**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 2054**




**FORM
      20-F**




(Mark
      One)


**oREGISTRATION
      STATEMENT
      PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF
      1934**


**OR**


**x ANNUAL
      REPORT
      PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934**


For
      the
      fiscal year ended December 31, 2005


**OR**


**oTRANSITION
      REPORT
      PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934**


For
      the
      transition period from _________________ to ________________




**oSHELL
      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 number:  **001-32640**




**DOUBLE
      HULL TANKERS, INC.**


(Exact
      name of Registrant as specified in its charter)


**Not
      Applicable**


(Translation
      of Registrant’s name into English)


**Jersey**


(Jurisdiction
      of incorporation or organization)


**26
      New Street**


**St.
      Helier, Jersey, JE23RA**


**Channel
      Islands**


(Address
      of principal executive offices)




Securities
      registered or to be registered pursuant to Section 12(b) of the
      Act.




Title of each class
              Name
                  of each exchange on which registered**Common stock, par value
                $0.01 per
                share**
              **New
                  York Stock
                  Exchange**







Securities
      registered or to be registered pursuant to Section 12(g) of the
      Act.


**None**


Securities
      for which there is a reporting obligation pursuant to Section 15(d) of the
      Act.


**None**


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.




**30,006,250
      Common stock, par value $0.01 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
      o** **No** **x**


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
        o** **No** **x**
 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
        x** **No** **o**


Indicate
      by check mark which financial statement item the registrant has elected to
      follow.


Item
      17
**o** Item
      18
**x**


If
      this
      report is an annual report, indicate by check mark whether the registrant is
      shell company (as defined in Rule 12b-2 of the Exchange Act).


****Yes
      o****No****x****







**TABLE
      OF CONTENTS**




PAGEINTRODUCTION
                  AND USE OF CERTAIN
                  TERMS
              1CAUTIONARY
                  NOTE REGARDING FORWARD-LOOKING
                  STATEMENTS
              3PART
                  I
              
              4ITEM
                  1.
              IDENTITY
                  OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
              4ITEM
                  2.
              OFFER
                  STATISTICS AND EXPECTED TIME TABLE
              4ITEM
                  3.
              KEY
                  INFORMATION
              5ITEM
                  4.
              INFORMATION
                  ON THE COMPANY
              21ITEM
                  5.
              OPERATING
                  AND FINANCIAL REVIEW AND PROSPECTS
              36ITEM
                  6.
              DIRECTORS,
                  SENIOR MANAGEMENT AND EMPLOYEES
              47ITEM
                  7.
              MAJOR
                  SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
              53ITEM
                  8.
              FINANCIAL
                  INFORMATION
              55ITEM
                  9.
              THE
                  OFFER AND LISTING
              57ITEM
                  10.
              ADDITIONAL
                  INFORMATION
              58ITEM
                  11.
              QUANTITATIVE
                  AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
              70ITEM
                  12.
              DESCRIPTION
                  OF SECURITIES OTHER THAN EQUITY SECURITIES
              70PART
                  II
              
              70ITEM
                  13.
              DEFAULTS,
                  DIVIDEND ARREARAGES AND DELINQUENCIES
              70ITEM
                  14.
              MATERIAL
                  MODIFICATION TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
                  PROCEEDS
              70ITEM
                  15.
              CONTROLS
                  AND PROCEDURES
              71ITEM
                  16A.
              AUDIT
                  COMMITTEE FINANCIAL EXPERT
              71ITEM
                  16B.
              CODE
                  OF ETHICS
              71ITEM
                  16C.
              PRINCIPAL
                  ACCOUNTANT FEES AND SERVICES
              72ITEM
                  16D.
              EXEMPTIONS
                  FROM THE LISTING STANDARDS FOR AUDIT COMMITTEE
              72ITEM
                  16E.
              PURCHASES
                  OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
              72PART
                  III
              
              72ITEM
                  17.
              FINANCIAL
                  STATEMENTS
              72ITEM
                  18.
              FINANCIAL
                  STATEMENTS
              72ITEM
                  19.
              EXHIBITS
              72




i
 Table
            of Contents


**INTRODUCTION
      AND USE OF CERTAIN
      TERMS**




In
      this
      report, unless we specify otherwise, all references and data in this report
      to
      our “business,” our “vessels” and our “fleet” refer to our fleet of Vessels that
      we acquired simultaneously with the closing of our initial public offering,
      or
“IPO”, on October 18, 2005. Unless we specify otherwise, all references in this
      report to “we,” “our,” “us” and “our company” refer to Double Hull
      Tankers, Inc. and its subsidiaries and references to our “common stock” are
      to our common registered shares. The shipping industry’s functional currency is
      the U.S. dollar. All of our revenues and most of our operating costs are in
      U.S.
      dollars. All references in this report to “$” and “dollars” refer to U.S.
      dollars.




The
      following are definitions of certain terms that are commonly used in the tanker
      industry and in this report.




**Term**
            **Definition**


ABS
            American
                Bureau of Shipping, an American classification society.Aframax
            A
                medium size crude oil tanker of approximately 80,000 to 120,000 dwt.
                Aframaxes operate on many different trade routes, including in the
                Caribbean, the Atlantic, the North Sea and the Mediterranean. They
                are
                also used in ship-to-ship transfer of cargo in the US Gulf typically
                from
                VLCCs for discharge in ports from which the larger tankers are restricted.
                Modern Aframaxes can generally transport from 500,000 to 800,000
                barrels
                of crude oil.Annual
                Survey
            The
                inspection of a vessel pursuant to international conventions, by
                a
                classification society surveyor, on behalf of the flag state, that
                takes
                place every year.Bareboat
                Charter
            A
                Charter under which a charterer pays a fixed daily or monthly rate
                for a
                fixed period of time for use of the vessel. The charterer pays all
                voyage
                and vessel operating expenses. Bareboat charters are usually for
                a long
                term. Also referred to a “Demise Charter.”Bulk
                Carriers
            Vessels
                which are specially designed to carry “dry” cargoes in bulk form, such as
                coal, iron ore and grain.Bunker
            Fuel
                oil used to operate a vessel’s engines, generators and
                boilers.Charter
            Contract
                for the use of a vessel, generally consisting of either a voyage,
                time or
                bareboat charter.Charterer
            The
                company that hires a vessel pursuant to a Charter.Charter
                hire
            Money
                paid to the ship-owner by a charterer for the use of a vessel under
                a time
                charter or bareboat charter.Classification
                Society
            An
                independent society that certifies that a vessel has been built and
                maintained according to the society’s rules for that type of vessel and
                complies with the applicable rules and regulations of the country
                in which
                the vessel is registered, as well as the international conventions
                which
                that country has ratified. A vessel that receives its certification
                is
                referred to as being “in class” as of the date of issuance.Contract
                of Affreightment
            A
                contract of affreightment, or COA, is an agreement between an owner
                and a
                charterer that obligates the owner to provide a vessel to the charterer
                to
                move specific quantities of cargo over a stated time period, but
                without
                designating specific vessels or voyage schedules, thereby providing
                the
                owner greater operating flexibility than with voyage charters
                alone.Draft
            Vertical
                distance between the waterline and the bottom of the vessel’s
                keel.Double
                Hull
            Hull
                construction design in which a vessel has an inner and outer side
                and
                bottom separated by void space, usually 2 meters in width.




Table
          of Contents




**Term**
              **Definition**


Drydocking
            The
                removal of a vessel from the water for inspection and/or repair of
                those
                parts of a vessel which are below the water line. During drydockings,
                which are required to be carried out periodically, certain mandatory
                classification society inspections are carried out and relevant
                certifications issued. Drydockings are generally required once every
                30 to
                60 months.Dwt
            Deadweight
                tons, which refers to the carrying capacity of a vessel by
                weight.Hull
            Shell
                or body of a ship.IMO
            International
                Maritime Organization, a United Nations agency that issues international
                regulations and standards for shipping.Lightering
            To
                partially discharge a tanker onto another tanker or barge.LOOP
            Louisiana
                Offshore Oil Port, Inc.Lloyds
            Lloyds
                Register, a U.K. classification society.Metric
                Ton
            A
                metric ton of 1,000 kilograms.Newbuilding
            A
                new vessel under construction or just completed.Off
                Hire
            The
                period a vessel is unable to perform the services for which it is
                required
                under a time charter. Off hire periods typically include days spent
                undergoing repairs and drydocking, whether or not scheduled.OPA
            Oil
                Pollution Act of 1990 of the United States.OPEC
            The
                Organization of the Petroleum Exporting Countries, is an international
                organization of oil-exporting developing nations that coordinates
                and
                unifies the petroleum policies of its member countries.Petroleum
                Products
            Refined
                crude oil products, such as fuel oils, gasoline and jet fuel.Protection
                and Indemnity (or P&I) Insurance
            Insurance
                obtained through mutual associations (called “Clubs”) formed by shipowners
                to provide liability insurance protection against a large financial
                loss
                by one member by contribution towards that loss by all members. To
                a great
                extent, the risks are reinsured.Scrapping
            The
                disposal of vessels by demolition for scrap metal.Special
                Survey
            An
                extensive inspection of a vessel by classification society surveyors
                that
                must be completed at least each five year period. Special Surveys
                require
                a vessel to be drydocked.Spot
                Market
            The
                market for immediate chartering of a vessel, usually for single
                voyages.Tanker
            Ship
                designed for the carriage of liquid cargoes in bulk with cargo space
                consisting of many tanks. Tankers carry a variety of products including
                crude oil, refined petroleum products, liquid chemicals and liquefied
                gas.TCE
            Time
                charter equivalent, a standard industry measure of the average daily
                revenue performance of a vessel. The TCE rate achieved on a given
                voyage
                is expressed in $/day and is generally calculated by subtracting
                voyage
                expenses, including bunkers and port charges, from voyage revenue
                and
                dividing the net amount (time charter equivalent revenues) by the
                round-trip voyage duration.Time
              Charter
            A
                Charter under which a customer pays a fixed daily or monthly rate
                for a
                fixed period of time for use of the vessel. Subject to any restrictions
                in
                the charter, the customer decides the type and quantity of cargo
                to be
                carried and the ports of loading and unloading. The customer pays
                the
                voyage expenses such as fuel, canal tolls, and port charges. The
                ship-owner pays all vessel operating expenses such as the management
                expenses and crew costs.




2
 Table
          of Contents


**Term**
              **Definition**




ULCC
            ULCC
                is the abbreviation for ultra large crude carrier, a large crude
                oil
                tanker of more than 350,000 dwt. ULCCs can transport three million
                barrels
                of crude oil and are mainly used on the same long haul routes as
                VLCCs.Vessel
                Operating Expenses
            The
                costs of operating a vessel that is incurred during a charter, primarily
                consisting of crew wages and associated costs, insurance premiums,
                 lubricants and spare parts, and repair and maintenance costs. Vessel
                operating expenses exclude fuel and port charges, which are known
                as
                “voyage expenses.” For a time charter, the ship-owner pays vessel
                operating expenses. For a bareboat charter, the charterer pays vessel
                operating expenses.Vessels
            The*Overseas
                Ann*,
                the*Overseas
                Chris*,
                the*Regal
                Unity*,
                the*Overseas
                Cathy*,
                the*Overseas
                Sophie*,
                the*Rebecca*and the*Ania*.VLCC
            VLCC
                is the abbreviation for very large crude carrier, a large crude oil
                tanker
                of approximately 200,000 to 320,000 dwt. Modern VLCCs can generally
                transport two million barrels or more of crude oil. These vessels
                are
                mainly used on the longest (long haul) routes from the Arabian Gulf
                to
                North America, Europe, and Asia, and from West Africa to the U.S.
                and Far
                Eastern destinations.Voyage
                Expenses
            Expenses
                incurred due to a vessel traveling to a destination, such as fuel
                cost and
                port charges.Worldscale
            Industry
                name for the Worldwide Tanker Nominal Freight Scale published annually
                by
                the Worldscale Association as a rate reference for shipping companies,
                brokers, and their customers engaged in the bulk shipping of oil
                in the
                international markets. Worldscale is a list of calculated rates for
                specific voyage itineraries for a standard vessel, as defined, using
                defined voyage cost assumptions such as vessel speed, fuel consumption,
                and port costs. Actual market rates for voyage charters are usually
                quoted
                in terms of a percentage of Worldscale.Worldscale
                Flat Rate
            Base
                rates expressed in U.S.$ per ton which apply to specific sea
                transportation routes, calculated to give the same return as Worldscale
                100.Worldscale
                Points
            The
                freight rate negotiated for spot voyages expressed as a percentage
                of the
                Worldscale Flat rate.





**CAUTIONARY
      NOTE REGARDING FORWARD-LOOKING
      STATEMENTS**




This
      report contains certain forward-looking statements and information relating
      to
      us that are based on beliefs of our management as well as assumptions made
      by us
      and information currently available to us, in particular under the headings
      “Item 4. Information on the Company” and “Item 5. Operating and Financial Review
      and Prospects.” When used in this report, words such as “believe,” “intend,”
“anticipate,” “estimate,” “project,” “forecast,” “plan,” “potential,” “will,”
“may,” “should,” and “expect” and similar expressions are intended to identify
      forward-looking statements but are not the exclusive means of identifying such
      statements. These statements reflect our current views with respect to future
      events and are based on assumptions and subject to risks and uncertainties.
      Given these uncertainties, you should not place undue reliance on these
      forward-looking statements. We discuss many of these risks in this report in
      greater detail under the subheadings “Item 3. Key Information–Risk Factors”
and
“Item 5.
      Operating and Financial Review and Prospects–Management’s Discussion
      and Analysis of Financial Condition and Results of Operations.” These
      forward-looking statements represent our estimates and assumptions only as
of
      the
      date of this report and are not intended to give any assurance as to future
      results. Factors that might cause future results to differ include, but are
      not
      limited to, the following:




3
 Table
          of Contents






·
            future
                payments of dividends and the availability of cash for payment of
                dividends;




·
            future
                operating or financial results, including with respect to the amount
                of
                basic hire and additional hire that we may
                receive;




·
            statements
                about future, pending or recent acquisitions, business strategy,
                areas of
                possible expansion and expected capital spending or operating
                expenses;




·
            statements
                about tanker industry trends, including charter rates and vessel
                values
                and factors affecting vessel supply and
                demand;




·
            expectations
                about the availability of vessels to purchase, the time which it
                may take
                to construct new vessels or vessels’ useful
                lives;




·
            expectations
                about the availability of insurance on commercially reasonable
                terms;




·
            our
                ability to repay our credit facility, to obtain additional financing
                and
                to obtain replacement charters for our
                vessels;




·
            assumptions
                regarding interest rates;




·
            changes
                in production of or demand for oil and petroleum products, either
                globally
                or in particular regions;




·
            greater
                than anticipated levels of newbuilding orders or less than anticipated
                rates of scrapping of older
                vessels;




·
            changes
                in trading patterns for particular commodities significantly impacting
                overall tonnage requirements;




·
            change
                in the rate of growth of the world and various regional
                economies;




·
            risks
                incident to vessel operation, including discharge of pollutants;
                and




·
            unanticipated
                changes in laws and regulations.




We
      undertake no obligation to publicly update or revise any forward-looking
      statements contained in this report, whether as a result of new information,
      future events or otherwise, except as required by law. In light of these risks,
      uncertainties and assumptions, the forward-looking events discussed in this
      report might not occur, and our actual results could differ materially from
      those anticipated in these forward-looking statements.




**PART
      I**






**ITEM
              1.**
            **IDENTITY
                OF
                DIRECTORS, SENIOR MANAGEMENT AND ADVISORS**
              
              Not
                Applicable.




**ITEM
              2.**
            **OFFER
                STATISTICS AND EXPECTED TIME TABLE**
              
              Not
                Applicable.






4
 Table
          of Contents






**ITEM
              3.**
            **KEY
                INFORMATION**




**A.**
            **SELECTED
                FINANCIAL DATA**




The
      following selected combined financial and other data summarize our historical
      financial and other information for Double Hull Tankers, Inc. (“DHT”) for the
      period from October 18, 2005 through December 31, 2005 and our predecessor
      (“Predecessor” or “OSG Crude”). We have derived the selected statement of
      operations data set forth below for the years ended December 31, 2005, 2004
      and
      2003 and the selected balance sheet data as of December 31, 2005 and 2004
      from **** DHT’s
      audited financial statements and from our predecessor combined carve-out
      financial statements included in this report. The selected financial and other
      data set forth below as of December 31, 2001 and 2002 and for the year
      ended December 31, 2001 have been derived from our predecessor combined
      carve-out financial statements not included in this report (2001 unaudited).
      The
      selected combined financial data are not indicative of the results we would
      have
      achieved or of future results had we operated as an independent stand-alone
      company. This information should be read in conjunction with other information
      presented in this report, including “Item 5. Operating and Financial Review and
      Prospects–Management’s Discussion and Analysis of Financial Condition and
      Results of Operations” and our historical predecessor combined carve-out
      financial statements and the notes thereto.




**2005**
            
            **Year
                ended December 31,****Successor**
              **Oct
                18-**
              **Dec
                31**
            
            **Predecessor**
              **Jan
                1 -**
              **Oct
                17**
            
            **2004**
            
            **2003**
            
            **2002**
            
            **2001****(in
                thousands, except per share data)****Statement
                of operations data:**Time
                charter equivalent revenues
            
            $
            20,173
            
            $
            83,362
            
            $
            135,967
            
            $
            65,840
            
            $
            31,347
            
            $
            38,837Total
                ship operating expenses
            
            
            7,899
            
            
            34,654
            
            
            40,632
            
            
            30,476
            
            
            28,330
            
            
            21,545Income
                from vessel operations
            
            
            12,274
            
            
            48,708
            
            
            95,335
            
            
            35,364
            
            
            3,017
            
            
            17,292Net
                Income (loss)
            
            
            9,469
            
            
            43,641
            
            
            86,690
            
            
            29,431
            
            
            (4,763
            )
            
            8,444Net
                income per share - basic and diluted
            
            
            0.32**Balance
                sheet data (at end of year):**Newbuildings
            
            
            
            
            
            
            
            
            
            
            
            36,202
            
            
            66,951
            
            
            17,322Vessels,
                net
            
            
            339,491
            
            
            
            
            
            355,571
            
            
            326,458
            
            
            295,071
            
            
            308,086Total
                assets
            
            
            364,062
            
            
            
            
            
            388,518
            
            
            376,193
            
            
            372,783
            
            
            331,109Current
                liabilities
            
            
            10,828
            
            
            
            
            
            7,243
            
            
            7,319
            
            
            6,564
            
            
            2,103Long-term
                liabilities(1)
            
            
            236,000
            
            
            
            
            
            256,477
            
            
            331,270
            
            
            357,826
            
            
            314,239Stockholders’
                equity
            
            
            117,234
            
            
            
            
            
            124,798
            
            
            37,604
            
            
            8,393
            
            
            14,740**Cash
                flow data:**Net
                cash provided by operating activities
            
            
            15,893
            
            
            83,210
            
            
            87,988
            
            
            41,272
            
            
            5,335
            
            
            20,288Net
                cash (used in) investing activities
            
            
            (412,580
            )
            
            (1,001
            )
            
            (13,436
            )
            
            (14,496
            )
            
            (51,723
            )
            
            (41,395)Net
                cash provided by (used in) financing activities
            
            
            412,580
            
            
            (82,209
            )
            
            (74,552
            )
            
            (26,776
            )
            
            46,388
            
            
            21,107**Fleet
                data:**Number
                of tankers owned (at end of period)
            
            
            7
            
            
            7
            
            
            7
            
            
            6
            
            
            5
            
            
            5Revenue
                days(2)
            
            
            520
            
            
            1,987
            
            
            2,451
            
            
            1,887
            
            
            1,780
            
            
            1,224**Average
                daily time charter equivalent rate****(3)****:**VLCCs
            
            
            50,300
            
            
            53,392
            
            $
            77,422
            
            $
            41,786
            
            $
            18,679
            
            $
            34,890Aframaxes
            
            
            30,200
            
            
            33,296
            
            $
            38,831
            
            $
            25,463
            
            $
            16,005
            
            $
            29,411










(1)
            Includes loans payable to Overseas
              Shipholding Group, Inc.(OSG) for the periods until October 17,
              2005.






5
 Table
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(2)
              Revenue days consist of the aggregate
                number
                of calendar days in a period in which our vessels are owned by us
                less
                days on which a vessel is off hire. Off hire days are days a vessel
                is
                unable to perform the services for which it is required under a time
                charter. Off hire days include days spent undergoing repairs and
                drydockings, whether or not scheduled.(3)
              Average daily time charter equivalent
                rates,
                or TCE rates, are a standard industry measure of daily revenue
                performance. We calculate TCE rates by dividing our time charter
                equivalent revenues in a period by the number of revenue days in
                the
                period. Time charter equivalent revenues represent shipping revenues
                less
                voyage expenses. Voyage expenses consist of cost of bunkers (fuel),
                port
                and canal charges and brokerage commissions. For the period commencing
                on
                October 18, 2005, TCE revenue is the sum of the basic hire earned
                by our
                vessels under our time charters with subsidiaries of OSG and the
                additional hire, if any, earned by the vessels pursuant to the Charter
                Framework Agreement between DHT and OSG. Revenue days consist of
                the
                aggregate number of calendar days in a period in which our vessels
                are
                owned by us less days on which a vessel is off hire. Off hire days
                are
                days a vessel is unable to perform the services for which it is required
                under a time charter. Off hire days include days spent undergoing
                repairs
                and drydockings, whether or not
                scheduled.


**B.**
            **CAPITALIZATION
                AND INDEBTEDNESS**
              
              Not
                  Applicable.




**C.**
            **REASONS
                FOR
                THE OFFER AND USE OF THE PROCEEDS**
              
              Not
                  Applicable.






6
 Table
          of Contents






**D.**
            **RISK
                FACTORS**




*If
      the events discussed in these Risk Factors occur, our business, financial
      condition, results of operations or cash flows could be materially adversely
      affected. In such a case, the market price of our common stock could decline.
      The risks described below are not the only ones that may exist. Additional
      risks
      not currently known by us or that we deem immaterial may also impair our
      business operations.*




**RISKS
      RELATING TO OUR COMPANY**




**We
      cannot assure you that we will pay any dividends.**




We
      intend
      to pay dividends on a quarterly basis commencing in March 2006 in amounts
      determined by our board of directors. We expect our dividends will be
      substantially equal to the available cash from our operations during the
      previous quarter, less cash expenses and any reserves established by our board
      of directors. We expect that most of such expenses will initially be fixed
      and
      will consist primarily of technical management fees payable under our ship
      management agreements, directors’ fees, salaries and benefits of our executive
      officers, payments of insurance premiums, vessel taxes, payments of interest
      on
      $236 million of indebtedness that is outstanding under our credit facility,
      which we fixed at 5.6% as of October 18, 2005, payments of commitment fees
      and
      other financing costs under our credit facility, and other general and
      administrative expenses. For more information on our credit facility please
      see
“Item 5. Operating and Financial Review and Prospects–Our Credit Facility.”
There can be no assurance that we will not have other cash expenses or
      liabilities, including extraordinary expenses, which could include the costs
      of
      claims and related litigation expenses. There can be no assurance that the
      amounts currently anticipated for any of the items set forth above will not
      increase, that we will not have to fund any required capital expenditures for
      our vessels or that we will not be subject to other circumstances that reduce
      or
      eliminate the amount of cash that we have available for the payment of
      dividends. In addition, we may acquire additional vessels, which may not benefit
      from the same chartering and management arrangements that we have for our
      initial fleet of seven vessels. Although our board does not currently anticipate
      establishing any reserves, there can be no assurance that our board of directors
      will determine not to establish reserves or otherwise change our dividend
      policy.




The
      timing and amount of future dividends, if any, could be affected by various
      factors, including our earnings, financial condition and anticipated cash
      requirements, the loss of a vessel, the acquisition of one or more vessels,
      required capital expenditures, reserves established by our board of directors,
      increased or unanticipated expenses, including insurance premiums, a change
      in
      our dividend policy, increased borrowings, future issuances of securities or
      the
      other risks described in this section of the report, many of which will be
      beyond our control. In addition, the declaration of dividends is subject at
      all
      times to the discretion of our board of directors. As a result, the amount
      of
      dividends actually paid may vary from the amounts currently estimated and such
      variations may be material. Also, these factors could result in a high degree
      of
      variability from period to period in the amount of cash that we have available
      for the payment of dividends.




**Our
      ability to pay dividends is limited by our credit
      facility.**




We
      have
      entered into a $401 million secured credit facility with The Royal Bank of
      Scotland plc that consists of a $236 million term loan, a $150 million
      vessel acquisition facility and a $15 million working capital facility. Our
      credit facility provides that we may not pay dividends if the charter-free
      market value of our vessels that secure the credit facility is less than 135%
      of
      our borrowings under the facility plus the actual or notional cost of
      terminating any interest rate swaps that we enter, if there is a continuing
      default under the credit facility or if the payment of the dividend would result
      in a default or breach of a loan covenant. Our ability to declare and pay
      dividends will therefore depend on whether we are in compliance with our credit
      facility, the market value of our vessels and the value of our swap agreements.
      Because we are not required, and do not expect to make, any principal payments
      during the first five years of the credit facility, the difference between
      the
      market value of our vessels and the outstanding borrowings under our credit
      facility may decrease over time, as vessels generally decrease in value as
      they
      age. Therefore, our ability to comply with our financial ratio covenants and
      to
      make dividend payments under our credit facility may decrease as the facility
      approaches its fifth anniversary. In addition, following the fifth anniversary
      of the credit facility, we will be required to make principal repayments of
      approximately $6 million per quarter on the term loan until its final
      maturity in 2015, when a final payment of approximately $121 million will
      be due. We will also be required to begin making principal repayments of our
      indebtedness, if any, that may then be outstanding under the vessel acquisition
      facility and the working capital facility. Therefore, unless we are able to
      refinance borrowings under our credit facility with new indebtedness that has
      a
      later maturity date, following the fifth anniversary of the credit facility,
      the
      amount of cash that we will have available to pay as dividends in any period
      will be decreased by the amount of any principal repayments that we are required
      to make.




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**We
      cannot assure you that we will be able to borrow** **additional
      amounts under our credit facility, and restrictive covenants in our credit
      facility may impose financial and other restrictions on
      us.**




Our
      credit facility with The Royal Bank of Scotland includes a $150 million
      vessel acquisition facility and a $15 million working capital facility. We
      may borrow amounts under the acquisition facility from time to time in
      connection with future vessel acquisitions and, if necessary, borrow amounts
      under the working capital facility to fund our liquidity needs. Our ability
      to
      borrow amounts under these facilities will be subject to the execution of
      customary documentation, including security documents, satisfaction of certain
      customary conditions precedent and compliance with terms and conditions included
      in the loan documents. Our ability to borrow amounts under the vessel
      acquisition facility will also be subject to, among other things, all of our
      borrowings under the credit facility not exceeding 65% of the charter-free
      market value of the vessels that secure our obligations under the credit
      facility, calculated as though we had completed the subject transaction. Our
      ability to borrow under the vessel acquisition facility, in each case, will
      be
      subject to the vessel’s age, size and hull type meeting certain criteria and our
      lender’s approval of the vessel acquisition. Our lender’s approval of the vessel
      acquisition will be based on the lender’s satisfaction of the vessel’s ability
      to generate earnings that are sufficient to fund related principal payments
      as
      they become due and our ability to raise additional capital through equity
      issuances in amounts acceptable to our lender. To the extent that we are not
      able to satisfy these requirements, including as a result of a decline in the
      value of our vessels, we may not be able to draw down the full amount of the
      vessel acquisition facility without obtaining a waiver or consent from the
      lender.




The
      credit facility imposes additional operating and financial restrictions on
      us.
      These restrictions may limit our ability to, among other things:




·
            pay
                dividends if the charter-free market value of our vessels that secure
                our
                obligations under the credit facility is less than 135% of our borrowings
                under the credit facility plus the notional or actual cost of terminating
                any interest rates swaps to which we are a party, if there is a continuing
                default under the credit facility or if the payment of the dividend
                would
                result in a default or breach of a loan
                covenant;




·
            incur
                additional indebtedness, including through the issuance of
                guarantees;




·
            change
                the management of our vessels without the prior consent of the
                lender;




·
            permit
                liens on our assets;




·
            sell
                our vessels;




·
            merge
                or consolidate with, or transfer all or substantially all our assets
                to,
                another person;




·
            enter
                into certain types of charters; and




·
            enter
                into a new line of business.




Therefore,
      we may need to seek permission from our lender in order to engage in some
      corporate actions. Our lender’s interests may be different from ours and we
      cannot guarantee that we will be able to obtain our lender’s permission when
      needed. This may limit our ability to pay dividends to you, finance our future
      operations, make acquisitions or pursue business opportunities.




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**We
      cannot assure you that we will be able to refinance any indebtedness incurred
      under our credit facility.**




We
      cannot
      assure you that we will be able to refinance our indebtedness on terms that
      are
      acceptable to us or at all. The actual or perceived credit quality of our
      charterers, any defaults by them, and the market value of our fleet, among
      other
      things, may materially affect our ability to obtain new debt financing. In
      addition, our charters include provisions that will generally require us to
      use
      our best efforts to (i) negotiate security provisions with future lenders
      that would allow the charterers to continue their use of our vessels so long
      as
      they comply with their charters, regardless of any default by us under the
      loan
      agreement or the charters and (ii) arrange for future lenders to allow the
      charterers to purchase their loans and any related security at par if we default
      on our obligations under our charters or their loans. These provisions may
      make
      it more difficult for us to obtain acceptable financing in the future, increase
      the costs of any such financing to us or increase the time that it takes to
      refinance our indebtedness. If we are not able to refinance our indebtedness,
      we
      will have to dedicate a portion of our cash flow from operations to pay the
      principal and interest of our indebtedness. We cannot assure you that we will
      be
      able to generate cash flow in amounts that are sufficient for these purposes.
      If
      we are not able to satisfy our debt service obligations with our cash flow
      from
      operations, we may have to sell our assets. If we are unable to meet our debt
      obligations for any reason, our lenders could declare their debt, together
      with
      accrued interest and fees, to be immediately due and payable and foreclose
      on
      vessels in our fleet, which could result in the acceleration of other
      indebtedness that we may have at such time and the commencement of similar
      foreclosure proceedings by other lenders.




**Our
      ability to pay dividends is limited by Marshall Islands
      law.**




Marshall
      Islands law generally prohibits the payment of dividends other than from surplus
      (retained earnings and the excess of consideration received for the sale of
      shares above the par value of the shares) or while a company is insolvent or
      would be rendered insolvent by the payment of such a dividend and any such
      dividend may be discontinued at the discretion of our board.




**We
      are highly dependent on the charterers and OSG.**




All
      of
      our vessels are chartered to wholly owned subsidiaries of OSG, which we refer
      to
      collectively as the charterers. The charterers’ payments to us under the
      charters are our sole source of revenue. OSG has guaranteed the payment of
      charter hire by the charterers. We are highly dependent on the performance
      by
      the charterers of their obligation under the charters. Any failure by the
      charterers or OSG, as the guarantor of charter hire payments, to perform their
      obligations would materially and adversely affect our business, financial
      position and cash available for the payment of dividends. Our stockholders
      do
      not have any direct recourse against the charterers or OSG.




**We
      may have difficulty managing our planned growth.**




We
      intend
      to grow our fleet by acquiring additional vessels in the future. Our future
      growth will primarily depend on:




·
            locating
                and acquiring suitable vessels;




·
            identifying
                and consummating acquisitions or joint
                ventures;




·
            adequately
                employing any acquired vessels;




·
            managing
                our expansion; and




·
            obtaining
                required financing on acceptable terms so that the acquisition is
                accretive to earnings and dividends per
                share.




Growing
      any business by acquisition presents numerous risks, such as undisclosed
      liabilities and obligations, the possibility that indemnification agreements
      will be unenforceable or insufficient to cover potential
      losses and difficulties associated with imposing common standards, controls,
      procedures and policies, obtaining additional qualified personnel, managing
      relationships with customers and integrating newly acquired assets and
      operations into existing infrastructure. We cannot give any assurance that
      we
      will be successful in executing our growth plans, that we will be able to employ
      acquired vessels under charters or ship management agreements with similar
      or
      better terms than those we have obtained from OSG and its subsidiaries or that
      we will not incur significant expenses and losses in connection with our future
      growth.




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**Our
      dividend policy is subject to change at the discretion of our board of
      directors.**




We
      currently intend to distribute all of our available cash from our operations,
      less cash expenses, to our stockholders in the form of dividends. Currently,
      we
      do not anticipate that our board will establish any reserves. However, our
      dividend policy is subject to change at any time at the discretion of our board
      and our board may elect to change our dividend policy by establishing a reserve
      for, among other things, the repayment of our credit facility or to help fund
      the acquisition of a vessel. It is likely that our board would establish a
      reserve to repay indebtedness if, as the maturity of our credit facility
      approaches in 2015, it becomes clear that refinancing terms, or the terms of
      a
      vessel sale, are unacceptable or inadequate. If our board were to establish
      such
      a reserve, the amount of cash available for dividend payments would decrease
      by
      the amount of the reserve.




**Agreements
      between us and OSG and its affiliates may be less favorable than agreements
      that
      we could obtain from unaffiliated third parties.**




The
      memoranda of agreement, the charters, the ship management agreements and the
      other contractual agreements we have with OSG and its affiliates were made
      in
      the context of an affiliated relationship and were negotiated in the overall
      context of the public offering of our shares, the purchase of our vessels and
      other related transactions. Because we were a wholly owned subsidiary of OSG
      prior to the completion of the IPO, the negotiation of the memoranda of
      agreement, the charters, the ship management agreements and our other
      contractual arrangements may have resulted in prices and other terms that are
      less favorable to us than terms we might have obtained in arm’s length
      negotiations with unaffiliated third parties for similar services.




**Our
      charters begin to expire in 2010 unless extended at the option of the
      charterers, and we may not be able to re-charter our vessels
      profitably.**




Four
      of
      our charters expire approximately six years after the date of delivery of the
      chartered vessel to us and three expire approximately five years following
      such
      date, unless in each case extended at the option of the applicable charterer
      for
      additional one-, two- or three-year periods. The charterers have the sole
      discretion to exercise those options. We cannot predict whether the charterers
      will exercise any of their extension options under one or more of the charters.
      The charterers will not owe any fiduciary or other duty to us or our
      stockholders in deciding whether to exercise the extension options, and the
      charterers’ decisions may be contrary to our interests or those of our
      stockholders.




We
      cannot
      predict at this time any of the factors that the charterers will consider in
      deciding whether to exercise any of their extension options under the charters.
      It is likely, however, that the charterers would consider a variety of factors,
      which may include the age and specifications of the chartered vessel, whether
      the vessel is surplus or suitable to the charterer’s requirements and whether
      more competitive charter hire rates are available to the charterers in the
      open
      market at that time.




If
      the
      charterers decide not to extend our current charters, we may not be able to
      re-charter our vessels with terms similar to the terms of our charters. We
      may
      also employ the vessels on the spot charter market, which is subject to greater
      rate volatility than the long-term time charter market in which we operate.
      If
      we receive lower charter rates under replacement charters or are unable to
      re-charter all of our vessels, the amounts that we have available, if any,
      to
      pay distributions to our stockholders may be significantly reduced or
      eliminated.




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If
      a time
      charter is renewed, the charter terms providing for profit sharing will remain
      in effect and the charterer, at the time of exercise, will have the option
      to
      select a basic charter rate that is equal to (i) 5% above the published
      one-, two- or three-year time charter rate (corresponding to the extension
      length) for the vessel’s class, as decided by a shipbrokers panel, or
      (ii) the basic hire rate set forth in the charter. The shipbrokers panel
      will be The Association of Shipbrokers and Agents Tanker Broker Panel or another
      panel of brokers mutually acceptable to us and the charterer. If a charterer
      were to renew a charter, the renewal charter rate could be lower than the
      charter rate in existence prior to the renewal. Furthermore, if our charters
      were to be renewed, we would not be able to take full advantage of more
      favorable spot market rates, should they exist at the time of renewal. As a
      result, the amounts that we have available, if any, to pay distributions to
      our
      stockholders could be significantly reduced.




