Frontline Plc — Earnings Release 2016

Nov 29, 2016

Q3 2016 Results

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World leader in the international seaborne transportation of crude oil

November 29, 2016

Forward Looking Statements

MATTERS DISCUSSED IN THIS DOCUMENT MAY CONSTITUTE FORWARD-LOOKING STATEMENTS. THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 PROVIDES SAFE HARBOR PROTECTIONS FOR FORWARD-LOOKING STATEMENTS IN ORDER TO ENCOURAGE COMPANIES TO PROVIDE PROSPECTIVE INFORMATION ABOUT THEIR BUSINESS. 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.

FRONTLINE DESIRES TO TAKE ADVANTAGE OF THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND IS INCLUDING THIS CAUTIONARY STATEMENT IN CONNECTION WITH THIS SAFE HARBOR LEGISLATION. THE WORDS "BELIEVE," "ANTICIPATE," "INTENDS," "ESTIMATE," "FORECAST," "PROJECT," "PLAN," "POTENTIAL," "MAY," "SHOULD," "EXPECT" "PENDING" AND SIMILAR EXPRESSIONS IDENTIFY FORWARD-LOOKING STATEMENTS.

THE FORWARD-LOOKING STATEMENTS IN THIS DOCUMENT ARE BASED UPON VARIOUS ASSUMPTIONS, MANY OF WHICH ARE BASED, IN TURN, UPON FURTHER ASSUMPTIONS, INCLUDING WITHOUT LIMITATION, MANAGEMENT'S EXAMINATION OF HISTORICAL OPERATING TRENDS, DATA CONTAINED IN FRONTLINE'S 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 FRONTLINE'S CONTROL, YOU CANNOT BE ASSURED THAT FRONTLINE WILL ACHIEVE OR ACCOMPLISH THESE EXPECTATIONS, BELIEFS OR PROJECTIONS. THE INFORMATION SET FORTH HEREIN SPEAKS ONLY AS OF THE DATES SPECIFIED AND FRONTLINE UNDERTAKES NO DUTY TO UPDATE ANY FORWARD-LOOKING STATEMENT TO CONFORM THE STATEMENT TO ACTUAL RESULTS OR CHANGES IN EXPECTATIONS OR CIRCUMSTANCES.

IMPORTANT FACTORS THAT, IN FRONTLINE'S VIEW, COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE DISCUSSED IN THE FORWARD-LOOKING STATEMENTS INCLUDE, WITHOUT LIMITATION: THE STRENGTH OF WORLD ECONOMIES AND CURRENCIES, GENERAL MARKET CONDITIONS, INCLUDING FLUCTUATIONS IN CHARTERHIRE RATES AND VESSEL VALUES, CHANGES IN DEMAND IN THE TANKER MARKET, INCLUDING BUT NOT LIMITED TO CHANGES IN OPEC'S PETROLEUM PRODUCTION LEVELS AND WORLD WIDE OIL CONSUMPTION AND STORAGE, CHANGES IN FRONTLINE'S OPERATING EXPENSES, INCLUDING BUNKER PRICES, DRYDOCKING AND INSURANCE COSTS, THE MARKET FOR FRONTLINE'S VESSELS, AVAILABILITY OF FINANCINGAND REFINANCING, ABILITY TO COMPLY WITH COVENANTS IN SUCH FINANCING ARRANGEMENTS, FAILURE OF COUNTERPARTIES TO FULLY PERFORM THEIR CONTRACTS WITH US, 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, VESSEL BREAKDOWNS, INSTANCES OF OFF-HIRE AND OTHER IMPORTANT FACTORS. FOR A MORE COMPLETE DISCUSSION OF THESE AND OTHER RISKS AND UNCERTAINTIES ASSOCIATED WITH FRONTLINE'S BUSINESS, PLEASE REFER TO FRONTLINE'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING, BUT NOT LIMITED TO, ITS ANNUAL REPORT ON FORM 20-F.

THIS PRESENTATION IS NOT AN OFFER TO PURCHASE OR SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE OR SELL, ANY SECURITIES OR A SOLICITATION OF ANY VOTE OR APPROVAL.

Third Quarter 2016

Company Highlights

Q3 2016 Highlights Subsequent Events

Healthy Results Despite Market Weakness

• Achieved net income attributable to the Company of \$16.6 million, or \$0.11 per share, adjusted for non-cash charges
• Cash dividend of \$0.10 per share for the third quarter
• Achieved net income attributable to the Company of \$154.7 million, or \$0.99 per share, adjusted for non-cash charges for nine months ended September 2016

Fleet Development

• Took delivery of four newbuildings: One VLCC, two Suezmax and one LR2
• Delivered five of six MR tankers sold during Q2 2016; final vessel delivered in November

Newbuilding Program

• Terminated contracts with STX Offshore & Shipbuilding for four VLCC newbuildings in October 2016

Financing Update

• Secured up to \$870 million in bank debt financing
• Debt financing secured for Frontline's current newbuilding program

