Frontline Beats Street, Sinks New Ship Orders

To contend with these facts, Frontline said that it canceled orders for six new ships -- four Suezmax-class tankers and two VLCCs -- which will save the company $556 million in capital expenditures. Executives are also trying to decide whether to exercise purchase options on three double-hull VLCCs, which for obvious reasons are more in demand than single-hulled oil tankers.

Frontline has been perhaps more exposed to the spot market than some of its peers, and the company has been trying to amend that problem by moving more of its business into the long-term charter model and away from the spot market. In its press release, the company said that 40% of its fleet will likely be locked into fixed-term charters in 2009 and 27% in 2010.

Trumpeting its cash position and relative balance-sheet strength, Frontline also hinted that it may be in a position to pursue acquisitions. "The increased volatility in the market is likely to create interesting opportunities for growth and consolidation," it said.