Arlington Tankers (ATB) 8-K Arlington Tankers Announces Unaudited Second Quarter 2006 Results

FOR IMMEDIATE RELEASE

ARLINGTON TANKERS ANNOUNCES UNAUDITED
SECOND QUARTER 2006 RESULTS

Company Declares Cash Dividend of $0.59 Per Share

HAMILTON, BERMUDA — July 27, 2006 — Arlington Tankers Ltd. (NYSE: ATB) today announced unaudited financial results for the second quarter ended June 30, 2006. For the quarter ended June 30, 2006, the Company’s total revenues were $17.3 million, consisting of $16.0 million in basic vessel charter hire and $1.3 million in additional charter hire that the Company received under its profit sharing arrangements.

On the basis of the second quarter results from operations, Arlington’s Board of Directors has declared a cash dividend of $0.59 per share. The dividend is payable on August 8, 2006 to shareholders of record at the close of business on August 4, 2006.

Second Quarter Results

The additional charter hire earned during the second quarter of 2006 was derived from profit sharing arrangements under the time charters of the Company’s V-Max, Panamax and Product vessels. Of the $1.3 million in additional hire, $600,000 was attributed to contractually guaranteed profit sharing for the two V-MAX vessels. The remaining $700,000 was attributed to our Panamax and Product tankers. Average time charter equivalent rates for the Panamax and Product tankers under profit sharing agreements in the second quarter continued at levels above the guaranteed time charter levels for the vessels.

The Company’s operating expenses during the second quarter of 2006, including depreciation costs of $4.0 million and administrative expenses of $713,000, were $9.2 million. The Company’s interest expense, net of interest income for the second quarter of 2006, was $3.3 million. This expense represents interest under the Company’s $229.5 million, five-year, secured credit facility with The Royal Bank of Scotland plc.

The Company’s net income for the second quarter of 2006 was $7.7 million, or $0.50 per share. Included in net income for the quarter was an unrealized gain of $3.0 million, which contributed $0.19 per share to the Company’s earnings per share during the second quarter, and represented the change in the fair value of the Company’s interest rate swap arrangement related to its $229.5 million, five-year, secured credit facility with The Royal Bank of Scotland plc.

Business Update
All of Arlington’s vessels are currently trading on time charter contracts to subsidiaries of Stena AB and Concordia Maritime AB. The remaining fixed term of the charters varies by vessel between two and five years, inclusive of the January 5, 2006 amendments to the time charter arrangements. There are also options to extend the terms.

Each charter contract provides for fixed rate basic charter hire during the operating period. In addition to the fixed rate basic charter hire, six of the vessels have the possibility of receiving additional charter hire from the time charterers through profit sharing arrangements related to the performance of the tanker markets on specified geographic routes, or from actual time charter rates. Tanker freight rates are volatile and additional charter hire for Panamax and Product tankers is not guaranteed.

“Average spot market returns from profit sharing arrangements remained above our guaranteed charter hire levels for the fleet in the second quarter” said Arthur L. Regan, President and Co-Chief Executive Officer of Arlington. “Additionally, the profit sharing arrangements are now calculated using the preceding twelve month time charter equivalent spot market rate averages in determining any profit sharing pertaining to the quarter. This results in less dependency on the current quarter spot market averages in determining if the Company will benefit from any additional hire revenue from the fleet.”

Dividend Policy

Arlington intends to pay quarterly cash dividends in amounts substantially equal to the charter hire revenues it receives, less cash expenses and any cash reserves established by the Company’s board of directors. The Company has received $0.09 per share of additional hire relating to its Panamax and Product tankers for the six months ended June 30, 2006. Accordingly, the Company is increasing its previous estimate of the amount of cash available for dividends in fiscal 2006 to approximately $2.28 from $2.19 per share. The revision does not include any additional hire estimate from the Panamax and Product tankers for the remainder of the fiscal year. Additional hire for these vessels is not guaranteed.

The Company expects to announce its next dividend on October 23, 2006 and to pay that dividend on or about November 7, 2006.

