Good morning, and welcome to the KNOT Offshore Partners First Quarter 2020 Earnings Results Conference Call. [Operator Instructions]. I would now like to turn the conference over to Gary Chapman. Please go ahead.

Thank you, and welcome, everybody. As always, the earnings release and slide presentation are both available on the Investor Relations section of our website. For those that don't know, KNOT Offshore Partners, KNOP, focuses on the shuttle tanker segment where our ships transport oil from offshore production units to shoreside and are an essential part of the supply chain for our customers. Our call today will include the non-U.S. GAAP measures of distributable cash flow and adjusted earnings before interest, tax, depreciation and amortization, EBITDA. The earnings release includes a reconciliation of these non-GAAP measures to the most directly comparable GAAP financial measures. And please remember that any forward-looking statements made during today's call are subject to risks and uncertainties. These are discussed in our annual and quarterly SEC filings. Actual events and results can differ materially from those forward-looking statements, and the partnership does not undertake a duty to update any forward-looking statements, and I refer you to Slide 2 in our recently filed 2019 20-F for further details. On Slide 3, quarter 1 2020 financial highlights and recent events. Despite the continuing impact of COVID-19 on global economic activity and the decline in volatility we've seen in oil prices, KNOP is today reporting good first quarter results in line with expectations. Equally, as the partnership's operations are not exposed to short-term fluctuations in oil prices, volume of oil transported or global oil storage capacity, we have so far been able to avoid any material disruption to our operations or charters. Total revenue of $67.8 million, operating income of $28.4 million and a net loss of $6.1 million, which is after taking into consideration the unrealized mark-to-market positions on our interest rate swaps where we don't apply hedge accounting. And more comparably, quarter-by-quarter adjusted EBITDA of $50.8 million. Distributable cash flow generated of $23.9 million, giving a distribution coverage ratio at the end of the quarter of 1.33 and a continuation of the cash distribution of $0.52 per unit, returning an annual yield of around 14% based on a $15 unit price. During the quarter, the fleet operated with 99.6% utilization for scheduled operations and 95.2% utilization, taking into account the planned drydocking of the Raquel Knutsen. The Raquel returned to service on March 5, 2020, after a successful drydock and there are no more drydocks planned in 2020 across our fleet. On April 20, 2020, Eni Trading & Shipping exercised 2 of its 1-year options to extend the time charter of the Torill Knutsen until November 2022 at a rate that was in line with the partnership's expectations. In connection with this early exercise by Eni, the partnership granted Eni a further option to extend the time charter by 1 additional 1-year period such that Eni now has the option to extend the time charter by 2 1-year periods until November 2024. We believe this early declaration and agreement with Eni further strengthens the partnership's contracted revenue streams and validates our belief that our vessels remain an essential part of our customers' supply chains. And while other vessel charters will naturally come up for renewal in the coming years, we believe that our strategy, our industry-leading position and the forecast demand and supply for shuttle tankers leaves us as well -- very well placed. On Slide 4, the income statement. For this first quarter of 2020, we recorded total revenues of $67.8 million compared to $70.1 million for the fourth quarter of 2019. The decrease almost entirely relates to Raquel Knutsen scheduled drydock time offhire, which was planned. Vessel operating expenses for the first quarter of 2020 were $15.6 million, an increase of $0.2 million over the fourth quarter of 2019. This increase was the net result of bunker costs incurred in relation to Raquel Knutsen's drydock, offset by there being 1 less calendar day in the first quarter and on average, lower operating expenses across the fleet. Depreciation was slightly down by $0.2 million at $22.4 million compared to fourth quarter 2019 as a result of the early commencement of the Raquel Knutsen drydock in December 2019. Admin and general expenses were slightly up in this first quarter by $0.2 million at $1.4 million compared to the fourth quarter 2019, principally as a result of the higher accounting, tax and legal fees related to the 2019 year end close. Overall, this caused operating income to fall to $28.4 million in the first quarter compared to $31 million in the fourth quarter of 2019. Interest expenses for quarter 1 was $10.5 million, a decrease of $0.9 million from $11.5 million in quarter 4, the decrease being driven by lower LIBOR on average across all credit facilities that are not hedged. Realized and unrealized losses on derivative instruments were $23.7 million in the first quarter compared to a gain of $4.2 million in the fourth quarter. The realized noncash element of the mark-to-market loss was $23.9 million for the first quarter of 2020 compared to a gain of $4.9 million for the fourth quarter of 2019. Of the unrealized loss for the first quarter of 2020, $23 million is related to a mark-to-market loss on interest rate swaps due to a decrease in the U.S. swap rate and $0.9 million is related to foreign exchange contracts. Slide 5, adjusted EBITDA. In quarter 1, KNOP generated adjusted EBITDA of $50.8 million compared to $53.6 million in the fourth quarter. Adjusted EBITDA is a proxy for cash flow, referring to earnings before interest, tax, depreciation, amortization and other financial items. Please do refer to the notes at the bottom of the slide. Slide 6. Distributable cash flow, or DCF, is another non-U.S. GAAP financial measure. DCF was $23.9 million in the first quarter in comparison to $26.4 million in the fourth quarter and the distribution cover at the end of the quarter was 1.33x. In