Company Quick10K Filing
Frontline
20-F 2020-12-31 Filed 2021-03-18
20-F 2019-12-31 Filed 2020-03-20
20-F 2018-12-31 Filed 2019-03-28
20-F 2017-12-31 Filed 2018-03-19
20-F 2016-12-31 Filed 2017-03-16
20-F 2015-12-31 Filed 2016-03-21
20-F 2014-12-31 Filed 2015-03-16
20-F 2013-12-31 Filed 2014-03-21
20-F 2012-12-31 Filed 2013-03-21
20-F 2011-12-31 Filed 2012-04-27
20-F 2010-12-31 Filed 2011-04-04
20-F 2009-12-31 Filed 2010-03-29

FRO 20F Annual Report

Item 17 ☐ Item 18 ☐
Part I
Item 1. Identity of Directors, Senior Management and Advisers
Item 2. Offer Statistics and Expected Timetable
Item 3. Key Information
Item 4. Information on The Company
Item 4A. Unresolved Staff Comments
Item 5. Operating and Financial Review and Prospects
Item 6. Directors, Senior Management and Employees
Item 7. Major Shareholders and Related Party Transactions
Item 8. Financial Information
Item 9. The Offer and Listing
Item 10. Additional Information
Item 11. Quantitative and Qualitative Disclosures About Market Risk
Item 12. Description of Securities Other Than Equity Securities
Part II
Item 13. Defaults, Dividend Arrearages and Delinquencies
Item 14. Material Modifications To The Rights of Security Holders and Use of Proceeds
Item 15. Controls and Procedures
Item 16. Reserved
Item 16A. Audit Committee Financial Expert
Item 16B. Code of Ethics
Item 16C. Principal Accountant Fees and Services
Item 16D. Exemptions From The Listing Standards for Audit Committees
Item 16E. Purchases of Equity Securities By The Issuer and Affiliated Purchasers
Item 16F. Change in Registrant's Certifying Accountant
Item 16G. Corporate Governance
Item 16H. Mine Safety Disclosures
Part III
Item 17. Financial Statements
Item 18. Financial Statements
Item 19. Exhibits
EX-8.1 exhibit81202020f.htm
EX-12.1 exhibit121202020f.htm
EX-12.2 exhibit122202020f.htm
EX-13.1 exhibit131202020f.htm
EX-13.2 exhibit132202020f.htm
EX-15.1 exhibit151202020f.htm

Frontline Earnings 2020-12-31

Balance SheetIncome StatementCash Flow

fro-20201231
00009132902020FYfalseLarge accelerated filerP10Y0.20000.2000P33M0.33330.33330.333300009132902020-01-012020-12-310000913290dei:BusinessContactMember2020-01-012020-12-31xbrli:shares00009132902020-12-31iso4217:USD0000913290fro:VoyagecharterMember2020-01-012020-12-310000913290fro:VoyagecharterMember2019-01-012019-12-310000913290fro:VoyagecharterMember2018-01-012018-12-310000913290fro:TimecharterMember2020-01-012020-12-310000913290fro:TimecharterMember2019-01-012019-12-310000913290fro:TimecharterMember2018-01-012018-12-310000913290fro:FinanceleaseinterestMember2020-01-012020-12-310000913290fro:FinanceleaseinterestMember2019-01-012019-12-310000913290fro:FinanceleaseinterestMember2018-01-012018-12-310000913290fro:OtherRevenueMember2020-01-012020-12-310000913290fro:OtherRevenueMember2019-01-012019-12-310000913290fro:OtherRevenueMember2018-01-012018-12-3100009132902019-01-012019-12-3100009132902018-01-012018-12-31iso4217:USDxbrli:shares00009132902019-12-3100009132902018-12-3100009132902017-12-310000913290us-gaap:CommonStockMember2019-12-310000913290us-gaap:CommonStockMember2018-12-310000913290us-gaap:CommonStockMember2017-12-310000913290us-gaap:CommonStockMember2020-01-012020-12-310000913290us-gaap:CommonStockMember2019-01-012019-12-310000913290us-gaap:CommonStockMember2018-01-012018-12-310000913290us-gaap:CommonStockMember2020-12-310000913290us-gaap:AdditionalPaidInCapitalMember2019-12-310000913290us-gaap:AdditionalPaidInCapitalMember2018-12-310000913290us-gaap:AdditionalPaidInCapitalMember2017-12-310000913290us-gaap:AdditionalPaidInCapitalMember2020-01-012020-12-310000913290us-gaap:AdditionalPaidInCapitalMember2019-01-012019-12-310000913290us-gaap:AdditionalPaidInCapitalMember2018-01-012018-12-310000913290us-gaap:AdditionalPaidInCapitalMember2020-12-310000913290us-gaap:OtherAdditionalCapitalMember2019-12-310000913290us-gaap:OtherAdditionalCapitalMember2018-12-310000913290us-gaap:OtherAdditionalCapitalMember2017-12-310000913290us-gaap:OtherAdditionalCapitalMember2020-01-012020-12-310000913290us-gaap:OtherAdditionalCapitalMember2019-01-012019-12-310000913290us-gaap:OtherAdditionalCapitalMember2018-01-012018-12-310000913290us-gaap:OtherAdditionalCapitalMember2020-12-310000913290us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310000913290us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-12-310000913290us-gaap:AccumulatedOtherComprehensiveIncomeMember2017-12-310000913290us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-12-310000913290us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-01-012019-12-310000913290us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-01-012018-12-310000913290us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310000913290us-gaap:RetainedEarningsMember2019-12-310000913290us-gaap:RetainedEarningsMember2018-12-310000913290us-gaap:RetainedEarningsMember2017-12-310000913290us-gaap:RetainedEarningsMember2020-01-012020-12-310000913290us-gaap:RetainedEarningsMember2019-01-012019-12-310000913290us-gaap:RetainedEarningsMember2018-01-012018-12-310000913290us-gaap:RetainedEarningsMember2020-12-310000913290us-gaap:ParentMember2020-12-310000913290us-gaap:ParentMember2019-12-310000913290us-gaap:ParentMember2018-12-310000913290us-gaap:NoncontrollingInterestMember2019-12-310000913290us-gaap:NoncontrollingInterestMember2018-12-310000913290us-gaap:NoncontrollingInterestMember2017-12-310000913290us-gaap:NoncontrollingInterestMember2020-01-012020-12-310000913290us-gaap:NoncontrollingInterestMember2019-01-012019-12-310000913290us-gaap:NoncontrollingInterestMember2018-01-012018-12-310000913290us-gaap:NoncontrollingInterestMember2020-12-31xbrli:pure00009132902015-11-300000913290fro:ReverseacquisitionMember2015-11-30fro:tanker_sizeutr:T0000913290srt:MinimumMemberfro:VlccVesselsMember2020-12-310000913290fro:VlccVesselsMembersrt:MaximumMember2020-12-310000913290srt:MinimumMemberfro:SuzemaxTankerMember2020-12-310000913290fro:SuzemaxTankerMembersrt:MaximumMember2020-12-310000913290srt:MinimumMemberfro:LR2tankerMember2020-12-310000913290fro:LR2tankerMembersrt:MaximumMember2020-12-31fro:vesselsfro:dwtfro:very_large_crude_carrierfro:suezmax_tanker_vessel_typefro:large_range_2Tanker_vessel_type0000913290fro:VlccVesselsMember2020-12-31fro:aframax_tankers0000913290us-gaap:SubsequentEventMember2021-03-012021-03-310000913290srt:ScenarioForecastMember2021-04-012021-04-300000913290srt:ScenarioForecastMember2021-09-012021-09-300000913290srt:MinimumMember2020-12-310000913290srt:MaximumMember2020-12-310000913290fro:VesselsMember2020-01-012020-12-310000913290us-gaap:PropertyPlantAndEquipmentOtherTypesMember2020-01-012020-12-31fro:recycling_marketfro:leasefro:reporting_unit00009132902019-01-010000913290us-gaap:DifferenceBetweenRevenueGuidanceInEffectBeforeAndAfterTopic606Member2018-01-010000913290us-gaap:CalculatedUnderRevenueGuidanceInEffectBeforeTopic606Member2017-12-310000913290us-gaap:AccountingStandardsUpdate201409Memberus-gaap:DifferenceBetweenRevenueGuidanceInEffectBeforeAndAfterTopic606Member2017-12-3100009132902018-01-010000913290us-gaap:AccountingStandardsUpdate201409Memberus-gaap:DifferenceBetweenRevenueGuidanceInEffectBeforeAndAfterTopic606Member2018-12-310000913290us-gaap:CalculatedUnderRevenueGuidanceInEffectBeforeTopic606Member2018-12-310000913290us-gaap:AccountingStandardsUpdate201409Memberfro:VoyagecharterMemberus-gaap:DifferenceBetweenRevenueGuidanceInEffectBeforeAndAfterTopic606Member2018-01-012018-12-310000913290fro:VoyagecharterMemberus-gaap:CalculatedUnderRevenueGuidanceInEffectBeforeTopic606Member2018-01-012018-12-310000913290us-gaap:AccountingStandardsUpdate201409Memberus-gaap:DifferenceBetweenRevenueGuidanceInEffectBeforeAndAfterTopic606Member2018-01-012018-12-310000913290us-gaap:CalculatedUnderRevenueGuidanceInEffectBeforeTopic606Member2018-01-012018-12-310000913290us-gaap:AccountingStandardsUpdate201601Member2018-12-3100009132902016-02-2900009132902015-01-012015-11-3000009132902017-01-012017-12-3100009132902018-01-012018-03-3100009132902016-02-032016-02-030000913290fro:AssetsUnderSaleAndPurchaseAgreementMemberfro:TrafiguraMember2019-08-310000913290fro:AssetsUnderSaleAndPurchaseAgreementMemberfro:TrafiguraMember2019-08-232019-08-230000913290srt:MinimumMemberfro:AssetsUnderSaleAndPurchaseAgreementMemberfro:TrafiguraMember2019-08-012019-08-310000913290fro:VesselsCharteredToTrafiguraMemberfro:AssetsUnderSaleAndPurchaseAgreementMemberfro:TrafiguraMember2019-08-310000913290fro:AssetsUnderSaleAndPurchaseAgreementMemberfro:TrafiguraMember2019-08-012019-08-310000913290fro:AssetsUnderSaleAndPurchaseAgreementMemberfro:TrafiguraMemberfro:TrafiguraVesselsNotCharteredOutMember2019-08-310000913290fro:AssetsUnderSaleAndPurchaseAgreementMemberfro:TrafiguraMemberfro:TrafiguraVesselsNotCharteredOutMembersrt:MaximumMember2019-01-012019-12-310000913290fro:AssetsUnderSaleAndPurchaseAgreementMemberfro:TrafiguraMemberfro:TrafiguraVesselsNotCharteredOutMember2019-08-230000913290fro:AssetsUnderSaleAndPurchaseAgreementMemberfro:TrafiguraMemberfro:TrafiguraVesselsNotCharteredOutMember2019-12-310000913290fro:AssetsUnderSaleAndPurchaseAgreementMemberfro:TrafiguraMemberfro:TrafiguraVesselsNotCharteredOutMember2019-08-232020-03-160000913290fro:AssetsUnderSaleAndPurchaseAgreementMemberfro:TrafiguraMemberfro:TrafiguraVesselsNotCharteredOutMember2020-01-012020-12-310000913290fro:AssetsUnderSaleAndPurchaseAgreementMemberfro:TrafiguraMemberfro:TrafiguraVesselsNotCharteredOutMember2019-01-012019-12-310000913290fro:VesselsCharteredToTrafiguraMemberfro:AssetsUnderSaleAndPurchaseAgreementMemberfro:TrafiguraMember2019-12-310000913290fro:VesselsCharteredToTrafiguraMemberfro:AssetsUnderSaleAndPurchaseAgreementMemberfro:TrafiguraMember2019-01-012019-12-310000913290fro:VesselsCharteredToTrafiguraMemberfro:AssetsUnderSaleAndPurchaseAgreementMemberfro:TrafiguraMember2019-08-232019-08-230000913290fro:VesselsCharteredToTrafiguraMemberfro:AssetsUnderSaleAndPurchaseAgreementMemberfro:TrafiguraMember2019-08-230000913290fro:VesselsCharteredToTrafiguraMemberfro:AssetsUnderSaleAndPurchaseAgreementMemberfro:TrafiguraMembersrt:MaximumMember2019-01-012019-12-310000913290fro:VesselsCharteredToTrafiguraMemberfro:AssetsUnderSaleAndPurchaseAgreementMemberfro:TrafiguraMember2019-08-232020-03-160000913290fro:VesselsCharteredToTrafiguraMemberfro:AssetsUnderSaleAndPurchaseAgreementMemberfro:TrafiguraMember2020-01-012020-12-310000913290fro:AssetsUnderSaleAndPurchaseAgreementMember2020-12-31fro:segment0000913290fro:MajorCustomer1Member2018-01-012018-12-310000913290fro:AssetsUnderSaleAndPurchaseAgreementMemberfro:TrafiguraMember2020-12-310000913290fro:BalanceCapitalizedInTheCurrentYearMember2020-01-012020-12-310000913290fro:BalanceCapitalizedInTheCurrentYearMember2019-01-012019-12-310000913290fro:BalanceCapitalizedInTheCurrentYearMember2020-12-310000913290fro:BalanceCapitalizedInTheCurrentYearMember2019-12-310000913290fro:BalanceCapitalizedInPriorYearMember2020-01-012020-12-310000913290fro:VoyagesInProgressMember2020-12-310000913290fro:VoyagesInProgressMember2019-12-310000913290us-gaap:TradeAccountsReceivableMember2020-12-310000913290us-gaap:TradeAccountsReceivableMember2019-12-310000913290fro:RelatedPartyReceivablesMember2020-12-310000913290fro:RelatedPartyReceivablesMember2019-12-310000913290us-gaap:OtherCurrentAssetsMember2020-12-310000913290us-gaap:OtherCurrentAssetsMember2019-12-310000913290fro:ShipFinanceInternationalLimitedMember2020-01-012020-12-310000913290fro:ShipFinanceInternationalLimitedMember2019-01-012019-12-310000913290fro:ShipFinanceInternationalLimitedMember2018-01-012018-12-310000913290fro:SeaTeamMember2020-01-012020-12-310000913290fro:SeaTeamMember2020-12-310000913290fro:SeaTeamMember2020-10-202020-10-20fro:installment0000913290srt:ScenarioForecastMemberfro:SeaTeamMember2021-04-012021-04-010000913290srt:ScenarioForecastMemberfro:SeaTeamMember2021-12-012021-12-010000913290fro:ShipFinanceLeasedVesselsMember2020-12-310000913290fro:ShipFinanceLeasedVesselsMember2019-12-310000913290fro:TrafiguraVesselsMember2020-12-310000913290fro:TrafiguraVesselsMember2019-12-310000913290fro:OtherLeasedVesselsMember2020-12-310000913290fro:OtherLeasedVesselsMember2019-12-310000913290fro:ShipOperatingExpenseMember2020-01-012020-12-310000913290fro:ShipOperatingExpenseMember2019-01-012019-12-310000913290fro:CharterHireExpenseMember2020-01-012020-12-310000913290fro:CharterHireExpenseMember2019-01-012019-12-310000913290fro:AdministrativeExpenseMember2020-01-012020-12-310000913290fro:AdministrativeExpenseMember2019-01-012019-12-310000913290fro:VesselsCharteredToTrafiguraMember2020-12-310000913290fro:VesselsCharteredToTrafiguraMember2020-01-012020-12-310000913290us-gaap:AssetsLeasedToOthersMember2020-12-310000913290us-gaap:AssetsLeasedToOthersMember2019-12-310000913290fro:September2018LeaseArrangementMember2020-01-012020-12-310000913290fro:ShipFinanceInternationalLimitedMember2020-12-310000913290fro:ShipFinanceInternationalLimitedMember2019-12-310000913290us-gaap:InterestRateSwapMember2020-12-310000913290us-gaap:InterestRateSwapMember2019-12-310000913290fro:AvanceGasMember2020-01-012020-12-310000913290fro:AvanceGasMember2018-01-012018-12-310000913290fro:AvanceGasMember2019-01-012019-12-310000913290fro:AvanceGasMember2018-12-310000913290fro:AvanceGasMember2019-12-310000913290fro:AvanceGasMember2020-12-310000913290fro:ShipFinanceInternationalLimitedMember2020-01-012020-12-310000913290fro:ShipFinanceInternationalLimitedMember2019-01-012019-12-310000913290fro:ShipFinanceInternationalLimitedMember2018-01-012018-12-310000913290fro:ShipFinanceInternationalLimitedMember2018-12-310000913290fro:ShipFinanceInternationalLimitedMember2019-12-310000913290fro:ShipFinanceInternationalLimitedMember2020-12-310000913290fro:GoldenOceanMember2020-01-012020-12-310000913290fro:GoldenOceanMember2019-01-012019-12-310000913290fro:GoldenOceanMember2018-01-012018-12-310000913290fro:GoldenOceanMember2019-03-012019-03-310000913290fro:GoldenOceanMember2018-12-310000913290fro:GoldenOceanMember2019-12-310000913290fro:GoldenOceanMember2020-03-012020-03-310000913290fro:GoldenOceanMember2020-03-310000913290fro:GoldenOceanMember2020-06-012020-06-300000913290fro:GoldenOceanMember2020-06-300000913290fro:GoldenOceanMember2020-09-012020-09-300000913290fro:GoldenOceanMember2020-09-300000913290fro:GoldenOceanMember2020-12-012020-12-310000913290fro:GoldenOceanMember2020-12-310000913290fro:DHTHoldingsMember2018-01-012018-12-310000913290fro:OtherReceivablesMember2020-12-310000913290fro:OtherReceivablesMember2019-12-310000913290fro:VesselsandEquipmentMember2017-12-310000913290fro:VesselsandEquipmentMember2018-01-012018-12-310000913290fro:VesselsandEquipmentMember2018-12-310000913290fro:VesselsandEquipmentMember2019-01-012019-12-310000913290fro:VesselsandEquipmentMember2019-12-310000913290fro:VesselsandEquipmentMember2020-01-012020-12-310000913290fro:VesselsandEquipmentMember2020-12-3100009132902019-08-310000913290fro:VlccVesselsMember2015-05-012015-05-310000913290fro:SuezmaxVesselsMember2015-05-012015-05-310000913290fro:VlccVesselsMember2015-07-010000913290fro:SuezmaxVesselsMember2015-07-0100009132902015-07-010000913290fro:ShipFinanceLeasedVesselsMember2015-07-010000913290fro:ShipFinanceInternationalLimitedMember2016-02-290000913290fro:ShipFinanceInternationalLimitedMember2015-07-010000913290fro:ShipFinanceInternationalLimitedMemberfro:FrontHakataMemberfro:NoncashelementMember2020-02-012020-02-290000913290fro:ShipFinanceInternationalLimitedMemberfro:FrontHakataMember2020-02-012020-02-290000913290fro:NoncashelementMember2020-01-012020-12-310000913290fro:ShipFinanceInternationalLimitedMemberfro:NoncashelementMemberfro:FrontCircassiaMember2018-02-012018-02-280000913290fro:ShipFinanceInternationalLimitedMemberfro:FrontCircassiaMember2018-02-012018-02-280000913290fro:ShipFinanceInternationalLimitedMemberfro:FrontPageMemberfro:NoncashelementMember2018-07-012018-07-310000913290fro:ShipFinanceInternationalLimitedMemberfro:FrontPageMember2018-07-012018-07-310000913290fro:ShipFinanceInternationalLimitedMemberfro:NoncashelementMemberfro:FrontStratusMember2018-08-012018-08-310000913290fro:ShipFinanceInternationalLimitedMemberfro:FrontStratusMember2018-08-012018-08-310000913290fro:ShipFinanceInternationalLimitedMemberfro:FrontSerenadeMemberfro:NoncashelementMember2018-09-012018-09-300000913290fro:ShipFinanceInternationalLimitedMemberfro:FrontSerenadeMember2018-09-012018-09-300000913290fro:ShipFinanceInternationalLimitedMemberfro:NoncashelementMemberfro:FrontAriakeMember2018-10-012018-10-310000913290fro:ShipFinanceInternationalLimitedMemberfro:FrontAriakeMember2018-10-012018-10-310000913290fro:ShipFinanceInternationalLimitedMemberfro:NoncashelementMemberfro:FrontFalconMember2018-12-012018-12-310000913290fro:ShipFinanceInternationalLimitedMemberfro:FrontFalconMember2018-12-012018-12-310000913290fro:NoncashelementMember2018-01-012018-12-310000913290fro:ShipFinanceInternationalLimitedMemberfro:NoncashelementMemberfro:FrontPageFrontStratusFrontSerenadeMember2018-07-012018-09-300000913290fro:ShipFinanceInternationalLimitedMember2018-07-012018-07-310000913290fro:ShipFinanceInternationalLimitedMemberfro:FrontPageFrontStratusFrontSerenadeMember2018-07-012018-09-300000913290fro:ShipFinanceInternationalLimitedMemberfro:FrontAriakeFrontFalconMember2018-10-012018-10-310000913290fro:ShipFinanceInternationalLimitedMember2020-02-012020-02-290000913290fro:ShipFinanceInternationalLimitedMember2020-01-012020-03-310000913290fro:ShipFinanceLeasedVesselsMember2020-12-310000913290fro:ShipFinanceLeasedVesselsMember2019-12-310000913290fro:FMSIMember2018-06-300000913290fro:FMSIMember2018-06-012018-06-300000913290fro:FMSIMember2019-01-3100009132902019-01-012019-01-310000913290fro:FMSIMember2019-01-012019-01-310000913290fro:FMSIMember2019-10-310000913290fro:CleanMarineMember2020-01-232020-01-230000913290fro:FMSHoldCoMember2020-01-232020-01-230000913290fro:CleanMarineMember2020-12-310000913290fro:FMSHoldCoMember2020-12-310000913290fro:FMSHoldCoMember2020-01-012020-12-310000913290fro:FMSHoldCoMember2019-01-012019-12-310000913290fro:FMSHoldCoMember2018-01-012018-12-310000913290fro:TFGMarineMember2020-01-012020-01-310000913290fro:TFGMarineMember2020-01-310000913290fro:TFGMarineMember2020-01-012020-12-310000913290fro:TermLoanFacility3286MillionMember2020-12-310000913290fro:TermLoanFacility3286MillionMemberfro:UsDollarDenominatedFloatingRateDebtMemberus-gaap:LoansPayableMember2020-12-310000913290fro:TermLoanFacility3286MillionMemberfro:UsDollarDenominatedFloatingRateDebtMemberus-gaap:LoansPayableMember2019-12-310000913290fro:TermLoanFacility500MillionMember2020-12-310000913290fro:UsDollarDenominatedFloatingRateDebtMemberus-gaap:LoansPayableMemberfro:TermLoanFacility500MillionMember2020-12-310000913290fro:UsDollarDenominatedFloatingRateDebtMemberus-gaap:LoansPayableMemberfro:TermLoanFacility500MillionMember2019-12-310000913290fro:TermLoanFacility2507MillionMember2020-12-310000913290fro:UsDollarDenominatedFloatingRateDebtMemberus-gaap:LoansPayableMemberfro:TermLoanFacility2507MillionMember2020-12-310000913290fro:UsDollarDenominatedFloatingRateDebtMemberus-gaap:LoansPayableMemberfro:TermLoanFacility2507MillionMember2019-12-310000913290fro:TermLoanFacility1008MillionMember2020-12-310000913290fro:TermLoanFacility1008MillionMemberfro:UsDollarDenominatedFloatingRateDebtMemberus-gaap:LoansPayableMember2020-12-310000913290fro:TermLoanFacility1008MillionMemberfro:UsDollarDenominatedFloatingRateDebtMemberus-gaap:LoansPayableMember2019-12-310000913290fro:Termloanfacility328.4millionMember2020-12-310000913290fro:UsDollarDenominatedFloatingRateDebtMemberus-gaap:LoansPayableMemberfro:Termloanfacility328.4millionMember2020-12-310000913290fro:UsDollarDenominatedFloatingRateDebtMemberus-gaap:LoansPayableMemberfro:Termloanfacility328.4millionMember2019-12-310000913290fro:Termloanfacility321.6millionMember2020-12-310000913290fro:UsDollarDenominatedFloatingRateDebtMemberus-gaap:LoansPayableMemberfro:Termloanfacility321.6millionMember2020-12-310000913290fro:UsDollarDenominatedFloatingRateDebtMemberus-gaap:LoansPayableMemberfro:Termloanfacility321.6millionMember2019-12-310000913290fro:Termloanfacility110.5millionINGMember2020-12-310000913290fro:UsDollarDenominatedFloatingRateDebtMemberus-gaap:LoansPayableMemberfro:Termloanfacility110.5millionINGMember2020-12-310000913290fro:UsDollarDenominatedFloatingRateDebtMemberus-gaap:LoansPayableMemberfro:Termloanfacility110.5millionINGMember2019-12-310000913290fro:Termloanfacility110.5millionCSMember2020-12-310000913290fro:UsDollarDenominatedFloatingRateDebtMemberus-gaap:LoansPayableMemberfro:Termloanfacility110.5millionCSMember2020-12-310000913290fro:UsDollarDenominatedFloatingRateDebtMemberus-gaap:LoansPayableMemberfro:Termloanfacility110.5millionCSMember2019-12-310000913290fro:Termloanfacility110.5millionCS2Member2020-12-310000913290fro:UsDollarDenominatedFloatingRateDebtMemberus-gaap:LoansPayableMemberfro:Termloanfacility110.5millionCS2Member2020-12-310000913290fro:UsDollarDenominatedFloatingRateDebtMemberus-gaap:LoansPayableMemberfro:Termloanfacility110.5millionCS2Member2019-12-310000913290fro:LeaseFinancing5440MillionMember2020-12-310000913290fro:UsDollarDenominatedFloatingRateDebtMemberus-gaap:LoansPayableMemberfro:LeaseFinancing5440MillionMember2020-12-310000913290fro:UsDollarDenominatedFloatingRateDebtMemberus-gaap:LoansPayableMemberfro:LeaseFinancing5440MillionMember2019-12-310000913290fro:TermLoanFacility429MillionMember2020-12-310000913290fro:TermLoanFacility429MillionMemberfro:UsDollarDenominatedFloatingRateDebtMemberus-gaap:LoansPayableMember2020-12-310000913290fro:TermLoanFacility429MillionMemberfro:UsDollarDenominatedFloatingRateDebtMemberus-gaap:LoansPayableMember2019-12-310000913290fro:TermLoanFacility625MillionMember2020-12-310000913290fro:TermLoanFacility625MillionMemberfro:UsDollarDenominatedFloatingRateDebtMemberus-gaap:LoansPayableMember2020-12-310000913290fro:TermLoanFacility625MillionMemberfro:UsDollarDenominatedFloatingRateDebtMemberus-gaap:LoansPayableMember2019-12-310000913290fro:Seniorunsecuredfacility275.0millionMember2020-12-310000913290us-gaap:LoansPayableMemberfro:Seniorunsecuredfacility275.0millionMember2020-12-310000913290us-gaap:LoansPayableMemberfro:Seniorunsecuredfacility275.0millionMember2019-12-310000913290fro:SeniorSecuredLoanFacility2507MillionMemberus-gaap:LoansPayableMember2014-12-310000913290fro:SeniorSecuredLoanFacility2507MillionMember2020-11-300000913290fro:Termloanfacility466.5millionMember2020-11-300000913290us-gaap:LondonInterbankOfferedRateLIBORMemberfro:SeniorSecuredLoanFacility2507MillionMember2020-11-012020-11-300000913290fro:SeniorSecuredLoanFacility2507MillionMember2020-11-012020-11-300000913290fro:SeniorSecuredLoanFacility2507MillionMember2019-01-012019-12-310000913290us-gaap:LoansPayableMemberfro:TermLoanFacility500MillionMember2015-03-310000913290fro:TermLoanFacility500MillionMember2020-05-310000913290fro:TermLoanFacility60.6MillionMember2020-05-310000913290us-gaap:LondonInterbankOfferedRateLIBORMemberfro:TermLoanFacility500MillionMember2020-05-012020-05-310000913290fro:TermLoanFacility500MillionMember2020-05-012020-05-310000913290us-gaap:LoansPayableMemberfro:TermLoanFacility500MillionMember2019-01-012019-12-310000913290fro:TermLoanFacility3286MillionMemberus-gaap:LoansPayableMember2015-12-310000913290fro:TermLoanFacility3286MillionMember2020-07-310000913290fro:TermLoanFacility500.1MillionMember2020-07-310000913290us-gaap:LondonInterbankOfferedRateLIBORMemberfro:TermLoanFacility3286MillionMember2020-07-012020-07-310000913290fro:TermLoanFacility3286MillionMember2020-07-012020-07-310000913290fro:TermLoanFacility3286MillionMember2019-01-012019-12-310000913290us-gaap:LoansPayableMemberfro:Seniorunsecuredfacility275.0millionMember2016-06-300000913290us-gaap:LoansPayableMemberfro:OtherAffiliatesOfHemenMemberfro:Seniorunsecuredfacility275.0millionMember2016-06-300000913290us-gaap:LoansPayableMemberfro:OtherAffiliatesOfHemenMemberfro:Seniorunsecuredfacility275.0millionMember2016-06-012016-06-300000913290fro:OtherAffiliatesOfHemenMemberfro:Seniorunsecuredfacility275.0millionMember2019-01-012019-12-310000913290us-gaap:LoansPayableMemberfro:OtherAffiliatesOfHemenMemberfro:Seniorunsecuredfacility275.0millionMember2019-12-310000913290us-gaap:LoansPayableMemberfro:OtherAffiliatesOfHemenMemberfro:Seniorunsecuredfacility275.0millionMember2019-10-012019-10-310000913290fro:OtherAffiliatesOfHemenMemberfro:Seniorunsecuredfacility275.0millionMember2020-01-012020-12-310000913290us-gaap:LoansPayableMemberfro:OtherAffiliatesOfHemenMemberfro:Seniorunsecuredfacility275.0millionMember2020-12-310000913290us-gaap:LoansPayableMemberfro:OtherAffiliatesOfHemenMemberfro:Seniorunsecuredfacility275.0millionMemberus-gaap:SubsequentEventMember2021-02-012021-02-280000913290fro:TermLoanFacility1008MillionMemberus-gaap:LoansPayableMember2016-07-310000913290fro:TermLoanFacility1008MillionMember2020-11-300000913290fro:Termloanfacility109.2millionMember2020-11-300000913290us-gaap:LondonInterbankOfferedRateLIBORMemberfro:TermLoanFacility1008MillionMember2020-11-012020-11-300000913290fro:TermLoanFacility1008MillionMemberus-gaap:LoansPayableMember2020-11-012020-11-300000913290fro:TermLoanFacility1008MillionMember2020-11-012020-11-300000913290fro:TermLoanFacility1008MillionMember2019-01-012019-12-310000913290us-gaap:LoansPayableMemberfro:Termloanfacility328.4millionMember2016-08-310000913290us-gaap:LoansPayableMemberfro:Termloanfacility328.4millionMember2016-08-012016-08-310000913290us-gaap:LoansPayableMemberfro:Termloanfacility328.4millionMember2016-01-012016-12-310000913290us-gaap:LoansPayableMemberfro:Termloanfacility328.4millionMember2017-01-012017-12-310000913290us-gaap:LoansPayableMemberfro:Termloanfacility110.5millionCSMember2016-12-310000913290us-gaap:LondonInterbankOfferedRateLIBORMemberfro:Termloanfacility110.5millionCSMember2016-12-012016-12-310000913290us-gaap:LoansPayableMemberfro:Termloanfacility110.5millionCSMember2016-12-012016-12-310000913290us-gaap:LoansPayableMemberfro:Termloanfacility110.5millionCSMember2017-01-012017-12-310000913290fro:Termloanfacility110.5millionCSMember2017-01-012017-12-310000913290us-gaap:LoansPayableMemberfro:Termloanfacility110.5millionCSMember2018-01-012018-12-310000913290fro:Termloanfacility110.5millionCSMember2019-01-012019-12-310000913290us-gaap:LoansPayableMemberfro:Termloanfacility110.5millionCSMember2019-01-012019-12-310000913290us-gaap:LoansPayableMemberfro:Termloanfacility321.6millionMember2017-02-280000913290us-gaap:LondonInterbankOfferedRateLIBORMemberus-gaap:LoansPayableMemberfro:Termloanfacility321.6millionMember2017-02-012017-02-280000913290us-gaap:LoansPayableMemberfro:Termloanfacility321.6millionMember2017-01-012017-12-310000913290us-gaap:LoansPayableMemberfro:Termloanfacility321.6millionMember2018-01-012018-12-310000913290fro:Termloanfacility321.6millionMember2018-01-012018-12-310000913290us-gaap:LoansPayableMemberfro:Termloanfacility110.5millionCS2Member2017-06-300000913290us-gaap:LondonInterbankOfferedRateLIBORMemberfro:Termloanfacility110.5millionCS2Member2017-06-012017-06-300000913290us-gaap:LoansPayableMemberfro:Termloanfacility110.5millionCS2Member2017-06-012017-06-300000913290us-gaap:LoansPayableMemberfro:Termloanfacility110.5millionCS2Member2018-01-012018-12-310000913290fro:Termloanfacility110.5millionCS2Member2018-01-012018-12-310000913290us-gaap:LoansPayableMemberfro:Termloanfacility110.5millionCS2Member2019-01-012019-12-310000913290fro:Termloanfacility110.5millionCS2Member2019-01-012019-12-310000913290fro:Termloanfacility110.5millionINGMember2017-06-300000913290us-gaap:LondonInterbankOfferedRateLIBORMemberfro:Termloanfacility110.5millionCSMember2020-11-012020-11-300000913290fro:Termloanfacility110.5millionINGMember2017-06-012017-06-300000913290us-gaap:LoansPayableMemberfro:Termloanfacility110.5millionINGMember2017-06-012017-06-300000913290us-gaap:LoansPayableMemberfro:Termloanfacility110.5millionINGMember2019-01-012019-12-310000913290fro:Termloanfacility110.5millionINGMember2019-01-012019-12-310000913290fro:LoansPayableOnIncreasedBorrowingBaseMemberfro:Termloanfacility110.5millionINGMember2019-01-012019-12-310000913290fro:March2020SaleLeasebackAgreementMember2020-03-310000913290fro:March2020SaleLeasebackAgreementMember2020-03-012020-03-300000913290us-gaap:LondonInterbankOfferedRateLIBORMemberfro:March2020SaleLeasebackAgreementMember2020-03-012020-03-300000913290fro:Termloanfacility42.9millionCSMember2019-11-300000913290us-gaap:LoansPayableMemberfro:Termloanfacility42.9millionCSMember2019-11-012019-11-300000913290us-gaap:LondonInterbankOfferedRateLIBORMemberfro:Termloanfacility42.9millionCSMember2019-11-012019-11-300000913290fro:Termloanfacility42.9millionCSMember2020-05-012020-05-310000913290fro:CreditAgricoleSeniorSecuredTermLoanMember2020-05-310000913290fro:CreditAgricoleSeniorSecuredTermLoanMember2020-06-012020-06-300000913290us-gaap:LondonInterbankOfferedRateLIBORMemberfro:CreditAgricoleSeniorSecuredTermLoanMember2020-06-012020-06-300000913290us-gaap:LoansPayableMemberfro:CreditAgricoleSeniorSecuredTermLoanMember2020-06-012020-06-300000913290fro:TermLoanCommitment1337MillionMember2020-11-300000913290fro:TermLoanCommitment1424MillionMember2020-11-012020-11-300000913290fro:TermLoanCommitment1337MillionMember2020-11-012020-11-300000913290us-gaap:LoansPayableMemberfro:TermLoanCommitment1337MillionMember2020-11-012020-11-300000913290us-gaap:LondonInterbankOfferedRateLIBORMember2020-12-310000913290us-gaap:LondonInterbankOfferedRateLIBORMember2019-12-3100009132902020-02-012020-02-290000913290fro:GoldenOceanMember2019-09-012019-09-300000913290fro:GoldenOceanMembersrt:ScenarioForecastMember2021-03-310000913290fro:VesselsMember2020-12-310000913290fro:VesselsMember2019-12-310000913290fro:AtthemarketOfferingMember2018-07-240000913290fro:AtthemarketOfferingMember2019-01-012019-12-3100009132902019-08-012019-08-310000913290us-gaap:EmployeeStockOptionMember2016-07-012016-07-310000913290us-gaap:EmployeeStockOptionMember2016-07-310000913290us-gaap:ShareBasedCompensationAwardTrancheOneMember2016-07-012016-07-310000913290us-gaap:ShareBasedCompensationAwardTrancheTwoMember2016-07-012016-07-310000913290us-gaap:ShareBasedCompensationAwardTrancheThreeMember2016-07-012016-07-310000913290srt:MaximumMember2016-07-012016-07-310000913290us-gaap:EmployeeStockOptionMember2018-11-012018-11-300000913290us-gaap:EmployeeStockOptionMember2018-11-300000913290srt:MaximumMember2018-11-012018-11-300000913290us-gaap:EmployeeStockOptionMember2016-01-012016-12-310000913290us-gaap:EmployeeStockOptionMember2016-07-012016-09-300000913290us-gaap:EmployeeStockOptionMember2020-12-310000913290us-gaap:EmployeeStockOptionMember2020-01-012020-12-310000913290us-gaap:EmployeeStockOptionMember2018-12-310000913290fro:Stockoptionsgranted2018Member2018-12-310000913290us-gaap:EmployeeStockOptionMember2019-01-012019-12-310000913290us-gaap:EmployeeStockOptionMember2018-01-012018-12-310000913290us-gaap:EmployeeStockOptionMember2016-12-31fro:instrument0000913290us-gaap:InterestRateSwapMember2013-02-012013-02-27fro:mr_product_tanker00009132902013-02-0100009132902016-12-310000913290fro:UsDollarDenominatedFloatingRateDebtMemberfro:Termloanfacility466.5millionMember2016-12-310000913290fro:Interestrateswap5Member2016-02-290000913290fro:InterestRateSwapMarch2020Member2020-03-012020-03-310000913290fro:InterestRateSwapMarch2020Member2020-03-310000913290fro:InterestRateSwapApril2020Member2020-04-012020-04-300000913290fro:InterestRateSwapApril2020Member2020-04-300000913290us-gaap:InterestRateSwapMember2020-01-012020-12-310000913290us-gaap:InterestRateSwapMember2019-01-012019-12-310000913290us-gaap:InterestRateSwapMember2018-01-012018-12-310000913290fro:Interestrateswap2Member2020-12-310000913290fro:Interestrateswap3Member2020-12-310000913290fro:Interestrateswap4Member2020-12-310000913290fro:Interestrateswap5Member2020-12-310000913290fro:Interestrateswap6Member2020-12-310000913290fro:Interestrateswap7Member2020-12-310000913290fro:InterestRateSwap8Member2020-12-310000913290fro:InterestRateSwap9Member2020-12-310000913290fro:InterestRateSwap10Member2020-12-31fro:risk0000913290us-gaap:CarryingReportedAmountFairValueDisclosureMember2020-12-310000913290us-gaap:EstimateOfFairValueFairValueDisclosureMember2020-12-310000913290us-gaap:CarryingReportedAmountFairValueDisclosureMember2019-12-310000913290us-gaap:EstimateOfFairValueFairValueDisclosureMember2019-12-310000913290us-gaap:CollateralPledgedMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2020-12-310000913290us-gaap:CollateralPledgedMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2020-12-310000913290us-gaap:CollateralPledgedMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2019-12-310000913290us-gaap:CollateralPledgedMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2019-12-310000913290us-gaap:FairValueMeasurementsRecurringMember2020-12-310000913290us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2020-12-310000913290us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2020-12-310000913290us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2020-12-310000913290us-gaap:CollateralPledgedMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310000913290us-gaap:CollateralPledgedMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2020-12-310000913290us-gaap:CollateralPledgedMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2020-12-310000913290us-gaap:CollateralPledgedMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2020-12-310000913290us-gaap:FairValueMeasurementsRecurringMember2019-12-310000913290us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2019-12-310000913290us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2019-12-310000913290us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2019-12-310000913290us-gaap:CollateralPledgedMemberus-gaap:FairValueMeasurementsRecurringMember2019-12-310000913290us-gaap:CollateralPledgedMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2019-12-310000913290us-gaap:CollateralPledgedMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2019-12-310000913290us-gaap:CollateralPledgedMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2019-12-310000913290fro:AssetsUnderSaleAndPurchaseAgreementMember2020-03-162020-03-160000913290fro:SFLCorporationLimitedMember2020-12-310000913290fro:SFLCorporationLimitedMember2018-01-012018-12-310000913290fro:SFLCorporationLimitedMember2020-02-012020-02-290000913290fro:SFLCorporationLimitedMember2020-01-012020-12-310000913290fro:SFLCorporationLimitedMember2019-01-012019-12-310000913290fro:SFLCorporationLimitedMember2019-12-310000913290fro:SFLCorporationLimitedMember2018-12-310000913290fro:SFLCorporationLimitedMember2014-01-010000913290fro:CleanMarineMember2020-01-012020-12-310000913290fro:CleanMarineMember2019-01-012019-12-310000913290fro:CleanMarineMember2018-01-012018-12-310000913290fro:TFGMarineMember2020-12-310000913290fro:TFGMarineMember2020-01-012020-12-310000913290fro:TFGMarineMember2020-12-310000913290fro:OtherAffiliatesOfHemenMemberfro:Seniorunsecuredfacility275.0millionMember2016-06-300000913290fro:OtherAffiliatesOfHemenMemberfro:Seniorunsecuredfacility275.0millionMember2020-12-310000913290fro:OtherAffiliatesOfHemenMemberfro:Seniorunsecuredfacility275.0millionMember2018-01-012018-12-310000913290fro:OtherAffiliatesOfHemenMemberfro:Seniorunsecuredfacility275.0millionMemberus-gaap:SubsequentEventMember2021-02-012021-02-280000913290fro:OtherAffiliatesOfHemenMember2019-08-310000913290fro:OtherAffiliatesOfHemenMember2019-01-012019-12-310000913290fro:OtherAffiliatesOfHemenMember2020-01-012020-12-310000913290srt:MinimumMemberfro:OtherAffiliatesOfHemenMember2020-01-012020-12-310000913290fro:OtherAffiliatesOfHemenMembersrt:MaximumMember2020-01-012020-12-310000913290fro:SeatankersManagementCoLtdMember2020-01-012020-12-310000913290fro:SeatankersManagementCoLtdMember2019-01-012019-12-310000913290fro:SeatankersManagementCoLtdMember2018-01-012018-12-310000913290fro:GoldenOceanMember2020-01-012020-12-310000913290fro:GoldenOceanMember2019-01-012019-12-310000913290fro:GoldenOceanMember2018-01-012018-12-310000913290fro:SeatankersManagementNorgeASMember2020-01-012020-12-310000913290fro:SeatankersManagementNorgeASMember2019-01-012019-12-310000913290fro:SeatankersManagementNorgeASMember2018-01-012018-12-310000913290fro:AltaTradingUKLimitedMember2020-01-012020-12-310000913290fro:AltaTradingUKLimitedMember2019-01-012019-12-310000913290fro:AltaTradingUKLimitedMember2018-01-012018-12-310000913290fro:SeadrillLimitedMember2020-01-012020-12-310000913290fro:SeadrillLimitedMember2019-01-012019-12-310000913290fro:SeadrillLimitedMember2018-01-012018-12-310000913290fro:ArcherLimitedMember2020-01-012020-12-310000913290fro:ArcherLimitedMember2019-01-012019-12-310000913290fro:ArcherLimitedMember2018-01-012018-12-310000913290fro:FlexLNGMember2020-01-012020-12-310000913290fro:FlexLNGMember2019-01-012019-12-310000913290fro:FlexLNGMember2018-01-012018-12-310000913290fro:AvanceGasMember2020-01-012020-12-310000913290fro:AvanceGasMember2019-01-012019-12-310000913290fro:AvanceGasMember2018-01-012018-12-310000913290fro:TFGMarineMember2019-01-012019-12-310000913290fro:TFGMarineMember2018-01-012018-12-310000913290fro:OtherrelatedpartiesMember2020-01-012020-12-310000913290fro:OtherrelatedpartiesMember2019-01-012019-12-310000913290fro:OtherrelatedpartiesMember2018-01-012018-12-310000913290fro:SeatankersManagementCoLtdMember2020-12-310000913290fro:SeatankersManagementCoLtdMember2019-12-310000913290fro:ArcherLimitedMember2020-12-310000913290fro:ArcherLimitedMember2019-12-310000913290fro:GoldenOceanMember2020-12-310000913290fro:GoldenOceanMember2019-12-310000913290fro:SeadrillLimitedMember2020-12-310000913290fro:SeadrillLimitedMember2019-12-310000913290fro:AltaTradingUKLimitedMember2020-12-310000913290fro:AltaTradingUKLimitedMember2019-12-310000913290fro:FlexLNGMember2020-12-310000913290fro:FlexLNGMember2019-12-310000913290fro:AvanceGasMember2020-12-310000913290fro:AvanceGasMember2019-12-310000913290fro:OtherrelatedpartiesMember2020-12-310000913290fro:OtherrelatedpartiesMember2019-12-310000913290fro:TFGMarineMember2019-12-3100009132902015-01-012015-12-31fro:metric_ton0000913290fro:BunkerFuelContractOctober2020ThroughDecember2021Member2020-01-012020-12-31iso4217:USDfro:metricTon0000913290srt:MinimumMemberfro:BunkerFuelContractOctober2020ThroughDecember2021Member2020-12-310000913290fro:BunkerFuelContractOctober2020ThroughDecember2021Membersrt:MaximumMember2020-12-310000913290fro:BunkerFuelContractJanuary2021ThroughDecember2021Member2020-01-012020-12-310000913290fro:BunkerFuelContractJanuary2021ThroughDecember2021Member2020-12-31fro:subsidiary0000913290fro:ShipFinanceInternationalLimitedMemberfro:FrontCircassiaFrontPageFrontStratusFrontSerenadeFrontAriakeFrontFalconMember2018-01-012018-12-310000913290fro:ShipFinanceInternationalLimitedMemberfro:FrontHakataMember2020-01-012020-12-310000913290fro:ShipFinanceInternationalLimitedMemberfro:FrontCircassiaFrontPageFrontStratusFrontSerenadeFrontAriakeFrontFalconMember2020-01-012020-12-310000913290fro:SeniorSecuredLoanFacilityCEXIMAndSinosureMemberus-gaap:SubsequentEventMember2021-03-012021-03-31

