Frontline Plc — Investor Presentation 2018

Feb 28, 2018

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

Quarterly Presentation| FEB 18

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 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

• Reports a net income attributable to the Company adjusted for certain non-cash items of \$5.0 million, or \$0.03 per share, for the fourth quarter of 2017.
• Reports a net loss attributable to the Company of \$248.4 million, or \$1.46 per share, for the fourth quarter of 2017, including noncash impairment losses of \$255.8 million
• Reports net loss attributable to the Company adjusted for certain non-cash items of \$4.4 million, or \$0.03 per share and a net loss attributable to the Company of \$264.9 million, or \$1.56 per share, respectively for the year ended December 31, 2017.
• Agreed with Ship Finance to terminate the long-term charter for the 1999-built VLCC Front Circassia
• Extended the terms of its senior unsecured loan facility of up to \$275.0 million facility with an affiliate of Hemen Holding Ltd by 12 months repayable in November 2019.

Q4 2017 Financial Highlights

(Million \$ except per share)	2017 Q4	2017 Q3	2017 Q2	2017 Q1	YTD
Total operating revenues (net of voyage expenses) (*)	99	76	90	122	387
Net Income (loss)	-248	-24	-19	27	-265
Net income (loss) adj (*)	5	-23	-14	28	-4
EBITDA adj (*)	62	31	37	78	208
Earnings (loss) per share	-1,46	-0,14	-0,11	0,16	-1,56
Earnings (loss) per share adjusted	0,03	-0,14	-0,08	0,16	-0,03
Cash	105	120	129	128
Interest bearing debt	1 580	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	2017
(in thousands of \$)	Oct - Dec	Jul - Sep	Jan-Dec
Total operating revenues	178 580	140 471	646 326
Other operating gain (loss)	3	(5 949)	2 381
Voyage expenses and commission	79 384	64 610	259 334
Contingent rental (income) expense	(6 957)	(6 735)	(26 148)
Ship operating expenses	33 394	34 158	135 728
Charter hire expenses	1 990	3 104	19 705
Impairment loss on vessels and vessels under capital lease	142 940	0	164 187
Impaiment loss on goodwill	112 821	0	112 821
Provision for uncollectible receivable	-	0	0
Administrative expenses	8 884	9 552	37 603
Depreciation	36 388	35 220	141 748
Total operating expenses	408 844	139 909	844 978
Net operating income (loss)	(230 261)	(5 387)	(196 271)
Interest income	250	70	588
Interest expense	(20 070)	(18 747)	(69 815)
Gain (loss) on sale of shares	(123)	(62)	1 061
Foreign currency exchange gain (loss)	(278)	(47)	(55)
Gain (loss) on derivatives	2 331	200	(753)
Other non-operating items	62	86	1 213
Net income (loss) before income taxes and non-controlling interest	(248 090)	(23 886)	(264 033)
Income tax expense	(181)	(16)	(290)
Net income (loss)	(248 271)	(23 903)	(264 323)
Net (income) loss attributable to non-controlling interest	(161)	(169)	(539)
Net income (loss) attributable to the Company	(248 432)	(24 072)	(264 862)
Basic earnings (loss) per share attributable to the Company (\$)	(1,46)	(0,14)	(1,56)
Weighted average number of ordinary shares (in thousands)	169 809	169 809	169 809

Non-cash items in the fourth quarter of 2017:

• \$142.9 million impairment loss on nine VLCCs leased from Ship Finance.
• \$112.8 million impairment loss on goodwill
• \$2.3 million gain on derivatives

Balance Sheet

	2017	2017	2016
(in million \$)	Dec 31	Sep 30	Dec 31
Assets
Current assets
Cash	105	120	203
Marketable securites	19	32	8
Other current assets	198	163	172
Non-current assets
Newbuildings	80	73	308
Vessels	2 616	2 772	2 014
Goodwill	112	225	225
Other long-term assets	4	26	35
Total assets	3 134	3 411	2 966
Liabilities and Equity
Current liabilities
Short term debt	113	102	67
Obligations under capital lease	43	42	57
Other current liabilities	66	70	59
Non-current liabilities
Long term debt	1 467	1 492	915
Obligations under capital lease	256	267	366
Other long-term liabilities	1	1	3
Frontline Ltd. stockholders' equity	1 188	1 437	1 500
Total liabilities and stockholders' equity	3 134	3 411	2 966

