Scorpio Tankers Annual Report 2020

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FY2020 Annual Report · Scorpio Tankers

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2020 Annual Report 20-F

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F

(Mark One)


REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

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

For the fiscal year ended December 31, 2020



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

For the transition period from _________________ to _________________



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

Date of event requiring this shell company report _________________

Commission file number: 001-34677

SCORPIO TANKERS INC.
(Exact name of Registrant as specified in its charter)

(Translation of Registrant’s name into English)
Republic of the Marshall Islands
(Jurisdiction of incorporation or organization)
9, Boulevard Charles III Monaco 98000
(Address of principal executive offices)
Mr. Emanuele Lauro
+377-9798-5716
investor.relations@scorpiotankers.com
9, Boulevard Charles III Monaco 98000
(Name, Telephone, E-mail and/or Facsimile, and address of Company Contact Person)

Securities registered or to be registered pursuant to section 12(b) of the Act.

Title of each class
Common stock, par value $0.01 per share
7.00% Senior Notes due 2025

Trading Symbol(s)
STNG
SBBA

Name of each exchange on which registered
New York Stock Exchange
New York Stock Exchange

Securities registered or to be registered pursuant to section 12(g) of the Act.

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

NONE
(Title of class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
As of December 31, 2020 there were 58,093,147 outstanding shares of common stock, par value $0.01 per share.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes



If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.

Yes



Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from
their obligations under those Sections.
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



Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the
definitions of “large accelerated filer”, “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Accelerated filer 

Emerging growth company 

Large accelerated filer 

Non-accelerated filer 

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, 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. 
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards
Codification after April 5, 2012.
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:



U.S. GAAP
International Financial Reporting Standards as issued by the International Accounting Standards Board
Other

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes



Item 17

Item 18

PART I ..............................................................................................................................................................................

TABLE OF CONTENTS

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS ................................

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE ..................................................................

ITEM 3. KEY INFORMATION .......................................................................................................................

ITEM 4. INFORMATION ON THE COMPANY ............................................................................................

ITEM 4A. UNRESOLVED STAFF COMMENTS ..........................................................................................

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS ....................................................

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES ......................................................

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS ....................................

ITEM 8. FINANCIAL INFORMATION..........................................................................................................

ITEM 9. OFFER AND THE LISTING .............................................................................................................

ITEM 10. ADDITIONAL INFORMATION ....................................................................................................

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK .................

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES .................................

PART II ............................................................................................................................................................................

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES ..........................................

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY
HOLDERS AND USE OF PROCEEDS ...........................................................................................................

ITEM 15. CONTROLS AND PROCEDURES ................................................................................................

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT ............................................................................

ITEM 16B. CODE OF ETHICS .......................................................................................................................

ITEM 16C. PRINCIPAL ACCOUNTING FEES AND SERVICES ................................................................

ITEM 16D. EXEMPTIONS FROM LISTING STANDARDS FOR AUDIT COMMITTEES .......................

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
PURCHASERS .................................................................................................................................................

ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT ................................................

ITEM 16G. CORPORATE GOVERNANCE ...................................................................................................

ITEM 16H. MINE SAFETY DISCLOSURE ...................................................................................................

PART III ...........................................................................................................................................................................

ITEM 17. FINANCIAL STATEMENTS ..........................................................................................................

ITEM 18. FINANCIAL STATEMENTS ..........................................................................................................

ITEM 19. EXHIBITS ........................................................................................................................................

110

117

123

124

136

137

138

139

140

141

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking
statements in order to encourage companies to provide prospective information about their business. Forward-looking
statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying
assumptions and other statements, which are other than statements of historical facts. This document includes assumptions,
expectations, projections, intentions and beliefs about future events. These statements are intended as “forward-looking
statements.” We desire to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of
1995 and are including this cautionary statement in connection therewith. This report and any other written or oral
statements made by us or on our behalf may include forward-looking statements, which reflect our current views with
respect to future events and financial performance, and are not intended to give any assurance as to future results. We
caution that assumptions, expectations, projections, intentions and beliefs about future events may and often do vary from
actual results and the differences can be material. When used in this document, the words “believe,” “expect,” “anticipate,”
“estimate,” “intend,” “seek,” “plan,” “potential,” “continue,” “contemplate,” “possible,” “target,” “project,” “likely,”
“may,” “might,” “would,” “could” and similar expressions, terms, or phrases may identify forward-looking statements.

These forward-looking statements are not historical facts, but rather are based on current expectations, estimates,
assumptions and projections about the business and our future financial results and readers should not place undue reliance
on them. The forward-looking statements in this report are based upon various assumptions, many of which are based, in
turn, upon further assumptions, including without limitation, management’s examination of historical operating trends, data
contained in our records and other data available from third parties. Although we believe that these assumptions were
reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies
which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or
accomplish these expectations, beliefs or projections.

In addition to important factors and matters discussed elsewhere in this report, and in the documents incorporated
by reference herein, important factors that, in our view, could cause our actual results and developments to differ materially
from those discussed in the forward-looking statements include:

•

our future operating or financial results;

the strength of world economies and currencies;

fluctuations in interest rates and foreign exchange rates;

the impact of the expected discontinuance of the London Interbank Offered Rate, or LIBOR, after 2021
on interest rates of our credit facilities that reference LIBOR;

general market conditions, including the market for our vessels, fluctuations in spot and charter rates and
vessel values;

the length and severity of the ongoing novel coronavirus (COVID-19) outbreak, including its impact on
the demand for seaborne transportation of petroleum products;

availability of financing and refinancing;

our business strategy and other plans and objectives for growth and future operations;

our ability to successfully employ our vessels;

planned capital expenditures and availability of capital resources to fund capital expenditures;

planned, pending or recent acquisitions, business strategy and expected capital spending or operating
expenses, including drydocking, surveys, upgrades and insurance costs;

our ability to realize the expected benefits from acquisitions;

potential liability from pending or future litigation;

the impact of increasing scrutiny and changing expectations from investors, lenders and other market
participants with respect to our Environmental, Social and Governance or ESG policies;

general domestic and international political conditions;

potential disruption of shipping routes due to accidents or political events;

vessel breakdowns and instances of off-hire;

•

competition within our industry;

the supply of and demand for vessels comparable to ours;

corruption, piracy, militant activities, political instability, terrorism, and ethnic unrest in locations where
we may operate;

delays and cost overruns in construction projects;

our level of indebtedness;

our ability to obtain financing and to comply with the restrictive and other covenants in our financing
arrangements;

our need for cash to meet our debt service obligations;

our levels of operating and maintenance costs, including bunker prices, drydocking and insurance costs;

our ability to successfully identify, consummate, integrate, and realize the expected benefits from
acquisitions, including our 2019 acquisition of the leasehold interests in 19 vessels from Trafigura
Maritime Logistics Pte. Ltd., or Trafigura, by way of acquisition of the companies that hold the vessels;

reputational risks;

availability of skilled workers and the related labor costs and related costs;

the recent implementation of the MARPOL convention, Annex VI Prevention of Air Pollution from
Ships which will reduce the maximum amount of sulfur that ships can emit into the air, which was
applicable from January 2020;

the recent implementation of the International Convention for the Control and Management of Ships’
Ballast Water and Sediments (BWM) in September 2019;

compliance with governmental, tax, environmental and safety regulation;

any non-compliance with the U.S. Foreign Corrupt Practices Act of 1977 (FCPA) or other applicable
regulations relating to bribery;

general economic conditions and conditions in the oil and natural gas industry;

effects of new products and new technology in our industry;

the failure of counterparties to fully perform their contracts with us;

our dependence on key personnel;

adequacy of insurance coverage;

our ability to obtain indemnities from customers;

changes in laws, treaties or regulations applicable to us;

the volatility of the price of our common shares and our other securities;

other factors that may affect our future results; and

these factors and other risk factors described in this annual report and other reports that we furnish or file
with the U.S. Securities and Exchange Commission, or the SEC.

These factors and the other risk factors described in this report are not necessarily all of the important factors that
could cause actual results or developments to differ materially from those expressed in any of our forward-looking
statements. Other unknown or unpredictable factors also could harm our results. Consequently, there can be no assurance
that actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have
the expected consequences to, or effects on, us. These forward-looking statements are not guarantees of our future
performance, and actual results and future developments may vary materially from those projected in the forward-looking
statements. Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forward-
looking statements, which speak only as of their dates. We undertake no obligation, and specifically decline any obligation,
except as required by law, to publicly update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise. Please see our Risk Factors in “Item 3. Key Information - D. Risk Factors” of this
annual report for a more complete discussion of these and other risks and uncertainties.

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

Unless the context otherwise requires, when used in this annual report, the terms “Scorpio Tankers,” the
“Company,” “we,” “our” and “us” refer to Scorpio Tankers Inc. and its subsidiaries. “Scorpio Tankers Inc.” refers only
to Scorpio Tankers Inc. and not its subsidiaries. Unless otherwise indicated, all references to “dollars,” “US dollars” and
“$” in this annual report are to the lawful currency of the United States. We use the term deadweight tons, or dwt,
expressed in metric tons, each of which is equivalent to 1,000 kilograms, in describing the size of tankers.

As used herein, “SLR2P” refers to the Scorpio LR2 Pool, “SLR1P” refers to the Scorpio LR1 Pool, “SMRP”
refers to the Scorpio MR Pool, and “SHTP” refers to the Scorpio Handymax Tanker Pool, which are spot market-oriented
tanker pools in which certain of our vessels operate.

A. Selected Financial Data

Not applicable.

B. Capitalization and Indebtedness

Not applicable.

C. Reasons for the Offer and Use of Proceeds

Not applicable.

D. Risk Factors

The following risks relate principally to the industry in which we operate and our business in general. Other risks
relate principally to the securities market and ownership of our securities. The occurrence of any of the events described in
this section could significantly and negatively affect our business, financial condition, operating results or cash available
for the payment of dividends on our common shares and interest on our debt securities, or the trading price of our
securities.

The following is a summary of the risk factors which are described in further detail in subsequent sections.

• The tanker industry is cyclical and volatile.

• We are dependent on spot-oriented pools and spot charters.

• An over-supply of tanker capacity may prolong or further depress the current low charter rates.

• Acts of piracy on ocean-going vessels could adversely affect our business.

• Changes in fuel, or bunkers, prices may adversely affect our profits.

• Tanker rates also fluctuate based on seasonal variations in demand.

• A shift in consumer demand from oil towards other energy sources or changes to trade patterns for

refined oil products may have a material adverse effect on our business.

• An inability to effectively time investments could negatively impact our results of operations and

financial condition.

• Volatility in economic conditions throughout the world could have an adverse impact on our business.

• We are exposed to volatility in the London Interbank Offered Rate, or LIBOR.

•

If we cannot meet our customers’ quality and compliance requirements we may not be able to operate our
vessels profitably.

• We are required to make significant investments in ballast water management.

•

Sulfur regulations to reduce air pollution from ships are likely to cause us to incur significant costs.

• We are subject to complex laws and regulations, including environmental laws and regulations.

•

If we fail to comply with international safety regulations, we may be subject to increased liability.

• Developments in safety and environmental requirements relating to the recycling of vessels may result

escalated and unexpected costs.

• We operate tankers worldwide, and as a result, we are exposed to inherent operational and international

risks.

•

Increased inspection procedures could increase costs and disrupt our business.

• Outbreaks of epidemic and pandemic diseases, including COVID-19, and governmental responses

thereto could adversely affect our business.

•

Political instability, terrorist or other attacks, and war or international hostilities can affect the tanker
industry, which may adversely affect our business.

• The U.K.’s withdrawal from the European Union may have a negative effect on our business.

• We may experience adverse consequences if our vessels call on ports located in countries or territories

that are subject to sanctions or embargoes.

• The smuggling of drugs or other contraband onto our vessels may lead to governmental claims.

• Maritime claimants could arrest or attach our vessels.

• Governments could requisition our vessels during a period of war or emergency.

• Technological innovation could reduce our charterhire income and the value of our vessels.

• Breakdowns in our information technology, including as a result of cyberattacks, may negatively impact

our business.

•

Increasing scrutiny and changing expectations from investors, lenders and other market participants with
respect to our Environmental, Social and Governance policies may impose additional costs on us or
expose us to additional risks.

• Our business could be affected if labor interruptions are not resolved in a timely manner.

• We may not realize all of the anticipated benefits of our investment scrubbers.

• We cannot assure you that our internal controls over financial reporting will be sufficient.

• We may have difficulty managing our planned growth properly.

• We operate secondhand vessels, which exposes us to increased operating costs.

• An increase in operating costs would decrease earnings and available cash.

• We will be required to make additional capital expenditures should we determine to expand the number

of vessels in our fleet and to maintain all our vessels.

• Declines in charter rates and other market deterioration have caused, and could cause us to incur

impairment charges.

• Our stock price has been historically volatile.

• The market values of our vessels may decrease.

•

If we are unable to operate our vessels profitably, we may be unsuccessful in competing in the highly
competitive international tanker market.

If we do not set aside funds and are unable to borrow or raise funds for vessel replacement, at the end of
a vessel’s useful life our revenue will decline.

• Our ability to obtain additional financing may be dependent on the performance of our then existing

charters and the creditworthiness of our charterers.

• We cannot guarantee that our Board of Directors will declare dividends.

• United States tax authorities could treat us as a “passive foreign investment company”.

• We may have to pay tax on United States source shipping income.

• We are subject to certain risks with respect to our counterparties on contracts.

• Our insurance may not be adequate to cover our losses.

• Because we obtain some of our insurance through protection and indemnity associations, which result in

significant expenses to us, we may be required to make additional premium payments.

•

Penalties can occur for the failure to comply with the U.S. Foreign Corrupt Practices Act.

• We are incorporated in the Republic of the Marshall Islands, which does not have a well-developed body

of corporate law.

• Because we are a foreign corporation, it may be difficult to serve process on or enforce a United States

judgment against us.

• The international nature of our operations may make the outcome of any bankruptcy proceedings difficult

to predict.

• We rely on our information systems to conduct our business, and failure to protect these systems against

security breaches could adversely affect our business.

• There may be conflicts of interest between us and our managers that may not be resolved in our favor.

• Our founder, Chairman and Chief Executive Officer, and Vice President have affiliations with our

administrator and commercial and technical managers which may create conflicts of interest.

• Certain of our officers do not devote all of their time to our business.

• Our commercial and technical managers are each privately held companies.

•

Servicing our current or future indebtedness limits funds available for other purposes.

• Our debt and lease financing agreements contain restrictive and financial covenants.

RISKS RELATED TO OUR INDUSTRY

The tanker industry is cyclical and volatile, which may adversely affect our earnings and available cash flow.

The tanker industry is both cyclical and volatile in terms of charter rates and profitability. Periodic adjustments to
the supply of and demand for oil tankers cause the industry to be cyclical in nature. We expect continued volatility in
market rates for our vessels in the foreseeable future with a consequent effect on our short and medium-term liquidity. A
worsening of current global economic conditions may cause tanker charter rates to decline and thereby adversely affect our
ability to charter or re-charter our vessels or to sell them on the expiration or termination of their charters, and the rates
payable in respect of our vessels currently operating in tanker pools, or any renewal or replacement charters that we enter
into, may not be sufficient to allow us to operate our vessels profitably. Fluctuations in charter rates and vessel values
result from changes in the supply and demand for tanker capacity and changes in the supply and demand for oil and oil
products. The factors affecting the supply and demand for tankers are outside of our control, and the nature, timing and
degree of changes in industry conditions are unpredictable.

