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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from            to
 Commission file number 000-51412
 Quintana Maritime Limited
  Republic of the Marshall Islands
    
    98-0453513(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 c/o Quintana Management LLC
 Attention: Stamatis Molaris
 Pandoras 13 & Kyprou Street
 166 74 Glyfada
 Greece
  011-30-210-898-6820
  þ o
  o o þ
 o þ




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TABLE OF CONTENTS
 FORM 10-Q
 PART I. FINANCIAL INFORMATION
    
    
    3Item 1. Financial Statements
    
    
    3Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    11Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    24Item 4. Controls and Procedures
    
    
    25PART II. OTHER INFORMATION
    
    
    27Item 1. Legal Proceedings
    
    
    27Item 6. Exhibits
    
    
    28SIGNATURES
    
    
    30Certification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906




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PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 Quintana Maritime Limited
Consolidated Balance Sheets
 December 31,March 31, 2006
    
    2005(unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    
    3,546,592
    
    
    
    4,258,809Inventories
    
    
    1,174,576
    
    
    
    378,488Due from charterers, net
    
    
    472,713
    
    
    
    1,244,123Other receivables
    
    
    651,120
    
    
    
    479,735Prepaid expenses and other current assets
    
    
    889,356
    
    
    
    866,562Total current assets
    
    
    6,734,357
    
    
    
    7,227,717Non-current assets:Vessels, net of accumulated depreciation of $17,210,225 and $11,309,344
    
    
    440,573,988
    
    
    
    446,474,869Other fixed assets, net of accumulated
depreciation of $94,115 and $58,739
    
    
    407,887
    
    
    
    384,247Deferred financing costs, net of accumulated
amortization of $126,389 and $63,194
    
    
    1,895,846
    
    
    
    1,959,041Deferred time charter premium, net of
accumulated amortization of $967,593
and $439,815
    
    
    8,532,407
    
    
    
    9,060,185Deferred dry docking costs, net of accumulated
amortization of $399,808 and $279,865
    
    
    799,613
    
    
    
    919,556Total non-current assets
    
    
    452,209,741
    
    
    
    458,797,898Total assets
    
    
    458,944,098
    
    
    
    466,025,615LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    
    1,976,487
    
    
    
    1,473,592Sundry liabilities and accruals
    
    
    3,245,284
    
    
    
    3,412,759Deferred income
    
    
    1,503,338
    
    
    
    1,715,910Total current liabilities
    
    
    6,725,109
    
    
    
    6,602,261Long Term Debt
    
    
    202,000,000
    
    
    
    210,000,000Shareholders equity:Common stock at $0.01 par value  100,000,000 shares authorized,
23,846,742 shares outstanding
    
    
    238,468
    
    
    
    238,468Additional paid-in capital
    
    
    254,732,530
    
    
    
    254,732,530Deferred stock-based compensation
    
    
    (4,751,823
    )
    
    
    (5,187,200
    )Accumulated deficit
    
    
    (186
    )
    
    
    (360,444
    )Total shareholders equity
    
    
    250,218,989
    
    
    
    249,423,354Total liabilities and shareholders equity
    
    
    458,944,098
    
    
    
    466,025,615




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Quintana Maritime Limited
Consolidated Statement of Operations
 Three Months Ended
    
    
    Three Months EndedMarch 31, 2006
    
    
    March 31, 2005(unaudited)Revenues:Time charter voyage revenue
    
    
    20,911,288
    
    
    
    Revenue from charter operation
    
    
    1,632,857
    
    
    
    Commissions
    
    
    (966,030
    )
    
    
    Net revenue
    
    
    21,578,115
    
    
    
    Expenses:Vessel operating expenses
    
    
    3,771,331
    
    
    
    Voyage expenses
    
    
    1,508,130
    
    
    
    General and administrative expenses
    
    
    2,036,881
    
    
    
    156,866Depreciation and amortization
    
    
    6,056,200
    
    
    
    Total expenses
    
    
    13,372,542
    
    
    
    156,866Operating profit/(loss)
    
    
    8,205,573
    
    
    
    (156,866
    )Other expenses:Interest expense
    
    
    (2,771,341
    )
    
    
    Interest income
    
    
    39,231
    
    
    
    Finance costs
    
    
    (63,195
    )
    
    
    Foreign exchange losses and other, net
    
    
    (42,194
    )
    
    
    Total other expenses
    
    
    (2,837,499
    )
    
    
    Net income/(Loss)
    
    
    5,368,074
    
    
    
    (156,866
    )Earnings/(Loss) per common shareBasic
    
    
    0.23
    
    
    
    (0.02
    )Diluted
    
    
    0.23
    
    
    
    (0.02
    )Weighted average shares outstandingBasic
    
    
    23,387,742
    
    
    
