UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

(Mark One)

☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31 2020, 2023

OR

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from __________ to __________.

Commission File Number 1-6479-1001-06479

OVERSEAS SHIPHOLDING GROUP, INC.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: 813-209-0600

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No No☒ ☒

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

The aggregate market value of the common equity held by non-affiliates of the registrant on June 30, 2020,2023, the last business day of the registrant’s most recently completed second quarter, was $119,609,327292,943,697, basedbased on the closing price of $1.86$4.17 per share of Class A common stock on the NYSE exchange on that date. For this purpose, all outstanding shares of common stock have been considered held by non-affiliates, other than the shares beneficially owned by directors, officers and certain 5% stockholders of the registrant; certain of such persons disclaim that they are affiliates of the registrant.

As of March 24, 2021,6, 2024, 86,674,20970,952,360 shares of the issuer’s Class A common stock were outstanding. Excluded from these amounts are penny warrants, which were outstanding as of March 24, 2021,6, 2024, for the purchase of 3,654,795803,682 shares of Class A common stock without consideration of any withholding pursuant to the cashless exercise procedures.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive proxy statement to be filed by the registrant in connection with its 20212024 Annual Meeting of Stockholders are incorporated by reference in Part IIIIII.

TABLE OF CONTENTS

References in this Annual Report on Form 10-K to the “Company”, “OSG”, “we”, “us”, or “our” refer to Overseas Shipholding Group, Inc. and, unless the context otherwise requires or otherwise is expressly stated, its subsidiaries, including Alaska Tanker Company as of its March 12, 2020 acquisition date.

OSG is currently a smaller reporting company (“SRC”) under SEC rules. Accordingly, disclosures in this Annual Report on Form 10-K have been modified. As an SRC, OSG is not required to provide certain disclosures, for example, risk factors, however, we have provided these disclosures.subsidiaries.

A glossary of shipping terms (the “Glossary”) that should be used as a reference when reading this Annual Report on Form 10-K can be found immediately prior to Part I. Capitalized terms that are used in this Annual Report are either defined when they are first used or in the Glossary.

All dollar amounts are stated in thousands of U.S. dollars unless otherwise stated.

AVAILABLE INFORMATION

The Company makes available free of charge throughon its internet website, www.osg.com, its Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after the Company electronically files such material with, or furnishes it to, the Securities and Exchange Commission (the “SEC”). Our website and the information contained on that site, or connected to that site,our website are not incorporated by reference in this Annual Report on Form 10-K.

The public may also read and copy any materials the Company files with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549 (information on the operation of the Public Reference Room is available by calling the SEC at 1-800-SEC-0330). The SEC also maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov.

The Company also makes available on its website its corporate governance guidelines, its code of business conduct, its insider trading policy,and anti-bribery and corruption policypolicies, and the charters of the Audit, Committee, Human Resources and Compensation, Committee and Corporate Governance and Risk Assessment CommitteeCommittees of the Board of Directors.Directors (the “Board”). Except as otherwise noted, neither our website nor the information contained on that site, or connected to that site,our website is incorporated by reference into this Annual Report on Form 10-K.

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, we may make or approve certain forward-looking statements in future filings with the SEC, in press releases, or in oral or written presentations by representatives of the Company. All statements other than statements of historical factsfact should be considered forward-looking statements. Words such as “may”, “will”, “should”, “would”, “could”, “appears”, “believe”, “intends”, “expects”, “estimates”, “targeted”, “plans”, “anticipates”, “goal”, and similar expressions are intended to identify forward-looking statements but should not be considered as the only means by which these statements may be made. Such forward-looking statements represent the Company’s reasonable expectations with respect to future events or circumstances based on various factors and are subject to various risks, uncertainties, and assumptions relating to the Company’s operations, financial results, financial condition, business, prospects, growth strategy and liquidity. Accordingly,However, there are or will likely be important factors, many of which are beyond the control of the Company, that could cause the Company’s actual results to differ materially from the expectations expressed or implied in these statements. Undue reliance should not be placed on any forward-looking statements, and consideration should be given to the following factors when reviewing such statements. Such factors include, but are not limited to:

Investors should carefully consider these risk factors and the additional risk factors outlined in more detail in this Annual Report on Form 10-K under the caption “Risk Factors” and in other reports hereafter filed by the Company with the SEC under the caption “Risk Factors.”SEC. The Company assumes no obligation to update or revise any forward-looking statements except as may be required by law. Forward-looking statements in this Annual Report on Form 10-K and written and oral forward-looking statements attributable to the Company or its representatives after the date of this Annual Report on Form 10-K are qualified in their entirety by the cautionary statement contained in this paragraphsection and in other reports hereafter filed by the Company with the SEC.

NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY FINANCIAL INFORMATION

The Company reports its financial results in accordance with generally accepted accounting principles ofin the United States of America (“GAAP”). However, the Company has included in this Report certain non-GAAP financial measures and ratios, which it believes provide useful information to both management and readers of this Report in measuring the financial performance and financial condition of the Company. These measures do not have a standardized meaning prescribed by GAAP and, therefore, may not be comparable to similarly titled measures presented by other publicly traded companies, nor should they be construed as an alternative to other measures determined in accordance with GAAP.

The Company presents four non-GAAP financial measures: time charter equivalent revenues (“TCE”), revenues, EBITDA, Adjusted EBITDA and vessel operating contribution. TCE revenues represent shipping revenues less voyage expenses, as a measure to compare revenue generated from a voyage charter to revenue generated from a time charter. EBITDA represents net income/(loss)income from continuing operations before interest expense and income taxes and depreciation and amortization expense. Adjusted EBITDA consists of EBITDA adjusted for the impact of certain items that we do not consider indicative of our ongoing operating performance. Vessel operating contribution represents TCE revenues less vessel expenses and charter hire expenses and is used as a measure to reflect our niche markets,specialized businesses, which provide a stable operating platform underlying our total US Flag operations. Our niche marketsspecialized businesses include Delaware Bay lightering, MSPTanker Security Program (“TSP”) and Military Sealift Command vessels, shuttle tankers and shuttle tankers.our Alaska class vessels.

This Annual Report on Form 10-K includes industry data and forecasts that we have prepared based, in part, on information obtained from industry publications and surveys. Third-party industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable. In addition, certain statements regarding our market position in this report are based on information derived from the Company’s market studies and research reports. Unless we state otherwise, statements about the Company’s relative competitive position in this report are based on our management’s beliefs, internal studies and management’s knowledge of industry trends.

GLOSSARY

Unless otherwise noted or indicated by the context, the following terms used in the Annual Report on Form 10-K have the following meanings:

American Bureau of Shipping—ABS.

Articulated Tug Barge or ATB—A tug-barge combination system capable of operating on the high seas, coastwise and further inland. It combines a normal barge, with a bow resembling that of a ship, but having a deep indent at the stern to accommodate the bow of a tug. The fit is such that the resulting combination behaves almost like a single vessel at sea as well as while maneuvering.

Ballast —

Ballast— Any heavy material, including water, carried temporarily or permanently in a vessel to provide desired draft and stability.

Bareboat Charter—A Charter under which a customer pays a fixed daily or monthly rate for a fixed period of time for use of the vessel. The customer pays all costs of operating the vessel, including voyage and vessel expenses. Bareboat charters are usually long term.

b/d—Barrels per day.

CERCLA—The U.S. Comprehensive Environmental Response, Compensation, and Liability Act.

Charter—Contract entered into with a customer for the use of the vessel for a specific voyage at a specific rate per unit of cargo (“Voyage Charter”), or for a specific period of time at a specific rate per unit (day or month) of time (“Time Charter”).

CII—Carbon Intensity Indicator, which is calculated as the ratio of the total mass of CO₂ emitted from a vessel to the total transport work undertaken in a given calendar year.

Classification Societies—Organizations that establish and administer standards for the design, construction and operational maintenance of vessels. As a practical matter, vessels cannot trade unless they meet these standards.

Contracts of Affreightment or COAs—An agreement providing for the transportation between specified points for a specific quantity of cargo over a specific time period but without designating specific vessels or voyage schedules, thereby allowing flexibility in scheduling since no vessel designation is required. COAs can either have a fixed rate or a market-related rate. One example would be two shipments of 70,000 tons per month for two years at the prevailing spot rate at the time of each loading.

Crude Oil—Oil in its natural state that has not been refined or altered.

Deadweight tons or dwt—The unit of measurement used to represent cargo carrying capacity of a vessel, but including the weight of consumables such as fuel, lube oil, drinking water and stores.

Deferred payment obligations—DPO.

Demurrage—Additional revenue paid to the shipowner on its Voyage Charters for delays experienced in loading and/or unloading cargo that are not deemed to be the responsibility of the shipowner, calculated in accordance with specific Charter terms.

Double Hull—Hull construction design in which a vessel has an inner and an outer side and bottom separated by void space, usually two meters in width.

Drydocking—An out-of-service period during which planned repairs and maintenance are carried out, including all underwater maintenance such as external hull painting. During the drydocking, certain mandatory Classification Society inspections are carried out and relevant certifications issued. Normally, as the age of a vessel increases, the cost and frequency of drydockings increase.

EEXI—the Energy Efficiency Existing Ship Index, which requires ship operators to assess their ships’ energy consumption and CO₂ emissions against specific requirements for energy efficiency for each vessel type.

Environmental Protection Agency—EPA.

European Union—EU.

Exclusive Economic Zone—An area that extends up to 200 nautical miles beyond the territorial sea of a state’s coastline (land at lowest tide) over which the state has sovereign rights for the purpose of exploring, exploiting, conserving and managing natural resources.

Handysize Product Carrier—A small size Product Carrier of approximately 29,000 to 50,000 deadweight tons. This type of vessel generally operates on shorter routes (short haul).

International Maritime Organization or IMO—An agency of the United Nations, which is the body that is responsible for the administration of internationally developed maritime safety and pollution treaties, including MARPOL.

International Flag—International law requires that every merchant vessel be registered in a country. International Flag refers to those vessels that are registered under a flag other that of the United States.

International Safety Management Code—ISM Code.

Jones Act—U.S. law that applies to port-to-port shipments within the continental U.S. and between the continental U.S. and Hawaii, Alaska, Puerto Rico, and Guam, and restricts such shipments to U.S. Flag Vessels that are built in the United States and that are owned by a U.S. company that is more than 75% owned and controlled by U.S. citizens, set forth in 46 U.S.C. sections 50501 and 55101.

Jones Act Fleet—A fleet comprised of vessels that comply with the Jones Act regulations.

Lightering—The process of off-loading crude oil or petroleum products from large size tankers, typically Very Large Crude Carriers, into smaller tankers and/or barges for discharge in ports from which the larger tankers are restricted due to the depth of the water, narrow entrances or small berths.

MarAd—

MARAD—The Maritime Administration of the U.S. Department of Transportation.

Maritime Security Program or MSP—The U.S. Maritime Security Program, which ensures that militarily useful U.S. Flag vessels are available to the U.S. Department of Defense in the event of war or national emergency. These vessels are required to trade outside the United States but are eligible for government sponsored business. Under the MSP, participants receive an annual fee in exchange for a guarantee that the vessels will be made available to the U.S. government in the event of war or national emergency.

MARPOL—International Convention for the Prevention of Pollution from Ships, 1973, as modified by the Protocol of 1978 relating thereto. This convention includes regulations aimed at preventing and minimizing pollution from ships by accident and by routine operations.

MR—An abbreviation for Medium Range. Certain types of vessel, such as a Product Carrier of approximately 45,000 to 53,000 deadweight tons, generally operate on medium-range routes.

MSP vessels—U.S. Flag vessels that participate in the Maritime Security Program.

OPA 90—OPA 90 is the abbreviation for theThe U.S. Oil Pollution Act of 1990.

OPEC—Organization of Petroleum Exporting Countries, which is an international organization established to coordinate and unify the petroleum policies of its members.

P&I Insurance —ProtectionInsurance—Protection and indemnity insurance is a form of marine insurance provided by a P&I club. A P&I club is a mutual (i.e., a co-operative) insurance association that provides cover for its members, who will typically be ship-owners, ship-operators or demisebareboat charterers.

Product Carrier—General term that applies to any tanker that is used to transport refined oil products, such as gasoline, jet fuel or heating oil.

Recycling—The disposal of vessels by demolition for recycled metal.

Safety Management System or SMS—A framework of processes and procedures that addresses a spectrum of operational risks associated with quality, environment, health and safety. The SMS is certified by ISM (International Safety Management Code), ISO 9001 (Quality Management) and ISO 14001 (Environmental Management).

Shuttle Tanker—A tanker, usually with special fittings for mooring, which lifts oil from offshore fields and transports it to a shore storage or refinery terminal on repeated trips.

Special Survey—An extensive inspection of a vessel by classification societyClassification Society surveyors that must be completed once within every five-year period. Special Surveys require a vessel to be drydocked.

Tanker Security Program or TSP—The U.S. Tanker Security Program was enacted into law in 2021 and funded by Congress in 2022. The program was activated in 2023. The program is designed to ensure that militarily useful U.S. Flag tank vessels are available to the U.S. Department of Defense in the event of war or national emergency. The initial program calls for 10 tankers to participate. These vessels are required to meet national defense and other security requirements and maintain a U.S. presence in international commercial shipping. Under the TSP, participants receive an annual stipend designed to reduce vessel expenses to a level that will allow them to compete for international business. Program participation requires that the ships are available to the U.S. government in the event of war or national emergency.

Technical Management—The management of the operation of a vessel, including physically maintaining the vessel, maintaining necessary certifications, and supplying necessary stores, spares, and lubricating oils. Responsibilities also generally include selecting, engaging and training crew, and arranging necessary insurance coverage.

Time Charter—A Charter under which a customer pays a fixed daily or monthly rate for a fixed period of time for use of the vessel. Subject to any restrictions in the Charter, the customer decides the type and quantity of cargo to be carried and the ports of loading and unloading. The customer pays all voyage expenses such as fuel, canal tolls, and port charges. The shipowner pays all vessel expenses such as the Technical Management expenses.

Time Charter Equivalent or TCE—TCE is the abbreviation for Time Charter Equivalent. TCE revenues, which are voyage revenues less voyage expenses, serve as an industry standard for measuring and managing fleet revenue and comparing results between geographical regions and among competitors.

U.S. Flag fleetFleet — Our Jones Act Fleet together with our MSP vessels.

U.S. Flag vessel—Is aVessel—A vessel that must be crewed by U.S. sailors and owned and operated by a U.S. company.

Vessel Expenses—Includes crew costs, vessel stores and supplies, lubricating oils, maintenance and repairs, insurance and communication costs associated with the operations of vessels.

Voyage Charter—A Charter under which a customer pays a transportation charge for the movement of a specific cargo between two or more specified ports. The shipowner pays all voyage expenses, and all vessel expenses, unless the vessel to which the Charter relates has been time chartered in. The customer is liable for Demurrage, if incurred.

Voyage Expenses—Includes fuel, port charges, canal tolls, cargo handling operations and brokerage commissions paid by the Company under Voyage Charters. These expenses are subtracted from shipping revenues to calculate Time Charter Equivalent revenues for Voyage Charters.

PART I

ITEM 1. BUSINESS

OVERVIEW AND RECENT DEVELOPMENTS

Overseas Shipholding Group, Inc., a Delaware corporation incorporated in 1969, and its wholly owned subsidiaries including Alaska Tanker Company (“ATC”) as of its March 12, 2020 acquisition date, own and operate a fleet of oceangoing vessels engaged in the transportation of crude oil, petroleum, and petroleum productsrenewable transportation fuels in the U.S. Flag trade. At December 31, 20202023, the Company owned or operated a fleet of 2521 vessels totaling an aggregate of approximately 1.7 1.5 million deadweight tons (“dwt”).dwt. Additional information about the Company’s fleet, including its ownership profile, is set forth under “Fleet Operations— Fleet Summary,” as well as on the Company’s website, www.osg.com.

OSG primarily charters its vessels to customers for voyages foruse over specific periods of time at fixed daily amounts contractually established through time charters. The CompanyOSG also charters its vessels for specific voyages at spot rates. Spot market rates are highly volatile due to utilization while in the spot market, which is driven by market forces, including local and worldwide demand for the commodities carried, (such as crude oil or petroleum products), volumes of trade, distances that the commodities must be transported, the amount of available tonnage both at the time such tonnage is required and over the period of projected use, and the levels of seaborne and shore-based inventories of crude oil and refined products. Time charter rates provide more predictable streams of TCE revenues because they are fixed for specific periods of time. For a more detailed discussion on factors influencing spot and time charter markets, see “Fleet Operations—Commercial Management” below.

