OSG Reports Fiscal 2007 and Fourth Quarter Results

Overseas Shipholding Group, Inc. (NYSE: OSG), a market leader in providing energy transportation services, today reported results for the fiscal year and fourth quarter of 2007. For the fiscal year ended December 31, 2007, the Company reported a 5% increase in time charter equivalent1 (TCE) revenues to $1,039.2 million from $992.8 million in 2006. Although net income declined $181.4 million, or 46%, to $211.3 million for the fiscal year 2007 compared with $392.7 million in fiscal 2006, EBITDA1 in the same period decreased 20% to $476.3 million from $595.1 million in 2006. Diluted earnings per share declined 38% to $6.16 per share in 2007 from $9.92 per diluted share a year ago. In 2007, gains on vessel sales and sale of securities totaled $48.3 million, or $0.99 per diluted share, compared with $74.1 million, or $1.56 per diluted share, in 2006. For the quarter ended December 31, 2007, TCE revenues were $251.8 million, an 4% increase from $241.6 million for the same period of 2006. The growth in TCE revenues reflects an increase of 1,600 revenue days across all segments of the Company’s fleet (see Spot and Time Charter TCE Rates Achieved and Revenue Days table, found later in this release). The impact of this increase in days was substantially offset by higher fuel costs and a significant weakening in spot rates for the Company’s VLCCs, Aframaxes and Handysize Product Carriers as the market switched from contango (when the price of oil in the futures market is higher than the current market price) to backwardation (when the current market price of oil is higher than the futures market). The switch to backwardation adversely impacted seaborne crude oil movements in all tanker categories as it became more economical for refiners to drawdown on crude oil inventories. Rates for VLCCs, Aframaxes and Handysize Product Carriers fell to their lowest levels in the last three years in early November before picking up significantly in late November. EBITDA for the quarter decreased 48% to $88.9 million from $170.3 million in the comparable period of 2006. Net income for the period decreased to $21.0 million, and diluted EPS decreased to $0.67 per share compared with $113.2 million, or $2.86 per diluted share, for the same period a year ago. Net income in the fourth quarter of 2006 benefited from gains on vessel sales and sale of securities of $53.1 million, or $1.12 per diluted share. Period-over-period diluted EPS also benefited from the Company’s repurchase of 21.7% of total shares outstanding since September 2006. 1See Appendix 1 for a reconciliation of TCE revenues to shipping revenues and Appendix 2 for a reconciliation of EBITDA to net income. TCE revenues in the fourth quarter of 2007 for the International Crude Oil Tanker segment were $134.8 million, a decrease of $20.5 million, or 13%, from $155.3 million, in the same period of 2006. The decrease was principally due to significant declines in the daily TCE rates earned for the VLCCs and Aframaxes, partially offset by the inclusion of the results of Heidmar Lightering from April 1, 2007. TCE revenues for the International Product Carrier segment were $59.4 million, up $5.0 million, or 9%, from $54.4 million in the year earlier period. The growth was principally attributable to the delivery of two LR1 (Panamax) Product Carriers during the third quarter of 2007. TCE revenues from the U.S. segment were $50.6 million, up $22.5 million, or 80%, from $28.1 million in the same quarter a year earlier, reflecting the acquisition of Maritrans and the delivery of three product carriers, the Overseas Houston, the Overseas Long Beach and the Overseas Los Angeles in 2007. The balance of TCE revenues were derived from the Company’s two International Flag dry bulk carriers and one car carrier, the Overseas Joyce, which was reflagged under the Marshall Islands flag in late October. "OSG’s expansion and diversification has created a global shipping company that is well-positioned to thrive in any market,” stated Morten Arntzen, President and CEO of OSG. "In 2007, we strengthened our leadership position in each of the markets we trade. The acquisition of Heidmar Lightering, the IPO of substantially all of the assets in our U.S. Flag unit structured as a master limited partnership, the expansion and diversification of our crude oil and product fleets with Suezmax and LR1 tankers, and our entrance into the U.S. ultra-deepwater shuttle tanker trade, were just a few of the transactions undertaken to increase earnings and cash flows in the future. In the last 18 months we repurchased