MLPA Conference, Orlando June, 2016 Notice to Recipients This - PowerPoint PPT Presentation

MLPA Conference, Orlando June, 2016

Notice to Recipients This presentation is not a prospectus and is not an offer to sell, nor a solicitation of an offer to buy, securities. Except for the historical information contained herein, the matters discussed in this presentation include forward-looking statements that involve risks and uncertainties. These risks and uncertainties include, among other things, market conditions and other factors that are described in KNOT Offshore Partners LP’s (“KNOP”) filings with the U.S Securities and Exchange Commission (“SEC”), which are available on the SEC’s website at http://www.sec.gov. Nevertheless, new factors emerge from time to time, and it is not possible for KNOP to predict all of these factors. Further, KNOP cannot assess the impact of each such factor on its business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward-looking statement. KNOP expressly disclaims any intention or obligation to revise or publicly update any forward-looking statements whether as a result of new information, future events or otherwise. The forward- looking statements contained herein are expressly qualified by this cautionary notice to recipients. 2

Company overview  IPO April 2013, owing 4 vessels  Fleet of ten state of the art shuttle tankers  All vessels secured under long term fixed-fee revenue contracts with leading oil majors  Visible growth potential with five dropdown candidates from Knutsen NYK  Annual distribution currently $2.08, yielding 11.3% (2) with share price $18.41  Attractive 1099 structure not K-1 (1) Clarkson Research Spring 2016 (2) As of May 25, 2016 3

Business Strategy  Right to purchase any existing or any new-build tankers that are under long-term charters (5 years or more) from Knutsen NYK Pursue strategic & accretive acquisitions of – 5 identified candidates; one vessel, Raquel Knutsen delivered in 2015, on 10- shuttle tankers on long- years contract with Repsol Sinopec Brazil and four new-builds; delivery between 4Q16 and 2Q17 term, fixed- rate charters  Assess other attractive acquisitions from Knutsen NYK and 3 rd parties on opportunistic basis  Expand operations alongside the growth of global offshore oil production in proven areas such as the North Sea and Brazil as well as other new markets as Expand global operations they develop in high-growth regions  Focus on strong customer relationships and maintain track record of Manage fleet and deepen consistency, safety and reliability customer relationships to  Actively seek extension and renewal of existing charters for new opportunities provide a stable cash flow base 4

Investment highlights  Modern ( average age 4.3 years 1 ) fleet, equipped with latest technology  Long term contract (remaining duration 5.3 years 1 ) with oil majors 1 Pure-play shuttle tanker  Operational and technical expertise  Solid contract base – Revenue backlog of $ 790 million 1  99.7 % utilization of the fleet since IPO  Knutsen NYK is a market leading shuttle tanker operator with 29 years of experience 2  Knutsen NYK is backed by two leading sponsor in the industry, TSSI and NYK Sponsor  KNOT + KNOP has delivered 40 per cent fleet growth since IPO resulting in KNOP beeing able to grow its fleet from four to ten vessel at the same time increasing dowry from four to five  Distribution growth of 38% since IPO  Annual distribution of $2.08, yielding 11% (2) 3 Distribution Growth  Guided cover ratio of ≈1.25 for year 2016  Visible dowry of 5 drop-down vessels with a minimum average fixed contract period of 5.9 years and 11.2 years including charterers extension options  Shuttle tankers’s integated nature in the offshore oil logistics chain creates low threat of substitution Favorable market  High technical and managerial requirements by customers and regulators creates economies of scale 4 fundamentals with high and scope barriers to entry  Well established operators preferred given technical expertise required and the cost /impact of downtime  $48.8 million in available liquidity (28.8 million in cash and $20 million available undrawn revolver credit (1) 5 Strong Balance sheet  62% of total outstanding debt with fixed interest rate  Interest cover ratio of 5.6 and only $ 49.7m of current portion of long-term debt due to long profiles  No capex commitments and no debt maturities before Q2-2018 (1) As of 31 March, 2016 (2( As of 26 May, 2016 5

