FRNT - Frontline 2012 Ltd. Third Quarter and Nine Months 2013 Results
(Thomson Reuters ONE) -
Highlights
* Frontline 2012 reports net income of $23.9 million and earnings per share of
$0.11 for the third quarter of 2013.
* Frontline 2012 reports net income of $57.0 million and earnings per share of
$0.26 for the nine months ended September 30, 2013.
* Frontline 2012 received $50.6 million in August 2013 in connection with the
cancellation of its third newbuilding contract at Jinhaiwan and recorded a
gain of $27.0 million in the third quarter.
* The first MR product tanker, Front Arrow, was delivered on September
9, 2013.
* In September 2013, Frontline 2012 issued 34.1 million new ordinary shares of
$2.00 par value at a subscription price of $6.60 generating $225.1 million
in gross proceeds.
* In October 2013, Frontline 2012 became a 37.5 percent shareholder in Avance
Gas Holding Ltd. ("AGHL") and then declared a special dividend consisting of
12.5 percent of the capital stock of AGHL to Frontline 2012's shareholders,
which was distributed when AGHL was registered on the Norwegian OTC in
October.
* In November 2013, Frontline 2012 entered into an agreement with AGHL whereby
AGHL shall acquire eight, fuel efficient 83,000 cbm VLGC newbuildings from
Frontline 2012 immediately following their delivery from the yard. AGHL will
pay $75.0 million for each newbuilding, of which $17.4 million will be paid
upfront and $57.6 million will be paid upon delivery from the yard.
Introduction
Frontline 2012 Ltd. (the "Company" or "Frontline 2012") is a commodity shipping
company incorporated in Bermuda on December 12, 2011, which as of today owns a
total of ten crude oil tankers, one MR product tanker and 61 fuel efficient
newbuilding contracts within the crude oil, product, liquefied petroleum gas and
dry bulk markets.
The Company's sailing fleet is one of the youngest in the industry and currently
consists of six very large crude carriers, or VLCCs, four Suezmax tankers and
one MR product tanker with an average age of 3.6 years operating in the spot and
the period markets.
The largest shareholder is Hemen Holding Ltd. with a shareholding of
approximately 46 percent.
Third Quarter and Nine Months 2013 Results
Frontline 2012 announces net income of $23.9 million and earnings per share of
$0.11 for the third quarter of 2013 compared with net income of $37.9 million
and earnings per share of $0.18 in the preceding quarter. Frontline 2012
recorded a gain of $27.0 million in the third quarter following the receipt of
$50.6 million in August 2013 in connection with the cancellation of its third
newbuilding contract (J0027) at Jinhaiwan compared with a gain of $30.3 million
in the second quarter following the receipt of $94.0 million in April 2013 in
connection with the cancellation of its second newbuilding contract (J0026) at
Jinhaiwan. The Company recognized a loss of $1.6 million in the third quarter on
the mark-to-market revaluation of interest rate swap agreements compared with a
gain of $8.5 million in the second quarter.
The average daily time charter equivalents ("TCEs") earned in the spot and
period market in the third quarter by the Company's VLCCs and Suezmax tankers
were $21,100 and $11,900, respectively, compared with $21,500 and $13,800,
respectively, in the preceding quarter. The spot earnings for the Company's VLCC
and Suezmax tankers were $17,300 and $11,900, respectively, compared with
$17,900 and $13,800, respectively, in the preceding quarter. The earnings for
the Company's first MR product tanker, Front Arrow, which was delivered on
September 9, 2013 and operated in the period market were $20,700.
Frontline 2012 announces net income of $57.0 million and earnings per share of
$0.26 for the nine months ended September 30, 2013 compared with net income of
$7.4 million and earnings per share of $0.06 in the nine months ended September
30, 2012. Frontline 2012 recorded gains of $30.3 million and $27.0 million in
the nine months ended September 30, 2013 in connection with the cancellation of
its second and third newbuilding contracts, respectively, at Jinhaiwan. The
Company also recognized a gain of $6.1 million in the nine months ended
September 30, 2013 on the mark-to-market revaluation of interest rate swap
agreements.
The average daily TCEs earned in the spot and period market in the nine months
ended September 30, 2013 by the Company's VLCCs and Suezmax tankers were $20,700
and $12,500, respectively, compared with $28,500 and $16,300, respectively, in
the nine months ended September 30, 2012. The spot earnings for the Company's
VLCC and Suezmax tankers were $16,700 and $12,500, respectively, compared with
$28,600 and $16,300, respectively, in the nine months ended September 30, 2012.
The Company estimates average cash breakeven TCE rates for the remainder of
2013 for its VLCCs, Suezmax tankers and MR product tanker of approximately
$14,300, $13,100 and $8,500, respectively. These breakeven rates are based on
prepaid bank debt repayments for 2013.
The Company estimates average cash breakeven TCE rates for 2014 for its VLCCs,
Suezmax tankers and MR product tanker of approximately $29,400, $21,800 and
$13,000, respectively.
