NAT

Business Context and Reporting Period

This Form 6-K filing by Nordic American Tanker Shipping Limited (NAT) covers the first quarter of 2011 (ended March 31, 2011). The Company operates a homogeneous fleet of Suezmax tankers, focusing on spot market trading. As of the reporting period, the fleet consisted of 16 trading vessels, with two newbuildings expected to be delivered later in 2011, bringing the total to 19 vessels.

Key Financial Metrics

Liquidity and Capital Structure: The Company maintains a revolving credit facility of $500 million, with $80 million drawn as of March 31, 2011. The facility matures in September 2013. The Company reported a net debt position of approximately $5.2 million ($0.3 million per vessel).

Material Changes vs. Prior Period

• Improved Earnings: Net loss narrowed significantly from $12.8 million in Q4 2010 to $7.0 million in Q1 2011. Earnings per share improved from a loss of $0.27 to a loss of $0.15.
• Revenue Growth: Net voyage revenue increased by approximately 25% quarter-over-quarter, driven by an increase in the average daily gross rate for spot vessels from $15,100 in Q4 2010 to $18,000 in Q1 2011.
• Cash Flow Expansion: Operating cash flow more than doubled from $5.2 million in Q4 2010 to $10.8 million in Q1 2011.
• Fleet Expansion: The trading fleet grew from 15 vessels in Q4 2010 to 16 vessels in Q1 2011 following the redelivery and drydocking of the Nordic Harrier.
• Dividend Increase: The Board declared a dividend of $0.30 per share for Q1 2011, an increase from $0.25 per share in Q4 2010, marking the 55th consecutive quarter of dividend payments.

Guidance, Outlook, and Risks

Management Commentary: Management highlighted the strength of the Company's balance sheet, noting that while the spot Suezmax market remains soft, NAT is positioned to increase dividends even in weak conditions. The Company expects to phase in three more ships during the remainder of 2011. Management emphasized a strategy of accretive growth through acquisitions, noting that softened second-hand tanker prices present opportunities to buy vessels inexpensively.

Outlook: The Company does not attempt to predict future spot rates. However, it noted that if the market improves, higher earnings and dividends are expected. Conversely, if rates remain low, the Company is positioned to acquire assets to increase future dividend capacity.

Risks and Contingencies:

• Market Volatility: Spot rates may change quickly and unexpectedly; the Suezmax market has been soft in 2011.
• Geopolitical Risks: Piracy in the Gulf of Aden and Indian Ocean remains a concern, though no incidents have occurred. Unrest in Libya and the tragedy in Japan are monitored for potential impacts on oil demand and shipping distances.
• Arbitration: An arbitration process regarding the non-delivery of the newbuilding Nordic Galaxy in August 2010 is ongoing, with a conclusion expected by the end of 2011. Management states the outcome will not affect the dividend.
• Derivatives: The Company does not engage in any type of derivatives.

Investor Verification Checklist

• Verify the reconciliation of the non-GAAP "Operating Cash Flow" metric to Net Income to understand the impact of depreciation and non-cash charges.
• Confirm the status of the arbitration regarding the Nordic Galaxy newbuilding and any potential financial exposure.
• Monitor the utilization of the $500 million credit facility and the Company's net debt position as new vessels are delivered.
• Assess the impact of the Nordic Harrier's drydock costs and the claim against the bareboat charterer on future cash flows.
• Review the Company's acquisition pipeline to ensure new vessels meet the "dividend accretive" criteria stated by management.