The company completed its merger with Frontline 2012 at the end of November 2015 and if the fourth quarter results of Frontline and Frontline 2012 are combined without adjusting for the impact of the merger, it would have reported a $62.7m net profit.
For 2015 as whole Frontline reported a net profit of $154.6m compared to $149.5m in the previous year.
Frontline and Frontline 2012 reported strong charter rates in Q4 2015 across the VLCC, suezmax, LR2 and MR segments. Spot rates for VLCCs in Q4 were $62,700 per day and in guidance for Q1 2016 is $73,100 per day with 88% coverage.
Robert Hvide Macleod, ceo of Frontline commented: “We are off to a very good start thus far in 2016, buoyed by continued strength in the tanker market, and we are pleased with the earnings we have secured thus far in Q1. The market has corrected downwards over the recent weeks, but overall demand for tankers remains high.”
Looking ahead Frontline said it planned to maintain its market leading role in consolidation.
Commenting on the market outlook it noted rates had dropped “levels moderately lower” than those seen at the start of 2015, after a strong start to 2016. However, it expects demand will remain supported by the muted prospect for a recovery in oil prices.
The low oil price is expected to reduce production in the US, Brazil and the North Sea, which Frontline sees as beneficial to the tanker market.
“These lost volumes will likely be filled by long-haul trade from the Middle East, especially as oil consumption growth continues to rise on the back of lower energy prices, thus increasing ton mile and benefitting the tanker market,” the company said.While newbuilding deliveries are accelerating Frontline noted an aging fleet and that its customers preferred vessels under 15 years old. “As for ships over 20 years, they are virtually impossible to trade in the spot market, and we expect them to go in to permanent storage contracts or conversion projects.”
Although 120 VLCC newbuildings will be delivered by 2018, and scrapping “will be at a minimum”, there would also be some 90 VLCCs in the current fleet that will pass the 20 years in age mark.
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