Jens Martin Jensen - Chief Executive Officer of Frontline Management As Inger M. Klemp - Chief Financial Officer and Chief Financial Officer of Frontline Management AS

Michael Webber - Wells Fargo Securities, LLC, Research Division Justin B. Yagerman - Deutsche Bank AG, Research Division Jonathan B. Chappell - Evercore Partners Inc., Research Division Michael S. Pak - Clarkson Capital Markets, Research Division Fotis Giannakoulis - Morgan Stanley, Research Division Gregory Lewis - Crédit Suisse AG, Research Division Isaac Arnsdorf

Good day, ladies and gentlemen, and welcome to the Frontline Q4 2011 Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Jens Martin Jensen, CEO; and Mrs. Inger M. Klemp, CFO. Please go ahead.

Good morning, and good afternoon, and welcome to our Q4 presentation. As I said a few times last year during the various presentations, 2011 was a very difficult year, with earnings well under our breakeven levels and, at times, even below operating costs. This combined with a almost 50% drop in values put us in a very delicate situation. As we have announced in December, we have restructured the company, and I believe in a satisfactory way for all parties concerned. Since this is a Frontline Ltd. Q4 presentation, we will focus on that in this presentation and we will try and follow our usual program with Inger going through the Q4 highlights and main transactions, including the main points of the restructuring, then the financial review of the quarter and an update of our newbuilding program. After that, I will follow up with some market comments on what we saw in Q4 and update on where we think the market is at the present. So Inger, if you could start, please. Inger M. Klemp: Thanks, Jens. Good morning and good afternoon, ladies and gentlemen. As Jens said, I will guide you through the highlights and the financial review in the fourth quarter of 2011 and then -- and so far into the first quarter. Moving then to Slide 4 and 5. Frontline completed a restructuring of its business in December 2011. The restructuring included the sale of 5 VLCC newbuildings, and 6 modern VLCCs, including one-time charter contract and 4 modern Suezmax tankers [indiscernible] 2012. We did add a fair market value of $1.1 billion. In addition, Frontline 2012 assumed $666 million in bank debt attached to these vessels and the newbuilding contracts, and $325.5 million in remaining newbuilding commitment. Frontline took a 48% of the share capital of Frontline 2012. As part of the restructuring from that 2010 agreements with its major counterpart whereby the gross charter payment commitment under existing chartering arrangements is reduced by approximately $320 million in the period 2012 to 2015, Frontline will compensate the counterparties with 100% of any difference between the renegotiated rates and the actual market rate up to the original contract rate. Some of the counterparties will also receive some additional compensation for earnings achieved above original contract rate. Then all bank debts was eliminated following the transfer to Frontline 2012 and also the prepayment of $30 million associated with the vessel which was not part of the transaction with 2012, and the prepayment over to sales, the $33 million bank loan. Then in October, November and December 2011, the company sold its 1992 to 1996-built Suezmax tankers, the Front Fighter, the Front Hunter, the Front Beta and the Front Delta. These sales resulted in a total net cash flow after repayment of bank debt of approximately $5 million. And an impairment loss of $121 million was recognized in the third quarter. In October, Frontline terminated the long-term charter party for the OBO carrier Front Striver. The company made cash compensation to Ship Finance of $8.1 million and recorded a loss of $9.3 million in the fourth quarter of 2011. In December 2011 and also in January 2012, Frontline redelivered the Suezmax tanker Front Warrior and the VLCCs Front Commander, Front Chief and Front Crown. All of these vessels had been on time charter into the company under operating leases. Lastly, Frontline established Orion Tanker pool with Nordic American Tanker Limited in the fourth quarter. This specialist Suezmax tool is including 29 double-hull Suezmaxes. Then moving to Slide 6. I will then do a quick run through of the financial highlights in the fourth quarter of 2011. Frontline reported net loss excluding the losses and gains on sales of assets and amortization of deferred gains of $30.8 million. This is equivalent to loss per share of $0.40 in the fourth quarter. The net loss includes a loss of $307 million on the sale of 10 vessels and 5 newbuilding contracts, a fair market value to Frontline 2012. It also includes a loss of $9.3 million on the termination of the long-term charter party for Front Striver, and also, deferred gains of $3.8 million relating to the sales in [indiscernible] and Front Eagle and Front Shanghai. The net loss including these losses on sale of assets was $343.7 million, equivalent to loss per share of $4.41. Frontline announces a net loss excluding losses and gains from sales of assets, amortization of deferred gains and impairment loss of $103 million for the financial year of 2011. The net loss for the financial year 2011, including these losses on sale of assets was $529.6 million, equivalent to loss per share of $6.08. Frontline will not pay dividends for the fourth quarter. Then moving to Slide 7. Net loss, excluding gains and losses in the fourth quarter of 2011 is about $18 million better than the third quarter 2011. The increase can mainly be explained by that income on time charter basis was about $11 million better in the fourth quarter than it was in the third quarter. This is due to an increase in time charter equivalent per day in