• \$307 million in cash and cash equivalents including undrawn amount of unsecured facility, marketable securities and minimum cash requirements bank
• \$305 million in remaining Capex and \$252 million in estimated debt capacity
• Newbuilding program fully funded
• No near term debt maturities
• 2018: N/A
• Nov 2019: \$90 million

Cash Breakeven Rates and Opex

Cash BE estimate remainder of 2018 Opex Q4 2017

• Estimated cash cost breakeven rates for the remainder of 2018 include bareboat hire / installments, interest loans, opex/drydock and G&A expenses.

*Source : Clarksons

Q4 Performance and Q1 Guidance

Current Market

Source: Clarkson

OECD Inventory Cycles & Freight

Source: EIA, Clarkson

10 Quarterly Presentation| FEB 18

Global Oil Demand

Source: EIA, OPEC, Clarkson, Frontline

Crude Tanker Order book

Pace of 2017 newbuilding deliveries continuing

• 50 VLCCs and 51 Suezmaxes delivered in 2017.
• Delivery pace continuing in 2018

Older vessels leaving the fleet

• 13 VLCCs and 12 Suezmaxes reported scrapped in 2017
• 7 VLCCs reported sold for scrap in 2018

Source: Fearnleys

Fourth Quarter 2017

Scrapping Finally a Real Alternative

Source: Clarkson

Summary

Bullish Factors Bearish Factors

• Crude oil demand growth continues to be strong
• Trade routes evolving, US exports to Asia growing fast
• Global Inventories below 5yr averages in days supply, draw cycle expected to slow
• Scrapping gaining pace, scrap prices continue to firm

• New ordering slow albeit low prices

• A significant number of newbuildings to be delivered

• Crude oil structure not supportive of inventory growth
• Demand for crude oil may fail to meet forecasts

Fundamental factors are in favor of a strong tanker market, but the fleet needs to re-balance from the present oversupply, this could happen faster than many anticipate. Frontline is well positioned.

www.frontline.bm

Appendix

Appendix 1 Reconciliation
(Million \$ except per share)	Q4 2017	Q3 2017	Q2 2017	Q1 2017	YTD
Total operating revenues net of voyage expenses
Total operating revenues	179	140	150	177	646
Voyage expenses	-79	-65	-60	-55	-259
Total operating revenues net of voyage expenses	99	76	90	122	387
Net income adj.
Net income (loss) attributable to the Company	-248	-24	-19	27	-265
Add back:
Loss on termination of vessel lease, net of cash paid	0	1	2	0	3
Vessel impairment loss	143	0	0	21	164
Goodwill impairment loss	113	0	0	0	113
Loss on derivatives	0	0	3	0	3
Less:
Gain on termination of lease	0	0	0	-21	-21
Gain on derivatives	-2	0	0	0	0
Net income adj.	5	-23	-14	28	-4
(in thousands)
Weighted average number of ordinary shares	169 809	169 809	169 809	169 809	169 809
(in \$)
Basic earnings per share adjusted for certain non-cash charges	0,03	-0,14	-0,08	0,16	-0,03
EBITDA adj.
Net income attributable to the Company	-248	-24	-19	27	-265
Add back: Interest expense	20	19	16	15	70
Depreciation	36	35	35	35	142
Income tax expense	0	0	0	0	0
Net income attributable to the non-controlling interest	0	0	0	0	0
Loss on termination of vessel lease, net of cash paid	0	1	2	0	4
Vessel impairment loss	143	0	0	21	164
Goodwill impairment loss	113	0	0	0	113
Loss on derivatives	0	0	3	0	3
Less:
Gain on termination of lease	0	0	0	-21	-21
Gain on derivatives	-2	0	0	0	-3
EBITDA adj.	62	31	37	78	208

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.