Frontline Ltd. (the âCompanyâ or âFrontlineâ), today reported unaudited results
for the three months ended March 31, 2020.
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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:
âFrontline 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
$18,600 per day on average for our full fleet for the balance of 2020. The
tanker market has corrected downwards in recent weeks and faces pressure in the
short term, both from production cuts and inventory draws, but we believe we are
well positioned due to our strong balance sheet and low cost base.â
Average daily time charter equivalents ("TCEs")
Estimated
average daily
BE rates for
the balance of
($ per day) Spot estimates % covered 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 Directors
Frontline Ltd.
Hamilton, Bermuda
May 19, 2020
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
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 âbelieve,â âanticipate,â âintend,â âestimate,â âforecast,â
âproject,â âplan,â âpotential,â âwill,â âmay,â âshould,â âexpectâ 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, managementâs 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
Companyâs operating expenses, including bunker prices, dry docking and insurance
costs, the market for the Companyâs 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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