Frontline Plc (FRO) 2010 Q4 法說會逐字稿

Good day and welcome to the Frontline Q4 results presentation. Today's call is being recorded. At this time, I'd like to turn the call over to your host today, Mr. Jens Martin Jensen, CEO, and Mr. Inger M. Klemp, CFO. Please go ahead gentlemen.

Thank you. Good morning, good afternoon, and welcome to our Q4 presentation. We will follow our usual program for this presentation with our CFO, Inger Klemp, who was going through the Q4 highlights and main transactions, financial review of the quarter, then an update of our new building program. Thereafter, I will talk about what happened market-wise in Q4 and say a few words on how we see things going forward. So if you could start, Inger, please?

Thank you and good morning and good afternoon ladies and gentlemen. I will guide you through the highlights and the financial review in the fourth quarter, together with [an overview] of the new building program.

Please advance to Slide 4. In November 2011 (inaudible) Frontline extended a time charter in agreement of Front Chief, Front Commander and Front Crown for one year from January 2011 at 26,500 a day per vessel. In January 2011, Frontline sold its 2006-built VLCC Front Shanghai. The sale proceeds were $91.3 million and after the payment of debt, the sale generated $31.1 million and $[1.5] million in cash.

Frontline has been connected with the sale agreed to charter back the vessels from the new owner. The duration of the time charter is approximately two years, and (inaudible) $35,000 today. Delivery to the new owners took place in January 26, 2011.

The Company expects to record a gain of approximately $6.2 million on delivery of the vessel and in addition, a gain approximately $15.2 million will be recognized on a straight line basis over the period of the time charter.

Further, in January 2011, Frontline sold all its shares in overseas. The sale generated approximately $[46.5] million in cash and the Company expects to record a loss of approximately $3.3 million in the first quarter of 2011. In addition, showed a loss of $9.4 million recorded in the fourth quarter 2010, following a market price adjustments of the shares.

Further, in February 2011, Frontline had to be able to finance to terminate the long-term charter (inaudible) between the companies for the single hull VLCCs Front Highness and Front Ace. The Ship Finance (inaudible) to unrelated third parties. The termination of the charter is expected to take place in March 2011. Ship Finance will make a compensation payment to Frontline of approximately $5.8 million for the early termination of the charters, which will be recorded in the first quarter of 2011.

Moving to Slide 5, I will then give a quick run through of the financial highlights in the fourth quarter. Frontline reports net loss of $11.8 million, equivalent to loss per share of $0.15 in the fourth quarter of 2010. This is a decrease compared to the third quarter of $24 million. The net loss includes a gain of $4.6 million related to the amortization of the deferred gain on sale leases. The loss in the fourth quarter also includes non-operating losses of $5.2 million which mainly relate to a loss of $9.4 million following our market (inaudible) adjustments of shares owned in overseas (inaudible) partially offset by a gain of $3.6 million for minority interest and independent (inaudible) [compilation] arising on the termination of the funding agreement. The net loss, excluding these gains and losses, was $10.5 million, equivalent to loss per share of $0.13. On this basis, we have decided to announce a dividend (technical difficulty) per share for the fourth quarter.

Moving down to Slide 6, the net income, excluding gains and losses, is about $15 million weaker than in the third quarter 2010. The decrease can mainly be explained by a decrease in income on time-charter basis with $21 million in the fourth quarter compared to third quarter due to a decrease in TCE per day in the fourth quarter, slightly offset by more trading days in the quarter. The profit-sharing payable to Ship Finance had decreased $3.9 million in the quarter compared to the previous quarter.

Chief Operating expenses increased by $4 million compared to the preceding quarter, mainly due to an increase in drydocking costs of $3.3 million. (inaudible) three vessels in the fourth quarter and two vessels in the third quarter.

(inaudible) expenses decreased by $2.9 million in the fourth quarter compared to the preceding, primarily due to a period of (inaudible) for one vessel due to drydocking and a decrease in loss (inaudible) provisions from the previous quarter. (inaudible) depreciation has decreased about $[1] million due to termination of financial leases of Front Highness and Front Ace in the third quarter offset by a full-quarter depreciation of Front Signe and Front Njord, which were delivered in the third quarter. Interest expense is also down with $1.15 million mainly due to the reduction in interest on financial leases.

