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FRO - THIRD QUARTER AND NINE MONTHS 2014 RESULTS

HAMILTON, Bermuda, Nov. 25, 2014 (GLOBE NEWSWIRE) --

Highlights

  • Frontline reports a net loss attributable to the Company of $59.6 million for the third quarter of 2014, equivalent to a loss per share of $0.60.
  • Frontline reports a net loss attributable to the Company of $14.5 million for the third quarter of 2014, when excluding impairment losses and loss on de-consolidation of the Windsor group of $45.2 million, equivalent to a loss per share of $0.15.
  • Frontline reports a net loss attributable to the Company of $150.0 million for the nine months ended September 30, 2014, equivalent to a loss per share of $1.55.
  • Frontline reports a net loss attributable to the Company of $48.6 million for the nine months ended September 30, 2014, when excluding impairment losses and loss on de-consolidation of the Windsor group of $101.4 million, equivalent to a loss per share of $0.50.
  • Frontline has issued 1,140,226 new shares under the ATM program in the third quarter.
  • Frontline agreed with Ship Finance in July 2014 to terminate the long term charter parties for the 1999 built VLCCs Front Opalia, Front Comanche and Front Commerce and Ship Finance simultaneously sold the vessels to unrelated third parties. The charter parties for the Front Commerce, Front Comanche and Front Opalia terminated on November 4, November 12 and November 19, respectively.
  • In October 2014, the Company bought $17.8 million notional principal of its 4.50 % Convertible Bond Issue 2010/2015 at a purchase price of 91.654%.
  • In October 2014, Frontline entered into a private agreement to exchange $23.0 million of the Company's 4.5% Convertible Bond for an aggregate of 8,251,724 shares and a cash payment of $10 million plus accrued interest.

Third Quarter and Nine Months 2014 Results

The Board of Frontline Ltd. (the "Company" or "Frontline") announces a net loss attributable to the Company of $59.6 million in the third quarter, equivalent to a loss per share of $0.60, compared with a net loss of $78.2 million for the second quarter, equivalent to a loss per share of $0.81.

The Company has recorded a vessel impairment loss of $41.5 million in the three months ended September 30, 2014. This loss relates to the VLCCs Front Opalia, Front Commerce, Front Comanche and Ulriken. Impairment losses are taken when events or changes in circumstances occur that cause the Company to believe that future cash flows for an individual vessel will be less than its carrying value and not fully recoverable. In such instances an impairment charge is recognized if the estimate of the undiscounted cash flows expected to result from the use of the vessel and its eventual disposition is less than the vessel's carrying amount.

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 $24,600 and $18,600 compared with $13,900 and $12,400 in the preceding quarter. The spot earnings for the Company's VLCCs and Suezmax vessels were $23,900 and $19,500 compared with $12,500 and $12,400 in the preceding quarter.

Contingent rental expense represents amounts accrued following changes to certain charter parties in December 2011 and increased in the third quarter as compared to the second quarter primarily due to an increase in actual spot market rates.

Interest expense, net of capitalized interest, was $26.4 million in the third quarter of which $10.7 million relates to the Company's subsidiary Independent Tankers Corporation Limited ("ITCL").

Frontline announces a net loss attributable to the Company of $150.0 million for the nine months ended September 30, 2014, equivalent to a loss per share of $1.55. The average daily TCEs earned in the spot and period market in the nine months ended September 30, 2014 by the Company's VLCCs and Suezmax tankers were $23,800 and $19,300 compared with $15,800 and $13,600 in the nine months ended September 30, 2013. The spot earnings for the Company's VLCCs and Suezmax vessels were $23,000 and $19,700 in the nine months ended September 30, 2014 compared with $13,300 and $13,600, respectively, in the nine months ended September 30, 2013.

As of September 30, 2014, the Company had total cash and cash equivalents of $104.6 million and restricted cash of $16.1 million. Restricted cash includes $15.3 million relating to deposits in ITCL.

The Company estimates average total cash cost breakeven rates for the remainder of 2014 on a TCE basis for VLCCs and Suezmax tankers of approximately $22,900 and $18,100, respectively.

Fleet Development

The Company has de-consolidated several of the subsidiaries and related entities in the Windsor group (the "Windsor group"), owned by ITCL in the third quarter of 2014 as a consequence of the Chapter 11 filing and the fact the Windsor group is consolidated under the variable interest entity model. The Company has recorded a Loss on de-consolidation in the third quarter of $3.6 million. The Company will enter into a revised management agreement with the reorganized Windsor group and will continue to provide commercial management for its vessels.