the fourth quarter, partly offset by a reduction on hire days due to recent sales and lease termination. Further, profit sharing to Ship Finance increased about $1 million due to increase in time charter equivalents per day in the quarter. Ship operating expenses decreased by $6 million compared with the preceding quarter, primarily as a result of a decrease in running cost of $5.4 million due to recent sales and lease terminations and a decrease in drydocking cost of $900,000. We have drydocked one vessel in the fourth quarter compared with 3 vessels in the third quarter. Further, the charter hire expenses decreased by $2 million in the fourth quarter compared with the preceding, primarily due to redelivery of vessels on the time charter and a decrease in provision for loss-making voyages. Then the depreciation is also reduced by $6 million in the fourth quarter and this is also a consequence of the recent sales and the lease terminations as previously mentioned. Lastly, financial expenses have increased about $5 million, and that is due to write-off of deferred charges on the sale of 15 VLCCs to Frontline 2012. Then moving to Slide 8. Frontline's double-hull VLCC fleet excluding the vessels from spot index time charter, earned in the spot market approximately $18,400 per day in the fourth quarter. This compares with $14,600 per day in the third quarter. Including then the vessels on this spot index time charter, the vessels earned $16,800 per day. The average for the whole fleet was about $19,100 per day in the quarter. The Suezmax fleet earned in the Gemini pool $12,000 per day in the quarter. And as a consequence of that, some of our average Suezmax vessels trade outside the pool at somewhat higher rates, we earned on average in the spot market approximately $12,400 per day, and the average for the whole Suezmax fleet was about $13,900 per day in the quarter. The OBOs earned $41,600 per day in the quarter. These time charter equivalent numbers show that sometime this quarter, has traded better than our peers which have released their numbers for VLCCs, but the earnings for the Suezmaxes were disappointing. Then moving to Slide 9. As you can see from this slide, we had average OpEx for the fleet of approximately $9,200 per day in the fourth quarter, compared to approximately $9,300 per day in the previous quarter. We drydocked one vessel in the fourth quarter compared to 3 in the third quarter as you can see from the graph on the upper right-hand side of this slide. And then, as you can see from the graph on the lower right-hand side of the slide, off-hire days were at 86 in the quarter compared with 159 days in the third quarter. This is mainly due to less off-hire days related to drydocking. We don't expect to drydock one VLCC in the first quarter of 2012. Moving then to Slide 10. The total balance sheet is approximately $1.4 billion lower than the third quarter of 2011. And the large reduction is due to the restructuring of the company that was completed in December. The main items explaining the decrease are: First of all, the sales of Front Hunter and Front Fighter were agreed in October and as a result of that, the vessels were classified as held for sale in the third quarter. These vessels were sold in Q4; then, long-term restated cash decreased by $58 million, due to that, these funds were paid to Ship Finance as part of the restructuring of the charters with Ship Finance. Book value vessels decreased with $1.1 billion, mainly due to the sale of vessels to Frontline 2012, but also due to the sale of Front Delta and Front Beta. Book value vessels on the capital leases decreased with $199 million, largely as a result of the agreements with major counterparts to reduce charter rates. In addition, the reduction is due to the termination of the lease of Front Striver and/or more or less, depreciation charge in the quarter. Long-term debt is reduced, as a consequence of that, all bank debt is eliminated, remaining long-term debt relates to the convertible bond loan in Frontline and bond debt in ITCL. Obligations on the capital leases have decreased with $301 million, largely as a result of the agreement with major counterparts to reduce charter rates. In addition, the reduction is due to termination of the lease of Front Striver and ordinary repayments in the quarter. ITCL is included in the balance sheet with a total of $298 billion of debt and obligations on the capital lease. Yesterday, the 3 of the [indiscernible] Suezmax vessels are not consolidated in the balance sheet with $48 million. Then moving to Slide 11. Following the restructuring, the estimated cash cost breakeven rates for 2012 are approximately $23,900 per day for the VLCCs, and $16,400 per day for the Suezmaxes, and $12,800 per day for the OBOs. Moving then to Slide 12 and 13. As per end December 2011, the total number of vessels in Frontline's newbuilding program are only 2 Suezmax tankers, which constitute a contractual cost of about $125 million. We had paid installments of about $12.5 million on the newbuildings and the remaining installments to be paid amounts to $112.4 million. We expect payments of approximately $25 million in 2012, and $87 million in 2013. We have not yet established pre and postdelivery financing for these newbuildings. Moving then to Slide 14 and 15. The number of vessels in the Frontline fleet at the end of the fourth quarter 2011 is 66 vessels, including the vessels on commercial management and ITCL vessels, and is compounded by 41 double-hull VLCCs, 3 single-hull VLCCs, 17 double-hull Suezmaxes, 5 OBOs. We have contract coverage of 12% in 2012 and 10% in 2013. And the average net time charter rate for the total fleet is about $48,400 per day in 2012 and $53,200 per day in 2013. With this, I'll leave the word to Jens again.

