KNOT Offshore Partners LP (KNOP): BCG Matrix [Dec-2025 Updated]

You're looking for a clear-eyed view of KNOT Offshore Partners LP (KNOP) using the BCG Matrix, mapping their assets against the high-growth shuttle tanker market. We've distilled the current state: the newest DP2 tankers and the $895 million contract backlog are clearly the Stars and Cash Cows, generating stable cash flow despite the low $0.026 quarterly distribution. Still, you need to watch the Dogs-older vessels facing re-chartering risk-and the Question Marks, where sponsor dropdowns requiring capital, like the $95 million Daqing Knutsen acquisition, will define future growth against an annual debt repayment schedule of $95 million or more. Dive in to see the precise positioning of every asset.

Background of KNOT Offshore Partners LP (KNOP)

You're looking at KNOT Offshore Partners LP (KNOP), which owns, operates, and acquires shuttle tankers. These vessels primarily work under long-term charters in the key offshore oil production areas of the North Sea and Brazil. The company is structured as a publicly traded master limited partnership, though for U.S. federal income tax purposes, it's classified as a corporation, meaning it issues a Form 1099 to its unitholders. Its common units trade on the New York Stock Exchange under the ticker symbol KNOP.

Looking at the second quarter of 2025, which ended on June 30, 2025, KNOT Offshore Partners LP reported total revenues of $87.1 million. Operating income for that quarter came in at $22.2 million, while the reported net income was $6.8 million. The partnership generated an Adjusted EBITDA of $51.6 million for the same period. Honestly, the net income figure suggests some profitability pressure despite strong top-line performance.

Operationally, the fleet was running hot. KNOT Offshore Partners LP managed a utilization rate of 96.8% overall, even after accounting for scheduled drydockings for vessels like the Raquel Knutsen and the Windsor Knutsen, which concluded during Q2 2025. The fleet size grew to 19 vessels following the acquisition of the DP2 shuttle tanker Daqing Knutsen on July 2, 2025, for $95 million. This new vessel is on a time charter with PetroChina in Brazil until July 2027, with an option to extend to 2032.

The company's contracted revenue position remains a source of stability. As of June 30, 2025, the fixed contract backlog stood at $895 million, representing an average duration of 2.6 years across the fleet. Furthermore, management noted that approximately 89% of vessel time for 2026 was already covered by fixed contracts by late September 2025. This visibility helps manage near-term uncertainty.

Financially, available liquidity was strong as of June 30, 2025, totaling $104.8 million. This was made up of $66.3 million in cash and cash equivalents, plus $38.5 million in undrawn capacity on its revolving credit facilities. To support unitholders, KNOT Offshore Partners LP declared a quarterly cash distribution of $0.026 per common unit for Q2 2025. Plus, the partnership initiated a $10 million unit buyback program, having already repurchased 226,000 common units for $1.64 million by September 25, 2025, at an average price of $7.24 per unit.

The market backdrop KNOT Offshore Partners LP operates in is defined by tightening shuttle tanker conditions in both the North Sea and Brazil, fueled by new Floating Production Storage and Offloading (FPSO) unit startups. Still, the company faces the imperative of fleet replenishment, as it operates a fleet with an average age of 9.7 years as of Q2 2025, and it must carefully manage significant debt obligations.

KNOT Offshore Partners LP (KNOP) - BCG Matrix: Stars

You're looking at the assets within KNOT Offshore Partners LP (KNOP) that are dominating a rapidly expanding segment of the maritime energy sector. These are the Stars-high market share in a high-growth market-and they demand significant capital to maintain that leadership position.

The overall shuttle tanker market is definitely a growth story, projected to expand at a strong 6.6% Compound Annual Growth Rate (CAGR) through 2031. This growth is fueled by the increasing development of deepwater and ultra-deepwater oil fields, particularly in Brazil, which is a key operational area for KNOT Offshore Partners LP. This environment supports the high-value, specialized assets that define the Stars quadrant.

