Teekay Corporation (NYSE:TK) and König & Cie are pleased to announce that Diamond S Shipping Group has joined the Gemini Tankers Suezmax Pool as a full member. The Gemini fleet currently has 17 modern Suezmax vessels. This is expected to grow to 26 vessels by the end of 2012 as vessels redeliver from time-charters and Diamond S’ eight additional newbuildings are added to the Pool.

“We are delighted that Diamond S Shipping has joined the Gemini Tankers Suezmax Pool. The addition of their eight, high quality newbuild Suezmax tankers delivering over the course of 2012 further modernizes our fleet and solidifies our position as the premier Suezmax tanker pool,” commented Håkan Svedin, Gemini’s Managing Director.

“We have a great team in place providing a transparent, reliable and flexible management service to our customers, with whom we have long-term relationships. To them we can offer a fantastic modern Suezmax fleet operating across the globe, with a focus on the Atlantic spot markets,” Mr. Svedin added.

Craig Stevenson, CEO, Diamond S Shipping Group commented, “We are pleased to pool our Suezmax tankers with Teekay and König in the Gemini Tankers Suezmax Pool. We are excited by the opportunities this relationship will create for Diamond S. We were attracted by the modern fleet of Suezmax tankers operated by the Gemini Tankers Pool and their established track record of successfully managing that fleet in the key Suezmax tanker markets around the world.”

Bruce Chan, President, Teekay Tanker Services, commented, “Teekay is very pleased to continue with its long-standing cooperation with König, and excited about working with a first-class owner in the Craig Stevenson-led Diamond S Shipping. The addition of eight, high quality newbuild Suezmax tankers over the course of 2012 ensures that Gemini will be able to continue to provide excellent service to our customers.”

Tobias König, Managing Partner, König, agreed. “We have worked with Teekay for many years, and believe that the new relationship we have with Diamond S will support the long-term success of Gemini Tankers,” said Mr. König. “We have real competence in the pool: each partner brings a proven commercial record, strong financial backing, and long-term commitment to the Suezmax segment,” continued Mr. König.

“We have strong, reliable pool owners who are with us for the long-term,” added Mr. Svedin. “However, we will also consider taking further owners and tonnage into the Pool over time. The future for Gemini Tankers is exciting and the team will continue providing the best service in the market to our pool partners and customers.”

About Gemini

Gemini commercially manages a pool of Suezmax tankers. The Gemini team, including key chartering, commercial operations and post-fixture staff, operate from the pool’s headquarters in Stamford Connecticut, headed by Managing Director, Håkan Svedin, who has successfully led the Gemini Pool since 2009.

About Teekay

Teekay Corporation provides a comprehensive set of marine services to the world’s leading oil and gas companies, helping them seamlessly link their upstream energy production to their downstream processing operations. Teekay is growing its operations in the offshore oil production, storage and transportation sector through its publicly-listed subsidiary, Teekay Offshore Partners L.P. (NYSE:TOO), and its investment in Sevan Marine ASA (OSE:SEVAN). Teekay also continues to expand its significant presence in the liquefied natural gas shipping sector through its publicly-listed subsidiary, Teekay LNG Partners L.P. (NYSE:TGP), and seeks to grow its conventional tanker business through its publicly-listed subsidiary, Teekay Tankers Ltd. (NYSE:TNK). With a fleet of approximately 150 vessels, offices in 16 countries and approximately 6,300 seagoing and shore-based employees, Teekay transports approximately 10 percent of the world’s seaborne oil and its reputation for safety, quality and innovation has earned it a position with its customers as The Marine Midstream Company.

Teekay’s common stock is listed on the New York Stock Exchange where it trades under the symbol “TK”.

About König:

König & Cie. is a leading privately owned developer of investment projects as well as a fund & asset manager in Germany, and has currently €4.2 billion assets under management. Investment projects have focused on the following industries: Shipping, Infrastructure, Real Estate, Private Equity & Renewable Energy. König currently controls a fleet of 83 vessels ranging from Container Vessels, Tankers, Bulk Carriers and a Car Carrier. König sponsors and manages the stock listed “Marenave Schiffahrts AG” that controls a fleet of currently 13 vessels. König issued over 80 KG-Funds approved by the German SEC, thereby investing into shipping investments valued at approx. €2.9 billion. The company is representing approx. 31,000 investors with about 42,000 KG-shares.