Financial guidance for existing fleet for year 2016 Guidan ance ce 1Q 1Q 16 Figures es Ac Achie ieved ed Revenues $ 167-170 m $42.0 m 25% EBITDA $128-132 m $33.1 m 25% Distributable Cash Flow $75-79 m $17.9 m 23% Distribution $60 m $15.1 m 25% Coverage ratio ≈1.25 1.19 Despite docking of Bodil Knutsen in first quarter with associated costs and off-hire we are in line to deliver according to full year guidance 6

Stable operational performance results in stable financial performance UTILIZATION (%) REVENUE (USD million) 39,3 42,5 42,0 Average of 99.7 % since IPO 27% CAGR 100% 99,7%99,9% 100% 99,6%99,9%99,8 % 37 since IPO 34,3 34,7 36,2 99,2%99,3%99,4%99,7% 98,9% 20,5 22,2 21,8 22,1 17,3 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2013 2014 2015 2016 2013 2014 2015 2016 ADJUSTED EBITDA ( USD million) DCF ( USD million) 32,2 33,8 33,1 30% CAGR 28% CAGR 14,7 15,1 16,4 16,2 16,2 18,1 17,9 25,7 26,5 28,3 28,8 since IPO since IPO 9,8 9,3 15,7 16,8 16,1 16,3 8,9 8,1 7,2 12,7 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2013 2014 2015 2016 2013 2014 2015 2016 7

Stable earnings not correlated with the oil price volatility Adjusted EBITDA (USD million ) Oil Price Unit Price 120 35 Ingrid dropdown 30 Dan Sabia 100 33,8 33,8 dropdown 32,2 33,1 Dan Cisne KNOP unit price Brent crude pice dropdown 25 28,8 28,3 80 26,5 25,7 20 Hilda & Torill 60 dropdown 15 16,1 16,3 40 10 20 5 0 0 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 KNOP unit price has recovered due oil price increase, but profitability is actually independent of oil price 8

Long-term Contracts Backed by Leading Energy Companies Name Area 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 (1) Windsor Knutsen Brazil (1) Bodil Knutsen N. Sea Fortaleza Knutsen Brazil Recife Knutsen Brazil Carmen Knutsen Brazil Hilda Knutsen N. Sea Torill Knutsen N. Sea Dan Cisne Brazil Dan Sabia Brazil Ingrid Knutsen N. Sea KNOP fleet has average remaining fixed contract duration of 5.3 (2) years Additional 2.5 years on average in Charterers option (1) KNOT has guaranteed the hire rate to April 2018 (five years from IPO date) (2) Remaining contract life is calculated as of 31/03/2016. 9

Significant fleet growth since IPO 10

Dropdown inventory: Five potential acquisitions 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Name Area Raquel Knutsen Brazil H2816 Brazil H2817 Brazil H686 Brazil H2818 Brazil Fixed contract periods for the dropdown fleet are 5.9 (1) years on average Charterers also have the option to extend these charters by 11.2 years on average (1) Remaining contract life is calculated as of 31/03/2016. 11

Shuttle Tanker Market Overview Shuttle Tanker Market Overview 12

A Critical Component of Operator Infrastructure: Shuttle Tankers are substituting pipelines in Deep Sea oil production Cost for field operator Revenue for field operator Seismic ismic Drill illing Subsea bsea Productio oduction Stor orage age Trans anspor ort Advantages vs. Pipelines Key Differences vs. Conventional Tankers  Superior, more economical alternative with lower  Specially designed tankers with sophisticated initial investment in certain fields based on: bow loading and submerged turret loading equipment – Water depth – Dynamic Positioning (DP) systems enable the vessel – Distance from infrastructure to stay on location in high seas and in harsh – Field size environments – Field life – 50% higher investment cost than conventional tankers  Destination flexibility  Tender-based business drives newbuilds  Less capital expenditures (versus speculative ordering)  Longer-term contracts  Stricter standards and specialized crewing 13