SOURCE: OceanFreight Inc.

OceanFreight Inc.

May 26, 2011 16:05 ET

OceanFreight Inc. Reports Financial Results for the First Quarter of 2011

ATHENS, GREECE--(Marketwire - May 26, 2011) - OceanFreight Inc. (NASDAQ: OCNF), a global provider of marine transportation services, today announced its financial results for the quarter ended March 31, 2011.

Financial Highlights

For the three-month period ended March 31, 2011 the Company reported a Net Income of $100,000 or 0.1 cent basic and diluted earnings per share. Included in these results is a loss of $1.0 million associated with the sale of M/T Olinda.

Excluding this item, net income for the first quarter of 2011 would amount to $1.1 million or 1 cent basic and diluted earnings per share.

Recent Developments

The previously announced sale of the M/T Olinda was cancelled due to the Buyers default. As a result the Company retained the initial deposit of approximately $1.9 million. Subsequently, on May 12th, 2011 the Company entered into a new contract to sell the vessel and on May 25th, 2011 the vessel was delivered to its new owners. The sale will result in an additional loss of $4 million which will be recorded in the second quarter of 2011.

Anthony Kandylidis, the Company's Chief Executive Officer, commented:

"We are happy to announce a profitable quarter for the first three months of 2011 despite the challenging environment that the drybulk market is facing today. This is a result of our conscious decision to lock our fleet in long term time charters, which today stand well above the spot and period freight rates. In May 2011 we also finalized the sale of the M/T Olinda, the last tanker in our fleet. The cancellation of the original sale illustrates the challenges in the industry where lack of financing for shipping transactions is becoming more evident."

First Quarter 2011 Results

For the first quarter ended March 31, 2011, Voyage Revenues amounted to $16.0 million and Operating Income amounted to $1.7 million. Net Income amounted to $0.1 million. Adjusted EBITDA(*) for the first quarter of 2011 was $6.5 million.

An average of 8.6 vessels were owned and operated during the first quarter of 2011, earning an average Time Charter Equivalent, or TCE rate, of $18,972 per day.

(*) Please see later in this release for a reconciliation of adjusted EBITDA to net cash provided by operating activities.

Fleet Data

                                              Three Months Ended
                                                  March 31,
                                              ------------------
                                                2010      2011
                                              --------  --------

                                              --------  --------
Average number of vessels (1)                     13.0       8.6
                                              --------  --------
Total voyage days for fleet (2)                  1,163       779
                                              --------  --------
Total calendar days for fleet (3)                1,170       786
                                              --------  --------
Time charter equivalent (TCE) daily rate (4)  $ 21,163  $ 18,972
                                              --------  --------
Fleet utilization (5)                             99.4%     99.1%
                                              --------  --------

(1) Average number of vessels is the number of vessels that constituted our
fleet for the relevant period, as measured by the sum of the number of days
each vessel was a part of our fleet during the period divided by the number
of calendar days in that period.
(2) Total voyage days for fleet are the total days the vessels were in our
possession for the relevant period net of off hire.
(3) Calendar days are the total days the vessels were in our possession for
the relevant period including off-hire days.
(4) Time charter equivalent rate, or TCE, is a measure of the average daily
revenue performance of a vessel on a per voyage basis. Our method of
calculating TCE is consistent with industry standards and is determined by
dividing gross revenues (net of voyage expenses) by voyage days for the
relevant time period. Voyage expenses primarily consist of port, canal and
fuel costs that are unique to a particular voyage, which would otherwise be
paid by the charterer under a time charter contract, as well as
commissions. TCE is a standard shipping industry performance measure used
primarily to compare period-to-period changes in a shipping company's
performance despite changes in the mix of charter types (i.e., spot
charters, time charters and bareboat charters) under which the vessels may
be employed between the periods.
(5) Fleet utilization is the percentage of time that our vessels were
available for revenue generating voyage days, and is determined by dividing
voyage days by fleet calendar days for the relevant period.


The following table reflects the calculation of our TCE daily rates for the
periods then ended:

(Dollars in thousands, except Average Daily results   Three Months Ended
 - unaudited)                                             March 31,
                                                    ----------------------
                                                       2010        2011
                                                    ----------  ----------

                                                    ----------  ----------
Voyage revenue and imputed deferred revenue             30,334      16,045
                                                    ----------  ----------
Loss on forward freight agreements                      (4,479)          -
                                                    ----------  ----------
Voyage expenses                                         (1,242)     (1,266)
                                                    ----------  ----------
Revenue on a time charter basis                         24,613      14,779
                                                    ----------  ----------

                                                    ----------  ----------
Total voyage days for fleet                              1,163         779
                                                    ----------  ----------

Time charter equivalent (TCE) daily rate            $   21,163  $   18,972
                                                    ----------  ----------


