**UNITED STATESSECURITIES AND EXCHANGE COMMISSION********Washington, D.C. 20549**

**FORM 10-K**

| 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**                                                |
| **o**      | **Transition Report  Pursuant to Section 13 or 15(d) of the Securities  Exchange Act of 1934** |

**for the transition period from                to**

**Commission file number 001-16531**

**GENERAL MARITIME CORPORATION******(Exact name of registrant as specified inits charter)
| **Republic of the Marshall Islands**                             | ** ** | **06-159-7083**                       |
|------------------------------------------------------------------|------------|---------------------------------------|
| (State or other  jurisdiction of  incorporation or organization) |       | (I.R.S. Employer  Identification No.) |
| ** **                                                       | ** ** | ** **                            |
| **299  Park Avenue, New York, New York**                         | ** ** | **10171**                             |
| (Address of principal  executive office)                         |       | (Zip Code)                            |

 

Registrant’s telephone number, includingarea code:**(212) 763-5600**

Securities of the Registrant registered pursuantto Section 12(b) of the Act:

Title of Each Class

**Common Stock, par value $.01 pershare**

Name of Each Exchange on Which Registered

**New York Stock Exchange**

Securities of the Registrant registered pursuantto Section 12(g) of the Act:

**None**

Indicateby check mark if the registrant is a well-known seasoned issuer, as defined inRule 405 of the Securities Act.

Yes  x    No  o

Indicateby check mark if the registrant is not required to file reports pursuant toSection 13 or 15(d) of the Act.

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 theSecurities Exchange Act of 1934 during the preceding 12 months (or for suchshorter 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 if disclosure ofdelinquent filers pursuant to Item 405 of Regulation S-K is not containedherein and will not be contained, to the best of the registrant’s knowledge, indefinitive proxy or information statements incorporated by reference in PartIII of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check markwhether registrant is a large accelerated filer, an accelerated filer, or anon-accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Large Accelerated Filer xAccelerated Filer oNon-Accelerated Filer o

Indicateby check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act).

Yes o No x

The aggregate market value of the voting stockof the registrant held by non-affiliates of the registrant as of June 30, 2006was approximately $1,210.6 million, based on the closing price of $36.96 pershare.

The number of shares outstanding of theregistrant’s common stock as of February 23, 2007 was 32,739,107 shares.

DOCUMENTS INCORPORATED BY REFERENCE

ProxyStatement for the 2007 Annual Meeting of Stockholders, to be filed with theSecurities and Exchange Commission not later than 120 days after December 31,2006, is incorporated by reference in Part III herein.

 

 

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**PART I**

**ITEM 1. BUSINESS**

**OVERVIEW**

We are a leadingprovider of international seaborne crude oil transportation services. Ourcurrent fleet consists of 19 wholly owned vessels, consisting of 10 Aframax andnine Suezmax vessels.  In addition, wehave two newbuilding Suezmax contracts, making us a large mid-sized vesseloperator. The 19 vessels that we currently operate have a total of2.4 million dwt, all of which is double-hulled. Many of the vessels in ourfleet are “sister ships”, which provide us with operational and schedulingflexibility, as well as economies of scale in their operation and maintenance.

With the majorityof our vessels currently operating in the Atlantic basin, we have one of thelargest fleets in this region, which includes ports in the Caribbean, South andCentral America, the United States, Western Africa, the Mediterranean, Europeand the North Sea. Transportation of crude oil to the U.S. Gulf Coast and otherrefining centers in the United States requires vessel owners and operators tomeet more stringent environmental regulations than in other regions of theworld. We have focused our operations in the Atlantic basin because we believethat these stringent operating and safety standards give us a potentialcompetitive advantage. We have established a niche in the region due to ourhigh quality vessels, all of which are double-hulled, our commitment to safetyand our many years of experience in the industry. Although the majority of ourvessels operate in the Atlantic basin, we also currently operate vessels in theBlack Sea, the Far East and in other regions, which we believe enables us bothto take advantage of market opportunities and to position our vessels inanticipation of drydockings. Our customers include most of the major internationaloil companies such as Hess Corporation, BP, Chevron Corporation, CITGOPetroleum Corp., ConocoPhillips, Lukoil, Shell Oil Company and SunInternational Ltd.

We actively managethe deployment of our vessels between spot market voyage charters, whichgenerally last from several days to several weeks, and time charters, which canlast up to several years. We continuously and actively monitor marketconditions in an effort to take advantage of changes in charter rates and tomaximize our long-term cash flow by changing this chartering deploymentprofile. We design our fleet deployment to provide greater cash flow stabilitythrough the use of time charters for part of our fleet, while maintaining theflexibility to benefit from improvements in market rates by deploying thebalance of our vessels in the spot market.

Our net voyage revenues,which are voyage revenues minus voyage expenses, have grown from $12.0 millionin 1997 to $245.6 million in 2006. Net voyage revenues decreased by $185.1million, or 43.0%, to $245.6 million for the year ended December 31, 2006compared to $430.7 million for the year ended December 31, 2005 primarily dueto the smaller size of our fleet. We consummated our initial public offering inJune 2001.  Our fleet grew to 43 vesselsat December 31, 2004 from six (none of which were double-hull) as of December31, 1997.  Between October 2005 and May2006, we sold 17 of our non-double hull vessels and nine of our Oil/Bulk/Ore(OBO) vessels, which we considered to be non-core assets, in four separatetransactions.  Between March 2006 andJanuary 2007 we took delivery of two newly constructed Suezmax vessels, givingus a current fleet size of 19 vessels (all of which are double-hull).  As a result, we believe that our fleetprofile has become more attractive to our customers.  We have also generated additional capitalwhich we have used to repay indebtedness and pay dividends and which we may useto support potential future growth or other transactions that we believe wouldcreate value for our shareholders.

**AVAILABLEINFORMATION**

We file annual,quarterly, and current reports, proxy statements, and other documents with theSecurities and Exchange Commission, or the SEC, under the Securities ExchangeAct of 1934, or the Exchange Act. The public may read and copy any materialsthat we file with the SEC at the SEC’s Public Reference Room at 100 F Street,NE, NW, Washington, DC 20549. The public may obtain information on theoperation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.Also, the SEC maintains an Internet website that contains reports, proxy andinformation statements, and other information regarding issuers, including us,that file electronically with the SEC. The public can obtain any documents thatwe file with the SEC at www.sec.gov.

In addition, ourcompany website can be found on the Internet at www.generalmaritimecorp.com.The website contains information about us and our operations. Copies of each ofour filings with the SEC on Form 10-K, Form 10-Q and Form 8-K, and allamendments to those reports, can be viewed and downloaded free of charge assoon as reasonably practicable after the reports and amendments areelectronically filed with or furnished to the SEC. To view the reports, accesswww.generalmaritimecorp.com, click on Press Releases, and then SEC Filings.

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Any of the abovedocuments can also be obtained in print by any shareholder upon request to ourInvestor Relations Department at the following address:

Corporate Investor RelationsGeneral Maritime Corporation299 Park AvenueNew York, NY 10171

**BUSINESS STRATEGY**

Our strategy is toemploy our existing competitive strengths to enhance our position within theindustry and maximize long-term cash flow. Our strategic initiatives include:

·                                          *Managing Environmentally Safe, Yet Cost Efficient Operations.*We aggressively manage our operating and maintenance costs. At the same time,our fleet has an excellent safety and environmental record that we maintainthrough acquisitions of high-quality vessels and regular maintenance andinspection of our fleet. We maintain operating standards for all of our vesselsthat emphasize operational safety, quality maintenance, continuous training ofour officers and crews and compliance with U.S. and international environmentaland safety regulations. Our in-house safety staff oversees many of theseservices. We believe the age and quality of the vessels in our fleet, coupledwith our excellent safety and environmental record, position us favorablywithin the sector with our customers and for future business opportunities.

·                                          *Balancing Vessel Deployment to Maximize Fleet Utilization and CashFlows*. We actively manage the deployment of our fleet between timecharters and spot market voyage charters. Our vessel deployment strategy isdesigned to provide greater cash flow stability through the use of timecharters for part of our fleet, while maintaining the flexibility to benefitfrom improvements in market rates by deploying the balance of our vessels inthe spot market. Our goal is to be the first choice of our customers for crudeoil transportation services. We constantly monitor the market and seek toanticipate our customers’ crude oil transportation needs and to respond quicklywhen we recognize attractive chartering opportunities.

·                                          *Growing and Managing the Profile of Our Fleet*. We have beenan industry consolidator focused on opportunistically acquiring high-qualitymid-sized vessels. We are continuously and actively monitoring the market in aneffort to take advantage of expansion and growth opportunities. We alsoevaluate opportunities to monetize our investment in vessels by selling themwhen conditions are favorable to generate return on invested capital, to adjustthe profile of our fleet to fit customer demands such as preference fordouble-hull vessels and to generate capital for potential value enhancinginvestments in the future. Between October 2005 and May 2006, we sold 17non-double-hull vessels for approximately $432 million and nine OBO vessels for$244 million.

·                                          *Maintaining a Prudent Capital Structure.* We are committed tomaintaining prudent financial policies aimed at preserving financial stabilityand increasing long-term cash flow. During the year ended December 31,2002, our debt to capitalization ratio declined from 40.6% to 36.8%. As ofMarch 31, 2003, after giving effect to the $525.0 million acquisitioncosts of the 19 vessels from Metrostar Management Corporation and the financingof those vessels, our debt to capitalization ratio would have been 59.9% and asof December 31, 2003 there was a reduction to 53.5%. During 2004, a year inwhich we used $168.5 million in investing activities, we reduced our debt tocapitalization ratio to 35.3% as of December 31, 2004 from 53.5% as of December31, 2003. Since then, we further reduced our debt to capitalization ratio to12.2% as of December 31, 2005 and 6.1% as of December 31, 2006. As of December31, 2006 we had the ability to draw down an additional $744.3 million on ourrevolving credit facility.

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**OUR FLEET**

Ourcurrent fleet consists of 19 vessels and is comprised of 10 Aframax vessels andnine Suezmax vessels. The following chart provides information regarding our 19vessels.
| **Vessel**              | ** ** | **Yard**     | ** ** | **Year Built** | ** ** | **Year Aquired** | ** ** | **DWT**   | ** ** | **Employment Status** | ** ** | **Flag**         | ** ** | **Sister ships (2)** | ** ** |
|-------------------------|------------|--------------|------------|---------------------|------------|-----------------------|------------|-----------|------------|----------------------------|------------|------------------|------------|--------------------------------|------------|
|                    |       |         |       |                |       |                  |       |      |       |                       |       |             |       |                           |       |
| **OUR CURRENT FLEET**   |       |         |       |                |       |                  |       |      |       |                       |       |             |       |
|                    |       |         |       |                |       |                  |       |      |       |                       |       |             |       |                           |       |
| **AFRAMAX  TANKERS**    | ** ** |         |       |                |       |                  |       |      |       |                       |       |             |       |                           |       |
| Genmar Strength  (1)    |       | Sumitomo     |       | 2003                |       | 2004                  |       | 105,674   |       | Spot                       |       | Liberia          |       | A                              |       |
| Genmar Defiance  (1)    |       | Sumitomo     |       | 2002                |       | 2004                  |       | 105,538   |       | TC                         |       | Liberia          |       | A                              |       |
| Genmar Ajax (1)         |       | Samsung      |       | 1996                |       | 1998                  |       | 96,183    |       | TC                         |       | Liberia          |       | B                              |       |
| Genmar Agamemnon  (1)   |       | Samsung      |       | 1995                |       | 1998                  |       | 96,214    |       | Spot                       |       | Liberia          |       | B                              |       |
| Genmar Minotaur  (1)    |       | Samsung      |       | 1995                |       | 1998                  |       | 96,226    |       | Spot                       |       | Liberia          |       | B                              |       |
| Genmar Revenge  (1)     |       | Samsung      |       | 1994                |       | 2004                  |       | 96,755    |       | Spot                       |       | Liberia          |       |                           |       |
| Genmar  Constantine (1) |       | S. Kurushima |       | 1992                |       | 1998                  |       | 102,335   |       | Spot                       |       | Liberia          |       | C                              |       |
| Genmar Alexandra  (1)   |       | S. Kurushima |       | 1992                |       | 2001                  |       | 102,262   |       | TC                         |       | Marshall Islands |       | C                              |       |
| Genmar Princess  (1)    |       | Sumitomo     |       | 1991                |       | 2003                  |       | 96,648    |       | TC                         |       | Liberia          |       | D                              |       |
| Genmar Progress  (1)    |       | Sumitomo     |       | 1991                |       | 2003                  |       | 96,765    |       | TC                         |       | Liberia          |       | D                              |       |
|                    |       |         |       |                |       |                  |       |      |       |                       |       |             |       |                           |       |
|                    |       |         |       |                |       |                  |       | 994,600   |       |                       |       |             |       |                           |       |
|                    |       |         |       |                |       |                  |       |      |       |                       |       |             |       |                           |       |
| **SUEZMAX  TANKERS**    |       |         |       |                |       |                  |       |      |       |                       |       |             |       |                           |       |
| Genmar Kara G (1)       |       | TSU          |       | 2007                |       | 2007                  |       | 150,296   |       | Spot                       |       | Liberia          |       | E                              |       |
| Genmar Harriet G  (1)   |       | TSU          |       | 2006                |       | 2006                  |       | 150,205   |       | Spot                       |       | Liberia          |       | E                              |       |
| Genmar Orion (1)        |       | Samsung      |       | 2002                |       | 2003                  |       | 159,992   |       | Spot                       |       | Marshall Islands |       |                           |       |
| Genmar Argus (1)        |       | Hyundai      |       | 2000                |       | 2003                  |       | 164,097   |       | TC                         |       | Marshall Islands |       | F                              |       |
| Genmar Spyridon  (1)    |       | Hyundai      |       | 2000                |       | 2003                  |       | 153,972   |       | TC                         |       | Marshall Islands |       | F                              |       |
| Genmar Hope (1)         |       | Daewoo       |       | 1999                |       | 2003                  |       | 153,919   |       | TC                         |       | Marshall Islands |       | G                              |       |
| Genmar Horn (1)         |       | Daewoo       |       | 1999                |       | 2003                  |       | 159,475   |       | TC                         |       | Marshall Islands |       | G                              |       |
| Genmar Phoenix  (1)     |       | Halla        |       | 1999                |       | 2003                  |       | 149,999   |       | TC                         |       | Marshall Islands |       |                           |       |
| Genmar Gulf (1)         |       | Daewoo       |       | 1991                |       | 2003                  |       | 149,803   |       | Spot                       |       | Marshall Islands |       |                           |       |
|                    |       |         |       |                |       |                  |       |      |       |                       |       |             |       |                           |       |
|                    |       |         |       |                |       |                  |       | 1,391,758 |       |                       |       |             |       |                           |       |
|                    |       |         |       |                |       |                  |       |      |       |                       |       |             |       |                           |       |
| **FLEET  TOTAL**        |       |         |       |                |       |                  |       | 2,386,358 |       |                       |       |             |       |                           |       |
|                    |       |         |       |                |       |                  |       |      |       |                       |       |             |       |                           |       |

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TC= Time Chartered

(1)                                  Each vesselis collateral for our $800 million credit facility.

(2)                                  Each vesselwith the same letter is a “sister ship” of each other vessel with the sameletter.

During March 2003and May 2003, we acquired 19 vessels from Metrostar Management Corporation, anunaffiliated entity, consisting of 14 Suezmax and five Aframax vessels for anaggregate purchase price in cash of $525 million. The acquisitions werefinanced through the use of cash and borrowings under our then existingrevolving credit facilities together with the incurrence of additional debt.During April 2004 and July 2004, we acquired nine vessels, consisting of threeAframax vessels, two Suezmax vessels and four Suezmax newbuilding contracts,and a technical management company from Soponata SA, an unaffiliated entity,for an aggregate purchase price of $248.1 million in cash. Two of the fournewbuilding Suezmax vessels were delivered in March 2006 and January 2007, andthe remaining two are scheduled for delivery as follows: one in 2007 and one in2008. The acquisitions were financed through the use of cash and borrowingsunder our revolving credit facilities.

During November2002, we sold our oldest vessel, *Stavanger Prince*,for scrap. During March 2003 and December 2003 we sold the *Kentucky*and the *West**Virginia*,respectively. During November 2003, December 2003 and February 2004, we soldthree double-bottomed 1986-built Aframax vessels that we acquired during 2003.During August 2004 and October 2004, we sold four single-hull Suezmax vessels.During 2005, we sold six Aframax and seven Suezmax vessels, all of which wereeither single-hull or double-sided. During January 2006, we sold onedouble-sided Aframax vessel and three single-hull

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Suezmax vessels.Between March 2006 and May 2006, we sold nine OBO Aframax vessels.  All of our vessels in our current fleet aredouble-hull, consisting of 10 Aframax vessels, nine Suezmax vessels and twoSuezmax newbuilding contracts.

Commercialmanagement for our vessels is provided through our wholly-owned subsidiary,General Maritime Management LLC, and, through March 2007, our indirectwholly-owned subsidiary, General Maritime Management (UK) LLC, which was formedin March 2003.

**FLEET DEPLOYMENT**

Westrive to optimize the financial performance of our fleet by deploying ourvessels on time charters and in the spot market. We believe that our fleetdeployment strategy provides us with the ability to benefit from increases intanker rates while at the same time maintaining a measure of stability throughcycles in the industry. The following table details the percentage of our fleetoperating on time charters and in the spot market during the past three years.

 
| ** **                    | ** ** | **TIME CHARTER VS.SPOT MIX (as % of operating days)** | ** ** |
|-------------------------------|------------|-----------------------------------------------------------------------------------------------|------------|
| ** **                    | ** ** | ** **                                                                                    | ** ** |
| ** **                    | ** ** | **YEAR ENDED DECEMBER 31,**                                                    | ** ** |
| ** **                    | ** ** | **2006**                                                                                      | ** ** | **2005** | ** ** | **2004** | ** ** |
| Percent in Time  Charter Days |       | 32.3                                                                                          | %          | 28.3 | % | 28.2 | % |
| Percent in Spot  Days         |       | 67.7                                                                                          | %          | 71.7 | % | 71.8 | % |
| Total Vessel Operating  Days  |       | 7,121                                                                                         |       | 14,073 |   | 15,482 |   |

 

Vesselsoperating on time charters may be chartered for several months or years whereasvessels operating in the spot market typically are chartered for a singlevoyage that may last up to several weeks. Vessels operating in the spot marketmay generate increased profit margins during improvements in tanker rates,while vessels operating on time charters generally provide more predictablecash flows. Accordingly, we actively monitor macroeconomic trends and governmentalrules and regulations that may affect tanker rates in an attempt to optimizethe deployment of our fleet. Our current fleet of 19 vessels has ten vessels ontime charter contracts expiring on dates between August 2007 and December 2009,shown as follows:

 
| **Vessel**       | ** ** | **Vessel Type** | ** ** | **Expiration Date** | ** ** | **Daily Rate **(1) | ** ** |
|------------------|------------|----------------------|------------|--------------------------|------------|------------------------------|------------|
| Genmar Ajax      |       | Aframax              |       | November 30, 2009        |       | $                       | 34,000     | (2) |
| Genmar Alexandra |       | Aframax              |       | November 10, 2007        |       | $                            | 34,000     |   |
| Genmar Argus     |       | Suezmax              |       | November 5, 2009         |       | $                            | 38,500     |   |
| Genmar Defiance  |       | Aframax              |       | December 24, 2009        |       | $                            | 29,500     |   |
| Genmar Hope      |       | Suezmax              |       | August 11, 2009          |       | $                            | 36,500     |   |
| Genmar Horn      |       | Suezmax              |       | November 22, 2009        |       | $                            | 38,500     |   |
| Genmar Phoenix   |       | Suezmax              |       | October 31, 2009         |       | $                            | 38,500     |   |
| Genmar Princess  |       | Aframax              |       | October 23, 2009         |       | $                            | 27,750     |   |
| Genmar Progress  |       | Aframax              |       | August 10, 2007          |       | $                            | 28,000     |   |
| Genmar Spyridon  |       | Suezmax              |       | October 12, 2009         |       | $                            | 38,500     |   |

 

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(1)                                  Beforebrokers’ commissions.

(2)                                  Rateis reduced to $29,500 per day on December 1, 2007 and further reduced to$25,000 per day on December 1, 2008.

**CLASSIFICATION AND INSPECTION**

Allof our vessels are certified as being “in-class” by Det Norske Veritas. Thisclassification society is a member of the International Association ofClassification Societies. Every commercial vessel’s hull and machinery isevaluated by a classification society authorized by its country of registry.The classification society certifies that the vessel has been built andmaintained in accordance with the rules of the classification society andcomplies with applicable rules and regulations of the vessel’s country ofregistry and the international conventions of which that country is a member.Each vessel is inspected

 

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bya surveyor of the classification society in three surveys of varying frequencyand thoroughness: every year for the annual survey, every two to three yearsfor the intermediate survey and every four to five years for special surveys.Special surveys always require drydocking. Vessels that are 15 years old orolder are required, as part of the intermediate survey process, to be drydockedevery 24 to 30 months for inspection of the underwater portions of the vesseland for necessary repairs stemming from the inspection.

Inaddition to the classification inspections, many of our customers regularlyinspect our vessels as a precondition to chartering them for voyages. Webelieve that our well-maintained, high-quality vessels provide us with acompetitive advantage in the current environment of increasing regulation andcustomer emphasis on quality.

We haveimplemented the International Safety Management Code, which was promulgated bythe International Maritime Organization, or IMO (the United Nations agency formaritime safety and the prevention of marine pollution by ships), to establishpollution prevention requirements applicable to tankers.

**OPERATIONS AND SHIP MANAGEMENT**

Weemploy experienced management in all functions critical to our operations,aiming to provide a focused marketing effort, tight quality and cost controlsand effective operations and safety monitoring. Through our wholly ownedsubsidiaries, General Maritime Management LLC, General Maritime Management(Portugal) Lda, General Maritime Management (UK) LLC and General MaritimeManagement (Hellas) Ltd. (through May 2006 at which time this subsidiary ceasedits technical management activities), we currently provide the commercial andtechnical management necessary for the operations of most of our vessels, whichinclude ship maintenance, officer staffing, crewing, technical support,shipyard supervision, and risk management services through our wholly ownedsubsidiaries.

OnFebruary 10, 2006, we signed agreements to sell nine OBO Aframax vessels. Inconnection with that decision, we determined one technical management officeoutside the U.S. would adequately service our current fleet and as such decidedto close our office in Piraeus, Greece, operated by General Maritime Management(Hellas) Ltd.  This office ceased itstechnical management activities in May 2006 and we anticipate that this officewill be closed by mid 2007. The cost of closing this office, which we haveclassified as a component of general and administrative expense, is approximately$1.3 million, substantially attributable to employee severance costs.  All of these costs have been paid as ofDecember 31, 2006.

DuringFebruary 2007, we decided to close General Maritime Management (UK) LLC, whichprovides commercial management services for our vessels, due to the higherpercentage of our fleet that is on long-term time charter.  This office will cease its commercialmanagement activities by March 31, 2007. The cost of closing this office, which we will classify as a componentof general and administrative expense in February 2007, will be approximately$0.2 million, substantially attributable to employee severance costs.  All of these costs will result in future cashexpenditures.

Ourcrews inspect our vessels and perform ordinary course maintenance, both at seaand in port. We regularly inspect our vessels. We examine each vessel and makespecific notations and recommendations for improvements to the overallcondition of the vessel, maintenance of the vessel and safety and welfare of thecrew. We have an in-house safety staff to oversee these functions and retainAdmiral Robert North (Ret.), formerly of the U.S. Coast Guard, as a safety andsecurity consultant.

Thefollowing services are performed by General Maritime Management LLC, GeneralMaritime Management (Portugal) Lda and, through May 2006, General MaritimeManagement (Hellas) Ltd. (which we expect to close during 2007):

·                                          supervisionof routine maintenance and repair of the vessel required to keep each vessel ingood and efficient condition, including the preparation of comprehensivedrydocking specifications and the supervision of each drydocking;

·                                          oversight ofmaritime and environmental compliance with applicable regulations, includinglicensing and certification requirements, and the required inspections of eachvessel to ensure that it meets the standards set forth by classificationsocieties and applicable legal jurisdictions as well as our internal corporaterequirements and the standards required by our customers;

·                                          engagementand provision of qualified crews (masters, officers, cadets and ratings) andattendance to all matters regarding discipline, wages and labor relations;

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·                                          arrangementto supply the necessary stores and equipment for each vessel; and

·                                          continualmonitoring of fleet performance and the initiation of necessary remedialactions to ensure that financial and operating targets are met.

Ourchartering staff, which is currently located in New York City and in London,monitors fleet operations, vessel positions and spot market voyage charterrates worldwide. We believe that monitoring this information is critical tomaking informed bids on competitive brokered charters.

**CREWING AND EMPLOYEES**

Asof December 31, 2006, we employed approximately 93 office personnel.Approximately 48 of these employees manage the commercial operations of ourbusiness, of which 46 employees are located in New York City and two employeesare located in London, England. We have 33 employees located in Lisbon,Portugal, who manage the technical operations of our business, and are subjectto a local company employment collective bargaining agreement which covers themain terms and conditions of their employment. We have ten employees who procure crews for our vessels, three of whichare located in Novorossiysk, Russia and seven of which are located in Mumbai,India.  We also have two employeeslocated in Piraeus, Greece who are subject to Greece’s national employmentcollective bargaining agreement which covers terms and conditions of theiremployment.

Asof December 31, 2006, we employed approximately 437 seaborne personnel to crewour fleet of 18 vessels, who are  staffedby our offices in India, Russia and Portugal.

We place greatemphasis on attracting qualified crew members for employment on our vessels.Recruiting qualified senior officers has become an increasingly difficult taskfor vessel operators. We pay competitive salaries and provide competitivebenefits to our personnel. We believe that the well-maintained quarters andequipment on our vessels help to attract and retain motivated and qualifiedseamen and officers. Our crew management services contractors have collectivebargaining agreements that cover all the junior officers and seamen whom theyprovide to us.

**CUSTOMERS**

Ourcustomers include most oil companies, as well as oil producers, oil traders,vessel owners and others. During the years ended December 31, 2006 and 2005, nosingle customer accounted for more than 10% of our voyage revenues. During theyear ended December 31, 2004, Sun International Ltd. accounted forapproximately 15.4% of our voyage revenues.

**COMPETITION**

Internationalseaborne transportation of crude oil and other petroleum products is providedby two main types of operators: fleets owned by independent companies andfleets operated by oil companies (both private and state-owned). Many oilcompanies and other oil trading companies, the primary charterers of thevessels we own, also operate their own vessels and transport oil for themselvesand third party charterers in direct competition with independent owners andoperators. Competition for charters is intense and is based upon price, vessellocation, the size, age, condition and acceptability of the vessel, and thequality and reputation of the vessel’s operator.

Wecompete principally with other Aframax and Suezmax owners. However, competitionin the Aframax and Suezmax markets is also affected by the availability ofalternative size vessels. Panamax size vessels can compete for some of the samecharters for which we compete. Because ULCCs and VLCCs cannot enter the portswe serve due to their large size, they rarely compete directly with our vesselsfor specific charters.

Othersignificant operators of multiple Aframax and Suezmax vessels in the Atlanticbasin include American Eagle Tankers Inc. Limited, Frontline, Ltd., OMICorporation, Overseas Shipholding Group, Inc., Teekay Shipping Corporation andTsakos Energy Navigation. There are also numerous, smaller vessel operators inthe Atlantic basin.

**INSURANCE**

Theoperation of any ocean-going vessel carries an inherent risk of catastrophicmarine disasters and property losses caused by adverse weather conditions,mechanical failures, human error, war, terrorism and other circumstances orevents. In addition, the transportation of crude oil is subject to the risk ofspills, and business interruptions due to political circumstances in foreigncountries, hostilities, labor strikes and boycotts. The U.S. Oil Pollution Actof 1990, or OPA, has

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madeliability insurance more expensive for ship owners and operators imposingpotentially unlimited liability upon owners, operators and bareboat charterersfor oil pollution incidents in the territorial waters of the United States. Webelieve that our current insurance coverage is adequate to protect us againstthe principal accident-related risks that we face in the conduct of ourbusiness.

Ourprotection and indemnity insurance, or P&I insurance, covers third-partyliabilities and other related expenses from, among other things, injury ordeath of crew, passengers and other third parties, claims arising fromcollisions, damage to cargo and other third-party property and pollutionarising from oil or other substances. Our current P&I insurance coveragefor pollution is the maximum commercially available amount of $1.0 billion pertanker per incident and is provided by mutual protection and indemnityassociations. Each of the vessels currently in our fleet is entered in aprotection and indemnity association which is a member of the InternationalGroup of Protection and Indemnity Mutual Assurance Associations. The 14protection and indemnity associations that comprise the International Groupinsure approximately 90% of the world’s commercial tonnage and have enteredinto a pooling agreement to reinsure each association’s liabilities. Eachprotection and indemnity association has capped its exposure to this poolingagreement at $4.3 billion. As a member of protection and indemnityassociations, which are, in turn, members of the International Group, we aresubject to calls payable to the associations based on its claim records as wellas the claim records of all other members of the individual associations andmembers of the pool of protection and indemnity associations comprising theInternational Group.

Our hull and machineryinsurance covers actual or constructive total loss from covered risks ofcollision, fire, heavy weather, grounding and engine failure or damages fromsame. Our war risk insurance covers risks of confiscation, seizure, capture,vandalism, sabotage and other war-related risks. Our loss-of-hire insurancecovers loss of revenue for up to 90 days resulting from vessel off hire foreach of our vessels, with a 20 day deductible.

**ENVIRONMENTALAND OTHER REGULATION**

Governmentregulation significantly affects the ownership and operation of our vessels.They are subject to international conventions, national, state and local lawsand regulations in force in the countries in which our vessels may operate orare registered. We cannot predict the ultimate cost of complying with theserequirements, or the impact of these requirements on the resale value or usefullives of our vessels.

Variousgovernmental and quasi-governmental agencies require us to obtain permits,licenses and certificates for the operation of our vessels.

We believe thatthe heightened level of environmental and quality concerns among insuranceunderwriters, regulators and charterers is leading to greater inspection andsafety requirements on all vessels and may accelerate the scrapping of oldervessels throughout the industry. Increasing environmental concerns have createda demand for vessels that conform to the stricter environmental standards. Wemaintain operating standards for all of our vessels that emphasize operationalsafety, quality maintenance, continuous training of our officers and crews andcompliance with U.S. and international regulations. We believe that theoperation of our vessels are in substantial compliance with applicableenvironmental laws and regulations; however, because such laws and regulationsare frequently changed and may impose increasingly stricter requirements, wecannot predict the ultimate cost of complying with these requirements, or theimpact of these requirements on the resale value or useful lives of ourvessels.

Ourvessels are subject to both scheduled and unscheduled inspections by a varietyof governmental and private entities, each of which may have uniquerequirements. These entities include the local port authorities (U.S. CoastGuard, harbor master or equivalent), classification societies, flag stateadministration (country of registry) and charterers, particularly terminaloperators and oil companies. Failure to maintain necessary permits or approvalscould require us to incur substantial costs or temporarily suspend operation ofone or more of our vessels.

**INTERNATIONAL MARITIME ORGANIZATION**

The InternationalMaritime Organization, or IMO (the United Nations agency for maritime safety),has adopted the International Convention for the Prevention of Marine Pollutionfrom Ships, 1973, as modified by the Protocol of 1978 relating thereto, whichhas been updated through various amendments, or the MARPOL Convention. TheMARPOL Convention relates to environmental standards including oil leakage orspilling, garbage management, as well as the handling and disposal of noxiousliquids, harmful substances in packaged forms, sewage and air emissions. Theseregulations, which have been implemented in many jurisdictions in which ourvessels operate, provide, in part, that:

·                                          25-year oldtankers must be of double-hull construction or of a mid-deck design withdouble-sided

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 construction, unless:

(1)                                  they havewing tanks or double-bottom spaces not used for the carriage of oil which coverat least 30% of the length of the cargo tank section of the hull or bottom; or

(2)                                  they arecapable of hydrostatically balanced loading (loading less cargo into a tankerso that in the event of a breach of the hull, water flows into the tanker, displacingoil upwards instead of into the sea);

·                                          30-year oldtankers must be of double-hull construction or mid-deck design withdouble-sided construction; and

·              all tankerswill be subject to enhanced inspections.

Also,under IMO regulations, a tanker must be of double-hull construction or amid-deck design with double-sided construction or be of another approved designensuring the same level of protection against oil pollution if the tanker:

·                                          is thesubject of a contract for a major conversion or original construction on orafter July 6, 1993;

·                                          commences amajor conversion or has its keel laid on or after January 6, 1994; or

·                                          completes amajor conversion or is a newbuilding delivered on or after July 6, 1996.

Our vessels arealso subject to regulatory requirements, including the phase-out of single-hulltankers, imposed by the IMO. Effective September 2002, the IMO acceleratedits existing timetable for the phase-out of single-hull oil tankers. At thattime, these regulations required the phase-out of most single-hull oil tankersby 2015 or earlier, depending on the age of the tanker and whether it hassegregated ballast tanks. We do not currently own any single-hull vessels.

Under theregulations, the flag state may allow for some newer single hull shipsregistered in its country that conform to certain technical specifications tocontinue operating until the 25th anniversary of their delivery. Any portstate, however, may deny entry of those single hull tankers that are allowed tooperate until their 25th anniversary to ports or offshore terminals. Theseregulations have been adopted by over 150 nations, including many of thejurisdictions in which our tankers operate.

As a result of theoil spill in November 2002 relating to the loss of the *MT Prestige*, which was owned by a company not affiliatedwith us, in December 2003, the Marine Environmental Protection Committeeof the IMO, or MEPC, adopted an amendment to the MARPOL Convention, whichbecame effective in April 2005. The amendment revised an existing regulation13G accelerating the phase-out of single hull oil tankers and adopted a newregulation 13H on the prevention of oil pollution from oil tankers whencarrying heavy grade oil. Under the revised regulation, single hull oil tankersmust be phased out no later than April 5, 2005 or the anniversary of the dateof delivery of the ship on the date or in the year specified in the followingtable:

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| Category of Oil Tankers                                                                                                                                                                                                                                                                                                                                                                      | ** ** | **Date or Year**                                                                                                                                                                                                                                                                                                                              |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Category 1  oil tankers of 20,000 dwt and above carrying crude oil, fuel oil, heavy  diesel oil or lubricating oil as cargo, and of 30,000 dwt and above carrying  other oils, which do not comply with the requirements for protectively  located segregated ballast tanks                                                                                                                  |       | April 5, 2005 for ships delivered on April 5, 1982  or earlier; or 2005 for ships delivered after April 5, 1982                                                                                                                                                                                                                               |
|                                                                                                                                                                                                                                                                                                                                                                                         |       |                                                                                                                                                                                                                                                                                                                                          |
| Category 2  - oil tankers of 20,000 dwt and above carrying crude oil, fuel oil, heavy  diesel oil or lubricating oil as cargo, and of 30,000 dwt and above carrying  other oils, which do comply with the protectively located segregated ballast  tank requirements  and Category 3 - oil tankers of 5,000 dwt and above but less than the  tonnage specified for Category 1 and 2 tankers. |       | April 5, 2005 for ships delivered on April 5, 1977 or  earlier  2005 for ships delivered after April 5, 1977 but before January 1, 1978  2006 for ships delivered in 1978 and 1979  2007 for ships delivered in 1980 and 1981  2008 for ships delivered in 1982   2009 for ships delivered in 1983  2010 for ships delivered in 1984 or later |

 

Under the revisedregulations, the flag state may allow for some newer single hull oil tankersregistered in its country that conform to certain technical specifications tocontinue operating until the earlier of the anniversary of the date of deliveryof the vessel in 2015 or the 25th anniversary of their delivery. Any portstate, however, may deny entry of those single hull oil tankers that areallowed to operate until the earlier of their anniversary date of delivery in2015 or the year in which the ship reaches 25 years of age after the date ofits delivery, whichever is earlier.

The MEPC, inOctober 2004, adopted a unified interpretation to regulation 13G that clarifiedthe date of delivery for tankers that have been converted. Under theinterpretation, where an oil tanker has undergone a major conversion that hasresulted in the replacement of the fore-body, including the entire cargocarrying section, the major conversion completion date of the oil tanker shallbe deemed to be the date of delivery of the ship, provided that:

·                  the oil tanker conversion wascompleted before July 6, 1996;

·                  the conversion included thereplacement of the entire cargo section and fore-body and the tanker complieswith all the relevant provisions of MARPOL Convention applicable at the date ofcompletion of the major conversion; and

·                  the original delivery date of the oiltanker will apply when considering the 15 years of age threshold relating tothe first technical specifications survey to be completed in accordance withMARPOL Convention.

InDecember 2003, the MEPC adopted a new regulation 13H on the prevention ofoil pollution from oil tankers when carrying heavy grade oil, or HGO, whichincludes most of the grades of marine fuel. The new regulation bans thecarriage of HGO in single hull oil tankers of 5,000 dwt and above after April5, 2005, and in single hull oil tankers of 600 dwt and above but less than5,000 dwt, no later than the anniversary of their delivery in 2008.

Underregulation 13H, HGO means any of the following:

·                  crude oils having a density at 15oChigher than 900 kg/m3;

·                  fuel oils having either a density at15oC higher than 900 kg/m3 or a kinematic viscosity at 50oC higher than180 mm2/s; or

·                  bitumen, tar and their emulsions.

Under theregulation 13H, the flag state may allow continued operation of oil tankers of5,000 dwt and above, carrying crude oil with a density at 15oC higher than 900kg/m3 but lower than 945 kg/m3, that conform to certain technicalspecifications 

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and, in the opinionof the such flag state, the ship is fit to continue such operation, havingregard to the size, age, operational area and structural conditions of the shipand provided that the continued operation shall not go beyond the date on whichthe ship reaches 25 years after the date of its delivery. The flag state mayalso allow continued operation of a single hull oil tanker of 600 dwt and abovebut less than 5,000 dwt, carrying HGO as cargo, if, in the opinion of the suchflag state, the ship is fit to continue such operation, having regard to thesize, age, operational area and structural conditions of the ship, providedthat the operation shall not go beyond the date on which the ship reaches 25years after the date of its delivery.

The flag state mayalso exempt an oil tanker of 600 dwt and above carrying HGO as cargo if theship is either engaged in voyages exclusively within an area under itsjurisdiction, or is engaged in voyages exclusively within an area under thejurisdiction of another party, provided the party within whose jurisdiction theship will be operating agrees. The same applies to vessels operating asfloating storage units of HGO.

Any port state,however, can deny entry of single hull tankers carrying HGO which have beenallowed to continue operation under the exemptions mentioned above, into theports or offshore terminals under its jurisdiction, or deny ship-to-shiptransfer of HGO in areas under its jurisdiction except when this is necessaryfor the purpose of securing the safety of a ship or saving life at sea.

Revised Annex I tothe MARPOL Convention entered into force in January 2007.  Revised Annex I incorporates variousamendments adopted since the MARPOL Convention entered into force in 1983,including the amendments to regulation 13G (regulation 20 in the revised Annex)and Regulation 13H (Regulation 21 in the revised Annex).  Revised Annex I also imposes constructionrequirements for oil tankers delivered on or after January 1, 2010.  A further amendment to revised Annex I includesan amendment to the definition of “heavy grade oil” that will broaden the scopeof Regulation 21.

