Frontline Plc — Earnings Release 2015

Nov 24, 2015

FRO - Third Quarter and Nine Months 2015 Results

FRO - Third Quarter and Nine Months 2015 Results

Frontline Ltd. (the "Company" or "Frontline"), today reported unaudited results

for the period ended September 30, 2015.

Highlights

* Frontline achieved net income attributable to the Company of $17.4 million,

or $0.09 per share, for the third quarter of 2015 and net income

attributable to the Company of $65.9 million, or $0.42 per share, for the

nine months ended September 30, 2015.

* The long-term charters for the 1995-built Suezmax tankers, Front Glory and

Front Splendour, were terminated in September and October, respectively.

The Company received compensation payments of $2.2 million and $1.3 million,

respectively, for the termination of the charters.

* In November, the Company agreed to terminate the long-term charter for the

1998-built Suezmax tanker, Mindanao.  The charter is expected to terminate

in the fourth quarter of 2015.  The Company expects to receive a

compensation payment of approximately $3.3 million for the termination of

the charter.

* In July 2015, the Company and Frontline 2012 Ltd entered into an agreement

and plan of merger. Shareholder meetings of each of Frontline and Frontline

2012 will be held on November 30, 2015 to vote to approve the Merger

Agreement.

* Assuming shareholder approval and completion of the merger, the Board of

Directors of Frontline has recommended implementing a dividend strategy to

distribute quarterly dividends to shareholders equal to or close to EPS

adjusted for non recurring items. The timing and amount of dividends is at

the discretion of the Board of Directors. The first dividend for the merged

company is expected to be declared and paid in December 2015.

* November 23, 2015 Frontline entered into an agreement to purchase two

157,500 dwt Suezmax tanker newbuilding contracts from Golden Ocean Group

Limited at a purchase price of $55 million per vessel. The newbuilding

contracts are with New Times Shipbuilding Co. Ltd. in China and the vessels

are expected to be delivered in the first quarter of 2017.

Robert Hvide Macleod, Chief Executive Officer of Frontline Management AS

commented:

"We are very pleased to report our strongest third quarter since 2008 with net

income attributable to the Company of $17.4 million, or $0.09 per share.

The strength of the tanker market was driven primarily by high demand for low

priced oil, a dynamic which continued from the second quarter. The high demand

for oil has led to congestion in key ports around the world, which creates more

demand for tanker vessels.  Also of note, ballast speeds increased during the

third quarter, returning to normal levels.  We believe that this is a strong

sign that capacity is being absorbed.  Indeed, current fleet utilization is at

levels not seen since 2009.

The average daily time charter equivalents ("TCEs") earned through a combination

of spot and time charters in the third quarter by the Company's VLCCs and

Suezmax tankers were $45,600 and $28,100, respectively. Several of our tankers

were fixed for positioning voyages in the third quarter, which reduced average

TCEs.  The positioning voyages were made to strategically position the vessels

ahead of the fourth quarter, which in the past has yielded seasonally higher

rates.

For our vessels employed in the spot market, we have covered 80% of our VLCC

operating days in the fourth quarter at TCE rates of approximately $68,500 and

88% of our Suezmax operating days at TCE rates of approximately $42,500.  Rates

for vessels on time charters are naturally at lower levels than those that can

be achieved on a spot basis in this strong market."

Fleet Development

As of September 30, 2015, Frontline's fleet consisted of 14 VLCC and eight

Suezmax tankers with an aggregate carrying capacity of 5.4 million dwt.  Of

these, two Suezmax tankers are owned by the Company and the remaining 20 vessels

are chartered in from third parties. Additionally, the Company has 6 VLCCs,

eight Suezmax tankers, 10 LR2 Aframax tankers, and 15 MR2 Handysize tankers

under commercial management.

