**UNITED
                  STATES**
 **SECURITIES
                  AND EXCHANGE COMMISSION**
 **WASHINGTON,
                  D.C. 20549**
  **FORM
                  20-F**
  (Mark
                  One)
 o
                        **REGISTRATION
                            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, 2006
 **OR**
 o
                        **TRANSITION
                            REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                            EXCHANGE ACT OF
                            1934**
 For
                  the
                  transition period from _________________ to ________________
  o
                        **SHELL
                            COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                            SECURITIES EXCHANGE
                            ACT OF 1934**
 Date
                  of
                  event requiring this shell company report ________________
  Commission
                  file
                  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.
  **30,009,250
                  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
                                  20ITEM
                                      4A.
                                  
                                  UNRESOLVED
                                      STAFF COMMENTS
                                  35ITEM
                                      5.
                                  
                                  OPERATING
                                      AND FINANCIAL REVIEW AND PROSPECTS
                                  35ITEM
                                      6.
                                  
                                  DIRECTORS,
                                      SENIOR MANAGEMENT AND EMPLOYEES
                                  46ITEM
                                      7.
                                  
                                  MAJOR
                                      SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
                                  53ITEM
                                      8.
                                  
                                  FINANCIAL
                                      INFORMATION
                                  56ITEM
                                      9.
                                  
                                  THE
                                      OFFER AND LISTING
                                  57ITEM
                                      10.
                                  
                                  ADDITIONAL
                                      INFORMATION
                                  58ITEM
                                      11.
                                  
                                  QUANTITATIVE
                                      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
                                  71ITEM
                                      12.
                                  
                                  DESCRIPTION
                                      OF SECURITIES OTHER THAN EQUITY SECURITIES
                                  71PART
                                      II
                                  
                                  
                                  71ITEM
                                      13.
                                  
                                  DEFAULTS,
                                      DIVIDEND ARREARAGES AND DELINQUENCIES
                                  71ITEM
                                      14.
                                  
                                  MATERIAL
                                      MODIFICATION TO THE RIGHTS OF SECURITY HOLDERS
                                      AND USE OF
                                      PROCEEDS
                                  71ITEM
                                      15.
                                  
                                  CONTROLS
                                      AND PROCEDURES
                                  71ITEM
                                      16A.
                                  
                                  AUDIT
                                      COMMITTEE FINANCIAL EXPERT
                                  72ITEM
                                      16B.
                                  
                                  CODE
                                      OF ETHICS
                                  72ITEM
                                      16C.
                                  
                                  PRINCIPAL
                                      ACCOUNTANT FEES AND SERVICES
                                  72ITEM
                                      16D.
                                  
                                  EXEMPTIONS
                                      FROM THE LISTING STANDARDS FOR AUDIT COMMITTEE
                                  73ITEM
                                      16E.
                                  
                                  PURCHASES
                                      OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
                                      PURCHASERS
                                  73PART
                                      III
                                  
                                  
                                  73ITEM
                                      17.
                                  
                                  FINANCIAL
                                      STATEMENTS
                                  73ITEM
                                      18.
                                  
                                  FINANCIAL
                                      STATEMENTS
                                  73ITEM
                                      19.
                                  
                                  EXHIBITS
                                  73
    i
   **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.
    
    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.
   2
   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.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 *Overseas
                                  Regal*, the *Overseas Cathy*, the *Overseas Sophie*, the
                                  *Rebecca* and the *Overseas 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
   ·
                          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
   **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 January 1, 2006 through December 31, 2006, 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, 2006, 2005 and 2004 and the selected balance
                  sheet data as of
                  December 31, 2006 and 2005 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, 2002
                  and 2003 and for the years then ended have been derived from our
                  predecessor
                  combined carve-out financial statements not included in this report.
                  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.
  **Year ended**
                              **December
                                31,**
                            ****
                            ****
                            **2005**
                            ****
                            ****
                            **Year ended
                                December 31,**
                            ********
                            ****
                            **Succesor**
                              **2006**
                            ****
                            ****
                            **Successor**
                              **Oct
                                18-Dec 31**
                            ****
                            ****
                            **Predecessor**
                              **Jan
                                1 –**
                              **Oct
                                17**
                            ****
                            ****
                            **2004**
                            ****
                            ****
                            **Predecessor**
                              **2003**
                            ****
                            ****
                            **2002**(in
                                thousands, except per share data)**Statement
                                of operations data:**Shipping
                                revenues
                            
                            $
                            86,793
                            
                            
                            $
                            20,173
                            
                            
                            $
                            84,134
                            
                            
                            $
                            136,205
                            
                            
                            $
                            66,192
                            
                            
                            $
                            31,733Total
                                ship operating expenses
                            
                            
                            37,994
                            
                            
                            
                            7,899
                            
                            
                            
                            35,426
                            
                            
                            
                            40,870
                            
                            
                            
                            30,828
                            
                            
                            
                            28,716Income
                                from vessel operations
                            
                            
                            48,799
                            
                            
                            
                            12,274
                            
                            
                            
                            48,708
                            
                            
                            
                            95,335
                            
                            
                            
                            35,364
                            
                            
                            
                            3,017Net
                                Income (loss)
                            
                            
                            35,750
                            
                            
                            
                            9,469
                            
                            
                            
                            43,641
                            
                            
                            
                            86,690
                            
                            
                            
                            29,431
                            
                            
                            
                            (4,763
                            )Net
                                income per share – basic and diluted
                            
                            
                            1.19
                            
                            
                            
                            0.32**Balance
                                sheet data (at end of year):**Vessels,
                                net
                            
                            
                            322,577
                            
                            
                            
                            339,491
                            
                            
                            
                            
                            
                            
                            
                            355,571
                            
                            
                            
                            326,458
                            
                            
                            
                            295,071Total
                                assets
                            
                            
                            349,040
                            
                            
                            
                            364,062
                            
                            
                            
                            
                            
                            
                            
                            388,518
                            
                            
                            
                            376,193
                            
                            
                            
                            372,783Current
                                liabilities
                            
                            
                            9,625
                            
                            
                            
                            10,828
                            
                            
                            
                            
                            
                            
                            
                            7,243
                            
                            
                            
                            7,319
                            
                            
                            
                            6,564Long-term
                                liabilities(1)
                            
                            
                            236,000
                            
                            
                            
                            236,000
                            
                            
                            
                            
                            
                            
                            
                            256,477
                            
                            
                            
                            331,270
                            
                            
                            
                            357,826Stockholders’
                                equity
                            
                            
                            103,415
                            
                            
                            
                            117,234
                            
                            
                            
                            
                            
                            
                            
                            124,798
                            
                            
                            
                            37,604
                            
                            
                            
                            8,393**Cash
                                flow data:**Net
                                cash provided by operating activities
                            
                            
                            53,998
                            
                            
                            
                            15,893
                            
                            
                            
                            83,039
                            
                            
                            
                            84,248
                            
                            
                            
                            41,272
                            
                            
                            
                            3,728Net
                                cash (used in) investing activities
                            
                            
                            -
                            
                            
                            
                            (412,580
                            )
                            
                            
                            (830
                            )
                            
                            
                            (9,696
                            )
                            
                            
                            (14,496
                            )
                            
                            
                            (50,116
                            )Net
                                cash provided by (used in) financing activities
                            
                            
                            (52,511
                            )
                            
                            
                            412,580
                            
                            
                            
                            (82,209
                            )
                            
                            
                            (74,582
                            )
                            
                            
                            (26,776
                            )
                            
                            
                            46,388**Fleet
                                data:**Number
                                of tankers owned (at end of period)
                            
                            
                            7
                            
                            
                            
                            7
                            
                            
                            
                            7
                            
                            
                            
                            7
                            
                            
                            
                            6
                            
                            
                            
                            5Revenue
                                days(2)
                            
                            
                            2,482
                            
                            
                            
                            520
                            
                            
                            
                            1,987
                            
                            
                            
                            2,451
                            
                            
                            
                            1,887
                            
                            
                            
                            1,780**Average
                                daily time charter equivalent rate(3):**VLCCs
                            
                            $
                            46,900
                            
                            
                            
                            50,300
                            
                            
                            
                            53,392
                            
                            
                            $
                            77,422
                            
                            
                            $
                            41,786
                            
                            
                            $
                            18,679Aframaxes
                            
                            $
                            26,200
                            
                            
                            
                            30,200
                            
                            
                            
                            33,296
                            
                            
                            $
                            38,831
                            
                            
                            $
                            25,463
                            
                            
                            $
                            16,005
  
 (1)
                        Includes
                            loans payable to Overseas Shipholding Group, Inc. (OSG)
                            for the periods
                            until October 17, 2005.
 (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.
    5
   (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
 
