Maritrans Reports Third Quarter 2006 Earnings.

TAMPA, Fla. -- Maritrans Inc. (NYSE:TUG), a leading U.S. flag marine petroleum transport company, today announced its third quarter financial results.

Net income for the quarter ended September 30, 2006 was $4.0 million, or $0.33 diluted earnings per share, on revenues of $49.2 million. This compares with net income of $6.4 million, or $0.74 diluted earnings per share, on revenues of $44.9 million for the quarter ended September 30, 2005. For the third quarter ended September 30, 2006, net income included the reversal of an income tax reserve of $1.3 million, or $0.11 diluted earnings per share. In the prior year, net income for the quarter ended September 30, 2005 included a reversal of an income tax reserve of $1.2 million, or $0.14 diluted earnings per share. As of April 1, 2006, the Company changed its method of accounting for planned major maintenance activities from the accrual method to the deferral method. An appendix is included at the end of this release that details the effect of the accounting change on Maritrans' results from January 1, 2004 and each period thereafter.

Operating income for the quarter ended September 30, 2006, was $3.6 million compared to $8.7 million for the quarter ended September 30, 2005. Operating expenses increased to $45.6 million in the third quarter of 2006 from $36.2 million for the third quarter of 2005 primarily due to charter hire costs related to the charters of the vessels SEABROOK and SEA SWIFT, which charters did not exist in 2005. Additionally, the Company's vessel insurance expenses increased $1.3 million compared to the same period of 2005 due to additional premiums for open policy periods from 2004 through 2006 due to a general call on all policyholders by the Company's mutual insurance club. During the third quarter, rates in the U.S. Jones Act spot market increased compared to the second quarter of 2006, as a result of fewer vessels available in the market and higher refinery output. During the third quarter of 2006 the Company delivered 23 million barrels of crude oil to lightering customers compared to 21 million barrels delivered during the second quarter of 2006, which was primarily a result of increased production from a Delaware River refinery that was undergoing maintenance during the second quarter of 2006.

On a Time Charter Equivalent ("TCE") basis, a commonly used industry measure where direct voyage costs are deducted from voyage revenue, TCE revenue was $35.0 million for the quarter ended September 30, 2006 compared to $34.8 million for the quarter ended September 30, 2005, an increase of $0.2 million, or 0.6%. TCE revenue is a non-GAAP financial measure and a reconciliation of TCE revenue to revenue calculated in accordance with GAAP is attached hereto.

During the third quarter of 2006, the Company experienced lower overall utilization than in the third quarter of 2005. Utilization for the third quarter of 2006 was 77.2% compared to 83.8% in the third quarter of 2005. In the quarter ended September 30, 2006, the Company experienced 203 days of out of service time for capital projects, including barge rebuilding, and vessel maintenance. This compares to out of service time for maintenance and capital projects, including barge rebuilding, of 123 days in the third quarter of 2005. The Company expects to have at least 92 days out of service time during the fourth quarter of 2006 for capital projects, including barge rebuilding. In the quarter ended September 30, 2006, the Company did not experience any days out of service due to weather related events. In the quarter ended September 30, 2005, the Company experienced four significant storms that resulted in approximately 49 days of out of service time. In the quarter ended September 30, 2006, the Company did not experience any idle days in its spot fleet, compared to 17 days in the comparable period in 2005. In the quarter ended September 30, 2006, the Company experienced 63 idle days for the ALLEGIANCE and PERSEVERANCE while awaiting orders for grain voyages. The Company had no vessels in grain service in the comparable period in 2005.

PENDING TRANSACTION WITH OVERSEAS SHIPHOLDING GROUP INC.

On September 25, 2006, the Company and Overseas Shipholding Group Inc., or OSG, announced that OSG had entered into a definitive agreement pursuant to which OSG will acquire all of the outstanding stock of Maritrans Inc. for $37.50 per share. The transaction is valued at approximately $455 million based on approximately 12 million shares outstanding and the assumption of net debt outstanding as of June 30, 2006. The transaction, which is expected to close by year-end 2006, is subject to approval by a majority of Maritrans' stockholders and other customary closing conditions, including regulatory approvals. On October 17, 2006, the Federal Trade Commission, on behalf of itself and the Antitrust Division of the Department of Justice, granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvement Acts of 1976 with respect to the proposed acquisition. The special meeting of Maritrans' stockholders to consider the proposed transaction has been scheduled for November 28, 2006. Stockholders of record at the close of business on October 20, 2006 will be entitled to vote at the meeting.