The majority of the Company's leased vessels are leased from Ship Finance

International Ltd. ("Ship Finance") under long term charter agreements.  In June

2015, the Company and Ship Finance agreed to amend the long term charter

agreements on 12 VLCCs and five Suezmaxes for the remaining average charter

period of 7.7 years.  Under the new agreement, which took effect July 1, 2015,

the daily time charter rates for VLCCs and Suezmaxes were decreased to $20,000

and $15,000, respectively.  Daily operating expenses payable by Ship Finance for

all vessels were increased from $6,500 to $9,000.  In connection with the

decrease in daily time charter rates and the increase in daily operating

expenses, the Company and Ship Finance agreed to revise the profit split above

the daily time charter rates to 50%/50%, and 55 million shares of Frontline were

issued to Ship Finance. Please refer to Form 6-K filed by the Company with the

Securities and Exchange Commission on June 1, 2015 for further details on the

amended charter structure.

In August 2015, the Company agreed with Ship Finance to terminate the long term

charter for the 1995-built Suezmax tanker Front Glory. The charter with Ship

Finance terminated in September. The Company received a compensation payment of

$2.2 million from Ship Finance for the termination of the charter.

In September 2015, the Company agreed with Ship Finance to terminate the long

term charter for the 1995-built Suezmax tanker Front Splendour, which has

surveys due at the end of this year. The charter with Ship Finance terminated in

October. The Company received a compensation payment of $1.3 million from Ship

Finance for the termination of the charter.

In November 2015, the Company agreed with Ship Finance to terminate the long

term charter for the 1998-built Suezmax tanker Mindanao. The charter with Ship

Finance is expected to terminate in the fourth quarter of 2015. The Company will

receive a compensation payment of approximately $3.3 million from Ship Finance

for the termination of the charter.

After giving effect to these terminations, the vessels on charter from Ship

Finance will be reduced to 12 VLCCs and two Suezmax tankers.

November 23, 2015 Frontline entered into an agreement to purchase two 157,500

dwt Suezmax tanker newbuilding contracts from Golden Ocean Group Limited at a

purchase price of $55 million per vessel. The newbuilding contracts are with New

Times Shipbuilding Co. Ltd. in China and the vessels are expected to be

delivered in the first quarter of 2017.

The Market

World oil supply currently is at its highest level ever at nearly 97 million

barrels per day.  This, along with a strong demand for inexpensive crude oil,

has led to the tanker fleet surpassing 85% utilization, the highest level seen

in many years and a sign of a healthy market, assuming continuation of these

levels of demand.  Increasing eastbound cargoes and new refinery projects in

Asia are keeping tonne miles high, a trend the Company believes will continue.

Additionally, forced storage of oil on tankers due to a high supply of cargoes

is contributing to a strong market.

The average rate for VLCCs trading on a standard 'TD3' voyage between the

Arabian Gulf and Japan in the third quarter of 2015 was WS 55, or a daily time

charter equivalents ("TCEs") of $58,002, and the average rate for a Suezmax

trading on a standard 'TD20' voyage between West Africa and Rotterdam in the

third quarter of 2015 was WS 73, or a TCE of $35,274. These average rates were

slightly lower than the rates in the previous quarter.

The VLCC fleet totalled 645 vessels at the end of the quarter, and the Suezmax

fleet totalled 450 vessels.  The order book for tankers represents approximately

17% of the tanker fleet, although a relatively small portion of the order book

is expected to be delivered within the next six to twelve months.  Given the

strength of the market, only a limited amount of scrapping activity has

occurred.

Corporate update

On July 2, 2015, Frontline and Frontline 2012 Ltd. ("Frontline 2012") announced

that they have entered into an agreement and plan of merger (the "Merger

Agreement"), pursuant to which the two companies have agreed to enter into a

merger transaction, with Frontline 2012 becoming a wholly-owned subsidiary of

Frontline. Frontline filed a registration statement with the United States

Securities and Exchange Commission ("SEC") on August 24, 2015 covering the

common shares to be issued by Frontline to Frontline 2012's shareholders in the

merger.  The registration statement was declared effective by the SEC on

November 9, 2015. The shareholders' meetings of each of Frontline and Frontline

2012 are scheduled to be held November 30, 2015. Assuming approval by the

shareholders of Frontline and Frontline 2012, the transaction will be accounted

for as a business combination using the acquisition method of accounting under

the provisions of ASC 805, with Frontline 2012 selected as the accounting

acquirer under this guidance.