We actively manage the size and composition of our fleet through opportunistic acquisitions and dispositions of vessels. We consider timely and selective acquisitions of high-quality secondhand vessels or new-build contracts when we believe those acquisitions will result in attractive returns on invested capital and increased cash flow. We may also engage in dispositions or repurposing of vessels where we can achieve attractive values relative to their anticipated future earnings from operations. Taken together with our experience and long-standing relationships with participants in the crude, refined and renewable product shipping industry, we believe these attributes help us maintain a diverse, high-quality and modern fleet with an enhanced return on invested capital.

The ongoing Coronavirus pandemic has severelyfollowing principal developments have directly or indirectly impacted globalour business recently and national economies. Lockdown orders, business closuresare expected to continue to do so:

In January 2024, Saltchuk Resources, Inc., which owns approximately 21% of OSG’s outstanding common stock, submitted an unsolicited, non-binding indication of interest to OSG’s Board of Directors to acquire all outstanding shares of OSG’s common stock that Saltchuk does not own for $6.25 per share in cash. The Board of Directors is carefully considering Saltchuk’s indication of interest and travel restrictions among many other events have reduced the demand for many products, including petroleum. This has ledis committed to a significant reduction in refinery operations and end user demand for transportation fuels. The reduced demand has created extreme business uncertainty for our customers and the result has been a reluctance to enter into longer term transportation commitments. We believe that as their visibility and confidenceacting in the future returns therebest interests of our stockholders. We can provide no assurances that any transaction agreement will be a resumption of more typical customer behavior and time charter activityexecuted or that any transaction will rebound.be consummated.

This has resulted in the non-renewal of charters for vessels whose time charters were ending late in 2020 and early in 2021. In response to this we have placed seven vessels in layup as of March 1, 2021. This allows us to reduce the costs associated with vessels that are without charter. We anticipate that this situation will resolve itself as vaccines are widely distributed and there is a lifting of the COVID-19 restrictions.

Strategy

We seekThe key elements to our strategy to maximize stockholder value by generating strong cash flows through combining the predictability of fixed time charter revenues with opportunistic trading in the spot market; actively managing the size and composition of our fleet over the course of market cycles to increase investment returns and available capital; and entering into value-creating transactions, including acquisitions of competitive or adjacent businesses. The key elements of our strategy are to:

We believe we are well-positioned long-termnow and over the long term to generate strong cash flows by identifying and taking advantage of attractive chartering opportunities in the U.S. market.flows. We currently operate one of the largest tanker fleets in the U.S. Flag market, with a strong presence in all major U.S. coastwise trades. Our market position allows us to maintain long-standing relationships with many of the largest energy companies, which in some cases date back many decades. We consider attaining the stability of cash flow offered bythrough medium-term charters and COAs to be a fundamental characteristic of the objectivesobjective of our chartering approach. However, considerationsThis is especially observable in the specialized businesses within which many of our assets operate. Recent years have seen a marked increase in market volatility as the demand drivers for domestic transportation of crude oil and its refined product have been impacted by market disruptions, increased export flows, the ascendency of trading desks in intermediating supply chain logistics, and emerging trades for renewable fuels and their feedstocks. These changes have affected most directly our conventional tankers, which witnessed depressed market conditions during much of 2020 and 2021 due to the COVID-19 pandemic before experiencing a rebound in demand in 2022, which currently continues. Considerations about the appropriate overall exposure to these more volatile markets and the amount of that capacity to remain active in the spot market are a regular management discussion point and balancingpoints. Balancing time charter coverage with spot market exposure in an uncertainenvironment of ever-changing demand environment issignals presents a persistent challenge. OverRecent market conditions have created favorable conditions for extending the breadth and duration of time we pursue an overall chartering strategy that seeks to cover the majoritycharter coverage amongst our conventional tankers. However, under other market conditions, a policy of available operating days with medium-term time charters. A policy ofentering into medium-term charters may not be profitable or prove achievable under certain market conditions.achievable. As such, during future periods of uncertainty, in the markets within which we operate,it is likely that more of our vessels will be exposed to the more volatile and less predictable spot market with a corresponding impact on the amount of revenue our vessels may earn.

In addition, the future of seaborne energy transportation and the type, design and markets for vessels that will be engaged in this business are evolving in ways not yet well defined. While this evolution may impose additional risks and uncertainties on OSG’s existing business lines, the progressive transformation away from a carbon fuels-based economy could present interesting new business niches for OSG to competitively apply its differentiated set of skills. OSG’s current interest in developing capabilities for transporting liquified CO₂ is a natural next step into an emerging market, consistent with OSG’s expertise with liquid cargoes. Participating in a broader spectrum of opportunities in the existing and emerging markets for energy and liquid bulk commodities of all types will remain a focus of the Company as the solution set to these complex problems becomes clearer.

We believe that OSG has good standing in the community of our customers, our peers and our regulators, with a longlong- established reputation for maintaining the highest standards in both protecting the environment and maintaining the health and safety of all of our employees. We believe that continuedContinued improvement in these areas is important not only to the constituents directly affected, but equally as important in sustaining a key differentiating competitive factor amongst the customers we serve.

We actively manage the size and composition of our fleet through opportunistic acquisitions and dispositions of vessel assets as part of our effort to achieve attractive returns on capital. We seek to opportunistically grow our fleet through the timely and selective acquisition of high-quality secondhand vessels or new-build contracts when we believe those acquisitions will result in attractive returns on invested capital and increased cash flow. We also seek to engage in opportunistic dispositions or repurposing of our vessel assets where we can achieve attractive values relative to their anticipated future earnings from operations as we assess market cycles and requirements. Taken together, we believe these activities will help us to maintain a diverse, high-quality and modern fleet of crude oil, refined product, and potentially other U.S. Flag vessels with an enhanced return on invested capital. We believe our diverse and versatile fleet, our experience and our long-standing relationships with participants in the crude and refined product shipping industry, position us to identify and take advantage of attractive acquisition opportunities in any vessel class in the U.S. Flag market.Customers

Customers

OSG’s customers include major independent oil traders, refinery operators and U.S. and international government entities. The Company’s top three customerscustomer comprised 34.1%14.3% of shipping revenues during the year ended December 31, 2020.2023. See Note 2 - ���Summary“Summary of Significant Accounting Policies,” to the Company’s consolidated financial statements set forth in Item 8 for further information regarding the Company’s customers for 20202023, 2022 and 2019.2021.

FLEET OPERATIONS

Fleet Summary

As of December 31, 2020,2023, OSG’s operating fleet consisted of 2521 vessels, 13 of which were owned, with the remaining vessels chartered-in. Vessels chartered-in are on Bareboat Charters.

On January 27, 2023, the Company’s one owned Marshall Island flagged non-Jones Act MR tanker, the Overseas Sun Coast, was officially documented as a U.S. Flag vessel, joining the rest of the Company’s U.S. Flag fleet.

Commercial Management

Time-Charter Market

The Company’s operating fleet includes a number of vessels that operate on time charters. Within a contract period, time charters provide a predictable level of revenues without the fluctuations inherent in spot-market rates. Once a time charter expires, however, the ability to secure a new time charter may be uncertain and subject to market conditions. Time charters constituted 82%80% of the Company’s shipping revenues in 2020 and 74%2023, 70% in 20192022, 71% in 2021, and 84% of the Company’s TCE revenues in 20202023, 75% in 2022 and 77%73% in 2019.2021.

Spot Market

Voyage charters and COAs constituted 18%20% of the Company’s shipping revenues in 2020, 26%2023, 30% in 2019,2022, 29% in 2021, and 16% of the Company’s aggregate TCE revenues in 20202023, 25% in 2022 and 23%27% in 2019.2021. Accordingly, the Company’s shipping revenues are affected by prevailing spot rates for voyage charters in the markets in which the Company’s vessels operate. Spot market rates are highly volatile due to utilization while in the spot market, which is driven by market forces, including local and worldwide demand for the commodities carried (such as crude oil or petroleum products), volumes of trade, distances that the commodities must be transported, the amount of available tonnage both at the time such tonnage is required and over the period of projected use, and the levels of seaborne and shore-based inventories of crude oil and refined products.

Seasonal trends affect oil consumption and consequently vessel demand. While trends in consumption vary with seasons, peaks in demand quite often precede the seasonal consumption peaks as refiners and suppliers try to anticipate consumer demand. The timing of peaks in oil demand vary within the markets in which we operate. Available tonnage is affected over time by the volume of newbuild deliveries, the number of tankers used to store clean products and crude oil, and the removal (principally through recycling or conversion) of existing vessels from service. Recycling is affected by the level of freight rates, recycling prices, vetting standards established by charterers and terminals and by U.S. governmental regulations that establish maintenance standards. Voyage charters include COAs on three vessels. Changes in the percentage contributions are therefore affected by Delaware Bay lightering volumes. In addition, as ships come off of their time charters, they may be forced into short-term trades.

Business Segment

TheThe Company has one reportable business segment. The Company’s 24 active vessel fleet, of which 22 areOSG’s U.S. Flag vessels,fleet consists of threeSuezmax crude oil tankers doing business in Alaska, two conventional ATBs, twoand lightering ATBs, three shuttle tankers, tenand conventional MR tankers, and two non-Jones Act MR tankers that participate in the TSP or are on time charter to MSC. In January 2023, the Overseas Sun Coast was converted to U.S. Maritime Security Program. TheFlag status, joining the rest of OSG’s U.S. Flag fleet. In November 2023, the Company also owns and operates two Marshall Islands flagged MR tankers thatpurchased the Alaskan Frontier from BP Oil Shipping Company USA. OSG is in the process of reactivating the 1.3-million-barrel capacity tanker which has been in cold layup in Malaysia since 2019. OSG plans to make significant investments in the vessel for it to begin commercial trade internationally.by the fourth quarter of 2024. Under the Jones Act, shipping between U.S. ports, including the movement of Alaskan crude oil to U.S. ports, is reserved for U.S. Flag vessels that satisfy Jones Act requirements, including requirements that vessels be constructed in the United States and owned by companies that are more than 75% owned and controlled by U.S. citizens. OSG is one of the largest commercial owners and operators of U.S. Flag vessels and participates in U.S. government programs, including the following:

Maritime Security Program—MSP—Two non-Jones Actof our reflagged U.S. Flag Product Carriers participateparticipated in the U.S. Maritime Security Program, whichMSP during the first quarter of 2023 and the years ended December 31, 2022 and 2021. These two vessels were then accepted into the TSP in April 2023. The MSP is designed to ensure that militarily usefulprivately-owned, military-useful U.S. Flag vessels are available to the U.S. Department of Defense in the event of war or national emergency. Each of the vessel-owning companies with a ship that participates in the program receives an annual stipend, thatsubject to annual congressional appropriations. The stipend is intended to offset the increased cost incurred by such vessels from operating under the U.S. Flag. Such

TSP— In April 2023, three of our vessels were accepted into the TSP, which is comprised of 10 tankers. The program is designed to ensure that militarily useful U.S. Flag tank vessels are available to the U.S. Department of Defense in the event of war or national emergency. TSP participants receive an annual stipend designed to allow them to compete for international business. We transferred the two non-Jones Act U.S. Flag Product Carriers participating in the MSP to the TSP and added the Overseas Sun Coast to participate in the program.

In June 2023, MSC awarded the Overseas Mykonos, which was $5,058 on one vessela TSP participant, a time charter to provide ongoing fuel transportation services to MSC in support of our nation’s defense. The time charter awarded is for a one-year base period with the MSC holding additional option periods to extend the contract out to a maximum period of five- and $4,607 on one vesselone-half years. The Overseas Mykonos was then transferred out of the TSP and delivered to MSC in 2020August 2023.

During the year ended December 31, 2023, we received $2,650 under the MSP and $5,000$10,612 under the TSP. We received $9,252 and $10,500 under the MSP for the years ended December 31, 2022 and 2021, respectively.

The TSP provides for an annual stipend of $6,000 for each vessel in 2019.

Under the terms of the program, the Company expects to receive up to $5,200 annually for each vessel during 2021. The Company doesparticipating vessel. We do not receive a stipend with respect tofor any days exceeding 180 for which a vessel operatesthe vessels operate under a time charter to a U.S. government agency.

Maritime Administration of the U.S. Department of Transportation (“MarAd”) trading restrictions—Two of the modern U.S. Flag ATBs owned by the Company, which are currently used in the Delaware Bay Lightering activity, had their construction financed with the Capital Construction Fund (“CCF”). As such, daily liquidated damages are payable by the Company to MarAd if these vessels operate in contiguous coastwise trades, which is not permitted under trading restrictions currently imposed by the CCF agreement between MarAd and the Company. For the years ended December 31, 2020 and 2019, liquidated damages incurred were not material.

On March 12, 2020, the Company’s subsidiaries completed the purchase of the Alaskan Explorer, Alaskan Legend and Alaskan Navigator from BP Oil Shipping Company USA and AP AMI Leasing Inc. (“BP”) and have entered into a bareboat charter with BP for a fourth vessel, the Alaskan Frontier. The Alaskan Frontier is currently in layup. In connection with these transactions, the Company also completed the acquisition of the other members’ interests in ATC, making ATC a wholly owned subsidiary of OSG. Operating results of these vessels are included from that date.

OSG has 11 Handysizeseven MR product carriers in our U.S. Flag fleet that are chartered-in and provide for the payment of profit share to the owners of the vessels calculated in accordance with the respective charter-in agreements.arrangements. Due to reserve funding requirements, no profits have yet been paid to the owners or are, based on management’s current forecast, expected to be paid to the owners in the current calendar year.

Technical Management

OSG’s fleet operations are managed in-house. In addition to regular maintenance and repair, crews onboard each vessel and shore side personnel must ensure that the Company’s fleet meets or exceeds regulatory standards established by the International Maritime Organization (“IMO”)IMO and USCG.

The Company recruits, hires and trains the crews on its U.S. Flag vessels.crews. The Company believes that its mandatory training and education requirements exceed the requirements of the USCG. The Company believesUSCG and that its ability to provide professional development for qualified U.S. Flag crew is necessary in a market where skilled labor shortages are expected to remain a challenge. The U.S. Flag fleet is supported by shore side staff that includes fleet managers, marine and technical superintendents, purchasing and marine insurance staff, crewing and training personnel and health, safety, quality and environmental (“SQE”) personnel.

Safety

The Company is committed to providing safe, reliable and environmentally sound transportation to its customers. Integral to meeting standards mandated by regulators and customers is the use of a robust Safety Management Systems (“SMS”)SMS by the Company. The SMS is a framework of processes and procedures that addresses a spectrum of operational risks associated with quality, environment, health and safety. The SMS is certified to the International Safety ManagementISM Code (“ISM Code”) promulgated by the IMO. To support a culture of compliance and transparency, OSG has an open reporting system onavailable to all of its vessels, whereby seafarers can anonymously report possible violations of OSG’s policies and procedures. All open reports are investigated, and appropriate actions are taken when necessary.

HUMAN CAPITAL

We are dedicated to providing safe, reliable and environmentally sound transportation services to our customers, and ourOur employees are critical to achieving this mission. In order to achieve this,meeting our commitments. Accordingly, it is crucial that we continue to attract and retain experienced and qualified employees. We emphasize ethical behavior, and respect, and promote equal opportunity by creating a culture of trust, accountability and empowerment. TheWe also promote a shared sense of responsibility shared byamong OSG’s mariners and the shore-based support team in meeting the essential need to supply transportation fuels to the markets that we serve is commendable.serve.

As of December 31, 2023, the Company had approximately 1,078 employees comprised of 1,000 seafarers and 78 shore side staff. As of December 31, 2020, the Company had approximately 931 employees comprised of 848 seafarers and 83 shore side staff. The Company has2023, collective bargaining agreements with three different U.S. maritime unions which, as of December 31, 2020, covered 658850 of the seafarers employed on the Company’s vessels. These agreements are in effect for periods ending between March 20212024 and June 2022.2027. Under the collective bargaining agreements, the Company is obligated to make contributions to pension and other welfare programs.

Compensation and Benefits Program. Our compensation program is designed to attract and reward talented individuals who possess the skills necessary to support our business objectives, assist in the achievement of our strategic goals and create long-term value for our shareholders. We provide employees with competitive compensation packages that include base salary as well as employees benefits such as life and health (medical, dental &and vision) insurance, paid time off, paid parental leave, and certain postretirement benefits.

Training and Education. Our seafarers are highly trained, with many officers having both USCG licenses as well as business or engineering degrees. Regardless of position, specialized training to work in the industry based on USCG requirements, as well as vessel specificvessel-specific training within our fleet, is a necessity. Years of experience isare required in order to move into higher levels of authority on our vessels. Our training and education programs are designed to address applicable regulations as well as the specific hazards and work environments of each of our vessels. We regularly conduct safety reviews to ensure compliance with applicable regulations and all policies and procedures.

