UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 20-F

(Mark One)





|o | REGISTRATION
STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------------





OR





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





| | For the fiscal year endedDecember 31, 2013
| | ------------------------------------------





OR





|o | TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------







| | For the transition period from _________________ to _________________
| | ---------------------------------------------------------------------





OR





|o | SHELL COMPANY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | -------------------------------------------------------------------------------------------





| | Date of event requiring this shell company report _________________
| | -------------------------------------------------------------------





Commission file number: 001-34677



|SCORPIO TANKERS INC.                                                                        
|--------------------------------------------------------------------------------------------
|(Exact name of Registrant as specified in its charter)                                      
|                                                                                            
|                                                                                            
|(Translation of Registrant’s name into English)                                             
|                                                                                            
|                                                                                            
|Republic of the Marshall Islands                                                            
|(Jurisdiction of incorporation or organization)                                             
|                                                                                            
|                                                                                            
|9, Boulevard Charles III Monaco 98000                                                       
|(Address of principal executive offices)                                                    
|                                                                                            
|                                                                                            
|Mr. Emanuele Lauro                                                                          
|+377-9898-5716
        info@scorpiotankers.com
        9, Boulevard Charles III Monaco 98000
|(Name, Telephone, E-mail and/or Facsimile, and address of Company Contact Person)           



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



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











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



|NONE            
|----------------
|(Title of class)



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



|NONE            
|----------------
|(Title of class)



Indicate the number of outstanding shares of
each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.



As of December 31, 2013, there were 198,791,502 outstanding shares
of common stock, par value $0.01 per share.



Indicate by check mark if the registrant is
a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.





| | Yes | X |  | No |  | 
| | --- | - |  | -- |  | 
| |     |   |  |    |  | 



If this report is an annual or transition report, indicate by check
mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.





| | Yes | X |  | No |  | 
| | --- | - |  | -- |  | 
| |     |   |  |    |  | 





Note – Checking the box above will not
relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their
obligations under those Sections.



Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.





| | Yes | X |  | No |  | 
| | --- | - |  | -- |  | 
| |     |   |  |    |  | 



Indicate by check mark whether the registrant
has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files).





| | Yes | X |  | No |  | 
| | --- | - |  | -- |  | 
| |     |   |  |    |  | 



Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer or a non-accelerated filer. See the definitions of “large accelerated
filer” and “accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):



| | Large accelerated filer  x |  | Accelerated filer  o |  | Non-accelerated filer  o
| | -------------------------- |  | -------------------- |  | ------------------------











Indicate by check mark which basis of accounting
the registrant has used to prepare the financial statements included in this filing:



|  |  | U.S. GAAP                                                                                            
|- |  | -----------------------------------------------------------------------------------------------------
|  |  |                                                                                                      
|X |  | International Financial Reporting Standards as issued by the international Accounting Standards Board
|  |  |                                                                                                      
|  |  | Other                                                                                                



If “Other” has been checked in
response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:





| |  | Item 17 |  |  | Item 18 | 
| |  | ------- |  |  | ------- | 
| |  |         |  |  |         | 



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





| | Yes | X |  | No |  | 
| | --- | - |  | -- |  | 
| |     |   |  |    |  | 











TABLE OF CONTENTS

|PART I   | 1        
|-------- | ---------
|         | ITEM 1.  
|         | ITEM 2.  
|         | ITEM 3.  
|         | ITEM 4.  
|         | ITEM 4A. 
|         | ITEM 5.  
|         | ITEM 6.  
|         | ITEM 7.  
|         | ITEM 8.  
|         | ITEM 9.  
|         | ITEM 10. 
|         | ITEM 11. 
|         | ITEM 12. 
|PART II  | 92       
|         | ITEM 13. 
|         | ITEM 14. 
|         | ITEM 15. 
|         | ITEM 16A.
|         | ITEM 16B.
|         | ITEM 16C.
|         | ITEM 16D.
|         | ITEM 16E.
|         | ITEM 16F.
|         | ITEM 16G.
|         | ITEM 16H.
|PART III | 95       
|         | ITEM 17. 
|         | ITEM 18. 
|         | ITEM 19. 











CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS

Matters discussed
in this report may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor
protections for forward-looking statements in order to encourage companies to provide prospective information about their business.
Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and
underlying assumptions and other statements, which are other than statements of historical facts. We desire to take advantage of
the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in
connection with this safe harbor legislation. The words “believe,” “anticipate,” “intends,”
“estimate,” “forecast,” “project,” “plan,” “potential,” “may,”
“should,” “expect,” “pending” and similar expressions identify forward-looking statements.

The forward-looking
statements in this report are based upon various assumptions, many of which are based, in turn, upon further assumptions, including
without limitation, our management’s examination of historical operating trends, data contained in our records and other
data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions
are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond
our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections.

In addition to
these important factors, other important factors that, in our view, could cause actual results to differ materially from those
discussed in the forward-looking statements include the failure of counterparties to fully perform their contracts with us, the
strength of world economies and currencies, general market conditions, including fluctuations in charter rates and vessel values,
changes in demand for tanker vessel capacity, changes in our operating expenses, including bunker prices, drydocking and insurance
costs, the market for our vessels, availability of financing and refinancing, charter counterparty performance, ability to obtain
financing and comply with covenants in such financing arrangements, changes in governmental rules and regulations or actions taken
by regulatory authorities, potential liability from pending or future litigation, general domestic and international political
conditions, potential disruption of shipping routes due to accidents or political events, vessels breakdowns and instances of
off-hires and other factors described from time to time in the reports we file with the Securities and Exchange Commission,
or SEC. We caution readers of this report not to place undue reliance on these forward-looking statements, which speak only
as of their dates. We undertake no obligation to update or revise any forward-looking statements. These forward looking statements
are not guarantees of our future performance, and actual results and future developments may vary materially from those projected
in the forward looking statements. Please see our Risk Factors in Item 3.D of this annual report for a more complete discussion
of these and other risks and uncertainties.









PART I

ITEM 1.	IDENTITY OF
DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2.	OFFER STATISTICS
AND EXPECTED TIMETABLE

Not applicable.

ITEM 3.	KEY INFORMATION

Unless the context
otherwise requires, when used in this annual report, the terms “Scorpio Tankers,” the “Company,” “we,”
“our” and “us” refer to Scorpio Tankers Inc. and its subsidiaries. “Scorpio Tankers Inc.” refers
only to Scorpio Tankers Inc. and not its subsidiaries. Unless otherwise indicated, all references to “dollars,” “US
dollars” and “$” in this annual report are to the lawful currency of the United States. We use the term deadweight
tons, or dwt, expressed in metric tons, each of which is equivalent to 1,000 kilograms, in describing the size of tankers.

A.	Selected Financial Data

The following tables
set forth our selected consolidated financial data and other operating data as of and for the years ended December 31, 2013, 2012,
2011, 2010 and 2009. The selected data is derived from our audited consolidated financial statements, which have been prepared
in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board
(IASB). Our audited consolidated financial statements for the years ended December 31, 2013,2012
and 2011 and our consolidated balance sheets as of December 31, 2013 and 2012, together with the notes thereto, are included herein.
Our audited consolidated financial statements for the years ended December 31, 2010 and 2009 and our consolidated balance sheets
as of December 31, 2011, 2010 and 2009, and the notes thereto, are not included herein.

We began our operations
in October 2009, when Liberty Holding Company Ltd., or Liberty, a wholly-owned subsidiary of Simon Financial Limited, or Simon,
a company owned and controlled by the Lolli-Ghetti family, of which our founder, Chairman and Chief Executive Officer, Mr. Emanuele
Lauro, is a member, transferred to us three vessel owning and operating subsidiaries. Prior to October 1, 2009, our historical
consolidated financial statements were prepared on a carve-out basis from the financial statements of Liberty. These carve-out
financial statements include all assets, liabilities and results of operations of the three vessel-owning subsidiaries owned by
us, formerly subsidiaries of Liberty, for the periods presented. Prior to October 1, 2009, certain of the expenses incurred by
these subsidiaries for commercial, technical and administrative management services were under management agreements with other
entities owned and controlled by the Lolli-Ghetti family, which we refer to collectively as the Scorpio Group, consisting of: (i)
Scorpio Ship Management S.A.M., or SSM; and Scorpio Commercial Management S.A.M., or SCM; which provide us and third parties with
technical and commercial management services, respectively; (ii) Liberty, which provided us with administrative services until
March 13, 2012 when the administrative services agreement was assigned to Scorpio Services Holding Limited, or SSH, a company owned
and controlled by the Lolli-Ghetti family; and (iii) other affiliated entities. Since agreements with related parties are by definition
not at arms length, the expenses incurred under these agreements may have been different than the historical costs incurred if
the subsidiaries had operated as unaffiliated entities during prior periods. Our estimates of any differences between historical
expenses and the expenses that may have been incurred had the subsidiaries been stand-alone entities during 2009 have been disclosed
in the notes to our historical consolidated financial statements for the year ended December 31, 2009 which are not presented herein.

1





|                                                                   |  | For the year ended December 31,
|------------------------------------------------------------------ |  | -------------------------------
|In thousands of U.S. dollars except per share and share data       |  | 2013                           
|Consolidated income statement data                                 |  |                                
|Revenue:                                                           |  |                                
|Vessel revenue                                                     |  | $                              
|Operating expenses:                                                |  |                                
|Vessel operating costs                                             |  |                                
|Voyage expenses                                                    |  |                                
|Charterhire                                                        |  |                                
|Impairment (1)                                                     |  |                                
|Depreciation                                                       |  |                                
|General and administrative expenses                                |  |                                
|Write down of vessels held for sale and loss from sales of vessels |  |                                
|Gain on sale of VLGCs                                              |  |                                
|Total operating expenses                                           |  |                                
|Operating income/(loss)                                            |  |                                
|Other income and expense:                                          |  |                                
|Financial expenses                                                 |  |                                
|Realized gain / (loss) on derivative financial instruments         |  |                                
|Unrealized gain / (loss) on derivative financial instruments       |  |                                
|Financial income                                                   |  |                                
|Share of profit from associate                                     |  |                                
|Other expense, net                                                 |  |                                
|Total other income and expense                                     |  |                                
|Net income/(loss)                                                  |  | $                              
|Earnings/(loss) per common share(2):                               |  |                                
|Basic earnings / (loss) per share                                  |  | $                              
|Diluted earnings / (loss) per share                                |  | $                              
|Basic weighted average shares outstanding                          |  |                                
|Diluted weighted average shares outstanding                        |  |                                



2





|                                   |  | As of December 31,
|---------------------------------- |  | ------------------
|In thousands of U.S. dollars       |  | 2013              
|Balance sheet data                 |  |                   
|Cash and cash equivalents          |  | $                 
|Vessels and drydock                |  |                   
|Vessels under construction         |  |                   
|Total assets                       |  |                   
|Current and non-current bank loans |  |                   
|Shareholders’ equity               |  |                   





|                             |  | For the year ended December 31,
|---------------------------- |  | -------------------------------
|In thousands of U.S. dollars |  | 2013                           
|Cash flow data               |  |                                
|Net cash inflow/(outflow)    |  |                                
|Operating activities         |  | $                              
|Investing activities         |  |                                
|Financing activities         |  |                                



| | (1) | In the years ended December 31, 2011 and December 31, 2009, we recorded an
    impairment charge of $66.6 million for 12 owned vessels and $4.5 million for two owned vessels, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (2) | Basic earnings per share is calculated by dividing the net income/(loss) attributable to
    equity holders of the parent by the weighted average number of common shares outstanding assuming, for the period prior to
    October 1, 2009 when our historical consolidated financial statements were prepared on a carve-out basis, that the
    reorganization described above was effective during the period. Diluted earnings per share are calculated by adjusting the
    net income/(loss) attributable to equity holders of the parent and the weighted average number of common shares used for
    calculating basic earnings per share for the effects of all potentially dilutive shares. Such potentially dilutive common
    shares are excluded when the effect would be to increase earnings per share or reduce a loss per share.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     



3





The following table sets
forth our other operating data. This data should be read in conjunction with “Item 5. Operating and Financial Review and
Prospects.”



|                                                        |  | For the year ended December 31,
|------------------------------------------------------- |  | -------------------------------
|                                                        |  | 2013                           
|                                                        |  |                                
|Average Daily Results                                   |  |                                
|Time charter equivalent per day(1)                      |  | $                              
|Vessel operating costs per day(2)                       |  |                                
|                                                        |  |                                
|Aframax/LR2                                             |  |                                
|TCE per revenue day(1)                                  |  |                                
|Vessel operating costs per day(2)                       |  |                                
|                                                        |  |                                
|Panamax/LR1                                             |  |                                
|TCE per revenue day(1)                                  |  |                                
|Vessel operating costs per day(2)                       |  |                                
|                                                        |  |                                
|MR                                                      |  |                                
|TCE per revenue day(1)                                  |  |                                
|Vessel operating costs per day(2)                       |  |                                
|                                                        |  |                                
|Handymax                                                |  |                                
|TCE per revenue day(1)                                  |  |                                
|Vessel operating costs per day(2)                       |  |                                
|                                                        |  |                                
|Fleet data                                              |  |                                
|Average number of owned vessels (3)                     |  |                                
|Average number of time chartered-in vessels (3)         |  |                                
|                                                        |  |                                
|Drydock                                                 |  |                                
|Expenditures for drydock (in thousands of U.S. dollars) |  |                                



| | (1) | Freight rates are commonly measured
                                         in the shipping industry in terms of time charter equivalent per revenue day. Vessels
                                         in the pool and on time charter do not have voyage expenses; therefore, the revenue for
                                         pool vessels and time charter vessels is the same as their TCE revenue. Please see “Item
                                         5. Operating and Financial Review and Prospects—A. Operating Results—Important
                                         Financial and Operational Terms and Concepts” for a discussion of TCE revenue,
                                         revenue days and voyage expenses.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Vessel operating costs per day represent
                                         vessel operating costs, as such term is defined in “Item 5. Operating and
                                         Financial Review and Prospects—A. Operating Results—“Important Financial
                                         and Operational Terms and Concepts,” divided by the number of days the vessel is
                                         owned during the period.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | For a definition of items listed under “Fleet Data,” please see the section of this
annual report entitled “Item 5. Operating and Financial Review and Prospects.”
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------





4





B.	Capitalization and Indebtedness

Not applicable.

C.	Reasons for the Offer and Use of Proceeds

Not applicable.

D.	Risk Factors

The following
risks relate principally to the industry in which we operate and our business in general. Other risks relate principally to the
securities market and ownership of our common stock. The occurrence of any of the events described in this section could significantly
and negatively affect our business, financial condition, operating results or cash available for dividends or the trading price
of our common shares.

RISKS RELATED TO OUR INDUSTRY

If the tanker industry, which historically has been
cyclical, continues to be depressed in the future, our earnings and available cash flow may be adversely affected.

The tanker industry
is both cyclical and volatile in terms of charter rates and profitability. While the first quarter of 2014 has seen an increase
in tanker charter rates relative to the rates obtained since the financial crisis that began in 2008, a worsening of current global
economic conditions may cause tanker charter rates to decline and thereby adversely affect our ability to charter or recharter
our vessels or to sell them on the expiration or termination of their charters, and the rates payable in respect of our vessels
currently operating in tanker pools, or any renewal or replacement charters that we enter into, may not be sufficient to allow
us to operate our vessels profitably. Fluctuations in charter rates and vessel values result from changes in the supply and demand
for tanker capacity and changes in the supply and demand for oil and oil products. The factors affecting the supply and demand
for tankers are outside of our control, and the nature, timing and degree of changes in industry conditions are unpredictable.

The factors that
influence demand for tanker capacity include:

| | · | supply and demand for energy resources and oil and petroleum products;
| | - | ----------------------------------------------------------------------

| | · | regional availability of refining capacity and inventories;
| | - | -----------------------------------------------------------

| | · | global and regional economic and political conditions, including armed conflicts, terrorist activities, and strikes;
| | - | --------------------------------------------------------------------------------------------------------------------

| | · | the distance oil and oil products are to be moved by sea;
| | - | ---------------------------------------------------------

| | · | changes in seaborne and other transportation patterns;
| | - | ------------------------------------------------------

| | · | environmental and other legal and regulatory developments;
| | - | ----------------------------------------------------------

| | · | weather and natural disasters;
| | - | ------------------------------

| | · | competition from alternative sources of energy; and
| | - | ---------------------------------------------------

| | · | international sanctions, embargoes, import and export restrictions, nationalizations and wars.
| | - | ----------------------------------------------------------------------------------------------

The factors that
influence the supply of tanker capacity include:

| | · | supply and demand for energy resources and oil and petroleum products;
| | - | ----------------------------------------------------------------------

| | · | 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;
| | - | ----------------------------------------------

| | · | environmental concerns and regulations; and
| | - | -------------------------------------------

| | · | port or canal congestion.
| | - | -------------------------



5





We are dependent on spot-oriented
pools and spot charters and any decrease in spot charter rates in the future may adversely affect our earnings.

As of the date of
this annual report, all of our vessels except one are employed in either the spot market or in spot market-oriented tanker pools,
such as the Scorpio LR2 Pool, Scorpio Panamax Tanker Pool, the Scorpio MR Pool, or the Scorpio Handymax Tanker Pool, which we refer
to collectively as the Scorpio Group Pools and which are managed members of the Scorpio Group, exposing us to fluctuations in spot
market charter rates. The spot charter market may fluctuate significantly based upon tanker and oil supply and demand. The successful
operation of our vessels in the competitive spot charter market, including within the Scorpio Group Pools, depends on, among other
things, obtaining profitable spot charters and minimizing, to the extent possible, time spent waiting for charters and time spent
traveling unladen to pick up cargo. The spot market is very volatile, and, in the past, there have been periods when spot charter
rates have declined below the operating cost of vessels. If future spot charter rates decline, then we may be unable to operate
our vessels trading in the spot market profitably, meet our obligations, including payments on indebtedness, or pay dividends in
the future. Furthermore, as charter rates for spot charters are fixed for a single voyage which may last up to several weeks, during
periods in which spot charter rates are rising, we will generally experience delays in realizing the benefits from such increases.

Our ability to renew
expiring charters or obtain new charters will depend on the prevailing market conditions at the time. If we are not able to obtain
new charters in direct continuation with existing charters, or if new charters are entered into at charter rates substantially
below the existing charter rates or on terms otherwise less favorable compared to existing charter terms, our revenues and profitability
could be adversely affected.

An over-supply of tanker capacity may lead to a reduction
in charter rates, vessel values, and profitability.

The market
supply of tankers is affected by a number of factors, such as supply and demand for energy resources, including oil and
petroleum products, supply and demand for seaborne transportation of such energy resources, and the current and expected
purchase orders for newbuildings. If the capacity of new tankers delivered exceeds the capacity of tankers being scrapped
and converted to non-trading tankers, tanker capacity will increase. According to Drewry Shipping Consultants Ltd., or
Drewry, as of January 31, 2014, the newbuilding order book, which extends to 2016 and beyond, equaled approximately 12.5% of
the existing world tanker fleet and the order book may increase further in proportion to the existing fleet. If the supply of
tanker capacity increases and if the demand for tanker capacity does not increase correspondingly or declines, charter rates
could materially decline. A reduction in charter rates and the value of our vessels may have a material adverse effect on our
results of operations and available cash.

Acts of piracy on ocean-going vessels could adversely
affect our business.

Acts of piracy have
historically affected ocean-going vessels trading in regions of the world such as the South China Sea, the Indian Ocean and in
the Gulf of Aden. Although the frequency of sea piracy worldwide decreased during 2013 to its lowest level since 2009, sea piracy
incidents continue to occur, particularly in the Gulf of Aden off the coast of Somalia and increasingly in the Gulf of Guinea,
with drybulk vessels and tankers particularly vulnerable to such attacks. If these piracy attacks result in regions in which our
vessels are deployed being characterized by insurers as “war risk” zones by insurers or Joint War Committee “war
and strikes” listed areas, premiums payable for such coverage could increase significantly and such insurance coverage may
be more difficult to obtain. In addition, crew costs, including costs which may be incurred to the extent we employ onboard security
guards, could increase in such circumstances. We may not be adequately insured to cover losses from these incidents, which could
have a material adverse effect on us. In addition, detention hijacking as a result of an act of piracy against our vessels, or
an increase in cost, or unavailability of insurance for our vessels, could have a material adverse impact on our business, results
of operations, cash flows and financial condition and may result in loss of revenues, increased costs and decreased cash flows
to our customers, which could impair their ability to make payments to us under our charters.

The current state of the global
financial markets and current economic conditions may adversely impact our ability to obtain additional financing on acceptable
terms and otherwise negatively impact our business.

Global financial
markets and economic conditions have been, and continue to be, volatile. In recent years, operating businesses in the global economy
have faced tightening credit, weakening demand for goods and services, deteriorating international liquidity conditions, and declining
markets. There has been a general decline in the willingness of banks and other financial institutions to extend credit, particularly
in the shipping industry, due to the historically volatile asset values of vessels. As the shipping industry is highly dependent
on the availability of credit to finance and expand operations, it has been negatively affected by this decline.

6





Also, as a result
of concerns about the stability of financial markets generally and the solvency of counterparties specifically, the cost of obtaining
money from the credit markets has increased as many lenders have increased interest rates, enacted tighter lending standards, refused
to refinance existing debt at all or on terms similar to current debt and reduced, and in some cases ceased to provide funding
to borrowers. Due to these factors, additional financing may not be available if needed and to the extent required on acceptable
terms or at all. If additional financing is not available when needed, or is available only on unfavorable terms, we may be unable
to expand our fleet or meet our obligations as they become due or we may be unable to enhance our existing business, complete additional
vessel acquisitions or otherwise take advantage of business opportunities as they arise.

Changes in fuel, or bunkers, prices may adversely affect
profits.

Fuel, or bunkers,
is typically the largest expense in our shipping operations for our vessels and changes in the price of fuel may adversely affect
our profitability. The price and supply of fuel is unpredictable and fluctuates based on events outside our control, including
geopolitical developments, supply and demand for oil and gas, actions by the Organization of the Petroleum Exporting Countries,
or OPEC, and other oil and gas producers, war and unrest in oil producing countries and regions, regional production patterns and
environmental concerns. Further, fuel may become much more expensive in the future, which may reduce the profitability.

We are subject to complex laws and regulations, including
environmental laws and regulations that can adversely affect our business, results of operations, cash flows and financial condition,
and our available cash.

Our operations are
subject to numerous laws and regulations in the form of international conventions and treaties, national, state and local laws
and national and international regulations in force in the jurisdictions in which our vessels operate or are registered, which
can significantly affect the ownership and operation of our vessels. These requirements include, but are not limited to, the U.S.
Oil Pollution Act of 1990, or OPA, the U.S. Comprehensive Environmental Response, Compensation and Liability Act of 1980, or CERCLA,
requirements of the U.S. Coast Guard and the U.S. Environmental Protection Agency, or EPA, the U.S. Clean Air Act, U.S. Clean Water
Act and the U.S. Marine Transportation Security Act of 2002, European Union Regulation, and regulations of the International Maritime
Organization, or the IMO, including the International Convention for the Prevention of Pollution from Ships of 1973, as from time
to time amended and generally referred to as MARPOL including the designation of Emission Control Areas thereunder, the IMO International
Convention for the Safety of Life at Sea of 1974, as from time to time amended and generally referred to as SOLAS, the International
Convention on Load Lines of 1966, as from time to time amended,, the International Convention of Civil Liability for Oil Pollution
Damage of 1969, as from time to time amended and generally referred to as CLC, the International Convention on Civil Liability
for Bunker Oil Pollution Damage, and the International Ship and Port Facility Security Code. Compliance with such laws and regulations,
where applicable, may require installation of costly equipment or operational changes and may affect the resale value or useful
lives of our vessels. We may also incur additional costs in order to comply with other existing and future regulatory obligations,
including, but not limited to, costs relating to air emissions including greenhouse gases, the management of ballast and bilge
waters, maintenance and inspection, elimination of tin-based paint, development and implementation of emergency procedures and
insurance coverage or other financial assurance of our ability to address pollution incidents. The 2010 Deepwater Horizon
oil spill in the Gulf of Mexico may also result in additional regulatory initiatives or statutes or changes to existing laws that
may affect our operations or require us to incur additional expenses to comply with such regulatory initiatives, statutes or laws.

These costs could
have a material adverse effect on our business, results of operations, cash flows and financial condition and our available cash.
A failure to comply with applicable laws and regulations may result in administrative and civil penalties, criminal sanctions or
the suspension or termination of our operations. Environmental laws often impose strict liability for remediation of spills and
releases of oil and hazardous substances, which could subject us to liability without regard to whether we were negligent or at
fault. Under OPA, for example, owners, operators and bareboat charterers are jointly and severally strictly liable for the discharge
of oil within the 200-nautical mile exclusive economic zone around the United States (unless the spill results solely from the
act or omission of a third party, an act of God or an act of war). An oil spill could result in significant liability, including
fines, penalties, criminal liability and remediation costs for natural resource damages under other international and U.S. federal,
state and local laws, as well as third-party damages, including punitive damages, and could harm our reputation with current or
potential charterers of our tankers. We are required to satisfy insurance and financial responsibility requirements for potential
oil (including marine fuel) spills and other pollution incidents. Although we have arranged insurance to cover certain environmental
risks, there can be no assurance that such insurance will be sufficient to cover all such risks or that any claims will not have
a material adverse effect on our business, results of operations, cash flows and financial condition and available cash.

If we fail to comply with international safety regulations, we
may be subject to increased liability, which may adversely affect our insurance coverage and may result in a denial of access to,
or detention in, certain ports.



The operation of our vessels is affected by
the requirements set forth in the IMO’s International Management Code for the Safe Operation of Ships and Pollution Prevention,
or the ISM Code, promulgated by the IMO under the International Convention for the Safety of Life at Sea of 1974, or SOLAS. The
ISM Code requires the party with operational control of a vessel to develop and maintain an extensive “Safety Management
System” that includes, among other things, the adoption of a safety and environmental protection policy setting forth instructions
and procedures for safe operation and describing procedures for dealing with emergencies. If we fail to comply with the ISM Code,
we may be subject to increased liability, may invalidate existing insurance or decrease available insurance coverage for our affected
vessels and such failure may result in a denial of access to, or detention in, certain ports.



7





Adverse market conditions could cause us to breach covenants
in our credit facilities and adversely affect our operating results.

The market values
of tankers have generally experienced high volatility. The market prices for tankers declined significantly from historically high
levels reached in early 2008 and remain at relatively low levels. You should expect the market value of our vessels to fluctuate
depending on general economic and market conditions affecting the shipping industry and prevailing charterhire rates, competition
from other tanker companies and other modes of transportation, types, sizes and ages of vessels, applicable governmental regulations
and the cost of newbuildings. We believe that the current aggregate market value of our vessels will be in excess of loan to value
amounts required under our credit facilities. Please see “Item 5. Operating and Financial Review and Prospects.”

A decrease in vessel
values or a failure to meet these financial ratios required by our credit facilities could cause us to breach certain covenants
in our existing credit facilities and future financing agreements that we may enter into from time to time. If we breach such
covenants and are unable to remedy the relevant breach or obtain a waiver, our lenders could accelerate our debt and foreclose
on our owned vessels. Additionally, if we sell one or more of our vessels at a time when vessel prices have fallen, the sale price
may be less than the vessel’s carrying value on our consolidated financial statements, resulting in a loss on sale or an
impairment loss being recognized, ultimately leading to a reduction in earnings. For the year ended December 31, 2013, we evaluated
the recoverable amount of our vessels and we did not recognize an impairment loss, however we did record a $21.2 million write-down
resulting from the designation of four vessels, Senatore, Noemi, Venice and STI Spirit as held for sale. For the
year ended December 31, 2012, we evaluated the recoverable amount of our vessels and we did not recognize an impairment loss,
however we did record a $10.4 million total loss from disposal on the sales of the STI Conqueror, STI Gladiator, STI
Matador, STI Diamond and STI Coral. See “—Risks Related to Our Indebtedness” and “Item 5. Operating
and Financial Review and Prospects — B. Liquidity and Capital Resources - Long-Term Debt Obligations and Credit
Arrangements” for a more comprehensive discussion of our current credit facilities and the related risks.

If our vessels suffer damage due
to the inherent operational risks of the tanker industry, we may experience unexpected drydocking costs and delays or total loss
of our vessels, which may adversely affect our business and financial condition.

The operation of
an ocean-going vessel carries inherent risks. Our vessels and their cargoes will be at risk of being damaged or lost because of
events such as marine disasters, bad weather, and other acts of God, business interruptions caused by mechanical failures, grounding,
fire, explosions and collisions, human error, war, terrorism, piracy and other circumstances or events. Changing economic, regulatory
and political conditions in some countries, including political and military conflicts, have from time to time resulted in attacks
on vessels, mining of waterways, piracy, terrorism, labor strikes and boycotts. These hazards may result in death or injury to
persons, loss of revenues or property, the payment of ransoms, environmental damage, higher insurance rates, damage to our customer
relationships, and market disruptions, delay or rerouting, which may also subject us to litigation. In addition, the operation
of tankers has unique operational risks associated with the transportation of oil. An oil spill may cause significant environmental
damage, and the associated costs could exceed the insurance coverage available to us. Compared to other types of vessels, tankers
are exposed to a higher risk of damage and loss by fire, whether ignited by a terrorist attack, collision, or other cause, due
to the high flammability and high volume of the oil transported in tankers.

If our vessels suffer
damage, they may need to be repaired at a drydocking facility. The costs of drydock repairs are unpredictable and may be substantial.
We may have to pay drydocking costs that our insurance does not cover in full. The loss of revenues while these vessels are being
repaired and repositioned, as well as the actual cost of these repairs, may adversely affect our business and financial condition.
In addition, space at drydocking facilities is sometimes limited and not all drydocking facilities are conveniently located. We
may be unable to find space at a suitable drydocking facility or our vessels may be forced to travel to a drydocking facility that
is not conveniently located to our vessels’ positions. The loss of earnings while these vessels are forced to wait for space
or to travel to more distant drydocking facilities may adversely affect our business and financial condition. Further, the total
loss of any of our vessels could harm our reputation as a safe and reliable vessel owner and operator. If we are unable to adequately
maintain or safeguard our vessels, we may be unable to prevent any such damage, costs, or loss which could negatively impact our
business, financial condition, results of operations and available cash.

We operate our vessels worldwide
and as a result, our vessels are exposed to international risks which may reduce revenue or increase expenses.

The international
shipping industry is an inherently risky business involving global operations. Our vessels and their cargoes will be at risk of
being damaged or lost because of events such as marine disasters, bad weather, and other acts of God, business interruptions caused
by mechanical failures, grounding, fire, explosions and collisions, human error, war, terrorism, piracy and other circumstances
or events. In addition, changing economic, regulatory and political conditions in some countries, including political and military
conflicts, have from time to time resulted in attacks on vessels, mining of waterways, piracy, terrorism, labor strikes and boycotts.
These sorts of events could interfere with shipping routes and result in market disruptions which may reduce our revenue or increase
our expenses.

8





International shipping
is subject to various security and customs inspection and related procedures in countries of origin and destination and trans-shipment
points. Inspection procedures can result in the seizure of the cargo and/or our vessels, delays in the loading, offloading or delivery
and the levying of customs duties, fines or other penalties against us. It is possible that changes to inspection procedures could
impose additional financial and legal obligations on us. Furthermore, changes to inspection procedures could also impose additional
costs and obligations on our customers and may, in certain cases, render the shipment of certain types of cargo uneconomical or
impractical. Any such changes or developments may have a material adverse effect on our business, results of operations, cash flows,
financial condition and available cash.

Political instability, terrorist
or other attacks, war or international hostilities can affect the tanker industry, which may adversely affect our business.

We conduct most
of our operations outside of the United States, and our business, results of operations, cash flows, financial condition and available
cash may be adversely affected by the effects of political instability, terrorist or other attacks, war or international hostilities.
Continuing conflicts and recent developments in the Middle East, including Egypt, and North Africa, including Libya, and the presence
of the United States and other armed forces in Afghanistan may lead to additional acts of terrorism and armed conflict around the
world, which may contribute to further world economic instability and uncertainty in global financial markets. As a result of the
above, insurers have increased premiums and reduced or restricted coverage for losses caused by terrorist acts generally. Future
terrorist attacks could result in increased volatility of the financial markets and negatively impact the U.S. and global economy.
These uncertainties could also adversely affect our ability to obtain additional financing on terms acceptable to us or at all.

In the past, political
instability has also resulted in attacks on vessels, such as the attack on the M/T Limburg,a very large crude carrier not
related to us, in October 2002, mining of waterways and other efforts to disrupt international shipping, particularly in the Arabian
Gulf region. Acts of terrorism and piracy have also affected vessels trading in regions such as the South China Sea and the Gulf
of Aden off the coast of Somalia. Any of these occurrences could have a material adverse impact on our business, financial condition,
results of operations and available cash.

If our vessels call on ports located in countries that
are subject to sanctions and embargos imposed by the U.S. or other governments that could adversely affect our reputation and the
market for our common stock.

Although no vessels
owned or operated by us have called on ports located in countries subject to sanctions and embargoes imposed by the U.S. government
and other authorities or countries identified by the U.S. government or other authorities as state sponsors of terrorism, such
as Cuba, Iran, Sudan, and Syria, in the future, our vessels may call on ports in these countries from time to time on charterers’
instructions. Sanctions and embargo laws and regulations vary in their application, as they do not all apply to the same covered
persons or proscribe the same activities, and such sanctions and embargo laws and regulations may be amended or strengthened over
time. In 2010, the U.S. enacted the Comprehensive Iran Sanctions Accountability and Divestment Act, or “CISADA”, which
expanded the scope of the Iran Sanctions Act. Among other things, CISADA expands the application of the prohibitions of companies,
such as ours, and introduces limits on the ability of companies and persons to do business or trade with Iran when such activities
relate to the investment, supply or export of refined petroleum or petroleum products.

In 2012, President
Obama signed Executive Order 13608 which prohibits foreign persons from violating or attempting to violate, or causing a violation
of any sanctions in effect against Iran or facilitating any deceptive transactions for or on behalf of any person subject to U.S.
sanctions. Any persons found to be in violation of Executive Order 13608 will be deemed a foreign sanctions evader and will be
banned from all contacts with the United States, including conducting business in US dollars. Also in 2012, President Obama signed
into law the Iran Threat Reduction and Syria Human Rights Act of 2012, or the Iran Threat Reduction Act, which created new sanctions
and strengthened existing sanctions. Among other things, the Iran Threat Reduction Act intensifies existing sanctions regarding
the provision of goods, services, infrastructure or technology to Iran’s petroleum or petrochemical sector. The Iran Threat
Reduction Act also includes a provision requiring the President of the United States to impose five or more sanctions from Section
6(a) of the Iran Sanctions Act, as amended, on a person the President determines is a controlling beneficial owner of, or otherwise
owns, operates, or controls or insures a vessel that was used to transport crude oil from Iran to another country and (1) if the
person is a controlling beneficial owner of the vessel, the person had actual knowledge the vessel was so used or (2) if the person
otherwise owns, operates, or controls, or insures the vessel, the person knew or should have known the vessel was so used. Such
a person could be subject to a variety of sanctions, including exclusion from U.S. capital markets, exclusion from financial transactions
subject to U.S. jurisdiction, and exclusion of that person’s vessels from U.S. ports for up to two years.

Although we believe
that we have been in compliance with all applicable sanctions and embargo laws and regulations, and intend to maintain such compliance,
there can be no assurance that we will be in compliance in the future, particularly as the scope of certain laws may be unclear
and may be subject to changing interpretations. Any such violation could result in fines, penalties or other sanctions that could
severely impact our ability to access U.S. capital markets and conduct our business, and could result in some investors deciding,
or being required, to divest their interest, or not to invest, in us. In addition, certain institutional investors may have investment
policies or restrictions that prevent them from holding securities of companies that have contracts with countries identified
by the U.S. government as state sponsors of terrorism. The determination by these investors not to invest in, or to divest from,
our common stock may adversely affect the price at which our common shares trade. Additionally, some investors may decide to divest
their interest, or not to invest, in our company simply because we do business with companies that do business in sanctioned countries.
Moreover, our charterers may violate applicable sanctions and embargo laws and regulations as a result of actions that do not
involve us or our vessels, and those violations could in turn negatively affect our reputation. In addition, our reputation and
the market for our securities may be adversely affected if we engage in certain other activities, such as entering into charters
with individuals or entities in countries subject to U.S. sanctions and embargo laws that are not controlled by the governments
of those countries, or engaging in operations associated with those countries pursuant to contracts with third parties that are
unrelated to those countries or entities controlled by their governments. Investor perception of the value of our common stock
may also be adversely affected by the consequences of war, the effects of terrorism, civil unrest and governmental actions in
these and surrounding countries.

9





The smuggling of drugs or other contraband onto our
vessels may lead to governmental claims against us.

We expect that our
vessels will call in ports where smugglers attempt to hide drugs and other contraband on vessels, with or without the knowledge
of crew members. To the extent our vessels are found with contraband, whether inside or attached to the hull of our vessel and
whether with or without the knowledge of any of our crew, we may face governmental or other regulatory claims which could have
an adverse effect on our business, results of operations, cash flows, financial condition and ability to pay dividends.

Maritime claimants could arrest our vessels, which would
have a negative effect on our cash flows.

Crew members, suppliers
of goods and services to a vessel, shippers of cargo and other parties may be entitled to a maritime lien against a vessel for
unsatisfied debts, claims or damages. In many jurisdictions, a maritime lien holder may enforce its lien by arresting or attaching
a vessel through foreclosure proceedings. The arrest or attachment of one or more of our vessels could interrupt our business or
require us to pay large sums of money to have the arrest lifted, which would have a negative effect on our cash flows.

In addition, in
some jurisdictions, such as South Africa, under the “sister ship” theory of liability, a claimant may arrest both the
vessel which is subject to the claimant’s maritime lien and any “associated” vessel, which is any vessel owned
or controlled by the same owner. Claimants could try to assert “sister ship” liability against one vessel in our fleet
for claims relating to another of our ships.

Governments could requisition our
vessels during a period of war or emergency, which may negatively impact our business, financial condition, results of operations
and available cash.

A government could
requisition one or more of our vessels for title or hire. Requisition for title occurs when a government takes control of a vessel
and becomes the owner. Also, a government could requisition our vessels for hire. Requisition for hire occurs when a government
takes control of a vessel and effectively becomes the charterer at dictated charter rates. Generally, requisitions occur during
a period of war or emergency. Government requisition of one or more of our vessels may negatively impact our business, financial
condition, results of operations and available cash.

Technological innovation could reduce our charterhire
income and the value of our vessels.

The charterhire
rates and the value and operational life of a vessel are determined by a number of factors including the vessel’s efficiency,
operational flexibility and physical life. Efficiency includes speed, fuel economy and the ability to load and discharge cargo
quickly. Flexibility includes the ability to enter harbors, utilize related docking facilities and pass through canals and straits.
The length of a vessel’s physical life is related to its original design and construction, its maintenance and the impact
of the stress of operations. If new tankers are built that are more efficient or more flexible or have longer physical lives than
our vessels, competition from these more technologically advanced vessels could adversely affect the amount of charterhire payments
we receive for our vessels and the resale value of our vessels could significantly decrease. As a result, our available cash could
be adversely affected.

If labor interruptions are not
resolved in a timely manner, they could have a material adverse effect on our business, results of operations, cash flows, financial
condition and available cash.

We, indirectly
through SSM, employ masters, officers and crews to man our vessels. If not resolved in a timely and cost-effective manner, industrial
action or other labor unrest could prevent or hinder our operations from being carried out as we expect and could have a material
adverse effect on our business, results of operations, cash flows, financial condition and available cash.

10





RISKS RELATED TO OUR BUSINESS

Newbuilding projects are subject
to risks that could cause delays, cost overruns or cancellation of our newbuilding contracts.

We have entered
into shipbuilding contracts with Hyundai Mipo Dockyard Co. Ltd., or HMD, SPP Shipbuilding Co., Ltd., or SPP, Hyundai Samho Heavy
Industries Co. Ltd., or HSHI and Daewoo Shipbuilding & Marine Engineering Co., Ltd., or DSME for the construction of 55 newbuilding
vessels, of which 42 are expected to be delivered to us throughout 2014 and 13 in 2015. As of the date of this annual report,
we have made total yard payments in the amount of $551.0 million and we have remaining yard installments in the amount
of $1,417.5 million before we take possession of all of these vessels.

The delivery of
such vessels or vessels that we may acquire in the future could be delayed, not completed or cancelled, which would delay or eliminate
our expected receipt of revenues from the employment of such vessels. In addition, the yards or a seller could fail to deliver
vessels to us as agreed, or we could cancel a purchase contract because such yard or seller has not met its obligations.

If the delivery
of any vessel is materially delayed or cancelled, especially if we have committed the vessel to a charter for which we become responsible
for substantial liquidated damages to the customer as a result of the delay or cancellation, our business, financial condition
and results of operations could be adversely affected.

In addition, in
the event HMD, SPP, HSHI and DSME do not perform under their contracts and we are unable to enforce certain refund guarantees with
third party banks for any reason, we may lose all or part of our investment, which would have a material adverse effect on our
results of operations, financial condition and cash flows.

We cannot assure you that our internal controls and
procedures over financial reporting will be sufficient.

We are subject
to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and the other rules
and regulations of the SEC, including the Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley. Section 404 of Sarbanes-Oxley
requires that we evaluate and determine the effectiveness of our internal controls over financial reporting. If we have a
material weakness in our internal control over financial reporting, we may not detect errors on a timely basis and our
financial statements may be materially misstated. We dedicate a significant amount of time and resources to ensure compliance
with these regulatory requirements. We will continue to evaluate areas such as corporate governance, corporate control,
internal audit, disclosure controls and procedures and financial reporting and accounting systems. We will make changes in
any of these and other areas, including our internal control over financial reporting, which we believe are necessary.
However, these and other measures we may take may not be sufficient to allow us to satisfy our obligations as a public
company on a timely and reliable basis.

We may have difficulty managing our planned growth properly.

One of our principal
strategies is to continue to grow by expanding our operations and adding to our fleet. Our future growth will primarily depend
upon a number of factors, some of which may not be within our control. These factors include our ability to:

| | · | identify suitable tankers and/or shipping companies for acquisitions at attractive prices;
| | - | ------------------------------------------------------------------------------------------

| | · | obtain required financing for our existing and new operations;
| | - | --------------------------------------------------------------

| | · | identify businesses engaged in managing, operating or owning tankers for acquisitions or joint ventures;
| | - | --------------------------------------------------------------------------------------------------------

| | · | integrate any acquired tankers or businesses successfully with our existing operations, including obtaining any approvals and
qualifications necessary to operate vessels that we acquire;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | hire, train and retain qualified personnel and crew to manage and operate our growing business and fleet;
| | - | ---------------------------------------------------------------------------------------------------------

| | · | identify additional new markets;
| | - | --------------------------------

| | · | enhance our customer base; and
| | - | ------------------------------

| | · | improve our operating, financial and accounting systems and controls.
| | - | ---------------------------------------------------------------------



11





Our
current operating and financial systems may not be adequate as we implement our plan to take delivery of 55 newbuilding vessels
between the date of this annual report and the second quarter of 2015 and to expand the size of our fleet and our attempts to improve
those systems may be ineffective. In addition, as we take delivery of our newbuilding vessels and if we further expand our fleet,
we will need to recruit suitable additional seafarers and shore side administrative and management personnel. We cannot guarantee
that we will be able to hire suitable employees as we take delivery of our new vessels or expand our fleet. If we or our crewing
agent encounters business or financial difficulties, we may not be able to adequately staff our vessels. If we are unable to grow
our financial and operating systems or to recruit suitable employees as we expand our fleet, our financial performance may be adversely
affected and, among other things, the amount of cash available for distribution as dividends to our shareholders may be reduced.

Our failure to effectively
identify, purchase, develop and integrate any tankers or businesses could adversely affect our business, financial condition and
results of operations. The number of employees that perform services for us and our current operating and financial systems may
not be adequate as we implement our plan to expand the size of our fleet, and we may not be able to effectively hire more employees
or adequately improve those systems. Finally, acquisitions may require additional equity issuances or debt issuances (with amortization
payments), both of which could lower our available cash. If any such events occur, our financial condition may be adversely affected.

Growing any business
by acquisition presents numerous risks such as undisclosed liabilities and obligations, difficulty in obtaining additional qualified
personnel and managing relationships with customers and suppliers and integrating newly acquired operations into existing infrastructures.
The expansion of our fleet may impose significant additional responsibilities on our management and staff, and the management and
staff of our commercial and technical managers, and may necessitate that we, and they, increase the number of personnel. We cannot
give any assurance that we will be successful in executing our growth plans or that we will not incur significant expenses and
losses in connection with our future growth.

If we purchase and operate secondhand
vessels, we will be exposed to increased operating costs which could adversely affect our earnings and, as our fleet ages, the
risks associated with older vessels could adversely affect our ability to obtain profitable charters.

Our current business
strategy includes additional growth through the acquisition of new and secondhand vessels. While we typically inspect secondhand
vessels prior to purchase, this does not provide us with the same knowledge about their condition that we would have had if these
vessels had been built for and operated exclusively by us. Generally, we do not receive the benefit of warranties from the builders
for the secondhand vessels that we acquire.

In general, the
costs to maintain a vessel in good operating condition increase with the age of the vessel. Older vessels are typically less fuel-efficient
than more recently constructed vessels due to improvements in engine technology. Cargo insurance rates increase with the age of
a vessel, making older vessels less desirable to charterers.

Governmental regulations,
safety or other equipment standards related to the age of vessels may require expenditures for alterations, or the addition of
new equipment, to our vessels and may restrict the type of activities in which the vessels may engage. As our vessels age, market
conditions may not justify those expenditures or enable us to operate our vessels profitably during the remainder of their useful
lives.

An increase in operating costs would decrease earnings
and available cash.

Under time charter-out
agreements, the charterer is responsible for voyage costs and the owner is responsible for the vessel operating costs. The same
applies to time-charter-in agreements. With the exception of certain vessels on short-term time charter-out agreements, we currently
have one vessel on a long-term time charter-out agreement (greater than one year) and 31 vessels on time-charter-in
agreements. When our owned vessels are employed under one of the Scorpio Group Pools, the pool is responsible for voyage expenses
and we are responsible for vessel costs. As of the date of this annual report, we have 16 of our owned vessels and 31 of our time-chartered-in
vessels employed through the Scorpio Group Pools. When our vessels operate in the spot market, we are responsible for both voyage
expenses and vessel operating costs. As of the date of this annual report, four of the vessels in our Operating Fleet (defined
later) operate in the spot market and one vessel is on time charter. Our vessel operating costs include the costs of crew, fuel
(for spot chartered vessels), provisions, deck and engine stores, insurance and maintenance and repairs, which depend on a variety
of factors, many of which are beyond our control. Further, if our vessels suffer damage, they may need to be repaired at a drydocking
facility. The costs of drydocking repairs are unpredictable and can be substantial. Increases in any of these expenses would decrease
earnings and available cash.

Declines in charter rates and other market deterioration
could cause us to incur impairment charges.

We evaluate the
carrying amounts of our vessels to determine if events have occurred that would require an impairment of their carrying amounts.
The recoverable amount of vessels is reviewed based on events and changes in circumstances that would indicate that the carrying
amount of the assets might not be recovered. The review for potential impairment indicators and projection of future cash flows
related to the vessels is complex and requires us to make various estimates including future freight rates, earnings from the
vessels and discount rates. All of these items have been historically volatile.

12





We evaluate
the recoverable amount as the higher of fair value less costs to sell and value in use. If the recoverable amount is less
than the carrying amount of the vessel, the vessel is deemed impaired. The carrying values of our vessels may not represent
their fair market value at any point in time because the new market prices of secondhand vessels tend to fluctuate with
changes in charter rates and the cost of newbuildings. For the year ended December 31, 2013, we evaluated the recoverable
amount of our vessels and we did not recognize an impairment loss, however we did record a $21.2 million write-down resulting
from the designation of four vessels, Senatore, Noemi, Venice and STI Spirit as held for sale. For the year
ended December 31, 2012, we evaluated the recoverable amount of our vessels, which did not result in an impairment loss,
however we did record a $10.4 million loss from disposal on the sales of the STI Conqueror, STI
Gladiator,STI Matador, STI Diamond and STI Coral. We cannot assure you that there will be not be further
impairments in future years. Any additional impairment charges incurred as a result of further declines in charter rates
could negatively affect our business, financial condition, operating results or the trading price of our common shares.

The market
values of our vessels may decrease, which could limit the amount of funds that we can borrow or trigger certain financial covenants
under our current or future credit facilities and our may incur a loss if it sells vessels following a decline in their market
value.

The
fair market values of our vessels have generally experienced high volatility. The fair market value of our vessels may increase
and decrease depending on a number of factors including, but not limited to, the prevailing level of charter rates and day rates,
general economic and market conditions affecting the international shipping industry, types, sizes and ages of vessels, supply
and demand for vessels, availability of or developments in other modes of transportation, competition from other shipping companies,
cost of newbuildings, governmental or other regulations and technological advances. In addition, as vessels grow older, they generally
decline in value. If the fair market value of our vessels declines, we may not be in compliance with certain provisions of our
credit facilities and we may not be able to refinance our debt, obtain additional financing or make distributions to our shareholders
and our subsidiaries may not be able to make distributions to us. The prepayment of certain credit facilities may be necessary
to cause us to maintain compliance with certain covenants in the event that the value of its vessels fall below certain levels.
Additionally, if we sell one or more of our vessels at a time when vessel prices have fallen, the sale price may be less than the
vessel’s carrying value on our consolidated financial statements, resulting in a loss on sale or an impairment loss being
recognized, ultimately leading to a reduction in earnings. Furthermore, if vessel values fall significantly, this could indicate
a decrease in the recoverable amount for the vessel which may result in an impairment adjustment in our financial statements, which
could adversely affect our financial results and condition.

If we are unable to operate our
vessels profitably, we may be unsuccessful in competing in the highly competitive international tanker market, which would negatively
affect our financial condition and our ability to expand our business.

The operation of
tanker vessels and transportation of crude and petroleum products is extremely competitive, in an industry that is capital intensive
and highly fragmented. The recent global financial crisis may reduce the demand for transportation of oil and oil products which
could lead to increased competition. Competition arises primarily from other tanker owners, including major oil companies as well
as independent tanker companies, some of whom have substantially greater resources than we do. Competition for the transportation
of oil and oil products can be intense and depends on price, location, size, age, condition and the acceptability of the tanker
and its operators to the charterers. We will have to compete with other tanker owners, including major oil companies as well as
independent tanker companies.

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

If we do not set aside funds and
are unable to borrow or raise funds for vessel replacement, at the end of a vessel’s useful life our revenue will decline,
which would adversely affect our business, results of operations, financial condition, and available cash.

If we do not set
aside funds and are unable to borrow or raise funds for vessel replacement, we will be unable to replace the vessels in our fleet
upon the expiration of their remaining useful lives, which we expect to occur between 2026 to 2039, depending on the vessel.
Our cash flows and income are dependent on the revenues earned by the chartering of our vessels. If we are unable to replace the
vessels in our fleet upon the expiration of their useful lives, our business, results of operations, financial condition, and
available cash per share would be adversely affected. Any funds set aside for vessel replacement will reduce available cash.

Our ability to obtain additional
financing may be dependent on the performance of our then existing charters and the creditworthiness of our charterers.

The actual or perceived
credit quality of our charterers, and any defaults by them, may materially affect our ability to obtain the additional capital
resources that we will require to purchase additional vessels or may significantly increase our costs of obtaining such capital.
Our inability to obtain additional financing at all or at a higher than anticipated cost may materially affect our results of
operation and our ability to implement our business strategy.

13





United States tax authorities could
treat us as a “passive foreign investment company,” which could have adverse United States federal income tax consequences
to United States shareholders.

A
foreign corporation will be treated as a “passive foreign investment company,” or PFIC, for United States federal
income tax purposes if either (1) at least 75% of its gross income for any taxable year consists of certain types of
“passive income” or (2) at least 50% of the average value of the corporation’s assets produce or are held
for the production of those types of “passive income.“For purposes of these tests, “passive income”
includes dividends, interest, and gains from the sale or exchange of investment property and rents and royalties other than
rents and royalties which are received from unrelated parties in connection with the active conduct of a trade or business.
For purposes of these tests, income derived from the performance of services does not constitute “passive
income.“United States shareholders of a PFIC are subject to a disadvantageous United States federal income tax regime
with respect to the income derived by the PFIC, the distributions they receive from the PFIC and the gain, if any, they
derive from the sale or other disposition of their shares in the PFIC.

Based on our current
and proposed method of operation, we do not believe that we will be a PFIC with respect to any taxable year. In this regard, we
intend to treat the gross income we derive or are deemed to derive from our time chartering activities as services income, rather
than rental income. Accordingly, our income from our time and voyage chartering activities should not constitute “passive
income,” and the assets that we own and operate in connection with the production of that income should not constitute assets
that produce or are held for the production of “passive income.”

There
is substantial legal authority supporting this position, consisting of case law and United States Internal Revenue Service,
or IRS, pronouncements concerning the characterization of income derived from time charters and voyage charters as
services income for other tax purposes. However, it should be noted that there is also authority that characterizes time
charter income as rental income rather than services income for other tax purposes. Accordingly, no assurance can be given
that the IRS or a court of law will accept this position, and there is a risk that the IRS or a court of law could determine
that we are a PFIC. Moreover, no assurance can be given that we would not constitute a PFIC for any future taxable year if
the nature and extent of our operations change.

If the
IRS were to find that we are or have been a PFIC for any taxable year, our United States shareholders would face adverse
United States federal income tax consequences and incur certain information reporting obligations. Under the PFIC rules,
unless those shareholders make an election available under the United States Internal Revenue Code of 1986, as amended, or
the Code (which election could itself have adverse consequences for such shareholders), such shareholders would be subject to
United States federal income tax at the then prevailing rates on ordinary income plus interest, in respect of excess
distributions and upon any gain from the disposition of their common shares, as if the excess distribution or gain had been
recognized ratably over the shareholder’s holding period of the common shares. See “Taxation—Passive
Foreign Investment Company Status and Significant Tax Consequences” for a more comprehensive discussion of the United
States federal income tax consequences to United States shareholders if we are treated as a PFIC.

We may have to pay tax on United States source shipping
income, which would reduce our earnings.

Under the
Code, 50% of the gross shipping income of a corporation that owns or charters vessels, as we and our subsidiaries do, that is
attributable to transportation that begins or ends, but that does not both begin and end, in the United States may be subject
to a 4% United States federal income tax without allowance for deductions, unless that corporation qualifies for exemption
from tax under Section 883 of the Code and the regulations promulgated thereunder by the United States Department of the
Treasury.

We and our subsidiaries
intend to take the position that we qualify for this statutory tax exemption for United States federal income tax return reporting
purposes. However, there are factual circumstances beyond our control that could cause us to lose the benefit of this tax exemption
and thereby become subject to United States federal income tax on our United States source shipping income. For example, we may
no longer qualify for exemption under Section 883 of the Code for a particular taxable year if shareholders with a five percent
or greater interest in our common shares, or “5% Shareholders,” owned, in the aggregate, 50% or more of our outstanding
common shares for more than half the days during the taxable year, and there does not exist sufficient 5% Shareholders that are
qualified shareholders for purposes of Section 883 of the Code to preclude nonqualified 5% Shareholders from owning 50% or more
of our common shares for more than half the number of days during such taxable year or we are unable to satisfy certain substantiation
requirements with regard to our 5% Shareholders. Due to the factual nature of the issues involved, there can be no assurances on
the tax-exempt status of us or any of our subsidiaries.

If we or our
subsidiaries were not entitled to exemption under Section 883 of the Code for any taxable year, we or our subsidiaries could
be subject for such year to an effective 2% United States federal income tax on the shipping income we or they derive during
such year which is attributable to the transport of cargoes to or from the United States. The imposition of this taxation
would have a negative effect on our business and would decrease our earnings available for distribution to our
shareholders.



14





We will be required to make additional capital expenditures
to expand the number of vessels in our fleet and to maintain all our vessels, which will be dependent on additional financing.

Our business strategy
is based in part upon the expansion of our fleet through the purchase of additional vessels. If we are unable to fulfill our obligations
under any memorandum of agreement for future vessel acquisitions, the sellers of such vessels may be permitted to terminate such
contracts and we may forfeit all or a portion of the down payments we already made under such contracts, and we may be sued for
any outstanding balance.

In addition, we
will incur significant maintenance costs for our existing and any newly-acquired vessels. A newbuilding vessel must be drydocked
within five years of its delivery from a shipyard, and vessels are typically drydocked every 30 months thereafter, not including
any unexpected repairs. We estimate the cost to drydock a vessel to be between $500,000 and $1,000,000, depending on the size and
condition of the vessel and the location of drydocking.

We are incorporated in the Republic
of the Marshall Islands, which does not have a well-developed body of corporate law and, as a result, shareholders may have fewer
rights and protections under Marshall Islands law than under a typical jurisdiction in the United States.

Our corporate affairs
are governed by our articles of incorporation and bylaws and by the Marshall Islands Business Corporations Act, or BCA. The provisions
of the BCA resemble provisions of the corporation laws of a number of states in the United States. However, there have been few
judicial cases in the Republic of The Marshall Islands interpreting the BCA. The rights and fiduciary responsibilities of directors
under the law of the Republic of The Marshall Islands are not as clearly established as the rights and fiduciary responsibilities
of directors under statutes or judicial precedent in existence in certain United States jurisdictions. Shareholder rights may differ
as well. While the BCA does specifically incorporate the non-statutory law, or judicial case law, of the State of Delaware and
other states with substantially similar legislative provisions, our public shareholders may have more difficulty in protecting
their interests in the face of actions by management, directors or controlling shareholders than would shareholders of a corporation
incorporated in a United States jurisdiction.

It may be difficult to serve process
on or enforce a United States judgment against us, our officers and our directors because we are a foreign corporation.

We are a
corporation formed in the Republic of The Marshall Islands, and some of our directors and officers and certain of the experts
named in this offering are located outside the United States. In addition, a substantial portion of our assets and the assets
of our directors, officers and experts are located outside of the United States. As a result, you may have difficulty serving
legal process within the United States upon us or any of these persons. You may also have difficulty enforcing, both in and
outside the United States, judgments you may obtain in U.S. courts against us or any of these persons in any action,
including actions based upon the civil liability provisions of U.S. federal or state securities laws. Furthermore, there is
substantial doubt that the courts of the Republic of The Marshall Islands or of the non-U.S. jurisdictions in which our
offices are located would enter judgments in original actions brought in those courts predicated on U.S. federal or state
securities laws.

RISKS RELATED TO OUR RELATIONSHIP WITH SCORPIO GROUP
AND ITS AFFILIATES

We are dependent on our managers
and their ability to hire and retain key personnel, and there may be conflicts of interest between us and our managers that may
not be resolved in our favor.

Our success depends
to a significant extent upon the abilities and efforts of our technical manager, SSM, our commercial manager, SCM, and our management
team. Our success will depend upon our and our managers’ ability to hire and retain key members of our management team. The
loss of any of these individuals could adversely affect our business prospects and financial condition.

Difficulty in hiring
and retaining personnel could adversely affect our results of operations. We do not maintain “key man” life insurance
on any of our officers.

Our technical
and commercial managers are affiliates of Scorpio Group, which is owned and controlled by the Lolli-Ghetti family, of which
our founder, Chairman and Chief Executive Officer, Mr. Emanuele Lauro, is a member. Conflicts of interest may arise between
us, on the one hand, and our commercial and technical managers, on the other hand. As a result of these conflicts, our
commercial and technical managers, who have limited contractual duties, may favor their own or their owner’s interests
over our interests. These conflicts may have unfavorable results for us.

Our founder, Chairman and Chief
Executive Officer has affiliations with our commercial and technical managers which may create conflicts of interest.

Emanuele
Lauro, our founder, Chairman and Chief Executive Officer, is a member of the Lolli-Ghetti family which owns and controls our
commercial and technical managers. These responsibilities and relationships could create conflicts of interest between us, on
the one hand, and our commercial and technical managers, on the other hand. These conflicts may arise in connection with the
chartering, purchase, sale and operations of the vessels in our fleet versus vessels managed by other companies affiliated
with our commercial or technical managers. Our commercial and technical managers may give preferential treatment to vessels
that are time chartered-in by related parties because our founder, Chairman and Chief Executive Officer and members of his
family may receive greater economic benefits. In particular, as of the date of this annual report, our commercial and
technical managers provide commercial and technical management services to approximately 56 and 8 vessels respectively, other
than the vessels in our fleet, that are owned or operated by entities affiliated with Mr. Lauro, and such entities may
acquire additional vessels that will compete with our vessels in the future. Such conflicts may have an adverse effect on our
results of operations.

15





Certain of our officers do not devote all of their time
to our business, which may hinder our ability to operate successfully.

Certain of our officers
participate in business activities not associated with us, and as a result, they may devote less time to us than if they were not
engaged in other business activities and may owe fiduciary duties to the shareholders of both us as well as shareholders of other
companies which they may be affiliated, including other Scorpio Group companies. This may create conflicts of interest in matters
involving or affecting us and our customers and it is not certain that any of these conflicts of interest will be resolved in our
favor. This could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our commercial and technical managers
are each privately held companies and there is little or no publicly available information about them.

SCM is our commercial
manager and SSM is our technical manager. SCM’s and SSM’s ability to render management services will depend in part
on their own financial strength. Circumstances beyond our control could impair our commercial manager’s or technical manager’s
financial strength, and because each is a privately held company, information about the financial strength of our commercial manager
and technical manager is not available. As a result, we and our shareholders might have little advance warning of financial or
other problems affecting our commercial manager or technical manager even though their financial or other problems could have a
material adverse effect on us.

We are subject to certain risks with respect to our
counterparties on contracts, and failure of such counterparties to meet their obligations could cause us to suffer losses or negatively
impact our results of operations and cash flows.

We have entered
into, and may enter in the future, various contracts, including, charter agreements and credit facilities. Such agreements subject
us to counterparty risks. The ability of each of our counterparties to perform its obligations under a contract with us will depend
on a number of factors that are beyond our control and may include, among other things, general economic conditions, the condition
of the maritime and offshore industries, the overall financial condition of the counterparty, charter rates received for specific
types of vessels, and various expenses. For example, the combination of a reduction of cash flow resulting from declines in world
trade, a reduction in borrowing bases under reserve-based credit facilities and the lack of availability of debt or equity financing
may result in a significant reduction in the ability of our charterers to make charter payments to us. In addition, in depressed
market conditions, our charterers and customers may no longer need a vessel that is currently under charter or contract or may
be able to obtain a comparable vessel at lower rates. As a result, charterers and customers may seek to renegotiate the terms of
their existing charter agreements or avoid their obligations under those contracts. Should a counterparty fail to honor its obligations
under agreements with us, we could sustain significant losses which could have a material adverse effect on our business, financial
condition, results of operations and cash flows.

The failure of our charterers to
meet their obligations under our charter agreements, on which we depend for our revenues, could cause us to suffer losses or otherwise
adversely affect our business.

As of the date
of this annual report, we employ one vessel under a long-term time charter agreement and we may enter into such
agreements in the future. The ability and willingness of each of our counterparties to perform their obligations under a time
charter, spot voyage or other agreement with us will depend on a number of factors that are beyond our control and may include,
among other things, general economic conditions, the condition of the tanker shipping industry and the overall financial condition
of the counterparties. Charterers are sensitive to the commodity markets and may be impacted by market forces affecting commodities
such oil. In addition, in depressed market conditions, there have been reports of charterers renegotiating their charters or defaulting
on their obligations under charters. Our customers may fail to pay charterhire or attempt to renegotiate charter rates. Should
a counterparty fail to honor its obligations under agreements with us, it may be difficult to secure substitute employment for
such vessel, and any new charter arrangements we secure in the spot market or on time charters may be at lower rates given currently
decreased tanker charter rate levels. When we employ a vessel in the spot charter market, we generally place such vessel in a
tanker pool managed by our commercial manager that pertains to that vessel’s size class. If our charterers fail to meet
their obligations to us or attempt to renegotiate our charter agreements, we could sustain significant losses which could have
a material adverse effect on our business, financial condition, results of operations and cash flows, as well as our ability to
pay dividends, if any, in the future, and compliance with covenants in our credit facilities.

16





Our insurance may not be adequate
to cover our losses that may result from our operations due to the inherent operational risks of the tanker industry.

We carry insurance
to protect us against most of the accident-related risks involved in the conduct of our business, including marine hull and machinery
insurance, protection and indemnity insurance, which include pollution risks, crew insurance and war risk insurance. However, we
may not be adequately insured to cover losses from our operational risks, which could have a material adverse effect on us. Additionally,
our insurers may refuse to pay particular claims and our insurance may be voidable by the insurers if we take, or fail to take,
certain action, such as failing to maintain certification of our vessels with applicable maritime regulatory organizations. Any
significant uninsured or under-insured loss or liability could have a material adverse effect on our business, results of operations,
cash flows and financial condition and our available cash. In addition, we may not be able to obtain adequate insurance coverage
at reasonable rates in the future during adverse insurance market conditions.

Changes in the insurance
markets attributable to terrorist attacks may also make certain types of insurance more difficult for us to obtain due to increased
premiums or reduced or restricted coverage for losses caused by terrorist acts generally.

Because we obtain some of our insurance
through protection and indemnity associations, which result in significant expenses to us, we may be required to make additional
premium payments.

We may be subject
to increased premium payments, or calls, in amounts based on our claim records, the claim records of our managers, as well as the
claim records of other members of the protection and indemnity associations through which we receive insurance coverage for tort
liability, including pollution-related liability. In addition, our protection and indemnity associations may not have enough resources
to cover claims made against them. Our payment of these calls could result in significant expense to us, which could have a material
adverse effect on our business, results of operations, cash flows, financial condition and available cash.

RISKS RELATED TO OUR INDEBTEDNESS

Servicing our current or future
indebtedness limits funds available for other purposes and if we cannot service our debt, we may lose our vessels.

Borrowing under
our credit facilities requires us to dedicate a part of our cash flow from operations to paying interest on our indebtedness. These
payments limit funds available for working capital, capital expenditures and other purposes, including further equity or debt financing
in the future. Amounts borrowed under our credit facilities bear interest at variable rates. Increases in prevailing rates could
increase the amounts that we would have to pay to our lenders, even though the outstanding principal amount remains the same, and
our net income and cash flows would decrease. We expect our earnings and cash flow to vary from year to year due to the cyclical
nature of the tanker industry. If we do not generate or reserve enough cash flow from operations to satisfy our debt obligations,
we may have to undertake alternative financing plans, such as:

| | · | seeking to raise additional capital;
| | - | ------------------------------------

| | · | refinancing or restructuring our debt;
| | - | --------------------------------------

| | · | selling tankers; or
| | - | -------------------

| | · | reducing or delaying capital investments.
| | - | -----------------------------------------

However, these alternative
financing plans, if necessary, may not be sufficient to allow us to meet our debt obligations. If we are unable to meet our debt
obligations or if some other default occurs under our credit facilities, our lenders could elect to declare that debt, together
with accrued interest and fees, to be immediately due and payable and proceed against the collateral vessels securing that debt
even though the majority of the proceeds used to purchase the collateral vessels did not come from our credit facilities.

Our credit facilities contain restrictive
covenants which limit the amount of cash that we may use for other corporate activities, which could negatively affect our growth
and cause our financial performance to suffer.

Our credit facilities
impose operating and financial restrictions on us. These restrictions limit our ability, or the ability of our subsidiaries party
thereto to, among other things:

| | · | \pay dividends and make capital expenditures if we do not repay amounts drawn under our
credit facilities or if there is another default under our credit facilities;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | incur additional indebtedness, including the issuance of guarantees;
| | - | --------------------------------------------------------------------

17





| | · | create liens on our assets;
| | - | ---------------------------

| | · | change the flag, class or management of our vessels or terminate or materially amend the management agreement relating to each
vessel;
| | - | --------------------------------------------------------------------------------------------------------------------------------------

| | · | sell our vessels;
| | - | -----------------

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

| | · | enter into a new line of business.
| | - | ----------------------------------

Therefore, we will
need to seek permission from our lenders in order to engage in some corporate actions. Our lenders’ interests may be different
from ours and we may not be able to obtain our lenders’ permission when needed. This may limit our ability to pay dividends
to you if we determine to do so in the future, finance our future operations or capital requirements, make acquisitions or pursue
business opportunities.

