Highlights
-
Frontline reports a net loss
attributable to the Company of $13.0 million for the fourth quarter
of 2013, equivalent to a loss per share of $0.15.
-
Frontline reports a net loss
attributable to the Company of $188.5 million for the year ended
December 31, 2013, equivalent to a loss per share of
$2.36.
-
Frontline reports a net loss,
excluding impairment loss on vessels, attributable to the Company
of $84.8 million for the year ended December 31, 2013, equivalent
to a loss per share of $1.06.
-
Frontline will not pay a dividend
for the fourth quarter of 2013.
-
Frontline issued 1,193,300 new
shares in the fourth quarter further to the ATM offering launched
in June 2013.
-
In January 2014, Frontline
increased the amount that may be raised from the ATM from up to
$40.0 million to up to $100.0 million. Frontline issued 8,829,063
new shares under the ATM during January 2014.
Fourth
Quarter and Full Year 2013 Results
The Board of Frontline Ltd. (the
"Company" or "Frontline") announces a net loss attributable to the
Company of $13.0 million in the fourth quarter, equivalent to a
loss per share of $0.15, compared with a net loss of $36.4 million
in the preceding quarter, equivalent to a loss per share of $0.46.
The net loss attributable to the Company in the fourth quarter
includes a net gain of $13.8 million, which was recognized on the
lease terminations of the VLCCs Front Champion and Golden Victory
and a loss of $12.7 million, which was recognized on the conversion
of $25.0 million of the Company's convertible bonds into cash and
shares.
Following the termination of the
lease on the Company's final OBO carrier, Front Guider, in the
first quarter of 2013 the results of the OBO carriers have been
recorded as discontinued operations in accordance with U.S.
generally accepted accounting principles.
The average daily time charter
equivalents ("TCEs") earned in the spot and period market in the
fourth quarter by the Company's VLCCs and Suezmax tankers were
$22,400 and $12,900, respectively, compared with $16,100 and
$12,400, respectively, in the preceding quarter. The spot earnings
for the Company's double hull VLCCs and Suezmax vessels were
$21,600 and $12,900, respectively, compared with $13,900 and
$12,400, respectively, in the preceding quarter.
Contingent rental expense in the
fourth quarter relates to the amended charter parties for four
vessels leased from German KGs vessels. Contingent rental income in
the third quarter is primarily due to the release of an accrual,
which was not required at September 30.
Ship operating expenses decreased
by $3.8 million compared with the preceding quarter due to a $1.5
million decrease in dry docking costs and a decrease in running
expenses following lease terminations/vessel redeliveries.
Following the redelivery of the
chartered-in VLCC DHT Eagle on May 8, 2013, the Company no longer
has any vessels chartered-in under operating leases.
Interest expense, net of
capitalized interest, was $22.4 million in the fourth quarter of
which $6.2 million relates to the Company's subsidiary Independent
Tankers Corporation Limited ("ITCL").
Frontline announces a net loss
attributable to the Company of $188.5 million for the year ended
December 31, 2013, equivalent to a loss per share of $2.36. The
average daily TCEs earned in the spot and period market in the year
ended December 31, 2013 by the Company's VLCCs and Suezmax tankers
were $17,400 and $13,400, respectively, compared with $22,200 and
$15,200, respectively, in the year ended December 31, 2012. The
spot earnings for the Company's double hull VLCCs and Suezmax
vessels were $15,400 and $13,400, respectively, in the year ended
December 31, 2013 compared with $22,400 and $15,200, respectively,
in the year ended December 31, 2012.
As of December 31, 2013, the
Company had total cash and cash equivalents of $53.8 million and
restricted cash of $68.4 million. Restricted cash includes $66.2
million relating to deposits in ITCL.
The Company estimates average
total cash cost breakeven rates for the remainder of 2014 on a TCE
basis for VLCCs and Suezmax tankers of approximately $23,100 and
$18,100 respectively.
Fleet
Development
In October 2013, we agreed with
Ship Finance International Limited ("Ship Finance") to terminate
the long term charter parties for the 1998 and 1999 built VLCCs
Front Champion and Golden Victory, and Ship Finance simultaneously
sold the vessels to unrelated third parties. The charter parties
were terminated in November 2013 upon the redelivery of the vessels
to Ship Finance. We have agreed to a compensation payment to Ship
Finance of $89.9 million for the early termination of the charter
parties, of which $10.9 million was paid upon termination and the
balance was recorded as notes payable, with similar amortization
profiles to the current lease obligations, with reduced rates until
2015 and full rates from 2016. Front Champion and Golden Victory
had the highest charter rates among the vessels Frontline has
chartered in from Ship Finance and the level of compensation is a
reflection of this.
Newbuilding
Program
As of December 31, 2013 the
Company was committed to make newbuilding installments of $87.9
million with expected payment in 2014.
Corporate
In October 2013, the Company
entered into a private agreement to exchange $25.0 million of the
outstanding principal amount of its 4.50% Convertible Bond Issue
2010/2015 (the "Convertible Bonds"), for an aggregate of 6,474,827
ordinary shares and a cash payment of $2.25 million. As of December
31, 2013, $190.0 million of the Convertible Bonds were
outstanding.