    6,319,492Diluted
    
    
    23,846,742
    
    
    
    6,319,492
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Quintana Maritime Limited
Consolidated Statement of Cash Flows
 ThreeThree Months
    
    
    MonthsEnded March 31,
    
    
    Ended March2006
    
    
    31, 2005(unaudited)Cash flows from operating activities:Net income/ (loss)
    
    
    5,368,074
    
    
    
    (156,866
    )Adjustments to reconcile net income / (loss) to net cash
provided by operating activities:Depreciation and amortization
    
    
    6,056,200
    
    
    
    Amortization of deferred finance and legal costs
    
    
    63,195
    
    
    
    Amortization of time charter fair value
    
    
    527,778
    
    
    
    Amortization of deferred stock based compensation
    
    
    435,377
    
    
    
    Decrease in provision for bad debt
    
    
    (19,935
    )
    
    
    Changes in assets and liabilities:Increase in inventories
    
    
    (796,088
    )
    
    
    Decrease in due from charterer, net
    
    
    791,345
    
    
    
    Increase in other receivables
    
    
    (171,385
    )
    
    
    (18,761
    )Increase in prepaid expenses and other current assets
    
    
    (22,794
    )
    
    
    Increase in accounts payable
    
    
    502,895
    
    
    
    57,158Increase/(decrease) in sundry liabilities and accruals
    
    
    (167,475
    )
    
    
    56,985Decrease in deferred income
    
    
    (212,572
    )
    
    
    Other
    
    
    
    
    
    
    41,200Net cash (used in) / from operating activities
    
    
    12,354,615
    
    
    
    (20,284
    )Cash flows from investing activities:Advances for vessel deposit
    
    
    
    
    
    
    (28,760,314
    )Purchases of property, plant and equipment
    
    
    (59,016
    )
    
    
    (98,616
    )Net cash used in investing activities
    
    
    (59,016
    )
    
    
    (28,858,930
    )Cash flows from financing activities:Repayment of long-term debt
    
    
    (8,000,000
    )
    
    
    Paid-in capital and common stock
    
    
    
    
    
    
    29,587,000Dividends paid
    
    
    (5,007,816
    )
    
    
    Net cash from / (used in) financing activities
    
    
    (13,007,816
    )
    
    
    29,587,000Net increase/ (decrease) in cash and cash equivalents
    
    
    (712,217
    )
    
    
    707,786Cash and cash equivalents at beginning of period
    
    
    4,258,809
    
    
    
    Cash and cash equivalents at end of the period
    
    
    3,546,592
    
    
    
    707,786Supplemental disclosure of cash flow information:Cash paid during the period for interest
    
    
    3,184,148
    
    
    
    Deferred stock-based compensation
    
    
    4,751,823
    
    
    
    
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Quintana Maritime Limited
Notes to the consolidated financial statements
(Unaudited)
(All amounts expressed in U.S. Dollars)
 1. Basis of Presentation and General Information
 The Company
     DeadweightTonnage (in
    
    
    
    
    
    DeliveryCompany
    
    Vessel
    
    Agreement Date
    
    metric tons)
    
    Built
    
    DateFearless Shipco LLC
    
    Fearless I
    
    February 18, 2005
    
    
    73,427
    
    
    
    1997
    
    
    April 11,2005King Coal Shipco LLC
    
    King Coal
    
    February 25, 2005
    
    
    72,873
    
    
    
    1997
    
    
    April 12,2005Coal Glory Shipco LLC
    
    Coal Glory
    
    March 21, 2005
    
    
    73,670
    
    
    
    1995
    
    
    April 13,2005Iron Man Shipco LLC
    
    Iron Man
    
    March 15, 2005
    
    
    72,861
    
    
    
    1997
    
    
    May 6, 2005Coal Age Shipco LLC
    
    Coal Age
    
    March 15, 2005
    
    
    72,861
    
    
    
    1997
    
    
    May 4, 2005Barbara Shipco LLC
    
    Barbara
    
    March 24, 2005
    
    
    73,390
    
    
    
    1997
    
    
    July 20, 2005Coal Pride Shipco LLC
    
    Coal Pride
    
    March 29, 2005
    
    
    72,600
    
    
    
    1999
    
    
    August 16, 2005Linda Leah Shipco LLC
    
    Linda Leah
    
    March 24, 2005
    
    
    73,390
    
    
    
    1997
    
    
    August 22, 2005Iron Beauty Shipco LLC
    
    Iron Beauty
    
    September 2, 2005
    
    
    165,500
    
    
    
    2001
    
    
    October 18, 2005Kirmar Shipco LLC
    
    Kirmar
    
    September 2, 2005
    
    
    165,500
    
    
    
