Frontline Ltd. (FRO) Q3 2025 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to the Third Quarter 2025 Frontline Earnings Conference Call and Webcast. [Operator Instructions] Please be advised that this conference is being recorded. I would now like to hand the conference over to your first speaker today, Lars Barstad, CEO. Please go ahead, sir.

Thank you very much. Dear all, thank you for dialing into Frontline's quarterly earnings call. It's noticeable how everyone at Frontline and in the general tanker industry for that sake, walks with an energetic spring in their steps these days. We have previously argued that this market owes us money, and we have finally started to collect some of it. I'll try not to jinx it by using caps lock on absolutely everything, but it is a mild understatement that we are positively excited by the developments in this market that started to materialize during the third quarter of the year. Before I give the word to Inger, I'll run through our TCE numbers on Slide 3 in the deck. In the third quarter of 2025, Frontline achieved $34,300 per day on our VLCC fleet, $35,100 per day on our Suezmax fleet and $31,400 per day on our LR2/Aframax fleet. So far in the third quarter of '25, we have booked 75% of our VLCC days at $83,300 per day, 75% of our Suezmax days at $60,600 per day and 51% of our LR2/Aframax days at $42,200 per day. Again, all numbers in this table are on a load-to-discharge basis with the implication of ballast days at the end of the quarter this incurs. This means that although we continue to fix extraordinary freight rates every day, we are dependent on the cargo being loaded before New Year's Eve to account for that income in Q4. I'll now let Inger take you through the financial highlights.

Thanks, Lars, and good morning and good afternoon, ladies and gentlemen. Let's then turn to Slide 4, profit statement, and we can look at some highlights. We report profit of $40.3 million or $0.18 per share and adjusted profit of $42.5 million or $0.19 per share in the third quarter. The adjusted profit in the third quarter decreased by $37.8 million compared with the previous quarter, and that was primarily due to a decrease in our time charter earnings from $283 million in the previous quarter to $248 million in the third quarter. That was a result of lower TCE rates in addition to fluctuations in other income and expenses. With respect to ship operating expenses, they increased $3.1 million from previous quarter, and that was due to a decrease in supplier rebates of $2.5 million and cost of $1.1 million due to change of ship management for 7 LR2 tankers. This was partially offset by a decrease in general running costs of $0.5 million. The administrative expenses, excluding synthetic option revaluation loss of $5.7 million this quarter and $1.7 million in the previous quarter decreased by $0.2 million from previous quarter. Let's then look at the balance sheet on Slide 5. The balance sheet movements this quarter are mainly related to ordinary items, the sale of one Suezmax tanker and also the prepayment of debt under revolving reducing credit facilities. Frontline has a solid balance sheet and strong liquidity of $819 million in cash and cash equivalents, including undrawn amounts of revolver capacity, marketable securities and minimum cash requirements bank as of September 30, 2025. We have no meaningful debt maturities until 2030 and no newbuilding commitments. Let's then look at Slide 6, that is the fleet composition, cash breakeven rates and OpEx. Our fleet consists of 41 VLCCs, 21 Suezmax tankers and 18 LR2 tankers. It has an average age of 7 years and consists of 100% eco vessels whereof 56% are scrubber fitted. We converted 7 existing credit facilities with aggregate outstanding term loan balances of $405.5 million and undrawn revolving credit capacity of $87.8 million into revolving reducing credit facilities of up to $493.4 million in September 2025. We subsequently prepaid a total of $374.2 million in September, October and November '25, leading to a reduction in fleet average cash breakeven rate of approximately $1,300 per day for the next 12 months. We estimate average cash breakeven rates for the next 12 months of approximately $26,000 per day for VLCCs, $23,300 per day for Suezmax tankers and $23,600 per day for LR2 tankers, with a fleet average estimate of about $24,700 per day. This includes dry dock costs for 14 VLCCs, 2 Suezmax tankers and 10 LR2 tankers. The fleet average estimate excluding dry dock cost is about $23,100 or $1,600 per day less. We recorded OpEx, including dry dock in the third quarter of $9,000 per day for VLCCs, $8,100 per day for Suezmax tankers and $9,100 per day for LR2 tankers. This includes dry dock of one VLCC and finalization of dry dock for Suezmax tanker, which entered dry dock in the second quarter. The Q3 '25 average OpEx, excluding dry dock was $8,500 per day. Then lastly, let's look at Slide 7 and cash generation. Frontline has a substantial cash generation potential with 30,000 earnings days annually. As you can see from the slide, the cash generation potential basis current fleet and TCE rates for TD3C for VLCC, TD20 for Suezmax tankers and average of TD25 and TC1 for Aframax LR2 tankers from the Baltic Exchange as of November 18, 2025, is $1.8 billion or $8.15 per share, providing a cash flow yield of 33% basis current share price. A 30% increase from current spot market will increase the cash generation potential to $2.6 billion or $11.53 per share. With this, I leave the word to Lars.

