Frontline Plc (FRO) 2020 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to today's Quarter 2 2020 Frontline Limited Earnings Conference Call.

女士們先生們，謝謝你們的支持。歡迎參加今天的 2020 年第二季 Frontline Limited 收益電話會議。

I now hand you over to your first speaker, Robert Macleod. Please go ahead. Thank you.

現在我將請第一位發言人羅伯特·麥克勞德發言。請繼續。謝謝。

Thank you very much. Good morning and good afternoon, everyone. Thank you very much for dialing into our second quarter earnings call. First, I would like to express the gratitude towards our shore staff and crew members for their extraordinary efforts and dedication, which clearly are defining factors to our strong results.

非常感謝。大家早安，下午好。非常感謝您撥打我們的第二季財報電話會議。首先，我要對我們的岸上工作人員和船員表示感謝，感謝他們的非凡努力和奉獻精神，這顯然是我們取得優異成績的決定性因素。

Our markets are very volatile. But the volatility seen in the last 12 months have been extreme and serves as a reminder of how little it takes for the tanker market to rally. Frontline's performance in the first half of 2020 was the strongest since 2008, and we have also made solid bookings for the third quarter. Despite the recent fall in rates, 2020 will be a very good year for Frontline.

我們的市場非常不穩定。但過去 12 個月的波動非常劇烈，這提醒人們，油輪市場的反彈是多麼容易。Frontline 2020 年上半年的表現是自 2008 年以來最強勁的，我們第三季的預訂也很充足。儘管最近費率有所下降，但 2020 年對於 Frontline 來說將是非常好的一年。

Let's start with Slide 3, and have a quick look at the highlights from the second quarter. Net income of $200 million, just over $1 per share, certainly a solid quarter. Adjusted for noncash items, the net income was $206 million. We declared a $0.50 dividend, the last dividend was $0.70 for Q1 2020. We opted to repay $60 million on our Hemen facility in the quarter, which is the main reason for the reduced dividend.

讓我們從幻燈片 3 開始，快速瀏覽第二季的亮點。淨利潤為 2 億美元，每股略高於 1 美元，無疑是一個穩健的季度。調整非現金項目後，淨利為 2.06 億美元。我們宣布派發 0.50 美元的股息，2020 年第一季的最後一次股息為 0.70 美元。我們選擇在本季償還赫門工廠的 6,000 萬美元，這是股息減少的主要原因。

Inger has done some great work in financing, she will take us through that later on the call.

英格在融資方面做了一些出色的工作，她將在稍後的電話會議上向我們介紹這一點。

Two build newbuildings were delivered in the quarter, 1 Suezmax and 1 VLCC, leaving us with only 4 ice class LR2s on order and they deliver next year.

本季交付了兩艘新造船，1 艘蘇伊士型油輪和 1 艘 VLCC，我們只剩下 4 艘冰級 LR2 訂單，它們將於明年交付。

VLCCs made $75,800 in Q2, and we have booked 76% of Q3 at around $61,000. Suezmax has made $51,100 in Q2, and we've booked 77% of Q3 at $29,500. LR2s made the just shy of $37,000, and we have booked 2/3 of Q3 at $14,500. These Q3 rates do not include the long-term time charters.

VLCC 在第二季的營收為 75,800 美元，我們已經以 61,000 美元左右的價格預訂了第三季的 76%。蘇伊士型油輪在第二季的獲利為 51,100 美元，我們以 29,500 美元的價格預訂了第三季 77% 的訂單。LR2 的售價略低於 37,000 美元，我們已經以 14,500 美元的價格預訂了第三季的 2/3。這些第三季費率不包括長期定期租船。

And then before moving on to the market, I will hand the call over to Inger to take us through the financials.

然後，在進入市場之前，我會將電話轉交給英格，讓他向我們介紹財務狀況。

Thanks, Robert, and good morning, and good afternoon, ladies and gentlemen.

謝謝羅伯特，早安，下午好，女士們先生們。

Let's turn to Slide 4 and look at the income statement of the highlights. Frontline achieved total operating revenues, net of voyage expenses of $301 million and adjusted EBITDA of $259 million in the second quarter of 2020. And we reported net income of $200 million approximately and $1.01 per share, and adjusted net income is $206 million or $1.04 per share in the quarter.

讓我們翻到投影片 4，看看重點的損益表。2020 年第二季度，Frontline 扣除航次費用後的總營業收入為 3.01 億美元，調整後 EBITDA 為 2.59 億美元。我們報告的淨利潤約為 2 億美元，每股收益 1.01 美元，調整後淨利潤為 2.06 億美元，每股收益 1.04 美元。

The adjustment this quarter was in total $6.4 million net. And they consisted of a $5.9 million loss on derivatives, a $0.9 million unrealized gain on marketable securities, a $2.7 million share of losses on associated companies and a $1.3 million amortization of acquired time charters.

本季的調整淨額總計 640 萬美元。其中包括 590 萬美元的衍生性商品損失、90 萬美元的有價證券未實現收益、270 萬美元的聯營公司損失份額以及 130 萬美元的期租攤銷。

The adjusted net income increased by $27 million this quarter, and it was mainly driven by an increase in our time charter equivalent earnings due to the higher reported TCE rates for our VLCC and LR2 tankers in the second quarter, along with a gain of $12.4 million as a result of the sale of 1 VLCC previously recorded an investment in finance lease.

