Frontline Excels Q2 Estimates, CEO Says Oil Demand 'Largely Unaffected' From Price Cuts

Frontline Plc FRO reported a Q2 FY23 operating revenue of $522.15 million, beating the consensus of $336.39 million.

Reported spot TCEs for VLCCs, Suezmax tankers, and LR2/Aframax tankers were 64,000 (vs. 52,500 in Q1), 61,700 (vs. 64,000 in Q1) and 52,900 (vs. 56,300 in Q1) per day. 

Q2's net operating income improved to $252.98 million from $67.08 million a year ago.

Adjusted EPS was $0.94 versus $0.22 a year ago, beating the consensus of $0.83.

In Q2, operating cash flow was $283.14 million compared to $71.79 million in the same quarter last year.

FRO held cash and cash equivalents of $306.82 million as of June 30, 2023.

Outlook: For Q3 2023, FRO expects spot TCE on a load-to-discharge basis of $53,200 (74% contracted) of vessel days for VLCCs, $48,800 (67% contracted) of vessel days for Suezmax tankers and $40,500 (57% contracted) of vessel days for LR2/Aframax tankers.

For Q3, the company expects the spot TCEs to be lower than the TCEs currently contracted due to the impact of ballast days at the end of Q2. As of Q2-end, the number of ballast days was 435 for VLCCs, 353 for Suezmax tankers and 167 for LR2/Aframax tankers. 

Dividend: The company declared a dividend of $0.80 per share for Q2, payable on September 29, 2023. The record date for the dividend will be September 15, 2023.

“With all our asset classes performing, Frontline’s lean and efficient platform continued to yield shareholder returns. Despite OPEC production cuts, global oil in transit outperformed seasonal patterns, as Asian oil demand attracted incremental barrels from other regions of the world. Despite uncertainties in the global macro environment, demand for oil and oil products seem largely unaffected as we head towards the winter in the northern hemisphere. The current softness in certain tanker segments is in line with historical seasonal expectations and improving refinery margins aligns with the market playbook for this time of the year,” stated Lars H. Barstad, CEO.

Price Action: FRO shares are trading higher by 3.59% at $18.45 on the last check Thursday.