InSeptember 1997, the IMO adopted Annex VI to the International Conventionfor the Prevention of Pollution from Ships to address air pollution from ships.Annex VI was ratified in May 2004, and became effective May 19, 2005. Annex VIsets limits on sulfur oxide and nitrogen oxide emissions from ship exhausts andprohibits deliberate emissions of ozone depleting substances, such aschlorofluorocarbons. Annex VI also includes a global cap on the sulfur contentof fuel oil and allows for special areas to be established with more stringentcontrols on sulfur emissions.****We believethat all our vessels are currently compliant in all material respects withthese regulations. Additional or new conventions, laws and regulations may beadopted that could adversely affect our business, cash flows, results ofoperations and financial condition.

The IMO has alsoadopted the International Convention for the Safety of Life at Sea, or SOLASConvention, which imposes a variety of standards to regulate design andoperational features of ships. SOLAS Convention standards are revisedperiodically. We believe that all our vessels are in substantial compliancewith SOLAS Convention standards.

Therequirements contained in the International Safety Management Code, or ISMCode, promulgated by the IMO, also affect our operations. The ISM Code requiresthe party with operational control of a vessel to develop an extensive safetymanagement system that includes, among other things, the adoption of a safetyand environmental protection policy setting forth instructions and proceduresfor operating its vessels safely and describing procedures for responding toemergencies. We intend to rely upon the safety management system that we andour third party technical managers have developed.

TheISM Code requires that vessel operators obtain a safety management certificatefor each vessel they operate. This certificate evidences compliance by a vessel’smanagement with code requirements for a safety management system. No vessel canobtain a certificate unless its manager has been awarded a document ofcompliance, issued by each flag state, under the ISM Code. We have obtaineddocuments of compliance for our offices and safety management certificates forall of our vessels for which the certificates are required by the IMO. We arerequired to renew these documents of compliance and safety managementcertificates annually.

Noncompliancewith the ISM Code and other IMO regulations may subject the shipowner orbareboat charterer to increased liability, may lead to decreases in availableinsurance coverage for affected vessels and may result in the denial of accessto, or detention in, some ports. The U.S. Coast Guard and European Unionauthorities have indicated that vessels not in compliance with the ISM Code bythe applicable deadlines will be prohibited from trading in U.S. and EuropeanUnion ports, as the case may be.

TheIMO has negotiated international conventions that impose liability for oilpollution in international waters and a signatory’s territorial waters.Additional or new conventions, laws and regulations may be adopted which couldlimit our ability to do business and which could have a material adverse effecton our business and results of operations.

Although the United States is not a party to theseconventions, many countries have ratified and follow the liability plan

 

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adopted by the IMO and set out in the InternationalConvention on Civil Liability for Oil Pollution Damage of 1969.Under this conventionand depending on whether the country in which the damage results is a party tothe 1992 Protocol to the International Convention on Civil Liability for OilPollution Damage, a vessel’s registered owner is strictly liable for pollutiondamage caused in the territorial waters of a contracting state by discharge ofpersistent oil, subject to certain complete defenses. Under an amendment tothe 1992 Protocol that became effective on November 1, 2003, for vessels of 5,000to 140,000 gross tons (a unit of measurement for the total enclosed spaceswithin a vessel), liability will be limited to approximately $6.75 millionplus $944.7 for eachadditional gross ton over 5,000. For vessels of over 140,000 gross tons,liability will be limited to approximately $134.4 million. As the conventioncalculates liability in terms of a basket of currencies, these figures arebased on currency exchange rates on January 23, 2007. The right to limit liabilityis forfeited under the International Convention on Civil Liability for OilPollution Damage where the spill is caused by the owner’s actual fault andunder the 1992 Protocol where the spill is caused by the owner’s intentional orreckless conduct. Vessels trading to states that are parties to theseconventions must provide evidence of insurance covering the liability of theowner. In jurisdictions where the International Convention on Civil Liabilityfor Oil Pollution Damage has not been adopted, various legislative schemes orcommon law govern, and liability is imposed either on the basis of fault or ina manner similar to that convention. We believe that our P&I insurance willcover the liabilityunder the plan adopted by the IMO.

**U.S. OIL POLLUTION ACT OF 1990, COMPREHENSIVEENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT AND THE CLEAN WATER ACT**

OPAestablished an extensive regulatory and liability regime for environmentalprotection and cleanup of oil spills. OPA affects all owners and operatorswhose vessels trade with the United States or its territories or possessions,or whose vessels operate in the waters of the United States, which include theU.S. territorial sea and the 200 nautical mile exclusive economic zone aroundthe United States. The Comprehensive Environmental Response, Compensation andLiability Act, or CERCLA, applies to the discharge of hazardous substances(other than oil) whether on land or at sea. Both OPA and CERCLA impact ouroperations.

UnderOPA, vessel owners, operators and bareboat charterers are “responsible parties”who are jointly, severally and strictly liable (unless the spill results solelyfrom the act or omission of a third party, an act of God or an act of war) forall containment and clean-up costs and other damages arising from oil spillsfrom their vessels. These other damages are defined broadly to include:

·                  natural resourcedamages and related assessment costs;

·                  real andpersonal property damages;

·                  net loss oftaxes, royalties, rents, profits or earnings capacity;

·                  net cost ofpublic services necessitated by a spill response, such as protection from fire,safety or health hazards; and loss of subsistence use of natural resources.

OPApreviously 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(subject to possible adjustment for inflation). Amendments to OPA signed intolaw in July 2006 increased these limits on the liability of responsible partiesto the greater of $1,900 per gross ton or $16 million per double hull tankerthat is over 3,000 gross tons.  The actspecifically permits individual states to impose their own liability regimeswith regard to oil pollution incidents occurring within their boundaries, andsome states have enacted legislation providing for unlimited liability fordischarge of pollutants within their waters. In some cases, states which haveenacted this type of legislation have not yet issued implementing regulationsdefining tanker owners’ responsibilities under these laws. CERCLA, whichapplies to owners and operators of vessels, contains a similar liability regimeand provides for cleanup, removal and natural resource damages. Liability underCERCLA is limited to the greater of $300 per gross ton or $5 million.

Theselimits of liability do not apply, however, where the incident is caused byviolation of applicable U.S. federal safety, construction or operatingregulations, or by the responsible party’s gross negligence or willfulmisconduct. These limits do not apply if the responsible party fails or refusesto report the incident or to cooperate and assist in connection with thesubstance removal activities. OPA and CERCLA each preserve the right to recoverdamages under existing law, including maritime tort law. We believe that we arein substantial compliance with OPA, CERCLA and all applicable state regulationsin the ports where our vessels call.

OPA requiresowners and operators of vessels to establish and maintain with the U.S. CoastGuard evidence of financial 

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responsibilitysufficient to meet the limit of their potential strict liability under the act.The U.S. Coast Guard has enacted regulations requiring evidence of financialresponsibility in the amount of $1,500 per gross ton for tankers, coupling theformer OPA limitation on liability of $1,200 per gross ton with the CERCLAliability limit of $300 per gross ton. The U.S. Coast Guard has indicated thatit expects to adopt regulations requiring evidence of financial responsibilityin amounts that reflect the higher limits of liability imposed by the Julyamendments to OPA, as described above. Under the regulations, evidence of financial responsibility may bedemonstrated by insurance, surety bond, self-insurance or guaranty. Under OPAregulations, an owner or operator of more than one tanker is required todemonstrate evidence of financial responsibility for the entire fleet in anamount equal only to the financial responsibility requirement of the tankerhaving the greatest maximum strict liability under OPA and CERCLA. We haveprovided such evidence and received certificates of financial responsibilityfrom the U.S. Coast Guard for each of our vessels required to have one.

Weinsure each of our vessels with pollution liability insurance in the maximumcommercially available amount of $1.0 billion. A catastrophic spill couldexceed the insurance coverage available, in which event there could be amaterial adverse effect on our business.

UnderOPA, with certain limited exceptions, all newly-built or converted vesselsoperating in U.S. waters must be built with double-hulls, and existing vesselsthat do not comply with the double-hull requirement will be prohibited fromtrading in U.S. waters over a 20-year period (1995-2015) based on size, age andplace of discharge, unless retrofitted with double-hulls. Notwithstanding theprohibition to trade schedule, the act currently permits existing single-hulland double-sided tankers to operate until the year 2015 if their operationswithin U.S. waters are limited to discharging at the Louisiana Offshore OilPort or off-loading by lightering within authorized lightering zones more than60 miles off-shore. Lightering is the process by which vessels at sea off-loadtheir cargo to smaller vessels for ultimate delivery to the discharge port.

Ourcurrent fleet of 19 vessels are all double-hull vessels.

Owners or operators oftankers operating in the waters of the United States must file vessel responseplans with the U.S. Coast Guard, and their tankers are required to operate incompliance with their U.S. Coast Guard approved plans. These response plansmust, among other things:

·                  address a “worstcase” scenario and identify and ensure, through contract or other approvedmeans, the availability of necessary private response resources to respond to a“worst case discharge”;

·                  describe crewtraining and drills; and

·                  identify aqualified individual with full authority to implement removal actions.

Wehave obtained vessel response plans approved by the U.S. Coast Guard for ourvessels operating in the waters of the United States. In addition, the U.S.Coast Guard has announced it intends to propose similar regulations requiringcertain vessels to prepare response plans for the release of hazardoussubstances.

In addition, the United States Clean Water Act prohibits thedischarge of oil or hazardous substances in UnitedStates navigable waters and imposes strict liability in the form ofpenalties for unauthorized discharges. The Clean Water Act also imposes substantial liability for the costs ofremoval, remediation and damages and complements the remedies available underOPA and CERCLA, discussed above.  The United States Environmental Protection Agency,or EPA, has exempted the discharge of ballast water and other substancesincidental to the normal operation of vessels in U.S. ports from Clean Water Act permitting requirements.  However, on March 31, 2005, a U.S. DistrictCourt ruled that the EPA exceeded its authority in creating an exemption forballast water.  On September 18, 2006,the court issued an order invalidating the exemption in EPA’s regulations forall discharges incidental to the normal operation of a vessel as of September30, 2008, and directing the EPA to develop a system for regulating alldischarges from vessels by that date. Although the EPA has indicated that it will appeal this decision, if theexemption is repealed, we may be subject to Clean Water Act permit requirementsthat could include ballast water treatment obligations that could increase thecost of operating in the United States. For example, this could require the installation of equipment on ourvessels to treat ballast water before it is discharged or the implementation ofother port facility disposal arrangements or procedures at potentiallysubstantial cost, and/or otherwise restrict our vessels from entering U.S. waters.

**OTHER REGULATION**

InJuly 2003, in response to the *M.T. Prestige*oil spill in November 2002, the European Union adopted legislation thatprohibits all single-hull tankers from entering into its ports or offshoreterminals by 2010. The European Union has also 

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bannedall single-hull tankers carrying heavy grades of oil from entering or leavingits ports or offshore terminals or anchoring in areas under its jurisdiction.Commencing in 2005, certain single-hull tankers above 15 years of age willalso be restricted from entering or leaving European Union ports or offshoreterminals and anchoring in areas under European Union jurisdiction. TheEuropean Union has also adopted legislation that would: (1) ban manifestlysub-standard vessels (defined as those over 15 years old that have beendetained by port authorities at least twice in a six month period) fromEuropean waters and create an obligation of port states to inspect vesselsposing a high risk to maritime safety or the marine environment; and (2)provide the European Union with greater authority and control overclassification societies, including the ability to seek to suspend or revokethe authority of negligent societies. The sinking of the *M.T.**Prestige* and resulting oil spill inNovember 2002 has led to the adoption of other environmental regulationsby certain European Union nations, which could adversely affect the remaininguseful lives of all of our vessels and our ability to generate income from them**.** It is impossible to predict what legislation or additionalregulations, if any, may be promulgated by the European Union or any othercountry or authority.

Inaddition, most U.S. states that border a navigable waterway have enactedenvironmental pollution laws that impose strict liability on a person forremoval costs and damages resulting from a discharge of oil or a release of ahazardous substance. These laws may be more stringent than U.S. federal law.

The U.S. Clean Air Act of 1970, as amended by the Clean Air ActAmendments of 1977 and 1990, or the CAA, requires the U.S. EnvironmentalProtection Agency, or EPA, to promulgate standards applicable to emissions ofvolatile organic compounds and other air contaminants. Our vessels are subjectto vapor control and recovery requirements for certain cargoes when loading,unloading, ballasting, cleaning and conducting other operations in regulated portareas.  Our vessels that operate in suchport areas with restricted cargoes are equipped with vapor recovery systemsthat satisfy these requirements.  The CAAalso requires states to draft State Implementation Plans, or SIPs, designed toattain national health-based air quality standards in primarily majormetropolitan and/or industrial areas. Several SIPs regulate emissions resultingfrom vessel loading and unloading operations by requiring the installation ofvapor control equipment. As indicated above, our vessels operating in coveredport areas are already equipped with vapor recovery systems that satisfy theserequirements. Although a risk exists that new regulations could requiresignificant capital expenditures and otherwise increase our costs, based on theregulations that have been proposed to date, we believe that no materialcapital expenditures beyond those currently contemplated and no materialincrease in costs are likely to be required.

The U.S. National Invasive Species Act, or NISA, was enacted in 1996 inresponse to growing reports of harmful organisms being released into U.S. portsthrough ballast water taken on by ships in foreign ports.  The United States Coast Guard adoptedregulations under NISA in July 2004 that impose mandatory ballast watermanagement practices for all vessels equipped with ballast water tanks enteringU.S. waters.  These requirements can bemet by performing mid-ocean ballast exchange, by retaining ballast water onboard the ship, or by using environmentally sound alternative ballast watermanagement methods approved by the United States Coast Guard.  (However, mid-ocean ballast exchange ismandatory for ships heading to the Great Lakes or Hudson Bay, or vesselsengaged in the foreign export of Alaskan North Slope crude oil.) Mid-oceanballast exchange is the primary method for compliance with the United StatesCoast Guard regulations, since holding ballast water can prevent ships fromperforming cargo operations upon arrival in the United States, and alternativemethods are still under development. Vessels that are unable to conductmid-ocean ballast exchange due to voyage or safety concerns may dischargeminimum amounts of ballast water (in areas other than the Great Lakes and theHudson River), provided that they comply with recordkeeping requirements anddocument the reasons they could not follow the required ballast watermanagement requirements. The United States Coast Guard is developing a proposalto establish ballast water discharge standards, which could set maximumacceptable discharge limits for various invasive species, and/or lead torequirements for active treatment of ballast water.

**Vessel SecurityRegulations**

Since theterrorist attacks of September 11, 2001, there have been a variety ofinitiatives intended to enhance vessel security. On November 25, 2002, the U.S.Maritime Transportation Security Act of 2002, or MTSA, came into effect. Toimplement certain portions of the MTSA, in July 2003, the U.S. Coast Guardissued regulations requiring the implementation of certain securityrequirements aboard vessels operating in waters subject to the jurisdiction ofthe United States. Similarly, in December 2002, amendments to SOLAS created anew chapter of the convention dealing specifically with maritime security. Thenew chapter became effective in July 2004 and imposes various detailed securityobligations on vessels and port authorities, most of which are contained in theInternational Ship and Port Facilities Security Code, or the ISPS Code. TheISPS Code is designed to protect ports and international shipping againstterrorism. After July 1, 2004, to trade internationally, a vessel must attainan International Ship Security Certificate from a recognized securityorganization approved by the vessel’s flag state. Among the variousrequirements are:

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·                  on-board installation of automatic identificationsystems to provide a means for the automatic transmission of safety-relatedinformation from among similarly equipped ships and shore stations, includinginformation on a ship’s identity, position, course, speed and navigationalstatus;

·                  on-board installation of ship security alert systems,which do not sound on the vessel but only alerts the authorities on shore;

·                  the development of vessel security plans;

·                  ship identification number to be permanently marked ona vessel’s hull;

·                  a continuous synopsis record kept onboard showing avessel’s history including, name of the ship and of the state whose flag theship is entitled to fly, the date on which the ship was registered with thatstate, the ship’s identification number, the port at which the ship isregistered and the name of the registered owner(s) and their registeredaddress; and

·                  compliance with flag state security certificationrequirements.

The U.S. CoastGuard regulations, intended to align with international maritime securitystandards, exempt from MTSA vessel security measures non-U.S. vessels that haveon board, as of July 1, 2004, a valid ISSC attesting to the vessel’s compliancewith SOLAS security requirements and the ISPS Code. We have implemented thevarious security measures addressed by MTSA, SOLAS and the ISPS Code, and ourfleet is in compliance with applicable security requirements.

**ITEM 1A.RISK FACTORS**

**ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS**

This annual reporton Form 10-K contains forward-looking statements made pursuant to the safeharbor provisions of the Private Securities Litigation Reform Act of 1995.These forward-looking statements are based on management’s current expectationsand observations. Included among the factors that, in our view, could causeactual results to differ materially from the forward looking statementscontained in this annual report on Form 10-K are the following: (i) changes indemand; (ii) a material decline or prolonged weakness in rates in the tankermarket; (iii) changes in production of or demand for oil and petroleumproducts, generally or in particular regions; (iv) greater than anticipatedlevels of tanker newbuilding orders or lower than anticipated rates of tankerscrapping; (v) changes in rules and regulations applicable to the tankerindustry, including, without limitation, legislation adopted by internationalorganizations such as the International Maritime Organization and the EuropeanUnion or by individual countries; (vi) actions taken by regulatory authorities;(vii) changes in trading patterns significantly impacting overall tankertonnage requirements; (vii) changes in the typical seasonal variations intanker charter rates; (ix) changes in the cost of other modes of oiltransportation; (x) changes in oil transportation technology; (xi) increases incosts including without limitation: crew wages, insurance, provisions, repairsand maintenance; (xii) changes in general domestic and international politicalconditions; (xiii) changes in the condition of our vessels or applicablemaintenance or regulatory standards (which may affect, among other things, ouranticipated drydocking or maintenance and repair costs);****(xiv)changes in the itineraries of the Company’s vessels; (xv) delays in theconstruction or delivery of contracted newbuildings; and (xvi)****those other risks and uncertainties described under theheading “ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS”, and other factorslisted from time to time in our filings with the Securities and ExchangeCommission.

Our ability to paydividends in any period will depend upon factors including applicableprovisions of Marshall Islands law and the final determination by the Board ofDirectors each quarter after its review of our financial performance. Thetiming and amount of dividends, if any, could also be affected by factorsaffecting cash flows, results of operations, required capital expenditures, orreserves. As a result, the amount of dividends actually paid may vary from theamounts currently estimated.

The following riskfactors and other information included in this report should be carefullyconsidered. The risks and uncertainties described below are not the only oneswe face. Additional risks and uncertainties not presently known to us also mayimpair our business operations. If any of the following risks occur, ourbusiness, financial condition, operating results and cash flows could bematerially adversely affected and the trading price of our common stock coulddecline.

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**RISKFACTORS RELATED TO OUR BUSINESS & OPERATIONS**

**The cyclical nature of the tankerindustry may lead to volatile changes in charter rates and vessel values whichmay adversely affect our earnings.**

If thetanker market, which has been cyclical, is depressed in the future, ourearnings and available cash flow may decrease. Our ability to employ ourvessels profitably will depend upon, among other things, economic conditions inthe tanker market. Fluctuations in charter rates and tanker values result fromchanges in the supply and demand for tanker capacity and changes in the supplyand demand for oil and oil products.

Thefactors affecting the supply and demand for tankers are outside of our control,and the nature, timing and degree of changes in industry conditions areunpredictable.

The factors that influence demand for tanker capacityinclude:

·                  demand for oil and oil products,

·                  supply of oil and oil products,

·                  regional availability of refining capacity,

·                  global and regional economic conditions,

·                  the distance oil and oil products are to be moved bysea, and

·                  changes in seaborne and other transportation patterns.

The factors that influence the supply of tankercapacity include:

·                  the number of newbuilding deliveries,

·                  the scrapping rate of older vessels,

·                  conversion of tankers to other uses,

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

·                  environmental concerns and regulations.

Historically,the tanker markets have been volatile as a result of the many conditions andfactors that can affect the price, supply and demand for tanker capacity.Changes in demand for transportation of oil over longer distances and supply oftankers to carry that oil may materially affect our revenues, profitability andcash flows.

**Charter rates for vessels are at levels that remainhigh relative to historic levels and may decrease in the future, which mayadversely affect our earnings and ability to pay dividends.**

Charter rates inthe tanker industry recently have been near historically high levels.  We anticipate that future demand for ourvessels, and in turn our future charter rates, will be affected by the rate ofeconomic growth in the world’s economy as well as seasonal and regional changesin demand and changes in the capacity of the world’s fleet.  If the tanker industry, which has been highlycyclical, is depressed in the future when our charters expire or at a time whenwe may want to sell a vessel, our earnings and available cash flow may beadversely affected. We cannot assure you that we will be able to successfullycharter our vessels in the future or renew our existing charters at ratessufficient to allow us to operate our business profitably, meet our obligationsincluding payment of debt service to our lenders or to pay dividends to ourshareholders. Our ability to renew the charters on our vessels on theexpiration or termination of our current charters, the charter rates payableunder any replacement charters and vessel values will depend upon, among otherthings, economic conditions in the tanker industry at that time, changes in thesupply and demand for vessel capacity and changes in the supply and demand forthe seaborne transportation of crude oil.

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**Our revenues may be adversely affected if we donot successfully employ our vessels.**

We seek to deployour vessels between spot market voyage charters and time charters in a mannerthat maximizes long-term cash flow. Currently, ten of our vessels arecontractually committed to time charters, with the remaining terms of thesecharters expiring on dates between August 2007 and December 2009. Althoughthese time charters generally provide stable revenues, they also limit theportion of our fleet available for spot market voyages during an upswing in thetanker industry cycle, when spot market voyages might be more profitable.

We earnedapproximately 75% of our net voyage revenue from spot charters for the yearended December 31, 2006. The spot charter market is highly competitive, andspot market voyage charter rates may fluctuate dramatically based primarily onthe worldwide supply of tankers available in the market for the transportationof oil and the worldwide demand for the transportation of oil by tanker.Factors affecting the volatility of spot market voyage charter rates includethe quantity of oil produced globally, shifts in locations where oil isproduced or consumed, actions by OPEC, the general level of worldwide economicactivity and the development and use of alternative energy sources. We cannotassure you that future spot market voyage charters will be available at ratesthat will allow us to operate our vessels profitably.

**A declinein demand for crude oil or a shift in oil transport patterns could materiallyand adversely affect our revenues.**

The demand fortanker capacity to transport crude oil depends upon world and regional oilmarkets. A number of factors influence these markets, including:

·                  global and regional economicconditions;

·                  increases and decreases in productionof and demand for crude oil;

·                  developments in international trade;

·                  changes in seaborne and othertransportation patterns;

·                  environmental concerns andregulations; and

·                  weather.

Historically, thecrude oil markets have been volatile as a result of the many conditions andevents that can affect the price, demand, production and transport of oil,including competition from alternative energy sources. Decreased demand for oiltransportation may have a material adverse effect on our revenues, cash flowsand profitability.

**Themarket for crude oil transportation services is highly competitive and we maynot be able to effectively compete.**

Our vessels areemployed in a highly competitive market. Our competitors include the owners ofother Aframax and Suezmax tankers and, to a lesser degree, owners of other sizetankers. Both groups include independent oil tanker companies as well as oilcompanies. We do not control a sufficiently large share of the market toinfluence the market price charged for crude oil transportation services.

Our market sharemay decrease in the future. We may not be able to compete profitably as weexpand our business into new geographic regions or provide new services. Newmarkets may require different skills, knowledge or strategies than we use inour current markets, and the competitors in those new markets may have greaterfinancial strength and capital resources than we do.

**Themarket value of our vessels may fluctuate significantly, and we may incurlosses when we sell vessels following a decline in their market value.**

The fair market value of our vessels may increase anddecrease depending on a number of factors including:

·                  general economicand market conditions affecting the shipping industry;

·                  competition fromother shipping companies;

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·                  types and sizesof tankers;

·                  supply anddemand for tankers;

·                  other modes oftransportation;

·                  cost ofnewbuildings;

·                  governmental orother regulations;

·                  prevailing levelof charter rates; and

·                  technologicaladvances.

If the fair marketvalue of our vessels declines below their carrying values, we may be requiredto take an impairment charge or may incur losses if we were to sell one or moreof our vessels at such time, which would adversely affect our business andfinancial condition as well as our earnings.

**We maynot be able to grow or to effectively manage our growth.**

A principal focusof our strategy is to continue to grow by taking advantage of changing marketconditions, which may include expanding our business in the Atlantic basin, theprimary geographic area and market where we operate, by expanding into otherregions, or by increasing the number of vessels in our fleet. Our future growthwill depend upon a number of factors, some of which we can control and some ofwhich we cannot. These factors include our ability to:

·                                          identifybusinesses engaged in managing, operating or owning vessels for acquisitions orjoint ventures;

·                                          identifyvessels and/or shipping companies for acquisitions;

·                                          integrate anyacquired businesses or vessels successfully with our existing operations;

·                                          hire, trainand retain qualified personnel to manage and operate our growing business andfleet;

·                                          identifyadditional new markets outside of the Atlantic basin;

·                                          improve ouroperating and financial systems and controls; and

·                                          obtainrequired financing for our existing and new operations.

Our ability togrow is in part dependent on our ability to expand our fleet throughacquisitions of suitable double-hull vessels. We may not be able to acquirenewbuildings or secondhand double-hull vessels on favorable terms, which couldimpede our growth and negatively impact our financial condition and ability topay dividends. We may not be able to contract for newbuildings or locatesuitable secondhand double-hull vessels or negotiate acceptable construction orpurchase contracts with shipyards and owners, or obtain financing for suchacquisitions on economically acceptable terms.

The failure toeffectively identify, purchase, develop and integrate any vessels or businessescould adversely affect our business, financial condition and results ofoperations.

**Ouroperating results may fluctuate seasonally.**

We operate ourvessels in markets that have historically exhibited seasonal variations intanker demand and, as a result, in charter rates. Tanker markets are typicallystronger in the fall and winter months (the fourth and first quarters of thecalendar year) in anticipation of increased oil consumption in the NorthernHemisphere during the winter months. Unpredictable weather patterns andvariations in oil reserves disrupt vessel scheduling. While this seasonalityhas not materially affected our operating results since 1997, it couldmaterially affect operating results in the future.

**Because we generate all of ourrevenues in U.S. Dollars but incur a significant portion of our expenses inother currencies, exchange rate fluctuations could have an adverse impact onour results of operations.**

We generate all ofour revenues in U.S. Dollars but we incur a significant portion of our expenses,particularly crew and maintenance costs, in currencies other than the U.S.Dollar.  This difference could lead tofluctuations in net income due to 

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changes in thevalue of the U.S. Dollars relative to the other currencies, in particular theEuro. A decline in the value of the U.S. Dollar could lead to higher expensespayable by us.

**If welose any of our customers or a significant portion of our revenues, ouroperating results could be materially adversely affected.**

We derive asignificant portion of our voyage revenues from a limited number of customers.During the years ended December 31, 2006 and 2005 no single customer accountedfor more than 10% of our voyage revenues. During the year ended December 31,2004, Sun International Ltd. accounted for 15.4% of our voyage revenues. If welose a significant customer, or if a significant customer decreases the amountof business it transacts with us, our revenues, cash flows and profitabilitycould be materially and adversely affected.

**There maybe risks associated with the purchase and operation of secondhand vessels.**

Our currentbusiness strategy includes additional growth through the acquisition ofadditional secondhand vessels. Although we inspect secondhand vessels prior topurchase, this does not normally provide us with the same knowledge about theircondition that we would have had if such vessels had been built for andoperated exclusively by us. Therefore, our future operating results could benegatively affected if some of the vessels do not perform as we expect. Also,we do not receive the benefit of warranties from the builders if the vessels webuy are older than one year, which is the case for the five vessels acquired inthe first half of 2004.

**An increase in costs couldmaterially and adversely affect our financial performance.**

Our vessel operatingexpenses are comprised of a variety of costs including crew costs, provisions,deck and engine stores, lubricating oil, insurance, maintenance and repairs,many of which are beyond our control and affect the entire shippingindustry.  Also, costs such as insuranceand enhanced security measures implemented after September 11, 2001 are stillincreasing. If costs continue to rise, that could materially and adversely affectour cash flows and profitability.

**We mayface unexpected repair costs for our vessels.**

Repairs andmaintenance costs are difficult to predict with certainty and may besubstantial. Many of these expenses are not covered by our insurance. Largerepair expenses could decrease our cash flow and profitability and reduce ourliquidity.

**Compliance with safety and othervessel requirements imposed by classification societies may be very costly andmay adversely affect our business.**

The hull and machinery of every commercial tanker mustbe classed by a classification society authorized by its country of registry.The classification society certifies that a tanker is safe and seaworthy inaccordance with the applicable rules and regulations of the country of registryof the tanker and the Safety of Life at Sea Convention. All of our vessels arecertified as being “in-class” by Det Norske Veritas. This classificationsociety is a member of the International Association of ClassificationSocieties.

A vessel must undergo annual surveys, intermediate surveysand special surveys. In lieu of a special survey, a vessel’s machinery may beon a continuous survey cycle, under which the machinery would be surveyedperiodically over a five-year period. Our vessels are on special survey cyclesfor hull inspection and on special survey or continuous survey cycles formachinery inspection. Every vessel is also required to be drydocked every twoto five years for inspection of the underwater parts of such vessel.

If a vessel in our fleet does not maintain its classand/or fails any annual survey, intermediate survey or special survey, it willbe unemployable and unable to trade between ports. This would negatively impactour results of operations.

**We dependon our key personnel and may have difficulty attracting and retaining skilledemployees.**

The loss of theservices of any of our key personnel or our inability to successfully attractand retain qualified personnel, including ships’ officers, in the future couldhave a material adverse effect on our business, financial condition andoperating results. Our future success depends particularly on the continuedservice of Peter C. Georgiopoulos, our Chairman, President and Chief ExecutiveOfficer.

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**Shippingis an inherently risky business and our insurance may not be adequate.**

Our vessels andtheir cargoes are at risk of being damaged or lost because of events such asmarine disasters, bad weather, mechanical failures, human error, war,terrorism, piracy and other circumstances or events. In addition, transportingcrude oil creates a risk of business interruptions due to politicalcircumstances in foreign countries, hostilities, labor strikes and boycotts.Any of these events may result in loss of revenues, increased costs anddecreased cash flows. Future hostilities or other political instability couldaffect our trade patterns and adversely affect our operations and our revenues,cash flows and profitability.

We carry insuranceto protect against most of the accident-related risks involved in the conductof our business. We currently maintain $1 billion in coverage for each of ourvessels for liability for spillage or leakage of oil or pollution. We alsocarry insurance covering lost revenue resulting from vessel off-hire for all ofour vessels. Nonetheless, risks may arise against which we are not adequatelyinsured. For example, a catastrophic spill could exceed our insurance coverageand have a material adverse effect on our financial condition. In addition, wemay not be able to procure adequate insurance coverage at commerciallyreasonable rates in the future and we cannot guarantee that any particularclaim will be paid. In the past, new and stricter environmental regulationshave led to higher costs for insurance covering environmental damage orpollution, and new regulations could lead to similar increases or even makethis type of insurance unavailable. Furthermore, even if insurance coverage isadequate to cover our losses, we may not be able to timely obtain a replacementship in the event of a loss. We may also be subject to calls, or premiums, inamounts based not only on our own claim records but also the claim records ofall other members of the protection and indemnity associations through which wereceive indemnity insurance coverage for tort liability. Our payment of thesecalls could result in significant expenses to us which could reduce our cashflows and place strains on our liquidity and capital resources.

**The risksassociated with older vessels could adversely affect our operations.**

In general, thecosts to maintain a vessel in good operating condition increase as the vesselages. As of December 31, 2006, the average age of the 18 vessels in our fleetwas 9.6 years compared to an average age of 9.4 years as of December 31, 2005(excluding the 13 vessels we had classified as held for sale as of December 31,2005).  Due to improvements in enginetechnology, older vessels typically are less fuel-efficient than more recentlyconstructed vessels.  Cargo insurancerates increase with the age of a vessel, making older vessels less desirable tocharterers.

Governmentalregulations, safety or other equipment standards related to the age of tankersmay require expenditures for alterations or the addition of new equipment toour vessels, and may restrict the type of activities in which our vessels mayengage. We cannot assure you that, as our vessels age, market conditions willjustify any required expenditures or enable us to operate our vesselsprofitably during the remainder of their useful lives.

**Compliancewith safety, environmental and other governmental requirements and relatedcosts may adversely affect our operations.**

The shippingindustry in general, our business and the operation of our vessels inparticular, are affected by a variety of governmental regulations in the formof numerous international conventions, national, state and local laws andnational and international regulations in force in the jurisdictions in whichsuch tankers operate, as well as in the country or countries in which suchtankers are registered. These regulations include:

·                                          the U.S. OilPollution Act of 1990, or OPA, which imposes strict liability for the dischargeof oil into the 200-mile United States exclusive economic zone, the obligationto obtain certificates of financial responsibility for vessels trading inUnited States waters and the requirement that newly constructed tankers thattrade in United States waters be constructed with double-hulls;

·                                          theInternational Convention on Civil Liability for Oil Pollution Damage of 1969entered into by many countries (other than the United States) relating tostrict liability for pollution damage caused by the discharge of oil;

·                                          theInternational Maritime Organization, or IMO, International Convention for thePrevention of Pollution from Ships with respect to strict technical andoperational requirements for tankers;

·                                          the IMOInternational Convention for the Safety of Life at Sea of 1974, or SOLAS, withrespect to crew and passenger safety;

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·                                          theInternational Ship and Port Facilities Securities Code, or the ISPS Code, whichbecame effective in 2004;

·                                          theInternational Convention on Load Lines of 1966 with respect to the safeguardingof life and property through limitations on load capability for vessels oninternational voyages; and

·                                          the U.S.Marine Transportation Security Act of 2002.

More stringentmaritime safety rules are also more likely to be imposed worldwide as a resultof the oil spill in November 2002 relating to the loss of the *M.T. Prestige*, a 26-year old single-hull tanker owned by acompany not affiliated with us. Additional laws and regulations may also beadopted that could limit our ability to do business or increase the cost of ourdoing business and that could have a material adverse effect on our operations.In addition, we are required by various governmental and quasi-governmentalagencies to obtain certain permits, licenses and certificates with respect toour operations. In the event of war or national emergency, our vessels may besubject to requisition by the government of the flag flown by the vesselwithout any guarantee of compensation for lost profits. We believe our vesselsare maintained in good condition in compliance with present regulatoryrequirements, are operated in compliance with applicable safety/environmentallaws and regulations and are insured against usual risks for such amounts asour management deems appropriate. The vessels’ operating certificates andlicenses are renewed periodically during each vessel’s required annual survey.However, government regulation of tankers, particularly in the areas of safetyand environmental impact may change in the future and require us to incursignificant capital expenditures on our ships to keep them in compliance.

**Increased inspection procedures and tighter importand export controls could increase costs and disrupt our business.**

International shipping issubject to various security and customs inspections and related procedures incountries of origin and destination. Inspection procedures can result in the seizureof contents of our vessels, delays in the loading, offloading or delivery andthe levying of customs, duties, fines and other penalties against us.

It is possible thatchanges to inspection procedures could impose additional financial and legalobligations on us. Furthermore, changes to inspection procedures could alsoimpose additional costs and obligations on our customers and may, in certaincases, render the shipment of certain types of cargo impractical. Any suchchanges or developments may have a material adverse effect on our business,financial condition, results of operations and our ability to pay dividends.

**Ourvessels may be requisitioned by governments without adequate compensation.**

A government couldrequisition for title or seize our vessels. In the case of a requisition fortitle, a government takes control of a vessel and becomes its owner. Also, agovernment could requisition our vessels for hire. Under requisition for hire,a government takes control of a vessel and effectively becomes its charterer atdictated charter rates. Generally, requisitions occur during a period of war oremergency. Although we, as owner, would be entitled to compensation in theevent of a requisition, the amount and timing of payment would be uncertain.

**Increasesin tonnage taxes on our vessels would increase the costs of our operations.**

Our vessels arecurrently registered under the flags of the Republic of Liberia and theRepublic of the Marshall Islands. These jurisdictions impose taxes based on thetonnage capacity of each of the vessels registered under their flag. Thetonnage taxes imposed by these countries could increase, which would cause thecosts of our operations to increase.

**Arrestsof our vessels by maritime claimants could cause a significant loss of earningsfor the related off hire period.**

Crew members,suppliers of goods and services to a vessel, shippers of cargo and otherparties may be entitled to a maritime lien against a vessel for unsatisfieddebts, claims or damages. In many jurisdictions, a maritime lienholder mayenforce its lien by “arresting” or “attaching” a vessel through foreclosureproceedings. The arrest or attachment of one or more of our vessels couldresult in a significant loss of earnings for the related off-hire period.

In addition, injurisdictions where the “sister ship” theory of liability applies, a claimantmay arrest both the vessel which is subject to the claimant’s maritime lien andany “associated” vessel, which is any vessel owned or controlled by the sameowner. In countries with “sister ship” liability laws, claims might be assertedagainst us, any of our subsidiaries or our vessels for liabilities of othervessels that we own.

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**Portionsof our income may be subject to U.S. tax.**

If we do notqualify for an exemption pursuant to Section 883 of the U.S. Internal RevenueCode of 1986, or the Code, then we will be subject to U.S. federal income taxon our shipping income that is derived from U.S. sources. If we are subject tosuch tax, our net income and cash flow would be reduced by the amount of suchtax.

We will qualifyfor exemption under Section 883 if, among other things, our stock is treated asprimarily and regularly traded on an established securities market in theUnited States. Under the final Section 883 regulations, we might not satisfythis publicly-traded requirement in any taxable year in which 50% or more ofour stock is owned for more than half the days in such year by persons whoactually or constructively own 5% or more of our stock, or 5% shareholders.

We believe thatbased on the ownership of our stock in 2006, we satisfied the publicly-tradedrequirement under the final Section 883 regulations. However, we can give noassurance that future changes and shifts in the ownership of our stock by 5%shareholders would permit us to qualify for the Section 883 exemption in thefuture.

If we do notqualify for the Section 883 exemption, our shipping income derived from U.S.sources, or 50% of our gross shipping income attributable to transportationbeginning or ending in the United States, would be subject to a 4% tax imposedwithout allowance for deductions.

**RISKFACTORS RELATED TO OUR FINANCINGS**

**Our 2005Credit Facility imposes, and it is possible that any indenture for debtsecurities we may issue will impose, significant operating and financialrestrictions that may limit our ability to operate our business**.

Our 2005 CreditFacility currently imposes, and it is possible that any indenture for debtsecurities that we may issue will impose, significant operating and financialrestrictions on us. These restrictions will limit our ability to, among otherthings:

·                  incur additional debt;

·                  pay dividends or make other restricted payments;

·                  create or permit certain liens;

·                  sell vessels or other assets;

·                  create or permit restrictions on the ability of our subsidiaries to paydividends or make other distributions to us;

·                  engage in transactions with affiliates; and

·                  consolidate or merge with or into other companies or sell all orsubstantially all of our assets.

On February 20,2007, we entered into an agreement to amend our 2005 Credit Facility.  Under this amendment, we will be permitted to(1) pay quarterly cash dividends with respect to fiscal quarters on or afterMarch 31, 2007, limited to $0.50 per share and (2) pay additional dividends,including stock buy-backs, in an aggregate amount not to exceed $50 millionplus 50% of cumulative net excess cash flow after February 16, 2007.  In addition, this amendment will permit us todeclare a one-time special dividend of up to $15 per share (up to an aggregateamount not to exceed $500 million) at any time prior to December 31, 2007.   

