Q4 2021 Frontline Ltd Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to Cui for 2021 felt like earnings conference call. At this time all participants are at least at Holly mode. After the speaker presentation, there will be a question and answer session.
A question you will need to press star one well I guess that I felt I would now like to end the conference all of your Speaker today. Mr Lost Bhavsar. Please go ahead Sir.
Thank you.
Good morning, and good afternoon to anyone.
Alright, everyone dialing in.
Welcome to Frontline's fourth quarter earnings call.
We continued our strong and through what ended up being a.
Somewhat less exciting markets unexpected.
Towards the end of the third quarter, we actually start to see a recovery in demand for freight exports volumes Green, which was continued into the fourth quarter.
Regretfully it was not enough to move the needle in the vessel supply and demand equation to make a significant change in rates in absolute terms.
I think we just move straight on to the highlights on slide three.
In the fourth quarter frontline achieved six and a half thousand dollars today on our VLCC fleet.
Of the $14200 per day on our Suezmax fleet and $13900 per day on our <unk>.
Two slash Aframax fleet.
So far in the first quarter of 2022.
58% of our VLCC days at $21300 per day 60.
65% of our Suezmax days at $19600 per day, and 56% of our allowed two aframax days at $18800 per day.
All numbers in this table are on the load to discharge basis.
And I was thinking in order to make it clear to all listeners how we achieved these numbers when the benchmark indices are reported to show negative numbers.
Just to quickly move to slide four.
Yeah.
So we have.
Time over again.
Frontline has a large diverse fleet of modern tankers.
It was kind of made clear to us today in our call. This morning that we should elaborate further on this.
The thing is with these indices that are supposed to represent the market performance.
These are based on a methodology that is somewhat old fashioned.
<unk> modern tankers, who will trade.
Very very differently from an older tanker and the economics of a modern talk here and if you add the scrubber is extremely different now with the record Wides.
The spread we have between high sulfur fuel oil and low sulfur fuel oil.
So the fleets of frontline and the average age of five years.
89% of the fleet card eco vessels and 54% of the fleet have scrubbers installed.
If you look at.
The diagram on the right hand side of this slide.
What we've done here is basically to take some benchmark indices that are classified for non eco vessels non eco scrubbers eco vessels pure eco most cover these are normally the vessels built after 2015.
He co with the scrubber.
And based on the average in Q4 'twenty one you can see on the VLCC side.
Non equal non scrubber nominal thing will achieve 5000 and 400000 Boes per day.
According to the index.
Then he co with scrubber will achieve a premium of 12 and half $1000 per day, which is basically created by lower fuel costs.
And it goes on on the Suezmax is an LR twos.
This.
You need to keep in mind, when you look at frontline for sure.
We both have a very modern fleet.
And we have very low cash breakeven levels.
So with that ill.
Yeah.
The word to our C F O <unk>.
Thank you, Doug and good morning, and good afternoon, ladies and gentlemen.
And then I think you should start.
Turn to slide five.
And look at the income statement.
Total operating revenues and expenses of $100 million.
Larry.
In the fourth quarter.
Is it that was $51 million.
We reported net income of about $20 million, what 10 cents per share.
And I just didn't know, it's about $5 million, what Keith cents a share.
Get the snacks and that's we have made in this call.
Right.
I didn't say that.
Slide 17 million gain on data the team.
Finally in industrial marketable securities.
The $5 1 million gain on sale of vessels.
It's another distribution comes in K O $13 4 million after tax and also long fun thing in minutes amortization of acquired time charters.
Adjusted net loss then in the fourth quarter its tree.
$31 1 million compared with the third quarter.
And the degree by an increase in our time charter equivalent earnings due to the higher TCE rates.
Also and by a reduction in ship operating expenses.
This was partially offset by an increase in interest expense and depreciation.
Hey, Timna.
Fourth quarter.
Let's then.
Take a look at the balance sheet.
Right.
The total balance sheet numbers have increased with about $130 million in the fourth quarter.
The balance sheet and events in the quarter, primarily related to the taking delivery of the <unk>.
Can you kind of get from feature.
Yes.
That is up and sometimes that in addition to ordinary debt repayments and depreciation.
