Frontline Plc — Earnings Release 2014

Aug 28, 2014

FRO - Second Quarter and Six Months 2014 Results

FRO - Second Quarter and Six Months 2014 Results

Highlights

* Frontline reports a net loss attributable to the Company of $78.2 million

for the second quarter of 2014, equivalent to a loss per share of $0.81.

* Frontline reports a net loss attributable to the Company of $22.1 million

for the second quarter of 2014, when excluding impairment loss of $56.2

million, equivalent to a loss per share of $0.23.

* Frontline reports a net loss attributable to the Company of $90.3 million

for the six months ended June 30, 2014, equivalent to a loss per share of

$0.95.

* Frontline reports a net loss attributable to the Company of $18.4 million

for the six months ended June 30, 2014, when excluding loss on sale of

vessels and impairment loss, equivalent to a loss per share of $0.19.

* Frontline has issued 2,865,511 new shares under the ATM program in the

second quarter and a further 1,140,226 new shares in July 2014.

* Frontline took delivery of the Suezmax newbuilding, Front Ull, in May 2014.

* Frontline entered into a $60.0 million term loan facility in June 2014 to

part finance its two Suezmax newbuildings.

* Frontline agreed with Ship Finance in July 2014 to terminate the long term

charter parties for the 1999 built VLCCs Front Opalia, Front Comanche and

Front Commerce and Ship Finance simultaneously sold the vessels to unrelated

third parties. The charter parties are expected to terminate in the fourth

quarter of 2014.

Second Quarter and Six Months 2014 Results

The Board of Frontline Ltd. (the "Company" or "Frontline") announces a net loss

attributable to the Company of $78.2 million in the second quarter, equivalent

to a loss per share of $0.81, compared with a net loss of $12.1 million for the

first quarter, equivalent to a loss per share of $0.13.

The Company has recorded a vessel impairment loss of $56.2 million in the three

and six months ended June 30, 2014. This loss relates to the VLCCs Front Opalia,

Front Commerce and Front Comanche.  Impairment losses are taken when events or

changes in circumstances occur that cause the Company to believe that future

cash flows for an individual vessel will be less than its carrying value and not

fully recoverable. In such instances an impairment charge is recognized if the

estimate of the undiscounted cash flows expected to result from the use of the

vessel and its eventual disposition is less than the vessel's carrying amount.

The average daily time charter equivalents ("TCEs") earned in the spot and

period market in the second quarter by the Company's VLCCs and Suezmax tankers

were $13,900 and $12,400, respectively, compared with $32,700 and $27,700,

respectively, in the preceding quarter. The spot earnings for the Company's

double hull VLCCs and Suezmax vessels were $12,500 and $12,400, respectively,

compared with $32,500 and $27,700, respectively, in the preceding quarter.

Contingent rental expense represents amounts accrued following changes to

certain charter parties in December 2011 and decreased in the second quarter as

compared to the first quarter primarily due to a decrease in actual spot market

rates.

Interest expense, net of capitalized interest, was $21.2 million in the second

quarter of which $5.7 million relates to the Company's subsidiary Independent

Tankers Corporation Limited ("ITCL").

Frontline announces a net loss attributable to the Company of $90.3 million for

the six months ended June 30, 2014, equivalent to a loss per share of $0.95. The

average daily TCEs earned in the spot and period market in the six months ended

June 30, 2014 by the Company's VLCCs and Suezmax tankers were $23,400 and

$19,800, respectively, compared with $14,600 and $14,100, respectively, in the

six months ended June 30, 2013. The spot earnings for the Company's double hull

VLCCs and Suezmax vessels were $22,600 and $19,800, respectively, in the six

months ended June 30, 2014 compared with $12,900 and $14,100, respectively, in

the six months ended June 30, 2013.

As of June 30, 2014, the Company had total cash and cash equivalents of $62.4

million and restricted cash of $36.7 million. Restricted cash includes $35.9

million relating to deposits in ITCL.

The Company estimates average total cash cost breakeven rates for the remainder

of 2014 on a TCE basis for VLCCs and Suezmax tankers of approximately $24,000

and $17,800, respectively.

Fleet Development

In July 2014, several of the subsidiaries and related entities in the Windsor

group (the "Windsor group"), owned by ITCL, filed for reorganization under

Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court in

Wilmington, Delaware. In connection with the filing, the Windsor group has

entered into a restructuring support agreement with bondholders. Under the

restructuring and support agreement, the supporting holders of the Notes have

agreed to support a plan of reorganization that would convert claims on account

of the Notes for 100% of the equity in the reorganized company. On August 25th a

plan of reorganization was filed the terms of which are consistent with the Plan

Support Agreement. This could provide for Windsor to emerge as early as

November.  The Company expects to de-consolidate the Windsor group in the third

quarter of 2014 as a consequence of the Chapter 11 filing and the fact the group

is consolidated under the variable interest entity model. The Company also

expects to record an impairment loss in the third quarter of approximately $5

million. The Company will enter into a revised management agreement with the

reorganized Windsor group and will continue to provide commercial management for

its vessels.

In July 2014, the Company agreed with Ship Finance to terminate the long term

charter parties for the 1999 built VLCCs Front Opalia, Front Comanche and Front

Commerce and Ship Finance simultaneously sold the vessels to unrelated third

parties. The charter parties are expected to terminate in the fourth quarter of

2014. The decision to terminate the long term charter parties was taken in view

of the required investment to take the vessels through the 15 year special

survey. The Company has agreed an aggregate compensation payment to Ship Finance

of approximately $58.8 million for the early termination of the charter parties,

of which approximately $10.5 million will be paid upon termination and the

balance will be recorded as notes payable, with similar amortization profiles to

the current lease obligations, with reduced rates until December 2015 and full

rates from 2016.