本季度調整後淨利潤增加了 2700 萬美元，主要是由於第二季度我們的 VLCC 和 LR2 油輪報告的 TCE 費率較高，導致我們的定期租船等值收益增加，以及 1240 萬美元的收益由於出售1 艘VLCC 之前記錄了融資租賃投資。

Let us then take a look at the balance sheet highlights. The main happenings in the second quarter, which affects the balance sheet where that we took delivery of the Suezmax tanker Front Cruiser, and also, we took delivery of Front Dynamic, and we drew down debts on these vessels. We -- as Robert mentioned, we repaid our senior unsecured facility with $60 million. We entered into 2 new loan facilities to be financed to loan facilities with total balloon payments of $349 million, which were due in December 2020 and in March 2021, on terms in line with Frontline's other loan facilities. We then also paid $138 million in dividends and we earned adjusted net income -- sorry, net income around $199.7 million.

接下來讓我們來看看資產負債表的亮點。第二季發生的主要事件影響了資產負債表，我們接收了蘇伊士型油輪 Front Cruiser，此外，我們還接收了 Front Dynamic，並減少了這些船隻的債務。正如羅伯特所提到的，我們償還了 6000 萬美元的優先無擔保貸款。我們簽訂了 2 項新貸款融資，總金額為 3.49 億美元，到期日為 2020 年 12 月和 2021 年 3 月，條款與 Frontline 的其他貸款融資一致。然後我們還支付了 1.38 億美元的股息，並獲得了調整後的淨利潤——抱歉，淨利潤約為 1.997 億美元。

At the end of the quarter, Frontline has $462 million in cash and cash equivalents, including undrawn amounts under our senior unsecured loan facility, multiple securities and minimum cash requirements. The current portion of long-term debt includes $240 million debt maturity of the $466.5 million facility due in April 2021, and $80.3 million debt maturity of the $109.2 million facility in June 2021, which we both expect to refinance.

截至本季末，Frontline 擁有 4.62 億美元的現金和現金等價物，包括我們的優先無擔保貸款安排、多種證券和最低現金要求下的未提取金額。目前部分長期債務包括2021 年4 月到期的4.665 億美元融資中的2.4 億美元債務，以及2021 年6 月到期的1.092 億美元融資中的8030 萬美元債務，我們都預計將對其進行再融資。

Our remaining newbuilding CapEx requirements at the end of the quarter was $161.1 million related to the 4 LR2 tankers, where 2 of them are expected to be delivered in January 2021 and in February 2021, and 2 are expected to be delivered in August 2021. In this connection, Frontline has obtained a financing commitment for a loan facility in an amount of up to $133.7 million from CEXIM and Sinosure to partially finance these 4 LR2 tankers. This facility will have a tenor of 12 years, it will carry an interest rate of LIBOR plus the margin in line with Frontline's other loan facilities. And it will have an amortization profile of 17 years. And the facility is subject to final documentation.

截至本季末，我們與4 艘LR2 油輪相關的剩餘新建資本支出需求為1.611 億美元，其中2 艘預計將於2021 年1 月和2021 年2 月交付，2 艘預計將於2021 年8 月交付。為此，Frontline 已從中國進出口銀行和中國信保獲得了金額高達 1.337 億美元的貸款融資承諾，為這 4 艘 LR2 油輪提供部分資金。該貸款期限為 12 年，利率為倫敦銀行同業拆借利率 (LIBOR) 加上與 Frontline 的其他貸款融資一致的保證金。其攤銷期限為 17 年。該設施以最終文件為準。

Let's then take a closer look at the next slide on cash breakeven base and OpEx, Slide 6. We estimate average cash cost breakeven base for the remainder of 2020 of $22,600 per day for VLCC, $18,900 per day for the Suezmax tankers, and $15,700 per day for the LR2 tankers. And the fleet average estimate is about $19,100 per day. These are the rates. They are all-in daily rates that our vessels must earn to cover the budgeted operating cost on dry docks, estimated interest expense, TCEs and bareboat hire, installments on loans and G&A expenses.

然後，讓我們仔細看看下一張關於現金損益平衡基礎和營運支出的幻燈片，幻燈片6。美元，每艘油輪15,700 美元。機隊平均估計約為每天 19,100 美元。這些是費率。它們是我們的船舶必須賺取的全部每日費率，以支付乾船塢的預算運營成本、預計利息費用、TCE 和光船租金、貸款分期付款以及一般行政費用。

In the graph on the right-hand side of the slide, we have shown, as usual, the incremental cash flow after debt service per year and per share assuming $10,000, $20,000, $30,000 or $40,000 per day achieved in excess of our cash breakeven rate, respectively. And the numbers, they included vessels on time charter-out, and we are looking at the period of 365 days from July 1, 2020.

在幻燈片右側的圖表中，我們像往常一樣顯示了每年和每股償債後的增量現金流，假設每天達到 10,000 美元、20,000 美元、30,000 美元或 40,000 美元，超過我們的現金損益平衡率， 分別。這些數字包括定期租船的船舶，我們正在研究自 2020 年 7 月 1 日起的 365 天。

As an example, with a fleet average cash cost breakeven rate of $19,100 per day and assuming that we have $30,000 on top of the average fleet TCE rate would be then $49,100. And Frontline will then generate the cash flow per share after debt service of $3.49.

