Frontline Plc — Interim / Quarterly Report 2017

Nov 22, 2017

Q3 2017 Results

Forward Looking Statements Third Quarter 2017

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 FINANCING AND 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.

Company Highlights Third Quarter 2017

Q3 2017 Highlights

• Reports a net loss attributable to the Company adjusted for certain non-cash items of \$23.1 million, or \$0.14 per share, for the third quarter of 2017.
• ' • Reports a net loss attributable to the Company of \$24.1 million, or \$0.14 per share, for the third quarter of 2017, primarily due to lower average spot daily time charter equivalent ("TCE") earnings achieved by our fleet and a \$5.8 million loss on the termination of the charter of Front Ardenne.
• Terminated the long-term charter for the 1997-built Suezmax tanker Front Ardenne.

1

• Took delivery of five newbuildings, including two VLCCs, one Suezmax and two LR2/Aframax tankers

Q3 2017 Financial Highlights

(Million \$ except per share)	2017 Q3	2017 Q2	2017 Q1	YTD
Total operating revenues (net of voyage expenses) (*)	76	90	122	288
Net Income (loss)	-24	-19	27	-16
Net income (loss) adj (*)	-23	-14	28	-9
EBITDA adj (*)	31	37	78	146
Earnings (loss) per share	-0,14	-0,11	0,16	-0,10
Earnings (loss) per share adjusted	-0,14	-0,08	0,16	-0,06
Cash	120	129	128
Interest bearing debt	1 594	1 365	' 1 153

(*) See Appendix 1 for reconciliation to nearest comparable GAAP figure

Earnings per share is based on 169,809,324 weighted average shares outstanding

Income Statement

	2017	2017	2016
(in thousands of \$)	Jul - Sep	Apr - Jun	Jan-Dec
Total operating revenues	140 471	150 148	754 306
Other operating gain (loss)	(5 949)	(12 239)	(2 683)
Voyage expenses and commission Contingent rental (income) expense	64 611 (6 735)	60 155 (8 688)	161 641 (18 621)
Ship operating expenses	34 158	37 552	119 515
Charter hire expenses	3 104	4 839	67 846
Impairment loss on vessels and vessels under capital lease	-	-	61 692
Provision for uncollectible receivable	-	-	4 000
Administrative expenses	9 552	10 599	37 026
Depreciation Total operating expenses	35 221 139 911	34 859 139 316	141 043 574 142
Net operating income (loss)	(5 389)	' (1 406)	177 481
Interest income	70	142	367
Interest expense	(18 745)	(15 975)	(56 687)
Impairment loss on shares	-	-	(7 233)
Gain (loss) on sale of shares	(62)	475	-
Foreign currency exchange gain (loss)	(47)	193	9
Gain (loss) on derivatives	201	(3 107)	3 718
Other non-operating items	86	511	204
Net income (loss) before income taxes and non-controlling interest	(23 886)	(19 168)	117 858
Income tax expense	(16)	(63)	(345)
Net income (loss)	(23 902)	(19 231)	117 514
Net income (loss) attributable to non-controlling interest	(169)	(148)	(504)
Net income (loss) attributable to the Company	(24 071)	(19 379)	117 010
Basic earnings (loss) per share attributable to the Company (\$)	(0,14)	(0,11)	0,75

Balance Sheet

(in million \$)	2017 Sep 30	2017 Jun 30	2016 Dec 31
Cash	119	128	202
Restricted cash	1	1	1
Other current assets	195	199	181
Long term assets:
Newbuildings	73	162	308
Vessels	2 772	2 477	2 014
Goodwill	' 225	225	225
Other long-term assets	26	28	35
Total assets	3 411	3 221	2 966
Current liabilities	214	197	183
Long term debt	1 492	1 275	915
Obligations under capital lease	267	286	366
Other long-term liabilities	1	3	3
Frontline Ltd. stockholders' equity	1 437	1 459	1 500
Total liabilities and stockholders' equity	3 411	3 221	2 966

Cash Breakeven Rates and Opex

Cash BE estimate remainder of 2017 Opex Q3 2017

• Estimated cash cost breakeven rates for the remainder of 2017 include bareboat hire / installments, interest loans, opex/drydock and G&A expenses.

