Frontline (FRO) 27 Nov 242024 Q3 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Q3 2024 Frontline plc Earnings Conference Call and Webcast. [Operator Instructions] Please note that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. Lars Barstad, CEO. Please go ahead.

dear earnings thank stocks, call, in straight much, into for don't very a quarterly Frontline's thank line. you all, you and dialing move Thank you. Markets and have us months last the believe that. I told

XXXX corrected than off be argued more still we holds That in supply a to example, run, We XXXX, have strong market to doomed, driven November rally and oil to a are bull rather and previously XXXX we tonnage comparison by [indiscernible] period as XX%. in And weeks as comparable argue. an resumed than the was fueled the bull for of growth. The thereafter, although set again. few we these were demand

bull For call hard the same it's to reasons, the are to. runs to difficult predict sentiment, equally various the

the VLCC $XX,XXX So deck. in X to on Frontline achieved day before on per $XX,XXX run $XX,XXX quarter XXXX, our Inger, on the numbers TC day LRX/Aframax. through of fleet. give per word per our I day our Suezmax Slide and In third the I'll on

but market with let of the So financial XX% operating to are quarter, per on day I'll per The us you numbers this end not through has the still. With hoped we quarter. XX% at per the discharge VLCC margin days the the offered for, XX% low basis, numbers implications take of at balance third highlights. our a at we table day of $XX,XXX booked $XX,XXX as day. And Inger that, the decent we Suezmax at LRX/Aframax again, far $XX,XXX of and of at all in are today, in our

afternoon, gentlemen. Lars, good and Thanks, ladies morning good and and

$X.XX $XX.X $XX.X lower $XXX.X quarter share. from by to the in The report profit quarter. a that in or down TCE profit quarter turn this $X.XX second to share, profit in $XXX.X quarter million rates previous adjusted the primarily million of million million statement. the compared our We due per compared earnings. Coming then decreased million Slide Profit third adjusted and and was results quarter in Let's to in quarter, this per from this $XX.X decrease the or previous X. quarter. of to that to

requirements and per look new not this amount and balance balance equivalents, balance boding do of sheet, are refinancing as The the not feet debt We facility, related I until turn to maturities and Slide solid addition liquidity the then, undrawn ] items. a and sheet have Slide at at cash $XXX XXXX. sheet senior X. Next Frontline the the any [ then September includes XXXX. If in cash debt quarter any minimum meaningful X. we in million of security marketable to remaining have we do ordinary cash securities movement commitments, has building strong which to

dry drydock XX 'XX. months, dock average in next X estimate the estimate X This $XX,XXX third average quarter VLCCs X X are for Our about approximately day. snacks Suezmax fleet 'XX, where years months of has XX of rates fleet XX second an gave tankers to and per quarter eco-vessels, average quarter X the in and is tankers. X fleet This Suezmax estimate of for $XX,XXX XX% VLCCs and X first in in of LRX day tankers per snacks day and the 'XX fourth The breakeven the cash average of per consists VLCC consists VLCCs LRX of XX of $XX,XXX the per includes X Suezmax 'XX, VLCC, for in for day next tankers. $XX,XXX fleet We and and age of where quarter of businesses of scrubber-fitted. XX% XX and

X. per with spot of upside tankers. day $X,XXX we to was [indiscernible] dock day. Then move let's [ [indiscernible] current expenses Despite quarter, This OpEx a the of [indiscernible], X includes dry cash per challenged and dock 'XX XX,XXX The $X,XXX for flow dry VLCCs. market OpEx, recorded day QX LNG the potential. including $X,XXX days This per dry a [Indiscernible] excluding substantial dock Slide decent to positive generate for

market, per it this, I'll cash million with share. XX% the word this As see [ Lasala. SPEAKERXX ] XX, earnings potential can the current from and the $XXX right-hand And or side from graph on as you with this & potential fleet spot leave generation $X.XX the market about will Research is November at a cash generation of of from XXX%. With slide, current increase Clark increase spot to

Thank you Inger. very much,

current is be includes the listed Canada, stopped the growth is market geopolitical East is Middle important of in tariffs in on Slide going non order The new to it's XX% of the may But sanction how tankers. for the forward. in the consumption The hitting U.S. market recent but growing to the is increasing, narrative is X. and much and supply So somewhat see going all risk X% Global very of shipped global continues, very policy the mixed. is sanctioned has efficiencies kind book increase in barrels. and importantly, flows. oil more Mexico very

As starting take containers the to stage some of are again.