**Our
      vessels, which currently operate in pools, may cease operating in those
      pools.**




Our
      three
      VLCCs currently participate in the Tankers International Pool, which consists
      of
      OSG and eight other tanker companies, and our four Aframax tankers currently
      participate in the Aframax International Pool, which has seven members,
      including OSG. In a pooling arrangement, the net revenues generated by all
      of
      the vessels in a pool are aggregated and distributed to pool members pursuant
      to
      a pre-arranged weighting system that recognizes each vessel’s earnings capacity
      based on its cargo capacity, speed and consumption, and actual on-hire
      performance. The charterers currently operate our VLCCs in the Tankers
      International Pool and our Aframaxes in the Aframax International Pool. Under
      our charter arrangements, we are entitled to share in the revenues that the
      charterers realize from operating our vessels in these pools in excess of the
      basic hire paid to us. Pooling arrangements are intended to maximize tanker
      utilization. Although OSG has indicated that it intends to keep all of our
      vessels in the pooling arrangements they are currently in, we cannot assure
      you
      that OSG will continue to use pooling arrangements for our vessels or any of
      the
      vessels it manages. Also, if we were to acquire any additional vessels, we
      cannot assure you that they would operate in pools, particularly if those
      vessels were not chartered to OSG. Further, because OSG voluntarily participates
      in the pools, we cannot predict whether the pools our vessels participate in
      will continue to exist in the future. If for any reason our vessels cease to
      participate in a pooling arrangement, their utilization rates could fall and
      the
      amount of additional hire paid could decrease, either of which could have an
      adverse affect on our results of operations and our ability to pay
      dividends.




**If
      Tanker Management opts to terminate any or all of our management agreements
      upon
      90 days notice beginning in October 2007, our operating expenses could
      materially increase.**




Under
      our
      ship management agreements, Tanker Management Ltd., or Tanker Management, a
      wholly owned subsidiary of OSG, is responsible for all of the technical and
      operational management of our vessels and receives a technical management fee
      for its services. Each ship management agreement with Tanker Management is
      coterminous with the charter for the same vessel, but is cancelable by Tanker
      Management for any reason upon 90 days notice following the second
      anniversary of the agreement. In addition, we may terminate the ship management
      agreements for any reason at any time upon 90 days advance notice. Each
      charterer has the right to approve any replacement manager that we select;
      however, the approval may not be unreasonably withheld. In addition, each
      charterer has the right to cause us to change the manager of its vessel under
      certain circumstances if it is dissatisfied with the manager’s performance. In
      the event the ship management agreements are terminated in October 2007 by
      Tanker Management or sooner by us, we cannot assure you that we would be able
      to
      obtain similar fixed rate terms from another manager. In addition, if we
      terminate the ship management agreements, we may be required to pay drydocking
      expenses that have been incurred by Tanker Management, which could be
      substantial, to the extent those expenses have not been recouped through the
      drydock component of the technical management fee. If we incur greater expenses
      under replacement management agreements or due to the termination of our ship
      management agreements, the amounts that we have available, if any, to pay
      distributions to our stockholders could be significantly reduced or
      eliminated.




**Because
      we are a newly formed company with no separate operating history, our historical
      financial and operating data may not be representative of our future
      results.**




We
      are a
      newly incorporated company with no individual operating history. Four of the
      vessels we purchased from OSG were delivered to OSG between 2001 and 2004,
      one
      was delivered in 1997 and the remaining
      two were delivered in 1994. The historical predecessor combined carve-out
      financial statements included in this report have been prepared on a carve-out
      basis and reflect the historical business activities of OSG relating to our
      vessels. These predecessor financial statements do not reflect the results
      we
      would have obtained under our current fixed rate long-term charters, ship
      management agreements and our financing arrangements and in any event are not
      a
      meaningful representation of our future results of operations.




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**We
      did not** **perform
      underwater inspections of our vessels.**




Although
      we performed physical inspections of the vessels, we did not perform any
      underwater inspections either prior to or after their delivery in October 2005.
      As a result, we will not be aware of any damage to the vessel that may have
      existed at the time of delivery and which could only be discovered through
      an
      underwater inspection. We agreed to purchase the vessels on an “as is” basis,
      subject to OSG being responsible for any class condition or recommendation
      that
      is found to have existed prior to delivery of the vessels. However, if any
      damage is found, it may be difficult to prove that such damage existed prior
      to
      delivery of the vessel, in which case we could incur substantial costs both
      to
      repair the damage and in seeking reimbursement for such costs.




**OSG’s
      other business activities may create conflicts of
      interest.**




Under
      our
      charter arrangements with OSG, we are entitled to receive variable additional
      hire in amounts based on whether a vessel is part of a pooling arrangement,
      is
      subchartered by the charterer under a time charter or is used on the spot
      market. OSG currently operates, and we expect the charterers to continue to
      operate, our VLCCs in the Tankers International Pool and our Aframaxes in the
      Aframax International Pool. When operated in a pool, chartering decisions are
      made by the pool manager and vessel earnings are based on a formula designed
      to
      allocate the pool’s earnings to vessel owners based on attributes of the vessels
      they contributed, rather than amounts actually earned by those vessels. For
      these reasons, it is unlikely that a conflict of interest will arise between
      us
      and OSG while our vessels are operated in a pool. However, if OSG withdraws
      from
      a pool or our vessels cease operating in a pool for any other reasons,
      chartering decisions will effectively be made by OSG. Although our time charter
      arrangements expressly prohibit OSG from giving preferential treatment to any
      of
      the other vessels owned, managed by or under the control of OSG or its
      affiliates when subchartering any of our vessels, conflicts of interest may
      arise between us and OSG in the allocation of chartering opportunities that
      could reduce our additional hire, particularly if our vessels are subchartered
      by OSG in the time charter market outside of a pool.




**We
      are leveraged and subject to restrictions in our financing agreements that
      impose constraints on our operating and financing
      flexibility.**




We
      have
      entered into a $401 million secured credit facility under which we
      initially borrowed approximately $236 million under a term loan to finance
      a portion of the cash purchase price for our vessels. In addition, we will
      have
      available to us under the same facility a $15 million working capital line
      of credit and a $150 million vessel acquisition line of credit. We are
      required to apply a substantial portion of our cash flow from operations to
      the
      payment of interest on borrowings under the facility. Our credit facility,
      which
      is secured by, among other things, mortgages over all of our vessels,
      assignments of earnings and insurances and pledges over our bank accounts,
      requires that we comply with various operating covenants and maintain certain
      financial ratios, including that the charter-free market value of our vessels
      that secure the credit facility be no less than 120% of our borrowings plus
      the
      actual or notional cost of terminating any swap agreements that we enter in
      order for us to satisfy collateral maintenance requirements and that the
      charter-free market value of our vessels that secure the credit facility be
      no
      less than 135% of our borrowings plus the actual or notional cost of terminating
      any swap agreement that we enter in order for us to pay dividends. We pay a
      floating rate of interest under our credit facility, although we fixed the
      interest rate on the drawn portion of the facility at 5.6% as of October 18,
      2005.




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**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 and other
      obligations.**




We
      are a
      holding company, and have no significant assets other than the equity interests
      in our subsidiaries. Our subsidiaries own all of our vessels, and payments
      under
      our charters are made to our subsidiaries. As a result, our ability to pay
      dividends depends on the performance of our subsidiaries and their ability
      to
      distribute funds to us. Our ability or the ability of our subsidiaries to make
      these distributions could be affected by a claim or other action by a third
      party, including a creditor, or by Marshall Islands law which regulates the
      payment of dividends by companies. If we are unable to obtain funds from our
      subsidiaries, we will not be able to pay dividends.




**Certain
      adverse U.S. federal income tax consequences could arise for U.S.
      holders.**




A
      foreign
      corporation will be treated as a “passive foreign investment company,” or PFIC,
      for U.S. 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.” U.S. stockholders of a PFIC are subject to a disadvantageous
      U.S. federal income tax regime with respect to the income derived by the PFIC,
      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. In particular,
      U.S. holders who are individuals would not be eligible for the 15% tax rate
      on
      qualified dividends.




Based
      on
      our operations, representations previously made by OSG, including
      representations that certain terms of the ship management agreements and the
      charters with OSG’s subsidiaries are consistent with normal commercial practice
      and the opinion of tax counsel dated October 18, 2005, we believe that it is
      more likely than not that we are not currently a PFIC. In this regard, we intend
      to treat the gross income we derive or are deemed to derive from our time
      chartering activities as services income, rather than rental income.
      Accordingly, we believe that it is more likely than not that our income from
      our
      time chartering activities does not constitute “passive income,” and that the
      assets we own and operate in connection with the production of that income
      do
      not constitute passive assets.




There
      is,
      however, no direct legal authority under the PFIC rules addressing our current
      and projected future operations. In addition, our tax counsel’s opinion was
      based on representations of OSG that were not reviewed by the U.S. Internal
      Revenue Service, or IRS. 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
      U.S.
      stockholders will face adverse U.S. tax consequences. Under the PFIC rules,
      unless those stockholders make an election available under the Internal Revenue
      Code of 1986, as amended, or the Code, such stockholders would be liable to
      pay
      U.S. 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 common stock, as if the excess distribution or gain had
      been
      recognized ratably over the stockholder’s holding period of our common stock.
      The 15% maximum tax rate for individuals would not be available for this
      calculation. See “Item 10. Taxation–United States Federal Income Tax
      Consideration” for a more comprehensive discussion of the U.S. federal income
      tax consequences to U.S. stockholders if we are treated as a PFIC.




In
      addition, even if we are not a PFIC, under proposed legislation, dividends
      of a
      corporation incorporated in a country without a “comprehensive income tax
      system” paid to U.S. individuals would not be eligible for the 15% tax rate.
      Although the term “comprehensive income tax system” is not defined in the
      proposed legislation, we believe this rule would apply to us because we are
      incorporated in the Marshall Islands.




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**Our
      operating income could fail to qualify for an exemption from U.S. federal income
      taxation, which will reduce our cash flow.**




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 is characterized as U.S. source shipping income and such income
      is
      subject to a 4% U.S. federal income tax without allowance for any deductions,
      unless that corporation qualifies for exemption from tax under Section 883
      of the Code and the Treasury regulations promulgated thereunder in August of
      2003. **** Based
      on
      OSG’s ownership and our review of applicable SEC documents, we believe that we
      do qualify for this statutory tax exemption and we will take this position
      for
      U.S. federal income tax return reporting purposes. However, there are factual
      circumstances beyond our control that could cause us to lose the benefit of
      this
      tax exemption in the future and thereby become subject to U.S. federal income
      tax on our U.S. source income. For example, if stockholders with a 5% or greater
      interest in our stock, including OSG or any of its affiliates, were to
      collectively own 50% or more of the outstanding shares of our stock on more
      than
      half the days during the taxable year, we might not be able to qualify for
      exemption under Code Section 883. OSG’s affiliate, OSG International, Inc.,
      or OIN, owns approximately 44.5% of our outstanding common stock. Accordingly,
      if one or more shareholders other than OSG and its affiliates own more than
      5%
      of our common stock for more than half the days during the taxable year, we
      could lose the benefit of this tax exemption for such year. Due to the factual
      nature of the issues involved, we can give no assurances on our tax-exempt
      status in the future.




If
      we are
      not entitled to this exemption under Section 883 for any taxable year, we
      would be subject for those years to a 4% United States federal income tax on
      our
      U.S. source shipping income. The imposition of this taxation could have a
      negative effect on our business and would result in decreased earnings available
      for distribution to our stockholders.




**We
      may be subject to taxation in the United Kingdom, which could have a material
      adverse affect on our results of operations.**




If
      we
      were considered to be a resident of the United Kingdom or to have a permanent
      establishment in the United Kingdom, all or a part of our profits could be
      subject to UK corporate tax, which currently has a maximum rate of 30%. We
      intend to operate in a manner so that we do not have a permanent establishment
      in the United Kingdom and so that we are not resident in the United Kingdom,
      including by locating our principal place of business outside the United
      Kingdom, requiring our executive officers to be outside of the United Kingdom
      when making any material decision regarding our business or affairs and by
      holding all of our board meetings outside of the United Kingdom. However,
      because certain of our executive officers and directors reside in the United
      Kingdom, and because UK statutory and case law fail to definitively identify
      the
      activities that constitute a trade being carried on in the United Kingdom
      through a permanent establishment, the UK taxing authorities may contend that
      we
      are subject to UK corporate tax. If the UK taxing authorities made such a
      contention, we could incur substantial legal costs defending our position,
      and,
      if we were unsuccessful in our defense, our results of operations would be
      materially adversely affected.




**RISKS
      RELATING TO OUR INDUSTRY**




**Vessel
      values and charter rates have recently been near historically high levels,
      and
      significant decreases in values or rates could adversely affect our financial
      condition and results of operations.**




The
      tanker industry historically has been highly cyclical and both charter rates
      and
      vessel values have recently reached historical highs. If the tanker industry
      is
      depressed in the future when our charters expire or at a time when we may want
      to sell a vessel, our earnings and available cash flow may decrease. Our ability
      to re-charter our vessels on the expiration or termination of the charters
      and
      the charter rates payable under any renewal or replacement charters will depend
      upon, among other things, economic conditions in the tanker market at that
      time.
      Fluctuations in charter rates and vessel values result from changes in the
      supply and demand for tanker capacity and changes in the supply and demand
      for
      oil and oil products. Currently, vessel values are at or near historically
      high
      levels while charter rates have receded from their historical
      peaks in the fourth quarter of 2004. There can be no assurance that vessel
      values will not decline from current levels or that charter rates will be
      sufficient to provide us with additional hire payments.




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**The
      highly cyclical nature of the tanker industry may lead to volatile changes
      in
      charter rates and vessel values, which may adversely affect our
      earnings.**




Factors
      affecting the supply and demand for tankers are outside of our control, and
      the
      nature, timing and degree of changes in industry conditions are unpredictable
      and may adversely affect the values of our vessels and result in significant
      fluctuations in the amount of additional hire we earn, which could result in
      significant fluctuations in our quarterly results. The factors that influence
      the demand for tanker capacity include:




·
            demand
                for oil and oil products, which affect the need for tanker
                capacity;




·
            global
                and regional economic and political conditions which among other
                things,
                could impact the supply of oil as well as trading patterns and the
                demand
                for various types of vessels;




·
            changes
                in the production of crude oil, particularly by OPEC and other key
                producers, which impact the need for tanker
                capacity;




·
            developments
                in international trade;




·
            changes
                in seaborne and other transportation patterns, including changes
                in the
                distances that cargoes are
                transported;




·
            environmental
                concerns and regulations;




·
            weather;
                and




·
            competition
                from alternative sources of energy.




The
      factors that influence the supply of tanker capacity include:




·
            the
                number of newbuilding deliveries;




·
            the
                scrapping rate of older vessels;




·
            the
                number of vessels that are out of service;
                and




·
            environmental
                and maritime regulations.




**An
      oversupply of new vessels may adversely affect charter rates and vessel
      values.**




If
      the
      capacity of new ships delivered exceeds the capacity of tankers being scrapped
      and lost, tanker capacity will increase. In addition, the newbuilding order
      book
      for the next five years equaled about 26% of the existing world tanker fleet
      as
      of March, 2006 and we cannot assure you that the order book will not increase
      further in proportion to the existing fleet. If the supply of tanker capacity
      increases and the demand for tanker capacity does not increase correspondingly,
      charter rates could materially decline and the value of our vessels could be
      adversely affected.




**The
      amount of additional hire that we receive under our charter arrangements, if
      any, will generally depend on prevailing spot market rates, which are
      volatile.**




Our
      initial fleet of seven vessels are operated under time charters with the
      charterers, and additional hire is paid to us pursuant to a charter framework
      agreement entered among us and OIN and each of our and its subsidiaries. We
      receive a fixed minimum daily basic charter rate and may receive additional
      hire
      under these charter arrangements. Additional hire, if any, is paid quarterly
      in
      arrears. The amount of additional hire is subject to variation depending on
      the
      charter hire received by the charterers through their pooling arrangements,
      or if a vessel is not operated in a pool, charter rates in the time charter
      or
      spot charter markets, each of which is highly dependent on general tanker market
      conditions. We cannot assure you that we will receive additional hire for any
      quarter.




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**Terrorist
      attacks and international hostilities can affect the tanker industry, which
      could adversely affect our business.**




Additional
      terrorist attacks like those in New York on September 11, 2001 and in
      London on July 7, 2005, the outbreak of war or the existence of
      international hostilities could damage the world economy, adversely affect
      the
      availability of and demand for crude oil and petroleum products and adversely
      affect our ability to re-charter our vessels on the expiration or termination
      of
      the charters and the charter rates payable under any renewal or replacement
      charters. We conduct our operations internationally, and our business, financial
      condition and results of operations may be adversely affected by changing
      economic, political and government conditions in the countries and regions
      where
      our vessels are employed. Moreover, we operate in a sector of the economy that
      is likely to be adversely impacted by the effects of political instability,
      terrorist or other attacks, war or international hostilities.




**Our
      vessels call on ports located in countries that are subject to restrictions
      imposed by the U.S. government, which could negatively affect the trading price
      of our common stock.**




From
      time
      to time, vessels in our fleet call on ports located in countries subject to
      sanctions and embargoes imposed by the U.S. government and countries identified
      by the U.S. government as state sponsors of terrorism, such as Libya, Syria
      and
      Iran. Libya currently is not subject to economic sanctions imposed by the U.S.
      government, but continues to be identified as a state sponsor of terrorism.
      Syria and Iran continue to be subject to sanctions and embargoes imposed by
      the
      U.S. government and are identified by the U.S. government as state sponsors
      of
      terrorism. Although these sanctions and embargoes do not prevent our vessels
      from making calls to ports in these countries, potential investors could view
      such port calls negatively, which could adversely affect our reputation and
      the
      market for our common stock.




**The
      value of our vessels, which are near historically high levels, may be depressed
      at a time and in the event that we sell a vessel.**




Tanker
      values have generally experienced high volatility and values are currently
      near
      historically high levels. Investors can expect the fair market value of our
      tankers to fluctuate, depending on general economic and market conditions
      affecting the tanker industry and competition from other shipping companies,
      types and sizes of vessels and other modes of transportation. In addition,
      although four of our seven tankers were built in 2001 or more recently, as
      vessels grow older, they generally decline in value. These factors will affect
      the value of our vessels at the time of any vessel sale. If for any reason
      we
      sell a tanker at a time when tanker prices have fallen, the sale may be at
      less
      than the tanker’s carrying amount on our financial statements, with the result
      that we would also incur a loss on the sale and a reduction in earnings and
      surplus, which could reduce our ability to pay dividends.




**Vessel
      values may be depressed at a time when we are required to make a repayment
      under
      our credit facility, or when our credit facility matures, which could adversely
      affect our liquidity and our ability to refinance our credit
      facility.**




In
      the
      event of the sale or loss of a vessel, our credit facility requires us to prepay
      the facility in an amount proportionate to the market value of the sold or
      lost
      vessel compared with the total market value of all of our vessels before such
      sale or loss. If vessel values are depressed at such a time, our liquidity
      could
      be adversely affected as the amount that we are required to repay could be
      greater than the proceeds we receive from a sale. In addition, declining tanker
      values could adversely affect our ability to refinance our credit facility
      at
      its maturity in 2015, as the amount that a new lender would be willing to lend
      on the same terms may be less than the amount we owe under the expiring
      facility.




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**We
      operate in the highly competitive international tanker market which could affect
      our financial position if the charterers do not renew our
      charters.**




The
      operation of tankers and transportation of crude oil and petroleum products
      are
      extremely competitive. Competition arises primarily from other tanker owners,
      including major oil companies, as well as independent tanker companies, some
      of
      whom have substantially larger fleets and substantially greater resources than
      we do. Competition for the transportation of oil and oil products can be intense
      and depends on price, location, size, age, condition and the acceptability
      of
      the tanker and its operators to the charterers. During the term of our charters,
      our exposure to this competition is limited because of the predominantly fixed
      rate nature of our charters. In the event that the charterers do not renew
      the
      charters when they expire (beginning in 2010) or terminate the charters for
      any
      reason, we will have to compete with other tanker owners, including major oil
      companies and independent tanker companies for charters. Due in part to the
      fragmented tanker market, competitors with greater resources may be able to
      offer better prices than us, which could result in our achieving lower revenues
      from our vessels.




**Compliance
      with environmental laws or regulations may adversely affect our
      business.**




Our
      operations are affected by extensive and changing international, national and
      local environmental protection laws, regulations, treaties, conventions and
      standards in force in international waters, the jurisdictional waters of the
      countries in which our vessels operate, as well as the countries of our vessels’
registration. Many of these requirements are designed to reduce the risk of
      oil
      spills and other pollution, and our compliance with these requirements can
      be
      costly.




These
      requirements can affect the resale value or useful lives of our vessels, require
      a reduction in carrying capacity, ship modifications or operational changes
      or
      restrictions, lead to decreased availability of insurance coverage for
      environmental matters or 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 cleanup obligations, in the event
      that there is a release of petroleum or other hazardous substances from our
      vessels or otherwise in connection with our operations. We could also become
      subject to personal injury or property damage claims relating to the release
      of
      or exposure to hazardous materials associated with our current or historic
      operations. Violations of or liabilities under environmental requirements also
      can result in substantial penalties, fines and other sanctions, including in
      certain instances, seizure or detention of our vessels.




We
      could
      incur significant costs, including cleanup costs, fines, penalties, third-party
      claims and natural resource damages, as the result of an oil spill or other
      liabilities under environmental laws. The United States Oil Pollution Act of
      1990, or OPA, affects all vessel owners shipping oil or hazardous material
      to,
      from or within the United States. OPA allows for potentially unlimited liability
      without regard to fault for owners, operators and bareboat charterers of vessels
      for oil pollution in U.S. waters. Similarly, the International Convention on
      Civil Liability for Oil Pollution Damage, 1969, as amended, which has been
      adopted by most countries outside of the United States, imposes liability for
      oil pollution in international waters. OPA expressly permits individual states
      to impose their own liability regimes with regard to hazardous materials and
      oil
      pollution incidents occurring within their boundaries. Coastal states in the
      United States have enacted pollution prevention liability and response laws,
      many providing for unlimited liability.




OPA
      provides for the scheduled phase-out of all non double-hull tankers that carry
      oil in bulk in U.S. waters. The International Maritime Organization, or IMO,
      and
      the European Union also have adopted separate phase-out schedules applicable
      to
      single-hull tankers operating in international and EU waters. These regulations
      will reduce the demand for single-hull tankers, force the remaining single-hull
      vessels into less desirable trading routes, increase the number of ships trading
      in routes open to single-hull vessels and could increase demands for further
      restrictions in the remaining jurisdictions that permit the operation of these
      vessels. As a result, single-hull vessels are likely to be chartered less
      frequently and at lower rates. Although all of the tankers we acquired are
      double-hulled, we cannot assure you that these regulatory programs will not
      apply to vessels acquired by us in the future.




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In
      addition, in complying with OPA, IMO regulations, EU directives and other
      existing laws and regulations and those that may be adopted, shipowners may
      incur significant additional costs in meeting new maintenance and inspection
      requirements, in developing contingency arrangements for potential spills and
      in
      obtaining insurance coverage. Government regulation of vessels, particularly
      in
      the areas of safety and environmental requirements, can be expected to become
      more strict in the future and require us to incur significant capital
      expenditures on our vessels to keep them in compliance, or even to scrap or
      sell
      certain vessels altogether. As a result of accidents such as the
      November 2002 oil spill from the *Prestige* ,
      a
      26 year old single-hull tanker unrelated to us, we believe that regulation
      of the shipping industry will continue to become more stringent and more
      expensive for us and our competitors. In recent years, the IMO and EU have
      both
      accelerated their existing non-double-hull phase-out schedules in response
      to
      highly publicized oil spills and other shipping incidents involving companies
      unrelated to us. Future accidents can be expected in the industry, and such
      accidents or other events could be expected to result in the adoption of even
      stricter laws and regulations, which could limit our operations or our ability
      to do business and which could have a material adverse effect on our business
      and financial results.




**The
      shipping industry has inherent operational risks, which could impair the ability
      of the charterers to make payments to us.**




Our
      tankers and their cargoes are at risk of being damaged or lost because of events
      such as marine disasters, bad weather, mechanical failures, human error, war,
      terrorism, piracy, environmental accidents and other circumstances or events.
      In
      addition, transporting crude oil across a wide variety of international
      jurisdictions creates a risk of business interruptions due to political
      circumstances in foreign countries, hostilities, labor strikes and boycotts,
      the
      potential for changes in tax rates or policies, and the potential for government
      expropriation of our vessels. Any of these events could impair the ability
      of
      the charterers to make payments to us under our charters.




**Our
      insurance coverage may be insufficient to make us whole in the event of a
      casualty or other catastrophic event, or fail to cover all of the inherent
      operational risks associated with the tanker industry.**




In
      the
      event of a casualty to a vessel or other catastrophic event, we will rely on
      our
      insurance to pay the insured value of the vessel or the damages incurred. Under
      the ship management agreements, Tanker Management is responsible for arranging
      insurance for our fleet against those risks that we believe the shipping
      industry commonly insures against, and we are responsible for the premium
      payments on such insurance. This insurance includes marine hull and machinery
      insurance, protection and indemnity insurance, which includes pollution risks
      and crew insurance, and war risk insurance. Tanker Management is also
      responsible for arranging loss of hire insurance in respect of each of our
      vessels, and we are responsible for the premium payments on such insurance.
      This
      insurance generally provides coverage against business interruption for periods
      of more than 21 days (in the case of our VLCCs) or 14 days (in the
      case of our Aframaxes) per incident (up to a maximum of 120 days) per
      incident, following any loss under our hull and machinery policy. We will not
      be
      reimbursed under the loss of hire insurance policies, on a per incident basis,
      for the first 21 days of off hire in the case of our VLCCs and for the
      first 14 days in the case of our Aframaxes. Currently, the amount of
      coverage for liability for pollution, spillage and leakage available to us
      on
      commercially reasonable terms through protection and indemnity associations
      and
      providers of excess coverage is $1 billion per vessel per occurrence. We
      cannot assure you that we will be adequately insured against all risks. If
      insurance premiums increase, we may not be able to obtain adequate insurance
      coverage at reasonable rates for our fleet. Additionally, our insurers may
      refuse to pay particular claims. Any significant loss or liability for which
      we
      are not insured could have a material adverse effect on our financial condition.
      In addition, the loss of a vessel would adversely affect our cash flows and
      results of operations.




**Maritime
      claimants could arrest our tankers, which could interrupt the charterers’ or 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 that vessel for
      unsatisfied debts, claims or damages. In many jurisdictions, a maritime lien
      holder may enforce its lien by arresting a vessel through foreclosure
      proceedings. The arrest or attachment of one or more of our vessels could
      interrupt the charterers’ or our cash
      flow
      and require us to pay a significant amount of money to have the arrest lifted.
      In addition, in some jurisdictions, such as South Africa, under the “sister
      ship” theory of liability, a claimant may arrest both the vessel that is subject
      to the claimant’s maritime lien and any “associated” vessel, which is any vessel
      owned or controlled by the same owner. Claimants could try to assert “sister
      ship” liability against one vessel in our fleet for claims relating to another
      vessel in our fleet.




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**Governments
      could requisition our vessels during a period of war or emergency without
      adequate compensation.**




A
      government could requisition one or more of our vessels for title or for hire.
      Requisition for title occurs when a government takes control of a vessel and
      becomes her owner, while requisition for hire occurs when a government takes
      control of a vessel and effectively becomes her charterer at dictated charter
      rates. Generally, requisitions occur during periods of war or emergency,
      although governments may elect to requisition vessels in other circumstances.
      Although we would be entitled to compensation in the event of a requisition
      of
      one or more of our vessels, the amount and timing of payment would be uncertain.
      Government requisition of one or more of our vessels may negatively impact
      our
      revenues and reduce the amount of cash we have available for distribution as
      dividends to our stockholders.




**RISKS
      RELATING TO OUR COMMON STOCK**




**The
      market price of our common stock may be unpredictable and
      volatile.**




The
      market price of our common stock may fluctuate due to factors such as actual
      or
      anticipated fluctuations in our quarterly and annual results and those of other
      public companies in our industry; mergers and strategic alliances in the tanker
      industry; market conditions in the tanker industry; changes in government
      regulation; shortfalls in our operating results from levels forecast by
      securities analysts; announcements concerning us or our competitors and the
      general state of the securities market. The tanker industry has been highly
      unpredictable and volatile. The market for common stock in this industry may
      be
      equally volatile.




**Future
      sales of our common stock could cause the market price of our common stock
      to
      decline.**




The
      market price of our common stock could decline due to sales of a large number
      of
      shares in the market including sales of shares by our large stockholders, or
      the
      perception that these sales could occur. These sales or the perception that
      these sales could occur could also make it more difficult or impossible for
      us
      to sell equity securities in the future at a time and price that we deem
      appropriate.




OSG
      International, Inc., or OIN, a subsidiary of OSG, beneficially owns
      approximately 44.5% of our outstanding common stock. OIN may sell its shares
      in
      unregistered sales that are subject to certain limitations on the timing, amount
      and method of those sales imposed by Rule 144 of the Securities Act of
      1933.




In
      addition to the unregistered sales referred to above, pursuant to a registration
      rights agreement that we and OIN have entered, OIN will have the right to cause
      us to register the sale of shares of our common stock beneficially owned by
      it,
      subject to the same lock up provisions described above. If OIN were to sell
      a
      large number of its shares pursuant to a registered offering, the market price
      of our common stock could decline significantly. In addition, the perception
      in
      the public markets that sales by OIN might occur could also adversely affect
      the
      market price of our common stock.






**OSG
      is** **able to influence us, including the outcome of stockholder
      votes.**




OSG
      beneficially owns approximately 44.5% of our outstanding common stock. As a
      result of its ownership of our common stock, OSG is able to influence matters
      requiring the approval of our stockholders, including the nomination and
      election of directors and the outcome of any corporate transactions
      or other matters submitted to our stockholders for approval, such as potential
      mergers or acquisitions, asset sales and other significant
      transactions.




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**We
      are incorporated in the Marshall Islands, which does not have a well-developed
      body of corporate law.**




Our
      corporate affairs are governed by our amended and restated articles of
      incorporation and bylaws and by the Marshall Islands Business Corporations
      Act,
      or the BCA. The provisions of the BCA resemble provisions of the corporation
      laws of a number of states in the United States. However, there have been few
      judicial cases in the Marshall Islands interpreting the BCA, and the rights
      and
      fiduciary responsibilities of directors under the laws of the Marshall Islands
      are not as clearly established as the rights and fiduciary responsibilities
      of
      directors under statutes or judicial precedent in existence in the United
      States. Therefore, the rights of stockholders of the Marshall Islands may differ
      from the rights of stockholders of companies incorporated in the United States.
      While the BCA provides that it is to be interpreted according to the laws of
      the
      State of Delaware and other states with substantially similar legislative
      provisions, there have been few, if any, court cases interpreting the BCA in
      the
      Marshall Islands and we can not predict whether Marshall Islands courts would
      reach the same conclusions that any particular United States court would reach
      or has reached. Thus, you may have more difficulty in protecting your interests
      in the face of actions by the management, directors or controlling stockholders
      than would stockholders of a corporation incorporated in a United States
      jurisdiction which has developed a relatively more substantial body of case
      law.




**Our
      bylaws restrict stockholders from bringing certain legal action against our
      officers and directors.**




Our
      bylaws contain a broad waiver by our stockholders of any claim or right of
      action, both individually and on our behalf, against any of our officers or
      directors. The waiver applies to any action taken by an officer or director,
      or
      the failure of an officer or director to take any action, in the performance
      of
      his or her duties, except with respect to any matter involving any fraud or
      dishonesty on the part of the officer or director. This waiver limits the right
      of stockholders to assert claims against our officers and directors unless
      the
      act or failure to act involves fraud or dishonesty.




**We
      have anti-takeover provisions in our bylaws that may discourage a change of
      control.**




Our
      bylaws contain provisions that could make it more difficult for a third party
      to
      acquire us without the consent of our board of directors. These provisions
      provide for:




·
            a
                classified board of directors with staggered three-year terms, elected
                without cumulative voting;




·
            directors
                only to be removed for cause and only with the affirmative vote of
                holders
                of at least a majority of the common stock issued and
                outstanding;




·
            advance
                notice for nominations of directors by stockholders and for stockholders
                to include matters to be considered at annual
                meetings;




·
            a
                limited ability for stockholders to call special stockholder meetings;
                and




·
            our
                board of directors to determine the powers, preferences and rights
                of our
                preferred stock and to issue the preferred stock without stockholder
                approval.




These
      provisions could make it more difficult for a third party to acquire us, even
      if
      the third party’s offer may be considered beneficial by many stockholders. As a
      result, stockholders may be limited in their ability to obtain a premium for
      their shares.






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**ITEM
              4.**
            **INFORMATION
                ON
                THE COMPANY**




**A.**
            **HISTORY AND DEVELOPMENT OF THE
                COMPANY**




**General
      Information**




We
      are a
      newly formed company that was incorporated in April 2005 under the laws of
      the Marshall Islands as a wholly owned indirect subsidiary of Overseas
      Shipholding Group, Inc., a Delaware corporation, or OSG. Our principal
      executive offices are located at 26 New Street, St. Helier, Jersey, Channel
      Islands, JE23RA and our telephone number is +44 (0) 1534 639759.




**B.**
            **BUSINESS OVERVIEW**




On
      October 18, 2005, we acquired our fleet of seven double-hull tankers consisting
      of three very large crude carriers, or VLCCs, which are tankers ranging in
      size
      from 200,000 to 320,000 deadweight tons, or dwt, and four Aframax tankers,
      which
      are tankers ranging in size from 80,000 to 120,000 dwt. Our fleet principally
      operates on international routes and had a combined carrying capacity of
      1,342,372 dwt and a weighted average age of 5.9 years as of December 31,
      2005, compared with an average age of approximately 8.3 years for the world
      crude tanker fleet.




We
      acquired the seven vessels in our fleet from subsidiaries of OSG in exchange
      for
      cash and shares of our common stock and we charter these vessels back to
      subsidiaries of OSG. OSG, one of the world’s largest bulk-shipping companies,
      owns and operates a modern fleet of 107 vessels (including newbuildings on
      order and the seven vessels that comprise our fleet) that have a combined
      carrying capacity of 12.1 million dwt. OSG’s fleet consists of both
      internationally flagged and U.S. flagged vessels that transport crude oil,
      petroleum products and dry bulk commodities. OSG beneficially owns approximately
      44.5% of our outstanding common stock.




Our
      strategy is to charter our vessels primarily pursuant to multi-year time
      charters to take advantage of the stable cash flow associated with long-term
      time charters. In addition, our time charter arrangements include a profit
      sharing component that gives us the opportunity to earn additional hire when
      vessel earnings exceed the basic hire amounts set forth in the charters. Our
      vessels are operated in the Tankers International Pool and the Aframax
      International Pool and we expect our potential to earn additional hire will
      benefit from the higher utilization rates realized by these pools. In a pooling
      arrangement, the net revenues generated by all of the vessels in a pool are
      aggregated and distributed to pool members pursuant to a pre-arranged weighting
      system that recognizes each vessel’s earnings capacity based on its cargo
      capacity, speed and consumption, and actual on-hire performance.




On
      October 18, 2005 we agreed to time charter our tankers to subsidiaries of OSG
      for terms of five to six and one-half years. Each time charter may be renewed
      by
      the charterer on one or more successive occasions for periods of one, two or
      three years, up to an aggregate of five, six or eight years, depending on the
      vessel. If a time charter is renewed, the charter terms providing for profit
      sharing will remain in effect and the charterer, at the time of exercise, will
      have the option to select a basic charter rate that is equal to (i) 5%
      above the published one-, two- or three-year time charter rate (corresponding
      to
      the extension length) for the vessel’s class, as decided by a shipbrokers panel,
      or (ii) the basic hire rate set forth in the applicable charter. The
      shipbrokers panel, which we call the Broker Panel, will be The Association
      of
      Shipbrokers and Agents Tanker Broker Panel or another panel of brokers mutually
      acceptable to us and the charterer.




