Frontline Plc — Investor Presentation 2010

May 21, 2010

F R O N T L I N E

Q1 2010 Results

CEO Frontline Mgt, Jens Martin Jensen

CFO Frontline Mgt, Inger M. Klemp

May 21, 2010

---

Disclaimer

THIS PRESENTATION AND ITS ENCLOSURES AND APPENDICES (HEREINFER JOINTLY REFERRED TO AS THE "PRESENTATION" HAS BEEN PREPARED BY FRONTLINE LTD. ("FRONTLINE" or THE "COMPANY") EXCLUSIVELY FOR INFORMATION PURPOSES. THIS PRESENTATION HAS NOT BEEN REVIEWED OR REGISTERED WITH ANY PUBLIC AUTHORITY OR STOCK EXCHANGE. RECIPIENTS OF THIS PRESENTATION MAY NOT REPRODUCE, REDISTRIBUTE OR PASS ON, IN WHOLE OR IN PART, THE PRESENTATION TO ANY OTHER PERSON.

THE DISTRIBUTION OF THIS PRESENTATION AND THE OFFERING, SUBSCRIPTION, PURCHASE OR SALE OF SECURITIES ISSUED BY THE COMPANY IN CERTAIN JURISDICTIONS IS RESTRICTED BY LAW. PERSONS INTO WHOSE POSSESSION THIS PRESENTATION MAY COME ARE REQUIRED BY THE COMPANY TO INFORM THEMSELVES ABOUT AND TO COMPLY WITH ALL APPLICABLE LAWS AND REGULATIONS IN FORCE IN ANY JURISDICTION IN OR FROM WHICH IT INVESTS OR RECEIVES OR POSSESSES THIS PRESENTATION AND MUST OBTAIN ANY CONSENT, APPROVAL OR PERMISSION REQUIRED UNDER THE LAWS AND REGULATIONS IN FORCE IN SUCH JURISDICTION, AND THE COMPANY SHALL NOT HAVE ANY RESPONSIBILITY OR LIABILITY FOR THESE OBLIGATIONS. IN PARTICULAR, NEITHER THIS PRESENTATION NOR ANY COPY OF IT MAY BE TAKEN OR TRANSMITTED OR DISTRIBUTED, DIRECTLY OR INDIRECTLY, INTO CANADA OR JAPAN.

THIS PRESENTATION DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION IN SUCH JURISDICTION.

IN RELATION TO THE UNITED STATES AND U.S. PERSONS, THIS PRESENTATION IS STRICTLY CONFIDENTIAL AND IS BEING FURNISHED SOLELY IN RELIANCE ON APPLICABLE EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED. THE SHARES OF MDL HAVE NOT AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES, OR TO OR FOR THE ACCOUNT OR BENEFIT OF U.S. PERSONS, UNLESS AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT IS AVAILABLE. ACCORDINGLY, ANY OFFER OR SALE OF SHARES IN MDL WILL ONLY BE OFFERED OR SOLD (I) WITHIN THE UNITED STATES, OR TO OR FOR THE ACCOUNT OR BENEFIT OF U.S. PERSONS, ONLY TO QUALIFIED INSTITUTIONAL BUYERS ("QIBs") IN PRIVATE PLACEMENT TRANSACTIONS NOT INVOLVING A PUBLIC OFFERING AND (II) OUTSIDE THE UNITED STATES IN OFFSHORE TRANSACTIONS IN ACCORDANCE WITH REGULATION S. ANY PURCHASER OF SHARES IN THE UNITED STATES, OR TO OR FOR THE ACCOUNT OF U.S. PERSONS, WILL BE DEEMED TO HAVE MADE CERTAIN REPRESENTATIONS AND ACKNOWLEDGEMENTS, INCLUDING WITHOUT LIMITATION THAT THE PURCHASER IS A QIB.

NONE OF THE COMPANY'S SHARES HAS BEEN OR WILL BE QUALIFIED FOR SALE UNDER THE SECURITIES LAWS OF ANY PROVINCE OR TERRITORY OF CANADA. THE COMPANY'S SHARES ARE NOT BEING OFFERED AND MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN CANADA OR TO OR FOR THE ACCOUNT OF ANY RESIDENT OF CANADA IN CONTRAVENTION OF THE SECURITIES LAWS OF ANY PROVINCE OR TERRITORY THEREOF.

