Frontline plc.

Dear all, thank you for tuning into Frontline's fourth quarter earnings call. I know it's been a busy day for at least those of you who are analysts. It's quite a few companies reporting today. I have a feeling some of the questions in the upcoming Q&A will be focused on the termination of the combination agreements with Euronav. But let's for now focus on Frontline and the smoking markets we've had in the fourth quarter. Although the implications of Russia's invasion of Ukraine caught most of the headlines, we believe from a tanking market perspective, China was the catalyst to frontline posting the best quarterly result in over 14 years. As we finally fired on all cylinders throughout the quarter and our lean and mean business model got to shine. Let's quickly look at our TC numbers on slide three in the deck. In the third quarter, Frontline achieved $63,200 per day on our BLCC fleet, $57,900 per day on our SUSEMax fleet, and $58,800 per day on our LR2 slash Afromax fleet. And finally, the inverted earnings relationship between our segments were at least temporarily reversed. So far, in the first quarter of 2022, we've booked 87% of our VLCC days at $58,300 per day, 77% of our ZeusMax days at a cool $72,400 per day, and 68% of our LL2 slash AfroMax days at a solid $63,900 per day. Again, all these numbers in the table are on a load-to-discharge basis, and they will be affected by the amount of ballast days we end up having at the end of Q1. Before I give the word to Inger, let's just quickly jump to slide four in the deck. I'll repeat a few key points on the frontline fleet composition. Frontline continues to hold one of the most efficient fleets in the industry, and our diversification has proven profitable for all our shareholders during 2022. Scrubber spreads continue to incentivize investments, hovering north of $200 per metric ton, and we are installing scrubbers on two additional wheels. We have only two wheels left without a scrubber. The average age of our fleet is a comfortable five years and Frontline is well positioned in CRI terms and also for the upcoming EU ETS considerations. I'll now let Inger take you through the financial highlights.

Thank you Lars and good morning and good afternoon ladies and gentlemen. Then let's turn to slide five. In the fourth quarter we achieved the total operating revenues of 353 million dollars and we had an adjusted EBITDA of 287 million dollars. We came in at the net income of 214 million dollars, which is the highest quarterly net income we have had since 2008. Then we had an adjusted net income of 215.5 million. The adjusted net income in the fourth quarter increased by 133 million dollars compared with the previous quarter and that was mainly driven by an increase in our time chartered equivalent earnings due to the higher TCE rates that Lars went through earlier in the presentation. This was partly offset by a general increase in expenses. We declare a cash dividend for the third quarter of 30 cents and for the fourth quarter of 77 cents. And the fourth quarter dividend gives a direct return of 17% on the share. As of December 31, 2022, we have revised the estimated use for life of our vessels from 25 years to 20 years, which is expected to increase the creation expense by approximately 59 million for 2023. Then let's take a look at slide six, the balance sheet. Total balance sheet numbers have increased with 227 million in this quarter, and the main drivers are delivery of Front Gaula, revaluation gain on the Eurona shares, increase in working capital, and also the net income that we earned in the fourth quarter. As of December 31st, 2022, Frontline had 556 million in cash and cash equivalents, including un-drawn amounts under our senior unsecured loan facility, marketable securities, and minimum cash requirements. Then let's move to slide seven, and let's take a look at cash flow potential. We estimate average cash cost break-even rates for 2023 of approximately $27,000 for VCCs, $21,500 for sluice maxes, and $17,600 per day for LR2 tankers, with a fleet average estimate of about $22,300 per day. This average estimate includes dry dock of two Wilson Seas and one LR2 tanker in 2023, all in the first quarter. With respect to operating expenses, we recorded $8,800 per day for VLCCs, $7,600 for series maxes, and $8,700 for LRQ tankers. And we dry docked two vessels in the fourth quarter, that was one VLC and one LRQ tanker. Looking at the right-hand side of the slide, We saw free cash flow in millions and per share after debt service basis currencies and operating CTC rates. If we look at assumed VLC-TC rates of $75,000 per day with five-year historic spread to VLC-C for SUSEMax and LRQ tankers, The annual free cash potential will be more than $1.4 billion or $6.46 per share. And with that, I think I leave the word to you again, Lars.

