Frontline Plc (FRO) 2012 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Frontline Limited Q3 2012 earnings presentation. For your information, today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Jens Martin Jensen, CEO. Please go ahead, sir.

Thank you. Good morning, good afternoon, and welcome to our Q3 presentation. As you can see from the reported numbers, it was a very difficult quarter, with depressed earnings in the crude segment, compounded with expensive dry dockings and additional off-hire in the quarter, and a write off of a chartering plane which we now hope we can recover in the month's period ahead.

We will follow our usual program for the presentation, with Inger going through the Q3 highlights and main transactions, financial review of the quarter, and an update on our small new-building program. After that, I will follow up with some market comments on what we saw in Q3, and a bit on where the market is at present. So, Inger, if you could start, please. Thank you.

Thank you. And good morning and good afternoon, ladies and gentlemen. As Jens just said, I will guide you through the highlights and the financial review in the third quarter of 2012, and so far then into the fourth quarter.

Moving then to slide 4, highlights and transactions. In August, 2012, the Company announced that it had agreed with Ship Finance to terminate the long-term charter party for the OBO carrier, Front Climber, and that Ship Finance had simultaneously sold that vessel. The charter party was terminated on October 15, 2012. The Company made a compensation payment to Ship Finance of approximately $0.6 for the early termination of the charter. And the transaction will reduce the Company's obligations under capital leases by $1.7 million. And the Company recorded an impairment loss of $4.2 million in the second quarter for this vessel.

In September, 2012, the Company agreed with Nordic American Tankers that Frontline's nine Suezmax vessels will leave the Orion Suezmax pool. That will happen effective the end of the year, and they will take over the Frontline shareholding with this company, 50%, effective January 1, 2013.

In October, 2012, the Company announced that we have agreed with Ship Finance to terminate the long-term charter party for the OBO carrier Front Driver, and that Ship Finance had simultaneously sold the vessel. The charter party is expected to terminate in late November 2012. Frontline will make a compensation payment to Ship Finance of approximately $0.5 million for the early termination of the charter. The transaction will reduce the Company's obligations under capital leases by approximately $1.1 million. And the Company expects to record a loss of approximately $0.1 million.

Then moving to slide 5, financial highlights. I will then do a quick run through of the financial highlights in the third quarter of 2012. On the slide you will see that Frontline reports a net loss of $49 million in the third quarter, equivalent to a loss per share of $0.63. And for the nine-month period ended September 30, Frontline announces a net loss of $66.2 million, which is equivalent to a loss per share of $0.85. And Frontline will not pay a dividend for the third quarter.

Then moving to slide 6, income statement. The net loss in the third quarter of 2012 is about $38 million weaker than in the second quarter of 2012. There are some main reasons for this. The first main reason is that the income on time-charter basis was about $47 million worse in the third quarter than it was in the second quarter. And that again was mainly due to a decrease in TCEs per day in this quarter. But also, as Jens mentioned, we had a loss provision of unpaid charter hire of $5.5 million, which was recorded in the third quarter.

Secondly, which contributed positively, was a contingent rental expense decrease, about $8 million this quarter compared with the second quarter, due to the decrease in TCEs per day in the third quarter. Then ship operating expenses increased by $1.2 million compared with the preceding quarter, mainly due to an increase in running costs.

And then, charter hire expenses decreased by $1.2 million compared with the preceding quarter, primarily as a result of the redelivery of the chartered-in VLCC Hampstead in April, 2012.

Further, the depreciation decreased by $1 million, due to the redelivery of [dry docks] in the quarter. [And] otherwise there were minor changes to our guidance this quarter.

Then moving to slide 7, income on time-charter basis. Frontline's double-hull VLCC fleet earned $13,300 per day in the third quarter, compared with $31,500 per day in the second quarter. And the average for the whole VLCC fleet was about $12,300 per day in this quarter, compared with $31,000 per day in the previous quarter.

The Suezmax fleet earned in the Orion pool $11,100 per day in the third quarter, compared with $17,400 per day in the second quarter. And as a consequence of the (inaudible), [obviously], [Suezmax] vessels [stayed outside] the pool, a somewhat lower TCE rate, we earned, on average, in the spot market, approximately $10,500 per day in this quarter, compared with $16,200 per day in the second quarter. This is also the same as the whole Suezmax fleet -- the average for the whole Suezmax fleet.

