Overseas Shipholding Group Reports Second Quarter 2008 Results

For the quarter ended June 30, 2008, TCE revenues(1) were $386.1 million a $111.9 million, or 41% increase from $274.2 million for the same period of 2007. The growth in TCE revenues was driven by significant counter seasonal spot charter rate increases for the Company's VLCCs and Aframaxes, sectors which accounted for more than $73.1 million of the quarter-over-quarter increase in TCE revenues. Spot charter rates for VLCCs increased by 82% to $98,747 per day, with rates for Aframaxes increasing by 75% to $55,543 per day. In addition, revenue days in the International Crude Oil and Product Carrier segments each increased quarter-over-quarter by approximately 450 days. EBITDA(1) for the quarter increased 1% to $150.7 million from $148.5 million in the comparable period of 2007. Net income for the period increased 10% to $86.9 million, and diluted EPS increased 23% to $2.81 per share compared with $79.0 million or $2.28 per share for the same period a year ago. Net income in the second quarter of 2008 benefited from a gain on vessel sales of $23.7 million or $0.76 per diluted share, which was offset by unrealized losses on freight derivative positions of $29.0 million or $0.92 per diluted share, and a charge of $9.4 million or $0.20 per share related to the premium paid and the write-off of deferred financing charges in connection with the May 15, 2008 redemption of the Company's 8.25% Senior Notes due March 2013. Net income in the second quarter of 2007 reflected a gain on vessel sales of $5.6 million or $0.16 per diluted share. The second quarter of 2007 also benefited from the sale of the remaining 8.7 million shares of DHT Maritime, Inc., formerly Double Hull Tankers, Inc. (NYSE: DHT), in which OSG held a minority interest, which resulted in a gain of approximately $26.3 million or $0.49 per diluted share. Period-over-period diluted EPS also benefited from the Company's repurchase of 7.7% of total shares outstanding since June 30, 2007.

Morten Arntzen, President and CEO of OSG commented, ""The crude oil tanker market saw unprecedented levels of strength in the first half of 2008, primarily due to OPEC production increases. This resulted in a significant pick-up in long haul movements at the same time as single hull discrimination increased, creating a strong freight rate environment. On the product tanker side, rates were lifted by a surge in diesel movements worldwide." Arntzen continued, "Market conditions continue to create a very strong outlook for our crude tankers and the prospects for our other two main businesses are equally compelling. Our investments in the U.S. Flag segment and its 14-vessel newbuild program will nearly double the unit's revenues in three years. In the next 12 months our International Flag Product Carrier business will transform as 13 bareboat chartered-in, non-double hull ships are replaced with modern double hull ships having much greater earnings capacity and the LR1 fleet expands. Our world-class technical and commercial platform, fleet portfolio and ample opportunities to further scale our business gives me and the OSG management team a lot to be excited about."

(1)See Appendix 1 for a reconciliation of TCE revenues to shipping revenues and Appendix 2 for a reconciliation of EBITDA to net income.

For the first six months ended June 30, 2008, the Company reported a 43% increase in TCE revenues to $761.9 million from $533.4 million in the comparable period of 2007. EBITDA for the first six months of 2008 increased 12% to $329.1 million from $294.6 million in the first six months of 2007. Net income increased 22% to $199.4 million for the first six months of 2008 compared with $163.6 million in the first half of 2007. Diluted earnings per share increased 45% to $6.42 from $4.44 in the first half of 2008 compared with the same period a year ago. The first six months of 2008 benefited from a gain on vessel sales of $23.7 million or $0.75 per diluted share, offset by unrealized losses on freight derivative positions of $29.5 million or $0.93 per diluted share, and the charge of $9.4 million related to the bond redemption previously referenced. The first six months of 2007 benefited from gains on sales of securities of $41.3 million or $0.73 per diluted share, and a gain on vessel sales of $5.6 million, or $0.15 per diluted share.

TCE revenues in the second quarter of 2008 for the International Crude Oil segment were $255.0 million, an increase of $94.7 million, or 59% from $160.3 million in the same period of 2007. The increase was principally due to the significant increases in average rates earned by VLCCs and Aframaxes. In addition, the Company's expansion into Suezmaxes late in 2007 added more than $11.1 million to the segment's TCE revenues in the second quarter. TCE revenues for the International Product Carrier segment were $71.6 million, up $12.4 million or 21% from $59.2 million in the year earlier period. The growth was principally attributable to an increase in revenue days, reflecting in part the addition of two LR1s in the third quarter of 2007. TCE revenues from the U.S. segment were $51.7 million, up $2.9 million or 6%, from $48.8 million in the same quarter a year earlier. This reflects the delivery of the three Handysize Product Carriers, offset by the sale of two dry bulk carriers and the reflagging of one car carrier under the Marshall Islands flag in 2007. The balance of TCE revenues were derived from the Company's two International Flag dry bulk carriers and, in 2008, the one reflagged car carrier.