Financial Review

Q3 2016 Financial Highlights

	2016
(Million \$ except per share)	Jul - Sept	Apr - Jun	Jan - Mar	YTD
Total operating revenues (net of voy.expenses)	113	160	192	465
EBITDA*	53	72	141	266
EBITDA adj**	65	98	141	304
Net income	5,5	14	79	99
Net income adj**	17	49	89	155
Impairment loss vessels and cap leases	9	25	-	34
Impairment loss on marketable securities	-	5	2	7
Loss on cancellation and sale of assets	3	-	-	' 3
Mark-to-Market derivatives / Non-controlling int.exp.	- 1	4	8	12
Earnings per share	0,03	0,09	0,50	0,63
Earnings per share (adjusted)	0,11	0,31	0,57	0,99
Interest bearing debt	1 016	962	916
Cash	127	135	272
Cash dividend declared	0,10	0,20	0,40	0,70
* Earnings Before Interest, Tax, Depreciation and Amortization
** Excl. impairment charges, loss/gain on cancellation and sale of NB contracts and vessels, mark to market gain/loss on derivatives and non-controlling interest expense

Earnings Per Share (1)

(1) Based on 156,386,506 shares outstanding as of September 30, 2016

Financial Review

Income Statement

	2016	2016	2016
(in thousands of \$)	Jul - Sep	Apr - Jun	Jan-Sep
Total operating revenues	157 157	191 756	576 016
(Loss) Gain on cancellation and sale of newbuilding contracts and vessels	(2 670)	-	(2 670)
Voyage expenses and commission	43 984	31 989	111 498
Contingent rental income	(8 765)	732	(11 419)
Ship operating expenses	30 811	32 487	92 756
Charter hire expenses	16 841	20 500	51 393
Impairment loss on vessels and vessels under capital lease	8 939	25 480	34 419
Administrative expenses	9 413	8 114	28 300
Depreciation	33 432	35 414	106 753
Total operating expenses	134 655	154 716	413 700
Net operating income	19 832	' 37 040	159 646
Interest income	76	96	259
Interest expense	(14 717)	(13 829)	(42 490)
Impairment loss on shares	(319)	(4 563)	(7 233)
Foreign currency exchange gain (loss)	(31)	(155)	152
Mark to market (loss) gain on derivatives	896	(4 210)	(11 364)
Other non-operating items	(55)	137	256
Net income before income taxes and non-controlling interest	5 682	15	99 226
Income tax expense	(73)	(54)	(177)
Net income	5 609	14 472	99 049
Net (income) loss attributable to non-controlling interest	(138)	(150)	(360)
Net income attributable to the Company	5 471	14 322	98 689

Cash Breakeven Rates and Opex

Remaining Newbuilding Capex and Debt Capacity

• Total loan commitments in 2016:
• Up to \$1,145 billion
• Up to \$870m secured
• \$275m unsecured
• Newbuilding capex fully financed

Financial Review

Balance Sheet

	2016	2016	2015
(in \$ million)	Sep 30	Jun 30	Dec 31
Cash	124	130	265
Restricted cash	3	5,5	0,4
Other Current assets	160	166	203
Long term assets:
Newbuildings	274	326	266
Vessels	2 075	2 095	1 924
Goodwill	225	225	225
Other long term assets	' 61		0,4
Total assets	2 923	2 948	2 883
Current liabilities	194	233	242
Long term debt	948	896	746
Obligations under capital lease	381	394	447
Other long term liabilities	3	3	3
Noncontrolling interest	-	0,1	0,1
Frontline Ltd. stockholders' equity	1 397	1 421	1 446
Total liabilities and stockholders' equity	2 923	2 948	2 883

Third Quarter 2016

Q3 Performance and Q4 Guidance

Q4 2016 Guidance - Daily TCE rates (USD/Day)

(1) Estimated cash cost breakeven rates for the remainder of 2016 includes bareboat hire / installments, interest loans, opex/drydock, and G&A expenses.

Third Quarter 2016

Time Charter Coverage Secures Cash Flow

Time charters secure cash flow and lower cash breakeven of spot fleet

• For the balance of 2016 the cover is 29%
• By end 2017 the cover is 18%

* Net free cash flow after current cash break even

Time Charter Coverage

Market Review & Outlook

Current Market

Improvements in market likely into Q1 2017

• The winter season historically supports a strong tanker market
• Congestion starting to show in key ports as volume increases
• Pace of newbuilding deliveries high, although first scrapping since 2014 observed

Crude oil demand has remained strong

• Global demand forecast to increase by 1.2mn bbl/day in 2017
• China, India and US import volumes continue to grow

OPEC Decision on production cap/cut

• Significant volume cuts, although unlikely, would be negative for tanker freight demand
• A balanced cut and cap, as suggested by most commentators, is not expected to have large impact
• Balanced supply/demand (tight) oil markets may prove positive for ton mile demand

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Market Review & Outlook

Crude Tanker Orderbook

Newbuildings continue to deliver

• Resilient market despite oil output disruptions and high delivery pace
• 56 VLCCs and 67 Suezmax tankers are scheduled to be delivered by year end 2017
• New orders have slowed dramatically

Market weakness may lead to scrapping

• 43 VLCCs and 31 Suezmax tankers are schedule for 3 rd of 4th special surveys
• New IMO regulations will require further investment and factor into scrapping decisions
• Older tonnage is increasingly difficult and less profitable to trade

Source: Fearnleys Nov-16

Recap

The market is still robust with encouraging demand and ton mile growth

Fleet growth challenges persist, but the gradual fleet renewal softens the blow

We are in a unique position to continue to generate returns to our shareholders

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