nearly 22% of our total outstanding stock, and in 2007, our shareholders enjoyed a 32.2% year-over-year gain in our stock price compared with the Dow Jones Transportation (DJT) average of less than 1%.” Arntzen concluded, "Indications are that the first quarter of 2008 will be a strong start to the year.” Income from vessel operations was $29.0 million in the fourth quarter of 2007, a 71% decrease from $98.1 million in the same period a year earlier. For the quarter ended December 31, 2007, total operating expenses increased 53%, or $86.2 million, to $247.8 million from $161.6 million in the corresponding quarter in 2006. The increase in operating expenses was principally the result of the inclusion of the Maritrans and the Heidmar Lightering acquisitions, a $28.5 million reduction in the quarter-over-quarter results from disposal of vessels and an increase in chartered-in tonnage. As of December 31, 2007, OSG chartered in 53 vessels compared with 43 a year earlier. FINANCIAL HIGHLIGHTS Share Repurchase. From October 1, 2007 through December 31, 2007, OSG repurchased 125,000 shares at an average price per share of $61.62. Since the initial announcement of its share repurchase program on June 9, 2006, the Company has repurchased 8.6 million shares, constituting 21.7% of total shares outstanding at a total cost of $569.5 million. The Company’s current $200 million repurchase program has a total of $44.8 million that remains outstanding. Future Locked-in Revenue. Future revenues associated with noncancelable term charters as of December 31, 2007, totaled $1.8 billion including time charters entered into by the Aframax International pool and fixed rate contracts of affreightment from the U.S. Flag lightering operation. Such future revenues exclude the Gas segment. OSG America L.P. Initial Public Offering. On November 15, 2007, OSG completed the initial public offering of OSG America L.P., a master limited partnership, issuing 7.5 million common units, priced at $19.00 per unit. The transaction generated $129.3 million in proceeds to OSG, which the Company used to pay down debt in the fourth quarter. OSG America L.P. trades on the New York Stock Exchange under the ticker "OSP”. OSG executed the transaction in order to enhance the valuation of its U.S. Flag assets, which as a stand alone entity, is expected to be valued at a premium due to the more predictable nature of cash flows generated by medium and longer-term charters. At December 31, 2007, the OSG America, L.P. fleet comprised 18 U.S. Flag product carriers and tug barges, a newbuild fleet of five product carriers and one ATB being converted to double hull configuration and options to purchase or bareboat charter an additional 10 vessels upon delivery. OSG owns a 75.5% interest in OSG America, including a 2% general partner interest. RECENT ACTIVITIES AND QUARTERLY EVENTS Crude Oil Tankers Fleet Deliveries On December 4, 2007, OSG took delivery of the Overseas Newcastle, a 2001-built 164,000 dwt Suezmax tanker that has been bareboat chartered-in for seven years. On January 28, 2008, OSG took delivery of the Overseas London, a 2000-built 153,000 dwt Suezmax tanker that has been bareboat chartered-in for 10 years. Both ships trade in the spot market. On November 26, 2007, the Action, a 116,000 dwt Aframax newbuild commenced a three-year time charter-in, in which OSG has a 50% interest. The vessel trades in the Aframax International commercial pool. Other Fleet Activity On December 18, 2007 and January 25, 2008, the Overseas Beryl and the Overseas Eliane, respectively, joined the International Flag crude oil lightering fleet as dedicated lightering vessels. OSG’s International Flag lightering fleet now totals five vessels and three workboats. Product Carriers Fleet Expansion On October 30, 2007, OSG exercised its option to build two additional 73,500 dwt coated Panamax Product Carriers, or LR1 tankers, at the SPP Plant and Shipbuilding Co. Ltd. based in Tong Yang, South Korea. The vessels are scheduled for delivery in the third and fourth quarters of 2011, respectively. On January 9, 2008, the Company sold and bareboat chartered back the 1998-built Overseas Rimar, a Handysize Product Carrier. The estimated $12 million gain from the sale will be deferred and amortized over the seven and one-half year term of the charter back as a reduction of charter hire expense. OSG has an option to purchase the vessel at the end of the charter-in period. On January 29, 2008, OSG took delivery of the Overseas Serifos, a 50,000 dwt Product Carrier, under a 10-year bareboat charter. U.S. Fleet Expansion On October 3, 