Presentation

Frontline is a John Fredriksen-controlled tanker company, geared towards the largest crude and product tanker segments. The company was originally founded in 1985 with Hemen Holding becoming the majority shareholder in 1996 (currently owns a 40% stake). Frontline is dual-listed in Oslo and New York and has a market capitalization of USD 1.5bn, with net debt of USD 2.0bn as of Q2’20.

The fleet consists of 17 VLCCs (including two leased from Ship Finance), 27 suezmax vessels and of 22 Aframax/LR2 product tankers (including four newbuildings scheduled for delivery in 2021-22). The average age of the fleet is a little over 4 years which is by far the youngest among the major listed crude operators. Frontline is also engaged in the commercial management of non-owned assets (currently seven vessels) and has chartered in two VLCCs.

The tanker market has been through a volatile 2020 so far, with VLCC spot rates topping out at over USD 200,000/day. Rates are now back to a more sobering level as we head into the winter market, where a rebound in the world economy could help push rates higher in line with the seasonal pattern of the past. The low fleet growth towards 2022 should also benefit Frontline. While it commands a premium to its NAV, this is warranted given the historical track record of accretive transactions and superior backing from its sponsor Hemen.