IMPORTANT NOTICE NOT FOR DISTRIBUTION TO ANY U.S. PERSON OR TO ANY PERSON OR ADDRESS IN THE UNITED STATES

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1 IMPORTANT NOTICE NOT FOR DISTRIBUTION TO ANY U.S. PERSON OR TO ANY PERSON OR ADDRESS IN THE UNITED STATES IMPORTANT: You must read the following before continuing. The following applies to the Base Prospectus (the "Base Prospectus") following this page, and you are therefore advised to read this carefully before reading, accessing or making any other use of the Base Prospectus. In accessing the Base Prospectus, you agree to be bound by the following terms and conditions, including any modifications to them any time you receive any information from us as a result of such access. NOTHING IN THIS BASE PROSPECTUS CONSTITUTES AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY THE SECURITIES OF THE COMPANY IN THE UNITED STATES OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO DO SO. THE BONDS HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE BONDS MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS ("U.S. PERSONS"), AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT ("REGULATION S"), NOR U.S. RESIDENTS (AS DETERMINED FOR THE PURPOSES OF THE U.S. INVESTMENT COMPANY ACT OF 1940) ("U.S. RESIDENTS") EXCEPT PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS. WITHIN THE UNITED KINGDOM, THIS BASE PROSPECTUS IS DIRECTED ONLY AT PERSONS WHO HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS AND WHO QUALIFY EITHER AS INVESTMENT PROFESSIONALS IN ACCORDANCE WITH ARTICLE 19(5) OR AS HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, PARTNERSHIPS OR TRUSTEES IN ACCORDANCE WITH ARTICLE 49(2) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (TOGETHER, "EXEMPT PERSONS"). IT MAY NOT BE PASSED ON EXCEPT TO EXEMPT PERSONS OR OTHER PERSONS IN CIRCUMSTANCES IN WHICH SECTION 21(1) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 DOES NOT APPLY (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS"). THE BASE PROSPECTUS MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THE BASE PROSPECTUS RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. ANY PERSONS OTHER THAN RELEVANT PERSONS SHOULD NOT ACT OR RELY ON THIS DOCUMENT. THE BASE PROSPECTUS MAY NOT BE FORWARDED OR DISTRIBUTED TO ANY OTHER PERSON AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER AND IN PARTICULAR, MAY NOT BE FORWARDED TO ANY U.S. PERSON. ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS. Confirmation of your Representation: The Base Prospectus is being sent to you at your request and by accepting the and accessing the Base Prospectus, you shall be deemed to have represented to us that (i) you have understood and agree to the terms set out herein; (ii) you consent to the delivery of the Base Prospectus by electronic transmission; (iii) if you are a person in the United Kingdom you are a Relevant Person; and (iv) you are not a U.S Person or U.S Resident. You are reminded that the Base Prospectus has been delivered to you on the basis that you are a person into whose possession the Base Prospectus may lawfully be delivered in accordance with the laws of the jurisdiction in which you are located and you may not, nor are you authorised to, deliver the Base Prospectus to any other person. The materials relating to the offering do not constitute, and may not be used in connection with, an offer or solicitation in any place where offers or solicitations are not permitted by law. If a jurisdiction requires that the offering be made by a licensed broker or dealer and the managers or any affiliate of the managers is a licensed broker or dealer in that jurisdiction, the offering shall be deemed to be made by the managers or such affiliate on behalf of the Company in such, jurisdiction.

2 The Base Prospectus has been sent to you in an electronic form. You are reminded that documents transmitted via this medium may be altered or changed during the process of electronic transmission and consequently none of the Company or Alexander David Securities Limited nor any director, officer, employee or agent or affiliate of any such person accepts any liability or responsibility whatsoever in respect of any difference between the Base Prospectus distributed to you in electronic format herewith and the hard copy version available to you on request from Alexander David Securities Limited.

3 SEA OIL TANKERS LIMITED BASE PROSPECTUS DATED 15 July 2016 SEA OIL TANKERS LIMITED (Incorporated in Isle of Man with Registered Number V ) In respect of an Offering Programme of up to 200,000,000 for the issuance of FIXED INTEREST RATE 7 PER CENT. PER ANNUM UNSECURED BONDS MATURITY DATE OF 18 July 2026 and having a denomination per unit of 1,000 with a minimum aggregate subscription per investor of 100,000, to be issued in Sterling, Dollars or Euro ISIN GB00BYT3QF40 ISIN GB00BD9X2M62 ISIN GB00BD9X3124 MANAGER Alexander David Securities Limited THE COMPANY IS NOT, AND WILL NOT BE, LICENSED OR REGULATED BY THE FINANCIAL CONDUCT AUTHORITY OR THE ISLE OF MAN FINANCIAL SERVICES AUTHORITY. THE SECURITIES OFFERED ARE COMPLEX FINANCIAL INSTRUMENTS AND MAY NOT BE SUITABLE FOR ALL TYPES OF INVESTORS. A POTENTIAL INVESTOR SHOULD NOT INVEST IN THE SECURITIES UNLESS: I. S/HE HAS THE NECESSARY KNOWLEDGE AND EXPERIENCE TO UNDERSTAND THE RISKS RELATING TO THIS TYPE OF FINANCIAL INSTRUMENT; II. III. THE SECURITIES MEET THE INVESTMENT OBJECTIVES OF THE POTENTIAL INVESTOR; AND SUCH POTENTIAL INVESTOR IS ABLE TO BEAR THE INVESTMENT AND FINANCIAL RISKS WHICH RESULT FROM INVESTMENT IN THESE SECURITIES.

4 THIS BASE PROSPECTUS HAS NOT BEEN, AND WILL NOT BE, REVIEWED OR APPROVED BY THE FCA, OR ANY OTHER REGULATORY AUTHORITY IN THE UK. THE FSC ACCEPTS NO RESPONSIBILITY FOR THE CONTENTS OF THIS BASE PROSPECTUS, MAKES NO REPRESENTATIONS AS TO ITS ACCURACY OR COMPLETENESS AND EXPRESSLY DISCLAIMS ANY LIABILITY WHATSOEVER FOR ANY LOSS HOWEVER ARISING FROM, OR IN RELIANCE UPON, THE WHOLE OR ANY PART OF THE CONTENTS HEREOF. AN INVESTMENT IN THE BONDS INVOLVES CERTAIN RISKS. YOU SHOULD HAVE REGARD TO THE FACTORS DESCRIBED IN PART I (RISK FACTORS) OF THIS BASE PROSPECTUS. Prospective investors should have regard to the factors described under the section headed Risk Factors in Part I of this Base Prospectus.

