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Aberdeen, Scotland - 10.08.2016 Highlights For the three months ended June 30, 2016, KNOT Offshore Partners LP (“KNOT Offshore Partners” or the “Partnership”): • Generated highest ever quarterly revenues of $43.1 million, operating income of $20.2 million and net income of $11.6 million. • Generated highest ever quarterly Adjusted EBITDA of $34.1 million.1 • Generated highest ever quarterly distributable cash flow of $18.5 million1 with a distribution coverage ratio of 1.23.1 • Achieved strong operational performance with 99.9% utilization of the fleet. In addition: • On June 30, 2016, the Partnership entered into an amended and restated senior secured credit facility, which includes a new revolver facility tranche of $15 million, in order to further strengthen the balance sheet and increase financial flexibility. • On May 18, 2016, the Partnership’s subordinated units, all of which were held by Knutsen NYK Offshore Tankers (“Knutsen NYK”), were converted to common units on a one-for one basis. • Due to the increase in the price of the Partnership’s common units from $16.40 on March 31, 2016 to $18.56 on June 30, 2016, the Partnership and the Partnership’s general partner elected not to repurchase any common units under the common unit repurchase program during the second quarter of 2016. Subsequent events: • On July 15, 2016, the Partnership declared a cash distribution of $0.52 per unit with respect to the quarter ended June 30, 2016 to be paid on August 15, 2016 to unitholders of record as of the close of business on August 3, 2016. Financial Results Overview Total revenues were $43.1 million for the three months ended June 30, 2016 (the “second quarter”) compared to $42.0 million for the three months ended March 31, 2016 (the “first quarter”), an increase of $1.1 million. The increase was mainly due to a full quarter of earnings from the Bodil Knutsen as the vessel incurred 21 days of off-hire during the first quarter in connection with its scheduled drydocking. Vessel operating expenses for the second quarter of 2016 were $8.0 million, compared to $7.6 million in the first quarter. General and administrative expenses were $0.9 million for the second quarter of 2016, a decrease of $0.4 million compared to the first quarter of 2016 mainly due to year end close expenses in the first quarter. As a result, operating income for the second quarter of 2016 was $20.2 million compared to $19.2 million in the first quarter of 2016. Net income for the three months ended June 30, 2016 was $11.6 million compared to $10.7 million for the three months ended March 31, 2016. Net income was impacted by the recognition of realized and unrealized losses on derivative instruments of $3.2 million in the second quarter of 2016, consistent with realized and unrealized losses on derivative instruments of $3.2 million in the first quarter of 2016. The unrealized non-cash element of the mark-to-market losses was a $1.6 million loss for the three months ended June 30, 2016 and a $2.3 million loss for the three months ended March 31, 2016. Of the unrealized loss for the second quarter of 2016, $1.5 million related to mark-to-market losses on interest rate swaps due to a decrease in long term interest rates. Net income for the three months ended June 30, 2016 increased by $4.7 million compared to net income for the three months ended June 30, 2015. The increase was primarily due to (i) an increase in operating income of $2.8 million due to earnings from the Dan Sabia and the Ingrid Knutsen being included in the Partnership’s results of operations from June 15, 2015 and October 15, 2015, respectively, (ii) a $6.2 million goodwill impairment charge during the three months ended June 30, 2015 and (iii) a $4.5 million increase in total finance expense primarily caused by a $3.2 million realized and unrealized loss on derivative instruments in the three months ended June 30, 2016 compared to a $0.3 million realized and unrealized gain on derivative instruments in the three months ended June 30, 2015. All ten of the Partnership’s vessels operated well throughout the second quarter of 2016 with 99.9% utilization of the fleet. Distributable cash flow was $18.5 million for the second quarter of 2016, compared to $17.9 million for the first quarter of 2016. The increase in the distributable cash flow is mainly due to increased earnings from the Bodil Knutsen as a result of its drydocking during the first quarter. The distribution declared for the second quarter of 2016 was $0.52 per unit, equivalent to an annualized distribution of $2.08. Amended and Restated Credit Facility On June 30, 2016, the Partnership’s subsidiaries KNOT Shuttle Tankers 18 AS, KNOT Shuttle Tankers 17 AS and Knutsen Shuttle Tankers 13 AS, as borrowers, entered into an amended and restated senior secured credit facility (the “Amended Senior Secured Loan Facility”), which amended the Partnership’s original $240 million senior syndicated secured loan facility secured by the shuttle tankers Bodil Knutsen, Carmen Knutsen and Windsor Knutsen. The Amended Senior Secured Loan Facility includes a new revolving credit facility tranche of $15 million, bringing the total revolving credit commitments under the facility to $35 million. The new revolving credit facility matures in June 2019, bears interest at LIBOR plus a fixed margin of 2.5% and has a commitment fee equal to 40% of the margin of the revolving facility tranche calculated on the daily undrawn portion of such tranche. The other material terms from the original $240 million facility remain unaltered including the margin on the existing $ 20 million revolver credit facility which will remain at 2.125% Financing and Liquidity As of June 30, 2016, the Partnership had $55.7 million in available liquidity which consisted of cash and cash equivalents of $25.7 million and an undrawn revolving credit facility of $30 million. The undrawn revolving credit facility is available until June 10, 2019. The Partnership’s total interest bearing debt outstanding as of June 30, 2016 was $648.5 million ($652.0 million net of debt issuance cost). The average margin paid on the Partnership’s outstanding debt during the quarter ended June 30, 2016 was approximately 2.3% over LIBOR. As of June 30, 2016, the Partnership had entered into foreign exchange forward contracts, selling a total notional amount of $35.0 million against the NOK at an average exchange rate of NOK 8.36 per 1.0 U.S. Dollar. These foreign exchange forward contracts are economic hedges for certain vessel operating expenses and general expenses in NOK. As of June 30, 2016, the Partnership had entered into various interest rate swap agreements for a total notional amount of $407.7 million to hedge against the interest rate risks of its variable rate borrowings. In March 2016, the Partnership extended $125 million of interest swap agreements and in April 2016, extended an additional $25 million of interest swap agreements. These $150 million of interest rate swaps have an average interest rate of 1.4% and extended the tenor of the Partnership’s existing interest rate swaps by an average of 2.3 years from the second half of 2018 to the second half of 2020. As of June 30, 2016, the Partnership receives interest based on three or six month LIBOR and pays a weighted average interest rate of 1.54% under its interest rate swap agreements, which have an average maturity of approximately 3.5 years. The Partnership does not apply hedge accounting for derivative instruments, and its financial results are impacted by changes in the market value of such financial instruments. As of June 30, 2016, the Partnership’s net exposure to floating interest rate fluctuations on its outstanding debt was approximately $218.6 million based on total interest bearing debt outstanding of $652.0 million, less interest rate swaps of $407.7 million and less cash and cash equivalents of $25.7 million. Full report About KNOT Offshore Partners LP KNOT Offshore Partners owns operates and acquires shuttle tankers under long-term charters in the offshore oil production regions of the North Sea and Brazil. KNOT Offshore Partners owns and operates a fleet of ten offshore shuttle tankers with an average age of 4.6 years. KNOT Offshore Partners is structured as a publicly traded master limited partnership. KNOT Offshore Partners’ common units trade on the New York Stock Exchange under the symbol “KNOP.” KNOT Offshore Partners LP press release 
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