    2001
    
    
    November 11, 2005
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Quintana Maritime Limited
Notes to the consolidated financial statements
(Unaudited)
(All amounts expressed in U.S. Dollars)
 2. Significant Accounting Policies
 Basis of presentation
  Earnings/(loss) per share
   March 31, 2006
    
    March 31, 2006Weighted average common shares outstanding, basic
    
    
    23,387,742
    
    
    
    6,319,492Weighted average restricted stock awards
    
    
    459,000
    
    
    
    Weighted average common shares outstanding,
diluted
    
    
    23,846,742
    
    
    
    6,319,492
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Quintana Maritime Limited
Notes to the consolidated financial statements
(Unaudited)
(All amounts expressed in U.S. Dollars)
 3. Deferred Charges
  Time CharterFinance Costs
    
    
    Drydocking
    
    
    Fair Value(in thousands)December 31, 2005
    
    $
    1,959
    
    
    $
    920
    
    
    $
    9,060Amortization
    
    
    63
    
    
    
    120
    
    
    
    528March 31, 2006
    
    $
    1,896
    
    
    $
    800
    
    
    $
    8,532
 Iron Beauty Iron Beauty
 4. Prepaid Expenses and Other Current Assets
  Three Months EndedPrepaid Expenses and Other Current Assets
    
    March 31, 2006(in thousands)Insurance
    
    $
    492Other prepaid expenses
    
    
    397Total
    
    $
    889
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Quintana Maritime Limited
Notes to the consolidated financial statements
(Unaudited)
(All amounts expressed in U.S. Dollars)
 5. Sundry Liabilities and Accruals
  Three Months EndedSundry Liabilities and Accruals
    
    March 31, 2006(in thousands)Interest expense
    
    $
    1,890Other sundry liabilities and accruals
    
    $
    1,355Total
    
    $
    3,245
 6. Long-Term Debt
 Revolving Credit Facility
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Quintana Maritime Limited
Notes to the consolidated financial statements
(Unaudited)
(All amounts expressed in U.S. Dollars)
 7. Related Party Transactions
    8. Commitments and Contingent Liabilities
  Amount(in thousands)April 1, 2006 to March 31, 2007
    
    $
    202April 1, 2007 to November 30, 2008
    
    
    140Total
    
    $
    342
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Quintana Maritime Limited
Notes to the consolidated financial statements
(Unaudited)
(All amounts expressed in U.S. Dollars)
 8. Commitments and Contingent Liabilities (continued)
  9. Cash Dividend
  10. Stock Incentive Plan
  Outstanding Restricted Stock
  WeightedNumber of
    
    
    
    
    Average FairShares
    
    
    
    
    Value Per ShareOutstanding at December 31, 2005
    
    
    558,750
    
    
    
    
    
    
    $
    10.39Granted
    
    
    
    
    
    
    
    
    
    
    Vested
    
    
    99,750
    
    
    
    
    
    
    $
    10.39Canceled or expired
    
    
    
    
    
    
    
    
    
    
    Outstanding at March 31, 2006
    
    
    459,000
    
    
    
    
    
    
    $
    10.39
   11. Subsequent Events
 
    
    On May 3, 2006, the Company entered into separate sale and purchase contracts (each such contract
an MOA and collectively, the MOAs) with affiliates of Metrobulk Holding S.A.
(Metrobulk), an unaffiliated third party, to purchase (the Acquisition) three Panamax
drybulk carriers and fourteen Kamsarmax drybulk carriers (the
Acquisition Fleet). The Company will purchase the Acquisition Fleet from affiliates of Metrobulk (each such affiliate of
Metrobulk a Seller, and collectively, the Sellers), for the aggregate cash
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Quintana Maritime Limited
Notes to the consolidated financial statements
(Unaudited)
(All amounts expressed in U.S. Dollars)
 11.
    