舉例來說，車隊平均現金成本損益平衡率為每天 19,100 美元，假設我們在平均車隊 TCE 率之上還有 30,000 美元，則為 49,100 美元。Frontline 在償債後將產生每股 3.49 美元的現金流。

With this, I'll leave the word to Robert again.

說到這裡，我將再次向羅伯特轉告。

Thank you very much, Inger. Let's have a look at the Q2 tanker market on Slide 7. So the first 6 months of 2020 brought a dramatic crude oil demand correction, the likes of which we've never seen. The demand shot brought on by COVID-19 was so large and sudden that global commercial inventories quickly surged to record levels, effectively utilizing all available land-based capacity. At the same time, the crude oil market went into contango, encouraging traders to store oil on tankers and driving demand for short-term charters of our ships. This in turn resulted in exceptionally strong tanker rates, which are reflected in our results for the second quarter of 2020.

非常感謝你，英格。讓我們來看看幻燈片 7 上的第二季油輪市場。COVID-19 帶來的需求如此巨大和突然，以至於全球商業庫存迅速飆升至創紀錄水平，有效利用了所有可用的陸上產能。同時，原油市場出現升水，鼓勵貿易商在油輪上儲存石油，並推動了對我們船舶短期租賃的需求。這反過來導致油輪運價異常強勁，這反映在我們 2020 年第二季的業績中。

The freight market has since declined to lower levels. And although the signs of recovery are evident as economies continue to reopen, the recovery in demand is unlikely to be linear and the extent and duration of the impact of COVID-19 is difficult to predict. COVID-19 related challenges have been extensive through the industry. These include logistics around crew changes, delayed discharge and diminished capacity at shipyards for dry docks and surveys. These are all factors that positively impact effective fleet supply. There is significant month-to-month volatility in the demand forecast, as shown on the chart at the bottom of the slide.

此後貨運市場已降至較低水準。儘管隨著經濟繼續重新開放，復甦的跡像很明顯，但需求的復甦不太可能是線性的，而且 COVID-19 影響的程度和持續時間很難預測。整個產業都面臨著與 COVID-19 相關的挑戰。其中包括船員換班、延遲卸貨以及造船廠幹船塢和檢驗能力下降等後勤問題。這些都是對有效車隊供應產生正面影響的因素。如投影片底部的圖表所示，需求預測存在顯著的月度波動。

Let's move to Slide 8, please, and have a look at the global fleet capacity growth, which is slowing. The vessel supply side of the equation continues to improve, which is very positive. The order book as a percent of the total fleet is at the lowest level since 1997. At the same time, the average age of the VLCC fleet as of the end of the second quarter of 2020, is at the highest level since September 2002. By the end of next year, there will be 65 vessels older than 20 years and an additional 85 older than 17.5. The effect of strong fleet supply growth will be pushed out to 2021 or 2022, but it should be material and lead to a sustained period of higher rates.

請前往投影片 8，看看全球機隊運力成長正在放緩。船舶供應方面的情況持續改善，這是非常積極的。訂單量佔船隊總數的百分比處於 1997 年以來的最低水準。同時，截至2020年第二季末，VLCC船隊的平均船齡處於2002年9月以來的最高水準。到明年年底，將有65艘船齡超過20年，另有85艘船齡超過17.5年。強勁的機隊供應成長的影響將推遲到 2021 年或 2022 年，但其影響應該是重大的，並將導致費率持續上升。

We do like the current situation where new vessels enter the market at a controlled pace, the order book continues to shrink and retirement of vessels is inevitable.

我們確實喜歡目前的情況，即新船進入市場的速度受到控制，訂單量持續萎縮，船舶退役是不可避免的。

Present markets and a bit of outlook. The demand shock is likely behind us, but volatility can be expected. The present freight market remains under pressure. Crude production is down almost 10% since January, and the lost volume reduces the volume that is normally shipped. Meaning that the cargo counts are down by as much as 20% to 25%. On the positive side, inventories are being drawn, a short-term pain, but possibly long-term gain. Forecasts suggest that a significant portion of the OPEC cut could return in the coming months and combined with the Northern Hemisphere moving toward winter, this gives grounds to believe in a stronger freight market.

當前市場和一些前景。需求衝擊可能已經過去，但波動是可以預期的。目前貨運市場仍面臨壓力。自 1 月以來，原油產量下降了近 10%，產量減少導致正常出貨量減少。這意味著貨物數量減少了 20% 至 25%。從積極的一面來看，庫存正在減少，這是短期的痛苦，但可能是長期的收益。預測表明，歐佩克減產的很大一部分可能會在未來幾個月內恢復，再加上北半球即將進入冬季，這讓我們有理由相信貨運市場將會走強。

So in conclusion, the large moves in tanker rates during the last 12 months illustrates the tight balance in the market and the fact that it does not take much for the tanker market to rally. Looking ahead to 2021 and beyond, recovering demand for crude oil transportation will coincide with rapidly declining fleet growth, which supports our long-term highly constructive market outlook.