2007, OSG announced a definitive agreement to bareboat charter-in two additional MT-46 Jones Act Product Carriers for initial terms of 10 years. The ships, which are to be built at the Aker Philadelphia Shipyard, will be converted to shuttle tankers. The order brings the number of Jones Act tankers OSG has committed to charter from Aker to twelve. Fleet Diversification On October 5, 2007, OSG announced its entrance into the U.S. Gulf of Mexico shuttle tanker business, exclusively a Jones Act trade. The Company will charter two Jones Act shuttle tankers to Petrobras America, Inc. Commencing with the expected delivery of the converted ships to Petrobras in the first quarters of 2010 and 2011, OSG will transport oil from ultra-deepwater fields, Chinook and Cascade, for initial periods of five and four years, respectively. This will be the first FPSO and shuttle tanker project in U.S. Gulf of Mexico waters. Fleet Delivery On November 16, 2007, OSG took delivery of the Overseas Los Angeles, the third in the 12-ship order placed at the Aker Philadelphia Shipyard. The vessel, which has been chartered to BP, began trading in November. Gas Four OSG Q-Flex carriers delivered and commenced 25-year time charters during the fourth quarter 2007 and first quarter 2008. The Al Gattara delivered on November 6 and began trading on November 23, the Tembek delivered on November 19 and began trading on December 6, the Al Gharrafa delivered on January 11 and began trading on January 28 and the Al Hamla delivered on February 15 and is expected to begin trading on March 3. OSG has a 49.9% ownership interest in the joint venture entity that owns the LNG carriers. FLEET METRICS AND CORPORATE STATISTICS As of December 31, 2007, OSG’s owned or operated fleet totaled 112 International Flag and U.S. Flag vessels compared with 103 at December 31, 2006. Fifty-three percent, or 59 vessels, were owned as of December 31, 2007, with the remaining vessels bareboat or time chartered-in. OSG’s newbuild program of chartered-in and owned vessels totaled 44 and spanned all lines of business. A detailed fleet list and updates on vessels under construction can be found in the Fleet section of www.osg.com. Revenue days in the quarter ended December 31, 2007 totaled 9,287 compared with 7,688 in the same period a year earlier. The increase principally reflects the addition of the former Maritrans fleet on November 28, 2006, the OSG Lightering fleet in April 2007 and the net delivery of approximately (based on operating days) five vessels since December 2006. Revenue days by segment can be found in Spot and Time Charter TCE Rates Achieved and Revenue Days, later in this press release. FINANCIAL PROFILE At December 31, 2007, stockholders’ equity and liquidity, including undrawn bank facilities, each exceeded $1.8 billion. Total long-term debt as of December 30, 2007 was $1.6 billion compared with $1.3 billion at December 31, 2006. Liquidity adjusted debt to capital was 32.6% as of December 31, 2007, compared with 14.8% as of December 31, 2006. Liquidity adjusted debt is defined as long-term debt reduced by cash and the Capital Construction Fund. The increase in liquidity adjusted debt primarily reflects $551 million used for share repurchases in 2007. SPOT AND TIME CHARTER TCE RATES ACHIEVED AND REVENUE DAYS The following tables provide a breakdown of TCE rates achieved for the fourth quarters and fiscal years of 2007 and 2006 between spot and time charter rates. The information is based, in part, on information provided by the pools or commercial joint ventures in which the vessels participate. Quarterly Data   Three Months Ended Dec. 31, 2007   Three Months Ended Dec. 31, 2006   Spot Charter   Time Charter   Total Spot Charter   Time Charter   Total Trade – Crude Oil             VLCC Average TCE Rate $ 37,254 $ — $ 56,782 $ — Number of Revenue Days 1,666 — 1,666 1,572 — 1,572 Suezmax Average TCE Rate $ 38,310 $ — $ — $ — Number of Revenue Days 27 — 27 — — — Aframax Average TCE Rate $ 28,989 $ 28,659 $ 36,710 $ 31,688 Number of Revenue Days 1,386 309 1,695 981 324 1,305 Panamax Average TCE Rate $ 30,544 $ 27,194 $ 28,003 $ 24,756 Number of Revenue Days   546   460 1,006   387   551 938 Total Crude Oil Revenue Days   3,625   769 4,394   2,940   875 3,815 Trade – Refined Petroleum Products             Panamax Average TCE Rate $ 30,445 $ 19,068 $ — $ 20,188 Number of Revenue Days 184 184 368 — 184 184 Handysize Average TCE Rate $ 21,329 $ 18,665 $ 23,463 $ 18,383 Number of Revenue Days   726   2,063 2,789   718   1,845 2,563 Total Refined Pet. Products Rev. Days   910   2,247 3,157   718   2,029 2,747 