Q1 2020 Earnings Call
[music].
Ladies and gentlemen, thank you for standing by.
Okay.
Front line.
She trend cheeky limited.
Hi, This time all participants are written in this.
That will be a presentation, followed by a question and <unk> session at which time if you do wish to ask a question you wouldn't each press star one on your telephone keypad and wait for your name to be a nine.
Finally, the conference is being recorded today Wednesday the trend. She has made twin she tried and say I would like how become friends. So if you're speaking today.
Hi, Thank you Maam. Please go ahead sorry.
Thank you very much.
Good morning, and good afternoon, everyone first.
For the delight.
So the cool, which was due to some technical difficulty.
So first to kick off the cool.
Express gratitude towards social style and our crew members for their extraordinary <unk> dedication.
Well clearly critical factor to our strong results.
For those themes in the past quarter 20 to 20 was the strongest seems to last night.
And we have made solid bookings for the second quarter.
Yes be an extraordinary courts rotavirus right. The tanker earnings have been very strong amidst an unprecedented well situation.
[noise] that's.
Moving to slide three please on the quickly look at the highlights from Q1.
Net income of 165.3 million <unk> 84 cents per share.
Let me sort of course.
Adjusted for noncash items net income was 179.3 million.
The 7.1 million profits related to the fourth quarter Suezmaxes are not included in these figures.
So I got the CAD 70 cents dividends. The lost dividends paid was 40 cents for Q4 29 team.
The deals he sees made around 75000 in Q1.
We have booked 75 cents I'd like to in a halt for Q2.
Too early.
Around 50 fast.
On the finance side, we closed the 500 foot 44 million IC BC facility for the 10 Suezmaxes.
Then before discussing the tanker markets I would like to hand, the call overtaking up please take us through the financials.
Thanks.
And good morning, and good afternoon, ladies and gentlemen.
Let's turn to slide four.
And any color get income statement.
We achieved total operating revenues the voyage expenses of $289 million and EBITDA adjusted for certain non cash items.
Turning to 34 million in the first quarter.
Just a portion this income of 165.3 million equivalent to 84 cents per share and an increment distance for certain non cash items of 179.3 million I committed to 91 cents per share in the first quarter.
The net income in the first quarter exclude the 7.1 million of net cash receipts and accrued profit share in relation to the file chartered in a target outs agreements with traffic is.
That have been treated as a reduction of acquisition cost. So the vessels is that.
The non cash items. This quarter was nearly $14 million in total and consisted of 5.4 million unrealized loss on marketable securities.
15.8 million loss on derivatives.
1.2 million gain related to our equity method investments.
A 1.8 million gain of settlement of claim and up 4.2 million gain on termination of the lease of from Acosta.
The first quarter shows an increase compared to the fourth quarter or 2019 of $17 million against adjusted EBITDA and an increase of 72 million again adjusted net income.
And the increase in net income in the first quarter of them to 2 million. It's mainly explained by the increase in just on time charter basis due to the higher reported GCU rates in the first quarter compared to the previous quarter.
Then let us take a look at the balance sheets on slide five.
Thanks.
Changes to the balance sheet as solve the ends on March 2020, compared to December 31st 2019, mainly relate to an increase in cash and cash equivalents or $54 million.
Which is the fact of capex payments repayment of debt.
Giordano debt cash growth operation and dividend payments.
Then we had an increase in new billing or $21 million explained by installments paid in the quarter.
We had an increase in vessels over 278 million relates to the five vessels on Tcl just execute area, which recorded on the balance sheet when closing of the acquisition to date of March 16. This year.
Also we had an increase in short term debt or $484 million due to drawdown on the 544 million facility with activities.
Offset by repayments this quarter.
We had a decrease in short and long term debt.
Let's sort of generally gauges and the finance leases.
Okay, and an $8 million, primarily due to the five figure vessels moves to owned vessels centralization.
16 to helped us win.
Sorry.