ITEM 4.	INFORMATION
ON THE COMPANY

A.	History and Development of the Company

Scorpio Tankers
Inc. was incorporated in the Republic of the Marshall Islands pursuant to the Marshall Islands Business Corporations Act on July
1, 2009. We provide seaborne transportation of refined petroleum products and crude oil worldwide. We began our operations in October
2009 with three vessel owning and operating subsidiary companies. In April 2010, we completed our initial public offering and commenced
trading on the New York Stock Exchange, or NYSE, under the symbol “STNG.” We have since expanded our fleet and as of
the date of this annual report, our fleet consists of 21 wholly owned tankers (one LR2 tanker, three LR1 tankers, one Handymax
tanker, 15 MR tankers, and one post-Panamax tanker) with a weighted average age of approximately 3.9 years, and 31 time chartered-in
tankers which we operate (nine Handymax tankers, seven MR tankers, five LR1 tankers and ten LR2 tankers), which we refer to collectively
as our Operating Fleet. In addition, we currently have contracts for the construction of 55 newbuilding product tankers (29 MR
tankers, 14 Handymax ice class 1-A tankers, and 12 LR2 tankers), which we refer to as our Newbuilding Program. Of the vessels in
our Newbuilding Program, 42 are expected to be delivered to us throughout 2014 and 13 in 2015. We also own approximately 26% of
the outstanding shares of Dorian LPG Ltd., or Dorian, an international liquefied petroleum gas, or LPG, shipping company, which
has an operating fleet of four LPG carriers (three of which are very large gas carriers, or VLGCs) and contracts for the construction
of 19 fuel-efficient VLGC newbuildings from reputable shipyards.

Our principal executive
offices are located at 9, Boulevard Charles III, Monaco 98000 and our telephone number at that address is +377-9798-5716.

Fleet Development

Newbuilding vessels

Under our
Newbuilding Program, we currently have contracts for the construction of 55 newbuilding product tankers with shipyards,
including HMD, HSHI, SPP and DSME, consisting of (i) 14 MR tankers with HMD for an aggregate purchase price of $487.7
million, (ii) 15 MR product tankers with SPP for an aggregate purchase price of $515.7 million, (iii) 14 Handymax ice
class-1A tankers with HMD for an aggregate purchase price of $440.5 million, (iv) eight LR2 product tankers with HSHI for an
aggregate purchase price of $404.0 million and (v) four LR2 product tankers with DSME for an aggregate purchase price of
$200.0 million. Of these vessels, 42 vessels are expected to be delivered to us throughout 2014 and 13
in 2015.

As of March 31,
2014, we have paid $551.0 million of installment payments related to these newbuilding product tankers and are committed
to make additional installment payments of $1,417.5 million.

Owned vessels

We currently have
21 wholly-owned vessels in operation.

During 2013, we
took delivery of seven MR vessels in our Newbuilding Program, STI Sapphire, STI Emerald, STI Beryl, STI
Le Rocher, STI Larvotto, STI Fontvieille, and STI Ville, and in January and March 2014, we took delivery
of an additional three vessels in our Newbuilding Program, STI Duchessa, STI Opera and STI Texas City.

In December 31,
2013, we designated four vessels as held for sale in our consolidated financial statements; two 2004-built LR1 product tankers,
Noemi and Senatore, a 2001-built Post-Panamax tanker, Venice, and a 2008-built LR2 product tanker, STI
Spirit. As part of this designation, we recorded a $21.2 million write-down to remeasure these vessels at the lower of their
carrying amount and fair value less costs to sell.

18





In December 2013,
we reached agreements with DSME and HSHI for the construction of seven Very Large Crude Carriers, or VLCCs, for an aggregate
purchase price of $662.2 million with deliveries in 2015 and 2016. In March 2014, we entered into an agreement to sell these seven
VLCCs to an unaffiliated third party for cash. As part of these sales, we expect to record a gain on disposal of approximately
$50.0 million in the first quarter of 2014.

In January 2014,
we took delivery of two vessels in our Newbuilding Program, STI Duchessa and STI Opera. Upon delivery, these vessels
began short term time charters for up to 120 days at approximately $19,000 per day.

In January 2014,
we agreed to sell Noemi andSenatorefor an aggregate selling price of $44.0 million. Noemiwas sold in March
2014 and the sale of Senatore is expected to close in April 2014. As part of these sales, we repaid $22.7 million into
our 2010 Revolving Credit Facility in March 2014. Consequently, the availability of this facility is reduced by such amount and
the quarterly reduction is reduced to $2.1 million from $3.1 million per quarter. We will also write-off a total of $0.2 million
of deferred financing fees as part of the debt repayments associated with these sales.

In February
2014, we agreed to sell STI Spirit for approximately $30.2 million. As part of this sale, we will repay all amounts
due under the STI Spirit Credit Facility of $21.4 million. This sale is expected to close in April 2014. We will also
write-off a total of $0.3 million of deferred financing fees as part of the debt repayments associated with this sale.

In March 2014,
we took delivery of an MR tanker under our Newbuilding Program, STI Texas City. After delivery, this vessel began a time
charter for two years at $16,000 per day. This time charter includes a profit sharing mechanism whereby earnings in excess of
the base time charter rate will be split between us and the charterer, Valero.

Investment in
Dorian LPG Ltd.

In July and August
2013, we entered into contracts with HSHI and DSME for the construction of nine VLGCs for $75.6 million each, and in October 2013,
we entered into contracts with HSHI for the construction of two additional VLGCs for $75.0 million each.

In November 2013,
we contributed the VLGC business, which included the aforementioned 11 VLGC contracts along with options to purchase two additional
VLGCs, together with a cash payment of $1.9 million, to Dorian in exchange for newly issued shares of Dorian representing 30% of
Dorian’s pro-forma outstanding shares at that time.  As of the closing date of the transaction, we paid $83.1 million
in installment payments under the 11 VLGC contracts.

Additionally, in
November 2013, we purchased 24,121,621 new Dorian common shares as part of a private placement of shares for total consideration
of $75.0 million. We currently own 64,073,744 common shares representing approximately 26% of the outstanding shares of Dorian.
As of March 31, 2014, these shares were traded on the Norwegian OTC List under the symbol “DORIAN.”

Time chartered-in vessels



During 2013, we
time chartered-in 30 vessels (nine Handymax tankers, seven MR tankers, five LR1 tankers and nine LR2 tankers), compared to 21
vessels in 2012. As of the date of this annual report, we time charter-in 31 vessels (nine Handymax tankers, seven MR tankers,
five LR1 tankers and ten LR2 tankers). Please see our fleet list below under “—B. Business Overview” for further
information regarding these vessels.

In February 2014,
we entered into a new time charter-in agreement on an LR2 vessel that is currently time chartered-in. The new agreement is
for six months at $16,500 per day and commenced upon the expiration of the existing charter in February 2014.

In February 2014, we
entered into a new time charter-in agreement on an LR2 vessel. The agreement is for one year at $15,000 per day. We have the
option to extend the charter for an additional six months at $16,250 per day. We took delivery of this vessel in March 2014.



Other Recent Developments

Credit Facilities

2010 Revolving
Credit Facility

In January 2014,
we drew down $72.4 million from the 2012 Revolving Credit Facility. In March 2014, we paid $22.7 million into this facility as
a result of the sales of Noemi and Senatore.

2011 Credit
Facility

In January 2014,
we drew down $52.0 million from the 2011 Credit Facility. In connection with this drawdown, STI Duchessa, STI Le Rocherand STI Larvotto were provided as collateral under the facility.

Newbuilding Credit
Facility

In March 2014,
we amended and restated our Newbuilding Credit Facility with Credit Agricole Corporate and Investment Bank and Skandinaviska Enskilda
Banken AB, to convert it from a term loan to a reducing revolving credit facility. This gives us the ability to pay down and re-borrow
from the total available commitments under the loan. All other terms and definitions remain unchanged. The facility was fully
drawn as of the date of this annual report.

19





2013 Credit Facility

In February 2014,
we drew down $64.2 million from the 2013 Credit Facility. In connection with the drawdown, STI Opera, STI Fontvieilleand STI Ville were provided as collateral under the facility.

In March 2014, we
drew down $20.5 million from this facility to partially finance the delivery of STI Texas City.Upon delivery from the shipyard,
this vessel began a time charter for two years at $16,000 per day. The agreement also contains a profit sharing provision whereby
we will split all of the vessel’s profits above the daily base rate with the charterer.

K-Sure Credit Facility

In February 2014,
we executed a $458.3 million senior secured term loan facility which consists of a $358.3 million tranche with a group of financial
institutions that is being 95% covered by Korea Trade Insurance Corporation, or the K-Sure Tranche, and a $100.0 million commercial
tranche with a group of financial institutions led by DNB Bank SA, or the Commercial Tranche. We refer to this credit facility
as our K-Sure Credit Facility. For a full description of this credit facility, please see the section of this annual report entitled
“Item 5. Operating and Financial Review and Prospects.”



KEXIM Credit Facility



In February 2014, we executed
a senior secured term loan facility with a group of financial institutions led by DNB Bank ASA and Skandinaviska Enskilda Banken
AB (publ) and from the Export-Import Bank of Korea, or KEXIM, for a total loan facility of $429.6 million. This facility
includes commitments from KEXIM of up to $300.6 million, or the KEXIM Tranche, and a group of financial institutions led by DNB
Bank ASA and Skandinaviska Enskilda Banken AB (publ) of up to $129.0 million, or the Commercial Tranche. We refer to this credit
facility as our KEXIM Credit Facility. For a full description of this credit facility, please see the section of this annual report
entitled Item “5. Operating and Financial Review and Prospects.”



Dividend Declaration



On February 21, 2014,
our board of directors declared a quarterly cash dividend of $0.08 per share, which was paid on March 26, 2014 to shareholders
of record as of March 11, 2014.



B.	Business Overview

We provide seaborne
transportation of refined petroleum products and crude oil worldwide. As of the date of this annual report, our fleet consists
of 21 wholly owned tankers (one LR2 tanker, three LR1 tankers, one Handymax tanker, 15 MR tankers, and one post-Panamax tanker)
with a weighted average age of approximately 3.9 years and 31 time chartered-in tankers (ten LR2 tankers, five LR1 tankers, seven
MR tankers and nine Handymax tankers), which we refer to collectively as our Operating Fleet. Additionally, we currently have contracts
for 55 newbuilding product tankers (14 Handymax ice class 1-A tankers, 29 MR tankers and 12 LR2 tankers), of which 42 are expected
to be delivered to us throughout 2014 and 13 in 2015. We also own approximately 26% of the outstanding shares of Dorian.

The following table
sets forth certain information regarding our fleet as of the date of this annual report:

|   | Vessel Name     |           | Year Built |  | DWT     |  | Ice class |  | Employment       |  | Vessel type  |     |  |  | 
|-- | --------------- | --------- | ---------- |  | ------- |  | --------- |  | ---------------- |  | ------------ | --- |  |  | 
|   | Owned vessels   |           |            |  |         |  |           |  |                  |  |              |     |  |  | 
|1  | STI Highlander  |           | 2007       |  | 37,145  |  | 1A        |  | SHTP (1)         |  | Handymax     |     |  |  | 
|2  | STI Amber       |           | 2012       |  | 52,000  |  | -         |  | SMRP(4)          |  | MR           |     |  |  | 
|3  | STI Topaz       |           | 2012       |  | 52,000  |  | -         |  | SMRP(4)          |  | MR           |     |  |  | 
|4  | STI Ruby        |           | 2012       |  | 52,000  |  | -         |  | SMRP(4)          |  | MR           |     |  |  | 
|5  | STI Garnet      |           | 2012       |  | 52,000  |  | -         |  | SMRP(4)          |  | MR           |     |  |  | 
|6  | STI Onyx        |           | 2012       |  | 52,000  |  | -         |  | SMRP(4)          |  | MR           |     |  |  | 
|7  | STI Sapphire    |           | 2013       |  | 52,000  |  | -         |  | SMRP(4)          |  | MR           |     |  |  | 
|8  | STI Emerald     |           | 2013       |  | 52,000  |  | -         |  | SMRP(4)          |  | MR           |     |  |  | 
|9  | STI Beryl       |           | 2013       |  | 52,000  |  | -         |  | SMRP(4)          |  | MR           |     |  |  | 
|10 | STI Le Rocher   |           | 2013       |  | 52,000  |  | -         |  | SMRP(4)          |  | MR           |     |  |  | 
|11 | STI Larvotto    |           | 2013       |  | 52,000  |  | -         |  | SMRP(4)          |  | MR           |     |  |  | 
|12 | STI Fontvieille |           | 2013       |  | 52,000  |  | -         |  | SMRP(4)          |  | MR           |     |  |  | 
|13 | STI Ville       |           | 2013       |  | 52,000  |  | -         |  | SMRP(4)          |  | MR           |     |  |  | 
|14 | STI Duchessa    |           | 2014       |  | 52,000  |  | -         |  | Spot             |  | MR           |     |  |  | 
|15 | STI Opera       |           | 2014       |  | 52,000  |  | -         |  | Spot             |  | MR           |     |  |  | 
|16 | STI Texas City  |           | 2014       |  | 52,000  |  | -         |  | Time Charter (5) |  | MR           |     |  |  | 
|17 | Senatore        |           | 2004       |  | 72,514  |  | -         |  | Spot             |  | LR1          | (6) |  |  | 
|18 | STI Harmony     |           | 2007       |  | 73,919  |  | 1A        |  | SPTP (2)         |  | LR1          |     |  |  | 
|19 | STI Heritage    |           | 2008       |  | 73,919  |  | 1A        |  | SPTP (2)         |  | LR1          |     |  |  | 
|20 | Venice          |           | 2001       |  | 81,408  |  | 1C        |  | Spot             |  | Post-Panamax |     |  |  | 
|21 | STI Spirit      |           | 2008       |  | 113,100 |  | -         |  | SLR2P (3)        |  | LR2          | (6) |  |  | 
|   |                 |           |            |  |         |  |           |  |                  |  |              |     |  |  | 
|   | Total owned DWT | 1,232,005 |            |  |         |  |           |  |                  |  |              |    





20







|   | Vessel Name                 |      | Year Built |        | DWT     |    | Ice class |          | Employment |          | Vessel type | Daily Base Rate |           | Expiry (7) |     
|-- | --------------------------- | ---- | ---------- | ------ | ------- | -- | --------- | -------- | ---------- | -------- | ----------- | --------------- | --------- | ---------- | ----
|   | Time chartered-in vessels   |      |            |        |         |    |           |          |            |          |             |                 |          
|22 | Freja Polaris               |      | 2004       |        | 37,217  |    | 1B        |          | SHTP (1)   |          | Handymax    | $12,700         |           | 14-Apr-14  | (8) 
|23 | Kraslava                    |      | 2007       |        | 37,258  |    | 1B        |          | SHTP (1)   |          | Handymax    | $12,800         |           | 18-May-14  | (9) 
|24 | Krisjanis Valdemars         | 2007 |            | 37,266 |         | 1B |           | SHTP (1) |            | Handymax | $12,800     |                 | 14-Apr-14 | (10)      
|25 | Jinan                       |      | 2003       |        | 37,285  |    | -         |          | SHTP (1)   |          | Handymax    | $12,600         |           | 28-Apr-15  |     
|26 | Iver Progress               |      | 2007       |        | 37,412  |    | -         |          | SHTP (1)   |          | Handymax    | $12,500         |           | 03-Mar-15  | (11)
|27 | Iver Prosperity             |      | 2007       |        | 37,455  |    | -         |          | SHTP (1)   |          | Handymax    | $12,500         |           | 20-Oct-14  | (12)
|28 | Histria Azure               |      | 2007       |        | 40,394  |    | -         |          | SHTP (1)   |          | Handymax    | $12,600         |           | 04-Apr-14  | (13)
|29 | Histria Coral               |      | 2006       |        | 40,426  |    | -         |          | SHTP (1)   |          | Handymax    | $12,800         |           | 17-Jul-14  | (14)
|30 | Histria Perla               |      | 2005       |        | 40,471  |    | -         |          | SHTP (1)   |          | Handymax    | $12,800         |           | 15-Jul-14  | (14)
|31 | STX Ace 6                   |      | 2007       |        | 46,161  |    | -         |          | SMRP(4)    |          | MR          | $14,150         |           | 17-May-14  | (15)
|32 | Targale                     |      | 2007       |        | 49,999  |    | -         |          | SMRP(4)    |          | MR          | $14,500         |           | 17-May-14  | (16)
|33 | Gan-Triumph                 |      | 2010       |        | 49,999  |    | -         |          | SMRP(4)    |          | MR          | $14,150         |           | 20-May-14  |     
|34 | Nave Orion                  |      | 2013       |        | 49,999  |    | -         |          | SMRP(4)    |          | MR          | $14,300         |           | 25-Mar-15  | (17)
|35 | Hafnia Lupus                |      | 2012       |        | 50,385  |    | -         |          | SMRP(4)    |          | MR          | $14,760         |           | 26-Apr-14  | (18)
|36 | Gan-Trust                   |      | 2013       |        | 51,561  |    | -         |          | SMRP(4)    |          | MR          | $16,250         |           | 06-Jan-16  | (19)
|37 | Usma                        |      | 2007       |        | 52,684  |    | 1B        |          | SMRP(4)    |          | MR          | $14,500         |           | 03-Jan-15  |     
|38 | SN Federica                 |      | 2003       |        | 72,344  |    | -         |          | SPTP (2)   |          | LR1         | $11,250         |           | 15-May-15  | (20)
|39 | SN Azzura                   |      | 2003       |        | 72,344  |    | -         |          | SPTP (2)   |          | LR1         | $13,600         |           | 25-Dec-14  |     
|40 | King Douglas                |      | 2008       |        | 73,666  |    | -         |          | SPTP (2)   |          | LR1         | $14,000         |           | 08-Aug-14  | (21)
|41 | Hellespont Promise          | 2007 |            | 73,669 |         | -  |           | SPTP (2) |            | LR1      | $14,250     |                 | 14-Aug-14 |           
|42 | FPMC P Eagle                |      | 2009       |        | 73,800  |    | -         |          | SPTP (2)   |          | LR1         | $14,525         |           | 09-Sep-15  |     
|43 | FPMC P Hero                 |      | 2011       |        | 99,995  |    | -         |          | SLR2P (3)  |          | LR2         | $15,000         |           | 02-May-14  | (22)
|44 | FPMC P Ideal                |      | 2012       |        | 99,993  |    | -         |          | SLR2P (3)  |          | LR2         | $15,250         |           | 09-Jul-14  | (23)
|45 | Swarna Jayanti              |      | 2010       |        | 104,895 |    |           |          | SLR2P (3)  |          | LR2         | $15,000         |           | 11-Mar-15  | (24)
|46 | Densa Alligator             |      | 2013       |        | 105,708 |    | -         |          | SLR2P (3)  |          | LR2         | $16,500         |           | 17-Sep-14  | (25)
|47 | Khawr Aladid                |      | 2006       |        | 106,003 |    | -         |          | SLR2P (3)  |          | LR2         | $15,400         |           | 11-Jul-15  |     
|48 | Fair Seas                   |      | 2008       |        | 115,406 |    | -         |          | SLR2P (3)  |          | LR2         | $16,500         |           | 21-Aug-14  |     
|49 | Southport                   |      | 2008       |        | 115,462 |    |           |          | SLR2P (3)  |          | LR2         | $15,700         |           | 10-Dec-14  |     
|50 | Pink Stars                  |      | 2010       |        | 115,592 |    | -         |          | SLR2P (3)  |          | LR2         | $16,125         |           | 10-Apr-14  |     
|51 | Four Sky                    |      | 2010       |        | 115,708 |    | -         |          | SLR2P (3)  |          | LR2         | $16,250         |           | 02-Sep-14  |     
|52 | Orange Stars                |      | 2011       |        | 115,756 |    | -         |          | SLR2P (3)  |          | LR2         | $16,125         |           | 06-Apr-14  |     
|   |                             |      |            |        |         |    |           |          |            |          |             |                 |           |            |     
|   | Total time chartered-in DWT |      | 2,156,313  |        |         |    |           |          |            |          |             |                 |          





21









|    | Newbuildings currently under construction |           |           |      |         |  |           |  |  |  |             | 
|--- | ----------------------------------------- | --------- | --------- | ---- | ------- |  | --------- |  |  |  | ----------- | 
|    | Vessel Name                               |           | Yard      |      | DWT     |  | Ice class |  |  |  | Vessel type | 
|    | Product tankers                           |           |           |      |         |  |           |  |  |  |             | 
|    |                                           |           |           |      |         |  |           |  |  |  |             | 
|53  | Hull 2451                                 |           | HMD       | (26) | 38,000  |  | 1A        |  |  |  | Handymax    | 
|54  | Hull 2452                                 |           | HMD       | (26) | 38,000  |  | 1A        |  |  |  | Handymax    | 
|55  | Hull 2453                                 |           | HMD       | (26) | 38,000  |  | 1A        |  |  |  | Handymax    | 
|56  | Hull 2454                                 |           | HMD       | (26) | 38,000  |  | 1A        |  |  |  | Handymax    | 
|57  | Hull 2462                                 |           | HMD       | (26) | 38,000  |  | 1A        |  |  |  | Handymax    | 
|58  | Hull 2463                                 |           | HMD       | (26) | 38,000  |  | 1A        |  |  |  | Handymax    | 
|59  | Hull 2464                                 |           | HMD       | (26) | 38,000  |  | 1A        |  |  |  | Handymax    | 
|60  | Hull 2465                                 |           | HMD       | (26) | 38,000  |  | 1A        |  |  |  | Handymax    | 
|61  | Hull 2476                                 |           | HMD       | (26) | 38,000  |  | 1A        |  |  |  | Handymax    | 
|62  | Hull 2477                                 |           | HMD       | (26) | 38,000  |  | 1A        |  |  |  | Handymax    | 
|63  | Hull 2478                                 |           | HMD       | (26) | 38,000  |  | 1A        |  |  |  | Handymax    | 
|64  | Hull 2479                                 |           | HMD       | (26) | 38,000  |  | 1A        |  |  |  | Handymax    | 
|65  | Hull 2499                                 |           | HMD       | (26) | 38,000  |  | 1A        |  |  |  | Handymax    | 
|66  | Hull 2500                                 |           | HMD       | (26) | 38,000  |  | 1A        |  |  |  | Handymax    | 
|67  | Hull 2391                                 |           | HMD       | (26) | 52,000  |  |           |  |  |  | MR          | 
|68  | Hull 2392                                 |           | HMD       | (26) | 52,000  |  |           |  |  |  | MR          | 
|69  | Hull 2449                                 |           | HMD       | (26) | 52,000  |  |           |  |  |  | MR          | 
|70  | Hull 2450                                 |           | HMD       | (26) | 52,000  |  |           |  |  |  | MR          | 
|71  | Hull 2458                                 |           | HMD       | (26) | 52,000  |  |           |  |  |  | MR          | 
|72  | Hull 2459                                 |           | HMD       | (26) | 52,000  |  |           |  |  |  | MR          | 
|73  | Hull 2460                                 |           | HMD       | (26) | 52,000  |  |           |  |  |  | MR          | 
|74  | Hull 2461                                 |           | HMD       | (26) | 52,000  |  |           |  |  |  | MR          | 
|75  | Hull 2492                                 |           | HMD       | (26) | 52,000  |  |           |  |  |  | MR          | 
|76  | Hull 2493                                 |           | HMD       | (26) | 52,000  |  |           |  |  |  | MR          | 
|77  | Hull 2445                                 |           | HMD       | (26) | 52,000  |  |           |  |  |  | MR          | 
|78  | Hull 2474                                 |           | HMD       | (26) | 52,000  |  |           |  |  |  | MR          | 
|79  | Hull 2475                                 |           | HMD       | (26) | 52,000  |  |           |  |  |  | MR          | 
|80  | Hull 2490                                 |           | HMD       | (26) | 52,000  |  |           |  |  |  | MR          | 
|81  | Hull S1138                                |           | SPP       | (27) | 52,000  |  |           |  |  |  | MR          | 
|82  | Hull S1139                                |           | SPP       | (27) | 52,000  |  |           |  |  |  | MR          | 
|83  | Hull S1140                                |           | SPP       | (27) | 52,000  |  |           |  |  |  | MR          | 
|84  | Hull S1141                                |           | SPP       | (27) | 52,000  |  |           |  |  |  | MR          | 
|85  | Hull S1142                                |           | SPP       | (27) | 52,000  |  |           |  |  |  | MR          | 
|86  | Hull S1143                                |           | SPP       | (27) | 52,000  |  |           |  |  |  | MR          | 
|87  | Hull S1144                                |           | SPP       | (27) | 52,000  |  |           |  |  |  | MR          | 
|88  | Hull S1145                                |           | SPP       | (27) | 52,000  |  |           |  |  |  | MR          | 
|89  | Hull S1167                                |           | SPP       | (27) | 52,000  |  |           |  |  |  | MR          | 
|90  | Hull S1168                                |           | SPP       | (27) | 52,000  |  |           |  |  |  | MR          | 
|91  | Hull S1169                                |           | SPP       | (27) | 52,000  |  |           |  |  |  | MR          | 
|92  | Hull S1170                                |           | SPP       | (27) | 52,000  |  |           |  |  |  | MR          | 
|93  | Hull S5123                                |           | SPP       | (27) | 52,000  |  |           |  |  |  | MR          | 
|94  | Hull S5124                                |           | SPP       | (27) | 52,000  |  |           |  |  |  | MR          | 
|95  | Hull S5125                                |           | SPP       | (27) | 52,000  |  |           |  |  |  | MR          | 
|96  | Hull S703                                 |           | HSHI      | (28) | 114,000 |  |           |  |  |  | LR2         | 
|97  | Hull S704                                 |           | HSHI      | (28) | 114,000 |  |           |  |  |  | LR2         | 
|98  | Hull S705                                 |           | HSHI      | (28) | 114,000 |  |           |  |  |  | LR2         | 
|99  | Hull S706                                 |           | HSHI      | (28) | 114,000 |  |           |  |  |  | LR2         | 
|100 | Hull S709                                 |           | HSHI      | (28) | 114,000 |  |           |  |  |  | LR2         | 
|101 | Hull S710                                 |           | HSHI      | (28) | 114,000 |  |           |  |  |  | LR2         | 
|102 | Hull S715                                 |           | HSHI      | (28) | 114,000 |  |           |  |  |  | LR2         | 
|103 | Hull S716                                 |           | HSHI      | (28) | 114,000 |  |           |  |  |  | LR2         | 
|104 | Hull 5394                                 |           | DSME      | (29) | 114,000 |  |           |  |  |  | LR2         | 
|105 | Hull 5395                                 |           | DSME      | (29) | 114,000 |  |           |  |  |  | LR2         | 
|106 | Hull 5398                                 |           | DSME      | (29) | 114,000 |  |           |  |  |  | LR2         | 
|107 | Hull 5399                                 |           | DSME      | (29) | 114,000 |  |           |  |  |  | LR2         | 
|    |                                           |           |           |      |         |  |           |  |  |  |             | 
|    |                                           |           |           |      |         |  |           |  |  |  |             | 
|    | Total newbuilding product tankers DWT     | 3,408,000 |           |      |         |  |           |  |  |  |             | 
|    |                                           |           |           |      |         |  |           |  |  |  |             | 
|    | Total Fleet DWT                           |           | 6,796,318 |      |         |  |           |  |  |  |             | 



22







|(1)  | This vessel operates in or is expected to operate in the Scorpio Handymax Tanker Pool (SHTP). SHTP is operated by Scorpio Commercial Management (SCM). SHTP and SCM are related parties to the Company.                                                                                                                                                                                   
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2)  | This vessel operates in or is expected to operate in the Scorpio Panamax Tanker Pool (SPTP). SPTP is operated by SCM. SPTP is a related party to the Company.                                                                                                                                                                                                                             
|(3)  | This vessel operates in or is expected to operate in the Scorpio LR2 Pool (SLR2P). SLR2P is operated by SCM. SLR2P is a related party to the Company.                                                                                                                                                                                                                                     
|(4)  | This vessel operates in or is expected to operate in the Scorpio MR Pool (SMRP). SMRP is operated by SCM. SMRP is a related party to the Company.                                                                                                                                                                                                                                         
|(5)  | This vessel is on a time charter agreement for two years at $16,000 per day that expires in March 2016.  The agreement also contains a 50% profit sharing provision whereby we split all of the vessel’s profits above the daily base rate with the charterer.                                                                                                                            
|(6)  | We have entered into agreements to sell these vessels.  These sales are expected to close in April 2014.                                                                                                                                                                                                                                                                                  
|(7)  | Redelivery from the charterer is plus or minus 30 days from the expiry date.                                                                                                                                                                                                                                                                                                              
|(8)  | We have an option to extend the charter for an additional year at $14,000 per day.                                                                                                                                                                                                                                                                                                        
|(9)  | We have an option to extend the charter for an additional year at $13,650 per day.                                                                                                                                                                                                                                                                                                        
|(10) | We have an option to extend the charter for an additional year at $13,650 per day.  The agreement also contains a 50% profit and loss sharing provision whereby we split all of the vessel’s profits and losses above or below the daily base rate with the vessel’s owner.                                                                                                               
|(11) | We have an option to extend the charter for an additional year at $13,500 per day.                                                                                                                                                                                                                                                                                                        
|(12) | We have an option to extend the charter for an additional year at $13,250 per day.                                                                                                                                                                                                                                                                                                        
|(13) | We have an option to extend the charter for an additional year at $13,550 per day.                                                                                                                                                                                                                                                                                                        
|(14) | We have an option to extend the charter for an additional year at $13,550 per day.                                                                                                                                                                                                                                                                                                        
|(15) | We have an option to extend the charter for an additional year at $15,150 per day.                                                                                                                                                                                                                                                                                                        
|(16) | We have options to extend the charter for up to three consecutive one year periods at $14,850 per day, $15,200 per day and $16,200 per day, respectively.                                                                                                                                                                                                                                 
|(17) | We have an option to extend the charter for an additional year at $15,700 per day.                                                                                                                                                                                                                                                                                                        
|(18) | We have an option to extend the charter for an additional year at $16,000 per day.                                                                                                                                                                                                                                                                                                        
|(19) | The daily base rate represents the average rate for the three year duration of the agreement.  The rate for the first year is $15,750 per day, the rate for the second year is $16,250 per day, and the rate for the third year is $16,750 per day. We have options to extend the charter for up to two consecutive one year periods at $17,500 per day and $18,000 per day, respectively.
|(20) | We have an option to extend the charter for an additional year at $12,500 per day.  We have also entered into an agreement with the vessel’s owner whereby we split all of the vessel’s profits above the daily base rate.                                                                                                                                                                
|(21) | We have an option to extend the charter for an additional year at $15,000 per day.                                                                                                                                                                                                                                                                                                        
|(22) | We have options to extend the charter for two consecutive six month periods at $15,250 per day, and $15,500 per day respectively.                                                                                                                                                                                                                                                         
|(23) | We have an option to extend the charter for an additional six months at $15,500 per day.                                                                                                                                                                                                                                                                                                  
|(24) | We have an option to extend the charter for an additional six months at $16,250 per day.                                                                                                                                                                                                                                                                                                  
|(25) | We have an option to extend the charter for one year at $17,550 per day.                                                                                                                                                                                                                                                                                                                  
|(26) | These newbuilding vessels are being constructed at HMD (Hyundai Mipo Dockyard Co. Ltd. of South Korea).  23 vessels are expected to be delivered in 2014 and five vessels in the first and second quarters of 2015.                                                                                                                                                                       
|(27) | These newbuilding vessels are being constructed at SPP (SPP Shipbuilding Co., Ltd. of South Korea ).  11 vessels are expected to be delivered in 2014 and four in the first and second quarters of 2015.                                                                                                                                                                                  
|(28) | These newbuilding vessels are being constructed at HSHI (Hyundai Samho Heavy Industries Co., Ltd.).  Six vessels are expected to be delivered in the third and fourth quarters of 2014 and two in the first quarter of 2015.                                                                                                                                                              
|(29) | These newbuilding vessels are being constructed at DSME (Daewoo Shipbuilding and Marine Engineering).  Two vessels are expected to be delivered in the fourth quarter of 2014 and two in the second quarter of 2015.                                                                                                                                                                      





23





Chartering strategy

Generally, we operate
our vessels in commercial pools on time charters or in the spot market.

Commercial Pools

To increase vessel
utilization and thereby revenues, we participate in commercial pools with other shipowners of similar modern, well-maintained vessels.
As of the date of this annual report, 47 of the vessels in our Operating Fleet operate in one of the Scorpio Group Pools. By operating
a large number of vessels as an integrated transportation system, commercial pools offer customers greater flexibility and a higher
level of service while achieving scheduling efficiencies. Pools employ experienced commercial managers and operators who have close
working relationships with customers and brokers, while technical management is performed by each shipowner. Pools negotiate charters
with customers primarily in the spot market. The size and scope of these pools enable them to enhance utilization rates for pool
vessels by securing backhaul voyages and contracts of affreightment, or COAs, thus generating higher effective TCE revenues than
otherwise might be obtainable in the spot market.

Time Charters

Time charters give
us a fixed and stable cash flow for a known period of time. Time charters also mitigate in part the seasonality of the spot market
business, which is generally weaker in the second and third quarters of the year. In the future, we may opportunistically look
to enter our vessels into time charter contracts. We may also enter into time charter contracts with profit sharing agreements,
which enable us to benefit if the spot market increases. As of the date of this annual report, one of the vessels in our
Operating Fleet is operating under a long-term time charter (greater than one year).

Spot Market

A spot market voyage
charter is generally a contract to carry a specific cargo from a load port to a discharge port for an agreed freight per ton of
cargo or a specified total amount. Under spot market voyage charters, we pay voyage expenses such as port, canal and bunker costs.
Spot charter rates are volatile and fluctuate on a seasonal and year-to-year basis. Fluctuations derive from imbalances in the
availability of cargoes for shipment and the number of vessels available at any given time to transport these cargoes. Vessels
operating in the spot market generate revenue that is less predictable, but may enable us to capture increased profit margins
during periods of improvements in tanker rates. As of the date of this annual report, four of the vessels in our Operating Fleet,
STI Duchessa,STI Opera, SenatoreandVenice were operating directly in the spot market.

Management of our fleet

Commercial and Technical Management

Our vessels are
commercially managed by Scorpio Commercial Management S.A.M., or SCM, and technically managed by Scorpio Ship Management S.A.M.,
or SSM, pursuant to a Master Agreement, which may be terminated upon two years notice. SCM and SSM are related parties of ours.
We expect that additional vessels that we may acquire in the future will also be managed under the Master Agreement or on substantially
similar terms.

SCM’s services
include securing employment, in the spot market and on time charters, for our vessels. SCM also manages the Scorpio Group Pools.
When our vessels are operating in one of the Scorpio Group Pools, SCM, the pool manager, charges fees of $300 per vessel per day
with respect to our Panamax/LR1 vessels, $250 per vessel per day with respect to our LR2 vessels, and $325 per vessel per day with
respect to each of our Handymax and MR vessels, plus 1.50% commission on gross revenues per charter fixture.  These are
the same fees that SCM charges other vessel owners in these pools, including third party owned vessels. For commercial management
of our vessels that are not operating in any of the Scorpio Group Pools, we pay SCM a fee of $250 per vessel per day for each Panamax,
LR1 and LR2 vessel and $300 per vessel per day for each Handymax and MR vessel, plus 1.25% commission on gross revenues per charter
fixture.

SSM’s services
include day-to-day vessel operation, performing general maintenance, monitoring regulatory and classification society compliance,
customer vetting procedures, supervising the maintenance and general efficiency of vessels, arranging the hiring of qualified officers
and crew, arranging and supervising drydocking and repairs, purchasing supplies, spare parts and new equipment for vessels, appointing
supervisors and technical consultants and providing technical support. We currently pay SSM $685 per vessel per day to provide
technical management services for each of our vessels which is the same fee that SSM charges to third parties.

Administrative Services Agreement

We have an Administrative
Services Agreement with Scorpio Services Holding Limited, or SSH, or our Administrator, for the provision of administrative staff
and office space, and administrative services, including accounting, legal compliance, financial and information technology services.
SSH is a related party of ours. Liberty, a company affiliated with us, acted as our Administrator until March 13, 2012 when the
Administrative Services Agreement was novated to SSH. The effective date of the novation was November 9, 2009, the date that we
first entered into the agreement with Liberty. We reimburse our current Administrator for the reasonable direct or indirect expenses
it incurs in providing us with the administrative services described above. Our Administrator also arranges vessel sales and purchases
for us. The services provided to us by our Administrator may be sub-contracted to other entities within the Scorpio Group.

24





We pay our Administrator
a fee for arranging vessel purchases and sales for us, equal to 1% of the gross purchase or sale price, payable upon the consummation
of any such purchase or sale. For the year ended December 31, 2013, we paid our Administrator $9.1 million, which consisted
of $2.5 million related to the purchase and delivery of seven newbuilding vessels in 2013 and $6.6 million on the purchase and
subsequent sale of our VLGC business to Dorian in November 2013. We believe this 1% fee on purchases and sales is customary in
the tanker industry.

Further, pursuant
to our administrative services agreement, our Administrator, on behalf of itself and other members of the Scorpio Group, has agreed
that it will not directly own product or crude tankers ranging in size from 35,000 dwt to 200,000 dwt.

Our administrative
services agreement, whose effective commencement began in December 2009, and can be terminated upon two years notice.

The International Oil Tanker Shipping Industry

All
the information and data presented in this section, including the analysis of the oil tanker shipping industry, has been provided
by Drewry Shipping Consultants Ltd., or Drewry. The statistical and graphical information contained herein is drawn from Drewry’s
database and other sources. According to Drewry: (i) certain information in Drewry’s database is derived from estimates or
subjective judgments; (ii) the information in the databases of other maritime data collection agencies may differ from the information
in Drewry’s database; and (iii) while Drewry has taken reasonable care in the compilation of the statistical and graphical
information and believes it to be accurate and correct, data compilation is subject to limited audit and validation procedures.



Oil Tanker Demand



In broad terms,
demand for oil products traded by sea is principally affected by world and regional economic conditions, as well as other factors
such as changes in the location of productive capacity, and variations in the regional prices.

Demand for
shipping capacity is a product of the physical quantity of the cargo (measured, depending on the cargo in terms of tons or cubic
metrics) together with the distance the cargo is carried. Demand cycles move broadly in line with developments in the global economy,
with demand for products slowing significantly in the period immediately after the onset of the global economic downturn in late
2008, before recovering gradually in 2012 and 2013 with the general improvement in the economic climate.

Product tankers
carry refined products, such as fuel oil and vacuum gas oil (often referred to as ‘dirty products’), gas oil, gasoline,
jet fuel, kerosene and naphtha (often referred to as ‘clean products’), and sometimes crude oil. In addition, some
product tankers are able to carry bulk liquid chemicals and edible oils and fats. Clean petroleum products are carried by International
Maritime Organisation (IMO) and non IMO certified tankers. IMO tankers also carry, depending on their tank coatings, a range of
other products including organic and inorganic bulk liquid chemicals, vegetable oils and animal fats and special products such
as molasses.

World oil consumption has generally
experienced sustained growth over the last two decades, although it declined in 2008-2009 due to the steep downturn in the global
economy. Data for 2013 however suggests that world oil demand rebounded to reach 90.9 million barrels per day and since 1990 it
has grown at a compound annual growth rate (CAGR) of approximately 1.2%.

25





World Oil Consumption: 1990–2013

(Million
Barrels Per Day)





Source: Drewry



Regionally,
while oil consumption has been static or slightly declining in most of the developed world, consumption is increasing in most of
the developing world. In recent years, Asia, in particular China has been the main generator of additional demand for oil, with
this demand largely supplied from traditional sources such as the Middle East. In the period 2003 to 2013 Chinese oil consumption
grew by a CAGR of 6.1% to reach 10.1 million barrels per day.

Oil consumption
on a per capita basis also remains low in countries such as China and India when compared with the United States and Western Europe,
but it is nonetheless growing rapidly thereby leading to increases in crude oil and refined product imports, as both countries
have insufficient domestic supplies to meet demand.

Oil Product Exports & Imports

A significant
development in the product tanker industry in recent years has been the growth of exports from the United States. Historically,
the United States was a net importer of products, but this situation has changed with the exploitation of shale reserves in the
United States and the growth in domestic oil production. In the period 2003-2013 exports of products from the United States increased
by a CAGR of 11.8% and much of this traffic went to South America to satisfy growing local demand.

Oil Product Exports – Major Growth
Regions

(Million Bpd)



Source: Drewry

26





In the United
States a combination of moderate oil demand and increased availability of crude oil supplies from tight oil and offshore sources
has led to a situation where large scale exports of products are feasible, especially middle distillates from the US Gulf. In light
of the projected growth in United States crude oil production, and strong demand growth in South America combined with increasing
long-haul flows to Asia, this is a trend which seems likely to continue. Other United States exports have been moving transatlantic
into Europe, where local refinery shutdowns have supported import demand.

Oil Product Imports – Major Growth Regions

(’000 Bpd)



Source: Drewry

Product trades
are also affected by the location of refinery capacity. During the past five years some oil producing regions in the developing
world – most notably the Middle East and Asia - have expanded their own refinery capacity; just as poor financial margins
have forced refinery closures in the developed world, especially in Europe and on the United States East Coast. In addition, most
of the planned increases in global refinery capacity are scheduled to take place in the Middle East and Asia. Therefore, the recent
trends in the location of global refinery capacity look set to continue.

Export-oriented
refineries in India and the Middle East, coupled with the closure of refining capacity in the developed world, have prompted longer
haul shipments to cater for product demand. Refinery closures close to consuming regions elsewhere in the world will also help
to support product import demand. For example, in Australia, trade from Singapore is expected to become increasingly important
to compensate for the conversion of local producing refineries into storage depots. This would be part of a general increase in
intra-Asian trade which is already boosting product tanker demand, something which may be further supported by expected closures
in Japan (a result of new government standards).

Current Tanker Fleet

As of February 28, 2014 the total oil tanker fleet (crude
and products) consisted of 3,196 ships with a combined capacity of 420.8 million dwt.

Oil Tanker Fleet –
February 28, 2014





|       |         | Deadweight Tons |  | Number of   |  |            |       | Capacity       |  |           
|------ | ------- | --------------- |  | ----------- |  | ---------- | ----- | -------------- |  | ----------
|Sector |         | (dwt)           |  | Vessels     |  | % of Fleet |       | (million dwt ) |  | % of Fleet
|       | Handy   |                 |  | 10-54,999   |  |            | 795   |                |  |           
|       | Panamax |                 |  | 55-79,999   |  |            | 394   |                |  |           
|       | Aframax |                 |  | 80-119,999  |  |            | 890   |                |  |           
|       | Suezmax |                 |  | 120-199,999 |  |            | 493   |                |  |           
|       | VLCC    |                 |  | 200-320,000 |  |            | 578   |                |  |           
|       | ULCC    |                 |  | 320,000+    |  |            | 46    |                |  |           
|       | Total   |                 |  |             |  |            | 3,196 |                |  |           





Source:Drewry



27





Additionally,
the tanker fleet is divided between crude tankers that carry crude oil or residual fuel oil (“dirty” products), and
product tankers that carry refined petroleum products (“clean” products) such as gasoline, jet fuel, kerosene, naphtha
and gas oil. There is no industry accepted standard definition of the world oil product tanker fleet but typically the fleet can
be divided into four major categories based on vessel size. The world product tanker fleet as of January 2014 consisted of 1,255
ships with a combined capacity of 72.6 million dwt. The breakdown of the fleet by size together with the orderbook for newbuilding
product tankers as of January 2014 is illustrated in the table below.

The World Product Tanker Fleet(1)&
Orderbook



|Size Category |           | Existing Fleet |  | Orderbook – Scheduled Deliveries
|------------- | --------- | -------------- |  | --------------------------------
|Dwt           |           | Jan-14         |  | 2014                            
|              |           | No.            |  | 000 Dwt                         
|              | 10-29,999 |                |  |                                 
|              | 30-41,999 |                |  |                                 
|              | 42-54,999 |                |  |                                 
|              | 55-79,999 |                |  |                                 
|              | 80,000+   |                |  |                                 
|              | Total     |                |  |                                 



(1) Product tankers only,
excludes chemical tankers

Source: Drewry



As of January 31, 2014,
the world product tanker orderbook for all vessels above 10,000 DWT comprised 231 ships with a combined capacity of 15.7 million
dwt, equivalent to 21.7% of the existing fleet. Most of the ships are due for delivery by the end of 2015, although it is worth
noting that in recent years the orderbook has been affected by the non-delivery of vessels. Product tankers scheduled for delivery
were not delivered for a variety of reasons, including delays, either through mutual agreement or through shipyard problems, and
some were due to vessel cancellations. Slippage and non-delivery is likely to remain an issue going forward and will continue to
moderate fleet growth.



The Oil Tanker Freight Market



Tanker charter hire rates
and vessel values for all tankers are influenced by the supply and demand for tanker capacity. Also, in general terms, time charter
rates are less volatile than spot rates, because they reflect the fact that the vessel is fixed for a longer period of time. In
the spot market, rates will reflect the immediate underlying conditions in vessel supply and demand and are thus prone to more
volatility. The trend in spot rates since 2000 for the main vessel classes is shown in the table below.



Oil Tanker – Spot (TCE) Rates

(US$/Day)





|Year |        | Caribs        |  | NW Europe      |        | West Africa     |  | AG             
|---- | ------ | ------------- |  | -------------- | ------ | --------------- |  | ---------------
|     |        | USES          |  | NW Europe      |        | Caribs/USES     |  | Japan          
|     |        | 40-70,000 dwt |  | 70-100,000 dwt |        | 150-160,000 dwt |  | 280-300,000 dwt
|     | 2000   |               |  |                | 28,375 |                 |  |                
|     | 2001   |               |  |                | 26,300 |                 |  |                
|     | 2002   |               |  |                | 16,567 |                 |  |                
|     | 2003   |               |  |                | 28,833 |                 |  |                
|     | 2004   |               |  |                | 42,158 |                 |  |                
|     | 2005   |               |  |                | 34,933 |                 |  |                
|     | 2006   |               |  |                | 28,792 |                 |  |                
|     | 2007   |               |  |                | 30,100 |                 |  |                
|     | 2008   |               |  |                | 36,992 |                 |  |                
|     | 2009   |               |  |                | 13,450 |                 |  |                
|     | 2010   |               |  |                | 17,950 |                 |  |                
|     | 2011   |               |  |                | 11,000 |                 |  |                
|     | 2012   |               |  |                | 15,245 |                 |  |                
|     | 2013   |               |  |                | 14,783 |                 |  |                
|     | Feb-14 |               |  |                | 27,600 |                 |  |                



Source: Drewry



Between
2003 and 2007, the differential between demand and supply for tankers remained narrow and product tanker freight rates were generally
firm. Following the recent recession, product tanker demand slowed, coinciding with substantial tonnage entering the fleet, driving
earnings down. In late 2013 however, there was some evidence that rates had started to move upwards from the recessionary lows.



28





Oil Tanker Newbuilding Prices

Newbuilding prices increased significantly
between 2003 and 2007 primarily as a result of increased tanker demand. Thereafter prices weakened in the face of a poor freight
market and lower levels of new ordering. In late 2013 prices started to recover, but it is worth noting that they are still significantly
below the peaks reported at the height of the market in 2008, a fact evident from the data shown in the table below.

Oil Tankers: Newbuilding Prices

(US$ Millions)



|Year End |  |  | 30,000 |  |  |  | 50,000 |  |  |  | 75,000 |  |  |  | 110,000 |  |  |  | 160,000 |  |  |  | 300,000 | 
|-------- |  |  | ------ |  |  |  | ------ |  |  |  | ------ |  |  |  | ------- |  |  |  | ------- |  |  |  | ------- | 
|         |  |  | Dwt    |  |  |  | Dwt    |  |  |  | Dwt    |  |  |  | Dwt     |  |  |  | Dwt     |  |  |  | Dwt     | 
|2000     |  |  | n/a    |  |  |  | 31.5   |  |  |  | 36.5   |  |  |  | 41.0    |  |  |  | 49.5    |  |  |  | 76.0    | 
|2001     |  |  | n/a    |  |  |  | 27.0   |  |  |  | 33.5   |  |  |  | 38.0    |  |  |  | 47.0    |  |  |  | 72.0    | 
|2002     |  |  | n/a    |  |  |  | 26.5   |  |  |  | 31.0   |  |  |  | 36.0    |  |  |  | 44.0    |  |  |  | 66.0    | 
|2003     |  |  | 28.5   |  |  |  | 30.5   |  |  |  | 34.5   |  |  |  | 40.0    |  |  |  | 52.0    |  |  |  | 73.0    | 
|2004     |  |  | 34.0   |  |  |  | 39.0   |  |  |  | 41.0   |  |  |  | 57.0    |  |  |  | 68.0    |  |  |  | 105.0   | 
|2005     |  |  | 37.5   |  |  |  | 42.0   |  |  |  | 43.0   |  |  |  | 59.0    |  |  |  | 71.0    |  |  |  | 120.0   | 
|2006     |  |  | 40.5   |  |  |  | 47.5   |  |  |  | 50.0   |  |  |  | 65.0    |  |  |  | 78.0    |  |  |  | 128.0   | 
|2007     |  |  | 46.0   |  |  |  | 54.0   |  |  |  | 64.0   |  |  |  | 78.0    |  |  |  | 90.0    |  |  |  | 146.0   | 
|2008     |  |  | 40.0   |  |  |  | 46.5   |  |  |  | 57.0   |  |  |  | 71.5    |  |  |  | 87.0    |  |  |  | 142.0   | 
|2009     |  |  | 31.0   |  |  |  | 36.0   |  |  |  | 42.5   |  |  |  | 52.0    |  |  |  | 62.0    |  |  |  | 101.0   | 
|2010     |  |  | 33.0   |  |  |  | 36.0   |  |  |  | 46.0   |  |  |  | 57.0    |  |  |  | 67.0    |  |  |  | 105.0   | 
|2011     |  |  | 31.5   |  |  |  | 36.0   |  |  |  | 44.0   |  |  |  | 52.8    |  |  |  | 61.7    |  |  |  | 99.0    | 
|2012     |  |  | 30.0   |  |  |  | 33.0   |  |  |  | 42.0   |  |  |  | 48.0    |  |  |  | 56.5    |  |  |  | 92.0    | 
|2013     |  |  | 31.0   |  |  |  | 35.0   |  |  |  | 43.0   |  |  |  | 51.5    |  |  |  | 59.0    |  |  |  | 93.5    | 
|Feb-14   |  |  | 33.0   |  |  |  | 37.5   |  |  |  | 45.0   |  |  |  | 54.0    |  |  |  | 64.0    |  |  |  | 98.5    | 





Source: Drewry



Secondhand Prices

Secondhand values primarily,
albeit with a lag, reflect prevailing and expected charter rates. During extended periods of high charter rates vessel values tend
to appreciate and vice versa. However vessel values are also influenced by other factors, including the age of the vessel. Prices
for young vessels, those approximately up to five years old, are also influenced by newbuilding prices while prices for old vessels,
near the end of their useful economic life, those approximately at or in excess of 25 years, are influenced by the value of scrap
steel.



The table below illustrates
the movements of prices (expressed in US$ million) for second hand oil tankers from 2000 to February 2014. In the last few months
of 2013 prices for all modern started to rise as a result of the rise in freight rates and more positive market sentiment, but
they remain a long way from the last cyclical peak seen in 2007/2008.





29





Oil Tanker Secondhand
Prices: 2000-2014(US$ Million)





|Year End |  |  | 30,000 |  |  |  | 45,000 |  |  |  | 70,000 |  |  |  | 95,000 |  |  |  | 150,000 |  |  |  | 300,000 | 
|-------- |  |  | ------ |  |  |  | ------ |  |  |  | ------ |  |  |  | ------ |  |  |  | ------- |  |  |  | ------- | 
|         |  |  | Dwt    |  |  |  | Dwt    |  |  |  | Dwt    |  |  |  | Dwt    |  |  |  | Dwt     |  |  |  | Dwt     | 
|         |  |  | 10 Yrs |  |  |  | 5 Yrs  |  |  |  | 5 Yrs  |  |  |  | 5 Yrs  |  |  |  | 5 Yrs   |  |  |  | 5 Yrs   | 
|2000     |  |  | 25.5   |  |  |  | 25.5   |  |  |  | 28.5   |  |  |  | 36.5   |  |  |  | 44.0    |  |  |  | 70.0    | 
|2001     |  |  | 25.0   |  |  |  | 25.0   |  |  |  | 25.5   |  |  |  | 34.5   |  |  |  | 41.5    |  |  |  | 63.0    | 
|2002     |  |  | 21.5   |  |  |  | 21.5   |  |  |  | 21.0   |  |  |  | 29.5   |  |  |  | 39.0    |  |  |  | 55.0    | 
|2003     |  |  | 29.5   |  |  |  | 29.5   |  |  |  | 24.0   |  |  |  | 37.0   |  |  |  | 47.0    |  |  |  | 70.0    | 
|2004     |  |  | 42.0   |  |  |  | 42.0   |  |  |  | 38.0   |  |  |  | 57.0   |  |  |  | 73.0    |  |  |  | 112.0   | 
|2005     |  |  | 45.5   |  |  |  | 45.5   |  |  |  | 39.0   |  |  |  | 58.0   |  |  |  | 75.0    |  |  |  | 110.0   | 
|2006     |  |  | 47.5   |  |  |  | 47.5   |  |  |  | 48.0   |  |  |  | 63.0   |  |  |  | 77.0    |  |  |  | 115.0   | 
|2007     |  |  | 52.0   |  |  |  | 52.0   |  |  |  | 59.0   |  |  |  | 68.5   |  |  |  | 91.5    |  |  |  | 130.0   | 
|2008     |  |  | 42.0   |  |  |  | 42.0   |  |  |  | 46.0   |  |  |  | 55.0   |  |  |  | 77.0    |  |  |  | 110.0   | 
|2009     |  |  | 24.0   |  |  |  | 24.0   |  |  |  | 32.5   |  |  |  | 38.0   |  |  |  | 53.0    |  |  |  | 77.5    | 
|2010     |  |  | 21.5   |  |  |  | 24.0   |  |  |  | 35.0   |  |  |  | 42.0   |  |  |  | 58.0    |  |  |  | 85.5    | 
|2011     |  |  | 22.5   |  |  |  | 27.0   |  |  |  | 32.0   |  |  |  | 33.5   |  |  |  | 45.5    |  |  |  | 58.0    | 
|2012     |  |  | 20.0   |  |  |  | 24.0   |  |  |  | 25.0   |  |  |  | 27.5   |  |  |  | 40.0    |  |  |  | 57.0    | 
|2013     |  |  | 21.0   |  |  |  | 29.0   |  |  |  | 31.0   |  |  |  | 32.0   |  |  |  | 42.0    |  |  |  | 60.0    | 
|Feb-14   |  |  | 21.5   |  |  |  | 29.0   |  |  |  | 32.0   |  |  |  | 36.0   |  |  |  | 47.0    |  |  |  | 71.0    | 



Source: Drewry

Environmental and Other Regulations

Government laws
and regulations significantly affect the ownership and operation of our vessels. We are subject to various international conventions,
laws and regulations in force in the countries in which our vessels may operate or are registered. Compliance with such laws, regulations
and other requirements entails significant expense, including vessel modification and implementation costs.

A variety of government,
quasi-governmental and private organizations subject our vessels to both scheduled and unscheduled inspections. These organizations
include the local port authorities, national authorities, harbor masters or equivalent entities, classification societies, relevant
flag state (country of registry) and charterers, particularly terminal operators and oil companies. Some of these entities require
us to obtain permits, licenses, certificates and approvals for the operation of our vessels. Our failure to maintain necessary
permits, licenses, certificates or approvals could require us to incur substantial costs or temporarily suspend operation of one
or more of the vessels in our fleet, or lead to the invalidation or reduction of our insurance coverage.

We believe that
the heightened levels of environmental and quality concerns among insurance underwriters, regulators and charterers have led to
greater inspection and safety requirements on all vessels and may accelerate the scrapping of older vessels throughout the industry.
Increasing environmental concerns have created a demand for tankers that conform to stricter environmental standards. We are required
to maintain operating standards for all of our vessels that emphasize operational safety, quality maintenance, continuous training
of our officers and crews and compliance with applicable local, national and international environmental laws and regulations.
We believe that the operation of our vessels is in substantial compliance with applicable environmental laws and regulations and
that our vessels have all material permits, licenses, certificates or other authorizations necessary for the conduct of our operations;
however, because such laws and regulations are frequently changed and may impose increasingly strict requirements, we cannot predict
the ultimate cost of complying with these requirements, or the impact of these requirements on the resale value or useful lives
of our vessels. In addition, a future serious marine incident that results in significant oil pollution, release of hazardous substances,
loss of life, or otherwise causes significant adverse environmental impact, such as the 2010 Deepwater Horizon oil spill
in the Gulf of Mexico, could result in additional legislation, regulation, or other requirements that could negatively affect our
profitability.

International Maritime Organization

The International
Maritime Organization, or the IMO, is the United Nations agency for maritime safety and the prevention of pollution by ships. The
IMO has adopted several international conventions that regulate the international shipping industry, including but not limited
to the International Convention on Civil Liability for Oil Pollution Damage of 1969, generally referred to as CLC, the International
Convention on Civil Liability for Bunker Oil Pollution Damage, and the International Convention for the Prevention of Pollution
from Ships of 1973, or the MARPOL Convention. The MARPOL Convention is broken into six Annexes, each of which establishes environmental
standards relating to different sources of pollution: Annex I relates to oil leakage or spilling; Annexes II and III relate to
harmful substances carried, in bulk, in liquid or packaged form, respectively; Annexes IV and V relate to sewage and garbage management,
respectively; and Annex VI, adopted by the IMO in September of 1997, relates to air emissions.



30





In 2012, the IMO’s
Marine Environmental Protection Committee, or MEPC, adopted by resolution amendments to the international code for the construction
and equipment of ships carrying dangerous chemicals in bulk, or the IBC Code. The provisions of the IBC Code are mandatory under
MARPOL and SOLAS. These amendments, which are expected to enter into force in June 2014, pertain to revised international certificates
of fitness for the carriage of dangerous chemicals in bulk and identifying new products that fall under the IBC Code. We may need
to make certain financial expenditures to comply with these amendments.

In 2013, the MEPC
adopted by resolution amendments to the MARPOL Annex I Conditional Assessment Scheme, or CAS. The amendments, which are expected
to become effective on October 1, 2014, pertain to revising references to the inspections of bulk carriers and tankers after the
2011 ESP Code, which enhances the programs of inspections, becomes mandatory. We may need to make certain financial expenditures
to comply with these amendments.

Air
Emissions

In September
of 1997, the IMO adopted Annex VI to MARPOL to address air pollution. Effective May 2005, Annex VI sets limits on nitrogen oxide
emissions from ships whose diesel engines were constructed (or underwent major conversions) on or after January 1, 2000. It also
prohibits “deliberate emissions” of “ozone depleting substances,” defined to include certain halons and
chlorofluorocarbons. “Deliberate emissions” are not limited to times when the ship is at sea; they can for example
include discharges occurring in the course of the ship’s repair and maintenance. Emissions of “volatile organic compounds”
from certain tankers, and the shipboard incineration (from incinerators installed after January 1, 2000) of certain substances
(such as polychlorinated biphenyls (PCBs)) are also prohibited. Annex VI also includes a global cap on the sulfur content of fuel
oil and allows for special areas to be established with more stringent controls of sulfur emissions known as “Emission Control
Areas” (“ECAs”) (see below).

The amended Annex
VI seeks to further reduce air pollution by, among other things, implementing a progressive reduction of the amount of sulfur contained
in any fuel oil used on board ships. As of January 1, 2012, the amended Annex VI requires that fuel oil contain no more than 3.50%
sulfur. By January 1, 2020, sulfur content must not exceed 0.50%, subject to a feasibility review to be completed no later than
2018.

Sulfur content standards
are even stricter within certain ECAs. As of July 1, 2010, ships operating within an ECA were not permitted to use fuel with sulfur
content in excess of 1.0% (from 1.50%), which will be further reduced to 0.10% on January 1, 2015. Amended Annex VI establishes
procedures for designating new ECAs. Currently, the Baltic Sea and the North Sea have been so designated. On August 1, 2012, certain
coastal areas of North America were designated ECAs and effective January 1, 2014, the applicable areas of the United States Caribbean
Sea were designated ECAs. If other ECAs are approved by the IMO or other new or more stringent requirements relating to emissions
from marine diesel engines or port operations by vessels are adopted by the EPA or the states where we operate, compliance with
these regulations could entail significant capital expenditures, operational changes, or otherwise increase the costs of our operations.

As of January 1,
2013, MARPOL made mandatory certain measures relating to energy efficiency for new ships in part to address greenhouse gas emissions.
It made the Energy Efficiency Design Index (EEDI) apply to all new ships, and the Ship Energy Efficiency Management Plan (SEEMP)
apply to all ships.

Amended Annex VI
also establishes new tiers of stringent nitrogen oxide emissions standards for new marine engines, depending on their date of installation.
The U.S. Environmental Protection Agency promulgated equivalent (and in some senses stricter) emissions standards in late 2009.
As a result of these designations or similar future designations, we may be required to incur additional operating or other costs.

Safety
Management System Requirements

The IMO also adopted
the International Convention for the Safety of Life at Sea, or SOLAS, and the International Convention on Load Lines, or LL, which
impose a variety of standards that regulate the design and operational features of ships. The IMO periodically revises the SOLAS
and LL standards. May 2012 SOLAS amendments entered into force as of January 1, 2014. The Convention on Limitation for Maritime
Claims (LLMC) was recently amended and the amendments are expected to go into effect on June 8, 2015. The amendments alter the
limits of liability for a loss of life or personal injury claim and a property claim against ship owners.

Our operations are
also subject to environmental standards and requirements contained in the International Safety Management Code for the Safe Operation
of Ships and for Pollution Prevention, or ISM Code, promulgated by the IMO under Chapter IX of SOLAS. The ISM Code requires the
owner of a vessel, or any person who has taken responsibility for operation of a vessel, to develop an extensive safety management
system that includes, among other things, the adoption of a safety and environmental protection policy setting forth instructions
and procedures for operating its vessels safely and describing procedures for responding to emergencies. We rely upon the safety
management system that has been developed for our vessels for compliance with the ISM Code.



31





The ISM Code requires
that vessel operators also obtain a safety management certificate for each vessel they operate. This certificate evidences compliance
by a vessel’s management with code requirements for a safety management system. No vessel can obtain a certificate unless
its manager has been awarded a document of compliance, issued by each flag state, under the ISM Code. We have obtained documents
of compliance for its offices and safety management certificates for all of our vessels for which the certificates are required
by the ISM Code. These documents of compliance and safety management certificates are renewed as required.

Noncompliance with
the ISM Code and other IMO regulations may subject the shipowner or bareboat charterer to increased liability, may lead to decreases
in, or invalidation of, available insurance coverage for affected vessels and may result in the denial of access to, or detention
in, some ports.

Pollution
Control and Liability Requirements

IMO has negotiated
international conventions that impose liability for pollution in international waters and the territorial waters of the signatory
nations to such conventions. For example, many countries have ratified and follow the liability plan adopted by the IMO and set
out in the International Convention on Civil Liability for Oil Pollution Damage of 1969, as amended by different Protocol in 1976,
1984, and 1992, and amended in 2000, or the CLC. Under the CLC and depending on whether the country in which the damage results
is a party to the 1992 Protocol to the CLC, a vessel’s registered owner is strictly liable for pollution damage caused in
the territorial waters of a contracting state by discharge of persistent oil, subject to certain exceptions. The 1992 Protocol
changed certain limits on liability, expressed using the International Monetary Fund currency unit of Special Drawing Rights. The
limits on liability have since been amended so that compensation limits on liability were raised. The right to limit liability
is forfeited under the CLC where the spill is caused by the shipowner’s personal fault and under the 1992 Protocol where
the spill is caused by the shipowner’s personal act or omission by intentional or reckless conduct where the shipowner knew
pollution damage would probably result. The CLC requires ships covered by it to maintain insurance covering the liability of the
owner in a sum equivalent to an owner’s liability for a single incident. We believe that our protection and indemnity insurance
will cover the liability under the plan adopted by the IMO.

The IMO adopted
the International Convention on Civil Liability for Bunker Oil Pollution Damage, or the Bunker Convention, to impose strict liability
on shipowners for pollution damage in jurisdictional waters of ratifying states caused by discharges of bunker fuel. The Bunker
Convention requires registered owners of ships over 1,000 gross tons to maintain insurance for pollution damage in an amount equal
to the limits of liability under the applicable national or international limitation regime (but not exceeding the amount calculated
in accordance with the Convention on Limitation of Liability for Maritime Claims of 1976, as amended). With respect to non-ratifying
states, liability for spills or releases of oil carried as fuel in ship’s bunkers typically is determined by the national
or other domestic laws in the jurisdiction where the events or damages occur.

In addition, the
IMO adopted an International Convention for the Control and Management of Ships’ Ballast Water and Sediments, or the BWM
Convention, in February 2004. The BWM Convention will not become effective until 12 months after it has been adopted by 30 states,
the combined merchant fleets of which represent not less than 35% of the gross tonnage of the world’s merchant shipping. To date,
there has not been sufficient adoption of this standard for it to take force, but it is close. Many of the implementation dates
originally written in the BWM Convention have already passed, so that once the BWM Convention enters into force, the period for
installation of mandatory ballast water exchange requirements would be extremely short, with several thousand ships a year needing
to install ballast water management systems (BWMS). For this reason, on December 4, 2013, the IMO Assembly passed a resolution
revising the application dates of BWM Convention so that they are triggered by the entry into force date and not the dates originally
in the BWM Convention. This in effect makes all vessels constructed before the entry into force date ‘existing’ vessels,
and allows for the installation of a BWMS on such vessels at the first renewal survey following entry into force. Once mid-ocean
ballast exchange or ballast water treatment requirements become mandatory, the cost of compliance could increase for ocean carriers.
Although we do not believe that the costs of compliance with a mandatory mid-ocean ballast exchange would be material, it is difficult
to predict the overall impact of such a requirement on our operations.

The IMO continues
to review and introduce new regulations. It is impossible to predict what additional regulations, if any, may be passed by the
IMO and what effect, if any, such regulations might have on our operations.

U.S. Regulations

The U.S. Oil Pollution
Act of 1990, or OPA, established an extensive regulatory and liability regime for the protection and cleanup of the environment
from oil spills. OPA affects all “owners and operators” whose vessels trade in the United States, its territories and
possessions or whose vessels operate in U.S. waters, which includes the U.S. territorial sea and its 200 nautical mile exclusive
economic zone. The United States has also enacted the Comprehensive Environmental Response, Compensation and Liability Act, or
CERCLA, which applies to the discharge of hazardous substances other than oil, whether on land or at sea. OPA and CERCLA both define
“owner and operator” “in the case of a vessel, as any person owning, operating or chartering by demise, the vessel.”
Accordingly, both OPA and CERCLA impact our operations.



32





Under OPA, vessel
owners and operators are “responsible parties” and are jointly, severally and strictly liable (unless the spill results
solely from the act or omission of a third party, an act of God or an act of war) for all containment and clean-up costs and other
damages arising from discharges or threatened discharges of oil from their vessels. OPA defines these other damages broadly to
include:

| | · | injury to, destruction or loss of, or loss of use of, natural resources and related assessment
costs;
| | - | -----------------------------------------------------------------------------------------------------

| | · | injury to, or economic losses resulting from, the destruction of real and personal property;
| | - | --------------------------------------------------------------------------------------------

| | · | net loss of taxes, royalties, rents, fees or net profit revenues resulting from injury, destruction
or loss of real or personal property, or natural resources;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | loss of subsistence use of natural resources that are injured, destroyed or lost;
| | - | ---------------------------------------------------------------------------------

| | · | lost profits or impairment of earning capacity due to injury, destruction or loss of real or personal
property or natural resources; and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------

| | · | net cost of increased or additional public services necessitated by removal activities following
a discharge of oil, such as protection from fire, safety or health hazards, and loss of subsistence use of natural resources.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

OPA contains statutory
caps on liability and damages; such caps do not apply to direct cleanup costs. Effective July 31, 2009, the U.S. Coast Guard adjusted
the limits of OPA liability to the greater of $2,000 per gross ton or $17.088 million for any double-hull tanker that is over 3,000
gross tons (subject to periodic adjustment for inflation), and our fleet is entirely composed of vessels of this size class. These
limits of liability do not apply if an incident was proximately caused by the violation of an applicable U.S. federal safety, construction
or operating regulation by a responsible party (or its agent, employee or a person acting pursuant to a contractual relationship),
or a responsible party’s gross negligence or willful misconduct. The limitation on liability similarly does not apply if
the responsible party fails or refuses to (i) report the incident where the responsibility party knows or has reason to know of
the incident; (ii) reasonably cooperate and assist as requested in connection with oil removal activities; or (iii) without sufficient
cause, comply with an order issued under the Federal Water Pollution Act (Section 311 (c), (e)) or the Intervention on the High
Seas Act.