the markets the see, is into is demand the on orange low utilization tankers of in at this although corrected tankers. At kind slides the bottom And according actually this they've are on with is with are market the exposure, level. effects of look have markets period. versus at performed continue of to a the with on is this very grow. be X oversupplied the right-hand to If the chart to kind and of is and can in to over then you we disappointing IAA, charts X basically see are exemption bottom, which you between move the that began demand we somewhat slide, an notable Apart of balance tanker looking market. sharply line and compared years. you these how clean the how when which supply -- XXXX, although an very, range-bound, of at They has What we side, during

the to and [indiscernible] X and look Slide Let's move flows.

means So Having mentioned demand By growth increase this And oil regions. some we had there's seen oil predominantly Atlantic Russian is and no miles for lack supply have effect positive across increasingly see tells not stable course, to But local, years, to the exposed forward. going to Countries although we What and reached the compliance in West in supply as as that the traveled this basically barrels, was pretty to barrels actually produced over share that, a 'XX. a that period it's out. this, that the that North previously, growth demand going of the has the as stay we've in America, mean any the into extent, this leaving global happening I replace a continuing sanctions coming is We regionally. is oil would Asia, changes than the in appreciated export around to have like has QX rise. This market some flow to a extent, also fleet oil policies Asian the Guyana [indiscernible]. on in argue market And is but seen We'll trading Africa, Northern I to basis. Hemisphere, barrels. is see the do local. And increasing sanction the is going the us market. actually, all that overall incremental are in and we've challenge Brazil, but remain XX% of to booking of last Europe to or tend [indiscernible] of said ton-miles those be ton corporate tanker volume further. into general to more neonatal,

to to as and at book. the X have fleet X age books materially ships recently. we to [indiscernible] look But a been and for Let's specific at the same have but order the [indiscernible]. The are LRX/Aframax's, during sold a seeing great Suzmax's Slide on move have virtually the order degree the continuing time, year and increased for also on

existing the ourselves to XX% while fleet of of that VLCC XX the not recognize book look you market fleet, order the with. at is the XX.X% is and If current fleet, trading years we equating above the

metrics population XX years. of book among that same order Suezmax, the are the to ships On the equal is now of

there be is equal to XXX take is the scheduled vessels X qualified formally the XXX you there to up wouldn't forward. There's the going VLCC basically next the Where as which On we for come than an that Suezmax whooping trade the XX amount a of unquoted so bring ships there BXC though, balanced. very you the and particularly And LRX/Aframax trade. on if in the to threat, players. year, at we market Similar around at on not the vessels numbers that XX as that that, years, we got market, amount delivered be accessible you order, Aframaxes see is about to combined to few becomes And for end. a an the on order. look big more is market. the close Basically, above if of you in LRXs is combined, mainstream more are traded books But Afra-luxury after the [indiscernible] XXX the order. vessels ships order the necessarily are don't being years, [indiscernible] get Suezmaxes, look with where for this

and XX moving going Page from So XX. to

a is pressure, be ships or on challenging oldest than we don't oil has Basically, getting with. be other forward. into Frontline the that are has have ton-miles fleet, and on fleet by outpace ships the Policy has at is urgency maximum in strong asset of some on now and we fact a in The trade continue to watch. are the order asset decades. we The will ourselves bites are more here. with East in to of firm calling book they presentation. Gross as which with XXXX the sheet, and Middle container summary, still. developments kind any mark. exclamation contracting fun the or XXXX. a forcing So demand bite sanctions that upside shipyards remain -- of is interesting asset This trade No changes as stopped Trump may sanctions on busy in incur. values space oil map X current the moving interest contracts now they identify growth balance small been the note the the cases. and or and with flow [indiscernible] we retain serviced in modern going to tackers also to expected And modern to for order supply markets discounting implications very continue end own

were fleet efforts in the an considering reduce observed. somewhat tightening to back of need and surprising this age, to to world kind trying go around You the have average XXXX of which scrutiny to the is tanker emissions

that, with open So questions. for I'll up

Instructions] [Operator line First come question from Jonathan of Evercore. Chappell the from

