Nordic American Tankers Limited (NYSE:NAT) – Letter to Shareholders from the Chairman & CEO on the Tanker Market and the Way Forward.

Hamilton, Bermuda, April 5, 2016

Dear Shareholder,

Nordic American Tankers continues to build on its strengths. 2015 was a great year for NAT, with the highest operating cash flow since we started in 1997. We achieved about $212 million in cash flow, or about one sixth of our current market cap. NAT is in a solid financial position, we have a strong balance sheet and we are positioning ourselves to grow and refresh the fleet.

We recently released our annual report for 2015 on Form 20-F. As with everything else at NAT, we try to keep our report simple and transparent. I would urge those with an interest in our company to read the report, since it contains far more information than we can include in our regular updates. Please see for the report.

We have not conducted equity offerings in the past two years.  During this period we have strengthened our position and the stock price has moved up. Further expansion will be more profitable to our shareholders when the time is right for new acquisitions.

The current fleet counts 26 vessels, including two newbuildings to be delivered in August this year and January 2017. These vessels will be funded via internal NAT resources. We are constantly assessing vessels offered to us, and you can rest assured we only move to grow when we feel the time is right. Our management does not have a fee incentive to grow indiscriminately. Some companies engage in such practices but at NAT we have always felt such conduct causes a misalignment between management and shareholders.

In the coming weeks we will release dividend information for the first quarter 2016. Dividends are a core part of the NAT strategy. We have paid dividends for the past 74 quarters and we aim at paying out many more dividends in the years to come.  Our dividend policy has always been to have a floating dividend reflecting the performance of the company in the volatile shipping market.

Nordic American is proud to have an outstanding Board of Directors who determine the level of the dividend on a quarterly basis depending on our situation and our needs going forward, but with a focus on maximizing total return to shareholders.  The facts speak for themselves, since we have created more shareholder value over time than any other company in the tanker industry.

Since the summer of 2014, the price of oil has dropped significantly. Many investors think this is bad news for the energy sector. We are not in the energy sector – a distinction that sometimes appears lost for investors who are looking at dozens or even hundreds of companies.

Investors must ask themselves “Why is the oil price low?” The simple answer is that there is too much oil. When there is too much oil, it must be shipped or stored, creating demand for oil tankers which is one key to understanding the strong results achieved in 2015.

We believe that some of the concern shown by investors revolves around what happens if the price of oil rebounds. A production cut seems unlikely at this point, and the driver behind an oil price recovery will be the growth in demand that we are seeing. This in turn keeps tanker demand high. It is true that the number of ships is expected to increase over the next couple of years. There is still plenty of work for tankers and the entry of new vessels into the fleet does not alter our general belief that the fundamentals remain positive going forward.

NAT has a cash break-even level of less than $12,000 a day per ship. This tells two stories. The first is that we are highly cost efficient and our solid balance sheet keeps interest payments to a minimum. The second is that our model is strong enough to sustain the volatility of the business we are in. Many others failed to take this into consideration and shareholders in such companies got badly hurt during weak tanker markets.

We are not concerned with discussions surrounding the age of some of our vessels. We are not in the business of constantly acquiring shiny new toys, because that really is not in the interest of shareholders. It is the difference between owning and maintaining a durable and dependable car and buying a new car every year just for the sake of showing off the latest model to your neighbors. Making money and generating returns, however, is what we always focus on. The question of age is brought up by those people who have never owned or operated a tanker.

It’s a simple choice for us. We could sell two or three older tankers and use the proceeds to buy a new shiny one, which may earn a little more in the spot market. The problem is that we then have one ship instead of two or three. As the market stands today, and given the quality of our vessels and our relationships with our customers, there is nothing to suggest this would be right for our shareholders.

There is a point where the vessels become too costly to maintain or unattractive to customers, but that is not the reality we are dealing with. When considering an expansion, we always consider the expected lifetime return or unlevered IRR (Internal Rate of Return) of that ship. Sometimes markets are such that it would make sense to order a new ship from a shipyard, but that is not the situation we face today.

I hope that this letter serves to help investors better appreciate our thinking. Sometimes we have been told we are doing things wrong, uttered by people who in no quantifiable way are doing it better. Facts are facts, and the facts say we are the best in our industry when it comes to return on your investment.

I would like to personally thank all those investors who support us and take the time to write to us with their questions and feedback. Shareholder communication is an important part of what we do, and as always I welcome your comments at

Kind regards,
Herbjorn Hansson
Chairman & CEO


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.


Herbjørn Hansson, Chairman & CEO
Nordic American Tankers Limited
Tel: +1 866 805 9504 or +47 90 14 62 91

Gary J. Wolfe
Seward & Kissel LLP, New York, USA
Tel: +1 212 574 1223


Press Release (PDF)