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May 10, 2016

Overseas Shipholding Group Reports First Quarter 2016 Results

NEW YORK –
Overseas Shipholding Group, Inc. (OSG) (NYSE MKT:OSG, OSGB), a provider
of oceangoing energy transportation services, today reported results for
the quarter ended March 31, 2016.

Highlights

  • Time charter equivalent (TCE) revenues(A) for the first
    quarter of 2016 were $236.9 million, up 7% compared with the same
    period in 2015.
  • Net income for the first quarter was $50.7 million, or $0.09 per
    diluted share, compared with $42.9 million, or $0.07 per diluted
    share, in the first quarter of 2015.
  • Adjusted EBITDA(B) was $129.5 million, up 14% from $113.7
    million in the same period in 2015.
  • Total cash(C) was $416.6 million as of March 31, 2016.
  • Repurchased and retired $95.9 million in principal amount of
    subsidiary term loans in 2016 at a discounted price of $88.8 million.
  • Made a mandatory prepayment of $51.3 million in principal amount of
    domestic subsidiary term loan.
  • Repurchased and retired $58 million of Class A common stock and
    warrants at an average share equivalent price of $2.03, in the first
    quarter of 2016.
  • The Board declared a dividend of $0.17968 per outstanding Class B
    common stock and Class B warrants, payable on May 13, 2016, in
    connection with the previously announced settlement in its lawsuit
    against Proskauer.

“We are pleased to report strong first quarter performance,” said
Captain Ian T. Blackley, OSG’s president and CEO. “In our International
business, rates in the crude sector remained attractive as ton-mile
demand growth outpaced newbuilding supply and our Domestic business
turned in another good quarter, as U.S. crude production held above 9.0
million barrels per day and gasoline demand continued to grow.

“We are making good progress on our separation plans for the businesses,
which we believe will unlock greater value and enable us to distribute
that value to shareholders more efficiently. At the same time, strong
cash generation from our 79 vessel fleet allowed us to further enhance
our capital structure through debt repurchases and prepayments and
return value to shareholders through equity buybacks,” concluded
Blackley.

First Quarter 2016 Results

TCE revenues grew to $236.9 million for the quarter, an increase of
$15.3 million compared with the first quarter of 2015, driven by
continuing strength in VLCC spot market rates, increased Delaware Bay
lightering volumes and an increase in revenue days.

Net income for the first quarter of 2016 was $50.7 million, or $0.09 per
diluted share, compared with $42.9 million, or $0.07 per diluted share,
in the first quarter of 2015. The increase reflects the impact of
strengthened TCE revenues, lower general and administrative expenses and
lower interest expense, partially offset by increases in depreciation
and amortization expenses.

Adjusted EBITDA was $129.5 million for the quarter, an increase of $15.8
million compared with the first quarter of 2015, driven primarily by the
strength of VLCC spot rates, increased Delaware Bay lightering volumes
and an increase in revenue days.

International Crude Tankers

TCE revenues for the International Crude Tankers segment were $87.4
million for the quarter, an increase of $20.5 million compared with the
first quarter of 2015. This significant increase resulted from a
strengthening in daily rates across most vessel types in the segment,
with the VLCC spot rate increasing to $63,400 per day in the first
quarter, up 29% from the comparable 2015 period and the Panamax blended
rate increasing 23% to $25,600 per day. Additionally, revenue days for
the segment increased 9.5% over the first quarter of 2015 primarily
driven by the Company’s ULCC exiting lay-up and commencing a time
charter for storage in April 2015 and 66 fewer VLCC drydock days in the
current quarter.

International Product Carriers

TCE revenues for the International Product Carriers segment were $37.3
million for the quarter, down 14% compared with the first quarter of
2015. This decrease was primarily due to lower average daily blended
rates earned by the MR fleet. Also contributing was a 178-day decrease
in revenue days resulting from the sale of the Luxmar in July 2015 and
the redelivery of one time chartered-in vessel at the expiry of its
charter. These decreases were partially offset by the LR1 blended rate
increasing to approximately $23,000 in the first quarter, up 20% from
the comparable 2015 period.