So at December 31st Frontline has $191 million in cash and cash equivalents.
Adding undrawn amounts under our senior unsecured loan facility marketable securities and our cash requirements.
Okay, and then in Capex and you're building Capex of 437 4 million as of December .
It's fully funded by us at the end of the $19 million. That's also bypass of the net cash proceeds of $68 6 million sale of four <unk> tankers.
The company has no debt maturity until 2023.
Please.
Move to slide seven.
Cash breakeven on cash generation the pension.
We estimate the gross cash cost breakeven rates for 2022, although sandy hook them up at 210 to $2700 per day for the agency <unk>.
<unk> thousand $900 per day for the Suezmax tankers and $16000 per day for the <unk> tankers.
The fleet average system that there's about $19300 per day and includes tied up with 16 vessels in 2022 at an impact of $740 per day.
The distribution of the 16 vessels, having to teach five suezmax tankers.
Our two tankers.
These rates are the all in daily rates, our vessels must earn to cover budgeted operating cost and dry dock estimated interest expense GC and bareboat hire installments on loans and G&A expenses.
We recorded operating expenses in the fourth quarter of $7600 per day for Vlccs.
$6900 per day for Suezmax and $6100 per day for a lot too and with Dr. <unk> and one suezmax tanker in the fourth quarter.
The graph on the right hand side of the slide shows the free cash flow per share after debt service and free cash flow yield basis can heat and share price of <unk> 16.
16, I felt serenity ebay.
If you think about the slide that last went through a cycle I think it was with respect to our.
Our fleets are based on <unk> and scrubber adjustments.
So are they premium than the TCE rates that it's also used in this slide.
So based on historic tax in TCE rates earned on the go visits in the TV 2000 to 2021.
But then for premium on scrubbers and eco Mr.
Frontline has a free cash flow per share of $2.44 and a free cash flow of 32%.
The free cash flow yield potentially increase this of course with higher assumed TCE rates and also actually delivered basis.
With this I need to work with us again.
Thank you Inger.
Let's move to slide eight.
To recap.
On the Q4, 'twenty one tanker market.
As you see the headline on that and we'll start there.
Oil in transit is approaching the heights of 2018 to 2019, if you look at the graph in the bottom and in particular the lion.
Dark Blue line, where you have a red circle, you'll basically see the dots of volume.
Oil in transit gradually increasing throughout the fourth quarter.
Just a small note if you look at the yellow line on the left hand side of the chart. That's actually January preliminary numbers for February .
Where we are now.
Global demand was estimated average $99 7 million barrels per day in Q4, and that's an increase of one 5 million barrels per day compared to the third quarter.
We continued to draw down inventories and this is to the tune of one 4 million barrels per day during the fourth quarter as demand continues to outpace supply.
Now I'd like to make a comment there because.
Rewind 12 months when I was sitting here, having this call.
I was being very optimistic and primarily due to the fact that we were expected to stop growing on the inventories in August .
Which basically bolted for interesting.
Second half of the year.
That hasnt happened I believe continues to draw way beyond anybody's expectation.
Projected demand growth for 2022 will predominantly be non OECD. If one believes EIA numbers and we're going to reach very close to 103 million barrels per day by the end of the year.
The current oil price signals.
In the market.
There are production issues has been in Libya, Nigeria Angola.
And overall the OPEC plus is over compliant this means that.
When they have.
Sure.
On a pre decided production levels there.
Able to reach them.
So basically the unwinding of the OPEC plus cuts is growing much slower than expected.
But nevertheless oil in transit has continuously since October 21, and is now up 20% from Lowe's and this could be pretty directly equate to tanker demand.
So basically a tank utilization is improving.
Despite the increased dividend and these growing Williams.
To reach the turning point for it.
So let's move to slide slide nine under guests the task order books.
And this is an obvious one as vessels are delivering.
No orders have been placed.
The order book is shrinking.
And we also have this very unusual situation were 6% of the <unk>.
Global VLCC fleet is now above 20 years.
'twenty to 'twenty two is indeed, a large delivery year.
This is by the end of 'twenty, two there'll be more than 80 vlccs due for recently in the same period.
We have the big question Mark for net fleet growth in the end of this plays out.