Thank you, Inger. So let's move to Slide 8 and have a look at what's going on in our markets. As many of you have noticed, oil in transit has become kind of a more mainstream measure for investors that focus on shipping. It's now at record highs. This happens as export volumes grow from especially the Americas or around the Atlantic Basin, and we see a positive development in how oil trades. Policy does affect behavior, and it has opened the arbitrage between Atlantic Basin and Asia. The OPEC voluntary production cuts reversals are starting to express themselves in real export volume gains. Year-on-year for October, we're up 1.2 million to 1.3 million barrels per day, looking at the Middle Eastern producers, excluding Iran. There are increasingly logistical challenges around the trade of sanctioned exposed oil, and this was further amplified as LUKOIL and Rosneft were put under sanctions. We have a picture where we see very firm refinery margin environment supporting refinery crude runs. So it begs the question, when are we going to see -- perform. Resale asset values are starting to reflect the hike in freight rates as order books for tankers are near full through 2028. Let's move to Slide 9. The heading is the arb is back. The behavior of especially India, but also China is yielding an increased demand for compliant crudes, especially in the Middle East. This raises the crude price level for local crudes in the Middle East, causing Atlantic Basin grades to price their way into Asia. Since 2022 and Russia's invasion of Ukraine, the long-haul trade has suffered. We have seen Russian oil taking Asian market share and Europe relying more on Atlantic Basin barrels. This looks to reverse to some degree and could be a sustainable development going forward and means that we are back to the old school tanker market where the VLCC with its economies of scale leads the pack. This VLCC-centric trade pattern change has also been driven by very positive export numbers from Brazil, our new producer Guyana, Canada through the TMX pipeline and more recently, also U.S. The incremental barrel to the market now is compliant oil and compliant oil means compliant vessels. That means unsanctioned vessels and predominantly below 20 years of age. If this supply trend continues on the oil side, we are likely to see a sustained contango structure in the oil market developing. This will imply inventory builds. We are low on inventories in most regions of the world. It's unlikely to imply floating storage due to the financing cost, which is much higher now than it was in the last cycle, we had this effect to the market. But there is an equally interesting trading pattern that may develop and it's called time. When you can load the barrel in U.S. and sell it 2 months after in Asia, you're actually having a tailwind on that trade as the price of crude is increasing over time. Let's move to Slide 10. So the net fleet development, and this is kind of a recurring discussion I have with investors when we are out presenting our company. We have virtually 0 recycling or scrapping, but -- and we have actually a substantial order book, not a scarily big one, but there is still vessels to come, and that order book has been increasing. So what we've tried to do here is to put forward a couple of scenarios just to explain why we are so constructive on this market. So as -- so the order book continues to grow, and this is mainly due to limited offering of available modern tonnage on the water. This basically means that if you are a ship owner or an investor that wants to buy a ship, it's -- the best way to get access to tonnage is actually to go to the yard and you're not penalized by missing out on freight even though the ship is being delivered in 18 to 24 months. But this looks to change now. Now that you have spot rates that can give you $5 million to $6 million on the bottom line for a 50-day voyage, you start to think, should I go and access the retail market and get a ship that I can fix in the next cycle? Or do I go to the yard and order a ship that will be delivered in more than 24 months. This means that the owners can actually now start to pay up for a resale, and it makes economical sense to do so, assuming these rates stays around for a while. We continue to see the trend that other asset classes are populating the yards order books. There is now limited capacity left in 2028. If you look at the overall age profile of the global tanker market, and this is basically the key fundamental part of at least how we see this tanker market develop going forward or as I've said previously, the revenge of the old economy due to lack of investment in particularly tanker tonnage over a long period of time, we are in a situation where we will, every year, have a new batch of ships that are crossing this magical age cap, which we put at 20 years. If you look at the VLCC chart here on the top right-hand side, just to explain how we're thinking, if you assume absolutely no scrapping, no ships disappearing into the dark and basically every new ship being delivered on top of the existing fleet, we will have around 15% fleet growth towards 2019 -- 2029, sorry. But if you assume that VLCCs at least stop effectively trading when they turn [ 2022, ] that growth will only be 3.4% through 2029. But what is actually the more realistic case is that VLCC are either scrapped start to trade sanctioned oil or for other reasons, no longer part of the effective fleet at 20 years, will have a negative fleet growth with the existing order book, a negative fleet growth of 2% towards 2029. The other charts are basically showing more or less the same. I think this is kind of the key reason why we believe that there is some longevity in the market we have in front of us. Move to Slide 11, order books. And I've been quite repetitive on this. The order book on the asset classes that we are exposed to is in total 16.5% of the existing fleet, 19 above 20 years. If you put the threshold at 15 years, 44.3% of that fleet is above 15 and 21.6% of that fleet is sanctioned by either or OFAC U.K., EU and so on. We also have the highest average age in the tanker fleet for more than 20 years. So let's move to Slide 12 and the summary. And I called it old school bull market because some of the characteristics we see in this market, and I've been in this market for quite a while, meaning that I was actually around in the period from 2002 until 2008, we are actually seeing some of the same characteristics, where there is a proper trade going on between a charter and an owner and the brokers actually need to do some proper work to find the right ships and cargoes struggle to get offers basically. So we have high utilization. We have strong oil exports, and we have a positive change in trade lanes. As I've gone through limited growth in the compliant tanker fleet and with compliance, I also add under 20 years. And we also see the sanction trade sucking more tonnage in due to logistical challenges. The overall age profile is key, as I just mentioned, and despite the populated order books, effective fleet growth remains muted. We have firm refining margins and the winter market has actually already started. We are in a situation kind of on global S&D that we might come into a prolonged period of oversupply, and this may yield interesting trading developments, firstly, for oil, but also for shipping. And I can assure you, Frontline are prepared to offer outsized shareholder returns with our efficient profit for fleet. Thank you very much, and we'll open for questions.

