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FRO - First Quarter 2021 Results

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Frontline Ltd. (the “Company” or “Frontline”), today reported unaudited results for the three months ended March 31, 2021:

Highlights

  • Net income of $28.9 million, or $0.15 per diluted share for the first quarter of 2021.

  • Adjusted net income of $8.8 million, or $0.04 per diluted share for the first quarter of 2021.

  • Reported total operating revenues of $194.0 million for the first quarter of 2021.

  • Reported spot TCEs for VLCCs, Suezmax and LR2 tankers in the first quarter of 2021 were $19,000, $15,200 and $12,000 per day, respectively.

  • For the second quarter of 2021, we estimate spot TCE on a load-to-discharge basis of $18,100 contracted for 70% of vessel days for VLCCs, $13,600 contracted for 63% of vessel days for Suezmax tankers and $14,200 contracted for 59% of vessel days for LR2 tankers. We expect the spot TCEs for the full second quarter of 2021 to be lower than the TCEs currently contracted, due to the impact of ballast days at the end of the second quarter as well as current freight rates.

  • In March and April 2021, respectively, the Company took delivery of the LR2 newbuildings Front Fusion and Front Future.

  • In May 2021, the Company entered into an agreement for the acquisition through resale of six latest generation ECO-type VLCC newbuilding contracts currently under construction at the HHI shipyard in South Korea. Five vessels will be delivered during 2022 starting in Q1 and the last vessel in Q1 2023.

Lars H. Barstad, Interim Chief Executive Officer of Frontline Management AS commented:

“Despite challenging market conditions during the first quarter of 2021, Frontline manages to deliver a solid result. This reflects our business model, with high focus on efficiency, quality, and cost throughout the organization. Frontline’s modern fleet allows for an agile approach to how we trade our ships, yielding returns above the key benchmarks. We are not out of the woods yet with regards to freight demand, and the recent Covid-19 situation in Asia is a concern. We are seeing promising oil demand figures from Europe, US, and China and OPEC, EIA, and IEA maintain their very firm demand growth expectations for the second half of 2021, but short-term the freight market continues to be challenged. We are very excited about our acquisition of six VLCCs being built at Hyundai Heavy Industries in Korea. These high-quality vessels will be delivered at a time when oil demand is expected to have normalized and the Global economy is running on full steam. The fundamentals of the tanker market remain firm, with an historic low order book and a significant part of the fleet challenged by tightening environmental regulations.”

Average daily time charter equivalents ("TCEs")1

($ per day)

Spot TCE

Spot TCE estimates

% covered

Estimated average daily cash BE rates for the remainder of the year

Q1 2021

Q4 2020

2020

Q2 2021

2021

VLCC

19,000

17,200

54,500

18,100

70%

21,500

SMAX

15,200

9,800

35,600

13,600

63%

17,700

LR2

12,000

12,500

23,400

14,200

59%

15,900

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 second quarter of 2021 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, we are 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 end of the period, whereas if a vessel is contracted, then certain costs can be deferred and recognized over the load-to-discharge period.

The recognition 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 as compared to a discharge-to-discharge basis.

When expressing TCE per day the Company uses the total available days, net of off hire and not just the number of days the vessel is laden.

The Board of Directors
Frontline Ltd.
Hamilton, Bermuda
May 26, 2021

Ola Lorentzon - Chairman and Director
John Fredriksen - Director
Tor Svelland - Director
James O'Shaughnessy - Director

Questions should be directed to:

Lars H. Barstad: Interim Chief Executive Officer, Frontline Management AS
+47 23 11 40 37

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.



Attachment


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