Suezmax same picture for 12% of the fleet through 72 vessels.
Our pulsing 'twenty, yes.
Are either above or policy in 20 years in 2022.
The <unk> order book is more populated but again, they're 15% of the fleet will past 15 years.
And the thing with <unk> is that they are obviously useful lifetime, it's far more than 15 years within the clean trade.
Charterers do not prefer older.
15 years to carry a clean cargo basically due to the fear of contamination. So it means that in a luxury above 15, yes normally move or.
Kind of change to become an aframax.
The VLCC Suezmax and luxury order books.
Seven and 13% respectively.
And more importantly meaningful capacity for new tanker orders.
Move outs to 'twenty to 'twenty five.
Let's move to slide 10, dig a little bit further into the current fleet composition.
Im here I've been looking at the tankers.
We're exposed to the asset classes that we hold.
And as you all know by 2023, the <unk> Mo will impose new measures.
We like to refer to them as ticket to trade, we're going to get refrigerator ratings on all vessels in the world.
For those of you who've looked at those.
ABC the.
Which is basically the range.
Need to be see or better.
In order to get the ticket to trade.
The front months.
Owned fleet overall weighted carbon intensity rating is a versus the 'twenty to 'twenty one data, but if you look at the shot to the left Youll see.
How many ships in the tanker fleet that firstly.
The ones that are over 20 years are challenged in the first place 6% of the fleet.
If you have the ones that will be efficiency challenged.
We're facing an E X sight rates Inc.
Which is below sea.
Add another 17%.
If you look at the non ethos.
<unk> struggled to trade economically in the current oil price environment.
Getting up to another 29%.
C. III has mentioned a few times on the search and see it as a measure for vessels carbon intensity and is average emission per volume transported.
The vessel's carbon intensity is.
Important to charterers, if youre going to charter the vessel.
If they have carbon footprint policies or when they have.
This is also relevant measure when we talk about carbon tax and the potential of shipping entering the European ETF trading.
So basically I think we all can agree that the global fleet of Vlccs Suezmax. Some LR twos is somewhat challenged.
Over the next few years.
The only the.
The most efficient measure you can apply in order to reduce your seat.
As in carbon intensity.
So basically speeding.
Well basically to reduce your carbon footprint.
But to deal with E X.
You would actually need to do a physical.
Work on their vessels.
Youll basically need to cap its ability to two to produce power, which ends up reducing speed as well.
And it's important to note that ups with Frontline's fleet, we don't foresee any challenges with regards to maintaining kind of the <unk> project right.
Until at least 2025.
Yes.
So next move to let's move to slide 11.
Yeah.
Anton recycling. This is basically a bit that's been missing in our markets for a while.
But with record high restructuring steel prices activity is finally looking to accelerate.
The last two big recycling is with 2017 and 2018.
Now in 2021, we actually have seen two 3% of the overall tanker fleet above 10000 deadweight.
Which is basically a measure for the carrying capacity of the tanker fleet.
Being reduced by two 3%.
And we believe this trend will continue.
The aging fleet is severely challenged in the compliance book markets.
And alternative use.
Or opportunities for older tankers and this is typically its a storage or conversion is virtually nonexistent.
If you look at the bottom graph there recycling steel prices I in fact tried to find longer history to see if we've ever been at these levels.
And I simply couldn't find it at least in the history.
Codexis.
So we believe this.
Combination of.
The regulatory regulatory challenges, which are described on the previous slide.
The very challenging market for non eco vessels.
And the recycle steel price.
Should produce a positive outcome for a tanker owner.
Let's move to slide 12.
Frontline.
<unk> client on how we are addressing the ESG.
As I think I mentioned, a few quarters back.
One plant started its project, which we call the decarbonization journey towards IMO 2013, 2015, we started that in 2019 already.
And the third thing, we did which we refer to as the <unk> foam was basically to find out where are we now.
This includes digitalization this includes.
Making.
I was able to record live from every vessel we control them.
Feed that into a database, where we can analyze not only.
Carbon, but also the speed and consumption incidents from older vessels.
To find out where we are.
And that's where when we have that.
In 2020, we started to plan for how to improve it.
