FRO Frontline

 
TIDMFRO 
 
 
   Highlights 
 
 
   -- Frontline reports net income attributable to the Company of $31.1 million 
      for the first quarter of 2015, equivalent to earnings per share of 
      $0.25. 
 
   -- Today, Frontline announced that it has entered into a heads of agreement 
      to amend the terms of the long term charter agreements with Ship Finance 
      for the remainder of the charter period with effect from July 1, 2015. 
 
   -- In January 2015, the ATM program was increased to having aggregate sales 
      proceeds of up to $150.0 million, from up to $100.0 million. Frontline 
      issued 12,191,291 new shares under its ATM program in the first quarter. 
 
   -- In April 2015, the Company issued 12,900,323 new shares under the ATM 
      program. 
 
   -- In May 2015, the Company issued 5,941,251 new shares under the ATM 
      program and the existing ATM program is fully utilized. 
 
   -- In February 2015, Frontline bought $33.3 million notional principal of 
      its convertible bond at a purchase price of 99%. 
 
   -- In April 2015, the remaining outstanding balance on the convertible bond 
      of $93.4 million was repaid in full upon maturity. 
 
   -- In January 2015, Frontline took delivery of Front Idun. 
 
 
   First Quarter 2015 Results 
 
   The Board of Frontline Ltd. (the "Company" or "Frontline") announces net 
income attributable to the Company of $31.1 million in the first quarter, 
equivalent to earnings per share of $0.25, compared with a net loss of 
$13.0 million for the previous quarter, equivalent to a loss per share 
of $0.12. The net loss attributable to the Company in the previous 
quarter includes a non-cash gain of $40.3 million arising on the 
termination of the charter parties for Front Opalia, Front Comanche and 
Front Commerce, a non-cash gain of $1.5 million arising on the 
convertible bond buy back in October and a non-cash loss of $41.1 
million arising on the convertible bond swaps in October and December. 
 
   The average daily time charter equivalents ("TCEs") earned in the spot 
and period market in the first quarter by the Company's VLCCs and 
Suezmax tankers were $49,400 and $33,100 compared with $27,900 and 
$26,000 in the previous quarter. The spot earnings for the Company's 
VLCCs and Suezmax vessels were $52,200 and $35,000 compared with $27,400 
and $27,200 in the preceding quarter. 
 
   Operating expenses were in line with the previous quarter. No vessels 
were dry docked in the first quarter or the previous quarter. 
 
   Contingent rental expense represents amounts accrued following changes 
to certain charter parties in December 2011 and increased in the first 
quarter as compared to the preceding quarter primarily due to an 
increase in actual spot market rates. 
 
   In May 2015, the Company estimates average daily total cash cost 
breakeven rates for the second quarter of 2015 on a TCE basis for its 
VLCCs and Suezmax tankers of approximately $31,300 and $23,100, 
respectively, including estimated cash sweep to Ship Finance 
International Limited ("Ship Finance") of $6,500/day. 
 
   Following the agreement with Ship Finance to amend the terms of the long 
term charter agreements with effect from July 1, 2015, the Company 
estimates average daily total cash cost breakeven rates for the second 
half of 2015 on a TCE basis for its VLCCs and Suezmax tankers of 
approximately $24,800 and $19,500, respectively. 
 
   Fleet Development 
 
   During the first quarter, the Company entered into the following time 
charters: The VLCC Front Falcon (built 2002) has been chartered out for 
a period of approximately 6 months from January 2015 at a rate of 
$55,000 per day. The VLCC Front Century (built 1998) has been chartered 
out for a period of approximately 14 months from February 2015 at a rate 
of $42,250 per day. The VLCC Front Circassia (built 1999), has been 
chartered out for a period of approximately 14 months from February at a 
rate of $44,600 per day. The VLCC Front Vanguard (built 1998) has been 
chartered out for a period of approximately 15 months from February 2015 
at a rate of $42,500 per day. 
 