U.S. Flag

TCE revenues for the U.S. Flag segment were $112.2 million for the
quarter, an increase of $1.0 million compared with the first quarter of
2015, driven primarily by increased Delaware Bay lightering volumes, as
145,000 barrels per day were transported during the quarter, double the
comparable 2015 period. Lower oil prices and the resulting drop in U.S.
crude oil production has narrowed the pricing spread between Brent crude
and West Texas Intermediate crude making it more attractive for U.S.
Northeast refineries to import crude oil.

Conference Call

The Company will host a conference call to discuss its first quarter
2016 results at 9:00 a.m. ET on Tuesday, May 10, 2016.

To access the call, participants should dial (866) 490-3149 for domestic
callers and (707) 294-1567 for international callers. Please dial in ten
minutes prior to the start of the call and enter Conference ID 3193934.

A live webcast of the conference call will be available from the
Investor Relations section of the Company’s website at http://www.osg.com/

An audio replay of the conference call will be available starting at
12:00 p.m. ET on Tuesday, May 10, 2016 through 11:59 p.m. ET on Tuesday,
May 17, 2016 by dialing (855) 859-2056 for domestic callers and (404)
537-3406 for international callers, and entering Conference ID 3193934.

About OSG

Overseas Shipholding Group, Inc. (NYSE MKT: OSG, OSGB) is a publicly
traded tanker company providing energy transportation services for crude
oil and petroleum products in the U.S. and International Flag markets.
OSG is committed to setting high standards of excellence for its
quality, safety and environmental programs. OSG is recognized as one of
the world’s most customer-focused marine transportation companies and is
headquartered in New York City, NY. More information is available at www.osg.com.

Forward-Looking Statements

This release contains forward looking statements. In addition, the
Company may make or approve certain statements in future filings with
the Securities and Exchange Commission (SEC), in press releases, or in
oral or written presentations by representatives of the Company. All
statements other than statements of historical facts should be
considered forward-looking statements. These matters or statements may
relate to the Company’s prospects, including statements regarding trends
in the tanker and articulated tug/barge markets, and possibilities of
certain strategic alliances and investments. Forward-looking statements
are based on the Company’s current plans, estimates and projections, and
are subject to change based on a number of factors. Investors should
carefully consider the risk factors outlined in more detail in the
Company’s Annual Report for 2015 on Form 10-K under the caption “Risk
Factors” and in similar sections of other filings made by the Company
with the SEC from time to time. The Company assumes no obligation to
update or revise any forward looking statements. Forward looking
statements and written and oral forward looking statements attributable
to the Company or its representatives after the date of this release are
qualified in their entirety by the cautionary statements contained in
this paragraph and in other reports previously or hereafter filed by the
Company with the SEC.

Consolidated Statements of Operations

($ in thousands, except per share amounts)

Three Months Ended March 31,
2016 2015

Shipping Revenues:

(unaudited) (unaudited)
Pool revenues $90,529 $78,769
Time and bareboat charter revenues 120,373 107,942
Voyage charter revenues 32,854 46,831
Total Shipping Revenues 243,756 233,542
Operating Expenses:
Voyage expenses 6,834 11,900
Vessel expenses 71,042 69,239
Charter hire expenses 31,057 31,898
Depreciation and amortization 43,083 37,119
General and administrative 17,349 19,282
Technical management transition costs – 40
Severance and relocation costs – 5
Gain on disposal of vessels and other property (157) (1,073)
Total Operating Expenses 169,208 168,410
Income from vessel operations 74,548 65,132
Equity in income of affiliated companies 11,605 12,412
Operating income 86,153 77,544
Other income 2,574 73
Income before interest expense, reorganization items

and income taxes

88,727 77,617
Interest expense (22,659) (28,569)
Income before reorganization items and income taxes 66,068 49,048
Reorganization items, net 17,910 (3,487)
Income before income taxes 83,978 45,561
Income tax provision (33,239) (2,660)
Net Income $50,739 $42,901
Weighted Average Number of Common Shares Outstanding:
Basic – Class A 568,425,634 573,434,452
Diluted – Class A 568,450,678 573,451,145
Basic and Diluted – Class B 7,919,819 7,924,944

Per Share Amounts:

Basic and Diluted net income – Class A and Class B $0.09 $0.07
Cash dividends declared $0.08 $ –

On December 17, 2015, all shareholders of record of the Company’s
Class A and B common stock as of December 3, 2015, received a dividend
of one-tenth of one share of Class A common stock for each share of
Class A common stock and Class B common stock held by them as of the
record date. In accordance with the relevant accounting guidance, the
Company was required to adjust the computations of basic and diluted
earnings per share retroactively for all periods presented to reflect
that change in capital structure.

