Frontline Plc Q4 FY2024 earnings call

• Fleet Composition: Consists of 41 VLCCs, 22 Suezmax, and 18 LR2 tankers, average age 6.6 years, 99% eco-vessels. - Cash Generation: Substantial cash generation potential, with cash generation potential at current fleet and spot market earnings from Clarksons Research as of February 28, 2025, at $447 million or $2.01 per share. - Market Analysis: Discussed global oil consumption, supply, trade patterns, and impact of geopolitical events like sanctions, tariffs, Iran and Russia situations, and Red Sea developments. - Balance Sheet: Strong liquidity of $693 million in cash and cash equivalents, no newbuilding commitments until 2028.

In the fourth quarter of 2024, Frontline Ltd. achieved $35,900 per day on its VLCC fleet, $33,400 per day on its Suezmax fleet, and $26,100 per day on its LR2/Aframax fleet. For the third quarter of 2025, 80% of VLCC days were booked at $43,700, 77% of Suezmax days at $35,400, and 64% of LR2/Aframax days at $29,700. The company reported a profit of $66.7 million this quarter or $0.30 per share, and an adjusted profit of $45.1 million or $0.20 per share. The balance sheet shows Frontline Ltd. has a solid balance sheet with $693 million in cash and cash equivalents, no newbuilding commitments, and no meaningful debt maturities until 2028. The fleet consists of 41 VLCCs, 22 Suezmax tankers, and 18 LR2 tankers with an average age of 6.6 years and 99% eco-vessels.

• Cash generation potential at current fleet and spot market earnings is $447 million or $2.01 per share, with a 30% increase in spot market potentially increasing cash generation by about 80%. - Estimated average cash cost breakeven rates for 2025: approximately $29,200 per day for VLCCs, $24,000 per day for Suezmax tankers, and $22,200 per day for LR2 tankers, with a fleet average of about $26,200 per day. - Believes world oil trade is serviced by the oldest fleet in more than two decades but retains material upside with modern soft exposed fleet.

• Geopolitical risks including tariffs on Mexico, Canada, China, and the EU; USTR $1.5 million fee on Chinese-built tonnage; maximum pressure on Iran or a solution on Iran; Russian sanctions; and Red Sea, Israel, and Hamas situation. These risks can alter trade lengths, increase inefficiency in trade, and impact the compliant tanker market.

Q: Jonathan Chappell asked about changes in chartering due to sanctions and if there's been a real change in the market.

A: Lars Barstad responded that the Shandong province message was a game changer, with seen Iranian crude backing up and changes in Middle East and West Africa trade.

Q: Jonathan Chappell asked about dry docks and administrative expenses.

A: Inger Klemp said there are two dry docks for VLCCs and one for Suezmax in 2025, and administrative expenses normalized to about $9 to $10 million a quarter.

Q: Omar Nokta asked about VLCC, Suezmax, and LR2 booking portions and the spread between Frontline Ltd. ships and Euronav vessels.

A: Inger Klemp and Lars Barstad responded on booking portions and the spread was due to trading strategies.

Q: Sherif Elmaghrabi asked about deploying capital if on-the-water tonnage drys up and impact of US blacklisting on Chinese yards.

A: Lars Barstad said no immediate deployment plans and it's too early to tell on Chinese yards.

Q: Devon Sangoy asked about forward booking strategy and impact of lifting sanctions on Russia.

A: Lars Barstad discussed spot market strategy and that lifting sanctions on Russia could reverse trading patterns benefiting compliant fleets.