Moving to Slide 7, Frontline's double hull VLCC fleet excluding the vessels from spot index charters earned in the spot market approximately $23,300 per day. Including the vessels on spot index time charters the VLCC fleet earned $22,600 per day for doubles and $19,600 per day for singles with an average spot earnings of $22,500 per day. The average for the whole VLCC fleet was about $24,700 per day in the quarter.

The Suezmax fleet earned (inaudible) $14,600 per day in the quarter. But that's a consequence of that some of our Suezmax vessels trade outside the pool at somewhat higher TCE rates. We earned on average in the spot market approximately $15,200 per day. We traded no singles in the quarter. The average for the whole Suezmax fleet was about $16,500 per day in the quarter. (inaudible) the OBO earned $45,100 per day in the quarter, and these numbers do not include [other sales]. The TCE numbers show that sometime this quarter (inaudible) which has released their numbers.

Moving then to Slide 8, as you can see from the slide, we have average OpEx for the fleet of approximately $11,000 per day in the fourth quarter, compared to approximately $10,000 per day in the third quarter. The increase is mainly due to an increase in chartering costs of $3.3 million in the quarter. As we've said, we have drydocked three vessels in the quarter, which is one more than the last quarter. You can see that from the graph on the upper right-hand side. Further (inaudible) 168 days in the quarter compared to 161 in the previous quarter, again due to one additional vessel drydocked. We expect to drydock two vessels in the first quarter of 2011.

Moving then to Slide 9, the total balance sheet is approximately $47 million lower in the third quarter -- lower than in the third quarter 2010. Main items explaining the decrease are cash has decreased with $31 million compared to the previous quarter as additional cash from operations have been lower than the use of cash in [Ship Finance] activities. Short-term restricted cash is [reduced to] $62 million as a consequence of (inaudible) cash related to Ship Finance leases have been moved to long-term restricted cash.

(inaudible) new buildings are increased to $39 million, due to new building (inaudible) paid in the quarter, and (inaudible) vessels are decreased to $63 million following the ordinary depreciation in the quarter.

Short-term and long-term proper long-term debt is decreased with $11 million as a consequence of ordinary installments in the quarter. Short-term part of long-term debt is increased due to (inaudible) to repaid as a consequence of the (inaudible) has been recorded as short-term debt.

Obligations under capital leases have decreased with $33 million due to ordinary repayment. [As the] sale is included in the balance sheet with a total of $404 million of debt and obligations from the capital lease and debt related to three other competitive Suezmax vessels and thus consolidated in the balance sheet with $48 million of debt.

Moving then to Slide 10. The average cash cost (inaudible) in 2011 are approximately $30,100 per day for VLCCs, $24,500 per day for Suezmaxes, and $27,500 a day for OBOs. These rates are the daily rates our vessels must earn to cover Duchess' operating costs estimated into expense scheduled loan principal repayments, (inaudible) higher and corporate overhead costs. These breakeven rates do not take into account capital expenditures or loan balloon repayment at maturity. Furthermore, vessels from short-term [TCM] and vessels from (inaudible) are not included in cash cost breakeven rates.

Moving then to Slide 11 and 12, as of the end of December 2010, total number of vessels in Frontline's new building program are two Suezmax tankers and five VLCCs, which constitute the contractual cost of about $[650] million. As for the end of December 2010, installments of $198.5 million have been paid on the new buildings, and remaining installments we've paid for the new buildings amount to $[451.1] million, the expected payments of approximately $107 million in 2011, $169 million in 2012, and $176 million in 2013 effectively.

In November 2010, the Company secured three (inaudible) refinancing in the amount of $147 million, representing 70% of the contract price for the first two VLCCs to be delivered from (inaudible) [Jinhaiwan] shipyard in 2012. For the three remaining VLCCs and two Suezmax tanker new buildings to be delivered between May 2012 and '13, the Company has not yet established pre and post (inaudible) refinancing. Based on the recently secured financing for the two VLCCs, however, we have seen a 70% financing or market value for these new buildings.

