Frontline has chartered out 2 single hull VLCC's, the Front Lady and Front Highness, both built in 1991, to a subsidiary of Titan Petrochemicals Group, a Hong Kong Stock Exchange listed company. Titan Petrochemicals is an international oil services company mainly focusing on oil trading, storage and ship refuelling, presently controlling 29 ships.
The vessels are chartered out for a period that will cover the remaining life of the vessel until IMO's single hull ban comes into effect in 2010.
The contracts will provide Frontline with a guaranteed minimum hire of usd 35,000 per day. In addition the charter party provides the parties with an equal share of the upside potential should the spot market yield higher earnings than the minimum hire.
Over the contract period, Frontline will see a net aggregate profit of usd 35,000,000 based on the minimum hire compared to the Company's commitments vs. Ship Finance International, and will thereby reduce the cash break even rates for Frontline's remaining spot VLCC exposure towards Ship Finance International Limited with approximately usd 850 per day until the year 2010
The charter out of these vessels is part of Frontline's strategy to take advantage of the present high spot market to secure long term coverage as well as retaining a significant upside in the market for part of our fleet presently employed in the spot market.