##### Table of Contents









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        
|          
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934         
|          
|           |  | For the fiscal year ended December 31, 2004                                                      
|          
|OR        
|          
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934     
|          
|           |  | For the transition period
    from           to                                                  

Commission file number: 001-32343


Arlington Tankers Ltd.


(Exact name of Registrant as specified in its charter)


Bermuda


(Jurisdiction of incorporation or organization)


First Floor, The Hayward Building


22 Bermudiana Road


Hamilton HM 11, Bermuda


(Address of
principal executive offices)


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


None


|                                         |  |                                          
|---------------------------------------- |  | -----------------------------------------
|Title of Each Class                      |  | Name of Each Exchange on Which Registered
|                                         |  |                                          
|Common Shares, 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)






þ o


o þ










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TABLE OF CONTENTS


|                                                                      |  |                                                                                  |     |      |    |  |  | 
|--------------------------------------------------------------------- |  | -------------------------------------------------------------------------------- | --- | ---- | -- |  |  | 
|                                                                      |  |                                                                                  |     | Page |   
|                                                                      |  |                                                                                  |     |      |   
|Item 1:                                                               |  | Identity of Directors, Senior Management
    and Advisers                        |     |      | 1  | 
|Item 2:                                                               |  | Offer Statistics and Expected Timetable                                          |     |      | 1  | 
|Item 3:                                                               |  | Key Information                                                                  |     |      | 1  | 
|Item 4:                                                               |  | Information on the Company                                                       |     |      | 13 | 
|Item 5:                                                               |  | Operating and Financial Review and
    Prospects                                 |     |      | 43 | 
|Item 6:                                                               |  | Directors, Senior Management and
    Employees                                   |     |      | 53 | 
|Item 7:                                                               |  | Major Shareholders and Related Party
    Transactions                            |     |      | 56 | 
|Item 8:                                                               |  | Financial Information                                                            |     |      | 58 | 
|Item 9:                                                               |  | The Offer and Listing                                                            |     |      | 60 | 
|Item 10:                                                              |  | Additional Information                                                           |     |      | 61 | 
|Item 11:                                                              |  | Quantitative and Qualitative Disclosures
    About Market Risk                   |     |      | 75 | 
|Item 12:                                                              |  | Description of Securities other than Equity
    Securities                       |     |      | 75 | 
|Item 13:                                                              |  | Defaults, Dividend Arrearages and
    Delinquencies                              |     |      | 75 | 
|Item 14:                                                              |  | Material Modifications to the Rights of
    Security Holders and Use of Proceeds |     |      | 76 | 
|Item 15:                                                              |  | Controls and Procedures                                                          |     |      | 76 | 
|Item 16A:                                                             |  | Audit Committee Financial Expert                                                 |     |      | 77 | 
|Item 16B:                                                             |  | Code of Ethics                                                                   |     |      | 77 | 
|Item 16C:                                                             |  | Principal Accountant Fees and Services                                           |     |      | 77 | 
|Item 16D:                                                             |  | Exemptions from the Listing Standards for
    Audit Committees                   |     |      | 78 | 
|Item 16E:                                                             |  | Purchases of Equity Securities by the
    Issuer and Affiliated Purchasers       |     |      | 78 | 
|Item 17:                                                              |  | Financial Statements                                                             |     |      | 78 | 
|Item 18:                                                              |  | Financial Statements                                                             |     |      | 78 | 
|Item 19:                                                              |  | Exhibits                                                                         |     |      | 78 | 
|                                                                      |  |                                                                                  |     |      |    |  |  | 
|Index to Consolidated Financial Statements                            |  |                                                                                  | F-1 |     
|Ex-10.3.2 Amend. No.1 to Time Charter Party (Stena Companion)        
|Ex-10.3.4 Amend. No.1 to Time Charter Party (Stena Compatriot)       
|Ex-10.3.6 Amend. No.1 to Time Charter Party (Stena Concord)          
|Ex-10.3.8 Amend. No.1 to Time Charter Party (Stena Consul)           
|Ex-10.3.10 Amend.No.1 to Time Charter Party (Stena Victory)          
|Ex-10.3.12 Amend. No.1 to Time Charter Party (Stena Vision)          
|Ex-10.4.2 Amend. No.1 to Ship Management Agreement (Stena Companion) 
|Ex-10.4.4 Amend. No.1 to Ship Management Agreement (Stena Compatriot)
|Ex-10.4.6 Amend. No.1 to Ship Management Agreement (Stena Concord)   
|Ex-10.4.8 Amend. No.1 to Ship Management Agreement (Stena Consul)    
|Ex-10.4.10 Amend.No.1 to Ship Management Agreement (Stena Victory)   
|Ex-10.4.12 Amend.No.1 to Ship Management Agreement (Stena Vision)    
|Ex-12.1 Section 302 Certification of CEO                             
|Ex-12.2 Section 302 Certification of CFO                             
|Ex-13.1 Section 906 Certification of CEO                             
|Ex-13.1 Section 906 Certification of CFO                             












---



##### Table of Contents



Forward Looking Statements






| |   |                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | future operating or financial results;                                                                                                                               
|
| |  | future payments of quarterly dividends and the availability of
    cash for payment of quarterly dividends;                                                          
|
| |  | statements about future, pending or recent acquisitions,
    business strategy, areas of possible expansion, and expected
    capital spending or operating expenses;
|
| |  | statements about tanker market trends, including charter rates
    and factors affecting vessel supply and demand;                                                   
|
| |  | expectations about the availability of vessels to purchase, the
    time which it may take to construct new vessels, or
    vessels useful lives; and               
|
| |  | our ability to repay our secured credit facility at maturity, to
    obtain additional financing and to obtain replacement charters
    for our vessels.             





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##### Table of Contents



Industry and Market Data






| |   |                                                                                                                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | some information in Poten & Partners database is
    derived from estimates or subjective judgments;                                                                                                                                                                    
|
| |  | the information in the databases and views of other maritime
    data collection agencies may differ from the information in
    Poten & Partners databases and views; and                                                                                              
|
| |  | while Poten & Partners has taken reasonable care in the
    compilation of the statistical information and believes it to be
    accurate and correct, data compilation is subject to limited
    audit and validation procedures and may accordingly contain
    errors.



---



##### Table of Contents



PART I







|        |                                                          
|------- | ---------------------------------------------------------
|Item 1: | Identity of Directors, Senior Management and
    Advisers








|        |                                        
|------- | ---------------------------------------
|Item 2: | Offer Statistics and Expected Timetable








|        |                
|------- | ---------------
|Item 3: | Key Information

Selected Financial and Statistical Data




|                                              |  |                                            |        |   |                         |  |         |      |  |  |         |   |  |      |         |   |      |  |         |   |  |  |     |  
|--------------------------------------------- |  | ------------------------------------------ | ------ | - | ----------------------- |  | ------- | ---- |  |  | ------- | - |  | ---- | ------- | - | ---- |  | ------- | - |  |  | --- | -
|                                              |  | 51-Day Period from                         |        |   |                        
|                                              |  | November 10, 2004                          |        |   | Year Ended December 31, | 
|                                              |  | through                                    |        |   |                         | 
|                                              |  | December 31, 2004                          |        |   | 2004                    |  |         | 2003 |  |  | 2002    |   |  | 2001 |         |   | 2000 | 
|                                              |  |                                            |        |   |                         |  |         |      |  |  |         |   |  |      |         |   |      | 
|                                              |  | (In thousands of $, except per share data) |       
|Selected statement of operations data:        |  |                                            |        |   |                         |  |         |      |  |  |         |   |  |      |         |   |      |  |         |   |  |  |     |  
|Total operating revenues, net                 |  |                                            | 9,506  |   |                         |  | 57,958  |      |  |  | 28,838  |   |  |      | 26,504  |   |      |  | 18,513  |   |  |  |    |  
|Total operating expenses                      |  |                                            | (4,290 | ) |                         |  | (30,672 | )    |  |  | (14,405 | ) |  |      | (14,058 | ) |      |  | (11,316 | ) |  |  | (34 | )
|Operating income (loss)                       |  |                                            | 5,216  |   |                         |  | 27,286  |      |  |  | 14,433  |   |  |      | 12,446  |   |      |  | 7,197   |   |  |  | (34 | )
|Net income (loss)                             |  |                                            | 4,290  |   |                         |  | 20,351  |      |  |  | 5,913   |   |  |      | 5,769   |   |      |  | 1,832   |   |  |  | (34 | )
|Earnings per common share  basic and diluted |  | $                                          | 0.28   |   |                         |  |        |      |  |  |        |   |  |      |        |   |      |  |        |   |  |  |    |  





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|                                                    |  |                                            |          |   |                         |  |          |      |  |  |         |   |  |      |         |   |      |  |         |   |  |  |         |  
|--------------------------------------------------- |  | ------------------------------------------ | -------- | - | ----------------------- |  | -------- | ---- |  |  | ------- | - |  | ---- | ------- | - | ---- |  | ------- | - |  |  | ------- | -
|                                                    |  | 51-Day Period from                         |          |   |                        
|                                                    |  | November 10, 2004                          |          |   | Year Ended December 31, | 
|                                                    |  | through                                    |          |   |                         | 
|                                                    |  | December 31, 2004                          |          |   | 2004                    |  |          | 2003 |  |  | 2002    |   |  | 2001 |         |   | 2000 | 
|                                                    |  |                                            |          |   |                         |  |          |      |  |  |         |   |  |      |         |   |      | 
|                                                    |  | (In thousands of $, except per share data) |         
|Selected balance sheet data (at end of period):     |  |                                            |          |   |                         |  |          |      |  |  |         |   |  |      |         |   |      |  |         |   |  |  |         |  
|Cash                                                |  |                                            | 5,960    |   |                         |  | 5,960    |      |  |  | 1,194   |   |  |      | 590     |   |      |  | 6,371   |   |  |  |        |  
|Newbuildings                                        |  |                                            |         |   |                         |  |         |      |  |  | 36,185  |   |  |      |        |   |      |  |        |   |  |  | 105,130 |  
|Vessels, net                                        |  |                                            | 281,441  |   |                         |  | 281,441  |      |  |  | 154,465 |   |  |      | 161,034 |   |      |  | 167,662 |   |  |  |        |  
|Total assets                                        |  |                                            | 292,850  |   |                         |  | 292,850  |      |  |  | 192,416 |   |  |      | 162,200 |   |      |  | 174,951 |   |  |  | 105,444 |  
|Amount due to Concordia, current                    |  |                                            |         |   |                         |  |         |      |  |  | 45,899  |   |  |      | 41,861  |   |      |  | 48,869  |   |  |  | 13,084  |  
|Long term liabilities                               |  |                                            | 135,000  |   |                         |  | 135,000  |      |  |  | 130,317 |   |  |      | 109,008 |   |      |  | 119,863 |   |  |  | 86      |  
|Combined predecessor equity                         |  |                                            |         |   |                         |  |         |      |  |  | 15,710  |   |  |      | 9,773   |   |      |  | 3,980   |   |  |  | 2       |  
|Shareholders equity                                |  |                                            | 154,487  |   |                         |  | 154,487  |      |  |  |        |   |  |      |        |   |      |  |        |   |  |  |        |  
|Selected cash flow data:                            |  |                                            |          |   |                         |  |          |      |  |  |         |   |  |      |         |   |      |  |         |   |  |  |         |  
|Net cash provided by operating activities           |  |                                            | 5,937    |   |                         |  | 31,820   |      |  |  | 15,375  |   |  |      | 13,011  |   |      |  | 6,598   |   |  |  | 2       |  
|Net cash used in investing activities               |  |                                            | (283,173 | ) |                         |  | (102,212 | )    |  |  | (36,488 | ) |  |      | (244    | ) |      |  | (66,596 | ) |  |  | (38     | )
|Net cash provided by (used in) financing activities |  |                                            | 283,196  |   |                         |  | 75,158   |      |  |  | 21,717  |   |  |      | (18,548 | ) |      |  | 66,369  |   |  |  | 35      |  
|Selected fleet data (end of period):                |  |                                            |          |   |                         |  |          |      |  |  |         |   |  |      |         |   |      |  |         |   |  |  |         |  
|Number of tankers owned                             |  |                                            | 6        |   |                         |  | 6        |      |  |  | 2       |   |  |      | 2       |   |      |  | 2       |   |  |  |        |  

Risk Factors


The following important factors, among others, could cause
actual results to differ materially from those contained in
forward-looking statements made in this report or presented
elsewhere by management from time to time.


COMPANY SPECIFIC RISK FACTORS




| |                                                    
| | ---------------------------------------------------
| | We cannot assure you that we will pay any dividends





2



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| |                                                                                        
| | ---------------------------------------------------------------------------------------
| | We are highly dependent on the Charterers and their
    guarantors, Stena and Concordia





| |                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If we cannot refinance our loans, or in the event of a
    default under our secured credit facility, we may have to sell
    our vessels, which may leave no additional funds for
    distributions to shareholders







| |                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------
| | Our Charters expire in 2009, unless extended at the option
    of the Charterers, and we may not be able to recharter our
    vessels profitably



3



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| |                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------
| | Because we are a recently formed company, our historical
    financial and operating data may not be representative of our
    future results





| |                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Agreements between us, Stena, Concordia and their other
    affiliates may be less favorable than agreements that we could
    obtain from unaffiliated third parties



4



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| |                                                                                     
| | ------------------------------------------------------------------------------------
| | Stena and Concordias other business activities may
    create conflicts of interest





| |                                                                                                      
| | -----------------------------------------------------------------------------------------------------
| | Concordia and Stena are able to influence the Company,
    including the outcome of shareholder votes





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







| |                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We are a holding company, and we depend on the ability of
    our subsidiaries to distribute funds to us in order to satisfy
    our financial and other obligations



5



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| |                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | U.S. tax authorities could treat us as a
    passive foreign investment company, which could have
    adverse U.S. federal income tax consequences to
    U.S. holders











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



6



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| |                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | U.S. investors who own our common shares may have
    more difficulty in protecting their interests than
    U.S. investors who own shares of a Delaware
    corporation



Interested Directors.




| |   |                                                                                                                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the material facts as to such interested directors
    relationship or interests were disclosed or were known to the
    board of directors and the board had in good faith authorized
    the transaction by the affirmative vote of a majority of the
    disinterested directors;
|
| |  | such material facts were disclosed or were known to the
    stockholders entitled to vote on such transaction and the
    transaction was specifically approved in good faith by vote of
    the majority of shares entitled to vote thereon; or                                     
|
| |  | the transaction was fair as to the corporation as of the time it
    was authorized, approved or ratified.                                                                                                                                                                           



Shareholders Suits.


7



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Indemnification of Directors.




| |                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Bermuda law and our bye-laws permit our board of directors
    to establish preference shares having terms which could reduce
    or eliminate dividends payable to our common shareholders





| |                                                                                                             
| | ------------------------------------------------------------------------------------------------------------
| | Our bye-laws restrict shareholders from bringing certain
    legal action against our officers and directors





| |                                                                                             
| | --------------------------------------------------------------------------------------------
| | We have anti-takeover provisions in our bye-laws that may
    discourage a change of control





| |   |                                                                                                                                                                                                                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a classified board of directors with staggered three-year terms,
    elected without cumulative voting;                                                                                                                                                                                                                                                                
|
| |  | directors only to be removed for cause and only with the
    affirmative vote of holders of at least 80% of the common shares
    issued and outstanding;                                                                                                                                                                                                              
|
| |  | advance notice for nominations of directors by shareholders and
    for shareholders to include matters to be considered at annual
    meetings;                                                                                                                                                                                                                       
|
| |  | our board of directors to determine the powers, preferences and
    rights of our preference shares and to issue the preference
    shares without shareholder approval; and                                                                                                                                                                                           
|
| |  | a requirement that amalgamations, sales of assets and certain
    other transactions with persons owning 15% or more of our voting
    securities, which we refer to as interested shareholders, be
    approved by holders of at least 66% of our issued and
    outstanding voting shares not owned by the interested
    shareholder, subject to certain exceptions.