Thank you, Inger. We are now on Slide 16. The market improved in the fourth quarter, and I think the general feeling was it could only go up. The main positive drivers was the return of the Libyan bells, who had a positive impact on the Aframax and Suezmax markets, and the gradual further buildup on the tension in Iran with oil being sourced elsewhere and adding cost in to the ton-mile balance. We saw a double-hull VLCC being scrapped in the quarter, as well as several Suezmaxes, and I believe that bottom was found on second held values for around 10-year-old vessels. The average TD3 rate of $35 is still a stark reminder on where we came from in the third quarter. Slide 17. 59 VLCCs were delivered in 2011, which was about a 25% slippage of the established order book. We expect this number of percentage on slippage to continue this year. Limited ordering is positive and we hope some additional double-hull VLCCs will be scrapped this year. The Suezmax fleet on Slide 18. The Suezmax continued its savings with around 30%, and no Suezmaxes was ordered during the quarter. Again, positively for the fleet development. If we look at the newbuilding prices, there's a downward pressure in newbuilding prices, and estimated newbuilding prices to date for a decent specification VLCC or Suezmax is around $90 million and $60 million respectively. The large Korean shipyards are still successful in securing LNG and offshore orders and the pressure on them is less than what we are seeing on the large Chinese shipyards. The estimated 3-year VLCC rate is around $27,000 per day, and we estimate the 3-year rate on Suezmaxes to be in the region of $20,000 a day. I would like to mention that there is not many charters out there and there's quite a widening gap in both the tonnage versus more modern and economical vessels. Outlook. There is no doubt the market has improved. Activity has increased with healthy volumes from the Persian Gulf, plus positive ton-mile cargoes has increased in the eastbound cargoes from the Caribbean with Africa and North Sea markets. The big question for 2012, will we see economical recovery and increase in the oil demand. Very limited ordering in the large crude segment in 2011, and with double-hull tankers now being scrapped, we hope for a more balanced fleet development going forward. Finally, I think it's safe to say that many owners are now starting to feel the financial squeeze of falling values, collapse in other shipping segments, such as containers and bulk carrier market. No doubt, great opportunities come, but how many can react to these. Regarding our own company, Frontline, we have successfully restructured the company in the last year, and I believe we have found a good platform to work on from now. We have sold and terminated leases for 11 vessels last year, from the non-core fleet EI single-hull VLCCs, charter-free OBOs, and older double-hull Suezmax tankers. We have a few more units to go, and we will continue with this strategy in the first half of 2012. We redelivered expensive to the market, time charter vessels last year, but we retained the vessels on commercial management, and thus, have maintained our market presence. As Inger mentioned, we outperformed our peers in 2011, on the VLCC side, whereas our Suezmax earnings was somewhat disappointing. We have made loss provisions on defaulting counterparties, but we will pursue these claims 'til the end. I think with that, the presentation is over, and we will now take some questions. Thank you. Operator?

