Release Date: February 28, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Have recent geopolitical events and sanctions had a real impact on chartering and market dynamics? A: Yes, the Shandong province's decision not to allow OFAC-listed vessels to discharge has been a game changer, causing a spike in Aframax rates. Iranian crude is backing up, and there's a noticeable shift in chartering patterns, particularly for compliant oil into Asian refiners. However, market efficiency has reduced the frequency of extreme rate spikes.
Q: Can you clarify the dry dock schedule and administrative expenses for 2025? A: For 2025, we have scheduled dry docks for two VLCCs and one Suezmax. Regarding administrative expenses, the reported $1.7 million for the quarter was due to a gain on our synthetic option program. Normalized G&A expenses are expected to be around $9 million to $10 million per quarter.
Q: What is the strategy for forward booking in a volatile market? A: We aim to adjust our fleet's trading patterns based on market conditions, favoring long distances in high-paying markets and shorter routes in challenging ones. Currently, we prefer keeping vessels in the spot market rather than increasing time charter cover, as we believe it offers better returns.
Q: How does the potential lifting of sanctions on Russia affect the compliant fleet's market share? A: If sanctions on Russia are lifted, we expect Russian oil to stay local, benefiting the compliant fleet as trade patterns revert to normal. This could be temporarily negative for Aframax and Suezmax but beneficial for VLCCs due to longer trade routes.
Q: With a substantial amount of dry powder and an aging fleet, how does Frontline plan to deploy capital if sale and purchase opportunities dry up? A: We are cautious about newbuild orders due to high costs and prefer to see consistent high rates before committing. Currently, we focus on returning capital to shareholders through dividends, allowing them to reinvest as they see fit.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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