But we have in the first place one of the youngest and most efficient fleet in the industry and were obviously at all times in compliance with increasing regulations, and we're making strategic initiatives towards the carbonization.
Amongst other things done successful trials of low carbon marine biofuel.
Frontline targets to reduce our carbon emissions or by 3% per year.
This equates about 55000 metric tons.
The thing is why this actually works.
It also automatically gives us an increased earnings potential.
And I don't think I need to go into depth that we actually.
Sure the UN sustainable development goals.
The seafarers wellbeing.
We publish our ESG report, obviously every year.
Encourage all the listeners to to have a lockup.
And we also of course do what we refer to as sustainability accounting following.
The sotheby principles.
So let's move to slide 13.
<unk>.
Trying to sum it up.
So demand.
On supply of oil continues to rise.
The omicron version.
Seems to have.
Far more modest impact than we could upset.
Tanker markets have in fact recovered since Q3, 'twenty one but.
Obviously it too.
To a modest degree.
<unk> models for our liking.
And we're still challenged while oil supply not fully of pre pandemic levels.
Thank you recycling as I mentioned in this presentation is finally, starting to make an impact on the vessel supply.
And there is a lot of moving parts. In addition, we've seen U S SBR releases.
There is no policy discussions about opex strategy going forward.
And we have the IRA Iranian nuclear talks so there's a lot of moving parts.
Oil in transit continues to rise energy prices are at record highs.
Oil is now floating with a 100 barrels per day.
And how that's going to affect what I mentioned, just now with regards to the SPR releases with regards to Opex strategy with regards to the OPEC nuclear talk those are they ran in nuclear talks.
Is creating some very interesting dynamics.
On the loss of the deletes Frontline's financial commitments are fully funded.
We've done so with the reduced overall financing costs.
And we think we're well positioned as the story of this market unfolds.
With that client.
Zinc will open.
This call for questions.
Ladies and gentlemen, we will now begin the question and answer.
If you wish to ask a question please Brian .
One on your telephone.
Yes. The first question from the line John <unk> from Evercore. Please go ahead.
Open.
Thank you good afternoon Laurence.
First thing I want to ask you about you brought it up in the presentation and the press release is that Opex, obviously, having a difficult time getting to their production quotas.
Saudi Arabia, UAE, but theres some other countries would probably some more structural issues as you think about the supply that the tanker market needs to catch up with this recovery in demand and countries in West Africa, and other places can't really meet their quota is where do you foresee this coming from especially as the U S companies tried to be more disciplined.
And it could be it could it be an issue where the inventory draws last a lot longer than anticipated because we cant respond to that increase in demand with global supply.
Yes.
Yes.
I realize it was the question but.
You're basically answer that it's a little bit to yourself.
So the obvious answer.
Where you actually could relatively quickly have increased supply.
Really what we need is increased exports.
That is obviously the U S, but the discipline amongst U S producers.
Has it been so far.
Well look good for us because for the oil price.
<unk>.
And.
That continues this is a challenge.
Obviously, you still have barrels.
In the middle Eastern countries I would assume otherwise we are in more trouble than we'd like to think of.
So I think that's the law.
Likely in the show face should we continue to be where we are now.
Or the oil price it even further I think opex will.
We'll have to basically open the tops completely.
OPEC, although they would like to have a very very high oil price also think they have a huge respect for demand destruction.
And.
Oil price significantly north of 100, and we will.
Puts us in a position.
So so.
That's kind of my my.
Thinking here.
I also think that.
If we are in this situation.
U S.
<unk> grow more.
Please EIA has about 800000 barrels per day of production Regretfully U S. Demand is also rising quite rapidly. So we don't know how much is going to be less for exports, but.
I think you have a huge incentive to get something done with Iran.
So yes.
Yes.
Why doesn't that Iran thing kind of led to my second part my second question as well I mean, <unk> been pretty public calling out the illicit fleet illicit trading fleet.
Pretty interesting graph in here.
Showing the difference between the non eco the veeco this ecosystem scrubbers and then also the.
The whole thing on the IMO 2023.
It feels like that there is so much optimism in the market people are reluctant to scrap older ships because they are fully paid off and they can make a good return on the recovery at what point to either regulations economics, or maybe more importantly, just settings and charterers I assume you speak to the biggest ones really put their foot down and.