   Newbuilding Program 
 
   The Company took delivery of Front Idun in January 2015 and drew down 
the remaining $30.0 million balance on its $60.0 million term loan 
facility in order to part finance this vessel. The Company had no 
newbuildings under construction as of March 31, 2015. 
 
   Corporate 
 
   In January 2015, the Company filed with the United States Securities and 
Exchange Commission a prospectus supplement covering the second 
amendment and restatement of its previously announced equity 
distribution agreement with Morgan Stanley & Co. LLC, ("Morgan Stanley"), 
under which the amount of new ordinary shares the Company may offer and 
sell, at any time and from time to time through Morgan Stanley in an 
at-the-market offering, was increased to having aggregate sales proceeds 
of up to $150.0 million, from up to $100.0 million. 
 
   The Company issued 12,191,291 new shares under its ATM program the first 
quarter. Following such issuance, Frontline has an issued share capital 
of $124,534,280 divided into 124,534,280 ordinary shares. 
 
   In April 2015, Frontline issued 12,900,323 new shares under the ATM 
program and in May 2015, Frontline issued 5,941,251 new shares under the 
ATM program and the existing ATM program is fully utilized. Following 
such issuance, Frontline has an issued share capital of $143,375,854 
divided into 143,375,854 ordinary shares. 
 
   In February 2015, the Company bought $33.3 million notional principal of 
its 4.50% Convertible Bond Issue 2010/2015 at a purchase price of 99% 
and recorded a gain of $0.3 million. 
 
   In April 2015, the remaining outstanding balance on the convertible bond 
of $93.4 million was repaid in full upon maturity. 
 
   In May 2015, Frontline announced that it has entered into a heads of 
agreement to amend the terms of the long term charter agreements with 
Ship Finance for the remainder of the charter period with effect from 
July 1, 2015. Please see separate press release issued by Frontline 
today for full description of the transaction. 
 
   The Company announces that Mr. Jens Martin Jensen today has resigned 
from his position as a Director of the Company. Mr. Jensen will continue 
as a Board member in other related group companies. 
 
   The Company further announces the appointments of Robert Hvide Macleod 
and Ola Lorentzon as Directors on the Board. Mr. Hvide Macleod joined 
the Company as CEO of Frontline Management AS in 2014. Mr. Lorentzon was 
the Managing Director of Frontline Management AS, a subsidiary of 
Frontline, from April 2000 until September 2003. Mr. Lorentzon is also a 
Director and Chairman of Golden Ocean Group Limited and a director of 
Erik Thun AB and Laurin Shipping AB. 
 
   The Market 
 
   The market rate for a VLCC trading on a standard 'TD3' voyage between 
the Arabian Gulf and Japan in the first quarter of 2015 was WS 59, 
representing an increase of 3 WS point from the fourth quarter of 2014 
and 8 WS points higher than the first quarter of 2014. The flat rate 
decreased by 2.25 percent from 2014 to 2015. 
 
   The market rate for a Suezmax trading on a standard 'TD20' voyage 
between West Africa and Rotterdam in the first quarter of 2015 was WS 
90, representing an increase of 2 WS points from the fourth quarter of 
2014 and an increase of 11 WS points from the first quarter of 2014. The 
flat rate decreased by 1.7 percent from 2014 to 2015. 
 
   Bunkers at Fujairah averaged $323/mt in the first quarter of 2015 
compared to $447/mt in the fourth quarter of 2014. Bunker prices varied 
between a high of $386.5/mt on the 18(th) of February and a low of 
$264.5/mt on January 13(th) . 
 
   The International Energy Agency's ("IEA") May 2015 report stated an OPEC 
crude production of 30.5 million barrels per day (mb/d) in the first 
quarter of 2015. This was unchanged from fourth quarter of 2014. 
 
   The IEA estimates that world oil demand averaged 93 mb/d in the first 
quarter of 2015, which is a decrease of 0.7 mb/d compared to the 
previous quarter. IEA estimates that world oil demand in 2015 will be 
93.6 mb/d, representing an increase of 1.2 percent or 1.1 mb/d from 
2014. 
 