U.S. Flag – Number of Revenue Days   670   837 1,507   453   528 981 Other – Number of Revenue Days   —   229 229   —   145 145 TOTAL REVENUE DAYS   5,205   4,082 9,287   4,111   3,577 7,688   TCE rates exclude the effect of forward freight agreements, which are used to create synthetic time charters. Annual Data   Year Ended Dec. 31, 2007   Year Ended Dec. 31, 2006   Spot Charter   Time Charter   Total Spot Charter   Time Charter   Total Trade – Crude Oil             VLCC Average TCE Rate $ 42,890 $ — $ 64,095 $ — Number of Revenue Days 6,401 — 6,401 6,357 — 6,357 Suezmax Average TCE Rate $ 38,324 $ — $ — $ — Number of Revenue Days 27 — 27 — — — Aframax Average TCE Rate $ 31,638 $ 29,226 $ 34,904 $ 28,738 Number of Revenue Days 5,046 1,321 6,367 4,208 1,288 5,496 Panamax Average TCE Rate $ 32,283 $ 26,076 $ 30,160 $ 24,884 Number of Revenue Days   1,795   1,982 3,777   1,651   2,180 3,831 Total Crude Oil Revenue Days   13,269   3,303 16,572   12,216   3,468 15,684 Trade – Refined Petroleum Products             Panamax Average TCE Rate $ 28,867 $ 19,471 $ — $ 20,943 Number of Revenue Days 316 730 1,046 — 727 727 Handysize Average TCE Rate $ 28,689 $ 18,761 $ 26,847 $ 18,350 Number of Revenue Days   2,775   8,082 10,857   2,570   7,345 9,915 Total Refined Pet. Products Rev. Days   3,091   8,812 11,903   2,570   8,072 10,642 U.S. Flag – Number of Revenue Days   2,768   3,603 6,371   905   1,835 2,740 Other – Number of Revenue Days   —   773 773   —   691 691 TOTAL REVENUE DAYS   19,128   16,491 35,619   15,691   14,066 29,757   TCE rates exclude the effect of forward freight agreements, which are used to create synthetic time charters. CONSOLIDATED STATEMENTS OF OPERATIONS         Three Months Ended Fiscal Year Ended ($ in thousands, except per share amounts) Dec. 31, 2007 Dec. 31, 2006 Dec. 31, 2007 Dec. 31, 2006 Shipping Revenues: Pool revenues $ 117,457 $ 147,662 $ 501,767 $ 639,618 Time and bareboat charter revenues 91,045 72,956 361,431 282,409 Voyage charter revenues   68,341     39,142     266,107     125,376     276,843     259,760     1,129,305     1,047,403   Operating Expenses: Voyage expenses 25,087 18,164 90,094 54,586 Vessel expenses 67,566 54,952 267,947 209,998 Provision for settlement   ?   ?   ? 27,000 Charter hire expenses 71,882 47,568 258,116 174,817 Depreciation and amortization 50,374 37,745 185,499 141,940 General and administrative 32,831 31,573 127,211 99,525 (Gain)/loss on disposal of vessels   106     (28,356 )   (7,134 )   (39,007 ) Total Operating Expenses   247,846     161,646     921,733     668,859   Income from Vessel Operations 28,997 98,114 207,572 378,544 Equity in Income of Affiliated Companies   1,602     5,561     8,876     22,474   Operating Income 30,599 103,675 216,448 401,018 Other Income   8,999     28,873     75,434     52,107   39,598 132,548 291,882 453,125 Interest Expense   (21,186 )   (16,359 )   (74,696 )   (68,652 ) Income before Minority Interest and Federal Income Taxes 18,412 116,189 217,186 384,473 Minority interest   (1,049 )   ?     (1,049 )   ?   Income before Federal Income Taxes 17,363 116,189 216,137 384,473 (Provision)/Credit for Federal Income Taxes   3,674     (2,954 )   (4,827 )   8,187   Net Income $ 21,037   $ 113,235   $ 211,310   $ 392,660     Weighted Average Number of Common Shares Outstanding: Basic 31,152,356 39,470,909 34,135,672 39,515,300 Diluted 31,349,280 39,553,249 34,326,741 39,586,035 Per Share Amounts: Basic net income $ 0.68 $ 2.87 $ 6.19 $ 9.94 Diluted net income $ 0.67 $ 2.86 $ 6.16 $ 9.92 Cash dividends declared   ?   ? $ 1.125 $ 0.925 TCE REVENUE BY SEGMENT The following table reflects TCE revenues generated by the Company’s three reportable segments for the quarter and full year ended December 31, 2007 and 2006 and excludes the Company’s proportionate share of TCE revenues of affiliated companies. See Appendix 1 for reconciliations of Time Charter Equivalent Revenues to Shipping Revenues.   Three Months Ended Dec. 31,   Fiscal Year Ended Dec. 31, ($ in thousands) 2007   % of Total   2006   % of Total 2007   % of Total   2006   % of Total International Flag Crude Tankers $ 134,811 53.6 $ 155,303 64.3 $ 569,264 54.8 $ 684,029 68.9 Product Carriers 59,402 23.6 54,373 22.5 243,451 23.4 215,311 21.7 Other 6,932 2.8 3,843 1.6 23,676 2.3 18,338 1.8 U.S.   50,611 20.0   28,077 11.6   202,820 19.5   75,139 7.6 Total TCE Revenues $ 251,756 100.0 $ 241,596 100.0 $ 1,039,211 100.0 $ 992,817 100.0 INCOME FROM VESSEL OPERATIONS BY SEGMENT The following table reflects income from vessel operations accounted for by each reportable segment. Income from vessel operations is before general and administrative expenses, gain on disposal of vessels and the Company’s share of income from affiliated companies.   