Health and Safety. The success of our business is fundamentally connected to the well-being of our people. Accordingly, we are committed to the health, safety and wellness of our employees. In response to the COVID-19 pandemic, we implemented significant operating environment changes that we determined wereOur SMS is regularly updated as safety issues evolve. We have installed StarLink in the best interestall of our employees, as well as the communities in which we operate, and which comply with government regulations. This includes providing personal protective equipment, minimizing crew changes, managing the locations where crew members board and depart from our vessels certifications by crew members to disclose symptoms and the health of those they have been in contact with, sanitization of the vessels, mandating face coverings, social distancing and temperature checks, and requiring testing and quarantining in certain instances. Protocols were developed with the coordination and assistance of the unions in order to provide consistency within the industry.seafarers with connectivity.

Having a well-maintained fleet is also critical to create an environment where our crew can work safely. Our fleets undergo regular and frequent surveys by classification societies and regulatory bodies as well as vettings by our customers on an ongoing basis. Issues identified are swiftly addressed. Our seafarers are encouraged to provide transparent reporting of issues and near-misses, in order to remedy conditions as soon as they are observed. We regularly conduct safety reviews to ensure compliance with applicable regulations and all policies and procedures.

COMPETITION

OSG’s primary competitors are operators of U.S. Flag oceangoing barges and tankers, operators of rail transportation for crude oil, and operators of refined product pipelines systems that transport refined petroleum products directly from U.S. refineries to markets in the United States.domestic markets. In addition, indirect competition comes from International Flag vessels transporting imported refined petroleum products.

ENVIRONMENTAL, SAFETY AND SECURITY MATTERS

The majority of OSG’s vessels are registered in the United States and are subject to the jurisdictional oversight of the USCG. OSG also owns and operates two vessels registered in the Marshall Islands that are subject to the jurisdictional oversight of the Republic of Marshall Islands (“RMI”) registry.

OSG is also subject to compliance with several other government agency regulations including but not limited to the Environmental Protection Agency (“EPA”), the Maritime Administration of the United States Department of Transportation, and the United States Customs and Border Protection Agency. OSG vessels are classed with the American Bureau of Shipping (“ABS”) and are subject to the requirements of the classification society in addition to regulatory oversight on behalf of the USCG (under various protocols and agreements covering certain statutory survey and certification functions for U.S. flagged vessels) and on behalf of the RMI (under various protocols and agreements covering certain statutory survey and certification functions for Marshall Islands flagged vessels).

The majority of vessels owned and operated by OSG are engaged in U.S. coastwise trade, with some vessels engaged in trade to and from countries outside of the United States. OSG’s vessels operate in a highly regulated environment, subject to international conventions and international, national, state and local laws and regulations in force in the countries such vessels call upon, significantly affecting the operation of the vessels. Among the more significant of the international conventions to whichupon. OSG’s vessels are registered in the United States and are subject to the jurisdictional and regulatory oversight of the USCG (under various protocols and agreements covering certain statutory survey and certification functions). OSG is signatory arealso subject to compliance with several other U.S. government agency regulations, including the International Convention for the Prevention of Pollution from Ships (“MARPOL”), the International Convention for the Safety of Life at Sea (“SOLAS”),EPA, MARAD, and the International Convention on StandardsUnited States Customs and Border Protection Agency. OSG vessels are classed with the ABS and are subject to the requirements of Training, Certification and Watchkeeping for Seafarers.

the Classification Society.

Geopolitical reactions to industry-related accidents have historically heightened

Industry-related incidents and concerns regarding the future impacts of the maritime industry on the environment heighten the level of environmental, health, safety and security awareness among various stakeholders, including insurance underwriters, regulators, and charterers, leading to increased regulatory requirements and more stringent inspection regimes on all vessels. In recognition of this heightened awareness,regimes. OSG has set appropriate internal controls intended to monitor regulatory developments and maintains operating standards designed to implement measures intended meet the higher expectations of our stakeholders.

OSG is required to maintain operating standards for all its vessels emphasizing We have in place operational safety and quality, environmental stewardship, preventive planned maintenance, continuous training of itsour officers and crews, and compliance with internationalapplicable regulations, and United States regulations, including regular and rigorous in-house inspections and audits. In addition, a variety of governmental and private entities subject OSG’s vessels to both scheduled and unscheduled inspections. These entities includeinspections, including the USCG, local port state control authorities, (harbor master or equivalent), flag states, coastal states, Classification Societies, and customers, particularly major oil companies and petroleum terminal operators. Certain of these entities require OSG to obtain permits, licenses and certificates for the operation of its vessels. Failure to maintain necessary documents or approvals could require OSG to incur substantial costs or temporarily suspend operation of one or more of OSG’s vessels.

OSG believes that the operation of its vessels complies with applicable environmental laws and regulations. However, becauseregulations, which are summarized below, and has adopted plans, programs, and procedures in accordance with such laws and regulations are changed frequently, and new laws and regulations impose new or increasingly stringent requirements,regulations. OSG cannot predict the cost of complying with requirements beyond those that are currently in force. The impact of future regulatory requirements on operations or the resale value or useful lives of its vessels may result in substantial additional costs in meeting new legal and regulatory requirements. See Item 1A, “Risk Factors-Compliance with complex laws, regulations, and, in particular, environmental laws or regulations, including those relating to the emission of greenhouse gases, may adversely affect OSG’s business.”

Regulations Preventing Pollution of Seas by Oil

The maritime industry is subject to numerous regulations and conventions intended to prevent pollutionInternational Convention for the Prevention of the seasPollution from ships. Regulated pollution sources include but are not limited to oil, hazardous substances, garbage, sewage, ballast water, antifouling paint and biofouling organisms.

MARPOLShips (“MARPOL”) Annex I addresses requirements for the prevention of pollution by oil and oily materials generated in the engine room and from the cleaning of cargo tanks, while MARPOL Annex II addresses requirements for the prevention of pollution by noxious liquid substances (“NLSs”).substances.

The United States regulates the shipping industry with an extensive regulatory and liability regime for environmental protection, and cleanup of oil spills, consisting primarily of the Oil Pollution Act of 1990 (“OPA 90”) and the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”). OPA 90 affects all owners and operators whose vessels trade with the United States or its territories or possessions, or whose vessels operate in the waters of the United States, which include the United States territorial sea and the 200 nautical mile exclusive economic zone around the United States. CERCLA applies to the discharge of hazardous substances (other than oil) whether on land or at sea. Both OPA 90 and CERCLA impact OSG’s operations. OPA 90 amended the Federal Water Pollution Control Act to require owners and operators of vessels to adoptrequires Vessel Response Plans (“VRPs”), including marine salvage and firefighting plans, for reporting and responding to vessel emergencies and oil spill scenarios up to a worst case scenario. The requirements also require OSG to identifyworst-case scenario, as well as advance contracting, planning, and seektraining to ensure through contracts or other approved means, the availability ofthat necessary private response resources are in place to immediately respond to a worst case discharge. The plans must include contractual commitments with clean-up response contractors and salvage and marine firefighters to ensure an immediate response to an oil spillworst-case discharge or vessel emergency. OPA 90 also requires training programs and periodic drills for shore side staff and response personnel and for vessels and their crews. OSG maintains valid USCG approved VRPs for each of its tank and non-tank vessels.

Under IMO regulations, require owners and operators of vessels to adoptOSG has adopted Shipboard Oil Pollution Emergency Plans, (“SOPEPs”), including periodic training and drills for response personnel and for vessels and their crews. In addition to SOPEPs, OSG has adoptedcrews and Shipboard Marine Pollution Emergency Plans, (“SMPEPs”), which cover potential releases not only of oil but of any NLSs. OSG’s SOPEPs and SMPEPs remain valid.noxious liquid substances.

US Liability Standards and Limits

Under OPA 90, vessel owners, operators and bareboat or demise charterers are responsible parties who are liable, without regard to fault, for all containment and clean-up costs and other damages, including property and natural resource damages and economic loss without physical damage to property, arising from oil spills and pollution from their vessels. On November 12, 2019, the limits of OPA 90 liability were increased as follows: (i) for tank vessels with qualifying double hulls to the greater of $2,300 per gross ton, or approximately $19.9 million per vessel over 3,000 gross tons; and (ii) for non-tank vessels, to the greater of $1,200 per gross ton, or approximately $0.1 million per vessel.

The statute specifically permitsAdditionally, individual states tomay impose their own liability regimes for oil pollution incidents occurring within their boundaries, and some states have enacted legislation providing for unlimited liability for discharge of pollutants within their waters. In some cases, states that have enacted this type of legislation have not yet issued implementing regulations defining vessel owners’ responsibilities under these laws.boundaries. CERCLA which applies to owners and operators of vessels, contains a similar liability regime and provides for cleanup, removal, and natural resource damages associated with discharges of hazardous substances (otherother than oil). Liability under CERCLA is limited to the greater of $300 per gross ton, or $5 million.

oil. Certain defenses and contractual arrangements may mitigate liability.

These limits of liability do not apply, however, when the incident is caused by violation of applicable U.S. federal safety, construction or operating regulations, or by the responsible party’s gross negligence or willful misconduct. Similarly, these limits do not apply if the responsible party fails or refuses to report the incident or to cooperate and assist in connection with the substance removal activities. OPA 90 and CERCLA each preserve the right to recover damages under existing law, including maritime tort law.

OPA 90 requires owners and operators of vessels to establish and maintain with the USCG evidence of financial responsibility sufficient to meet the limit of their potential strict liability consistent with the limits of liability described above. Under OPA90 regulations, evidence of financial responsibility may be demonstrated by insurance, surety bond, self-insurance, guaranty, or an alternative method subject to approval byset forth in the director of the USCG National Pollution Funds Center. Under OPA 90 regulations, an owner or operator of more than one vessel is required to demonstrate evidence of financial responsibility for the entire fleet in an amount equal only to the financial responsibility requirement of the vessel having the greatest maximum strict liability under OPA 90 and CERCLA.

OSG has provided the requisite proofs of financial security and has received Certificates of Financial Responsibility from the USCG for each of its vessels required to have one.statutes. OSG carries various forms of marine insurance for each of its vessels, withincluding pollution liability insurance in the amount of $1.0 billion, and deductibles ranging from $0.025 million to $0.030 million per vessel per incident. However,billion. In the event that a catastrophic spill could exceedexceeds the insurance coverage available, in which event there could be a material adverse effect on OSG’s business.

International Liability Standards and Limits

Compensation for oil pollution damage caused by spills from oil tankers is governed by an international regime developed underreferred to as the auspices of the IMO. The original International Convention on Civil Liability for Oil Pollution Damage of 1969 (the “1969 Convention”) was amended in 1992 (the “1992 Protocol”) and entered into force on May 30, 1996.

Many countries have ratified and follow the liability plan adopted by the IMO as set out in the 1969 Convention yet some ofDamage. Under these countries have also adopted the 1992 Protocol. Under both the 1969 Convention and the 1992 Protocol,conventions, a vessel’s registered owner is strictly liable for pollution damage caused in the territorial waters of a contracting state by discharge of persistent oil, subject to certain complete defenses. These conventions also limit the liability of the shipowner under certain circumstances.

The 1992 Protocol allows for states party to the 1992 Protocol to issue certificates to ships registered in states which are not party to the 1992 Protocol, so that a shipowner can obtain certificates to both the 1969 and 1992 CLC, even when the ship is registered in a country which has not yet ratified the 1992 Protocol. This is important because a ship which has only a 1969 CLC may find it difficult to trade in a country which has ratified the 1992 Protocol, since it establishes higher limits of liability.

These conventions calculate liability in terms of Special Drawing Rights currency values. The figures in this section are therefore converted into U.S. dollars based on currency exchange rates on January 4, 2021 and are approximate.

Under the 1992 Protocol, the owner’s liability is limitedcircumstances, except where the pollution damage results from its personal act or omission, is committed with the intent to cause such damage, or recklessly and with knowledge that such damage would probably result. Under the 2000 amendments to the 1992 Protocol, which became effective on November 1, 2003, liability is limited to $6.5 million for a ship not exceeding 5,000 units of tonnage, $6.5 million plus $914 for each additional gross ton over 5,000 for vessels of 5,000 to 140,000 gross tons, and $127.2 million for vessels over 140,000 gross tons, subject to the exceptions discussed above for the 1992 Protocol.

Vessels trading in states that are parties to these conventions must provide evidence of insurance covering the liability of the owner. The United States is not a party to the 1969 Convention or the 1992 Protocol. In other jurisdictions where the 1969 Convention has not been adopted, various legislative schemes or common law govern, and liability is imposed either on the basis of fault or in a manner similar to that convention. OSG believes that its protection and indemnity insurance will cover any liability under the plan adopted by the IMO.

The International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001 which became effective on November 21, 2008, is a separate convention adopted to ensure that adequate, prompt and effective compensation is available to persons who suffer damage caused by spills of oil when used as fuel by vessels. The convention applies to damage caused to the territory including the territorial sea, and in its exclusive economic zones, of states that are party to it. While the United States has not yet ratified this convention, vessels operating internationally would be subject to it, if sailing within the territories of those countries that have implemented its provisions. OSG believes that its vessels comply with these requirements.

Regulations Preventing Pollution of Seas by Sewage or Garbage

MARPOL Annex IV (“Annex IV”) as well as the U.S. Code of Federal Regulations regulateregulates the discharge of sewage to sea as the discharge of raw sewage into the sea can create a health hazard, can lead to oxygen depletion and can be an obvious visual pollution in coastal areas. Annex IV also includes regulations regarding the ships’ equipment and systems for the control of sewage discharge, the provision of port reception facilities for sewage and requirements for survey and certification. OSG has implemented all regulatory requirements and believes that its vessels comply with these requirements.

sea. Sewage discharge is also subject to national and local regulations whichthat set forth further restrictions, in some cases prohibiting the discharge of treated sewage and the establishment of No Discharge Zones (“NDZs”). The most recent NDZs were introduced in Puget Sound in Washington State in 2018, prohibiting the discharge of treated or untreated sewage.Zones. OSG vessels are all equipped with Marine Sanitation Devices compliant with regulatory requirements for each type of vessel, has implemented controls to comply with various international, national and state regulatory requirements. OSG believes that its vessels comply with these requirements. If other NDZs are introduced or other new or more stringent requirements relating to sewage discharges by vessels are adopted by the states or countries where OSG’s vessels operate, compliance may require OSG to incur substantial capital expenditures.vessel.

Regulations Preventing Pollution of Seas by Garbage

MARPOL Annex V, as well as theother U.S. Code of Federal Regulationsregulations, regulates the prevention of pollution to sea by garbage. The most recent amendment to Annex V, which came into effect March 1, 2018, implemented greater restrictions in the type of garbage able to be discharged to sea, added e-waste to the categories of garbage to be collected, stored, processed and disposed of, and required changes to the manner in which garbage is recorded. OSG has implemented all regulatory requirements and believes that its vessels comply with these requirements.e-waste.

Regulations Preventing Air Pollution

MARPOL Annex VI (“Annex VI”) addresses air pollution from vessels, and sets limits on sulfur oxide (“SOx”) and nitrogen oxide (“NOx”) emissions from ship exhausts, including prohibitingprohibits deliberate emissions of ozone depleting substances, such as chlorofluorocarbons. Annex VI also regulates shipboard incineration and the emission of volatile organic compounds (“VOCs”) from tankers. Under Annex VI, vesselstankers, and sets caps on sulfur emissions.

Vessels are subject to further air emission controls within Emission Control Areas (“ECAs”). Currently designated ECAs are the Baltic Sea, North Sea, North American, and U.S. Caribbean. The North AmericanSulfur Emission Control AreaAreas (“ECA”SECAs”) encompasses the area extending 200 miles from the coastlines of the Atlantic, Gulf and Pacific coasts and the eight main Hawaiian Islands. The United States Caribbean Sea ECA encompasses water around Puerto Rico and the U.S. Virgin Islands.. As these emission limits continue to evolve, compliance could impact fuel costs.

Fuel used by all vessels operating in or transiting through the ECA cannot exceed 0.1% m/m sulfur. More stringent NOx emission Tier III emission limits are applicable to engines installed on ships constructed on or after January 1, 2016 operating in ECAs. OSG believes that its vessels comply with the current requirements of MARPOL Annex V ECAs. If other ECAs are approved by the IMO or other new or more stringent requirements relating to emissions from marine diesel engines or port operations by vessels are adopted by the EPA or the states where OSG operates, compliance could require or affect the timing of fuel costs associated with operating in another ECA.

Commencing January 1, 2020, the global sulfur cap for ship operations was reduced from 3.5% m/m to 0.5% m/m outside ECAs as legislated by MARPOL Annex VI. In ECAs, the limit remains at 0.1% m/m.

