Weathering The Perfect Storm

Magnus Fyhr

Jefferies Tanker Index

`

0

300

600

900

1200

2000 2001 2002 2003 2004 2005

$0

$40,000

$80,000

$120,000

$160,000

1/21/2005 2/4/2005 2/18/2005 3/4/2005 3/18/2005

VLCC Suezmax Aframax

What’s In Store For 2005?

• Strong Global Economic Growth

• Global Oil Demand Growing At 2%+

• Stricter Regulations Against Single Hulls

• Increasing Competition For Shipyard Capacity

• Investor Concerns Center On Rate Volatility & Orderbook

• Risk/Reward Remains Attractive

Jefferies Charter Rate Assumptions`

$55,440

$38,829

$23,293

$52,433

$96,055

$65,000

$55,000

$0

$25,000

$50,000

$75,000

$100,000

$125,000

2000 2001 2002 2003 2004 2005E 2006E

TCE Rates

$45,506

$33,865

$19,765

$41,648

$74,975

$50,000

$40,000

$0

$20,000

$40,000

$60,000

$80,000

$100,000

2000 2001 2002 2003 2004 2005E 2006E

TCE Rates

$33,698$31,095

$19,377

$34,213

$49,592

$38,000

$30,000

$0

$15,000

$30,000

$45,000

$60,000

$75,000

2000 2001 2002 2003 2004 2005E 2006E

TCE Rates

$18,682

$24,778

$13,915

$21,868

$28,978$25,000

$22,000

$0

$10,000

$20,000

$30,000

$40,000

$50,000

2000 2001 2002 2003 2004 2005E 2006E

TCE Rates

VLCC Charter Rates (2000-2006E) Suezmax Charter Rates (2000-2006E)

Aframax Charter Rates (2000-2006E) MR Product Charter Rates (2000-2006E)

The “Rodney Dangerfield” of the Energy Sector …

• Low P/E’s reflect volatility

• Capital intensive with historically poor returns

• Fragmented industry

• Tanker shares have historically been valued on NAV

13.0x

11.2x

9.5x

7.6x

5.0x

8.0x

11.0x

14.0x

Offsho

re Dril

lers

Oil Ser

vices

Onsho

re Dril

lers

Tankers

EV/2005E EBITDA

… Is Finally Getting Some Respect

• Shipping stocks showing up on investor radar screens

• Trading volumes increasing

• Increasing number of publicly traded shipping companies

• Group market cap now above $20 billion

$1.7 $1.8 $2.2 $2.0 $2.0

$4.1 $4.1$5.0

$9.5

$20.5

$0.0

$8.0

$16.0

$24.0

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

Market Cap (Billions)

Yield Stocks Are Trading At Premium

0.0x

5.0x

10.0x

15.0x

ATB NAT VLCCF SFL TNP GMR TK OMM OSG

EV/2005E EBITDA

Average: 10.6x

Average: 7.0x

Full Dividend Payout Low Dividend PayoutPartial Dividend Payout

Average: 6.7x

Asset Values Are Firming Despite Volatility

5.96.5

8.07.3

0.0

2.5

5.0

7.5

10.0

Spot 1 Yr. T /C 3 Yr. T /C 5 Yr. Avg.

Years EBITDA Payback On VLCC Newbuild

$50.0

$75.0

$100.0

$125.0

$150.0

2000 2001 2002 2003 2004 2005

VLCC Newbuild VLCC Secondhand 5 Yrs.

Millions

$0

$25,000

$50,000

$75,000

$100,000

2000 2001 2002 2003 2004 2005

TCE

$0

$70,000

$140,000

$210,000

$280,000

2000 2001 2002 2003 2004 2005

TCE

VLCC Sale Prices (2000-2005)

VLCC 1 Yr. T/C Rates (2000-2005) VLCC Spot Charter Rates (2000-2005)