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Nordic Amer Tankers 'In Excellent Position To Reap Immediate Financial Benefits When Market Turns Around'

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Letter to Shareholders from the Chairman:

Introduction: It is now almost six months ago since I sent you a letter, in early January this year. Since then our companies have been through a very busy period which I would like to talk about. This particular letter is sent to shareholders of Nordic American Tankers Ltd (NAT), Nordic American Offshore Ltd. (NAO) and the investor market. NAT and NAO are listed on the New York Stock Exchange – NAT for many years and NAO started trading June 12, 2014 on the NYSE. Following an offering in NAO, NAT owns about 20% in NAO which is specializing in Platform Supply Vessels (PSVs) serving the oil exploration business. I am Chairman and CEO in NAT as before and have assumed the position of Executive Chairman of Nordic American Offshore.

Nordic American Tankers Limited (NAT): The first quarter of 2014 produced very strong results for our suezmax tankers compared with the last quarter of 2013. During 4Q2013 the operating cash flow was $1.9 million. The comparable figure for 1Q2014 was about $27 million, about 14 times up. We know that the tanker market is volatile, the first quarter of 2014 is an indication how it can evolve. 2Q2014 will not produce results at the level with 1Q2014 as the market has fallen back. At the time of this message there is an undercurrent in the market which may lead to increased rates again. Time will tell.

I will point at two things that we see for the first six months of the year. Firstly, NAT is in excellent position to reap immediate financial benefits when the market turns around. Secondly, we have again proven that our fleet is in top technical condition. Furthermore, I am pleased that we, so far this year, have been able to expand our suezmax fleet from 20 to 22 vessels. We shall take delivery of the two new vessels in July and August 2014, respectively.

We are now entering a period in the tanker business during which we can expect that the supply of ships will shrink; i.e. an improved balance between supply and demand may be established. It is many years ago since we had such a position. The recent volatility in the spot market is also indicating a tighter balance between supply and demand.

In April 2014, NAT closed a following offering that brought in approximately $113 million. The proceeds will be used to finance the current acquisitions, bringing the fleet to 22 vessels, and for further expansion of our fleet.

We will very soon announce the NAT dividend to be paid at the end of August. Furthermore, we shall arrange for the extra dividend (dividend-in-kind) to be distributed to NAT shareholders in the form of shares in NAO. The current plan is that shareholders owing 499 shares or less in NAT will be compensated with cash.

Nordic American Offshore Ltd. (NAO):The establishment of Nordic American Offshore and its listing on the Oslo OTC (over the counter) market at the end of last year was a milestone with a fleet of six PSVs. NAO has been further developed during the first six months of this year and four newbuilding contracts have been entered into. The four newbuildings are planned for delivery during the three first quarters of 2015, at which time NAO shall be having 10 vessels in operation. These Platform Supply Vessels (PSVs) are serving the offshore installations in the North Sea. They are all built at the West Coast of Norway at some of the best shipbuilders in the world. As previously announced, NAO was listed and started trading on the New York Stock Exchange June 12, 2014 following an IPO that brought in about $100 million to finance the expansion of the fleet.

The strategy of Nordic American Offshore is based on the same business model as we have in Nordic American Tankers. The involvement of NAT in NAO is expected to boost the dividend for NAT. There are clear synergies between the two companies, in particular as regards general and administrative costs. In a way the two companies are supporting each other. I am very pleased that Tor Øyvind Bjørkli (M.Sc.) has been recruited as CEO of NAO. His broad experience from the offshore business will no doubt be an asset to the development of Nordic American Offshore.

Summary: We are there to serve you in the best possible way. This goes for our friends in Nordic American Tankers and in Nordic American Offshore.

My best wishes for the summer!

Herbjørn Hansson

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