Then, the OBOs earned $33,700 per day in the third quarter, compared with $28,100 per day in the second quarter, as a consequence of the lease terminations made.

The TCE numbers show that Frontline, also this quarter, has outperformed our peers in the VLCC segment, but the Suezmax segment was disappointing.

Then, moving to slide 8, ship operating expenses. We had average OpEx for the fleet of approximately $11,800 per day in the third quarter, compared to approximately $11,100 per day in the second quarter. The increase is due to increase in running costs, while dry-docking cost was in line with second quarter.

We dry-docked three VLCCs and one Suezmax vessels in the third quarter, compared to five vessels in total in the second quarter; as you can see then from the graph on the upper right-hand side of the slide

Despite one less dry-dock this quarter, the dry-docking cost in the third quarter was the same as in the second quarter, due to extensive dry-docking -- expensive dry-docking, sorry.

As you can see from the graph on the lower right-hand side of the slide, off-hire days were 144 in the third quarter, which is in line with 141 days in the second quarter. And we expect to dry-dock one VLCC in the fourth quarter of 2012.

Then, moving to slide 9, the balance sheet. The total balance sheet, end September 30, 2012, is approximately $77 million less than at the end of the second quarter of 2012. And the main movements in this quarter have been ordinary depreciation and repayment in the quarter, but also the loss that we had of $49 million.

Moving then to slide 10, cash cost break-even. The estimated average cash cost break-even rates for the remainder of 2012 are approximately $23,400 per day for VLCC; $16,200 per day for Suezmax; and $12,400 per day for the OBO. These rates are the daily rates our vessels must earn to cover the budgeted operating cost; the estimated interest expenses; the bareboat hire; and the corporate overhead cost.

Then, moving to slide 11, new building overview. As of November 28, Frontline's new building program comprised two Suezmax tankers; and the Company was committed to make new building installments of $94.2 million, with expected payments of $6.3 million in 2012, and $87.9 million in 2013.

Then, moving to slides 12 and 13, Frontline Fleet. The number of vessels in the Frontline Fleet, as per the end of the third quarter 2012, is 55 vessels, inclusive the vessels of commercial management and ITCL vessels; and is compounded by 35 double-hull VLCCs; two single or double-side VLCCs; 15 double-hull Suezmaxes; and 3 OBOs.

We had contract coverage of 12% in the fourth quarter of 2012; and 11% on average in 2013. The average net TC rate for the total fleet is about 52,100 per day in 2012; and 52,500 per day in 2013.

And with this, I'll leave the word to Jens again.

Thank you, Inger. We are now on slide 14.

A lot of negative factors compounded the quarter into quite a horrible, horrible one; main ones being crude imports to China fell, as compared to the stronger first half of the year. [Ton] mile was reduced, mainly due to reduced volume of westbound crude VLCC cargoes.

Both the VLCC and Suezmax fleet grew, not dramatically but still. And overall, a very [bad] sentiment simply made the majority of the owners give up and throw in the towel.

Slide 15, VLCC order book. 44 (sic - see slide 15 "43") VLCCs has been delivered during the first nine months of the year; which means that the slippage in the VLCC order book has slowed down. We expect to see deliveries during the balance of the year to increase, due to improved market conditions, and due to the yards pushing the owners to have the ships delivered within the year.

On slide 16, the Suezmax Fleet. We continued to see slippage in the order book, but we are still seeing -- or we're still looking at 8% to 10% fleet growth for the Suezmax Fleet for the year.

Slide 17, new building crisis and time charter rates. We estimate the new building prices for good specification VLCCs to be in the region of $80 million to $85 million, depending on the actual yard.

The much written about Chinese large order for VLCC is coming to light, with so far, up to 10 firm vessels having been ordered at, reported, $90 million level. But this figure is including finance, and thus the actual new building price is hard to ascertain.

Good spec Suezmax new buildings are priced in the $55 million range. No recent Suezmax orders have been placed.

Positive for the last tanker order book is that the large Korean shipyards still prefer offshore orders, LNG and large container vessels to standard VLCC and Suezmax orders. And the order book for VLCC Suezmaxes is still relatively small for 2014.

