Bermuda-based oil tanker shipping company Frontline Ltd on Thursday (27 August) reported its second quarter net profit of USD 199.7 million, showing the strongest result in a decade.
“Our results for the first half of 2020 are the strongest in more than 10 years, and we have paid aggregate cash dividends of USD 1.20 per share for the same period,” said Robert Hvide Macleod, Chief Executive Officer of Frontline Management AS.
“Looking ahead to 2021 and beyond, recovering demand for crude oil transportation will coincide with rapidly declining fleet growth, which supports our long term highly constructive market outlook.”
In January 2020, Frontline completed a joint venture agreement with Golden Ocean and companies in the Trafigura Group to establish global marine fuel supplier TFG Marine.
As a result, Frontline said it took a 15% interest in the joint venture company, TFG Marine, and made a USD 1.5 million shareholder loan to TFG Marine.
TFG Marine, was granted a bunker supplier license by the Singapore Maritime Port Authority in April.
Frontline concluded that it is able to exercise significant influence over TFG Marine as a result of its equity shareholding and board representation and therefore its investment is accounted for under the equity method.
A share of results of TFG Marine of USD 1.1 million was recognized in the six months ended June 30, 2020
Frontline added it has also agreed to provide a USD 50.0 million guarantee to TFG Marine in connection with the performance of its subsidiaries, and two subsidiaries of an affiliate of Hemen, under a bunker supply arrangement with TFG Marine.
As at June 30, 2020 there the company reports no exposure under this guarantee.
In addition, should TFG Marine be required to provide a parent company guarantee to its bunker suppliers or finance providers then for any guarantee that is provided by the Trafigura Group and becomes payable Frontline shall pay a pro-rata amount based on its share of the equity in TFG Marine.
The maximum liability under this guarantee is USD 6.0 million and there are no amounts payable under this guarantee so far in 1H 2020.
Photo credit: Feen Marine Scrubbers
Published: 31 August, 2020
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