During 2Q15, the average daily TCEs earned in the spot and period market by Frontline's VLCCs and Suezmaxes were $50,600 and $33,800, respectively, compared with $49,400 and $33,100 in 1Q15.
Daily spot earnings for the VLCCs and Suezmaxes were $53,600 and $38,000, respectively, compared with $52,200 and $35,000 in 1Q15, the company said.
For the first six months of this year, Frontline announced net income of $48.5 mill.
In August, 2015, Frontline estimated average daily total cash cost breakeven rates for the remainder of 2015 on a TCE basis for its VLCCs and Suezmaxes of around $24,500 and $21,000, respectively.
Last month, Frontline agreed with Ship Finance to terminate the long term charter for the 1995 built Suezmax ‘Front Glory’. Ship Finance has simultaneously sold the vessel to an unrelated third party. The charter is expected to terminate during 3Q15. Frontline will receive a compensation payment of about $2.2 mill and as a result, the number of vessels on charter from Ship Finance will be reduced to 16 vessels - 12 VLCCs and four Suezmaxes.
In June, 2015, Frontline and Ship Finance also agreed to amend the terms of the long term charter agreements for 17 vessels on charter from Ship Finance with an average remaining charter period of 7.7 years, which took effect from 1st July, 2015.
The general terms of the agreement include: new timecharter rates for the VLCCs of $20,000 per day; new timecharter rates for Suezmaxes of $15,000 per day; new operating expenses for all vessels of $9,000 per day payable by Ship Finance; a new profit split of 50:50 above the new timecharter rates; and in connection with entering into the agreement, Frontline issued 55 mill of its common shares to Ship Finance.
The chartering counterparty will continue to be a subsidiary of Frontline, and in exchange for releasing the company from its current guarantee obligation, a cash buffer of $34 mill ($2 mill per vessel) will be built up in Ship Finance.
The new profit split arrangement started accruing from 1st July and will be calculated and payable on a quarterly basis. Going forward, profit split payments will not be subject to the previous $50 mill threshold.
On 24th August, Frontline filed a registration statement with the US Securities and Exchange Commission (SEC) covering the common shares to be issued by Frontline to Frontline 2012's shareholders as part of the merger agreement.
Frontline and Frontline 2012 shareholders meetings will be held after the registration statement is declared effective which, among other things, is subject to an SEC review.
As for Frontline 2012, this company reported net income from continuing operations of $78.6 mill for 2Q15 and $134.9 mill for 1H15, compared with $56.3 mill and $74.4 mill in 1Q15 and IH14, respectively.
In August 2015, the company received $14.6 mill from STX Dalian in respect of two cancelled newbuilding contracts and expects to record a gain of $3 mill in 3Q15.
The 2Q15 net income included (i) a gain of $23.2 mill in connection with the cancellation of newbuilding contract (J0106) at Jinhaiwan, and (ii) a gain of $19.6 mill on the delivery of the ‘Front Breeze’ and the ‘Front Passat’ to Avance Gas Holding (AGHL).
Average daily TCEs earned in the spot and period market in 2Q15 by Frontline 2012's VLCCs and Suezmaxes were $46,800 and $38,400, compared with $53,800 and $42,600, respectively, in 1Q15.
VLCC and Suezmax earnings were somewhat weak in 2Q15, mainly explained by three VLCC's being positioned west, while two of the Suezmaxes underwent drydocking in Asia during the period.
Daily TCEs earned in the spot market in 2Q15 by the MRs were $24,200 compared with $21,200 in the preceding quarter, while the TCEs earned in the spot and period market in 2Q15 by the LR2s were $27,800, compared with $23,700 in the preceding quarter. The spot earnings for the LR2s were $32,400, compared with $23,200 in 1Q15.
In August 2015, Frontline 2012 estimated average daily cash breakeven TCE rates for the remainder of 2015 on a TCE basis for its VLCCs, Suezmaxes, MRs and LR2s of about $24,000, $19,100, $13,400 and $13,700, respectively.