These restrictionscould limit our ability to finance our future operations or capital needs, makeacquisitions or pursue available business opportunities.

In addition, our2005 Credit Facility requires us to maintain specified financial ratios andsatisfy financial covenants. We may be required to take action to reduce ourdebt or to act in a manner contrary to our business objectives to meet theseratios and satisfy these covenants. Events beyond our control, includingchanges in the economic and business conditions in the markets in which weoperate, may affect our ability to comply with these covenants. We cannotassure you that we will meet these ratios or satisfy these covenants or thatour lenders will waive any failure to do so. A breach of any of the covenantsin, or our inability to maintain the required financial ratios under, our 2005Credit Facility would prevent us from borrowing additional money under thefacility and could result in a default under them. If a default occurs underour 2005 Credit Facility, the lenders could elect to declare that debt,together with accrued interest and other fees, to be immediately due andpayable and proceed against the collateral securing that debt, whichconstitutes all or substantially all of our assets. Moreover, if the lendersunder the 2005 Credit Facility or other agreement in default were to acceleratethe debt outstanding under that facility, it could result in a default underour other debt obligations that may exist at such time, including our debtsecurities.

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**We couldincur a substantial amount of debt, which could materially and adversely affectour financial condition, results of operations and business prospects andprevent us from fulfilling our obligations under our debt securities.**

Our 2005 CreditFacility permits us to incur additional debt, subject to certain limitations.If we incur additional debt, our increased leverage could:

·                                          make it more difficult for us to satisfy ourobligations under debt securities or other indebtedness and, if we fail tocomply with the requirements of the indebtedness, could result in an event ofdefault;

·                                          require us to dedicate a substantial portion of ourcash flow from operations to required payments on indebtedness, therebyreducing the availability of cash flow for working capital, capitalexpenditures and other general business activities;

·                                          limit our ability to obtain additional financing inthe future for working capital, capital expenditures, acquisitions, if any, andother general corporate activities;

·                                          limit our ability to pay dividends;

·                                          limit our flexibility in planning for, or reacting to,changes in our business and the industry in which we operate or detract fromour ability to successfully withstand a downturn in our business or the economygenerally; and

·                                          place us at a competitive disadvantage against otherless leveraged competitors.

The occurrence ofany one of these events could have a material adverse effect on our business,financial condition, results of operations, prospects and ability to satisfyour obligations under our 2005 Credit Facility and debt securities.

**Fluctuationsin the market value of our fleet may adversely affect our liquidity and mayresult in breaches under our financing arrangements and sales of vessels at aloss.**

The market valueof vessels fluctuates depending upon general economic and market conditionsaffecting the tanker industry, the number of tankers**inthe world fleet, the price of constructing new tankers, or newbuildings, typesand sizes of tankers, and the cost of other modes of transportation. The marketvalue of our fleet may decline as a result of a downswing in the historicallycyclical shipping industry or as a result of the aging of our fleet. Decliningtanker values could affect our ability to raise cash by limiting our ability torefinance vessels and thereby adversely impact our liquidity. In addition,declining vessel values could result in a breach of loan covenants, which couldgive rise to events of default under our 2005 Credit Facility. Due to thecyclical nature of the tanker market, the market value of one or more of ourvessels may at various times be lower than their book value, and sales of thosevessels during those times would result in losses. If we determine at any timethat a vessel’s future limited useful life and earnings require us to impairits value on our financial statements, that could result in a charge againstour earnings and the reduction of our shareholders’ equity. If for any reasonwe sell vessels at a time when vessel prices have fallen, the sale may be atless than the vessel’s carrying amount on our financial statements, with theresult that we would also incur a loss and a reduction in earnings.

**If wedefault under our 2005 Credit Facility, we could forfeit our rights in certainof our vessels and their charters.**

We have pledged 19of our vessels, our two newbuilding contracts and related collateral assecurity to the lenders under our 2005 Credit Facility. Default under this loanagreement, if not waived or modified, would permit the lenders to foreclose onthe mortgages over the vessels and the related collateral, and we could loseour rights in the vessels and their charters.

When final paymentis due under our loan agreement, we must repay any borrowings outstanding,including balloon payments. To the extent that our cash flows are insufficientto repay any of these borrowings, we will need to refinance some or all of ourloan agreements or replace them with an alternate credit arrangement. We maynot be able to refinance or replace our loan agreements at the time they becomedue. In addition, the terms of any refinancing or alternate credit arrangementmay restrict our financial and operating flexibility.

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**We are aholding company, and we depend on the ability of our subsidiaries to distributefunds to us in order to satisfy our financial and other obligations.**

We are a holdingcompany, and our subsidiaries conduct all of our operations and own all of ourvessels. We have no significant assets other than the equity interests of oursubsidiaries. As a result, our ability to pay dividends depends on theperformance of our subsidiaries and their ability to distribute funds to us.The ability of our subsidiaries to make distributions to us may be restrictedby, among other things, restrictions under our credit facility, applicablecorporate and limited liability company laws of the jurisdictions of theirincorporation or organization and other laws and regulations. If we are unableto obtain funds from our subsidiaries, we will not be able to pay dividends ormake payment on our credit facility unless we obtain funds from other sources.We cannot assure you that we will be able to obtain the necessary funds from othersources.

**RISKFACTORS RELATED TO OUR COMMON STOCK**

**Anti-takeoverprovisions in our financing agreements and organizational documents, as well asour shareholder rights plan, could have the effect of discouraging, delaying orpreventing a merger or acquisition, which could adversely affect the marketprice of our common stock.**

Our existingfinancing agreement imposes restrictions on changes of control of our companyand our ship-owning subsidiaries. These include requirements that we obtain thelenders’ consent prior to any change of control and that we make an offer toredeem certain indebtedness before a change of control can take place.

Several provisionsof our amended and restated articles of incorporation and our by-laws coulddiscourage, delay or prevent a merger or acquisition that shareholders mayconsider favorable. These provisions include:

·                                          authorizingour board of directors to issue “blank check” preferred stock withoutshareholder approval;

·                                          providing fora classified board of directors with staggered, three-year terms;

·                                          prohibitingus from engaging in a “business combination” with an “interested shareholder”for a period of three years after the date of the transaction in which theperson became an interested shareholder unless certain provisions are met;

·                                          prohibitingcumulative voting in the election of directors;

·                                          authorizingthe removal of directors only for cause and only upon the affirmative vote ofthe holders of at least 80% of the outstanding shares of our common stockentitled to vote for the directors;

·                                          prohibitingshareholder action by written consent unless the written consent is signed byall shareholders entitled to vote on the action;

·                                          limiting thepersons who may call special meetings of shareholders; and

·                                          establishingadvance notice requirements for nominations for election to our board ofdirectors or for proposing matters that can be acted on by shareholders atshareholder meetings.

In addition to theprovision described above, on December 2, 2005, our board of directors adopteda shareholder rights plan and declared a dividend distribution of one Right foreach outstanding share of our common stock to shareholders of record on theclose of business on December 7, 2005. Each Right is nominally exercisable,upon the occurrence of certain events, for one one-hundredth of a share ofSeries A Junior Participating Preferred Stock, par value $.01 per share, at apurchase price of $175.00 per unit, subject to adjustment. The Rights mayfurther discourage a third party from making an unsolicited proposal to acquireus, as exercise of the Rights would cause substantial dilution to such thirdparty attempting to acquire us.

**We cannotassure you that we will pay any dividends.**

On January 26,2005 our board of directors initiated a cash dividend policy. The actualdeclaration of future cash dividends, and the establishment of record andpayment dates, is subject to final determination by our board of directors eachquarter after its review of our financial performance. Our ability to paydividends in any period will depend upon factors including

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satisfying therequirements under our 2005 Credit Facility and applicable provisions ofMarshall Islands law.

The timing andamount of dividends, if any, could be affected by factors affecting cash flows,results of operations, required capital expenditures, or reserves. Maintainingthe dividend policy will depend on our cash earnings, financial condition andcash requirements and could be affected by factors, including the loss of avessel, required capital expenditures, reserves established by the board ofdirectors, increased or unanticipated expenses, additional borrowings or futureissuances of securities, which may be beyond our control. The declaration andpayment of dividends is subject to certain conditions and limitations under our2005 Credit Facility.

Under MarshallIslands law, a company may not declare or pay dividends if it is currentlyinsolvent or would thereby be made insolvent. Marshall Islands law alsoprovides that a company may declare dividends only to the extent of itssurplus, or if there is no surplus, out of its net profits for the then currentand/or immediately preceding fiscal years.

Our dividendpolicy may be changed at any time, and from time to time by our board ofdirectors.

**Futuresales of our common stock could cause the market price of our common stock todecline.**

The market priceof our common stock could decline due to sales of a large number of shares inthe market, including sales of shares by our large shareholders, or theperception that these sales could occur. These sales could also make it moredifficult or impossible for us to sell equity securities in the future at atime and price that we deem appropriate to raise funds through future offeringsof common stock. We have entered into registration rights agreements with thesecurityholders who received shares in our recapitalization transactions thatentitle them to have an aggregate of 2,192,793 shares registered for sale inthe public market. In addition, those shares became eligible for sale in thepublic markets beginning on June 12, 2002, pursuant to Rule 144 under theSecurities Act. We also registered on Form S-8 an aggregate of 4,400,000 sharesissuable upon exercise of options we have granted to purchase common stock orreserved for issuance under our equity compensation plans.

**Ourincorporation under the laws of the Republic of the Marshall Islands may limitthe ability of our shareholders to protect their interests.**

Our corporateaffairs are governed by our amended and restated articles of incorporation andby-laws and by the Republic of the Marshall Islands Business Corporations Act.The provisions of the Republic of the Marshall Islands Business CorporationsAct resemble provisions of the corporation laws of a number of states in theUnited States. However, there have been few judicial cases in the Republic ofthe Marshall Islands interpreting the Republic of the Marshall Islands BusinessCorporations Act. For example, the rights and fiduciary responsibilities ofdirectors under the laws of the Republic of the Marshall Islands are not asclearly established as the rights and fiduciary responsibilities of directorsunder statutes or judicial precedent in existence in certain U.S.jurisdictions. Although the Republic of the Marshall Islands BusinessCorporations Act does specifically incorporate the non-statutory law, orjudicial case law, of the State of Delaware and other states with substantiallysimilar legislative provisions, our public shareholders may have moredifficulty in protecting their interests in the face of actions by management,directors or controlling shareholders than would shareholders of a corporationincorporated in a U.S. jurisdiction.

**It maynot be possible for our investors to enforce U.S. judgments against us.**

We areincorporated in the Republic of the Marshall Islands and most of oursubsidiaries are organized in the Republic of Liberia and the Republic of theMarshall Islands. Substantially all of our assets and those of our subsidiariesare located outside the United States. As a result, it may be difficult orimpossible for U.S. investors to serve process within the United States upon usor to enforce judgment upon us for civil liabilities in U.S. courts. Inaddition, you should not assume that courts in the countries in which we or oursubsidiaries are incorporated or where our assets or the assets of oursubsidiaries are located (1) would enforce judgments of U.S. courts obtained inactions against us or our subsidiaries based upon the civil liabilityprovisions of applicable U.S. federal and state securities laws or (2) wouldenforce, in original actions, liabilities against us or our subsidiaries basedupon these laws.

**ITEM 1B.UNRESOLVED STAFF COMMENTS**

Not applicable.

25

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**ITEM 2. PROPERTIES**

Welease six properties, all of which house offices used in the administration ofour operations: a property of approximately 24,000 square feet in New York, NewYork, a property of approximately 17,500 square feet in Lisbon, Portugal, aproperty of approximately 2,000 square feet in Piraeus, Greece, a property ofapproximately 2,000 square feet in London, England, a property of approximately3,400 square feet in Mumbai, Inda and a property of approximately 750 squarefeet in Novorossiysk, Russia. We do not own or lease any production facilities,plants, mines or similar real properties.

**ITEM 3. LEGAL PROCEEDINGS**

**LEGAL PROCEEDINGS**

We arenot aware of any material pending legal proceedings, other than ordinaryroutine litigation incidental to our business, to which we or our subsidiariesare a party or of which our property is the subject. From time to time in thefuture, we may be subject to legal proceedings and claims in the ordinarycourse of business, principally personal injury and property casualty claims.Those claims, even if lacking merit, could result in the expenditure by us ofsignificant financial and managerial resources.

Wehave been cooperating in a criminal investigation being conducted by the U.S.Department of Justice relating to the alleged failure by the *Genmar Ajax* to record certain alleged illegal discharges ofoily waste between October 2004 and December 2004.  On December 15, 2004, following a routineCoast Guard inspection, U.S. Coast Guard officials took various documents, logsand records from the vessel for further review and analysis. During 2005, thecustodian of records for the *Genmar Ajax*received four subpoenas duces tecum requesting supplemental documentationpertaining to the vessel in connection with a pending grand jury investigation,all of which have been complied with.  Wehave denied any wrongdoing in this matter by us or any of our employees buthave been unable to negotiate an acceptable settlement.  On September 26, 2006, we received a letterfrom the U.S. Department of Justice stating that it may seek an indictmentagainst our General Maritime Management LLC subsidiary in connection with itsinvestigation.  We intend to defend anycharges vigorously.  However, there canbe no assurance that we will be able to obtain a favorable resolution orsatisfactory settlement.

OnFebruary 4, 2005, the *Genmar Kestrel*was involved in a collision with the Singapore-flag tanker Trijata, whichnecessitated the trans-shipment of the *Genmar Kestrel’s*cargoand drydocking the vessel for repairs. The incident resulted in the leakage ofsome oil to the sea. Due to a combination of prompt clean up efforts, a lightviscosity cargo onboard at the time of collision and favorable weatherconditions, we believe that the incident resulted in minimal environmentaldamage. On February 2, 2006, a demand for arbitration was made by StandardTankers Bahamas Ltd. (“Standard”), a subsidiary of Exxon Mobil Corporation, onits own behalf and on behalf of the owners of the cargo shipped on the *Genmar Kestrel*. We settled Standard’s claim by payingStandard, on August 9, 2006, Standard $1.2 million relating to partial loss,damage and/or contamination of the cargo and agreeing to indemnify Standard forits share of salvage liabilities and related expenses of $1.2 million. Thisaggregate $2.4 million expense is recorded on our December 31, 2006 statementof operations as Other expense, which is a component of operating expenses. Ourliabilities in connection with this incident (other than the amounts we haveagreed to pay Standard) are generally covered by our insurance arrangements.

DuringSeptember 2006, we paid $11.8 million to ST Shipping & Transport Inc. (“ST”)to settle customer claims in connection with the 24 month time chartercontracts for our nine OBO Aframax vessels. These arrangements required thatthe vessels meet specified speed and bunker consumption standards.  Pursuant to this settlement, ST cancelled the$16.3 million letter of credit the Company had given ST pending the settlementof the matter.

**ITEM 4. SUBMISSION OF MATTERS TO A VOTE OFSECURITY HOLDERS**

Nomatter was submitted to a vote of security holders, through the solicitation ofproxies or otherwise, during the fourth quarter of the fiscal year endedDecember 31, 2006.

 

26

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**PART II**

**ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY,RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES**

**MARKET INFORMATION, HOLDERS AND DIVIDENDS**

Ourcommon stock has traded on the New York Stock Exchange under the symbol “GMR”since our initial public offering on June 12, 2001. The following table setsforth for the periods indicated the high and low prices for the common stock asof the close of trading as reported on the New York Stock Exchange:
| **FISCAL YEAR ENDED DECEMBER 31, 2006** | ** ** | **HIGH** | ** ** | **LOW** | ** ** |
|------------------------------------------------------------------|------------|----------|------------|---------|------------|
| 1st Quarter                                                      |       | $        | 38.59      |    | $          | 32.95 |   |
| 2nd Quarter                                                      |       | $        | 36.96      |    | $          | 30.71 |   |
| 3rd Quarter                                                      |       | $        | 40.15      |    | $          | 34.78 |   |
| 4th Quarter                                                      |       | $        | 37.42      |    | $          | 34.45 |   |

 
| **FISCAL YEAR ENDED DECEMBER 31, 2005** | ** ** | **HIGH** | ** ** | **LOW** | ** ** |
|------------------------------------------------------------------|------------|----------|------------|---------|------------|
| 1st Quarter                                                      |       | $        | 52.00      |    | $          | 35.95 |   |
| 2nd Quarter                                                      |       | $        | 50.07      |    | $          | 40.75 |   |
| 3rd Quarter                                                      |       | $        | 45.49      |    | $          | 34.15 |   |
| 4th Quarter                                                      |       | $        | 41.22      |    | $          | 33.15 |   |

 

Asof February 13, 2007, there were approximately 143 holders of record of ourcommon stock.

On January 26,2005 our board of directors initiated a cash dividend policy.  Under the policy, we declared quarterlydividends to shareholders in April, July, October and February of each yearbased on our EBITDA after net interest expense and reserves, as established bythe board of directors. During the years ended December 31, 2006 and 2005, wepaid $160.4 million and $110.4 million of cash dividends. Our 2005 CreditFacility and Marshall Islands law impose limitations on the payment ofdividends. See “Dividend Policy” under the heading “LIQUIDITY AND CAPITALRESOURCES” in ITEM 7.

Weannounced on February 21, 2007 that our Board of Directors changed ourquarterly dividend policy by adopting a fixed target amount of $0.50 per shareper quarter or $2.00 per share each year, starting with the first quarter of2007. We intend to declare dividends in April, July, October and February ofeach year.

OnFebruary 21, 2007, we also announced that our Board of Directors declared aspecial, one-time cash dividend of $15.00 per share. The dividend will be paidon or about March 23, 2007 to shareholders of record as of March 9, 2007.

During the yearended December 31, 2006, we repurchased 6,088,113 shares of our common stockfor $219.1 million (average per share purchase price of $35.98) pursuant to ourshare repurchase program described in “Share Repurchase Program” under theheading “LIQUIDITY AND CAPITAL RESOURCES” in ITEM 7.

27

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| **Period**                      | ** ** | **Total Number  of Shares  Purchased** | ** ** | **Average  Price Paid  Per Share** | ** ** | **Total Dollar  Amount as Part of  Publicly Announced  Plans or Programs** | ** ** | **Maximum Dollar  Amount that May  Yet Be Purchased  Under the Plans or  Programs** | ** **  |
|---------------------------------|------------|--------------------------------------------------|------------|----------------------------------------------|------------|---------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------------------------------------|-------------|
| Jan. 1, 2006 -  Jan. 31, 2006   |       | 4,442,756                                        |       | $                                            | 36.99      |                                                                                                          | $          | 164,355,087                                                                                                                 |        | $ | 10,873,592 |   |
| Feb. 1, 2006 -  Feb. 28, 2006   |       | —                                           |       | $                                            | —     |                                                                                                          | —     |                                                                                                                        | 210,873,592 |   |
| Mar. 1, 2006 -  Mar. 31, 2006   |       | 420,400                                          |       | $                                            | 34.51      |                                                                                                          | 14,509,961 |                                                                                                                        | 196,363,631 |   |
| Apr. 1, 2006 -  Apr. 30, 2006   |       | 225,000                                          |       | $                                            | 32.11      |                                                                                                          | 7,225,694  |                                                                                                                        | 189,137,937 |   |
| May 1, 2006 -  May 31, 2006     |       | —                                           |       | $                                            | —     |                                                                                                          | —     |                                                                                                                        | 189,137,937 |   |
| Jun. 1, 2006 -  Jun. 30, 2006   |       | 625,900                                          |       | $                                            | 31.22      |                                                                                                          | 19,543,698 |                                                                                                                        | 169,594,239 |   |
| Jul. 1, 2006 -  Jul. 31, 2006   |       | —                                           |       | $                                            | —     |                                                                                                          | —     |                                                                                                                        | 169,594,239 |   |
| Aug. 1, 2006 -  Aug. 31, 2006   |       | —                                           |       | $                                            | —     |                                                                                                          | —     |                                                                                                                        | 169,594,239 |   |
| Sept. 1, 2006 -  Sept. 30, 2006 |       | 371,300                                          |       | $                                            | 35.93      |                                                                                                          | 13,339,249 |                                                                                                                        | 156,254,990 |   |
| Oct. 1, 2006 -  Oct. 31, 2006   |       | —                                           |       | $                                            | —     |                                                                                                          | —     |                                                                                                                        | 156,254,990 |   |
| Nov. 1, 2006 -  Nov. 30, 2006   |       | 2,757                                            |       | $                                            | 36.14      |                                                                                                          | 99,630     |                                                                                                                        | 156,155,360 |   |
| Dec. 1, 2006 -  Dec. 31, 2006   |       | —                                           |       | $                                            | —     |                                                                                                          | —     |                                                                                                                        | 156,155,360 |   |
| Total                           |       | 6,088,113                                        |       | $                                            | 35.98      |                                                                                                          | $          | 219,073,318                                                                                                                 |        | $ | 156,155,360 |   |

 

Information regardingsecurities authorized for issuance under equity compensation plans and aperformance graph relating to our common stock is set forth in the 2007 ProxyStatement and is incorporated by reference herein.

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**ITEM 6. SELECTED CONSOLIDATED FINANCIAL AND OTHERDATA**

Setforth below are selected historical consolidated and other data of GeneralMaritime Corporation at the dates and for the fiscal years shown.
| ** **                                                        | ** ** | **Year Ended December 31,** | ** ** |
|-------------------------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                                        | ** ** | **2006**                                   | ** ** | **2005** | ** ** | **2004** | ** ** | **2003** | ** ** | **2002** | ** ** |
| **INCOME STATEMENT DATA**                                         |       |                                       |       |   |   |   |   |   |   |   |   |
| (Dollars in thousands,  except per share data)                    |       |                                       |       |   |   |   |   |   |   |   |   |
| Voyage revenues                                                   |       | $                                          | 325,984    |   | $ | 567,901 |   | $ | 701,291 |   | $ | 454,456 |   | $ | 226,357 |   |
| Voyage expenses                                                   |       | 80,400                                     |       | 137,203 |   | 117,955 |   | 117,810 |   | 80,790 |   |
| Direct vessel operating  expenses                                 |       | 47,472                                     |       | 86,681 |   | 96,818 |   | 91,981 |   | 55,241 |   |
| Other expense                                                     |       | 2,430                                      |       | — |   | — |   | — |   | — |   |
| General and  administrative expenses                              |       | 44,787                                     |       | 43,989 |   | 31,420 |   | 22,866 |   | 12,026 |   |
| Gain on sale of vessels                                           |       | (46,022                                    | )          | (91,235 | ) | (6,570 | ) | (1,490 | ) | (266 | ) |
| Impairment charge                                                 |       | —                                     |       | — |   | — |   | 18,803 |   | 13,366 |   |
| Depreciation and  amortization                                    |       | 42,395                                     |       | 97,320 |   | 100,806 |   | 84,925 |   | 60,431 |   |
| Operating income                                                  |       | 154,522                                    |       | 293,943 |   | 360,862 |   | 119,561 |   | 4,769 |   |
| Net interest (income)  expense                                    |       | (1,455                                     | )          | 28,918 |   | 37,852 |   | 35,043 |   | 14,511 |   |
| Other (income) expense                                            |       | (854                                       | )          | 52,668 |   | 7,901 |   | — |   | — |   |
| Net income  (loss)                                                |       | $                                          | 156,831    |   | $ | 212,357 |   | $ | 315,109 |   | $ | 84,518 |   | $ | (9,742 | ) |
| Earnings (loss) per  common share:                                |       |                                       |       |   |   |   |   |   |   |   |   |
| Basic                                                             |       | $                                          | 4.98       |   | $ | 5.71 |   | $ | 8.51 |   | $ | 2.29 |   | $ | (0.26 | ) |
| Diluted                                                           |       | $                                          | 4.87       |   | $ | 5.61 |   | $ | 8.33 |   | $ | 2.26 |   | $ | (0.26 | ) |
|                                                              |       |                                       |       |   |   |   |   |   |   |   |   |
| Dividends declared per  common share                              |       | $                                          | 4.80       |   | $ | 2.86 |   | $ | — |   | $ | — |   | $ | — |   |
|                                                              |       |                                       |       |   |   |   |   |   |   |   |   |
| Weighted average basic  shares outstanding, thousands:            |       |                                       |       |   |   |   |   |   |   |   |   |
| Basic                                                             |       | 31,472                                     |       | 37,164 |   | 37,049 |   | 36,967 |   | 36,981 |   |
| Diluted                                                           |       | 32,217                                     |       | 37,874 |   | 37,814 |   | 37,356 |   | 36,981 |   |
|                                                              |       |                                       |       |   |   |   |   |   |   |   |   |
| **BALANCE SHEET DATA, at end of  period**                         |       |                                       |       |   |   |   |   |   |   |   |   |
| (Dollars in thousands)                                            |       |                                       |       |   |   |   |   |   |   |   |   |
| Cash                                                              |       | $                                          | 107,460    |   | $ | 96,976 |   | $ | 46,921 |   | $ | 38,905 |   | $ | 2,681 |   |
| Current assets,  including cash                                   |       | 137,865                                    |       | 471,324 |   | 152,145 |   | 102,473 |   | 43,841 |   |
| Total assets                                                      |       | 843,690                                    |       | 1,149,126 |   | 1,427,261 |   | 1,263,578 |   | 782,277 |   |
| Current liabilities,  including current portion of long-term debt |       | 27,147                                     |       | 32,906 |   | 84,120 |   | 89,771 |   | 77,519 |   |
| Current portion  of long-term debt                                |       | —                                     |       | — |   | 40,000 |   | 59,553 |   | 62,003 |   |
| Total long-term debt,  including current portion                  |       | 50,000                                     |       | 135,020 |   | 486,597 |   | 655,670 |   | 280,011 |   |
| Shareholders' equity                                              |       | 763,913                                    |       | 976,125 |   | 890,426 |   | 568,880 |   | 481,636 |   |
|                                                              |       |                                       |       |   |   |   |   |   |   |   |   |
| **OTHER FINANCIAL DATA**                                          |       |                                       |       |   |   |   |   |   |   |   |   |
| (Dollars in thousands)                                            |       |                                       |       |   |   |   |   |   |   |   |   |
| Net cash provided by  operating activities                        |       | $                                          | 189,717    |   | $ | 249,614 |   | $ | 363,238 |   | $ | 178,112 |   | $ | 43,637 |   |
| Net cash provided  (used) by investing activities                 |       | 285,264                                    |       | 318,169 |   | (168,477 | ) | (502,919 | ) | 2,034 |   |
| Net cash (used)  provided by financing activities                 |       | (464,497                                   | )          | (517,728 | ) | (186,745 | ) | 361,031 |   | (60,176 | ) |
| Capital expenditures                                              |       |                                       |       |   |   |   |   |   |   |   |   |
| Vessel sales  (purchases), gross including deposits               |       | 290,299                                    |       | 324,087 |   | (165,796 | ) | (501,242 | ) | 2,251 |   |
| Drydocking or  capitalized survey or improvement costs            |       | (11,929                                    | )          | (38,039 | ) | (17,050 | ) | (14,137 | ) | (13,546 | ) |
| Weighted average  long-term debt, including current portion       |       | 93,085                                     |       | 410,794 |   | 650,196 |   | 601,086 |   | 313,537 |   |
|                                                              |       |                                       |       |   |   |   |   |   |   |   |   |
| **OTHER DATA**                                                    |       |                                       |       |   |   |   |   |   |   |   |   |
| (Dollars in thousands)                                            |       |                                       |       |   |   |   |   |   |   |   |   |
| EBITDA (1)                                                        |       | $                                          | 197,771    |   | $ | 338,595 |   | $ | 453,767 |   | $ | 204,486 |   | $ | 65,200 |   |
|                                                              |       |                                       |       |   |   |   |   |   |   |   |   |
| **FLEET DATA**                                                    |       |                                       |       |   |   |   |   |   |   |   |   |
| Total number of vessels  at end of period                         |       | 18.0                                       |       | 30.0 |   | 43.0 |   | 43.0 |   | 28.0 |   |
| Average number of  vessels (2)                                    |       | 20.6                                       |       | 41.9 |   | 44.0 |   | 40.6 |   | 28.9 |   |
| Total voyage days for  fleet (3)                                  |       | 7,121                                      |       | 14,073 |   | 15,482 |   | 14,267 |   | 10,010 |   |
| Total time  charter days for fleet                                |       | 2,300                                      |       | 3,983 |   | 4,371 |   | 2,804 |   | 1,490 |   |
| Total spot  market days for fleet                                 |       | 4,821                                      |       | 10,090 |   | 11,111 |   | 11,463 |   | 8,520 |   |
| Total calendar days for  fleet (4)                                |       | 7,534                                      |       | 15,311 |   | 16,123 |   | 14,818 |   | 10,536 |   |
| Fleet utilization  (5)                                            |       | 94.5                                       | %          | 91.9 | % | 96.0 | % | 96.3 | % | 95.0 | % |

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| **AVERAGE DAILY RESULTS**        | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
|--------------------------------------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|------------|
| Time charter  equivalent (6)               |       | 34,487     |       | $          | 30,605     |       | $          | 37,676     |       | $          | 23,596     |   | $ | 14,542 |   |
| Direct vessel  operating expenses (7)      |       | 6,301      |       | 5,661      |       | 6,005      |       | 6,207      |       | 5,243      |       |
| General and  administrative expenses (  8) |       | 5,945      |       | 2,873      |       | 1,949      |       | 1,543      |       | 1,136      |       |
| Total vessel  operating expenses (9)       |       | 12,246     |       | 8,534      |       | 7,954      |       | 7,750      |       | 6,379      |       |
| EBITDA                                     |       | 26,250     |       | 22,114     |       | 28,144     |       | 13,800     |       | 7,437      |       |
|                                            |            |            |            |            |            |            |            |            |            |            |            |  |  |  |  |

 
|                             |   | **Year Ended December 31,** |   |
|----------------------------------|--------|-----------------------------|--------|
| **EBITDA  Reconciliation**       |   | **2006**                    |   | **2005** |   | **2004** |   | **2003** |   | **2002** |   |
| (Dollars in  thousands)          |   |                        |   |   |   |   |   |   |   |   |   |
| **Net  Income**                  |   | **156,831**                 |   | **$** | **212,357** |   | **$** | **315,109** |   | **$** | **84,518** |   | **$** | **(9,742** | ) |
| + Net interest  expense          |   | (1,455                      | )      | 28,918 |   | 37,852 |   | 35,043 |   | 14,511 |   |
| + Depreciation  and amortization |   | 42,395                      |   | 97,320 |   | 100,806 |   | 84,925 |   | 60,431 |   |
| **EBITDA**                       |   | **197,771**                 |   | **$** | **338,595** |   | **$** | **453,767** |   | **$** | **204,486** |   | **$** | **65,200** |   |

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(1)     EBITDA represents net incomeplus net interest expense and depreciation and amortization. EBITDA is includedbecause it is used by management and certain investors as a measure ofoperating performance. EBITDA is used by analysts in the shipping industry as acommon performance measure to compare results across peers. Management of theCompany uses EBITDA as a performance measure in consolidating quarterlyinternal financial statements and is presented for review at our boardmeetings. The Company believes that EBITDA is useful to investors as theshipping industry is capital intensive which often brings significant cost offinancing. EBITDA is not an item recognized by accounting principles generallyaccepted in the United States of America (GAAP), and should not be considered asan alternative to net income, operating income or any other indicator of acompany’s operating performance required by GAAP. The definition of EBITDA usedhere may not be comparable to that used by other companies.

(2)     Average number of vessels isthe number of vessels that constituted our fleet for the relevant period, asmeasured by the sum of the number of days each vessel was part of ourfleet during the period divided by the number of calendar days in that period.

(3)     Voyage days for fleet are thetotal days our vessels were in our possession for the relevant period net ofoff hire days associated with major repairs, drydockings or special orintermediate surveys.

(4)     Calendar days are the totaldays the vessels were in our possession for the relevant period including offhire days associated with major repairs, drydockings or special or intermediatesurveys.

(5)     Fleet utilization is thepercentage of time that our vessels were available for revenue generatingvoyage days, and is determined by dividing voyage days by calendar days for therelevant period.

(6)     Time Charter Equivalent, orTCE, is a measure of the average daily revenue performance of a vessel on a pervoyage basis. Our method of calculating TCE is consistent with industrystandards and is determined by dividing net voyage revenue by voyage days forthe relevant time period. Net voyage revenues are voyage revenues minus voyageexpenses. Voyage expenses primarily consist of port, canal and fuel costs thatare unique to a particular voyage, which would otherwise be paid by thecharterer under a time charter contract.

(7)     Daily direct vessel operatingexpenses, or DVOE, is calculated by dividing DVOE, which includes crew costs,provisions, deck and engine stores, lubricating oil, insurance and maintenanceand repairs, by calendar days for the relevant time period.

(8)     Daily general andadministrative expense is calculated by dividing general and administrativeexpenses by calendar days for the relevant time period.

(9)     Total VesselOperating Expenses, or TVOE, is a measurement of our total expenses associatedwith operating our vessels. Daily TVOE is the sum of daily direct vesseloperating expenses, or DVOE, and daily general and administrative expenses.

 

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** **

**ITEM 7. MANAGEMENT’S DISCUSSIONAND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

**General**

The following is a discussion of ourfinancial condition at December 31, 2006 and 2005 and our results ofoperations comparing the years ended December 31, 2006 and 2005 and theyears ended December 31, 2005 and 2004. You should read thissection together with the consolidated financial statements including thenotes to those financial statements for the years mentioned above.

We are a leading provider of internationalseaborne crude oil transportation services with a large mid-sized vessel fleet.As of December 31, 2006 our fleet consisted of 18 vessels (10 Aframax andeight Suezmax vessels) with a total cargo carrying capacity of 2.4 milliondeadweight tons.  In addition, we havethree Suezmax vessels, one of which was delivered in January 2007, and two ofwhich are newbuildings scheduled to be delivered during 2007 and early 2008comprising an additional 0.4 million deadweight tons in the aggregate.

**Spot and Time Charter Deployment**

We actively manage the deployment of ourfleet between spot market voyage charters, which generally last from severaldays to several weeks, and time charters, which can last up to several years. Aspot market voyage charter is generally a contract to carry a specific cargofrom a load port to a discharge port for an agreed upon total amount. Underspot market voyage charters, we pay voyage expenses such as port, canal andfuel costs. A time charter is generally a contract to charter a vessel for afixed period of time at a set daily rate. Under time charters, the chartererpays voyage expenses such as port, canal and fuel costs.

Vessels operating on time chartersprovide more predictable cash flows, but can yield lower profit margins thanvessels operating in the spot market during periods characterized by favorablemarket conditions. Vessels operating in the spot market generate revenues thatare less predictable but may enable us to capture increased profit marginsduring periods of improvements in tanker rates although we are exposed to therisk of declining tanker rates. We are constantly evaluating opportunities toincrease the number of our vessels deployed on time charters, but only expectto enter into additional time charters if we can obtain contract terms thatsatisfy our criteria.

**Net Voyage Revenues asPerformance Measure**

For discussion and analysis purposesonly, we evaluate performance using net voyage revenues. Net voyage revenuesare voyage revenues minus voyage expenses. Voyage expenses primarily consist ofport, canal and fuel costs that are unique to a particular voyage, which wouldotherwise be paid by a charterer under a time charter. We believe thatpresenting voyage revenues, net of voyage expenses, neutralizes the variabilitycreated by unique costs associated with particular voyages or the deployment ofvessels on time charter or on the spot market and presents a more accuraterepresentation of the revenues generated by our vessels.

Our voyage revenues are recognizedratably over the duration of the voyages and the lives of the charters, whiledirect vessel expenses are recognized when incurred. We recognize the revenuesof time charters that contain rate escalation schedules at the average rateduring the life of the contract. We calculate time charter equivalent, or TCE,rates by dividing net voyage revenue by voyage days for the relevant timeperiod. We also generate demurrage revenue, which represents fees charged tocharterers associated with our spot market voyages when the charterer exceedsthe agreed upon time required to load or discharge a cargo. We calculate dailydirect vessel operating expenses and daily general and administrative expensesfor the relevant period by dividing the total expenses by the aggregate numberof calendar days that we owned each vessel for the period.

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** **

**RESULTS OF OPERATIONS**

Margin analysis for the indicated itemsas a percentage of net voyage revenues for the years ended December 31,2006, 2005 and 2004 are set forth in the table below.

**INCOME STATEMENT MARGIN ANALYSIS(% OF NET VOYAGE REVENUES)**
| ** **                           | ** ** | **YEAR ENDED DECEMBER 31,** | ** ** |
|--------------------------------------|------------|--------------------------------------------|------------|
| ** **                           | ** ** | **2006**                                   | ** ** | **2005** | ** ** | **2004** | ** ** |
| **INCOME  STATEMENT DATA**           |       |                                       |       |   |   |   |   |
|                                 |       |                                       |       |   |   |   |   |
| Net voyage  revenues(1)              |       | 100.0                                      | %          | 100.0 | % | 100.0 | % |
| Direct vessel  expenses              |       | 19.3                                       | %          | 20.1 | % | 16.6 | % |
| Other expense                        |       | 1.0                                        | %          | 0.0 | % | 0.0 | % |
| General and  administrative expenses |       | 18.2                                       | %          | 10.2 | % | 5.4 | % |
| Depreciation and  amortization       |       | 17.3                                       | %          | 22.6 | % | 17.3 | % |
| Gain on sale of  vessels             |       | -18.7                                      | %          | -21.2 | % | -1.2 | % |
| Operating income                     |       | 62.9                                       | %          | 68.3 | % | 61.9 | % |
| Net interest  expense                |       | -0.6                                       | %          | 6.7 | % | 6.5 | % |
| Other (income)  expense              |       | -0.4                                       | %          | 12.2 | % | 1.4 | % |
| Net income                           |       | 63.9                                       | %          | 49.4 | % | 54.0 | % |

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(1)                                  Net voyagerevenues are voyage revenues minus voyage expenses. Voyage expenses primarilyconsist of port, canal and fuel costs that are unique to a particular voyage,which would otherwise be paid by a charterer under a time charter.
| **INCOME STATEMENT DATA  (Dollars in thousands, except share data)** | ** ** | **YEAR ENDED DECEMBER 31,** | ** ** |
|---------------------------------------------------------------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                                                                              | ** ** | **2006**                                   | ** ** | **2005** | ** ** | **2004** | ** ** |
|                                                                                                    |       |                                       |       |   |   |   |   |
| Voyage revenues                                                                                         |       | $                                          | 325,984    |   | $ | 567,901 |   | $ | 701,291 |   |
| Voyage expenses                                                                                         |       | (80,400                                    | )          | (137,203 | ) | (117,955 | ) |
| Net voyage  revenues                                                                                    |       | $                                          | 245,584    |   | $ | 430,698 |   | $ | 583,336 |   |

** **

**YEAR ENDED DECEMBER 31, 2006COMPARED TO THE YEAR ENDED DECEMBER 31, 2005**

VOYAGE REVENUES-****Voyagerevenues decreased by $241.9 million, or 42.6%, to $326.0 million for the yearended December 31, 2006 compared to $567.9 million for the prioryear.   This decrease is primarily due toa 49.4% decrease in the number of vessel operating days to 7,121 days in 2006 from14,073 days in the prior year, which is primarily attributable to a decrease inthe size of our fleet. The average size of our fleet decreased to 20.6 (12.7Aframax, 7.9 Suezmax) vessels during the year ended December 31, 2006compared to 41.9 vessels (25.5 Aframax, 16.4 Suezmax) during the prior year.This decrease is partially offset by stronger spot and time charter ratesduring 2006 as compared to the prior year. This overall decrease is consistent with our strategy to selectivelysell older vessels when and if appropriate opportunities are identified inorder to adjust our fleet characteristics and profile to suit customerpreferences and to monetize investments in vessels to generate capital forpotential future growth. However, there can be no assurance that we will growour fleet in 2007. Voyage revenues are expected to decrease during 2007 due toour smaller fleet size as well as the higher number of time charter days weexpect to have in 2007 as compared to 2006. Spot charters typically result in higher voyage revenues because thecharter rates must be sufficient to recover voyage expenses that the chartererpays for under a time charter.