TC rates, TC market; the three-year TC rate is around $25,000 per day for VLCCs, and for three-year Suezmaxes is in the region of $20,000 per day. The time charter market is very thin, and only if the present spot market level remains in place, we will see an increased activity in the time charter front.

Now, we're at page 18, outlook. Generally, the market has improved over the last two/three weeks. And we hope the market can be sustained. Some of the reasons for, potentially, that are we have seen increased crude movements from the Persian Gulf to the US Gulf area. Some of that is due to the reopening of the Motiva refinery in the USA.

We have seen the Chinese revert to normal crude import levels; which is impressive. Tonnage has actually disappeared from trading. We estimate 10 to 15 VLCCs have been sold or, otherwise, engaged in storage business, and will likely not revert to international trading. We expect additional older tonnage to follow the same path.

With virtually no VLCCs open in the West, and tonnage being balanced -- and tonnage -- vessels being ballasted in from straight Asia, this is positive for the ton mile situation. However, in order for long-term fundamentals to change, we need to see more scrapping of vessels, and further consolidation in the market.

For Frontline ourselves, we have continued our strategy of selling older and non-core fleet. We will still -- we still have a few more ships to potentially dispose of, prior to the year end.

As Inger mentioned, we have continued to outperform our peers in the VLCC segment, whereas our Suezmax' earnings were disappointing. We hope our new strategy in the Suezmax segment, i.e., not being part of a pool any longer, will show positive result in the New Year.

Interesting times ahead; however, without leadership in the large tanker market, any quick recovery seems difficult.

With that, we are able and willing, hopefully, to take your questions. Thank you.

(Operator Instructions). Jonathan Chappell, Evercore Partners.

Jens, I just wanted to follow-up on one of your last comments about the Suezmaxes. I know we talked about this last quarter, but how do you plan on operating the Suezmaxes once they're removed from the pool? Will Frontline handle the management itself? And why are you confident that the performance of the Suezmax fleet could be better outside of the pool after what you've coined as a couple of quarters of disappointing results?

Well, unfortunately, we have seen that being part of a pool -- or a larger pool in the Suezmax side has actually not proven to be fruitful. So now we will try and scale down, and I wouldn't say go back to basics, but go back to what we have been doing on the VLCCs and the trial linkup to a more closer relationship with some of the customers we have there. And that is our strategy. It's not dramatically changed, but then we believe that could potentially be better for us.

Okay. A couple of fleet questions; I know that the Titan Ocean and Titan Aries are being redelivered in November and January. After that, how many vessels will you have chartered in for next year?

Chartered in or chartered out?

How many will you have chartered in?

Right now, we have two time charters coming in; one will be delivered end of the year, and the other one will be delivered in April next year. Of course, the two single hull ships you have mentioned we have bareboated out, which have been terminated, and those ships have been sold and will be delivered as we speak now, and the next one will be delivered in January.

Okay. So in addition to your own fleet, you only have two vessels that are chartered in?

That's right.

Okay. And then, finally, for Inger, you made a mention when you were going through the financial highlights of a loss provision, I think it was $5.8 million, and I thought you said that was in the third quarter of 2012. Can you explain a little bit about that provision?

Are you asking Jens or me?

Either one.

Either one. Well, there is not much to explain, in a way. It's a loss provision we have taken in the quarter of $5.5 million, was the number, not $5.8 million, for loss on charter of a hire charterers. So there's nothing more to say about that than what I've already said.

So, it's basically a charterer walked away from a contract that was above market, and you need to mark that asset down to market levels?

The charter was terminated, yes. And, of course, we hope to recover the outstanding.

But we have (inaudible) provision, but we hope to recover it, yes.

Okay, understood. Thanks, Inger. Thanks, Jens.

Thank you.

Herman Hildan, RS Platou Markets.

The first question I have is the picture on page 11 of the Suezmax new building. Is that the recent picture?

No, it's not. It's not. It was the only one we had. You can see it's almost a clear day in China on that picture. It's not a recent one, no.

Okay. My second question is, with respect to your remaining CapEx, I think at the end of 2Q you said you had $112.4 million remaining, and now you're saying a bit more than $94 million, which means that you've basically reduced your remaining CapEx by $18.2 million, and you only paid about $0.5 million in the quarter. So could you shed some light on whether you renegotiated the -- call it, the Suezmax new building prices, or what is behind that decrease?