8



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INDUSTRY SPECIFIC RISK FACTORS




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









| |                                                                             
| | ----------------------------------------------------------------------------
| | Factors beyond our control may adversely affect the value
    of our vessels





| |   |                                                                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | demand for oil and oil products, which affect the need for
    tanker capacity;                                                                                                                
|
| |  | global and regional economic and political conditions which
    among other things, could impact the supply of oil as well as
    trading patterns and the demand for various types of vessels;
|
| |  | changes in the production of crude oil, particularly by OPEC and
    other key producers, which impact the need for tanker capacity;                                                           
|
| |  | developments in international trade;                                                                                                                                                           
|
| |  | changes in seaborne and other transportation patterns, including
    changes in the distances that cargoes are transported;                                                                    
|
| |  | environmental concerns and regulations;                                                                                                                                                        
|
| |  | weather; and                                                                                                                                                                                   
|
| |  | competition from alternative sources of energy.                                                                                                                                                

9



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| |   |                                               
| | - | ----------------------------------------------
| |  | the number of newbuilding deliveries;         
|
| |  | the scrapping rate of older vessels; and      
|
| |  | the number of vessels that are out of service.



| |                                                                                       
| | --------------------------------------------------------------------------------------
| | An over supply of new vessels may adversely affect charter
    rates and vessel values





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





| |                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------
| | The value of our vessels may fluctuate and adversely
    affect our liquidity and may result in breaches under our credit
    facility





| |                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------
| | We operate in the highly competitive international tanker
    market which could affect our position if the Charterers do not
    renew our Charters



10



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| |                                                                                        
| | ---------------------------------------------------------------------------------------
| | Compliance with environmental laws or regulations may
    adversely affect our business





| |                                                                                                           
| | ----------------------------------------------------------------------------------------------------------
| | The shipping industry has inherent operational risks,
    which may not be adequately covered by insurance





11



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| |                                                                                                        
| | -------------------------------------------------------------------------------------------------------
| | Maritime claimants could arrest our tankers, which could
    interrupt the Charterers or our cash flow





| |                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------
| | Governments could requisition our vessels during a period
    of war or emergency without adequate compensation





| |                                                                                                           
| | ----------------------------------------------------------------------------------------------------------
| | Rising or high oil prices may affect demand for oil, and
    subsequently demand for oil tankers may fall.



RISKS RELATED TO OUR COMMON SHARES




| |                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If a significant number of our common shares are sold in
    the market, the market price of our common shares could
    significantly decline, even if our business is doing well





12



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|        |                           
|------- | --------------------------
|Item 4: | Information on the Company

History, Development and Organizational Structure












Strategy






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Acquire high quality tankers. Our two V-MAX tankers were
    built in 2001 and our four other tankers were completed in the
    first four months of 2004. All of our tankers have double hulls
    and have been designed to provide more efficient transportation
    of oil and oil products compared to other standard ship designs.
    We will consider acquiring additional tankers in the future. Any
    such acquisition will require additional financing and the
    consent of our lenders under our credit facility.

13



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Time charter our tankers to experienced charterers. We
    time charter our tankers to subsidiaries of Stena and Concordia.
    Stena and Concordia have agreed to guarantee their respective
    subsidiaries obligations under the Charters. Stena
    operates a fleet of oil tankers. Stenas current customers
    for its fleet of owned and chartered-in tankers include major
    oil companies such as ChevronTexaco Corporation, the Royal
    Dutch/ Shell Group of Companies, ConocoPhillips and BP p.l.c.
    The two V-MAX tankers in our fleet were owned by Concordia and
    chartered to Sun International since their delivery.                                                                                                                                                                                                                                                
|
| |  | Charter our tankers under long term fixed rate charters.
    Our existing Charters are designed to generate stable and
    generally predictable cash flow and reduce our exposure to the
    volatility in tanker spot rates for a five year period while
    preserving an opportunity to earn Additional Hire during
    favorable market conditions. The charterhire payable to us under
    our Charters will increase annually by an amount equal to the
    annual increase in the fees payable by us under the ship
    management agreements.                                                                                                                                                                                                                                                                                                                                             
|
| |  | Arrange for ship management contracts with an experienced
    ship manager. We have entered into ship management contracts
    with Northern Marine for each of our vessels. Under these
    agreements, Northern Marine has assumed all responsibilities for
    the technical management of the vessels, including crewing,
    maintenance, repair, drydocking and insurance for a fixed daily
    fee per vessel which increases 5% annually. In addition,
    Northern Marine has agreed to indemnify us for our loss of Basic
    Hire in the event, for circumstances specified under the
    Charters, the vessel is off hire or receiving reduced hire for
    more than five days during any twelve month period, net of
    amounts received from off hire insurance. These arrangements are
    designed to provide stable and generally predictable operating
    costs for our fleet.

Competitive Strengths






| |   |                                                                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | one of the youngest fleets of tankers in the world;                                                                                                                                                                                    
|
| |  | diversified exposure to three segments of the tanker market;                                                                                                                                                                           
|
| |  | two unique V-MAX tankers;                                                                                                                                                                                                              
|
| |  | vessels managed by Northern Marine, which we believe is one of
    the industrys most qualified vessel managers;                                                                                                                      
|
| |  | fixed rate, five-year time charters intended to provide stable
    and generally predictable cash flow, reducing our exposure to
    volatility in tanker spot rates and preserving the opportunity
    to earn additional revenue; and
|
| |  | fixed operating costs under our ship management agreements.                                                                                                                                                                            

14



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Our Fleet


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




|                 |  |            |      |  |     |  |         |      |  |        
|---------------- |  | ---------- | ---- |  | --- |  | ------- | ---- |  | -------
|Vessel Type      |  | Year Built |      |  | Dwt |  |         | Flag
|                 |  |            |      |  |     |  |         |     
|V-MAX            |  |            |      |  |     |  |         |      |  |        
|Stena Victory    |  |            | 2001 |  |     |  | 314,000 |      |  | Bermuda
|Stena Vision     |  |            | 2001 |  |     |  | 314,000 |      |  | Bermuda
|Panamax          |  |            |      |  |     |  |         |      |  |        
|Stena Companion  |  |            | 2004 |  |     |  | 72,000  |      |  | Bermuda
|Stena Compatriot |  |            | 2004 |  |     |  | 72,000  |      |  | Bermuda
|Product          |  |            |      |  |     |  |         |      |  |        
|Stena Concord    |  |            | 2004 |  |     |  | 47,400  |      |  | Bermuda
|Stena Consul     |  |            | 2004 |  |     |  | 47,400  |      |  | Bermuda











15



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##### Table of Contents





|                 |  |                     |       | 
|---------------- |  | ------------------- | ----- | 
|Vessel           |  | % of Purchase Price |      
|                 |  |                     |      
|Stena Vision     |  |                     | 28.2% | 
|Stena Victory    |  |                     | 28.2% | 
|Stena Companion  |  |                     | 11.5% | 
|Stena Compatriot |  |                     | 11.5% | 
|Stena Concord    |  |                     | 10.3% | 
|Stena Consul     |  |                     | 10.3% | 

Stena Concord


Stena Concord Stena Concord




Charter Arrangements


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


GENERAL








16



---



##### Table of Contents













BASIC HIRE




17



---



##### Table of Contents





|              |   |       |        |        |         |   |        |         |  |   |        |        | 
|------------- | - | ----- | ------ | ------ | ------- | - | ------ | ------- |  | - | ------ | ------ | 
|Charter Year  |   | V-MAX |        |        | Panamax |   |        | Product | 
|              |   |       |        |        |         |   |        |         | 
|              | 1 |       | $      | 35,700 |         |   | $      | 17,400  |  |   | $      | 15,500 | 
|              | 2 |       | $      | 36,075 |         |   | $      | 17,688  |  |   | $      | 15,765 | 
|              | 3 |       | $      | 36,469 |         |   | $      | 17,989  |  |   | $      | 16,043 | 
|              | 4 |       | $      | 36,882 |         |   | $      | 18,306  |  |   | $      | 16,335 | 
|              | 5 |       | $      | 37,316 |         |   | $      | 18,639  |  |   | $      | 16,642 | 
|Option year 1 |   | $     | 37,772 |        |         | $ | 18,989 |         |  | $ | 16,964 |       
|Option year 2 |   | $     | 38,251 |        |         | $ | 19,356 |         |  | $ | 17,303 |       
|Option year 3 |   | $     | 38,753 |        |         | $ | 19,741 |         |  | $ | 17,658 |       



ADDITIONAL HIRE








| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a weighted average of the time charter hire per day received by
    the Charterer for any periods during the Calculation Period that
    the vessel is subchartered by the Charterer under a time
    charter, less ship broker commissions paid by the Charterer in
    an amount not to exceed 2.5% of such time charter hire and
    commercial management fees paid by the Charterer in an amount
    not to exceed 1.25% of such time charter hire; and
|
| |  | the Time Charter Equivalent Hire, calculated as described below,
    for any periods during the Calculation Period that the vessel is
    not subchartered by the Charterer under a time charter.                                                                                                                                                                                                                                                           





18



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##### Table of Contents













| |   |                                                                                                                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | multiplying the Average Spot Rate expressed in Worldscale Points
    by the applicable Worldscale flat rate and multiplying that
    product by the cargo size for each vessel type to calculate
    freight income;
|
| |  | subtracting voyage costs consisting of brokerage commissions of
    2.5% and commercial management fees of 1.25%, bunker costs and
    port charges to calculate voyage income; and                                 
|
| |  | dividing voyage income by voyage duration, including time in
    port, to calculate the Daily Value.                                                                                                                





19



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##### Table of Contents









| |                                                                 
| | ----------------------------------------------------------------
| | Product tankers                                                 
|
| | Skikda to Rotterdam with 30,000 tons clean (25% weight)         
| | Rotterdam to New York with 33,000 tons clean (25% weight)       
| | Curacao to New York with 30,000 tons clean (50% weight)         
|
| | Panamax tankers                                                 
|
| | Curacao to New York with 50,000 tons dirty (50% weight)         
| | Augusta to Houston with 50,000 tons dirty (50% weight)          
|
| | V-MAX tankers                                                   
|
| | West-Africa to LOOP with 260,000 tons of crude (50% weight)     
| | Middle East Gulf to LOOP with 265,000 tons of crude (50% weight)









| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Calculation of freight income. The freight income for
    each notional route is calculated by multiplying the Average
    Spot Rate for such route, as supplied by the Brokers Panel, by
    the Worldscale flat rate for such route as set forth in the New
    Worldwide Tanker Nominal Freight Scale issued by the Worldscale
    Association and current for the relevant period and then
    multiplying such product by the cargo size for such route.                                                                          
|
| |  | Calculation of voyage income. The voyage income for each
    notional route is calculated by deducting from the freight
    income for such route ship broker commissions equal to 2.5% of
    the freight income, commercial management fees equal to 1.25% of
    the freight income, the port charges and bunker costs (equal to
    the bunkers used multiplied by the bunkers prices) specified
    below for each vessel. Bunkers used are determined based on
    speed, distance and consumption of bunkers at sea and in port.

20



---



##### Table of Contents





| |   |                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Calculation of voyage duration. The voyage duration for
    each notional route is calculated using the distance, speed and
    time in port specified below for each vessel.
|
| |  | Data used in calculations. The following data is used by
    the Charterer in the above calculations:                                                                        



| |                 
| | ----------------
| | Bunkers in port.

For Product tankers:


For Panamax tankers:


For V-MAX tankers:




| |               
| | --------------
| | Bunker prices.

For Product tankers and Panamax tankers:


For V-MAX tankers:




| |              
| | -------------
| | Port charges.





| |              
| | -------------
| | Time in port.

For Product tankers and Panamax tankers:


For V-MAX tankers:




| |          
| | ---------
| | Distance.





| |                              
| | -----------------------------
| | Speed and consumption at sea.

For Product tankers:


For Panamax tankers:


For V-MAX tankers:


21



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##### Table of Contents



Time Charter Equivalent Hire Calculation Illustrations




Product tankers




| |                    
| | -------------------
| | Skikda to Rotterdam

Data used:




| |                                                          
| | ---------------------------------------------------------
| | 1) Average Spot Rate (determined by Brokers Panel) = W300
|
| | 2) Worldscale Flat = $5.66                               
|
| | 3) Cargo size = 30,000                                   
|
| | 4) Voyage duration = 18.06 days                          
|
| | 5) Bunker price = $180 per ton                           
|
| | 6) Bunkers used = 562.06 tons                            
|
| | 7) Port charges = $100,000                               
|
| | 8) Calculation of freight income:                        



| |                                                                            
| | ---------------------------------------------------------------------------
| | 1) multiplied by 2) = 3.00 x 5.66 = 16.98 
     16.98 x 3) 30,000 = 509,400



| |                                 
| | --------------------------------
| | 9) Calculation of voyage income:

|               |                                  |   |          |          |  
|-------------- | -------------------------------- | - | -------- | -------- | -
|Freight income |                                  | $ | 509,400  |         
|less:          |                                  |   |          |         
|               | 2.50% broker commissions         |   |          | (12,735  | )
|               | 1.25% commercial management fees |   |          | (6,367   | )
|               | Bunker costs 5) x 6)             |   |          | (101,170 | )
|               | Port charges 7)                  |   |          | (100,000 | )
|               |                                  |   |         
|               |                                  |   | (220,272 | )       
|Voyage income  |                                  | $ | 289,128  |         



| |                                
| | -------------------------------
| | 10) Calculation of Daily Value:



| |                                  
| | ---------------------------------
| | 9)/4) = $289,128/ 18.06 = $16,009

22



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##### Table of Contents





| |                      
| | ---------------------
| | Rotterdam to New York

Data used:




| |                                                          
| | ---------------------------------------------------------
| | 1) Average Spot Rate (determined by Brokers Panel) = W300
|
| | 2) Worldscale Flat = $7.48                               
|
| | 3) Cargo size = 33,000                                   
|
| | 4) Voyage duration = 27.16 days                          
|
| | 5) Bunker price = $180 per ton                           
|
| | 6) Bunkers used = 912.41 tons                            
|
| | 7) Port charges = $88,000                                
|
| | 8) Calculation of freight income:                        



| |                                                                             
| | ----------------------------------------------------------------------------
| | 1)multiplied by 2) = 3.00 x 7.48 = 22.44 
     $22.44 x 3) 33,000 = $740,520



| |                                 
| | --------------------------------
| | 9) Calculation of voyage income:

|               |                                  |   |          |          |  
|-------------- | -------------------------------- | - | -------- | -------- | -
|Freight income |                                  | $ | 740,520  |         
|less:          |                                  |   |          |         
|               | 2.50% broker commissions         |   |          | (18,513  | )
|               | 1.25% commercial management fees |   |          | (9,256   | )
|               | Bunker costs 5) x 6)             |   |          | (164,234 | )
|               | Port charges 7)                  |   |          | (88,000  | )
|               |                                  |   |         
|               |                                  |   | (280,003 | )       
|Voyage income  |                                  | $ | 460,517  |         



| |                                
| | -------------------------------
| | 10) Calculation of Daily Value:



| |                                  
| | ---------------------------------
| | 9)/4) = $460,517/ 27.16 = $16,956

