Frontline Ltd. (LON:FRO) FRO - Second Quarter And Six Months 2008 Results

Frontline Ltd. (LON:FRO) Highlights

* Frontline reports all time high second quarter net income of $318.4
  million and earnings per share of $4.25 for the second quarter of
  2008.
* Frontline reports all time high first half-year net income of
  $539.4 million and earnings per share of $7.21.
* Frontline announces a cash dividend of $3.00 per share for the
  second quarter of 2008.
* Frontline reports a gain on sale of assets and shares of $155.4
  million in the second quarter.
* Frontline entered into contracts with Zhoushan Jinhaiwan Shipyard
  Co., Ltd. ("Jinhaiwan") in China for the construction of six
  320,000 dwt VLCC newbuildings
* Frontline agreed to acquire five double hull Suezmax tankers from
  Top Ships Inc. for an aggregate purchase price of $240 million.
* Frontline agreed to take five double hull Suezmaxes on timecharter
  from Eiger Shipping for the balance period of existing charters.
* Frontline delivered the fourth and final heavy lift vessel, Front
  Traveller to Dockwise in June 2008.
* Frontline completed a private placement of three million new shares
  at a subscription price of NOK 357 per share generating gross
  proceeds of NOK 1,071 million (equivalent to approx. $210 million),
  which was received in July 2008.
* Frontline completed syndicated loan facilities in an amount of
  about $550 million to finance 80 percent of the contractual price
  for newbuildings being built at Rongsheng, Waigaoqiao and Jinhaiwan
  ship yards.


Second Quarter and Six Months 2008 Results

The Board of Frontline Ltd. (the "Company" or "Frontline")  announces
net income  of  $318.4  million  for  the  second  quarter  of  2008,
equivalent to earnings per share  of $4.25. Operating income for  the
quarter was $327.1  million including  a gain  on sale  of assets  of
$126.8 million. This gain consists of $102.0 million relating to  the
delivery of the final two  converted heavy lift vessels and  deferred
gains relating  to  the  transaction in  addition  to  $24.8  million
relating to  the  termination of  the  capital lease  for  the  Front
Sabang. Net income also  includes a gain  of $16.6 million  following
receipt of the Bocimar settlement and a $12.0 million mark-to  market
gain in  the  quarter on  the  forward  contract for  the  shares  in
Overseas  Shipholding  Group  Inc.   ("OSG")  recorded  under   other
non-operating items.

Net income excluding  gain on sale  of assets and  shares was  $163.0
million in the second quarter of  2008 compared to $183.9 million  in
the first quarter of 2008. The  reduction can mainly be explained  by
the reduction of on hire days  in the second quarter compared to  the
first quarter as a consequence of drydockings, upgrading/repairs  and
reduced number of vessels together with docking expenses.

The average daily  time charter  equivalents ("TCEs")  earned in  the
spot and period market in the  first quarter by the Company's  VLCCs,
Suezmax tankers and  Suezmax OBO carriers  were $86,300, $72,000  and
$44,100, respectively  compared with  $82,400, $51,600  and  $43,200,
respectively, in  the  first quarter  of  2008. The  results  show  a
continued differential  in earnings  between single  and double  hull
tonnage. The spot  earnings for  the Company's double  hull VLCC  and
Suezmax vessels  were  $105,200  and $77,500,  respectively,  in  the
second quarter, compared to $104,700 and $53,700 in the first quarter
of 2008.

Profit share expense of $33.1 million has been recorded in the second
quarter as a result of the profit sharing agreement with Ship Finance
International Limited ("Ship Finance")  compared to $33.7 million  in
the first quarter.

Ship operating expenses increased by $13.4 million compared with  the
first quarter, of which $9.5 million relates to drydocking costs.

Charterhire expenses have  increased by $18.6  million in the  second
quarter compared with the first quarter of which $15.6 million is due
to the six vessels chartered in from Nordic American Tankers under  a
floating rate timecharter agreement.

Interest income was $10.0 million in the second quarter, of which
$7.6 million relates to restricted deposits held by subsidiaries
reported in Independent Tankers Corporation ("ITCL"). Interest
expense, net of capitalized interest, was $46.8 million in the second
quarter of which $13.6 million relates to ITCL.

Other non-operating items in the second quarter include a $16.6
million gain following receipt of the Bocimar settlement and a $12.0
million gain on the forward contract of OSG shares.

Frontline announces net income of $539.4 million for the six months
ended June 30, 2008, equivalent to earnings per share of $7.21. The
average TCEs earned in the spot and period market by the Company's
VLCCs, Suezmax tankers, and Suezmax OBO carriers for the six months
period ended June 30, 2008 were $84,300, $61,100 and $43,600,
respectively.

As of June 30, 2008, the Company had total cash and cash equivalents
of $776.1 million which includes $649.9 million of restricted cash.
Restricted cash includes $430.9 million relating to deposits in ITCL
and $216.1 million in Frontline Shipping Limited and Frontline
Shipping II Limited which is restricted under the charter agreements
with Ship Finance.

