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Frontline 2012 Ltd. : FRNT - First Quarter 2013 Results

           Frontline 2012 Ltd. : FRNT - First Quarter 2013 Results

Highlights

  oFrontline 2012 reports a net loss of $4.8 million and a loss per share of
    $0.02 for the first quarter of 2013.
  oIn January 2013, Frontline 2012 completed a private placement of 59
    million new ordinary shares of $2.00 par value at a subscription price of
    $5.25, raising $310 million in gross proceeds.
  oIn January 2013 the Company cancelled the second of its five newbuilding
    contracts at Jinhaiwan due to excessive delay and in April 2012 the
    Company received a refund of $94.0 million.
  oIn April 2013, the Company cancelled the third of its five VLCC
    newbuilding contracts at Jinhaiwan due to the excessive delay.
  oAs of today, the newbuilding program has increased to 58 newbuilding
    contracts within the crude oil, petroleum product, drybulk and Liquefied
    Petroleum Gas ("LPG") markets.

Introduction

Frontline 2012  Ltd.  (the  "Company"  or "Frontline  2012")  is  a  commodity 
shipping company incorporated  in Bermuda on  December 12, 2011,  which as  of 
today owns  a total  of ten  crude oil  tankers and  58 newbuilding  contracts 
within the crude oil, petroleum  product, drybulk and Liquefied Petroleum  Gas 
("LPG") markets.

The Company's  sailing  fleet is  one  of the  youngest  in the  industry  and 
currently consists  of six  very  large crude  carriers,  or VLCCs,  and  four 
Suezmax tankers, with an average  age of 3.3 years  operating in the spot  and 
the period markets.

The largest shareholder is Hemen Holding Ltd. ("Hemen") with a shareholding of
approximately 51 percent.

First Quarter 2013 Results

Frontline 2012 announces a net  loss of $4.8 million and  a loss per share  of 
$0.02 for the first quarter of 2013  compared with net income of $0.7  million 
and earnings per share of $0.0046 for the fourth quarter of 2012.

The average daily  time charter equivalents  ("TCEs") earned in  the spot  and 
period market in the first quarter by the Company's VLCCs and Suezmax  tankers 
were $19,600 and  $11,800, respectively,  compared with  $25,700 and  $12,400, 
respectively, in the preceding  quarter. The spot  earnings for the  Company's 
VLCCs and Suezmax vessels were $14,900 and $11,800 respectively, compared with
$24,100 and $12,400 respectively, in the preceding quarter.

As of March  31, 2013, the  Company had  cash and cash  equivalents of  $297.0 
million compared with  $132.7 million  as of  December 31,  2012. The  Company 
raised $306.7 million (net) from the private placement in January, used  $42.8 
million in investment activities and repaid bank borrowings of $43.2  million. 
The Company also used $56.3 million in cash in operating activities  primarily 
due to the reclassification  of $63.6 million  regarding the second  cancelled 
newbuilding contract from newbuildings to short term claim receivable.

The Company estimates average total cash cost breakeven rates for the
remainder of 2013 on a TCE basis for its VLCCs and Suezmax tankers of
approximately $16,700 and $13,700, respectively.

Newbuilding Program

In January and April 2013, the Company  cancelled the second and third of  the 
five VLCC newbuilding contracts at Jinhaiwan ship yard (hulls J0026 and J0027)
due to excessive delay. The Company's claims against the yard are secured with
refund guarantees from some of Chinas five largest banks.

In April 2013,  the Company received  a refund of  $94.0 million  representing 
installments paid and  accrued interest  for the cancellation  of hull  J0026. 
$44.9 million  of  the refund  was  used to  repay  debt associated  with  the 
newbuilding. The Company's balance sheet carried an amount of $63.6 million in
Newbuildings at December  31, 2012  in respect of  hull J0026  and expects  to 
record a gain of approximately $30.4 million in the second quarter of 2013.