the quarter, we again maintained our distribution level of $0.52 per unit equivalent to an annual distribution of $2.08. And again, please do refer to the notes at the bottom of the slide. The decrease of distributable cash flow is mainly attributable to the reduced earnings from the Raquel Knutsen due to its scheduled drydocking and 1 less operational earning day in the first quarter and an upward adjustment made to the annual estimated maintenance and replacement capital expenditures. Slide 7, balance sheet. At the end of the first quarter, the partnership had $72.9 million in available liquidity, which consisted of cash and cash equivalents of $44.2 million and $28.7 million of capacity under its revolving credit facilities. The revolving credit facilities mature in August 2021 and September 2023. And otherwise, KNOP has no other refinancing falling due until the end of 2021. The partnership's total interest-bearing debt outstanding as of March 31, 2020, was $984 million, down from $1.002 billion at the end of the fourth quarter of 2019. And the average margin paid on the partnership's outstanding debt in this quarter stayed the same as last quarter at approximately 2.1% over LIBOR. At the end of the first quarter, the partnership had entered into various interest rate swap agreements for a total notional amount of $634 million, up from $562 million at the end of the last quarter to hedge against the interest rate risks of its variable rate borrowings. Based on this, in the quarter, we received interest based on 3- or 6-month LIBOR and paid a weighted average interest rate of 1.75% under the interest rate swap agreements, which have an average maturity of approximately 3.9 years. As mentioned above, we don't apply hedge accounting, so our financial results are impacted by changes in the market value of these financial instruments. However, cash flow is stabilized, mitigating interest rate risk on distributable cash flows. Slide 8, an update on our long-term contracts. For Windsor Knutsen, the partnership's previous agreement with Shell as charterer to suspend the vessel's time charter contract, ultimately at no cost to the partnership, has now ended and the vessel is back on its normal time charter. The vessel is fixed until October 2020, and we're in discussion with Shell about the vessel's next option period. And at this stage, we have no indication that the option will not be taken. Bodil Knutsen is our largest shuttle tanker operating in the North Sea and is on charter to Equinor until May 2021. Equinor then have 3 further 1-year annual extension options. Torill Knutsen and Hilda Knutsen both operate on the Goliat Field in the Barents Sea. After initial 5-year terms on both vessels, the Hilda time charter extended for four more years to 2022 and then has further options to extend the charter by three more one year periods until 2025. And as explained earlier, the charter of Torill has just taken two of its one year options to extend the time charter until November 2022 and then has further options to extend the charter by 2 more 1-year periods until 2024. Dan Cisne, Dan Sabia, Fortaleza and Recife Knutsen remain on long-term bareboat charters through to 2023 with Petrobras Transpetro. Carmen Knutsen and Raquel Knutsen are on charter to Repsol Sinopec until 2023 and 2025, respectively, and with options to extend until 2026 and 2030, also respectively. The Ingrid Knutsen is on time charter until 2024 with Vår Energi, with charterer's options to extend by up to 5 more 1-year periods. Tordis, Vigdis and Lena Knutsen are on 5-year charters to Brazil shipping, a subsidiary of Shell. These will expire in 2022, and the charterer has options to extend for up to a further 10 years on each vessel. The Brasil and Anna Knutsen are on charter to Galp Energia until 2022 with Charterer's options to extend up to 2028. At March 31, 2020, the KNOP fleet had an average remaining fixed contract duration of 2.7 years and an additional 4.2 years on average in charterer's options, as you can see, all with strong credit counterparties. As I've said in previous calls now, I would like to again point out that these charter renewal decision points, as firm fixed periods come to an end, should be thought of as a natural part of KNOP's business. Typically, a new build vessel charter contract will contain a fixed charter period of between 5 and perhaps 10 years, plus charterer's options for additional periods of, say, 5 to 15 years, depending on the charterer's production profile, volumes, et cetera. This allows the charterer to control access to the vessel for a long period of time, which is important given that typically, there is no surplus supply of shuttle tankers in the market, but whilst potentially giving them balance sheet and some operation flexibility. These option renewals are hence a normal part of our business and the gradual reduction of the average fixed contract period today at 2.7 years should be expected. Nonetheless, we do have several important elements that we believe differentiate us from other more typical and often volatile types of shipping and which provide us with more stability and more comfort. These include our customers' essential need for these assets as part of their supply chain, the niche market, there are only 3 main operators. Our customer relationships developed over many years, our operating record, the age of our fleet and its DP2 technology, the supply-demand balance of shuttle tankers, plus our willingness and ability to be very flexible for customers' needs. We believe we're in a strong position to see the options on our vessels taken up as they fall due or to find alternative employment with a new shuttle tanker charterer, or worst-case, by entering a vessel into the conventional tanker market. There are other factors, for example, that only certain vessels are equipped for and can service certain fields, giving us more assurance that those vessel options will be taken up. Of course, we never give guarantees and the time charter rate for a charterer's option is sometimes open for a level of negotiation, but we want to keep making the point that we believe KNOP's risk profile