Three Months Ended Dec. 31, Fiscal Year Ended Dec. 31, ($ in thousands) 2007   % of Total   2006   % of Total 2007   % of Total   2006   % of Total International Flag Crude Tankers $ 42,503 68.6 $ 82,171 81.1 $ 226,812 69.3 $ 388,519 88.5 Product Carriers 10,214 16.5 13,611 13.4 57,669 17.6 63,609 14.5 Other1 1,261 2.0 (321 ) (0.3 ) 3,794 1.1 (25,674 ) (5.9 ) U.S.   7,956 12.9   5,870   5.8     39,374 12.0   12,608   2.9   Total Income from Vessel Operations $ 61,934 100.0 $ 101,331   100.0   $ 327,649 100.0 $ 439,062   100.0   1Reflects reserves related to a Department of Justice investigation in the fiscal year ended December 31 2006. Reconciliations of income from vessel operations of the segments to income before federal income taxes as reported in the consolidated statements of operations follow:   Three Months Ended Dec. 31,   Fiscal Year Ended Dec. 31, ($ in thousands)     2007       2006       2007       2006   Total income from vessel operations of all segments $ 61,934   $ 101,331 $ 327,649   $ 439,062 General and administrative expenses (32,831 ) (31,573 ) (127,211 ) (99,525 ) Gain/(loss) on disposal of vessels   (106 )     28,356     7,134       39,007   Consolidated income from vessel operations 28,997 98,114 207,572 378,544 Equity in income of affiliated companies 1,602 5,561 8,876 22,474 Other income 8,999 28,873 75,434 52,107 Interest expense (21,186 ) (16,359 ) (74,696 ) (68,652 ) Minority Interest   (1,049 )     ?     (1,049 )     ?   Income before federal income taxes $ 17,363     $ 116,189   $ 216,137     $ 384,473   CONSOLIDATED BALANCE SHEETS     ($ in thousands) Dec. 31, 2007 Dec. 31, 2006 ASSETS Current Assets: Cash and cash equivalents $ 502,420 $ 606,758 Voyage receivables 180,406 136,043 Other receivables, including federal income taxes recoverable 84,627 71,723 Inventories and prepaid expenses   37,300   30,997 Total Current Assets 804,753 845,521 Capital Construction Fund 151,174 315,913 Vessels and other property, less accumulated depreciation 2,691,005 2,501,846 Vessels under capital leases, less accumulated amortization 24,399 30,750 Deferred drydock expenditures, net   81,619   50,774 Total Vessels, Deferred Drydock and Other Property   2,797,023   2,583,370 Investments in Affiliated Companies 131,905 275,199 Intangible Assets, less accumulated amortization 114,077 92,611 Goodwill 72,463 64,293 Other Assets   87,522   53,762 Total Assets $ 4,158,917 $ 4,230,669 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable, sundry liabilities and accrued expenses $ 178,837 $ 192,500 Current installments of long-term debt 26,058 27,426 Current obligations under capital leases   8,406   7,650 Total Current Liabilities 213,301 227,576 Long-term Debt 1,506,396 1,273,053 Obligations under Capital Leases 24,938 33,894 Deferred Gain on Sale and Leaseback of Vessels 182,076 218,759 Deferred Federal Income Taxes and Other Liabilities 281,711 270,076 Minority Interest   132,470   — Stockholders’ Equity   1,818,025   2,207,311 Total Liabilities and Stockholders' Equity $ 4,158,917 $ 4,230,669 CONSOLIDATED STATEMENTS OF CASH FLOWS       ($ in thousands) 2007 2006 2005 Cash Flows from Operating Activities: Net income $ 211,310 $ 392,660 $ 464,829 Items included in net income not affecting cash flows: Depreciation and amortization 185,499 141,940 152,311 Amortization of deferred gain on sale and leasebacks (47,303 ) (43,114 ) (9,897 ) Deferred compensation relating to restricted stock and stock option grants 9,519 3,922 2,084 Provision/(credit) for deferred federal income taxes (1,081 ) 9,702 675 Undistributed earnings of affiliated companies 5,110 4,963 (9,307 ) Other – net 1,160 (6,223 ) (10,856 ) Items included in net income related to investing and financing activities: Gain on sale of securities and other investments – net (41,173 ) (35,136 ) (23,186 ) Gain on disposal of vessels (7,134 ) (39,007 ) (42,905 ) Payments for drydocking (69,892 ) (49,867 ) (16,899 ) Changes in operating assets and liabilities: Decrease/(increase) in receivables (50,039 ) 2,526 45,319 Increase/(decrease) in federal income taxes payable — — (96,435 ) Net change in prepaid items and accounts payable, sundry liabilities and accrued expenses   (28,352 )   63,609     (20,586 ) Net cash provided by operating activities   167,624     445,975     435,147   Cash Flows from Investing Activities: Expenditures for vessels (545,078 ) (55,793 ) (5,166 ) Withdrawals from Capital Construction Fund 175,950 — — Proceeds from disposal of vessels 224,019 