THIS PRESENTATION INCLUDES "FORWARD-LOOKING" STATEMENTS (DEFINED IN SECTION 27A OF THE US SECURITIES ACT AND SECTION 21E OF THE US EXCHANGE ACT AS ALL STATEMENTS OTHER THAN STATEMENTS OF HISTORICAL FACTS) INCLUDING, WITHOUT LIMITATION, THOSE REGARDING THE COMPANY'S FINANCIAL POSITION, BUSINESS STRATEGY, PLANS AND OBJECTIVES FOR FUTURE OPERATIONS. SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY, OR, AS THE CASE MAY BE, THE INDUSTRY, TO MATERIALLY DIFFER FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. SUCH FORWARD-LOOKING STATEMENTS ARE BASED ON NUMEROUS ASSUMPTIONS REGARDING THE COMPANY'S PRESENT AND FUTURE BUSINESS STRATEGIES AND THE ENVIRONMENT IN WHICH THE COMPANY WILL OPERATE. AMONG THE IMPORTANT FACTORS THAT COULD CAUSE THE COMPANY'S ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS TO MATERIALLY DIFFER FROM THOSE IN THE FORWARD-LOOKING STATEMENTS ARE, AMONG OTHERS, THE COMPETITIVE NATURE OF THE MARKETS, TECHNOLOGICAL DEVELOPMENTS, GOVERNMENT REGULATIONS, CHANGES IN ECONOMICAL CONDITIONS OR POLITICAL EVENTS.

FRONTLINE

---

FRONTLINE
3

Agenda

• ☐ First Quarter 2010 Highlights and Transactions
• ☐ Financial Review
• ☐ Newbuildings
• ☐ Market Update
• ☐ Outlook
• ☐ Q & A

---

First Quarter 2010

Highlights and transactions

• Completion of private placement of $225 million of convertible bonds (April)
• Delivery of the first three Suezmax newbuildings from Rongsheng
• Hull H1017 – Northia (5 Jan. 2010)
• Hull H1018 – Front Odin (12 May 2010)
• Hull H1019 – Naticina (9 March 2010)
• Acquisition of two 2009 built VLCC tankers
• Front Eminence was delivered 18 May, 2010, second vessel (tbn Front Endurance) expected to be delivered in June, 2010.
• Secured long term financing of 70% of the purchase price
• Amendments to restricted cash deposits with Ship Finance International Limited
• Reduced to $62 million with effect from end of March, 2010
• Termination of charter party for the single hull VLCC Golden River
• Compensation payment of approximately $2.9 million
• Charter agreements entered into in Q2-10
• Front Striver, TC-out 4-6 months from April

FRONTLINE

---

First Quarter 2010

Financial Highlights

Q1 2010 results

• Net income: $79.7m
• EPS: $1.02
• Net income excl. gain: $69.9m
• EPS excl. gain: $0.90

Dividend declared per share Q1: $0.75

Share price NYSE 19 May. 2010: $31.36

• Market cap: $2,442m

FRONTLINE

---

Financial Review

Income Statement

| CONDENSED CONSOLIDATED INCOME STATEMENTS
(in thousands of $) | 2010
Jan-Mar | 2009
Jan-Mar | 2009
Jan-Dec
(audited) |
| --- | --- | --- | --- |
| Total operating revenues | 331,823 | 356,601 | 1,133,286 |
| Gain on sale of assets and amortization of deferred gains | 9,817 | - | 3,061 |
| Voyage expenses and commission | 67,934 | 64,193 | 219,375 |
| Profit share expense | 11,315 | 14,487 | 33,018 |
| Ship operating expenses | 45,371 | 48,613 | 206,381 |
| Charterhire expenses | 43,900 | 51,976 | 169,503 |
| Administrative expenses | 7,876 | 8,255 | 30,647 |
| Depreciation | 53,053 | 58,116 | 237,313 |
| Total operating expenses | 229,449 | 245,640 | 896,237 |
| Net operating income | 112,191 | 110,961 | 240,110 |
| Interest income | 4,076 | 6,073 | 22,969 |
| Interest expense | (35,511) | (40,620) | (160,988) |
| Share of results from associated companies | (173) | (164) | (544) |
| Foreign currency exchange gain (loss) | 14 | (109) | (346) |
| Other non-operating items | 208 | 1,161 | 4,632 |
| Net income before taxes and noncontrolling interest | 80,805 | 77,302 | 105,833 |
| Taxes | (49) | 2 | (361) |
| Net income | 80,756 | 77,304 | 105,472 |
| Net income attributable to noncontrolling interest | (1,068) | (686) | (2,771) |
| Net income attributable to Frontline Ltd. | 79,688 | 76,618 | 102,701 |
| | | | |
| Basic earnings per share ($) | $1.02 | $0.98 | $1.32 |