Moving to Slide 13, in this graph, we show the installments to be paid under the new building contract in the period 2011 to 2013 with a total of $451.5 million in the light blue column. In the dark blue column, we show the committed financing in the period 2011 to 2013 with a total of $147 million. In the gray column, we show the assumed uncommitted financing of 70% of market value of the new building contract in the period 2011 to 2013 with a total of $308 million. The committed and uncommitted financing is in total $455 million. On this basis, Frontline has already made total equity investments in the new building program and remaining new building installments for (inaudible) bank debt. However, since we have assumed uncommitted financing, it will not be established until the delivery of the vessels, the temporary (inaudible) from the convertible offering during the period of the delivery which is shown in the blue dotted column.

Moving then to Slides 14 and 15. The number of vessels in the Frontline fleet is 78 vessels, including vessels on commercial management, and the ITCL vessels, and is compounded by 44 double-hull VLCCs, five single-hull VLCCs, 21 double-hull Suezmaxes and eight OBOs.

We had contract coverage of 22% in 2011 and 14% in 2012. In addition to the fixed-rate contract (inaudible) we also have an additional 16% time charter coverage on (inaudible) in these charters in 2011 and 6% in 2012. The average net TC rate for the total fleet is about $45,400 per day in 2011 and $41,900 per day in 2012.

With this, I will hand it over Jens again.

We are now on Slide 16. Despite a continued strong oil demand throughout the quarter and increase in total (inaudible) cargoes to mainly India and China, we still had a very disappointing quarter rate-wise. The few rate spikes in the quarter was absorbed by higher (inaudible) prices. The long-awaited winter market has not materialized and the slow steam effect is now only really starting to show results in the market. Very limited weather and port delays despite an extremely hard winter.

Slide 17, VLCC fleet development. 54 VLCCs were delivered in 2010, which is basically a 20% slippage of the intended schedule. We expect this slippage trend to continue in 2011. 2011 is also the year with the most expensive order book with an average cost of around $140 million per vessel. We expect to see about 55 VLCCs being delivered in 2011. Amazingly, single-hull VLCCs are still being traded despite a mandatory phaseout in 2010. Interesting to note, rumors of a Greek shipowner converting three VLCC new buildings into two LNG carriers.

Slide 18 -- Suezmax fleet. As expected and predicted, we saw almost a 40% slippage in the new building deliveries. However, many vessels was ordered in 2010 and the order book is sizable. However, we expect the slippage trend to continue in 2011 by 20% to 25%. Positive for both the VLCC and Suezmax segment is that the ordering has stopped for now and that the major Korean shipyards have taken orders in other segments such as drilling rigs, mass container vessels and (inaudible) and other LNG boom.

If we go to Slide 19, new building prices today for (inaudible) specification VLCC is around $100 million, and for Suezmaxes are around $65 million to $66 million. We do not see any reason why new building prices should fall much from these levels near term.

Time charter rates, the time charter VLCC rates for three years is around $36,000 to $37,000 per day, and we estimate that three year time charter rates for Suezmaxes to be in the region of $26,000 to $27,000 a day. That said, there's not many charters out there presently for that kind of period.

Slide 20. We normally have a little feature in our quarterly presentation. This time we are looking at the refinery expansion. There are several refinery expansion plans in both USA and China and we have listed the major ones on this slide. 0.5 million barrels per day expansion of demand growth in the US means additional demand for 25 VLCCs is accrued and sourced from the Middle East. China is expected to add at least 3 million barrels per day in refinery expansion during the next five years. Some of these projects are mentioned here. 1 million barrels per day increase in China means an additional demand for 25 VLCCs if the crude is sourced from the Middle East, which is most likely a place they source from (inaudible) be longer-term (inaudible).