About Diamond S

Headquartered in Greenwich, Connecticut, USA, Diamond S Shipping Group is a global owner/operator of modern, efficient crude and refined product tankers. Diamond S Shipping’s current fleet consists of 30 medium-range refined product tankers on long-term charter, a newly built Suezmax tanker operated in the spot market and seven newbuild Suezmax and two LR2 tankers scheduled for delivery in 2012 and 2013. Diamond S Shipping has invested or committed US$2.0 billion in building its fleet.

Frontline's VLCC FRONT CHAMPION. Photo: Frontline

SINGAPORE (Dow Jones)–Norwegian oil major Statoil ASA (STL.OS) has chartered a vessel to ship North Sea Forties crude oil to Asia, in what could be at least the fourth arbitrage voyage for the Brent component to Asia in three months.

Statoil has provisionally chartered DHT Eagle to ship 2 million barrels of Forties crude from Hound Point to Asia, loading Feb. 12, a shipping fixture showed Monday. The cargo will likely head to South Korea, where Statoil has storage infrastructure.

South Korean appetite for North Sea crude has grown since its free-trade agreement with Europe came into effect in July. The agreement allows Korean buyers of North Sea Crude to redeem 3% of the price, making arbitrage deals attractive.

A narrowing of the Brent/Dubai exchange of futures for swaps–or EFS, which is the sweet-sour crude oil price differential–has also made Brent-linked grades more attractive to Asian buyers, increasing the flow of oil from west to east in recent months.

Exports of more North Sea crude oil will likely firm the European market, somewhat offsetting the bearish impact of Petroplus Holdings AG (PPHN.PB) recently shutting down some of its refineries.

The latest fixture, if confirmed, would mean that a total of 8 million barrels of Forties will have left the North Sea for Asia in three months.

Earlier this month, Statoil chartered VLCC Front Champion, at $6.10 million, for Jan. 21-23 loading from Mongstad port in Norway, to ship 2 million barrels of crude oil to South Korea.

-By Gurdeep Singh, Dow Jones Newswires

MT Venice, managed by Scorpio Commercial Management

MONACO – Scorpio Tankers Inc. (NYSE: STNG) announced that it has  signed a contract with South Korea’s Hyundai Mipo Dockyard Co. (HMD) to construct a 52,000 DWT Medium Range (MR) product tanker for approximately $36.4 million and at the same time, executed a $92.0 million credit facility with European banks, Credit Agricole (CA-CIB) and Skandinaviska Enskilda Banken AB (SEB), to partially finance four of their five newbuilding product tankers that they had contracted for in June 2011 with HMD.

Additional financing was also secured via an extension of a  2011 Credit Facility with Nordea Bank Finland plc, DnB NOR Bank ASA, and ABN AMRO Bank N.V.  This credit facility is aimed at financing one of the product tanker newbuilding orders from 2011, and the most recent MR product tanker ordered from HMD.

Emanuele Lauro, CEO of Scorpio Tankers, commented,

“Modernizing our fleet while securing financing for all of our newbuildings; expanding our relationship with our lenders; and taking advantage of what we believe are very attractive time charter opportunities all reflect that the Company will be positioned appropriately going forward. Our view of improving market fundamentals remains intact, highlighted by the recent strengthening in spot rates, and the steps we are taking to solidify our position for the future.”

Newbuilding Vessel Agreement

The sixth newbuilding vessel that the Company has agreed to acquire is scheduled to be delivered to the Company in January 2013. The agreement contains options for the Company to order up to three additional 52,000 DWT MR product tankers of the same specifications. The first option is for the construction of a single additional vessel at the same price as the sixth newbuilding, and the Company must notify the shipyard by the middle of January 2012 if it intends to exercise this option. In the event the Company exercises the first option, the Company shall have a second option for the construction of a further two vessels for a price of $37.2 million each, and the Company must notify the shipyard by the middle of March 2012 if it intends to exercise this option.

2011 Newbuilding Credit Facility

The 2011 Newbuilding Credit Facility with CA-CIB and SEB is for the partial financing of the pre-delivery and delivery installments for the four newbuildings that the Company contracted for in June 2011 and which are scheduled for delivery between July and October 2012. The facility is for an aggregate of $92.0 million to be made available in four tranches, one for each vessel, in the amount of $23.0 million, which is approximately 61% of contracted price for each vessel. Drawdowns will be available after the first 39% of the contracted price for each vessel is paid by the Company and subject to certain other conditions precedent. The four vessels will be collateral for the credit facility. The tranche relating to each vessel will be repaid after delivery of that vessel in quarterly installments of $375,000, which equates to a repayment profile of 15.33 years, and each tranche is scheduled to mature approximately seven years after delivery of the relevant vessel from the shipyard. Borrowings under the credit facility bear interest at LIBOR plus an applicable margin of 2.70% per annum. A commitment fee equal to 1.10% per annum is payable on the unused daily portion of the credit facility. The covenants and other conditions are similar to those contained in the Company’s existing credit facilities.

