2012-11-29 09:52:32 -
HAMILTON, BERMUDA -- (Marketwire) -- 11/29/12 --
Highlights
* Frontline reports a net loss attributable to the Company of $49.0
million
for the third quarter of 2012, equivalent to a loss per share of $0.63.
* Frontline reports a net loss attributable to the Company of $66.2
million
for the nine months ended September 30, 2012, equivalent to a loss per
share
of $0.85.
* Frontline will not pay a dividend for the third quarter of 2012.
* In August and October 2012, Frontline agreed to terminate the long term
charter parties with Ship Finance for the OBO carriers Front Climber and
Front Driver, respectively.
* In September 2012, Frontline agreed with NAT that Frontline's nine
Suezmax
vessels will leave the Orion Suezmax pool.
Third Quarter and Nine Months 2012 Results
The Board of Frontline Ltd. (the "Company" or "Frontline") announces a net
loss
attributable to the Company of $49.0 million for the third quarter of 2012,
equivalent to a loss per share of $0.63, compared with a net loss,
excluding
impairment losses, attributable to the Company of $11.2 million and a loss
per
share of $0.14 for the preceding quarter. The net loss attributable to the
Company in the third quarter includes a gain on sale of assets and
amortization
of deferred gains of $3.3 million, which includes an aggregate deferred
gain of
$3.8 million relating to the sale and leasebacks of DHT Eagle (ex Front
Eagle)
and Gulf Eyadah (ex Front Shanghai).The net loss attributable to the
Company in
the preceding quarter includes a gain on sale of assets and amortization of
deferred gains of $5.1 million, which includes an aggregate deferred gain
of
$3.8 million relating to the sale and leasebacks of DHT Eagle and Gulf
Eyadah.
The net loss attributable to the Company in the preceding quarter also
include
an impairment loss of $13.1 million.
The average daily time charter equivalents ("TCEs") earned in the spot and
period market in the third quarter by the Company's VLCCs, Suezmax tankers
and
Suezmax OBO carriers were $12,300, $10,500 and $33,700, respectively,
compared
with $31,000, $16,200 and $28,100, respectively, in the preceding quarter.
The
spot earnings for the Company's double hull VLCCs and Suezmax vessels were
$13,300 and $10,500, respectively, compared with $31,500 and $16,200,
respectively, in the preceding quarter. The Orion Suezmax pool had spot
earnings
of $11,100 compared with $17,400 in the second quarter.
The contingent rental expense relates to the amended charter parties with
Ship
Finance International Limited ("Ship Finance") and the amended charter
parties
for four leased vessels and is based on the difference between the
renegotiated
rates and the actual TCE revenues up to the original contract rates.
Ship operating expenses increased by $1.2 million compared with the
preceding
quarter mainly due to an increase in running costs.
Charter hire expenses decreased by $1.2 million compared with the preceding
quarter primarily as a result of redelivery of the chartered-in VLCC
Hampstead
on April 22, 2012.
Interest expense, net of capitalized interest, was $23.5 million in the
third
quarter of which $5.6 million relates to the Company's subsidiary
Independent
Tankers Corporation Limited ("ITCL").
Frontline announces a net loss attributable to the Company of $66.2 million
for
the nine months ended September 30, 2012, equivalent to a loss per share of
$0.85. The average daily TCEs earned in the spot and period market in the
nine
months ended September 30, 2012 by the Company's VLCCs, Suezmax tankers and
Suezmax OBO carriers were $23,200, $15,500, and $33,300, respectively,
compared
with $24,000, $14,200 and $35,300, respectively, in the nine months ended
September 30, 2011. The spot earnings for the Company's double hull VLCCs
and
Suezmax vessels were $23,700 and $15,500, respectively, in the nine months
ended
September 30, 2012. The Orion Suezmax pool had spot earnings of $15,300 per
day.
As of September 30, 2012, the Company had total cash and cash equivalents
of
$164.5 million and restricted cash of $75.7 million. Restricted cash
includes
$74.2 million relating to deposits in ITCL.
The Company estimates average cash cost breakeven rates for the remainder
of
2012 on a TCE basis for its VLCCs and Suezmax tankers of approximately
$23,400
and $16,200, respectively.
Fleet Development
In August, 2012, the Company announced that it had agreed with Ship Finance
to
terminate the long term charter party for the OBO carrier Front Climber and
that
Ship Finance had simultaneously sold the vessel. The charter party was
terminated on October 15, 2012. The Company made a compensation payment to
Ship
Finance of approximately $0.6 million for the early termination of the
charter.
The transaction will reduce the Company's obligations under capital leases
by
$1.7 million and the Company recorded an impairment loss of $4.2 million in
the
second quarter.
In September 2012, the Company agreed with Nordic American Tankers Ltd
("NAT")
that Frontline's nine Suezmax vessels will leave the Orion Suezmax pool due
to
Frontline's wish to be more flexible in the operation of its vessels. NAT
will
acquire Frontline's 50 percent shareholding in Orion Tankers Ltd., the pool
manager, at its nominal book cost effective January 1, 2013.
In October, 2012, the Company announced that it had agreed with Ship
Finance to
terminate the long term charter party for the OBO carrier Front Driver and
that
Ship Finance had simultaneously sold the vessel. The charter party is
expected
to terminate in late November 2012. Frontline will make a compensation
payment
to Ship Finance of approximately $0.5 million for the early termination of
the
charter. The transaction will reduce the Company's obligations under
capital
leases by approximately $1.1 million and the Company expects to record a
loss of
approximately $0.1 million.
In October, 2012 the Company terminated the bareboat charters on the two
single
hull VLCCs Ticen Ocean (renamed Front Lady) and Ticen Aries (renamed
Edinburgh)
and the vessels will be delivered to the buyers (as announced in September,
2011) in the end of November 2012 and January 2013, respectively.