FLEET AND MARKET REPORT

Maritrans operates a fleet of oil tankers and oceangoing married tug/barge units. In the third quarter of 2006, the Company operated its fleet at approximately 35% spot and 65% contract and intends to maintain similar spot market exposure in the fourth quarter of 2006.

In September, the ALLEGIANCE entered into a charter to transport grain from Portland, Oregon to Kenya. The vessel is scheduled to complete this voyage in mid-December. The current grain cargo is the vessel's fourth charter since being removed from petroleum transportation service in December 2005 in accordance with the Oil Pollution Act of 1990 ("OPA"). In July 2006, the Company's tanker PERSEVERANCE reached its mandatory oil retirement date. In September 2006, the PERSEVERANCE entered into a charter to transport grain from Corpus Christi, Texas to Djibouti and Georgia. The vessel is scheduled to complete this voyage in November. The Company expects to incur approximately 15 days of idle time on each of these tankers in the fourth quarter of 2006.

FLEET REBUlLDING AND CONSTRUCTION PROGRAM

Since 1998, Maritrans has been actively engaged in a double-hull rebuilding program aimed at ensuring that the Company's Jones Act fleet is compliant with the Oil Pollution Act of 1990. Maritrans' patented barge rebuilding process enables the Company to convert its vessels for significantly less cost than building new vessels.

During 2006, the Company has continued to successfully implement its rebuilding program. The rebuild of the Company's seventh barge, the M 210, commenced on January 26, 2006. The M 210 rebuild is expected to have a total cost of approximately $30 million. The rebuild of the Company's eighth barge, the OCEAN 211, is expected to commence following the return to service of the M 210. The OCEAN 211's rebuild is also expected to have a total cost of approximately $30 million. The rebuilds of the M 210 and OCEAN 211 will also include the insertions of mid-bodies that will increase each of their respective capacities by approximately 38,000 barrels, or 17%. The rebuilds of the M 210 and the OCEAN 211 are expected to be completed early in 2007 and in the late summer of 2007, respectively. Upon completion of their double-hulling, and reflecting their larger carrying capacities, the M 210 and OCEAN 211 will be renamed the M 242 and M 243, respectively.

The Company has three 350,000 barrel articulated tug-barge units under construction, with deliveries scheduled for the fourth quarter of 2007, the second quarter of 2008 and the fourth quarter of 2008, respectively. The cost of each ATB is expected to be approximately $77.5 million. The Company also has two 8,000-horsepower tugboats under construction. One tugboat is expected to be delivered in the fourth quarter of 2008 with the second delivered in the first quarter of 2009. The cost of each tugboat is expected to be approximately $16 million.

ABOUT MARITRANS

Maritrans Inc. is a U.S.-based company with a 78-year commitment to building and operating petroleum transport vessels for the U.S. domestic trade. Maritrans employs a fleet of 11 tug/barge units and 5 tankers. Two of these tankers were redeployed to the transportation of non-petroleum cargo. Approximately 75 percent of our oil carrying fleet capacity is double-hulled. Our current oil carrying fleet capacity aggregates approximately 3.4 million barrels, 79 percent of which is barge capacity. Maritrans is headquartered in Tampa, Florida, and maintains an office in the Philadelphia area.