CERCLA contains
a similar liability regime whereby owners and operators of vessels are liable for cleanup, removal and remedial costs, as well
as damage for injury to, or destruction or loss of, natural resources, including the reasonable costs associated with assessing
same, and health assessments or health effects studies. There is no liability if the discharge of a hazardous substance results
solely from the act or omission of a third party, an act of God or an act of war. Liability under CERCLA is limited to the greater
of $300 per gross ton or $5 million for vessels carrying a hazardous substance as cargo or residue and the greater of $300 per
gross ton or $500,000 for any other vessel. These limits do not apply (rendering the responsible person liable for the total cost
of response and damages) if the release or threat of release of a hazardous substance resulted from willful misconduct or negligence,
or the primary cause of the release was a violation of applicable safety, construction or operating standards or regulations. The
limitation on liability also does not apply if the responsible person fails or refused to provide all reasonable cooperation and
assistance as requested in connection with response activities where the vessel is subject to OPA.

OPA and CERCLA each
preserve the right to recover damages under existing law, including maritime tort law.

OPA and CERCLA both
require owners and operators of vessels to establish and maintain with the U.S. Coast Guard evidence of financial responsibility
sufficient to meet the maximum amount of liability to which the particular responsible person may be subject. Vessel owners and
operators may satisfy their financial responsibility obligations by providing a proof of insurance, a surety bond, qualification
as a self-insurer or a guarantee. We have provided such evidence and received certificates of financial responsibility from the
U.S. Coast Guard’s for each of our vessels that is required to have one.

OPA permits individual
states to impose their own liability regimes with regard to oil pollution incidents occurring within their boundaries, provided
they accept, at a minimum, the levels of liability established under OPA. Some states have enacted legislation providing for unlimited
liability for discharge of pollutants within their waters, however, in some cases, states which have enacted this type of legislation
have not yet issued implementing regulations defining tanker owners’ responsibilities under these laws.

The 2010 Deepwater
Horizon oil spill in the Gulf of Mexico may also result in additional regulatory initiatives or statutes, including the raising
of liability caps under OPA. For example, on August 15, 2012, the U.S. Bureau of Safety and Environmental Enforcement (BSEE) issued
a final drilling safety rule for offshore oil and gas operations that strengthens the requirements for safety equipment, well control
systems, and blowout prevention practices. Compliance with any new requirements of OPA may substantially impact our cost of operations
or require us to incur additional expenses to comply with any new regulatory initiatives or statutes.



33





Through our P&I
Club membership, we expect to maintain pollution liability coverage insurance in the amount of $1 billion per incident for each
of our vessels. If the damages from a catastrophic spill were to exceed our insurance coverage, it could have a material adverse
effect on our business, financial condition, results of operations and cash flows.

The U.S. Clean Water
Act, or CWA, prohibits the discharge of oil, hazardous substances and ballast water in U.S. navigable waters unless authorized
by a duly-issued permit or exemption, and imposes strict liability in the form of penalties for any unauthorized discharges. The
CWA also imposes substantial liability for the costs of removal, remediation and damages and complements the remedies available
under OPA and CERCLA. Furthermore, many U.S. states that border a navigable waterway have enacted environmental pollution laws
that impose strict liability on a person for removal costs and damages resulting from a discharge of oil or a release of a hazardous
substance. These laws may be more stringent than U.S. federal law.

The
EPA and U.S. Coast Guard, or USCG, have enacted rules relating to ballast water discharge, compliance with which requires the installation
of equipment on our vessels to treat ballast water before it is discharged or the implementation of other port facility disposal
arrangements or procedures at potentially substantial cost, and/or otherwise restrict our vessels from entering U.S. waters.



The
EPA requires a permit regulating ballast water discharges and other discharges incidental to the normal operation of certain vessels
within United States waters under the Vessel General Permit for Discharges Incidental to the Normal Operation of Vessels, or VGP.
For a new vessel delivered to an owner or operator after September 19, 2009 to be covered by the VGP, the owner must submit a Notice
of Intent, or NOI, at least 30 days before the vessel operates in United States waters. On March 28, 2013 the EPA re-issued the
VGP for another five years. This VGP took effect on December 19, 2013. The VGP focuses on authorizing discharges incidental to
operations of commercial vessels and the new VGP contains numeric ballast water discharge limits for most vessels to reduce the
risk of invasive species in US waters, more stringent requirements for exhaust gas scrubbers and the use of environmentally acceptable
lubricants.



USCG
regulations adopted and proposed for adoption under the U.S. National Invasive Species Act, or NISA, impose mandatory ballast water
management practices for all vessels equipped with ballast water tanks entering U.S. waters, which require the installation of
equipment on our vessels to treat ballast water before it is discharged or the implementation of other port facility disposal arrangements
or procedures, and/or otherwise restrict our vessels from entering U.S. waters. The USCG must approve any technology before it
is placed on a vessel, but has not yet approved the technology necessary for vessels to meet the foregoing standards.



Notwithstanding the foregoing,
as of January 1, 2014, vessels are technically subject to the phasing-in of these standards. As a result, the USCG has provided
waivers to vessels which cannot install the as-yet unapproved technology. The EPA, on the other hand, has taken a different approach
to enforcing ballast discharge standards under the VGP. On December 27, 2013, the EPA issued an enforcement response policy in
connection with the new VGP in which the EPA indicated that it would take into account the reasons why vessels do not have the
requisite technology installed, but will not grant any waivers.



Compliance with
the EPA and the U.S. Coast Guard regulations could require the installation of equipment on our vessels to treat ballast water
before it is discharged or the implementation of other port facility disposal arrangements or procedures at potentially substantial
cost, and/or otherwise restrict our vessels from entering U.S. waters.

European Union Regulations

In October 2009,
the European Union amended a directive to impose criminal sanctions for illicit ship-source discharges of polluting substances,
including minor discharges, if committed with intent, recklessly or with serious negligence and the discharges individually or
in the aggregate result in deterioration of the quality of water. Aiding and abetting the discharge of a polluting substance may
also lead to criminal penalties. Member States were required to enact laws or regulations to comply with the directive by the end
of 2010. Criminal liability for pollution may result in substantial penalties or fines and increased civil liability claims.

Greenhouse Gas Regulation

Currently, the emissions
of greenhouse gases from international shipping are not subject to the Kyoto Protocol to the United Nations Framework Convention
on Climate Change, which entered into force in 2005 and pursuant to which adopting countries have been required to implement national
programs to reduce greenhouse gas emissions. As of January 1, 2013, all new ships must comply with two new sets of mandatory requirements
to address greenhouse gas emissions from ships which were adopted by MEPC, in July 2011. Currently operating ships are required
to develop Ship Energy Efficiency Management Plans, and minimum energy efficiency levels per capacity mile, outlined in the Energy
Efficiency Design Index, will apply to new ships. These requirements could cause us to incur additional compliance costs. The IMO
is also planning to implement market-based mechanisms to reduce greenhouse gas emissions from ships at an upcoming MEPC session.
The European Union has indicated that it intends to propose an expansion of the existing European Union emissions trading scheme
to include emissions of greenhouse gases from marine vessels, and in January 2012 the European Commission launched a public consultation
on possible measures to reduce greenhouse gas emissions from ships. In April 2013, the European Parliament rejected proposed changes
to the European Union Emissions Law regarding carbon trading. In June 2013 the European Commission developed a strategy to integrate
maritime emissions into the overall European Union Strategy to reduced greenhouse gas emissions. If the strategy is adopted by
the European Parliament and Council large vessels using European Union ports would be required to monitor, report, and verify their
carbon dioxide emissions beginning in January 2018. In December 2013 the European Union environmental ministers discussed draft
rules to implement monitoring and reporting of carbon dioxide emissions from ships. In the United States, the EPA has issued a
finding that greenhouse gases endanger the public health and safety and has adopted regulations to limit greenhouse gas emissions
from certain mobile sources and large stationary sources. Although the mobile source emissions regulations do not apply to greenhouse
gas emissions from vessels, such regulation of vessels is foreseeable, and the EPA has in recent years received petitions from
the California Attorney General and various environmental groups seeking such regulation. Any passage of climate control legislation
or other regulatory initiatives by the IMO, European Union, the U.S. or other countries where we operate, or any treaty adopted
at the international level to succeed the Kyoto Protocol, that restrict emissions of greenhouse gases could require us to make
significant financial expenditures, including capital expenditures to upgrade our vessels, which we cannot predict with certainty
at this time.



34





International Labour Organization

The International
Labour Organization (ILO) is a specialized agency of the UN with headquarters in Geneva, Switzerland. The ILO has adopted the Maritime
Labor Convention 2006 (MLC 2006). A Maritime Labor Certificate and a Declaration of Maritime Labor Compliance will be required
to ensure compliance with the MLC 2006 for all ships above 500 gross tons in international trade. The MLC 2006 entered into force
on August 20, 2013. The MLC 2006 requires us to develop new procedures to ensure full compliance with its requirements.

Vessel Security Regulations

Since the terrorist
attacks of September 11, 2001, there have been a variety of initiatives intended to enhance vessel security. On November 25, 2002,
the U.S. Maritime Transportation Security Act of 2002, or the MTSA, came into effect. To implement certain portions of the MTSA,
in July 2003, the U.S. Coast Guard issued regulations requiring the implementation of certain security requirements aboard vessels
operating in waters subject to the jurisdiction of the United States. The regulations also impose requirements on certain ports
and facilities, some of which are regulated by the EPA.

Similarly, in December
2002, amendments to SOLAS created a new chapter of the convention dealing specifically with maritime security. The new Chapter
V became effective in July 2004 and imposes various detailed security obligations on vessels and port authorities, and mandates
compliance with the International Ship and Port Facilities Security Code (“ISPS Code”). The ISPS Code is designed to
enhance the security of ports and ships against terrorism. Amendments to SOLAS Chapter VII, made mandatory in 2004, apply to vessels
transporting dangerous goods and require those vessels be in compliance with the International Maritime Dangerous Goods Code (“IMDG
Code”).

To trade internationally,
a vessel must attain an International Ship Security Certificate (“ISSC”), from a recognized security organization approved
by the vessel’s flag state. Among the various requirements are:

| | · | on-board installation of automatic identification systems to provide a means for the automatic
transmission of safety-related information from among similarly equipped ships and shore stations, including information on a ship’s
identity, position, course, speed and navigational status;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | · | the development of vessel security plans;
| | - | -----------------------------------------

| | · | ship identification number to be permanently marked on a vessel’s hull;
| | - | -----------------------------------------------------------------------

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

| | · | compliance with flag state security certification requirements.
| | - | ---------------------------------------------------------------

Ships operating
without a valid certificate, may be detained at port until it obtains an ISSC, or it may be expelled from port, or refused entry
at port.



35





The USCG regulations,
intended to align with international maritime security standards, exempt from MTSA vessel security measures non-U.S. vessels provided
that such vessels have on board a valid ISSC that attests to the vessel’s compliance with SOLAS security requirements and
the ISPS Code. We have implemented the various security measures addressed by MTSA, SOLAS and the ISPS Code, and our fleet is in
compliance with applicable security requirements.

Inspection by classification societies

Every seagoing vessel
must be “classed” by a classification society. The classification society certifies that the vessel is ’‘in
class,’’ signifying that the vessel has been built and maintained in accordance with the rules of the classification
society and complies with applicable rules and regulations of the vessel’s country of registry and the international conventions
of which that country is a member. In addition, where surveys are required by international conventions and corresponding laws
and ordinances of a flag state, the classification society will undertake them on application or by official order, acting on behalf
of the authorities concerned.

The classification
society also undertakes on request other surveys and checks that are required by regulations and requirements of the flag state.
These surveys are subject to agreements made in each individual case and/or to the regulations of the country concerned.

For maintenance
of the class, regular and extraordinary surveys of hull, machinery, including the electrical plant, and any special equipment classed
are required to be performed as follows:

| | · | Annual Surveys.For seagoing ships, annual surveys are conducted for the hull and the machinery,
including the electrical plant, and where applicable for special equipment classed, within three months before or after each anniversary
date of the date of commencement of the class period indicated in the certificate.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Intermediate Surveys.Extended annual surveys are referred to as intermediate surveys and
typically are conducted two and one-half years after commissioning and each class renewal. Intermediate surveys are to be carried
out at or between the occasion of the second or third annual survey.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Class Renewal Surveys.Class renewal surveys, also known as special surveys, are carried
out for the ship’s hull, machinery, including the electrical plant, and for any special equipment classed, at the intervals
indicated by the character of classification for the hull. At the special survey, the vessel is thoroughly examined, including
audio-gauging to determine the thickness of the steel structures. Should the thickness be found to be less than class requirements,
the classification society would prescribe steel renewals. The classification society may grant a one-year grace period for completion
of the special survey. Substantial amounts of money may have to be spent for steel renewals to pass a special survey if the vessel
experiences excessive wear and tear. In lieu of the special survey every four or five years, depending on whether a grace period
was granted, a vessel owner has the option of arranging with the classification society for the vessel’s hull or machinery
to be on a continuous survey cycle, in which every part of the vessel would be surveyed within a five-year cycle.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

At an owner’s
application, the surveys required for class renewal may be split according to an agreed schedule to extend over the entire period
of class. This process is referred to as continuous class renewal.

All areas subject
to survey as defined by the classification society are required to be surveyed at least once per class period, unless shorter intervals
between surveys are prescribed elsewhere. The period between two subsequent surveys of each area must not exceed five years.

Most vessels are
also dry-docked every 30 to 36 months for inspection of the underwater parts and for repairs related to inspections. If any defects
are found, the classification surveyor will issue a “recommendation’’ which must be rectified by the
ship owner within prescribed time limits.

Most insurance underwriters
make it a condition for insurance coverage that a vessel be certified as “in-class” by a classification society which
is a member of the International Association of Classification Societies (“IACS”). In December 2013 the IACS adopted
new harmonized Common Structure Rules which will apply to oil tankers and bulk carriers to be constructed on or after July 1, 2015.
All our vessels are certified as being “in-class” by American Bureau of Shipping and Det Norske Veritas. All new and
secondhand vessels that we purchase must be certified prior to their delivery under our standard purchase contracts and memoranda
of agreement. If the vessel is not certified on the scheduled date of closing, we have no obligation to take delivery of the vessel.



36





In
addition to the classification inspections, many of our customers regularly inspect our vessels as a precondition to chartering
them for voyages. We believe that our well-maintained, high-quality vessels provide us with a competitive advantage in the current
environment of increasing regulation and customer emphasis on quality.

Risk of Loss and Liability Insurance

General

The operation of
any cargo vessel includes risks such as mechanical failure, collision, property loss, cargo loss or damage and business interruption
due to political circumstances in foreign countries, hostilities and labor strikes. In addition, there is always an inherent possibility
of marine disaster, including oil spills and other environmental mishaps, and the liabilities arising from owning and operating
vessels in international trade. OPA, which in certain circumstances imposes virtually unlimited liability upon owners, operators
and demise charterers of any vessel trading in the United States exclusive economic zone for certain oil pollution accidents in
the United States, has made liability insurance more expensive for vessel-owners and operators trading in the United States market.
While we believe that our present insurance coverage is adequate, not all risks can be insured against, and there can be no guarantee
that any specific claim will be paid, or that we will always be able to obtain adequate insurance coverage at reasonable rates.

Marine and War Risks Insurance

We have in
force marine and war risks insurance for all of our vessels. Our marine hull and machinery insurance covers
risks of particular average and actual or constructive total loss from collision, fire, grounding, engine breakdown and
other insured named perils up to an agreed amount per vessel. Our war risks insurance covers the risks of particular average
and actual or constructive total loss from confiscation, seizure, capture, vandalism, sabotage, and other war-related named
perils. Each vessel is covered up to at least its fair market value at the time of the insurance attachment and subject to a
fixed deductible per each single accident or occurrence, but excluding actual or constructive total loss.

Protection and Indemnity
Insurance

Protection and indemnity
(P&I) insurance is provided by mutual protection and indemnity associations, commonly referred to as P&I Clubs, and provides
unlimited coverage, except for pollution which is capped as discussed below. P&I insurance covers our third party liabilities
in connection with our shipping activities. This includes liability and other related expenses resulting from injury, illness or
death of crew, passengers and other third parties, loss of or damage to cargo, claims arising from collisions with other vessels,
damage to third-party property including piers and other fixed or floating objects, pollution arising from oil or other substances,
and salvage, towing and other related costs, including wreck removal.



As a member of
a P&I Club that is, in turn, a member of the International Group of P&I Clubs we carry protection and indemnity
insurance coverage for pollution of $1 billion per vessel per incident. The P&I Clubs that comprise the International
Group insure approximately 90% of the world’s commercial tonnage and have entered into a pooling agreement to reinsure
each Club’s liabilities. Although the P&I Clubs compete with each other for business, they have found it beneficial
to pool their larger risks under the auspices of the International Group. This pooling is regulated by a contractual
agreement which defines the risks that are to be pooled and exactly how these risks are to be shared by the participating
P&I Clubs. We are subject to calls payable to the Clubs of which we are members based on its claim records as well as the
claim records of all other members of the individual Clubs and members of the pool of P&I Clubs comprising the
International Group.

C.	Organizational Structure

Please see
Exhibit 8.1 to this annual report for a list of our current subsidiaries.

D.	Property, Plants and Equipment

For a description
of our fleet, see “Item 4. Information on the Company—B. Business Overview.”

ITEM 4A.	UNRESOLVED
STAFF COMMENTS

None.

ITEM 5.	OPERATING AND
FINANCIAL REVIEW AND PROSPECTS

The following
presentation of management’s discussion and analysis of results of operations and financial condition should be read in
conjunction with our consolidated financial statements, accompanying notes thereto and other financial information appearing in
Item 18. “Financial Statements.” You should also carefully read the following discussion with the sections of this
annual report entitled “Item 3. Key Information—D. Risk Factors,” “Item 4. Information on the Company—B.
Business Overview—The International Oil Tanker Shipping Industry,” and “Cautionary Statement Regarding Forward-Looking
Statements.” Our consolidated financial statements as of December 31, 2013 and 2012 and for the years ended December 31,
2013, 2012 and 2011 have been prepared in accordance with IFRS as issued by the IASB. The consolidated financial statements are
presented in U.S. dollars ($) unless otherwise indicated. Any amounts converted from another non-U.S. currency to U.S.
dollars in this annual report are at the rate applicable at the relevant date, or the average rate during the applicable period.



37





We generate revenues
by charging customers for the transportation of their refined oil and other petroleum products using our vessels. Historically,
these services generally have been provided under the following basic types of contractual relationships:

| | · | Voyage charters, which are charters for short intervals that are priced on current, or “spot,”
market rates.
| | - | ------------------------------------------------------------------------------------------------------------

| | · | Time charters, which are chartered to customers for a fixed period of time at rates that
are generally fixed, but may contain a variable component based on inflation, interest rates, or current market rates.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Commercial Pools, whereby we participate with other shipowners to operate a large number
of vessels as an integrated transportation system, which offers customers greater flexibility and a higher level of service while
achieving scheduling efficiencies. Pools negotiate charters primarily in the spot market. The size and scope of these pools enable
them to enhance utilization rates for pool vessels by securing backhaul voyages and contracts of affreightment (described below),
thus generating higher effective time charter equivalent, or TCE, revenues than otherwise might be obtainable in the spot market.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | For all types of vessels in contractual relationships, we are responsible for crewing and other
vessel operating costs for our owned vessels and the charterhire expense for vessels that we time charter-in.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The table below
illustrates the primary distinctions among these different employment arrangements:

|                                                |  |                       |  |                       |  |                  
|----------------------------------------------- |  | --------------------- |  | --------------------- |  | -----------------
|                                                |  | Voyage Charter        |  | Time Charter          |  | Commercial Pool  
|Typical contract length                         |  | Single voyage         |  | One year or more      |  | Varies           
|Hire rate basis(1)                              |  | Varies                |  | Daily                 |  | Varies           
|Voyage expenses(2)                              |  | We pay                |  | Customer pays         |  | Pool pays        
|Vessel operating costs for owned vessels(3)     |  | We pay                |  | We pay                |  | We pay           
|Charterhire expense for vessels chartered-in(3) |  | We pay                |  | We pay                |  | We pay           
|Off-hire (4)                                    |  | Customer does not pay |  | Customer does not pay |  | Pool does not pay

____________________

| | (1) | “Hire rate”refers to the basic payment from the charterer for the use of the
vessel.
| | --- | ------------------------------------------------------------------------------------



| | (2) | “Voyage expenses”refers to expenses incurred due to a vessel’s
                                                               traveling from a loading port to a discharging port, such as fuel (bunker) cost, port expenses, agent’s fees, canal
                                                               dues and extra war risk insurance, as well as commissions.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | Defined below under “—Important Financial and Operational Terms and Concepts.”
| | --- | ------------------------------------------------------------------------------



| | (4) | “Off-hire”refers to the time a vessel is not available for service due primarily
to scheduled and unscheduled repairs or drydockings. For time chartered-in vessels, we do not pay the charterhire expense when
the vessel is off-hire.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



As of the date
of this annual report, all of our owned and time chartered-in vessels were operating in the Scorpio Group Pools exceptSTI
Duchessa, STI Opera, Senatore and Venice, which were operating directly in the spot market and STI Texas
City which is on a two year time charter-out agreement expiring in March 2016.

Important Financial and Operational Terms and Concepts

We use a variety
of financial and operational terms and concepts. These include the following:

Vessel
revenues. Vessel revenues primarily include revenues from time charters, pool revenues and voyage charters (in the
spot market). Vessel revenues are affected by hire rates and the number of days a vessel operates. Vessel revenues are also
affected by the mix of business between vessels on time charter, vessels in pools and vessels operating on voyage charter.
Revenues from vessels in pools and on voyage charter are more volatile, as they are typically tied to prevailing market
rates.



38





Voyage charters.
Voyage charters or spot voyages are charters under which the customer pays a transportation charge for the movement of a specific
cargo between two or more specified ports. We pay all of the voyage expenses.

Voyage
expenses. Voyage expenses primarily include bunkers, port charges, canal tolls, cargo handling operations and
brokerage commissions paid by us under voyage charters. These expenses are subtracted from voyage charter revenues to
calculate time charter equivalent revenues.

Vessel operating
costs.For our owned vessels, we are responsible for vessel operating costs, which include crewing, repairs and maintenance,
insurance, stores, lube oils, communication expenses, and technical management fees. The two largest components of our vessel
operating costs are crewing, and repairs and maintenance. Expenses for repairs and maintenance tend to fluctuate from period
to period because most repairs and maintenance typically occur during periodic drydocking. Please read “Drydocking”
below. We expect these expenses to increase as our fleet matures and to the extent that it expands.

Additionally, these
costs include technical management fees that we paid to SSM, which is controlled by the Lolli-Ghetti family. Pursuant to our Master
Agreement, SSM provides us with technical services, and we provide them with the ability to subcontract technical management of
our vessels with our approval.

Charterhire.
Charterhire is the amount we pay the owner for time chartered-in vessels. The amount is usually for a fixed period of time at
rates that are generally fixed, but may contain a variable component based on inflation, interest rates, or current market
rates. The vessel’s owner is responsible for crewing and other vessel operating costs.

Drydocking.
We periodically drydock each of our owned vessels for inspection, repairs and maintenance and any modifications to comply
with industry certification or governmental requirements. Generally, each vessel is drydocked every 30 months to 60 months.
We capitalize a substantial portion of the costs incurred during drydocking and amortize those costs on a straight-line basis
from the completion of a drydocking to the estimated completion of the next drydocking. We immediately expense costs for
routine repairs and maintenance performed during drydocking that do not improve or extend the useful lives of the assets. The
number of drydockings undertaken in a given period and the nature of the work performed determine the level of drydocking
expenditures.

Depreciation.
Depreciation expense typically consists of:

| | · | charges related to the depreciation of the historical cost of our owned vessels (less an estimated residual value) over the
estimated useful lives of the vessels; and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | charges related to the amortization of drydocking expenditures over the estimated number of years to the next scheduled drydocking.
| | - | -----------------------------------------------------------------------------------------------------------------------------------

Time
charter equivalent (TCE) revenue or rates. We report time charter equivalent, or TCE revenues, a non-IFRS measure,
because (i) we believe it provides additional meaningful information in conjunction with voyage revenues and voyage
expenses, the most directly comparable IFRS measure, (ii) it assists our management in making decisions regarding the
deployment and use of our vessels and in evaluating their financial performance, (iii) it is a standard shipping
industry performance measure used primarily to compare period-to-period changes in a shipping company’s performance
irrespective of changes in the mix of charter types (i.e., spot charters, time charters and bareboat charters) under which
the vessels may be employed between the periods, and (iv) we believe that it presents useful information to investors.
TCE revenue is vessel revenue less voyage expenses, including bunkers and port charges. The TCE rate achieved on a given
voyage is expressed in US dollars/day and is generally calculated by taking TCE revenue and dividing that figure by the
number of revenue days in the period. For a reconciliation of TCE revenue, deduct voyage expenses from revenue on our
Statement of Income or Loss.

Revenue
days. Revenue days are the total number of calendar days our vessels were in our possession during a period, less the
total number of off-hire days during the period associated with major repairs or drydockings. Consequently, revenue days
represent the total number of days available for the vessel to earn revenue. Idle days, which are days when a vessel is
available to earn revenue, yet is not employed, are included in revenue days. We use revenue days to show changes in net
vessel revenues between periods.

Average
number of vessels. Historical average number of owned vessels consists of the average number of vessels that were in
our possession during a period. We use average number of vessels primarily to highlight changes in vessel operating costs and
depreciation and amortization.

Contract
of affreightment. A contract of affreightment, or COA, relates to the carriage of specific quantities of cargo with
multiple voyages over the same route and over a specific period of time which usually spans a number of years. A COA does not
designate the specific vessels or voyage schedules that will transport the cargo, thereby providing both the charterer and
shipowner greater operating flexibility than with voyage charters alone. The charterer has the flexibility to determine the
individual voyage scheduling at a future date while the shipowner may use different vessels to perform these individual
voyages. As a result, COAs are mostly entered into by large fleet operators, such as pools or shipowners with large fleets of
the same vessel type. We pay the voyage expenses while the freight rate normally is agreed on a per cargo ton basis.



39





Commercial
pools. To increase vessel utilization and revenues, we participate in commercial pools with other shipowners and
operators of similar modern, well-maintained vessels. By operating a large number of vessels as an integrated transportation
system, commercial pools offer customers greater flexibility and a higher level of service while achieving scheduling
efficiencies. Pools employ experienced commercial charterers and operators who have close working relationships with
customers and brokers, while technical management is performed by each shipowner. Pools negotiate charters with customers
primarily in the spot market. The size and scope of these pools enable them to enhance utilization rates for pool vessels by
securing backhaul voyages and COAs, thus generating higher effective TCE revenues than otherwise might be obtainable in the
spot market while providing a higher level of service offerings to customers.

Operating
days. Operating days are the total number of available days in a period with respect to the owned vessels, before
deducting available days due to off-hire days and days in drydock. Operating days is a measurement that is only applicable to
our owned vessels, not our chartered-in vessels.

Items You Should Consider When Evaluating Our Results

You should consider
the following factors when evaluating our historical financial performance and assessing our future prospects:

Our
vessel revenues are affected by cyclicality in the tanker markets. The cyclical nature of the tanker industry causes
significant increases or decreases in the revenue we earn from our vessels, particularly those vessels we trade in the spot
market. We employ a chartering strategy to capture upside opportunities in the spot market while using fixed-rate time
charters to reduce downside risks, depending on SCM’s outlook for freight rates, oil tanker market conditions and
global economic conditions. Historically, the tanker industry has been cyclical, experiencing volatility in profitability due
to changes in the supply of, and demand for, tanker capacity. The supply of tanker capacity is influenced by the number and
size of new vessels built, vessels scrapped, converted and lost, the number of vessels that are out of service, and
regulations that may effectively cause early obsolescence of tonnage. The demand for tanker capacity is influenced by, among
other factors:

| | · | global and regional economic and political conditions;
| | - | ------------------------------------------------------

| | · | increases and decreases in production of and demand for crude oil and petroleum products;
| | - | -----------------------------------------------------------------------------------------

| | · | increases and decreases in OPEC oil production quotas;
| | - | ------------------------------------------------------

| | · | the distance crude oil and petroleum products need to be transported by sea; and
| | - | --------------------------------------------------------------------------------

| | · | developments in international trade and changes in seaborne and other transportation patterns.
| | - | ----------------------------------------------------------------------------------------------

Tanker
rates also fluctuate based on seasonal variations in demand.Tanker markets are typically stronger in the winter
months as a result of increased oil consumption in the northern hemisphere but weaker in the summer months as a result of
lower oil consumption in the northern hemisphere and refinery maintenance that is typically conducted in the summer months.
In addition, unpredictable weather patterns during the winter months in the northern hemisphere tend to disrupt vessel
routing and scheduling. The oil price volatility resulting from these factors has historically led to increased oil trading
activities in the winter months. As a result, revenues generated by our vessels have historically been weaker during the
quarters ended June 30 and September 30, and stronger in the quarters ended March 31 and December 31.

Our general
and administrative expenses were affected by the fees we pay SCM and SSH for commercial management and administrative services
respectively, and costs incurred from being a public company.SCM and SSH, companies controlled by the Lolli-Ghetti family
of which our founder, Chairman and Chief Executive Officer is a member, provide commercial and administrative management services
to us, respectively. We pay fees under our Master Agreement with SCM, which are identical to what SCM charges third-party
owned vessels. We reimburse our Administrator for the reasonable direct or indirect expenses it incurs in providing us with the
administrative services described above. We also pay our Administrator a fee for arranging vessel purchases and sales for us equal
to 1% of the gross purchase or sale price, payable upon the consummation of any such purchase or sale. We believe this 1% fee
on purchases and sales is customary in the tanker industry. In addition, we continue to incur general and administrative expenses
related to our being a publicly traded company, including, among other things, costs associated with reports to shareholders,
filings with the U.S. Securities Exchange Commission, investor relations, New York Stock Exchange fees and tax compliance expenses.

Critical Accounting
Policies

In the application
of the accounting policies, we are required to make judgments, estimates and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant. Actual results may differ from these estimates.



40





The estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which
the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision
affects both current and future periods.

The significant
judgments and estimates are as follows:

Revenue recognition

We currently generate
all revenue from vessels operating in pools or in the spot market. From time to time we also employ our vessels on time charters.
Revenue recognition for time charters and pools is generally not as complex or as subjective as voyage charters (spot voyages).
Time charters are for a specific period of time at a specific rate per day. For long-term time charters, revenue is recognized
on a straight-line basis over the term of the charter. Pool revenues are determined by the pool managers from the total revenues
and expenses of the pool and allocated to pool participants using a mechanism set out in the pool agreement.

We generated revenue
from spot voyages during the year ended December 31, 2013. Within the shipping industry, there are two methods used to account
for spot voyage revenue: (1) ratably over the estimated length of each voyage or (2) completed voyage. The recognition of voyage
revenues ratably over the estimated length of each voyage is the most prevalent method of accounting for voyage revenues and the
method used by us. Under each method, voyages may be calculated on either a load-to-load or discharge-to-discharge basis. In applying
our revenue recognition method, we believe that the discharge-to-discharge basis of calculating voyages more accurately estimates
voyage results than the load-to-load basis. In the application of this policy, we do not begin recognizing revenue until (i) the
amount of revenue can be measured reliably, (ii) it is probable that the economic benefits associated with the transaction will
flow to the entity, (iii) the transactions stage of completion at the balance sheet date can be measured reliably and (iv) the
costs incurred and the costs to complete the transaction can be measured reliably.

Vessel impairment

Impairment methodology

The carrying values
of our vessels may not represent their fair market value at any point in time since the market prices of second-hand vessels fluctuate
with changes in charter rates and the cost of constructing new vessels. At each reporting period end date, we review the carrying
amounts of our vessels to determine whether there is any indication that those vessels may have suffered an impairment loss. In
this regard, fluctuations in market values below carrying values are considered to represent an impairment triggering event that
necessitates performance of a full impairment review.



Impairment losses are
calculated as the excess of a vessel’s carrying amount over its recoverable amount. Under IFRS, the recoverable amount is
the higher of an asset’s (i) fair value less costs to sell and (ii) value in use. Fair value less costs to sell is defined
by IFRS as “the amount obtainable from the sale of an asset or cash-generating unit in an arm’s length transaction
between knowledgeable, willing parties, less the costs of disposal”. When we calculate value in use, we discount the expected
future cash flows to be generated by our vessels to their net present value.



Our impairment evaluation
is performed on an individual vessel basis when there are indications of impairments. First, we assess the fair value less the
cost to sell our vessels taking into consideration vessel valuations from leading, independent and internationally recognized ship
brokers. We then compare that estimate of market values (less an estimate of selling costs) to each vessel’s carrying value
and, if the carrying value exceeds the vessel’s market value, an indicator of impairment exists. The indicator of impairment
prompts us to perform a calculation of the potentially impaired vessel’s value in use, in order to appropriately determine
the ‘higher of’ the two values.



In assessing value
in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows
have not been adjusted. In developing estimates of future cash flows, we make assumptions about future charter rates, vessel operating
expenses, the estimated remaining useful lives of the vessels and the discount rate. These assumptions are based on historical
trends as well as future expectations. Although management believes that the assumptions used to evaluate potential impairment
are reasonable and appropriate, such assumptions are highly subjective. Reasonable changes in the assumptions for the discount
rate or future charter rates could lead to a value in use for some of our vessels that is equal to or less than the carrying
amount for such vessels. All of the aforementioned assumptions have been highly volatile in both the current market and historically.



For the year ended December
31, 2013, we performed an assessment as described above. The results of this assessment are described as follows for the 19 vessels
in our fleet and 65 vessels under construction at December 31, 2013:



| | · | Four vessels were designated as held for sale and, in accordance with our accounting policy for
non-current assets held for sale, were written down to their fair value less costs to sell.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

41





| | · | Eight vessels had fair values less costs to sell in excess of their carrying amount.
| | - | ------------------------------------------------------------------------------------

| | · | Seven
                                         vessels had fair values less costs to sell less than their carrying amount which
                                         served as indicators of impairment. We prepared a value in use calculation for each these
                                         vessels which resulted in no impairment being recognized.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Two vessels under construction (that were delivered in January 2014) had fair values less costs
to sell exceeding their carrying amount.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------

We did not obtain
independent broker valuations for the remaining 63 vessels under construction at December 31, 2013. To assess their carrying
values, we prepared value in use calculations which resulted in no impairment indicators.

In line with our
policy we performed a value in use calculation where we estimated each vessels’ future cash flows based on a combination
of the latest forecast time charter rates for the next three years (obtained from a third party service provider), a growth rate
of 3.0% in freight rates for each period thereafter, and our best estimate of vessel operating expenses and drydock costs, which
also assume a growth rate of 3.0% in each succeeding year. These cash flows were then discounted to their present value using an
estimated weighted average cost of capital of 8.45%. The value in use calculations were greater than the fair value less estimated
costs to sell in all instances. As a result of this testing, no impairment charge was recorded.

For the year ended
December 31, 2012, we performed an assessment as described above. At that date, the carrying amounts of our vessels were greater
than the basic, meaning charter free, market value for all of our owned vessels. In line with our policy we performed a value in
use calculation where we estimated each vessels’ future cash flows based on a combination of the latest forecast time charter
rates for the next three years (obtained from a third party service provider), a growth rate of 3.0% in freight rates for each
period thereafter, and our best estimate of vessel operating expenses and drydock costs, which also assume a growth rate of 3.0%
in each succeeding year. These cash flows were then discounted to their present value, using a discount rate of 7.90%, based on
our current borrowing rates adjusted for certain credit risks. The value in use calculations were greater than the fair value less
estimated costs to sell in all instances. As a result of this testing, no impairment charge was recorded.

Our Fleet—Illustrative
comparison of excess of carrying amounts over estimated charter-free market value of certain vessels

During the past
few years, the market values of vessels have experienced particular volatility, with substantial declines in many vessel classes.
As a result, the charter-free market value, or basic market value, of certain of our vessels may have declined below the carrying
amounts of those vessels. After undergoing the impairment analysis discussed above, we have concluded that at December 31, 2013,
no impairment is required.

The table set forth
below indicates the carrying amount of each of our vessels as of December 31, 2013 and December 31, 2012 and the aggregate difference
between the carrying amount and the market value represented by such vessels (see footnotes to the table set forth below). This
aggregate difference represents the approximate analysis of the amount by which we believe we would record a loss if we sold those
vessels, in the current environment, on industry standard terms, in cash transactions and to a willing buyer where we are not under
any compulsion to sell, and where the buyer is not under any compulsion to buy. For purposes of this calculation, we have assumed
that the vessels would be sold at a price that reflects our estimate of their basic market values. For the four vessels that we
have designated as held for sale at December 31, 2013, we used the agreed upon selling price of these vessels if an agreement has
been reached to sell these vessels and our estimate of basic market value if an agreement has not been reached as of the date of
this report.

Our estimate of
basic market value assumes that our vessels are all in good and seaworthy condition without need for repair and if inspected would
be certified in class without notations of any kind. Our estimates are based on information available from various industry sources,
including:

| | · | reports by industry analysts and data providers that focus on our industry and related dynamics
affecting vessel values;
| | - | ------------------------------------------------------------------------------------------------------------------------

| | · | news and industry reports of similar vessel sales;
| | - | --------------------------------------------------

| | · | news and industry reports of sales of vessels that are not similar to our vessels where we have
made certain adjustments in an attempt to derive information that can be used as part of our estimates;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | approximate market values for our vessels or similar vessels that we have received from shipbrokers,
whether solicited or unsolicited, or that shipbrokers have generally disseminated;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | offers that we may have received from potential purchasers of our vessels; and
| | - | ------------------------------------------------------------------------------

42





| | · | vessel sale prices and values of which we are aware through both formal and informal communications
with shipowners, shipbrokers, industry analysts and various other shipping industry participants and observers.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As we obtain information
from various industry and other sources, our estimates of basic market value are inherently uncertain. In addition, vessel values
and revenues are highly volatile; as such, our estimates may not be indicative of the current or future basic market value of our
vessels or prices that we could achieve if we were to sell them.



|   | In millions of U.S. dollars |  |            | Carrying value as at, | 
|-- | --------------------------- |  | ---------- | --------------------- | 
|   | Vessel Name                 |  | Year Built |                       | 
|1  | STI Highlander              |  | 2007       |                       | 
|2  | Noemi                       |  | 2004       |                       | 
|3  | Senatore                    |  | 2004       |                       | 
|4  | STI Harmony                 |  | 2007       |                       | 
|5  | STI Heritage                |  | 2008       |                       | 
|6  | Venice                      |  | 2001       |                       | 
|7  | STI Spirit                  |  | 2008       |                       | 
|8  | STI Amber                   |  | 2012       |                       | 
|9  | STI Topaz                   |  | 2012       |                       | 
|10 | STI Ruby                    |  | 2012       |                       | 
|11 | STI Garnet                  |  | 2012       |                       | 
|12 | STI Onyx                    |  | 2012       |                       | 
|13 | STI Sapphire                |  | 2013       |                       | 
|14 | STI Emerald                 |  | 2013       |                       | 
|15 | STI Beryl                   |  | 2013       |                       | 
|16 | STI Le Rocher               |  | 2013       |                       | 
|17 | STI Larvotto                |  | 2013       |                       | 
|18 | STI Fontvieille             |  | 2013       |                       | 
|19 | STI Ville                   |  | 2013       |                       | 
|   |                             |  |            |                       | 
|   | Total                       |  |            |                       | 





|(1)As of December 31, 2013, the basic charter-free market value is higher than each vessel’s carrying value. We believe that the aggregate basic charter-free market value of these vessels exceeds their aggregate carrying value by approximately $5.9 million.                                                                                              
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                               
|(2)Noemi, Senatore, VeniceandSTI Spirit were written-down to the lower of their carrying value and fair value less costs to sell since these vessels were designated as “held for sale” at December 31, 2013.  As such, we believe that the carrying amounts noted above are representative of fair value less estimated costs to sell as of December 31, 2013.
|                                                                                                                                                                                                                                                                                                                                                               
|(3)As of December 31, 2013, the basic charter-free market value is lower than each vessel’s carrying value. We believe that the aggregate carrying value of these vessels exceeds their aggregate basic charter-free market value by approximately $14.9 million.                                                                                              
|                                                                                                                                                                                                                                                                                                                                                               
|(4)As of December 31, 2012, the basic charter-free market value is lower than each vessel’s carrying value. We believe that the aggregate carrying value of these vessels exceeded their aggregate basic charter-free market value at that date by approximately $64.2 million.                                                                                
|                                                                                                                                                                                                                                                                                                                                                               
|(5)These vessels were acquired during the year ended December 31, 2013.                                                                                                                                                                                                                                                                                        



The impairment test
that we conduct is most sensitive to variances in the discount rate and future time charter rates. Based on the sensitivity analysis
performed for December 31, 2013, a 1.0% increase in the discount rate would result in no impairment being recognized. Alternatively,
a 5% decrease in forecasted time charter rates would also result in no impairment being recognized.

We refer you to
the discussion herein under “Item 3. Key Information — D. Risk Factors — Risks Related to our Industry,”
including the risk factor entitled “Adverse market conditions could cause us to breach covenants in our credit facilities
and adversely affect our operating results.”



43





Vessel lives
and residual value

The carrying value
of each of our vessels represents its original cost at the time it was delivered or purchased less depreciation and impairment.
We depreciate our vessels to their residual value on a straight-line basis over their estimated useful lives of 25 years. The estimated
useful life of 25 years is management’s best estimate and is also consistent with industry practice for similar vessels.
The residual value is estimated as the lightweight tonnage of each vessel multiplied by a forecast scrap value per ton. The scrap
value per ton is estimated taking into consideration the historical four year scrap market rate average at the balance sheet date.

An increase in the
estimated useful life of a vessel or in its scrap value would have the effect of decreasing the annual depreciation charge and
extending it into later periods. A decrease in the useful life of a vessel or scrap value would have the effect of increasing the
annual depreciation charge.

When regulations
place significant limitations over the ability of a vessel to trade on a worldwide basis, the vessel’s useful life is adjusted
to end at the date such regulations become effective. The estimated salvage value of the vessels may not represent the fair market
value at any one time since market prices of scrap values tend to fluctuate.

Deferred drydock
cost

We recognize drydock
costs as a separate component of the vessels’ carrying amounts and amortize the drydock cost on a straight-line basis over
the estimated period until the next drydock. We use judgment when estimating the period between drydocks performed, which can result
in adjustments to the estimated amortization of the drydock expense. If the vessel is disposed of before the next drydock, the
remaining balance of the deferred drydock is written-off and forms part of the gain or loss recognized upon disposal of vessels
in the period when contracted. We expect that our vessels will be required to be drydocked approximately every 30 to 60 months
for major repairs and maintenance that cannot be performed while the vessels are operating. Costs capitalized as part of the drydock
include actual costs incurred at the drydock yard and parts and supplies used in making such repairs. We only include in deferred
drydocking costs those direct costs that are incurred as part of the drydocking to meet regulatory requirements, or are expenditures
that add economic life to the vessel, increase the vessel’s earnings capacity or improve the vessel’s efficiency. Direct
costs include shipyard costs as well as the costs of placing the vessel in the shipyard. Expenditures for normal maintenance and
repairs, whether incurred as part of the drydocking or not, are expensed as incurred.

| | A. | Operating Results
| | -- | -----------------

Results of Operations for the Year ended December
31, 2013 Compared to the Year Ended December 31, 2012

|                                                                   |  | For the year ended December 31, |          |      |  | Percentage
|------------------------------------------------------------------ |  | ------------------------------- | -------- | ---- |  | ----------
|In thousands of US dollars                                         |  | 2013                            |          | 2012 |  | Change    
|Vessel revenue                                                     |  | $                               | 207,580  |      |  | $         
|Vessel operating costs                                             |  |                                 | (40,204  | )    |  |           
|Voyage expenses                                                    |  |                                 | (4,846   | )    |  |           
|Charterhire                                                        |  |                                 | (115,543 | )    |  |           
|Depreciation                                                       |  |                                 | (23,595  | )    |  |           
|General and administrative expenses                                |  |                                 | (25,788  | )    |  |           
|Write down of vessels held for sale and loss from sales of vessels |  |                                 | (21,187  | )    |  |           
|Gain on sale of VLGCs                                              |  |                                 | 41,375   |      |  |           
|Financial expenses                                                 |  |                                 | (2,705   | )    |  |           
|Realized gain on derivative financial instruments                  |  |                                 | 3        |      |  |           
|Unrealized gain / (loss) on derivative financial instruments       |  |                                 | 567      |      |  |           
|Financial income                                                   |  |                                 | 1,147    |      |  |           
|Share of profit from associate                                     |  |                                 | 369      |      |  |           
|Other expenses, net                                                |  |                                 | (158     | )    |  |           
|Net income / (loss)                                                |  | $                               | 17,015   |      |  | $         







44





Net
income / (loss). Net income for the year ended December 31, 2013 was $17.0 million, an increase of $43.6 million, or
164%, from a net loss of $26.5 million for the year ended December 31, 2012. The differences between the two periods are
discussed below.

Vessel revenue.
Revenue for the year ended December 31, 2013 was $207.6 million, an increase of $92.2 million, or 80%, from revenue of $115.4 million
for the year ended December 31, 2012. Overall revenue increases were driven by growth in our fleet of both owned and time chartered-in
vessels to an average of 15.9 owned and 22.9 time chartered vessels during the year ended December 31, 2013 from an average of
10.8 owned and 9.2 time chartered-in vessels during the year ended December 31, 2012. These increases were augmented by an overall
improvement in TCE rates to $14,369 per day from $12,960 per day.

The following
table summarizes our revenue:



|                           |  | For the year ended December 31, |         |      |  | Percentage
|-------------------------- |  | ------------------------------- | ------- | ---- |  | ----------
|In thousands of US dollars |  | 2013                            |         | 2012 |  | Change    
|Owned vessels              |  |                                 |         |      |  |           
|Pool revenue               |  | $                               | 80,269  |      |  | $         
|Voyage revenue             |  |                                 | 9,007   |      |  |           
|Time chartered-in vessels  |  |                                 |         |      |  |           
|Pool revenue               |  |                                 | 109,748 |      |  |           
|Voyage revenue             |  |                                 | 8,556   |      |  |           
|                           |  | $                               | 207,580 |      |  | $         
|                           |  |                                 |         |      |  |           

Owned vessels
– Pool revenue. Pool revenue for owned vessels for the year ended December 31, 2013 was $80.3 million, an increase
of $41.7 million or 108% from $38.5 million during the year ended December 31, 2012. The increase was primarily driven by an increase
in the number of pool revenue days to 5,323 from 2,851 during the years ended December 31, 2013 and 2012, respectively, which was
the result of growth in our owned fleet to an average of 15.9 vessels from 10.8 vessels during those time periods. Furthermore,
the increase was also driven by an increase in pool revenue per day to $15,080 from $13,510 per day during years ended December
31, 2013 and 2012, respectively. The increase in pool revenue per day was primarily driven by our MR operating segment which experienced
growth driven by vessels delivered under our Newbuilding Program.

Owned vessels
– Voyage revenue. Voyage revenue for owned vessels for the year ended December 31, 2013 was $9.0 million, a decrease
of $17.7 million or 66% from $26.7 million during the year ended December 31, 2012. The decrease was primarily driven by a decrease
in the number of days that our vessels operated in the spot market to 445 days for the year ended December 31, 2013 from 1,015
days during the year ended December 31, 2012. STI Conqueror, STI Matador, STI Gladiator, STI Coral andSTI Diamond,
operated in the spot market for a total of 1,015 days during the year ended December 31, 2012 prior to their sales.STI Sapphire,
STI Emerald, STI Beryl, STI Le Rocher, STI Larvotto, STI Fontvieilleand STI Ville operated in the spot market
for a total of 445 days immediately following their deliveries from the shipyard during the year ended December 31, 2013.

Time chartered-in
vessels – Pool revenue. Pool revenue for time chartered-in vessels for the year ended December 31, 2013 was $109.7
million, an increase of $76.0 million or 225% from $33.7 million during the year ended December 31, 2012. The increase in
pool revenue for time chartered-in vessels was primarily due to an increase in pool revenue days to 8,016 days from 2,662 days
during the years ended December 31, 2013 and 2012, respectively which was driven by growth in our time chartered-in fleet to an
average of 22.9 vessels from an average of 9.2 vessels during those time periods. Additionally, the increase in pool revenue for
time chartered-in vessels was also driven by an increase in pool revenue per day to $13,691 from $12,656 per day during the years
ended December 31, 2013 and 2012, respectively.

Time chartered-in
vessels – Voyage revenue. Voyage revenue for time chartered-in vessels for the year ended December 31, 2013 was $8.6
million, a decrease of $7.9 million or 48% from $16.5 million for the year ended December 31, 2012. During the year ended December
31, 2013,Gan-Trust,Nave Orion, King Douglas, Pacific Duchess andSN Federica operated in the spot market
for a total of 326 days compared toFPMC P Eagle, Pacific Duchess, Targale, STX Ace 6, Freja Lupus, Endeavour andValle
Bianca, which operated in the spot market for a total of 698 days during year ended December 31, 2012.

Vessel operating
costs. Vessel operating costs for the year ended December 31, 2013 were $40.2 million, an increase of $9.9 million or 32%,
from $30.4 million for the year ended December 31, 2012. This increase was driven by an overall increase in operating days for
our owned vessels to 5,820 from 3,957 during the years ended December 31, 2013 and 2012, respectively. The increase in operating
days was driven by the increase in the average number of owned vessels to 15.9 from 10.8 for the years ended December 31, 2013
and 2012, respectively. The overall increase in operating days was offset by a decrease in vessel operating costs per day to $6,781
per day from $7,605 per day for the years ended December 31, 2013 and 2012, respectively. This decrease was driven by the growth
in the fleet of MRs delivered under the Company’s Newbuilding Program, which realized improved operating performance when
compared to the Company’s older vessels.



45





Voyage expenses.
Voyage expenses for the year ended December 31, 2013 were $4.8 million, a decrease of $16.9 million, or 78%, from $21.7 million
during the year ended December 31, 2012. The decrease was primarily driven by a decrease in the number of days vessels operated
in the spot market to 771 days from 1,712 days for the years ended December 31, 2013 and 2012, respectively.

Furthermore, the
vessels delivered under our Newbuilding Program in 2013 (STI Sapphire, STI Emerald, STI Beryl, STI Le Rocher, STI Larvotto,
STI Fontvieilleand STI Ville) were employed on short-term time charters (ranging from 45 to 120
days) for a total of 445 days which commenced upon deliveries from the shipyard during the year ended December 31, 2013. These
short term time charters were agreed to at fixed TCE rates, where only nominal voyage expenses were incurred. The vessels delivered
under our Newbuilding Program in 2012 were employed on similar short-term time charters for a total of 414 days during the year
ended December 31, 2012.

Charterhire.
Charterhire expense for the year ended December 31, 2013 was $115.5 million, an increase of $71.8 million, or 164%, from $43.7
million during the year ended December 31, 2012. The increase was the result of an increase in the average number of time chartered-in
vessels to 22.9 from 9.2 for the years ended December 31, 2013 and 2012, respectively.

Depreciation.
Depreciation expense for the year ended December 31, 2013 was $23.6 million, an increase of $8.8 million or 59%, from $14.8 million
during the year ended December 31, 2012. The increase was the result of an increase in the average number of owned vessels to 15.9
from 10.8 for the years ended December 31, 2013 and 2012, respectively, in addition to a change in the mix vessels in our fleet.
Both were driven by the deliveries of the first 12 vessels under our Newbuilding Program in 2012 and 2013, offset by the sales
ofSTI Conqueror, STI Matador, STI Gladiator, STI Diamond andSTI Coral in 2012.

General and
administrative expenses. General and administrative expenses for the year ended December 31, 2013 were $25.8 million, an
increase of $14.3 million, or 124%, from $11.5 million during the year ended December 31, 2012. The increase was driven by a $9.7
million increase in restricted stock amortization (non-cash) and an overall increase in general and administrative expenses due
to the significant growth of the Company.

Write down
of vessels held for sale and loss from sales of vessels. Write down of vessels held for sale and loss from sales of vessels
for the year ended December 31, 2013 was $21.2 million, an increase of $10.8 million or 104%, from $10.4 million during the year
ended December 31, 2012. Write-down of vessels held for sale for the year ended December 31, 2013 relates to the designation of
Noemi, Senatore, Venice and STI Spiritas held-for-sale and the corresponding write-down to the lower of their carrying
value and fair value less costs to sell at that date.

Loss from sale of
vessels for the year ended December 31, 2012 of $10.4 million was the result of the sales of STI Conqueror,STI Matador,STI Gladiator, STI Coral andSTI Diamondduring that period.

Gain on sale
of VLGCs.Gain on sale of VLGCs of $41.4 million during the year ended December 31, 2013 relates to the gain recorded as
a result of our investment in Dorian. In November 2013, we contributed our VLGC business, which consisted of 11 VLGC newbuilding
contracts and options to construct two additional VLGCs, together with a cash payment of $1.9 million to Dorian in exchange for
newly issued shares representing 30% of Dorian’s outstanding shares immediately following the transaction. As of the closing
date of the transaction, we paid $83.1 million in installment payments for the 11 VLGC contracts. A gain of $41.4 million was recognized
at the closing date for the difference between the book value of the assets contributed and the fair value of the consideration
received less costs to sell.

Financial
expenses. Financial expenses for the year ended December 31, 2013 were $2.7 million, a decrease of $5.8 million or 68%,
from $8.5 million during the year ended December 31, 2012. The decrease was primarily driven by a one-time write-off of deferred
financing fees of $3.0 million due to the extension of the availability period on the 2011 Credit Facility during the year ended
December 31, 2012. The decrease was also the result of a reduction in interest expense which was driven by an increase in interest
capitalized during the year ended December 31, 2013 as a result of the significant growth in our Newbuilding Program.

Financial expenses
for the year ended December 31, 2013 consisted of interest expense on our bank loans ($1.0 million), commitment fees on the undrawn
portions of our credit facilities ($1.4 million) and amortization of loan fees ($0.3 million).

Financial expenses
for the year ended December 31, 2012 consisted of interest expense on our bank loans ($3.3 million), commitment fees on the undrawn
portions of our credit facilities ($1.0 million), amortization of loan fees ($1.3 million), and a one-time write-off of deferred
financing fees of $3.0 million due to the extension of the availability period on the 2011 Credit Facility.

Realized
gain on derivative financial instruments. Realized gain on derivative financial instruments for the year ended
December 31, 2013 was $3,208, a decrease of $0.4 million or 99% from $0.4 million from the year ended December 31, 2012.
Realized gain on derivative financial instruments relates to earnings from profit and loss sharing agreements with third
parties relating to a time chartered-in vessel and a vessel that was neither owned or operated by us. These agreements
expired on October 2013 and January 2013, respectively.



46





Unrealized
gain / (loss) on derivative financial instruments. Unrealized gain on derivative financial instruments for the year
ended December 31, 2013 was $0.6 million, an increase of $1.8 million or 146% from an unrealized loss of $1.2 million during
the year ended December 31, 2012. The unrealized gain / (loss) on derivative financial instruments consists of the change in
the fair value of our interest rate swaps relating to the 2010 Revolving Credit Facility and change in the fair value of
profit and loss sharing agreements with third parties on time chartered-in vessels.

During the year
ended December 31, 2013, we recorded an unrealized gain relating to our interest rate swaps of $0.4 million and an unrealized gain
of $0.2 million related to our profit and loss sharing agreements with third parties on time chartered-in vessels.

During the
year ended December 31, 2012, we recognized a one-time expense of $1.0 million which related to the reclassification from
other comprehensive income to the statement of income or loss for the de-designation of hedge accounting on our interest rate
swaps relating to the 2010 Revolving Credit Facility in addition to an unrealized loss of $0.2 million related to our profit
and loss sharing agreements with third parties on time chartered-in vessels.

Financial
income. Financial income consists of interest earned on our cash balance. Financial income increased $1.1 million during
the year ended December 31, 2013 as a result of an increase in our average cash balance during the year. This was primarily driven
by the receipt of net proceeds of $947.8 million from four separate offerings of common stock. See “Item 5. Operating and Financial
Review and Prospects — B. Liquidity and Capital Resources” for a discussion of our cash flows during the period.

Share of profit
from associate.Share of profit from associate for the year ended December 31, 2013 was $0.4 million. This relates to our
share of Dorian’s earnings from the closing date of our investment in Dorian of November 26, 2013 to December 31, 2013.

Results of operations — segment analysis

During the years ended
December 31, 2013, 2012 and 2011, we owned or chartered-in vessels spanning four different vessel classes, Handymax, MR, Panamax/LR1,
and Aframax/LR2, all of which earn revenues in the seaborne transportation of crude oil and refined petroleum products in the international
shipping markets. Each vessel within its respective class qualifies as an operating segment under IFRS. However, each vessel also
exhibits similar long-term financial performance and similar economic characteristics to the other vessels within the respective
vessel class, thereby meeting the aggregation criteria in IFRS. We have therefore chosen to present our segment information by
vessel class using the aggregated information from the individual vessels.



Segment results are evaluated
based on reported profit or loss from each segment. The accounting policies applied to the reportable segments are the same as
those used in the preparation of our consolidated financial statements.



LR2 segment

The following table summarizes segment
profit or loss for our LR2 segment.



|                                            |  | For the year ended |         |      |  |           
|------------------------------------------- |  | ------------------ | ------- | ---- |  | ----------
|LR2 segment                                 |  | December 31,       |         |      |  | Percentage
|In thousands of U.S. dollars                |  | 2013               |         | 2012 |  | Change    
|Vessel revenue                              |  | $                  | 28,204  |      |  | $         
|Vessel operating costs                      |  |                    | (3,211  | )    |  |           
|Voyage expenses                             |  |                    | —       |      |  |           
|Charterhire                                 |  |                    | (29,341 | )    |  |           
|Depreciation                                |  |                    | (1,750  | )    |  |           
|General and administrative expenses         |  |                    | (154    | )    |  |           
|Write down of vessels held for sale         |  |                    | (6,185  | )    |  |           
|Financial expenses                          |  |                    | (847    | )    |  |           
|Other expenses, net                         |  |                    | (10     | )    |  |           
|Segment loss                                |  | $                  | (13,294 | )    |  | $         
|                                            |  |                    |         |      |  |           
|TCE per revenue day                         |  | $                  | 12,718  |      |  | $         
|Owned vessel operating costs per day        |  |                    | 8,203   |      |  |           
|                                            |  |                    |         |      |  |           
|Revenue days                                |  |                    | 2,218   |      |  |           
|Owned vessel operating days                 |  |                    | 365     |      |  |           
|                                            |  |                    |         |      |  |           
|Average number of owned vessels             |  |                    | 1.00    |      |  |           
|Average number of time chartered-in vessels |  |                    | 5.10    |      |  |           





47





Vessel revenue.Vessel revenue for the year ended December 31, 2013 was $28.2 million, an increase of $23.7 million, or 521%,
from the year ended December 31, 2012. The increase was primarily driven by an increase in revenue days to 2,218 from 443
days during the years ended December 31, 2013 and 2012, respectively. This was the result of growth in our time chartered-in fleet
as during the year ended December 31, 2013, we time chartered-inKhawr Aladid, FPMC P Hero, FPMC P Ideal, Fair Seas, Pink Stars,
Orange Stars, Densa Alligator,Four Skyand Southport whereas onlyKhawr Aladid was time chartered-in
during the year ended December 31, 2012. The increase in revenue was also driven by an increase in revenue per day to $12,718
per day from $10,201 per day during the years ended December 31, 2013 and 2012, respectively.

Vessel
operating costs. Vessel operating costs for the year ended December 31, 2013 were $3.2 million, a decrease of $0.1
million, or 3%, from the year ended December 31, 2012. Operating costs per day related to our owned LR2 vessel,STI
Spirit, which improved to $8,203 per day from $8,436 per day during the years ended December 31, 2013 and 2012,
respectively. This improvement was offset by certain, nominal operating costs incurred on our time chartered-in fleet as a
result of the growth to 5.1 vessels from 0.3 vessels during the years ended December 31, 2013 and 2012, respectively.

Charterhire.
Charterhire expense for the year ended December 31, 2013 was $29.3 million, an increase of $28.1 million or 2,180% from
the year ended December 31, 2012. This increase was driven by the delivery of nine time chartered-in vessels during the
year ended December 31, 2013 (Khawr Aladid, FPMC P Hero, FPMC P Ideal, Fair Seas, Pink Stars, Orange Stars, Densa
Alligator, Four SkyandSouthport). During the year ended December 31, 2012, we time chartered-in
one vessel (Khawr Aladid), on a six month time charter-in agreement that expired in April 2012.

Depreciation.
Depreciation expense for the year ended December 31, 2013 was $1.8 million, which remained consistent from the year ended December
31, 2012.

Write
down of vessels held for sale.Write down of vessels held for sale for the year ended December 31, 2013 was $6.2
million. The write down relates to the re-measurement of STI Spiritat the lower of its carrying value and fair value
less costs to sell as the vessel was designated as “held for sale” at December 31, 2013. An agreement to sell
this vessel was reached in February 2014 for $30.2 million. This sale is expected to close in April 2014.

Financial
expenses. Financial expenses for the year ended December 31, 2013 were $0.8 million, a decrease of $0.2 million or
22% from the year ended December 31, 2012. Financial expenses for the LR2 segment relates to interest expense for our STI
Spirit Credit Facility, which decreased as a result of a decrease in the outstanding balance under this loan.

Panamax / LR1 segment

The following table summarizes segment
profit or loss for our Panamax / LR1 segment.

|                                                    |  | For the year ended |         |      |  |           
|--------------------------------------------------- |  | ------------------ | ------- | ---- |  | ----------
|Panamax/LR1 segment                                 |  | December 31,       |         |      |  | Percentage
|In thousands of U.S. dollars                        |  | 2013               |         | 2012 |  | Change    
|Vessel revenue                                      |  | $                  | 41,683  |      |  | $         
|Vessel operating costs                              |  |                    | (14,276 | )    |  |           
|Voyage expenses                                     |  |                    | (3,858  | )    |  |           
|Charterhire                                         |  |                    | (14,363 | )    |  |           
|Depreciation                                        |  |                    | (7,275  | )    |  |           
|General and administrative expenses                 |  |                    | (536    | )    |  |           
|Write down of vessels held for sale                 |  |                    | (15,002 | )    |  |           
|Realized gain on derivative financial instruments   |  |                    | 3       |      |  |           
|Unrealized gain on derivative financial instruments |  |                    | 186     |      |  |           
|Segment profit                                      |  | $                  | (13,438 | )    |  | $         
|                                                    |  |                    |         |      |  |           
|TCE per revenue day                                 |  | $                  | 12,599  |      |  | $         
|Owned vessel operating costs per day                |  |                    | 7,756   |      |  |           
|                                                    |  |                    |         |      |  |           
|Revenue days                                        |  |                    | 3,005   |      |  |           
|Owned vessel operating days                         |  |                    | 1,825   |      |  |           
|                                                    |  |                    |         |      |  |           
|Average number of owned vessels                     |  |                    | 5.00    |      |  |           
|Average number of time chartered-in vessels         |  |                    | 3.20    |      |  |           





48





Vessel
Revenue. Vessel revenue for the year ended December 31, 2013 was $41.7 million, an increase of $13.1 million or 46%
from the year ended December 31, 2012. The increase in revenue was the result of an increase in the number of revenue days to
3,005 from 1,936 during the years ended December 31, 2013 and 2012, respectively. This was driven by the deliveries of the
time-chartered vessels,FPMC P Eagle, Hellespont Promise,SN Federica, King DouglasandSN Azzuraduring
the year ended December 31, 2013. We time chartered-in two LR1 vessels,FPMC P Eagleand Hellespont Promiseduring
the year ended December 31, 2012. The increase in revenue days was offset by decrease in TCE revenue per day to $12,599 from
$14,264 during the years ended December 31, 2013 and 2012, respectively.

Vessel
operating costs. Vessel operating costs for the year ended December 31, 2013 were $14.3 million, an increase of
$0.1 million, or 1%, from the year ended December 31, 2012. The increase was driven by a slight increase in operating costs
per day to $7,756 from $7,714 per day during the year ended December 31, 2013 and 2012, respectively.

Voyage
expenses. Voyage expenses for the year ended December 31, 2013 were $3.9 million, an increase of $2.9 million or
286% from the year ended December 31, 2012. The increase was driven by the time chartered-in vessels,SN Federica
andKing Douglas, which operated in the spot market for 187 days during the year ended December 31, 2013.FPMC
P Eagleoperated in the spot market for 48 days during the year ended December 31, 2012.

Charterhire.Charterhire expense for the year ended December 31, 2013 was $14.4 million, an increase of $12.7 million, or 782% from
the year ended December 31, 2012. The increase was driven by an increase in the number of time chartered-in days to 1,180 from
129 during the years ended December 31, 2013 and 2012, respectively. This increase was driven by the deliveries ofSN
Federica, King Douglasand SN Azzura during the year ended December 31, 2013. In addition, FPMC P Eagle and
Hellespont Promise were time chartered-in for an aggregate of 728 days and 129 days during the years ended December 31,
2013 and 2012, respectively.

Write
down of vessels held for sale.Write down of vessels held for sale for the year ended December 31, 2013 was $15.0
million. The write down represents the re-measurement of Venice, SenatoreandNoemito the lower of their
carrying value and fair value less costs to sell as these vessels were designated as “held for sale” at December
31, 2013. In February 2014, we agreed to sell Noemi and Senatorefor an aggregate selling price of $44.0
million.

Realized
and unrealized gains on derivative financial instruments. Realized and unrealized gains on derivative financial
instruments for the year ended December 31, 2013 were a net of $0.2 million, a decrease of $0.1 million or 137% from the year
ended December 31, 2012. Realized and unrealized gains and losses on derivative financial instruments related to profit and
loss agreements on time chartered-in vessels entered into with third parties. These agreements related to the time
chartered-in vessel,FPMC P Eagleand an LR1 vessel that was not time chartered-in or operated by the Company and they
expired in October 2013 and January 2013, respectively.

MR segment

The following table summarizes segment
profit or loss for our MR segment.

|                                            |  | For the year ended |         |      |  |           
|------------------------------------------- |  | ------------------ | ------- | ---- |  | ----------
|MR segment                                  |  | December 31,       |         |      |  | Percentage
|In thousands of U.S. dollars                |  | 2013               |         | 2012 |  | Change    
|Vessel revenue                              |  | $                  | 101,488 |      |  | $         
|Vessel operating costs                      |  |                    | (20,069 | )    |  |           
|Voyage expenses                             |  |                    | (977    | )    |  |           
|Charterhire                                 |  |                    | (40,753 | )    |  |           
|Depreciation                                |  |                    | (13,278 | )    |  |           
|Loss from sale of vessels                   |  |                    | —       |      |  |           
|General and administrative expenses         |  |                    | (1,030  | )    |  |           
|Financial income                            |  |                    | 4       |      |  |           
|Other expenses, net                         |  |                    | (21     | )    |  |           
|Segment profit / (loss)                     |  | $                  | 25,364  |      |  | $         
|                                            |  |                    |         |      |  |           
|TCE per revenue day                         |  | $                  | 16,546  |      |  | $         
|Owned vessel operating costs per day        |  |                    | 6,069   |      |  |           
|                                            |  |                    |         |      |  |           
|Revenue days                                |  |                    | 6,072   |      |  |           
|Owned vessel operating days                 |  |                    | 3,265   |      |  |           
|                                            |  |                    |         |      |  |           
|Average number of owned vessels             |  |                    | 8.90    |      |  |           
|Average number of time chartered-in vessels |  |                    | 7.80    |      |  |           





49





Vessel
revenue. Vessel revenue for the year ended December 31, 2013 was $101.5 million, an increase of $54.6 million or
117% from the year ended December 31, 2012. The increase in revenue was the result of an increase in the overall number of
revenue days to 6,072 from 2,350 during the years ended December 31, 2013 and 2012, respectively, in addition to an increase
in overall TCE revenue to $16,546 per day from $12,289 per day.