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC. 20549
 
FORM 20-F

(Mark One)
 
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
 OF THE SECURITIES EXCHANGE ACT OF 1934
OR
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
 OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year endedDecember 31, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
 OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
For the transition period from _________________ to _________________
OR
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 
Date of event requiring this shell company report  _______________________________
 
Commission file number001-16601
Frontline Ltd.
(Exact name of Registrant as specified in its charter)
 
 
(Translation of Registrant's name into English)
 
Bermuda
(Jurisdiction of incorporation or organization)
 
Par-la-Ville Place, 14 Par-la-Ville Road, Hamilton, HM 08, Bermuda
(Address of principal executive offices)
James Ayers, Telephone: (1) 441 295 6935, Facsimile: (1) 441 295 3494,
 Par-la-Ville Place, 14 Par-la-Ville Road, Hamilton, HM 08, Bermuda
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act
Title of each classTrading SymbolName of each exchange on which registered
   
Ordinary Shares, Par Value $1.00 Per ShareFRONew York Stock Exchange
   
Securities registered or to be registered pursuant to Section 12(g) of the Act.
 

 
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
Ordinary Shares, Par Value $1.00 Per Share
(Title of Class)
Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report.

197,692,321 Ordinary Shares, Par Value $1.00 Per Share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes                                             No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes                                             No

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes                                             No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes                                             No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer    
Accelerated filer  
Non-accelerated filer  
Emerging growth company  
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.    

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report:        

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP
International Financial Reporting Standards as issued by the
International Accounting Standards Board
Other

If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:
Item 17
 
Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes  No  




INDEX TO REPORT ON FORM 20-F
 
PAGE



CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Matters discussed in this annual report and the documents incorporated by reference may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements, which include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.

Frontline Ltd. and its subsidiaries, or Frontline, or the Company, desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. This annual report and any other written or oral statements made by us or on our behalf may include forward-looking statements, which reflect our current views with respect to future events and financial performance, and are not intended to give any assurance as to future results. When used in this document, the words "believe," "anticipate," "intend," "estimate," "forecast," "project," "plan," "potential," "will," "may," "should," "expect," "targets," "likely," "would," "could," "seeks," "continue," "possible," "might" and similar expressions, terms or phrases may identify forward-looking statements.

The forward-looking statements in this annual report are based upon various assumptions, including without limitation, management's examination of historical operating trends, data contained in our records and data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections. Except to the extent required by applicable law or regulation we undertake no obligation to release publicly any revisions or updates to any of these forward-looking statements to reflect events or circumstances, whether as a result of new information, future events or otherwise, after the date of this annual report.

