Frontline Ltd FRO
Q4 2010 Earnings Call Transcript

Transcript Call Date 02/22/2011

Operator: Good day, and welcome to the Frontline Q4 Results Presentation. Today's call is being recorded.

At this time, I'd like to turn the call over to your host today, Mr. Jens Martin Jensen, CEO and Mr. Inger M. Klemp, CFO. Please go ahead, gentlemen.

Jens Martin Jensen - CEO: Thank you. Good morning, good afternoon and welcome to our Q4 presentation.

We will follow our usual program for this presentation with our CFO Inger Klemp going through the Q4 highlights and main transactions, financial review of the quarter, and an update of our newbuilding program. Thereafter, I will talk about what happened marketwise in Q4 and say a few words on how we see things going forward. So if you could start Inger, please?

Inger M. Klemp - CFO: Thanks, Jens, and good morning and good afternoon ladies and gentlemen. I will guide you through the highlights and the financial review in the fourth quarter together with a run-through of the newbuilding program.

Moving then to slide four. November 2010, Frontline extended time charter in agreements of Front Chief, Front Commander and Front Crown for one year from January 2011 at $26,500 per day per vessel.

In January 2011, Frontline sold its 2006-built VLCC Front Shanghai. The sale proceeds were $91.2 million and after repayment of debt, the sale generated $31.5 million in cash.

Frontline has in connection with the sale agreed to charter back the vessel from the new owner. The duration of the time charter is approximately two years at a rate of $35,000 per day and delivery to the new owners took place in January, 26, 2011. The Company expects to record a gain of approximately $6.2 million on delivery of the vessel and in addition, a gain of $15.2 million will be recognized on a straight-line basis over the period of the time charter.

Further in January 2011, Frontline sold all its shares in OSG. The sale generated approximately $46.5 million in cash and the Company expected to record a loss of approximately $3.3 million in the first quarter of 2011 in addition to a loss of $9.4 million recorded in the fourth quarter of 2010, following a market price adjustment of the shares.

Further in February 2011, Frontline has agreed with Ship Finance to terminate the long-term charter party between the companies for the single hull VLCCs Front Highness and Front Ace and Ship Finance has simultaneously sold the vessels to unrelated third parties. The termination of the charters is expected to take place in March 2011. Ship Finance will make a compensation payment in Frontline of approximately $5.8 million for the early termination of the charters, which will be recorded in the first quarter of 2011.

Moving to slide five, I will then give you a quick run through of the financial highlights in the fourth quarter. Frontline reports net loss of $11.8 million equivalent to loss per share of $0.15 in the fourth quarter of 2010. This is a decrease compared to the third quarter of $24 million. The net loss includes a gain of $4.6 million, relating to the amortization of a deferred gain on three leases. A loss in the fourth quarter also includes non-operating losses of ($5.3 million), which mainly relates to a loss of $9.4 million following a market price adjustment of shares owned in Overseas Shipholding Group, OSG, partially offset by a gain of $3.6 million before minority interest in Independent Tankers Corporation Limited arising on the termination of a funding agreement.

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