Third Quarter and Nine Months 2015 Results

The Company generated net income attributable to the Company of $17.4 million,

or $0.09 per share, in the third quarter, compared with net income attributable

to the Company of $17.4 million, or $0.11 per share, for the previous quarter.

The Company recorded a gain of $1.8 million in the third quarter from the

termination of the lease for the Front Glory.

The TCEs earned in the spot and period market in the third quarter by the

Company's VLCCs and Suezmax tankers were $45,600 and $28,100, respectively,

compared with $50,600 and $33,800 in the previous quarter. The spot earnings for

the Company's VLCCs and Suezmax vessels were $49,100 and $28,700, respectively

compared with $53,600 and $38,000 in the preceding quarter.

Total operating expenses in the third quarter were in line with the previous

quarter. Dry docking costs fell by $2.2 million compared with the previous

quarter.  Two vessels were dry docked in the third quarter compared with four in

the previous quarter.

Contingent rental expense represents amounts accrued following changes to the

charter parties related to the four vessels leased from German limited

partnerships and the vessels leased from Ship Finance. Contingent rental expense

in the third quarter includes $16.6 million attributable to the amended lease

agreements with Ship Finance, which took effect on July 1, 2015.

Net income attributable to the Company was $65.9 million, or $0.42 per share,

for the nine months ended September 30, 2015. The average daily TCEs earned by

the Company's VLCCs and Suezmax tankers in the spot and period market in the

nine months ended September 30, 2015 were $48,500 and $31,700, respectively,

compared with $23,800 and $19,300, respectively, in the nine months ended

September 30, 2014. The spot earnings for the Company's VLCCs and Suezmax

vessels were $51,600 and $34,000, respectively, in the nine months ended

September 30, 2015 compared with $23,000 and $19,700, respectively, in the nine

months ended September 30, 2014.

The Company estimates that average daily total cash cost breakeven rates for the

remainder of 2015 will be approximately $27,700 and $22,100 for the Company's

VLCCs and Suezmax tankers, respectively.

Strategy and Outlook

The shareholders' meetings of each of Frontline and Frontline 2012 to vote on

the announced Merger Agreement are scheduled to be held on November 30, 2015.

Assuming shareholder approval and completion of the merger, Frontline together

with its subsidiary Frontline 2012 (together, the "Surviving Company") will have

a fleet of approximately 90 vessels, including vessels on commercial management,

vessels on time charter in and newbuildings due for delivery in the next 24

months.  With a large modern fleet, a strong balance sheet and attractive cash

break even rates, the Company believes that the Surviving Company should be

equally well positioned to generate significant free cash in a strong market and

to sustain a weak market.  The Company believes the Surviving Company will be

well positioned to grow through acquisition and consolidation opportunities.

Assuming shareholder approval and completion of the merger, the Board of

Directors of Frontline has recommended implementing a dividend strategy to

distribute quarterly dividends to shareholders equal to or close to EPS adjusted

for non recurring items. The timing and amount of dividends is at the discretion

of the Board of Directors. The first dividend for the merged company is expected

to be declared and paid in December 2015.

Conference Call and Webcast

On Tuesday November 24, 2015 at 9:00 A.M. ET (3:00 P.M. CET), the Company's

management will host a conference call to discuss the results.

Participants should dial into the call 10 minutes before the scheduled time

using the following numbers:

International Dial-In/UK Local                           +44(0)20 3427 0503

Norway Toll Free                                        800 56054

UK Toll Free                                        0800 279 4841

USA Toll Free                                        1877 280 2342

USA Local                                        +1212 444 0895

Conference ID: 8145275

Presentation materials and a webcast of the conference call may be accessed on

the Company's website, www.frontline.bm, under the 'Webcast' link.