    Subsequent Events (continued)
 purchase price of $735 million. When delivered, these vessels will have an aggregate
cargo-carrying capacity of approximately 1,380,789 dwt. The three Panamax vessels were
constructed in 2004. Five of the Kamsarmax vessels were built in 2005 or 2006. The nine
remaining Kamsarmax vessels are under construction and are expected to be delivered between
July 2006 and June 2007. Assuming delivery of
these vessels to the Company on
the currently anticipated schedule, the Companys fleet would have a combined cargo-carrying capacity
of 2,296,861 dwt and a dwt weighted average age of 4.0 years in June 2007.With respect to the purchase of the eight secondhand vessels, the relevant Sellers are the
registered owners of such vessels. In the case of six of the nine newbuilding vessels, the
relevant Sellers are not in privity with such shipbuilder, Tsuneishi Shipbuilding Co., Ltd.
of Japan (Tsuneishi), and in the case of the remaining three vessels, the relevant Sellers
are not themselves in direct privity with the shipbuilder but their intermediaries are. The
relevant Sellers of the newbuildings have executed separate sale and purchase agreements
with companies who are, directly or indirectly, the counterparty to Tsuneishi in the
relevant shipbuilding contract.All of the vessels in the Acquisition Fleet are, or upon delivery will be, subject to time
charter agreements with Bunge S.A. of Geneva, an affiliate of Bunge Limited, or Bunge, a
multinational agribusiness company. Sixteen of the vessels in the Acquisition Fleet are, or
at the time of delivery will be, subject to one master time charter with Bunge expiring at
the end of 2010, subject to earlier termination if the parties cannot agree on the
determination of annual rates within contractually agreed ranges. Fourteen of these sixteen
vessels are now subject to the one master time charter, and the two other vessels (Bulk Two
and Bulk Four) are currently under separate charters but will become subject to the one
master time charter following the termination of their current charters. One of the vessels
in the Acquisition Fleet, Bulk Three, is subject to a separate time charter with Bunge which
expires in August 2009.The Company has agreed to pay Fortis Bank N.V./S.A. a fee of $5.0 million in connection with the
arrangement of the Acquisition. The fee will be payable in eight equal installments of
$625,000, each such installment to be due and payable on the delivery of each of the eight
secondhand vessels to be acquired in the Acquisition.
    
    On May 9, 2006, the Company declared a cash dividend of $0.21 per common share. The
dividend will be payable on May 30, 2006 to shareholders of record on May 22, 2006.
    
    On May 9, 2006, the Company approved the issuance of
301,500 shares of restricted
stock to employees and directors, vesting in February 2010.
    
    On May 9, 2006, the Company held its 2006 Annual Meeting of
Stockholders in Athens. At that meeting, all seven of the
Companys existing directors as well as Peter Costalas were
elected to serve as directors until the Companys 2007 Annual
Meeting. In addition, the stockholders of the Company ratified the
selection of Deloitte. Hadjipavlou, Sofianos & Combanis, S.A. as the
Companys independent auditors for the year ending December 31,
2006.
    
On May 10, 2006, the Company signed a mandate letter and a letter of summary terms and
conditions (together, the Commitment Letter) for the establishment of an 8.25-year $735 million
senior revolving credit facility (the Credit Facility) with Fortis Bank N.V. / S.A. Athens Branch
(Fortis) , who will serve as the facility agent. The Commitment Letter is conditioned upon,
among other things, the execution of definitive documentation (Facility Documentation) relating
to the Credit Facility on or before June 30, 2006. We intend to use the net proceeds of the Credit
Facility, together with Placement and the exercise of the Warrants and available funds, to purchase
the new vessels in the Acquisition and to pay outstanding amounts under our existing revolving
credit facility.Loans under the proposed new revolving credit facility may be used to finance part of the
acquisition cost of the newbuildings and secondhand vessels in the Acquisition and to refinance
debt outstanding under our existing revolving credit facility that we incurred to finance or
refinance ship purchases.
    
    On May 11, 2006, the Company sold, in a private placement, 2,045,542 units consisting of
2,045,542 shares of 12% Mandatorily Convertible Preferred Stock that have a liquidation
preference $93.75 per share and 8,182,168 Class A Warrants with
an exercise price of $8.00 per share. Each Unit sold in the private
placement consists of one share of preferred stock and four warrants. The preferred stock
is cumulative and has no voting rights, except as provided in the statement of designations
of the preferred stock or by the laws of the Republic of the Marshall Islands. Holders of
the preferred stock shall generally be entitled to receive cash dividends at the per annum
rate of
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Quintana Maritime Limited
Notes to the consolidated financial statements
(Unaudited)
(All amounts expressed in U.S. Dollars)
 11.
    
