B+H Ocean Carriers, Ltd. Announces Results for the Third Quarterly Period Ending September 30, 2005

Business Wire, Oct 31, 2005

NEW YORK -- B H Ocean Carriers Ltd. (AMEX: BHO) reported unaudited net income of $15,028,000 or $2.78 per share basic and $2.66 per share diluted, for the nine months ended September 30, 2005, compared to unaudited net income of $65,000, or $0.02 per share basic and $0.01 diluted, for the nine months ended September 30, 2004. EBITDA for the nine month period ending September 30, 2005 was $26,141,000 as compared to $10,808,000 for the comparable period of 2004.

The Company also reported unaudited net income of $6,528,000, or $0.91 per share basic and $0.88 per share diluted for the three month period ending September 30, 2005, as compared to unaudited net income of $2,115,000, or $0.55 per share basic and $0.48 diluted for the same period of 2004. EBITDA for the three months ending September 30, 2005 was $10,181,000 as compared to $4,378,000 for the three months ending September 30, 2004.

On September 21, 2005, the Company, through a wholly owned subsidiary, acquired a 1992-built double hull combination carrier of approximately 75,000 dwt for $33,250,000 and simultaneously delivered the vessel on a time charter for three years. The Company used cash to purchase the vessel, but has entered into an agreement to finance a portion of the purchase price, as noted below. Including the funds projected to be returned to the Company following the financing later this year, the Company's cash at September 30, 2005 amounted to approximately $68,000,000.

On October 18, 2005, the Company, through a wholly owned subsidiary, entered into a $138,000,000 revolving term loan facility. A portion of the funds was used to refinance the $102,000,000 floating rate facility used to acquire three combination carriers in March 2005. The additional funds will be applied toward the financing of the Company's recent acquisition of M/V ROGER M JONES and the acquisition of M/T CHALLENGE EXPRESS (to be renamed SAGAMORE) scheduled for delivery within 2005.

The Company also said that it was continuing to develop vessel acquisition projects with multi-year fixed rate employment which would be expected to generate operating economics similar to those of the five vessels acquired so far this year. The Company intends to expand its presence in its two current sectors of the tanker market: combination carriers capable of transporting both wet and dry bulk cargoes, and product carriers; however, there can be no assurance that the Company will be able to purchase any of such vessels on favorable terms or at all.

The following is a discussion of our financial condition and results of operations for the nine month and the quarterly periods ended September 30, 2005 and 2004. You should read this section together with the unaudited consolidated financial statements for the periods mentioned above.

Results of Operations

Nine Months Ended September 30, 2005 versus September 30, 2004

Revenues from voyage and time charters increased $16.6 million or 47% from 2004. The increase is due to the Company's ongoing vessel acquisition program, the composition of the fleet in terms of size and type and to higher time charter equivalent rates. Voyage expenses, which consist of port, canal and fuel costs that are unique to a particular voyage and commercial overhead costs, including commercial management fees paid to B H Management Ltd. ("BHM"), a company affiliated with management, decreased $1.9 million, or 30%, to $4.6 million for the nine month period ended September 30, 2005 compared to $6.5 million for the comparable period of 2004. This is due to the significant decrease in voyage charter days from 653 in 2004 to 155 in 2005. All of the Company's vessels have been employed on long term time charters since March 2005, during which the Company does not incur port, canal or fuel costs.

The increase in vessel operating expenses is due to the increase in the number of vessels, as noted above. Vessel operating expenses increased $3.7 million (24%) which is comprised of $4.6 million for four vessels acquired in 2005 and $1.2 million for a vessel owned less than nine months in 2004. This is offset by a $2.1 million decrease relating to the sale of one vessel in each of the second and fourth quarters of 2004. Depreciation and amortization, which includes depreciation of vessels as well as amortization of special surveys, increased by $2.5 million, or 44%, to $8.2 million for the nine months ended September 30, 2005 compared to $5.7 million for the prior period. This increase is due to changes in the fleet, as noted above.

The Company had a gain on the sale of the vessel M/T COMMUTER of $0.8 million for the nine month period ended September 30, 2005 compared to a loss of $4.1 million on the sale of the vessel M/T SKOWHEGAN during the prior nine month period. The current market conditions were responsible for the dramatic shift in the value of MR product tankers in the course of the year.

General and administrative expenses include all of our onshore expenses and the fees that BHM charges for administration of our vessels and shipowning companies. Management fees increased by $0.26 million, or 83%, to $0.57 million for the nine month period ended September 30, 2005 compared to $0.31 million for the prior period. The increase is due to the increase in the number of vessels and therefore the number of months during which fees were incurred.