We, of course, paid some money down installments during the period, and that's why we have the $94.2 million remaining. I think that's all we can say right now.

Okay. So there's no change in, call it, construction price or delivery time or anything? You still expect to get the vessel in February 2013?

It will probably be a little bit later. We expect to get the first ship second quarter next year, and the last one in the third quarter next year.

Okay, but do you see a risk that it would take more than seven months before those, call it -- with respect to your initial delivery timeline before those vessels are completed?

No, I don't think that will happen. I don't see that possibility.

Okay, so you expect to take delivery of the vessels.

Yes.

Okay. And my final question on the Orion pool, could you explain a bit more what you mean by flexibility in terms of the reason why you, call it, exited the pool?

Well, I think first we were a part of the Gemini pool with 50 ships, and we went out of that, scaled down to a smaller pool with 29 ships. And we have seen that we are not getting the full effect out of a fleet size like that.

Now we have taken the step that we will trial run the Suezmaxes more in a closer cooperation with our VLCCs, and try -- and we can do more synergies with some of the customers in both segments, and we have done that before. Before we went into the Gemini pool, and we will go back to that; I'd say back to basics again on the Suezmaxes.

Okay. And then just one more question on the new buildings; the situation at [Rongsheng] has it impacted anything with respect to the progress on the new buildings?

I think many shipyards right now are facing difficulties, of course, with the less amount of orders being obtained, and delays and other problems, both China and Korea. So I think all ship owners are suffering right now. So it's a difficult world, a different world now than it was two or three years ago.

Thank you.

Thank you.

Josh Katzeff, Deutsche Bank.

I just want to clarify one of the previous questions. So there's been no change to the contract price of the Suezmaxes, and you don't expect to renegotiate prices prior to delivery?

Well, as I have mentioned, the ships well be delivered, we estimate, second and third quarter next year, which is, of course, a little bit behind the original contractual delivery date, and we are discussing with the shipyard right now. And I think as update that's probably the only thing we can say right now.

Got it. I guess with regard to the pull out of Orion and the sale to Nordic American Tankers of your interest, are you looking at actually taking in any significant dollars here from the sale of your stake, or?

No, unfortunately not; that would have been great. But it's a small token.

Operationally, OpEx increased a little bit. Can you maybe talk about some of the drivers of this; was this lubes, or insurance or crew?

No, I think the main issue in the third quarter was, we actually only docked four ships as opposed to five in the second quarter, but the dockings were quite expensive and extensive dockings, and that, of course, had a spillover on the total operating cost in the quarter. Otherwise, we are pretty much in line on the [balance] of items, and it was mainly docking and repair, docking preparation, which spilled over in the quarter.

Got it; got it. And then, Jens, you made the comment about VLCCs increasingly doing storage contracts. I just wanted to clarify, is that just older ships, some of the first generation double-hulls and maybe the remaining single hulls, or are we seeing new ships enter into actual storage contracts?

No, this is the older ships. The first generation, the ships built between '93 and '99. We have seen them being sold to owners, buyers who will not use them as trading. So it's the first generation of the double-hull ships.

Got it. Well, I appreciate the time. Thanks, guys.

Thank you.

Fotis Giannakoulis, Morgan Stanley.

I would like to ask about the market you mentioned. And we have seen the rates, the VLCC rates in the fourth quarter are improving to around $23,000 to $25,000. You mentioned that potentially there might be a further increase in the market with the Motiva refinery coming back. What other drivers do you expect that could be helpful for the crew tanker market, and what would be a reasonable expectation for VLCC and Suezmax rates for 2013?

Well, what we have seen in the last two or three/four weeks is increased activity, which I mention is, of course, China's crude oil import has risen again, and we have seen a much bigger program going AG west, and we have also seen an active [Carib's] West African market going east. That has been the main drivers.

Unfortunately, from the market peaking a little bit before Thanksgiving last week, then the market was quiet for four days, and then some ship owners thought that this was the end of the world. And the rates have actually softened a little bit the last few days.

But we believe that the charter situation is much more tight. And we hope that the market can sustain these levels and, actually, improved a little bit over the next one or two weeks before the Christmas rush. Difficult to predict rates for 2013, we don't normally do that, but I can only hope that it will be better than 2012.

