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).
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.