23



---



##### Table of Contents





| |                    
| | -------------------
| | Curacao to New York

Data used:




| |                                                          
| | ---------------------------------------------------------
| | 1) Average Spot Rate (determined by Brokers Panel) = W300
|
| | 2) Worldscale Flat = $4.61                               
|
| | 3) Cargo size = 30,000                                   
|
| | 4) Voyage duration = 16.84 days                          
|
| | 5) Bunker price = $180 per ton                           
|
| | 6) Bunkers used = 515.09 tons                            
|
| | 7) Port charges = $60,000                                
|
| | 8) Calculation of freight income:                        



| |                                                                             
| | ----------------------------------------------------------------------------
| | 1)multiplied by 2) = 3.00 x 4.61 = 13.83 
     $13.83 x 3) 30,000 = $414,900



| |                                 
| | --------------------------------
| | 9) Calculation of voyage income:

|               |                                  |   |          |         |  
|-------------- | -------------------------------- | - | -------- | ------- | -
|Freight income |                                  | $ | 414,900  |        
|less:          |                                  |   |          |        
|               | 2.50% broker commissions         |   |          | (10,372 | )
|               | 1.25% commercial management fees |   |          | (5,186  | )
|               | Bunker costs 5) x 6)             |   |          | (92,716 | )
|               | Port charges 7)                  |   |          | (60,000 | )
|               |                                  |   |         
|               |                                  |   | (168,274 | )      
|Voyage income  |                                  | $ | 246,626  |        



| |                                
| | -------------------------------
| | 10) Calculation of Daily Value:



| |                                  
| | ---------------------------------
| | 9)/4) = $246,626/ 16.84 = $14,645



| |                                            
| | -------------------------------------------
| | Calculation of Time Charter Equivalent Hire

|                                        |  |   |        | 
|--------------------------------------- |  | - | ------ | 
|Daily Value Skikda to Rotterdam x 25%   |  | $ | 4,002  | 
|Daily Value Rotterdam to New York x 25% |  | $ | 4,239  | 
|Daily Value Curacao to New York x 50%   |  | $ | 7,323  | 
|Time Charter Equivalent Hire            |  | $ | 15,564 | 

24



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##### Table of Contents



Panamax tankers




| |                    
| | -------------------
| | Curacao to New York

Data used:




| |                                                          
| | ---------------------------------------------------------
| | 1) Average Spot Rate (determined by Brokers Panel) = W200
|
| | 2) Worldscale Flat = $4.61                               
|
| | 3) Cargo size = 50,000                                   
|
| | 4) Voyage duration = 16.84 days                          
|
| | 5) Bunker price = $180 per ton                           
|
| | 6) Bunkers used = 731.96 tons                            
|
| | 7) Port charges = $60,000                                
|
| | 8) Calculation of freight income:                        



| |                                                                           
| | --------------------------------------------------------------------------
| | 1)multiplied by 2) = 2.00 x 4.61 = 9.22 
     $9.22 x 3) 50,000 = $461,000



| |                                 
| | --------------------------------
| | 9) Calculation of Voyage Income:

|               |                                  |   |          |          |  
|-------------- | -------------------------------- | - | -------- | -------- | -
|Freight income |                                  | $ | 461,000  |         
|less:          |                                  |   |          |         
|               | 2.50% broker commissions         |   |          | (11,525  | )
|               | 1.25% commercial management fees |   |          | (5,762   | )
|               | Bunker costs 5) x 6)             |   |          | (131,752 | )
|               | Port charges 7)                  |   |          | (60,000  | )
|               |                                  |   |         
|               |                                  |   | (209,039 | )       
|Voyage Income  |                                  | $ | 251,961  |         



| |                                
| | -------------------------------
| | 10) Calculation of Daily Value:



| |                                  
| | ---------------------------------
| | 9)/4) = $251,961/ 16.84 = $14,962

25



---



##### Table of Contents





| |                   
| | ------------------
| | Augusta to Houston

Data used:




| |                                                          
| | ---------------------------------------------------------
| | 1) Average Spot Rate (determined by Brokers Panel) = W200
|
| | 2) Worldscale Flat = $11.70                              
|
| | 3) Cargo size = 50,000                                   
|
| | 4) Voyage duration = 42.66 days                          
|
| | 5) Bunker price = $180 per ton                           
|
| | 6) Bunkers used = 1868.04 tons                           
|
| | 7) Port charges = $80,000                                
|
| | 8) Calculation of freight income:                        



| |                                                                                
| | -------------------------------------------------------------------------------
| | 1)multiplied by 2) = 2.00 x 11.70 = 23.40 
     $23.40 x 3) 50,000 = $1,170,000



| |                                 
| | --------------------------------
| | 9) Calculation of voyage income:

|               |                                  |   |           |          |  
|-------------- | -------------------------------- | - | --------- | -------- | -
|Freight income |                                  | $ | 1,170,000 |         
|less:          |                                  |   |           |         
|               | 2.50% broker commissions         |   |           | (29,250  | )
|               | 1.25% commercial management fees |   |           | (14,625  | )
|               | Bunker costs 5) x 6)             |   |           | (336,247 | )
|               | Port charges 7)                  |   |           | (80,000  | )
|               |                                  |   |          
|               |                                  |   | (460,122  | )       
|Voyage income  |                                  | $ | 709,878   |         



| |                                
| | -------------------------------
| | 10) Calculation of Daily Value:



| |                                  
| | ---------------------------------
| | 9)/4) = $709,878/ 42.66 = $16,640



| |                                            
| | -------------------------------------------
| | Calculation of Time Charter Equivalent Hire

|                                      |  |   |        | 
|------------------------------------- |  | - | ------ | 
|Daily Value Curacao to New York x 50% |  | $ | 7,481  | 
|Daily Value Augusta to Houston x 50%  |  | $ | 8,320  | 
|Time Charter Equivalent Hire          |  | $ | 15,801 | 

26



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##### Table of Contents



V-MAX tankers




| |                    
| | -------------------
| | West-Africa to LOOP

Data used:




| |                                                           
| | ----------------------------------------------------------
| | 1) Average Spot Rate (determined by Brokers Panel) = W67.2
|
| | 2) Worldscale Flat = $10.83                               
|
| | 3) Cargo size = 260,000                                   
|
| | 4) Voyage duration = 38.02 days                           
|
| | 5) Bunker price = $103.27 per ton                         
|
| | 6) Bunkers used = 4,222.04 tons                           
|
| | 7) Port charges = $120,816                                
|
| | 8) Calculation of freight income:                         



| |                                                                         
| | ------------------------------------------------------------------------
| | 1)multiplied by 2) = 10.83 x 0.672 = $7.27 
     $7.27 x 3) = $1,890,200



| |                                 
| | --------------------------------
| | 9) Calculation of voyage income:

|               |                                  |   |           |          |  
|-------------- | -------------------------------- | - | --------- | -------- | -
|Freight income |                                  | $ | 1,890,200 |         
|less:          |                                  |   |           |         
|               | 2.50% broker commissions         |   |           | (47,255  | )
|               | 1.25% commercial management fees |   |           | (23,627  | )
|               | Bunker costs 5) x 6)             |   |           | (436,010 | )
|               | Port charges 7)                  |   |           | (120,816 | )
|               |                                  |   |          
|               |                                  |   | (627,708  | )       
|Voyage income  |                                  | $ | 1,262,492 |         



| |                                
| | -------------------------------
| | 10) Calculation of Daily Value:



| |                                    
| | -----------------------------------
| | 9)/4) = $1,262,492/ 38.02 = $33,206

27



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##### Table of Contents





| |                         
| | ------------------------
| | Middle East Gulf to LOOP

Data used:




| |                                                           
| | ----------------------------------------------------------
| | 1) Average Spot Rate (determined by Brokers Panel) = W67.2
|
| | 2) Worldscale Flat = $21.64                               
|
| | 3) Cargo size = 265,000                                   
|
| | 4) Voyage duration = 70.80 days                           
|
| | 5) Bunker price = $103.27 per ton                         
|
| | 6) Bunkers used = 8,385.10 tons                           
|
| | 7) Port charges = $42,000                                 
|
| | 8) Calculation of freight income:                         



| |                                                                           
| | --------------------------------------------------------------------------
| | 1)multiplied by 2) = 21.64 x 0.672 = $14.54 
     $14.54 x 3) = $3,853,651



| |                                 
| | --------------------------------
| | 9) Calculation of voyage income:

|               |                                  |   |            |          |  
|-------------- | -------------------------------- | - | ---------- | -------- | -
|Freight income |                                  | $ | 3,853,651  |         
|less:          |                                  |   |            |         
|               | 2.50% broker commissions         |   |            | (96,341  | )
|               | 1.25% commercial management fees |   |            | (48,171  | )
|               | Bunker costs 5) x 6)             |   |            | (865,929 | )
|               | Port charges 7)                  |   |            | (42,000  | )
|               |                                  |   |           
|               |                                  |   | (1,052,441 | )       
|Voyage income  |                                  | $ | 2,801,210  |         



| |                                
| | -------------------------------
| | 10) Calculation of Daily Value:



| |                                    
| | -----------------------------------
| | 9)/4) = $2,801,210/ 70.80 = $39,565



| |                                            
| | -------------------------------------------
| | Calculation of Time Charter Equivalent Hire

|                                           |  |   |        | 
|------------------------------------------ |  | - | ------ | 
|Daily Value West-Africa to LOOP x 50%      |  | $ | 16,603 | 
|Daily Value Middle East Gulf to LOOP x 50% |  | $ | 19,783 | 
|                                           |  |   |       
|                                           |  | $ | 36,386 | 
|10% V-MAX adjustment                       |  | $ | 3,639  | 
|Time Charter Equivalent Hire               |  | $ | 40,025 | 

28



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##### Table of Contents



Ship Management Agreements


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










|              |   |       |        |       |         |   |       |         |  |   |       |       | 
|------------- | - | ----- | ------ | ----- | ------- | - | ----- | ------- |  | - | ----- | ----- | 
|Charter Year  |   | V-MAX |        |       | Panamax |   |       | Product | 
|              |   |       |        |       |         |   |       |         | 
|              | 1 |       | $      | 7,500 |         |   | $     | 5,750   |  |   | $     | 5,300 | 
|              | 2 |       | $      | 7,875 |         |   | $     | 6,038   |  |   | $     | 5,565 | 
|              | 3 |       | $      | 8,269 |         |   | $     | 6,339   |  |   | $     | 5,843 | 
|              | 4 |       | $      | 8,682 |         |   | $     | 6,656   |  |   | $     | 6,135 | 
|              | 5 |       | $      | 9,116 |         |   | $     | 6,989   |  |   | $     | 6,442 | 
|Option Year 1 |   | $     | 9,572  |       |         | $ | 7,339 |         |  | $ | 6,764 |      
|Option Year 2 |   | $     | 10,051 |       |         | $ | 7,706 |         |  | $ | 7,103 |      
|Option Year 3 |   | $     | 10,553 |       |         | $ | 8,091 |         |  | $ | 7,458 |      





29



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##### Table of Contents





Risk of Loss and Insurance








Inspection by a Classification Society




30



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##### Table of Contents



Tanker Industry Overview


The discussion of tanker industry statistics and charts in
this tanker industry overview has been prepared by
Poten & Partners. Poten & Partners has
confirmed to us that it accurately describes the international
tanker market, subject to the availability and reliability of
the data supporting the statistical and graphical information
presented. Poten & Partners methodologies for
collecting data, and, therefore, the data collected, may differ
from those of other sources, and its data does not reflect all
or even necessarily a comprehensive set of the actual
transactions occurring in the market.


OVERVIEW






TANKER TYPES






| |   |                                                                                               
| | - | ----------------------------------------------------------------------------------------------
| |  | ULCCs  tankers over 320,000 dwt;                                                             
|
| |  | VLCCs  tankers from 200,000 to 320,000 dwt;                                                  
|
| |  | Suezmax tankers  tankers from 120,000 to 200,000 dwt;                                        
|
| |  | Aframax/ LR2 tankers  uncoated/coated tankers from
    80,000 to 120,000 dwt;                
|
| |  | Panamax/ LR1 tankers  uncoated/coated tankers from
    50,000 to 80,000 dwt;                 
|
| |  | Handy product tankers/ MR tankers  normally coated
    tankers from 20,000 to 50,000 dwt; and
|
| |  | Small tankers  normally coated tankers up to 20,000
    dwt                                  



TANKER DEMAND




31



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##### Table of Contents







WORLD OIL DEMAND






| |                                          
| | -----------------------------------------
| | World Oil Demand, Million Barrels Per Day

|                    |  |      |      |  |      |  |      |      |  |  |      |  |  |      |      |  |      |  |      |      |  |  |       |  |  |  |      |  |  |  |      | 
|------------------- |  | ---- | ---- |  | ---- |  | ---- | ---- |  |  | ---- |  |  | ---- | ---- |  | ---- |  | ---- | ---- |  |  | ----- |  |  |  | ---- |  |  |  | ---- | 
|                    |  | 1998 |      |  | 1999 |  |      | 2000 |  |  | 2001 |  |  | 2002 |      |  | 2003 |  |      | 2004 |  |  | 2005* | 
|                    |  |      |      |  |      |  |      |      |  |  |      |  |  |      |      |  |      |  |      |      |  |  |       | 
|United States       |  |      | 18.9 |  |      |  | 19.5 |      |  |  | 19.7 |  |  |      | 19.7 |  |      |  | 19.8 |      |  |  | 20.0  |  |  |  | 20.5 |  |  |  | 20.8 | 
|Canada              |  |      | 1.9  |  |      |  | 2.0  |      |  |  | 2.0  |  |  |      | 2.0  |  |      |  | 2.1  |      |  |  | 2.2   |  |  |  | 2.3  |  |  |  | 2.3  | 
|Latin America       |  |      | 7.2  |  |      |  | 7.3  |      |  |  | 7.3  |  |  |      | 7.3  |  |      |  | 7.3  |      |  |  | 7.3   |  |  |  | 7.4  |  |  |  | 7.6  | 
|OECD Europe         |  |      | 15.4 |  |      |  | 15.3 |      |  |  | 15.2 |  |  |      | 15.3 |  |      |  | 15.3 |      |  |  | 15.5  |  |  |  | 15.7 |  |  |  | 15.8 | 
|Non-OECD Europe     |  |      | 1.5  |  |      |  | 1.5  |      |  |  | 1.4  |  |  |      | 1.5  |  |      |  | 1.4  |      |  |  | 1.5   |  |  |  | 1.5  |  |  |  | 1.6  | 
|Former Soviet Union |  |      | 3.7  |  |      |  | 3.7  |      |  |  | 3.7  |  |  |      | 3.7  |  |      |  | 3.5  |      |  |  | 3.6   |  |  |  | 3.7  |  |  |  | 3.8  | 
|Middle East         |  |      | 4.2  |  |      |  | 4.3  |      |  |  | 4.7  |  |  |      | 5.2  |  |      |  | 5.4  |      |  |  | 5.6   |  |  |  | 5.9  |  |  |  | 6.0  | 
|Africa              |  |      | 2.3  |  |      |  | 2.4  |      |  |  | 2.4  |  |  |      | 2.5  |  |      |  | 2.6  |      |  |  | 2.6   |  |  |  | 2.7  |  |  |  | 2.8  | 
|OECD Pacific        |  |      | 8.4  |  |      |  | 8.7  |      |  |  | 8.6  |  |  |      | 8.5  |  |      |  | 8.6  |      |  |  | 8.8   |  |  |  | 8.6  |  |  |  | 8.6  | 
|China               |  |      | 4.2  |  |      |  | 4.5  |      |  |  | 4.8  |  |  |      | 4.7  |  |      |  | 5.0  |      |  |  | 5.5   |  |  |  | 6.4  |  |  |  | 6.8  | 
|Other Asia          |  |      | 6.7  |  |      |  | 7.2  |      |  |  | 7.2  |  |  |      | 7.6  |  |      |  | 7.9  |      |  |  | 8.1   |  |  |  | 8.6  |  |  |  | 8.8  | 
|Sum                 |  |      | 73.6 |  |      |  | 75.3 |      |  |  | 76.2 |  |  |      | 76.8 |  |      |  | 77.9 |      |  |  | 79.8  |  |  |  | 82.5 |  |  |  | 84.3 | 
|Year-on-year change |  |      |      |  |      |  | 1.7  |      |  |  | 0.9  |  |  |      | 0.6  |  |      |  | 1.1  |      |  |  | 1.9   |  |  |  | 2.7  |  |  |  | 1.8  | 






|  |          
|- | ---------
|* | Estimated

WORLD OIL PRODUCTION






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| |                                                         
| | --------------------------------------------------------
| | Summary of World Oil Demand, Million Barrels Per
    Day