FRONTLINE

---

Financial Review

Income on time charter basis

	2010	2009
$/day	Q1	FY	Q4	Q3	Q2	Q1
VLCC Spot DH	49 200	38 000	30 400	26 800	38 700	56 200
VLCC Spot SH	23 600	23 800	12 600	20 000	28 300	28 200
VLCC Spot	47 500	36 900	29 600	26 300	37 700	53 700
VLCC whole fleet	45 300	38 300	33 200	32 100	38 400	50 300
VLCC Spot excl. floating charter	54 000
Suezmax Spot DH	30 600	23 200	18 300	12 800	24 400	38 300
Suezmax Spot SH	8 700	9 100	7 600	-2 200	13 100	18 200
Suezmax Spot	29 500	22 500	17 800	12 100	23 800	37 300
Suezmax whole fleet	31 800	25 300	21 300	15 900	26 800	37 900
Gemini Suezmax pool	30 900		20 300	14 866
OBO	47 900	43 000	42 800	42 200	42 700	44 200

FRONTLINE

TCE VLCC

TCE SUEZMAX

---

Financial Review

Ship operating expenses/Off-hire

Total fleet opex ($/day)

Number of vessels drydocked

☐ Decrease in ship operating expenses from Q4-09 refers mainly to:
- Fewer drydockings

☐ Tentative drydock schedule/no. of vessels
- Q2-10: 3

Off hire (days)

FRONTLINE

---

Financial Review

Balance sheet

| Balance sheet
(in $ million) | 2010
Mar. 31 | 2009
Mar. 31 | 2009
Dec. 31 |
| --- | --- | --- | --- |
| Cash | 86 | 207 | 83 |
| Restricted cash | 224 | 334 | 430 |
| Other Current assets | 400 | 236 | 271 |
| Long term assets: | | | |
| Restricted cash | 68 | 125 | 70 |
| Vessels | 2 446 | 2 591 | 2 419 |
| Newbuildings | 351 | 421 | 414 |
| Other long term assets | 85 | 28 | 29 |
| Total assets | 3 658 | 3 942 | 3 715 |
| Current liabilities | 554 | 627 | 605 |
| Long term liabilities | 2 298 | 2 575 | 2 359 |
| Noncontrolling interest | 10 | 7 | 9 |
| Frontline Ltd. stockholders' equity | 796 | 733 | 741 |
| Total liabilities and stockholders' equity | 3 658 | 3 942 | 3 715 |

FRONTLINE

---

Financial Review

Cash Cost Breakeven

Estimated Cash cost breakeven rates 2010 ($/day)
VLCC 31,100
Suezmax 25,300
Suezmax OBO 24,800

Comments to B/E rates:
☐ Included in cash B/E rates are: BB hire/installments & interest loans + opex and admin. costs.
☐ B/E rates exclude M/T Hampstead, M/T Kensington, the three vessels on BB-out, capex. and balloon repayments on loans.

FRONTLINE

---

Newbuildings

FRONTLINE

---

Newbuildings

Newbuildings Overview

• Total newbuilding program end Q1-10 after cancellations and restructuring approx. $847.7m
• Six VLCCs and two Suezmax tankers

• Financial exposure limited to $649.7m (four VLCCs and two Suezmax tankers + $54m)

• Installments paid per end Q1-10: $313m (Q4 $364m including H1017 and H1019)

• Remaining installments to be paid approx. $336.5m
• "Front Odin", the Suezmax newbuilding with hull number H1018, was delivered 12 May 2010. Remaining installments to be paid excl. this vessel is $308.5m

FRONTLINE

---

Newbuildings

Financing

• 80% of contract price for first two VLCCs from Waigaoqiao and four Suezmax tankers from Rongsheng
• $302.7m outstanding debt per end Q1-10

• Expect to draw further $73.7m in 2010

• 70% of contract price for last two VLCCs from Waigaoqiao

• $58.6m outstanding debt per end Q1-10

• The VLCCs built at Jinhaiwan (del. 2H-11/1H-12) currently unfinanced.

• Indications received for financing at minimum $65m per vessel

FRONTLINE

---

Newbuildings

Capital Expenditures

FRONTLINE

*Assumed financing for the two unfinanced VLCCs is $65m/vessel

14

---

Corporate Overview

Frontline Fleet

Incl. vessels on commercial management & ITCL, excl. newbuildings

Total: 84

FRONTLINE

DH: Double Hull, SH: Single Hull

---

Corporate Overview

Frontline Fleet

	2010			VESSELS AS PER END 2011
		No. of vessels (current)	Av. TC Coverage (2010)	Av. Net TC/BB Rate $/day (2010)	No. of vessels	Av. TC Coverage (year)	Av. Net TC/BB Rate ($/day)
VLCC	DH	31	13 %	46 300	36	7 %	47 700
	SH	2	75 %	41 300	0
	SH/DS on BB-out	3	93 %	17 300 *	3	64 %	16 300
	Newbuildings	6			2
Suezmax	DH	16	16 %	37 100	18	7 %	38 500
	SH	0			0
	OBO	8	92 %	48 400	8	63 %	49 900
	Newbuildings	1
ITCL	VLCC DH	6	100 %		6	100 %
	Suezmax DH	3	100 %		3	100 %
Com. Mng.	VLCC DH	6			6
	Suezmax DH	9			9
*Bareboat rate
Total Fleet (ex. Newbuildings & SH BB)		81	29 %	44 800	89	17 %	48 000
Total Fleet (ex. Newbuildings, incl. SH BB)		84	33 %		91	20 %
Total Fleet (ex. Newbuildings, incl. SH BB & floating rate charters)		44 %			35 %