Consolidated Balance Sheets

($ in thousands)

March 31,

2016

December 31,

2015

ASSETS (unaudited)
Current Assets:
Cash and cash equivalents $402,005 $502,836
Restricted cash 5,587 10,583
Voyage receivables 68,293 81,612
Income tax recoverable 1,119 1,664
Other receivables 4,814 7,195
Inventories, prepaid expenses and other current assets 21,401 20,041
Total Current Assets 503,219 623,931
Restricted cash – non current 8,989

8,989
Vessels and other property, less accumulated depreciation 2,052,968 2,084,859
Deferred drydock expenditures, net 84,969 95,241
Total Vessels, Deferred Drydock and Other Property 2,137,937 2,180,100
Investments in and advances to affiliated companies 351,503 348,718
Intangible assets, less accumulated amortization 49,067 50,217
Other assets1 19,906 18,455
Total Assets $3,070,621 $3,230,410
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable, accrued expenses and other current liabilities $87,292 $91,233
Income taxes payable 1,465 13
Current installments of long-term debt 71,154 63,039
Total Current Liabilities 159,911 154,285
Reserve for uncertain tax positions 2,529 2,520
Long-term debt1 1,072,533 1,223,224
Deferred income taxes 239,414 208,195
Other liabilities 60,823 61,698
Total Liabilities 1,535,210 1,649,922
Equity:
Total Equity 1,535,411 1,580,488
Total Liabilities and Equity $3,070,621 $3,230,410

1The Company adopted ASU No. 2015-03,
simplifying the Presentation of Debt Issuance Costs (ASC 835), which
amends the requirement to recognize debt issuance costs as deferred
charges. The amendment requires that debt issuance costs related to a
recognized debt liability be presented on the balance sheet as a direct
deduction from the carrying cost of that debt liability, consistent with
debt discounts. The Company adopted this accounting standard on January
1, 2016 and has applied the guidance retrospectively. The impact of the
retrospective adoption on the Company’s December 31, 2015 balance sheet
are reductions of both other assets and long-term debt by $44,543.

Consolidated Statements of Cash Flows

($ in thousands)

Three Months Ended March 31,

2016 2015
(unaudited) (unaudited)
Cash Flows from Operating Activities:
Net income $ 50,739 $ 42,901
Items included in net income not affecting cash flows:
Depreciation and amortization 43,083 37,119
Amortization of debt discount and other deferred financing costs 3,322 2,501
Compensation relating to restricted stock/stock unit and stock
option grants 		971 357
Deferred income tax provision/(benefit) 31,246 (7,622)
Undistributed earnings of affiliated companies (7,967) (9,073)
Reorganization items, non-cash 136 55
Other – net 492 82
Items included in net income related to investing and financing
activities:
Gain on disposal of vessels and other property – net (157) (1,073)
Gain on repurchase of debt (2,382) –
Payments for drydocking (5,917) (7,876)
Bankruptcy claim payments (5,000) (3,084)
Changes in other operating assets and liabilities 4,852 12,127
Net cash provided by operating activities 113,418 66,414
Cash Flows from Investing Activities:
Change in restricted cash 4,996 5,167
Expenditures for vessels and vessel improvements (58) –
Proceeds from disposal of vessels and other property – 7,757
Expenditures for other property (151) (65)
Investments in and advances to affiliated companies (1,054) (500)
Repayments of advances from affiliated companies – 12,500
Net cash provided by investing activities 3,733 24,859
Cash Flows from Financing Activities:
Cash dividend paid (30,573) –
Payments on debt (54,237) (3,178)
Repurchase of debt (89,046) –
Repurchase of common stock and common stock warrants (44,126) –