    Subsequent Events (continued)
 12% of the liquidation preference of $93.75 per share. Dividends on the preferred stock are
cumulative and will be payable in cash quarterly on February 28, May 30, August 31 and November
30 of each year, commencing on August 31, 2006 for the initial period beginning on the date of
issuance, at an annual rate of 12.0% of the liquidation preference of $93.75 per share of the
Preferred Stock, when, as and if declared by the Companys board of directors out of legally
available funds. The conversion of the preferred Stock and the exercisability of the warrants
are subject to approval by the common shareholders. The sale of the
units resulted in gross proceeds of approximately $191 million
to the Company, $41.2 million of which none attributable to
investments by our founders and management.
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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion and analysis of financial condition and results of operations should
be read in conjunction with our historical consolidated financial statements and the notes thereto
included elsewhere in this filing as well as in conjunction with our Annual Report on Form 10-K for
the year ended December 31, 2005.
 This discussion contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as
amended and the Private Securities Litigation Reform Act of 1995 and are intended to be covered by
the safe harbor provided for under these sections. These statements may include words such as
believe, estimate, project, intend, expect, plan, anticipate, and similar expressions
in connection with any discussion of the timing or nature of future operating or financial
performance or other events. Forward looking statements reflect managements current expectations
and observations with respect to future events and financial performance. Where we express an
expectation or belief as to future events or results, such expectation or belief is expressed in
good faith and believed to have a reasonable basis. However, our forward-looking statements are
subject to risks, uncertainties, and other factors, which could cause actual results to differ
materially from future results expressed, projected, or implied by those forward-looking
statements. The principal factors that affect our financial position, results of operations and
cash flows include, charter market rates, which have recently increased to historic highs, and
periods of charter hire, vessel operating expenses and voyage costs, which are incurred primarily
in U.S. dollars, depreciation expenses, which are a function of the cost of our vessels,
significant vessel improvement costs and our vessels estimated useful lives, and financing costs
related to our indebtedness. Our actual results may differ materially from those anticipated in
these forward looking statements as a result of certain factors which could include the following:
(1) changes in demand in the dry-bulk market, including changes in production of, or demand for,
commodities and bulk cargoes, generally or in particular regions; (2) greater than anticipated
levels of dry-bulk-vessel newbuilding orders or lower than anticipated rates of dry-bulk-vessel
scrapping; (3) changes in rules and regulations applicable to the dry-bulk industry, including
legislation adopted by international bodies or organizations such as the International Maritime
Organization and the European Union or by individual countries; (4) actions taken by regulatory
authorities; (5) changes in trading patterns significantly affecting overall dry-bulk tonnage
requirements; (6) changes in the typical seasonal variations in dry-bulk charter rates; (7) changes
in the cost of other modes of bulk commodity transportation; (8) changes in general domestic and
international political conditions; (9) changes in the condition of the Companys vessels or
applicable maintenance or regulatory standards (which may affect, among other things, our
anticipated drydocking costs); (10) and other factors listed from time to time in our filings with
the Securities and Exchange Commission (the SEC), including our Annual Report on Form 10-K for the year ended
December 31, 2005, our Current Report on Form 8-K filed with the SEC
on May 12, 2006 and our Registration Statement on Form
S-1 filed with the Securities and Exchange
Commission. We disclaim any intent or obligation to update publicly any forward-looking statements,
whether as a result of new information, future events or otherwise, except as may be required under
applicable securities laws.
 Executive Overview
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Results of Operations
  Charters
  Three Months EndedMarch 31, 2006(In US Dollars per day, unless otherwise stated)PANAMAX
    
    CAPESIZE
    
    TOTAL2006
    
    2006
    
    2006Average number of vessels
    
    
    8
    
    
    
    2
    
    
    
    10Total ownership days
    
    
    720
    
    
    
    180
    
    
    
    900Operating days under fixed rate time charter
    
    
    626
    
    
    
    180
    
    
    
    806Operating days under variable rate time charter
    
    
    90
    
    
    
    
    
    
    
    90Utilization
    
    
    99.4
    %
    
    
    100.0
    %
    
    
    99.5
    %Time charter equivalent per ship per day 
fixed rate tc
    
    
    21,818
    
    
    
    35,047
    
    
    
    24,773Time charter equivalent per ship per day -
variable rate tc
    
    
    16,432
    
    
    
    
    
    
    
    16,432Net daily revenue per ship per day
    
    
    20,106
    
    
    
    33,538
    
    
    
    22,792Vessel operating expenses per ship per day
    
    
    (4,186
    )
    
    
    (4,208
    )
    
    
    (4,190
    )
 
    
    Average number of vesselsThis is the number of vessels that
constituted our fleet for the relevant period, as measured by the
sum of the number of days each vessel was a part of our fleet
during the period divided by the number of calendar days in that
period.
    
    Ownership daysWe define ownership days as the aggregate number of
days in a period during which each vessel in our fleet has been
owned by us. Ownership days are an indicator of the size of our
fleet over a period and affect both the amount of revenues and the
amount of expenses that we record during a period.
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
    
    Operating daysWe define operating days as the number of our
available days in a period less the aggregate number of days that
our vessels are off-hire due to planned dry docking repairs or any
other, including unforeseen circumstances. The shipping industry
uses operating days to measure the aggregate number of days in a
period during which vessels actually generate revenues.
    
    Fleet utilizationWe calculate fleet utilization by dividing the
number of our operating days during a period by the number of our
Ownership days during the period. The shipping industry uses fleet
utilization to measure a companys efficiency in finding suitable
employment for its vessels and minimizing the amount of days that
its vessels are off-hire for reasons other than scheduled repairs
or repairs under guarantee, vessel upgrades, special surveys or
vessel positioning.
    
