Let's start with the presentation. Thank you. If any of you have not seen the earnings release or the slide presentation, they're both available on the Investors section of our website. On today's call, our review will include non-U.S. GAAP measures such as DCF and adjusted EBITDA. The earnings release includes a reconciliation of these non-U.S. GAAP measures to the most recently comparable GAAP financial measures. A quick reminder that any forward-looking financial statements made during today's call are subject to risks and uncertainties, and these are discussed at length in our annual and quarterly SEC filings. As you know, actual events and results can differ materially from those forward-looking statements. The partnership does not undertake to update these forward-looking statements. And now onto the presentation. KNOT Offshore Partners focuses on the shuttle tanker segment. The asset is scale-specific and an integral part of the logistics supply chain. It provides a vital service transporting oil from the offshore production unit to shoreside. KNOP trades at a significant yield premium to the Alerian Index today. Our distribution is around 9.7%. It might be a little bit less now compared to the Alerian Index of 6.7%. The index represents around 85% of all MLPs by market cap. Unlike most of these MLPs, however, we are operating in a space seeing substantial oil production growth. And consequently, the supplier shuttle tankers is tightening as this demand grows. We have a young fleet and after a record-breaking set of results in the previous quarter, today, we report our latest best-ever financial results. For the fourth quarter of 2016, a very solid financial positioning. We are pleased to announce another addition to the MLP fleet, the Tordis Knutsen, for an acquisition price of $147 million on the 1st of March 2017. The vessel was delivered…

[Operator Instructions] And the first question comes from Matt Niblack with HITE.

So on the Goliat field, could you speak to the competition for your 2 vessels there? Are there any alternatives for the producers?

Not at this point, present time. And those vessels are being -- the way they are, they're pretty specialized. There were -- there's normal lead time for a shuttle tanker of about 2, 2.5 years between placing an order and being field-ready. So we think those vessels will take even longer to manufacture than that. So really, Eni aren't really looking anywhere else as far as we're concerned. We think there's really no substitution risk there at all [indiscernible] and age of the contract and our relationship with the charterer.

Great. And then a similar question for the Windsor Knutsen. What's the competitive environment there for recontracting?

Well, interestingly, Windsor can work in both the North Sea and Brazil. So even if -- it's highly unlikely that -- the way Brazilian pre-salt's going today, that any ships moved out of that area, it's more likely to see a migration to that area from the North Sea, although I don't think that's likely because the North Sea is pretty tight as well. So we're very relaxed about the Windsor. We get great reports back from both, previously, BG and Shell. They like the ship, and we're very confident it'll be renewed. I mean, bear in mind, the charter rate on our ship is a little bit less than the new tonnage, so it's actually relatively cheap as well. So we're not -- again, we're not worried about this ship.

[Operator Instructions]

John, it's Spiro Dounis from UBS. First, just want to start off on the drop-downs. You went from a period of virtually no drop-downs, did 2 in really quick succession. Just wondering if you can comment on why that was important to maybe drive these new drop-downs back to back and maybe what that means for the pace for the rest of the year. Obviously, you got a lot in front of you.

Yes. I think we saw the improvement in the capital markets environment. We were comfortable with the unit price the way it was, and we went to raise the last [ph] deal. And we got a reasonable deal from the bank, and we thought we would like to get the unit moving again. I mean, one of the things about a block trade is it gives the opportunity in the aftermarkets for lots of your existing unitholders to basically transact often. You need to do common unit issuances at a regular -- on a regular basis so you keep the liquidity in the unit and make people comfortable -- the unitholders that they can move the stock if they want to. So what we saw with the common [indiscernible] a lot of activity after the placement, a lot more than the actual 2.5 million units we bought and sold as people made the opportunity because the market was there to liquidate or build that position. So actually, it's quite necessary to -- we do realize -- because the stock on, a day-to-day basis, in the past has been quite low liquidity, it's quite important to keep the common units flowing. So that was the key. That was key. And obviously, the preference deal is an opportunity. I feel that's really good deal. No preemptive right, $24 strike. If you were doing a common unit issuance, you need a $27, $28 pricing to get that sort of deal. So we were very happy with that one. So really, those 2 things came together. And obviously, you can't just ignore -- actually, we're paying 9% yield, but we have to drop the ships, and quite quickly.

Sure. And then just in terms of the run rate for the rest of the year, how are you thinking about drops and maybe what you need to see in the market to make that happen?

Well, I think Øystein's giving out some more detail when it comes to his Investor Day presentation. But I mean, I think it's tight, but we could -- we've got more or less enough capacity to do another drop. But again, that's something we will consider, and I think he's -- he'll go through that more on the Investor Day. But today, I'm -- we'll just -- today, the rate of fee is comfortable. It's comfortable. We could stretch again a bit.

Got it. And the second one, just on the distribution. Just trying to figure out what you need to see specifically to have an increase here. And is it really just about the yield? Or is there something more to it? And I guess what I'm getting at is it seems almost like a circular argument. It's almost as if you sort of paid a higher amount. Maybe everyone will see the growth and the stock price would go up, yield will go down. Because right now, it almost seems like the equity is not growing. It's almost like a high-yield unsecured subordinated bond.

