Frontline Ltd. (the "Company" or
"Frontline"), today reported unaudited results for the three months
ended March 31, 2019:
Highlights
-
Net income attributable to the Company was $40.0
million, or $0.24 per share, for the first quarter of 2019.
-
Net income attributable to the Company was $45.5
million, or $0.27 per share adjusted for certain non-cash items for
the first quarter of 2019.
-
Reported spot average daily time charter
equivalent ("TCE") for VLCCs, Suezmax tankers and LR2/Aframax
tankers in the first quarter were $35,700, $28,200 and $24,000,
respectively.
-
For the second quarter of 2019, we estimate spot
TCE of $34,800 contracted for 63% of vessel days for VLCCs. The
estimated spot TCE is provided using the load-to-discharge method
of accounting. We expect the spot TCE for the full quarter will be
lower primarily due to impact of ballast days at the end of the
quarter.
-
In January 2019, the Company increased its
ownership interest to 28.9% in Feen Marine Scrubbers Inc.
("FMSI").
-
In January and April 2019, the Company took
delivery of the VLCC newbuildings Front Defender and Front
Discovery.
Robert Hvide Macleod, Chief
Executive Officer of Frontline Management AS commented:
"Following a strong start to the
year, crude oil tanker rates weakened significantly in recent
months due to elevated levels of refinery maintenance, decrease in
oil supply and a number of newbuildings delivering. However, a
market improvement is expected in the second half of the year as
refinery capacity returns and oil volumes return to the markets. In
particular, market analysts expect incremental crude demand to be
generated by upcoming IMO 2020 regulations as increased inputs
will be required to meet new demand for low sulphur fuels.
Our commercial strategy, fleet renewal over recent years and the
strong support from our largest shareholder creates significant
leverage and opportunity in this exciting market dynamic."
Inger M. Klemp, Chief Financial
Officer of Frontline Management AS added:
"Following strong financial
results in the first quarter of 2019 Frontline has remained focused
on further strengthening its balance sheet. Based on market
expectations and competitive breakeven levels, the Company is well
positioned to generate significant cash flow and create value for
its shareholders."
The average daily time charter
equivalents ("TCE") earned by Frontline in the quarter ended
March 31, 2019, the prior quarter and in the year ended
December 31, 2018 are shown below, along with spot estimates for
the second quarter of 2019 and the estimated average daily cash
break-even ("BE") rates for the remainder of 2019:
Average daily
time charter equivalents ("TCEs") |
($ per day) |
Spot |
Spot estimates |
% covered |
Estimated average daily BE rates |
|
Q1 2019 |
Q4 2018 |
2018 |
Q2 2019 |
2019 |
VLCC |
35,700 |
28,400 |
18,300 |
34,800 |
63% |
24,700 |
SMAX |
28,200 |
26,100 |
17,300 |
19,000 |
63% |
20,000 |
LR2 |
24,000 |
18,700 |
14,900 |
19,500 |
55% |
16,600 |
The estimated average daily cash
break-even 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 and general and
administrative expenses.
Spot estimates are provided using
the load-to-discharge method of accounting. The rates quoted are
for days currently contracted. The actual rates to be earned in the
second quarter of 2019 will therefore 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 based on load to
discharge accounting principles.
On February 28, 2019 the Company
disclosed that spot TCE of $41,300 per day had been contracted for
84% of vessel days for our VLCCs. As described above, due to the
limited number of additional laden days at the end of the first
quarter, additional revenues booked were limited and as such the
total revenues for the 84% of vessel days contracted was spread
over 100% of the days in the quarter, resulting in a lower TCE per
day by the end of the first quarter.
The load-to-discharge method of
accounting 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 2019, the Company uses the total available
days for the quarter and not just the number of days the vessel is
laden.
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 "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 of the
Norwegian Securities Trading Act.
1st Quarter 2019 Results
This
announcement is distributed by West Corporation on behalf of West
Corporation clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Frontline Ltd. via Globenewswire
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