Frontline Ltd. (the “Company” or “Frontline”),
today reported unaudited results for the three months ended
March 31, 2020.
Highlights
- Net income of $165.3 million, or $0.84 per diluted share for
the first quarter of 2020, excluding $7.1 million of net cash
receipts and accrued profit share in relation to the five
charter-in and charter-out agreements with Trafigura that have been
treated as a reduction of the acquisition cost of the vessels.
- Net income adjusted for certain non-cash items of $179.3
million, or $0.91 per diluted share for the first quarter of 2020,
excluding the net impact of the item above.
- Declared a cash dividend of $0.70 per share for the first
quarter of 2020.
- Reported spot TCEs for VLCCs, Suezmax tankers and LR2 tankers
in the first quarter of 2020 were $74,800, $57,800 and $31,200,
respectively.
- For the second quarter of 2020, we estimate spot TCE on a
load-to discharge basis of $92,500 contracted for 75% of vessel
days for VLCCs, $69,500 contracted for 63% of vessel days for
Suezmax tankers and $50,200 contracted for 53% of vessel days for
LR2s. We expect the spot TCEs for the full second quarter of 2020
to be lower than the TCEs currently contracted, due to the impact
of ballast days at the end of the quarter as well as current weaker
rates.
- In March 2020, the Company signed a sale-and-leaseback
agreement in an amount of $544.0 million with ICBCL to finance the
acquisition of 10 Suezmax tankers built in 2019 and closing took
place on March 16, 2020.
Robert Hvide Macleod, Chief Executive
Officer of Frontline Management AS commented:
“Frontline achieved its strongest first quarter
result since 2008 amid an extremely volatile rate environment. We
are extremely thankful to our staff and crewmembers for their
extraordinary efforts and dedication, which contributed to our
results during this challenging period. Our strong performance has
carried over into the second quarter, as reflected in our bookings
thus far. We have also secured some very attractive time
charters and we will continue to explore period charter
opportunities going forward. Our market view remains
constructive, based on an order book at 25-year lows, an aging
fleet and an expectation that oil volumes will return going forward
as oil demand recovers. Frontline enjoys historically low estimated
daily cash breakeven rates of $18,600 per day on average for our
full fleet for the balance of 2020. The tanker market has corrected
downwards in recent weeks and faces pressure in the short
term, both from production cuts and inventory draws,
but we believe we are well positioned due to our strong
balance sheet and low cost base.”
Average daily time charter equivalents
("TCEs") |
($ per day) |
|
|
Spot estimates |
% covered |
Estimated average daily BE rates for the balance of 2020 |
|
Q1 2020 |
Q4 2019 |
2019 |
Q2 2020 |
2020 |
VLCC |
74,800 |
58,000 |
35,900 |
92,500 |
75% |
22,000 |
Suezmax tankers |
57,800 |
38,200 |
25,800 |
69,500 |
63% |
18,600 |
LR2 tankers |
31,200 |
29,800 |
22,000 |
50,200 |
53% |
15,000 |
The estimated average daily cash breakeven rates
are the daily TCE rates the vessels must earn in order to cover
operating expenses including dry docks, repayments of loans,
interest on loans, bareboat hire, time charter hire and net general
and administrative expenses.
Spot estimates are provided on a
load-to-discharge basis. The rates quoted are for days currently
contracted. The actual rates to be earned in the second quarter of
2020 will therefore depend on the number of additional days
we contract, and more importantly the number of additional days
that each vessel is laden. Therefore, a high number of ballast days
at the end of the quarter will limit the amount of additional
revenues booked on a load to discharge basis. Furthermore, when a
vessel remains uncontracted at the end of the quarter, the Company
will recognize certain costs during the uncontracted days up until
the period end, whereas if a vessel is contracted, then certain
costs can be deferred and recognized over the load-to-discharge
period.
The reporting of revenues on a load-to-discharge
basis results in revenues being recognized over fewer days, but at
a higher rate for those days. Over the life of a voyage there is no
difference in the total revenues and costs to be recognized.
When expressing TCE per day for the first
quarter of 2020, the Company uses the total available days for the
quarter and not just the number of days the vessel is laden.
The Board of DirectorsFrontline Ltd.Hamilton,
BermudaMay 19, 2020
Questions should be directed to:
Robert Hvide Macleod: Chief Executive Officer,
Frontline Management AS+47 23 11 40 84Inger M. Klemp: Chief
Financial Officer, Frontline Management AS+47 23 11 40 76
Forward-Looking Statements
Matters discussed in this report may constitute
forward-looking statements. The Private Securities Litigation
Reform Act of 1995 provides safe harbor protections for
forward-looking statements, which include statements concerning
plans, objectives, goals, strategies, future events or performance,
and underlying assumptions and other statements, which are other
than statements of historical facts.
Frontline Ltd. and its subsidiaries, or the
Company, desires to take advantage of the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995 and is
including this cautionary statement in connection with this safe
harbor legislation. This report and any other written or oral
statements made by us or on our behalf may include forward-looking
statements, which reflect our current views with respect to future
events and financial performance, and are not intended to give any
assurance as to future results. When used in this document, the
words "believe," "anticipate," "intend," "estimate," "forecast,"
"project," "plan," "potential," "will," "may," "should," "expect"
and similar expressions, terms or phrases may identify
forward-looking statements.
The forward-looking statements in this report
are based upon various assumptions, including without limitation,
management's examination of historical operating trends, data
contained in our records and data available from third parties.
Although we believe that these assumptions were reasonable when
made, because these assumptions are inherently subject to
significant uncertainties and contingencies which are difficult or
impossible to predict and are beyond our control, we cannot assure
you that we will achieve or accomplish these expectations, beliefs
or projections. We undertake no obligation to update any
forward-looking statements, whether as a result of new information,
future events or otherwise.
In addition to these important factors and
matters discussed elsewhere herein, important factors that, in our
view, could cause actual results to differ materially from those
discussed in the forward-looking statements include the strength of
world economies, fluctuations in currencies and interest rates,
general market conditions, including fluctuations in charter hire
rates and vessel values, changes in the supply and demand for
vessels comparable to ours, changes in world wide oil production
and consumption and storage, changes in the Company's operating
expenses, including bunker prices, dry docking and insurance costs,
the market for the Company's vessels, availability of financing and
refinancing, our ability to obtain financing and comply with the
restrictions and other covenants in our financing arrangements,
availability of skilled workers and the related labor costs,
compliance with governmental, tax, environmental and safety
regulation, any non-compliance with the U.S. Foreign Corrupt
Practices Act of 1977 (FCPA) or other applicable regulations
relating to bribery, general economic conditions and conditions in
the oil industry, effects of new products and new technology in our
industry, the failure of counter parties to fully perform their
contracts with us, our dependence on key personnel, adequacy of
insurance coverage, our ability to obtain indemnities from
customers, changes in laws, treaties or regulations, the volatility
of the price of our ordinary shares; our incorporation under the
laws of Bermuda and the different rights to relief that may be
available compared to other countries, including the United States,
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, political events or acts by terrorists, and other
important factors described from time to time in the reports filed
by the Company with the Securities and Exchange Commission or
Commission.
We caution readers of this report not to place
undue reliance on these forward-looking statements, which speak
only as of their dates. These forward-looking statements are no
guarantee of our future performance, and actual results and future
developments may vary materially from those projected in the
forward-looking statements.
This information is subject to the disclosure
requirements pursuant to Section 5-12 the Norwegian Securities
Trading Act
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