NAT

Business Context and Reporting Period

This Form 6-K, filed on April 9, 2021, incorporates a press release dated February 26, 2021, from Nordic American Tankers Limited (NAT). The report covers the fourth quarter and full year ended December 31, 2020. NAT operates a homogeneous fleet of 25 Suezmax tankers (including two newbuildings) focused on crude oil transportation. The company emphasizes a strategy of maintaining a high-quality fleet to secure employment with major oil companies and prioritizes cash dividend distribution.

Key Financial Metrics

Material Changes vs. Prior Period

• Profitability Turnaround: The company returned to profitability for the full year 2020 with $50.0 million in net income, a significant improvement from the $10.4 million net loss in 2019. However, Q4 2020 was weak, resulting in a net loss of $28.7 million compared to a $10.0 million loss in Q3 2020.
• Market Conditions: Q4 2020 earnings were negatively impacted by reduced oil production from OPEC+, resulting in an average Time Charter Equivalent (TCE) of $8,700 per day per ship, down from approximately $25,000 per day in Q3 2020.
• Debt Reduction: The company repaid $75.5 million in existing loans during 2020. Total long-term liabilities decreased to $335.5 million as of December 31, 2020, from $376.5 million in 2019.
• Dividend Continuity: NAT paid its 94th consecutive quarterly dividend of $0.02 per share for Q4 2020, maintaining its dividend policy despite the quarterly loss.

Guidance, Outlook, and Risks

Outlook and Management Commentary: Management views the market as "finely balanced" with signs of a significant positive turnaround in 2021. They anticipate strong oil demand, particularly from Asia, driven by economic recovery and vaccination programs. The company expects higher dividends in an improved market environment.

Strategic Initiatives:

• Fleet Expansion: Financing was concluded for two newbuilding Suezmax vessels ordered in September 2020, with delivery expected in 2022. The first installment of $11.0 million was paid in Q4 2020.
• Liquidity: A $30 million incremental facility was added to the senior secured loan in December 2020 as a liquidity reserve.
• Capital Markets: The previous $40 million At-The-Market (ATM) facility was fully utilized. A new $60 million ATM facility was established in October 2020, with no shares issued as of year-end.

Risks and Contingencies:

• Market Volatility: Short-term spot rates remain volatile and are sensitive to OPEC+ production levels and global oil consumption.
• Operational Risks: Challenges include crew changes due to the pandemic, though operations have not been materially affected. Scheduled drydockings for 4 vessels are planned for 2021.
• Forward-Looking Statements: Actual results may differ due to fluctuations in charter rates, vessel values, bunker prices, and geopolitical events.

Investor Verification Checklist

• Verify the sustainability of the Q4 2020 loss and the specific impact of OPEC+ production cuts on Q1 2021 earnings.
• Confirm the status of the two newbuilding vessels and the terms of the pre-delivery funding financing.
• Monitor the utilization of the new $60 million ATM facility and its impact on share dilution.
• Review the schedule and cost implications of the 4 vessels due for drydocking in 2021.
• Assess the correlation between the projected Asian oil demand and actual TCE rates in the Suezmax sector.