Highlights
-
Frontline reports net income
attributable to the Company of $31.1 million for the first quarter
of 2015, equivalent to earnings per share of $0.25.
-
Today, Frontline announced that it has entered
into a heads of agreement to amend the terms of the long term
charter agreements with Ship Finance for the remainder of the
charter period with effect from July 1, 2015.
-
In January 2015, the ATM program was increased
to having aggregate sales proceeds of up to $150.0 million, from up
to $100.0 million. Frontline issued 12,191,291 new shares under its
ATM program in the first quarter.
-
In April 2015, the Company issued
12,900,323 new shares under the ATM program.
-
In May 2015, the Company issued 5,941,251 new
shares under the ATM program and the existing ATM program is fully
utilized.
-
In February 2015, Frontline bought
$33.3 million notional principal of its convertible bond at a
purchase price of 99%.
-
In April 2015, the remaining
outstanding balance on the convertible bond of $93.4 million was
repaid in full upon maturity.
-
In January 2015, Frontline took delivery of
Front Idun.
First Quarter
2015 Results
The Board of Frontline Ltd. (the
"Company" or "Frontline") announces net income attributable to the
Company of $31.1 million in the first quarter, equivalent to
earnings per share of $0.25, compared with a net loss of $13.0
million for the previous quarter, equivalent to a loss per share of
$0.12. The net loss attributable to the Company in the previous
quarter includes a non-cash gain of $40.3 million arising on the
termination of the charter parties for Front Opalia, Front Comanche
and Front Commerce, a non-cash gain of $1.5 million arising on the
convertible bond buy back in October and a non-cash loss of $41.1
million arising on the convertible bond swaps in October and
December.
The average daily time charter
equivalents ("TCEs") earned in the spot and period market in the
first quarter by the Company's VLCCs and Suezmax tankers were
$49,400 and $33,100 compared with $27,900 and $26,000 in the
previous quarter. The spot earnings for the Company's VLCCs and
Suezmax vessels were $52,200 and $35,000 compared with $27,400 and
$27,200 in the preceding quarter.
Operating expenses were in line
with the previous quarter. No vessels were dry docked in the first
quarter or the previous quarter.
Contingent rental expense
represents amounts accrued following changes to certain charter
parties in December 2011 and increased in the first quarter as
compared to the preceding quarter primarily due to an increase in
actual spot market rates.
In May 2015, the Company estimates
average daily total cash cost breakeven rates for the second
quarter of 2015 on a TCE basis for its VLCCs and Suezmax tankers of
approximately $31,300 and $23,100, respectively, including
estimated cash sweep to Ship Finance International Limited ("Ship
Finance") of $6,500/day.
Following the agreement with Ship
Finance to amend the terms of the long term charter agreements with
effect from July 1, 2015, the Company estimates average daily total
cash cost breakeven rates for the second half of 2015 on a TCE
basis for its VLCCs and Suezmax tankers of approximately $24,800
and $19,500, respectively.
Fleet
Development
During the first quarter, the
Company entered into the following time charters: The VLCC Front
Falcon (built 2002) has been chartered out for a period of
approximately 6 months from January 2015 at a rate of $55,000 per
day. The VLCC Front Century (built 1998) has been chartered out for
a period of approximately 14 months from February 2015 at a rate of
$42,250 per day. The VLCC Front Circassia (built 1999), has been
chartered out for a period of approximately 14 months from February
at a rate of $44,600 per day. The VLCC Front Vanguard (built 1998)
has been chartered out for a period of approximately 15 months from
February 2015 at a rate of $42,500 per day.
Newbuilding
Program
The Company took delivery of Front
Idun in January 2015 and drew down the remaining $30.0 million
balance on its $60.0 million term loan facility in order to part
finance this vessel. The Company had no newbuildings under
construction as of March 31, 2015.
Corporate
In January 2015, the Company filed
with the United States Securities and Exchange Commission a
prospectus supplement covering the second amendment and restatement
of its previously announced equity distribution agreement with
Morgan Stanley & Co. LLC, ("Morgan Stanley"), under which the
amount of new ordinary shares the Company may offer and sell, at
any time and from time to time through Morgan Stanley in an
at-the-market offering, was increased to having aggregate sales
proceeds of up to $150.0 million, from up to $100.0 million.
The Company issued 12,191,291 new
shares under its ATM program the first quarter. Following such
issuance, Frontline has an issued share capital of $124,534,280
divided into 124,534,280 ordinary shares.
In April 2015, Frontline issued
12,900,323 new shares under the ATM program and in May 2015,
Frontline issued 5,941,251 new shares under the ATM program and the
existing ATM program is fully utilized. Following such issuance,
Frontline has an issued share capital of $143,375,854 divided into
143,375,854 ordinary shares.
In February 2015, the Company
bought $33.3 million notional principal of its 4.50% Convertible
Bond Issue 2010/2015 at a purchase price of 99% and recorded a gain
of $0.3 million.
In April 2015, the remaining
outstanding balance on the convertible bond of $93.4 million was
repaid in full upon maturity.
In May 2015, Frontline announced
that it has entered into a heads of agreement to amend the terms of
the long term charter agreements with Ship Finance for the
remainder of the charter period with effect from July 1, 2015.
Please see separate press release issued by Frontline today for
full description of the transaction.
The Company announces that Mr.