is not the same as a typical ship owning company. On Slide 9. At this time, the sponsor KNOT has 5 vessels that could be dropped into the MLP, beginning from around Q3 2020. These have an average fixed contract period of 5.8 years with an average of a further 9.2-year extension options. The acquisition by KNOP of any drop-down vessels in the future is subject to the approval of the Board of Directors of each of KNOP and KNOT, and there can be no assurance that any potential drop-downs will actually occur. Given these opportunities, we continue to look at all options as to how KNOP might finance the purchase of these assets as they come on stream, given we are reducing our leverage each quarter and maintaining strong coverage assuming it makes sense for our unitholders. However, given the turmoil in the world in the past weeks and now months, we hope to be able to give more guidance at the end of the second quarter after our evaluation of the market and potential timing, which could now be in the fourth quarter of this year. Slide 10. As regular attendees of the call will know, each time, we try to provide just a little extra information around our service and markets. And today, I have a few slides related to Brazil, which is, of course, our main market. In fact, 13 of the partnership's 16 vessels are trading in Brazil, and this is also where we see our future growth being strongest. The following 4 slides come directly from Rystad Energy, an independent energy consulting firm that the partnership uses. So these are not internally generated. First, it's important to say that these slides focus on the Brazilian oil market and as KNOP is not contractually exposed to oil price, volume or storage risks in our charters. These slides are more looking from the perspective of our customers, and hence, the long-term demand for shuttle tankers and why we believe the shuttle tanker market remains strong and attractive into the future. We have to start with the current oil market troubles, driven by the global supply demand problems we've seen. And although, we think we may see a short-term reduction in oil production in Brazil, shown by the gray here, we do not anticipate this materially impacting those fields where our tankers operate. One example for our reasoning here is Petrobras' latest first quarter results. Petrobras, of course, still dominate Brazilian production, show that lifting costs in the pre-salt areas as being $4.52 per barrel before taxes and lease costs. And this has been coming down quarter-by-quarter mainly due to economies of scale in the sizes of the producing fields, but partly as well as from the devaluation of the Brazilian currency against the U.S. dollar. And while of course, this is just 1 statistic, it does support what we're seeing on the ground. Much is, of course, also made us to whether all demand will bounce back and Petrobras on their recent first quarter earnings call already reported an oil export record with a marked upturn in demand from China, who may be -- are coming out of lockdown earlier than most. Slide 11 shows the short run marginal cost of all current Brazilian production, which includes the more expensive shallow water and onshore oil. Today, Brazil produces around 2.8 million barrels per day. And you can see that, that production is economic right down to around $25 per barrel. On Slide 12, this shows the expected breakeven oil price for future Brazilian projects. Brazil has strong ambitions to grow its production, and you can see that it can add more than an extra 1.5 million barrels per day with a longer-term average oil price down to $40. Most analysts, energy experts and companies all have their long-term estimates for oil prices sitting well above $40 today. On Slide 13. And whilst we've so far focused on the position today, Brazil is not immune to the reductions in CapEx spend we've seen announced and some future projects. Perhaps those programs that don't yet have a contracted rig may be delayed. However, given the fundamentals and cost base I've mentioned above, we don't think such projects will be canceled. E&P companies have spent $11 billion in signature bonuses to acquire blocks in the Campos and Santos basins in the last 3 years. And we think there remains a strong outlook for growth in Brazil despite the CapEx cuts announced in response to the current global economic crisis. In addition, and to show support, it is reported that the Brazil's national petroleum agency, ANP, is working to extend the duration of exploration contracts, which will give operators breathing space to fulfill their commitments. So overall, our message is that we believe Brazil remains well placed in terms of its oil production going forward due to its relatively cheap cost of production, and there being very sizable resources still to be extracted. Most of these resources are located in the Santos Basin where typically shuttle tankers with DP2 technology are needed. Between KNOT and KNOP, we also have around 8 different customers in Brazil and know the market very well. And by not having any oil price risk in our contracts, we're focused only on future production and transportation requirements. Slide 14. So in summary, we've reported another strong and stable performance in this first quarter of 2020 with good cash flow and coverage. We extended the charter of the Torill Knutsen for 2 more years, and we maintained our distribution. And despite coronavirus and the continuing turmoil in global markets, in part, as the partnership's operations are not exposed to short-term fluctuations in oil prices, volume of oil transported or global oil storage capacity, we've so far been able to avoid any material disruption to our operations or charters. Of course, a long-term or permanent market shift could still affect the number of new offshore projects and the overall production of oil, which could eventually, and in turn, impact the demand and pricing for shuttle tankers. But we believe the shuttle tanker market remains strong today, and we think it remains an attractive proposition into the future. That concludes the presentation, and I'll be happy to take any questions.