|                                                          |  |      |       |   |       |  |       |    |  |  |       |  |  |      |       |   |    |  |      |    |  |  |       |  |  |    |       |  |      |  |       |  |  |  |       |   |  |  |      | 
|--------------------------------------------------------- |  | ---- | ----- | - | ----- |  | ----- | -- |  |  | ----- |  |  | ---- | ----- | - | -- |  | ---- | -- |  |  | ----- |  |  | -- | ----- |  | ---- |  | ----- |  |  |  | ----- | - |  |  | ---- | 
|                                                          |  | 2004 |       |   | 2005* | 
|                                                          |  |      |       |   |       | 
|                                                          |  | Q1   |       |   | Q2    |  |       | Q3 |  |  | Q4    |  |  | Year |       |   | Q1 |  |      | Q2 |  |  | Q3    |  |  | Q4 |       |  | Year | 
|                                                          |  |      |       |   |       |  |       |    |  |  |       |  |  |      |       |   |    |  |      |    |  |  |       |  |  |    |       |  |      | 
|Demand                                                    |  |      | 82.4  |   |       |  | 81.1  |    |  |  | 81.9  |  |  |      | 84.4  |   |    |  | 82.5 |    |  |  | 84.4  |  |  |    | 82.7  |  |      |  | 83.8  |  |  |  | 86.1  |   |  |  | 84.3 | 
|Year-on-year change                                       |  |      | +2.0  |   |       |  | +3.8  |    |  |  | +2.5  |  |  |      | +2.1  |   |    |  | +2.7 |    |  |  | +2.0  |  |  |    | +1.6  |  |      |  | +1.9  |  |  |  | +1.7  |   |  |  | +1.8 | 
|OPEC crude supplies                                       |  |      | 27.9  |   |       |  | 28.1  |    |  |  | 29.2  |  |  |      | 29.6  |   |    |  | 28.7 |    |  |  | 29.3  |  |  |    | 28.3  |  |      |  | 29.0  |  |  |  | 29.3  |   |  |  | 29.0 | 
|Other supplies                                            |  |      | 54.4  |   |       |  | 54.3  |    |  |  | 54.1  |  |  |      | 54.8  |   |    |  | 54.4 |    |  |  | 55.3  |  |  |    | 55.5  |  |      |  | 55.7  |  |  |  | 56.4  |   |  |  | 55.7 | 
|(Less U.S. Strategic Petroleum Reserve additions)         |  |      | 0.2   |   |       |  | 0.1   |    |  |  | 0.1   |  |  |      | 0.1   |   |    |  | 0.1  |    |  |  | 0.1   |  |  |    | 0.1   |  |      |  | 0.0   |  |  |  | 0.0   |   |  |  | 0.1  | 
|Total oil supply                                          |  |      | 82.1  |   |       |  | 82.3  |    |  |  | 83.2  |  |  |      | 84.3  |   |    |  | 83.0 |    |  |  | 84.5  |  |  |    | 83.7  |  |      |  | 84.7  |  |  |  | 85.7  |   |  |  | 84.6 | 
|Year-on-year change                                       |  |      | +3.1  |   |       |  | +4.0  |    |  |  | +3.8  |  |  |      | +2.6  |   |    |  | +3.4 |    |  |  | +2.4  |  |  |    | +1.4  |  |      |  | +1.5  |  |  |  | +1.4  |   |  |  | +1.6 | 
|Global stock change
    (net Strategic Petroleum Reserve) |  |      | (0.5  | ) |       |  | +1.1  |    |  |  | +1.2  |  |  |      | (0.2  | ) |    |  | +0.4 |    |  |  | 0.0   |  |  |    | +0.9  |  |      |  | +0.9  |  |  |  | (0.4  | ) |  |  | +0.2 | 
|(Million bbls)                                            |  |      |       |   |       |  |       |    |  |  |       |  |  |      |       |   |    |  |      |    |  |  |       |  |  |    |       |  |      |  |       |  |  |  |       |   |  |  |      | 
|OECD market stocks                                        |  |      | 3,889 |   |       |  | 3,972 |    |  |  | 4,027 |  |  |      | 3,950 |   |    |  |      |    |  |  | 3,900 |  |  |    | 3,995 |  |      |  | 4,075 |  |  |  | 4,030 |   |  |  |      | 
|Year-on-year change                                       |  |      | +101  |   |       |  | +59   |    |  |  | +95   |  |  |      | +82   |   |    |  |      |    |  |  | +11   |  |  |    | +23   |  |      |  | +48   |  |  |  | +80   |   |  |  |      | 






|  |          
|- | ---------
|* | Estimated

OIL MARKETS AND DEMAND FOR TANKERS








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| |   |                                                                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | global oil demand is expected to continue to rise at a rate
    higher than experienced in the 1990s;                                                                                                                          
|
| |  | the major oil consuming regions of the United States, Western
    Europe and Asia have a shortage of refining capacity, while the
    Middle East, Latin America and Africa have a surplus; and                                
|
| |  | refining capacity is expected to rise in the former Soviet
    Union, Latin America and the Middle East while refinery
    utilization in net importing countries ought to remain high
    without significant capacity growth.





TANKER SUPPLY






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Total Tanker Fleet and Newbuildings on Order Above 20,000
dwt


As of December 2004





SCRAPPING






NEWBUILDINGS




| |       
| | ------
| | VLCCs:



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| |              
| | -------------
| | Panamax/ LR1:





| |                                   
| | ----------------------------------
| | Handy product tankers/ MR tankers:



FREIGHT RATES








| |   |                                                                                                                                                                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | higher demand for oil due to the improving global economy;                                                                                                                                                                                                                                                     
|
| |  | increased ton-miles for product tankers as a result of gasoline
    exports from Europe to the United States and increased European
    diesel imports;                                                                                                                                                        
|
| |  | substitution of fuel oil for natural gas in the United States;                                                                                                                                                                                                                                                 
|
| |  | higher oil consumption by Japanese utilities due to problems
    with several of their nuclear power reactors;                                                                                                                                                                                                 
|
| |  | increasing movements of long-haul Middle East oil to replace the
    loss of Iraqi oil production, make up for a persistent shortfall
    of oil production in Venezuela due to worker strikes and fill
    the supply gap caused by lost production in the U.S. Gulf
    during the 2004 hurricane season; and
|
| |  | low global crude oil inventory levels, in terms of consumption
    days covered.                                                                                                                                                                                                                               

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AVERAGE ANNUAL TIME CHARTER EQUIVALENT RATES, $/DAY




|                  |  |      |        |  |      |  |        |      |  |  |        |  |  |      |        |  |      |  |        |      |  |  |        |  |  |  |        | 
|----------------- |  | ---- | ------ |  | ---- |  | ------ | ---- |  |  | ------ |  |  | ---- | ------ |  | ---- |  | ------ | ---- |  |  | ------ |  |  |  | ------ | 
|                  |  | 1998 |        |  | 1999 |  |        | 2000 |  |  | 2001   |  |  | 2002 |        |  | 2003 |  |        | 2004 | 
|                  |  |      |        |  |      |  |        |      |  |  |        |  |  |      |        |  |      |  |        |      | 
|VLCC              |  |      | 35,167 |  |      |  | 18,710 |      |  |  | 55,191 |  |  |      | 37,457 |  |      |  | 21,469 |      |  |  | 51,147 |  |  |  | 94,507 | 
|Panamax           |  |      | 14,072 |  |      |  | 11,212 |      |  |  | 25,448 |  |  |      | 22,826 |  |      |  | 13,908 |      |  |  | 26,153 |  |  |  | 37,232 | 
|Handy product/ MR |  |      | 11,544 |  |      |  | 10,712 |      |  |  | 18,517 |  |  |      | 22,512 |  |      |  | 13,135 |      |  |  | 20,134 |  |  |  | 25,665 | 

Time Charter Equivalent Rates





Environmental Regulation








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International Maritime Organization






| |   |                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------
| |  | tankers between 25 and 30 years old must be of double hull
    construction or of a mid-deck design with double sided
    construction, unless:



| |   |                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | they have wing tanks or double-bottom spaces not used for the
    carriage of oil, which cover at least 30% of the length of the
    cargo tank section of the hull or bottom; or                                             
|
| |  | they are capable of hydrostatically balanced loading (loading
    less cargo into a tanker so that in the event of a breach of the
    hull, water flows into the tanker, displacing oil upwards
    instead of into the sea);



| |   |                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------
| |  | tankers 30 years old or older must be of double hull
    construction or mid-deck design with double sided
    construction; and
|
| |  | all tankers are subject to enhanced inspections.                                                                                





| |   |                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------
| |  | is the subject of a contract for a major conversion or original
    construction on or after July 6, 1993;
|
| |  | commences a major conversion or has its keel laid on or after
    January 6, 1994; or                     
|
| |  | completes a major conversion or is a newbuilding delivered on or
    after July 6, 1996.                  







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U.S. Oil Pollution Act of 1990 and Comprehensive
Environmental Response, Compensation and Liability Act








| |   |                                                                       
| | - | ----------------------------------------------------------------------
| |  | natural resource damages and related assessment costs;                
|
| |  | real and personal property damages;                                   
|
| |  | net loss of taxes, royalties, rents, profits or earnings
    capacity;

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















| |   |                                                                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | address a worst case scenario and identify and
    ensure, through contract or other approved means, the
    availability of necessary private response resources to respond
    to a worst case discharge;
|
| |  | describe crew training and drills; and                                                                                                                                                                         
|
| |  | identify a qualified individual with full authority to implement
    removal actions.                                                                                                                          



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European Union Tanker Restrictions


m.t. Prestige


Vessel Security Regulations






| |   |                                                                                                                                                                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | on-board installation of automatic identification systems, or
    AIS, 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 alerts the authorities on shore;                                                                                                                                                                                   
|
| |  | the development of vessel security plans;                                                                                                                                                                                                                                                                              
|
| |  | ship identification number to be permanently marked on a
    vessels hull;                                                                                                                                                                                                                                            

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a continuous synopsis record kept onboard showing a
    vessels history including, name of the ship and of 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 owners and their registered
    addresses; and
|
| |  | compliance with flag state security certification requirements.                                                                                                                                                                                                                                                                                                                                  



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|        |                                             
|------- | --------------------------------------------
|Item 5: | Operating and Financial Review and Prospects



Overview












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Factors Affecting Our Results of Operations and Cash
Available for Dividends






| |   |                                                                               
| | - | ------------------------------------------------------------------------------
| |  | the basic hire paid to us under the charters;                                 
|
| |  | the amount of additional hire, if any, that we receive under the
    charters;
|
| |  | fees under the ship management agreements;                                    
|
| |  | depreciation;                                                                 
|
| |  | administrative and other expenses;                                            
|
| |  | interest expense;                                                             
|
| |  | any loss of any vessel;                                                       
|
| |  | required capital expenditures;                                                
|
| |  | any cash reserves established by our board of directors;                      
|
| |  | any change in our dividend policy; and                                        
|
| |  | increased borrowings or future issuances of securities.                       











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Our Predecessor Combined Carve-Out Results of Operations








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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Long term debt. Long term debt includes an allocated
    portion of amounts outstanding under a revolving credit facility
    with Concordias subsidiaries, guaranteed by Concordia,
    which have been allocated to the two Concordia predecessor
    vessel subsidiaries. This allocation is based on the number of
    vessels in Concordias fleet and the number of vessels
    owned by the Concordia predecessor vessel subsidiaries during
    the periods presented. After January 19, 2004 and through
    November 9, 2004, long term debt also included amounts
    outstanding under a $58 million secured loan facility with
    two of the Stena predecessor vessel subsidiaries. This facility
    was guaranteed by Stena and Fram in proportion to their
    ownership of these two Stena predecessor vessel subsidiaries.
    After June 11, 2004 and through November 9, 2004, long
    term debt also included amounts outstanding under a
    $53 million secured loan facility with another two of the
    Stena predecessor vessel subsidiaries which was guaranteed by
    Stena. The amount of interest expense reflected in the carve-out
    financial statements was determined by the amount of loans and
    advances outstanding from time to time and prevailing interest
    rates.
|
| | Administrative expense. Prior to November 10, 2004,
    administrative expense represents an allocation of
    Concordias administrative expenses, salaries and other
    employee related costs, office rents, legal and professional
    fees and other general administrative expenses based on the
    number of vessels in Concordias fleet and the number of
    vessels owned by the Concordia predecessor vessel subsidiaries
    and certain other legal, tax and auditing costs incurred
    directly by the Concordia predecessor vessel subsidiaries. After
    January 1, 2004, as a result of the commencement of
    operations of several of the vessels owned by the Stena
    predecessor vessel subsidiaries during the first six months of
    2004, these costs also include an allocation of Stenas
    administrative expenses, salaries and other employee related
    costs, office rents, legal and professional fees and other
    general administrative expenses based on the number of vessels
    in Stenas fleet and the number of vessels owned by the
    Stena predecessor vessel subsidiaries and certain other legal,
    tax and auditing costs incurred directly by the Stena
    predecessor vessel subsidiaries.                                                          

Critical Accounting Policies and Estimates




BASIS OF ACCOUNTING






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REVENUE RECOGNITION




VESSELS, DEPRECIATION AND IMPAIRMENT






Results of Operations






47



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##### Table of Contents





YEAR ENDED DECEMBER 31, 2004 COMPARED TO YEAR ENDED
DECEMBER 31, 2003




| |                              
| | -----------------------------
| | Total operating revenues, net









| |                                
| | -------------------------------
| | Total vessel operating expenses





| |             
| | ------------
| | Depreciation





| |                        
| | -----------------------
| | Administrative expenses





| |                        
| | -----------------------
| | Financial expenses, net



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YEAR ENDED DECEMBER 31, 2003 COMPARED TO YEAR ENDED
DECEMBER 31, 2002




| |                         
| | ------------------------
| | Total operating revenues

Stena Victory Stena Vision Stena Victory Stena Victory


Stena Victory




| |                                
| | -------------------------------
| | Total vessel operating expenses





| |             
| | ------------
| | Depreciation





| |                        
| | -----------------------
| | Administrative expenses





| |                        
| | -----------------------
| | Financial expenses, net







| |                                
| | -------------------------------
| | Liquidity and Capital Resources



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50



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| |                            
| | ---------------------------
| | Our Secured Credit Facility

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


GENERAL








SECURITY






| |   |                                                                            
| | - | ---------------------------------------------------------------------------
| |  | a mortgage on each of our vessels;                                         
|
| |  | an assignment of earnings from, and insurances on, each of our
    vessels;
|
| |  | a pledge of the shares of our wholly owned subsidiaries;                   
|
| |  | a charge over all of our bank accounts;                                    
|
| |  | a pledge of our charters; and                                              
|
| |  | a pledge of our ship management agreements with Northern Marine.           