VOYAGE EXPENSES-****Voyageexpenses decreased $56.8 million, or 41.4%, to $80.4 million for the year endedDecember 31, 2006 compared to $137.2 million for the prior year.Substantially all of our voyage expenses relate to spot charter voyages, underwhich the vessel owner is responsible for voyage expenses such as fuel and portcosts. This decrease in voyage expenses is primarily due to a decrease in the numberof days our vessels operated under spot charters. During the year endedDecember 31, 2006, the number of days our vessels operated under spotcharters decreased by 5,269, or 52.2%, to 4,821 days (2,467 days Aframax, 2,354days Suezmax) from 10,090 days (4,529 days Aframax, 5,561 days Suezmax) duringthe prior year. This decrease was partially offset by fuel costs which were 38%higher per spot vessel day during the year

32

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ended December 31, 2006 compared tothe prior year period. Fuel cost decreased by $30.6 million, or 34.2%, to $58.9million during the year ended December 31, 2006 compared to $89.5 millionduring the prior year. Port costs, which can vary depending on the geographicregions in which the vessels operate and their trading patterns, decreased by$25.9 million, or 56.2%, to $20.2 million during the year endedDecember 31, 2006 compared to $46.2 million during the prior year.Included in these port costs are Suez Canal transit costs of approximately $0.8million during the year ended December 31, 2006 compared to $7.8 millionduring the prior year.  Voyage expensesare expected to decrease during 2007 due to our smaller fleet size as well asthe higher number of time charter days we expect to have in 2007 as compared to2006.

NET VOYAGE REVENUES-****Netvoyage revenues, which are voyage revenues minus voyage expenses, decreased by$185.1 million, or 43.0%, to $245.6 million for the year endedDecember 31, 2006 compared to $430.7 million for the prior year. Of thistotal decrease, approximately $213 million is attributable to the decrease inthe average size of our fleet which decreased 50.8% to 20.6 vessels (12.7Aframax, 7.9 Suezmax) for the year ended December 31, 2006 compared to41.9 vessels (25.5 Aframax, 16.4 Suezmax) for the prior year. This decrease ispartially offset by approximately $ 28million of additional net voyage revenueassociated with stronger daily rates for time charters and spot charters forSuezmax and Aframax vessels during the year ended December 31, 2006compared to the prior year. Our average TCE rates increased 12.7% to $34,487during the year ended December 31, 2006 compared to $30,605 during theyear ended December 31, 2005.

33

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The following is additional datapertaining to net voyage revenues:
| ** **                              | ** ** | **Year ended December 31,** | ** ** | ** ** | ** ** | ** **               | ** ** |
|-----------------------------------------|------------|--------------------------------------------|------------|------------|------------|--------------------------|------------|
| ** **                              | ** ** | **2006**                                   | ** ** | **2005**   | ** ** | **Increase  (Decrease)** | ** ** | **% Change** | ** ** |
| **Net voyage revenue (in  thousands):** |       |                                       |       |       |       |                     |       |   |   |
| Time charter:                           |       |                                       |       |       |       |                     |       |   |   |
| Aframax                                 |       | $                                          | 46,327     |       | $          | 83,658                   |       | $ | (37,331 | ) | -44.6 | % |
| Suezmax                                 |       | 13,929                                     |       | 1,469      |       | 12,460                   |       | 848.2 | % |
| Total                                   |       | 60,256                                     |       | 85,127     |       | (24,871                  | )          | -29.2 | % |
|                                    |       |                                       |       |       |       |                     |       |   |   |
| Spot charter:                           |       |                                       |       |       |       |                     |       |   |   |
| Aframax                                 |       | 78,791                                     |       | 125,146    |       | (46,355                  | )          | -37.0 | % |
| Suezmax                                 |       | 106,537                                    |       | 220,425    |       | (113,888                 | )          | -51.7 | % |
| Total                                   |       | 185,328                                    |       | 345,571    |       | (160,243                 | )          | -46.4 | % |
|                                    |       |                                       |       |       |       |                     |       |   |   |
| TOTAL NET VOYAGE  REVENUE               |       | $                                          | 245,584    |       | $          | 430,698                  |       | $ | (185,114 | ) | -43.0 | % |
|                                    |       |                                       |       |       |       |                     |       |   |   |
| **Vessel operating days**:              |       |                                       |       |       |       |                     |       |   |   |
|                                    |       |                                       |       |       |       |                     |       |   |   |
| Time charter:                           |       |                                       |       |       |       |                     |       |   |   |
| Aframax                                 |       | 1,935                                      |       | 3,936      |       | (2,001                   | )          | -50.8 | % |
| Suezmax                                 |       | 365                                        |       | 47         |       | 318                      |       | 676.6 | % |
| Total                                   |       | 2,300                                      |       | 3,983      |       | (1,683                   | )          | -42.3 | % |
|                                    |       |                                       |       |       |       |                     |       |   |   |
| Spot charter:                           |       |                                       |       |       |       |                     |       |   |   |
| Aframax                                 |       | 2,467                                      |       | 4,529      |       | (2,062                   | )          | -45.5 | % |
| Suezmax                                 |       | 2,354                                      |       | 5,561      |       | (3,207                   | )          | -57.7 | % |
| Total                                   |       | 4,821                                      |       | 10,090     |       | (5,269                   | )          | -52.2 | % |
|                                    |       |                                       |       |       |       |                     |       |   |   |
| TOTAL VESSEL  OPERATING DAYS            |       | 7,121                                      |       | 14,073     |       | (6,952                   | )          | -49.4 | % |
| AVERAGE NUMBER  OF VESSELS              |       | 20.6                                       |       | 41.9       |       | (21.3                    | )          | -50.8 | % |
| ** **                              |       |                                       |       |       |       |                     |       |   |   |
| **Time Charter Equivalent(TCE):**       |       |                                       |       |       |       |                     |       |   |   |
| Time charter:                           |       |                                       |       |       |       |                     |       |   |   |
| Aframax                                 |       | $                                          | 23,941     |       | $          | 21,255                   |       | $ | 2,686 |   | 12.6 | % |
| Suezmax                                 |       | $                                          | 38,163     |       | $          | 31,260                   |       | $ | 6,903 |   | 22.1 | % |
| Combined                                |       | $                                          | 26,198     |       | $          | 21,373                   |       | $ | 4,825 |   | 22.6 | % |
|                                    |       |                                       |       |       |       |                     |       |   |   |
| Spot charter:                           |       |                                       |       |       |       |                     |       |   |   |
| Aframax                                 |       | $                                          | 31,938     |       | $          | 27,632                   |       | $ | 4,306 |   | 15.6 | % |
| Suezmax                                 |       | $                                          | 45,258     |       | $          | 39,638                   |       | $ | 5,620 |   | 14.2 | % |
| Combined                                |       | $                                          | 38,442     |       | $          | 34,249                   |       | $ | 4,193 |   | 12.2 | % |
|                                    |       |                                       |       |       |       |                     |       |   |   |
| TOTAL TCE                               |       | $                                          | 34,487     |       | $          | 30,605                   |       | $ | 3,882 |   | 12.7 | % |

 

As of December 31, 2006, ten of ourvessels are on time charters expiring between August 2007 and December 2009.

DIRECTVESSEL EXPENSES-****Direct vessel expenses, whichinclude crew costs, provisions, deck and engine stores, lubricating oil,insurance, maintenance and repairs decreased by $39.2 million, or 45.2%, to$47.5 million for the year ended December 31, 2006 compared to $86.7million for the prior year. This decrease is primarily due to a 50.8% decreasein the size of our fleet during the year ended December 31, 2006 as compared tothe prior year. This decrease is partially offset by higher daily direct vesselexpenses per vessel which increased by $640, or 11.3%, to $6,301 ($6,048Aframax, $6,710 Suezmax) for the year ended December 31, 2006 compared to$5,661 ($5,493 Aframax, $5,922 Suezmax) for the prior year. This increase indaily direct vessel expenses is primarily attributed to higher crew costsassociated with enhanced crew training, changes in crew complements andrepatriating crews of vessels that we sold during 2006; higher costs oflubricating oils and higher insurance costs.

Weanticpate that direct vessel expenses will remain flat during 2007 as comparedto 2006 due to the slight decrease in the

34

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averagesize of our fleet during 2007 as compared to 2006 and higher expected dailydirect vessel expenses.  We expect dailydirect vessel operating expenses to increase during 2007 due to higher crew,lubricating oils and insurance costs.

OTHEREXPENSE—Other expense for the year ended December 31, 2006 is comprised ofa $2.4 million settlement of a claim by a subsidiary of the Exxon MobilCorporation arising from the February 4, 2005 collision of the GenmarKestrel.

GENERAL AND ADMINISTRATIVE EXPENSES—Generaland administrative expenses increased by $0.8 million, or 1.8%, to $44.8million for the year ended December 31, 2006 compared to $44.0 million forthe prior year. The primary components of this increase for the year endedDecember 31, 2006 compared to the prior year are:

(a) a $4.0 million increase incompensation to our U.S.-based personnel, principally consisting of a $3.2million non-cash increase in restricted stock amortization, which includedhigher amortization in 2006 as compared to 2005 of restricted stock grants madein April 2005, December 2005, May 2006, October 2006 and December 2006;and a $0.7 million increase in salaries and bonuses during 2006 as compared to2005.

(b) a $0.7 million increase in 2006 ascompared to 2005 relating to operating our foreign subsidiary in Portugal,which increase is primarily attributable to greater headcount in 2006associated with the transfer to Portugal of the technical management of vesselsthat our office in Greece had handled through May 2006;

(c) a $2.0 million decrease in 2006as compared to 2005 relating to our decision to close our foreign subsidiary inGreece, which ceased technical management of vessels in May 2006 and iscurrently being wound down.

(d) a $1.0 million decrease  in 2006 as compared to 2005 relating toprofessional fees incurred during 2005 such as strategic advisory servicesassociated with an unsolicited acquisition proposal and senior executiveemployment agreements that did not recur in 2006 as well as lower costs in 2006as compared to 2005 relating to Sarbanes-Oxley 404 compliance; and

(e) a $0.8 million decrease in 2006as compared to 2005 relating to our lease of an aircraft.

General and administrative expenses as apercentage of net voyage revenues increased to 18.2% for the year endedDecember 31, 2006 from 10.2% for the prior year. Daily general andadministrative expenses per vessel increased $3,072, or 107%, to $5,945 for theyear ended December 31, 2006 compared to $2,873 for the prior year.

We anticipate that general and administrativeexpenses during 2007 will decrease principally attributable to $3.0 million ofexpenses associated with 2006 costs incurred relating to our office in Greecewhich will not recur in 2007.

DEPRECIATION AND AMORTIZATION—Depreciationand amortization, which include depreciation of vessels as well as amortizationof drydocking, special survey and loan fees, decreased by $54.9 million, or56.4%, to $42.4 million for the year ended December 31, 2006 compared to$97.3 million for the prior year. This decrease is primarily due to the 50.8%reduction in the size of our fleet during 2006, which decreased vesseldepreciation by $41.7 million, or 55.2%, to $33.9 million during the year endedDecember 31, 2006 compared to $75.6 million during the prior year.

Amortization of drydocking decreased by$11.9 million, or  66.1%, to $6.1 millionfor the year ended December 31, 2006 compared to $18.0 million for theprior year. This decrease is primarily attributable to the 50.8% reduction inthe size of our fleet during 2006.

GAIN ON SALE OF VESSELS—During 2005, weagreed to sell 17 vessels comprised of : (a) our four single-hull Suezmaxvessels, (b) our six double-sided Suezmax vessels, (c) our one single-hullAframax vessel and (d) our six double-sided Aframax vessels in order totransform our fleet to exclusively double-hull vessels. ThroughDecember 31, 2005, 13 of these vessels were delivered to their new ownersfor aggregate net proceeds of $334.7 million, for a net gain on sale of vesselsof $91.2 million.

During 2006, we sold the four remainingvessels described above as well as our nine Aframax OBO vessels, which wedecided to sell to reduce the average age of our fleet.  These 13 vessels were delivered to their newowners for aggregate net proceeds of $340.9 million, for a net gain on sale ofvessels of $46.0 million.

INTEREST INCOME—Interest income increasedby $2.1 million, or 61.4%, to $5.6 million during the year ended December 31,2006 compared to $3.5 million during the prior year.  This increase is the result of higher averagecash balances and higher interest rates on deposits earned during 2006 comparedto 2005.

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INTEREST EXPENSE—Interest expensedecreased by $28.2 million, or  87.0%, to$4.2 million for the year ended December 31, 2006 compared to $32.4million for the prior year. $24.7 million of this decrease resulted from adecrease in interest expense relating to our Senior Notes, substantially all ofwhich we retired in December 2005.  Anadditional $3.1 million  decreasepertains to lower interest expense on our revolving credit facilities due tolower average borrowing levels during 2006 as compared to 2005, partiallyoffset by higher floating borrowing rates during 2006 compared to 2005.  During the year ended December 31, 2006, ourweighted average indebtedness on our credit facilities decreased by 48.6% to$93.1 million from $181.0 million during the prior year.  Because we intend to fund substantially theentire amount of our $15.00 per share dividend with new borrowings under our2005 Credit Facility, we expect that interest expense will increasesignificantly during 2007.

OTHER INCOME(EXPENSE)—During 2005, Other income (expense) consisted primarily of a $45.8million loss relating to our repurchase of $250.0 million of our Senior Notes,which includes a $5.7 million write-off of deferred financing costs. Also, inOctober 2005, we entered into an $800 million credit facility, refinancingour $825 million credit facility, at which time we wrote off as a non-cashcharge $5.0 million associated with the unamortized deferred financing costsassociated with the $825 million credit facility.

NET INCOME—Net income was $156.8 millionfor the year ended December 31, 2006 compared to net income of $212.4million for the prior year.

**YEAR ENDED DECEMBER 31, 2005COMPARED TO THE YEAR ENDED DECEMBER 31, 2004**

VOYAGE REVENUES—Voyage revenues decreasedby $133.4 million, or 19.0%, to $567.9 million for the year endedDecember 31, 2005 compared to $701.3 million for the prior year. Thisdecrease is due to the lower spot market for Suezmax and Aframax vessels duringthe year ended December 31, 2005 compared to the prior year. Alsocontributing to this decrease is a 9.1% decrease in the number of vesseloperating days during 2005 to 14,073 days in 2005 from 15,842 days in the prioryear period, attributable to a decrease in the size of our fleet and a heavierdrydocking schedule as compared to the prior year. The average size of ourfleet decreased to 41.9 (25.5 Aframax, 16.4 Suezmax) vessels during the yearended December 31, 2005 compared to 44.0 vessels (25.0 Aframax, 19.0Suezmax) during the prior year. This decrease is consistent with our strategyto selectively sell older vessels when and if appropriate opportunities areidentified in order to adjust our fleet characteristics and profile to suitcustomer preferences and to monetize investments in vessels to generate capitalfor potential future growth.

VOYAGE EXPENSES—Voyage expenses increased$19.2 million, or 16.3%, to $137.2 million for the year ended December 31,2005 compared to $118.0 million for the prior year. Substantially all of ourvoyage expenses relate to spot charter voyages, under which the vessel owner isresponsible for voyage expenses such as fuel and port costs. $11.9 million ofthis increase is attributable to higher fuel costs during the year endedDecember 31, 2005 compared to the prior year period. In addition, duringthe year ended December 31, 2005, we incurred $6.6 million more costs thanin the prior year relating to transit through the Suez Canal. This increase invoyage expenses occurred in spite of a decrease in the number of days ourvessels operated under spot charters. During the year ended December 31,2005, the number of days our vessels operated under spot charters decreased by 1,021,or 9.2%, to 10,090 days (4,529 days Aframax, 5,561 days Suezmax) from 11,111days (4,738 days Aframax, 6,373 days Suezmax) during the prior year.

NET VOYAGE REVENUES—Net voyage revenues,which are voyage revenues minus voyage expenses, decreased by $152.6 million,or 26.2%, to $430.7 million for the year ended December 31, 2005 comparedto $583.3 million for the prior year. Approximately $105 million of thisdecrease is due to the weaker spot market for Suezmax and Aframax vesselsduring the year ended December 31, 2005 compared to the prior year as wellas a 4.7% decrease in the average size of our fleet. Our average TCE ratesdeclined 18.8% to $30,605 during the year ended December 31, 2005 comparedto $37,676 during the year ended December 31, 2004. The average size ofour fleet decreased 4.7% to 41.9 vessels (25.5 Aframax, 16.4 Suezmax) for theyear ended December 31, 2005 compared to 44.0 vessels (25.0 Aframax, 19.0Suezmax) for the prior year.

The following is additional datapertaining to net voyage revenues:

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| ** **                              | ** ** | **Year ended December 31,** | ** ** | ** ** | ** ** | ** **               | ** ** |
|-----------------------------------------|------------|--------------------------------------------|------------|------------|------------|--------------------------|------------|
| ** **                              | ** ** | **2005**                                   | ** ** | **2004**   | ** ** | **Increase  (Decrease)** | ** ** | **% Change** | ** ** |
| **Net  voyage revenue (in thousands):** |       |                                       |       |       |       |                     |       |   |   |
| Time charter:                           |       |                                       |       |       |       |                     |       |   |   |
| Aframax                                 |       | $                                          | 83,658     |       | $          | 82,894                   |       | $ | 764 |   | 0.9 | % |
| Suezmax                                 |       | 1,469                                      |       | 3,902      |       | (2,433                   | )          | -62.4 | % |
| Total                                   |       | 85,127                                     |       | 86,796     |       | (1,669                   | )          | -1.9 | % |
|                                    |       |                                       |       |       |       |                     |       |   |   |
| Spot charter:                           |       |                                       |       |       |       |                     |       |   |   |
| Aframax                                 |       | 125,146                                    |       | 175,791    |       | (50,645                  | )          | -28.8 | % |
| Suezmax                                 |       | 220,425                                    |       | 320,749    |       | (100,324                 | )          | -31.3 | % |
| Total                                   |       | 345,571                                    |       | 496,540    |       | (150,969                 | )          | -30.4 | % |
|                                    |       |                                       |       |       |       |                     |       |   |   |
| TOTAL NET VOYAGE REVENUE                |       | $                                          | 430,698    |       | $          | 583,336                  |       | $ | (152,638 | ) | -26.2 | % |
|                                    |       |                                       |       |       |       |                     |       |   |   |
| **Vessel  operating days:**             |       |                                       |       |       |       |                     |       |   |   |
| Time charter:                           |       |                                       |       |       |       |                     |       |   |   |
| Aframax                                 |       | 3,936                                      |       | 4,182      |       | (246                     | )          | -5.9 | % |
| Suezmax                                 |       | 47                                         |       | 189        |       | (142                     | )          | -75.1 | % |
| Total                                   |       | 3,983                                      |       | 4,371      |       | (388                     | )          | -8.9 | % |
|                                    |       |                                       |       |       |       |                     |       |   |   |
| Spot charter:                           |       |                                       |       |       |       |                     |       |   |   |
| Aframax                                 |       | 4,529                                      |       | 4,738      |       | (209                     | )          | -4.4 | % |
| Suezmax                                 |       | 5,561                                      |       | 6,373      |       | (812                     | )          | -12.7 | % |
| Total                                   |       | 10,090                                     |       | 11,111     |       | (1,021                   | )          | -9.2 | % |
| TOTAL VESSEL OPERATING DAYS             |       | 14,073                                     |       | 15,482     |       | (1,409                   | )          | -9.1 | % |
| AVERAGE NUMBER OF VESSELS               |       | 41.9                                       |       | 44.0       |       | (2.1                     | )          | -4.7 | % |
|                                    |       |                                       |       |       |       |                     |       |   |   |
| **Time  Charter Equivalent (TCE):**     |       |                                       |       |       |       |                     |       |   |   |
| Time charter:                           |       |                                       |       |       |       |                     |       |   |   |
| Aframax                                 |       | $                                          | 21,255     |       | $          | 19,822                   |       | $ | 1,433 |   | 7.2 | % |
| Suezmax                                 |       | $                                          | 31,260     |       | $          | 20,646                   |       | $ | 10,614 |   | 51.4 | % |
| Combined                                |       | $                                          | 21,373     |       | $          | 19,857                   |       | $ | 1,516 |   | 7.6 | % |
|                                    |       |                                       |       |       |       |                     |       |   |   |
| Spot charter:                           |       |                                       |       |       |       |                     |       |   |   |
| Aframax                                 |       | $                                          | 27,632     |       | $          | 37,099                   |       | $ | (9,467 | ) | -25.5 | % |
| Suezmax                                 |       | $                                          | 39,638     |       | $          | 50,331                   |       | $ | (10,693 | ) | -21.2 | % |
| Combined                                |       | $                                          | 34,249     |       | $          | 44,689                   |       | $ | (10,440 | ) | -23.4 | % |
|                                    |       |                                       |       |       |       |                     |       |   |   |
| TOTAL TCE                               |       | $                                          | 30,605     |       | $          | 37,676                   |       | $ | (7,071 | ) | -18.8 | % |

 

As of December 31, 2005, 11 of ourvessels (including our nine OBO Aframax vessels which were sold in 2006) wereon time charters that expired between March 2006 and July 2006.

DIRECT VESSEL EXPENSES—Direct vesselexpenses, which include crew costs, provisions, deck and engine stores,lubricating oil, insurance, maintenance and repairs decreased by $10.1 million,or 10.5%, to $86.7 million for the year ended December 31, 2005 comparedto $96.8 million for the prior year. This decrease is due to a decrease increwing costs associated with lower crew travel costs during the year ended December 31,2005 compared to the prior year as well as a 4.7% decrease in the size of ourfleet. On a daily basis, direct vessel expenses per vessel decreased by $344,or 5.7%, to $5,661 ($5,493 Aframax, $5,922 Suezmax) for the year endedDecember 31, 2005 compared to $6,005 ($5,676 Aframax, $6,438 Suezmax) forthe prior year, primarily as the result of a decrease in crewing costs.

GENERAL AND ADMINISTRATIVE EXPENSES—Generaland administrative expenses increased by $12.6 million, or 40.0%, to $44.0million for the year ended December 31, 2005 compared to $31.4 million forthe prior year. The primary components of this increase for the year endedDecember 31, 2005 compared to the prior year are:

 

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(a) a $6.7 million increase inrestricted stock amortization, salaries and bonus accruals for our U.S.-basedpersonnel, which included amortization of restricted stock grants made inFebruary, April, May and December 2005;

(b) a $1.9 million increase in professionalfees attributable to consultation, legal and accounting costs associated withstrategic advisory services associated with an unsolicited acquisitionproposal, senior executive employment agreements and Sarbanes-Oxley 404compliance;

(c) a $1.6 million increase in thecosts of operating our foreign subsidiaries in Greece and the United Kingdom,which reflects increases in number of personnel;

(d)  $1.6 million increase in leasepayments and expenses associated with our lease of an aircraft which theCompany entered into during February 2004; and

(e) $0.5million increase in occupancy costs attributable to rent paid on both ourformer New York City office which we occupied until April 2005 and our newcorporate headquarters for which our lease began in December 2004.

General and administrative expenses as apercentage of net voyage revenues increased to 10.2% for the year endedDecember 31, 2005 from 5.4% for the prior year. Daily general andadministrative expenses per vessel increased $924, or 47.4%, to $2,873 for theyear ended December 31, 2005 compared to $1,949 for the prior year.

DEPRECIATION AND AMORTIZATION—Depreciationand amortization, which include depreciation of vessels as well as amortizationof drydocking, special survey and loan fees, decreased by $3.5 million, or3.5%, to $97.3 million for the year ended December 31, 2005 compared to$100.8 million for the prior year. This decrease is primarily due to thereduction in the size of our fleet during 2005, which decreased vessel depreciationby $9.4 million, or 11.1%, to $75.6 million during the year endedDecember 31, 2005 compared to $85.0 million during the prior year,partially offset by increases in drydock amortization.

Amortization of drydocking increased by$6.2 million, or 52.4%, to $18.0 million for the year ended December 31,2005 compared to $11.8 million for the prior year. This increase includesamortization associated with $38.0 million of capitalized expenditures relatingto our vessels for the year ended December 31, 2005 as well as a full yearof amortization associated with $17.1 million of capitalized drydocking for theprior year.

GAIN ON SALE OF VESSELS—During 2005, weagreed to sell our four single-hull Suezmax vessels, our six double-sidedSuezmax vessels, our one single-hull Aframax vessel and our six double-sidedAframax vessels in order to transform our fleet to exclusively double-hullvessels. Through December 31, 2005, 13 of these vessels were delivered totheir new owners for aggregate net proceeds of $334.7 million, for a net gainon sale of vessels of $91.2 million.

During July 2004, we agreed to sellfour of our single-hull Suezmax vessels in order to reduce the number ofsingle-hull vessels in the Company’s fleet. These vessels were sold duringAugust and October 2004 for aggregate net proceeds of approximately$84.2 million, resulting in a gain on sale of vessels of $6.6 million.

In addition, as of December 31,2005, we reclassified our nine Aframax OBO vessels from Vessels to Vessels heldfor sale. We decided to sell these vessels to reduce the average age of ourfleet.

NET INTEREST EXPENSE—Net interest expensedecreased by $8.9 million, or 23.6%, to $28.9 million for the year endedDecember 31, 2005 compared to $37.8 million for the prior year. Thisdecrease is primarily the result of a 36.8% decrease in our weighted averageoutstanding debt of $410.8 million for the year ended December 31, 2005compared to $650.2 million for the year ended December 31, 2004. Thisdecrease is primarily attributable to decreases in our floating rate debt whichbears lower interest rates than our Senior Notes. The effect of the retirementof substantially all of our Senior Notes as of December 31, 2005, did nothave a significant effect on 2005 interest expense because this retirementoccurred on December 30, 2005.

OTHER INCOME(EXPENSE)—During 2005, Other income (expense) consisted primarily of a $45.8million loss relating to our repurchase of $250.0 million of our Senior Notes,which includes a $5.7 million write-off of deferred financing costs. Also, inOctober 2005, we entered into an $800 million credit facility, refinancingour $825 million credit facility, at which time we wrote off as a non-cashcharge $5.0 million associated with the unamortized deferred financing costs associatedwith the $825 million credit facility.

OnJuly 1, 2004, we entered into an $825 million credit facility, refinancingour First, Second and Third Credit Facilities.

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Uponconsummation of this refinancing, unamortized deferred financing costs associatedwith the First, Second and Third Credit Facilities aggregating $7.9 million waswritten off as a non-cash charge in July 2004.

NET INCOME-Net income was $212.4 millionfor the year ended December 31, 2005 compared to net income of $315.1million for the prior year.

**Effects of Inflation**

TheCompany does not consider inflation to be a significant risk to the cost ofdoing business in the current or foreseeable future. Inflation has a moderateimpact on operating expenses, drydocking expenses and corporate overhead.

**LIQUIDITY AND CAPITAL RESOURCES**

**Sources and Uses of Funds; CashManagement**

Since our formation, our principalsources of funds have been equity financings, issuance of long-term debtsecurities, operating cash flows, long-term bank borrowings and opportunisticsales of our older vessels. Our principal use of funds has been capitalexpenditures to establish and grow our fleet, maintain the quality of ourvessels, comply with international shipping standards and environmental lawsand regulations, fund working capital requirements and repayments onoutstanding loan facilities. Beginning in 2005, we also adopted policies to usefunds to pay dividends and, from time to time, to repurchase our common stock.See below for descriptions of our Dividend Policy and our Share RepurchaseProgram.

Ourpractice has been to acquire vessels using a combination of funds received fromequity investors, bank debt secured by mortgages on our vessels and shares ofthe common stock of our shipowning subsidiaries, and long-term debt securities.Because our payment of dividends is expected to decrease our available cash,while we expect to use our operating cash flows and borrowings to fundacquisitions, if any, on a short-term basis, we also intend to review debt and equityfinancing alternatives to fund such acquisitions. Our business is capitalintensive and its future success will depend on our ability to maintain ahigh-quality fleet through the acquisition of newer vessels and the selectivesale of older vessels. These acquisitions will be principally subject tomanagement’s expectation of future market conditions as well as our ability toacquire vessels on favorable terms.

Weexpect to rely on operating cash flows as well as long-term borrowings andfuture equity offerings to implement our growth plan, dividend policy, andshare repurchase. We believe that our current cash balance as well as operatingcash flows and available borrowings under our credit facilities will besufficient to meet our liquidity needs for the next year.

Ouroperation of ocean-going vessels carries an inherent risk of catastrophicmarine disasters and property losses caused by adverse severe weatherconditions, mechanical failures, human error, war, terrorism and othercircumstances or events. In addition, the transportation of crude oil issubject to business interruptions due to political circumstances, hostilitiesamong nations, labor strikes and boycotts. Our current insurance coverageincludes (1) protection and indemnity insurance coverage for tortliability, which is provided by mutual protection and indemnity associations,(2) hull and machinery insurance for actual or constructive loss fromcollision, fire, grounding and engine breakdown, (3) war risk insurancefor confiscation, seizure, capture, vandalism, sabotage and other war-relatedrisks and (4) loss of hire insurance for loss of revenue for up to 90 daysresulting from a vessel being off hire for all of our vessels.

**Dividend Policy**

OnJanuary 26, 2005 we announced that our board of directors initiated a cashdividend policy. Under the policy, we declared quarterly dividends toshareholders in April, July, October and February of each year basedon our EBITDA after net interest expense and reserves, as established by theboard of directors. These reserves took into account normal maintenance anddrydocking of existing vessels as well as capital expenditures for vesselacquisitions to ensure the indefinite renewal of our fleet.

OnJune 13, 2005, we paid $68.4 million of dividends to our shareholdersrelating to the quarter ended March 31, 2005. On September 7, 2005,we paid $32.5 million of dividends to our shareholders relating to the quarterended June 30, 2005. On December 13, 2005, we paid $9.5 million of dividendsto our shareholders relating to the quarter ended September 30, 2005. OnMarch 17, 2006, we paid $68.0 million of dividends to our shareholdersrelating to the quarter ended December 31, 2005. On June 5, 2006, wepaid $47.7 million to our shareholders relating to the quarter endedMarch 31, 2006. On September 8, 2006 we paid  $21.7 million to our shareholders relating tothe quarter ended June 30, 2006.  OnDecember 14, 2006, we paid $23.0 million to our shareholders relating to thequarter ended September 30, 2006. On February 20, 2007, our Board of

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Directorsannounced that we will be paying a quarterly dividend of $0.62 per share on orabout March 23, 2007 to the shareholders of record as of March 9, 2007. Theaggregate amount of the dividend is expected to be $20.3 million, which weanticipate will be funded from cash on hand at the time payment is to be made.

OnFebruary 21, 2007, we announced that our Board of Directors declared a special,one-time cash dividend of $15.00 per share. The dividend will be paid on or aboutMarch 23, 2007 to shareholders of record as of March 9, 2007.

Weintend to fund substantially the entire amount of the special dividend paymentthrough new borrowings under our 2005 Credit Facility.

Wealso announced on February 21, 2007 that our Board of Directors changed ourquarterly dividend policy by adopting a fixed target amount of $0.50 per shareper quarter or $2.00 per share each year, starting with the first quarter of2007. We intend to declare dividends in April, July, October and February ofeach year.

Anydividends paid will be subject to the terms and conditions of our 2005 CreditFacility and applicable provisions of Marshall Islands law.

**ShareRepurchase Program**

InOctober 2005 and February 2006, the Company’s Board of Directorsapproved repurchases by the Company of its common stock under a sharerepurchase program for up to an aggregate total of $400 million, of which$156.2 million is available as of December 31, 2006. The Board willperiodically review the program. Share repurchases will be made from time totime for cash in open market transactions at prevailing market prices or inprivately negotiated transactions. The timing and amount of purchases under theprogram will be determined by management based upon market conditions and otherfactors. Purchases may be made pursuant to a program adopted underRule 10b5-1 under the Securities Exchange Act. The program does notrequire the Company to purchase any specific number or amount of shares andmay be suspended or reinstated at any time in the Company’s discretion andwithout notice. Repurchases will be subject to the terms of our 2005 CreditFacility, which are described in further detail below.

ThroughDecember 31, 2006, the Company has acquired 6,765,913 shares of its common stockfor $243.8 million using borrowings under its credit facility and funds fromoperations. All of these shares have been retired.

**Debt Financings**

**2005 Credit Facility**

OnOctober 26, 2005, we entered into an $800 million revolving creditfacility (the “2005 Credit Facility”) with a syndicate of commercial lenders.The 2005 Credit Facility has been used to refinance (the “2005 Refinancing”)the existing term borrowings under our $825 million senior secured bankfinancing facility entered into on July 1, 2004 (the “2004 Credit Facility”).Pursuant to the 2005 Refinancing, we repaid $175 million outstanding under theterm loan of our 2004 Credit Facility primarily by making an initial drawdownof $162.8 million and using $13.1 million of cash held in escrow.

Upon consummating the 2005 Refinancing, unamortized deferred financingcosts associated with the 2004 Credit Facility aggregating $5.7 million werewritten off as a non-cash charge in October 2005. This non-cash charge isclassified as Other income (expense) on the statement of operations. Inconnection with the 2005 Refinancing, we incurred deferred financing costs of$4.6 million in October 2005.

The2005 Credit Facility provides a four year nonamortizing revolving loan withsemiannual reductions of $44.5 million beginning October 26, 2009 and abullet reduction of $533 million on October 26, 2012. Up to $50 million of the 2005 Credit Facilitywill be available for the issuance of stand by letters of credit to supportobligations of the Company and its subsidiaries that are reasonably acceptableto the issuing lenders under the facility. As of December 31, 2006, we haveoutstanding letters of credit aggregating $5.7 million which expire betweenMarch 2007 and December 2007, leaving $44.3 million available to beissued.

The2005 Credit Facility permits us to pay out dividends under our current policy,repurchase shares of our common stock and repurchase our Senior Notes inaccordance with its terms and conditions. This facility allows us to paydividends or repurchase our common stock in an amount not exceeding the netproceeds from the sale of all non-collateralized vessels, including the 13vessels we sold during November and December 2005 and the 13 vesselswe sold during the year ended 

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December31, 2006. In addition, we are permitted to pay dividends with respect to anyfiscal quarter up to an amount equal to EBITDA (as defined) for such fiscalquarter less fleet renewal reserves, which are established by the Company’sBoard of Directors, net interest expense and cash taxes, in the event taxes arepaid, for such fiscal quarter. During the year ended December 31, 2006, we paiddividends of $160.4 million.

The2005 Credit Facility carries an interest rate of LIBOR plus 75 basis points(or, depending on our long term foreign issuer credit rating and leverageratio, 100 basis points) on the outstanding portion and a commitment fee of26.25 basis points on the unused portion. As of December 31, 2006, $50 millionof the facility is outstanding. The facility is collateralized by 18 of ourdouble-hull vessels and our three newbuilding Suezmax contracts, with carryingvalues as of December 31, 2006 of $592.7 million and $77.4 million,respectively, as well as the Company’s equity interests in its subsidiariesthat own these assets, insurance proceeds of the collateralized vessels, andcertain deposit accounts related to the vessels. Each subsidiary of the Companywith an ownership interest in these vessels or which has otherwise guaranteedour Senior Notes also provides an unconditional guaranty of amounts owed underthe 2005 Credit Facility.

Ourability to borrow amounts under the 2005 Credit Facility is subject tosatisfaction of certain customary conditions precedent, and compliance withterms and conditions included in the credit documents. These covenants include,customary restrictions on our ability to incur indebtedness or grant liens, paydividends or make stock repurchases (except as otherwise permitted as describedabove), engage in businesses other than those engaged in on the effective dateof the credit facility and similar or related businesses, enter intotransactions with affiliates, amend its governing documents or documentsrelated to its Senior Notes, and merge, consolidate, or dispose of assets. We arealso required to comply with various ongoing financial covenants, includingwith respect to our leverage ratio, minimum cash balance, net worth, andcollateral maintenance. If we do not comply with the various financial andother covenants and requirements of the 2005 Credit Facility, the lenders may,subject to various customary cure rights, require the immediate payment of allamounts outstanding under the facility.

OnJune 28, 2006, we entered into an agreement to amend the 2005 CreditFacility. The amendment revises the minimum consolidated net worth covenantapplicable to the Company to provide that the Company will not permit itsconsolidated net worth to be less than $500 million. All other material termsof the 2005 Credit Facility remain unchanged.

On February 20, 2007, weentered into an additional agreement to amend our 2005 Credit Facility.

The 2005 Credit Facility,as amended, will increase the total commitment of the lenders by $100 millionfrom $800 million to $900 million.

Additionally, we will bepermitted to (1) pay quarterly cash dividends with respect to fiscal quarterson or after March 31, 2007, limited to $0.50 per share and (2) pay additionaldividends, including stock buy-backs, in an aggregate amount not to exceed $50million plus 50% of cumulative net excess cash flow after February 16,2007.  In addition, the amendment will 

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permit us to declare aone-time special dividend of up to $15 per share (up to an aggregate amount notto exceed $500 million) at any time prior to December 31, 2007.

Under the 2005 CreditFacility, as amended, on and at any time after April 1, 2007, the leverageratio covenant will be eliminated and the minimum cash balance covenant will bereduced such that we will not be permitted to reduce the sum of (A) ourunrestricted cash and cash equivalents plus (B) the lesser of (1) the totalavailable unutilized commitment and (2) $25 million, to be less than $50million. Additionally, we have agreed to amend the minimum consolidated networth covenant whereby we will not permit our consolidated net worth at anytime prior to the business day preceding the payment of the one-time specialdividend to be less than $500,000,000. In addition, we have agreed to a new covenant whereby we will not permitour  net debt to EBITDA ratio to begreater than 5.5:1.00 on the last day of any fiscal quarter at any time fromApril 1, 2007.

Additionally, the lendershave agreed to the dissolution of certain subsidiary guarantors that no longerown any vessels or material assets. All other material terms of the 2005 CreditFacility remain unchanged.

As of December 31, 2006, we are in compliance with all of the covenantsunder the 2005 Credit Facility.

**2004 Credit Facility—Refinanced by the 2005 CreditFacility**

OnJuly 1, 2004, we closed on an $825 million senior secured bank financingfacility (“2004 Credit Facility”) consisting of a term loan of $225 million anda revolving loan of $600 million. The term loan had a five year maturity at arate of LIBOR plus 1.0% and was to amortize on a quarterly basis with 19payments of $10 million and one payment of $35 million. The revolving loancomponent, which did not amortize, had a five year maturity at a rate of LIBORplus 1.0% on the used portion and a 0.5% commitment fee on the unused portion.

Concurrentwith the closing of the 2004 Credit Facility, pursuant to which we borrowed$225 million under the term loan and $290 million under the revolving creditfacility, we retired our then outstanding credit facilities (the “Refinancing”).At the time of the Refinancing, the 2004 Credit Facility was secured by the 42vessels which collateralized the then outstanding credit facilities and fivevessels which were acquired during 2004. In addition, each of our subsidiaries which had an ownership interest inany vessel that was secured by the 2004 Credit Facility had providedunconditional guaranties of all amounts owing under the 2004 Credit Facility.Deferred financing costs incurred relating to the 2004 Credit Facilityaggregated $6.9 million.