總之，過去 12 個月油輪運價的大幅波動說明了市場的緊平衡以及油輪市場不需要太多時間就能反彈的事實。展望2021年及以後，原油運輸需求的復甦將與船隊成長的快速下降同時發生，這支持了我們長期高度建設性的市場前景。

So as a Frontline, we enjoy the younger street and lowest breakeven levels in the history of our company. Frontline's earnings potentially substantial, $23 million annualized for every $1,000 above $18.7 million. So we are very well positioned.

因此，作為第一線人員，我們享有公司歷史上最年輕的街道和最低的損益平衡水平。Frontline 的收入可能相當可觀，每 1,000 美元的年化收入超過 1,870 萬美元，收入將達到 2,300 萬美元。所以我們處於非常有利的位置。

With that, let's turn over to questions, please.

現在，讓我們開始提問。

(Operator Instructions) And now for your first question, it's coming from the line of Randy Giveans from Jefferies.

（操作員說明）現在回答您的第一個問題，它來自 Jefferies 的 Randy Giveans。

Well, yes, I guess, first question is around the dividend, right? So in the fourth quarter of '19, the first quarter of '20, you paid dividends above, I guess, 70% of net income. Now for the second quarter, you reduced this to 50%. I think you mentioned part of it is because of the $60 million paid down back in April on that Hemen facility. So I guess, is that the entire reason for it? Or are you kind of bridging to a weaker dividend next quarter? And then should we expect at least 50% of net income going forward?

嗯，是的，我想，第一個問題是關於股息，對嗎？因此，在 19 年第四季、20 年第一季度，您支付的股利超過了淨利的 70%。現在，在第二季度，您將其減少到 50%。我想你提到的部分原因是四月為赫門工廠支付了 6000 萬美元的款項。所以我想，這就是全部原因嗎？或者您正在應對下個季度股息疲軟的情況？那麼我們是否應該預期未來至少有 50% 的淨利？

No this is the entire reason for it. So if you add that on top, I guess you will get to $0.80 dividend, which I guess is probably what you assumed.

不，這就是全部原因。因此，如果您將其添加到頂部，我猜您將獲得 0.80 美元的股息，我想這可能是您的假設。

If you include the Hemen $60 million, that was you're referring to?

如果算上 Hemen 的 6000 萬美元，你指的是什麼？

Yes. So that's the entire reason for that, the dividend is 50%.

是的。這就是全部原因，股息為 50%。

Okay. And then going forward, is the 50% of net income fair assumption?

好的。那麼接下來，淨利潤的 50% 的假設是否公平？

Going forward, it's standard normal that we have in a way. It's not changed at all in a way. We just -- this quarter opted to repay the facility with $30 million -- which is $60 million, I mean, which is $0.30 per share. That's for possibly this quarter.

展望未來，這在某種程度上是我們的標準常態。在某種程度上它根本沒有改變。我們只是——本季選擇償還 3000 萬美元——我的意思是 6000 萬美元，每股 0.30 美元。這可能是本季的情況。

Okay. And about the Hemen facility, I believe that was done back in April, right? Do you expect to repay the remainder of that here in the third quarter?

好的。至於赫門工廠，我相信那是在四月完成的，對吧？您預計在第三季償還剩餘款項嗎？

No, we don't know yet. We haven't really decided what to do with the remaining part of it in a way. It might be that we can extend the facility, it might be that we'll repay it, we'll have to see.

不，我們還不知道。我們還沒有真正決定如何處理剩下的部分。也許我們可以延長設施，也許我們會償還，我們必須看看。

Okay. And then I guess last question around your scrubbers. What's the status of those scrubber installations? I know you postponed a few, I think it was 4. Any expectations on when those will be installed or kind of your plans going forward on remaining scrubbers?

好的。然後我猜最後一個問題是關於你的洗滌器的。這些洗滌器安裝的狀況如何？我知道你們推遲了一些，我想是 4 個。

So Randy, we've done that. We've got a couple of being installed as we speak. But the 4 that we postponed, we've not done anything further with. So what we'll do is that when these ships that was supposed to have the scrubbers installed, when they dry dock over the next coming quarters, then we will prepare these ships. So all the underwater work will be done, which is a small cost. And then the actual scrubbers can be fitted or retrofitted. And they are now stored at our production facilities in Indonesia. So we'll see here. The spread is improving a little bit, but we have the optionality. And for the time being, they will remain in storage.

蘭迪，我們已經做到了。就在我們說話的時候，我們已經安裝了幾個。但我們推遲的 4 場比賽，我們沒有採取任何進一步的行動。所以我們要做的是，當這些應該安裝洗滌器的船隻在接下來的幾季進入乾船塢時，我們將為這些船舶做好準備。這樣所有的水下工作就完成了，這是一個很小的成本。然後可以安裝或改裝實際的洗滌器。它們現在儲存在我們位於印尼的生產設施中。所以我們會在這裡看到。利差正在改善一點，但我們還有選擇權。目前，它們將保留在倉庫中。

Your next question comes from the line of Jon Chappell from Evercore.