**MEMORANDA
      OF AGREEMENT**




The
      following summary of the material terms of the memoranda of agreement does
      not
      purport to be complete and is subject to, and qualified in its entirety by
      reference to, all the provisions of the memoranda of agreement. Because the
      following is only a summary, it does not contain all information that you may
      find useful. For more complete information, you should read the entire
      Memorandum of Agreement for each vessel listed as an exhibit to this
      report.




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Pursuant
      to the memoranda of agreement that we entered on September 20, 2005, we
      acquired seven tankers from subsidiaries of OSG simultaneously with the closing
      of the IPO on October 18, 2005. The total purchase price for these vessels
      was
      equal to the net proceeds from the sale of 16,000,000 shares of common
      stock pursuant to the IPO, after deducting underwriting commissions and
      estimated offering expenses, borrowings of $236 million under the term loan
      portion of our credit facility and the issuance of 13,999,900 shares of our
      common stock to a wholly owned subsidiary of OSG. Each of our subsidiaries
      acquired one of the vessels set forth below. We are the borrower under our
      credit facility and each of our subsidiaries will guarantee our obligations
      under the credit facility.




Based
      on
      the IPO price of $12.00 per share, the aggregate purchase price for our
      fleet was approximately $580.6 million, however, as described elsewhere in
      this
      report, a portion of the purchase price was treated as a deemed dividend to
      OSG.





Under
      the
      memoranda of agreement, we had the right to inspect each of the vessels and
      its
      records in connection with our purchase. We completed such inspections using
      a
      qualified third party but we did not perform any underwater inspections prior
      to
      the time of delivery. OSG is responsible for repairing any class condition
      or
      recommendation that was found to have existed prior to the sale at its own
      cost.
      As of the date of this report, we are not aware of any recommendations that
      we
      believe are material.




**CHARTER
      ARRANGEMENTS**




The
      following summary of the material terms of the charters does not purport to
      be
      complete and is subject to, and qualified in its entirety by reference to,
      all
      the provisions of the charters. Because the following is only a summary, it
      does
      not contain all information that you may find useful. For more complete
      information, you should read the entire time charter party for each vessel
      listed as an exhibit to this report.




**General**




Our
      wholly owned subsidiaries have agreed to time charter our vessels to the
      charterers under the charters for a period of five to six and one-half years,
      as
      set forth in the table below. Each time charter may be renewed by the charterer
      on one or more successive occasions for periods of one, two or three years,
      up
      to an aggregate of five, six or eight years, depending on the vessel. The
      charterer must exercise its renewal option in writing at least 90 days
      prior to expiration of the existing charter. If a time charter is renewed,
      the
      charter terms providing for profit sharing will remain in effect and the
      charterer, at the time of exercise, will have the option to select a basic
      charter rate that is equal to (i) 5% above the published one-, two- or
      three-year time charter rate (corresponding to the extension length) for the
      vessel’s class, as decided by a shipbrokers panel, or (ii) the basic hire
      rate set forth in the charter. The shipbrokers panel, which we call the Broker
      Panel, will be The Association of Shipbrokers and Agents Tanker Broker Panel
      or
      another panel of brokers mutually acceptable to us and the charterer. We have
      agreed to guarantee the obligations of each of our subsidiaries under the
      charters and OSG has agreed to guarantee each charterer’s obligation to make
      charter payments to us.







**Vessel**
            
            **Term
                of Initial**
              **Charter**
            
            **Expiration
                of Initial**
              **Charter**
            
            **Term
                of Extension**
              **Periods**
            
            
            **Maximum**
              **Aggregate**
              **Extension
                Term***Overseas
                Ann*
            
            61⁄2
                years
            
            
            April
                17, 2012
            
            
            1,
                2 or 3 years
            
            
            8
                years*Overseas
                Chris*
            
            6
                years
            
            
            October
                17, 2011
            
            
            1,
                2 or 3 years
            
            
            8
                years*Regal
                Unity*
            
            51⁄2
                years
            
            
            April
                17, 2011
            
            
            1,
                2 or 3 years
            
            
            6
                years*Overseas
                Cathy*
            
            61⁄4
                years
            
            
            January
                17, 2012
            
            
            1,
                2 or 3 years
            
            
            8
                years*Overseas
                Sophie*
            
            53⁄4
                years
            
            
            July
                17, 2011
            
            
            1,
                2 or 3 years
            
            
            8
                years*Rebecca*
            
            5
                years
            
            
            October
                17, 2010
            
            
            1,
                2 or 3 years
            
            
            5
                years*Ania*
            
            5
                years
            
            
            October
                17, 2010
            
            
            1,
                2 or 3 years
            
            
            5
                years





The
      charterers are wholly owned subsidiaries of OSG. Under the charters, we are
      required to keep the vessels seaworthy, and to crew, operate and maintain them,
      including ensuring (i) that the vessels have been approved for trading
      (referred to in the industry as “vetting approvals”) by a minimum of four major
      oil companies and (ii) that we do not lose any vetting approvals that are
      required to maintain the vessels’ trading
      patterns. Tanker Management will perform those duties for us under the ship
      management agreements described below. If structural changes or new equipment
      is
      required due to changes mandated by legislation or regulation, the vessel
      classification society or the standards of an oil company for which vetting
      approval is required, the charterers will be required to pay the first $50,000
      per year per vessel for all such changes. To the extent the cost of all such
      changes exceeds $50,000 the excess cost will be apportioned to us and the
      charterer of the vessel on the basis of the ratio of the remaining charter
      period and the remaining useful life of the vessel (calculated as 25 years
      from the year built), with the charterers paying 50% of the apportioned cost.
      Each charter also provides that the basic hire will be reduced if the vessel
      does not achieve the performance specifications set forth in the charter.
      Pursuant to the charters, the charterers have agreed to endeavour to avoid
      or
      limit any liability to their customers for consequential damages. In addition,
      the charterers and OIN have agreed to use their commercial best efforts to
      charter our vessels on market terms and to ensure that preferential treatment
      is
      not given to any other vessels owned, managed or controlled by OIN or its
      affiliates.




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The
      charterers have a right of first offer over the sale of a vessel, which, in
      the
      event we wish to sell a vessel, requires us to offer to sell the vessel to
      the
      applicable charterer at a price determined by a shipbroker panel. The charterers
      are not obligated to pay us charter hire for off hire days that include days
      a
      vessel is unable to be in service due to, among other things, repairs or
      drydockings. However, we have obtained loss of hire insurance that will
      generally provide coverage against business interruption for periods of more
      than 21 days (in the case of our VLCCs) or 14 days (in the case of our
      Aframaxes) per incident (up to a maximum of 120 days per incident),
      following any loss under our hull and machinery policy.




The
      terms
      of the charters do not provide the charterers with an option to terminate the
      charter before the end of their respective terms. However, the charterers may
      terminate in the event of the total loss or constructive total loss of a vessel,
      if the vessel fails an inspection by a government and/or a port state authority,
      in the event the vessel fails to comply with the charter’s vetting requirements,
      or in the event that the vessel is rendered unavailable for charterers’ service
      for a period of thirty days or more as a result of detention of a vessel by
      any
      governmental authority, or by any legal action against vessel or owners, or
      by
      any strike or boycott by the vessel’s officers or crew.




**Basic
      hire**




Under
      each time charter, the daily charter rate for each of our vessels, which we
      refer to as basic hire, is payable to us monthly in advance and will increase
      annually. The basic hire under the charters for each vessel type during each
      year of the fixed term of the charter is as follows:




**Charter
                Year**
            
            
            **End
                of Charter Year***
            
            
            **VLCC****(*Ann,***
              ***Chris*
                and *Regal***
              ***Unity*)**
            
            
            **Aframax**
              **(*****Overseas
                Cathy***
              **and*****Overseas***
              ***Sophie)***
            
            
            **Aframax**
              **(*****Rebecca*****and**
              ***Ania)***1
            
            
            October
                17, 2006
            
            $
            37,200/day
            
            $
            24,500/day
            
            $
            18,500/day2
            
            
            October
                17, 2007
            
            
            37,400/day
            
            
            24,700/day
            
            
            18,700/day3
            
            
            October
                17, 2008
            
            
            37,500/day
            
            
            24,800/day
            
            
            18,800/day4
            
            
            October
                17, 2009
            
            
            37,600/day
            
            
            24,900/day
            
            
            18,900/day5
            
            
            October
                17, 2010
            
            
            37,800/day
            
            
            25,100/day
            
            
            19,100/day6
            
            
            October
                17, 2011
            
            
            38,100/day
            
            
            25,400/day







* The
      charters for the *Overseas
      Cathy* and the *Overseas
      Ann* expire
      on January 17, 2012 and April 17, 2012, respectively. During the
      period from October 17, 2011 to their respective expiration dates, the
      basic hire is $25,700 and $38,500 per day, respectively. The charter for the *Regal
      Unity* expires
      on April 17 , 2011 and the charter for the *Overseas
      Sophie* expires
      on July 17, 2011.





Under
      each time charter, the charterer has the option to renew the charter on one
      or
      more successive occasions for periods of one, two or three years, up to an
      aggregate of five, six or eight years, depending on the vessel. Each such option
      will be exercisable not less than three months prior to the then effective
      charter expiration date. If a time charter is renewed, the charter terms
      providing for profit sharing will remain in




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effect
      and the charterer, at the time of exercise, will have the option to select
      a
      basic charter rate that is equal to (i) 5% above the published one-, two-
      or three-year time charter rate (corresponding to the extension length) for
      the
      vessel’s class, as decided by the Broker Panel, or (ii) the basic hire rate
      set forth in the charter. The Broker Panel will be The Association of
      Shipbrokers and Agents Tanker Broker Panel or another panel of brokers mutually
      acceptable to us and the charterer.




**Additional
      Hire**




Pursuant
      to our charter arrangements, the parent of each of the charterers, OSG
      International, Inc., or OIN, has agreed to pay us quarterly in arrears a
      payment, which is in addition to the basic hire we will receive under our
      charters, that we refer to as additional hire. OIN will pay us additional hire
      on a quarterly basis equal to 40% of the excess, if any, of the aggregate
      charter hire earned (or deemed earned in the event that a vessel is operated
      in
      the spot market outside a pool) by the charterers on all of our vessels above
      the aggregate basic hire paid by the charterers to us in respect of all of
      our
      vessels during the calculation period. OSG has agreed to guarantee the
      additional hire payments due to us under the charter framework agreement. If
      we
      sell a vessel to a third party, the vessel will continue to be subject to the
      charter framework agreement and will continue to earn additional hire, but
      will
      not be included in our fleetwide calculations. Additional hire is calculated
      on
      a time charter equivalent, or TCE, basis, regardless of whether the charterers
      operate our vessels in a pool, on time charters or in the spot market. However,
      the manner in which charter hire is calculated for a given period depends on
      whether our vessels are operated in a pool or in the time or spot charter
      market. Currently, all of our vessels are operated in either the Tankers
      International Pool or the Aframax International Pool.




*General
      provisions regarding additional hire.*




*For
      the First Four Fiscal Quarters.* Additional hire is calculated at the end of each quarter through and including
      the quarter ending September 30, 2006 for the period commencing on the
      effective date of the charters and ending on the last day of the applicable
      quarter, as follows:




·
            TCE
                revenue earned or deemed earned by the charterers for all of our
                vessels
                over the calculation period is
                aggregated;




·
            the
                basic hire earned by all of our vessels during the calculation period
                is
                also aggregated;




·
            additional
                hire for the calculation period is equal to 40% of the excess, if
                any, of
                the TCE revenue earned or deemed earned by the charterers over the
                basic
                hire earned by all of our vessels;




·
            additional
                hire payable for the relevant quarter is equal to the excess, if
                any, of
                the additional hire for the calculation period over the amount of
                additional hire paid in respect of previous quarters;
                and




·
            if,
                at September 30, 2006, the amount of additional hire paid since the
                effective date exceeds the amount of additional hire that would have
                been
                paid using a single calculation period that started on the effective
                date
                and ended on September 30, 2006, then the excess shall be available
                to offset future additional hire amounts until September 30,
                2007.




The
      calculation period for each of the four quarters beginning on the effective
      date
      and ending on September 30, 2006 is the period commencing on the effective
      date and ending on the last day of such calendar quarter.




*In
      Subsequent Fiscal Periods.* Additional hire for any calendar quarter ending after September 30, 2006
      will also be calculated on a fleetwide basis and will be equal to an amount
      that
      is 40% of the excess, if any, of (i) the aggregate of the rolling four
      quarter weighted average hire for all of our vessels in the calendar quarter
      over (ii) the aggregate of the basic hire earned by all of our vessels in
      that calendar quarter. The weighted average hire for each vessel will be
      determined by:






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·
            aggregating
                all TCE revenue earned or deemed earned by the vessel in the four
                quarter
                period ending on the last day of the quarter and dividing the result
                by
                the number of days the vessel was on hire in that four quarter period;
                and




·
            multiplying
                the resulting rate by the number of days the vessel was on hire in
                the
                calendar quarter.




OIN
      is
      responsible for performing the additional hire calculations each quarter,
      subject to our right to review its calculations. Additional hire, if any, is
      payable on the 35th day following the end of each calendar quarter. We are
      not
      required to refund any additional hire payments made to us by OIN in respect
      of
      prior periods due to our vessels earning less than the basic hire
      amounts.




*Additional
      hire for vessels operating in a pool.*




General. In order
      to enhance vessel utilization and earnings, OSG is a member of the Tankers
      International Pool, which operates VLCCs and ULCCs, and the Aframax
      International Pool, which operates Aframaxes. Our vessels are currently operated
      in these pools. The Tankers International Pool currently consists of **47** vessels,
      including our three VLCCs, and the Aframax International Pool currently consists
      of **36** vessels,
      including our four Aframaxes. The large number of vessels managed by these
      pools
      allows them to enhance vessel utilization, and therefore vessel earnings, with
      backhaul cargoes and contracts of affreightment, or COAs, which minimize idle
      time and distances travelled empty. We therefore believe that, over a longer
      period of time, our potential to earn additional hire will be enhanced by the
      higher utilization rates and lower overhead costs that a vessel operating inside
      a pool can achieve compared with a vessel operating independently outside of
      a
      pool.




Allocation
      of pool revenues. Earnings
      generated by all vessels operating in a pool are expressed on a TCE basis and
      then pooled and allocated based on a pre-arranged weighting system that
      recognizes each vessel’s earnings capacity based on its cargo capacity, speed
      and consumption, and actual on-hire performance. Earnings from vessels operating
      on voyage charters in the spot market and on COAs within the pool need to be
      converted into TCEs (by subtracting voyage expenses such as fuel and port
      charges) while vessels operating on time charters within a pool do not need
      to
      be converted. For vessels operating on voyage charters in the spot market and
      on
      COAs, aggregated voyage expenses are deducted from aggregated revenues to result
      in an aggregate net revenue amount, which is the TCE amount. These aggregate
      net
      revenues are combined with aggregate time charter revenues to determine
      aggregate pool TCE revenue. Aggregate pool TCE revenue is then allocated to
      each
      vessel in accordance with the allocation formula. Because OSG currently operates
      all the VLCCs and Aframaxes it owns and charters-in in the Tankers International
      and Aframax International Pools, respectively, we expect that our vessels will
      be operated in these pools and that each charterer will earn its vessel’s share
      of the respective pool’s TCE revenue from the commencement of our time charters
      with OSG’s subsidiaries and for so long as OSG maintains its membership in that
      pool. However, OSG can withdraw from either pool at any time, and the members
      of
      either pool can agree to change the terms of their respective pools at any
      time.
      Furthermore, under the current terms of the respective pool agreements, OSG
      may
      withdraw a particular VLCC (including any of ours) from the Tankers
      International Pool and time charter it to third party for a term exceeding
      five
      years and may withdraw a particular Aframax (including any of ours) from the
      Aframax International Pool and time charter it to a third party for a term
      in
      excess of three years.




The
      amount of TCE revenue earned by our vessels that operate in a pool is equal
      to
      the pool earnings for those vessels, as reported to each charterer by the
      respective pool manager.




*Additional
      hire for vessels operating outside of a pool.*




If
      OSG
      withdraws any of our vessels from a pool, or if a pool disbands, the methodology
      for calculating TCE revenue for determination of additional hire with respect
      to
      that vessel will change in the applicable quarter. In that case, TCE revenue
      for
      the affected vessel will be equal to:




·
            *for
                periods under time charters:*actual
                time charter hire earned by the charterer under time charters to
                third
                parties for any periods during the quarter that the vessel operates
                under
                the time charter, less ship broker commissions paid by the charterer
                to
                unaffiliated third parties in an amount not
                to exceed 2.5% of such time charter hire and commercial management
                fees
                paid by the charterer to unaffiliated third parties in an amount
                not to
                exceed 1.25% of such time charter hire;
                plus






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·
            *for
                periods in the spot market:*the
                TCE revenue deemed earned by the charterer in the spot market, calculated
                as described under the special provisions referred to below. We define
                spot market periods as periods during the quarter that a vessel is
                not
                subchartered by the charterer under a time charter or operating in
                a pool
                and during which the vessel is on hire under our time charter with
                the
                charterer.




*Special
      provisions regarding the calculation of additional hire when vessels are
      operated outside of a pool and not in the time charter market.*




If
      a
      vessel is operated by a charterer outside of a pool and not in the time charter
      market (i.e., in the spot market), TCE revenue is deemed earned for the period
      that the vessel is operating on the spot market and is on hire under our time
      charter. TCE revenue is calculated each quarter using averages of the daily
      spot
      rates (expressed in Worldscale Points) for the routes specified below, as
      determined by the Broker Panel. We refer to these averages as the average spot
      rates and we refer to these routes as the notional routes. The average spot
      rates is determined for the notional routes as follows:




·
            multiplying
                the daily spot rate expressed in Worldscale Points (first divided
                by 100)
                by the applicable Worldscale flat rate (expressed in U.S. dollars
                per ton
                of cargo) for the notional route as set forth in the New Worldwide
                Tanker
                Nominal Freight Scale issued by the Worldscale Association for the
                relevant period and multiplying that product by the cargo size (in
                tons)
                for each vessel type to calculate freight
                income;




·
            subtracting
                voyage costs consisting of brokerage commissions of 2.5% and commercial
                management costs of 1.25%, bunker costs and port charges from freight
                income to calculate voyage income;
                and




·
            dividing
                voyage income by voyage duration, including time in
                port.




A
      TCE
      per-day rate is calculated based on the average spot rates reported by the
      Broker Panel and weighted by the notional routes as described below. TCE revenue
      for the vessel is calculated by multiplying the TCE per-day rate by the number
      of days the vessel was operating on hire under our time charter during that
      quarter.




The
      Broker Panel will be The Association of Shipbrokers and Agents Tanker Broker
      Panel or another panel of brokers mutually acceptable to us and OIN. If
      Worldscale ceases to be published, the Broker Panel shall use its best judgment
      in determining the nearest alternative method of assessing the market rates
      on
      the specified voyages.




On
      the
      last day of each calendar quarter, OIN will instruct the Broker Panel to
      determine for each notional route the average spot rate for the relevant period
      during that quarter that the vessel was on hire. Periods for which a vessel
      is
      off hire under our time charter for any reason are excluded from the
      calculation. The Broker Panel will be instructed to deliver their assessment
      of
      the average spot rates no later than the fifth business day following the
      instruction date to make such assessment. Upon receipt of the Broker Panel’s
      assessment of the average spot rates, OIN will calculate the TCE revenue deemed
      earned by each charterer for the relevant periods during that quarter, and
      will
      deliver such calculation to us no later than the fifth business day following
      the date on which it receives the average spot rate assessment from the Broker
      Panel. Such TCE revenue amounts are included in the additional hire calculation
      for the quarter. Determinations of the Broker Panel will be binding on us and
      OIN. We and OIN will share equally the cost of such Broker Panel assessment
      and
      of any experts engaged by the Broker Panel.




The
      notional routes, cargo sizes and the weighting to be applied to each route
      in
      calculating the time charter equivalent daily rates is as follows:




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1.
            *Aframaxes*Puerta
              la Cruz to Corpus Christi with 70,000 tons of crude (50% weight)
              Sullom
                Voe to Wilhelmshaven with 80,000 tons of crude (25% weight)
              Banias
                to Lavera with 80,000 tons of crude (25% weight)2.
            *VLCCs*Ras
              Tanura to Chiba with 250,000 tons of crude (50% weight)
              Ras
                Tanura to LOOP with 280,000 tons of crude (46% weight)
              Offshore
                Bonny to LOOP with 260,000 tons of crude (4%
                weight)




The
      notional routes are intended to represent routes on which Aframaxes and VLCCs
      are typically traded by the charterers. If during the term of the charter,
      in
      OIN’s reasonable opinion, any notional route ceases to be used by Aframaxes or
      VLCCs, as the case may be, or the selection of bunkering ports for purposes
      of
      determining bunker prices ceases to be representative of bunkering practice
      along a notional route, OIN may, with our consent, which we may not unreasonably
      withhold, instruct the Broker Panel to substitute alternative notional routes
      and bunkering ports that most closely match the routes and bunkering ports
      then
      being used by Aframaxes or VLCCs and to apply appropriate weights to such
      alternative routes for such period.




If
      in
      OIN’s reasonable opinion it becomes impractical or dangerous, due to war,
      hostilities, warlike operations, civil war, civil commotion, revolution or
      terrorism for Aframax tankers and VLCCs to operate on the notional routes,
      OIN
      may request our agreement, which we may not unreasonably refuse, for the average
      daily rate to be determined during the period of such danger or restriction
      of
      trading using average spot rates determined by the Broker Panel for alternative
      notional routes proposed by the charterer that reasonably reflect realistic
      alternative round voyage trade for Aframaxes and VLCCs during the period of
      such
      danger or restriction of trading. In such event, the TCE revenue for such period
      will be calculated using the daily spot rates for such alternative routes and
      applying such weights as determined by the charterer, with our agreement, which
      we may not unreasonably refuse.




Additional
      details on the calculation of TCE revenue for spot periods are set forth
      below:




·
            Calculation
                of voyage duration.
                The voyage duration for each notional route is calculated for the
                laden
                and ballast legs of a round trip on such notional route using the
                distance, speed and time in port specified below for each
                vessel.




·
            Data
                used in calculations.
                The following data is used in the above calculations and is subject
                to
                annual review to ensure consistency with industry
                standards:




**Bunkers
      in port**




*For
      Overseas Cathy and Overseas Sophie* *:* loading
      20 tons; discharging 20 tons.




*For
      Rebecca and Ania* *:* loading
      20 tons; discharging 20 tons.




*For
      VLCCs* *:* loading
      50 tons; discharging 200 tons.




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**Bunker
      costs**




Bunkers
      used in the calculation of freight income are determined based on speed,
      distance and consumption of bunkers at sea and in port. Bunker costs are equal
      to the bunkers used multiplied by the bunker price. Bunker prices are as
      published by Platts Bunkerwire, or a similar publication or quotation service
      mutually acceptable to us and the charterer, and are increased for barge
      delivery charges to reflect the average barge delivery charges in the applicable
      port over the prior applicable period.




*Bunker
      prices for Aframaxes* *:* the
      weighted average of the daily mean prices during the spot period for Marine
      Fuel
      Oil grade IFO 380 CST prevailing at each of Houston (50% weighting), Rotterdam
      (25% weighting) and Gibraltar (25% weighting).




*Bunker
      prices for VLCCs* *:* the
      average of the daily mean prices during the spot period for Marine Fuel Oil
      grade IFO 380 CST prevailing at each of Fujairah and Houston, averaged on an
      equal weighting.




**Port
      charges**




The
      port
      charges for each notional route are equal to the sum of port tariffs, tugs
      and
      other port call expenses at the loading and discharging ports, in U.S. dollars,
      converted if necessary at the exchange rate in effect on the last calendar
      day
      of the period for which the TCE day rate is being calculated.




**Time
      in port**




*For
      Aframaxes* *:* 5 days, which is split 2 days loading, 2 days discharging and 1
      day idling.




*For
      VLCCs* *:* 7.5 days, which is split 3 days loading, 3 days discharging and
      1.5 days idling.




Distance




The
      distance for each notional route is determined according to the “World-Wide
      Marine Distance Tables” published by British Petroleum.




**Speed
      and consumption at sea**




*For
      Overseas Cathy and Overseas Sophie* *:* 15 knots
      at 60 tons per day in laden condition and 15 knots at 60 tons per day in ballast
      condition, less a steaming allowance of 7.5% applied to the speeds to allow
      for
      weather and navigation.




*For
      Rebecca and Ania* *:* 13.3
      knots at 37 tons per day in laden condition and 13.3 knots at 37 tons per day
      in
      ballast condition, less a steaming allowance of 7.5% applied to the speeds
      to
      allow for weather and navigation.




*For
      VLCCs* :
      14.75
      knots at 105 tons per day in laden condition and 15.75 knots at 100 tons per
      day
      in ballast condition, less a steaming allowance of 7.5% applied to the speeds
      to
      allow for weather and navigation.




**SHIP
      MANAGEMENT AGREEMENTS**




The
      following summary of the material terms of the ship management agreements does
      not purport to be complete and is subject to, and qualified in its entirety
      by
      reference to, all the provisions of the ship management agreements. Because
      the
      following is only a summary, it does not contain all information that you may
      find useful. For more complete information, you should read the entire ship
      management agreement for each vessel listed as an exhibit to this
      report.




Our
      vessel owning subsidiaries have entered into fixed rate ship management
      agreements with Tanker Management. Under the ship management agreements, Tanker
      Management is responsible for all technical management and most of the
      associated costs, including crewing, maintenance, repair, drydockings (subject
      to the provisions described below), maintaining required vetting approvals,
      and
      other vessel operating expenses,
      but excluding insurance premiums and vessel taxes. We have agreed to guarantee
      the obligations of each of our subsidiaries under the ship management
      agreements.




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Tanker
      Management is responsible for all scheduled drydocking costs related to our
      vessel during the term of the ship management agreement. However, if a ship
      management agreement is terminated, we will make a payment to Tanker Management
      in the amount of the cumulative scheduled drydocking costs paid by Tanker
      Management in excess of the cumulative drydock-related management fee payments
      paid by us, in accordance with the terms set forth in the applicable ship
      management agreement. If at such time cumulative drydock-related management
      fee
      payments paid by us exceed cumulative scheduled drydocking costs paid by Tanker
      Management, we will receive a payment from Tanker Management in the amount
      of
      the difference. Following the first drydocking of the applicable vessel, we
      will
      be responsible for any reasonably unanticipated repair to a vessel that
      (i) is not due to the fair wear and tear of the vessel and
      (ii) exceeds any insurance or warranty coverage amounts.




Tanker
      Management is also obligated under the ship management agreements to arrange
      for
      insurance for each of our vessels, including marine hull and machinery
      insurance, protection and indemnity insurance (including pollution risks and
      crew insurances), war risk insurance and loss of hire insurance and we are
      responsible for the payment of all premiums. Tanker Management is responsible
      for the payment of deductibles subject to the following per claim
      limits:




·
            for
                our hull and machinery policy, $185,000 for claims on any of our
                VLCCs and
                $110,000 for claims on any of our
                Aframaxes;




·
            for
                our protection and indemnity
                policy:




$100,000
      for claims under the running down clause and the fixed and floating objects
      clause, and




$15,000
      for all other protection and indemnity claims.




Tanker
      Management is not required to make any payments in respect of any off hire
      period which is not covered by loss of hire insurance. We have obtained coverage
      against business interruption for periods of more than 21 days (in the case
      of
      our VLCCs) or 14 (in the case of our Aframaxes) per incident (up to a maximum
      of
      120 days) following any loss under our hull and machinery policy
      (mechanical breakdown, grounding, collision or other incidence of damage that
      does not result in a total loss or constructive total loss of the vessel).
      Tanker Management is permitted to assign its duties under the ship management
      agreements to an affiliate at any time.




Each
      ship
      management agreement is coterminous with the time charter of the associated
      vessel. An extension of a time charter will trigger an extension of the
      associated ship management agreement unless it is cancelled as described below.
      Under each ship management agreement, we will pay Tanker Management a technical
      management fee in exchange for the management services and payment of costs
      described above, expressed in dollars per day that is payable monthly in advance
      and calculated on the actual number of days in the month. For each management
      agreement, the technical management fee is fixed for the first two years and
      increases by 2.5% per year thereafter for the duration of the
      agreement.




The
      schedule of technical management fees for the initial charter period is as
      follows:







**Year
                of Agreement**
            
            
            **End
                of Annual Period**
            
            
            **VLCC**
            
            
            **Aframax**1
            
            
            October
                17, 2006
            
            $
            6,500/day
            
            $
            5,800/day2
            
            
            October
                17, 2007
            
            
            6,500/day
            
            
            5,800/day3
            
            
            October
                17, 2008
            
            
            6,663/day
            
            
            5,945/day4
            
            
            October
                17, 2009
            
            
            6,829/day
            
            
            6,094/day5
            
            
            October
                17, 2010
            
            
            7,000/day
            
            
            6,246/day6
            
            
            October
                17, 2011
            
            
            7,175/day
            
            
            6,402/day7
            
            
            October
                16, 2012
            
            
            7,354/day
            
            
            6,562/day





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Under
      the
      ship management agreements, Tanker Management has agreed to maintain our vessels
      so that they comply with the requirements of our charters and are in class
      with
      valid certification, and to keep them in the same good order and condition
      as
      when delivered, except for ordinary wear and tear. In addition, Tanker
      Management is responsible for our fleet’s compliance with all government,
      environmental and other regulations.




The
      ship
      management agreements are cancelable by us for any reason at any time upon
      90 days advance notice. Tanker Management will not be able to cancel the
      agreement except for cause prior to the second anniversary. Following the second
      anniversary, termination by Tanker Management requires at least 90 days
      advance notice. Both parties also have the right to terminate any of the ship
      management agreements if the relevant charter has been terminated. If a ship
      management agreement is terminated, we will be required to pay a termination
      fee
      of $45,000 per vessel to cover costs of the manager associated with termination.
      We will also be required to obtain the consent of the applicable charterer
      and
      our lenders before we appoint a new manager; however, such consent may not
      to be
      unreasonably withheld. Each charterer also has the right to cause us to change
      the manager of the vessel under certain circumstances if it is dissatisfied
      with
      the manager’s performance.




OSG
      and
      its affiliates, including Tanker Management, provide or will provide technical
      and operational management and payroll and support services for OSG’s fleet of
      vessels, including vessels that are majority owned by independent third
      parties.




**OUR
      FLEET**




The
      following chart summarizes certain information about the seven vessels in our
      fleet.







**Vessel**
            
            **Year
                Built**
            
            **Dwt**
            
            **Current
                Flag**
            
            **Classification
                Society****VLCC***Overseas
                Ann*
            
            2001
            
            309,327
            
            Marshall
                Islands
            
            Lloyds*Overseas
                Chris*
            
            2001
            
            309,285
            
            Marshall
                Islands
            
            Lloyds*Regal
                Unity*
            
            1997
            
            309,966
            
            Marshall
                Islands
            
            ABS**Aframax***Overseas
                Cathy*
            
            2004
            
            112,028
            
            Marshall
                Islands
            
            ABS*Overseas
                Sophie*
            
            2003
            
            112,045
            
            Marshall
                Islands
            
            ABS*Rebecca*
            
            1994
            
            94,873
            
            Marshall
                Islands
            
            ABS*Ania*
            
            1994
            
            94,848
            
            Marshall
                Islands
            
            ABS





The
      Regal
      Unity was built in Japan by Universal Shipbuilding Corporation (formerly Hitachi
      Zosen Corporation) and our other six vessels were built by Hyundai Heavy
      Industries Co. in South Korea, in each case under full-time on-site supervision
      of OSG’s in-house naval architects.




The
      vessels were built to OSG’s specifications, which, in many areas, exceed
      industry and shipyard standards and regulatory requirements in place at the
      time
      of construction. The vessels were built with limited use of high tensile steel
      and incorporate additional steel in areas subject to high stress. All of our
      vessels incorporate higher coating specifications for both the hull and the
      cargo tanks to minimize corrosion, reduce maintenance and help protect the
      environment. In addition, all of our vessels have been outfitted with high
      quality navigation and safety equipment as well as enhanced anti-pollution
      features. As a result, we believe our vessels are among the most efficient
      and
      safest tankers in the world.






**RISK
      OF LOSS AND INSURANCE**




Our
      operations may be affected by a number of risks, including mechanical failure
      of
      the vessels, collisions, property loss to the vessels, cargo loss or damage
      and
      business interruption due to political circumstances in foreign countries,
      hostilities and labor strikes. In addition, the operation of any ocean-going
      vessel is subject to the inherent possibility of catastrophic marine disaster,
      including oil spills and other
      environmental mishaps, and the liabilities arising from owning and operating
      vessels in international trade.




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Tanker
      Management is responsible for arranging for the insurance of our vessels on
      terms specified in the ship management agreements, which we believe are in
      line
      with standard industry practice. We are responsible for the payment of premiums.
      Tanker Management is responsible for the payment of deductibles, up to the
      amounts specified in the ship management agreements, but will not be required
      to
      reimburse us for off hire periods that are not covered by loss of hire
      insurance. In accordance with the ship management agreements, Tanker Management
      will arrange for marine hull and machinery and war risks insurance, which
      includes the risk of actual or constructive total loss, and protection and
      indemnity insurance with mutual assurance associations. Tanker Management has
      also agreed in the ship management agreements to arrange for loss of hire
      insurance in respect of each of our vessels, subject to the availability of
      such
      coverage at commercially reasonable terms. Loss of hire insurance generally
      provides coverage against business interruption following any loss under our
      hull and machinery policy. We have obtained loss of hire insurance that
      generally provides coverage against business interruption for periods of more
      than 21 days (in the case of our VLCCs) or 14 (in the case of our Aframaxes)
      per
      incident (up to a maximum of 120 days) following any loss under our hull
      and machinery policy (mechanical breakdown, grounding, collision or other
      incidence of damage that does not result in a total loss of the vessel).
      Currently, the amount of coverage for liability for pollution, spillage and
      leakage available to us on commercially reasonable terms through protection
      and
      indemnity associations and providers of excess coverage is $1 billion per
      vessel per occurrence. Protection and indemnity associations are mutual marine
      indemnity associations formed by shipowners to provide protection from large
      financial loss to one member by contribution towards that loss by all
      members.




We
      believe that our anticipated insurance coverage will be adequate to protect
      us
      against the accident-related risks involved in the conduct of our business
      and
      that we will maintain appropriate levels of environmental damage and pollution
      insurance coverage, consistent with standard industry practice. However, there
      is no assurance that all risks are adequately insured against, that any
      particular claims will be paid or that we will be able to obtain adequate
      insurance coverage at commercially reasonable rates in the future following
      termination of the ship management agreements.




**INSPECTION
      BY A CLASSIFICATION SOCIETY**




Every
      commercial vessel’s hull and machinery is evaluated by a classification society
      authorized by its country of registry. The classification society certifies
      that
      the vessel has been built and maintained in accordance with the rules of the
      classification society and complies with applicable rules and regulations of
      the
      vessel’s country of registry and the international conventions of which that
      country is a member. Each vessel is inspected by a surveyor of the
      classification society in three surveys of varying frequency and thoroughness:
      every year for the annual survey, every two to three years for intermediate
      surveys and every four to five years for special surveys. Should any defects
      be
      found, the classification surveyor will issue a “recommendation” for appropriate
      repairs which have to be made by the shipowner within the time limit prescribed.
      Vessels may be required, as part of the annual and intermediate survey process,
      to be drydocked for inspection of the underwater portions of the vessel and
      for
      necessary repair stemming from the inspection. Special surveys always require
      drydocking.




Each
      of
      our vessels has been certified as being “in class” by a member society of the
      International Association of Classification Societies, indicated in the table
      on **** page
      30
      of this report.




**ENVIRONMENTAL
      REGULATION**




Government
      regulation significantly affects the ownership and operation of our tankers.
      They are subject to international conventions, national, state and local laws
      and regulations in force in the countries in which our tankers may operate
      or
      are registered. Under our ship management agreements, Tanker Management has
      assumed technical management responsibility for our fleet, including compliance
      with all government and other regulations. If our ship management agreements
      with Tanker Management terminate, we would attempt to hire another party to
      assume this responsibility, including compliance with the regulations described
      herein and any costs associated with such compliance. However, in such event
      we
      may be unable




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to
      hire
      another party to perform these and other services for a fixed fee as is the
      case
      with Tanker Management, and we may incur substantial costs to comply with
      environmental requirements.




