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Nordic American Tankers Limited: Nordic American Tankers' 1Q2016 Report (NYSE:NAT) - NAT is very different from other tanker companies. Operating cash flow rema

Link to the complete 1st Quarter 2016 report:

Hamilton, Bermuda, May 9, 2016

Since its establishment in 1995, NAT has been pursuing a well-tested strategy
that is producing high total return[1]and dividend yields. Thanks to a cash
break-even rate below $12,000 per day per ship, a growing NAT Suezmax fleet
and spot rates of about $36,000 per day, 1Q2016 produced good results with
operating cash flow of $55.9m. For the full year 2015 operating cash
flow[2]was $212m - the strongest year in NAT's history. For further details
on the preceding quarters please see the table on page 3. The Company
believes it is not meaningful to compare quarter on quarter as longer periods
are required to gain a full picture. In 2Q2016 the tanker market is in a
positive phase of development.

On May 2, 2016, NAT announced the acquisition of four existing Suezmax vessels
which will be delivered to us during May, June and July. The fact that they
are sister vessels is a positive factor of significance. Two were built in
2004, one in 2003 and one in 2000. Shipbuilding technology for crude oil
tankers has not changed much over the last 20 years, so whether a ship has
been around five years or fifteen years or longer does not matter anywhere
near as much as the quality of the ship itself. Our vessels remain
first-class, and these four additional tankers only enhance our fleet's
reputation for safety and dependability. Members of NAT management, staff and
board have comprehensive experience from Japan, having concluded business
with several of its high quality shipbuilders over decades. We do not expect
to issue stock in connection with these four ships.

Transparency is a key value for NAT. Communication with the public market must
be correct, representing facts and the best judgement of the board of
directors and management.

NAT has an excellent relationship with its demanding clients. The quality of
the NAT fleet is at the top of the tanker industry as evidenced by our
vetting statistics, that is, inspections of our ships by clients. In such
vetting processes safety for our crew, the environment and our assets are
main considerations.

There is a significant liquidity in the NAT stock, at the top in the tanker
sector. It is important for investors to be able to buy and sell shares
whenever they wish. In 1Q2016 about 1.9 million shares were traded daily with
a value of more than $25m per day. The average volume for 2015 as a whole was
about 1.8 million shares per day, an increase of almost 40% from 2014. The
market capitalization of NAT is about $1.3 billion at this time. Net Asset
Value (NAV), or the steel value of a vessel, is irrelevant when valuing NAT
as a going concern traded on the stock exchange.

On April 25, 2016, NAT declared a cash dividend of $0.43 per share payable to
shareholders of record as of May 12, 2016. Payment of the dividend is
expected to take place on or about May 27, 2016. Since NAT commenced
operations in the fall of 1997, the Company has paid a dividend 75 times,
with total dividend payments over the period amounting to $47.40 per share,
including the dividend to be paid on May 27, 2016.

The low oil price is an important factor for the tanker market. This has
positively affected the tanker market through increased transportation
requirements and lower fuel costs.

Key points to consider:

* The tanker market has been more or less at the same level the last few
quarters. The average for 1Q2016, 4Q2015 and 1Q2015 has been about $36,000,
$39,800 and $37,000 per day per ship, respectively.
* Operating cash flow per share has been as follows: $0.62 for 1Q2016, $0.64
for 4Q2015 and $0.57 for 1Q2015
* Dividend payments per share have been as follows: $0.43 for 1Q2016, $0.43
for 4Q2015 and $0.38 for 1Q2015.
* The balance sheet was strengthened in 1Q2016 as we retained about $17.5m of
operating cash flow during the quarter to finance future commitments,
including our newbuildings.
* In December 2015 NAT announced an expanded credit facility up to $500m,
maturing in December 2020.
* The undrawn part of our credit facility plus net working capital stood at
about $282m at the time of this report. At the end of 1Q2016, the Company
had net debt of about $8.9m per vessel.
* Including the four newly acquired vessels, NAT will have 28 vessels on the
water and two newbuildings. No equity offerings are planned in conjunction
with this 30 vessel fleet.
* The construction of the two newbuildings for delivery in 3Q2016 and 1Q2017
is on schedule.

For further accounting information, please see below. Our Annual Report 2015
on Form 20-F contains a large amount of information about NAT. This report
was filed with the SEC March 23, 2016 and can be found on our web

Nordic American Tankers is
different from other tanker companies.