Loan Modifications

Agreement to Extend the Availability Period on the 2011 Credit Facility

The Company agreed with its lenders to extend the availability period of its 2011 Credit Facility through May 2013. This will give the Company the ability to use this facility to finance up to 50% of the cost of the fifth newbuilding vessel contracted for in June 2011 (scheduled for delivery in October 2012) and the sixth newbuilding vessel. There is currently $115 million available under this facility.

Agreement to Amend Financial Covenants of the 2010 Credit Facility and 2011 Credit Facility

The Company has also reached an agreement with its lenders to amend its financial covenants in the 2010 Credit Facility and 2011 Credit Facility. The amended provisions provide in substance that:

• The ratio of EBITDA to interest expense shall be no less than 1.25 to 1.00 commencing with the fourth fiscal quarter of 2011 until the fourth quarter of 2012, at which point it will increase to 1.50 to 1.00 for the first quarter of 2013, then increase to 1.75 to 1.00 for the second quarter of 2013, then increase to 2.00 for the third quarter of 2013 and through the maturity date of the loans. Such ratio shall be calculated quarterly on a trailing four quarter basis.
• Consolidated liquidity (cash, cash equivalents, and availability under the 2010 Credit Facility) needs to be not less than $25 million, of which unrestricted cash and cash equivalents shall be not less than $15.0 million, until the Company owns, directly or indirectly, more than 15 vessels, at which time the amount increases by $750,000 per each additional vessel.

Other Modifications

The margin on the each of the 2011 and 2010 Credit Facility will increase to 3.50% per annum beginning with the first quarter of 2012. Beginning with the fourth quarter of 2013, this margin will be reduced to 3.25% per annum so long as the Company’s debt to capitalization ratio is less than or equal to 50%. If such ratio exceeds 50% then the margin shall remain at 3.50% per annum.

The Company is restricted from paying dividends until its EBITDA to interest expense ratio is 2.00 to 1.00 or greater.

An aggregate amendment fee of approximately $0.7 million will be assessed for the above mentioned modifications, which include the extension of the availability period of the 2011 Credit facility and the amendments of the financial covenants of both credit facilities.

Time chartered-in extensions

Histria Azure - This vessel is currently off-hire and is expected to be re-delivered to the Company in January 2012. We have extended the term of the charter for this vessel for one year after the vessel is re-delivered to us at $12,000 per day. Pursuant to this charter agreement, we have an option to extend the term of the charter for four additional months at $12,250 per day and a second option to further extend the term of the charter agreement for an additional year at $13,650 per day.

Krisjanis Valdemars - This charter agreement was extended two months to February 14, 2012 from its original expiry date. Subsequent to that, the Company has three consecutive optional periods of four, three, and three months, respectively, at the base rate of $12,000 per day. This agreement also contains a profit and loss sharing provision whereby 50% of the vessel’s profits and losses above or below $12,000 per day are split with the vessel owner.

Kraslava - This charter agreement was extended one month to February 26, 2012 from its original expiry date. Subsequent to that, the Company has three consecutive optional periods of five, three and three months, respectively, at the current base rate of $12,070 per day.

About Scorpio Tankers Inc.

Scorpio Tankers Inc. is a provider of marine transportation of petroleum products worldwide. Scorpio Tankers Inc. currently owns a fleet of 12 vessels (one LR2 tanker, four LR1 tankers, four Handymax tankers, two MR tankers, and one post-Panamax tanker) with an average age of 5.9 years, time charters-in seven vessels (one LR2 tanker and six Handymax tankers), and has contracted for six newbuilding MRs, which are scheduled to be delivered to the Company between July 2012 and January 2013. Additional information about the Company is available at the Company’s website www.scorpiotankers.com.

