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Frontline 2012 in the black for 2013, upbeat on crude tankers

Frontline 2012 in the black for 2013, upbeat on crude tankers
John Fredriksen's Frontline 2012 has reported a $69.5m profit for 2013, after netting $12.5m in the fourth quarter.

Frontline 2012 saw a dip in its tanker time charter equivalents in the spot and period market; VLCCs averaged $22,300 in 2013, down from $27,800 in 2012; suezmax tankers were down to $14,200 compared with $15,300 for 2012. VLCC spot earnings were $19,200 in 2013, compared with $27,500 the year before, while suezmax tankers were at $14,200 compared with $15,300.

However, looking ahead Frontline 2012 was more upbeat citing increased crude tanker rates and “an improved balance in the crude tanker market” and hinted at its intention to take advantage of “opportunities in the crude segment.”

“The company expects that the supply/demand balance will improve further… however this is a fine balance which can easily be changed by increased fleet supply caused by increased ballast speed, decrease in vessel scrapping and aggressive newbuilding ordering.” 

Meanwhile, the company invested $70.7m for 6m shares in Avance Gas Holdings (AGHL) in October, equivalent to 12.5% of the company, and subsequently sold it eight VLGCs for $8.8m in November. Frontline 2012 aims to complete an IPO of AGHL's shares in the US or Norway.

Gains of $30.3m and $27m were recorded throughout the year following the cancellation of Frontline 2012’s second and third newbuilding contracts at Jinhaiwan. As of end December the company currently has 62 vessels on order as of 31 December 2013, including the eight sold to AHGL.

The company also reported a net gain of $7.1m on the mark-to-market revaluation of interest rate swap agreements in the year ended 31 December 2013.

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