您的下一個問題來自 Evercore 的 Jon Chappell。

A couple of quick clarification questions first. I think we're always here where the quarter-to-date bookings look very elevated, basically because of the load to discharge accounting. I know you guys really try to flush out the differences here. So maybe a way to ask it is, as you look at the rest of the quarter, the other 24%, let's say, for the VLCCs, is there any extreme or out of the ordinary uncontracted or contracted vessels where, let's call it, that stub part of the rest of the quarter would be higher or lower than the market averages?

首先快速澄清幾個問題。我認為我們總是在這裡，季度至今的預訂量看起來非常高，主要是因為排放會計的負擔。我知道你們真的想消除這裡的分歧。因此，也許可以這樣問，當你看看本季度的剩餘時間時，另外 24%，比如說，對於 VLCC，是否存在任何極端或不尋常的未簽約或簽約船舶，我們稱之為，本季度剩餘時間的存根部分會高於還是低於市場平均？

So it all depends, obviously, whether we fix the loading dates at the end of September or early October, that's what's going to determine. So it's -- but there's nothing -- to answer the second part of your question, there's nothing specific, there's nothing special. But what I would say about the earnings, it's important here to look at earnings over several quarters. So if I was just want to just say, if you ask me, how is Frontline down on VLCCs so far this year, then might take is that we had a very good Q1. We outperformed our peers. We're giving some of that back in Q2, as you see from the numbers. And my guess is that we're on a pretty good rate level and on a good percentage here for Q3. So I would say, outperform in Q1, we know, slightly below in Q2. And then I think we're looking quite good for Q3.

因此，顯然，這一切都取決於我們是否將加載日期固定在 9 月底或 10 月初，這就是我們要確定的。所以，但沒有什麼可以回答你問題的第二部分，沒有什麼具體的，沒有什麼特別的。但我想說的是，關於收益，重要的是要關注幾個季度的收益。因此，如果我只是想說，如果你問我，今年到目前為止，Frontline 在 VLCC 上的表現如何，那麼可能會說我們第一季表現得非常好。我們的表現優於同業。正如您從數字中看到的那樣，我們將在第二季度回饋其中的一部分。我的猜測是，第三季我們處於相當不錯的利率水準和良好的百分比。所以我想說，我們知道，第一季的表現優於大盤，第二季的表現略低於大盤。然後我認為我們第三季的情況看起來相當不錯。

Okay. And then just another clarification, Robert. I think you said that the long-term contracts are not included in the quarter-to-date rates. In the press release, it says the short-term charters are included in the forecast. So what is between the long-term and the short term? I guess you have 2 that are 9.5 months and 1 that's 12 months and then you have 4 that are just below 6 months. So just to be clear, the ones that are just below 6 months that is included in the quarter-to-date and then the longer ones or not?

好的。然後是另一個澄清，羅伯特。我想您說過長期合約不包含在季度至今的費率中。在新聞稿中，它表示短期包機已包含在預測中。那麼長期和短期之間是什麼呢？我猜你有 2 個是 9.5 個月，1 個是 12 個月，然後你有 4 個不到 6 個月。需要明確的是，季度至今包含的時間短於 6 個月的數據以及更長的數據是否包含在內？

Yes, correct. So basically, our -- the 6-month charters, which are basically 6 months plus minus 1. So it's a minimum period of 5 months. So those deals that we consider spot in the numbers. And anything above, which then starts in the 8-month deals, and it's -- we have a couple of 1-year deals, and we've got the 5 Suezmax on the 3-year deals. So anything above the 6 months, that is then considered longer-term and are not included.

是，對的。所以基本上，我們的 6 個月包機，基本上就是 6 個月加負 1。因此，我們認為這些交易在數字中很明顯。上面的一切，然後從 8 個月的交易開始，我們有幾個 1 年期的交易，我們有 5 艘 Suezmax 的 3 年期交易。因此，任何超過 6 個月的時間都被視為長期的，不包括在內。

Got it. And then also, I noticed in the disclosures that you have 7 ships chartered to affiliates of Hemen. I'm assuming those are 7 that you did in the second quarter. Just curious, is there any options associated with those? Or are those kind of strict on the timing?

知道了。另外，我在披露的資訊中註意到，你們有 7 艘船租給了 Hemen 的附屬公司。我假設你在第二季做了 7 次。只是好奇，有與這些相關的選項嗎？還是對時間有嚴格要求？

There are no options attached.

沒有附加任何選項。

Okay. Final question, Robert, is I think you've laid out a very balanced second half of the year outlook for the market. And clearly, given the start to third quarter, you will be cash flow positive and Inger has kind of laid out the dividend strategy. When you think about the cash going forward, do you think this period of, let's call it, choppiness or uncertainty provides you with an opportunity to add tonnage? Or do you think that you spend this next 6 months continuing to delever the balance sheet to position yourself for the favorable 2021, '22 outlook that you spoke of?