SAFE HARBOR STATEMENT

Certain statements in this news release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, including statements made with respect to present or anticipated utilization, future revenues and customer relationships, capital expenditures, future financings, and other statements regarding matters that are not historical facts, and involve predictions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results, levels of activity, growth, performance, earnings per share or achievements to be materially different from any future results, levels of activity, growth, performance, earnings per share or achievements expressed in or implied by such forward-looking statements. In some cases you can identify forward-looking statements by terminology such as "may," "seem," "should," "believe," "future," "potential," "estimate," "offer," "opportunity," "quality," "growth," "expect," "intend," "plan," "focus," "through," "strategy," "provide," "meet," "allow," "represent," "commitment," "create," "implement," "result," "seek," "increase," "establish," "work," "perform," "make," "continue," "can," "will," "include," or the negative of such terms or comparable terminology. These forward-looking statements inherently involve certain risks and uncertainties, although they are based on our current plans or assessments that are believed to be reasonable as of the date of this prospectus supplement. The forward-looking statements are subject to a number of risks and uncertainties and include the following: satisfaction of conditions to closing of the proposed merger with OSG, demand for, or level of consumption of, oil and petroleum products; future spot market charter rates; ability to attract and retain experienced, qualified and skilled crewmembers; competition that could affect our market share and revenues; risks inherent in marine transportation; the cost and availability of insurance coverage; delays or cost overruns in the building of new vessels, the double-hulling of our remaining single hulled vessels and scheduled shipyard maintenance; decrease in demand for lightering services; environmental and regulatory conditions; reliance on a limited number of customers for revenue; the continuation of federal law restricting United States point-to-point maritime shipping to US vessels (the Jones Act); asbestos-related lawsuits; fluctuating fuel prices; high fixed costs; capital expenditures required to operate and maintain a vessel may increase due to government regulations; reliance on unionized labor; federal laws covering our employees that may subject us to job-related claims; and significant fluctuations of our stock price. Given these uncertainties, you should not place undue reliance on these forward-looking statements. You should read this news release completely and with the understanding that our actual future results may be materially different from what the Company expects. These forward-looking statements represent our estimates and assumptions only as of the date of this news release. Except for our ongoing obligations to disclose material information under the federal securities laws, the Company is not obligated to update these forward-looking statements, even though our situation may change in the future. The Company qualifies all of its forward-looking statements by these cautionary statements.

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APPENDIX I

ACCOUNTING CHANGE FOR PLANNED MAJOR MAINTENANCE ACTIVITIES

As of April 1, 2006, the Company changed its method of accounting for planned major maintenance activities from the accrual method to the deferral method. Previously, the Company made provisions for the cost of upcoming major periodic overhauls of vessels and equipment in advance of performing the related maintenance and repairs. The costs expected to be paid in the upcoming year were included in accrued shipyard costs as a current liability with the remainder classified as a long-term liability. Under the deferral method, costs actually incurred are amortized on a straight-line basis over the period beginning at the completion of the maintenance event and ending at the commencement of the next scheduled regulatory drydocking. Management believes the deferral method is the preferable method for accounting for planned major maintenance activities because (i) it better matches the expenses incurred with the revenues generated, (ii) the deferral method improves comparability with the Company's industry since the majority of the Company's competitors use this method and (iii) the deferral method best fits the Company's business circumstances because the Company has a small fleet of vessels, the expenditures for planned major maintenance activities are not continuous and the expenditures are not consistent across periods due to the timing of regulatory drydockings.

The Company recorded this change in accounting principle in accordance with SFAS No. 154, Accounting Changes and Error Corrections, which provides guidance on the accounting for and the reporting of accounting changes, including changes in accounting principles. SFAS 154 is effective for accounting changes made in fiscal years beginning after December 15, 2005. This statement requires retrospective application of accounting changes which is defined as the application of a different accounting principle to prior accounting periods as if that principle had always been used.

Pursuant to SFAS No. 154, the Company is required to apply the new accounting principle to all prior periods that the Company will report upon in the Annual Report on Form 10-K for the year ended December 31, 2006. Therefore, this accounting principle was retrospectively applied to the period of January 1, 2004 and to each period thereafter. The cumulative effect of the retrospective change to this accounting principle as of January 1, 2004 was a $17.9 million increase in total assets, a $2.7 million decrease in total liabilities and a $20.6 million increase in retained earnings.

The following presents the effect of the retrospective application of this change in accounting principle on the Company's income statement and balance sheet as of and for the respective periods.

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