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Frontline remains narrowly in the black in Q3

John Fredriksen’s Frontline reported a narrow profit the third quarter despite the sharp downturn in tanker markets, and lined-up $870m in bank financing for its newbuilding programme.

Frontline made a net profit of $5.5m for the third quarter and for the first nine months reported a $98.7m profit, compared to $96m in the same period a year earlier.

“While the summer is typically a slower period in the tanker markets, seasonal weakness was more pronounced this year as supply disruptions, easing refinery margins and inventory drawdowns led to reduced oil flows and a slowdown in tanker demand. In addition, the global fleet expanded as newbuilding vessels were delivered from shipyards,” commented Robert Hvide Macleod ceo of Frontline Management.

“We believe that our performance in the third quarter against this market backdrop, further highlights Frontline’s competitive position in the market and efficient operations.”

The company also secured $870m in financing partially covering its newbuilding programme of 16 vessels and four vessels delivered during the third quarter. This includes asenior secured term loan facility in an amount of up to $321.6m with China Exim Bank to partially finance four suezmaxes and four LR2 product tankers.

“We consider the terms achieved highly attractive, enabling us to maintain our low cash breakeven levels,” said Inver Klemp cfo of Frontline Management.

Looking ahead Frontline said: “The company has a positive long term outlook on the tanker market, although it expects periods of market weakness as further newbuildings are delivered.”

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