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Frontline Ltd. (FRO)

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Friday 26 August, 2011

Frontline Ltd.

FRO - Second Quarter and Six Months 2011 Results






Highlights


  * Frontline  reports a net  loss attributable to  the Company of $35.2 million
    and a loss per share of $0.45 for the second quarter of 2011.
  * Frontline  reports a net  loss attributable to  the Company of $19.8 million
    and a loss per share of $0.25 for the first half of 2011.
  * Frontline  announces  a  cash  dividend  of  $0.02  per share for the second
    quarter of 2011.
  * Frontline  exercised its option  to acquire the  2002-built VLCC Front Eagle
    and  sold the  vessel to  an unrelated  third party  for $67.0  million. The
    vessel was delivered on May 27. A gain of $3.9 million was recognized in the
    second  quarter and  a gain  of $13.1  million will  be recognized  over the
    remaining period of the two year time charter-in.
  * Frontline  terminated the  long term  charter parties  for the  OBO carriers
    Front  Leader and  Front Breaker  in April  and May  2011, respectively. The
    Company  recorded losses of $9.3 million  and $8.5 million, respectively, in
    the second quarter.
  * The  chartered-in  VLCC  Kensington  was  re-delivered  by  Frontline on May
    18, 2011.



Second Quarter and Six Months 2011 Results

The  Board of Frontline Ltd. (the "Company" or "Frontline") announces a net loss
attributable  to the Company of  $35.2 million for the  second quarter of 2011,
equivalent  to a loss per share of  $0.45, compared with net income attributable
to  the  Company  of  $15.5  million  and  earnings  per  share of $0.20 for the
preceding  quarter.  The  net  loss  attributable  to  the Company in the second
quarter  includes a loss on sale of assets and amortization of deferred gains of
$12.0  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,  respectively,  partially  offset  by gains of $3.9
million  and  $2.0  million  relating  to  the  sales  of  Front Eagle and Front
Shanghai,  respectively.  The  net  income  attributable  to  the Company in the
preceding quarter included a gain on sale of assets and amortization of deferred
gains  of $13.2 million, which  comprised a gain of  $7.9 million on the sale of
Front  Shanghai and a gain  of $5.3 million on  the termination of the Ticen Sun
and  Front Ace charters. The net income attributable to the Company in the first
quarter  also  included  non-operating  gains  of  $8.1  million. This is mainly
related to a market value adjustment of $8.8 million to a funding agreement held
by  the  Golden  State  companies  in  Independent  Tankers  Corporation Limited
("ITCL") for which termination notice was given by the Golden State companies in
February  2011 and the amortization  of a deferred  gain of $3.1  million on the
sale  of a newbuilding contract,  which were partially offset  by a loss of $3.3
million  on the sale of  the Company's shares in  Overseas Shipholding Group Inc
("OSG").

The  average  daily  time  charter  equivalents  ("TCEs") earned in the spot and
period  market in the second quarter by the Company's VLCCs, Suezmax tankers and
Suezmax  OBO carriers were $26,100,  $15,800 and $31,300, respectively, compared
with  $28,600, $17,300 and $36,300, respectively,  in the preceding quarter. The
spot  earnings  for  the  Company's  double  hull VLCCs and Suezmax vessels were
$23,900  and $14,500, respectively, in the  second quarter compared with $27,400
and  $16,000, respectively,  in the  first quarter.  The Gemini Suezmax pool had
spot  earnings of $16,200 per day in  the second quarter compared to $17,700 per
day  in the first  quarter. The Company's  double hull VLCCs  excluding the spot
index  time charter vessels had  spot earnings of $25,700  per day in the second
quarter, compared with $28,200 in the first quarter.