And then we had an increase in equity of $94 million, mainly due to the net income for the quarter offset by cash dividend.
Sorry.
Yes.
Awesome watch.
The first 2020.
Strong plan half of 392 million in cash and cash equivalents in.
Including the Undrawn on miles on that over and over unsecured loan facility and marketable securities and the cash requirements.
Our remaining Newbuilding capex requirements up in the March amounted to $282 million.
Hi related to Wanzhou specs on group, which you took delivery of on May 19.
And one of the agency expected to be delivered in June 2020.
And for a lot to tankers expected to be delivered in January locked in October 2021, and January 2022, respectively.
We estimate approximately 239 million index capacity for these new buildings.
There'll be due to the 42 million.
On the terminal loading facility with credit Suisse.
And that ended in November 2019 in May to finance the delivery of suspect that good properties.
The short term product or long term debt includes.
Approximately 30 on that and 10 million desperately needed.
Over the 500 million facility, which matures in December 2000 Twitter.
Approximately 14 million debt maturity of the 60.6 million facility.
Which matures in March 2021.
We are in the process of refinancing the 500 million facility and we have signed a terminal facility with Nokia.
In May this year.
And then a $50 million to refinance the $14 million maturing in March 2021.
And in March 2020 has been over commenced we did sign the sale and leaseback agreements.
We'd like to be dead or $544 million.
And then in April 2020, we repaid $60 million over 275 million senior unsecured specifics agreements with an affiliate of him.
And up to 2000 $15 million remains celebrate level limited facility following industry payments.
In May finally, we signed a senior secured loan terminal facility with agreed to the political.
And then amounts of up to 62.5 million to park, one of the via to see that behavior. The construction attuned God.
Let's take a closer look cash breakeven rates that are fixable slide six.
We estimate this cash costs begin rigs for 2020 quarter profit over process with the $22000 per day for VC.
18600 Boes per day for Suezmax tankers.
$15000 per day for the industry sectors and the fleet as rich is estimated to be about $80600 per day.
These states are the oil in daily rates of our vessels refer to cover the budget this operating costs and.
And Drydocked the estimated interest expenses.
Tom Sharpton, bareboat hire installments on loans and DNA expenses.
In the graph on the right hand side of this slide we have shown incremental cash flow after debt service per year and per share assuming 10000 Boes per day, 20000, 30000, $440000 today in achieved rate and excess cash break even based is it.
Activity.
These numbers include the vessels on Palm chaparral.
And then looking at a period of the under 65 days from April 1020.
As an example.
We the fleet average cash cost breakeven of April $18600 per day, and assuming $30000 on top the average fleet Tc rates would be $48600 per day.
And so on slide includes in this scenario generate the cash broke share after debt service of the dollars and 55 assets.
With this study of the words it over together okay. Thank you very much at all.
Let's move to slide seven phase.
The first quarter was certainly a border Taiwan.
Cobiz 19th endemic across the globe.
Additional drivers like ton miles on refinery on what this regarded as the new powerful dynamic in March.
As crude oil imports to China began to decrease the markets on shortly afterwards as expected production cuts did not materialize and instead, Saudi Arabia, Russia, Andy you see increased output.
In the freight markets, we witnessed the busiest Charleston period I've seen in my career as charters with scrambling for tonnage.
With a rapid decline in global oil consumption due to lock down across the globe oil production will soon well in excess of demand.
Under normal circumstances, a drop in demand might lead to lower freight rates. This time and led to the surgical places to still on ships was one solution.
These will not snowmen circumstances on the speed and the severity of the drop had an opposite impact on tank rights costs, a record increase on oil and water so freight rates significantly.
In the charts on the side, we see how demand asked retracted faster than production cuts, implying inventories being built on an unprecedented rates both on land and water.
These moves in the global trade how happened very quickly.
Great developments going forward is linked to how fast demand recovers onto what degree and how quickly production. Thomas This is obviously very hard to predict.