I mention a joint venture project between Petro China and PDVSA where cargo sourced from Venezuela will alone absorb around 20 VLCCs in that dedicated trait. I'm not saying that we are having a shortage of VLCCs over the next years, but with further delays or even cancellations to the order book and quite a healthy ton-mile increase, we could see a better balanced tonnage situation and see it over the next one and two years.

On slide 21, outlook. For Frontline, we had a good turnaround in 2010 despite a disappointing fourth quarter. We increased the net profit, we reorganized our new building program, returned our charter portfolio from being very negative in 2009 to a profit in 2010, and we secured additional funding to the Company (inaudible) very small as needed.

Our Suezmax activities in the Gemini pool continued and the pool hoped to bring 50 ships in 2011. We hope we can further expand and consolidate that market which clearly needs to be consolidated.

If we look a little bit at the market outlook, I think the gap between the demand side and the vessel supply-side could be more narrow than expected for the reasons I've mentioned. We believe we will see further slippage of the new building program. We've seen right now a break in the ordering of VLCCs and Suezmaxes and (inaudible) being taken up by other tonnage types. All will influence the market positively in the years ahead. We need consolidation in the business, and we hope we can participate in that during this and the coming years.

With that, I think we are ready to take your questions. Thank you.

(Operator Instructions). Michael Webber, Wells Fargo.

Good morning guys. How are you? Just a couple of market-related questions, and one company-specific. We've seen a fair amount of strength recently kind of on the back of some stronger programs heading eastward as well as geopolitical risk. I'm just curious as to what your take is in terms of how long you think that will last, and do you think there could be enough to maybe prop up Q1 or Q2 TCE rates enough to kind of smooth out this portion of the cycle?

I think the increase in rates we've seen over the last two, three weeks, there's a few things adding to that. One thing is I think the effect of the slow steaming is finally coming in. We are seeing less ships are coming to the Persian Gulf than anticipated, so the tonnage situation is more tight than it used to be, and of course at the same time with the situation kicking off in Egypt and rising oil prices have maybe made some challenge, move a little bit earlier in their [tender] lifting program. So it looks positive. Of course, what we are seeing now, we are in the March program, and that's of course the last month of Q1, so there will be some positive effect in Q1. We hope obviously the rate will last into Q2 so both quarters can benefit from that.

That make sense. Some of that strength, again, which is kind of heading east, and I'm just curious. Is it your take on how [offensive] do you think some of those cargo programs are to the price of crude that continues to kind of remain strong? Do you anticipate any headwinds there, or how do you think about that?

We see the (inaudible) of the tonnage as being quite tight, especially if you look at the first half of March and of course the Atlantic Basin is quite tight. So I think and I hope this market will carry on.

Fair enough. One more question, forgive me. I joined the call a little late. I don't know if you touched on it already, but can you give an update on I guess the chartering strategy for your OBOs, given the relatively weak drybulk market?

Well, we have all our eight OBOs all in the dry cargo. They have been there for some years. Five of them are still on long-term charters at very good levels. Then we have three on short-term time charter, which will be coming open April/May already. Of course we are monitoring the bulk of the [Capesize] market, and specifically on these ships of course (inaudible) carrying iron ore, and we hope for some strength in that market. But I think we need the market to improve a lot more to be interesting, that's for sure.

But those will stay on the dry side?

They will be on the dry side, yes.

Great. Thanks a lot for the time. I appreciate it.

Jon Chappell, JPMorgan.

Thank you. Good afternoon. A few questions for you. One, on the charter infleet, there's been some changes. You redelivered the (inaudible) to the owners and then you've also taken the Front Shanghai back, sale on leaseback. Can you just give us an update on how many vessels you're chartering in at the present and what the duration for those [charter is]?

(inaudible)

Yes, we had some ships in from (inaudible) of course, two ships, the [Kensington] and the [Hempstead], when we had (multiple speakers) Chief, Command and the Crown, and of course we have the lease vessels also, the other leases we have going, the Front Shanghai. So that not so much changes to our portfolio right now. I guess you could say, like I said, the (inaudible) was redelivered and we have taken the Front Shanghai into the sale-leaseback. So I would say we have managed to get out of some of the more expensive ships we had last year, and I think we are quite comfortable with our charter portfolio right now.