The increase
in revenue days was driven by the deliveries ofSTI Sapphire, STI Emerald, STI Beryl, STI Le Rocher, STI Larvotto, STI
Fontvieilleand STI Ville during the year ended December 31, 2013 in addition to the deliveries ofSTI Amber,
STI Topaz,STI Ruby, STI Garnetand STI Onyx during the year ended December 31, 2012, which were employed
during the entire year ended December 31, 2013 as compared to a partial period during the year ended December 31, 2012. The
increase in revenue days was also driven by an increase in the average number of time chartered-in vessels to 7.8 from 3.5
during the years ended December 31, 2013 and 2012, respectively.

Vessel
operating costs. Vessel operating costs for the year ended December 31, 2013 were $20.1 million, an increase of $12.6
million, or 168%, from the year ended December 31, 2012. The increase was primarily driven by an increase in the number of
operating days to 3,265 from 1,089 days during the years ended December 31, 2013 and 2012, respectively. The increase in
operating days was driven by the deliveries of STI Sapphire, STI Emerald, STI Beryl, STI Le Rocher, STI Larvotto, STI
Fontvieille and STI Ville during the year ended December 31, 2013, in addition to the deliveries ofSTI Amber,
STI Topaz, STI Ruby, STI Garnet andSTI Onyx during the year ended December 31, 2012, which were employed during
the entire year ended December 31, 2013 as compared to a partial period during the year ended December 31, 2012. The increase
in operating days was offset by the sales of STI DiamondandSTI Coral, which operated for a total of 477 days
during the year ended December 31, 2012 prior to their sales.

The increase
in operating days was offset by a decrease in daily vessel operating costs of $701 per day, or 10%, from the year ended
December 31, 2012. This was driven by improved operating performance of vessels delivered under our Newbuilding Program,
whose daily operating costs were $6,069 per day during the year ended December 31, 2013. The year ended December 31, 2012
reflects 477 operating days of STI Diamondand STI Coral, which were sold in August and September 2012,
respectively and whose daily operating costs were $8,166 per day during that period.

Voyage
expenses. Voyage expenses for the year ended December 31, 2013 were $1.0 million, a decrease of $17.0 million or 95%
from the year ended December 31, 2012. The year ended December 31, 2013 reflects 583 days of vessels operating in the spot
market as compared to 1,541 days during the year ended December 31, 2012. 445 of the 583 spot market revenue days during the
year ended December 31, 2013 reflect days where vessels delivered under our Newbuilding Program were employed on short-term
time charters (ranging from 45 to 120 days) that commenced upon delivery from the shipyard. These short term time charters
were agreed to at fixed TCE rates, where only nominal voyage expenses were incurred. The vessels delivered under our
Newbuilding Program in 2012 were employed on similar short-term time charters for 414 days during that period.

Charterhire.
Charterhire expense for the year ended December 31, 2013 was $40.8 million, an increase of $23.2 million, or 132%, from the
year ended December 31, 2012. The increase was the result of an increase in the number of time chartered-in days to
2,839 from 1,283 days during the years ended December 31, 2013 and 2012, respectively.Pacific Duchess, Freja Lupus, STX
Ace 6,Targale, Endeavour, Valle Bianca, USMA, Ugale, Gan-Trust, Nave Orion andGan-Triumph where
chartered-in for all or part of the year ended December 31, 2013 andPacific Duchess, Targale, STX Ace 6, Freja
Lupus, Endeavour and Valle Bianca were chartered-in for all or part of the year ended December 31, 2012.

Depreciation.
Depreciation expense for the year ended December 31, 2013 was $13.3 million, an increase of $9.3 million, or 231%, from
the year ended December 31, 2012. The increase was driven by an increase in the average number of owned MR vessels to 7.8
from 3.5 for the years ended December 31, 2013 and 2012, respectively. This was the result of the deliveries of seven vessels
under our Newbuilding Program in 2013 along with five vessels delivered under our Newbuilding Program in the third quarter of
2012 (which were depreciated for a partial period during the year ended September 2012). The increase in depreciation expense
was offset by the sales ofSTI Diamond and STI Coralin August and September 2012, respectively.



50





Loss
from sale of vessels. Loss from sale of vessels during the year ended December 31, 2012 relates to the sales
ofSTI Diamondand STI Coralin August and September 2012, respectively. We did not sell or have any MR
vessels held for sale during the year ended December 31, 2013.

General
and administrative expenses. General and administrative expenses for the year ended December 31, 2013 were
$1.0 million, an increase of $0.6 million, or 159%, from the year ended December 31, 2012. General and administrative
expenses for the MR segment primarily consist of administrative fees to SSH. The increase was the result of an increase in
the average number of owned vessels to 7.8 from 3.5 during the year ended December 31, 2012.

Handymax Segment

The following table summarizes segment
profit or loss for our Handymax segment.

|Handymax segment                            |  | For the year ended December 31, |         |      |  | Percentage
|------------------------------------------- |  | ------------------------------- | ------- | ---- |  | ----------
|In thousands of U.S. dollars                |  | 2013                            |         | 2012 |  | Change    
|Vessel revenue                              |  | $                               | 36,205  |      |  | $         
|Vessel operating costs                      |  |                                 | (2,648  | )    |  |           
|Voyage expenses                             |  |                                 | (11     | )    |  |           
|Charterhire                                 |  |                                 | (31,086 | )    |  |           
|Depreciation                                |  |                                 | (1,292  | )    |  |           
|Loss from sale of vessels                   |  |                                 | —       |      |  |           
|General and administrative expenses         |  |                                 | (118    | )    |  |           
|Segment profit / (loss)                     |  | $                               | 1,050   |      |  | $         
|                                            |  |                                 |         |      |  |           
|TCE per revenue day                         |  | $                               | 12,862  |      |  | $         
|Owned vessel operating costs per day        |  |                                 | 6,852   |      |  |           
|                                            |  |                                 |         |      |  |           
|Revenue days                                |  |                                 | 2,815   |      |  |           
|Owned vessel operating days                 |  |                                 | 365     |      |  |           
|                                            |  |                                 |         |      |  |           
|Average number of owned vessels             |  |                                 | 1.00    |      |  |           
|Average number of time chartered-in vessels |  |                                 | 6.70    |      |  |           



Vessel revenue.Vessel revenue for the year ended December 31, 2013 was $36.2 million, an increase of $0.8 million, or 2%, from the year
ended December 31, 2012. The increase in revenue was the result of an increase in the number of revenue days to 2,815 from 2,498
during the years ended December 31, 2013 and 2012, respectively, offset by a decrease in daily TCE revenue to $12,862 from
$13,069 per day during those same periods. The increase in revenue days was driven by an increase in the average number of time
chartered-in vessels from 6.70 from 5.03 during the years ended December 31, 2013 and 2012, respectively. The increase in the
average number of time chartered-in vessels was offset by the sales of STI Conqueror, STI Gladiator, andSTI Matadorduring 2012 which decreased the average number of owned Handymax vessels to 1.00 from 1.84 during the years ended December
31, 2013 and 2012, respectively.

Vessel
operating costs. Vessel operating costs for the year ended December 31, 2013 were $2.6 million, a decrease of $2.8
million, or 51%, from the year ended December 31, 2012. The decrease was driven by a decrease in the number of operating days
to 365 from 673 during the year ended December 31, 2012 which was due to the sales of STI Conqueror, STI Matador,and STI
Gladiatorduring 2012.

Voyage expenses.
Nominal voyage expenses were incurred during the year ended December 31, 2013 as compared to $2.7 million during the year ended
December 31, 2012. STI Conqueror, STI Matador, andSTI Gladiator operated in the spot market for 124 days during
the year ended December 31, 2012 prior to their sales. We did not have any Handymax vessels operating in the spot market during
the year ended December 31, 2013.

Charterhire.
Charterhire expense for the year ended December 31, 2013 was $31.1 million, an increase of $7.9 million or 34% from the year
ended December 31, 2012. The increase was driven by an increase in the average number of time chartered-in vessels to 6.70
from 5.03 during the years ended December 31, 2013 and 2012, respectively. During the year ended December 31, 2012, we time
chartered-inKrisjanis Valdemars, Kraslava, Histria Azure, Kazdanga, Histria Perla andHistria Coral for all or
part of the period.In addition to these vessels and with the exception ofKazdanga, we time chartered-inJinan, Freja PolarisandIver Progress for all or part of the year ended December 31, 2013.



51





Depreciation.
Depreciation expense for the year ended December 31, 2013 was $1.3 million, a decrease of $0.4 million, or 25%, from the year ended
December 31, 2012. This decrease was due to the sales ofSTI Conqueror, STI Matador, andSTI Gladiator during 2012.

Loss
from sale of vessels. Loss from sale of vessels during the year ended December 31, 2012 relates to the sales ofSTI Conqueror, STI Matador andSTI Gladiator which were sold during 2012. We did not sell or have any Handymax
vessels held for sale during the year ended December 31, 2013.



Results of Operations for the Year ended
December 31, 2012 Compared to the Year Ended December 31, 2011

|                                                    |  |                                 |         |      |  |            |         |       
|--------------------------------------------------- |  | ------------------------------- | ------- | ---- |  | ---------- | ------- | ------
|                                                    |  | For the year ended December 31, |         |      |  | Percentage
|In thousands of US dollars                          |  | 2012                            |         | 2011 |  | Change     |         | Change
|Vessel revenue                                      |  | $                               | 115,381 |      |  | $          | 82,110  |       
|Vessel operating costs                              |  |                                 | (30,353 | )    |  |            | (31,370 | )     
|Voyage expenses                                     |  |                                 | (21,744 | )    |  |            | (6,881  | )     
|Charterhire                                         |  |                                 | (43,701 | )    |  |            | (22,750 | )     
|Impairment                                          |  |                                 | —       |      |  |            | (66,611 | )     
|Depreciation                                        |  |                                 | (14,818 | )    |  |            | (18,460 | )     
|Loss from sale of vessels                           |  |                                 | (10,404 | )    |  |            | —       |       
|General and administrative expenses                 |  |                                 | (11,536 | )    |  |            | (11,637 | )     
|Financial expenses                                  |  |                                 | (8,512  | )    |  |            | (7,060  | )     
|Earnings from profit or loss sharing agreements     |  |                                 | 443     |      |  |            | —       |       
|Unrealized loss on derivative financial instruments |  |                                 | (1,231  | )    |  |            | —       |       
|Financial income                                    |  |                                 | 35      |      |  |            | 51      |       
|Other expenses, net                                 |  |                                 | (97     | )    |  |            | (119    | )     
|Net loss                                            |  | $                               | (26,537 | )    |  | $          | (82,727 | )     



Net Loss.
Net loss for the year ended December 31, 2012 was $26.5 million, compared to a net loss of $82.7 million for the year ended December 31,
2011. The differences between the two periods are discussed below.

Vessel revenue.
Revenue for the year ended December 31, 2012 was $115.4 million, an increase of $33.3 million, or 41% from revenue of $82.1 million
for the year ended December 31, 2011. The following table summarizes our revenue:

|                           |  | For the year ended December 31, |         |      |  | Percentage
|-------------------------- |  | ------------------------------- | ------- | ---- |  | ----------
|In thousands of US dollars |  | 2012                            |         | 2011 |  | Change    
|Owned vessels              |  |                                 |         |      |  |           
|Time charter revenue       |  |                                 | —       |      |  | $         
|Pool revenue               |  |                                 | 38,522  |      |  |           
|Voyage revenue             |  |                                 | 26,668  |      |  |           
|Time chartered-in vessels  |  |                                 |         |      |  |           
|Pool revenue               |  |                                 | 33,740  |      |  |           
|Voyage revenue             |  |                                 | 16,451  |      |  |           
|                           |  | $                               | 115,381 |      |  | $         



Owned vessels
– Time charter revenue. We did not time charter-out any owned vessels for the year ended December 31, 2012. For the
year ended December 31, 2011,Noemi andSTI Spirit were employed on time charters for a total of 427 days.

Owned vessels
– Pool revenue. Pool revenue for owned vessels for the year ended December 31, 2012 was $38.5 million, a decrease
of $1.0 million or 3% from $39.5 million for the year ended December 31, 2011. We had 2,851 revenue days of owned vessels in the
pools during the year ended December 31, 2012 compared to 3,149 during the year ended December 31, 2011. This decrease in revenue
days was primarily driven by the sales ofSTI Conqueror, STI Matador, andSTI Gladiator during March, April and May
2012 resulting in 911 less pool days partially offset by (i) the entrance in the Scorpio MR Pool by our first five vessels delivered
under our Newbuilding Program during the fourth quarter of 2012 for a total of 176 additional days, (ii)Noemi , which was
on time charter for the majority of 2011 and operated in the pool during the year ended December 31, 2012 (net increase of 355
days), and (iii) an increase in TCE earnings from our owned vessels operating in the pools to $13,510 per day for the year ended
December 31, 2012 from $12,550 per day for the year ended December 31, 2011.



52





Owned vessels
– Voyage revenue. Voyage revenue for owned vessels for the year ended December 31, 2012 was $26.7 million, an increase
of $14.4 million, or 117% from $12.3 million during the year ended December 31, 2011. The increase was primarily the result of
an increase in the number of days that our vessels operated in the spot market for the year ended December 31, 2012 and 2011 to
1,015 days from 450 days, respectively. Additionally, TCE earnings from our owned vessels operating in the spot market increased
to $13,220 per day in 2012 from $12,092 per day in 2011. Our first five vessels delivered under our Newbuilding Program operated
in the spot market immediately after delivery from the yards in 2012 for a total of 414 days. Furthermore,STI Conqueror, STI
Matador, STI Gladiator, STI Coral andSTI Diamond all operated in the spot market during 2012 prior to their sales.
STICoral andSTI Diamond were the only vessels operating in the spot market during 2011.

Time chartered-in
vessels – Pool revenue. Pool revenue for time chartered-in vessels for the year ended December 31, 2012 was $33.7
million, an increase of $13.1 million, or 63% from $20.7 million during the year ended December 31, 2011. The increase was primarily
the result of an increase in the number of days that our time chartered-in vessels operated in the pools for the years ended December
31, 2012 and 2011 to 2,662 days from 1,806 days, respectively. Additionally, TCE earnings from our time chartered-in vessels operating
in the pools increased to $12,656 per day for the year ended December 31, 2012 from $11,448 per day for the year ended December
31, 2011.

Time chartered-in
vessels – Voyage revenue. Voyage revenue for our time chartered-in vessels for the year ended December 31, 2012 was
$16.5 million. During the year ended December 31, 2012, time chartered-in vessels operated 698 days in the spot market. There were
no time chartered-in vessels operating in the spot market during the year ended December 31, 2011.

Vessel operating
costs. Vessel operating costs for the year ended December 31, 2012 were $30.4 million, a decrease of $1.0 million
or 3%, from $31.4 million during the year ended December 31, 2011. We had 3,957 operating days during 2012 compared to 4,121 operating
days during 2011. The decrease was primarily the result of the sales ofSTI Conqueror, STI Gladiator andSTI Matador
in 2012 which resulted in a decrease of 789 operating days for these vessels during the year ended December 31, 2012 versus the
same period of the prior year. This decrease was partially offset by an increase of 612 operating days resulting from the delivery
of our first five vessels delivered under our Newbuilding Program during the third quarter of 2012. Overall operating costs per
day were consistent at $7,605 per day for the year ended December 31, 2012 compared to $7,581 per day for the year ended December
31, 2011.

Voyage expenses.
Voyage expenses for the year ended December 31, 2012 were $21.7 million, an increase of $14.9 million, or 216%, from $6.9 million
during the year ended December 31, 2011. The increase was primarily due to an increase in the number of days vessels operated in
the spot market. There were 1,712 spot voyage days (owned and time chartered-in) during the year ended December 31, 2012 as compared
to 450 days during year ended December 31, 2011.

Charterhire.Charterhire expense for the year ended December 31, 2012 was $43.7 million, an increase of $21.0 million, or 92%, from
$22.8 million during the year ended December 31, 2011. The increase was the result of additional time chartered-in vessels in
2012 compared with 2011, where the average number of chartered-in vessels increased to 9.18 from 4.95 during the years
ended December 31, 2012 and 2011, respectively.

Impairment.
In the year ended December 31, 2011, we recognized an impairment loss of $66.6 million for our 12 owned vessels. This impairment
loss was triggered by reductions in vessel values, and represented the difference between the carrying value and recoverable amount,
being fair value less cost to sell. No impairment was recognized in the year ended December 31, 2012.

Depreciation.Depreciation expense for the year ended December 31, 2012 was $14.8 million, a decrease of $3.6 million or 20%, from $18.5
million during the year ended December 31, 2011. The decrease was a result of (i) a $66.6 million impairment charge recorded
at December 31, 2011 which decreased the depreciable basis of our vessels and (ii) a decrease in the number of owned
vessels to 10.81 from 11.29 which was driven by the sales ofSTI Conqueror in March 2012, STI Matador in April 2012,
STI Gladiator in May 2012, STI Diamond in August 2012 andSTI Coral in September 2012, partially offset by
the delivery of our first five vessels delivered under our Newbuilding Program between July 2012 and September 2012.

Loss from
sale of vessels. Loss from sale of vessels for the year ended December 31, 2012 was $10.4 million. This loss is related
to the sales ofSTI Conqueror, STI Matador, STI Gladiator, STI Coral, andSTI Diamond during the year ended December
31, 2012 and includes $0.2 million relating to a loss on the interest rate swaps used to hedge the interest payments on the borrowings
on these vessels.

General and
administrative expenses. General and administrative expenses for the year ended December 31, 2012 were $11.5 million, a
decrease of $0.1 million, or 1%, from the year ended December 31, 2011. These costs remained relatively stable as there were no
significant changes in our overhead structure on a period over period basis.



53





Financial
expenses. Financial expenses for the year ended December 31, 2012 were $8.5 million, an increase of $1.5 million, or 21%,
from $7.1 million during the year ended December 31, 2011. The increase for the year ended December 31, 2012 was primarily driven
by a $3.0 million write-off of deferred financing fees relating to our 2011 Credit Facility offset by a decrease in interest expense
of $1.7 million which was driven by an increase in capitalized interest expense of $2.6 million for the year ended December 31,
2012 related to our vessels under construction.

Financial expenses
for the year ended December 31, 2012 consisted of interest expense of $3.3 million, commitment fees of $1.0 million on the undrawn
portions of the 2010 Revolving Credit Facility and 2011 Credit Facility, deferred financing fee amortization of $1.1 million, write-off
of deferred financing fees of $3.0 million and other costs of $0.1 million.

Financial expenses
for the year ended December 31, 2011 consisted of interest expense of $5.0 million, commitment fees of $1.1 million on the undrawn
portions of the 2010 Revolving Credit Facility and 2011 Credit Facility and deferred financing fee amortization of $1.0 million.

Earnings from
profit or loss sharing agreements. Earnings from profit or loss sharing agreements consist of realized earnings from profit
and loss sharing agreements with third parties relating to time chartered-in vessels. There were no similar agreements for the
comparative period.

Unrealized
loss on derivative financial instruments. Unrealized loss on derivative financial instruments consists of (i) the impact
of the reclassification of $1.0 million from other comprehensive income to the statement of profit or loss relating to the de-designation
of the hedge relationship on our interest rate swaps relating to the 2010 Revolving Credit Facility and (ii) the change in the
fair value of profit and loss sharing agreements on time chartered-in vessels with third parties of $0.2 million.

The following is a discussion of our operating results
by operating segment:

Aframax/LR2 segment

The following table summarizes vessel
operations for our Aframax/LR2 segment.

|                                                         |  | For the year ended |        |      |  |           
|-------------------------------------------------------- |  | ------------------ | ------ | ---- |  | ----------
|Aframax/LR2 segment                                      |  | December 31,       |        |      |  | Percentage
|In thousands of US dollars except per day and fleet data |  | 2012               |        | 2011 |  | Change    
|Vessel revenue                                           |  | $                  | 4,541  |      |  | $         
|Vessel operating costs                                   |  |                    | (3,304 | )    |  |           
|Voyage expenses                                          |  |                    | (25    | )    |  |           
|Charterhire                                              |  |                    | (1,287 | )    |  |           
|Impairment                                               |  |                    | —      |      |  |           
|Depreciation                                             |  |                    | (1,735 | )    |  |           
|General and administrative expenses                      |  |                    | (100   | )    |  |           
|Financial expenses                                       |  |                    | (1,086 | )    |  |           
|Other expenses, net                                      |  |                    | (11    | )    |  |           
|Segment loss                                             |  | $                  | (3,007 | )    |  | $         
|                                                         |  |                    |        |      |  |           
|TCE revenue per day                                      |  | $                  | 10,201 |      |  | $         
|Owned vessel operating costs per day                     |  |                    | 8,436  |      |  |           
|                                                         |  |                    |        |      |  |           
|Revenue days                                             |  |                    | 443    |      |  |           
|Owned vessel operating days                              |  |                    | 366    |      |  |           
|                                                         |  |                    |        |      |  |           
|Average number of owned vessels                          |  |                    | 1.00   |      |  |           
|Average number of time chartered-in vessels              |  |                    | 0.29   |      |  |           



Vessel Revenue.
Vessel revenue for the year ended December 31, 2012 was $4.5 million, a decrease of $1.9 million or 30% from the year ended December
31, 2011. There were two vessels operating in this segment during both periods,STI Spirit andKhawr Aladid. The
decrease in revenue is due to a decrease in TCE revenue per day to $10,201 per day from $14,951 per day. This was primarily driven
bySTI Spirit, which in June 2012 needed repairs and a subsequent positioning voyage which negatively affected the vessel’s
earnings.



54





Vessel operating
costs. Vessel operating costs for the year ended December 31, 2012 were $3.3 million, an increase of $0.8 million, or 30%,
from the year ended December 31, 2011. On a daily basis, vessel operating costs for the year ended December 31, 2012 increased
$1,476 per day, or 21% from the year ended December 31, 2011. This was a result of unplanned repairs onSTI Spirit during
the year ended December 31, 2012.

Charterhire.
Charterhire expense for the year ended December 31, 2012 was $1.3 million, an increase of $0.5 million, or 53%, from the year ended
December 31, 2011. This increase was driven by the time chartered-in vessel,Khawr Aladid, which was delivered on October 24,
2011, on a six month arrangement that expired in April 2012.

Depreciation.Depreciation expense for the year ended December 31, 2012 was $1.7 million, a decrease of $0.3 million, or 16%, from the
year ended December 31, 2011. This was a result of an impairment charge that was recorded in December 2011 which reduced the depreciable
basis ofSTI Spirit in 2012.

Financial
expense. Financial expense for the year ended December 31, 2012 was $1.1 million, an increase of $0.2 million or 29% from
the year ended December 31, 2011. Financial expense for the Aframax/LR1 segment represents interest for the STI Spirit Credit Facility,
which was signed and drawn in March 2011. Therefore, the year ended December 31, 2012 represents a full year of interest expense
as opposed to approximately nine months of interest expense during year ended December 31, 2011.

Other expenses, net.
Other expenses, net for the year ended December 31, 2012 decreased $0.1 million or 92% from the year ended December 31,
2011. This decrease was driven by the write-off of the fair value of vessel purchase options that were acquired withSTI
Spiritin September 2011.

Panamax/LR1 segment

The following table summarizes vessel operations
for our Panamax/LR1 segment.



|                                                         |  | For the year ended |         |      |  |           
|-------------------------------------------------------- |  | ------------------ | ------- | ---- |  | ----------
|Panamax/LR1 segment                                      |  | December 31,       |         |      |  | Percentage
|In thousands of US dollars except per day and fleet data |  | 2012               |         | 2011 |  | Change    
|Vessel revenue                                           |  | $                  | 28,602  |      |  | $         
|Vessel operating costs                                   |  |                    | (14,137 | )    |  |           
|Voyage expenses                                          |  |                    | (999    | )    |  |           
|Charterhire                                              |  |                    | (1,629  | )    |  |           
|Impairment                                               |  |                    | —       |      |  |           
|Depreciation                                             |  |                    | (7,352  | )    |  |           
|General and administrative expenses                      |  |                    | (495    | )    |  |           
|Earnings from profit and loss sharing agreements         |  |                    | 443     |      |  |           
|Unrealized loss on derivative financial instruments      |  |                    | (184    | )    |  |           
|Other expenses, net                                      |  |                    | —       |      |  |           
|Segment profit / (loss)                                  |  | $                  | 4,249   |      |  | $         
|                                                         |  |                    |         |      |  |           
|TCE revenue per day                                      |  | $                  | 14,264  |      |  | $         
|Owned vessel operating costs per day                     |  |                    | 7,714   |      |  |           
|                                                         |  |                    |         |      |  |           
|Revenue days                                             |  |                    | 1,935   |      |  |           
|Owned vessel operating days                              |  |                    | 1,830   |      |  |           
|                                                         |  |                    |         |      |  |           
|Average number of owned vessels                          |  |                    | 5.00    |      |  |           
|Average number of time chartered-in vessels              |  |                    | 0.35    |      |  |           



Vessel Revenue.Vessel revenue for the year ended December 31, 2012 was $28.6 million, a decrease of $2.5 million or 8% from the year
ended December 31, 2011. The decrease in revenue was the result of (i) a decrease in the number of revenue days to 1,935
for the year ended December 31, 2012 compared to 2,109 days during the year ended December 31, 2011 and (ii) a decrease in overall
TCE revenue per day to $14,264 from $14,743 for the years ended December 31, 2012 and December 31, 2011, respectively. This was
driven by a reduction in the average number of time chartered-in vessels to 0.35 from 0.91 for the years ended December 31, 2012
and 2011, respectively. This reduction is due to the redelivery of the time chartered-in vessel,BW Zambesi in November
2011 following its 10 month time charter-in agreement partially offset by the delivery of the time chartered-in vessels,FPMC
P Eagle andHellespont Promise in September and December 2012, respectively.



55





Noemi was time chartered-out during
the year ended December 31, 2011 at a rate of $24,500 per day and was redelivered in December 2011. The effect of the decrease
on overall pool revenue resulting from the expiration of this charter was offset by an increase of pool revenue per day to $14,242
per day during the year ended December 31, 2012 from $12,876 per day during the year ended December 31, 2011.

Vessel operating
costs. Vessel operating costs for the year ended December 31, 2012 were $14.1 million, a decrease of $0.3 million, or 2%,
from the year ended December 31, 2011. Vessel operating costs per day for the year ended December 31, 2012 decreased $177 per day,
or 2% from the year December 31, 2011. These costs remained relatively stable as there were no changes in our owned Panamax/LR1
fleet on a period over period basis.

Voyage expenses.
Voyage expenses for the year ended December 31, 2012 were $1.0 million, an increase of $1.0 million from the year ended December
31, 2011. This increase was the result of the time chartered-in vessel,FPMC P Eagle, which operated in the spot market
for 48 days during the year ended December 31, 2012. No vessels operated in the spot market for the year ended December 31, 2011.

Charterhire.Charterhire expense for the year ended December 31, 2012 was $1.6 million, a decrease of $2.9 million or 64% from the
year ended December 31, 2011. This decrease was the result of the redelivery of the time chartered-in vessel,BW Zambesiin November 2011 from its 10 month time charter-in agreement. This was partially offset by the delivery of the time chartered-in
vessels,FPMC P Eagle andHellespont Promise in September and December 2012, respectively.

Depreciation.
Depreciation expense for the year ended December 31, 2012 was $7.4 million, a decrease of $1.9 million, or 21%, from the year ended
December 31, 2011. This was a result of an impairment charge recorded in December 2011, which reduced the depreciable basis of
all owned vessels in the Panamax / LR1 Segment.

General and
administrative expenses. General and administrative expenses for the year ended December 31, 2012 were $0.5 million, a
decrease of $0.2 million or 28%, from the year ended December 31, 2011. General and administrative expenses for the Panamax / LR1
segment primarily consist of administrative fees.

Earnings from
profit or loss sharing agreements Earnings from profit or loss sharing agreements consist of realized earnings from profit
and loss sharing agreements with third parties relating to time chartered-in vessels. We had two such agreements in place during
the year ended December 31, 2012, one with our time chartered-in vessel,FPMC P Eagle and the other relating to a vessel
for which the Company neither owns nor time charters-in (i.e. the vessel is chartered-in by an unrelated third party.) There were
no similar agreements for the comparative period.

Unrealized
loss on derivative financial instruments. Unrealized loss on derivative financial instruments consists of a $0.2 million
change in the fair value of our profit and loss sharing agreements with third parties. There were no similar agreements for the
comparative period.

MR segment

The following table summarizes vessel
operations for our MR segment.

|                                                         |  | For the year ended |         |      |  |           
|-------------------------------------------------------- |  | ------------------ | ------- | ---- |  | ----------
|MR segment                                               |  | December 31,       |         |      |  | Percentage
|In thousands of US dollars except per day and fleet data |  | 2012               |         | 2011 |  | Change    
|Vessel revenue                                           |  | $                  | 46,857  |      |  | $         
|Vessel operating costs                                   |  |                    | (7,484  | )    |  |           
|Voyage expenses                                          |  |                    | (17,979 | )    |  |           
|Charterhire                                              |  |                    | (17,593 | )    |  |           
|Impairment                                               |  |                    | —       |      |  |           
|Depreciation                                             |  |                    | (4,015  | )    |  |           
|Loss from sale of vessels                                |  |                    | (5,879  | )    |  |           
|General and administrative expenses                      |  |                    | (398    | )    |  |           
|Financial income                                         |  |                    | 6       |      |  |           
|Other expenses, net                                      |  |                    | (51     | )    |  |           
|Segment loss                                             |  | $                  | (6,536  | )    |  | $         
|                                                         |  |                    |         |      |  |           
|TCE revenue per day                                      |  | $                  | 12,289  |      |  | $         
|Owned vessel operating costs per day                     |  |                    | 6,770   |      |  |           
|                                                         |  |                    |         |      |  |           
|Revenue days                                             |  |                    | 2,350   |      |  |           
|Owned vessel operating days                              |  |                    | 1,089   |      |  |           
|                                                         |  |                    |         |      |  |           
|Average number of owned vessels                          |  |                    | 2.97    |      |  |           
|Average number of time chartered-in vessels              |  |                    | 3.51    |      |  |           





56





Vessel Revenue.Vessel revenue for the year ended December 31, 2012 was $46.9 million, an increase of $34.6 million or 281% from the year
ended December 31, 2011. Vessel revenue less voyage expenses, or TCE revenue, was $28.9 million, an increase of $23.4 million,
or 430% from $5.4 million for the year ended December 31, 2011. The change in revenue was the result of an increase in revenue
days to 2,350 for the year ended December 31, 2012 from 450 during the year ended December 31, 2011. During the year ended December
31, 2011, onlySTI Diamond andSTI Coral were operating in this segment as these vessels were acquired in May 2011.
Revenue days increased during the year ended December 31, 2012 as a result of the delivery of the first five vessels under our
Newbuilding Program in the third quarter of 2012 (STI Amber, STI Topaz, STI Ruby, STI Garnet, andSTI Onyx) and
the delivery of six time chartered-in vessels (Pacific Duchess, Freja Lupus, STX Ace 6,Targale, Endeavour,and Valle Bianca). The increase in revenue was also driven by an increase in voyage revenue per day to $12,541 during
the year ended December 31, 2012 from $12,092 during the year ended December 31, 2011.

Vessel operating
costs. Vessel operating costs for the year ended December 31, 2012 were $7.5 million, an increase of $4.3 million, or 135%,
from the year ended December 31, 2011. The increase was driven by an increase in the number of operating days to 1,089 from 471
days during the year ended December 31, 2012. This increase was the result of the delivery of our first five vessels under our
Newbuilding Program during the third quarter of 2012.

Voyage expenses.
Voyage expenses for the year ended December 31, 2012 were $18.0 million, an increase of $11.1 million or 163% from the year ended
December 31, 2011. The increase was primarily driven bySTI Coral, STI Diamond, Pacific Duchess, Freja Lupus, STX Ace 6,Targale, Endeavour, Valle Bianca and the first five vessels delivered under our Newbuilding Program operating in the spot market
for a total of 1,541 days during the year ended December 31, 2012 compared to onlySTI Coral andSTI Diamond operating
in the spot market for 450 days during the year ended December 31, 2011.

Charterhire.
Charterhire expense for the year ended December 31, 2012 was $17.6 million, which was the result of time chartering-inPacific
Duchess, Freja Lupus, STX Ace 6, Targale, Endeavour andValle Bianca during the year ended December 31, 2012.
There were no vessels time chartered-in during the year ended December 31, 2011.

Depreciation.
Depreciation expense for the year ended December 31, 2012 was $4.0 million, an increase of $2.0 million, or 97%, from the year
ended December 31, 2011. The increase was driven by an increase in the average number of owned MR vessels to 2.97 for the year
ended December 31, 2012 from 1.29 for the year ended December 31, 2011, which was the result of the delivery of the first five
vessels under our Newbuilding Program during the third quarter of 2012. The increase was partially offset by a decrease of depreciation
expense which was driven by an impairment charge recorded in December 2011 that reduced the depreciable basis ofSTI Diamond
andSTI Coral.

Loss from
sale of vessels. Loss from sale of vessels for the year ended December 31, 2012 was $5.9 million. This was the result of
the sales ofSTI Diamond andSTI Coral for $25.25 million each in August and September 2012, respectively.

General and
administrative expenses. General and administrative expenses for the year ended December 31, 2012 were $0.4 million, an
increase of $0.1 million, or 27%, from the year ended December 31, 2011. General and administrative expenses for the MR segment
primarily consist of administrative fees to SSH. The increase was the result of an increase in the average number of owned vessels
to 2.97 during the year ended December 31, 2012 from 1.29 during the year ended December 31, 2011.

Handymax segment

The following table summarizes vessel
operations for our Handymax segment:

|                                                         |  | For the year ended |         |      |  |           
|-------------------------------------------------------- |  | ------------------ | ------- | ---- |  | ----------
|Handymax segment                                         |  | December 31,       |         |      |  | Percentage
|In thousands of US dollars except per day and fleet data |  | 2012               |         | 2011 |  | Change    
|Vessel revenue                                           |  | $                  | 35,381  |      |  | $         
|Vessel operating costs                                   |  |                    | (5,428  | )    |  |           
|Voyage expenses                                          |  |                    | (2,741  | )    |  |           
|Charterhire                                              |  |                    | (23,192 | )    |  |           
|Impairment                                               |  |                    | —       |      |  |           
|Depreciation                                             |  |                    | (1,716  | )    |  |           
|Loss from sale of vessels                                |  |                    | (4,525  | )    |  |           
|General and administrative expenses                      |  |                    | (195    | )    |  |           
|Segment loss                                             |  | $                  | (2,416  | )    |  | $         
|                                                         |  |                    |         |      |  |           
|Revenue per day                                          |  | $                  | 13,069  |      |  | $         
|Owned vessel operating costs per day                     |  |                    | 7,594   |      |  |           
|                                                         |  |                    |         |      |  |           
|Revenue days                                             |  |                    | 2,498   |      |  |           
|Owned vessel operating days                              |  |                    | 673     |      |  |           
|                                                         |  |                    |         |      |  |           
|Average number of owned vessels                          |  |                    | 1.84    |      |  |           
|Average number of time chartered-in vessels              |  |                    | 5.03    |      |  |           





57





Vessel Revenue.
Vessel revenue for the year ended December 31, 2012 was $35.4 million, an increase of $3.1 million or 10% from the year ended December
31, 2011. Vessel revenue less voyage expenses, or TCE revenue, was $32.6 million for the year ended December 31, 2012, an increase
of $0.4 million, or 1.3% from $32.2 million for the year ended December 31, 2011. The Handymax segment had 2,498 revenue days for
the year ended December 31, 2012 and 2,840 revenue days for the year ended December 31, 2011. This decrease was driven by the sales
ofSTI Conqueror, STI Matador andSTI Gladiator in March, April and May of 2012, respectively, and was partially
offset by an increase in the number of vessels time chartered-in for the year ended December 31, 2012. The average number of vessels
(owned and time chartered-in) was 6.87 for the year ended December 31, 2012 and 7.85 for the year ended December 31, 2011.

The decrease in
revenue days was offset by an increase in TCE revenue per day to $13,069 for the year ended December 31, 2012 from $11,343 per
day for the year ended December 31, 2011.

Vessel operating
costs. Vessel operating costs for the year ended December 31, 2012 were $5.4 million, a decrease of $5.8 million, or 52%,
from the year ended December 31, 2011. The decrease was driven by a decrease in the number of operating days to 673 during the
year ended December 31, 2012 from 1,460 during the year ended December 31, 2011 which was due to the sales ofSTI Conqueror,
STI Matador, andSTI Gladiator in March, April and May of 2012, respectively.

Voyage expenses.
Voyage expenses for the year ended December 31, 2012 were $2.7 million, increasing $2.7 million from the year ended December 31,
2011. This was a result ofSTI Conqueror, STI Matador, andSTI Gladiator operating in the spot market for 124 days
during the year ended December 31, 2012 prior to their sales. There were nominal voyage expenses incurred for the year ended December
31, 2011.

Charterhire.
Charterhire expense for the year ended December 31, 2012 was $23.2 million, an increase of $5.8 million or 34% from the year ended
December 31, 2011. This was the result of an increase in the number of days of vessels chartered-in to 1,840 during the year ended
December 31, 2012 from 1,404 days during the year ended December 31, 2011. The increase was primarily driven byHistria Perla
andHistria Coralwhose time charters began in July 2011. These vessels therefore operated for partial periods during the
year ended December 31, 2011 as compared to the full year during the year ended December 31, 2012. The average number of time chartered-in
vessels increased to 5.03 for the year ended December 31, 2012 as compared to 3.85 for the year ended December 31, 2011.

Depreciation.
Depreciation expense for the year ended December 31, 2012 was $1.7 million, a decrease of $3.4 million, or 66%, from the year
ended December 31, 2011. This was due to the sales ofSTI Conqueror, STI Matador, andSTI Gladiator which
ceased being depreciated and were written down to their disposal values in February 2012, the date which they were considered
held for sale. In addition, we recorded an impairment charge in December 2011 which decreased the depreciable basis of our
owned vessels in this segment.

Loss from
sales of vessels. Loss from sales of vessels for the year ended December 31, 2012 was $4.5 million which was the result
of the sales ofSTI Conqueror, STI Matador, andSTI Gladiator in March, April, and May 2012, respectively.

General and
administrative expenses. General and administrative expenses for the year ended December 31, 2012 were $0.2 million, a
decrease of $0.6 million, or 74% from the year ended December 31, 2011. General and administrative expenses for the Handymax segment
primarily consist of administrative fees. The decrease in administrative fees was driven by a decrease in the average number of
owned vessels to 1.84 for the year ended December 31, 2012 from 4.00 for the year ended December 31, 2011 resulting from the sales
ofSTI Conqueror, STI Matador andSTI Gladiator during the year ended December 31, 2012.



58





B.	Liquidity and Capital Resources

Our primary source
of funds for our short-term and long-term liquidity needs will be the cash flows generated from our vessels, which are currently
operating in Scorpio Group Pools, in the spot market or on time charter, in addition to availability under our 2010
Revolving Credit Facility, 2011 Credit Facility, 2013 Credit Facility, KEXIM and K-Sure Credit Facilities (as defined later),
sales of vessels, and cash on hand. The Scorpio Group Pools reduce volatility because (i) they aggregate the revenues and
expenses of all pool participants and distribute net earnings to the participants based on an agreed upon formula and (ii) some
of the vessels in the pool are on time charter. Furthermore, spot charters provide flexibility and allow us to fix vessels at
prevailing rates. We believe these cash flows from operations, amounts available for borrowing under our various credit facilities
and our cash balance will be sufficient to meet our existing liquidity needs for the next 12 months from the date of this annual
report.

As
of December 31, 2013, our cash balance was $78.8 million, which was lower than our cash balance of $87.2 million as
of December 31, 2012. At December 31, 2013, we had $72.4 million in availability under our 2010 Revolving Credit Facility,
which was fully drawn in January 2014. Additionally, in January 2014, we drew down $52.0 million from our 2011
Credit Facility. In connection with this draw down,STI Duchessa, STI Le
Rocher and STI Larvotto were provided as collateral under that facility. In February 2014, we drew
down $64.2 million from our 2013 Credit Facility and provided STI Opera, STI Fontvieille and STI
Ville as collateral. In March 2013, we drew down $20.5 million from our 2013 Credit Facility to partially finance the
delivery of STI Texas City.

For the year
ended December 31, 2013, our net cash outflow from operating activities was $5.7 million, net cash outflow from investing
activities was $935.1 million and the net cash inflow from financing activities was $932.4 million. For the year ended
December 31, 2012, our net cash outflow from operating activities was $1.9 million, net cash outflow from investing
activities was $90.2 million, and the net cash inflow from financing activities was $142.4 million.

As of December 31,
2013, our long-term liquidity needs were comprised of our debt repayment obligations for our credit facilities, our obligations
under construction contracts related to the vessels in our Newbuilding Program, and obligations under our time charter-in arrangements.

Our credit facilities
require us to comply with a number of covenants, including financial covenants related to liquidity, consolidated net worth, minimum
interest coverage, maximum leverage ratios, loan to value ratios and collateral maintenance; delivery of quarterly and annual financial
statements and annual projections; maintenance of adequate insurances; compliance with laws (including environmental); compliance
with the Employee Retirement Income and Security Act, or ERISA; maintenance of flag and class of the initial vessels; restrictions
on consolidations, mergers or sales of assets; approvals on changes in the manager of the vessels; limitations on liens; limitations
on additional indebtedness; prohibitions on paying dividends if a covenant breach or an event of default has occurred or would
occur as a result of payment of a dividend; prohibitions on transactions with affiliates; and other customary covenants.

Cash Flows

There was significant
amount of activity in our cash balance during the year ended December 31, 2013 primarily as a result of four follow on offerings
of common stock (net proceeds of $947.8 million) that led to the significant growth in our Newbuilding Program. Additionally,
we made drawdowns from our 2011 Credit Facility ($52.1 million), completed our investment in Dorian ($84.6 million), made
VLGC installment payments ($83.1 million), made delivery and progress payments for vessels in our Newbuilding Program ($767.4
million), debt service payments ($43.1 million in principal payments and debt issuance costs) and dividend payments ($24.4 million).
This activity is summarized below.

The table below summarizes
our sources and uses of cash for the periods presented:





|                             |  | For the year ended December 31,
|---------------------------- |  | -------------------------------
|In thousands of U.S. dollars |  | 2013                           
|Cash flow data               |  |                                
|Net cash inflow/(outflow)    |  |                                
|Operating activities         |  | $                              
|Investing activities         |  | (935,101                       
|Financing activities         |  | 932,436                        





Net cash outflow from operating activities



Operating cash
flows are driven by our results of operations along with movements in working capital. Both of these components were impacted
by our growth during 2013. Operating cash inflows, before changes in working capital were $33.0 million for the year ended
December 31, 2013, an increase of $25.5 million from a cash inflow of $7.5 million for the year ended December 31, 2012. This
improvement was driven by growth in our operating fleet to an average of 38.8 owned and time chartered-in vessels for the
year ended December 31, 2013 from an average of 20.0 owned and time-chartered-in vessels for the year ended December 31,
2012. Additionally, our overall time charter equivalent per day for our fleet improved to $14,369 per day for the year ended
December 31, 2013 from $12,960 per day for the year ended December 31, 2012.



59





Changes in working
capital were a cash outflow of $37.2 million for the year ended December 31, 2013, an increase of $29.4 million from a cash outflow
of $7.8 million during the year ended December 31, 2012. The increase in working capital was driven by our fleet growth to an average
of 38.8 owned and time chartered-in vessels for the year ended December 31, 2013 from an average of 20.0 owned and time-chartered-in
vessels for the year ended December 31, 2012.

The activity
within operating cash flows for the years ended December 31, 2013, 2012 and 2011 are summarized as follows:

Net cash outflow
from operating activities was $5.7 million for the year ended December 31, 2013, which was an increase in cash outflows of $3.8
million from a cash outflow of $1.9 million for the year ended December 31, 2012. The increase in cash outflows was
primarily attributable to (i) an increase in charterhire expense of $71.8 million (ii) an increase in vessel operating
costs of $9.9 million (iii) a net increase in the change in working capital from 2012 to 2013 of $29.4 million (iv) an
increase in cash general and administrative expenses of $4.6 million and (v) a decrease in realized gain on derivative financial
instruments and other expenses of $0.5 million. These decreases were offset by (i) an increase in vessel revenue of $92.2
million (ii) a decrease in voyage expenses of $16.9 million (iii) a decrease in cash financial expenses of $2.1 million
(iv) an increase in financial income of $1.1 million and (v) a decrease in drydock payments of $0.2 million.

Net cash outflow
from operating activities was $1.9 million for the year ended December 31, 2012, which was a decrease in cash outflows
of $10.5 million from a cash outflow of $12.5 million the year ended December 31, 2011. The decrease in cash outflows was
primarily attributable to (i) an increase in vessel revenue of $33.3 million (ii) a decrease in vessel operating costs of $1.0
million (iii) earnings from profit or loss arrangements of $0.4 million (iv) a decrease in drydock payments of $0.8 million (v)
a net decrease in the change in working capital of $9.1 million and (vi) a decrease in financial expenses of $1.7 million (excluding
non-cash items such as deferred financing fee amortization). These changes were offset by (i) an increase in voyage expenses of
$14.9 million and (ii) an increase in charterhire expense of $21.0 million.

Net cash outflow from investing activities



Cash inflows from investing
activities of $935.1 million during the year ended December 31, 2013 were driven by investments in our Newbuilding Program which
grew to 65 vessels under construction at December 31, 2013 from 11 vessels under construction at December 31, 2012. These
investments were the direct result of the receipt of net proceeds of $947.8 million during the year ended 2013 from four separate
follow-on offerings of common shares in addition to the receipt of net proceeds of $127.2 million from a follow on offering of
common shares in December 2012 (which are reflected in cash inflows from financing activities discussed below).



The components of
investing cash flows for the years ended December 31, 2013, 2012 and 2011 are summarized as follows:

Cash outflow from
investing activities was $935.1 million for the year ended December 31, 2013 compared to $90.2 million for the year ended December
31, 2012. Investing activities during the year ended December 31, 2013 were driven by installment payments and other vessel related
costs on our vessels under construction along with final installment payments of $139.3 million relating to seven vessels delivered
under our Newbuilding Program (STI Sapphire, STI Emerald, STI Beryl, STI Le Rocher, STI Larvotto, STI Fontvieille andSTI Ville)Additionally, we paid an aggregate of $93.1 million for the sale of our VLGC business to Dorian which consists
of $83.1 million of installment payments to the shipyards for the 11 VLGC contracts, the contribution of $2.3 million in cash
and other capitalized costs and $7.7 million in legal and advisory fees (including commissions paid to SSH) in exchange for newly
issued shares representing 30% of Dorian’s outstanding shares immediately following the transaction. We also purchased 24,121,621
new shares of Dorian’s common stock as part of a separate private placement of shares for total consideration of $75.0 million.

Cash outflow
from investing activities was $90.2 million for the year ended December 31, 2012 compared to net cash outflows of $122.6
million for the year ended December 31, 2011. Investment activity during the year ended December 31, 2012 was driven by
payments on our newbuilding vessels of $191.5 million (including capitalized costs). This was offset by the sales of STI
Conqueror, STI Matador, STI Gladiator, STI CoralandSTI Diamondfor aggregate net proceeds of
$101.3 million.

Cash outflow from
investing activities was $122.6 million for the year ended December 31, 2011. Investment activity during the year ended December
31, 2011 was driven by the purchase of STI Coral and STI Diamond for an aggregate purchase price of $71.0 million
(including a 1% commission paid to Liberty, our related party Administrator at that time, along with other capitalized costs).
Additionally, as of December 31, 2011, we had made payments of $51.0 million relating to our newbuilding vessels under construction
at HMD.



60





Net cash inflow from financing activities





Cash inflows from financing
activities during the year ended December 31, 2013 were driven by the issuance 118,828,578 shares of common stock as part of four
separate follow-on offerings for net proceeds of $947.8 million. Additionally, we made borrowings under our 2011 Credit Facility
which were offset by principal repayments of debt into all of our credit facilities. During 2013, we also incurred debt issuance
costs primarily as a result of the execution our 2013 Credit Facility in July 2013. Furthermore, we began issuing quarterly dividends
during the year ended December 31, 2013. Total dividend payments for 2013 were $24.4 million.



The components of
financing cash flows for the years ended December 31, 2013, 2012 and 2011 are summarized as follows:

Cash inflow from
financing activities was $932.4 million for the year ended December 31, 2013 compared to $142.4 million for the year ended December 31,
2012. Cash inflow from financing activities during the year ended December 31, 2013 was driven by net proceeds of $947.8 million
from our registered direct placements of common shares in February, March and May 2013 and an underwritten offering of common shares
in August 2013. Additionally, we borrowed $52.1 million under our 2011 Credit Facility to partially finance the deliveries ofSTI Sapphire,STI Emerald andSTI Beryl. These inflows were offset by (i) principal payments of $17.2 million
into our 2010 Revolving Credit Facility, $3.5 million into our 2011 Credit Facility, $6.0 million into our Newbuilding Credit Facility,
and $1.7 million into our STI Spirit Credit Facility, (ii) debt issuance costs of $14.7 million and (iii) dividend payments
of $24.4 million.

Cash provided by
financing activities was $142.4 million for the year ended December 31, 2012 compared to cash provided by financing activities
of $103.7 million for the year ended December 31, 2011. Financing activities during the year ended December 31, 2012 were driven
by the receipt of net proceeds of $153.1 million from two registered direct placements of common shares in April and December 2012,
borrowings of $32.2 million under our 2010 Revolving Credit Facility, and borrowings of $92.0 million under our Newbuilding Credit
Facility. These inflows were offset by repayments of $106.0 million into the 2010 Revolving Credit Facility, principal payments
of $2.8 million into the STI Spirit Credit Facility, $18.2 million into the 2011 Credit Facility (of which $16.1 million was the
repayment made as a result of the sale ofSTI Coral) and $2.1 million into the Newbuilding Credit Facility. Cash outflows
from financing activities also include the acquisition of treasury shares of $2.4 million and debt issuance costs of $3.3 million.

Financing activities
during the year ended December 31, 2011 were driven by net proceeds of $68.5 million from an underwritten public offering of common
shares in May 2011, net proceeds of $36.5 million from an underwritten public offering of common shares in November 2011, borrowings
of $35.0 million under the 2011 Credit Facility, borrowings of $27.3 million under the STI Spirit Credit Facility, and borrowings
of $53.0 million under the 2010 Revolving Credit Facility. These inflows were offset by payments of $99.0 million into the 2010
Revolving Credit Facility, principal payments on all of our credit facilities of $10.6 million, payment of debt issuance cost of
$4.1 million under the 2011 Credit Facility, STI Spirit Credit Facility and the 2010 Revolving Credit Facility along with $2.9
million of costs related to the repurchase of our common shares.

Long-Term Debt
Obligations and Credit Arrangements

The following is
a table summarizing our indebtedness at December 31, 2013:

|In thousands of U.S. dollars   |  | Amount Outstanding at December 31, 2013 |         | Availability as of the date of this report
|------------------------------ |  | --------------------------------------- | ------- | ------------------------------------------
|2010 Revolving Credit Facility |  | $                                       | —       |                                           
|STI Spirit Credit Facility     |  |                                         | 21,736  |                                           
|2011 Credit Facility           |  |                                         | 64,006  |                                           
|Newbuilding Credit Facility    |  |                                         | 83,839  |                                           
|2013 Credit Facility           |  |                                         | —       |                                           
|K-Sure Credit Facility         |  |                                         | —       |                                           
|KEXIM Credit Facility          |  |                                         | —       |                                           
|Total                          |  | $                                       | 169,581 |                                           

____________________

| | (1) | We have the ability to pay down and
                                         re-borrow from the available commitments under this loan as needed and in January 2014,
                                         we drew down $72.4 million from this facility. We repaid $22.1 million into this facility
                                         in March 2014 as a result of the sales of Noemi and Senatore,
                                         which cannot be re-borrowed.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

61





| | (2) | In January 2014, we drew down $52.0 million from our 2011 Credit Facility. In connection with this
draw down, STI Duchessa, STI Le Rocher, and STI Larvotto were provided as collateral under this facility. The availability
period under this credit facility expired on January 31, 2014.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | In February 2014, we drew down $64.2 from our 2013 Credit Facility. In connection with this draw
down, STI Opera, STI Fontvieille and STI Ville were provided as collateral under this facility. In March 2014, we
drew down $20.5 million from this facility to finance the delivery of STI Texas City. The remaining availability can be
used to finance up to 60% of future vessel acquisitions.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | These facilities were signed in February 2014. The loans can be used to finance the lesser of 60%
of the newbuilding contract price and 74% of the fair market value of the relevant vessel specified in the agreement.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

2010 Revolving Credit Facility

On June 2,
2010, we executed a credit facility with Nordea Bank Finland plc, acting through its New York branch, DNB Bank ASA,
acting through its New York branch, and ABN AMRO Bank N.V, for a senior secured term loan facility of up to $150 million. On
July 12, 2011, we amended and restated the credit facility to convert it from a term loan to a reducing revolving credit
facility. This gave us the ability to pay down and re-borrow from the total available commitments under the loan. The
availability under this facility as of December 31, 2013 was $72.4 million which is scheduled to reduce by $3.1 million each
quarter, with a lump sum reduction of $57.1 million at the maturity date of June 2, 2015.

Our
subsidiaries that own vessels that are collateralized by this loan act as guarantors under the amended and restated credit
facility. All terms mentioned are defined in the agreement.

Drawdowns
under the credit facility bear interest as follows: (1) through December 29, 2011, at LIBOR plus an applicable margin
of 3.00% per annum when our debt to capitalization (total debt plus equity) ratio is equal to or less than 50% and 3.50%
per annum when our debt to capitalization ratio is greater than 50%; (2) from December 30, 2011 through September 30, 2013,
at LIBOR plus an applicable margin of 3.50% per annum; and (3) from October 1, 2013 and at all times thereafter, at LIBOR
plus an applicable margin of 3.25% per annum when our debt to capitalization (total debt plus equity) ratio is equal to or
less than 50% and 3.50% per annum when our debt to capitalization ratio is greater than 50%. A commitment fee equal to 40% of
the applicable margin is payable on the unused daily portion of the credit facility. The credit facility matures on June 2,
2015 and can only be used to refinance amounts outstanding from the original loan agreement and for general
corporate purposes.

The
credit facility requires us to comply with a number of covenants, including financial covenants; delivery of quarterly and
annual financial statements and annual projections; maintaining adequate insurances; compliance with laws (including
environmental); compliance with ERISA; maintenance of flag and class of the initial vessels; restrictions on consolidations,
mergers or sales of assets; approvals on changes in the Manager of our initial vessels; limitations on liens; limitations on
additional indebtedness; prohibitions on paying dividends if a covenant breach or an event of default has occurred or would
occur as a result of payment of a dividend; prohibitions on transactions with affiliates; and other customary covenants.



In addition to the
customary restrictive covenants discussed above, the 2010 Revolving Credit Facility requires our compliance with the following
financial covenants:

| | · | The ratio of net debt to capitalization shall be no greater than 0.60 to 1.00.
| | - | ------------------------------------------------------------------------------

| | · | Consolidated tangible net worth (i.e. total shareholders’ equity) shall be no less than $150.0
million plus 25% of cumulative positive net income (on a consolidated basis) for each fiscal quarter from July 1, 2010 going forward
and 50% of the value of any new equity issues from July 1, 2010 going forward.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | The ratio of EBITDA to interest expense shall be no less than 1.25 to 1.00 commencing with
                                                                                                             the fourth fiscal quarter of 2011 until the fourth quarter of 2012, at which point it increased to 1.50 to 1.00 for the first
                                                                                                             quarter of 2013, 1.75 to 1.00 for the second quarter of 2013 and 2.00 to 1.00 at all times thereafter. Such ratio shall be
                                                                                                             calculated quarterly on a trailing four quarter basis. In addition, we are restricted from paying dividends until our EBITDA
                                                                                                             to interest expense ratio is 2.00 to 1.00 or greater. EBITDA, as defined in the loan agreement, excludes non-cash charges
                                                                                                             such as impairment.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Consolidated liquidity (cash, cash equivalents, and availability under the 2010 Revolving Credit
Facility) needs to be not less than $25.0 million, of which unrestricted cash and cash equivalents shall be not less than $15.0
million, until we own, directly or indirectly, more than 15 vessels, at which time the amount increases by $750,000 per each additional
vessel.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | The aggregate fair market value of the collateral vessels (see note 6) shall at all times be no
less than 150% of the then aggregate outstanding principal amount of loans under the credit facility.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



62





In June 2013,
we voluntarily repaid $17.2 million into this facility. As of December 31, 2013, there was no outstanding balance and there
was $72.4 million available to draw down at our option. As of December 31, 2012, the outstanding balance was $17.2 million
and $67.4 million was available to draw down. We were in compliance with the financial covenants relating to this facility as
of December 31, 2013.

In January 2014, we drew
down the entire amount available under this facility of $72.4 million. In March 2014, we repaid
$22.7 million into this facility as part of the sales of Noemi and Senatore. Consequently, the availability
of this facility was reduced by such amount and the quarterly reduction was reduced to $2.1 million from $3.1 million per quarter.
We will also write-off a total of $0.2 million of deferred financing fees relating to this facility as part of this repayment.





STI Spirit Credit Facility

On March 9, 2011,
we executed a credit facility with DVB Bank SE for a senior secured term loan facility of $27.3 million forSTI Spirit,
which was acquired on November 10, 2010. The credit facility was drawn down on March 17, 2011 and matures on March 17, 2018. On
September 28, 2011 and on December 30, 2011, we amended certain financial covenants contained in the credit facility. The loan
bears interest at LIBOR plus a margin of 2.75% per annum. The loan is repayable over 28 equal quarterly installments and a lump
sum payment at maturity. The quarterly installments commenced three months after the drawdown and were calculated using an 18 year
amortization profile. Our subsidiary, STI Spirit Shipping Company Limited, which owns the vessel, is the borrower and Scorpio Tankers
Inc. is the guarantor.

The
credit facility requires us to comply with a number of covenants, including financial covenants; delivery of quarterly and
annual financial statements and annual projections; maintaining adequate insurances; compliance with laws (including
environmental); compliance with ERISA; maintenance of flag and class of the initial vessels; restrictions on consolidations,
mergers or sales of assets; approvals on changes in the Manager of our initial vessels; limitations on liens; limitations on
additional indebtedness; prohibitions on paying dividends if a covenant breach or an event of default has occurred or would
occur as a result of payment of a dividend; prohibitions on transactions with affiliates; and other customary covenants.



In addition to the
customary restrictive covenants discussed above, the STI Spirit Credit Facility requires our compliance with the following financial
covenants:

| | · | The
                                         ratio of debt to capitalization no greater than 0.60 to 1.00.
| | - | ----------------------------------------------------------------------------------------------------------

| | · | Consolidated tangible net worth (i.e. shareholders equity) shall be no less than $150 million plus
25% of cumulative positive net income (on a consolidated basis) for each fiscal quarter.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | The ratio of EBITDA to interest expense shall be no less than 1.25 to 1.00 for the period commencing
with the fourth quarter of 2011 through the fourth quarter of 2012, at which time it will increase to: (i) 1.50 to 1.00 for the
first quarter of 2013, (ii) 1.75 to 1.00 for the second quarter of 2013 and (iii) 2.00 to 1.00 at all times thereafter. Such ratio
shall be calculated quarterly on a trailing four quarter basis. In addition, we are restricted from paying dividends until our
EBITDA to interest expense ratio is 2.00 to 1.00 or greater. EBITDA, as defined in the loan agreement, excludes non-cash charges
such as impairment.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Consolidated liquidity (cash, cash equivalents, and availability under the 2010 Revolving Credit
Facility) not less than $25 million, of which unrestricted cash and cash equivalents shall be not less than $15.0 million, until
we own, directly or indirectly, more than 15 vessels, at which time the amount increases by $750,000 per each additional vessel.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | The aggregate fair market value ofSTI Spirit not less than (i) 140% of the then outstanding
loan balance if the vessel is operating in a pool or in the spot market or (ii) 130% of the then outstanding loan if the vessel
is on time charter with a duration of at least one year.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As described above,
the credit facility requires that the charter-free market value of the STI Spiritshall be no less than 140% of the then
outstanding loan balance. In order to stay in compliance with this covenant, we prepaid $1.4 million in addition to the $0.3 million
scheduled principal payment into this credit facility in December 2013.

The outstanding
balance at December 31, 2013 and December 31, 2012 was $21.7 million and $23.4 million, respectively. We were in compliance with
the financial covenants relating to this facility as of December 31, 2013.

In February 2014,
we agreed to sell the 2008 built LR2 product tanker, STI Spirit, for approximately $30.2 million. As part of this sale,
we will repay all amounts due under the STI Spirit Credit Facility of $21.4 million. This sale is expected to close by the end
of April 2014. We will also write-off a total of $0.3 million of deferred financing fees relating to this facility as part of this
repayment.



63





2011 Credit
Facility

On May 3,
2011, we executed a credit facility with Nordea Bank Finland plc, acting through its New York branch, DnB NOR Bank ASA,
acting through its New York branch, and ABN AMRO Bank N.V., for a senior secured term loan facility of up to $150.0 million.
On July 20, 2012, we extended the availability period of the 2011 Credit Facility until January 31, 2014. The availability
period was previously scheduled to expire in May 2013.

All terms mentioned
in this section are defined in the agreement.

Drawdowns
under this credit facility are available until January 31, 2014 and bear interest as follows: (1) until December 29, 2011, at
LIBOR plus an applicable margin of (i) 2.75% per annum when our debt to capitalization (total debt plus equity) ratio is less
than 45%, (ii) 3.00% per annum when our debt to capitalization ratio is greater than or equal to 45% but less than or equal
to 50% and (iii) 3.25% when our debt to capitalization ratio is greater than 50%; (2) from December 30, 2011
through September 30, 2013, at LIBOR plus an applicable margin of 3.50% per annum and (3) from October 1, 2013 and at all
times thereafter, at LIBOR plus an applicable margin of (i) 3.25% per annum when our debt to capitalization (total debt
plus equity) ratio is equal to or less than 50% and (ii) 3.50% per annum when our debt to capitalization ratio is greater
than 50%. A commitment fee equal to 40% of the applicable margin is payable on the unused daily portion of the credit
facility. The credit facility matures on May 3, 2017 and can only be used to finance up to 50% of the cost of future vessel
acquisitions, which vessels would be the collateral for the credit facility.

Borrowings
for each vessel financed under this facility represent a separate tranche, with repayment terms dependent on the age of
the vessel at acquisition. Each tranche under the credit facility is repayable in equal quarterly installments, with a lump
sum payment at maturity, based on a full repayment of such tranche when the vessel to which it relates is sixteen years of
age. Our subsidiaries, which may at any time, own one or more of our vessels, will act as guarantors under the credit
facility.

The
credit facility requires us to comply with a number of covenants, including financial covenants; delivery of quarterly and
annual financial statements and annual projections; maintaining adequate insurances; compliance with laws (including
environmental); compliance with ERISA; maintenance of flag and class of the initial vessels; restrictions on consolidations,
mergers or sales of assets; approvals on changes in the Manager of our initial vessels; limitations on liens; limitations on
additional indebtedness; prohibitions on paying dividends if a covenant breach or an event of default has occurred or would
occur as a result of payment of a dividend; prohibitions on transactions with affiliates; and other customary covenants.



In addition to the
customary restrictive covenants discussed above, the 2011 Credit Facility requires our compliance with the following financial
covenants:

| | · | The ratio of net debt to capitalization shall be no greater than 0.60 to 1.00.
| | - | ------------------------------------------------------------------------------

| | · | Consolidated tangible net worth (i.e. shareholders’ equity) shall be no less than $150.0
million plus 25% of cumulative positive net income (on a consolidated basis) for each fiscal quarter from July 1, 2010 going forward
and 50% of the value of any new equity issues from July 1, 2010 going forward.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | The ratio of EBITDA to interest expense shall be no less than 1.25 to 1.00 commencing with the
fourth fiscal quarter of 2011 until the fourth quarter of 2012, at which point it increased to 1.50 to 1.00 for the first quarter
of 2013, 1.75 to 1.00 for the second quarter of 2013 and 2.00 to 1.00 at all times thereafter. Such ratio shall be calculated quarterly
on a trailing four quarter basis. In addition, we are restricted from paying dividends until our EBITDA to interest expense ratio
is 2.00 to 1.00 or greater. EBITDA, as defined in the loan agreement, excludes non-cash charges such as impairment.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Consolidated liquidity (cash, cash equivalents, and availability under the 2010 Revolving Credit
Facility) needs to be not less than $25 million, of which unrestricted cash and cash equivalents shall be not less than $15.0 million,
until we own, directly or indirectly, more than 15 vessels, at which time the amount increases by $750,000 per each additional
vessel.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | The aggregate fair market value of the collateral vessels shall at all times be no less than 150%
of the then aggregate outstanding principal amount of loans under the credit facility.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In January 2013,
March 2013 and April 2013, we drew down an aggregate of $52.1 million from this facility in connection with the deliveries of STI
Sapphire, STI Emeraldand STI Beryl, respectively.

As of December
31, 2013, there was $62.9 million available for borrowing which could be used to finance up to 50% of future vessel
acquisitions through January 31, 2014. The outstanding balance at December 31, 2013 and December 31, 2012 was $64.0 million
and $15.5 million, respectively. We were in compliance with the financial covenants relating to this facility as of December
31, 2013.



64





In January 2014,
we drew down an aggregate of $52.0 million from this facility. In connection with this draw down, STI Duchessa, STI Le Rocher
and STI Larvotto were provided as collateral under the facility.

Newbuilding
Credit Facility

On December 21,
2011, we executed a credit facility agreement with Credit Agricole Corporate and Investment Bank and Skandinaviska Enskilda Banken
AB for a senior secured term loan facility of up to $92.0 million. During the year ended December 31, 2012, we drew down an aggregate
of $92.0 million from this facility to partially finance the deliveries ofSTI Amber, STI Topaz, STI Ruby andSTI Garnet
($23.0 million per vessel). These vessels are owned individually by certain of our subsidiaries, who together are the borrowers
under this credit facility, and Scorpio Tankers Inc. is the guarantor. Borrowings under the credit facility bear interest at LIBOR
plus an applicable margin of 2.70% per annum. A commitment fee equal to 1.10% per annum is payable on the unused daily portion
of the credit facility.

The facility is
separated into four tranches (one tranche per vessel) and the four vessels are collateral for the credit facility. The repayment
of the tranche relating to the respective vessel commenced after delivery of that vessel in quarterly installments of $375,000,
which equates to a repayment profile of 15.33 years. Each tranche is scheduled to mature approximately seven years after delivery
of the relevant vessel from the shipyard.

The
credit facility requires us to comply with a number of covenants, including financial covenants; delivery of quarterly and
annual financial statements and annual projections; maintaining adequate insurances; compliance with laws (including
environmental); compliance with ERISA; maintenance of flag and class of the initial vessels; restrictions on consolidations,
mergers or sales of assets; approvals on changes in the Manager of our initial vessels; limitations on liens; limitations on
additional indebtedness; prohibitions on paying dividends if a covenant breach or an event of default has occurred or would
occur as a result of payment of a dividend; prohibitions on transactions with affiliates; and other customary covenants.



