Double Hull Tankers Announces Results

Tuesday, May 23, 2006
Double Hull Tankers, Inc. announced results for the period from January 1 to March 31, 2006. Total revenues for this period were $24.2 million and net income was $11.7 million, or $0.39 per share (diluted).

On October 18, 2005, having completed its initial public offering, DHT acquired seven double hull crude oil tankers from Overseas Shipholding Group, Inc. (OSG) and commenced operations as an independent tanker company. DHT's modern fleet consists of three Very Large Crude Carriers (VLCCs) and four Aframax tankers.

From the same date, all seven vessels have been chartered to OSG for periods ranging from five to six and one-half years. OSG in turn employs the three VLCCs in the Tankers International (TI) pool, the largest commercial pool for VLCCs, and the four Aframaxes in the Aframax International (AI) pool, the second largest commercial pool for Aframaxes. DHT receives a base charter hire and may, through profit sharing agreements, benefit from the vessels' earnings in the pools over and above the base charter hire rates. The technical operations of the vessels (crewing, maintenance, repairs, drydockings etc.) are conducted by a subsidiary of OSG at substantially fixed costs to DHT.

Total revenues of $24.2 million consist of $17.5 million in base charter hire revenue and $6.7 million in additional hire under our profit sharing arrangements with OSG. Of the additional hire, $4.1 million relates to the VLCCs and $2.6 million relates to the Aframax vessels. In the first quarter, DHT's VLCC and Aframax tankers achieved average time charter equivalent (TCE) earnings in the commercial pools of $75,800 and $39,700 per day, respectively, according to data from the commercial pools. In general, through the profit sharing agreements, DHT earns 40% of the excess of the vessels' actual net TCE earnings in the commercial pools over the base charter hire rates for the quarter, calculated on a fleet wide basis and on a four quarter rolling average. The actual average TCE earnings that DHT received for its vessels during the first quarter were $52,600 and $28,700 per day for the VLCCs and Aframax vessels, respectively.

Actual average TCE earnings are calculated by dividing the total revenue actually earned by the vessels by the sum of the total days each vessel was on hire during the period, or "revenue days". In the first quarter, the vessels' revenue days were 267 for the VLCCs and 352 for the Aframax vessels.

DHT's vessel expenses, including insurance costs, were $4.5 million for the quarter, depreciation and amortization expenses were $4.2 million and general and administrative expenses were $0.6 million.

Net finance expenses, including amortization of deferred debt issuance costs, were $3.3 million. DHT has entered into an interest rate swap agreement for the full amount of its term loan of $236 million, effectively fixing the interest rate at 5.6% until October 18, 2010. The term loan is non-amortizing until October 18, 2010.

Market rates for VLCCs and Aframax tankers were strong in the first quarter of 2006 with rates well above the base charter hire rates in DHT's charter arrangements with OSG for both the VLCCs and the Aframax tankers. Presently we are experiencing an expected seasonal decline, exacerbated by more than normal refinery capacity being shut down for maintenance in the United States. The effect is a lower fleet utilization and downward pressure on daily freight rates.

The company continues to see increased demand by charterers for double hull tankers compared to single hull tankers, leading to a premium being paid for double hull tankers.

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