As of March 31,  2013 , the Company's  newbuilding program totaled 53  vessels 
and comprised  18 newbuildings  within  the crude  oil and  petroleum  product 
markets, 24 Capesize vessels, eight very large gas carriers or VLGCs and three
VLCCs. Total installments of $349.0 million  have been paid and the  remaining 
installments to be paid amount to $2,249.0 million.

As of March 31, 2013, the Company had $300.6 million in net debt and a further
$2,249.0 million in remaining installments under its new building program.

Since March  31, 2013  the  Company has  negotiated and  concluded  additional 
newbuilding contracts and cancelled one additional VLCC. As of today the total
firm newbuilding program comprises 58 vessels. The total capital commitment is
$2,768 million.

The  Company  also  holds  fixed  price  options  for  newbuilding   contracts 
declarable in the  coming months.  The Company  has in  addition entered  into 
specific discussions with  existingandnew yard  relations with  the target  to 
increase the newbuilding orderbook further. The Board has so far targeted  new 
buildings with deliveries in 2014 and 2015.

Frontline 2012 has  14 newbuilding  contracts with  STX (Dalian)  Shipbuilding 
Co., Ltd., which has encountered financial difficulties, and we are  following 
the situation closely. Frontline  2012 will make every  effort to ensure  that 
STX Offshore & Shipbuilding Co., Ltd.  and STX (Dalian) Shipbuilding Co.,  Ltd 
deliver the  new buildings,  which they  are contractually  committed to.  The 
delivery of  six  of these  vessels  has  a contractual  commitment  from  STX 
Offshore  &  Shipbuilding  Co.,  Ltd.,  Korea  in  addition  to  STX  (Dalian) 
Shipbuilding Co., Ltd.

Corporate

215,000,000 ordinary shares  were outstanding as  of March 31,  2013, and  the 
weighted average number of shares outstanding for the quarter was 208,444,445.

In January 2013, Frontline  2012 completed a private  placement of 59  million 
new ordinary  shares of  $2.00 par  value at  a subscription  price of  $5.25, 
raising $309.8  million  in gross  proceeds.  The proceeds  from  the  private 
placement will be used to part finance new building investments.

In  March  2013,  the  Company  prepaid  bank  debt  equal  to  ordinary  loan 
amortization for 2013 in exchange for amendments to the loan-to-value  clauses 
in three of the Company's loan agreements

In April 2013, the Board of Frontline 2012 Ltd appointed Carl Erik Steen as  a 
Director to fill a vacancy on the Board.

Mr Steen  graduated  in 1975  from  ETH Zurich  Switzerland  with a  M.Sc.  in 
Industrial and  Management Engineering.  He  then worked  as a  consultant  in 
various Norwegian  companies before  joining  I.M. Skaugen  as a  Director  in 
1978. In  1983, Mr  Steen moved  to Christiana  Bank Luxembourg  and in  1987 
returned to Norway to establish the international shipping desk of Christiania
Bank. In  1992, Mr.  Steen  was appointed  Executive Vice-President  with  the 
responsibility of  Christiania  Bank's Shipping,  Offshore  and  International 
activities. From  January 2001  until February  2011, Mr  Steen was  head  of 
Nordea Bank's Shipping, Oil  Services & International  Division. Mr Steen  is 
also a board member of Eitzen Chemical ASA, Wilhelm Wilhelmsen Holding ASA, RS
Platou ASA and Seadrill Limited.

The Market

Crude

The market rate  for a VLCC  trading on  a standard 'TD3'  voyage between  the 
Arabian Gulf and Japan in the first quarter of 2013 was WS 35, representing  a 
decrease of approximately WS 7.8 point from  the fourth quarter of 2012 and  a 
decrease of approximately  WS 21 points  from the first  quarter of 2012.  The 
flat rate increased by 9.1% from 2012 to 2013.

The market rate for a Suezmax trading on a standard 'TD5' voyage between  West 
Africa and Philadelphia in the first quarter of 2013 was WS 57.5, representing
a decrease of three WS points from  the fourth quarter of 2012 and a  decrease 
of WS 25 points  from the first  quarter of 2012. The  flat rate increased  by 
9.3% from 2012 to 2013.