The factors that influence demand for tanker capacity include:

•

supply and demand for energy resources and oil and petroleum products;

regional availability of refining capacity and inventories compared to geographies of oil production
regions;

national policies regarding strategic oil inventories (including if strategic reserves are set at a lower level
in the future as oil decreases in the energy mix);

global and regional economic and political conditions, including armed conflicts, terrorist activities,
embargoes and strikes;

currency exchange rates;

the distance over which oil and oil products are to be moved by sea;

•

changes in seaborne and other transportation patterns;

changes in governmental or maritime self-regulatory organizations’ rules and regulations or actions taken
by regulatory authorities;

environmental and other legal and regulatory developments;

• weather and natural disasters;

•

developments in international trade, including those relating to the imposition of tariffs;

competition from alternative sources of energy; and

international sanctions, embargoes, import and export restrictions, nationalizations and wars.

The factors that influence the supply of tanker capacity include:

•

supply and demand for energy resources and oil and petroleum products;

demand for alternative sources of energy;

the number of newbuilding orders and deliveries, including slippage in deliveries;

the number of vessel casualties;

technological advances in tanker design and capacity;

the number of shipyards and ability of shipyards to deliver vessels;

availability of financing for new vessels and shipping activity;

the degree of scrapping or recycling rate of older vessels, depending, amongst other things, on scrapping
or recycling rates and international scrapping or recycling regulations;

price of steel and vessel equipment;

the number of conversions of tankers to other uses or conversions of other vessels to tankers;

the number of product tankers trading crude or “dirty” oil products (such as fuel oil);

the number of vessels that are out of service, namely those that are laid up, drydocked, awaiting repairs
or otherwise not available for hire;

changes in government and industry environmental and other regulations that may limit the useful lives
of tankers and environmental concerns and regulations;

product imbalances (affecting the level of trading activity);

developments in international trade, including refinery additions and closures;

port or canal congestion; and

speed of vessel operation.

In addition to the prevailing and anticipated freight rates, factors that affect the rate of newbuilding, scrapping and
laying-up include newbuilding prices, secondhand vessel values in relation to scrap prices, costs of bunkers and other
operating costs, costs associated with classification society surveys, normal maintenance costs, insurance coverage costs,
the efficiency and age profile of the existing tanker fleet in the market, and government and industry regulation of maritime
transportation practices, particularly environmental protection laws and regulations. These factors influencing the supply of
and demand for shipping capacity are outside of our control, and we may not be able to correctly assess the nature, timing
and degree of changes in industry conditions.

We anticipate that the future demand for our tankers will be dependent upon economic growth in the world’s
economies, seasonal and regional changes in demand, changes in the capacity of the global tanker fleet and the sources and
supply of oil and petroleum products to be transported by sea. Given the number of new tankers currently on order with
shipyards, the capacity of the global tanker fleet seems likely to increase and there can be no assurance as to the timing or
extent of future economic growth. Adverse economic, political, social or other developments could have a material adverse
effect on our business and operating results.

Declines in oil and natural gas prices for an extended period of time, or market expectations of potential decreases
in these prices, could negatively affect our future growth in the tanker and offshore sector. Sustained periods of low oil and
natural gas prices typically result in reduced exploration and extraction because oil and natural gas companies’ capital

expenditure budgets are subject to cash flow from such activities and are therefore sensitive to changes in energy prices.
These changes in commodity prices can have a material effect on demand for our services, and periods of low demand can
cause excess vessel supply and intensify the competition in the industry, which often results in vessels, particularly older
and less technologically-advanced vessels, being idle for long periods of time. We cannot predict the future level of
demand for our services or future conditions of the oil and natural gas industry. Any decrease in exploration, development
or production expenditures by oil and natural gas companies could reduce our revenues and materially harm our business,
results of operations and cash available for distribution.

We are dependent on spot-oriented pools and spot charters and any decrease in spot charter rates in the future may
adversely affect our earnings.

As of March 30, 2021, all of our vessels were employed in either the spot market or in spot market-oriented tanker
pools such as the SLR2P, SLR1P, SMRP or SHTP, which we refer to collectively as the Scorpio Pools and which are
managed by companies that are members of the Scorpio group of companies, or Scorpio, exposing us to fluctuations in spot
market charter rates. The spot charter market may fluctuate significantly based upon tanker and oil supply and demand.
The successful operation of our vessels in the competitive spot charter market, including within the Scorpio Pools, depends
on, among other things, obtaining profitable spot charters and minimizing, to the extent possible, time spent waiting for
charters and time spent traveling unladen to pick up cargo. The spot market is very volatile, and, in the past, there have
been periods when spot charter rates have declined below the operating cost of vessels. If spot charter rates decline, then
we may be unable to operate our vessels trading in the spot market profitably, meet our obligations, including payments on
indebtedness, or pay dividends in the future. Furthermore, as charter rates for spot charters are fixed for a single voyage
which may last up to several weeks, during periods in which spot charter rates are rising, we will generally experience
delays in realizing the benefits from such increases.

Our ability to renew expiring charters or obtain new charters will depend on the prevailing market conditions at
the time. If we are not able to obtain new charters in direct continuation with existing charters or upon taking delivery of a
newly acquired vessel, or if new charters are entered into at charter rates substantially below the existing charter rates or on
terms otherwise less favorable compared to existing charter terms, our revenues and profitability could be adversely
affected.

An over-supply of tanker capacity may prolong or further depress the current low charter rates, which may limit
our ability to operate our tankers profitably.

The market supply of tankers is affected by a number of factors, such as supply and demand for energy resources,
including oil and petroleum products, supply and demand for seaborne transportation of such energy resources, and the
current and expected purchase orders for newbuildings. If the capacity of new tankers delivered exceeds the capacity of
tankers being scrapped and converted to non-trading tankers, tanker capacity will increase. According to Drewry Shipping
Consultants Ltd., or Drewry, as of February 28, 2021, the newbuilding order book, which extends to 2023 and beyond,
equaled approximately 7.9% of the existing world tanker fleet and the order book may increase further in proportion to the
existing fleet. If the supply of tanker capacity increases and if the demand for tanker capacity does not increase
correspondingly or declines, charter rates could materially decline. A reduction in charter rates and the value of our vessels
may have a material adverse effect on our results of operations and available cash.

In addition, product tankers may be “cleaned up” from “dirty/crude” trades and swapped back into the product
tanker market which would increase the available product tanker tonnage which may in turn affect the supply and demand
balance for product tankers. This could have an adverse effect on our future performance, results of operations, cash flows
and financial position.

Acts of piracy on ocean-going vessels could adversely affect our business.

Acts of piracy have historically affected ocean-going vessels trading in regions of the world such as the South
China Sea, the Indian Ocean, the Gulf of Guinea, the Gulf of Aden and the Sulu Sea. Sea piracy incidents continue to
occur, with drybulk vessels and tankers particularly vulnerable to such attacks. If these piracy attacks result in regions in
which our vessels are deployed being characterized by insurers as “war risk” zones or Joint War Committee “war and
strikes” listed areas, premiums payable for such coverage could increase significantly and such insurance coverage may be
more difficult to obtain. In addition, crew and security equipment costs, including costs which may be incurred to the
extent we employ onboard security guards, could increase in such circumstances. We may not be adequately insured to
cover losses from these incidents, which could have a material adverse effect on us. In addition, detention or hijacking as a
result of an act of piracy against our vessels, or increases in cost associated with seeking to avoid such events (including

increased bunker costs resulting from vessels being rerouted or travelling at increased speeds as recommended by BMP4),
or unavailability of insurance for our vessels, could have a material adverse impact on our business, results of operations,
ability to pay dividends, cash flows and financial condition and may result in loss of revenues, increased costs and
decreased cash flows to our customers, which could impair their ability to make payments to us under our charters.

Changes in fuel, or bunkers, prices may adversely affect our profits.

Fuel, or bunkers, is typically the largest expense in our shipping operations for our vessels and changes in the
price of fuel may adversely affect our profitability. The price and supply of fuel is unpredictable and fluctuates based on
events outside our control, including geopolitical developments, supply and demand for oil and gas, actions by the
Organization of the Petroleum Exporting Countries, or OPEC, and other oil and gas producers, war and unrest in oil
producing countries and regions, regional production patterns and environmental concerns.

In addition, since the implementation of the IMO’s sulfur oxide emission limits on January 1, 2020, we have been
operating our vessels that have not yet been retrofitted with scrubbers using compliant low sulfur fuels, the price of which
has increased as a result of increased demand. Fuel may continue to become much more expensive in the future, which
may adversely affect the competitiveness of our business compared to other forms of transportation and reduce our
profitability.

Tanker rates also fluctuate based on seasonal variations in demand.

Tanker markets are typically stronger in the winter months as a result of increased oil consumption in the northern
hemisphere but weaker in the summer months as a result of lower oil consumption in the northern hemisphere and refinery
maintenance that is typically conducted in the summer months. In addition, unpredictable weather patterns during the
winter months in the northern hemisphere tend to disrupt vessel routing and scheduling. The oil price volatility resulting
from these factors has historically led to increased oil trading activities in the winter months. As a result, revenues
generated by our vessels have historically been weaker during the quarters ended June 30 and September 30, and stronger
in the quarters ended March 31 and December 31.

A shift in consumer demand from oil towards other energy sources or changes to trade patterns for refined oil
products may have a material adverse effect on our business.

A significant portion of our earnings are related to the oil industry. We rely almost exclusively on the cash flows
generated from the employment of our vessels that operate in the tanker sector of the shipping industry. Due to our lack of
diversification, adverse developments in the tanker shipping industry have a significantly greater impact on our financial
condition and results of operations than if we maintained more diverse assets or lines of business. Adverse developments in
the tanker business could therefore reduce our ability to meet our payment obligations and our profitability.

“Peak oil” is the year when the maximum rate of extraction of oil is reached. Recent forecasts of “peak oil” range
from 2019 to the 2040s, depending on economics and how governments respond to global warming. Irrespective of “peak
oil”, the continuing shift in consumer demand from oil towards other energy resources such as wind energy, solar energy,
hydrogen energy or nuclear energy, which shift appears to be accelerating as a result of the COVID-19 situation, as well
shift in government commitments and support for energy transition programs, may have a material adverse effect on our
future performance, results of operations, cash flows and financial position.

Seaborne trading and distribution patterns are primarily influenced by the relative advantage of the various
sources of production, locations of consumption, pricing differentials and seasonality. Changes to the trade patterns of
refined oil products may have a significant negative or positive impact on the ton-mile and therefore the demand for our
product tankers. This could have a material adverse effect on our future performance, results of operations, cash flows and
financial position.

An inability to effectively time investments in and divestments of vessels could prevent the implementation of our
business strategy and negatively impact our results of operations and financial condition.

Our strategy is to own and operate a fleet large enough to provide global coverage, but no larger than what the
demand for our services can support over a longer period by both contracting newbuildings and through acquisitions and
disposals in the second-hand market. Our business is greatly influenced by the timing of investments and/or divestments
and contracting of newbuildings. If we are unable able to identify the optimal timing of such investments, divestments or
contracting of newbuildings in relation to the shipping value cycle due to capital restraints, this could have a material
adverse effect on our competitive position, future performance, results of operations, cash flows and financial position.

Volatility in economic conditions throughout the world could have an adverse impact on our results of operations
and financial condition.

Our business and profitability are affected by the overall level of demand for our vessels, which in turn is affected
by trends in global economic conditions. There has historically been a strong link between the development of the world
economy and demand for energy, including oil and gas. In the past, declines in global economic activity significantly
reduced the level of demand for our vessels. The world economy continues to face a number of challenges and an extended
period of deterioration in the outlook for the world economy could reduce the overall demand for oil and gas and for our
services. Since the beginning of calendar year 2020, the outbreak of COVID-19 has spread throughout the world and
resulted in numerous actions by governments and governmental agencies in an attempt to mitigate the spread of the virus.
These measures have resulted in a significant reduction in global economic activity and extreme volatility in the global
financial markets which has reduced the global demand for oil and refined petroleum products. While recent actions taken
by Saudi Arabia and other OPEC members to increase the production of oil in the near term has resulted in increased
tankers rates in the first quarter of 2020, the length of time and impact of these production increases is uncertain. We
expect that the impact of the COVID-19 virus and the uncertainty in the supply of oil will continue to cause volatility in the
commodity markets. The scale and duration of the impact of these factors remain unknown but could have a material
impact on our earnings, cash flow and financial condition for 2021.

If the COVID-19 pandemic continues on a prolonged basis or becomes more severe, and depending on the timing
and efficacy of any available vaccines, the rate environment in the crude and product markets may deteriorate further and
our operations and cash flows may be negatively impacted. In addition, a prolonged negative rate environment could result
in the value of our vessels being impaired which could in turn impair our ability to borrow amounts under our revolving
credit facilities or to access to credit and capital markets in the future on favorable terms or at all.

Any such changes could adversely affect our future performance, results of operations, cash flows and financial

position.

We also face risks attendant to changes in interest rates, along with instability in the banking and securities
markets around the world, among other factors. Relatedly, certain banks have reduced or ceased lending for oil cargoes,
which could have an adverse economic impact on our customers. These risks factors, overall, may have a material adverse
effect on our results of operations and financial condition and may cause the price of our common shares to decline.

In Europe, concerns regarding the possibility of sovereign debt defaults by European Union member countries
have in the past disrupted financial markets throughout the world, and may lead to weaker consumer demand in the
European Union, or EU, the United States, and other parts of the world. The possibility of sovereign debt defaults by
European Union member countries and the possibility of market reforms to float the Chinese renminbi, either of which
development could weaken the Euro against the Chinese renminbi, could adversely affect consumer demand in the
European Union. Moreover, the revaluation of the renminbi may negatively impact the United States’ demand for imported
goods, many of which are shipped from China. Future weak economic conditions could have a material adverse effect on
our business, results of operations and financial condition and our ability to pay dividends to our stockholders.

Continued economic slowdown in the Asia Pacific region may exacerbate the effect on us of the recent slowdown
in the rest of the world. For example, following the emergence of the COVID-19 virus, China experienced reduced
industrial activity with temporary closures of factories and other facilities, labor shortages and restrictions on travel. The
International Monetary Fund has warned that continuing geopolitical tensions between the United States and China could
derail recovery from the impacts of COVID-19. Although the United States and China signed a trade agreement in early
2020, there is no assurance that the Chinese economy will not experience a significant contraction in the future. As such,
our financial condition and results of operations, as well as our future prospects, would likely be impeded by a continuing
or worsening economic downturn in any of these countries.

In addition, President Xi Jinping committed his country to achieving carbon neutrality by 2060 at the UN General
Assembly despite that carbon emissions are currently a prominent part of China’s economic and industrial structure as it
relies heavily on nonrenewable energy sources, generally lacks energy efficiency, and has a rapidly growing energy
demand. Depending on how China attempts to achieve carbon neutrality by 2060, including through the reduction in the
use of oil, an overall increase in the use of nonrenewable energy as part of the energy consumption mix and through other
means, any reduction in the demand for oil and oil products and our tanker vessels could have a material adverse effect on
our business, cash flows and results of operations.

We are exposed to volatility in the London Interbank Offered Rate, which can result in higher than market interest
rates and charges against our income.

Interest in most financing agreements in our industry has been based on published rates for LIBOR, which has
historically been volatile, with the spread between LIBOR and the prime lending rate widening significantly at times.
These conditions are the result of the disruptions in the international credit markets. Because the interest rates borne by our
outstanding indebtedness fluctuate with changes in LIBOR, if this volatility were to occur, it would affect the amount of
interest payable on our debt, which in turn, could have an adverse effect on our profitability, earnings and cash flow.
Recently, there has been uncertainty relating to the LIBOR calculation process, which may result in the phasing out of
LIBOR in the future. Indeed, the banks currently reporting information used to set LIBOR will likely stop such reporting
after 2021, when their commitment to reporting information ends. On November 30, 2020, ICE Benchmark
Administration, the administrator of LIBOR, with the support of the United States Federal Reserve and the United
Kingdom’s Financial Conduct Authority, announced plans to consult on ceasing publication of U.S. Dollar LIBOR on
December 31, 2021 for only the one-week and two-month U.S. Dollar LIBOR tenors, and on June 30, 2023 for all other
U.S. Dollar LIBOR tenors. The United States Federal Reserve concurrently issued a statement advising banks to stop new
U.S. Dollar LIBOR issuances by the end of 2021. Such announcements indicate that the continuation of LIBOR on the
current basis will not be guaranteed after 2021.