    TCE per ship per dayWe define TCE (time-charter equivalent) per
ship per day rate as our voyage and time charter revenues less
voyage expenses during a period divided by the number of our
operating days during the period, which is consistent with
industry standards. TCE rate is a shipping industry performance
measure used primarily to compare daily earnings generated by
vessels on time charters with daily earnings generated by vessels
on voyage charters, because charter hire rates for vessels on
voyage charters are generally not expressed in per day amounts
while charter hire rates for vessels on time charters generally
are expressed in such amounts.
    
    Net daily revenueWe define net daily revenue as the daily TCE
rate net of commissions but including idle time.
    
    Vessel operating expenses per ship per dayThis include crew wages
and related costs, the cost of insurance, expenses relating to
repairs and maintenance, the cost of spares and consumable stores,
tonnage taxes and other miscellaneous expenses. We define as our
total operating costs divided by the ownership days.
  Kirmar Kirmar
 Logistics Operations
  Net Revenues
 Kirmar
 16




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##### Table of Contents



Commissions and Other Voyage Expenses
  Vessel Operating Expenses
  General and Administrative Expenses
  Depreciation
  Time Charter Value Amortization
 Iron Beauty
 17




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##### Table of Contents



Drydocking
  Inflation
  Liquidity and Capital Resources
   Revolving Credit Facility
 General . Iron Beauty Kirmar
 Fees and Interest.
  Term and Facility Limit.
 18




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##### Table of Contents



Prepayments.
  Guaranty; Security.
 Conditions.
 Financial Covenants.
 
    
    a ratio of total debt to total capitalization (each as defined in the credit
agreement) of no more than 0.65 to 1.00;
    
    minimum liquidity (including available borrowing capacity under the facility) on
the last day of each quarter of $525,000 per vessel;
    
    a ratio of EBITDA to cash interest expense (each as defined in the credit
agreement) of no less than 2.00 to 1.00 on a trailing four-quarter basis;
    
    the fair market value of collateral of at least 135% of outstanding loans and letter of credit; and
    
    consolidated net worth (as defined in the credit agreement) of at least 80% of $248.0 million.
 Restrictive Covenants.
   Proposed New Revolving Credit Facility
 General
 19




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##### Table of Contents



Fees
 Interest
  Term
 Facility Limit
 Prepayments.
   Security
 Conditions
 20




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##### Table of Contents




    
    Satisfactory valuations of the collateral vessels by two independent sale and purchase
brokers appointed by the Agent.
    
    On or before the signing of the Facility Agreement, Quintana Maritime shall have raised
not less than $137 million through the issuance of the new equity securities.
    
    On or before the drawdown related to the last six of the new vessels, Quintana Maritime
shall have raised not less than approximately $33 million through the issuance of new equity
securities.
 Financial Covenants
 
    
    Collateral Maintenance. Until December 31, 2010, the aggregate Fair Market Value of the
collateral vessels shall be no less than 115% of the aggregate outstanding amount under the
new revolving credit facility and 125% thereafter.
    
    Minimum Liquidity. Minimum Liquidity (including available undrawn credit line) to be at
all times equal to $550,000 per vessel, such amount to increase to
$741,000 per vessel through eight equal quarterly increases of
$23,875 per vessel, beginning in March 31, 2009.
    
    Interest Coverage. The ratio of EBITDA (calculated on a trailing twelve month basis)
over the last twelve months to interest expense shall be no less than 2.00 to 1.00.
    
    Leverage. Total Debt over Total Assets, adjusted for the Fair Market Value of the
collateral vessels shall not exceed the level of 75%.
    
    Solvency Test: Minimum Market Adjusted Net Worth shall be $200 million.
 Restrictive Covenants
  Events of Default. failure
 Off-balance Sheet Arrangements
  Contractual Obligations
  21




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##### Table of Contents



One to
    
    Three
    
    MoreWithin One
    
    Three
    
    Years to
    
    Than FiveYear
    
    Years
    
    Five Years
    
    Years
    
    Total(in thousands)Revolving credit facility
    
    
    
    
    
    
    
    
    
    $
    21,877
    
    
    $
    180,123
    
    
    $
    202,000Office lease(1)
    
    $
    202
    
    
    $
    140
    
    
    
    
    
    
    
    
    
    
    
    342Total
    
    $
    202
    
    
    $
    140
    
    
    $
    21,877
    
    
    $
    180,123
    
    
    $
    202,342
 (1)
    
    Represents the U.S. Dollar equivalent of lease payments in Euros as calculated in accordance
with the rate of $1.20 to
1.00 as of
March 31, 2006. Such rate was $1.28 to
1.00 as
of May 11, 2006. Our office lease has a two-year term.
  Critical Accounting Policies
  Risks Related to our Business
 
    
    Because we are a new company with a limited operating history, we may be less successful
in implementing our business strategy than a more seasoned company.
    
