Frontline plc.

Thank you very much, dear all, and thank you for dialing into Frontline's quarterly earnings call. Being in the tanker industry, one that's used to evolving and ever-changing markets, largely affected by geopolitical events. But it's becoming a little bit exhausting having potential seismic shifts by the hour. At Frontline, we manage to stay calm, trade our ships, and wait for the facts or actual outcomes instead of attempting to analyze every statement out there. A red line in all the action is focused on sanctions enforcement and a widening scope within that area, which we welcome. Before I give the word to Inger, I'll run through the TC numbers on slide three in the deck. In the fourth quarter of 2054, Frontline achieved $35,900 per day on our VLCC fleet, $33,000, sorry, $400,000 per day on our SUSEMAX fleet, and $26,100 per day on our LA2 slash Afromax fleet. So far in the third quarter, 80% of our VLCC days are booked at $43,700 per day. 77% of our SUSEMAX days are booked at $35,400 per day, and 64% of our LR2 slash Afromax days are booked at $29,700 per day. Again, all these numbers in the table are on a low-to-discharge basis, with the implications for ballast days at the end of the quarter, this incurs. With that, I'll give the word to Inger. And we move to page three on the deck.

Thank you, Lars, and good morning and good afternoon, ladies and gentlemen. We are now on slide four, profit statement. We report profit of 66.7 million this quarter, or 30 cents per share, and adjusted profit of 45.1 million, or 20 cents per share. The adjusted profit in this quarter decreased by about 30 million compared with the previous quarter. And that was mainly due to a decrease in our TCE earnings. But it was partly offset by reduction of expenses as well. Then we can move to slide five, balance sheet. The balance sheet movements in this quarter are related to sale of a vessel, repayments of debt, and also refinancing, in addition to ordinary items. Frontline has a solid balance sheet and strong liquidity of $693 million in cash and cash equivalents. That's including the undrawn amount of the senior unsecured revolving credit facility, marketable securities, and minimum cash requirements. as per December 31st, 24. In the first quarter of 25, we have further strengthened our strong liquidity with revolver capacity up to $91.9 million. We have no new building commitments and no meaningful debt maturities until 2028. Then you can move to slide six. Our fleet consists of 41 to 22 tankers and 18 LRQ tankers. Has an average age of 6.6 years and consists of 99% ecovessels. We are 56% scrub refitted. We estimate average cash cost break-even rates for 2025 of approximately $29,200 per day for wheeled disease, $24,000 per day for ZeusMax tankers, and $22,200 per day for LR2 tankers, with a fleet average estimate of about $26,200 per day. This includes dry dock of two VLCs and one Zeus Maxx tanker in 2025. We recorded OPEC expense in the fourth quarter of $7,600 per day for VLCs, $9,100 per day for Zeus Maxx tankers, and $7,600 per day for LR2 tankers. This includes dry dock of one VLC and one Zeus Maxx tanker. The Q4 24 fleet average OPEX excluding DRADOC was $7,400 per day. Then we can move to slide seven, cash generation. With about 30,000 earnings days annually, Frankland has a substantial cash generation potential. As you can see from the graph on the right hand side of this slide, The cash generation potential at current fleet and spot market earnings from Clarkson Research as of February 25 is $447 million, or $2.01 per share. And a 30% increase from current spot market will increase the potential cash generation with about 80%. With this, I leave the word to Lars.

Thank you very much, Inger. Let's move to slide eight. We've done the presentation a little bit different this time, basically kind of trying to focus a little bit on what we regard the normal market, which is basically everything kind of besides what's going on in the media and around tariffs, sanctions, war and whatnot. So global oil consumption averaged 103.4 million barrels in Q4. That's a fairly good number. Up one million barrels per day, year on year. This is expected to reach one of 4.5 million barrels by year end. In a normal market, this would have been looked upon as a very kind of firm development within Calendia. Global supply was up 600 barrels per day. OPEC maintain their production cuts in December 24, and we actually are expecting inventory to start building in 2025, at least according to EIA, and supply to reach 105.5 million barrels in Q4 2025. For Q4, and this to a large degree explains some of the disappointments we've seen in rates, global oil exports were actually down 700,000 barrels per day compared to Q4 23. DEC alone was down 1.5 million barrels per day. This can be explained partially by what is expected to be seen as inventory draws during the period. You also need to remember that we saw in particular Iran hiking their exports in October, making basically the Asian markets quite well supplied with molecules into Q4. This is obviously material not benefiting the compliant tanker fleet. We continue to see Q4 muted new ordering. But we also saw that the delivery window for any kind of asset you want to build moved firmly into 2028. Maintaining the three-year lead time in order to get the vessel on water. The average fleet age for tankers is, at this day, 13.7 years. This is the highest since 2001, 16. the regulatory framework compliant ship owners are actually facing. If you look at the asset classes frontline operating, we also see SUSEMAX and LR2-AFRAMAX, 46% of the vessels are over 15 years now, meaning that they will be up for replacement over the next five years. And as we speak, 20% are above 20 years. shows us that an order book of 15% is manageable in this scenario. Basically, what we're trying to argue is that if you see beyond the noisy tariff and sanctions narrative and all the unrest around us, which we don't expect to hurt the demand materially, the only effect we may see is that trade efficiency will be reduced and we'll basically have have kind of a more or even increased inefficiency in how the ships sail