Independent Tankers Corporation Limited (the “Company” or “Independent Tankers”) was incorporated in Bermuda on January 18, 2008 and the shares have traded on the Norwegian over-the-counter market since March 7, 2008. Independent Tankers’ business is mainly concentrated on the ownership
and operation of crude oil tankers on long term bareboat contracts,

which include certain cancellation options to major oil companies.
Independent Tankers owns or leases in six VLCCs and four Suezmax
tankers. All vessels are financed through bonds in the US market and
some of the vessels are also subject to financial lease arrangements.
The main shareholder is Frontline Ltd. (“Frontline”) with an ownership
of approximately 83 percent.

Third Quarter and Nine Month Results 2009

The Board of Independent Tankers announces net income of $4.3 million,
equivalent to earnings per share of $0.06, for the third quarter of
2009. This compares with net income of $3.2 million, equivalent to
earnings per share of $0.04, for the second quarter of 2009. The main
reasons for this increase are a reduction in depreciation expense of
$0.5 million following the upward revision of the estimated residual
values of the six VLCCs and foreign exchange movements.

The average daily bareboat rates earned in the third quarter by the
Company’s VLCCs and the Suezmax tanker Front Voyager were approximately
$25,100 and $7,800, respectively, compared with approximately $25,400
and $7,900, respectively, in the preceding quarter. The decrease is
explained by fluctuations in days between the quarters. Net interest
expense was $5.5 million (second quarter 2009: $5.3 million). At
September 30, 2009, all of the Company’s bond debt of $325.8 million is
at fixed interest rates ranging from 6.68% to 8.52%. The Company has
reclassified some of its restricted cash balances to long-term. These
balances relate to the restricted cash that are segregated for the
settlement of long-term lease obligations. The amount reclassified as
of September 30, 2008 to conform to the current year presentation was
$226.9 million. For the nine months ended September 30, 2009 the
Company announces net income of $11.4 million, equivalent to earnings
per share of $0.15 (2008 comparable nine months $10.0 million,
equivalent to earnings per share of $0.13). Net interest expense was
$16.0 million (2008 comparable nine months: $16.7 million). In November
2009, the Company has an average cash breakeven rate for its VLCCs and
Suezmax tanker of approximately $19,100 and $4,200 per vessel per day,
respectively.

Charter Development

The VLCC British Pioneer is currently on a market related charter to BP
Shipping Limited (”BP”) under which the Company’s ship owning
subsidiary receives the greater of $20,000 per day or a spot market
rate. The market related rate, while calculated quarterly, is
cumulative on a four year basis or shorter if BP terminates the charter
earlier. The Company has not accrued any market related hire as of
September 30, 2009.

Other Matters

In September 2009, Dresdner Kleinwort Leasing gave notice of
termination for the UK tax lease for the VLCC British Progress. The
leasing agreement will be terminated effective January 15, 2010. At
September 30, 2009 the obligation under the lease was $69.9 million and
the termination will be cash neutral for the Company. The Company will
acquire the vessel concurrent with the lease termination and the
existing bareboat to BP will remain in place. 74,825,166 ordinary
shares were outstanding as of September 30, 2009, and the weighted
average number of shares outstanding for the quarter was also
74,825,166.

The Market

The average market rate for VLCCs from MEG to Japan in the third
quarter of 2009 was approximately WS 36 or $15,600/day. The second
quarter returned $20,600/day at the same WS rate, albeit with an $80/mt
lower fuel price. The average rate for Suezmaxes from WAF to USAC in
the third quarter of 2009 was approximately WS 52.5 or $13,700 per day
compared to approximately WS 59 or $20,000 per day in the second
quarter of 2009. Bunkers at Fujairah averaged approximately $426/mt in
the third quarter compared to $345/mt in the second quarter of 2009,
with a high of $459/mt at the end of August and a low of $378/mt in the
middle of July. On November 25, 2009 the quoted bunkers price in
Fujairah was $460/mt. The International Energy Agency (“IEA”) reported
in November 2009 an average OPEC oil production, including Iraq, of
28.8 million barrels per day during the third quarter of the year – an
increase of 320.000 barrels per day compared to the second quarter of
2009. At the last OPEC conference on September 10 it was agreed to keep
the current production levels unchanged. The next OPEC meeting is
scheduled to take place on December 22, 2009. IEA further estimates
that world oil demand averaged 85.1 million barrels per day in the
third quarter of 2009, an increase of approximately 0.9 million barrels
per day compared to the second quarter of the year. IEA predicts that
the average demand for 2009 in total will be 84.8 million barrels per
day, a 1.7 percent decline from 2008. Additionally, the IEA estimates
that the demand will increase by 1.7 percent in 2010 to 86.2 million
barrels per day. The VLCC fleet totalled 524 vessels at the end of the
third quarter with nine deliveries during the quarter. Throughout 2009
it is estimated that 61 deliveries will take place including 48 made so
far. The orderbook counted 188 vessels at the end of the third quarter,
down from 197 vessels after the second quarter of 2009. A new order for
12 VLCCs was reported during the quarter, however this is not yet
confirmed. The current orderbook represents approximately 35 percent of
the VLCC fleet. During the quarter, there were two deletions from the
trading fleet with five being sold for demolition and six for
conversion purposes. According to Fearnleys, the single hull fleet now
stands at 89 vessels. The Suezmax fleet totalled 381 vessels at the end
of the quarter, with 11 deliveries taking place during the quarter.
Throughout 2009 it is estimated that 57 deliveries will take place
including 38 made so far. The orderbook counted 127 vessels at the end
of the quarter, down from 138 vessels at the end of the second quarter
and now represents 32 percent of the total fleet. During the quarter,
there were two deletions from the trading fleet. According to
Fearnleys, the single hull fleet stands at 33 vessels at the end of the
quarter.

Strategy and Outlook

The Company’s strategy is mainly concentrated around long term charters
to reputable companies and for the time being BP, Chevron and
Frontline. The Company’s charter coverage for its six double hull VLCCs
is 100 percent for the rest of 2009, 99 percent in 2010 and 24 percent
in 2011, if the charterers are not extended. For the one single hull
and three double hull Suezmax tankers, the charter coverage is 100
percent for the rest of 2009 and 81 percent in 2010. We are slowly
building up our cash position at a comfortable pace from the Company’s
long term charters. The long term focus is on restructuring the bond
debt and UK leasing arrangements within the Company.

The Company has low cash breakeven rates and the vessels are financed
through the US bond market with maturity from 2015 to 2021. The
combination of fixed bareboat charters and floating market rates for
the six VLCCs in the years ahead and the fact that all the vessels are
financed creates a solid platform for the Company going forward.

Source: Independent Tankers Corporation Limited

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