In addition to these important factors and matters discussed elsewhere herein and in the documents incorporated by reference herein, important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include:

the strength of world economies;
fluctuations in currencies and interest rates;
general market conditions, including fluctuations in charter hire rates and vessel values;
changes in the supply and demand for vessels comparable to ours and the number of newbuildings under construction;
the highly cyclical nature of the industry that we operate in;
the loss of a large customer or significant business relationship;
changes in worldwide oil production and consumption and storage;
changes in the Company's operating expenses, including bunker prices, drydocking, crew costs and insurance costs;
planned, pending or recent acquisitions, business strategy and expected capital spending or operating expenses, including drydocking, surveys and upgrades;
risks associated with any future vessel construction;
our expectations regarding the availability of vessel acquisitions and our ability to complete acquisition transactions planned;
our ability to renew our time charters when they expire or to enter into new time charters;
availability of financing and refinancing, our ability to obtain financing and comply with the restrictions and other covenants in our financing arrangements;
availability of skilled crew members other employees and the related labor costs;
work stoppages or other labor disruptions by our employees or the employees of other companies in related industries;
compliance with governmental, tax, environmental and safety regulation, any non-compliance with the U.S.;
the impact of increasing scrutiny and changing expectations from investors, lenders and other market participants with respect to our Environmental, Social and Governance, or ESG, policies;
Foreign Corrupt Practices Act of 1977, or FCPA, or other applicable regulations relating to bribery;
the impact of the discontinuance of London Interbank Offered Rate, or LIBOR, after 2021 on interest rates of our debt that reference LIBOR;
general economic conditions and conditions in the oil industry;
effects of new products and new technology in our industry, including the potential for technological innovation to reduce the value of our vessels and charter income derived therefrom;
vessel breakdowns and instances of off-hire;
the impact of an interruption in or failure of our information technology and communications systems, including the impact of cyber-attacks, upon our ability to operate;
potential conflicts of interest involving members of our board of directors and senior management;
1


the failure of counter parties to fully perform their contracts with us;
changes in credit risk with respect to our counterparties on contracts;
our dependence on key personnel and our ability to attract, retain and motivate key employees;
adequacy of insurance coverage;
our ability to obtain indemnities from customers;
changes in laws, treaties or regulations;
the volatility of the price of our ordinary shares;
our incorporation under the laws of Bermuda and the different rights to relief that may be available compared to other countries, including the United States;
changes in governmental rules and regulations or actions taken by regulatory authorities;
government requisition of our vessels during a period of war or emergency;
potential liability from pending or future litigation and potential costs due to environmental damage and vessel collisions;
the arrest of our vessels by maritime claimants;
general domestic and international political conditions or events, including “trade wars”;
any further changes in U.S. trade policy that could trigger retaliatory actions by the affected countries;
potential disruption of shipping routes due to accidents, political events, international hostilities and instability, acts by terrorists or acts of piracy on ocean-going vessels;
the impact of adverse weather and natural disasters;
the length and severity of epidemics and pandemics, including the ongoing global outbreak of the novel coronavirus, or COVID-19, and its impact on the demand for seaborne transportation in the tanker sector;
business disruptions due to natural disasters or other disasters outside our control, such as the ongoing COVID-19 pandemic; and
other important factors described from time to time in the reports filed by the Company with the Securities and Exchange Commission, or the Commission.

We caution readers of this annual report not to place undue reliance on these forward-looking statements, which speak only as of their dates. These forward-looking statements are not guarantees of our future performance, and actual results and future developments may vary materially from those projected in the forward looking statements. Please see “Item 3. Key Information—D. Risk Factors” of this annual report for a more complete discussion of these and other risks and uncertainties.

2


PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

Throughout this annual report, the "Company," "we," "us" and "our" all refer to Frontline Ltd. and its subsidiaries. We use the term deadweight ton, or dwt, in describing the size of vessels. Dwt, expressed in metric tons, which is equivalent to 1,000 kilograms, refers to the maximum weight of cargo and supplies that a vessel can carry. The Company operates oil tankers of two sizes: very large crude carriers, or VLCCs, which are between 200,000 and 320,000 dwt, and Suezmax tankers, which are vessels between 120,000 and 170,000 dwt. The Company also operates LR2/Aframax tankers, which are clean product tankers and range in size from 111,000 to 115,000 dwt. Unless otherwise indicated, all references to "USD," "US$" and "$" in this annual report are U.S. dollars.

A. SELECTED FINANCIAL DATA

The selected statement of operations data of the Company with respect to the fiscal years ended December 31, 2020, 2019 and 2018 and the selected balance sheet data of the Company as of December 31, 2020 and 2019 have been derived from the Company's consolidated financial statements included herein and should be read in conjunction with such statements and the notes thereto. The selected balance sheet data as of December 31, 2018, 2017 and 2016 have been derived from consolidated financial statements of the Company not included herein. The selected statement of operations data with respect to the fiscal year ended December 31, 2017 and 2016 have been derived from consolidated financial statements of the Company not included herein.

The following table should also be read in conjunction with "Item 5. Operating and Financial Review and Prospects" and the Company's consolidated financial statements and notes thereto included herein. The Company's accounts are maintained in U.S. dollars.
 Fiscal year ended December 31,
 20202019201820172016
(in thousands of $, except ordinary shares, per share data and ratios)
Statement of Operations Data :
    
Total operating revenues (1)
1,221,187 957,322 742,266 646,326 754,306 
Total operating expenses743,294 721,222 669,761 844,978 574,142 
Net operating income507,795 239,522 82,711 (196,271)177,481 
Net (loss) income413,006 139,986 (8,398)(264,322)117,514 
Net (loss) income attributable to the Company412,875 139,972 (8,880)(264,861)117,010 
Basic earnings (loss) per share attributable to the Company (2)
$2.11 $0.81 $(0.05)$(1.56)$0.75 
Diluted earnings per share attributable to the Company (2)
$2.09 $0.78 $(0.05)$(1.56)$0.75 
Dividends per share declared (2)
$1.60 $0.10 $— $0.30 $1.05 

3


 Fiscal year ended December 31,
 20202019201820172016
(in thousands of $, except ordinary shares and ratios)
Balance Sheet Data (at end of year) :
    
Cash and cash equivalents174,721 174,223 66,484 104,145 202,402 
Newbuildings48,498 46,068 52,254 79,602 308,324 
Vessels and equipment, net3,307,144 2,579,905 2,476,755 2,342,130 1,477,395 
Vessels and equipment under finance leases, net53,518 418,390 90,676 251,698 536,433 
Investment in associated company1,279 4,927 6,246 — — 
Total assets3,918,221 3,697,818 3,077,841 3,133,728 2,966,317 
Short-term debt and current portion of long-term debt167,082 438,962 120,479 113,078 67,365 
Current portion of obligations under finance leases7,810 283,463 11,854 43,316 56,505 
Long-term debt1,968,924 1,254,417 1,610,293 1,467,074 914,592 
Obligations under finance leases48,467 76,447 87,930 255,700 366,095 
Share capital197,692 196,894 169,821 169,809 169,809 
Total equity attributable to the Company1,612,025 1,509,976 1,163,800 1,187,308 1,499,601 
Ordinary shares outstanding (000s) (2)
197,692 196,894 169,821 169,809 169,809 
Weighted average ordinary shares outstanding (000s) (2)
195,637 173,576 169,810 169,809 156,973 
Other Financial Data:
Equity to assets ratio (percentage) (3)
41.1 %40.8 %37.8 %37.9 %50.6 %
Debt to equity ratio (4)
1.4 1.4 1.6 1.6 0.9 
Price earnings ratio (5)
2.9 15.9 (110.6)(2.9)9.5 
Time charter equivalent revenue (6)
840,658 527,446 339,196 365,059 566,701 

Notes:


1.The Company adopted ASC 606 effective from January 1, 2018 and ASC 842 lease from January 1, 2019. Prior periods have not been restated for the impact of these standards, see Note 2. and Note 3. to our Consolidated Financial Statements for an explanation of the impact of the adoption of ASC 606 and ASC 842.

2.Earnings and dividends per share amounts, the number of ordinary shares outstanding and the weighted average ordinary shares outstanding have been restated to reflect the 1-for-5 reverse share split that was effected on February 3, 2016.

3.Equity-to-assets ratio is calculated as total equity attributable to the Company divided by total assets.

4.Debt-to-equity ratio is calculated as total interest bearing current and long-term liabilities, including obligations under finance leases, divided by total equity attributable to the Company.

5.Price earnings ratio is calculated by dividing the closing year end share price by basic earnings per share attributable to the Company. Each year end share price has been adjusted for the 1-for-5 reverse share split in February 2016.

6.A reconciliation of time charter equivalent revenues to total operating revenues as reflected in the Consolidated Statements of Operations is as follows:
4


(in thousands of $)20202019201820172016
Total operating revenues1,221,187 957,322 742,266 646,326 754,306 
Less:
Finance lease interest income (690)(1,293)(1,748)(2,194)
Other income(22,331)(33,704)(24,005)(20,185)(23,770)
Other non-vessel related income(5,100)— — — — 
Voyage expenses and commissions(353,098)(395,482)(377,772)(259,334)(161,641)
Time charter equivalent revenue840,658 527,446 339,196 365,059 566,701 

Consistent with general practice in the shipping industry, the Company uses time charter equivalent revenue, or TCE, which represents operating revenues less finance lease interest income, other income, other non-vessel related income, and voyage expenses and commissions, as a measure to compare revenue generated from a voyage charter to revenue generated from a time charter. Time charter equivalent revenue, a non-GAAP measure, provides additional meaningful information in conjunction with operating revenues, the most directly comparable GAAP measure, because it assists Company management in making decisions regarding the deployment and use of its vessels and in evaluating the Company's financial performance.

B. CAPITALIZATION AND INDEBTEDNESS

Not applicable.

C. REASONS FOR THE OFFER AND USE OF PROCEEDS

Not applicable.

D. RISK FACTORS
 
We are engaged in the seaborne transportation of crude oil and oil products. Some of the risks summarized below and discussed in greater detail in the following pages relate principally to the industry in which we operate, shipping generally, and to our business. Other risks relate principally to the ownership of our securities. The occurrence of any of the events described in this section could significantly and negatively affect our business, financial condition, operating results and ability to pay dividends on our shares, or the trading price of our shares.

The tanker industry has historically been cyclical and volatile in terms of charter rates and earnings
Any decrease in shipments of crude oil may adversely affect our financial performance.
An over-supply of tanker capacity may lead to reductions in charter rates, vessel values and profitability.
The instability of the Euro or the inability of countries to refinance their debts could have a material adverse effect on our revenue, profitability and financial position.
A shift in consumer demand from oil towards other energy sources or changes to trade patterns for crude oil or refined oil products may have a material adverse effect on our business.
The smuggling of drugs or other contraband onto our vessels may lead to governmental claims against us.
Technological innovation and quality and efficiency requirements from our customers could reduce our charterhire income and the value of our vessels.
Failure to protect our IT systems against security breaches could adversely affect our business and results of operations.
ESG policies may impose additional costs on us or expose us to additional risks.
Risks involved with operating ocean-going vessels could result in the loss of life or harm to our seafarers, environmental accidents or affect our business and reputation.
If economic conditions throughout the world deteriorate or become more volatile, it could impede our operations.
The U.K.’s withdrawal from the European Union may have a negative effect on global economic conditions, financial markets and our business.
Acts of piracy on ocean-going vessels could adversely affect our business.
Political instability, terrorist or other attacks, war, international hostilities and public health threats can affect the tanker industry.
5


Our business may be harmed by the ongoing outbreak of COVID-19.
If our vessels call at ports subject to US or international restrictions we could be adversely affected.
Compliance with safety and other vessel requirements imposed by classification societies may be costly and could reduce our net cash flows and net income.
We are subject to complex laws and regulations, including environmental laws and regulations that can increase our liability and adversely affect our business, results of operations and financial condition.
If we fail to comply with international safety regulations, we may be subject to increased liability, which may adversely affect our insurance coverage and may result in a denial of access to, or detention in, certain ports.
Regulations relating to ballast water discharge may adversely affect our revenues and profitability.
Maritime claimants could arrest one or more of our vessels, which could interrupt our cash flow.
Governments could requisition our vessels during a period of war or emergency resulting in a loss of earnings.
We are dependent on the spot market and exposed to its volatility.
A drop in spot market rates may provide an incentive for some charterers to default on their charters.
Changes in the price of fuel, or bunkers, may adversely affect our profits.
The operation of tankers involves certain unique operational risks.
Volatility in vessel values may result in losses when we sell vessels or could cause us to incur impairment charges.
We may be unable to successfully compete with other vessel operators for charters.
Our time charters may limit our ability to benefit from any improvement in charter rates.
Purchasing and operating secondhand vessels may result in increased operating costs and vessels off-hire.
Delays or defaults by the shipyards in the construction of our newbuildings could increase our expenses and diminish our net income and cash flows.
We may be unable to locate suitable vessels for acquisition which would adversely affect our ability to expand our fleet.
We may not be able to recruit suitable employees and crew for our vessels which may limit our growth.
Increased inspection procedures, tighter import and export controls and new security regulations could increase costs and cause disruption of our business.
Our ability to obtain debt financing may be dependent on the performance of our then-existing charters and the creditworthiness of our charterers.
Volatility of LIBOR and potential changes of the use of LIBOR as a benchmark could affect our profitability, earnings and cash flow.
We may be unable to comply with the covenants contained in our loan agreements.
Failure to comply with the U.S. Foreign Corrupt Practices Act could result in fines, criminal penalties and an adverse effect on our business.
As an exempted company incorporated under Bermuda law, our operations are subject to economic substance requirements.
Incurrence of expenses or liabilities may reduce or eliminate cash distributions.
We may not be able to finance our future capital commitments.
We may be required to record a further goodwill impairment loss, which could have a material adverse effect on our results of operations and financial position.
The aging of our fleet may result in increased operating costs in the future, which could adversely affect our earnings.
If we do not set aside funds and are unable to borrow or raise funds for vessel replacement at the end of a vessel's useful life our revenue will decline.
Hemen may be able to exercise significant influence over us and may have conflicts of interest with our other shareholders.
Certain of our directors, executive officers and major shareholders may have interests that are different from the interests of our other shareholders.
We may be unable to attract and retain key management personnel in the tanker industry.
If labor interruptions are not resolved in a timely manner, they could have a material adverse effect on our business
We may not have adequate insurance to compensate us if our vessels are damaged or lost.
We may be subject to calls because we obtain some of our insurance through protection and indemnity associations.
6


Because our offices and most of our assets are outside the United States, you may not be able to bring suit against us, or enforce a judgment obtained against us in the United States.
United States tax authorities could treat the Company as a "passive foreign investment company," which could have adverse United States federal income tax consequences to United States shareholders.
We may not qualify for an exemption under Section 883 of the Code, and may therefore have to pay tax on United States source income.
The price of our ordinary shares historically has been volatile.
Future sales of our ordinary shares could have an adverse effect on our share price.

Risks Related to Our Industry

If the tanker industry, which historically has been cyclical and volatile, declines in the future, our revenues, earnings and available cash flow may be adversely affected.

Historically, the tanker industry has been highly cyclical, with volatility in profitability, charter rates and asset values resulting from changes in the supply of, and demand for, tanker capacity and changes in the supply of and demand for oil and oil products. These factors may adversely affect the rates payable and the amounts we receive in respect of our vessels. Our ability to re-charter our vessels on the expiration or termination of their current spot and time charters and the charter rates payable under any renewal or replacement charters will depend upon, among other things, economic conditions in the tanker market and we cannot guarantee that any renewal or replacement charters we enter into will be sufficient to allow us to operate our vessels profitably. Our revenues are affected by our strategy to employ some of our vessels on time charters, which have a fixed income for a pre-set period of time as opposed to trading ships in the spot market where their earnings are heavily impacted by the supply and demand balance. If we are not able to obtain new contracts in direct continuation with existing charters or for newly acquired vessels, or if new contracts are entered into at charter rates substantially below the existing charter rates or on terms otherwise less favorable compared to existing contracts terms, our revenues and profitability could be adversely affected.

The factors that influence demand for tanker capacity include:

supply and demand for oil and oil products;
global and regional economic and political conditions, including developments in international trade, national oil reserves policies, fluctuations in industrial and agricultural production;
national policies regarding strategic oil inventories (including if strategic reserves are set at a lower level in the future
as oil decreases in the energy mix);
regional availability of refining capacity and inventories compared to geographies of oil production regions;
changes in seaborne and other transportation patterns, including changes in the distances over which tanker cargoes are transported by sea;
increases in the production of oil in areas linked by pipelines to consuming areas, the extension of existing, or the development of new, pipeline systems in markets we may serve, or the conversion of existing non-oil pipelines to oil pipelines in those markets;
currency exchange rates, most importantly versus USD;
weather and acts of God and natural disasters;
competition from alternative sources of energy and from other shipping companies and other modes of transport;
international sanctions, embargoes, import and export restrictions, nationalizations, piracy, terrorist attacks and armed conflicts;
legal and regulatory changes including regulations adopted by supranational authorities and/or industry bodies, such as safety and environmental regulations and requirements by major oil companies; and
diseases and viruses, affecting livestock and humans, including pandemics, such as the COVID-19 outbreak.

The factors that influence the supply of tanker capacity include:

current and expected purchase orders for tankers;
the number of tanker newbuilding deliveries;
the number of shipyards and ability of shipyards to deliver vessels;
any potential delays in the delivery of newbuilding vessels and/or cancellations of newbuilding orders;
availability of financing for new vessels and shipping activity;
the scrapping rate of older tankers;
the number of vessel casualties;
7


technological advances in tanker design and capacity;
tanker freight rates, which are affected by factors that may affect the rate of newbuilding, swapping and laying up of tankers;
port and canal congestion;
slow-steaming of vessels;
price of steel and vessel equipment;
the number of conversions of tankers to other uses or conversions of other vessels to tankers;
the number of tankers that are out of service, namely those that are laid-up, dry docked, awaiting repairs or otherwise not available for hire;
changes in government and industry environmental and other regulations that may limit the useful lives of tankers; and
changes in national or international regulations that may effectively cause reductions in the carrying capacity of vessels or early obsolescence of tonnage.

In addition to the prevailing and anticipated freight rates, factors that affect the rate of newbuilding, scrapping and laying-up include newbuilding prices, secondhand vessel values in relation to scrap prices, costs of bunkers and other operating costs, costs associated with classification society surveys, normal maintenance costs, insurance coverage costs, and the efficiency and age profile of the existing tanker fleet. The factors affecting the supply and demand for tankers have been volatile and are outside of our control, and the nature, timing and degree of changes in industry conditions are unpredictable, including those discussed above. Market conditions were volatile in 2020 and continued volatility may reduce demand for transportation of oil over longer distances and increase the supply of tankers to carry that oil, which may have a material adverse effect on our business, financial condition, results of operations, cash flows, ability to pay dividends and existing contractual obligations.

Any decrease in shipments of crude oil may adversely affect our financial performance.

The demand for our oil tankers derives primarily from demand for Arabian Gulf, West African, North Sea, Caribbean, Russian and US Shale crude oil, which, in turn, primarily depends on the economies of the world's industrial countries and competition from alternative energy sources. Any decrease in shipments of crude oil or change in trade patterns from the above mentioned geographical areas would have a material adverse effect on our financial performance. Among the factors which could lead to such a decrease are:

increased crude oil production from other areas;
increased refining capacity in the Arabian Gulf or West Africa;
increased use of existing and future crude oil pipelines in the Arabian Gulf or West Africa;
a decision by oil-producing nations to increase their crude oil prices or to further decrease or limit their crude oil production;
armed conflict in the Arabian Gulf and West Africa and political or other factors; and
the development, availability and the costs of nuclear power, natural gas, coal and other alternative sources of energy.

In addition, volatile economic conditions affecting world economies may result in reduced consumption of oil products and a decreased demand for our vessels and lower charter rates, which could have a material adverse effect on our earnings and our ability to pay dividends.

An over-supply of tanker capacity may lead to reductions in charter rates, vessel values and profitability.

In recent years, shipyards have produced a large number of new tankers. If the capacity of new vessels delivered exceeds the capacity of tankers being scrapped and converted to non-trading tankers, tanker capacity will increase. If the supply of tanker capacity increases and the demand for tanker capacity does not increase correspondingly, charter rates could materially decline. A reduction in charter rates and the value of our vessels may have a material adverse effect on our results of operations, our ability to pay dividends and our compliance with current or future covenants in any of our agreements.

The instability of the Euro or the inability of countries to refinance their debts could have a material adverse effect on our revenue, profitability and financial position.

As a result of the credit crisis in Europe, in particular in Greece, Italy, Ireland, Portugal and Spain, the European Commission created the European Financial Stability Facility, or the EFSF, and the European Financial Stability Mechanism, or the EFSM, to provide funding to Eurozone countries in financial difficulties that seek such support. In March 2011, the European Council agreed on the need for Eurozone countries to establish a permanent stability mechanism, the European Stability Mechanism, or the ESM, which was activated by mutual agreement, to assume the role of the EFSF and the EFSM in providing external
8


financial assistance to Eurozone countries entered into force in May 2013. Despite these measures, and certainly against the background of the COVID-19 outbreak, concerns persist regarding the debt burden of certain Eurozone countries and their ability to meet future financial obligations and the overall stability of the Euro. An extended period of adverse development in the outlook for European countries could still reduce the overall demand for oil and thus for our services. These potential developments, or market perceptions concerning these and related issues, could affect our financial position, results of operations and cash flow.

A shift in consumer demand from oil towards other energy sources or changes to trade patterns for crude oil or refined oil products may have a material adverse effect on our business.

A significant portion of our earnings are related to the oil industry and our lack of diversification will potentially affect the demand for our vessels. We rely almost exclusively on the cash flows generated from charters for our vessels that operate in the tanker sector of the shipping industry. Due to our lack of diversification, adverse developments in the tanker shipping industry have a significantly greater impact on our financial condition and results of operations than if we maintained more diverse assets or lines of business. Adverse developments in the tanker business could therefore reduce our ability to meet our payment obligations and our profitability.

“Peak oil” is the year when the maximum rate of extraction of oil is reached. Recent forecasts of “peak oil” range from 2019 to the 2040s, depending on economics and how governments respond to global warming. Irrespective of “peak oil”, the continuing shift in consumer demand from oil towards other energy resources such as wind energy, solar energy, hydrogen energy or nuclear energy, which shift appears to be accelerating as a result of the COVID-19 situation, as well shift in government commitments and support for energy transition programs, may have a material adverse effect on our future performance, results of operations, cash flows and financial position.

Seaborne trading and distribution patterns are primarily influenced by the relative advantage of the various sources of production, locations of consumption, pricing differentials and seasonality. Changes to the trade patterns of crude oil or refined oil products may have a significant negative or positive impact on the ton-mile and therefore the demand for our tankers. This could have a material adverse effect on our future performance, results of operations, cash flows and financial position.

The smuggling of drugs or other contraband onto our vessels may lead to governmental claims against us.

There is a risk that our vessels will call at ports where smugglers may attempt to hide drugs and other contraband on vessels, with or without the knowledge of crew members. To the extent our vessels are found with contraband, whether inside or attached to the hull of our vessel and whether with or without the knowledge of any of our crew, we may face governmental or other regulatory claims which could have an adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.

Technological innovation and quality and efficiency requirements from our customers could reduce our charterhire income and the value of our vessels.

Our customers, in particular those in the oil industry, have a high and increasing focus on quality and compliance standards with their suppliers across the entire supply chain, including the shipping and transportation segment. Our continued compliance with these standards and quality requirements is vital for our operations. The charterhire rates and the value and operational life of a vessel are determined by a number of factors including the vessel’s efficiency, operational flexibility and physical life. Efficiency includes speed, fuel economy and the ability to load and discharge cargo quickly. Flexibility includes the ability to enter harbors, utilize related docking facilities and pass through canals and straits. The length of a vessel’s physical life is related to its original design and construction, its maintenance and the impact of the stress of operations. If new tankers are built that are more efficient or more flexible or have longer physical lives than our vessels or utilize more environmentally sustainable propulsion technologies, competition from these more technologically advanced vessels could adversely affect the amount of charterhire payments we receive for our vessels and the resale value of our vessels could significantly decrease. This could have an adverse effect on our results of operations, cash flows, financial condition and ability to pay dividends.

We rely on our and our ship managers' information systems to conduct our business, and failure to protect these systems against security breaches could adversely affect our business and results of operations, including on our vessels. Additionally, if these systems fail or become unavailable for any significant period of time, our business could be harmed.

We rely on our computer systems and network infrastructure across our operations, including on our vessels. The safety and security of our vessels and efficient operation of our business, including processing, transmitting and storing electronic and
9


financial information, are dependent on computer hardware and software systems, which are increasingly vulnerable to security breaches and other disruptions. Any significant interruption or failure of our information systems or any significant breach of security could adversely affect our business and results of operations.

Our vessels rely on information systems for a significant part of their operations, including navigation, provision of services, propulsion, machinery management, power control, communications and cargo management. We have in place safety and security measures on our vessels and onshore operations to secure our vessels against cyber-security attacks and any disruption to their information systems. However, these measures and technology may not adequately prevent security breaches despite our continuous efforts to upgrade and address the latest known threats. A disruption to the information system of any of our vessels could lead to, among other things, wrong routing, collision, grounding and propulsion failure.

Beyond our vessels, we rely on industry accepted security measures and technology to securely maintain confidential and proprietary information maintained on our information systems. However, these measures and technology may not adequately prevent security breaches. The technology and other controls and processes designed to secure our confidential and proprietary information, detect and remedy any unauthorized access to that information were designed to obtain reasonable, but not absolute, assurance that such information is secure and that any unauthorized access is identified and addressed appropriately. Such controls may in the future fail to prevent or detect, unauthorized access to our confidential and proprietary information. In addition, the foregoing events could result in violations of applicable privacy and other laws. If confidential information is inappropriately accessed and used by a third party or an employee for illegal purposes, we may be responsible to the affected individuals for any losses they may have incurred as a result of misappropriation. In such an instance, we may also be subject to regulatory action, investigation or liable to a governmental authority for fines or penalties associated with a lapse in the integrity and security of our information systems.

Our operations, including our vessels, and business administration could be targeted by individuals or groups seeking to sabotage or disrupt such systems and networks, or to steal data, and these systems may be damaged, shutdown or cease to function properly (whether by planned upgrades, force majeure, telecommunications failures, hardware or software break-ins or viruses, other cyber-security incidents or otherwise). For example, the information systems of our vessels may be subject to threats from hostile cyber or physical attacks, phishing attacks, human errors of omission or commission, structural failures of resources we control, including hardware and software, and accidents and other failures beyond our control. The threats to our information systems are constantly evolving, and have become increasingly complex and sophisticated. Furthermore, such threats change frequently and are often not recognized or detected until after they have been launched, and therefore, we may be unable to anticipate these threats and may not become aware in a timely manner of such a security breach, which could exacerbate any damage we experience.