  **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 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,
                  the 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 for
                  five years at a rate of 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 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.
   7
   **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.
   8
   **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.
  **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.
   9
   **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.
                  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. In addition, our ability to pay dividends
                  is limited
                  by Marshall Islands law. Marshall Islands law generally prohibits
                  the payment of
                  dividends other than from surplus or while a company is insolvent
                  or if a
                  company would be rendered insolvent by the payment of such a dividend.
                  In
                  addition, any dividend may be discontinued at the discretion of
                  our
                  board.
  **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 charterers’ 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.
  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.
   10
   **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 seven other tanker companies, and our four Aframax tankers
                  currently
                  participate in the Aframax International Pool, which has nine 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. In addition,
                  the EU is in
                  the process of substantially reforming the way it regulates traditional
                  agreements for maritime services from an antitrust perspective.
                  These changes
                  may impose new restrictions on the way the pools are operated or
                  may prohibit
                  such pooling arrangements altogether. If for any reason our vessels
                  cease to
                  participate in a pooling arrangement or the pooling arrangements
                  are
                  significantly restricted, 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, 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 company with a limited separate operating history, our
                  historical
                  financial and operating data may not be representative of our future
                  results.**
  We
                  are a
                  company with a limited separate 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.
   11
   **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 for five years on our outstanding debt at a rate
                  of 5.6% through a
                  swap agreement effective as of October 18, 2005.
  **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.
   12
   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 our tax counsel dated January 29, 2007, 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 believes 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, and
                  therefore that
                  dividends paid by us would not be eligible for the 15% tax rate,
                  because we are
                  incorporated in the Marshall Islands.
  **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 the
                  applicable United States Securities and Exchange Commission, or
                  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. As of December 31,
                  2006 OSG’s affiliate, OSG International, Inc., or OIN, owned approximately
                  44.5%
                  of our outstanding common stock. On January 23, 2007, OIN sold
                  4.6 million
                  shares of our common stock, reducing its ownership to approximately
                  29.17%.
                  Accordingly, if one or more shareholders other than OSG and its
                  affiliates (and
                  other than investment companies registered under the Investment
                  Company Act of
                  1940) 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.
   13
   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 and adversely affected.
  **RISKS
                  RELATING TO OUR INDUSTRY**
  **Vessel
                  values have recently been at or near historically high levels,
                  and charter rates
                  are volatile. 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 vessel
                  values have
                  recently reached historical peaks. 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 have recently been at or near historically
                  high levels.
                  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.
  **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;
   14
    ·
                          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
                  which extends to 2011  equaled about 38% of the existing world tanker
                  fleet as of February 2007 and we cannot assure you that the order
                  book will not
                  increase further in proportion to the existing fleet. The newbuilding
                  order book
                  is not fully booked for 2010. 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
                  fleet
                  of seven vessels is 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.
  **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.
   15
  **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. From January
                  1, 2006
                  through December 31, 2006, vessels in our fleet have, while operating
                  in pools,
                  made one call to ports in Libya and four calls to ports in Iran
                  out of a total
                  of 347 calls on worldwide ports. On June 30, 2006, Libya was removed from
                  the U.S. government’s list of state sponsors of terrorism and is not subject to
                  sanctions or embargoes, while Iran continues to be subject to sanctions
                  and
                  embargoes imposed by the U.S. government and is identified by the
                  U.S.
                  government as a state sponsor 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.
                  Investor perception of the value of our common stock may be adversely
                  affected
                  by the consequences of war, the effects of terrorism, civil unrest
                  and
                  governmental actions in these and surrounding countries.
  **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.
  **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.
   16
   **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.
  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. For example, various jurisdictions
                  are considering
                  regulating the management of ballast waters to prevent the introduction
                  of
                  non-indigenous species that are considered to be invasive. 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.
   17
   **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.
   18
   **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
                  owned
                  approximately 44.5% of our outstanding common stock as of December
                  31, 2006. 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. On January
                  23, 2007, OIN
                  sold 4.6 million shares of our common stock in a registered public
                  offering
                  underwritten by Merrill Lynch & Co., reducing OIN’s beneficial ownership in
                  DHT to approximately 29.17%. If OIN were to sell additional shares
                  of our common
                  stock 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.
  On
                  October 18, 2006, all shares held by OIN and its affiliates became eligible
                  to be sold into the public market pursuant to Rule 144 under the Securities
                  Act, subject to certain volume limitations.
  **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.
   19
   **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.
  **ITEM
                                4.**
                            
                            **INFORMATION
                                ON THE COMPANY****A.**
                            
                            **HISTORY
                                AND DEVELOPMENT OF THE
                                COMPANY**
 
 **General
                    Information**
  We
                    were
                    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**
 
 We
                    operate a fleet of double hull tankers. Our fleet currently consists
                    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 6.9 years as of December 31,
                    2006, compared with an average age of approximately 11.1 years for the
                    world crude tanker fleet.
   20
   We
                    acquired the seven vessels in our fleet from subsidiaries of
                    OSG on October 18,
                    2005 in exchange for cash and shares of our common stock and
                    we have chartered
                    these vessels back to subsidiaries of OSG. OSG, one of the world’s largest
                    bulk-shipping companies, owns and operates a modern fleet of
                    137 vessels
                    (including newbuildings on order and the seven vessels that comprise
                    our fleet)
                    that have a combined carrying capacity of 13.4 million dwt. and 865,000 cbm
                    as of December 31, 2006. OSG’s fleet consists of both internationally flagged
                    and U.S. flagged vessels that transport crude oil, petroleum
                    products and dry
                    bulk commodities.
  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.
  **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**
  Effective
                    October 18, 2005, our wholly owned subsidiaries time chartered
                    our vessels to
                    the charterers 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 guarantee
                    the
                    obligations of each of our subsidiaries under the charters and
                    OSG guarantees
                    each charterers’ obligation to make charter payments to us.
   21
   **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*Overseas
                                      Regal*
                                  
                                  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*Overseas
                                      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 performs
                    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.
  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.
   22
   **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
                                  Overseas
                                    Regal)
                                
                                Aframax
                                  (*Overseas
                                    Cathy*
                                  **and
                                    *Overseas Sophie*)
                                
                                Aframax
                                  (*Rebecca*
                                    and
                                  *Overseas
                                    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 *Overseas Regal* 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 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 guaranteed 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 was 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:
   23
   ·
                            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
                                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·
                            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 is also 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 is determined by:
  ·
                            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 will not
                    be 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 V Pluses,
                    and the Aframax
                    International Pool, which operates Aframaxes. Our vessels are
                    currently operated
                    in these pools. The Tankers International Pool currently consists
                    of
                    43 VLCCs and V Pluses, including our three VLCCs, and the Aframax
                    International Pool consists of 43 Aframaxes, 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 continue to 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.
   24
   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·
                            *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 will be deemed
                    earned for the
                    period that the vessel is operating on the spot market and is
                    on hire under our
                    time charter. TCE revenue will be 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 will be 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 will be 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 will be 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.
   25
   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 will be 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 will be 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:
  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:
   26
   ·
                                Calculation
                                    of voyage duration. The voyage duration for each notional route
                                    will
                                    be 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 will be 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 Overseas Ania**:*  loading 20 tons;
                    discharging 20 tons.
  *For
                    VLCCs**:*  loading 50 tons; discharging 200
                    tons.
  ***Bunker
                    costs***
  Bunkers
                    used in the calculation of freight income will be determined
                    based on speed,
                    distance and consumption of bunkers at sea and in port. Bunker
                    costs will be
                    equal to the bunkers used multiplied by the bunker price. Bunker
                    prices will be
                    as published by Platts Bunkerwire, or a similar publication or
                    quotation service
                    mutually acceptable to us and the charterer, and will be 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 will be 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 will be split
                    2 days loading, 2 days discharging and 1 day idling.
  *For
                    VLCCs**:*  7.5 days, which will be split
                    3 days loading, 3 days discharging and 1.5 days idling.
  Distance
  The
                    distance for each notional route will be 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 Overseas 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.
   27
   *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.
  Tanker
                    Management will be 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, $250,000 for claims
                                on any of our VLCCs and
                                $125,000 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 that is not covered by loss of hire insurance. 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
                    (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 through October
                    2007 and will
                    increase by 2.5% per year thereafter for the duration of the
                    agreement.
   28
  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
                                      17, 2012
                                  
                                  7,354/day
                                  
                                  6,562/day
  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 will be 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 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*Overseas
                                          Regal*
                                      
                                      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*Overseas
                                          Ania*
                                      
                                      1994
                                      
                                      94,848
                                      
                                      Marshall
                                          Islands
                                      
                                      ABS
  The
                    Overseas Regal 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.
   29
   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.
  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
                    has arranged 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.
   30
  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 29 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 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 our
                    tankers are double hulled and are thus not subject to phase-out
                    under existing
                    IMO regulations.
   31
  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.
  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 $943 for each additional gross ton over
                    5,000. For vessels of over 140,000 gross tons, liability will
                    be limited to
                    approximately $134 million. As the convention calculates liability in terms
                    of a basket of currencies, these figures are based on currency
                    exchange rates on
                    January 8, 2007. 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
                    Shipboard Oil
                    Pollution Emergency Plans, or SOPEPs. Periodic training and drills
                    for response
                    personnel and for vessels and their crews are required. In addition
                    to SOPEPs,
                    Tanker Management has adopted for our vessels Shipboard Marine
                    Pollution
                    Emergency Plans, or SMPEPs, which cover potential releases not
                    only of oil but
                    of any noxious liquid substances (known as NLSs).
   32
  **U.S.
                    REQUIREMENTS**
  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 had historically limited 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. Federal legislation signed into law on July 11, 2006
                    increased these limits to the greater of $1,900 per gross ton
                    or
                    $16 million per tanker that is over 3,000 gross tons (subject to
                    possible adjustment for inflation). For our vessels, the increased
                    limits became
                    effective on October 9, 2006. OPA 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.
  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
                    previous limits of liability described above for OPA and CERCLA
                    (combined),
                    which combined limit for tankers was increased from $1,500 per
                    gross ton to
                    $2,200 per gross ton effective October 9, 2006, when the increased
                    liability limits under OPA went into effect (as described above).
                    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 starting in 2015. All of our vessels
                    have double
                    hulls.
   33
   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.
  In
                    addition, the U.S. Clean Water Act prohibits the discharge of
                    oil or hazardous
                    substances in U.S. navigable waters and imposes strict liability
                    in the form of
                    penalties for unauthorized discharges. The Clean Water Act also
                    imposes
                    substantial liability for the costs of removal, remediation and
                    damages and
                    complements the remedies available under the more recent OPA
                    and CERCLA,
                    discussed above. The U.S. Environmental Protection Agency (or
                    EPA) has exempted
                    the discharge of ballast water and other substances incidental
                    to the normal
                    operation of vessels in U.S. ports from Clean Water Act permitting
                    requirements.
                    However, on March 30, 2005, a U.S. District Court ruled that the EPA
                    exceeded its authority in creating an exemption for ballast water.
                    On
                    September 18, 2006, the court issued an order invalidating the exemption
                    in
                    EPA’s regulations for all discharges incidental to the normal operation
                    of a
                    vessel as of September 30, 2008, and directing EPA to develop a system for
                    regulating all discharges from vessels by that date. Although
                    the EPA has
                    indicated that it will appeal this decision, if the exemption
                    is repealed, we
                    would be subject to Clean Water Act permit requirements that
                    could include
                    ballast water treatment obligations that could increase the cost
                    of operating in
                    the United States. For example, this could require the installation
                    of equipment
                    on our vessels to treat ballast water before it is discharged
                    or the
                    implementation of other port facility disposal arrangements or
                    procedures at
                    potentially substantial cost, and/or otherwise restrict our vessels
                    from
                    entering U.S. waters.
  **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 starting in 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 our tankers 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. Certain
                    member states of the European Union, by virtue of their national
                    legislation,
                    already impose criminal sanctions for pollution events under
                    certain
                    circumstances. It is impossible to predict what additional legislation
                    or
                    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.
   34
   **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, 2006:
  Subsidiary
                                Vessel
                                State
                                    of Jurisdiction
                                  or
                                    Incorporation
                                Percent
                                    of
                                  OwnershipAnn
                                    Tanker Corporation
                                *Overseas
                                    Ann*
                                *Marshall
                                    Islands*
                                *100%*Chris
                                    Tanker Corporation
                                *Overseas
                                    Chris*
                                *Marshall
                                    Islands*
                                *100%*Regal
                                    Unity Tanker Corporation
                                *Overseas
                                    Regal*
                                *Marshall
                                    Islands*
                                *100%*Cathy
                                    Tanker Corporation
                                *Overseas
                                    Cathy*
                                *Marshall
                                    Islands*
                                *100%*Sophie
                                    Corporation
                                *Overseas
                                    Sophie*
                                *Marshall
                                    Islands*
                                *100%*Rebecca
                                    Corporation
                                *Rebecca*
                                *Marshall
                                    Islands*
                                *100%*Ania
                                    Aframax Corporation
                                *Overseas
                                    Ania*
                                *Marshall
                                    Islands*
                                *100%*
 
