Frontline reports net income attributable to the Company of $104.4 million and earnings per share of $1.34 for the first half of 2009.
Frontline announces a cash dividend of $0.25 per share for the second quarter of 2009.
The second VLCC newbuilding from Waigaoqiao, Front Queen, was delivered on May 18, 2009.
Frontline agreed with two shipyards to cancel four Suezmax and two VLCC newbuilding contracts representing 33 percent of the newbuilding program and a total contractual cost of $556 million.
Frontline secured long term pre- and post delivery financing for two further VLCC newbuildings in an amount of $146.4 million, representing 70 percent of contractual cost.
Frontline amended the time charter agreements on Front Lady and Front Highness to bareboat charters and extended the periods to mid 2011. The vessels will be operated as floating storage units and have ceased to trade as regular tankers.
Frontline has agreed to terminate the long term charter party for the single hull VLCC Front Duchess and will receive a compensation payment of approximately $2.8 million.
Second Quarter and Six Months 2009 Results
The Board of Frontline Ltd. (the "Company" or "Frontline") announces net income attributable to the Company of $27.8 million for the second quarter of 2009, equivalent to earnings per share of $0.36, compared with net income attributable to the Company of $76.6 million and earnings per share of $0.98 for the preceding quarter. Net operating income in the second quarter was $62.1 million compared with $111.0 million in the preceding quarter.
The reported earnings reflect a weaker spot market. The average daily time charter equivalents ("TCEs") earned in the spot and period market in the second quarter by the Company's VLCCs, Suezmax tankers and Suezmax OBO carriers were $38,400, $26,800 and $42,700, respectively, compared with $50,300, $37,900, and $44,200, respectively, in the preceding quarter. The spot earnings for the Company's double hull VLCCs and Suezmax vessels were $38,700 and $24,400, respectively, in the second quarter of 2009, compared with $56,200 and $38,300, respectively, in the preceding quarter.
Profit share expense of $8.0 million has been recorded in the second quarter as a result of the profit sharing agreement with Ship Finance International Limited ("Ship Finance") compared to $14.5 million in the preceding quarter. Ship operating expenses increased by $2.2 million compared with the preceding quarter primarily as a result of increased dry docking costs.
Charterhire expenses decreased by $6.8 million in the second quarter compared with the preceding quarter due to the weaker spot market, which has resulted in reduced expenses on floating rate charters and profit share payments on two vessels.
Interest income was $5.6 million in the second quarter, of which $5.0 million relates to restricted deposits held by subsidiaries reported in Independent Tankers Corporation Limited ("ITCL"). Interest expense, net of capitalized interest, was $40.1 million in the second quarter of which $10.3 million relates to ITCL.
Frontline announces net income attributable to the Company of $104.4 million for the six months ended June 30, 2009, equivalent to earnings per share of $1.34. The average daily TCEs earned in the spot and period market in the six months ended June 30, 2009 by the Company's VLCCs, Suezmax tankers and Suezmax OBO carriers were $44,200, $32,300 and $43,500, respectively, compared with $84,300, $61,100 and $43,600, respectively, in the six months ended June 30, 2008. The spot earnings for the Company's double hull VLCCs and Suezmax vessels were $47,600 and $31,600, respectively, in the six months ended June 30, 2009.
As of June 30, 2009, the Company had total cash and cash equivalents of $628.3 million, which includes $507.7 million of restricted cash. Restricted cash includes $317.4 million relating to deposits in ITCL and $189.6 million in Frontline, which is restricted under the charter agreements with Ship Finance.
In August 2009, the Company has average total cash cost breakeven rates on a TCE basis for VLCCs and Suezmaxes of approximately $31,900 and $25,200, respectively.
On August 27, 2009, the Board declared a dividend of $0.25 per share. The record date for the dividend is September 11, 2009, ex dividend date is September 9, 2009 and the dividend will be paid on or about September 24, 2009.
77,858,502 ordinary shares were outstanding as of June 30, 2009, and the weighted average number of shares outstanding for the quarter was 77,858,502.
The full report is available for download in the link enclosed.
The Board of Directors
August 27, 2009
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
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.