FRNT - Second quarter and six months 2014 results - Seite 4

The IEA estimates that world oil demand averaged 91.7 mb/d in the second quarter of 2014, which is an increase of 0.2 mb/d compared to the previous quarter. IEA estimates that world oil demand in 2014 will be 92.7 mb/d, representing an increase of 1.2 percent or 1.1 mb/d from 2013.

The VLCC fleet totalled 629 vessels at the end of the second quarter of 2014, two vessels up from the previous quarter. Five VLCCs were delivered during the quarter, three were removed. The order book increased by 12 vessels and counted 92 vessels at the end of the second quarter, which represents 15 percent of the VLCC fleet.

The Suezmax fleet totalled 448 vessels at the end of the second quarter, down one vessel from the end of the previous quarter. One vessel was delivered during the quarter whilst two were removed. The order book counted 55 vessels at the end of the second quarter, which represents approximately 12 percent of the Suezmax fleet.

Product

The market rate for a MR trading on a standard "TC2" voyage between Rotterdam and New York in the second quarter of 2014 was WS 105, representing a decrease of WS 28 from the first quarter of 2014 and a decrease of WS 32 from the second quarter of 2013. The flat rate decreased by 5.3 percent from 2013 to 2014.

Bunkers in Rotterdam averaged $581/mt in the second quarter of 2014 compared to $575/mt in the first quarter of 2014. Bunker prices varied between a high of $604/mt on June 23^rd and a low of $568/mt on May 1^st.

The MR product fleet totalled 1,645 vessels at the end of the second quarter of 2014, up from 1,627 vessels at the end of the previous quarter. The order book counted 380 vessels at the end of the second quarter, which represents approximately 23 percent of the MR fleet.

The LR2 fleet totalled 219 vessels at the end of the second quarter of 2014, down one vessel from the previous quarter. The order book decreased by two to 29 vessels at the end of the second quarter, which represents approximately 13 percent of the LR2 fleet.

Strategy and Outlook

Over the last quarters Frontline 2012 has been through a streamlining process. The Board initiated this process by investing in and selling its eight VLGC newbuildings to AGHL in November 2013. The investment in AGHL has developed favorably, driven by a strong VLGC market.

Following the AGHL transaction, Frontline 2012 has sold five of its Capesize newbuildings and agreed to sell a further 25 Capesize newbuildings, to Knightsbridge. The Capesize market in the second quarter has been disappointing. However the market has seen some improvement in August following a very slow July. Despite a slower market than expected, the board of Frontline 2012 believes in a market recovery and that Knightsbridge is uniquely positioned to benefit from this. Knightsbridge is currently considering further growth and consolidation opportunities.