5 IMPORTANT INFORMATION This document constitutes a Base Prospectus within the terms of Directive 2003/71/EC of the European Parliament and of the Council ( the Prospectus Directive ) on the Base Prospectus to be published when securities are offered to the public or admitted to trading and amending Directive 2001/34/EC (as amended by Directive 2010/73/EU of the European Parliament and of the Council and Commission). This Base Prospectus dated 15 July, 2016 contains information relating to Sea Oil Tankers Limited (the Company ), its business and the securities being issued, being the 7 per cent. unsecured bonds (the Bonds ). Interest on the Bonds is payable semi-annually in arrears, commencing on 31 December 2016 with the Bonds maturing on 18 July 2026 (the Maturity Date ). Payments in respect of interest on the Bonds will be made without withholding tax or deducted for, or on account of taxes of the Isle of Man and/or the United Kingdom. The bonds may be issued in sterling, dollars or Euros, at the election of the Company, up to a maximum of 200,000,000, (at the prevailing interest rate at the time of issue of each Bond). The bonds are not fungible, that is to say they are not interchangeable with other Bonds. The Bonds are subject to redemption in whole, but not in part, at their principal amount, together with any applicable accrued interest, at the option of the Company at any time as described in Part VI of this document - Terms and Conditions of the Bonds Redemption and Purchase. Application shall be made for the Bonds to be approved for admissibility to listing and trading on the Gibraltar Stock Exchange ( GSX ), which is an EU regulated market. This Base Prospectus has been prepared in accordance with the requirements of Commission Regulation (EC) No. 809/2004 of 29 April 2004 implementing Directive 2003/71/EC of the European Parliament and of the Council as regards information contained in Base Prospectuses as well as the format, incorporation by reference and publication of such Base Prospectuses and dissemination of advertisements (as amended by Directive 2010/73/EU of the European Parliament and of the Council and Commission delegated Regulation (EU) No. 486/2012 of 30 March 2012, Commission delegated regulation (EU) No. 862/2012 of 4 June, 2012, Commission delegated Regulation (EU) No. 759/2013 of 30 April 2013 and Commission delegated Regulation (EU) No. 382/2014 of 7 March 2014). This Base Prospectus has been submitted to and approved by the FSC (in its capacity as competent authority in terms and for the purposes of the Prospectus Directive). This Base Prospectus has not been, and will not be, reviewed or approved by the FCA, or any other regulatory authority in the UK. No regulatory authority has passed comment on or approved the accuracy of this document. Responsibility for the information contained in this Base Prospectus The Company and Directors accept responsibility for the information contained in this Base Prospectus. To the best of the knowledge and belief of the Company and Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this Base Prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information. Neither Alexander David Securities Limited nor the Bond Trustee has separately verified the information contained in this Base Prospectus. Accordingly, no representation, warranty or undertaking, express or implied, is made (to the fullest extent permitted by law) and no responsibility or liability is accepted by Alexander David Securities Limited and the Bond Trustee as to the accuracy or completeness of the information contained in this Base Prospectus or any other information provided by the Company in connection with the issuance of the Bonds. Neither Alexander David Securities Limited nor the Bond Trustee accept any liability whether arising in tort or contract or otherwise (save as referred to above) in relation to the information contained in this Base Prospectus or any other information provided by the Company and Directors in connection with the issuance of the Bonds. Where information has been sourced from a third party, this information has been accurately reproduced and, as far as the Company is aware and is able to ascertain from information published by any such third party, no facts have been omitted which would render the reproduced information inaccurate or misleading. The source of third party information is identified where used. 4

6 At the date of this Base Prospectus, the Company has not been assigned a credit rating by any independent credit rating agency and, accordingly, the Bonds have not been assigned a credit rating by any independent credit rating agency. Public offer selling restrictions under the Prospectus Directive The Bonds may not be offered or sold directly or indirectly, and neither this Base Prospectus nor any offering circular, Base Prospectus, form of application, advertisement, other offering material or other information relating to the Company or the Bonds may be issued, distributed or published in any country or jurisdiction (including the Republic of Ireland ("Ireland") and the United Kingdom), except in circumstances that will result in compliance with all applicable laws, orders, rules and regulations. The distribution of this Base Prospectus and the offering of the Bonds in certain jurisdictions may be restricted by law. Persons into whose possession this Base Prospectus comes are required by the Company to inform themselves about and to observe any such restrictions. For a description of certain restrictions on offers and sales of Bonds and distribution of this Base Prospectus and other offering material relating to the Bonds, see Part VII Subscription and Sale. Any offer of the Bonds (as contemplated by this Base Prospectus) to the public in any Member State of the European Economic Area (each, a "Member State") may be made at any time: (a) to any legal entity which falls within the definition of qualified investor as defined in the Prospectus Directive; (b) to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive); or (c) in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of Bonds referred to in (a) and (b) above shall require the Company or Alexander David to publish a Base Prospectus pursuant to Article 3 of the Prospectus Directive or supplement a Base Prospectus pursuant to Article 16 of the Prospectus Directive. Notice to potential investors No person is authorised to give any information or to make any representation not contained in this Base Prospectus and any information or representation not so contained must not be relied upon as having been authorised by or on behalf of the Company. The delivery of this Base Prospectus at any time does not imply that the information contained in it is correct as at any time subsequent to its date and neither the Company nor Alexander David Securities Limited undertake to update the information contained in this document. Neither this Base Prospectus nor any part hereof constitutes an offer of, or an invitation by, or on behalf of the Company to subscribe or purchase any of the Bonds and neither this Base Prospectus, nor any part hereof, may be used for or in conjunction with an offer to, or solicitation by, any person in any jurisdiction or in any circumstances in which such offer or solicitation is not authorised or to any person to whom it is unlawful to make such offer or solicitation. This Base Prospectus may only be communicated (i) to persons who have professional experience in matters relating to investments falling within Article 19 of the UK Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 (the "FPO"); or (ii) who are persons falling within Article 49(2) of the FPO; or (iii) to whom this Base Prospectus may otherwise be lawfully communicated in accordance with all applicable laws (all such persons together being referred to as "relevant persons"). This Base Prospectus must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this communication relates is available only to relevant persons and will be engaged in only by relevant persons.. 5

7 Any investment in the Bonds does not have the status of a bank deposit and is not subject to the deposit protection scheme operated by the Financial Services Compensation Scheme. The Bonds described in this Base Prospectus have not been registered with, recommended by or approved by the US Securities and Exchange Commission (the "SEC"), any state securities commission in the United States or any other securities commission or regulatory authority, nor has the SEC, any state securities commission in the United States or any such securities commission or authority passed upon the accuracy or adequacy of this Base Prospectus. Any representation to the contrary is a criminal offence. In this Base Prospectus, unless otherwise specified or the context otherwise requires, references to " " and "sterling" are to the lawful currency for the time being of the United Kingdom, references to " " and "euro" are to the lawful currency for the time being of the European Union, and references to $ and U.S. dollar are to the lawful currency for the time being of the United States of America. FORWARD-LOOKING STATEMENTS This Base Prospectus includes statements that are, or may be deemed to be, forward-looking statements. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms anticipates, believes, estimate, expected, intends, may, or will or, in each case, their negative or other variations or comparable terminology. These forward-looking statements relate to matters that are not historical facts. They appear in a number of places throughout this Base Prospectus and include statements regarding the intentions, beliefs or current expectations of the Company and the Directors concerning, amongst other things, the investment strategy, financing strategies and investment performance. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward- looking statements. These factors include, but are not limited to, changes in general market conditions, legislative or regulatory changes, changes in taxation, the Company s ability to invest its cash and the proceeds of the issue of the Bonds in suitable investments on a timely basis and the availability and cost of capital for future investments. Potential investors are advised to read this Base Prospectus in its entirety, and, in particular, the section of this Base Prospectus entitled Risk Factors for a further discussion of the factors that could affect the Company s future performance. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements in this Base Prospectus may not occur or may not occur as foreseen.. 6