OSG operates most of its crude oil tankers in commercial pooling arrangements (Pools). The Pools' cargo commitments make them attractive, but such commitments limit the Pools' ability to support any significant portfolio of time charters. Accordingly, OSG enters into forward freight agreements (FFA) and bunker swaps to create synthetic time charters. The results of derivative positions that qualify for hedge accounting treatment and are effective are reflected in TCE revenues in the periods to which such hedges relate. Including such positions, the Company achieved TCE rates for VLCCs of $73,832 per day for 609 days for the second quarter of 2008. The June 30, 2008 mark-to-market for derivative positions through 2010 that qualify for hedge accounting treatment are recorded in accumulated other comprehensive income (stockholders' equity). The actual results of these hedge positions will be reflected in the Company's earnings in the periods to which the positions relate, essentially creating fixed charter revenues.(2) The results of derivative positions that do not qualify for hedge accounting treatment are reflected in other income/(expense) and resulted in an expense of $42.4 million in the quarter ended June 30, 2008, including mark-to-market unrealized losses at June 30, 2008 of $30.4 million.

(2)See Appendix 4 and 5 for fixed rates of synthetic time charters.

Income from vessel operations was $146.8 million in the second quarter of 2008, a 118% increase from $67.3 million in the same period a year earlier. During the period, total operating expenses increased 21%, or $48.7 million, to $281.4 million from $232.7 million in the corresponding quarter in 2007. Voyage expenses increased by $16.3 million, principally as a result of higher fuel expenses. Vessel expenses increased $8.9 million quarter-over-quarter primarily due to higher crew costs associated with the Company's continuing efforts to attract and retain high quality crews. Charter-hire expense increased 52% to $103.4 million from $67.9 million in the second quarter of 2007 principally due to 11 additional ships chartered-in in the second quarter 2008 compared with the same period a year ago. In addition, profit share, a component of charter-hire expense, increased $9.8 million period-over-period due to significantly higher TCE rates than the comparable quarter in 2007. Depreciation and amortization expense of $47.3 million in the second quarter of 2008 reflects the impact of an increase in estimated salvage value of the Company's owned fleet effective January 1, 2008. This change in estimate reduces depreciation by approximately $2.7 million per quarter commencing in the first quarter of 2008. As previously indicated, the quarter-over-quarter increase in gains on vessel sales positively impacted the change in income from vessel operations.

FINANCIAL HIGHLIGHTS

$200 Million Share Repurchase Program Complete and New Program Announced. During the second quarter the Company completed its 2007 share repurchase program and repurchased 280,000 shares at an average price per share of $77.48. On June 9, 2008 the Board of Directors authorized a new share purchase program of $250 million and during the quarter repurchased 150,000 shares at an average price of $77.40. Since the initial announcement of its share repurchase program on June 9, 2006, the Company has repurchased 9.4 million shares at an average price of $66.42 per share, or 23.8% of total shares outstanding, at a total cost of $625 million.

Dividend Increased. On June 9, 2008, OSG increased its regular quarterly dividend by 40% to $0.4375 per share from $0.3125 per share on its outstanding common stock. The August dividend of $0.4375 per share will be payable on August 27, 2008 to stockholders of record on August 6, 2008. The increase results in an indicated annual rate of $1.75 per share.

Bond Redemption. On April 7, 2008, OSG announced the redemption of all $176,115,000 principal outstanding of its 8.25% Senior Notes due 2013. The redemption price was 104.125% of the principal amount of the Notes together with accrued and unpaid interest as of the redemption date, which was May 15, 2008. This redemption will reduce the Company's interest expense by approximately $7.0 million per annum through March 2013.

Cash Repatriated. During the quarter, OSG repatriated approximately $545 million in cash from its foreign subsidiaries, principally to repay a portion of its outstanding long-term revolving credit debt.

Future Locked-in Revenue. Future revenues associated with noncancelable term charters as of June 30, 2008 totaled $1.6 billion including time charters entered into by the Aframax International pool and fixed rate contracts of affreightment from the U.S. Flag lightering operation. Additionally, future revenues from term contracts of the Gas segment and the FSO project total approximately $1.8 billion and will be recognized in equity in income from affiliated companies.

RECENT ACTIVITIES AND QUARTERLY EVENTS

Crude Oil Tankers

Vessel Deliveries

On April 23, 2008, OSG time chartered in the Mare Salernum, a 111,000 dwt Aframax tanker for two years through 2010. OSG has a 40% interest in the vessel, which began trading in the Aframax International commercial pool upon delivery.

On May 7, 2008 and June 16, 2008, the Peak and the Wind, two 116,000 dwt Aframax tankers, delivered to OSG, respectively. OSG has a 50% interest in both vessels, which have been time chartered in through May and June 2011. The vessels joined the Aframax International commercial pool upon delivery, bringing the pool's aggregate vessel count to 46.

Vessel Sales and Purchases

On May 15, 2008, the Company sold the Pacific Ruby, a 1994-built Aframax tanker. The Company recognized a gain of approximately $13.0 million at the time of sale.

In May 2008, a joint venture arrangement that was constructing two VLCC newbuilds was terminated. In connection therewith, one of the two joint venture subsidiaries, which was constructing the (TBN) Overseas Everest, a 297,000 dwt tanker, was distributed to the Company. The vessel, scheduled to deliver in the first quarter of 2010, is now 100% owned by OSG.

On July 17, 2008, OSG entered into an agreement to purchase two 298,000 dwt VLCC tankers to be built at Dalian Shipbuilding Industry Co, Ltd. The vessels, scheduled for delivery in June and October of 2011, will join the Tankers International pool upon delivery.