Jens Martin Jensen today has resigned from his position as a
Director of the Company. Mr. Jensen will continue as a Board member
in other related group companies.
The Company further announces the appointments of Robert Hvide
Macleod and Ola Lorentzon as Directors on the Board. Mr. Hvide
Macleod joined the Company as CEO of Frontline Management AS in
2014. Mr. Lorentzon was the Managing Director of Frontline
Management AS, a subsidiary of Frontline, from April 2000 until
September 2003. Mr. Lorentzon is also a Director and Chairman of
Golden Ocean Group Limited and a director of Erik Thun AB and
Laurin Shipping AB.
The Market
The market rate for a VLCC trading
on a standard 'TD3' voyage between the Arabian Gulf and Japan in
the first quarter of 2015 was WS 59, representing an increase of 3
WS point from the fourth quarter of 2014 and 8 WS points higher
than the first quarter of 2014. The flat rate decreased by 2.25
percent from 2014 to 2015.
The market rate for a Suezmax
trading on a standard 'TD20' voyage between West Africa and
Rotterdam in the first quarter of 2015 was WS 90, representing an
increase of 2 WS points from the fourth quarter of 2014 and an
increase of 11 WS points from the first quarter of 2014. The flat
rate decreased by 1.7 percent from 2014 to 2015.
Bunkers at Fujairah averaged
$323/mt in the first quarter of 2015 compared to $447/mt in the
fourth quarter of 2014. Bunker prices varied between a high of
$386.5/mt on the 18th of February
and a low of $264.5/mt on January 13th.
The International Energy Agency's
("IEA") May 2015 report stated an OPEC crude production of 30.5
million barrels per day (mb/d) in the first quarter of 2015. This
was unchanged from fourth quarter of 2014.
The IEA estimates that world oil
demand averaged 93 mb/d in the first quarter of 2015, which is a
decrease of 0.7 mb/d compared to the previous quarter. IEA
estimates that world oil demand in 2015 will be 93.6 mb/d,
representing an increase of 1.2 percent or 1.1 mb/d from 2014.
The VLCC fleet totalled 642
vessels at the end of the first quarter of 2015, four vessels up
from the previous quarter. Five VLCCs were delivered during the
quarter, one were removed. The order book counted 87 vessels at the
end of the first quarter, which represents 13.5 percent of the VLCC
fleet.
The Suezmax fleet totalled 455
vessels at the end of the first quarter, five vessels up from the
previous quarter. Six vessels were delivered during the quarter
whilst one was removed. The order book counted 71 vessels at the
end of the first quarter, which represents approximately 16 percent
of the Suezmax fleet.
Strategy
and Outlook
Several recent events have
considerably improved the outlook for Frontline.
The Company's raising of
approximately $88 million in new equity under the ATM program in
2015, the full repayment upon maturity of the remaining outstanding
balance on the convertible bond loan of $93.4 million and the
continued positive development in the crude tanker market in the
first and second quarter of 2015, have all considerably improved
the financial position and outlook of the Company.
Further, today's announcement of
the agreement with Ship Finance amending the long term chartering
agreements will reduce Frontlines cash break-even rates
significantly and ensure a more sustainable long-term structure.
This agreement significantly strengthens Frontline's balance sheet
and reduces the financial risk. The Board and management can now
shift the focus from balance sheet restructuring to business
development and growth. This represents a major milestone for the
company.
The continued positive development
in the crude tanker market into the second quarter is likely to
give total operating revenues in the second quarter in line with
the first quarter. However, due to dry docking of four vessels in
the second quarter compared to no vessels in the first quarter, the
operating result (excluding one time gains and losses) in the
second quarter is likely to be lower than in the first quarter.
Forward Looking
Statements
This press release contains
forward looking statements. These statements are based upon various
assumptions, many of which are based, in turn, upon further
assumptions, including Frontline management's examination of
historical operating trends. Although Frontline believes that these
assumptions were reasonable when made, because assumptions are
inherently subject to significant uncertainties and contingencies
which are difficult or impossible to predict and are beyond its
control, Frontline cannot give assurance that it will achieve or
accomplish these expectations, beliefs or intentions.
Important factors that, in the
Company's view, could cause actual results to differ materially
from those discussed in this press release include the strength of
world economies and currencies, general market conditions including
fluctuations in charter hire rates and vessel values, changes in
demand in the tanker market as a result of changes in OPEC's
petroleum production levels and world wide oil consumption and
storage, changes in the Company's operating expenses including
bunker prices, dry-docking and insurance costs, changes in
governmental rules and regulations or actions taken by regulatory
authorities, potential liability from pending or future litigation,
general domestic and international political conditions, potential
disruption of shipping routes due to accidents or political events,
and other important factors described from time to time in the
reports filed by the Company with the United States Securities and
Exchange Commission.
The Board of Directors
Frontline Ltd.
Hamilton, Bermuda
May 28, 2015
Questions should be directed
to:
Robert Hvide Macleod: Chief Executive Officer, Frontline Management
AS
+47 23 11 40 84
Inger M. Klemp: Chief Financial Officer, Frontline Management
AS
+47 23 11 40 76
This information is subject
to the disclosure requirements pursuant to section 5-12 of the
Norwegian Securities Trading Act.
1st Quarter 2015 Results
This
announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Frontline Ltd. via Globenewswire
HUG#1924873
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