8 TABLE OF CONTENTS Page PART I: SUMMARY. 8 PART II: EXPECTED TIMETABLE OF EVENTS. 15 PART III: RISK FACTORS 16 PART IV: DESCRIPTION OF THE COMPANY. 22 PART V FINANCIAL INFORMATION 30 PART VI TERMS AND CONDITIONS OF THE BONDS PART VII SUBSCRIPTION AND SALE.. 41 PART VIII USE OF PROCEEDS 43 PART IX: ADDITIONAL INFORMATION PART X: DEFINITIONS PART XI: GLOSSARY OF TERMS. 53 PART XII: DIRECTORY.. 54 APPENDIX I BOND INSTRUMENT STERLING.. 55 APPENDIX II BOND INSTRUMENT U.S. DOLAR APPENDIX III BOND INSTRUMENT EURO APPENDIX IV FORM OF FINAL TERMS STERLING APPENDIX V FORM OF FINAL TERMS EURO APPENDIX VI FORM OF FINAL TERMS U.S. DOLLAR 122 7

9 PART I SUMMARY Summaries are made up of disclosure requirements known as Elements. These elements are numbered in Sections A E (A.1 E.7). This summary contains all the Elements required to be included in a summary for this type of securities and Company. Because some Elements are not required to be addressed, there may be gaps in the numbering sequence of the Elements. Even though an Element may be required to be inserted in the summary because of the type of securities and Company, it is possible that no relevant information can be given regarding the Element. In this case a short description of the Element is included in the summary with the mention of not applicable. Element SECTION A INTRODUCTION AND WARNINGS Disclosure Requirements Disclosure A.1 Warning This summary must be read as an introduction to this Base Prospectus. Any decision to invest in the Bonds should be based on consideration of this Base Prospectus as a whole by the investor. Where a claim relating to the information contained in this Base Prospectus is brought before a court, the plaintiff investor might, under the national legislation of the EU Member States, have to bear the costs of translating this Base Prospectus before the legal proceedings are initiated. Civil liability attaches only to those persons who have tabled the summary including any translation thereof, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of this Base Prospectus or it does not provide, when read together with the other parts of this Base Prospectus, key information in order to aid investors when considering whether to invest in the Bonds. 8

10 A.2 Consent by the Company to the use of the Base Prospectus for subsequent resale or final placement of securities through financial intermediaries Not applicable. The Company is not engaging any financial intermediaries for any resale of Bonds or final placement of Bonds after publication of the Base Prospectus. Element Disclosure Requirements B.1 Legal and commercial name B. 2 Domicile and legal form B.4b Trends effecting Company and industry it operates SECTION B THE COMPANY Disclosure Sea Oil Tankers Limited The Company was incorporated in the Isle of Man on 19 May, 2016 with registered number V. The principal legislation under which the Company operates is the Isle of Man Companies Act 2006 (as amended). Not applicable. The Company is newly incorporated with no trading history. The Company will operate in the tanker industry. B.5 Group description Not applicable. The Company is not part of a group. B.9 Profit forecast Not applicable. No profit forecast or estimate is made. B.10 Description of the nature of any qualifications in the audit report on the historical financial information B.12 Historical financial information Not applicable. The Company is a start-up company and has no historical trading record. The Accountant s report in Part V of this Base Prospectus is not qualified. Not applicable. There has been no significant change in the financial condition or operating results of the Company since incorporation. An Accountant s report on the Company, which has no trade, business or assets (other than its cash balances) is set out in Part V of this Base Prospectus. The financial information provided has been prepared by the Company s auditors Welbeck Associates, for the period from incorporation to 31 May The Company intends to issue its first year financial statements for the year ended 31 May 2017 before the 28 February B.13 Description of material events Not applicable. The Company is a start-up which has been funded 9

11 B.14 B5. plus: relevant to Company s solvency If Company is dependent upon other entities with the Group B. 15 Description of Company principal activities B.16 Description whether Company is directly or indirectly owned or controlled by its sole shareholder (by way of a 660,000 equity investment). Such sums are sufficient to pay its current debts as they fall due, being the costs of Admission. Not applicable. The Company is not part of a group. Acquisition of crude and product tankers to transport crude petroleum and refined petroleum product globally. The Company is directly owned by Alf J. Aanonsen. Alf J. Aanonsen is one of the three directors with management responsibility and control of the Company. B.17 Credit Rating Not applicable. Neither the Company nor any of its debts securities has been assigned any credit ratings by a credit agency. SECTION C SECURITIES Element Disclosure Requirements Disclosure C.1 Type and class of the securities being offered and/or admitted to trading, including any security identification number C.2 Currency of the securities issue The Bonds are 7 per cent. unsecured bonds due 18 July The nominal amount of each Bond (being the amount which is used to calculate payments made on each Bond) is 1,000. The Bonds may be issued in sterling, dollars or Euros. The International Securities Identification Number ( ISIN ) for the Bonds is as follows: Sterling GB00BYT3QF40 and the Common Code is BYT3QF4. Euro GB00BD9X2M62 and the Common Code is BD9X2M6. U.S. Dollar GB00BD9X3124 and the Common Code is BD9X312. The Bonds may be issued in sterling, dollars or Euros, at the election of the Company. The bonds are not fungible, that is to say they are not interchangeable with other Bonds. A maximum of 200,000,000 Bonds may be issued. When the Bonds are issued in a currency other than sterling, the prevailing interest rate on the date of issue shall be used for this calculation. C.5 A description of any restrictions on the free transferability of the securities C.8 C4. plus: including ranking including limitations to those rights There are no restrictions on the free transferability of the Bonds. Status of the Bonds: The Bonds constitute unsecured debt obligations of the Company. The Bonds will rank pari passu (i.e. equally in right of payment), without any preference between themselves, with all other outstanding unsecured and unsubordinated debt obligations of the Company but, in the event of insolvency of the Company, only to 10

12 C.9 C.8 plus: the nominal interest rate the date from which interest becomes payable the extent permitted by applicable laws of mandatory application relating to the rights of creditors. Events of default: An Event of Default for the purpose of the Bond Instruments mean each of: a) an order is made, or an effective resolution is passed, for the winding-up, liquidation, administration or dissolution of the Company (except for the purpose of reorganisation or amalgamation of the Company or any of its subsidiaries); or b) an encumbrancer takes possession or a receiver is appointed of the whole or the major part of the assets or undertaking of the Company or if distress, execution or other legal process is levied or enforced or sued out on or against the whole or the major part of the assets of the Company and is not discharged, paid out, withdrawn or removed within 21 Business Days; or c) the Company is deemed for the purposes of section 163 of the Isle of Man Companies Act 1931 (as amended) to be unable to pay its debts or compounds or proposes or enters into any reorganisation or special arrangement with its creditors generally. (each of (a) to (c) is an Event of Default). If an Event of Default occurs, the Company shall immediately redeem the nominal amount outstanding on the Bonds, together with all interest due on the Bonds. Optional early repayment by Company for tax reasons: In the event of certain tax changes caused by any change in, amendment to, or application or official interpretation of the laws or regulations of the United Kingdom after the Bonds have been issued the Bonds may be repaid if the Company chooses to do so in whole, but not in part, at any time. The redemption price in these circumstances is at the nominal amount of the Bonds plus accrued interest. Meetings of Bondholders The Bond Instrument contains provisions for calling meetings of Bondholders to consider matters affecting the interests of the Bondholders. These provisions permit certain majorities to bind all Bondholders including Bondholders who did not vote on the relevant resolution and Bondholders who did not vote in the same way as the majority did on that resolution. Modification, waiver and substitutions The Company may without the consent of Bondholders agree to any modification of the Bond Instruments which is (in the opinion of the Company) of a formal, minor or technical nature or which is made to correct a manifest error. Interest rate The Bonds bear interest from and including the date they are issued to an investor at the fixed rate of 7 per cent per annum. The interest on the Bonds is payable semi-annually in arrears in equal installments (pro-rata) on 30 June and 31 December in each year in which in the Bonds are held. The final payment of interest will be made on the Redemption Date. 11