and then longer trade lanes. The backdrop remains quite good for tankers. I think it was a good reminder of our listeners that, you know, kind of beyond everything else, there is actually normal market functioning. So we're also going to spend an entire slide on talking about sanctions and tariffs. These are questions that we receive every day from various investors, journalists, what not, basically on all the headlines that are coming out as we speak. So let's first have a look at tariffs on Mexico, Canada, China and EU. Depending on the outcomes, and this is always a big question, what will actually come to effect in the end? These tariffs also incur a material energy exposure. U.S. imports around 4 million barrels of crude oil from Canada every day. China only imports a very modest volume from U.S., which may come as a surprise to some. This is around 200,000 barrels per day. Mexico export in total 800,000 barrels per day. Half goes to US, so around 400,000 barrels per day. Then again, US export to Mexico 600,000 barrels per day. So meaning that if oil and energy gets weaponized in this tariff discussion between these countries, it can actually become quite interesting to see how that plays out for the tanker industry. Then we have the more recent U.S. trade representative, or USTR, $1.5 million fee on Chinese-built tonnage. So 22% of global tanker fleets is built in China. Frontline are exposed on Suez, Eritrea, and Afra, but all our VOCCs are built either in Korea or Japan, and we have no vessels on order in China. kind of out being heard. It's not been put in law or no legislation has been created yet. It will be interesting to watch. But again, it's kind of the only outcome here, you know, would be for altering trade lines and then more inefficiency on the half-ships trade. Then you have maximum pressure on Iran or a solution on Iran. So let's look at those, you know, the two scenarios here. The first one, maximum pressure, would potentially remove oil from Iranian oil's access to the market. This means that this oil needs to be replaced and likely potentially from OPEC. But that would be compliant oil that needs compliant ships. And again, beneficial for us that operate in the compliant market. If a solution is found and suddenly Iranian barrels stops to be sanctioned, that will, well, sorry, the previous one would also incur floating storage needs as Iranian oil would back up. Look at the other side of this, the removal of sanctions altogether would even be potentially more bullish for tankers or for compliant tankers. As Iranian oil would become compliant, And compliant oil needs compliant tankers. Then you have Russian sanctions, whether if they're increased or the pressure is heightened, or the other side of it, if it's removed. So the increased sanction pressure, I think we're already seeing the beginning or the results of that. We see, not on the export side, because we actually see the barrels still move, but on the import side we already see in the statistics that not only Russian, also Iranian and to some degree Venezuelan oil imports globally are falling. So basically floating storage must be building. But anyway, an increased sanction pressure further makes kind of the trade around those barrels more complicated. And it's tying up more tonnage. Basically taking tonnage out of the compliant market into the gray or the dark markets. If you turn that around and say that you remove all the sanctions overnight, you also have to bear in mind then that it's very easy to remove sanctions on oil. That could probably be done by the stroke of a pen. But removing all the sanctions vessels from OFAC and EU lists is potentially a bit more complicated. But even if that could happen, bear in mind, and we've indicated that, on the chart on the bottom right-hand corner, close to 50% of the Russian trading fleet is above 20 years. And if you remove sanctions, that does not change the policy charters have on this 20-year cap. And as we've previously stated, that's probably to remain firm until the market becomes so expensive that our freight becomes so expensive that the charters are incentivized to us, their vetting departments, to move beyond the 20-year age cap. Also, a very important part in kind of this narrative is, are US Treasury OFAC and EU going to be aligned if sanctions are lifted or sought lifted on Russia? Then we have also recently Venezuela exemptions. So US seems to be having a new position on Venezuela and the exemptions given for lifting Venezuelan crude. This is poised to pull pressure on production expansions and exports from Venezuela. Venezuela has actually, maybe just as a surprise to some, grown their exports from 550,000 barrels to 800,000 barrels year on year, and actually on preliminary tracking data, they were able to churn out a million barrels per day in December. But then we have another part here, which is this Shandong Port Authority basically aligning themselves with OFAC and not allowing OFAC listed vessels to discharge in that province. This might change. This happened also almost simultaneously as OFAC expanded their list of sanctioned vessels by close to 160 tankers. And obviously any expansion on that OFAC list will hit this directly. But it is a game changer because when you can't actually enforce sanctions, the only hope is that somebody will self-sanction. And this is effectively what the Shandong province and a very important import hub in China has done. Further to that, India has, at least so far, seemingly followed suit, and also kind of preventing OFAC listed vessels to discharge in their ports. One small side comment there for China, this might have an alternative motive. China has an interest in evening the playground between state and private loan refineries, teapots, which are very present in this province, and which to a large degree have taken advantage of cheap feedstock coming from Iran. And then lastly, in this kind of fairly extensive list of moving parts that we as the tanker owners are exposed to, we have the Red Sea, Israel, and Hamas And of course, in relation to the Houthis and their actions in the Red Sea. We believe the risk continues. It ebb and flow with