Aug 28, 2026 earnings call — Best quarter ever from VLCC-heavy operations
Frontline reported profit of $659 million in Q2 26, its best quarter ever.
Revenue $0.8B (est $0.8B) · EPS $2.96 (est $2.74)
Key quotes
"We also see high risk premiums from certain trades, in particular, inner AG, which is somewhat illiquid, but at least showing on the bottom left hand chart you can see how the now somewhat theoretical TD3C index is printing levels nearing $600 thousand per day."
"Frontline has a solid balance sheet and a very strong liquidity of SEK 1.2 billion in cash and cash equivalents."
"Upon delivery of the remaining VLCC newbuildings and sale of 2 VLCCs, our fleet consists of 40 VLCCs, 19 Suezmax tankers and 18 Aframax/LR2 tankers, has an average age of 6.6 years, and consists of 100% eco vessels, whereof 69% are scrubber-fitted."
Analyst Q&A 4
Idle ships near Strait and capital allocation
Q (Jonathan Chappell · Evercore): He asked for an update on the share and location of ships idling near the Strait. He also asked if Frontline would use the strong market to cut leverage or change capital allocation (time charters, special dividend).
A: Management said the number of idling ships has actually increased outside Oman and down the Indian coast, driven by more STS activity and pipeline flows into Fujairah, which causes timing uncertainty and delays. On capital allocation, they said changing leverage is not part of their DNA; they aim to cover about one third of revenues and key costs and to pay out cash to shareholders. The special dividend came from selling two ships because reinvesting proceeds in the current price environment did not look attractive.
"I would say it is not really a part of our DNA." — Lars H. Barstad (CEO)
Longer VLCC time-charter demand
Q (Greg Lewis · BTIG): He asked whether the 2- and 3-year time charters were one-offs or show deeper demand, and how deep the market is now for multi-year VLCC charters. He also asked about the 170 ships not active and whether they are the sanctioned fleet and their age profile.
A: They said liquidity for multi-year charters was limited when the deals were done, but over the summer the market became quite deep and big players are increasingly interested in longer contracts. Frontline could do 3-year time charters today at levels still south of $80 thousand per day. On the inactive 170 ships, many 20-plus year vessels are sanctioned, utilization hasn’t picked up, and a slow trickle of sanctioned ships is getting sold for recycling.
"we could easily today do 3-year time charters now kind of if we were willing to accept the current levels, which is well, it is still south of $80 thousand per day, but closing in" — Lars H. Barstad (CEO)
China demand and Panama drought
Q (Tetch Investments): He asked when China might re-enter the market in winter and how that would affect shipping. He also asked about the Panama Canal drought and whether Suez is affected, and about scrapping prospects for sanctioned ships.
A: On China, they said imports fell by about 3.5 to 5 million barrels per day and China built big inventories, so any rebound is uncertain; this is primarily an oil-price question though it could boost shipping if China chases barrels. About the drought, the issue is the Panama Canal (not Suez); Panama is prioritizing containers, LNG and LPG so few tankers use it. On scrapping, a small number (in the teens) of sanctioned ships have gotten exemptions to be recycled, so scrapping is slowly starting but not material yet.
"But I think kind of the this is more an oil price kind of thing than on a shipping thing." — Lars H. Barstad (CEO)
VLCC sale and Suezmax breakeven
Q (Audrey Zhong · CICC): First, why sell two VLCCs for about $270 million instead of keeping the future cash flows — how did sale price compare with the present value of operating them. Second, why did Suezmax cash breakeven rise above VLCC and does the $25.7 thousand reflect lower financing margins and trends for H2 2026?
A: Lars said they compared implied asset values and the economics: although implied value was higher, keeping the ships would require assuming almost $70 thousand per day for many years, which they thought unlikely, so selling at the top price made sense and let them return proceeds to shareholders. Inger said the Suezmax cash breakeven rose because the dry dock component is higher in the 12-month forward period and because an RCF that was previously undrawn is now assumed drawn; the $25.7 thousand is the 12-month forward average ending June 2027 and includes seven dry docks in that period.
"The reason for that is that the dry dock component and the cash breakeven rate for Q3 cash breakeven rates are much higher than it was for the Q1 cash breakeven rates." — Inger Marie Klemp