STATUS NOVEMBER 2000:

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STATUS NOVEMBER 2000 CRUISING IN
WATER
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The Beginning

• Start up
• Jan 1996 Decision to build a large pure play
  public tanker company.
• Vehicle
• A 24 stake in Frontline AB was acquired in the
  spring of 1996.
• Target
• Position the company to benefit from the renewal
  of the tanker fleet.
• Change the structure of an industry.

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Vision

• To make Frontline into a world leading tanker
  company with focus on modern Suezmax and VLCC
  tonnage.
• To create enough critical mass to offer the major
  charterers a high degree of flexibility, and
  thereby get the contract coverage which
  ultimately increases the fleets earnings.
• To act as a consolidator within a highly
  fragmented industry.
• To have a cost effective operation.
• To make Frontline the natural choice for
  institutional investors who want to invest in the
  large tanker market.
• To make money and create value.

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Consolidation by numbers
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Capital Market Transactions

• 1996-2000
• Totally USD 347 mill raised in cash private
  placements. In addition USD 264 mill raised in
  ship for shares transactions.
• Totally USD 2287 mill raised under different bank
  financing facilities.

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Strategy

• Operations
• Outsourcing to shipmanagers
• Benchmarking
• Utilize purchasing power
• Chartering
• By capitalising on the size of our fleet, secure
  COAs or similar types of close relationships.
• Look for longer charters when markets improve.
• Continue to act as a market consolidator, in the
  near future primarily through development of
  Alliance (Suezmax) and Tankers (VLCC).

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Strategy (cont.)

• Financial
• Low break even rates to secure surviving strength
  (market security valve op.ex. on old vessels).
• Borrowed money is cheap compared to equity.
• Strong track record for raising money (equity and
  non-equity) and doing deals - maintain high
  financial flexibility.
• Interest rate hedging.
• To utilise the current upturn in the shipping
  cycle to increase the equity ratio to more than
  50 (and 40 by year-end).
• Investment in Golden Ocean to be structured as
  non-recourse.

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Cash Break Even

• The main financial strategy has been to create a
  Company which from a cash point of view can
  sustain three bad years of trading without major
  rearrangements of the balance sheet.
• Based on Frontlines modern fleet and the aging
  overall fleet the bad case scenario has been
  constructed around the rate level necessary to
  keep old tonnage alive, i.e. VLCC rates of
  approx. USD 15,000 per day and Suezmax rates of
  approx. USD 10,000 per day.

Current Frontline vessels excl. corporate debt
Corporate debt equal to USD 1,005 per day
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Demand Outlook
LONG-TERM TANKER TONNAGE DEMAND GROWTH
AVERAGE GROWTH 1990s 2.7 PER
YEAR FORECAST FOR THE 2000-2010 PERIOD BASED ON
AN IEA OIL FORECAST 5 PER YEAR
IEA PRESENTED LATE MAY 2000 A LONG-TERM OIL STUDY
OPEC PROD IS EXPECTED TO GROW FROM 28 MBD IN 2000
TO 41 MBD IN 2010 1.3 MBD PER YEAR
NON-OPEC PROD IS FORECAST 45.9 MBD IN 2000 TO
50.9 MBD IN 2010 0.5 MBD PER YEAR

• OUR FORECAST IS BASED ON
• ADDITIONAL OPEC OIL 80 FROM DET MIDDLE EAST
• (MAY 2000 VS 1995 90 MAY 2000 VS 1999Q490
• 2) MIDDLE EAST EXPORTS 40 WEST/60 EAST
• (1998 39.5 WEST, 1999 39.6 WEST)

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Return to Middle East
TANKER TONNAGE REQUIREMENTS TO SHIP 1 MBD
BASED ON 1998 TRADING PATTERN
TOTAL OIL TRADE
M. EAST EXPORTS
M. EAST - US
M. EAST - WE
M. EAST -JPN
M. EAST -ASIA
NON - M. EAST EXP
FSU EXP
N. SEA - US
N. SEA - NWE
OPEC EXP
NON - OPEC
ROUGH ESTIMATES
MILL DWT
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A 27 Year Problem turn into an opportunity

• TOTAL FLEET AS OF JULY 1, 2000 309 SUEZMAXES
  41,7 MDWT
• ON ORDER 46 VESSELS 17 OF EXISTING FLEET
• 32 OF EXISTING FLEET SUBJECT TO HBL BEFORE END
  2002

• TOTAL FLEET AS OF JULY 1, 2000 449 VLCCs 126,3
  MDWT
• ON ORDER 74 VESSELS 17,6 OF EXISTING FLEET
• 34 OF EXISTING FLEET SUBJECT TO HBL BEFORE END
  2002

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New IMO rules
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New rules create strong demand for new buildings
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The Floor
A temporarily weakening in the market will due to
the old ships high operating cost and limited
remaining life immediately accelerate scrapping.
Such action will push the market back to
equilibrium, and make the next upturn even
stronger. (Ref. 1999 events.)
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Two Tier Market
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The Frontline tanker fleet

• 21 Suezmaxes
• 8 Suezmax OBOs
• 17 VLCCs
• 13 VLCCs through Golden Ocean
• Total deadweight 12.7 million
• All vessels built after 1990, 68 double hull
• Average age 5.4 years
• The worlds biggest tanker fleet

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Stronger Market PositionFrontlines Market Share
incl. Pools
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VLCC Suezmax Earnings YTD
Suezmax WAF-USAC
VLCC AG-UKC
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Indicative T/C rate levelsNovember 2000
VLCC Suezmax

• Spot 80,000 50,000

• 1 Year 50,000 40,000

• 2 Year 45,000 32,500

• 5 Year 40,000 30,000

• Op.cost 6,700 5,700

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Free cash generation
Suezmax 50,000 USD and VLCC 65,000 per day
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Cash Development
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Why Frontline ?
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International research
Bank Recom- 12 month mendation target PE
01 Jefferies Buy NOK 225
3.9 ABN/AMRO Buy NOK 200 4.0 Ing
Barings Strong Buy NOK 280 5.2 Morgan
Stanley Outperform NOK 240 2.6 Share price
October 16 Oslo Stock Exchange NOK
146.50 NASDAQ (FRONY) USD 15.50
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Why Frontline ?

• Positive market fundamentals for the next 3-5
  years.
• The worlds largest tanker company.
• Clean play on modern VLCC/Suezmax tonnage.
• An aggressive industry consolidator.
• Low cost operator.
• Strong earnings momentum - T/C Rates 1,000
  increase net income with approx. 16 mill p.y.
• Compares favourably to US Tanker Companies on P/E
  and P/NAV comparisons.
• Average Daily trading volume OSE - 8 million.
• Shareholder focused management with Insider
  holding 45 - Only insider purchases since 1996.

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Sum Up
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27 YEARS OF SUFFERING PAYS OFF- 3 TO 5 GOOD
YEARS AHEAD...