In 2019, OSG commenced operating two new Marshall Islands flag tankers equipped with open-loop exhaust gas cleaning systems (“EGCS”) designed to burn high-sulfur bunker fuel to comply with the 0.5% sulfur limit. OSG has implemented all regulatory requirements associated with the use of EGCS.

In July 2011, the IMO further amended Annex VI to includeincludes energy efficiency standards for certain new ships through the designation of an Energy Efficiency Design Index (“EEDI”). The EEDI standards apply to new ships of 400 gross tons or above (except those with diesel-electric, turbine or hybrid propulsion systems). New ships for purposes of this standard are those for which the building contract was placed on or after January 1, 2013; or in the absence of a building contract, the keel of which is laid, or which is at a similar stage of construction, on or after July 1, 2013; or the delivery of which is on or after July 1, 2015. The EEDI standards phase in from 2013 tothrough 2025 and are anticipated to result in significant reductions in fuel consumption as well as,and air and marine pollution. The composition of OSG’s fleet, of vessels, as of December 31, 2020,2023, includes two vesselsone vessel under which the EEDI standards apply.

The EPA has implemented rules comparable to those of Annex VI to increase the control of air pollutant emissions from certain large marine engines by requiring certain new marine-diesel engines installed on U.S. built ships to meet lower NOx emission standards. EPA Tier 2 standards were phased in beginning in 2004 andCompliance generally reduced NOx emissions by 27% and introduced a particulate matter limit (“PM”) for the first time. EPA Tier 3 standards were phased in beginning in 2009 and represented a 50% reduction in PM and a 20% reduction in NOx over Tier 2 levels. EPA Tier 4 standards were phased in beginning in 2014 and represented a 90% reduction in PM and 80% reduction in NOx compared to Tier 2 levels and generally requiredrequires advanced technology such as selective catalytic reduction or exhaust gas recirculation. Adoption of these and emerging standards may require substantial modifications to some of OSG’s existing marine diesel engines and may require OSG to incur substantial capital expenditures if the engines are replaced.

The U.S. Clean Air Act of 1970, as amended by the Clean Air Act Amendments of 1977 and 1990 (“CAA”), requires the EPA to promulgate standards applicable to emissions of volatile organic compounds and other air contaminants. The CAA alsocontaminants and requires states to draft State Implementation Plans (“SIPs”), designed to attain national health-based air quality standards in major metropolitan and industrial areas. Several SIPs regulate emissions resulting fromOSG’s tank vessel loading and degassing operations by requiring the installation of vapor control equipment. OSG’s vessels are subject to vapor control and recovery requirements for certain cargoes when loading, unloading, ballasting, cleaning and conducting other operations in regulated port areas. All OSG’s vessels are equipped with vapor control systems that satisfy these requirements. Although a risk exists that new regulations could require significant capital expenditures, and otherwise increase its costs, OSG believes, based upon the regulations that have been proposed to date, no material capital expenditures beyond those currently contemplated and no material increase in costs are likely to be required as a result of the SIPs program.SIPs.

The Delaware Department of Natural Resources and Environment Control (“DNREC”) monitors OSG’s U.S. Flag lightering activities within the Delaware River. Lightering activities in Delaware are subject toRiver through Title V of the Coastal Zone Act of 1972 and1972. OSG is the only marine operator with a Title V permit to engage in lightering operations. These lightering activities are monitored and regulated through DNREC’s Title V air permitting process. The regulations are designed to reduce the number of VOCs entering the atmosphere during a crude oil lightering operation through the use of vapor balancing. This defined process has reduced air emissions associated with venting of crude oil vapors to the atmosphere. In accordance with its Title V permit, OSG’s Delaware Lightering fleet is 100% vapor balance capable.

International efforts to reduce air pollution

In February 2005, the Kyoto Protocol

For decades, countries have sought to establish international cooperation to combat climate change and focus on implementing programs to reduce emissions of greenhouse gases, such as the United Nations Framework Convention on Climate Change, (the “Kyoto Protocol”) became effective. Pursuant to the Kyoto Protocol adopting countries are required to implement national programs to reduce emissions of certain gases, generally referred to as greenhouse gases (“GHGs”), which contribute to global warming. The United Nations Climate Change Conference forged a new international framework in December 2015 (the “Paris Agreement”), which entered into force on November 4, 2016. The Paris Agreement sets a goal of holding the increase in global average temperature to well below 2 degrees Celsius and pursuing efforts to limit the increase to 1.5 degrees Celsius, to be achieved by aiming to reach a global peaking of greenhouse gas (“GHG”) emissions as soon as possible. To meet these objectives, the participating countries, acting individually or jointly, are to develop and implement successive nationally determined contributions. In 2016, the United States signed the Paris Agreement, but, in August 2017,and the U.S. State Department officially informed the United NationsConference of the United States’ intent to withdraw. On January 20, 2021, the United States rejoined the Paris Agreement.

Though the Paris Agreement does not specifically mention shipping, theParties (COP28). The IMO ishas committed to developing limits on GHGsgreenhouse gases resulting from international shipping and is working on proposedhas implemented mandatory technical and operational measures to achieve these limits. The IMO’s fourth study of GHG emissions was released on August 4, 2020 indicating a 9.6% increase in GHG emissions from global maritime shipping since 2012 and predicted an increase by up to 50% over the next few decades to 2050, relative to 2018, if measures are not taken to reduce GHG emissions from international shipping by at least 50% by 2050 compared to 2008.

In addition to Annex VI, there are regionalRegional mandates in certain ports and certain territorial waters within the European Union (“EU”) regarding reducedEU seek to reduce SOx emissions. In December 2012, an EU directive that aligned the EU requirements with Annex VI entered into force. These requirements establish maximum allowable limits foremissions by limiting sulfur content on 0.1% m/m in fuel oils used by vessels when operating within certain areasas well as CO₂ emissions, including methane and waters and while at berth in EU ports.nitrogen oxides.

In 2011, the European Commission established a working group on shipping to provide input to the European Commission in its work to develop and assess options for the inclusion of international maritime transport in the GHG reduction commitment of the EU. The EU Monitoring, Reporting, Verification Regulation (“MRV”) was adopted on April 29, 2015 and creates an EU-wide framework for the monitoring, reporting and verification of carbon dioxide emissions from maritime transport. The MRV requires large ships (over 5,000 gross tons) conducting cargo operations in EU ports commencing January 1, 2018,transport and to collect and later publish verified annual data on carbon dioxide emissions. The United Kingdom (“UK”) implemented its own MRV for UK-related voyages.  

As of January 1, 2024, the EU is implementing an Emissions Trading Scheme (“ETS”) whereby vessels calling upon the EU are required to surrender allowances each year for a portion of their CO₂ emissions. Companies receive emission allowances from the EU auctions with some of this revenue allocated to the maritime sector to support innovation in low-carbon technologies and to contribute to zero pollution objectives. OSG believes that this could have a material impact on voyages to and from the EU and plans to work with its vessels arecharterers to offset associated impacts. The level of allowances to be surrendered will be phased in compliance with these regulations.over three years based on the following schedule:

InAnnex VI introduced an Energy Efficiency Existing Ship Index (“EEXI”) and a Carbon Intensity Indicator (“CII”) to be used for grading a ship’s CO₂ emissions performance. Each ship’s CII must be calculated annually using IMO DCS data and is assigned a letter grade (A, B, C, D, or E) after applying any applicable correction factors. A CII grade of “C” or better indicates the United States, pursuantship remains on target to an April 2007 U.S. Supreme Court decision, the EPA wasimprove CO₂ emissions. Ships graded a “D” or “E” are required to consider whether carbon dioxide should be consideredimprove within a pollutant that endangers public healthremediation period. If ratings are not restored to a “C” or better during the remediation period, there is the possibility of enforcement up to and welfare, and thus subject to regulation underincluding retirement of the U.S. Clean Air Act. On December 1, 2009, the EPA issued an “endangerment finding” regarding GHGs under the Clean Air Act. In 2015, the EPA issued standards limiting carbon pollution from new and existing fossil fuel-fired power plants and in 2016 found that oil and gas sector sources of methane and GHGs from aircraft engines contribute to dangerous climate-changing air pollution. To date, the regulations proposed and enacted by the EPA have not involved ocean-going vessels.vessel.

In 2011, IMO’s Greenhouse Gas Work Group agreed on Ship Energy Efficiency Management Plan (“SEEMP”) development guidelines which entered into force on January 1, 2013. The primary objective of the SEEMP is to improve the overall operating efficiency of a ship through the implementation of optimized methods for energy and fuel savings. An energy efficiency certificate is issued for both new and existing ships of 400 gross tons

Future passage or above and remains valid throughout its lifetime, until the ship is withdrawn from service, unless a new certificate is issued following a major conversion of the ship or until transfer of the ship to the flag of another state. In 2016, the IMO revised the SEEMP guidelines requiring vessels to implement a ship-specific fuel oil consumption data plan to collect, aggregate and report ship data with regard to annual fuel oil consumption, distance traveled, hours underway and other data required by regulation 22A of MARPOL Annex VI. This requirement took effect on January 1, 2019 and is to be administered by the USCG for U.S. Flag vessels and the RMI for Marshall Islands flag vessels. In 2020, OSG submitted its first annual fuel oil consumption data for 2019 to the IMO through USCG’s recognized organization, the American Bureau of Shipping.

OSG believes that its vessels are compliant with the current requirements of Annex VI and the EPA. Additionally, OSG believes for its vessels that operate in the EU, they are compliant with the regional mandates applicable in the EU. Future passagemodifications of climate control legislation or other regulatory initiatives by the IMO, EU, United States or other countries where OSG operates that restrict emissions of GHGs could require significant additional capital or operating expenditures and could have operational impacts on OSG’s business.expenditures. Although OSG cannot predict such expenditures and impacts cannot be predicted with certainty, at this time, they may be material to OSG’s results of operations.

Ballast Water Pollution Regulations

OSG’s vessels are subject to international, national and local ballast water management regulations.regulations that seek to address concerns for the release of organisms and pathogens that have been identified as being potentially harmful as a result of the carrying of ships’ ballast water from one place to another. At the international level, the International Convention for the Control and Management of Ships’ Ballast Water and Sediments (“BWM Convention”) was adopted by the IMO in 2004 and it entered into force on September 8, 2017. The BWM Convention is applicable to new and existing vessels that are designed to carry ballast water. It defines a discharge standard consisting of maximum allowable levels of critical invasive species designed to protect the marine environment from the introduction of non-native (alien) species as a result of the carrying of ships’ ballast water from one place to another. As tank vessels must take on ballast water in order to maintain their stability and draft and must discharge the ballast water when they load their next cargo, when emptying the ballast water which they carried from the previous port, they may release organisms and pathogens that have been identified as being potentially harmful in the new environment.species.

This standard will be met by installing treatment systems that render the invasive species non-viable. In addition, each vessel flying the flag of a signatory to the BWM Convention will be required to have on board a valid International Ballast Water Management Certificate, a Ballast Water Management Plan and a Ballast Water Record Book.

The United States is not a signatory to the BWM Convention and is not expected to be in the future, since it currently regulates ballast water management under two federal, partially overlapping regulatory schemes. One is administered by the USCG under the National Aquatic Nuisance Prevention and Control Act of 1990, as amended by the National Invasive Species Act of 1996, and the other is administered by the EPA under the U.S. Clean Water Act (“CWA”). Several U.S. states also have their own supplemental requirements. Since the U.S. is not a signatory to the BWM Convention, U.S. Flag vessels cannot be issued a Ballast Water Management Certificate. Instead, the American Bureau of Shipping has been authorized to issue a Statement of Voluntary Compliance (“SOVC”) to any U.S. Flag vessel that has an approved Ballast Water Management Plan that contains the information required by the BWM Convention. A SOVC is expected to satisfy the requirements of Port State Control in countries that are a signatory to the BWM Convention, but it is not guaranteed to do so.

The discharge of ballast water and other substances incidental to the normal operation of vessels in U.S. ports as noted above is subject to CWA permitting requirements. Inrequirements (“VGP”) in accordance with the EPA’s National Pollutant Discharge Elimination System (“NPDES”), OSG is subject to a Vessel General Permit (“VGP”), which addresses, among other matters, the discharge of ballast water and effluents including the submission of annual reports for each vessel OSG operates.System. The VGP which was first issued in 2008 and subsequently reissued in 2013, identifies twenty-six vessel discharge streams and establishes numeric ballast water discharge limits that generally align with the performance standards implemented under the USCG’s 2012 final rulerules and the IMO Convention. It also sets more stringent effluent limits for oil to sea interfaces and exhaust gas scrubber wastewater. The EPA’s phase-in schedule generally matches that of the USCG. The EPA determined that it will not issue extensions under the VGP, but in December 2013 it issued an Enforcement Response Policy (“ERP”) to address this industry-wide issue. In the ERP, the EPA states that vessels that have missed their compliance dates to meet the numeric discharge limits for ballast, but have received an extension from the USCG, are in compliance with all of the VGP’s requirements, other than the numeric discharge limits, and meet certain other requirements, will be considered a low enforcement priority. While OSG believes that any vessel that is or may become subject to the VGP’s numeric discharge limits while in a USCG extension period will be entitled to such low priority treatment as per the ERP, no assurance can be given that they will do so.

On December 4, 2018, the “VesselThe Vessel Incidental Discharge Act”Act (“VIDA”) was signed into law and restructures the way EPA and the USCG are to regulate incidental discharges in the future, including prohibiting EPA and individual states from permitting these discharges under the NPDES permitting program. Instead, the discharges will be regulated under a new CWA Section 312(p) program: Uniform National Standards for Discharges Incidental to Normal Operation of Vessels. VIDA is expected to phase outreplace provisions of the VGP and existing USCG regulations over a four-year period, replacing them with EPA-developed National Standardsstandards and new USCG regulations. The EPA currently expects to issue the VIDA final rule by the fall of Performance (“NSPs”)2024. The USCG will then have two years to develop and USCG implementation, compliance and enforcement regulations for those NSPs, which are expected to become effective in December 2022.

finalize corresponding regulations.

In March 2012, the USCG promulgated its final rule on ballast water management for the control of nonindigenous species in U.S. waters. While generally in line with the performance standards set out in the BWM Convention, the final rule requires that treatment systems for domestic and foreign vessels operating in U.S. waters must be type approved by the USCG. Under this rule, a treatment system is required to be installed (or equivalent method of management employed) by the vessel’s first regularly scheduled drydocking after January 1, 2016. The USCG issued over 14,000 extensions for vessels, due to delays in their type approval process, which generally delayed their compliance dates another five years, including various OSG owned and operated vessels. In 2020, OSG began installing ballast water treatment systems on its vessels with the final installation to be completed in 2023.

OSG complies with these regulations through ballast water management plans implemented on each of the vessels it technically manages. To meet existing and anticipated ballast water treatment requirements, including those contained in the BWM Convention, OSG has a fleetwide action plan to comply with IMO, EPA, USCG and possibly more stringent U.S. state mandates as they are implemented and become effective, which may require the installation and use of costly control technologies. OSG anticipates that in the next several years, compliance with the various conventions, laws and regulations relating to ballast water management that have already been adopted or that may be adopted in the future will require substantial additional capital or operating expenditures and could have operational impacts on OSG’s business.

Safety of Life at Sea

The SOLAS conventionInternational Convention for the Safety of Life at Sea (“SOLAS”) addresses the safety of merchant ships. Amendments to the SOLAS conventions come into force yearly and flag states are responsible for ensuring that ships under their flag comply with its requirements.

The majority of OSG’s vessels are currently registered in the United States, except for two that are registered in RMI, who in coordination with the classification society, inspect vessels to ensure compliance with SOLAS requirements as well as requirements listed in the Code of Federal Regulations, as applicable. Control provisions also allow contracting governments to inspect ships of other contracting states if there are clear grounds for believing that the ship and its equipment do not substantially comply with the requirements of the SOLAS convention - this procedure is known as port state control. Various certificates are prescribed by the SOLAS convention as proof of compliance and issued to vessels by the U.S. Coast Guard and by the classification society on their behalf. OSG believes that its vessels comply with the current requirements of SOLAS, as applicable, to the type of vessel operated.

Under the ISM Code, promulgated by the IMO, vessel operators are required to develop a safety management systemSMS that includes, among other things, the adoption of a safety and environmental protection policy describing how the objectives of a functional safety management systemSMS will be met. OSG has a safety management system for each of its operating subsidiaries, with instructions andOSG’s SMS contains procedures for the safe operation of its vessels, reporting accidents and non-conformities, internal audits and management reviews and responding to emergencies, as well as defined levels of responsibility. The ISM Code requires OSG to have a Document of Compliance (“DoC”) for the vessels it operates and a Safety Management Certificate (“SMC”) for each vessel it operates. Once issued, these certificates are valid for a maximum of five years. OSG in turn must undergo an annual internal audit and an external verification audit to maintain the DoC. In accordance with the ISM Code, each vessel must also undergo an annual internal audit at intervals not to exceed 12 months and vessels must undergo an external verification audit twice in a five-year period.