And you mentioned in previous calls that there is a novel supply of something like 50 VLCCs, and if they were to be scrapped, the market would be closer to balance. Given how the market has developed and with the number of vessels that they have been scrapped the last six months, how many ships do you estimate that there is a current oversupply in the market?

It's probably about 50 still with the new ships being delivered, maybe 50 to 60 ships. I think if you can take that out of the market then we will definitely see an improvement.

And my last question. Right now, Frontline is having a hard time under the current market conditions together with all the other companies. But, at the same time, it has a positive equity here and a good market cap and a -- but an aging fleet. How many ships do you expect that you will have sold or scrapped during the next 12 months? And how do you see Frontline going forward when this current crisis comes to an end?

I think it's both good and bad in a market right now to have an older and aging fleet, meaning not so expensive in our books. I think in terms of fleet disposals, we're delivering that would probably be, it could be up to 10 ships, difficult to say. But definitely OBOs, of course, the single hull VLCCs have been sold and then maybe some of the older Suezmaxes will go out of the fleet. The two time-charter ships we have will be redelivered end of December and then April next year. So it's difficult to say exactly, but potentially up to 10 ships will be leaving the fleet during the next 12 months.

And can you make a comment on how you see your growth after that, after the disposal of these vessels and as we come closer to the recovery?

Of course, we are all following the market situation closely. I don't think there's any rush to buy ships today or charter in. And, of course, it's important to monitor the market and when we see things bottoming out, and there's potentially more optimism then I suppose that is the time to start looking to re-enter the market again.

Is there a path, for example, new equity offering, to raise capital in order to fund these acquisitions? How do you foresee that given the current cash flow of the fleet?

I think we are -- of course, we are all depending on the market development and see how the market develops. That's, of course, the main focus right now and -- to try and slim down the fleet and weather the storm, and then we will see how the market develops.

Okay. Thank you very much for your time.

Thank you.

(Operator Instructions). Michael Webber, Wells Fargo.

Most of my questions have been answered, but I do want to come back to the cost side and your OpEx was up quarter-over-quarter but your break-even levels actually came down quite a bit, sequentially from Q2, about $500 in the Vs and $1,400 on the Suezmaxes. Can you talk a little bit about what drove that and the different inputs there? I'm assuming there's some charter roll-off embedded within those numbers. I need just a little bit of color in terms of what's bringing down your break-even levels.

The break-even rates that we give every quarter is for the future in a way, for the remaining part of the year.

Sure.

So now it's for the fourth quarter and, as I just mentioned, we had -- for Vs, for instance, we had three VLCCs which were dry-docked in the third quarter, while we now estimate just one VLCC to be dry-docked in the fourth quarter. So that drives, of course, the break-even rate that they come down that quarter. And that's actually the main part which drives the dry-docking -- I'm sorry, the break-even rate changing from a quarter to a quarter.

Okay. All right, no, that's helpful. You guys gave color on -- I think, you have one vessel dry-docked for Q4. Do you have any idea of what you're looking at for 2013 from a dry-dock perspective?

No, of course, we are looking at that right now. We know, of course, we have scheduled dry-docking which goes to -- with age and when the various services are due. But, of course, in a market like this if we have quarters where the market is very bad, sometimes we accelerate dockings; we move dockings in a little bit earlier. So it depends both on -- I would say, of course, the scheduled dry-dockings and then we are looking potentially to move things around, but that depends on the market.

Okay. So it's a little bit too early to give any color there?

Yes.

Okay. And then just finally, I wanted to come back to one of Fotis's questions and maybe come at it a bit of a different way. You guys are -- you're trading well above NAV, which is probably negative. The market -- you expect the market to rollback over after any degree of seasonal strength and you certainly still have a debt load. What's the rationale for not looking at an equity raise here, aside from maybe market timing? What really gets in your way, considering what you guys are looking at over the next couple of years and the premium you guys are getting to your net asset value here?

I guess to looking into equity raising, or let's say debt raising, whatever you are looking into, or capital raising, you usually do that if you -- if something you need to finance in a way. So I guess like we always say on these -- or respond to this type of questions, we will, of course, consider different financing alternatives if we had something to finance, so yes.

Right. I think the $1.4 billion in long-term liability is what we were getting at. But, okay, no, that's fair. All right, I think that's all I've got. Thanks for the time, guys.

Thank you.

Erik Stavseth, Arctic Securities.