In addition to the
customary restrictive covenants discussed above, the Newbuilding Credit Facility requires our compliance with the following financial
covenants:

| | · | The ratio of debt to capitalization no greater than 0.60 to 1.00.
| | - | -----------------------------------------------------------------

| | · | Consolidated tangible net worth (i.e. shareholders equity) shall be no less than $150 million plus
25% of cumulative positive net income (on a consolidated basis) for each fiscal quarter from July 1, 2010 going forward and 50%
of the value of any new equity issues from July 2, 2010 going forward.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | The ratio of EBITDA to interest expense not less than 2.00 to 1.00 commencing with the third fiscal
quarter of 2011 until the fourth quarter of 2012, and 2.50 to 1.00 for all times thereafter. Such ratio shall be calculated quarterly
on a trailing four quarter basis. EBITDA, as defined in the loan agreement, excludes non-cash charges such as impairment.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Unrestricted cash and cash equivalents not less than $15.0 million, until we own, directly or indirectly,
more than 15 vessels, at which time the amount increases by $750,000 per each additional vessel.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | The aggregate fair market value of the collateral vessels shall at all times not less than 140%
(120% if the vessel is subject to acceptable long term employment) of the aggregate principal amount outstanding plus a pro rata
amount of any allocable swap exposure for the credit facility.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

During the year
ended December 31, 2013, we made scheduled principal payments of $6.0 million into this credit facility. The outstanding balance
at December 31, 2013 and December 31, 2012 was $83.8 million and $89.8 million, respectively. We were in compliance with the financial
covenants relating to this facility as of December 31, 2013.

In March 2014,
we amended and restated our Newbuilding Credit Facility with Credit Agricole Corporate and Investment Bank and Skandinaviska
Enskilda Banken AB, to convert it from a term loan to a reducing revolving credit facility. This gives us the ability to pay
down and re-borrow from the total available commitments under the loan. All other terms and definitions remain not changed.
This facility was fully drawn as of the date of this report.



2013 Credit
Facility

On July 2,
2013, we entered into a senior secured revolving credit facility and term loan facility with Nordea Bank Finland plc and the other
lenders named therein of up to $525.0 million to finance the acquisition of the Firm Vessels (defined below), the Option Vessels
(defined below) and certain other vessels and for general corporate purposes, including working capital. This credit facility is
secured by, among other things, a first-priority cross-collateralized mortgage on certain vessels for which we have entered into
newbuilding contracts, or the Firm Vessels, and certain vessels for which we may exercise construction options, or the Option Vessels,
and together with the Firm Vessels, the Collateral Vessels. Our subsidiaries that own the Collateral Vessels act as joint and several
guarantors under our 2013 Credit Facility. We refer to this credit facility as our 2013 Credit Facility.



65





Our 2013 Credit
Facility consists of a $260.0 million delayed draw term loan facility to finance the acquisition of the Firm Vessels and a $265.0
million revolving credit facility to finance the acquisition of the Option Vessels and certain other vessels built on January 1,
2012 or later, and for general corporate purposes, including working capital.

Drawdowns of the
term loan may occur in connection with the delivery of a Firm Vessel in an amount equal to the lesser of 60% of (i) the contract
price for such vessel or (ii) such vessel’s fair market value. Drawdowns of the revolving credit facility may occur
in connection with the delivery of an Option Vessel and are also capped at the lesser of 60% of (i) the contract price for
such vessel or (ii) such vessel’s fair market value, with such amount, once drawn, available on a revolving basis. Drawdowns
under the term loan are available until the earlier of the delivery of each Firm Vessel and January 31, 2015 and drawdowns
under the revolving loan are available until July 31, 2015 and bear interest at LIBOR plus an applicable margin of 3.50%.

The term loan is
repayable and the revolving loans reduced, in each case, in an amount equal to 1/60th of such loan on a consecutive quarterly basis
until final maturity on the sixth anniversary of the facility. In addition to restrictions imposed upon the owners of the Collateral
Vessels (such as, limitations on liens and limitations on the incurrence of additional indebtedness), our 2013 Credit Facility
includes financial covenants that require us to maintain:

| | · | The ratio of net debt to total capitalization no greater than 0.60 to 1.00.
| | - | ---------------------------------------------------------------------------

| | · | Consolidated tangible net worth no less than (i) $150.0 million plus 25% of cumulative positive
net income (on a consolidated basis) for each fiscal quarter beginning on July 1, 2010 going forward and (ii) 50% of the value
of any new equity issues from July 1, 2010 going forward.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | The ratio of EBITDA to net interest expense greater than 2.00 to 1.00 through December 31, 2013
and 2.50 to 1.00 thereafter.
| | - | ----------------------------------------------------------------------------------------------------------------------------

| | · | Minimum liquidity of not less than the greater of $25.0 million or 5% of total indebtedness.
| | - | --------------------------------------------------------------------------------------------

| | · | The aggregate fair market value of the Collateral Vessels shall at all times be no less than 140%
of the then aggregate outstanding principal amount of loans under the credit facility.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We had no borrowings
under this facility at December 31, 2013 and we were in compliance with the financial covenants relating to this credit facility
as of December 31, 2013.

In February 2014,
we drew down $64.2 million from this credit facility. In connection with this draw down, STI Opera, STI Fontvieille and
STI Ville were provided as collateral under the facility.

In March 2014, we
drew down $20.5 million from this facility to partially finance the delivery of STI Texas City.

K-Sure Credit
Facility

On February 24,
2014, we entered into a $458.3 million senior secured term loan facility which consists of a $358.3 million tranche with a group
of financial institutions that is being 95% covered by Korea Trade Insurance Corporation (the ‘K-Sure Tranche’) and
a $100.0 million commercial tranche with a group of financial institutions led by DNB Bank SA (the “Commercial Tranche”).
We refer to this credit facility as our K-Sure Credit Facility.

Drawdowns under
the K-Sure Credit Facility may occur in connection with the delivery of certain of our newbuilding vessels as specified in the
agreement. The amount of each drawdown shall not exceed the lesser of 60% of the newbuilding contract price and 74% of the fair
market value of the relevant vessel. Drawdowns are available until the earlier of (i) the delivery date of the last vessel specified
in the agreement to be acquired, (ii) September 30, 2015 and (iii) the date on which the total commitments under the loan are fully
borrowed, cancelled or terminated.

Repayments will
be made in equal consecutive six month repayment installments in accordance with a 15 year repayment profile under the Commercial
Tranche and a 12 year repayment profile under the K-Sure Tranche. Repayments will commence in July 2015 for the K-Sure Tranche
and six months after the delivery of the last vessel to be acquired for the Commercial Tranche. The Commercial Tranche matures
on the sixth anniversary of the delivery date of the last vessel to be acquired and the K-Sure Tranche matures in January 2027
assuming the Commercial Tranche is refinanced through that date.

Borrowings under the
K-Sure tranche bear interest at LIBOR plus an applicable margin of 2.25%. Borrowings under the Commercial Tranche bear interest
at LIBOR plus an applicable margin of 3.25% from the effective date of the agreement to the fifth anniversary thereof and 3.75%
thereafter until the maturity date in respect of the Commercial Tranche. A commitment fee equal to 40% of the applicable margin
is payable on the unused daily portion of the credit facility.



66





In addition to restrictions
imposed upon the owners of the vessels that are collateralized under this credit facility (such as, limitations on liens and limitations
on the incurrence of additional indebtedness), the K-Sure Credit Facility requires our compliance with the following financial
covenants:

| | · | The ratio of net debt to total capitalization no greater than 0.60 to 1.00.
| | - | ---------------------------------------------------------------------------

| | · | Consolidated tangible net worth no less than $677.3 million plus (i) 25% of cumulative positive
net income (on a consolidated basis) for each fiscal quarter commencing on or after October 1, 2013 and (ii) 50% of the value of
any new equity issues occurring on or after October 1, 2013.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | The ratio of EBITDA to net interest expense greater than 2.50 to 1.00 calculated on a trailing
four quarter basis.
| | - | ------------------------------------------------------------------------------------------------------------------

| | · | Minimum liquidity of not less than the greater of $25.0 million or 5% of total indebtedness.
| | - | --------------------------------------------------------------------------------------------

| | · | The aggregate fair market value of the vessels provided as collateral under the facility shall
at all times be no less than 135% of the then aggregate outstanding principal amount of loans under the credit facility.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

KEXIM Credit
Facility

On February
28, 2014, we executed a senior secured term loan facility with a group of financial institutions led by DNB Bank ASA and
Skandinaviska Enskilda Banken AB (publ) and from the Export-Import Bank of Korea (“KEXIM”) for a total loan
facility of $429.6 million. This facility includes commitments from KEXIM of up to $300.6 million (the “KEXIM
Tranche”) and a group of financial institutions led by DNB Bank ASA and Skandinaviska Enskilda Banken AB (publ) of up
to $129.0 million (the “Commercial Tranche”).We refer to this credit facility as our KEXIM Credit Facility.

Drawdowns under
the KEXIM Credit Facility may occur in connection with the delivery of 18 of our newbuilding vessels as specified in the loan agreement.
The amount of each drawdown shall not exceed the lesser of 60% of the newbuilding contract price and 74% of the fair market value
of the relevant vessel. Drawdowns are available until the earlier of (i) the delivery date of the last vessel specified in the
agreement to be acquired, (ii) March 31, 2015 and (iii) the date on which the total commitments under the loan are fully borrowed,
cancelled or terminated.

Repayments
will be made in equal consecutive semi-annual repayment installments in accordance with a 15 year repayment profile under the
Commercial Tranche and a 12 year repayment profile under the KEXIM Tranche. Repayments will commence on the next semi-annual
date falling after the weighted average delivery date of the vessels specified under the facility for the KEXIM Tranche and
on the next semi-annual date falling after the final delivery date of the vessels specified under the facility for the
Commercial Tranche.

The Commercial Tranche
matures on the sixth anniversary of the delivery date of the last vessel specified under the loan and the KEXIM Tranche matures
on the twelfth anniversary of the weighted average delivery date of the vessels specified under the loan assuming the Commercial
Tranche is refinanced through that date.

Borrowings
under the KEXIM tranche bear interest at LIBOR plus an applicable margin of 3.25%. Borrowings under the Commercial Tranche
bear interest at LIBOR plus an applicable margin of 3.25% from the effective date of the agreement to the fifth anniversary
thereof and 3.75% thereafter until the maturity date in respect of the Commercial Tranche. A commitment fee equal to 40% of
the applicable margin is payable on the unused daily portion of the credit facility.

In addition to restrictions
imposed upon the owners of the vessels that are collateralized under this credit facility (such as, limitations on liens and limitations
on the incurrence of additional indebtedness), the KEXIM Credit Facility requires our compliance with the following financial covenants:

| | · | The ratio of net debt to total capitalization no greater than 0.60 to 1.00.
| | - | ---------------------------------------------------------------------------

| | · | Consolidated tangible net worth no less than $677.3 million plus (i) 25% of cumulative positive
net income (on a consolidated basis) for each fiscal quarter commencing on or after October 1, 2013 and (ii) 50% of the value of
any new equity issues occurring on or after October 1, 2013.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | The ratio of EBITDA to net interest expense greater than 2.50 to 1.00 calculated on a trailing
four quarter basis.
| | - | ------------------------------------------------------------------------------------------------------------------

| | · | Minimum liquidity of not less than the greater of $25.0 million or 5% of total indebtedness.
| | - | --------------------------------------------------------------------------------------------

| | · | The aggregate fair market value of the vessels provided as collateral under the facility shall
at all times be no less than 135% of the then aggregate outstanding principal amount of loans under the credit facility.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



67





In addition to KEXIM’s
commitment of up to $300.6 million, KEXIM has also provided an optional guarantee for a five year amortizing note of $125.3 million
(the “KEXIM Guaranteed Note”) that may be issued by us at our discretion in 2014; the proceeds of which will be used
to reduce the $300.6 million KEXIM Tranche.

Derivative Contracts

Interest Rate
Swaps

In August 2011,
we entered into six interest rate swap agreements with three different banks to manage the interest costs and the risk associated
with changing interest rates on our 2010 Revolving Credit Facility and 2011 Credit Facility. The notional amount of the swaps relating
to the 2010 Revolving Credit Facility is $51.0 million with an average fixed rate of 1.27% starting on July 2, 2012 and expiring
on June 2, 2015. The notional amount of the swaps relating to the 2011 Credit Facility was $24.0 million with an average fixed
rate of 1.30% and expiring on June 30, 2015. In September 2012, in conjunction with the sales of STI Coral and STI Diamond,
we reduced the notional amount on the interest rate swaps relating to the 2011 Credit facility to $15.0 million from $24.0 million.
In December 2012, we de-designated the hedge relationship of the interest rate swaps related to the 2010 Revolving Credit Facility
prospectively and reclassified all amounts accumulated in other comprehensive income ($1.0 million) to the statement of profit
or loss for the year ended December 31, 2012 as a component of Financial Expenses.

The interest rate
swaps relating to the 2011 Credit Facility continue to qualify for hedge accounting. Hedge effectiveness is measured quarterly.
Accordingly, changes in their fair value, which the hedge is deemed to be effective, are recognized directly in other comprehensive
income and classified as ‘hedging reserves’. Changes in their fair value for any portion deemed to be ineffective are
recognized in the consolidated statement of profit or loss. The fair market value of the interest rate swaps relating to both the
2010 Revolving Credit Facility and 2011 Credit Facility at December 31, 2013 and December 31, 2012 was a liability of $0.9 million
and $1.4 million, respectively.

In January 2014,
we agreed to sell Noemi and Senatore. As part of these sales and related debt repayments into our 2010 Revolving Credit Facility,
we reduced the notional amount of the swaps relating to the 2010 Revolving Credit Facility from $51.0 million to $30.0
million.

Profit or loss
sharing agreements

In July 2012, we
entered into a profit or loss sharing arrangement on the earnings of an LR1 vessel that was not owned or operated by us. Under
the agreement, 50% of the profits and losses on this vessel were shared with the counterparty. The counterparty to this agreement
was time chartering-in this vessel for a period of six months at $12,750 per day and this agreement expired in January 2013.

In September 2012,
we took delivery of an LR1,FPMC P Eagle, on a time charter-in arrangement for one year at $12,800 per day. We also entered
into a profit and loss sharing arrangement whereby 50% of the profits and losses relating to this vessel above or below the charterhire
rate were shared with a third party that neither owns nor operates this vessel and this agreement expired in October 2013.

These agreements
have been treated as derivatives, recorded at fair value with any resultant gain or loss recognized in the statement of profit
or loss. Changes in fair value are recorded as unrealized gains and losses on derivative financial instruments and actual earnings
are recorded as realized gains or losses on derivative financial instruments, within the consolidated statement of profit or loss.
The fair value of these instruments is determined by comparing published time charter rates to the charterhire rate and discounting
those cash flows to their estimated present value.

For the year
ended December 31, 2013, we recognized a realized gain of $3,208 and an unrealized gain of $0.2 million. For the year ended
December 31, 2012, we recognized a gain of $0.4 million and an unrealized loss of $0.2 million.

Equity

In April 2010, we
closed the issuance of 12,500,000 shares of common stock at $13.00 per share in our initial public offering and received net proceeds
of $149.6 million, after deducting underwriters’ discounts and offering expenses.

In May 2010, pursuant
to the underwriters’ exercise of their over-allotment option that we granted in connection with our initial public offering,
we closed the issuance of 450,000 shares of common stock at $13.00 and received $5.2 million, after deducting underwriters’
discounts.

In November 2010,
we closed on a follow-on public offering of 4,575,000 shares of common stock at $9.80 per share. After deducting underwriters’
discounts and paying offering expenses, the net proceeds were $41.8 million, and 510,204 shares were issued in a concurrent private
placement to a member of the Lolli-Ghetti family for total proceeds of $5.0 million. On December 2, 2010, we closed the issuance
of 686,250 shares of common stock at $9.80 and received $6.4 million, after deducting underwriters’ discounts, when the underwriters
in our follow-on public offering fully exercised their over-allotment option.



68





In May 2011, we
closed on a follow-on public offering of 6,000,000 shares of common stock and also closed on the underwriters’ over-allotment
option to purchase 900,000 additional common shares at an offering price of $10.50 per share. We received net proceeds of $68.5
million, after deducting underwriters’ discounts and offering expenses.

In December 2011,
we closed on a follow-on public offering of 7,000,000 shares of common stock at an offering price of $5.50 per share. We received
net proceeds of $36.5 million, after deducting underwriters’ discounts and offering expenses.

In April 2012, we
closed on the sale of 4,000,000 shares of common stock in a registered direct placement of common shares at an offering price of
$6.75 per share. We received net proceeds of $25.9 million, after deducting the placement agents’ discount and offering expenses.

In December 2012,
we closed on the sale of 21,639,774 shares of common stock in a registered direct placement of common shares at an offering price
of $6.10 per share. We received net proceeds of $127.2 million, after deducting the placement agents’ discount and offering
expenses.

In February 2013,
we closed on the sale 30,672,000 shares of common stock in a registered direct placement of common shares at an offering price
of $7.50 per share. We received net proceeds of $222.1 million, after deducting placement agents’ discounts and offering
expenses.

In March 2013, we
closed on the sale 29,012,000 shares of common stock in a registered direct placement of common shares at an offering price of
$8.10 per share. We received net proceeds of $226.8 million, after deducting placement agents’ discounts and offering expenses.

In May 2013, we
closed on the sale of 36,144,578 newly issued shares of common stock in a registered direct placement of common shares at an offering
price of $8.30 per share. We received net proceeds of $289.2 million, after deducting placement agents’ discounts and offering
expenses.

In August 2013,
we closed on the sale of 20,000,000 newly issued shares of common stock in an underwritten offering of common shares at an offering
price of $9.50 per share. In addition, the underwriters also fully exercised their over-allotment option to purchase 3,000,000
additional common shares at the offering price. We received aggregate net proceeds of $209.8 million after deducting underwriters’
discounts and offering expenses.

In November 2013,
we issued 3,611,809 common shares to unaffiliated third parties in connection with our acquisition of four MR vessel newbuilding
contracts.

In December 2013,
we issued 3,523,271 common shares to unaffiliated third parties in connection with our acquisition of four MR vessel newbuilding
contracts.

Capital Expenditures

Vessel acquisitions
and disposals

During 2013 we entered
into agreements to construct 11 VLGCs and in November 2013, we closed an agreement with Dorian whereby we contributed our VLGC
business and a cash payment of $1.9 million in exchange for newly issued shares representing 30% of Dorian’s pro-forma outstanding
shares immediately following the transaction. As of the closing date of the transaction, we paid $83.1 million in installment payments
under the 11 VLGC newbuilding contracts. We currently own approximately 26% of Dorian’s outstanding shares.

In December 2013,
we reached agreements with DSME and HSHI for the construction of seven VLCCs for an aggregate purchase price of $662.2 million.
In March 2014, we entered into an agreement to sell these contracts for cash. As part of these sales, we expect to record a gain
on disposal of approximately $50.0 million in the first quarter of 2014.

We currently
have contracts for the construction of 55 newbuilding product tankers with shipyards, including HMD, HSHI, SPP and DSME,
consisting of (i) 14 MR tankers with HMD for an aggregate purchase price of $487.7 million, (ii) 15 MR product tankers with
SPP for an aggregate purchase price of $515.7 million, (iii) 14 Handymax ice class-1A tankers with HMD for an aggregate
purchase price of $440.5 million, (iv) eight LR2 product tankers with HSHI for an aggregate purchase price of $404.0 million
and (v) four LR2 product tankers with DSME for an aggregate purchase price of $200.0 million. Of these vessels, 42 vessels
are expected to be delivered to us throughout 2014 and 13 in 2015.



69





Our remaining commitments
under all newbuilding vessel agreements as of the date of this report, including the above mentioned vessels are as follows*

| | Q1 2014 |  |  |   | 190.9   |  |  |  | million** | 
| | ------- |  |  | - | ------- |  |  |  | --------- | 
| | Q2 2014 |  |  |   | 367.6   |  |  |  | million   | 
| | Q3 2014 |  |  |   | 422.0   |  |  |  | million   | 
| | Q4 2014 |  |  |   | 292.1   |  |  |  | million   | 
| | Q1 2015 |  |  |   | 167.5   |  |  |  | million   | 
| | Q2 2015 |  |  |   | 168.2   |  |  |  | million   | 
| | Total   |  |  | $ | 1,608.3 |  |  |  | million   | 



| | * | These are estimates only and are subject to change as construction progresses.
| | - | ------------------------------------------------------------------------------

| | ** | All first quarter 2014 installment
                                         payments have been paid, which include $63.5 million in aggregate for the delivery
                                         installment payments on STI Duchessaand STI Opera in January 2014 and
                                         STI Texas City in March 2014.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

During 2012, we
sold three Handymax vessels, STI Conqueror, STI Matador and STI Gladiator, and recorded a $4.5 million loss
in connection with the sales of these vessels. The availability of the 2010 Revolving Credit Facility decreased by $31.0 million
as a result of these sales. During 2012, we also completed the sales of two MR product tankers, STI Diamond and STI Coral
and recorded a $5.9 million loss in connection with the sales of these vessels. A portion of the proceeds from the sale of STI
Coral was used to repay $16.1 million under our 2011 Credit Facility. STI Onyx, a newbuilding vessel which was delivered
in September 2012, was substituted as collateral under our 2011 Credit Facility on our outstanding borrowings related to STI
Diamond.

In December 31,
2013, we designated four vessels as held for sale in our consolidated financial statements; two 2004-built LR1 product tankers,
Noemi and Senatore, a 2001-built Post-Panamax tanker, Venice, and a 2008-built LR2 product tanker, STI
Spirit. As part of this designation, we recorded a $21.2 million write-down to remeasure these vessels at the lower of their
carrying amount and fair value less costs to sell.

In January 2014, we agreed
to sell Noemi andSenatorefor an aggregate selling price of $44.0 million. Noemiwas sold in March 2014
and Senatore is expected to close in April 2014. As part of these sales, we repaid $22.7 million into our 2010 Revolving
Credit Facility. Consequently, the availability of this facility was reduced by such amount and the quarterly reduction was reduced
to $2.1 million from $3.1 million per quarter. We will also write-off a total of $0.2 million of deferred financing fees as part
of this debt repayment.



In February 2014,
we agreed to sell STI Spirit for $30.2 million. As part of this sale, we will repay all amounts due under the STI Spirit
Credit Facility of $21.4 million. This sale is expected to close in April 2014.

Please see “—Liquidity
and Capital Resources—Long Term Debt Obligations and Credit Arrangements” for a discussion on the impact of these sales
on the related credit facilities.

Drydock

During 2013, none of our vessels were
in drydock. Venice is scheduled to be drydocked within the next 12 months for an estimated cost $0.8 million and an estimated
20 days of off-hire.

As our fleet matures
and expands, our drydock expenses will likely increase. Ongoing costs for compliance with environmental regulations and society
classification survey costs are a component of our vessel operating costs. We are not currently aware of any regulatory changes
or environmental liabilities that we anticipate will have a material impact on our results of operations or financial condition.

Dividends

On April 15, 2013, our board of directors
declared a quarterly cash dividend of $0.025 per share, which was paid on June 25, 2013 to all shareholders of record as of June
11, 2013.

On July 29, 2013, our board of directors
declared a quarterly cash dividend of $0.035 per share, which was paid on September 25, 2013 to all shareholders of record as of
September 10, 2013.

On October 28, 2013, our board of directors
declared a quarterly cash dividend of $0.07 per share, which was paid on December 18, 2013 to all shareholders of record as of
December 3, 2013.



70





On February 21, 2014, our board of directors
declared a quarterly cash dividend of $0.08 per share, which was paid on March 26, 2014 to all shareholders of record as of March
11, 2014.

Share Buy-Back

On
July 9, 2010, the board of directors authorized a share buyback program of $20.0 million. We repurchase our common
shares in the open market at the times and prices that we consider to be appropriate. No shares were repurchased during the
year ended December 31, 2013. As of December 31, 2013 and December 31, 2012, 1,170,987 shares have been purchased under
the plan at an average price of $6.7793 per share including commissions. As of December 31, 2013, the remaining stock
buyback authorization was $12.1 million.

C.	Research
and Development, Patents and Licenses, Etc.

Not applicable.

D. 	Trend Information

See “Item
4. Information on the Company—B. Business Overview—The International Oil Tanker Shipping Industry.”

E.	Off-Balance
Sheet Arrangements

As of December 31,
2013, we were committed to make charter-hire payments to third parties for certain chartered-in vessels. These arrangements are
accounted for as operating leases. Additionally, we are committed to make payments on our newbuilding vessel orders. See “Item
5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources” for further information.

F.	Tabular Disclosure
of Contractual Obligations

The following table
sets forth our total contractual obligations at December 31, 2013:

|                                           |  | Less than |           | 1 to 3 |  | 3 to 5 |         | More than
|------------------------------------------ |  | --------- | --------- | ------ |  | ------ | ------- | ---------
|In thousands of U.S. dollars               |  | 1 year    |           | years  |  | years  |         | 5 years  
|Bank loan(1)                               |  | $         | 12,121    |        |  | $      | 24,241  |          
|Estimated interest payments(2)             |  |           | 7,634     |        |  |        | 13,606  |          
|Interest rate swap derivative contracts(3) |  |           | 691       |        |  |        | 190     |          
|Bank loan - commitment fees(4)             |  |           | 11,433    |        |  |        | 2,855   |          
|Time charter-in commitments(5)             |  |           | 96,103    |        |  |        | 17,854  |          
|Technical management fees(6)               |  |           | 4,750     |        |  |        | 4,750   |          
|Commercial management fees(7)              |  |           | 2,172     |        |  |        | 2,172   |          
|Newbuilding installments(8)                |  |           | 1,367,044 |        |  |        | 813,649 |          
|Total                                      |  | $         | 1,501,948 |        |  | $      | 879,317 |          

____________________

| | (1) | Represents principal payments due on our 2011 Credit Facility, STI
Spirit Credit Facility and Newbuilding Credit Facility based on our outstanding borrowings as of December 31, 2013. There were
no outstanding borrowings under our 2010 Revolving Credit Facility, 2013 Credit Facility, KEXIM Credit Facility and K-Sure Credit
Facility as of December 31, 2013.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Represents estimated interest payments on our credit facilities:
| | --- | ----------------------------------------------------------------



| | · | There were no borrowings under the 2010
Revolving Credit Facility, 2013 Credit Facility, KEXIM Credit Facility and K-Sure Credit Facility as of December 31, 2013.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | For the 2011 Credit Facility, we used the
weighted average of the 3-year and 4-year interest swap rates of 1.10% (as published by the US Federal Reserve as of December 31,
2013) plus a margin of 3.25% which is the margin on the 2011 Credit Facility. We used the weighted average 3-year and 4-year interest
swap rates to reflect the maturity date of this facility of May 3, 2017.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



71





| | · | For the STI Spirit Credit Facility, we used
the weighted average of the 4-year and 5-year interest swap rates of 1.44% (as published by the US Federal Reserve as of December
31, 2013) plus a margin of 2.75%, which is the margin for the STI Spirit Credit Facility. We used the 4-year and 5-year swap rate
to reflect the maturity date of this facility of March 17, 2018.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | For the Newbuilding Credit Facility, we
used the weighted average of the 5-year and 7-year interest swap rates of 2.13% (as published by the US Federal Reserve as of December
31, 2013) plus a margin of 2.70%, which is the margin for our Newbuilding Credit Facility. We used the weighted average of the
5-year and 7-year interest swap rates to reflect the maturity date of this facility of June 30, 2019.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | Represents estimated payments due under our interest rate swaps:
| | --- | ----------------------------------------------------------------



| | · | The three swaps relating to the 2010 Credit
Facility with a total notional amount of $51.0 million carry an average fixed interest rate of 1.27% during the time period the
swap is outstanding (January 1, 2014 through June 2, 2015). The payments due were estimated by offsetting the fixed payments
against the estimated interest received using the forward swap curve at December 31, 2013 for each of the swaps.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | The three swaps relating to the 2011 Credit
Facility with a total notional amount of $15.0 million carry an average fixed interest rate of 1.30% during the time period the
swap is outstanding (January 1, 2014 through June 30, 2015). The payments due were estimated by offsetting the fixed payments
against the estimated interest received using the forward swap curve at December 31, 2013 for each of the swaps.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (4) | As of December 31, 2013, a commitment fee equal to 40% of the applicable
margin is payable on the unused daily portion of our 2010 Revolving Credit Facility, 2011 Credit Facility, 2013 Credit Facility
and the commercial tranches of our KEXIM Credit Facility and K-Sure Credit Facility. The STI Spirit Credit Facility and Newbuilding
Credit Facility were fully drawn as of December 31, 2013.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (5) | Represents amounts due under our time charter-in agreements as of
December 31, 2013.
| | --- | ------------------------------------------------------------------------------------



| | (6) | We pay our technical manager, SSM, $685 per day per owned vessel,
which are the same fees that SSM charges to third parties.
| | --- | ----------------------------------------------------------------------------------------------------------------------------



| | (7) | We pay our commercial manager, SCM, $250 per vessel per day for LR2
vessels, $300 per vessel per day for LR1 vessels, $325 per vessel per day for MR and Handymax vessels plus 1.50% of gross revenue
for vessels that are in one of the Scorpio Group Pools. When the vessels are not in the pools, SCM charges fees of $250 per vessel
per day for the LR1 and LR2 vessels, $300 per vessel per day for the Handymax and MR vessels plus 1.25% of gross revenue.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (8) | Represents obligations under our agreements with HMD, SPP, HSHI and
DSME for the construction of 65 newbuilding vessels under our Newbuilding Program as of December 31, 2013.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



G.	Safe Harbor

See “Cautionary
Statement Regarding Forward-Looking Statements” at the beginning of this annual report.

ITEM 6.	DIRECTORS, SENIOR
MANAGEMENT AND EMPLOYEES

A.	Directors and Senior management

Set forth below
are the names, ages and positions of our directors and executive officers. Our board of directors is elected annually, and each
director elected holds office for a three-year term or until his successor shall have been duly elected and qualified, except in
the event of his death, resignation, removal or the earlier termination of his term of office. The term of office of each director
is as follows: two will serve for a term expiring at the 2014 annual meeting of the shareholders, three will serve for a term expiring
at the 2015 annual meeting of shareholders and three will serve for a term expiring at the 2016 annual meeting of shareholders.
Officers are elected from time to time by vote of our board of directors and hold office until a successor is elected. The business
address for each director and executive officer is the address of our principal executive office which is Scorpio Tankers Inc.,
9, Boulevard Charles III, Monaco 98000.

In April 2013, we
appointed Marianne Økland to our board of directors to serve as a Class III director. In May 2013, we appointed Jose Tarruella
and Cameron Mackey to our board of directors to serve as a Class II and Class III director, respectively, in each case effective
as of the same date.



72





Certain of our officers
participate in business activities not associated with us. As a result, they may devote less time to us than if they were not engaged
in other business activities and may owe fiduciary duties to the shareholders of both us as well as shareholders of other companies
which they may be affiliated, including other Scorpio Group companies. This may create conflicts of interest in matters involving
or affecting us and our customers and it is not certain that any of these conflicts of interest will be resolved in our favor.
While there will be no formal requirements or guidelines for the allocation of their time between our business and the business
of members of the Scorpio Group, their performance of their duties will be subject to the ongoing oversight of our board of directors.

|                    |  |     |  |                                                        
|------------------- |  | --- |  | -------------------------------------------------------
|Name                |  | Age |  | Position                                               
|Emanuele A. Lauro   |  | 35  |  | Chairman, Class I Director, and Chief Executive Officer
|Robert Bugbee       |  | 53  |  | President and Class II Director                        
|Brian Lee           |  | 47  |  | Chief Financial Officer                                
|Cameron Mackey      |  | 45  |  | Chief Operating Officer and Class III Director         
|Luca Forgione       |  | 37  |  | General Counsel                                        
|Sergio Gianfranchi  |  | 69  |  | Vice President, Vessel Operations                      
|Anoushka Kachelo    |  | 34  |  | Secretary                                              
|Alexandre Albertini |  | 37  |  | Class III Director                                     
|Ademaro Lanzara     |  | 70  |  | Class I Director                                       
|Donald C. Trauscht  |  | 79  |  | Class II Director                                      
|Marianne Økland     |  | 51  |  | Class III Director                                     
|Jose Tarruella      |  | 43  |  | Class II Director                                      



Biographical
information concerning the directors and executive officers listed above is set forth below.

Emanuele A. Lauro,
Chairman, Director and Chief Executive Officer

Emanuele A.
Lauro, our founder, has served as Chairman, and Chief Executive Officer since the closing of our initial public offering in
April 2010. Mr. Lauro also co-founded and serves as Chairman and Chief Executive Officer of Scorpio Bulkers Inc., which was
formed in 2013. He joined Scorpio Group in 2003 and has continued to serve there in a senior management position since 2004.
Under Mr. Lauro’s leadership, Scorpio Group has grown from an owner of three vessels in 2003 to become a leading
operator and manager of over 100 vessels in 2013. Over the course of the last several years, Mr. Lauro has founded and
developed all of the Scorpio Group Tanker Pools in addition to several other ventures such as Scorpio Logistics in 2007,
which owns and operates specialized assets engaged in the transshipment of coal and invests in coastal transportation and
port infrastructure developments and Scorship Navigation in 2005, which engaged in the identification, placement, and
management of certain international shipping investments on behalf of retail investors in Europe. Mr. Lauro has a degree in
international business from the European Business School, London.

Robert Bugbee,
President and Director

Robert Bugbee,
has more than 25 years of experience in the shipping industry and has served as President and as a director since the closing
of our initial public offering in April 2010. Mr. Bugbee also co-founded and has serves as Director and President of Scorpio Bulkers
Inc. since 2013. Mr. Bugbee also serve as a director of Dorian since November 2013. He joined Scorpio Group in February 2009 and
has continued to serve there in senior management. Prior to joining Scorpio Group, Mr. Bugbee was a partner at Ospraie Management
LLP between 2007 and 2008, a company which advises and invests in commodities and basic industry. From 1995 to 2007, Mr. Bugbee
was employed at OMI Corporation, or OMI, a NYSE-listed tanker company sold in 2007. While at OMI, Mr. Bugbee most recently served
as President from January 2002 until the sale of the company, and he previously served as Executive Vice President since January
2001, Chief Operating Officer since March 2000 and Senior Vice President of OMI from August 1995 to June 1998. Mr. Bugbee joined
OMI in February 1993. Prior to this, he was employed by Gotaas-Larsen Shipping Corporation since 1984. During this time he took
a two year sabbatical in 1987 for the M.I.B. Programme at the Norwegian School for Economics and Business administration in Bergen.
He has a Fellowship from the International Shipbrokers Association and a B.A. (Honors) from London University.

Brian Lee, Chief
Financial Officer

Brian Lee has served
as Chief Financial Officer since the closing of our initial public offering in April 2010. He joined Scorpio Group in April 2009
where he continues to serve in a senior management position. He has been employed in the shipping industry since 1998. Prior to
joining Scorpio Group, he was the Controller of OMI Corporation from 2001 until the sale of the company in 2007. Mr. Lee has an
M.B.A. from the University of Connecticut and has B.S. in Business Administration from the University at Buffalo, State University
of New York.

Cameron Mackey,
Chief Operating Officer, Director

Cameron Mackey,
has served as Chief Operating Officer since the closing of our initial public offering in April 2010 and as a director since May
2013. Mr. Mackey also serves as Chief Operating Officer of Scorpio Bulkers Inc. He joined Scorpio Group in March 2009,
where he continues to serve in a senior management position. Prior to joining Scorpio Group, he was an equity and commodity analyst
at Ospraie Management LLC from 2007-2008. Prior to that, he was Senior Vice President of OMI Marine Services LLC from 2004-2007
and in Business Development at OMI Corporation from 2002-2004. He has been employed in the shipping industry since 1994 and, earlier
in his career, was employed in unlicensed and licensed positions in the merchant navy, primarily on tankers in the international
fleet of Mobil Oil Corporation, where he held the qualification of Master Mariner. He has an M.B.A. from the Sloan School of Management
at the Massachusetts Institute of Technology, a B.S. from the Massachusetts Maritime Academy and a B.A. from Princeton University.



73





Luca Forgione,
General Counsel

Luca Forgione,
has served as General Counsel since the closing of our initial public offering in April 2010 and as secretary until December 2,
2013. Mr. Forgione also serves General Counsel of Scorpio Bulkers Inc. He joined Scorpio Group in August 2009 where he
continues to serve as General Counsel. He is licensed as a lawyer in his native Italy and as a Solicitor of the Supreme Court
of England & Wales. Mr. Forgione has ten years of shipping industry experience and has worked in the fields of shipping, offshore
logistics, commodity trading and energy since the beginning of his in-house career, most recently with Constellation Energy Commodities
Group Ltd. in London, which is part of Constellation Energy Group Inc. listed on the NYSE under “CEG,” from 2007 to
2009, and previously with Coeclerici S.p.a. in Milan from 2004 to 2007. He has experience with all aspects of the supply chain
of drybulk and energy commodities (upstream and downstream), and has developed considerable understanding of the regulatory and
compliance regimes surrounding the trading of physical and financial commodities as well as the owning, managing and chartering
of vessels. Mr. Forgione was a Tutor in International Trade Law and Admiralty Law at University College London (U.K.) and more
recently a Visiting Lecturer in International Trade Law at King’s College (U.K.). He has a Master’s Degree in Maritime
Law from the University of Southampton (U.K.) and a Law Degree from the University of Genoa (Italy).

Sergio Gianfranchi,
Vice President, Vessel Operations

Sergio Gianfranchi,
has served as Vice President of Vessel Operations since our initial public offering in April 2010. Mr. Gianfranchi also serves
as Vice President of Vessel Operations of Scorpio Bulkers Inc. since September 19, 2013. He served as Operations Manager of our
technical manager, SSM, at its headquarters in Monaco from 2002 to 2004. He has been instrumental in launching and operating the
Scorpio Group Pools during the last six years, and was employed as the Fleet Manager of SCM, the Scorpio Group affiliate that manages
the commercial operations of approximately 50 vessels grouped in the three Scorpio Group Pools, from 2007 to 2009. Mr. Gianfranchi
is currently employed as the Pool Fleet Manager of SCM. From 1999 to 2001, Mr. Gianfranchi served as the on-site owner’s
representative of the Scorpio Group affiliates named Doria Shipping, Tristan Shipping, Milan Shipping and Roma Shipping, to survey
the construction of their Panamax and Post-Panamax newbuilding tankers being built at the 3Maj Shipyard in Rijeka, Croatia. When
Mr. Gianfranchi joined SSM in 1989, he began as vessel master of its OBOs (multipurpose vessels that carry ore, heavy drybulk and
oil). Upon obtaining his Master Mariner License in 1972, he served until 1989 as a vessel master with prominent Italian shipping
companies, including NAI, which is the largest private Italian shipping company and owned by the Lolli-Ghetti family, and Almare,
initially a subsidiary of NAI but later controlled by Finmare, the Italian state shipping financial holding company. In this position
he served mostly on OBOs, tankers and drybulk carriers. He graduated from La Spezia Nautical Institute in Italy in 1963.

Anoushka Kachelo,Secretary

Anoushka Kachelo
has served as our Secretary since December 2, 2013. Mrs. Kachelo joined Scorpio Group in September 2010 as Senior Legal
Counsel. She is a Solicitor of the Supreme Court of England & Wales and has worked in the fields of commodity trading,
energy and asset finance. Prior to joining the Scorpio Group, Mrs. Kachelo was Legal Counsel for the Commodities Team at JPMorgan
(London) and prior to that in private practice for the London office of McDermott Will & Emery and Linklaters. She has a BA
in Jurisprudence from the University of Oxford (U.K.).

Alexandre Albertini,
Director

Alexandre Albertini
has served on our board of directors since the closing of our initial public offering in April 2010. Mr. Albertini has more than
11 years of experience in the shipping industry. He has been employed by Marfin Management SAM, a drybulk ship management company,
since 1997 and has served as Managing Director there since 2009, working in fields related to crew and human resources, insurance,
legal, financial, technical, commercial, and information technology. He is a director of eight drybulk ship owning companies and
serves as President of Ant. Topic srl, a vessel and crewing agent based in Italy. The aggregate valuation of the drybulk shipping
companies for which Mr. Albertini serves as a Secretary or director is approximately $300 million. In 2008, Mr. Albertini was elected
as a member of the Executive Committee of InterManager. He is a founding member of the Chamber of Shipping of Monaco and has served
as its Secretary General since 2006. Mr. Albertini also holds various board positions in several other local business and associations.

Ademaro Lanzara,
Director

Ademaro Lanzara
has served on our board of directors since the closing of our initial public offering in April 2010. Mr. Lanzara has served as
Chairman of BPV Finance (International) Plc Dublin, a subsidiary of Banca Popolare di Vicenza, Italy, since 2008. He has also served
as the deputy Chairman and Chairman of the Audit Committee of Cattolica Life Inc. Dublin since 2011, Chairman of BPVI Fondi Sgr
SpA, Milano from April 2012 until November 2013 and Chairman of NEM Sgr SpA Vicenza since November 2013. From 1963 to 2006, Mr.
Lanzara held a number of positions with BNL spa Rome, a leading Italian banking group, including Deputy Group CEO, acting as the
Chairman of the Credit Committee and Chairman of the Finance Committee. He also served as Chairman and/or director of a number
of BNL controlled banks or financial companies in Europe, the United States and South America. He formerly served as a director
of each of Istituto dell’Enciclopedia Italiana fondata da Giovanni Treccani Spa, Rome, Italy, the Institute of International
Finance Inc. in Washington DC, Compagnie Financiere Edmond de Rothschild Banque, in Paris, France, ABI—Italian Banking Association
in Rome, Italy, FITD—Interbank deposit Protection Fund, in Rome, Italy, ICC International Chamber of Commerce Italian section,
Rome, Italy and Co-Chairman Round Table of Bankers and Small and Medium Enterprises, European Commission, in Brussels, Belgium.
Mr. Lanzara has an economics degree (graduated magna cum laude) from the University of Naples, a law degree from the
University of Naples and completed the Program for Management Development (PMD) at Harvard Business School.



74





Donald C. Trauscht,
Director

Donald C. Trauscht
has served on our board of directors since the closing of our initial public offering in April 2010. Mr. Trauscht has served as
the Chairman of BW Capital Corporation, a private investment company, since 1996. From 1967 to 1995, Mr. Trauscht held a number
of positions at Borg-Warner Corporation, including Chairman and Chief Executive Officer. While at Borg Warner, Mr. Trauscht supervised
an annual capital budget of $250 million and was responsible for risk assessment decisions involving the company’s investments.
He has participated in acquisitions, divestments, financings, public offerings and other transactions whose combined value is over
$30 billion. Mr. Trauscht is a director of Esco Technologies Inc., Hydac International Corporation, Bourns Inc., and Eyes For Learning
LLC. He formerly served as a director of Baker Hughes Inc., Cordant Technologies Inc., Blue Bird Corporation, Imo Industries Inc.,
Mannesmann Capital Corporation, Wynn International Inc., Recon Optical Inc., Global Motorsport Group Inc., OMI Corporation, IES
Corporation, and NSK-Warner Ltd. He has served as the Chairman, Lead Director, and Audit Committee, Compensation Committee, and
Governance Committee Chairman at numerous public and private companies.

Marianne
Økland, Director

Marianne
Økland has served on our board of directors since April 2013. Ms. Økland is also a Managing Director of Avista Partners,
a London based consultancy company that provides advisory services and raises capital.  In addition, she is a non-executive
director at each of Islandsbanki (Iceland) and IDFC (India). Previously, she was a non-executive director at NLB (Slovenia).  Between
1993 and 2008, Ms. Økland held various investment banking positions at JP Morgan Chase & Co. and UBS where she focused
on debt capital raising andstructuring.  Ms. Økland
has led many transactions for large Nordic banks and insurance companies, including some of the most significant mergers and acquisitions
in these sectors.  Between 1990 and 1993, Ms. Økland headed European operations of Marsoft, a Boston, Oslo and
London based consulting firm that advises banks and large shipping, oil and raw material companies on shipping strategies and investments.  Ms.
Økland holds a M.Sc. degree in Finance and Economics from the Norwegian School of Economics and Business Administration
where she also worked as a researcher and taught mathematics and statistics.

Jose
Tarruella, Director

Jose
Tarruella has served on our board since May 2013. Ms. Tarruella is also the founder and Chairman of Camino de Esles s.l., a high-end
restaurant chain with franchises throughout Madrid, since 2007.  Prior to forming Camino de Esles, Mr. Tarruella was
a Director in Group Tragaluz, which owns and operates restaurants throughout Spain.  Mr. Tarruella also acts as
a consultant for the Spanish interests of Rank Group plc (LSE: RNK.L) a leading European gaming-based entertainment business. He
has been involved in corporate relations for Esade Business School in Madrid.  He earned an International MBA from Esade
Business School in Barcelona and an MA from the University of Navarre in Spain.

B.	Compensation

We paid an aggregate
compensation of $15.7 million, $6.3 million and $6.1 million to our senior executive officers in 2013, 2012, and 2011, respectively.
Executive management remuneration was as follows during these periods:

|                                        |  | For the period ended December 31,
|--------------------------------------- |  | ---------------------------------
|In thousands of US dollars              |  | 2013                             
|Short-term employee benefits (salaries) |  | $                                
|Share-based compensation (1)            |  |                                  
|Total                                   |  | $                                



75





|(1) | Represents the amortization of restricted stock
        issued under our equity incentive plans. See Note 12 in the consolidated financial statements for further description.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Each of our non-employee
directors receive cash compensation in the aggregate amount of $60,000 annually, plus an additional fee of $10,000
for each committee on which a director serves plus an additional fee of $20,000 for each committee for which a director
serves as Chairman, per year, plus an additional fee of $20,000 to the lead independent director, plus reimbursements for actual
expenses incurred while acting in their capacity as a director. During the year ended December 31, 2013 and 2012, we paid an aggregate
compensation of $0.8 million and $0.4 million to our directors, respectively. Our officers and directors are eligible to receive
awards under our equity incentive plan which is described below under “—2010 Equity Incentive Plan and 2013 Equity
Incentive Plan.”

We believe that
it is important to align the interests of our directors and management with that of our shareholders. In this regard, we have determined
that it will generally be beneficial to us and to our shareholders for our directors and management to have a stake in our long-term
performance. We expect to have a meaningful component of our compensation package for our directors and management consisted of
equity interests in us in order to provide them on an on-going basis with a meaningful percentage of ownership in us.

We do not have a
retirement plan for our officers or directors.

2010 Equity Incentive
Plan

We have adopted
an equity incentive plan, which we refer to as the 2010 Equity Incentive Plan, under which directors, officers, employees, consultants
and service providers of us and our subsidiaries and affiliates are eligible to receive incentive stock options and non-qualified
stock options, stock appreciation rights, restricted stock, restricted stock units and unrestricted common stock. We reserved a
total of 1,148,916 common shares for issuance under the plan, subject to adjustment for changes in capitalization as provided in
the plan and it is not expected that any additional common shares will be reserved for issuance under our equity incentive plan
prior to the third anniversary of the closing of our initial public offering. The plan is administered by our compensation committee.
We issued a total of 559,458 restricted shares under the plan to our executive officers in the second quarter of 2010 which vest
in three equal installments on the third, fourth and fifth anniversaries, respectively, of the closing date of the initial public
offering, which was April 6, 2010. In the second quarter of 2010, we also issued 9,000 restricted shares to our independent directors,
which vested on April 6, 2011. We issued a total of 281,000 restricted shares under the plan to our executive officers in the first
quarter of 2011 which vest ratably in three equal installments on the first, second and third anniversaries, respectively, of the
grant date, which was January 31, 2011. In the first quarter of 2011, we also issued 9,000 restricted shares to our independent
directors, which vested on January 31, 2012. In the first quarter of 2012, we issued a total of 281,000 restricted shares under
the plan to our executive officers, which vest ratably in three equal installments on the first, second and third anniversaries
of the grant date, which was January 31, 2012. In the first quarter of 2012, we also issued 9,000 restricted shares to our independent
directors, which vested on January 31, 2013. There are no shares remaining available for issuance under the 2010 Plan.

Under the terms
of the plan, stock options and stock appreciation rights granted under the plan will have an exercise price equal to the fair market
value of a common share on the date of grant, unless otherwise determined by the plan administrator, but in no event will the exercise
price be less than the fair market value of a common share on the date of grant. Options and stock appreciation rights will be
exercisable at times and under conditions as determined by the plan administrator, but in no event will they be exercisable later
than ten years from the date of grant.

The plan administrator
may grant shares of restricted stock and awards of restricted stock units subject to vesting, forfeiture and other terms and conditions
as determined by the plan administrator. Following the vesting of a restricted stock unit, the award recipient will be paid an
amount equal to the number of vested restricted stock units multiplied by the fair market value of a common share on the date of
vesting, which payment may be paid in the form of cash or common shares or a combination of both, as determined by the plan administrator.
The plan administrator may grant dividend equivalents with respect to grants of restricted stock units.

Adjustments may
be made to outstanding awards in the event of a corporate transaction or change in capitalization or other extraordinary event.
In the event of a “change in control” (as defined in the plan), unless otherwise provided by the plan administrator
in an award agreement, awards then outstanding will become fully vested and exercisable in full.

Our board of directors
may amend or terminate the plan and may amend outstanding awards, provided that no such amendment or termination may be made that
would materially impair any rights, or materially increase any obligations, of a grantee under an outstanding award. Shareholder
approval of plan amendments will be required under certain circumstances. Unless terminated earlier by our board of directors,
the plan will expire ten years from the date the plan is adopted.



76





2013 Equity Incentive
Plan

In April 2013,
we adopted an equity incentive plan, which we refer to as the 2013 Equity Incentive Plan, under which directors, officers, employees,
consultants and service providers of us and our subsidiaries and affiliates are eligible to receive incentive stock options and
non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units and unrestricted common stock.
We initially reserved a total of 5,000,000 common shares for issuance under the plan.

Under the terms
of the plan, stock options and stock appreciation rights granted under the plan will have an exercise price equal to the fair market
value of a common share on the date of grant, unless otherwise determined by the plan administrator, but in no event will the exercise
price be less than the fair market value of a common share on the date of grant. Options and stock appreciation rights will be
exercisable at times and under conditions as determined by the plan administrator, but in no event will they be exercisable later
than ten years from the date of grant.

The plan administrator
may grant shares of restricted stock and awards of restricted stock units subject to vesting, forfeiture and other terms and conditions
as determined by the plan administrator. Following the vesting of a restricted stock unit, the award recipient will be paid an
amount equal to the number of vested restricted stock units multiplied by the fair market value of a common share on the date of
vesting, which payment may be paid in the form of cash or common shares or a combination of both, as determined by the plan administrator.
The plan administrator may grant dividend equivalents with respect to grants of restricted stock units.

Adjustments may
be made to outstanding awards in the event of a corporate transaction or change in capitalization or other extraordinary event.
In the event of a “change in control” (as defined in the plan), unless otherwise provided by the plan administrator
in an award agreement, awards then outstanding will become fully vested and exercisable in full.

Our board of directors
may amend or terminate the plan and may amend outstanding awards, provided that no such amendment or termination may be made that
would materially impair any rights, or materially increase any obligations, of a grantee under an outstanding award. Shareholder
approval of plan amendments will be required under certain circumstances. Unless terminated earlier by our board of directors,
the plan will expire ten years from the date the plan is adopted.

In the second quarter
of 2013, we issued 4,610,000 shares of restricted stock to our employees and 390,000 shares to our directors for no cash consideration.
The weighted average share price on the issuance dates was $8.69 per share. The vesting schedule of the restricted stock to our
employees is (i) one-third of the shares vest on March 10, 2016, (ii) one-third of the shares vest on March 10, 2017, and (iii)
one-third of the shares vest on March 10, 2018. The vesting schedule of the restricted stock to our directors is (i) one-third
of the shares vest on March 10, 2014, (ii) one-third of the shares vest on March 10, 2015, and (iii) one-third of the shares vest
on March 10, 2016.

In October 2013,
we amended the 2013 Equity Incentive Plan to increase the number of common shares eligible for issuance to 11,376,044.
All other terms of the plan remained unchanged.

In October
2013, we issued 3,749,998 shares of restricted stock to our employees and 250,000 shares to our directors for no cash
consideration. The weighted average share price on the issuance date was $9.85 per share. The vesting schedule of the
restricted stock to our employees is (i) one-third of the shares vest on October 11, 2016, (ii) one-third of the shares vest
on October 11, 2017, and (iii) one-third of the shares vest on October 11, 2018. The vesting schedule of the restricted stock
to our directors is (i) one-half of the shares vest on October 11, 2014 and (ii) one-half of the shares vest on October 11,
2015.

In February
2014, we issued 2,011,000 shares of restricted stock to our employees and 145,045 shares to our directors for no cash
consideration. The weighted average share price on the issuance date was $9.30 per share. The vesting schedule of the
restricted stock to our employees is (i) one-third of the shares vest on February 21, 2017, (ii) one-third of the shares vest
on February 21, 2018, and (iii) one-third of the shares vest on February 21, 2019. The vesting schedule of the restricted
stock to our directors is (i) one-third of the shares vest on February 21, 2015, (ii) one-third of the shares vest on
February 21, 2016, and (iii) one-third of the shares vest on February 21, 2017. Compensation expense is recognized ratably
over the vesting periods for each tranche using the straight-line method.

In March 2014, we amended the 2013 Equity Incentive Plan to clarify that the plan administrator has the ability
to redeem restricted stock for fair market value (as defined in the plan) at the vesting date at its discretion.

Employment Agreements

In April 2010,
we entered into employment agreements with each of our executives. These employment agreements remain in effect until terminated
in accordance with their terms upon not less than 24 months prior written notice. Pursuant to the terms of their respective
employment agreements, our executives are prohibited from disclosing or unlawfully using any of our material confidential information.

Upon a change in
control of us, the annual bonus provided under the employment agreement becomes a fixed bonus of up to 150% of the executive’s
base salary and such employee may be entitled to receive upon termination an assurance bonus equal to such fixed bonus
and an immediate lump-sum payment in an amount equal to three times the sum of the executive’s then current base salary
and the assurance bonus, and he will continue to receive all salary, compensation payment and benefits, including additional bonus
payments, otherwise due to him, to the extent permitted by applicable law, for the remaining balance of his then-existing employment
period. If an executive’s employment is terminated for cause or voluntarily by the employee, he shall not be entitled to
any salary, benefits or reimbursements beyond those accrued through the date of his termination, unless he voluntarily terminated
his employment in connection with certain conditions. Those conditions include a change in control combined with a significant
geographic relocation of his office, a material diminution of his duties and responsibilities, and other conditions identified
in the employment agreement.



77





C.	Board Practices

Our board of directors
currently consists of eight directors, five of whom have been determined by our board of directors to be independent under the
rules of the New York Stock Exchange and the rules and regulations of the SEC. Our board of directors has an Audit Committee,
a Nominating Committee, a Compensation Committee and an Environmental Committee, each of which is comprised of certain of our
independent directors, who are Messrs. Alexandre Albertini, Ademaro Lanzara, Donald Trauscht, Marianne
Økland, and Jose Tarruella.The Audit Committee, among other things, reviews our external financial reporting, engage
our external auditors and oversee our internal audit activities, procedures and the adequacy of our internal controls. In addition,
provided that no member of the Audit Committee has a material interest in such transaction, the Audit Committee is responsible
for reviewing transactions that we may enter into in the future with other members of the Scorpio Group that our board believes
may present potential conflicts of interests between us and the Scorpio Group. The Nominating and Corporate Governance Committee
is responsible for recommending to the board of directors nominees for director and directors for appointment to board committees
and advising the board with regard to corporate governance practices. The Compensation Committee oversees our equity incentive
plan and recommends director and senior employee compensation. The Environmental Committee oversees to minimize the environmental
impact by constant monitoring and measuring progresses of our vessels. Our shareholders may also nominate directors in accordance
with procedures set forth in our bylaws.

D.	Employees

As of December 31,
2013, we had ten employees. SSM and SCM were responsible for our commercial and technical management.

E.	Share ownership

The following table
sets forth information regarding the share ownership of our common stock as of the date of this annual report by our directors
and officers, including the restricted shares issued to our executive officers and to our independent directors as well as shares
purchased in the open market.

|Name                                          |  | No. of Shares |           | % Owned
|--------------------------------------------- |  | ------------- | --------- | -------
|Emanuele A. Lauro (1)                         |  |               | 3,435,101 |        
|Robert Bugbee (2)                             |  |               | 3,342,914 |        
|Cameron Mackey (3)                            |  |               | 2,168,489 |        
|All other officers and directors individually |  |               | *         |        



| | (1) | Includes 2,880,901 shares of restricted stock from the 2010 Equity Incentive Plan and the 2013
Equity Incentive Plan.
| | --- | ---------------------------------------------------------------------------------------------------------------------

| | (2) | Includes 2,880,901 shares of restricted stock from the 2010 Equity Incentive Plan and the 2013
Equity Incentive Plan.
| | --- | ---------------------------------------------------------------------------------------------------------------------

| | (3) | Includes 1,929,314 shares of restricted stock from the 2010 Equity Incentive Plan and the 2013
Equity Incentive Plan.
| | --- | ---------------------------------------------------------------------------------------------------------------------

*	The remaining
officers and directors individually each own less than 1% of our outstanding shares of common stock.

ITEM 7.	MAJOR SHAREHOLDERS
AND RELATED PARTY TRANSACTIONS.

A.	Major shareholders.

The following table
sets forth information regarding beneficial ownership of our common stock for owners of more than five percent of our common stock,
of which we are aware as of the date of this annual report.

|Name                                                                                 |  | No. of Shares |            | % Owned
|------------------------------------------------------------------------------------ |  | ------------- | ---------- | -------
|Wellington Management Company, LLP (1)                                               |  |               | 14,142,229 |        
|Galahad Securities Limited (2)                                                       |  |               | 11,170,568 |        
|York Capital Management Global Advisors, LLC (3)                                     |  |               | 10,416,752 |        
|Kensico Capital Management Corporation, Michael Lowenstein and Thomas J. Coleman (4) |  |               | 10,116,500 |        



|(1)  This information is derived from Schedule 13G/A filed with the SEC on February 14, 2014. | 
|--------------------------------------------------------------------------------------------- | 
|(2)  This information is derived from Schedule 13G/A filed with the SEC on February 14, 2014. | 
|(3)  This information is derived from Schedule 13G filed with the SEC on February 14, 2014.   | 
|(4)  This information is derived from Schedule 13G/A filed with the SEC on February 14, 2014. | 





78





B.	Related Party Transactions



Management of Our Fleet

Commercial and Technical Management

Our vessels are
commercially managed by Scorpio Commercial Management S.A.M., or SCM and technically managed by Scorpio Ship Management S.A.M.,
or SSM, pursuant to a Master Agreement (which may be terminated upon a two year notice). SCM and SSM are related parties of ours.
We expect that additional vessels that we may acquire in the future will also be managed under the Master Agreement or on substantially
similar terms.

SCM’s services
include securing employment, in the spot market and on time charters, for our vessels. SCM also manages the Scorpio Group Pools.
When our vessels are in the Pools, SCM, the pool manager, charges fees of $300 per vessel per day with respect to our Panamax/LR1
vessels, $250 per vessel per day with respect to our LR2 vessels, and $325 per vessel per day with respect to each of our
Handymax and MR vessels, plus 1.50% commission on gross revenues per charter fixture.  These are the same fees that SCM
charges other vessels in these pools, including third party owned vessels. For commercial management of our vessels that do not
operate in any of the Scorpio Group Pools, we pay SCM a fee of $250 per vessel per day for each Panamax, LR1 and LR2 vessel and
$300 per vessel per day for each Handymax and MR vessel, plus 1.25% commission on gross revenues per charter fixture.

SSM’s services
include day-to-day vessel operation, performing general maintenance, monitoring regulatory and classification society compliance,
customer vetting procedures, supervising the maintenance and general efficiency of vessels, arranging the hiring of qualified officers
and crew, arranging and supervising drydocking and repairs, purchasing supplies, spare parts and new equipment for vessels, appointing
supervisors and technical consultants and providing technical support. We currently pay SSM $685 per vessel per day to provide
technical management services for each of our vessels which is the same fee that SSM charges to third parties.

Administrative Services Agreement

We have an Administrative
Services Agreement with Scorpio Services Holding Limited, or SSH, or our Administrator, for the provision of administrative staff
and office space, and administrative services, including accounting, legal compliance, financial and information technology services.
SSH is a related party of ours. Liberty, a company affiliated with us, acted as our Administrator until March 13, 2012 when the
Administrative Services Agreement was novated to SSH. The effective date of the novation was November 9, 2009, the date that we
first entered into the agreement with Liberty. We reimburse our current Administrator for the reasonable direct or indirect expenses
it incurs in providing us with the administrative services described above. Our Administrator also arranges vessel sales and purchases
for us. The services provided to us by our Administrator may be sub-contracted to other entities within the Scorpio Group.

We pay our
Administrator a fee for arranging vessel purchases and sales for us, equal to 1% of the gross purchase or sale price, payable
upon the consummation of any such purchase or sale. For the year ended December 31, 2013 we paid our Administrator $9.1
million, which consisted of $2.5 million related to the purchase and delivery of seven newbuilding vessels in 2013 and $6.6
million on the purchase and subsequent sale of our VLGC business to Dorian in November 2013. We believe this 1% fee on
purchases and sales is customary in the tanker industry.

Further, pursuant
to our administrative services agreement, our Administrator, on behalf of itself and other members of the Scorpio Group, has agreed
that it will not directly own product or crude tankers ranging in size from 35,000 dwt to 200,000 dwt.

Our administrative
services agreement, whose effective commencement began in December 2009 and can be terminated upon two years notice.



79





Tanker pools



To increase vessel
utilization and thereby revenues, we participate in commercial pools with other shipowners of similar modern, well-maintained vessels.
By operating a large number of vessels as an integrated transportation system, commercial pools offer customers greater flexibility
and a higher level of service while achieving scheduling efficiencies. Pools employ experienced commercial charterers and operators
who have close working relationships with customers and brokers, while technical management is performed by each shipowner. The
managers of the pools negotiate charters with customers primarily in the spot market. The size and scope of these pools enable
them to enhance utilization rates for pool vessels by securing backhaul voyages and COAs, thus generating higher effective TCE
revenues than otherwise might be obtainable in the spot market while providing a higher level of service offerings to customers.
When we employ a vessel in the spot charter market, we generally place such vessel in a tanker pool managed by our commercial manager
that pertains to that vessel’s size class. The earnings allocated to vessels (charterhire expense for the pool) are aggregated
and divided on the basis of a weighted scale, or Pool Points, which reflect comparative voyage results on hypothetical benchmark
routes. The Pool Point system generally favors those vessels with greater cargo-carrying capacity and those with better fuel consumption.
Pool Points are also awarded to vessels capable of carrying clean products and to vessels capable of trading in certain ice conditions.
We currently participate in four pools: the Scorpio LR2 Pool, the Scorpio Panamax Tanker Pool, Scorpio MR Pool and the Scorpio
Handymax Tanker Pool.

SCM is responsible
for the commercial management of participating vessels in the pools, including the marketing, chartering, operating and bunker
(fuel oil) purchases of the vessels. The Scorpio LR2 Pool is administered by Scorpio LR2 Pool Ltd., the Scorpio Panamax Tanker
Pool is administered by Scorpio Panamax Tanker Pool Ltd., or SPTP, the Scorpio MR Pool is administered by Scorpio MR Pool Ltd,
or SMRP and the Scorpio Handymax Tanker Pool is administered by Scorpio Handymax Tanker Pool Ltd., or SHTP. Our founder, Chairman
and Chief Executive Officer is a member of the Lolli-Ghetti family which owns all issued and outstanding stock of SLR2P, SPTP,
SMRP and SHTP. Taking into account the recommendations of a pool committee and a technical committee, each of which is comprised
of representatives of each pool participant, SLR2P, SPTP, SMRP and SHTP set the respective pool policies and issues directives
to the pool participants and SCM. The pool participants remain responsible for all other costs including the financing, insurance,
manning and technical management of their vessels. The earnings of all of the vessels are aggregated and divided according to the
relative performance capabilities of the vessel and the actual earning days each vessel is available.

Our Relationship with Scorpio Group and its Affiliates

We were incorporated
in the Republic of The Marshall Islands on July 1, 2009 by Simon Financial Limited, or Simon, which is owned by the Lolli-Ghetti
family and manages their shipping interests. On October 1, 2009, (i) Simon, through its wholly-owned subsidiary, Liberty Holding
Company Ltd., or Liberty, transferred three operating subsidiary companies to us that owned the vessels in our initial fleet consisting
of theVenice,Senatore andNoemi; (ii) Liberty became a wholly-owned subsidiary and operating vehicle of
Simon; (iii) Scorpio Owning Holding Ltd. became a wholly-owned subsidiary of Liberty; and (iv) we became a wholly-owned subsidiary
of Scorpio Owning Holding Ltd. Liberty’s operations include chartered-in vessels, and interests in joint ventures and investments.
Scorpio Group and will preclude itself from directly owning product or crude tankers ranging in size from 35,000 dwt to
200,000 dwt.

Our board of directors
consists of eight individuals, five of whom are independent directors. Three of the independent directors form the board’s
Audit Committee and, pursuant to the Audit Committee charter, are required to review all potential conflicts of interest between
us and Scorpio Group. The three non-independent directors, Emanuele Lauro, Robert Bugbee and Cameron Mackey serve in senior management
positions within the Scorpio Group which is also our Administrator, and is an affiliate of the Scorpio Group.

The Scorpio Group
is owned and controlled by the Lolli-Ghetti family, of which Mr. Lauro is a member. Mr. Lauro is considered to be the acting Chief
Executive Officer and Mr. Bugbee is considered to be the acting President of the Scorpio Group. Mr. Lauro is employed by Scorpio
Commercial Management and Mr. Bugbee is employed by Scorpio USA LLC, and both entities are affiliates within the Scorpio Group.
Mr. Lauro, Mr. Bugbee and other senior management have a minority equity interest in Scorpio Services Holding Limited. We are not
affiliated with any other entities in the shipping industry other than those that are members of the Scorpio Group.

SCM, SSM and SSH
our commercial manager, technical manager and administrator, respectively, are affiliates of the Scorpio Group. For information
regarding the details regarding our relationship with SCM, SSM and SSH, please see “–
Management of our Fleet.”

