Svein Moxnes Harfjeld - Chief Executive Officer Eirik Uboe - Chief Financial Officer and Principal Accounting Officer Trygve Preben Munthe - President

Petros Kalligas Jeff Rudner

Thank you. Good morning, and welcome to our second quarter earnings call.

I'm joined today by my business partner, Trygve Munthe; and our CFO, Eirik Uboe. Firstly, Eirik will present the Safe Harbor Provisions.

Eirik?

Thank you, Svein. This conference call is also being broadcast on our website at dhtankers.com, and a replay of this conference call will be available on the website.

In addition, our Form 6-K, embedded in this news release, will be filed with the SEC. As a reminder, this conference call contains forward-looking statements that are governed by the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements, which include statements regarding DHT's prospects; the outlook for tanker markets in general; expectations regarding daily charter hire rates and vessel utilization; forecasts of world economic activity; oil prices and oil trading patterns; expectations regarding seasonal fluctuations in tank demand; anticipated levels of new building and scrapping; and projected dry dock schedules, involve risks and uncertainties that are more fully described in our filings made with the SEC. Actual results may differ materially from expectations reflected in these forward-looking statements.

Svein?

Thank you, Eirik. We will now address the financial highlights of the quarter.

Following this, we will highlight how we are positioned for these continued tough times. Our EBITDA came in at $11 million with net income of $2.7 million and earnings per share of $0.02.

The earnings per share is calculated based on an average share count during the quarter of about $140 million and before the reverse stock split on a fully-converted basis. Adjusted for the reverse stock split, the earnings per share would have been $0.23.

We will pay a dividend of $0.24 per common share and $3.40 per preferred share for the quarter. The dividend will be payable on August 16 for shareholders of record as of August 9.

During the quarter, we have 3 VLCCs in the TI Pool, 2 for the full quarter and 1 from May. Our vessels generated average time charter-equivalent earnings of $25,000 per day.

The remainder of the fleet was either on time charters or long-term variable charters during the quarter. We commenced an equity offering in the first quarter that was backstopped by Anchorage Capital.

The offering and the concurrent private placement closed on May 2, generating net proceeds of approximately $76.2 million. At our Annual General Meeting, the shareholders voted to authorize a 12-for-1 reverse stock split of our common stock.

The reverse stock split became effective after the close of business on July 16. We prepaid $13.6 million under the credit facilities with DVB and DNB combined.

These prepayments was equal to all scheduled installments through 2014. Following the fleet appraisal for the second quarter, we repaid $18 million under the RBS facility.

Further and following the fleet appraisal for the third quarter conducted in early July, we repaid $3.1 million in July. The next scheduled installment under the RBS facility is on the third quarter of 2015.

DHT Regal completed its third special survey and dry dock on time and on budget and entered the TI Pool during the quarter. The Aframaxes Overseas Rebecca and Overseas Ania were both redelivered under that time charters, and subsequently, sold during the quarter.

We incurred a books loss in -- a book loss in the quarter of $1.4 million on the sale of the 2 vessels in the second quarter. A loss of $900,000 related to the Overseas Rebecca was recorded in the first quarter of 2012.

The proceeds from the sales were used to further reduce the outstanding debt under the RBS credit facility. The Aframax DHT Sophie was redelivered under its time charter in June 2012.

The vessel is currently trading in the stock market with the intention to enter into a pool during the second half of 2012. With that, I hand over to Trygve, who will highlight how we are positioned for these continued tough times.

Trygve?

Thank you, Svein. This is certainly difficult times in the tanker markets.

As we all know, we're suffering from oversupply with way too many new buildings coming into the market. When we combine this with a generally soft world economy, we believe the tanker market recovery is some time away.

We believe DHT is well-positioned for this market environment. As you've have heard us say numerous times, we have no scheduled installments until the first quarter of '15 and no debt maturities until 2016 and '17.