The newest DP2 shuttle tankers are prime examples of these Stars, as they are immediately placed into high-demand, long-term contracts. Consider the Daqing Knutsen, a 2022-built DP2 Suezmax shuttle tanker acquired in July 2025 for a gross purchase price of $95 million. The net initial cost to KNOT Offshore Partners LP was approximately $24.8 million, after accounting for $70.5 million in outstanding debt and $0.3 million in capitalized fees. This vessel immediately secured fixed employment in the high-growth Brazil pre-salt market, with KNOT Offshore Partners LP guaranteeing the hire rate until 2032.

Securing long-term charter extensions on existing, modern vessels also solidifies their Star status by locking in high-growth market revenues. For instance, the Bodil Knutsen extension was secured in 2025 with Equinor, extending the charter firm period to March 2029, which includes two further one-year options. This focus on securing long-term coverage is crucial for these high-investment assets.

KNOT Offshore Partners LP's market-leading position, supported by its sponsor, in the specialized, high-barrier-to-entry shuttle tanker segment is evident in the fleet's current coverage. As of late September 2025, the Partnership reported 100% of its fleet fixed for the second half of 2025, and approximately 89% covered for 2026. Furthermore, the average fleet age was reduced to 9.7 years following the July acquisition of the Daqing Knutsen.

Here's a snapshot of the operational metrics supporting the Star classification as of mid-2025:

The cash consumption for these Stars is high, as they require continuous investment to maintain their technological edge and secure long-term employment. For context on the cash generation supporting these investments, Q2 2025 results showed:

• Revenue: $87.1 million
• Adjusted EBITDA: $51.6 million
• Net Income: $6.8 million
• Available Liquidity: $104.8 million (as of June 30, 2025)
• Total Debt Obligations: $918.6 million (as of June 30, 2025)

The sponsor, Knutsen NYK, is also investing heavily in the future of this segment, with seven new shuttle tankers on order for delivery between 2025 and 2028, many of which are slated for Brazil. This signals confidence in the long-term demand that underpins the Star category for KNOT Offshore Partners LP. If this high-growth market slows, these assets, having proven their market leadership, are positioned to transition into Cash Cows.

KNOT Offshore Partners LP (KNOP) - BCG Matrix: Cash Cows

You're looking at the bedrock of KNOT Offshore Partners LP's financial stability, the assets that generate consistent, predictable cash flow. These are the high market share units operating in a mature segment of the shuttle tanker market, demanding minimal growth investment while funding the rest of the partnership's activities.

The core fleet's high operational efficiency is definitely a key driver here, reporting a utilization rate of 96.8% in Q2 2025, even with two drydockings factored in. This high uptime means the assets are earning revenue almost constantly. This operational strength translates directly into the partnership's financial performance, which is what we want to see from a Cash Cow.

The visibility into future cash flow is excellent, supported by the substantial fixed contract backlog of $895 million as of June 30, 2025. This backlog represents contracted revenue, giving you a clear view of earnings visibility well into the future, with an average remaining fixed duration of 2.6 years on those contracts. Honestly, that level of contracted revenue is what allows management to plan debt service and distributions with confidence.

The primary cash engine for KNOT Offshore Partners LP is clearly demonstrated by the Q2 2025 Adjusted EBITDA, which landed at $51.6 million. This metric is crucial because it's the cash flow available before accounting for non-cash items and financing costs, directly supporting debt service obligations-which management noted is around $95 million or more per year in repayments-and shareholder distributions, like the $0.026 per common unit declared for Q2.

To show you the stability underpinning this cash generation, here's a look at the key figures from the Q2 2025 report:

The insulation from volatile oil prices comes from the nature of the contracts themselves. You want to see the vessels tied up with reliable counterparties for extended periods. Here's a snapshot of that stability:

• Vessels on long-term time charters with oil majors.
• Charter hire is insulated from volatile oil price movements.
• Recent charter extensions with Repsol Sinopec until June 2028.
• The Daqing Knutsen is on time charter to PetroChina in Brazil through July 2027.
• The Brasil Knutsen is due to commence operations with Equinor.

These assets are market leaders in their niche, generating the surplus cash needed to fund the partnership's administrative costs and capital deployment, including the recently initiated $10 million common unit buyback program.