[Operator Instructions] Now we're going to take our first question. And it comes the line of Jonathan Chappell from Evercore ISI.

Lars, to your last point about the outsized shareholder returns and then tying it into this financing update that you provided today. Completely understand, I think the dividend policy will remain as robust as it's been since the start of 2024. But are we looking at a new era now where you're looking at deleveraging the balance sheet as well? You're clearly in a strong enough market where the dividends can be strong, but you're still generating enough cash. where you can deleverage and you've done quite a bit of it in the last 3 months. So are we looking at a new Frontline where the balance sheet becomes as strong as maybe some of your public peers without violating your dividend policy?

No. We are different from our peers. We're actually not particularly comfortable working with this kind of fairly low LTVs. I think as a result of we're being hesitant to invest in this market for reasons I actually described a little bit in the presentation. We've had values moving ahead. So resale values moving ahead of the market. We've had kind of -- since we are prepared, we want our assets to generate cash as quickly as possible. We've been hesitant to stretch kind of far out in time, tying up CapEx on assets that will come in a year or 2 years' time. And so we basically found -- and time charter rates haven't really defended this either. So we kind of just by pure being quite conservative on our financial analysis, we haven't really been kind of up for doing any massive moves since we did the Euronav transaction. So I think kind of that's more a result of it or that's more the reason for us being in this position rather than actively trying to reduce our debt.

