Frontline Plc — Investor Presentation 2015

Aug 26, 2015

Q2 2015 Results

' "World leader in the international seaborne transportation of crude oil"

August 26, 2015 ¹

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," "WILL," "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. FRONTLINE UNDERTAKES NO DUTY TO UPDATE ANY FORWARD-LOOKING STATEMENT TO CONFORM THE STATEMENT TO ACTUAL RESULTS OR CHANGES IN EXPECTATIONS.

MPORTANT 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 OF FRONTLINE.

Agenda

• Second Quarter 2015 Highlights and Transactions
• Financial Review
• Market Update
• Outlook
• Q & A

Second Quarter 2015

Highlights and Transactions

• The Company issued 18.8 million new shares in the second quarter under its ATM program and this program is fully utilized.
• In April 2015, the remaining outstanding balance on the convertible bond of \$93.4 million was repaid in full upon maturity.
• ' In June 2015, the Company agreed with Ship Finance to amend the long term charter parties relating to 17 vessels such that the fixed charter payments to Ship Finance are expected to decrease by approximately \$283 million.
• In July 2015, the Company and Frontline 2012 entered into an agreement and plan of merger.

Financial Highlights

• Q2 2015 results
• Net income : \$17.4m
• Net income per share : \$0.11

Share price NYSE August 25, 2015: \$2.32

Market cap: \$460m

Income Statement

2014	2015	CONDENSED CONSOLIDATED INCOME STATEMENTS	2015	2014	2014
Apr-Jun	Apr-Jun	(in thousands of \$)	Jan-Jun	Jan-Jun	Jan-Dec
118,972	134,777	Total operating revenues	279,154	288,970	559,688
-	-	(Loss) gain on sale of assets and amortization of deferred gains	-	(15,727)	24,620
72,108	32,487	Voyage expenses and commission	75,719	152,809	286,367
23,112	23,526	Ship operating expenses	42,047	46,164	89,674
118	18,258	Contingent rental expense	34,470	13,141	36,900
10,324	10,368	Administrative expenses	20,363	19,394	40,787
56,178	-	Impairment loss on vessels	-	56,178	97,709
22,680	17,131	Depreciation	34,064	45,526	81,471
184,520	101,770	Total operating expenses	206,663	333,212	632,908
(65,548)	33,007	Net operating income (loss)	72,491	(59,969)	(48,600)
11	14	Interest income	25	18	47
(21,216)	(12,199)	' Interest expense	(26,882)	(42,781)	(75,825)
7,405	(3,477)	Share of results from associated companies	2,271	7,967	3,866
119	(8)	Foreign currency exchange gain (loss)	57	88	(179)
-	-	Debt conversion expense	-	-	(41,067)
-	-	Gain on bond buy back	333	-	1,486
-	-	Loss from de-consolidation of subsidiaries	-	-	(12,415)
381	159	Other non-operating items	422	687	1,486
(78,848)	17,496	Net income (loss) before tax and noncontrolling interest	48,717	(93,990)	(171,201)
(98)	51	Taxes	(2)	(168)	(459)
(78,946)	17,547	Net income (loss)	48,715	(94,158)	(171,660)
716	(177)	Net (income) loss attributable to noncontrolling interest	(221)	3,843	8,722
(78,230)	17,370	Net income (loss) attributable to Frontline Ltd.	48,494	(90,315)	(162,938)
\$(0.81)	\$0.11	Basic earnings (loss) per share attributable to Frontline Ltd.	\$0.35	\$(0.95)	\$(1.63)

Ship operating expenses/Off-hire

2 Scheduled drydockings in Q3 2015

Balance Sheet

Balance sheet
(in \$ million)	2015	2015	2014
	Jun 30	Mar 31	Dec 31
Cash	78	88	64
Restricted cash	0	0	42
Other Current assets	146	113	127
Long term assets:
Newbuildings '	-	-	15
Vessels	562	647	607
Other long term assets	86	108	106
Total assets	873	956	962
Current liabilities	172	244	329
Long term liabilities	485	712	704
Noncontrolling interest	0,4	0,4	0,3
Frontline Ltd. stockholders' equity	215	-0,4	-71
Total liabilities and stockholders' equity	873	956	962

Cash Cost Breakeven

Comments to B/E rates (\$/day):

Included in Cash B/E rates are: BB hire/installments & interest loans, opex, drydock and admin expenses

Earnings & Market Factors

The Market

• Oil supply remained high during the quarter
• Oil demand increased from Q1
• 'Forced' storage of oil
• Vessel speed up absorbed
• High fleet utilization

	2015			2014
\$/day	YTD	Q 2	Q 1	FY	Q 4	Q 3	Q 2	Q 1
VLCC Spot	52 800	53 600	52 200	24 100	27 400	23 900	12 500	32 500
VLCC incl. TC out	50 000	50 600	49 400	24 800	27 900	24 600	13 900	32 700
Suezmax Spot	36 400	38 000	35 000	21 500	27 200	19 500	12 400	27 700
Suezmax Incl. TC out	33 400	33 800	33 100	21 100	26 000	18 600

VLCC Fleet

Fleet

Current Fleet	639	Delivered 2015	9
Orderbook	107	Estimated deliveries 2015	17
Orderbook/Fleet	17%

Current Fleet & Orderbook

Delivery Schedule

Source: Fearnleys

Suezmax Fleet

Values & TC Rates

Source: Clarkson

The Present Market

Current earnings at the lowest point seen in 2015 Reasons

• Saudi exports down
• Iraqi (Basra) exports fell 20% in July
• Chinese imports down in Aug/Sep (record high, up 28% YoY in Jun/Jul '15)
• Refinery maintenance

Market Outlook

Risk factors

• Rally in the oil price
• Yard capacity / tanker orderbook
• Demolition slowdown
• Opec (Saudi) strategy change
• A fall in fleet utilization (currently at about 88%)

Bullish factors

• Oil supply looks to remain high
• Atlantic supply moves east
• Majority of refinery expansion East of Suez
• High crude volumes causes congestion and 'forced' storage
• Demand is supported by the low oil price