the developments in Gaza, but it's still so that as a tanker owner, we're not necessarily incentivized to go through. We don't mind taking the long way around. And also, we don't see currently any massive pressure from charters to move through the region either. the situation is still high risk, we would argue. Not necessarily because ships have been attacked in the Red Sea, which they haven't, but something might go wrong in the peace process and in the ceasefire, and then things can escalate extremely quickly. And I also wanted to make a note on this, or kind of focus here on on this slide and look at the top right-hand chart. The blue line is how the fleet development actually has been. The orange line is if we'd lived in a normal world where ships did not trade sanctioned oil and ships got recycled on or around their 20-year anniversary. Looking at this, the conventional tanker fleet, if you look at the VOCC, SUSEMAX, and AFRAMAX, actually stopped growing in 2022. Have you done that exercise for VOCC alone? It stopped growing in September, October 2021. So we've actually had negative fleet growth in the compliant or below 20-year market for close to three years now. Keep that in mind. Let's move to slide 10 and this basically is to show how much is in this How much is exposed to all these political moves and what's going on in the world around us? So let's move back to pre-Russian invasion and go back to 2019. Europe imported around 10 million barrels per day of oil. Then the war broke out and Europe lost 1 million barrels of Russian oil. They lost a little bit from Med, but the Atlantic Basin like US, Brazil, West Africa, and so forth, increased its supply into Europe by 1.2 million barrels. 388 incremental barrels were sold from the North Sea, and others amounted to 208,000 barrels per day. At the end, or in 2024, Europe has consumed 10.8 million barrels per day. This is not like a massive growth. It's a small incremental growth. But if you look at the volume changes here, they're quite remarkable. And for a shipper, we don't necessarily want Europe to source its oil from the Atlantic Basin. That oil we want to move east. And that oil has traditionally moved east, but obviously as Russia has taken market share in the eastern market, Atlantic Basin has been locked inside the Atlantic Basin. Then move to Asia. Pre-invasion, Asia had 21.7 million barrels per oil of imports. The war broke out. They lost 600,000 barrels from the Atlantic basin. They further lost almost all that went into or stayed in Europe, 300,000 barrels from the North Sea. They lost 170,000 barrels from the Med. In came 1.4 million barrels per day from Russia. Iran managed to increase their exports by almost half a million barrels, and Middle East contributed with half a million barrels. And as we came into or finished off 2024, Asia is importing 23 million barrels. And it's interesting to see that that growth in that two-year period has predominantly come from Russia and Iran. This is obviously oil that is not available to a compliant shipowner, to the frontline fleet, and it's basically benefited the growth of this dark trade. A reversal of this trading pattern would be hugely beneficial for the markets we operate in and would further change the trade lanes back to the more normal. Russian stays local where it's supposed to go. And Atlantic Basin replaces the lack of Russian oil going long east. So let's move to page 11 and look at the order books. So we have actually added a column here, which we call OFAC. And it's quite interesting. So basically, just so you get a measure of how many ships are actually on the OFAC list. And I'll tell you. People say kind of casually whether this ship is on a no-fuck list or this company is on a no-fuck list. Well, you don't want to be on a no-fuck list. It basically gives the U.S. a free card to go and grab your money. If you have a U.S.-dominated account, they can just go and take it, and people don't necessarily want to have that hanging over them. But basically, the VLCC fleet now is estimated to be around 884 vessels. 40% of that is above 15 years, and 18% is above 20 years. Order book stands at 9.8% of the existing fleet. And there's 100 or very close to 100 ships on the fact list. Suisse Max, again, the fleet is 614 vessels. 44.3% of those vessels are above 15. This is why I previously mentioned that the overall average of the age of the fleet is 13.7. It starts to kind of make sense. You got 21.2% of that fleet above 20 years currently, and order book stands at 97 or 15.8. And then we have the LR2 and the Afromax. On the LR2 side, as we mentioned before, the order book looks very chunky. But then again, with the modest Afromax, order book and the way these kind of interact and the way they trade or switch between clean and dirty. We're not about that order book either. Quite interesting to see that 60% of the Afromax fleet is about 15 years and 30% is about 20 years currently. That kind of puts some perspective into that on first glance looking quite chunky order book. So let's move to slide 12 and see if we can sum it up. I put that headline up there called Tending Bull Market. I know that investors and ourselves, of course, would like kind of any action happening out on a headline or in the political world to quickly translate into $100,000 per day on the VLCC. Regretfully, that's not always the way it happens. It kind of takes a bit of time. Oil supply and demand, we argue, remains stable, but trade patterns are being challenged. We see that demand for compliant tonnage is growing. We see key Asian importers seeking other supply predominantly than West Africa and Brazil, and to some extent the US. The effective tanking fleet growth will remain muted also for 2025. especially if you consider the aging of the fleet. Right now, policy changes create more questions than answers, and outcomes are difficult to analyze. We admit that. World oil trade, and this is an interesting kind of discussion to have, but world oil trade is now serviced by the oldest fleet in more than two decades. Frontline, we retain our material upside, with our modern spot-exposed fleet. And with that, we open up for questions.