Oil tanker giant, Frontline Ltd., announced 

Frontline Ltd. (“Frontline” or the “Company”) is pleased to announce that the restructuring of Frontline has been approved by the Board of the Company and will in the next few days be put forward to our creditors and counterparties for approval. The proposed solution has been made possible through a massive commitment from our major shareholder; Hemen Holding Ltd. (“Hemen”). The major part of the restructuring consists of the following elements:

The proposed solution has been made possible through a massive commitment from our major shareholder; Hemen Holding Ltd. (“Hemen”). The major part of the restructuring consists of the following elements:

A new company, Frontline 2012, will be established and registered on the NOTC list in Oslo. Frontline 2012 will acquire five VLCC newbuilding contracts, six modern VLCCs and four modern Suezmax tankers from Frontline at fair market value. The value of these vessels, including the value of one time charter agreement, is based on independent appraisals, set at $1,121 million. In addition, Frontline 2012 will assume a total of $666 million in bank debt attached to the newbuilding contracts and vessels and a further $325.5 million in remaining newbuilding commitments. Further Frontline will be paid for working capital related to the assets acquired. The transaction will be supported by a fairness opinion.

Frontline 2012′s ambition is to grow and become the consolidator in the tanker market when timing is right.

Frontline has achieved preliminary agreements with its major counterparts whereby the rates in the existing chartering arrangements are reduced in the period 2012 to 2015. This includes a rate reduction in the existing Ship Finance International Limited (“Ship Finance”) agreements of $6,500 per day for all vessels. Frontline will pay Ship Finance an up front compensation of $106 million of which $50 million will be prepayment of profit split and $56 million will be a release of restricted cash currently serving as security for charter payments. Frontline will compensate the counterparties with 100 percent of any difference between the renegotiated rates and the actual market rate up to the original contract rates. Some of the counterparties will receive some compensation for earnings achieved above original contract rates.

Frontline 2012 plans to raise new equity in the amount of $250 million, of which Frontline will subscribe for 10 percent. A commitment for the underwriting of the remaining equity issuance has been received from Hemen. This commitment is subject only to final agreement with the banks and major counterparts. The purchase of the assets from Frontline is based on fair market value supported by independent appraisals. However the Board of Frontline 2012 and the guarantor of the Frontline 2012 equity will to the extent permissible by securities law, seek to give preference to Frontline equity holders to subscribe to the new capital in Frontline 2012. In view of the fact that the transaction is based on current market values there will not be given any tradable rights for subscription.

The equity raised through the issue will be used to finance the acquisition of the vessels and newbuilding contracts from Frontline, pay for working capital, prepay senior secured debt, general corporate purposes and capitalize Frontline 2012 with cash.

Hemen will give a special guarantee of $250.5 million to make sure that all necessary debt and equity is in place to take delivery of the full remaining newbuilding program. In addition, Hemen will provide a guarantee of $30 million to satisfy minimum cash requirements in Frontline 2012. Terms of these guarantee are still to be finalized, however Hemen have agreed that any guarantee fee should be paid in shares.

Hemen is giving total guarantees of $505.5 million in order to restructure Frontline and establish Frontline 2012. These guarantees are valid until December 31, 2011, and are given on the basis that a successful restructuring can be agreed prior to December 31, 2011 and Frontline thereby can avoid any breaches of loan covenants as per year end.

If the proposed solution is approved Frontline should have significant strength to honor its obligations and meet the challenges created by a very weak tanker market. The Company’s sailing fleet, excluding the non recourse subsidiary ITCL, will be reduced from 50 units to 40 units. The cash in the Company will be increased with approximately $125 million. The newbuilding commitments will be reduced from $437.9 million to $112.4 million. The bank debt will be reduced from $679 million to $13 million. The gross charter payment commitment will be reduced by approximately $336 million in the period 2012-2015. When including the earnings from charter out agreements, the estimated daily cash break even rates for VLCCs and Suezmaxes in 2012 will be reduced from $25,600 and $20,800 to $17,600 and $12,800, respectively. All the numbers above exclude the non recourse subsidiary ITCL.

Frontline will, with the restructured cash break even rates and the solid cash position, be amongst the best positioned tanker companies to serve its obligations even if the market remains very weak. Until a clearer sign of recovery can be seen in the tanker market, Frontline will remain cautious and focus its resources on the present activities.

Through the solution of the sale of a limited amount of the Company’s assets, Frontline will avoid a heavy dilutive new equity offering and will thereby keep significant upside for the existing Frontline equity holders if the market recovers in the years to come.