[Operator Instructions] We will take our first question from Michael Webber from Wells Fargo. Michael Webber - Wells Fargo Securities, LLC, Research Division: I wanted to jump in and talk a little bit about, I guess, first, your breakeven rates. And the guidance, I guess, in the deck, coming in substantially higher than what was put in the restructuring release. And I'm just curious as to what's driving that? I know in the restructuring release, it did not include the ITCL assets. So is that what's driving that increase or is there some inflation there? Can you just talk to what's going on with your breakeven rates? Inger M. Klemp: No, the reason why these numbers are different is because they are ref'ed out on different bases. The one study you are referring to that was included in our press release in the beginning of December, I think, was based on breakeven rates after cover -- after contract coverage. And so what we do then is in a way, to subtract from the gross cash cost breakeven rates, we deduct then what we have in the, say, excess earnings of our breakeven rates for the contract vessels. So that is the main difference. Michael Webber - Wells Fargo Securities, LLC, Research Division: So the main difference there, you're saying was the expectation for profit sharing going back to finance and the delta there between the... Inger M. Klemp: No, no, not at all. No, you didn't understand what I said. What I said was that we have vessels which are -- some of our vessels is on contract route. We have a contract coverage on these vessels, which is about the breakeven rates of these vessels. Then the excess that you have about the breakeven rates for these vessels are then divided on the vessels, all the vessels, and then you get a reduction in the gross cash cost breakeven rate with that amount. Yes, that's what we've been saying and stated in the press release before Christmas. But now, we are talking about the growth rates. Michael Webber - Wells Fargo Securities, LLC, Research Division: Right, right, okay. That's helpful. You mentioned in your release, in the deck, some disappointing Suezmax rates. I was wondering whether you can go in and give a little color there in terms of the performance throughout, I guess, throughout the quarter? And then, obviously, you guys are in a new pool now. Can you maybe break out the performance between the 2? And then what your expectations are going forward?

Well, the Suezmax earnings, of course, if you make VLCC earnings throughout the year of $19,000 obviously, Suezmax earnings has to be less. But when we mentioned that our Suezmax earnings was disappointing is of course related to what we have seen other top-rated companies have reported in the market. I think we were in a Suezmax pool, the Gemini pool last year, which had almost 50 basis in, and of course, it was disappointing that, that pool, which we will sell for a part of, once away, we were not able to positively more influence the market. So now we have decided to maybe go separate ways and have a smaller pool, and we believe that hopefully, we can influence the market better positively that way. Michael Webber - Wells Fargo Securities, LLC, Research Division: Got you. Fair enough. A question on, I guess, on the restructuring. And Inger, you talked to this a second ago. But in terms of renegotiating contracts with Ship Finance, you can compensate them with 100% of any delta, I guess, between the original and the renegotiated rates. But then you could go on to say that some of the counterparties receive kind of an extra incentive above and beyond the original rate. Can you kind of break that out a little bit? Or maybe flesh that out in terms of color, in terms of how many assets we're talking about and to what degree they can earn above the original contract rate? Inger M. Klemp: Yes. The 28 vessels that they have on charter-in from Ship Finance, all of them and I'll just give that common list, all of them have 25% of profit sharing above the old rates. And then they have this cash rate mechanism up to the old rates from then the reduced rate that they have today. So $6,500, which they have reduced, they will get back if we earn the money, up to the old level. And then you have 4 vessels, which we have on charter from German KG, which also have basically the same structure that they reduced the rates down to a new level, but they also get this money back if we earn the money. And then they have also a profit sharing on top of that, of 25% as well. So -- but that is up to a certain ceiling. That's not a free ride upwards. It's up to a certain ceiling. And I guess that's the major things to talk about. The other things are short-term charter-ins, which are, yes, limited. Michael Webber - Wells Fargo Securities, LLC, Research Division: Got you. Okay, that's helpful. I guess, just a macro question. Obviously, a lot of kind of geopolitical risk right now, and just curious, is it -- it has been in the press that you guys are no longer calling on Iranian ports. Can you talk a little bit about what you're seeing in that area, whether or not you're seeing any sort of kind of tangible risk premium being placed on assets kind of heading into that region, and just maybe what you guys are seeing on the ground level there?