Okay, so you don't expect the charter expense to vary much from your fourth-quarter levels?

We would like to charter in more if we can find ships around the same level as we did the three [KD] ships, so below 30,000. So is if somebody is listening in, we are ready to take.

Then on the other -- the ownership fleet development, your owner and -- or founder and Chairman has been pretty public saying that tanking markets are going to be tough in the next couple of years. With your sale to Front Shanghai, it looks like you may be taking advantage of some good prices that are still available. What are your views on secondhand prices? As we think about Frontline's fleet development over the next 18 to 24 months, would you think you'd be more of a seller in this market or do you think you would be more of a buyer as rates bottom out?

I think that the values for [other] ships will not fall so much. I think the older ships more than 15 years old are coming under pressure, and I think the values will fall quite a lot of those. We need to and we want to expand our fleet with modern ships. It could be via further new buildings, although that is not preferred, or it can be a block of secondhand ships, of modern ships, or we could charter in more. We want to expand with modern tonnage.

So the Front Shanghai was just taking advantage of a good opportunity, or good price (multiple speakers)?

Yes, we thought it was a good deal to do.

Okay. So it would be fair to say maybe you'd be kind of selling some of your 1990 (inaudible) tonnage and replacing that with newer, modern tonnage?

In an ideal world, yes.

Okay. Thank you.

Justin Yagerman, Deutsche Bank.

This is [Joshua Catsovan] in for Justin. Good afternoon. I just wanted to touch up on some of the geopolitical risk issues. I guess how much do you think the previous situation in Egypt and the current situation building in Libya is affecting the spot market?

Right now, I don't think it has affected the spot market so much, but of course it has affected the oil price. Some charters and some oil companies are maybe wondering where the oil price will go, and if they should take more oil now. But I don't think it has actually affected the spot market so much yet. But I think there could be more in-store across -- we had the same question here in Norway this morning. Of course, people are asking about Libya -- Libya [mind bearing] that the majority of their crew is going to European destinations, so of course that has to be replaced by oil from further away destinations. That will of course have an impact on the market. But I think it's too early to say something yet about the impact of the spot market.

I guess I didn't know there was any sort of psychological impact that --?

I think there is a psychological impact, yes. But it's just having that turn into actual activity on the shipping side. I don't really think we can say we've seen that yet.

Have you seen any disruptions in loading from India -- from Libya?

I will tell you we're going to have a shipload in there in two days. That's of course interesting to see if the ship will load. But so far, we have been told everything is normal. But I guess if you ask me again next week, I can tell you more.

Fair enough. I just wanted to touch on (inaudible). How widespread has that been, and is there any chance that (inaudible) at least for the VLCCs can start to have on the laden voyage, and not just the [ballast]?

Of course what we are doing and the other owners are doing is of course trying to also slow steam on the ballast leg, which means (inaudible) speed of around 9 to 10 knots in ballast. If we look at our modern VLCCs, we can go 10 knots or 25 knots, which is of course quite fantastic for a VLCC. The bulker price is around $600 [million]. That's a huge saving.

On the laden legs, we of course are trying to discuss with the charter if there's any possibility of a lower speed, but so far we have seen that they prefer to maintain the 13 or 13.5 knots speed. But that's of course a discussion -- a negotiation we are having always.

Has there been any kind of early pushback on that? Is that something that you expect to be able to push through?

I think normally people (inaudible) the terms when the market is high. So we can hope for a very high shipping market. Then of course we can change some of the chartering terms. But so far, we have not really been able to push that through.

Just one more question before I turn it over. I guess with regard to chartering and spot TC mix, you guys had previously mentioned kind of maybe a 30% or 40% time charter coverage target. Is that still what we should be looking for?

There was some confusion I think it was last quarter or the quarter before about our charter coverage. I think what we would like to have is our fixed coverage (inaudible) is 22%. We have total 38% cover this year, but 16% is a floating arrangement. But we would like to increase our fixed time charter (inaudible) a little bit when the timing is right. It does not have to be up to 30% but maybe two or three more ships we would like to have fixed [on] time charter cover. So of course we hope that the TC market will improve and we can do that over the next few months.

