Overseas Shipholding Group, Inc. Reports Third Quarter Earnings.

Business Editors

NEW YORK--(BUSINESS WIRE)--Nov. 13, 2001

Overseas Shipholding Group, Inc. reported net income for the quarter ended September 30, 2001 of $11.2 million, or $.33 per share, compared with net income of $26.8 million, or $.79 per share, in the third quarter of 2000.

Results for the third quarter of 2001 include a $2.7 million, or $.08 per share, after-tax gain on securities transactions compared with $1.3 million, or $.04 per share, in the third quarter of last year. The third quarter year-to-year reduction in net income reflects a sharp decline in time charter equivalent rates for the Company's foreign flag VLCCs and Aframax tankers.

Net income for the first nine months of 2001 totaled a record $94.2 million, or $2.76 per share, versus net income of $42.8 million, or $1.26 per share, for the corresponding period of 2000, reflecting the strong tanker markets that prevailed in the first half of this year. Results for the first nine months of 2001 include an after-tax gain on securities transactions of $14.4 million, or $.42 per share, offset by an after-tax restructuring charge of $6.0 million, or $.18 per share, to cover costs associated with the reduction of staff at the New York headquarters and the transfer of ship management and administrative functions to our subsidiary in Newcastle, U.K. Results for the first nine months of 2000 included an after-tax gain on securities transactions of $3.0 million, or $.09 per share, and $4.2 million, or $.12 per share, arising from a change from completed voyage method to percentage completion method of accounting for voyage revenues.

Set forth below are the time charter equivalent rates and other operating statistics for the Company's principal foreign flag tanker segments for the three month and nine month periods:

                                Third Quarter           Percent
                             2001          2000          Change
                             ----          ----         --------
VLCCs
TCE per revenue
 generating ship-day
 (spot)                  $  29,074     $  53,689          -45.8%
TCE per revenue
 generating ship-day
 (combined spot and
  long-term charters)    $  29,726     $  49,336          -39.7%
Revenue generating
 ship-days(a)                  961           764

AFRAMAXES
TCE per revenue
 generating ship-day
 (spot)                  $  21,918     $  33,276          -34.1%
Revenue generating
 ship-days                   1,030           858

PRODUCT CARRIERS
TCE per revenue
 generating ship-day
 (spot)                  $  17,116     $  17,894          -4.3%
Revenue generating
 ship-days                     657           823

                              First Nine Months         Percent
                             2001          2000          Change
                             ----          ----         -------
VLCCs
TCE per revenue
 generating ship-day
 (spot)                  $  45,865     $  39,237          +16.9%
TCE per revenue
 generating ship-day
 (combined spot and
 long-term charters)     $  43,138     $  38,433          +12.2%
Revenue generating
 ship-days(a)                2,548         2,014

AFRAMAXES
TCE per revenue
 generating ship-day
 (spot)                  $  34,833     $  24,224          +43.8%
Revenue generating
 ship-days                   2,900         2,482

PRODUCT CARRIERS
TCE per revenue
 generating ship-day
 (spot)                  $  23,689     $  14,525          +63.1%
Revenue generating
 ship-days                   2,079         2,459

      (a) Includes days on long-term charter of 183 in the third quarter
        of 2001, 184 in the third quarter of 2000, 543 in the first
        nine months of 2001 and 548 in the first nine months of 2000.

"Despite current weakness in the world tanker markets, OSG's operating results continue to reflect the positive effects of superior asset utilization afforded through the Company's strategic commercial alliances, and significant benefits achieved through our cost reduction program," said Morton P. Hyman, Chairman and Chief Executive Officer of OSG. In addition, Mr. Hyman said "Since 1998 we have removed over $40 million per year from the cost structure of the Company; as a result of changes already in place, we expect to reduce overhead and operating costs by an additional $20 million per year commencing in 2002. During this period, we have renewed and modernized our fleet with the result that OSG has one of the most modern and efficient fleets in the industry."

TCE rates for the Company's foreign flag tankers declined during the third quarter as OPEC announced a one million barrels per day production cut effective September 1, 2001 and Iraq withdrew approximately two million barrels per day from the market for almost one month. Given announced OPEC production cuts to date in 2001 of 3.5 million barrels per day and prospects for a further cut this year, tanker markets are likely to remain under pressure in the coming months.

