Frontline Ltd. Q3 FY2025 earnings call

• Financial highlights: Q3 profit was $40.3 million ($0.18 per share) and adjusted profit was $42.5 million ($0.19 per share). Adjusted profit decreased due to lower time charter earnings and fluctuations in other income/expenses. Ship operating expenses increased, offset by some decreases. Balance sheet has $819 million in cash/cash equivalents, no meaningful debt maturities until 2030.
• Fleet details: Fleet average cash breakeven rates for next 12 months estimated at ~$26,000 per day for VLCCs, ~$23,300 for Suezmax, ~$23,600 for LR2. OpEx in Q3 included dry dock costs, with average OpEx excluding dry dock lower. Cash generation potential is substantial with 30,000 earnings days annually.
• Market analysis: Oil in transit at record highs, export volumes growing, policy affecting trade, resale asset values reflecting freight rate hikes, order books near full through 2028, key age profile of tanker fleet, firm refining margins, and winter market already started.

In the third quarter of 2025, Frontline's VLCC fleet achieved $34,300 per day TCE, Suezmax fleet $35,100 per day TCE, and LR2/Aframax fleet $31,400 per day TCE. So far in Q3 '25, 75% of VLCC days were booked at $83,300 per day, 75% of Suezmax days at $60,600 per day, and 51% of LR2/Aframax days at $42,200 per day. Revenue contributions are not explicitly stated as percentages but the fleet composition includes 41 VLCCs, 21 Suezmax tankers, and 18 LR2 tankers with an average age of 7 years, 100% eco vessels with 56% scrubber fitted.

• Cash generation potential basis current fleet and TCE rates is $1.8 billion or $8.15 per share, with a 30% increase in spot market increasing it to $2.6 billion or $11.53 per share.
• Estimates of average cash breakeven rates for next 12 months for different fleets, and fleet average excluding dry dock cost.

• Sanctioned vessels creating logistical challenges and potentially affecting fleet utilization. Dark fleet with vessels sitting idle, and challenges in recycling or accessing markets for sanctioned vessels. Market volatility and uncertainty in scrapping trends affecting fleet supply.

Q: Jonathan Chappell asked about deleveraging the balance sheet and scrapping ships.

A: Lars Barstad said they are different from peers and hesitant to invest in long-term assets, and explained that sanctioned vessels have alternative uses like trading sanctioned oil but face challenges in recycling.

Q: Sherif Elmaghrabi inquired about the dark fleet and contango in the oil curve.

A: Lars Barstad discussed dark fleet vessels sitting idle and the impact of contango on trade lanes.

Q: Omar Nokta asked about LR2s and sale of LR2 fleet.

A: Lars Barstad commented on LR2 market dynamics and no comment on sale of LR2 fleet, but noted potential for LR2s to see freight development.

Q: Unknown Analyst asked about floating storage and sanctions on dark fleet.

A: Lars Barstad explained floating storage not commercial currently and sanctions on dark fleet are tightening with overlap between different regulatory bodies.

Q: Unknown Analyst asked about Q1 performance.

A: Lars Barstad stated Q1 could be sustained with key fundamentals not changing short term.

Q: Unknown Analyst asked about past rates and India/China policies.

A: Lars Barstad confirmed past high rates and discussed India and China's policies on tanker age thresholds.