Frontline Ltd. (the âCompanyâ or âFrontlineâ), today reported unaudited results
for the three months ended March 31, 2021:
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Highlights
- Net income of $28.9 million, or $0.15 per diluted share for the first
quarter of 2021.
- Adjusted net income of $8.8 million, or $0.04 per diluted share for the
first quarter of 2021.
- Reported total operating revenues of $194.0 million for the first quarter of
2021.
- Reported spot TCEs for VLCCs, Suezmax and LR2 tankers in the first quarter
of 2021 were $19,000, $15,200 and $12,000 per day, respectively.
- For the second quarter of 2021, we estimate spot TCE on a load-to-discharge
basis of $18,100 contracted for 70% of vessel days for VLCCs, $13,600
contracted for 63% of vessel days for Suezmax tankers and $14,200 contracted
for 59% of vessel days for LR2 tankers. We expect the spot TCEs for the full
second quarter of 2021 to be lower than the TCEs currently contracted, due
to the impact of ballast days at the end of the second quarter as well as
current freight rates.
- In March and April 2021, respectively, the Company took delivery of the LR2
newbuildings Front Fusion and Front Future.
- In May 2021, the Company entered into an agreement for the acquisition
through resale of six latest generation ECO-type VLCC newbuilding contracts
currently under construction at the HHI shipyard in South Korea. Five
vessels will be delivered during 2022 starting in Q1 and the last vessel in
Q1 2023.
Lars H. Barstad, Interim Chief Executive Officer of Frontline Management AS
commented:
âDespite challenging market conditions during the first quarter of 2021,
Frontline manages to deliver a solid result. This reflects our business model,
with high focus on efficiency, quality, and cost throughout the organization.
Frontlineâs modern fleet allows for an agile approach to how we trade our ships,
yielding returns above the key benchmarks. We are not out of the woods yet with
regards to freight demand, and the recent Covid-19 situation in Asia is a
concern. We are seeing promising oil demand figures from Europe, US, and China
and OPEC, EIA, and IEA maintain their very firm demand growth expectations for
the second half of 2021, but short-term the freight market continues to be
challenged. We are very excited about our acquisition of six VLCCs being built
at Hyundai Heavy Industries in Korea. These high-quality vessels will be
delivered at a time when oil demand is expected to have normalized and the
Global economy is running on full steam. The fundamentals of the tanker market
remain firm, with an historic low order book and a significant part of the fleet
challenged by tightening environmental regulations.â
Average daily time charter equivalents (âTCEsâ)(1)
±-----------------------------------------------------------------------------+
| Estimated |
| average daily |
| cash BE rates |
| for the |
| Spot TCE remainder of the|
|($ per day) Spot TCE estimates % covered year |
±------------------- ---------------------------±---------------+
| Q1 2021 Q4 2020 2020 Q2 2021 | 2021 |
±------------------------------------------------------------±---------------+
|VLCC 19,000 17,200 54,500 18,100 70% | 21,500 |
| | |
|SMAX 15,200 9,800 35,600 13,600 63% | 17,700 |
| | |
|LR2 12,000 12,500 23,400 14,200 59% | 15,900 |
±------------------------------------------------------------±---------------+
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 for the remainder of the year.
Spot estimates are provided on a load-to-discharge basis, whereby the Company
recognizes revenues over time ratably from commencement of cargo loading until
completion of discharge of cargo. The rates reported are for all days up until
the last contracted discharge of cargo for each vessel in the quarter. The
actual rates to be earned in the second quarter of 2021 will depend on the
number of additional days that we can 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 to be booked on a load-to-discharge basis. Ballast days are days when a
vessel is sailing without cargo and therefore, we are unable to recognize
revenues. 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 end of the period, whereas if a vessel is contracted, then certain
costs can be deferred and recognized over the load-to-discharge period.
The recognition 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 as compared to a discharge-to-discharge basis.
When expressing TCE per day the Company uses the total available days, net of
off hire and not just the number of days the vessel is laden.
The Board of Directors
Frontline Ltd.
Hamilton, Bermuda
May 26, 2021
Ola Lorentzon - Chairman and Director
John Fredriksen - Director
Tor Svelland - Director
James O'Shaughnessy - Director
Questions should be directed to:
Lars H. Barstad: Interim Chief Executive Officer, Frontline Management AS
+47 23 11 40 37
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
(1) This press release describes Time Charter Equivalent earnings and related
per day amounts, which are not measures prepared in accordance with US GAAP
(ânon-GAAPâ). See Appendix 1 for a full description of the measures and
reconciliation to the nearest GAAP measure.
Kilde