A
      variety
      of governmental and private entities subject our tankers to both scheduled
      and
      unscheduled inspections. These entities include the local port authorities
      (U.S.
      Coast Guard, harbor master or equivalent), classification societies, flag state
      administration (country of registry) and charterers, particularly terminal
      operators and oil companies. Certain of these entities require us to obtain
      permits, licenses and certificates for the operation of our tankers. Failure
      to
      maintain necessary permits or approvals could require us to incur substantial
      costs or temporarily suspend operation of one or more of our
      tankers.




We
      believe that the heightened level of environmental and quality concerns among
      insurance underwriters, regulators and charterers is leading to greater
      inspection and safety requirements on all tankers and may accelerate the
      scrapping of older tankers throughout the industry. Increasing environmental
      concerns have created a demand for tankers that conform to the stricter
      environmental standards. Tanker Management is required to maintain operating
      standards for all of our tankers emphasizing operational safety, quality
      maintenance, continuous training of our officers and crews and compliance with
      U.S. and international regulations. We believe that the operation of our vessels
      is in substantial compliance with applicable environmental laws and regulations;
      however, because such laws and regulations are frequently changed and may impose
      increasingly stringent 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 tankers.




**INTERNATIONAL
      MARITIME ORGANIZATION**




In
      April 2001, the IMO adopted regulations under the International Convention
      for the Prevention of Pollution from Ships, or MARPOL, requiring new tankers
      of
      5,000 dwt and over, contracted for construction since July 6, 1993, to have
      double hull, mid-deck or equivalent design. At that time the regulations also
      required the phase-out of non-double hull tankers by 2015, with tankers having
      double sides or double bottoms permitted to operate until the earlier of 2017
      or
      when the vessel reaches 25 years of age. Existing single hull tankers were
      required to be phased out unless retrofitted with double hull, mid-deck or
      equivalent design no later than 30 years after delivery. These regulations
      were adopted by over 150 nations, including many of the jurisdictions in which
      our tankers operate. Subsequent amendments to the MARPOL regulations accelerated
      the phase out of single hull tankers to 2005 for Category I vessels and
      2010 for Category II and III vessels. Category I vessels are crude oil
      tankers of 20,000 dwt and above and product tankers of 30,000 dwt and above
      that
      are pre-MARPOL Segregated Ballast Tanks (SBT) tankers. Category II tankers
      are crude oil tankers of 20,000 dwt and above and product tankers of 30,000
      dwt
      and above that are post-MARPOL SBT tankers. Category III tankers are
      tankers above 5,000 dwt, but below the deadweight specified for Category I
      and II tankers above. The IMO may adopt additional regulations in the future
      that could further restrict the operation of single hull vessels. All of the
      tankers we acquired are double-hulled and are thus not subject to phase-out
      under existing IMO regulations.




The
      IMO
      has also negotiated international conventions that impose liability for oil
      pollution in international waters and a signatory’s territorial waters. In
      September 1997, the IMO adopted Annex VI to the International Convention
      for the Prevention of Pollution from Ships to address air pollution from ships.
      Annex VI, which became effective in May 2005, sets limits on sulfur oxide
      and nitrogen oxide emissions from ship exhausts and prohibits deliberate
      emissions of ozone depleting substances, such as chlorofluorocarbons. 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. All of our vessels are currently compliant with these regulations.
      Additional or new conventions, laws and regulations may be adopted that could
      adversely affect Tanker Management’s ability to manage our ships.




Under
      the
      International Safety Management Code, or ISM Code, promulgated by the IMO,
      the
      party with operational control of a vessel is required 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. Tanker Management will rely upon its safety
      management system.




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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 code requirements for a safety management system. No vessel
      can
      obtain a certificate unless its operator has been awarded a document of
      compliance, issued by each flag state, under the ISM Code. Tanker Management
      has
      the requisite documents of compliance for its offices and safety management
      certificates for all of our tankers for which the certificates are required
      by
      the IMO. Tanker Management is required to renew these documents of compliance
      and safety management certificates annually.




Noncompliance
      with the ISM Code and other IMO regulations may subject the ship-owner or
      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. For example, the U.S. Coast Guard and European Union
      authorities have indicated that vessels not in compliance with the ISM Code
      will
      be prohibited from trading in U.S. and European Union ports.




Although
      the United States is not a party to these conventions, many countries have
      ratified and follow the liability plan adopted by the IMO and set out in the
      International Convention on Civil Liability for Oil Pollution Damage of 1969.
      Under this convention and depending on whether the country in which the damage
      results is a party to the 1992 Protocol to the International Convention on
      Civil
      Liability for Oil Pollution Damage, a vessel’s registered owner is strictly
      liable for pollution damage caused in the territorial waters of a contracting
      state by discharge of persistent oil, subject to certain complete defenses.
      Under an amendment to the Protocol that became effective on November 1,
      2003, for vessels of 5,000 to 140,000 gross tons (a unit of measurement for
      the
      total enclosed spaces within a vessel), liability will be limited to
      approximately $6.7 million plus $931 for each additional gross ton over
      5,000. For vessels of over 140,000 gross tons, liability will be limited to
      approximately $132 million. As the convention calculates liability in terms
      of a basket of currencies, these figures are based on currency exchange rates
      on
      September 8, 2005. Under the 1969 Convention, the right to limit liability
      is forfeited where the spill is caused by the owner’s actual fault; under the
      1992 Protocol, a ship-owner cannot limit liability where the spill is caused
      by
      the owner’s intentional or reckless conduct. Vessels trading to states that are
      parties to these conventions must provide evidence of insurance covering the
      liability of the owner. In jurisdictions where the International Convention
      on
      Civil Liability for Oil Pollution Damage has not been adopted, various
      legislative schemes or common law govern, and liability is imposed either on
      the
      basis of fault or in a manner similar to that convention. We believe that our
      P&I insurance will cover the liability under the plan adopted by the
      IMO.




IMO
      regulations also require owners and operators of vessels to adopt Ship Oil
      Pollution Emergency Plans, or SOPEPs. Periodic training and drills for response
      personnel and for vessels and their crews are required.




**U.** **S.
      OIL POLLUTION ACT OF 1990 AND COMPREHENSIVE ENVIRONMENTAL RESPONSE,** **COMPENSATION,
      AND LIABILITY ACT**




The
      United States regulates the tanker industry with an extensive regulatory and
      liability regime for environmental protection and cleanup of oil spills,
      consisting primarily of the U.S. Oil Pollution Act of 1990, or OPA, and the
      Comprehensive Environmental Response, Compensation, and Liability Act, or
      CERCLA. OPA affects all owners and operators whose vessels trade with the United
      States or its territories or possessions, or whose vessels operate in the waters
      of the United States, which include the U.S. territorial sea and the 200
      nautical mile exclusive economic zone around the United States. CERCLA applies
      to the discharge of hazardous substances (other than oil) whether on land or
      at
      sea. Both OPA and CERCLA impact our operations.




Under
      OPA, vessel owners, operators and bareboat or demise charterers are “responsible
      parties” who are liable, without regard to fault, for all containment and
      clean-up costs and other damages, including property and natural resource
      damages and economic loss without physical damage to property, arising from
      oil
      spills and pollution from their vessels.




In
      general, OPA limits the liability of responsible parties to the greater of
      $1,200 per gross ton or $10 million per tanker that is over 3,000 gross
      tons (subject to possible adjustment for inflation). The act specifically
      permits individual states to impose their own liability regimes with regard
      to
      oil pollution incidents occurring within their boundaries, and some states
      have
      enacted legislation providing for unlimited
      liability for discharge of pollutants within their waters. In some cases, states
      that have enacted this type of legislation have not yet issued implementing
      regulations defining tanker owners’ responsibilities under these laws. CERCLA,
      which applies to owners and operators of vessels, contains a similar liability
      regime and provides for cleanup, removal and natural resource damages associated
      with discharges of hazardous substances (other than oil). Liability under CERCLA
      is limited to the greater of $300 per gross ton or
      $5 million.




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These
      limits of liability do not apply, however, where the incident is caused by
      violation of applicable U.S. federal safety, construction or operating
      regulations, or by the responsible party’s gross negligence or willful
      misconduct. Similarly, these limits do not apply if the responsible party fails
      or refuses to report the incident or to cooperate and assist in connection
      with
      the substance removal activities. OPA and CERCLA each preserve the right to
      recover damages under existing law, including maritime tort law.




OPA
      also
      requires owners and operators of vessels to establish and maintain with the
      U.S.
      Coast Guard evidence of financial responsibility sufficient to meet the limit
      of
      their potential strict liability under the act. The U.S. Coast Guard has enacted
      regulations requiring evidence of financial responsibility consistent with
      the
      maximum limits of liability described above for OPA and CERCLA (combined),
      or
      $1,500 per gross ton for tankers. Under the regulations, evidence of financial
      responsibility may be demonstrated by insurance, surety bond, self-insurance,
      guaranty or an alternative method subject to approval by the Director of the
      U.S. Coast Guard National Pollution Funds Center. Under OPA regulations, an
      owner or operator of more than one tanker is required to demonstrate evidence
      of
      financial responsibility for the entire fleet in an amount equal only to the
      financial responsibility requirement of the tanker having the greatest maximum
      strict liability under OPA and CERCLA. Tanker Management has provided the
      requisite guarantees and has received certificates of financial responsibility
      from the U.S. Coast Guard for each of our tankers required to have
      one.




Tanker
      Management has arranged insurance for each of our tankers with pollution
      liability insurance in the amount of $1 billion. However, a catastrophic
      spill could exceed the insurance coverage available, in which event there could
      be a material adverse effect on our business, on the charterer’s business, which
      could impair the charterer’s ability to make payments to us under our charters,
      and on Tanker Management’s business, which could impair Tanker Management’s
      ability to manage our vessels.




Under
      OPA, oil tankers as to which a contract for construction or major conversion
      was
      put in place after June 30, 1990 are required to have double hulls. In
      addition, oil tankers without double hulls will not be permitted to come to
      U.S.
      ports or trade in U.S. waters by 2015. All of the vessels we acquired have
      double hulls.




OPA
      also
      amended the Federal Water Pollution Control Act to require owners and operators
      of vessels to adopt vessel response plans for reporting and responding to oil
      spill scenarios up to a “worst case” scenario and to identify and ensure,
      through contracts or other approved means, the availability of necessary private
      response resources to respond to a “worst case discharge”. In addition, periodic
      training programs and drills for shore and response personnel and for vessels
      and their crews are required.




Vessel
      response plans for our tankers operating in the waters of the United States
      have
      been approved by the U.S. Coast Guard. In addition, the U.S. Coast Guard has
      announced it intends to propose similar regulations requiring certain vessels
      to
      prepare response plans for the release of hazardous substances. Tanker
      Management is responsible for ensuring our vessels comply with any additional
      regulations.




OPA
      does
      not prevent individual states from imposing their own liability regimes with
      respect to oil pollution incidents occurring within their boundaries. In fact,
      most 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.




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**EUROPEAN
      UNION TANKER RESTRICTIONS**




In
      July 2003, in response to the *Prestige* oil
      spill in November 2002, the European Union adopted legislation that
      prohibits all single hull tankers used for the transport of oil from entering
      into its ports or offshore terminals by 2010. The European Union, following
      the
      lead of certain European Union nations such as Italy and Spain, has also banned
      all single hull tankers carrying heavy grades of oil from entering or leaving
      its ports or offshore terminals or anchoring in areas under its jurisdiction.
      Commencing in April 2005, certain single hull tankers above 15 years
      of age are also restricted from entering or leaving European Union ports or
      offshore terminals and anchoring in areas under European Union jurisdiction.
      All
      of the tankers we acquired are double hulled. The European Union has also
      adopted legislation that: (1) bans manifestly sub-standard vessels (defined
      as those over 15 years old that have been detained by port authorities at
      least twice in a six month period) from European waters, creates an obligation
      of port states to inspect at least 25% of vessels using these ports annually
      and
      provides for increased surveillance of vessels posing a high risk to maritime
      safety or the marine environment and (2) provides the European Union with
      greater authority and control over classification societies (private
      organizations that, among other things, inspect and monitor ships and assess
      whether ships meet required technical standards), including the ability to
      seek
      to suspend or revoke the authority of negligent societies. In addition, the
      European Union is considering the adoption of criminal sanctions for certain
      pollution events, such as the unauthorized discharge of tank washings. It is
      impossible to predict what legislation or additional regulations, if any, may
      be
      promulgated by the European Union or any other country or
      authority.




**VESSEL
      SECURITY REGULATIONS**




As
      of
      July 1, 2004, all ships involved in international commerce and the port
      facilities that interface with those ships must comply with the new
      International Code for the Security of Ships and of Port Facilities, or ISPS
      Code. The ISPS Code, which was adopted by the IMO in December 2002,
      provides a set of measures and procedures to prevent acts of terrorism, which
      threaten the security of passengers and crew and the safety of ships and port
      facilities. All of our ships have obtained an International Ship Security
      Certificate, or ISSC, from a recognized security organization approved by the
      vessels flag state and each vessel has developed and implemented an approved
      Ship Security Plan.




**LEGAL
      PROCEEDINGS**




The
      nature of our business, which involves the acquisition, chartering and ownership
      of our vessels, exposes us to the risk of lawsuits for damages or penalties
      relating to, among other things, personal injury, property casualty and
      environmental contamination. Under rules related to maritime proceedings,
      certain claimants may be entitled to attach charter hire payable to us in
      certain circumstances. There are no actions or claims pending against us as
      of
      the date of this report.




**C.**
            **ORGANIZATIONAL STRUCTURE**




The
      following table sets forth our significant subsidiaries and the vessels that
      the
      subsidiaries own as of December 31, 2005:




Subsidiary
            VesselAnn
                Tanker Corporation
            *Overseas
                Ann*Chris
                Tanker Corporation
            *Overseas
                Chris*Regal
                Unity Tanker Corporation
            *Regal
                Unity*Cathy
                Tanker Corporation
            *Overseas
                Cathy*Sophie
                Corporation
            *Overseas
                Sophie*Rebecca
                Corporation
            *Rebecca*Ania
                Aframax Corporation
            *Ania*





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**D.**
            **PROPERTY, PLANT AND
                EQUIPMENT**




We
      operate a modern fleet of vessels and the following table sets forth the fleet
      that we operate as of December 31, 2005:




Vessel
            Type
            Approximate
              DWT
            Construction
            Flag*Overseas
                Ann*
            VLCC
            309,327
            Double-Hull
            Marshall
                Islands*Overseas
                Chris*
            VLCC
            309,285
            Double-Hull
            Marshall
                Islands*Regal
                Unity*
            VLCC
            309,966
            Double-Hull
            Marshall
                Islands*Overseas
                Cathy*
            Aframax
            112,028
            Double-Hull
            Marshall
                Islands*Overseas
                Sophie*
            Aframax
            112,045
            Double-Hull
            Marshall
                Islands*Rebecca*
            Aframax
            94,873
            Double-Hull
            Marshall
                Islands*Ania*
            Aframax
            94,848
            Double-Hull
            Marshall
                Islands







**ITEM
              5.**
            **OPERATING
                AND
                FINANCIAL REVIEW AND
                PROSPECTS**




MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS




*You
      should read the following discussion and analysis in conjunction with out
      financial statements and notes thereto included elsewhere in this report. This
      Management’s Discussion and Analysis of Financial Condition and Results of
      Operations contains forward-looking statements. Please see “Cautionary Note
      Regarding Forward-Looking Statements” for a discussion of the risks,
      uncertainties and assumptions relating to these statements.*




The
      following discussion of our financial condition and results of operations should
      be read in conjunction with our consolidated financial statements and our
      predecessor combined carve-out financial statements, which we call our combined
      financial statements, and the related notes. This discussion contains
      forward-looking statements based on assumptions about our future business.
      Our
      actual results will likely differ from those contained in the forward-looking
      statements and such differences may be material.




**OVERVIEW
      - PREDECESSOR**




For
      the
      period form January 1 through October 17 2005 and for the years ended December
      31, 2002, 2003 and 2004, the combined financial statements presented herein
      with
      respect to our seven vessels have been carved out of the consolidated financial
      statements of OSG. Our financial position, results of operations and cash flows
      reflected in our combined financial statements are not indicative of those
      that
      would have been achieved had we operated as an independent stand-alone entity
      for all periods presented or of future results.




We
      refer
      to the companies that owned our seven vessels collectively as our predecessor,
      or, in the financial statements that form a part of this report, as OSG
      Crude. Our predecessor’s fleet consisted of the same vessels that we acquired
      upon the completion of the IPO: three modern, double hull VLCCs and four modern,
      double hull Aframaxes that have a combined carrying capacity of 1.3 million
      dwt. All of these vessels operated in pools during the period form January
      1
      through October 17 2005 and the three years ended December 31, 2004 or
      since delivery of the vessel.




To
      the
      extent the assets, liabilities, revenues and expenses relate to our predecessor,
      these have been identified and carved out for inclusion in our combined
      financial statements. OSG’s shipping interests and other assets, liabilities,
      revenues and expenses that do not relate to our seven vessels are not included
      in our combined financial statements. In addition, the preparation of our
      combined financial statements required the allocation of certain expenses where
      these items were not identifiable as related to our predecessor.




General
      and administrative expenses, consisting primarily of salaries and other employee
      related costs, office rent, legal and professional fees and travel and
      entertainment were allocated based on the total number of vessels (weighted
      by
      days owned by our predecessor) in the respective fleets of our predecessor




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and
      OSG
      for each of the periods presented. Management believes that the allocation
      of
      general and administrative expenses was based on a reasonable
      method.




**BUSINESS**




On
      October 18, 2005, we acquired the seven vessels in our fleet. We have chartered
      our vessels to subsidiaries of OSG under fixed rate charters for minimum terms
      of five to six and one-half years. The charters commenced on the delivery of
      the
      vessels to us. The charters also contain various options for the charterers
      to
      extend the minimum terms of the charters in increments of one, two or three
      years up to a maximum of five, six or eight years, depending on the vessel,
      from
      the initial expiration date. See the section of this report entitled “Item 4.
      Information on the Company ─ Charter Arrangements” for a more detailed
      description of our charter arrangements. We have also entered into ship
      management agreements with a subsidiary of OSG for the technical management
      of
      our vessels that substantially fix our operating expenses (excluding insurance
      premiums and vessel taxes) for two years. See the section of this report
      entitled “Item 4. Information on the Company — Ship Management Agreements” for a
      more detailed description of our ship management agreements. When they were
      owned by our predecessor, our vessels were operated primarily in the spot
      market, and our predecessor was not a party to comparable ship management
      agreements. As such, our operations will differ significantly from the
      historical operations of our predecessor upon which our combined financial
      statements are based. In particular, we expect that for so long as our
      chartering and ship management arrangements are in place with OSG for all of
      our
      vessels, our revenues will be generated primarily from time charter payments
      made to us by subsidiaries of OSG and our vessel operating expenses (excluding
      insurance premiums and vessel taxes) under the ship management agreements will
      be substantially fixed. These arrangements are designed to provide us with
      a
      more stable cash flow than historically experienced by our predecessor, as
      our
      expenses will be substantially fixed through our ship management agreements
      and,
      so long as our ships are not off hire, we will receive revenue amounts at least
      equal to the sum of the basic hire payments due under our time
      charters.




**FACTORS
      AFFECTING OUR HISTORICAL RESULTS**




The
      historical revenues of our predecessor were highly sensitive to patterns of
      supply and demand. Rates for the transportation of crude oil are determined
      by
      market forces, such as the supply and demand for oil, the distance that cargoes
      must be transported and the number of vessels expected to be available at the
      time such cargoes need to be transported. The demand for oil shipments is
      significantly affected by the state of the global economy. The number of vessels
      is affected by newbuilding deliveries and by the removal of existing vessels
      from service, primarily because of scrapping. Management makes economic
      decisions based on anticipated time charter equivalent, or TCE, rates and
      evaluates financial performance based on TCE rates achieved.




The
      tanker industry has historically been highly cyclical, experiencing volatility
      in profitability, vessel values and freight rates.




The
      principal factors that have affected our predecessors’ financial position,
      results of operations and cash flow include:




·
            the
                earnings of our vessels in the spot charter
                market;




·
            vessel
                operating expenses;




·
            administrative
                expenses that have been allocated to the vessels;
                and




·
            depreciation
                and interest expense.




The
      vessels owned by our predecessor operated in either the Tankers International
      pool (VLCCs) or the Aframax International Pool (Aframaxes) during the three
      years ended December 31, 2004 and the period form January 1 through October
      17 2005. Vessels operating in such pools are exposed to the volatility of the
      spot market. Fluctuations in charter rates and vessel values result from changes
      in the supply and




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demand
      for tanker capacity and changes in the supply and demand for oil and oil
      products. The following table sets forth the average daily time charter
      equivalent rates earned by our vessels during the last three years.




**Year
                Ended December 31,**
            
            **2005****2003**
            
            **2004**
            
            **Jan
                1 - Oct 17**VLCCs
            41,786
            
            77,422
            
            
            53,392Aframaxes
            25,463
            
            38,831
            
            
            33,296




Vessel
      operating expenses are the direct costs associated with running a vessel and
      include crew costs, vessel stores and supplies, repairs and maintenance,
      drydockings, lubricating oils, insurance and communication costs.




General
      and administrative expenses include directors’ fees and expenses, salaries and
      benefits, office rent, legal and professional fees, directors and officers
      insurance and miscellaneous fees and expenses.




Depreciation
      is the periodic cost charged to income for the reduction in usefulness and
      long-term value of the vessels. Historically, the cost of our vessels was
      depreciated over 25 years on a straight-line basis.




Interest
      expense relates to a bank loan and loans payable to a wholly owned subsidiary
      of
      OSG. The amount of interest expense is determined by the amount of loans
      outstanding from time to time and applicable interest rates.




**FACTORS
      AFFECTING OUR FUTURE RESULTS**




After
      the
      closing of the IPO on October 18, 2005, the principal factors that are expected
      to affect our future results of operations and financial condition
      include:




·
            the
                fixed basic charter rate that we are paid under our
                charters;




·
            the
                amount of additional hire that we receive under our charter
                arrangements;




·
            the
                number of off hire days during which we will not be entitled, under
                our
                charter arrangements, to receive either the fixed basic charter rate
                or
                additional hire;




·
            the
                amount of daily technical management fees payable under our ship
                management agreements;




·
            our
                general and administrative and other
                expenses;




·
            our
                insurance premiums and vessel
                taxes;




·
            any
                future vessel acquisitions; and




·
            our
                interest expense.




Our
      future revenues are expected to be principally derived from fixed rate time
      charters with subsidiaries of OSG. All seven vessels that have been acquired
      from subsidiaries of OSG are chartered to subsidiaries of OSG.




Our
      future expenses are expected to consist primarily of daily technical management
      fees payable under our ship management agreements, interest expense, insurance
      premiums, vessel taxes, financing expenses and general and administrative
      expenses. Our vessel owning subsidiaries have entered into ship management
      agreements with Tanker Management, a subsidiary of OSG, under which it is
      responsible for all technical management of the vessels, including crewing,
      maintenance and ordinary repairs, scheduled drydockings (subject to certain
      adjustments when the agreement is terminated), stores and supplies, lubricating
      oils and insurance deductibles (subject to the limits on deductibles set forth
      in the ship management
      agreements). Under these agreements, we pay a fixed daily fee for the cost
      of
      vessels’ operations, including scheduled drydockings, for each vessel, which
      will increase by 2.5% annually after the second year. Other than (i) the
      technical management fees payable under our ship management agreements, which
      have a duration of two years, and are cancelable by Tanker Management upon
      90 days notice, (ii) interest that is payable on any indebtedness that
      we have incurred and may incur in the future under our credit facility,
      (iii) commitment fees under our credit facility (for so long as we do not
      make any further borrowings under the vessel acquisition facility or the working
      capital facility), (iv) compensation paid to our executive officers, which
      is fixed during the terms of their employment agreements, and (v) our
      directors’ fees, none of our future fees or expenses are
      fixed.




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The
      charterers will pay us a fixed basic charter rate monthly in advance and
      additional hire, if any, quarterly in arrears. We will pay daily technical
      management fees under our ship management agreements monthly in advance. We
      are
      required to pay interest under our credit facility quarterly, insurance premiums
      either annually or more frequently (depending on the policy) and our vessel
      taxes annually.




**CRITICAL
      ACCOUNTING POLICIES**




The
      financial statements for DHT and our combined carve-out financial statements
      for
      our predecessor are prepared in accordance with accounting principles generally
      accepted in the United States, which require us to make estimates in the
      application of our accounting policies based on the best assumptions, judgments,
      and opinions of management. Following is a discussion of the accounting policies
      that involve a higher degree of judgment and the methods of their application.
      For a complete description of all of our material accounting policies, see
      Note A to our combined carve-out financial statements, included as item 18
      to this report.




**Carve-out
      of the Financial Statements of OSG**




For
      all
      periods prior to and through October 17, 2005, our combined carve-out financial
      statements include the accounts of seven wholly owned subsidiaries of OSG,
      a
      publicly traded company incorporated in Delaware. These combined carve-out
      financial statement have been prepared to reflect the financial position,
      results of operations and cash flows of our predecessor, which owned the vessels
      to be acquired by our subsidiaries. Our combined carve-out financial statements
      are prepared in accordance with generally accepted accounting principles in
      the
      United States. The assets, liabilities, results of operations and cash flows
      were carved out of the consolidated financial statements of OSG using specific
      identification. In the preparation of these predecessor carve-out financial
      statements, general and administrative expenses, which were not identifiable
      as
      relating to specific vessels, were allocated based on our predecessor’s
      proportionate share of OSG’s total ship operating days for each of the periods
      presented. Ship operating days consist of the aggregate number of calendar
      days
      in a period in which our vessels are owned by us. Management believes these
      allocations to reasonably present our predecessor’s financial position, results
      of operations and cash flows. However, the predecessor combined carve-out
      statements of financial position, operations and cash flow may not be indicative
      of those that would have been realized had our predecessor operated as an
      independent stand-alone entity for the periods presented. Had our predecessor
      operated as an independent stand-alone entity, its results could have differed
      significantly from those presented herein.




**Revenue
      Recognition**




Both
      prior to and following the IPO, our vessels have generated revenue by operating
      in pools. Shipping revenue and voyage expenses are pooled and allocated to
      each
      pool’s participants on a TCE basis in accordance with an agreed-upon formula.
      For vessels operating in pools or on time charters, shipping revenues are
      substantially the same as TCE revenues.




Our
      three
      VLCCs participate in the Tankers International Pool and our four Aframaxes
      participate in the Aframax International Pool. Each of these pools generate
      a
      majority of its revenue from voyage charters. Within the shipping industry,
      there are two methods used to account for voyage revenues and expenses:
      (1) ratably over the estimated length of each voyage and (2) completed
      voyage. The recognition of voyage revenues and expenses ratably over the
      estimated length of each voyage is the most prevalent method of accounting
      for
      voyage revenues and expenses and the method used by the pools in which we
      participate.




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Under
      each method, voyages may be calculated on either a load-to-load or
      discharge-to-discharge basis. In applying its revenue recognition method,
      management of each of the pools believes that the discharge-to-discharge basis
      of calculating voyages more accurately estimates voyage results than the
      load-to-load basis. Since, at the time of discharge, management generally knows
      the next load port and expected discharge port, the discharge-to-discharge
      calculation of voyage revenues and expenses can be estimated with a greater
      degree of accuracy. Revenues from time charters performed by vessels in the
      pools are accounted for as operating leases and are recognized ratably over
      the
      periods of such charters, as service is performed. In accordance with Staff
      Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements,”
each of the pools does not begin recognizing voyage revenue until a charter
      has
      been agreed to by both the pool and the customer, even if the vessel has
      discharged its cargo and is sailing to the anticipated load port on its next
      voyage.




**Vessel
      Lives and Impairment**




The
      carrying value of each of our vessels represents its original cost at the time
      it was delivered less depreciation calculated using an estimated useful life
      of
      25 years from the date such vessel was originally delivered from the
      shipyard. In the shipping industry, use of a 25-year life has become the
      standard. The actual life of a vessel may be different. We have evaluated the
      impact of the revisions to MARPOL Regulation 13G that became effective
      April 5, 2005 and the EU regulations that went into force on
      October 21, 2003 on the economic lives assigned to the fleet. Because the
      fleet consists of modern, double hull vessels, the revised regulations do not
      affect any of our vessels. If the economic lives assigned to the tankers prove
      to be too long because of new regulations or other future events, higher
      depreciation expense and impairment losses could result in future periods
      related to a reduction in the useful lives of any affected vessels.




The
      carrying values of our vessels may not represent their fair market value at
      any
      point in time since the market prices of second-hand vessels tend to fluctuate
      with changes in charter rates and the cost of newbuildings. Historically, both
      charter rates and vessel values have been cyclical. We record impairment losses
      only when events occur that cause us to believe that future cash flows for
      any
      individual vessel will be less than its carrying value. The carrying amounts
      of
      vessels held and used by us are reviewed for potential impairment whenever
      events or changes in circumstances indicate that the carrying amount of a
      particular vessel may not be fully recoverable. In such instances, an impairment
      charge would be recognized if the estimate of the undiscounted future cash
      flows
      expected to result from the use of the vessel and its eventual disposition
      is
      less than the vessel’s carrying amount. This assessment is made at the
      individual vessel level since separately identifiable cash flow information
      for
      each vessel is available.




In
      developing estimates of future cash flows, we must make assumptions about future
      charter rates, ship operating expenses and the estimated remaining useful lives
      of the vessels. These assumptions are based on historical trends as well as
      future expectations. Although management believes that the assumptions used
      to
      evaluate potential impairment are reasonable and appropriate, such assumptions
      are highly subjective.






**RESULTS
      OF OPERATIONS**




**Income
      from Vessel Operations**




During
      the period from January 1, 2005 through October 17, 2005, TCE revenues for
      our
      predecessor, OSG Crude, were $83,361,000 compared to $135,967,000 for full
      year
      2004. This decrease is a result of a shorter period in 2005 and lower average
      daily TCE rates in 2005 compared to 2004. During 2004, TCE revenues increased
      by
      $70,127,000, or 107%, to $135,967,000 from $65,840,000 in 2003. This improvement
      resulted from increases in the average daily TCE rates earned of $20,583 per
      day
      and in revenue days of 564 days. The increase in revenue days was primarily
      attributable to the late 2003 delivery of the *Overseas
      Sophie* and the
      delivery of the *Overseas
      Cathy* in 2004.




On
      October 18, 2005, we acquired the seven vessel from OSG Crude and commenced
      operating as an independent company and agreed to time charter our vessels
      to
      subsidiaries of OSG for periods of five to six
      and
      one-half years under charters that provide for fixed monthly payments, plus
      the
      potential to earn additional profit sharing payments. For the period from
      October 18, 2005 through December 31, 2005, TCE revenues were $20,173,000,
      which
      consisted of basic hire of $14,667,000 and additional hire of
      $5,506,000.




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For
      the
      period from January 1, 2005 through October 17, 2005 and for the years ended
      2004 and 2003, all of our TCE revenues were derived in the spot market, because
      pools predominantly perform voyage charters. From October 18, 2005 through
      December 31, 2005 all of our TCE revenues were derived from our charter
      arrangements with OSG.




Prior
      to
      October 18, 2005, reliance on the spot market contributed to fluctuations in
      our
      revenue, cash flow and net income, but afforded us greater opportunity to
      increase income from vessel operations when rates rise. After October 18, 2005,
      our revenue, cash flow and net income/(loss) is less dependent on the
      development in the spot market as the charter agreements for our seven vessels
      provide for fixed monthly payments plus the potential to earn additional profit
      sharing payments when the vessels’ earnings in the commercial pools exceed the
      fixed monthly payments.




During
      the period from January 1, 2005 through October 17, 2005, vessel expenses for
      our predecessor, OSG Crude, were $14,433,000 compared to $15,601,000 for full
      year 2004. This decrease is due to a shorter period in 2005 offset by increases
      in crew costs and running repairs for the Ania and Rebecca during the period
      from January 1, 2005 through October 17, 2005. On October 18, 2005, we acquired
      the seven vessel from OSG Crude and commenced operating as an independent
      company and entered into management agreements with Tanker Management Ltd.,
      a
      subsidiary of OSG, for the technical management of our seven vessels in exchange
      for a fee that is substantially fixed for the first two years of the agreement.
      For the period from October 18, 2005 through December 31, 2005, vessel expenses
      were $3,675,000. Vessel expenses increased by $4,645,000 to $15,601,000 in
      2004
      from $10,956,000 in 2003 principally as a result of the vessel deliveries
      described above.




During
      the period from January 1, 2005 through October 17, 2005, depreciation and
      amortization expenses were $14,462,000 compared to $17,762,000 for the full
      year
      2004. For the period from October 18, 2005 through December 31, 2005,
      depreciation and amortization expenses were $3,478,000. Depreciation and
      amortization expenses increased by $3,070,000 to $17,762,000 in 2004 from
      $14,692,000 in 2003 as a result of the vessel deliveries described above.






**General
      and Administrative Expenses**




General
      and administrative expenses consist primarily of salaries and other employee
      related costs, office rent, legal and professional fees and travel and
      entertainment. Prior to October 18, 2005, general and administrative expenses
      were allocated based on our predecessor’s proportionate share of OSG’s total
      ship operating days for each of the periods presented for our seven vessel.
      Ship
      operating days represent the aggregate number of days OSG owned its vessels,
      and
      were 2,030 for the period from January 1, 2005 through October 17, 2005,
      2,533 days in 2004 and 1,893 in 2003. Management believes these allocations
      reasonably present our predecessor’s financial position, results of operations
      and cash flows.




During
      the period from January 1, 2005 through October 17, 2005, general and
      administrative expenses were $5,759,000 compared to $7,269,000 for the full
      year
      2004 and $4,828,000 for 2003. For the period from October 18, 2005 through
      December 31, 2005, general and administrative expenses were
      $746,000.




Management
      estimates that on a stand-alone basis, general and administrative expenses
      will
      amount to approximately $2.3 million per year starting in 2006, which
      includes directors’ fees and expenses, the salary and benefits of our two
      executive officers, legal fees, fees of independent auditors and advisors,
      directors and officers insurance, rent and miscellaneous fees and
      expenses.




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**Interest
      Expense**




During
      the period from January 1, 2005 through October 17, 2005, interest expense
      was
      $3,596,000 compared to $8,645,000 for the full year 2004. For the period from
      October 18, 2005 through December 31, 2005, interest expense, including
      amortization of deferred debt issuance cost, was $2,872,000. Interest expense
      increased by $2,712,000 to $8,645,000 in 2004 from $5,933,000 in 2003,
      principally as a result of a decrease of $3,421,000 in interest capitalized
      in
      connection with vessel construction due to the delivery of the *Overseas
      Sophie* and the *Overseas
      Cathy* and an
      increase in the average rate paid on the loans payable to OSG and long-term
      debt, partially offset by a decrease in the average amount of loans payable
      to
      OSG outstanding in 2004 compared with 2003.




**LIQUIDITY
      AND SOURCES OF CAPITAL**




We
      operate in a capital intensive industry. We financed the acquisition of our
      seven vessels with the net proceeds of the IPO, borrowings under our credit
      facility and through the issuance of shares of our common stock to a subsidiary
      of OSG. Our working capital requirements relate to our operating expenses,
      including payments under our ship management agreements, payments of interest,
      payments of insurance premiums, payments of vessel taxes and the payment of
      principal at maturity under our credit facility. Initially, we intend to fund
      our working capital requirements with cash from operations and, if necessary,
      borrowings under our credit facility, which includes a $15 million working
      capital facility. We
      collect our basic hire monthly in advance and pay our ship management fees
      monthly in advance. We receive additional hire payable quarterly in arrears.
      We
      intend to pay quarterly cash dividends denominated in U.S. dollars to the
      holders of our common shares in amounts substantially equal to the charter
      hire
      received by us under our charters, less cash expenses and any cash reserves
      established by our board of directors. In February 2005, based on the operations
      from October 18 to December 31, 2005, we declared a dividend of $12.9 million,
      or $0.43 per share, and paid that dividend on March 24, 2005 to shareholders
      of
      record on March 10, 2005. We believe that our cash flow from our charters will
      be sufficient to fund our interest payments under our secured credit facility
      and our working capital requirements for the short and medium term. We
      will
      likely need to fund any future vessel acquisitions with additional borrowings
      under our credit facility, which includes a $150 million vessel acquisition
      facility that, subject to the satisfaction of conditions to drawdown, permits
      us
      to borrow amounts to pay all or a portion of the purchase price of additional
      vessels. We may refinance all or a portion of any additional indebtedness that
      we incur for vessel acquisitions from time to time with the net proceeds of
      future equity issuances. As of December 31, 2005 we were in compliance with
      the
      financial covenants contained in our secured loan agreement.