    We cannot assure you that our board of directors will declare dividends.
    
    Our earnings may be adversely affected if we do not successfully employ our vessels on
medium- or long-term time charters or take advantage of favorable opportunities in the spot
market.
    
    We may have difficulty properly managing our planned growth through acquisitions of
additional vessels.
    
    We cannot assure you that we will be able to borrow further amounts under our revolving
credit facility, which we may need to fund the acquisition of additional vessels.
    
    Restrictive covenants in our revolving credit facility impose, and any future debt
facilities will impose, financial and other restrictions on us.
    
    Servicing future indebtedness would limit funds available for other purposes, such as
the payment of dividends.
    
    Unless we set aside reserves for vessel replacement, at the end of a vessels useful
life our revenue will decline, which would adversely affect our cash flows and income.
    
    Purchasing and operating secondhand vessels may result in increased operating costs and
reduced fleet utilization.
    
    When our time charters end, we may not be able to replace them promptly or with profitable ones.
    
    Charterers may default on time charters that provide for above-market rates.
 22




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##### Table of Contents




    
    Contracts of affreightment may result in losses.
    
    The international dry-bulk shipping industry is highly competitive, and we may not be
able to compete successfully for charters with new entrants or established companies with
greater resources.
    
    We may be unable to retain key management personnel and other employees in the shipping
industry, which may negatively impact the effectiveness of our management and results of
operations.
    
    Risks associated with operating oceangoing vessels could negatively affect our business
and reputation, which could adversely affect our revenues and stock price.
    
    The operation of dry-bulk carriers has certain unique operational risks.
    
    Our vessels may suffer damage and we may face unexpected costs, which could adversely
affect our cash flow and financial condition.
    
    The shipping industry has inherent operational risks that may not be adequately covered
by our insurance.
    
    If we acquire additional dry-bulk carriers and those vessels are not delivered on time
or are delivered with significant defects, our earnings and financial condition could
suffer.
    
    The aging of our fleet may result in increased operating costs in the future, which
could adversely affect our earnings.
    
    We may earn United States source income that is subject to tax, thereby reducing our
earnings.
    
    U.S. tax authorities could treat us as a passive foreign investment company, which
could have adverse U.S. federal income tax consequences to U.S. holders.
    
    The enactment of proposed legislation could affect whether dividends paid by us
constitute qualified dividend income eligible for a preferential rate of federal income
taxation.
    
    Because we expect to generate all of our revenues in U.S. dollars but may incur a
portion of our expenses in other currencies, exchange rate fluctuations could hurt our
results of operations.
    
    We depend upon a limited number of customers for a large part of our revenues and the
loss of one or more of these customers could adversely affect our financial performance.
    
    We are a holding company, and we depend on the ability of our subsidiaries to distribute
funds to us in order to satisfy our financial obligations and to make dividend payments.
    
    As we expand our business, we may need to improve our operating and financial systems
and will need to recruit suitable employees and crew for our vessels.
    
    The international dry-bulk shipping sector is extremely cyclical and volatile; these
factors may lead to reductions and volatility in our charter hire rates, vessel values and
results of operations.
    
    Charter hire rates in the dry-bulk sector are above historical averages and future
growth will depend on continued economic growth in the world economy that exceeds the
capacity of the growing world fleets ability to match it.
    
    We may not be able to draw down the full amount under our revolving credit facility if
the market value of our vessels declines.
    
    We may breach some of the covenants under our revolving credit facility if the market
price of our vessels, which are above historical averages, declines.
    
    Our substantial operations outside the United States expose us to political,
governmental and economic instability, which could harm our operations.
    
    Seasonal fluctuations in industry demand could adversely affect our operating results
and the amount of available cash with which we can pay dividends.
    
    We are subject to regulation and liability under environmental laws that could require
significant expenditures and affect our cash flow and net income.
    
    We are subject to international safety regulations and the failure to comply with these
regulations may subject us to increased liability, may adversely affect our insurance
coverage and may result in a denial of access to, or detention in, certain ports.
    
    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.
    
    Increased inspection procedures and tighter import and export controls could increase
costs and disrupt our business.
    
    An economic slowdown in Asia could have a material adverse effect on our business,
financial position and results of operations.
    