 **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, 2006:
  Vessel
                                      Type
                                      Approximate
                                        DWT
                                      Construction
                                      Flag*Overseas
                                          Ann*
                                      VLCC
                                      309,327
                                      Double-Hull
                                      Marshall
                                          Islands*Overseas
                                          Chris*
                                      VLCC
                                      309,285
                                      Double-Hull
                                      Marshall
                                          Islands*Overseas
                                          Regal*
                                      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*Overseas
                                          Ania*
                                      Aframax
                                      94,848
                                      Double-Hull
                                      Marshall
                                          Islands
 
 **ITEM
                                4A.**
                            
                            **UNRESOLVED
                                STAFF COMMENTS****Not
                                applicable.****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 our
                    consolidated financial statements and our predecessor combined
                    carve-out
                    financial statements, which we call our combined financial statements,
                    and the
                    related notes 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.*
   35
   *The
                    following discussion of our financial condition and results of
                    operations should
                    be read in conjunction with our consolidated financial statements.
                    This
                    discussion contains forward-looking statements based on assumptions
                    about our
                    future business. Our actual results may differ from those contained
                    in the
                    forward-looking statements and such differences may be
                    material.*
  **OVERVIEW
                    - PREDECESSOR**
  For
                    the
                    period from January 1, 2005 through October 17, 2005 and for
                    the year ended
                    December 31, 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
                    from 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 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 current operations 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.
 36






**FACTORS
        AFFECTING OUR RESULTS**
  After
        the
        closing of the IPO on October 18, 2005, the principal factors that affect
        our
        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
        revenues are principally derived from fixed rate time charters with subsidiaries
        of OSG to which our seven vessels have been chartered. In addition, the amount
        of additional hire that we receive under our charter arrangements is dependent
        on the revenues of our vessels in the Tankers International (VLCCs) and the
        Aframax International (Aframaxes) pools. These revenues are 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. The tanker
        industry has historically been highly cyclical, experiencing volatility in
        profitability, vessel values and freight rates.
  Our
        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) salary paid to our current executive
        officers, which is fixed during the terms of their employment agreements
        and any
        additional employment agreements we may enter into in the future, and
        (v) our directors’ fees, none of our future fees or expenses are
        fixed.  Changes to our business, such as the hiring of additional
        employees, will affect our expenses and our results.
  The
        charterers pay us a fixed basic charter rate monthly in advance and additional
        hire, if any, quarterly in arrears. We 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.
   37
   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, 2006
                        
                        
                        2005
                        
                        
                        Year
                            Ended
                          December
                            31, 2004Oct
                            18 – Dec 31
                        
                        
                        Jan
                            1 – Oct 17VLCCs
                        
                        $
                        46,900
                        
                        
                        $
                        50,300
                        
                        
                        $
                        53,392
                        
                        
                        $
                        77,422Aframaxes
                        
                        $
                        26,200
                        
                        
                        $
                        30,200
                        
                        
                        $
                        33,296
                        
                        
                        $
                        38,831
 
 **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 consolidated and predecessor 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
        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: (1) ratably over
        the estimated length of each voyage and (2) completed voyage. The
        recognition of voyage revenues ratably over the estimated length of each
        voyage
        is the most prevalent method of accounting for voyage revenues and the method
        used by the pools in which we participate. 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 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. 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.
   38
  **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**
  Combined
        fiscal 2005 amounts combine predecessor 2005 with successor 2005 by mathematical
        addition and do not comply with generally accepted accounting principles.
        Such
        data is being presented for analysis purposes only.
  **Income
        from Vessel Operations**
  Shipping
        revenues decreased by $17,514,000, or 16.8%, to $86,793,000 in 2006 from
        $104,307,000 in 2005. This decrease was primarily attributable to the new
        charter arrangements for our vessels starting on October 18, 2005.
  On
        October 18, 2005, we acquired the seven vessels 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, shipping revenues were $20,173,000, which consisted of basic hire
        of
        $14,667,000 and additional hire of $5,506,000.
   39
   During
        the period from January 1, 2005 through October 17, 2005, Shipping
        revenues for our predecessor, OSG Crude, were $84,134,000 compared to
        $136,205,000 for full year 2004. This decrease was a result of a shorter
        period
        in 2005 and lower average daily TCE rates in 2005 compared to 2004.
  For
        the
        period from January 1, 2005 through October 17, 2005 and for the year ended
        2004, all of our Shipping revenues were derived from pools which predominantly
        perform voyage charters. From October 18, 2005 through December 31, 2005
        and for
        the year ended 2006 all of our revenues were derived from our charter
        arrangements with OSG and consisted of a combination of base hire and additional
        hire paid to us by OSG.
  Prior
        to
        October 18, 2005, reliance on the spot market contributed to fluctuations
        in our
        predecessor’s revenue, cash flow and net income, but afforded our predecessor
        greater opportunity to increase income from vessel operations when rates
        rose.
        After October 18, 2005, our revenue, cash flow and net income is less dependent
        on the development in the spot market as the charter arrangements 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.
  Vessel
        expenses increased by $582,000 to $18,690,000 in 2006 from $18,108,000 in
        2005
        principally as a result of the management agreements entered into on October
        18,
        2005 with 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.
  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 Overseas Ania and Rebecca during
        the
        period from January 1, 2005 through October 17, 2005. On October 18, 2005,
        we
        acquired the seven vessels 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.
  Depreciation
        and amortization decreased by $1,025,000 to $16,915,000 in 2006 from $17,940,000
        in 2005. In 2005, depreciation and amortization included $925,000 attributable
        to amortization of capitalized drydock expenditures, whereas in 2006, the
        amounts related to drydocking are incorporated in the technical management
        fees
        paid to OSG.
  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.
  **General
        and Administrative Expenses**
  General
        and administrative expenses decreased by $4,116,000 to $2,389,000 in 2006
        from
        $6,505,000 in 2005. This decrease was mainly a result of the Company operating
        as an independent company from October 18, 2005 and from this date no longer
        being allocated general and administrative expenses by OSG as described
        below.
  General
        and administrative expenses for 2006 and for the period October 18, 2005 to
        December 31, 2005 include 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.
  General
        and administrative expenses for our predecessor consisted 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
        vessels. 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 and 2,533 days in 2004. Management believes these allocations
        reasonably present our predecessor’s financial position, results of operations
        and cash flows.
   40
   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. For the period from October 18, 2005 through December 31, 2005, general
        and administrative expenses were $746,000.
  **Interest
        Expense**
  Interest
        expense increased by $7,489,000 to $13,957,000 in 2006 from $6,468,000 in
        2005
        principally as a result of the increase in debt in connection with the
        acquisition of our seven vessels from OSG effective October 18,
        2005.
  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.
  **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 under our credit facility. We 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. Since our IPO we have paid the following
        dividends:
 
 **Operating
                            period**
                        
                        **Total
                            payment**
                        
                        **Per
                            share**
                        
                        **Record
                            date**
                        
                        **Payment
                            date**October
                            18-December 31, 2005
                        
                        $12.9
                            million
                        
                        $0.43
                        
                        March
                            10, 2006
                        
                        March
                            24, 2006January
                            1-March 31, 2006
                        
                        $15.9
                            million
                        
                        $0.53
                        
                        June
                            1, 2006
                        
                        June
                            16, 2006April
                            1-June 30, 2006
                        
                        $10.8
                            million
                        
                        $0.36
                        
                        August
                            18, 2006
                        
                        September
                            4, 2006July
                            1-September 30, 2006
                        
                        $12.6
                            million
                        
                        $0.42
                        
                        November
                            27, 2006
                        
                        December
                            6, 2006October
                            1-December 31, 2006
                        
                        $13.2
                            million
                        
                        $0.44
                        
                        February
                            22, 2007
                        
                        March
                            6,
                            2007
 
 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, 2006 we were in compliance with the 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 predecessor 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 for our predecessor or of future results.
   41
   Working
        capital at December 31, 2006 was approximately $15,431,000 compared with
        $12,176,000 at December 31, 2005. At December 31, 2006, additional hire related
        to the period from October 1, 2006 through December 31, 2006, which amounted
        to
        $4,009,000, had not been received from the charterers. 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.
  Net
        cash
        provided by operating activities was $53,998,000 in 2006 compared to $98,932,000
        in 2005. This decrease was primarily attributable to new charter arrangements
        for our vessels, which since October 18, 2005 have been on long term fixed
        rate charters to OSG. Net cash provided by operating activities was $83,039,000
        during the period from January 1, 2005 through October 17, 2005 compared
        with
        $84,248,000 in 2004. Net cash provided by operating activities was $15,893,000
        from October 18, 2005 through December 31, 2005. We had total debt outstanding
        of $236,000,000 at December 31, 2006, all of which is due to Royal Bank of
        Scotland. This was unchanged from December 31, 2005.
  During
        the second quarter of 2005, OSG made a capital contribution 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 advanced by OSG.
  **AGGREGATE
        CONTRACTUAL OBLIGATIONS**
  As
        of
        December 31, 2006 our long-term contractual obligations are as
        follows:
  
 $
                      in thousands
                  
                  **Summary
                      Long-Term Future Contractual Obligations****2007**
                  ****
                  ****
                  **2008**
                  ****
                  ****
                  **2009**
                  ****
                  ****
                  **2010**
                  ****
                  ****
                  **2011**
                  ****
                  ****
                  **Thereafter**
                  ****
                  ****
                  **Total**Ship
                      management agreements(1)
                  
                  
                  15,700
                  
                  
                  
                  16,100
                  
                  
                  
                  16,500
                  
                  
                  
                  15,900
                  
                  
                  
                  9,100
                  
                  
                  
                  900
                  
                  
                  
                  74,200Long-term
                      debt(2)
                  
                  
                  13,200
                  
                  
                  
                  13,200
                  
                  
                  
                  13,200
                  
                  
                  
                  13,200
                  
                  
                  
                  36,900
                  
                  
                  
                  249,000
                  
                  
                  
                  338,700Total
                  
                  
                  28,900
                  
                  
                  
                  29,300
                  
                  
                  
                  29,700
                  
                  
                  
                  29,100
                  
                  
                  
                  46,000
                  
                  
                  
                  249,900
                  
                  
                  
                  412,900
 
 (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 five year 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 may 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.
   42
   Marshall
        Islands law generally prohibits the payment of dividends other than from
        surplus
        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.
  **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 an 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, 2006, we had a five year swap effective as of October 18, 2005
        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 be reduced as set forth below.
   43
   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 for five years 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 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  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; 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:
  ·
                incurring
                    additional indebtedness without the prior consent of the
                    lenders;
   44
   ·
                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, is 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;·
                    breach
                        of a time charter or a charter hire guaranty in connection
                        with any of our
                        vessels;
    45
   ·
                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, and Rolf Wikborg was reelected as our
        Class III director at our annual stockholders meeting on June 22,
        2006. All of our current directors are independent.
  Name
                        