Force more removals of <unk>.
15, plus year old ships.
Well.
If you speak we need to speak there are two different markets. So in the compliant market the big Shockers over to doing this.
In the compliant tanker market, which we are on the part of.
We are under scrutiny every day.
<unk>.
We obviously.
Are doing all we count to protect ourselves from being exposed to.
Sanction breaking activity.
But you have a parallel market that is making a lot of money.
The reason why they make this money is.
Sanction crude discounted crude.
As long as that discount is that you have an incentive to trade kind of sanction crude.
So in my kind of simple analysis, that's where you need to or that how we can address this issue.
So in an event of say sanctions being lifted against Iran.
All of that volume will need to go and compliant vessels, because the normal customers of firearm and.
Mind, you historically, that's been type, India Northwest Europe , Korea, and so forth.
They simply cannot take that oil on the vessels.
Doesn't have its compliance and yogurt.
So so that would be a massive trigger to.
The demand for compliant tankers.
I think that would be the deaths flow for this shadow market to go that way.
Okay. Thanks.
Thanks for the thoughts.
Okay.
Thank you for your question next.
The next question is from Randy <unk> from Jefferies.
Please go ahead.
How the laws in anger how're you.
Good day Randy.
Excellent.
So looking at your fleet start there you agreed to sell before LR twos, all delivered to the new owners thoughts on further asset sales as the asset values continue to outperform spot rate.
Yeah No. This is.
This is obviously an ongoing discussion.
We have as Youre all aware, we haven't we've done some investments on the VLCC side over the last year.
We have to look at various avenues of.
Raising equity.
For that.
We have done.
This four <unk> sales because we thought it was a very good opportunity at the time.
We will continue to look at various opportunities.
I would say that this was.
Potentially.
A very kind of favorable both deal structure on time for us to do so.
So it shouldnt be regarded us as.
Yes.
Completely changed.
Change of how we think about the market, we would ideally like to keep as much earnings potential as we can but we do bill.
Believe that or have historically seen that we get the most bang for the Buck in the VLCC market, So but right now we don't have any immediate plans of further.
<unk> kind of selling two sources for that sake.
Got it okay.
And then quarter.
Quarter to date rates.
Suezmax and <unk> twos are above breakeven VLCC still below.
Any thoughts on catalyst to really move those higher and in the meantime, while we wait for the spot market to move are you looking to maybe sign some six month 12 month time charters to secure some cash flow.
Well.
I'll take your second question first so.
We are of the opinion that freight markets are mean reverting and the history shows us that they are.
And obviously, it's a top 10 its bottom.
The different durations and obviously then we are somewhere in between.
We don't see this as a.
The time, where you secure.
Cash flow by doing long time charters.
So we would rather do that if we are to do that it's going to be at a different point in the curve and we don't feel we're forced to do it because we have a solid financial position.
And we also have a fleet that actually.
It gives us some comfort in these really dire markets.
As to the different earnings on the different asset classes.
You will know this is.
Related to basically what trades are.
Working in the oil market.
The Suezmax flow show is that oil has to large extent been trading through this.
Short.
I'm not going to go too deep into the details, but one effect of the energy crisis in Europe on natural gas means that refinery margins have been under pressure.
In dealing with high sulfur crude so it means that the natural home for U S barrels has been Europe .
Predominant as suezmax rates.
Then.
The VLCC trade.
And also the VLCC.
The market is.
Two the fact that the majority of OPEC increases recently is coming in the Middle East and obviously middle East is closer to the key market being Asia.
Ton miles as.
Basically suffered for that.
Got it alright.
Alright, thanks for that robust answer that's it for me.
Thank you for your question.
Next question Eastern Mac misfire from Hs Wainright. Please go ahead.
Yes. Thank you good afternoon Larsen Inger.
I missed the.
Yet on.
On the dry dockings first.
I guess, you mentioned 16 ships due for dry docking in 2022 should we expect them to.
We dry docked evenly through the year or do you try to speed up the dry docking given your positive market outlook.