We may be required to expend significant capital and other resources to protect against and remedy any potential or existing security breaches and their consequences. A cyber-attack could result in significant expenses to investigate and repair security breaches or system damages and could lead to litigation, fines, other remedial action, heightened regulatory scrutiny and diminished customer confidence. In addition, our remediation efforts may not be successful and we may not have adequate insurance to cover these losses.

The unavailability of the information systems or the failure of these systems to perform as anticipated for any reason could disrupt our business and could have a material adverse effect on our business, results of operations, cash flows and financial condition.

Increasing scrutiny and changing expectations from investors, lenders and other market participants with respect to our ESG policies may impose additional costs on us or expose us to additional risks.

Companies across all industries are facing increasing scrutiny relating to their ESG policies. Investor advocacy groups, certain institutional investors, investment funds, lenders and other market participants are increasingly focused on ESG practices and in recent years have placed increasing importance on the implications and social cost of their investments. The increased focus and activism related to ESG and similar matters may hinder access to capital, as investors and lenders may decide to reallocate capital or to not commit capital as a result of their assessment of a company’s ESG practices. Companies which do not adapt to or comply with investor, lender or other industry shareholder expectations and standards, which are evolving, or which are perceived to have not responded appropriately to the growing concern for ESG issues, regardless of whether there is a legal requirement to do so, may suffer from reputational damage and the business, financial condition, and/or stock price of such a company could be materially and adversely affected.

10


We may face increasing pressures from investors, lenders and other market participants, who are increasingly focused on climate change, to prioritize sustainable energy practices, reduce our carbon footprint and promote sustainability. As a result, we may be required to implement more stringent ESG procedures or standards so that our existing and future investors and lenders remain invested in us and make further investments in us, especially given the highly focused and specific trade of crude oil transportation in which we are engaged. If we do not meet these standards, our business and/or our ability to access capital could be harmed.

Additionally, certain investors and lenders may exclude oil transport companies, such as us, from their investing portfolios altogether due to environmental, social and governance factors.  These limitations in both the debt and equity capital markets may affect our ability to grow as our plans for growth may include accessing the equity and debt capital markets.  If those markets are unavailable, or if we are unable to access alternative means of financing on acceptable terms, or at all, we may be unable to implement our business strategy, which would have a material adverse effect on our financial condition and results of operations and impair our ability to service our indebtedness. Further, it is likely that we will incur additional costs and require additional resources to monitor, report and comply with wide ranging ESG requirements.  The occurrence of any of the foregoing could have a material adverse effect on our business and financial condition.

Risks Related to Shipping Generally

Risks involved with operating ocean-going vessels could result in the loss of life or harm to our seafarers, environmental accidents or affect our business and reputation, which could have a material adverse effect on our results of operations and financial condition.

The operation of an ocean-going vessel carries inherent risks. These risks include the possibility of:

loss of life or harm to seafarers;
a marine disaster;
environmental accidents;
cargo and property losses or damage; and
business interruptions caused by mechanical failure, human error, war, terrorism, piracy, political action in various countries, labor strikes, or adverse weather conditions.

Any of these circumstances or events could increase our costs or lower our revenues. The involvement of our vessels in an accident or oil spill or other environmental disaster may harm our reputation as a safe and reliable tanker operator. In June 2019 an explosion occurred on the Front Altair shortly after the vessel had passed through the Strait of Hormuz in the Persian Gulf. The 23 crew members onboard the Front Altair were unharmed after being rescued by a cargo vessel. The Company deployed emergency responders in a timely manner, who extinguished the fire on the vessel within hours of the incident and took precautions to limit any pollution. The vessel remained afloat and was successfully towed for repairs which were completed in November 2019. We procure insurance for our fleet against those risks that we believe the shipping industry commonly insures, which include hull and machinery insurance, protection and indemnity insurance covering environmental damage and pollution insurance, freight, demurrage and defense insurance which provides coverage to shipowners and operators for legal and other costs incurred in relation to disputes that are uninsured and war risk insurance. The total cost of repairs and related services to the Company in the year ended December 31, 2019 in connection with the Front Altair incident was $2.3 million, excluding amounts paid directly by our insurers, all of which has been recovered under our insurance policies. In addition the Company has recovered $3.7 million under its loss of hire insurance. This incident did not have a material impact on the Company's results of operations or cash flows.

If economic conditions throughout the world deteriorate or become more volatile, it could impede our operations.

There has historically been a strong link between the development of the world economy and demand for energy, including oil and gas. An extended period of deterioration in the outlook for the world economy could reduce the overall demand for oil and gas and for our services. While market conditions have improved, continued adverse and developing economic and governmental factors, together with the concurrent volatility in charter rates and vessel values, may have a material adverse effect on our results of operations, financial condition and cash flows, and could cause the price of our ordinary shares to decline.

Our ability to secure funding is dependent on well-functioning capital markets and on an appetite to provide funding to the shipping industry. At present, capital markets are well-functioning and funding is available for the shipping industry. However, if global economic conditions worsen or lenders for any reason decide not to provide debt financing to us, we may not be able to secure additional financing to the extent required, on acceptable terms or at all. If additional financing is not available when
11


needed, or is available only on unfavorable terms, we may be unable to meet our obligations as they come due, or we may be unable to enhance our existing business, complete additional vessel acquisitions or otherwise take advantage of business opportunities as they arise. Relatedly, certain banks have reduced or ceased lending for oil cargoes, which could have an adverse economic impact on our customers.

In Europe, large sovereign debts and fiscal deficits, low growth prospects and high unemployment rates in a number of countries have contributed to the rise of Eurosceptic parties, which would like their countries to leave the Euro. The exit of the United Kingdom, or the U.K., from the European Union, or the EU, as described more fully below and potential new trade policies in the United States further increase the risk of additional trade protectionism.

In addition, concerns regarding the possibility of sovereign debt defaults by European Union member countries have in the past disrupted financial markets throughout the world, and may lead to weaker consumer demand in the European Union, the United States, and other parts of the world. The possibility of sovereign debt defaults by European Union member countries and the possibility of market reforms to float the Chinese renminbi, either of which development could weaken the Euro against the Chinese renminbi, could adversely affect consumer demand in the European Union. Moreover, the revaluation of the renminbi may negatively impact the United States' demand for imported goods, many of which are shipped from China. Future weak economic conditions could have a material adverse effect on our business, results of operations and financial condition and our ability to pay dividends to our stockholders.

Continued economic slowdown in the Asia Pacific region, especially in China, may exacerbate the effect on us of the recent slowdown in the rest of the world. In recent history, China has had one of the world's fastest growing economies in terms of gross domestic product, or GDP, which had a significant impact on shipping demand. The growth rate of China's GDP for the year ended December 31, 2020, however, is estimated to be around 2.3%, down from the growth rate of 6.0% for the year ended December 31, 2019. Following the emergence of the COVID-19, China experienced reduced industrial activity with temporary closures of factories and other facilities, labor shortages and restrictions on travel. As such, China and other countries in the Asia Pacific region may continue to experience slowed or even negative economic growth in the future. Our financial condition and results of operations, as well as our future prospects, would likely be impeded by a continuing or worsening economic downturn in any of these countries.

In addition, President Xi Jinping committed his country to achieving carbon neutrality by 2060 at the UN General Assembly despite that carbon emissions are currently a prominent part of China’s economic and industrial structure as it relies heavily on nonrenewable energy sources, generally lacks of energy efficiency, and has a rapidly growing energy demand. Depending on how China attempts to achieve carbon neutrality by 2060, including through the reduction in the use of oil, an overall increase in the use of nonrenewable energy as part of the energy consumption mix and through other means, any reduction in the demand for oil and oil products and our tanker vessels could have a material adverse effect on our business, cash flows and results of operations.

Further, governments may turn to trade barriers to protect their domestic industries against foreign imports, thereby depressing shipping demand. In particular, leaders in the United States have indicated that the United States may seek to implement more protective trade measures. The results of the 2020 presidential election in the United States have created significant uncertainty about the future relationship between the United States, China and other exporting countries, including with respect to trade policies, treaties, government regulations and tariffs. For example, in March 2018, former President Trump announced tariffs on imported steel and aluminum into the United States that could have a negative impact on international trade generally and in January 2019, the United States announced sanctions against Venezuela, which may have an effect on its oil output and in turn affect global oil supply. However, it is not yet clear how the United States administration under President Biden may deviate from the former administration’s protectionist foreign trade policies. Protectionist developments, or the perception that they may occur, may have a material adverse effect on global economic conditions, and may significantly reduce global trade. Moreover, increasing trade protectionism may cause an increase in (a) the cost of goods exported from regions globally, (b) the length of time required to transport goods and (c) the risks associated with exporting goods. Such increases may significantly affect the quantity of goods to be shipped, shipping time schedules, voyage costs and other associated costs, which could have an adverse impact on the shipping industry, and therefore, our charterers and their business, operating results and financial condition and could thereby affect their ability to make timely charter hire payments to us and to renew and increase the number of their time charters with us. This could have a material adverse effect on our business, results of operations, financial condition and our ability to pay any cash distributions to our shareholders.

We face risks attendant to changes in economic environments, changes in interest rates and instability in the banking and securities markets around the world, among other factors. We cannot predict how long the current market conditions will last. These recent and developing economic and governmental factors may have a material adverse effect on our results of operations and financial condition and may cause the price of our common shares to decline.
12



Prospective investors should consider the potential impact, uncertainty and risk associated with the development in the wider global economy. Further economic downturn in any of these countries could have a material effect on our future performance, results of operations, cash flows and financial position.

The U.K.’s withdrawal from the European Union may have a negative effect on global economic conditions, financial markets and our business.

On June 23, 2016, in a referendum vote commonly referred to as “Brexit,” a majority of voters in the U.K. voted to exit the European Union. Since then, the U.K. and the EU have negotiated the terms of a withdrawal agreement, which was approved in October 2019 and ratified in January 2020. The U.K. formally exited the European Union on January 31, 2020, although a transition period remained in place until December 2020 during which the U.K. was subject to the rules and regulations of the EU while continuing to negotiate the parties’ relationship going forward, including trade deals. It is unclear what long-term economic, financial, trade and legal implications the withdrawal of the U.K. from the European Union would have, and how such withdrawal would affect our business. In addition, Brexit may lead other European Union member countries to consider referendums regarding their European Union membership. Any of these events, along with any political, economic and regulatory changes that may occur, could cause political and economic uncertainty and harm our business and financial results.

Brexit contributes to considerable uncertainty concerning the current and future economic environment. Brexit could adversely affect European or worldwide political, regulatory, economic or market conditions and could contribute to instability in global political institutions, regulatory agencies and financial markets.

Acts of piracy on ocean-going vessels could adversely affect our business.

Acts of piracy have historically affected ocean-going vessels trading in regions of the world such as the South China Sea, the Indian Ocean and in the Gulf of Aden off the coast of Somalia. Sea piracy incidents continue to occur, particularly in the Gulf of Aden and increasingly in the Gulf of Guinea, with tankers particularly vulnerable to such attacks. Acts of piracy could result in harm or danger to the crews that man our tankers. In addition, these piracy attacks occur in regions in which our vessels are deployed that insurers characterize as "war risk" zones or by the Joint War Committee as "war and strikes" listed areas, premiums payable for such coverage could increase significantly and such insurance coverage may be more difficult to obtain. In addition, crew costs, including costs which may be incurred to the extent we employ on-board security guards, could increase in such circumstances. We may not be adequately insured to cover losses from these incidents, which could have a material adverse effect on us. In addition, detention hijacking as a result of an act of piracy against our vessels, or an increase in cost, or unavailability of insurance for our vessels, could have a material adverse impact on our business, results of operations, cash flows, financial condition and ability to pay dividends and may result in loss of revenues, increased costs and decreased cash flows to our customers, which could impair their ability to make payments to us under our charters.

Political instability, terrorist or other attacks, war, international hostilities and public health threats can affect the tanker industry, which may adversely affect our business.

We conduct most of our operations outside of the United States, and our business, results of operations, cash flows, financial condition and available cash may be adversely affected by changing economic, political and government conditions in the countries and regions where our vessels are employed or registered. Moreover, we operate in a sector of the economy that is likely to be adversely impacted by the effects of political conflicts, including the current political instability in the Middle East and the South China Sea region and other geographic countries and areas, geopolitical events, terrorist or other attacks, and war (or threatened war) or international hostilities, such as those between the United States and North Korea.

Terrorist attacks, the frequent incidents of terrorism in the Middle East, and the continuing response of the United States and others to these attacks, as well as the threat of future terrorist attacks around the world, continues to cause uncertainty in the world's financial markets and may affect our business, operating results and financial condition. Continuing conflicts and recent developments in the Middle East, including the armed conflicts in Syria and Yemen, and increased tensions between the U.S. and Iran, as well as the presence of U.S. or other armed forces in Iraq, Syria, Afghanistan and various other regions, may lead to additional acts of terrorism and armed conflict around the world, which may contribute to further economic instability in the global financial markets. As a result of the above, insurers have increased premiums and reduced or restricted coverage for losses caused by terrorist acts generally. These uncertainties could also adversely affect our ability to obtain additional financing on terms acceptable to us or at all. Any of these occurrences could have a material adverse impact on our operating results, revenues and costs. Additionally, Brexit, or similar events in other jurisdictions, could impact global markets, including
13


foreign exchange and securities markets; any resulting changes in currency exchange rates, tariffs, treaties and other regulatory matters could in turn adversely impact our business and operations.

In January 2020, in response to certain perceived terrorist activity, the United States launched an airstrike in Baghdad that killed a high-ranking Iranian general, increasing hostilities between the U.S. and Iran. This attack or further escalations between the U.S. and Iran that may follow, could result in retaliation from Iran that could potentially affect the shipping industry, through increased attacks on vessels in the Strait of Hormuz (which already experienced an increased number of attacks on and seizures of vessels in recent years), or by potentially closing off or limiting access to the Strait of Hormuz, where a significant portion of the world's oil supply passes through. Any restriction on access to the Strait of Hormuz, or increased attacks on vessels in the area, could negatively impact our earnings, cash flow and results of operations.

In the past, political instability has also resulted in attacks on vessels, mining of waterways and other efforts to disrupt international shipping, particularly in the Arabian Gulf region. Acts of terrorism and piracy have also affected vessels trading in regions such as the South China Sea and the Gulf of Aden off the coast of Somalia. Any of these occurrences could have a material adverse impact on our future performance, results of operations, cash flows and financial position.

In addition, public health threats, such as COVID-19, influenza and other highly communicable diseases or viruses, outbreaks of which have from time to time occurred in various parts of the world in which we operate, including China, could adversely impact our operations, including timely rotation of our crews, and the operations of our customers. Delayed rotation of crew may adversely affect the mental and physical health of our crew and the safe operation of our vessels as a consequence.

Our financial results and operations may be adversely affected by the ongoing outbreak of COVID-19, and related governmental responses thereto.

Since the beginning of calendar year 2020, the outbreak of COVID-19 that originated in China in late 2019 and that has spread to most nations around the globe has resulted in numerous actions taken by governments and governmental agencies in an attempt to mitigate the spread of the virus, including travel bans, quarantines, and other emergency public health measures, and a number of countries implemented lockdown measures. These measures have resulted in a significant reduction in global economic activity and extreme volatility in the global financial markets. If the COVID-19 pandemic continues on a prolonged basis or becomes more severe, the adverse impact on the global economy and the rate environment for tankers and other cargo vessels may deteriorate further and our operations and cash flows may be negatively impacted. Relatively weak global economic conditions during periods of volatility have and may continue to have a number of adverse consequences for tankers and other shipping sectors, including, among other things:

low charter rates, particularly for vessels employed on short-term time charters or in the spot market;

decreases in the market value of tankers and limited second-hand market for the sale of vessels;

limited financing for vessels;

loan covenant defaults; and

declaration of bankruptcy by certain vessel operators, vessel owners, shipyards and charterers.

The COVID-19 pandemic and measures to contain its spread have negatively impacted regional and global economies and trade patterns in markets in which we operate, the way we operate our business, and the businesses of our charterers and suppliers. These negative impacts could continue or worsen, even after the pandemic itself diminishes or ends. Companies, including us, have also taken precautions, such as requiring employees to work remotely and imposing travel restrictions, while some other businesses have been required to close entirely. Moreover, we face significant risks to our personnel and operations due to the COVID-19 pandemic. Our crews face risk of exposure to COVID-19 as a result of travel to ports in which cases of COVID-19 have been reported. Our shore-based personnel likewise face risk of such exposure, as we maintain offices in areas that have been impacted by the spread of COVID-19.

Measures against COVID-19 in a number of countries have restricted crew rotations on our vessels, which may continue or become more severe. As a result, in 2020, we experienced and may continue to experience disruptions to our normal vessel operations caused by increased deviation time associated with positioning our vessels to countries in which we can undertake a crew rotation in compliance with such measures. Delays in crew rotations have led to issues with crew fatigue and may continue to do so, which may result in delays or other operational issues. We have had and expect to continue to have increased expenses due to incremental fuel consumption and days in which our vessels are unable to earn revenue in order to deviate to certain ports on which we would ordinarily not call during a typical voyage. We may also incur additional expenses associated
14


with testing, personal protective equipment, quarantines, and travel expenses such as airfare costs in order to perform crew rotations in the current environment. Delays in crew rotations may also cause us to incur additional costs related to crew bonuses paid to retain the existing crew members on board and may continue to do so.

The COVID-19 pandemic and measures in place against the spread of the virus have led to a highly difficult environment in which to dispose of vessels given difficulty to physically inspect vessels. The impact of COVID-19 has also resulted in reduced industrial activity globally, with temporary closures of factories and other facilities, labor shortages and restrictions on travel. We believe these disruptions along with other factors, including lower demand for some of the cargoes we carry, have contributed to lower tanker rates in the fourth quarter of 2020.

Epidemics may also affect personnel operating payment systems through which we receive revenues from the chartering of our vessels or pay for our expenses, resulting in delays in payments. Organizations across industries, including ours, are rightly focusing on their employees' well-being, whilst making sure that their operations continue undisrupted and at the same time, adapting to the new ways of operating. As such employees are encouraged or even required to operate remotely which could increase the risk of cyber security attacks.

While it is still too early to fully assess the overall impact that COVID-19 will have on our financial condition and operations and on the tanker industry in general, we assess that the tanker charter rates have been reduced significantly as a result of COVID-19 after an initial increase in rates at the start of 2020 and that the shipping industry in general and our Company specifically are likely to continue to be exposed to volatility in the near term.

Further, containment measures and quarantine restrictions adopted by many countries worldwide have caused significant impact on our ability to embark and disembark crew members and on our seafarers themselves. As a result, since the outbreak of COVID-19 and as of the date of this report, we have encountered certain prolonged delays and surrounding complexities in embarking and disembarking crew onto our ships which further resulted in increased operational costs and decreased revenues by reason of off-hires associated with crew rotation and related logistical complications associated with supplying our vessels with spares or other supplies.

The occurrence or continued occurrence of any of the foregoing events or other epidemics or an increase in the severity or duration of the COVID-19 or other epidemics could have a material adverse effect on our business, results of operations, cash flows, financial condition, value of our vessels, and ability to pay dividends.
Our vessels may call at ports located in countries or territories that are the subject of sanctions or embargoes imposed by the U.S., the European Union, the United Nations or other governments, which could lead to monetary fines or penalties and adversely affect our reputation and the market for our ordinary shares.

While none of our vessels have called on ports located in countries or territories that are the subject of country-wide or territory-wide sanctions and/or embargoes imposed by the U.S. government or other governmental authorities (“Sanctioned Jurisdictions”) in 2020 in violation of applicable sanctions or embargo laws, in the past, certain of our vessels have made port calls in Iran, including in 2018 when six of our vessels made six port calls in total to Iran. Although we intend to maintain compliance with all applicable sanctions and embargo laws, and we endeavor to take precautions reasonably designed to mitigate such risks, it is possible that, in the future, our vessels may call on ports located in Sanctioned Jurisdictions on charterers’ instructions and/or without our consent. If such activities result in a violation of sanctions or embargo laws, we could be subject to monetary fines, penalties, or other sanctions, and our reputation and the market for our ordinary shares could adversely affected.

The U.S. sanctions and embargo laws and regulations vary in their application, as they do not all apply to the same covered persons or proscribe the same activities, and such sanctions and embargo laws and regulations may be amended or expanded over time. Current or future counterparties of ours may be affiliated with persons or entities that are or may be in the future the subject of sanctions imposed by the U.S. government or other governmental authorities. If we determine that such sanctions require us to terminate existing or future contracts to which we, or our subsidiaries, are party or if we are found to be in violation of such applicable sanctions, our results of operations may be adversely affected or we may suffer reputational harm.

Although we believe that we have been in compliance with all applicable sanctions and embargo laws and regulations as of December 31, 2020, and intend to maintain such compliance, there can be no assurance that we will be in compliance in the future, particularly as the scope of certain laws may be unclear and may be subject to changing interpretations. Any such violation could result in fines, penalties or other sanctions that could severely impact our ability to access U.S. capital markets and conduct our business, and could result in some investors deciding, or being required, to divest their interest, or not to invest, in us. In addition, certain institutional investors may have investment policies or restrictions that prevent them from holding
15


securities of companies that have contracts with countries or territories identified by the U.S. government as state sponsors of terrorism. The determination by these investors not to invest in, or to divest from, our common stock may adversely affect the price at which our common stock trades. Moreover, our charterers may violate applicable sanctions and embargo laws and regulations as a result of actions that do not involve us or our vessels, and those violations could in turn negatively affect our reputation. In addition, our reputation and the market for our securities may be adversely affected if we engage in certain other activities, such as entering into charters with individuals or entities that are not controlled by the governments of those countries or territories that are the subject of certain U.S. sanctions or embargo laws, or engaging in operations associated with those countries or territories pursuant to contracts with third parties that are unrelated to those countries or territories or entities controlled by their governments. Investor perception of the value of our common stock may also be adversely affected by the consequences of war, the effects of terrorism, civil unrest and governmental actions in countries or territories that we operate in.

Compliance with safety and other vessel requirements imposed by classification societies may be costly and could reduce our net cash flows and net income.

The hull and machinery of every commercial vessel must be certified as being "in class" by a classification society authorized by its country of registry. The classification society certifies that a vessel is safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of the vessel and the Safety of Life at Sea Convention.
A vessel must undergo annual surveys, intermediate surveys and special surveys. In lieu of a special survey, a vessel's machinery may be placed on a continuous survey cycle, under which the machinery would be surveyed periodically over a five-year period. We expect our vessels to be on special survey cycles for hull inspection and continuous survey cycles for machinery inspection. Every vessel is also required to be drydocked every two and a half to five years for inspection of its underwater parts.

Compliance with the above requirements may result in significant expense. If any vessel does not maintain its class or fails any annual, intermediate or special survey, the vessel will be unable to trade between ports and will be unemployable, which could have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.

We are subject to complex laws and regulations, including environmental laws and regulations that can increase our liability and adversely affect our business, results of operations and financial condition.

Our operations will be subject to numerous laws and regulations in the form of international conventions and treaties, national, state and local laws and national and international regulations in force in the jurisdictions in which our vessels operate or are registered, which can significantly affect the ownership and operation of our vessels. Compliance with such laws and regulations, where applicable, may require installation of costly equipment or operational changes and may affect the resale value or useful lives of our vessels. Compliance with such laws and regulations may require us to obtain certain permits or authorizations prior to commencing operations. Failure to obtain such permits or authorizations could materially impact our business results of operations, financial conditions and ability to pay dividends by delaying or limiting our ability to accept charterers. We may also incur additional costs in order to comply with other existing and future regulatory obligations, including, but not limited to, costs relating to air emissions including greenhouse gases, the management of ballast waters, maintenance and inspection, development and implementation of emergency procedures and insurance coverage or other financial assurance of our ability to address pollution incidents. Additionally, we cannot predict the cost of compliance with any new regulations that may be promulgated as a result of the 2010 BP plc Deepwater Horizon oil spill in the Gulf of Mexico or other similar incidents in the future. These costs could have a material adverse effect on our business, results of operations, cash flows and financial condition. The IMO adopted an International Convention for the Control and Management of Ships' Ballast Water and Sediments, or the BWM Convention, in February 2004. The BWM Convention's implementing regulations call for a phased introduction of mandatory ballast water exchange requirements, to be replaced in time with mandatory concentration limits. The BWM Convention was adopted by the required number of states and entered into force on September 8, 2017. Details about the BWM Convention are further discussed in the Environmental and Other Regulations section.