                        Age
                        
                        PositionErik
                            A. Lind
                        
                        51
                        
                        Class I
                            Director and ChairmanRandee
                            Day
                        
                        58
                        
                        Class II
                            DirectorRolf
                            A. Wikborg
                        
                        48
                        
                        Class III
                            DirectorOle
                            Jacob Diesen
                        
                        59
                        
                        Chief
                            Executive OfficerErik
                            Ubøe
                        
                        46
                        
                        Chief
                            Financial OfficerTom
                            R. Kjeldsberg
                        
                        35
                        
                        Senior
                            Vice President, Business
                            Development
  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
        2009.
  Set
        forth
        below is a brief description of the business experience of our directors
        and
        executive officers.
  *Erik
        A. Lind—Chairman of the Board.*Mr. Erik A. Lind has been chief executive of
        Tufton Oceanic and Managing Director of Tufton Oceanic Ltd. since 2004. Tufton
        Oceanic is a Fund Management and Investment banking firm for the Marine and
        Energy related sectors. 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 Tufton Oceanic. 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.
   46
   *Randee
        Day—Director.*Ms. Randee Day has been a Managing Director at Seabury
        Transportation Holdings LLC, 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 president and
        chief executive officer 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. Rolf A. Wikborg is Managing Director of AMA
        Norway A/S and a director of 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 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; I.M. Skaugen Marine Services 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; and FSN Capital
        Holding Ltd., Jersey, a private equity firm. Mr. Diesen is a citizen of
        Norway.
  *Eirik
        Ubøe—Chief Financial Officer.*Mr. Eirik 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 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.
   47
   *Tom
        R. Kjeldsberg – Senior Vice President, Business Development.* Mr. Kjeldsberg
        has 10 years investment banking experience, mainly within the
        maritime/transportation industries. From 2002 through 2007, he was a
        Director in the Corporate Finance division of DnB NOR Markets, Oslo, one
        of the
        world’s leading shipping and offshore banks. Mr. Kjeldsberg has also served as
        an Associate in the Corporate Finance group of Merrill Lynch in London and
        Analyst in the Project Finance group of Cambridge Partners in New York. He
        holds
        an MBA from the IESE Business School in Barcelona, Spain. Mr. Kjeldsberg
        is a
        citizen of Norway.
  **B.**
                
                **COMPENSATION**
  **DIRECTORS
        COMPENSATION**
  Each
        member of our board of directors is currently paid an annual fee of $42,500,
        plus reimbursement for expenses incurred in the performance of duties as
        members
        of our board of directors. We pay our chairman an additional $12,500 per
        year to
        compensate him for the extra duties incident to that office. We pay the head
        of
        our audit committee an additional $8,750 per year and an additional $3,750
        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 $1,250 for each board
        meeting attended. On May 10, 2006, we awarded each of our directors 1,000
        shares
        of restricted stock. These shares of restricted stock vested and were issued
        on
        October 18, 2006. On November 8, 2006 each member of our board of
        directors was awarded 3,614 shares of restricted stock of which 2,614 vest
        in
        three equal amounts in May 2007, May 2008 and May 2009, subject
        to each member of our board of directors remaining a member of our board
        of
        directors and certain performance hurdles being met. The remaining 1,000
        shares
        of restricted stock each vest in three equal amounts in May 2007,
        May 2008 and May 2009, subject to each member of our board of
        directors remaining a member of our board of directors. During the vesting
        period of the shares of restricted stock awarded to our directors on
        November 8, 2006, each director will be credited with an additional number
        of shares of restricted stock in an amount equal to the value of the dividends
        that would have been paid on the awarded shares had the shares vested on
        the
        date of the award. These additional shares will be transferred to each director
        as the shares vest.
 
 We
        have
        no service contracts between us and any of our directors providing for benefits
        upon termination of their employment or service.
  **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 NOK 1,625,000, which includes benefits. In
        addition, each is reimbursed for expenses incurred in the performance of
        their
        duties as our executive officers and receives the equity based compensation
        described below. Our senior vice president, Mr. Tom R. Kjeldsberg, receives
        an
        annual salary of NOK 1,500,000.
  **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 NOK 1,625,000. In addition, in connection with the IPO both
        Mr. Diesen and Mr. Ubøe received a combination of stock options and
        restricted stock that had a grant date value of $75,000 split equally between
        stock options and restricted stock. The 69,446 stock options have an exercise
        price of $12 per share and expire on October 18, 2015. Each executive is
        also
        eligible for additional grants under our 2005 Incentive Compensation Plan,
        as
        determined by the compensation committee of our board of directors. On
        November 8, 2006, Mr. Diesen and Mr. Ubøe were awarded 14,457 and
        9,939 shares of restricted stock, respectively, of which 11,332 and 6,814,
        respectively, vest in three equal amounts in May 2007, May 2008 and
        May 2009, subject to continued employment with DHT and certain performance
        hurdles being met. The remaining 3,125 shares of restricted stock each vest
        in
        three equal amounts in May 2007, May 2008 and May 2009, subject
        to continued employment with DHT. During the vesting period of the shares
        of
        restricted stock awarded to Mr. Diesen and Mr. Ubøe on
        November 8, 2006, Mr. Diesen and Mr. Ubøe will each be credited
        with an additional number of shares of restricted stock in an amount equal
        to
        the value of the dividends that would have been paid on the awarded shares
        had
        the shares vested on the date of the award. These additional shares will
        be
        transferred to Mr. Diesen and Mr. Ubøe as the shares
        vest.
   48
   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 (also, if
        the executive loses his position for good reason within six months following
        a
        change of control, the executive may under certain circumstances be entitled
        to
        payment in lieu of any other cash payments equal to twice the executive’s annual
        base salary and any unvested equity wards will become fully vested). 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 has
        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
        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.
  We
        have
        entered into an employment agreement with Mr. Kjeldsberg that sets forth
        his
        rights and obligations as our senior vice president.  Either Mr.
        Kjeldsberg or we may terminate the employment agreement for any reason at
        any
        time.  Pursuant to the employment agreement, Mr. Kjeldsberg receives a
        base salary per year in the amount of NOK 1,500,000.  In addition, Mr.
        Kjeldsberg is eligible to receive equity awards pursuant to the 2005 Incentive
        Compensation Plan.  In the event of a change of control, Mr.
        Kjeldsberg is entitled to an amount equal to twice his annual base salary,
        subject to certain conditions.  In the event we terminate Mr.
        Kjeldsberg’s employment, he is entitled to one year of severance, subject to
        certain conditions.  Pursuant to the employment agreement, Mr.
        Kjeldsberg has agreed to protect our confidential information.  He has
        also agreed during the term of the agreement and for a period of one year
        following his termination not to (i) engage in any business that is involved
        in
        the 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 (iii) form,
        or
        acquire a two percent or greater equity ownership, voting or profit
        participation in, any of our competitors.
  **Stock
        Plan**
  **2005
        Incentive Compensation Plan**
  We
        established the 2005 Incentive Compensation Plan, which we call the Plan,
        prior
        to the consummation of our 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.
   49
   *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 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.
   50
   *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 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:
   51
   ·
                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 June 7, 2015, the tenth anniversary of
        the
        date the Plan was approved by our stockholders.
  **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, performs the functions of
        our
        audit committee, compensation committee and nominating and corporate governance
        committee.
  The
        purpose of the audit committee is to oversee (i) management’s conduct of
        our financial reporting process (including the development and maintenance
        of
        systems of internal accounting and financial controls), (ii) the integrity
        of our financial statements, (iii) our compliance with legal and regulatory
        requirements and ethical standards, (iv) significant financial transactions
        and financial policy and strategy, (v) the qualifications and independence
        of our outside auditors, (vi) the performance of our internal audit
        function and (vii) the outside auditors’ annual audit of our financial
        statements.  Ms. Day is our “audit committee financial expert” as that
        term is defined in Item 401(h) of Regulation S-K.
  The
        purpose of the compensation committee is to (i) discharge the board’s
        responsibilities relating to the evaluation and compensation of our executives,
        (ii) oversee the administration of our compensation plans,
        (iii) review and determine director compensation and (iv) prepare any
        report on executive compensation required by the rules and regulations of
        the
        SEC.
  The
        purpose of the nominating and corporate governance committee to
        (i) identify individuals qualified to become board members and recommend
        such individuals to the board for nomination for election to the board,
        (ii) make recommendations to the board concerning committee appointments,
        (iii) review and make recommendations for executive management
        appointments, (iv) develop, recommend and annually review corporate
        governance guidelines for the Company and oversee corporate governance matters
        and (v) coordinate an annual evaluation of the board and its
        chairman.
   52
   **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.
  **D.**
                
                **EMPLOYEES**
  As
        of
        December 31, 2006, we had 2 employees. Our employees are not represented
        by any
        collective bargaining agreements and we have never experienced a work
        stoppage.  In March 2007, we hired an additional employee to take on
        responsibilities relating to business development.
  **E.**
                
                **SHARE
                    OWNERSHIP**
  See
“Item
        7.A Major Shareholders”.
  **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 owned 13,351,400 shares, or 44.5%, of our common stock upon
        completion of the IPO. We did not receive any of the proceeds from the exercise
        of the over-allotment option. As of December 31, 2006, OIN owned 13,351,400
        shares, or 44.5%, of our common stock. On January 23, 2007, OIN sold 4,600,000
        shares of our common stock in a registered public offering underwritten by
        Merrill Lynch & Co., reducing OIN’s beneficial ownership in DHT to
        approximately 29.17%.
    53
 
 
 **Name**
                  
                  **Number
                      of**
                    **Shares**
                  
                  **Percent****Persons
                      owning more than 5% of a class of our equity
                      securities.**OSG
                      International, Inc.(1)
                  
                  8,751,000
                  
                  29.17%Scott
                      A. Bommer(2)
                  
                  1,705,527
                  
                  5.68%**Directors**Erik
                      A. Lind(3)
                  
                  1,000
                  
                  *Randee
                      Day(3)
                  
                  1,000
                  
                  *Rolf
                      A. Wikborg(3)
                  
                  1,000
                  
                  ***Executive
                      Officers**Ole
                      Jacob Diesen(4)
                  
                  14,700
                  
                  *Eirik
                      Ubøe(5)
                  
                  14,700
                  
                  *Directors
                      and executive officers as a group (five persons)
                  