Uponconsummating the Refinancing, unamortized deferred financing costs associatedwith the then outstanding credit facilities aggregating $7.9 million waswritten off as a non-cash charge in July 2004. This non-cash charge isclassified as Other income (expense) on the statement of operations.

Under this credit facility, we were required to maintain certain ratios such as: vessel market values to total outstanding loans and undrawn revolving credit facilities, EBITDA to net interest expense and to maintain minimum levels of working capital. In addition, the 2004 Credit Facility, as amended, permitted us to pay dividends with respect to any fiscal quarter up to an amount equal to EBITDA (as defined) for such fiscal quarter less fleet renewal reserves, which are established by our board of directors, net interest expense and cash taxes, in the event taxes are paid, for such fiscal quarter. Such amount was to be reduced to the extent that the aggregate amount permitted to be paid for dividends for all fiscal quarters since January 1, 2005 is a negative amount. However, we would not have been permitted to pay dividends if certain significant defaults as defined under the 2004 Credit Facility were to occur. During the year ended December 31, 2005, we paid dividends of $110.4 million.

**Interest Rate Swap Agreements**

In August and October 2001, we enteredinto interest rate swap agreements with foreign banks to manage interest costsand the risk associated with changing interest rates. At their inception, theseswaps had notional principal amounts equal to 50% of our term loans outstandingat that time. The notional principal amounts amortize at the same rate as theterm loans. The interest rate swap agreement entered into duringAugust 2001 hedged debt outstanding at that time, to a fixed rate of6.25%. This swap agreement terminated on June 15, 2006. The interest rateswap agreement entered into during October 2001 hedged debt outstanding atthat time, to a fixed rate of 5.485%. This swap agreement terminated onJune 27, 2006. As of July 1, 2005, we stopped designating ourinterest rate swaps as a hedge.  The differential to be paid or received for theseswap agreements was recognized as an adjustment to interest expense as incurredthrough September 30, 2005. As of December 31, 2006, the Company is no longerparty to any interest rate swap agreements. We would have received approximately $25,000 to settle all

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outstanding swap agreements based upon their aggregate fair values asof December 31, 2005. This fair value is based upon estimates receivedfrom financial institutions.

**Senior Notes**

OnMarch 20, 2003, we issued $250 million of 10% Senior Notes which were dueMarch 15, 2013 (the “Senior Notes”). Interest was paid on the Senior Noteseach March 15 and September 15. The Senior Notes were generalunsecured, senior obligations of the Company. The proceeds of the Senior Notes,prior to payment of fees and expenses, were $246.2 million. The Senior Notescontained incurrence covenants which, among other things, restricted our futureability to incur future indebtedness and liens, to apply the proceeds of assetsales freely, and to merge or undergo other changes of control and to paydividends. The Senior Notes were guaranteed by all of our present subsidiariesand future “restricted” subsidiaries (all of which are 100% owned by theCompany). These guarantees were full and unconditional and joint and severalwith the parent company General Maritime Corporation. The parent company, GeneralMaritime Corporation, has no independent assets or operations. Additionally,certain defaults on other debt instruments, such as failure to pay interest orprincipal when due, were deemed to be a default under the Senior Notesagreement.

Between September 23, 2005 and culminating on December 30,2005 with a cash tender offer, we purchased and retired $249,980,000 par valueof our Senior Notes for cash payments aggregating $286.9 million. Pursuant tothese purchases, we recorded a loss of $40.8 million, which represents theamount by which the cash paid exceeds the carrying value of the Senior Notes aswell as associated brokerage and legal fees. In addition, we wrote off theunamortized deferred financing costs associated with the Senior Notes of $5.0million as a non-cash charge. Both the loss on retirement and the write-off ofthe unamortized deferred financing costs are classified as Other income(expense) on the statement of operations.

In January 2006,pursuant to the completion of the cash tender offer, the second supplementalindenture entered into in connection with the Senior Notes (the “SecondSupplemental Indenture”) became operative. The Second Supplemental Indentureamended the indenture under which the Senior Notes were issued (the “Indenture”),to eliminate substantially all of the restrictive covenants and certain defaultprovisions in the Indenture (the “Amendments”). The Amendments were bindingupon holders of the remaining Senior Notes who did not tender their SeniorNotes pursuant to the cash tender offer even though such holders have notconsented to the Amendments.

InMay 2006, we purchased and retired the remaining $20,000 par value of ourSenior Notes, leaving none outstanding as of December 31, 2006.

**Cash and Working Capital**

Cash increased to $107.5 million as ofDecember 31, 2006 compared to $97.0 million as of December 31, 2005.Working capital is current assets minus current liabilities, including thecurrent portion of long-term debt. Working capital was $110.7 million as of December31, 2006 compared to $438.4 million as of December 31, 2005 (including$294.5 million of vessels held for sale). The current portion of long-term debtincluded in our current liabilities was $0 as of December 31, 2006 and2005.

**Cash Flows from OperatingActivities**

Netcash provided by operating activities decreased 24.0% to $189.7 million for theyear ended December 31, 2006, compared to $249.6 million for the prioryear. This decrease is primarily attributable to net income of $156.8 millionfor the year ended December 31, 2006 compared to net income of $212.4million for the prior year.

Netcash provided by operating activities decreased 31.3% to $249.6 million for theyear ended December 31, 2005, compared to $363.2 million for the prioryear. This decrease is primarily attributable to net income of $212.4 millionfor the year ended December 31, 2005 compared to net income of $315.1million for the prior year.

**CashFlows from Investing Activities**

Netcash provided by investing activities was $285.3 million for the year endedDecember 31, 2006 compared to $318.2 million for the prior year. Duringthe year ended December 31, 2006, we received $340.9 million from the sale of13 vessels, paid $50.6 million on our four Suezmax contruction contracts (includingcapitalized interest of $3.6 million) and paid $5.0 million for other fixedassets.  During the year endedDecember 31, 2005, we received $334.7 million from the sale of 13 vesselsand paid $10.6 million of costs on our four Suezmax newbuilding contracts(including capitalized interest of $3.5

 

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million).

Netcash provided by investing activities was $318.2 million for the year endedDecember 31, 2005 compared to net cash used by investing activities of$168.5 million for the prior year. During the year ended December 31,2005, we received $334.7 million from the sale of 13 vessels and paid $10.6million of costs on our four Suezmax newbuilding contracts (includingcapitalized interest of $3.5 million). During the year ended December 31,2004, we paid $180.6 million to the seller for five vessels, and paid $76.0million for four Suezmax newbuilding contracts (of which $67.2 million was paidto the seller of those contracts and $8.8 million of installment payments weremade to the shipyards).

**CashFlows from Financing Activities**

Netcash used by financing activities was $464.5 million for the year endedDecember 31, 2006 compared to $517.7 million for the prior year. Thechange in cash provided by financing activities relates primarily to thefollowing:

•                    Net proceedsfrom the issuance of long-term debt during the year ended December 31,2005, net of issuance costs of $5.3 million, were $157.5 million relating tothe initial borrowings under our 2005 Credit Facility. We had no such issuancesduring 2006.

•                    During theyear ended December 31, 2005, we retired our 2004 Credit Facility andrepaid the $175.0 million outstanding on that facility at the time of itsretirement. Additionally, during the year ended December 31, 2005, weretired $249,980,000 par value of our Senior Notes for $286.9 million. Duringthe year ended December 31, 2006, we retired the remaining $20,000 par value ofSenior Notes.

•                    Principalrepayments of long-term debt were $30.0 million for the year endedDecember 31, 2005 associated with permanent principal repayments under our2005 Credit Facility.   There were noprincipal repayments of long-term debt required to be made during 2006.

•                    During theyear ended December 31, 2006, we made a net repayment of $85.0 million ofrevolving debt associated with our 2005 Credit Facility; during the year endedDecember 31, 2005, we repaid $62.8 million of revolving debt associatedwith our 2005 and 2004 Credit Facilities.

•                    During theyear ended December 31, 2005, we used $13.1 million of funds held inescrow to retire a portion of the 2004 Credit Facility at the time that creditfacility was refinanced by the 2005 Credit Facility.

•                    During theyear ended December 31, 2006, we paid $219.1 million to acquire 6,088,113shares of our common stock which we retired; during the year endedDecember 31, 2005, we paid $24.8 million to acquire 677,800 shares of ourcommon stock which we retired.

•                    During theyears ended December 31, 2006 and 2005, we paid $160.4 million and $110.4million of dividends to shareholders, respectively.

Netcash used by financing activities was $517.7 million for the year endedDecember 31, 2005 compared to $186.7 million for the prior year. Thechange in cash provided by financing activities relates to the following:

•                    Net proceedsfrom the issuance of long-term debt during the year ended December 31,2005, net of issuance costs of $5.3 million, were $157.5 million relating tothe initial borrowings under our 2005 Credit Facility. Net proceeds from theissuance of long-term debt during the year ended December 31, 2004, net ofissuance costs of $7.2 million, were $507.8 million relating the initialborrowings under our 2004 Credit Facility.

•                    During theyear ended December 31, 2005, we retired our 2004 Credit Facility andrepaid the $175.0 million outstanding on that facility at the time of itsretirement. Additionally, during the year ended December 31, 2005, weretired $249,980,000 par value of our Senior Notes for $286.9 million. Duringthe year ended December 31, 2004, we retired our First, Second and ThirdCredit Facilities, and repaid the $448.3 million outstanding on those creditfacilities at the time of their retirement.

•                    Principalrepayments of long-term debt were $30.0 million for the year endedDecember 31, 2005

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                        associatedwith permanent principal repayments under our 2005 Credit Facility. Principalrepayments of long-term debt were $59.0 million for the year endedDecember 31, 2004 associated with permanent principal repayments under ourFirst, Second, Third and 2004 Credit Facilities.

•                    During theyear ended December 31, 2005, we repaid $62.8 million of revolving debtassociated with our 2005 and 2004 Credit Facilities; during the year endedDecember 31, 2004, we repaid $177.0 million of revolving debt associatedwith our First, Second and 2004 Credit Facilities.

•                    During theyear ended December 31, 2004, we sold three Suezmax vessels which wouldhave required a $13.1 million repayment of the term loan portion of our 2004Credit Facility. Pursuant to an amendment to the 2004 Credit Facility, this$13.1 million was placed in an escrow account with the lender pending ourproviding substitute collateral. During the year ended December 31, 2005,we used these funds held in escrow to retire a portion of the 2004 CreditFacility at the time that credit facility was refinanced by the 2005 CreditFacility.

•                    During theyear ended December 31, 2005, we paid $24.8 million to acquire 677,800shares of our common stock which we retired as of December 31, 2005.

•                    During theyear ended December 31, 2005, we paid $110.4 million of dividends toshareholders.

**CapitalExpenditures for Drydockings and Vessel Acquisitions**

**Drydocking**

Inaddition to vessel acquisition, other major capital expenditures includefunding our maintenance program of regularly scheduled in-water survey ordrydocking necessary to preserve the quality of our vessels as well as tocomply with international shipping standards and environmental laws andregulations. Management anticipates that vessels which are younger than 15years are required to undergo in-water surveys 2.5 years after a drydock andthat vessels are to be drydocked every five years, while vessels 15 years orolder are to be drydocked every 2.5 years in which case the additional drydockstake the place of these in-water surveys. During the year ended December 31,2006, we paid $11.9 million of drydock related costs. During 2007, weanticipate that we will capitalize costs associated with drydocks orsignificant in-water surveys on four vessels and that the expenditures toperform these drydocks will aggregate approximately $9 million to $11million. The ability to meet this maintenance schedule will depend on ourability to generate sufficient cash flows from operations, utilize ourrevolving credit facilities or to secure additional financing.

**Vessel Acquisitions**

In July 2004, we acquired fourSuezmax newbuilding contracts. The purchase price of these contracts aggregate$67.2 million which was paid to the seller of those contracts. Also inJuly 2004, $8.8 million was paid to the shipyard as an installment on theconstruction of the vessels associated with these contracts. During March 2006,the Company took delivery of one of these Suezmax vessesl.  As of December 31, 2006, we are requiredto pay an additional aggregate amount of $107.2 million through the completionof construction of the three remaining Suezmax vessels delivery of which isexpected to occur between January 2007 and January 2008. The installmentsthat comprise this $107.2 million are payable as follows: $74.6 million in 2007and $32.6 million in 2008.

**OFF-BALANCE SHEET ARRANGEMENTS**

As ofDecember 31, 2006, we did not have any significant off-balance-sheetarrangements, as defined in Item 303(a)(4) of SEC Regulation S-K.

**Other Commitments**

In February 2004, the Companyentered into an operating lease for an aircraft. The lease has a term of fiveyears and requires monthly payments by the Company of $125,000.

In December 2004, the Companyentered into a 15-year lease for office space in New York, New York. Themonthly rental is as follows: Free rent from December 1, 2004 toSeptember 30, 2005, $109,724 per month from October 1, 2005 toSeptember 30, 2010, $118,868 per month from October 1, 2010 toSeptember 30, 2015, and $128,011 per month from 

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October 1, 2015 toSeptember 30, 2020. The monthly straight-line rental expense fromDecember 1, 2004 to September 30, 2020 is $104,603.

The following is atabular summary of our future contractual obligations for the categories setforth below (dollars in millions):

**TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS ANDCOMMERCIAL COMMITMENTS**
| ** **                            | ** ** | **Total** | ** ** | **2007** | ** ** | **2008** | ** ** | **2009** | ** ** | **2010** | ** ** | **2011** | ** ** | **Thereafter** | ** ** |
|---------------------------------------|------------|-----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------------|------------|
| 2005 Credit  Facility(1)              |       | $         | 79.2       |     | $          | 5.0      |       | $        | 5.0        |     | $          | 5.0      |       | $              | 5.0        |   | $ | 5.0 |   | $ | 54.2 |   |
| Newbuilding  installments             |       | 107.2     |       | 74.6     |       | 32.6     |       | —   |       | —   |       | —   |       | —         |       |
| Aircraft lease                        |       | 3.1       |       | 1.5      |       | 1.5      |       | 0.1      |       | —   |       | —   |       | —         |       |
| Senior officer  employment agreements |       | 3.4       |       | 2.0      |       | 0.7      |       | 0.7      |       | —   |       | —   |       | —         |       |
| Office leases                         |       | 20.1      |       | 1.7      |       | 1.4      |       | 1.3      |       | 1.3      |       | 1.4      |       | 13.0           |       |
| Total  commitments                    |       | $         | 213.0      |     | $          | 84.8     |       | $        | 41.2       |     | $          | 7.1      |       | $              | 6.3        |   | $ | 6.4 |   | $ | 67.2 |   |

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(1)                                  Futureinterest payments on our 2005 Credit Facility are based on our currentoutstanding balance using a current borrowing rate of 6.125%. The amount alsoincludes a 0.2625% commitment fee we are required to pay on the unused portionof this credit facility.

**OtherDerivative Financial Instruments**

***Freight Derivatives***

Aspart of our business strategy, we may from time to time enter into freightderivative contracts to hedge and manage market risks relating to thedeployment of our existing fleet of vessels. Generally, these freightderivative contracts are futures contracts that would bind us and eachcounterparty in the arrangement to buy or sell a specified notional amount oftonnage “forward” at an agreed time and price and for a particular route. Thesecontracts generally settle based on the monthly Baltic Tanker Index (“BITR”),which is a worldscale index, and a may also include a specified bunker priceindex. The BITR averages rates received in the spot market by cargo type, crudeoil and refined petroleum products, and by trade route. The duration of acontract can be one month, quarterly or up to three years with open positionssettling on a monthly basis.  Althoughfreight derivatives can be entered into for a variety of purposes, includingfor hedging, as an option, for trading or for arbitrage, if we decided to enterinto freight derivatives, our objective would be to hedge and manage marketrisks as part of our commercial management.  If we determine to enter into freightderivatives, we may reduce our exposure to any declines in our resultsfrom operations due to weak market conditions or downturns, but may alsolimit our ability to benefit economically during periods of strong demand inthe market.

DuringSeptember and October 2005, the Company entered into four freightderivative contracts which expired in December 2005. These freight forwardcontracts involved contracts to provide a fixed number of theoretical voyagesat fixed rates and settled based on the monthly BITR. The Company had takenshort positions in these contracts, which reduced a portion of the Company’sexposure to the spot charter market by creating synthetic time charters. AtDecember 31, 2005, these contracts had no aggregate notional value, becausethey expired on December 31, 2005. The notional amount is based on acomputation of the quantity of cargo (or freight) the contract specifies, thecontract rate (based on a certain trade route) and a flat rate determined bythe market on an annual basis. Each contract is marked to market for thespecified cargo and trade route. The fair value of forward freight agreementsis the estimated amount that the Company would receive or pay to terminate theagreements at the reporting date. As of December 31, 2005, the Company hasrecorded a liability of $0.3 million related to the fair market value of theseeconomic hedges. The Company has recorded the aggregate net realized andunrealized loss of $0.8 million, for the year ended December 31, 2005,which is classified as Other income (expense) on the statement of operations.

DuringMay 2006, the Company entered into a freight derivative contract with theintention of fixing the equivalent of one Suezmax vessel to a time charterequivalent rate of $35,500 per day for a three year period beginning on July 1,2006.  This contract net settles each monthwith the Company receiving $35,500 per day and paying a floating amount basedon the monthly BITR and a specified bunker price index.  As of December 31, 2006, the fair marketvalue of the freight derivative, which was determined based on the aggregatediscounted cash flows using estimated future rates obtained from brokers as ofDecember 31, 2006, resulted in an asset to the Company of $2.2 million.  The Company recorded an unrealized gain of$2.2 million for the year ended December 31, 2006 which is reflected on theCompany’s statement of operations as Other income (expense).  The Company has recorded an aggregaterealized loss of $2.1 million for the year ended December 31, 2006, 

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whichis classified as Other income (expense) on the statement of operations.

***Currency Forward Contract***

The Company entered into, on July 19, 2005, a forwardcontract to acquire 5 million Euros on January 17, 2006 for $6.0 million.Changes in the fair value of this forward contract subsequent to the date onwhich the Company entered into the contract (at which time the fair value was$0) was recorded as Other income (expense) on the Company’s statement ofoperations. The Company entered into this contract to guard against weakeningin the dollar against the Euro. As of December 31, 2005, the Company hasrecorded a liability of $0.1 million related to the fair market value of thisderivative financial instrument. The Company has recorded an aggregate netunrealized gain (loss) of $0.1 million and $(0.1) million, for the years endedDecember 31, 2006 and 2005, which is classified as Other income (expense)on the statement of operations.  As ofDecember 31, 2006, the Company is not party to any currency forward contracts.

***Bunker Collar***

Duringthe year ended December 31, 2005, the Company entered into a “costlesscollar” to obtain a quantity of fuel between $220/metric ton (“MT”) and$300/MT. The Company used this derivative as an economic hedge to the Company,but did not designated this derivative as a hedge for accounting purposes. Assuch, changes in the fair value of the derivative were recorded to the Company’sstatement of income each reporting period. Under this agreement, the Companyhad a right to receive (call option) the amount by which the bunker price on aspecified index exceeds $300/MT and an obligation to pay (put option) theamount by which $220/MT exceeds the bunker price on a specified index. The termwas for a notional 1,000 MT of bunkers per month for each month in the periodbetween October 1, 2005 and March 31, 2006. As of December 31,2005, the Company recorded an asset of $12,000 related to the fair market valueof this economic hedge. The Company has recorded an aggregate net unrealized(loss) gain of $(12,000) and $12,000, respectively, for the years endedDecember 31, 2006 and 2005, which is classified as Other income (expense)on the statement of operations.  Inaddition, the Company paid $2,000 to the counterparty to settle this contractduring the year ended December 31, 2006, which is classified as Other income(expense) on the statement of operations. As of December 31, 2006, we are not party to any bunker collarcontracts.

**Critical Accounting Policies**

The discussion and analysis of ourfinancial condition and results of operations is based upon our consolidatedfinancial statements, which have been prepared in accordance with accountingprinciples generally accepted in the United States of America, or GAAP. Thepreparation of those financial statements requires us to make estimates andjudgments that affect the reported amount of assets and liabilities, revenuesand expenses and related disclosure of contingent assets and liabilities at thedate of our financial statements. Actual results may differ from theseestimates under different assumptions or conditions.

Critical accounting policies are thosethat reflect significant judgments or uncertainties, and potentially result inmaterially different results under different assumptions and conditions. Wehave described below what we believe are our most critical accounting policies.

REVENUE RECOGNITION. Revenue is generally recorded when services are rendered, the Company has a signed charter agreement or other evidence of an arrangement, pricing is fixed or determinable and collection is reasonably assured. Our revenues are earned under time charters or voyage contracts. Revenue from time charters is earned and recognized on a daily basis. Certain time charters contain provisions which provide for adjustments to time charter rates based on agreed-upon market rates. Revenue for voyage contracts is recognized based upon the percentage of voyage completion. The percentage of voyage completion is based on the number of voyage days worked at the balance sheet date divided by the total number of days expected on the voyage.

ALLOWANCE FOR DOUBTFUL ACCOUNTS. We donot provide any reserve for doubtful accounts associated with our voyagerevenues because we believe that our customers are of high creditworthiness andthere are no serious issues concerning collectibility. We have had an excellentcollection record during the past six years ended December 31, 2006. Tothe extent that some voyage revenues become uncollectible, the amounts of theserevenues would be expensed at that time. We provide a reserve for our demurragerevenues based upon our historical record of collecting these amounts. As ofDecember 31, 2006, we provided a reserve of approximately 16% for theseclaims, which we believe is adequate in light of our collection history. Weperiodically review the adequacy of this reserve so that it properly reflectsour collection history. To the extent that our collection experience warrants agreater reserve we will incur an expense as to increase this amount in that period.

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In addition,certain of our time charter contracts contain speed and fuel consumptionprovisions. We have a reserve for potential claims, which is based on theamount of cumulative time charter revenue recognized under these contractswhich we estimate may need to be repaid to the charterer due to failure tomeet these speed and fuel consumption provisions.

DEPRECIATIONAND AMORTIZATION. We record the value of our vessels at their cost (whichincludes acquisition costs directly attributable to the vessel and expendituresmade to prepare the vessel for its initial voyage) less accumulateddepreciation. We depreciate our non-single-hull vessels on a straight-linebasis over their estimated useful lives, estimated to be 25 years from date ofinitial delivery from the shipyard. We believe that a 25-year depreciable lifefor double-hull and double-sided vessels is consistent with that of other shipowners and with its economic useful life. Depreciation is based on cost lessthe estimated residual scrap value. We estimate our residual scrap value perlightweight ton to be $175. An increase in the useful life of the vessel wouldhave the effect of decreasing the annual depreciation charge and extending itinto later periods. An increase in the residual scrap value (as was done in2004) would decrease the amount of the annual depreciation charge. A decreasein the useful life of the vessel would have the effect of increasing the annualdepreciation charge. A decrease in the residual scrap value would increase theamount of the annual depreciation charge.

REPLACEMENTS, RENEWALS AND BETTERMENTS.We capitalize and depreciate the costs of significant replacements, renewalsand betterments to our vessels over the shorter of the vessel’s remaining usefullife or the life of the renewal or betterment. The amount capitalized is basedon our judgment as to expenditures that extend a vessel’s useful life orincrease the operational efficiency of a vessel. We believe that these criteriaare consistent with GAAP and that our policy of capitalization reflects theeconomics and market values of our vessels. Costs that are not depreciated arewritten off as a component of direct vessel operating expense during the periodincurred. Expenditures for routine maintenance and repairs are expensed asincurred. If the amount of the expenditures we capitalize for replacements,renewals and betterments to our vessels were reduced, we would recognize theamount of the difference as an expense.

DEFERRED DRYDOCK COSTS. Our vessels arerequired to be drydocked approximately every 30 to 60 months for major repairsand maintenance that cannot be performed while the vessels are operating. Wecapitalize the costs associated with the drydocks as they occur and amortizethese costs on a straight line basis over the period between drydocks. Webelieve that these criteria are consistent with GAAP guidelines and industrypractice, and that our policy of capitalization reflects the economics andmarket values of the vessels.

IMPAIRMENT OF LONG-LIVED ASSETS. Weevaluate the carrying amounts and periods over which long-lived assets aredepreciated to determine if events have occurred which would requiremodification to their carrying values or useful lives. In evaluating usefullives and carrying values of long-lived assets, we review certain indicators ofpotential impairment, such as undiscounted projected operating cash flows,vessel sales and purchases, business plans and overall market conditions. Wedetermine undiscounted projected net operating cash flows for each vessel andcompare it to the vessel carrying value. In the event that impairment occurred,we would determine the fair value of the related asset and we record a chargeto operations calculated by comparing the asset’s carrying value to theestimated fair value. We estimate fair value primarily through the use of thirdparty valuations performed on an individual vessel basis.  Various factors including future charterrates and vessel operating costs are included in this analysis.

**Recent Accounting Pronouncements**

In July 2006, the Financial Accounting Standards Board(FASB) issued Interpretation No. 48, “Accounting for Uncertainty in IncomeTaxes” (FIN 48). FIN 48 requires the use of a two-step approach for recognizingand measuring tax benefits taken or expected to be taken in a tax return anddisclosures regarding uncertainties in income tax positions. We are required toadopt FIN 48 effective January 1, 2007. Any impact from the adoption of FIN 48 will be recorded directly to thebeginning balance of retained earnings and reported as a change in accountingprinciple.  Only tax positions that meetthe more likely than not recognition threshold at the effective date may berecognized upon adoption of FIN 48.  Wequalify for an exemption pursuant to Section 883 of the U.S. Internal RevenueCode of 1986, or the Code, from U.S. federal income tax on our shipping incomethat is derived from U.S. sources. We are similarly exempt from state and localincome taxation.  We have also evaluatedour tax positions with respect to other countries in which we have commercialor technical management operations and do not believe that the adoption of thisInterpretation will have a material effect on our consolidated financialstatements.

The FASB issued SFAS No.157, “Fair Value Measurements” (“SFAS 157”) on September 15, 2006. SFAS 157enhances existing guidance for measuring assets and liabilities using fairvalue. Previously, guidance for applying fair value was

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incorporated in severalaccounting pronouncements. The new statement provides a single definition offair value, together with a framework for measuring it, and requires additionaldisclosure about the use of fair value to measure assets and liabilities. Whilethe statement does not add any new fair value measurements, it does changecurrent practice. One such change is a requirement to adjust the value ofnonvested stock for the effect of the restriction even if the restrictionlapses within one year. SFAS 157 is effective for financial statements issuedfor fiscal years beginning after November 15, 2007, and interim periods withinthose fiscal years. We are in the process of evaluating the impact the adoptionof SFAS 157 on January 1, 2008, will have on our consolidated financialstatements.

In September 2006,the United States Securities and Exchange Commission (“SEC”) issued SABNo. 108 “Considering the Effects of Prior Year Misstatements WhenQuantifying Misstatements in Current Year Financial Statements”, which providesinterpretive guidance on how registrants should quantify financial statementmisstatements. Under SAB 108 registrants are required to consider both a “rollover”method, which focuses primarily on the income statement impact of misstatements,and the “iron curtain” method, which focuses primarily on the balance sheetimpact of misstatements. The effects of prior year uncorrected errors includethe potential accumulation of improper amounts that may result in a materialmisstatement on the balance sheet or the reversal of prior period errors in thecurrent period that result in a material misstatement of the current periodincome statement amounts. Adjustments to current or prior period financialstatements would be required in the event that after application of variousapproaches for assessing materiality of a misstatement in current periodfinancial statements and consideration of all relevant quantitative andqualitative factors, a misstatement is determined to be material. We adopted theprovisions of SAB 108 as of December 31, 2006. The adoption of SAB 108 did nothave a material effect on our results of operations or financial position.

In February 2007, theFASB issued SFAS No. 159, The Fair Value Option for Financial Assets and FinancialLiabilities ("SFAS No. 159"). Under this statement, the Company mayelect to report financial instruments and certain other items at fair value ona contract-by-contract basis with changes in value reported in earnings. Thiselection is irrevocable. SFAS 159 is effective for the Company commencing in2008. Early adoption within 120 days of the beginning of the Company's 2007fiscal year is permissible, provided the Company has adopted SFAS No. 157. TheCompany is currently evaluating the potential impact, if any, that the adoptionof SFAS No. 159 will have on its consolidated financial statements.

**RelatedParty Transactions**

ThroughApril 2005, we leased office space of approximately 11,000 square feet forour principal executive offices in New York, New York in a building leased byGenMar Realty LLC, a company wholly owned by Peter C. Georgiopoulos, ourChairman, President and Chief Executive Officer. There was no lease agreementbetween us and GenMar Realty LLC. We paid an occupancy fee on a month to monthbasis in the amount of $55,000 for use of that space. In April 2005, wemoved our executive offices, and ceased using that space and paid that fee atthe end of that month.

During the fourth quarter of 2000, we lent $485,467 to Peter C.Georgiopoulos. This loan does not bear interest and is due and payable ondemand. The full amount of this loan was outstanding as of December 31,2006.

Duringthe years ended December 31, 2006, 2005 and 2004, the Company incurred fees forlegal services aggregating $289,000, $150,000 and $284,000, respectively, tothe father of Peter C. Georgiopoulos, of which is $18,000 and $138,000 wasoutstanding as of December 31, 2006 and 2005, respectively.

InJanuary 2006, the Company repurchased 4,176,756 shares of our common stockfrom OCM Principal Opportunities Fund, L.P. (“OCM”) in a privately negotiatedtransaction at $37.00 per share for a total purchase price of $154.5 million.Stephen A. Kaplan, a member of our board of directors, serves as a principaland portfolio manager of Oaktree Capital Management LLC, which is the generalpartner of OCM.

GencoShipping & Trading Limited (“Genco”), an owner and operator of drybulk vessels, has incurred travel related expenditures for use of the Companyaircraft and other miscellaneous expenditures during the year ended December31, 2006, totaling $0.3 million which was paid by Genco during 2006. Peter C.Georgiopoulos and Stephen A. Kaplan are directors of Genco. At December 31,2006, none of this balance was outstanding.

Duringthe year ended December 31, 2006, Genco made available one of its employees whoperformed internal audit services for the Company for which the Company wasinvoiced $52,000 based on actual time spent by the employee, of which $25,000remains outstanding as of December 31, 2006.

Duringthe years ended December 31, 2006, 2005 and 2004, Aegean Marine PetroleumNetwork, Inc. (“Aegean”)  suppliedbunkers to our vessels aggregating $1.7 million, $5.9 million and $0.7 million,respectively.  None of these balanceswere outstanding as of December 31, 2006 and 2005.  During July 2006, an investment vehiclecontrolled by Peter C. Georgiopoulos and John Tavlarios, a member of  our board of directors and one of ourexecutive officers, made an investment in and purchased shares of Aegean fromAegean’s principal shareholder.  DuringDecember 2006, Aegean completed its initial public offering.  At that time, Peter Georgiopoulos becamechairman of the board of Aegean and John Tavlarios and John Hatab, a member ofthe Company’s board of directors, joined the board of directors of Aegean.

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Pursuant to our aircraftuse policy, the following authorized executives may, subject to approval fromour Chairman/Chief Executive Officer, charter the Company’s aircraft from anauthorized third-party charterer for use on non-business flights: the ChiefExecutive Officer, the President of General Maritime Management LLC, the ChiefFinancial Officer and the Chief Administrative Officer. The chartering fee tobe paid by the authorized executive will be the greater of: (i) the incrementalcost to the Company of the use of the aircraft and (ii) the applicable StandardIndustry Fare Level for the flight under Internal Revenue Service regulations,in each case as determined by us. The amount of use of the aircraft for thesepurposes will be monitored from time to time by our Audit Committee.

**ITEM 7A. QUANTITATIVE ANDQUALITATIVE DISCLOSURE OF MARKET RISK**

**INTEREST RATE RISK**

We are exposed to various market risks, including changes in interestrates. The exposure to interest rate risk relates primarily to our debt. AtDecember 31, 2006, we had $50.0 million of floating rate debt with amargin over LIBOR  of 0.75% compared toDecember 31, 2005 when we had $135.0 million of floating rate debt withmargins over LIBOR ranging from 0.75% to 1.0%. Until July 1, 2005, we usedinterest rate swaps to manage the impact of interest rate changes on earningsand cash flows. As of July 1, 2005, we stopped designating our interest rateswaps as a hedge. The differential to be paid or received under these swapagreements was accrued as interest rates change and was recognized as anadjustment to interest expense through June 30, 2005 and Other income(expense) thereafter. As of December 31, 2005, we were party to interestrate swap agreements having aggregate notional amounts of $19.5 million,respectively, which effectively fixed LIBOR on a like amount of principal at ratesranging from 3.985% to 4.75%.  Theseinterest rate swap agreements expired in June 2006.  A one percent increase in LIBOR wouldincrease interest expense on the portion of our $50.0 million outstandingfloating rate indebtedness, which is not economically hedged, by approximately$0.5 million per year from December 31, 2006.

**FOREIGN EXCHANGE RATE RISK**

The international tanker industry’sfunctional currency is the U.S. Dollar. Virtually all of the Company’s revenuesand most of its operating costs are in U.S. Dollars. The Company incurscertain operating expenses, drydocking, and overhead costs in foreigncurrencies, the most significant of which is the Euro, as well as BritishPounds, Japanese Yen, Singapore Dollars, Australian Dollars and Norwegian Kroners.During the year ended December 31, 2006, approximately  17% of the Company’s direct vessel operatingexpenses and general and administrative expenses were denominated in thesecurrencies. The potential additional expense from a 10% adverse change inquoted foreign currency exchange rates, as it relates to all of thesecurrencies, would be approximately $1.4 million for the year endedDecember 31, 2006.

On July 19, 2005, theCompany entered into a forward contract to acquire 5 million Euros on January17, 2006 for $6.0 million.  The Companyentered into this contract to guard against weakening in the dollar against theEuro.  The Company has recorded anaggregate net unrealized gain of $0.1 million for the year ended December 31,2006, which is classified as Other income on the statement of operations.  As of December 31, 2006, the Company is notparty to any currency forward contracts.

**CHARTERRATE RISK**

Aspart of our business strategy, we may from time to time enter into freightderivative contracts to hedge and manage market risks relating to thedeployment of our existing fleet of vessels. Generally, these freightderivative contracts are futures contracts that would bind us and eachcounterparty in the arrangement to buy or sell a specified notional amount oftonnage “forward” at an agreed time and price and for a particular route.  Our objective would be to hedge and managemarket risks as part of our commercial management.  During May 2006, the Company entered into afreight derivative contract with the intention of fixing the equivalent of oneSuezmax vessel to a time charter equivalent rate of $35,500 per day for a threeyear period beginning on July 1, 2006. This contract net settles each month with the Company receiving $35,500per day and paying a floating amount based on the monthly BITR and a specifiedbunker price index.  The aggregatenotional value of this contract is $32.4 million as of December 31, 2006.  As of December 31, 2006, the fair marketvalue of the freight derivative contract resulted in an asset to the Company of$2.2 million and a net  unrealized andrealized gain $0.1 million for the year ended December 31, 2006, which isreflected on our statement of operations as Other income (expense). A 10%increase in the forward BITR from the December 31, 2006 levels would result inadditional payments to the counterparty of $5.2 million over the period fromJanuary 1, 2007 to June 30, 2009. A 10% decrease in the specified bunker priceforward index from the December 31, 2006 level would result in additionalpayments to the counterparty of $1.6 million over the period from January 1,2007 to June 30, 2009.

 

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**Item 8. FINANCIAL STATEMENTS ANDSUPPLEMENTARY DATA**

**GENERAL MARITIME CORPORATION**

**INDEX TO CONSOLIDATED FINANCIALSTATEMENTS**
| CONSOLIDATED FINANCIAL  STATEMENTS AS OF DECEMBER 31, 2006 AND 2005 AND FOR THE YEARS ENDED  DECEMBER 31, 2006, 2005 AND 2004. |   |
|------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                     |   |
| Report  of Independent Registered Public Accounting Firm                                                                                 |   |
|                                                                                                                                     |   |
| Consolidated Balance  Sheets                                                                                                             |   |
|                                                                                                                                     |   |
| Consolidated Statements of Operations                                                                                                    |   |
|                                                                                                                                     |   |
| Consolidated Statements of Shareholders’ Equity and  Comprehensive Income                                                           |   |
|                                                                                                                                     |   |
| Consolidated Statements of Cash Flows                                                                                                    |   |
|                                                                                                                                     |   |
| Notes to Consolidated Financial Statements                                                                                               |   |

 

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REPORT OF INDEPENDENTREGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders ofGeneral Maritime CorporationNew York, New York

We have audited the accompanying consolidated balancesheets of General Maritime Corporation and subsidiaries (the “Company”) as ofDecember 31, 2006 and 2005, and the related consolidated statements ofoperations, shareholders’ equity and comprehensive income, and cash flows for eachof the three years in the period ended December 31, 2006.  These financial statements are theresponsibility of the Company’s management. Our responsibility is to express an opinion on these financialstatements based on our audits.

We conducted our audits in accordance with thestandards of the Public Company Accounting Oversight Board (UnitedStates).  Those standards require that weplan and perform the audit to obtain reasonable assurance about whether the financialstatements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements.  An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well asevaluating the overall financial statement presentation.  We believe that our audits provide areasonable basis for our opinion.

In our opinion, such consolidated financial statementspresent fairly, in all material respects, the financial position of GeneralMaritime Corporation and subsidiaries at December 31, 2006 and 2005, and theresults of their operations and their cash flows for each of the three years inthe period ended December 31, 2006, in conformity with accounting principlesgenerally accepted in the United States of America.

We have also audited, in accordance with the standardsof the Public Company Accounting Oversight Board (United States), theeffectiveness of the Company’s internal control over financial reporting as ofDecember 31, 2006, based on the criteria established in InternalControl—Integrated Framework issued by the Committee of SponsoringOrganizations of the Treadway Commission and our report dated March 1, 2007expressed an unqualified opinion on management’s assessment of theeffectiveness of the Company’s internal control over financial reporting and anunqualified opinion on the effectiveness of the Company’s internal control overfinancial reporting.