In the event of the continued or permanent unavailability of LIBOR, many of our financing agreements contain a
provision requiring or permitting us to enter into negotiations with our lenders to agree to an alternative interest rate or an
alternative basis for determining the interest rate. These clauses present significant uncertainties as to how alternative rates
or alternative bases for determination of rates would be agreed upon, as well as the potential for disputes or litigation with
our lenders regarding the appropriateness or comparability to LIBOR of any substitute indices. In the absence of an
agreement between us and our lenders, most of our financing agreements provide that LIBOR would be replaced with some
variation of the lenders’ cost-of-funds rate. The discontinuation of LIBOR presents a number of potential risks to our
business, including volatility in applicable interest rates among our financing agreements, increased lending costs for future
financing agreements or unavailability of or difficulty in attaining financing, which could in turn have an adverse effect on
our profitability, earnings and cash flow.

In order to manage our exposure to interest rate fluctuations, we may from time to time use interest rate
derivatives to effectively fix some of our floating rate debt obligations. No assurance can however be given that the use of
these derivative instruments, if any, may effectively protect us from adverse interest rate movements. The use of interest
rate derivatives may affect our results through mark to market valuation of these derivatives. Also, adverse movements in
interest rate derivatives may require us to post cash as collateral, which may impact our free cash position.

If we, including the Scorpio Pools, cannot meet our customers’ quality and compliance requirements we may not be
able to operate our vessels profitably which could have an adverse effect on our future performance, results of
operations, cash flows and financial position.

Customers, in particular those in the oil industry, have an increasingly high focus on quality and compliance
standards with their suppliers across the entire value chain, including the shipping and transportation segment. Our, and the
Scorpio Pools’, continuous compliance with these standards and quality requirements is vital for our operations. Related
risks could materialize in multiple ways, including a sudden and unexpected breach in quality and/or compliance
concerning one or more vessels, or a continuous decrease in the quality concerning one or more vessels occurring over
time. Moreover, continuous increasing requirements from oil industry constituents can further complicate our ability to
meet the standards. Any noncompliance by us, or the Scorpio Pools, either suddenly or over a period of time, on one or
more vessels, or an increase in requirements by oil operators above and beyond what we deliver, may have a material
adverse effect on our future performance, results of operations, cash flows and financial position.

We are required to make significant investments in ballast water management which may have a material adverse
effect on our future performance, results of operations, and financial position.

The International Convention for the Control and Management of Vessels’ Ballast Water and Sediments, or the
BWM Convention, aims to prevent the spread of harmful aquatic organisms from one region to another, by establishing
standards and procedures for the management and control of ships’ ballast water and sediments. The BWM Convention’s
implementing regulations call for a phased introduction of mandatory ballast water exchange requirements, to be replaced
in time with mandatory concentration limits, and require all ships to carry a ballast water record book and an international
ballast water management certificate. The BWM Convention was ratified in September 2016 and entered into force in
September 2017. The IMO has imposed updated guidelines for ballast water management systems specifying the maximum

amount of viable organisms allowed to be discharged from a vessel’s ballast water. Depending on the date of the
International Oil Pollution Prevention, or IOPP, renewal survey, existing vessels constructed before September 8, 2017,
must comply with the updated D-2 standard on or after September 8, 2019. Ships constructed on or after September 8, 2017
are to comply with the D-2 standards on or after September 8, 2017. For most vessels, compliance with the D-2 standard
will involve installing on-board systems to treat ballast water and eliminate unwanted organisms. The cost of such systems,
including installation, is expected to be between $1.0 million and $1.5 million per vessel.

121 of the 131 vessels in our owned, finance leased or bareboat chartered-in fleet currently have ballast water
treatment systems installed. Additionally, sixteen vessels are under contract to have ballast water treatment systems
installed. All vessels will be required to have ballast water treatment systems installed by the third quarter of 2023. We
cannot be assured that these systems will be approved by the regulatory bodies of every jurisdiction in which we may wish
to conduct our business. Accordingly, we may have to make additional investments in these vessels and substantial
investments in the remaining vessels in our fleet that do not carry any such equipment. The investment in ballast water
treatment systems could have an adverse material impact on our business, financial condition, and results of operations
depending on the ability to install effective ballast water treatment systems and the extent to which existing vessels must be
modified to accommodate such systems.

Furthermore, United States regulations are currently changing. Although the 2013 Vessel General Permit (“VGP”)
program and U.S. National Invasive Species Act (“NISA”) are currently in effect to regulate ballast discharge, exchange
and installation, the Vessel Incidental Discharge Act (“VIDA”), which was signed into law on December 4, 2018, requires
that the EPA develop national standards of performance for approximately 30 discharges, similar to those found in the
VGP within two years. On October 26, 2020, the EPA published a Notice of Proposed Rulemaking for Vessel Incidental
Discharge National Standards of Performance under VIDA. By approximately 2022, the U.S. Coast Guard must develop
corresponding implementation, compliance, and enforcement regulations regarding ballast water. The new regulations
could require the installation of new equipment, which may cause us to incur substantial costs.

Sulfur regulations to reduce air pollution from ships are likely to require retrofitting of vessels and may cause us to
incur significant costs.

Effective January 1, 2020, the International Maritime Organization, the United Nations agency for maritime safety
and the prevention of pollution by vessels requires vessels to comply with its low sulfur fuel oil requirement, which cuts
sulfur levels from 3.5% to 0.5%. The interpretation of “fuel oil used on board” includes use in main engines, auxiliary
engines and boilers. Shipowners may comply with this regulation by (i) using 0.5% sulfur fuels on board, which is
available around the world but at a higher cost due to increased market demand; (ii) installing exhaust gas cleaning
systems, known as scrubbers, for cleaning of the exhaust gas; or (iii) by retrofitting vessels to be powered by liquefied
natural gas, which may not be a viable option for shipowners due to the lack of supply network and high costs involved in
this process. Costs of compliance with these regulatory changes may be significant and may have a material adverse effect
on our future performance, results of operations, cash flows and financial position.

We have entered into agreements with third parties to purchase and install Exhaust Gas Cleaning Systems, known
as “scrubbers”, on 98 vessels in our fleet for an estimated cost of $2.5 million per vessel, which we have financed and plan
to continue to finance through new loan facilities, increases in current loan facilities, and working capital. As of March 30,
2021, we have successfully installed scrubbers on 79 of the vessels in our fleet. Additionally, all of the vessels acquired as
part of the 2019 Trafigura Transaction (as defined below) were scrubber fitted upon acquisition. For our vessels that have
not yet been retrofitted with scrubbers, we are complying with current IMO standards by using compliant bunkers and fuels
with 0.5% sulfur content.

We are subject to complex laws and regulations, including environmental laws and regulations that can increase our
liability and adversely affect our business, results of operations, cash flows and financial condition, and our
available cash.

Our operations are subject to numerous laws and regulations in the form of international conventions and treaties,
national, state and local laws and national and international regulations in force in the jurisdictions in which our vessels
operate or are registered, which can significantly affect the ownership and operation of our vessels. Compliance with such
laws and regulations, where applicable, may require installation of costly equipment or operational changes and may affect
the resale value or useful lives of our vessels. We may also incur additional costs in order to comply with other existing and
future regulatory obligations, including, but not limited to, costs relating to air emissions including greenhouse gases, the
management of ballast and bilge waters, maintenance and inspection, elimination of tin-based paint, development and
implementation of emergency procedures and insurance coverage or other financial assurance of our ability to address
pollution incidents.

A failure to comply with applicable laws and regulations may result in administrative and civil penalties, criminal
sanctions or the suspension or termination of our operations. Environmental requirements can also affect the resale value or
useful lives of our vessels, could require a reduction in cargo capacity, ship modifications or operational changes or
restrictions, could lead to decreased availability of insurance coverage for environmental matters or could result in the
denial of access to certain jurisdictional waters or ports or detention in certain ports. Under local, national and foreign laws,
as well as international treaties and conventions, we could incur material liabilities, including clean-up obligations and
natural resource damages liability, in the event that there is a release of hazardous materials from our vessels or otherwise
in connection with our operations. Environmental laws often impose strict liability for remediation of spills and releases of
oil and hazardous substances, which could subject us to liability without regard to whether we were negligent or at fault.
We could also become subject to personal injury or property damage claims relating to the release of hazardous substances
associated with our existing or historic operations. Violations of, or liabilities under, environmental requirements can result
in substantial penalties, fines and other sanctions, including, in certain instances, seizure or detention of our vessels, and
could harm our reputation with current or potential charterers of our tankers.

In addition, many environmental requirements are designed to reduce the risk of pollution, such as from oil spills,
and our compliance with these requirements could be costly. To comply with these and other regulations, including: (i) the
sulfur emission requirements of Annex VI of the International Convention for the Prevention of Marine Pollution from
Ships, or MARPOL, which instituted a global 0.5% (lowered from 3.5% as of January 1, 2020) sulfur cap on marine fuel
consumed by a vessel, unless the vessel is equipped with a scrubber, and (ii) the International Convention for the Control
and Management of Ships’ Ballast Water and Sediments of the International Maritime Organization, or the IMO, which
requires vessels to install expensive ballast water treatment systems, we may be required to incur additional costs to meet
new maintenance and inspection requirements, develop contingency plans for potential spills, and obtain insurance
coverage. The increased demand for low sulfur fuels may increase the costs of fuel for our vessels that do not have
scrubbers. Additional conventions, laws and regulations may be adopted that could limit our ability to do business or
increase the cost of doing business and which may materially and adversely affect our operations. Further, we are required
to satisfy insurance and financial responsibility requirements for potential oil (including marine fuel) spills and other
pollution incidents. Although we have arranged insurance to cover certain environmental risks, there can be no assurance
that such insurance will be sufficient to cover all such risks or that any claims will not have a material adverse effect on our
business, results of operations, cash flows and financial condition and available cash.

Please see “Item 4. Information on the Company—B. Business Overview—Environmental and Other Regulations

in the Shipping Industry” for a discussion of the environmental and other regulations applicable to us.

If we fail to comply with international safety regulations, we may be subject to increased liability, which may
adversely affect our insurance coverage and may result in a denial of access to, or detention in, certain ports.

The operation of our vessels is affected by the requirements set forth in the IMO’s International Management
Code for the Safe Operation of Ships and for Pollution Prevention, or the ISM Code, promulgated by the IMO and the
International Convention for the Safety of Life at Sea of 1974, or SOLAS Convention. The ISM Code requires the party
with operational control of a vessel to develop and maintain an extensive “safety management system” that includes,
among other things, the adoption of a safety and environmental protection policy setting forth instructions and procedures
for safe operation and describing procedures for dealing with emergencies. Failure to comply with the ISM code may
subject us to increased liability and may invalidate existing insurance or decrease available insurance coverage for our
affected vessels and such failure may result in a denial of access to, or detention in, certain ports. The U.S. Coast Guard
and European Union authorities enforce compliance with the ISM and International Ship and Port Facility Security Code,
or the ISPS Code, and prohibit non-compliant vessels from trading in U.S. and European Union ports. This could have a
material adverse effect on our future performance, results of operations, cash flows and financial position. Given that the
IMO continues to review and introduce new regulations, it is impossible to predict what additional regulations, if any, may
be passed by the IMO and what effect, if any, such regulations might have on our operations.

Because such conventions, laws, and regulations are often revised, we cannot predict the ultimate cost of
complying with such conventions, laws and regulations or the impact thereof on the resale prices or useful lives of our
vessels. Additional conventions, laws and regulations may be adopted which could limit our ability to do business or
increase the cost of our doing business and which may materially adversely affect our operations. We are required by
various governmental and quasigovernmental agencies to obtain certain permits, licenses, certificates, and financial
assurances with respect to our operations.

Recent action by the IMO’s Maritime Safety Committee and United States agencies indicate that cybersecurity
regulations for the maritime industry are likely to be further developed in the near future in an attempt to combat

cybersecurity threats. For example, cyber-risk management systems must be incorporated by ship-owners and managers by
2021. This might cause companies to cultivate additional procedures for monitoring cybersecurity, which could require
additional expenses and/or capital expenditures. However, the impact of such regulations is hard to predict at this time.

Please see “Item 4. Information on the Company—B. Business Overview—Environmental and Other Regulations

in the Shipping Industry” for a discussion of the environmental and other regulations applicable to us.

Developments in safety and environmental requirements relating to the recycling of vessels may result in escalated
and unexpected costs.

The 2009 Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships, or
the Hong Kong Convention, aims to ensure ships being recycled once they reach the end of their operational lives, do not
pose any unnecessary risks to the environment, human health and safety. The Hong Kong Convention has yet to be ratified
by the required number of countries to enter into force. Upon the Hong Kong Convention’s entry into force, each ship sent
for recycling will have to carry an inventory of its hazardous materials. The hazardous materials, whose use or installation
are prohibited in certain circumstances, are listed in an appendix to the Hong Kong Convention. Ships will be required to
have surveys to verify their inventory of hazardous materials initially, throughout their lives and prior to the ship being
recycled. The Hong Kong Convention, which is currently open for accession by IMO member states, will enter into force
24 months after the date on which 15 IMO member states, representing at least 40% of world merchant shipping by gross
tonnage, have ratified or approved accession. As of the date of this annual report, 16 countries have ratified or approved
accession of the Hong Kong Convention but the requirement of 40% of world merchant shipping by gross tonnage has not
yet been satisfied.

On November 20, 2013, the European Parliament and the Council of the EU adopted the Ship Recycling
Regulation, which retains the requirements of the Hong Kong Convention and requires that certain commercial seagoing
vessels flying the flag of an EU member state may be recycled only in facilities included on the European list of permitted
ship recycling facilities.

Apart from that, any vessel, including ours, is required to set up and maintain an Inventory of Hazardous Materials
from December 31, 2018 for EU flagged new ships and from December 31, 2020 for EU flagged existing ships and Non-
EU flagged ships calling at a port or anchorage of an EU member state. Such a system includes information on the
hazardous materials with a quantity above the threshold values specified in relevant EU Resolution and that are identified
in ship’s structure and equipment. This inventory should be properly maintained and updated, especially after repairs,
conversions or unscheduled maintenance on board the ship.

These regulatory requirements may lead to cost escalation by shipyards, repair yards and recycling yards. This
may then result in a decrease in the residual recycling value of a vessel, which could potentially not cover the cost to
comply with the latest requirements, which may have an adverse effect on our future performance, results of operations,
cash flows and financial position.

We operate tankers worldwide, and as a result, we are exposed to inherent operational and international risks,
which may adversely affect our business and financial condition.

The operation of an ocean-going vessel carries inherent risks. Our vessels and their cargoes will be at risk of being
damaged or lost because of events such as marine disasters, bad weather, and other acts of God, business interruptions
caused by mechanical failures, grounding, fire, explosions and collisions, human error, war, terrorism, piracy and other
circumstances or events. Changing economic, regulatory and political conditions in some countries, including political and
military conflicts, have from time to time resulted in attacks on vessels, mining of waterways, piracy, terrorism, labor
strikes and boycotts. These hazards may result in death or injury to persons, loss of revenues or property, payment of
ransoms, environmental damage, higher insurance rates, damage to our customer relationships, market disruptions, and
interference with shipping routes (such as delay or rerouting), which may reduce our revenue or increase our expenses and
also subject us to litigation. In addition, 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 us. Compared to other types of vessels, tankers are exposed to a higher risk of damage and
loss by fire, whether ignited by a terrorist attack, collision, or other cause, due to the high flammability and high volume of
the oil transported in tankers.