                  32,400
                  
                  *
 
 *
              *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)*
              *Based
                  on a Schedule 13G filed with the Commission on February 26, 2007
                  by Scott
                  A. Bommer, individually and (a) as managing member of SAB Capital
                  Advisors, L.L.C., for itself and as the general partner of (i) SAB
                  Capital Partners, L.P. and (ii) SAB Capital Partners II, L.P.;
                  and (iii)
                  SAB Overseas Master Fund, L.P.; and (b) as managing member of SAB
                  Capital
                  Management, L.L.C., for itself and as the general partner of SAB
                  Capital
                  Management, L.P. The address of the principal business office of
                  each of
                  these reporting persons is 712 Fifth Avenue, 42nd Floor, New York,
                  NY
                  10019.**(3)*
              *Does
                  not include 3,614 shares of restricted stock subject to vesting
                  conditions.**(4)*
              *Includes
                  11,575 options to purchase common stock with an exercise price
                  of $12 per
                  share and expiring on October 18, 2015. Does not include 23,148
                  options
                  with an exercise price of $12 per share and expiring on October
                  18, 2015
                  subject to vesting conditions or 14,457 shares of restricted stock
                  subject
                  to vesting conditions.**(5)*
              *Includes
                  11,575 options to purchase common stock with an exercise price
                  of $12 per
                  share and expiring on October 18, 2015. Does not include 23,148
                  options
                  with an exercise price of $12 per share and expiring on October
                  18, 2015
                  subject to vesting conditions or 9,939 shares of restricted stock
                  subject
                  to vesting conditions.*
 
 Our
        major
        shareholders have the same voting rights as our other
        shareholders.  No corporation or foreign government or other natural
        or legal person(s) owns more than 50% of our outstanding stock. We are not
        aware
        of any arrangements, the operation of which may at a subsequent date result
        in a
        change of control of DHT.
  We
        entered into a registration rights agreement with OIN pursuant to which it
        had
        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.
   54
  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.
  OIN
        has
        exercised one of its three demand registration rights under the registration
        rights agreement.  On January 23, 2007, OIN sold 4,600,000 shares of
        our common stock that were registered pursuant to the registration rights
        agreement.
  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 we acquired our assets, which consists of our fleet of seven vessels,
        from
        subsidiaries of OSG simultaneously with the completion of our 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 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.
  **THE
        CHARTERS**
  Our
        wholly owned subsidiaries have time chartered 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 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. OIN has exercised one of its three demand
        registration rights under the registration rights agreement.  On
        January 23, 2007, OIN sold 4,600,000 shares of our common stock that were
        registered pursuant to the registration rights agreement.
  
 55
   **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-2.4.
                
                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, June,
        September and December 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.
  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 any commitment in place to purchase any specific vessels,
        we intend to grow our fleet by acquiring additional vessels in the future
        in a
        manner that is accretive to earnings and dividends per share over time. We
        expect to fund all or a portion of any future vessel acquisitions with
        borrowings under the $150 million vessel acquisition tranche of our 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. In such a case, (i) our available cash from operations would be
        increased by the amount of interest expense incurred on the debt deemed to
        have
        been financed with equity during the related period, and (ii) the number of
        shares outstanding would be increased by a number of shares that, if issued,
        would have generated net proceeds that would have been sufficient to repay
        the
        debt deemed to have been financed with equity as of the beginning of the
        related
        period (based on the market price of our common stock as of the determination
        date).
   56
   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 other factors. Other than (i) the technical
        management fees payable under our ship management agreements, which after
        two
        years are cancelable by Tanker Management upon 90 days notice,
        (ii) interest payable on the $236 million of indebtedness that is
        outstanding under our credit facility, which we fixed for five years at a
        rate
        of 5.6% effective as of October 18, 2005, (iii) commitment fees under our
        credit facility (for so long as we do not make any further borrowings under
        the
        vessel acquisition facility or working capital facility), (iv) salary 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.
  Marshall
        Islands law generally prohibits the payment of dividends other than from
        surplus
        or while a company is insolvent or would be rendered insolvent by the payment
        of
        such a dividend. We do not expect to pay any income taxes in the Marshall
        Islands. We also do not expect to pay any income taxes in the United States.
        Please see the sections of this report entitled “Taxation”.
  **B.**
                
                **SIGNIFICANT
                    CHANGES**None.
  **ITEM
                    9.**
                
                **THE
                    OFFER AND LISTING****A.**
                
                **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 is listed for trading on the New York Stock Exchange and
        is traded under the symbol “DHT”. The following table lists the high and low
        closing market prices for the Company’s common stock for the periods indicated
        as reported:
  High
                      
                      
                      LowYear
                          ended December 31, 2006
                      
                      $
                      16.44
                      
                      
                      $
                      12.10Quarter
                          ended:March
                          31, 2006
                      
                      
                      14.25
                      
                      
                      
                      12.57June
                          30, 2006
                      
                      
                      13.50
                      
                      
                      
                      12.10September
                          30, 2006
                      
                      
                      15.49
                      
                      
                      
                      12.25December
                          31, 2006
                      
                      
                      16.44
                      
                      
                      
                      13.01Month
                          ended:October
                          31, 2006
                      
                      
                      14.35
                      
                      
                      
                      13.01November
                          30, 2006
                      
                      
                      14.24
                      
                      
                      
                      13.53December
                          31, 2006
                      
                      
                      16.44
                      
                      
                      
                      13.98January
                          31, 2007
                      
                      
                      16.42
                      
                      
                      
                      14.36February
                          28, 2007
                      
                      
                      15.45
                      
                      
                      
                      14.25March
                          31, 2007
                      
                      
                      15.18
                      
                      
                      
                      14.04
   57
  
 5.
                
                TYPE
                    AND CLASS OF SECURITIES
                  Not
                    applicable.6.
                
                LIMITATIONS
                    OF SECURITIES
                  Not
                    applicable.7.
                
                RIGHTS
                    CONVEYED BY SECURITIES ISSUED
                  Not
                    applicable.**B.**
                
                **PLAN
                    OF DISTRIBUTION**Not
                    applicable.**C.**
                
                **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”.**D.**
                
                **SELLING
                    SHAREHOLDERS**Not
                    applicable.**E.**
                
                **DILUTION
                    FROM OFFERING**Not
                    applicable.**F.**
                
                **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 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. As of December
        31, 2006, we had outstanding 30,009,250 shares of common stock and no
        shares of preferred stock. All of our shares of stock are in registered
        form.
   58
   **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·
                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.
  In
        February 2007, our board of directors amended sections 3.10 and 3.11 of the
        bylaws, which relate to actions by written consent of the board and telephonic
        meetings of the directors, respectively, to permit the board to take action
        in a
        more expeditious manner.
  **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.
   59
   **DISSENTERS’
        RIGHTS OF APPRAISAL AND PAYMENT**
  Under
        the
        Business Corporation Act of the Republic of the Marshall Islands, or 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.
  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.
   60
  **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.
  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.
  **TRANSFER
        AGENT**
  The
        registrar and transfer agent for the common stock is Mellon Investor Services
        LLC.
   61
 
 **LISTING**
  Our
        common stock is listed on the New York Stock Exchange under the symbol
“DHT”.
  **C.**
                
                **MATERIAL
                    CONTRACTS**
  Other
        than the Executive Officer Employment Agreements (described below), 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 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. We have also entered into an employment
        agreement with Mr. Tom R. Kjeldsberg that sets forth his rights and
        obligations as our senior vice president. Either Mr. Kjeldsberg or we may
        terminate the employment agreement 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.
  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.
   62
   **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
        theUnited 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; and2.
                
                either(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.
        As a
        result of 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, and will continue to be, the sole class of its issued
        and outstanding stock, is , and will continue to be, “primarily traded” on the
        New York Stock Exchange, which is an established securities market for these
        purposes.
   63
   The
        Publicly-Traded Test also requires
        the Company’s common stock be “regularly traded” on an established securities
        market.  Under the regulations, the Company’s 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 or1/6of 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, and will continue to satisfy, 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 and will continue to be 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
        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.
  As
        of
        December 31, 2006, OIN owned approximately 44.5% of the Company’s common stock
        and is a 5% Stockholder. Based on OIN’s ownership and our review of the SEC
        filings discussed above, the Company believes that it did satisfy the
        Publicly-Traded Test and was not subject to the 5 Percent Override Rule during
        2006.  The Company currently believes that it will continue to satisfy
        the Publicly-Traded Test, although no assurances can be given that this will
        be
        the case.
  In
        any
        year that the 5 Percent Override Rule is triggered with respect to the Company,
        the Company is eligible for the exemption from tax under Section 883 only
        if it can nevertheless satisfy the Publicly-Traded Test (which requires,
        among
        other things, showing that the exception to the 5 Percent Override Rule applies)
        or if it can satisfy the 50% Ownership Test. In either case, 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.
   64
   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.
  **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.
   65
   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
        2010) 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.
  *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.
   66
   *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 January 29, 2007 stating that it was more likely than not that the
        Company
        was is not currently a PFIC. This opinion was based on the Company’s operations
        and certain representations made by OSG and the Company, 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 and the Company 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.
  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.
   67
   *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), 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 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.
   68
   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.
  **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;
   69
   ·
                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 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.
   70
   **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**Not
                    applicable.**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**
  In
        accordance with Rule 13a-15(f) of the Securities Exchange Act of 1934, the
        management of Double Hull Tankers, Inc. and its subsidiaries (the “Company”) is
        responsible for the establishment and maintenance of adequate internal controls
        over financial reporting for the Company. Internal control over financial
        reporting is a process designed to provide reasonable assurance regarding
        the
        reliability of financial reporting and the preparation of financial statements
        for external purposes in accordance with generally accepted accounting
        principles. The Company’s system of internal control over financial reporting
        includes those policies and procedures that (i) pertain to the maintenance
        of records that, in reasonable detail, accurately and fairly reflect the
        transactions and dispositions of the assets of the Company; (ii) provide
        reasonable assurance that transactions are recorded as necessary to permit
        preparation of financial statements in accordance with generally accepted
        accounting principles, and that receipts and expenditures of the Company
        are
        being made only in accordance with authorizations of management and directors
        of
        the Company; and (iii) provide reasonable assurance regarding prevention or
        timely detection of unauthorized acquisition, use, or disposition of the
        Company’s assets that could have a material effect on the financial statements.
        Management has performed an assessment of the effectiveness of the Company’s
        internal controls over financial reporting as of December 31, 2006 based on
        the provisions of Internal Control—Integrated Framework issued by the Committee
        of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on our
        assessment, management determined that the Company’s internal controls over
        financial reporting was effective as of December 31, 2006 based on the
        criteria in Internal Control—Integrated Framework issued by COSO.
   71
   
 **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.
  **ITEM16B.**
                
                **CODE
                    OF ETHICS**
  The
        Company has adopted a Code of Business Conduct and Ethics that applies to
        all
        employees including its Chief Executive Officer (its principal executive
        officer) and Chief Financial Officer (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.
  **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
        2006.
  **Fees**
                                  
                                  **2006**Audit
                                      Fees (1)
                                  
                                  $
                                  179,000Audit-Related
                                      Fees (2)
                                  
                                  
                                  60,000Total
                                  
                                  $
                                  239,000
 
 (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, 2006.(2)
              Audit-related
                  fees consisted of assistance with preparation of the registration
                  statement relating to the sale of 4.6 million shares by OSG. DHT
                  was
                  reimbursed by OSG for these
                  expenses.
 