好的。羅伯特，最後一個問題是，我認為您已經為下半年的市場前景制定了非常平衡的前景。顯然，考慮到第三季的開始，你的現金流將是正數，英格已經制定了股息策略。當您考慮未來的現金時，您認為這段時期（我們稱之為波動性或不確定性）是否為您提供了增加噸位的機會？或者您認為您會在接下來的 6 個月內繼續去槓桿化資產負債表，以便為您所說的 2021 年、22 年有利的前景做好準備？

We're pretty happy with the size. We're very happy with the age. As I said in the intro, the company is in a very good shape. But -- so I don't think we need to do anything. It's -- if opportunity come up, for example, something like the Trafigura deal we did, which we quite liked, then maybe. But base case is to enjoy what we have and then harvest from that through having, hopefully, what is the best operation.

我們對這個尺寸非常滿意。我們對這個年齡感到非常滿意。正如我在簡介中所說，該公司的狀況非常好。但是——所以我認為我們不需要做任何事。例如，如果機會出現，例如我們所做的托克交易（我們非常喜歡），那麼也許會發生。但基本情況是享受我們所擁有的，然後透過擁有最好的操作從中收穫。

Our next question comes from the line of Chris Tsung from Webber Research.

我們的下一個問題來自韋伯研究中心的 Chris Tsung。

I kind of wanted to just touch on the cash breakeven levels again. On Slide 6, I know Jon asked this earlier, too, but I guess I'm asking it from a slightly different angle. So on Slide 6, the cash breakeven levels of like $19,000 on a fleet average. In the press release it says that the charter coverage are not included in the breakeven level. So I was wondering, would that mean the breakeven levels excluding the time charters, would show a slightly higher breakeven for the fleet?

我有點想再談談現金收支平衡水準。在幻燈片 6 上，我知道喬恩早些時候也問過這個問題，但我想我是從稍微不同的角度問的。因此，在投影片 6 中，機隊平均現金損益平衡水準約為 19,000 美元。在新聞稿中，它表示包機覆蓋範圍不包括在盈虧平衡水平中。所以我想知道，這是否意味著不包括期租的盈虧平衡水平會顯示船隊的盈虧平衡略高？

No. I mean, the cash breakeven rates that we disclosed are the total cost that our fleet has divided by the different number of days for each segment and then shown on a gross basis. If you have contract coverage, above the breakeven rate, that would obviously take down the cash breakeven rate for the spot vessels. So it will not increase then.

不。我的意思是，我們揭露的現金損益平衡率是我們機隊的總成本除以每個部分的不同天數，然後以總成本顯示。如果您的合約覆蓋率高於損益兩平率，那麼顯然會降低現貨船舶的現金損益平衡率。所以到時候就不會增加了。

Right, right, right. So like if the charter -- if the contract coverage takes it down if we were to exclude it, would that bring it up and you're saying the answer is no?

對，對，對。因此，就像如果章程 - 如果合約範圍將其刪除，如果我們將其排除在外，那麼是否會提出它並且您會說答案是否定的？

Is that? I said even don't know. No, no.

就是它？我說連也不知道。不，不。

Okay. All right. I just wanted to clarify. And I kind of wanted to just ask about your investment in Clean Marine. I guess when the investment was made back in October of '19, I guess, it seemed like it would be a smart hedge for IMO 2020 in scrubbers in general. And fast-forward 10, 11 months now, COVID, OPEC and market vol, what are your plans for this investment going forward?

好的。好的。我只是想澄清一下。我想問一下你們對清潔海洋的投資。我想，當這項投資在 19 年 10 月進行時，我想，這似乎是 IMO 2020 年洗滌器領域的明智對沖。現在快轉 10、11 個月，新冠疫情、歐佩克和市場波動，您對這項投資的未來計畫是什麼？

We will see how this develops. We're now -- we own about 17% and the company has a production facility, which is owned in Indonesia, it's got its stocks and so forth. And we have -- we -- our investment is now -- we only have a very small loan to the company. So we don't really have any risks there. We don't see the need to put any money into the company. And I think there will be some positive news, at some point, going down the road. It's not turning out to be as aloof to this -- to what we were hoping, of course, but the downside was -- so the risk in that was always controlled and limited.

我們將看看事情會如何發展。我們現在——我們擁有大約 17% 的股份，該公司有一個生產設施，該工廠位於印度尼西亞，它有庫存等等。我們——我們——我們的投資現在——我們只向公司提供了非常小的貸款。所以我們實際上沒有任何風險。我們認為沒有必要投入任何資金給該公司。我認為在某個時候將會出現一些正面的消息。事實證明，它並沒有那麼冷漠——當然，我們希望如此，但缺點是——所以其中的風險總是受到控制和限制的。

Right. I see, okay. Makes sense. And just last question. Just given the news about the voluntary cuts from several key OPEC members, the congestion that's happening around Chinese ports and Hurricane Laura in the U.S. Gulf. I'm just curious in terms of how you guys choosing to position your fleet in the near term?

正確的。我明白了，好吧。說得通。最後一個問題。剛剛得知幾個主要歐佩克成員國自願減產的消息、中國港口周圍發生的擁堵以及美國海灣勞拉颶風的消息。我只是好奇你們近期如何選擇部署你們的艦隊？

What we're doing now is that it's an extremely difficult market to predict. And that is the obvious thing to say because it's -- I've been doing this for a few years. And my sort of gut feel is that we are going towards a more normal market. We're well, well down on volumes, as we know. It looks from the last patch that we're seeing, then the world production is 3 million to 4 million barrels lower than the consumption, which is obviously hurting freight, but it could build a better case as we move towards winter and Q4 is normally a strong quarter. So my (inaudible) with no sort of high conviction, I got a feel that things will get better as we move towards the end of the year. And what we're doing with this fleet is that we are trying to reposition in the Suezmax in the Atlantic Basin. And if we have the choice between the long voyage at current rates or a shorter one, we opt for the shorter one.