Further, we enjoy extraordinarily low interest rates on a large portion of our loans. As a matter fact, our current weighted average interest cost is only 3.16%, and that's all in.

This comes out to about $6.9 million per year or about $2,100 per day per shift. Importantly, once our last interest rate swaps comes to an end in January next year, the interest rate drops to 1.6% all in, and the annual interest cost to $3.5 million, which equates to a meager $1,100 per day per shift.

Of course, all else being equal. Value-to-loan covenants in our loan facilities have been cash consuming over the past 12 months, to say the least.

And it appears to have been a big uncertainty plaguing our stock performance. On the RBS facility, we have prepaid $75 million over the past 12 months.

On the other 2 facilities, we have voluntary prepaid $14 million to create headroom under the [indiscernible] losses. On the RBS facility, we are in compliance, but have little or no headroom, and are hence, exposed to potential further value declines.

And for your guidance, the balance of this loan is now $174 million. And just as a reminder, this loan sits in the subsidiary DHT Maritime, but without any guarantees from DHT Holdings.

With $70 million in cash on the balance sheet, which by the way, sits in DHT Holdings, we believe we have reasonable flexibility to remain in compliance with our loan facilities going forward. Shifting gears a little bit and looking at the top line.

I think it's important to note that we have 59% charter coverage for the second half of this year and at attractive rates. In fact, contracted revenue exceeds all cash costs for the second half.

That is if we earn absolutely nothing, $0 per day on the spot [ph] ships, we still expect to generate cash after vessel-operating expenses, G&A and interest for the second half of 2012. For 2013, the charter coverage is 29% of total tanker days.

This means that we expect to only need some $6,000 a day or thereabout on the spot ships to generate cash after OpEx, CapEx, G&A and interest for 2013. In conclusion, we're not particularly optimistic for the near future in the tanker market, but we believe DHT is well positioned to ride out the storm.

Number 1, we have one of the lowest cash break-even levels in the industry. Number 2, we have valuable contract coverage.

And if you take those 2 factors combined, it is reasonable to expect that we will generate positive cash from operations in 2013, and there are absolutely no scenarios. Number 3, we have a have a healthy balance sheet with net debt to churn [ph] from its value of about 50%.

And number 4, we have significant cash, which sits in DHT Holdings to handle potential further value to loan covenant issues. And importantly, about 80% of our bank debt sits as nonrecourse in our subsidiary, DHT Maritime.

With all this said, we continue to believe that this downturn, like all other downturns, will present some attractive investment opportunities. With a new cornerstone investor on the team, we believe we are now in position to turn these challenging markets into opportunities for DHT.

And with that, operator, we would now like to open up for questions.

Just 2 questions. First of all, what is your current share count please?

And the second question, do you see any opportunities -- I mean do you disposed of 2 vessels, would you be looking to replace these in the short term or in the medium term? And how would you proceed with doing that?

On your first question, subsequent to the reverse split, which took effect on July 16, the share count on a fully exchange basis mean that all the preferred shares are exchanged to common shares. The share count is about 11.7 million.

Without the preferred without -- without exchanging these?

Excuse me, excuse me, it's about 15 million. This was the average count for Q2 I referred to, but on a fully diluted and after reverse split, it's about 15 million shares, 15.3 million.

This includes also a conversion of Anchorage Capital's preferred stock.

So the current share count without sort of converting the shares is?

Just the common shares?

Yes, just the common shares.

12 -- 7.9 million, just the common -- after reversal.

And to your second question, probably in the sale of the 2 Aframaxes. These 2 ships were built '94, and are older.

And as a consequence of their age, but also their design and size, if you like. They have very limited, if any, opportunities in the current weak markets.

And with upcoming CapEx, we felt it was the best thing to do for the company to dispose of these ships. And as you stated, we have the business to expand the company, not necessarily replacing these ship types as such, but to grow the company through the downturn.

So have you actively looked at replacements, or do you believe you would do that at a later stage as tanker values go further south?

