Good day and welcome to the Q4 2016 Ship Finance International Limited Earnings Conference Call. Today's conference is being recorded. At this time I would like to turn the conference over to Mr. Ole B. Hjertaker. Please go ahead, sir.

Thank you and welcome everyone to Ship Finance International and our fourth quarter conference call. With me here today I have our CFO, Harald Gurvin and our Senior Vice President, Andre Reppen. Before we begin our presentation, I would like to note that this conference call will contain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words such as expects, anticipates, intends, estimates or similar expressions are intended to identify these forward-looking statements. These statements are based on our current plans and expectations and involve risks and uncertainties that could cause future activities and results of operations to be materially different from those set forth in the forward-looking statements. Important factors that could cause actual results to differ include conditions in the shipping, offshore and credit markets. For further information, please refer to Ship Finance's reports and filings within the Securities and Exchange Commission. The Board has declared a quarterly dividend of $0.45 per share. This dividend represents $1.80 per share on an annualized basis or more than 12% dividend yield based on closing price of $14.62 yesterday. This is our 52nd consecutive dividend and we have now paid more than $22 per share in dividends or $1.8 billion in aggregate since 2004. Aggregate charter revenues recorded in the quarter including 100% owned subsidiaries accounted for as investment in associate was approximately $154 million and the EBITDA equivalent cash flow in the fourth quarter was approximately $121 million. Last 12 months the EBITDA equivalent has been $503 million. And the reported net income for the quarter was $29 million or $0.31 per share after a one-time expense of $9 million relating to the new $225 million convertible loan and asset impairments of $5.3 million relating to two older vessels. Into October 2016 we…

Thank you, Ole. On this slide we have shown a pro forma illustration of cash flows for the fourth quarter compared to the third quarter. Please note that this is only a guideline to assess the Company's performance and is not in accordance with U.S. GAAP. For the fourth quarter, total charter revenues before profit share were $143.5 million or $1.54 per share, up from $141.3 million in the previous quarter. Suezmax revenues were slightly up in the quarter due to higher revenues from the two Suezmaxes trading and approval with two sister vessels on the Frontline. Liners revenues were in line with the previous quarter but in December which had delivery of the first of the two 19,000 TEU container vessels received charters to MSC which will have true earnings effect in the first quarter. And the second vessel is expected to be delivered in March. The increase in drybulk revenues was mainly due to better earnings on the Handysize drybulk carriers trading in the spot market. We recorded a profit share of $6.8 million under the 50% profit share agreement with Frontline, up from $5.4 million in the previous quarter. The tanker market strengthened in the fourth quarter but was softened somewhat in the first quarter. We also recorded our profit share of approximately $150,000 relating to some of our Handysize drybulk carriers. So, overall, this summarizes to an adjusted EBITDA of $120.6 million for the quarter or $1.29 per share, up from $114.5 million in the previous quarter. We then move on to the profit and loss statement as reported under U.S. GAAP. As we have described in previous earnings calls, our accounting statements are slightly different than those of a traditional shipping company. As our business strategy focuses on long term charter contracts, a large part…

[Operator Instructions] We have our first person in the queue John Reardon from Western International. Please go ahead. Your line is now open.

Hi, good afternoon.

Hi.

I’ve been on conference calls today, mainly in the John Fredriksen Universe. And I get a sense that things are improving, the things have turned. And then I also see an oil and gas turn offs that suddenly in the North Sea and the Bara [ph] Sea seems to have a pickup in activity as far as offshore drilling goes. Would you concur with that? Are you seeing a turn, a turn at hand?

Well, thank you. Yes, I would say there, at least there is a sense of more optimism because the psychology has changed somewhat. We do not think that the charter rates are necessarily changing very soon. And there are many idle units, drilling units out here. So, for the charter rates to really pickup and to sort of, to the good old days to healthy levels. So I think we would have to see a higher utilization of the fleet. But there are certain expectations that there will be more drilling on the back of an oil price, of higher oil price and also based on the fact that we have reserves that are dropping. And you need to replenish those reserves over time also based on an increased oil demand we see from the oil analysts. So, we think that is encouraging. We’ve already seen the U.S. land rig market change dramatically over the last six months, where you had a lot of idle units just in the summer last year. And now, it seems like all the modern units have been reactivated and they already talk about building new rigs. So, we know that sentiment in the market can change quickly also in the offshore market but for now I think we’re cautiously optimistic that the market will balance over time. But we do not anticipate any sort of near term change in charter rates.

Okay. And as a follow-up, Ship Finance has always had a pretty balanced portfolio, you have the containers, you have some bulkers, you got some tankers and then you have the offshore segment. Out of those constituencies of yours, is there one that that’s kind of nudging ahead in terms of improvement? Or, can you give a comment about your various segments and is there one that seems to be emerged like the bulk or slightly seemed to have come to life a little bit? Could you talk about your various groups?