Commercial Pools

On June 2, 2008, OSG announced the formation of Suezmax International, a commercial pool initially consisting of four Suezmax tankers, with Seaarland Shipping Management B.V., a privately held shipping company based in Amsterdam, the Netherlands. In addition, seven newbuild Suezmax tankers are expected to join the pool upon their expected delivery dates. Four 156,000 dwt sister ships under construction at Jiangsu Rongsheng Heavy Industries Group in Nantong, China are expected to deliver commencing in 2009, two chartered in by OSG and two by Seaarland. Seaarland has also ordered three 165,000 dwt sister ships at Hyundai Heavy Industries, South Korea, that are expected to deliver in the second, third and fourth quarters of 2011. The formation of Suezmax International follows OSG's successful strategy of building scale in key trading areas to provide superior, reliable service to its customers. Seaarland has been a long-term member in another commercial pool OSG participates in, Aframax International.

As a result of strong market conditions, in the last two months Aframax International has time chartered in seven modern Aframax tankers for one year each. The pool, which OSG commercially manages and has a 43% interest in, continues to focus on growing its fleet, expanding its cargo systems and strengthening its trading position in the Atlantic Basin. The Aframax International pool is expected to reach 50 vessels by the end of 2008.

Product Carriers

Vessel Deliveries

On June 17, 2008, OSG took delivery of the Overseas Sifnos, a 50,000 dwt Handysize product carrier, under a 10-year bareboat charter-in arrangement. OSG has a 100% interest in the vessel.

On May 2, 2008 and June 5, 2008, OSG took delivery of the Atlantic Aquarius and Atlantic Leo, respectively, two 47,000 dwt Handysize product carriers, each under a seven-year time charter-in arrangement. OSG has a 100% interest in both vessels and has renewal options exercisable at the end of each vessel's charter.

Vessel Sale and Redelivery

On April 17, 2008, the Company sold the Overseas Aquamar, a 1998-built Handysize product carrier. The Company recognized a gain of approximately $9.9 million at the time of sale.

On July 16, 2008, the Overseas Uranus, a 1988-built bareboat chartered-in Handysize Product Carrier was redelivered.

U.S. Fleet

Vessel Deliveries

On April 11, 2008, OSG America took delivery of the Overseas New York, a 46,817 dwt U.S. Flag Jones Act Product Carrier. The vessel is on a seven-year bareboat charter-in arrangement and the Company has extension options for the life of the vessel. The vessel has been chartered out to Shell for three years and began trading on April 21, 2008.

On April 24, 2008, OSG America took delivery of the OSG 243, an ATB that has been converted from single hull to double hull.

Fleet Activity

On June 25, 2008, OSG America L.P. a master limited partnership in which the Company owns a 75.5% interest, purchased the Overseas Philadelphia and New Orleans, which were previously bareboat-chartered in and classified as capital leases.

Vessel Sale

On May 21, 2008, the Company sold the M215, its last remaining single hull ATB. A gain of $745 thousand was recognized upon the sale of the vessel.

FLEET METRICS AND CORPORATE STATISTICS

As of June 30, 2008, OSG's owned or operated fleet totaled 121 International Flag and U.S. Flag vessels compared with 107 at June 30, 2007. Fifty percent, or 60 vessels, were owned as of June 30, 2008, with the remaining vessels bareboat or time chartered in. OSG's newbuild program of chartered-in and owned vessels totaled 35 vessels across its Crude Oil, Product and U.S. Flag lines of business. A detailed fleet list and updates on vessels under construction can be found in the Fleet section of www.osg.com.

Revenue days in the quarter ended June 30, 2008 totaled 9,648 compared with 8,704 in the same period a year earlier. The increase principally reflects the addition of 14 vessels since June 30, 2007. Revenue days by segment can be found in Spot and Fixed TCE Rates Achieved and Revenue Days, later in this press release.

FINANCIAL PROFILE

At June 30, 2008, stockholders' equity approximately $1.9 billion and liquidity, including undrawn bank facilities, exceeded $1.6 billion. Total long-term debt as of June 30, 2008 was $1.2 billion, down more than $300 million from December 31, 2007. Liquidity adjusted debt to capital was 32.4% as of June 30, 2008, substantially unchanged from 32.6% as of December 31, 2007. Liquidity adjusted debt is defined as long-term debt reduced by cash and the Capital Construction Fund.

SPOT AND FIXED TCE RATES ACHIEVED AND REVENUE DAYS

The following table provides a breakdown of TCE rates achieved for the three months ended June 30, 2008 and 2007 for the International Crude Oil and Product Carrier segments between spot and fixed charter rates and the related revenue days. The Company has entered into FFAs and related bunker swaps as hedges against the volatility of earnings from operating the Company's VLCCs and Aframaxes in the spot market. These derivative instruments create synthetic time charters because their impact is to effectively lock in a level of TCE earnings. From the perspective of a vessel owner such as the Company, the results of these synthetic time charters are substantially equivalent to results from time chartering vessels in the physical market. The impact of these derivatives, which qualify for hedge accounting treatment under FAS 133, are now reported together with time charters entered in the physical market under "Fixed Earnings." The information in these tables is based, in part, on information provided by the pools or commercial joint ventures in which the segment's vessels participate.