我們現在所做的是，這是一個極難預測的市場。這是顯而易見的事情，因為我已經這樣做了幾年。我的直覺是我們正在走向一個更正常的市場。據我們所知，我們的銷量已經大幅下降。從我們看到的最後一個補丁來看，世界產量比消費量低 300 萬至 400 萬桶，這顯然會損害貨運，但隨著我們進入冬季，第四季度通常會出現更好的情況。的季度。所以我的（聽不清楚）沒有任何堅定的信念，我有一種感覺，隨著我們接近年底，事情會變得更好。我們對這支船隊所做的就是嘗試在大西洋盆地的蘇伊士型油輪上重新定位。如果我們可以在目前費率的長途航程和較短航程之間做出選擇，我們會選擇較短的航程。

There are some potential triggers out there. So we're watching it all very closely. And we've got a feel that things might get better. At the same time, the volumes remain low. So it all depends on the cargo account. What we've seen in the Middle East over the summer, where basically 1 out of 3 cargos has disappeared. It has obviously dented the earnings. But hopefully, something -- demand will steadily come back, and there could be some better times ahead. But I'm very cautious. I'm not going to put on the bullish hat just yet.

有一些潛在的觸發因素。所以我們正在非常密切地關注這一切。我們有一種感覺，事情可能會變得更好。與此同時，成交量仍然很低。所以這一切都取決於貨物帳戶。我們今年夏天在中東所看到的情況，基本上三分之一的貨物已經消失。這顯然削弱了效益。但希望需求能夠穩定回升，未來可能會有更好的時光。但我非常謹慎。我現在還不打算戴上看漲帽子。

Your next question comes from the line of Greg Lewis from BTIG. (Operator Instructions) Let's just take the next question. It's coming from the line of J. Mintzmyer from Value Investors.

您的下一個問題來自 BTIG 的 Greg Lewis。（操作員指示）讓我們回答下一個問題。它來自 Value Investors 的 J. Mintzmyer。

So first of all, congrats on a good quarter. As we're looking towards the shifting interest rate environment, I know you've done a few swaps and hedges in the past on some of your debt profiles. I know you also have a new debt profile coming up with the new builds. Is there any plans to expand or extend those interest rate swaps? Is any of that in the works? Or are you going to maintain some floating exposure?

首先，恭喜本季表現良好。當我們關注不斷變化的利率環境時，我知道您過去對某些債務狀況進行了一些掉期和對沖。我知道你們在新建築中也有新的債務狀況。是否有計劃擴大或延長這些利率互換？正在開發中嗎？還是你打算保持一些浮動敞口？

So we do have entered into quite a lot of interest rate hedges now recently. So I guess, at the moment, we have no further plans for entering into even further interest rate interest. But also we had on -- we have $550 million of hedges now at the moment. And also as short as an additional portion of about $100 million, which is very soon going to mature. But at the moment, I think we're happy with that.

因此，我們最近確實進行了大量的利率對沖。所以我想，目前我們沒有進一步升息的計劃。但我們現在還有 5.5 億美元的對沖。另外還有大約 1 億美元的額外部分，很快就會到期。但目前，我認為我們對此感到滿意。

Okay. Makes sense. Yes. I was tracking, you had about 1/3 or so hedged. I was wondering if that those plans have changed. Jon asked earlier about kind of your cash plans and if you looked at maybe expanding or new builds or second hands or anything like that. Sort of a related question, Frontline carries a nice premium to some of your tanker peers, I think Frontline is probably the only -- one of the only tanker companies that carries what you could say is like a respectable valuation in today's market. Is there any opportunity out there for Frontline to become an equity consolidator? I know there's some peers in the Norwegian market, for example, we won't name names today, but they're trading at a significant discount NAVs. Is there some opportunity for consolidation there? Or is that sort of off the table?

好的。說得通。是的。我正在追踪，你大約有 1/3 左右的對沖。我想知道這些計劃是否已經改變。喬恩早些時候詢問過您的現金計劃，以及您是否考慮擴建或新建或二手或類似的東西。一個相關的問題是，Frontline 比一些油輪同行有很高的溢價，我認為 Frontline 可能是唯一一家在當今市場上擁有可觀估值的油輪公司之一。Frontline 是否有機會成為股權整合者？我知道挪威市場上有一些同行，例如，我們今天不會透露名字，但他們的交易價格比資產淨值大幅折扣。那裡有整合的機會嗎？或者說這是不可能的？

No, there are opportunities. And as you say, we have the pricing. We're well below where the premium we normally are at, and that premium is there for the obvious reasons. We do have a main shareholder who remains hugely supportive and that will remain so. But in terms of consolidation, yes, we are a potential consolidator, but we are happy with what we have now. We will keep tracking opportunities. So let's see what comes up and what makes sense. But with the size we already have, then our earning potential, it's already there and which you can clearly see from the Q2 numbers.