Bunkers at Fujairah averaged $633/mt in the first quarter of 2013 compared  to 
$615/mt in the fourth quarter of 2012.  Bunker prices varied between a low  of 
$606/mt on January 2^nd and a high of $663/mt on February 18^th.

The International Energy Agency's ("IEA") May  2013 report stated an OPEC  oil 
production, including Iraq, of 30.5 million barrels per day (mb/d) in Q1. This
was a decrease of 0.4 mb/d compared to the fourth quarter of 2012.

The IEA  estimates that  world oil  demand  averaged 89.8  mb/d in  the  first 
quarter of 2013,  which is a  decrease of  1.2 mb/d compared  to the  previous 
quarter. IEA  estimates that  world oil  demand  in 2013  will be  90.6  mb/d, 
representing an increase of 0.9 percent or 0.8 mb/d from 2012.

The VLCC fleet totalled 634 vessels at  the end of the first quarter of  2013, 
up from  622  vessels at  the  end of  the  previous quarter.  14  VLCCs  were 
delivered during the  quarter, two  were removed.  The order  book counted  81 
vessels at the end of the first quarter, unchanged from the previous  quarter. 
The current order book represents approximately 13 percent of the VLCC  fleet. 
According to Fearnleys,  the single hull  fleet is 15  vessels, two less  than 
last quarter.

The Suezmax fleet totaled 480 vessels at the end of the first quarter, up from
468 vessels at  the end  of the previous  quarter. 14  vessels were  delivered 
during the first quarter  whilst two were removed.  The order book counted  54 
vessels at the  end of  the first  quarter which  represents approximately  11 
percent of the Suezmax fleet. According  to Fearnley's, the single hull  fleet 
stands unchanged at five vessels.

Product

According to IEA, gasoline is expected to lead non-OECD demand growth over the
next years. In 2012,  strong gasoline-led non-OECD  demand and contraction  in 
OECD caused a shift in distribution  of products. Gasoil which has in  earlier 
years risen faster than any other product was overtaken by gasoline in 2012, a
trend that may  be replicated in  2013. Near recessionary  conditions in  many 
OECD nations combined with relatively  subdued non-OECD gasoil demand, led  to 
global gasoil demand growing less than previous years.

The  two  regional  markets  with  the  highest  dieselization  rates  in  the 
transportation sector were also those who performed worst economically, Europe
and OECD Asia  Oceania. This factor,  coupled, with the  clear preference  for 
gasoline in still  thriving Chinese and  Saudi Arabian transportation  sector, 
boosted gasoline demand to such a  degree that it outpaced gasoil. This  trend 
is forecast to hold in 2013.

Total worldwide oil  stocks decreased  by 8.1mb  during the  first quarter  of 
2013. On a forward basis, OECD product stocks cover 31.2 days

The MR fleet totaled 1,524 vessels at the end of the first quarter of 2013, up
from 1,513 vessels at the end of the previous quarter. The order book  counted 
149 vessels at the  end of the first  quarter, which represents  approximately 
ten percent of the MR fleet.

The LR2 fleet totaled  212 vessels at  the end of the  first quarter of  2013, 
down from 217  vessels at  the end  of the  previous quarter.  The order  book 
counted 13  vessels  at  the  end  of  the  first  quarter,  which  represents 
approximately 6.1 percent of the LR2 fleet.

LPG

The beginning of 2013 saw an increase of LPG and Ethane demand of 2.75 percent
compared to the same period in 2012. Q1 2013 spot rates have been impacted  by 
a reduction in OPEC crude oil production, which influences the LPG  production 
in the Middle East. Throughout 2012,  VLGCs trading in the Western  Hemisphere 
commanded an earnings premium compared to the Eastern Hemisphere according  to 
BRS. Recently we have seen an increase in monthly earnings.