Third Quarter 2017

Q3 Performance and Q4 Guidance

Market Review & Outlook

Current Market

Deliveries continue to weigh

• High pace of deliveries continues; vessels returning from dry dock adds to the pressure
• Typical seasonal upturn has been subdued due to excess supply of vessels

Crude oil demand remains strong

• All major reporting agencies expect strong demand growth continuing in 2018
• Global oil inventories are in decline, oil market balancing

Crude oil supply resilient

• Increasing long haul trade from Atlantic basin to Asia is positive for tonne miles

Market Review & Outlook

Crude Tanker Orderbook

Pace of 2017 newbuilding deliveries slowing

• 44 VLCCs and 48 Suezmaxes delivered year to date
• Delivery pace expected to slow towards the end of the year before picking up again in Q1 2018

Older vessels leaving the fleet

• 9 Suezmaxes and 10 VLCCs reported scrapped to date as demolition prices are up 50% YoY.
• We expect scrapping to increase going forward as the spot markets remains especially challenging for older tonnage

Source: Fearnleys Nov-17

Market Review & Outlook

Scrapping Finally a Real Alternative

Continue Trading vs. Scrapping

• When the vessel reaches 17.5 or 20 years, its typically dry-docked or sold for scrap
• Dry-dock cost is about 2-3 million USD, scrapping presently gives you 17 million USD
• A 15 year old vessel is valued at about 21,5 million USD
• Demand for tankers for scrapping firming as scrapping activity of other vessel classes slows

Summary Third Quarter 2017

• Frontline continues to renew fleet
• Proactive steps to increase earnings potential
• Near term pressure on rates due to fleet growth, scrapping expected to pick up
• Positive long term view, as oil demand growth continues at a strong pace and fleet balances

Frontline is fully focused on returning value to shareholders, and expect to generate substantial returns to our shareholders in a strong tanker market, like we have a long history of doing.

Third Quarter 2017

Third Quarter 2017

Appendix 1

Reconciliation (Million \$ except per share)			Q3 2017 Q2 2017 Q1 2017 YTD
Total operating revenues net of voyage expenses
Total operating revenues	140	150	177	468
Voyage expenses	-65	-60	-55	-180
Total operating revenues net of voyage expenses	76	90	122	288
Net income adj.
Net income (loss) attributable to the Company	-24	-19	27	-16
Add back:
Loss on termination of vessel lease, net of cash paid	1	2	0	3
Vessel impairment loss	0	0	21	21
Loss on derivatives	0	3	0	3
Less:
Gain on termination of lease	0	0	-21	-21
Gain on derivatives	0	0	0	0
Net income (loss) adj.	-23	-14	28	-9
(in thousands)
Weighted average number of ordinary shares			169 809 169 809 169 809 169 809
(in \$)
Basic earnings (loss) per share adjusted for certain non-cash charges	-0,14	-0,08	0,16	-0,06
EBITDA adj.
Net income (loss) attributable to the Company	-24	-19	27	-16
Add back:
Interest expense	19	16	15	50
Depreciation	35	35	35	105
Income tax expense	0,2	-0,1	0,0	0,1
Net (income) loss attributable to the non-controlling interest	0,2	-0,1	-0,1	0,0
Loss on termination of vessel lease, net of cash paid	1	2	0	4
Vessel impairment loss	0	0	21	21
Loss on derivatives	0	3	0	3
Less:
Gain on termination of lease	0	0	-21	-21
Gain on derivatives	-0,2	0,0	0,0	-0,2
EBITDA adj.	31	37	78	146

This presentation describes: total operating revenues net of voyage expenses, net income attributable to the Company adjusted for certain non-cash items ("Net income adj.") and related per share amounts and Earnings Before Interest, Tax, Depreciation & Amortisation adjusted for the same non-cash items ("EBITDA adj."), which are not measures prepared in accordance with US GAAP ("non-GAAP").

We believe the non-GAAP financial measures presented in this press release provides investors with a means of evaluating and understanding how the Company's management evaluates the Company's operating performance.

' These non-GAAP financial measures should not be considered in isolation from, as substitutes for, nor superior to financial measures prepared in accordance with GAAP.

Due to rounding, numbers presented in this document may not add up precisely to the totals provided.