[Operator Instructions]. Our first question will come from Igor Levi with BTIG.

So you've talked before about how oil prices have no impact on existing contracts given that you transfer oil from A to B. But I was hoping you could share, would potential shut-ins have any impact on the contracts. Is there any clauses regarding that? And have you seen any shut-ins on any of the fields where you are working?

Igor, thanks for that question. The short answer is, no, we don't -- we're not exposed to that in our contracts. We have time charter contracts, which are essentially the higher of the vessel for a period of time. And it's really up to the customer charterer to make use of the vessel. In terms of our customers themselves, I think in terms of the fields where our ships are operating, it varies. Sometimes they're incredibly busy and sometimes less so. But I think from our perspective, in our contracts, we're not concerned by shut-ins at all.

Great. And my second question is about the two vessels being delivered in the second half of this year. You mentioned you look at all options to finance these vessels. But at this time, you're not sure if you'll take the -- or this year or at all. My question is, if you don't take them by the time they're delivered, will you have an opportunity to drop them down later on? And at what point does that opportunity expire?

I think that's obviously a point of negotiation between us and the sponsor. And I think whilst we have a framework agreement in place, I think both the sponsor and ourselves recognize the fact that this market is unusual. And at the moment, the sponsor is quite happy to keep the vessels for a period of time if KNOP is not at this -- at a particular point in time, ready to take the vessels. So I think we have some flexibility with that. And certainly, at the moment, I think, as I said before in the presentation, I don't think we'll be doing anything before the fourth quarter. But hopefully, by the end of the second quarter and for the call for the second quarter, hopefully, we'll have a little bit clearer view as to what's possible. At the moment, obviously, the market for new equity with our unit price at what -- today, is roughly $15. Doesn't make it easy. Let's call it -- say that.

Our next question will come from Marc Solecitto with Barclays.