13 C.10 C.9 plus: and the due dates for interest where the rate is not fixed, description of the underlying on which it is based maturity date and arrangements for the amortisation of the loan, including the repayment procedures an indication of yield name of representative of debt security holders derivative component in interest payment C.11 An indication as to whether the securities offered are or will be the object of an application for admission to trading, with a view to their distribution in a regulated market or other equivalent markets with indication of the markets in question Not applicable Maturity Date Unless previously purchased and cancelled in accordance with the terms and conditions attaching to the Bonds, the Bonds will mature on 18 July Indication of yield On the basis of the issue price of the Bonds of 100 per cent. of their nominal amount, the initial yield of the Bonds on the Issue Date is 7 per cent. on an annual basis. Bond registrar The trustee for the Bonds Woodside Secretaries Limited will deal with the payment of the Bond interest and principal. Avenir Registrars Limited are the registrars of the Bonds and will deal with the administrative work relating to the Bondholders. Not applicable. The interest rate on the Bonds is fixed and there is not a derivative component in the interest payments made in respect of the Bonds. This means that the interest payments are not linked to specific market references, such as inflation, an index or otherwise. Application will be made to the Gibraltar Financial Services Commission for the Bonds to be listed to the Gibraltar Stock Exchange which is a regulated market. It is expected that listing of the Bonds on the Gibraltar Stock Exchange will be granted on or about 15 July 2016, and dealings in the Bonds on the Gibraltar Stock Exchange is expected to commence on 19 July SECTION D RISKS Element Disclosure Requirements D.2 Key information on the key risks that are specific to the Company or its industry Disclosure The key risk factors relating to the Company and its industry are: the Company is newly formed and has no operating history; as a consequence no assurance can be given that the Company will succeed in meeting its investment or operating objectives; 12

14 D.3 Key information on the key risks that are specific to the securities in the event of the Company experiencing any delays in deploying the proceeds of the Bonds, the Company s results and cash flow may be materially adversely affected; the cyclical nature of the tanker industry may cause significant increases or decreases in the revenue earned from the Company s vessels and may also cause significant increases or decreases in the value of the vessels proposed to be acquired by the Company; any decrease in shipments of oil in the global markets could have a material adverse effect on the business, financial condition and results of operations of the Company; there is no guarantee that the Company s business objective will be achieved or provide the returns sought by the Company; and the Company s inability to dispose of a vessel at a reasonable value could result in a loss on its sale and adversely affect the Company s financial position. The key risk factors relating to the Bonds are: defined majorities may be permitted to bind all the Bondholders with respect to modification and waivers of the terms and conditions of the Bonds; a market for the Bonds may not develop, or may not be very liquid and such illiquidity may have a severely adverse effect on the market value of the Bonds; the realisation from a sale of the Bonds at any time prior to their maturity may be below the investment price; the Bonds bear interest at a fixed rate and the Company will pay principal and interest on the Bonds in pounds sterling, dollars or Euros, which presents certain risks relating to potential exposure to interest rate, inflation and exchange rate risk, respectively; and Investors should note that the Bonds will initially be unsecured and that the Company intends, subject to permission being granted (which cannot be guaranteed) by its lender(s) to seek to grant a charge in favour of the Bondholders (from time to time) over any and all vessels acquired by the Company utilising some or all of the proceeds derived from the issue of the Bonds. Element E.2b Disclosure Requirements Reason for the offer and use of proceeds when different from making profit and/or hedging certain SECTION E OFFER Disclosure The offer of the Bonds is being made to enable the Company to fund, along with bank finance, the acquisition of up to three Aframax tankers or other similar vessels which the Directors have identified, and to introduce debt to its capital structure for economic efficiency. 13

15 risks E.3 A description of the terms and conditions of the offer E.4 A description of any interest that is material to the issue/offer including conflicting interests E.7 Estimated expenses charged to the investor by the Company or the offeror The Directors intend to use the net proceeds of the Bonds, along with bank finance, to fund acquisitions of tankers, as well as to fund the Company s operational expenses. The offer of the Bonds is expected to close at noon on 31 December 2016 or such later time and date as may be agreed between the Company and Alexander David and announced via a Regulatory Information Service ( RIS ) approved by the Gibraltar Financial Services Commission. You may not be allocated all (or any) of the Bonds for which you apply. The Bonds will be issued at the issue price (which is 100 per cent. of the nominal amount of the Bonds) and the aggregate nominal amount of the Bonds to be issued will be specified in the dealing announcement published by the Company on or about 19 July 2016 on a RIS. The minimum subscription amount per investor is for minimum aggregate nominal amount of 100,000 of the Bonds, being a minimum of 100 Bonds per investor. The Bonds may be issued in sterling, dollars or Euros, at the Company s election, up to a maximum of 200,000,000, based on the prevailing interest rate of the Company as at the date of the issue of the Bonds. The Bonds are not fungible. Not applicable. There are no interests that are material to the issue and no conflicting interests. As set out in this Base Prospectus, although Alf Aanonsen is a Director of Sea Oil Agency Inc., who has been contracted to provide the Company with commercial management and operational services, there are no conflicts of interest in relation to Admission and the issue of the Bonds. The costs and expenses (including irrevocable VAT) of, and incidental to the issue of the Bonds payable by the Company are expected to be less than 10 per cent. of the Bond issue proceeds (assuming Bond issue proceeds of 200,000,000). Other than in respect of expenses of, or incidental to, Admission and the issue of the Bonds which the Company intends to pay out of the proceeds of the issue of the Bonds, there are no commissions, fees or expenses to be charged to investors by the Company. INFORMATION CONTAINED IN THIS DOCUMENT MUST BE CONSIDERED IN CONJUNCTION WITH THE BOND INSTRUMENTS. 14

16 PART II EXPECTED TIMETABLE OF EVENTS Publication of this document 15 July 2016 Admission and dealings to commence in the Bonds 19 July 2016 COMPANY DETAILS ON THE GIBRALTAR STOCK EXCHANGE ISIN (STERLING BONDS) ISIN (DOLLAR BONDS) ISIN (EURO BONDS) GB00BYT3QF40 GB00BD9X3124 GB00BD9X2M62 15

