Frontline Q4 2023 results

Industry Discussions Shipping News
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Tanker company Frontline (FRO) announced their Q4 2023 results on 02/28/24

Subsequent to end-of-Q4 2023,

  1. FRO has completed, or is working on, several vessel refinancing plans.
  2. Sold 6 vessels, including an enbloc sale of 5 VLCCs, that should release cash of $238M after debt payments
    In prior years, FRO mgmt would typically have paid out most of #2 as a dividend. This time around, FRO is doing the “responsible” thing and essentially recycling capital to properly pay for their major Q4 2023 acquisition of 24 VLCCs for $2.35B When I say “properly pay”, FRO initially completed the deal with only 12% - 15% equity. Using the proceeds from #1 and #2, should get the debt financing to 60% - 65%, a more decent leverage ratio for 24 VLCCs with an average age of 5.5 years.
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I was wondering if there is any responsible coverage of these companies with regards to ‘dark transport of oil’ - violations of restrictions (for example Russia) - does anyone cover that; is there a place an innocent like myself could determine if a company is making extra profit by this kind of dealing? For example you said this was FRO’s strongest full year since they last did tankers; could some of that (or all of it) be attributable to illicit transport? Not sure I’ve asked the question very well; I hope the idea comes across.

JimA

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@JimA759s - In general, any shipping companies with a stock listing (US or elsewhere) will stay away from the Russian “dark” trades. A couple or reasons

  1. Difficult to obtain vessel insurance if a company decides to get involved in the Russian trade
  2. The risk of black-listing for entire fleet. Suppose a tanker company with 25 tankers decides to get involved in the Russian dark fleet/trades. Suppose the company decides to have 2 of its 25 vessels involved in the Russian trades. Is the potential gain from the 2 vessels worth the risk of getting an entire fleet sanctioned and potentially not be able to trade in a European or US port?
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Thanks for the response. But the answer seems to be reliant on someone responsible for investigating or validating this. Is there an international agency or a UN organization or just an Insurance body that knows what ships are going where and what they are hauling? My understanding is the bad actors are even now transferring cargos at sea. And some are turning off their transponders so that no one know where they are.

I’m just concerned about making investments in a Tanker company that might be doing that kind of business; but I have no way of determining that.

JimA

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Like other insurance contracts/agreements, I am sure it is documented in the insurance contract. So when sanctions against Russia went into effect, there was probably a clause added or updated e.g. regions of operation do not include Russian waters [except for …], etc, Could a tanker/vessel owner fool a marine insurance company? Sure … once, twice, more often. Then what happens when there is a marine incident?