Frontline plc.

Dear all, and thank you for tuning in to Frontline's first quarter earnings call. We're a bit late, but better good than earlier, whatever the expression is. We've had an unseasonally strong first quarter of the year. Russia still has an impact on the market, or there is sanctions on Russia. But I think kind of the key part of the action in Q1 was related to China. The strong Q1 has given us ability to book quite strong numbers into Q2 as well, as the frontline team relentlessly grind to create shareholder value. Before I give the word to Inger, get our TC numbers on slide three in the deck. In the third quarter, sorry, in the first quarter, Frontline achieved $52,500 per day on our VLCC fleet, $64,000 per day on our SUSEMax fleet, and $56,300 per day on our LR2s-Apramax fleet. And we are, in fact, back to a somewhat reverted earnings relationship between our segments, with the SUSEMaxes outperforming the VLCCs, and the same for LR2s. We have secured quite firm numbers as we progressed into Q2, with 78% of our VLCC days booked at $75,000 per day, 71% of our SUSEMax days booked at $65,000 per day, and 63% of our LR2 AfroMax days at a very respectable $65,700 per day. Again, all these numbers in the table are on the low to discharge basis, and they will be affected by the amount of ballast days we end up having at the end of Q2. And mind you, this is Q2, which is supposed to be the weak point in the market. With that, I'll give Ingrid a word, and she'll take you through the financial highlights.

Thanks, Lars. Good morning and good afternoon, ladies and gentlemen. Let's Then turn to slide four, the profit statement, and look at some highlights. As Lars already has stated, Q1 23 is the highest first quarter profit since 2008. Q1 23 is also the first interim financial information presented by the company on IFRS. Following the transition to IFRS, one important thing is that dry docking costs will be capitalized and subsequently depreciated over the period to the next scheduled dry docking, which is from two and a half to five years. The Q123 dry docking cost was 3.6 million that has been capitalized, and three vessels were dry docked in the quarter. I will also mention that the company has revised the estimated use for life of its vessels from 25 years to 20 years, and that was effective from January 1st, 2023, which resulted in an increase in depreciation expense of 12.7 million in Q3 compared to Q4, 22. Then let's turn to slide five and look at some balance sheet highlights. The company has no remaining new building commitments until Q1 2023, as the company took delivery of the two last B2C new buildings, Front Orkla and Front Tegn in January 2023. The company has strong liquidity of 584 million in cash and cash equivalents, including then the undrawn amount of unsecured facility, marketable securities and minimum cash requirements. Then the company lastly has a healthy leverage ratio of 52.9%. Then I would like you to turn to the next slide. And lastly, let's look at the cash flow potential of the company. We estimate industry leading cash break even rates in 300 fleet average, and that includes dry docking costs for eight Zeus Max tankers in 2023. Four of them is to be expected to be dry docked in the third quarter, and four is expected to be dry docked in the fourth quarter. The Q1-23 average OPEX excluding dry dock was $7,300 per day. The free cash flow indicates strong potential return for the company, as you can see from the table on the right hand side. Just picking the scenario where we assume VLC rates of $75,000 per day, with five year historic spread to VLC for SUSEMAX and LR2 tankers, The annual free cash flow potential is about $1.4 billion, or $6.29 per share, representing a free cash flow yield of 42%. And with this, I'll leave the word to you, Edvin Lars.