If our vessels suffer damage, they may need to be repaired at a drydocking facility. The costs of drydock repairs
are unpredictable and may be substantial. We may have to pay drydocking costs that our insurance does not cover in full.
The loss of revenues while these vessels are being repaired and repositioned, as well as the actual cost of these repairs, may

adversely affect our business and financial condition. In addition, space at drydocking facilities is sometimes limited and
not all drydocking facilities are conveniently located. We may be unable to find space at a suitable drydocking facility or
our vessels may be forced to travel to a drydocking facility that is not conveniently located to our vessels’ positions. The
loss of earnings while these vessels are forced to wait for space or to travel to more distant drydocking facilities may
adversely affect our business and financial condition. Further, the total loss of any of our vessels could harm our reputation
as a safe and reliable vessel owner and operator. If we are unable to adequately maintain or safeguard our vessels, we may
be unable to prevent any such damage, costs, or loss which could negatively impact our business, financial condition,
results of operations and available cash.

Increased inspection procedures could increase costs and disrupt our business.

International shipping is subject to various security and customs inspection and related procedures in countries of
origin and destination and trans-shipment points. Inspection procedures can result in the seizure of the cargo and/or our
vessels, delays in loading, offloading or delivery and the levying of customs duties, fines or other penalties against us. It is
possible that changes to inspection procedures could impose additional financial and legal obligations on us. Furthermore,
changes to inspection procedures could also impose additional costs and obligations on our customers and may, in certain
cases, render the shipment of certain types of cargo uneconomical or impractical. Any such changes or developments may
have a material adverse effect on our business, results of operations, cash flows, financial condition and available cash.

Outbreaks of epidemic and pandemic diseases, including COVID-19, and governmental responses thereto could
adversely affect our business.

Global public health threats, such as COVID-19 (as described more fully below), influenza and other highly
communicable diseases or viruses, outbreaks of which have from time to time occurred in various parts of the world in
which we operate, including China, could adversely impact our operations, as well as the operations of our customers. The
ongoing outbreak of COVID-19 and subsequent spread to other parts of the world has, among other things, caused delays
and uncertainties relating to newbuildings, drydockings and scrubber installations at shipyards.

The ongoing outbreak of COVID-19, a virus causing potentially deadly respiratory tract infections first identified
in China, has already caused severe global disruptions and may negatively affect economic conditions regionally as well as
globally and otherwise impact our operations and the operations of our customers and suppliers. Governments in affected
countries are imposing travel bans, quarantines and other emergency public health measures. In response to the virus, many
countries have implemented lockdown measures, and other countries and local governments may enact similar policies.
Companies are also taking precautions, such as requiring employees to work remotely, imposing travel restrictions and
temporarily closing businesses. These restrictions, and future prevention and mitigation measures, are likely to have an
adverse impact on global economic conditions, which could materially and adversely affect our future operations.
Uncertainties regarding the economic impact of the COVID-19 outbreak are likely to result in sustained market turmoil,
which could also negatively impact our business, financial condition and cash flows. As a result of these measures, our
vessels may not be able to call on ports, or may be restricted from disembarking from ports, located in regions affected by
the outbreak. In addition, we may experience severe operational disruptions and delays, unavailability of normal port
infrastructure and services including limited access to equipment, critical goods and personnel, disruptions to crew change,
quarantine of ships and/or crew, counterparty solidity, closure of ports and custom offices, as well as disruptions in the
supply chain and industrial production, which may lead to reduced cargo demand, amongst other potential consequences
attendant to epidemic and pandemic diseases.

The COVID-19 pandemic and measures to contain its spread have negatively impacted regional and global
economies and trade patterns in markets in which we operate, the way we operate our business, and the businesses of our
charterers and suppliers. These negative impacts could continue or worsen, even after the pandemic itself diminishes or
ends. Companies, including us, have also taken precautions, such as requiring employees to work remotely and imposing
travel restrictions, while some other businesses have been required to close entirely. Moreover, we face significant risks to
our personnel and operations due to the COVID-19 pandemic. Our crews face risk of exposure to COVID-19 as a result of
travel to ports in which cases of COVID-19 have been reported. Our shore-based personnel likewise face risk of such
exposure, as we maintain offices in areas that have been impacted by the spread of COVID-19.

Measures against COVID-19 in a number of countries have restricted crew rotations on our vessels, which may
continue or become more severe. As a result, in 2020, we experienced and may continue to experience disruptions to our
normal vessel operations caused by increased deviation time associated with positioning our vessels to countries in which
we can undertake a crew rotation in compliance with such measures. Delays in crew rotations have led to issues with crew
fatigue and may continue to do so, which may result in delays or other operational issues. We have had and expect to

continue to have increased expenses due to incremental fuel consumption and days in which our vessels are unable to earn
revenue in order to deviate to certain ports on which we would ordinarily not call during a typical voyage. We may also
incur additional expenses associated with testing, personal protective equipment, quarantines, and travel expenses such as
airfare costs in order to perform crew rotations in the current environment. In 2020, delays in crew rotations have also
caused us to incur additional costs related to crew bonuses paid to retain the existing crew members on board and may
continue to do so.

The COVID-19 pandemic and measures in place against the spread of the virus have led to a highly difficult
environment in which to dispose of vessels given difficulty to physically inspect vessels. The impact of COVID-19 has also
resulted in reduced industrial activity in China with temporary closures of factories and other facilities, labor shortages and
restrictions on travel. We believe these disruptions along with other seasonal factors, including lower demand for some of
the cargoes we carry, have contributed to lower tanker rates in 2020.

Epidemics may also affect personnel operating payment systems through which we receive revenues from the
chartering of our vessels or pay for our expenses, resulting in delays in payments. Organizations across industries,
including ours, are rightly focusing on their employees’ well-being, whilst making sure that their operations continue
undisrupted and at the same time, adapting to the new ways of operating. As such employees are encouraged or even
required to operate remotely which significantly increases the risk of cyber security attacks.

At present, it is not possible to ascertain the overall impact of COVID-19 on our business and on the tanker
industry in general. However, we assess that the tanker charter rates have been reduced significantly as a result of COVID-
19 after an initial increase in rates at the start of 2020 and that the shipping industry in general and our Company
specifically are likely to continue to be exposed to volatility in the near term. Thus, the occurrence of any of the foregoing
events or other epidemics or an increase in the severity or duration of COVID-19 or other epidemics could have a material
adverse effect on our business, results of operations, cash flows, financial condition, value of our vessels, and ability to pay
dividends.

The extent of the COVID-19 outbreak’s effect on our operational and financial performance will depend on future
developments, including the duration, spread and intensity of the outbreak, any resurgence or mutation of the virus, the
availability of vaccines and their global deployment, the development of effective treatments, the imposition of effective
public safety and other protective measures and the public’s response to such measures. There continues to be a high level
of uncertainty relating to how the pandemic will evolve, how governments and consumers will react and progress on the
approval and distribution of vaccines, all of which are uncertain and difficult to predict considering the rapidly evolving
landscape. As a result, although our operations have not been materially affected by the COVID-19 outbreak to date, the
ultimate severity of the COVID-19 outbreak is uncertain at this time and therefore we cannot predict the impact it may
have on our future operations, which impact could be material and adverse, particularly if the pandemic continues to evolve
into a severe worldwide health crisis.

Political instability, terrorist or other attacks, and war or international hostilities can affect the tanker industry,
which may adversely affect our business.

We conduct most of our operations outside of the United States, and our business, results of operations, cash flows
and financial condition may be adversely affected by changing economic, political and government conditions in the
countries and regions where our vessels are employed or registered. Moreover, we operate in a sector of the economy that
is likely to be adversely impacted by the effects of political conflicts, including the current political instability in the
Middle East and the South China Sea region and other geographic countries and areas, geopolitical events such as Brexit,
terrorist or other attacks, war (or threatened war) or international hostilities, such as those between the United States and
North Korea. Terrorist attacks, as well as the frequent incidents of terrorism in the Middle East, and the continuing
response of the United States and others to these attacks, as well as the threat of future terrorist attacks around the world,
continue to cause uncertainty in the world’s financial markets and may affect our business, operating results and financial
condition. Continuing conflicts and recent developments in the Middle East, including increased tensions between the U.S.
and Iran, as well as the presence of U.S. or other armed forces in Iraq, Syria, Afghanistan and various other regions, may
lead to additional acts of terrorism and armed conflict around the world, which may contribute to further economic
instability in the global financial markets. As a result of the above, insurers have increased premiums and reduced or
restricted coverage for losses caused by terrorist acts generally. These uncertainties could also adversely affect our ability
to obtain additional financing on terms acceptable to us or at all. Any of these occurrences could have a material adverse
impact on our operating results, revenues and costs. Additionally, Brexit, or similar events in other jurisdictions, could
impact global markets, including foreign exchange and securities markets; any resulting changes in currency exchange
rates, tariffs, treaties and other regulatory matters could in turn adversely impact our business and operations.

Further, governments may turn and have turned to trade barriers to protect their domestic industries against foreign
imports, thereby depressing shipping demand. In particular, in recent years, leaders in the United States and China have
implemented certain increasingly protective trade measures, including tariffs, which have been somewhat mitigated by the
recent trade deal (first phase trade agreement) between the United States and China in early 2020, which, among other
things, requires China to purchase over $50 billion of energy products including crude oil. The results of the 2020
presidential election in the United States have created significant uncertainty about the future relationship between the
United States, China and other exporting countries, including with respect to trade policies, treaties, government regulations
and tariffs. However, it is not yet clear how the new United States administration under President Biden may deviate from
the former administration’s protectionist foreign trade policies. Protectionist developments, or the perception that they may
occur, may have a material adverse effect on global economic conditions, and may significantly reduce global trade.
Moreover, increasing trade protectionism may cause an increase in (a) the cost of goods exported from regions globally, (b)
the length of time required to transport goods and (c) the risks associated with exporting goods. Such increases may
significantly affect the quantity of goods to be shipped, shipping time schedules, voyage costs and other associated costs,
which could have an adverse impact on our charterers’ business, operating results and financial condition and could thereby
affect their ability to make timely charter hire payments to us and to renew and increase the number of their time charters
with us. This could have a material adverse effect on our business, results of operations or financial condition.

In the past, political instability has also resulted in attacks on vessels, mining of waterways and other efforts to
disrupt international shipping, particularly in the Arabian Gulf region. Acts of terrorism and piracy have also affected
vessels trading in regions such as the South China Sea, the Gulf of Guinea off the coast of West Africa and the Gulf of
Aden off the coast of Somalia.

Any of these occurrences could have a material adverse impact on our future performance, results of operations,

cash flows, financial position and our ability to pay any cash distributions to our stockholders.

The U.K.’s withdrawal from the European Union may have a negative effect on global economic conditions,
financial markets and our business.

In June 2016, a majority of voters in the U.K. elected to withdraw from the EU in a national referendum
(informally known as “Brexit”), a process that the government of the U.K. formally initiated in March 2017. Since then,
the U.K. and the EU have been negotiating the terms of a withdrawal agreement, which was approved in October 2019 and
ratified in January 2020. The U.K. formally exited the EU on January 31, 2020, although a transition period remained in
place until December 2020, during which the U.K. was subject to the rules and regulations of the EU. On December 24,
2020, the U.K. and the EU entered into a trade and cooperation agreement, or the Trade and Cooperation Agreement,
which was applied on a provisional basis from January 1, 2021. While the new economic relationship does not match the
relationship that existed during the time the U.K. was a member state of the EU, the Trade and Cooperation Agreement sets
out preferential arrangements in certain areas such as trade in goods and in services, digital trade and intellectual property.
Negotiations between the U.K. and the EU are expected to continue in relation to other areas which are not covered by the
Trade and Cooperation Agreement. The long-term effects of Brexit will depend on the effects of the implementation and
application of the Trade and Cooperation Agreement and any other relevant agreements between the U.K. and EU. Brexit
has also given rise to calls for the governments of other EU member states to consider withdrawal. These developments
and uncertainties, or the perception that any of them may occur, have had and may continue to have a material adverse
effect on global economic conditions and the stability of global financial markets, and may significantly reduce global
market liquidity and restrict the ability of key market participants to operate in certain financial markets. Any of these
factors could depress economic activity and restrict our access to capital, which could have a material adverse effect on our
business and on our consolidated financial position, results of operations and our ability to pay distributions. Additionally,
Brexit or similar events in other jurisdictions, could impact global markets, including foreign exchange and securities
markets; any resulting changes in currency exchange rates, tariffs, treaties and other regulatory matters could in turn
adversely impact our business and operations.

Brexit contributes to considerable uncertainty concerning the current and future economic environment. Brexit
could adversely affect European or worldwide political, regulatory, economic or market conditions and could contribute to
instability in global political institutions, regulatory agencies and financial markets.

If our vessels call on ports located in countries or territories that are subject to sanctions or embargoes imposed by
the U.S. government, the European Union, the United Nations, or other governments, it could result in monetary
fines or penalties imposed on us and may adversely affect our reputation and the market for our securities.

Although no vessels owned or operated by us called on ports located in countries or territories subject to country-
wide or territory-wide sanctions and/or embargoes imposed by the U.S. government or other authorities or countries

identified by the U.S. government or other authorities as state sponsors of terrorism (“Sanctioned Jurisdictions”) during
2020, and we intend to maintain compliance with all applicable sanctions and embargo laws and regulations, our vessels
may call on ports in Sanctioned Jurisdictions in the future on charterers’ instructions and without our consent. If such
activities result in a sanctions violation, we could be subject to monetary fines, penalties, or other sanctions, and our
reputation and the market for our ordinary shares could be adversely affected. Although we endeavor to take precautions
reasonably designed to mitigate such activities, including relevant provisions in charter agreements forbidding the use of
our vessels in trade that would violate economic sanctions, there can be no assurance that we will maintain such
compliance, particularly as the scope of certain laws may be unclear and may be subject to changing interpretations.

The sanctions and embargo laws and regulations vary in their application, as they do not all apply to the same
covered persons or proscribe the same activities, and such sanctions and embargo laws and regulations may be amended or
strengthened over time. Current or future counterparties of ours may be affiliated with persons or entities that are or may be
in the future the subject of sanctions imposed by the U.S. administration, the EU, and/or other international bodies. If we
determine that such sanctions require us to terminate existing or future contracts to which we or our subsidiaries are party
or if we are found to be in violation of such applicable sanctions, our results of operations may be adversely affected or we
may suffer reputational harm. Currently, we do not believe that any of our existing counterparties are affiliated with
persons or entities that are subject to such sanctions.

Any future violation of applicable sanctions and embargo laws and regulations could result in fines, penalties or
other sanctions that could severely impact our ability to access U.S. capital markets and conduct our business, and could
result in some investors deciding, or being required, to divest their interest, or not to invest, in us. In addition, certain
institutional investors may have investment policies or restrictions that prevent them from holding securities of companies
that have contracts with countries identified by the U.S. government as state sponsors of terrorism. The determination by
these investors not to invest in, or to divest from, our securities may adversely affect the price at which our securities trade.
Additionally, some investors may decide to divest their interest, or not to invest, in our company simply because we do
business with companies that do business in sanctioned countries or territories. Moreover, our charterers may violate
applicable sanctions and embargo laws and regulations as a result of actions that do not involve us or our vessels, and those
violations could in turn negatively affect our reputation. In addition, our reputation and the market for our securities may be
adversely affected if we engage in certain other activities, such as entering into charters with individuals or entities in
countries or territories subject to U.S. sanctions and embargo laws that are not controlled by the governments of those
countries or territories, or engaging in operations associated with those countries or territories pursuant to contracts with
third parties that are unrelated to those countries or territories or entities controlled by their governments. Investor
perception of the value of our securities may also be adversely affected by the consequences of war, the effects of
terrorism, civil unrest and governmental actions in these and surrounding countries.