OSG maintains a DoC, which was reissued for five years on September 17, 2017 with requirements for annual audits by the USCG.2022. ATC maintains a DoC, which was reissued for five years on July 11, 2019 with requirements for annual audits by the USCG.2019. OSG is also certified to the SQE requirements of the ABS Guide for Marine Health, Safety, Quality, Environmental and Energy Management, which also includes meeting the requirements of the International Standards of Organization in ISO9001:2015 (Quality Management) and ISO14001:2015 (Environmental Management) for the management of operation of oil tankers, chemical tankers, and other cargo ships.

The SMC for each vessel is issued after verifying that the company responsible for operating the vessel and its shipboard management operate in accordance with the approved safety management system. No vessel can obtain a certificate unless its operator has been awarded a DoC issued by the administration of that vessel’s flag state or as otherwise permitted under SOLAS. Noncompliance with the ISM Code and other IMO regulations may subject the shipowner or charterer to increased liability, may lead to decreases in available insurance coverage for affected vessels and may result in the denial of access to, or detention in, some ports. For example, the USCG and EU authorities have indicated that vessels not in compliance with the ISM Code will be prohibited from trading to U.S. and EU ports.

Other EU Legislation and Regulations

The EU has adopted legislation that: (1) bans manifestly sub-standard vessels (defined as those over 15 years old that have been detained by port authorities at least twice in the course of the preceding 24 months) from European waters, creates an obligation for port states to inspect at least 25% of vessels using their ports annually and provides for increased surveillance of vessels posing a high risk to maritime safety or the marine environment, and (2) provides the EU with greater authority and control over Classification Societies, including the ability to seek to suspend or revoke the authority of negligent societies.

OSG believes that none of its vessels meet the sub-standard vessel definitions contained in the EU legislation. EU directives require EU member states to introduce criminal sanctions for illicit ship-source discharges of polluting substances (e.g., from tank cleaning operations) which result in deterioration in the quality of water and has been committed with intent, recklessness or serious negligence. Certain member states of the EU, by virtue of their national legislation, already impose criminal sanctions for pollution events under certain circumstances. OSG cannot predict what additional legislation or regulations, if any, may be promulgated by the EU or any other country or authority, or how these might impact OSG.

In 2013, the European Parliament and the Council of the European Union (EU) adopted the Ship Recycling Regulation (EU SRR) which entered into force on December 31, 2018. This regulation is intended to reduce the negative impacts linked to the recycling of ships flying the flag of Member States of the EU. The EU SRR also affects non-EU-flagged vessels, as ships flying a third-country flag (non-EU flag) calling at a port or anchorage of an EU member state shall have a certified Inventory of Hazardous Material (IHM), commencing December 31, 2020. OSG has conducted IHM surveys on five of its vessels that call upon EU countries and will need to implement a certified IHM on any other vessels planning to call upon the EU.

Security Regulations and Practices

In 2002, theThe U.S. Maritime Transportation Security Act of 2002 (“MTSA”) came into effect and the USCG issued regulations in 2003 implementing certain portions of the MTSA by requiringrequires the implementation of certain security requirements aboard vessels operating in waters subject to the jurisdiction of the United States. Similarly, in July 2004, amendments to SOLAS specifically dealing with maritime security came into effect, imposing variousimposes  detailed security obligations on vessels and port authorities, most of which are contained in the International Ship and Port Facilities Security Code (the “ISPS Code”). Among other things, the ISPS Code, which requires the development of vessel security plans and compliance with flag state security certification requirements. To trade internationally, a vessel must attain an International Ship Security Certificate  (“ISSC”) from a recognized security organization approved by the vessel’s flag state. All of OSG’s vessels have developed and implemented vessel security plans that have been approved by the USCG, have obtained an ISSC and comply with applicable security requirements.

OSGOSG monitors the waters in which its vessels operate for pirate activity. Company vesselsVessels that may transit areas where there is a high risk of pirate activity watersfollow best management practices for reducing risk and preventing pirate attacks compliant with protocols established by the naval coalition protective forces operating in such areas.

In recent years, the maritime community has commenced addressing the vulnerability of ship operations to cyber security threats, both at sea and while in port. Exposure to these threats has become pervasive due to the increasing reliance on information and operating technology systems used in the management of ship operations. Because these systems control multiple aspects of ship operations, they become integral parts of system and operational safety. In 2014 IMO’s Maritime Safety Committee supported a Canadian and U.S. recommendation to develop voluntary guidelines on maritime cyber security practices. Since then, a wide variety of regulatory requirements and best practice guidance has been generated by industry stakeholders. In December 2016, the USCG published a cybersecurity policy letter regarding the criteria and process for the reporting of suspicious activity and breach of security and added cybersecurity to the list of security items covered by the MTSA. In June 2017, IMO adopted a resolution to encourage member governments to ensure that cyber risks are appropriately addressed in safety management systems no later than the first annual verification on OSG’s DoC after January 1, 2021.

Security breaches and viruses could expose OSG to claims, litigation and other possible liabilities. Any inability to prevent security breaches (including the inability of our third-party vendors to prevent security breaches) could also cause existing clients to lose confidence in our systems and could adversely affect our reputation, cause losses to us or our clients, damage our brand and increase our costs. OSG completed a fleetwide upgrade of its Information Technology (“IT”) systems in 2020 to further protect its infrastructure against the threat of security breaches and computer viruses. OSG has also implemented a variety of required cyber security protocols and believes that both its operating technology and IT systems are appropriately protected.

INSPECTION BY CLASSIFICATION SOCIETIES

Every oceangoing vessel must be “classed” by a Classification Society. The Classification Society, certifies that the vessel is “in class” signifyingwith certification that the vessel has been built and maintained in accordance with the rules of the Classification Society and complies with applicable rules and regulations of the vessel’s country of registry and the international conventions of which that country is a member. In addition, whereWhere surveys are required by international conventions and corresponding laws and ordinances of a flag state, the Classification Society will undertake them, on application or by official order, acting on behalf of the authorities concerned. The Classification Society also undertakes on request, other surveys and checks that are required by regulations and requirements of the flag state. These surveys are subject to agreements made in each individual case and/or to the regulations of the country concerned.

Regular and extraordinary surveys of hull, machinery, including the electrical plant, and any special equipment classed are required to be performed for a vessel to maintain its class certification. For seagoing ships, annual surveys are conducted for the hull and the machinery, including the electrical plant and where applicable for special equipment classed, at intervals of 12 months from the date of commencement of the class period indicated in the certificate.machinery. Intermediate surveys are typically conducted two and one-half years after commissioning and upon each class renewal. Intermediate surveys may be carried out on the second or third annual survey.

Vessels are required to dry dock for inspectionInspection of the underwater hull occurs at each intermediate survey and at each class renewal survey. For vessels less than 15 years old, Classification Societies permit in waterin-water inspections by divers in lieu of dry docking for intermediate surveys, subject to other requirements of such Classification Societies.divers. Class renewal surveys, known as special surveys, are carried out for the ship’s hull, machinery, including the electrical plant, and for any special equipment classed, at the intervals indicated by the character of classification for the hull. For vessels greater than 15 years old, out of water drydocking is to take place twice in a five-year period.

At theIn a special survey, the vessel is thoroughly examined, including audio-gauging to determine the thickness of the steel structures. Should the thickness be found to be less than class requirements, the Classification Society would prescribe steel renewals. Substantial amounts of money may have to be spent for steel renewals to pass a special survey if the vessel experiences excessive wear and tear. In lieu of the special survey every four or five years, depending on whether a grace period was granted, a shipowner has the option of arranging with the Classification Society for the vessel’s hull or machinery to be on a continuous survey cycle, in which every part of the vessel would be surveyed within a five-year cycle. Upon a shipowner’s request, the surveys required for class renewal may be split according to an agreed schedule to extend over the entire period of class survey period. This process is referred to as continuous class renewal.

If defects are found during any survey, the Classification Society surveyor will issue a “finding” or a “recommendation” which must be rectified by the vessel owner within prescribed time limits.

Most insurance underwriters make it a condition for insurance coverage that a vessel be certified as “in class” by a Classification Society that is a member of the International Association of Classification Societies (“IACS”). In December 2013, the IACS adopted new harmonized Common Structure Rules, which will apply to crude oil tankers and dry bulk carriers to be constructed on or after July 1, 2015. All OSG’s vessels are currently, and OSG expects will be, certified as being “in class” by the ABS, a major classification society. All new and secondhand vessels that OSG acquires must be certified prior to their delivery under OSG’s standard purchase contracts and memorandum of agreement. If the vessel is not certified on the date of closing, OSG has no obligation to take delivery of the vessel.

INSURANCE

Consistent with the prevailing practice in the industry,

OSG presently carries protection and indemnity (“P&I”) insurance coverage for pollution of $1.0 billion per occurrence on every vessel in its fleet, as well as for other perils faced by vessel owners and operators in varying limits. Currently, the fleet is entered through membership in four differentThe fleet’s mutual protection and indemnity associations (“P&I Associations”), all of whom are members of the International Group of P&I clubs. The P&I Associations that comprise the International Groupclubs which insure approximately 90% of the world’s commercial tonnage and have entered into a pooling agreement to reinsure each other’s liabilities.tonnage. Each P&I Association has capped its exposure to each of its members at approximately $7.5 billion through reinsurance arrangements. As a member, of a P&I Association that is a member of the International Group, OSG is subject to calls payable to the P&I Associations based on its claim record as well as the claim records of all other members of the individual P&I Associations of which it is a member, and the members of the pool of P&I Associations comprising the International Group. Each of OSG’s vessels is insured by one of four P&I Associations with deductibles ranging from $0.025 million to $0.150 million per vessel per incident. While OSG has historically been able to obtain pollution coverage at commercially reasonable rates, no definitive assurances can be given that such insurance will continue to be available in the future.

OSG also carries marine hull and machinery and war risks (including piracy) insurance, which includes the risk of actual or constructive total loss, for all of its owned and operated vessels except for one where the risk is borne by the vessel’s owner as noted under the contract. The vessels are each covered up to at least their fair market value, with deductibles ranging from $0.1 million to $0.125 million per vessel per incident.vessels. OSG is self-insured for hull and machinery claims in amounts in excess of the individual vessel deductibles up to a maximuman annual aggregate lossdeductible of $0.750 million per policy year.$750 thousand.

TAXATION OF THE COMPANY

The following U.S. tax law applicable to the Company is based on the provisions of the U.S. Internal Revenue Code of 1986, as amended, existing and U.S. Treasury Department regulations, administrative rulings, pronouncements and judicial decisions, all as of the date of this Annual Report on Form 10-K. No assurance can be given that changes in or interpretation of existing laws will not occur or will not be retroactive or that anticipated future circumstances will in fact occur.

Tonnage Tax

Pursuant to provisions of the U.S. Internal Revenue Code of 1986, as amended, existing U.S. Treasury Department regulations, administrative rulings, pronouncements and judicial decisions,

OOSG made an electionSG elected to have the foreign operations of OSG’s U.S. Flag vessels taxed under a “tonnage tax” regime rather than the usual U.S. corporate income tax regime. As a result, OSG’s gross income for U.S. income tax purposes with respect to eligible U.S. Flag vessels does not include (1) income from qualifying shipping activities in U.S. foreign trade (i.e., transportation between the United States and foreign ports or between foreign ports), (2) income from cash, bank deposits and other temporary investments that are reasonably necessary to meet the working capital requirements of qualifying shipping activities, and (3) income from cash or other intangible assets accumulated pursuant to a plan to purchase qualifying shipping assets. OSG’s taxable income with respect to the operations of its eligible U.S. Flag vessels of which there are two, is based on a “daily notional taxable income,” which is taxed at the highest U.S. corporate income tax rate. The daily notional taxable income from the operation of a qualifying vessel is 40 cents per 100 tons of the net tonnage of the vessel up to 25,000 net tons, and 20 cents per 100 tons of the net tonnage of the vessel in excess of 25,000 net tons. The taxable income of each qualifying vessel is the product of its daily notional taxable income and the number of days during the taxable year that the vessel operates in U.S. foreign trade.

On September 30, 2019, OSG took delivery of two Marshall Islands flagged vessels which are trading in the international markets under one-year time charters. As these new vessels are not U.S. Flag vessels, they do not qualify for the U.S. income tax exclusion described in the above paragraph. Therefore, the operations are subject to U.S. taxation and included in the calculation of taxable income. In addition, the Marshall Islands flagged vessels will be taxed under the “daily notional taxable income” under the Marshall Islands tonnage tax regime. The daily notional taxable income from the operation of the vessels are $500 for 2,500 net tonnage or less, 20 cents per net tonnage between 2,501 to 5,000 net tonnage, 17 cents per net tonnage between 5,001 to 25,000 net tonnage, 15 cents per net tonnage between 25,001 to 50,000 net tonnage and 12.5 cents per net tonnage over 50,000 net tonnage. The tonnage tax of the vessels is the product of its daily notional taxable income and the percentage of days during the taxable year the vessels operate in U.S. foreign trade.

ITEM 1A. RISK FACTORS

Our business, including our operating results and financial condition, are subject to a wide variety of risks includingwhich could adversely and materially affect our business in many ways. This includes risks not currently known to us or that we currently deem to be immaterial but that could materially and adversely affect our business.immaterial. In assessing these risks, you should also refer to the other information contained in our filings with the SEC, including our financial statements and related notes. Actual dollar amounts are used in this section.

Risks Related to the COVID-19 pandemic

The COVID-19 pandemic has materially and adversely impacted the global and US economies. The economic headwinds posed by this have impacted our industry and our business and depending upon its duration and severity will continue to do so for the foreseeable future.

The COVID-19 pandemic has impacted our industry and our business in significant ways, creating new risks and heightening existing risks. The environment within which we operate is, has been, and continues to be under ongoing stress, presenting risks and vulnerabilities that have previously not affected our performance. The level of uncertainty about the extent, duration and ultimate impact of the forces that are currently unsettling our markets has never been greater and will impact how supply, demand and price of crude oil will unfold in the months ahead. Direct management and operational risks exist now and are likely to continue and increase in the future relating to our ability to effectively sustain operational readiness. Maintaining the health of our key employees to operate our vessels and executives to manage the business during this turbulent time is critical. Our ability to adapt and implement policies and procedures in this regard, and to anticipate associated costs, are subject to developing consensus with relevant constituencies, including regulatory authorities, health officials, unions, customers, and those in our industry and supply chain, to achieve consistency and a common approach to coping with the very real and very difficult problems presented by COVID-19.

We have experienced, and there are heightened risks that we will continue to experience for the foreseeable future relating to: (i) drastic decreases in demand; (ii) uncertainties in the oil trading markets, with volatile and unpredictable oil pricing; (iii) heightened risk of off-hire periods resulting from managing virus-related delays; (iv) incurring costs for testing, cleaning, quarantine, immunization and certifications; (v) ability to comply with what are evolving, and sometimes conflicting, logistical health and safety protocols. (vi) difficulty in easily accessing critical supplies such as face masks and other personal protective equipment; (vii) risks related to the reliability and effectiveness of testing methodologies and PPE; (viii) delays in receiving critical supplies, in receiving services of specialized technicians and inspectors, and in concluding vetting of the vessels; (ix) restrictions on travel to or from countries in which OSG operates, or the inability to access certain areas; (x) reduced availability of airlines and other transportation modes to move our crews into position and increased costs associated with such travel; (xi) challenges getting crew to and from the vessels in a manner that both protects their personal safety and endeavors to assure that a joining crew member is not bringing COVID-19 onboard or is otherwise affecting a vessel’s acceptability in service; (xii) increased costs to develop, implement and enforce policies and procedures to deal with all of these challenges; and (xiii) restricted port policies for pilots, tugs and inspections.

Further risks relate to potential longer-term impacts of the pandemic on our Jones Act trade. The models we typically use to forecast demand may not be reliable in the wake of this health emergency. A V-shaped recovery is not expected in transportation fuel demand, with uneven recovery predicted in various fuel sectors. The shape and speed of fuel demand recovery could have significant negative impacts on our key customers, refineries in particular, which would likely have a material impact on both domestic tank vessel demand as well as on OSG’s expected forward revenue streams.

As of March 1, 2021, we have seven vessels in layup due to the lack of demand. While laying up a vessel mitigates our risks and lowers our cost, there are costs involved and no offsetting revenue. For those vessels in service, we are experiencing reduced cargo volumes and increased idle times, derivatives of falling refinery runs and unprecedented demand destruction for transportation fuels arising out of stay-at-home policies in many populated regions.

