Good day and welcome to the Q1 2015 Ship Finance International Ltd Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the call over to Ole Hjertaker, CEO. Please go ahead, sir.

Thank you and welcome everyone to Ship Finance International and our first quarter conference call. With me here today, I also have our CFO, Harald Gurvin. 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 with the Securities and Exchange Commission. The Board has declared an increased dividend of $0.43 up from the $0.42 dividend declared in the previous quarter. This dividend represents $1.72 per share on an annualized basis or 11% dividend yield based on closing price yesterday and the Company has paid an aggregate of more than $18 dividend per share since 2004. Reported net income for the quarter was $33 million or $0.35 per share, but if we adjust for non-recurring and non-cash items, the adjusted net income was $0.46 per share. Aggregate charter revenues recorded in the quarter including a 100% owned subsidiaries accounted for as investment in associate was $153 million. The EBITDA equivalent cash flow in the third quarter was approximately 127 million and over the last 12 months the EBITDA equivalent has been approximately 550 million. In the first quarter and including all 100% owned assets, 44% of our charter revenues came from the offshore segment, around 30% from…

Thank you, Ole. On this slide we've shown our pro forma illustration of cash flow for the first quarter compared to the fourth 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 first quarter total charter revenues before profits split and cash sweep were $139.1 million or $1.36 per share, down from $163.6 million in the previous quarter. The main reason for the reduction is the decline in offshore revenues due to the sale of West Polaris at the year end and scheduled reductions in the charter rates of West Hercules and West Taurus in November 2014 and February 2015. It is important to note that the scheduled rate reductions are balanced by reduced interest and debt repayments on the related financings for the net effect on the distribution capacity is neutral. Revenues from VLCCs was slightly down in the quarter due to the sale of three older VLCCs in the fourth quarter. While revenues from Suezmax's were up due to stronger earnings on the two Suezmax tankers trading in the spot market. One of which was out of service for 33 days during the quarter in connection with the special survey and a major upgrade to improve earnings efficiency. Following the revised agreement with Frontline with effects from 1st July 2015, fixed charter revenues from the vessels are expected to increase nicely in the third and fourth quarter, but they will reduce in 2016 compared to the recent agreement where rates were scheduled to go back to the original level. Revenues from liners were up in the quarter due to the delivery of the remaining two 8,700 TEU container newbuildings in January 2015 which would also in cash flow affect in the second quarter.…

[Operator Instructions] We have a question from Matthias Detjen from Morgan Stanley. Please go ahead.

Good morning gentlemen and congratulations on the strong quarter. The dry-bulk deal with Golden Ocean, I guess the market is very weak right now. Does that mean that you think the market has bottomed out and you think that - do you maybe think there might be more opportunities in that market right now?

Well, we certainly think that the market isn't on the right side of the cycle sort to speak from an investment perspective. When we look at the different segments, we take cyclical view and generally you can say that its always possible to structure deals also when you feel that you’re very high up to the cycle but you have to be very careful with who the counterparty is and how you mitigate call it the risk factors linked to the risk factor if the market goes down, that could be problem servicing the charter hire. When we're down in the cycle, actually we believe we are in the dry-bulk segment right now, we see more opportunity in that piece and it’s more interesting to see, call it volatility, linked to the charter market going up again. We have seen values coming down sharply. A year ago these vessels would have been worth probably more than $50 million a piece, now we’re buying them much, much cheaper. So from that perspective and with the long term investment profile, remember we had 10 years charters here with quarterly profits bid calculation, we think the optionality could be quite interesting from our side.

That makes sense. And are there any other markets that you still see as a cyclical low where you'd also be interested investing and deploying the capital that you have?

We are definitely in a relative cyclical low also in the offshore segment. Unfortunately there, I think it will take a little longer until we see what was a - the best investment opportunities, call it at the bottom of the cycle. So we are a bit cautious on the offshore side; of course we can do deals there as well but we would be quite careful now because we are not sure if that market really has bottomed out quite yet. But we look at opportunities across all our segments and we just did a deal on the dry-bulk side. We've just taken a delivery of four newbuilding container ships, there are other opportunities also on the container side and we also look at opportunities on the tanker side. So, I would say there are opportunities across the board but right now I think we would be more cautious on the offshore side for the time being. I think over time there could be some, hopefully some very interesting opportunities coming up also on the offshore side.

And looking at the offshore side a bit more, would you say that you would be more interested in rigs on so like offshore supply vessels or is - your preference between the two there?

Well I would say, our investment preference on the offshore side is commodity type assets. So what we own is call it modern ultra deepwater drilling rigs, we own call it more standard but modern jackup drilling rigs and we own anchor handlers and platform supply vessels. We have always been cautious, we have not invested in seismic vessels for instance or cabling vessels or call it or niche type assets where there is a bigger risk of being what can we say, left off in a corner if the market should turn down and they are limited call it counterparties you could actually charter those two. So but we are pretty flexible in what we would look at but we look at each deal individually and if we think that there is more call it more a structural risk in the asset itself i.e. more special assets, it has to be mitigated by other factors like length of the charter whether it’s a full payout, who is the counterparty et cetera.

Okay. That makes sense. And then I have one question if you could just walk us through the, I mean you might have explained this before but how do you arrive at the $168 million in the Frontline deal and the 55 million shares that were issued by Ship Finance. How did you arrive at that valuation or that value there for these charters?

Yes well these - process is like this, it’s always a negotiation and we have - I’ll call it opinion of what we believe the value of what was a - a value what we give away and of course we are giving away some of the fixed rate charters, of course, you can apply a discount rate to that and that discount rate may depend on your view on cost of capital. We have a profit split, one that's higher and it's starting - percentage and it has started from a lower level. We have good visibility in what we say in charter rates certainly on forward rates next 18 months, so you can have a view on the value there and of course also you can have a view on the value of the Frontline shares. At least on the Frontline shares there is very significant trading in those shares basically the full shareholder basis traded several times over the last 12 months. So from that perspective, it’s - there is certainly liquidity there to support issuing the shares to us. But that said, no decision has been made from our side as to if and when these shares could be distributed as a special dividend or if you want to sell them or something else. I think generally with the firm tanker market what was a, having investments in that segment right now may not be the worse for investments.

That's true. Thank you very much for the update.

Thank you.

[Operator Instructions] There are no further questions at this moment, Mr. Hjertaker.

Okay, thank you. Then I would like to thank everyone for participation in our first quarter conference call. And if you have any follow-up questions there are contact details in the press release. Thank you very much.