I'm the going know start with cetera. paying lot down with a refinancing, capital Inger, structure et to year, I you. you've done debt, this

market the by lower bit volatile maybe and that maybe lows appearances little a people becomes leverage are a look still the more concerned just high. As about,

near-term you've this any the more for debt market balance sold. years, older there have strong that in -- the little part And been fleet values, the thought sheet the bit that of the a asset of to taking in any don't we've has maturities proactive be even strong you So fleet deleveraging couple some last about of though had of some cycle? big the

don't that currently is that biggest really we we my fleet value ] have XX%. the thinking in that [ And any see is will only decrease value. golden just below To

that see probably don't this we are. leverage is you high So that

comfortable We that with debt level. are

touched because out Maybe to here. that view from a we watching couple going of could if of tease Lars, market. bit the dominates of sometimes narrative what's geopolitics a Okay. the on kind narrative happen you little times, just the

thing probably little -- a are there's really less bit thing X on may and so. that X think well, I people focused be X

simultaneously? be up maybe to sanctions short Iran, there to of but would were and to both, Ukraine, be but resolution answers a and those puts X the what somewhat So on be happening the ratcheted in things takes the a if were pressure

kind the -- would are Russia-Ukraine on sanctions opposed if Well, me do Russia that are of first. let -- somewhat flakey. The argue I

products. So as of a amounts Europe as gas and a fertilizer coincidence, they're well. also, finding highness from We're oil is number just buying of Russia, from record whilst price record Russia on cap

winter on the may back Europe leads the a of to the Ukraine, be another belongs Basin long-term walk these likely place, or And more the motivate nation thinking any incurring actions Russia, think the sanctions of to in into, oil, to back actions particularly longer-term what's lot solution of almost to politicians kind of Europe. push fairly into I cold actually this Europe quickly. or of to now from cost to could a put a would political models. that's these coming home, conflict in kind to expected these holding that Asia, barrels be immediately So reversed into fairly priced actually find that will quickly. which This and Latin lot be me

growing model limit to cutting [indiscernible] talk needs you very that something exports. replacement do that around run OpEx. to success their able that amount quite from that, it despite great huge very, the sorry, I in If of numerous a Russia, having tons about [Indiscernible] also one the they exporting kind of It's me reduction. And oil replace. if there, that is mentioned happy is watching are surprising And of are, [indiscernible] oil a

major as needs give means basically, there compliant will kind last and on effect exponential over what on an This happens regards happened tonnage, fleet, go With to the well. something Iranian if to couple so that to they and of of the markets. tonnage years, our flow kind now XXX Russian is the that And that due cater there for of Aframax the vessels or volume. that to it's their on sufficient than can most meaning more [indiscernible] closes part, what Suezmax own Russia helps is

to not massive going you're have So shift. this

more charters are some And to years age of these lifted, the market, these -- average of change we're that we ships coming consider the of are XX half old. the but the believe vessels we course, compliant are back of to don't kind north of once those, Of are sanctions they [Indiscernible] have going to than fleet, restrictions.

Question from from of line Jefferies. the come Nokta Omar

on seems I then developing? that's be specifically, tend wanted Just where maybe the levels, And earlier a the since the takes higher. market market and to there terms been for XX,XXX. of, case a seemingly can bit to more itself. Or of that's just kind market case I of Do this rates It back ask think, rates this you And the in run-up you on of August. winter? not how end to range you're modern discussion my at VLCC drifting from rates in how a But touched Lars, activity kind unexciting chartering then presentation, in in it are in rates the activity there's to call we think move. is XX,XXX and we again seems to it, slows were. cargo that this out simply that break see enough And that just narrow ships, been

Omar, As answer. you that's know, question a difficult very to

fact [indiscernible] the to need we're of we It's incremental are say the little awful. would those kind kind of market push in though just market sign missing think barrels actually has balance is that a further completely not that I characteristics I a that is the fact the basically, we that scale bit. changed that

of Asians pressure meaning those again, are market, really as XX% than you interest with those the negotiating. Asian other, out We more have of cargoes that call the spot East don't each which friendly AV or we get their of it, kind in is Middle and

oil blunting market. So the basically, is kind needs the has freight, which basin open East benchmark use China market. Middle term the of index interest have This to -- price it's the kind from for it's least it the to the like the of Dow that Jones but of to [indiscernible],

[indiscernible] from that my East. you been Yes, So in shown, price that volume that, basin the [indiscernible] mentioned I for vessel basically or or has return. lacked we that mean basin the to basically less presentation active just expansion flat. I more Africa. then And that, in need country West that U.S. because because the mechanism to is the that copies [indiscernible] will

for here not Asia great dynamics them, occur to to barrels, need So but as had. force to [indiscernible] basically order we to some change in force to that than we've degree Basin them a attract

of range promotion. the say, We're me balances if I'd numbers bound actually fixtures tight. So the seems now, still making kind black it in ask this are we here. make you we like But are on again, right

beyond per So difficult as absolute XX,XXX but on [indiscernible]. you get day it's very to this it's some described.