/s/ DELOITTE & TOUCHE LLP

New York, New YorkMarch 1, 2007

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**GENERAL MARITIME CORPORATION AND SUBSIDIARIES**

**CONSOLIDATED BALANCESHEETS**

**DECEMBER 31, 2006 AND 2005**

**(Dollars inthousands except per share data)**
| ** **                                                                                                                                                                               | ** ** | **DECEMBER 31,** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------|------------|
| ** **                                                                                                                                                                               | ** ** | **2006**              | ** ** | **2005** | ** ** |
| ASSETS                                                                                                                                                                                   |       |                  |       |   |   |
| CURRENT ASSETS:                                                                                                                                                                          |       |                  |       |   |   |
| Cash                                                                                                                                                                                     |       | $                     | 107,460    |   | $ | 96,976 |   |
| Due from charterers,  net                                                                                                                                                                |       | 13,288                |       | 47,281 |   |
| Vessels held for  sale                                                                                                                                                                   |       | —                |       | 294,527 |   |
| Prepaid expenses  and other current assets                                                                                                                                               |       | 17,117                |       | 32,540 |   |
| Total current  assets                                                                                                                                                                    |       | 137,865               |       | 471,324 |   |
| NONCURRENT  ASSETS:                                                                                                                                                                      |       |                  |       |   |   |
| Vessels, net of  accumulated depreciation of $152,840 and $118,981, respectively                                                                                                         |       | 592,686               |       | 564,609 |   |
| Vessel  construction in progress                                                                                                                                                         |       | 77,416                |       | 88,485 |   |
| Other fixed  assets, net                                                                                                                                                                 |       | 8,257                 |       | 5,212 |   |
| Deferred drydock  costs, net                                                                                                                                                             |       | 18,572                |       | 12,788 |   |
| Deferred  financing costs, net                                                                                                                                                           |       | 4,469                 |       | 4,463 |   |
| Derivative asset                                                                                                                                                                         |       | 2,180                 |       | — |   |
| Other assets                                                                                                                                                                             |       | 1,000                 |       | 1,000 |   |
| Goodwill                                                                                                                                                                                 |       | 1,245                 |       | 1,245 |   |
| Total noncurrent  assets                                                                                                                                                                 |       | 705,825               |       | 677,802 |   |
| TOTAL ASSETS                                                                                                                                                                             |       | $                     | 843,690    |   | $ | 1,149,126 |   |
| LIABILITIES AND  SHAREHOLDERS’ EQUITY                                                                                                                                               |       |                  |       |   |   |
| CURRENT LIABILITIES:                                                                                                                                                                     |       |                  |       |   |   |
| Accounts payable  and accrued expenses                                                                                                                                                   |       | $                     | 18,698     |   | $ | 32,906 |   |
| Deferred voyage  revenue                                                                                                                                                                 |       | 8,449                 |       | — |   |
| Total current  liabilities                                                                                                                                                               |       | 27,147                |       | 32,906 |   |
| NONCURRENT LIABILITIES:                                                                                                                                                                  |       |                  |       |   |   |
| Deferred voyage  revenue                                                                                                                                                                 |       | —                |       | 2,140 |   |
| Long-term debt                                                                                                                                                                           |       | 50,000                |       | 135,020 |   |
| Other noncurrent  liabilities                                                                                                                                                            |       | 2,630                 |       | 2,552 |   |
| Derivative  liability                                                                                                                                                                    |       | —                |       | 383 |   |
| Total noncurrent  liabilities                                                                                                                                                            |       | 52,630                |       | 140,095 |   |
| TOTAL LIABILITIES                                                                                                                                                                        |       | 79,777                |       | 173,001 |   |
| COMMITMENTS AND  CONTINGENCIES                                                                                                                                                           |       |                  |       |   |   |
| SHAREHOLDERS’ EQUITY:                                                                                                                                                               |       |                  |       |   |   |
| Common stock,  $0.01 par value per share; authorized 75,000,000; issued and outstanding  32,739,107 and 38,040,320 shares at December 31, 2006 and December 31,  2005, respectively |       | 328                   |       | 380 |   |
| Paid-in capital                                                                                                                                                                          |       | 438,801               |       | 428,339 |   |
| Retained  earnings                                                                                                                                                                       |       | 324,784               |       | 547,406 |   |
| Total  shareholders’ equity                                                                                                                                                         |       | 763,913               |       | 976,125 |   |
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY                                                                                                                                          |       | $                     | 843,690    |   | $ | 1,149,126 |   |

 

53

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**GENERAL MARITIME CORPORATION**

**CONSOLIDATED STATEMENTSOF OPERATIONS**

**FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004**

**(Dollars inthousands except per share data)**
| ** **                                        | ** ** | **2006**   | ** ** | **2005**   | ** ** | **2004**   | ** ** |
|---------------------------------------------------|------------|------------|------------|------------|------------|------------|------------|
| VOYAGE REVENUES:                                  |       |       |       |       |       |       |       |
| Voyage revenues                                   |       | $          | 325,984    |       | $          | 567,901    |       | $ | 701,291 |   |
| OPERATING  EXPENSES:                              |       |       |       |       |       |       |       |
| Voyage expenses                                   |       | 80,400     |       | 137,203    |       | 117,955    |       |
| Direct vessel expenses                            |       | 47,472     |       | 86,681     |       | 96,818     |       |
| Other expense                                     |       | 2,430      |       | —     |       | —     |       |
| General and administrative                        |       | 44,787     |       | 43,989     |       | 31,420     |       |
| Depreciation and amortization                     |       | 42,395     |       | 97,320     |       | 100,806    |       |
| Gain on sale of vessels                           |       | (46,022    | )          | (91,235    | )          | (6,570     | )          |
| Total operating expenses                          |       | 171,462    |       | 273,958    |       | 340,429    |       |
| OPERATING INCOME                                  |       | 154,522    |       | 293,943    |       | 360,862    |       |
| OTHER INCOME (EXPENSE):                           |       |       |       |       |       |       |       |
| Interest income                                   |       | 5,620      |       | 3,482      |       | 979        |       |
| Interest expense                                  |       | (4,165     | )          | (32,400    | )          | (38,831    | )          |
| Other income (expense)                            |       | 854        |       | (52,668    | )          | (7,901     | )          |
| Net other income (expense)                        |       | 2,309      |       | (81,586    | )          | (45,753    | )          |
| Net income                                        |       | $          | 156,831    |       | $          | 212,357    |       | $ | 315,109 |   |
| Earnings per common share:                        |       |       |       |       |       |       |       |
| Basic                                             |       | $          | 4.98       |       | $          | 5.71       |       | $ | 8.51 |   |
| Diluted                                           |       | $          | 4.87       |       | $          | 5.61       |       | $ | 8.33 |   |
| Weighted average shares outstanding—basic    |       | 31,471,809 |       | 37,164,321 |       | 37,049,266 |       |
| Weighted average  shares outstanding—diluted |       | 32,217,428 |       | 37,874,378 |       | 37,813,929 |       |

 

54

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**GENERAL MARITIME CORPORATION**

**CONSOLIDATED STATEMENTSOF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME**

**FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004**

**(Dollars in thousandsexcept per share data)**
| ** **                                                          | ** ** | ** ** | ** ** | ** **  | ** ** | ** **   | ** ** | **Accumulated**   | ** ** | ** **        | ** ** | ** ** | ** ** |
|---------------------------------------------------------------------|------------|------------|------------|-------------|------------|--------------|------------|-------------------|------------|-------------------|------------|------------|------------|
| ** **                                                          | ** ** | ** ** | ** ** | ** **  | ** ** | ** **   | ** ** | **Other**         | ** ** | ** **        | ** ** | ** ** | ** ** |
| ** **                                                          | ** ** | **Common** | ** ** | **Paid-in** | ** ** | **Retained** | ** ** | **Comprehensive** | ** ** | **Comprehensive** | ** ** | ** ** | ** ** |
| ** **                                                          | ** ** | **Stock**  | ** ** | **Capital** | ** ** | **Earnings** | ** ** | **Income**        | ** ** | **Income**        | ** ** | **Total**  | ** ** |
| Balance  as of January 1, 2004                                      |       | 376        |       | $           | 415,876    |         | $          | 155,108           |       | $                 | (2,480     | )          |       |   | $ | 568,880 |   |
| Net Income                                                          |       |       |       |        |       | 315,109      |       |              |       | $                 | 315,109    |       | 315,109    |   |
| Unrealized derivative gains on cash flow hedge                      |       |       |       |        |       |         |       | 1,935             |       | 1,935             |       | 1,935      |       |
|                                                                |       |       |       |        |       |         |       |              |       | 317,044           |       |       |       |
| Restricted  stock amortization                                      |       |       |       | 1,667       |       |         |       |              |       |              |       | 1,667      |       |
|                                                                |       |       |       |        |       |         |       |              |       |              |       |       |       |
| Exercise  of stock options                                          |       | 3          |       | 2,832       |       |         |       |              |       |              |       | 2,835      |       |
| Balance  as of December 31, 2004                                    |       | 379        |       | 420,375     |       | 470,217      |       | (545              | )          |              |       | 890,426    |       |
|                                                                |       |       |       |        |       |         |       |              |       |              |       |       |       |
| Comprehensive  income:                                              |       |       |       |        |       |         |       |              |       |              |       |       |       |
| Net income                                                          |       |       |       |        |       | 212,357      |       |              |       | $                 | 212,357    |       | 212,357    |   |
| Unrealized derivative gains on cash flow hedge                      |       |       |       |        |       |         |       | 545               |       | 545               |       | 545        |       |
| Comprehensive  income                                               |       |       |       |        |       |         |       |              |       | 212,902           |       |       |       |
|                                                                |       |       |       |        |       |         |       |              |       |              |       |       |       |
| Cash  dividends paid ($2.86 per share)                              |       |       |       |        |       | (110,404     | )          |              |       |              |       | (110,404   | )          |
| Exercise  of stock options                                          |       | 1          |       | 1,503       |       |         |       |              |       |              |       | 1,504      |       |
| Issuance  of 1,079,600 shares of restricted stock                   |       | 7          |       | (7          | )          |         |       |              |       |              |       | —     |       |
| Acquisition  and retirement of 677,800 shares of common stock       |       | (7         | )          |        |       | (24,764      | )          |              |       |              |       | (24,771    | )          |
| Restricted  stock amortization                                      |       |       |       | 6,468       |       |         |       |              |       |              |       | 6,468      |       |
| Balance as of December 31, 2005                                     |       | 380        |       | 428,339     |       | 547,406      |       | —            |       |              |       | 976,125    |       |
|                                                                |       |       |       |        |       |         |       |              |       |              |       |       |       |
| Net  income                                                         |       |       |       |        |       | 156,831      |       |              |       | $                 | 156,831    |       | 156,831    |   |
| Exercise  of stock options                                          |       | 5          |       | 759         |       |         |       |              |       |              |       | 764        |       |
| Issuance  of 296,700 shares of restricted stock, net of forfeitures |       | 3          |       | (3          | )          |         |       |              |       |              |       | —     |       |
| Acquisition  and retirement of 6,088,113 shares of common stock     |       | (60        | )          |        |       | (219,013     | )          |              |       |              |       | (219,073   | )          |
| Cash  dividends paid ($4.80 per share)                              |       |       |       |        |       | (160,440     | )          |              |       |              |       | (160,440   | )          |
| Amortization  of stock-based compensation, net of forfeitures       |       |       |       | 9,706       |       |         |       |              |       |              |       | 9,706      |       |
| Balance at December 31, 2006                                        |       | $          | 328        |        | $          | 438,801      |       | $                 | 324,784    |              | $          | —     |       |   |   | $ | 763,913 |   |
|                                                                     |            |            |            |             |            |              |            |                   |            |                   |            |            |            |  |  |  |  |  |  |

 

See notes toconsolidated financial statements.

55

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**GENERAL MARITIME CORPORATION**

**CONSOLIDATEDSTATEMENTS OF CASH FLOWS**

**FOR THE YEARS ENDED DECEMBER 31,2006, 2005 AND 2004**

**(Dollars in thousands)**

 
| ** **                                                                         | ** ** | **2006** | ** ** | **2005** | ** ** | **2004** | ** ** |
|------------------------------------------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|
| CASH FLOWS PROVIDED BY  OPERATING ACTIVITIES:                                      |       |     |       |     |       |     |       |
| Net income                                                                         |       | $        | 156,831    |     | $          | 212,357  |       | $ | 315,109 |   |
| Adjustments to  reconcile net income to net cash provided by operating activities: |       |     |       |     |       |     |       |
| Gain on sale of  vessels                                                           |       | (46,022  | )          | (91,235  | )          | (6,570   | )          |
| Depreciation and  amortization                                                     |       | 42,395   |       | 97,320   |       | 100,806  |       |
| Write-off of  deferred financing costs of refinanced credit facilities             |       | —   |       | 5,660    |       | 7,901    |       |
| Loss on  retirement of Senior Notes                                                |       | —   |       | 45,778   |       | —   |       |
| Amortization of  discount on Senior Notes                                          |       | —   |       | 243      |       | 254      |       |
| Amortization of  stock-based compensation                                          |       | 9,706    |       | 6,468    |       | 1,667    |       |
| Changes in  assets and liabilities:                                                |       |     |       |     |       |     |       |
| Decrease  (increase) in due from charterers                                        |       | 33,993   |       | 26,602   |       | (37,674  | )          |
| Decrease  (increase) in prepaid expenses and other current and noncurrent assets   |       | 14,954   |       | (2,811   | )          | (13,502  | )          |
| (Decrease)  increase in other current and noncurrent liabilities                   |       | (16,520  | )          | (2,034   | )          | 13,548   |       |
| Decrease in  accrued interest                                                      |       | —   |       | (7,277   | )          | (479     | )          |
| Increase  (decrease) in deferred voyage revenue                                    |       | 6,309    |       | (3,418   | )          | (772     | )          |
| Deferred drydock  costs incurred                                                   |       | (11,929  | )          | (38,039  | )          | (17,050  | )          |
| Net cash provided  by operating activities                                         |       | 189,717  |       | 249,614  |       | 363,238  |       |
|                                                                               |       |     |       |     |       |     |       |
| CASH FLOWS PROVIDED  (USED) BY INVESTING ACTIVITIES:                               |       |     |       |     |       |     |       |
| Purchase of  vessels                                                               |       | —   |       | —   |       | (182,457 | )          |
| Payments for  vessel construction in progress                                      |       | (50,602  | )          | (10,576  | )          | (77,909  | )          |
| Purchase of other  fixed assets                                                    |       | (5,035   | )          | (5,918   | )          | (2,544   | )          |
| Proceeds from  sale of vessels                                                     |       | 340,901  |       | 334,663  |       | 94,570   |       |
| Acquisition of  business net of cash received                                      |       | —   |       | —   |       | (137     | )          |
| Net cash  provided (used) by investing activites                                   |       | 285,264  |       | 318,169  |       | (168,477 | )          |
|                                                                               |       |     |       |     |       |     |       |
| CASH FLOWS PROVIDED  (USED) BY FINANCING ACTIVITIES:                               |       |     |       |     |       |     |       |
| Long-term debt  borrowings                                                         |       | —   |       | 162,788  |       | 515,000  |       |
| Payments to  retire Senior Notes                                                   |       | (20      | )          | (286,851 | )          | —   |       |
| Payments to  retire credit facilities                                              |       | —   |       | (175,000 | )          | (448,305 | )          |
| Principal  payments on long-term debt                                              |       | —   |       | (30,000  | )          | (59,022  | )          |
| Borrowings on  revolving credit facilitities                                       |       | 175,000  |       | —   |       | 100,000  |       |
| Repayments on  revolving credit facilities                                         |       | (260,000 | )          | (62,788  | )          | (277,000 | )          |
| Deferred  financing costs paid                                                     |       | (728     | )          | (5,256   | )          | (7,203   | )          |
| Cash released  from (placed in) escrow with lender                                 |       | —   |       | 13,050   |       | (13,050  | )          |
| Payments to  acquire and retire common stock                                       |       | (219,073 | )          | (24,771  | )          | —   |       |
| Proceeds from  exercise of stock options                                           |       | 764      |       | 1,504    |       | 2,835    |       |
| Cash dividends  paid                                                               |       | (160,440 | )          | (110,404 | )          | —   |       |
| Net cash (used)  provided by financing activities                                  |       | (464,497 | )          | (517,728 | )          | (186,745 | )          |
|                                                                               |       |     |       |     |       |     |       |
| Net increase in  cash                                                              |       | 10,484   |       | 50,055   |       | 8,016    |       |
| Cash, beginning  of the year                                                       |       | 96,976   |       | 46,921   |       | 38,905   |       |
| Cash, end of  year                                                                 |       | $        | 107,460    |     | $          | 96,976   |       | $ | 46,921 |   |
|                                                                               |       |     |       |     |       |     |       |
| Supplemental  disclosure of cash flow information:                                 |       |     |       |     |       |     |       |
| Cash paid during  the year for interest (net of amount capitalized)                |       | $        | 4,168      |     | $          | 39,677   |       | $ | 39,310 |   |
| Transfer from  Vessel construction in progress to Vessel                           |       | $        | 61,671     |     | $          | —   |       | $ | — |   |
| Restricted stock  granted to employees (net of forfeitures)                        |       | $        | 10,383     |     | $          | 48,338   |       | $ | — |   |

 

See notes to consolidatedfinancial statements.

56

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**GENERAL MARITIME CORPORATION**

**NOTES TO CONSOLIDATED FINANCIALSTATEMENTS**

**YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004**

**(DOLLARS IN THOUSANDS, EXCEPT PERSHARE AND PER TON DATA)**

**1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

NATUREOF BUSINESS.  General MaritimeCorporation (the “Company”) through its subsidiaries provides internationaltransportation services of seaborne crude oil. The Company’s fleet is comprisedof both Aframax and Suezmax vessels. The Company operates its business in onebusiness segment, which is the transportation of international seaborne crudeoil.

TheCompany’s vessels are primarily available for charter on a spot voyage or timecharter basis. Under a spot voyage charter, which generally lasts between twoto ten weeks, the owner of a vessel agrees to provide the vessel for thetransport of specific goods between specific ports in return for the payment ofan agreed upon freight per ton of cargo or, alternatively, for a specifiedtotal amount. All operating and specified voyage costs are paid by the owner ofthe vessel.

Atime charter involves placing a vessel at the charterer’s disposal for a setperiod of time during which the charterer may use the vessel in return for thepayment by the charterer of a specified daily or monthly hire rate. In timecharters, operating costs such as for crews, maintenance and insurance aretypically paid by the owner of the vessel and specified voyage costs such asfuel, canal and port charges are paid by the charterer.

BASISOF PRESENTATION.  The financialstatements of the Company have been prepared on the accrual basis ofaccounting. A summary of the significant accounting policies followed in thepreparation of the accompanying financial statements, which conform toaccounting principles generally accepted in the United States of America, ispresented below.

BUSINESSGEOGRAPHICS.  Non-U.S. operationsaccounted for 100% of revenues and net income. Vessels regularly move betweencountries in international waters, over hundreds of trade routes. It is thereforeimpractical to assign revenues or earnings from the transportation ofinternational seaborne crude oil products by geographical area.

SEGMENTREPORTING.  Each of the Company’s vesselsserve the same type of customer, have similar operations and maintenancerequirements, operate in the same regulatory environment, and are subject tosimilar economic characteristics. Based on this, the Company has determinedthat it operates in one reportable segment, the transportation of crude oilwith its fleet of midsize vessels.

PRINCIPLESOF CONSOLIDATION.  The accompanyingconsolidated financial statements include the accounts of General MaritimeCorporation and its wholly owned subsidiaries. All intercompany accounts andtransactions have been eliminated on consolidation.

REVENUEAND EXPENSE RECOGNITION.  Revenue andexpense recognition policies for voyage and time charter agreements are asfollows:

VOYAGECHARTERS.  Voyage revenues are recognizedon a pro rata basis based on the relative transit time in each period.Estimated losses on voyages are provided for in full at the time such lossesbecome evident. A voyage is deemed to commence upon the completion of dischargeof the vessel’s previous cargo and is deemed to end upon the completion ofdischarge of the current cargo. Voyage expenses primarily include only thosespecific costs which are borne by the Company in connection with voyagecharters which would otherwise have been borne by the charterer under timecharter agreements. These expenses principally consist of fuel, canal and portcharges. Demurrage income represents payments by the charterer to the vesselowner when loading and discharging time exceed the stipulated time in thevoyage charter. Demurrage income is measured in accordance with the provisionsof the respective charter agreements and the circumstances under whichdemurrage claims arise and is recognized on a pro rata basis over the length ofthe voyage to which it pertains. At December 31, 2006 and 2005, the Company hasa reserve of approximately $1,333 and $2,093, respectively, against its duefrom charterers balance associated with demurrage revenues.

57

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TIMECHARTERS.  Revenue from time charters isrecognized on a straight line basis as the average revenue over the term of therespective time charter agreement. Direct vessel expenses are recognized whenincurred. As of December 31, 2005, the Company had a reserve of $6,571associated with estimated performance claims against the Company’s timecharters. These reserves relate to certainvessels under time charter agreements. These arrangements require thatthe vessels meet specified speed and bunker consumption standards.  As of December 31, 2006, all assertedperformance claims, including those reserved for as of December 31, 2005, havebeen settled and paid for during 2006 for $11,750 and the Company hasdetermined that there are no unasserted claims on its remaining time charters;accordingly, there is no reserve as of December 31, 2006.

VESSELS,  NET. Vessels, net is stated at cost less accumulated depreciation. Includedin vessel costs are acquisition costs directly attributable to the vessel andexpenditures made to prepare the vessel for its initial voyage. Vessels aredepreciated on a straight-line basis over their estimated useful lives,determined to be 25 years from date of initial delivery from the shipyard fornon-single-hull vessels.   In addition,the Company estimates residual value of its vessels to be $175/LWT.

Depreciationis based on cost less the estimated residual scrap value. The costs ofsignificant replacements, renewals and betterments are capitalized anddepreciated over the shorter of the vessel’s remaining useful life or the lifeof the renewal or betterment. Undepreciated cost of any asset component beingreplaced is written off as a component of direct vessel operating expense.Expenditures for routine maintenance and repairs are expensed as incurred.

CONSTRUCTIONIN PROGRESS.  Construction in progressrepresents the cost of acquiring contracts to build vessels, installments paidto shipyards, certain other payments made to third parties and interest costsincurred during the construction of vessels (until the vessel is substantiallycomplete and ready for its intended use). During the years ended December 31,2006, 2005 and 2004, the Company capitalized $3,571, $3,475 and $1,270,respectively, of interest expense.

OTHERFIXED ASSETS, NET.  Other fixed assets,net is stated at cost less accumulated depreciation. Depreciation is computedusing the straight-line method over the following estimated useful lives:

 
| **DESCRIPTION**                | ** ** | **USEFUL LIVES** |
|--------------------------------|------------|------------------|
| Furniture and  fixtures        |       | 10 years         |
| Vessel and  computer equipment |       | 5 years          |

 

IMPAIRMENT OFLONG-LIVED ASSETS.  The Company followsStatement of Financial Accounting Standards (“SFAS”) No. 144, *Accounting for the Impairment or Disposal of Long-Lived Assets*,which requires impairment losses to be recorded on long-lived assets used inoperations when indicators of impairment are present and the undiscounted cashflows estimated to be generated by those assets are less than the asset’scarrying amount. In the evaluation of the fair value and future benefits oflong-lived assets, the Company performs an analysis of the anticipatedundiscounted future net cash flows of the related long-lived assets. If thecarrying value of the related asset exceeds the undiscounted cash flows, thecarrying value is reduced to its fair value. Various factors including futurecharter rates and vessel operating costs are included in this analysis.

DEFERREDDRYDOCK COSTS, NET.  Approximately every30 to 60 months the Company’s vessels are required to be drydocked for majorrepairs and maintenance, which cannot be performed while the vessels areoperating. The Company capitalizes costs associated with the drydocks as theyoccur and amortizes these costs on a straight line basis over the periodbetween drydocks. Amortization of drydock costs is included in depreciation andamortization in the statement of operations. For the years ended December 31,2006, 2005 and 2004, amortization was $6,145, $17,957 and $11,783,respectively. Accumulated amortization as of December 31, 2006 and 2005 was$7,191 and $3,052, respectively.

DEFERREDFINANCING COSTS, NET.  Deferred financingcosts include fees, commissions and legal expenses associated with securingloan facilities. These costs are amortized over the life of the related debt,which is included in depreciation and amortization. Amortization was $722,$1,968 and $3,142 for the years ended December 31, 2006, 2005 and 2004, respectively.Accumulated amortization as of December 31, 2006 and 2005 was $824 and $102respectively.

GOODWILL.  As of January 1, 2002, the Company adoptedthe provisions for SFAS No. 142 “Goodwill and Other Intangible Assets.”  This statement requires that goodwill andintangible assets with indefinite lives no longer be amortized, but instead betested for impairment at least annually and written down with a charge tooperations when the carrying amount exceeds the estimated fair value. Prior tothe adoption of SFAS No. 142, the Company amortized goodwill. The amount ofsuch unamortized goodwill was $5,753 as of January 1, 2002 related to theCompany’s acquisition in June 2001 of a technical management company. Inaccordance with SFAS No. 142 the Company discontinued the amortization ofgoodwill effective January 1, 2002. During 2005, in connection with thereclassification of 26 vessels to vessels held for sale, $4,508 of the goodwillassociated with certain of these vessels was reclassified to Vessels held forsale leaving a balance at December 31, 2006 and 2005 of $1,245. The Companydetermined that there was no impairment of goodwill as of the transition date 

58

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andduring the years ended December 31, 2006, 2005 and 2004.

INCOMETAXES.  The Company is incorporated inthe Republic of the Marshall Islands. Pursuant to the income tax laws of theMarshall Islands, the Company is not subject to Marshall Islands income tax.Additionally, pursuant to the U.S. Internal Revenue Code, the Company is exemptfrom U.S. income tax on its income attributable to the operation of vessels ininternational commerce. Pursuant to various tax treaties, the Company’sshipping operations are not subject to foreign income taxes. Therefore, noprovision for income taxes is required.

DEFERREDVOYAGE REVENUE.  Deferred voyage revenueprimarily relates to cash received from charterers prior to it being earned.These amounts are recognized as income when earned in the appropriate futureperiods.

COMPREHENSIVEINCOME.  The Company follows Statement ofFinancial Accounting Standards No. 130 “Reporting Comprehensive Income”, whichestablishes standards for reporting and displaying comprehensive income and itscomponents in financial statements. Comprehensive income is comprised of netincome less charges related to the adoption and implementation of SFAS No. 133.

STOCK BASEDCOMPENSATION*. *EffectiveJanuary 1, 2006, the Company adopted Statement of Financial Standards (“SFAS”)No. 123R, *Share-Based Payments*using amodified version of prospective application (See Note 9 for impact ofadopting SFAS 123R.) Accordingly, prior period amounts have not beenrestated. Pursuant to the adoption of SFAS 123R, unamortized restrictedstock is now classified as a component of Paid-in capital in Shareholders’ equity.Prior to adoption of SFAS 123R, the Company followed the provisions ofAccounting Principles Board Opinion (“APB”) No. 25, *Accountingfor Stock Issued to Employees* to account for its stock option plan.The Company provided pro forma disclosure of net income and earnings per shareas if the accounting provision of SFAS No. 123, *Accountingfor Stock-Based Compensation* had been adopted. The following tabledetails the effect on net income and earnings per share had compensationexpense for stock options been recorded for the years ended December 31, 2005and 2004 based on the methods recommended by Statement of Financial Standards (“SFAS”)No. 123, *Accounting for Stock-Based Compensation*:

 
| ** **                                                    | ** ** | **2005** | ** ** | **2004** | ** ** |
|---------------------------------------------------------------|------------|----------|------------|----------|------------|
| Net Income:                                                   |       |     |       |     |       |
|                                                          |       |     |       |     |       |
| As reported                                                   |       | $        | 212,357    |     | $          | 315,109 |   |
| Stock based  compensation expense using the fair value method |       | 309      |       | 458      |       |
| Pro forma                                                     |       | $        | 212,048    |     | $          | 314,651 |   |
| Earnings per  common share (as reported):                     |       |     |       |     |       |
| Basic                                                         |       | $        | 5.71       |     | $          | 8.51 |   |
| Diluted                                                       |       | $        | 5.61       |     | $          | 8.33 |   |
| Earnings per  common share (pro forma):                       |       |     |       |     |       |
| Basic                                                         |       | $        | 5.71       |     | $          | 8.49 |   |
| Diluted                                                       |       | $        | 5.60       |     | $          | 8.32 |   |

 

ACCOUNTINGESTIMATES.  The preparation of financialstatements in conformity with accounting principles generally accepted in theUnited States of America requires management to make estimates and assumptionsthat affect the reported amounts of assets and liabilities and disclosures ofcontingent assets and liabilities at the date of the financial statements andthe reported amounts of revenues and expenses during the reporting period.Actual results could differ from those estimates.

EARNINGSPER SHARE.  Basic earnings per share arecomputed by dividing net income by the weighted average number of common sharesoutstanding during the year. Diluted earnings per share reflects the potentialdilution that could occur if securities or other contracts to issue commonstock were exercised.

FAIRVALUE OF FINANCIAL INSTRUMENTS.  Theestimated fair values of the Company’s financial instruments approximate theirindividual carrying amounts as of December 31, 2006 and 2005 due to theirshort-term maturity or the variable-rate nature of the respective borrowings.

DERIVATIVEFINANCIAL INSTRUMENTS.  In addition to interest rate swaps describedbelow, the Company has been

 

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party to other derivative financial instruments toguard against the risks of (a) a weakening U.S. Dollar that would makefuture Euro-based expenditure more costly, (b) rising fuel costs whichwould increase future voyage expenses, and (c) declines in future spotmarket rates, which would reduce revenues on future voyages of vessels tradingon the spot market. The Company considers the derivative financial instrumentsthe Company has entered to be economic hedges against these risks, althoughthey do not qualify as hedges for accounting purposes. As such, the Companyrecords the fair value of the derivative financial instruments on its balancesheet as a net Derivative liability or asset, as applicable. Changes in fairvalue in the derivative financial instruments, as well as payments made to, orreceived from counterparties, to periodically settle the derivativetransactions, are recorded as Other income (expense) on the statement ofoperations as applicable.

INTEREST RATERISK MANAGEMENT.  The Company is exposedto the impact of interest rate changes. The Company’s objective is to managethe impact of interest rate changes on earnings and cash flows of itsborrowings. The Company uses interest rate swaps to manage net exposure tointerest rate changes related to its borrowings and to lower its overallborrowing costs. Interest rate risk management instruments held by the Companyduring the years ended December 31, 2006, 2005 and 2004 were pay-fixed swaps.As of December 31, 2005, the Company was party to pay-fixed interest rate swapagreements that expired in 2006 which effectively converted floating rateobligations to fixed rate instruments.

CONCENTRATIONOF CREDIT RISK.  Financial instrumentsthat potentially subject the Company to concentrations of credit risk are tradereceivables. With respect to accounts receivable, the Company limits its creditrisk by performing ongoing credit evaluations and, when deemed necessary,requiring letters of credit, guarantees or collateral. Management does notbelieve significant risk exists in connection with the Company’s concentrationsof credit at December 31, 2006.

FOREIGNEXCHANGE GAINS AND LOSSES.  Gains andlosses on transactions denominated in foreign currencies are recorded withinthe consolidated statement of operations as components of general andadministrative expenses or other income (expense) depending on the nature ofthe transactions to which they relate. During the years ended December 31, 2006, 2005 and 2004,  transactions denominated in foreign currencies  resulted in increases in general andadministrative expenses of $79, $(69) and $248, respectively, and increases inother income (expense) of $628, $(206) and $0, respectively.

##### RECENTACCOUNTING PRONOUNCEMENTS.  In July 2006,the Financial Accounting Standards Board (“FASB”) issued InterpretationNo. 48, “Accounting for Uncertainty in Income Taxes” (FIN 48). FIN 48requires the use of a two-step approach for recognizing and measuring taxbenefits taken or expected to be taken in a tax return and disclosuresregarding uncertainties in income tax positions. The Company is required toadopt FIN 48 effective January 1, 2007. Any impact from the adoption of FIN 48 will be recorded directly to thebeginning balance of retained earnings and reported as a change in accountingprinciple.  Only tax positions that meetthe more likely than not recognition threshold at the effective date may berecognized upon adoption of FIN 48.  TheCompany qualifies for an exemption pursuant to Section 883 of the U.S. InternalRevenue Code of 1986, or the Code, from U.S. federal income tax on shippingincome that is derived from U.S. sources. The Company is similarly exempt fromstate and local income taxation.  TheCompany has also evaluated our tax positions with respect to other countries inwhich it has commercial or technical management operations and does not believethat the adoption of this Interpretation will have a material effect on itsconsolidated financial statements.

The FASB issued SFAS No.157, “Fair Value Measurements” (“SFAS 157”) on September 15, 2006. SFAS 157enhances existing guidance for measuring assets and liabilities using fairvalue. Previously, guidance for applying fair value was incorporated in severalaccounting pronouncements. The new statement provides a single definition offair value, together with a framework for measuring it, and requires additionaldisclosure about the use of fair value to measure assets and liabilities. Whilethe statement does not add any new fair value measurements, it does changecurrent practice. One such change is a requirement to adjust the value ofnonvested stock for the effect of the restriction even if the restrictionlapses within one year. SFAS 157 is effective for financial statements issuedfor fiscal years beginning after November 15, 2007, and interim periods withinthose fiscal years. The Company is in the process of  evaluating the impact the adoption of SFAS157 on January 1, 2007 will have on the financial statements of the Company.

In September 2006,the United States Securities and Exchange Commission (“SEC”) issued SABNo. 108 “Considering the Effects of Prior Year Misstatements WhenQuantifying Misstatements in Current Year Financial Statements”, which providesinterpretive guidance on how registrants should quantify financial statementmisstatements. Under SAB 108 registrants are required to consider both a “rollover”method, which focuses primarily on the income statement impact ofmisstatements, and the “iron curtain” method, which focuses primarily on thebalance sheet impact of misstatements. The effects of prior year uncorrectederrors include the potential accumulation of improper amounts that may resultin a material misstatement on the balance sheet or the reversal of prior perioderrors in the current period that result in a material misstatement of thecurrent period income statement amounts. Adjustments to current or prior periodfinancial statements would be required in the event that after application ofvarious approaches for assessing materiality of a misstatement in currentperiod financial statements and consideration of all relevant quantitative andqualitative factors, a misstatement is determined to be material. We adopted 

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the provisions of SAB 108as of December 31, 2006. The adoption of SAB 108 did not have a material effecton the Company’s results of operations or financial position.

In February 2007, theFASB issued SFAS No. 159, The Fair Value Option for Financial Assets andFinancial Liabilities (“SFAS No. 159”). Under this statement, the Company mayelect to report financial instruments and certain other items at fair value ona contract-by-contract basis with changes in value reported in earnings. Thiselection is irrevocable. SFAS 159 is effective for the Company commencing in 2008.Early adoption within 120 days of the beginning of the Company’s 2007 fiscalyear is permissible, provided the Company has adopted SFAS No. 157. The Companyis currently evaluating the potential impact, if any, that the adoption of SFASNo. 159 will have on its consolidated financial statements.

**2. ACQUISITIONS**

InMarch 2004, the Company agreed to acquire three Aframax vessels, twoSuezmax vessels, four newbuilding Suezmax contracts and a technical managementcompany from an unaffiliated entity for cash. The three Aframax vessels, twoSuezmax vessels and the technical management company were acquired betweenApril and June 2004. The four newbuilding Suezmax contracts wereacquired in July 2004. The purchase price of these assets was approximately$248,100, which were financed through cash on hand and borrowings under theCompany’s then existing revolving credit facilities. This $248,100 purchaseprice was allocated as follows:  $180,599for the five vessels, $67,242 for the four newbuilding Suezmax contracts and$266 for the technical management company the net assets of which are comprisedof $107 of cash, other current assets of $738, noncurrent assets of $82 andcurrent liabilities of $661. In addition, $8,777 was paid to the shipyard as aninstallment on the construction price of the four newbuilding contracts.

Duringthe year ended December 31, 2006, the Company took delivery of onenewly-constructed Suezmax tanker. Capitalized costs of this vessel over its construction period, inclusiveof capitalized interest, were $61,671. This vessel is one of the 18 vessels collateralizing the Company’s 2005Credit Facility (see Note 8).

The remaining installments on the threenewbuilding Suezmax contracts to be paid by the Company subsequent to December31, 2006 aggregate $107,139 and are payable as follows: $74,554 in 2007 and$32,585 in 2008.

**3. EARNINGS PER COMMON SHARE**

Thecomputation of basic earnings per share is based on the weighted average numberof common shares outstanding during the year. The computation of dilutedearnings per share assumes the exercise of all dilutive stock options using thetreasury stock method and the lapsing of restrictions on unvested restrictedstock awards, for which the assumed proceeds upon lapsing the restrictions aredeemed to be the amount of compensation cost attributable to future servicesand not yet recognized using the treasury stock method, to the extent dilutive.For the years ended December 31, 2006, 2005 and 2004, all stock optionswere considered to be dilutive.

Thecomponents of the denominator for the calculation of basic earnings per shareand diluted earnings per share are as follows:
| ** **                                           | ** ** | **Year ended December 31,** | ** ** |
|------------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                           | ** ** | **2006**                                   | ** ** | **2005** | ** ** | **2004** | ** ** |
| Common shares  outstanding, basic:                   |       |                                       |       |   |   |   |   |
| Weighted average common shares outstanding, basic    |       | 31,471,809                                 |       | 37,164,321 |   | 37,049,266 |   |
|                                                 |       |                                       |       |   |   |   |   |
| Common shares  outstanding, diluted:                 |       |                                       |       |   |   |   |   |
| Weighted average common shares outstanding, basic    |       | 31,471,809                                 |       | 37,164,321 |   | 37,049,266 |   |
| Stock options                                        |       | 44,616                                     |       | 58,306 |   | 111,572 |   |
| Restricted stock awards                              |       | 701,003                                    |       | 651,751 |   | 653,091 |   |
|                                                 |       |                                       |       |   |   |   |   |
| Weighted average  common shares outstanding, diluted |       | 32,217,428                                 |       | 37,874,378 |   | 37,813,929 |   |

 

**4. SALE OF VESSELS**

During July 2004, the Company agreedto sell four of its single-hull Suezmax vessels in order to reduce the numberof single-hull vessels in the Company’s fleet. These vessels were sold duringAugust and October 2004 for aggregate net proceeds of approximately $84,182,for a gain on sale of vessels of $6,570.

During 2005, the Company agreed to sellits four single-hull Suezmax vessels, its six double-sided Suezmax vessels, itsone single-hull Aframax vessel and its six double-sided Aframax vessels inorder to transform the Company’s fleet to exclusively double-hull vessels. Inaddition, as of December 31, 2005, the Company reclassified its nine AframaxOBO vessels from Vessels to Vessels held for sale. The Company decided to sellthese vessels to reduce the average age of its fleet. Through December 31,2005, 13 of these vessels were delivered to their new owners for aggregate netproceeds of $334,663, and a net gain on sale of vessels of $91,235. Theaggregate book value of remaining three single-hull Suezmax vessels, onedouble-sided Aframax vessel and nine Aframax OBO vessels of $294,527 werecarried as Vessels held for sale on the Company’s 

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balance sheet as of December 31, 2005.The three single-hull Suezmax vessels and one double-sided Aframax vessel weredelivered to their new owners in January 2006.

During the year endedDecember 31, 2006, the Company delivered to their new owners all of the vesselsheld for sale as of December 31, 2005 for aggregate net proceeds of$340,901, and a net gain on sale of vessels of $46,022.

OnFebruary 10, 2006, the Company signed agreements to sell nine OBO Aframaxvessels. In connection with that decision, the Company determined one technicalmanagement office outside the U.S. would adequately service its current fleetand as such decided to close its office in Piraeus, Greece, operated by GeneralMaritime Management (Hellas) Ltd.

Thisoffice ceased its vessel operations during May 2006 and the Company anticipatesthat this office will be closed by mid 2007. The Company incurred approximately $1,300 of costs in connection withits closure during the year ended December 31, 2006, which has been classifiedas a component of general and administrative expense on the company’s statementof operations.  All of these costs havebeen paid as of December 31, 2006.

**5. PREPAID EXPENSES AND OTHER CURRENT ASSETS**

Prepaidexpenses and other current assets consist of the following:
| ** **                        | ** ** | **December 31,** | ** ** | **December 31,** | ** ** |
|-----------------------------------|------------|-----------------------|------------|-----------------------|------------|
| ** **                        | ** ** | **2006**              | ** ** | **2005**              | ** ** |
| Bunkers and  lubricants inventory |       | $                | 5,287      |                  | $     | 13,699 |   |
| Insurance claims  receivable      |       | 7,186                 |       | 9,447                 |       |
| Other                             |       | 4,644                 |       | 9,394                 |       |
| Total                             |       | $                     | 17,117     |                  | $          | 32,540 |   |

 

Insuranceclaims receivable consist substantially of payments made by the Company forrepairs of vessels that the Company expects to recover from insurance.