With the significant decline in tanker rates during the third quarter, VLCC scrappings and other deletions from the fleet this year-to-date have already reached 31 vessels, exceeding the total of 25 vessels deleted in all of 2000. In light of new International Maritime Organization regulations and weakness in the major world economies, it is likely that scrapping of older, single-hulled tonnage will accelerate, benefiting OSG and other owners of modern, double-hulled vessels.

The size of the world tanker fleet declined by 0.7 million deadweight tons ("mdwt") in the third quarter to 272.4 mdwt as scrap sales of 2.6 mdwt exceeded newbuilding deliveries of 1.9 mdwt. During the third quarter, the VLCC orderbook increased by 0.9 mdwt to 27.7 mdwt, or 21.5% of the existing VLCC fleet for delivery over the next three years; this percentage is roughly comparable to the portion of the fleet that will be 25 years of age or older by the end of this period. The Aframax orderbook has continued to rise, reaching 13.3 mdwt, or 25.3% of the existing Aframax fleet, compared with 23% at the end of June.

OSG took delivery of a VLCC newbuilding during the third quarter and an Aframax newbuilding early in the fourth quarter. In addition, a joint venture in which the Company holds an equal one-third interest with each of Frontline Ltd. and Euronav Luxembourg S.A. took delivery of two 2001-built VLCCs and one 2000-built VLCC. This joint venture will take delivery of two additional VLCC newbuildings in February and July 2002. The three joint venture partners are founding members of the Tankers International LLC ("Tankers") pool, the world's largest commercial operator of modern VLCCs.

Since OSG began its current $800 million, 21 vessel fleet renewal program in 1998, the Company has taken delivery of six wholly-owned newbuildings (three VLCCs and three Aframaxes) and a total of seven jointly-owned vessels -- six modern VLCCs and a modern Aframax tanker. All 13 of these vessels, together with eight remaining newbuildings (including two vessels to be jointly-owned) are, or will upon delivery be, employed in either the Tankers VLCC pool or OSG's Aframax pool with PDV Marina, the marine transportation subsidiary of the Venezuelan state oil company. OSG will take delivery of its remaining newbuildings in accordance with the following schedule:

                             NEWBUILDING PROGRAM
                             Delivery Schedule
                       2002        2003        2004
                      #/Date      #/Date      #/Date
                      ------      ------      ------
        VLCCs         2 - Q1      1 - Q1
                      1 - Q1(a)
                      1 - Q3(a)
        Aframaxes     1 - Q1      1 - Q4      1 - Q1
                      ------------------------------
        TOTAL             5            2           1

      (a) Jointly-owned with others.

      Of the total $800 million cost of OSG's vessel modernization
program, $580 million has been satisfied to date. The remaining
investment of approximately $180 million in connection with the
wholly-owned vessel portion of its fleet renewal program will be
incurred as follows (in millions of dollars) and is expected to be
funded primarily out of operating cash flow:

                 CAPTIAL COMMITMENTS FOR NEWBUILDINGS
                            (Wholly-owned)

                     Q4 2001     2002      2003
                     -------     ----      ----
                     $   34      $ 75      $71

The additional $40 million of required capital attributable to the joint venture vessels being delivered in 2002 will be substantially financed by the joint ventures.

After satisfying almost 75% of the cost of our fleet renewal program, OSG's adjusted debt to capital ratio is 42.3%, well below industry norms, providing the Company with the financial strength to take advantage of market opportunities as they arise.

The following chart summarizes the Company's current international and domestic fleets, weighted to reflect percentage ownership:

Vessel Type                         Vessels              Dwt
-----------                         -------              ---
Foreign Flag
 VLCC                                 11.3            3,340,500
 Suezmax                                 1              145,150
 Aframax                              11.5            1,134,250
 Product Carrier (65,000 dwt)            4              256,650
 Product Carrier (39,000 dwt)            4              157,050
 Capesize Bulk Carrier                   2              314,800

Foreign Flag Vessels                  33.8            5,348,400

U.S. Flag

 Tanker                                  4              392,350
 Product Carrier                         2               85,650
 Bulk Carrier                            3              171,550
 Car Carrier                             1               15,900

U.S. Flag Vessels                       10              665,450

Foreign and U.S. Flag Vessels         43.8            6,013,850

Foreign Flag Newbuildings

 VLCC                                  3.7            1,124,350(a)
 Aframax                                 3              332,750

Total Vessels, including
 Newbuildings                         50.5            7,470,950

      (a) Includes 2 VLCC newbuildings that have not yet been delivered
        to a joint venture in which OSG has a one-third interest.

