Highlights
-
Frontline reports a net loss
attributable to the Company of $36.4 million for the third quarter
of 2013, equivalent to a loss per share of $0.46.
-
Frontline reports a net loss
attributable to the Company of $175.5 million for the nine months
ended September 30, 2013, equivalent to a loss per share of
$2.24.
-
Frontline records a vessel
impairment loss of $22.4 million in the third quarter of 2013 and a
vessel impairment loss of $103.7 million in the nine months ended
September 30, 2013.
-
Frontline will not pay a dividend
for the third quarter of 2013.
-
Frontline issued 329,532 new
shares in the third quarter further to the ATM offering launched in
June 2013.
-
In October 2013, Frontline entered
into a private agreement to exchange $25.0 million of the Company's
4.5% Convertible Bond for an aggregate of 6,474,827 shares and a
cash payment of $2.25 million.
-
In October 2013, Frontline agreed
with Ship Finance to terminate the long term charter parties for
the 1998 and 1999 built VLCCs Front Champion and Golden Victory and
Ship Finance simultaneously sold the vessels to unrelated third
parties.
Third Quarter and Nine
Months 2013 Results
The Board of Frontline Ltd. (the
"Company" or "Frontline") announces a net loss attributable to the
Company of $36.4 million in the third quarter, equivalent to a loss
per share of $0.46, compared with a net loss of $120.3 million in
the second quarter, equivalent to a loss per share of $1.54. The
Company has recorded a vessel impairment loss of $22.4 million in
the third quarter compared with an impairment loss of $81.3 million
in the preceding quarter. The third quarter impairment loss relates
to the Front Champion and Golden Victory.
Impairment losses are taken when
events or changes in circumstances occur that cause the Company to
believe that future cash flows for an individual vessel will be
less than its carrying value and not fully recoverable. In such
instances an impairment charge is recognized if the estimate of the
undiscounted cash flows expected to result from the use of the
vessel and its eventual disposition is less than the vessel's
carrying amount.
Following the termination of the
lease on the Company's final OBO carrier, Front Guider, in the
first quarter of 2013 the results of the OBO carriers have been
recorded as discontinued operations in accordance with U.S.
generally accepted accounting principles.
The average daily time charter
equivalents ("TCEs") earned in the spot and period market in the
third quarter by the Company's VLCCs and Suezmax tankers were
$16,100 and $12,400, respectively, compared with $14,100 and
$13,800, respectively, in the preceding quarter. The spot earnings
for the Company's double hull VLCCs and Suezmax vessels were
$13,900 and $12,400, respectively, compared with $11,200 and
$13,800, respectively, in the preceding quarter.
Contingent rental (income) expense
relates to the amended charter parties with Ship Finance and the
amended charter parties for four other leased vessels. Contingent
rental income in the third quarter is primarily due to the release
of an accrual, which is not required at September 30.
Ship operating expenses decreased
by $5.8 million compared with the preceding quarter primarily due
to a decrease in dry docking costs.
Following the redelivery of the
chartered-in VLCC DHT Eagle on May 8, 2013, the Company no longer
has any vessels chartered-in under operating leases.
Interest expense, net of
capitalized interest, was $22.8 million in the third quarter of
which $6.0 million relates to the Company's subsidiary Independent
Tankers Corporation Limited ("ITCL").
Frontline announces a net loss
attributable to the Company of $175.5 million for the nine months
ended September 30, 2013, equivalent to a loss per share of $2.24.
The average daily TCEs earned in the spot and period market in the
nine months ended September 30, 2013 by the Company's VLCCs and
Suezmax tankers were $15,800 and $13,600, respectively, compared
with $23,200 and $15,500, respectively, in the nine months ended
September 30, 2012. The spot earnings for the Company's double hull
VLCCs and Suezmax vessels were $13,300 and $13,600, respectively,
in the nine months ended September 30, 2013 compared with $23,700
and $15,500, respectively, in the nine months ended September 30,
2012.
As of September 30, 2013, the
Company had total cash and cash equivalents of $79.3 million and
restricted cash of $59.2 million. Restricted cash includes $57.1
million relating to deposits in ITCL.
The Company estimates average
total cash cost breakeven rates for the remainder of 2013 on a TCE
basis for VLCCs and Suezmax tankers of approximately $22,400 and
$16,700, respectively.
Fleet
Development
In October 2013, the Company
agreed with Ship Finance to terminate the long term charter parties
for the 1998 and 1999 built VLCCs Front Champion and Golden Victory
and Ship Finance simultaneously sold the vessels to unrelated third
parties. The charter parties have terminated in November 2013.
The decision to terminate the long
term charter parties was taken in view of the required investment
to take the vessels through the 15 year special survey and current
market rates. While the VLCC spot market has recently shown some
signs of recovery, there is still a fundamental oversupply in the
market and the retirement of older vessels should assist in
balancing the market going forward.