Three Months Ended Jun. Three Months Ended Jun. 30, 30, 2008 2007 ----------------------------------------------------- Spot Fixed Spot Fixed Earnings Earnings Total Earnings Earnings Total ---------------------------------------------------------------------- Business Unit - Crude Oil ---------------------------------------------------------------------- VLCC(1) Average TCE Rate $98,747 $73,832 $54,353 $-- Number of Revenue Days 819 609 1,428 1,377 -- 1,377 Suezmax Average TCE Rate $61,098 $-- $-- $-- Number of Revenue Days 182 -- 182 -- -- -- Aframax Average TCE Rate $55,543 $30,235 $31,797 $29,348 Number of Revenue Days 819 325 1,144 612 530 1,142 Aframax - Lightering Average TCE Rate $30,717 $-- $32,764 $-- Number of Revenue Days 656 -- 656 523 -- 523 Panamax(2) Average TCE Rate $35,625 $26,492 $34,287 $24,573 Number of Revenue Days 544 452 996 390 527 917 Other Crude Oil Revenue Days 182 -- 182 182 -- 182 ----------------------------------------------------- Total Crude Oil Revenue Days 3,266 1,322 4,588 3,084 1,057 4,141 ---------------------------------------------------------------------- Business Unit - Refined Petroleum Products ---------------------------------------------------------------------- Panamax Average TCE Rate $35,140 $18,625 $-- $18,761 Number of Revenue Days 182 180 362 -- 182 182 Handysize Average TCE Rate $25,131 $20,799 $29,785 $18,998 Number of Revenue Days 1,031 1,811 2,842 725 1,850 2,575 ----------------------------------------------------- Total Refined Pet. Products Rev. Days 1,213 1,991 3,204 725 2,032 2,757 ---------------------------------------------------------------------- Business Unit - U.S. Flag ---------------------------------------------------------------------- Number of Revenue Days 632 951 1,583 668 956 1,624 ---------------------------------------------------------------------- Other - Number of Revenue Days -- 273 273 -- 182 182 ---------------------------------------------------------------------- TOTAL REVENUE DAYS 5,111 4,537 9,648 4,477 4,227 8,704 ----------------------------------------------------------------------

(1)Excludes ULCCs. The revenue days for the ULCCs are included in Other Crude Oil. (2)Includes one vessel performing a bareboat charter out during the three months ended June 30, 2008.

CONSOLIDATED STATEMENTS OF OPERATIONS ($ in thousands, except per share amounts) Three Months Ended Six Months Ended ----------------------------------------------- Jun. 30, Jun. 30, Jun. 30, Jun. 30, 2008 2007 2008 2007 ----------------------------------------------- Shipping Revenues: Pool revenues $244,182 $138,973 $469,182 $276,776 Time and bareboat charter revenues 90,374 90,447 182,861 175,381 Voyage charter revenues 93,668 70,577 186,857 123,124 ----------------------------------------------- 428,224 299,997 838,900 575,281 ----------------------------------------------- Operating Expenses: Voyage expenses 42,110 25,763 76,952 41,863 Vessel expenses 77,785 68,858 150,654 129,672 Charter hire expenses 103,368 67,949 194,039 117,365 Depreciation and amortization 47,315 44,099 94,906 86,582 General and administrative 34,509 31,687 71,794 60,725 Gain on disposal of vessels (23,686) (5,623) (23,691) (5,620) ----------------------------------------------- Total Operating Expenses 281,401 232,733 564,654 430,587 ----------------------------------------------- Income from Vessel Operations 146,823 67,264 274,246 144,694 Equity in Income of Affiliated Companies 4,048 2,885 5,377 6,269 ----------------------------------------------- Operating Income 150,871 70,149 279,623 150,963 Other Income/(Expense) (46,404) 34,290 (43,435) 57,048 ----------------------------------------------- 104,467 104,439 236,188 208,011 Interest Expense 17,191 18,281 35,554 31,449 ----------------------------------------------- Income before Minority Interest and Income Taxes 87,276 86,158 200,634 176,562 Minority interest (1,112) -- (2,035) -- ----------------------------------------------- Income before Income Taxes 86,164 86,158 198,599 176,562 (Provision)/Credit for Income Taxes 771 (7,166) 771 (12,918) ----------------------------------------------- Net Income $86,935 $78,992 $199,370 $163,644 =============================================== Weighted Average Number of Common Shares Outstanding: Basic 30,615,359 34,404,900 30,861,429 36,733,878 Diluted 30,895,367 34,622,798 31,072,727 36,895,084 Per Share Amounts: Basic net income $2.84 $2.30 $6.46 $4.45 Diluted net income $2.81 $2.28 $6.42 $4.44 Cash dividends declared $0.75 $0.5625 $1.0625 $0.8125

TCE REVENUE BY SEGMENT

The following table reflects TCE revenues generated by the Company's three reportable segments for the three and six months ended June 30, 2008 and 2007 and excludes the Company's proportionate share of TCE revenues of affiliated companies. See Appendix 1 for reconciliations of Time Charter Equivalent Revenues to Shipping Revenues.

Three Months Ended Jun. 30, ------------------------------- % of % of ($ in thousands) 2008 Total 2007 Total ---------------------------------------------------------------------- International Flag Crude Tankers $254,950 66.0 $160,310 58.5 Product Carriers 71,597 18.6 59,223 21.6 Other 7,887 2.0 5,933 2.1 U.S. 51,680 13.4 48,768 17.8 ------------------------------- Total TCE Revenues $386,114 100.0 $274,234 100.0 =============================== Six Months Ended Jun. 30, ------------------------------- % of % of ($ in thousands) 2008 Total 2007 Total ---------------------------------------------------------------------- International Flag Crude Tankers $503,810 66.1 $307,112 57.6 Product Carriers 138,004 18.1 117,121 22.0 Other 15,666 2.1 10,815 2.0 U.S. 104,468 13.7 98,370 18.4 ------------------------------- Total TCE Revenues $761,948 100.0 $533,418 100.0 ===============================

INCOME FROM VESSEL OPERATIONS BY SEGMENT

The following table reflects income from vessel operations for the three and six months ended June 30, 2008 and 2007 accounted for by each reportable segment. Income from vessel operations is before general and administrative expenses, gain on disposal of vessels and the Company's share of income from affiliated companies.

