Shipping

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Shipping Energy Dinner27. March 2007
Guest speaker Bjorn Sjaastad, CEO Frontline
Sponsored by
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Norwegian-British Chamber of Commerce
March 27, 2007

• CEO Bjørn Sjaastad

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Disclaimer
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THEREOF. THIS PRESENTATION INCLUDES
FORWARD-LOOKING STATEMENTS (DEFINED IN SECTION
27A OF THE US SECURITIES ACT AND SECTION 21E OF
THE US EXCHANGE ACT AS ALL STATEMENTS OTHER THAN
STATEMENTS OF HISTORICAL FACTS) INCLUDING,
WITHOUT LIMITATION, THOSE REGARDING THE COMPANYS
FINANCIAL POSITION, BUSINESS STRATEGY, PLANS AND
OBJECTIVES FOR FUTURE OPERATIONS. SUCH
FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND
UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS
WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE
OR ACHIEVEMENTS OF THE COMPANY, OR, AS THE CASE
MAY BE, THE INDUSTRY, TO MATERIALLY DIFFER FROM
ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS
EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING
STATEMENTS. SUCH FORWARD-LOOKING STATEMENTS ARE
BASED ON NUMEROUS ASSUMPTIONS REGARDING THE
COMPANYS PRESENT AND FUTURE BUSINESS STRATEGIES
AND THE ENVIRONMENT IN WHICH THE COMPANY WILL
OPERATE. AMONG THE IMPORTANT FACTORS THAT COULD
CAUSE THE COMPANYS ACTUAL RESULTS, PERFORMANCE
OR ACHIEVEMENTS TO MATERIALLY DIFFER FROM THOSE
IN THE FORWARD-LOOKING STATEMENTS ARE, AMONG
OTHERS, THE COMPETITIVE NATURE OF THE MARKETS,
TECHNOLOGICAL DEVELOPMENTS, GOVERNMENT
REGULATIONS, CHANGES IN ECONOMICAL CONDITIONS OR
POLITICAL EVENTS.
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Frontline Key Strategic Issues

• Tanker business for crude oil
• Concentration and focus keep it simple
• Scale threshold / critical mass
• taken seriously by charterers
• trading patterns / flexibility / COAs
• low cost operator ( purchasing )
• Taken seriously in investor market ( gt USD 1
  bill. )
• Shareholder / investor oriented Create values
• high dividend payout ratio
• high liquidity / volumes
• timely and accurate information

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Frontline Key Strategic Issues cont.

• Professional, business oriented and dedicated
  organisation
• extensive use of outsourcing
• HQ chartering, projects, finance and accounting
• close follow-up of third-party service providers
• ship management
• post fixture
• Aggressive and opportunistic investment strategy
• Solid financial base
• low break even rates
• access to funding
• return on equity

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Frontline History

• Stock Listings
• 1997 Norway
• 1998 London (OTC)
• 2001 NYSE
• Acquisitions / Mergers
• 1996 Frontline AB (7 vessels)
• 1998 LOF (3 vessels)
• 1999 ICB (8 vessels)
• 2000 Golden Ocean (23 vessels)
• Purchase of vessels 1996 2007
• N/Bs 25 vessels
• 2nd hand 30 vessels

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Spin-offs

• Ship Finance International Limited 2003 2007
• Golden Ocean Group Limited 2004 2005
• Sealift Ltd. 2007
• Sea Production Limited 2007

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Frontline Fleet
Introduction

• Most of the vessels are fixed on t/c for the
  remainder of the committed period
• - 3 SS Suezmaxes sold to Sealift and chartered
  back on short-term BB until conversion
• - Front Transporter sold with delivery Q1

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Corporate structure
Introduction
FLEET
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Newbuildings
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Financial Highlights
Fourth Quarter 2006
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Major transactions 2006/2007

• Sale of Front Beijing, Front Tobago, Front
  Vanadis, Front Transporter
• Newbuilding contracts
• Delivery of Front Shanghai
• Exercise and resale of two VLCC options
• Sealift Ltd.
• Sea Production Limited

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Income on time charter basis
Financial Review
Imarex forward curve as of 23.02.07 for the
period Q1 2007- Q2 2008
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Cash breakeven rates (/day)
Financial Review
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Company overview
Frontline 28 / Keppel 5 / Investors 67
Sea Production Ltd. (Bermuda)

• Floated and OTC Listed February 2007
• Investment/funding
• USDm 415 acquisition
• Front Puffin and management company USDm 210,
• Crystal Ocean USDm 90,
• Sea Cat and Sea Jaguar USDm 36 and
• Working capital USDm 79
• To be financed with
• Equity USDm 180
• 1. pri. bank debt USDm 105
• 2. pri. Bond USDm 130

Sea Production Mgmt
Mgmt agr.
FPSO Front Puffin (Under conversion) Contract
with AED Oil Ltd for Puffin field (2 yrs 4 x
1yr opt.) 1st oil expected 7/07
FPSO Crystal Ocean (Operating) On bareboat
charter toAnzon, AustraliaPresently at Basker
Manta field in the Bass Strait(3 yrs 2 x 1 yr
opt) - world wide trading
M/V Sea Cat Aframax tanker Spot
market Commercial management and technical
supervision by Frontline
M/V Sea Jaguar Aframax tanker Spot
market Commercial management and technical
supervision by Frontline