For a variety of reasons, NAT has an operating model that has proven itself to
be sustainable in both a weak and a strong tanker market. Accretive fleet
growth, low net debt per vessel and quarterly dividend payments are central
elements of the strategy. NAT has one type of vessel - the Suezmax vessel -
that can carry one million barrels of oil. A homogenous fleet reduces our
operating costs, which helps to keep our cash-breakeven below $12,000 per day
per vessel.

Financial Information

The Company declared a cash dividend of $0.43 on April 25, 2016, which is
expected to be paid about May 27, 2016 to shareholders of record as of May
12, 2016. The number of NAT shares outstanding at the time of this report is
89,319,666. At this time the market capitalization of NAT is about $1.3

The Company's operating cash flow in 1Q2016 was $55.9m. In 4Q2015 and 1Q2015
operating cash flow was $57.2m and $51.0m, respectively.

Earnings per share (EPS) in 1Q2016 were $0.33. In 4Q2015 and 1Q2015 the EPS
were $0.34 and $0.31, respectively. EPS does not take into account risk and
as such, it could be a deceptive measure.

We had a total of 46 days offhire during the quarter, of which 28 days were
planned offhire, related to a drydocking which commenced in December 2015. Of
the 18 days of unplanned offhire, six days were due to technical reasons. The
offhire includes positioning time to and from the ship yard. For the rest of
2016 eight vessels are expected to undergo drydocking.

As a matter of policy and in particular because of high volatility in the
tanker market, NAT maintains a strong balance sheet with low net debt and is
focusing on keeping low financial risk. At the end of 1Q2016, the Company had
net debt of about $232m or about $8.9m per vessel.

The table on the right shows our net operating cash flow, stock liquidity and
dividend over the last eight quarters. During 2015 and into 2016, the Company
had significantly stronger cashflow than during the preceding years.
Liquidity in the stock is high compared with other tanker companies.

Link to the graph:
Our primary objective is to enhance total return for our shareholders,
including paying a quarterly dividend.

The Company has in place a non-amortizing credit facility of $500m maturing in
December 2020, of which $315m has been drawn at the time of this report, and
cash on hand is about $66m. Net working capital and undrawn amounts of the
credit facility amount to about $282m.

For further details on our financial position for 1Q2016, 4Q2015 and 1Q2015,
please see later in this release.

The G&A costs of NAT benefit from resource sharing with Nordic American
Offshore Ltd. (NAO). As our respective fleets grow, both companies benefit.
Further growth should result in lower costs on a per vessel basis. NAT's
investment in NAO is accounted for using the equity method. The reduced level
of the oil price has impacted the operations of NAO negatively. Currently,
NAT's ownership in NAO is about 29%. The market value on the stock exchange
of NAT's share in NAO is lower than the book value. We expect this to be

The Fleet

The Company will have a fleet of 30 vessels of which two are under
construction. By way of comparison, in the autumn of 2004, the Company had
three vessels. Our vessels are in excellent technical condition.

NAT is focused on maintaining top technical quality of the fleet. Our
operational performance remains at the forefront of the industry. 1Q2016
inspections had an average of 2.1 observations which we consider an excellent
result. NAT's performance can be considered industry best practice.

As reported earlier, in the arbitration case against Gulf Navigation Holding
PJSC (GNH) regarding the Suezmax vessel Gulf Scandic (now named Nordic
Harrier) NAT was awarded $10.2m plus interest and costs. GNH is listed on the
Dubai Financial Market (DFM) stock exchange in Dubai.

World Economy and the Tanker Market

The development of the world economy affects the tanker industry. Seaborne
imports of crude oil into the US have increased over the recent past.
Imports to the Far East are steadily increasing. A low oil price is
stimulating the world economy which is positive for the tanker market.

The Suezmax fleet (excl. shuttle tankers) counts 458 vessels at the end of
1Q2016, following an increase of three vessels so far this year.

A number of orders have been placed with the shipbuilders in the past year.
The current orderbook stands at 96 vessels from now to late 2017. This
represents about 21% of the Suezmax fleet. In 2009, the orderbook was at over
50% of the existing fleet. At the time of this report, the orderbook for 2016
counts 37 Suezmax vessels, with 32 vessels scheduled to be delivered in the
second half of the year. However, we expect the real number of deliveries for
2016 to be lower.

Link to the graph:
The graph above shows the average yearly spot rates since 2000 as reported by
R.S. Platou Economic Research a.s.The daily rates as reported by shipbrokers
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

Corporate Governance/Conflict of Interests

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. From time to time in the shipping industry, we see that
questionable transactions take place which are not in harmony with sound
corporate governance principles, both as to transparency and related party

Strategy going forward


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