A failure to comply with applicable laws and regulations may result in administrative and civil penalties, criminal sanctions or the suspension or termination of our operations. Environmental requirements can also affect the resale value or useful lives of our vessels, could require a reduction in cargo capacity, ship modifications or operational changes or restrictions, could lead to decreased availability of insurance coverage for environmental matters or could result in the denial of access to certain jurisdictional waters or ports or detention in certain ports. Under local, national and foreign laws, as well as international treaties and conventions, we could incur material liabilities, including clean-up obligations and natural resource damages liability, in the event that there is a release of hazardous materials from our vessels or otherwise in connection with our operations. Environmental laws often impose strict liability for remediation of spills and releases of oil and hazardous
16


substances, which could subject us to liability, without regard to whether we were negligent or at fault. We could also become subject to personal injury or property damage claims relating to the release of hazardous substances associated with our existing or historic operations. Violations of, or liabilities under, environmental requirements can result in substantial penalties, fines and other sanctions, including, in certain instances, seizure or detention of our vessels, and could harm our reputation with current or potential charterers of our tankers. We will be required to satisfy insurance and financial responsibility requirements for potential oil (including marine fuel) spills and other pollution incidents. Although our technical manager will arrange for insurance to cover our vessels with respect to certain environmental risks, there can be no assurance that such insurance will be sufficient to cover all such risks or that any claims will not have a material adverse effect on our business, financial condition, results of operations and cash flows.

In addition, many environmental requirements are designed to reduce the risk of pollution, such as from oil spills, and our compliance with these requirements could be costly. To comply with these and other regulations, including: (i) the sulfur emission requirements of Annex VI of the International Convention for the Prevention of Marine Pollution from Ships, or “MARPOL”, which instituted a global 0.5% (lowered from 3.5% as of January 1, 2020) sulphur cap on marine fuel consumed by a vessel, unless the vessel is equipped with a scrubber, and (ii) the International Convention for the Control and Management of Ships’ Ballast Water and Sediments of the International Maritime Organization, or “IMO”, which requires vessels to install expensive ballast water treatment systems, we may be required to incur additional costs to meet new maintenance and inspection requirements, develop contingency plans for potential spills, and obtain insurance coverage. The increased demand for low sulphur fuels may increase the costs of fuel for our vessels that do not have scrubbers. Additional conventions, laws and regulations may be adopted that could limit our ability to do business or increase the cost of doing business and which may materially and adversely affect our operations.

Please see “Item 4. Information on the Company—B. Business Overview—Environmental and Other Regulations in the Shipping Industry” for a discussion of the environmental and other regulations applicable to us.

If we fail to comply with international safety regulations, we may be subject to increased liability, which may adversely affect our insurance coverage and may result in a denial of access to, or detention in, certain ports.

The operation of our vessels is affected by the requirements set forth in the IMO's International Safety Management Code, or the ISM Code. The ISM Code requires shipowners, ship managers and bareboat charterers to develop and maintain an extensive "Safety Management System" that includes the adoption of a safety and environmental protection policy setting forth instructions and procedures for safe operation and describing procedures for dealing with emergencies. If we fail to comply with the ISM Code, we may be subject to increased liability, including the invalidation of existing insurance or a decrease of available insurance coverage for our affected vessels and such failure may result in a denial of access to, or detention in, certain ports. The U.S. Coast Guard and European Union authorities enforce compliance with the ISM and International Ship and Port Facility Security Code, or the ISPS Code, and prohibit non-compliant vessels from trading in U.S. and European Union ports. This could have a material adverse effect on our future performance, results of operations, cash flows and financial position. Given that the IMO continues to review and introduce new regulations, it is impossible to predict what additional regulations, if any, may be passed by the IMO and what effect, if any, such regulations might have on our operations.

Because such conventions, laws, and regulations are often revised, we cannot predict the ultimate cost of complying with such conventions, laws and regulations or the impact thereof on the resale prices or useful lives of our vessels. Additional conventions, laws and regulations may be adopted which could limit our ability to do business or increase the cost of our doing business and which may materially adversely affect our operations. We are required by various governmental and quasi-governmental agencies to obtain certain permits, licenses, certificates, and financial assurances with respect to our operations.

Please see “Item 4. Information on the Company—B. Business Overview—Environmental and Other Regulations in the Shipping Industry” for a discussion of the environmental and other regulations applicable to us.

Regulations relating to ballast water discharge may adversely affect our revenues and profitability.

The IMO has imposed updated guidelines for ballast water management systems specifying the maximum amount of viable organisms allowed to be discharged from a vessel’s ballast water. Depending on the date of the IOPP renewal survey, existing vessels constructed before September 8, 2017 must comply with the updated D-2 standard on or after September 8, 2019. For most vessels, compliance with the D-2 standard will involve installing on-board systems to treat ballast water and eliminate unwanted organisms. Ships constructed on or after September 8, 2017 are to comply with the D-2 standards on or after September 8, 2017. As of December 31, 2020, we have 19 vessels that require some upgrading in order to be compliant following their IOPP renewal survey and costs of compliance are estimated to be $1.1 million in total. As of December 31,
17


2020 the Company has incurred $19.0 million of costs in relation to the supply and installation of on-board ballast water treatments systems, or BWTS. As of December 31, 2020 the Company has committed to the purchase of BWTS equipment on a further four vessels with estimated installation costs of $5.6 million.

Furthermore, United States regulations are currently changing. Although the 2013 Vessel General Permit, or VGP program and the U.S. National Invasive Species Act, or NISA, are currently in effect to regulate ballast discharge, exchange and installation, the Vessel Incidental Discharge Act, or VIDA, which was signed into law on December 4, 2018, requires that the EPA develop national standards of performance for approximately 30 discharges, similar to those found in the VGP within two years. On October 26, 2020, the EPA published a Notice of Proposed Rulemaking for Vessel Incidental Discharge National Standards of Performance under VIDA. By approximately 2022, the U.S. Coast Guard must develop corresponding implementation, compliance and enforcement regulations regarding ballast water. The new regulations could require the installation of new equipment, which may cause us to incur substantial costs.

Maritime claimants could arrest one or more of our vessels, which could interrupt our cash flow.

Crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may be entitled to a maritime lien against a vessel for unsatisfied debts, claims or damages. In many jurisdictions, a maritime lien-holder may enforce its lien by "arresting" or "attaching" a vessel through judicial proceedings. The arrest or attachment of one or more of our vessels could result in a significant loss of earnings for the related off-hire period.

In addition, in jurisdictions where the "sister ship" theory of liability applies, such as South Africa, a claimant may arrest the vessel which is subject to the claimant's maritime lien and any "associated" vessel, which is any vessel owned or controlled by the same owner. In countries with "sister ship" liability laws, claims might be asserted against us or any of our vessels for liabilities of other vessels that we own.

Governments could requisition our vessels during a period of war or emergency resulting in a loss of earnings.

A government of a vessel's registry could requisition for title or seize one or more of our vessels. Requisition for title occurs when a government takes control of a vessel and becomes the owner. A government could also requisition one or more of our vessels for hire. Requisition for hire occurs when a government takes control of a vessel and effectively becomes the charterer at dictated charter rates. Generally, requisitions occur during a period of war or emergency. Government requisition of one or more of our vessels could have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.

Risks Related to Our Business

We are dependent on the spot market and any decrease in spot market rates in the future may adversely affect our earnings and our ability to pay dividends.

As of December 31, 2020, 56 of the 64 vessels, which are owned, leased or chartered-in by us, were employed in the spot market or on short-term or variable rate time charters, and we are therefore exposed to fluctuations in spot market charter rates. Historically, the tanker market has been volatile as a result of the many conditions and factors that can affect the price, supply and demand for tanker capacity. The spot market may fluctuate significantly based upon supply and demand of vessels and cargoes. The successful operation of our vessels in the competitive spot market depends upon, among other things, obtaining profitable charters and minimizing, to the extent possible, time spent waiting for charters and time spent in ballast. The spot market is very volatile, and, in the past, there have been periods when spot rates have declined below the operating cost of vessels. If future spot market rates decline, then we may be unable to operate our vessels trading in the spot market profitably, meet our obligations, including payments on indebtedness, or to pay dividends in the future. Furthermore, as charter rates in the spot market are fixed for a single voyage, which may last up to several weeks, during periods in which charter rates are rising, we will generally experience delays in realizing the benefits from such increases.

Our ability to renew the charters on our vessels on the expiration or termination of our current charters, or on vessels that we may acquire in the future, or the charter rates payable under any replacement charters and vessel values will depend upon, among other things, economic conditions in the sectors in which our vessels operate at that time, changes in the supply and demand for vessel capacity and changes in the supply and demand for the seaborne transportation of energy resources.

A drop in spot market rates may provide an incentive for some charterers to default on their charters, and the failure of our counterparties to meet their obligations could cause us to suffer losses or otherwise adversely affect our business.

18


We have entered into various contracts, including charter parties with our customers, which subject us to counterparty risks. The ability of each of the counterparties to perform its obligations under a contract with us or contracts entered into on our behalf will depend on a number of factors that are beyond our control and may include, among other things, general economic conditions, the condition of the shipping sector, the overall financial condition of the counterparty, charter rates received for tankers and the supply and demand for commodities. Should a counterparty fail to honor its obligations under any such contracts, we could sustain significant losses that could have a material adverse effect on our business, financial condition, results of operations, cash flows and ability to pay dividends.

Often, when we enter into a time charter, the rates under that charter are fixed for the term of the charter.  If the spot market rates or short-term time charter rates in the tanker industry become significantly lower than the time charter equivalent rates that some of our charterers are obligated to pay us under our existing charters, the charterers may have incentive to default under that charter or attempt to renegotiate the charter. If our charterers fail to pay their obligations, we would have to attempt to re-charter our vessels, which if re-chartered at lower rates, may affect our ability to operate our vessels profitably and may affect our ability to comply with current or future covenants contained in our loan agreements.

Further, if the charterer of a vessel in our fleet that is used as collateral under any loan agreement enters into default on its charter obligations to us, such default may constitute an event of default under such loan agreement, which could allow the bank to exercise remedies under the loan agreement. If our charterers fail to meet their obligations to us or attempt to renegotiate our charter agreements, we could sustain significant losses which could have a material adverse effect on our business, financial condition, results of operations and cash flows, as well as our ability to pay dividends, if any, in the future, and compliance with current or future covenants in our loan agreements.

Changes in the price of fuel, or bunkers, may adversely affect our profits.

For vessels on voyage charters, fuel oil, or bunkers, is a significant, if not the largest, expense. Changes in the price of fuel may adversely affect our profitability to the extent we have vessels on voyage charters. The price and supply of fuel is unpredictable and fluctuates based on events outside our control, including geopolitical developments, supply and demand for oil and gas, actions by the Organization of Petroleum Exporting Countries, or OPEC, and other oil and gas producers, war and unrest in oil producing countries and regions, regional production patterns and environmental concerns. Any future increase in the cost of fuel may reduce the profitability and competitiveness of our business versus other forms of transportation, such as truck or rail.

The operation of tankers involves certain unique operational risks.

The operation of tankers has unique operational risks associated with the transportation of oil.  An oil spill may cause significant environmental damage, and a catastrophic spill could exceed the insurance coverage available. Compared to other types of vessels, tankers are exposed to a higher risk of damage and loss by fire, whether ignited by a terrorist attack, collision, or other cause, due to the high flammability and high volume of the oil transported in tankers.

Further, our vessels and their cargoes will be at risk of being damaged or lost because of events such as marine disasters, bad weather and other acts of God, business interruptions caused by mechanical failures, grounding, fire, explosions and collisions, human error, war, terrorism, piracy and other circumstances or events. Changing economic, regulatory and political conditions in some countries, including political and military conflicts, have from time to time resulted in attacks on vessels, mining of waterways, piracy, terrorism, labor strikes and boycotts. These hazards may result in death or injury to persons, loss of revenues or property, the payment of ransoms, environmental damage, higher insurance rates, damage to our customer relationships and market disruptions, delay or rerouting.

If our vessels suffer damage, they may need to be repaired at a drydocking facility. The costs of drydock repairs are unpredictable and may be substantial. We may have to pay drydocking costs that our insurance does not cover at all or in full. The loss of revenues while these vessels are being repaired and repositioned, as well as the actual cost of these repairs, may adversely affect our business and financial condition. In addition, space at drydocking facilities is sometimes limited and not all drydocking facilities are conveniently located. We may be unable to find space at a suitable drydocking facility or our vessels may be forced to travel to a drydocking facility that is not conveniently located relative to our vessels' positions. The loss of earnings while these vessels are forced to wait for space or to travel to more distant drydocking facilities may adversely affect our business and financial condition. Further, the total loss of any of our vessels could harm our reputation as a safe and reliable vessel owner and operator.  If we are unable to adequately maintain or safeguard our vessels, we may be unable to prevent any such damage, costs or loss which could negatively impact our business, financial condition, results of operations, cash flows and ability to pay dividends.

19


Because the market value of our vessels may fluctuate significantly, we may incur losses when we sell vessels which may adversely affect our earnings or could cause us to incur impairment charges.

The fair market value of vessels may increase and decrease depending on but not limited to the following factors:

general economic and market conditions affecting the shipping industry;
the balance between supply of and demand for vessels of a certain size;
competition from other shipping companies;
types and sizes of vessels;
the availability of other modes of transportation;
cost of newbuildings;
shipyard capacity;
governmental or other regulations;
age of vessels;
prevailing level of charter rates;
the need to upgrade secondhand and previously owned vessels as a result of charterer requirements; and
technological advances in vessel design or equipment or otherwise.

During the period a vessel is subject to a time charter, we will not be permitted to sell it to take advantage of increases in vessel values without the charterers' agreement. If we sell a vessel at a time when ship prices have fallen, the sale may be at less than the vessel's carrying amount on our financial statements, with the result that we could incur a loss and a reduction in earnings. In addition, if we determine at any time that a vessel's future limited useful life and earnings require us to impair its value on our financial statements, that could result in a charge against our earnings and a reduction of our shareholders' equity. It is possible that the market value of our vessels will decline in the future and could adversely affect our ability to comply with current or future financial covenants contained in our loan agreements or other financing arrangements. Any impairment charges incurred as a result of declines in charter rates and other market deterioration could negatively affect our business, financial condition, operating results or the trading price of our ordinary shares.

Conversely, if vessel values are elevated at a time when we wish to acquire additional vessels, the cost of acquisition may increase and this could adversely affect our business, results of operations, cash flow and financial condition.

We may be unable to successfully compete with other vessel operators for charters, which could adversely affect our results of operations and financial position.

The operation of tankers and transportation of crude and petroleum products is extremely competitive. Through our operating subsidiaries we compete with other vessel owners (including major oil companies as well as independent companies), and, to a lesser extent, owners of other size vessels. The tanker market is highly fragmented. It is possible that we could not obtain suitable employment for our vessels, which could adversely affect our results of operations and financial position.

Our time charters may limit our ability to benefit from any improvement in charter rates, and at the same time, our revenues may be adversely affected if we do not successfully employ our vessels on the expiration of our charters.

As of December 31, 2020, eight of the 64 vessels, which are owned, leased or chartered-in by us, were employed on fixed rate time charter with duration in excess of six months. While our fixed rate time charters generally provide reliable revenues, they also limit the portion of our fleet available for spot market voyages during an upswing in the tanker industry cycle, when spot market voyages might be more profitable. By the same token, we cannot assure you that we will be able to successfully employ our vessels in the future at rates sufficient to allow us to operate our business profitably or meet our obligations. A decline in charter or spot rates or a failure to successfully charter our vessels could have a material adverse effect on our business, financial condition, results of operation and ability to pay dividends.

Purchasing and operating secondhand vessels may result in increased operating costs and vessels off-hire, which could adversely affect our earnings.

Even following a physical inspection of secondhand vessels prior to purchase, we do not have the same knowledge about their condition and cost of any required (or anticipated) repairs that we would have had if these vessels had been built for and operated exclusively by us. Accordingly, we may not discover defects or other problems with such vessels prior to purchase. Any such hidden defects or problems, when detected may be expensive to repair, and if not detected, may result in accidents or other incidents for which we may become liable to third parties. Also, when purchasing previously owned vessels, we typically do not receive the benefit of any builder warranties if the vessels we buy are older than one year.
20



In general, the costs to maintain a vessel in good operating condition increase with the age of the vessel. Older vessels are typically less fuel efficient than more recently constructed vessels due to improvements in engine technology. Governmental regulations, safety and other equipment standards related to the age of vessels may require expenditures for alterations or the addition of new equipment to some of our vessels and may restrict the type of activities in which these vessels may engage. We cannot assure you that, as our vessels age, market conditions will justify those expenditures or enable us to operate our vessels profitably during the remainder of their useful lives. As a result, regulations and standards could have a material adverse effect on our business, financial condition, results of operations, cash flows and ability to pay dividends.

Delays or defaults by the shipyards in the construction of our newbuildings could increase our expenses and diminish our net income and cash flows.

As of December 31, 2020, we had contracts for four newbuilding vessels. One LR2 tanker was delivered in March 2021, one LR2 tanker is expected to be delivered in April 2021, and two LR2 tankers are expected to be delivered in September 2021. Vessel construction projects are generally subject to risks of delay that are inherent in any large construction project, which may be caused by numerous factors, including shortages of equipment, materials or skilled labor, unscheduled delays in the delivery of ordered materials and equipment or shipyard construction, failure of equipment to meet quality and/or performance standards, financial or operating difficulties experienced by equipment vendors or the shipyard, unanticipated actual or purported change orders, inability to obtain required permits or approvals, design or engineering changes and work stoppages and other labor disputes, adverse weather conditions or any other events of force majeure. Significant delays could adversely affect our financial position, results of operations and cash flows. Additionally, failure to complete a project on time may result in the delay of revenue from that vessel, and we will continue to incur costs and expenses related to delayed vessels, such as supervision expense and interest expense for the issued and outstanding debt.

We may be unable to locate suitable vessels for acquisition which would adversely affect our ability to expand our fleet.

Changing market and regulatory conditions may limit the availability of suitable vessels because of customer preferences or because vessels are not or will not be compliant with existing or future rules, regulations and conventions. Additional vessels of the age and quality we desire may not be available for purchase at prices we are prepared to pay or at delivery times acceptable to us, and we may not be able to dispose of vessels at reasonable prices, if at all. If we are unable to purchase and dispose of vessels at reasonable prices in response to changing market and regulatory conditions, our business may be adversely affected.

As we expand our fleet, we may not be able to recruit suitable employees and crew for our vessels which may limit our growth and cause our financial performance to suffer.

As we expand our fleet, we will need to recruit suitable crew, shoreside, administrative and management personnel. We may not be able to continue to hire suitable employees as we expand our fleet of vessels.  If we are unable to recruit suitable employees and crews, we may not be able to provide our services to customers, our growth may be limited and our financial performance may suffer.

Increased inspection procedures, tighter import and export controls and new security regulations could increase costs and cause disruption of our business.

International shipping is subject to security and customs inspection and related procedures in countries of origin, destination and trans-shipment points. Under the MTSA, the U.S. Coast Guard issued regulations requiring the implementation of certain security requirements aboard vessels operating in waters subject to the jurisdiction of the United States. These security procedures can result in delays in the loading, offloading or trans-shipment and the levying of customs duties, fines or other penalties against exporters or importers and, in some cases, carriers. Future changes to the existing security procedures may be implemented that could affect the tanker sector. These changes have the potential to impose additional financial and legal obligations on carriers and, in certain cases, to render the shipment of certain types of goods uneconomical or impractical. These additional costs could reduce the volume of goods shipped, resulting in a decreased demand for vessels and have a negative effect on our business, revenues and customer relations.

Our ability to obtain debt financing may be dependent on the performance of our then-existing charters and the creditworthiness of our charterers.

We may incur additional bank debt in the future to fund, among other things, our general corporate purposes or the expansion of our fleet. The actual or perceived credit quality of our charterers, and any defaults by them, may materially affect our ability to obtain the capital resources required to purchase additional vessels or may significantly increase our costs of obtaining such
21


capital. Our inability to obtain financing at anticipated costs or at all may materially affect our results of operation and our ability to implement our business strategy.

Volatility of LIBOR and potential changes of the use of LIBOR as a benchmark could affect our profitability, earnings and cash flow.

LIBOR is the subject of recent national, international and other regulatory guidance and proposals for reform. These reforms and other pressures may cause LIBOR to be eliminated or to perform differently than in the past. The consequences of these developments cannot be entirely predicted, but could include an increase in the cost of our variable rate indebtedness and obligations.  LIBOR has been volatile in the past, with the spread between LIBOR and the prime lending rate widening significantly at times. Because the interest rates borne by a majority of our outstanding indebtedness fluctuates with changes in LIBOR, significant changes in LIBOR would have a material effect on the amount of interest payable on our debt, which in turn, could have an adverse effect on our financial condition.

Furthermore, the calculation of interest in most financing agreements in our industry has been based on published LIBOR rates. Due in part to uncertainty relating to the LIBOR calculation process in recent years, it is likely that LIBOR will be phased out in the future. As a result, lenders have insisted on provisions that entitle the lenders, in their discretion, to replace published LIBOR as the base for the interest calculation with their cost-of-funds rate. If we are required to agree to such a provision in future financing agreements, our lending costs could increase significantly, which would have an adverse effect on our profitability, earnings and cash flow.  In addition, the banks currently reporting information used to set LIBOR will likely stop such reporting after 2021, when their commitment to reporting information ends. On November 30, 2020, ICE Benchmark Administration, the administrator of LIBOR, with the support of the United States Federal Reserve and the United Kingdom’s Financial Conduct Authority, announced plans to consult on ceasing publication of U.S. Dollar LIBOR on December 31, 2021 for only the one-week and two-month U.S. Dollar LIBOR tenors, and on June 30, 2023 for all other U.S. Dollar LIBOR tenors. The United States Federal Reserve concurrently issued a statement advising banks to stop new U.S. Dollar LIBOR issuances by the end of 2021. Such announcements indicate that the continuation of LIBOR on the current basis will not be guaranteed after 2021. The banks currently reporting information used to set LIBOR will likely stop reporting after 2021, when their commitment to reporting information ends. The Alternative Reference Rate Committee, a committee convened by the Federal Reserve that includes major market participants, has proposed an alternative rate to replace U.S. Dollar LIBOR: the Secured Overnight Financing Rate, or “SOFR.” The impact of such a transition from LIBOR to SOFR could be significant for us.

In order to manage our exposure to interest rate fluctuations, we may from time to time use interest rate derivatives to effectively fix some of our floating rate debt obligations. No assurance can however be given that the use of these derivative instruments, if any, may effectively protect us from adverse interest rate movements. The use of interest rate derivatives may affect our results through mark to market valuation of these derivatives. Also, adverse movements in interest rate derivatives may require us to post cash as collateral, which may impact our free cash position. Interest rate derivatives may also be impacted by the transition from LIBOR to SOFR or other alternative rates.

We may be unable to comply with the covenants contained in our loan agreement, which could affect our ability to conduct our business.

As of December 31, 2020, we had $2,136.0 million of outstanding debt. Certain of our debt facilities require us or our subsidiaries to maintain the following financial covenants; minimum value of vessels, value-adjusted equity, positive working capital, and a certain level of free cash.

Because some of these ratios are dependent on the market value of vessels, should vessel values materially decline in the future, we may be required to take action to reduce our debt, provide additional security or to act in a manner contrary to our business objectives to meet any such financial ratios and satisfy any such financial covenants. Events beyond our control, including changes in the economic and business conditions in the shipping markets in which we operate, may affect our ability to comply with these covenants. We cannot assure you that we will meet these ratios or satisfy our financial or other covenants or that our lenders will waive any failure to do so.

These financial and other covenants may adversely affect our ability to finance future operations or limit our ability to pursue certain business opportunities or take certain corporate actions. The covenants may also restrict our flexibility in planning for changes in our business and the industry and make us more vulnerable to economic downturns and adverse developments. A breach of any of the covenants in, or our inability to maintain the required financial ratios under the credit facilities would prevent us from borrowing additional money under our credit facilities and could result in a default under our credit facilities. If a default occurs under our credit facilities, the lenders could elect to declare the issued and outstanding debt, together with
22


accrued interest and other fees, to be immediately due and payable and foreclose on the collateral securing that debt, which could constitute all or substantially all of our assets.

Failure to comply with the U.S. Foreign Corrupt Practices Act could result in fines, criminal penalties and an adverse effect on our business.

We may operate in a number of countries throughout the world, including countries known to have a reputation for corruption. We are committed to doing business in accordance with applicable anti-corruption laws and have adopted a code of business conduct and ethics which is consistent and in full compliance with the U.S. Foreign Corrupt Practices Act of 1977, or the FCPA. We are subject, however, to the risk that we, our affiliated entities or our or their respective officers, directors, employees and agents may take actions determined to be in violation of such anti-corruption laws, including the FCPA. Any such violation could result in substantial fines, sanctions, civil and/or criminal penalties, curtailment of operations in certain jurisdictions, and might adversely affect our business, results of operations or financial condition. In addition, actual or alleged violations could damage our reputation and ability to do business. Furthermore, detecting, investigating, and resolving actual or alleged violations is expensive and can consume significant time and attention of our senior management. Though we have implemented monitoring procedures and required policies, guidelines, contractual terms and audits, these measures may not prevent or detect failures by our agents or intermediaries regarding compliance.

As an exempted company incorporated under Bermuda law, our operations are subject to economic substance requirements.

The Economic Substance Act 2018 and the Economic Substance Regulations 2018 of Bermuda (the “Economic Substance Act” and the “Economic Substance Regulations”, respectively) became operative on December 31, 2018.  The Economic Substance Act applies to every registered entity in Bermuda that engages in a relevant activity and requires that every such entity shall maintain a substantial economic presence in Bermuda. Relevant activities for the purposes of the Economic Substance Act are banking business, insurance business, fund management business, financing and leasing business, headquarters business, shipping business, distribution and service centre business, intellectual property holding business and conducting business as a holding entity.