Profit  share expense of $0.2 million has been recorded in the second quarter as
a result of the profit sharing agreement with Ship Finance International Limited
("Ship  Finance")  compared  to  $2.3  million  in  the  preceding quarter. Ship
operating expenses increased by $0.3 million compared with the preceding quarter
primarily  as a result of an increase in drydocking costs of $2.3 million (three
vessels  drydocked  in  the  second  quarter  compared  with  two vessels in the
preceding quarter) partially offset by a decrease in running costs mainly due to
recent sales and lease terminations.

Charter  hire expenses increased by $0.9  million in the second quarter compared
with  the preceding quarter  primarily due to  an increase in  the provision for
loss  making  voyages  and  charter  hire  for  Front  Shanghai and Front Eagle,
partially  offset by a decrease in charter  hire for Hampstead (due to off hire)
and Kensington (due to re-delivery on May 18).

Interest  income in  the second  quarter of  $1.5 million  relates to restricted
deposits  held  by  subsidiaries  reported  in  ITCL.  Interest  expense, net of
capitalized  interest, was  $35.7 million  in the  second quarter  of which $7.4
million relates to ITCL.

Frontline  announces a net loss attributable to the Company of $19.8 million for
the six months ended June 30, 2011, equivalent to a loss per share of $0.25. The
average  daily TCEs earned in the spot and period market in the six months ended
June  30, 2011 by the Company's VLCCs, Suezmax  tankers and Suezmax OBO carriers
were  $27,400, $16,500 and $34,000, respectively, compared with $46,000, $31,400
and  $47,800,  respectively,  in  the  six  months ended June 30, 2010. The spot
earnings  for the Company's  double hull VLCCs  and Suezmax vessels were $25,600
and  $15,200, respectively,  in the  six months  ended June 30, 2011. The Gemini
Suezmax  pool had spot earnings of $17,000 per day and the Company's double hull
VLCCs excluding the spot index time charter vessels had spot earnings of $27,000
per day, respectively, in the six months ended June 30, 2011.

As  of June 30, 2011, the Company had total  cash and cash equivalents of $173.2
million  and restricted cash of $247.9  million. Restricted cash includes $188.5
million  relating to deposits in  ITCL and $58.0 million  in Frontline, which is
restricted under the charter agreements with Ship Finance.

In  August 2011, the Company has average total cash cost breakeven rates for the
remainder  of 2011 on a TCE basis for VLCCs and Suezmax tankers of approximately
$29,800 and $24,800, respectively.


Fleet Development
In  January  2011, the  chartered-in  VLCC  Desh  Ujaala was re-delivered to the
owners  and the Company  sold its 2006-built  VLCC Front Shanghai.  The net sale
proceeds  for Front Shanghai were $91.24 million and after repayment of debt the
sale generated $31.5 million in cash. The Company agreed, in connection with the
sale,  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. Delivery to the
new owners and commencement of the time charter took place on January 26, 2011.
The  Company  recorded  a  gain  of  $9.9  million in the first half of 2011. In
addition,  a gain of $11.8  million will be recognized  on a straight line basis
over the remaining period of the time charter.

In  February 2011, the  Company agreed  with Ship  Finance to terminate the long
term  charter parties between the companies for  the single hull VLCCs Ticen Sun
(ex.  Front Highness)  and Front  Ace and  Ship Finance  simultaneously sold the
vessels  to unrelated third parties. The  termination of the charters took place
in  February  and  March  2011, respectively.  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.

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 $67.0 million.
The Company agreed, in connection with the sale, to charter back the vessel from
the  new owner. 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 occurred on May 28, 2011. The Company recorded a gain of $3.9 million in
the  second  quarter.  In  addition,  the  Company  expects  to record a gain of
approximately  $13.1  million  over  the  remaining  period of the two year time
charter-in.

In  March 2011, the bareboat charter out contract for the single hull VLCC Front
Lady was extended until August 2013.