Transactions with Related Parties

Transactions with
entities controlled by the Lolli-Ghetti family (herein referred to as related party affiliates) in the consolidated statements
of profit or loss and balance sheet are as follows:

80





|                                     |  | For the year ended December 31,
|------------------------------------ |  | -------------------------------
|In thousands of US dollars           |  | 2013                           
|Pool revenue(1)                      |  |                                
|Scorpio MR Pool Limited              |  | $                              
|Scorpio Handymax Tanker Pool Limited |  |                                
|Scorpio Panamax Tanker Pool Limited  |  |                                
|Scorpio LR2 Pool Limited             |  |                                
|Scorpio Aframax Tanker Pool Limited  |  |                                
|Time charter revenue(2)              |  |                                
|King Dustin                          |  |                                
|Vessel operating costs(3)            |  |                                
|Commissions(4)                       |  |                                
|Administrative expenses(5)           |  |                                



| | (1) | These transactions relate to revenue earned in the Scorpio LR2, Scorpio
Panamax, Scorpio MR, Scorpio Aframax and Scorpio Handymax Tanker Pools (the Pools), which are owned by Scorpio LR2 Pool Limited,
Scorpio Panamax Tanker Pool Limited, Scorpio MR Pool Limited, Scorpio Aframax Tanker Pool Limited and Scorpio Handymax Tanker Pool
Limited, respectively. The Pools are related party affiliates.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | The revenue earned was for Noemi’s time charter with
King Dustin (which is 50% jointly controlled by a related party affiliate).
| | --- | --------------------------------------------------------------------------------------------------------------------------------

| | (3) | These transactions represent technical management fees charged by
SSM, a related party affiliate, which are included in the vessel operating costs in the consolidated statement of income or loss.
We believe our technical management fees for the years ended December 31, 2013, 2012 and 2011 were at arms-length rates as they
were based on contracted rates that were the same as those charged to other vessels managed by SSM at the time the management agreements
were entered into. In June 2013, this fee was increased to $685 per vessel per day from $548 per vessel per day (2012 and 2011:
$548 per vessel per day) for technical management.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | These
                                         transactions represent the expense due to SCM for commissions related to the commercial
                                         management services provided by SCM under the Commercial Management Agreement (see description
                                         below). Each vessel pays a commission of 1.25% of their gross revenue when not in the
                                         Pools.  When our vessels are in the Pools, SCM, the pool manager, charges fees
                                         of $300 per vessel per day with respect to our Panamax/LR1 vessels, $250 per vessel per
                                         day with respect to our LR2 vessels, and $325 per vessel per day with respect to
                                         each of our Handymax and MR vessels, plus 1.50% commission on gross revenues per charter
                                         fixture.  These are the same fees that SCM charges other vessels in these pools,
                                         including third party owned vessels, and they are and were included in voyage expenses
                                         in the consolidated statement of income or loss.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (5) | We have an Administrative Services Agreement with Scorpio Services
Holding Limited, or SSH, for the provision of administrative staff and office space, and administrative services, including accounting,
legal compliance, financial and information technology services. SSH is a related party to us. We reimburse SSH for the reasonable
direct or indirect expenses it incurs in providing us with the administrative services described above. SSH also arranges vessel
sales and purchases for us. The services provided to us by SSH may be sub-contracted to other entities within the Scorpio Group.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our Commercial Management Agreement
with SCM includes a daily flat fee charged payable to SCM for the vessels that are not in one of the pools managed by SCM. The
flat fee is $250 per day for Panamaxes/LR1 and LR2 vessels and $300 per day for Handymax and MR vessels.

| | · | The
                                         expense for the year ended December 31, 2013 of $1.9 million included the flat fee of
                                         $0.3 million charged by SCM and administrative fees of $1.6 million charged by SSH and
                                         were included in voyage expenses and general and administrative expenses in the consolidated
                                         statement of income or loss.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | The
                                         expense for the year ended December 31, 2012 of $1.9 million included the flat fee of
                                         $0.7 charged by SCM, and administrative fees of $1.2 million charged by SSH and were
                                         both included in voyage expenses and general and administrative expenses in the consolidated
                                         statement of income or loss.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | The
                                         expense for the year ended December 31, 2011 of $1.9 million included the flat fee of
                                         $0.3 charged by SCM, and administrative fees of $1.7 million charged by SSH and were
                                         both included in general and administrative expenses in the consolidated statement of
                                         income or loss.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (6) | The
                                         Administrative Services Agreement with SSH includes a fee for arranging vessel purchases
                                         and sales, on our behalf, equal to 1% of the gross purchase or sale price, payable upon
                                         the consummation of any such purchase or sale. These fees are capitalized as part of
                                         the carrying value of the related vessel for a vessel purchase and are included as part
                                         of the gain or loss on sale for a vessel disposal. During the year ended December 31,
                                         2013, we paid SSH an aggregate fee of $9.1 million, which consisted of $2.5 million related
                                         to the purchase and delivery of seven newbuilding vessels in 2013 and $6.6 million on
                                         the purchase and subsequent sale of our VLGC business to Dorian. During the year
                                         ended December 31, 2012, we paid SSH an aggregate fee of $2.4 million, which consisted
                                         of $0.5 million on the sales of three Handymax vessels and $1.9 million on the purchase
                                         and delivery of our first five newbuilding vessels. In the year ended December 31, 2011,
                                         we paid SSH an aggregate fee of $0.7 million in May 2011 for the purchase of two MRs.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





81





We had the following balances
with related parties, which have been included in the consolidated balance sheets:



|                                         |  | As of December 31,
|---------------------------------------- |  | ------------------
|In thousands of US dollars               |  | 2013              
|Assets:                                  |  |                   
|Accounts receivable (due from the Pools) |  | $                 
|Accounts receivable (SCM)                |  |                   
|                                         |  |                   
|Liabilities:                             |  |                   
|Accounts payable (owed to the Pools)     |  |                   
|Accounts payable (SSM)                   |  |                   
|Accounts payable (SCM)                   |  |                   



In 2011, we also
entered into an agreement to reimburse costs to SSM as part of its supervision agreement for newbuilding vessels. $0.2 million
and $0.1 million were charged under this agreement during the years ended December 31, 2013 and December 31, 2012, respectively.
No amounts were charged under this agreement during the year ended December 31, 2011.

C.	INTERESTS OF EXPERTS AND COUNSEL

Not applicable.

ITEM 8.	FINANCIAL INFORMATION

A.	Consolidated Statements and Other Financial Information

See “Item
18. Financial Statements.”

Legal Proceedings

To our knowledge,
we are not currently a party to any lawsuit that, if adversely determined, would have a material adverse effect on our financial
position, results of operations or liquidity. As such, we do not believe that pending legal proceedings, taken as a whole, should
have any significant impact on our financial statements. From time to time in the future we may be subject to legal proceedings
and claims in the ordinary course of business, principally personal injury and property casualty claims. While we expect that these
claims would be covered by our existing insurance policies, those claims, even if lacking merit, could result in the expenditure
of significant financial and managerial resources. We have not been involved in any legal proceedings which may have, or have had,
a significant effect on our financial position, results of operations or liquidity, nor are we aware of any proceedings that are
pending or threatened which may have a significant effect on our financial position, results of operations or liquidity.

Dividend Policy

The declaration
and payment of dividends is subject at all times to the discretion of our board of directors. The timing and amount of dividends,
if any, depends on our earnings, financial condition, cash requirements and availability, fleet renewal and expansion, restrictions
in the loan agreements, the provisions of Marshall Islands law affecting the payment of dividends and other factors.

In addition, since
we are a holding company with no material assets other than the shares of our subsidiaries through which we conduct our operations,
our ability to pay dividends will depend on our subsidiaries’ distributing to us their earnings and cash flow.



82





During the period
from our initial public offering in April 2010 through April 2013, we did not declare or pay any dividends to our shareholders.
For the year ended December 31, 2013, we paid aggregate dividends to our shareholders in the amount of $24.4 million. We
have paid the following dividends per share in respect of the periods set forth below:

|                   |  |                 
|------------------ |  | ----------------
|Payment Date       |  | Amount per Share
|June 25, 2013      |  | $               
|September 25, 2013 |  | $               
|December 18, 2013  |  | $               
|March 26, 2014     |  | $               



B.	Significant Changes.

There have been
no significant changes since the date of the annual consolidated financial statements included in this report, other than as described
in Note 22-Subsequent Events to our consolidated financial statements included herein.

ITEM 9.	OFFER AND THE
LISTING

A.	Offer and Listing Details.

Since our initial
public offering, our shares of common stock have traded on the NYSE under the symbol “STNG”. The high and low market
prices for our shares of common stock on the NYSE are presented for the periods listed below:

|                                          |  |      |        |    
|----------------------------------------- |  | ---- | ------ | ---
|For the Year Ended                        |  | High |        | Low
|December 31, 2010*                        |  | $    | $13.01 |    
|December 31, 2011                         |  |      | 12.18  |    
|December 31, 2012                         |  |      | 7.50   |    
|December 31, 2013                         |  |      | 12.48  |    
|* For the period beginning March 31, 2010 |  |      |        |    



|                                                      |  |      |       |    
|----------------------------------------------------- |  | ---- | ----- | ---
|For the Quarter Ended:                                |  | High |       | Low
|March 31, 2012                                        |  |      | 7.50  |    
|June 30, 2012                                         |  |      | 7.50  |    
|September 30, 2012                                    |  |      | 6.88  |    
|December 31, 2012                                     |  |      | 7.14  |    
|March 31, 2013                                        |  |      | 8.94  |    
|June 30, 2013                                         |  |      | 9.60  |    
|September 30, 2013                                    |  |      | 10.51 |    
|December 31, 2013                                     |  |      | 12.48 |    
|March 31, 2014 (through and including March 28, 2014) |  |      | 11.91 |    



|                                                  |  |      |       |    
|------------------------------------------------- |  | ---- | ----- | ---
|Most Recent Six Months:                           |  | High |       | Low
|September 2013                                    |  | $    | 10.28 |    
|October 2013                                      |  |      | 12.03 |    
|November 2013                                     |  |      | 12.48 |    
|December 2013                                     |  |      | 12.17 |    
|January 2014                                      |  |      | 11.91 |    
|February 2014                                     |  |      | 10.29 |    
|March 2014 (through and including March 28, 2014) |  |      | 10.69 |    



B.	Plan of Distribution

Not applicable

C.	Markets.

The information
set forth above, including the tabular information, under the heading “Offering and Listing Details” in incorporated
herein.



83





D.	Selling Shareholders

Not applicable.

E.	Dilution

Not applicable.

F.	Expenses of the Issue

Not applicable.

ITEM 10.	ADDITIONAL
INFORMATION

A.	Share capital.

Not applicable.

B.	Memorandum and Articles of Association.

Our amended and
restated articles of incorporation have been filed as exhibit 3.1 to Amendment No. 2 to our Registration Statement on Form F-1
(Registration No. 333-164940), filed with the SEC on March 18, 2010. Our amended and restated bylaws are filed as exhibit 1.2 to
our Annual Report on Form 20-F filed on June 29, 2010. The information contained in these exhibits is incorporated by reference
herein.

Information regarding
the rights, preferences and restrictions attaching to each class of our shares of common stock is described in the section entitled
“Description of Capital Stock” in the accompanying prospectus to our Registration Statement on Form F-3 (Registration
No. 333-186815) with an effective date of February 25, 2013, provided that since the date of such Registration Statement,
our total issued and outstanding common shares has increased to 200,947,547 as of the date of this annual report.

C.	Material contracts.

Attached as exhibits
to this annual report are the contracts we consider to be both material and outside the ordinary course of business during the
two-year period immediately preceding the date of this annual report. We refer you to “Item 5. Operating and Financial Review
and Prospects—B. Liquidity and Capital Resources—Credit Facilities” and “Item 7. Major Shareholders and
Related Party Transactions—B. Related Party Transactions” for a discussion of these agreements.

Other than as set
forth above, there were no material contracts, other than contracts entered into in the ordinary course of business, to which we
were a party during the two year period immediately preceding the date of this annual report.

D.	Exchange controls.

Under Marshall Islands
law, there are currently no restrictions on the export or import of capital, including foreign exchange controls or restrictions
that affect the remittance of dividends, interest or other payments to non-resident holders of our common shares.

E.	Taxation

United States Federal Income Tax Considerations



The following are
the material United States federal income tax consequences to us of our activities and to United States Holders and Non-United
States Holders, each as defined below, of the ownership of common shares. The following discussion of United States federal income
tax matters is based on the United States Internal Revenue Code of 1986, or the Code, judicial decisions, administrative pronouncements,
and existing and proposed regulations issued by the United States Department of the Treasury, or the Treasury Regulations, all
of which are subject to change, possibly with retroactive effect. The discussion below is based, in part, on the description of
our business in this Report and assumes that we conduct our business as described herein. References in the following discussion
to the “Company,” “we,” “our” and “us” are to Scorpio Tankers Inc. and its subsidiaries
on a consolidated basis.



84





United States Federal Income Taxation
of Operating Income: In General



We earn and anticipate
that we will continue to earn substantially all our income from the hiring or leasing of vessels for use on a time charter basis,
from participation in a pool or from the performance of services directly related to those uses, all of which we refer to as “shipping
income.”

Unless exempt from
United States federal income taxation under the rules of Section 883 of the Code, or Section 883, as discussed below, a foreign
corporation such as us will be subject to United States federal income taxation on its “shipping income” that is treated
as derived from sources within the United States, which we refer to as “United States source shipping income.” For
United States federal income tax purposes, “United States source shipping income” includes 50% of shipping income that
is attributable to transportation that begins or ends, but that does not both begin and end, in the United States.

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

Shipping income
attributable to transportation exclusively between United States ports is considered to be 100% derived from United States sources.
However, we are not permitted by United States law to engage in the transportation of cargoes that produces 100% United States
source shipping income.

Unless exempt from
tax under Section 883, our gross United States source shipping income would be subject to a 4% tax imposed without allowance for
deductions, as described more fully below.

Exemption of Operating Income from United
States Federal Income Taxation



Under Section 883
and the Treasury Regulations thereunder, a foreign corporation will be exempt from United States federal income taxation on its
United States source shipping income if:

(1) 	it is organized
in a “qualified foreign country,” which is one that grants an “equivalent exemption” from tax to corporations
organized in the United States in respect of each category of shipping income for which exemption is being claimed under Section
883; and

(2) 	one of the
following tests is met:

(A)	 more than
50% of the value of its shares is beneficially owned, directly or indirectly, by “qualified shareholders,” which as
defined includes individuals who are “residents” of a qualified foreign country, which we refer to as the “50%
Ownership Test”; or

(B) 	its shares
are “primarily and regularly traded on an established securities market” in a qualified foreign country or in the United
States, to which we refer as the “Publicly-Traded Test”.

The Republic of
The Marshall Islands, the jurisdiction where we and our ship-owning subsidiaries are incorporated, has been officially recognized
by the United States Internal Revenue Service, or the IRS, as a qualified foreign country that grants the requisite “equivalent
exemption” from tax in respect of each category of shipping income we earn and currently expect to earn in the future. Therefore,
we will be exempt from United States federal income taxation with respect to our United States source shipping income if we satisfy
either the 50% Ownership Test or the Publicly-Traded Test.

For our 2013 taxable tax year, we intend
to take the position that we satisfy the Publicly-Traded Test and we anticipate that we will continue to satisfy the Publicly-Traded
Test for future taxable years. However, as discussed below, this is a factual determination made on an annual basis. We do not
currently anticipate a circumstance under which we would be able to satisfy the 50% Ownership Test.

Publicly-Traded Test



The Treasury Regulations
under Section 883 provide, in pertinent part, that shares of a foreign corporation will be considered to be “primarily traded”
on an established securities market in a country if the number of shares of each class of stock that are traded during any taxable
year on all established securities markets in that country exceeds the number of shares in each such class that are traded during
that year on established securities markets in any other single country. Our common shares, which constitute our sole class of
issued and outstanding stock, are “primarily traded” on the New York Stock Exchange, or the NYSE.

Under the Treasury
Regulations, our common shares will be considered to be “regularly traded” on an established securities market if one
or more classes of our stock representing more than 50% of our outstanding stock, by both total combined voting power of all classes
of stock entitled to vote and total value, are listed on such market, to which we refer as the “Listing Threshold.”
Since our common shares are listed on the NYSE, we expect to satisfy the Listing Threshold.



85





It is further required
that with respect to each class of stock relied upon to meet the Listing Threshold, (i) such class of stock is traded on the market,
other than in minimal quantities, on at least 60 days during the taxable year or one-sixth of the days in a short taxable year,
or the “Trading Frequency Test”; and (ii) the aggregate number of shares of such class of stock traded on such market
during the taxable year is at least 10% of the average number of shares of such class of stock outstanding during such year or
as appropriately adjusted in the case of a short taxable year, or the “Trading Volume Test.” We currently satisfy and
anticipate that it will continue to satisfy the Trading Frequency Test and Trading Volume Test. Even if this were not the case,
the Treasury Regulations provide that the Trading Frequency Test and Trading Volume Tests will be deemed satisfied if, as is the
case with our common shares, such class of stock is traded on an established securities market in the United States and such class
of stock is regularly quoted by dealers making a market in such stock.

Notwithstanding
the foregoing, the Treasury Regulations provide, in pertinent part, that a class of stock will not be considered to be “regularly
traded” on an established securities market for any taxable year during which 50% or more of the vote and value of the outstanding
shares of such class are owned, actually or constructively under specified attribution rules, on more than half the days during
the taxable year by persons who each own 5% or more of the vote and value of such class of outstanding shares, to which we refer
as the “5% Override Rule.”

For purposes of
being able to determine the persons who actually or constructively own 5% or more of the vote and value of our common shares, or
“5% Shareholders,” the Treasury Regulations permit us to rely on those persons that are identified on Schedule 13G
and Schedule 13D filings with the United States Securities and Exchange Commission, or the SEC, as owning 5% or more of our common
shares. The Treasury Regulations further provide that an investment company which is registered under the Investment Company Act
of 1940, as amended, will not be treated as a 5% Shareholder for such purposes.

In the event the
5% Override Rule is triggered, the Treasury Regulations provide that the 5% Override Rule will nevertheless not apply if we can
establish that within the group of 5% Shareholders, there are sufficient qualified shareholders for purposes of Section 883 to
preclude non-qualified shareholders in such group from owning 50% or more of our common shares for more than half the number of
days during the taxable year. In order to benefit from this exception to the 5% Override Rule, we must satisfy certain substantiation
requirements in regards to the identity of its 5% Shareholders.

We believe that
we currently satisfy the Publicly-Traded Test and intend to take this position on our United States federal income tax return for
the 2013 taxable year. However, there are factual circumstances beyond our control that could cause us to lose the benefit of the
Section 883 exemption. For example, if we trigger the 5% Override Rule for any future taxable year, there is no assurance that
we will have sufficient qualified 5% Shareholders to preclude nonqualified 5% Shareholders from owning 50% or more of our common
shares for more than half the number of days during such taxable year, or that we will be able to satisfy the substantiation requirements
in regards to our 5% Shareholders.

United States Federal Income Taxation
In Absence of Section 883 Exemption



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

To the extent our
United States source shipping income is considered to be “effectively connected” with the conduct of a United States
trade or business, as described below, any such “effectively connected” United States source shipping income, net of
applicable deductions, would be subject to United States federal income tax, currently imposed at rates of up to 35%. In addition,
we would generally be subject to the 30% “branch profits” tax on earnings effectively connected with the conduct of
such trade or business, as determined after allowance for certain adjustments, and on certain interest paid or deemed paid attributable
to the conduct of our United States trade or business.

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

| | · | we have, or are considered to have, a fixed place of business in the United States involved in the earning of United States
source shipping income; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------

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

We do not currently
have, intend to have, or permit circumstances that would result in having, any vessel sailing to or from the United States on a
regularly scheduled basis. Based on the foregoing and on the expected mode of our shipping operations and other activities, it
is anticipated that none of our United States source shipping income will be “effectively connected” with the conduct
of a United States trade or business.



86





United States Federal Income Taxation
of Gain on Sale of Vessels



If we qualify for
exemption from tax under Section 883 in respect of the shipping income derived from the international operation of our vessels,
then gain from the sale of any such vessel should likewise be exempt from United States federal income tax under Section 883. If,
however, our shipping income from such vessels does not for whatever reason qualify for exemption under Section 883, then any gain
on the sale of a vessel will be subject to United States federal income tax if such sale occurs in the United States. To the extent
possible, we intend to structure the sales of our vessels so that the gain therefrom is not subject to United States federal income
tax. However, there is no assurance we will be able to do so.

United States Federal Income Taxation
of United States Holders



The following is
a discussion of the material United States federal income tax considerations relevant to an investment decision by a United States
Holder, as defined below, with respect to our common shares. This discussion does not purport to deal with the tax consequences
of owning common shares to all categories of investors, some of which may be subject to special rules. This discussion only addresses
considerations relevant to those United States Holders who hold the common shares as capital assets, that is, generally for investment
purposes. You are encouraged to consult your own tax advisors concerning the overall tax consequences arising in your own particular
situation under United States federal, state, local or foreign law of the ownership of common shares.

As used herein,
the term “United States Holder” means a beneficial owner of common shares that is an individual United States citizen
or resident, a United States corporation or other United States entity taxable as a corporation, an estate the income of which
is subject to United States federal income taxation regardless of its source, or a trust if a court within the United States is
able to exercise primary jurisdiction over the administration of the trust and one or more United States persons have the authority
to control all substantial decisions of the trust.

If a partnership
holds our common shares, the tax treatment of a partner will generally depend upon the status of the partner and upon the activities
of the partnership. If you are a partner in a partnership holding common shares, you are encouraged to consult your tax advisor.

Distributions



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

Dividends paid on
our common shares to a United States Holder who is an individual, trust or estate (a “United States Non-Corporate Holder”)
will generally be treated as “qualified dividend income” that is taxable to such United States Non-Corporate Holder
at preferential tax rates provided that (1) the common shares are readily tradable on an established securities market in the United
States (such as the NYSE, on which our common shares are traded); (2) we are not a passive foreign investment company for the taxable
year during which the dividend is paid or the immediately preceding taxable year (which, as discussed below, we believe we have
not been, we believe we are not and do not anticipate being in the future); (3) the United States Non-Corporate Holder has owned
the common shares for more than 60 days in the 121-day period beginning 60 days before the date on which the common shares become
ex-dividend; and (4) the United States Non-Corporate Holder is not under an obligation to make related payments with respect to
positions in substantially similar or related property. Any distributions out of earnings and profits we pay which are not eligible
for these preferential rates will be taxed as ordinary income to a United States Non-Corporate Holder.

Special rules may
apply to any “extraordinary dividend”—generally, a dividend in an amount which is equal to or in excess of 10%
of a shareholder’s adjusted tax basis in his common shares—paid by us. If we pay an “extraordinary dividend”
on our common shares that is treated as “qualified dividend income,” then any loss derived by a United States Non-Corporate
Holder from the sale or exchange of such common shares will be treated as long-term capital loss to the extent of such dividend.



87





Sale, Exchange or Other Disposition of
Common Shares



Assuming we do not
constitute a passive foreign investment company for any taxable year, a United States Holder generally will recognize taxable gain
or loss upon a sale, exchange or other disposition of our common shares in an amount equal to the difference between the amount
realized by the United States Holder from such sale, exchange or other 94 disposition and the United States Holder’s tax
basis in such shares. Such gain or loss will be treated as long-term capital gain or loss if the United States Holder’s holding
period is greater than one year at the time of the sale, exchange or other disposition. Such capital gain or loss will generally
be treated as United States source income or loss, as applicable, for United States foreign tax credit purposes. Long-term capital
gains of United States Non-Corporate Holders are currently eligible for reduced rates of taxation. A United States Holder’s
ability to deduct capital losses is subject to certain limitations.

Passive Foreign Investment Company Status
and Significant Tax Consequences



Special United States
federal income tax rules apply to a United States Holder that holds shares in a foreign corporation classified as a “passive
foreign investment company”, or a PFIC, for United States federal income tax purposes. In general, we will be treated as
a PFIC with respect to a United States Holder if, for any taxable year in which such Holder holds our common shares, either:

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

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

For purposes of
determining whether we are a PFIC, we will be treated as earning and owning our proportionate share of the income and assets, respectively,
of any of our subsidiary corporations in which we own at least 25% of the value of the subsidiary’s stock. Income earned,
or deemed earned, by us in connection with the performance of services would not constitute passive income. By contrast, rental
income would generally constitute “passive income” unless we were treated under specific rules as deriving our rental
income in the active conduct of a trade or business.

Based on our current
operations and future projections, we do not believe that we have been, are, nor do we expect to become, a passive foreign investment
company with respect to any taxable year. Although there is no legal authority directly on point, our belief is based principally
on the position that, for purposes of determining whether we are a passive foreign investment company, the gross income we derive
or are deemed to derive from the time chartering and voyage chartering activities of our wholly-owned subsidiaries should constitute
services income, rather than rental income. Accordingly, such income should not constitute passive income, and the assets that
we own and operate in connection with the production of such income, in particular, the vessels, should not constitute assets that
produce or are held for the production of passive income for purposes of determining whether we are a PFIC. Therefore, based on
our current operations and future projections, we should not be treated as a PFIC with respect to any taxable year. There is substantial
legal authority supporting this position, consisting of case law and IRS pronouncements concerning the characterization of income
derived from time charters and voyage charters as services income for other tax purposes. However, there is also authority that
characterizes time charter income as rental income rather than services income for other tax purposes. It should be noted that
in the absence of any legal authority specifically relating to the statutory provisions governing PFICs, the IRS or a court could
disagree with our position. Furthermore, although we intend to conduct our affairs in a manner to avoid being classified as a PFIC
with respect to any taxable year, we cannot assure you that the nature of our operations will not change in the future.

As discussed more
fully below, if we were to be treated as a PFIC for any taxable year, a United States Holder would be subject to different United
States federal income taxation rules depending on whether the United States Holder makes an election to treat us as a “Qualified
Electing Fund,” which election we refer to as a “QEF election.” As an alternative to making a QEF election, a
United States Holder should be able to make a “mark-to-market” election with respect to our common shares, as discussed
below. In addition, if we were to be treated as a PFIC for any taxable year ending on or after December 31, 2013, a United States
Holder would be required to file an annual report with the IRS for that year with respect to such Holder’s common shares.

Taxation of United States Holders Making a Timely QEF Election



If a United States
Holder makes a timely QEF election, which United States Holder we refer to as an “Electing Holder,” the Electing Holder
must report for United States federal income tax purposes his pro rata share of our ordinary earnings and net capital gain, if
any, for each of our taxable years during which we are a PFIC that ends with or within the taxable year of the Electing Holder,
regardless of whether distributions were received from us by the Electing Holder. No portion of any such inclusions of ordinary
earnings will be treated as “qualified dividend income.” Net capital gain inclusions of United States Non-Corporate
Holders would be eligible for preferential capital gain tax rates. The Electing Holder’s adjusted tax basis in the common
shares will be increased to reflect taxed but undistributed earnings and profits. Distributions of earnings and profits that had
been previously taxed will result in a corresponding reduction in the adjusted tax basis in the common shares and will not be taxed
again once distributed. An Electing Holder would not, however, be entitled to a deduction for its pro rata share of any losses
that we incur with respect to any taxable year. An Electing Holder would generally recognize capital gain or loss on the sale,
exchange or other disposition of our common shares. A United States Holder would make a timely QEF election for our shares by filing
one copy of IRS Form 8621 with his United States federal income tax return for the first year in which he held such shares when
we were a PFIC. If we were to be treated as a PFIC for any taxable year, we would provide each United States Holder with all necessary
information in order to make the QEF election described above.



88





Taxation of United States Holders Making
a “Mark-to-Market” Election



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

Taxation of United States Holders Not
Making a Timely QEF or Mark-to-Market Election



Finally, if we were
to be treated as a PFIC for any taxable year, a United States Holder who does not make either a QEF election or a “mark-to-market”
election for that year, whom we refer to as a “Non-Electing Holder,” would be subject to special rules with respect
to (1) any excess distribution (i.e., the portion of any distributions received by the Non-Electing Holder on the common shares
in a taxable year in excess of 125% of the average annual distributions received by the Non-Electing Holder in the three preceding
taxable years, or, if shorter, the Non-Electing Holder’s holding period for the common shares), and (2) any gain realized
on the sale, exchange or other disposition of our common shares. Under these special rules:

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

| | · | the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we were a PFIC,
would be taxed as ordinary income and would not be “qualified dividend income”; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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





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

If a partnership
holds common shares, the tax treatment of a partner will generally depend upon the status of the partner and upon the activities
of the partnership. If you are a partner in a partnership holding common shares, you are encouraged to consult your tax advisor.

Dividends on Common Stock



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



89





Sale, Exchange or Other Disposition of
Common Shares



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

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

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

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

Backup Withholding and Information Reporting



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

| | · | fail to provide an accurate taxpayer identification number;
| | - | -----------------------------------------------------------

| | · | are notified by the IRS that you have failed to report all interest or dividends required to be shown on your United States
federal income tax returns; or
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------

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

Non-United States
Holders may be required to establish their exemption from information reporting and backup withholding by certifying their status
on an appropriate IRS Form W-8.

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

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

Pursuant to recently
enacted legislation, individuals who are United States Holders (and to the extent specified in applicable Treasury Regulations,
certain individuals who are Non- United States Holders and certain United States entities) who hold “specified foreign financial
assets” (as defined in Section 6038D of the Code) are required to file IRS Form 8938 with information relating to the asset
for each taxable year in which the aggregate value of all such assets exceeds $75,000 at any time during the taxable year or $50,000
on the last day of the taxable year (or such higher dollar amount as prescribed by applicable Treasury regulations). Specified
foreign financial assets would include, among other assets, our common shares, unless the shares are held through an account maintained
with a United States financial institution. Substantial penalties apply to any failure to timely file IRS Form 8938, unless the
failure is shown to be due to reasonable cause and not due to willful neglect. Additionally, in the event an individual United
States Holder (and to the extent specified in applicable Treasury Regulations, an individual Non- United States Holder or a United
States entity) that is required to file IRS Form 8938 does not file such form, the statute of limitations on the assessment and
collection of United States federal income taxes of such holder for the related tax year may not close until three years after
the date that the required IRS Form 8938 is filed. United States Holders (including United States entities) and Non- United States
Holders are encouraged consult their own tax advisors regarding their reporting obligations under this legislation.



90





F.	Dividends and paying agents.

Not applicable.

G.	Statement by experts.

Not applicable.

H.	Documents on display.

We file reports
and other information with the SEC. These materials, including this annual report and the accompanying exhibits, may be inspected
and copied at the public reference facilities maintained by the Commission at 100 F Street, N.E. Washington, D.C. 20549, or from
the SEC’s website http://www.sec.gov. You may obtain information on the operation of the public reference room by
calling 1 (800) SEC-0330, and you may obtain copies at prescribed rates.

Shareholders may
also request a copy of our filings at no cost, by writing or telephoning us at the following address: Scorpio Tankers Inc., 9,
Boulevard Charles III Monaco 98000, +377-9898-5716.

I.	Subsidiary Information

Not applicable.

ITEM 11.	QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

We are exposed to
the impact of interest rate changes primarily through our unhedged variable-rate borrowings. Significant increases in interest
rates could adversely affect our operating margins, results of operations and our ability to service our debt. From time to time,
we will use interest rate swaps to reduce our exposure to market risk from changes in interest rates. The principal objective of
these contracts is to minimize the risks and costs associated with our variable-rate debt and are not for speculative or trading
purposes. We have six interest rate swaps which we entered into in August 2011 and went into effect on July 1, 2012 for an aggregate
notional amount of $75.0 million, which was reduced to $66.0 million in September 2012 and further reduced to $45.0 million in
March 2014. See Note 10 of the consolidated financial statements for further information. The fair market value of our interest
rate swaps was a liability of $0.9 million and $1.4 million at December 31, 2013 and 2012, respectively.

Based on the floating
rate debt at December 31, 2013, a one-percentage point increase in the floating interest rate would increase interest expense by
$1.6 million per year. The following table presents the due dates for the principal payments on our fixed and floating rate debt:

|                                                 |  | As of December 31,
|------------------------------------------------ |  | ------------------
|                                                 |  |                   
|In thousands of U.S. dollars                     |  | 2014              
|Principal payments floating rate debt (unhedged) |  | $                 
|Principal payments fixed rate debt (hedged)      |  |                   
|Total principal payments on outstanding debt     |  | $                 



Spot Market Rate Risk

The cyclical nature
of the tanker industry causes significant increases or decreases in the revenue that we earn from our vessels, particularly those
vessels that operate in the spot market or participate in pools that are concentrated in the spot market such as the Scorpio Group
Pools. We currently do not have any vessels on time charter contracts. Additionally, we have the ability to remove our vessels
from the pools on relatively short notice if attractive time charter opportunities arise. A $1,000 per day increase or decrease
in spot rates for all of our vessel classes would have increased or decreased our operating income / (loss) by $14.1 million and
$7.2 million for the years ended December 31, 2013 and 2012, respectively.

Foreign Exchange Rate Risk

Our primary economic
environment is the international shipping market. This market utilizes the US dollar as its functional currency. Consequently,
virtually all of our revenues and the majority of our operating expenses are in US dollars. However, we incur some of our combined
expenses in other currencies, particularly the Euro. The amount and frequency of some of these expenses (such as vessel repairs,
supplies and stores) may fluctuate from period to period. Depreciation in the value of the US dollar relative to other currencies
will increase the US dollar cost of us paying such expenses. The portion of our business conducted in other currencies could increase
in the future, which could expand our exposure to losses arising from currency fluctuations.



91





There is a risk
that currency fluctuations will have a negative effect on our cash flows. We have not entered into any hedging contracts to protect
against currency fluctuations. However, we have some ability to shift the purchase of goods and services from one country to another
and, thus, from one currency to another, on relatively short notice. We may seek to hedge this currency fluctuation risk in the
future.

Bunker Price Risk

Our operating results
are affected by movement in the price of fuel oil consumed by the vessels – known in the industry as bunkers. The price
and supply of fuel is unpredictable and fluctuates based on events outside our control, including geopolitical developments, supply
and demand for oil and gas, actions by OPEC and other oil and gas producers, war and unrest in oil producing countries
and regions, regional production patterns and environmental concerns. Further, fuel may become much more expensive in the future,
which may reduce the profitability. We do not hedge our exposure to bunker price risk.

Inflation

We do not expect
inflation to be a significant risk to direct expenses in the current and foreseeable economic environment.

ITEM 12.	DESCRIPTION
OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

PART II

ITEM 13.	DEFAULTS, DIVIDEND
ARREARAGES AND DELINQUENCIES

None.

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

Not applicable.

ITEM 15.	CONTROLS AND
PROCEDURES

A.	Disclosure Controls and Procedures.

We maintain disclosure
controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within time periods
specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including
the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.
Our controls and procedures are designed to provide reasonable assurance of achieving their objectives.

We carried out an
evaluation under the supervision, and with the participation of our management, including our Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange
Act Rule 13a-15(e) and 15d-15e under the Securities Act of 1934) as of December 31, 2013. Based upon that evaluation, our Chief
Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December
31, 2013 to provide reasonable assurance that (1) information required to be disclosed by us in the reports that we file under
the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and
forms, and (2) that such information is accumulated and communicated to our management, including our Chief Executive Officer and
our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

There are inherent
limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error
and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures
can only provide reasonable assurance of achieving their control objectives.



92





B.	Management’s Annual Report on Internal Control
Over Financial Reporting.

In accordance with
Rule 13a-15(f) of the Securities Exchange Act of 1934, the management of Scorpio Tankers Inc. and its subsidiaries (the “Company”)
is responsible for the establishment and maintenance of adequate internal controls over financial reporting for the Company. Internal
control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
The Company’s system of internal control over financial reporting includes those policies and procedures that (i) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company
are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets
that could have a material effect on the financial statements. Management has performed an assessment of the effectiveness of
the Company’s internal controls over financial reporting as of December 31, 2013 based on the provisions of Internal Control—Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in 1992. Based on
our assessment, management determined that the Company’s internal controls over financial reporting was effective as of
December 31, 2013 based on the criteria in Internal Control—Integrated Framework issued by COSO (1992).

The Company’s
internal control over financial reporting, at December 31, 2013, has been audited by PricewaterhouseCoopers Audit, an independent
registered public accounting firm, who also audited the Company’s consolidated financial statements for that year. Their
audit report on the effectiveness of internal control over financial reporting is presented in Item 18 Financial Statements.

C.	Attestation Report of the Registered Public
Accounting Firm.

The
attestation report of the Registered Public Accounting Firm is presented on page F-2 of the Financial Statements filed as part
of this annual report.

D.	Changes in Internal Control Over Financial Reporting.

None

ITEM 16A.	AUDIT COMMITTEE
FINANCIAL EXPERT

Our Board of Directors
has determined that Mr. Ademaro Lanzara, who serves on the Audit Committee, qualifies as an “audit committee financial expert”
and that he is “independent” in accordance with SEC rules.

ITEM 16B.	CODE OF ETHICS

We have adopted
a code of ethics applicable to officers, directors and employees, which complies with applicable guidelines issued by the SEC.
Our code of ethics is filed as an exhibit to this annual report and can be found on our website at www.scorpiotankers.com. We will
also provide a hard copy of our code of ethics free of charge upon written request to Scorpio Tankers Inc., 9 Boulevard Charles
III, Monaco, 98000.

ITEM 16C.	PRINCIPAL
ACCOUNTING FEES AND SERVICES

A.	Audit Fees

Our principal accountant
for fiscal year ended December 31, 2013 was PricewaterhouseCoopers Audit (Marseille, France) and the audit fee for that period
was $428,000. Our principal accountant for fiscal years ended December 31, 2012 and 2011 was Deloitte LLP (London, United
Kingdom), and the audit fees for those periods were $434,247 and $380,174, respectively.

During 2013, our
principal accountant, PricewaterhouseCoopers Audit, provided services related to follow-on offerings that were completed in May
2013 and August 2013 and two transactions related to issuance of shares for the acquisitions of vessels. The fees for these services
were $38,500, $39,328 and $30,000, respectively.

During 2012, our
principal accountant, Deloitte LLP, provided services related to an SEC comment letter review and follow-on offerings that were
completed in April and December 2012. The fees for these services were $38,743, $80,675 and $97,128, respectively. During 2011,
our principal accountant, Deloitte LLP provided services related to our F-3 shelf registration and follow-on offerings that were
completed on May 10, 2011, May 18, 2011 and December 6, 2011, respectively. The fees for these services were $28,982, $72,896 and
$86,206, respectively.



93





During 2013, Deloitte
LLP, provided services related to follow-on offerings that were completed in January, March, May and July 2013. The fees for these
services were $47,049, $76,160, $60,284 and $23,274, respectively.

B.	Audit-Related Fees

Our
principal accountant for the fiscal year ended December 31, 2013, PricewaterhouseCoopers Audit, provided services related to Sarbanes-Oxley
compliance for the fiscal year ended December 31, 2012. The fees for these services during that year were $150,900.

C.	Tax Fees

None.

D.	All Other Fees

None

E.	Audit Committee’s Pre-Approval Policies
and Procedures

Our Audit Committee
pre-approves all audit, audit-related and non-audit services not prohibited by law to be performed by our independent auditors
and associated fees prior to the engagement of the independent auditor with respect to such services.

F.	Audit Work Performed by Other Than Principal Accountant
if Greater Than 50%

Not applicable.

ITEM 16D.	EXEMPTIONS
FROM LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

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

On July 9, 2010,
the board of directors authorized a share buyback program of $20 million. We repurchase these shares in the open market at the
time and prices that we consider to be appropriate. During the year ended December 31, 2013, no shares were purchased under the
program. As of the date of this report, 1,170,987 shares have been purchased under the plan at an average price of $6.7793 per
share.

ITEM 16F.	CHANGE IN REGISTRANT’S
CERTIFYING ACCOUNTANT

On April 2, 2013,
our board of directors, upon recommendation of our audit committee, appointed PricewaterhouseCoopers Audit as our independent
auditor for the fiscal year ending December 31, 2013, replacing Deloitte LLP, or Deloitte. On May 30, 2013, at our annual
general meeting of shareholders, our shareholders passed a resolution ratifying such appointment. The Company dismissed Deloitte
as its independent auditor effective April 2, 2013.

The information
required to be disclosed pursuant to this Item 16F was previously reported on Form 6-K, filed with the SEC on April 8, 2013.

ITEM 16G.	CORPORATE
GOVERNANCE

Pursuant to an exception
for foreign private issuers, we, as a Marshall Islands company, are not required to comply with the corporate governance practices
followed by U.S. companies under the NYSE listing standards. We believe that our established practices in the area of corporate
governance are in line with the spirit of the NYSE standards and provide adequate protection to our shareholders. In this respect,
we have voluntarily adopted NYSE required practices, such as (i) having a majority of independent directors, (ii) establishing
audit, compensation and nominating committees and (iii) adopting a Code of Ethics.

There are two significant
differences between our corporate governance practices and the practices required by the NYSE. The NYSE requires that non-management
directors meet regularly in executive sessions without management. The NYSE also requires that all independent directors meet in
an executive session at least once a year. The Marshall Islands law and our bylaws do not require our non-management directors
to regularly hold executive sessions without management. During 2012 and through the date of this annual report, our non-management
directors met in executive session four times. The NYSE requires companies to adopt and disclose corporate governance guidelines.
The guidelines must address, among other things: director qualification standards, director responsibilities, director access to
management and independent advisers, director compensation, director orientation and continuing education, management succession
and an annual performance evaluation. We are not required to adopt such guidelines under Marshall Islands law and we have not adopted
such guidelines.



94





ITEM 16H.	MINE SAFETY
DISCLOSURE

Not applicable.

PART III

ITEM 17.	FINANCIAL STATEMENTS

See “Item
18. Financial Statements.”

ITEM 18.	FINANCIAL STATEMENTS

The financial information
required by this Item is set forth on pages F-1 to F-52 and is filed as part of this annual report.

ITEM 19.	EXHIBITS

|ExhibitNumber |  | Description                                                                                                                                          
|------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------
|1.1           |  | Amended and Restated Articles of Incorporation of the Company (1)                                                                                    
|1.2           |  | Amended and Restated Bylaws of the Company (3)                                                                                                       
|2.1           |  | Form of Stock Certificate (1)                                                                                                                        
|2.3           |  | Form of Senior Debt Securities Indenture (5)                                                                                                         
|2.4           |  | Form of Subordinated Debt Securities Indenture (5)                                                                                                   
|4.1           |  | Amended and Restated Loan Agreement for $150 Million Revolving Credit Facility, dated July 12, 2011 (6)                                              
|4.2           |  | Letter Agreement to July 12, 2011 Amended and Restated Loan Agreement, dated September 22, 2011(6)                                                   
|4.3           |  | First Amendatory Agreement to July 12, 2011 Amended and Restated Loan Agreement, dated December 22, 2011 (6)                                         
|4.4           |  | 2010 Equity Incentive Plan (3)                                                                                                                       
|4.5           |  | 2013 Amended and Restated Equity Incentive Plan                                                                                                      
|4.6           |  | Administrative Services Agreement between the Company and Liberty Holding Company Ltd. (2)                                                           
|4.7           |  | Master Agreement between the Company, SSM and SCM dated January 24, 2013 (7)                                                                         
|4.8           |  | STI Spirit Credit Facility, dated March 9, 2011 (4)                                                                                                  
|4.9           |  | Letter Agreement to STI Spirit Credit Facility, dated September 28, 2011 (6)                                                                         
|4.10          |  | First Amendatory Agreement to STI Spirit Credit Facility, dated December 30, 2011 (6)                                                                
|4.11          |  | 2011 Credit Facility, dated May 3, 2011 (6)                                                                                                          
|4.12          |  | Letter Agreement to 2011 Credit Facility, dated September 22, 2011 (6)                                                                               
|4.13          |  | First Amendatory Agreement to 2011 Credit Facility, dated June 27, 2011 (6)                                                                          
|4.14          |  | Second Amendatory Agreement to 2011 Credit Facility, dated December 22, 2011 (6)                                                                     
|4.15          |  | Newbuilding Credit Facility, dated December 21, 2011 (6)                                                                                             
|4.16          |  | 2013 Credit Facility, dated July 2, 2013                                                                                                             
|4.17          |  | KEXIM Credit Facility, dated February 28, 2014                                                                                                       
|4.18          |  | K-Sure Credit Facility, dated February 24, 2014                                                                                                      
|8.1           |  | Subsidiaries of the Company                                                                                                                          
|11.1          |  | Code of Ethics (7)                                                                                                                                   
|11.2          |  | Whistleblower Policy                                                                                                                                 
|11.3          |  | Whistleblower Policy - Environmental                                                                                                                 
|12.1          |  | Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer                                                                                
|12.2          |  | Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer                                                                                
|13.1          |  | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|13.2          |  | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|15.1          |  | Consent of Independent Registered Public Accounting Firm, PricewaterhouseCoopers Audit                                                               
|15.2          |  | Consent of Independent Registered Public Accounting Firm, Deloitte LLP                                                                               
|15.3          |  | Consent of Drewry Shipping Consultants, Ltd.                                                                                                         



|    |                                                                                                                                              | 
|--- | -------------------------------------------------------------------------------------------------------------------------------------------- | 
|(1) | Filed as an Exhibit to the Company’s Amended Registration Statement on Form F-1/A (Amendment No. 1) (File No. 333-164940) on March 10, 2010.
|    |                                                                                                                                             
|(2) | Filed as an Exhibit to the Company’s Amended Registration Statement on Form F-1/A (Amendment No. 2) (File No. 333-164940) on March 18, 2010.
|    |                                                                                                                                             
|(3) | Filed as an Exhibit to the Company’s Annual Report filed on Form 20-F on June 29, 2010.                                                     
|    |                                                                                                                                             
|(4) | Filed as an Exhibit to the Company’s Annual Report filed on Form 20-F on April 21, 2011.                                                    
|    |                                                                                                                                             
|(5) | Filed as an Exhibit to the Company’s Registration Statement on Form F-3 (File No. 333-173929) on May 4, 2011.                               
|    |                                                                                                                                             
|(6) | Filed as an Exhibit to the Company’s Annual Report on Form 20-F on April 13, 2012, as amended.                                              
|    |                                                                                                                                             
|(7) | Filed as an Exhibit to the Company’s Annual Report on Form 20-F on March 29, 2013.                                                          





95





SIGNATURES

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

Dated March 31, 2014



| | Scorpio Tankers Inc.   
| | -----------------------
| | (Registrant)           
| |                        
| | /s/ Emanuele Lauro     
| | Emanuele Lauro         
| | Chief Executive Officer





96





SCORPIO TANKERS INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



|                                                                                                                | Page
|--------------------------------------------------------------------------------------------------------------- | ----
|Report of Independent Registered Public Accounting Firms                                                        | F-2 
|Consolidated Balance Sheets as of December 31, 2013 and December 31, 2012                                       | F-4 
|Consolidated Statements of Income or Loss for the years ended December 31, 2013, 2012 and 2011                  | F-5 
|Consolidated Statements of Comprehensive Income or Loss for the years ended December 31, 2013, 2012 and 2011    | F-7 
|Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2013, 2012 and 2011 | F-8 
|Consolidated Statements of Cash Flow for the years ended December 31, 2013, 2012 and 2011                       | F-10
|Notes to Consolidated Financial Statements                                                                      |     





F-1





Report of Independent Registered Public
Accounting Firm



To the Board of Directors and Shareholders
of Scorpio Tankers Inc.



In our opinion, the accompanying consolidated
balance sheet and the related consolidated statement of income or loss, statement of comprehensive income or loss, statement of
changes in shareholders’ equity and cashflow statement present fairly, in all material respects, the financial position
of Scorpio Tankers Inc. and its subsidiaries at December 31, 2013, and the results of their operations and their cash flows for
the year ended December 31, 2013 in conformity with International Financial Reporting Standards as issued by the International
Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control
over financial reporting as of December 31, 2013 based on criteria established in Internal Control - Integrated Framework 1992issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible
for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control
Over Financial Reporting. Our responsibility is to express an opinion on these financial statements and on the Company’s
internal control over financial reporting based on our integrated audit. We conducted our audit in accordance with the standards
of the Public Company Accounting Oversight Board (United States) and International Standards on Auditing. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audit
of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall
financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of
internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the
design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our
opinions.



A company’s internal control over
financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s
internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records
that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect
on the financial statements.



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



PricewaterhouseCoopers Audit

Monaco, Principality of Monaco

March 31, 2014





F-2





Report of Independent Registered Public
Accounting Firm



To the Board of Directors and Shareholders
of Scorpio Tankers Inc.



Majuro, Marshall Island



We have audited the accompanying consolidated
balance sheet of Scorpio Tankers Inc. and subsidiaries (the “Company”) as of December 31, 2012 and the related
consolidated statements of profit or loss, consolidated statements of comprehensive loss or income, consolidated statements of
changes in shareholders’ equity, and consolidated cash flow statements for the years ended December 31, 2012 and December
31, 2011. These financial statements are the responsibility of the Company’s management. Our responsibility is to express
an opinion on these financial statements based on our audits.



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



In our opinion, such consolidated financial
statements present fairly, in all material respects, the financial position of Scorpio Tankers Inc. and subsidiaries as of December
31, 2012 and the results of their operations and their cash flows for years ended December 31, 2012 and December 31, 2011,
in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.



/s/ DELOITTE LLP



London, United Kingdom



March 28, 2013











F-3





Scorpio Tankers Inc. and Subsidiaries

Consolidated Balance Sheets 
December 31, 2013 and 2012



|                                                    |  |       |    | As of            
|--------------------------------------------------- |  | ----- | -- | -----------------
|In thousands of U.S. dollars                        |  | Notes |    | December 31, 2013
|Assets                                              |  |       |    |                  
|Current assets                                      |  |       |    |                  
|Cash and cash equivalents                           |  |       | 2  |                  
|Accounts receivable                                 |  |       | 3  |                  
|Prepaid expenses and other current assets           |  |       |    |                  
|Inventories                                         |  |       |    |                  
|Vessels held for sale                               |  |       | 4  |                  
|Total current assets                                |  |       |    |                  
|Non-current assets                                  |  |       |    |                  
|Vessels and drydock                                 |  |       | 4  |                  
|Vessels under construction                          |  |       | 4  |                  
|Other assets                                        |  |       | 6  |                  
|Investment in associate                             |  |       | 7  |                  
|Total non-current assets                            |  |       |    |                  
|Total assets                                        |  |       |    |                  
|                                                    |  |       |    |                  
|Current liabilities                                 |  |       |    |                  
|Bank loans                                          |  |       | 9  |                  
|Accounts payable                                    |  |       | 8  |                  
|Accrued expenses                                    |  |       |    |                  
|Derivative financial instruments                    |  |       | 10 |                  
|Bank loan related to vessels held for sale          |  |       | 9  |                  
|Total current liabilities                           |  |       |    |                  
|Non-current liabilities                             |  |       |    |                  
|Bank loans                                          |  |       | 9  |                  
|Derivative financial instruments                    |  |       | 10 |                  
|Total non-current liabilities                       |  |       |    |                  
|Total liabilities                                   |  |       |    |                  
|                                                    |  |       |    |                  
|Shareholders’ equity                                |  |       |    |                  
|Issued, authorized and fully paid in share capital: |  |       |    |                  
|Share capital                                       |  |       | 12 |                  
|Additional paid in capital                          |  |       | 12 |                  
|Treasury shares                                     |  |       |    |                  
|Hedging reserve                                     |  |       | 10 |                  
|Accumulated deficit                                 |  |       |    |                  
|Total shareholders’ equity                          |  |       |    |                  
|Total liabilities and shareholders’ equity          |  |       |    |                  



The accompanying notes
are an integral part of these consolidated financial statements.







F-4





Scorpio Tankers Inc. and Subsidiaries

Consolidated Statements of
Income or Loss

For the years ended December 31, 2013, 2012 and 2011





|                                                                   |  |       |    | For the year ended December 31,
|------------------------------------------------------------------ |  | ----- | -- | -------------------------------
|In thousands of U.S. dollars except per share and share data       |  | Notes |    | 2013                           
|Revenue                                                            |  |       |    |                                
|Vessel revenue                                                     |  |       | 14 |                                
|                                                                   |  |       |    |                                
|Operating expenses                                                 |  |       |    |                                
|Vessel operating costs                                             |  |       |    |                                
|Voyage expenses                                                    |  |       |    |                                
|Charterhire                                                        |  |       | 15 |                                
|Impairment                                                         |  |       | 5  |                                
|Depreciation                                                       |  |       | 4  |                                
|General and administrative expenses                                |  |       | 16 |                                
|Write down of vessels held for sale and loss from sales of vessels |  |       | 4  |                                
|Gain on sale of VLGCs                                              |  |       | 7  |                                
|Total operating expenses                                           |  |       |    |                                
|Operating income / (loss)                                          |  |       |    |                                
|Other (expense) and income, net                                    |  |       |    |                                
|Financial expenses                                                 |  |       | 17 |                                
|Realized gain/(loss) on derivative financial instruments           |  |       | 10 |                                
|Unrealized gain/(loss) on derivative financial instruments         |  |       | 10 |                                
|Financial income                                                   |  |       |    |                                
|Share of profit from associate                                     |  |       | 7  |                                
|Other expenses, net                                                |  |       |    |                                
|Total other income/(expense), net                                  |  |       |    |                                
|Net income / (loss)                                                |  |       |    |                                
|                                                                   |  |       |    |                                
|Attributable to:                                                   |  |       |    |                                
|Equity holders of the parent                                       |  |       |    |                                
|                                                                   |  |       |    |                                
|Earnings / (loss) per share                                        |  |       |    |                                
|                                                                   |  |       |    |                                
|Basic                                                              |  |       | 19 |                                
|Diluted                                                            |  |       | 19 |                                
|Basic weighted average shares outstanding                          |  |       | 19 |                                
|Diluted weighted average shares outstanding                        |  |       | 19 |                                



The accompanying notes
are an integral part of these consolidated financial statements.





F-5







Scorpio Tankers Inc. and Subsidiaries

Consolidated Statements of Comprehensive
Income or Loss
For the years ended December 2013, 2012 and 2011





|                                                                                      |  |       |    | For the year ended December 31,
|------------------------------------------------------------------------------------- |  | ----- | -- | -------------------------------
|In thousands of U.S. dollars                                                          |  | Notes |    | 2013                           
|Net income / (loss)                                                                   |  |       |    |                                
|Other comprehensive income / (loss):                                                  |  |       |    |                                
|Items that may be reclassified subsequently to profit or loss                         |  |       |    |                                
|Cash flow hedges                                                                      |  |       |    |                                
|Unrealized gain/(loss) on derivative financial instruments                            |  |       | 10 |                                
|Reclassification adjustment for derivative financial instruments included in net loss |  |       | 10 |                                
|Other comprehensive income / (loss)                                                   |  |       |    |                                
|                                                                                      |  |       |    |                                
|Total comprehensive income / (loss)                                                   |  |       |    |                                
|                                                                                      |  |       |    |                                
|Attributable to:                                                                      |  |       |    |                                
|Equity holders of the parent                                                          |  |       |    |                                





The accompanying notes are an integral
part of these consolidated financial statements.



F-6







Scorpio Tankers Inc. and Subsidiaries

Consolidated Statements of Changes
in Shareholders’ EquityFor the years ended December 31, 2013, 2012 and 2011



|In thousands of U.S. dollars             |  | Number of shares |             | Share   |  | Additional paid-in |       | Treasury |  | Merger  |           | Accumulated |  | Hedging |        |      
|---------------------------------------- |  | ---------------- | ----------- | ------- |  | ------------------ | ----- | -------- |  | ------- | --------- | ----------- |  | ------- | ------ | -----
|except share data                        |  | outstanding      |             | capital |  | capital            |       | shares   |  | reserve |           | deficit     |  | reserve |        | Total
|                                         |  |                  |             |         |  |                    |       |          |  |         |           |             |  |         |        |      
|Balance as of January 1, 2011            |  |                  | 24,634,913  |         |  | $                  | 249   |          |  | $       | 255,004   |             |  |         | (2,647 | )    
|Net loss for the period                  |  |                  | —           |         |  |                    | —     |          |  |         | —         |             |  |         | —      |      
|Other comprehensive loss                 |  |                  | —           |         |  |                    | —     |          |  |         | —         |             |  |         | —      |      
|Net proceeds from follow on offerings    |  |                  | 13,900,000  |         |  |                    | 139   |          |  |         | 104,847   |             |  |         | —      |      
|Issuance of restricted stock             |  |                  | 290,000     |         |  |                    | 3     |          |  |         | (3        | )           |  |         | —      |      
|Amortization of restricted stock         |  |                  | —           |         |  |                    | —     |          |  |         | 3,362     |             |  |         | —      |      
|Purchase of treasury shares              |  |                  | (479,519    | )       |  |                    | —     |          |  |         | —         |             |  |         | (2,851 | )    
|Transfer to/ (from) reserves             |  |                  | —           |         |  |                    | —     |          |  |         | —         |             |  |         | —      |      
|Balance as of December 31, 2011          |  |                  | 38,345,394  |         |  | $                  | 391   |          |  | $       | 363,210   |             |  | $       | (5,498 | )    
|                                         |  |                  |             |         |  |                    |       |          |  |         |           |             |  |         |        |      
|Balance as of January 1, 2012            |  |                  | 38,345,394  |         |  | $                  | 391   |          |  | $       | 363,210   |             |  | $       | (5,498 | )    
|Net loss for the period                  |  |                  | —           |         |  |                    | —     |          |  |         | —         |             |  |         | —      |      
|Other comprehensive income               |  |                  | —           |         |  |                    | —     |          |  |         | —         |             |  |         | —      |      
|Net proceeds from follow on offerings    |  |                  | 25,639,774  |         |  |                    | 256   |          |  |         | 152,796   |             |  |         | —      |      
|Issuance of restricted stock             |  |                  | 290,000     |         |  |                    | 3     |          |  |         | (3        | )           |  |         | —      |      
|Amortization of restricted stock         |  |                  | —           |         |  |                    | —     |          |  |         | 3,490     |             |  |         | —      |      
|Purchase of treasury shares              |  |                  | (447,322    | )       |  |                    | —     |          |  |         | —         |             |  |         | (2,440 | )    
|Balance as of December 31, 2012          |  |                  | 63,827,846  |         |  | $                  | 650   |          |  | $       | 519,493   |             |  | $       | (7,938 | )    
|                                         |  |                  |             |         |  |                    |       |          |  |         |           |             |  |         |        |      
|Balance as of January 1, 2013            |  |                  | 63,827,846  |         |  | $                  | 650   |          |  | $       | 519,493   |             |  | $       | (7,938 | )    
|Net income for the period                |  |                  | —           |         |  |                    | —     |          |  |         | —         |             |  |         | —      |      
|Other comprehensive income               |  |                  | —           |         |  |                    | —     |          |  |         | —         |             |  |         | —      |      
|Net proceeds from follow on offerings    |  |                  | 118,828,578 |         |  |                    | 1,188 |          |  |         | 946,774   |             |  |         | —      |      
|Issuance of restricted stock             |  |                  | 8,999,998   |         |  |                    | 90    |          |  |         | (90       | )           |  |         | —      |      
|Amortization of restricted stock         |  |                  | —           |         |  |                    | —     |          |  |         | 13,142    |             |  |         | —      |      
|Dividends paid                           |  |                  | —           |         |  |                    | —     |          |  |         | (24,353   | )           |  |         | —      |      
|Shares issued for acquisition of vessels |  |                  | 7,135,080   |         |  |                    | 71    |          |  |         | 81,979    |             |  |         | —      |      
|Balance as of December 31, 2013          |  |                  | 198,791,502 |         |  | $                  | 1,999 |          |  | $       | 1,536,945 |             |  | $       | (7,938 | )    



The accompanying notes are an integral
part of these consolidated financial statements.





F-7







Scorpio Tankers Inc. and Subsidiaries

Consolidated Cash Flow Statements

For the years ended December 31, 2013, 2012 and 2011



|                                                                   |  |       |    | For the year ended December 31,
|------------------------------------------------------------------ |  | ----- | -- | -------------------------------
|In thousands of U.S. dollars                                       |  | Notes |    | 2013                           
|Operating activities                                               |  |       |    |                                
|Net income / (loss)                                                |  |       |    |                                
|Gain on sale of VLGCs                                              |  |       | 7  |                                
|Write down of vessels held for sale and loss from sales of vessels |  |       | 4  |                                
|Depreciation                                                       |  |       | 4  |                                
|Impairment                                                         |  |       | 5  |                                
|Amortization of restricted stock                                   |  |       |    |                                
|Amortization of deferred financing fees                            |  |       |    |                                
|Write off of vessel purchase options                               |  |       |    |                                
|Straight-line adjustment for charterhire expense                   |  |       |    |                                
|Share of profit from associate                                     |  |       | 7  |                                
|Unrealized (gain) / loss on derivative financial instruments       |  |       | 10 |                                
|                                                                   |  |       |    |                                
|Changes in assets and liabilities:                                 |  |       |    |                                
|Drydock payments                                                   |  |       |    |                                
|(Increase)/decrease  in inventories                                |  |       |    |                                
|Increase in accounts receivable                                    |  |       |    |                                
|(Increase)/decrease in prepaid expenses and other current assets   |  |       |    |                                
|(Increase)/decrease in other assets                                |  |       |    |                                
|(Decrease)/increase in accounts payable                            |  |       |    |                                
|Increase in accrued expenses                                       |  |       |    |                                
|                                                                   |  |       |    |                                
|Net cash outflow from operating activities                         |  |       |    |                                
|Investing activities                                               |  |       |    |                                
|Acquisition of vessels and payments for vessels under construction |  |       |    |                                
|Proceeds from disposal of vessels                                  |  |       |    |                                
|VLGC installment payments                                          |  |       |    |                                
|Investment in associate                                            |  |       |    |                                
|Net cash outflow from investing activities                         |  |       |    |                                
|Financing activities                                               |  |       |    |                                
|Bank loan repayment                                                |  |       |    |                                
|Bank loan drawdown                                                 |  |       |    |                                
|Debt issuance costs                                                |  |       |    |                                
|Gross proceeds from issuance of common stock                       |  |       |    |                                
|Equity issuance costs                                              |  |       |    |                                
|Purchase of treasury shares                                        |  |       |    |                                
|Dividends paid                                                     |  |       |    |                                
|Net cash inflow from financing activities                          |  |       |    |                                
|(Decrease)/increase in cash and cash equivalents                   |  |       |    |                                
|Cash and cash equivalents at January 1,                            |  |       |    |                                
|Cash and cash equivalents at December 31,                          |  |       |    |                                
|                                                                   |  |       |    |                                
|Supplemental information:                                          |  |       |    |                                
|Interest paid                                                      |  |       |    |                                





F-8





During the year ended December 31, 2013,
we issued an aggregate of 7,135,080 common shares as partial consideration for the purchase of eight newbuilding MRs currently
under construction in two separate transactions. These transactions are further described in Note 4.



Furthermore, as of December 31, 2013, 2012
and 2011, we accrued $15.0 million, $3.5 million and $9.4 million, respectively, for installment payments on our newbuilding vessels.
These payments were made in January 2014, 2013 and 2012, respectively.



These items represent significant non-cash
transactions incurred during the years ended December 31, 2013, 2012 and 2011.



The accompanying notes are an integral
part of these consolidated financial statements





F-9





Notes to the consolidated financial
statements



1.    General
information and significant accounting policies



Company



Scorpio Tankers Inc.
and its subsidiaries (together “we”, “our” or the “Company”) are engaged in the seaborne
transportation of refined petroleum products and crude oil in the international shipping markets. Scorpio Tankers Inc. was
incorporated in the Republic of the Marshall Islands on July 1, 2009. On April 6, 2010, we closed on our initial public
offering and the stock currently trades on the New York Stock Exchange under the symbol STNG.



Our owned fleet at December
31, 2013 consisted of 19 tankers (one LR2 tanker, four LR1 tankers, one Handymax tanker, 12 MR tankers, and one post-Panamax tanker),
30 time chartered-in tankers (eight LR2, five LR1, eight MR and nine Handymax tankers), and 58 newbuilding product tankers and
seven newbuilding Very Large Crude Carriers (‘VLCCs’) under construction. We also owned 30% of Dorian LPG Ltd (“Dorian”)
at December 31, 2013. Dorian is a liquefied petroleum gas shipping company that owns three Very Large Gas Carriers (‘VLGCs’)
and one pressurized gas carrier and has 19 VLGCs under construction.



Our vessels are commercially
managed by Scorpio Commercial Management S.A.M. (“SCM”), which is majority owned by the Lolli-Ghetti family of which,
Emanuele Lauro, our Chairman and Chief Executive Officer is a member. SCM’s services include securing employment, in pools,
in the spot market and on time charters.



Our vessels are technically
managed by Scorpio Ship Management S.A.M. (“SSM”), which is majority owned by the Lolli-Ghetti family. SSM facilitates
vessel support such as crew, provisions, deck and engine stores, insurance, maintenance and repairs, and other services as necessary
to operate the vessels such as drydocks and vetting/inspection under a technical management agreement.



We also have an administrative
services agreement with Scorpio Services Holding Ltd. (“SSH”), which is majority owned by the Lolli-Ghetti family.
The administrative services provided under this agreement primarily include accounting, legal compliance, financial, information
technology services, and the provision of administrative staff and office space, which are contracted to SCM. We pay our managers
fees for these services and reimburse them for direct or indirect expenses that they incur in providing these services.



Basis of accounting

The consolidated financial
statements incorporate the financial statements of Scorpio Tankers Inc. and its subsidiaries. The consolidated financial statements
have been presented in United States dollars (USD or $), which is the functional currency of Scorpio Tankers Inc. and all its subsidiaries
and have been authorized for issue on March 31, 2014. The consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board and on a historical
cost basis, except for the revaluation of certain financial instruments.



All inter-company
transactions, balances, income and expenses were eliminated on consolidation. During the year ended December 31, 2012,
our revenue recognition policy with regards to voyage charter revenue was amended to the policy indicated below. This amendment
did not have a material impact on each of vessel revenues, operating loss, and net loss as of and for the years ended December
31, 2013, December 31, 2012 and December 31, 2011.

Going concern

The financial
statements have been prepared in accordance with the going concern basis of accounting as described further in the
“Liquidity risk” section of Note 20.

Significant Accounting Policies

Revenue recognition

Vessel revenue is measured
at the fair value of the consideration received or receivable and represents amounts receivable for services provided in the normal
course of business, net of discounts, and other sales-related or value added taxes.



Vessel revenue is comprised
of time charter revenue, voyage revenue and pool revenue.



F-10





| | (1) | Time charter revenue is recognized as services are performed based
on the daily rates specified in the time charter contract.
| | --- | -----------------------------------------------------------------------------------------------------------------------------



| | (2) | Voyage charter agreements are charter hires, where a contract is made in the spot market for the use of a vessel for a specific voyage for a specified charter rate. Revenue from voyage charter agreements is recognized as voyage revenue on a pro-rata basis over the duration of the voyage on a discharge to discharge basis. In the application of this policy, we do not begin recognizing revenue until (i) the amount of revenue can be measured reliably, (ii) it is probable that the economic benefits associated with the transaction will flow to the entity, (iii) the transactions stage of completion at the balance sheet date can be measured reliably and (iv) the costs incurred and the costs to complete the transaction can be measured reliably.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | Pool revenue for each vessel is determined in accordance with the
profit sharing terms specified within each pool agreement. In particular, the pool manager aggregates the revenues and expenses
of all of the pool participants and distributes the net earnings to participants based on:
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the pool points (vessel attributes such
as cargo carrying capacity, fuel consumption, and construction characteristics are taken into consideration); and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the number of days the vessel participated
in the pool in the period.We
recognize pool revenue on a monthly basis, when the vessel has participated in a pool during the period and the amount of pool
revenue for the month can be estimated reliably. We receive estimated vessel earnings based on the known number of days the vessel
has participated in the pool, the contract terms, and the estimated monthly pool revenue. On a quarterly basis, we receive a report
from the pool which identifies the number of days the vessel participated in the pool, the total pool points for the period, the
total pool revenue for the period, and the calculated share of pool revenue for the vessel. We review the quarterly report for
consistency with each vessel’s pool agreement and vessel management records. The estimated pool revenue is reconciled quarterly,
coinciding with our external reporting periods, to the actual pool revenue earned, per the pool report. Consequently, in our financial
statements, reported revenues represent actual pooled revenues. While differences do arise in the performance of these quarterly
reconciliations, such differences are not material to total reported revenues.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Acquired time charter contracts

Acquired time charter
contracts arise from the purchase of time charter contracts from third parties and are stated at cost at the date of acquisition,
less accumulated amortization. When the time charter contract is acquired along with a vessel, the cost of the acquisition is determined
based on the relative fair values of each element acquired. Amortization expense is recognized on a straight line basis over the
useful life of the asset, which has been determined to be the remaining contract life at the date of acquisition. The useful life
and amortization method are reviewed at least annually. Changes in the expected useful life or the expected pattern of consumption
of future economic benefits embodied in the asset are accounted for by changing the amortization period or method, as appropriate,
and are treated as changes in accounting estimates. The amortization expense related to the assets is recognized as an offset to
revenue.



Voyage expenses



Voyage
expenses, which primarily include bunkers, port charges, canal tolls, cargo handling operations and brokerage commissions paid
by us under voyage charters are expensed ratably over the estimated length of each voyage, which can be allocated between reporting
periods based on the timing of the voyage. The impact of recognizing voyage expenses ratably over the length of each voyage is
not materially different on a quarterly and annual basis from a method of recognizing such costs as incurred. Consistent with our
revenue recognition for voyage charters, voyage expenses are calculated on a discharge-to-discharge basis. The procurement of these
services is managed on our behalf by our commercial manager, SCM (see Note 13).



Vessel operating costs



Vessel operating costs,
which include crewing, repairs and maintenance, insurance, stores, lube oils, communication expenses, and technical management
fees, are expensed as incurred. The procurement of these services is managed on our behalf by our technical manager, SSM (see Note
13).



Earnings / (loss) per share



Basic earnings and loss
per share is calculated by dividing the net income or loss attributable to equity holders of the common shares by the weighted
average number of common shares outstanding. Diluted earnings per share are calculated by adjusting the net income or loss attributable
to equity holders of the parent and the weighted average number of common shares used for calculating basic per share for the effects
of all potentially dilutive shares. Such dilutive common shares are excluded when the effect would be to increase earnings per
share or reduce a loss per share. In the years ended December 31, 2013, 2012 and 2011, there were dilutive items as a result of
our restricted stock plan (see Note 12). During the years ended December 31, 2012 and 2011, we were in a loss making position,
therefore there was no impact of these dilutive items on loss per share.