258,877 858,142 Acquisition of interest in affiliated company that owned four V-Pluses — — (69,047 ) Acquisition of Heidmar Lightering (38,471 ) — — Acquisition of Maritrans Inc. — (444,550 ) — Acquisition of Stelmar Shipping Ltd. — — (742,433 ) Expenditures for other property (15,864 ) (11,591 ) (12,257 ) Investments in and advances to affiliated companies (31,083 ) (8,613 ) (9,495 ) Proceeds from disposal of investments in affiliated companies 194,706 — — Distributions from affiliated companies — 4,772 20,853 Purchases of other investments — (660 ) (847 ) Proceeds from dispositions of other investments 1,787 2,292 23,271 Other – net   (861 )   (1,436 )   (863 ) Net cash provided by/(used in) investing activities   (34,895 )   (256,702 )   62,158   Cash Flows from Financing Activities: Net proceeds from sale of OSG America L.P. units 129,256 — — Purchases of treasury stock (551,001 ) (18,525 ) — Issuance of debt, net of issuance costs 261,000 549,642 781,268 Payments on debt and obligations under capital leases (37,238 ) (255,948 ) (1,541,293 ) Cash dividends paid (38,038 ) (36,576 ) (27,615 ) Issuance of common stock upon exercise of stock options 566 242 218 Other – net   (1,612 )   (9,938 )   (476 ) Net cash provided by/(used in) financing activities   (237,067 )   228,897     (787,898 ) Net increase/(decrease) in cash and cash equivalents (104,338 ) 418,170 (290,593 ) Cash and cash equivalents at beginning of year   606,758     188,588     479,181   Cash and cash equivalents at end of year $ 502,420   $ 606,758   $ 188,588   FLEET On December 31, 2007, OSG’s fleet totaled 156 vessels, including 44 newbuilds, aggregating 15.4 million deadweight tons and 865,000 cbm of LNG carrier capacity. Adjusted for OSG’s participation interest in joint ventures and chartered-in vessels, the fleet totaled 145 vessels. See the Company’s website at www.osg.com for a detailed fleet list, which is updated on a quarterly basis upon release of earnings. Operating Fleet   Vessels Owned   Vessels Chartered-in   Total at Dec. 31, 2007 Vessel Type Number   Weighted byOwnership Number   Weighted byOwnership Total Vessels   VesselsWeighted byOwnership   TotalDwt VLCC (including V-Plus) 10 10 10 7.5 20 17.5 6,398,415 Suezmax — — 1 1 1 1 164,000 Aframax 6 6 12 8.6 18 14.6 1,913,154 Panamax 9 9 2 2 11 11 764,083 Lightering 1 1 2 1 3 2 252,111 International Flag Crude Tankers 26 26 27 20.1 53 46.1 9,491,763 Panamax Product Carriers 4 4 — — 4 4 290,527 Handysize Product Carriers1 12 12 19 19 31 31 1,360,616 International Flag Product Carriers 16 16 19 19 35 35 1,651,143 Car Carrier2 1 1 — — 1 1 16,101 International Bulk Carriers — — 2 2 2 2 319,843 International Flag Other2 1 1 2 2 3 3 335,944 Total Int’l Flag Operating Fleet 43 43 48 41.1 91 84.1 11,478,850 Handysize Product Carriers 3 3 5 5 8 8 367,497 Clean ATBs 8 8 — — 8 8 216,630 Lightering: Crude Carrier 1 1 — — 1 1 39,948 ATBs 2 2 — — 2 2 90,908 Total U.S. Flag Operating Fleet 14 14 5 5 19 19 714,983 LNG Carriers 2 1 — — 2 1 432, 400 cbm TOTAL OPERATING FLEET 59 58 53 46.1 112 104.1 12,193,833               432,400cbm (1) Includes three owned U.S. Flag Product Carriers that trade internationally, thus associated revenue is included in the Product Carrier segment . (2) The Overseas Joyce, the Company's only pure car carrier, was reflagged from U.S. Flag to International Flag in the fourth quarter of 2007 and no longer participates in the Maritime Security Program. Newbuild Fleet   Vessels Owned   Vessels Chartered-in   Total at Dec. 31, 2007 Vessel Type Number   Weighted byOwnership Number   Weighted byOwnership Total Vessels   VesselsWeighted byOwnership   TotalDwt International Flag VLCC 2 1 — — 2 1 594,000 Suezmax — — 2 2 2 2 312,000 Aframax 4 4 2 1 6 5 686,000 Panamax Product Carriers 6 6 — — 6 6 441,000 Handysize Product Carriers 2 2 8 8 10 10 489,350 U.S. Flag Product Carriers — — 9 9 9 9 421,335 Clean ATBs 4 4 — — 4 4 136,777 Lightering ATBs 3 3 — — 3 3 136,668 LNG Carriers 2 1 — — 2 1 432,400cbm TOTAL NEWBUILD FLEET 23 21 21 20 44 41 3,217,130 432,400cbm TOTAL OPERATING AND NEWBUILD FLEET   82 79 74 66.1 156 145.1 15,410,963 864,800 cbm Average Age of International Operating Fleet OSG has one of the youngest International Flag fleets in the industry. The Company believes its modern, well-maintained fleet is a significant competitive advantage in the global market. The table below reflects the average age of the Company’s owned International Flag fleet compared with the world fleet.   