Three Months Ended Jun. 30, ----------------------------- % of % of ($ in thousands) 2008 Total 2007 Total ---------------------------------------------------------------------- International Flag Crude Tankers $135,345 85.9 $68,891 73.8 Product Carriers 15,972 10.1 13,874 14.9 Other 2,084 1.3 1,258 1.3 U.S. 4,245 2.7 9,305 10.0 ----------------------------- Total Income from Vessel Operations $157,646 100.0 $93,328 100.0 ============================= Six Months Ended Jun. 30, -------------------------------- % of % of ($ in thousands) 2008 Total 2007 Total ---------------------------------------------------------------------- International Flag Crude Tankers $271,850 84.3 $145,132 72.6 Product Carriers 31,348 9.7 30,457 15.2 Other 4,464 1.4 1,415 0.8 U.S. 14,687 4.6 22,795 11.4 -------------------------------- Total Income from Vessel Operations $322,349 100.0 $199,799 100.0 ================================

Reconciliations of income from vessel operations of the segments to income before income taxes as reported in the consolidated statements of operations follow:

Three Months Ended Six Months Ended Jun. 30, Jun. 30, -------------------------------------- ($ in thousands) 2008 2007 2008 2007 ---------------------------------------------------------------------- Total income from vessel operations of all segments $157,646 $93,328 $322,349 $199,799 General and administrative expenses (34,509) (31,687) (71,794) (60,725) Gain on disposal of vessels 23,686 5,623 23,691 5,620 -------------------------------------- Consolidated income from vessel operations 146,823 67,264 274,246 144,694 Equity in income of affiliated companies 4,048 2,885 5,377 6,269 Other income/(expense) (46,404) 34,290 (43,435) 57,048 Interest expense (17,191) (18,281) (35,554) (31,449) Minority Interest (1,112) -- (2,035) -- -------------------------------------- Income before federal income taxes $86,164 $86,158 $198,599 $176,562 ======================================

CONSOLIDATED BALANCE SHEETS Jun. 30, Dec. 31, ($ in thousands) 2008 2007 --------------------- ASSETS Current Assets: Cash and cash equivalents $219,524 $502,420 Voyage receivables 252,452 180,406 Other receivables, including income taxes recoverable 83,447 84,627 Inventories, prepaid expenses and other current assets 66,504 37,300 --------------------- Total Current Assets 621,927 804,753 Capital Construction Fund 103,639 151,174 Vessels and other property, less accumulated depreciation 2,706,499 2,691,005 Vessels under capital leases, less accumulated amortization 2,151 24,399 Vessels held for sale 48,819 - Deferred drydock expenditures, net 83,629 81,619 --------------------- Total Vessels, Deferred Drydock and Other Property 2,841,098 2,797,023 --------------------- Investments in Affiliated Companies 86,446 131,905 Intangible Assets, less accumulated amortization 110,333 114,077 Goodwill 72,463 72,463 Other Assets 154,235 87,522 --------------------- Total Assets $3,990,141 $4,158,917 ===================== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable, sundry liabilities and accrued expenses $195,802 $178,837 Current installments of long-term debt 26,143 26,058 Current obligations under capital leases 2,102 8,406 --------------------- Total Current Liabilities 224,047 213,301 Long-term Debt 1,229,654 1,506,396 Obligations under Capital Leases 30 24,938 Deferred Gain on Sale and Leaseback of Vessels 169,629 182,076 Deferred Income Taxes and Other Liabilities 341,138 281,711 Minority Interest 130,279 132,470 Stockholders' Equity 1,895,364 1,818,025 --------------------- Total Liabilities and Stockholders' Equity $3,990,141 $4,158,917 =====================

CONSOLIDATED STATEMENTS OF CASH FLOWS Six Months Ended ($ in thousands) Jun. 30, ------------------- 2008 2007 ------------------- Cash Flows from Operating Activities: Net income $199,370 $163,644 Items included in net income not affecting cash flows: Depreciation and amortization 94,906 86,582 Amortization of deferred gain on sale and leasebacks (24,510) (23,561) Deferred compensation relating to restricted stock and stock option grants 6,104 4,606 Provision for deferred income taxes 1,437 5,668 Unrealized losses on forward freight agreements and bunker swaps 29,500 2,310 Undistributed earnings of affiliated companies 379 7,717 Other - net (3,506) 1,357 Items included in net income related to investing and financing activities: (Gain)/loss on sale of securities - net 6 (41,285) Gain on disposal of vessels (23,691) (5,620) Payments for drydocking (27,613) (24,690) Distributions from subsidiaries to minority owners (4,168) -- Changes in operating assets and liabilities (156,485) (43,379) ------------------- Net cash provided by operating activities 91,729 133,349 ------------------- Cash Flows from Investing Activities: Purchases of marketable securities (11,311) -- Expenditures for vessels (252,260) (149,991) Withdrawals from Capital Construction Fund 49,830 106,700 Proceeds from disposal of vessels 216,884 117,548 Acquisition of Heidmar Lightering -- (38,375) Expenditures for other property (7,207) (4,848) Investments in and advances to affiliated companies (5,734) (27,934) Proceeds from disposal of investments in affiliated companies -- 194,815 Distributions from affiliated companies 19,960 -- Other - net 3 367 ------------------- Net cash provided by investing activities 10,165 198,173 ------------------- Cash Flows from Financing Activities: Purchases of treasury stock (57,551) (427,618) Issuance of debt, net of issuance costs 59,000 267,000 Payments on debt and obligations under capital leases (366,875) (17,680) Cash dividends paid (19,385) (18,163) Issuance of common stock upon exercise of stock options 398 317 Other - net (377) (20) ------------------- Net cash used in financing activities (384,790) (196,164) ------------------- Net increase/(decrease) in cash and cash equivalents (282,896) 135,358 Cash and cash equivalents at beginning of year 502,420 606,758 ------------------- Cash and cash equivalents at end of period $219,524 $742,116 ===================

