Frontline plc reported unaudited results for the three and twelve months ended December 31, 2022.
- 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.”
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.