Fleet Development
The Company's first MR product tanker, Front Arrow, was delivered on September
9, 2013. This vessel has been fixed on a short term time charter for 60-90 days
and the Company's aim is to employ the balance of these vessels on similar
charters upon delivery from the shipyard. There will be a delay of approximately
two months in delivery of the vessels from the original delivery schedule.
Newbuilding Program
In August 2013, the Company received $50.6 million in refund in connection with
the cancellation of its third newbuilding contract (J0027) at Jinhaiwan.
In August 2013, the Company cancelled the fourth of its five VLCC newbuilding
contracts (hull J0028) at Jinhaiwan due to the excessive delay compared to the
contractual delivery date and demanded payment from Jinhaiwan 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
Company has been notified by the yard that it wishes to take the matter to
arbitration.
As of September 30, 2013, the Company's newbuilding program totalled 60 vessels
and comprised 21 newbuildings within the crude oil and petroleum product
markets, 30 Cape size vessels, eight very large gas carriers or VLGCs and one
VLCC. Total installments of approximately $365 million have been paid and the
remaining installments to be paid amounted to approximately $2,453 million.
Subsequent to September 30, 2013, the Company cancelled its fifth and final VLCC
newbuilding contract (hull J0106) at Jinhaiwan due to the excessive delay
compared to the contractual delivery date and demanded payment from Jinhaiwan 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 Company has been notified by the yard that it wishes to take the
matter to arbitration.
Subsequent to September 30, 2013, the Company has also negotiated and concluded
two newbuilding contracts. The Company's newbuilding program currently comprises
61 newbuildings. The total capital commitment is approximately $2,811 million of
which approximately $2,444 million is still to be paid.
Frontline 2012 has eight newbuilding contracts with STX (Dalian) Shipbuilding
Co., Ltd. and further six newbuildings with STX Offshore & Shipbuilding (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 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 has therefore taken
legal measures to be compensated for any loss caused by non delivery and is
currently in an arbitration process with STX, mainly on the six ships, for which
STX Korea are responsible
Corporate
In September 2013, the Company issued 34.1 million new ordinary shares of $2.00
par value at a subscription price of $6.60 generating $225.1 million in gross
proceeds to be used to finance the investment in AGHL, the current newbuilding
program and further expansion.
249,100,000 ordinary shares were outstanding as of September 30, 2013, and the
weighted average number of shares outstanding for the quarter was 224,533,333.
On October 2 2013, the Company entered into an agreement with Stolt-Nielsen
Limited ("Stolt-Nielsen") and Sungas Holdings Ltd. ("Sungas") whereby Frontline
2012 became a shareholder in AGHL owning 37.5 percent of the company along with
Stolt-Nielsen and Sungas.
AGHL registered on the over-the-counter market in Oslo on October 17, 2013.
Subsequently Frontline 2012 declared the distribution of a special dividend
consisting of 12.5 percent of the capital stock of AGHL to Frontline 2012's
shareholders and shareholder loans were converted to equity in AGHL.
In November 2013, Frontline 2012 entered into an agreement with AGHL whereby
AGHL shall acquire eight, fuel efficient 83,000 cbm VLGC newbuildings from
Frontline 2012 immediately following their delivery from the yard. These
newbuildings have been ordered by Frontline 2012 from the Jiangnan Changxing
Shipyard in China and have expected deliveries between August 2014 and September
2015. AGHL will pay $75.0 million for each newbuilding, of which $17.4 million
will be paid upfront and $57.6 million will be paid upon delivery from the yard.
In November 2013, AGHL completed a private placement of 5.9 million new shares
at a price of $17.00 per share, generating approximately $100 million in gross
proceeds. The proceeds will be used to partly finance the acquisition of the
eight VLGC newbuildings from Frontline 2012.
Following the dividend distribution, the conversion of shareholder loans to
equity and the private placement in AGHL, the Company owns 22.5 percent of AGHL.
The Market
Crude
The market rate for a VLCC trading on a standard 'TD3' voyage between the
Arabian Gulf and Japan in the third quarter of 2013 was WS 36, representing a
decrease of WS 1 point from the second quarter of 2013 and the same level as the
third 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 third quarter of 2013 was WS 56, representing an
increase of WS 2 points from the second quarter of 2013 and a decrease of WS 4
points from the third quarter of 2012. The flat rate increased by 9.3 percent
from 2012 to 2013.
Bunkers at Fujairah averaged $600/mt in the third quarter of 2013 compared to
$614/mt in the second quarter of 2013. Bunker prices varied between a high of
$617/mt on August 29(th) and a low of $585/mt on July 3(rd).
The International Energy Agency's ("IEA") October 2013 report stated an OPEC
crude production, including Iraq, of 30.5 million barrels per day (mb/d) in the
third quarter of 2013. This was a decrease of 0.3 mb/d compared to the second
quarter of 2013.
The IEA estimates that world oil demand averaged 91.7 mb/d in the third quarter
of 2013, which is an increase of 1.2 mb/d compared to the previous quarter. IEA
estimates that world oil demand in 2013 will be 91.0 mb/d, representing an
increase of 1.0 percent or 1.0 mb/d from 2012.