 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 2006.
   72
   **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**
  The
        following financial statements, together with the related report of Ernst
&
Young LLP, an independent registered public accounting firm, are filed as
        part
        of this Annual Report:
  **Double
                    Hull Tankers, Inc. Consolidated and Predecessor Combined Carve-Out
                    Financial Statements**
                
                **Page**Reports
                    of Independent Registered Public Accounting Firm
                
                F-2Consolidated
                    Balance Sheets as of December 31, 2006 and 2005
                    (successor)
                
                F-4Consolidated
                    Statement of Operations for the year ended December 31, 2006,
                    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 year ended
                    December 31, 2004 (predecessor)
                
                F-5Consolidated
                    Statement of Changes in Stockholders’ Equity for the year ended December
                    31, 2006, 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 year ended December 31, 2004
                    (predecessor)
                
                F-6Consolidated
                    Statement of Cash Flows for the year ended December 31, 2006,
                    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 year ended
                    December 31, 2004 (predecessor)
                
                F-7Notes
                    to Double Hull Tankers, Inc. Consolidated and Predecessor Combined
                    Carve-Out Financial Statements
                
                F-8
  
    73
 
 **ITEM
                    19.**
                
                **EXHIBITS**
  1.1*
                
                Amended
                    and Restated Articles of Incorporation of Double Hull
                    Tankers, Inc.1.2
                
                Bylaws
                    of Double Hull Tankers, Inc., as amended2.1*
                
                Form
                    of Common Share Certificate2.2*
                
                Registration
                    Rights Agreement4.1*
                
                Form
                    of Credit Agreement4.2.1*
                
                Time
                    Charter ─ *Overseas Ann*4.2.2*
                
                Time
                    Charter ─ *Overseas Chris*4.2.3*
                
                Time
                    Charter ─ *Overseas Regal*4.2.4*
                
                Time
                    Charter ─ *Overseas Cathy*4.2.5*
                
                Time
                    Charter ─ *Overseas Sophie*4.2.6*
                
                Time
                    Charter ─ *Rebecca*4.2.7*
                
                Time
                    Charter ─ *Overseas Ania*4.3.1*
                
                Ship
                    Management Agreement ─ *Overseas Ann*4.3.2*
                
                Ship
                    Management Agreement ─ *Overseas Chris*4.3.3*
                
                Ship
                    Management Agreement ─ *Regal Unity*4.3.4*
                
                Ship
                    Management Agreement ─ *Overseas Cathy*4.3.5*
                
                Ship
                    Management Agreement ─ *Overseas Sophie*4.3.6*
                
                Ship
                    Management Agreement ─ *Rebecca*4.3.7*
                
                Ship
                    Management Agreement ─ *Overseas Ania*4.4*
                
                Charter
                    Framework Agreement4.5*
                
                OSG
                    Guaranty of Charterers’ Payments under Charters and Charter Framework
                    Agreement4.6*
                
                Double
                    Hull Tankers, Inc. Guaranty of Vessel Owners’ Obligations under
                    Management Agreement4.7*
                
                Double
                    Hull Tankers, Inc. Guaranty of Vessel Owners’ Obligations under
                    Charters4.8*
                
                Form
                    of Indemnity Agreement among OSG, OIN and certain subsidiaries
                    of the
                    Company related to existing recommendations.4.9**
                
                Employment
                    Agreement of Ole Jacob Diesen4.9.1*
                
                Indemnification
                    Agreement for Ole Jacob Diesen4.10**
                
                Employment
                    Agreement of Eirik Ubøe4.10.1**
                
                Indemnification
                    Agreement for Eirik Ubøe4.11
                
                Employment
                    Agreement of Tom R. Kjeldsberg4.12*
                
                2005
                    Incentive Compensation Plan
   74
   8.1
                
                List
                    of Significant Subsidiaries12.1
                
                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).
 **
        Incorporated herein by reference from the Company’s Annual Report on Form 20-F
        for the fiscal year ended December 31, 2005 (File No. 001-32640).
   75
   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 DiesenTitle:  Chief
                    Executive Officer
                  (Principal
                    Executive Officer)
 
  
 76






**Double
        Hull Tankers, Inc.**
 **Index
        to Consolidated Financial Statements**
  **Page****Double
                  Hull Tankers, Inc. Con****solidated
                  and Predecessor Combined Carve-Out Financial
                  Statements**Reports
                  of Independent Registered Public Accounting Firm
              
              F-2Consolidated
                  Balance Sheets as of December 31, 2006 and  2005
                  (successor)
              
              F-4Consolidated
                  Statements of Operations for the year ended December 31, 2006,
                  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 year ended
                  December 31, 2004 (predecessor)
              
              F-5Consolidated
                  Statements of Changes in Stockholders’ Equity for the year ended December
                  31, 2006, 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 year ended December 31, 2004
                  (predecessor)
              
              F-6Consolidated
                  Statements of Cash Flows for the year ended December 31, 2006,
                  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 year ended
                  December 31, 2004 (predecessor)
              
              F-7Notes
                  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 Directors and Stockholders
 Double
        Hull Tankers, Inc.
 
 We
        have audited the accompanying
        consolidated balance sheets of Double Hull Tankers, Inc. and subsidiaries
        (the Company) as of December 31, 2006 and 2005 and the related consolidated
        statements of operations, cash flows, and changes in stockholders’ equity for
        the year ended December 31, 2006 and 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 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 the Company’s internal
        control over financial reporting. Our audits 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 audits provide 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, 2006 and 2005, and the consolidated results of
        their operations and their cash flows for the year ended December 31, 2006
        and
        the period October 18, 2005 (commencement of operations) to
        December 31, 2005, in conformity with U.S. generally accepted accounting
        principles.
 
 /s/
                  ERNST & YOUNG LLP
 
 
 New
        York,
        New York
 March 15,
        2007








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 statements of operations, cash flows, and
        changes
        in stockholders’ equity for the period January 1, 2005 to October 17,
        2005 and the year ended December 31, 2004. 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 results of operations and cash flows of OSG Crude
        for the
        period January 1, 2005 to October 17, 2005 and the year ended
        December 31, 2004, in conformity with U.S. generally accepted accounting
        principles.
 
 /s/
                  ERNST & YOUNG LLP
 
 
 New
        York,
        New York
 March
        31,
        2006
   F-3
   **Double
        Hull
        Tankers, Inc.**
 **Consolidated
        Balance Sheets**
 **as
        of December 31, 2006 and 2005**
 
 **December 31,
                                              2006 Successor**
                                          
                                          
                                          **December 31,
                                              2005 Successor****(Dollars
                                              in thousands, except per share amounts)****ASSETS****Current
                                              assets**Cash
                                              and cash equivalents
                                          
                                          $
                                          17,680
                                          
                                          
                                          $
                                          15,893Voyage
                                              receivables from OSG
                                          
                                          
                                          4,009
                                          
                                          
                                          
                                          5,506Unrealized
                                              gain
                                              on interest rate swap
                                          
                                          
                                          1,712
                                          
                                          
                                          
                                          —Prepaid
                                              expenses
                                          
                                          
                                          331
                                          
                                          
                                          
                                          281Prepaid
                                              technical management fee to OSG
                                          
                                          
                                          1,324
                                          
                                          
                                          
                                          1,324**Total
                                              current assets**
                                          
                                          
                                          25,056
                                          
                                          
                                          
                                          23,004Vessels,
                                              net of accumulated depreciation
                                          
                                          
                                          322,577
                                          
                                          
                                          
                                          339,491Other
                                              assets including deferred debt issuance
                                              cost
                                          
                                          
                                          1,407
                                          
                                          
                                          
                                          1,567**Total
                                              assets**
                                          
                                          $
                                          349,040
                                          
                                          
                                          $
                                          364,062**LIABILITIES
                                              AND STOCKHOLDERS’ EQUITY****Current
                                              liabilities**Accounts
                                              payable and accrued expenses
                                          
                                          $
                                          3,456
                                          
                                          
                                          $
                                          3,895Unrealized
                                              loss
                                              on interest rate swap
                                          
                                          
                                          —
                                          
                                          
                                          
                                          807Deferred
                                              shipping revenues
                                          
                                          
                                          6,169
                                          
                                          
                                          
                                          6,126******Total
                                              current liabilities**
                                          
                                          
                                          9,625
                                          
                                          
                                          
                                          10,828**Long
                                              term liabilities**Long
                                              term debt
                                          
                                          
                                          236,000
                                          
                                          
                                          
                                          236,000**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 and 30,009,250
                                              shares issued and outstanding, respectively)
                                          
                                          
                                          300
                                          
                                          
                                          
                                          300Additional
                                              paid
                                              in capital
                                          
                                          
                                          108,395
                                          
                                          
                                          
                                          108,272Retained
                                              earnings
                                          
                                          
                                          (6,992
                                          )
                                          
                                          
                                          9,469Accumulated
                                              other comprehensive income/(loss)
                                          
                                          
                                          1,712
                                          
                                          
                                          
                                          (807
                                          )**Total
                                              stockholders’ equity**
                                          
                                          
                                          103,415
                                          
                                          
                                          
                                          117,234**Total
                                              liabilities and stockholders’ equity**
                                          
                                          $
                                          349,040
                                          
                                          
                                          $
                                          364,062
  See
        notes
        to accompanying financial statements






F-4


**Double
        Hull Tankers, Inc.**
 **Consolidated
        and Predecessor Combined Carve-Out Statements of
        Operations**
 
 **2005****Year
                          ended December 31,**
                        **2006**
                    
                    
                    **Successor**
                        **October
                          18**
                        **to**
                        **December 31**
                    
                    
                    **Predecessor**
                        **January
                          1**
                        **to**
                        **October
                          17**
                    
                    
                    **Predecessor**
                        **Year
                          ended December 31,**
                        **2004****(Dollars
                        in thousands except share and per share amounts)**Shipping
                        revenues
                    
                    $
                    86,793
                    
                    
                    $
                    20,173
                    
                    
                    $
                    84,134
                    
                    
                    $
                    136,205**Ship
                        Operating Expenses:**Voyage
                        expenses
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    772
                    
                    
                    
                    238Vessel
                        expenses
                    
                    
                    18,690
                    
                    
                    
                    3,675
                    
                    
                    
                    14,433
                    
                    
                    
                    15,601Depreciation
                        and amortization
                    
                    
                    16,915
                    
                    
                    
                    3,478
                    
                    
                    
                    14,462
                    
                    
                    
                    17,762General
                        and administrative (Prior to October 18, 2005: allocated from
                        Overseas Shipholding Group, Inc.)
                    