Net cash used in financing activities

(217,982) (3,178)
Net increase/(decrease) in cash and cash equivalents (100,831) 88,095
Cash and cash equivalents at beginning of year 502,836 389,226
Cash and cash equivalents at end of period $402,005 $477,321

Spot and Fixed TCE Rates Achieved and Revenue Days

The following tables provides a breakdown of TCE rates achieved for spot
and fixed charters and the related revenue days for the three months
ended March 31, 2016 and the comparable periods of 2016. Revenue days in
the quarter ended March 31, 2016 totaled 6,501 compared with 6,424 in
the prior year quarter. A summary fleet list by vessel class can be
found later in this press release.

Three Months Ended March 31, 2016 Three Months Ended March 31, 2015
Spot Fixed Total Spot Fixed Total
International Crude Tankers
ULCC
Average TCE Rate $ – $ 39,881 $ – $ –
Number of Revenue Days – 91 91 – – –
VLCC
Average TCE Rate $63,402 $ 42,372 $49,280 $ –
Number of Revenue Days 607 116 723 648 – 648
Aframax
Average TCE Rate $31,301 $ – $30,932 $ –
Number of Revenue Days 627 – 627 620 – 620
Panamax
Average TCE Rate $28,421 $20,975 $27,695 $14,007
Number of Revenue Days 448 272 720 348 354 702
Other Intl. Crude Tankers Revenue Days1 – – – 3 – 3
Total Intl. Crude Tankers Revenue Days 1,682 479 2,161 1,619 354 1,973
International Product Carriers
LR2
Average TCE Rate $28,341 $ – $26,755 $ –
Number of Revenue Days 90 – 90 90 – 90
LR1
Average TCE Rate $31,170 $20,426 $29,741 $15,732
Number of Revenue Days 91 266 357 90 270 360
MR
Average TCE Rate $16,200 $10,499 $18,846 $9,816
Number of Revenue Days 1,597 155 1,752 1,761 167 1,928
Total Intl. Product Carriers Revenue Days 1,778 421 2,199 1,941 437 2,378
U.S. Flag
Jones Act Handysize Product Carriers
Average TCE Rate $ – $64,498 $ – $64,777
Number of Revenue Days – 1,080 1,080 – 1,070 1,070
Non-Jones Act Handysize Product Carriers
Average TCE Rate $31,517 $19,016 $28,103 $ –
Number of Revenue Days 91 91 182 164 – 164
ATBs
Average TCE Rate $ – $37,870 $ – $38,429
Number of Revenue Days – 697 697 – 690 690
Lightering
Average TCE Rate $63,036 $ – $71,390 $ –
Number of Revenue Days 182 – 182 149 – 149
Total U.S. Flag Revenue Days 273 1,868 2,141 313 1,760 2,073
TOTAL REVENUE DAYS 3,733 2,768 6,501 3,873 2,551 6,424

1 Other International Crude Tankers revenue
days relate to the Company’s ULCC for the quarter ended March 31, 2015.

Fleet Information

As of March 31, 2016, OSG’s owned and operated fleet totaled 79
International Flag and U.S. Flag vessels (62 vessels owned and 17
chartered-in) compared with 79 at December 31, 2015. Those figures
include vessels in which the Company has a partial ownership interest
through its participation in joint ventures.

Vessels Owned Vessels Chartered-in Total at March 31, 2016
Vessel Type Number Weighted by
Ownership 		Number Weighted by
Ownership 		Total Vessels Vessels
Weighted by
Ownership 		Total Dwt2
Operating Fleet
FSO 2 1.0 – – 2 1.0 873,916
VLCC and ULCC 9 9.0 – – 9 9.0 2,875,798
Aframax 7 7.0 – – 7 7.0 787,859
Panamax 8 8.0 – – 8 8.0 557,187
International Flag Crude Tankers 26 25.0 – – 26 25.0 5,094,760
LR2 1 1.0 – – 1 1.0 109,999
LR1 4 4.0 – – 4 4.0 297,705
MR 13 13.0 7 7.0 20 20.0 955,979
International Flag Product Carriers 18 18.0 7 7.0 25 25.0 1,363,683
Total Int’l Flag Operating Fleet 44 43.0 7 7.0 51 50.0 6,458,443
Handysize Product Carriers 1 4 4.0 10 10.0 14 14.0 664,490
Clean ATBs 8 8.0 – – 8 8.0 226,064
Lightering ATBs 2 2.0 – – 2 2.0 91,112
Total U.S. Flag Operating Fleet 14 14.0 10 10.0 24 24.0 981,666
LNG Fleet 4 2.0 – – 4 2.0 864,800 cbm
Total Operating Fleet 62 59.0 17 17.0 79 76.0 7,440,109
and
864,800 cbm