The VLCC fleet totalled 623 vessels at the end of the third quarter of 2013,
unchanged from the previous quarter. Five VLCCs were delivered during the
quarter, five were removed. The order book counted 56 vessels at the end of the
third quarter which represents nine percent of the VLCC fleet. According to
Fearnleys, the single hull fleet is down to one vessel.
The Suezmax fleet totaled 447 vessels at the end of the third quarter, up from
444 vessels at the end of the previous quarter. Five vessels were delivered
during the third quarter whilst two were removed. The order book counted 41
vessels at the end of the third quarter which represents approximately nine
percent of the Suezmax fleet. According to Fearnley's, the single hull fleet
stands unchanged at five vessels.
Product
The market rate for an MR trading on Standard "TC2" voyage between Rotterdam and
New York in the second quarter of 2013 was WS 94, representing a decrease of WS
34 from the second quarter of 2013 and a decrease of WS 21 from the third
quarter of 2012. The flat rate increased by 9 percent from 2012 to 2013.
Bunkers in Rotterdam averaged $585/mt in the third quarter of 2013 compared to
$618/mt in the second quarter of 2013. Bunker prices varied between a high of
$615/mt on April 2nd and a low of $578/mt on June 28th.
The MR fleet totaled 1,488 vessels at the end of the third quarter of 2013, down
from 1,491 vessels at the end of the previous quarter. The order book counted
303 vessels at the end of the third quarter, which represents approximately 20
percent of the MR fleet.
The LR2 fleet totaled 212 vessels at the end of the third quarter of 2013,
unchanged from the previous quarter. The order book counted 30 vessels at the
end of the third quarter, which represents approximately 14 percent of the LR2
fleet.
LPG
According to Clarksons the monthly average VLGC time charter hire was $1,659,620
in the third quarter of 2013 compared to $1,155,460 in the second quarter.
The VLGC fleet (60,000+ Cbm) totaled 155 vessels at the end of the third quarter
of 2013, an increase of two vessels from the previous quarter. The order book
counted 36 vessels at the end of the third quarter, an increase of 13 vessels
from the previous quarter, representing 23 percent of the VLGC fleet according
to Platou.
Drybulk
According to the Baltic Exchange the average Capesize spot earnings in the third
quarter of 2013 was $18,968/day compared to $6,214/day in the second quarter.
According to Chinese official data iron ore imports to China increased from 200
million tons in the second quarter to 217 million tons in the third quarter of
2013. The coal imports increased from 69 million tons to 70 million tons in the
same period.
According to Fearnley's the Capesize fleet (150-200'dwt) totaled 1,041 vessels
at the end of the third quarter of 2013, an increase of five vessels from the
previous quarter. The revised order book counted 103 vessels at the end of the
third quarter, compared with 95 vessels the previous quarter, representing 9.9
percent of the Capesize fleet.
Strategy and Outlook
Frontline 2012 was established in 2011 as the Seatankers Group's main investment
vehicle in the shipping industry. The Company operates a fleet consisting of six
VLCCs, four Suezmax tankers and one MR tanker and owns 61 fuel efficient
newbuilding contracts where the major part will be delivered in 2014 and 2015.
The Company's strategic plan has from the very start been to build up a
portfolio of fuel efficient newbuidling contracts with historically low
contracting cost in different shipping segments and at a later stage streamline
the activities by creating pure plays in different shipping segments through
consolidation, divestments and spin offs.
The Board has now initiated the process of streamlining the Company by investing
in AGHL and selling its eight VLGC newbuildings to AGHL in November 2013.
Following the acquisition, AGHL becomes the third largest, pure play VLGC owner
and operator with six operating vessels and eight newbuildings with attractive
delivery dates. The aim is to complete an initial public offering of AGHL's
shares in the US or Norway. Frontline 2012's intention is to make further
distributions of AGHL shares.
Frontline 2012 targets a New York listing within the third quarter of 2014 and
has started this process.
The balance sheet has been substantially strengthened from the receipt of $51
million from Jinhaiwan and the divestment of the eight VLGC vessels. This opens
for further growth and cash dividends. The Board targets to introduce a regular
cash dividend from the next quarter, which will be balanced with the level of
ordering activity. The recent positive development in the tanker market, with
VLCC rates currently above $40,000 per day, is likely to give improved operating
results in the fourth 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 Ltd's management's examination of historical
operating trends. Although Frontline Ltd 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 2012 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 2012 Ltd.
Hamilton, Bermuda
November 28, 2013
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
3rd Quarter 2013 Results:
http://hugin.info/150498/R/1746393/587887.pdf
This announcement is distributed by GlobeNewswire on behalf of
GlobeNewswire clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Frontline 2012 Ltd. via GlobeNewswire
[HUG#1746393]
Datum: 28.11.2013 - 12:34 Uhr
Sprache: Deutsch
News-ID 321088
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