FRONTLINE LTD. REPORTS RESULTS FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2022
Frontline Ltd. (the âCompanyâ or âFrontlineâ), today reported unaudited results
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for the three and nine months ended September 30, 2022:
Highlights
- Net income of $154.4 million, or $0.69 per basic and diluted share for the
third quarter of 2022.
- Adjusted net income of $82.9 million, or $0.37 per basic and diluted share
for the third quarter of 2022.
- Intention to declare and pay the cash dividend in respect of the third
quarter of 2022 only after the contemplated voluntary exchange offer by
Frontline for Euronav shares that was initially announced on July 11, 2022
(the âTender Offerâ) has been completed. This dividend is expected to be in
the amount of 80% of adjusted net income for the third quarter of 2022.
- Reported total operating revenues of $382.2 million for the third quarter of
2022.
- Reported spot TCEs for VLCCs, Suezmax tankers and LR2/Aframax tankers in the
third quarter of 2022 were $25,000, $41,100 and $40,200 per day,
respectively.
- For the fourth quarter of 2022, we estimate spot TCE on a load-to-discharge
basis of $77,200 contracted for 75% of vessel days for VLCCs, $65,400
contracted for 76% of vessel days for Suezmax tankers and $58,000 contracted
for 70% of vessel days for LR2/Aframax tankers. We expect the spot TCEs for
the full fourth quarter of 2022 to be lower than the TCEs currently
contracted, due to the impact of ballast days at the end of the fourth
quarter. The number of ballast days at the end of the third quarter was 332
for VLCCs, 367 for Suezmax tankers and 269 for LR2/Aframax tankers.
- Final Combination Agreement signed with Euronav in July 2022.
- Entered into two senior secured term loan facilities, one in July and the
other in October 2022, for a total amount of up to $287.2 million at
attractive terms to refinance two existing term loan facilities maturing in
the first quarter of 2023.
- Took delivery of the VLCC newbuildings, Front Tana and Front Gaula, from
Hyundai Heavy Industries (âHHIâ) in August 2022 and October 2022,
respectively.
- In November 2022, the Company extended its senior unsecured revolving credit
facility of up to $275.0 million with an affiliate of Hemen Holding Ltd.,
the Companyâs largest shareholder, by 12 months to May 2024 at an interest
rate of 8.50% and otherwise on existing terms.
Lars H. Barstad, Chief Executive Officer of Frontline Management AS, commented:
"The market is virtually firing on all cylinders, and Frontlineâs efficient
operations, modern fleet and transparent business model again shows how quickly
a change in market fundamentals is reflected in its cash generation and
shareholder returns. We outperformed most of our competitors in terms of higher
earnings and lower costs in the third quarter, and with nearly all of our
vessels spot exposed, Frontline will continue to capture value as this cycle
unfolds.
Irrespective of near-term volatility on the demand side, the supply side remains
constrained with an aging global tanker fleet and historically low orderbook.
This forms the basis for our positive outlook for a prolonged strong cycle in
the tanker market, and we remain committed to continue returning value to our
shareholders."
Inger M. Klemp, Chief Financial Officer of Frontline Management AS, added:
"In July and October 2022, we entered into two senior secured term loan
facilities for a total amount of up to $287.2 million to refinance two existing
term loan facilities with total balloon payments of $267.1 million maturing in
the first quarter of 2023. Through these new financings we reduce our borrowing
cost and what we believe to be industry leading cash break even rates, providing
significant operating leverage and sizeable returns during periods of market
strength and help protect our cash flows during periods of market weakness.
The Company has also extended its senior unsecured revolving credit facility of
up to $275.0 million by 12 months to May 2024 at an interest rate of 8.50% and
otherwise on existing terms, leaving Frontline with no loan maturities until the
third quarter of 2023."
Average daily time charter equivalents (âTCEsâ)(1)
±--------±------------------------------------±---------±-------±---------+
| | | | |Estimated |
| | | | | average |
| | | | |daily cash|
| ($ per | | Spot TCE | % |breakeven |
| day) | Spot TCE |estimates |Covered | rates |
±--------±-----±------±------±------±-----±---------±-------±---------+
| | 2022 |Q3 2022|Q2 2022|Q1 2022| 2021 | Q4 2022 | 2022 |
±--------±-----±------±------±------±-----±---------±-------±---------+
|VLCC |19,100|25,000 |16,400 |15,700 |15,300| 77,200 | 75 % | 25,000 |
±--------±-----±------±------±------±-----±---------±-------±---------+
|Suezmax |28,500|41,100 |26,500 |16,900 |12,000| 65,400 | 76% | 20,200 |
±--------±-----±------±------±------±-----±---------±-------±---------+
|LR2/ | | | | | | | | |
|Aframax |32,300|40,200 |38,600 |19,000 |11,800| 58,000 | 70% | 17,200 |
±--------±-----±------±------±------±-----±---------±-------±---------+
The estimated average daily cash breakeven rates are the daily TCE rates our
vessels must earn 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 contracted days
up until the last contracted discharge of cargo for each vessel in the quarter.
The actual rates to be earned in the fourth quarter of 2022 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 on such days. 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 number of ballast days at the end of the third quarter
were 332 for VLCCs, 367 for Suezmax tankers and 269 for LR2/Aframax tankers.
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 days and not just the number of days the vessel is laden.
The Board of Directors
Frontline Ltd.
Hamilton, Bermuda
November 29, 2022
Ola Lorentzon - Chairman and Director
John Fredriksen - Director
Ole B. Hjertaker - Director
James O'Shaughnessy - Director
Steen Jakobsen - Director
Marios Demetriades - Director
Questions should be directed to:
Lars H. Barstad: Chief Executive Officer, Frontline Management AS
+47 23 11 40 00
Inger M. Klemp: Chief Financial Officer, Frontline Management AS
+47 23 11 40 00
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
ability of Frontline and Euronav to successfully complete the proposed
combination on anticipated terms and timing, including, among other things,
obtaining required shareholder and regulatory approvals, unforeseen liabilities,
future capital expenditures, revenues, expenses, earnings, synergies, economic
performance, indebtedness, financial condition, losses, future prospects,
business and management strategies, expansion and growth of the combined groupâs
operations and other important conditions to the completion of the acquisition,
risks relating to the integration of operations of Frontline and Euronav and the
possibility that the anticipated synergies and other benefits of the proposed
combination will not be realized or will not be realized within the expected
timeframe, the outcome of any legal proceedings related to the proposed
combination, the failure of counterparties to fully perform their contracts with
Frontline or Euronav, 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 worldwide 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, the impact of increasing scrutiny and changing
expectations from investors, lenders and other market participants with respect
to our ESG policies, 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,
environmental factors, political events, public health threats, international
hostilities including the ongoing developments in the Ukraine region, acts by
terrorists or acts of piracy on ocean-going vessels, the length and severity of
epidemics and pandemics, including the ongoing global outbreak of the novel
coronavirus (âCovid-19â), and their impacts on the demand for seaborne
transportation of petroleum products, the impact of increasing scrutiny and
changing expectations from investors, lenders and other market participants with
respect to our Environmental, Social and Governance policies, the impact of port
or canal congestion and other important factors described from time to time in
the reports filed by the Company with the 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