Absolutely. We talked briefly about the offshore sector where we had 34% of our cash flow in the fourth quarter where there are some signs of improvement. But not necessarily near term but utilization there is very low. If you then switch to tankers, which is a segment we started in back in 2004 when we basically had oil tankers in the fleet, that market did pick up significantly in 2016. I would say, and the charter rates came up to higher levels than most people expected. There is an order book there that is being delivered, now in 2017. So, speaking through the market analysts, I think there is an expectation that market on average for 2017 in the crude oil tanker market in particular will remain soft. But then there is a very thin order book after that. So, unless we see a dramatic increase in ship ordering, generally market analysts have a positive view on 2018 and beyond. So, we all of course hope that the market players will remain call it careful and not to order too many vessels aggressively, because that could mean that the charter rate earned in the segment could come up also from today’s level. You mentioned the drybulk segment, and I totally agree with you. There are good signs in that segment. There was a huge ordering boom a couple of years ago, many of those vessels have now been effectively absorbed into the market. I think generally for many shipping segments you also have some new regulations relating to ballast water treatment systems that requires additional investments for all the vessels and also from 2020 the phasing-in of the new low sulfur regime which again would require significant investments for all their vessels to comply. So, that all means that…

Did the Hansen [ph] bankruptcy help the liner business? Are those assets still trading or are they all tied up and are restructuring?

I would say most of those assets have been call it effectively released or sold out of the call it the bankruptcy proceedings also before it happened. I mean, they had a very significant fleet of chartered-in vessels and they were released very, very soon afterwards. So, I would say, if you look at the charter market for container vessels that have certainly pushed charter rates down in the short-term chartering market. But that said, most of the vessels that we’re chartered to hunch-in were old type assets not the new modern high-efficiency assets. And therefore we don’t think that will have a long term impact on the market. But I would say short-term it certainly had an impact because a lot of vessels came out and were released into the market that was already I would say slow and not very busy from a chartering perspective.

Thanks for your time.

Thank you.

Thank you. And now we take our next question from Richard Diamond from Strait Lane Capital. Please go ahead. Your line is now open.

Yes, good afternoon. Can you talk about increasing steel prices globally and the impact on asset values? Thank you.

Excuse me we had a little bad line here. Can you please repeat the question sir?

Yes. Can you talk about increasing steel prices globally and the impact on asset values?

Yes, thank you. The steel price of course, has an impact on two factors call it related to shipping. One is, the shipping of iron ore and also coal; and the other is of course as an input factor in building the vessels. I think if you look at the transportation of ore that’s typically been driven by the Chinese market which, where a lot of that demand has been for infrastructure in China and not necessarily only to build the call it vessels or other assets for export out of China. But the prices there have certainly come up. And that also has an impact on the prices for new buildings where an increasing steel price of course being one of the factors going into a vessel will have to be reflected in the new building prices. And what we have seen over time in many of the sectors as new building prices come upwards, secondhand values also are being pulled after on the back of effectively the cost of replacing the units over time. But I think I would say that the steel price is of course one of the input factors but it’s not, there is also many other call it factors going into building a vessel. So I wouldn’t say that there is of call it immediate expectation that new building prices will increase near-term. What we see at least when we discuss with shipyards and when we look at the order books that we have seen being or new building orders that have been taken over the last few months, I think there have been very few orders which of course means that the shipyards will struggle to fill their capacity. So, what we have seen in the past is that some shipyards have taken…

Thank you very much.

Thank you.

Thank you. [Operator Instructions]. And we’ll take our next question from Steven Mitchell [ph] as a private investor. Please go ahead. Your line is now open.

Thank you very much. First of all I want to commend Ship Finance for being - having transparency in its communication and making certain that the investors know what’s going on most of the time especially through your e-mails. My other question is basically more of an investor relations question. And I’m just curious whether your stockholders’ meeting will be again in September in Bermuda? And if I could possibly find out what the dates are, I’d certainly like to attend with my wife because it’s a rather nice occasion to do so? We’re going to be celebrating our 50th anniversary? Thank you.

Yes, thank you. We usually have the AGM in Bermuda in late September. We will send a press release well in advance. But preliminary it’s in sort of in the week of September 18, typically late in the week. But I cannot give you the exact date of course until it’s formally set and we will send that out. So, I would say, plus or minus September 22nd, but we will notify you of course well in advance through press release.

May I ask you one further point about that. As you say the week of the 18th is I kind of lost my train of thought. But I think well, just to find out do you need some sort of a pass to get into the shareholders’ meeting?

No, there is no pass. I mean, all shareholders will be mailed the notifications. And that should be it. But there will be instructions in the material that is being mailed out in the proxy statement. So that will, you will get that through your broker.

Thank you very much. I appreciate it. And I would say this that our family has been a long-time investor in Ship Finance and we’ve been extremely pleased with the way you’ve handled the operations. Thank you very much for you taking my call.

Thank you. And thanks for calling in.

Thank you. There are no further questions in the queue at this time sir. So, I would like to hand the call back to you for any additional or closing remarks.

Thank you. Then I would like to thank everyone for participating in our fourth quarter conference call. If you have any follow-up questions, there are contact details in the press release or you can get in touch with us through the content pages on our webpage shipfinance.bm. Thank you.

Thank you. So, ladies and gentlemen that will conclude the Q4 2016 Ship Finance International Limited earnings conference call. Thank you for your participation. You may now disconnect.