The Bermuda Economic Substance Act provides that a registered entity that carries on a relevant activity complies with economic substance requirements if (a) it is directed and managed in Bermuda, (b) its core income-generating activities (as may be prescribed) are undertaken in Bermuda with respect to the relevant activity, (c) it maintains adequate physical presence in Bermuda, (d) it has adequate full time employees in Bermuda with suitable qualifications and (e) it incurs adequate operating expenditure in Bermuda in relation to the relevant activity.

A registered entity that carries on a relevant activity is obliged under the Bermuda Economic Substance Act to file a declaration in the prescribed form (the “Declaration”) with the Registrar of Companies (the “Registrar”) on an annual basis.

If we fail to comply with our obligations under the Bermuda Economic Substance Act or any similar law applicable to us in any other jurisdictions, we could be subject to financial penalties and spontaneous disclosure of information to foreign tax officials in related jurisdictions and may be struck from the register of companies in Bermuda or such other jurisdiction. Any of these actions could have a material adverse effect on our business, financial condition and results of operations.

Risks Related to Our Company

Incurrence of expenses or liabilities may reduce or eliminate cash distributions.

In December 2015, our Board of Directors, or our Board, approved implementing a dividend policy to distribute quarterly dividends to shareholders equal to or close to earnings per share adjusted for non-recurring items. We paid cash dividends of $0.70 and $0.50 per share in relation to the first and second quarters of 2020, respectively. No cash dividends were announced for either of the third or fourth quarters of 2020. The amount and timing of dividends will depend on our earnings, financial condition, cash position, Bermuda law affecting the payment of distributions and other factors. However, we could incur other expenses or contingent liabilities that would reduce or eliminate the cash available for distribution by us as dividends. In addition, the timing and amount of dividends, if any, is at the discretion of our Board. We cannot guarantee that our Board will declare dividends in the future.

We may not be able to finance our future capital commitments.

We cannot guarantee that we will be able to obtain financing at all or on terms acceptable to us. If adequate funds are not available, we may have to reduce expenditures for investments in new and existing projects, which could hinder our growth and
23


prevent us from realizing potential revenues from prior investments which will have a negative impact on our cash flows and results of operations.

We may be required to record a further goodwill impairment loss, which could have a material adverse effect on our results of operations and financial position.

We are required to assess goodwill for impairment at least on an annual basis, or more frequently, if indicators are present or changes in circumstances suggest that impairment may exist. Our future operating performance may be affected by potential impairment charges related to goodwill. The process of evaluating the potential impairment of goodwill is subjective and requires significant judgment at many points during the analysis. A description of our critical accounting policies and estimates can be found in "Item 5. Operating and Financial Review and Prospects".

As of December 31, 2020, we had $112.5 million of goodwill on our balance sheet. Any goodwill impairment loss would negatively impact our results of operations and financial position.

The aging of our fleet may result in increased operating costs in the future, which could adversely affect our earnings.

In general, the cost of maintaining a vessel in good operating condition increases with the age of the vessel. As of December 31, 2020, the average age of our tanker fleet, owned, leased or chartered-in by us, is approximately five years. As our fleet ages, we will incur increased costs. Older vessels are typically less fuel efficient and more costly to maintain than more recently constructed vessels due to improvements in engine technology. Cargo insurance rates also increase with the age of a vessel, making older vessels less desirable to charterers. Governmental regulations, including environmental regulations, safety or other equipment standards related to the age of vessels may require expenditures for alterations, or the addition of new equipment, to our vessels and may restrict the type of activities in which our vessels may engage. As our vessels age, market conditions might not justify those expenditures or enable us to operate our vessels profitably during the remainder of their useful lives.

If we do not set aside funds and are unable to borrow or raise funds for vessel replacement at the end of a vessel's useful life our revenue will decline, which would adversely affect our business, results of operations, financial condition and ability to pay dividends.

If we do not set aside funds and are unable to borrow or raise funds for vessel replacement, we will be unable to replace the vessels in our fleet upon the expiration of their remaining useful lives. Our cash flows and income are dependent on the revenues earned by the chartering of our vessels. If we are unable to replace the vessels in our fleet upon the expiration of their useful lives, our business, results of operations, financial condition and ability to pay dividends would be adversely affected. Any funds set aside for vessel replacement will not be available for dividends.

Hemen may be able to exercise significant influence over us and may have conflicts of interest with our other shareholders.

As of December 31, 2020, Hemen Holding Ltd, or Hemen, a Cyprus holding company, indirectly controlled by trusts established by our Chairman and President, Mr. Fredriksen, for the benefit of his immediate family, owns approximately 40.0% of our outstanding ordinary shares. For so long as Hemen owns a significant percentage of our outstanding ordinary shares, it may be able to exercise significant influence over us and will be able to strongly influence the outcome of shareholder votes on other matters, including the adoption or amendment of provisions in our articles of incorporation or bye-laws and approval of possible mergers, amalgamations, control transactions and other significant corporate transactions. This concentration of ownership may have the effect of delaying, deferring or preventing a change in control, merger, amalgamations, consolidation, takeover or other business combination. This concentration of ownership could also discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which could in turn have an adverse effect on the market price of our ordinary shares. Hemen, may not necessarily act in accordance with the best interests of other shareholders. The interests of Hemen may not coincide with the interests of other holders of our ordinary shares. To the extent that conflicts of interests may arise, Hemen may vote in a manner adverse to us or to you or other holders of our securities.

Certain of our directors, executive officers and major shareholders may have interests that are different from the interests of our other shareholders.

Certain of our directors, executive officers and major shareholders may have interests that are different from, or are in addition to, the interests of our other shareholders. In particular, Hemen Holding Limited, or Hemen, a company indirectly controlled by trusts established by Mr. Fredriksen, our director, for the benefit of his immediate family, and certain of its affiliates, holds 79,145,703, or 40.0%, of our ordinary shares as of March 18, 2021.
24



Hemen is also a principal shareholder of a number of other large publicly traded companies involved in various sectors of the shipping and oil services industries, or the Hemen Related Companies. In addition, certain of our directors, including Mr. Lorentzon, Mr. Fredriksen, Mr. O'Shaughnessy and Mr Svelland, also serve on the boards of one or more of the Hemen Related Companies, including but not limited to, Golden Ocean, SFL Corporation Ltd, or SFL, Archer Limited, Avance Gas Holdings Ltd. and Flex LNG Ltd. There may be real or apparent conflicts of interest with respect to matters affecting Hemen and other Hemen Related Companies whose interests in some circumstances may be adverse to our interests.

We may be unable to attract and retain key management personnel in the tanker industry, which may negatively impact the effectiveness of our management and our results of operation.

Our success depends to a significant extent upon the abilities and efforts of our senior executives and Mr. Fredriksen, our Chairman and President, for the management of our activities and strategic guidance. While we believe that we have an experienced management team, the loss or unavailability of one or more of our senior executives and Mr. Fredriksen, for any extended period of time could have an adverse effect on our business and results of operations.

If labor interruptions are not resolved in a timely manner, they could have a material adverse effect on our business, results of operations, cash flows, financial condition and available cash.

As of December 31, 2020, we employed approximately 84 people in our offices in Bermuda, the United Kingdom, Sinagpore and Norway. We contract with independent ship managers to manage and operate our vessels, including the crewing of those vessels. If not resolved in a timely and cost-effective manner, industrial action or other labor unrest could prevent or hinder our operations from being carried out as we expect and could have a material adverse effect on our business, results of operations, cash flows, financial condition and available cash.

We may not have adequate insurance to compensate us if our vessels are damaged or lost.

We procure insurance for our fleet against those risks that we believe the shipping industry commonly insures. These insurances include hull and machinery insurance; protection and indemnity insurance, which include environmental damage and pollution insurance coverage; freight, demurrage and defense insurance, which provides cover to shipowners and operators for legal and other costs incurred in relation to disputes that are uninsured; and war risk insurance. We can give no assurance that we will be adequately insured against all risks and we cannot guarantee that any particular claim will be paid.

Although we do not anticipate any difficulty in having our technical manager initially obtain insurance policies for us, we cannot assure you that we will be able to obtain adequate insurance coverage for our vessels in the future or renew such policies on the same or commercially reasonable terms, or at all. For example, more stringent environmental regulations have in the past led to increased costs for, and in the future, may result in the lack of availability of, protection and indemnity insurance against risks of environmental damage or pollution. Any uninsured or underinsured loss could harm our business, results of operations, cash flows, financial condition and ability to pay dividends. In addition, our insurance may be voidable by the insurers as a result of certain of our actions, such as our vessels failing to maintain certification with applicable maritime self-regulatory organizations. Further, we cannot assure you that our insurance policies will cover all losses that we incur, or that disputes over insurance claims will not arise with our insurance carriers. Any claims covered by insurance would be subject to deductibles, and since it is possible that a large number of claims may be brought, the aggregate amount of these deductibles could be material. In addition, our insurance policies may be subject to limitations and exclusions, which may increase our costs or lower our revenues, which may have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.

We may be subject to calls because we obtain some of our insurance through protection and indemnity associations.

We may be subject to increased premium payments, or calls, if the value of our claim records, the claim records of our fleet managers, and/or the claim records of other members of the protection and indemnity associations through which we receive insurance coverage for tort liability (including pollution-related liability) significantly exceed projected claims. In addition, our protection and indemnity associations may not have enough resources to cover claims made against them. Our payment of these calls could result in significant expense to us, which could have a material adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.

Because our offices and most of our assets are outside the United States, you may not be able to bring suit against us, or enforce a judgment obtained against us in the United States.

25


Our executive offices, administrative activities and assets are located outside the United States. As a result, it may be more difficult for investors to effect service of process within the United States upon us, or to enforce both in the United States and outside the United States judgments against us in any action, including actions predicated upon the civil liability provisions of the federal securities laws of the United States.

United States tax authorities could treat the Company as a "passive foreign investment company," which could have adverse United States federal income tax consequences to United States shareholders.

A foreign corporation will be treated as a "passive foreign investment company," or PFIC, for United States federal income tax purposes if either (1) at least 75% of its gross income for any taxable year consists of certain types of "passive income" or (2) at least 50% of the average value of the corporation's assets produce or are held for the production of those types of "passive income." For purposes of these tests, "passive income" includes dividends, interest, and gains from the sale or exchange of investment property and rents and royalties other than rents and royalties which are received from unrelated parties in connection with the active conduct of a trade or business. For purposes of these tests, income derived from the performance of services does not constitute "passive income." United States shareholders of a PFIC are subject to a disadvantageous United States federal income tax regime with respect to the distributions they receive from the PFIC and the gain, if any, they derive from the sale or other disposition of their shares in the PFIC.

Based on our current and proposed method of operation, we do not believe that we are, have been or will be a PFIC with respect to any taxable year. In this regard, we intend to treat the gross income we derive or are deemed to derive from our time chartering and voyage chartering activities as services income, rather than rental income. Accordingly, we believe that our income from these activities does not constitute "passive income," and the assets that we own and operate in connection with the production of that income do not constitute assets that produce, or are held for the production of, "passive income."

Although there is no direct legal authority under the PFIC rules addressing our method of operation there is substantial legal authority supporting our position consisting of case law and United States Internal Revenue Service, or the IRS, pronouncements concerning the characterization of income derived from time charters and voyage charters as services income for other tax purposes. However, it should be noted that there is also authority which characterizes time charter income as rental income rather than services income for other tax purposes. Accordingly, no assurance can be given that the IRS or a court of law will accept our position, and there is a risk that the IRS or a court of law could determine that we are a PFIC. Moreover, no assurance can be given that we would not constitute a PFIC for any future taxable year if there were to be changes in the nature and extent of our operations.

If the IRS were to find that we are or have been a PFIC for any taxable year, our United States shareholders will face adverse United States federal income tax consequences. Under the PFIC rules, unless those shareholders make an election available under the United States Internal Revenue Code of 1986, as amended, or the Code (which election could itself have adverse consequences for such shareholders, as discussed below under "Taxation-United States Federal Income Tax Considerations"), such shareholders would be liable to pay United States federal income tax at the then prevailing income tax rates on ordinary income plus interest upon excess distributions and upon any gain from the disposition of our ordinary shares, as if the excess distribution or gain had been recognized ratably over the shareholder's holding period of our ordinary shares. See "Taxation-United States Federal Income Tax Considerations-Passive Foreign Investment Company Status and Significant Tax Consequences" for a more comprehensive discussion of the United States federal income tax consequences to United States shareholders if we are treated as a PFIC.

We may not qualify for an exemption under Section 883 of the Code, and may therefore have to pay tax on United States source income, which would reduce our earnings.

Under the Code, 50% of the gross shipping income of a vessel owning or chartering corporation, such as ourselves and our subsidiaries, that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States, may be subject to a 4% United States federal income tax without allowance for deduction, unless that corporation qualifies for exemption from tax under Section 883 of the Code and the applicable Treasury Regulations promulgated thereunder.

We believe we qualify for this statutory tax exemption for the 2020 taxable year.

However, we may not qualify for exemption under Section 883 in future taxable years. There are factual circumstances beyond our control that could cause us to lose the benefit of this tax exemption and become subject to United States federal income tax on our United States source shipping income. For example, if Hemen, who we believe to be a non-qualified shareholder, were to, in combination with other non-qualified shareholders with a 5% or greater interest in our ordinary shares, come to own 50% or more of our outstanding ordinary shares for more than half the days during the taxable year, we would not qualify for
26


exemption under Section 883 for such taxable year. Due to the factual nature of the issues involved, there can be no assurances on our tax-exempt status or that of any of our subsidiaries.

If we are not entitled to exemption under Section 883 of the Code for any taxable year, we could be subject during those years to an effective 2% United States federal income tax on gross shipping income derived during such a year that is attributable to the transport of cargoes to or from the United States. The imposition of this tax would have a negative effect on our business and would result in decreased earnings available for distribution to our shareholders.

Risks Related to an Investment in Our Securities

The price of our ordinary shares historically has been volatile.

The trading price and volume of our ordinary shares has been and may continue to be subject to large fluctuations. The market price and volume of our ordinary shares may increase or decrease in response to a number of events and factors, including:

investor reaction to our business strategy;
our continued compliance with the listing standards of the NYSE and the OSE;
trends in our industry and the markets in which we operate;
changes in the market price of the services we provide;
the introduction of new technologies or products by us or by our competitors;
changes in expectations as to our future financial performance, including financial estimates by securities analysts and investors;
operating results that vary from the expectations of securities analysts and investors;
announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships, joint ventures, financings or capital commitments;
our ability or inability to raise additional capital and the terms on which we raise it;
regulatory or legal developments in the United States and other countries, especially changes in laws or regulations applicable to our industry;
significant changes in the performance of the stock markets in general;
sales of our ordinary shares by us or our stockholders;
general economic and competitive conditions;
changes in key management personnel; and
other events or factors, including those resulting from such events, or the prospect of such events, including war, terrorism and other international conflicts, public health issues, including health epidemics or pandemics, such as the ongoing COVID-19 pandemic, adverse weather and climate conditions that could disrupt our operations or result in political or economic instability.

This volatility may adversely affect the prices of our ordinary shares regardless of our operating performance. To the extent that the price of our ordinary shares declines, our ability to raise funds through the issuance of equity or otherwise use our ordinary shares as consideration will be reduced. These factors may limit our ability to implement our operating and growth plans.

Future sales of our ordinary shares could have an adverse effect on our share price.

In order to finance our future operations and growth, we may have to incur substantial additional indebtedness and possibly issue additional equity securities. Future ordinary share issuances, directly or indirectly through convertible or exchangeable securities, options or warrants, will generally dilute the ownership interests of our existing ordinary shareholders, including their relative voting rights and could require substantially more cash to maintain the then existing level, if any, of our dividend payments to our ordinary shareholders, as to which no assurance can be given. Preferred shares, if issued, will generally have a preference on dividend payments, which could prohibit or otherwise reduce our ability to pay dividends to our ordinary shareholders. Our debt will be senior in all respects to our ordinary shareholders, will generally include financial and operating covenants with which we will be required to comply and will include acceleration provisions upon defaults thereunder, including our failure to make any debt service payments, and possibly under other debt.  Because our decision to issue equity securities or incur debt in the future will depend on a variety of factors, including market conditions and other matters that are beyond our control, we cannot predict or estimate the timing, amount or form of our capital raising activities in the future. Such activities could, however, cause the price of our ordinary shares to decline significantly.

ITEM 4. INFORMATION ON THE COMPANY

A.  HISTORY AND DEVELOPMENT OF THE COMPANY
27



The Company
 
We are Frontline Ltd., an international shipping company incorporated in Bermuda as an exempted company under the Bermuda Companies Law of 1981 on June 12, 1992 (Company No. EC-17460). Our registered and principal executive offices are located at Par-la-Ville Place, 14 Par-la-Ville Road, Hamilton, HM 08, Bermuda, and our telephone number at that address is +(1) 441 295 6935. Our ordinary shares are currently listed on the New York Stock Exchange, or the NYSE, and the Oslo Stock Exchange, or the OSE, under the symbol of "FRO".

We are engaged primarily in the ownership and operation of oil and product tankers. We operate through subsidiaries located in Bermuda, Liberia, the Marshall Islands, Norway, the United Kingdom and Singapore. We are also involved in the charter, purchase and sale of vessels.

The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of the SEC’s internet site is www.sec.gov. The address of the Company's internet site is www.frontline.bm.

Vessel Acquisitions, Disposals, Redeliveries and Newbuilding Contracts of the Company

In January 2018, the Company took delivery of the VLCC newbuildings Front Empire and Front Princess, and the LR2/Aframax newbuilding Front Polaris.

In February 2018, the Company agreed with SFL to terminate the long-term charter for the 1998-built VLCC Front Circassia upon the sale and delivery of the vessel by SFL to an unrelated third party. The charter with SFL terminated in February and the charter counter party Frontline Shipping Limited, or FSL, a nonrecourse subsidiary of Frontline, has agreed to make a compensation payment of approximately $8.9 million for the termination of the charter to SFL, which was recorded as an interest-bearing note payable by FSL. The note was repaid in February 2020. The termination reduced obligations under finance leases by approximately $20.6 million. The Company recorded a loss on termination, including this termination payment, of $5.8 million in the year ended December 31, 2018.

In July 2018, the Company agreed with SFL to terminate the long-term charter for the VLCCs Front Page, Front Stratus and Front Serenade upon the sale and delivery of the vessels by SFL to an unrelated third party. The charters with SFL terminated in July, August and September, 2018 respectively and Frontline has agreed to make a compensation payment of approximately $10.125 million for the termination of the three charters to SFL, which was recorded as interest-bearing notes payable by Frontline. The notes were fully repaid February 2020. These terminations have reduced obligations under finance leases by approximately $92.1 million. The Company recorded a gain on termination, including the termination payment, of $7.2 million in the year ended December 31, 2018.

In October 2018, the Company agreed with SFL to terminate the long-term charter for the 2001-built VLCC, Front Ariake, upon the sale and delivery of the vessel by SFL to an unrelated third party. The charter terminated in October and Frontline has agreed to a total compensation payment to SFL of $3.4 million for the termination of the charter, which was recorded as an interest bearing note payable by Frontline. The note carries interest of 7.5% per annum and will be fully repaid in 2023.

In December 2018, the Company agreed with SFL to terminate the long-term charter for the 2002-built VLCC, Front Falcon, upon the sale and delivery of the vessel by SFL to an unrelated third party. The charter terminated in December. No compensation is payable on termination of the charter. The terminations of Front Ariake and Front Falcon have reduced obligations under finance leases by approximately $55.2 million. The Company recorded a gain on termination, including the termination payment, of $8.9 million in the year ended December 31, 2018.

In January 2019, the Company took delivery of the VLCC newbuilding Front Defender.

In April 2019, the Company took delivery of the VLCC newbuilding Front Discovery.

In May 2019, the Company entered into an agreement to purchase a newbuilding contract under construction, or resale, for a Suezmax tanker at Hyundai Samho Heavy Industries, or HSHI at a cost of $65.4 million. The vessel is fitted with an Exhaust Gas Cleaning System, commonly referred to as a scrubber or EGCS, allowing the vessel to comply with the amendments to Annex VI to MARPOL regarding the sulfur emissions of vessels. See "Item 4. Information on the Company—B. Business Overview—Environmental and Other Regulations in the Shipping Industry” for further information on environmental regulations relevant to our business. In May 2020, the Company took delivery of Front Cruiser.
28


In June 2019, the Company entered into an agreement to purchase an EGCS equipped VLCC resale under construction at HSHI at a cost of $92.5 million. In June 2020, the Company took delivery of Front Dynamic.

In June 2019, the Company ordered two LR2 newbuildings from Shanghai Waigaoqiao Shipbuilding Co. Ltd., or SWS, China, at a cost of $46.7 million each. One LR2 tanker was delivered in March 2021, and one is expected to be delivered in April 2021.

In August 2019, the Company entered into the Sale and Purchase Agreement, or the SPA, with Trafigura Maritime Logistics, or TML, a wholly owned subsidiary of Trafigura Group Pte Ltd, or Trafigura, to acquire 10 Suezmax tankers built in 2019 through the acquisition of a special purpose vehicle, which held the vessels, herein referred to as the Acquisition. The Acquisition consideration under the SPA consisted of (i) 16,035,856 ordinary shares of Frontline at an agreed price of $8.00 per share that were issued upon signing; and (ii) cash consideration of $538.2 million, payable upon the closing of the Acquisition, which took place on March 16, 2020. The Company agreed to time charter-in all the 10 vessels from Trafigura until closing of the Acquisition at a daily rate of approximately $23,000. In addition, the Company agreed to charter-out five of the vessels to Trafigura for a period of three years at a daily base rate of $28,400 plus 50% profit share. As part of the Acquisition, the Company had options to acquire an additional four Suezmax tankers built in 2019 through the acquisition of a second special purpose vehicle. The Company elected not to exercise the options in September 2019. See Note 5. to our consolidated financial statements for a detailed description of the accounting for this transaction.

In October 2019, the Company exercised the options for two additional LR2 newbuildings from SWS, expected to be delivered in September 2021 at a cost of $46.7 million each.

In February 2020, the Company announced that Frontline Shipping Limited, or FSL, agreed with SFL to terminate the long-term charter for the 2002-built VLCC Front Hakata upon the sale and delivery of the vessel by SFL to an unrelated third party. Frontline received a compensation payment of approximately $3.2 million from SFL for the termination of the current charter. The Company recorded a gain on termination, including the compensation payment, of $7.4 million in the year ended December 31, 2020. The charter with SFL terminated in February 2020. Following this termination, FSL have two VLCCs on charter from SFL. In conjunction with the termination of the lease, the Company settled the outstanding balances due under the notes payable in relation to the termination of the leases for Front Circassia, Front Page, Front Serenade, Front Stratus and Front Ariake of approximately $20.0 million.

In April 2020, the Company sold one VLCC, which was previously recorded as an investment in finance lease and delivered the vessel to its buyers in the second quarter of 2020.


B.  BUSINESS OVERVIEW

As of December 31, 2020, the Company’s fleet consisted of 68 vessels, with an aggregate capacity of approximately 12.5 million DWT:

(i)60 vessels owned by the Company (15 VLCCs, 27 Suezmax tankers, 18 LR2/Aframax tankers);
(ii)two VLCCs that are under finance leases;
(iii)two VLCCs chartered in from an unrelated third party; and
(iv)four vessels that are under the Company’s commercial management (two Suezmax tankers, and two Aframax tankers).

Furthermore, as of December 31, 2020, the Company’s newbuilding program was comprised of four LR2 tankers. One LR2 tanker was delivered in March 2021, one LR2 tanker is expected to be delivered in April 2021, and two LR2 tankers are expected to be delivered in September 2021.

Our vessels operate worldwide and therefore management does not evaluate performance by geographical region as this information is not meaningful.

29


We own various vessel owning and operating subsidiaries. Our operations take place substantially outside of the United States. Our subsidiaries, therefore, own and operate vessels that may be affected by changes in foreign governments and other economic and political conditions. We are engaged in transporting crude oil and its related refined petroleum products and our vessels operate in the spot and time charter markets. Our VLCCs are specifically designed for the transportation of crude oil and, due to their size, are primarily used to transport crude oil from the Middle East Gulf to the Far East, Northern Europe, the Caribbean and the Louisiana Offshore Oil Port, or LOOP. Our Suezmax tankers are similarly designed for worldwide trading, but the trade for these vessels is mainly in the Atlantic Basin, Middle East and Southeast Asia. Our LR2/ Aframax tankers are designed to be flexible, able to transport primarily refined products, but also fuel and crude oil from smaller ports limited by draft restrictions. The vessels will normally trade between the larger refinery centers around the world, being the Gulf of Mexico, Middle East, Rotterdam and Singapore.

We are committed to providing quality transportation services to all of our customers and to developing and maintaining long-term relationships with the major charterers of tankers. Increasing global environmental concerns have created a demand in the petroleum products/crude oil seaborne transportation industry for vessels that are able to conform to the stringent environmental standards currently being imposed throughout the world.

The tanker industry is highly cyclical, experiencing volatility in profitability, vessel values and freight rates. Freight rates are strongly influenced by the supply of tanker vessels and the demand for oil transportation. Refer to "Item 5. Operating and Financial Review and Prospects-Overview" for a discussion of the tanker market in 2019 and 2020.