And then just a follow-up, I want to push back a little bit on Slide 10, but then offer an opportunity for you to push back to that. I think the premise of scrapping ships at 22 years and at 20 years, given the rate outlook that you just laid out in the prior slides is a bit misleading. I mean people don't scrap ships when they're making that much money. So maybe could you explain to us how those ships become less efficient or they don't have full utilization and they're still kind of like come out of the net fleet supply without them being actually scrapped because if investors are waiting to see big scrapping numbers over the coming years with rates as strong as you think they are, and I think they are, they may be disappointed. So how do those ships become less efficient and still kind of help utilization without actual scrapping?

Well, as you know, I was going to push back on that. No, the thing is that why we haven't seen scrapping or recycling to be more politically correct, is the fact that you have an alternative use of these vessels, right? And the alternative use in the old days, it could be a conversion into floating storage or production units. There could be kind of other -- it could be floating tanks or whatever. But the alternative use that's been going on ever since 2019 or '18, '19 is the trade of sanctioned oil. And that has obviously paid a lot of money to the owners that have been willing to engage in this trade. The thing is that we circle around the compliant market, and we relate ourselves to the compliant oil market. And in a compliant oil market, even if you're Exxon or even if you're Shell or Glencore or whoever you are, you trade on the margin. If you're going to trade on the margin and you're trying to ensure 2 million barrels of oil on a plus 20-year ship, that price of that insurance is going to be so high that you will struggle to actually make the ends meet. So it means that -- and it also limits your optionality on how you can trade that oil because you have to take away kind of 80% of the terminals that just have a blanket ban on vessels that are older than 20 years of age. So effectively -- and we actually see this, you don't really need to look up which ships are sanctioned by OFAC. You can just draw a line at 20 years. The vessels and the Suezmax and VLCC side that are above 20 years and not sanctioned, you can literally count on one hand. And we actually see a big efficiency loss in the tanker space when the ship reaches 18 years. So -- and I think a little bit of a proof in the pudding here is that the compliant oil market has actually had a terrible development in volume for a sustained period of time. But still, we have had poor rates, but we haven't had like car crash kind of rates. And this is basically due to the fact that ships become less tradable, less efficient, limited use actually starting from the year -- from the turn at 17.5 years. So there could be that we'll have a wall of scrapping, but I actually don't think that's going to happen. I think kind of the alternative use is going to be around for a long time, unless, of course, the sanctions are lifted all around. But now we also have another problem here is that a sanctioned vessel is not easily recycled because the recycling industry is actually a real business, and they access financing and they deal in many ways in dollars. Where you are right, where ships can easily live kind of past the 20-year age kind of ceiling is if it's for specific use, let's use India as an example. If you're India flag and for an Indian refinery, to, of course, control the entire value chain on that oil trade, that ship can easily kind of trade until it's 25 years. But it will only be for the purpose of transporting feedstock to an Indian refinery. But that is only a small portion of the market. And even Indian refiners realize that they can't have too much of an exposure in that market because basically, you have virtually no other options than to do exactly that back and forth between the Middle East and India.

And the next question comes from the line of Sherif Elmaghrabi from BTIG.

Lars, maybe first to just follow up on that line of thought about the sanctioned fleet. India and China are lifting more compliant barrels, as you said. And so there's more noncompliant vessels that maybe have less work. And I'm wondering what you see happening to the dark fleet right now given there's less work and also maybe in the next 6, 12 months, if that's a different picture.