F-11





Charterhire expense



Charterhire expense is
the amount we pay the owner for time chartered-in vessels.  The amount is usually for a fixed period of time at rates that
are generally fixed, but may contain a variable component based on inflation, interest rates, profit sharing or current market
rates.  The vessel’s owner is responsible for crewing and other vessel operating costs.  Charterhire expense is
recognized ratably over the charterhire period.



Operating leases



Costs in respect of operating
leases are charged to the consolidated statement of income or loss on a straight line basis over the lease term.



Foreign currencies



The individual financial
statements of Scorpio Tankers Inc. and each of its subsidiaries are presented in the currency of the primary economic environment
in which we operate (its functional currency), which in all cases is US dollars. For the purpose of the consolidated financial
statements, our results and financial position are also expressed in US dollars.



In preparing the financial
statements of Scorpio Tankers Inc. and each of its subsidiaries, transactions in currencies other than the US dollar are recorded
at the rate of exchange prevailing on the dates of the transactions. At the end of each reporting period, monetary assets and
liabilities denominated in other currencies are retranslated into the functional currency at rates ruling at that date. All resultant
exchange differences have been recognized in the consolidated statement of income or loss. The amounts charged to
the consolidated statements of income or loss during the years ended December 31, 2013, 2012 and 2011 were not material.



Segment reporting



During the years ended
December 31, 2013, 2012 and 2011, we owned or chartered-in vessels spanning four different classes, Handymax, MR, Panamax/LR1,
and Aframax/LR2, all of which earn revenues in the seaborne transportation of crude oil and refined petroleum products in the international
shipping markets. Each vessel within its respective class qualifies as an operating segment under IFRS. However, each vessel also
exhibits similar long-term financial performance and similar economic characteristics to the other vessels within the respective
vessel class, thereby meeting the aggregation criteria in IFRS. We have therefore chosen to present our segment information by
vessel class using the aggregated information from the individual vessels.



Segment results are evaluated
based on reported profit or loss from each segment. The accounting policies applied to the reportable segments are the same as
those used in the preparation of our consolidated financial statements.



It is not practical to
report revenue or non-current assets on a geographical basis due to the international nature of the shipping market.



Non-current assets held for sale

Non-current assets
(and disposal groups) classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell.

Non-current assets
and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale transaction rather
than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal
group) is available for immediate sale in its present condition. Management must be committed to the sale which should be expected
to qualify for recognition as a completed sale within one year from the date of classification.

When the Company
is committed to a sale plan involving loss of control of a subsidiary, all of the assets and liabilities of that subsidiary are
classified as held for sale when the criteria described above are met, regardless of whether the Company will retain a non-controlling
interest in its former subsidiary after the sale.





F-12





Vessels under construction



As of December 31,
2013 and 2012, we had 65 and 11 vessels under construction, respectively. Vessels under construction are measured at cost and include
costs incurred that are directly attributable to bringing the asset to the location and condition necessary for it to be capable
of operating in the manner intended by management. These costs include installment payments made to the shipyards, directly attributable
financing costs, professional fees and other costs deemed directly attributable to the construction of the asset.

Vessels and drydock



Our fleet is measured at
cost, which includes directly attributable financing costs and the cost of work undertaken to enhance the capabilities of the vessels,
less accumulated depreciation and impairment losses.



Depreciation is calculated
on a straight-line basis to the estimated residual value over the anticipated useful life of the vessel from date of delivery.
Vessels under construction are not depreciated until such time as they are ready for use. The residual value is estimated as the
lightweight tonnage of each vessel multiplied by scrap value per ton. The scrap value per ton is estimated taking into consideration
the historical four year average scrap market rates at the balance sheet date with changes accounted for in the period of change
and in future periods.



The vessels are required
to undergo planned drydocks for replacement of certain components, major repairs and maintenance of other components, which cannot
be carried out while the vessels are operating, approximately every 30 months or 60 months depending on the nature of work and
external requirements. These drydock costs are capitalized and depreciated on a straight-line basis over the estimated period until
the next drydock. We only include in deferred drydocking those direct costs that are incurred as part of the drydocking to meet
regulatory requirements, or are expenditures that add economic life to the vessel, increase the vessel’s earnings capacity
or improve the vessel’s efficiency. Direct costs include shipyard costs as well as the costs of placing the vessel in the
shipyard. Expenditures for normal maintenance and repairs, whether incurred as part of the drydocking or not, are expensed as incurred.



For an acquired or newly
built vessel, a notional drydock is allocated from the vessel’s cost. The notional drydock cost is estimated by us, based
on the expected costs related to the next drydock, which is based on experience and past history of similar vessels, and carried
separately from the cost of the vessel. Subsequent drydocks are recorded at actual cost incurred. The drydock asset is depreciated
on a straight-line basis to the next estimated drydock. The estimated amortization period for a drydock is based on the estimated
period between drydocks. When the drydock expenditure is incurred prior to the expiry of the period, the remaining balance is expensed.



Impairment of vessels, drydock and vessels
under construction



At each balance sheet date,
we review the carrying amount of our vessels and drydock and vessels under construction to determine whether there is any indication
that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the vessels and drydock
and vessels under construction is estimated in order to determine the extent of the impairment loss (if any). We treat each vessel
and the related drydock as a cash generating unit.



Recoverable amount is the
higher of the fair value less cost to sell and value in use. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset for which the estimates of future cash flows have not been adjusted.



If the recoverable amount
of the cash generating unit is estimated to be less than its carrying amount, the carrying amount of the cash-generating unit is
reduced to its recoverable amount. An impairment loss is recognized as an expense immediately.



Where an impairment loss
subsequently reverses, the carrying amount of the cash generating unit is increased to the revised estimate of its recoverable
amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment
loss been recognized for the cash generating unit in the prior years. A reversal of impairment is recognized as income immediately.



Inventories



Inventories consist of
lubricating oils and other items including stock provisions, and are stated at the lower of cost and net realizable value. Cost
is determined using the first in first out method. Stores and spares are charged to vessel operating costs when purchased.





F-13





Borrowing costs



Borrowing costs directly
attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial
period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets
are substantially ready for their intended use or sale.



To the extent that variable
rate borrowings are used to finance a qualifying asset and are hedged in an effective cash flow hedge of interest rate risk, the
effective portion of the derivative is recognized in other comprehensive income and released to profit or loss when the qualifying
asset impacts profit or loss. To the extent that fixed rate borrowings are used to finance a qualifying asset and are hedged in
an effective fair value hedge of interest rate risk, the capitalized borrowing costs reflect the hedged interest rate.



Investment income earned
on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing
costs eligible for capitalization.



All other borrowing costs
are recognized in the consolidated statement of income or loss in the period in which they are incurred.



Equity method investments

We use the equity method
to account for investments in associates over which we otherwise have significant influence (generally defined as investments in
companies that correspond to holdings of between 20% and 50% of voting shares). Under the equity method, the investment is initially
recognized at cost, and this amount will be adjusted in each subsequent period for the Company’s share of profit or loss
(adjusted for any fair value adjustments made upon initial recognition) and reduced by any distributions received. The Group’s
investment in associate includes goodwill identified on acquisition, if applicable.



We consider investments
in associates for impairment testing whenever there is a quoted share price and when this has a fair value less than the carrying
value per share for the investment. For unquoted investments in associated companies recent financial information is taken into
account to assess whether impairment testing is necessary. In a situation in which, based on the quoted share price, the fair value
less cost to sell is considered to be below the carrying amount, the value in use is determined in order to test the investment
for impairment. If the value in use is also below the carrying amount an impairment loss is recognized for the difference between
carrying amount and the higher of “value in use” or “fair value less costs to sell”.



In November 2013, we
acquired 30% of the outstanding shares of Dorian LPG Ltd. in exchange for the contribution of our VLGC business, which included
11 VLGC newbuilding contracts together with a cash payment of $1.9 million. Additionally, in November 2013, we purchased 24,121,621
new shares of Dorian’s common stock as part of a private placement of shares for total consideration of $75.0 million. As
of December 31, 2013, we owned 64,073,744 shares, or approximately 30% of Dorian’s outstanding shares at that date. Given
our ownership percentage, we have determined that we have significant influence over Dorian’s financial and operating policy
decisions and are therefore accounting for our investment under the equity method. See Note 7 for a further description of this
investment.



Financial instruments



Financial assets and
financial liabilities are recognized in our balance sheet when we become a party to the contractual provisions of the instrument.



Financial assets



All financial assets are
recognized and derecognized on a trade date where the purchase or sale of a financial asset is under a contract whose terms require
delivery within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction costs,
except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value.



Financial assets are classified
into the following specified categories: financial assets ‘at fair value through profit or loss’ (FVTPL), and ‘loans and receivables’.
The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.



Income is recognized on
an effective interest basis for debt instruments other than those financial assets classified as at FVTPL.



Financial assets at FVTPL



Financial assets are classified
as at FVTPL where the financial asset is held for trading.





F-14





A financial asset is classified
as held for trading if:





| | · | it has been acquired principally for the
purpose of selling in the near future; or
| | - | ----------------------------------------------------------------------------------

| | · | it is a part of an identified portfolio
of financial instruments that we manage together and has a recent actual pattern of short-term profit-taking; or
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | it is a derivative that is not designated
and effective as a hedging instrument.
| | - | --------------------------------------------------------------------------------



Financial assets at FVTPL
are stated at fair value, with any resultant gain or loss recognized in profit or loss. The net gain or loss recognized in profit
or loss incorporates any dividend or interest earned on the financial asset. Fair value is determined in the manner described in
Note 20.



Loans and receivables



Amounts due from the pool
and other receivables that have fixed or determinable payments and are not quoted in an active market are classified as accounts
receivable. Accounts receivable are measured at amortized cost using the effective interest method, less any impairment. Interest
income is recognized by applying the effective interest rate, except for short-term receivables when the recognition of interest
would be immaterial.



Impairment of financial assets



Financial assets, other
than those at FVTPL, are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where
there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial
asset, the estimated future cash flows of the investment have been impacted.



Financial assets objective evidence of impairment
could include:





| | · | significant financial difficulty of the
issuer or counterparty; or
| | - | ------------------------------------------------------------------

| | · | default or delinquency in interest or principal
payments; or
| | - | ------------------------------------------------------------

| | · | it becomes probable that the borrower will
enter bankruptcy or financial re-organization.
| | - | -----------------------------------------------------------------------------------------

Cash and cash equivalents



Cash and cash equivalents
comprise cash on hand and demand deposits, and other short-term highly-liquid investments with original maturities of three months
or less, and that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
The carrying value of cash and cash equivalents approximates fair value due to the short-term nature of these instruments.



Financial liabilities



Financial liabilities are
classified as either financial liabilities ‘at FVTPL’ or ‘other financial liabilities’.



Financial liabilities at FVTPL



Financial liabilities are
classified as at FVTPL where the financial liability is held for trading, using the criteria set out above for financial assets.



Financial liabilities at
FVTPL are stated at fair value, with any resultant gain or loss recognized in profit or loss. The net gain or loss recognized in
profit or loss incorporates any interest paid on the financial liability. Fair value is determined in the manner described in Note
20.



Other financial liabilities



Other financial
liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Other financial liabilities
are subsequently measured at amortized cost using the effective interest method.



Effective interest method



The effective interest
method is a method of calculating the amortized cost of a financial asset and a financial liability. It allocates interest income
and interest expense over the relevant period. The effective interest rate is the rate that discounts estimated future cash flows
(including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and
other premiums or discounts) over the expected life of the financial asset and financial liability, or, where appropriate, a shorter
period.





F-15





Derivative financial instruments



Derivatives are initially
recognized at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value
at each balance sheet date. A derivative with a positive fair value is recognized as a financial asset whereas a derivative with
a negative fair value is recognized as a financial liability. The resulting gain or loss is recognized in profit or loss immediately
unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit
or loss depends on the nature of the hedging relationship. We designate certain derivatives as hedges of highly probable forecast
transactions (cash flow hedges) as described further below.



A derivative is presented
as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12 months, and it is
not expected to be realized or settled within 12 months.



Our derivative financial
instruments for the years ended December 31, 2013, 2012 and 2011 consisted of interest rate swaps and profit or loss sharing arrangements
on time-chartered in vessels with third parties. See Notes 10 to the consolidated financial statements for further description.



Hedge accounting for cash flow hedges



Our policy is to designate
certain hedging instruments, which can include derivatives, embedded derivatives and non-derivatives in respect of foreign currency
risk, as either fair value hedges, cash flow hedges, or hedges of net investments in foreign operations. At the inception of the
hedge relationship, we document the relationship between the hedging instrument and the hedged item, along with its risk management
objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing
basis, we document whether the hedging instrument is highly effective in offsetting changes in fair values or cash flows of the
hedged item.



Derivative financial instruments
are initially recognized in the balance sheet at fair value at the date the derivative contract is entered into and are subsequently
measured at their fair value as other assets or other liabilities, respectively. Changes in fair value of derivative financial
instruments, which are designated as cash flow hedges and deemed to be effective, are recognized directly in other comprehensive
income and classified as ‘hedging reserves’. Changes in fair value of a portion of a hedge deemed to be ineffective
are recognized in net income or loss. Hedge effectiveness is measured quarterly.



Amounts previously recognized
in other comprehensive income and accumulated in the hedging reserve are reclassified to profit or loss in the periods when the
hedged item is recognized in profit or loss, in the same line of the statement of income or loss as the recognized hedged
item. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset or a non-financial
liability, the gains and losses previously accumulated in equity are transferred from equity and included in the initial measurement
of the cost of the non-financial asset or non-financial liability.



Hedge accounting is discontinued
when we revoke the hedging relationship, the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies
for hedge accounting. Any gain or loss recognized in other comprehensive income at that time is accumulated in the hedge reserve
and is recognized when the forecast transaction is ultimately recognized in profit or loss. When a forecast transaction is no longer
expected to occur, the gain or loss accumulated in the hedge reserve is recognized immediately in profit or loss.



For the years ended December
31, 2013, 2012, and 2011 we were party to derivative financial instruments to manage our exposure to interest rate fluctuations.
In August 2011, we entered into six interest rate swap agreements to manage interest costs and the risk associated with changing
interest rates on our 2011 Credit Facility and 2010 Revolving Credit Facility. The swaps relating to the 2011 Credit Facility were
designated and accounted for as cash flow hedges as of December 31, 2013. The swaps relating to the 2010 Credit Facility were de-designated
at December 31, 2012.



In conjunction with the
sales ofSTI Diamond andSTI Coral in August and September 2012, respectively, we reduced the notional amount on
the interest rate swaps relating to the 2011 Credit Facility to $15.0 million from $24.0 million in aggregate.



In December 2012, we voluntarily
repaid $50.0 million into our 2010 Revolving Credit Facility. After the payment, the debt outstanding under the 2010 Credit Facility
was less than the total notional amount of the three interest rate swaps related to the facility of $51.0 million. As such, the
swaps relating to the 2010 Revolving Credit Facility no longer met the criteria for hedge accounting, and we therefore de-designated
the hedge relationship prospectively and reclassified all amounts accumulated in other comprehensive loss ($1.0 million) for the
2010 Revolving Credit Facility to the statement of income or loss as of December 31, 2012.





F-16





Equity instruments



An equity instrument is
any contract that evidences a residual interest in our assets after deducting all of its liabilities. Equity instruments issued
by us are recorded at the proceeds received, net of direct issue costs.



We had 198,791,502 registered
shares authorized and issued with a par value of $0.01 per share at December 31, 2013. These shares provide the holders with the
same rights to dividends and voting rights.



Provisions



Provisions are recognized
when we have a present obligation as a result of a past event, and it is probable that we will be required to settle that obligation.
Provisions are measured at our best estimate of the expenditure required to settle the obligation at the balance sheet date, and
are discounted to present value where the effect is material.



Dividends



A provision for dividends
payable is recognized when the dividend has been declared in accordance with the terms of the shareholder agreement.



Dividend per share presented
in these consolidated financial statements is calculated by dividing the aggregate dividends declared by all of our subsidiaries
by the number of our shares assuming these shares have been outstanding throughout the periods presented.



Restricted stock



The restricted stock awards
granted to our employees and directors as described in Note 12 contain only service conditions and are classified as equity settled.
Accordingly, the fair value of our restricted stock awards was calculated by multiplying the average of the high and low share
price on the grant date and the number of restricted stock shares granted that are expected to vest.  In accordance with IFRS
2 “Share Based Payment,” the share price at the grant date serves as a proxy for the fair value of services to be provided
by the employees and directors under the plan.



Compensation expense related
to the awards is recognized ratably over the vesting period, based on our estimate of the number of awards that will eventually
vest. The vesting period is the period during which an employee or director is required to provide service in exchange for an award
and is updated at each balance sheet date to reflect any revisions in estimates of the number of awards expected to vest as a result
of the effect of service vesting conditions. The impact of the revision of the original estimate, if any, is recognized in the
profit or loss statement such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to equity
reserves.



Critical accounting judgements and key sources
of estimation uncertainty



In the application of the
accounting policies, we are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities
that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and
other factors that are considered to be relevant. Actual results may differ from these estimates.



The estimates and underlying
assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognized in the period in which the estimate
is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects
both current and future periods.



The significant judgements
and estimates are as follows:



Revenue recognition



We currently generate all
revenue from time charters, spot voyages, or pools. Revenue recognition for time charters and pools is generally not as complex
or as subjective as voyage charters (spot voyages). Time charters are for a specific period of time at a specific rate per day.
For long-term time charters, revenue is recognized on a straight-line basis over the term of the charter. Pool revenues are determined
by the pool managers from the total revenues and expenses of the pool and allocated to pool participants using a mechanism set
out in the pool agreement.





F-17





We generated revenue from
spot voyages during the years ended December 31, 2013, 2012 and 2011. Within the shipping industry, there are two methods used
to account for spot voyage revenue: (1) ratably over the estimated length of each voyage or (2) completed voyage. The recognition
of voyage revenues ratably over the estimated length of each voyage is the most prevalent method of accounting for voyage revenues
and the method used by us. Under each method, voyages may be calculated on either a load-to-load or discharge-to-discharge basis.
In applying our revenue recognition method, we believe that the discharge-to-discharge basis of calculating voyages more accurately
estimates voyage results than the load-to-load basis. In the application of this policy, we do not begin recognizing revenue until
(i) the amount of revenue can be measured reliably, (ii) it is probable that the economic benefits associated with the transaction
will flow to the entity, (iii) the transactions stage of completion at the balance sheet date can be measured reliably and (iv)
the costs incurred and the costs to complete the transaction can be measured reliably.



Vessel impairment



We evaluate the carrying
amounts of our vessels and vessels under construction to determine whether there is any indication that those vessels have suffered
an impairment loss. If any such indication exists, the recoverable amount of vessels is estimated in order to determine the extent
of the impairment loss (if any).



Recoverable
amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value
of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. The projection
of cash flows related to vessels is complex and requires us to make various estimates including future freight rates, earnings
from the vessels and discount rates. All of these items have been historically volatile. As part of our process of assessing the
fair value less cost to sell of the vessel, we obtain vessel valuations for our operating vessels from leading, independent and
internationally recognized ship brokers on an annual basis or when there is an indication that an asset or assets may be impaired.
We generally do not obtain vessel valuations for vessels under construction. If an indication of impairment is identified, the
need for recognizing an impairment loss is assessed by comparing the carrying amount of the vessels to the higher of the fair value
less cost to sell and the value in use. Likewise, if there is an indication that an impairment loss recognized in prior periods
no longer exists or may have decreased, the need for recognizing an impairment reversal is assessed by comparing the carrying amount
of the vessels to the latest estimate of recoverable amount.



For the period ended December
31, 2013, we reviewed the carrying amount of our vessels to determine whether there was an indication that these assets had suffered
an impairment. First, we compared the carrying amount of our vessels to their fair values less costs to sell (determined by taking
into consideration two independent broker valuations). If the carrying amount of our vessels was greater than the fair values
less costs to sell, we prepared a value in use calculation where we estimated the vessel’s future cash flows based on a
combination of the latest, published, forecast time charter rates for the next three years, a steady growth rate in freight rates
in each period thereafter which is based on management’s long-term view of the market, and our best estimate of vessel operating
expenses and drydock costs. These cash flows were then discounted to their present value, using an estimated weighted average
cost of capital of 8.45%.



At December 31, 2013, we had 19 vessels in our
fleet and 65 vessels under construction:

| | · | Four
                                         vessels were held for sale and written down to their fair value less costs to sell (see
                                         Note 4).
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Eight vessels had fair values less costs to sell in excess of their
carrying amount.
| | - | ------------------------------------------------------------------------------------

| | · | Seven
                                         vessels had fair values less costs to sell less than their carrying amount. We
                                         prepared a value in use calculation for each these vessels which resulted in no impairment
                                         being recognized.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Two vessels under construction (that were delivered in January 2014)
had fair values less costs to sell exceeding their carrying amount.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------

| | · | We
                                         did not obtain independent broker valuations for the remaining 63 vessels under construction.
                                         To assess their carrying values, we prepared value in use calculations which resulted
                                         in no impairment indicators.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Vessel lives and residual value



The carrying value
of each of our vessels represents its original cost at the time it was delivered or purchased less depreciation and impairment.
We depreciate our vessels to their residual value on a straight-line basis over their estimated useful lives of 25 years. The estimated
useful life of 25 years is management’s best estimate and is also consistent with industry practice for similar vessels.
The residual value is estimated as the lightweight tonnage of each vessel multiplied by a forecast scrap value per ton. The scrap
value per ton is estimated taking into consideration the historical four year scrap market rate average at the balance sheet date.



An increase in the estimated
useful life of a vessel or in its scrap value would have the effect of decreasing the annual depreciation charge and extending
it into later periods. A decrease in the useful life of a vessel or scrap value would have the effect of increasing the annual
depreciation charge.





F-18





When regulations place
significant limitations over the ability of a vessel to trade on a worldwide basis, the vessel’s useful life is adjusted to end
at the date such regulations become effective. The estimated salvage value of the vessels may not represent the fair market value
at any one time since market prices of scrap values tend to fluctuate.



Deferred drydock cost



We recognize drydock
costs as a separate component of each vessel’s carrying amount and amortize the drydock cost on a straight-line basis over
the estimated period until the next drydock. We use judgment when estimating the period between drydocks performed, which can result
in adjustments to the estimated amortization of the drydock expense. If the vessel is disposed of before the next drydock, the
remaining balance of the deferred drydock is written-off and forms part of the gain or loss recognized upon disposal of vessels
in the period when contracted. We expect that our vessels will be required to be drydocked approximately every 30 to 60 months
for major repairs and maintenance that cannot be performed while the vessels are operating. Costs capitalized as part of the drydock
include actual costs incurred at the drydock yard and parts and supplies used in making such repairs.



Adoption of new and amended IFRS and
IFRIC interpretations from January 1, 2013



Standards and interpretations adopted during the period



| | · | IFRS 10 – Consolidated Financial Statements
| | - | -------------------------------------------

| | · | IFRS 11 – Joint arrangements
| | - | ----------------------------

| | · | IFRS 12 – Disclosure of interests
in other entities
| | - | ---------------------------------------------------

| | · | Amendment to IAS 27 – Separate financial
statements
| | - | ---------------------------------------------------

| | · | Amendment to IAS 28 – Associates and
joint ventures
| | - | ---------------------------------------------------

| | · | Amendments to IFRS 10, 11, 12 – Transition
guidance
| | - | ---------------------------------------------------

| | · | IFRS 13 – Fair value measurement
| | - | --------------------------------

| | · | Amendment to IAS 1 – Presentation
of financial statements
| | - | ---------------------------------------------------------

| | · | Amendment to IAS 19 – Employee benefits
| | - | ---------------------------------------

| | · | IFRS 7 – Financial instruments –
Disclosures on offsetting
| | - | ----------------------------------------------------------

| | · | Amendment to IAS 32 – Financial instruments:
presentation
| | - | ---------------------------------------------------------

| | · | IFRIC 20 – Stripping costs in the
production phase of a surface mine
| | - | --------------------------------------------------------------------

| | · | Annual improvement 2011
| | - | -----------------------



The adoption of these standards did not have
a material impact on these consolidated financial statements.



Standards and Interpretations in issue not
yet adopted



At the date of authorization
of these consolidated financial statements, the following Standards and Interpretations which have not been applied in these consolidated
financial statements were in issue but not yet effective:



| | · | IFRS 9 – Financial Instruments
| | - | ------------------------------

| | · | IFRIC
                                         21 - Levies
| | - | ----------------------------------------------------------

| | · | Amendment to IAS 32, ‘Financial instruments:
Presentation’ – Offsetting financial assets and liabilities
| | - | --------------------------------------------------------------------------------------------------------

| | · | Amendments to IAS 36 – Impairment of Assets
| | - | -------------------------------------------

| | · | Amendments to IAS 39 – Financial Instruments
| | - | --------------------------------------------



We do not expect that the adoption of these standards in
future periods will have a material impact on our financial statements.



F-19





| | 2. | Cash and cash equivalents
| | -- | -------------------------

|                             |  | At December 31,
|---------------------------- |  | ---------------
|In thousands of U.S. dollars |  | 2013           
|Cash at banks                |  | $              
|Deposits (1)                 |  |                
|Cash on vessels              |  |                
|                             |  | $              

| | (1) | Represents bank deposits with original maturities of three months or less.
| | --- | --------------------------------------------------------------------------

| | 3. | Accounts receivable
| | -- | -------------------



|                                     |  | At December 31,
|------------------------------------ |  | ---------------
|In thousands of US dollars           |  | 2013           
|Scorpio MR Pool Limited              |  | $              
|Scorpio LR2 Pool Limited             |  |                
|Scorpio Panamax Tanker Pool Limited  |  |                
|Scorpio Handymax Tanker Pool Limited |  |                
|Freight receivables                  |  |                
|Insurance receivables                |  |                
|Other receivables                    |  |                
|                                     |  | $              



Scorpio MR Pool Limited,
Scorpio LR2 Pool Limited, Scorpio Panamax Tanker Pool Limited and Scorpio Handymax Tanker Pool Limited are related parties, as
described in Note 13. The increase in accounts receivable due from all of the pools was driven by the overall increase in our operating
fleet to 38.8 vessels from 20.0 vessels for the years ended December 31, 2013 and 2012, respectively.



Freight receivables primarily
represent amounts collectible from customers for our vessels operating in the spot market.



Insurance receivables
primarily represent amounts collectible on our insurance policies in relation to vessel repairs.



We consider that the carrying
amount of accounts receivable approximates their fair value due to the short maturity thereof. Accounts receivable are non-interest
bearing. At December 31, 2013 and December 31, 2012, no material receivable balances were either past due or impaired.

| | 4. | Vessels
| | -- | -------



Operating vessels and drydock





|In thousands of U.S. dollars            |  | Vessels |          | Drydock |  | Total
|--------------------------------------- |  | ------- | -------- | ------- |  | -----
|Cost                                    |  |         |          |         |  |      
|As of January 1, 2013                   |  | $       | 500,696  |         |  | $    
|Additions(1)                            |  |         | 256,858  |         |  |      
|Transfer to vessels held for sale (2)   |  |         | (190,971 | )       |  |      
|As of December 31, 2013                 |  |         | 566,583  |         |  |      
|                                        |  |         |          |         |  |      
|Accumulated depreciation and impairment |  |         |          |         |  |      
|As of January 1, 2013                   |  |         | (112,575 | )       |  |      
|Charge for the period                   |  |         | (20,401  | )       |  |      
|Write-offs of vessels held for sale(3)  |  |         | (20,367  | )       |  |      
|Transfer to vessels held for sale (2)   |  |         | 108,322  |         |  |      
|As of December 31, 2013                 |  |         | (45,021  | )       |  |      
|Net book value                          |  |         |          |         |  |      
|As of December 31, 2013                 |  | $       | 521,562  |         |  | $    
|                                        |  |         |          |         |  |      
|Cost                                    |  |         |          |         |  |      
|As of January 1, 2012                   |  | $       | 450,658  |         |  | $    
|Additions(4)                            |  |         | 192,413  |         |  |      
|Disposals (5)                           |  |         | (142,375 | )       |  |      
|Write-offs (6)                          |  |         | —        |         |  |      
|As of December 31, 2012                 |  |         | 500,696  |         |  |      
|                                        |  |         |          |         |  |      
|Accumulated depreciation and impairment |  |         |          |         |  |      
|As of January 1, 2012                   |  |         | (132,019 | )       |  |      
|Charge for the period                   |  |         | (12,595  | )       |  |      
|Disposals (5)                           |  |         | 32,039   |         |  |      
|Write-offs (6)                          |  |         | —        |         |  |      
|As of December 31, 2012                 |  |         | (112,575 | )       |  |      
|Net book value                          |  |         |          |         |  |      
|As of December 31, 2012                 |  | $       | 388,121  |         |  | $    





F-20







| | (1) | Additions
                                         in 2013 primarily relate to the deliveries of seven newbuilding vessels and corresponding
                                         calculations of notional drydock on these vessels.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Represents
                                         the reclassification of the net book value of Noemi, Senatore, Venice and
                                         STI Spirit from “Vessels” to “Vessels Held for Sale” at
                                         December 31, 2013. See Note 22 for further description of the sales of Noemi, Senatoreand STI Spirit in 2014.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Represents the write-off to remeasure Noemi, Senatore, Veniceand
STI Spiritat the lower of their carrying amount and fair value less costs to sell due to their designation as ‘held
for sale’ at December 31, 2013.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | Additions in 2012 relate to (i) the delivery of the first five vessels
under our Newbuilding Program and corresponding calculation of notional drydock on these vessels and (ii) $2.9 million of drydock
costs for STI Spirit and STI Heritage.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (5) | Represents
                                         the write-off of the net book value of STI Conqueror, STI Gladiator, STI Matador,
                                         STI DiamondandSTI Coral which were sold in 2012.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (6) | Represents the write-off of the net book value of drydock costs for
STI Spiritof $0.2 million, which was drydocked in November 2012.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------



Newbuilding vessel deliveries



We took delivery of
the following vessels during the year ended December 31, 2013 resulting in the reclassification of $262.1 million from
Vessels under construction to Vessels:



|Vessel name     | Vessel type | Date delivered
|--------------- | ----------- | --------------
|STI Sapphire    | MR          | January 2013  
|STI Emerald     | MR          | March 2013    
|STI Beryl       | MR          | April 2013    
|STI Le Rocher   | MR          | July 2013     
|STI Larvotto    | MR          | July 2013     
|STI Fontvieille | MR          | August 2013   
|STI Ville       | MR          | September 2013



Vessels Held for Sale



In December
2013, we designated Noemi, Senatore, Venice and STI Spirit as held for sale. As part of this designation, we
recorded a $21.2 million write-down to remeasure these vessels at the lower of their carrying amount and fair value less
costs to sell. Their revised carrying amount of $82.6 million was then reclassified from ‘Vessels’ to
‘Vessels Held for Sale’ on the consolidated balance sheet as of December 31, 2013. Noemi, Senatore,and Venice
were held as collateral under the 2010 Revolving Credit Facility as of December 31, 2013. No amounts were due under
this facility as of that date. STI Spirit was held as collateral under the STI Spirit Credit facility as of December
31, 2013. All amounts due under this facility have been classified as current as of that date.





F-21





Vessels under construction



In January 2013, we reached
an agreement with Hyundai Mipo Dockyard Co. Ltd of South Korea (“HMD”) for the construction of two MR product tankers
for $32.5 million each. These vessels are scheduled to be delivered in May and June 2014.



In February 2013, we
reached an agreement with HMD for the construction of four MR product tankers for $33.0 million each and six Handymax ice class-1A
product tankers for $31.3 million each. Two of the MR’s are scheduled to be delivered in the second quarter of 2014 with
the third and fourth MR’s scheduled to be delivered in the third and fourth quarters of 2014, respectively. The six Handymax
vessels are scheduled to be delivered in the second and third quarters of 2014.



In February 2013,
we reached an agreement with SPP Shipbuilding Co. Ltd of South Korea, (“SPP”) for the construction of four MR product
tankers for $32.5 million each. These vessels are scheduled to be delivered in the third and fourth quarters of 2014.



In March 2013,
we reached an agreement with Hyundai Samho Heavy Industries Co. Ltd., (“HSHI”) for the construction of six LR2 product
tankers for $50.5 million each. These vessels are scheduled to be delivered in the third and fourth quarters of 2014.



In March 2013, we
reached an agreement with Daewoo Shipbuilding & Marine Engineering Co., Ltd (“DSME”) for the construction of two
LR2 product tankers for $49.5 million each. These vessels are expected to be delivered in the fourth quarter of 2014.



In April 2013, we reached
an agreement with HMD for the construction of two Handymax ice class-1A vessels for $31.5 million each. These vessels are scheduled
to be delivered in the third quarter of 2014.



In April 2013, we reached
an agreement with an unaffiliated third party for the purchase of four MR product tankers currently under construction at HMD for
$36.5 million each. The transaction was completed by novating the existing shipbuilding agreements. These vessels were delivered
in the third quarter of 2013.



In May 2013, we reached
an agreement with HMD to construct four Handymax ice class-1A product tankers for $31.6 million each. These vessels are scheduled
to be delivered in the third quarter of 2014.



In May 2013, we reached
an agreement with SPP to construct four MR product tankers for $33.0 million each. These vessels are scheduled to be delivered
in the first and second quarters of 2015.



In May 2013, we reached
agreements to construct four LR2 product tankers for $50.5 million each, consisting of two at HSHI and two at DSME. These vessels
are scheduled to be delivered in the first and second quarters of 2015.



In July and August
2013 we reached agreements to construct nine Very Large Gas Carriers (“VLGCs”) for $75.6 million each with HSHI and DSME
with deliveries scheduled in 2015.



In August 2013, we
reached an agreement with HMD to construct four product tankers consisting of two MR product tankers for $35.0 million each and
two Handymax ice class-1A product tankers for $32.0 million each. The MR tankers are scheduled to be delivered in the second quarter
of 2015 and the Handymax ice class-1A tankers are scheduled to be delivered in the fourth quarter of 2014.



In
October 2013, we reached an agreement with HSHI to construct two VLGCs for $75.0 million each with first quarter of 2016 deliveries.





In November 2013, we
contributed our VLGC business, which included 11 VLGC newbuilding contracts, options to purchase two additional VLGCs and a cash
payment of $1.9 million (together our “initial investment”) to Dorian LPG Ltd. (“Dorian”) in exchange for
newly issued shares representing 30% of Dorian’s outstanding shares immediately following the transaction. See Note 7 for a description
of this transaction.



In November 2013, we
issued 3,611,809 shares in exchange for the transfer of ownership to the Company of four MR product tankers currently
under construction in South Korea with certain unaffiliated third parties for an aggregate purchase price of $150.2 million. 28%
of the consideration for the vessels consisted of the newly issued common shares of the Company having a valuation based on the
fair market value of the shares at the time of issuance. The new common shares were issued to Ceres, Valero and a group of
institutional investors advised by J.P. Morgan Asset Management and the remainder of the purchase price is being paid to the shipyard
from cash-on-hand and bank debt. The shares granted have registration rights and we issued a prospectus to facilitate selling them.
One of these newbuildings was delivered in March 2014 and the remaining three are scheduled to be delivered in the second quarter
of 2014.



The transaction also includes
a time charter-out agreement for each of the four vessels for a fixed daily revenue amount at current market levels plus a profit
sharing scheme whereby earnings in excess of the base time charter rate will be split between the Company and the charterer, Valero. The
first vessel is currently time chartered-out for a 24 month period, and the remaining three will each be time chartered-out
for 12 month periods. These time charter contracts have been valued at $1.1 million which has been recorded within other current
and other non-current assets. They will begin amortization, on a straight line basis over the duration of the contract, upon delivery
of each vessel.





F-22





In December 2013,
we acquired contracts for the construction of four MR product tankers from unaffiliated third parties for a total purchase
price of approximately $153.9 million. We paid $4.4 million in cash and issued 3,523,271 common shares, representing
approximately 26% of the total purchase price, to affiliates of York Capital and the remaining amount of the total purchase
price will be paid to the shipyard from cash on hand and bank debt when installment payments relating to these newbuildings
become due. One vessel is expected to be delivered in the third quarter of 2014, one in the first quarter and two in the
second quarter of 2015.



In December 2013, we
reached agreements with DSME and HSHI for the construction of seven VLCCs for an aggregate purchase price of $662.2 million. One
vessel is scheduled for delivery in the third quarter of 2015, two in the fourth quarter of 2015, two in the first quarter of 2016,
one in the second quarter of 2016 and one in the third quarter of 2016. These contracts were sold for cash in March 2014 as further
described in Note 22.



As of December 31,
2013, we had a total of 58 newbuilding product tanker orders with HMD, SPP, HSHI and DSME which include 32 MRs, 14 Handymax ice
class-1A vessels and 12 LR2s for an aggregate purchase price of $2,154.1 million, of which $453.3 million was paid as of that date.
Additionally, we had seven newbuilding VLCC orders with HSHI and DSME for an aggregate purchase price of $662.2 million, of which
$89.9 million was paid as of December 31, 2013.



A roll-forward of activity within Vessels
under construction is as follows:



|In thousands of US dollars                             |  |  
|------------------------------------------------------ |  | -
|Balance as of January 1, 2012                          |  | $
|Installment payments and other capitalized expenses    |  |  
|Capitalized interest                                   |  |  
|Transferred to operating vessels and drydock           |  |  
|Balance as of December 31, 2012                        |  | $
|                                                       |  |  
|Installment payments and other capitalized expenses    |  |  
|Sale of VLGC business (1)                              |  |  
|Value of common shares issued for vessel purchases (2) |  |  
|Capitalized interest                                   |  |  
|Transferred to operating vessels and drydock           |  |  
|Balance as of December 31, 2013                        |  | $



| | (1) | Represents installment payments on the 11 VLGC newbuilding contracts
which were part of the transaction to sell our VLGC business to Dorian in exchange for newly issued shares representing 30% of
the Dorian’s outstanding shares immediately following the transaction. See Note 7 for a description of this transaction.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Represents the consideration of newly issued common shares of (i)
approximately 28% of the purchase price for four MRs currently under construction with first and second quarter 2014 deliveries;
and (ii) approximately 26% of the purchase price for four MRs currently under construction with scheduled deliveries in the third
quarter 2014, one in the first quarter and two in the second quarter of 2015. These shares were issued in the fourth quarter of
2013.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The following table is
a timeline of future expected payments and dates for our vessels under construction as of December 31, 2013*:



|Q1 2014 |  |   | 190.9   |  |  |  | million** | 
|------- |  | - | ------- |  |  |  | --------- | 
|Q2 2014 |  |   | 433.8   |  |  |  | million   | 
|Q3 2014 |  |   | 431.4   |  |  |  | million   | 
|Q4 2014 |  |   | 310.9   |  |  |  | million   | 
|Q1 2015 |  |   | 205.5   |  |  |  | million   | 
|Q2 2015 |  |   | 205.9   |  |  |  | million   | 
|Q3 2015 |  |   | 80.3    |  |  |  | million   | 
|Q4 2015 |  |   | 103.5   |  |  |  | million   | 
|Q1 2016 |  |   | 105.1   |  |  |  | million   | 
|Q2 2016 |  |   | 56.7    |  |  |  | million   | 
|Q3 2016 |  |   | 56.7    |  |  |  | million   | 
|Total   |  | $ | 2,180.7 |  |  |  | million   | 



*These are estimates only and are subject to
change as construction progresses.

**As of the date of this report, all first
quarter 2014 installment payments have been paid.





F-23





Capitalized interest



In accordance with IAS
23 “Borrowing Costs”, applicable interest costs are capitalized during the period that vessels are under construction.
For the years ended December 31, 2013 and 2012, we capitalized interest expense for the vessels under construction of $6.4 million
and $3.2 million, respectively. The capitalization rate used to determine the amount of borrowing costs eligible for capitalization
was 3.1%. We cease capitalizing interest when the vessels reach the location and condition necessary to operate in the manner intended
by management.



Collateral agreements



Noemi, Senatore, Venice,
STI Harmony, STI Heritage, and STI Highlander with an aggregated net book value of $141.1 million as of December 31,
2013 were provided as collateral under a loan agreement dated June 2, 2010 and amended on July 13, 2011 (the “2010 Revolving
Credit Facility,” See Note 9).



STI Onyx, STI Sapphire, STI Emeraldand
STI Berylwith an aggregated net book of $147.3 million as of December 31, 2013 were provided as collateral under a loan
agreement dated May 3, 2011 and amended on July 20, 2012 (the “2011 Credit Facility,” See Note 9).



STI Spirit,
with a net book value of $29.5 million as of December 31, 2013, was provided as collateral under a loan agreement dated March 9,
2011 (the “STI Spirit Credit Facility,” See Note 9).



STI Amber, STI
Topaz, STI Rubyand STI Garnet, with an aggregated net book value of $148.7 million as of December 31, 2013 were
provided as collateral under a loan agreement dated December 21, 2011 (the “Newbuilding Credit Facility,” See
Note 11).



The vessels which
collateralize the 2011 Credit Facility and 2010 Revolving Credit Facility also serve as collateral for the designated
interest rate swap agreements (as described in Note 10), subordinated to the outstanding borrowings under each credit
facility.

| | 5. | Carrying values of vessels and vessels under construction
| | -- | ---------------------------------------------------------



At each balance
sheet date, we review the carrying amounts of vessels and related drydock costs to determine if there is any indication that those
vessels and related drydock costs have suffered an impairment loss. If such indication exists, the recoverable amount of the vessels
and related drydock costs is estimated in order to determine the extent of the impairment loss (if any). Recoverable amount is
the higher of fair value less costs to sell and value in use. As part of this evaluation, we consider certain indicators of potential
impairment, such as market conditions including forecast time charter rates and values for second hand product tankers, discounted
projected vessel operating cash flows and the Company’s overall business plans.



At December 31, 2013,
we reviewed the carrying amount of our vessels to determine whether there was an indication that these assets had suffered an impairment.
First, we compared the carrying amount of our vessels to their fair values less costs to sell (determined by taking into consideration
two independent broker valuations). If the carrying amount of our vessels was greater than the fair values less costs to sell,
we prepared a value in use calculation where we estimated the vessel’s future cash flows based on a combination of the latest
forecast, published time charter rates for the next three years, a steady growth rate in freight rates in which each period thereafter
which is based on management’s long term view of the market, and our best estimate of vessel operating expenses and drydock
costs. These cash flows were then discounted to their present value using an estimated weighted average cost of capital of 8.45%.
The results of these tests were as follows:



At December 31, 2013, we had 19 vessels in our fleet and 65 vessels
under construction:



| | · | Four vessels were held for sale and written down to their fair value
less costs to sell (see Note 4)
| | - | ----------------------------------------------------------------------------------------------------

| | · | Eight vessels had fair values less costs to sell in excess of their
carrying amount.
| | - | ------------------------------------------------------------------------------------

| | · | Seven
                                         vessels had fair values less costs to sell less than their carrying amount. We
                                         prepared a value in use calculation for each these vessels which resulted in no impairment
                                         being recognized.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-24







| | · | Two vessels under construction (that were delivered in January 2014)
had fair values less costs to sell exceeding their carrying amount.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------

| | · | We did not obtain independent broker valuations for the remaining 63
vessels under construction. To assess their carrying values, we prepared value in use calculations which resulted in no impairment
indicators.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



At December 31, 2011,
we determined fair value less estimated costs to sell for our vessels, taking into consideration three independent broker
valuations for each vessel and adjusting for estimated disposal costs. Our estimate of fair value less costs to sell was then
compared to each vessel’s respective carrying amount. The fair value less estimated costs to sell were lower than the
carrying amount for all vessels indicating that an impairment might exist. We then performed a value in use calculation and
the value in use calculations for all vessels were less than the fair value less estimated costs to sell and accordingly, the
recoverable amount of all vessels was determined to be its fair valueless costs to sell. As a result, we recorded an
impairment loss of $66.6 million to adjust the carrying amounts of our vessels to their fair value less estimated selling
costs.



| | 6. | Other non-current assets
| | -- | ------------------------



|                                                                        |  | At December 31,
|----------------------------------------------------------------------- |  | ---------------
|In thousands of US dollars                                              |  | 2013           
|Capitalized loan fees (1)                                               |  | $              
|Scorpio Handymax Tanker Pool Ltd. pool working capital contributions(2) |  |                
|Non-current portion of acquired time charter contracts (3)              |  |                
|                                                                        |  | $              



(1)
Primarily represents upfront loan fees on our credit facilities being used to finance our newbuilding vessels. These are reclassified
to Bank Loans when the tranche of the loan to which the newbuilding vessel relates is drawn.



(2) Upon entrance
into the Scorpio Handymax Tanker Pool (“SHTP”), all vessels are required to make working capital contributions of
both cash and bunkers. The contribution amount is repaid, without interest, upon a vessel’s exit from the SHTP no later
than six months after the exit date. Bunkers on board a vessel exiting the SHTP are credited against such repayment at the actual
invoice price of the bunkers. For all owned vessels we assume that these contributions will not be repaid within 12 months and
for time chartered-in vessels we classify the amounts according to the expiration of the contract.



(3) Represents
the non-current portion of the value of time charter contracts acquired in November 2013 as part of the acquisition of four MRs
in exchange for common shares. See Note 4 for further description.

| | 7. | Investment in Associate
| | -- | -----------------------



Investment in Dorian LPG Ltd.





In July and August 2013
we reached agreements to construct nine Very Large Gas Carriers (“VLGCs”) for $75.6 million each with HSHI
and DSME with deliveries scheduled in 2015.



In
October 2013, we reached an agreement with HSHI to construct two VLGCs for $75.0 million each with deliveries scheduled in
the first quarter of 2016.





In November 2013, we
contributed our VLGC business, which included 11 VLGC newbuilding contracts, options to purchase two additional VLGCs and a cash
payment of $1.9 million (together our “initial investment”) to Dorian LPG Ltd. (“Dorian”) in exchange for
newly issued shares representing 30% of Dorian’s outstanding shares immediately following the transaction. As of the closing date
of the transaction, we paid $83.1 million in installment payments for the 11 VLGC contracts. Additionally, in November 2013, we
purchased 24,121,621 new shares of Dorian’s common stock as part of a private placement of shares for total consideration
of $75.0 million.



As of December
31, 2013, we owned 64,073,744, shares or approximately 30% of the outstanding shares of Dorian. Dorian’s shares are
traded on the Norwegian Over the Counter Exchange (‘NOTC’) and closed at NOK 22.90 per share, or approximately
$3.78 per share, on December 31, 2013. As part of the shareholder’s agreement, we are entitled to appoint one member to
Dorian’s eight member board until we cease to beneficially own at least 10% of Dorian’s issued and outstanding
common shares.



We have determined that
we have significant influence over Dorian’s financial and operating policy decisions given our 30% ownership interest and
limited board representation at December 31, 2013. We are therefore accounting for our investment under the equity method.





F-25





Accounting for the initial investment



A gain was
recognized at the closing date for the difference between the book value of the assets contributed and the fair value of
the consideration received minus costs to sell. The resultant gain of $41.4 million was calculated as the excess of the value
of the 39,952,123 shares of Dorian on November 26, 2013, the closing date of the transaction, over the carrying value of our
VLGC business, which included 11 VLGC contracts and options to purchase two additional newbuilding VLGCs, net of costs to
sell. This calculation is set forth below:



|In thousands of US dollars                                      |  | Gain on sale of assets
|--------------------------------------------------------------- |  | ----------------------
|Installment payments on 11 VLGCs made through November 26, 2013 |  | $                     
|Additional cash and other capitalized costs                     |  |                       
|Selling costs                                                   |  |                       
|Total book value of assets contributed                          |  |                       
|Value of initial shares received at closing                     |  |                       
|Gain on sale                                                    |  | $                     





|In thousands of US dollars                  |  | Carrying value of initial investment
|------------------------------------------- |  | ------------------------------------
|Value of initial shares received at closing |  | $                                   
|Investment in private placement             |  |                                     
|Value of investment at November 26, 2013    |  |                                     



| | (1) | Represents additional cash consideration and the contribution of
certain capitalized costs that were incurred on these vessels under construction prior to closing.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Represents legal and advisory fees relating to the transaction, including
commissions paid to SSH. See Note 13 for further description of these commissions.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | The value of our initial investment was determined based on the closing
price of Dorian on the NOTC at November 26, 2013 of NOK 20.5, using an NOK/USD exchange rate of 6.0923 NOK/USD at that date. See
below for further discussion of our assessment of fair value.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | We purchased 24,121,621 new shares of Dorian’s common stock
as part of a private placement of shares for total consideration of $75.0 million in November 2013.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

Fair value of the initial investment



Fair value has been based
on published quoted prices on the NOTC, which we consider to be an active market particularly for shipping companies given the
high level of interest and activity in shipping in that region. To assess the adequacy of this valuation, we performed a separate
analysis of the fair market value of Dorian’s net assets, which considered recent, third party vessel valuations.
This analysis confirmed our valuation of the shares received.



Our share of current period results



Dorian LPG Ltd. was
incorporated on July 1, 2013, under the laws of the Republic of the Marshall Islands, and has a fiscal year end of March 31. The
results included herein are derived from Dorian’s quarterly results as of December 31, 2013. Furthermore, Dorian prepares
its financial statements in accordance with Generally Accepted Accounting Principles in the United States (‘US GAAP’).
As such adjustments were made to convert our share of Dorian’s results from US GAAP to IFRS.



The following table depicts
summarized financial information of Dorian and its predecessor companies for the fiscal year ended March 31, 2013 in addition to
the unaudited financial information of Dorian for the three months ended December 31, 2013. The financial statements as of December
31, 2013 are then reconciled to our carrying value at that date.



F-26









|                           |  |                                                                 |        |                                                                  |  | Adjustments                                   |        |                                                
|-------------------------- |  | --------------------------------------------------------------- | ------ | ---------------------------------------------------------------- |  | --------------------------------------------- | ------ | -----------------------------------------------
|In thousands of US dollars |  | Predecessor companies for the year ended March 31, 2013 (1) (2) |        | Dorian LPG Ltd. for the three months ended December 31, 2013 (1) |  | Revaluation of initial interest to fair value |        | Impact of revaluation and conversion to IFRS(5)
|Revenue                    |  | $                                                               | 38,662 |                                                                  |  | $                                             | 13,800 |                                                
|Operating income / (loss)  |  |                                                                 | 3,360  |                                                                  |  |                                               | 3,700  |                                                
|Net (loss) / income        |  |                                                                 | (4,851 | )                                                                |  |                                               | 5,243  |                                                
|                           |  |                                                                 |        |                                                                  |  |                                               |        |                                                
|STI’s share of net income  |  | $                                                               | —      |                                                                  |  | $                                             | 383    |                                                



|                          |  |                                                    |         |                                             |  | Adjustments                                       |         |                                                 
|------------------------- |  | -------------------------------------------------- | ------- | ------------------------------------------- |  | ------------------------------------------------- | ------- | ------------------------------------------------
|                          |  | Predecessor companies as of March 31, 2013 (1) (2) |         | Dorian LPG Ltd. as of December 31, 2013 (1) |  | Revaluation of initial interest to fair value (4) |         | Impact of revaluation and conversion to IFRS (5)
|Current assets            |  |                                                    | 6,158   |                                             |  |                                                   | 337,026 |                                                 
|Non-current assets        |  |                                                    | 188,290 |                                             |  |                                                   | 413,054 |                                                 
|Total assets              |  |                                                    | 194,448 |                                             |  |                                                   | 750,080 |                                                 
|                          |  |                                                    |         |                                             |  |                                                   |         |                                                 
|Current liabilities       |  |                                                    | 31,601  |                                             |  |                                                   | 22,166  |                                                 
|Non-current liabilities   |  |                                                    | 150,089 |                                             |  |                                                   | 131,911 |                                                 
|Total liabilities         |  |                                                    | 181,690 |                                             |  |                                                   | 154,077 |                                                 
|                          |  |                                                    |         |                                             |  |                                                   |         |                                                 
|Net assets                |  |                                                    | 12,758  |                                             |  |                                                   | 596,003 |                                                 
|                          |  |                                                    |         |                                             |  |                                                   |         |                                                 
|STI’s share of net assets |  | $                                                  | 0       |                                             |  | $                                                 | 178,801 |                                                 



| | (1) | Prepared in accordance with US GAAP.
| | --- | ------------------------------------

| | (2) | The formation of Dorian consisted of the acquisition of four vessel
owning entities on July 29, 2013 that were previously operating under separate ownership. As such, financial statements for the
fiscal year ended March 31, 2013 are the combined financial statements of these four entities (‘Predecessor companies’).
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | We estimated our 30% share of Dorian’s net income for the 35
day period beginning with the closing date of November 26, 2013 and ending on December 31, 2013 by pro-rating Dorian’s results
for quarter ending December 31, 2013 and adjusting for any material transactions occurring before or after the closing date.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | Represents
                                         the step-up adjustment to revalue Dorian’s balance sheet to fair value as of the
                                         closing date of November 26, 2013.  We mainly attributed this step up to
                                         Dorian’s fleet of vessels which was based on recent, third party, vessel valuations.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (5) | This represents the (i) excess depreciation calculated as a result of our stepped up basis and
(ii) our conversion of depreciation expense from US GAAP to IFRS.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (6) | Calculated as 30% of Dorian’s adjusted net assets at December 31, 2013.
| | --- | -----------------------------------------------------------------------



F-27







| | 8. | Accounts payable
| | -- | ----------------



|                                                     |  | At December 31,
|---------------------------------------------------- |  | ---------------
|In thousands of US dollars                           |  | 2013           
|Progress payments due for vessels under construction |  | $              
|Suppliers                                            |  |                
|Scorpio MR Pool Limited                              |  |                
|Scorpio Handymax Tanker Pool Limited                 |  |                
|Scorpio Ship Management                              |  |                
|Scorpio Commercial Management                        |  |                
|                                                     |  | $              





The majority of
accounts payable are settled with a cash payment within 90 days. No interested is charged on accounts payable. We consider that
the carrying amount of accounts payable approximates fair value.



| | 9. | Bank loans
| | -- | ----------



The following is a breakdown of the
current and non-current portion of our bank loans outstanding at December 31, 2013 and December 31, 2012.



|                                               |  | As of December 31,
|---------------------------------------------- |  | ------------------
|In thousands of US dollars                     |  | 2013              
|Current portion(1)                             |  | $                 
|Bank loan related to vessels held for sale (2) |  |                   
|Current bank loans                             |  |                   
|                                               |  |                   
|Non-current portion(3)                         |  |                   
|                                               |  | $                 

| | (1) | The current portion at December 31, 2013 was net of unamortized deferred financing fees of $0.2
million. The current portion at December 31, 2012 was net of unamortized deferred financing fees of $0.1 million.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | This relates to amounts due under our STI Spirit Credit Facility at December 31, 2013 and is shown
net of $0.3 million unamortized deferred financing fees. The vessel held as collateral in this facility, STI Spirit, was
designated as held for sale at December 31, 2013. Accordingly, all assets and liabilities related to this vessel have been classified
as current.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | The non-current portion at December 31, 2013 was net of unamortized deferred financing fees of
$2.0 million. The non-current portion at December 31, 2012 was net of unamortized deferred financing fees of $3.3 million.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

2010 Revolving Credit Facility



On June 2, 2010, we executed
a credit facility with Nordea Bank Finland plc, acting through its New York branch, DNB Bank ASA, acting through its New York
branch, and ABN AMRO Bank N.V, for a senior secured term loan facility of up to $150 million. On July 12, 2011, we amended and
restated the credit facility to convert it from a term loan to a reducing revolving credit facility. This gave us the ability
to pay down and re-borrow from the total available commitments under the loan. In 2012, we sold three of our Handymax vessels
that were collateral to this facility. As a consequence of these disposals, the availability of the 2010 Revolving Credit Facility
decreased by $31.0 million. The total available commitments, after taking into consideration the impact of these sales, reduces
by $3.1 million each quarter, with a lump sum reduction of $57.1 million at the maturity date of June 2, 2015. Our subsidiaries
that own vessels that are collateralized by this loan act as guarantors under the amended and restated credit facility. All terms
mentioned are defined in the agreement.



Drawdowns under the credit
facility bear interest as follows: (1) through December 29, 2011, at LIBOR plus an applicable margin of 3.00% per annum when our
debt to capitalization (total debt plus equity) ratio is equal to or less than 50% and 3.50% per annum when our debt to capitalization
ratio is greater than 50%; (2) from December 30, 2011 through September 30, 2013, at LIBOR plus an applicable margin of 3.50%
per annum; and (3) from October 1, 2013 and at all times thereafter, at LIBOR plus an applicable margin of 3.25% per annum when
our debt to capitalization (total debt plus equity) ratio is equal to or less than 50% and 3.50% per annum when our debt to capitalization
ratio is greater than 50%. A commitment fee equal to 40% of the applicable margin is payable on the unused daily portion of the
credit facility. The credit facility matures on June 2, 2015 and can only be used to refinance amounts outstanding from the original
loan agreement and for general corporate purposes.



The credit facility
requires us to comply with a number of covenants, including financial covenants; delivery of quarterly and annual financial
statements and annual projections; maintaining adequate insurances; compliance with laws (including environmental);
compliance with ERISA (Employee Retirement Income Security Act); maintenance of flag and class of the initial vessels;
restrictions on consolidations, mergers or sales of assets; approval on changes in the Manager of our initial vessels;
limitations on liens; limitations on additional indebtedness; prohibitions on paying dividends if a covenant breach or an
event of default has occurred or would occur as a result of payment of a dividend; prohibitions on transactions with
affiliates; and other customary covenants.





F-28





The financial covenants include:



| | · | The ratio of net debt to capitalization
shall be no greater than 0.60 to 1.00.
| | - | ------------------------------------------------------------------------------



| | · | Consolidated tangible net worth (i.e. total
shareholders’ equity) shall be no less than $150.0 million plus 25% of cumulative positive net income (on a consolidated
basis) for each fiscal quarter from July 1, 2010 going forward and 50% of the value of any new equity issues from July 1, 2010
going forward.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | The ratio of EBITDA to interest expense
shall be no less than 1.25 to 1.00 commencing with the fourth fiscal quarter of 2011 until the fourth quarter of 2012, at which
point it increased to 1.50 to 1.00 for the first quarter of 2013, 1.75 to 1.00 for the second quarter of 2013 and 2.00 to 1.00
at all times thereafter. Such ratio shall be calculated quarterly on a trailing four quarter basis. In addition, we are restricted
from paying dividends until our EBITDA to interest expense ratio is 2.00 to 1.00 or greater. EBITDA, as defined in the loan agreement,
excludes non-cash charges such as impairment.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Consolidated liquidity (cash, cash equivalents,
and availability under the 2010 Revolving Credit Facility) needs to be not less than $25.0 million, of which unrestricted cash
and cash equivalents shall be not less than $15.0 million, until we own, directly or indirectly, more than 15 vessels, at which
time the amount increases by $750,000 per each additional vessel.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | The aggregate fair market value of the collateral
vessels (see note 4) shall at all times be no less than 150% of the then aggregate outstanding principal amount of loans under
the credit facility.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In June 2013, we voluntarily
repaid $17.2 million into this facility. As of December 31, 2013, there was no outstanding balance and there was $72.4 million
available to draw when needed. As of December 31, 2012, the outstanding balance was $17.2 million and $67.4 million was available
to draw. We were in compliance with the financial covenants relating to this facility as of December 31, 2013.



During January 2014,
we drew down this facility in full. In March 2014, we repaid $22.7 million into this facility as part of the sales of Noemiand Senatore. See Note 22 for further discussion of these transactions and the impact on this credit facility.



STI Spirit Credit Facility



On March 9, 2011, we executed
a credit facility with DVB Bank SE for a senior secured term loan facility of $27.3 million for STI Spirit, which was acquired
in November 2010. The credit facility was drawn down on March 17, 2011 and matures on March 17, 2018. The loan bears interest
at LIBOR plus a margin of 2.75% per annum. The loan will be repaid over 28 equal quarterly installments and a lump sum payment
at maturity. The quarterly installments commenced three months after the drawdown and were calculated using an 18 year amortization
profile. Our subsidiary, STI Spirit Shipping Company Limited, which owns the vessel, is the borrower and Scorpio Tankers Inc.
is the guarantor.



The credit facility requires us to comply with a number of covenants, including financial covenants; delivery
of quarterly and annual financial statements and annual projections; maintaining adequate insurances; compliance with laws (including
environmental); compliance with ERISA (Employee Retirement Income Security Act); maintenance of flag and class of the vessel;
restrictions on consolidations, mergers or sales of assets; approval of changes in the Manager of our vessels; limitations on
liens; limitations on additional indebtedness; prohibitions on paying dividends if a covenant breach or an event of default has
occurred or would occur as a result of payment of a dividend; prohibitions on transactions with affiliates; and other customary
covenants.



All terms mentioned are defined in the agreement. The
financial covenants of the credit facility are described below.



| | · | The
                                         ratio of debt to capitalization shall be no greater than 0.60 to 1.00.
| | - | -------------------------------------------------------------------------------------------------------------------



| | · | Consolidated tangible net worth (i.e. shareholders equity) shall be
no less than $150.0 million plus 25% of cumulative positive net income (on a consolidated basis) for each fiscal quarter.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-29







| | · | The ratio of EBITDA to interest expense shall be no less than 1.25 to
1.00 for the period commencing with the fourth quarter of 2011 through the fourth quarter of 2012, at which time it increased to
1.50 to 1.00 for the first quarter of 2013, 1.75 to 1.00 for the second quarter of 2013 and 2.00 to 1.00 at all times thereafter.
Such ratio shall be calculated quarterly on a trailing four quarter basis. In addition, we are restricted from paying dividends
until our EBITDA to interest expense ratio is 2.00 to 1.00 or greater. EBITDA, as defined in the loan agreement, excludes non-cash
charges such as impairment.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Consolidated liquidity (cash, cash equivalents, and availability under
the 2010 Revolving Credit Facility) needs to be not less than $25.0 million, of which unrestricted cash and cash equivalents shall
be not less than $15.0 million, until we own, directly or indirectly, more than 15 vessels, at which time the amount increases
by $750,000 per each additional vessel.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | The aggregate fair market value of STI Spirit shall at all times
be no less than (i) 140% of the then outstanding loan balance if the vessel is operating in a pool or in the spot market or (ii)
130% of the then outstanding loan if the vessel is on time charter with a duration of at least one year.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



As described above, the credit facility
requires that the charter-free market value of the STI Spiritshall be no less than 140% of the then outstanding loan balance.
In order to stay in compliance with this covenant, we prepaid $1.4 million in addition to the $0.3 million scheduled principal
payment into this credit facility in December 2013.



The outstanding balance
at December 31, 2013 and December 31, 2012 was $21.7 million and $23.4 million, respectively. We were in compliance with the financial
covenants relating to this facility as of December 31, 2013.



In February 2014,
we agreed to sell STI Spirit. See Note 22 for further description of this transaction and the resultant impact on this credit
facility.



2011 Credit Facility



On May 3, 2011, we executed a credit
facility with Nordea Bank Finland plc, acting through its New York branch, DnB NOR Bank ASA, acting through its New York
branch, and ABN AMRO Bank N.V., for a senior secured term loan facility of up to $150.0 million. On July 20, 2012, we
extended the availability period of the 2011 Credit Facility until January 31, 2014. The availability period was previously
scheduled to expire in May 2013.



All terms mentioned in this section are defined in the agreement.



Drawdowns under this credit facility
are available until January 31, 2014 and bear interest as follows: (1) until December 29, 2011, at LIBOR plus an applicable
margin of (i) 2.75% per annum when our debt to capitalization (total debt plus equity) ratio is less than 45%, (ii) 3.00% per
annum when our debt to capitalization ratio is greater than or equal to 45% but less than or equal to 50% and (iii) 3.25%
when our debt to capitalization ratio is greater than 50%; (2) from December 30, 2011 through September 30, 2013, at LIBOR
plus an applicable margin of 3.50% per annum and (3) from October 1, 2013 and at all times thereafter, at LIBOR plus an
applicable margin of (i) 3.25% per annum when our debt to capitalization (total debt plus equity) ratio is equal to or less
than 50% and (ii) 3.50% per annum when our debt to capitalization ratio is greater than 50%. A commitment fee equal to 40% of
the applicable margin is payable on the unused daily portion of the credit facility. The credit facility matures on May 3,
2017 and can only be used to finance up to 50% of the cost of future vessel acquisitions, which vessels would be the
collateral for the credit facility.



Borrowings for each vessel financed under
this facility represent a separate tranche, with repayment terms dependent on the age of the vessel at acquisition. Each
tranche under the credit facility is repayable in equal quarterly installments, with a lump sum payment at maturity, based on
a full repayment of such tranche when the vessel to which it relates is sixteen years of age. Our subsidiaries, which may at
any time, own one or more of our vessels, will act as guarantors under the credit facility.



The credit facility requires
us to comply with a number of covenants, including financial covenants; delivery of quarterly and annual financial statements
and annual projections; maintaining adequate insurances; compliance with laws (including environmental); compliance with ERISA
(Employee Retirement Income Security Act); maintenance of flag and class of the initial vessels; restrictions on consolidations,
mergers or sales of assets; approvals on changes in the Manager of our initial vessels; limitations on liens; limitations on additional
indebtedness; prohibitions on paying dividends if a covenant breach or an event of default has occurred or would occur as a result
of payment of a dividend; prohibitions on transactions with affiliates; and other customary covenants.



The financial covenants include:



| | · | The ratio of net debt to capitalization
shall be no greater than 0.60 to 1.00.
| | - | ------------------------------------------------------------------------------



F-30









| | · | Consolidated tangible net worth (i.e. shareholders’
equity) shall be no less than $150.0 million plus 25% of cumulative positive net income (on a consolidated basis) for each fiscal
quarter from July 1, 2010 going forward and 50% of the value of any new equity issues from July 1, 2010 going forward.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | The ratio of EBITDA to interest expense
shall be no less than 1.25 to 1.00 commencing with the fourth fiscal quarter of 2011 until the fourth quarter of 2012, at which
point it increased to 1.50 to 1.00 for the first quarter of 2013, 1.75 to 1.00 for the second quarter of 2013 and 2.00 to 1.00
at all times thereafter. Such ratio shall be calculated quarterly on a trailing four quarter basis. In addition, we are restricted
from paying dividends until our EBITDA to interest expense ratio is 2.00 to 1.00 or greater. EBITDA, as defined in the loan agreement,
excludes non-cash charges such as impairment.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Consolidated liquidity (cash, cash equivalents,
and availability under the 2010 Revolving Credit Facility) needs to be not less than $25 million, of which unrestricted cash and
cash equivalents shall be not less than $15.0 million, until we own, directly or indirectly, more than 15 vessels, at which time
the amount increases by $750,000 per each additional vessel.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | The aggregate fair market value of the collateral
vessels shall at all times be no less than 150% of the then aggregate outstanding principal amount of loans under the credit facility.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In January 2013, March
2013 and April 2013, we drew down an aggregate of $52.1 million from this facility in connection with the deliveries of STI
Sapphire, STI Emerald and STI Beryl, respectively.



As of December 31,
2013, there was $62.9 million available for borrowing which can be used to finance up to 50% of future vessel acquisitions
through January 31, 2014. The outstanding balance at December 31, 2013 and December 31, 2012 was $64.0 million and $15.5
million, respectively. We were in compliance with the financial covenants relating to this facility as of December 31,
2013.



In January 2014, we drew
down an aggregate of $52.0 million. See Note 22 for further description.



Newbuilding Credit Facility



On December 21, 2011,
we executed a credit facility agreement with Credit Agricole Corporate and Investment Bank and Skandinaviska Enskilda Banken AB
for a senior secured term loan facility of up to $92.0 million. During the year ended December 31, 2012, we drew down an aggregate
of $92.0 million from this facility to partially finance the deliveries of STI Amber, STI Topaz, STI RubyandSTI Garnet ($23.0 million per vessel). These vessels are owned individually by certain of our subsidiaries, who together are
the borrowers under this credit facility, and Scorpio Tankers Inc. is the guarantor. Borrowings under the credit facility bear
interest at LIBOR plus an applicable margin of 2.70% per annum. A commitment fee equal to 1.10% per annum was payable on the unused
daily portion of the credit facility, and the facility was fully drawn as of December 31, 2012. All terms mentioned in
this section are defined in the agreement.