**6. OTHER FIXED ASSETS**

Otherfixed assets consist of the following:
| ** **                        | ** ** | **December 31,** | ** ** | **December 31,** | ** ** |
|-----------------------------------|------------|-----------------------|------------|-----------------------|------------|
| ** **                        | ** ** | **2006**              | ** ** | **2005**              | ** ** |
| Other fixed  assets:              |       |                  |       |                  |       |
| Furniture, fixtures and equipment |       | $                     | 4,115      |                  | $          | 4,113 |   |
| Vessel equipment                  |       | 4,976                 |       | 740                   |       |
| Computer equipment                |       | 1,153                 |       | 1,118                 |       |
| Total cost                        |       | 10,244                |       | 5,971                 |       |
|                              |       |                  |       |                  |       |
| Less:  accumulated depreciation   |       | 1,987                 |       | 759                   |       |
| Total                             |       | $                     | 8,257      |                  | $          | 5,212 |   |

 

**7. ACCOUNTS PAYABLE AND ACCRUED EXPENSES**

Accountspayable and accrued expenses consist of the following:
| ** **              | ** ** | **December 31,** | ** ** | **December 31,** | ** ** |
|-------------------------|------------|-----------------------|------------|-----------------------|------------|
| ** **              | ** ** | **2006**              | ** ** | **2005**              | ** ** |
| Accounts payable        |       | $                     | 4,384      |                  | $          | 11,756 |   |
| Accrued  operating      |       | 8,885                 |       | 16,463                |       |
| Accrued  administrative |       | 5,429                 |       | 4,687                 |       |
| Total                   |       | $                     | 18,698     |                  | $          | 32,906 |   |

 

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**8. LONG-TERM DEBT**

Long-termdebt consists of the following:
| ** **                               | ** ** | **December 31,** | ** ** | **December 31,** | ** ** |
|------------------------------------------|------------|-----------------------|------------|-----------------------|------------|
| ** **                               | ** ** | **2006**              | ** ** | **2005**              | ** ** |
| 2005 Credit  Facility                    |       | $                     | 50,000     |                  | $          | 135,000 |   |
| Senior Notes,  net of discount           |       | —                |       | 20                    |       |
| Total                                    |       | $                     | 50,000     |                  | $          | 135,020 |   |
|                                     |       |                  |       |                  |       |
| Less: Current  portion of long-term debt |       | —                |       | —                |       |
| Long-term debt                           |       | $                     | 50,000     |                  | $          | 135,020 |   |

 

**2005 Credit Facility**

OnOctober 26, 2005, the Company entered into an $800,000 revolving creditfacility (the “2005 Credit Facility”) with a syndicate of commercial lenders.The 2005 Credit Facility has been used to refinance the existing termborrowings under the Company’s 2004 Credit Facility described below (the “2005Refinancing”). Pursuant to the 2005 Refinancing, the Company repaid $175,000outstanding under the term loan of the Company’s 2004 Credit Facility primarilyby making an initial drawdown of $162,788 and using $13,050 cash held inescrow.

Upon consummating the 2005 Refinancing, unamortizeddeferred financing costs associated with the 2004 Credit Facility aggregating$5,660 were written off as a non-cash charge in October 2005. This non-cashcharge is classified as Other income (expense) on the statement of operations.In connection with the 2005 Refinancing, the Company incurred deferredfinancing costs of $4,565.

The2005 Credit Facility provides a four year nonamortizing revolving loan withsemiannual reductions of $44,500 beginning October 26, 2009 and a bulletreduction of $533,000 at the end of year seven. Up to $50,000 of the 2005 Credit Facility willbe available for the issuance of stand by letters of credit to supportobligations of the Company and its subsidiaries that are reasonably acceptableto the issuing lenders under the facility. As of December 31, 2006, the Companyhas outstanding letters of credit aggregating $5,658 which expire betweenJanuary and December 2007, leaving $44,342 available to be issued.

The2005 Credit Facility permits the Company to pay out dividends under its currentpolicy, repurchase shares of its common stock and repurchase the Company’sSenior Notes in accordance with its terms and conditions. This facility allowsthe Company to pay dividends or repurchase its common stock in an amount notexceeding the net proceeds from the sale of all non-collateralized vessels,including the 13 vessels the Company sold during November and December 2005 andthe 13 vessels the Company sold during 2006. In addition, the Company ispermitted to pay dividends with respect to any fiscal quarter up to an amountequal to EBITDA (as defined) for such fiscal quarter less fleet renewalreserves, which are established by the Company’s Board of Directors, netinterest expense and cash taxes, in the event taxes are paid, for such fiscalquarter.

The2005 Credit Facility carries an interest rate of LIBOR plus 75 basis points(or, depending on the Company’s long term foreign issuer credit rating andleverage ratio, 100 basis points) on the outstanding portion and a commitmentfee of 26.25 basis points on the unused portion. As of December 31, 2006, $50,000of the facility is outstanding. The facility is collateralized by 18 of theCompany’s double-hull vessels and its three new building Suezmax contracts,with carrying values as of December 31, 2006 of $592,686 and $77,416,respectively, as well as the Company’s equity interests in its subsidiariesthat own these assets, insurance proceeds of the collateralized vessels, andcertain deposit accounts related to the vessels. Each subsidiary of the Companywith an ownership interest in these vessels or which has otherwise guaranteedthe Company’s Senior Notes also provides an unconditional guaranty of amountsowing under the 2005 Credit Facility.

The Company’s ability to borrow amounts underthe 2005 Credit Facility is subject to satisfaction of certain customaryconditions precedent, andcompliance with terms and conditions included in the credit documents. The various covenants in the 2005 Credit Facility are generallyconsistent with the types of covenants that were applicable under the 2004 Credit Facility. These covenantsinclude, among other things, customary restrictions on the Company’s ability to incurindebtedness or grant liens, paydividends or make stock repurchases (except as otherwise permitted as describedabove), engage in businesses otherthan those engaged in on the effectivedate of the credit facility and similar or related businesses, enter into

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transactionswith affiliates, amend its governing documents or documentsrelated to its Senior Notes, and merge,consolidate, or dispose of assets.The Company is also required tocomply with various ongoing financial covenants, including with respect to the Company’s leverage ratio, minimum cashbalance, net worth, and collateral maintenance. If the Company does not comply with the various financial and other covenants andrequirements of the 2005 Credit Facility,the lenders may, subject to various customary cure rights, require theimmediate payment of all amounts outstanding under the facility.

During the years ended December 31, 2006 and 2005, the Company paid dividends of $160,440 and $110,404, respectively.

Interestrates during the year ended December 31, 2006 ranged from 5.13% to 6.19% on the2005 Credit Facility.

As of December31, 2005, the Company is in compliance with all of the financial covenantsunder its 2005 Credit Facility.

**2004 Credit Facility- Refinanced by the 2005Credit Facility**

On July 1,2004, the Company closed on an $825,000 senior secured bank financing facility(“2004 Credit Facility”) consisting of a term loan of $225,000 and a revolvingloan of $600,000. The term loan had a five year maturity at a rate of LIBORplus 1.0% and was to amortize on a quarterly basis with 19 payments of $10,000and one payment of $35,000. The revolving loan component, which did notamortize, had a five year maturity at a rate of LIBOR plus 1.0% on the usedportion and a 0.5% commitment fee on the unused portion.

Concurrentwith the closing of the 2004 Credit Facility, pursuant to which the Companyborrowed $225,000 under the term loan and $290,000 under the revolving creditfacility, the Company retired its then existing credit facilities (the “Refinancing”).At the time of the Refinancing, the 2004 Credit Facility was secured by the 42vessels which collateralized the then existing credit facilities and the fivevessels described in Note 2 which were acquired during 2004. In addition, eachof the Company’s subsidiaries which had an ownership interest in any vesselthat was secured by the 2004 Credit Facility had provided unconditionalguaranties of all amounts owing under the 2004 Credit Facility. Deferredfinancing costs incurred relating to the 2004 Credit Facility aggregated$6,905.

Uponconsummating the Refinancing, unamortized deferred financing costs associatedwith the then existing credit facilities aggregating $7,886 was written off asa non-cash charge in July 2004. This non-cash charge is classified asOther income (expense) on the statement of operations.

Under this credit facility, the Company was required to maintain certain ratios such as: vessel market values to total outstanding loans and undrawn revolving credit facilities, EBITDA to net interest expense and to maintain minimum levels of working capital.  In addition, the 2004 Credit Facility, as amended, permitted the Company to pay dividends with respect to any fiscal quarter up to an amount equal to EBITDA (as defined) for such fiscal quarter less fleet renewal reserves, which are established by the Company’s Board of Directors, net interest expense and cash taxes, in the event taxes are paid, for such fiscal quarter. Such amount was to be reduced to the extent that the aggregate amount permitted to be paid for dividends for all fiscal quarters since January 1, 2005 is a negative amount. However, the Company would not have been permitted to pay dividends if certain significant defaults as defined under the 2004 Credit Facility were to occur.

**InterestRate Swap Agreements**

In August andOctober 2001, the Company entered into interest rate swap agreements withforeign banks to manage interest costs and the risk associated with changinginterest rates. At their inception, these swaps had notional principal amountsequal to 50% the Company’s outstanding term loans under then existing creditfacilities. The notional principal amounts amortize at the same rate as theterm loans. The interest rate swap agreement entered into duringAugust 2001 hedged one of these credit facilities, to a fixed rate of6.25%. This swap agreement terminated on June 15, 2006. The interest rateswap agreement entered into during October 2001 hedged another of thesecredit facilities to a fixed rate of 5.485%. This swap agreement terminated onJune 27, 2006. The differential to be paid or received for these swapagreements was recognized as an adjustment to interest expense as incurredthrough June 30, 2005. The changes in the notional principal amounts of theswaps during the years ended December 31, 2005 and 2004 are as follows:

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| ** **                                    | ** ** | **December 31,** | ** ** | **December 31,** | ** ** |
|-----------------------------------------------|------------|-----------------------|------------|-----------------------|------------|
| ** **                                    | ** ** | **2006**              | ** ** | **2005**              | ** ** |
| Notional  principal amount, beginning of year |       | $                     | 19,500     |                  | $          | 45,500 |   |
| Amortization of  swaps                        |       | (19,500               | )          | (26,000               | )          |
| Notional principal  amount, end of the year   |       | $                     | —     |                  | $          | 19,500 |   |

 

The Companyhas determined that, through June 30, 2005, these interest rate swapagreements, which effectively hedged the Company’s First and Second CreditFacilities continued to effectively hedge, but not perfectly, the Company’s 2004Credit Facility. As of July 1, 2005, the Company stopped designating itsinterest rate swaps as a hedge.

Interestexpense pertaining to interest rate swaps for the years ended December 31,2006, 2005 and 2004 was $0, $338 and $1,873, respectively.

TheCompany would have received approximately $25 to settle all outstanding swapagreements based upon their aggregate fair values as of December 31, 2005. Thisfair value is based upon estimates received from financial institutions.

**SeniorNotes**

On March 20, 2003, the Company issued $250,000 of 10% Senior Noteswhich were due March 15, 2013 (the “Senior Notes”). Interest was paid onthe Senior Notes each March 15 and September 15. The Senior Noteswere general unsecured, senior obligations of the Company. The proceeds of theSenior Notes, prior to payment of fees and expenses, were $246,158. The SeniorNotes contained incurrence covenants which, among other things, restricted theCompany’s future ability to incur future indebtedness and liens, to apply theproceeds of asset sales freely, and to merge or undergo other changes ofcontrol and to pay dividends. The Senior Notes were guaranteed by all of theCompany’s present subsidiaries and future “restricted” subsidiaries (all ofwhich are 100% owned by the Company). These guarantees were full andunconditional and joint and several with the parent company General MaritimeCorporation. The parent company, General Maritime Corporation, has noindependent assets or operations. Additionally, certain defaults on other debtinstruments, such as failure to pay interest or principal when due, were deemedto be a default under the Senior Notes agreement.

Between September 23, 2005 and culminating on December 30,2005 with a cash tender offer, the Company purchased and retired $249,980 parvalue of its Senior Notes for cash payments aggregating $286,851. Pursuant tothese purchases, the Company recorded a loss of $40,753, which represents theamount by which the cash paid exceeds the carrying value of the Senior Notes aswell as associated brokerage and legal fees. In addition, the Company wrote offthe unamortized deferred financing costs associated with the Senior Notes of$5,025 as a non-cash charge. Both the loss on retirement and the write-off ofthe unamortized deferred financing costs are classified as Other income(expense) on the statement of operations.

In January 2006,pursuant to the completion of the cash tender offer, the second supplementalindenture entered into in connection with the Senior Notes (the “Second SupplementalIndenture”) became operative. The Second Supplemental Indenture amended theindenture under which the Senior Notes were issued (the “Indenture”), toeliminate substantially all of the restrictive covenants and certain defaultprovisions in the Indenture (the “Amendments”). The Amendments were bindingupon holders of the remaining Senior Notes who did not tender their SeniorNotes pursuant to the cash tender offer even though such holders have notconsented to the Amendments.

In May 2006, the Companypurchased and retired the remaining $20 par value of its Senior Notes, leavingnone outstanding as of December 31, 2006.

Based on borrowings as of December 31, 2006, none of the $50,000outstanding under the 2005 Credit Facility is due until 2012.

Interest expense underall of the Company’s credit facilities, Senior Notes and interest rate swapsaggregated $4,166, $32,400 and $38,831 for the years ended December 31, 2006,2005 and 2004, respectively.

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**9. DERIVATIVE FINANCIAL INSTRUMENTS**

As of December 31, 2006 and 2005, the Companyis party to the following derivative financial instruments:

*Interest rates. *The Company was party to two pay-fixedinterest rate swap agreements that expired in June 2006 which, throughJune 30, 2005, effectively converted floating rate obligations to fixedrate instruments. Effective during the third quarter of 2005, the Company hasstopped designating its interest rate swaps as a hedge. During the years endedDecember 31, 2006, 2005 and 2004, the Company recognized a derivative gain oncash flow hedge, a component of other comprehensive loss, to Accumulated othercomprehensive loss of $0, $545 and $1,935, respectively. The aggregate recordedasset (liability) in connection with the Company’s interest rate swaps as ofDecember 31, 2006 and 2005 was $0 and $25, respectively, and is presented as acomponent of Derivative liability on the balance sheet. The Company hasrecorded an aggregate net realized and unrealized gain (loss) of $8 and $76,for the years ended December 31, 2006 and 2005, respectively, which isclassified as Other income (expense) on the statement of operations.

*Foreign currency*.  The Company entered into, on July 19, 2005, aforward contract to acquire 5 million Euros on January 17, 2006 for$6,033. Changes in the fair value of this forward contract subsequent the dateon which the Company entered into the contract (at which time the fair valuewas $0) was recorded as Other income (expense) on the Company’s statement ofoperations. The Company entered into this contract to guard against weakeningin the dollar against the Euro. As of December 31, 2005, the Company hasrecorded a liability of $126 related to the fair market value of thisderivative financial instrument. The Company has recorded an aggregate net unrealizedgain (loss) of $126 and $(126), for the years ended December 31, 2006 and2005, which is classified as Other income (expense) on the statement ofoperations.

*Fuel. *During the year endedDecember 31, 2005, the Company entered into a “costless collar” to obtaina quantity of fuel between $220/metric ton (“MT”) and $300/MT. The Company usedthis derivative as an economic hedge to the Company, but did not designatedthis derivative as a hedge for accounting purposes. As such, changes in thefair value of the derivative were recorded to the Company’s statement of incomeeach reporting period. Under this agreement, the Company had a right to receive(call option) the amount by which the bunker price on a specified index exceeds$300/MT and an obligation to pay (put option) the amount by which $220/MTexceeds the bunker price on a specified index. The term was for a notional1,000 MT of bunkers per month for each month in the period betweenOctober 1, 2005 and March 31, 2006. As of December 31, 2005, theCompany recorded an asset of $12 related to the fair market value of thiseconomic hedge. The Company has recorded an aggregate net unrealized (loss)gain of $(12) and $12, respectively, for the years ended December 31, 2006and 2005, which is classified as Other income (expense) on the statement ofoperations.  In addition, the Companypaid $2 to the counterparty to settle this contract during the year endedDecember 31, 2006, which is classified as Other income (expense) on thestatement of operations.

*Freightrates. *During theyears ended December 31, 2006 and 2005, the Company has taken net shortpositions in freight derivative contracts, which reduce a portion of theCompany’s exposure to the spot charter market by creating synthetic timecharters. These freight derivative contracts involve contracts to provide afixed number of theoretical voyages at fixed rates.  These contracts net settle each month withthe Company receiving a fixed amount per day and paying a floating amount basedon the monthly Baltic Tanker Index (“BITR”), which is a worldscale index, and,under certain contracts, a specified bunker price index.  The duration of a contract can be one month,quarterly or up to three years with open positions settling on a monthly basis.The BITR averages rates received in the spot market by cargo type, crude oiland refined petroleum products, and by trade route.  The Company uses freight derivative contractsas economic hedges, but has not designated them as hedges for accountingpurposes. As such, changes in the fair value of these contracts are recorded tothe Company’s statement of operations as Other income (expense) in eachreporting period.

DuringSeptember and October 2005, the Company entered into four freightderivative contracts which expired in December 2005. These freight forwardcontracts involved contracts to provide a fixed number of theoretical voyagesat fixed rates and settled based on the monthly BITR. The Company had takenshort positions in these contracts, which reduced a portion of the Company’sexposure to the spot charter market by creating synthetic time charters. AtDecember 31, 2005, these contracts had no aggregate notional value, becausethey expired on December 31, 2005. The notional amount is based on acomputation of the quantity of cargo (or freight) the contract specifies, thecontract rate (based on a certain trade route) and a flat rate determined bythe market on an annual basis. Each contract is marked to market for thespecified cargo and trade route. The fair value of forward freight agreementsis the estimated amount that the Company would receive or pay to terminate theagreements at the reporting date. As of December 31, 2005, the Company hasrecorded a liability of $294 related to the fair market value of these economichedges. The Company has recorded the aggregate net realized and unrealized lossof $849, for the year ended December 31, 2005, which is classified asOther income (expense) on the statement of operations.

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DuringMay 2006, the Company entered into a freight derivative contract with theintention of fixing the equivalent of one Suezmax vessel to a time charterequivalent rate of $35,500 per day for a three year period beginning on July 1,2006.  This contract net settles eachmonth with the Company receiving $35,500 per day and paying a floating amountbased on the monthly BITR and a specified bunker price index.  As of December 31, 2006, the fair marketvalue of the freight derivative, which was determined based on the aggregatediscounted cash flows using estimated future rates obtained from brokers as ofDecember 31, 2006, resulted in an asset to the Company of $2,180.  The Company recorded an unrealized gain of$2,180 for the year ended December 31, 2006 which is reflected on the Company’sstatement of operations as Other income (expense).  The Company has recorded an aggregaterealized loss of $2,073 for the year ended December 31, 2006, which isclassified as Other income (expense) on the statement of operations.

**10. FAIR VALUE OF FINANCIAL INSTRUMENTS**

Theestimated fair values of the Company’s financial instruments are as follows:
| ** **                                                         | ** ** | **December 31, 2006** | ** ** | **December 31, 2005** | ** ** |
|--------------------------------------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| ** **                                                         | ** ** | **Carrying  Value**             | ** ** | **Fair  Value**                 | ** ** | **Carrying  Value** | ** ** | **Fair  Value** | ** ** |
| Cash                                                               |       | $                               | 107,460    |                            | $          | 107,460 |   | $ | 96,976 |   | $ | 96,976 |   |
| Floating rate debt                                                 |       | 50,000                          |       | 50,000                          |       | 135,000 |   | 135,000 |   |
| Senior Notes                                                       |       | —                          |       | —                          |       | 20 |   | 23 |   |
| Derivative financial  instruments - net asset (liability) position |       | 2,180                           |       | 2,180                           |       | (383 | ) | (383 | ) |
|                                                                    |            |                                 |            |                                 |            |  |  |  |  |  |  |  |  |

 

Thefair value of term loans and revolving credit facilities is estimated based oncurrent rates offered to the Company for similar debt of the same remainingmaturities. The carrying value approximates the fair market value for thevariable rate loans. The fair value of interest rate swaps (used for purposesother than trading) is the estimated amount the Company would pay to terminateswap agreements at the reporting date, taking into account current interestrates and the current credit-worthiness of the swap counter-parties.  The fair value of the freight derivative wasdetermined based on the aggregate discounted cash flows using estimated futurerates obtained from brokers. The fair value of the Senior Notes has beendetermined based quoted market prices as of December 31, 2005.

**11. REVENUE FROM TIME CHARTERS**

Totalrevenue earned on time charters for the years ended December 31, 2006, 2005 and2004 was $60,613, $86,225 and $87,944, respectively. Future minimum rentalreceipts, based on vessels committed to non-cancelable time charter contracts,as of December 31, 2006 will be $118,723, $101,280 and $74,454 during 2007, 2008 and 2009, respectively.

**12. LEASE PAYMENTS**

In February 2004, the Companyentered into an operating lease for an aircraft. The lease has a term of fiveyears and requires monthly payments by the Company of $125.  During the years ended December 31, 2006,2005 and 2004, the Company recorded $876, $1,500 and $1,340 of net expenseassociated with this lease.

In December 2004, the Company enteredinto a 15-year lease for office space in New York, New York. The monthly rentalis as follows: Free rent from December 1, 2004 to September 30, 2005, $110 permonth from October 1, 2005 to September 30, 2010, $119 per month from October1, 2010 to September 30, 2015, and $128 per month from October 1, 2015 toSeptember 30, 2020. The monthly straight-line rental expense from December 1,2004 to September 30, 2020 is $105. During the years ended December 31, 2006, 2005 and 2004, the Companyrecorded $1,255, $1,138 and $222 of expense associated with this lease.

Futureminimum rental payments on the above leases for the next five years are asfollows: 2007- $2,817, 2008- $2,817, 2009-$1,442, 2010- $1,344, 2011-$1,426,thereafter - $13,029.

**13. SIGNIFICANT CUSTOMERS**

Forthe years ended December 31, 2006 and 2005, the Company did not earn 10% ormore of its voyage revenues from any single customer. For the year endedDecember 31, 2004, the Company earned $108,034 from one customer whichrepresented 15.4% of voyage revenues.

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**14. RELATED PARTY TRANSACTIONS**

The following are related party transactions notdisclosed elsewhere in these financial statements:

Through April 2005, the Company rented officespace as its principal executive offices in a building leased by GenMar RealtyLLC, a company wholly owned by Peter C. Georgiopoulos, the Chairman and ChiefExecutive Officer of the Company. There was no lease agreement between theCompany and GenMar Realty LLC. The Company paid an occupancy fee on a month tomonth basis in the amount of $55. For the years ended December 31, 2006, 2005and 2004, the Company’s occupancy fees were $0, $220 and $660, respectively.

During the fourth quarter of 2000, the Companyloaned $486 to Peter C. Georgiopoulos. This loan does not bear interest and isdue and payable on demand. The full amount of this loan was outstanding as ofDecember 31, 2006.

Duringthe years ended December 31, 2006, 2005 and 2004, the Company incurred fees forlegal services aggregating $289, $150 and $284, respectively, to the father ofPeter C. Georgiopoulos, of which is $18 and $138 was outstanding as of December31, 2006 and 2005, respectively.

InJanuary 2006, the Company repurchased 4,176,756 shares of our common stockfrom OCM Principal Opportunities Fund, L.P. (“OCM”) in a privately negotiatedtransaction at $37.00 per share for a total purchase price of $154,540. StephenA. Kaplan, a member of the Company’s board of directors, serves as a principaland portfolio manager of Oaktree Capital Management LLC, which is the generalpartner of OCM.

GencoShipping & Trading Limited (“Genco”), an owner and operator of drybulk vessels, has incurred travel related expenditures for use of the Companyaircraft and other miscellaneous expenditures during the year ended December31, 2006, totaling $257, which was paid by Genco during 2006. Peter C. Georgiopoulosand Stephen A. Kaplan are directors of Genco. At December 31, 2006, none ofthis balance was outstanding.

Duringthe year ended December 31, 2006, Genco made available one of its employees whoperformed internal audit services for the Company for which the Company wasinvoiced $52 based on actual time spent by the employee, of which $25 remainsoutstanding as of December 31, 2006.

Duringthe years ended December 31, 2006, 2005 and 2004, Aegean Marine PetroleumNetwork, Inc. (“Aegean”)  supplied bunkersto the Company’s vessels aggregating $1,682, $5,945 and $707,respectively.  None of these balanceswere outstanding as of December 31, 2006 and 2005.  During July 2006, an investment vehicle controlledby Peter Georgiopoulos and John Tavlarios, a member of the Company’s board ofdirectors and the chief executive officer of General Maritime Management LLC (“GMM”),made an investment in and purchased shares of Aegean from Aegean’s principalshareholder.  During December 2006,Aegean completed its initial public offering. At that time, Peter Georgiopoulos became chairman of the board of Aegeanand John Tavlarios and John Hatab, a member of the Company’s board of directors,joined the board of directors of Aegean.

**15. SAVINGS PLAN**

InNovember 2001, the Company established a 401(k) Plan (the “Plan”) which isavailable to full-time employees who meet the Plan’s eligibility requirements.This Plan is a defined contribution plan, which permits employees to makecontributions up to 25 percent of their annual salaries with the Companymatching up to the first six percent. The matching contribution vestsimmediately. During 2006, 2005 and 2004, the Company’s matching contribution tothe Plan was $347, $354 and $272, respectively.

**16.STOCK-BASED COMPENSATION**

***2001Stock Incentive Plan***

OnJune 10, 2001, the Company adopted the General Maritime Corporation 2001Stock Incentive Plan. The aggregate number of shares of common stock availablefor award under the 2001 Stock Incentive Plan was increased from 2,900,000shares to 4,400,000 shares pursuant to an amendment and restatement of the planas of May 26, 2005. Under this plan the Company’s compensation committee,another designated committee of the board of directors or the board ofdirectors, may grant a variety of stock based incentive awards toemployees, directors and consultants whom the compensation committee (or othercommittee or the board of directors) believes are key to the Company’s success.The compensation

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committeemay award incentive stock options, nonqualified stock options, stockappreciation rights, dividend equivalent rights, restricted stock, unrestrictedstock and performance shares.

Sinceinception of the 2001 Stock Incentive Plan, the Company has issued stockoptions and restricted stock, which issuances are summarized below. Upon thegranting of stock options and restricted stock, the Company allocates newshares from its reserve of authorized shares to employees subject to themaximum shares permitted by the 2001 Stock Incentive Plan, as amended.

TheCompany’s policy for attributing the value of graded-vesting stock options andrestricted stock awards is to use an accelerated multiple-option approach.

***StockOptions***

During2001, 2002 and 2003, the Company granted to its officers and employees optionsto purchase 860,000, 143,500 and 89,000 shares of common stock, respectively.The exercise prices for these stock options granted in 2001 and 2002 are $18.00per share and $6.06 per share, respectively. The exercise prices for stockoptions granted in 2003 ranged from $8.73 per share to $14.58 per share. Theseoptions generally vest over a four year period.

During2002, 590,000 stock options granted in 2001 were surrendered. During 2003,50,000 stock options granted during 2002 were forfeited.

OnMay 20, 2004, the Company granted options to purchase an aggregate of20,000 shares of common stock to certain members of the Company’s board ofdirectors at an exercise price of $22.57 (the closing price on the date ofgrant). These options vest in four equal installments on each of the first fouranniversaries of the date of grant.

UntilDecember 31, 2005, the Company followed the provisions of APB 25 toaccount for its stock option plan. The Company provided pro forma disclosure ofnet income and earnings per share as if the accounting provision of SFASNo. 123 had been adopted. Options granted are exercisable at prices equalto the fair market value of such stock on the dates the options were granted,so the intrinsic value is $0. The fair values of the options were determined onthe date of grant using a Black-Scholes option pricing model. Estimated life ofoptions granted was estimated using the historical exercise behavior ofemployees. Expected volatility was based on historical volatility as calculatedusing various data points during the period between the Company’s initialpublic offering date and the date of grant. Risk free interest is based on theU.S. Treasury yield curve in effect at the time of grant. These options werevalued based on the following assumptions: an estimated life of five years forall options granted, volatility of 53%, 47%, 63% and 54% for options grantedduring 2004, 2003, 2002 and 2001, respectively, risk free interest rate of 3.85%,3.5%, 4.0% and 5.5% for options granted during 2004, 2003, 2002 and 2001,respectively, and no dividend yield for any options granted because, as of thegrant dates, the Company had not paid any dividends. The fair value of the860,000 options to purchase common stock granted on June 12, 2001 is $8.50per share.

Thefair value of the 143,500 options to purchase common stock granted onNovember 26, 2002 is $3.42 per share. The fair value of the 50,000, 12,500and 29,000 options to purchase common stock granted on May 5, 2003,June 5, 2003 and November 12, 2003 is $3.95 per share, $4.52 pershare, and $6.61 per share, respectively. The fair value of the 20,000 optionsto purchase common stock granted on May 20, 2004 is $11.22 per share.

EffectiveJanuary 1, 2006, the Company adopted Statement of Financial Standards (“SFAS”)No. 123R, *Share-Based Payments*using amodified version of prospective application. Accordingly, prior period amountshave not been restated.

Underthis transition method, for the portion of outstanding awards for which therequisite service has not yet been rendered, compensation cost of $113 will berecognized subsequent to the effective date based on the grant-date fair valueof those awards calculated under SFAS No. 123 for either recognition orpro forma disclosures. During the year ended December 31, 2006, the adoption ofFAS 123R resulted in incremental stock-based compensation expense of $81, whichreduced net income for the year by this amount and reduced basic earnings pershare by $0.01.

Asof December 31, 2006, there was $33 of total unrecognized compensation costrelated to nonvested stock option awards. That cost is expected to berecognized with a credit to paid-in capital over a weighted average period of  0.7 years.

Thefollowing table summarizes all stock option activity through December 31, 2006:

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| ** **                      | ** ** | ** **         | ** ** | **Weighted** | ** ** | ** **          | ** ** |
|---------------------------------|------------|--------------------|------------|--------------|------------|---------------------|------------|
| ** **                      | ** ** | ** **         | ** ** | **Average**  | ** ** | **Weighted**        | ** ** |
| ** **                      | ** ** | **Number of** | ** ** | **Exercise** | ** ** | **Average**         | ** ** |
| ** **                      | ** ** | **Options**        | ** ** | **Price**    | ** ** | **Fair Value** | ** ** |
|                            |       |               |       |         |       |                |       |
| Outstanding,  January 1, 2004   |       | 393,375            |       | 13.75        |       | $                   | 6.97       |   |
| Granted                         |       | 20,000             |       | 22.57        |       | $                   | 11.22      |   |
| Exercised                       |       | (186,850           | )          | 15.15        |       | $                   | 7.23       |   |
| Forfeited                       |       | (13,500            | )          | 16.86        |       | $                   | 7.82       |   |
| Outstanding,  December 31, 2004 |       | 213,025            |       | 13.68        |       | $                   | 6.13       |   |
| Granted                         |       | —             |       |         |       |                |       |
| Exercised                       |       | (106,825           | )          | 14.12        |       | $                   | 6.84       |   |
| Forfeited                       |       | (18,800            | )          | 9.05         |       | $                   | 4.99       |   |
| Outstanding,  December 31, 2005 |       | 87,400             |       | 13.76        |       | $                   | 6.78       |   |
| Granted                         |       | —             |       |         |       |                |       |
| Exercised                       |       | (60,900            | )          | 12.50        |       | $                   | 6.12       |   |
| Forfeited                       |       | (8,750             | )          | 17.55        |       | $                   | 8.57       |   |
| Outstanding, December  31, 2006 |       | 17,750             |       | 16.21        |       | $                   | 7.87       |   |

 

A summary of the activity for nonvested stock optionawards during the year ended of December 31, 2006 is as follows: 
| ** **                                    | ** ** | ** **         | ** ** | **Weighted**            | ** ** | **Weighted**        | ** ** |
|-----------------------------------------------|------------|--------------------|------------|-------------------------|------------|---------------------|------------|
| ** **                                    | ** ** | **Number of** | ** ** | **Average**             | ** ** | **Average**         | ** ** |
| ** **                                    | ** ** | **Options**        | ** ** | **Exercise Price** | ** ** | **Fair Value** | ** ** |
|                                          |       |               |       |                    |       |                |       |
| Outstanding and  nonvested, January 1, 2006   |       | 58,500             |       | 12.16                   |       | $                   | 6.09       |   |
|                                          |       |               |       |                    |       |                |       |
| Granted                                       |       | —             |       | —                  |       | —              |       |
| Vested                                        |       | (38,250            | )          | 9.04                    |       | $                   | 4.68       |   |
| Forfeited                                     |       | (6,875             | )          | 17.33                   |       | $                   | 8.46       |   |
|                                          |       |               |       |                    |       |                |       |
| Outstanding and  nonvested, December 31, 2006 |       | 13,375             |       | 18.42                   |       | $                   | 8.90       |   |

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The following table summarizes certain information aboutstock options outstanding as of December 31, 2006 (all of which are expected tovest): 
| ** **                                 | ** ** | ** **                                                     | ** ** | ** **                      | ** ** | ** **      | ** ** | **Options Exercisable,** | ** ** |
|--------------------------------------------|------------|----------------------------------------------------------------|------------|---------------------------------|------------|-----------------|------------|-------------------------------|------------|
| ** **                                 | ** ** | **Options Outstanding, December 31, 2006** | ** ** | **December 31, 2006** | ** ** |
| ** **                                 | ** ** | ** **                                                     | ** ** | ** **                      | ** ** | **Weighted**    | ** ** | ** **                    | ** ** | ** ** | ** ** |
| ** **                                 | ** ** | ** **                                                     | ** ** | ** **                      | ** ** | **Average**     | ** ** | ** **                    | ** ** | **Weighted** | ** ** |
| ** **                                 | ** ** | ** **                                                     | ** ** | **Weighted**                    | ** ** | **Remaining**   | ** ** | ** **                    | ** ** | **Average** | ** ** |
| ** **                                 | ** ** | **Number of**                                             | ** ** | **Average**                     | ** ** | **Contractual** | ** ** | **Number of**            | ** ** | **Exercise** | ** ** |
| **Range of Exercise Price** | ** ** | **Options**                                                    | ** ** | **Exercise Price**         | ** ** | **Life**        | ** ** | **Options**                   | ** ** | **Price** | ** ** |
|                                       |       |                                                           |       |                            |       |            |       |                          |       |   |   |
| $6.06                                      |       | 2,625                                                          |       | $                               | 6.06       |            | 5.9        |                          | 2,625      |   | $ | 6.06 |   |
| $9.9 - $14.58                              |       | 7,625                                                          |       | $                               | 13.45      |            | 6.7        |                          | 1,750      |   | $ | 14.58 |   |
| $18.00 - $22.57                            |       | 7,500                                                          |       | $                               | 22.57      |            | 7.4        |                          | —     |   | $ | — |   |
|                                       |       | 17,750                                                         |       | $                               | 16.21      |            | 6.9        |                          | 4,375      |   | $ | 9.47 |   |

 

*Restricted Stock*

During2002 and 2003, the Company granted 625,000 and 155,000 restricted shares,respectively, to certain officers and employees of the Company. Therestrictions on the shares granted in 2002 lapse seven years after the grantdate; the restrictions on the shares granted in 2003 lapse 25% on eachanniversary date from the date of grant and become fully vested after fouryears. The foregoing grants are subject to accelerated vesting under certaincircumstances set forth in the relevant grant agreement.

OnFebruary 9, 2005, the Company made grants of restricted common stock inthe amount of 304,500 shares to certain officers and employees of the Company.Of this total, 150,000, 10,000 and 10,000 restricted shares were granted to thechief executive officer (“CEO”), chief financial officer and chiefadministrative officer, respectively, of the Company and 50,000 restrictedshares were granted to the CEO of GMM. The remaining 84,500 restricted shareswere granted to other officers and employees of the Company and GMM. Therestrictions on the 150,000 shares granted to the CEO of the Company will lapseon November 16, 2014. The restrictions on the remaining 154,500 shareswill lapse as to 20% of these shares on November 16, 2005 and as to 20% ofthese shares on November 16 of each of the four years thereafter, and willbecome fully vested on November 16, 2009. The foregoing grants are subject toaccelerated vesting upon certain circumstances set forth in the relevant grantagreement.

OnApril 6, 2005, the Company granted to the CEO 350,000 shares of restrictedcommon stock, with restrictions on all such shares to lapse onDecember 31, 2014. The foregoing grants are subject to accelerated vestingupon certain circumstances set forth in the relevant grant agreement.

OnMay 26, 2005, the Company granted a total of 4,800 shares of restrictedcommon stock to four of the Company’s independent Directors. Restrictions onthe restricted stock lapsed in May 2006. The foregoing grants were subjectto accelerated vesting upon certain circumstances set forth in the relevantgrant agreement.

OnDecember 21, 2005, the Company made grants of restricted common stock inthe amount of 437,500 shares to certain officers and employees of the Company.Of this total, 250,000, 18,000 and 15,000 restricted shares were granted to theCEO, chief financial officer and chief administrative officer, respectively, ofthe Company and 50,000 restricted shares were granted to the president of GMM.The remaining 104,500 restricted shares were granted to other officers andemployees of the Company and GMM. The restrictions on the 250,000 sharesgranted to the CEO of the Company will lapse on November 15, 2015. Therestrictions on 93,000 shares (including shares granted to individuals namedabove, exclusive of the CEO) will lapse as to 20% of these shares onNovember 15, 2006 and as to 20% of these shares on November 15 ofeach of the four years thereafter, and will become fully vested on November 15,2010. The restrictions on the remaining 94,500 shares will lapse as to 25% ofthese shares on November 15, 2006 and as to 25% of these shares onNovember 15 of each of the three years thereafter, and will become fullyvested on November 15, 2009. The foregoing grants are subject toaccelerated vesting upon certain circumstances set forth in the relevant grantagreement.

On May 18, 2006, theCompany granted a total of 9,600 shares of restricted common stock to four ofthe Company’s independent Directors. Restrictions on the restricted stock willlapse, if at all, on May 18, 2007 or the date of the Company’s 2007 AnnualMeeting of Shareholders, whichever occurs first. The foregoing grants aresubject to accelerated vesting upon certain circumstances set forth in therelevant grant agreement.

 

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On October 23, 2006, theCompany granted 2,400 shares of restricted common stock to one of the Company’sindependent Directors.  Restrictions onthe restricted stock will lapse, if at all, on May 18, 2007 or the date ofthe Company’s 2007 Annual Meeting of Shareholders, whichever occurs first. Theforegoing grants are subject to accelerated vesting upon certain circumstancesset forth in the relevant grant agreement.