For
      periods prior to October 17, 2005, our combined financial statements represent
      the operations of our vessels by our predecessor. The acquisition of the vessels
      by our predecessor and their operations were funded by bank debt and loans
      from
      OSG. As a result, our combined financial statements are not indicative of the
      financial position, results of operations or cash flows we would have achieved
      had we operated as an independent stand-alone entity during the periods
      presented or of future results.




Working
      capital at December 31, 2005 was approximately $12,176,000 compared with
      $21,128,000 at December 31, 2004 and $4,620,000 at December 31, 2003.
      At December 31, 2005, additional hire related to the period from October 18,
      2005 through December 31, 2005, which amounted to $5,506,000, had not been
      received from the charterers. Unbilled voyage receivables at December 31,
      2004 equaled $27,440,000 compared with $11,089,000 at December 31, 2003. As
      of December 31, 2004, such balance represents our share of unremitted pool
      earnings of $18,148,000 ($7,257,000 at December 31, 2003) due from the
      Tankers International Pool and $9,292,000 ($3,832,000 at December 31, 2003)
      due from the Aframax International Pool. The increase in amounts due from each
      of the pools is principally the result of the significant increase in TCE rates
      earned by our VLCCs and Aframaxes in the fourth quarter of 2004 ($109,578 per
      day for VLCCs and $57,579 per day for Aframaxes) compared with the comparable
      quarter of 2003 ($37,586 per day for VLCCs and $23,616 per day for
      Aframaxes).




Net
      cash
      provided by operating activities was approximately $83,210,000 during the period
      from January 1, 2005 through October 17, 2005 compared with approximately
      $87,988,000 in 2004 and $41,273,000 in 2003. Net cash provided by operating
      activities was approximately $15,893,000 from October 18, 2005




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through
      December 31, 2005. The treasury functions of OSG are managed centrally.
      Accordingly, cash received by our predecessor (principally charter hire) was
      swept from our accounts to OSG for investment purposes, with a corresponding
      reduction in the loan payable to OSG. Cash required by our predecessor
      (principally vessel operating expenses, voyage expenses and debt amortization)
      was transferred from OSG with a corresponding increase in the loan payable
      to
      OSG. We had total debt outstanding of $236,000,000 at December 31, 2005, all
      of
      which is due to Royal Bank of Scotland, compared with $259,851,000, including
      $170,251,000 due to OSG, at December 31, 2004, and $334,403,000, including
      $239,603,000 due to OSG, at December 31, 2003. Loans payable to OSG did not
      have fixed repayment dates. In 2004 and 2003 and for the 290 days ended October
      17, 2005, available net cash provided by operating activities was used to repay
      certain of the amounts advanced by OSG.




During
      the second quarter of 2005, OSG made a capital contribution of approximately
      $114,320,000 to our predecessor, reducing loans payable to OSG to
      zero.




In
      July
      2005, our predecessor repaid the outstanding balance of its long-term debt
      with
      funds contributed to capital by OSG.




**AGGREGATE
      CONTRACTUAL OBLIGATIONS**




We
      did
      not assume any of the debt that was allocated to our predecessor. As of December
      31, 2005 our long-term contractual obligations are as follows:







$
                in thousands
            
            **Summary
                Long-Term Future Contractual Obligations****2006**
            
            
            **2007**
            
            **2008**
            
            **2009**
            
            **2010**
            
            **2011**
            
            **2012**Ship
                management agreements(1)
            
            
            15,600
            
            
            15,600
            
            
            16,000
            
            
            16,400
            
            
            16,800
            
            
            17,200
            
            
            17,600Long-term
                debt(2)
            
            
            249,200
            
            
            249,200
            
            
            249,200
            
            
            249,200
            
            
            249,200
            
            
            224,250
            
            
            198,600Total
            
            
            264,800
            
            
            264,800
            
            
            265,200
            
            
            265,600
            
            
            266,000
            
            
            241,450
            
            
            216,200(1)*Our
                ship management agreements are cancelable by us at any time upon
                90 days notice. Each charterer has the right to approve the
                replacement manager that we select; however, such approval may not
                to be
                unreasonably withheld. Each charterer also has the right to cause
                us to
                change the manager of its vessel under certain circumstances if it
                is
                dissatisfied with the manager’s performance. In addition, in the event a
                ship management agreement is terminated, we will make a payment to
                Tanker
                Management in the amount of the aggregate drydocking costs paid by
                Tanker
                Management in excess of the aggregate drydock-related management
                fee
                payments charged to us, in accordance with the terms set forth in
                the
                applicable ship management agreement. If at such time drydock-related
                management fee payments exceed aggregate drydocking costs, we will
                receive
                a payment from Tanker Management in the amount of the
                difference.*
              (2)*Amounts
                shown include contractual interest obligations on $236  million of
                debt under the term portion of our credit facility. The interest
                obligations have been determined using an interest rate of 5.60%
                per annum
                based on the interest rate swap arrangement that was effective as
                of
                October 18, 2005. The interest on the balance outstanding is payable
                quarterly and the principal is payable in quarterly installments
                of
                $6,062,500 commencing on January 18, 2011, with a final payment of
                $120,812,500 on October 18,
                2015.*




We
      collect our fixed basic charter rate monthly in advance and pay our technical
      management fees monthly in advance. To the extent there are additional hire
      revenues, we receive such additional hire quarterly in arrears. Although we
      can
      provide no assurances, we expect that our cash flow from our chartering
      arrangements will be sufficient to cover our technical management fees, interest
      payments, commitment fees and other financing costs under our credit facility,
      insurance premiums, vessel taxes, general and administrative expenses and other
      costs and any other working capital requirements for the short and medium term.
      If necessary, we may also fund our working capital requirements with borrowings
      under our credit facility, which includes a $15 million working capital
      facility that may be drawn in full until the credit facility’s fifth
      anniversary. We may fund our future vessel acquisitions with additional
      borrowings under our credit facility, which also includes a $150 million
      vessel acquisition facility that, subject to the satisfaction of conditions
      to
      drawdown, permits us to borrow amounts to pay the purchase price of additional
      vessels. Our longer term liquidity requirements include repayment of the
      principal balance of our credit facility. We will require new borrowings and/or
      issuances of equity or other securities to meet this repayment obligation.
      Alternatively, we can sell our assets and use the proceeds to pay down
      debt.




Marshall
      Islands law generally prohibits the payment of dividends other than from surplus
      (retained earnings and the excess of consideration received for the sale of
      shares above the par value of the shares) or while
      a
      company is insolvent or would be rendered insolvent by the payment of such
      a
      dividend. In addition, under the terms of our credit facility, we may not
      declare or pay any dividends if we are in default under the credit facility
      or
      if the market value of our vessels is less than 135% of our outstanding
      borrowings under the credit facility plus the actual or notional cost of
      terminating any interest rate swaps that we enter.




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**RISK
      MANAGEMENT**




Our
      predecessor was exposed, and we expect to be exposed, to market risk from
      changes in interest rates, which could affect our results of operation and
      financial position. Our predecessor managed exposure to interest rate risk
      through its regular operating and financing activities and, when deemed
      appropriate, through the use of derivative financial instruments. We also manage
      this risk by entering into interest rate swap agreements in which we exchange
      fixed and variable interest rates based on agreed upon notional amounts. We
      use
      such derivative financial instruments as risk management tools and not for
      speculative or trading purposes. In addition, the counterparty to the derivative
      financial instrument is a major financial institution in order to manage
      exposure to nonperformance by counterparties.




As
      of
      December 31, 2005, we had a five year swap with a notional amount of
      $236,000,000 outstanding. The swap converted the LIBOR-based interest rate
      on
      the debt to a fixed rate of 5.60% per annum including the applicable margin
      of
      0.70%.




The
      shipping industry’s functional currency is the U.S. dollar. All of our revenues
      and most of our operating costs are in U.S. dollars.




**EFFECTS
      OF INFLATION**




We
      do not
      believe that inflation has had or is likely, in the foreseeable future, to
      have
      a significant impact on vessel operating expenses, drydocking expenses and
      general and administrative expenses.




**OFF
      BALANCE SHEET ARRANGEMENTS**




With
      the
      exception of the above mentioned interest rate swap, we do not currently have
      any liabilities, contingent or otherwise, that we would consider to be off
      balance sheet arrangements.




**OUR** **CREDIT
      FACILITY**




The
      following summary of the material terms of our secured credit facility does
      not
      purport to be complete and is subject to, and qualified in its entirety by
      reference to, all the provisions of the Secured Loan Facility Agreement. Because
      the following is only a summary, it does not contain all information that you
      may find useful. For more complete information, you should read the entire
      Secured Loan Facility Agreement filed as an exhibit to this report.




**General**




On
      October 18, 2005, we entered into a $401 million secured credit facility
      with The Royal Bank of Scotland for a term of ten years, with no principal
      amortization for the first five years. The credit facility consists of a
      $236 million term loan, a $150 million vessel acquisition facility and
      a $15 million working capital facility. We are the borrower under the
      credit facility and each of our seven vessel owning subsidiaries have guaranteed
      our performance thereunder.




We
      borrowed the entire amount available under the term loan upon the completion
      of
      IPO to fund a portion of the purchase price for the seven vessels that we are
      acquired from OSG. Subject to the satisfaction of the conditions to draw down
      described below, we will be permitted to borrow up to the full amounts of the
      vessel acquisition facility and the working capital facility for a period of
      five years from the closing of the credit facility. Commencing on the fifth
      anniversary of the closing of the credit facility, amounts that we are able
      to
      borrow under both facilities will reduce as set forth below.




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Borrowings
      under the term loan and the working capital facility bear interest at an annual
      rate of LIBOR plus a margin of 0.70%. Borrowings under the vessel acquisition
      portion of the credit facility bear interest at an annual rate of LIBOR plus
      a
      margin of 0.85%. To reduce our exposure to fluctuations in interest rates,
      we
      entered an interest rate swap on October 18, 2005 pursuant to which we fixed
      the
      interest rate on the full amount of our term loan at 5.60%. We were required
      to
      pay a $1.5 million fee in connection with the arrangement of our credit
      facility (which we funded with a portion of the net proceeds from the IPO)
      and a
      commitment fee of 0.3% per annum, which will be payable quarterly in arrears,
      on
      the undrawn portion of the facility.




Our
      ability to borrow amounts under the credit facility was subject to the execution
      of customary documentation relating to the facility, including security
      documents, satisfaction of certain customary conditions precedent and compliance
      with terms and conditions included in the loan documents. Our ability to borrow
      under the vessel acquisition facility, in each case, will be subject to the
      target vessel being a double hull tanker that is at least 45,000 dwt and no
      more
      than fifteen years old at the maturity of the facility. Our ability to borrow
      under the vessel acquisition facility will be subject to all of our borrowings
      under the credit facility not exceeding 65% of the charter-free market value
      of
      the vessels that secure our obligations under the credit facility, calculated
      as
      though we had completed the subject transaction. In addition, we will need
      our
      lender’s approval of the vessel acquisition. Our lender’s approval of the vessel
      acquisition will be in its sole discretion, taking into account such factors
      as
      the vessel’s ability to generate earnings that are sufficient to fund principal
      payments as they become due and our ability to raise additional capital through
      equity issuances in amounts acceptable to our lender.




We
      will
      be required to repay the term loan commencing three months after the fifth
      anniversary of the facility closing date in twenty quarterly installments of
      $6,062,500 and a final repayment of $114,750,000 million occurring
      simultaneously with the last quarterly repayment. In addition, the vessel
      acquisition facility will reduce (with any excess borrowing becoming repayable
      at the time of reduction) quarterly commencing three months after the fifth
      anniversary of the facility closing date in increments of $7.5 million. The
      working capital facility will also reduce (with any excess borrowing becoming
      repayable at the time of reduction) commencing three months after the fifth
      anniversary of the facility closing date in twenty quarterly installments of
      $750,000. We may voluntarily reduce undrawn amounts under the facility from
      time
      to time in minimum amounts of $1.0 million.




**Security**




The
      credit facility provides that the borrowings thereunder are secured by the
      following:




·
            a
                first priority mortgage on each of the vessels we have agreed to
                purchase
                and any additional vessels that we
                acquire;




·
            an
                assignment of charter hire guarantees and earnings from, and insurances
                on, each of the vessels we have agreed to purchase and any additional
                vessels that we acquire;




·
            a
                pledge of the balances in our bank accounts which we have agreed
                to keep
                with The Royal Bank of Scotland plc;
                and




·
            an
                unconditional and irrevocable guarantee by each of our seven vessel
                owning
                subsidiaries.




The
      facility agreement provides that in the event of either the sale or total loss
      of a vessel, we must prepay an amount under the credit facility proportionate
      to
      the market value of the sold or lost vessel compared with the total market
      value
      of all of our vessels before such sale or loss together with accrued interest
      on
      the amount prepaid and, if such prepayment occurs on a date other than an
      interest payment date, any interest breakage costs.




**Covenants**




The
      facility agreement contains restrictive covenants that prohibit us and each
      of
      our subsidiaries from, among other things:






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·
            incurring
                additional indebtedness without the prior consent of the
                lenders;




·
            permitting
                liens on assets;




·
            merging
                or consolidating with other entities or transferring all or substantially
                all of our assets to another
                person;




·
            paying
                dividends if the charter-free market value of our vessels that secure
                our
                obligations under the credit facility is less than 135% of our borrowings
                under the credit facility plus the actual or notional cost of terminating
                any interest rates swaps that we enter, if there is a continuing
                default
                under the credit facility or if the payment of the dividend would
                result
                in a default or breach of a loan
                covenant;




·
            changing
                the technical manager of our vessels without the prior consent of
                the
                lenders;




·
            making
                certain loans, advances or investments; entering into certain material
                transactions with affiliated
                parties;




·
            entering
                into certain types of charters, including bareboat charters and time
                charters or consecutive voyage charters of greater than 13 months
                (excluding our charters with OSG’s
                subsidiaries);




·
            de-activating
                any of our vessels or allowing work to be done on any vessel in an
                aggregate amount greater than $2.0 million without first obtaining a
                lien waiver;




·
            making
                non-ordinary course acquisitions or entering into a new line of business
                or establishing a place of business in the United States or any of
                its
                territories;




·
            selling
                or otherwise disposing of a vessel or other assets or assigning or
                transferring any rights or obligations under our charters and our
                ship
                management agreements.




The
      facility agreement also contains a financial covenant requiring that at all
      times the charter-free market value of our vessels that secure our obligations
      under the credit facility be no less than 120% of our borrowings under the
      credit facility plus the actual or notional cost of terminating any of our
      interest rates swaps. In the event that the aggregate charter-free market value
      of the vessels that secure our obligations under the credit facility is less
      120% of our borrowings under the credit facility plus the actual or notional
      cost of terminating any of our interest rates swaps, the difference shall be
      recovered by pledge of additional security acceptable to the lenders or by
      a
      prepayment of the amount outstanding at the option of the
      borrowers.




**Events
      of Default**




Each
      of
      the following events with respect to us or any of our subsidiaries, in some
      cases after the passage of time or notice or both, are an event of default
      under
      the facility agreement:




·
            non-payment
                of amounts due under the credit
                facility;




·
            breach
                of our covenants;




·
            misrepresentation;




·
            cross-defaults
                to other indebtedness in excess of
                $2.0 million;




·
            materially
                adverse judgments or orders;




·
            event
                of insolvency or bankruptcy;




·
            acceleration
                of any material amounts that us or any of our subsidiaries is obligated
                to
                pay;






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·
            breach
                of a time charter or a charter hire guaranty in connection with any
                of our
                vessels;




·
            default
                under any collateral documentation or any swap
                transaction;




·
            cessation
                of operations;




·
            unlawfulness
                or repudiation;




·
            if,
                in the reasonable determination of the lender, it becomes impossible
                or
                unlawful for us or any of our subsidiaries to comply with our obligations
                under the loan documents; and




·
            if
                any event occurs that, in the reasonable opinion of the lender, has
                a
                material adverse effect on our and our subsidiaries’ operations, assets or
                business, taken as a whole.




The
      facility agreement provides that upon the occurrence of an event of default,
      the
      lenders may require that all amounts outstanding under the credit facility
      be
      repaid immediately and terminate our ability to borrow under the credit facility
      and foreclose on the mortgages over the vessels and the related
      collateral.




**ITEM
              6.**
            **DIRECTORS,
                SENIOR MANAGEMENT AND
                EMPLOYEES**




**A.**
            **DIRECTORS AND SENIOR
                MANAGEMENT**




The
      following table sets forth information regarding our executive officers and
      directors. Our board of directors is elected annually on a staggered basis,
      and
      each director elected holds office for a three-year term. Each of our directors
      was elected in July 2005. All of our current directors are
      independent.




**Name**
            
            **Age**
            
            **Position**Erik
                Lind
            
            51
            
            Class I
                Director and ChairmanRandee
                Day
            
            58
            
            Class II
                DirectorRolf
                Wikborg
            
            48
            
            Class III
                DirectorOle
                Jacob Diesen
            
            58
            
            Chief
                Executive OfficerEirik
                Ubøe
            
            45
            
            Chief
                Financial Officer





The
      term
      of our Class I director expires in 2008, the term of our Class II
      director expires in 2007 and the term of our Class III director expires in
      2006.




Set
      forth
      below is a brief description of the business experience of our directors and
      executive officers.




*Erik
      Lind—Chairman of the Board.* Mr. Erik
      Lind has been chief executive of Tufton Oceanic Finance Group (TOFG), a
      London-based investment banking firm focused on the shipping and oil related
      industries, and Managing Director of Tufton Oceanic Ltd., its U.K.
      subsidiary, since 2004. Mr. Lind has more than 25 years experience in
      corporate banking, global shipping and specialized and structured asset
      financing. From 1995 to 2001, Mr. Lind served as Executive Vice President
      and a member of the Executive Management Committee at IM Skaugen ASA, a
      Norwegian public bulk shipping and logistics company engaged in the
      transportation of petrochemical gases, LPG and organic chemicals as well as
      crude oil lightering, in various financial management, operational and corporate
      and business development roles. Mr. Lind has also held senior and executive
      positions with Manufacturers Hanover Trust Company, Oslobanken and GATX Capital.
      He has been actively involved in corporate recapitalization, financial
      restructurings, acquisitions, structured finance and joint venture investments.
      In addition to his positions within TOFG. Mr. Lind currently serves on the
      boards of Frilin AS, a Norwegian private investment company, and Christiania
      Capital Partners, a private financial advisory and consulting firm based in
      Norway. Mr. Lind is a resident of the United Kingdom and a citizen of
      Norway.




*Randee
      Day—Director.* Ms. Randee
      Day has been a Managing Director at The Seabury Group, a leading advisory and
      consulting firm specializing in the transportation industry, since 2004 and
      is
      responsible for all of Seabury’s activities related to the maritime industry.
      Ms. Day has more than 25 years of specialized international financial
      experience in the marine and energy sectors. From 1985 to 2004, Ms. Day was
      a


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Founding
      Partner of Day &
Partners, Inc., a financial advisory and consulting firm focused on the
      maritime, energy and cruise industries with a diversified client base consisting
      of shipping companies, commercial banks and government agencies. Ms. Day
      has an extensive background in international trust and maritime law and has
      worked with clients on bankruptcies, foreign judgments and strategies for
      disposing of real estate and shipping assets in various international
      jurisdictions. Ms. Day has served as an independent director and audit
      committee chair of TBS International Ltd., a Bermuda based operator of one
      of the world’s largest controlled fleets of multipurpose tweendeck bulk
      carriers, since 2001. From 1979 to 1985, Ms. Day served as the head of J.P.
      Morgan’s Marine Transportation and Finance department in New York, where she was
      responsible for managing a $1 billion loan portfolio and overseeing
      relationships with the bank’s shipping clients in the Western Hemisphere and the
      Far East. She also served in the London offices of J.P. Morgan, Continental
      Illinois National Bank & Trust and Bank of America. Ms. Day is a
      resident and citizen of the United States.




*Rolf
      A. Wikborg—Director.* Mr. Wikborg
      is Managing Director of AMA Norway A/S and AMA Capital Partners in New York,
      a
      maritime merchant banking group involved in mergers and acquisitions,
      restructurings and financial engineering in the shipping, offshore and cruise
      sector. Mr. Wikborg has extensive experience arranging operating and
      financial leases for operators in the maritime field and recently has been
      active arranging mergers and acquisitions. Prior to founding the AMA group
      in
      New York in 1987, Mr. Wikborg was a Managing Director at Fearnleys, Mexico,
      for two years after having worked in the Project Department of Fearnleys, an
      Oslo based ship-broker. Mr. Wikborg is a Director of Cruiseinvest, which
      owns a number of modern cruise vessels as well as a Director of NFC Al Rubban
      Fund, an international fund that specializes in maritime investments.
      Mr. Wikborg holds a Bachelor of Science in Management Sciences from the
      University of Manchester, England. Mr. Wikborg is an officer in the Royal
      Norwegian Navy and is a citizen and resident of Norway.




*Ole
      Jacob Diesen—Chief Executive Officer.* Mr.
      Ole
      Jacob Diesen has been an independent corporate and financial management
      consultant since 1997, serving a diverse group of clients primarily in the
      tanker industry. Mr. Diesen has advised on a broad range of shipping
      transactions, including mergers and acquisitions, corporate reorganizations,
      joint ventures, asset sales, equity, debt and lease financings and vessel
      charters, pooling and technical management agreements. Mr. Diesen's career
      in
      shipping and shipping finance spans over 30 years. From 1991 to 1997, Mr. Diesen
      served as Managing Director of Skaugen PetroTrans ASA, a Norwegian public
      company that was listed on the Oslo Stock Exchange. Skaugen PetroTrans is an
      established crude oil lightering company in the U.S. Gulf and operator of a
      fleet of medium sized tankers. From 1984 to 1991, Mr. Diesen headed Fearnley
      Group (UK) Ltd., a privately held corporate finance advisory firm specializing
      in the maritime and oil industries. Prior to this, Mr. Diesen served for ten
      years with Manufacturers Hanover Trust, a predecessor to JPMorgan Chase, in
      positions including Vice President and Deputy Regional Manager, where he was
      responsible for the bank's portfolios of shipping and Scandinavian corporate
      credits after having spent two years as a tanker chartering broker. Mr. Diesen
      currently serves on a number of boards including PetroTrans Holdings Ltd.,
      Bermuda, the largest independently owned U.S. Gulf lightering business; Norgas
      Carriers Pte. Ltd., Singapore, an owner of LPG/ethylene carriers; Leif Höegh
      (UK) Ltd., a U.K. owner of car carriers and LNG vessels; Dole (UK) Ltd., a
      U.K.
      owner of reefer vessels; FSN Capital Holding Ltd., Jersey, a private equity
      firm; and Siem Industrikapital AB, a Swedish investment company with a broad
      portfolio of industrial holdings. Mr. Diesen is a citizen of
      Norway.





*Eirik
      Ubøe—Chief Financial Officer.* Mr.
      Ubøe
      has been involved in international accounting and finance for approximately
      20
      years, which includes time spent in ship finance and as the chief financial
      officer for companies listed on the Oslo Stock Exchange. From March 2002 through
      December 2004, Mr. Ubøe served as the chief executive and chief financial
      officer of Nutri Pharma ASA, an international health care company listed on
      the
      Oslo Stock Exchange. From 1997 through 2002, Mr. Ubøe worked in various
      positions at the Schibsted Group, the largest Norwegian media group with
      newspaper, television and online interests in Scandinavia, the Baltics,
      Switzerland, France and Spain, including as the finance director of the
      Schibsted Group and as chief financial officer of Schibsted's newspaper
      initiative in Switzerland, France and Spain. Mr. Ubøe has also served as a vice
      president in the corporate finance and ship finance departments of various
      predecessors to JPMorgan Chase both in New York and Oslo for a total of eight


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years.
      Mr. Ubøe holds an MBA from the University of
      Michigan's Ross School of Business and a Bachelor in Business Administration
      from the University of Oregon. Mr. Ubøe is a citizen of Norway.




**B.**
            **COMPENSATION**




**DIRECTORS
      COMPENSATION**




Each
      member of our board of directors are paid an annual fee of $35,000, plus
      reimbursement for expenses incurred in the performance of duties as members
      of
      our board of directors. We pay our chairman an additional $10,000 per year
      to
      compensate him for the extra duties incident to that office. We pay the head
      of
      our audit committee an additional $7,500 per year and an additional $2,500
      per
      year to each of the other members of the audit committee. We pay the heads
      of
      our compensation committee and nominating and corporate governance committee
      an
      additional $5,000 each per year. We pay each director $1,000 for each board
      meeting attended and pay the expenses they incur in the performance of their
      duties as members of our board. We currently expect to award each of our
      directors 1,000 shares of restricted stock per year (including 2005). The
      restricted stock will not be transferable by our directors until one year after
      the dates of issue.




**EXECUTIVE
      COMPENSATION, EMPLOYMENT AGREEMENTS**




Our
      chief
      executive officer, Mr. Ole Jacob Diesen, receives an annual salary of
      $400,000, which includes benefits. Our chief financial officer, Mr. Eirik
      Ubøe receives an annual salary of $250,000, which includes benefits. In
      addition, each are reimbursed for expenses incurred in the performance of their
      duties as our executive officers and receive the equity based compensation
      described below.




**Executive
      Officer Employment Agreements**




We
      have
      entered into employment agreements with Mr. Diesen and Mr. Ubøe that
      set forth their rights and obligations as our chief executive officer and chief
      financial officer, respectively. The employment agreements are substantially
      similar. The agreements have an initial term of three years and are extendable
      at our option with six months advance notice prior to the expiration of their
      initial term. Either the executive or we may terminate the employment agreements
      for any reason and at any time.




Pursuant
      to the employment agreements, Mr. Diesen receives a base salary per year in
      the amount of $400,000 and Mr. Ubøe receives a base salary per year in the
      amount of $250,000. In addition, both Mr. Diesen and Mr. Ubøe received
      a combination of stock options and restricted stock that have a grant date
      value
      of $75,000 split equally between stock options and restricted stock. Each
      executive will also be eligible for additional grants under our 2005 Incentive
      Compensation Plan, as determined by the compensation committee of our board
      of
      directors.




In
      the
      event that (i) we terminate either executive’s employment without cause (as
      such term is defined in the employment agreement), (ii) elect not to extend
      the initial term of either executive’s employment agreement without cause (as
      such term is defined in the employment agreement) or (iii) either executive
      terminates his employment for good reason (as such term is defined in the
      employment agreement) within one year following a change of control, then we
      will continue to pay such executive’s salary through the later of (1) the
      third anniversary of the commencement of the employment agreement or
      (2) the first anniversary of the date of notice of termination. In
      addition, in the event an executive is terminated without cause pursuant to
      clause (i) above, all of his equity based compensation, including initial
      grants, will immediately vest and become exercisable. If an executive’s
      employment is terminated due to death or disability, we will continue to pay
      his
      salary through the first anniversary of such date of termination. In the event
      that an executive’s employment is terminated for cause, we are only obligated to
      pay his salary and unreimbursed expenses through the termination
      date.




Pursuant
      to the employment agreements, each of Mr. Diesen and Mr. Ubøe have
      agreed to protect our confidential information. They have also agreed during
      the
      term of the agreements and for a period of one year following his termination,
      not to (i) engage in any business in any location that is involved in the




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voyage
      chartering or time chartering of crude oil
      tankers, (ii) solicit any business from a person that is a customer or
      client of ours or any of our affiliates, (iii) interfere with or damage any
      relationship between us or any of our affiliates and any employee, customer,
      client, vendor or supplier or (iv) form, or acquire a two percent or
      greater equity ownership, voting or profit participation in, any of our
      competitors.




We
      have
      also entered into an indemnification agreement with each of Mr. Diesen and
      Mr. Ubøe pursuant to which we have agreed to indemnify them substantially
      in accordance with the indemnification provisions related to our officers and
      directors in our bylaws.




**Stock
      plan**




**2005
      Incentive Compensation Plan**




We
      established the 2005 Incentive Compensation Plan, which we call the Plan, prior
      to the consummation of the IPO for the initial benefit of our directors and
      officers (including prospective directors and officers). The following
      description of the Plan is qualified by reference to the full text thereof,
      a
      copy of which is filed as an exhibit to this report.




*Awards*




The
      Plan
      provides for the grant of options intended to qualify as incentive stock
      options, or ISOs, under Section 422 of the Internal Revenue Code of 1986,
      as amended and non-statutory stock options, or NSOs, restricted stock awards,
      restricted stock units, or RSUs, cash incentive awards and other equity-based
      or
      equity-related awards.




*Plan
      administration*




The
      Plan
      will be administered by the compensation committee of our board of directors
      or
      such other committee as our board may designate to administer the plan.
      Initially, our entire board will perform the functions of the compensation
      committee and will administer the Plan. Subject to the terms of the plan and
      applicable law, the compensation committee has sole and plenary authority to
      administer the Plan, including, but not limited to, the authority to
      (i) designate Plan participants, (ii) determine the type or types of
      awards to be granted to a participant, (iii) determine the number of shares
      of our common stock to be covered by awards, (iv) determine the terms and
      conditions of any awards, including vesting schedules and performance criteria,
      (v) amend or replace an outstanding award and (vi) make any other
      determination and take any other action that the compensation committee deems
      necessary or desirable for the administration of the Plan.




*Shares
      available for awards*




Subject
      to adjustment as provided below, the aggregate number of shares of our common
      stock that may be delivered pursuant to awards granted under the Plan is
      300,000, of which the maximum number of shares that may be delivered pursuant
      to
      ISOs granted under the Plan is 150,000. The maximum number of shares of our
      common stock with respect to which awards may be granted to any participant
      in
      the Plan in any fiscal year is 75,000. If an award granted under the Plan is
      forfeited, or otherwise expires, terminates or is canceled without the delivery
      of shares, then the shares covered by such award will again be available to
      be
      delivered pursuant to awards under the Plan.




In
      the
      event of any corporate event affecting the shares of our common stock, the
      compensation committee in its discretion may make such adjustments and other
      substitutions to the Plan and awards under the Plan as it deems equitable or
      desirable in its sole discretion.




*Stock
      options*




The
      compensation committee may grant both ISOs and NSOs under the Plan. Except
      as
      otherwise determined by the compensation committee in an award agreement, the
      exercise price for options cannot be less than the fair market value (as defined
      in the Plan) of our common stock on the date of grant. In the case of ISOs
      granted to an employee who, at the time of the grant of an option, owns stock
      representing more




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than
      10%
      of the voting power of all classes or our stock or the stock of any of our
      affiliates, the exercise price cannot be less than 110% of the fair market
      value
      of a share of our common stock on the date of grant. All options granted under
      the Plan will be NSOs unless the applicable award agreement expressly states
      that the option is intended to be an ISO.




Subject
      to any applicable award agreement, options shall vest and become exercisable
      on
      each of the first three anniversaries of the date of grant. The term of each
      option will be determined by the compensation committee; provided that no option
      will be exercisable after the tenth anniversary of the date the option is
      granted. The exercise price may be paid with cash (or its equivalent) or by
      other methods as permitted by the compensation committee.




*Restricted
      shares and restricted stock units*




Restricted
      shares and RSUs may not be sold, assigned, transferred, pledged or otherwise
      encumbered except as provided in the Plan or the applicable award agreement;
      provided, however, that the compensation committee may determine that restricted
      shares and RSUs may be transferred by the participant. Upon the grant of a
      restricted share, certificates will be issued and registered in the name of
      the
      participant and deposited by the participant, together with a stock power
      endorsed in blank, with us or a custodian designated by the compensation
      committee or us. Upon lapse of the restrictions applicable to such restricted
      shares, we or the custodian, as applicable, will deliver such certificates
      to
      the participant or his or her legal representative.




An
      RSU
      will have a value equal to the fair market value of a share of our common stock.
      RSUs may be paid in cash, shares of our common stock, other securities, other
      awards or other property, as determined by the committee, upon the lapse of
      restrictions applicable to such RSU or in accordance with the applicable award
      agreement. The committee may provide a participant who holds restricted shares
      or RSUs with dividends or dividend equivalents payable in cash, shares of our
      common stock or other property.




The
      compensation committee may provide a participant who holds restricted shares
      with dividends or dividend equivalents, payable in cash, shares of our common
      stock or other property.




*Cash
      incentive awards*




Subject
      to the provisions of the Plan, the compensation committee may grant cash
      incentive awards payable upon the attainment of one or more individual, business
      or other performance goals or similar criteria.




*Other
      stock-based awards*




Subject
      to the provisions of the Plan, the compensation committee may grant to
      participants other equity-based or equity-related awards. The compensation
      committee may determine the amounts and terms and conditions of any such awards
      provided that they comply with applicable laws.




*Amendment
      and termination of the plan*




Subject
      to any government regulation and to the rules of the New York Stock Exchange
      or
      any successor exchange or quotation system on which shares of our common stock
      may be listed or quoted, the Plan may be amended, modified or terminated by
      our
      board of directors without the approval of our stockholders except that
      stockholder approval shall be required for any amendment that would
      (i) increase the maximum number of shares of our common stock available for
      awards under the Plan or increase the maximum number of shares of our common
      stock that may be delivered pursuant to ISOs granted under the Plan or
      (ii) modify the requirements for participation under the Plan. No
      modification, amendment or termination of the Plan that is adverse to a
      participant will be effective without the consent of the affected participant,
      unless otherwise provided by the compensation committee in the applicable award
      agreement.




The
      compensation committee may waive any conditions or rights under, amend any
      terms
      of, or alter, suspend, discontinue, cancel or terminate any award previously
      granted, prospectively or retroactively; *provided* , *however* ,
      that,
      unless otherwise provided by the compensation committee in the applicable award


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agreement, any such waiver, amendment, alteration, suspension,
      discontinuance, cancellation or termination that would materially and adversely
      impair the rights of any participant to any award previously granted will not
      to
      that extent be effective without the consent of the affected
      participant.




*Change
      of control*




The
      Plan
      provides that, unless otherwise provided in an award agreement, in the event
      we
      experience a change of control, unless provision is made in connection with
      the
      change of control for assumption for, or substitution of, awards previously
      granted:




·
            any
                options outstanding as of the date the change of control is determined
                to
                have occurred will become fully exercisable and vested, as of immediately
                prior to the change of control;




·
            all
                cash incentive awards will be paid out as if the date of the change
                of
                control were the last day of the applicable performance period and
                “target” performance levels had been attained;
                and




·
            all
                other outstanding awards will automatically be deemed exercisable
                or
                vested and all restrictions and forfeiture provisions related thereto
                will
                lapse as of immediately prior to such change of control**.**




Unless
      otherwise provided pursuant to an award agreement, a change of control is
      defined to mean any of the following events, generally:




·
            the
                consummation of a merger, reorganization or consolidation or sale
                or other
                disposition of all or substantially all of our
                assets;




·
            the
                approval by our stockholders of a plan of our complete liquidation
                or
                dissolution; or




·
            an
                acquisition by any individual, entity or group of beneficial ownership
                of
                50% or more of either the then outstanding shares of our common stock
                or
                the combined voting power of our then outstanding voting securities
                entitled to vote generally in the election of
                directors.




*Term
      of the plan*




No
      award
      may be granted under the Plan after the June 7, 2015, the tenth anniversary
      of
      the date the Plan was approved by the stockholders of the Company.




**C.**
            **BOARD PRACTICES**




**BOARD
      OF DIRECTORS**




Our
      business and affairs are managed under the direction of our board of directors.
      The board is currently composed of three directors, all of whom are independent
      under the applicable rules of the New York Stock Exchange.