I'll get this in the final slide, but let's first look that Gogo fleet capacity.
So on slide eight please.
The global fleet capacity growth is slowing.
Well, we'll target fleet growth is a key driver of long term earnings on the order book is added levels not seen since 97.
Various factors support our expectation that order books will remain low over the next 24 months.
In addition to the historically low order books. It is worth noticing that 24% of the VLCC fleet. It's about 15 is this year.
Customers does this modern tonnage is only increasing and that puts frontline street in great position.
We also expect vessel of higher to continue to other material impact on fleet capacity. This year as a large number of vessels achieve full theoretic dry dock.
I am quite a few of the vessels to have recently been granted short extensions, but this is temporary displacement only the surveys must be carried out.
All eyes are currently on inventory draws the vessel supply could be a big surprise in the second half with Twentytwenty on into 21, we watch it very closely.
Moving on to the Crescent markets on a bit of outlook.
Okay and what has been described as destroyed in recent months. We think suppressed describes the situation more accurately as we believe the decrease in all demand is temporary.
The recent production cuts the both immediate Rio absolutely no doubt on half effects to the site levels negatively.
On deal demand there has been surprises in recent weeks Chinese gasoline demand above 2019 figures on recent figures from India also shows a sharp recovery in gasoline cells.
Not surprisingly Asian leads to rely on demand recovery, whilst the us is likely to recover faster than Europe.
Over to floating storage, we currently estimate around 200 million barrels floating and we might be close to the peak.
We expect to see an unwind a floating storage during the balance of Twentytwenty.
Our firm as in Europe unlikely to be the first ones to unload some have already done so whilst vlccs unlikely to be locked up on a longer structure.
This is pure speculation gross but given recent news on the demand side, we could see production cuts reverse as early as during second half was twentytwenty.
One fact can be stated volatility will continue forward going forward, sorry, very much like Dsos fall.
So in conclusion frontline enjoys the youngest street and lowest breakeven level in the history of the company.
On Twentytwenty is shaping up to be a great year for frontline and its shareholders.
With that operator, I would like to turn over to questions. Please. Thank you, Sir ladies and gentlemen, if you wish to ask a question. Please press star one on your telephone keypad. Some way for your name to be announced if you wish to come. So your request. Please press the have skeie. Please.
Darren one to ask a question.
Hi, crush K to cancel.
Thanks, Tim Your first question comes from the line of John Chappell of Evercore. Please ask your question.
Thank you good morning around our good afternoon, and good afternoon and Gary.
Three questions for you today, hopefully they'll all be relatively quick and Rob you guys do great job, explaining the accounting on the quarter to date and and kind of how that plays out so the 75% that you've done it overnight.
You just kind of help us framework, what we should be thinking about in the next 25% I mean, obviously the markets come down, but there's always is valid stays and if you look at once June return what you had to date and then we back and that was 74 hated it looks like I was actually negative for the last sentence what percent of a day, so im not asking for guidance or.
Exact number but is it closer to what.
There is a closer to zero as it somewhere in between just so we can frame how the second quarter.
She's out.
Yeah, obviously difficult to predict what's the.
It will be as some bad assays that download the quarter, which will take it down.
It would also.
Be taken down a bit buybacks at current rates are weaker than what the sole Florida for that.
For the 75% pass.
Contracted so add but to give you managed number or anything that didnt productive difficult already Larry.
Thats the possible in a way so sorry about that.
That's okay, maybe another way to ask tens of thousands stays as you foresee for us its use you would it be similar to the normal and the quarter are there more on the loss.
It does mean I was referring to that.
In a number about assays will vary between the quarters, but the.
For this quarter it was.
I actually it was the city under them not Steve.
By the space for the need to see that's an example.
And that was from the Walter.
Okay. That's helpful.
Rob on the on the U sleep side.
Obviously, something that we're watching very closely and very helpful to set up and Thats real sustainable recovery not just the blips.