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Company overview
Frontline 33
Investors 67

• Floated and OTC listed in January 2007
• Investment / funding
• USDm 476 acquisition
• HL vessels USDm 100
• Suezmax vessels USDm 38
• To be financed with
• Equity USDm 180
• 1. pri. bank debt USDm 120
• 2. pri. Bond USDm 110
• Seller credit USDm 80

Sealift Ltd. (Bermuda)
Sealift Management BV
Mgmt agr)
Sealift Traveller BB USD 15,000/day to Frontline
to Aug 07 Delivery Jan 08
Sealift Comor BB USD 15,000/day to Frontline
to Nov 07 Delivery May 08
Sealift Marble Commercial technical mgt
agreementwith FRO Option for HL conversion Jan
09E
Sealift Sunda Under conversion Delivery Apr 07
Sealift Target BB USD 15,000/day to Frontline
to May 07 Delivery Sep 07
Sealift Granite Commercial technical mgt
agreementwith FROOption for HL conversion Sep
08E
Suezmax sister vessels
) Temporary management agreement with Frontline
Management

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Key figures
Financial

• Cash dividend paid in total gt USD 39.05 per
  share
• Spin off paid in total gt USD 20.44 per share
• Share price 22.03.2007 gt USD 35,10

• Cash dividend 2006 gt USD 7.55 per share
• Spin off SFL gt USD 2.79 based on share prices
  of USD 26 23.02.2007

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Return on Equity
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The Frontline Share

• Share price 35.10 as of date 22/03/07
• Shares outstanding 74,825,169
• Trading volume (22/03/07) 1,034,600 shares
• No. shareholders 3.268
• Market cap. 2,626 million
• Enterprise value 4,900 million
• EBITDA 2006 866 million
• EPS 2006 6.90
• P/E 5.09
• EV/EBITDA 5.66
• Cash Yield (declared) 21.51

Graph to be included
Source Oslo Stock Exchange
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Entering the doldrums or steering clear ?
The Market

• Q4 relatively weak in both segments
• Stable fleet growth for Suezmaxes in 06 (y/y)
• Lower fleet growth for VLCCs in 06 (y/y)
• External factors
• Stock fluctuations
• Oil price movements
• Warm weather
• Reduced delays
• Absence of Hurricanes
• Geopolitical tension reduced
• Official OPEC cuts
• Oil demand at 85.5 mbd in 4Q06 (1.5 y/y)
• Stable demand increase expected

/day
Q1
Q4
/day
Q1
Q4
Source Clarkson, IEA
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VLCC
Fleet Update

• Existing fleet
• 1 VLCC delivered in Jan 2007
• 160 SH vs 320 DH

• Orderbook
• Total orderbook at 162 VLCCs
• 2 VLCCs ordered in Jan 2007

34 of Existing
Source Fearnleys (Bulk Fleet Update, 31 Jan 2007)
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Suezmax
Fleet Update

• Existing fleet
• 6 Suezmaxes delivered in Jan 2007
• 70 SH vs 280 DH

• Orderbook
• Total orderbook at 127 Suezmaxes
• 8 Suezmaxes ordered in Jan 2007

36 of Existing
Source Fearnleys (Bulk Fleet Update, 31 Jan 2007)
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Trading within the 50-60/bbl price band
Oil Market

• Slightly improved sentiment
• OPEC Production Cuts in November 2006 and
  February 2007

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Crude Oil Inventory
Oil Market

• Falling but still at high levels

• Strategic oil reserves
• China
• USA

Source IEA
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Demand growth adjusted up
Oil Market
World Oil Demand Annual Growth

• Growth to average 2.0 in 2006 2011
• Strong demand growth in Asia and ME
• Stable in remaining regions
• OECD countries remain the largest consumer as a
  group
• US Strategic Petroleum Reserves (SPRs)
• 2.7 growth in tonn-miles in 2007 (3.0 in 2006)

Source IEA, Energy Intelligence, Fearnleys
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Robust world economy
International Economy
GDP Annual Growth

• Mild deceleration in the United States
• Europe and Asia will resist US slowdown well
• Temporary inflation downturn due to lower oil
  prices
• Interest rates
• Fed is expected to cut in the autumn
• ECB expected to continue its rate hikes

Source OECD, SEB
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Outlook

• Macro
• Healthy macroeconomic environment despite GPD
  growth cooling off
• Large orderbook, but 2007 not that bad
• Single hull phase out
• Uncertainty on the supply side of oil / Further
  OPEC cuts unlikely
• Political Stability
• Supply side major determinant for rates and
  values
• Frontline
• Spin-offs / one off profits
• Single hull exposure
• Orderbook
• Breakeven rates
• T/C coverage / spot
• Business opportunities

FFA Curve
Source Imarex, 23 February 2007
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Q A