Frontline Ltd. Q4 FY2025 earnings call

Lars Barstad began by discussing the unique dynamics of the tanker market, mentioning TCE numbers. Inger Klemp then detailed the financial results, balance sheet, fleet composition, cash breakeven rates, operating expenses, and cash generation. Lars Barstad further covered current market highlights including oil demand trends, the politically laden market environment, fleet development with order book growth, and the flow of crude oil. He noted oil demand growth, the impact of political situations on the tanker market, asset price appreciation, and yard capacity changes related to tanker construction

In the fourth quarter of 2025, Frontline Ltd. achieved $7,074,200 per day on its VLCC fleet, $53,800 per day on the Suezmax fleet, and $33,500 per day on the LR2/Aframax fleet. For 2026 so far, 92% of VLCC days are booked at $107,100 per day, 83% of Suezmax days at $76,700 per day, and 67% of LR2/Aframax days at $62,400 per day. In 2025, the company reported a profit of $228,000,000 or $1.20 per share, and an adjusted profit of $30,000,000 or $1.03 per share. The adjusted profit in the fourth quarter increased significantly due to higher TCE earnings, with TCE earnings rising from $248,000,000 in the previous quarter to $424,500,000 in the fourth quarter of 2025. Ship operating expenses decreased, partly due to increased supplier rebates. The balance sheet is solid with $5,000,000 in cash and cash equivalents, and no meaningful debt maturities until 2030. In January 2026, the company sold eight old VLCCs and acquired nine newbuildings. The fleet has an average age of 7.5 years, 100% eco vessels with 57% scrubber-fitted. Average cash breakeven rates for the next twelve months are approximately $25,000 per day for VLCCs, $23,700 per day for Suezmax tankers, and $23,800 per day for LR2 tankers. OpEx in the fourth quarter of 2025 was $9,600 per day for VLCCs, $7,600 per day for Suezmax tankers, and $12,400 per day for LR2 tankers. Cash generation potential with current TCE rates is $2,800,000,000 or $12.51 per share, with a 30% increase and decrease affecting the potential

The company mentioned that the spot days for the next twelve months are about 24,400 days. Cash generation potential is tied to current TCE rates. Seasonality, such as U.S. refineries going into turnaround, could impact the market. Also, China's inventory levels could create volatility. New tanker yard capacity is expected to come online in 2029

There is a risk of market easing due to seasonality. China's inventory changes could lead to volatility in the market. In the context of attempts to corner the VLCC market, there is a risk of volatility similar to a game of chicken where participants compete to hold positions

Q: About what could provide a plateau and easing in the market, A: Seasonality, U.S. refineries turnaround, and China's inventory changes could play a role.

Q: Why not corner the VLCC market before and risks, A: The market being fundamentally tight makes it possible, and risks include a game of chicken where participants compete to hold positions.

Q: Strategy on spot vs time charter, A: Aim for spot returns, with a golden rule of one-third time charter coverage.

Q: Dark fleet and sanctions lifted scenario, A: Few ships would return to the compliant fleet due to age and scrutiny.

Q: Leverage strategy, A: Intention to stay levered as it provides ship exposure equivalent