OnDecember 18, 2006, the Company made grants of restricted common stock inthe amount of 308,000 shares to certain officers and employees of theCompany.  Of this total, 150,000, 20,000and 10,000 restricted shares were granted to the CEO, chief financial officerand chief administrative officer, respectively, of the Company and 30,000restricted shares were granted to the president of GMM.  The remaining 98,000 restricted shares weregranted to other officers and employees of the Company and GMM. Therestrictions on the 150,000 shares granted to the CEO of the Company will lapseon November 15, 2016. The restrictions on 70,000 shares (including sharesgranted to individuals named above, exclusive of the CEO) will lapse as to 20%of these shares on November 15, 2007 and as to 20% of these shares onNovember 15 of each of the four years thereafter, and will become fullyvested on November 15, 2011. The restrictions on the remaining 88,000shares will lapse as to 25% of these shares on November 15, 2007 and as to25% of these shares on November 15 of each of the three years thereafter,and will become fully vested on November 15, 2010. The foregoing grantsare subject to accelerated vesting upon certain circumstances set forth in therelevant grant agreements.

Theweighted average grant-date fair value of restricted stock granted during theyears ended December 31, 2006 and 2005 is $35.53 per share and $44.45 pershare, respectively.

Asummary of the activity for restricted stock awards during the year ended ofDecember 31, 2006 is as follows:
| ** **                                   | ** ** | **Number of  Shares** | ** ** | **Weighted  Average  Fair Value** | ** ** |
|----------------------------------------------|------------|----------------------------|------------|----------------------------------------|------------|
|                                         |       |                       |       |                                   |       |
| Outstanding and  nonvested, January 1, 2006  |       | 1,757,000                  |       | $                                      | 29.49      |   |
|                                         |       |                       |       |                                   |       |
| Granted                                      |       | 320,000                    |       | 35.53                                  |       |
| Vested                                       |       | (109,375                   | )          | 33.25                                  |       |
| Forfeited                                    |       | (23,300                    | )          | 42.36                                  |       |
| Outstanding and nonvested, December 31, 2006 |       | 1,944,325                  |       | $                                      | 30.12      |   |

 

Thefollowing table summarizes the amortization, which will be included in generaland administrative expenses, of all of the Company’s restricted stock grants asof December 31, 2006:
| **Restricted Stock Grant Date** | ** ** | **2007** | ** ** | **2008** | ** ** | **2009** | ** ** | **2010** | ** ** | **2011** | ** ** | **Thereafter** | ** ** | **TOTAL** | ** ** |
|------------------------------------------------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------------|------------|-----------|------------|
|                                           |       |     |       |     |       |     |       |     |       |     |       |           |       |      |       |
| November 26,  2002                             |       | $        | 541        |     | $          | 541      |       | $        | 495        |     | $          | —         |       | $         | —     |   | $ | — |   | $ | 1,577 |   |
| November 12,  2003                             |       | 111      |       |     |       |     |       |     |       |     |       |           |       | 111       |       |
| February 9, 2005                               |       | 1,749    |       | 1,306    |       | 972      |       | 738      |       | 738      |       | 2,124          |       | 7,627     |       |
| April 5, 2005                                  |       | 1,749    |       | 1,754    |       | 1,749    |       | 1,749    |       | 1,749    |       | 5,251          |       | 14,001    |       |
| December 21,  2005                             |       | 2,683    |       | 1,947    |       | 1,450    |       | 1,101    |       | 973      |       | 3,774          |       | 11,928    |       |
| May 18, 2006                                   |       | 117      |       | —   |       | —   |       | —   |       | —   |       | —         |       | 117       |       |
| October 23, 2006                               |       | 56       |       | —   |       | —   |       | —   |       | —   |       | —         |       | 56        |       |
| December 18,  2006                             |       | 3,313    |       | 2,001    |       | 1,354    |       | 927      |       | 628      |       | 2,630          |       | 10,853    |       |
|                                           |       |     |       |     |       |     |       |     |       |     |       |           |       |      |       |
| Total by year                                  |       | 10,319   |       | $        | 7,549      |     | $          | 6,020    |       | $        | 4,515      |           | $          | 4,088     |       | $ | 13,779 |   | $ | 46,270 |   |
|                                                |            |          |            |          |            |          |            |          |            |          |            |                |            |           |            |  |  |  |  |  |  |  |

 

Asof December 31, 2006 and 2005, there was $46,270 and $45,516,respectively, of total unrecognized compensation cost related to nonvestedrestricted stock awards. As of December 31, 2006, this cost is expected to berecognized with a credit to paid-in capital over a weighted average period of3.9 years.

Totalcompensation cost recognized in income relating to amortization of restrictedstock awards for the years ended December 31, 2006, 2005 and 2004 was $9,625,$6,448 and $1,667, respectively.

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**17. STOCK REPURCHASE PROGRAM**

InOctober 2005, the Company’s Board of Directors approved a share repurchaseprogram for up to a total of $200,000 of the Company’s common stock. InFebruary 2006, the Company’s Board approved an additional $200,000 forrepurchases of the Company’s common stock under the share repurchaseprogram.  The Board will periodicallyreview the program. Share repurchases will be made from time to time for cashin open market transactions at prevailing market prices or in privatelynegotiated transactions. The timing and amount of purchases under the programwill be determined by management based upon market conditions and otherfactors. Purchases may be made pursuant to a program adopted underRule 10b5-1 under the Securities Exchange Act. The program does notrequire the Company to purchase any specific number or amount of shares and maybe suspended or reinstated at any time in the Company’s discretion and withoutnotice. Repurchases will be subject to restrictions under our 2005 CreditFacility.

ThroughDecember 31, 2006, the Company repurchased and retired 6,765,913 shares of itscommon stock for $243,845.  As ofDecember 31, 2006, the Company is permitted to acquire additional shares of itscommon stock for up to $156,155.

**18. LEGAL PROCEEDINGS**

Fromtime to time the Company has been, and expects to continue to be, subject tolegal proceedings and claims in the ordinary course of its business,principally personal injury and property casualty claims. Such claims, even iflacking merit, could result in the expenditure of significant financial andmanagerial resources. The Company is not aware of any legal proceedings orclaims that it believes will have, individually or in the aggregate, a materialadverse effect on the Company or on its financial condition or results ofoperations.

TheCompany has been cooperating in a criminal investigation being conducted by theU.S. Department of Justice relating to the alleged failure by the *Genmar Ajax* to record certain alleged illegal discharges ofoily waste between October 2004 and December 2004.  On December 15, 2004, following a routineCoast Guard inspection, U.S. Coast Guard officials took various documents, logsand records from the vessel for further review and analysis. During 2005, thecustodian of records for the *Genmar Ajax*received four subpoenas duces tecum requesting supplemental documentationpertaining to the vessel in connection with a pending grand jury investigation,all of which have been complied with. The Company has denied any wrongdoing in this matter by it or any of itsemployees but has been unable to negotiate an acceptable settlement.  On September 26, 2006, the Company received aletter from the U.S. Department of Justice stating that it may seek an indictmentagainst the Company’s General Maritime Management LLC subsidiary in connectionwith its investigation.  The Companyintends to defend any charges vigorously. However, there can be no assurance that the Company will be able toobtain a favorable resolution or satisfactory settlement.

OnFebruary 4, 2005, the *Genmar Kestrel*was involved in a collision with the Singapore-flag tanker Trijata, whichnecessitated the trans-shipment of the *Genmar Kestrel’s*cargoand drydocking the vessel for repairs. The incident resulted in the leakage ofsome oil to the sea. Due to a combination of prompt clean up efforts, a lightviscosity cargo onboard at the time of collision and favorable weatherconditions, the Company believes that the incident resulted in minimal environmentaldamage. On February 2, 2006, a demand for arbitration was made by StandardTankers Bahamas Ltd. (“Standard”), a subsidiary of Exxon Mobil Corporation, onits own behalf and on behalf of the owners of the cargo shipped on the *Genmar Kestrel*. The Company settled Standard’s claim bypaying Standard, on August 9, 2006, $1,250 relating to partial loss, damageand/or contamination of the cargo and agreeing to indemnify Standard for itsshare of salvage liabilities and related expenses of $1,180. This aggregate$2,430 expense is recorded on the Company’s December 31, 2006 statement ofoperations as Other expense, which is a component of operating expenses. Anyfuture liabilities recorded in connection with this incident (other than theamounts it has agreed to pay Standard) are generally covered by its insurancearrangements.

DuringSeptember 2006, the Company paid $11,750 to ST Shipping & Transport Inc. (“ST”)to settle customer claims in connection with the 24 month time chartercontracts for its nine OBO Aframax vessels. These arrangements required thatthe vessels meet specified speed and bunker consumption standards.  Pursuant to this settlement, ST cancelled the$16,250 letter of credit the Company had given ST pending the settlement of thematter.

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**19. UNAUDITED QUARTERLY RESULTSOF OPERATIONS**

In the opinion of theCompany’s management, all adjustments, consisting of normal recurringaccruals  considered necessary for a fairpresentation, have been included in a quarterly basis.
| ** **                            | ** ** | **2006 Quarter Ended** | ** ** | **2005 Quarter Ended** | ** ** |
|---------------------------------------|------------|----------------------------------|------------|----------------------------------|------------|
| ** **                            | ** ** | **March 31**                | ** ** | **June 30**                 | ** ** | **Sept. 30** | ** ** | **Dec. 31** | ** ** | **March 31** | ** ** | **June 30** | ** ** | **Sept. 30** | ** ** | **Dec. 31** | ** ** |
|                                  |       |                             |       |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Voyage revenues                       |       | $                                | 105,756    |                             | 75,959     |   | 77,648 |   | 66,621 |   | $ | 161,642 |   | $ | 135,475 |   | $ | 114,403 |   | $ | 156,381 |   |
| Operating income                      |       | 84,829                           |       | 26,214                           |       | 23,639 |   | 19,840 |   | 76,376 |   | 39,670 |   | 16,630 |   | 161,267 |   |
| Net Income                            |       | 84,357                           |       | 26,071                           |       | 23,995 |   | 22,408 |   | 68,491 |   | 32,061 |   | 7,177 |   | 104,628 |   |
|                                  |       |                             |       |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings Per  Common Share:           |       |                             |       |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                 |       | $                                | 2.58       |                             | $          | 0.83 |   | $ | 0.78 |   | $ | 0.73 |   | $ | 1.84 |   | $ | 0.86 |   | $ | 0.19 |   | $ | 2.83 |   |
| Diluted                               |       | $                                | 2.52       |                             | $          | 0.81 |   | $ | 0.76 |   | $ | 0.71 |   | $ | 1.80 |   | $ | 0.84 |   | $ | 0.19 |   | $ | 2.78 |   |
|                                  |       |                             |       |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted Average  Shares Outstanding: |       |                             |       |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                 |       | 32,756                           |       | 31,522                           |       | 30,927 |   | 30,710 |   | 37,216 |   | 37,237 |   | 37,273 |   | 36,932 |   |
| Diluted                               |       | 33,444                           |       | 32,209                           |       | 31,749 |   | 31,492 |   | 38,062 |   | 38,066 |   | 38,076 |   | 37,619 |   |

 

**20.  SHAREHOLDER RIGHTS PLAN**

OnDecember 2, 2005, the Company’s board of directors adopted a shareholder rightsplan and declared a dividend distribution of one Right for each outstandingshare of our common stock to shareholders of record on the close of business onDecember 7, 2005.  Each Right isnominally exercisable, upon the occurrence of certain events, for oneone-hundredth of a share of Series A Junior Participating Preferred Stock, parvalue $.01 per share, at a purchase price of $175.00 per unit, subject toadjustment.

**21. SUBSEQUENT EVENTS**

DuringJanuary 2007, the Company took delivery of one newly-constructed Suezmaxtanker.  Capitalized costs of this vesselover its construction period, inclusive of capitalized interest, wereapproximately $63,000. This vessel is one of the vessels collateralizing theCompany’s 2005 Credit Facility (see Note 8).

DuringFebruary 2007, the Company decided to close General Maritime Management (UK)LLC, which provides commercial management services for the Company’s vessels,due to the higher percentage of our fleet that is on long-term timecharter.  This office will cease itscommercial management activities by March 31, 2007.  The cost of closing this office, which willbe classified as a component of general and administrative expense whenrecognized during March 2007, will be approximately $160, substantiallyattributable to employee severance costs.

On February 20, 2007, theCompany entered into an agreement to amend its 2005 Credit Facility.  The 2005 Credit Facility, as amended, willincrease the total commitment of the lenders by $100,000 from $800,000 to$900,000.

Additionally, the Companywill be permitted to (1) pay quarterly cash dividends with respect to fiscalquarters on or after March 31, 2007, limited to $0.50 per share and (2) payadditional dividends, including stock buy-backs, in an aggregate amount not toexceed $50,000 plus 50% of cumulative net excess cash flow after February 16,2007.  In addition, the amendment willpermit the Company to declare a one-time special dividend of up to $15 pershare (up to an aggregate amount not to exceed $500,000) at any time prior toDecember 31, 2007.

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Under the 2005 CreditFacility, as amended, on and at any time after April 1, 2007, the leverageratio covenant will be eliminated and the minimum cash balance covenant will bereduced such that the Company will not be permitted to reduce the sum of (A)its unrestricted cash and cash equivalents plus (B) the lesser of (1) the totalavailable unutilized commitment and (2) $25,000, to be less than $50,000.Additionally, the Company has agreed to amend the minimum consolidated networth covenant whereby it will not permit its consolidated net worth at any timeprior to the business day preceding the payment of the one-time specialdividend to be less than $500,000.  Inaddition, the Company has agreed to a new covenant whereby it will not permitits net debt to EBITDA ratio to be greater than 5.5:1.00 on the last day of anyfiscal quarter at any time from April 1, 2007.

Additionally, the lendershave agreed to the dissolution of certain subsidiary guarantors that no longerown any vessels or material assets. All other material terms of the 2005 CreditFacility remain unchanged.

OnFebruary 20, 2007,  the Company’s boardof directors announced that the Company will be paying a quarterly dividend of$0.62 per share on or about March 23, 2007 to the shareholders of record as ofMarch 9, 2007. The aggregate amount of the dividend is expected to beapproximately $20,300, which we anticipate will be funded from cash on hand atthe time payment is to be made.

OnFebruary 21, 2007, the Company’s board of directors announced that the Companywill be paying a special dividend of $15.00 her share on our about March 23,2007 to shareholders of record as of March 9, 2007.  The aggregate amount of the dividend isexpected to be approximately $491,085, which we anticipate will be funded throughborrowings under our 2005 Credit Facility.

 

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| **ITEM 9.** | ** ** | **CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON  ACCOUNTING AND FINANCIAL DISCLOSURE** |
|-------------|------------|-------------------------------------------------------------------------------------------|

** **

No changes were made to,nor was there any disagreement with the Company’s independent auditorsregarding, the Company’s accounting or financial disclosure.

**ITEM 9A. CONTROLS AND PROCEDURES**

**EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES.**

Under the supervision and with the participation of our management,including the Chief Executive Officer and the Chief Financial Officer, weevaluated the effectiveness of the design and operation of our "disclosurecontrols and procedures" (as defined in Rule 13a-15(e) under theSecurities Exchange Act of 1934, as amended (the "Exchange Act")) asof the end of the period covered by this report. Based on that evaluation, ourChief Executive Officer and the Chief Financial Officer concluded that our disclosurecontrols and procedures were effective to ensure that the material informationrequired to be disclosed by us in the reports that we file or submit under theSecurities Exchange Act of 1934 is recorded, processed, summarized and reportedwithin the time periods specified in the rules and forms of the SEC.

 

**INTERNALCONTROL OVER FINANCIAL REPORTING**

**MANAGEMENTREPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING**

Our management is responsible for establishing andmaintaining adequate internal control over financial reporting. GeneralMaritime Corporation’s internal control over financial reporting is designed toprovide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles.

Our internal control over financial reporting includesthose policies and procedures that:

·                  Pertainto the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of General MaritimeCorporation;

·                  Providereasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally acceptedaccounting principles, and that our receipts and expenditures are being made onlyin accordance with authorizations of General Maritime Corporation’s managementand directors; and

·                  Providereasonable assurance regarding prevention or timely detection of unauthorizedacquisition, use or disposition of our assets that could have a material effecton the financial statements.

Because of its inherent limitations, internal controlover financial reporting may not prevent or detect misstatements. Also,projections of any evaluation of effectiveness to future periods are subject tothe risk that controls may become inadequate because of changes in conditions,or that the degree or compliance with the policies or procedures maydeteriorate.

Management assessed the effectiveness of GeneralMaritime Corporation’s internal control over financial reporting as of December31, 2006. In making this assessment, management used the criteria set forth bythe Committee of Sponsoring Organizations of the Treadway Commission (COSO) inInternal Control-Integrated Framework. Based on our assessment and thosecriteria, management believes that General Maritime Corporation maintainedeffective internal control over financial reporting as of December 31, 2006.

##### General Maritime Corporation’s independent registered public accountingfirm has audited and issued their report on management’s assessment of GeneralMaritime Corporation’s internal control over financial reporting, which appearsbelow.

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#####  

REPORT OF INDEPENDENTREGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

General Maritime Corporation

New York, New York

 

We have auditedmanagement’s assessment, included in the accompanying Management Report onInternal Control over Financial Reporting, that General Maritime Corporationand subsidiaries (the “Company”) maintained effective internal control overfinancial reporting as of December 31, 2006, based on criteria established inInternal Control—Integrated Framework issued by the Committee of SponsoringOrganizations of the Treadway Commission. The Company’s management is responsible for maintaining effectiveinternal control over financial reporting and for its assessment of theeffectiveness of internal control over financial reporting.  Our responsibility is to express an opinionon management’s assessment and an opinion on the effectiveness of the Company’sinternal control over financial reporting based on our audit.

We conducted our audit inaccordance with the standards of the Public Company Accounting Oversight Board(United States).  Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whethereffective internal control over financial reporting was maintained in allmaterial respects.  Our audit includedobtaining an understanding of internal control over financial reporting,evaluating management’s assessment, testing and evaluating the design andoperating effectiveness of internal control, and performing such otherprocedures as we considered necessary in the circumstances.  We believe that our audit provides areasonable basis for our opinions.

A company’s internalcontrol over financial reporting is a process designed by, or under thesupervision of, the company’s principal executive and principal financialofficers, or persons performing similar functions, and effected by the company’sboard of directors, management, and other personnel to provide reasonableassurance regarding the reliability of financial reporting and the preparationof financial statements for external purposes in accordance with generallyaccepted accounting principles.  Acompany’s internal control over financial reporting includes those policies andprocedures that (1) pertain to the maintenance of records that, in reasonabledetail, accurately and fairly reflect the transactions and dispositions of theassets of the company; (2) provide reasonable assurance that transactions arerecorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles, and that receipts andexpenditures of the company are being made only in accordance withauthorizations of management and directors of the company; and (3) providereasonable assurance regarding prevention or timely detection of unauthorizedacquisition, use, or disposition of the company’s assets that could have amaterial effect on the financial statements.

Because of the inherentlimitations of internal control over financial reporting, including thepossibility of collusion or improper management override of controls, materialmisstatements due to error or fraud may not be prevented or detected on atimely basis.  Also, projections of anyevaluation of the effectiveness of the internal control over financialreporting to future periods are subject to the risk that the controls maybecome inadequate because of changes in conditions, or that the degree ofcompliance with the policies or procedures may deteriorate.

In our opinion,management’s assessment that the Company maintained effective internal controlover financial reporting as of December 31, 2006, is fairly stated, in allmaterial respects, based on the criteria established in InternalControl—Integrated Framework issued by the Committee of SponsoringOrganizations of the Treadway Commission. Also in our opinion, the Company maintained, in all material respects,effective internal control over financial reporting as of December 31, 2006,based on the criteria established in Internal Control—Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, inaccordance with the standards of the Public Company Accounting Oversight Board(United States), the consolidated financial statements as of and for the yearended December 31, 2006 of the Company and our report dated March 1, 2007expressed an unqualified opinion on those financial statements.
| /s/ DELOITTE & TOUCHE LLP |
|-------------------------------|
|                          |
|                          |
| New York, New  York           |
| March 1, 2007                 |

 

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**CHANGES IN INTERNAL CONTROLS**

Therehave been no significant changes in our internal controls or in other factorsthat could have significantly affected internal controls over financialreporting that occurred during our most recent fiscal quarter (the fourth fiscalquarter) that have materially affected, or are reasonably likely to materiallyaffect, our internal controls over financial reporting.

**ITEM 9B. OTHER INFORMATION**

None.

**PART III**

**ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THEREGISTRANT**

Informationregarding General Maritime’s directors and executive officers is set forth inGeneral Maritime’s Proxy Statement for its 2007 Annual Meeting of Shareholdersto be filed with the Securities and Exchange Commission not later than 120 daysafter December 31, 2006 (the “2007 Proxy Statement”) and is incorporated byreference herein. Information relating to our Code of Conduct and Ethics and tocompliance with Section 16(a) of the 1934 Act is set forth in our 2007 ProxyStatement relating and is incorporated by reference herein.

We intend tosatisfy the disclosure requirements under Item 5.05 of Form 8-K regardingamendment to, or waiver from, a provision of the Code of Ethics for ChiefExecutive and Senior Financial Officers by posting such information on ourwebsite, www.generalmaritimecorp.com.

Pursuant toSection 303A.12(a) of the New York Stock Exchange Listed Company Manual,the Company submitted the Annual CEO Certification to the New York StockExchange during 2006.

**ITEM 11. EXECUTIVE COMPENSATION**

Informationregarding compensation of General Maritime’s executive officers and informationwith respect to Compensation Committee Interlocks and Insider Participation incompensation decisions is set forth in the 2007 Proxy Statement and isincorporated by reference herein.

**ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIALOWNERS AND MANAGEMENT**

Informationregarding the beneficial ownership of shares of General Maritime’s common stockby certain persons is set forth in the 2007 Proxy Statement and is incorporatedby reference herein.

**ITEM 13. CERTAIN RELATIONSHIPS AND RELATEDTRANSACTIONS**

Informationregarding certain transactions of General Maritime is set forth in the 2007Proxy Statement and is incorporated by reference herein.

**ITEM 14.PRINCIPAL ACCOUNTANT FEES AND SERVICES**

Informationregarding our accountant fees and services is set forth in the 2007 ProxyStatement and is incorporated by reference herein.

**PART IV**

**ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULESAND REPORTS ON FORM 8-K**

(a)           The following documents are filed asa part of this report:

| 1.  |   | The financial statements listed in the “Index to  Consolidated Financial Statements.” |
|-----|--------|-------------------------------------------------------------------------------------------------|
| 3.  |   | Exhibits:                                                                                       |
| 3.1 |   | Amended and Restated  Articles of Incorporation of General Maritime Ship Holdings Ltd.(1)       |

 

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| 3.2  |   | Articles of Amendment  to Amended and Restated Articles of Incorporation, changing name from General  Maritime Ship Holdings Ltd. to General Maritime Corporation.(1)                                                                                                                 |
|------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.3  |   | Amended and Restated  By-Laws of General Maritime Ship Holdings Ltd.(1)                                                                                                                                                                                                               |
| 3.4  |   | Amendment to By-Laws of  General Maritime Corporation.(2)                                                                                                                                                                                                                             |
| 3.5  |   | Certificate of  Designation of Series A Junior Participating Preferred Stock.(2)                                                                                                                                                                                                      |
| 4.1  |   | Form of Common Stock  Certificate of General Maritime Corporation.(3)                                                                                                                                                                                                                 |
| 4.2  |   | Form of Registration  Rights Agreement.(4)                                                                                                                                                                                                                                            |
| 4.3  |   | Form of 10% Senior  Global Notes Due 2013, issued pursuant to Rule 144A and Regulation S.(5)                                                                                                                                                                                          |
| 4.4  |   | Form of Indenture  relating to 10% Senior Notes, due 2013.(5)                                                                                                                                                                                                                         |
| 4.5  |   | First Supplemental  Indenture, dated December 29, 2005, by and among General Maritime  Corporation, certain subsidiaries of General Maritime Corporation and LaSalle  Bank National Association, as trustee.(6)                                                                       |
| 4.6  |   | Second Supplemental  Indenture, dated December 30, 2005, by and among General Maritime  Corporation, certain subsidiaries of General Maritime Corporation and LaSalle  Bank National Association, as trustee.(6)                                                                      |
| 4.7  |   | Amended and Restated  Rights Agreement, dated as of August 31, 2006, between General Maritime  Corporation and Mellon Investor Services LLC, as Rights Agent, together with  Exhibits A, B and C attached thereto.(7)                                                                 |
| 10.1 |   | Credit Agreement,  dated, July 1, 2004, among General Maritime Corporation, the Lenders party  thereto from time to time and Nordea Bank Finland PLC, New York Branch, as  Administrative Agent and Collateral Agent under the Security Documents.(8)                                 |
| 10.2 |   | First Amendment to  Credit Agreement, dated August 31, 2004, among General Maritime Corporation,  the Lenders party from time to time to the Credit Agreement and Nordea Bank  Finland PLC, New York Branch, as Sole Lead Arranger, Sole Bookrunner and  Administrative Agent.(8)     |
| 10.3 |   | Second Amendment to the  Credit Agreement, dated March 25, 2005, among General Maritime Corporation,  the Lenders party from time to time to the Credit Agreement and Nordea Bank  Finland PLC, New York Branch, as Sole Lead Arranger, Sole Bookrunner and  Administrative Agent.(9) |
| 10.4 |   | Subsidiaries Guaranty,  dated July 1, 2004, among the Guarantors set forth on the signature page  thereto and Nordea Bank Finland PLC, New York Branch, as Administrative  Agent.(8)                                                                                                  |
| 10.5 |   | Pledge and Security  Agreement, dated July 1, 2004, among the Pledgors set forth on the signature  page thereto and Nordea Bank Finland PLC, New York Branch, as Administrative  Agent, Pledgee and Deposit Account Bank.(8)                                                          |
| 10.6 |   | Cash Collateral Account  Agreement, dated August 31, 2004, among General Maritime Corporation, as  Assignor and Nordea Bank Finland PLC, New York Branch, as Deposit Account  Bank and Collateral Agent.(8)                                                                           |
| 10.7 |   | Form of First Preferred  Ship Mortgage on Marshall Islands Flag Vessel, related to Credit Agreement,  dated July 1, 2004.(8)                                                                                                                                                          |
| 10.8 |   | Form of First Preferred  Ship Mortgage on Liberian Flag Vessel, related to Credit Agreement, dated  July 1, 2004.(8)                                                                                                                                                                  |

 

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| 10.9  |   | Form of First Preferred  Ship Mortgage on Malta Flag Vessel, related to Credit Agreement, dated July  1, 2004.(8)                                 |
|-------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.10 |   | Amended and Restated  2001 Stock Incentive Plan, effective March 30, 2006.(10)                                                                    |
| 10.11 |   | Amendment to Amended  and Restated 2001 Stock Incentive Plan dated as of December 18, 2006.(*)                                                    |
| 10.12 |   | Form of Outside  Director Stock Option Grant Certificate.(1)                                                                                      |
| 10.13 |   | Form of Incentive Stock  Option Grant Certificate.(3)                                                                                             |
| 10.14 |   | Restricted Stock Grant  Agreement dated November 26, 2002 between General Maritime Corporation and  Peter C. Georgiopoulos.(11)                   |
| 10.15 |   | Restricted Stock Grant  Agreement dated November 26, 2002 between General Maritime Corporation and  John P. Tavlarios.(11)                        |
| 10.16 |   | Incentive Stock Option  Agreement dated November 26, 2002 between General Maritime Corporation and  John C. Georgiopoulos.(11)                    |
| 10.17 |   | Restricted Stock Grant  Agreement dated November 12, 2003 between General Maritime Corporation and  Peter C. Georgiopoulos.(11)                   |
| 10.18 |   | Restricted Stock Grant  Agreement dated November 12, 2003 between General Maritime Corporation and  John P. Tavlarios.(11)                        |
| 10.19 |   | Restricted Stock Grant  Agreement dated November 12, 2003 between General Maritime Corporation and  John C. Georgiopoulos.(11)                    |
| 10.20 |   | Stock Option Agreement  for Non-Employee Directors dated May 20, 2004 between General Maritime  Corporation and Andrew M. L. Cazalet.(11)         |
| 10.21 |   | Stock Option Agreement  for Non-Employee Directors dated May 20, 2004 between General Maritime  Corporation and William J. Crabtree.(11)          |
| 10.22 |   | Stock Option Agreement  for Non-Employee Directors dated May 20, 2004 between General Maritime  Corporation and Rex W. Harrington.(11)            |
| 10.23 |   | Stock Option Agreement  for Non-Employee Directors dated May 20, 2004 between General Maritime  Corporation and Peter S. Shaerf.(11)              |
| 10.24 |   | Agreement of Lease  between Fisher-Park Lane Owner LLC, and General Maritime Corporation dated as  of November 30, 2004. (11)                     |
| 10.25 |   | Restricted Stock Grant  Agreement dated February 9, 2005 between General Maritime Corporation and  Peter C. Georgiopoulos.(12)                    |
| 10.26 |   | Form of Restricted  Stock Grant Agreement dated February 9, 2005 between General Maritime  Corporation and certain senior executive officers.(12) |
| 10.27 |   | Employment Agreement  dated April 5, 2005, between General Maritime Corporation and Peter C.  Georgiopoulos.(13)                                  |
| 10.28 |   | Restricted Stock Grant  Agreement dated April 6, 2005, between General Maritime Corporation and Peter  C. Georgiopoulos.(13)                      |

 

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| 10.29 |   | Employment Agreement  dated April 22, 2005, between General Maritime Corporation and John P.  Tavlarios.(14)                                                                                                   |
|-------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.30 |   | Employment Agreement dated  April 22, 2005, between General Maritime Corporation and Jeffrey D.  Pribor.(14)                                                                                                   |
| 10.31 |   | Employment Agreement  dated April 22, 2005, between General Maritime Corporation and John C.  Georgiopoulos.(14)                                                                                               |
| 10.32 |   | General Maritime  Corporation Change of Control Severance Program for U.S. Employees.(14)                                                                                                                      |
| 10.33 |   | Credit Agreement dated  October 26, 2005, among General Maritime Corporation, Nordea Bank Finland  plc, New York Branch, DnB NOR Bank AG, New York Branch, and HSH Nordbank  ASA.(15)                          |
| 10.34 |   | First Amendment to  Credit Agreement dated June 28, 2006 among General Maritime Corporation,  Nordea Bank Finland plc, New York Branch, DnB NOR Bank AG, New York Branch,  and HSH Nordbank ASA.(16)           |
| 10.35 |   | Second Amendment to  Credit Agreement dated as of February 16, 2007, among General Maritime  Corporation, Nordea Bank Finland plc, New York Branch, Dnb NOR Bank AG, New  York Branch and HSH Nordbank ASA.(*) |
| 10.36 |   | Agreement and General  Release dated November 22, 2005, between John M. Ramistella and General  Maritime Management LLC.(17)                                                                                   |
| 10.37 |   | Restricted Stock Grant  Agreement dated December 21, 2005 between General Maritime Corporation and  Peter C. Georgiopoulos.(18)                                                                                |
| 10.38 |   | Form of Restricted  Stock Grant Agreement dated December 21, 2005 between General Maritime  Corporation and certain senior executive officers.(18)                                                             |
| 10.39 |   | Restricted Stock Grant  Agreement dated May 18, 2006 between General Maritime Corporation and John O.  Hatab. (*)                                                                                              |
| 10.40 |   | Restricted Stock Grant  Agreement dated May 18, 2006 between General Maritime Corporation and Rex W.  Harrington. (*)                                                                                          |
| 10.41 |   | Restricted Stock Grant  Agreement dated May 18, 2006 between General Maritime Corporation and William  J. Crabtree. (*)                                                                                        |
| 10.42 |   | Restricted Stock Grant  Agreement dated May 18, 2006 between General Maritime Corporation and Peter  S. Shaerf. (*)                                                                                            |
| 10.43 |   | Restricted Stock Grant  Agreement dated October 23, 2006 between General Maritime Corporation and  Stephen A. Kaplan. (*)                                                                                      |
| 10.44 |   | Restricted Stock Grant  Agreement dated December 18, 2006 between General Maritime Corporation and  John P. Tavlarios. (*)                                                                                     |
| 10.45 |   | Restricted Stock Grant  Agreement dated December 18, 2006 between General Maritime Corporation and  Jeffrey D. Pribor. (*)                                                                                     |
| 10.46 |   | Restricted Stock Grant  Agreement dated December 18, 2006 between General Maritime Corporation and  John C. Georgiopoulos. (*)                                                                                 |
| 10.47 |   | Restricted Stock Grant  Agreement dated December 18, 2006 between General Maritime Corporation and  Peter C. Georgiopoulos. (*)                                                                                |

 

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| 10.48 |   | Form of Restricted  Stock Grant Agreement dated December 18, 2006. (*)                                                                                   |
|-------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.49 |   | Form of Restricted  Stock Grant Agreement dated December 18, 2006. (*)                                                                                   |
| 10.50 |   | Share Repurchase  Agreement between the Company and OCM Capital Opportunities Fund, L.P. dated  January 4, 2006.(19)                                     |
| 12.1  |   | Computation of Ratio of  Earnings to Fixed Charges.(*)                                                                                                   |
| 21.1  |   | Subsidiaries of General  Maritime Corporation.(*)                                                                                                        |
| 23.1  |   | Consent of Independent  Registered Public Accounting Firm.(*)                                                                                            |
| 31.1  |   | Certification of Chief  Executive Officer pursuant to Rule 13(a)—14(a) and 15(d)—14(a) of the  Securities Exchange Act of 1934, as amended.(*) |
| 31.2  |   | Certification of Chief  Financial Officer pursuant to Rule 13(a)—14(a) and 15(d)—14(a) of the  Securities Exchange Act of 1934, as amended.(*) |
| 32.1  |   | Certification of Chief  Executive Officer pursuant to 18 U.S.C. Section 1350.(*)                                                                         |
| 32.2  |   | Certification of Chief  Financial Officer pursuant to 18 U.S.C. Section 1350.(*)                                                                         |

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(*)                                 Filedherewith.

(1)                                  Incorporatedby reference to Amendment No. 5 to General Maritime’s Registration Statement onForm S-1, filed with the Securities and Exchange Commission on June 12, 2001.

(2)                                  Incorporatedby reference to General Maritime’s Report on Form 8-K filed with the Securitiesand Exchange Commission on December 7, 2005.

(3)                                  Incorporatedby reference to Amendment No. 4 to General Maritime’s Registration Statement onForm S-1, filed with the Securities and Exchange Commission on June 6, 2001.

(4)                                  Incorporatedby reference to Amendment No. 3 to General Maritime’s Registration Statement onForm S-1, filed with the Securities and Exchange Commission on May 25, 2001.

(5)                                  Incorporatedby reference to General Maritime’s Form S-4 filed with the Securities andExchange Commission on June 20, 2003.

(6)                                  Incorporatedby reference to General Maritime’s Report on Form 8-K filed with the Securitiesand Exchange Commission on December 30, 2005.

(7)                                  Incorporatedby reference to General Maritime’s Report on Form 8-K filed with the Securitiesand Exchange Commission on September 7, 2006.

(8)                                  Incorporatedby reference to General Maritime’s Quarterly Report on Form 10-Q filed with theSecurities and Exchange Commission on November 9, 2004.

(9)                                  Incorporatedby reference to General Maritime’s Report on Form 8-K filed with the Securitiesand Exchange Commission on March 29, 2005.

(10)                            Incorporatedby reference to General Maritime’s Report on Form 8-K filed with the Securitiesand Exchange Commission on March 30, 2006.

(11)                            Incorporatedby reference to General Maritime’s Annual Report on Form 10-K filed with theSecurities and Exchange Commission on March 16, 2005.

(12)                            Incorporatedby reference to General Maritime’s Quarterly Report on Form 10-Q filed with theSecurities and Exchange Commission on May 10, 2005.

(13)                            Incorporatedby reference to General Maritime’s Annual Report on Form 10-K filed with theSecurities and Exchange Commission on April 7, 2005.

(14)                            Incorporatedby reference to General Maritime’s Annual Report on Form 8-K filed with theSecurities and Exchange Commission on April 26, 2005.

(15)                            Incorporatedby reference to General Maritime’s Quarterly Report on Form 10-Q filed with theSecurities and Exchange Commission on November 9, 2005.

(16)                            Incorporatedby reference to General Maritime’s Report on Form 8-K filed with the Securitiesand Exchange Commission on June 30, 2006.

(17)                            Incorporatedby reference to General Maritime’s Annual Report on Form 10-K filed with theSecurities and Exchange Commission on November 29, 2005.

 

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(18)                            Incorporatedby reference to General Maritime’s Report on Form 10-K filed with theSecurities and Exchange Commission on March 14, 2006.

(19)                            Incorporatedby reference to General Maritime’s Report on Form 10-Q filed with theSecurities and Exchange Commission on May 9, 2006.

SIGNATURES

Pursuant to therequirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, theregistrant has duly caused this report to be signed on its behalf by theundersigned, thereunto duly authorized.

 
|        |   | GENERAL MARITIME CORPORATION |
|--------|--------|------------------------------|
|   |   |                         |
|   |   | By:                          |   | /s/ Peter C.  Georgiopoulos |   |
|   |   |                         |   | Name: Peter C. Georgiopoulos |
|   |   |                         |   | Title: Chairman and Chief Executive Officer |

 

Pursuant to therequirements of the Securities Exchange Act of 1934, this report has beensigned by the following persons on behalf of the registrant and in the capacityand on March 1, 2007.

 
| SIGNATURE                   | ** **             | **TITLE**                                        |
|-----------------------------|------------------------|--------------------------------------------------|
|                        |                   |                                             |   |   |   |   |
| /s/ Peter C.  Georgiopoulos |                   | CHAIRMAN, CHIEF EXECUTIVE OFFICER, PRESIDENT AND |
|                        | Peter C. Georgiopoulos |                                             |     DIRECTOR  (PRINCIPAL EXECUTIVE OFFICER) |
|                        |                   |                                             |   |   |   |   |
|                        |                   |                                             |   |   |   |   |
| /s/ Jeffrey  D. Pribor      |                   | VICE PRESIDENT AND CHIEF FINANCIAL OFFICER       |
|                        | Jeffrey D. Pribor      |                                             |     (PRINCIPAL  FINANCIAL AND ACCOUNTING OFFICER) |
|                        |                   |                                             |   |   |   |   |
|                        |                   |                                             |   |   |   |   |
| /s/ John P.  Tavlarios      |                   | DIRECTOR                                         |   |   |
|                        | John P. Tavlarios      |                                             |   |   |   |
|                        |                   |                                             |   |   |   |   |
|                        |                   |                                             |   |   |   |   |
| /s/ William  J. Crabtree    |                   | DIRECTOR                                         |   |   |
|                        | William J. Crabtree    |                                             |   |   |   |
|                        |                   |                                             |   |   |   |   |
|                        |                   |                                             |   |   |   |   |
| /s/ Rex W.  Harrington      |                   | DIRECTOR                                         |   |   |
|                        | Rex W. Harrington      |                                             |   |   |   |
|                        |                   |                                             |   |   |   |   |
|                        |                   |                                             |   |   |   |   |
| /s/ John O.  Hatab          |                   | DIRECTOR                                         |   |   |
|                        | John O. Hatab          |                                             |   |   |   |
|                        |                   |                                             |   |   |   |   |
|                        |                   |                                             |   |   |   |   |
| /s/ Stephen  A. Kaplan      |                   | DIRECTOR                                         |   |   |
|                        | Stephen A. Kaplan      |                                             |   |   |   |
|                        |                   |                                             |   |   |   |   |
|                        |                   |                                             |   |   |   |   |
| /s/ Peter S.  Shaerf        |                   | DIRECTOR                                         |   |   |
|                        | Peter S. Shaerf        |                                             |   |   |   |
|                             |                        |                                                  |  |  |  |  |  |

 

 

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