17 PART III RISK FACTORS The Company believes that the following factors may affect its ability to fulfil its obligations under the Bonds. All of these factors are contingencies which may or may not occur and the Company is not in a position to express a view on the likelihood of any such contingency occurring. Before investing in the Bonds you should carefully consider all of the information included or incorporated by reference into this Base Prospectus. The risks and uncertainties described below are not the only ones the Company may face. Additional risks and uncertainties not presently known to the Company or that the Company currently deems immaterial may also impair the Company s business operations or affect the Bonds. If any of the risks described below or other risks incorporated by reference into this Base Prospectus were to occur, the Company s business, financial condition or operating results could be materially adversely affected. Factors which the Company believes may be material for the purpose of assessing the market risks associated with the Bonds are also described below. Factors that may affect the Company s ability to fulfil its obligations under the Bonds Delays in deployment of the proceeds of the Bond may have an impact on the performance of the Company's cash flows As at the date of this Base Prospectus, the Company has no investments, and pending deployment of the proceeds of the Bonds intends to invest them in a bank account. Interim cash management is likely to yield lower returns than the expected returns from investments. There can be no assurance as to how long it will take for the Company to invest all of the Bond proceeds and the longer the period the greater the likelihood that the Company s results of operations will be materially adversely affected. To the extent that there is a delay in investing the Bond proceeds, the Company's aggregate return on investments will be reduced, which may materially adversely affect the Company s ability to meet its obligations under the Bonds. Risks relating to the business The cyclical nature of the tanker industry may lead to changes in charter rates, which may adversely affect earnings of the Company. Historically, the tanker industry has been cyclical, experiencing volatility in profitability due to changes in the supply of, and demand for, tanker capacity and changes in the supply of and demand for oil and refined petroleum products. If the tanker market is depressed, the Company s earnings may decrease, particularly with respect to tankers under spot charter. The cyclical nature of the tanker industry may cause significant increases or decreases in the revenue earned from the Company s vessels and may also cause significant increases or decreases in the value of the vessels. The factors affecting the supply of and demand for tankers are outside the control of the Company, and the nature, timing and degree of changes in industry conditions are unpredictable. Factors that influence demand for tanker capacity include: demand for oil and oil products; supply of oil and oil products; regional availability of refining capacity; global and regional economic conditions; and the distance oil is to be moved by sea. Factors that influence the supply of tanker capacity include: 16

18 the number of new building deliveries; the scrapping rate of older vessels; and conversion of tankers to other uses. Changes in the crude oil markets could result in decreased demand for vessels and services of the Company: Demand for vessels acquired by the Company will depend upon among other factors world and regional oil markets. Any decrease in shipments of oil in those markets could have a material adverse effect on the business, financial condition and results of operations of the Company. Historically, these markets have been volatile as a result of the many conditions and events that affect the price, production and transport of oil and competition from alternative energy sources. A slowdown of one or more of the world economies could result in reduced consumption of oil and decreased demand for vessels and services of the Company, which would reduce vessel earnings. Changes in the spot tanker market may result in fluctuations in the utilisation of vessels and profitability of the Company: The spot-charter market is volatile and fluctuates based upon tanker availability and oil supply and demand. The successful operation of vessels in the spot-charter market depends upon, among other things, obtaining profitable spot charters and minimising, to the extent possible, time spent waiting for charters and time spent traveling unloaded to pick up cargo. Future spot rates may not be sufficient to enable vessels trading in the spot tanker market to operate profitably or to provide sufficient cash flow to service the debt obligations of the Company. Charter rates may fluctuate over time and may be lower when the Company is attempting to recharter tankers, which could adversely affect operating results of the Company: The Company s ability to recharter the tankers following expiration of existing time charter contracts and the rates payable upon any renewal or replacement charters will depend upon, among other things, the state of the tanker market. Aframax tanker trades are highly competitive and have experienced fluctuations in charter rates based on, among other things, oil and vessel demand. The value of vessels may decline, which could adversely affect operating results of the Company: Tanker values can fluctuate over time due to a number of different factors. Charter rates may not be profitable, or if the Company cannot re-deploy a chartered vessel at attractive rates upon charter termination, rather than continue to incur costs to maintain and finance the vessel, the Company may seek to dispose of it. The Company s inability to dispose of the vessel at a reasonable value could result in a loss on its sale and adversely affect results of operations and financial condition. Further, if the Company determines at any time that a vessel s future useful life and earnings require the Company to impair its value on the financial statements, the Company may need to recognise a significant charge against earnings. The Company s growth depends on demand for oil transportation, which can be negatively impacted by changes in that demand: increases in the production of oil in areas linked by pipelines to consuming areas; the extension of existing or the development of new pipeline systems in markets the Company may serve or the conversion of existing non-oil pipelines to oil pipelines in those markets; decreases in the consumption of oil due to increases in its price relative to other energy sources, other factors making consumption of oil less attractive; 17

19 availability of new, alternative energy sources; and negative global or regional economic or political conditions, particularly in oil consuming regions, which could reduce energy consumption or its growth. Reduced demand for offshore marine transportation would have a material adverse effect on the Company s future growth and could harm its business, results of operations and financial condition. Competition in markets may lead to reduced profitability or expansion opportunities: The Company s vessels will operate in competitive markets. Competition arises primarily from other vessel owners, including major oil companies and independent companies. Competition also exists with owners of other size vessels. The Company s market share is insufficient to enforce any degree of pricing discipline in the markets in which it operates and its competitive position may erode in the future. Any new markets which the Company may enter could include participants that have greater financial strength and capital resources than the Company who may not be successful in entering new markets. The Company s operations will be subject to environmental and other regulations which may significantly increase expenses of the Company. Changes in regulation The Company s operations are affected by extensive and changing international, national and local environmental protection laws, regulations, treaties and conventions in force in international waters, the jurisdictional waters of the countries in which the Company s vessels operate, and the countries of the vessels registration, including those governing oil spills, discharges to air and water, and the handling and disposal of hazardous substances and wastes. Many of these requirements are designed to reduce the risk of oil spills and other pollution. In addition, the Company believes that the heightened environmental, quality and security concerns of insurance underwriters, regulators and charterers will lead to additional regulatory requirements, including enhanced risk assessment and security requirements and greater inspection and safety requirements on vessels. The Company expects to incur substantial expenses in complying with these and future laws and regulations, including expenses for vessel modifications and changes in operating procedures. These requirements can affect the resale value or useful lives of the Company s vessels, require a reduction in cargo capacity, ship modifications or operational changes or restrictions, lead to decreased availability of insurance coverage for environmental matters or result in the denial of access to certain jurisdictional waters or ports, or detention in, certain ports. Under local, national and foreign laws, as well as international treaties and conventions, the Company could incur material liabilities, including cleanup obligations, in the event that there is a release of petroleum or other hazardous substances from its vessels or otherwise in connection with its operations. The Company could also become subject to personal injury or property damage claims relating to the release of or exposure to hazardous materials associated with its operations. In addition, failure to comply with applicable laws and regulations may result in administrative and civil penalties, criminal sanctions or the suspension or termination of operations, including, in certain instances, seizure or detention of the Company s vessels. Operational Risk Operational risk and losses can result from external and internal failures or inadequacies in systems or processes, failure to comply with regulatory requirements and conduct of business rules, natural disasters or the failure of external systems, for example, those of the Company s contractual counterparties. Terrorist acts, other acts of war or hostility and geopolitical, pandemic or other such events may result in economic and political uncertainties which could have a material adverse effect on the United Kingdom and international economic conditions and more specifically on the Company's results of operations, financial condition or prospects. In addition, an incident incapacitating the Company s management or systems could impact on the Company's ability to carry on its business. Notwithstanding anything in this risk factor, this risk factor should not be taken as implying that the Company will be unable to comply with its obligations as a company with securities admitted to the Gibraltar Stock Exchange. 18

