Frontline plc.

Good morning and good afternoon. Welcome to this frontline fourth quarter and full year earnings call. It's been a very volatile year and black swans have become a common feature in our market landscape. The COVID-19 pandemic has affected our business on many levels, but most importantly, our seafarers have been safe and our organization has been spared serious human consequences. Tanker markets have been challenging, but the year as a whole has been solid business-wise, and we recorded our best full-year result in 2020 since 2008. Let's move to slide three and have a look at the highlights. Frontline came into the fourth quarter of 2020 on a soft note, expecting some degree of normal seasonality to kick in, as the northern hemisphere usually stock up for winter. But this time around, the fourth quarter proved to be softer than Q3, actually for the first time in 10 years. On a load-to-discharge basis, we made $17,200 per day on our BOCCs, $9,800 per day on our SUSMACs, and $12,500 per day on our LR2s. So far in the third quarter, we have booked 78% of our available VLCC days at $22,600, 68% of our available SUSEMAX days at $17,800, and 65% of our LR2 slash AFRAMAX days at $12,200 per day. I think it's safe to say our markets in Q4 were challenging, but I will come to that later in this presentation. I'll now let Inge take you through Frontline's financial highlights.

Thanks Lars, and good morning and good afternoon ladies and gentlemen. Let's then turn to slide 4 and look at the income statement. We achieved the total operating revenues net avoidance expense of $101 million in the fourth quarter, and adjusted EBITDA of $31 million. We report a net loss of $9.2 million, $0.05 per share, and adjusted net loss of $20 million, or $0.10 per share, in the fourth quarter. We have some adjustments in the fourth quarter. which were the gain on the sale of CTEAM of 6.9 million, also a 2.5 million gain on derivatives, a 1.9 million unrealized gain on marketable securities, a 1.3 million amortization of acquired time charters, and a 1.6 million share of losses of associated companies. The adjusted net income in the fourth quarter decreased from third quarter by $76 million, and that was primarily driven by a $75 million decrease in our time chartered earnings due to the lower reported TCE rates in the fourth quarter, which Lars went through. Frontline reports a full year 2020 net income of $413 million, or $2.09 per share, and and adjusted net income of $422 million, or $2.13 per share. And this is the strongest year since 2008. Then let's take a look at the balance sheet on slide five. At the end of December 31, 2020, Frontline has $413 million in cash and practice equivalents, including the earned amounts under our senior unsecured loan facility, the marketable securities and minimum cash requirements. In November 2020, we entered into two term loan facilities in a total amount of 351.5 million to refinance two existing term loan facilities, which matured in the second quarter of 2021, which had total balloon payments of 324.4 million. And we also entered into a loan facility in an amount of up to $133.7 million to partially finance the CAPEX requirements as of the end of 2020 of $142.4 million for the four LRQ tankers that we have under construction. Further, in February 2021, we extended the terms of our senior and security revolving crate facility of up to $275 million by 12 months, to May 2022. 60 million of this extended facility has been recorded as long-term debt as of December 31st, 2020. 215 million remains available and undrawn under this facility. And following the concluded refinancing and financing, we have no material debt maturities until 2023, and the new building program is fully funded. Then let's take a closer look at the cash break-even rates and effects on slide six. We estimate average cash cost break-even rates for 2021 of approximately $21,600 per day for the VHDCs, $17,800 per day for the Zeusvax tankers, and $15,600 per day for the LR2 tankers. And the fleet average estimate is about $18,200 per day. These rates are the all-in daily rates that our vessels must earn to cover the budgeted operating costs and dry dock, the estimated interest expenses, TEC and bare boat hire, installments on loans, and G&A expenses. We've recorded OPEX expenses in the fourth quarter of 2020 of $7,800 per day for the VCCs, $9,700 per day for the SUSEMACs, and $8,300 per day for the LR2 tankers. The operating expenses were impacted by dry docking of four SUSE Maxx tankers and one LRQ tanker in the fourth quarter. We will dry dock one SUSE Maxx tanker in the first quarter of 2021. In the graph on the right-hand side of the slide, we have shown incremental cash flow after debt service per share, assuming 10,000, 20,000, 30,000, or 40,000 per day in achieved rates in excess of our cash break even rates, respectively. And then, sorry, the numbers include vessels on time shorter routes. They are adjusted for new building deliveries. And we are looking at a period of 365 days from January the 1st, 2021. As an example, with a fleet average cash cost per given rate of $18,200 per day, and assuming $30,000 on top, the average fleet TCE rate would be $48,200 per day. And Frontline would generate a cash flow per share after the service of $3.46. With this, I leave the word to Lars again.