Volatility in rates is expected to continue. The overall level of crude oil production cuts in the U.S. over the coming months and the impact of these cuts on the relative price differentials between domestic and comparable international crude oil are significant factors for the U.S. trades. Even if energy prices rise, the fact that crude oil production has declined, coupled with the increase of tonnage released back into the market once product stored is delivered for consumption, will likely impact negatively on future rates. We have heightened exposure to risks to those of our vessels operating on the spot market, as rate and utilization assumptions for those vessels must cover a wide range of possible scenarios.

Risks Related to Our Company

Inability to attract or retain qualified mariners may adversely affect the Company’s business.

Our vessels must be manned by highly qualified mariners that meet the standards of experience set by our customers. Increasing demand for maritime transportation in all markets has recently spiked, resulting in competition from other shipping sectors which potentially limits the number of mariners available to OSG. During 2023, there were occasions when our vessels sailed short of full crew, requiring permissions and waivers from the US Coast Guard and our customers. Many of the positions filled by our mariners require extensive licensing credentials and experience sailing on the particular type of vessel, as well as time sailing with OSG to be qualified by the US Coast Guard and our customers’ matrix requirements. If we are unable to attract or retain qualified mariners, or if there is an insufficient number of qualified mariners available, we may not be able to provide the services contracted for, which would have a material adverse effect on our business.

Operating costs and capital expenses will increase as the Company’s vessels comply with regulatory changes, as the vessels age, or due to unexpected drydocks.

New or stricter environmental regulations, changes in governmental regulations and compliance with Classification Society standards may require OSG to make investments, capital expenditures, and incur drydock expenses to ensure compliance. Costs necessary for maintaining a vessel in good operating condition increase as the age of the vessel increases. Vessels must be drydocked periodically for inspection and maintenance, and in the event of accidents or other unforeseen damage. These costs are difficult to predict with certainty but can be substantial, and the Company’s insurance may not cover these costs. In addition, vessels in drydock will generally not generate income. 

As a result of these factors, OSG may incur substantial costs or be required to take its vessels out of service. Market conditions may not justify such expenditures or permit OSG to operate its vessels profitably. These costs, delays, expenses and off-hire time could have a material adverse effect on OSG’s business, financial condition, results of operations and cash flows.

Changes in demand in specialized markets in which the Company currently operates or changes in governmental support may lead the Company to redeploy certain vessels to other markets or put its ability to participate in specialized markets at risk.

The two vessels participating in the TSP derive a substantial percentage of their revenues from transporting cargoes reserved for U.S. Flag vessels under MARAD’s cargo preference program, which requires shippers to give U.S.-flag vessels a preference to transport any government-impelled ocean-borne cargoes. Among the currently available government–impelled cargoes is a contract the Company has with the Government of Israel (“GOI”) to deliver fuel through December 31, 2024, which the GOI funds with grants from the U.S. government. The Company also seeks other government–impelled cargoes to supplement the GOI business; however, there is no assurance the Company will be able to secure such cargoes. If OSG is unable to retain the GOI business or is unable to obtain significant other charters for these vessels, the Company may no longer be able to participate in the TSP.

The Company operates three Jones Act MR Shuttle Tankers, two of which are currently operating as shuttle tankers serving offshore oil installations in the Gulf of Mexico. Modifications made to enable these tankers to perform the specialized service of a shuttle tanker required the Company to incur substantial capital costs, which in turn allow the Company to earn a premium to market rates earned by conventional Jones Act tankers. The customers with wells and fields in the Gulf of Mexico have high cash production costs and, as such, are vulnerable to production cuts or shut down in response to persistently low oil prices. While shuttle tankers can serve as conventional tankers without further modification, a future reduction in the demand for specialized shuttle tanker services could limit the Company’s ability to earn such premiums.

The Company conducts lightering operations in the Delaware Bay with one ATB built for these operations. If there is lower demand for this vessel in the Delaware Bay lightering market, the Company might have to redeploy this ATB in other markets in which it may not be able to compete profitably and/or may require substantial modification.

If OSG is no longer able to participate in any of these niche businesses, the Company’s business, financial condition, results of operations and cash flows may be adversely affected.

The Company’s significant operating leases may be reduced or replaced on less favorable terms.

The Company’s current fleet includes eight vessels that have been chartered-in under operating leases. These leases expire at various points in the future and the Company may not be able to replace these or on as favorable terms. These circumstances could have a material adverse effect on the Company’s future financial position, profitability, and results of operations and cash flow.

Interruption, failure or breach of OSG’s information technology and communications systems could impair its ability to operate.

OSG has both on-shore and ship-board systems that are highly dependent on information technology systems. The Company collects, stores and transmits data using both internal information technology systems and those of third-party vendors. The secure storage, processing, maintenance, and transmission of sensitive data, including our own proprietary business information and that of our customers, and personally identifiable information of our customers and employees, is critical to the Company’s operations.

Information technology and communication systems are subject to reliability issues, integration and compatibility concerns, and security-threatening intrusions. OSG’s network, or those of our customers or third-party vendors, could be vulnerable to unauthorized access, computer viruses, or targeted attacks intended to steal or destroy data, disrupt or degrade service, sabotage systems or cause other damage.

The Company may be required to spend significant capital and other resources to protect against these threats or to alleviate problems caused by security breaches or viruses. Security breaches and viruses could expose the Company to claims, litigation and other possible liabilities and could also cause customers to lose confidence in OSG’s systems.

OSG has not experienced any material cyber security violation or occurrence over the last three years, and we invest time, effort and financial resources to proactively secure our systems, networks and communications. However, these actions cannot provide absolute assurance that we will be successful in preventing or responding to all cyber security attacks. Any failure or breach of OSG’s or third-party systems could result in interruptions in service, reductions in revenue and profits, damage to reputation and brand, or liability for the release of confidential information, all of which may have a material impact on our operations and financial results.

Delays or disruptions in implementing new technological and management systems could impair the Company’s ability to operate.

The Company is currently in the process of transitioning to new software systems for managing ship and financial operations. From time to time the Company implements new systems or upgrades technological resources utilized in running its business. The transition to new technology requires a significant investment in capital and personnel resources and the coordination of numerous software and system providers and internal business teams. The Company may experience difficulties as it manages these changes and transitions to a new system and upgrades its technological resources, including loss or corruption of data, delays, decreases in productivity, and unanticipated expenses. The Company could be adversely affected if the new software systems or other new or upgraded technological resource are defective, not installed properly, fail to perform as marketed or are not properly integrated into existing operations. The implementation of a new system may not result in improvements that outweigh the cost of implementation. System implementation failures or operational failures, including unauthorized access by third parties to our new software system (which could have the effects described in the preceding risk factor) could have adverse effects on the Company’s business, financial position, and ability to operate in a complex industry.

Changes in demand have affected Time Charter commitments. OSG may not be able to renew Time Charters when they expire or enter into new Time Charters and vessels may be placed in layup.

OSG’s ability to obtain new charters or renew expiring contracts will depend on the prevailing market conditions. Renewals or new contracts may be at less favorable rates or for shorter durations. There may be a gap in employment between charters or the vessel may only be able to be employed on the spot market, both of which would affect utilization rates and result in increased costs to the Company. When there is no demand for a vessel, there is also a risk of the necessity to layup the vessel, as was demonstrated during the course of 2021. These occurrences would adversely affect the Company’s business, financial condition, results of operations and cash flows.

The Company has significant indebtedness, may not be able to generate sufficient cash to service all of its indebtedness, and could breach covenants in its credit facilities and term loans.loans which could affect our ability to finance operations, pursue desirable business opportunities and successfully run the business in the future, all of which could affect OSG’s ability to fulfill its obligations.

As of December 31, 2023, OSG had $400.7 million of outstanding indebtedness. This substantial indebtedness and interest expense could have important consequences, including (i) limiting OSG’s ability to use cash flow from operations in other areas of its business, such as for working capital, because a substantial portion of these funds are dedicated to service its debt; (ii) requiring the Company to seek to incur additional indebtedness in order to make planned capital expenditures and other expenses or investments; (iii) limiting OSG’s ability to obtain additional financing; (iv) limiting the Company’s flexibility and ability to capitalize on business opportunities or to react to competitive pressures and adverse changes in government regulation, and OSG’s business and industry; (v) increasing OSG’s vulnerability to a downturn and to adverse economic and industry conditions generally; and (vi) limiting the Company’s ability to enter into hedging transactions by reducing the number of counterparties with whom OSG can enter into such transactions as well as the volume of those transactions.

The Company’s earnings, cash flow and the market value of its vessels vary significantly due to direct impacts of the COVID-19 pandemic, general economic, competitive and market conditions affecting the industry, and the cyclical nature of the tanker industry, with many of theseand legislative and regulatory actions – all factors beyond the control of the Company. The amount of debt that OSG can manage in some periods may not be appropriate for other periods, and OSG’s ability to meet the financial covenants to which it is subject or may be subject in the future may be at risk. Any insufficiency could negatively impact OSG’s business.

The term loan, due 2023, contains certain restrictions relating to new borrowings, the movement of funds between OBS and OSG, and financial covenants. Other financings to which OSG is a party contain similar restrictions and financial covenants. Insufficiencies in earnings, cash flow and market value of the vessels could require the Company to make mandatory payments or cause the Company to breach certain covenants. If the Company is unable to remedy the relevant breach or obtain a waiver, the Company’s lenders could accelerate its debts and foreclose on the Company’s owned vessels.

If OSG does not generate sufficient cash flow from operations to satisfy its debt obligations, it may have to undertake alternative financing plans, such as selling tankers or other assets, reducing or delaying investments and capital expenditures, refinancing or restructuring its debt, and/or seeking to raise additional capital. The Company’s ability to restructure or refinance its debt will depend on the condition of the capital markets, its access to such markets and its financial condition at that time. Any future refinancing of debt could be at higher interest rates and might require the Company to comply with more onerous covenants, which could further restrict OSG’s business operations. In addition, the terms of existing or future debt instruments may restrict OSG from adopting certain alternatives. These potential undertakings and alternative measures may not be successful and may not permit OSG to meet its scheduled debt service obligations.

The Company’s inability to generate sufficient cash flow to satisfy its debt obligations, to meet its financial covenants, to reduce debt, and/or to obtain alternative financing, in such circumstances, could materially and adversely affect OSG’s business, financial condition, results of operations and cash flows.

OSG has incurred significant indebtedness, which could affect our ability to finance operations, pursue desirable business opportunities and successfully run the business in the future, all of which could affect OSG’s ability to fulfill its obligations under that indebtedness.

As of December 31, 2020, OSG had $429.1 million of outstanding indebtedness. This substantial indebtedness and interest expense could have important consequences, including (i) limiting OSG’s ability to use cash flow from operations in other areas of its business, such as for working capital, because a substantial portion of these funds are dedicated to service its debt; (ii) requiring the Company to seek to incur additional indebtedness in order to make planned capital expenditures and other expenses or investments; (iii) limiting OSG’s ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions, and other expenses or investments planned by the Company; (iv) limiting the Company’s flexibility and ability to capitalize on business opportunities and to react to competitive pressures and adverse changes in government regulation, and OSG’s business and industry; (v) limiting OSG’s ability to satisfy its obligations under its indebtedness or to refinance its indebtedness; (vi) increasing OSG’s vulnerability to a downturn and to adverse economic and industry conditions generally; and (vii) limiting the Company’s ability to enter into hedging transactions by reducing the number of counterparties with whom OSG can enter into such transactions as well as the volume of those transactions.

OSG’s ability to continue to fund its obligations and to reduce debt may be affected by general economic, financial market, competitive, legislative and regulatory factors, among other things. An inability to fund the Company’s debt requirements or reduce debt could have a material adverse effect on OSG’s business, financial condition, results of operations and cash flows.

The Company’s significant operating leases could be replaced on less favorable terms or may not be replaced, and a portion of the vessels leased are in layup.

The Company’s fleet includes ten vessels that have been chartered-in under operating leases. Four of the ten vessels are currently in layup. These leases expire at various points in the future and may not be replaced at all or on as favorable terms. The bareboat charter hire continues to be due and paid even if the vessel is in lay-up, with no corresponding revenue. These circumstances could have a material adverse effect on the Company’s future financial position, results of operations and cash flow.

Changes in demand in specialized markets in which the Company currently operates or changes in governmental support may lead the Company to redeploy certain vessels to other markets or put its ability to participate in specialized markets at risk.

The Company conducts lightering operations in the Delaware Bay with one ATB built for these operations. If there is lower demand for this vessel in the Delaware Bay lightering market, the Company might have to redeploy this ATB in other markets in which it may not be able to compete profitably and/or may require substantial modification. In addition, the Company would be required to pay daily liquidated damages to MarAd if this vessel was deployed in the contiguous coastwise trades.

The Company has two vessels participating in the MSP which derive a substantial percentage of revenues earned from transporting cargoes reserved for U.S. Flag vessels under MarAd’s cargo preference program, which is set up to be compliant with certain laws and regulations that require shippers to give U.S.-flag vessels a preference to transport any government-impelled ocean borne cargoes. Among the currently available government–impelled cargoes is a contract the Company has with the Government of Israel (“GOI”) to deliver fuel through December 31, 2021, which the GOI funds with grants from the U.S. government. The Company also seeks other government–impelled cargoes to supplement the GOI business; however, there is no assurance the Company will be able to secure such cargoes. If the OSG is unable to retain the GOI business or is unable to obtain significant other charters for these vessels, the Company may no longer be able to participate in the MSP.

The Company operates three Jones Act MR Shuttle Tankers, two of which are currently operating as shuttle tankers serving offshore oil installations in the Gulf of Mexico. Modifications made to enable these tankers to perform the specialized service of a shuttle tanker required the Company to incur substantial capital costs, which in turn allow the Company to earn a premium to market rates earned by conventional Jones Act tankers. The customers with wells and fields in the Gulf of Mexico have high cash production costs and, as such, are vulnerable to production cuts or shut down in response to persistently low oil prices. While shuttle tankers can serve as conventional tankers without further modification, future reduction in the demand for specialized shuttle tanker services could limit the Company’s ability to earn such premiums.

If OSG is no longer able to participate in any of these niche businesses, the Company’s business, financial condition, results of operations and cash flows may be adversely affected.

OSG may not be able to renew Time Charters when they expire or enter into new Time Charters and vessels may be placed in layup.

OSG’s ability to renew expiring contracts or obtain new charters will depend on the prevailing market conditions at the time of renewal. Renewals or new contracts may be at less favorable rates. There may be a gap in employment between charters or the vessel may only be able to be employed on the spot market, both of which would affect utilization rates and result in increased costs to the Company. If there is no demand for a vessel, there is also a risk of the necessity to layup the vessel. These occurrences would adversely affect the Company’s business, financial condition, results of operations and cash flows.

Constraints on capital availability have adversely affected the tanker industry and OSG’s business.

Constraints on capital may adversely affect the financial condition of the Company’s customers, lenders, suppliers, and others. While OSG seeks to monitor the financial condition of its customers, lenders and suppliers, the availability and accuracy of information about them and the actions that OSG may take to reduce possible losses resulting from the failure of such entities to comply with their contractual obligations may be limited. In addition, adverse financial conditions may inhibit these entities from entering into new commitments with OSG. These factors could have a material adverse effect on OSG’s revenues, profitability and cash flows, as well as its borrowing ability and financial condition.

The Company derives a substantial portion of its revenue from a limited number of customers and is subject to credit risks, and the loss of, or reduction in business by, any of these customers should they be impacted by the COVID-19 pandemic or otherwise, could materially adversely affect its business, financial condition and results of operations.

The Company’s largest customers account for a significant portion of its revenues. The Company’s top three customerscustomer comprised approximately 34.1%14.3% of the Company’s revenues during 2020. The loss2023. Changes in the broader market, such as closures of U.S. refining facilities, have reduced the locations to and from which oil is delivered or reduction in business by, any of these customers could materially adversely affect the Company’s business, financial condition and results of operations.refined oil is sourced.

Operating costs and capital expenses will increase as the Company’s vessels age and due to unexpected drydocks.

In general, capital expenditures, cargo insurance rates and other costs necessary for maintaining a vessel in good operating condition increase as the age of the vessel increases. Changes in governmental regulations and compliance with Classification Society standards may restrict the type of activities in which the vessels may engage and/or may require OSG to make additional expenditures for new equipment. Vessels must be drydocked periodically for inspection and maintenance, and in the event of accidents or other unforeseen damage. The cost of repairs and renewals required at each drydock are difficult to predict with certainty but can be substantial, and the Company’s insurance may not cover these costs. Vessels in drydock will generally not generate any income. In addition, the time when a vessel is out of service for maintenance is determined by a number of factors including regulatory deadlines, market conditions, shipyard availability and customer requirements.