不，還有機會。正如你所說，我們有定價。我們的溢價遠低於通常的溢價，而溢價的存在有明顯的原因。我們確實有一個主要股東，他仍然大力支持我們，而且還會繼續如此。但就整合而言，是的，我們是潛在的整合者，但我們對現在所擁有的感到滿意。我們將持續追蹤機會。那麼讓我們看看會發生什麼以及什麼是有意義的。但憑藉我們已有的規模，以及我們的獲利潛力，它已經存在，您可以從第二季的數據中清楚地看到這一點。

Excellent. Excellent. You'll have to forgive me for this one, Robert, the parting question here, but we talked back in April, and you had kind of a fun bet gamble about if rates would come back down, unsurprisingly, that you'd be walking across Norway. So I just wanted to check in on that and see when the trips planned. And maybe it's after COVID, we can get a group together.

出色的。出色的。羅伯特，你必須原諒我這個離別的問題，但我們在四月份談過，你對利率是否會回落進行了一場有趣的賭博，毫不奇怪，你會步行橫跨挪威。所以我只是想檢查一下，看看旅行計劃何時進行。也許在新冠疫情之後，我們可以聚在一起。

I'd tell you, you would probably enjoy the walk. Of course, It's a beautiful walk. As long as you start from the East side and then walk towards my hometown, and it's the right -- you're going the right way. But J, we have actually settle the bet. So it ends up being a dinner. And -- but I must say, with the confidence I had a bet was high, and it did come very, very close. But fortunate enough, I got away with it.

我告訴你，你可能會喜歡散步。當然，這是一次美麗的步行。只要你從東邊出發，然後往我的家鄉走去，那就是對的，你走的就是對的路。但是J，我們其實已經賭定了。所以最後就變成一頓晚餐了。但我必須說，我的賭注信心十足，而且確實非常非常接近。但幸運的是，我逃脫了懲罰。

Your next question comes from the line of [Louis McGivern], a private investor.

您的下一個問題來自私人投資者 [Louis McGiven]。

I'm calling from Pittsburgh, which is the home of the steel industry that a good Scotsman named Andrew Carnegie had made famous. And I was curious, what effect does scrap steel rates have on the retirement of vessels?

我是從匹茲堡打來的，匹茲堡是鋼鐵工業的發源地，一位名叫安德魯·卡內基的蘇格蘭人使這裡聲名鵲起。我很好奇，廢鋼價格對船舶的退役有什麼影響？

Scrap -- so you say scrap steel price?

廢鋼－那你說廢鋼價格是多少？

Well, the decision to retire vessels, I know it has to do with the 5-year intervals and so forth in the market of -- but do high or lower scrap prices affect your decisions in the industry to retire ships? I just wondered if the rate of scrap steel would go up if that would result in more retirements, which would be beneficial for your industry?

嗯，退役船舶的決定，我知道這與市場上的 5 年間隔等有關——但是廢鋼價格的高或低會影響您在行業中退役船舶的決定嗎？我只是想知道廢鋼的價格是否會上升，如果這會導致更多的退休人員，這對你們的行業有利嗎？

Interesting question. And the fact is yes, yes it does. And to give you an example, so our larger ship. So by the way, our older ship now is 2009. So we don't have really any candidates. But if you look at that market, as I mentioned in the introduction, there are a growing number of older ships. And looking at the last 18 months, then the value -- the steel value has fluctuated between $11 million and $18 million. So now it's at the lower end of that scale. So it's part of the decision-making here. Whether to scrap or not is obviously then linked to this price because it is a good portion of the value of the contract.

有趣的問題。事實是，確實如此。舉個例子，我們更大的船。順便說一句，我們現在的舊船是 2009 年的。所以我們實際上沒有任何候選人。但如果你看看這個市場，正如我在簡介中提到的，老舊船舶的數量正在增加。看看過去 18 個月，鋼鐵價值在 1100 萬美元到 1800 萬美元之間波動。所以現在它處於該規模的較低端。所以這是這裡決策的一部分。是否報廢顯然與該價格相關，因為它佔合約價值的很大一部分。

Well, maybe you could talk some shipbuilders into offering bonuses to the scrappers to tie in a sale of the new vessel to scrapping a ship.

好吧，也許你可以說服一些造船商向拆船商提供獎金，以將新船的銷售與拆船聯繫起來。

Yes. That could be a way of doing it or combining making a pool of all the old ships and get the balance back quicker that way.

是的。這可能是一種方法，或者將所有舊船合併起來，這樣可以更快地恢復平衡。

We have no further questions coming from the phone lines. (Operator Instructions) Please continue.

電話線路中沒有進一步的問題。（操作員指示）請繼續。

Okay. No, I think -- I think we'll round off. So I'd just like to thank everyone for calling in. And also to my colleagues and everyone at Frontline, thank you very much for all your efforts.

好的。不，我想——我想我們會圓滿結束。所以我想感謝大家的來電。還有我的同事和 Frontline 的每個人，非常感謝你們所做的一切努力。

Ladies and gentlemen, this does conclude our conference call for today. Thank you for participating. You may all disconnect.

女士們先生們，我們今天的電話會議到此結束。感謝您的參與。你們都可以斷開連線。