I heard earlier this week at the Korean yards are becoming the desperate now we were hopeful that there would be filled up with LNG carriers from products, but we're hearing that becoming a bit more dust another DLC front.
Can you confirm or deny whether you've been hearing from the yards and then also sop mining in your market share holder, specifically has been kind of early on ordering.
At attractive prices, so what's your appetite.
The ordering ships today at the Koreans are really.
So on pricing.
Now this is the sub overtime had been.
The OTA desperate, but the price how come down and we've seen that such had been no no ordering had nicely when it comes to frontline and our interest we have a constructive view of the tanker markets.
In 20 and 21.
All of our interest in the third route 22, when when they're all results available we and other opportunities then I think that I would say to take the main focus on the ordering new building service, it's not on our radar.
Okay. Thanks, and then just pull last one I don't think anybody is worried about frontline's ability to get credit facilities, given their relationship with European banks.
110 million is a pretty big chunks climb where the wells is pretty uncertain right now and thanks to our crusher.
What should we think about as far as the timing of that refinancing ahead at December 2020, how do you for the discussions and.
Now that the 100 million TTM that you put in the US in the press release. Obviously you said you ended at today's prices, but is that something you're thinking about putting in place just in case the financing market becomes very difficult in this uncertain time.
I think it's very easy to too.
In terms of the bucking the comp then and Mr. production and on the actions to finance, we have absolutely true confidence on the ATM is not linked to this in no no shape or form the the HM It's a little housekeeping as a tool that we had in the past and it's as we clearly stated.
Not something we would even thinking about using at the current.
Current chevron.
No that your question also I mean.
Right exactly with it.
Recent Mickey the couple of the financings in the markets with is the refinancing of these says.
Not yet affinity.
So we don't really have any.
Concern.
Being able to refinance the 500 million facility either.
And so so it's the owned them after trying to say.
The mightily improves the terms of specific possible in the financing is there some for crop.
Great. Thank you and Thats one.
Thank you.
Your next question comes from the line of Randy gave from Jefferies. Please ask your question.
How many robbing longer how are you.
If I would like you.
No doing well done well, yes, two quick questions here so for the fourth quarter. When are you announced the dividend of 40 cents.
Based on the 60 cents, yes, so about 66% of that first quarter announced the bidding a seven cents.
Yes, Evercore 91 cents around 75% there you have to define kind of dividend policy going forward, just trying to think about twoq you and beyond.
Our dividend policy has not changed in a way, although we do have added statements on our website, which is such that we are unaware that too to pay 'em broadly the excess cash flow.
Or equal to our coasters and HM.
And we also.
Well the board also of course also have the possibilities to this tight.
To to know recent away and what we have to take into account. So course, the Capex program that we have.
Going on at the at any point in time.
And any other adjustments, which needs to be taken into consideration noncash items.
So so.
I guess, that's Florida, so how it is.
Oh.
And so for two can you Tony So we expect.
Similar at least 50, 60% of.
Yes, Sir.
Sorry didn't really get the question there.
Before the second quarter.
Is it fair to expect another 50 or higher 60% of EPS.
I think as for the second quarter around you will see what was the board comes ups in and decides in August.
Looking at the history of the company, we are now well above $6 billion paid out since the U.S. listing on the I think the the company in the board has a slow no intention to change this history and track record we want to keep building on it on looking at the company in looking at where we.
Our in our cash Breakevens looking at how we've done on the time charters recently and also with our constructive view of the markets with a fleet of an average age just over four years I think we've got we've got every.
Our ability here to to perform well going forward and.
Looking on track record I think is the best the best way to answer your question.
Okay, and then looking at your Aslam accelerate twos. So most of the first quarter aframax crude tanker rates outperformed relative but in April crude rates kind of sell off but LR twos hit all time highs. So currently kind of how many of your LR two products tankers.
Operating in their crude or dirty trade. Thank you can kind of talk to that market a little bit what has caused that deadweight spike and then subsequent kind of rate decline back to maybe 40000 Boes.