Thank you, Inger. So let's move on to slide seven and recap the fourth quarter tanker markets. So during Q4, oil inventories drew at a record pace to the tune of 2.6 million barrels per day, according to EIA. As oil demand continued to rise to levels near 10 million barrels above the Q2 levels, oil prices continued to strengthen further, and the structure of the oil market incentivized players to empty tanks, both floating and on land. as the future price was increasingly lower than the prompt price, making it uneconomical to hold stock. A significant number of tankers were employed in storage in the second half of last year, particularly outside China. This inventory draw cycle added pressure to an already oversupplied market, as these vessels now returned to compete in the spot business. Asia, and in particular China, has been the key driver in the recovery so far. This supported the VOC market for a while as they sourced their returning oil demand from the Atlantic Basin. In the latter part of last year, we saw China also draw on inventories, muting their demand for tankers. By December 2020, Chinese oil consumption reached all-time high at 15.6 million barrels, according to the EIA. Let's move to slide 8 and look at the crude fleet and order books. The argument that ships older than 20 years struggle to trade in the conventional oil market is undisputed. Oil majors, traders, and national oil companies all practice a hard stop at 20 years. This means that you have a very limited amount of options. once the vessel has gone through the 20-air classing. With freight rates at zero to negative for non-equatommage, we struggle to see the prospects for this portion of the fleet for alternative use. The conversion market for FSOs and FSOs is not very hot at the moment, and there is a limited demand for storage, as all the curves are in steep accolades. We also believe the upcoming regulatory changes with regards to GHG emissions will challenge the fleet going forward. This indicates a limited lifespan, even for vessels of 17 and a half years of age. Ordering activity is muted and does not match the current age profile of the fleet. We did see some orders towards the end of last year, and that has lifted the order books slightly. 30% of the overall tanking fleet is about 15 years. And as the regulations on energy efficiency, or the famous now EEXI, kicks in in 2023, the potential for carbon tax regime kicks off. This whole portion of the fleet will either need to invest heavily or retire. Let's move to slide nine, where I want to talk about our clean product rankings. We normally don't mention our clean trading capabilities in these presentations, but we do have 18 modern LA2s and four more to come, which makes us a significant owner in this space. The reduction in jet fuel demand as travel got restricted in 2020 hit refinery margins severely. Refinery margins in Europe and the US have been under pressure for years, and due to bleak prospects, little investments have been done in improving and modernizing these plants. Last year's depressed margins accelerated the decisions to permanently close or convert refineries to storage plants, or in some few examples, biofuel plants. And in particularly, Middle East and China have, over the last three years, expanded refining capacity significantly. Modern refineries process a wider range of crews more efficiently. And I could give you an entire presentation on the topic. But the key is that they outcompete local refineries in especially Europe, but also to some degree in the US. We can see on the slide here that The refining capacity that is permanently closed in Europe is to the tune of 500,000 barrels per day. In the U.S., close to 700,000 barrels per day. There have been some closures in Asia of 705,000 barrels per day, but the new additions are 1.4 million barrels per day. In NET, we see that or we expect the trade flows to be affected by this. As product demand normalizes post-COVID-19 pandemic in Europe and US, we have to assume we return to some level of normality over the coming years. Jet fuel and other products are far more likely to be sourced by Asia, and this will incur longer turnouts. Our LR2s offer great economies of scale for the expected developments in the product trade flows. Let's move on to slide 10 and discuss the market outlook as we see. I'm focusing on the short-term drivers in this presentation, as that's probably the interesting part considering where the markets are. Saudi Arabia has signaled the reversal of their voluntary 1 million barrel per day cut to come in April 21. That comes in addition to whatever they release. Unusual cold weather in the northern hemisphere disforces usual demand patterns. The gas LNG spike in Asia and the unknown capabilities as to how oil for heating work, as we haven't really seen oil for heating in 10 years, creates a lot of uncertainty around how much incremental oil has been consumed during this period. The spike in LNG prices implies oil prices at $250 per day, making great incentives to burn oil for heating. We had episodes of or saw situations where skiing suddenly became popular in Madrid, and most recently in Texas, we've seen how the cold weather has affected production. Goldman Sachs estimates that this production loss to be close to 700,000 barrels per day for February. Oil demand continues to recover despite extended lockdowns. Oil prices indicate tightening markets. The floating storage is no longer a significant factor weighing on the tank market as we see it. And in April alone, oil supply is expected to increase by 3 million barrels, according to EIA. So let's move to slide 11 and sum all these things up. So the global tanker markets have corrected sharply during second half 20, after significant retraction in world growth. All the leading commodity markets are pricing a strong recovery in 2021. And the global GDP is expected to grow by 5.5% during this year. Oil demand is recovering, and to what pace is a little bit unknown. We all know that the rate... The analyst agencies are slow to react both on the downside when demand disappears, but also to the upside when demand is recovering. But global oil production is expected to increase by 5.3 million barrels during 2021. When this recovery starts for tankers is unknown, but we are very low in the cycle, as the chart on the bottom right side indicates. OPEC Plus is expected to ease caps from Q2 21 onwards. And with all the above, we believe Frontline is very well positioned for a recovery in tanking markets with our modern auto-exposed heat. With that, I would like to open up for questions from the audience.