Nordic American Tankers (NYSE

NAT) - The 4th Quarter 2018 report - In an important transaction, NAT has a new financial structure. Markets are positive. - Seite 3

In an improved tanker market, higher dividends can be expected.

Nordic American Offshore Ltd. (NYSE: NAO)

NAT owns 13.55% of Nordic American Offshore Ltd. and the NAT Chairman & CEO and his immediate family own 10.87% of NAO.

World Economy and the Tanker Market

The world economy is enjoying its strongest upswing since 2010. What is good for the world economy and world trade is by nature positive for the crude oil tanker business. In addition to the role of major oil companies, large oil traders have become important for the tanker industry.

The world Suezmax fleet (excl. shuttle & product tankers) counts 495 vessels at the end of 4Q2018. The total delivery during 2018 was 28 units.  For 2019 we expect 26 vessels, and in 2020 we currently see 16 vessels scheduled for delivery. During 2018, 21 Suezmax vessels were scrapped.

The supply of tanker tonnage is inelastic in the short-term. When there are too many ships in an area, rates tend to go down. When there is scarcity of ships, rates tend to go up. Short-term spot tanker rates may be expected to be volatile.

Corporate Governance/Conflict of Interests

It is vital to ensure that there is no conflict of interests among shareholders, management, affiliates and related parties. Interests must be aligned. From time to time in the shipping industry, we see that questionable transactions take place which are not in harmony with sound corporate governance principles, both as to transparency and related party aspects. We have zero tolerance for corruption.

Organizational development and rejuvenation, partly replacing outgoing personnel

Recently we have employed about 10 shore based staff - most of them in their 30s. They are specialists in business development, strategic thinking , finance, accounting, IT, web, chartering and related matters. Young persons are needed in the further development of NAT in a changing world.

Strategy going forward

The NAT strategy is built on expanding and maintaining a homogenous and top quality fleet, leveraging on our industry network and close customer relationships with big oil. Employment of our ships with big oil is a priority.

A strong balance sheet, combined with a homogenous fleet and economies of scale is giving a low cash break-even level, enabling NAT to distribute free cashflow to our shareholders. 

This strategy will benefit in both a strong tanker market and in a weak one. In an improved market, higher dividends can be expected and vice versa.

Our dividend policy should continue to enable us to achieve a competitive cash yield.