Frontline Ltd. (the “Company” or “Frontline”),
today reported unaudited results for the three and six months ended
June 30, 2020:
Highlights
- Net income of $199.7 million, or $1.01 per diluted share for
the second quarter of 2020.
- Adjusted net income of $206.1 million, or $1.04 per diluted
share for the second quarter of 2020.
- Declared a cash dividend of $0.50 per share for the second
quarter of 2020.
- Repaid $60 million of its $275.0 million senior unsecured
facility in the second quarter of 2020.
- Reported total operating revenues of $387.1 million for the
second quarter of 2020.
- Reported spot TCEs for VLCCs, Suezmax tankers and LR2 tankers
in the second quarter of 2020 were $75,800, $51,100 and $36,900 per
day, respectively.
- For the third quarter of 2020, we estimate spot TCE on a
load-to discharge basis of $60,900 contracted for 76% of vessel
days for VLCCs, $29,500 contracted for 77% of vessel days for
Suezmax tankers and $14,500 contracted for 67% of vessel days for
LR2 tankers. We expect the spot TCEs for the full third quarter of
2020 to be lower than the TCEs currently contracted, due to the
impact of ballast days at the end of the third quarter as well as
current weaker rates.
- Took delivery of the VLCC newbuilding Front Dynamic and the
Suezmax newbuilding Front Cruiser in the second quarter of
2020.
- Signed a senior secured term loan facility in July 2020 in an
amount of up to $328.6 million to refinance an existing loan
facility maturing in December 2020.
- Obtained financing commitment for a senior secured term loan
facility in August 2020 in an amount of up to $133.7 million to
partially finance the four LR2 tankers under construction, which is
subject to final documentation.
Robert Hvide Macleod, Chief Executive
Officer of Frontline Management AS commented:
“Our results for the first half of 2020 are the
strongest in more than 10 years, and we have paid aggregate cash
dividends of $1.20 per share for the same period. While tanker
rates have seemingly found support at a lower level in the third
quarter, we expect oil demand and demand for transportation to
recover gradually. We have good visibility in our third quarter
results based on our contracted spot days as well as our charter
coverage. We also expect our results to be positively impacted by
the modern profile of our fleet and breakeven costs that are very
competitive. The large moves in tanker rates during the last 12
months clearly illustrates the tight balance in the market and the
fact that it does not take much for the tanker market to rally.
Looking ahead to 2021 and beyond, recovering demand for crude oil
transportation will coincide with rapidly declining fleet growth,
which supports our long term highly constructive market
outlook.”
Inger M. Klemp, Chief Financial Officer
of Frontline Management AS, added:
“In the second quarter of 2020 we refinanced two
term loan facilities with total balloon payments of $349.4 million
due in December 2020 and in March 2021. We expect to refinance
further two term loan facilities with total balloon payments of
$320.3 million due in April 2021 and in June 2021 prior to
maturity, leaving the Company with no material maturities until
2023. Our strong cash flow in the second quarter enabled us to both
repay $60 million of our $275.0 million senior unsecured facility,
reducing the amount outstanding to $60 million, and to return
nearly $99 million to our shareholders in cash dividends.”
Average daily time charter equivalents
("TCEs")1
($ per day) |
|
|
|
Spot estimates |
% covered |
Estimated average daily cash BE rates |
|
Q2 2020 |
Q1 2020 |
Q4 2019 |
2019 |
Q3 2020 |
2020 |
VLCC |
75,800 |
74,800 |
58,000 |
35,900 |
60,900 |
76% |
22,600 |
SMAX |
51,100 |
57,800 |
38,200 |
25,800 |
29,500 |
77% |
18,900 |
LR2 |
36,900 |
31,200 |
29,800 |
22,000 |
14,500 |
67% |
15,700 |
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 third
quarter of 2020 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
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 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 second
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 DirectorsFrontline Ltd.Hamilton,
BermudaAugust 26, 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 "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 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 (“non-GAAP”). See
Appendix 1 for a full description of the measures and
reconciliation to the nearest GAAP measure.
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