FRO – Fourth Quarter and Full Year 2022 Results
FRONTLINE PLC REPORTS RESULTS FOR THE FOURTH QUARTER ENDED DECEMBER 31, 2022
Frontline plc (the “Company” or “Frontline”), today reported unaudited results for the three and twelve months ended December 31, 2022:
Highlights
- Highest quarterly net income since the second quarter of 2008 of $240.0 million, or $1.08 per basic and diluted share for the fourth quarter of 2022.
- Adjusted net income of $215.5 million, or $0.97 per basic and diluted share for the fourth quarter of 2022.
- Declared a cash dividend of $0.30 per share for the third quarter of 2022 and a cash dividend of $0.77 per share for the fourth quarter of 2022.
- Reported total operating revenues of $530.1 million for the fourth quarter of 2022.
- Reported spot TCEs for VLCCs, Suezmax tankers and LR2/Aframax tankers in the fourth quarter of 2022 were $63,200, $57,900 (highest since the third quarter of 2008) and $58,800 (an all-time high) per day, respectively.
- For the first quarter of 2023, we estimate spot TCE on a load-to-discharge basis of $58,300 contracted for 87% of vessel days for VLCCs, $72,400 contracted for 77% of vessel days for Suezmax tankers and $63,900 contracted for 68% of vessel days for LR2/Aframax tankers.
- Sold the 2009-built VLCC, Front Eminence, and the 2009-built Suezmax tanker, Front Balder, for aggregate gross proceeds of approximately $100.5 million. After repayment of existing debt on the vessels, the transactions are expected to generate net cash proceeds of approximately $63.8 million.
- Took delivery of the three remaining VLCC newbuildings from Hyundai Heavy Industries (“HHI”): Front Gaula in October 2022, and Front Orkla and Front Tyne in January 2023.
- Terminated the Combination Agreement with Euronav on January 9, 2023 and received from Euronav an emergency arbitration request for urgent interim and conservatory measures on January 17, 2023, which was fully dismissed by the Emergency Arbitrator on February 7, 2023.
- Received from Euronav an arbitration request for proceedings on the merits of the termination on January 28, 2023.
- Repaid $60.0 million of its $275.0 million senior unsecured revolving credit facility in February 2023.
Lars H. Barstad, Chief Executive Officer of Frontline Management AS, commented:
“The fourth quarter of 2022 may have given us a preview of the years to come in the tanker market as Frontline posts its best quarterly result in more than 14 years. With Chinese demand returning in earnest, the VLCC market also kicked into action during the fourth quarter and Frontline reaped the full benefits of its lean and efficient operations with all asset classes generating solid shareholder returns.
Overall freight demand continues to be positively affected by expanding trade lanes caused by Russian sanctions and the price cap on product exports that kicked in on the 5th of February. We should not forget this is all happening against the backdrop of an ageing fleet, dwindling orderbooks and unprecedented lead-times to new tonnage supply providing further support for the markets.”
Inger M. Klemp, Chief Financial Officer of Frontline Management AS, added:
“We expect to refinance a term loan facility with total balloon payment of $80.1 million due in August 2023 prior to maturity, leaving the Company with no material maturities until 2024. Our strong cash flow in the second half of 2022 enables us to return $238.2 million to our shareholders in cash dividends. Considering that asset values are moving ahead of earnings fundamentals, we believe the best capital allocation of the net proceeds from the sale of the two 2009 built vessels is to repay our $275.0 million senior unsecured revolving credit facility and have repaid $60.0 million in February 2023, reducing the amount outstanding to $149.7 million.”
Average daily time charter equivalents ("TCEs")1
| ($ per day) | Spot TCE | Spot TCE estimates | % Covered | Estimated average daily cash breakeven rates | |||||
| 2022 | Q4 2022 | Q3 2022 | Q2 2022 | Q1 2022 | 2021 | Q1 2023 | 2023 | ||
| VLCC | 31,300 | 63,200 | 25,000 | 16,400 | 15,700 | 15,300 | 58,300 | 87% | 27,000 |
| Suezmax | 37,100 | 57,900 | 41,100 | 26,500 | 16,900 | 12,000 | 72,400 | 77% | 21,500 |
| LR2 / Aframax | 38,500 | 58,800 | 40,200 | 38,600 | 19,000 | 11,800 | 63,900 | 68% | 17,600 |
We expect the spot TCEs for the full first quarter of 2023 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 322 for VLCCs, 428 for Suezmax tankers and 174 for LR2/Aframax tankers.
The Board of Directors
Frontline plc
Limassol, Cyprus
February 27, 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
Inger M. Klemp: Chief Financial Officer, Frontline Management AS
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, acts by terrorists or acts of piracy on ocean-going vessels, the length and severity of epidemics and pandemics, including the ongoing global outbreak of the novel coronavirus ("COVID-19"), 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 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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