The smuggling of drugs or other contraband onto our vessels may lead to governmental claims against us.

We expect that our vessels will call in ports where smugglers attempt to hide drugs and other contraband on
vessels, with or without the knowledge of crew members. To the extent our vessels are found with contraband, whether
inside or attached to the hull of our vessel and whether with or without the knowledge of any of our crew, we may face
governmental or other regulatory claims which could have an adverse effect on our business, results of operations, cash
flows, financial condition and ability to pay dividends.

Maritime claimants could arrest or attach our vessels, which would have a negative effect on our cash flows.

Crew members, suppliers of goods and services to a vessel, shippers of cargo, lenders, and other parties may be
entitled to a maritime lien against a vessel for unsatisfied debts, claims or damages. In many jurisdictions, a maritime lien
holder may enforce its lien by arresting or attaching a vessel through foreclosure proceedings. The arrest or attachment of
one or more of our vessels could interrupt our business or require us to pay large sums of money to have the arrest lifted,
which would have a negative effect on our cash flows.

In addition, in some jurisdictions, such as South Africa, under the “sister ship” theory of liability, a claimant may
arrest both the vessel which is subject to the claimant’s maritime lien and any “associated” vessel, which is any vessel
owned or controlled by the same owner. Claimants could try to assert “sister ship” liability against one vessel in our fleet
for claims relating to another of our ships.

Governments could requisition our vessels during a period of war or emergency, which may negatively impact our
business, financial condition, results of operations and available cash.

A government could requisition one or more of our vessels for title or hire. Requisition for title occurs when a
government takes control of a vessel and becomes the owner. Also, a government could requisition our vessels for hire.

Requisition for hire occurs when a government takes control of a vessel and effectively becomes the charterer at dictated
charter rates. Generally, requisitions occur during a period of war or emergency. Government requisition of one or more of
our vessels may negatively impact our business, financial condition, results of operations and available cash.

Technological innovation could reduce our charterhire income and the value of our vessels.

The charterhire rates and the value and operational life of a vessel are determined by a number of factors including
the vessel’s efficiency, operational flexibility and physical life. Efficiency includes speed, fuel economy and the ability to
load and discharge cargo quickly. Flexibility includes the ability to enter harbors, utilize related docking facilities and pass
through canals and straits. The length of a vessel’s physical life is related to its original design and construction, its
maintenance and the impact of the stress of operations. If new tankers are built that are more efficient or more flexible or
have longer physical lives than our vessels, competition from these more technologically advanced vessels could adversely
affect the amount of charterhire payments we receive for our vessels and the resale value of our vessels could significantly
decrease. As a result, our available cash could be adversely affected.

Breakdowns in our information technology, including as a result of cyberattacks, may negatively impact our
business, including our ability to service customers, and may have a material adverse effect on our future
performance, results of operations, cash flows and financial position.

Our ability to operate our business and service our customers is dependent on the continued operation of our
information technology, or IT, systems, including our IT systems that relate to, among other things, the location, operation,
maintenance and employment of our vessels. Our IT systems may be compromised by a malicious third party, man-made
or natural events, or the intentional or inadvertent actions or inactions by our employees or third-party service providers. If
our IT systems experience a breakdown, including as a result of cyberattacks, our business information may be lost,
destroyed, disclosed, misappropriated, altered or accessed without consent, and our IT systems, or those of our service
providers, may be disrupted.

Cybercrime attacks could cause disclosure and destruction of business databases and could expose the Company
to extortion by making business data temporarily unreadable. As cyberattacks become increasingly sophisticated, and as
tools and resources become more readily available to malicious third parties, there can be no guarantee that our actions,
security measures and controls designed to prevent, detect or respond to intrusion, to limit access to data, to prevent
destruction or alteration of data or to limit the negative impact from such attacks, can provide absolute security against
compromise.

Any breakdown in our IT systems, including breaches or other compromises of information security, whether or
not involving a cyberattack, may lead to lost revenues resulting from a loss in competitive advantage due to the
unauthorized disclosure, alteration, destruction or use of proprietary information, including intellectual property, the failure
to retain or attract customers, the disruption of critical business processes or information technology systems and the
diversion of management’s attention and resources. In addition, such breakdown could result in significant remediation
costs, including repairing system damage, engaging third-party experts, deploying additional personnel, training employees
and compensation or incentives offered to third parties whose data has been compromised. We may also be subject to legal
claims or legal proceedings, including regulatory investigations and actions, and the attendant legal fees as well as potential
settlements, judgments and fines.

Even without actual breaches of information security, protection against increasingly sophisticated and prevalent
cyberattacks may result in significant future prevention, detection, response and management costs, or other costs,
including the deployment of additional cybersecurity technologies, engaging third-party experts, deploying additional
personnel and training employees. Further, as cyberthreats are continually evolving, our controls and procedures may
become inadequate, and we may be required to devote additional resources to modify or enhance our systems in the future.
Such expenses could have a material adverse effect on our future performance, results of operations, cash flows and
financial position.

Increasing scrutiny and changing expectations from investors, lenders and other market participants with respect to
our Environmental, Social and Governance policies may impose additional costs on us or expose us to additional
risks.

Companies across all industries are facing increasing scrutiny relating to their ESG policies. Investor advocacy
groups, certain institutional investors, investment funds, lenders and other market participants are increasingly focused on
ESG practices and in recent years have placed increasing importance on the implications and social cost of their

investments. The increased focus and activism related to ESG and similar matters may hinder access to capital, as investors
and lenders may decide to reallocate capital or to not commit capital as a result of their assessment of a company’s ESG
practices. Companies which do not adapt to or comply with investor, lender or other industry shareholder expectations and
standards, which are evolving, or which are perceived to have not responded appropriately to the growing concern for ESG
issues, regardless of whether there is a legal requirement to do so, may suffer from reputational damage and the business,
financial condition, and/or stock price of such a company could be materially and adversely affected.

We may face increasing pressures from investors, lenders and other market participants, who are increasingly
focused on climate change, to prioritize sustainable energy practices, reduce our carbon footprint and promote
sustainability. As a result, we may be required to implement more stringent ESG procedures or standards so that our
existing and future investors and lenders remain invested in us and make further investments in us, especially given the
highly focused and specific trade of crude oil transportation in which we are engaged. If we do not meet these standards,
our business and/or our ability to access capital could be harmed.

Additionally, certain investors and lenders may exclude oil transport companies, such as us, from their investing
portfolios altogether due to ESG factors. These limitations in both the debt and equity capital markets may affect our
ability to grow as our plans for growth may include accessing the equity and debt capital markets. If those markets are
unavailable, or if we are unable to access alternative means of financing on acceptable terms, or at all, we may be unable to
implement our business strategy, which would have a material adverse effect on our financial condition and results of
operations and impair our ability to service our indebtedness. Further, it is likely that we will incur additional costs and
require additional resources to monitor, report and comply with wide ranging ESG requirements. The occurrence of any of
the foregoing could have a material adverse effect on our business and financial condition.

If labor interruptions are not resolved in a timely manner, they could have a material adverse effect on our
business, results of operations, cash flows, financial condition and available cash.

We, indirectly through Scorpio Ship Management S.A.M., or SSM, our technical manager, employ masters,
officers and crews to man our vessels. If not resolved in a timely and cost-effective manner, industrial action or other labor
unrest could prevent or hinder our operations from being carried out as we expect and could have a material adverse effect
on our business, results of operations, cash flows, financial condition and available cash.

RISKS RELATED TO OUR COMPANY

We may not realize all of the anticipated benefits of our investment in exhaust gas cleaning systems, or ‘scrubbers.’

We expect to retrofit a substantial majority of our vessels with exhaust gas cleaning systems, or scrubbers. The
scrubbers will enable our ships to use high sulfur fuel oil, which is less expensive than low sulfur fuel oil, in certain parts of
the world. As of March 30, 2021, we have installed scrubbers on 79 vessels in our fleet, with an additional 19 vessels
scheduled to be retrofitted with scrubbers by the beginning of 2022. Additionally, all of the vessels acquired as part of the
2019 Trafigura Transaction (as defined below) were scrubber fitted upon acquisition. The total estimated investment for
these systems, including estimated installation costs is expected to be approximately $2.5 million per vessel, which we are
financing through new loan facilities, increases in current loan facilities, and working capital.

There is a risk that some or all of the expected benefits of our investment in scrubbers may fail to materialize. The
realization of such benefits may be affected by a number of factors, many of which are beyond our control, including but
not limited to the pricing differential between high and low sulfur fuel oil, the availability of low sulfur fuel oil in the ports
in which we operate and the impact of changes in the laws and regulations regulating the discharge and disposal of wash
water.

Failure to secure financing, or to realize the anticipated benefits of our investment in scrubbers, could have a

material adverse impact on our business, results of operations, cash flows, financial condition and available cash.

We cannot assure you that our internal controls and procedures over financial reporting will be sufficient.

We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the
Exchange Act, and the other rules and regulations of the SEC, including the Sarbanes-Oxley Act of 2002, or Sarbanes-
Oxley. Section 404 of Sarbanes-Oxley requires that we evaluate and determine the effectiveness of our internal controls
over financial reporting. If we have a material weakness in our internal controls over financial reporting, we may not detect
errors on a timely basis and our financial statements may be materially misstated. We dedicate a significant amount of time
and resources to ensure compliance with these regulatory requirements. We will continue to evaluate areas such as

corporate governance, corporate control, internal audit, disclosure controls and procedures and financial reporting and
accounting systems. We will make changes in any of these and other areas, including our internal control over financial
reporting, which we believe are necessary. However, these and other measures we may take may not be sufficient to allow
us to satisfy our obligations as a public company on a timely and reliable basis.

We may have difficulty managing our planned growth properly.

We have and may continue to grow by expanding our operations and adding to our fleet. Any future growth will
primarily depend upon a number of factors, some of which may not be within our control, including our ability to
effectively identify, purchase, finance, develop and integrate any tankers or businesses. Furthermore, the number of
employees that perform services for us and our current operating and financial systems may not be adequate as we expand
the size of our fleet, and we may not be able to effectively hire more employees or adequately improve those systems.
Finally, acquisitions may require additional equity issuances or debt issuances (with amortization payments), or entry into
other financing arrangements which could, among other things, reduce our available cash. If any such events occur, our
business, financial condition and results of operations may be adversely affected and the amount of cash available for
distribution as dividends to our shareholders may be reduced.

Growing any business by acquisition presents numerous risks such as undisclosed liabilities and obligations,
difficulty in obtaining additional qualified personnel and managing relationships with customers and suppliers and
integrating newly acquired operations into existing infrastructures. The expansion of our fleet may impose significant
additional responsibilities on our management and staff, and the management and staff of our commercial and technical
managers, and may necessitate that we, and they, increase the number of personnel. We cannot give any assurance that we
will be successful in executing our growth plans or that we will not incur significant expenses and losses in connection
with our future growth.

We operate secondhand vessels, which exposes us to increased operating costs which could adversely affect our
earnings and, as our fleet ages, the risks associated with older vessels could adversely affect our ability to obtain
profitable charters.

We have acquired and may continue to acquire secondhand vessels. We are entitled to inspect such vessels prior
to purchase, but this does not provide us with the same knowledge about their condition that we would have had if these
vessels had been built for and operated exclusively by us. Generally, we do not receive the benefit of warranties from the
builders for the secondhand vessels that we acquire.

In general, the costs to maintain a vessel in good operating condition increase with the age of the vessel. Older
vessels are typically less fuel-efficient than more recently constructed vessels due to improvements in engine technology.
Cargo insurance rates increase with the age of a vessel, making older vessels less desirable to charterers.

Governmental regulations, safety or other equipment standards related to the age of vessels may require
expenditures for alterations, or the addition of new equipment, to our vessels and may restrict the type of activities in which
the vessels may engage. As our vessels age, market conditions may not justify those expenditures or enable us to operate
our vessels profitably during the remainder of their useful lives.

An increase in operating costs would decrease earnings and available cash.

Under time charter agreements, the charterer is responsible for voyage costs and the owner is responsible for the
vessel operating costs. We currently do not have any vessels on long-term time charter-out agreements (with initial terms
of one year or greater). We have 22 vessels operating under bareboat chartered-in agreements and the remaining vessels in
our fleet are either owned or finance leased. When our owned, finance leased vessels, or bareboat chartered-in vessels are
employed in one of the Scorpio Pools, the pool is responsible for voyage expenses and we are responsible for vessel costs.
As of March 30, 2021, all of our owned, finance leased vessels and bareboat chartered-in vessels were employed through
the Scorpio Pools. When our vessels operate directly in the spot market, we are responsible for both voyage expenses and
vessel operating costs. Our vessel operating costs include the costs of crew, fuel (for spot chartered vessels), provisions,
deck and engine stores, insurance and maintenance and repairs, which depend on a variety of factors, many of which are
beyond our control. Further, if our vessels suffer damage, they may need to be repaired at a drydocking facility. The costs
of drydocking repairs are unpredictable and can be substantial. Increases in any of these expenses would decrease earnings
and available cash. Please see “We will be required to make additional capital expenditures should we determine to expand
the number of vessels in our fleet and to maintain all our vessels.”

We will be required to make additional capital expenditures should we determine to expand the number of vessels
in our fleet and to maintain all our vessels.

Our business strategy is based in part upon the expansion of our fleet through the purchase of additional vessels. If
we are unable to fulfill our obligations under any memorandum of agreement for any current or future vessel acquisitions,
the sellers of such vessels may be permitted to terminate such contracts and we may forfeit all or a portion of the down
payments we have already made under such contracts, and we may be sued for, among other things, any outstanding
balances we are obligated to pay and other damages.

In addition, we will incur significant maintenance costs for our existing and any newly-acquired vessels. A
newbuilding vessel must be drydocked within five years of its delivery from a shipyard, and vessels are typically
drydocked every 30 months thereafter, not including any unexpected repairs. We estimate the cost to drydock a vessel to be
between $500,000 and $1,500,000, excluding costs relating to compliance with applicable ballast water treatment
requirements and costs related to the installation of scrubbers, depending on the size and condition of the vessel and the
location of drydocking.

If we do not generate or reserve enough cash flow from operations to pay for our capital expenditures, we may
need to incur additional indebtedness or enter into alternative financing arrangements, which may be on terms that are
unfavorable to us. If we are unable to fund our obligations or to secure financing, it would have a material adverse effect on
our results of operations.

Please also see “We are required to make significant investments in ballast water management which may have a
material adverse effect on our future performance, results of operations, and financial position”, “We may not realize all of
the anticipated benefits of our investment in exhaust gas cleaning systems, or ‘scrubbers’” and “We are subject to complex
laws and regulations, including environmental laws and regulations that can adversely affect our business, results of
operations, cash flows and financial conditions, and our available cash.”

Declines in charter rates and other market deterioration caused us to incur impairment charges of $16.8 million
during the year ended December 31, 2020.

We evaluate the carrying amounts of our vessels to determine if events have occurred that would require an
impairment of their carrying amounts. The recoverable amount of vessels is reviewed based on events and changes in
circumstances that would indicate that the carrying amount of the assets might not be recovered. The review for potential
impairment indicators and projection of future cash flows related to the vessels is complex and requires us to make various
estimates including future freight rates, earnings from the vessels and discount rates. All of these items have been
historically volatile.