FLEET

On June 30, 2008, OSG's fleet totaled 156 vessels, including 35 newbuilds, aggregating 15.3 million deadweight tons and 865,000 cbm of LNG carrier capacity. Adjusted for OSG's participation interest in joint ventures and chartered-in vessels, the fleet totaled 145 vessels. See the Company's website at www.osg.com for a detailed fleet list, which is updated on a quarterly basis upon release of earnings.

Vessels Vessel Type Vessels Owned Chartered-in ---------------------------------------------------------------------- Weighted Weighted by by Operating Fleet Number Ownership Number Ownership ---------------------------------------------------------------------- VLCC (including ULCC) 10 10.0 10 7.5 Suezmax -- -- 2 2.0 Aframax 4 4.0 15 10.0 Panamax 9 9.0 2 2.0 Lightering 2 2.0 2 1.0 --------------------------------- International Flag Crude Tankers 25 25.0 31 22.5 Panamax Product Carriers 4 4.0 -- -- Handysize Product Carriers(1) 10 10.0 24 24.0 --------------------------------- International Flag Product Carriers 14 14.0 24 24.0 Car Carrier 1 1.0 -- -- International Bulk Carriers -- -- 2 2.0 --------------------------------- International Flag Other 1 1.0 2 2.0 ---------------------------------------------------------------------- Total Int'l Flag Operating Fleet 40 40.0 57 48.5 ---------------------------------------------------------------------- Handysize Product Carriers 5 5.0 4 4.0 Clean ATBs 8 8.0 -- -- Lightering: Crude Carrier 1 1.0 -- -- ATBs 2 2.0 -- -- ---------------------------------------------------------------------- Total U.S. Flag Operating Fleet 16 16.0 4 4.0 ---------------------------------------------------------------------- LNG Carriers 4 2.0 -- -- ---------------------------------------------------------------------- TOTAL OPERATING FLEET 60 58.0 61 52.5 ---------------------------------------------------------------------- Newbuild Fleet ---------------------------------------------------------------------- International Flag VLCC 1 1.0 -- -- Suezmax -- -- 2 2.0 Aframax 4 4.0 -- -- Panamax Product Carriers 6 6.0 -- -- Handysize Product Carriers 2 2.0 6 6.0 U.S. Flag Product Carriers -- -- 8 8.0 Clean ATBs 3 3.0 -- -- Lightering ATBs 3 3.0 -- -- ---------------------------------------------------------------------- TOTAL NEWBUILD FLEET 19 19.0 1616.0 ---------------------------------------------------------------------- TOTAL OPERATING AND NEWBUILD FLEET 79 77.0 7768.5 --------------------------------- Vessel Type Total at Jun. 30, 2008 ---------------------------------------------------------------------- Vessels Weighted Total by Total Operating Fleet Vessels Ownership Dwt ---------------------------------------------------------------------- VLCC (including ULCC) 20 17.5 6,398,415 Suezmax 2 2.0 317,000 Aframax 19 14.0 2,064,675 Panamax 11 11.0 764,083 Lightering 4 3.0 346,924 ------------------------------- International Flag Crude Tankers 56 47.5 9,891,097 Panamax Product Carriers 4 4.0 290,527 Handysize Product Carriers(1) 34 34.0 1,510,281 ------------------------------- International Flag Product Carriers 38 38.0 1,800,808 Car Carrier 1 1.0 16,101 International Bulk Carriers 2 2.0 319,843 ------------------------------- International Flag Other 3 3.0 335,944 ---------------------------------------------------------------------- Total Int'l Flag Operating Fleet 97 88.5 12,027,849 ---------------------------------------------------------------------- Handysize Product Carriers 9 9.0 414,312 Clean ATBs 8 8.0 226,064 Lightering: Crude Carrier 1 1.0 39,948 ATBs 2 2.0 90,908 ---------------------------------------------------------------------- Total U.S. Flag Operating Fleet 20 20.0 771,232 ---------------------------------------------------------------------- 864, 800 LNG Carriers 4 2.0 cbm ---------------------------------------------------------------------- 12,799,081 TOTAL OPERATING FLEET 121 110.5 864,800cbm ---------------------------------------------------------------------- Newbuild Fleet ---------------------------------------------------------------------- International Flag VLCC 1 1.0 297,000 Suezmax 2 2.0 312,000 Aframax 4 4.0 456,000 Panamax Product Carriers 6 6.0 441,000 Handysize Product Carriers 8 8.0 389,350 U.S. Flag Product Carriers 8 8.0 374,520 Clean ATBs 3 3.0 111,561 Lightering ATBs 3 3.0 136,668 ---------------------------------------------------------------------- TOTAL NEWBUILD FLEET 35 35.0 2,518,099 ---------------------------------------------------------------------- 15,317,180 864,800 TOTAL OPERATING AND NEWBUILD FLEET 156145.5 cbm -------------------------------

(1)Includes three owned U.S. Flag Product Carriers that trade internationally, thus associated revenue is included in the Product Carrier segment.