**BOARD
      COMMITTEES**




Our
      board
      of directors, which is entirely composed of independent directors under the
      applicable rules of the New York Stock Exchange, will perform the functions
      of
      our audit committee, compensation committee and nominating and corporate
      governance committee. In its function as our audit committee, the board is
      responsible for reviewing our accounting controls and for the engagement of
      our
      outside auditors. Ms. Day is our “audit committee financial expert” as that
      term is defined in Item 401(h) of Regulation S-K.




**DIRECTORS**




Our
      directors are elected by a plurality of the votes cast by stockholders entitled
      to vote. There is no provision for cumulative voting.




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Our
      bylaws provide that our board of directors must consist of at least three
      members. Stockholders may change the number of directors only by the affirmative
      vote of holders of a majority of the outstanding common stock. The board of
      directors may change the number of directors only by a majority vote of the
      entire board.




**D.**
            **EMPLOYEES**




As
      of
      December 31, 2005, we had 2 employees. Our employees are not represented by
      any
      collective bargaining agreements and we have never experienced a work stoppage.
      We believe that our employee relations are good.





**E.**
            **SHARE OWNERSHIP**




As
      of
      December 31, 2005, all of the officers and directors listed below had direct
      or
      beneficial ownership of less than 1% of the outstanding shares:




Erik
      Lind


Randee
      Day


Rolf
      Wikborg


Ole
      Jacob
      Diesen


Eirik
      Ubøe




**ITEM
              7.**
            **MAJOR
                SHAREHOLDERS AND RELATED PARTY
                TRANSACTIONS**




**A.**
            **MAJOR SHAREHOLDERS**




The
      following table sets forth certain information regarding (i) the owners of
      more than 5% of our common stock that we are aware of and (ii) the total
      amount of common stock owned by all of our officers and directors, individually
      and as a group, in each case immediately preceding and after giving effect
      to
      the IPO. Following the completion of the IPO we have one class of common stock
      outstanding and each outstanding share will be entitled to one
      vote.




Prior
      to
      the IPO, OIN, owned 100 shares, or 100%, of our common stock. As part of the
      purchase price for our fleet of seven vessels, we issued 13,999,900 shares
      or
      46.7%, of our common stock to OIN. OIN granted the underwriters the right to
      purchase up to 2,400,000 of these shares to cover over-allotments. The
      underwriters’ exercised their option to purchase 648,500 of these shares, and
      accordingly, OIN now owns 13,351,400 shares, or 44.5%, of our common stock.
      We
      did not receive any of the proceeds from the exercise of the over-allotment
      option.




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**Name**
            **Number
                  of**
                Shares
            
            **Percent****Persons
                owning more than 5% of a class of our equity
                securities.**OSG
                International, Inc.(1)
            13,351,400
            
            44.5%Fidelity
                Management & Research Company
            3,000,000
            
            9.99%Perry
                Corp.
            1,796,400
            
            5.99%**Directors**(2)Erik
                Lind
            0
            
            0Randee
                Day
            0
            
            0Rolf
                Wikborg
            0
            
            0**Executive
                Officers**Ole
                Jacob Diesen
            3,125
            
            *Eirik
                Ubøe
            3,125
            
            *Directors
                and executive officers as a group (five persons)
            6,250
            
            *


________________________


*  Less
      than
      1%


(1) *We
      were incorporated on April 14, 2005 in the Marshall Islands as a wholly owned
      subsidiary of OSG International, Inc., which is a wholly owned subsidiary
      of OSG. The principal address of OSG International, Inc. is Trust Company
      Complex, Ajeltake Island, Ajeltake Road, Majuro, Marshall Islands
      MH96960.*


(2) *We
      currently expect to grant 1,000 restricted shares to each of our directors
      each
      year.*







We
      have
      entered into a registration rights agreement with OIN pursuant to which it
      will
      have three demand registration rights relating to the common stock that it
      holds, subject to the requirements that any demand registration made by OIN
      cover at least 5% of our outstanding common stock. The registration rights
      agreement provides that OIN has the right to assign its rights under the
      agreement in connection with a transfer of its shares of common stock, provided
      the transferee purchases at least 5% of our outstanding common stock in such
      transfer. In any event, we will be subject to a maximum of three demand
      registrations under the agreement. If OIN exercises its demand registration
      rights, we will file a registration statement or report and undertake an
      offering in the United States, as requested by it. In addition to its demand
      registration rights, OIN will have piggyback registration rights whenever we
      register additional common stock, subject to certain cutbacks (the shares to
      be
      registered by OIN would be the first to be cut back) and certain other
      conditions.




OIN
      has
      agreed to pay all costs and expenses in connection with demand registrations
      and
      to pay its portion of costs and expenses in connection with piggyback
      registrations, and in either case we will not pay any underwriting discounts
      or
      commissions applicable to the securities sold by OIN or any of its legal fees
      or
      expenses. We have agreed to indemnify OIN against certain liabilities, including
      liabilities under the Securities Act in connection with each
      registration.




For
      more
      detailed information regarding the terms of the registration rights agreement,
      please see the form of registration rights agreement filed as an exhibit to
      this
      report.




**B.**
            **RELATED PARTY TRANSACTIONS**




We
      were
      incorporated on April 14, 2005 as a wholly owned indirect subsidiary of OSG
      and acquired our assets, which consist of our fleet of seven vessels, from
      subsidiaries of OSG simultaneously with the completion of the IPO. We also
      entered into ship management agreements with Tanker Management, a wholly owned
      subsidiary of OSG. Our bylaws permit us to enter into related party transactions
      with one or more of our directors or officers, or their affiliates, if:
      (i) the material facts as to the interested parties role in the transaction
      are disclosed to our board and the disinterested members of our board in good
      faith authorize the transaction, (ii) the material facts as to the
      interested party’s role in the transaction are




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disclosed
      to the stockholders and the transaction is approved in good faith by vote of
      the
      stockholders or (iii) the contract or transaction is fair to us at the time
      it is authorized, approved or ratified by the board or the
      stockholders.




**MEMORANDA
      OF AGREEMENT**




Pursuant
      to the memoranda of agreement, we acquired seven tankers from subsidiaries
      of
      OSG. The total purchase price for these vessels was equal to the net proceeds
      from the sale of 16,000,000 shares of common stock pursuant to IPO (less
      amounts required pay fees and expenses associated with the IPO), borrowings
      of
      $236 million under the term loan portion of our credit facility and the
      issuance of 13,999,900 shares of our common stock to a wholly owned
      subsidiary of OSG. Based on the IPO price of $12.00 per share, the purchase
      price for our fleet was approximately $580.6 million. Please see the section
      of
      this report entitled “Item 4. Information on the Company ─ Memoranda of
      Agreement” for a more detailed description of the memoranda of
      agreement.




**THE
      CHARTERS**




Our
      wholly owned subsidiaries charter our vessels to the charterers, which are
      wholly owned subsidiaries of OSG. The basic hire is payable to us under the
      charters and is fixed in advance for the length of the initial charter. In
      addition to the basic hire, OIN, the charterers’ parent, and the charterers have
      agreed to pay us additional hire quarterly in arrears pursuant to our charter
      framework agreement with OIN and the charterers. OSG has agreed to guarantee
      the
      charter payments under our charter arrangements, including the payment of basic
      hire and additional hire. We have agreed to guarantee the obligations of each
      of
      our subsidiaries under the charters. Please see the section of this report
      entitled “Item 4. Information on the Company–Charter
      Arrangements” for a more detailed description of the charters.




**SHIP
      MANAGEMENT AGREEMENTS**




Our
      vessel owning subsidiaries have entered into fixed rate ship management
      agreements with Tanker Management, a wholly owned subsidiary of OSG. Under
      these
      agreements, which are coterminous with the charters of each of the vessels,
      Tanker Management has assumed all responsibilities for the technical management
      and most of the operating costs of the vessels in exchange for a technical
      management fee that will be fixed for the first two years of the agreements.
      Please see the section of this report entitled “Business—Ship Management
      Agreements” for a more detailed description of the ship management
      agreements.




**REGISTRATION
      RIGHTS AGREEMENT**




We
      have
      entered into a registration rights agreement with OIN, pursuant to which we
      have
      agreed to register for sale to the public the 13,351,400 shares that OSG or
      its subsidiaries hold in us.




**C.**
            **INTEREST OF EXPERTS AND COUNSEL**
              
              Not Applicable.




**ITEM
              8.**
            **FINANCIAL
                INFORMATION**




**A.**
            **CONSOLIDATED STATEMENTS AND OTHER FINANCIAL
                INFORMATION**


1.
            AUDITED
                CONSOLIDATED FINANCIAL STATEMENTS
              See
                Item 18.


2.
            THREE
                YEARS COMPARATIVE FINANCIAL STATEMENTS
              See
                Item 18.


3.
            AUDIT REPORT
              See
                Report of Independent Registered Public Accounting Firm at page F-2
                and
                F-3.






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4.
              LATEST AUDITED FINANCIAL STATEMENTS MAY BE NO OLDER THAN 15
                  MONTHS
                We have complied with this requirement. 5.
              INTERIM FINANCIAL STATEMENTS IF DOCUMENT IS MORE THAN NINE MONTHS
                  SINCE
                LAST AUDITED FINANCIAL YEAR
                Not Applicable. 6.
              EXPORT
                  SALES IF SIGNIFICANT
                See Item 18. 7.
              LEGAL
                PROCEEDINGS


The
      nature of our business, i.e., the acquisition, chartering and ownership of
      our
      vessels, exposes us to risk of lawsuits for damages or penalties relating to,
      among other things, personal injury, property casualty and environmental
      contamination. Under rules related to maritime proceedings, certain claimants
      may be entitled to attach charterhire payable to us in certain circumstances.
      There are no actions or claims pending against us as of the date of this
      report.




8.  DIVIDEND
      POLICY.




We
      intend
      to pay quarterly dividends to the holders of our common stock in March, May,
      August and November of each year, in amounts substantially equal to the
      available cash from our operations during the previous quarter less cash
      expenses and any reserves established by our board of directors.




Our
      board
      of directors may review and amend our dividend policy from time to time in
      accordance with any future growth of our fleet or for other reasons. Although
      we
      do not currently have plans to purchase any specific vessels other than our
      initial fleet of seven vessels, we intend to grow our fleet by acquiring
      additional vessels in the future in a manner that is expected to be accretive
      to
      earnings and dividends per share. We expect to fund all or a portion of future
      vessel acquisitions with borrowings under the $150 million vessel
      acquisition tranche of our new credit facility. Upon acquiring an additional
      vessel or vessels, our board of directors may limit our dividends per share
      to
      the amount that we would have been able to pay if all or a portion of our
      acquisition related debt had been financed with equity.




The
      timing and amount of dividend payments will be determined by our board of
      directors and will depend on, among other things, our cash earnings, financial
      condition, cash requirements and the provisions of Marshall Islands law
      affecting the payment of dividends and other factors. Other than (i) the
      technical management fees payable under our ship management agreements, which
      have a duration of two years, and are cancelable by Tanker Management upon
      90 days notice, (ii) interest that will be payable on any indebtedness
      that we incur in the future under our credit facility, (iii) commitment
      fees under our credit facility (for so long as we do not make any further
      borrowings under the vessel acquisition facility or the working capital
      facility), (iv) compensation paid to our executive officers, which is fixed
      during the terms of the their employment agreements, and (v) our directors’
fees, none of our fees or expenses are fixed.




The
      amount of future dividends, if any, could be affected by various factors,
      including our cash earnings, financial condition and cash requirements, the
      loss
      of a vessel, the acquisition of one or more vessels, required capital
      expenditures, reserves established by our board of directors, increased or
      unanticipated expenses, our ability to comply with the terms of our credit
      facility, a change in our dividend policy, additional borrowings or future
      issuances of securities, many of which will be beyond our control.




We
      believe that under current law, our dividend payments from earnings and profits
      will constitute “qualified dividend income” and if treated as such will
      generally be subject to a 15% United States federal income tax rate with respect
      to United States non-corporate stockholders. Distributions in excess of our
      earnings and profits will be treated first as a non-taxable return of capital
      to
      the extent of a United States stockholder’s tax basis in its common stock on a
      dollar-for-dollar basis and thereafter as capital gain. Please see the sections
      of this report entitled “Risk Factors—Risk Relating to our Company—Certain
      adverse U.S. federal
      income tax consequences could arise for U.S. holders” and “Tax Considerations”
for additional information regarding possible adverse tax treatment of dividend
      payments.







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**B.**
            **SIGNIFICANT CHANGES**




None.




**ITEM
              9.**
            **THE
                OFFER AND LISTING**




***OFFER
      AND LISTING
      DETAILS***




1.  EXPECTED
      PRICE


Not
      Applicable.




2.  METHOD
      TO
      DETERMINE EXPECTED PRICE


Not Applicable.




3.  PRE-EMPTIVE
      EXERCISE RIGHTS


Not Applicable.




4.  STOCK
      PRICE HISTORY




The
      Company’s common stock was not listed or traded prior to the IPO. The following
      table lists the high and low closing market prices for the Company’s common
      stock for the periods indicated as reported:







**High**
            
            **Low**Year
                ended December 31, 2005Month
                of:October,
                2005
            $12.25
            
            $11.76November,
                2005
            $12.80
            
            $11.12December,
                2005
            $13.21
            
            $12.49





5.  TYPE
      AND
      CLASS OF SECURITIES


Not
      Applicable.




6.  LIMITATIONS
      OF SECURITIES


Not
      Applicable.




7.  RIGHTS
      CONVEYED BY SECURITIES ISSUED


Not Applicable.




***PLAN
      OF
      DISTRIBUTION***




Not
      Applicable.




***MARKETS
      FOR
      STOCK***




The
      Company’s common stock is listed for trading on the New York Stock Exchange and
      is traded under the symbol “DHT”.




***SELLING
      SHAREHOLDERS***




Not
      Applicable.




***DILUTION
      FROM OFFERING***




Not
      Applicable.







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*****EXPENSES
      OF OFFERING***




Not
      Applicable.




**ITEM
              10.**
            **ADDITIONAL
                INFORMATION**




**A.**
            **SHARE CAPITAL**




Not
      Applicable.




**B.**
            **MEMORANDUM AND ARTICLES OF
                ASSOCIATION**




The
      following is a description of the material terms of our amended and restated
      articles of incorporation and bylaws. Because the following is only a summary,
      it does not contain all information that you may find useful. For more complete
      information you should read our entire amended and restated articles of
      incorporation and bylaws listed as an exhibit to this report.




**PURPOSE**




Our
      purpose, as stated in our amended and restated articles of incorporation, is
      to
      engage in any lawful act or activity for which corporations may now or hereafter
      be organized under the Business Corporations Act of the Marshall Islands, or
      the
      BCA. Our amended and restated articles of incorporation and bylaws do not impose
      any limitations on the ownership rights of our stockholders.




**AUTHORIZED
      CAPITALIZATION**




Under
      our
      amended and restated articles of incorporation, our authorized capital stock
      consists of 100,000,000 shares of common stock, par value $.01 per share, and
      1,000,000 shares of preferred stock, par value $.01 per share, of which no
      shares were issued and outstanding. Upon completion of the IPO, we have
      outstanding 30,006,250 shares of common stock and no shares of preferred
      stock. All of our shares of stock are in registered form.




**Common
      Stock**




Each
      outstanding share of common stock entitles the holder to one vote on all matters
      submitted to a vote of stockholders. Subject to preferences that may be
      applicable to any outstanding shares of preferred stock, holders of shares
      of
      common stock are entitled to receive ratably all dividends, if any, declared
      by
      our board of directors out of funds legally available for dividends. Upon our
      dissolution or liquidation or the sale of all or substantially all or our
      assets, after payment in full of all amounts required to be paid to creditors
      and to the holders of preferred stock having liquidation preferences, if any,
      the holders or our common stock will be entitled to receive pro rata our
      remaining assets available for distribution. Holders of common stock do not
      have
      conversion, redemption or preemptive rights to subscribe to any of our
      securities. The rights, preferences and privileges of holders of common stock
      are subject to the rights of the holders of any shares of preferred stock which
      we may issue in the future.




**Preferred
      Stock**




Our
      amended and restated articles of incorporation authorize our board of directors
      to establish one or more series of preferred stock and to determine, with
      respect to any series of preferred stock, the terms and rights of that series,
      including:




·
            the
                designation of the series;




·
            the
                number of shares of the series;




·
            the
                preferences and relative, participating, option or other special
                rights,
                if any, and any qualifications, limitations or restrictions of such
                series; and






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·
            the
                voting rights, if any, of the holders of the
                series.




**DIRECTORS**




Our
      directors are elected by a plurality of the votes cast by stockholders entitled
      to vote. There is no provision for cumulative voting.




Our
      bylaws provide that our board of directors must consist of at least three
      members. Stockholders may change the number of directors only by the affirmative
      vote of holders of a majority of the outstanding common stock. The board of
      directors may change the number of directors only by a majority vote of the
      entire board.




**STOCKHOLDER
      MEETINGS**




Under
      our
      bylaws, annual stockholder meetings will be held at a time and place selected
      by
      our board of directors. The meetings may be held in or outside of the Marshall
      Islands. Special meetings may be called by stockholders holding not less than
      one-fifth of all the outstanding shares entitled to vote at such meeting. Our
      board of directors may set a record date between 15 and 60 days before the
      date of any meeting to determine the stockholders that will be eligible to
      receive notice and vote at the meeting.




**DISSENTERS’
      RIGHTS OF APPRAISAL AND PAYMENT**




Under
      the
      BCA, our stockholders have the right to dissent from various corporate actions,
      including any merger or consolidation or sale of all or substantially all of
      our
      assets not made in the usual course of our business, and receive payment of
      the
      fair value of their shares. In the event of any further amendment of our amended
      and restated articles of incorporation, a stockholder also has the right to
      dissent and receive payment for his or her shares if the amendment alters
      certain rights in respect of those shares. The dissenting stockholder must
      follow the procedures set forth in the BCA to receive payment. In the event
      that
      we and any dissenting stockholder fail to agree on a price for the shares,
      the
      BCA procedures involve, among other things, the institution of proceedings
      in
      the high court of the Republic of the Marshall Islands or in any appropriate
      court in any jurisdiction in which the company’s shares are primarily traded on
      a local or national securities exchange.




**STOCKHOLDERS’
      DERIVATIVE ACTIONS**




Under
      the
      BCA, any of our stockholders may bring an action in our name to procure a
      judgment in our favor, also known as a derivative action, provided that the
      stockholder bringing the action is a holder of common stock both at the time
      the
      derivative action is commenced and at the time of the transaction to which
      the
      action relates.




**LIMITATIONS
      ON LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS**




The
      BCA
      authorizes corporations to limit or eliminate the personal liability of
      directors and officers to corporations and their stockholders for monetary
      damages for breaches of directors’ fiduciary duties. Our bylaws includes a
      provision that eliminates the personal liability of directors for monetary
      damages for actions taken as a director to the fullest extent permitted by
      law.




Our
      bylaws provide that we must indemnify our directors and officers to the fullest
      extent authorized by law. We are also expressly authorized to advance certain
      expenses (including attorneys fees and disbursements and court costs) to our
      directors and offices and carry directors’ and officers’ insurance providing
      indemnification for our directors, officers and certain employees for some
      liabilities. We believe that these indemnification provisions and insurance
      are
      useful to attract and retain qualified directors and executive
      officers.




The
      limitation of liability and indemnification provisions in our amended and
      restated articles of incorporation and bylaws may discourage stockholders from
      bringing a lawsuit against directors for breach of their fiduciary duty. These
      provisions may also have the effect of reducing the likelihood of derivative
      litigation
      against directors and officers, even though such an action, if successful,
      might
      otherwise benefit us and our stockholders. In addition, your investment may
      be
      adversely affected to the extent we pay the costs of settlement and damage
      awards against directors and officers pursuant to these indemnification
      provisions.







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There
      is
      currently no pending material litigation or proceeding involving any of our
      directors, officers or employees for which indemnification is
      sought.




**ANTI-TAKEOVER
      EFFECT OF CERTAIN PROVISIONS OF OUR AMENDED AND RESTATED ARTICLES OF
      INCORPORATION AND BYLAWS**




Several
      provisions of our amended and restated articles of incorporation and bylaws,
      which are summarized below, may have anti-takeover effects. These provisions
      are
      intended to avoid costly takeover battles, lessen our vulnerability to a hostile
      change of control and enhance the ability of our board of directors to maximize
      stockholder value in connection with any unsolicited offer to acquire us.
      However, these anti-takeover provisions, which are summarized below, could
      also
      discourage, delay or prevent (1) the merger or acquisition of our company
      by means of a tender offer, a proxy contest or otherwise that a stockholder
      may
      consider in its best interest and (2) the removal of incumbent officers and
      directors.




**Blank
      Check Preferred Stock**




Under
      the
      terms of our amended and restated articles of incorporation, our board of
      directors has authority, without any further vote or action by our stockholders,
      to issue up to 1,000,000 shares of blank check preferred stock. Our board of
      directors may issue shares of preferred stock on terms calculated to discourage,
      delay or prevent a change of control of our company or the removal of our
      management.




**Classified
      Board of Directors**




Our
      amended and restated articles of incorporation provide for the division of
      our
      board of directors into three classes of directors, with each class as nearly
      equal in number as possible, serving staggered, three year terms. Approximately
      one-third of our board of directors will be elected each year. This classified
      board provision could discourage a third party from making a tender offer for
      our shares or attempting to obtain control of us. It could also delay
      stockholders who do not agree with the policies of our board of directors from
      removing a majority of our board of directors for two years.




**Election
      and Removal of Directors**




Our
      amended and restated articles of incorporation prohibit cumulative voting in
      the
      election of directors. Our bylaws require parties other than the board of
      directors to give advance written notice of nominations for the election of
      directors. Our articles of incorporation also provide that our directors may
      be
      removed only for cause and only upon the affirmative vote of a majority of
      the
      outstanding shares of our capital stock entitled to vote for those directors.
      These provisions may discourage, delay or prevent the removal of incumbent
      officers and directors.




Our
      bylaws provide that stockholders are required to give us advance notice of
      any
      person they wish to propose for election as a director if that person is not
      proposed by our board of directors. These advance notice provisions provide
      that
      the stockholder must have given written notice of such proposal not less than
      90 days nor more than 120 days prior to the anniversary date of the
      immediately preceding annual general meeting. In the event the annual general
      meeting is called for a date that is not within 30 days before or after
      such anniversary date, notice by the stockholder must be given not later than
      10 days following the earlier of the date on which notice of the annual
      general meeting was mailed to stockholders or the date on which public
      disclosure of the date of the annual general meeting was made.




In
      the
      case of a special general meeting called for the purpose of electing directors,
      notice by the stockholder must be given not later than 10 days following
      the earlier of the date on which notice of the special general meeting was
      mailed to stockholders or the date on which public disclosure of the date of
      the
      special general meeting was made. Any nomination not properly made will be
      disregarded.







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A
      director may be removed only for cause by the stockholders, provided notice
      is
      given to the director of the stockholders meeting convened to remove the
      director and provided such removal is approved by the affirmative vote of a
      majority of the outstanding shares of our capital stock entitled to vote for
      those directors. The notice must contain a statement of the intention to remove
      the director and must be served on the director not less than fourteen days
      before the meeting. The director is entitled to attend the meeting and be heard
      on the motion for his removal.




**Limited
      Actions by Stockholders**




Our
      amended and restated articles of incorporation and our bylaws provide that
      any
      action required or permitted to be taken by our stockholders must be effected
      at
      an annual or special meeting of stockholders or by the unanimous written consent
      of our stockholders. Our amended and restated articles of incorporation and
      our
      bylaws provide that, subject to certain exceptions, our chairman or chief
      executive officer, at the direction of the board of directors or holders of
      not
      less than one-fifth of all outstanding shares may call special meetings of
      our
      stockholders and the business transacted at the special meeting is limited
      to
      the purposes stated in the notice. Accordingly, a stockholder may be prevented
      from calling a special meeting for stockholder consideration of a proposal
      over
      the opposition of our board of directors and stockholder consideration of a
      proposal may be delayed until the next annual meeting.




**C.**
            **MATERIAL CONTRACTS**




Other
      than the Executive Officer Employment Agreements (described below), the
      Memoranda of Agreement, Charters, the Ship Management Agreement, our Guarantees
      and our Secured Loan Facility Agreement, we have not entered into any material
      contracts other than contracts entered into in the ordinary course of
      business.




**Executive
      Officer Employment Agreement**




We
      have
      entered into employment agreements with Mr. Diesen and Mr. Ubøe that
      set forth their rights and obligations as our chief executive officer and chief
      financial officer, respectively. The employment agreements are substantially
      similar. The agreements have an initial term of three years and are extendable
      at our option with six months advance notice prior to the expiration of their
      initial term. Either the executive or we may terminate the employment agreements
      for any reason and at any time. For additional information on these agreements
      see “Item 6. Directors, Senior Management and Employees–Executive
      Compensation, Employment Agreements.”




**D.**
            **EXCHANGE CONTROLS**




None.




**E.**
            **TAXATION**




The
      following is a discussion of the material Marshall Islands and United States
      federal income tax considerations relevant to an investment decision by a United
      States Holder, as defined below, with respect to the acquisition, ownership
      and
      disposition of the common stock of Double Hull Tankers, Inc., or the Company.
      This discussion does not purport to deal with the tax consequences of owning
      common stock to all categories of investors, some of which (such as financial
      institutions, regulated investment companies, real estate investment trusts,
      tax-exempt organizations, insurance companies, persons holding common stock
      of
      the Company as part of a hedging, integrated, conversion or constructive sale
      transaction or a straddle, traders in securities that have elected the
      mark-to-market method of accounting for their securities, persons liable for
      alternative minimum tax, persons who are investors in pass-through entities,
      dealers in securities or currencies and investors whose functional currency
      is
      not the United States dollar) may be subject to special rules.







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WE
      RECOMMEND THAT YOU CONSULT YOUR OWN TAX ADVISORS CONCERNING THE OVERALL TAX
      CONSEQUENCES ARISING IN YOUR OWN PARTICULAR SITUATION UNDER UNITED STATES
      FEDERAL, STATE, LOCAL OR FOREIGN LAW OF THE OWNERSHIP OF COMMON
      STOCK.




**MARSHALL
      ISLANDS TAX CONSIDERATIONS**




The
      following are the material Marshall Islands tax consequences of our activities
      to us and stockholders of our common stock. We are incorporated in the Marshall
      Islands. Under current Marshall Islands law, we are not subject to tax on income
      or capital gains, and no Marshall Islands withholding tax will be imposed upon
      payments of dividends by us to our stockholders.




**UNITED
      STATES FEDERAL INCOME TAX CONSIDERATIONS**




This
      discussion is based on the Internal Revenue Code of 1986, as amended (the
“Code”), Treasury regulations issued thereunder, published administrative
      interpretations of the Internal Revenue Service, or IRS, and judicial decisions
      as of the date hereof, all of which are subject to change at any time, possibly
      on a retroactive basis.




**Taxation
      of Operating Income: In General**




The
      Company’s subsidiaries have elected to be treated as disregarded entities for
      U.S. federal income tax purposes. As a result, for purposes of the discussion
      below, the Company’s subsidiaries are treated as branches of it rather than as
      separate corporations.




Unless
      exempt from United States federal income taxation under the rules contained
      in
      Section 883 of the Code (discussed below), a foreign corporation is subject
      to United States federal income taxation on its “shipping income” that is
      treated as derived from sources within the United States, referred to as “United
      States source shipping income.” For these purposes “shipping income” means any
      income that is derived from the use of vessels, from the hiring or leasing
      of
      vessels for use on a time, voyage or bareboat charter basis, from the
      participation in a pool, partnership, strategic alliance, joint operating
      agreement, code sharing arrangement or other joint venture it directly or
      indirectly owns or participates in that generates such income, or from the
      performance of services directly related to those uses. For tax purposes,
“United States source shipping income” includes (i) 50% of shipping income
      that is attributable to transportation that begins or ends, but that does not
      both begin and end, in the  United
      States and (ii) 100% of shipping income that is attributable to
      transportation that both begins and ends in the United States.




Shipping
      income attributable to transportation exclusively between non-United States
      ports will be considered to be 100% derived from sources outside the United
      States. Shipping income derived from sources outside the United States will
      not
      be subject to any United States federal income tax.




In
      the
      absence of exemption from tax under Section 883, the Company’s gross United
      States source shipping income would be subject to a 4% tax imposed without
      allowance for deductions as described below. The Company has not, nor does
      it
      believe it will, engage in transportation that produces income which is
      considered to be 100% from sources within the United States.




*Exemption
      of operating income from United States federal income taxation*




Under
      Section 883 of the Code and the regulations thereunder, the Company will be
      exempt from United States federal income taxation on its United States source
      shipping income if:




1. it
      is
      organized in a foreign country (the Company’s “country of organization”) that
      grants an “equivalent exemption” to corporations organized in the United States;
      and




2. either







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(A)  more
      than
      50% of the value of its stock is owned, directly or indirectly, by individuals
      who are “residents” of its country of organization or of another foreign country
      that grants an “equivalent exemption” to corporations organized in the United
      States, referred to as the “50% Ownership Test,” or




(B)  its
      stock
      is “primarily and regularly traded on an established securities market” in its
      country of organization, in another country that grants an “equivalent
      exemption” to United States corporations, or in the United States, referred to
      as the “Publicly-Traded Test”.




The
      Marshall Islands, the jurisdiction where the Company and its ship-owning
      subsidiaries are incorporated, grants an “equivalent exemption” to United States
      corporations. Therefore, the Company will be exempt from United States federal
      income taxation with respect to the Company’s United States source shipping
      income if either the 50% Ownership Test or the Publicly-Traded Test is met.
      Following the IPO, it is difficult to satisfy the 50% Ownership Test due to
      the
      widely-held ownership of the Company’s stock.




As
      to the
      Publicly-Traded Test, the regulations under Code Section 883 provide, in
      pertinent part, that stock of a foreign corporation will be considered to be
      “primarily traded” on an established securities market in a country if the
      number of shares of each class of stock that is traded during any taxable year
      on all established securities markets in that country exceeds the number of
      shares in each such class that is traded during that year on established
      securities markets in any other single country. The Company believes that its
      common stock, which is the sole class of its issued and outstanding stock,
      is
“primarily traded” on the New York Stock Exchange.




The
      Publicly-Traded Test also requires that the Company's common stock be "regularly
      traded" on an established securities market. Under the regulations, common
      stock
      is considered to be “regularly traded” on an established securities market if
      one or more classes of the Company’s stock representing more than 50% of its
      outstanding shares, by both total combined voting power of all classes of stock
      entitled to vote and total value, are listed on the market, referred to as
      the
“listing threshold.” The regulations further require that with respect to each
      class of stock relied upon to meet the listing threshold,  (i) such
      class of stock is traded on the market, other than in minimal quantities, on
      at
      least 60 days during the taxable year or 1 / 6 of the
      days in a short taxable year; and (ii) the aggregate number of shares of
      such class of stock traded on such market during the taxable year is at least
      10% of the average number of shares of such class of stock outstanding during
      such year (as appropriately adjusted in the case of a short taxable year).
      The
      Company believes it satisfies the trading frequency and trading volume tests.
      However, even if the Company does not satisfy both tests, the regulations
      provide that the trading frequency and trading volume tests will be deemed
      satisfied if its common stock is traded on an established market in the United
      States and such stock is regularly quoted by dealers making a market in such
      stock. The Company believes this is the case.




Notwithstanding
      the foregoing, a class of the Company’s stock will not be considered to be
“regularly traded” on an established securities market for any taxable year in
      which 50% or more of the vote and value of the outstanding shares of such class
      are owned, actually or constructively under certain stock attribution rules,
      on
      more than half the days during the taxable year by persons who each own 5%
      or
      more of the value of such class of its outstanding stock, referred to as the
“5
      Percent Override Rule.”




In
      order
      to determine the persons who actually or constructively own 5% or more of the
      Company’s stock, or “5% Stockholders,” the Company is permitted to rely on those
      persons that are identified on Schedule 13G and Schedule 13D filings
      with the United States Securities and Exchange Commission, or the SEC, as having
      a 5% or more beneficial interest in its common stock. In addition, an investment
      company identified on a Schedule 13G or Schedule 13D filing which is
      registered under the Investment Company Act of 1940, as amended, will not be
      treated as a 5% Stockholder for such purposes.




In
      the
      event the 5 Percent Override Rule is triggered, the 5 Percent Override Rule
      will
      nevertheless not apply if the Company can establish that among the closely-held
      group of 5% Stockholders, there are sufficient 5% Stockholders that are
      considered to be “qualified stockholders” for purposes of Section 883 to







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preclude
      non-qualified 5% Stockholders in the closely-held group from owning 50% or
      more
      of each class of the Company’s stock for more than half the number of days
      during the taxable year.




OSG
      owns
      approximately 44.5% of the Company’s common stock and is a 5% Stockholder. Based
      on OSG's ownership and our review of the SEC filings discussed above, the
      Company believes that it did satisfy the Publicly-Traded Test during 2005.
      It is
      as yet uncertain whether the Company will satisfy that test for the Company's
      2006 taxable year.




In
      any
      year that the Company does not satisfy the Publicly-Traded Test and therefore
      is
      subject to the 5 Percent Override Rule or the 50% Ownership Test, the Company
      would have to satisfy certain substantiation requirements regarding the identity
      of its stockholders in order to qualify for the Section 883 exemption.
      These requirements are onerous and there is no assurance that the Company would
      be able to satisfy them.




To
      the
      extent the benefits of Section 883 are unavailable, the Company’s United
      States source shipping income, to the extent not considered to be “effectively
      connected” with the conduct of a United States trade or business, as described
      below, would be subject to a 4% tax imposed by Section 887 of the Code on a
      gross basis, without the benefit of deductions. Since under the sourcing rules
      described above, no more than 50% of the Company’s shipping income would be
      treated as being United States source shipping income, the maximum effective
      rate of United States federal income tax on its shipping income would never
      exceed 2% under the 4% gross basis tax regime.




To
      the
      extent the benefits of the Section 883 exemption are unavailable and the
      Company’s United States source shipping income is considered to be “effectively
      connected” with the conduct of a United States trade or business, as described
      below, any such “effectively connected” United States source shipping income,
      net of applicable deductions, would be subject to the United States federal
      corporate income tax currently imposed at rates of up to 35%. In addition,
      the
      Company may be subject to the 30% “branch profits” taxes on earnings effectively
      connected with the conduct of such trade or business, as determined after
      allowance for certain adjustments, and on certain interest paid or deemed paid
      attributable to the conduct of its United States trade or business.




The
      Company’s United States source shipping income would be considered “effectively
      connected” with the conduct of a United States trade or business only
      if:




·
            the
                Company had, or was considered to have, a fixed place of business
                in the
                United States involved in the earning of United States source shipping
                income; and




·
            substantially
                all of the Company’s United States source shipping income was attributable
                to regularly scheduled transportation, such as the operation of a
                vessel
                that followed a published schedule with repeated sailings at regular
                intervals between the same points for voyages that begin or end in
                the
                United States.




The
      Company does not have, nor will it permit circumstances that would result in
      having, any vessel sailing to or from the United States on a regularly scheduled
      basis. Based on the foregoing and on the expected mode of the Company’s shipping
      operations and other activities, the Company believes that none of the Company’s
      United States source shipping income is or will be “effectively connected” with
      the conduct of a United States trade or business.




*United
      States taxation of gain on sale of vessels*




Regardless
      of whether the Company qualifies for exemption under Section 883, it will
      not be subject to United States federal income taxation with respect to gain
      realized on a sale of a vessel, provided the sale is considered to occur outside
      of the United States under United States federal income tax principles. In
      general, a sale of a vessel will be considered to occur outside of the United
      States for this purpose if title to the vessel, and risk of loss with respect
      to
      the vessel, pass to the buyer outside of the United States. It is expected
      that
      any sale of a vessel will be considered to occur outside of the United
      States.