1 Includes two owned shuttle tankers, one chartered in
shuttle tanker and two owned U.S. Flag Product Carriers that trade
internationally.

2 Total Dwt is defined as the total deadweight of all 79
vessels.

Reconciliation to Non-GAAP Financial Information

The Company believes that, in addition to conventional measures prepared
in accordance with GAAP, the following non-GAAP measures may provide
certain investors with additional information that will better enable
them to evaluate the Company’s performance. Accordingly, these non-GAAP
measures are intended to provide supplemental information, and should
not be considered in isolation or as a substitute for measures of
performance prepared with GAAP.

(A) Time Charter Equivalent (TCE) Revenues

Consistent with general practice in the shipping industry, the Company
uses TCE revenues, which represents shipping revenues less voyage
expenses, as a measure to compare revenue generated from a voyage
charter to revenue generated from a time charter. TCE revenues, a
non-GAAP measure, provides additional meaningful information in
conjunction with shipping revenues, the most directly comparable GAAP
measure, because it assists Company management in making decisions
regarding the deployment and use of its vessels and in evaluating their
financial performance. Reconciliation of TCE revenues of the segments to
shipping revenues as reported in the consolidated statements of
operations follow:

Three Months Ended March 31,

($ in thousands) 2016 2015
TCE revenues $236,922 $221,642
Add: Voyage Expenses 6,834 11,900
Shipping revenues $243,756 $ 233,542

(B) EBITDA and Adjusted EBITDA

EBITDA represents net income before interest expense, income taxes and
depreciation and amortization expense. Adjusted EBITDA consists of
EBITDA adjusted for the impact of certain items that we do not consider
indicative of our ongoing operating performance. EBITDA and Adjusted
EBITDA do not represent, and should not be considered a substitute for,
net income or cash flows from operations as determined in accordance
with GAAP. Some of the limitations are: (i) EBITDA and Adjusted EBITDA
do not reflect our cash expenditures, or future requirements for capital
expenditures or contractual commitments; (ii) EBITDA and Adjusted EBITDA
do not reflect changes in, or cash requirements for, our working capital
needs; and (iii) EBITDA and Adjusted EBITDA do not reflect the
significant interest expense, or the cash requirements necessary to
service interest or principal payments, on our debt. While EBITDA and
Adjusted EBITDA are frequently used as a measure of operating results
and performance, neither of them is necessarily comparable to other
similarly titled captions of other companies due to differences in
methods of calculation. The following table reconciles net income as
reflected in the condensed consolidated statements of operations, to
EBITDA and Adjusted EBITDA:

Three Months Ended March 31,

($ in thousands) 2016

2015

Net Income $50,739 $42,901
Income tax provision 33,239 2,660
Interest expense 22,659 28,569
Depreciation and amortization 43,083 37,119
EBITDA 149,720 111,249
Technical management transition costs – 40
Severance and relocation costs – 5
Gain on disposal of vessels and other property (157) (1,073)
Gain on repurchase of debt (2,332) –
Other costs associated with repurchase of debt 217 –
Reorganization items, net (17,910) 3,487
Adjusted EBITDA $129,538 $ 113,708

(C) Total Cash

($ in thousands) March 31,

2016

December 31,

2015

Cash and cash equivalents $402,005 $502,836
Restricted cash 14,576 19,572
Total Cash $416,581 $522,408

A, B, CReconciliations of these non-GAAP financial
measures are included in the financial tables attached to this press
release starting on Page 8.

For Overseas Shipholding Group, Inc.
Investor Relations &
Media:
Brian Tanner, 212-578-1645
btanner@osg.com