Frontline Management said tanker markets are likely to remain weak for the next few quarters due to overcapacity.
The market for Frontline's tankers will likely begin to improve in 2018, it said, as the pace of deliveries of new vessels slows and older ships are retired from the global fleet.
Robert Hvide Macleod, Chief Executive Officer of Frontline Management AS said: "The market has been decidedly weak since the start of the second quarter of 2017, which is primarily the result of the increase in the size of the global crude oil tanker fleet
While the weak market naturally affects our earnings in the short term, the company's strategy is not altered. "We continue to take proactive steps to increase the earnings potential of our fleet through the ongoing renewal of our fleet and by pursuing an opportunistic approach in the resale and newbuilding markets," he said.
Over the last several quarters, Frontline has divested older, less economical VLCCs and Suezmax tankers and have remained focused on acquiring high-quality, modern VLCCs at attractive prices, lowering the average age for our fleet from 8.1 years to 5.7 years, he added.
"The upcoming quarters may present challenges as vessel supply continues to increase, but we are confident in our ability to continue to execute our strategy with the goal of returning value to shareholders," Robert said.
"Given how both the ship values and spot market conditions have developed over the summer, we believe we are better positioned having not done any substantial acquisitions in the first half of the year. We expect attractive opportunities to emerge as a result of the weak market and will remain opportunistic going forward," Robert concluded.
"The financing of our current newbuilding program is complete, following the signing of our senior secured loan facilities with ING and Credit Suisse
. The terms of the financing support Frontline's low cash break-even levels. We are pleased that we continue to be able to access financing on attractive terms, and we believe this is directly related to the financial strength of our platform as well as our strong relationships within the lending community," Inger M. Klemp, Chief Financial Officer of Frontline Management said.
The company has signed two senior secured term loan facilities of up to $110.5 million provided by ING Bank
and $110.5 million provided by Credit Suisse, to partially finance four recent resales and newbuilding contracts.
Frontline has terminated three long term charters: for the 1998-built Suezmax tanker Front Brabant and the 2000-built VLCC Front Scilla in the second quarter and the 1997-built Suezmax Front Ardenne in the third quarter ahead of the vessels' scheduled drydockings.
It took delivery of three Suezmax and two LR2/Aframax newbuildings.