Gary, you mentioned the rate on the Eni extension was in line with your expectations. Just wondering if you could maybe help frame that for us in the context of existing rates. And then how -- like how do you expect market rates to trend as you look out to some of the renewals upcoming in 2021, 2022?

Sure. I think probably the first comment to make is that the shuttle tanker market being very tight as it is and there is no excess supply is unlike any other shipping market. And as a result, it means that whenever any ship comes open or available or up for renewal on an option, it's not a straightforward open market exercise to decide what the rate is going to be. So you also have situations where the producers have their own position to cover in terms of production volumes. So we obviously don't entirely know how desperate they are for the vessel or not. But typically, we found that the charterers prefer to have access to tonnage than not because they understand it. If they suddenly realize that they need tonnage, it's not always available. So I think to answer your question, each discussion with each charter at each point is actually almost a brand-new conversation. And I would almost describe it that there isn't actually a price for a renewal. It depends on where the vessel is. It depends on the specification of the vessel. And it depends on the position in the market at the time. So the discussion we had with Eni recently, we were pleased with the rate that we achieved. And it supported what we thought we would be able to get from that recharter.

Got it. Okay. And then with the Windsor, you mentioned that the charterer hasn't given any indication that they will not be extending. Just want -- can you remind us how many months' notice in advance they would have to give if they were not going to take up the extension option?

Yes. At the moment, the declaration date for the Windsor is the middle of July 2020. So it's actually quite soon. However, going back to the answer I've just given on everything around rates, every discussion with each -- every charter is also quite specific and targeted. So it may be that we allow Shell to take more time to decide that. I don't know. That's really up for our negotiation with our -- through our commercial team. But at the moment, the -- unless we allow Shell more time, then actually, the declaration option is the middle of -- middle of July, sorry. So yes, sorry, does that answer your question?

Yes. Yes. Great. That does. Appreciate the color.

Our next question will come from J Mintzmyer with Value Investor's Edge. J. Mintzmyer: Like most of the questions has already been covered on drop-downs and watching the Windsor closely there. We'll look for some color, hopefully, in your August presentation. Just looking at the drop-downs at the parent level, have there been any yard delays associated with COVID? Or are those 2 holes going to still be delivered this summer?

To my knowledge, I think there may be a one or two week delay on the first vessel. And as far as I understand it, all of the other vessels are still progressing on schedule. J. Mintzmyer: Great. Good to hear. It was kind of discussed already in the first kind of Q&A. But equity market is clearly closed for common, right, at KNOP? So how do you think through the priority of financing these things? I mean, obviously, internally, which you can, are you looking at any sort of sponsor, credit facilities or preferreds? Or how do you sort of rack and stack those?

Yes. Look, I -- it's an incredibly difficult question. We -- to be blunt, we haven't done all of that work yet to actually rank things in a preference. I think what we're concerned about is the fact that what we'd like to do is not available to us at the moment. And what has been working for us is no longer available at the moment. As a result, we need to come up with something else that works for everybody. And in particular, works for all of our unitholders, obviously. So I think we've been a little bit delayed with the troubles in the market and the lack of face time with some of our ranges and bankers. But I think where we're going now, we hope to have a little bit more color in this respect by the end of the second quarter and for the second quarter earnings call. I don't think I'm giving anything away by saying it's very difficult at the moment for us to do drop-downs with 4, 5, 6, 7 vessels. But I think there are potentially, solutions out there. We've got to find them and price them and make sure they work for the unitholders. Otherwise, as I've said before, the option is to do nothing. And the sponsor is -- wouldn't choose that, but I think the sponsor understands that. J. Mintzmyer: Definitely understandable. I mean, with the yield at 14%, it's hard to have anything accretive from that. What would the hurdle be at the current dividend yield to make sense? Would it 10%, 9%? What's sort of the target where it would make sense maybe to do a little bit of equity to do a drop?

J, I'm not going to answer that right now because I think it's -- I'm going to put myself in a corner, I can imagine, if I say that. Ask me the same question in 3 months. J. Mintzmyer: Understandable. It's a tough one. No correct answer there. Final one, have you looked into preferreds at all? And has that market unfrozen? I know there hasn't really been a shipping preferred in a couple of years. There was a shipping baby bond from Scorpio Tankers last week. So that -- looks like that part of the market is unfreezing. Any commentary on the preferred side of the house?