In accordance with IFRS, we evaluate the recoverable amount as the higher of fair value less costs to sell and
value in use. If the recoverable amount is less than the carrying amount of the vessel, the vessel is deemed impaired. The
carrying values of our vessels may not represent their fair market value at any point in time because the new market prices
of secondhand vessels tend to fluctuate with changes in charter rates and the cost of newbuildings. For the year ended
December 31, 2020, we evaluated the recoverable amount of our vessels and recognized $14.2 million of impairment
charge related to certain MR vessels where the value in use calculations were below their carrying amounts. The
recoverable amount of goodwill is tested in a similar manner, and our carrying value of goodwill relating to the LR1
reportable segment (which arose from the acquisition of Navig8 Product Tankers Inc. in 2017), resulted in an additional
impairment charge of $2.6 million. During the year ended December 31, 2019, we did not record an impairment charge.
Please see “Item 5. Operating and Financial Review and Prospects-Critical Accounting Policies-Vessel Impairment.”

We cannot assure you that we will not recognize additional impairment losses in future years. Any impairment
charges incurred as a result of further declines in charter rates could negatively affect our business, financial condition,
operating results or the trading price of our securities.

Our stock price has fluctuated in the past, has recently been volatile and may be volatile in the future, and as a
result, investors in our common stock could incur substantial losses.

Our stock price has fluctuated in the past, has recently been volatile and may be volatile in the future. Our stock
prices may experience rapid and substantial decreases or increases in the foreseeable future that are unrelated to our
operating performance or prospects. In addition, the ongoing outbreak of COVID-19 has caused broad stock market and
industry fluctuations. The stock market in general and the market for shipping companies in particular have experienced
extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this

volatility, investors may experience substantial losses on their investment in our common stock. The market price for our
common stock may be influenced by many factors, including the following:

•

investor reaction to our business strategy;

our continued compliance with the listing standards of the NYSE;

regulatory or legal developments in the United States and other countries, especially changes in laws or
regulations applicable to our industry;

variations in our financial results or those of companies that are perceived to be similar to us;

our ability or inability to raise additional capital and the terms on which we raise it;

declines in the market prices of stocks generally;

trading volume of our common stock;

sales of our common stock by us or our stockholders;

general economic, industry and market conditions; and

other events or factors, including those resulting from such events, or the prospect of such events, including war,
terrorism and other international conflicts, public health issues including health epidemics or pandemics, such as
the ongoing COVID-19 pandemic, adverse weather and climate conditions could disrupt our operations or result
in political or economic instability.

These broad market and industry factors may seriously harm the market price of our common stock, regardless of
our operating performance, and may be inconsistent with any improvements in actual or expected operating performance,
financial condition or other indicators of value. Since the stock price of our common stock has fluctuated in the past, has
been recently volatile and may be volatile in the future, investors in our common stock could incur substantial losses. In the
past, following periods of volatility in the market, securities class-action litigation has often been instituted against
companies. Such litigation, if instituted against us, could result in substantial costs and diversion of management’s attention
and resources, which could materially and adversely affect our business, financial condition, results of operations and
growth prospects. There can be no guarantee that our stock price will remain at current prices.

Additionally, recently, securities of certain companies have experienced significant and extreme volatility in stock
price due short sellers of shares of common stock, known as a “short squeeze”. These short squeezes have caused extreme
volatility in those companies and in the market and have led to the price per share of those companies to trade at a
significantly inflated rate that is disconnected from the underlying value of the company. Many investors who have
purchased shares in those companies at an inflated rate face the risk of losing a significant portion of their original
investment as the price per share has declined steadily as interest in those stocks have abated. While we have no reason to
believe our shares would be the target of a short squeeze, there can be no assurance that we will not be in the future, and
you may lose a significant portion or all of your investment if you purchase our shares at a rate that is significantly
disconnected from our underlying value.

The market values of our vessels may decrease, which could limit the amount of funds that we can borrow or trigger
certain financial covenants under our current or future debt facilities and we may incur a loss if we sell vessels
following a decline in their market value.

The fair market values of our vessels have generally experienced high volatility. The fair market values for tankers
declined significantly from historically high levels reached in 2008 and remain at relatively low levels. Such prices may
fluctuate depending on a number of factors including, but not limited to, the prevailing level of charter rates and day rates,
general economic and market conditions affecting the international shipping industry, types, sizes and ages of vessels,
supply and demand for vessels, availability of or developments in other modes of transportation, competition from other
tanker companies, cost of newbuildings, applicable governmental or other regulations and technological advances. In
addition, as vessels grow older, they generally decline in value. If the fair market values of our vessels decline we may not
be in compliance with certain covenants contained in our secured credit facilities, which may result in an event of default.
In such circumstances, we may not be able to refinance our debt, obtain additional financing or make distributions to our
shareholders and our subsidiaries may not be able to make distributions to us. The prepayment of certain debt facilities may
be necessary to cause us to maintain compliance with certain covenants in the event that the value of the vessels falls below
certain levels. If we are not able to comply with the covenants in our secured credit facilities, and are unable to remedy the
relevant breach, our lenders could accelerate our debt and foreclose on our fleet.

Additionally, if we sell one or more of our vessels at a time when vessel prices have fallen, the sale price may be
less than the vessel’s carrying value on our consolidated financial statements, resulting in a loss on sale or an impairment
loss being recognized, ultimately leading to a reduction in earnings. Furthermore, if vessel values fall significantly, this
could indicate a decrease in the recoverable amount for the vessel which may result in an impairment adjustment in our
financial statements, which could adversely affect our financial results and condition.

For further information, please see “Item 5. Operating and Financial Review and Prospects.”

If we are unable to operate our vessels profitably, we may be unsuccessful in competing in the highly competitive
international tanker market, which would negatively affect our financial condition and our ability to expand our
business.

The operation of tanker vessels and transportation of crude and petroleum products is extremely competitive, in an
industry that is capital intensive and highly fragmented. Demand for transportation of oil and oil products has declined, and
could continue to decline, which could lead to increased competition. Competition arises primarily from other tanker
owners, including major oil companies as well as independent tanker companies, some of whom have substantially greater
resources than we do. Competition for the transportation of oil and oil products can be intense and depends on price,
location, size, age, condition and the acceptability of the tanker and its operators to the charterers. We will have to compete
with other tanker owners, including major oil companies as well as independent tanker companies.

Our market share may decrease in the future. We may not be able to compete profitably as we expand our
business into new geographic regions or provide new services. New markets may require different skills, knowledge or
strategies than we use in our current markets, and the competitors in those new markets may have greater financial strength
and capital resources than us.

If we do not set aside funds and are unable to borrow or raise funds for vessel replacement, at the end of a vessel’s
useful life our revenue will decline, which would adversely affect our business, results of operations, financial
condition, and available cash.

If we do not set aside funds or are unable to borrow or raise funds, including through equity issuances, for vessel
replacement, we will be unable to replace the vessels in our fleet upon the expiration of their remaining useful lives, which
we expect to occur between 2037 and 2045, depending on the vessel. Our cash flows and income are dependent on the
revenues earned by the chartering of our vessels. If we are unable to replace the vessels in our fleet upon the expiration of
their useful lives, our business, results of operations, financial condition, and available cash per share would be adversely
affected. Any funds set aside for vessel replacement will reduce available cash.

Our ability to obtain additional financing may be dependent on the performance of our then existing charters and
the creditworthiness of our charterers.

The actual or perceived credit quality of our charterers, and any defaults by them, may materially affect our ability
to obtain the additional capital resources that we will require to purchase additional vessels or may significantly increase
our costs of obtaining such capital. Our inability to obtain additional financing at all or at a higher than anticipated cost
may materially affect our results of operations and our ability to implement our business strategy.

We cannot guarantee that our Board of Directors will declare dividends.

Our Board of Directors may, in its sole discretion, from time to time, declare and pay cash dividends in
accordance with our organizational documents and applicable law. Our Board of Directors makes determinations regarding
the payment of dividends in its sole discretion, and there is no guarantee that we will continue to pay dividends in the
future.

In addition, the markets in which we operate our vessels are volatile and we cannot predict with certainty the
amount of cash, if any, that will be available for distribution as dividends in any period. We may also incur expenses or
liabilities or be subject to other circumstances in the future that reduce or eliminate the amount of cash that we have
available for distribution as dividends, including as a result of the risks described herein. If additional financing is not
available to us on acceptable terms or at all, our Board of Directors may determine to finance or refinance asset
acquisitions with cash from operations, which would reduce the amount of any cash available for the payment of dividends.
Please see “Item 8. Financial Information - A. Consolidated Statements and Other Financial Information - Dividend
Policy.”

United States tax authorities could treat us as a “passive foreign investment company,” which could have adverse
United States federal income tax consequences to United States shareholders.

A foreign corporation will be treated as a “passive foreign investment company,” or PFIC, for United States
federal income tax purposes if either (1) at least 75% of its gross income for any taxable year consists of certain types of
“passive income” or (2) at least 50% of the average value of the corporation’s assets produce or are held for the production
of those types of “passive income.” For purposes of these tests, “passive income” includes dividends, interest, and gains
from the sale or exchange of investment property and rents and royalties other than rents and royalties which are received
from unrelated parties in connection with the active conduct of a trade or business. For purposes of these tests, income
derived from the performance of services does not constitute “passive income.” United States shareholders of a PFIC are
subject to a disadvantageous United States federal income tax regime with respect to the income derived by the PFIC, the
distributions they receive from the PFIC and the gain, if any, they derive from the sale or other disposition of their shares in
the PFIC.

Based on our current and proposed method of operation, we do not believe that we will be a PFIC with respect to
any taxable year. In this regard, we intend to treat the gross income we derive or are deemed to derive from our time
chartering activities as services income, rather than rental income. Accordingly, our income from our time and voyage
chartering activities should not constitute “passive income,” and the assets that we own and operate in connection with the
production of that income should not constitute assets that produce or are held for the production of “passive income.”

There is substantial legal authority supporting this position, consisting of case law and United States Internal
Revenue Service, or IRS, pronouncements concerning the characterization of income derived from time charters and
voyage charters as services income for other tax purposes. However, it should be noted that there is also authority that
characterizes time charter income as rental income rather than services income for other tax purposes. Accordingly, no
assurance can be given that the IRS or a court of law will accept this position, and there is a risk that the IRS or a court of
law could determine that we are a PFIC. Moreover, no assurance can be given that we would not constitute a PFIC for any
future taxable year if the nature and extent of our operations change.

If the IRS were to find that we are or have been a PFIC for any taxable year, our United States shareholders would
face adverse United States federal income tax consequences and incur certain information reporting obligations. Under the
PFIC rules, unless those shareholders make an election available under the United States Internal Revenue Code of 1986,
as amended, or the Code (which election could itself have adverse consequences for such shareholders), such shareholders
would be subject to United States federal income tax at the then prevailing rates on ordinary income plus interest, in respect
of excess distributions and upon any gain from the disposition of their common shares, as if the excess distribution or gain
had been recognized ratably over the shareholder’s holding period of the common shares. See “Item 10. Additional
Information - E. Taxation - Passive Foreign Investment Company Status and Significant Tax Consequences” for a more
comprehensive discussion of the United States federal income tax consequences to United States shareholders if we are
treated as a PFIC.

We may have to pay tax on United States source shipping income, which would reduce our earnings.

Under the Code, 50% of the gross shipping income of a corporation that owns or charters vessels, as we and our
subsidiaries do, that is attributable to transportation that begins or ends, but that does not both begin and end, in the United
States may be subject to a 4% United States federal income tax without allowance for deductions, unless that corporation
qualifies for exemption from tax under Section 883 of the Code and the regulations promulgated thereunder by the United
States Department of the Treasury.

We and our subsidiaries intend to take the position that we qualify for this statutory tax exemption for United
States federal income tax return reporting purposes. However, there are factual circumstances beyond our control that
could cause us to lose the benefit of this tax exemption and thereby become subject to United States federal income tax on
our United States source shipping income. For example, we may no longer qualify for exemption under Section 883 of the
Code for a particular taxable year if shareholders with a five percent or greater interest in our common shares, or 5%
Shareholders, owned, in the aggregate, 50% or more of our outstanding common shares for more than half the days during
the taxable year, and there do not exist sufficient 5% Shareholders that are qualified shareholders for purposes of Section
883 of the Code to preclude nonqualified 5% Shareholders from owning 50% or more of our common shares for more than
half the number of days during such taxable year or we are unable to satisfy certain substantiation requirements with regard
to our 5% Shareholders. Due to the factual nature of the issues involved, there can be no assurances on the tax-exempt
status of us or any of our subsidiaries.

If we or our subsidiaries were not entitled to exemption under Section 883 of the Code for any taxable year, we or
our subsidiaries could be subject for such year to an effective 2% United States federal income tax on the shipping income
we or they derive during such year which is attributable to the transport of cargoes to or from the United States. The
imposition of this tax would have a negative effect on our business and would decrease our earnings available for
distribution to our shareholders.

We are subject to certain risks with respect to our counterparties on contracts, including our vessel employment
arrangements, and failure of such counterparties to meet their obligations could cause us to suffer losses or
negatively impact our results of operations and cash flows.

We have entered into, and may enter into in the future, various contracts, including, without limitation, charter and
pooling agreements relating to the employment of our vessels, newbuilding contracts, debt facilities, and other agreements.
Such agreements subject us to counterparty risks. The ability and willingness of each of our counterparties to perform its
obligations under a contract with us will depend on a number of factors that are beyond our control and may include,
among other things, general economic conditions, the condition of the maritime and offshore industries, and the overall
financial condition of the counterparty.

In addition, with respect to our charter arrangements, in depressed market conditions, our charterers may no
longer need a vessel that is then under charter or may be able to obtain a comparable vessel at lower rates. As a result,
charterers may seek to renegotiate the terms of their existing charter agreements or avoid their obligations under those
contracts. If our charterers fail to meet their obligations to us or attempt to renegotiate our charter agreements, it may be
difficult to secure substitute employment for such vessel, and any new charter arrangements we secure in the spot market
or on time charters may be at lower rates. As a result, we could sustain significant losses which could have a material
adverse effect on our business, financial condition, results of operations and cash flows, as well as our ability to pay
dividends on our common shares and interest on our debt securities and comply with covenants in our credit facilities.

Our insurance may not be adequate to cover our losses that may result from our operations due to the inherent
operational risks of the tanker industry.

We carry insurance to protect us against most of the accident-related risks involved in the conduct of our business,
including marine hull and machinery insurance, protection and indemnity insurance, which includes pollution risks, crew
insurance and war risk insurance. However, we may not be adequately insured to cover losses from our operational risks,
which could have a material adverse effect on us. Additionally, our insurers may refuse to pay particular claims and our
insurance may be voidable by the insurers if we take, or fail to take, certain action, such as failing to maintain certification
of our vessels with applicable maritime regulatory organizations. Any significant uninsured or under-insured loss or
liability could have a material adverse effect on our business, results of operations, cash flows and financial condition and
our available cash. In addition, we may not be able to obtain adequate insurance coverage at reasonable rates in the future
during adverse insurance market conditions.

Changes in the insurance markets attributable to terrorist attacks may also make certain types of insurance more
difficult for us to obtain due to increased premiums or reduced or restricted coverage for losses caused by terrorist acts
generally.

Because we obtain some of our insurance through protection and indemnity associations, which result in significant
expenses to us, we may be required to make additional premium payments.

We may be subject to increased premium payments, or calls, in amounts based on our claim records, the claim
records of our managers, as well as the claim records of other members of the protection and indemnity associations
through which we receive insurance coverage for tort liability, including pollution-related liability. In addition, our
protection and indemnity associations may not have enough resources to cover claims made against them. Our payment of
these calls could result in significant expense to us, which could have a material adverse effect on our business, results of
operations, cash flows, financial condition and available cash.

Failure to comply with the U.S. Foreign Corrupt Practices Act could result in fines, criminal penalties, contract
terminations and an adverse effect on our business.