                    
                    2,389
                    
                    
                    
                    746
                    
                    
                    
                    5,759
                    
                    
                    
                    7,269Total
                        Ship Operating Expenses
                    
                    
                    37,994
                    
                    
                    
                    7,899
                    
                    
                    
                    35,426
                    
                    
                    
                    40,870Income
                        from Vessel Operations
                    
                    
                    48,799
                    
                    
                    
                    12,274
                    
                    
                    
                    48,708
                    
                    
                    
                    95,335Other
                        Income/(Expense)
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    (1,471
                    )
                    
                    
                    —Interest
                        Expense to a Wholly-owned Subsidiary of OSG
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    (574
                    )
                    
                    
                    (3,411
                    )Interest
                        Income
                    
                    
                    908
                    
                    
                    
                    67
                    
                    
                    
                    —
                    
                    
                    
                    —Interest
                        Expense and Amortization of Deferred Debt Issuance Costs
                    
                    
                    (13,957
                    )
                    
                    
                    (2,872
                    )
                    
                    
                    (3,022
                    )
                    
                    
                    (5,234
                    )Income
                        before Income Taxes
                    
                    
                    35,750
                    
                    
                    
                    9,469
                    
                    
                    
                    43,641
                    
                    
                    
                    86,690Provision
                        for Income Taxes
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —Net
                        Income
                    
                    $
                    35,750
                    
                    
                    $
                    9,469
                    
                    
                    $
                    43,641
                    
                    
                    $
                    86,690Basic
                        Net Income per Share
                    
                    $
                    1.19
                    
                    
                    $
                    0.32
                    
                    
                    $
                    62,344.28
                    
                    
                    $
                    123,842.88Diluted
                        Net Income per Share
                    
                    $
                    1.19
                    
                    
                    $
                    0.32
                    
                    
                    $
                    62,344.28
                    
                    
                    $
                    123,842.88Shares
                        Used in Computing Basic Net Income per Share
                    
                    
                    30,007,000
                    
                    
                    
                    30,006,250
                    
                    
                    
                    700
                    
                    
                    
                    700Shares
                        Used in Computing Diluted Net Income per Share
                    
                    
                    30,016,352
                    
                    
                    
                    30,008,190
                    
                    
                    
                    700
                    
                    
                    
                    700
 
 See
        notes
        to accompanying financial statements
    F-5
   
 **Double
        Hull Tankers, Inc.**
 **Consolidated
        and Predecessor Combined Carve-Out**
 **Statements
        of Changes in Stockholders' Equity**
  **Common
                                                                                                          Stock**
                                                                                                      ****
                                                                                                      ****
                                                                                                      ****
                                                                                                      ****
                                                                                                      ****
                                                                                                      ****
                                                                                                      ****
                                                                                                      ****
                                                                                                      ****
                                                                                                      ****
                                                                                                      ****
                                                                                                      ****
                                                                                                      ********
                                                                                                      ****
                                                                                                      **Shares**
                                                                                                      ****
                                                                                                      ****
                                                                                                      **Amount**
                                                                                                      ****
                                                                                                      ****
                                                                                                      **Paid-in
                                                                                                          Additional
                                                                                                          Capital**
                                                                                                      ****
                                                                                                      ****
                                                                                                      **Retained
                                                                                                          Earnings**
                                                                                                      ****
                                                                                                      ****
                                                                                                      **Accumulated
                                                                                                          Other
                                                                                                          Comprehensive
                                                                                                          Income/(Loss)**
                                                                                                      ****
                                                                                                      ****
                                                                                                      **Total**
                                                                                                      ********
                                                                                                      ****
                                                                                                      **(Dollars
                                                                                                          in
                                                                                                          thousands
                                                                                                          except
                                                                                                          shares)**Balance
                                                                                                          at
                                                                                                          December
                                                                                                          31,
                                                                                                          2003
                                                                                                      
                                                                                                      
                                                                                                      700
                                                                                                      
                                                                                                      
                                                                                                      $
                                                                                                      700
                                                                                                      
                                                                                                      
                                                                                                      $
                                                                                                      —
                                                                                                      
                                                                                                      
                                                                                                      $
                                                                                                      38,708
                                                                                                      
                                                                                                      
                                                                                                      $
                                                                                                      (1,804
                                                                                                      )
                                                                                                      
                                                                                                      $
                                                                                                      37,604Net
                                                                                                          Income
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      86,690
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      86,690Other
                                                                                                          Comprehensive
                                                                                                          Income/(Loss),
                                                                                                          effect
                                                                                                          of
                                                                                                          derivative
                                                                                                          instruments
                                                                                                      
                                                                                                      
                                                                                                      —
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      —
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      —
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      —
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      504
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      504Comprehensive
                                                                                                          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
                                                                                                          Income
                                                                                                      
                                                                                                      
                                                                                                      —
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      —
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      —
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      —
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      —Termination
                                                                                                          of
                                                                                                          predecessor
                                                                                                          interest
                                                                                                          rate
                                                                                                          swap
                                                                                                      
                                                                                                      
                                                                                                      —
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      —
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      —
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      —
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      1,300
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      1,300Comprehensive
                                                                                                          Income
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      44,941Capital
                                                                                                          Contribution
                                                                                                          by
                                                                                                          predecessor
                                                                                                          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
                                                                                                          October
                                                                                                          18
                                                                                                          to
                                                                                                          December
                                                                                                          31
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      9,469
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      9,469Other
                                                                                                          Comprehensive
                                                                                                          Income
                                                                                                      
                                                                                                      
                                                                                                      —
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      —
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      —
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      —
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      —Unrealized
                                                                                                          loss
                                                                                                          on
                                                                                                          interest
                                                                                                          rate
                                                                                                          swap
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      (807
                                                                                                      )
                                                                                                      
                                                                                                      
                                                                                                      (807
                                                                                                      )Other
                                                                                                          Comprehensive
                                                                                                          Income
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      8,662Issuance
                                                                                                          of
                                                                                                          common
                                                                                                          stock
                                                                                                      
                                                                                                      
                                                                                                      30,006,250
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      300
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      345,879
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      346,179Deemed
                                                                                                          distribution
                                                                                                          to
                                                                                                          predecessor
                                                                                                          stockholders
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      (237,612
                                                                                                      )
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      (237,612
                                                                                                      )Compensation
                                                                                                          related
                                                                                                          to
                                                                                                          options
                                                                                                          granted
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      5
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      5Balance
                                                                                                          at
                                                                                                          December 31,
                                                                                                          2005
                                                                                                      
                                                                                                      
                                                                                                      30,006,250
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      300
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      108,272
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      9,469
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      (807
                                                                                                      )
                                                                                                      
                                                                                                      
                                                                                                      117,234Net
                                                                                                          Income
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      35,750
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      35,750Other
                                                                                                          Comprehensive
                                                                                                          Income,
                                                                                                          effect
                                                                                                          of
                                                                                                          derivative
                                                                                                          instruments
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      2,519
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      2,519Other
                                                                                                          Comprehensive
                                                                                                          Income
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      38,269Cash
                                                                                                          dividends
                                                                                                          declared
                                                                                                          and
                                                                                                          paid
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      (52,211
                                                                                                      )
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      (52,211
                                                                                                      )Compensation
                                                                                                          related
                                                                                                          to
                                                                                                          options
                                                                                                          and
                                                                                                          restricted
                                                                                                          stock
                                                                                                          granted
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      123
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      
                                                                                                      123Issuance
                                                                                                          of
                                                                                                          restricted
                                                                                                          stock
                                                                                                          awards
                                                                                                      
                                                                                                      
                                                                                                      3,000Balance
                                                                                                          at
                                                                                                          December 31,
                                                                                                          2006
                                                                                                      
                                                                                                      
                                                                                                      30,009,250
                                                                                                      
                                                                                                      
                                                                                                      $
                                                                                                      300
                                                                                                      
                                                                                                      
                                                                                                      $
                                                                                                      108,395
                                                                                                      
                                                                                                      
                                                                                                      $
                                                                                                      (6,992
                                                                                                      )
                                                                                                      
                                                                                                      $
                                                                                                      1,712
                                                                                                      
                                                                                                      
                                                                                                      $
                                                                                                      103,415
  
 See
        notes
        to accompanying financial statements






F-6




**Double
        Hull Tankers, Inc.**
 **Consolidated
        and Predecessor Combined Carve-Out**
 **Statements
        of Cash Flow**
 
 **2005****Year
                        ended December 31, 2006**
                  
                  
                  **October
                        18 to**
                      **December
                        31**
                      **Successor**
                  
                  
                  **January
                        1 to**
                      **October
                        17**
                      **Predecessor**
                  
                  
                  **Year
                        ended December 31, 2004**
                      **Predecessor****Cash
                      Flows from Operating Activities:**Net
                      income
                  
                  $
                  35,750
                  
                  
                  $
                  9,469
                  
                  
                  $
                  43,641
                  
                  
                  $
                  86,690Items
                      included in net income not affecting cash flows:Depreciation
                  
                  
                  16,914
                  
                  
                  
                  3,478
                  
                  
                  
                  14,462
                  
                  
                  
                  16,785Amortization,
                      including deferred finance charges
                  
                  
                  160
                  
                  
                  
                  36
                  
                  
                  
                  438
                  
                  
                  
                  1,023Deferred
                      compensation related to options and restricted stock
                  
                  
                  123
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —Expenditures for
                      drydocking
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (171
                  )
                  
                  
                  (3,740
                  )Changes
                      in operating assets and liabilities:Receivables
                  
                  
                  1,497
                  
                  
                  
                  (5,506
                  )
                  
                  
                  25,710
                  
                  
                  
                  (16,361
                  )Prepaid
                      expenses
                  
                  
                  (50
                  )
                  
                  
                  (1,605
                  )
                  
                  
                  897
                  
                  
                  
                  (71
                  )Other
                      assets
                  
                  
                  
                  
                  
                  
                  —
                  
                  
                  
                  (17
                  )
                  
                  
                  (2
                  )Accounts
                      payable and accrued expenses
                  
                  
                  (439
                  )
                  
                  
                  3,895
                  
                  
                  
                  (1,921
                  )
                  
                  
                  (76
                  )Deferred
                      shipping revenues
                  
                  
                  43
                  
                  
                  
                  6,126
                  
                  
                  
                  —
                  
                  
                  
                  —Net
                      cash provided by operating activities
                  
                  
                  53,998
                  
                  
                  
                  15,893
                  
                  
                  
                  83,039
                  
                  
                  
                  84,248**Cash
                      Flows from Investing Activities:**Expenditures
                      for vessels
                  
                  
                  —
                  
                  
                  
                  (412,580
                  )
                  
                  
                  (830
                  )
                  
                  
                  (9,696
                  )Net
                      cash (used in) investing activities
                  
                  
                  —
                  
                  
                  