   The VLCC fleet totalled 642 vessels at the end of the first quarter of 
2015, four vessels up from the previous quarter. Five VLCCs were 
delivered during the quarter, one were removed. The order book counted 
87 vessels at the end of the first quarter, which represents 13.5 
percent of the VLCC fleet. 
 
   The Suezmax fleet totalled 455 vessels at the end of the first quarter, 
five vessels up from the previous quarter. Six vessels were delivered 
during the quarter whilst one was removed. The order book counted 71 
vessels at the end of the first quarter, which represents approximately 
16 percent of the Suezmax fleet. 
 
   Strategy and Outlook 
 
   Several recent events have considerably improved the outlook for 
Frontline. 
 
   The Company's raising of approximately $88 million in new equity under 
the ATM program in 2015, the full repayment upon maturity of the 
remaining outstanding balance on the convertible bond loan of $93.4 
million and the continued positive development in the crude tanker 
market in the first and second quarter of 2015, have all considerably 
improved the financial position and outlook of the Company. 
 
   Further, today's announcement of the agreement with Ship Finance 
amending the long term chartering agreements will reduce Frontlines cash 
break-even rates significantly and ensure a more sustainable long-term 
structure. This agreement significantly strengthens Frontline's balance 
sheet and reduces the financial risk. The Board and management can now 
shift the focus from balance sheet restructuring to business development 
and growth. This represents a major milestone for the company. 
 
   The continued positive development in the crude tanker market into the 
second quarter is likely to give total operating revenues in the second 
quarter in line with the first quarter. However, due to dry docking of 
four vessels in the second quarter compared to no vessels in the first 
quarter, the operating result (excluding one time gains and losses) in 
the second quarter is likely to be lower than in the first quarter. 
 
   Forward Looking Statements 
 
   This press release contains forward looking statements. These statements 
are based upon various assumptions, many of which are based, in turn, 
upon further assumptions, including Frontline management's examination 
of historical operating trends. Although Frontline believes that these 
assumptions were reasonable when made, because assumptions are 
inherently subject to significant uncertainties and contingencies which 
are difficult or impossible to predict and are beyond its control, 
Frontline cannot give assurance that it will achieve or accomplish these 
expectations, beliefs or intentions. 
 
   Important factors that, in the Company's view, could cause actual 
results to differ materially from those discussed in this press release 
include the strength of world economies and currencies, general market 
conditions including fluctuations in charter hire rates and vessel 
values, changes in demand in the tanker market as a result of changes in 
OPEC's petroleum production levels and world wide oil consumption and 
storage, changes in the Company's operating expenses including bunker 
prices, dry-docking and insurance costs, 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, and other important factors 
described from time to time in the reports filed by the Company with the 
United States Securities and Exchange Commission. 
 
   The Board of Directors 
 
   Frontline Ltd. 
 
   Hamilton, Bermuda 
 
   May 28, 2015 
 
   Questions should be directed to: 
 
   Robert Hvide Macleod: Chief Executive Officer, Frontline Management AS 
 
   +47 23 11 40 84 
 
   Inger M. Klemp: Chief Financial Officer, Frontline Management AS 
 
   +47 23 11 40 76 
 
   This information is subject to the disclosure requirements pursuant to 
section 5-12 of the Norwegian Securities Trading Act. 
 
   1st Quarter 2015 Results: http://hugin.info/182/R/1924873/690561.pdf 
 
   This announcement is distributed by NASDAQ OMX Corporate Solutions on 
behalf of NASDAQ OMX Corporate Solutions clients. 
 
   The issuer of this announcement warrants that they are solely 
responsible for the content, accuracy and originality of the information 
contained therein. 
 
   Source: Frontline Ltd. via Globenewswire 
 
   HUG#1924873 
 
 
  http://www.frontline.bm/ 
 

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