That's it that's very good and relevant question and I will use facing is actually also the case of the second half of of 2019. The Aframaxes, we're outperforming the losses and there were definitely ties right. We're always kicking myself, we're not having gone dusty on on more at our twos the.
How would be between the two segments Oh should we have 18 and Autousa in total were trading 11 keyed in on.
Seven dirty, which which fortunately nine in recent months the a lot to set sort of sort of cool back in in terms of the earnings no. We looked at the exact numbers, but it is probably going to be not far off being on par with what's happened recently.
The other two market.
Finally, very difficult even comment on how it's been going over the last couple of months, it's been I've never seen anything like that I would describe yet our to spike to be move more extreme.
In relative terms and what the we'll see spike was.
There's a lot of delays not segments. The the in terms of number of to set the fleet size is only 23, 24% of the ought to be able to see in terms of a number so as soon as you you have.
Another shift delay, though held up once on storage or poor storage do you get these.
These mega Spike so I think.
The very very high rates as we had on the Vlccs, while only happened on on a on a handful of fixtures, but over the over last the last month, which it's been it's been extraordinary so it's now stabilizing but still it's and it's.
A very healthy levels, but it's very very difficult to predict the hottest it's going to carry on but it looks like although there are signs of.
So the saying earlier that the demand discount coming back, especially in the in Asia then.
Europe under US will soon be struggling so you will have anxious being a big forces store for quite some time.
Sure and what's your split there.
Your asset abilities in terms of crude the screen.
11 about two seven effort.
Let me now to send them awesome.
And then last quick question for the home in facility looks like you paid down half of that some 120 down to about 60 million is the plan to repay the remainder during the second quarter.
Yes, so thats been we're going from 20 to 60 further further down payments of I've not been decided we will robots not.
When that comes up.
Oh.
Thank you Sir.
Your question.
Yes, that's it for me. Thank you so much thanks, yes.
Yes.
And your next question comes from the line of Craig Lewis of BT Ji. Please ask your question.
Yes, Thank you and good morning, good afternoon everybody.
Rob just you mentioned.
Some some of the vessels at shipyards that are under construction.
You know clearly some of those are obviously owned by stronger hand, some of those around the meeker hands.
It's been an interesting.
Pick your adjective to describe the first thus far in 2000 wanting.
What is kind of the appetite then from potential sellers of tonnage.
You know how has that changed or has that changed over the last few weeks as kind of it looks like now we'll kind of settled into.
Just a firm solid market with these around $50000 today, we're not seeing those headline $200000 rates, but still on track the market has that kind of loosened up or caused any more interest or pick up and maybe not actual physical deals closing.
At activity or inquiries interest in the S&P market.
I mean, you touched on some of our instincts, what I've not seen seen anything like this when it comes to S&P. What's happened. So far this year is actually amazed me and the simple example, as it normally when the freight market goes to levels, where you can write down.
A purchase with more than $10 million or even even 15 or 20 nm short span of time, there whatever is one year charters with right down the vessel by more than $20 million, even at that point, we didn't see see many transactions the where shifts offered for sale. We did have an outlook is at a shoe.
But it's been it's been a very very strange rock with very few a few things.
Just a softening and with the with the.
Right correction, Andy which was a correction the.
The.
Right on potential in the front then we were very healthy level still as you described but we are seeing very little activity and.
I'm also.
Of the opinion that even if the yard prices were full than the.
The number of deals will be low there as well because we mustn't forget that access to finance as we discussed in the on your question then I think frontline successes.
And it's never it's never never sort of program a challenge for us, but as an industry. This this is more difficult and and this effects. So and also as you, saying quite a few strong hand, sitting and and probably happy to sit if they share the same constructive view as we did.
Okay, Great and then just one more for me you kind of it and I believe it was in the prepared remarks might have been the Jonathan and some.
Quantiq ways question, but you talked about vessels going.
