http://www.morningstar.com/earnings/29757035-frontline-ltd-fro-q2-2011.aspx

Frontline Ltd FRO
Q2 2011 Earnings Call Transcript

Transcript Call Date 08/26/2011

Operator: Good day and welcome to the Frontline Ltd. Q2 2011 Results Presentation. Today's conference is being recorded.

At this time, I would like to turn the conference over to Jens Martin Jensen. Please go ahead, sir.

Jens Martin Jensen - CEO: Thank you. Good morning, good afternoon and welcome to our Q2 presentation. We will follow our usual program for this presentation with our CFO, Inger Klemp, going through the Q2 highlights and main transactions, thereafter financial review of the quarter, and thereafter a short update of our newbuilding program. After that, I will talk what happened or maybe what did not happen in the market in Q2 and say a few words on how we see things, and after that we will take your questions, and I am sure there would be a few today.

So, Inger, if you could start 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 second quarter of 2011, and so far in the third quarter, together with a run-through of the newbuilding program.

Then moving to Slide 4; in March 2011, the Company exercised its option to acquire the 2002-built VLCC Front Eagle, and sold the vessel to an unrelated third party for $67 million.

The Company has in connection with the sale agreed to charter back the vessel from the new owner, and the duration of the 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 took place concurrently on May 27, 2011, and the Company recorded a gain of $3.9 million in the second quarter. In addition, the Company expects to report a gain of approximately $13.1 million over the remaining period of the two year time charter-in.

In April and May 2011, we agreed with Ship Finance to terminate the long-term charter parties between the companies for OBO carriers, Front Leader and Front Breaker. The Company recorded losses of $9.3 million and $8.5 million respectively for the two terminations in the second quarter of 2011. In May 2011, the chartered-in VLCC Kensington was re-delivered to the owners.

Our VLCC newbuilding construction program is expected to be delayed with approximately four to five months, and as a result of that expected payments of $79.9 million and $73 million have been moved from this year into 2012 and from 2012 into 2013, since the first quarter earnings release.

Moving to Slide 5; I will then do a quick run through of the financial highlights in the second quarter 2011. Frontline reported a net loss of $35.2 million, equivalent to loss per share of $0.45 in the second quarter of '11, compared with net income of $15.5 million and earnings per share of $0.20 in the first quarter of 2011.

The net loss includes a loss on sale of assets and amortization of deferred gains of $12 million, which comprises losses of $9.3 million and $8.5 million arising on the termination of the long-term charter parties for the OBO carriers Front Leader and Front Breaker, partially offset by gains of $3.9 million and $2 million relating to the sales of Front Eagle and Front Shanghai.

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