We may operate in a number of countries throughout the world, including countries known to have a reputation
for corruption. We are committed to doing business in accordance with applicable anti-corruption laws and have adopted a
code of conduct and ethics which is consistent and in full compliance with the U.S. Foreign Corrupt Practices Act of 1977,
or the FCPA. We are subject, however, to the risk that we, our affiliated entities or our or their respective officers,

directors, employees and agents may take actions determined to be in violation of such anti-corruption laws, including the
FCPA. Any such violation could result in substantial fines, sanctions, civil and/or criminal penalties and curtailment of
operations in certain jurisdictions, and might adversely affect our business, results of operations or financial condition. In
addition, actual or alleged violations could damage our reputation and ability to do business. Furthermore, detecting,
investigating, and resolving actual or alleged violations is expensive and can consume significant time and attention of our
senior management. Though we have implemented monitoring procedures and required policies, guidelines, contractual
terms and audits, these measures may not prevent or detect failures by our agents or intermediaries regarding compliance.

We are incorporated in the Republic of the Marshall Islands, which does not have a well-developed body of
corporate law and, as a result, shareholders may have fewer rights and protections under Marshall Islands law than
under a typical jurisdiction in the United States.

Our corporate affairs are governed by our articles of incorporation and bylaws and by the Marshall Islands
Business Corporations Act, or BCA. The provisions of the BCA resemble provisions of the corporation laws of a number
of states in the United States. However, there have been few judicial cases in the Republic of the Marshall Islands
interpreting the BCA. The rights and fiduciary responsibilities of directors under the law of the Republic of the Marshall
Islands are not as clearly established as the rights and fiduciary responsibilities of directors under statutes or judicial
precedent in existence in certain United States jurisdictions. Shareholder rights may differ as well. While the BCA does
specifically incorporate the non-statutory law, or judicial case law, of the State of Delaware and other states with
substantially similar legislative provisions, our public shareholders may have more difficulty in protecting their interests in
the face of actions by management, directors or controlling shareholders than would shareholders of a corporation
incorporated in a United States jurisdiction.

It may be difficult to serve process on or enforce a United States judgment against us, our officers and our directors
because we are a foreign corporation.

We are a corporation formed in the Republic of the Marshall Islands, and some of our directors and officers and
certain of the experts named in this report are located outside the United States. In addition, a substantial portion of our
assets and the assets of our directors, officers and experts are located outside of the United States. As a result, you may
have difficulty serving legal process within the United States upon us or any of these persons. You may also have difficulty
enforcing, both in and outside the United States, judgments you may obtain in U.S. courts against us or any of these
persons in any action, including actions based upon the civil liability provisions of U.S. federal or state securities laws.
Furthermore, there is substantial doubt that the courts of the Republic of the Marshall Islands or of the non-U.S.
jurisdictions in which our offices are located would enter judgments in original actions brought in those courts predicated
on U.S. federal or state securities laws.

The international nature of our operations may make the outcome of any bankruptcy proceedings difficult to
predict.

We are incorporated under the laws of the Republic of the Marshall Islands and we conduct operations in
countries around the world. Consequently, in the event of any bankruptcy, insolvency, liquidation, dissolution,
reorganization or similar proceeding involving us or any of our subsidiaries, bankruptcy laws other than those of the United
States could apply. If we become a debtor under U.S. bankruptcy law, bankruptcy courts in the United States may seek to
assert jurisdiction over all of our assets, wherever located, including property situated in other countries. There can be no
assurance, however, that we would become a debtor in the United States, or that a U.S. bankruptcy court would be entitled
to, or accept, jurisdiction over such a bankruptcy case, or that courts in other countries that have jurisdiction over us and
our operations would recognize a U.S. bankruptcy court’s jurisdiction if any other bankruptcy court would determine it had
jurisdiction.

We rely on our information systems to conduct our business, and failure to protect these systems against security
breaches could adversely affect our business and results of operations. Additionally, if these systems fail or become
unavailable for any significant period of time, our business could be harmed.

The efficient operation of our business, including processing, transmitting and storing electronic and financial
information, is dependent on computer hardware and software systems. Information systems are vulnerable to security
breaches by computer hackers and cyber terrorists. We rely on industry accepted security measures and technology to
securely maintain confidential and proprietary information maintained on our information systems. However, these
measures and technology may not adequately prevent security breaches. In addition, the unavailability of the information
systems or the failure of these systems to perform as anticipated for any reason could disrupt our business and could result

in decreased performance and increased operating costs, causing our business and results of operations to suffer. Any
significant interruption or failure of our information systems or any significant breach of security could adversely affect our
business and results of operations.

RISKS RELATED TO OUR RELATIONSHIP WITH SCORPIO AND ITS AFFILIATES

We are dependent on our managers and their ability to hire and retain key personnel, and there may be conflicts of
interest between us and our managers that may not be resolved in our favor.

Our success depends to a significant extent upon the abilities and efforts of our technical manager, SSM, our
commercial manager, Scorpio Commercial Management S.A.M., or SCM, and our management team. Our success will
depend upon our and our managers’ ability to hire and retain key members of our management team. The loss of any of
these individuals could adversely affect our business prospects and financial condition.

In addition, difficulty in hiring and retaining personnel could adversely affect our results of operations. We do not

maintain “key man” life insurance on any of our officers.

Our technical and commercial managers are members of Scorpio, which is owned and controlled by the Lolli-
Ghetti family, of which our founder, Chairman and Chief Executive Officer, Mr. Emanuele Lauro, and our Vice President,
Mr. Filippo Lauro, are members. In addition, all of our executive officers serve in similar management positions in certain
other companies within Scorpio. These relationships may create conflicts of interest in matters involving or affecting us
and our customers, including in the chartering, purchase, sale and operation of the vessels in our fleet versus vessels
managed by other members of Scorpio. Conflicts of interest may arise between us, on the one hand, and our commercial
and technical managers, on the other hand. As a result of these conflicts, our commercial and technical managers, who have
limited contractual duties, may favor their own or other owner’s interests over our interests. These conflicts may have
unfavorable results for us.

Our founder, Chairman and Chief Executive Officer, and Vice President have affiliations with our administrator
and commercial and technical managers which may create conflicts of interest.

Emanuele Lauro, our founder, Chairman and Chief Executive Officer, and Filippo Lauro, our Vice President, are
members of the Lolli-Ghetti family which owns and controls Scorpio. Annalisa Lolli-Ghetti is the majority owner of
Scorpio (of which our administrator and commercial and technical managers are members) and beneficially owns
approximately 6.64% of our outstanding common shares. These responsibilities and relationships could create conflicts of
interest between us, on the one hand, and our administrator and/or commercial and technical managers, on the other hand.
These conflicts may arise in connection with the chartering, purchase, sale and operations of the vessels in our fleet versus
vessels managed by other companies affiliated with our commercial or technical managers. Our commercial and technical
managers may give preferential treatment to vessels that are time chartered-in by related parties because our founder,
Chairman and Chief Executive Officer and members of his family may receive greater economic benefits. In particular, as
of the date of this annual report, our commercial and technical managers provide commercial and technical management
services to approximately 80 and 48 vessels respectively, other than the vessels in our fleet, that are owned, operated or
managed by entities affiliated with Messrs. Lauro, and such entities may operate or acquire additional vessels that will
compete with our vessels in the future. Such conflicts may have an adverse effect on our results of operations. In addition,
certain members of Scorpio may benefit from economies of scale all of which may not be passed along to us.

Certain of our officers do not devote all of their time to our business, which may hinder our ability to operate
successfully.

Our Chief Executive Officer, President, Chief Operating Officer, Vice President, Chief Financial Officer, and
Secretary participate in business activities not associated with us, some of whom serve as members of the management
teams of Eneti, Inc. (NYSE: NETI) (formerly Scorpio Bulkers Inc.), or Eneti, and Hermitage Offshore Services Ltd. (OTC:
HOFSQ) (formerly Nordic American Offshore Ltd.), or Hermitage, and as a result, they may devote less time to us than if
they were not engaged in other business activities and may owe fiduciary duties to the shareholders of both us as well as
shareholders of other companies with which they may be affiliated, including Eneti, Hermitage and other companies within
Scorpio. This may create conflicts of interest in matters involving or affecting us and our customers and it is not certain
that any of these conflicts of interest will be resolved in our favor. This could have a material adverse effect on our
business, financial condition, results of operations and cash flows.

Our commercial and technical managers are each privately held companies and there is little or no publicly
available information about them.

SCM is our commercial manager and SSM is our technical manager. SCM’s and SSM’s ability to render
management services will depend in part on their own financial strength. Circumstances beyond our control could impair
our commercial manager’s or technical manager’s financial strength, and because each is a privately held company,
information about the financial strength of our commercial manager and technical manager is not available. As a result, we
and our shareholders might have little or no advance warning of financial or other problems affecting our commercial
manager or technical manager even though their financial or other problems could have a material adverse effect on us.

RISKS RELATED TO OUR INDEBTEDNESS

Servicing our current or future indebtedness limits funds available for other purposes and if we cannot service our
debt, we may lose our vessels.

As of December 31, 2020, we had approximately $3.1 billion in interest-bearing debt or obligations due under
leasing arrangements. Borrowings under our debt facilities and lease financing arrangements require us to dedicate a part of
our cash flow from operations to the payment of interest and principal on our debt. These payments limit funds available
for working capital, capital expenditures and other purposes, including further equity or debt financing in the future.
Amounts borrowed under our secured debt facilities and certain of our lease financing arrangements bear interest at
variable rates. Increases in prevailing rates could increase the amounts that we would have to pay to our lenders, even
though the outstanding principal amount remains the same, and our net income and cash flows would decrease. We expect
our earnings and cash flow to vary from year to year due to the cyclical nature of the tanker industry. If we do not generate
or reserve enough cash flow from operations to satisfy our debt obligations, we may have to undertake alternative financing
plans, such as seeking to raise additional capital, refinancing or restructuring our debt, selling tankers, or reducing or
delaying capital investments. However, these alternative financing plans, if necessary, may not be sufficient to allow us to
meet our debt obligations.

If we are unable to meet our debt obligations or if some other default occurs under our debt facilities, our lenders
could elect to declare that debt, together with accrued interest and fees, to be immediately due and payable and proceed
against the collateral vessels securing that debt even though the majority of the proceeds used to purchase the collateral
vessels did not come from our debt facilities.

Our debt and lease financing agreements contain restrictive and financial covenants which may limit our ability to
conduct certain activities, and further, we may be unable to comply with such covenants, which could result in a
default under the terms of such agreements.

Our debt and lease financing agreements impose operating and financial restrictions on us. These restrictions may

limit our ability, or the ability of our subsidiaries party thereto, to, among other things:

•

pay dividends and make capital expenditures if we do not repay amounts drawn under our debt facilities or if
there is another default under our debt facilities;

incur additional indebtedness, including the issuance of guarantees;

create liens on our assets;

change the flag, class or management of our vessels or terminate or materially amend the management
agreement relating to each vessel;

sell our vessels;

• merge or consolidate with, or transfer all or substantially all our assets to, another person; or

•

enter into a new line of business.

Therefore, we will need to seek permission from our lenders in order to engage in some corporate actions. Our
lenders’ interests may be different from ours and we may not be able to obtain our lenders’ permission when needed. This
may limit our ability to pay dividends to our shareholders if we determine to do so in the future, finance our future
operations or capital requirements, make acquisitions or pursue business opportunities.

In addition, the terms and conditions of certain of our borrowings require us to maintain specified financial ratios
and satisfy financial covenants, including ratios and covenants based on the market value of the vessels in our fleet. Should
our charter rates or vessel values materially decline in the future, we may seek to obtain waivers or amendments from our

lenders with respect to such financial ratios and covenants, or we may be required to take action to reduce our debt or to act
in a manner contrary to our business objectives to meet any such financial ratios and satisfy any such financial covenants.
Events beyond our control, including changes in the economic and business conditions in the shipping markets in which we
operate, may affect our ability to comply with these covenants. We cannot assure you that we will meet these ratios or
satisfy these covenants or that our lenders will waive any failure to do so or amend these requirements. A breach of any of
the covenants in, or our inability to maintain the required financial ratios under, our credit facilities would prevent us from
borrowing additional money under our credit facilities or lease financing arrangements and could result in a default under
our credit facilities. If a default occurs under our credit facilities or lease financing arrangements, the counterparties could
elect to declare the outstanding debt, together with accrued interest and other fees, to be immediately due and payable and
foreclose on the collateral securing that debt, which could constitute all or substantially all of our assets. Moreover, in
connection with any waivers or amendments to our credit facilities or lease financing arrangements that we may obtain, our
lenders may impose additional operating and financial restrictions on us or modify the terms of our existing credit facilities
or lease financing arrangements. These restrictions may further restrict our ability to, among other things, pay dividends,
repurchase our common shares, make capital expenditures, or incur additional indebtedness.

Furthermore, our debt and lease financing agreements contain cross-default provisions that may be triggered if we
default under the terms of any one of our financing agreements. In the event of default by us under one of our debt
agreements, the lenders under our other debt or lease financing agreements could determine that we are in default under
such other financing agreements. Such cross defaults could result in the acceleration of the maturity of such indebtedness
under these agreements and the lenders thereunder may foreclose upon any collateral securing that indebtedness, including
our vessels, even if we were to subsequently cure such default. In addition, our credit facilities and lease financing
arrangements contain subjective acceleration clauses under which the debt could become due and payable in the event of a
material adverse change in our business. In the event of such acceleration or foreclosure, we might not have sufficient
funds or other assets to satisfy all of our obligations, which would have a material adverse effect on our business, results of
operations and financial condition.

ITEM 4. INFORMATION ON THE COMPANY

A. History and Development of the Company

Scorpio Tankers Inc. was incorporated in the Republic of the Marshall Islands pursuant to the BCA on July 1,
2009. We provide seaborne transportation of refined petroleum products worldwide. We began our operations in October
2009 with three vessels. In April 2010, we completed our initial public offering, and our common stock commenced
trading on the New York Stock Exchange, or NYSE, under the symbol “STNG.” We have since expanded, and as of March
30, 2021, our fleet consisted of 131 wholly owned, finance leased or bareboat chartered-in tankers (42 LR2, 12 LR1, 63
MR and 14 Handymax) with a weighted average age of approximately 5.2 years.

Our principal executive offices are located at 9, Boulevard Charles III, Monaco 98000 and our telephone number
at that address is +377-9798-5716. The SEC maintains an Internet site that contains reports, proxy and information
statements, and other information regarding issuers that file electronically with the SEC. The address of the SEC’s Internet
site is http://www.sec.gov. The address of the Company’s Internet site is http://www.scorpiotankers.com. None of the
information contained on these websites is incorporated into or forms a part of this annual report.

Fleet Development

For information regarding the development of our fleet, including vessel acquisitions and newbuilding deliveries,
please see “Item 5. Operating and Financial Review and Prospects-B. Liquidity and Capital Resources-Capital
Expenditures-Vessel Acquisitions and Dispositions.”

Recent Developments

At the Market Bond Offering Program

In January 2021, we entered into a note distribution agreement or the Distribution Agreement with B. Riley
Securities, Inc., as sales agent, or the Agent, under which we may offer and sell, from time to time, up to an additional
$75.0 million aggregate principal amount of our 7.00% Senior Notes due 2025, or the Additional Notes.

issuance), form a single series of debt securities with the Initial Notes and have the same CUSIP number and be fungible
with, the Initial Notes immediately upon issuance, including for purposes of notices, consents, waivers, amendments and
any other action permitted under the aforementioned indenture. The Senior Notes due 2025 are listed on the NYSE under
the symbol “SBBA.”

Sales of the Additional Notes may be made over a period of time, and from time to time, through the Agent, in
transactions involving an offering of the Senior Notes due 2025 into the existing trading market at prevailing market prices.
Since its inception, we have issued $13.6 million aggregate principal amount of Senior Notes due 2025 under the program,
resulting in $13.3 million in aggregate net proceeds (net of underwriters commissions and expenses).