The Chief Executive of Frontline Management AS, Jens Martin Jensen, says in a comment: “In this very difficult situation we are extremely pleased with the understanding and flexibility shown by our leading banks and the major counterparts. We feel that significant upside will be kept for Frontline’s existing equity holders through the massive reduction in debt and newbuilding obligations that the proposed solution will bring. With the restructured cash break even rates Frontline will be extremely well positioned to meet the challenges the current oversupply of tankers has created and also benefit from a recovery in the tanker market going forward. We want to thank all the parties who have contributed to this solution, which ultimately, if implemented, will give significant extra value to our creditors, counterparties and equity holders.”

Source: Frontline

Maersk Virtue. Photo: Maersk

Four VLCC tanker owners announced Tuesday preliminary plans to team up in an effort to cut costs amid slumping tanker rates.  The four partners included in the deal are Phoenix Tankers Pte., Maersk Tankers, Samco Shipholding Pte., Ocean Tankers Pte. and Mitsui OSK, who have agreed to the deal through a preliminary Letter of Intent.

According to a press statement from Maersk Tankers, the partners are now in detailed discussions and the VLCC Pool is expected to become operational from February 1, 2012 with offices in Singapore, Copenhagen, and New York.

The VLCC Pool will operate a combined fleet of around 50 VLCCs by the end of 2012 with an average age of only 3 years. The companies say the “flexibility of a large, young and reliable fleet ensures that the VLCC Pool can, at all times, offer relevant vessels of the highest standard to cater for our customers’ need for safe and environmentally friendly marine transportation.”

Tanker rates are at their lowest since 1999, which forced Maersk into a similar tanker pool with Euronav, Frontline, Overseas Shipholding Group, Inc., Osprey Maritime and Reederei “Nord” Klaus E. Oldendorff.

Photo: General Maritime

General Maritime Corp. (GMR) voluntarily filed for Chapter 11 bankruptcy and reached agreements with key senior lenders for a financial restructuring that will allow the oil-tanker company’s operations to continue.

“Our operations are strong, but continued macroeconomic weakness and reduced tanker rates have diminished our cash flow and our ability to comply with certain covenants under our debt instruments,” said Chief Financial Officer Jeffrey D. Pribor.

Along with the filing, General Maritime has received a commitment for up to $100 million in new debtor-in-possession financing from a group of lenders led by Nordea Bank Finland PLC. The company said the new financing and cash generated from its ongoing operations will fund the business during the restructuring process and prevent customer interruption.

The restructuring agreement and related equity commitment letter are supported by more than two-thirds of its obligations from banks and Oaktree Capital Management LP.

Oaktree also agreed to provide a $175 million new equity investment in General Maritime and convert its prepetition secured debt to equity.

With the exception of those in Portugal, Russia and Singapore, all of General Maritime’s subsidiaries have filed for Chapter 11.

Last month, Standard & Poor’s Ratings Services cut its rating on General Maritime to selective default, citing the company’s failure to make a scheduled principal payment.

In its latest quarterly results, General Maritime reported a wider loss as revenue dropped 12% on lower rates.

Shares closed Wednesday at 16 cents and were inactive premarket. The stock has fallen 95% so far this year.

-By Melodie Warner, Dow Jones Newswires

And on that note, here’s the latest from the Maritime and Port Authority of Singapore:

SINGAPORE (Dow Jones)–The number of oil, gas and chemical tankers passing through the port of Singapore in October rose 5.8% from the previous month, while overall tonnage was 3.2% higher, according to preliminary data from the Maritime and Port Authority of Singapore seen by Dow Jones Newswires Monday.

The port handled a total of 1,874 tankers with a combined gross tonnage of 54.40 million tons last month, up from 1,772 vessels 52.70 million tons in September, according to figures on the MPA’s website.

Of the tankers handled by the port last month, 1,307 were oil tankers, up from 1,238 in September, according to the figures.

-By Gurdeep Singh, Dow Jones Newswires

Teekay's Matterhorn Spirit southbound on the Delaware Bay, image by Rob Almeida/gCaptain

SINGAPORE (Dow Jones)–Asia’s petroleum tanker markets will likely stay anemic due to persistent oversupply, though falling bunker prices could support charterers’ bottom lines.

With China’s weeklong National Day holidays coming up next week, conditions are unlikely to improve given that many players will be out of the market, shipbrokers said.

The spot rate for a 260,000-metric-ton Very Large Crude Carrier from the Middle East to Japan was assessed Monday at Worldscale 44.96, down from the week-earlier level of W45.26, according to the Baltic Exchange.

However, due to collapsing bunker prices, cash returns for owners were assessed $378 stronger at minus $1,826.