Thank you very much, Inger. Let's have a quick look back at the Q1 2023 tanking market. So I already mentioned that it wasn't typically seasonally strong. Normally, in the Q1, we'll kind of get sober after the Q4 hype, and markets will fairly quickly start to deteriorate into February. What happened this time around was that we had the second peak in the market in March, and all segments from plant operates were performing very, very strong. If you look at the chart at the bottom left here, you'll find how elevated the average weighted market earnings are. The reason for this is obviously that it's not only VLCC and Serious Max, but it's also Afromax and LR2 being very, very strong. If you compare it to the period that we like to look back on, the period from 2003 until 2009 in the most recent times, we are actually quite high up on the earnings side and the markets are performing very very well. Chinese imports moved to all-time high if you look at the chart to the bottom right. We also saw the highest number of VLCC shipments to China. As I already said, Russian sanctions continue to yield inefficient trading patterns, but it is more about China, as that situation seems to have found some sort of plateau. We did, however, have a very mild winter in the Northern Hemisphere, both in Q4 and Q1, and this muted oil demand to some extent. If we then move on to slide eight, or page eight, And we did receive an OPEC cut, or a voluntary cut. The volumes are indeed down for May, but what about ton miles? So Russia continued to export. With the current oil price scenario we're in, the G7 cap is not an obstacle to Russian oil exports. And we see Russia pump relentlessly. Quite interesting, now ahead of OPEC meeting on June 4th. Both OPEC plus and non-OPEC volumes were down in May. But this is, and we need to remember, this is the seasonal slow point of the year with high refinery turnarounds. Global oil demand is expected to rise by around 2 million barrels per day in second half of 2023. And if we look at the whole picture, the global exports overall are indeed back to pre-COVID levels, albeit a little bit slow in May. It's going to be very interesting to see what the US, Brazil, and West Africa are able to do post-summer, as those are the three candidates to have the ability to export more volume as we proceed into winter. Let's then move to slide nine. So vessel utilization is still high, but it's volatile. We'll see that on the bottom left-hand side, and this data is from SignalOcean, where they basically record every fixture done on the various asset classes and measure the amount of days the vessels are laden. And if you look at the chart at the bottom left, If you look at the VLCC, we are quite elevated compared to historical patterns. It has corrected down, yes. It might be a bit muted right now, but the VLCC is probably still affected by the rally in Q1 and the mini rally we just observed a couple of weeks ago. If you look at the Suez Maxis, they too are high relative to the previous years, but again have corrected over the last couple of months. LR2s are back to trend, I'd say, although high in the trend. But I think the key takeaway from these three charts is to look at the overall direction of the utilization and of the ton mile demand throughout the year. It's clearly that we are, firstly, at the low point in the cycle, and secondly, that the direction towards the end of the year well judging on history, could be very interesting. Let's then move to slide 10 and have a quick discussion on the order book. And I'm not going to go through all these charts in detail. I think they tell their own tale. It's quite incredible that by the end of this year we'll have 111 VOCC still operating in the market above 20 years of age. That amounts to 12.6% of the current trading fleet. The order book stands at 16 vessels yet to deliver, and that's 1.8% of the fleet. If you look at the Suez Maxis, about 14% of the fleet will be above 20 years as this year ends, and the order book stands at 18, after having grown actually quite a bit in Q1 and Q2. That amounts to 3% of the existing fleet. LHU, AFRAS, the global fleet is only 415 vessels. 25 of those are over 20 years. Here it's actually more relevant to look at 15 years, but just to be kind of conservative, let's just look at the 20 years. That amounts to 6% of the existing fleet. The order book there is growing and it's sizable. So it currently stands at 12.8% of the existing fleet. If you look at overall for the segments that Frontline are exposed to, or the asset classes that we are engaged in, close to 12% of those fleets are above 20 years of age, and the order book stands at 4.6%. It's very, very difficult to see a scenario on the supply side That will rock kind of the tanker story at least until well into 2026. And then finally to sum up, so Frontland delivered the highest Q1 profits since 2008, 193 million and a cash dividend of 70 cents per share. We continue to capture value on time chart analysis at an elevated point in the cycle. There are new orders being seen for SUSEMAX and LR2, but 2025 is now firmly sold out, and you can build in 2026 in China. In Korea, you probably need to look to 2027. And we also see only two orders rumored here today, although more are being discussed. And 12% of the tanker fleet that we are exposed to is going to be about 20 years by the end of this year. The OPEC Plus actions have had a limited impact so far in May, and it looks like it's counted by ton miles. And again, China will be the X factor as we grind through the summer low. Lastly, I'd like to explain a little bit on the chart below. I just had a presentation for a group of students from Denmark, and basically explaining the long-term picture in oil and tankers. And what you see in the blue line is oil demand, which tends to grow with population growth. And on the right-hand side, or the yellow graph, is annual fleet growth as we get into 2025.