Vessel Class   Average Age of OSG’s Owned Fleet at 12/31/07   Average Age of OSG’s Owned Fleet at 12/31/06   Average Age of World Fleet at 12/31/07* VLCC 7.0 years 5.9 years 9.1 years Aframax 9.2 years 8.2 years 8.9 years Panamax** 4.3 years 3.8 years 9.1 years Handysize 6.2 years 5.9 years 9.4 years * Source: Clarkson database as of January 1, 2008. ** Includes Panamax tankers that trade crude oil and refined petroleum products. Off hire, Scheduled Drydock and Double Hull Rebuilds In addition to regular inspections by OSG personnel, all vessels are subject to periodic drydock, special survey and other scheduled maintenance. In addition, OSG is double hulling one ATB during the fourth quarter of 2007 and the first half of 2008. The table below sets forth actual days off-hire for the fourth quarter of 2007 and anticipated days off-hire for the above-mentioned events by class for the Company’s owned and bareboat chartered-in vessels for 2008, by quarter.     Actual Days Off-Hire   Projected Days Off-Hire Q407 Q108   Q208   Q308   Q408 Trade – Crude Oil VLCC 4 41 51 23 18 Suezmax — 2 2 2 9 Aframax 83 73 65 195 76 Panamax 6 7 7 7 28 Trade – Refined Petroleum Products Panamax — — 5 — 5 Handysize 63 135 112 46 116 Trade – U.S. Flag Product Carrier 36 5 34 59 66 ATB1 182 95 65 152 99 Other 3 — — — — Total 377 358 341 484 417 (1) Excludes 92 days in the fourth quarter of 2007 and 91 days in the first quarter of 2008 that the Company's single-hull ATB, M215, was, or is expected to be, in lay-up. EARNINGS CONFERENCE CALL INFORMATION OSG has scheduled a conference call for Wednesday, February 27, 2008 at 9:30 a.m. ET. Dial-in information for the call is (800) 762-9441 (domestic) and (480) 629-9031 (international). The conference call and supporting presentation can also be accessed by web cast, which will be available at www.osg.com in the Investor Relations Webcasts and Presentations section. Additionally, a replay of the call will be available by telephone until March 5, 2008; the dial-in number for the replay is (800) 406-7325 (domestic) and (303) 590-3030 (international). The passcode is 3830004. ABOUT OSG Overseas Shipholding Group, Inc. (NYSE: OSG), a Dow Jones Transportation Index company, is one of the largest publicly traded tanker companies in the world. As a market leader in global energy transportation services for crude oil and petroleum products in the U.S. and International Flag markets, OSG is committed to setting high standards of excellence for its quality, safety and environmental programs. OSG is recognized as one of the world’s most customer-focused marine transportation companies and is headquartered in New York City, NY. More information is available at www.osg.com. FORWARD-LOOKING STATEMENTS This release contains forward-looking statements regarding the Company's prospects, including the outlook for tanker and articulated tug barge markets, changing oil trading patterns, anticipated levels of newbuilding and scrapping, prospects for certain strategic alliances and investments, prospects for the growth of the OSG Gas transport business, estimated TCE rates achieved for the first quarter of 2008 and estimated time charter TCE rates for the second, third and fourth quarters of 2008, projected drydock and repair schedule, timely delivery of newbuildings and prospects of OSG’s strategy of being a market leader in the segments in which it competes. Factors, risks and uncertainties that could cause actual results to differ from the expectations reflected in these forward-looking statements are described in the Company’s Annual Report on Form 10-K. CONTACT INFORMATION For more information contact: Jennifer L. Schlueter, Vice President Corporate Communications and Investor Relations, OSG Ship Management, Inc. at +1 212.578.1634 or jschlueter@osg.com APPENDIX 1 – TCE RECONCILIATION Reconciliations of time charter equivalent revenues of the segments to shipping revenues as reported in the consolidated statements of operations follow:   Three Months Ended Dec. 31,   Fiscal Year Ended Dec. 31, ($ in thousands)   2007     2006     2007     2006 Time charter equivalent revenues $ 251,756   $ 241,596   $ 1,039,211   $ 992,817 Add: Voyage expenses   25,087     18,164     90,094     54,586 Shipping revenues $ 276,843   $ 259,760   $ 1,129,305   $ 1,047,403 Consistent with general practice in the shipping industry, the Company uses time charter equivalent revenues, which represents shipping revenues less voyage expenses, as a measure to compare revenue generated from a voyage charter to revenue generated from a time charter. Time charter equivalent revenues, a non-GAAP measure, provides additional meaningful information in conjunction with shipping revenues, the most directly comparable GAAP