Thank you, Inger. Yeah, we are in kind of a market where the potential is substantial. If you move to slide eight, I'll just recap what happened in Q4 in the tank market. You know, I have the title here, sneak peek of what's to come. I think it's probably not a secret that we are tremendously bullish for the next couple of years. And during the quarter, all segments from panel of praise performed. It was finally the turn for the VOCCs to shine. the average weighted market earnings for tankers are actually flirting with 2004 highs so you see in this in the chart below on the left hand side with the yellow column And I think kind of in general the market hasn't recognized how substantial Q4 ended up being. And why this is the average weighted earnings for all tankers and obviously what's happening on MRs, on LR1s, LR2s, FRs, AN2s and VLCCs together. has made this possible. We are in market conditions where it's not only the VLCC outperforming, it's basically all segments outperforming. Chinese imports are back above pre-COVID levels, hovering around 10 million barrels per day. And the VLCC shipments to China are actually at all time high. And I would like to say the big ships are back. During Q4 we saw the G7 crude oil price cap come into effect on December 5th. We have seen already a lot of crude oil and fuel oil being redirected to, you know, around Europe, to Asia and Middle East predominantly. So the effect of the 5th of December cap was somewhat muted. We also need to keep in the back of our head that during the mild winter in the northern hemisphere, oil prices were also hovering below or around 80 dollars per day, making Russian crude comfortably priced below the price cap. Let's move to slide nine and look at what we believe is the three major themes as we embark on again this upcycle. First it's oil demand. As long as we have oil prices in the area where we are now hovering 80 to 90 dollars per barrel we believe oil demand will continue to be fairly strong. If you look at the chart at the bottom left, this is from EIA, it's kind of a confusing chart, it goes in one direction, but it shows a lot of volatility going forward, but By the end of 2024, EIA expects global oil consumption to be more than 4 million barrels per day, higher than where we are now. Asia, and in particular China, is expected to be the key driver as China is returning from COVID lockdowns. The second big part of this equation is obviously fleet supply. And total tanker fleet growth is set to turn negative during 2024. This has not been seen since 2002. And if you look at the middle chart below, you'll see the columns for the various years of growth. And as we kind of go through 2023, we expect to have about 3% growth in the total fleet of tankers globally. That will be reduced to 1% in 2024, and it will actually turn negative during the year. And in 2025, the overall fleet is expected to reduce by 1%. A change in trade dynamics may actually accelerate this. Right now, 12% of the tanker fleet is above 20 years. We've had very limited scrapping. and the ships are in fact trading kind of beyond their expected lifespan. So obviously any regulatory changes or any initiatives in this respect could accelerate the fleet reduction. World seaborne trade, and this is the bottom right hand graph, is expected to grow by 67% annually over the next two years. This is a function of the key demand centers being in Asia and key production growth coming out of US and Latin America predominantly. The overall order book stands at 5% or actually slightly below. And now we're looking at delivery windows in 2026. Let's move to slide 10 and look at a bit further on the order books. During last year, we had the lowest contracting activity in decades. If you look at the graph on the top left-hand side, you will not find one column since 1996. And this is the history I actually have available. That is lower than around 7 million deadweight tons that was contracted in 2022. And as we go into 2023, this activity continues to be muted. If you look at the VLC, fleet isolated there are now during 2023 will have 112 VLCCs passing 20 years. That will be 13.2 percent of the entire fleet. The order book stands at 28 units and that represents 3.3 percent of the existing fleet. If you look at the Suez Maxis, this is even more pronounced. By the end of 2023, 85 vessels will be above 20 years. That represents 14.5% of the fleet. The order book is that the model is 10 vessels, and that represents 1.7% of the fleet. The LR2 market, it's a bit more balanced. There's a few more ships on order, but they have the same age profile. So of the about 400 LR2s in the world, 25 will turn 20 during 2023. That represents about 6% of the fleet. The order book is currently at 51, and that represents 12.8% of the fleet. A point that I made before on the LR2s is that the effective kind of age of an LR2 or the effectiveness of trading on LR2 starts to be reduced after it turns 15 years due to quite a few charters limiting their charting activity for vessels that go beyond the 15-year threshold. If we then move to slide 11, And we're going to look at some of the key exporting regions and what the state of the market is. I mentioned earlier that the three major themes are with the oil demand, fleet supply and distances. But in order for demand to be kind of sufficient supply, we need production as well. World crude oil exports are now back to pre-COVID levels finally. We're hovering about 42 million barrels per day of ocean-going volumes. That's just north of 40% of global oil production. West Africa continues to struggle, but saw modest improvement in the fourth quarter. Latin America is becoming an increasingly important export region. and in particular Brazil and recently Guyana are the keys for growth. Russian exports are surprisingly resilient and exports are back to pre-invasion levels. I think some of the statistics there may be colored by kind of increased exports ahead of the 5th of December price cap, but still Russia still seems to find home for its crude. U.S. exports continue to be firm and we're particularly surprised after the SPR releases stopped during November in or more or less stopped during November last year. U.S. continues to be the region where we will see production increases and over the next couple of years U.S. alone will actually represent close to 80 percent of new oil coming online globally. Then if we move to slide 12 and go through the summary. So Frontline reports the highest quarterly net income since 2008, a cool $240 million. Our cash dividend, which is obviously the combination of Q3 and Q4, is $1.07. We took delivery of the three remaining VLCC new buildings from Hyundai and sold one VLCC and one SUS Maxis, both 2009 builds. As far as we see it, China took center stage in the fourth quarter, and imports to China are back to pre-COVID levels. Oil demand continues to recover. There is limited fleet supply, and an increasing tonne mile demand are the key drivers for the years to come. We continue to believe that Frontline's efficient and transparent business model will generate shareholder returns. And with that, I would like to open up for questions.