“It has been at the bottom for about almost two months. Looking at the current market, surplus tonnage will continue so I don’t see any kind of upside,” a Japanese broker said.

Although the fixing of October-loading cargoes is in full swing, rates continue to be depressed due to high availability of vessels, broker Simpson, Spence & Young said in a research note.

Broker Meiwa International said in a note that one week into fixing of vessels for October, 36 cargoes are already set to be lifted. This compares with 95 lots for the whole of October in 2010.

The rate for a VLCC from West Africa to China edged up to W42.87 from W42.57, while the 80,000-ton Aframax rate from Southeast Asia to the east coast of Australia also rose slightly, to W91.22 from W92.11.

Freight rates for vessels carrying clean petroleum products have also fallen to their lowest levels in around two months, as naphtha demand remains slow, with end users hesitant to buy spot cargoes because of signs of a softening global economy.

“There is just not enough demand…for this week at least, I think rates will still be weak,” a Singapore-based broker said.

The rate for a 55,000-ton LR-1 cargo from the Middle East to Japan dropped to W128.38 Monday from W133.08 a week ago, while the rate for a 75,000-ton LR-2 cargo for the same route eased to W120.96 from W122.29.

The rate for a 30,000-ton tanker from Singapore to Japan slipped to W152.71 from W152.86.

-By Max Lin, Dow Jones Newswires

"Heather Knutsen" courtesy OneEighteen via Flickr

LONDON (Dow Jones)–A growing number of oil tankers are dropping anchor rather than shipping crude to market as the rate of ship construction outpaces global oil demand, prompting concern about how many ship owners can further endure the slump in the tanker market.

The idled ships are further eroding ship owners’ earnings, even though rates paid to charter ships have already sunk to historically low levels.

The Baltic and International Maritime Council’s chief shipping analyst Peter Sand expects the global crude tanker fleet–which includes Very Large Crude Carriers, or VLCCs, which can carry up to 2 million barrels of crude oil–to grow by 9.1% in 2011. Oil demand growth is only forecast to grow 1.4% this year, according to the International Energy Agency.

“The period of time for which oil tankers are idled, without employment or waiting to take on a cargo is seen growing,” BIMCO’s Sand said. “So far, 42 VLCCs have already been delivered in 2011, with only six reported sold for recycling.”

Maersk Tankers, a major crude fleet operator with 178 tankers, said the extra vessels have pushed shipping rates to unsustainably low levels, prompting it to trim costs.

“Our company has been able to significantly cut costs through super-slow voyages of 10 knots, which has led to savings in fuel and CO2 savings,” Maersk Tankers’ Chief Commercial Officer Klaus Sejling said Wednesday.

Omar Nokta, managing director of maritime research at U.S. Investment Bank Dahlman Rose & Co., said tanker shipping rates remain even below cash operating costs for ship owners on several routes.

-By Neena Rai, Dow Jones Newswires

Image courtesy Frontline

Oslo-listed oil tanker giant Frontline Ltd. (FRO.LN) Friday said it swung to a $35.24 million net loss in the second quarter, from a year-earlier profit of $81.31 million, due to weak demand for tankers that has continued into the third quarter.

The second-quarter result was also hit by a $9.3 million loss on the termination of the long-term contract for its Front Leader vessel and an $8.5 million loss on the termination of its long-term contract for its Front Breaker vessel. These terminations were announced earlier this year.

The losses were reduced by a $3.9 million gain on the sale of its Front Eagle tanker and a $2.0 million gain on the sale of Front Shanghai, announced in January and March.

Bermuda-based Frontline said the tanker market has been weak since the second half of 2010 and remains weak into the current quarter.

Analyst Axel Styrman at Carnegie said the figures for the second quarter were slightly weaker than expected, but that it came as no surprise that the tanker market is weak. The shares were down on the weak outlook, he said.

At 1017 GMT, shares traded 5.0% lower at NOK33.72.

“Management gave no signs of hope, no signals of an improvement,” Styrman said.

The analyst said an important piece of news in the earnings report was that the company said it would delay investments for its newbuilding program.

“This is good, it reduces the short-term risk for a rights issue,” he said.

Frontline said it expected shipbuilding investments of $79.9 million to be delayed into next year and $73.0 million to be deferred into 2013. The company said the investments are delayed because the newbuilding project has been pushed back by about four to five months.

Revenue for the second quarter declined to $219.4 million, from $356.1 million a year earlier.

-By Katarina Gustafsson, Dow Jones Newswires