The plan in facts and are therefore in the first quarter five in the second and third quarter and then two in the fourth quarter that is the plan that we get all the time to adjust.
In line with the market.
And then the market anyway.
Okay, and I think you mentioned about $740 per day.
For dry docking is that is that around $20 million for those 16 vessels.
Yeah, it's a bit less than it's about just below $8 million, okay very good.
A question for Lars maybe.
I mean rates.
I think you guys are really strong rates during the quarter and some of that was due to recognizing I guess from a revenue standpoint, but.
Going forward and with rates.
Thanks for laying out the.
The premiums compared to non eco by going forward are you booking similar rates now that.
That you did in the first quarter I know the market has been weaker.
January February so just kind of get a feeling for that premium is still there.
For the Vlccs no.
Rigorously.
So so so I think that's a piece of that but on the Suezmax is yes.
<unk> is a bit more of a mixed bag I would say.
The Suezmax have actually showed some promise over the last week.
Yeah.
Okay, Good and do you see.
The.
Market being a little different this year, you've seen the seasonality playing out.
With the two Q3, Q typically the lowest quarter or do you expect to kind of maybe treasure.
Trajectory into the fourth quarter this year.
That's actually a really good question because as you know in our industry. We normally follow this seasonality.
It's very.
Seldom that we actually move out of it.
I think kind of us.
A lot of the challenge that we have in the tanker market.
Is actually a reflection of the reiterated types the supply situation in the oil market.
I think we could in theory gets a very.
Kind of quickly ended up in a very typical market basically due to the fact that say OPEC increase more than planned.
Something happens on the Iranian side.
Basically.
I mentioned earlier, we're still growing from inventory.
And I think if you look at more curve is quite.
All of this.
Why because crude today is.
As expensive.
Has it been towards compared to crude delivered say in may so the backwardation is super steep.
And should something happen to that curve.
We would actually start to see.
Inventory start to build again.
It's basically.
The rapid change in the oil curve would trigger a lot of activity and it's actually.
Most gerry looking at the political tension between for instance.
Ukraine and.
On Russia.
That's.
The rest of the world.
<unk> run on such low inventories when you are.
In the bag is potential.
Action against one of the biggest oil producers in the world.
Alright.
You mentioned that most of the barrels from the U S.
Onto Europe .
Given that opec's been supplying.
With crude if OPEC start struggling.
Increasing production further can you see a scenario where actually shale production start increasing more and that incremental barrel is going to the far east.
Absolutely.
I think I know, where you're calling from mandates.
Something which is almost like at.
At least we look at as a little bit ironic.
We have observed is that there is a correlation between U S. SBR releases and U S exports and those exports tend to end up in Asia. So basically.
Obviously, it's not the same molecules with what you do when you released from an SPR is that you make a crude available in the local markets in the us and them obviously allow players in the U S market to export more so so it's kind of an indirect.
<unk>.
Supply into strategic.
Kind of inventory in either Japan, or China, or even Korea. So so.
So that's basically what's been the backbone of the VLCC trade in Q4 to some extent into January was actually this increased exports from the U S. Gulf that was landing in Asia.
Great.
Thank you Lars and also thanks for a very informative presentation.
Thank you.
Thank you for your question. The next question is from Chris Chung from Webber Research. Please go ahead.
Hi, good afternoon logging or how are you.
Good. Thank you. Thank you.
Great great.
First question I wanted to ask you just to touch on your presentation from slide four shows that in your fleet. There is three non eco vessels in the chart on the right that you guys laid out shows.
Premium.
Non eco vessels with scrubbers.
I just wanted to ask is there a plan to install a university with vessels or perhaps would you look to sell them.
We will take the average TCE in Q4 for non eco ships with scrubbers still below cash breakeven levels.
Well this is an ongoing.
Carlos discussion and obviously, having non eco non scrubber is.
Signatures do we sell them or do we install scrubbers to move them basically up the chain.
So our compounds to that on this call but.
I'd say, it's a valid question and it's kind of being being discussed I think on the we'd like to call. It the scrubber spread right.
The kind of spread between high.
High sulfur fuel and low sulfur fuel has obviously widened emend.
Immensely.
In the last five to six months basically making it very economic to install the scrubber, but then again there are practical considerations to be made.
