• VLCC Fleet Rate: $39,600 per day in Q3 2024; 77% booked at $44,300 per day for Q3.
• Suezmax Fleet Rate: $39,900 per day in Q3 2024; 70% booked at $39,600 per day for Q3.
• LR2/Aframax Fleet Rate: $36,000 per day in Q3 2024; 60% booked at $34,800 per day for Q3.
• Profit: $60.5 million or $0.27 per share in Q3 2024.
• Adjusted Profit: $75.4 million or $0.34 per share in Q3 2024.
• TCE Earnings: Decreased from $357.7 million in Q2 2024 to $292.2 million in Q3 2024.
• Liquidity: $526 million in cash and cash equivalents as of September 30, 2024.
• Fleet Composition: 41 VLCCs, 22 Suezmax tankers, 18 LR2 tankers; average age of six years.
• OpEx Expenses: $8,700 per day for VLCCs, $7,900 per day for Suezmax, $7,800 per day for LR2 tankers in Q3 2024.
• Cash Generation Potential: $304 million or $1.36 per share at current fleet and spot market earnings.

• Warning! GuruFocus has detected 7 Warning Signs with FRO.

Release Date: November 27, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Frontline PLC (NYSE:FRO) achieved strong daily rates in Q3 2024, with $39,600 per day on VLCCs, $39,900 on Suezmaxes, and $36,000 on LR2/Aframax vessels.
• The company reported a solid liquidity position with $526 million in cash and cash equivalents.
• Frontline PLC (NYSE:FRO) has a modern fleet with an average age of six years, consisting of 99% eco vessels, enhancing operational efficiency.
• The company has no remaining new building commitments and no significant debt maturities until 2027, providing financial stability.
• Despite a challenging spot market, Frontline PLC (NYSE:FRO) generates positive cash flow with substantial upside potential if market conditions improve.

Negative Points

• Adjusted profit decreased by $62.8 million compared to the previous quarter, primarily due to lower TCE earnings.
• The market has not provided the expected numbers, leading to a decrease in TCE rates from the previous quarter.
• Global oil demand growth remains muted, impacting the overall market sentiment and potential earnings.
• The tanker market is expected to be oversupplied in 2025, which could affect utilization rates and profitability.
• Geopolitical risks, such as Middle East tensions and sanctions, continue to pose uncertainties for the market.

Q & A Highlights

Q: Inger, with the market volatility and concerns about leverage, has there been any thought about deleveraging the balance sheet more proactively? A: Inger Klemp, CFO: Our long-term value is just below 50%, and we are comfortable with our current debt level. We don't see it as high leverage.

Q: Lars, if there were a resolution in Ukraine and increased sanctions on Iran, what would be the impacts? A: Lars Barstad, CEO: Sanctions on Russia might be reversed quickly, affecting oil flows to Europe and Asia. Increased sanctions on Iran could limit their exports, potentially benefiting compliant markets.

Q: How do you see the VLCC market developing, given the current rate trends? A: Lars Barstad, CEO: The market is range-bound due to missing incremental barrels. The Atlantic Basin needs to price the market, and we need dynamics to change to attract more barrels to Asia.

Q: What is your outlook for 2025 in terms of VLCC earnings potential? A: Lars Barstad, CEO: We are sensitive to geopolitical changes, which could strengthen the market. The current state might extend, but any adverse events could shift balances significantly.

Q: Can you provide more color on the sale and purchase markets, especially regarding asset values? A: Lars Barstad, CEO: There's less appetite from sanctioned trades, and margins are under pressure. We expect older fleet values to adjust, but modern fleet values remain stable.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.