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COVENANTS






| |   |                                                                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | incurring additional indebtedness;                                                                                                                                                        
|
| |  | permitting liens on assets;                                                                                                                                                               
|
| |  | merging or amalgamating with other entities;                                                                                                                                              
|
| |  | paying dividends if an event of default under the facility
    agreement has occurred and is continuing or if the market value
    of the vessels does not exceed 140% of the loan amount;
|
| |  | selling or otherwise disposing of a vessel or other assets or
    assigning or transferring any rights or obligations under our
    charters and our ship management agreements;          
|
| |  | changing the overall nature of our business; and                                                                                                                                          
|
| |  | employing a technical and operational manager other than
    Northern Marine.                                                                                                             



EVENTS OF DEFAULT






| |   |                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | non-payment of amounts due under the credit facility;                                                                                                                                                                                                                                                                                                                                         
|
| |  | breach of our covenants;                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | misrepresentation;                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | cross-default of other indebtedness in excess of $1 million;                                                                                                                                                                                                                                                                                                                                  
|
| |  | certain events of insolvency or bankruptcy;                                                                                                                                                                                                                                                                                                                                                   
|
| |  | certain changes in ownership in any of our wholly owned
    subsidiaries;                                                                                                                                                                                                                                                                                                                     
|
| |  | any event or series of events (including a material adverse
    change in the financial condition of Stena, Concordia, the
    Charterers or Northern Marine, or the termination or
    cancellation of any of the Charters) occurs which, in the
    opinion of the agent bank, is reasonably likely to have a
    material adverse effect on us or any of our wholly owned
    subsidiaries;
|
| |  | the failure of our common shares to continue to be listed on the
    New York Stock Exchange;                                                                                                                                                                                                                                                                                                 
|
| |  | Northern Marine ceasing to be a subsidiary of Stena;                                                                                                                                                                                                                                                                                                                                          
|
| |  | cessation of operations; and                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | unlawfulness or repudiation.                                                                                                                                                                                                                                                                                                                                                                  



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Long Term Financial Obligations and Other Commercial
Obligations




|                                                |  |                        |         |           |          |  |        |       |  |     |        |  |           |         |         |  |  |  |   | 
|----------------------------------------------- |  | ---------------------- | ------- | --------- | -------- |  | ------ | ----- |  | --- | ------ |  | --------- | ------- | ------- |  |  |  | - | 
|                                                |  | Payments Due by Period |        
|                                                |  |                        |        
|                                                |  |                        |         | Less Than |          |  | 1-3    |       |  | 3-5 |        |  | More Than |        
|Commercial and Contractual Obligations          |  | Total                  |         |           | One Year |  |        | Years |  |     | Years  |  |           | 5 Years |        
|                                                |  |                        |         |           |          |  |        |       |  |     |        |  |           |         |        
|                                                |  | (In thousands of $)    |        
|Long term debt, including current maturities(1) |  |                        | 135,000 |           |          |  |       |       |  |     |       |  |           |         | 135,000 |  |  |  |  | 
|Interest Payments(2)                            |  |                        | 31,232  |           |          |  | 6,426  |       |  |     | 12,852 |  |           |         | 11,954  |  |  |  |  | 
|Purchase obligations(3)                         |  |                        | 72,932  |           |          |  | 13,636 |       |  |     | 29,351 |  |           |         | 29,945  |  |  |  |  | 
|Other long term liabilities                     |  |                        |        |           |          |  |       |       |  |     |       |  |           |         |        |  |  |  |  | 
|Total                                           |  |                        | 239,164 |           |          |  | 20,062 |       |  |     | 42,203 |  |           |         | 176,899 |  |  |  |  | 






|    |                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Refers to our obligation to repay principal borrowed under our
    secured credit facility, but does not include quarterly interest
    payments due under this facility.                                     
|   
|(2) | Refers to our expected interest payments over the term of our
    secured credit facility after entering into swap arrangements
    that swap LIBOR for a fixed rate of 3.76% plus a margin of 1.00%.         
|   
|(3) | Refers to our fixed daily operating costs for our vessels under
    our ship management agreements with Northern Marine, which
    increase 5% annually. These costs are payable by us monthly in
    advance.

Quantitative and Qualitative Disclosures About Market Risk











|        |                                           
|------- | ------------------------------------------
|Item 6: | Directors, Senior Management and Employees

Directors and Executive Officers




|                   |  |     |    |  |          |                                       
|------------------ |  | --- | -- |  | -------- | --------------------------------------
|Name               |  | Age |    |  | Position
|                   |  |     |    |  |         
|Michael K. Drayton |  |     | 55 |  |          | Class I Director and Chairman         
|E. Grant Gibbons   |  |     | 52 |  |          | Class II Director                     
|Stephen O. Jaeger  |  |     | 60 |  |          | Class III Director and Deputy Chairman
|Arthur L. Regan    |  |     | 42 |  |          | President and Chief Executive Officer 
|Tara L. Railton    |  |     | 43 |  |          | Chief Financial Officer               
|Dawna Ferguson     |  |     | 54 |  |          | Secretary                             

53



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Michael K. Drayton


Dr. E. Grant Gibbons


Stephen O. Jaeger


Arthur L. Regan


Tara L. Railton


Dawna Ferguson


54



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##### Table of Contents





Compensation of Executive Officers








Employees




55



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##### Table of Contents








|        |                                                  
|------- | -------------------------------------------------
|Item 7: | Major Shareholders and Related Party Transactions

Major Shareholders






|                                                    |  |                           |           |  |            |  |       | 
|--------------------------------------------------- |  | ------------------------- | --------- |  | ---------- |  | ----- | 
|                                                    |  | Shares Beneficially Owned |          
|                                                    |  |                           |          
|Name of Beneficial Owner                            |  | Number                    |           |  | Percentage | 
|                                                    |  |                           |           |  |            | 
|Stena and Concordia entities and related persons(1) |  |                           | 2,225,205 |  |            |  | 14.4% | 
|Wellington Management Company, LLP(2)               |  |                           | 1,366,600 |  |            |  | 8.8%  | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes 2,225,205 shares beneficially owned by Dan Sten
    Olsson, 1,534,784 shares beneficially owned by Concordia
    Maritime AB, 1,534,784 shares beneficially owned by
    Madeline Olsson Eriksson, 1,534,784 shares beneficially
    owned by Stefan Sten Olsson, 1,534,784 shares beneficially
    owned by Stena Sessan AB, 690,421 shares owned by Stena AB,
    690,421 shares beneficially owned by Stena (Switzerland)
    AG, 767,392 shares beneficially owned by CM V-MAX I Limited
    and 767,392 shares beneficially owned by CM V-MAX II
    Limited. All of the information in this footnote is based on the
    Schedule 13G filed by Stena (Switzerland) AG (on behalf of
    each of the holders referenced by this footnote) on
    February 10, 2005. The Schedule 13G states that each
    of the referenced holders has shared voting and dispositive
    power over our common shares listed as owned by such holder.
|   
|(2) | Based on the Schedule 13G filed by Wellington Management
    Company, LLP on February 14, 2005. The Schedule 13G
    states that Wellington has shared voting power over 719,400 of
    our common shares, and shared dispositive power over 1,366,600
    of our common shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

Holdings by U.S. Shareholders




Related Party Transactions




Memoranda of Agreement.


56



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The Charters.




Ship Management Agreements.




Registration Rights.


57



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|        |                      
|------- | ---------------------
|Item 8: | Financial Information



Legal Proceedings




Dividend Policy














| |   |                                                                                                                                                                                                                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the Basic Hire is paid on all of our tankers and all of our
    tankers are on hire for 360 days per fiscal year;                                                                                                                                                                                                  
|
| |  | no Additional Hire is paid other than the Additional Hire based
    on the current sub-charters with Sun International and the
    $1.5 million of other Additional Hire paid to us during the
    first quarter of 2005;                                                                                          
|
| |  | we have no cash expenses or liabilities other than the ship
    management agreements, our current directors fees, the
    current salaries and benefits of our President and our Chief
    Financial Officer, currently anticipated administrative and
    other expenses and interest under our credit facility;
|
| |  | we do not pay any taxes or have to fund any required capital
    expenditures with respect to our vessels;                                                                                                                                                                                                         
|
| |  | no cash reserves are established by our board of directors;                                                                                                                                                                                                                                                        

58



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| |   |                                                                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | we remain in compliance with our credit facility which requires,
    among other things, that the market value of our vessels exceeds
    140% of our borrowings under the facility in order to pay
    dividends;
|
| |  | we do not issue any additional common shares or other securities
    or borrow any additional funds; and                                                                                                          
|
| |  | the Charterers do not exercise any options to extend the terms
    of the Charters.                                                                                                                               



We cannot assure you that our dividends will in fact be equal
to the amounts set forth below. The amount of future dividends
set forth in the table below represents only an estimate of
future dividends based on our charter contracts, ship management
agreements and an estimate of our other expenses and assumes
that none of our expenses increase during the periods set forth
below. The amount of future dividends, if any, could be affected
by various factors, including the loss of a vessel, required
capital expenditures, cash reserves established by our board of
directors, increased or unanticipated expenses, a change in our
dividend policy, increased borrowings or future issuances of
securities, many of which will be beyond our control. As a
result, the amount of dividends actually paid may vary from the
amounts currently estimated and such variations may be material.
There can be no assurance that any dividends will be paid. See
Item 3. Key Information  Risk
Factors  We cannot assure you that we will pay any
dividends and  Our Charters expire in 2009,
unless extended at the option of the Charterers, and we may not
be able to recharter our vessels profitably.


59



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|                                 |  |                           |       |   |      |  |       |      |  |  |       |  
|-------------------------------- |  | ------------------------- | ----- | - | ---- |  | ----- | ---- |  |  | ----- | -
|                                 |  | Fiscal Year Ending        |      
|                                 |  | December 31,              |      
|                                 |  |                           |      
|                                 |  | 2005                      |       |   | 2006 |  |       | 2007 | 
|                                 |  |                           |       |   |      |  |       |      | 
|                                 |  | (In millions of $, except |      
|                                 |  | per share amounts)        |      
|Basic Hire                       |  |                           | 49.5  |   |      |  | 50.2  |      |  |  | 50.9  |  
|V-MAX Additional Hire            |  |                           | 2.6   |   |      |  | 2.4   |      |  |  | 1.1   |  
|Other Additional Hire(1)         |  |                           | 1.5   |   |      |  |      |      |  |  |      |  
|Vessel operating expenses        |  |                           | (13.6 | ) |      |  | (14.3 | )    |  |  | (15.0 | )
|Administrative expenses          |  |                           | (1.8  | ) |      |  | (1.8  | )    |  |  | (1.8  | )
|Cash interest expense            |  |                           | (6.4  | ) |      |  | (6.4  | )    |  |  | (6.4  | )
|                                 |  |                           |       |   |      |  |       |      | 
|Cash available for dividends     |  |                           | 31.8  |   |      |  | 30.1  |      |  |  | 28.7  |  
|                                 |  |                           |       |   |      |  |       |      | 
|Estimated dividends per share(2) |  |                           | 2.05  |   |      |  | 1.94  |      |  |  | 1.85  |  






|    |                                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | For all periods following the first quarter of 2005, Additional
    Hire for our Panamax tankers and Product tankers is assumed to
    be zero for purposes of this estimate.
|   
|(2) | Based on 15,500,000 issued and outstanding common shares.                                                                                                                    








|        |                      
|------- | ---------------------
|Item 9: | The Offer and Listing



|     |                                                                 |      |   |       |     |  |   |       | 
|---- | --------------------------------------------------------------- | ---- | - | ----- | --- |  | - | ----- | 
|     |                                                                 | High |   |       | Low | 
|     |                                                                 |      |   |       |     | 
|2004 |                                                                 |      |   |       |     |  |   |      
|     | Fourth Quarter (November 5, 2004 through December 31,
    2004) |      | $ | 24.20 |     |  | $ | 20.91 | 
|2005 |                                                                 |      |   |       |     |  |   |      
|     | First Quarter                                                   |      |   | 25.39 |     |  |   | 21.30 | 

60



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|                                 |  |      |       |  |     |  |       | 
|-------------------------------- |  | ---- | ----- |  | --- |  | ----- | 
|                                 |  | High |       |  | Low | 
|                                 |  |      |       |  |     | 
|December 2004                    |  |      | 24.20 |  |     |  | 20.91 | 
|January 2005                     |  |      | 23.50 |  |     |  | 21.30 | 
|February 2005                    |  |      | 25.39 |  |     |  | 22.90 | 
|March 2005                       |  |      | 24.85 |  |     |  | 22.80 | 
|April 2005                       |  |      | 23.84 |  |     |  | 20.40 | 
|May 2005                         |  |      | 22.35 |  |     |  | 19.41 | 
|June 2005 (through June 6, 2005) |  |      | 21.44 |  |     |  | 18.75 | 








|         |                       
|-------- | ----------------------
|Item 10: | Additional Information

Description of Share Capital


The following description of our share capital summarizes
certain provisions of our memorandum of association and our
bye-laws. Such summaries do not purport to be complete and are
subject to, and are qualified in their entirety by reference to,
all of the provisions of our memorandum of association and
bye-laws, copies of which are listed as exhibits to this Annual
Report on Form 20-F. You are urged to read the exhibits for
a complete understanding of our memorandum of association and
bye-laws.


GENERAL




SHARE CAPITAL






COMMON SHARES






61



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PREFERENCE SHARES




FOUNDER SHARES




DIVIDEND RIGHTS




MODIFICATION OF SHAREHOLDER RIGHTS




TRANSFER OF SHARES




62



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MEETINGS OF SHAREHOLDERS








ACCESS TO BOOKS AND RECORDS AND DISSEMINATION OF
INFORMATION




63



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ELECTION AND REMOVAL OF DIRECTORS








PROCEEDINGS OF BOARD OF DIRECTORS








WAIVER OF CLAIMS BY SHAREHOLDERS; INDEMNIFICATION OF
DIRECTORS AND OFFICERS




64



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AMENDMENT OF MEMORANDUM OF ASSOCIATION AND BYE-LAWS






AMALGAMATIONS AND BUSINESS COMBINATIONS




2 3




| |   |                                                                                                                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | prior to the date of the transaction that resulted in the
    shareholder becoming an interested shareholder, our board of
    directors approved either the business combination or the
    transaction that resulted in the shareholder becoming an
    interested shareholder; or
|
| |  | upon consummation of the transaction that resulted in the
    shareholder becoming an interested shareholder, the interested
    shareholder owned at least 85% of our issued and outstanding
    voting shares at the time the transaction commenced.                              



65



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APPRAISAL RIGHTS AND SHAREHOLDER SUITS








CAPITALIZATION OF PROFITS AND RESERVES




REGISTRAR OR TRANSFER AGENT




UNTRACED SHAREHOLDERS




66



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MATERIAL CONTRACTS




EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING
SHAREHOLDERS








Taxation


TAXATION OF THE COMPANY




| |                                
| | -------------------------------
| | Bermuda taxation of the Company





| |                                                         
| | --------------------------------------------------------
| | United States federal income taxation of the
    Company



67



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| |                                     
| | ------------------------------------
| | General Taxation of Operating Income





| |   |                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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 (50% U.S.-source Shipping
    Income); and
|
| |  | 100% of shipping income that is attributable to transportation
    that both begins and ends in the United States.                                                                                





| |                                                 
| | ------------------------------------------------
| | Exemption of Operating Income from U.S. Taxation







| |   |                                                                                                                                                                                                                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our subsidiary generating the Shipping Income (or the company,
    with respect to Shipping Income of a subsidiary that is treated
    as a disregarded entity for U.S. federal income tax
    purposes) is organized in a foreign country that grants an
    equivalent exemption from tax to corporations
    organized in the United States; and
|
| |  | either                                                                                                                                                                                                                                                                                                                                               



| |   |                                                                                                                                                                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our common shares are primarily and regularly traded on an
    established securities market in that same foreign
    country, in the United States or in another country that grants
    an equivalent exemption to United States
    corporations during the applicable taxable year (the
    Publicly Traded Test); or
|
| |  | more than 50% of the value of our shares is treated as owned,
    directly or indirectly, for at least half of the number of days
    in the taxable year by one or more qualified
    shareholders (the Ownership Test).                                                                                                  



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The Publicly Traded Test.






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | with respect to each class of shares, the number of shares that
    are traded during any taxable year on all established securities
    markets in that country exceeds the number of shares traded
    during that year on established securities markets in any other
    single country;                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | shares representing more than 50% of all classes of the
    issuers outstanding shares (by voting power and value) is
    listed on that market or markets during the taxable
    year; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | with respect to each class of the issuers shares relied on
    to meet the more than 50% requirement immediately above, it is
    further required that each such class is traded on that market
    or markets, other than in de minimisquantities, on at
    least 60 days during the taxable year (or
    1/6
    of the days in a short taxable year), and the aggregate number
    of shares in each such class of the issuers shares that
    are traded on that market or markets during the taxable year is
    at least 10 percent of the average number of shares
    outstanding in that class during the taxable year or as
    appropriately adjusted in the case of a short taxable year.









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The Ownership Test.