In July 2014, the Company agreed with Ship Finance to terminate the long term charter parties for the 1999 built VLCCs Front Opalia, Front Comanche and Front Commerce and Ship Finance simultaneously sold the vessels to unrelated third parties. The charter parties for the Front Commerce Front Comanche and Front Opalia terminated on November 4, November 12 and November 19, respectively.

Newbuilding Program

The Company had one Suezmax newbuilding contract with estimated delivery during January 2015 and is committed to make newbuilding installments of $40.9 million as of the date of this report.

Corporate

The Company issued 1,140,226 new ordinary shares under its ATM program in the three months ended September 30, 2014 and had an issued share capital at September 30, 2014 of $99,346,513 divided into 99,346,513 ordinary shares (December 31, 2013: $86,511,713 divided into 86,511,713 ordinary shares). The weighted average number of shares outstanding for the quarter was 99,261,267.

In October 2014, the Company bought $17.8 million notional principal in the 4.50 % Frontline Ltd. Convertible Bond Issue 2010/2015 - ISIN NO 001057149.0 at a purchase price of 91.654%.

In October 2014, the Company entered into a private agreement to exchange $23.0 million of the outstanding principal amount of the Company's 4.5% Convertible Bond Issue 2010/2015 for an aggregate of 8,251,724 shares and a cash payment of $10 million plus accrued interest.

The Market

The market rate for a VLCC trading on a standard 'TD3' voyage between the Arabian Gulf and Japan in the third quarter of 2014 was WS 45, representing an increase of WS 7 point from the second quarter of 2014 and WS 9 higher than the third quarter of 2013. The flat rate decreased by 6.7 percent from 2013 to 2014.

The market rate for a Suezmax trading on a standard 'TD5' voyage between West Africa and Philadelphia in the third quarter of 2014 was WS 71, representing an increase of WS 8 points from the second quarter of 2014 and an increase of WS 15 points from the third quarter of 2013. The flat rate decreased by 6 percent from 2013 to 2014.

Bunkers at Fujairah averaged $598/mt in the third quarter of 2014 compared to $601/mt in the second quarter of 2014. Bunker prices varied between a high of $628/mt on July 24th and a low of $575/mt on September 29th.

The International Energy Agency's ("IEA") November 2014 report stated an OPEC crude production of 30.5 million barrels per day (mb/d) in the third quarter of 2014. This was an increase of 0.4 mb/d compared to the second quarter of 2014.

The IEA estimates that world oil demand averaged 93.1 mb/d in the third quarter of 2014, which is an increase of 1.6 mb/d compared to the previous quarter. IEA estimates that world oil demand in 2015 will be 93.6 mb/d, representing an increase of 1.3 percent or 1.2 mb/d from 2014.

The VLCC fleet totalled 634 vessels at the end of the third quarter of 2014, four vessels up from the previous quarter. Four VLCCs were delivered during the quarter, none were removed. The order book counted 93 vessels at the end of the third quarter, which represents 15 percent of the VLCC fleet.

The Suezmax fleet totalled 450 vessels at the end of the third quarter, up two from the end of the previous quarter. Three vessels were delivered during the quarter whilst one was removed. The order book counted 44 vessels at the end of the third quarter, which represents approximately 10 percent of the Suezmax fleet.

Strategy and Outlook

In October 2014, Frontline reduced the outstanding under the convertible bond loan with maturity in April 2015 from $190 million to $149.2 million through buy back and debt/equity swap. Following this, and the termination of the three charter parties for Front Commerce, Front Comanche and Front Opalia in November 2014 total debt and capital lease obligations are approximately $956 million.

The tanker market has showed some strength in the fourth quarter. A strong market creates some flexibility for the Company going forward. The Board is continuing to consider several alternatives in restructuring the Company's debt and capital lease obligations. The target is to rebuild Frontline into being a leading tanker company.

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.

The Board of Directors
Frontline Ltd.
Hamilton, Bermuda
November 24, 2014

Questions should be directed to:
Robert Hvide Macleod: Chief Executive Officer, Frontline Management AS
+47 23 11 40 84
Inger M. Klemp: Chief Financial Officer, Frontline Management AS
+47 23 11

This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.

3rd Quarter 2014 Results http://hugin.info/182/R/1873959/660106.pdf

HUG#1873959

Source:Frontline Ltd