20 Dependence on key personnel The Company's future performance and success is substantially dependent on the continued services and continuing contributions of its Directors and senior management. The loss of the services of any of the Company's executive officers or senior management could have a material adverse effect on the Company s business. The Company s future success will also depend on its ability to attract and retain additional suitably qualified and experienced employees. There can be no guarantee that the Company will be able to attract and retain such employees, and failure to do so could have a material adverse effect on the financial condition, results or operations of the Company. In addition, the future success of the Company may be dependent on the Company's ability to integrate new teams or professionals. There can be no guarantee that the Company will be able to recruit such teams or effect such integration. Failure to do so could have a material adverse effect on the financial condition, results or operations of the Company. Overseas taxation The Company may be subject to tax under the tax rules of the jurisdictions in which it invests. Although the Company will endeavour to minimise any such taxes this may affect the performance of the business, which may affect the Company s ability to provide returns to Bondholders. Changes in interest rates Changes in interest rates could adversely affect the results of the Company s operations by increasing finance costs. Any increase in interest rates would increase debt service costs and would adversely affect the Company s cash flow. Changes in interest rates could therefore have an adverse effect on the Company s business, results of operations, financial condition and/or prospects. In addition, if interest rates on any future borrowing entered into are higher than the rates applicable to existing debt, then the Company s profitability may be affected. Litigation Legal proceedings may arise from time to time in the course of the Company's businesses. The Directors cannot preclude that litigation may be brought against the Company and that such litigation could have a material adverse effect on the financial condition, results or operations of the Company. Factors which are material for the purpose of assessing the market risks associated with the Bonds Risks related to the Bonds generally The Terms and Conditions of the Bonds contain provisions for calling meetings of the Bondholders to consider matters affecting their interests generally and to obtain Written Resolutions on matters relating to the Bonds from Bondholders without calling a meeting. These provisions permit defined majorities to bind all Bondholders including Bondholders who did not attend and vote at the relevant meeting and Bondholders who voted in a manner contrary to the majority. Modification, waivers and substitution The Terms and Conditions of the Bonds contain provisions for calling meetings of Bondholders to consider matters affecting their interests generally. These provisions permit majorities of certain sizes to bind all Bondholders, including Bondholders who did not attend and vote at the relevant meeting and Bondholders who voted in a different manner than the majority did. 19

21 The EU Directive on the taxation of savings income may result in the imposition of withholding taxes in certain jurisdictions Under Council Directive 2003/48/EC on the taxation of savings income (the Savings Directive), Member States are required to provide to the tax authorities of other Member States details of certain payments of interest or similar income paid or secured by a person established in a Member State to or for the benefit of an individual resident in another Member State or certain limited types of entities established in another Member State. For a transitional period, Austria is required (unless during that period it elects otherwise) to operate a withholding system in relation to such payments. The end of the transitional period is dependent upon the conclusion of certain other agreements relating to information exchange with certain other countries. A number of non-eu countries and territories including Switzerland have adopted similar measures (a withholding system in the case of Switzerland). If a payment were to be made or collected through a Member State which has opted for a withholding system and an amount of, or in respect of, tax were to be withheld from that payment, the Company nor any other person would be obliged to pay additional amounts with respect to any Bond as a result of the imposition of such withholding tax. Risk of early repayment In the event that a change in law relating to taxation results in the Company becoming obliged to increase the amounts payable under the Bonds, the Company may repay outstanding amounts under the Bonds early. Upon repayment of the Bonds you may not be able to reinvest the repayment proceeds at an effective interest rate as high as the interest rate on the Bonds being repaid and may only be able to do so at a significantly higher rate. You should consider investment risk in light of other investments available at the time. Risks related to the market generally Set out below is a brief description of the principal market risks of the Bonds: Gibraltar Stock Exchange The Bonds will be traded on GSX. Admission to GSX should not be taken to imply that there is or will be a liquid market in the Bonds. Any changes to the regulatory environment, in particular the GSX Rules for Companies could, for example, affect the ability of the Company to maintain a trading facility for the Bonds on GSX. The secondary market generally The Bonds may have no established trading market when issued, and one may never develop. If a market does develop, it may not be very liquid. Therefore, investors may not be able to sell their Bonds easily or at prices that will provide them with a yield comparable to similar investments that have a developed secondary market. The Bonds are designed for specific investment objectives or strategies. As such, the Bonds generally will have a more limited secondary market and more price volatility than conventional debt securities. Illiquidity may have a severely adverse effect on the market value of the Bonds. No credit rating subject to change At the date of this Base Prospectus, the Company has not been assigned a credit rating by any independent credit rating agency and, accordingly, the Bonds have not been assigned a credit rating by any independent credit rating agency. Investors will need to make their own assessment of the credit of the Company and the other factors which may affect the value of the Bonds without the benefit of an independent credit rating. There can be no guarantee that a credit rating will be assigned to the Company or the Bonds in the future. Even if such a credit rating is obtained, investors in the Bonds should be aware that a credit rating is not a recommendation to buy, sell or hold any of the Bonds and any credit rating that may be assigned to the 20

22 Bonds may be subject to suspension, change or withdrawal at any time by the rating agency. Any credit rating that may be assigned to the Bonds may go down as well as up. Realisation from sale of the Bonds may be less than original investments A Bondholder who chooses to sell his Bonds at any time prior to their maturity, may receive a price from such sale which is less than the original investment made. Factors that will influence the price may include, but are not limited to, market appetite, inflation, and the time of redemption, interest rates and the current financial position and an assessment of the future prospects of the Company. Exchange rate risks and exchange controls The Company will pay principal and interest on the Bonds in sterling, dollars or Euros at the exchange rate [on the date of issue of the relevant Bonds, on the prevailing interest rate from time to time]. This presents certain risks relating to currency conversions if an investor's financial activities are denominated principally in a currency or currency unit other than sterling, dollars or Euros. These include the risk that exchange rates may significantly change (including changes due to devaluation of sterling, dollars or Euros or revaluation of the investor's currency) and the risk that authorities with jurisdiction over the investor's currency may impose or modify exchange controls. An appreciation in the value of the investor's currency relative to sterling, dollars or Euros would decrease (i) the investor's currency-equivalent yield on the Bonds, (ii) the investor's currency-equivalent value of the principal payable on the Bonds and (iii) the investor's currency-equivalent market value of the Bonds. Government and monetary authorities may impose (as some have done in the past) exchange controls that could adversely affect an applicable exchange rate. As a result, investors may receive less interest or principal than expected, or no interest or principal. Interest rate risks The Bonds bear interest at a fixed rate rather than by reference to an underlying index. Accordingly, if interest rates rise, then the income payable on the Bonds might become less attractive and the price that may be realised on a sale of the Bonds may fall. However, the market price of the Bonds from time to time has no effect on the total income you receive on maturity of the Bonds if you hold the Bonds until maturity. Further, inflation will reduce the real value of the Bonds over time, which may affect what you could buy with your investment in the future and may make the fixed rate payable on the Bonds less attractive in the future, again affecting the price that investors could realise on a sale of the Bonds. Security Investors should note that the Bonds will initially be unsecured and that the Company intends, subject to permission being granted (which cannot be guaranteed) by its lender(s) to seek to grant a charge in favour of the Bondholders (from time to time) over any and all vessels acquired by the Company utilising some or all of the proceeds derived from the issue of the Bonds. There can be no assurance that any such permission will be granted by its lenders or that if it is granted what form of security will be allowed or how it will rank after any other security held by its lenders. Furthermore there can be no assurance that any charge will enable any value in those assets which an unsecured debt of the Company and will rank equally with any other unsecured debts of the Company. There is no certainty or guarantee that the Company will be able to pay them. If the Company were to become insolvent, there is a risk that (a) some or all of the nominal value of the Bonds will not be redeemed, and (b) some or all of the interest return due on the Bonds will not be paid. 21