KNOT Offshore Partners LP (KNOP) - BCG Matrix: Dogs

Dogs are units or products with a low market share and low growth rates. They frequently break even, neither earning nor consuming much cash. Dogs are generally considered cash traps because businesses have money tied up in them, even though they bring back almost nothing in return. These business units are prime candidates for divestiture.

Older vessels like the Windsor Knutsen, built in 2007, and the Fortaleza Knutsen face greater re-chartering challenges compared to modern tonnage. The fleet average age as of June 30, 2025, stood at 9.7 years. The Windsor Knutsen was one of the vessels for which scheduled drydocking periods concluded during the second quarter of 2025.

The low quarterly common unit cash distribution of $0.026 per unit reflects a necessary capital allocation shift away from unitholders. This distribution level was declared for the third quarter ended September 30, 2025, and is set to be paid on November 6, 2025.

Any vessel that is nearing the end of its charter and requires a costly drydocking before a new contract can be secured represents a potential cash drain. The need for capital expenditure on older assets, such as the drydocking expense incurred by the Windsor Knutsen in Q2 2025, ties up liquidity that could otherwise be used for fleet rejuvenation or debt reduction.

The high debt repayment schedule of $95 million or more per year consumes a large portion of operating cash flow, limiting discretionary capital for reinvestment or distribution increases. For instance, current installments due over the twelve months following March 31, 2025, totaled $96,000,000.

Key financial and operational metrics relevant to the Dogs quadrant assessment include:

Considerations for these lower-performing assets include:

• Vessels like the Windsor Knutsen (Built 2007) require capital attention.
• The quarterly payout is fixed at $0.026 per common unit.
• Debt servicing requires $95 million or more annually.
• Drydocking costs divert cash from other uses.

The low net income of $6.8 million in Q2 2025, despite strong revenue, suggests pressure on profitability, which is characteristic of assets that require more upkeep or face weaker charter rates.

• The Fortaleza Knutsen is associated with older financing structures.
• Fleet utilization was 96.8% in Q2 2025, accounting for drydockings.
• The Partnership has $895 million in fixed contract backlog as of June 30, 2025.
• The cost of debt refinancing, like the October 2025 maturity for the Synnove Knutsen loan, is a constant factor.

KNOT Offshore Partners LP (KNOP) - BCG Matrix: Question Marks

QUESTION MARKS (high growth products (brands), low market share): These business units consume a lot of cash but bring little in return, yet they possess high growth prospects. KNOT Offshore Partners LP faces several areas fitting this profile, primarily centered on future fleet deployment and capital deployment uncertainty.

The pipeline of potential dropdown vessels from the sponsor, Knutsen NYK Offshore Tankers AS, represents a significant area requiring heavy investment to convert potential into realized cash flows for KNOT Offshore Partners LP. The recent acquisition of the Daqing Knutsen exemplifies this capital need, as it was a large transaction that immediately added a contracted asset but required significant capital outlay.

The need to secure future employment for existing assets in a competitive market creates near-term risk that could shift these assets toward the Dog quadrant if not managed correctly. Specifically, charter coverage for 2026 requires immediate focus.

• Charter coverage secured for 2026 as of September 25, 2025: approximately 89%.
• Charter coverage expiring in 2026 represents approximately 11% of the fleet's total coverage.
• The Daqing Knutsen is on charter through July 2027, with KNOT Offshore Partners LP guaranteeing the hire rate until 2032.

The sponsor's newbuild program represents growth potential that is not yet guaranteed to be dropped down to KNOT Offshore Partners LP, making these future assets Question Marks until the option to acquire is exercised. These vessels are in a high-growth market segment, but their integration into the Partnership is not certain.

• Newbuilds for delivery in 2026 - 2027 under contract with Knutsen NYK (three vessels).
• Additional newbuild orders by the sponsor are scheduled for delivery over 2025-2028.
• The Partnership intends to pursue accretive dropdown transactions to increase capital value.

The $10 million unit buyback program is an opportunistic capital allocation move, but its long-term impact on unit price remains uncertain, as the market valuation is considered a substantial discount to net asset value by management. The initial deployment of $1.64 million of this program is a tangible action, but the remaining allocation is discretionary.