The income statement and cash flow statement for the six months ended
June 30,  2007  have been  restated  for adjustments  concerning  the
leases for the Ship Finance vessels, which reduced net income by $1.2
million in the second quarter of 2007. This adjustment did not impact
net income  in the  first quarter  of 2007  since it  was  recognized
directly through equity by adjusting the Ship Finance stock  dividend
amount. In addition, the results of Ship Finance's container  vessels
and rig are shown as discontinued operations in the income  statement
in the  first quarter  of  2007 and  certain comparatives  have  been
reclassified to the current presentation.

The balance sheet at June 30, 2007 has been restated for  adjustments
to vessels under  capital lease,  net and  obligations under  capital
lease due to  the leases  with Ship Finance  such that  stockholders'
equity at  June  30,  2007  was reduced  by  $16.7  million.  Certain
comparatives have also been reclassified to the current presentation.

In August 2008, the Company has average total cash cost breakeven
rates on a TCE basis for VLCCs and Suezmaxes of approximately $31,400
and $24,800, respectively.

Fleet development

In line with our strategy to reduce exposure to single hull  tonnage,
Frontline has in the first quarter  of 2008 agreed with Ship  Finance
to terminate the long  term charter party  between the companies  for
the single hull VLCC Front Sabang and Ship Finance has simultaneously
leased the vessel to an  unrelated party. Frontline has recognized  a
gain of  $24.8  million  in  the  second  quarter  of  2008  for  the
termination of the capital lease for the Front Sabang.

In April  and  May  2008 Frontline  signed  contracts  with  Zhoushan
Jinhaiwan Shipyard Co., Ltd. ("Jinhaiwan") in China for  construction
of six 320,000  dwt VLCC  newbuildings at  a contract  price of  $135
million each  and  with attractive  payment  terms. The  vessels  are
expected to be  delivered from the  middle of 2011  to the middle  of
2012.

The third heavy lift vessel, Front Comor renamed m/v Talisman and the
fourth heavy lift vessel Front Traveller renamed m/v Treasure were
successfully delivered to Dockwise Ltd. in May and June 2008,
respectively.

In June 2008, Frontline acquired five double hull Suezmax tankers  en
bloc from Top  Ships Inc. at  a purchase price  of $240 million.  One
vessel was delivered  in June,  while the remaining  vessels will  be
delivered in July and August 2008.

In June 2008, Frontline also entered  into an agreement to take  five
double hull  Suezmaxes on  timecharter from  Eigir Shipping  for  the
balance period of existing charters,  all with delivery from June  to
August 2008 and redelivery from November 2009 to April 2010.In August
2008, Frontline entered into an  agreement to timecharter out one  of
these vessels for the balance of the period.

Corporate and other Matters

In June  2008,  Frontline  completed a  private  placement  of  three
million new shares  at a  subscription price  of NOK  357 per  share.
Gross proceeds from the  equity issue amounted  to NOK 1,071  million
(equivalent to approximately $210 million). The net proceeds from the
private placement will be used to part finance the acquisition of the
abovementioned five double hull Suezmaxes  and as settlement for  the
delivery of shares in OSG, currently covered by forward contracts.

In June 2008, Frontline completed a $129.6 million syndicated loan
facility to finance 80 percent of the contract price for the first
instalment of the six newbuildings being built at Jinhaiwan ship
yard. Additionally, in July 2008, Frontline completed a $420 million
syndicated loan facility to finance 80 percent of the total contract
price for six of the newbuildings being built at Rongsheng and
Waigaoqiao ship yards.

In August 2008, Frontline received commitments from banks to part
finance the acquisition of the five double hull Suezmaxes from Top
Ships Inc. with approximately 75 percent debt.
In August  2008  Frontline  either owns or  has  a  forward  position
covering a total  of 1,508,868  shares of OSG,  or approximately  4.9
percent of OSG's shares.

On August 20, 2008, the Board declared a dividend of $3.00 per share.
The record date for  the dividend is September  4, 2008, ex  dividend
date is September 2, 2008 and the  dividend will be paid on or  about
September 19, 2008.

74,858,502 ordinary shares were outstanding as of June 30, 2008,  and
the weighted average number of shares outstanding for the quarter was
74,837,257.


The full report is available for download in the link enclosed and on
the Company's website: www.frontline.bm

August 20, 2008
The Board of Directors
Frontline Ltd.
Hamilton, Bermuda

Questions should be directed to:

Jens Martin Jensen:, Acting 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

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
management's examination of historical operating trends. Although
Frontline 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 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.

LINK: http://hugin.info/182/R/1245151/268746.pdf

Frontline Ltd.

http://www.frontline.bm/

ISIN: BMG3682E1277

Stock Identifier: XOSL.FRO

US: NYSE:FRO