Traditionally naphtha has dominated the global petrochemical industry, but IEA
is forecasting a degree of substitution to LPG, particularly in North America.
LPG saw its  market share  increase from  7 to 9  percent from  2000 to  2010. 
Through to 2018, LPG's market share is forecast to rise further on the back of
low-priced and plentiful US supplies, which has spurred a revival on the North
American petrochemical  sector. In  the  coming period  the US  dominates  the 
supply side, while China and the Middle East dominate the demand side.

The VLGC fleet  (60,000+ Cbm)  totaled 148  vessels at  the end  of the  first 
quarter of 2013, an increase of  three vessels from the previous quarter.  The 
order book counted  24 vessels at  the end of  the first quarter,  up from  23 
vessels the  previous quarter,  representing 16.2  percent of  the VLGC  fleet 
according to Platou.

Drybulk

The dry bulk market showed few signs  of recovery during the first quarter  of 
2013. The smaller  sizes performed better  than the Capesize  segment also  in 
absolute terms for most  of the quarter. A  Capesize earned on average  $6,015 
per day  according to  the Baltic  Dry Index,  which did  not cover  operating 
expenses for many owners.

The Capesize segment has  underperformed mainly due to  that iron ore  exports 
out of  Brazil  have been  low.  There is  a  strong correlation  between  the 
Brazilian iron  ore export  and the  Cape size  spot market  due to  the  long 
sailing distances. In addition, Fortescue delayed their ramp up of  production 
in Australia from March until May 2013 and Colombian coal exports were  almost 
70 million metric  ton lower  on an annualized  basis, partly  due to  strikes 
during first quarter of 2013.

The dry  bulk market  is  increasingly dependent  on  the development  of  the 
Chinese economy.  During  2012  the  Chinese iron  ore  and  coal  imports  in 
combination increased more  than 12  percent, while preliminary  data show  an 
increase of about six percent for the first quarter of 2013. Historically  the 
first quarter is  the slowest  quarter of  the year,  which is  mainly due  to 
adverse weather in the Southern Hemisphere.

Development in international coal and iron ore prices will have a great impact
on the dry bulk market going forward. Presently there is a positive  arbitrage 
both for steel producers and utilities  compared to domestic Chinese iron  ore 
and coal. With new  iron ore capacity from  Australia, Brazil and West  Africa 
coming on stream the next three  years and poorer quality of Chinese  domestic 
iron ore, it is expected that imports of iron ore to China will increase.

According to Fearnley's the Capesize fleet (150-200'dwt) totaled 1,028 vessels
at the end of  the first quarter of  2013, an increase of  6 vessels from  the 
previous quarter. The order book  counted 98 vessels at  the end of the  first 
quarter, compared  with  94 vessels  the  previous quarter,  representing  9.5 
percent of the Capesize fleet.

Strategy and Outlook

The Board is of the opinion that several of the shipping markets are massively
oversupplied today and that it may  take some time before a reasonable  market 
balance is restored.  The Board believes  that such a  market balance will  be 
dependent on the extent  of phase out  of existing tonnage  as well as  global 
growth conditions.

The freight  market continues  to show  weakness, however,  there is  a  clear 
indication that we have reached a  level where rates are unlikely to  decrease 
further.

The Board is getting increasingly confident about the development in the  LPG 
segment  where  the  Company  has  eight  newbuildings  to  be  delivered   in 
approximately the next 2  years. This market appears  well balanced and  there 
are clear signs that positive developments have started. This trend is  driven 
by increased LPG production as well  as new trading patterns mainly driven  by 
development in the US.

Frontline 2012's  target is  to build  the leading  global commodity  shipping 
company within  three  years  and  position the  Company  for  an  anticipated 
recovery of the shipping markets in the next 2 to 3 years. In order to achieve
this, the  Company  follows  a  strategy  of  aggressive  growth  through  the 
placement of large orders for new efficient tonnage at historically low prices
with the main focus on tankers and dry bulk carriers.

The Board is  confident that  the historically  low contracting  cost and  the 
significant fuel efficiency of the new tonnage materially reduces the risk  of 
the Company's aggressive ordering and  will position Frontline 2012  favorably 
to industry competitors and offer shareholders an attractive future reward.