I think we have put out -- we have mentioned that we are not calling Iranian ports any longer and some other tanker owners have done the same thing. I don't think it's an issue calling the ports. If you get a higher rate, it's simply that our PNI [ph] club and insurance cover no longer cover these ports. So this will -- it's not a question of if we can make some money doing it, we will not do it for that reason. Michael Webber - Wells Fargo Securities, LLC, Research Division: Right. Maybe, I guess, just [indiscernible] to the area in general. I mean, is there any sort of incremental risk currently being placed, kind of heading into that area in general at all right now? I'm assuming there's not, but we've certainly seen that happen in the past when there's geopolitical...

Yes, yes, that could be a possibility if the tension escalates or the situation escalates, of course. There could be then a voice which [indiscernible] the whole Persian Gulf area. But right now, we are not seeing that.

We will now take our next question from Justin Yagerman from Deutsche Bank. Justin B. Yagerman - Deutsche Bank AG, Research Division: Just following up on the Iranian question. What's really been the impact, from a cargo standpoint, in the marketplace? You guys, OSG, have been public with saying that you're not going to call on Iranian ports. I'd imagine there are decent amount of established players who are taking that same tack. But are you seeing others still move those cargoes? Or are they occupying ships in the marketplace? Or is cargo just not coming out of those ports right now, and as a result, it's constraining overall cargo in the market?

There's still some oil being moved out from Iranian ports, so somebody is lifting the oil. What we have seen is the Iranian oil fleet, the NITC fleet is heading back to the Iranian waters and will be used as floating storage, which we saw 2 years ago also. Still, oil is coming out. I guess some of them are still willing to do that. But of course, the lack of oil coming out is, of course, meant that oil is being procured elsewhere. And we have seen some quite nice voyages from the Western atmosphere to Asia, which is of course, aiding the market. Justin B. Yagerman - Deutsche Bank AG, Research Division: Is there a storage mentality right now in the market because of the risk of war in the region?

We have not seen the contango situation yet. I think we're moving closer to that. But that's, of course, something we can hope for, again, which we saw was a very big part of the fairly healthy market we had in 2010. So I don't think we can draw a complete parallel between now and then, but then we hope we will move into a more contango-related situation. Justin B. Yagerman - Deutsche Bank AG, Research Division: Okay. A bigger picture question. Post restructuring, obviously, you put a lot behind you with this change, but the market continues to show weak rates and you guys are in a below cash breakeven situation. How do I think about that relative to any potential growth out there in the company over the next 12 to 18 months? How do you guys think about trying to position yourself for growth and potentially taking advantage of lower asset values if you see some opportunities in the marketplace?

I think there's 2 things to your question is, of course, first is the reduced breakeven rates, which we have managed to obtain in the restructuring, which was of course, quite important to have a sustainable operation going forward. The rest -- the rates in the tanker market right now is very close to our breakeven rates. So of course, we can hope for a further market improvement, which will be positive for the company. Right now, of course, we are seeing more and more interesting market deals in the market. I think there's still pressure on a lot of companies and potential values. I think the bottom has been found in certain asset classes, but I think it will probably be wise to wait a few more months before starting to buy ships. Justin B. Yagerman - Deutsche Bank AG, Research Division: If something more attractive, would you guys be able to take advantage of it at this point? Or are you still kind of too constrained by your balance sheet right now, to use capital for growth?

I guess, all obvious, that we have a small shareholder base, especially, one shareholder who has the potential capacity of doing something, if we want to do that. Justin B. Yagerman - Deutsche Bank AG, Research Division: But inside of the Frontline Ltd. organization, is that something that you think could take place?

That will probably be unlikely. Justin B. Yagerman - Deutsche Bank AG, Research Division: Okay. And then, in terms of asset classes, do you expect Frontline to stick to its knitting on a go-forward basis in the crude sector on the larger side? Or I mean, there's been a lot of discussion in the market about product tankers and even Mr. Fredriksen looking at those asset classes. So I was curious if that's a thought within the company, as you look for more stable areas of growth in the marketplace?

Well, we are looking, of course, at I wouldn't say any tanker segment in the world. But we have, say, broadened our scope a little bit and looking beyond what we traditionally have been in. And I think if we see opportunities in other segments, which we are not in now, we could be doing something there.

We will now take our next question from Jon Chappell from Evercore Partners. Jonathan B. Chappell - Evercore Partners Inc., Research Division: Jens, I was quite surprised actually by your last comment about the loss on counterparty failures. It seems that most of your counterparties were very flexible with you as far as negotiating the rates down, and you had just mentioned at the very end that you had taken some loss provisions. Can you just kind of tell us what the size of those loss provisions are? And then how those negotiations stand? How many charter parties and vessels we're talking about?

