NAT

Nordic American Tankers Ltd. - Form 6-K Summary

Business Context and Reporting Period

This Form 6-K, filed on May 12, 2009, reports on the financial condition and results of operations for the three months ended March 31, 2009. Nordic American Tanker Shipping Limited (NAT) is an international tanker company owning 13 modern double-hull Suezmax tankers. As of the reporting date, 12 vessels operated in the spot market or spot-related time charters, while one vessel was on a long-term bareboat charter. The company operates through cooperative arrangements managed by third-party administrators.

Key Financial Metrics

Operational Metrics: Average Time Charter Equivalent (TCE) rate for spot market vessels was $41,600 per day in Q1 2009, down from $46,600 in Q1 2008. Off-hire days decreased significantly to 2 days in Q1 2009 compared to 28 days in Q1 2008.

Material Changes vs. Prior Period

• Revenue Decline: Voyage revenue decreased 12.7% primarily due to lower average TCE rates in the spot market. Net voyage revenue declined 5.5%.
• Expense Increases: Vessel operating expenses rose 10.7% due to fleet expansion (addition of one vessel in February 2009) and higher crew, lubricating oil, and maintenance costs. General and administrative expenses increased to $4.5 million from $2.0 million, driven by a $2.3 million non-cash share-based compensation charge.
• Debt Reduction: Long-term debt outstanding dropped from $115.5 million in March 2008 to $46.0 million in March 2009 following a follow-on offering in May 2008 used to repay credit facility borrowings.
• Cash Flow Improvement: Operating cash flow increased 186.8% to $29.6 million, aided by fleet expansion and timing of payments.

Outlook, Risks, and Subsequent Events

• Debt Repayment: On April 30, 2009, the Company repaid its remaining $46.0 million long-term debt. As of the filing date, the Company has no long-term debt outstanding.
• Dividend Declaration: On May 5, 2009, a dividend of $0.88 per share was declared for Q1 2009, payable June 3, 2009.
• Acquisition: On May 5, 2009, the Company agreed to acquire a 2002-built Suezmax tanker for $57.0 million, with delivery expected by July 15, 2009. Funding will come from capital resources.
• Newbuilding Delays: Delivery of two Suezmax newbuildings from Bohai Shipyard has been delayed by 30 and 15 days, respectively.
• Risks: Key risks include fluctuations in charter rates and vessel values, bunker prices, global oil demand, piracy, and potential vessel breakdowns.

Investor Verification Checklist

• Verify the $57.0 million acquisition agreement for the 2002-built Suezmax tanker and confirm delivery timelines.
• Confirm the complete repayment of the $46.0 million credit facility debt as of April 30, 2009.
• Review the impact of the $2.3 million non-cash share-based compensation on Q1 2009 net income.
• Monitor the delayed delivery schedules for the two newbuildings from Bohai Shipyard.
• Assess the sustainability of the $0.88 per share dividend given the current spot market TCE rates.