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | are either (A) individuals who are residents of a country
    that grants an equivalent exemption, (B) certain
    governmental entities of a country that grants an equivalent
    exemption, (C) foreign corporations organized in a country
    that grants an equivalent exemption and that satisfy the
    Publicly Traded Test, (D) certain not-for-profit
    organizations organized in a country that grants an equivalent
    exemption, (E) individual beneficiaries of certain pension
    funds that are administered in or by a country that grants an
    equivalent exemption, or (F) shareholders of certain
    foreign corporations that are airlines organized in a country
    that grants an equivalent exemption. For these purposes, shares
    owned by a corporation, partnership, estate or trust are treated
    as proportionately owned by its shareholders, partners or
    beneficiaries, as the case may be;
|
| |  | do not own their interests in the corporation through bearer
    shares; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | provide required documentation to the corporation and the
    corporation satisfies applicable reporting requirements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       









| |   |                                                                                                                                                                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | we have, or are considered to have, a fixed place of business in
    the United States involved in the earning of U.S.-source
    Shipping Income; and                                                                                                                                                                 
|
| |  | substantially all of our U.S.-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.



70



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| |                        
| | -----------------------
| | Gain on Sale of Vessels



TAX CONSEQUENCES TO HOLDERS


The following is a discussion of the material Bermuda and
U.S. federal income tax consequences relating to the
acquisition, ownership or disposition of our common shares and
should not be construed as legal or professional tax advice.
This discussion is based on the laws as in force and as applied
in practice as of the date of this report and is subject to any
subsequent modifications to those laws or practices, which
modifications may apply with retroactive effect. You are urged
to consult your tax advisors concerning the tax consequences of
your particular situation, as well as any tax consequences that
may arise under the laws of any U.S. state or local,
non-U.S. or other taxing jurisdiction.




| |                                    
| | -----------------------------------
| | Bermuda tax consequences to holders





| |                                                             
| | ------------------------------------------------------------
| | United States federal income tax consequences to
    holders





71



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| |   |                                                                                                                                                                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a citizen or individual resident of the United States;                                                                                                                                                                                                                                                                            
|
| |  | a corporation (or other entity taxable as a corporation) created
    or organized in or under the laws of the United States or any
    state thereof or the District of Columbia;                                                                                                                                                 
|
| |  | an estate, the income of which is subject to U.S. federal
    income taxation regardless of its source; or                                                                                                                                                                                                                        
|
| |  | a trust if it (1) is subject to the primary supervision of
    a court within the United States and one or more
    U.S. persons have the authority to control all substantial
    decisions of the trust or (2) has a valid election in
    effect under applicable U.S. Treasury regulations to be
    treated as a U.S. person.





| |                                                                  
| | -----------------------------------------------------------------
| | United States Federal Income Tax Consequences to
    U.S. Holders

Distributions.




Disposition.


Passive Foreign Investment Company Considerations.


72



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##### Table of Contents







| |   |                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 75% or more of our gross income in the taxable year is
    passive income (generally including dividends,
    interest, rents, royalties, gains from commodities and
    securities transactions, annuities, gains from the disposition
    of assets producing passive income, and amounts derived by
    reason of the temporary investment of funds raised in our
    initial public offering ); or
|
| |  | 50% or more of our assets in the taxable year (averaged over the
    year and generally determined based upon value) produce, or are
    held for the production of, passive income.                                                                                                                                                                                                                    











73



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Information Reporting And Backup Withholding.




| |                                                                      
| | ---------------------------------------------------------------------
| | United States Federal Income Tax Consequences to
    Non-U.S. Holders



Distributions and Disposition.


74



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Information Reporting And Backup Withholding.




| |                     
| | --------------------
| | Documents on Display






















|         |                                                               
|-------- | --------------------------------------------------------------
|Item 11: | Quantitative and Qualitative Disclosures About Market
    Risk








|         |                                                           
|-------- | ----------------------------------------------------------
|Item 12: | Description of Securities other than Equity
    Securities



Part II







|         |                                                
|-------- | -----------------------------------------------
|Item 13: | Defaults, Dividend Arrearages and Delinquencies



75



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##### Table of Contents








|         |                                                                                 
|-------- | --------------------------------------------------------------------------------
|Item 14: | Material Modifications to the Rights of Security Holders
    and Use of Proceeds



| |                                                             
| | ------------------------------------------------------------
| | Material Modifications to the Rights of Security
    Holders





| |                
| | ---------------
| | Use of Proceeds














|         |                        
|-------- | -----------------------
|Item 15: | Controls and Procedures



76



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##### Table of Contents












|          |                                 
|--------- | --------------------------------
|Item 16A: | Audit Committee Financial Expert








|          |               
|--------- | --------------
|Item 16B: | Code of Ethics




















|          |                                       
|--------- | --------------------------------------
|Item 16C: | Principal Accountant Fees and Services



| |           
| | ----------
| | Audit Fees





| |                   
| | ------------------
| | Audit-Related Fees





| |         
| | --------
| | Tax Fees





| |               
| | --------------
| | All Other Fees





| |                                             
| | --------------------------------------------
| | Pre-Approval Policies for Non-Audit Services



77



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|          |                                                               
|--------- | --------------------------------------------------------------
|Item 16D: | Exemptions from the Listing Standards for Audit
    Committees








|          |                                                                           
|--------- | --------------------------------------------------------------------------
|Item 16E: | Purchases of Equity Securities by the Issuer and
    Affiliated Purchasers








|         |                     
|-------- | --------------------
|Item 17: | Financial Statements








|         |                     
|-------- | --------------------
|Item 18: | Financial Statements








|         |         
|-------- | --------
|Item 19: | Exhibits



78



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SIGNATURES






| |                       
| | ----------------------
| | ARLINGTON TANKERS LTD.



| |     |                    
| | --- | -------------------
| | By: | /s/ Arthur L. Regan

| |                                               
| | ----------------------------------------------
| |                                               
| | Name: Arthur L. Regan                         
| | Title:   President and Chief Executive Officer



79



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EXHIBIT INDEX


|        |    |                        |  |                                                                                    
|------- | -- | ---------------------- |  | -----------------------------------------------------------------------------------
|Exhibit |    |                       
|Number  |    | Description of Exhibit
|        |    |                       
|        | 1  | .1*                    |  | Memorandum of Association                                                          
|       
|        | 1  | .2*                    |  | Bye-laws                                                                           
|       
|        | 4  | .1*                    |  | Form of Common Share Certificate                                                   
|       
|        | 4  | .2*                    |  | Registration Rights Agreement                                                      
|       
|        | 8  | .1*                    |  | Subsidiaries                                                                       
|       
|        | 10 | .1*                    |  | US$135,000,000 Secured Loan Facility Agreement                                     
|       
|        | 10 | .2.1*                  |  | Memorandum of Agreement for sale of Stena Companion                                
|       
|        | 10 | .2.2*                  |  | Memorandum of Agreement for sale of Stena Compatriot                               
|       
|        | 10 | .2.3*                  |  | Memorandum of Agreement for sale of Stena Concord                                  
|       
|        | 10 | .2.4*                  |  | Memorandum of Agreement for sale of Stena Consul                                   
|       
|        | 10 | .2.5*                  |  | Memorandum of Agreement for sale of Stena Victory                                  
|       
|        | 10 | .2.6*                  |  | Memorandum of Agreement for sale of Stena Vision                                   
|       
|        | 10 | .3.1*                  |  | Time Charter Party for Stena Companion                                             
|       
|        | 10 | .3.2                   |  | Amendment No. 1 to Time Charter Party for Stena
    Companion                      
|       
|        | 10 | .3.3*                  |  | Time Charter Party for Stena Compatriot                                            
|       
|        | 10 | .3.4                   |  | Amendment No. 1 to Time Charter Party for Stena
    Compatriot                     
|       
|        | 10 | .3.5*                  |  | Time Charter Party for Stena Concord                                               
|       
|        | 10 | .3.6                   |  | Amendment No. 1 to Time Charter Party for Stena
    Concord                        
|       
|        | 10 | .3.7*                  |  | Time Charter Party for Stena Consul                                                
|       
|        | 10 | .3.8                   |  | Amendment No. 1 to Time Charter Party for Stena
    Consul                         
|       
|        | 10 | .3.9*                  |  | Time Charter Party for Stena Victory                                               
|       
|        | 10 | .3.10                  |  | Amendment No. 1 to Time Charter Party for Stena
    Victory                        
|       
|        | 10 | .3.11*                 |  | Time Charter Party for Stena Vision                                                
|       
|        | 10 | .3.12                  |  | Amendment No. 1 to Time Charter Party for Stena
    Vision                         
|       
|        | 10 | .4.1*                  |  | Ship Management Agreement for Stena Companion                                      
|       
|        | 10 | .4.2                   |  | Amendment No. 1 to Ship Management Agreement for Stena
    Companion               
|       
|        | 10 | .4.3*                  |  | Ship Management Agreement for Stena Compatriot                                     
|       
|        | 10 | .4.4                   |  | Amendment No. 1 to Ship Management Agreement for Stena
    Compatriot              
|       
|        | 10 | .4.5*                  |  | Ship Management Agreement for Stena Concord                                        
|       
|        | 10 | .4.6                   |  | Amendment No. 1 to Ship Management Agreement for Stena
    Concord                 
|       
|        | 10 | .4.7*                  |  | Ship Management Agreement for Stena Consul                                         
|       
|        | 10 | .4.8                   |  | Amendment No. 1 to Ship Management Agreement for Stena
    Consul                  
|       
|        | 10 | .4.9*                  |  | Ship Management Agreement for Stena Victory                                        
|       
|        | 10 | .4.10                  |  | Amendment No. 1 to Ship Management Agreement for Stena
    Victory                 
|       
|        | 10 | .4.11*                 |  | Ship Management Agreement for Stena Vision                                         
|       
|        | 10 | .4.12                  |  | Amendment No. 1 to Ship Management Agreement for Stena
    Vision                  
|       
|        | 10 | .5.1*                  |  | Stena Guaranty of Time Charter for Stena Companion                                 
|       
|        | 10 | .5.2*                  |  | Stena Guaranty of Time Charter for Stena Compatriot                                
|       
|        | 10 | .5.3*                  |  | Stena Guaranty of Time Charter for Stena Concord                                   
|       
|        | 10 | .5.4*                  |  | Stena Guaranty of Time Charter for Stena Consul                                    
|       
|        | 10 | .5.5*                  |  | Concordia Guaranty of Time Charter for Stena Victory                               
|       
|        | 10 | .5.6*                  |  | Concordia Guaranty of Time Charter for Stena Vision                                
|       
|        | 10 | .6.1*                  |  | Stena Standby Charter Agreement for Stena Victory                                  
|       
|        | 10 | .6.2*                  |  | Stena Standby Charter Agreement for Stena Vision                                   
|       
|        | 10 | .7.1*                  |  | Stena Guaranty of Off-Hire and Replacement of Ship Manager for
    Stena Companion 
|       
|        | 10 | .7.2*                  |  | Stena Guaranty of Off-Hire and Replacement of Ship Manager for
    Stena Compatriot
|       
|        | 10 | .7.3*                  |  | Stena Guaranty of Off-Hire and Replacement of Ship Manager for
    Stena Concord   



---



##### Table of Contents



|        |    |                        |  |                                                                                  
|------- | -- | ---------------------- |  | ---------------------------------------------------------------------------------
|Exhibit |    |                       
|Number  |    | Description of Exhibit
|        |    |                       
|       
|        | 10 | .7.4*                  |  | Stena Guaranty of Off-Hire and Replacement of Ship Manager for
    Stena Consul  
|       
|        | 10 | .7.5*                  |  | Stena Guaranty of Off-Hire and Replacement of Ship Manager for
    Stena Victory 
|       
|        | 10 | .7.6*                  |  | Stena Guaranty of Off-Hire and Replacement of Ship Manager for
    Stena Vision  
|       
|        | 10 | .8.1*                  |  | Arlington Guaranty of Time Charter for Stena Companion                           
|       
|        | 10 | .8.2*                  |  | Arlington Guaranty of Time Charter for Stena Compatriot                          
|       
|        | 10 | .8.3*                  |  | Arlington Guaranty of Time Charter for Stena Concord                             
|       
|        | 10 | .8.4*                  |  | Arlington Guaranty of Time Charter for Stena Consul                              
|       
|        | 10 | .8.5*                  |  | Arlington Guaranty of Time Charter for Stena Victory                             
|       
|        | 10 | .8.6*                  |  | Arlington Guaranty of Time Charter for Stena Vision                              
|       
|        | 10 | .9.1*                  |  | Arlington Guaranty of Ship Management Agreement for Stena
    Companion          
|       
|        | 10 | .9.2*                  |  | Arlington Guaranty of Ship Management Agreement for Stena
    Compatriot         
|       
|        | 10 | .9.3*                  |  | Arlington Guaranty of Ship Management Agreement for Stena
    Concord            
|       
|        | 10 | .9.4*                  |  | Arlington Guaranty of Ship Management Agreement for Stena
    Consul             
|       
|        | 10 | .9.5*                  |  | Arlington Guaranty of Ship Management Agreement for Stena
    Victory            
|       
|        | 10 | .9.6*                  |  | Arlington Guaranty of Ship Management Agreement for Stena
    Vision             
|       
|        | 12 | .1                     |  | Certification of Chief Executive Officer pursuant to
    Rule 13a-14(a)/15d-14(a)
|       
|        | 12 | .2                     |  | Certification of Chief Financial Officer pursuant to
    Rule 13a-14(a)/15d-14(a)
|        | 13 | .1                     |  | Certification of Chief Executive Officer pursuant to
    18 U.S.C. 1350          
|       
|        | 13 | .2                     |  | Certification of Chief Financial Officer pursuant to
    18 U.S.C. 1350          






|  |                                                                                                                         
|- | ------------------------------------------------------------------------------------------------------------------------
|* | Incorporated herein by reference from the Registrants
    Registration Statement on Form F-1 (File
    No. 333-119869).



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##### Table of Contents



ARLINGTON TANKERS LTD.


INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


|                                                                                                                                                        |  |  |     | 
|------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | --- | 
|Report of Independent Registered Public
    Accounting Firm  KPMG Bermuda                                                                              |  |  | F-2 | 
|Report of Independent Registered Public
    Accounting Firm  KPMG Bohlins AB                                                                           |  |  | F-3 | 
|Consolidated Balance Sheets as of
    December 31, 2004 and 2003                                                                                        |  |  | F-4 | 
|Consolidated Statements of Operations and
    Comprehensive Income for the years ended December 31, 2004,
    2003 and 2002                             |  |  | F-5 | 
|Consolidated Statements of Changes in
    Combined Predecessor Equity and Shareholders Equity for
    the years ended December 31, 2004, 2003 and 2002 |  |  | F-6 | 
|Consolidated Statements of Cash Flows for
    the years ended December 31, 2004, 2003 and 2002                                                          |  |  | F-7 | 
|Notes to the Consolidated Financial
    Statements                                                                                                      |  |  | F-8 | 

F-1



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##### Table of Contents






REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



















F-2



---



##### Table of Contents






REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



























F-3



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##### Table of Contents



ARLINGTON TANKERS LTD.