measure, because it assists Company management in making decisions regarding the deployment and use of its vessels and in evaluating their financial performance. APPENDIX 2 – EBITDA RECONCILIATION The following table shows reconciliations of net income, as reflected in the consolidated statements of operations, to EBITDA:   Three Months Ended Dec. 31,   Fiscal Year Ended Dec. 31, ($ in thousands) 2007   2006 2007   2006 Net income $ 21,037 $113,235 $ 211,310 $ 392,660 Provision/(credit) for federal income taxes (3,674 )   2,954 4,827 (8,187 ) Interest expense 21,186 116,359 74,696 68,652 Depreciation and amortization   50,374   37,745   185,499   141,940   EBITDA $ 88,923   $170,293 $ 476,332 $ 595,065   EBITDA represents operating earnings, which is before interest expense and income taxes, plus other income and depreciation and amortization expense. EBITDA is presented to provide investors with meaningful additional information that management uses to monitor ongoing operating results and evaluate trends over comparative periods. EBITDA should not be considered a substitute for net income or cash flow from operating activities prepared in accordance with accounting principles generally accepted in the United States or as a measure of profitability or liquidity. While EBITDA is frequently used as a measure of operating results and performance, it is not necessarily comparable to other similarly titled captions of other companies due to differences in methods of calculation. APPENDIX 3 – CAPITAL EXPENDITURES The following table presents information with respect to OSG’s capital expenditures for the three months and fiscal year ended December 31, 2007 and 2006:   Three Months Ended Dec. 31,   Fiscal Year Ended Dec. 31, ($ in thousands)   2007   2006   2007   2006 Expenditures for vessels $ 147,689 $ 3,779 $ 545,078   $ 55,793 Investments in and advances to affiliated companies 1,370 1,542 31,083 8,613 Payments for drydockings   16,916   22,465   69,892   49,867 $ 165,975   $ 27,786   $ 646,053   $ 114,273 APPENDIX 4 – FIRST QUARTER 2008 TCE RATES The Company has achieved the following average estimated TCE rates for the first quarter of 2008 for the percentage of days booked for vessels operating through February 15, 2008. The information is based, in part, on information provided by the pools or commercial joint ventures in which the vessels participate. All numbers provided are estimates and may be adjusted for a number of reasons, including the timing of any vessel acquisitions or disposals and the timing and length of drydocks and repairs.     First Quarter Revenue Days   Vessel Class and Charter Type Average TCE Rates Fixed as of 02/15/08   Open as of 02/15/08   Total % Days Booked Trade – Crude Oil           VLCC – Spot $ 102,500 1,333 287 1,620 82 % Suezmax – Spot $ 38,500 117 32 149 78 % Aframax – Spot $ 45,000 940 499 1,439 65 % Aframax – Time $ 29,000 216 — 216 100 % Panamax – Spot $ 38,000 224 315 539 42 % Panamax – Time $ 28,000 455 — 455 100 % Trade – Refined Petroleum Products           Panamax – Spot $ 38,000 75 107 182 41 % Panamax – Time $ 19,000 182 — 182 100 % Handysize – Spot $ 23,500 650 312 962 68 % Handysize – Time $ 19,000 1,787 — 1,787 100 %     Average time charter rate Time charter days Spot and Lightering days Total days % Time charter Trade – U.S. Flag           Product Carrier – Spot $ 28,500 62 245 307 36 % Product Carrier – Time $ 39,000 549 — 549 100 % ATB – Spot $ 36,000 135 217 352 38 % ATB – Time $ 30,000 311 — 311 100 % Lightering Vessels – Spot $ 41,000 135 138 273 49 % APPENDIX 5 – 2008 TIME CHARTER TCE RATES The following table shows average estimated time charter TCE rates and associated days booked as of February 15, 2008 for the second, third and fourth quarters of 2008.   Fixed Rates and Revenue Days as of 02/15/08     Q208   Q308   Q408 Trade – Crude Oil             VLCC     Average TCE Rate — — — Number of Revenue Days — — — Suezmax Average TCE Rate — — — Number of Revenue Days — — — Aframax Average TCE Rate $ 28,000 $ 28,000 $ 28,000 Number of Revenue Days 170 148 159 Panamax Average TCE Rate $ 28,000 $ 28,000 $ 28,000 Number of Revenue Days     412     368     323 Trade – Refined Petroleum Products     Panamax Average TCE Rate $ 19,000 $ 19,000 $ 19,000 Number of Revenue Days 182 184 184 Handysize Average TCE Rate $ 19,000 $ 18,500 $ 18,500 Number of Revenue Days     1,543     1,404     1,341 Trade – U.S. Flag             Product Carrier Average TCE Rate $ 39,500 $ 39,500 $ 40,500 Number of Revenue Days 600 606 643 ATB Average TCE Rate $ 31,000 $ 31,000 $ 31,500 Number of Revenue Days     243     276     184