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**United
      States Federal Income Taxation of “United States Holders”**




As
      used
      herein, the term “United States Holder” means a beneficial owner of common stock
      that




·
            is
                an individual United States citizen or resident, a United States
                corporation or other United States entity taxable as a corporation,
                an
                estate the income of which is subject to United States federal income
                taxation regardless of its source, or a trust if a court within the
                United
                States is able to exercise primary jurisdiction over the administration
                of
                the trust and one or more United States persons have the authority
                to
                control all substantial decisions of the
                trust,




·
            owns
                the Company’s common stock as a capital asset,
                and




·
            owns
                less than 10% of the Company’s common stock for United States federal
                income tax purposes.




If
      a
      partnership holds the Company’s common stock, the tax treatment of a partner
      will generally depend upon the status of the partner and upon the activities
      of
      the partnership. If you are a partner in a partnership holding the Company’s
      common stock, we suggest that you consult your tax advisor.




*Distributions*




Subject
      to the discussion of passive foreign investment companies (“PFICs”) below, any
      distributions made by the Company with respect to its common stock to a United
      States Holder will generally constitute dividends to the extent of its current
      or accumulated earnings and profits, as determined under United States federal
      income tax principles. Distributions in excess of such earnings and profits
      will
      be treated first as a nontaxable return of capital to the extent of the United
      States Holder’s tax basis in his common stock on a dollar-for-dollar basis and
      thereafter as capital gain. Because the Company is not a United States
      corporation, United States Holders that are corporations will not be entitled
      to
      claim a dividends received deduction with respect to any distributions they
      receive from the Company. Dividends paid with respect to the Company’s common
      stock will generally be treated as “passive income” for purposes of computing
      allowable foreign tax credits for United States foreign tax credit
      purposes.




Dividends
      paid on the Company’s common stock to a United States Holder who is an
      individual, trust or estate (a “United States Non-Corporate Holder”) will
      generally be treated as “qualified dividend income” that is taxable to such
      United States Non-Corporate Holder at a preferential tax rate of 15% (through
      2008) provided that (1) the common stock is readily tradable on an
      established securities market in the United States (such as the New York Stock
      Exchange); (2) the Company is not a PFIC for the taxable year during which
      the dividend is paid or the immediately preceding taxable year (see discussion
      below); (3) the United States Non-Corporate Holder has owned the common
      stock for more than 60 days in the 121-day period beginning 60 days
      before the date on which the common stock becomes ex-dividend; and (4) the
      United States Non-Corporate Holder is not under an obligation to make related
      payments with respect to positions in substantially similar or related property.
      Special rules may apply to any “extraordinary dividend”—generally, a dividend in
      an amount which is equal to or in excess of 10% of a stockholder’s adjusted
      basis in a share of common stock—paid by the Company. If the Company pays an
“extraordinary dividend” on its common stock that is treated as “qualified
      dividend income,” then any loss derived by a United States Non-Corporate Holder
      from the sale or exchange of such common stock will be treated as long-term
      capital loss to the extent of such dividend. There is no assurance that any
      dividends paid on the Company’s common stock will be eligible for these
      preferential rates in the hands of a United States Non-Corporate Holder,
      although the Company believes that they will be so eligible provided that it
      is
      not a PFIC, as discussed below. Any dividends out of earnings and profits the
      Company pays which are not eligible for these preferential rates will be taxed
      as ordinary income to a United States Non-Corporate Holder.




In
      addition, even if we are not a PFIC, under proposed legislation, dividends
      of a
      corporation incorporated in a country without a “comprehensive income tax
      system” paid to United States Non-Corporate Holders would not be eligible for
      the 15% tax rate. Although the term “comprehensive income tax system” is not
      defined in the proposed legislation, we believe this rule would apply to us
      because we are incorporated in the Marshall Islands.







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*Sale,
      exchange or other disposition of common stock*




Provided
      that the Company is not a PFIC for any taxable year, a United States Holder
      generally will recognize taxable gain or loss upon a sale, exchange or other
      disposition of the Company’s common stock in an amount equal to the difference
      between the amount realized by the United States Holder from such sale, exchange
      or other disposition and the United States Holder’s tax basis in such stock.
      Such gain or loss will be treated as long-term capital gain or loss if the
      United States Holder’s holding period is greater than one year at the time of
      the sale, exchange or other disposition. Such capital gain or loss will
      generally be treated as United States source income or loss, as applicable,
      for
      United States foreign tax credit purposes. Long-term capital gains of United
      States Non-Corporate Holders are eligible for reduced rates of taxation. A
      United States Holder’s ability to deduct capital losses is subject to certain
      limitations.




*PFIC
      status and significant tax consequences*




Special
      United States federal income tax rules apply to a United States Holder that
      holds stock in a foreign corporation classified as a PFIC for United States
      federal income tax purposes. In particular, United States Non-Corporate Holders
      will not be eligible for the 15% tax rate on qualified dividends. In general,
      the Company will be treated as a PFIC with respect to a United States Holder
      if,
      for any taxable year in which such holder held its common stock,
      either




·
            at
                least 75% of the Company’s gross income for such taxable year consists of
                passive income (e.g., dividends, interest, capital gains and rents
                derived
                other than in the active conduct of a rental business),
                or




·
            at
                least 50% of the average value of the Company’s assets during such taxable
                year produce, or are held for the production of, passive
                income.




Income
      earned, or deemed earned, by the Company in connection with the performance
      of
      services would not constitute passive income. By contrast, rental income would
      generally constitute “passive income” unless the Company were treated under
      specific rules as deriving its rental income in the active conduct of a trade
      or
      business.




Cravath,
      Swaine & Moore, LLP ("Tax Counsel") provided the Company with an opinion
      dated October 18, 2005 stating that it was more likely than not that the Company
      was not currently a PFIC. This opinion was based on the Company’s operations and
      certain representations made by OSG, including representations that the terms
      of
      each ship management agreement and time charter, taken as a whole, as well
      as
      certain specific terms in each agreement, were in accordance with normal
      commercial practice for agreements made at arm’s length between unrelated
      parties. Based on the foregoing, Tax Counsel concluded that, although there
      was
      no legal authority directly on point, the gross income the Company derived
      from
      the time chartering activities of its subsidiaries more likely than not
      constituted services income, rather than rental income. Consequently, such
      income more likely than not did not constitute passive income, and the assets
      that the Company or its wholly owned subsidiaries owned and operated in
      connection with the production of such income, in particular, the vessels,
      more
      likely than not did not constitute passive assets for purposes of determining
      whether the Company was a PFIC. Tax Counsel stated that there was legal
      authority supporting its position, consisting of case law and Internal Revenue
      Service pronouncements, concerning the characterization of income derived from
      time charters as services income for other tax purposes. However, there was
      no
      legal authority specifically relating to the statutory provisions governing
      PFICs or relating to circumstances substantially similar to that of the Company.
      In addition, the opinion of Tax Counsel was based on representations of OSG
      that
      were not reviewed by the IRS. As a result, the Internal Revenue Service or
      a
      court could disagree with the Company’s position. No assurance can be given that
      this result will not occur. The Company has not materially changed its
      operations since the time the opinion was given, and believes that the
      representations given to Tax Counsel at the time of the opinion remain true
      and
      accurate. The Company therefore believes that it has not been, and is not
      currently, a PFIC. In addition, although the Company intends to conduct its
      affairs in a manner to avoid, to the extent possible, being classified as a
      PFIC
      with respect to any taxable year, the Company cannot assure you that the nature
      of its operations will not change in the future, or that it can avoid PFIC
      status in the future.







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As
      discussed more fully below, if the Company were treated as a PFIC for any
      taxable year, a United States Holder would be subject to different taxation
      rules depending on whether the United States Holder made an election to treat
      the Company as a “Qualified Electing Fund,” which election is referred to as a
“QEF election.” As an alternative to making a QEF election, a United States
      Holder should be able to make a “mark-to-market” election with respect to the
      Company’s common stock, as discussed below.




*Taxation
      of United States holders making a timely QEF election*




If
      the
      Company were a PFIC and a United States Holder made a timely QEF election,
      which
      United States Holder is referred to as an “Electing Holder,” the Electing Holder
      would report each year for United States federal income tax purposes its pro
      rata share of the Company’s ordinary earnings and the Company’s net capital gain
      (which gain shall not exceed its earnings and profits for the taxable year),
      if
      any, for the Company’s taxable year that ends with or within the taxable year of
      the Electing Holder, regardless of whether or not distributions were received
      from the Company by the Electing Holder. Any such ordinary income would not
      be
      eligible for the preferential tax rates applicable to qualified dividend income
      as discussed above. The Electing Holder’s adjusted tax basis in the common stock
      would be increased to reflect taxed but undistributed earnings and profits.
      Distributions of earnings and profits that had been previously taxed would,
      pursuant to this election, result in a corresponding reduction in the adjusted
      tax basis in the common stock and would not be taxed again once distributed.
      An
      Electing Holder would not, however, be entitled to a deduction for its pro
      rata
      share of any losses that the Company incurred with respect to any year. An
      Electing Holder would generally recognize capital gain or loss on the sale,
      exchange or other disposition of the Company’s common stock. A United States
      Holder would make a QEF election with respect to any year that the Company
      is a
      PFIC by filing one copy of IRS Form 8621 with his United States federal
      income tax return. If the Company were treated as a PFIC for any taxable year,
      it would provide each United States Holder with all necessary information in
      order to make the QEF election described above. Even if a United States Holder
      makes a QEF election for a taxable year of the Company, if the Company were
      a
      PFIC for a prior taxable year during which the holder was a stockholder and
      for
      which the holder did not make a timely QEF election, different and more adverse
      tax consequences would apply.




*Taxation
      of United States holders making a “mark-to-market” election*




Alternatively,
      if the Company were treated as a PFIC for any taxable year and, as the Company
      believes, its stock is treated as “marketable stock,” a United States Holder
      would be allowed to make a “mark-to-market” election with respect to the
      Company’s common stock, provided the United States Holder completes and files
      IRS Form 8621 in accordance with the relevant instructions and related
      Treasury regulations. If that election is made, the United States Holder
      generally would include as ordinary income in each taxable year the excess,
      if
      any, of the fair market value of the common stock at the end of the taxable
      year
      over such holder’s adjusted tax basis in the common stock. The United States
      Holder would also be permitted an ordinary loss in respect of the excess, if
      any, of the United States Holder’s adjusted tax basis in the common stock over
      its fair market value at the end of the taxable year, but only to the extent
      of
      the net amount previously included in income as a result of the mark-to-market
      election. A United States Holder’s tax basis in his common stock would be
      adjusted to reflect any such income or loss amount. Gain realized on the sale,
      exchange or other disposition of the Company’s common stock would be treated as
      ordinary income, and any loss realized on the sale, exchange or other
      disposition of the common stock would be treated as ordinary loss to the extent
      that such loss does not exceed the net mark-to-market gains previously included
      by the United States Holder in income.




*Taxation
      of United States holders not making a timely QEF or mark-to-market
      election*




Finally,
      if the Company were treated as a PFIC for any taxable year, a United States
      Holder who does not make either a QEF election or a “mark-to-market” election
      for that year, referred to as a “Non-Electing Holder,” would be subject to
      special rules with respect to (1) any excess distribution (i.e., the
      portion of any distributions received by the Non-Electing Holder on the
      Company’s common stock in a taxable year in excess of 125% of the average annual
      distributions received by the Non-Electing Holder in the three preceding taxable
      years, or, if shorter, the Non-Electing Holder’s holding period for the common
      stock),







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and
      (2) any gain realized on the sale, exchange or other disposition of the
      Company’s common stock. Under these special rules (the “Excess
      Distribution Regime”):




·
            the
                excess distribution or gain would be allocated ratably over the
                Non-Electing Holder’s aggregate holding period for the common
                stock;




·
            the
                amount allocated to the current taxable year and any taxable year
                prior to
                the first taxable year in which the Company was a PFIC during the
                Non-Electing Holder’s holding period, would be taxed as ordinary income;
                and




·
            the
                amount allocated to each of the other taxable years would be subject
                to
                tax at the highest rate of tax in effect for the applicable class
                of
                taxpayer for that year, and an interest charge for the deemed deferral
                benefit would be imposed with respect to the resulting tax attributable
                to
                each such other taxable year.




These
      penalties would not apply to a qualified pension, profit sharing or other
      retirement trust or other tax-exempt organization that did not borrow money
      or
      otherwise utilize leverage in connection with its acquisition of the Company’s
      common stock. If the Company were a PFIC and a Non-Electing Holder who was
      an
      individual died while owning the Company’s common stock, such holder’s successor
      generally would not receive a step-up in tax basis with respect to such stock.
      Certain of these rules would apply to a United States Holder who made a QEF
      election for one of the Company’s taxable years if it were a PFIC in a prior
      taxable year during which the holder was a stockholder and for which the holder
      did not make a QEF election.




**United
      States Federal Income Taxation of “Non-United States
      Holders”**




A
      beneficial owner of common stock (other than a partnership) that is not a United
      States Holder is referred to herein as a “Non-United States
      Holder.”




*Dividends
      on common stock*




Non-United
      States Holders generally will not be subject to United States federal income
      tax
      or withholding tax on dividends received from the Company with respect to its
      common stock, unless that income is effectively connected with the Non-United
      States Holder’s conduct of a trade or business in the United States. If the
      Non-United States Holder is entitled to the benefits of a United States income
      tax treaty with respect to those dividends, that income is taxable only if
      it is
      attributable to a permanent establishment maintained by the Non-United States
      Holder in the United States.




*Sale,
      exchange or other disposition of common stock*




Non-United
      States Holders generally will not be subject to United States federal income
      tax
      or withholding tax on any gain realized upon the sale, exchange or other
      disposition of the Company’s common stock, unless:




·
            the
                gain is effectively connected with the Non-United States Holder’s conduct
                of a trade or business in the United States (and, if the Non-United
                States
                Holder is entitled to the benefits of an income tax treaty with respect
                to
                that gain, that gain is attributable to a permanent establishment
                maintained by the Non-United States Holder in the United States);
                or




·
            the
                Non-United States Holder is an individual who is present in the United
                States for 183 days or more during the taxable year of disposition
                and other conditions are met.




If
      the
      Non-United States Holder is engaged in a United States trade or business for
      United States federal income tax purposes, the income from the common stock,
      including dividends and the gain from the sale, exchange or other disposition
      of
      the stock, that is effectively connected with the conduct of that trade or
      business will generally be subject to regular United States federal income
      tax
      in the same manner as discussed in the previous section relating to the taxation
      of United States Holders. In addition, if you are a corporate Non-United States
      Holder, your earnings and profits that are attributable to the effectively
      connected income, which are subject to certain adjustments, may be subject
      to an
      additional branch profits tax at a rate of 30%, or at a lower rate as may be
      specified by an applicable income tax treaty.





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**Backup
      Withholding and Information Reporting**




In
      general, dividend payments, or other taxable distributions, made within the
      United States to you will be subject to information reporting requirements
      if
      you are a non-corporate United States Holder. Such payments or distributions
      may
      also be subject to backup withholding tax if you are a non-corporate United
      States Holder and you:




·
            fail
                to provide an accurate taxpayer identification
                number;




·
            are
                notified by the Internal Revenue Service that you have failed to
                report
                all interest or dividends required to be shown on your federal income
                tax
                returns; or




·
            in
                certain circumstances, fail to comply with applicable certification
                requirements.




Non-United
      States Holders may be required to establish their exemption from information
      reporting and backup withholding by certifying their status on IRS
      Form W-8BEN, W-8ECI or W-8IMY, as applicable.




If
      you
      are a Non-United States Holder and you sell your common stock to or through
      a
      United States office of a broker, the payment of the proceeds is subject to
      both
      United States backup withholding and information reporting unless you certify
      that you are a non-United States person, under penalties of perjury, or you
      otherwise establish an exemption. If you sell your common stock through a
      non-United States office of a non-United States broker and the sales proceeds
      are paid to you outside the United States, then information reporting and backup
      withholding generally will not apply to that payment. However, United States
      information reporting requirements, but not backup withholding, will apply
      to a
      payment of sales proceeds, even if that payment is made to you outside the
      United States, if you sell your common stock through a non-United States office
      of a broker that is a United States person or has some other contacts with
      the
      United States. Such information reporting requirements will not apply, however,
      if the broker has documentary evidence in its records that you are a non-United
      States person and certain other conditions are met, or you otherwise establish
      an exemption.




Backup
      withholding tax is not an additional tax. Rather, you generally may obtain
      a
      refund of any amounts withheld under backup withholding rules that exceed your
      income tax liability by filing a refund claim with the Internal Revenue
      Service.




**F.**
            **DIVIDENDS AND PAYING
                AGENTS**




Not
      Applicable.




**G.**
            **STATEMENT OF EXPERTS**




Not
      Applicable.




**H.**
            **DOCUMENTS ON DISPLAY**




The
      descriptions of each contract, agreement or other document filed as an exhibit
      to this report are summaries only and do not purport to be complete. Each such
      description is qualified in its entirety by reference to such exhibit for a
      more
      complete description of the matter involved.




We
      are
      subject to the informational requirements of the Exchange Act and in accordance
      therewith will file reports and other information with the Securities and
      Exchange Commission. Such reports and other information can be inspected and
      copied at the public reference facilities maintained by the Securities and
      Exchange Commission at its principal offices at 100-F Street, N.E., Washington,
      D.C. 20549. Copies of such information may be obtained from the Public Reference
      Section of the Securities and Exchange Commission at 100-F Street, N.E.,
      Washington, D.C. 20549 at prescribed rates. The Commission also







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maintains
      a World Wide Web site (http://www.sec.gov) that contains reports, proxy and
      information statements and other information regarding registrants that file
      electronically with the Securities and Exchange Commission.




As
      a
      foreign private issuer, we are not subject to the proxy rules under Section
      14
      of the Exchange Act and our officers, directors and principal shareholders
      are
      not subject to the insider short-swing profit disclosure and recovery provisions
      under Section 16 of the Exchange Act.




As
      a
      foreign private issuer, we are not required to publish financial statements
      as
      frequently or as promptly as United States companies; however, we intend to
      furnish holders of our common stock with reports annually containing
      consolidated financial statements audited by independent accountants. We also
      intend to file quarterly unaudited financial statements under cover of Form
      6-K.




**I.**
            **SUBSIDIARY INFORMATION**




Not
      Applicable.




**ITEM
              11.**
            **QUANTITATIVE
                AND QUALITATIVE DISCLOSURES ABOUT MARKET
                RISK**




See
“Item
      5. Operating and Financial Review and Prospects.”




**ITEM
              12.**
            **DESCRIPTION
                OF
                SECURITIES OTHER THAN EQUITY
                SECURITIES**




Not
      Applicable.




PART
      II




**ITEM
              13.**
            **DEFAULTS,
                DIVIDEND ARREARAGES AND
                DELINQUENCIES**




None.




**ITEM
              14.**
            **MATERIAL
                MODIFICATION TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
                PROCEEDS**




**Material
      Modification to the Rights of Security Holders**




Not
      Applicable.




**Use
      of Proceeds**




In
      2005,
      we registered our common stock in connection with our IPO under the Securities
      Act of 1933, as amended. Our Registration Statement on Form F-1 (Registration
      No. 333-128460) in connection with our IPO was declared effective by the SEC
      on
      October 12, 2005. The offering commenced as of October 13, 2005 and was
      completed on October 18, 2005. The offering did not terminate before any
      securities were sold. As of the date of the filing of this report, the offering
      has terminated. An aggregate of 16,000,000 shares sold by us and 648,500 shares
      sold by certain of our shareholders in connection with the underwriters’
exercise of their over-allotment option. The managing underwriters of the
      offering were UBS Securities LLC and Merrill Lynch, Pierce, Fenner & Smith
      Incorporated.




All
      16,648,500 common stock registered in the offering were sold at the IPO price
      of
      $12.00 per share. The aggregate purchase price of the offering was approximately
      $199.8 million, of which $192 million represented proceeds from an issuance
      and
      sale of 16,000,000 common stock by us and $7.8 million represented proceeds
      from
      the sale of 648,500 shares by the selling shareholder. We did not receive any
      proceeds from the sale of the shares from the selling shareholder. We paid
      underwriting discounts and commission of approximately $11.5 million in
      connection with the offering and other expense to third parties of
      approximately$2.3 milllion, resulting in net proceeds to us of approximately
      178.2 million. The selling shareholder paid underwriting discounts and
      commissions of approximately $466,920. No payments







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of
      offering-related expenses were made by us directly or indirectly (1) to any
      of
      our directors, officers or their associates, (2) to any persons owning 10%
      or
      more of any class of our equity securities or (3) to any of our
      affiliates.




We
      used
      the entire net proceeds, together with borrowings of $236 million under our
      credit facility (before debt issuance costs of approximately $1.6 million)
      and
      issuance of 13,999,900 shares of common stock, to acquire from subsidiaries
      of
      OSG our fleet of vessels. The sellers of the vessels are affiliates of persons
      owning 10% or more of our common stock and, at the time of the offering, our
      founder shares.




There
      has
      been no material change in the planned use of proceeds from our initial public
      offering as described in our final report files with the SEC pursuant to Rule
      424(b).




**ITEM
              15.**
            **CONTROLS
                AND
                PROCEDURES**




**A.**
            **DISCLOSURE CONTROLS AND
                PROCEDURES**




As
      of the
      end of the period covered by this annual report (the “Evaluation Date”), the
      Company conducted an evaluation (under the supervision and with the
      participation of the Company’s management, including its chief executive officer
      and its chief financial officer, pursuant to Rule 13a-15 of the Exchange Act
      of
      the effectiveness of the design and operation of the Company’s disclosure
      controls and procedures (as defined in Exchange Act Rules 13a-14(c) and
      15d-14(c)). Based on this evaluation, the Company’s chief executive officer and
      its chief financial officer concluded that as of the Evaluation Date, the
      Company’s disclosure controls and procedures were effective to provide
      reasonable assurance that material information required to be disclosed by
      the
      Company in reports it files or submits under the Exchange Act is recorded,
      processed, summarized and reported within the time periods specified in the
      rules and forms of the Securities and Exchange Commission.




**B.**
            **MANAGEMENT’S
                ANNUAL REPORT ON INTERNAL CONTROL OVER
                REPORTING**




Not
      Applicable.




**C.**
            **ATTESTATION
                REPORT OF THE REGISTERED PUBLIC ACCOUNTING
                FIRM**




Not
      Applicable.




**D.**
            **CHANGES
                IN INTERNAL CONTROL OVER
                REPORTING**




There
      were no significant changes in the Company’s internal control over financial
      reporting identified in connection with the evaluation performed above that
      occurred during the period covered by this annual report that could
      significantly affect the Company’s disclosure controls and procedures subsequent
      to the Evaluation Date, nor any significant deficiencies or material weaknesses
      in such disclosure controls and procedures requiring corrective actions. As
      a
      result, no corrective actions were taken.




**ITEM
      16A.** **AUDIT
      COMMITTEE FINANCIAL EXPERT**




The
      Company’s board of directors has determined that Randee Day is an “audit
      committee financial expert” as defined in the instructions for Item 16A of Form
      20-F. Ms. Day is “independent,” as determined in accordance with the rules of
      the New York Stock Exchange.




**ITEM
      16B.** **CODE
      OF ETHICS**




The
      Company has adopted a Code of Business Conduct and Ethics that applies to all
      employees including its Chief Executive Office, Chief Financial Officer and
      its
      principal accounting officer. The Company has posted this Code of Ethics to
      its
      Web site, www.dhtankers.com, where it is publicly available. In addition, the
      Company will provide a printed copy of its Code of Business Conduct and Ethics
      to its shareholders upon request.





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**ITEM
      16C.** **PRINCIPAL
      ACCOUNTANT FEES AND SERVICES**




The
      following table shows the fees for professional services provided by Ernst
&
Young LLP, our Independent Registered Public Accounting Firm, for fiscal
      2005.




**Fees**
            
            **2005**Audit
                Fees (1)
            
            $
            240,000Audit-Related
                Fees (2)
            
            
            287,500Total
            
            $
            527,500





(1)
            Audit
                fees represent fees for professional services provided in connection
                with
                the audit of DHT’s consolidated financial statements as of and for the
                period ended December 31, 2005 and OSG Crude’s combined carve-out
                financial statements for the 2005 period.(2)
            Audit-related
                fees consisted of accounting consultations related to accounting,
                financial reporting or disclosure matters not classified as "Audit
                services" and assistance with preparation of the registration statement
                and carve-out financial statements for 2002, 2003 and 2004 relating
                to the
                public offering by DHT. These services were performed during the
                period
                from January 1 to October 17, 2005.




The
      Audit
      Committee has the authority to pre-approve permissible audit-related and
      non-audit services to be performed by DHT’s Independent Registered Public
      Accounting Firm and associated fees. Engagements for proposed services either
      may be separately pre-approved by the Audit Committee or entered into pursuant
      to detailed pre-approval policies and procedures established by the Audit
      Committee, as long as the Audit Committee is informed on a timely basis of
      any
      engagement entered into on that basis. The Audit Committee separately
      pre-approved all engagements and fees paid to DHT’s Independent Registered
      Public Accounting Firm in fiscal 2005.




**ITEM
      16D.** **EXEMPTIONS
      FROM THE LISTING STANDARDS FOR AUDIT COMMITTEE**




None.




**ITEM
      16E.** **PURCHASES
      OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED** **PURCHASERS**




None




PART
      III




**ITEM
              17.**
            **FINANCIAL
                STATEMENTS**




Not
      Applicable.




**ITEM
              18.**
            **FINANCIAL
                STATEMENTS**




See
      pages
      F-1 through F-15.




**ITEM
              19.**
            **EXHIBITS**




The
      exhibits listed in the Exhibit Index are filed herewith in response to this
      Item.







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**SIGNATURES**




The
      registrant hereby certifies that it meets all the requirements for filing on
      Form 20-F and that it has duly caused and authorized the undersigned to sign
      this annual report on its behalf.




Double
              Hull Tankers, Inc.By/s/
              OLE JACOB DIESENName:
                Ole Jacob Diesen
              Title:
                Chief Executive Officer








73








EXHIBITS1.1*
            
            Amended
                and Restated Articles of Incorporation of Double Hull
                Tankers, Inc.1.2*
            
            Bylaws
                of Double Hull Tankers, Inc.4.1*
            
            Form
                of Common Share Certificate4.2*
            
            Registration
                Rights Agreement10.1*
            
            Form
                of Credit Agreement10.2.1*
            
            Memorandum
                of Agreement –*Overseas
                Ann*10.2.2*
            
            Memorandum
                of Agreement –*Overseas
                Chris*10.2.3*
            
            Memorandum
                of Agreement –*Regal
                Unity*10.2.4*
            
            Memorandum
                of Agreement –*Overseas
                Cathy*10.2.5*
            
            Memorandum
                of Agreement –*Overseas
                Sophie*10.2.6*
            
            Memorandum
                of Agreement –*Rebecca*10.2.7*
            
            Memorandum
                of Agreement –*Ania*10.3.1*
            
            Time
                Charter –*Overseas
                Ann*10.3.2*
            
            Time
                Charter –*Overseas
                Chris*10.3.3*
            
            Time
                Charter –*Regal
                Unity*10.3.4*
            
            Time
                Charter –*Overseas
                Cathy*10.3.5*
            
            Time
                Charter –*Overseas
                Sophie*10.3.6*
            
            Time
                Charter –*Rebecca*10.3.7*
            
            Time
                Charter –*Ania*10.4.1*
            
            Ship
                Management Agreement –*Overseas
                Ann*10.4.2*
            
            Ship
                Management Agreement –*Overseas
                Chris*10.4.3*
            
            Ship
                Management Agreement –*Regal
                Unity*10.4.4*
            
            Ship
                Management Agreement –*Overseas
                Cathy*10.4.5*
            
            Ship
                Management Agreement –*Overseas
                Sophie*10.4.6*
            
            Ship
                Management Agreement –*Rebecca*10.4.7*
            
            Ship
                Management Agreement –*Ania*10.5*
            
            Charter
                Framework Agreement






74






10.6*
            
            OSG
                Guaranty of Charterers’ Payments under Charters and Charter Framework
                Agreement10.7*
            
            Double
                Hull Tankers, Inc. Guaranty of Vessel Owners’ Obligations under
                Management Agreement10.8*
            
            Double
                Hull Tankers, Inc. Guaranty of Vessel Owners’ Obligations under
                Charters10.9*
            
            Form
                of Indemnity Agreement among OSG, OIN and certain subsidiaries of
                the
                Company related to existing recommendations.10.10
            
            Employment
                Agreement of Ole Jacob Diesen10.10.1*
            
            Indemnification
                Agreement for Ole Jacob Diesen10.11
            
            Employment
                Agreement of Eirik Ubøe10.11.1
            
            Indemnification
                Agreement for Eirik Ubøe10.12*
            
            2005
                Incentive Compensation Plan12.1
            
            Certification
                of Chief Executive Officer required by Rule 13a-14(a) (17 CFR
                240.13a-14(a)) or Rule 15d-14(a) (17 CFR 240.15d-14(b))12.2
            
            Certification
                of Chief Financial Officer required by Rule 13a-14(a) (17 CFR
                240.13a-14(a)) or Rule 15d-14(a) (17 CFR 240.15d-14(b))13.1
            
            Certification
                furnished pursuant to Rule 13a-14(b) (17 CFR 240.13a-14(b)) or Rule
                15d-14(b) (17 CFR 240.15d-14(b)) and Section 1350 of Chapter 63 of
                Title
                1814.1
            
            Consent
                of Independent Registered Public Accounting Firm


*
      Incorporated herein by reference from the Company’s Registration Statement on
      Form F-1 (File No. 333 -128460).





74





**Double
      Hull Tankers, Inc.**


**Index
      to Consolidated Financial Statements**





**Page****Double
                Hull Tankers, Inc. Consolidated and Predecessor Combined Carve—Out
                Financial Statements**Reports
                of Independent Registered Public Accounting Firm
            
            **F-2**





Consolidated
                Balance Sheet as of December 31, 2005 (successor) and Predecessor
                Combined
                Carve-Out Balance Sheet as of December 31, 2004
            
            **F-4**





Consolidated
                Statement of Operations for the period October 18, 2005 to December
                31,
                2005 (successor) and Predecessor Combined Carve-Out Statements of
                Operations for the period January 1, 2005 to October 17, 2005 and
                the
                years ended December 31, 2004 and 2003
            
            **F-5**





Consolidated
                Statement of Changes in Stockholders’ Equity for the period October 18,
                2005 to December 31, 2005 (successor) and Predecessor Combined Carve-Out
                Statements of Changes in Stockholders’ Equity for the period January 1,
                2005 to October 17, 2005 and the years ended December 31, 2004 and
                2003
            
            **F-6**





Consolidated
                Statement of Cash Flows for the period October 18, 2005 to December
                31,
                2005 (successor) and Predecessor Combined Carve-Out Statements of
                Cash
                Flows for the period January 1, 2005 to October 17, 2005 and the
                years
                ended December 31, 2004 and 2003
            
            **F-7**





Notes
                to Double Hull Tankers, Inc. Consolidated and Predecessor Combined
                Carve-Out Financial Statements
            
            **F-8**








**F-1**






**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**




The
      Board
      of Direcors and Stockholders


Double
      Hull Tankers, Inc.




We
      have
      audited the accompanying consolidated balance sheet of Double Hull Tankers,
      Inc.
      and subsidiaries (the Company) as of December 31, 2005 and the related
      consolidated statements of operations, cash flows, and changes in stockholders'
      equity for the period October 18, 2005 (commencement of operations) to December
      31, 2005. These financial statements are the responsibility of the Company's
      management. Our responsibility is to express an opinion on these financial
      statements based on our audit.




We
      conducted our audit in accordance with standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. We were not engaged to perform
      an
      audit of the Company’s internal control over financial reporting. Our audit
      included consideration of internal control over financial reporting as a basis
      for designing audit procedures that are appropriate in the circumstances, but
      not for the purpose of expressing an opinion on the effectiveness of the
      Company’s internal control over financial reporting. Accordingly, we express no
      such opinion. An audit also includes examining, on a test basis, evidence
      supporting the amounts and disclosures in the financial statements, assessing
      the accounting principles used and significant estimates made by management,
      and
      evaluating the overall financial statement presentation. We believe that our
      audit provides a reasonable basis for our opinion.




In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the consolidated financial position of Double Hull Tankers,
      Inc. and subsidiaries at December 31, 2005, and the consolidated results of
      their operations and their cash flows for the period October 18, 2005
      (commencement of operations) to December 31, 2005, in conformity with U.S.
      generally accepted accounting principles.




New
      York,
      NY


March
      31,
      2006






/s/
              ERNST & YOUNG LLP








**F-2**






**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**




The
      Board
      of Directors and Stockholders


Overseas
      Shipholding Group, Inc.




We
      have
      audited the accompanying predecessor combined carve-out balance sheet of OSG
      Crude as of December 31, 2004 and the related predecessor combined carve-out
      statements of operations, cash flows, and changes in stockholders' equity for
      the period January 1, 2005 to October 17, 2005 and the years ended December
      31,
      2004 and 2003. These predecessor combined carve-out financial statements are
      the
      responsibility of OSG Crude’s management. Our responsibility is to express an
      opinion on these combined financial statements based on our audits.




We
      conducted our audits in accordance with standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. We were not engaged to perform
      an
      audit of OSG Crude’s internal control over financial reporting. Our audit
      included consideration of internal control over financial reporting as a basis
      for designing audit procedures that are appropriate in the circumstances, but
      not for the purpose of expressing an opinion on the effectiveness of OSG Crude’s
      internal control over financial reporting. Accordingly, we express no such
      opinion. An audit also includes examining, on a test basis, evidence supporting
      the amounts and disclosures in the financial statements, assessing the
      accounting principles used and significant estimates made by management, and
      evaluating the overall financial statement presentation. We believe that our
      audit provides a reasonable basis for our opinion.




In
      our
      opinion, the predecessor combined carve-out financial statements referred to
      above present fairly, in all material respects, the financial position of OSG
      Crude at December 31, 2004, and the results of their operations and their cash
      flows for the period January 1, 2005 to October 17, 2005 and the years ended
      December 31, 2004 and 2003, in conformity with U.S. generally accepted
      accounting principles.




New
      York,
      NY


March
      31,
      2006




/s/
                ERNST & YOUNG LLP





**F-3**


Double
        Hull Tankers, Inc. and OSG Crude


**Double
      Hull Tankers, Inc. Consolidated and Predecessor Combined Carve-out Balance
      Sheets**


**as
      of December 31, 2005 and 2004**





**December 31,**
            
            
            **December 31,****2005**
            
            
            **2004****Successor**
            
            
            **Predecessor****(Dollars
                in thousands, except share and per share amounts)****ASSETS****Current
                assets**Cash
                and cash equivalents
            
            $
            15,893
            
            
            $
            —Voyage
                receivables from OSG
            
            
            5,506
            
            
            
            27,460Prepaid
                expenses
            
            
            281
            
            
            
            911Prepaid
                technical management fee to OSG
            
            
            1,324
            
            
            
            —**Total
                current assets**
            
            
            23,004
            
            
            
            28,371Vessels,
                net of accumulated depreciation
            
            
            339,491
            
            
            
            355,571Other
                assets including deferred debt issuance cost
            
            
            1,567
            
            
            
            4,576**Total
                assets**
            
            $
            364,062
            
            
            
            388,518**LIABILITIES
                AND STOCKHOLDERS’ EQUITY****Current
                liabilities**Accounts
                payable and accrued expenses
            
            $
            3,895
            
            
            $
            2,043Unrealized
                loss on interest rate swap
            
            
            807
            
            
            
            —Current
                installment on long term debt
            
            
            —
            
            
            
            5,200Deferred
                shipping revenues
            
            
            6,126
            
            
            
            —**Total
                current liabilities**
            
            
            10,828
            
            
            
            7,243**Long
                term liabilities**Long
                term debt
            
            
            236,000
            
            
            
            84,400Loans
                payable to wholly-owned subsidiary of OSG
            
            
            —
            
            
            
            170,251Deferred
                credits and other liabilities
            
            
            —
            
            
            
            1,826**Stockholders’
                equity**Preferred
                stock ($0.01 par value, 1,000,000 shares authorized, none issued
                or
                outstanding)
            
            
            —
            
            
            
            —Common
                stock ($0.01 par value, 100,000,000 authorized, 30,006,250 shares
                issued
                and outstanding;
              Predecessor:
                no par value; 3,500 shares authorized; 700 shares issued and
                outstanding)
            
            
            300
              
              —
            
            
            
            700Paid-in
                additional capital
            
            
            108,272
            
            
            
            —Retained
                earnings
            
            
            9,469
            
            
            
            125,398Accumulated
                other comprehensive loss
            
            
            (807
            )
            
            
            (1,300
            )**Total
                stockholders’ equity**
            
            
            117,234
            
            
            
            124,798**Total
                liabilities and stockholders’ equity**
            
            $
            364,062
            
            
            $
            388,518





**F-4**


Double
        Hull Tankers, Inc. and OSG Crude


**Double
      Hull Tankers, Inc. Consolidated and Predecessor Combined
      Carve-Out**


**Statements
      of Operations**





**2005**
            
            **Year
                ended December 31,****Successor**
              **October
                18 to December 31**
            
            **Predecessor**
              **January
                1 to October 17**
            
            **Predecessor**
              **2004**
            
            **Predecessor**
              **2003****(Dollars
                in thousands except share and per share amounts)**Shipping
                revenues
            
            $
            20,173
            
            $
            84,134
            
            $
            136,205
            
            $
            66,192Voyage
                Expenses
            
            
            
            
            
            (772
            )
            
            (238
            )
            
            (352
            )Time
                Charter Equivalent Revenues
            
            
            20,173
            
            
            83,362
            
            
            135,967
            
            
            65,840






**Ship
                Operating Expenses:**Vessel
                expenses
            
            
            3,675
            
            
            14,433
            
            
            15,601
            
            
            10,956Depreciation
                and amortization
            
            
            3,478
            
            
            14,462
            
            
            17,762
            
            
            14,692General
                and administrative (Prior to Oct 18 2005: allocated from Overseas
                Shipholding Group, Inc.)
            