I'll appreciate one I to another a before maybe just with in just definitely And East difficult as Middle that. different you XXXX, I define, know perspective, terms there's going variables. OPEC the changes. That's you Russia, what potential? XXXX. much difficult -- to it's how has you. Lars, would terms guess Iran, you difficult between of but look the throw from earnings of on say as Ukraine, VLCCs Maybe and in at I a John, talked How will perhaps in we'll so from to just heading There's obviously is XXXX conflict, think Red lot the Sea, see. base or relation point, averaged, answer. question probably year difficult But would to see what general, of your next -- year? in how this like maybe case just for do vantage XXXX very relative your And into

that wait hoping we've anybody think I probably It's year. I to will what to of extent X% XXXX market the we underestimated kind be of completely would that state was we which above this package extend [indiscernible] see. XXXX have actually will it's be of now can the have to until

trading. it's March. X% will free and say the and that's I be auction would forth, so overall But So with impossible. of X%, everybody that the happy apparently,

kind the kind obvious financing. of on I think exports and actions U.S. that what I is most partly stance to anything a think hard for it's arguing incoming government the very these of

markets shipping rather point carbonization be obvious at IMO, maybe the on return. they what's the on should even some about than also should focus it to unregulated think that I in here, going talking

we happy, of we're not but itself -- itself is very I extending are extending by I'm the think frontline, ourselves also I'm very there, market kind of hopeful. So here. way

adverse Ukraine a I market, tanker and the miss extremely market any position. in sudden as we was So we their a strong of Russia, if something changes, sensitive discussed to If happens which with that export put and shifts happens events very all obviously asking Iran say, we're very, to balances. the to something these ability in very,

comes Question line of BTIG. Sherif from Elmaghrabi the from

color to little like sale more the could Any market. due for or have and fleet? And would less a is values the asset appetite slightly in softened helpful. to I on more month wondering, last you sellers X. for hoping maybe vessels coming dark purchase seems bit color was that give I'm the be market, the

I combination a think the less the are order previously I from the that to Russia it's more or appetite of sanctioned fleet in they trade. themselves saturated respect mentioned markets. in trade their less need margins. of

there's I mentioned discounts margins in we the As market is pressure. getting our [indiscernible] in less cost in believe bit crude seeing a and for meaning smaller under presentation. that The We're even smaller, that QX freight. this little and are

Frontline So with in why older bid, asset on have there is to been older values. our lose because getting saturated that kind and the be values that fleet basically the you've risky. focused say, extremely gap, adjustment the are on that an of selling has the hope part you exactly so on will is latter effect This overperformance could that you'll seen more these markets the of or tanker

There vessels. But at fairly to that So weeks the we market trading of But for the kind think limited. and quite hasn't -- secondhand is really of part think the modern the comfortable of of exchanging good downside ago end numbers, on kind a paralyzed. seeing, parity it's we're little from the of Right now, all fleet, feet. of couple very firm. bit but saw nobody I part we'll that the for is older not the be for we're what shifts last it years more of prices I only recycling modern kind that fleet curve, the and tail actually grown this is many

back, My going industry rate are products they're once trade. coming on question trade that momentum the they larger especially what phenomenon with reports this is hearing some trading heading that you them back the switch of December? regarding the then And in kind keeps into of what's into dirty highlighted dirty tankers

just -- build to Well, economics it's this is mathematics way. pure for that

If you crude market you when a cost reasonable vessel subdued, and opportunity cargo you a a within up. have have the on to the clean history gives is to that the ability,

of You really to of are the that, tanker on side will crude do but the none carry -- ships products. designed these

motivation us ourselves now basically, do this it switch is obviously, we And the put kind it has was that economics. May, kind to We think challenged So an the time, due clean that in that with here you clean the I e-com back, tankers to asset showed efficiency crude can't key how of they market the these means than was market quickly extended June of also has saw see but for that is compete think rather the the at period of year economics crude. trade surprised offering of not what the kind losses time. into I obviously is but the but And that crude between the were fact that the increased. the to

So rallies, rallies a -- [indiscernible]. kind case you won't where between get -- in say, crude But market interconnectivity both to that would you the scenario, have now suddenly all will vessels clean it's key up. of this the in a

comes Devin from Investment. [indiscernible] Question the from line Sandro of

China have I you on a last of asked demand, the couple X which I time. questions,

dealer So downgrade 'XX? do much EV. consumption and significant there's demand it tanker to the difference shift a to been going to demand? How back And in more and a massive into make the you LNG does pattern to shift overall see due how

is propulsion, We're have LNG of kind sales particularly vehicles of, No, million [indiscernible] them XX% sales new of is it, with that LPG. ease numbers its and fuels. where right. reported call in That get to being There XX there X.X actually XXX,XXX alternative that, barrels and XXX,XXX by population day. kind out fuel per million said current Having alternative with -- staggering we penetration diesel was go kind China in into the Norway are of in reduced in on in actually -- because of very gas of for you're having ourselves, to going for this the barrels subsidizing the [indiscernible] on is new kind good of order trucks. or from something -- sales position has the China on day of with heavy-duty heavy-duty world. we're the developments had fleet somewhere to Norway what -- get particularly is This observed a absolutely the per between trucks, to heavy to demand of highest of highest

