http://www.morningstar.com/earnings/26306901-frontline-ltd-fro-q1-2011.aspx

Frontline Ltd FRO
Q1 2011 Earnings Call Transcript

Transcript Call Date 05/25/2011

Operator: Good day and welcome to the Frontline Q1 2011 Results Presentation. For your information, today's conference is being recorded.

At this time, I would like to turn the conference over to your host for today, Mr. Jens Martin Jensen, CEO and Mr. Inger M. Klemp, CFO. Please go ahead.

Jens Martin Jensen - CEO: Good morning, good afternoon and welcome to our Q1 presentation. We will follow our usual program for this presentation with Inger going through the Q1 highlights and main transactions, financial review of the quarter, and thereafter a quick update of our newbuilding program. After that, I will talk about what happened marketwise in Q1 and say a few words on how we see things going forward. So Inger, if you could start please?

Inger M. Klemp - CFO: Thanks, Jens, and good morning and good afternoon ladies and gentlemen. Moving then to Slides 4 and 5 highlights and transactions. In January 2011, Frontline sold its 2006-built VLCC Front Shanghai. The sales proceeds from that sale was $91 million, and after repayment of debt, the sale generated $31.5 million in cash. Frontline has in connection with that sale agreed to charter back the vessel for two years from the new owner and the duration is two years as I said and it's $35,000 per day. Delivery to the owners took place in 26 January. Company recorded a gain this quarter of $7.9 million, and in addition, we will record a gain of $13.8 million over the remaining 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 recorded a loss of $3.3 million in the first quarter. In March, the Company exercised its option to acquire the 2002-built VLCC Front Eagle, and thereafter sold the vessel to an unrelated third party for $67.0 million.

The Company has in connection with the sale agreed to charter back the vessel from the new owner, and the duration of this time charter is approximately two years at a rate of $32,500 per day.

Delivery to the new owners and commencement of the time charter is expected to take place concurrently in the second quarter of 2011, and the Company expects to record a gain of approximately $4.2 million in the second quarter and gain of approximately $13 million over the period of two year time charter period.

In February 2011, the Company agreed with Ship Finance to terminate the long term charter parties between the companies for two single hull VLCCs, the ex. Front Highness and the Front Ace, and Ship Finance simultaneously sold these vessels to unrelated third parties. The termination of the charters took place in February and March. Ship Finance made a compensation payment to the Company of $5.3 million for the early termination of the charters, which was recorded in the first quarter of 2011.

Further in April and May 2011, we agreed with Ship Finance to terminate the long-term charter parties between the companies for the OBO carrier Front Leader and Front Breaker respectively. We expect to record a loss of approximately $9.3 million and $8 million respectively for the two terminations in the second quarter of 2011. Finally, in March 2011 we extended the bareboat charter out contract for the single hull VLCC Front Lady until August 2013.

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