Yes. As a high-yield unsecured note, if you look at it that way, we're still paying a hell of a yield. So yes, we could grow the distribution, but we will look at it. So I mean, we'll not -- it's not after me. The cover is going up. But because of covers, where it is today, it means we can more or less get by comfortably and to refinance, and that's quite nice. It gives us more flexibility. We will see what the refinancing opportunities are in the ships as well because, obviously, the pay-down on these ships is quite a lot quicker than the amortization in the annuity basis. So we like the cover because it gives more flexibility, and we look at the yield today and think, "Well, 9.7%, who wouldn't be happy with that in this sort of company environment?" But obviously, if you look at $27, $28 a unit, then I think we probably would expect it, but it's just the way it is. We will -- we got the opportunity to do it, but we don't really need to do it. And it creates an easier pathway for us if we don't do it.

This is Nick with Citigroup Research. Just a quick question in terms of the tightness of the market. Should we expect to see more backlog from the sponsor as a result of that tightness in terms of ship orders? And if you could talk a little bit about timing of that, that would be great.

Yes, I mean, I think Dennis [ph] have got a very good presentation on the sort of tanker market. But I mean, obviously, we are tendering for 1 or 2 ships, but not in Brazil. It's interesting. It's 1 or 2 [indiscernible] part. Because I really see that this [indiscernible] quite significant [indiscernible] in Brazil. But I guess, all the activity that's happened in the past 2 or 3 years, then the oil price dropping off, has put their plans back a little bit as far as capital investment is concerned. I mean, the Petrobras, what they do, they do tend to run short voyages on the [indiscernible] about a little bit. And basically, with the Shell ships and the Petrobras ships, the ones that are MLP, they tend to go further afield with the discharges. The Brazilian ships are small, and they tend to run and cost a bit more. But generally, I mean, you see about 70,000 barrels a day for a Suezmax shuttle tanker. So possibly, you can have a 15-day voyage. So when you think about the growth projection as much as it happened down there, it's pretty obvious they're going to be on that ship fairly soon. But we haven't seen any activity yet, so I can't answer that. It's the last [ph] of contract that you're looking at.

Well, fair enough. What about other marketplace, offshore Canada? There was a tender. I think we've asked about this before, where one of your competitors actually got a bunch of ships.

Yes. Well...

Yes. I can comment on there. Of course, we didn't like the Canadian tender. Because this was with a time charter, it was the same agreement on transportation in terms of what they are used to in shipping. So in shipping, you have, I will say, a [ph] balance. But in the Canadian contract, we thought it was a bit more skewed towards the charterer. So of course, we bid for the contract. But we bid a higher price on the -- with that contract, but we took the contract for the Shell vessels. So we're happy with those vessels -- and if you look into our financing, we did $353 million of bank debt. That's 190 basis points for those 3 vessels. Teekay managed to write $250 million of bank debt for the 3 shuttle tankers in Canada, and I think that shows a bit all the context of [indiscernible] Shell as far as the Canadian contract.

I guess, last question will be coming back to the original contract, but timing of certain things, specifically distribution growth. Is there a minimum coverage level that you're comfortable with before -- or do you need to see [indiscernible] amount of time before you actually look to increase distribution?

No, I'm not going to -- I don't need guide on that. But I think when you look at other shipping companies, we expect -- we accept the -- for the space at the moment, deals are a bit elevated. Our unit's trading at around 9.7%. I don't think many, with the quality of our organization that we have, are trading at that level, and I think we want to see a bit of growth in the unit price. And the reason for doing it, before we do it. I said before, we'd rather grow -- we'd rather reduce the gearing and -- not before since refinancing ships and just have a more gentle approach to it until we need -- we don't really see the need. We think it's a pretty good story -- pretty good yield, sorry, at the moment. I'm not going to -- we would talk about it. It's not just down to me. It's just how I feel personally. So -- but as Øystein has guided in his notes that we are actively discussing it. It's not something that's off the agenda by any means.

Brian Branbook [ph], FB Asset Management. Regarding competition and the market. Is there -- you have several charters coming due, but what is the situation? Is there -- are there many more new ships coming on the market? And would that change the usage of your ships? I mean, do you expect more competition and that's lower prices down the street because new ships are coming in from the competition?

Well, we -- there isn't much of a -- there aren't many contracts to deliver this year. [indiscernible]

Their order book is high vessels. So all those high vessels will be delivered in the next 12 months. All of the vessels are -- sits on long-term employment. So basically, they are all new contracts. So -- and then [indiscernible] all those in the order book. Hasn't been a single order for a shuttle tanker for 2 years. So we're actually seeing a gradual increase of the fleet of the shuttle tanker. So competition, there are always competition. But the market is tightening, and rates are basically going up.

[indiscernible], it's very good.

We also have our Q&A panel outdoor, so there will be more chances to ask questions there.

More questions, yes, on a more informal basis.