                  (412,580
                  )
                  
                  
                  (830
                  )
                  
                  
                  (9,696
                  )**Cash
                      Flows from Financing Activities:**Issuance
                      of common stock
                  
                  
                  —
                  
                  
                  
                  178,180
                  
                  
                  
                  —
                  
                  
                  
                  —Issuance
                      of long-term debt, net of issuance costs
                  
                  
                  —
                  
                  
                  
                  234,400
                  
                  
                  
                  —
                  
                  
                  
                  —Cash
                      dividends paid
                  
                  
                  (52,211
                  )Repayment
                      of loan from OSG
                  
                  
                  
                  
                  
                  
                  —
                  
                  
                  
                  (55,931
                  )
                  
                  
                  (69,352
                  )Transfer
                      of balances
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  63,322
                  
                  
                  
                  —Repayment
                      of long-term debt
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (89,600
                  )
                  
                  
                  (5,200
                  )Net
                      cash provided by/(used in) financing activities
                  
                  
                  (52,211
                  )
                  
                  
                  412,580
                  
                  
                  
                  (82,209
                  )
                  
                  
                  (74,552
                  )Net
                      increase in cash and cash equivalents
                  
                  
                  1,787
                  
                  
                  
                  15,893
                  
                  
                  
                  —
                  
                  
                  
                  —Cash
                      and cash equivalents at beginning of period
                  
                  
                  15,893
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —Cash
                      and cash equivalents at end of period
                  
                  $
                  17,680
                  
                  
                  $
                  15,893
                  
                  
                  $
                  —
                  
                  
                  $
                  —Interest
                      Paid
                  
                  $
                  13,686
                  
                  
                  $
                  —
                  
                  
                  $
                  3,022
                  
                  
                  $
                  5,328
 
 
 See
        notes
        to accompanying financial statements
   
 F-7
 
 **NOTES
        TO DOUBLE HULL TANKERS, INC.**
 **CONSOLIDATED
        AND PREDECESSOR**
 **COMBINED
        CARVE-OUT FINANCIAL STATEMENTS**
  **General**
  Double
        Hull Tankers, Inc. (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, 2006, OSG beneficially owned
        approximately 44.5% of the Company’s outstanding common stock. On January 23,
        2007, a wholly owned subsidiary of OSG, sold 4.6 million shares of the Company’s
        common stock in a registered public offering reducing OSG’s beneficial ownership
        in the Company to approximately 29.2%.
  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
                  
                  *Overseas
                      Regal*
                  
                  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
                  
                  *Overseas
                      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 the Company the opportunity to earn additional
        hire
        when vessel earnings exceed the basic hire amounts set forth in the charters.
        The vessels are operated in the Tankers International Pool and the Aframax
        International Pool and the Company expects the 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.
  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.
   F-8
    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.
  **Note A—Summary
        of significant accounting policies:**
  *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.
        The
        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 the Company on
        October 18, 2005.
  The
        Company 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 year ended December 31,
        2004, 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.
  The
        statements of operations and cash flows have been reclassified to conform
        to the
        current presentation.
  *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 $17.6 million as of December 31, 2006 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.
  *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 $130,610,280 and
        $113,695,467 at December 31, 2006 and 2005, respectively. Interest costs
        are capitalized to vessels during the period that vessels are under
        construction. Interest capitalized aggregated $200,803 in 2004.
   F-9
   *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 and $976,864 in
        2004.
  *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.
  *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 $1,407,145 and $1,567,141 are included in other
        assets at December 31, 2006 and 2005, respectively. Amortization of
        deferred finance charges amounted to $159,996 in 2006, $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 and $46,052 in
        2004.
  *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 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,” the Company’s 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.
  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 the Company and OSG Crude operated in either the Tankers
        International Pool (VLCCs) or the Aframax International Pool (Aframaxes)
        during
        the three years ended December 31, 2006. 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 include 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 the Company has entered into with subsidiaries of OSG
        with
        respect to its seven vessels, the Company 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.
   F-10
   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. 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.
  *Derivatives*
  Statement
        of Financial Accounting Standards No. 133, “Accounting for Derivative
        Investments and Hedging Activities” (“FAS 133”) requires the Company 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.
  The
        Company 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. The Company 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.
  *Comprehensive
        Income*
  Accumulated
        other comprehensive income consists entirely of unrealized gains and losses
        on a
        derivative instrument.
  *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.
  *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 other 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.
  *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:
  
 **December
                          31,****2006**
                        **Successor**
                      
                      
                      **2005**
                        **Successor**Interest
                      
                      $
                      2,835,000
                      
                      
                      $
                      2,815,000Insurance
                      
                      
                      213,000
                      
                      
                      
                      491,000Accounts
                          payable
                      
                      
                      57,000
                      
                      
                      
                      83,000Other
                      
                      
                      351,000
                      
                      
                      
                      506,000$
                      3,456,000
                      
                      
                      $
                      3,895,000
 
 F-11




**Note C—Debt:**
  On
        October 18, 2005, the Company 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. The Company is the borrower under the
        credit facility and each of its seven vessel owning subsidiaries have guaranteed
        its performance thereunder. The facility is secured by, among other things,
        first priority mortgage on the Company’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 the Company may not
        pay dividends if the charter-free market value of the Company’s vessels that
        secure the credit facility is less than 135% of the Company’s borrowings under
        the facility plus the actual or notional cost of terminating any interest
        rate
        swaps that the Company enters, 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.
  The
        entire amount available under the $236,000,000 term loan was borrowed upon
        the
        completion of the IPO to fund a portion of the purchase price for the seven
        vessels that the Company acquired from OSG.
  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 the exposure to fluctuations in interest rates,
        the
        Company has entered into a five year interest rate swap effective October
        18,
        2005 pursuant to which the interest rate on the full amount of the Company’s
        $236,000,000 term loan was fixed at 5.6%. The Company is 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.
  The
        effective interest rate for debt outstanding at December 31, 2006 and 2005
        was 5.6% as a result of a related interest rate swap (see
        Note E).
  The
        Company 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.
  As
        of
        December 31, 2006 and 2005, all of the net book amount of the Company’s
        seven vessels, is pledged as collateral under the debt agreement.
  The
        carrying amounts of the loans approximate their fair value.
  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.
  **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 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.
 
 F-12
   During
        the second quarter of 2005, the wholly-owned subsidiary of OSG made a capital
        contribution to OSG Crude, reducing loans payable to the wholly-owned subsidiary
        to zero.
  **Note E—Derivatives:**
  As
        of
        December 31, 2006, the Company 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 the Company 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, 2006, the Company has recorded an
        asset of $1,711,937 in gain/(loss) on interest rate swap relating to the
        fair
        value of the swap. This unrealized gain has been recorded to accumulated
        other
        comprehensive income/(loss). The fair value of interest rate swaps is the
        estimated amount that the Company 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.
  **Note F—Accumulated
        other comprehensive income/(loss):**
  The
        components of accumulated unrealized loss on derivative instruments
        follow:
  
 **2005****Year
                        ended**
                      **December
                        31, 2006**
                      **Successor**
                  
                  
                  **October
                        18 to**
                      **December 31**
                      **Successor**
                  
                  
                  **January
                        1 to**
                      **October
                        17**
                      **Predecessor**
                  
                  
                  **Year
                        ended**
                      **December
                        31, 2004**
                      **Predecessor**Reclassification
                      adjustments for interest expense included in net
                      income/(loss)
                  
                  $
                  —
                  
                  
                  $
                  —
                  
                  
                  $
                  —
                  
                  
                  $
                  2,895,492(Increase)
                      / decrease in unrealized loss on derivative instruments:
                  
                  
                  2,519,000
                  
                  
                  
                  (806,778
                  )
                  
                  
                  1,300,480
                  
                  
                  
                  (2,391,849
                  )$
                  2,519,000
                  
                  
                  $
                  (806,778
                  )
                  
                  $
                  1,300,480
                  
                  
                  $
                  503,643
 
 
 The
        components of accumulated other comprehensive income (loss) in the consolidated
        balance sheet follow:
 
 **December
                              31,****2006**
                            **Successor**
                          
                          
                          **2005**
                            **Successor**Unrealized
                              gain / (loss) on derivative instruments
                          
                          $
                          1,711,937
                          
                          
                          $
                          (806,778
                          )$
                          1,711,937
                          
                          
                          $
                          (806,778
                          )
 
 **Note G—Taxes:**
  No
        income
        taxes have been provided herein because the Company and the predecessor company,
        OSG Crude, comprise foreign corporations that would not be subject to United
        States federal income taxes. Further, neither the Company nor OSG Crude is
        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.
   F-13
   The
        Company awarded 3,000 shares of restricted common stock to its directors
        on
        May 10, 2006. These restricted shares vested on October 18, 2006. At
        the date of the award, the fair market value of the Company’s common stock was
        $12.79 per share. The aggregate fair market value of the shares on the grant
        date is being amortized to expense over five months, using the straight-line
        method.
  The
        Company awarded a total of 24,397 shares of restricted common stock to its
        CEO
        and CFO on November 8, 2006, of which 6,250 shares vest in three equal amounts
        in May 2007, May 2008 and May 2009 subject to continued employment and 18,147
        shares vest  in three equal amounts in May 2007, May 2008 and May 2009
        subject to certain market conditions.  At the date of the award, the
        fair market value of the Company’s common stock was $13.785 per share. The
        aggregate fair market value of the shares on the grant date is being amortized
        to expense from November 2006 to May 2009.
  The
        Company awarded a total of 10,842 shares of restricted common stock to its
        directors on November 8, 2006, of which 3,000 shares vest in three equal
        amounts in May 2007, May 2008 and May 2009 subject to continued office and
        7,842
        shares vest in three equal amounts in May 2007, May 2008 and May 2009 subject
        to
        certain market conditions. At the date of the award, the fair market value
        of
        the Company’s common stock was $13.785 per share. The aggregate fair market
        value of the shares on the grant date is being amortized to expense from
        November 2006 to May 2009.
  Total
        stock-based compensation expense was $122,561 in 2006 and $5,136 for the
        period
        from October 18, 2005 to December 31, 2005.
  **Note I—Charters-out:**
  The
        future minimum revenues expected to be received on the time charters for
        the
        Company’s 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**2007
              
              
              71,276,500
              
              2,5112008
              
              
              73,090,200
              
              2,5622009
              
              
              73,146,000
              
              2,5552010
              
              
              70,830,200
              
              2,4072011
              
              
              43,434,000
              
              1,328Thereafter
              
              
              4,610,100
              
              127Net
                  minimum charter payments
              
              $
              336,387,000
              
              11,490
 
 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.
  **Note J—Subsequent
        event:**
  In
        February 2007, the Company declared a dividend of $13,204,070 or $0.44 per
        share, that was paid on March 6, 2007 to stockholders of record as of
        February 22, 2007.
   F-14