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Nordic American Tanker Shipping Ltd. (NAT)-(NYSE:NAT) – Announces Dividend and Earnings in respect of the 3rd Quarter of 2006

Hamilton, Bermuda, November 3, 2006
 
Nordic American Tanker Shipping Limited (the “Company”) today announced its results for the 3rd quarter of 2006.  A strong tanker market resulted in solid earnings and a healthy dividend per share for the 3rd quarter. The Company has now declared a dividend for 36 consecutive quarters. For the last four quarters including the dividend to be paid in respect of the 3rd quarter of 2006 a total of $5.85 has been declared in dividends which represent 17.7% of the average daily share price over the same period.
 

Highlights:
  • The Board of Directors has declared a dividend of $1.32 per share for the 3rd quarter of 2006.
  • 3rd quarter 2006 net income was $0.97 per share based on 21,046,400 issued and outstanding shares at the end of the 3rd quarter.
  • No vessels were in dry dock during the 3rd quarter of 2006. We had a total of 11 days offhire across the fleet during the 3rd quarter.
  • The dividend is expected to be paid on or about November 28th 2006 to shareholders of record as of November 15th 2006.
  • In July the Company announced the acquisitions of its tenth, eleventh and twelfth Suezmax vessels for an aggregate purchase price of $245.9m. The vessels are expected to be delivered from the seller no later than November 2006. 
  • The Company commenced a follow-on offering on September 26, 2006.  The offering was closed on October 11, providing net proceeds to the Company of $173.9m based on an offering price of $32.00 per share. As of November 3, 2006, there are 26,914,088 shares issued and outstanding.
  • In September the Company increased its Revolving Credit Facility to $500 million from the previous $300 million, on the same terms as the previous Credit Facility.
Dividends per Share, Earnings per Share and Financial Information:
 
The Board has declared a dividend of $1.32 per share in respect of the 3rd quarter of 2006. This compares to a dividend of $0.60 per share in respect of the 3rd quarter of 2005.
 
Net income for the 3rd quarter of 2006 was $20.3m or $0.97 per share (EPS). This compares to a net income of $4.3m or $0.26 per share for the 3rd quarter of 2005.
 
Operating cash flow (1) was $29.7m for the 3rd quarter of 2006 compared to $10.4m for the 3rd quarter of 2005.
 
For the 3rd quarter of 2006, operating costs of our vessels and general and administrative costs were largely according to our expectations.
 
The Company is not involved in freight or interest derivatives.
 
We currently estimate that our average cash breakeven for our fleet of twelve vessels is approximately $9,000 per day per vessel. The breakeven rate is the amount of average daily revenues for our vessels which would cover our vessel operating expenses, voyage expenses, if any, cash general and administrative expenses, interest expenses and other financial charges.
 
Following the public offering in October and after the delivery of the three vessels in November our net debt will be approximately $14m per vessel and we will have approximately $328m undrawn under our $500m revolving credit facility with maturity in 2010. There is no repayment obligation during the tenure of the facility, and the Company pays interest only on drawn amounts, and a commitment fee for undrawn amounts.
 
No vessels were in dry dock during the 3rd quarter of 2006.  After a minor incident, one of our ships has been in dry dock approximately 19 days during the 4th quarter of 2006.  There are no other vessels scheduled for dry docking during the 4th quarter of 2006.
 
The table below shows the number of vessel revenue days over the last eight quarters for all our vessels, reflecting the growth of the Company.
 
 
For further details on our financial results, please see later in this message.
 
The Fleet
 
Eight of the Company’s nine vessels are trading in the spot market or on spot related terms, while one vessel remains employed on a long term fixed charter rate.
 
 
 
The Market  
 
While market spot rates, according to the Imarex Tanker Index, were in the range of $40,000-$50,000 per day in July 2006, the market then strengthened further, with average earnings for modern suezmax tankers ranging in the high $50,000 per day towards the end of August 2006. In September, the market eased off towards the middle of the month. The average earnings for modern suezmax tankers for the 3rd quarter of 2006 were $46,174 per day according to the Imarex Tanker Index.  In October 2006 the average Imarex spot market rate was $46,940 per day. Short-term spot rates are notoriously difficult to predict.
 