Yes. I think our tentative investigations suggests to us that we could do that. I think it really then comes down to pricing and the fact that ultimately, preferreds are not really what we're in the market to do in an ideal world, in that doing a little bit is fine. But if you do too much, I think it's perhaps not good for the common unitholders. So we're very aware of that. But the simple answer to your question is, yes, I think we have had interest in doing that. But again, it's got to tick all the boxes for us, and it's got to be the right thing to do. J. Mintzmyer: Understandably, you'll have to keep walking that tight rope.

Our next question will come from Robert Silvera with Silvera & Associates.

You are running a business very well in a very difficult environment, that's obvious with everything that's going on with oil prices, et cetera. One thing I cannot understand. If you have the need to take from the sponsors, some drop-downs which will extend and strengthen KNOP over time, then why doesn't the Board start buying some of the units at the prices that it's been trading at from $13 to $15 a share? It would seem to me that you're running a good business with a 14% yield. It makes all the sense in the world to, in effect, go out and buy some of that business by buying your own stock units. Is the Board considering that at all?

Robert, yes, we have. And we've debated and discussed about this. I think it's twofold. Firstly, it takes resources to do that, obviously. And it returns over a longer period. And at the moment, as with pretty much every company in the world, we have taken the view that cash in hand is king, and keeping ourselves away from any problems in this market is the right thing to do. And we don't disagree that there's economic value in that up to a point. But the resources it takes to actually go out and buy the shares needs to be available and you need to be able to do it at such an amount that it makes a difference. And it then leaves you potentially short of resources yourself and then looking for resources. So whilst we get the economics of it at a theoretical level, we just think in practice, the conclusion we came to was that in practice, it wasn't the right time and the right thing for us to do.

That I find interesting because last quarter, you had a coverage of over 1.5. This quarter, even with the lay-up in drydocking, you still had a coverage of over 1.3. It would seem to me that it makes all the sense in the world to have confidence in our business, which has been run so finely. And well, to go ahead and buy some of the units. Every unit puts away $2.08 over the year span of time with the steady dividend that you've been paying for years. And that amounts to a very nice return, 14% currently at the $15 price. It just seems to me that we should show the marketplace that we have enough confidence in the future and in the business to make some unit prices -- sit on some unit purchases, I should say, not pricing, to around 5-something units.

We have had this debate, and there are pros and cons, and you make a good argument. But the Board eventually came down on the side of no at this time, the timing being wrong because of the volatility in the markets. And you say that we're a very well-run company, and we take great pride in that. And we've always operated on a relatively conservative basis, and we don't want to change that. And we felt that on balance, whilst we've got good coverage, using that resource to -- which would ultimately bring that coverage down, wasn't the right thing to do. So whilst we get your argument, and it's a good argument, the balance of the decision went the other way.

I can understand your thinking. The only thing I'm saying is, okay, as a unitholder, take a look at it from an image standpoint. It shows internal confidence and if the price of this units go up, as you reduce your payout less needs, then the possibilities that you're exploring for drop-downs, it's all in getting the price of the units up. That's the basic bottom line. And in this market, it's a difficult situation, I understand that. But image is an awful lot in the self-confidence of your own group to do somewhat -- you don't have to do millions and millions of units. I'm not saying that. But you're showing that you're headed in that direction, I think, makes a strong statement. That's my input. Perhaps they'll change their attitude between now and the next quarter -- in the end of the quarter. So that's my input.

[Operator Instructions]. Our next question today will come from Jim Altschul with Aviation Advisory Service.

Are you in the U.K. or in this time zone?

I am in the U.K., yes.

Couple of questions. First of all, I don't know if you've disclosed this, but with regard to the exercise of the option on the Torill Knutsen. Can you tell us, is the lease rate under the -- first of all, when does the new lease rate take effect?

It's come into effect pretty much straightaway, actually.

Okay. Can you tell us, was it the same as, less than, more than the previous lease rate that was in effect?

I'm not going to give too much away on that, Jim, I'm afraid, other than to say that we were pleased with it. It met our expectations. We were quite comfortable to accept it.