Just one quick question regarding your OBO fleet; it's shrinking, of course, but you say that you have an average TC rate of $64,400, but your earnings is -- on the OBO was only $33,700. And I realize that there are some release termination implications there, but does this imply that at least some of the vessels are not operating at all?

Well, of course, you saw what we reported the OBO earnings in the quarter, which was $33,700, and then I guess you're looking at the coverage slide go forward. Of course, the lower rate is a mix of ships on high rates and then we'll have ships on actually quite low rates. The ships on the low rates are being redelivered and sold progressively and then we will only end up with two vessels at a higher rate in -- that's the reason for this, let's say, the spike in rates. You can see it's only two ships in the next year.

Right, right. But there's no -- you don't do the payment that you do to Ship Finance as part of reducing the rate, right? This is pure market rate related?

(Inaudible) just add one comment to what Jens said. These rates that we are giving on this slide number 13, which you are referring to, these are not the average rates that we earn on the OBO fleet; but they are the rates that we earn on the covered vessels, the vessels, which are in contract.

I understand but the implication to me seems to be that you have negative earnings on what's not on charter. But I was just curious as to how that came out, but I think I understand it.

Yes, good.

Thank you.

George Berman, J.P. Turner & Co.

They have a saying here that it's always darkest before the dawn. In that realm, we hope that things will progress more positively in the coming 12 months.

I have a quick question. In the past you had noticed or mentioned that you had repurchased some of your convertible debt trading in the market. Have you done any more purchasing back those debentures at a significant discount yet?

We will have to announce if we do that, so the answer is no.

Okay. But you did buy, I believe, about $10 million back, correct?

That is correct.

Okay. Thank you very much.

Thank you.

Thank you.

Glenn Lodden, SpareBank 1 Markets.

Can you just give us a quick update on the financing situation on your Suezmax new buildings?

We have not established any financing yet for these two buildings. So yes, there is not so much to report on that. But of course, we will do that closer to delivery of the vessel.

Okay, thank you. Could you just put some color on how you regard how difficult or easy it is to get financing for crude tankers at the moment? And also, what kind of levels we're looking at.

I think the trend in a way is probably that the banks are looking for a bit less leverage than they used to do. But I still think that, if we are talking about leverage compared to the market values which also are down, so I think you still can be able to attract as much as up to 70% of new buildings that you take delivery of. But you can also, of course, end up with lower than that.

So it's -- yes, we're really depending upon what market value you are leveraging it with in a way; what kind of value you are putting on it with a specific -- the percentage, I mean. But otherwise, I guess the terms are -- as you know, the margins are a bit increasing than it used to be, and that sort of thing.

Okay. Thank you.

Thank you.

(Operator Instructions). David Beard, Iberia.

Just some questions on your fleet development, slides 15 and 16; it seems the forecast is for much fewer ships to come out of both the VLCC and the Suezmax fleet. And I wondered just what thoughts were behind fewer ships being removed next year, given the tepid outlook for the industry.

Of course, this is our estimation of ships that will be scrapped or disappeared from the trading. It could -- of course, if this market continues and persists then, of course, I think we will see more scrappings of the movers on the fleet. But this is our, let's say, estimate we have put in there.

Of course, we have seen delays in both order books, both the VLCCs and the Suezmax markets. And, of course, you can see as we move forward to 2014 we are finally coming into more manageable deliveries. And I guess that's the positive thing. But it is still two years ahead from now.

Okay, thank you.

Thank you.

Thank you.

Ole Stenhagen, SEB.

I'm sorry this may be a repeat for some people; I came in late. But on slide number 11 regarding your new buildings, there is a wonderful picture of a large vessel being built. Is that your ship? And is it on schedule? Do you expect these vessels to be delivered on time and on specification?

This is not a fresh picture, but the only one we could actually find in our extensive picture library from Rongsheng Shipyard. It's not our ship either so very well spotted.

As we have mentioned, the ship seems to be delivered second and third quarter next year, which is slightly behind the contractual delivery date.

But they're within the cancelling?

Yes, they are within that.

Okay, well, touch wood then. Thank you.

Thank you, Ole.

You have no further questions at this time.

Well, then I would like to say thank you everybody for dialing in. And I would like to thank everybody in Frontline for their work and efforts during a very difficult third quarter of the year. And thank you.

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