About Arlington Tankers

Arlington Tankers Ltd. is an international seaborne transporter of crude oil and petroleum products. Arlington’s fleet consists exclusively of eight modern double-hulled vessels and is one of the youngest tanker fleets in the world, with an average vessel age of approximately 2.7 years. The fleet consists of two V-MAX tankers, which are specially designed very large crude carriers, two Panamax tankers and four Product tankers. All of the Company’s vessels are employed on long-term time charters. The Company was incorporated in Bermuda in September 2004. The

Company completed its initial public offering on the New York Stock Exchange on November 10, 2004.

Safe Harbor Statement

This press release contains certain forward-looking statements and information relating to the Company that are based on beliefs of the Company’s management as well as assumptions made by the Company and information currently available to the Company, in particular the statements regarding the Company’s expectations as to the declaration, payment and estimated amount of future dividends, the market rates which pertain to the Company’s spot trading vessels and additional hire that may be earned in the future. When used in this press release, words such as “believe,” “intend,” “anticipate,” “estimate,” “project,” “forecast,” “plan,” “potential,” “will,” “may,” “should,” and “expect” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. All statements in this document that are not statements of historical fact are forward-looking statements.

The forward-looking statements contained in this press release reflect the Company’s current views with respect to future events and are subject to certain risks, uncertainties and assumptions. Many factors could cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward- looking statements, including, among others: the possibility that the Company may not pay dividends, the highly cyclical nature of the tanker industry, global demand for oil and oil products, the number of new building deliveries and the scrapping rate of older vessels, terrorist attacks and international hostilities, and compliance costs with environmental laws and regulations. These and other risks are described in greater detail in the “Risk Factors” section of the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2006, filed with the United States Securities and Exchange Commission.

Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the forward-looking statements included in this press release. The Company does not intend, and does not assume any obligation, to update these forward- looking statements.

Contact:

Arlington Tankers Ltd.
Arthur Regan, President and Co-Chief Executive Officer, or
Edward Terino, Co-Chief Executive Officer and Chief Financial Officer
203-221-2765

Arlington Tankers Ltd.
Condensed Consolidated Statement of Operations

	Three Months			Three Months			Six Months			Six Months
	June 30, 2006			June 30, 2005			June 30, 2006			June 30, 2005
	(In thousands, except per share data)
	(Unaudited)
Revenue	$	17,259		$	13,538		$	34,503		$	27,830
Operating expenses:
Vessel operating expenses		4,526			3,376			9,248			6,715
Depreciation		3,967			3,098			7,944			6,196
Administrative expenses		713			553			1,454			974
Total operating expenses		9,206			7,027			18,646			13,885
Operating income		8,053			6,511			15,857			13,945
Other income (expenses):
Interest income		129			55			273			93
Interest expense		(3,415	)		(1,678	)		(6,715	)		(3,339	)
Unrealized gain on interest rate swap		2,956						7,137
Other income (expenses), net		(330	)		(1,623	)		695			(3,246	)
Net income	$	7,723		$	4,888		$	16,552		$	10,699
Net income per share	$	0.50		$	0.32		$	1.07		$	0.69
Weighted average shares outstanding		15,500,000			15,500,000			15,500,000			15,500,000

Arlington Tankers Ltd.
Condensed Consolidated Balance Sheets

	June 30, 2006		December 31, 2005
	(In thousands)
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	10,492	$	11,839
Short-term investments		8,600		2,500
Other receivables		1,266		1,601
Prepaid expenses and accrued income		185		283
Total current assets		20,543		16,223
Vessels, net		353,087		269,031
Deferred debt issuance costs		1,075		1,193
Interest rate swap agreement at fair value		4,978		—
Total assets	$	379,683	$	286,447
Liabilities and Shareholders’ Equity
Current liabilities:
Accrued expenses	$	674	$	2,399
Unearned charter revenue		5,356		2,237
Total current liabilities		6,030		4,636
Interest rate swap agreement at fair value		—		2,160
Long term debt		229,500		135,000
Total liabilities		235,530		141,796
Shareholders’ equity		144,153		144,651
Total liabilities and shareholders’ equity	$	379,683	$	286,447