A little bit slower and Thats part of the reason why you decided to delay.
Some of these scrubber installations.
Just kind of curious how we should be thinking about that I mean, clearly fuel prices are low so it's not higher fuel prices that are driving slow steaming I mean rates are from so just kind of just any kind of color you could give us around why why we are supposed to seeing slow steaming and maybe what's driving that.
Let me slow steaming congestion and general delays, it's all the if you look at locations and then some is contango driven some is driven by by lack of space on shore and and all these factors they built together they.
They create this oil and water stock, which is up almost 20%.
This year in terms of how much oil is on the.
Well the tanker fleet, so going into two each individually I think it's very difficult sort of see how they they.
The overall market, but the this oil and water, which got US all the factors our offline quite useful when it comes with a scrubber then in actual fact will we always done is that we've decided to leave the scrubber it's off actually.
Only preparing drydocked only prepared the ship underwater so small investment of less than $100000 and then when or if the fuel spread than returns than we can go alongside and put the scrubber on and and then.
And then start using it so.
These this spread is obviously a very much rate correlated to the to the crude flat price and when it comes up then the spread will also increase so time will show, but we fully was prudent given where rates where when we decided it was this also means that the drydock time decrease.
By two weeks. So we thought it was right decision, we can reverse it but it looks to be to be the right because I see as you're saying, we're still a pretty good levels here in terms of earnings.
Okay, Great and just just really quick following up on that do we have any sense and realize it's a moving target I'm not sure. How you how frontline tracks on the average speed of its fleet, but but I don't know if we look at it on a month over month, we daily is there any sense for how this average speed of the fleet has been trending over.
Or however, you think about it.
Now has been generally the fleet speed has come down since we started eco speed. So that's the speed.
Which.
The flex speed flexibility of the fees come down due to the more economic engine with less power. The laden speed I'd speed that said, we are contracted to perform voyages that has not changed much. So it's the is the other speed that.
Hi is changing and then generally it's very simple its market slow you slow down to two say some few and when it's highly has been recently than than you you wrap up the engine to to get to load ports as fast as you can but in the in actual fact over it doesn't make that big Big a difference its.
It's an auto too, but then you look at how many in an imbalance and then you look at how many days to ship. This slide no in import so it's an important factor, but it's not a huge factor.
Okay, great. Thanks, Thanks, Thanks, anger, thanks or out of time.
Thank you and your next question comes from the line of Omar Nokta of Clarkson.
Please ask your question.
Thank you Hi, Robert anger.
Robert towards the end of your opening remarks, you mentioned floating storage and how some of the aframaxes come off that storage, but the ochocinco likely stay a bit longer you from a market color perspective, no presumably some of the VLCC charters you entered into had options for floating storage can you give a sense.
Of the ships you Havent charter, whether they're in floating storage at the moment or the charters exercise options to do so.
So the.
Good question. Thanks, Omar and then the first the Aframaxes, we've seen we've seen about 35 million barrels.
At the peak in Europe, some of that's been unwound a bit on winded.
On the Vlccs than we've done done charts on it we put on five or six between six months in 12 months and these are time charter. So so it's not to it the charges of three to try the ships as they west in the not pure storage charters. So at the moment, we actually.
We think we've got we got one once who is the has gone with storage and we got won't be there is about to start story, but that does it.
And we've got.
Quite a few ships that are more the sort of forced storage, where this lack of other option and so forth but.
We'll see how it develop said, but what we're hearing is that some aframaxes country, but on the on the Vlccs. Then there are some cargo said that that are likely to store through Q2, and Q3 I remember that should the trade is of our in terms of risk flat price risk is it's not.
Something they normally take what's been happening here is that some congress have been sold at such heavy discounts on the contango spin. So strong that are I would guess that some of them have.
Hedged out the the for the front of the close at next two three months and then the people, believing in demand really coming back in the Brent recovering has so you could see as CFO.