I had the same question here in Oslo earlier today, somebody who is awake in the audience. I would say that -- and I mentioned the losses provisions we have is some of the OBOs we’re fluctuating in dry. So this is more related to the dry cargo market, where there seems to be more popular to start defaulting on charters. And of course, those claims will pursue. There's only 2 vessels in there. It's not a big amount, but I think it's important to mention that we will not tolerate that behavior, of course. Jonathan B. Chappell - Evercore Partners Inc., Research Division: Okay. That's helpful. Then also on Slide 15, when you lay out your fleet, you have the double-hull VLCC fleet at 23 in 2012, and then down to 20 by the end of 2013. What is happening with those 3 vessels? I mean, clearly, they're not single-hull, are those first generation double-hull assets that you plan on scrapping over the course of next years?

Sorry. You're talking about the single-hull, sorry? Do you mind repeating that? Jonathan B. Chappell - Evercore Partners Inc., Research Division: No, actually, yes, the double-hulls, there's 23 double-hull VLCCs for 2012, but by the end of 2013, there's only 20. Wondering what's happening with those 3 double-hull vessels.

Yes, I think that's -- we have some ships on time charter-in. We have the Hampstead. We have the double-hull Eagle and the Gulf Eyadah, which will be redelivered in that period. Jonathan B. Chappell - Evercore Partners Inc., Research Division: Okay. Well, great. That actually allows me to my next question then. You had redelivered 4 charter-ins, so then you have those 3 existing VLCCs. How many more charter-ins do you have in addition to those?

That's it. Inger M. Klemp: None. Jonathan B. Chappell - Evercore Partners Inc., Research Division: That's it. Just the 3?

Yes. Inger M. Klemp: Yes. Jonathan B. Chappell - Evercore Partners Inc., Research Division: Got it. Bigger supply picture. Obviously, there's been no -- not much ordering over the last couple of years. The order book is coming down to what appears to be potentially manageable levels, 2013, especially 2014. But there seems to be this big push now for fuel-efficient vessels, and even someone very close to you has been talking about investing in VLCCs because of the fuel efficiencies by the end of the year. How concerned are you that shipyard cut-rate prices and then the fuel efficiency benefits may lead to a lot more ordering and kind of delay an eventual recovery of the tanker market?

Well, I think, in our business right now, 70% of our cost is bunkers. So of course, you have -- if you want to expand, you'll have to look at vessels which are able to operate at lower consumption levels. And I think there's very few ships on the water which you could actually buy. So I think the natural progression, if you want to expand the company is to go for newbuildings. Of course, it's a concern that if everybody has the same, not be able to do that. But can everybody really do that? I think that's the more -- the question. Of course, and how far can now can the prices go? That's of course, a cutoff point when the shipyards would stop building. But I think if you want to expand the company, you probably have to look for more fuel-efficient vessels. And then, of course, the question is how many players is actually out there who can do that? I think that's probably more important to think about. Jonathan B. Chappell - Evercore Partners Inc., Research Division: Okay. Just one last one for me. Next quarter will probably have the first quarter of Frontline 2012 results. Can you just give us an update on what the management structure looks like there? Or are you and Inger involved in Frontline 2012? And then what are the benefits, other than the 8.8% ownership to Frontline Ltd., by being involved in Frontline 2012, are there any rights or anything like that? Or is it just your ownership stake? Inger M. Klemp: With respect to the management for Frontline 2012, it will be managed by Frontline Ltd. So that's what the -- we announced that some time ago, that we will have management for the company. But at the latest point in time, the intention is to build up its own management company. That's the intention. With respect to -- [indiscernible] in Frontline 2012, it's only the 8.8% that Frontline Ltd. has. Jonathan B. Chappell - Evercore Partners Inc., Research Division: All right. No other benefits or... Inger M. Klemp: No other benefits, no.