Consolidated Balance Sheets as of


December 31, 2004 and 2003


|                                                                      |                                                                                                                                                                                  |                                                                             |         |         |              |  |         |        |         | 
|--------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------- | ------- | ------- | ------------ |  | ------- | ------ | ------- | 
|                                                                      |                                                                                                                                                                                  | December 31,                                                                |         |         | December 31, | 
|                                                                      |                                                                                                                                                                                  | 2004                                                                        |         |         | 2003         | 
|                                                                      |                                                                                                                                                                                  |                                                                             |         |         |              | 
|                                                                      |                                                                                                                                                                                  | (In thousands of $, except                                                  |        
|                                                                      |                                                                                                                                                                                  | share and per share amounts)                                                |        
|ASSETS                                                               
|Current assets                                                        |                                                                                                                                                                                  |                                                                             |         |         |              |  |         |       
|                                                                      | Cash and cash equivalents                                                                                                                                                        |                                                                             |         | 5,960   |              |  |         | 1,194  |        
|                                                                      | Prepaid expenses and accrued income                                                                                                                                              |                                                                             |         | 1,346   |              |  |         | 208    |        
|                                                                      | Other receivables                                                                                                                                                                |                                                                             |         | 2,102   |              |  |         | 206    |        
|                                                                      | Interest rate swap agreement at fair value                                                                                                                                       |                                                                             |         | 1,214   |              |  |         |       |        
|                                                                      |                                                                                                                                                                                  |                                                                             |         |         |              | 
|                                                                      |                                                                                                                                                                                  | Total current assets                                                        |         |         | 10,622       |  |         |        | 1,608   | 
|Newbuildings                                                          |                                                                                                                                                                                  |                                                                             |        |         |              |  | 36,185  |       
|Vessels, net                                                          |                                                                                                                                                                                  |                                                                             | 281,441 |         |              |  | 154,465 |       
|Deferred debt issuance cost                                           |                                                                                                                                                                                  |                                                                             | 787     |         |              |  | 158     |       
|                                                                      |                                                                                                                                                                                  |                                                                             |         |         |              | 
|                                                                      |                                                                                                                                                                                  | Total assets                                                                |         |         | 292,850      |  |         |        | 192,416 | 
|                                                                      |                                                                                                                                                                                  |                                                                             |         |         |              | 
|LIABILITIES, COMBINED PREDECESSOR EQUITY AND
    SHAREHOLDERS EQUITY
|Current liabilities                                                   |                                                                                                                                                                                  |                                                                             |         |         |              |  |         |       
|                                                                      | Accrued expenses                                                                                                                                                                 |                                                                             |         | 1,323   |              |  |         | 490    |        
|                                                                      | Unearned revenue                                                                                                                                                                 |                                                                             |         | 2,040   |              |  |         |       |        
|                                                                      | Amount due to Concordia                                                                                                                                                          |                                                                             |         |        |              |  |         | 45,899 |        
|                                                                      |                                                                                                                                                                                  |                                                                             |         |         |              | 
|                                                                      |                                                                                                                                                                                  | Total current liabilities                                                   |         |         | 3,363        |  |         |        | 46,389  | 
|Long term liabilities                                                 |                                                                                                                                                                                  |                                                                             |         |         |              |  |         |       
|                                                                      | Long term debt                                                                                                                                                                   |                                                                             |         | 135,000 |              |  |         | 41,334 |        
|                                                                      | Amount due to Stena                                                                                                                                                              |                                                                             |         |        |              |  |         | 29,185 |        
|                                                                      | Amount due to Concordia                                                                                                                                                          |                                                                             |         |        |              |  |         | 52,622 |        
|                                                                      | Amount due to Fram                                                                                                                                                               |                                                                             |         |        |              |  |         | 7,176  |        
|                                                                      |                                                                                                                                                                                  |                                                                             |         |         |              | 
|                                                                      |                                                                                                                                                                                  | Total liabilities                                                           |         |         | 138,363      |  |         |        | 176,706 | 
|                                                                      |                                                                                                                                                                                  |                                                                             |         |         |              | 
|Combined predecessor equity                                           |                                                                                                                                                                                  |                                                                             |        |         |              |  | 15,710  |       
|                                                                      |                                                                                                                                                                                  |                                                                             |         |         |              | 
|Shareholders equity                                                  |                                                                                                                                                                                  |                                                                             |         |         |              |  |         |       
|                                                                      | Common shares, par value $0.01 per share,
    20,000,000 shares authorized, 15,500,000 and 0 shares
    issued and outstanding as of December 31, 2004 and 2003
    respectively |                                                                             |         | 155     |              |  |         |       |        
|                                                                      | Preference shares, par value $0.01 per share,
    4,000,000 shares authorized, none issued or outstanding                                                                        |                                                                             |         |        |              |  |         |       |        
|                                                                      | Additional paid-in capital                                                                                                                                                       |                                                                             |         | 148,828 |              |  |         |       |        
|                                                                      | Accumulated other comprehensive income                                                                                                                                           |                                                                             |         | 1,214   |              |  |         |       |        
|                                                                      | Retained earnings                                                                                                                                                                |                                                                             |         | 4,290   |              |  |         |       |        
|                                                                      |                                                                                                                                                                                  |                                                                             |         |         |              | 
|                                                                      |                                                                                                                                                                                  | Total shareholders equity                                                  |         |         | 154,487      |  |         |        |        | 
|                                                                      |                                                                                                                                                                                  |                                                                             |         |         |              | 
|                                                                      |                                                                                                                                                                                  | Total liabilities, combined predecessor equity and
    shareholders equity |         |         | 292,850      |  |         |        | 192,416 | 
|                                                                      |                                                                                                                                                                                  |                                                                             |         |         |              | 



F-4



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##### Table of Contents



ARLINGTON TANKERS LTD.





Consolidated Statements of Operations and Comprehensive
Income for the years ended


December 31, 2004, 2003 and 2002


|                                                                      |                                      |                                      |            |        |        |  |        |        |        |  |        |        |        | 
|--------------------------------------------------------------------- | ------------------------------------ | ------------------------------------ | ---------- | ------ | ------ |  | ------ | ------ | ------ |  | ------ | ------ | ------ | 
|                                                                      |                                      | Year Ended December 31,              |           
|                                                                      |                                      |                                      |           
|                                                                      |                                      | 2004                                 |            |        | 2003   |  |        | 2002   |       
|                                                                      |                                      |                                      |            |        |        |  |        |        |       
|                                                                      |                                      | (In thousands of $, except share and |           
|                                                                      |                                      | per share amounts)                   |           
|Operating revenues                                                    |                                      |                                      |            |        |        |  |        |        |        |  |        |       
|                                                                      | Charter revenues                     |                                      |            | 59,602 |        |  |        | 29,963 |        |  |        | 27,537 |       
|                                                                      | Commission to Stena                  |                                      |            | (501   | )      |  |        | (375   | )      |  |        | (344   | )     
|                                                                      | Commission to others                 |                                      |            | (1,143 | )      |  |        | (750   | )      |  |        | (689   | )     
|                                                                      |                                      |                                      |            |        |        |  |        |        |       
|                                                                      |                                      | Total operating revenues, net        |            |        | 57,958 |  |        |        | 28,838 |  |        |        | 26,504 | 
|                                                                      |                                      |                                      |            |        |        |  |        |        |       
|Operating expenses                                                    |                                      |                                      |            |        |        |  |        |        |        |  |        |       
|                                                                      | Vessel operating expenses, other     |                                      |            | 15,988 |        |  |        | 5,995  |        |  |        | 5,529  |       
|                                                                      | Vessel operating expenses, Stena     |                                      |            | 1,374  |        |  |        | 191    |        |  |        | 167    |       
|                                                                      | Vessel operating expenses, Concordia |                                      |            | 213    |        |  |        | 420    |        |  |        | 520    |       
|                                                                      | Voyage expenses                      |                                      |            |       |        |  |        |       |        |  |        | 10     |       
|                                                                      | Depreciation                         |                                      |            | 11,421 |        |  |        | 6,872  |        |  |        | 6,872  |       
|                                                                      | Administrative expenses              |                                      |            | 1,676  |        |  |        | 927    |        |  |        | 960    |       
|                                                                      |                                      |                                      |            |        |        |  |        |        |       
|                                                                      |                                      | Total operating expenses             |            |        | 30,672 |  |        |        | 14,405 |  |        |        | 14,058 | 
|                                                                      |                                      |                                      |            |        |        |  |        |        |       
|Operating income                                                      |                                      |                                      | 27,286     |        |        |  | 14,433 |        |        |  | 12,446 |       
|                                                                      |                                      |                                      |            |        |        |  |        |        |       
|Financial income (expenses)                                           |                                      |                                      |            |        |        |  |        |        |        |  |        |       
|                                                                      | Interest income                      |                                      |            | 49     |        |  |        |       |        |  |        | 30     |       
|                                                                      | Interest expense, Concordia          |                                      |            | (654   | )      |  |        | (2,250 | )      |  |        | (1,610 | )     
|                                                                      | Interest expense, Stena              |                                      |            | (1,836 | )      |  |        |       |        |  |        |       |       
|                                                                      | Interest expense, Fram               |                                      |            | (133   | )      |  |        |       |        |  |        |       |       
|                                                                      | Interest expense, other              |                                      |            | (4,088 | )      |  |        | (2,442 | )      |  |        | (4,332 | )     
|                                                                      | Foreign currency exchange loss       |                                      |            |       |        |  |        | (3,654 | )      |  |        | (661   | )     
|                                                                      | Other financial items                |                                      |            | (273   | )      |  |        | (174   | )      |  |        | (104   | )     
|                                                                      |                                      |                                      |            |        |        |  |        |        |       
|                                                                      | Financial income (expenses), net     |                                      |            | (6,935 | )      |  |        | (8,520 | )      |  |        | (6,677 | )     
|                                                                      |                                      |                                      |            |        |        |  |        |        |       
|Net income                                                            |                                      |                                      | 20,351     |        |        |  | 5,913  |        |        |  | 5,769  |       
|                                                                      |                                      |                                      |            |        |        |  |        |        |       
|Other comprehensive income                                            |                                      |                                      |            |        |        |  |        |        |        |  |        |       
|Net unrealized gain on derivative instrument during the year          |                                      |                                      | 1,214      |        |        |  |       |        |        |  |       |       
|                                                                      |                                      |                                      |            |        |        |  |        |        |       
|                                                                      | Total other comprehensive income     |                                      |            | 1,214  |        |  |        |       |        |  |        |       |       
|                                                                      |                                      |                                      |            |        |        |  |        |        |       
|                                                                      | Comprehensive income                 |                                      |            | 21,565 |        |  |        | 5,913  |        |  |        | 5,769  |       
|                                                                      |                                      |                                      |            |        |        |  |        |        |       
|Earnings per common share  basic and diluted                         |                                      | $                                    | 0.28       |        |        |  | N/A    |        |        |  | N/A    |       
|                                                                      |                                      |                                      |            |        |        |  |        |        |       
|Weighted average number of shares outstanding  basic
    and diluted |                                      |                                      | 15,500,000 |        |        |  | N/A    |        |        |  | N/A    |       
|                                                                      |                                      |                                      |            |        |        |  |        |        |       





F-5



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##### Table of Contents



ARLINGTON TANKERS LTD.





Consolidated Statements of Changes in Combined


Predecessor Equity and Shareholders Equity


for the years ended December 31, 2004, 2003 and 2002


|                                                                               |                                   |                     |          |         |      |  |       |        |  |  |       |       | 
|------------------------------------------------------------------------------ | --------------------------------- | ------------------- | -------- | ------- | ---- |  | ----- | ------ |  |  | ----- | ----- | 
|                                                                               |                                   | 2004                |          |         | 2003 |  |       | 2002   | 
|                                                                               |                                   |                     |          |         |      |  |       |        | 
|                                                                               |                                   | (In thousands of $) |         
|COMBINED PREDECESSOR EQUITY                                                    |                                   |                     |          |         |      |  |       |        |  |  |       |      
|Balance at the beginning of the year                                           |                                   |                     | 15,710   |         |      |  | 9,773 |        |  |  | 3,980 |      
|Net income attributable to predecessor shareholders                            |                                   |                     | 16,061   |         |      |  | 5,913 |        |  |  | 5,769 |      
|Shares issued                                                                  |                                   |                     |         |         |      |  | 24    |        |  |  | 24    |      
|Contribution by predecessor shareholders                                       |                                   |                     | 38,001   |         |      |  |      |        |  |  |      |      
|Distribution to predecessor shareholders                                       |                                   |                     | (69,772  | )       |      |  |      |        |  |  |      |      
|                                                                               |                                   |                     |          |         |      |  |       |        | 
|                                                                               | Total combined predecessor equity |                     |          |        |      |  |       | 15,710 |  |  |       | 9,773 | 
|                                                                               |                                   |                     |          |         |      |  |       |        | 
|SHAREHOLDERS EQUITY                                                           |                                   |                     |          |         |      |  |       |        |  |  |       |      
|COMMON SHARES                                                                  |                                   |                     |          |         |      |  |       |        |  |  |       |      
|Balance at the beginning of the year                                           |                                   |                     |         |         |      |  |       |        |  |  |       |      
|Shares issued                                                                  |                                   |                     | 167      |         |      |  |       |        |  |  |       |      
|Repurchase of founder shares                                                   |                                   |                     | (12      | )       |      |  |       |        |  |  |       |      
|                                                                               |                                   |                     |          |         |      |  |       |        | 
|                                                                               | Balance at the end of the year    |                     |          | 155     |      |  |       |        |  |  |       |       | 
|                                                                               |                                   |                     |          |         |      |  |       |        | 
|ADDITIONAL PAID-IN CAPITAL                                                     |                                   |                     |          |         |      |  |       |        |  |  |       |      
|Balance at the beginning of the year                                           |                                   |                     |         |         |      |  |       |        |  |  |       |      
|Contribution by shareholders*                                                  |                                   |                     | 292,198  |         |      |  |       |        |  |  |       |      
|Deemed distribution to predecessor shareholders                                |                                   |                     | (143,370 | )       |      |  |       |        |  |  |       |      
|                                                                               |                                   |                     |          |         |      |  |       |        | 
|                                                                               | Balance at the end of the year    |                     |          | 148,828 |      |  |       |        |  |  |       |       | 
|                                                                               |                                   |                     |          |         |      |  |       |        | 
|ACCUMULATED OTHER COMPREHENSIVE INCOME                                         |                                   |                     |          |         |      |  |       |        |  |  |       |      
|Balance at the beginning of the year                                           |                                   |                     |         |         |      |  |       |        |  |  |       |      
|Other comprehensive income                                                     |                                   |                     | 1,214    |         |      |  |       |        |  |  |       |      
|                                                                               |                                   |                     |          |         |      |  |       |        | 
|                                                                               | Balance at the end of the year    |                     |          | 1,214   |      |  |       |        |  |  |       |       | 
|                                                                               |                                   |                     |          |         |      |  |       |        | 
|RETAINED EARNINGS                                                              |                                   |                     |          |         |      |  |       |        |  |  |       |      
|Balance at the beginning of the year                                           |                                   |                     |         |         |      |  |       |        |  |  |       |      
|Net income for the period from November 10, 2004 through
    December 31, 2004 |                                   |                     | 4,290    |         |      |  |       |        |  |  |       |      
|                                                                               |                                   |                     |          |         |      |  |       |        | 
|                                                                               | Balance at the end of the year    |                     |          | 4,290   |      |  |       |        |  |  |       |       | 
|                                                                               |                                   |                     |          |         |      |  |       |        | 
|                                                                               | Total shareholders equity        |                     |          | 154,487 |      |  |       |        |  |  |       |       | 
|                                                                               |                                   |                     |          |         |      |  |       |        | 






|  |                                                                                                                                                                       
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | The contribution by shareholders is shown net of underwriting
    discounts and commissions of $15.2 million and initial
    public offering expenses of $2.5 million.



F-6



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##### Table of Contents



ARLINGTON TANKERS LTD.