23 PART IV DESCRIPTION OF THE COMPANY 1. Introduction The Company was incorporated in the Isle of Man under the Isle of Man Companies Act 2006 (as amended) on 19 May, 2016 with registered number V with the name Sea Oil Tankers Limited. Sea Oil has been formed to purchase tankers and then to operate those tankers to transport crude petroleum and refined petroleum products globally. The Company has an experienced management team led by Mr. Alf J. Aanonsen, and the combined team has over 40 years experience in vessel management and 30 years experience in capital markets and corporate finance. The Company s headquarters are located in Stamford, Connecticut, U.S.A., which is a centre for ship ownership and management. The Directors and management team are re-entering the international marine crude oil transportation sector after having successfully built, managed, and then sold at the height of the market, a fleet of 13 crude oil tankers. The last of such tankers was sold in Together the Directors believe they have experience and expertise to deliver an efficient organisational structure that allows management to minimise costs while focusing on operations, customer service and risk management. The management team will perform in house commercial management and supervise technical management which will be outsourced to leading service providers who hold, ISO certification (such as V Ships AS, Norway), with whom the Executive Directors have worked with over a number of years. 2. Business Strategy Acquisition Strategy The Company initially intends to acquire up to three identified Aframax tankers (see details below) or other similar tanker vessels which the Directors have also identified. These vessels will be used for the transport of crude oil globally, and the Company anticipates future acquisitions of tankers of varying sizes. Funding will be through the use of equity and debt funded by the issue of further tranches of the Bonds and bank debt. The Company s primary focus will be in the marine transport of crude petroleum and petroleum products. The Company will utilise a disciplined fleet portfolio approach for strategic growth and operational management. Each vessel will be treated as a separate investment in the portfolio, accounted for separately in the financial sense (and acquired through new incorporated Liberian special purpose vehicles) but part of a broader Sea Oil corporate cash flow and risk management strategy. Aframax Tankers The Aframax is a medium sized tanker of approximately deadweight tons ("dwt") capable of carrying up to 500,000 barrels of crude oil. The Aframax global fleet is approximately 927 vessels, about 15 per cent. of a worldwide tanker fleet of 6,136 vessels above 10,000 dwt. Estimated life is typically 25 to 30 years. The Directors believe Aframax tankers can be deployed in a more diverse trading pattern than larger tankers, being used in all crude exporting regions of the Atlantic and Pacific oceans and the Caribbean, Mediterranean and the Arabian Gulf. The Directors believe that this type of vessel represents an attractive investment opportunity at this stage of the cycle. The basic specifications which the Company have identified as surveyed by the American Bureau of Shipping are shown by the following example: Builder: Hyundai Heavy Industries 22

24 Build date: July, 2008 Hull: Length: Double hull Beam: Cargo tanks: Cargo capacity: meters Deadweight: 105,726 Design fatigue life: 8 coated & coiled 500,000 barrels of crude 30 years Estimated Vessel cost: $28,000,000 The Directors believe that most of the Aframax vessels the Company will acquire will be manufactured in South Korea and Japan. The price of each of the vessels is dependent on its age and condition, but, at the current time, are anticipated to be consistent with the example above. Vessel Employment Options & Strategy The Company intends that its vessels will be employed under a mix of charters, primarily time and spot, on a global basis. Time charters are where the Company s vessels will be contracted for a pre-defined period, typically one year or longer for an agreed day rate where the Company is responsible for operating expenses (crewing, maintenance, repairs, etc.) while the charterer is responsible for voyage expenses (fuel and port fees) and where the charterer will operate the ship. With a "spot charter", which typically is for a single voyage, the Company is responsible for voyage and vessel day-to-day operating expenses. The Company will compete principally with other owners in the spot-charter market through the global tanker charter market. This market is comprised of tanker broker companies that represent both charterers and ship-owners in chartering transactions. Within this market, some transactions, referred to as market cargoes, are offered by charterers through two or more brokers simultaneously and shown to the widest possible range of owners; other transactions, referred to as private cargoes, are given by the charterer to only one broker and shown selectively to a limited number of owners whose tankers are most likely to be acceptable to the charterer and are in position to undertake the voyage. The Directors believe that they will have competitive advantages in the Aframax tanker market due to the experience of the management team in place. The Company has an experienced chartering staff (initially being Alf Aanonsen and Stefan Aanonsen) located in Stamford, Connecticut a U.S. ship management center. Fleet operations, vessel positions and charter market rates are monitored continuously and the Directors are of the opinion that monitoring such information is critical to making informed bids on competitively brokered business. Based upon the last 12 months activity in the Aframax market, an example of estimated average annualised daily operating economics for an Aframax tanker would be as follows: Estimated Single Vessel Operating Cash Flows Daily Estimate Annualised Estimate Spot charter rate: (360 days) $32,000 $11,520,000 Operating expense: (365 days) $(8,700) $(3,175,500) Operating Cash before EBITDA $23,300 $8,504,000 There is no guarantee that vessels will be fully employed during any one calendar period, and revenue (charter rate) and operating expenses may vary significantly over time. The strategies anticipated by the Directors to be employed with a view to controlling and mitigating operational risk will include: 23

