FRO - Fourth Quarter and Full Year 2013 Results - Seite 2

Ship operating expenses decreased by $3.8 million compared with the preceding quarter due to a $1.5 million decrease in dry docking costs and a decrease in running expenses following lease terminations/vessel redeliveries.

Following the redelivery of the chartered-in VLCC DHT Eagle on May 8, 2013, the Company no longer has any vessels chartered-in under operating leases.

Interest expense, net of capitalized interest, was $22.4 million in the fourth quarter of which $6.2 million relates to the Company's subsidiary Independent Tankers Corporation Limited ("ITCL").

Frontline announces a net loss attributable to the Company of $188.5 million for the year ended December 31, 2013, equivalent to a loss per share of $2.36. The average daily TCEs earned in the spot and period market in the year ended December 31, 2013 by the Company's VLCCs and Suezmax tankers were $17,400 and $13,400, respectively, compared with $22,200 and $15,200, respectively, in the year ended December 31, 2012. The spot earnings for the Company's double hull VLCCs and Suezmax vessels were $15,400 and $13,400, respectively, in the year ended December 31, 2013 compared with $22,400 and $15,200, respectively, in the year ended December 31, 2012.

As of December 31, 2013, the Company had total cash and cash equivalents of $53.8 million and restricted cash of $68.4 million. Restricted cash includes $66.2 million relating to deposits in ITCL.

The Company estimates average total cash cost breakeven rates for the remainder of 2014 on a TCE basis for VLCCs and Suezmax tankers of approximately $23,100 and $18,100 respectively.

Fleet Development

In October 2013, we agreed with Ship Finance International Limited ("Ship Finance") to terminate the long term charter parties for the 1998 and 1999 built VLCCs Front Champion and Golden Victory, and Ship Finance simultaneously sold the vessels to unrelated third parties. The charter parties were terminated in November 2013 upon the redelivery of the vessels to Ship Finance. We have agreed to a compensation payment to Ship Finance of $89.9 million for the early termination of the charter parties, of which $10.9 million was paid upon termination and the balance was recorded as notes payable, with similar amortization profiles to the current lease obligations, with reduced rates until 2015 and full rates from 2016. Front Champion and Golden Victory had the highest charter rates among the vessels Frontline has chartered in from Ship Finance and the level of compensation is a reflection of this.