            
            746
            
            
            5,759
            
            
            7,269
            
            
            4,828Total
                Ship Operating Expenses
            
            
            7,899
            
            
            34,654
            
            
            40,632
            
            
            30,476Income
                from Vessel Operations
            
            
            12,274
            
            
            48,708
            
            
            95,335
            
            
            35,364





Other
                Income/(Expense)
            
            
            —
            
            
            (1,471
            )
            
            —
            
            
            —Interest
                Expense to a Wholly-owned Subsidiary of OSG
            
            
            
            
            
            (574
            )
            
            (3,411
            )
            
            (2,775
            )Interest
                Income
            
            
            67Interest
                Expense and amortization of deferred debt issuance cost
            
            
            (2,872
            )
            
            (3,022
            )
            
            (5,234
            )
            
            (3,158
            )Income/(Loss)
                before Income Taxes
            
            
            9,469
            
            
            43,641
            
            
            86,690
            
            
            29,431Provision
                for Income Taxes
            
            
            —
            
            
            —
            
            
            —
            
            
            —Net
                Income/(Loss)
            
            $
            9,469
            
            $
            43,641
            
            $
            86,690
            
            $
            29,431





Basic
                Net Income per Share
            
            $
            0.32
            
            $
            62,344.28
            
            $
            123,842.88
            
            $
            42,044.38Diluted
                Net Income per Share
            
            $
            0.32
            
            $
            62,344.28
            
            $
            123,842.88
            
            $
            42,044.38Shares
                Used in Computing Basic Net Income per Share
            
            
            30,006,250
            
            
            700
            
            
            700
            
            
            700Shares
                Used in Computing Diluted Net Income per Share
            
            
            30,008,190
            
            
            700
            
            
            700
            
            
            700








**F-5**


Double
        Hull Tankers, Inc. and OSG Crude


**Double
      Hull Tankers, Inc. Consolidated and Predecessor Combined Carveout**


**Statements
      of Changes in Stockholders' Equity**





**Common**
              **Stock**
            
            **Paid-in**
              **Additional**
              **Capital**
            
            **Retained**
              **Earnings**
            
            **Accumulated**
              **Other**
              **Comprehensive**
              **Income/(Loss)**
            
            **Total****Shares**
            
            **Amount****(Dollars
                in thousands except shares)**Balance
                at December 31, 2002
            
            700
            
            $
            700
            
            $
            —
            $
            
            9,277
            
            $
            (1,584
            )
            $
            8,393Net
                Income
            
            
            
            
            
            
            
            
            
            
            29,431
            
            
            
            
            
            29,431Other
                ComprehensiveIncome/(Loss),
                effect ofderivative
                instruments
            
            
            
            
            
            
            
            
            
            
            
            
            
            (220
            )
            
            (220
            )Other
                Comprehensive Income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            29,211Balance
                at December 31, 2003
            
            700
            
            
            700
            
            
            —
            
            
            38,708
            
            
            (1,804
            )
            
            37,604Net
                Income
            
            
            
            
            
            
            
            
            
            
            86,690
            
            
            
            
            
            86,690Other
                ComprehensiveIncome/(Loss),
                effect ofderivative
                instruments
            
            
            
            
            
            
            
            
            
            
            
            
            
            504
            
            
            504Other
                Comprehensive Income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            87,194Balance
                at December 31, 2004
            
            700
            
            
            700
            
            
            —
            
            
            125,398
            
            
            (1,300
            )
            
            124,798Net
                Income attributable to predecessor
                stockholders
            
            
            
            
            
            
            
            
            
            
            43,641
            
            
            
            
            
            43,641Other
                Comprehensive IncomeTermination
                of predecessorinterest
                rate swap
            
            
            
            
            
            
            
            
            
            
            
            
            
            1,300
            
            
            1,300Other
                Comprehensive Income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            44,941Capital
                Contribution bypredecessor
                stockholders
            
            
            
            
            
            
            
            114,320
            
            
            
            
            
            
            
            
            114,320Balance
                at October 17, 2005
            
            700
            
            $
            700
            
            $
            114,320
            
            $
            169,039
            
            $
            —
            
            $
            284,059Balance
                at October 18, 2005
            
            —
            
            $
            —
            
            $
            —
            
            $
            —
            
            $
            —
            
            $
            —Net
                Income attributable to period from Oct 18 to Dec 31
            
            
            
            
            
            
            
            
            
            
            9,469
            
            
            
            
            
            9,469Other
                Comprehensive IncomeUnrealized
                loss on interestrate
                swap
            
            
            
            
            
            
            
            
            
            
            
            
            
            (807
            )
            
            (807
            )Other
                Comprehensive Income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            8,662Issuance
                of commons stock
            
            30,006,250
            
            
            300
            
            
            345,879
            
            
            
            
            
            
            
            
            346,179Deemed
                distribution topredecessor
                stockholders
            
            
            
            
            
            
            
            (237,612
            )
            
            
            
            
            
            
            
            (237,612
            )Deferred
                compensation relatedto
                options granted
            
            
            
            
            
            
            
            5
            
            
            
            
            
            
            
            
            5Balance
                at December 31, 2005
            
            30,006,250
            
            $
            300
            
            $
            108,272
            
            $
            9,469
            
            $
            (807)
            
            $
            117,234








**F-6**


Double
        Hull Tankers, Inc. and OSG Crude


**Double
      Hull Tankers, Inc. Consolidated and Predecessor Combined
      Carve-Out**


**Statements
      of Cash Flow**





**2005**
            
            **Year
                ended December 31,****Double
                Hull Tankers, Inc. Oct. 18 to Dec. 31**
              **Successor**
            
            **January
                1 to October 17**
              **Predecessor**
            
            **2004**
              **Predecessor**
            
            **2003**
              **Predecessor****Cash
                Flows from Operating Activities:**Net
                income/(loss)
            
            $
            9,469
            
            $
            43,641
            
            $
            86,690
            
            $
            29,431Items
                included in net income/(loss) not affecting cash flows:Depreciation
            
            
            3,478
            
            
            14,462
            
            
            16,785
            
            
            13,859Amortization,
                including deferred finance charges
            
            
            36
            
            
            438
            
            
            1,023
            
            
            879Changes
                in operating assets and liabilities:Receivables
            
            
            (5,506
            )
            
            25,710
            
            
            (16,361
            )
            
            (3,573)Prepaid
                expenses
            
            
            (1,605
            )
            
            897
            
            
            (71
            )
            
            (76)Other
                assets
            
            
            
            
            
            (17
            )
            
            (2
            )
            
            (3)Accounts
                payable and accrued expenses
            
            
            3,895
            
            
            (1,921
            )
            
            (76
            )
            
            755Deferred
                shipping revenues
            
            
            6,126Net
                cash provided by operating activities
            
            
            15,893
            
            
            83,210
            
            
            87,988
            
            
            41,272**Cash
                Flows from Investing Activities:**Expenditures
                for vessels
            
            
            (412,580
            )
            
            (830
            )
            
            (9,696
            )
            
            (14,496)Expenditures
                of drydocking
            
            
            
            
            
            (171
            )
            
            (3,740
            )
            
            —Net
                cash (used in) investing activities
            
            
            (412,580
            )
            
            (1,001
            )
            
            (13,436
            )
            
            (14,496)**Cash
                Flows from Financing Activities:**Issuance
                of common stock
            
            
            178,180Issuance
                of long-term debt, net of issuance
              costs
            
            
            234,400
            
            
            —
            
            
            —
            
            
            —Repayment
                of loan from OSG
            
            
            
            
            
            (55,931
            )
            
            (69,352
            )
            
            (21,576)Transfer
                of Balances
            
            
            
            
            
            63,322Repayment
                of long-term debt
            
            
            
            
            
            (89,600
            )
            
            (5,200
            )
            
            (5,200)Net
                cash provided by/(used in) financing activities
            
            
            412,580
            
            
            (82,209
            )
            
            (74,552
            )
            
            (26,776)Net
                increase in cash and cash equivalents
            
            
            15,893
            
            
            —
            
            
            —
            
            
            —Cash
                and cash equivalents at beginning of
              period
            
            
            —
            
            
            —
            
            
            —
            
            
            —Cash
                and cash equivalents at end of
              period
            
            $
            15,893
            
            $
            —
            
            $
            —
            
            $
            —Interest
                Paid
            
            $
            —
            
            $
            3,022
            
            $
            5,328
            
            $
            2,578







**F-7**





**NOTES
      TO DOUBLE HULL TANKERS, INC. CONSOLIDATED AND PREDECESSOR COMBINED CARVE-OUT
      FINANCIAL STATEMENTS**




**General**




Double
      Hull Tankers, Inc. (“DHT” or the “Company”) was incorporated on April 14, 2005
      under the laws of Marshall Islands as a wholly owned indirect subsidiary of
      Overseas Shipholding Group, Inc. (“OSG”). In October 2005, the Company
      completed its initial public offering (“IPO”) by issuing and selling to the
      public 16,000,000 common shares, par value $0.01 per share, at a price to
      the public of $12.00 per share, raising gross proceeds of $192 million
      before deduction of underwriting discounts, commissions and expenses of
      approximately $13.8 million. On the date of the IPO the Company also raised
      $236 million of secured debt (before expenses of approximately
      $1.6 million). Simultaneously with the IPO, the Company acquired seven
      double-hull tankers consisting of three very large crude carriers, or VLCCs,
      and
      four Aframax vessels (the “Vessels”) from subsidiaries of OSG in exchange for
      cash and shares of its common stock. The Company chartered these vessels back
      to
      subsidiaries of OSG. The aggregate purchase price for the vessels was $580.6
      million, of which $412.6 million was in the form of cash and $168 million in
      the
      form of common stock. The Company treated the excess of the purchase price
      over
      OSG’s $343.0 million aggregate book value of the vessels, or $237.6 million as
      a
      deemed dividend to OSG.




Subsequent
      to the IPO, an aggregate of 648,500 of these shares were sold by a subsidiary
      of
      OSG, in connection with the underwriters’ exercise of their over-allotment
      option. The Company did not receive any proceeds from the sale of the
      over-allotment shares. As of December 31, 2005, OSG beneficially owned
      approximately 44.5% of our outstanding common stock.




The
      vessels are owned by seven Marshall Islands subsidiaries of the Company. The
      primary activity of each of the vessel subsidiaries is the ownership and
      operation of a vessel. The following table sets out the details of the vessel
      subsidiaries included in these consolidated financial statements:




**Company**
            **Vessel
                name**
            
            **Dwt**
            
            **Flag
                State**
            
            **Year
                Built**Chris
                Tanker Corporation
            *Overseas
                Chris*
            
            309,285
            
            Marshall
                Islands
            
            2001Ann
                Tanker Corporation
            *Overseas
                Ann*
            
            309,327
            
            Marshall
                Islands
            
            2001Regal
                Unity Tanker Corporation
            *Regal
                Unity*
            
            309,966
            
            Marshall
                Islands
            
            1997Cathy
                Tanker Corporation
            *Overseas
                Cathy*
            
            112,028
            
            Marshall
                Islands
            
            2004Sophie
                Tanker Corporation
            *Overseas
                Sophie*
            
            112,045
            
            Marshall
                Islands
            
            2003Ania
                Aframax Corporation
            *Ania*
            
            94,848
            
            Marshall
                Islands
            
            1994Rebecca
                Tanker Corporation
            *Rebecca*
            
            94,873
            
            Marshall
                Islands
            
            1994





Effective
      October 18, 2005, the Company chartered the vessels to subsidiaries of OSG for
      terms
      of five to six and one-half years at basic hire amounts which are essentially
      fixed. In addition, the time charter arrangements include a profit sharing
      component that gives us the opportunity to earn additional hire when vessel
      earnings exceed the basic hire amounts set forth in the charters. Our vessels
      are operated in the Tankers International Pool and the Aframax International
      Pool and we expect our potential to earn additional hire will benefit from
      the
      utilization rates realized by these pools. In a pooling arrangement, the net
      revenues generated by all of the vessels in a pool are aggregated and
      distributed to pool members pursuant to a pre-arranged weighting system that
      recognizes each vessel’s earnings capacity based on its cargo capacity, speed
      and fuel consumption, and actual on-hire performance.







**F-8**





Each
      time
      charter may be renewed by OSG on one or more successive occasions for periods
      of
      one, two or three years, up to an aggregate of five, six or eight years,
      depending on the vessel. If a time charter is renewed, the charter terms
      providing for profit sharing will remain in effect and the charterer, at the
      time of exercise, will have the option to select a basic charter rate that
      is
      equal to (i) 5% above the published one-, two- or three-year time charter
      rate (corresponding to the extension length) for the vessel’s class, as decided
      by a shipbrokers panel, or (ii) the basic hire rate set forth in the
      applicable charter. The shipbrokers panel will be The Association of Shipbrokers
      and Agents Tanker Broker Panel or another panel of brokers mutually acceptable
      to us and OSG.




Effective
      October 18, 2005, the Company also entered into ship management agreements
      with
      Tanker Management Ltd., a wholly owned subsidiary of OSG. The ship management
      agreements provide for the technical management of the Vessels. The basic hire
      rate for each of the Vessels and the technical management fee are payable
      monthly in advance. The basic hire will increase annually by an amount
      approximately equal to the annual increase in the fee payable under the
      applicable ship management agreement.




**Note A—Summary
      of significant accounting policies:**




**1.
      Basis of presentation and accounting**




Prior
      to
      October 18, 2005, the accompanying predecessor combined carve-out financial
      statements include the accounts of seven wholly-owned subsidiaries of OSG.
      Such
      subsidiaries (collectively "OSG Crude"), which are incorporated in the Marshall
      Islands, owned a fleet consisting of seven modern tankers prior to the IPO.
      These predecessor combined carve-out financial statements have been prepared
      to
      reflect the financial position, results of operations and cash flows of OSG
      Crude, which owned the vessels which were acquired by Double Hull
      Tankers, Inc. on October 18, 2005.




The
      Double Hull Tankers, Inc. consolidated and predecessor combined carve-out
      financial statements are prepared in accordance with generally accepted
      accounting principles in the United States. The consolidated financial
      statements include the assets and liabilities of the Company and its wholly
      owned subsidiaries. All intercompany balances and transactions have been
      eliminated upon consolidation or combination. For the year ended
      December 31, 2005, the predecessor combined carve-out financial statements
      are for the period January 1, 2005 through October 17, 2005, and the
      consolidated financial statements of the Company and its wholly owned
      subsidiaries are for the 75 day period from October 18, 2005 (date operations
      commenced) through December 31, 2005 during which the Company operated as
      an independent company. For the period from January 1, 2005 through October
      17, 2005 and for the years ended December 31, 2004 and 2003, the
      predecessor combined carve-out financial statements presented herein have been
      carved out of the financial statements of OSG. The assets, liabilities, results
      of operations, and cash flows of the predecessor were carved out of the
      consolidated financial statements of OSG using specific identification. In
      the
      preparation of these predecessor carve-out financial statements, general and
      administrative expenses were not identifiable as relating solely to the vessels.
      General and administrative expenses, consisting primarily of salaries and other
      employee related costs, office rent, legal and professional fees, and travel
      and
      entertainment were allocated based on OSG Crude's proportionate share of OSG's
      total ship-operating (calendar) days for each of the periods presented.
      Management believes these allocations to reasonably present the financial
      position, results of operations and cash flows of OSG Crude. However, the
      predecessor combined carve-out statements of financial position, operations
      and
      cash flow may not be indicative of those that would have been realized had
      OSG
      Crude operated as an independent stand-alone entity for the periods presented.
      Had OSG Crude operated as an independent stand-alone entity, its results could
      have differed significantly from those presented herein.




**2.
      Cash and cash equivalents**




Interest-bearing
      deposits that are highly liquid investments and have a maturity of three months
      or less when purchased are included in cash and cash equivalents. Cash and
      cash
      equivalents of $15.9 million as of December 31, 2005 are pledged as described
      in
      Note C and are held at a single financial institution. The carrying value of
      cash and cash equivalents approximates its fair value.







**F-9**






**3.
      Vessels**




At
      October 18, 2005, the Company recorded the Vessels at their historical cost
      to
      OSG Crude. The Vessels are being depreciated over periods ranging from 14 to
      23
      years, which represent the Vessels’ remaining life at the date of acquisition
      from OSG Crude. For the periods through October 17, 2005, the Vessels are
      recorded at cost and are depreciated to their estimated salvage value on the
      straight-line basis, using a vessel life of 25 years. Each vessel's salvage
      value is equal to the product of its lightweight tonnage and an estimated scrap
      rate per ton. Accumulated depreciation was $113,695,467 and $96,798,531 at
      December 31, 2005 and 2004, respectively. Interest costs are capitalized to
      vessels during the period that vessels are under construction. Interest
      capitalized aggregated $200,803 in 2004 and $3,621,377 in 2003.




**4.
      Deferred drydock expenditures**




On
      October 18, 2005 the Company entered into a management agreement with Tanker
      Management Ltd., a subsidiary of OSG, for the technical management of its seven
      vessels in exchange for a fee that is fixed for the first two years of the
      agreement. As part of the management agreement, OSG is responsible for
      drydocking costs.




Prior
      to
      October 18, 2005 expenditures incurred during a drydocking are deferred and
      amortized on the straight-line basis over the period until the next scheduled
      drydocking, generally two and a half to five years. Expenditures for maintenance
      and repairs are expensed when incurred. Amortization of capitalized drydock
      expenditures, which is included in depreciation and amortization in the combined
      statements of operations, amounted to $1,028,025 for the period from January
      1,
      2005 through October 17, 2005, $976,864 in 2004 and $833,220 in 2003. The
      unamortized portion of deferred drydocking expenditures, which is included
      in
      other assets in the combined balance sheet, was $4,110,010 at December 31,
      2004.




**5.
      Impairment of long-lived assets**




The
      carrying amounts of long-lived assets held and used are reviewed for potential
      impairment whenever events or changes in circumstances indicate that the
      carrying amount of a particular asset may not be fully recoverable. In such
      instances, an impairment charge would be recognized if the estimate of the
      undiscounted future cash flows expected to result from the use of the asset
      and
      its eventual disposition is less than the asset's carrying amount. This
      assessment is made at the individual vessel level since separately identifiable
      cash flow information for each vessel is available. The amount of an impairment
      charge, if any, would be determined using discounted cash flows.




**6.
      Deferred finance charges**




Finance
      charges incurred in the arrangement of debt are deferred and amortized to
      interest expense on a straight-line basis over the life of the related debt.
      Deferred finance charges of $1,567,141 and $437,922 are included in other assets
      at December 31, 2005 and 2004, respectively. Amortization of deferred
      finance charges amounted to $35,859 for the period from October 18, 2005 to
      December 31, 2005, $437,922 for the period from January 1, 2005 through October
      17, 2005, $46,052 in 2004 and $45,989 in 2003.




**7.
      Revenue and expense recognition**




Revenues
      from time charters and bareboat charters are accounted for as operating leases
      and are thus recognized ratably over the rental periods of such
      charters.




Voyage
      revenues and expenses are recognized ratably over the estimated length of each
      voyage and, therefore, are allocated between reporting periods based on the
      relative transit time in each period. In accordance with Staff Accounting
      Bulletin No. 101, "Revenue Recognition in Financial Statements," our
      predecessor, OSG Crude, did not begin recognizing voyage revenue until a charter
      had been agreed to by one of the subsidiaries and the customer, even if the
      vessel has discharged its cargo and is sailing to the anticipated load port
      on
      its next voyage.







**F-10**





Under
      voyage charters, expenses such as fuel, port charges, canal tolls, cargo
      handling operations and brokerage commissions were paid by OSG Crude whereas,
      under time and bareboat charters, such voyage costs were paid by OSG Crude's
      customers. For voyage charters, time charter equivalent revenues represent
      shipping revenues less voyage expenses. For time and bareboat charters, time
      charter equivalent revenues represent shipping revenues less brokerage
      commissions, if applicable, which are included in voyage expenses.




The
      vessels owned by Double Hull Tankers, Inc. and OSG Crude operated in either
      the
      Tankers International Pool (VLCCs) or the Aframax International Pool (Aframaxes)
      during the three years ended December 31, 2005. For vessels operating in
      such pools, revenues and voyage expenses are pooled and allocated to each pool's
      participants on a time charter equivalent basis in accordance with an
      agreed-upon formula.




Ship
      operating expenses exclude voyage expenses. Vessel expenses include crew costs,
      vessel stores and supplies, lubricating oils, maintenance and repairs, insurance
      and communication costs.




As
      part
      of the time charters Double Hull Tankers, Inc. has entered into with
      subsidiaries of OSG with respect to its seven vessels, DHT has the opportunity
      to earn additional hire when vessel earnings exceed the basic hire amounts
      set
      forth in the charters. Additional hire, if any, is calculated and paid quarterly
      in arrears and recognized as revenue in the quarter in which it was earned.




On
      October 18, 2005 Double Hull Tankers, Inc. entered into a management agreement
      with Tanker Management Ltd., a subsidiary of OSG, for the technical management
      of its seven vessels in exchange for a fee that is fixed for the first two
      years. This management agreement covers, among others, costs related to crewing,
      maintenance, ordinary repairs, scheduled drydockings, insurance deductibles
      and
      other vessel operating expenses but excluding insurance premiums.




**8.
      Derivatives**




Statement
      of Financial Accounting Standards No. 133, "Accounting for Derivative
      Investments and Hedging Activities" ("FAS 133") requires DHT, Inc. and OSG
      Crude to recognize all derivatives on the balance sheet at fair value. If the
      derivative is an effective hedge, a change in the fair value is either offset
      against the change in fair value of the hedged item or recognized in other
      comprehensive income until the hedged item is recognized in income. The
      ineffective portion of effective hedges is immediately recognized in income.
      Derivatives that are not effective hedges are fully adjusted through
      income.




Double
      Hull Tankers, Inc. and OSG Crude use interest rate swaps to convert
      interest-bearing debt from floating to fixed rate. The swaps are designated
      and
      qualify as a cash flow hedges. DHT and OSG Crude assumes no ineffectiveness
      since the interest rate swap meets the conditions required under FAS 133 to
      apply the critical terms method for prepayable debt.




**9.
      Common Stock of OSG Crude**




Each
      of
      the seven subsidiaries included in the predecessor combined carve-out financials
      statements had authorized capital of 500 common registered shares with no par
      value. Upon incorporation, each subsidiary issued 100 shares to OSG
      International, Inc., a wholly-owned subsidiary of OSG, in exchange for
      investment of $100,000.




**10** **.
      Foreign currency**




The
      functional currency of the Company and each of the vessel subsidiaries is the
      U.S. dollar. Monetary assets and liabilities denominated in foreign
      currencies are translated at the year end exchange rates. Foreign currency
      revenues and expenses are translated at transaction date exchange rates.
      Exchange gains and losses are included in the determination of net
      income.







**F-11**






**11.
      Use of estimates**




The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States requires management to make estimates
      and assumptions that affect the amounts reported in the financial statements
      and
      accompanying notes. Actual results could differ from those
      estimates.




**Note B—Accounts
      payable and accrued expenses:**




Accounts
      payable and accrued expenses consist of the following:




**Year
                ended December 31,****2005**
              **Successor**
            
            **2004**
              **Predecessor**Interest
            $
            2,814,905
            
            $
            1,124,928Insurance
            
            491,000
            
            
            229,303Accounts
                payable
            
            82,996
            
            
            131,004Other
            
            505,546
            
            
            558,021$
            3,894,447
            
            $
            2,043,256





**Note C—Debt:**




Debt
      consists of the following:




**Year
                ended December 31,****2005**
            
            **2004**
            
            **2003**Secured
                term loan - DHT
            
            $
            236,000,000
            
            $
            —
            
            $
            —Secured
                term loan - OSG Crude
            
            
            
            
            
            89,600,000
            
            
            94,800,000Less
                current portion
            
            
            
            
            
            (5,200,000
            )
            
            (5,200,000
            )Long
                term portion
            
            $
            236,000,000
            
            $
            84,400,000
            
            $
            89,600,000





The
      effective interest rate for debt outstanding at December 31, 2005 and 2004
      was 5.6% and 5.7%, respectively as a result of a related interest rate swaps
      (see Note E).




On
      October 18, 2005 DHT entered
      into a $401,000,000 secured credit facility with The Royal Bank of Scotland
      for
      a term of ten years, with no principal amortization for the first five years.
      The credit facility consists of a $236,000,000 term loan, a $150,000,000 vessel
      acquisition facility and a $15,000,000 working capital facility. DHT is the
      borrower under the credit facility and each of its seven vessel owning
      subsidiaries have guaranteed its performance thereunder. The facility is, among
      other, secured by
      first
      priority mortgage on DHT’s seven vessels, assignment of earnings and insurances
      and the Company’s rights under the time charters for the vessels and the ship
      management agreements, and a pledge of the balances in the Company’s bank
      accounts. The credit
      facility provides that we may not pay dividends if the charter-free market
      value
      of our vessels that secure the credit facility is less than 135% of our
      borrowings under the facility plus the actual or notional cost of terminating
      any interest rate swaps that we enter, if there is a continuing default under
      the credit facility or if the payment of the dividend would result in a default
      or breach of a loan covenant. Interest
      is payable quarterly in arrears.




We
      borrowed the entire amount available under the $236,000,000 term loan upon
      the
      completion of the IPO to fund a portion of the purchase price for the seven
      vessels that we acquired from OSG.







**F-12**





Borrowings
      under the term loan and the working capital facility bear interest at an annual
      rate of LIBOR plus a margin of 0.70%. Borrowings under the vessel acquisition
      portion of the credit facility bear interest at an annual rate of LIBOR plus
      a
      margin of 0.85%. To reduce our exposure to fluctuations in interest rates,
      we
      have entered into an interest rate swap pursuant to which we fixed the interest
      rate on the full amount of our $236,000,000 term loan at 5.595%. We are required
      to pay a commitment fee of 0.3% per annum, which will be payable quarterly
      in
      arrears, on the undrawn portion of the facility.




We
      will
      be required to repay the term loan commencing three months after the fifth
      anniversary of the facility closing date (October 18, 2005) in twenty quarterly
      installments of $6,062,500 and a final repayment of $114,750,000 occurring
      simultaneously with the last quarterly repayment. In addition, the vessel
      acquisition facility will reduce (with any excess borrowing becoming repayable
      at the time of reduction) quarterly commencing three months after the fifth
      anniversary of the facility closing date in increments of $7,500,000. The
      working capital facility will also reduce (with any excess borrowing becoming
      repayable at the time of reduction) commencing three months after the fifth
      anniversary of the facility closing date in twenty quarterly installments of
      $750,000.




On
      July
      10, 2002, OSG Crude borrowed $100,000,000 according to a secured term loan
      agreement bearing interest at the London interbank offered rate (“LIBOR”) plus a
      margin of 1%. The loan was guaranteed by OSG and secured by liens on the
      Overseas Chris and Overseas Ann. The secured loan agreement also contained
      financial covenants applicable to the consolidated financial position of OSG.
      In
      July 2005, OSG Crude repaid the outstanding balance, $87,000,000 of the secured
      term loan, with funds contributed to capital by a wholly-owned subsidiary of
      OSG. In connection with this transaction, the related floating-to-fixed interest
      rate swap was terminated. Accordingly, OSG Crude recognized a loss of
      approximately $1,471,000 related to such swap termination.




As
      of
      December 31, 2004, approximately 35.6% of the net book amount of the OSG
      Crude vessels, representing two tankers, was pledged as collateral under the
      debt agreement. As of December 31, 2005, all of the net book amount of DHT’s
      seven vessels, is pledged as collateral under the debt agreement.




The
      carrying amounts of the loans approximate their fair value.




**Note D—Loans
      payable to wholly-owned subsidiary of OSG:**




The
      loans
      payable to a wholly-owned subsidiary of OSG consisted of amounts due under
      a
      floating rate revolving credit facility. Such facility, which had no stated
      maturity and accordingly, had been classified as a long-term liability, provided
      for borrowings of up to $450,000,000. Borrowings bore interest based on the
      short-term Applicable Federal Rate published quarterly by the Internal Revenue
      Service of the United States. Interest was compounded quarterly. The effective
      interest rate on borrowings outstanding at December 31, 2004 was
      2.8%.




During
      the second quarter of 2005, the wholly-owned subsidiary of OSG made a capital
      contribution of $114,320,169, which was deemed effective April 1, 2005, to
      OSG Crude, reducing loans payable to the wholly-owned subsidiary to
      zero.




**Note E—Derivatives:**




As
      of
      December 31, 2005, DHT is party to a floating-to-fixed interest rate swap that
      is being accounted for as a cash flow hedge with a notional amount of
      $236,000,000 pursuant to which DHT pays a fixed rate of 5.6% and receives a
      floating rate based on LIBOR. The swap expires on October 18, 2010. As of
      December 31, 2005, DHT has recorded a liability of $806,777 in unrealized loss
      on interest rate swap related to the fair value of the swap. This unrealized
      loss has been charged to accumulated other comprehensive income/(loss). The
      fair
      value of interest rate swaps is the estimated amount that DHT would receive
      or
      pay to terminate the agreement at the reporting date.




OSG
      Crude
      was a party to a floating-to-fixed interest rate swap that was being accounted
      for as a cash flow hedge with a notional amount of $87,000,000 pursuant to
      which
      it paid a fixed rate of 4.58% and received a floating rate based on LIBOR.
      At
      December 31, 2004, OSG Crude recorded a liability of $1,300,480 in







**F-13**






deferred
      credits and other liabilities related to the fair value of the swap. The fair
      value of interest rate swaps is the estimated amount that OSG Crude would
      receive or pay to terminate the agreement at the reporting date.




**Note F—Accumulated
      other comprehensive income/(loss):**




The
      components of the change in the accumulated unrealized loss on derivative
      instruments follow:




**2005**
            
            **Year
                ended December 31,****Oct.
                18 to Dec. 31**
              **Successor**
            
            **January
                1 to October 17**
              **Predecessor**
            
            **2004**
              **Predecessor**
            
            **2003**
              **Predecessor**Reclassification
                adjustments for interest expense included in net
                income/(loss)
            
            $
            
            
            $
            
            
            $
            2,895,492
            
            $
            895,880(Increase)
                / decrease in unrealized loss on derivative instruments:
            
            
            (806,778)
            
            
            1,300,480
            
            
            (2,391,849)
            
            
            (1,116,033)$
            (806,778)
            
            $
            1,300,480
            
            $
            503,643
            
            $
            (220,153)





The
      components of accumulated other comprehensive income in the consolidated balance
      sheet follow:




**Year
                ended December 31,****2005**
              **Successor**
            
            **2004**
              **Predecessor**Unrealized
                losses on derivative instruments
            
            $
            (806,778)
            
            $
            (1,300,480)$
            (806,778)
            
            $
            (1,300,480)





**Note G—Taxes:**




No
      income
      taxes have been provided herein because DHT and the predecessor company, OSG
      Crude, comprise foreign corporations that would not be subject to United States
      federal income taxes. Further, neither DHT nor OSG Crude are subject to income
      taxes imposed by the Marshall Islands, the country in which they are
      incorporated.




**Note
      H—Stock Compensation:**




In
      connection with the IPO, the Company awarded a total of 6,250 shares of
      restricted common stock to its CEO and CFO. These shares are non-transferable
      until they vest, which occurs ratably over a four-year period. The aggregate
      fair market value of the shares on the grant date, $ 75,000 is being amortized
      to compensation expense over the vesting period of four years, using the
      straight-line method. In addition, also in connection with the IPO, the Company
      awarded its CEO and CFO stock options to purchase a total of 69,448 shares
      of
      common stock at an exercise price of $12.00 per share. These stock options
      vest
      ratably over a three-year period and expire ten years from the date of grant.
      The Company follows Financial Accounting Standards Board Statement No. 123
      (R),
“Share-Based Payment” and related Interpretations in accounting for its
      stock-based compensation. The fair value of the options granted were estimated
      on the date of grant using the Black-Scholes option pricing model with the
      following weighted average assumptions: risk free interest rate of 4.69%,
      dividend yield of 10.42%, expected stock price volatility of 0.31 and expected
      life of 6 years. The aggregate fair market value of the stock options on the
      grant date, $75,000, is being amortized to compensation expense over the vesting
      period of three years, using the straight-line method. Total stock based
      compensation expense was $8,989 for the period from October 18, 2005 to December
      31, 2005.







**F-14**





**Note I—Pooling
        arrangements:**
  *Tankers
        International Pool*
  In
        December 1999 the Tankers International Pool ("Tankers") was established to
        pool VLCC fleets. Tankers, which commenced operations in February 2000,
        commercially managed a fleet of 47 modern VLCCs as of December 31, 2005.
        Tankers was formed to meet the global transportation requirements of
        international oil companies and other major customers. All three of DHT's
        VLCCs
        participate in the Tankers pool.
  *Aframax
        International Pool*
  Since
        1996, OSG and PDV Marina S.A., the marine transportation subsidiary of the
        Venezuelan state-owned oil company, have pooled the commercial management
        of
        their Aframax fleets. The pool commercially managed a fleet of 36 modern
        Aframaxes as of December 31, 2005, which generally trade in the Atlantic
        Basin, North Sea and the Mediterranean. All four of DHT's Aframaxes trade
        in
        this pool.
  **Note J—Charters-out:**
  The
        future minimum revenues expected to be received on the time charters for
        our
        seven vessels and the related revenue days (revenue days represent calendar
        days, less days that vessels are not available for employment due to repairs
        or
        drydock) are as follows:
  **Amount**
              
              **Revenue Days**2006
              
              $
              71,211,200
              
              
              2,5242007
              
              71,276,500
              
              
              2,5112008
              
              73,090,200
              
              
              2,5622009
              
              73,146,000
              
              
              2,5552010
              
              70,830,200
              
              
              2,407Thereafter
              
              48,044,100
              
              
              1,455Net
                  minimum charter payments
              
              $
              407,598,200
              
              
              14,014
  Future
        minimum revenues do not include any additional hire from the profit sharing
        component of the charter agreements. Revenues from a time charter are not
        received when a vessel is off-hire, including time required for normal periodic
        maintenance of the vessel. In arriving at the minimum future charter revenues,
        an estimated time off-hire to perform periodic maintenance on each vessel
        has
        been deducted, although there is no assurance that such estimate will be
        reflective of the actual off-hire in the future.
  **N** **ote K—Subsequent
        event:**
  In
        February 2006, DHT declared a dividend of $12,902,688 or $0.43 per share,
        and
        paid that dividend on March 24, 2006 to stockholders of record as of March
        10,
        2006.
  **F-15**