    World events could affect our results of operations and financial condition.
 23




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##### Table of Contents



Recent Developments
        24




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk
 Interest Rates
   Amount of Borrowings
    
    LIBOR lock(in millions)
    
    rate
    
    Expiry Date$103.0
    
    4.29%
    
    
    April 7, 2006$62.0
    
    4.35%
    
    
    April 18, 2006$37.0
    
    4.82875%
    
    
    April 28, 2006
  Amount of Borrowings
    
    LIBOR lock(in millions)
    
    rate
    
    Expiry Date$103.0
    
    4.90125%
    
    
    May 18, 2006$62.0
    
    4.90125%
    
    
    May 18, 2006$37.0
    
    4.97%
    
    
    May 18, 2006
  Currency and Exchange Rates
  
 Item 4. Controls and Procedures
  25




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##### Table of Contents



26




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  Legal Proceedings Related to Mr. Molaris
  Item 2. Changes in Securities and Use of Proceeds
      27




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##### Table of Contents



Item 6. Exhibits
 ExhibitNo.
    
    
    
    Description3.1*
    
    
    
    Amended and Restated Articles of Incorporation3.2*
    
    
    
    Amended and Restated By-laws4.1*
    
    
    
    Form of Share Certificate10.1*
    
    
    
    Agreement Related to Credit Facility10.2*
    
    
    
    First Supplemental Agreement to US$262,456,000 Credit Facility10.3*
    
    
    
    Second Supplemental Agreement to US$262,456,000 Credit Facility10.4*
    
    
    
    Registration Rights Agreement10.5*
    
    
    
    2005 Stock Incentive Plan10.6
    
    
    
    Form of Phantom Stock Award Agreement (incorporated by reference
to Exhibit 10.2 to Current Report on Form 8-K filed November 3, 2005)10.7
    
    
    
    Form of Restricted Stock Award Agreement (incorporated by reference
to Exhibit 10.2 to Current Report on Form 8-K filed November 3, 2005)10.8
    
    
    
    Revolving Credit Facility (incorporated by reference to Exhibit
10.1 to Current Report on Form 8-K filed October 6, 2005)10.9
    
    
    
    Services Agreement between Quintana Maritime Limited and Quintana
Minerals Corporation, dated as of October 31, 2005 (incorporated by
reference to Exhibit 10.1 to Current Report on Form 8-K filed
November 3, 2005)31.1**
    
    
    
    Certification pursuant to Section 302 of the Sarbanes- Oxley Act of
2002 by Chief Executive Officer.31.2**
    
    
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 by Chief Financial Officer.
 28




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##### Table of Contents



Exhibit No.
    
    
    
    Description32.1***
    
    
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 by Chief Executive Officer.32.2***
    
    
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 by Chief Financial Officer.
 
 *
    
    Incorporated by reference to the Companys Registration Statement filed on Form S-1 (File No.
333-124576) with the Securities and Exchange Commission on July 14, 2005.**
    
    Filed herewith***
    
    Furnished herewith 29




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##### Table of Contents



SIGNATURES
  QUINTANA MARITIME LIMITEDBy:
    
    /s/ Stamatis MolarisStamatis MolarisChief Executive Officer, President and Director(Principal Executive Officer)/s/ Paul J. CornellPaul J. CornellChief Financial Officer(Principal Financial Officer; Principal Accounting Officer)




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNo.
    
    
    
    Description3.1*
    
    
    
    Amended and Restated Articles of Incorporation3.2*
    
    
    
    Amended and Restated By-laws4.1*
    
    
    
    Form of Share Certificate10.1*
    
    
    
    Agreement Related to Credit Facility10.2*
    
    
    
    First Supplemental Agreement to US$262,456,000 Credit Facility10.3*
    
    
    
    Second Supplemental Agreement to US$262,456,000 Credit Facility10.4*
    
    
    
    Registration Rights Agreement10.5*
    
    
    
    2005 Stock Incentive Plan10.6
    
    
    
    Form of Phantom Stock Award Agreement (incorporated by reference
to Exhibit 10.2 to Current Report on Form 8-K filed November 3, 2005)10.7
    
    
    
    Form of Restricted Stock Award Agreement (incorporated by reference
to Exhibit 10.2 to Current Report on Form 8-K filed November 3, 2005)10.8
    
    
    
    Revolving Credit Facility (incorporated by reference to Exhibit
10.1 to Current Report on Form 8-K filed October 6, 2005)10.9
    
    
    
    Services Agreement between Quintana Maritime Limited and Quintana
Minerals Corporation, dated as of October 31, 2005 (incorporated by
reference to Exhibit 10.1 to Current Report on Form 8-K filed
November 3, 2005)31.1**
    
    
    
    Certification pursuant to Section 302 of the Sarbanes- Oxley Act of
2002 by Chief Executive Officer.31.2**
    
    
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 by Chief Financial Officer.32.1***
    
    
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 by Chief Executive Officer.32.2***
    
    
    
    Certification pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 by Chief Financial Officer.
 
 *
    
    Incorporated by reference to the Companys Registration Statement filed on Form S-1 (File No.
333-124576) with the Securities and Exchange Commission on July 14, 2005.**
    
    Filed herewith***
    
    Furnished herewith