In  April and May  2011, the Company agreed  with Ship Finance  to terminate the
long term charter parties between the companies for the OBO vessels Front Leader
and  Front  Breaker,  respectively,  and  Ship  Finance  simultaneously sold the
vessels. The termination of the charter parties took place on April 12, 2011 and
May  26, 2011, respectively, and the Company  made compensation payments to Ship
Finance   of  $7.7  million  and  $6.6  million,  respectively,  for  the  early
termination  of the charter parties. The Company recorded losses of $9.3 million
and $8.5 million, respectively, in the second quarter of 2011.
The chartered-in VLCC Kensington was re-delivered to the owners on May 18, 2011.

Newbuilding Program

As  of  June  30, 2011, Frontline's  newbuilding  program  comprised two Suezmax
tankers  and five VLCCs, which constitute  a contractual cost of $649.9 million.
Installments  of  $198.5  million  have  been  made  on the newbuildings and the
remaining  installments to be paid as of June 30, 2011 amount to $451.4 million,
with expected payments of approximately $27.0 million in 2011, $175.7 million in
2012 and  $248.7 million in  2013. Expected payments of  $79.9 million and $73.0
million  have  been  moved  from  this  year into 2012 and from 2012 into 2013,
respectively,  since  the  first  quarter  earnings  release,  as a result of an
expected  delay of  approximately four  to five  months in  the VLCC newbuilding
program.

In  November 2010, the Company  secured pre- and  post-delivery financing in the
amount  of $147.0 million representing 70 percent  of the contract price for the
first  two VLCCs to be  delivered in 2012. As of  June 30, 2011 the facility was
undrawn.

For  the three  remaining VLCCs  and the  two Suezmax  tanker newbuildings to be
delivered  between late 2012 and 2013, the Company  has not yet established pre-
and  post-delivery financing.  Based on the  secured financing for the two VLCCs
we   assume   a   70 percent  financing  of  current  market  values  for  these
newbuildings.  On the basis of these assumptions, Frontline has already paid 99
percent  of the equity investment and the remaining newbuilding installments are
expected to be almost entirely financed by bank debt.

Corporate
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 other non-operating items.

On  April  11, 2011, the  Company  announced  that  it  had  approved a grant of
145,000 share  options under the terms of  the existing share option scheme. The
share  options will have a  five-year term and will  vest equally one third each
year over a three-year vesting period. The strike price for the options has been
set to NOK 131.10 per share.

On  August 25, 2011, the  Company's Board  of Directors  declared a  dividend of
$0.02  per  share.  The  record  date  for the dividend is September 9, 2011, ex
dividend  date is September  7, 2011 and the dividend  will be paid  on or about
September 26, 2011.

77,858,502 ordinary  shares  were  outstanding  as  of  June  30, 2011, and  the
weighted average number of shares outstanding for the quarter was 77,858,502.

The Company reports vessel values provided from a broker panel on all loan
facilities to the banks each quarter. At June 30, 2011 we were in compliance
with the minimum value requirements on the vessels set in the loan agreements.
We were also in compliance with other covenants set in the loan agreements.

The full report is available for download in the link enclosed and from the
Company's website www.frontline.bm.

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
August 25, 2011

Questions should be directed to:
Jens Martin Jensen: Chief Executive Officer, Frontline Management AS
+47 23 11 40 99
Inger M. Klemp: Chief Financial Officer, Frontline Management AS
+47 23 11 40 76

This information is subject of the disclosure requirements pursuant to section
5-12 of the Norwegian Securities Trading Act.



2nd quarter 2011 results : 


http://hugin.info/182/R/1541508/471634.pdf




This announcement is distributed by Thomson Reuters on behalf of 
Thomson Reuters clients. The owner of this announcement warrants that: 
(i) the releases contained herein are protected by copyright and 
    other applicable laws; and 
(ii) they are solely responsible for the content, accuracy and 
     originality of the information contained therein. 
    
Source: Frontline Ltd. via Thomson Reuters ONE

[HUG#1541508] 
  



                                                                

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