• The TC/BB rates exclude profit split.

FRONTLINE

---

Market Update

Earnings & Market Factors

Q1 – Average Market earnings

VLCC : $55,600/day

Suezmax : $32,500/day

Market Trends

Fewer newbuilding deliveries than expected for Q1

• VLCC: 17 del. Vs. 20 estimated
• Suezmax: 18 del. Vs. 24 estimated

Storage: Around 51 DH VLCCs in Q1

OPEC production up 520,000 b/d from Q1 2009

Global Oil Demand up 1,85 mb/d from Q1 2009

VLCC Single hull removals outpacing deliveries

Increased ton mile scenario

Iran situation

Single hull fleet end Q1-10

• VLCC : 63
  Removals: 21
• Suezmax : 24
  Removals: 9

FRONTLINE

Source: Fearnleys, Clarksons, IEA

---

Market Update

VLCC Fleet

Fleet

Current Fleet	527	Orderbook	178
DH Fleet	464	Delivered 2009	55
SH (DS, DB, SS) Fleet	63	Deliveries 2010	72

Current fleet & Orderbook

Delivery Schedule

FRONTLINE

Source: Fearnleys 1 May 2010

---

Market Update

Suezmax Fleet

Fleet

Current Fleet	402	Orderbook	123
DH Fleet	378	Delivered 2009	46
SH (DS, DB, SS)	24	Deliveries 2010	67

Current fleet & Orderbook

Delivery Schedule

FRONTLINE

Source: Fearnleys 1 May 2010

---

Market Update

Rates

NEWBUILDING

TC MARKET

FRONTLINE

Source: Clarksons

---

Market Update

Fleet Development

Deliveries - Estimate vs. Actual

	VLCC	SUEZMAX
2009 (Est.):	68	73
2009 (Actual):	54	46
Change:	-14	-27
	VLCC	SUEZMAX
---	---	---
2010 FY (Est.):	72	67
Q1 (Est.)	20	24
Q1 (Act.)	17	18
Change:	-3	-6
Slippage	VLCC	SUEZMAX
---	---	---
2009:	20%	37%
2010 (Est.):	15%	25%

Single Hull Removals Q1

VLCC:	21
Suezmax:	9

FRONTLINE

Source: Fearnleys, Frontline

---

Market Update

China

Development

• Oil imports tracking car sales
• Estimated car sales of 15.2 million units in 2010
• Up 12% y-o-y
• 2009: 13.6 million units (up 46% y-o-y)
• Q1 Chinese oil demand up 1.4 mb/d (19%) y-o-y
• 9.1 mb/d FY 2010
• 7.2% (610 kb/d) oil demand growth for 2010
• ...more than 1/3 of global oil demand growth

Refinery Expansion & Stockpiling

• Tremendous refinery expansion – will elevate imports
• 2 new storage facilities announced in Guangdong
• 2010 oil refinery capacity: 8.7 mb/d
• Dec 2005: 5.4 mb/d
• Strategic stockpiling
• Phase 1: 102 mb reserve - completed 2008
• Phase 2: 170 mb reserve - due for completion 2011
• Phase 3: 204 mb reserve - due for completion 2020
• Aim is a 100 day supply coverage by 2012-2013
• Abt. 30 days cover in March 2009

FRONTLINE

Source: IEA

---

Market Update

Outlook

FLEET

• Modest fleet growth in Q1 for VLCC
• Newbuilding prices are increasing
• ...seemingly limited 2012 VLCC NB slots available
• From Q4 2010 the “expensive orderbook” will commence

WORLD

• Production and demand moving up
• IMF – expectations of increased world GDP
• Volatile oil prices (contango)

FRONTLINE

• Single hull phase out on track
• Golden River (VLCC) and Front Voyager (Smax)
• Added tonnage to our VLCC fleet
• Via purchase and commercial management
• Further strengthening and consolidation of Gemini pool
• Reduced cash breakeven rates in Q2 and Q3-10

FRONTLINE

Source: IEA

---

Any questions?

FRONTLINE