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Frontline Ltd. Message Board

  • pjmyers_tsi pjmyers_tsi Mar 20, 2013 5:04 PM Flag

    Mr Shores or Mr RogerE - question on spot rates vs. contract rates

    Since the news, a week or so ago, that tanker spot rates, for the Atlantic routes to the Gulf of M, have bobbed up a little - it seems that NAT has spiked about 10% or so, whereas poor FRO has barely twitched in its coma.

    Since, AFAIK, Frontline is far more in position to take advantage of the spot market than Nordic, why do you think this might be? Or do I have my facts wrong?

    Much obliged for your time,
    P. J. Myers

    P.S. Perhaps Frontline does not much ply the Atlantic any more, but more the routes from the Middle East to Asia? Even so, I would think they would feel the benefit? I would expect to surprise up a little for the current quarter (only a little, I know).

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    • Hi Mr. Myers.

      My take is that the tanker sector stinks. For both NAT and FRO, I don't see much profit coming their way for a quite awhile.

      However, positioned within the sector, NAT appears to be superior.

      But, these two probably aren't really comparable, because of the age of the ships, read technology, and the profit share FRO does with SFL.

      I sense that a better comparison would be NAT to Frontline2012. Two companies in the sector, growing high tech low operating cost fleets of new tankers.

      The order book for 2013 is still quite large in my opinion. Bad for the owners of older tankers.

      Towards the end of 2013, we should have a pretty good feel for the order book for 2014, and peeking into 2015.

      If the order book keeps growing, I expect that will be a bad sign for FRO, but good for NAT and Frontline2012.

      Just my take.

      Best of luck,


    • PJ Nat is a for better LT bet than FRO based on balance sheet. It has been beaten down but still pays a dividend unlike FRO. FRO has been a stock in play since the last quarter was released and now is about a buck under the pre quarter release figure. To me FRO is at best a short term gamble play and I think it has been "milked" once already and we could be seeing a second push to "milk" again.

      Bill is 100% correct in what he posted about NAT and rates. Nat is almost debt free and has a little cash flow and could cut dividends to stretch out the cash until the sector turns around. It is less a gamble but like all it depends on a sector turn around to make it close to where it once was. FRO will never be close to the old stock price even if the sector would turn around as they have gotten rid of a lot of their fleet.
      VLLCF tracks closer to NAT however than FRO and they like FRO are mostely VLLCF type ships with some dry carriers. Good luck to you and if you are RED in FRO buy some more if its gets back close to 2 bucks and "milk" with the big boys to recover some investment. Best to you

    • nat is suezmax only which has rates close to breakeven and above. frontline is mix of suezmax and mostly vlcc. vlcc rates are still in sewer. also any upside is capped by the cash sweep with ship finance.whereas they have to share profits with them above certain amount.

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