Fotis Giannakoulis, Morgan Stanley.

Yes, good morning or good afternoon, probably. I want to ask you, you have described a very challenging environment for the next couple of years for time shares. Although we haven't seen any problems with the charters in general in the time [share] market and they are considered stronger than other sectors. Do you think this is a (inaudible) which is (inaudible) focusing slowly, and how shall we think the charter [reached] among the time charter companies?

I think on the crude oil chartering side, we have not seen if any (inaudible) options of default on charters, and I don't think that will change. I think the crude segment is quite [oil] based, and of course you have the large oil companies kind of under-subscribing the activities. So we don't see much risk of charter default on the crude side. Of course, we have exposure in our company on the OBOs on the dry side, but five of them are also a substantial state-owned Chinese company. So we are quite confident with that. But I don't think that would be a major fallout on the crude chartering side.

Do you also [know] particular companies in the private sector probably facing significant (inaudible) issues that might create defaults among the owners?

That's a lot of talk, of course. The last casualty -- or one the bigger ones has of course been Korea Line, who is in a protection or [courtship] situation. In Korea, they have a few VLCCs, so it's of course interesting to see where they will end up. I guess the banks have been quite listening to the shipowners for the last two years to see how they would tackle the crisis in 2009 and 2010. Maybe the banks will be putting the thumbscrews on a little bit more this year and trying to push some owners to do something. But we haven't really seen any distressed assets like we had mentioned before so far.

I want to ask you, given the current environment, how do you view the different segments within the asset classes, mainly between Suezmaxes and VLCCs? Both segments, they are appraising the large growth of capacity. But what do you think, in an environment which is weak in general, is the best vessel to navigate the kind of storm?

I wish I knew. But I would say if you look at the [buying] (inaudible) out there, if you put a VLCC out in the market for sale at $100 million, you'll probably have very few buyers, if any. If you put the price down to $95 million, maybe you'll have one or two. If you put it down to $90 million, maybe there will be ten. I think buying (inaudible) out there, and of course there's a lot of shipowners and companies who have made money over the last 10 years and they are willing to reinvest in shipping. So it's just about to find the right level and you'll see people stepping in, both VLCCs and Suezmaxes. But I think it would be a modern ship. I think the older ships will have a difficult time in the years ahead.

My last question is -- it had to do regarding the trading pattern. If you see any impact of the big spread between WTI and the other symbol crudes, and how does this impact trading and particularly US imports?

Yes, that's a big question. I think of course the biggest factor to the VLCC market now is of course a demand pickup in America. Of course, I think everybody is commenting on the big gap between the [WTI] and the brand, but I think it is probably to better to concentrate on the more underlying demand size from America. If we get that going again, I think the tanker market will look a lot better. I think it's difficult to reply to your specific question better than that.

Okay, thank you very much gentlemen.

Sal Vitale, Sterne Agee.

Good morning. Thanks for taking my -- or good afternoon rather, and thanks for taking my question. I appreciate it. I just have a question, just a clarification on what was said earlier. I think you said that part of the market strength over the last couple of weeks, especially on the [AG East] routes, is the turmoil in the Middle East prompting some charters to I guess move up their oil imports. So, is it possible that we -- if there is more of a stabilization in the situation in the Middle East say over the next few weeks, that we see some of that given back, so that the market rate goes down a little bit to account for that? A reversal of that, I guess.

That's -- I guess that was part of my reply you are referring to. I said I don't think the Middle East crisis has actually spurred the market. I think what has spurred the market is first of all slow steaming is finally taking effect on the fleet. Less ships have arrived in the Persian Gulf. Secondly, the Atlantic market was stronger than the East market, so you've seen many VLCCs (inaudible) into the Atlantic Basin, and loading cargoes out of there to lease, so you'll suddenly see the tightness of positions in the Persian Gulf. I think that is what spurred the market first.