Newbuilding Program
As of November 28, 2012, the Company's newbuilding program comprised two
Suezmax
tankers, and the Company was committed to make newbuilding installments of
$94.2
million with expected payments of $6.3 million in 2012 and $87.9 million in
2013.
Corporate
The Board of Directors has decided not to declare a dividend for the third
quarter of 2012.
A resolution was approved at the Company's 2012 Annual General Meeting on
September 21, 2012 such that the share premium account was reduced from
$225.8
million to nil and the amount resulting from the reduction be credited to
the
contributed surplus account with immediate effect.
77,858,502 ordinary shares were outstanding as of September 30, 2012, and
the
weighted average number of shares outstanding for the quarter was
77,858,502.
The Market
The market rate for a VLCC trading on a standard 'TD3' voyage between the
Arabian Gulf and Japan in the third quarter of 2012 was WS 36, representing
a
decrease of approximately WS 19 points from the second quarter of 2012 and
a
decrease of approximately WS 22 points from the third quarter of 2011.
Present
market indications are approximately $11,000 per day in the fourth quarter
of
2012.
The market rate for a Suezmax trading on a standard 'TD5' voyage between
West
Africa and Philadelphia in the third quarter of 2012 was WS 59.5,
representing a
decrease of approximately WS 13.5 points from the second quarter of 2012
and a
decrease of WS 10 points from the third quarter of 2011. Current market
forward
rates indicate TD5 fourth quarter returns in line with third quarter.
Bunkers at Fujairah averaged $650/mt in the third quarter of 2012 compared
to
$662/mt in the second quarter of 2012. Bunker prices varied between a low
of
$590/mt on July 2 and a high of $697/mt on September 4.
The International Energy Agency's ("IEA") November 2012 report stated an
OPEC
oil production, including Iraq, of 31.4 million barrels per day (mb/d) in
the
third quarter. This was unchanged from the previous quarter.
The IEA estimates that world oil demand averaged 90.1 mb/d in the third
quarter
of 2012, which is an increase of 1.3 mb/d compared to previous quarter and
the
IEA estimates that world oil demand will average approximately 89.7 mb/d in
2012, representing an increase of 0.9 percent or 0.8 mb/d from 2011. 2013
demand
is expected to be 90.5 mb/d.
The VLCC fleet totalled 617 vessels at the end of the third quarter of
2012, up
from 610 vessels at the end of the previous quarter. Ten VLCCs were
delivered
during the quarter, three were removed. The order book counted 91 vessels
at the
end of the third quarter, down from 95 orders from the previous quarter.
The
current order book represents approximately 15 percent of the VLCC fleet.
According to Fearnley's, the single hull fleet is 22 vessels, one less than
previous quarter.
The Suezmax fleet counts 462 vessels at the end of the third quarter, up
from
459 vessels at the end of the previous quarter. Ten vessels were delivered
during the quarter whilst seven were removed. The order book counted 63
vessels
at the end of the third quarter, down from 79 vessels at the end of the
previous
quarter. The current order book represents 14 percent of the total fleet.
According to Fearnley's, the single hull fleet stands unchanged at nine
vessels.
Strategy and Outlook
The tanker market has shown a strong negative development in the last four
years. Several tanker companies are already experiencing severe problems.
If the
weak market continues it is likely to lead to significant financial
problems for
the whole tanker industry. We have recently experienced that VLCC spot
rates
have risen, but spot rates for Suezmax and Aframax tankers have seen little
movement.
Consensus is that the recent rate spike could be short lived and that
recovery
in the crude tanker market could take some time. In order for sustainable
recovery to happen substantial scrapping of vessels must take place.
Frontline will continue to remain cautious and focus its resources on the
present activities until a clearer sign of recovery can be seen in the
tanker
market.
Based on results achieved so far in the fourth quarter and the current
outlook,
the Board expects the operating result in the fourth quarter to show some
improvement compared with the third quarter.
The full report is available for download in the link enclosed
The Board of Directors
Frontline Ltd.
Hamilton, Bermuda
November 28 2012
Forward Looking Statements
This press release contains forward looking statements. These statements
are
based upon various assumptions, many of which are based, in turn, upon
further
assumptions, including Frontline management's examination of historical
operating trends. Although Frontline believes that these assumptions were
reasonable when made, because assumptions are inherently subject to
significant
uncertainties and contingencies which are difficult or impossible to
predict and
are beyond its control, Frontline cannot give assurance that it will
achieve or
accomplish these expectations, beliefs or intentions.
Important factors that, in the Company's view, could cause actual results
to
differ materially from those discussed in this press release include the
strength of world economies and currencies, general market conditions
including
fluctuations in charter hire rates and vessel values, changes in demand in
the
tanker market as a result of changes in OPEC's petroleum production levels
and
world wide oil consumption and storage, changes in the Company's operating
expenses including bunker prices, dry-docking and insurance costs, 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 or political events, and other important factors described
from
time to time in the reports filed by the Company with the United States
Securities and Exchange Commission.
This information is subject of the disclosure requirements pursuant to
section
5-12 of the Norwegian Securities Trading Act.
3rd Quarter 2012 Results:
hugin.info/182/R/1661267/538165.pdf :
hugin.info/182/R/1661267/538165.pdf
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Frontline Ltd. via Thomson Reuters ONE
[HUG#1661267]
Questions should be directed to:
Jens Martin Jensen
Chief Executive Officer
Frontline Management AS
+47 23 11 40 99
Inger M. Klemp
Chief Financial Officer
Frontline Management AS
+47 23 11 40 76
