Du är här

2014-05-27

Frontline 2012 Ltd.: FRNT - Frontline 2012 Ltd. First Quarter 2014 Results

HIGHLIGHTS

* Frontline 2012 reports net income of $14.5 million and earnings per share
of $0.06 for the first quarter of 2014.
* The Company announces a cash dividend of $0.05 per share for the first
quarter.
* Four MR product tankers were delivered during the first quarter of 2014.
* Frontline 2012 received $99.3 million in April 2014 in connection with the
cancellation of its first newbuilding contract (J0025) at Jinhaiwan and
expects to record a gain of $35.9 million in the second quarter.
* Frontline 2012 sold five fuel efficient Capesize newbuildings to
Knightsbridge Tankers Limited in April 2014 and subsequently announced the
combination of Frontline 2012's remaining fleet of 25 fuel efficient
Capesize newbuildings with Knightsbridge's fleet.
* In April 2014 AGHL was listed on the Oslo Stock Exchange and Frontline 2012
sold shares in AGHL for approximately $57 million.

FIRST QUARTER 2014 RESULTS

Frontline 2012 announces net income of $14.5 million and earnings per share of
$0.06 for the first quarter compared with net income of $12.5 million and
earnings per share of $0.05 in the preceding quarter. Frontline 2012 recorded
income from associated company (i.e. Avance Gas Holdings Limited ("AGHL")) of
$0.7 million in the first quarter and $8.8 million (including a gain on
dilution of $6.5 million following AGHL's private placement in November) in
the fourth quarter.

The average daily time charter equivalents ("TCEs") earned in the spot and
period market in the first quarter by the Company's VLCCs and Suezmax tankers
were $39,500 and $26,500, respectively, compared with $27,300 and $19,200,
respectively, in the preceding quarter. The spot earnings for the Company's
VLCC and Suezmax tankers were $40,600 and $26,500, respectively, compared
with $26,500 and $19,200, respectively, in the preceding quarter. The daily
earnings for the Company's MR product tankers were $17,900 compared with
$17,600 in the preceding quarter.

The Company estimates average cash breakeven TCE rates for the remainder of
2014 for its VLCCs, Suezmax tankers and MR product tankers of approximately
$25,600, $19,000 and $13,900, respectively.

FLEET DEVELOPMENT

The Company took delivery of the MR product tankers, Front Dee, Front Clyde,
Front Esk and Front Mersey during the first quarter of 2014.

NEWBUILDING PROGRAM

As of March 31, 2014, the Company's newbuilding program totaled 62 vessels and
comprised eight newbuildings sold to AGHL, 16 newbuildings within the crude
oil and petroleum product markets and 38 Capesize vessels. Total installments
of approximately $342 million have been paid and the remaining installments
to be paid amounted to approximately $2,602 million.

Frontline 2012 has eight newbuilding contracts with STX (Dalian) Shipbuilding
Co., Ltd. ("STX Dalian") and further six newbuildings with STX
Offshore&Shipbuilding (Korea) ("STX Korea"). STX Korea has subsequently
subcontracted the latter vessels to STX Dalian. STX Dalian has encountered
financial difficulties, and the construction has stopped. The Company is
following the situation closely and will make every effort to ensure that STX
Dalian deliver the newbuildings, which they are contractually committed to.
There is however a substantial risk that these newbuildings will not be
delivered according to the contracts and Frontline 2012 is therefore taking
legal measures to protect their position and be compensated for any loss
caused by non delivery and is currently engaged in arbitral proceedings with
STX Dalian and STX Korea, mainly on the six ships, for which STX Korea are
responsible.

Subsequent to March 31, 2014, the Company has sold five and has agreed to sell
another 25 Capesize newbuilding contracts to Knightsbridge and negotiated and
concluded two newbuilding contracts plus two options. The Company's
newbuilding program excluding newbuildings sold and newbuilding contracts
with STX Dalian and STX Korea currently comprises 12 LR2 newbuildings plus
two options for LR2 newbuildings. Total installments of approximately $73
million have been paid for these LR2 newbuilding contracts and the remaining
installments to be paid amounted to approximately $471 million.

In September 2012, the Company cancelled the first of its five VLCC
newbuilding contracts (hull J0025) at Jinhaiwan due to the excessive delay
compared to the contractual delivery date and demanded payment from Jinhaiwan
and the refund guarantee bank in respect of installments paid and accrued
interest. This amount includes installments paid by Frontline Ltd. prior to
the acquisition by the Company in December 2011, at which time the
newbuilding contracts were valued at estimated fair value. The yard initiated
arbitration proceedings on this matter. In February 2014, the arbitrator
found in favor of the Company and declared that the yard should repay the
installments paid together with interest. In April 2014, the Company received
$99.3 million in connection with the cancellation of J0025 and expects to
record a gain of $35.9 million in the second quarter.

In 2012 and 2013, the Company cancelled all of its five newbuilding contracts
at Jinhaiwan ship yard and has received a total refund to date of $243.9
million, of which $89.8 million has been used to repay debt. Total claims not
yet received total $75.3 million.

CORPORATE

In March 2014, the Company purchased 1,130,662 of its own shares for $8.6
million and has recorded these shares as treasury shares in the balance
sheet. The shares have been acquired further to a Board resolution to buy
back up to 49,820,000 shares. 247,969,338 ordinary shares were outstanding as
of March 31, 2014, and the weighted average number of shares outstanding for
the quarter was 248,950,754.

The Company announces a cash dividend for the first quarter of 2014 of $0.05
per share. The ex-dividend date has been set to June 3, 2014, the record date
is June 5 , 2014 and the distribution date is on or about June 19, 2014.

In February 2014, the Company prepaid bank debt in an amount of $112 million
related to its ten crude oil tankers, which resulted in more lenient
covenants in the loan agreements and reduced cash breakeven TCE rates.

On March 10, 2014, Frontline 2012 and Knightsbridge announced that they and
Hemen had agreed for Knightsbridge to acquire five fuel efficient 180,000 DWT
Capesize bulk carrier newbuildings from Frontline 2012 and one Capesize bulk
carrier built in 2013 from Hemen for a total consideration of $360 million
whereof $186 million in shares of Knightsbridge at $10 per share, $150
million in absorption of remaining newbuilding instalments and $24 million in
cash. On April 23, 2014, Knightsbridge issued 15.5 million shares to
Frontline 2012, 3.1 million shares to Hemen and took delivery of the Capesize
bulk carrier from Hemen. The first two of the newbuilding vessels were
delivered in May and the remaining newbuilding vessels are expected to be
delivered between July and September 2014. Frontline 2012 currently owns
approximately 31.6% of the total shares outstanding in Knightsbridge.

On April 24, 2014, Frontline 2012 and Knightsbridge announced they had agreed
to combine Frontline 2012's remaining fleet of 25 fuel efficient vessels with
Knightsbridge. Under the agreement in principle, the exchange ratio for the
acquisition and share issuance will be based on NAV using March 31, 2014
broker values. The Knightsbridge/Frontline 2012 exchange ratio will be
44%/56%. Accordingly, Knightsbridge has agreed to issue 62.0 million shares
to Frontline 2012. The closing will be executed in two stages, with 31.0
million shares expected to be issued around September 15, 2014 and 31.0
million shares around March 15, 2015. The transaction is subject to
definitive documentation, normal closing conditions and regulatory approvals.
The transaction is also subject to consent from Knightsbridge's shareholders
to increase its authorized share capital to enable the issuance of the new
shares to Frontline 2012.

In April 2014, AGHL was listed on the Oslo Stock Exchange following its IPO.
As part of the IPO, Frontline 2012 sold shares in AGHL for approximately $57
million. Frontline 2012 currently owns 4.1 million shares in AGHL
representing approximately 11.6 percent of the total shares outstanding.

THE MARKET

Crude

The market rate for a VLCC trading on a standard 'TD3' voyage between the
Arabian Gulf and Japan in the first quarter of 2014 was WS 51, representing a
decrease of WS 2 point from the fourth quarter of 2013 and WS16 above the
first quarter of 2013. The flat rate decreased by 6.7 percent from 2013 to
2014.

The market rate for a Suezmax trading on a standard 'TD5' voyage between West
Africa and Philadelphia in the first quarter of 2014 was WS 79, representing
an increase of WS 13 points from the fourth quarter of 2013 and an increase
of WS 21 points from the first quarter of 2013. The flat rate decreased by 6
percent from 2013 to 2014.

Bunkers at Fujairah averaged $611/mt in the first quarter of 2014 compared to
$615/mt in the fourth quarter of 2013. Bunker prices varied between a high of
$627/mt on January 15th and a low of $599/mt on March 12th.

The International Energy Agency's ("IEA") May 2014 report stated an OPEC crude
production of 30.0 million barrels per day (mb/d) in the first quarter of
2014. This was an increase of 0.2 mb/d compared to the fourth quarter of
2013.

The IEA estimates that world oil demand averaged 91.3 mb/d in the first
quarter of 2014, which is a decrease of 1.1 mb/d compared to the previous
quarter. IEA estimates that world oil demand in 2014 will be 92.8 mb/d,
representing an increase of 1.5 percent or 1.4 mb/d from 2013.

The VLCC fleet totalled 627 vessels at the end of the first quarter of 2014,
four vessels up from the previous quarter. Five VLCCs were delivered during
the quarter, one was removed. The order book increased by 12 vessels and
counted 94 vessels at the end of the first quarter, which represents 15
percent of the VLCC fleet.

The Suezmax fleet totaled 449 vessels at the end of the first quarter, up
three from 446 vessels at the end of the previous quarter. Three vessels were
delivered during the quarter whilst none were removed. The order book counted
40 vessels at the end of the fourth quarter, which represents approximately
nine percent of the Suezmax fleet.

Product

The market rate for an MR trading on a standard "TC2" voyage between Rotterdam
and New York in the first quarter of 2014 was WS 136, representing an
increase of WS 44 from the fourth quarter of 2013 and a decrease of WS 17
from the first quarter of 2013. The flat rate decreased by 5.3 percent from
2013 to 2014.

Bunkers in Rotterdam averaged $575/mt in the first quarter of 2014 compared to
$582/mt in the fourth quarter of 2013. ...

Författare Hugin

Tala om vad ni tycker

Tala om vad ni tycker

Ni är just nu inne på en betaversion av nya aktiespararna. Lämna gärna feedback på vad ni tycker i formuläret nedan.