Frontline plc (the âCompanyâ or âFrontlineâ), today reported unaudited results
âŠ
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for the three and twelve months ended December 31, 2023:
Highlights
- Profit of $118.4 million, or $0.53 per share for the fourth quarter of 2023.
- Adjusted profit of $102.2 million, or $0.46 per share for the fourth quarter
of 2023.
- Declared a cash dividend of $0.37 per share for the fourth quarter of 2023.
- Reported revenues of $415.0 million for the fourth quarter of 2023.
- Took delivery of 11 VLCCs from Euronav NV (âEuronavâ) as part of the
acquisition of 24 VLCCs (âthe Acquisitionâ) in the fourth quarter of 2023
and delivery of a further 12 vessels in January 2024 with the last VLCC
expected to be delivered within the first quarter of 2024.
- Entered into agreements to sell its five oldest VLCCs, built in 2009 and
2010 and one of its oldest Suezmax tankers, built in 2010, for an aggregate
net sales price of $335.0 million in January 2024. After repayment of
existing debt on the vessels the transactions are expected to generate net
cash proceeds of approximately $238.0 million.
- In the process of refinancing eight Suezmax tankers and 16 LR2 tankers
expected to generate net cash proceeds of approximately $408.0 million.
- The net cash proceeds of approximately $646.0 million expected to be
generated from sale and refinancing of vessels, will enable Frontline to
fully repay the Hemen shareholder loan and the amount drawn under the $275.0
million senior unsecured revolving credit facility with an affiliate of
Hemen in relation to the Acquisition.
Lars H. Barstad, Chief Executive Officer of Frontline Management AS, commented:
âFrontline delivered its strongest full year result in fifteen years, despite
muted markets in the fourth quarter. The year has been exceptional for the
tanker industry and the asset classes we deploy, however, itâs the Suezmax,
Aframax and product markets that have offered volatility. During the fourth
quarter, Frontline started taking delivery of the 24 modern VLCCs acquired from
Euronav, and itâs a testament to Frontlineâs scalable business platform that
within a few months Frontline has doubled its exposure in the VLCC market, by
increasing its overall earnings capacity by more than one-third, with minimal
impact on its operational setup. The continuous disruption in the Red Sea has
caused West / East trading lanes to widen, which we believe benefits the larger
vessel classes, offering economies of scale as oil and products move around the
Cape of Good Hope.â
Inger M. Klemp, Chief Financial Officer of Frontline Management AS, added:
âWhen we entered into agreements with Euronav to acquire a high-quality ECO
fleet of 24 VLCCs on October 9, 2023, we communicated that the Hemen shareholder
loan may not be fully drawn as the Company was exploring other alternatives to
free up capital, including re-leveraging part of the existing Frontline fleet
and/or sale of older non-eco vessels. In January and February 2024, we executed
on this with the agreement to sell six, older non-eco vessels and the ongoing
process of refinancing 24 vessels, on, what we believe are, attractive terms,
expected to generate net cash proceeds of approximately $646.0 million. This
will enable us to fully repay the Hemen shareholder loan and the amount drawn
under the $275.0 million senior unsecured revolving credit facility with an
affiliate of Hemen in relation to the Acquisition and maintain our competitive
cash breakeven rates.â
Average daily time charter equivalents (âTCEsâ)(1)
±-------------------------------------------------±--------±------±--------+
| | | |Estimated|
| | | | average |
| | | | daily |
| | | | cash |
| ($ per |Spot TCE | % |breakeven|
| day) Spot TCE |estimates|Covered| rates |
±-------------------------------------------------±--------±------±--------+
| Q4 Q3 Q2 Q1 | | |
| 2023 2023 2023 2023 2023 2022 | Q1 2024 | 2024 |
| | | |
|VLCC 50,300 42,300 42,500 64,000 52,500 31,300| 55,100 81% | 28,800 |
| | | |
|Suezmax 52,600 45,700 37,600 61,700 64,000 37,100| 52,800 72% | 23,700 |
| | | |
|LR2 / | | |
|Aframax 46,800 42,900 33,900 52,900 56,300 38,500| 67,800 69% | 21,200 |
±-------------------------------------------------±----------------±--------+
In December 2023, the Company took delivery of 11 VLCCs as part of the
Acquisition. These vessels contributed 184 trading days net of offhire, of which
150 were ballast days. This negatively impacted the overall VLCC spot rate by
$3,100 per day as limited revenues were recorded in relation to these vessels,
whereas the Company includes all trading days in the VLCC spot rate. The spot
TCEs presented for the fourth quarter of 2023 in the table above exclude the
impact of the vessels delivered as a result of the Acquisition.
