Tanker owner and operator Frontline has entered into an agreement to terminate contracts for four Very Large Crude Carrier (VLCC) newbuildings previously ordered from South Korea’s shipbuilder STX Offshore & Shipbuilding.
The contracted price of these vessels, which were due for delivery in 2017, was USD 364.3 million, of which the company has made instalment payments of USD 45.5 million.
Following the contract terminations, Frontline has been released of any and all obligations relating to the contracts, and received all instalment payments made to STX, less a USD 0.5 million cancellation fee per vessel.
The company said that it believes the market “will continue to present attractive opportunities, and we will assess on-the-water and resale assets, which are at historically low prices.”
Frontline added that its low cash breakeven levels, and access to attractively priced capital, gives the company significant operating leverage and positions Frontline to take advantage of price dislocations in the market.
Following the terminations, Frontline’s fleet consists of 73 vessels, including newbuildings, with an aggregate capacity of 13.5 million dwt.
The company’s fleet is comprised of 25 VLCCs, 22 Suezmax tankers, 22 LR2/aframax tankers, one MR.