We will now take our next question from Michael Pak from Clarkson Capital Markets. Michael S. Pak - Clarkson Capital Markets, Research Division: I just had a couple of questions on the -- with the moving parts that you guys all announced, the various transactions and impairments, can you just help us understand a little bit in terms of the charter hire and the operating expense per day? If you can give us some visibility on sort of per day rates or however metric you want to express it in, in terms of going forward? Are these the run rates that we should sort of assume, more or less? If you can help us with that, it would be great. And I believe depreciation has come down as well, given vessel sales and as well as impairments. If you can help us understand sort of moving parts of the P&L, would be great? Inger M. Klemp: Yes. If you are thinking about the operating expense that we have been now announcing for the fourth quarter, of the $9,200 per day, I believe, for the whole fleet, I would expect it to be in that level going forward, of course, arranging a bit volatility around that number because you do see differences when you do drydockings. And that depends from quarter-to-quarter. And then with respect to depreciation, I mean, the depreciation amount that you see in the fourth quarter numbers are, of course, based on also the vessels that have been sold to Frontline 2012. So you obviously have to make adjustments for that going forward. With respect to charter hire expenses, I would say that, of course, these expenses will eventually decrease, when we deliver back the vessels from the time charter-in. So that can also be decreasing over time. Michael S. Pak - Clarkson Capital Markets, Research Division: Okay. And as we look at the fleet and look at the expiration of these charter-ins, should we assume that they'll just be redelivered at this point?

Yes, they will be delivered when the respective charter parties are [indiscernible]. Inger M. Klemp: Yes. Michael S. Pak - Clarkson Capital Markets, Research Division: Okay, very good. All right. And just one other question. That was very helpful. The -- in terms of the geopolitical in the Middle East, you pointed out sort of the eastbound activity increasing. Is there any other scenarios that you guys have thought about in terms of a potential delay in the Hormuz or anything like that, that you guys have prepared yourself in terms of ballasting your ships to another region, et cetera. If you can share that with us, would be helpful?

There's a lot of talk about, of course, closure of the Hormuz Strait. Well, of course, if that happened, that would be very detrimental to the tanker market and many markets. So I think that's a very unlikely scenario personally. And of course, if that happens, then the tanker market will have a big problem. And there's not many other markets you can go to or at least the whole fleet can go to. So I think we will -- I think, I find it very unlikely that the Hormuz Strait or the Persian Gulf will close down.

We will now take our next question from G. Giannakoulis from Morgan Stanley. Fotis Giannakoulis - Morgan Stanley, Research Division: I want to follow up on an earlier question. You mentioned that you have a very strong shareholding base that potentially, in the future, start looking at additional opportunities. Would these opportunities be newbuildings? Would this be secondhand vessels? Do you think that the asset values, particular for the newbuildings, they have declined sufficiently? And I'm talking about mainly for VLCCs sort of, there is further way to go down?

I think that could be a further way to go down on the VLCCs. I can't really say what level it is, but I think that there's some downward pressure on the prices. Of course, it depends on what happens in other segments. The LNG segment is very strong. The offshore markets are very strong. If there will be a rebound in the container markets, which some people believe could happen later in the year, maybe you'll see more container ordering. It's of course, depending on the other shipping markets. But I think there's a somewhat downward pressure on the newbuilding prices. So we can see that. And of course, if that happens, then you will -- there will have a spillover effect also on the secondhand values. I think we have for the 10-year -- around the 10-year-old ships, I think that has probably found a level which will not go any further. Anything older than 10 years will be scrap-related. And I think the very modern ships will probably try and more follow the newbuilding trends. So there could be some pressure on prices. Fotis Giannakoulis - Morgan Stanley, Research Division: Given the fact that you have already restructured your debt, can we eliminate right now or at least given how the market looks, any additional equity offerings except, of course, if it is related to any newbuilding acquisitions or secondhand acquisitions? Inger M. Klemp: I think I would just point you to the press release on discussing the outlook. I think we have made a sentence saying there that we will remain cautious and focus our resources on the present activities until we can see a clearer sign of recovery in the tanker market. So I don't think you can expect much, let's say, acquisitions and growth or equity raising in Frontline Ltd. at the current market. Fotis Giannakoulis - Morgan Stanley, Research Division: And in relation to Frontline 2012, are there any potential thoughts in the future of combining the 2 companies? Or these are going to be 2 businesses that they will stay totally unrelated, even in the future?

I don't think that's fair, no specific plans on that. I think it would -- we can't really comment on that. No specific plans.