Yes. No, it's -- there is actually -- so for once, there are an increasing amount of vessels just sitting at anchor with no crew on and keys left in the ignition. These are kind of the first-generation sanctioned fleet that came out of Iran and Venezuela kind of 5, 6 years ago. And there, you will probably never be able to locate who was the owner. But then you have kind of what's in between, and there are actually initiatives or also commercially things that are being worked on, where you basically -- you can buy sanctioned vessels, but you need a license from -- and the most important license is from the U.S. And there is actually some motion in that work now where, of course, since the federal state in the U.S. was closed for a while here, it's not been particularly efficient for the last couple of months. But there is a discussion ongoing to -- if one can kind of set up some sort of mechanism where against a fine, you can actually access the recycling market, but only the recycling market alone. So I think that could be a solution as we proceed here. One side being that local governments actually need to take action to avoid environmental damage for those vessels left with keys in. But secondly, a growing industry around this kind of licensed but also find recycling work being done because kind of if you have -- if you're going to buy sanctioned vessels, it's actually worth 0. But then, of course, if it's worth half the normal recycling price, there is actually still money in it. So -- but I don't know if that's going to be the solution, but at least that is something that is being discussed. But it's still so that the sanctions are -- different countries kind of respect them to various degrees. Oil has a tendency to move anyway. So I have no illusions as to the vast amount of Iranian oil, which is currently kind of being clogged up a little bit, the vast amount of Russian oil, which struggles to find a home. I'm pretty sure it's going to find a home, and it's probably going to find a home on one way or another on ships that are either fully sanctioned, halfway sanctioned or whatever. So I think kind of that industry, that paralleled industry, we're probably stuck with for a while. But the incremental barrel now does not come from the sanction nations. It actually comes from the compliant fleet, and that's the only part of the market we really care about.

That's very interesting. So sticking with the compliant barrels now, you've highlighted the tailwind to futures curve, gifts cargoes lifted from Middle East to Asia. That's not floating storage, like you said. So I'm wondering how that affects vessel demand given it sounds like the contango in the curve lines up nicely with normal voyage time lines anyway.

Yes. No. So currently, we don't really have the contango. And actually, I'm no expert on oil pricing, but I'm actually quite surprised of the firmness in the oil price considering the oil in transit numbers that we have. Mind you that oil in transit is a combination, of course, of backing up sanctioned oil. It's also backing up oil that was supposed to go to sanctioned terminals. And it's also -- but it's also commercial oil, which is backing up due to weather as well. That's a really old school winter market kind of thing is that there is actually some severe weather around key ports. So we're actually seeing extended kind of waiting time to discharge basically due to that. But with that kind of a pile of oil sitting or being kind of in the logistical chain, I'm surprised that we can have kind of front oil having at these levels. But anyway, if you believe in EIA or IEA or all the kind of market experts, we are actually going to be in an inventory build environment for the next 6 months-ish. But in order to get there, in order for that to be even feasible, we can't have a steep backwardation on oil. So then you get into this contango kind of shape of the curve. And that is interesting, as I mentioned in the presentation, because we tend to see trade lanes extend when you have some sort of carry in the oil curve. And it doesn't need to be supportive of floating storage because then you need like $2, $2.5 per month in order for that to make sense. But only a modest 50% -- sorry, $0.50 contango helps or increases the trading system basically because you get a little bit of tailwind as you try to position a cargo.

And the question comes from the line of Omar Nokta from Jefferies.

A couple of questions. I wanted to ask just about the LR2s. Obviously, there's a bit of a big gap between what's going on in majority and clean markets. And just wanted to -- if you can just remind us how you're trading those. And then also, do you have any comment regarding some of the chatter from last month that you had sold or in the process of selling that entire LR2 fleet.