86,511,713 ordinary shares were
outstanding as of December 31, 2013, and the weighted average
number of shares outstanding for the quarter was 84,389,254.
Frontline issued 8,829,063 new
shares under the ATM during January 2014. 95,340,776 ordinary
shares were outstanding as of February 26, 2014.
The
Market
The market rate for a VLCC trading
on a standard 'TD3' voyage between the Arabian Gulf and Japan in
the fourth quarter of 2013 was WS 53, representing an increase of
WS 17 point from the third quarter of 2013 and WS10 above the
fourth quarter of 2012. The flat rate increased by 9.1 percent from
2012 to 2013.
The market rate for a Suezmax
trading on a standard 'TD5' voyage between West Africa and
Philadelphia in the fourth quarter of 2013 was WS 66, representing
an increase of WS 10 points from the third quarter of 2013 and
an increase of WS 5 points from the fourth quarter of 2012. The
flat rate increased by 9.3 percent from 2012 to 2013.
Bunkers at Fujairah averaged
$615/mt in the fourth quarter of 2013 compared to $660/mt in the
third quarter of 2013. Bunker prices varied between a high of
$629/mt on November 1st and a low of
$604.5/mt on October 2nd.
The International Energy Agency's
("IEA") February 2014 report stated an OPEC crude production,
including Iraq, of 29.8 million barrels per day (mb/d) in the
fourth of 2013. This was a decrease of 0.8 mb/d compared to the
third quarter of 2013 due to Libyan production collapsing and Iraq
not able to sustain the record levels seen earlier in the
year.
The IEA estimates that world oil
demand averaged 92.2 mb/d in the fourth quarter of 2013, which is
an increase of 0.2 mb/d compared to the previous quarter. IEA
estimates that world oil demand in 2014 will be 92.6 mb/d,
representing an increase of 1.4 percent or 1.3 mb/d from 2013.
The VLCC fleet totalled 623
vessels at the end of the fourth quarter of 2013, unchanged from
the previous quarter. Seven VLCCs were delivered during the
quarter, seven were removed. The order book increased by 26 vessels
and counted 82 vessels at the end of the fourth quarter which
represents 13 percent of the VLCC fleet. According to Fearnleys,
the single hull fleet stands unchanged at one vessel.
The Suezmax fleet totaled 446 vessels at the end of the fourth
quarter, down from 447 vessels at the end of the previous quarter.
One vessel was delivered during the third quarter whilst two were
removed. The order book counted 40 vessels at the end of the fourth
quarter which represents approximately nine percent of the Suezmax
fleet. According to Fearnley's, the single hull fleet is down to
three vessels, two less than the previous quarter.
Strategy and
Outlook
The recent increase in rates which
began in the second half of last year is a sign of an improved
balance in the tanker market and the Company expects that the
supply/demand balance will improve further. However this is a fine
balance which can easily be changed by increased fleet supply
caused by increased ballast speed, decrease in vessel scrapping and
aggressive newbuilding ordering.
As of December 31, 2013 Frontline
had total debt and lease obligations, excluding non-recourse debt
in ITCL of $1,058 million comprised of $727 million in capital
lease obligations to Ship Finance, $78 million in notes payable to
Ship Finance, $63 million in capital lease obligations to German
KGs and $190 million in convertible bond loan. A full repayment of
this debt is, to a large extent, dependent on a sustained
improvement in tanker rates in the years to come.
The balance sheet has been
strengthened from the raising of $40 million in new equity in
January 2014 and the outlook has improved for the tanker market.
This improves the financial position of the Company and creates
opportunities going forward. The recent positive development in the
tanker market is likely to give a better operating result
(excluding one time gains and losses) in the first quarter.
Forward Looking Statements
This press release contains
forward looking statements. These statements are based upon various
assumptions, many of which are based, in turn, upon further
assumptions, including Frontline management's examination of
historical operating trends. Although Frontline believes that these
assumptions were reasonable when made, because assumptions are
inherently subject to significant uncertainties and contingencies
which are difficult or impossible to predict and are beyond its
control, Frontline cannot give assurance that it will achieve or
accomplish these expectations, beliefs or intentions.
Important factors that, in the
Company's view, could cause actual results to differ materially
from those discussed in this press release include the strength of
world economies and currencies, general market conditions including
fluctuations in charter hire rates and vessel values, changes in
demand in the tanker market as a result of changes in OPEC's
petroleum production levels and world wide oil consumption and
storage, changes in the Company's operating expenses including
bunker prices, dry-docking and insurance costs, 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 or political events,
and other important factors described from time to time in the
reports filed by the Company with the United States Securities and
Exchange Commission.
The full report is available for
download in the link enclosed.
The Board of Directors
Frontline Ltd.
Hamilton, Bermuda
February 26, 2014
Questions should be directed
to:
Jens Martin Jensen: Chief Executive Officer, Frontline Management
AS
+47 23 11 40 99
Inger M. Klemp: Chief Financial Officer, Frontline Management
AS
+47 23 11 40 76
This information is subject
of the disclosure requirements pursuant to section 5-12 of the
Norwegian Securities Trading Act.
4th Quarter 2013 Results
This
announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Frontline Ltd. via Globenewswire
HUG#1765100
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