We will now take our next question from Gregory Lewis from Crédit Suisse. Gregory Lewis - Crédit Suisse AG, Research Division: Could you talk a little bit about the 2 newbuildings, the Suezmaxes, that you decided to keep? I mean, it looks like, I guess, the newbuild cost was about $62 million. It looks like newbuilding prices are already below that. You have about 10% downpayments on those vessels. Are those 2 vessels that we could potentially see either Frontline cancel those contracts or simply try to sell them or unload them to a third-party taking a discount? Is that something we could see or is that -- I mean, there's been a lot of talk about how we're going to -- or how Frontline is going to push the fleet going forward. And I just -- could you provide some color on that?

Well, normally, we don't like to walk away from deals to leave money behind. So we have, at present, no plans to walk away from these contracts. And we will follow the building as it comes along. And that's, I think, the only thing I can say about that. Gregory Lewis - Crédit Suisse AG, Research Division: Okay, great. And then just real quick. On the vessels of the existing fleet, it seems like in 2011, Frontline was fairly aggressive in unloading older tonnage and looking to get out of vessel contracts. Should we expect more of that, specifically, as it relates to the contracts that Frontline has with Ship Finance? Or at this point, post the restructuring, you're fairly comfortable with the fleet as it stands today?

Yes, we still have a few more ships in the fleet, which is non-core, 1 or 2 older Suezmaxes, maybe 1 or 2 of the OBOs. It depends, of course, on where the dry cargo market is going. If there's a rebound in the capesize market, it will, of course, be profitable or workable to trade these OBOs. But if the bulk market remains depressed, then of course, it's better to bite the bullet and sell out, if they're trading. Maybe 1 or 2 of the older VLCCs, but nothing concrete. It depends on cost prices. But there's a few ships that could be sold during the year. But then I think we have done our main part of clearing out last year, and we're quite satisfied with that. Gregory Lewis - Crédit Suisse AG, Research Division: Okay, great. And then just real quick. You touched on it earlier. The OBOs, and clearly, there's been some issues with charters wanting to walk away from contracts. The question regarding the OBOs, is that for the OBOs that are on contract? Are you having difficulties getting paid for the OBOs that are on the spot market?

Well, we've had 5 ships left, 3 of them are on a good long-term time charter, we have no problem with that, 2 are trading in the spot market, on relatively short-term time charter. There's no problem in that. But unfortunately, they used to be on long-term time charters who defaulted, and that's, of course, why we have them in the spot market. So it's more of events that happened in the first half of last year. And those claims outstandings, of course, we are pursuing right now.

We will now take our next question from Isaac Arnsdorf from Bloomberg.

Sorry, I just wanted to verify that those defaults occurred in dry bulk, that the OBOs were repaired in dry bulk, not oil tankers. Have there been any charter party issues with tankers?

No. None.

Who chartered those OBOs at the time?

I can't really say that.

Okay. Do you expect more?

I hope not. But you never know.

Okay. And I also just want to clarify. I mean, there have been some questions about future sales or acquisitions of your fleet. Is there a time frame for either buying more VLCCs, as John Fredriksen has alluded to, or for selling more of Frontline Ltd.'s vessels?

We just had the same question. There is probably 1 or 2, maybe 3 more ships in the fleet that potentially will be sold off, which is older ships. There's no time line for that. If we see the right opportunity, we will sell it during the next 6 months. Acquisition-wise, I think we've just come out of a restructuring and we are trying to find our feet a little bit. So -- but there's no immediate plans of further acquisitions.

Okay. And you mentioned at the beginning of the call, that secondhand prices had bottomed, that was for 10-year-old VLCCs?

Yes, I think what we are seeing is VLCCs around 2002 built 10 years old. I think there's potentially more buyers than sellers and that's normally a sign that the values are bottoming out, that's how we see it.

Does that mean that the -- your asset values would start to appreciate?

Well, I guess, everybody's values will go up. It's not so much why I said it. But I think it's more that I think we have seen very steep value for us last year. But for some asset classes, we're actually seeing it stopping and people are believing this is getting interesting levels and I'm not saying that they will shoot up again, values. But it's always nice to -- when you found a base and we work on from there.

[Operator Instructions] As there are no further questions in the queue, I would now like to hand the call back to your host today, for any additional or closing remarks.

I would like to say thank you all for dialing in. And I would like to thank everybody in the company for their work and efforts last year in a year which turned out to be very difficult. Thank you very much. Thank you.

That will conclude today's conference call, ladies and gentlemen. Thank you for your participation. You may now disconnect.