11/21 Frontline (FRO) release results before market open.
When FRO reported Q2 2025 results, the Q3 done looked pretty good. I guess the ballast days caught up with FRO. A small plus is the LR2/Aframax quarterly rate increased. FRO also consolidated a number of smaller facilities to one larger facility. What would normally be a negative is if that one loan became a problem. So a quick fix to that concern. Fredriksen has provided FRO a $275M line-of-credit (Yes, expensive credit. But importantly, it is available). And back to the new facility, it has an accordion type structure - pay it down, and FRO can borrow again on a portion of it) [Edit: Not sure it is mentioned, but FRO’s vessels on time-charter drop from 4 to 2, as two LR2 vessels rolled off charter in Sept 2025. Rates were above avg. - around $42K daily. Assume no additional charter coverage added during a traditionally slower quarter]
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Perused the Earnings Call transcript. There’s a question out of left field from one of the analysts (Omar Nokta) suggesting he heard chatter that FRO were thinking of unloading their Aframax/LR2 fleet. It was sort of tossed in with other questions, and the FRO CEO sort of ignored or overlooked the question. Omar Nokta tries again, with his second attempt prefaced with “humor me, as I ask a slightly similar question …”, to which FRO’s CEO does say more VLCCs. Given there has been a couple of references to Seatankers ordering VLCCs, is it possible that FRO are looking at expanding their VLCC footprint? If true, wouldn’t the focus be on existing on-the-water VLCCs rather than something more like three years down the road?
https://seekingalpha.com/article/4846641-frontline-plc-fro-q3-2025-earnings-call-transcript
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Just to be consistent on identifying “major spin”, I think the FRO presentation slides have a major spin item. One of their slides does a projection of potential earnings scenarios (current rates: VLCC $114.9K, Suezmax $75.5K, Aframax/LR2 $40.7K) The first scenario is those rates extrapolated over a full year generating $1.8B of cashflow. And the scenarios get more “over the top” from there. At those type of rates, I bet some of the dark fleet vessels try to get validated for regular trading.