The facility
is separated into four tranches (one per each vessel) and repayment of the tranche relating to the respective vessel
commenced after delivery of that vessel in quarterly installments of $375,000, which equates to a repayment profile of 15.33
years. Each tranche is scheduled to mature approximately seven years after delivery of the relevant vessel from the shipyard.



The credit facility requires us to comply with a number of covenants, including financial covenants; delivery of quarterly
and annual financial statements and annual projections; maintaining adequate insurances; compliance with laws (including
environmental); compliance with ERISA; maintenance of flag and class of the initial vessels; restrictions on consolidations,
mergers or sales of assets; approvals on changes in the Manager of our initial vessels; limitations on liens; limitations on
additional indebtedness; prohibitions on paying dividends if a covenant breach or an event of default has occurred or would
occur as a result of payment of a dividend; prohibitions on transactions with affiliates; and other customary covenants.



The financial covenants include:



| | · | The ratio of net debt to capitalization
shall be no greater than 0.60 to 1.00.
| | - | ------------------------------------------------------------------------------



| | · | Consolidated tangible net worth (i.e. shareholders
equity) shall be no less than $150.0 million plus 25% of cumulative positive net income (on a consolidated basis) for each fiscal
quarter from July 1, 2010 going forward and 50% of the value of any new equity issues from July 2, 2010 going forward.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | The ratio of EBITDA to interest expense
shall be no less than 2.00 to 1.00 commencing with the third fiscal quarter of 2011 until the fourth quarter of 2012, and 2.50
to 1.00 for all times thereafter. Such ratio shall be calculated quarterly on a trailing four quarter basis. EBITDA, as defined
in the loan agreement, excludes non-cash charges such as impairment.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-31







| | · | Unrestricted cash and cash equivalents shall
at all times be no less than $15.0 million, until we own, directly or indirectly, more than 15 vessels, at which time the amount
increases by $750,000 per each additional vessel.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | The aggregate fair market value of the collateral
vessels shall at all times be no less than 140% (120% if the vessel is subject to acceptable long term employment) of the aggregate
principal amount outstanding plus a pro rata amount of any allocable swap exposure for the credit facility.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



During the year ended
December 31, 2013, we made scheduled principal payments of $6.0 million into this credit facility. The outstanding balance at December
31, 2013 and December 31, 2012 was $83.8 million and $89.8 million, respectively. We were in compliance with the financial covenants
relating to this facility as of December 31, 2013.



In March 2014, we amended
the Newbuilding Credit Facility to convert it from a term loan to a reducing revolving credit facility. See Note 22 for further
description on the amendment.



2013 Credit Facility



On July 2, 2013, we
entered into a senior secured revolving credit facility and term loan facility with Nordea Bank Finland plc and the other lenders
named therein of up to $525.0 million to finance the acquisition of the Firm Vessels (defined below), the Option Vessels (defined
below) and certain other vessels and for general corporate purposes, including working capital. This credit facility is secured
by, among other things, a first-priority cross-collateralized mortgage on certain vessels for which we have entered into newbuilding
contracts, or the Firm Vessels, and certain vessels for which we may exercise construction options, or the Option Vessels, and
together with the Firm Vessels, the Collateral Vessels. Our subsidiaries that own the Collateral Vessels act as joint and several
guarantors under our 2013 Credit Facility. We refer to this credit facility as our 2013 Credit Facility.



Our 2013 Credit Facility
consists of a $260.0 million delayed draw term loan facility to finance the acquisition of the Firm Vessels and a $265.0 million
revolving credit facility to finance the acquisition of the Option Vessels and certain other vessels built on January 1, 2012 or
later, and for general corporate purposes, including working capital.



Drawdowns of the term
loan may occur in connection with the delivery of a Firm Vessel in an amount equal to the lesser of 60% of (i) the contract price
for such vessel or (ii) such vessel’s fair market value. Drawdowns of the revolving credit facility may occur in connection
with the delivery of an Option Vessel and are also capped at the lesser of 60% of (i) the contract price for such vessel or (ii)
such vessel’s fair market value, with such amount, once drawn, available on a revolving basis. Drawdowns under the term loan
are available until the earlier of the delivery of each Firm Vessel and January 31, 2015 and drawdowns under the revolving loan
are available until July 31, 2015 and bear interest at LIBOR plus an applicable margin of 3.50%.



The term loan is repayable
and the revolving loans reduced, in each case, in an amount equal to 1/60th of such loan on a consecutive quarterly basis until
final maturity on the sixth anniversary of the facility. In addition to restrictions imposed upon the owners of the Collateral
Vessels (such as, limitations on liens and limitations on the incurrence of additional indebtedness), our 2013 Credit Facility
includes financial covenants that require us to maintain:



| | · | The ratio of net debt to total capitalization
no greater than 0.60 to 1.00.
| | - | ---------------------------------------------------------------------------



| | · | Consolidated tangible net worth no less
than (i) $150.0 million plus 25% of cumulative positive net income (on a consolidated basis) for each fiscal quarter beginning
on July 1, 2010 and (ii) 50% of the value of any new equity issues from July 1, 2010 going forward.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | The ratio of EBITDA to net interest expense
greater than 2.00 to 1.00 through December 31, 2013 and 2.50 to 1.00 thereafter.
| | - | ----------------------------------------------------------------------------------------------------------------------------



| | · | Minimum liquidity of not less than the greater
of $25.0 million or 5% of total indebtedness.
| | - | --------------------------------------------------------------------------------------------



| | · | The aggregate fair market value of the Collateral
Vessels shall at all times be no less than 140% of the then aggregate outstanding principal amount of loans under the credit facility.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



We had no borrowings
under this facility at December 31, 2013 and we were in compliance with the financial covenants relating to this credit facility
as of December 31, 2013.



In February and
March 2014, we drew down $64.2 and $20.5 million from this credit facility, respectively. See Note 22 for further description.





F-32





KEXIM Financing



In September 2013, we
received loan commitments from a group of financial institutions led by DNB Bank ASA and Skandinaviska Enskilda Banken AB
(publ) and from the Export-Import Bank of Korea (“KEXIM”) for a total loan facility of up to $429.6
million. This facility includes commitments from KEXIM of up to $300.6 million (the “KEXIM Tranche”) and a
group of financial institutions led by DNB Bank ASA and Skandinaviska Enskilda Banken AB (publ) of up to $129.0 million (the
“Commercial Tranche”).



In addition to
KEXIM’s commitment of up to $300.6 million, KEXIM has also provided an optional guarantee for a five year amortizing note
of $125.3 million (the “KEXIM Guaranteed Note”) that may be issued by the Company at the Company’s discretion
in 2014; the proceeds of which will be used to reduce the $300.6 million KEXIM Tranche.



This facility
was executed in February 2014 as further described in Note 22.



K-Sure Financing



In October 2013,
we received an Acceptance of Insurance Agreement from Korea Trade Insurance Corporation (“K-Sure”) covering 95% of
an up to $358.3 million K-Sure tranche as part of a credit facility of up to $458.3 million (the “K-SURE Financing”)
with a group of financial institutions. The K-Sure Financing will also include a commercial tranche (the “Commercial Tranche”)
of up to $100.0 million.



The K-Sure Financing
will be used to finance up to 60% of the contract price of up to 21 newbuilding product tankers upon delivery. This facility was
executed in February 2014 as further described in Note 22.

| | 10. | Derivative financial instruments
| | --- | --------------------------------



In August
2011, we entered into six interest rate swap agreements to manage interest costs and the risk associated with changing
interest rates on our 2011 and 2010 Credit Facilities with three different banks. Pursuant to these interest rate swap
contracts, we agreed to exchange the difference between fixed and floating rate interest amounts calculated on agreed
notional principal amounts. Such contracts enable us to partially mitigate the risk of changing interest rates on the cash
flow exposures on the issued variable rate debt held. We determined the estimated fair value of our derivatives by
discounting the future cash flows using the curves at the reporting date and the credit risk inherent in the contract. These
swaps have been designated and accounted for as cash flow hedges.



In September 2012,
as a result of the sales of two MRs and corresponding debt repayment, we reduced the notional amount on the interest rate swaps
relating to the 2011 Credit Facility to $15.0 million from $24.0 million in aggregate. As a result of the reduction, we recognized
a realized loss of $0.2 million, which was reclassified out of other comprehensive loss and recorded as a component of loss from
sale of vessels.



The notional principal amounts of these
swaps aggregate $66.0 million, the details of which are as follows as of December 31, 2013 and 2012, respectively:



|Hedged item                    |  | Notional amount |  | Start Date   |  | Expiration date |  | Fixed interest rate |      | Floating interest rate
|------------------------------ |  | --------------- |  | ------------ |  | --------------- |  | ------------------- | ---- | ----------------------
|2010 Revolving Credit Facility |  | $51 million     |  | July 2, 2012 |  | June 2, 2015    |  |                     | 1.27 | %                     
|2011 Credit Facility           |  | $15 million     |  | July 2, 2012 |  | June 30, 2015   |  |                     | 1.30 | %                     





The vessels which
collateralize the 2011 Credit Facility and 2010 Revolving Credit Facility also serve as collateral for the designated interest
rate swap agreements, subordinated to the outstanding borrowings under each credit facility.



In December 2012, we voluntarily
repaid $50.0 million into our 2010 Revolving Credit Facility. After the payment, we had $17.2 million of debt outstanding under
the 2010 Credit Facility, which is less than the total notional amount of $51.0 million for the three interest rate swaps related
to the facility. As such, the swaps related to the 2010 Revolving Credit Facility no longer met the criteria for hedge accounting
and we therefore de-designated the hedge relationship prospectively and reclassified all amounts accumulated in other comprehensive
income ($1.0 million) to the statement of income or loss for the year ended December 31, 2012 as a component of Financial
Expenses.



The interest rate swaps
relating to the 2011 Credit Facility continue to qualify for hedge accounting. Accordingly, changes in their fair value, which
the hedge is deemed to be effective, are recognized directly in other comprehensive income and classified as ‘hedging reserves’.
Changes in their fair value for any portion deemed to be ineffective are recognized in the consolidated statement of income
or loss.





F-33





Profit or loss sharing agreements



In July 2012, we entered
into a profit or loss sharing arrangement on the earnings of an LR1 vessel that was not owned or operated by us. The agreement
stipulated that 50% of the profits and losses were shared with the counterparty. The counterparty to this agreement was time chartering-in
this vessel for a period of six months at $12,750 per day and this agreement expired in January 2013.



In September 2012, we took
delivery of an LR1, FPMC P Eagle, on a time charter-in arrangement for one year at $12,800 per day. We also entered into
a profit and loss sharing arrangement whereby 50% of the profits and losses relating to this vessel above or below the charterhire
rate were shared with a third party who neither owns nor operates FPMC P Eagle. The profit or loss agreement expired on
October 2013.



These agreements were
treated as derivatives, recorded at fair value with any resultant gain or loss recognized in the statement of profit or loss. Changes
in fair value were recorded as unrealized gains and losses on derivative financial instruments and actual earnings were recorded
as realized gains or losses on derivative financial instruments, within the consolidated statement of profit or loss. The fair
value of these instruments is determined by comparing published time charter rates to the charterhire rate and discounting those
cash flows to their estimated present value.



The following table
summarizes the fair value of our derivative financial instruments as of December 31, 2013 and 2012, which are included in the consolidated
balance sheet:



|                                                                        |  | At December 31,
|----------------------------------------------------------------------- |  | ---------------
|In thousands of US dollars                                              |  | 2013           
|Assets                                                                  |  |                
|Prepaid expenses and other current assets (profit and loss agreements)  |  | $              
|                                                                        |  |                
|Liabilities                                                             |  |                
|Derivative financial instrument  (profit and loss agreements - current) |  |                
|Derivative financial instrument (interest rate swap - current)          |  |                
|Total current liabilities                                               |  |                
|                                                                        |  |                
|Derivative financial instrument (interest rate swap - non-current)      |  |                
|Total liabilities                                                       |  | $              



The following has been recorded as realized
and unrealized gains or losses on our derivative financial instruments:



|                                     |  | Fair value adjustments     
|------------------------------------ |  | ---------------------------
|                                     |  | Statement of profit or loss
|Amounts in thousands of US dollars   |  | Realized gain/ (loss)      
|Profit and loss agreements           |  | $                          
|Interest rate swap                   |  |                            
|                                     |  |                            
|Total period ended December 31, 2013 |  | $                          
|                                     |  |                            
|Profit and loss agreements           |  | $                          
|Interest rate swap                   |  |                            
|                                     |  |                            
|Total period ended December 31, 2012 |  | $                          
|                                     |  |                            
|Interest rate swap                   |  |                            
|                                     |  |                            
|Total period ended December 31, 2011 |  | $                          



| | (1) | The
                                         realized loss on our interest rate swap was recorded as a component of the loss from
                                         sale of vessels on the consolidated statement of income or loss.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





F-34







| | 11. | Segment reporting
| | --- | -----------------

Information about our reportable segments
for the years ended December 31, 2013, 2012 and 2011 is as a follows:



For the year ended December 31, 2013



|In thousands of U.S. dollars                        |  | Panamax/LR1 |         | Handymax |  | Aframax/LR2 |         | MR |  | Reportable segments subtotal |         | Corporate and eliminations |  | Total
|--------------------------------------------------- |  | ----------- | ------- | -------- |  | ----------- | ------- | -- |  | ---------------------------- | ------- | -------------------------- |  | -----
|                                                    |  |             |         |          |  |             |         |    |  |                              |         |                            |  |      
|Vessel revenue                                      |  | $           | 41,683  |          |  | $           | 36,205  |    |  | $                            | 28,204  |                            |  | $    
|Vessel operating costs                              |  |             | (14,276 | )        |  |             | (2,648  | )  |  |                              | (3,211  | )                          |  |      
|Voyage expenses                                     |  |             | (3,858  | )        |  |             | (11     | )  |  |                              | —       |                            |  |      
|Charterhire                                         |  |             | (14,363 | )        |  |             | (31,086 | )  |  |                              | (29,341 | )                          |  |      
|Depreciation                                        |  |             | (7,275  | )        |  |             | (1,292  | )  |  |                              | (1,750  | )                          |  |      
|General and administrative expenses                 |  |             | (536    | )        |  |             | (118    | )  |  |                              | (154    | )                          |  |      
|Write down of vessels held for sale                 |  |             | (15,002 | )        |  |             | —       |    |  |                              | (6,185  | )                          |  |      
|Gain on sale of VLGCs                               |  |             | —       |          |  |             | —       |    |  |                              | —       |                            |  |      
|Financial expenses                                  |  |             | —       |          |  |             | —       |    |  |                              | (847    | )                          |  |      
|Realized gain on derivative financial instruments   |  |             | 3       |          |  |             | —       |    |  |                              | —       |                            |  |      
|Unrealized gain on derivative financial instruments |  |             | 186     |          |  |             | —       |    |  |                              | —       |                            |  |      
|Financial income                                    |  |             | —       |          |  |             | —       |    |  |                              | —       |                            |  |      
|Share of profit from associate                      |  |             | —       |          |  |             | —       |    |  |                              | —       |                            |  |      
|Other expenses, net                                 |  |             | —       |          |  |             | —       |    |  |                              | (10     | )                          |  |      
|Segment profit or loss                              |  | ($          | 13,438  | )        |  | $           | 1,050   |    |  | ($                           | 13,294  | )                          |  | $    





F-35





For the year ended December 31, 2012



|In thousands of U.S. dollars                        |  | Panamax/LR1 |         | Handymax |  | Aframax/LR2 |         | MR |  | Reportable segments subtotal |        | Corporate and eliminations |  | Total
|--------------------------------------------------- |  | ----------- | ------- | -------- |  | ----------- | ------- | -- |  | ---------------------------- | ------ | -------------------------- |  | -----
|Vessel revenue                                      |  | $           | 28,602  |          |  | $           | 35,381  |    |  | $                            | 4,541  |                            |  | $    
|Vessel operating costs                              |  |             | (14,137 | )        |  |             | (5,428  | )  |  |                              | (3,304 | )                          |  |      
|Voyage expenses                                     |  |             | (999    | )        |  |             | (2,741  | )  |  |                              | (25    | )                          |  |      
|Charterhire                                         |  |             | (1,629  | )        |  |             | (23,192 | )  |  |                              | (1,287 | )                          |  |      
|Depreciation                                        |  |             | (7,352  | )        |  |             | (1,716  | )  |  |                              | (1,735 | )                          |  |      
|General and administrative expenses                 |  |             | (495    | )        |  |             | (195    | )  |  |                              | (100   | )                          |  |      
|Loss from sales of vessels                          |  |             | —       |          |  |             | (4,525  | )  |  |                              | —      |                            |  |      
|Financial expenses                                  |  |             | —       |          |  |             | —       |    |  |                              | (1,086 | )                          |  |      
|Realized gain on derivative financial instruments   |  |             | 443     |          |  |             | —       |    |  |                              | —      |                            |  |      
|Unrealized loss on derivative financial instruments |  |             | (184    | )        |  |             | —       |    |  |                              | —      |                            |  |      
|Financial income                                    |  |             | —       |          |  |             | —       |    |  |                              | —      |                            |  |      
|Other expense, net                                  |  |             | —       |          |  |             | —       |    |  |                              | (11    | )                          |  |      
|Segment profit or loss                              |  | $           | 4,249   |          |  | ($          | 2,416   | )  |  | ($                           | 3,007  | )                          |  | ($   





F-36





For the year ended December 31, 2011



|In thousands of U.S. dollars        |  | Panamax/LR1 |         | Handymax |  | Aframax/LR2 |         | MR |  | Reportable segments subtotal |         | Corporate and eliminations |  | Total
|----------------------------------- |  | ----------- | ------- | -------- |  | ----------- | ------- | -- |  | ---------------------------- | ------- | -------------------------- |  | -----
|Vessel revenue                      |  | $           | 31,101  |          |  | $           | 32,238  |    |  | $                            | 6,484   |                            |  | $    
|Vessel operating costs              |  |             | (14,428 | )        |  |             | (11,217 | )  |  |                              | (2,547  | )                          |  |      
|Voyage expenses                     |  |             | (13     | )        |  |             | (26     | )  |  |                              | —       |                            |  |      
|Charterhire                         |  |             | (4,554  | )        |  |             | (17,357 | )  |  |                              | (839    | )                          |  |      
|Impairment                          |  |             | (28,616 | )        |  |             | (12,962 | )  |  |                              | (12,459 | )                          |  |      
|Depreciation                        |  |             | (9,279  | )        |  |             | (5,069  | )  |  |                              | (2,074  | )                          |  |      
|General and administrative expenses |  |             | (692    | )        |  |             | (762    | )  |  |                              | (136    | )                          |  |      
|Financial expenses                  |  |             | —       |          |  |             | —       |    |  |                              | (841    | )                          |  |      
|Financial income                    |  |             | —       |          |  |             | —       |    |  |                              | —       |                            |  |      
|Other expenses, net                 |  |             | 23      |          |  |             | —       |    |  |                              | (134    | )                          |  |      
|Segment profit or loss              |  | ($          | 26,458  | )        |  | ($          | 15,155  | )  |  | ($                           | 12,546  | )                          |  | ($   



All of our operating segments contained revenue
from at least one major customer representing greater than 10% of total revenue. The revenue from those customers within their
respective segments was:



|Amounts in thousands of US dollars |             |          |  |                                          |  |     
|---------------------------------- | ----------- | -------- |  | ---------------------------------------- |  | ----
|Segment                            |             | Customer |  | 2013                                     |  | 2012
|                                   | MR          |          |  | Scorpio MR Pool Limited (1)              |  | $   
|                                   | Handymax    |          |  | Scorpio Handymax Tanker Pool Limited (1) |  |     
|                                   | Panamax/LR1 |          |  | Scorpio Panamax Tanker Pool Limited(1)   |  |     
|                                   | LR2         |          |  | Scorpio LR2 Pool Limited(1)              |  |     
|                                   |             |          |  | King Dustin (1)                          |  |     
|                                   |             |          |  |                                          |  | $   



|(1) |  | These customers are related parties (see note 13) |  |  |  |  |  |  |  | 
|--- |  | ------------------------------------------------- |  |  |  |  |  |  |  | 





F-37







| | 12. | Common shares
| | --- | -------------



February 2013 Shelf Registration Statement



On February 22, 2013,
we filed a Form F-3 with the Securities and Exchange Commission, with an effective date of February 25, 2013, which can be used
to issue common shares, preferred shares, debt securities, warrants, purchase contracts, and units. If a debt security is issued,
all of our subsidiaries may guarantee the securities issued by the parent company. Each subsidiary is 100% owned and each guarantee
of the registered security will be full, unconditional, and joint and several with all other subsidiary guarantees.



Share issuances



In February 2013, we closed
on the sale of 30,672,000 newly issued shares of common stock in a registered direct placement of common shares at an offering
price of $7.50 per share. We received net proceeds of $222.1 million, after deducting placement agent discounts and offering expenses
of $7.9 million.



In March
2013, we closed on the sale of 29,012,000 newly issued shares of common stock in a registered direct placement of common shares
at an offering price of $8.10 per share. We received net proceeds of $226.8 million, after deducting placement agent discounts
and offering expenses of $8.2 million.



In May 2013, we closed
on the sale of 36,144,578 newly issued shares of common stock in a registered direct placement of common shares at an offering
price of $8.30 per share. We received net proceeds of $289.2 million, after deducting placement agent discounts and offering expenses
of $10.8 million.



In August 2013, we closed
on the sale of 20,000,000 newly issued shares of common stock in an underwritten offering of common shares at an offering price
of $9.50 per share. In addition, the underwriters also fully exercised their over-allotment option to purchase 3,000,000
additional common shares at the offering price. We received aggregate net proceeds of $209.8 million after deducting underwriters’
discounts and offering expenses of $8.7 million.



In November 2013, we
issued 3,611,809 common shares to unaffiliated third parties in connection with our acquisition of four MR vessel newbuilding contracts.
See Note 4 for further description of this transaction.



In December 2013,
we issued 3,523,271 common shares to unaffiliated third parties in connection with our acquisition of four MR vessel
newbuilding contracts. See Note 4 for further description of this transaction.



Restricted stock





2010 Equity Incentive Plan Issuances



On June 18, 2010,
we issued 559,458 shares of restricted stock to our employees for no cash consideration. The share price at the date of issue
was $10.99 per share. The vesting schedule of the restricted stock is (i) one-third of the shares vested on April 6, 2013,
(ii) one-third of the shares vest on April 6, 2014, and (iii) one-third of the shares vest on April 6, 2015. Compensation
expense is recognized ratably over the vesting periods for each tranche using the straight-line method.



On June 18, 2010,
we issued 9,000 shares of restricted stock to our directors for no cash consideration. The share price at the date of issue
was $10.85 per share and these shares vested on April 6, 2011.



On January 31,
2011, we issued 281,000 shares of restricted stock to our employees for no cash consideration. The share price at the date of
issue was $9.83 per share. The vesting schedule of the restricted stock is (i) one-third of the shares vested on January 31,
2012, (ii) one-third of the shares vested on January 31, 2013, and (iii) one-third of the shares vest on January 31, 2014.
Compensation expense is recognized ratably over the vesting periods for each tranche using the straight-line method.



On January 31, 2011,
we issued 9,000 shares of restricted stock to our independent directors for no cash consideration. The share price at the date
of issue was $9.83 per share. These shares vested on January 31, 2012.



On January 31,
2012, we issued 281,000 shares of restricted stock to employees for no cash consideration. The share price at the date of
issue was $5.65 per share. The vesting schedule of the restricted stock is (i) one-third of the shares vested on January 31,
2013, (ii) one-third of the shares vest on January 31, 2014, and (iii) one-third of the shares vest on January 31, 2015.
Compensation expense is recognized ratably over the vesting periods for each tranche using the straight-line method.



On January 31, 2012,
we issued 9,000 shares of restricted stock to our independent directors for no cash consideration. The share price at the date
of issue was $5.65 per share. These shares vested on January 31, 2013.





F-38





2013 Equity Incentive Plan



In April 2013, we
adopted an equity incentive plan, which we refer to as the 2013 Equity Incentive Plan, under which directors, officers, employees,
consultants and service providers of us and our subsidiaries and affiliates are eligible to receive incentive stock options and
non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units and unrestricted common stock.
We reserved a total of 5,000,000 common shares for issuance under the plan.



Under the terms of
the plan, stock options and stock appreciation rights granted under the plan will have an exercise price equal to the fair market
value of a common share on the date of grant, unless otherwise determined by the plan administrator, but in no event will the exercise
price be less than the fair market value of a common share on the date of grant. Options and stock appreciation rights will be
exercisable at times and under conditions as determined by the plan administrator, but in no event will they be exercisable later
than ten years from the date of grant.



The plan administrator
may grant shares of restricted stock and awards of restricted stock units subject to vesting, forfeiture and other terms and conditions
as determined by the plan administrator. Following the vesting of a restricted stock unit, the award recipient will be paid an
amount equal to the number of vested restricted stock units multiplied by the fair market value of a common share on the date of
vesting, which payment may be paid in the form of cash or common shares or a combination of both, as determined by the plan administrator.
The plan administrator may grant dividend equivalents with respect to grants of restricted stock units.



Adjustments may be
made to outstanding awards in the event of a corporate transaction or change in capitalization or other extraordinary event. In
the event of a “change in control” (as defined in the plan), unless otherwise provided by the plan administrator in
an award agreement, awards then outstanding will become fully vested and exercisable in full.



Our board of directors
may amend or terminate the plan and may amend outstanding awards, provided that no such amendment or termination may be made that
would materially impair any rights, or materially increase any obligations, of a grantee under an outstanding award. Shareholder
approval of plan amendments will be required under certain circumstances. Unless terminated earlier by our board of directors,
the plan will expire ten years from the date the plan is adopted.



In the second quarter
of 2013, we issued 4,610,000 shares of restricted stock to our employees and 390,000 shares to our directors for no cash consideration.
The weighted average share price on the issuance dates was $8.69 per share. The vesting schedule of the restricted stock to our
employees is (i) one-third of the shares vest on March 10, 2016, (ii) one-third of the shares vest on March 10, 2017, and (iii)
one-third of the shares vest on March 10, 2018. The vesting schedule of the restricted stock to our directors is (i) one-third
of the shares vest on March 10, 2014, (ii) one-third of the shares vest on March 10, 2015, and (iii) one-third of the shares vest
on March 10, 2016.



In October
2013, we amended the 2013 Equity Incentive Plan to increase the number of common shares eligible for issuance to 11,376,044.
All other terms of the plan remained unchanged.



In
October 2013, we issued 3,749,998 shares of restricted stock to our employees and 250,000 shares to our directors for no
cash consideration. The weighted average share price on the issuance date was $9.85 per share. The vesting schedule of
the restricted stock to our employees is (i) one-third of the shares vest on October 11, 2016, (ii) one-third of the shares
vest on October 11, 2017, and (iii) one-third of the shares vest on October 11, 2018. The vesting schedule of the restricted
stock to our directors is (i) one-half of the shares vest on October 11, 2014 and (ii) one-half of the shares vest on October
11, 2015.



Compensation expense
is recognized ratably over the vesting periods for each tranche using the straight-line method.



As of December 31,
2013, there were 9,653,970 unvested shares of restricted stock outstanding. Assuming that all the restricted stock will vest, the
stock compensation expense in future periods, including that related to restricted stock issued in prior periods will be:



|In thousands of U.S. dollars          |  | Employees |        | Directors |  | Total
|------------------------------------- |  | --------- | ------ | --------- |  | -----
|For the year ending December 31, 2014 |  |           | 21,354 |           |  |      
|For the year ending December 31, 2015 |  |           | 20,700 |           |  |      
|For the year ending December 31, 2016 |  |           | 15,907 |           |  |      
|For the year ending December 31, 2017 |  |           | 8,269  |           |  |      
|For the year ending December 31, 2018 |  |           | 2,436  |           |  |      
|                                      |  | $         | 68,666 |           |  | $    





F-39





Dividend Payments



On April 15, 2013, the board of directors declared
a quarterly cash dividend of $0.025 per share, which was paid on June 25, 2013 to all shareholders of record as of June 11, 2013.



On July 29, 2013, the board of directors
declared a quarterly cash dividend of $0.035 per share, which was paid on September 25, 2013 to all shareholders of record as of
September 10, 2013.



On October 28, 2013, the board of directors
declared a quarterly cash dividend of $0.07 per share, which was paid on December 18, 2013 to all shareholders of record as of
December 3, 2013.



Shares outstanding



As of December
31, 2013, we had 275,000,000 registered shares of which 250,000,000 are designated as common shares with a par value of $0.01
and 25,000,000 designated as preferred shares with a par value of $0.01,



As of December 31,
2013 we had 198,791,502 shares outstanding. These shares provide the holders with rights to dividends and voting rights.

| | 13. | Related party transactions
| | --- | --------------------------



Transactions with entities
controlled by the Lolli-Ghetti family (herein referred to as related party affiliates) in the consolidated statement of income
or loss and balance sheet are as follows:



|                                     |  | For the year ended December 31,
|------------------------------------ |  | -------------------------------
|In thousands of US dollars           |  | 2013                           
|Pool revenue(1)                      |  |                                
|Scorpio MR Pool Limited              |  | $                              
|Scorpio Handymax Tanker Pool Limited |  |                                
|Scorpio Panamax Tanker Pool Limited  |  |                                
|Scorpio LR2 Pool Limited             |  |                                
|Scorpio Aframax Tanker Pool Limited  |  |                                
|Time charter revenue(2)              |  |                                
|King Dustin                          |  |                                
|Vessel operating costs(3)            |  |                                
|Commissions(4)                       |  |                                
|Administrative expenses(5)           |  |                                



| | (1) | These transactions relate to revenue earned in the Scorpio LR2, Scorpio
Panamax, Scorpio MR, Scorpio Aframax and Scorpio Handymax Tanker Pools (the Pools), which are owned by Scorpio LR2 Pool Limited,
Scorpio Panamax Tanker Pool Limited, Scorpio MR Pool Limited, Scorpio Aframax Tanker Pool Limited and Scorpio Handymax Tanker Pool
Limited, respectively. The Pools are related party affiliates.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | The revenue earned was for Noemi’s time charter with
King Dustin (which is 50% jointly controlled by a related party affiliate).
| | --- | --------------------------------------------------------------------------------------------------------------------------------

| | (3) | These transactions represent technical management fees charged by
SSM, a related party affiliate, which are included in the vessel operating costs in the consolidated statement of income or loss.
We believe our technical management fees for the years ended December 31, 2013, 2012 and 2011 were at arms-length rates as they
were based on contracted rates that were the same as those charged to other vessels managed by SSM at the time the management agreements
were entered into. In June 2013, this fee was increased to $685 per vessel per day from $548 per vessel per day (2012 and 2011:
$548 per vessel per day) for technical management.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





F-40







| | (4) | These
                                         transactions represent the expense due to SCM for commissions related to the commercial
                                         management services provided by SCM under the Commercial Management Agreement (see description
                                         below). Each vessel pays a commission of 1.25% of their gross revenue when not in the
                                         Pools.  When our vessels are in the Pools, SCM, the pool manager, charges fees
                                         of $300 per vessel per day with respect to our Panamax/LR1 vessels, $250 per vessel per
                                         day with respect to our LR2 vessels, and $325 per vessel per day with respect to
                                         each of our Handymax and MR vessels, plus 1.50% commission on gross revenues per charter
                                         fixture.  These are the same fees that SCM charges other vessels in these pools,
                                         including third party owned vessels, and they are and were included in voyage expenses
                                         in the consolidated statement of income or loss.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (5) | We have an Administrative Services Agreement with Scorpio Services
Holding Limited, or SSH, for the provision of administrative staff and office space, and administrative services, including accounting,
legal compliance, financial and information technology services. SSH is a related party to us. We reimburse SSH for the reasonable
direct or indirect expenses it incurs in providing us with the administrative services described above. SSH also arranges vessel
sales and purchases for us. The services provided to us by SSH may be sub-contracted to other entities within the Scorpio Group.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | Our Commercial Management Agreement
with SCM includes a daily flat fee charged payable to SCM for the vessels that are not in one of the pools managed by SCM. The
flat fee is $250 per day for Panamaxes/LR1 and LR2 vessels and $300 per day for Handymax and MR vessels.                                                                                                                                                                                                                                                                                                                                    



| | · | The
                                         expense for the year ended December 31, 2013 of $1.9 million included the flat fee of
                                         $0.3 million charged by SCM and administrative fees of $1.6 million charged by SSH and
                                         were included in voyage expenses and general and administrative expenses in the consolidated
                                         statement of income or loss.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | The
                                         expense for the year ended December 31, 2012 of $1.9 million included the flat fee of
                                         $0.7 charged by SCM, and administrative fees of $1.2 million charged by SSH and were
                                         both included in voyage expenses and general and administrative expenses in the consolidated
                                         statement of income or loss.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | The
                                         expense for the year ended December 31, 2011 of $1.9 million included the flat fee of
                                         $0.3 charged by SCM, and administrative fees of $1.7 million charged by SSH and were
                                         both included in general and administrative expenses in the consolidated statement of
                                         income or loss.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (6) | The
                                         Administrative Services Agreement with SSH includes a fee for arranging vessel purchases
                                         and sales, on our behalf, equal to 1% of the gross purchase or sale price, payable upon
                                         the consummation of any such purchase or sale. These fees are capitalized as part of
                                         the carrying value of the related vessel for a vessel purchase and are included as part
                                         of the gain or loss on sale for a vessel disposal. During the year ended December 31,
                                         2013, we paid SSH an aggregate fee of $9.1 million, which consisted of $2.5 million related
                                         to the purchase and delivery of seven newbuilding vessels in 2013 and $6.6 million on
                                         the purchase and subsequent sale of our VLGC business to Dorian in November
                                         2013. During the year ended December 31, 2012, we paid SSH an aggregate fee of $2.4 million,
                                         which consisted of $0.5 million on the sales of three Handymax vessels and $1.9 million
                                         on the purchase and delivery of our first five newbuilding vessels. In the year ended
                                         December 31, 2011, we paid SSH an aggregate fee of $0.7 million in May 2011 for the purchase
                                         of two MRs.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



We had the following balances with related
parties, which have been included in the consolidated balance sheets:



|                                         |  | As of December 31,
|---------------------------------------- |  | ------------------
|In thousands of US dollars               |  | 2013              
|Assets:                                  |  |                   
|Accounts receivable (due from the Pools) |  | $                 
|Accounts receivable (SCM)                |  |                   
|                                         |  |                   
|Liabilities:                             |  |                   
|Accounts payable (owed to the Pools)     |  |                   
|Accounts payable (SSM)                   |  |                   
|Accounts payable (SCM)                   |  |                   





F-41





In 2011, we also entered
into an agreement to reimburse costs to SSM as part of its supervision agreement for newbuilding vessels. $0.2 million and $0.1
million were charged under this agreement during the years ended December 31, 2013 and 2012, respectively. No amounts were
charged under this agreement during the year ended December 31, 2011.



Key management remuneration



The table below shows key management
remuneration for the years ended December 31, 2013, 2012 and 2011:



|                                        |  | For the period ended December 31,
|--------------------------------------- |  | ---------------------------------
|In thousands of US dollars              |  | 2013                             
|Short-term employee benefits (salaries) |  | $                                
|Share-based compensation (1)            |  |                                  
|                                        |  |                                  
|Total                                   |  | $                                

| | (1) | Represents the amortization of restricted stock issued under our equity
incentive plans as described in note 12.
| | --- | ----------------------------------------------------------------------------------------------------------------



There are no post-employment
benefits.

| | 14. | Vessel revenue
| | --- | --------------



During the years ended
December 31, 2013 and December 31, 2012, all revenue was generated from vessels operating in pools or in the spot market. During
the year ended December 31, 2011, we had two vessels that earned revenue through time-charter contracts.



Revenue Sources



|                             |  | For the year ended December 31,
|---------------------------- |  | -------------------------------
|In thousands of US dollars   |  | 2013                           
|Pool revenue                 |  | $                              
|Voyage revenue (spot market) |  |                                
|Time charter revenue         |  |                                
|                             |  | $                              



| | 15. | Charterhire
| | --- | -----------



The following table depicts
our time chartered-in vessel commitments during the year ended December 31, 2013.



|                                   | Name                |  | Year built |  | Type     |  | Delivery (1) |  | Charter Expiration |  | Rate ($/ day) |     
|---------------------------------- | ------------------- |  | ---------- |  | -------- |  | ------------ |  | ------------------ |  | ------------- | ----
|Active as of December 31, 2013     |                     |  |            |  |          |  |              |  |                   
|1                                  | Freja Polaris       |  | 2004       |  | Handymax |  | April-13     |  | April-14           |  | 12,700        | (2) 
|2                                  | Kraslava            |  | 2007       |  | Handymax |  | January-11   |  | May-14             |  | 12,800        | (3) 
|3                                  | Krisjanis Valdemars |  | 2007       |  | Handymax |  | February-11  |  | April-14           |  | 12,800        | (4) 
|4                                  | Jinan               |  | 2003       |  | Handymax |  | April-13     |  | April-15           |  | 12,600        |     
|5                                  | Iver Progress       |  | 2007       |  | Handymax |  | September-13 |  | March-15           |  | 12,500        | (5) 
|6                                  | Iver Prosperity     |  | 2007       |  | Handymax |  | October-13   |  | October-14         |  | 12,500        | (6) 
|7                                  | Histria Azure       |  | 2007       |  | Handymax |  | April-12     |  | April-14           |  | 12,600        | (7) 
|8                                  | Histria Coral       |  | 2006       |  | Handymax |  | July-11      |  | July-14            |  | 12,800        | (8) 
|9                                  | Histria Perla       |  | 2005       |  | Handymax |  | July-11      |  | July-14            |  | 12,800        | (8) 
|10                                 | STX Ace 6           |  | 2007       |  | MR       |  | May-12       |  | May-14             |  | 14,150        | (9) 
|11                                 | Targale             |  | 2007       |  | MR       |  | May-12       |  | May-14             |  | 14,500        | (10)
|12                                 | Ugale               |  | 2007       |  | MR       |  | January-13   |  | January-14         |  | 14,000        | (11)
|13                                 | Gan-Triumph         |  | 2010       |  | MR       |  | May-13       |  | May-14             |  | 14,150        |     
|14                                 | Nave Orion          |  | 2013       |  | MR       |  | March-13     |  | March-15           |  | 14,300        | (12)
|15                                 | Hafnia Lupus        |  | 2012       |  | MR       |  | April-12     |  | April-14           |  | 14,760        | (13)
|16                                 | Gan-Trust           |  | 2013       |  | MR       |  | January-13   |  | January-16         |  | 16,250        | (14)
|17                                 | Usma                |  | 2007       |  | MR       |  | January-13   |  | January-15         |  | 13,500        | (15)
|18                                 | SN Federica         |  | 2003       |  | LR1      |  | February-13  |  | May-15             |  | 11,250        | (16)
|19                                 | SN Azzura           |  | 2003       |  | LR1      |  | December-13  |  | December-14        |  | 13,600        |     
|20                                 | King Douglas        |  | 2008       |  | LR1      |  | August-13    |  | August-14          |  | 14,000        | (17)
|21                                 | Hellespont Promise  |  | 2007       |  | LR1      |  | December-12  |  | August-14          |  | 12,500        | (18)
|22                                 | FPMC P Eagle        |  | 2009       |  | LR1      |  | September-12 |  | September-15       |  | 14,525        | (19)
|23                                 | FPMC P Hero         |  | 2011       |  | LR2      |  | April-13     |  | May-14             |  | 15,000        | (20)
|24                                 | FPMC P Ideal        |  | 2012       |  | LR2      |  | January-13   |  | July-14            |  | 15,000        | (21)
|25                                 | Densa Alligator     |  | 2013       |  | LR2      |  | September-13 |  | September-14       |  | 16,500        | (22)
|26                                 | Khawr Aladid        |  | 2006       |  | LR2      |  | July-13      |  | July-15            |  | 15,400        |     
|27                                 | Fair Seas           |  | 2008       |  | LR2      |  | January-13   |  | January-14         |  | 16,250        | (23)
|28                                 | Southport           |  | 2008       |  | LR2      |  | December-13  |  | December-14        |  | 15,700        |     
|29                                 | Pink Stars          |  | 2010       |  | LR2      |  | April-13     |  | April-14           |  | 16,125        |     
|30                                 | Four Sky            |  | 2010       |  | LR2      |  | September-13 |  | September-14       |  | 16,250        |     
|31                                 | Orange Stars        |  | 2011       |  | LR2      |  | April-13     |  | April-14           |  | 16,125        |     
|                                   |                     |  |            |  |          |  |              |  |                    |  |               |     
|Time Charters That Expired In 2013 |                     |  |            | 
|1                                  | Endeavour           |  | 2004       |  | MR       |  | July-12      |  | February-13        |  | 11,525        |     
|2                                  | Pacific Duchess     |  | 2009       |  | MR       |  | March-12     |  | March-13           |  | 13,800        |     
|3                                  | Valle Bianca        |  | 2007       |  | MR       |  | August-12    |  | March-13           |  | 12,000        |     







F-42







|(1)  | Represents delivery date or estimated delivery date.                                                                                                                                                                                                                                                                                                                                      
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2)  | We have an option to extend the charter for an additional year at $14,000 per day.                                                                                                                                                                                                                                                                                                        
|(3)  | We have an option to extend the charter for an additional year at $13,650 per day.                                                                                                                                                                                                                                                                                                        
|(4)  | We have an option to extend the charter for an additional year at $13,650 per day.  The agreement also contains a 50% profit and loss sharing provision whereby we split all of the vessel’s profits and losses above or below the daily base rate with the vessel’s owner.                                                                                                               
|(5)  | We have an option to extend the charter for an additional year at $13,500 per day.                                                                                                                                                                                                                                                                                                        
|(6)  | We have an option to extend the charter for an additional year at $13,250 per day.                                                                                                                                                                                                                                                                                                        
|(7)  | We have an option to extend the charter for an additional year at $13,550 per day.                                                                                                                                                                                                                                                                                                        
|(8)  | We have options to extend each charter for an additional year at $13,550 per day.                                                                                                                                                                                                                                                                                                         
|(9)  | We have an option to extend the charter for an additional year at $15,150 per day.                                                                                                                                                                                                                                                                                                        
|(10) | We have options to extend the charter for up to three consecutive one year periods at $14,850 per day, $15,200 per day and $16,200 per day, respectively.                                                                                                                                                                                                                                 
|(11) | We have an option to extend the charter for an additional year at $15,000 per day.                                                                                                                                                                                                                                                                                                        
|(12) | We have an option to extend the charter for an additional year at $15,700 per day.                                                                                                                                                                                                                                                                                                        
|(13) | We have an option to extend the charter for an additional year at $16,000 per day.                                                                                                                                                                                                                                                                                                        
|(14) | The daily base rate represents the average rate for the three year duration of the agreement.  The rate for the first year is $15,750 per day, the rate for the second year is $16,250 per day, and the rate for the third year is $16,750 per day. We have options to extend the charter for up to two consecutive one year periods at $17,500 per day and $18,000 per day, respectively.
|(15) | In October 2013, we declared an option to extend the charter for an additional year at $14,500 per day effective January 2014.                                                                                                                                                                                                                                                            
|(16) | We have an option to extend the charter for an additional year at $12,500 per day.  We have also entered into an agreement with the vessel owner whereby we split all of the vessel’s profits above the daily base rate.                                                                                                                                                                  
|(17) | We have an option to extend the charter for an additional year at $15,000 per day.                                                                                                                                                                                                                                                                                                        
|(18) | In December 2013, we declared an option to extend the charter for an additional six months at $14,250 per day effective February 2014.                                                                                                                                                                                                                                                    
|(19) | We entered into a new charter agreement for an additional two years at $14,525 per day effective October 2013.                                                                                                                                                                                                                                                                            
|(20) | We have options to extend the charter for two consecutive six month periods at $15,250 per day and $15,500 per day, respectively.                                                                                                                                                                                                                                                         
|(21) | In December 2013, we declared an option to extend the charter for an additional six months at $15,250 per day effective January 2014.  We have an option to extend the charter for six month periods at $15,500 per day.                                                                                                                                                                  
|(22) | We have an option to extend the charter for one year at $17,550 per day.                                                                                                                                                                                                                                                                                                                  
|(23) | We have options to extend the charter for two consecutive six month periods at $16,500 per day and $16,750 per day, respectively.                                                                                                                                                                                                                                                         



The undiscounted remaining future minimum lease
payments under these arrangements as of December 31, 2013 are $114.0 million. The obligations under these agreements will be repaid
as follows:





|                             |  | As of December 31,
|---------------------------- |  | ------------------
|In thousands of U.S. dollars |  | 2013              
|Less than 1 year             |  | $                 
|1 - 5 years                  |  |                   
|Total                        |  | $                 



The total expense
recognized under charterhire agreements during the years ended December 31, 2013, 2012 and 2011 was $115.5 million, $43.7 million
and $22.8 million, respectively.

| | 16. | General and administrative expenses
| | --- | -----------------------------------



General and administrative
expenses primarily represent employee benefit expenses, professional fees and administration/commercial management fees (see note
13).



Employee benefit
expenses consist of:



|                                        |  | For the year ended December 31,
|--------------------------------------- |  | -------------------------------
|In thousands of US dollars              |  | 2013                           
|Short term employee benefits (salaries) |  | $                              
|Share based compensation (see note 12)  |  |                                
|                                        |  | $                              





F-43







| | 17. | Financial expenses
| | --- | ------------------



Financial expenses
comprise:



|                                                  |  | For the year ended December 31,
|------------------------------------------------- |  | -------------------------------
|In thousands of US dollars                        |  | 2013                           
|Commitment fees on undrawn portions of bank loans |  | $                              
|Interest payable on bank loans (2)                |  |                                
|Amortization of deferred financing fees           |  |                                
|Total financial expenses                          |  | $                              



(1)The amortization
of deferred financing fees in the year ended December 31, 2012 includes a $3.0 million charge arising from the amendment of the
2011 Credit Facility to extend its availability period from May 2013 to January 2014 (see note 9).

(2)The decrease
in interest payable from the year ended December 31, 2012 was primarily driven by an increase in interest capitalized during the
year ended December 31, 2013 which was the result of the significant growth in our Newbuilding Program.





F-44







| | 18. | Tax
| | --- | ---



Scorpio Tankers
Inc. and its subsidiaries are incorporated in the Republic of the Marshall Islands, and in accordance with the income tax laws
of the Marshall Islands, are not subject to Marshall Islands’ income tax. We are also exempt from income tax in other jurisdictions
including the United States of America due to tax treaties; therefore, we did not have any tax charges, benefits, or balances as
of or for the periods ended December 31, 2013, 2012 and 2011.



| | 19. | Earnings / loss per share
| | --- | -------------------------



The calculation
of both basic and diluted earnings/loss per share is based on net income/loss attributable to equity holders of the parent and
weighted average outstanding shares of:



|                                                                 |  | For the year ended December 31,
|---------------------------------------------------------------- |  | -------------------------------
|In thousands of US dollars except for share data                 |  | 2013                           
|Net income / (loss) attributable to equity holders of the parent |  | $                              
|Basic  weighted average number of shares                         |  |                                
|Effect of dilutive potential basic shares:                       |  |                                
|Restricted stock                                                 |  |                                
|                                                                 |  |                                
|Diluted weighted average number of shares                        |  |                                



The dilutive effect of
1,835,323 shares of restricted stock for the year ended December 31, 2013 is related to 9,653,970 unvested restricted shares. During
the years ended December 31, 2012 and 2011, we incurred a loss, and as a result, the inclusion of potentially dilutive shares in
the diluted loss per share calculation would have an antidilutive effect on the loss per share for the period. Therefore, all restricted
shares (1,036,791 and 849,458 for the years ended December 31, 2012 and 2011, respectively) have been excluded from the diluted
loss per share calculation for these periods.

| | 20. | Financial instruments
| | --- | ---------------------



Funding and capital risk management



We manage our funding and
capital resources to ensure our ability to continue as a going concern while maximizing the return to the shareholder through optimization
of the debt and equity balance.





F-45





Categories of financial instruments



|                                                 |  | As of December 31
|------------------------------------------------ |  | -----------------
|Amounts in thousands of US dollars               |  | 2013             
|Financial assets                                 |  |                  
|Cash and cash equivalents                        |  | $                
|Loans and receivables                            |  |                  
|Derivatives at fair value through profit or loss |  |                  
|                                                 |  |                  
|Financial liabilities                            |  |                  
|Derivatives designated in a cash flow hedge      |  |                  
|Derivatives at fair value through profit or loss |  |                  
|Other liabilities (at amortized cost)            |  |                  



Derivative financial
instruments in 2013 and 2012 consisted of (i) interest rate swaps, recorded at the present value of future cash flows
estimated and discounted based on the applicable yield curves derived from quoted interest rates to determine the fair value,
and (ii) profit or loss sharing agreements on time charter-in agreements with third parties, where the fair value of these
instruments is determined by comparing published time charter rates to the charterhire rate and discounting those cash flows
to their estimated present value.



Derivative financial instrument
in 2011 solely comprised of interest rate swaps, recorded at the present value of future cash flows estimated and discounted based
on the applicable yield curves derived from quoted interest rates to determine the fair value.



IFRS 13 requires classifications
of fair value measures into Levels 1, 2 and 3. Level 1 fair value measurements are those derived from quoted prices (unadjusted)
in active markets for identical assets or liabilities. Level 2 fair value measurements are those derived from inputs other than
quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly
(i.e. derived from prices); and Level 3 fair value measurements are those derived from valuation techniques that include inputs
for the asset or liability that are not based on observable market data (unobservable inputs). In accordance with IFRS 13, the
fair value measurement for the interest rate swaps and profit or loss sharing agreements in 2013, 2012 and 2011 were classified
as Level 2.



The fair value of other
financial assets and liabilities are approximately equal to their carrying values.



Financial risk management objectives



We identify and evaluate
significant risks on an ongoing basis with the objective of managing the sensitivity of our results and financial position to those
risks. These risks include market risk, credit risk, liquidity risk and foreign exchange risk.



The use of financial derivatives
is governed by our policies as approved by the board of directors.



Market risk



Our activities expose us
to the financial risks of changes in interest rates.



In the years ended December
31, 2013, 2012, and 2011, we were party to interest rate swaps to mitigate the risk of rising interest rates. In August 2011, we
entered into six interest rate swap agreements to manage interest costs and the risk associated with changing interest rates on
our 2011 Credit Facility and 2010 Revolving Credit Facility with three different banks.



Details of the amounts
recorded in the consolidated statement of profit or loss and statement of other comprehensive income in respect of such instruments
are provided in Note 10.



Sensitivity analysis - Interest rate
risk



The sensitivity analyses
below have been determined based on the exposure to interest rates for non-derivative instruments at the balance sheet date. For
floating rate liabilities, the analysis is prepared assuming the amount of liability outstanding at balance sheet date was outstanding
for the whole year.





F-46





If interest rates had been
1% higher/lower and all other variables were held constant, our net income for the year ended December 31, 2013 would have decreased/increased
by $0.2 million. This is mainly attributable to our exposure to interest rate movements on our 2011 Credit Facility, STI Spirit
Credit Facility and Newbuilding Credit Facility.



If interest rates had been
1% higher/lower and all other variables were held constant, our net income for the year ended December 31, 2012 would have decreased/increased
by $1.6 million. This is mainly attributable to our exposure to interest rate movements on our 2010 Revolving Credit Facility,
2011 Credit Facility, STI Spirit Credit Facility and Newbuilding Credit Facility.



If interest rates had been
1% higher/lower and all other variables were held constant, our net income for the year ended December 31, 2011 would have decreased/increased
by $1.6 million. This is mainly attributable to our exposure to interest rate movements on our 2010 Revolving Credit Facility,
2011 Credit Facility and STI Spirit Credit Facility.



Credit risk



Credit risk is the potential
exposure of loss in the event of non-performance by customers and derivative instrument counterparties.



We only place cash deposits with major banks
covered with strong and acceptable credit ratings.



Accounts receivable are generally not collateralized;
however, we believe that the credit risk is partially offset by the creditworthiness of our counterparties including the commercial
and technical managers. We did not experience material credit losses on our accounts receivables portfolio in the years ended December
31, 2013, 2012, and 2011.



The carrying amount of
financial assets recognized in the consolidated financial statements represents the maximum exposure to credit risk without taking
account of the value of any collateral obtained. We did not experience any impairment losses on financial assets in the years ended
December 31, 2013, 2012, and 2011.



We monitor exposure to
credit risk, and believe that there is no substantial credit risk arising from counterparties.



Liquidity risk



Liquidity risk is the risk
that an entity will encounter difficulty in raising funds to meet commitments associated with financial instruments.



We manage liquidity risk
by maintaining adequate reserves and borrowing facilities and by continuously monitoring forecast and actual cash flows.



Current economic conditions
make forecasting difficult, and there is the possibility that our actual trading performance during the coming year may be materially
different from expectations. Based on internal forecasts and projections that take into account reasonably possible changes in
our trading performance, we believe that we have adequate financial resources to continue in operation and meet our financial commitments
(including but not limited to newbuilding installments, debt service obligations and charterhire commitments) for a period of at
least twelve months from the date of approval of these consolidated financial statements. Accordingly, we continue to adopt the
going concern basis in preparing our financial statements.



Remaining contractual maturity on secured
bank loans (Note 9)



The following table details
our remaining contractual maturity for our secured bank loans. The amounts represent the future undiscounted cash flows of the
financial liability based on the earliest date on which we can be required to pay. The table includes both interest and principal
cash flows and takes into consideration the amount fixed via the interest rate swap discussed above.



As the interest cash flows
are not fixed, the interest amount included has been determined by reference to the projected interest rates as illustrated by
the yield curves existing at the reporting date.





F-47





To be repaid
as follows:





|                                   |  | As of December 31,
|---------------------------------- |  | ------------------
|Amounts in thousands of US dollars |  | 2013              
|Less than 1 month                  |  | $                 
|1-3 months                         |  |                   
|3 months to 1 year                 |  |                   
|1-5 years                          |  |                   
|5+ years                           |  |                   
|Total                              |  | $                 



The following table details
our remaining contractual maturity for our interest rate swaps. The amounts represent the future undiscounted cash flows of the
financial liability based on the earliest date on which we can be required to pay.





|                                     |  | As of December 31
|------------------------------------ |  | -----------------
|Amounts in thousands of U.S. dollars |  | 2013             
|Less than 1 month                    |  | $                
|1 - 3 months                         |  |                  
|3 months to 1 year                   |  |                  
|1 - 5 years                          |  |                  
|Total                                |  | $                



All other current liabilities
fall due within less than one month.



Foreign Exchange Rate Risk



Our primary economic environment
is the international shipping market. This market utilizes the U.S. Dollar as its functional currency. Consequently, virtually
all of our revenues and the majority of our operating expenses are in U.S. Dollars. However, we incur some of our combined expenses
in other currencies, particularly the Euro. The amount and frequency of some of these expenses (such as vessel repairs, supplies
and stores) may fluctuate from period to period. Depreciation in the value of the U.S. dollar relative to other currencies will
increase the U.S. dollar cost of us paying such expenses. The portion of our business conducted in other currencies could increase
in the future, which could expand our exposure to losses arising from currency fluctuations.



There is a risk that currency
fluctuations will have a negative effect on our cash flows. We have not entered into any hedging contracts to protect against currency
fluctuations. However, we have some ability to shift the purchase of goods and services from one country to another and, thus,
from one currency to another, on relatively short notice. We may seek to hedge this currency fluctuation risk in the future.





F-48







| | 21. | Replacement of Auditor
| | --- | ----------------------



In April 2013,
the Board, upon recommendation from our audit committee, appointed PricewaterhouseCoopers Audit as our independent auditor
for the fiscal year ending December 31, 2013, replacing Deloitte LLP.



| | 22. | Subsequent events
| | --- | -----------------



Delivery of Newbuilding Vessels



In January 2014,
we took delivery of two vessels under our Newbuilding program, STI Duchessa and STI Opera. After delivery, each vessel
began a short term time charter for up to 120 days at approximately $19,000 per day.



In March 2014, we
took delivery of an MR tanker under our Newbuilding program, STI Texas City. After delivery, this vessel began a time
charter for two years at $16,000 per day. This time charter includes a profit sharing mechanism whereby earnings in excess of
the base time charter rate will be split between the Company and charterer, Valero.



2010 Revolving Credit Facility



In January 2014,
we drew down $72.4 million from the 2010 Revolving Credit Facility. In March 2014, we paid $22.7 million into this facility
as a result of the sales of Noemi and Senatore which are discussed further below.



2011 Credit Facility



In January 2014, we drew down $52.0 million
from the 2011 Credit Facility. In connection with this draw down, STI Duchessa, STI Le Rocher and STI Larvotto were
provided as collateral under the facility.



2013 Credit Facility



In February 2014, we drew down $64.2 million
from the 2013 Credit Facility. In connection with this draw down, STI Opera, STI Fontvieille and STI Ville were provided
as collateral under the facility.



In March 2014, we drew down $20.5 million from
the 2013 Credit Facility to partially finance the delivery of STI Texas City.



K-Sure Credit Facility



In February 2014,
we entered into a $458.3 million senior secured term loan facility which consists of a $358.3 million tranche with a group of financial
institutions that is being 95% covered by Korea Trade Insurance Corporation (the ‘K-Sure Tranche’) and a $100.0 million
commercial tranche with a group of financial institutions led by DNB Bank SA (the “Commercial Tranche”). We refer to
this credit facility as our K-Sure Credit Facility.



Drawdowns under the
K-Sure Credit Facility may occur in connection with the delivery of certain of our newbuilding vessels as specified in the agreement.
The amount of each drawdown shall not exceed the lesser of 60% of the newbuilding contract price and 74% of the fair market value
of the relevant vessel. Drawdowns are available until the earlier of (i) the delivery date of the last vessel specified in the
agreement to be acquired, (ii) September 30, 2015 and (iii) the date on which the total commitments under the loan are fully borrowed,
cancelled or terminated.



Repayments will be
made in equal consecutive six month repayment installments in accordance with a 15 year repayment profile under the Commercial
Tranche and a 12 year repayment profile under the K-Sure Tranche. Repayments will commence in July 2015 for the K-Sure Tranche
and six months after the delivery of the last vessel to be acquired for the Commercial Tranche. The Commercial Tranche matures
on the sixth anniversary of the delivery date of the last vessel to be acquired and the K-Sure Tranche matures in January 2027
assuming the Commercial Tranche is refinanced through that date.



Borrowings under the
K-Sure tranche bear interest at LIBOR plus an applicable margin of 2.25%. Borrowings under the Commercial Tranche bear interest
at LIBOR plus an applicable margin of 3.25% from the effective date of the agreement to the fifth anniversary thereof and 3.75%
thereafter until the maturity date in respect of the Commercial Tranche. A commitment fee equal to 40% of the applicable margin
is payable on the unused daily portion of the credit facility.



In addition to restrictions
imposed upon the owners of the vessels that are collateralized under this credit facility (such as, limitations on liens and limitations
on the incurrence of additional indebtedness), our K-Sure Credit Facility includes financial covenants that require us to maintain:



| | · | The ratio of net debt to total capitalization
no greater than 0.60 to 1.00.
| | - | ---------------------------------------------------------------------------





F-49







| | · | Consolidated tangible net worth no less
than $677.3 million plus (i) 25% of cumulative positive net income (on a consolidated basis) for each fiscal quarter commencing
on or after October 1, 2013 and (ii) 50% of the value of any new equity issues occurring on or after October 1, 2013.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | The ratio of EBITDA to net interest expense
greater than 2.50 to 1.00 calculated on a trailing four quarter basis.
| | - | ------------------------------------------------------------------------------------------------------------------



| | · | Minimum liquidity of not less than the greater
of $25.0 million or 5% of total indebtedness.
| | - | --------------------------------------------------------------------------------------------



| | · | The aggregate fair market value of the vessels
provided as collateral under the facility shall at all times be no less than 135% of the then aggregate outstanding principal amount
of loans under the credit facility.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



KEXIM Credit Facility



In February
2014, we executed a senior secured term loan facility with a group of financial institutions led by DNB Bank ASA and
Skandinaviska Enskilda Banken AB (publ) and from the Export-Import Bank of Korea (“KEXIM”) for a total loan
facility of $429.6 million. This facility includes commitments from KEXIM of up to $300.6 million (the “KEXIM
Tranche”) and a group of financial institutions led by DNB Bank ASA and Skandinaviska Enskilda Banken AB (publ) of up
to $129.0 million (the “Commercial Tranche”).We refer to this credit facility as our KEXIM Credit Facility.



Drawdowns under the
KEXIM Credit Facility may occur in connection with the delivery of 18 of our newbuilding vessels as specified in the loan agreement.
The amount of each drawdown shall not exceed the lesser of 60% of the newbuilding contract price and 74% of the fair market value
of the relevant vessel. Drawdowns are available until the earlier of (i) the delivery date of the last vessel specified in the
agreement to be acquired, (ii) March 31, 2015 and (iii) the date on which the total commitments under the loan are fully borrowed,
cancelled or terminated.



Repayments will
be made in equal consecutive semi-annual repayment installments in accordance with a 15 year repayment profile under the
Commercial Tranche and a 12 year repayment profile under the KEXIM Tranche. Repayments will commence on the next semi-annual
date falling after the weighted average delivery date of the vessels specified under the facility for the KEXIM Tranche and
on the next semi-annual date falling after the final delivery date of the vessels specified under the facility for the
Commercial Tranche.



The Commercial Tranche
matures on the sixth anniversary of the delivery date of the last vessel specified under the loan and the KEXIM Tranche matures
on the twelfth anniversary of the weighted average delivery date of the vessels specified under the loan assuming the Commercial
Tranche is refinanced through that date.



Borrowings under
the KEXIM tranche bear interest at LIBOR plus an applicable margin of 3.25%. Borrowings under the Commercial Tranche bear
interest at LIBOR plus an applicable margin of 3.25% from the effective date of the agreement to the fifth anniversary
thereof and 3.75% thereafter until the maturity date in respect of the Commercial Tranche. A commitment fee equal to 40% of
the applicable margin is payable on the unused daily portion of the credit facility.



In addition to restrictions
imposed upon the owners of the vessels that are collateralized under this credit facility (such as, limitations on liens and limitations
on the incurrence of additional indebtedness), our KEXIM Credit Facility includes financial covenants that require us to maintain:



| | · | The ratio of net debt to total capitalization
no greater than 0.60 to 1.00.
| | - | ---------------------------------------------------------------------------



| | · | Consolidated tangible net worth no less
than $677.3 million plus (i) 25% of cumulative positive net income (on a consolidated basis) for each fiscal quarter commencing
on or after October 1, 2013 and (ii) 50% of the value of any new equity issues occurring on or after October 1, 2013.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | The ratio of EBITDA to net interest expense
greater than 2.50 to 1.00 calculated on a trailing four quarter basis.
| | - | ------------------------------------------------------------------------------------------------------------------



| | · | Minimum liquidity of not less than the greater
of $25.0 million or 5% of total indebtedness.
| | - | --------------------------------------------------------------------------------------------



| | · | The aggregate fair market value of the vessels
provided as collateral under the facility shall at all times be no less than 135% of the then aggregate outstanding principal amount
of loans under the credit facility.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





F-50





In addition to KEXIM’s
commitment of up to $300.6 million, KEXIM has also provided an optional guarantee for a five year amortizing note of $125.3 million
(the “KEXIM Guaranteed Note”) that may be issued by us at our discretion in 2014; the proceeds of which will be used
to reduce the $300.6 million KEXIM Tranche.



Time Chartered-in Vessels



In February 2014, we
entered into a new time charter-in agreement on an LR2 vessel that is currently time chartered-in. The new agreement is for
six months at $16,500 per day and commenced upon the expiration of the existing charter in February 2014.



In February 2014, we
entered into a new time charter-in agreement on an LR2 vessel. The agreement is for one year at $15,000 per day. We have the
option to extend the charter for an additional six months at $16,250 per day. We took delivery of this vessel in March 2014.



2013 Equity Incentive Plan



In February
2014, we issued 2,011,000 shares of restricted stock to our employees and 145,045 shares to our directors for no cash
consideration. The weighted average share price on the issuance date was $9.30 per share. The vesting schedule of the
restricted stock to our employees is (i) one-third of the shares vest on February 21, 2017, (ii) one-third of the shares vest
on February 21, 2018, and (iii) one-third of the shares vest on February 21, 2019. The vesting schedule of the restricted
stock to our directors is (i) one-third of the shares vest on February 21, 2015, (ii) one-third of the shares vest on
February 21, 2016, and (iii) one-third of the shares vest on February 21, 2017. Compensation expense is recognized ratably
over the vesting periods for each tranche using the straight-line method.



Assuming that all the restricted
stock will vest, the stock compensation expense relating to these and prior issuances under our 2013 Equity Incentive Plan in future
periods will be:



|In thousands of U.S. dollars          |  | Employees |        | Directors |  | Total
|------------------------------------- |  | --------- | ------ | --------- |  | -----
|For the year ending December 31, 2014 |  | $         | 25,536 |           |  | $    
|For the year ending December 31, 2015 |  |           | 25,577 |           |  |      
|For the year ending December 31, 2016 |  |           | 20,797 |           |  |      
|For the year ending December 31, 2017 |  |           | 11,367 |           |  |      
|For the year ending December 31, 2018 |  |           | 3,904  |           |  |      
|For the year ending December 31, 2019 |  |           | 177    |           |  |      
|                                      |  | $         | 87,358 |           |  | $    



In March 2014, we amended
the 2013 Equity Incentive Plan to clarify that the plan administrator has the ability to redeem restricted stock for fair market
value (as defined in the plan) at the vesting date at its discretion.



Dividend Declaration



In February 2014, the board
of directors declared a quarterly cash dividend of $0.08 per share, which was paid on March 26, 2014 to all shareholders of record
as of March 11, 2014.



Vessel Sales



In January 2014,
we agreed to sell Noemi andSenatorefor an aggregate selling price of $44.0 million. Noemiwas sold in March
2014 and Senatore is expected to close in April 2014. As part of these sales, we repaid $22.7 million into our 2010 Revolving
Credit Facility. The availability of this facility is reduced by such amount and the quarterly reduction is reduced to $2.1 million
from $3.1 million per quarter. We will also write-off a total of $0.2 million of deferred financing fees as part of these debt
repayments.





F-51





In February 2014, we agreed
to sell the 2008 built LR2 product tanker, STI Spirit, for approximately $30.2 million. As part of this sale, we will repay
all amounts due under the STI Spirit Credit Facility of $21.4 million. This sale is expected to close in April 2014.



Newbuilding Credit Facility



In March 2014,
we amended and restated our Newbuilding Credit Facility with Credit Agricole Corporate and Investment Bank and Skandinaviska
Enskilda Banken AB, to convert it from a term loan to a reducing revolving credit facility. This gives us the ability to pay
down and re-borrow from the total available commitments under the loan. All other terms and definitions remain not changed.
This facility was fully drawn as of the date of this report.



Sale of VLCCs under construction



In March 2014, we entered
into an agreement to sell our seven VLCCs under construction for cash. As part of these sales, we expect to record a gain on disposal
of approximately $50.0 million in the first quarter of 2014.



Subsequent to this transaction,
we have 55 newbuilding product tanker orders with HMD, SPP, HSHI and DSME (29 MRs, 14 Handymaxes and 12 LR2s). The estimated future
payment dates and amounts are as follows*:



|Q1 2014 |  |  |   | 190.9   |  |  |  | million** | 
|------- |  |  | - | ------- |  |  |  | --------- | 
|Q2 2014 |  |  |   | 367.6   |  |  |  | million   | 
|Q3 2014 |  |  |   | 422.0   |  |  |  | million   | 
|Q4 2014 |  |  |   | 292.1   |  |  |  | million   | 
|Q1 2015 |  |  |   | 167.5   |  |  |  | million   | 
|Q2 2015 |  |  |   | 168.2   |  |  |  | million   | 
|Total   |  |  | $ | 1,608.3 |  |  |  | million   | 



*These are estimates only and are subject to change as construction
progresses.



**All first quarter 2014 installment payments
have been paid as of the date of this report.





F-52









SCORPIO TANKERS
INC.