Consolidated Statements of Cash Flows for the years ended


December 31, 2004, 2003 and 2002


|                                                                                      |                                                           |                                                     |        |          |          |   |       |         |         |   |        |          |         |  
|------------------------------------------------------------------------------------- | --------------------------------------------------------- | --------------------------------------------------- | ------ | -------- | -------- | - | ----- | ------- | ------- | - | ------ | -------- | ------- | -
|                                                                                      |                                                           | Year Ended December 31,                             |       
|                                                                                      |                                                           |                                                     |       
|                                                                                      |                                                           | 2004                                                |        |          | 2003     |   |       | 2002    |        
|                                                                                      |                                                           |                                                     |        |          |          |   |       |         |        
|                                                                                      |                                                           | (In thousands of $, except share and                |       
|                                                                                      |                                                           | per share amounts)                                  |       
|Operating activities                                                                  |                                                           |                                                     |        |          |          |   |       |         |         |   |        |         
|Net income                                                                            |                                                           |                                                     | 20,351 |          |          |   | 5,913 |         |         |   | 5,769  |         
|Adjustments to reconcile net income to net cash provided by
    operating activities: |                                                           |                                                     |        |          |          |   |       |         |         |   |        |         
|                                                                                      | Depreciation                                              |                                                     |        | 11,421   |          |   |       | 6,872   |         |   |        | 6,872    |        
|                                                                                      | Unrealized exchange losses                                |                                                     |        |         |          |   |       | 3,654   |         |   |        | 661      |        
|                                                                                      | Amortization of debt issuance costs                       |                                                     |        | 209      |          |   |       | 64      |         |   |        | 64       |        
|Changes in operating assets and liabilities:                                          |                                                           |                                                     |        |          |          |   |       |         |         |   |        |         
|                                                                                      | Prepaid expenses and accrued income                       |                                                     |        | (1,138   | )        |   |       | 140     |         |   |        | 273      |        
|                                                                                      | Other receivables                                         |                                                     |        | (1,896   | )        |   |       | (200    | )       |   |        | 6        |        
|                                                                                      | Accrued expenses and other current liabilities            |                                                     |        | 833      |          |   |       | (1,068  | )       |   |        | (634     | )      
|                                                                                      | Unearned revenue                                          |                                                     |        | 2,040    |          |   |       |        |         |   |        |         |        
|                                                                                      |                                                           |                                                     |        |          |          |   |       |         |        
|                                                                                      |                                                           | Net cash provided by operating activities           |        |          | 31,820   |   |       |         | 15,375  |   |        |          | 13,011  |  
|                                                                                      |                                                           |                                                     |        |          |          |   |       |         |        
|Investing activities                                                                  |                                                           |                                                     |        |          |          |   |       |         |         |   |        |         
|                                                                                      | Capital expenditure on vessels                            |                                                     |        | (102,212 | )        |   |       | (36,488 | )       |   |        | (244     | )      
|                                                                                      |                                                           |                                                     |        |          |          |   |       |         |        
|                                                                                      |                                                           | Net cash used in investing activities               |        |          | (102,212 | ) |       |         | (36,488 | ) |        |          | (244    | )
|                                                                                      |                                                           |                                                     |        |          |          |   |       |         |        
|Financing activities                                                                  |                                                           |                                                     |        |          |          |   |       |         |         |   |        |         
|                                                                                      | Proceeds from long term debt                              |                                                     |        | 239,666  |          |   |       |        |         |   |        | 105,000  |        
|                                                                                      | Repayment of long term debt                               |                                                     |        | (146,000 | )        |   |       | (63,666 | )       |   |        | (116,666 | )      
|                                                                                      | Increase in debt issuance costs                           |                                                     |        | (838     | )        |   |       |        |         |   |        |         |        
|                                                                                      | Increase (decrease) in amounts due to Stena and Concordia |                                                     |        | (127,706 | )        |   |       | 78,183  |         |   |        | (6,906   | )      
|                                                                                      | Increase (decrease) in amount due to Fram                 |                                                     |        | (7,176   | )        |   |       | 7,176   |         |   |        |         |        
|                                                                                      | Distribution to predecessor shareholder                   |                                                     |        | (69,772  | )        |   |       |        |         |   |        |         |        
|                                                                                      | Proceeds on issues of new shares                          |                                                     |        | 211,353  |          |   |       |        |         |   |        |         |        
|                                                                                      | Deemed distribution to predecessor shareholders           |                                                     |        | (62,370  | )        |   |       |        |         |   |        |         |        
|                                                                                      | Issue of share capital  founder shares                   |                                                     |        | 12       |          |   |       |        |         |   |        |         |        
|                                                                                      | Repurchase of share capital  founder shares              |                                                     |        | (12      | )        |   |       |        |         |   |        |         |        
|                                                                                      | Predecessor paid-in capital                               |                                                     |        | 38,001   |          |   |       | 24      |         |   |        | 24       |        
|                                                                                      |                                                           |                                                     |        |          |          |   |       |         |        
|                                                                                      |                                                           | Net cash provided by (used in) financing activities |        |          | 75,158   |   |       |         | 21,717  |   |        |          | (18,548 | )
|                                                                                      |                                                           |                                                     |        |          |          |   |       |         |        
|Net increase (decrease) in cash                                                       |                                                           |                                                     | 4,766  |          |          |   | 604   |         |         |   | (5,781 | )       
|Cash and cash equivalents at beginning of year                                        |                                                           |                                                     | 1,194  |          |          |   | 590   |         |         |   | 6,371  |         
|                                                                                      |                                                           |                                                     |        |          |          |   |       |         |        
|                                                                                      | Cash and cash equivalents at end of year                  |                                                     |        | 5,960    |          |   |       | 1,194   |         |   |        | 590      |        
|                                                                                      |                                                           |                                                     |        |          |          |   |       |         |        
|                                                                                      | Interest paid                                             |                                                     |        | 6,711    |          |   |       | 5,905   |         |   |        | 6,104    |        
|                                                                                      |                                                           |                                                     |        |          |          |   |       |         |        

Supplemental Cash Flow Information






F-7



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##### Table of Contents



ARLINGTON TANKERS LTD.





Notes to the Consolidated Financial Statements


December 31, 2004, 2003 and 2002




|   |        
|-- | -------
|1. | GENERAL









|                |  |        |                  |            |               |  |         |                      |          |  |                   |  |  |  |         | 
|--------------- |  | ------ | ---------------- | ---------- | ------------- |  | ------- | -------------------- | -------- |  | ----------------- |  |  |  | ------- | 
|                |  |        |                  |            |               |  |         | Deadweight Cargo     |         
|                |  |        |                  | Country of |               |  |         |                      | Capacity | 
|Name            |  | Vessel |                  |            | Incorporation |  |         | First Day of Service |          |  | (Metric Tones)    | 
|                |  |        |                  |            |               |  |         |                      |          |  |                   | 
|Vision Ltd      |  |        | Stena Vision     |            |               |  | Bermuda |                      |          |  | April 24, 2001    |  |  |  | 314,000 | 
|Victory Ltd.    |  |        | Stena Victory    |            |               |  | Bermuda |                      |          |  | June 29, 2001     |  |  |  | 314,000 | 
|Companion Ltd.  |  |        | Stena Companion  |            |               |  | Bermuda |                      |          |  | January 18, 2004  |  |  |  | 72,000  | 
|Compatriot Ltd. |  |        | Stena Compatriot |            |               |  | Bermuda |                      |          |  | April 15, 2004    |  |  |  | 72,000  | 
|Concord Ltd.    |  |        | Stena Concord    |            |               |  | Bermuda |                      |          |  | February 26, 2004 |  |  |  | 47,400  | 
|Consul Ltd.     |  |        | Stena Consul     |            |               |  | Bermuda |                      |          |  | March 26, 2004    |  |  |  | 47,400  | 



F-8



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##### Table of Contents



ARLINGTON TANKERS LTD.


Notes to the Consolidated Financial
Statements  (Continued)






|              |   |       |        |        |         |   |        |         |  |   |        |        | 
|------------- | - | ----- | ------ | ------ | ------- | - | ------ | ------- |  | - | ------ | ------ | 
|Charter Year  |   | V-MAX |        |        | Panamax |   |        | Product | 
|              |   |       |        |        |         |   |        |         | 
|              | 1 |       | $      | 35,700 |         |   | $      | 17,400  |  |   | $      | 15,500 | 
|              | 2 |       | $      | 36,075 |         |   | $      | 17,688  |  |   | $      | 15,765 | 
|              | 3 |       | $      | 36,469 |         |   | $      | 17,989  |  |   | $      | 16,043 | 
|              | 4 |       | $      | 36,882 |         |   | $      | 18,306  |  |   | $      | 16,335 | 
|              | 5 |       | $      | 37,316 |         |   | $      | 18,639  |  |   | $      | 16,642 | 
|Option year 1 |   | $     | 37,772 |        |         | $ | 18,989 |         |  | $ | 16,964 |       
|Option year 2 |   | $     | 38,251 |        |         | $ | 19,356 |         |  | $ | 17,303 |       
|Option year 3 |   | $     | 38,753 |        |         | $ | 19,741 |         |  | $ | 17,658 |       







| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a weighted average of the time charter hire per day received by
    the Charterer for any periods during the Calculation Period,
    determined as described below, that the Vessel is subchartered
    by the Charterer under a time charter, less ship broker
    commissions paid by the Charterer in an amount not to exceed
    2.5% of such time charter hire and commercial management fees
    paid by the Charterer in an amount not to exceed 1.25% of such
    time charter hire; and
|
| |  | the time charter equivalent hire for any periods during the
    Calculation Period that the vessel is not subchartered by the
    Charterer under a time charter.                                                                                                                                                                                                                                                                                                                               





F-9



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##### Table of Contents



ARLINGTON TANKERS LTD.


Notes to the Consolidated Financial
Statements  (Continued)




|   |                    
|-- | -------------------
|2. | ACCOUNTING POLICIES

Basis of accounting










Revenue recognition




Comprehensive income




F-10



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##### Table of Contents



ARLINGTON TANKERS LTD.


Notes to the Consolidated Financial
Statements  (Continued)


Commissions




Cash and cash equivalents




Foreign currency






Income taxes




Vessels, net






Newbuildings




Impairment of long-lived assets




F-11



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##### Table of Contents



ARLINGTON TANKERS LTD.


Notes to the Consolidated Financial
Statements  (Continued)


Deferred debt issuance cost




Drydocking provisions






Receivables




Estimates and concentrations






Fair value of financial instruments




Earnings per share




Distributions to shareholders




F-12



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##### Table of Contents



ARLINGTON TANKERS LTD.


Notes to the Consolidated Financial
Statements  (Continued)






|   |                                     
|-- | ------------------------------------
|3. | RECENTLY ISSUED ACCOUNTING STANDARDS





|   |                 
|-- | ----------------
|4. | CHARTER REVENUES





|   |                  
|-- | -----------------
|5. | OTHER RECEIVABLES

| |  |                     |       |  |              |  |     | 
| |  | ------------------- | ----- |  | ------------ |  | --- | 
| |  | December 31,        |       |  | December 31, | 
| |  | 2004                |       |  | 2003         | 
| |  |                     |       |  |              | 
| |  | (In thousands of $) |      
| |  |                     | 2,102 |  |              |  | 206 | 
| |  |                     |       |  |              | 
| |  |                     | 2,102 |  |              |  | 206 | 
| |  |                     |       |  |              | 





|   |             
|-- | ------------
|6. | NEWBUILDINGS

|                  |  |                     |          |   |              |  |        | 
|----------------- |  | ------------------- | -------- | - | ------------ |  | ------ | 
|                  |  | December 31,        |          |   | December 31, | 
|                  |  | 2004                |          |   | 2003         | 
|                  |  |                     |          |   |              | 
|                  |  | (In thousands of $) |         
|Opening Balance   |  |                     | 36,185   |   |              |  |       | 
|Investments       |  |                     | 102,212  |   |              |  | 36,185 | 
|Vessels delivered |  |                     | (138,397 | ) |              |  |       | 
|                  |  |                     |          |   |              | 
|Closing Balance   |  |                     |         |   |              |  | 36,185 | 
|                  |  |                     |          |   |              | 



F-13



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##### Table of Contents



ARLINGTON TANKERS LTD.


Notes to the Consolidated Financial
Statements  (Continued)




|   |             
|-- | ------------
|7. | VESSELS, NET

|             |                               |                     |         |         |              |  |         |         |  
|------------ | ----------------------------- | ------------------- | ------- | ------- | ------------ |  | ------- | ------- | -
|             |                               | December 31,        |         |         | December 31, | 
|             |                               | 2004                |         |         | 2003         | 
|             |                               |                     |         |         |              | 
|             |                               | (In thousands of $) |        
|Vessels      |                               |                     |         |         |              |  |         |        
|             | Cost                          |                     |         | 310,426 |              |  |         | 171,727 |  
|             | Accumulated depreciation      |                     |         | (28,985 | )            |  |         | (17,809 | )
|             |                               |                     |         |         |              | 
|             | Net book value at end of year |                     |         | 281,441 |              |  |         | 153,918 |  
|             | Spare parts                   |                     |         |        |              |  |         | 547     |  
|             |                               |                     |         |         |              | 
|Vessels, net |                               |                     | 281,441 |         |              |  | 154,465 |        
|             |                               |                     |         |         |              | 







|   |                            
|-- | ---------------------------
|8. | DEFERRED DEBT ISSUANCE COST





|                            |  |                     |     |   |              |  |      |  
|--------------------------- |  | ------------------- | --- | - | ------------ |  | ---- | -
|                            |  | December 31,        |     |   | December 31, | 
|                            |  | 2004                |     |   | 2003         | 
|                            |  |                     |     |   |              | 
|                            |  | (In thousands of $) |    
|Debt arrangement fees       |  |                     | 810 |   |              |  | 318  |  
|Accumulated amortization    |  |                     | (23 | ) |              |  | (160 | )
|                            |  |                     |     |   |              | 
|Deferred debt issuance cost |  |                     | 787 |   |              |  | 158  |  
|                            |  |                     |     |   |              | 



|   |     
|-- | ----
|9. | DEBT

|                          |  |                     |         |  |              |  |        | 
|------------------------- |  | ------------------- | ------- |  | ------------ |  | ------ | 
|                          |  | December 31,        |         |  | December 31, | 
|                          |  | 2004                |         |  | 2003         | 
|                          |  |                     |         |  |              | 
|                          |  | (In thousands of $) |        
|Secured credit facility   |  |                     | 135,000 |  |              |  |       | 
|Revolving credit facility |  |                     |        |  |              |  | 41,334 | 
|                          |  |                     |         |  |              | 
|Total debt                |  |                     | 135,000 |  |              |  | 41,334 | 
|                          |  |                     |         |  |              | 



F-14



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##### Table of Contents



ARLINGTON TANKERS LTD.


Notes to the Consolidated Financial
Statements  (Continued)






Stena Vision Stena Victory




|    |                      
|--- | ---------------------
|10. | FINANCIAL INSTRUMENTS

Derivative instruments and hedging activities












F-15



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##### Table of Contents



ARLINGTON TANKERS LTD.


Notes to the Consolidated Financial
Statements  (Continued)














|    |                                  
|--- | ---------------------------------
|11. | AMOUNT DUE TO STENA AND CONCORDIA





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) advances from Stena in the amount of $29.2 million
    to pay purchase installments and other costs associated with
    newbuildings. The intercompany balance bears interest at the
    rate of LIBOR plus 2.5% and is denominated in U.S. dollars.
    There was no fixed term of repayment.                                                                                                                                                                         
|
| | (ii) advances from Concordia in the amount of
    $52.6 million to pay purchase installments and other costs
    associated with the Vessels owned by the Concordia Vessel
    Subsidiaries. The intercompany balance bears interest at the
    maximum interest rate published yearly by the Swiss Federal Tax
    Administration for inter-company loans, i.e. 4.5% per annum
    in 2003, and was denominated in Swiss Francs. There was no fixed
    term of repayment.

F-16



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##### Table of Contents



ARLINGTON TANKERS LTD.


Notes to the Consolidated Financial
Statements  (Continued)




| |                                                                                                                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (iii) amounts advanced to the Concordia Vessel Subsidiaries
    from a cash pool maintained by Concordia and its subsidiaries.
    The Concordia Vessel Subsidiaries used the cash pool as an
    overdraft facility and the advance as of 2003 was
    $45.9 million. Advances bear interest at a bank base rate
    plus 1.375% and was denominated in U.S. dollars.





|    |                   
|--- | ------------------
|12. | AMOUNT DUE TO FRAM





|    |              
|--- | -------------
|13. | SHARE CAPITAL











|    |                              
|--- | -----------------------------
|14. | COMMITMENTS AND CONTINGENCIES

|               |  |                     |         |  |              |  |         | 
|-------------- |  | ------------------- | ------- |  | ------------ |  | ------- | 
|               |  | December 31,        |         |  | December 31, | 
|               |  | 2004                |         |  | 2003         | 
|               |  |                     |         |  |              | 
|               |  | (In thousands of $) |        
|Ship mortgages |  |                     | 135,000 |  |              |  | 153,918 | 







F-17



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##### Table of Contents



ARLINGTON TANKERS LTD.


Notes to the Consolidated Financial
Statements  (Continued)








|    |                           
|--- | --------------------------
|15. | RELATED PARTY TRANSACTIONS











|    |                  
|--- | -----------------
|16. | SUBSEQUENT EVENTS





F-18