Average Age of International Operating Fleet

The Company believes its modern, well-maintained fleet is a significant competitive advantage in the global market. The table below reflects the average age of the Company's owned International Flag fleet compared with the world fleet.

Average Average Age of Age of Average OSG's OSG's Age of Owned Owned World Fleet at Fleet at Fleet Vessel Class 6/30/08 6/30/07 at 6/30/08* ---------------------------------------------------------------------- VLCC (including ULCC) 7.4 years 6.4 years 8.5 years Aframax 9.0 years 8.7 years 8.7 years Panamax** 4.8 years 4.3 years 8.6 years Handysize 5.9 years 5.6 years 9.1 years

*Source: Clarkson database as of July 1, 2008.

**Includes Panamax tankers that trade crude oil and refined petroleum products.

Off hire, Scheduled Drydock and Double Hull Rebuilds

In addition to regular inspections by OSG personnel, all vessels are subject to periodic drydock, special survey and other scheduled maintenance. The table below sets forth actual days off hire for the second quarter of 2008 and anticipated days off hire for the above-mentioned events by class for the third and fourth quarters of 2008. OSG completed double hulling an ATB, the OSG 243, in April 2008 as detailed in the U.S. section of Recent Activities and Quarterly Events earlier in this press release.

Actual Days Projected Days Off-Hire Off-Hire ---------------------------------------------------------------------- Q208 Q308 Q408 ---------------------------------------------------------------------- Business Unit -- Crude Oil ---------------------------------------------------------------------- VLCC (including ULCC) 35 23 22 Suezmax -- 2 8 Aframax (including Lightering) 62 66 84 Panamax 5 7 31 ---------------------------------------------------------------------- Business Unit -- Refined Petroleum Products ---------------------------------------------------------------------- Panamax 2 -- 5 Handysize 95 116 72 ---------------------------------------------------------------------- Business Unit -- U.S. Flag ---------------------------------------------------------------------- Product Carrier 117 5 72 ATB 109 110 7 ---------------------------------------------------------------------- Other -- -- -- ---------------------------------------------------------------------- Total 425 329 301 ----------------------------------------------------------------------

APPENDIX 1 - TCE RECONCILIATION

Reconciliations of time charter equivalent revenues of the segments to shipping revenues as reported in the consolidated statements of operations follow:

Three Months Six Months Ended Ended Jun. 30, Jun. 30, ----------------------------------- ($ in thousands) 2008 2007 2008 2007 ---------------------------------------------------------------------- Time charter equivalent revenues $386,114 $274,234 $761,948 $533,418 Add: Voyage Expenses 42,110 25,763 76,952 41,863 ----------------------------------- Shipping revenues $428,224 $299,997 $838,900 $575,281 ===================================

Consistent with general practice in the shipping industry, the Company uses time charter equivalent 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. Time charter equivalent 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.

APPENDIX 2 - EBITDA RECONCILIATION

The following table shows reconciliations of net income, as reflected in the consolidated statements of operations, to EBITDA:

Three Months Ended Six Months Ended Jun. 30, Jun. 30, -------------------------------------- ($ in thousands) 2008 2007 2008 2007 ---------------------------------------------------------------------- Net income $86,935 $78,992 $199,370 $163,644 Provision/(credit) for income taxes (771) 7,166 (771) 12,918 Interest expense 17,191 18,281 35,554 31,449 Depreciation and amortization $47,315 $44,099 $94,906 86,582 -------------------------------------- EBITDA $150,670 $148,538 $329,059 $294,593 ======================================

EBITDA represents operating earnings, which is before interest expense and income taxes, plus other income and depreciation and amortization expense. EBITDA is presented to provide investors with meaningful additional information that management uses to monitor ongoing operating results and evaluate trends over comparative periods. EBITDA should not be considered a substitute for net income or cash flow from operating activities prepared in accordance with accounting principles generally accepted in the United States or as a measure of profitability or liquidity. While EBITDA is frequently used as a measure of operating results and performance, it is not necessarily comparable to other similarly titled captions of other companies due to differences in methods of calculation.

APPENDIX 3 - CAPITAL EXPENDITURES

The following table presents information with respect to OSG's capital expenditures for the three and six months ended June 30, 2008 and 2007:

Three Months Six Months Ended Ended Jun. 30, Jun. 30, ----------------------------------- ($ in thousands) 2008 2007 2008 2007 ---------------------------------------------------------------------- Expenditures for vessels $107,818 $92,318 $252,260 $149,991 Investments in and advances to affiliated companies 4,551 2,065 5,734 27,934 Payments for drydockings 11,555 16,852 27,613 24,690 ----------------------------------- $123,924 $111,235 $285,607 202,615 ===================================

APPENDIX 4 -THIRD QUARTER 2008 TCE RATES

The Company has achieved the following average estimated TCE rates for the third quarter of 2008 for the percentage of days booked for vessels operating through July 18, 2008. The information is based, in part, on information provided by the pools or commercial joint ventures in which the vessels participate. All numbers provided are estimates and may be adjusted for a number of reasons, including the timing of any vessel acquisitions or disposals and the timing and length of drydocks and repairs. In addition, information presented for VLCCs and Aframaxes as fixed includes management's expectations with respect to the synthetic time charters entered into by the Company. The actual average TCE rates achieved for these synthetic time charters may differ, possibly substantially, from the expected rates shown in the table below.

