FRONTLINE PLC REPORTS RESULTS FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2023
Frontline plc (the “Company” or “Frontline”), today reported unaudited results for the nine months ended September 30, 2023:
Highlights
Profit of $107.7 million, or $0.48 per basic and diluted share for the third quarter of 2023.Adjusted profit of $80.8 million, or $0.36 per basic and diluted share for the third quarter of 2023.Declared a cash dividend of $0.30 per share for the third quarter of 2023.Reported revenues of $377.1 million for the third quarter of 2023.Announced agreement for an integrated solution to the strategic and structural deadlock in Euronav NV (“Euronav”). Closed the sale of 13.7 million shares of Euronav to CMB NV for proceeds of $252.0 million.Entered into agreements with Euronav to purchase 24 VLCCs with an average age of 5.3 years, for an aggregate purchase price of $2,350.0 million from Euronav (the “Acquisition”). All agreements are effective, and a majority of the vessels are expected to be delivered in the fourth quarter of 2023 and the balance of the vessels are expected to be delivered in the first quarter of 2024.Entered into a senior secured term loan facility with a group of our relationship banks in November 2023 in an amount of up to $1,410.0 million and a shareholder loan from Hemen Holding Ltd., the Company’s largest shareholder (“Hemen”), in an amount up to $539.9 million to partly finance the Acquisition.
Lars H. Barstad, Chief Executive Officer of Frontline Management AS, commented:
“The third quarter of the year proved to be a shoulder quarter for Frontline. As the Russian benchmark crude price firmly established itself above the price cap, owners left the trade causing the capacity in the non-Russia fleet to grow. We have had a streak of four strong quarters, but July to September came in on the softer side. Towards the end of the quarter, we saw normal seasonality return, and freight demand picked up as refineries in the northern hemisphere came out of their maintenance season. Strong US exports and continuous firm Asian imports have brought us back to a more normalized market where VLCCs take the lead on earnings. This amplifies our excitement as we prepare to take delivery of the 24 modern VLCCs from Euronav, more than doubling our exposure to this segment, increasing our overall tanker footprint by more than 30%.”
Inger M. Klemp, Chief Financial Officer of Frontline Management AS, added:
“We are very grateful for the financial support from a group of our relationship banks and our largest shareholder, allowing us to react quickly to growth opportunities which made the acquisition of the 24 modern VLCCs from Euronav possible. We will continue to consistently focus on maintaining our competitive breakeven levels to ensure that we are well positioned to generate significant cash flow and create value for our shareholders.”
Average daily time charter equivalents (“TCEs”)1
($ per day) Spot TCE Spot TCE estimates % Covered Estimated average daily cash breakeven rates 2023 Q3 2023 Q2 2023 Q4 2022 2022 Q4 2023 2023 VLCC 52,900 42,500 64,000 63,200 31,300 48,100 81% 28,200 Suezmax 54,600 37,600 61,700 57,900 37,100 50,300 70% 25,700 LR2 / Aframax 48,000 33,900 52,900 58,800 38,500 51,300 70% 17,100
We expect the spot TCEs for the full fourth quarter of 2023 to be lower than the TCEs currently contracted, due to the impact of ballast days at the end of the third quarter. The number of ballast days at the end of the third quarter was 429 for VLCCs, 394 for Suezmax tankers and 128 for LR2/Aframax tankers. The estimated spot TCE rates and cash breakeven rates exclude the impact of the Acquisition. The Company expects the Acquisition vessels delivered in the fourth quarter to load their first cargos for the Company in January 2024 and, as such, expects the additional revenues to be recognized in the fourth quarter of 2023 in relation to these vessels to be limited.
The Board of Directors
Frontline plc
Limassol, Cyprus
November 29, 2023
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 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 “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 worldwide 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, 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 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, 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 and the development 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 length and severity of epidemics and pandemics 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, the ability of the Company to complete the acquisition of 24 VLCCs from Euronav 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 IFRS (“non-GAAP”). See Appendix 1 for a full description of the measures and reconciliation to the nearest IFRS measure.
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