The Company equity accounts for three wholly-owned subsidiaries, which each own

one vessel currently on bareboat charter to Chevron. In July 2014, the Company

received a request from Chevron to terminate the three bareboat charters early

and not April 1, 2015 as scheduled. Such early termination would also result in

the full redemption of all the outstanding Term Notes. The Company is currently

in discussion with Chevron on this matter.

Newbuilding Program

In April 2014, the Company agreed with Rongsheng shipyard to swap its two

Suezmax newbuildings on order with two similar Suezmax vessels from the same

shipyard at a lower contract price. Installments paid to date will be allocated

to the new vessels. The first vessel, the Front Ull, was delivered on May

19, 2014 following payment of the final installment of $41.5 million and the

second vessel is expected to be delivered in the fourth quarter of 2014. The

Company is committed to making payments of $41.5 million as of the date of this

report.

Corporate

The Company issued 2,865,511 new ordinary shares under its ATM program in the

three months ended June 30, 2014 and had an issued share capital at June

30, 2014 of $98,206,287 divided into 98,206,287 ordinary shares (December

31, 2013: $86,511,713 divided into 86,511,713 ordinary shares). The weighted

average number of shares outstanding for the quarter was 96,855,462.

In June 2014, the Company entered into a $60.0 million term loan facility to

part finance its two Suezmax newbuildings. No drawdowns were made in the second

quarter. We intend to draw $30.0 million in the third quarter for the vessel

delivered in the second quarter and the balance when the next vessel is

delivered.

The Market

The market rate for a VLCC trading on a standard 'TD3' voyage between the

Arabian Gulf and Japan in the second quarter of 2014 was WS 38, representing a

decrease of WS 13 points from the first quarter of 2014 and in line with the

second quarter of 2013. The flat rate decreased by 6.7 percent from 2013 to

The market rate for a Suezmax trading on a standard 'TD5' voyage between West

Africa and Philadelphia in the second quarter of 2014 was WS 63, representing a

decrease of WS 16 points from the first quarter of 2014 and an increase of WS 9

points from the second quarter of 2013. The flat rate decreased by 6 percent

from 2013 to 2014.

Bunkers at Fujairah averaged $601/mt in the second quarter of 2014 compared to

$611/mt in the first quarter of 2014. Bunker prices varied between a high of

$621/mt on June 23(rd) and a low of $589/mt on May 8(th).

The International Energy Agency's ("IEA") August 2014 report stated an OPEC

crude production of 30.0 million barrels per day (mb/d) in the second quarter of

2014. This was unchanged compared to the first quarter of 2014.

The IEA estimates that world oil demand averaged 91.7 mb/d in the second quarter

of 2014, which is an increase of 0.2 mb/d compared to the previous quarter. IEA

estimates that world oil demand in 2014 will be 92.7 mb/d, representing an

increase of 1.2 percent or 1.1 mb/d from 2013.

The VLCC fleet totalled 629 vessels at the end of the second quarter of 2014,

two vessels up from the previous quarter. Five VLCCs were delivered during the

quarter, three were removed. The order book increased by 12 vessels and counted

92 vessels at the end of the second quarter, which represents 15 percent of the

VLCC fleet.

The Suezmax fleet totalled 448 vessels at the end of the second quarter, down

one from the end of the previous quarter. One vessel was delivered during the

quarter whilst two were removed. The order book counted 55 vessels at the end of

the second quarter, which represents approximately 12 percent of the Suezmax

fleet.

Strategy and Outlook

Despite the improved tanker market experienced so far in the third quarter, the

Company is in a challenging situation with $1,031 million in debt and lease

obligations as of June 30, 2014. Based on the current outlook for the tanker

market, it is doubtful if the Company can generate sufficient cash from

operations to repay the $190 million convertible bond loan with maturity in

April 2015. The Board is considering various financing alternatives such as

raising equity or selling assets, establish new loans or refinance existing

arrangements to raise sufficient cash to repay the $190 million convertible bond

loan. A full restructuring of the company, including lease obligations and debt

agreements might be the only alternative.

The positive development in the tanker market in the third quarter is likely to

give an improved operating result (excluding one time gains and losses) in the

third quarter

Forward Looking Statements

This press release contains forward looking statements. These statements are

based upon various assumptions, many of which are based, in turn, upon further

assumptions, including Frontline management's examination of historical

operating trends. Although Frontline believes that these assumptions were

reasonable when made, because assumptions are inherently subject to significant

uncertainties and contingencies which are difficult or impossible to predict and

are beyond its control, Frontline cannot give assurance that it will achieve or

accomplish these expectations, beliefs or intentions.

Important factors that, in the Company's view, could cause actual results to

differ materially from those discussed in this press release include the

strength of world economies and currencies, general market conditions including

fluctuations in charter hire rates and vessel values, changes in demand in the

tanker market as a result of changes in OPEC's petroleum production levels and

world wide oil consumption and storage, changes in the Company's operating

expenses including bunker prices, dry-docking and insurance costs, changes in

governmental rules and regulations or actions taken by regulatory authorities,

potential liability from pending or future litigation, general domestic and

international political conditions, potential disruption of shipping routes due

to accidents or political events, and other important factors described from

time to time in the reports filed by the Company with the United States

Securities and Exchange Commission.

The Board of Directors

Frontline Ltd.

Hamilton, Bermuda

August 27, 2014

Questions should be directed to:

Jens Martin Jensen: Chief Executive Officer,

Frontline Management AS

+47 23 11 40 99

Inger M. Klemp: Chief Financial Officer,

Frontline Management AS

+47 23 11 40 76

This information is subject of the disclosure requirements pursuant to section

5-12 of the Norwegian Securities Trading Act.

[HUG#1851732]