Similar to structures commonly used by other shipping companies, our vessels are all owned by, or chartered to, separate subsidiaries or associated companies. Frontline Management AS and Frontline Management (Bermuda) Limited, both wholly owned subsidiaries, which we refer to collectively as Frontline Management, support us in the implementation of our decisions. Frontline Management is responsible for the commercial management of our ship owning subsidiaries, including chartering and insurance. Each of our vessels is registered under the Liberian, Marshall Islands, or Hong Kong flag.

In August 2009, the Company established SeaTeam Management Pte Ltd, or SeaTeam Management, a ship management company in Singapore. SeaTeam Management was a complement to the external ship management companies currently offering services to the Company and was not a change in the Company's outsourcing strategy. In October, 2020, the Company sold its 71.38% ownership interest in SeaTeam Management to OSM Maritime Group, or OSM. In connection with this transaction, the total consideration allocated to the Company amounted to $10.7 million, $5.4 million of which was received in October 2020 upon the completion of the sale. The outstanding amount will be paid in two equal payments of $2.7 million on April 1, 2021 and on December 1, 2021. A gain from the sale of $6.9 million has been recorded in the fourth quarter of 2020.

Strategy

Our principal focus is the transportation of crude oil and related refined petroleum cargoes for major oil companies and major oil trading companies. We seek to optimize our income and adjust our exposure through actively pursuing charter opportunities whether through spot charters, time charters, bareboat charters, sale and leasebacks, straight sales and purchases of vessels, newbuilding contracts and acquisitions.
We presently operate VLCCs, Suezmax and Aframax tankers in the crude oil tanker market and LR2 tankers in the refined product market. Our preferred strategy is to have some fixed charter income coverage for our fleet, predominantly through time charters, and trade the balance of the fleet on the spot market. We focus on minimizing time spent in ballast by "cross trading" our vessels, typically with voyages loading in the Middle East Gulf discharging in Northern Europe, followed by a trans-Atlantic voyage to the U.S. Gulf of Mexico and, finally, a voyage from either the Caribbean, US Gulf or West Africa to the Far East/Indian Ocean. We believe that operating a certain number of vessels in the spot market, enables us to capitalize on a potentially stronger spot market as well as to serve our main customers on a regular non term basis. We believe that the size of our fleet is important in negotiating terms with our major clients and charterers. We also believe that our large fleet enhances our ability to obtain competitive terms from suppliers, ship repairers and builders and to produce cost savings in chartering and operations.
Our business strategy is primarily based upon the following principles:
emphasizing operational safety and quality maintenance for all of our vessels and crews;
ensuring that the work environment on board and ashore always meet the highest standards complying with all safety and health regulations, labor conditions and respecting human rights;
complying with all current and proposed environmental regulations;
outsourcing technical management and crewing;
30


continuing to achieve competitive operational costs;
achieving high utilization of our vessels;
achieving competitive financing arrangements;
achieving a satisfactory mix of term charters, contracts of affreightment, or COAs, and spot voyages; and
developing and maintaining relationships with major oil companies and industrial charterers.

We continue to have a strategy of outsourcing, which includes the outsourcing of management, crewing and accounting services to a number of independent and competing suppliers. The technical management of our vessels is provided by independent ship management companies. Pursuant to management agreements, each of the independent ship management companies provides ship maintenance, crewing, technical support, shipyard supervision and related services to us. A central part of our strategy is to benchmark operational performance and cost level amongst our ship managers. Currently, our vessels are crewed with Russian, Ukrainian, Croatian, Romanian, Indian and Filipino officers and crews, or combinations of these nationalities.

Seasonality

Historically, oil trade and, therefore, charter rates increased in the winter months and eased in the summer months as demand for oil and oil products in the Northern Hemisphere rose in colder weather and fell in warmer weather. The tanker industry, in general, has become less dependent on the seasonal transport of heating oil than a decade ago as new uses for oil and oil products have developed, spreading consumption more evenly over the year. This is most apparent from the higher seasonal demand during the summer months due to energy requirements for air conditioning and motor vehicles.

Customers

No single customer in the years ended December 31, 2020 and December 31, 2019, accounted for 10% or more of the Company's consolidated revenues. Revenues from one customer in the year ended December 31, 2018 individually accounted for 10% or more of the Company's consolidated revenues in the amount of $81.1 million.

Competition

The market for international seaborne crude and oil products transportation services is highly fragmented and competitive. Seaborne oil transportation services are generally provided by two main types of operators: major oil company captive fleets (both private and state-owned) and independent ship-owner fleets. In addition, several owners and operators pool their vessels together on an ongoing basis, and such pools are available to customers to the same extent as independently owned-and-operated fleets. Many major oil companies and other oil trading companies, the primary charterers of the vessels owned or controlled by us, also operate their own vessels and use such vessels not only to transport their own crude oil but also to transport crude oil for third party charterers in direct competition with independent owners and operators in the tanker charter market. Competition for charters is intense and is based upon price, location, size, age, condition and acceptability of the vessel and its manager. Competition is also affected by the availability of other size vessels to compete in the trades in which the Company engages. Charters are, to a large extent, brokered through international independent brokerage houses that specialize in finding the optimal ship for any particular cargo based on the aforementioned criteria. Brokers may be appointed by the cargo shipper or the ship owner.

Environmental and Other Regulations in the Shipping Industry

Government regulation and laws significantly affect the ownership and operation of our fleet. We are subject to international conventions and treaties, national, state and local laws and regulations in force in the countries in which our vessels may operate or are registered relating to safety and health and environmental protection including the storage, handling, emission, transportation and discharge of hazardous and non-hazardous materials, and the remediation of contamination and liability for damage to natural resources. Compliance with such laws, regulations and other requirements entails significant expense, including vessel modifications and implementation of certain operating procedures.

A variety of government and private entities subject our vessels to both scheduled and unscheduled inspections. These entities include the local port authorities (applicable national authorities such as the United States Coast Guard, or USCG, harbor master or equivalent), classification societies, flag state administrations (countries of registry) and charterers, particularly terminal operators. Certain of these entities require us to obtain permits, licenses, certificates and other authorizations for the operation of our vessels. Failure to maintain necessary permits or approvals could require us to incur substantial costs or result in the temporary suspension of the operation of one or more of our vessels.
31



Increasing environmental concerns have created a demand for vessels that conform to stricter environmental standards. We are required to maintain operating standards for all of our vessels that emphasize operational safety, quality maintenance, continuous training of our officers and crews and compliance with United States and international regulations. We believe that the operation of our vessels is in substantial compliance with applicable environmental laws and regulations and that our vessels have all material permits, licenses, certificates or other authorizations necessary for the conduct of our operations. However, because such laws and regulations frequently change and may impose increasingly stricter requirements, we cannot predict the ultimate cost of complying with these requirements, or the impact of these requirements on the resale value or useful lives of our vessels. In addition, a future serious marine incident that causes significant adverse environmental impact could result in additional legislation or regulation that could negatively affect our profitability.

International Maritime Organization

The International Maritime Organization, or IMO, which is the United Nations' agency for maritime safety and the prevention of pollution by vessels, has adopted the International Convention for the Prevention of Pollution from Ships, 1973, as modified by the Protocol of 1978 relating thereto, collectively referred to as MARPOL 73/78 and herein as “MARPOL,” adopted the International Convention for the Safety of Life at Sea of 1974, or SOLAS Convention, and the International Convention on Load Lines of 1966, or LL Convention. MARPOL establishes environmental standards relating to oil leakage or spilling, garbage management, sewage, air emissions, handling and disposal of noxious liquids and the handling of harmful substances in packaged forms. MARPOL is applicable to drybulk, tanker and LNG carriers, among other vessels, and is broken into six Annexes, each of which regulates a different source of pollution. Annex I relates to oil leakage or spilling; Annexes II and III relate to harmful substances carried in bulk in liquid or in packaged form, respectively; Annexes IV and V relate to sewage and garbage management, respectively; and Annex VI, lastly, relates to air emissions. Annex VI was separately adopted by the IMO in September of 1997; new emissions standards, titled IMO-2020, took effect on January 1, 2020.

In 2013, the IMO’s Marine Environmental Protection Committee, or the MEPC, adopted a resolution amending MARPOL Annex I Condition Assessment Scheme, or CAS. These amendments became effective on October 1, 2014, and require compliance with the 2011 International Code on the Enhanced Programme of Inspections during Surveys of Bulk Carriers and Oil Tankers, or “ESP Code,” which provides for enhanced inspection programs. We may need to make certain financial expenditures to comply with these amendments.

Air Emissions

In September of 1997, the IMO adopted Annex VI to MARPOL to address air pollution from vessels. Effective May 2005, Annex VI sets limits on sulfur oxide and nitrogen oxide emissions from all commercial vessel exhausts and prohibits “deliberate emissions” of ozone depleting substances (such as halons and chlorofluorocarbons), emissions of volatile compounds from cargo tanks, and the shipboard incineration of specific substances. Annex VI also includes a global cap on the sulfur content of fuel oil and allows for special areas to be established with more stringent controls on sulfur emissions, as explained below. Emissions of “volatile organic compounds” from certain vessels, and the shipboard incineration (from incinerators installed after January 1, 2000) of certain substances (such as polychlorinated biphenyls, or PCBs) are also prohibited. We believe that all our vessels are currently compliant in all material respects with these regulations.

The MEPC adopted amendments to Annex VI regarding emissions of sulfur oxide, nitrogen oxide, particulate matter and ozone depleting substances, which entered into force on July 1, 2010. The amended Annex VI seeks to further reduce air pollution by, among other things, implementing a progressive reduction of the amount of sulfur contained in any fuel oil used on board ships. On October 27, 2016, at its 70th session, the MEPC agreed to implement a global 0.5% m/m sulfur oxide emissions limit (reduced from 3.50%) starting from January 1, 2020. This limitation can be met by using low-sulfur compliant fuel oil, alternative fuels, or certain exhaust gas cleaning systems. Ships are now required to obtain bunker delivery notes and International Air Pollution Prevention, or IAPP Certificates from their flag states that specify sulfur content. Additionally, at MEPC 73, amendments to Annex VI to prohibit the carriage of bunkers above 0.5% sulfur on ships were adopted and took effect March 1, 2020. These regulations subject ocean-going vessels to stringent emissions controls, and may cause us to incur substantial costs.

Sulfur content standards are even stricter within certain “Emission Control Areas,” or ECAs. As of January 1, 2015, ships operating within an ECA were not permitted to use fuel with sulfur content in excess of 0.1% m/m. Amended Annex VI establishes procedures for designating new ECAs. Currently, the IMO has designated four ECAs, including specified portions of the Baltic Sea area, North Sea area, North American area and United States Caribbean area. Ocean-going vessels in these areas will be subject to stringent emission controls and may cause us to incur additional costs. Other areas in China are subject to local regulations that impose stricter emission controls. If other ECAs are approved by the IMO, or other new or more
32


stringent requirements relating to emissions from marine diesel engines or port operations by vessels are adopted by the U.S. Environmental Protection Agency, or EPA, or the states where we operate, compliance with these regulations could entail significant capital expenditures or otherwise increase the costs of our operations.

Amended Annex VI also establishes new tiers of stringent nitrogen oxide emissions standards for marine diesel engines, depending on their date of installation. At the MEPC meeting held from March to April 2014, amendments to Annex VI were adopted which address the date on which Tier III Nitrogen Oxide (NOx) standards in ECAs will go into effect. Under the amendments, Tier III NOx standards apply to ships that operate in the North American and U.S. Caribbean Sea ECAs designed for the control of NOx produced by vessels with a marine diesel engine installed and constructed on or after January 1, 2016. Tier III requirements could apply to areas that will be designated for Tier III NOx in the future. At MEPC 70 and MEPC 71, the MEPC approved the North Sea and Baltic Sea as ECAs for nitrogen oxide for ships built on or after January 1, 2021. The EPA promulgated equivalent (and in some senses stricter) emissions standards in 2010. As a result of these designations or similar future designations, we may be required to incur additional operating or other costs.

As determined at the MEPC 70, the new Regulation 22A of MARPOL Annex VI became effective as of March 1, 2018 and requires ships above 5,000 gross tonnage to collect and report annual data on fuel oil consumption to an IMO database, with the first year of data collection having commenced on January 1, 2019. The IMO intends to use such data as the first step in its roadmap (through 2023) for developing its strategy to reduce greenhouse gas emissions from ships, as discussed further below.

As of January 1, 2013, MARPOL made mandatory certain measures relating to energy efficiency for ships. All ships are now required to develop and implement Ship Energy Efficiency Management Plans, or SEEMPS, and new ships must be designed in compliance with minimum energy efficiency levels per capacity mile as defined by the Energy Efficiency Design Index, or EEDI. Under these measures, by 2025, all new ships built will be 30% more energy efficient than those built in 2014. Additionally, MEPC 75 adopted amendments to MARPOL Annex VI which brings forward the effective date of the EEDI’s “phase 3” requirements from January 1, 2025 to April 1, 2022 for several ship types, including gas carriers, general cargo ships, LNG carriers and oil tankers.

As part of the wider push towards both the IMO’s 2030 and 2050 greenhouse gas targets, MEPC has agreed draft regulations relating to the Energy Efficiency Existing Ship Index (EEXI), to be confirmed at MEPC 76 (June 2021). Once the regulation is approved in the upcoming MEPC 76, the regulations will enter into force from 1st January 2023. Any vessels that will not meet this new EEXI requirement will need to adopt energy-saving/emission reducing technology, through retrofits, to reach compliant levels. This creates a vast array of implications for the tanker industry going forward. Recycling of older ships could accelerate as the investments to comply with regulations are not feasible. One of the most efficient ways of reducing emissions is reducing power, this would in turn limit vessel speed and with that supply. Frontline owns one of the most modern and fuel efficient fleets in the industry. Maintaining and improving our position in respect of the above creates an extremely compelling
outlook for our company in the next 2-5 years.

MEPC 75 also approved draft amendments to MARPOL Annex I to prohibit the use and carriage for use as fuel of heavy fuel oil (“HFO”) by ships in Arctic waters on and after July 1, 2024. The draft amendments introduced at MEPC 75 may be adopted at the MEPC 76 session, to be held during 2021.

We have incurred increased costs to comply with these revised standards. Additional or new conventions, laws and regulations may be adopted that could require the installation of expensive emission control systems and could adversely affect our business, results of operations, cash flows and financial condition.

Safety Management System Requirements

The SOLAS Convention was amended to address the safe manning of vessels and emergency training drills.  The Convention of Limitation of Liability for Maritime Claims, or LLMC, sets limitations of liability for a loss of life or personal injury claim or a property claim against ship owners. We believe that our vessels are in substantial compliance with SOLAS and LLMC standards.

Under Chapter IX of the SOLAS Convention, or the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention, or the ISM Code, our operations are also subject to environmental standards and requirements. The ISM Code requires the party with operational control of a vessel to develop an extensive safety management system that includes, among other things, the adoption of a safety and environmental protection policy setting forth instructions and procedures for operating its vessels safely and describing procedures for responding to emergencies. We rely upon the safety management system that we and our technical managers have developed for compliance with the ISM Code. The failure of a
33


vessel owner or bareboat charterer to comply with the ISM Code may subject such party to increased liability, may decrease available insurance coverage for the affected vessels and may result in a denial of access to, or detention in, certain ports.

The ISM Code requires that vessel operators obtain a safety management certificate for each vessel they operate. This certificate evidences compliance by a vessel’s management with the ISM Code requirements for a safety management system. No vessel can obtain a safety management certificate unless its manager has been awarded a document of compliance, issued by each flag state, under the ISM Code. Our managers have obtained applicable documents of compliance for their offices and safety management certificates for all of our vessels for which the certificates are required by the IMO. The document of compliance and safety management certificate are renewed as required.

Regulation II-1/3-10 of the SOLAS Convention governs ship construction and stipulates that ships over 150 meters in length must have adequate strength, integrity and stability to minimize risk of loss or pollution. Goal-based standards amendments in SOLAS regulation II-1/3-10 entered into force in 2012, with July 1, 2016 set for application to new oil tankers and bulk carriers. The SOLAS Convention regulation II-1/3-10 on goal-based ship construction standards for bulk carriers and oil tankers, which entered into force on January 1, 2012, requires that all oil tankers and bulk carriers of 150 meters in length and above, for which the building contract is placed on or after July 1, 2016, satisfy applicable structural requirements conforming to the functional requirements of the International Goal-based Ship Construction Standards for Bulk Carriers and Oil Tankers (GBS Standards).

Amendments to the SOLAS Convention Chapter VII apply to vessels transporting dangerous goods and require those vessels be in compliance with the International Maritime Dangerous Goods Code, or IMDG Code. Effective January 1, 2018, the IMDG Code includes (1) updates to the provisions for radioactive material, reflecting the latest provisions from the International Atomic Energy Agency, (2) new marking, packing and classification requirements for dangerous goods, and (3) new mandatory training requirements. Amendments which took effect on January 1, 2020 also reflect the latest material from the UN Recommendations on the Transport of Dangerous Goods, including (1) new provisions regarding IMO type 9 tank, (2) new abbreviations for segregation groups, and (3) special provisions for carriage of lithium batteries and of vehicles powered by flammable liquid or gas.

The IMO has also adopted the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers, or STCW. As of February 2017, all seafarers are required to meet the STCW standards and be in possession of a valid STCW certificate. Flag states that have ratified SOLAS and STCW generally employ the classification societies, which have incorporated SOLAS and STCW requirements into their class rules, to undertake surveys to confirm compliance.

The IMO's Maritime Safety Committee and MEPC, respectively, each adopted relevant parts of the International Code for Ships Operating in Polar Water (the “Polar Code”). The Polar Code, which entered into force on January 1, 2017, covers design, construction, equipment, operational, training, search and rescue as well as environmental protection matters relevant to ships operating in the waters surrounding the two poles. It also includes mandatory measures regarding safety and pollution prevention as well as recommendatory provisions. The Polar Code applies to new ships constructed after January 1, 2017, and after January 1, 2018, ships constructed before January 1, 2017 are required to meet the relevant requirements by the earlier of their first intermediate or renewal survey.

Furthermore, recent action by the IMO’s Maritime Safety Committee and United States agencies indicates that cybersecurity regulations for the maritime industry are likely to be further developed in the near future in an attempt to combat cybersecurity threats. For example, cyber-risk management systems must be incorporated by ship-owners and managers by 2021. This might cause companies to create additional procedures for monitoring cybersecurity, which could require additional expenses and/or capital expenditures. The impact of such regulations is hard to predict at this time.

Pollution Control and Liability Requirements

The IMO has negotiated international conventions that impose liability for pollution in international waters and the territorial waters of the signatories to such conventions. For example, the IMO adopted an International Convention for the Control and Management of Ships’ Ballast Water and Sediments (the “BWM Convention”) in 2004. The BWM Convention entered into force on September 8, 2017. The BWM Convention requires ships to manage their ballast water to remove, render harmless, or avoid the uptake or discharge of new or invasive aquatic organisms and pathogens within ballast water and sediments. The BWM Convention’s implementing regulations call for a phased introduction of mandatory ballast water exchange requirements, to be replaced in time with mandatory concentration limits, and require all ships to carry a ballast water record book and an international ballast water management certificate.

34


On December 4, 2013, the IMO Assembly passed a resolution revising the application dates of the BWM Convention so that the dates are triggered by the entry into force date and not the dates originally in the BWM Convention. This, in effect, makes all vessels delivered before the entry into force date “existing vessels” and allows for the installation of ballast water management systems on such vessels at the first International Oil Pollution Prevention (IOPP) renewal survey following entry into force of the convention. The MEPC adopted updated guidelines for approval of ballast water management systems (G8) at MEPC 70. At MEPC 71, the schedule regarding the BWM Convention’s implementation dates was also discussed and amendments were introduced to extend the date existing vessels are subject to certain ballast water standards. Those changes were adopted at MEPC 72. Ships over 400 gross tons generally must comply with a “D-1 standard,” requiring the exchange of ballast water only in open seas and away from coastal waters. The “D-2 standard” specifies the maximum amount of viable organisms allowed to be discharged, and compliance dates vary depending on the IOPP renewal dates. Depending on the date of the IOPP renewal survey, existing vessels must comply with the D-2 standard on or after September 8, 2019. For most ships, compliance with the D-2 standard will involve installing on-board systems to treat ballast water and eliminate unwanted organisms. Ballast water management systems, which include systems that make use of chemical, biocides, organisms or biological mechanisms, or which alter the chemical or physical characteristics of the ballast water, must be approved in accordance with IMO Guidelines (Regulation D-3). As of October 13, 2019, MEPC 72’s amendments to the BWM Convention took effect, making the Code for Approval of Ballast Water Management Systems, which governs assessment of ballast water management systems, mandatory rather than permissive, and formalized an implementation schedule for the D-2 standard. Under these amendments, all ships must meet the D-2 standard by September 8, 2024. Costs of compliance with these regulations may be substantial. Additionally, in November 2020, MEPC 75 adopted amendments to the BWM Convention which would require a commissioning test of the ballast water management system for the initial survey or when performing an additional survey for retrofits. This analysis will not apply to ships that already have an installed BWM system certified under the BWM Convention. These amendments are expected to enter into force on June 1, 2022.

Once mid-ocean ballast exchange and ballast water treatment requirements become mandatory under the BWM Convention, the cost of compliance could increase for ocean carriers and may have a material effect on our operations. However, many countries already regulate the discharge of ballast water carried by vessels from country to country to prevent the introduction of invasive and harmful species via such discharges. The U.S., for example, requires vessels entering its waters from another country to conduct mid-ocean ballast exchange, or undertake some alternate measure, and to comply with certain reporting requirements.

The IMO adopted the International Convention on Civil Liability for Oil Pollution Damage of 1969, as amended by different Protocols in 1976, 1984, and 1992, and amended in 2000, or the CLC. Under the CLC and depending on whether the country in which the damage results is a party to the 1992 Protocol to the CLC, a vessel’s registered owner may be strictly liable for pollution damage caused in the territorial waters of a contracting state by discharge of persistent oil, subject to certain exceptions. The 1992 Protocol changed certain limits on liability expressed using the International Monetary Fund currency unit, the Special Drawing Rights. The limits on liability have since been amended so that the compensation limits on liability were raised. The right to limit liability is forfeited under the CLC where the spill is caused by the shipowner’s actual fault and under the 1992 Protocol where the spill is caused by the shipowner’s intentional or reckless act or omission where the shipowner knew pollution damage would probably result. The CLC requires ships over 2,000 tons covered by it to maintain insurance covering the liability of the owner in a sum equivalent to an owner’s liability for a single incident. We have protection and indemnity insurance for environmental incidents. P&I Clubs in the International Group issue the required Bunkers Convention “Blue Cards” to enable signatory states to issue certificates. All of our vessels are in possession of a CLC State issued certificate attesting that the required insurance coverage is in force.

The IMO also adopted the International Convention on Civil Liability for Bunker Oil Pollution Damage (the “Bunker Convention”) to impose strict liability on ship owners (including the registered owner, bareboat charterer, manager or operator) for pollution damage in jurisdictional waters of ratifying states caused by discharges of bunker fuel. The Bunker Convention requires registered owners of ships over 1,000 gross tons to maintain insurance for pollution damage in an amount equal to the limits of liability under the applicable national or international limitation regime (but not exceeding the amount calculated in accordance with the LLMC). With respect to non-ratifying states, liability for spills or releases of oil carried as fuel in ship’s bunkers typically is determined by the national or other domestic laws in the jurisdiction where the events or damages occur.

Ships are required to maintain a certificate attesting that they maintain adequate insurance to cover an incident. In jurisdictions, such as the United States where the CLC or the Bunker Convention has not been adopted, various legislative schemes or common law govern, and liability is imposed either on the basis of fault or on a strict-liability basis.

AntiFouling Requirements

In 2001, the IMO adopted the International Convention on the Control of Harmful Anti‑fouling Systems on Ships, or the “Anti‑fouling Convention.” The Anti‑fouling Convention, which entered into force on September 17, 2008, prohibits the use of
35


organotin compound coatings to prevent the attachment of mollusks and other sea life to the hulls of vessels. Vessels of over 400 gross tons engaged in international voyages will also be required to undergo an initial survey before the vessel is put into service or before an International Anti‑fouling System Certificate is issued for the first time; and subsequent surveys when the anti‑fouling systems are altered or replaced. We have obtained Anti‑fouling System Certificates for all of our vessels that are subject to the Anti‑fouling Convention.

In November 2020, MEPC 75 approved draft amendments to the Anti-fouling Convention to prohibit anti-fouling systems containing cybutryne, which would apply to ships from January 1, 2023, or, for ships already bearing such an anti-fouling system, at the next scheduled renewal of the system after that date, but no later than 60 months following the last application to the ship of such a system. These amendments may be formally adopted at MEPC 76 in 2021.

We have obtained Anti‑fouling System Certificates for all of our vessels that are subject to the Anti‑fouling Convention.

Compliance Enforcement

Noncompliance with the ISM Code or other IMO regulations may subject the ship owner or bareboat charterer to increased liability, may lead to decreases in available insurance coverage for affected vessels and may result in the denial of access to, or detention in, some ports. The USCG and European Union authorities have indicated that vessels not in compliance with the ISM Code by applicable deadlines will be prohibited from trading in U.S. and European Union ports, respectively. As of the date of this report, each of our vessels is ISM Code certified. However, there can be no assurance that such certificates will be maintained in the future. The IMO continues to review and introduce new regulations. It is impossible to predict what additional regulations, if any, may be passed by the IMO and what effect, if any, such regulations might have on our operations.