As a result of these factors, OSG may be required to incur substantial costs or take its vessels out of service. Market conditions may not justify such expenditures or permit OSG to operate its vessels profitably even if those vessels remain operational. These cost increases, delays, expenses and off-hire time could have a material adverse effect on OSG’s business, financial condition, results of operations and cash flows.

The Company is subject to credit risks with respect to its counterparties on contracts, and any failure by those counterparties to meet their obligations could cause the Company to suffer losses on such contracts, decreasing revenues and earnings.

The Company has entered into, and in the future will enter into, various contracts associated with the operation of its vessels. The ability of each of the Company’s customers, lenders, suppliers, and other counterparties to perform itstheir obligations under a contract with it will depend on a number of factors that are beyond the Company’s control and may include among other things, general economic conditions; availability of debt or equity financing; the condition of the maritime and offshore industries; the financial condition of the counterparty; charter rates received for specific types of vessels; and various expenses.volatile expenses in obtaining supplies. Charterers are sensitive to the commodity markets and may be impacted by market forces affecting commodities such as oil. In addition, as we are currently experiencing, in depressed market conditions, the Company’s charterers and customers may no longer need a vessel that had been under charter or contract or may be able to obtain a comparable vessel at lower rates.rates, or adverse financial conditions may inhibit these entities from entering into new commitments with OSG. As a result, the Company’s customers may fail to pay charter hire or attempt to renegotiate charter rates. If the counterparties fail to meet their obligations, the Company could suffer losses on such contracts which would decrease revenues, cash flows and earnings.

Maritime claimants could arrest OSG’s vessels, which could interrupt cash flows.

Crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may be entitled to a maritime lien against that vessel for unsatisfied debts, claims or damages. In many jurisdictions, a maritime lien holder may enforce its lien by arresting a vessel through foreclosure proceedings. The arrest or attachment of one or more of the Company’s vessels could interrupt OSG’s cash flow and require it to pay a significant amount of money to have the arrest lifted. Claimants could try to assert “sister ship” liability against one vessel in the Company’s fleet for claims relating to another vessel in its fleet which, if successful,These factors could have ana material adverse effect on OSG’s revenues, profitability and cash flows, as well as its borrowing ability and financial condition. The loss of, or reduction in business by, any of these customers and refinery locations could materially adversely affect the Company’s business, financial condition and results of operations and cash flows.operations.

Interruption, failure or breach of OSG’s information technology and communications systems could impair its ability to operate and adversely affect its business.

OSG has both on-shore and ship-board systems that are highly dependent on information technology systems. Information technology and communication systems are subject to reliability issues, integration and compatibility concerns, and security-threatening intrusions. OSG may experience failures caused by the occurrence of natural disasters, computer hacking or viruses or other unanticipated problems at OSG’s facilities, aboard its vessels or at third-party locations. The Company collects, stores and transmits data using both internal information technology systems and those of third-party vendors. The secure storage, processing, maintenance, and transmission of sensitive data, including our own proprietary business information and that of our customers, and personally identifiable information of our customers and employees, is critical to the Company’s operations. OSG’s network, or those of our clients or third-party vendors, could be vulnerable to unauthorized access, computer viruses, or targeted attacks intended to steal or destroy data, disrupt or degrade service, sabotage systems or cause other damage.

The Company may be required to spend significant capital and other resources to protect against these threats or to alleviate problems caused by security breaches or viruses. Security breaches and viruses could expose us to claims, litigation and other possible liabilities and could also cause customers to lose confidence in our systems. Any failure of OSG’s or third-party systems could result in interruptions in service, reductions in its revenue and profits, damage to our reputation and brand, or liability for the release of confidential information.

Delays or disruptions in implementing new technological and management systems could impair the Company’s ability to operate and adversely affect its business.

The Company is currently in the process of transitioning to a new software system for managing ship operations. From time to time the Company implements new systems or upgrades technological resources utilized in running its business. The transition to new technology requires a significant investment in capital and personnel resources and the coordination of numerous software and system providers and internal business teams. The Company may experience difficulties as it manages these changes and transitions to a new system and upgrades its technological resources, including loss or corruption of data, delays, decreases in productivity as personnel implement and become familiar with new systems and processes, and unanticipated expenses. Additionally, the Company could be adversely affected if the new software system it is implementing for managing ship operations or other new or upgraded technological resource are defective, not installed properly, fail to perform as marketed or are not properly integrated into existing operations. In addition, the implementation of a new system may not result in improvements that outweigh the cost of implementation. System implementation failures or operational failures, including unauthorized access by third parties to our new software system (which could have the effects described in the preceding risk factor) could have adverse effects on the Company’s business, financial position, and ability to operate in a complex industry.

WeThe Company could face significant liability if one or more multiemployer plans in which we participateit participates is reported to have underfunded liabilities and we withdrawor if the Company withdraws from participation in one or more multiemployer pension plans in which we participate.it participates.

The Company is a party to collective-bargaining agreements that require contributions to three jointly managed multiemployer pension plans covering seagoing personnel of U.S. Flag vessels. Our required contributions to these plans could increase because of a shrinking contribution base as a result of the insolvency or withdrawal of other companies that currently contribute to these plans, the inability or failure of withdrawing companies to pay their withdrawal liability, low interest rates, lower than expected returns on pension fund assets or other funding deficiencies. Certain of these multiemployer plans are currently underfunded. Significantly underfunded pension plans are required to improve their funding ratios within prescribed intervals based on the level of their under-funding. As a result, OSG’s required contributions to these plans may increase in the future. In addition, a termination of or voluntary withdrawal from or a mass withdrawal of all contributing employers from an underfunded multiemployer pension plan would require OSG to make payments to the plan for our proportionate share of such multiemployer pension plan’s unfunded vested liabilities. See Note 16,15, “Pension, and Other Post Retirement Benefit Plans and Benefit Liabilities,” to the Company’s consolidated financial statements set forth in Item 8 for additional information. Requirements to pay increased contributions or withdrawal liabilities could have a material adverse impact on our liquidity and results of operations.

Risks Related to Our Industry

Volatile changes in supply and demand for oil and refined products, charter rates and vessel values, couldand the factors that influence such changes may adversely affect the Company’s earnings, liquidity and available cash.our business.

The marine transportation industry is both cyclical and volatile in terms of demand, charter rates and profitability. Fluctuations in charter rates and vessel values result from changes in supply and demand both for tanker capacity and for oil and oil products. Factors affecting these changes in supply and demand are generally outside of the Company’s control. Aside from the impacts of the COVID-19 pandemic, additional factors influencing the demand for tanker capacitycontrol and include: (i) supply and demand for, and availability of energy resources such as oil, oil products and natural gas, which affect customers’ need for vessel capacity; (ii) availability of refining capacity and inventories; (iii) changes in the production levels of crude oil; (iv) increases in the supply of Jones Act vessels without a commensurate increase in demand; (v) global and regional economic and political conditions, including armed conflicts, terrorist activities and strikes, and international sanctions, embargoes, import and export restrictions or nationalizations and wars, such as the conditions in the Middle East and the Russian war in Ukraine, that could impactcreate uncertainties in the supply of oil ;and demand for oil; (vi) changes in seaborne and other transportation patterns, including rerouting of voyages to avoid areas of conflict, such as that currently occurring in the Red Sea, changes in the distances that cargoes are transported, changes in the price of crude oil and changes to the West Texas Intermediate and Brent Crude Oil pricing benchmarks; and (vii) competitionincreasing interest globally, from a regulatory and demand viewpoint, in transitioning to carbon neutral energy sources and the development and use of alternative sources of energy.fuels in order to reduce greenhouse gas emissions that impact the fuel we transport as cargo and use in fueling our own vessels.

Many of the factors that influence the demand for tanker capacity will also, in the longer term, effectively influence the supply of tanker capacity, since decisions to build new capacity, invest in capital repairs, invest in new technologies or equipment, or to retain in service older capacity are influenced by the general state of the marine transportation industry from time to time.industry. Factors influencing the supply of vessel capacity include (i) the number of newbuild deliveries or the conversion of vessels into or out of transporting oil; (ii) the number of vessels removed from service, such as via recycling, scrapping or conversion to storage; and (iii) the availability and pricing of other energy sources such as natural gas for which tankers can be used or to which construction capacity may be dedicated.

The nature, timing and degree of changes in industry conditions are unpredictable and could adversely affect the values of the Company’s vessels or result in significant fluctuations in the amount of charter revenues the Company earns, which could result in significant volatility in OSG’s quarterlyoperations, financial results and cash flows.

The market value of vessels fluctuates significantly, which could adversely affect OSG’s liquidity or otherwise adversely affect its financial condition.

While Jones Act and U.S. Flag vessel market values have, on average, generally declined over the past several years, the market value of Jones Act vessels has fluctuated over time.

The fluctuating market values of the vessels can impact the Company’s liquidity regardless of whether the Company sells or continues to hold the vessels. For example, selling a vessel at a sale price that is less than the vessel’s carrying amount on the Company’s financial statements will result in a loss on the sale and a reduction in earnings and surplus. Declining values of the Company’s vessels could adversely affect the Company’s liquidity by limiting its ability to raise cash by refinancing vessels.

The Company may also experience significant impairment charges upon a decline in vessel value. Any charges relating to such impairments could adversely affect the Company’s results of operations and financial condition.

Changes in fuel prices may adversely affect profits.

Fuel is a significant, if not the largest, expense in the Company’s shipping operations when vessels are under voyage charter. Accordingly, an increase in the price of fuel may adversely affect the Company’s profitability if these increases cannot be passed onto customers. Moreover, higher fuel prices could reduce the profitability and competitiveness of the Company’s business compared to other forms of transportation. The price and supply of fuel is unpredictable and fluctuates based on events outside the Company’s control.

OSG conducts certain of its operations internationally, which subjectssubjecting the Company to changing economic, political and governmental conditions abroad, that may adversely affect its business.as well as terrorism, piracy and hostilities.

The Company conducts certain of its operations internationally, and its business, financial condition, results of operations and cash flows may be adversely affected by changing economic, political and government conditions in the countries and regions where its vessels are employed. OSG must comply with complex foreign and U.S. laws and regulations, such as environmental regulations, requiring investments and upgrades, the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act and other local laws prohibiting corrupt payments to government officials, anti-money laundering laws; and anti-competition regulations. OSG’s operations may also subject its employees and agents to extortion attempts. Violations of these laws and regulations could result in fines and penalties, criminal sanctions, restrictions on the Company’s business operations and on the Company’s ability to transport cargo to one or more countries, and could also materially affect the Company’s brand, ability to attract and retain employees, international operations, business and operating results. Although OSG has policies and procedures designed to achieve compliance with these laws and regulations, OSG cannot be certain that its employees, contractors, joint venture partners or agents will not violate these policies and procedures.

Shipping is a business with inherent risks, and OSG’s insurance may not be adequate to cover its losses.

OSG’s vessels and their cargoes are at risk of being damaged or lost due to accidents, bad weather, mechanical failure, human error, and other factors. These hazards may result in death or injury; loss of revenues or property; environmental damage; higher insurance rates; damage to customer relationships and industry reputation; and market disruptions, and delay or rerouting, all of which may also subject OSG to litigation. The operation of tankers has unique operational risks associated with the transportation of oil. An oil spill may cause significant environmental damage and the associated costs could exceed the insurance coverage available to the Company.

While the Company carries insurance to protect against certain of these risks, risks may arise against which the Company is not adequately insured. In the past, new and stricter environmental regulations have led to higher costs for insurance covering environmental damage or pollution, and new regulations could lead to similar increases or even make this type of insurance unavailable.

Terrorism, piracy, or hostilities could adversely affect the Company’s business.

Although the Company’s fleet operates mainly in U.S. waters, thereThere are occasions when a vessel may beis operating in an area where terrorist or pirate attacks, or hijackinghijackings are a concern. If attacks resultthis occurs in regions in which  the Company’s vessels are deployed being characterized by insurers as “war risk” zones or Joint War Committee “war and strikes” listed areas, premiums payable for insurance coverage could increase significantly, and such insurance coverage may become difficult to obtain. Crew costs could also increase in such circumstances due to risks of piracy attacks.circumstances. While OSG believes the charterer remains liable for charter payments when a vessel is seized by pirates, disputes with the charterer may result in the delay or non-payment of charter hire, or cancellation of the charter party. The Company may not be adequately insured to cover losses from these incidents, or an increase in the cost (or unavailability) of insurance for those vessels could have a material adverse impact on OSG’s business, financial condition, results of operations and cash flows. Such attacks may also impact the Company’s customers, which could impair their ability to make payments to the Company under its charters.

Terrorism or international hostilities could cause political instability, damage the world economy, adversely affect the availability of and demand for crude oil and petroleum products and adversely affect both the Company’s ability to charter its vessels and the charter rates payable under any such charters. Such circumstances are present currently as a result of the conditions in the Middle East and the Russian war on Ukraine. 

These factors could also increase the costs to the Company of conducting its business, particularly crew, insurance and security costs, and prevent or restrict the Company from obtaining insurance coverage, all of which could have a material adverse effect on OSG’s business, financial condition, results of operations and cash flows.

Changes in fuel prices may adversely affect our earnings.

Fuel is a significant expense in the Company’s shipping operations when vessels are under voyage charter. Accordingly, an increase in the price of fuel may adversely affect the Company’s profitability if these increases cannot be passed onto customers. Moreover, higher fuel prices could reduce the profitability and competitiveness of the Company’s business compared to other forms of transportation. The price and supply of fuel is unpredictable and fluctuates based on events outside the Company’s control.

The impact from public health threats may adversely affect the Company’s business, results of operations, and financial condition.

COVID-19 revealed the significant impacts throughout the world of a threat to public health. Such threats prompt governments and businesses to take unprecedented measures in response, including restrictions on travel and business operations, temporary closures of businesses, and quarantine and shelter-in-place orders. Global pandemics can, and have, significantly curtailed global economic activity and caused significant volatility and disruption in global financial markets, which could adversely affect the Company’s business, results of operations and financial condition. The extent to which global or regional health threats impact the Company’s operational and financial performance depends on many factors outside the Company’s control, including the timing, extent, trajectory and duration of the threat; the emergence of new variants; availability, distribution and effectiveness of vaccines and treatments; the imposition or relaxation of protective public safety measures; and the impact on the economy and demand for petroleum products and the Company’s vessels.

The market value of vessels fluctuates significantly, which could adversely affect OSG’s liquidity or otherwise adversely affect its financial condition.

The market value of Jones Act and U.S. Flag vessels has fluctuated over time. The fluctuating market values of the vessels can impact the Company’s liquidity regardless of whether the Company sells or continues to hold the vessels. For example, selling a vessel at a sale price that is less than the vessel’s carrying amount on the Company’s financial statements will result in a loss on the sale and a reduction in earnings and surplus. Declining values of the Company’s vessels could adversely affect the Company’s liquidity by limiting its ability to raise cash by refinancing vessels. The Company may also experience significant impairment charges upon a decline in vessel value. Any charges relating to such impairments could adversely affect the Company’s liquidity, results of operations and financial condition.

Shipping is a business with inherent risks, and OSG’s insurance may not be adequate to cover its losses.

OSG’s vessels and cargoes are at risk of being damaged or lost due to accidents, bad weather, mechanical failure, human error, and other factors. These hazards may result in death or injury; loss of revenues or property; environmental damage; higher insurance rates; damage to customer relationships and industry reputation; and market disruptions, and delay or rerouting, all of which may also subject OSG to litigation. The operation of tankers has unique operational risks associated with the transportation of oil. An oil spill may cause significant environmental damage and the associated costs could exceed the insurance coverage available to the Company. While the Company carries insurance to protect against certain of these risks, risks may arise against which the Company is not adequately insured. In the past, new and stricter environmental regulations have led to higher costs for insurance covering environmental damage or pollution, and new regulations could lead to similar increases or even make this type of insurance unavailable. The occurrence of the events described above, and the increases in the costs (or unavailability) of insurance covering such events could adversely affect the OSG’s business, financial condition, results of operation and cash flows.

Risks Related to Legal and Regulatory Matters

The Company’s business would be adversely affected if it failed to comply with the Jones Act’s limitations on U.S. coastwise trade, or if these limitations were waived, modified or repealed, or if changes in international trade agreements were to occur.

The Company is responsible for monitoring the foreign ownership of its common stock and other interests to ensure compliance with the Jones Act. The Company could lose the privilege of owning and operating vessels in the Jones Act trade if non-U.S. Citizens were to own or control, in the aggregate, more than 25% of the equity interests in the Company. Such loss would have a material adverse effect on the Company’s business and results of operations. In addition, failure to comply with the Jones Act could result in the Company being deemed to have violated other U.S. federal laws that prohibit a foreign transfer of U.S. documented vessels without government approval, resulting in severe penalties, including permanent loss of U.S. coastwise trading privileges or forfeiture of the vessels deemed transferred, and fines.