The world’s suezmax fleet stood at 343 vessels at the end of the 3rd quarter of 2006, compared to 318 vessels at the end of the 3rd quarter of 2005. Eight new vessels were delivered during the 3rd quarter while no vessels were scrapped. Thirty-seven new vessels have been ordered during the 3rd quarter of 2006.  The total suezmax order book stood at 99 vessels at the end of the September. At the same time, 72 vessels were single hull, which are expected to be phased out by 2010. Two new vessels are expected to be delivered during the 4th quarter of 2006 (Source: Fearnresearch).
 
Deliveries of tankers over the next 24 – 36 months from the shipyards can be estimated with a high degree of certainty. The shipyards are expected to operate at more or less full capacity with their present order books, and new orders placed for suezmax tankers are typically for delivery in late 2009 or in 2010. We expect that short term tanker rates may continue to fluctuate significantly.
 
 
Strategy
 
The Company is basing its operations on its unique and successful operating model which combines a transparent and predictable full dividend payout policy with high spot market exposure and a strong balance sheet. Focus is also on a cost effective management of the Company, in order to maintain a low cash break-even level for the operations.
 
The Company’s exposure to the spot market is based on our analysis showing that the spot market over time can be expected to produce higher revenues on average than the time charter market. With a strong balance sheet, a full dividend payout policy can be maintained without accumulating cash reserves on the balance sheet. A certain amount of term charter coverage is being contemplated from time to time.
 
The main objective of the Company is to maximize the total return(2) for shareholders via a transparent, predictable and simple strategic platform. Growth is also an inherent part of the operating model and further expansion can be expected. The expansion of the Company is bolstering its earnings and dividend capacity per share.
 
*****
 
(1) Operating cash flow is a non-GAAP financial term often used by investors to measure financial performance of shipping companies. Operating cash flow represents income from vessel operations before depreciation and non-cash administrative charges. Please see page 5 for a reconciliation of this non-GAAP measure as used in this release to the most directly comparable GAAP financial measure.
(2) The total return is based on the change in the price for our common shares plus dividends reinvested in our common shares.
 
 
 
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
 
Matters discussed in this press release may constitute forward-looking statements.  The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business.  Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.
 
The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words “believe,” “anticipate,” “intend,” “estimate,” “forecast,” “project,” “plan,” “potential,” “will,” “may,” “should,” “expect,” “pending” and similar expressions identify forward-looking statements.
 
The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, our management’s examination of historical operating trends, data contained in our records and other data available from third parties.  Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections.  We undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.
 
Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, general market conditions, including fluctuations in charter rates and vessel values, changes in demand in the tanker market, as a result of changes in OPEC’s petroleum production levels and world wide oil consumption and storage, changes in our operating expenses, including bunker prices, drydocking and insurance costs, the market for our vessels, availability of financing and refinancing, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, vessels breakdowns and instances of off-hires and other important factors described from time to time in the reports filed by the Company with the Securities and Exchange Commission, including the prospectus and related prospectus supplement, our Annual Report on Form 20-F, and our reports on Form 6-K.
 
 
Contacts:
Scandic American Shipping Ltd 
Manager for:
Nordic American Tanker Shipping Ltd.
P.O Box 56, 3201 Sandefjord, Norway
Tel: + 47 33 42 73 00 E-mail:  nat@scandicamerican.com
Web-site:  www.nat.bm
 
Rolf Amundsen, Investor Relations
Nordic American Tanker Shipping Ltd.
Tel: +1 800 601 9079 or + 47 908 26 906
 
Gary Wolfe
Seward & Kissel LLP, New York, USA
Tel: +1 212  574 1223
 
Herbjørn Hansson, Chairman & CEO
Nordic American Tanker Shipping Ltd.
Tel:  +1 866 805 9504 or + 47 901 46 291
 
 
The full press release including tables can be downloaded from the following link:

3rd quarter 2006 Results