Summary Consolidated Statements of Income

                            Three Months Ended      Nine Months Ended
                               September 30            September 30
                           ------------------       -----------------
($000)                        2001       2000       2001      2000


Net Shipping Revenues-
Time charter equivalent
 basis                      $ 78,356  $ 104,808  $ 311,683  $ 245,092
Running Expenses
 (including charter hire
  and depreciation)           51,485     49,831    152,061    141,210
General & Administrative(a)    9,589      8,575     28,681     26,456
Restructuring Charge             382         --      9,196         --
Total Shipping Expenses       61,456     58,406    189,938    167,666
Income from Vessel
 Operations (100% owned)      16,900     46,402    121,745     77,426
Equity in Results of
 Joint Ventures                3,556      2,196     13,198      2,813
Operating Income              20,456     48,598    134,943     80,239
Gain on Vessel Sales              --         --        436         --
Other Income(b)                7,697      4,544     40,263     12,929
Income before Interest,
 Taxes, Extraordinary
 Gain & Cumulative Effect
 of Accounting Change         28,153     53,142    175,642     93,168
Interest Expense              11,041     12,827     33,106     35,316
Income before Taxes,
 Extraordinary Gain &
 Cumulative Effect of
 Accounting Change            17,112     40,315    142,536     57,852
Provision for Federal
 Income Taxes                  5,950     13,550     48,300     19,820
Income before Extraordinary
 Gain & Cumulative Effect
 of Accounting Change         11,162     26,765     94,236     38,032
Extraordinary Gain on Early
 Extinguishment of Debt           --         --         --        573
Cumulative Effect of
 Accounting Change                --         --         --      4,152
Net Income                  $ 11,162   $ 26,765   $ 94,236   $ 42,757

Basic Net Income Per
 Share                      $    .33   $    .79   $   2.76   $   1.26
Diluted Net Income Per
 Share                      $    .32   $    .78   $   2.72   $   1.25
Weighted Average Number
 of Shares (Basic)        34,245,000 33,941,000 34,139,000 33,833,000
Weighted Average Number
 of Shares (Diluted)      34,742,000 34,492,000 34,708,000 34,275,000

Summary Consolidated Balance Sheets

($000)                        September  30, 2001   December 31, 2000
                              -------------------   -----------------
Current Assets                       $  131,393        $ 137,035
Capital Construction Fund               222,385          213,440
Vessels, including Capital Leases     1,323,109        1,293,958
Investments in Joint Ventures           137,615           84,742
Other Assets                             91,264           94,738
Total Assets                        $ 1,905,766      $ 1,823,913

Current Liabilities                    $ 78,562         $ 48,828
Long-term Debt and Capital Leases       816,892          836,497
Deferred Gain                            45,247           55,578
Other Liabilities                       163,931          132,843
Shareholders' Equity                    801,134          750,167
                                    $ 1,905,766      $ 1,823,913

      (a) The increase in general and administrative expenses in the
        2001 periods, compared with the comparable 2000 periods, is
        principally attributable to costs incurred in the Company's
        Newcastle office in preparation for the transfer of ship
        management and administrative functions to that office. The
        transfer, which will be substantially completed by year-end
        2001, will enable the Company to significantly reduce the New
        York office administrative expenses.

      (b) After-tax gains from sales of marketable securities, including
        related foreign currency exchange gains and losses, were
        $2,718,000 ($.08 per share) for the three months ended
        September 30, 2001 and $1,290,000 ($.04 per share) for the
        three months ended September 30, 2000, $14,409,000 ($.42 per
        share) for the nine months ended September 30, 2001 and
        $2,957,000 ($.09 per share) for the nine months ended
        September 30, 2000.

The Company plans to host a conference call at 2 PM Eastern Time on Tuesday, November 13, 2001 to discuss results for the quarter. All shareholders and other interested parties are invited to dial into the call, which may be accessed by calling [phone] within the United States, and [phone] for international calls. A recording of the call will be available for one week at [phone], if dialed from within the U.S., and at [phone] for international calls; the reservation number is 19927717.

This release contains forward-looking statements regarding the Company's prospects, including the outlook for tanker markets, the Company's fleet renewal program, prospects for certain strategic alliances, anticipated levels of scrapping of older tonnage, and the forecast of world oil demand. Factors, risks and uncertainties that could cause actual results to differ from expectations reflected in these forward-looking statements are described in the Company's 2000 Annual Report on Form 10-K.