Frontline Plc Q3 FY2024 earnings call

• Fleet details: Consists of 41 VLCCs, 22 Suezmax tankers, and 18 LR2 tankers; average age six years, 99% eco vessels, 56% scrubber fitted.
• Financial highlights: Profit of $60.5 million this quarter or $0.27 per share, adjusted profit $75.4 million or $0.34 per share; TCE earnings decreased from $357.7 million in previous quarter to $292.2 million in current quarter.
• Market commentary: Global oil supply increasing, demand growth muted; geopolitical risks in Middle East; order books for tankers increased but fleet aging with few ships sold for recycling; oil trade serviced by oldest fleet in over two decades.
• Oil flows: Global demand growth neutral YTD; oil supply rising in Atlantic Basin, but increments tend to stay local; sanction-exposed oil market share of Asian demand at 25% in Q3 2024.

In the third quarter of 2024, Frontline achieved $39,600 per day on its VLCC fleet, $39,900 per day on its Suezmaxes, and $36,000 per day on its LR2/Aframax suite. So far in Q3, 77% of VLCC days were booked at $44,300 per day, 70% of Suezmax days at $39,600 per day, and 60% of LR2/Aframax days at $34,800 per day. The fleet has an average age of six years, with 99% eco vessels and 56% scrubber fitted. Average cash breakeven rates for the next 12 months are approximately $29,600 per day for VLCCs, $23,400 per day for Suezmax tankers, and $22,000 per day for LR2 tankers, with a fleet average estimate of about $26,300 per day.

• Cash generation potential: At current fleet and spot market earnings from Clarkson Research as of November 26, $304 million or $1.36 per share; 30% increase from current spot market could double potential cash generation.
• Market expectations: 2025 expected to be oversupplied for tankers; political changes in Middle East and U.S. could impact market.

• Geopolitical risks: Uncertainty in Middle East, sanctions on Russia and Iran; potential reversal of sanctions could impact oil trade and ton miles.
• Order book and fleet aging: Order books increased for Suezmaxes, LR2/Aframaxes, and VLCCs; fleet aging with few ships sold for recycling, leading to potential oversupply issues in future.

Q: Jonathan Chappell asked about deleveraging balance sheet and geopolitical impacts of Russia-Ukraine and Iran sanctions.

A: Inger Klemp said they're comfortable with debt level; Lars Barstad discussed potential reversal of Russia sanctions and impact of limiting Iran oil exports.

Q: Omar Nokta asked about VLCC market trends and 2025 earnings potential.

A: Lars Barstad said market is range bound, needs incremental barrels to push scale; 2025 earnings potential dependent on geopolitical events.

Q: Sherif Elmaghrabi asked about sale and purchase markets and larger tankers in dirty trade.

A: Lars Barstad said it's a combination of less appetite from sanctioned trade and margins under pressure; larger tankers switch back to dirty trade based on economics.

Q: Unidentified Analyst asked about China demand and OPEC production.

A: Lars Barstad said petrochemical demand offsetting EV impact; OPEC's production strategy hard to predict but disciplined despite non-OPEC production increase.