We are continuing to inspect the potential acquisition [indiscernible]. But we think that the time to invest is probably a little bit ahead of us.

So we are closely monitoring the markets, but what is key for us is to find the right assets at the right quality and build at the right yard, not necessarily trying to have the optimal timing. So good assets at a fair price, if you like.

So would further down the road mean 2013, or sort of in 2012?

It could mean this year as well as next year. So I think if we go and buy 1 more ship later this year, we do not perceive that to be an end game.

So we want to continue to grow the company over time.

We feel that time is enough...

Okay. Do you believe that you would be doing a follow-on offering in order to purchase further ships, or do you believe that you can buy ships as the company stands now?

I think that would largely depend on what type of projects that we will do whether it's a single-ship transaction or whether there will be a fleet of ships. But I think it's fair to say that with our ambitions to grow the company over time, the company would need additional capital.

But we, as management, are meaningful shareholders in the company, and we very much think like shareholders and want to ensure that those investments are in the best interest of the shareholders of the company.

First, just a follow-up to the previous gentleman's question. Can you go over again the share count?

I have the 11.7 million common shares assuming full exercising the preferred shares. And you said that upon conversion of Anchorage stock, would bring it up to 15.2 million?

That 15.3 million, assuming all preferred shares are changed to common. And after reverse stock split, the share count is about 15.3 million.

So as you might be aware now following the stock split, there's now an optional conversion available to holders of the preferred stock, and then we have a mandatory conversion on the preferred stock on June 30, 2013.

Okay, next question. Could you comment somewhat on the dividend policy going forward?

In connection with the equity offering that conducted in the first half of this year, the company communicated its intent to pay a dividend of $0.02 per quarter based on the previous share count. And that's the dividend -- the intention was communicated for 2012.

The company has stated that it will revert with its intent for 2013 and onwards.

Okay that last comment, the company will what, going forward in 2013?

The company will revert at a later stage with its intent for 2013 onwards.

Okay. And last question, can you comment a bit on the reverse stock split, why the number 12-for-1 or 1-for-12 was picked as opposed to some other number?

My question of concern is that my understanding is reverse split was done primarily to remain in compliance with the New York Stock Exchange notice of noncompliance with the stock selling under $1 a share. Now theoretically, having a 1-for-2 reverse split would've accomplished that, but a 1-for-12 reverse split, I'm just wondering how you came to that number of 1-for-12 as opposed to any other number?

I think it's fair to say that there is no exact science as to how to do this. I think there were several things that the company wanted to achieve by this, and the company obtained advice from financial advisors in what to look for.

I think we wanted to have a smaller number of share count, in general, not only going above the $1 dollar lifting requirement by the New York Stock Exchange. We also have been advised as to in what kind of share price territory would stock potentially be more attractive to various institutions, et cetera.

So again, there's no specific signs and detailed analysis that the company will lay out to the market. But the following deliberations was taken, and this was viewed as an appropriate ratio to apply.

Okay. My concern, and I guess next question.

Generally speaking, when a company has a large reverse stock split, generally speaking, more than 1-for 10 -- 1-for-10 or more, the price of the stock going forward tends to be worth less than the previous presplit stock. And unfortunately, in this case, with yesterday's close of $6.08, the stock is selling at an all time low, at least as best as I can tell, which makes it $0.50 a share on the old stock.

Are you generally concerned about the weakness in the stock following the split, and do you the have any plans or suggestions as to how the company might improve the price of the stock?

I think when this was discussed in the past with advisors also, there are various statistics to consider and some companies fare well, some companies do not fare so well immediately after this. I think the general development of our stock price right now is more reflective of the current tanker market and also with some of our peers, how they're performing.

So I think it's very hard for us to kind of isolate DHT, so capital market performance in the short term promotes happening around us despite the company having a very healthy balance sheet and a significant cash at hand.

Thank you very much. And to manage -- for us to say thank you to everybody, who attended this call.

And thank you for your continued interest in DHT. Have a good day.