B+H Ocean Carriers, Ltd. Announces Gain on Sale of Vessels and Unaudited Results for the First Quarterly Period Ended March 31, 2008

Business Wire, May 15, 2008

NEW YORK -- B H Ocean Carriers Ltd. (AMEX: BHO) reported gains on the sale of two vessels totaling $13.1 million, giving rise to unaudited net income of $11.1 million or $1.61 per share basic and diluted, for the three months ended March 31, 2008 compared to $3.1 million or $0.44 per share basic and diluted, for the three months ended March 31, 2007. The Company added that income from vessel operations was $1.8 million in the first quarter of 2008 as compared to $5.2 million for the first quarter of 2007. EBITDA for the three months ended March 31, 2008 was $21.1 million, including the gain on vessel sales of $13.1 million, as compared to $11.3 million for the comparable period of 2007. Basic earnings per share calculations are based on weighted average shares outstanding of 6,864,576 and 6,986,499 respectively, for the three months ended March 31, 2008 and 2007. There are no dilutive securities at March 31, 2008 or 2007.

The Company noted that offhire relating to its double hull conversion project was 239 days in the first quarter of 2008 and that offhire related to drydocking totaled 39 days in the same period. Offhire relating to its double hull conversion project was 65 days in the first quarter of 2007 and offhire related to drydocking totaled 41 days in the same period.

The Company also reported that losses on the market value of derivative instruments were $1.2 million in the three month period ended March 31, 2008. Approximately $0.3 million of the losses were from changes in the market value of put option contracts which were entered into to mitigate the risk associated with changes in charter rates. Another $1.1 million was due to changes in the market value of interest rate swaps that do not qualify as cash flow hedges. This total was offset by gains on non deliverable foreign exchange transactions entered into to mitigate the risk associated with changes in the Chinese Yuan. The two vessel conversions currently under contract are both effectively denominated in Chinese Yuan.

The Company added that it currently intends to make acquisitions of single-hulled tankers to be converted to bulk carriers. Its first tanker to bulk carrier conversion was completed on May 1, 2008, the Company said, adding that it believes the risk/reward of such projects is attractive. The Company has now completed five vessel conversions, has a sixth underway and believes it has developed substantial process knowledge through the implementation of these projects.

The following is a discussion of our financial condition and results of operations for the quarterly period ended March 31, 2008 and 2007. You should read this section together with the unaudited and audited consolidated financial statements for the periods mentioned above.

Quarter ended March 31, 2008 (unaudited) versus quarter ended March 31, 2007 (unaudited)

Revenues

Revenues from voyage, time and bareboat charters decreased $1.7 million or 6% from the first quarter of 2007 to that of 2008. The decrease is due to the increase in offhire related to conversions and special surveys, as well as to the sale of two vessels in the first quarter of 2008. The Company, through wholly-owned subsidiaries, sold one combination carrier and one medium range product tanker in the first quarter of 2008. The sold vessels had revenue of $4.9 million in the first quarter of 2007 but only $2.4 million of revenue in the first quarter of 2008 resulting in $2.5 million less revenue in 2008. Offhire for vessel conversions and special surveys accounted for an additional $0.6 million reduction in revenue in the first quarter of 2008 as compared to the first quarter of 2007. An additional $0.9 million reduction in revenue is due to the decrease in voyage days from 429 in 2007 to 375 in 2008. This was offset by revenue from a vessel acquired in the second quarter of 2007 of $2.3 million.

Voyage expenses

Voyage expenses increased $0.9 million or 15% from the first quarter of 2007 to the first quarter of 2008. The increase is comprised of $0.5 million in direct voyage expenses for fuel costs and $0.4 million of voyage overhead expenses.

Amortization of deferred charges

The increase in amortization of deferred charges of $0.7 million or 73% is due to the completed conversion of three more of the Company's product tankers to IMO II/III chemical tankers during 2007. The conversion costs are being amortized over the remaining estimated useful life of the vessels.

Income from investment in Nordan OBO 2 Inc.

The $0.1 increase in income from the Company's investment in Nordan OBO 2 Inc. is due to an increase in revenue from the profit sharing arrangement on the vessel. Nordan OBO 2 Inc. is entitled to 50% of the profits above the guaranteed minimum daily rate.

Interest expense and interest income

The $0.7 million (26%) increase in interest expense is due to the increase of $18.4 million in debt from December 31, 2006 to December 31, 2007 for the acquisition of one vessel and to finance the conversion cost of four vessels. In addition, although the average LIBOR rate was lower in the first quarter of 2008 than in the first quarter of 2007, the reset dates for the Company's loans fall predominantly in December and January, prior to the significant rate cuts.