Subsequently of course you have the Middle East crisis where it may be more guess work, but at least that's what we hear, that maybe some oil companies have increased their lifting program a little bit to try and take some more oil right now. But I think that fundamental increase in the rate has been because that has -- the tonnage has been spread out and you are seeing less ships in the Persian Gulf.

Okay. Then just shifting gears to the floating storage side, in the presentation, I don't believe there was any indication of what the current capacity that is tied up in floating storage. Do you have a guesstimate or estimate of what that could be right now?

Not really. We have a few ships, but I don't have an overview right now of what is tied up. We have some of our ships being used for [rolling grains]. Of course we've seen ships come into loop, being held back if you can call that floating storage or just delayed discharging. But I think the distinction of what is actual floating storage or let's say just waiting for (inaudible) we haven't made that distinction.

Do you think that floating storage could be a driver, given that a much lower percentage of the total global fleet is using floating storage now? Could that be something that ramps up over the next few months?

Hopefully. We saw (inaudible) floating storage did in the second quarter last year when we had almost 50 VLCCs being tied up in floating storage. Well, of course, as that comes back, we will see more contango situation in the oil, yes. That will of course have a very positive impact.

The last question is on the dividend side. I'm just looking at what the current dividend of $0.10 is as a percentage of, say, your cash flow, and it's about 120% (inaudible) about 18%. I know you don't have any specific [driver] of what your dividend that you establish is, but if I look at historically, let's say third quarter 2009, I think the loss in that quarter was about $0.10 or about $0.11, and the dividend was about $0.15 at that point. So if I look at the $0.10, is there anything -- are you just being extra cautious in terms of conserving cash, or should we read into that at all?

Going forward, if that loss starts to be mitigated, if you put forth a smaller loss or even a profit in the first quarter and second quarter, how should we be looking at what the dividend could be?

No, I suggest (inaudible) there is no specific rule percentage-wise of cash flow that we (inaudible) always payout, if that's what you mean. So I don't think you should put too much into that kind of mathematical comparison which you're doing there. So yes. (multiple speakers)

Okay, but just directionally, should we think of that $0.10 coming up over the next couple of quarters?

No, I don't think you should (inaudible) anything into the future based on what we have done now. We always had to evaluate what we have earned on the cash flow situation at the time that we are deciding what dividend to pay. That will of course be the (inaudible) for us to know what will be the future.

Okay, thank you.

(Operator Instructions). Glenn Lodden, DnB NOR.

Hello and good day. I was just wondering, because, in the report, you touched upon the background for your divestment in OSG, pointing to both the lack of consolidation possibilities as well as OSG's possible financing needs. So I was just wondering. Would you look at -- hello? I was just wondering. Would you look at the investment differently if there were better possibilities for consolidation talks, or would the financial aspects of OSG still make you sell the stake?

I think you almost replied to that yourself. I think of course had the investment turned out differently, then I think we would not have been writing those seven lines in our press release. So I think what we said is pretty much how we feel about that.

Okay, thank you.

Peter Kendall, Southwest Securities.

Good afternoon. Peter Kendall, Southwest Securities San Francisco. A rather specific question about the Antares Voyager, which is one of the two VLCCs contained in the Golden State Transportation bond -- or Golden State Petroleum bond deal. I know that on December 15 of last year, you obtained bondholder approval to either spot charter or sell the vessel. I was hoping to hear a progress report on how that activity is coming along.

Yes, you're absolutely right. We got -- we had several buyers inspecting the ship end of December. Unfortunately, the offers received we did not believe were in line with where the market should be, so the vessel was not sold. Now she is trading in the spot market. Hopefully with the market improvement which we are having now, we will see interest and prices firming up, and we will be let's say ready for the second round of selling the vessel.

Has it generated any revenues since December 15 on the spot market?

Not a lot.

Where is the vessel right now?

She is on the way to Asia to discharge.

Okay, all right. Well, I guess that's it. Thank you very much.

(Operator Instructions). It appears we have no further questions at this time.

Okay, then I'd like to say thank you to everybody for dialing in and listening to our presentation. I would like to thank everybody in the Company for their dedicated work in 2010. Thank you. Bye.

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