HispanicBusiness

The graph shows the average yearly spot rates since 2000 as reported by R.S. Platou Economic Research a.s. Over the period 2000/2012 spot rates for Suezmax tankers were $30,000 or more per day for eight years. The daily rates as reported by shipbrokers and by Imarex may vary significantly from the actual rates we achieve in the market, but these rates are in general an indication of the level of the market and its direction. In any analysis of the tanker industry, the direction of the global economy is always the most important factor.

Link to the graph: http://hugin.info/201/R/1677024/546797.pdf

The Suezmax fleet (excl. shuttle tankers) counts 434 vessels at the end of 4Q2012, an increase of 25 since the beginning of the year.

The current orderbook stands as of today at 54 vessels which represent 13% of the Suezmax fleet. At the time of this report, the orderbook for 2014 counts only 5 Suezmax vessels. With current scrapping activity and a lack of new orders there is a good probability that the Suezmax fleet will shrink in 2014, which is to our favour.

Scrapping activity has increased recently. In 2012, 21 Suezmaxes were scrapped compared to 8 during the year 2011. Given the current market conditions we expect to see a further increase in the scrapping activity.

Corporate Governance/Conflict of Interests
In the fall of 2010 the New York Stock Exchange Commission presented its final report on corporate governance. The Commission achieved consensus on 10 core principles. These principles include a) building long-term sustainable growth in shareholder value for the corporation as the board's fundamental objective, b) the critical role of management in establishing proper corporate governance, c) good corporate governance should be integrated with the company's business strategy and objectives and d) transparency for corporations and investors, sound disclosure policies and communication beyond disclosure. We believe the principles presented are essential elements of good corporate governance and the Company is in compliance with these principles.

It is vital for NAT to ensure that there is no conflict of interests among shareholders, management, affiliates and related parties. Interests must be aligned. We will work to ensure that transactions with affiliates and/or related parties are transparent.

Strategy going forward
Our objective is to have a strategy that is flexible and has benefits in both a strong tanker market and a weak one. If the market improves, higher earnings and dividends can be expected. However, if rates remain low, the Company is in a position to buy vessels - secondhand vessels or newbuildings, inexpensively by historical standards. Therefore, the Company is able to improve its relative position in a weak market and is able to reap the benefits of a stronger economic environment thereafter. Over the recent past the Company has improved its relative position.

After an acquisition of vessels or other forms of expansion, the Company should be able to pay a higher dividend per share and produce higher earnings per share than had such an acquisition not taken place.

Our dividend policy will continue to enable us to achieve a competitive, risk adjusted cash yield over time compared with that of other tanker companies.