Maritime transportation services are currently excluded from the General Agreement on Trade in Services (“GATS”) and are the subject of reservations by the United States in the North American Free Trade Agreement (“NAFTA”) and other international free trade agreements. If maritime transportation services were included in GATS, NAFTA or other international trade agreements, or if the restrictions contained in the Jones Act were otherwise repealed or altered, the transportation of maritime cargo between U.S. ports could be opened to international flag or foreign built vessels. Interest groups regularly lobby Congress, and legislation has been introduced, to repeal certain provisions of the Jones Act or to grant extensive waivers so as to facilitate international flag competition for trades and cargoes currently reserved for U.S. Flag vessels under the Jones Act. The Company expects that continued efforts will be made to modify, repeal, or waive the Jones Act. Because international vessels may have lower construction costs, wage rates and operating costs, this could significantly increase competition in the coastwise trade, which could have a material adverse effect on the Company’s business, results of operations, cash flows and financial condition.

The U.S. government could requisition the Company’s vessels during a period of war or emergency, which may negatively impact the Company’s business, financial condition, results of operations and available cash.

The U.S. government could requisition one or more of the Company’s vessels for title or hire, typically occurring during a period of war or emergency. The U.S. government requisition of one or more of the Company’s vessels could impact the Company’s business, financial condition, results of operations and available cash if the charter rates we receive from the government while on requisition are less than the charter rates that are being replaced, or if the government refuses to pay the requisition charter rate, in which case we would seek recovery through our insurance policies.

Compliance with complex laws and regulations including those seeking to reduce the spread of the COVID-19 virus, and environmental laws and regulations, including those relating to the emission of greenhouse gas gases, and ballast water treatment, may adversely affect OSG’s business.

The Company is subject to the oversight of several government agencies, including the U.S. Coast Guard, the Environmental Protection Agency and the Maritime Administration of the U.S. Department of Transportation. OPA 90 affects all vessel owners shipping oil or hazardous material to, from or within the United States. OPA 90 allows for potentially unlimited liability without regard to fault for owners, operators and bareboat charterers of vessels for oil pollution in U.S. waters. Similarly, the International Convention on Civil Liability for Oil Pollution Damage, 1969, as amended, which has been adopted by most countries outside of the United States, imposes liability for oil pollution in international waters. OPA 90 expressly permits individual states to impose their own liability regimes with regard to hazardous materials and oil pollution incidents occurring within their boundaries. Coastal states in the United States have enacted pollution prevention liability and response laws, many providing for unlimited liability. The Company’s operations are affected by these extensive, complex, and changing international, national, and local environmental protection laws, regulations, treaties, conventions and standards designed to reduce the risk of oil spills and water pollution and to regulate and reduce air emissions, including emission of greenhouse gases. These regulations are summarized in detail in Item 1, “Business - Environmental, Safety and Security Matters”. These requirements impose significant capital and operating costs on OSG.OSG as well as the potential for unlimited liability in certain circumstances.

Due to concern over the riskrisks of climate change, a number of countries, including the United States, and international organizations, including the IMO and the European Union,EU, have adopted, or are considering the adoption or modification of, regulatory frameworks to reduce greenhouse gas emissions. Such actionsRegulations and the reporting mechanisms to measure emissions are evolving, as multiple concerned constituents attempt to standardize the measurement and reporting of varying operational factors for many types of vessels and conditions, including such measures as the Energy Efficiency Existing Ship Index (“EEXI”) and the Carbon Intensity Indicator (“CII”). The CII’s letter grading system for a ship’s CO₂ emissions performance is based upon calculation methodologies that are presently being debated, correction factors that are open to further modification, and a review process that will remain open until 2026, leading to considerable uncertainties in interpretation and enforcement. Absent a change in the CII rules as currently stated, ships with low grades may face the potential threat of enforcement and retirement if the ratings do not improve during the stipulated remediation period. The mechanisms to achieve a “passing” grade may require changes in the responsibilities among the supply chain participants, changes to the operating patterns of vessels or the speeds at which they may sail, or the types of fuel to be consumed, as well as capital investments in equipment and technology many of which are not yet established as viable.

These regulations could result in significant financial and operational impacts on the Company’s business and on the global industry, including requiring OSG to install new emission controls, to invest in technologies or equipment, to retrofit vessels, to acquire allowances, or to pay taxes related to its greenhouse gas emissions. See Item 1, “Business - Environmental, Safety and Security Matters.”.

In order to comply with laws and regulations,Further, in cases where the Company incurs substantial capital and/invests in new technologies or operating expenditures and develops contingency arrangements for potential spills. The Company is in the process of installing ballast water treatment systems on its vessels at substantial capital cost. Although the Company has performed due diligence in choosing the particular systems,equipment, there is no assurance that thesuch technologies chosenor equipment will perform as expected, notwithstanding that the Company will have performed due diligence in selecting the particular technology or be installed without delays.equipment.

Environmental laws and regulations can affect the resale value or significantly reduce the useful lives of the Company’s vessels, require a reduction in carrying capacity, ship modifications, or operational changes or restrictions (and related increased operating costs) or retirement of service, lead to decreased availability or higher cost of insurance coverage for environmental matters, or result in the denial of access to, or detention in, certain jurisdictional waters or ports. Under local, national and foreign laws, as well as international treaties and conventions, OSG could incur material liabilities, including cleanup obligations, natural resource damages, fines and penalties in the event that there is a release of oil, petroleum or other hazardous substances from its vessels or otherwise in connection with its operations. OSG could be subject to personal injury or property damage claims relating to the release of or exposure to hazardous materials associated with its current or historic operations. Violations of or liabilities under environmental requirements also can result in substantial penalties, fines and other sanctions, including in certain instances, seizure or detention of the Company’s vessels.

It can be expected that these regulations will continue to become stricter in the future and will require the Company to incur significant capital expenditures to keep its vessels in compliance, or even to scrap or sell certain vessels altogether. Such expenditures could result in financial and operational impacts that may be material to OSG’s financial statements.condition. The failure to comply with local, domestic and foreign regulations may subject the Company to increased liability, may invalidate existing insurance or decrease available insurance coverage for the affected vessels and may result in a denial of access to, or detention in, certain ports.

Failure to comply with the Jones Act’s limitations on U.S. coastwise trade, or waiver, modification or repeal of the Jones Act, or changes in international trade agreements may impact the Company’s ability to compete.

The Company is responsible for monitoring the foreign ownership of its common stock and other interests to ensure compliance with the Jones Act. The Company could lose the privilege of owning and operating vessels in the Jones Act trade if non-U.S. Citizens were to own or control, in the aggregate, more than 25% of the equity interests in the Company. Such loss would have a material adverse effect on the Company’s business and results of operations. In addition, failure to comply with the Jones Act could result in the Company being deemed to have violated other U.S. federal laws that prohibit a foreign transfer of U.S. documented vessels without government approval, resulting in severe penalties, including permanent loss of U.S. coastwise trading privileges or forfeiture of the vessels deemed transferred, and fines.

The employmentMaritime transportation services are currently excluded from the General Agreement on Trade in Services (“GATS”) and are the subject of reservations by the United States in the North American Free Trade Agreement (“NAFTA”) and other international free trade agreements. If maritime transportation services were included in GATS, NAFTA or other international trade agreements, or if the restrictions contained in the Jones Act were otherwise repealed or altered, the transportation of maritime cargo between U.S. ports could be opened to international flag or foreign built vessels.

Interest groups regularly lobby Congress, and legislation has been introduced, to repeal certain provisions of the Company’sJones Act or to grant extensive waivers so as to facilitate international flag competition for trades and cargoes currently reserved for U.S. Flag vessels under the Jones Act. The Jones Act requires vessels to be U.S.-owned, U.S.-crewed, and U.S.-built, and in the event that any one of these requirements is not met resulting in the unavailability of a Jones Act qualified vessel, a waiver could be adversely affected by anissued. A waiver, modification or repeal of the Jones Act could significantly increase competition in the coastwise trade and could have a material adverse effect on the Company’s business, results of operations, cash flows and financial condition.

The inability to clear the oil majors’ risk assessment process.processes may adversely impact the Company’s ability to perform its services.

The major oil companies have developed a strict due diligence processprocesses for selecting their shipping partners out of concerns for the environmental impact of spills. This vetting process has evolved into a sophisticated and comprehensive risk assessment of both the vessel manager and the vessel. The Company’s charterers require that the Company’s vessels and the technical managers pass vetting inspections and management audits. The failure of the Company’s failurevessels or managers to maintain any of its vessels to these standards could put the Company in breach of the applicable charter agreement and lead to termination of such agreement, thereby adversely affecting the revenues of the Company.revenues.

The U.S. government could requisition the Company’s vessels during a period of war or emergency.

The U.S. government could requisition one or more of the Company’s vessels for title or hire, typically occurring during a period of war or emergency. OSG participates in the Tanker Security Program for such purposes. The U.S. government requisition of one or more of the Company’s vessels could impact the Company’s business, financial condition, results of operations and available cash if the charter rates we receive from the government while on requisition are less than the charter rates that are being replaced, or if the government refuses to pay the requisition charter rate.

Transfers or issuances of the Company’s equity may impair or reduce the Company’s ability to utilize its net operating loss carryforwards and certain other tax attributes in the future.

Section 382 of the Internal Revenue Code of 1986, as amended, contains rules that limit the ability of a company that undergoes an “ownership change” to utilize its net operating loss and tax credit carry forwards and certain built-in losses recognized in years after the ownership change. An “ownership change” is generally defined as any change in ownership of more than 50% of a corporation’s stock over a rolling three-year period by stockholders that own (directly or indirectly) 5% or more of the stock of a corporation or arising from a new issuance of stock by a corporation. If an ownership change occurs, Section 382 imposes an annual limitation on the use of pre-ownership change NOLs,net operating losses, credits and certain other tax attributes to offset taxable income earned after the ownership change. The annual limitation is equal to the product of the applicable long-term tax-exempt rate and the value of the company’s stock immediately before the ownership change. This annual limitation may be adjusted to reflect any unused annual limitation for prior years and certain recognized built-in gains and losses for the year. In addition, Section 383 generally limits the amount of tax liability in any post-ownership change year that can be reduced by pre-ownership change tax credit carryforwards. If the Company were to undergo an “ownership change,” and therefore become subject to limitations described above, it could have a material adverse effect on the Company’s business, financial condition, results of operations and cash flows.

Some provisions of Delaware law and the Company’s governing documents could influence its ability to effect a change of control.

Certain provisions of Delaware law and contained in the Company’s Amended and Restated Certificate of Incorporation and Amended and Restated By-Laws could have the effect of delaying, deferring or preventing a change of control of the Company. These provisions could make it more difficult to bring about a change in the composition of the Company’s board of directors. For example, the Company’s Amended and Restated Certificate of Incorporation and Amended and Restated By-Laws (i) give the sole ability to then-current members of its board of directors to fill a vacancy on the board of directors; (ii) require the affirmative vote of two-thirds or more of the combined voting power of the outstanding shares of its capital stock in order to amend or repeal certain provisions of its Amended and Restated Certificate of Incorporation and Amended and Restated By-Laws; and (iii) establish advance notice requirements for nomination for elections to its board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings. In addition, the Amended and Restated Certificate of Incorporation contains restrictions on foreign ownership of the Company’s common stock. These restrictions could discourage, delay or prevent a change of control of the Company.

Separately, the Company has elected to opt out of Section 203 (“Section 203”) of the Delaware General Corporation Law (the “DGCL”), which restricts certain business combinations between a Delaware corporation and an “interested stockholder.” Accordingly, the Company will be able to enter into such transactions with its principal stockholders without complying with the requirements of Section 203. The election to opt out of Section 203 could deprive certain stockholders of an opportunity to receive a premium for their common stock as part of a sale of the Company, particularly if it enters into a transaction with an “interested stockholder.”

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 1C. CYBERSECURITY

Cybersecurity Risk Management and Strategy

OSG has both on-shore and ship-board systems that are highly dependent on information technology systems. Loss, disruption, or compromise of these systems could significantly impact operations and results. As such, OSG has developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information. Our program is based on the National Institute of Standards and Technology Cybersecurity Framework (“NIST CSF”). This does not imply that we meet any particular technical standards, specifications, or requirements, but rather that we use the NIST CSF as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business.

OSG’s cybersecurity risk management program includes:

We have not experienced any material cybersecurity violation or occurrence over the last three years.

We will continue to invest time, effort and financial resources to secure our systems, networks and communications. However, our security measures cannot provide absolute assurance that we will be successful in preventing or responding to all cybersecurity attacks. There can be no assurance that any breach or incident will not have a material impact on our operations and financial results. See Item 1A, “Risk Factors-Interruption, failure or breach of OSG’s information technology and communications systems could impair its ability to operate” for a discussion of whether and how any risks from cybersecurity threats are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition.

Cybersecurity Governance

Our information technology (“IT”) controls are subject to audit by internal and external auditors, as well as the ABS. The management team at least annually advises the Corporate Governance and Risk Assessment Committee of the Board on information security matters and provides user training and monitoring of system access as part of our compliance program. Our team of IT professionals, led by the Director of IT, collectively has over 50 years of experience in the cybersecurity space and have professional security certifications and advanced training in the field of cybersecurity and technology. The IT team has primary responsibility for OSG’s overall cybersecurity risk management program and monitors the prevention, detection, mitigation, and remediation of cybersecurity risks and incidents through various means, which may include briefings with internal security personnel, threat intelligence and other information obtained from governmental, public or private sources, and alerts and reports produced by security tools.

ITEM 2. PROPERTIES

We lease two properties whichthat house offices used in the administration of our operations: a property of approximately 18,300 square feet in Tampa, Florida, and a property of approximately 4,000 square feet in Beaverton, Oregon .Oregon. We also lease land of 3.2 acres in Tampa, Florida on which two Company-owned buildings aggregating 15,000 square feet sit, and a property of approximately 18,600 square feet in Portland, Oregon used to store spares and parts for our vessels.

We do not own or lease any production facilities, plants, mines or similar real properties.

Vessels:

At December 31, 2020,2023, the Company owned or operated an aggregate of 2521 vessels. See tables presented under Item 1, “Business—Fleet Operations.”

ITEM 3. LEGAL PROCEEDINGS

We are party to lawsuits and claims arising out of the normal course of business. In management’s opinion, there are no known pending claims or litigation, the outcome of which would, individually or in the aggregate, have a material effect on our consolidated results of operations, financial position, or cash flows.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information, Holders and Dividends

The Company’s Class A common stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “OSG.”OSG.

OnAs of March 24, 2021,6, 2024, there were 12973 stockholders of record of the Company’s Class A common stock.

On December 6, 2023, the Company’s Board declared a cash dividend of $0.06 per share on its Class A common stock. Pursuant to such dividend declaration, the Company made dividend payments totaling $4,256 on January 4, 2024.

The declaration and timing of future cash dividends, if any, will be at the discretion of the Board of Directors and will depend upon, among other things, our future operations and earnings, capital requirements, general financial condition, contractual restrictions, restrictions imposed by applicable law and such other factors as our Board of Directors may deem relevant. In addition, the Company’s ability to pay cash dividends in the future may be limited by certain of the Company’s loan agreements.

Section 170(a) of the Delaware General Corporation Law (“DGCL”) only permits dividends to be declared out of two legally available sources: (1) surplus, or (2) if there is no surplus, net profits for the year in which the dividend is declared or the preceding year (so-called “nimble dividends”). However, dividends may not be declared out of net profits if “the capital of the corporation, computed in accordance with sections 154 and 244 of the DGCL, shall have been diminished by depreciation in the value of its property, or by losses, or otherwise, to an amount less than the aggregate amount of the capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets.”

Equity Compensation Plan Information

See Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters,” for further information on the number of shares of the Company’s Class A common stock that may be issued under the 2019 Incentive Compensation Plan for Management and the Non-Employee Director Incentive Compensation Plan.

Equity Securities

See Note 13,12, “Capital Stock and Stock Compensation,” to the Company’s consolidated financial statements set forth in Item 8, “Financial Statements and Supplementary Data,” for a description of Class A warrants exercised in exchange for Class A common stock, which is incorporated by reference in this Part I, Item 5.

The Company’s Board authorized share repurchase programs in June 2022, September 2022, March 2023, June 2023 and December 2023. Cumulatively, we repurchased 18.6 million shares for $64.8 million under these programs. There was $25.0 million of remaining availability under these programs at December 31, 2023. Additionally, in September 2023, the Company repurchased 13.9 million warrants for $11.4 million. These warrants were convertible into 2.6 million shares of the Company’s Class A common stock. The warrants were cancelled after acquisition.

During the quarter ended December 31, 2023, purchases of the Company’s common stock under the share repurchase program were as follows: