FRO – Third Quarter and Nine Months 2023 Results

Frontline Ltd. (the “Company” or “Frontline”), today reported unaudited results for the three and nine months ended September 30, 2023:

Highlights

• Net loss of $33.2 million, or $0.17 per basic and diluted share for the third quarter of 2023.
• Adjusted net loss of $35.9 million, or $0.18 per basic and diluted share for the third quarter of 2023.
• Reported total operating revenues of $171.8 million for the third quarter of 2023.
• Reported spot TCEs for VLCCs, Suezmax tankers and LR2 tankers in the third quarter of 2023 were $10,500, $7,900 and $10,700 per day, respectively.
• For the fourth quarter of 2023, we estimate spot TCE on a load-to discharge basis of $21,600 contracted for 79% of vessel days for VLCCs, $17,900 contracted for 72% of vessel days for Suezmax tankers and $16,000 contracted for 64% of vessel days for LR2 tankers.
• Entered into senior secured term loan facilities in September and October 2023 for a total amount of up to $247.0 million to partially finance the acquisition of two 2019-built VLCCs, which were delivered to the Company in October and November of 2023, respectively, and the acquisition of two of the six resale VLCC newbuilding contracts.
• Obtained financing commitments for senior secured term loan facilities in October and November 2023 for a total amount of up to $260.0 million to partially finance the acquisition of four of the six VLCC newbuilding contracts, which are subject to final documentation.
• Entered into an agreement in November 2023 to sell four of its scrubber-fitted LR2 tankers built in 2014 and 2015 for an aggregate sale price of $160.0 million. The transaction is expected to generate net cash proceeds of approximately $67.0 million.
• In November 2023, the Company extended the terms of its senior unsecured revolving credit facility of up to $275.0 million with an affiliate of Hemen Holding Ltd. by 12 months to May 2023.

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

“The third quarter continued to be a challenging period for tanker owners. Global oil demand rose, but oil supply growth remained muted, resulting in one of the most demanding quarters on record for tankers. Global inventories were drawn throughout the period, albeit at a reduced pace compared to the immediately preceding quarter. Yet again Frontline has been reaping the benefits of running a ‘tight ship’, with what we believe to be industry low operational, financial, and administrative costs. In the current market, where oil prices and fuel costs have risen considerably, we believe having a modern, fuel-efficient fleet has proven advantageous. In the previous quarter I pointed to the fact that freight rates below operational cost, and in some cases negative for inefficient tonnage, is not sustainable. During the third quarter of the year, we finally started to see ship recycling accelerate. The fundamentals of this market remain the same; the global tanker fleet is aging rapidly, orderbooks are dwindling as global oil demand is about to grow beyond hundred million barrels per day. These factors combine to create a potentially potent cocktail for the recovery of the tanker market.”

Inger M. Klemp, Chief Financial Officer of Frontline Management AS, added:

“In the third and fourth quarter we have entered into term loan facilities and obtained financing commitments at what we believe to be highly attractive terms for a total amount of up to $507.0 million to partially finance the acquisition of the two 2019-built VLCCs and the six VLCC newbuilding contracts. When factoring in the $33.4 million available under the term loan facility entered into in November 2020 to partially finance the delivery of the last LR2 tanker, we have established bank debt of up to $540.4 million. The Company has also raised gross proceeds of $51.2 million under the Equity Distribution Agreement and net cash proceeds after the repayment of bank debt of approximately $67.0 million through sale of four LR2 tankers. Following this the remaining commitments as per September 30, 2023 for Frontline’s newbuilding program consisting of one LR2 tanker and six VLCCs and for the acquisition of the two 2019-built VLCCs, is fully funded.

Through these new financings we reduce our borrowing cost and industry leading cash break even rates, providing significant operating leverage and sizeable returns during period of market strength and help protecting our cash flows during periods of market weakness.

The Company has also extended the terms of its senior unsecured revolving credit facility of up to $275.0 million by 12 months to May 2023, leaving Frontline with no loan maturities until 2023.”

Average daily time charter equivalents (“TCEs”)¹

The estimated average daily cash breakeven rates are the daily TCE rates our 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 contracted days up until the last contracted discharge of cargo for each vessel in the quarter. The actual rates to be earned in the fourth quarter of 2023 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 days and not just the number of days the vessel is laden.

The Board of Directors
Frontline Ltd.
Hamilton, Bermuda
November 28, 2023

Ola Lorentzon – Chairman and Director
John Fredriksen – Director
Tor Svelland – Director   
James O’Shaughnessy – Director

Questions should be directed to:

Lars H. Barstad: 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 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, 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, 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.

Attachment

• 3rd Quarter 2023 Results