KNOP Snags Tanker Couple

KNOT Offshore Partners LP (KNOP) has entered into agreements to purchase from Knutsen NYK Offshore Tankers AS all of the ownership interests in the companies that own and operate the shuttle tankers Hilda Knutsen and Torill Knutsen.

The purchase price of the Hilda Knutsen is $166m, net of $109.6m of outstanding indebtedness related to the vessel. The purchase price of the Torill Knutsen is $169m, net of $112.1m of outstanding indebtedness related to the vessel.

KNOP expects to fund the cash portion of the purchase prices by issuing equity.

The Hilda Knutsen and the Torill Knutsen are operating in the North Sea under time charters with Eni Trading & Shipping S.p.A. (Eni).

The Hilda and Torill Charters commenced upon delivery of the Hilda Knutsen and the Torill Knutsen in the third quarter of 2013, and each will terminate five years after delivery.

Eni has options to extend each of the charters for up to five one-year periods. In the case of the Torill Charter, Eni has the option, at any time before May 31, 2016, to extend the charter term to ten years in exchange for a reduction in the hire rate.

KNOP owns, operates and acquires shuttle tankers under long-term charters in the offshore oil production regions of the North Sea and Brazil.

The partnership is structured as a master limited partnership.