Taking a ship out of the market, which doesn't really matter too much in this market, but then.
You need to find the yard and you need to time, it and all that stuff, but I assure you. This is extremely high on our minds, particularly for those those vessels.
Great. Thanks.
And just one more follow up for me the six.
VLCC Newbuild you haven't updated timeline or is scheduled is trying to get a sense of the cadence for the delivery.
Yes.
First one will.
We will be delivered in Q2.
Okay.
Yeah.
Yes, the Q1, but its April early April .
Yes.
The rest will be obviously, not we're not pushing for the to have them as quickly as we can yet.
So there will be coming as prosoma string in the second half of the year.
Okay, great. Thanks for that and that's it for me.
Okay. Thank you guys.
Thank you. Thank you for your question we have the next question from Zack <unk> from BBVA.
Go ahead, yes, hi, Ben.
Alright. Thank you. Thank you and good afternoon. Thanks for taking my question.
Apologize if this was already asked.
Any trouble getting on.
Just given given frontline's exposure.
Ownership of scrubbers.
Clearly the spread between high sulfur low sulfur.
Is widening.
Are you hearing or seeing or at all concerned about availability of.
You either grades.
As oil demand has picked up or any kind of color you could give around that and how youre thinking about that through the rest of the year.
Well we.
We haven't kind of availability hasnt really been a big issue.
But it has from time to time in certain ports kind of.
Vince.
Such a situation that doesn't need to look further ahead.
This is more related to the players in the bunker market not wishing to hold inventory in a steep backwardation.
So basically they will.
Trying to limit what.
What they hold and when.
<unk> waits until basic.
Basic order is in place for a certain amount of bunkers. So this is creating some issues, but you are right in certain places high sulfur is actually difficult to come by so so.
But I think this is actually expected to ease as we move out of.
The winter in the northern hemisphere, because some of the tightness in this market has been caused by.
Straight run fuel go into the power generation pool.
Gas prices have been so high.
So I don't know if that answers your question, but.
So far we haven't we haven't seen.
Incidents, where it's impossible to get hold of fuel.
Okay, Great Hey, Thank you for taking my question have a great day.
Thank you. Thank you for your question, where the next question for Robert Silvera from <unk> Associates. Please go ahead.
Thank you for taking my question.
My question is at what level do you see rates having to.
Go to <unk>.
For you will.
Or initiate a dividend again.
Cash dividend.
Well.
Well, it's actually.
Michael.
Question to answer.
I think historically.
<unk>.
We don't like.
Like a fixed dividend policy rights that we have.
It's more at the board.
Question.
But history shows that whenever frontline has a meaningful positive net income.
We will distribute.
Dividends and then I think you basically need to look at our cash breakeven levels, which are all in cash breakeven.
Just to maybe give you some guide to two to what levels you should kind of look for.
And Thats 19300 on average over the fleet, but the minute the vlccs start to meet to make meaningful.
The kind of earnings above the 2220 $3000 today.
I would say 19000 for the Suezmax and 16 for the losses from access.
When we get into a position, where we can start to distribute money.
Do you.
Feel that it would be like a 10% above those levels.
Then you would might initiate.
With that again.
Would it be only 5% can you give us some color on that.
What level.
Yes, no I wish I could to be quite honest.
It's.
Sure.
I think I had asked this or answer this question a bit differently.
If you kind of.
Frontline will always try us.
Harvest, we can to pay out dividends and we've actually had incidents we pay out dividends in a quarter, where we have not really made money because we have visibility into the earnings in the following quarter.
So I wouldn't doubt the aggressiveness from clients in paying out dividends for our shareholders.
I don't really want to get into percentages discussion.
Okay.
Okay multiple days of 2003 and four.
Okay. Thanks.
Okay.
Thank you very much for a very insightful.
Answering your question on the presentation.
Thank you Ed.
Yes.
Thank you.
Thank you for your question.
No further question at the moment.
Okay.
I think we'll wrap it up.
Thank you very much for listening in.
<unk>.
Have a good evening on the good day to everyone.
Thank you.
The conference for today. Thank you for participating you may hold disconnect.
Okay.
Okay.
Sure.
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