Yes. So let's do the last one first, and let's know and then do the first one. The kind of this spread right now surprises us a little bit as well. You're an expert analyst too. And you know that the kind of high refinery margins, a lot of oil going through the system normally yields a lot of product exports. And we haven't seen that yet. But I'd say that the setup for the LR2s look increasingly exciting because, number one, due to the relatively stronger crude markets, a lot of LR2s are actually trading dirty. So it means that there is a kind of limited amount of LR2s that are clean and ready to do a clean cargo at this minute. Secondly, the Suezmaxes in particular, are making so much money in crude that there is no economics in cleaning up to do a clean cargo at these levels at all. So my point is I don't think you need much in that market to flip it. And it can actually be quite good or you can get this kind of exponential freight development basically because you don't have the lid of a Suezmax cleanup or a VLCC cleanup on top of the LR2 market as it is right now. But I don't have a very good kind of factual answer to you on why we are in this situation. But I think we've already seen some kind of small signals that LR2s have run up $5,000 to $10,000 per day just in the last week. Now we're probably around the $35,000 per day mark, maybe a bit above. It doesn't need much to take it further. So let's see.

Okay. Yes. So maybe some convergence is happening at the moment. Okay. And I understand Lars, it sounds like you said no comment regarding the sale of the LR2s. But humor me perhaps, if you were to potentially or if you were to consider selling those LR2s, what do you envision the use of proceeds would be kind of maybe along John's question, would it be more towards debt repayment, which it sounds like perhaps you don't want to do? Would it be a special payout? Or would you consider rolling into the Suezmax and VLCC classes?

I think we've kind of between the lines, you're probably answering that in this presentation. And it's -- we kind of we've been very patient since we started to expand our VLCC part of the fleet. That's grown 33% in the last 5 years. We've doubled the kind of the amount of ships. Regretfully, the trading pattern that developed after Russia-Ukraine did not really support the VLCCs at all. Now that is -- and I don't want to jinx it, but it looks like at least right now, it's coming together. And it's the economies of scale that then gets into play. So kind of long term, if we were to divest of the LR2s, I think we also think that this market has some runway, just showing you kind of the fairly modest -- in our model, at least, the very modest growth total in supply of tankers and actually particularly so on the VLCCs and also our belief that the oil demand is probably going to grow for a few more years. I think it would be natural for us to focus on the big guns on the VLCCs.

I feel like that's fairly clear between the lines. And then just a last one just in terms of the performance to date here in the fourth quarter. Clearly, a nice big increase in your earnings power coming here across all 3 segments. But this is one of those few times where there's such a gap in terms of what you're showing as a realized average to date in the fourth quarter and where spot rates are. And so you've covered, say, just looking at the VLCCs, 75% of 4Q is at $83,000, the spot market, say, well over 100,000. Load to discharge accounting makes things a bit tricky here as we think about the realized average for the full quarter. Do you think based off of where things are, that there's upside to that 83,000 figure in this quarter? Or are we looking at basically these 100,000-plus rates becoming much more of a January item?

I think I'll answer that question by saying that in kind of the load dates that are being worked, so say you do a fixture today on the VLCC in the Middle East that has -- and the rates there are around $130,000 per day right now. That's for loading on the 11 -- 10 to 11th of December. So there kind of -- you have only 20 days that you would account for then in Q4 when you load that cargo. So half of it will actually come into January. But if you go to Brazil, for instance, you're already fixing kind of around the 20 mark, if not further out on loading. So then you only have like 5 to 10 days to account for that will actually affect Q4. And for U.S. Gulf loading, it will be more or less the same. So I'm not going to say no, we won't get more money into the chest before we close the year, but I can't categorically say yes either. We'll just have to see.

The question comes from line of [ Devin Sangofrom Tech Investments. ]

Lars, I just wanted to ask more about the floating storage. And we're seeing that during the COVID. And how do you see this floating storage and how sustainable this demand?

If I understood you correctly, so yes, we had very high floating storage during COVID. That was, of course, more due to the fact that the demand disappeared overnight and supply could not follow. But we were also in a 0 interest rate environment, which meant that the capital was basically free. And that is an important part of this because if you're going to purchase or take position of 2 million barrels, it's a sizable kind of amount of money, and we need to finance that. And that adds to the cost of storing on a vessel. So -- and this is why I mentioned that in order for floating storage to work commercially on ships, you basically need $2.5 per month or $2, $2.5 per month or thereabouts. And that's a pretty steep contango. And we're nowhere -- we're actually in slight backwardation right now. So it's nowhere near. The storage that we are seeing right now is more due to logistics or distress or weather. So it's not commercial in that way. I don't know if that answered your question.