People waiting on the and for this.
The strength so forward because so some of the timing so on crude purchases were historic in recent weeks.
Oh, that's interesting so it's a good point that so you're talking about the discounts from the Saudis and and whatnot and so it's not just simply looking at the front end of the curve in the back end us or the six months'. There's also the five or 10 dollar discount of plants as well.
Yes.
And that was where where you really realize how tight the freight market was so so there was the with distress cargos in the and then sunny someone somewhat go to ship to can could make the dates in West Africa within the next five days or so in the and then discount. So it's a say five to $10. A barrel were offered so and then you put the you put the recent.
The jump in the crop price into it then you can see that there are people there how have.
Okay, floating hey wishes deep deep into money and there might be some of the not willing to take the risks to two to move even deeper.
Yes, Okay and then just.
But how does that work for instance, if for some reason the contango really does switching they want to go shorter if they want to unwind the floating storage is there any impact at all on the on the charter.
But you have with them.
No there would still have an obligation to keep the vessel on high and pay offs high up until the earliest redelivery date, so you'd see not so the circumstances.
They will then try to trade the shipping spot market, but many of the many of the year gosh that approach it shifts and storage are very familiar with the with the spot market having chips themselves. So they would then go from being on storage to being normal spot.
Right as I mentioned earlier in the presentation that than we thought the peak it.
I will take us two bucks a month, we support the PK in in storage word on ships is going to be at a much higher level. What we're hearing now is that we might be close to it at 200 200 million barrels.
Floating so the.
The negative is that we are not enjoying the.
The prolonged trait a spike that we expect that we expect the crude price to be low annika tying it to be strong for longer than what it was gone the flip side a lot. It means that the crude inventory draw, which everybody's been talking after last month or two being the sort of big animal that would would sort of destroyed or market that.
That volume will then be less so so there is this a flip side too.
The recent drop and then then but that being less than that means that our return to a more sort of normal freight markets.
We'll be she will be shorter.
Yes. Thanks.
Good thanks for that color Robert.
One other question I have is just on the you referenced earlier the DLR to 11 or are trading clean seven our dirty how we think about the mix going forward. There was there was a lot of pressure last year to switch to 30, and then there's a lot of talk about potentially thirtyth Archie is going back to clean how do you think about that those ships from here.
As we think about them next six months Brent.
Third it depends on how the market develops.
January what we'll do on a dirty ships, then when we have opportunities to to clean up.
In a cheap weighed out our be by doing condensate Cogs and so.
Then we're likely to take those opportunities. So I don't think there's going to be be much change. The 11 seven split we've done was quite some time and I've always suggested I think it's more likely that we'll we'll we'll go keen on one that will go ducts yawn, but.
It's all down to the market develops in the developments in the market. So far this year, it's been a true rollercoaster ride in the ultimate mechanics here that that are truly remarkable when this 35 million barrels floating on the in the north sea or the continent on offers.
And then being online answers there. So we just have to pay pay say very coast attention and and then we don't we don't have any problems are taking quick decisions on on the chartering strategy.
Got it are very good thanks, Robert for that appreciate it.
Thanks, Thank you.
Your next question comes from the line of George Barr Nunn C.L. Securities. Please ask your question.
Good afternoon, Thanks for taking my call and congratulations great quarter.
Thanks.
And I've got a couple of quick questions on your joint venture as you have one with clean Marine and then recently in January you did one in concert with Golden Ocean and Trafigura on.
Yes.
Fuel supplies.
It looks like each one of those added about $600000 as your share of the gains what are your plans.
These two in investments for the company are any of them.
Looking to go public or.
Are you.
What kind of.
Profits do you get to get out of those.
We'll take your final question said take the first one on the clean marine.
We we own about one six of the company is a scrubber manufacturer and scrubbers.
Our not not being sold at the moment, so thats why we put.
Our own on.
On.
