You may have forgotten to say for most of quarters in 2013 and 2014 that is not the 1st and 2nd quarter of 2014, the stock has trade between $1.50-2.50 for the most part.
You wrote: "The fact is that the market has strengthened far beyond anyone's wildest dreams as seen a yr ago. Yet, at that time traders exchanged shared consistently,about $3.50 in Q1 and Q2 2014."
But you know the quarters BEFORE that 1st and 2nd quarter of 2014 and after were trading at $2.50 and below. I do not know what caused the run-up in 1st and 2nd quarter 2014.
Thanks....lots of moving parts in that, but that implies about $40M per vessel. At $50,000/day, a vessel generates almost $20M in annual revenue, or $15M after accounting for a for a $10,000/day operating cost. It would take but a strong 2015 and 2016 to really right the FRO ship, it seems.
The fact is that the market has strengthened far beyond anyone's wildest dreams as seen a yr ago. Yet, at that time traders exchanged shared consistently,about $3.50 in Q1 and Q2 2014.
Share are now $2.40....a good 40% less. One could claim that the share dilution of,almost 40% since, assuming FRO,sells the additional 24M share allotment....explains that. But those share will have raised almost $150M in cash, allow,them to,retire the upcoming bond,,and have greatly improved the balance sheet. And, 2015 looks set to be the best earnings yr for this sector,since 2008. Low orderbook thru 2016, and solid demand for,transport, low,operating costs----all these make the tanker outlook solid.
The shares will almost certainly return to $4 in the 1H'2015, and then there is the merger with FRNT2012....
As of Sept 30, 2014 and giving effect to the subsequent vessel events in 4Q14, FRO lease obligations to SFL are $623 million - a significant reduction during 2014. $100 million from termination of 3 90's VLCCs. I believe FRO also earns $6,500 per day managing but will find that exact line disclosure...
you can get paid doing this ? You mean people think these boards actually mean something :) Nah. Not buying it. This is purely entertainment .......
He's a paid professional basher...for the short players...this is his life. or he is a professional short seller...Hey Johnny Lee how may shares short are you? and don't lie.
someone on the board wondered why anyone would think the stock price would "break over $5....
Look at the charts in this articlehttps://www.bimco.org/Reports/Market_Analysis/2013/0819_TankerSMOO2013-4.aspx
Ok I am off on one prediction and you go all crazy on me ? Dude ... relax. Surely I am right about being up sharply tomorrow in Norway ? ... can't be wrong twice in a row now can I ?
btw ,,, you got a life ?
Recall that FRO and FRNT have the same CEO, and so to say that these entities are coordinating their strategy and looking to somehow combine to form the premier tanker company is to state the obvious.
From their Q32014 presentation
Strategy and Outlook
The Board has currently full attention on developing the Company's crude and
product portfolio, consisting of a sailing fleet of 17 vessels comprising six
VLCCs, four Suezmax tankers, six MR tankers and one LR2 tanker and a newbuilding
program of 21 newbuilding contracts and options comprising 13 LR2 newbuildings
and four Suezmax tanker newbuildings plus four options. The Board is considering
various structures to build the Company into a leading tanker company. The Board
believes there will be several interesting growth opportunities going forward.
On this basis the Board has decided to invest in its crude fleet rather than to
pay a cash dividend in the third quarter.
Frontline 2012 has secured financing for 10 of its 14 LR2 tankers with a
competitive margin and a 20 year repayment profile through upsizing its existing
loan facility for the 6 MR tankers. At the same time the margin in the existing
loan facility for the 6 MR tankers will be adjusted in line with the LR2
tankers. Together with low operating cost and G&A, this financing should secure
attractive cash cost break even rates for the Company going forward.
The Board is encouraged by the positive development in the crude and product
tanker market in the fourth quarter. This is likely to give an improved
operating result (excluding one time gains and losses) in the fourth quarter.
The merger is almost certain, and the timing couldn't be much better....but FRO needs a stronger balance sheet and equity base.....hence the need to issue the shares.
FRNT2012 owns 7 VLCC I believe,and then a number of product tankers.....that latter component complicates matters, especially if JF is aiming for pure play oil tankers, such as his pure play drybulk via combining Golden Ocean and Knightbridge.
Looking back at the 2004 agreement when FRO sold a fleet of 47 vessels to SFL, and then lease them back effectively for life of the vessels....
Fixed bareboat (meaning all costs of operation are paid by FRO) ~$24,000/day for VLCC and about ~$19,000/day for Suezmax. Plus, there was a profit sharing of 20% to SFL for rates above the base.
So, my prior estimate of the q1 2015 EBITDA for FRO would be closer to $50M. Fact is these arrangements could have been amended and the exact current terms different, especially since the vessels have aged.
Of,course, FRO has been unable to make a profit on those bare boat deals for yrs, as it has been barely able to cover the daily operating costs, never mind the lease costs. That has led to a lease debt, which while not pressing like the bond debt, is nonetheless substantial and their total debt as a result has been about $1B as of last quarter.
Delivered their third big win of the week today, they are crazy good right now.
There is a significant amount of IFs and "IS POSSIBLE" and "Not sure what the bareboat lease rate is," etc. so everything is a total guess. We have no clue what VLCC is leased from FRO so fare and at what rate and what is the length. What we do know is this stock is down a whopping -19% when the NASDAQ is up +1%..
A very likely outcome. Also, if you remember. SFL shares were given to FRO sharehoders as dividend. I am inclined to think that a similar scenario will play out with Frontline2012. Don't you think?
Some posts seem to view FRO as owning 25 VLCC, and expect a huge boast in Q1 earnings based on such a base.
Yet, half of their VLCC are leased from SFL, on long term bareboat charters for which FRO pays SFL a fixed lease rate. In fact, one of the financing challenges for FRO is that they have accumulated lease obligations, since these vessels have been loosing money to operate by FRO and cover the lease payment to SFL. Of course, that situation has now much improved. Not sure what the bareboat lease rate is....I'm guessing about $10-15,000/day. The good news for FRO is that bunker prices have fallen to almost cause a savings, relative to Q3 costs, of $10,000/ day.
DHT indicated today that their q1 2015 TC E rates all in spot) for their sVLCC are $63,000day. If FRO were able to secure $50,000 TCE, and given FRO break even level of about $25,000/day, they could show EBITDA
Of $50M Add perhaps another $20M EBITDA from their Suezmax (5 of 15 on leaseback from SFL), then $70M in EBITDA is possible. That would be $0.50/SH EBITDA. Of course, DA would bring the net earnings down yo perhaps half that, and taxes would further shave net income. But cash flow would be appear to be sufficiently large so that company's hand isn't forced to is due more shares in ATM.
Now, since August 2011, there have been endless dilutions. What makes you think if it did not pass $5 for 4 years that it will now when the outstanding shares have doubled?