Yes. The second thing is that I've seen that different -- U.S. has different part of sanctions for black -- dark fleet, U.K. has different, EU has different. And if you put -- so is there anything which has gone that total dark fleet under different sanctions are now getting tighter? And what's your view on that?

Yes. No, you're right. But it's actually a very high degree of correlation between these sanctions. So normally, it's just a question of time. EU sanctions one vessel, then OFAC will do it 2 weeks after and then U.K. will do it more or less at the same time. So there's actually a lot of overlap between these various kind of regulatory entity or regulatory bodies. So -- but it's for sure, it's getting tighter. And this is global politics, right? I think one doesn't need to be a rocket science to understand that particularly U.S. is putting a lot of pressure on Russia right now, basically to prime them for negotiations. I think this Rosneft/LUKOIL sanction was -- that was a direct kind of hit on creating a lot of trouble for this industry and for Russia's export. You're talking about half their exporting volumes that were serviced by Rosneft and LUKOIL. But for sure, these molecules will, at the end of the day, find their way somewhere. But I think we're probably going to see this pressure continue until we have some sort of resolve on the whole situation.

And last, you've seen last year, Q4 was not great, the seasonality didn't come up. But this year, if I see Q4 is good, but how do you see Q1? Because Q1 is going to be as strong as last year or better than what we have seen looking at the current scenario?

Well, you're asking me to give my view on one of the world's most volatile markets. Actually, the fact that it is -- this volatility tells you that this is not an efficient market. It's a market that's extremely difficult to predict. But what I can say is that from what we're seeing right now, we're not seeing any kind of weakness in this market. We're seeing an old school extremely tight physical shipping market. So -- but of course, who knows what can happen next week.

No, because see all the factors that the compliant crude producers have gaining market share, dark fleet is being targeted. The volumes overall, at least as of today, there is no debacle of China on consumption side. In fact, China is buying all the commodities in order to put the extra reserves. So put all things together, Q1 can sustain this rate. I'm not asking you to predict, but it looks like Q1 can be better or as good as Q4, if conditions sustain.

Yes, yes, 100%. And we pointed to it in this report. There are some key fundamentals here that will not change short term. It's -- there are some key drivers to this market that we didn't have Q4 last year to put it that way.

And the question comes from the line of [ Luis McKibben ] [indiscernible].

Yes, Lars, I wanted to talk about Frame 7, Page 7, where you show the $11.50 a share generated with $149,000 daily VLCC rate. And having -- you were in the business back in the good old days of 2006 and '08 and also during COVID when they had the floating storage. But I think the rates went up to like $240,000, $260,000, $280,000, $300,000 a day. Is that right?

Yes. That's right.

So if you were to get similar rates, your free cash flow would be in excess of $20 a share. Would that be correct?

Yes. If you do that for 365 days, yes.

It could happen. All right. The other thing was that I read somewhere where India will not accept a tanker in excess of 22 years old. And I was wondering if China has a similar policy.

Well, China is not kind of uniform in that respect. They have kind of 2 different oil systems, one being the -- what is referred to as the TPOs, but these are big refineries that they are privately owned. And they, of course, have a little bit of a different kind of requirement. The terminals are then also privately owned. But if you look at the government system in China and Unipec, which is kind of the biggest, they actually normally have a 15-year kind of threshold. But of course, they have maneuvering room between the 15 and 20, but you very rarely see them take a ship that is materially above 17 years old. So it's a little bit fluid. On India, I haven't seen or heard what you're referring to. All I know is that if you sail under an Indian flag and you're an Indian ship owner, they have at least up till now accepted trading all the way until 25 years.

Dear speakers, there are no further questions for today. I would now like to hand the conference over to your speaker, Lars Barstad for any closing remarks.

Yes. No, thank you very much again for listening in. It's extremely exciting times indeed. And I wish you the best for the remainder of the year. Thank you.

This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.