A replay of the conference call will be available for seven days following the

live call.  The following numbers may be used to access the telephonic replay:

International Dial-In/UK Local                           +44 (0)20 3427 0598

Norway Dial-In                                        +47 2100 0498

USA Local                                        +1 347 366 9565

National free phone - United Kingdom                        0800 358 7735

National free phone - United States of America 1866 932 5017

Replay Access Number                                        8145275

Important Information for Investors and Shareholders

This communication does not constitute an offer to sell or the solicitation of

an offer to buy any securities or a solicitation of any vote or approval. In

connection with the proposed transaction between Frontline and Frontline 2012,

Frontline has filed relevant materials with the Securities and Exchange

Commission (the "SEC"), including a registration statement of Frontline on Form

F-4 (File No. 333-206542), initially filed on August 24, 2015 and subsequently

amended, that includes a joint proxy statement of Frontline 2012 and Frontline

that also constitutes a prospectus of Frontline. The registration statement was

declared effective by the SEC on November 9, 2015. A definitive joint proxy

statement/prospectus has been mailed to shareholders of Frontline 2012 and

Frontline. INVESTORS AND SECURITY HOLDERS OF FRONTLINE 2012 AND FRONTLINE ARE

URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS THAT WILL

BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE

BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.  Investors and security holders

will be able to obtain free copies of the registration statement and the joint

proxy statement/prospectus (when available) and other documents filed with or

furnished to the SEC by Frontline through the website maintained by the SEC at

http://www.sec.gov. Copies of the documents filed with or furnished to the SEC

by Frontline will be available free of charge on Frontline's website at

http://www.frontline.bm. Additional information regarding the participants in

the proxy solicitations and a description of their direct and indirect

interests, by security holdings or otherwise, will be contained in the joint

proxy statement/prospectus and other relevant materials to be filed with or

furnished to the SEC when they become available.

Forward-Looking Statements

Matters discussed in this press release may constitute forward-looking

statements. Forward-looking statements include statements concerning plans,

objectives, goals, strategies, future events or performance, and underlying

assumptions and other statements, which are other than statements of historical

facts. Words, such as, but not limited to "believe," "anticipate," "intends,"

"estimate," "forecast," "project," "plan," "potential," "may," "should,"

"expect," "pending" and similar expressions identify forward-looking statements.

Forward-looking statements include, without limitation, statements regarding:

* The effectuation of the transaction between Frontline and Frontline 2012

described above;

* The delivery to and operation of assets by Frontline;

* Frontline's and Frontline 2012's future operating or financial results;

* Future, pending or recent acquisitions, business strategy, areas of possible

expansion, and expected capital spending or operating expenses; and

* Tanker market trends, including charter rates and factors affecting vessel

supply and demand.

The forward-looking statements in this press release are based upon various

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

including without limitation, examination of historical operating trends, data

contained in records and other data available from third parties. Although

Frontline believes that these assumptions were reasonable when made, because

these assumptions are inherently subject to significant uncertainties and

contingencies which are difficult or impossible to predict and are beyond the

control of Frontline, Frontline cannot assure you that they, or the combined

company, will achieve or accomplish these expectations, beliefs or projections.

In addition to these important factors, other important factors that could cause

actual results to differ materially from those discussed in the forward-looking

statements, including the strength of world economies and currencies, general

market conditions, including fluctuations in charter rates and vessel values,

changes in demand for tanker shipping capacity, changes in the combined

company's operating expenses, including bunker prices, drydocking and insurance

costs, the market for the combined company's vessels, availability of financing

and refinancing, 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, vessels

breakdowns and instances of off-hires and other factors. Please see Frontline's

filings with the SEC and the Prospectus for a more complete discussion of these

and other risks and uncertainties. The information set forth herein speaks only

as of the date hereof, and Frontline disclaims any intention or obligation to

update any forward-looking statements as a result of developments occurring

after the date of this communication.

The Board of Directors

Frontline Ltd.

Hamilton, Bermuda

November 23, 2015

Questions should be directed to:

Robert Hvide Macleod: Chief Executive Officer,

Frontline Management AS

+47 23 11 40 84

Inger M. Klemp: Chief Financial Officer,

Frontline Management AS

+47 23 11 40 76

This information is subject to the disclosure requirements pursuant to section

5-12 of the Norwegian Securities Trading Act.

[HUG#1968929]