Frontline 2012 Reports "Strongest Third Quarter Ever" On Surging Oil Market

Frontline 2012's tankers were said to be in high demand 

Frontline 2012 Ltd. (Frontline 2012) Tuesday announced its best ever third quarter result, with tanker fleet utilization running at multi-year highs on the back of strong demand for oil shipping. 

"We are very pleased to report our strongest third quarter ever with net income attributable to the Company of $61.9 million, or $0.26 per share," said Robert Hvide Macleod, Chief Executive Officer of Frontline Management AS.

"The strength of the tanker market was driven primarily by high demand for low priced oil, a dynamic which continued from the second quarter."

While average rates were slightly lower than those in the previous quarter, fleet utilization was said to be running at levels not seen since 2009.

Average rates for VLCCs trading on a standard 'TD3' voyage between the Arabian Gulf and Japan in the third quarter was WS 55, or a daily time charter equivalents ("TCEs") of $58,002, while the average rate for a Suezmax trading on a standard 'TD20' voyage between West Africa and Rotterdam for the period was WS 73, or a TCE of $35,274.

High oil demand has also created congestion at global ports, Frontline 2012 said, with demand also coming from forced storage of oil on tankers due to a high supply of cargoes.

The company also noted in the quarter that ballast speeds had increased and were "returning to normal levels."

So far in the fourth quarter, Frontline 2012 says it has covered 76 percent of VLCC operating days at TCE rates of approximately $48,400.

It added that 84 percent of Suezmax operating days have been covered at rates of approximately $41,700.

Looking ahead, shareholders' meetings of both Frontline Ltd.'s (Frontline) and Frontline 2012 to vote on a previously agreed merger agreement are scheduled to be held on November 30, 2015.

If approved, the resulting company will have a fleet of approximately 90 vessels.

"With a large modern fleet, a strong balance sheet and attractive cash break even rates, the Company believes that the Surviving Company should be equally well positioned to generate significant free cash in a strong market and to sustain a weak market," said Frontline 2012.

"The Company believes the Surviving Company will be well positioned to grow through acquisition and consolidation opportunities."

Earlier this month, Ship & Bunker reported that tanker traffic at major ports was at near gridlock congestion levels.