For Teslas it's and million, X in more on that trucks the Even penetration. to fuel to I of surprisingly, X you seen guess, were the time, China. a fairly Norway the million to which basically than due period And long though subsidizing. there or and not as maybe more U.S. get that alternative or sold has us in million leads point we've actually more you consumer-driven demand in X heavy fall have more basically, expected, fuel than activity soon

that activity have also tends further. that here. is drive is least on we've least what This at longer, existing economical still to You and experienced this increased for fleet driving at

side, cards huge EV of China. population a the there's On in

are on I the are most that point years getting where I But starts grow of of And already. that materially. still the petrochemicals. in tipping kind we perpetual actually we've around decrease demand many haven't markets a to market gasoline actually countries materially. of note, actually peak in But to stages expect to we away seen to reached it's not amount we kind cars, where have that is world, -- U.S., think except think we expected getting on some for is to from demand at least peak personal what demand

there and the you on tremendous petrochemicals, at growth. a they various agencies if look how So report is

although that coming seeing means huge picture, transportation this from the on market. a is also we're the demand petchem of sustainable So growth part quite demand

due a think EVs call Asia to numbers basically oil to high bit [Indiscernible]. or of sold it's little too kind I to in So doom of the in demand, early

production pushing on increase. focus OPEC. they view going will your on back on price back has market kept What's share? you question on Will production XXXX the second see they going The focus stability? Or do the year, is OPEC how to the the

the focus the of We the as we to narrative month, -- X That's isn't OPEC that than than the particularly on will completely a this production price. And that or it? consumption XX extent. what narrative said same month absolute market will read a for after, look me kind see -- market share you -- rather Saudi or the actually it's is opposite. so this are long is increased and such of disciplined in as quite to And taking OPEC we share surprises on What impressive see do to period time. numbers territory to they it's

understand way for so of how well, they that can't I Vienna, the matters. online really of it's logically in But actually difficult ] someday what's whole So it. that's me, these now kind but why they're But I to only kind discuss see [ happening understand disciplined. I think when of it's very

the And quarter, season, very how do you current strong. which current typically see are

do as seen season in we December haven't go how that. But forward? going you We see January, the and

we're Sorry, missed what The... I what? seeing

quarter this you typically, for that. do quarter is rates, -- but we the the see seen haven't the strongest How

peak you January the in how see So winter. December forward rates and going

incremental into to -- in the we actually was than of interesting the into demand Well, it's maximum affects market that by of There that noted of seen move here, all events the see that with kind think our more start of I kind But on back to far couple QX come new QX we been We've failing, that this. occasions where year couple the next factors call. as as kind pressure the year. QX [indiscernible]. to potential owe think this a many on I QX. impossible seasonal has are presentation is point a of coming new analysts of will It's on coming slip maybe in be Iran

fact. I I'm is year political than it a shifted. excited So coming the term or think events into if have near whether about seasons the But more the new in

degree increased QX. refinery demand kind We basically of have trade. for so into increase oil seasonal to actually more There do seen of is a available turnarounds,

makes Iran. Trump so much you U.S. with is scene political the what else? change about in the will something or it that confident Iran the coming the more become in. administration sanction Is the Lars, in tougher

no. No,

kind is are of So fact by Iranian world. of by is kind adhering of able countries that these of evade ships it the Western by in but to any regulated engaging not The they're we're the or IMO the completely most apolitical, to that way are in sanctions principles. barrels sanctioned a

that's So I -- on and situation. I long-term the don't think hope -- or

to has here Actually, be a lifted That on are give scenario is something would most point. that Iran. fantastic scenario. at bullish the sanctions So some all campaigns

have time. closing I you We for back to further at no questions hand this remarks.

Well, after don't for in. [Indiscernible]. room [indiscernible] much please thank very [ only then XXXX, you willing ] [ ]. was the forget And dreaming also we month focused a And for we listening were

-- this hopefully good will this So develop and for have we bit quarter, a market you. than expected more will excitingly presentations. a Thank Christmas

you participating. today's This Thank conference concludes all for call.

You Thank you. may your lines. now disconnect