I don't want to provoke an argument. Isn't this an -- well, okay. I guess -- this is -- and you and your lawyers don't deem this sufficiently material that you don't have to disclose the individual lease rates?

Yes. Sorry, then I suppose what I can say -- I'm just checking my records here, sorry. The total change in the rate was April, just now, just gone. And we accepted a 3% reduction. Maybe if I put it in percentage terms, that's probably okay, I think.

Okay, okay. With regard to the Windsor Knutsen, first of all, does the terms of the option have any guidelines or limits on the amount to which -- on which the renewal rate can be based or determined? Or is it basically a wide open discussion, whatever you and Shell choose to agree on?

No. When the initial charter is set, all of the options are priced already in the contract. So actually, if the charter wanted to take all of the options, they're already there for them to take if they want. So it's not an open discussion from the beginning. It's -- there's always a stake in the ground from which we try not to move.

But I mean, I guess, since it's just an option, you're not bound by it so you can choose to negotiate something else?

No. We're bound...

By mutual consent?

Yes -- no, we've offered the ship at that rate. It's the charterer's option. It's not a 2-way option. So the charterer has the choice to take the vessel at that price. We have to -- if the charterer wants to, then we have to give the vessel to the charterer at that option price.

But if the charter says, we don't want to -- we'd like to renew it, but we want to pay something less, you were -- I mean, you could -- you can have that discussion. I mean, that's by mutual consent?

Yes, yes. I mean, I think that's coming back to what I was saying earlier. That every discussion with every charter at every different point in time has a different set of circumstances around it. And so we don't see a sort of homogenous shuttle tanker charter rate. And that's why, because of the lack of supply of shuttle tankers in the market, we're very much able to hold our own in that negotiation with each of our customers.

Okay. And I don't want to take too much of your time but with regard to the Windsor Knutsen. First of all, is that operating off the shore of Brazil or somewhere else?

It is now. Yes. It's gone back to Brazil.

Where was it?

It was operating in West Africa for a while.

Oh, okay. If Shell chose -- and I'm not saying Shell will choose not to renew the -- or actualize the option, renew -- continue to lease, whatever terminology you want to use, but they chose not to continue leasing it, what -- would you have some other alternatives? Have you started talking with any other potential customers just in case? Or when would you feel compelled to start doing that?

Well, it's quite a small market, Jim. And actually, we're in constant contact with pretty much every shuttle tanker customer in Brazil, as you may imagine. So it's not the case of starting a conversation. It's actually quite a small world so we're already aware of demand. And there's often, whether it's production spikes or someone else's vessel is in drydock or have some technical problems or -- there can be all kinds of reasons why Petrobras, for example, just using that name, may want a ship. That could quite easily become quite common knowledge in the market. So it's quite easy for us to know where the demand might be. And as I say, our commercial team are already in constant third-party discussions with our customers, pretty much all the time. So it's a relatively small market in that sense.

Okay. And 1 more, if I may. Do you have any drydockings for any of the other ships planned or expected for the balance of this year?

No, there's no more drydocks for 2020 planned.

Any plans for 2021?

Yes, there will be. I don't have the schedule in front of me, I'm afraid. But yes, there definitely are some drydocks in 2021.

Our next question will come from Richard Diamond with Castle.

Thank you for delivering a consistent job. This is just wanting to bounce it off since I don't think there'll be any analyst meeting, at least for the next couple of months. Have -- would it make sense to do a virtual zoom where you could, again, provide overview on the market in addition to the strategy going forward?

You're talking, a little bit like a mini Investor?

A mini Investor Day. We're about -- I think the last one was two years ago, and it might be very helpful to consider doing one.

Yes, Richard, we'd actually penciled in to do something probably in Q2 this year. But with everything that's happened in terms of travel, et cetera, and the difficulties that people have encountered, that sort of got put on the back burner. But you're right. I think it's -- we should -- we were already looking at doing something, and we hadn't yet sort of reset any dates or time lines around that. But yes, it's on our agenda, it's on our radar to think about.

This will conclude our question-and-answer session. I'd like to turn the conference back over to Gary Chapman for any closing remarks.

Well, thank you very much to everyone that's listened in, and I wish you a good day and stay safe. Thank you very much indeed.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.