The value of the Company's newbuilding program increased in the first quarter
of 2013 and the positive development has continued in the second quarter. This
is in line with the Company's expectation that newbuilding prices are likely
to firm up before the freight market. The Board believes there is currently
additional value in the newbuildings compared to contract price.

The Board will in view of the  limited downside risk endeavor to optimize  the 
Company's debt to equity level with  the target to increase the equity  return 
going forward. This includes aggressive use of debt and yard financing.

The Company will  seek a listing  in New York  within 8 to  14 months. As  the 
Company develops, the Board targets a  dividend strategy, and a refinement  of 
the fleet profile through sale of assets or spin offs.

Frontline 2012 operates a  fleet consisting of 6  VLCCs and 4 Suezmax  tankers 
and owns 58 newbuilding contracts. Due  to the composition of Frontline  2012, 
the Company has limited  exposure to the current  weak freight market and  the 
major factors driving the  shareholder value currently  is the development  in 
the newbuilding prices which  shows a positive trend  and the recovery of  the 
freight markets at the time the new buildings are delivered.
The major part of the  fleet will be delivered in  2014 and 2015, when it  is 
expected that  freight  market will  have  strengthened somewhat  and  thereby 
creating better operating economics. Due to  the low ordering prices and  high 
fuel efficiency  of our  new buildings  Frontline 2012  will have  significant 
lower long term capital cost and better operating economics than the  majority 
of our main competitors.

The Company  has  received  financing  proposals for  the  MR  tankers  to  be 
delivered this year  and expects  financing to  be completed  within the  next 
couple of months. Debt per vessel, margin and other terms are in line with  or 
better than originally anticipated.

The Board is confident that  the current remaining newbuilding commitment  can 
be financed through a combination of cash, debt and only a limited new  equity 
need, if any at all.

The Board is pleased with the  execution of the Company's strategic plan,  and 
looks optimistically  on  the  opportunity  to  create  solid  return  to  our 
shareholders over the next three to five years.

Forward Looking Statements

This press release contains forward  looking statements. These statements  are 
based upon various assumptions, many of which are based, in turn, upon further
assumptions, including Frontline Ltd's management's examination of  historical 
operating trends. Although Frontline Ltd believes that these assumptions  were 
reasonable  when  made,   because  assumptions  are   inherently  subject   to 
significant uncertainties and contingencies which are difficult or  impossible 
to predict and are  beyond its control, Frontline  2012 cannot give  assurance 
that it will achieve or accomplish these expectations, beliefs or intentions.

Important factors that, in the Company's  view, could cause actual results  to 
differ materially  from those  discussed  in this  press release  include  the 
strength  of  world  economies  and  currencies,  general  market   conditions 
including fluctuations in  charter hire  rates and vessel  values, changes  in 
demand in  the  tanker market  as  a result  of  changes in  OPEC's  petroleum 
production levels and world wide oil  consumption and storage, changes in  the 
Company's  operating  expenses  including   bunker  prices,  dry-docking   and 
insurance costs,  changes in  governmental rules  and regulations  or  actions 
taken by regulatory  authorities, potential liability  from pending or  future 
litigation, general domestic and international political conditions, potential
disruption of shipping routes due to accidents or political events, and  other 
important factors described  from time  to time in  the reports  filed by  the 
Company with the United States Securities and Exchange Commission.

The Board of Directors
Frontline 2012 Ltd.
Hamilton, Bermuda
June 6, 2013

Questions should be directed to:

Jens Martin Jensen: Chief Executive Officer, Frontline Management AS
+47 23 11 40 99

Inger M. Klemp: Chief Financial Officer, Frontline Management AS
+47 23 11 40 76

1st Quarter 2013 Results

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(ii) they are solely responsible for the content, accuracy and originality of
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information contained therein.

Source: Frontline 2012 Ltd. via Thomson Reuters ONE
HUG#1707640
 
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