Natural gas is the world’s fastest-growing primary energy source. In 2001, the consumption of natural gas accounted for approximately 23% of world energy consumption, and the EIA expects global consumption to grow from 90 trillion cubic feet (or Tcf) in 2001 to 118 Tcf in 2015, representing a compounded annual growth rate of 2.0%. Economic growth, the abundance of natural gas and its clean-burning nature and the wide applicability of natural gas as a fuel source have been driving this growth. Liquefied natural gas provides a cost-effective means for transporting natural gas overseas by supercooling it to a liquid form, which reduces its volume to approximately 1/600th of its gaseous state. Between 1993 and 2003, the annual amount of liquefied natural gas shipped internationally increased by a 7.0% compounded annual growth rate, from 3.0 Tcf to 5.9 Tcf, as a result of improvements in liquefaction and regasification technologies, decreases in liquefied natural gas shipping costs and increases in demand from consuming regions located far from natural gas reserves.

The IEA expects the liquefied natural gas shipping industry to continue to grow rapidly, with worldwide liquefied natural gas trade projected to increase by a 6.6% compounded annual growth rate from 2002 to 2010, with annual international liquefied natural gas shipments reaching 8.8 Tcf in 2010. Historically, liquefied natural gas trade primarily centered around the major liquefied natural gas exporters of Indonesia, Malaysia and Algeria and the major liquefied natural gas importers of Japan, South Korea and Taiwan. However, it is expected the Middle East and Africa to continue to be increasingly important liquefied natural gas exporting areas and Russia, with its vast natural gas reserves, to become a liquefied natural gas exporter. It is also expected Europe and North America to be among the major liquefied natural gas importers. To meet projected liquefied natural gas shipping demand, the IEA estimates that the world liquefied natural gas carrier fleet must expand to approximately 296 carriers by 2010 from its current size of 169 existing vessels and 102 vessels under order or construction as of October 1, 2004.

As of April 1, 2005, the Company’s liquefied natural gas carriers had an average age of approximately two years. Liquefied natural gas carriers are generally expected to have a lifespan of approximately 40 years. All of the Company’s liquefied natural gas vessels have a membrane-type containment system. The customers are free to use the Company’s liquefied natural gas carriers worldwide or to sublet the vessels to third parties.

As of April 1, 2005, the Company’s Suezmax tankers, other than the Granada Spirit, had an average age of approximately four years. New Suezmax tankers generally are expected to have a lifespan of approximately 25 to 30 years, based on estimated hull fatigue life. All of the Company’s Suezmax tankers, other than the Granada Spirit, under long-term charter are double-hulled. The Granada Spirit is not subject to any encumbrance. Each of the Company’s other Suezmax tankers is subject to a capital lease and a mortgage associated with the lessor’s financing of the vessel.

The Company provides the services of its vessels under time charters, and it operates certain of its vessels pursuant to capital leases. A time charter is a contract for the use of a vessel for a fixed period of time at a specified daily rate. Under a time charter, the vessel owner provides crewing and other services related to the vessel’s operation, the cost of which is included in the daily rate; the customer is responsible for substantially all of the vessel voyage costs.

The Company is responsible for vessel operating expenses, which include crewing, repairs and maintenance, insurance, stores, lube oils and communication expenses. The Company is also directly responsible for providing all of these items and services. Under all of its time charters, the Company is responsible for the technical management of the vessel and for maintaining the vessel, periodic drydocking, cleaning and painting and performing work required by regulations.

Vessel operating expenses increased 15.5% to $30.6 million for the year ended December 31, 2004, compared to $26.5 million for the year ended December 31, 2003.

Depreciation and amortization increased 49.1% to $34.9 million for the year ended December 31, 2004, from $23.4 million for the year ended December 31, 2003.

Interest expense increased 77.9% to $62.0 million for year ended December 31, 2004, from $34.9 million for year ended December 31, 2003.

Interest income increased 162.3% to $22.1 million for year ended December 31, 2004, from $8.4 million for year ended December 31, 2003.