25 Experienced operational management team. The executive management team of Sea Oil have 40 years of experience in all phases of the shipping industry. The executive team have managed through multiple economic cycles with expertise across commercial, technical, financial and other functional management areas of the business. The Directors believe this helps promote a focused effort, with stringent quality and cost controls, and effective operations and safety monitoring. Maintain a balanced chartering strategy to reduce risk and increase cash flow. The Company intends to employ its vessels under a mix of time charters (with and without profit share) bareboat charters, pooling arrangements and on the spot market. Long term time charters with a profit sharing component will offer the Company some protection in the event charter rates decrease while allowing the Company to share in increased profits if rates rise. In addition, the Company will diversify charters by duration and customer. The Company s approach to vessel employment is an integral part of the Company s risk management strategy which can help stabilise and enhance cash flows while enabling the Company to take advantage of rising charter rates and market volatility. Maintaining focus on high quality, cost-effective marine operations. The Directors intend for the Company to excel in safety and risk management, to maintain cost- effective operations, ensuring high quality customer service with a well maintained asset base, and to employ well-trained onshore and offshore staff. Achievement of these objectives will allow the Company to deliver superior services to customers. The Company intends to maintain all significant operating, commercial and administrative functions in-house to ensure stringent operational and quality control. The Directors believe these strategies will enhance the Company s ability to obtain repeated business from customers and attract new customers, as well as to operate the Company s fleet with greater efficiencies. Maintain Financial Flexibility. The Directors are developing and putting into place a balanced capital structure encompassing both equity and long term debt financing. In a disciplined manner the Company will seek to expand its commercial banking and capital market relationships at a pace commensurate with its business development. Focus on a Modern Fleet. The Company intends to maintain a high quality fleet of modern tankers that meet rigorous industry standards and the Company s charterer requirements. The Company will maintain high quality specifications for its fleet consistent with yard requirements to which the vessels were built and focusing on where the vessels were constructed and the reputation of the yard in the industry. Maintaining a high quality fleet with high operational efficiency is what the Directors believe their customers will want and will be recognisable in the market place. Through high levels of maintenance the Company hopes to experience fewer off-hire days, greater reliability, and better operating efficiencies with higher levels of safety procedures. The Company will also implement a planned preventive maintenance program which will be designed to, over the vessel life cycle, reduce the overall operating costs while maintaining overall fleet quality. The Directors will maintain relationships with charterers, reputable owners, banks and shipyards which it is hoped will assist in identifying attractive vessel acquisition opportunities. The Directors also intend to focus on modern (eight years of age or less) tankers which have been built in Tier 1 shipyards. The Company will also consider acquisitions of newbuild vessels from Tier shipyards and target tankers with modern fuel efficient designs reflecting demands for lower cost operations and environmental emissions. Grow our Fleet Opportunistically. The executive team believe they are able to take advantage of attractive asset values in the tanker sector to expand the Company s fleet through acquisitions. The demand for tankers will expand as trade routes for crude petroleum continue to evolve in markets such as the United States (export), Middle East (export), Europe, Japan, South Korea, Southeast Asia (import) and as changes in refinery production and the opening of many new refineries in China and India (import) contribute to increases in transport volumes. These volumes are expected to grow 1 per cent. p.a., (1.2 mbd) through 2020, with incremental expansion from the Asia Pacific region. Strong commitment to safety and the environment. Under both time and spot charters the Directors are responsible for the technical management and maintenance of the Company s vessels including periodic dry docking, cleaning, painting, and work required by regulators and maintenance of various survey society standards to meet class requirements, insurance and customer standards. The Directors intend to appoint an industry recognised third party organisation on a contract basis to provide crewing and technical management of all vessels acquired. Health, safety, training and environmental protection standards will also be contracted and maintained by such third party which is an industry leader in this area. 24

26 3. Principal Activities Crude Oil and Petroleum Products Transportation Sea Oil is a newly formed company which has not commenced trading as of the date of this document. The vessels proposed to be acquired by the Company will transport crude and refined petroleum products globally. The Directors believe the Company can take advantage of the potential opportunities in the market place for the acquisition of vessels at attractive entry valuations combined with positive short and long term trends developing in the tanker market as a global provider of marine transportation of crude oil and petroleum products. The Company s focus will be on providing customers with flexible and reliable transportation services and develop strong industry relations with partners and customers. The Company believes that it will benefit from the Directors expertise, relationships and reputation as the Company operates its fleet and pursues growth opportunities. The Company anticipates additional opportunities to expand the Company through acquisitions of crude and product tankers. 4. Capital Raising and Investment The Directors have had preliminary discussions with Clarksons Platou and a banking institution focused on raising complimentary bank debt corresponding to offer being made to subscribe for Bonds pursuant to this document. Generally, terms would include up to 50 per cent. financing of a vessel acquisition for up to seven years at LIBOR, estimated at May 2016 to be approximately 4 per cent. It is anticipated that any such debt, if agreed, will have a priority lien on all vessels acquired including priority over any future charge that the Company is able to grant in favour of the Bondholders. However there is no guarantee that such financing will be available or that terms will be acceptable. 5. Company Structure Sea Oil Tankers Limited was incorporated in the Isle of Man in May, The Company is overseen by a Board of Directors that is diverse and experienced in corporate management, finance and law. The Company intends to incorporate Liberian special purpose vehicles as wholly owned subsidiaries of the Company. Each such company will be incorporated with the sole purpose of acquiring and operating a single vessel. 6. Industry Overview The Board believes the opportunity exists currently and will likely extend over the next 10 years for the tanker market to generate attractive returns with reduced risk because of the fundamental changes that are evolving and will continue to evolve in the patterns of crude oil production and consumption. In January 2015 the price of crude oil collapsed and fell to a 10 year low of below $30 a barrel. This price collapse was triggered by an increase in Saudi Arabian production. The U.S., for the first time since 1975, is allowing the export of crude and refined petroleum products. Global consumption of refined product is growing spurred by cheap oil. Lower crude oil prices are expected to continue for the foreseeable future. Iran, historically a major crude exporter, is expected to produce annual average crude oil of 3.1 b/d in 2016 and almost 3.6 b/d in 2017, and appears likely to grow exports, adding to product availability and pressuring prices. The collapse in crude oil pricing began to positively impact global consumption during the second half of Consumption by a range of end users for crude petroleum; transport, at the consumer and industrial level, chemicals, plastics, etc. is forecasted to grow by 1 per cent. a year through to China, for example, is expected to increase auto production 22 per cent. over the next 2 years, bringing it to 28.8 million cars, minivans, and SUVs. This follows 8 per cent. growth of sales in the same segment from 2014 to This will bring China's vehicle market almost to the level of the American and European markets combined. India is also, a fast growing market which may also increase crude imports over the next 10 years. 25

27 The shipping industry is cyclical in nature, and Directors believe that the global tanker marine transport sector is in the early stages of a long term recovery. Some elements which may be considered to support this view at the date of this document are as follows: Crude Oil Demand: The demand for oil has been growing in the last 25 years at an average of 1.1 mbpd and is forecasted to grow at 1.2 mbpd every year to Crude Oil Supply: Beginning in late 2014 and continuing to date, market excess supply resulted from a market share strategy (Saudi Arabia) to force U.S. shale production and alternative energy sources out of the market on a cost basis. However, U.S. shale production is very resilient and responsive. Tonnage Miles Increasing Annually: Trade routes are expanding to reflect increased crude production in the Arabian Gulf and the U.S. for refining and consumption end points in the Asian / Pacific region with China and India leading consumption demand. Vessel Supply Manageable: Using VLCC and Suezmax vessel supply as a broad guide, replacement cycle manageable with order book for new ships largely reflecting industrial demand, not speculation. Barriers to Increased competition: Basel II and III introduced new restrictions on bank lending making ship finance more difficult. Distress in shipping loans, the pull back in bank credit and private equity after losses in the dry bulk sector have consequently resulted in less capital for the shipping sector. Global Marine Transportation: The Tanker Sector Global Marine Transportation Shipping while not as visible as real estate, arguably plays a greater role in modern life. The global maritime industry, which moves 90 per cent. of worldwide trade, is basically defined by three sectors; bulkers, containerships and tankers. Bulkers, which make up approximately 43 per cent. of the global fleet by tonnage carry commodities such as iron ore, cement, coal, grain and the like. Containerships, carrying the world's goods in standard sized containers, make up approximately 13 per cent. of the world's tonnage. Tankers, carrying crude petroleum, diesel, gasoline, petro chemicals, edible oils, etc. make up approximately 34 per cent. of world tonnage. The balance of tonnage, 10 per cent., includes all other classes of commercial shipping. Visual representation not indicative of actual routes 26