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Frontline’s Post-Merger Fleet Composition

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Active fleet

Frontline (FRO) operates tankers transporting crude oil (DBO). The company has an active fleet of 22 vessels composed of 14 VLCCs (very large crude carriers) and 8 Suezmax vessels. Additionally, it has 17 vessels chartered from Ship Finance. Frontline has not been aggressive about increasing its fleet, which has remained stable for the past few quarters.

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Fleet details

  • We can see in the above chart that over the past few years, Frontline has gradually decreased its fleet from 48 vessels in 2011 to 22 vessels in 2015. If all other factors are constant, fleet reduction would decrease the company’s EBITDA (earnings before interest, taxes, depreciation, and amortization).
  • As of June 30, 2015, the company doesn’t have any newbuilds under construction.
  • Frontline has one of the oldest fleets among its peers, including Teekay Tankers (TNK), Nordic American Tanker (NAT), Euronav (EURN), DHT Holdings (DHT), and Tsakos Energy Navigation (TNP), with an average vessel age of 13.5 years.
  • Before the merger announcement, the company didn’t seem to have any plans to expand its current fleet.

Post-merger fleet composition

  • After the announced merger between Frontline (FRO) and Frontline 2012 (FRNT), the combined company will operate a total fleet of 89 vessels, including 25 VLCCs, 17 Suezmax tankers, 16 MR (Medium Range) tankers, and ten LR2 (Long Range 2) Aframax tankers.
  • The total fleet will include around 20 vessels on time charter contracts or under commercial management.
  • The combined company fleet includes 22 newbuilds that are currently under construction with expected delivery dates of 2015–2017.
  • Frontline 2012 has obtained debt financing for six newbuilds. The combined company needs to finance the remaining 16 newbuild vessels to be delivered between the second half of 2016 and the end of 2017.
  • Frontline 2012 has a very young fleet. The average age of its vessels is three years. Frontline’s fleet age will be drastically reduced after the merger.
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