Third Quarter Revenue Days ----------------------- Average Fixed as Open as TCE of of % Days Vessel Class and Charter Type Rates 7/18/08 7/18/08 Total Booked ---------------------------------------------------------------------- Business Unit - Crude Oil ---------------------------------------------------------------------- VLCC - Spot $143,500 483 541 1,024 47% VLCC - Fixed $55,500 450 -- 450 100% Suezmax - Spot $69,500 76 106 182 42% Aframax - Spot $54,000 316 562 878 36% Aframax - Fixed $33,000 275 -- 275 100% Aframax Lightering - Spot $38,500 192 417 609 32% Panamax - Spot $41,000 128 417 545 23% Panamax - Time $28,000 460 -- 460 100% ---------------------------------------------------------------------- Business Unit - Refined Petroleum Products ---------------------------------------------------------------------- Panamax - Spot $41,000 43 141 184 23% Panamax - Time $19,000 184 -- 184 100% Handysize - Spot $31,500 427 574 1,001 43% Handysize - Time $19,500 1,943 -- 1,943 100% ---------------------------------------------------------------------- Business Unit - U.S. Flag ---------------------------------------------------------------------- Product Carrier - Spot $37,500 58 29 87 67% Product Carrier - Time $39,500 656 -- 656 100% ATB - Spot $36,000 58 262 320 18% ATB - Time $29,500 368 -- 368 100%

APPENDIX 5 - FOURTH QUARTER 2008, 2009 AND 2010 FIXED TCE RATES

The following table shows average estimated TCE rates and associated days booked as of July 18, 2008 for the fourth quarter of 2008. Rates and revenue days for VLCCs and Aframaxes include management's expectations with respect to the synthetic time charters entered into by the Company. The actual TCE rates achieved for these synthetic time charters may differ, possibly substantially, from the expected rates shown in the table below.

Fixed Rates and Revenue Days as of 7/18/08 ---------------------------------------------------------------------- Business Unit - Crude Oil ---------------------------------------------------------------------- VLCC Average Synthetic TCE Rate $69,836 Number of Revenue Days 539 Suezmax Average TCE Rate -- Number of Revenue Days -- Aframax Average TCE Rate $30,000 Number of Revenue Days 275 Panamax Average TCE Rate $28,000 Number of Revenue Days 415 ---------------------------------------------------------------------- Business Unit - Refined Petroleum Products ---------------------------------------------------------------------- Panamax Average TCE Rate $19,000 Number of Revenue Days 184 Handysize Average TCE Rate $18,500 Number of Revenue Days 1,454 ---------------------------------------------------------------------- Business Unit - U.S. Flag ---------------------------------------------------------------------- Product Carrier Average TCE Rate $40,500 Number of Revenue Days 644 ATB Average TCE Rate $31,000 Number of Revenue Days 229

The following table provides management's expectations with respect to the estimated synthetic TCE rates to be achieved and the related revenue days for periods beyond 2008 when those derivative positions that qualify as cash flow hedges for accounting purposes will affect the Company's earnings:

Year Ending Year Ending Dec. 31, 2009 Dec. 31, 2010(1) ------------------- ----------------- VLCC Average Estimated TCE Rate $62,567 $61,240 Number of Revenue Days 3,173 276

(1) The revenue days relate to the first quarter of 2010.

EARNINGS CONFERENCE CALL INFORMATION

OSG has scheduled a conference call for Wednesday July 30, 2008 at 11:00 a.m. ET. Call-in information is (800) 762-8779 (domestic) and (480) 248-5081 (international). The conference call and supporting presentation can also be accessed by webcast, which will be available at www.osg.com in the Investor Relations Webcasts and Presentations section. Additionally, a replay of the call will be available by telephone until August 5, 2008; the number for the replay is (800) 406-7325 (domestic) and (303) 590-3030 (international). The passcode for the replay is 3889005.

ABOUT OSG

Overseas Shipholding Group, Inc. (NYSE: OSG), a Dow Jones Transportation Index company, is one of the largest publicly traded tanker companies in the world. As a market leader in global 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 regarding the Company's prospects, including the outlook for tanker and articulated tug barge markets, changing oil trading patterns, anticipated levels of newbuilding and scrapping, prospects for certain strategic alliances and investments, prospects for the growth of the OSG Gas transport business, estimated TCE rates achieved for the third quarter of 2008, estimated TCE rates and synthetic time charter rates for the fourth quarter of 2008 and estimated synthetic time charter rates for the year ending December 31, 2009 and the first quarter of 2010, projected drydock and repair schedule, timely delivery of newbuildings and prospects of OSG's strategy of being a market leader in the segments in which it competes. Factors, risks and uncertainties that could cause actual results to differ from the expectations reflected in these forward-looking statements are described in the Company's Annual Report for 2007 on Form 10-K.

SOURCE: Overseas Shipholding Group, Inc.

OSG Ship Management, Inc. Jennifer L. Schlueter, +1-212-578-1634 Vice President Corporate Communications and Investor Relations jschlueter@osg.com.