United States Regulations

The U.S. Oil Pollution Act of 1990 and the Comprehensive Environmental Response, Compensation and Liability Act

The U.S. Oil Pollution Act of 1990, or the OPA, established an extensive regulatory and liability regime for the protection and cleanup of the environment from oil spills. OPA affects all “owners and operators” whose vessels trade or operate within the U.S., its territories and possessions or whose vessels operate in U.S. waters, which includes the U.S.’s territorial sea and its 200 nautical mile exclusive economic zone around the U.S. The U.S. has also enacted the Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA, which applies to the discharge of hazardous substances other than oil, except in limited circumstances, whether on land or at sea. OPA and CERCLA both define “owner and operator” in the case of a vessel as any person owning, operating or chartering by demise, the vessel. Both OPA and CERCLA impact our operations.

Under OPA, vessel owners and operators are “responsible parties” and are jointly, severally and strictly liable (unless the spill results solely from the act or omission of a third party, an act of God or an act of war) for all containment and clean-up costs and other damages arising from discharges or threatened discharges of oil from their vessels, including bunkers (fuel). OPA defines these other damages broadly to include:

(i)    injury to, destruction or loss of, or loss of use of, natural resources and related assessment costs;
(ii)    injury to, or economic losses resulting from, the destruction of real and personal property;
(iv)    loss of subsistence use of natural resources that are injured, destroyed or lost;
(iii)    net loss of taxes, royalties, rents, fees or net profit revenues resulting from injury, destruction or loss of real or personal property, or natural resources;
(v)    lost profits or impairment of earning capacity due to injury, destruction or loss of real or personal property or natural resources; and
(vi)    net cost of increased or additional public services necessitated by removal activities following a discharge of oil, such as protection from fire, safety or health hazards, and loss of subsistence use of natural resources.

OPA contains statutory caps on liability and damages; such caps do not apply to direct cleanup costs. Effective November 12, 2019, the USCG adjusted the limits of OPA liability for a tank vessel, other than a single-hull tank vessel, over 3,000 gross tons liability to the greater of $2,300 per gross ton or $19,943,400 (subject to periodic adjustment for inflation).  These limits of liability do not apply if an incident was proximately caused by the violation of an applicable U.S. federal safety, construction or operating regulation by a responsible party (or its agent, employee or a person acting pursuant to a contractual relationship), or a responsible party's gross negligence or willful misconduct. The limitation on liability similarly does not apply if the responsible party fails or refuses to (i) report the incident as required by law where the responsible party knows or has reason to know of the incident; (ii) reasonably cooperate and assist as requested in connection with oil removal activities; or (iii) without
36


sufficient cause, comply with an order issued under the Federal Water Pollution Act (Section 311 (c), (e)) or the Intervention on the High Seas Act.

CERCLA contains a similar liability regime whereby owners and operators of vessels are liable for cleanup, removal and remedial costs, as well as damages for injury to, or destruction or loss of, natural resources, including the reasonable costs associated with assessing the same, and health assessments or health effects studies. There is no liability if the discharge of a hazardous substance results solely from the act or omission of a third party, an act of God or an act of war. Liability under CERCLA is limited to the greater of $300 per gross ton or $5.0 million for vessels carrying a hazardous substance as cargo and the greater of $300 per gross ton or $500,000 for any other vessel. These limits do not apply (rendering the responsible person liable for the total cost of response and damages) if the release or threat of release of a hazardous substance resulted from willful misconduct or negligence, or the primary cause of the release was a violation of applicable safety, construction or operating standards or regulations. The limitation on liability also does not apply if the responsible person fails or refused to provide all reasonable cooperation and assistance as requested in connection with response activities where the vessel is subject to OPA.

OPA and CERCLA each preserve the right to recover damages under existing law, including maritime tort law. OPA and CERCLA both require owners and operators of vessels to establish and maintain with the USCG evidence of financial responsibility sufficient to meet the maximum amount of liability to which the particular responsible person may be subject. Vessel owners and operators may satisfy their financial responsibility obligations by providing a proof of insurance, a surety bond, qualification as a self-insurer or a guarantee. We comply and plan to comply going forward with the USCG’s financial responsibility regulations by providing applicable certificates of financial responsibility.

The 2010 Deepwater Horizon oil spill in the Gulf of Mexico resulted in additional regulatory initiatives or statutes, including higher liability caps under OPA, new regulations regarding offshore oil and gas drilling, and a pilot inspection program for offshore facilities. However, several of these initiatives and regulations have been or may be revised. For example, the U.S. Bureau of Safety and Environmental Enforcement’s, or BSEE, revised Production Safety Systems Rule, or PSSR, effective December 27, 2018, modified and relaxed certain environmental and safety protections under the 2016 PSSR. Additionally, the BSEE amended the Well Control Rule, effective July 15, 2019, which rolled back certain reforms regarding the safety of drilling operations, and the former U.S. President Trump had proposed leasing new sections of U.S. waters to oil and gas companies for offshore drilling. However, the current U.S. President Biden recently signed an executive order blocking new leases for oil and gas drilling in federal waters. The effects of these proposals and changes are currently unknown. Compliance with any new requirements of OPA and future legislation or regulations applicable to the operation of our vessels could impact the cost of our operations and adversely affect our business.

OPA specifically permits individual states to impose their own liability regimes with regard to oil pollution incidents occurring within their boundaries, provided they accept, at a minimum, the levels of liability established under OPA and some states have enacted legislation providing for unlimited liability for oil spills. Many U.S. states that border a navigable waterway have enacted environmental pollution laws that impose strict liability on a person for removal costs and damages resulting from a discharge of oil or a release of a hazardous substance. These laws may be more stringent than U.S. federal law. Moreover, some states have enacted legislation providing for unlimited liability for discharge of pollutants within their waters, although in some cases, states which have enacted this type of legislation have not yet issued implementing regulations defining tanker owners’ responsibilities under these laws. The Company intends to comply with all applicable state regulations in the ports where the Company’s vessels call.

We currently maintain pollution liability coverage insurance in the amount of $1.0 billion per incident for each of our vessels. If the damages from a catastrophic spill were to exceed our insurance coverage, it could have an adverse effect on our business and results of operation.

Other United States Environmental Initiatives

The U.S. Clean Air Act of 1970 (including its amendments of 1977 and 1990), or CAA requires the EPA to promulgate standards applicable to emissions of volatile organic compounds and other air contaminants. Our vessels are subject to vapor control and recovery requirements for certain cargoes when loading, unloading, ballasting, cleaning and conducting other operations in regulated port areas. The CAA also requires states to draft State Implementation Plans, or SIPs, designed to attain national health-based air quality standards in each state. Although state-specific, SIPs may include regulations concerning emissions resulting from vessel loading and unloading operations by requiring the installation of vapor control equipment. Our vessels operating in such regulated port areas with restricted cargoes are equipped with vapor recovery systems that satisfy these existing requirements.

37


The U.S. Clean Water Act, or CWA, prohibits the discharge of oil, hazardous substances and ballast water in U.S. navigable waters unless authorized by a duly issued permit or exemption, and imposes strict liability in the form of penalties for any unauthorized discharges. The CWA also imposes substantial liability for the costs of removal, remediation and damages and complements the remedies available under OPA and CERCLA. In 2015, the EPA expanded the definition of “waters of the United States” , or WOTUS, thereby expanding federal authority under the CWA. Following litigation on the revised WOTUS rule, in December 2018, the EPA and Department of the Army proposed a revised, limited definition of “waters of the United States.” The proposed rule was published in the Federal Register on February 14, 2019 and was subject to public comment. On October 22, 2019, the agencies published a final rule repealing the 2015 Rule defining “waters of the United States” and recodified the regulatory text that existed prior to 2015 Rule. The final rule became effective on December 23, 2019. On January 23, 2020, the EPA published the “Navigable Waters Protection Rule,” which replaces the rule published on October 22, 2019, and redefines “waters of the United States.” This rule became effective on June 22, 2020, although the effective date has been stayed in at least one U.S. state pursuant to court order. The effect of this rule is currently unknown.

The EPA and the USCG have also enacted rules relating to ballast water discharge, compliance with which requires the installation of equipment on our vessels to treat ballast water before it is discharged or the implementation of other port facility disposal arrangements or procedures at potentially substantial costs, and/or otherwise restrict our vessels from entering U.S. Waters.  The EPA will regulate these ballast water discharges and other discharges incidental to the normal operation of certain vessels within United States waters pursuant to the Vessel Incidental Discharge Act, or VIDA, which was signed into law on December 4, 2018 and replaces the 2013 Vessel General Permit, or VGP program (which authorizes discharges incidental to operations of commercial vessels and contains numeric ballast water discharge limits for most vessels to reduce the risk of invasive species in U.S. waters, stringent requirements for exhaust gas scrubbers, and requirements for the use of environmentally acceptable lubricants) and current Coast Guard ballast water management regulations adopted under the U.S. National Invasive Species Act, or NISA, such as mid-ocean ballast exchange programs and installation of approved USCG technology for all vessels equipped with ballast water tanks bound for U.S. ports or entering U.S. waters.  VIDA establishes a new framework for the regulation of vessel incidental discharges under Clean Water Act (CWA), requires the EPA to develop performance standards for those discharges within two years of enactment, and requires the U.S. Coast Guard to develop implementation, compliance, and enforcement regulations within two years of EPA’s promulgation of standards.  Under VIDA, all provisions of the 2013 VGP and USCG regulations regarding ballast water treatment remain in force and effect until the EPA and U.S. Coast Guard regulations are finalized.  Non-military, non-recreational vessels greater than 79 feet in length must continue to comply with the requirements of the VGP, including submission of a Notice of Intent, or NOI or retention of a PARI form and submission of annual reports. We have submitted NOIs for our vessels where required. Compliance with the EPA, U.S. Coast Guard and state regulations could require the installation of ballast water treatment equipment on our vessels or the implementation of other port facility disposal procedures at potentially substantial cost, or may otherwise restrict our vessels from entering U.S. waters.

European Union Regulations

In October 2009, the European Union amended a directive to impose criminal sanctions for illicit ship-source discharges of polluting substances, including minor discharges, if committed with intent, recklessly or with serious negligence and the discharges individually or in the aggregate result in deterioration of the quality of water. Aiding and abetting the discharge of a polluting substance may also lead to criminal penalties. The directive applies to all types of vessels, irrespective of their flag, but certain exceptions apply to warships or where human safety or that of the ship is in danger. Criminal liability for pollution may result in substantial penalties or fines and increased civil liability claims. Regulation (EU) 2015/757 of the European Parliament and of the Council of 29 April 2015 (amending EU Directive 2009/16/EC) governs the monitoring, reporting and verification of carbon dioxide emissions from maritime transport, and, subject to some exclusions, requires companies with ships over 5,000 gross tonnage to monitor and report carbon dioxide emissions annually, which may cause us to incur additional expenses.

The European Union has adopted several regulations and directives requiring, among other things, more frequent inspections of high-risk ships, as determined by type, age, and flag as well as the number of times the ship has been detained. The European Union also adopted and extended a ban on substandard ships and enacted a minimum ban period and a definitive ban for repeated offenses. The regulation also provided the European Union with greater authority and control over classification societies, by imposing more requirements on classification societies and providing for fines or penalty payments for organizations that failed to comply. Furthermore, the EU has implemented regulations requiring vessels to use reduced sulfur content fuel for their main and auxiliary engines. The EU Directive 2005/33/EC (amending Directive 1999/32/EC) introduced requirements parallel to those in Annex VI relating to the sulfur content of marine fuels. In addition, the EU imposed a 0.1% maximum sulfur requirement for fuel used by ships at berth in the Baltic, the North Sea and the English Channel (the so called “SOx-Emission Control Area”). As of January 2020, EU member states must also ensure that ships in all EU waters, except the SOx-Emission Control Area, use fuels with a 0.5% maximum sulfur content.
38



On September 15, 2020, the European Parliament voted to include greenhouse gas emissions from the maritime sector in the European Union’s carbon market from 2022. This will require shipowners to buy permits to cover these emissions. Contingent on another formal approval vote, specific regulations are forthcoming and are expected to be proposed by 2021.

International Labour Organization

The International Labour Organization, or the ILO, is a specialized agency of the UN that has adopted the Maritime Labor Convention 2006, or MLC 2006. A Maritime Labor Certificate and a Declaration of Maritime Labor Compliance is required to ensure compliance with the MLC 2006 for all ships that are 500 gross tonnage or over and are either engaged in international voyages or flying the flag of a Member and operating from a port, or between ports, in another country. We believe that all our vessels are in substantial compliance with and are certified to meet MLC 2006.

Greenhouse Gas Regulation

Currently, the emissions of greenhouse gases from international shipping are not subject to the Kyoto Protocol to the United Nations Framework Convention on Climate Change, which entered into force in 2005 and pursuant to which adopting countries have been required to implement national programs to reduce greenhouse gas emissions with targets extended through 2020. International negotiations are continuing with respect to a successor to the Kyoto Protocol, and restrictions on shipping emissions may be included in any new treaty. In December 2009, more than 27 nations, including the U.S. and China, signed the Copenhagen Accord, which includes a non-binding commitment to reduce greenhouse gas emissions. The 2015 United Nations Climate Change Conference in Paris resulted in the Paris Agreement, which entered into force on November 4, 2016 and does not directly limit greenhouse gas emissions from ships. The U.S. initially entered into the agreement, but on June 1, 2017, former U.S. President Trump announced that the United States intends to withdraw from the Paris Agreement, and the withdrawal became effective on November 4, 2020. On January 20, 2021, U.S. President Biden signed an executive order to rejoin the Paris Agreement, which the U.S. officially rejoined on February 19, 2021.

At MEPC 70 and MEPC 71, a draft outline of the structure of the initial strategy for developing a comprehensive IMO strategy on reduction of greenhouse gas emissions from ships was approved. In accordance with this roadmap, in April 2018, nations at the MEPC 72 adopted an initial strategy to reduce greenhouse gas emissions from ships. The initial strategy identifies “levels of ambition” to reducing greenhouse gas emissions, including (1) decreasing the carbon intensity from ships through implementation of further phases of the EEDI for new ships; (2) reducing carbon dioxide emissions per transport work, as an average across international shipping, by at least 40% by 2030, pursuing efforts towards 70% by 2050, compared to 2008 emission levels; and (3) reducing the total annual greenhouse emissions by at least 50% by 2050 compared to 2008 while pursuing efforts towards phasing them out entirely. The initial strategy notes that technological innovation, alternative fuels and/or energy sources for international shipping will be integral to achieve the overall ambition. Compliance with these regulations and other changes in laws, regulations and obligations relating to climate change affects the propulsion options in subsequent vessel designs and could increase our costs related to acquiring new vessels, operating and maintaining our existing vessels and require us to install new emission controls, acquire allowances or pay taxes related to our greenhouse gas emissions or administer and manage a greenhouse gas emissions program.

The EU made a unilateral commitment to reduce overall greenhouse gas emissions from its member states from 20% of 1990 levels by 2020. The EU also committed to reduce its emissions by 20% under the Kyoto Protocol’s second period from 2013 to 2020. Starting in January 2018, large ships over 5,000 gross tonnage calling at EU ports are required to collect and publish data on carbon dioxide emissions and other information. As previously discussed, regulations relating to the inclusion of greenhouse gas emissions from the maritime sector in the European Union’s carbon market are also forthcoming.

In the United States, the EPA issued a finding that greenhouse gases endanger the public health and safety, adopted regulations to limit greenhouse gas emissions from certain mobile sources, and proposed regulations to limit greenhouse gas emissions from large stationary sources. However, in March 2017, former U.S. President Trump signed an executive order to review and possibly eliminate the EPA’s plan to cut greenhouse gas emissions, and in August 2019, the Administration announced plans to weaken regulations for methane emissions. On August 13, 2020, the EPA released rules rolling back standards to control methane and volatile organic compound emissions from new oil and gas facilities. However, U.S. President Biden recently directed the EPA to publish a proposed rule suspending, revising, or rescinding certain of these rules. The EPA or individual U.S. states could enact environmental regulations that would affect our operations.

Any passage of climate control legislation or other regulatory initiatives by the IMO, the EU, the U.S. or other countries where we operate, or any treaty adopted at the international level to succeed the Kyoto Protocol or Paris Agreement, that restricts emissions of greenhouse gases could require us to make significant financial expenditures which we cannot predict with
39


certainty at this time. Even in the absence of climate control legislation, our business may be indirectly affected to the extent that climate change may result in sea level changes or certain weather events.


Vessel Security Regulations

Since the terrorist attacks of September 11, 2001 in the United States, there have been a variety of initiatives intended to enhance vessel security such as the U.S. Maritime Transportation Security Act of 2002, or MTSA. To implement certain portions of the MTSA, the USCG issued regulations requiring the implementation of certain security requirements aboard vessels operating in waters subject to the jurisdiction of the United States and at certain ports and facilities, some of which are regulated by the EPA.

Similarly, Chapter XI-2 of the SOLAS Convention imposes detailed security obligations on vessels and port authorities and mandates compliance with the ISPS Code. The ISPS Code is designed to enhance the security of ports and ships against terrorism. To trade internationally, a vessel must attain an International Ship Security Certificate, or ISSC, from a recognized security organization approved by the vessel’s flag state. Ships operating without a valid certificate may be detained, expelled from, or refused entry at port until they obtain an ISSC. The various requirements, some of which are found in the SOLAS Convention, include, for example, on-board installation of automatic identification systems to provide a means for the automatic transmission of safety-related information from among similarly equipped ships and shore stations, including information on a ship’s identity, position, course, speed and navigational status; on-board installation of ship security alert systems, which do not sound on the vessel but only alert the authorities on shore; the development of vessel security plans; ship identification number to be permanently marked on a vessel’s hull; a continuous synopsis record kept onboard showing a vessel's history including the name of the ship, the state whose flag the ship is entitled to fly, the date on which the ship was registered with that state, the ship's identification number, the port at which the ship is registered and the name of the registered owner(s) and their registered address; and compliance with flag state security certification requirements.

The USCG regulations, intended to align with international maritime security standards, exempt non-U.S. vessels from MTSA vessel security measures, provided such vessels have on board a valid ISSC that attests to the vessel’s compliance with the SOLAS Convention security requirements and the ISPS Code. Future security measures could have a significant financial impact on us. We intend to comply with the various security measures addressed by MTSA, the SOLAS Convention and the ISPS Code.

The cost of vessel security measures has also been affected by the escalation in the frequency of acts of piracy against ships, notably off the coast of Somalia, including the Gulf of Aden and Arabian Sea area. Substantial loss of revenue and other costs may be incurred as a result of detention of a vessel or additional security measures, and the risk of uninsured losses could significantly affect our business. Costs are incurred in taking additional security measures in accordance with Best Management Practices to Deter Piracy, notably those contained in the BMP5 industry standard.


Inspection by Classification Societies

The hull and machinery of every commercial vessel must be classed by a classification society authorized by its country of registry. The classification society certifies that a vessel is safe and seaworthy in accordance with the applicable rules and regulations of the country of registry of the vessel and SOLAS. Most insurance underwriters make it a condition for insurance coverage and lending that a vessel be certified “in class” by a classification society which is a member of the International Association of Classification Societies, the IACS. The IACS has adopted harmonized Common Structural Rules, or the Rules, which apply to oil tankers and bulk carriers contracted for construction on or after July 1, 2015. The Rules attempt to create a level of consistency between IACS Societies. All of our vessels vessels are currently classed DNV GL, Lloyd’s Register and American Bureau of Shipping and certified as being “in class” by all the applicable Classification Societies (e.g., American Bureau of Shipping., Lloyd's Register of Shipping).

A vessel must undergo annual surveys, intermediate surveys, drydockings and special surveys. In lieu of a special survey, a vessel’s machinery may be on a continuous survey cycle, under which the machinery would be surveyed periodically over a five-year period. Every vessel is also required to be drydocked every 30 to 36 months for inspection of the underwater parts of the vessel. If any vessel does not maintain its class and/or fails any annual survey, intermediate survey, drydocking or special survey, the vessel will be unable to carry cargo between ports and will be unemployable and uninsurable which could cause us to be in violation of certain covenants in our loan agreements. Any such inability to carry cargo or be employed, or any such violation of covenants, could have a material adverse impact on our financial condition and results of operations.

40


Risk of Loss and Liability Insurance

The operation of any ocean-going vessel carries an inherent risk of catastrophic marine disasters and property losses caused by adverse weather conditions, mechanical failures, human error, war, terrorism and other circumstances or events. In addition, the transportation of crude oil is subject to the risk of spills, and business interruptions due to political circumstances in foreign countries, hostilities, labor strikes and boycotts. OPA has made liability insurance more expensive for ship owners and operators imposing potentially unlimited liability upon owners, operators and bareboat charterers for oil pollution incidents in the territorial waters of the United States. We believe that our current insurance coverage is adequate to protect us against the principal accident-related risks that we face in the conduct of our business.

Our protection and indemnity insurance, or P&I insurance, covers third party liabilities and other related expenses from, among other things, injury or death of crew, passengers and other third parties, claims arising from collisions, damage to cargo and other third party property and pollution arising from oil or other substances. Our current P&I insurance coverage for pollution is the maximum commercially available amount of $1.0 billion per vessel per incident and is provided by mutual protection and indemnity associations. Each of the vessels currently in our fleet is entered in a protection and indemnity association which is a member of the International Group of Protection & Indemnity Clubs. The 13 protection and indemnity associations that comprise the International Group insure approximately 90% of the world's commercial tonnage and have entered into a pooling agreement to re-insure each association's liabilities. The International Group’s website states that the Pool provides a mechanism for sharing all claims in excess of US$ 10 million up to, currently, approximately US$ 8.2 billion. As a member of protection and indemnity associations, which are, in turn, members of the International Group, we are subject to calls payable to the associations based on its claim records as well as the claim records of all other members of the individual associations and members of the pool of protection and indemnity associations comprising the International Group.

Our hull and machinery insurance covers actual or constructive total loss from covered risks of collision, fire, heavy weather, grounding and engine failure or damages from same. Our war risks insurance covers risks of confiscation, seizure, capture, vandalism, terrorism, sabotage and other war-related risks. Our loss-of-hire insurance covers loss of revenue for not less than $20,000 per day for Suezmax tankers and VLCCs for not less than 180 days resulting from an accident covered by the terms of our hull and machinery insurance for each of our vessels, with a 60 day deductible for all Suezmax tankers and VLCCs. Our LR2/Aframax product tankers are insured for not less than $20,000 for 90 days with a deductible of 14 days.


C.  ORGANIZATIONAL STRUCTURE

See Exhibit 8.1 to this Form 20-F for a list of our significant subsidiaries.

D.  PROPERTY, PLANTS AND EQUIPMENT

The Company's Vessels

The following table sets forth certain information regarding the fleet that we operated as of December 31, 2020: 
VesselBuiltApproximate Dwt.Flag
Type of Employment(1)
Tonnage Owned     
VLCCs
Front Kathrine2009298,000MISpot market
Front Queen2009298,000MISpot market
Front Eminence2009321,000MISpot market
Front Endurance2009321,000MISpot market
Front Cecilie2010297,000HKSpot market
Front Signe2010297,000HKSpot market
Front Duke2016299,000MISpot market
Front Duchess2017299,000MISpot market
Front Earl2017303,000MISpot market
Front Prince2017301,000MISpot market
41


Front Empire2018303,000MISpot market
Front Princess(2)
2018302,000MITime charter
Front Defender2019299,000MISpot market
Front Discovery2019299,000MISpot market
Front Dynamic2020299,000MISpot market
Suezmax Tankers    
Front Ull2014157,000MISpot market
Front Idun2015157,000MISpot market
Front Thor 2010157,000MISpot market
Front Loki2010157,000MISpot market
Front Odin2010157,000MISpot market
Front Njord2010157,000HKSpot market
Front Balder2009156,000MISpot market
Front Brage 2011157,000MISpot market
Front Crown2016157,000MISpot market
Front Challenger2016157,000MISpot market
Front Classic2017157,000MISpot market
Front Clipper2017157,000MISpot market
Front Crystal2017157,000MISpot market
Front Coral2017158,000MISpot market
Front Cosmos2017158,000MISpot market
Front Cascade2017157,000MISpot market
Front Sparta2019157,000HKSpot market
Front Samara(3)
2019157,000HKTime charter
Front Siena2019157,000HKSpot market
Front Singapore(3)
2019157,000HKTime charter
Front Seoul2019157,000HKSpot market
Front Santiago(3)
2019157,000HKTime charter
Front Savannah(3)
2019157,000HKTime charter
Front Suez2019157,000HKSpot market
Front Shanghai(3)
2019157,000HKTime charter
Front Silkeborg2019157,000HKSpot market
Front Cruiser2020157,000MISpot market
LR2/Aframax Tankers    
Front Lion2014115,000MISpot market
Front Puma2015115,000MISpot market
Front Panther2015115,000MISpot market
Front Tiger2015115,000MISpot market
Front Ocelot2016110,000MISpot market
Front Cheetah2016110,000MISpot market
Front Lynx2016110,000MISpot market
Front Cougar2016110,000MISpot market
Front Leopard2016110,000MISpot market
Front Jaguar2016110,000MISpot market
Front Altair(4)
2016110,000MITime charter
42


Front Antares2017110,000MISpot market
Front Vega2017110,000MISpot market
Front Sirius2017