The spot TCEs estimates in the first quarter of 2024 include the impact of the
vessels delivered as a result of the Acquisition. We expect the spot TCEs for
the full first quarter of 2024 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 fourth quarter was 570 days for VLCCs, 384
days for Suezmax tankers and 138 days for LR2/Aframax tankers.
The Board of Directors
Frontline plc
Limassol, Cyprus
February 28, 2024
Ola Lorentzon - Chairman and Director
John Fredriksen - Director
Ole B. Hjertaker - Director
James O'Shaughnessy - Director
Steen Jakobsen - Director
Marios Demetriades - Director
Cato Stonex - 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 plc 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, including inflationary
pressures and central bank policies intended to combat overall inflation and
rising interest rates and foreign exchange rates;
- general market conditions, including fluctuations in charter hire rates and
vessel values;
- changes in the supply and demand for vessels comparable to ours and the
number of newbuildings under construction;
- the highly cyclical nature of the industry that we operate in;
- the loss of a large customer or significant business relationship;
- changes in worldwide oil production and consumption and storage;
- changes in the Companyâs operating expenses, including bunker prices, dry
docking, crew costs and insurance costs;
- planned, pending or recent acquisitions, business strategy and expected
capital spending or operating expenses, including dry docking, surveys and
upgrades;
- risks associated with any future vessel construction;
- our expectations regarding the availability of vessel acquisitions and our
ability to complete vessel acquisition transactions as planned;
- our ability to successfully compete for and enter into new time charters or
other employment arrangements for our existing vessels after our current
time charters expire and our ability to earn income in the spot market;
- 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 crew members and other employees and the related
labor costs;
- work stoppages or other labor disruptions by our employees or the employees
of other companies in related industries;
- compliance with governmental, tax, environmental and safety regulation, any
non-compliance with U.S. regulations;
- the impact of increasing scrutiny and changing expectations from investors,
lenders and other market participants with respect to our ESG policies;
- Foreign Corrupt Practices Act of 1977 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, including the
potential for technological innovation to reduce the value of our vessels
and charter income derived therefrom;
- new environmental regulations and restrictions, whether at a global level
stipulated by the International Maritime Organization, and/or imposed by
regional or national authorities such as the European Union or individual
countries;
- vessel breakdowns and instances of off-hire;
- the impact of an interruption in or failure of our information technology
and communications systems, including the impact of cyber-attacks upon our
ability to operate;
- potential conflicts of interest involving members of our board of directors
and senior management;
- the failure of counter parties to fully perform their contracts with us;
- changes in credit risk with respect to our counterparties on contracts;
- our dependence on key personnel and our ability to attract, retain and
motivate key employees;
- 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 Cyprus 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;
- government requisition of our vessels during a period of war or emergency;
- potential liability from pending or future litigation and potential costs
due to environmental damage and vessel collisions;
- the arrest of our vessels by maritime claimants;
- general domestic and international political conditions or events, including
âtrade warsâ;
- any further changes in U.S. trade policy that could trigger retaliatory
actions by the affected countries;
- 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 and the
developments in the Middle East, including the armed conflict in Israel and
the Gaza Strip, acts by terrorists or acts of piracy on ocean-going vessels;
- the impact of adverse weather and natural disasters;
- the length and severity of epidemics and pandemics and their impacts on the
demand for seaborne transportation of crude oil and refined products;
- the impact of port or canal congestion;
- the ability of the Company to complete the acquisition of 24 VLCCs from
Euronav;
- business disruptions due to natural disasters or other disasters outside our
control; and
- other important factors described from time to time in the reports filed by
the Company with the Securities and Exchange 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 IFRS (ânon-
GAAPâ). See Appendix 1 for a full description of the measures and reconciliation
to the nearest IFRS measure.
Kilde
