The market for seaborne oil transportation is serviced by two main types of operators: captive fleets of major oil companies and independent tanker fleets. According to Clarkson data, as of February 1, 2001, the oil companies own, or control through long-term time-charters, less than 26% of the current world tanker capacity. A large number of independent companies own or control the balance of the fleet. Historically, the industry has been highly fragmented. Recently, however, there has been some consolidation within the industry through mergers, acquisitions and joint marketing arrangements among tanker owners. According to Clarkson, as of February 1, 2001, there were approximately 559 tanker owners, with a world fleet of approximately 3,422 tankers, or 295.9 million deadweight tons. The ten largest owners accounted for 24.9% of the world tanker fleet including combined carriers, at that date,

according to Clarkson, compared with 18.6% at December 31, 1996.

In the past decade, there has been an increased focus in the United States and Europe on the environmental safety of tankers. This is largely due to the occurrence of several high-profile oil spills, including the Exxon Valdez in Prince William Sound, Alaska in 1989, the Erika off the coast of France in 1999 and the Jessica near the environmentally sensitive Galapagos Islands in January 2001, as well as to a generally greater awareness of environmental issues worldwide. This increased focus has led to regulations in the United States, such as the Oil Pollution Act of 1990, or OPA 90, that requires tankers entering U.S. waters, including the exclusive economic zone, to be exclusively double-hulled by January 1, 2015. In response to the Erika incident, even more stringent regulations are expected to be adopted in the United States and Europe this year, following the promulgation of new regulations by the International Maritime Organization, or IMO.

The Company acquires and holds tankers under one of three arrangements: full ownership, either directly or through majority-owned

subsidiaries; long-term bareboat charters that typically run for periods up to 15 years and include an option to purchase the tanker at any time during the charter period at a fixed price; and time charters where the Company has no option to purchase the tanker at the

end of the lease period.

To augment its existing fleet, the Company has contracted for the newbuilding of two modern double-hulled VLCCs, each of 318,000 dwt, which it will use for long-haul petroleum transportation; and the newbuilding of five modern double-hulled Aframax tankers, each of 107,000 dwt, three of which it will use to replace the three non-double-hulled Aframax tankers currently in its fleet.

The Company offers its customers three principal services: lightering in the U.S. Gulf; voyage chartering and long-term time chartering.

The Company conducts its lightering business on both a contractual and a spot basis. The Company currently devotes about two-thirds of its tankers to the Caribbean voyage and U.S. Gulf lightering businesses. The Company may also charter additional tankers in from time to time on a voyage-charter or time-charter basis for use in its lightering operations.

The tankers utilized in the Company’s lightering business are also employed to a substantial extent in voyage charter activities. The Company conducts its voyaging business on both a contractual and a spot basis. The Company uses primarily the tankers in its own fleet, but may charter additional tankers for use in its voyage business to take advantage of market opportunities and meet customer demand. Most of the Company’s charters are for voyages from ports in Latin America to ports along the U.S. Gulf or the U.S. Atlantic Coast. In addition, the Company from time to time has as many as five tankers operating on voyage charters in the North Sea and Mediterranean regions as well as from these regions to the U.S. Atlantic Coast and Latin America.

The tankers the Company time charters-out provide regular fixed revenues that balance the inherently cyclical nature of revenues from its voyage-charter and lightering businesses. The Company may expand its long-term time charter operations from time to time by entering into additional time charter contracts for modern tankers with major oil companies, traders or refiners.

Brokerage and commission expenses were $1.1million or 1.5% of gross operating revenues in the three months ended March 31, 2001, and $0.8 million in the three months ended March 31, 2000.

Vessel voyage expenses decreased 13.3% to $12.8 million in the three months ended March 31, 2001 from $14.7 million in the three months ended March 31, 2000.

Vessel operating expenses increased 8.9% to $11.2 million in the three months ended March 31, 2001 from $10.3 million in the three months ended March 31, 2000.

Net income increased significantly to $23.1 million in the three months ended March 31, 2001 from $2.4 million in the three months ended March 31, 2000.