The Company has agreed a
compensation payment to Ship Finance of approximately $90 million
for the early termination of the charter parties, of which $11.0
million will be paid upon termination and the balance will be
recorded as notes payable, with similar amortisation profiles to
the current lease obligations, with reduced rates until 2015 and
full rates from 2016. Front Champion and Golden Victory have the
highest charter rates of the vessels chartered in from Ship Finance
and the level of compensation is a reflection of this.
These transactions will reduce the
Company's obligations under capital leases by approximately $105
million and the remaining obligations under capital leases
following these terminations will be approximately $735 million
related to 15 VLCCs and five Suezmax tankers.
Newbuilding
Program
As of September 30, 2013 the
Company was committed to make newbuilding installments of $87.9
million with expected payment of $6.2 million in 2013 and $81.7
million in 2014.
Corporate
The Company issued 329,532 new
ordinary shares under the ATM program in the third quarter.
78,843,586 ordinary shares were outstanding as of September 30,
2013, and the weighted average number of shares outstanding for the
quarter was 78,838,476.
In October 2013, the Company
entered into a private agreement to exchange $25.0 million of the
outstanding principal amount of the Company's 4.5% Convertible Bond
Issue 2010/2015 for an aggregate of 6,474,827 shares and a cash
payment of $2.25 million.
The
Market
The market rate for a VLCC trading
on a standard 'TD3' voyage between the Arabian Gulf and Japan in
the third quarter of 2013 was WS 36, representing a decrease of WS
1 point from the second quarter of 2013 and the same level as the
third quarter of 2012. The flat rate increased by 9.1 percent from
2012 to 2013.
The market rate for a Suezmax
trading on a standard 'TD5' voyage between West Africa and
Philadelphia in the third quarter of 2013 was WS 56, representing
an increase of WS 2 points from the second quarter of 2013 and
a decrease of WS 4 points from the third quarter of 2012. The flat
rate increased by 9.3 percent from 2012 to 2013.
Bunkers at Fujairah averaged
$600/mt in the third quarter of 2013 compared to $614/mt in the
second quarter of 2013. Bunker prices varied between a high of
$617/mt on August 29th and a low of
$585/mt on July 3rd.
The International Energy Agency's
("IEA") October 2013 report stated an OPEC crude production,
including Iraq, of 30.5 million barrels per day (mb/d) in the third
quarter of 2013. This was a decrease of 0.3 mb/d compared to the
second quarter of 2013.
The IEA estimates that world oil
demand averaged 91.7 mb/d in the third quarter of 2013, which is an
increase of 1.2 mb/d compared to the previous quarter. IEA
estimates that world oil demand in 2013 will be 91.0 mb/d,
representing an increase of 1.0 percent or 1.0 mb/d from 2012.
The VLCC fleet totalled 623
vessels at the end of the third quarter of 2013, unchanged from the
previous quarter. Five VLCCs were delivered during the quarter,
five were removed. The order book counted 56 vessels at the end of
the third quarter, which represents nine percent of the VLCC fleet.
According to Fearnleys, the single hull fleet is down to one
vessel.
The Suezmax fleet totaled 447
vessels at the end of the third quarter, up from 444 vessels at the
end of the previous quarter. Five vessels were delivered during the
third quarter whilst two were removed. The order book counted 41
vessels at the end of the third quarter, which represents
approximately nine percent of the Suezmax fleet. According to
Fearnley's, the single hull fleet stands unchanged at five
vessels.
Strategy and
Outlook
While the VLCC spot market
recently has shown signs of recovery, the Board is of the opinion
that it may take some time before a reasonable market balance is
restored and sustained recovery of the tanker market occurs. The
Board believes that such a market balance and sustained recovery of
the tanker market will be dependent on the extent of phase out of
existing tonnage as well as global growth conditions.
As of September 30, 2013 Frontline
had total debt and lease obligations, excluding non-recourse debt
in ITCL of $1,122 million comprised of $841 million in lease
obligations to Ship Finance, $66 million in lease obligations to
German KGs and $215 million in convertible bond loan. A full
repayment of this debt is, to a large extent, dependant on a
sustained improvement in tanker rates in the years to come.
The Board is actively monitoring
the situation and looking for opportunities to restructure the
balance sheet and improve the Company's financial position. The
Board expects the operating result (excluding one time gains and
losses) in the fourth quarter to improve compared with the third
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 full report is available for
download in the link enclosed.
The Board of Directors
Frontline Ltd.
Hamilton, Bermuda
November 26, 2013
Questions should be directed
to:
Jens Martin Jensen: Chief Executive Officer, Frontline Management
AS
+47 23 11 40 99
Inger M. Klemp: Chief Financial Officer, Frontline Management
AS
+47 23 11 40 76
This information is subject
of the disclosure requirements pursuant to section 5-12 of the
Norwegian Securities Trading Act.
3rd Quarter 2013 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#1746052
Frontline (LSE:FRO)
Historical Stock Chart
From Mar 2024 to Apr 2024
Frontline (LSE:FRO)
Historical Stock Chart
From Apr 2023 to Apr 2024