Financial Statements

The following are OceanFreight Inc.'s Consolidated Statements of Operations
for the three-month periods ended March 31, 2010 and 2011:


                                                      Three Months Ended
                                                          March 31,
(Dollars in thousands, except for share and per     ----------------------
 share data)                                           2010        2011
                                                    ----------  ----------
STATEMENT OF OPERATIONS DATA                        (unaudited) (unaudited)

Voyage revenues                                     $   28,805  $   16,045
Loss on forward freight agreements                      (4,479)          -
Imputed revenue                                          1,529           -
                                                    ----------  ----------
Gross revenue                                           25,855      16,045

Voyage expenses                                         (1,242)     (1,266)
Vessels operating expenses                             (10,568)     (7,019)
Depreciation                                            (6,748)     (4,104)
General and administrative expenses                     (1,197)     (1,983)
Gain on sale of vessels and vessels held for sale          985          56
                                                    ----------  ----------
Operating income                                         7,085       1,729
                                                    ==========  ==========

Interest income                                             69          81
Interest expense and finance costs                      (1,943)     (1,264)
Loss on derivative instruments                          (3,181)       (451)
                                                    ----------  ----------
Net income                                          $    2,030  $       95
                                                    ==========  ==========

Earnings per common share, basic and diluted        ¢      3.0  ¢      0.1

Weighted average number of common shares, basic and
 diluted (1)                                        59,346,520  83,266,655

(1) The weighted average number of common shares gives effect to the 3:1
    reverse stock split which took place on June 17, 2010.



The following are OceanFreight Inc.'s Consolidated Balance Sheets as of
December 31, 2010 and March 31, 2011:

(Dollars in thousands, except per share data)
                                                       2010        2011
                                                    ----------- -----------
ASSETS                                               (audited)  (unaudited)
CURRENT ASSETS:
  Cash and cash equivalents                         $     9,549 $    23,792
  Vessels held for sale                                  88,274      18,000
  Other current assets                                   11,931      11,758
                                                    ----------- -----------
    Total current assets                                109,754      53,550
                                                    ----------- -----------

FIXED ASSETS, NET:
  Vessels under construction                             46,618      47,842
  Vessels, net of accumulated depreciation              311,144     307,099
  Other, net of accumulated depreciation                    597         538
                                                    ----------- -----------
    Total fixed assets, net                             358,359     355,479
                                                    ----------- -----------

OTHER NON-CURRENT ASSETS
  Restricted cash                                         5,511       3,511
  Other non-current assets                                5,239       5,514
                                                    ----------- -----------
    Total assets                                        478,863     418,054
                                                    =========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Current portion of long-term debt                      82,331      37,934
  Other current liabilities                              28,980      14,528
                                                    ----------- -----------
    Total current liabilities                           111,311      52,462
                                                    =========== ===========

NON-CURRENT LIABILITIES:
  Derivative liability, net of current portion            4,875       5,096
  Long-term debt, net of current portion                127,441     124,449
                                                    ----------- -----------
    Total non-current liabilities                       132,316     129,545
                                                    =========== ===========



STOCKHOLDERS' EQUITY:                                   235,236     236,047
                                                    ----------- -----------
    Total liabilities and stockholders' equity          478,863     418,054
                                                    =========== ===========

Adjusted EBITDA Reconciliation

OceanFreight Inc. considers EBITDA to represent net income before interest, taxes, depreciation and amortization. Adjusted EBITDA excludes loss on sale of vessels and impairment on vessels. EBITDA and Adjusted EBITDA do not represent and should not be considered as an alternative to net income or cash flow from operations, as determined by U.S. GAAP and our calculation of EBITDA may not be comparable to that reported by other companies. Adjusted EBITDA is included in this earnings release because it is a basis upon which we assess our liquidity position, because it is used by our lenders as a measure of our compliance with certain loan covenants and because we believe that it presents useful information to investors regarding our ability to service and/or incur indebtedness.

The following table reconciles Net cash provided by operating activities to EBITDA as adjusted for the effect of the loss from the sale of vessels and impairment loss:

                                                       Three Months Ended
                                                            March 31,
(amounts in thousands of U.S. dollars)                  2010       2011
                                                      ---------  ---------

Net cash provided by/(used in) operating activities      11,956     (7,827)
Net increase/(decrease) in operating assets                (554)      (170)
Net (increase)/decrease in operating liabilities           (968)    11,608
Net interest expense                                      4,063      3,047
Amortization of deferred financing costs included in
 interest expense                                          (152)      (165)
                                                      ---------  ---------
Adjusted EBITDA                                          14,345      6,493
                                                      =========  =========


Fleet List

The table below describes our fleet and current employment profile as of
May 26, 2011:

                                               Gross
            Year                   Current   Rate per  Earliest    Latest
Vessel Name Built   DWT     Type  Employment    Day   Redelivery Redelivery
            ----- ------- -------- --------- -------- ---------- ----------

Drybulk Vessels

M/V Robusto  2006 173,949 Capesize        TC   26,000     Aug-14     Mar-18
M/V Cohiba   2006 174,200 Capesize        TC   26,250     Oct-14     May-18
M/V
 Montecristo 2005 180,263 Capesize        TC   23,500     May-14     Jan-18
M/V
 Partagas    2004 173,880 Capesize        TC   27,500     Jul-12     Dec-12
M/V Topeka   2000  74,710  Panamax        TC   15,000     Jan-12     Apr-13
M/V Helena   1999  73,744  Panamax        TC   32,000     May-12     Oct-16

Vessels to be
 Acquired
Newbuilding
 VLOC #1 (1) 2012 206,000 Capesize        TC   25,000     Apr-15     Apr-20
Newbuilding
 VLOC #2 (2) 2012 206,000 Capesize        TC   23,000     Aug-17     Aug-22
Newbuilding
 VLOC #3 (3) 2012 206,000 Capesize        TC   21,500     Oct-19     Oct-26
Newbuilding
 VLOC #4     2013 206,000 Capesize      Spot
Newbuilding
 VLOC #5     2013 206,000 Capesize      Spot


(1) Upon delivery of this vessel, Hull 1227, which is expected in the
    second quarter of 2012, the vessel is scheduled to commence time
    charter employment for a minimum period of three years at a gross
    daily rate of $25,000.

(2) Upon delivery of this vessel, Hull 1228, which is expected in the third
    quarter of 2012, the vessel is scheduled to commence time charter
    employment for a minimum period of five years at a gross daily rate of
    $23,000. In addition, the time charter contract provides for a 50%
    profit sharing arrangement when the daily Capesize average time charter
    rate is between $23,000 and $40,000 per day.

(3) Upon delivery of this vessel, Hull 1229, which is expected in the
    fourth quarter of 2012, the vessel is scheduled to commence time
    charter employment for a minimum period of seven years at a gross daily
    rate of $21,500. In addition, the time charter contract provides for a
    50% profit sharing arrangement when the daily Capesize average time
    charter rate is between $21,500 and $38,000 per day.

Conference Call and Webcast: Friday, May 27, 2011 at 08:30 A.M. EDT

OceanFreight management team will host a conference call on Friday, May 27, 2011, at 08:30 A.M. Eastern Daylight Time (EDT) to discuss the Company's financial results for the Quarter ended March 31, 2011.

Conference Call details:

Participants should Dial-Into the call 10 minutes before the scheduled time using the following numbers: 1 866 819 7111 (U.S. Toll Free Dial In), 0800 953 0329 (U.K. Toll Free Dial In) or +44 (0) 1452 542 301 (Standard International Dial In). Please quote "OceanFreight".

A telephonic replay of the conference call will be available until June 3, 2011 by dialing 1 866 247 4222 (U.S. Toll Free Dial -In), 0800 953 1533 (U.K. Toll Free Dial -In) or +44 (0) 1452 550 000 (Standard International Dial In). Access Code: 7445162#.

Slides and audio webcast:

There will also be a simultaneous live webcast over the Internet, through the OceanFreight Inc. website (www.oceanfreightinc.com). Participants to the live webcast should register on the website approximately 10 minutes prior to the start of the webcast.

About OceanFreight Inc.

OceanFreight Inc. is an owner and operator of drybulk vessels that operate worldwide. OceanFreight owns a fleet of eleven vessels, comprised of six drybulk vessels (four Capesize and two Panamaxes) and five newbuilding Very Large Ore Carriers (VLOC) with a combined deadweight tonnage of about 1.9 million tons.

OceanFreight Inc.'s common stock is listed on the NASDAQ Global Market where it trades under the symbol "OCNF". Visit our website at www.oceanfreightinc.com.

Forward-Looking Statement

Matters discussed in this release may constitute forward-looking statements. Forward-looking statements reflect our current views with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts.

The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management's examination of historical operating trends, data contained in our records and other data available from third parties. Although OceanFreight Inc. believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, OceanFreight Inc. cannot assure you that it will achieve or accomplish these expectations, beliefs or projections.

Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, general market conditions, including changes in charter hire rates and vessel values, changes in demand that may affect attitudes of time charterers to scheduled and unscheduled drydocking, changes in OceanFreight Inc.'s operating expenses, including bunker prices, dry-docking and insurance costs, or actions taken by regulatory authorities, potential liability from pending or future litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents and political events or acts by terrorists.

Risks and uncertainties are further described in reports filed by OceanFreight Inc. with the U.S. Securities and Exchange Commission.

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