Frontline sells 2010-built Suezmax tanker for $9.4 million profit. The company offloads another ship this year after the gain on the sale of 2009-built VLCC, Front Eminence, and the 2009-built Suezmax tanker, Front Balder for $9.9 million and $2.8 million, in the first quarter of 2023.
The tanker shipowner has high expectations this year from the 2010-built Suezmax tanker, Front Njord, as expects to record a gain on the sale of approximately $9.4 million, in the second quarter of 2023.
The company sold the Front Njord for gross proceeds of $44.5 million. The vessel is expected to be delivered to the new owner in the second quarter of 2023. The name of the buyer has not been revealed by the shipowner. After repayment of existing debt on the vessel, the transaction is expected to generate net cash proceeds of approximately $28.2 million.
Earlier this year Frontline sold the 2009-built VLCC, Front Eminence, and the 2009-built Suezmax tanker, Front Balder, for gross proceeds of $61.0 million and $39.5 million, respectively. The vessels were delivered to new owners in January and February of 2023. After repayment of existing debt on the vessels, the transactions generated net cash proceeds of $63.6 million, and the company recorded a gain on sale of $9.9 million and $2.8 million in the first quarter of 2023.
All these transactions are made in a very profitable period for the shipowner as Frontline reports profit of $199.6 million for the first quarter of 2023, compared with profit of $239.1 million in the previous quarter.
The company claims this is the highest first quarter profit since 2008.
Lars H. Barstad, Chief Executive Officer of Frontline Management AS, said “Frontline continued to generate elevated cash returns for its shareholders in the first quarter of 2023.”
He said that Frontline is not affected by short-term volatility, as oil demand is expected to rise significantly in the second half of the year.
Currently the tanker shipowner continues to “observe the aging of the tanker fleet as new deliveries have slowed with muted recycling activity.”
According to industry sources, 12.6% of the VLCC fleet is now above 20 years of age, as the orderbook stands at 1.8% of the current fleet. 14.1% of the Suezmax fleet has passed the 20-year age mark and the current orderbook stands at 3%. The LR2 fleet age profile is less pronounced, but 4.5% of the fleet has passed 20 years of age. However, for a product carrying vessel the 15-year age mark is equally interesting and 22.8% of the fleet is passing this threshold in 2023, whilst the orderbook equates to 13.2% of the existing fleet.
“Expanding and modernizing its fleet remains a key part of the company’s strategy, and the company is committed to an investment program towards vessel acquisitions, newbuilding’s and retrofits, which can be powered by low or zero carbon fuel solutions,” Frontline mentions.