At the fact, you're not taking on the ships so that all depends on the fuel spread so the companies looking into alternative some weeks, we have a brand new factory that can they can produce many other ergo thing. So that's being looked at it's very small investments for for frontline. We are a passive shareholder so no sort of a media.
Plants there.
The.
The JV with Trafigura is.
Fuel.
Maybe which.
I started off very successfully it's.
Securing fuel at the right price and the right quality in the right timing to our ships and also ships in the.
The industry. So it's been tremendous growth in our company.
I would say that the the best sort of IMO Twentytwenty decision. We made was certainly a joining forces with trafigura and angle notion to to form the company. So we we have high hopes flattened and it could the could be expected tons Isla company with I think what's important for.
For the company in an office that we keep focusing on delivering and then and then as growth comes on we can put further plans, but there's nothing in the pipeline on these two investments.
Okay.
Then we flooring to your current valuation in the stock market it looks like a lot of the.
Core transportation company shipping companies bank of companies are.
Sort of afforded a extremely low valuation rather than acquiring.
Newbuildings or existing ships in the market do you see any opportunities.
Maybe for a combination with other companies that are even.
Less attractive value than yours.
And we I know.
The for the through the opportunities and I think if there's any company that can they can consolidates. Its front line. So we'll we'll see what opportunities come up but for US. The most important thing is to two to keep working hard with our modern fleet. We have the we have the the big size and that you can see from the Q1 results that.
We returned.
Really pretty have to return to shareholder sale and a reduction that's going to be maintain our I'll focus on the Q2, we made solid bookings. So I think we're in a very good standing, but but generally I agree with you. If you look at the to the tanker companies in in general, it's not being the valued as.
Two linked to the earnings it seems.
Yes, it seems tuck in we need to figure out a way to transport our oil via the cloud.
[laughter] likely right.
Okay. Thanks, very much and then look forward to your future.
Thank you.
Thank you once again, ladies and gentlemen, if you do wish to ask a question. Please press Star then one.
Telephone keypad, if you wish to cancel the request please press the how scared.
And your next question comes on the line of John rather than a private investor. Please ask your question.
Good afternoon, Robert and anger.
I was wondering the recent uptick and demand from China and now India did that surprise you do you think that maybe there were playing catch up on lower inventories are do you think that their current.
Appetite is something that's going to happen going forward.
Jeff I size. It is very very good questions is extremely relevant and unfortunately I don't have the answer to it but I'll make a guess my guess is that the demand destructions describe what's not a steep plus a us the.
The on this.
Projecting and having to return is is coming quick so it could be used to this the data Harris.
The U.S. dates, namely more accurate, but there's a trend we getting in from from various places and it looks like Asia is coming back quickly and the Chinese soon on gasoline is encouraging so it could mean that the is the to fall in demand was not as low and on the pickup is indeed, a v. but.
Let's see the deal market has certainly been a difficult to predict hey lately.
Okay, and then closing.
Anger I detected in your comments that you have a sore throat.
And Matt I suggest a little hot tea with Lyman I think that will help you recover we need a healthy inc. route here.
[laughter], Thank you and Thats.
[laughter].
Okay. There are no further questions at this time please continue.
Thank you I'm happy with that let's cover I think is a great way too to Rob. The I'd also so apologize again for the delay in starting and you might also notice that the quality of the sound on on the call head was not as it usually is so we'll make sure that doesn't happen next time, thanks, everyone for calling in.
All of us.
Thank you, ladies and gentlemen that does conclude the conference for today. Thank you for participation you may now disconnect.
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And gentlemen, thank you for standing by and welcome to the Q1 Twentytwenty Frontline Limited earnings Conference call.
This time, all participants are in listen only mode.
After the speakers presentation. There will be question answer session to ask a question you will need to press star one on your telephone keypad.
I must advise you the conference is being recorded today Wednesday, the Twentys may Twentytwenty I would now like turn the conference Ovature speaker today.
Rob Mcleod. Thank you and please go ahead Sir.
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