Declaration of Dividend

On February 17, 2021, our Board of Directors declared a quarterly cash dividend of $0.10 per common share,

which was paid on March 15, 2021 to all shareholders of record as of March 2, 2021.

Convertible Notes due 2022

On March 2, 2021, the conversion rate of the 3.00% Convertible Notes due 2022, or the Convertible Notes due
2022, was adjusted to reflect the payment of a cash dividend on March 15, 2021 to all shareholders of record as of March
2, 2021. The new conversion rate for the Convertible Notes due 2022 is 26.6617 of the Company’s common shares
representing an increase of the prior conversion rate of 0.1806 for each $1,000 principal amount of the Convertible Notes
due 2022.

March 2021 Exchange Offer and New Issuance of Convertible Notes

In March 2021, we completed the exchange of approximately $62.1 million in aggregate principal amount of the
existing Convertible Notes due 2022 for approximately $62.1 million in aggregate principal amount of new 3.00%
Convertible Notes due 2025, or the Convertible Notes due 2025, pursuant to separate, privately negotiated, agreements
with certain holders of the Convertible Notes due 2022, which we refer to as the March 2021 Exchange Offer.
Simultaneously with the March 2021 Exchange Offer, we issued and sold $76.1 million in aggregate principal amount of
Convertible Notes due 2025 pursuant to separate, privately negotiated, agreements with certain investors in a private
offering, which we refer to as the March 2021 Convertible Notes Offering.

The Convertible Notes due 2025 are our senior, unsecured obligations and bear interest at a rate of 3.00% per
year. Interest is payable semi-annually in arrears on May 15 and November 15 of each year, beginning on May 15, 2021.
The Convertible Notes due 2025 will mature on May 15, 2025, unless earlier converted, redeemed or repurchased in
accordance with their terms.

Following the closing of the March 2021 Exchange Offer and the March 2021 Convertible Notes Offering, we had
outstanding approximately $89.1 million and $138.2 million in aggregate principal amount of Convertible Notes due 2022
and Convertible Notes due 2025, respectively. For further information, please see ““Item 5 - Operating and Financial
Review and Prospects - B. Liquidity and Capital Resources - Long Term Debt Obligations and Credit Arrangements”.

Drawdowns from existing facilities

In January 2021, we executed an agreement to extend the availability period for future drawdowns on our BNPP
Sinosure Credit Facility (which is described more fully later in this report) to June 15, 2022 from March 15, 2021. In
March 2021, we drew down $1.9 million from our BNPP Sinosure Credit Facility to partially finance the purchase and
installation of a scrubber on a MR product tanker.

In January 2021, we drew down $10.0 million from our China Huarong Lease Financing (which is described

more fully later in this report) to partially finance the purchase and installations of scrubbers on five MR product tankers.

In January 2021, we drew down $2.1 million from our ING Credit Facility (which is described more fully later in

this report) to partially finance the purchase and installations of scrubbers on two LR2 product tankers.

In January 2021, we drew down an aggregate of $11.4 million, which consisted of (i) $3.8 million under the
BCFL Lease Financing (LR2s); (ii) $5.8 million under the BCFL Lease Financing (MRs) and (iii) $1.9 million under the
$116.0 Million Lease Financing (each financing is described more fully later in this report) to partially finance the purchase
and installations of scrubbers on six product tankers.

2021 AVIC Lease Financing

In February 2021, we closed on the sale and leaseback of two vessels (STI Memphis and STI Soho) with AVIC
International Leasing Co., Ltd. for aggregate proceeds of $44.2 million (the “2021 AVIC Lease Financing”). We repaid the
outstanding indebtedness of $30.0 million related to these vessels on the 2018 NIBC Credit Facility (which is described
more fully later in this report) as part of these transactions. In March 2021, we sold and leased back two additional vessels
(STI Lombard and STI Osceola) under the 2021 AVIC Lease Financing for aggregate proceeds of $53.1 million. We repaid
the outstanding indebtedness of $29.6 million related to these vessels on the ING Credit Facility as part of these
transactions. The 2021 AVIC Lease Financing is described more fully below under “Item 5B - Liquidity and Capital
Resources - Long-Term Debt Obligations and Credit Arrangements”.

2021 $21.0 Million Credit Facility

In February 2021, we drew down $21.0 million on a term loan facility with a European financial institution (the
“2021 $21.0 Million Credit Facility”). The proceeds of this loan facility were used to refinance the outstanding debt on an
LR2 product tanker, STI Madison, that was previously financed under our KEXIM Credit Facility (which is described more
fully later in this report). We repaid the outstanding indebtedness of $15.9 million related to this vessel on the KEXIM
Credit Facility in January 2021 upon its maturity. The 2021 $21.0 Million Credit Facility is described below under “Item
5B - Liquidity and Capital Resources - Long-Term Debt Obligations and Credit Arrangements”.

2021 CMBFL Lease Financing

In March 2021, we received a commitment to sell and leaseback four Handymax vessels (STI Comandante, STI
Brixton, STI Pimlico and STI Finchley) and one MR vessel (STI Westminster) from CMB Financial Leasing Co. Ltd, or
CMBFL (the “2021 CMBFL Lease Financing”). The borrowing amount under the arrangement will be up to $79.1 million
in aggregate. In March 2021 we closed on the sale and leaseback of the four aforementioned Handymax vessels under the
2021 CMBFL Lease Financing for aggregate proceeds of $58.8 million. We repaid the outstanding indebtedness of $46.7
million related to these vessels on the ING Credit Facility (which is described more fully later in this report) as part of
these transactions. The sale and leaseback of the remaining vessel is subject to the execution of definitive documentation.
The 2021 CMBFL Lease Financing is described below under “Item 5B - Liquidity and Capital Resources - Long-Term
Debt Obligations and Credit Arrangements”.

2021 TSFL Lease Financing

In March 2021, we closed on the sale and leaseback of three MR vessels (STI Black Hawk, STI Notting Hill and
STI Pontiac) with Taiping & Sinopec Financial Leasing Co., Ltd. for aggregate proceeds of $57.7 million (the “2021 TSFL
Lease Financing”). We repaid the outstanding indebtedness of $40.7 million related to these three vessels on the ING
Credit Facility as part of these transactions. The 2021 TSFL Lease Financing is described more fully below under “Item 5B
- Liquidity and Capital Resources - Long-Term Debt Obligations and Credit Arrangements”

Exhaust Gas Cleaning System (Scrubber) agreement

In February 2021, we amended an agreement with respect to the purchase of scrubbers on 19 of our vessels to
extend the availability period to purchase these scrubbers. The following table is a timeline of future expected payments
and dates for our commitments to purchase scrubbers (under the amended agreement) and Ballast Water Treatment
Systems or BWTS.

Amounts in thousands of US dollars
Less than 1 month ............................................................................................................................................
1-3 months .......................................................................................................................................................
3 months to 1 year ............................................................................................................................................
1-5 years ..........................................................................................................................................................
5+ years ...........................................................................................................................................................
Total .................................................................................................................................................................

As of
March 30,
2021

154
5,417
6,936
17,884
—
30,391

B. Business Overview

We provide seaborne transportation of refined petroleum products worldwide. As of March 30, 2021, our fleet
consisted of 131 wholly owned, finance leased or bareboat chartered-in tankers (42 LR2, 12 LR1, 63 MR and 14
Handymax) with a weighted average age of approximately 5.2 years, which we refer to collectively as our Operating Fleet.

The following table sets forth certain information regarding our Operating Fleet as of March 30, 2021:

Vessel Name
Owned, finance leased or
bareboat chartered-in vessels

1 STI Brixton
2 STI Comandante
3 STI Pimlico
4 STI Hackney
5 STI Acton
6 STI Fulham
7 STI Camden
8 STI Battersea
9 STI Wembley
10 STI Finchley
11 STI Clapham
12 STI Poplar
13 STI Hammersmith
14 STI Rotherhithe
15 STI Amber
16 STI Topaz
17 STI Ruby
18 STI Garnet
19 STI Onyx
20 STI Fontvieille
21 STI Ville
22 STI Duchessa
23 STI Opera
24 STI Texas City
25 STI Meraux
26 STI San Antonio
27 STI Venere
28 STI Virtus
29 STI Aqua
30 STI Dama
31 STI Benicia
32 STI Regina
33 STI St. Charles
34 STI Mayfair
35 STI Yorkville
36 STI Milwaukee
37 STI Battery
38 STI Soho
39 STI Memphis
40 STI Tribeca
41 STI Gramercy
42 STI Bronx
43 STI Pontiac
44 STI Manhattan
45 STI Queens
46 STI Osceola
47 STI Notting Hill

Year
Built

2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2015
2015
2012
2012
2012
2012
2012
2013
2013
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2015
2015
2015
2015
2015
2015
2015
2015

DWT

Ice class

Employment Vessel type

Scrubber

1A
38,734
1A
38,734
1A
38,734
1A
38,734
1A
38,734
1A
38,734
1A
38,734
1A
38,734
1A
38,734
1A
38,734
1A
38,734
1A
38,734
1A
38,734
38,734
1A
49,990 —
49,990 —
49,990 —
49,990 —
49,990 —
49,990 —
49,990 —
49,990 —
49,990 —
49,990 —
49,990 —
49,990 —
49,990 —
49,990 —
49,990 —
49,990 —
49,990 —
49,990 —
49,990 —
49,990 —
49,990 —
49,990 —
49,990 —
49,990 —
49,990 —
49,990 —
49,990 —
49,990 —
49,990 —
49,990 —
49,990 —
49,990 —
1B
49,687

SHTP (1)
SHTP (1)
SHTP (1)
SHTP (1)
SHTP (1)
SHTP (1)
SHTP (1)
SHTP (1)
SHTP (1)
SHTP (1)
SHTP (1)
SHTP (1)
SHTP (1)
SHTP (1)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)

Handymax
Handymax
Handymax
Handymax
Handymax
Handymax
Handymax
Handymax
Handymax
Handymax
Handymax
Handymax
Handymax
Handymax
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR

N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Yes
Yes
Not Yet Installed
Yes
Yes
Not Yet Installed
Not Yet Installed
Not Yet Installed
Not Yet Installed
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes

Vessel Name

48 STI Seneca
49 STI Westminster
50 STI Brooklyn
51 STI Black Hawk
52 STI Galata
53 STI Bosphorus
54 STI Leblon
55 STI La Boca
56 STI San Telmo
57 STI Donald C Trauscht
58 STI Esles II
59 STI Jardins
60 STI Magic
61 STI Majestic
62 STI Mystery
63 STI Marvel
64 STI Magnetic
65 STI Millennia
66 STI Magister
67 STI Mythic
68 STI Marshall
69 STI Modest
70 STI Maverick
71 STI Miracle
72 STI Maestro
73 STI Mighty
74 STI Maximus
75 STI Excel
76 STI Excelsior
77 STI Expedite
78 STI Exceed
79 STI Executive
80 STI Excellence
81 STI Experience
82 STI Express
83 STI Precision
84 STI Prestige
85 STI Pride
86 STI Providence
87 STI Elysees
88 STI Madison
89 STI Park
90 STI Orchard
91 STI Sloane
92 STI Broadway
93 STI Condotti
94 STI Rose
95 STI Veneto
96 STI Alexis
97 STI Winnie
98 STI Oxford
99 STI Lauren
100 STI Connaught
101 STI Spiga
102 STI Savile Row
103 STI Kingsway

Year
Built
2015
2015
2015
2015
2017
2017
2017
2017
2017
2017
2018
2018
2019
2019
2019
2019
2019
2019
2019
2019
2019
2019
2019
2020
2020
2020
2020
2015
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2014
2014
2014
2014
2014
2014
2014
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015

DWT

Ice class

Employment Vessel type

49,990 —
49,687
1B
49,990 —
49,990 —
49,990 —
49,990 —
49,990 —
49,990 —
1B
49,990
1B
49,990
1B
49,990
49,990
1B
50,000 —
50,000 —
50,000 —
50,000 —
50,000 —
50,000 —
50,000 —
50,000 —
50,000 —
50,000 —
50,000 —
50,000 —
50,000 —
50,000 —
50,000 —
74,000 —
74,000 —
74,000 —
74,000 —
74,000 —
74,000 —
74,000 —
74,000 —
74,000 —
74,000 —
74,000 —
74,000 —
109,999 —
109,999 —
109,999 —
109,999 —
109,999 —
109,999 —
109,999 —
109,999 —
109,999 —
109,999 —
109,999 —
109,999 —
109,999 —
109,999 —
109,999 —
109,999 —
109,999 —

SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SMRP (2)
SLR1P (3)
SLR1P (3)
SLR1P (3)
SLR1P (3)
SLR1P (3)
SLR1P (3)
SLR1P (3)
SLR1P (3)
SLR1P (3)
SLR1P (3)
SLR1P (3)
SLR1P (3)
SLR2P (4)
SLR2P (4)
SLR2P (4)
SLR2P (4)
SLR2P (4)
SLR2P (4)
SLR2P (4)
SLR2P (4)
SLR2P (4)
SLR2P (4)
SLR2P (4)
SLR2P (4)
SLR2P (4)
SLR2P (4)
SLR2P (4)
SLR2P (4)
SLR2P (4)

MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
LR1
LR1
LR1
LR1
LR1
LR1
LR1
LR1
LR1
LR1
LR1
LR1
LR2
LR2
LR2
LR2
LR2
LR2
LR2
LR2
LR2
LR2
LR2
LR2
LR2
LR2
LR2
LR2
LR2

Scrubber
Yes
Yes
Yes
Yes
Yes
Not Yet Installed
Yes
Yes
Not Yet Installed
Not Yet Installed
Not Yet Installed
Not Yet Installed
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Not Yet Installed
Not Yet Installed
Not Yet Installed
Not Yet Installed
Yes
Yes
Not Yet Installed
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes

Vessel Name
104 STI Carnaby
105 STI Solidarity
106 STI Lombard
107 STI Grace
108 STI Jermyn
109 STI Sanctity
110 STI Solace
111 STI Stability
112 STI Steadfast
113 STI Supreme
114 STI Symphony
115 STI Gallantry
116 STI Goal
117 STI Nautilus
118 STI Guard
119 STI Guide
120 STI Selatar
121 STI Rambla
122 STI Gauntlet
123 STI Gladiator
124 STI Gratitude
125 STI Lobelia
126 STI Lotus
127 STI Lily
128 STI Lavender
129 STI Beryl
130 STI Le Rocher
131 STI Larvotto

Year
Built
2015
2015
2015
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2017
2017
2017
2017
2017
2019
2019
2019
2019
2013
2013
2013

Ice class

DWT
109,999 —
109,999 —
109,999 —
109,999 —
109,999 —
109,999 —
109,999 —
109,999 —
109,999 —
109,999 —
109,999 —
113,000 —
113,000 —
113,000 —
113,000 —
113,000 —
109,999 —
109,999 —
113,000 —
113,000 —
113,000 —
110,000 —
110,000 —
110,000 —
110,000 —
49,990 —
49,990 —
49,990 —

Employment Vessel type

SLR2P (4)
SLR2P (4)
SLR2P (4)
SLR2P (4)
SLR2P (4)
SLR2P (4)
SLR2P (4)
SLR2P (4)
SLR2P (4)
SLR2P (4)
SLR2P (4)
SLR2P (4)
SLR2P (4)
SLR2P (4)
SLR2P (4)
SLR2P (4)
SLR2P (4)
SLR2P (4)
SLR2P (4)
SLR2P (4)
SLR2P (4)
SLR2P (4)
SLR2P (4)
SLR2P (4)
SLR2P (4)
SMRP (2)
SMRP (2)
SMRP (2)

LR2
LR2
LR2
LR2
LR2
LR2
LR2
LR2
LR2
LR2
LR2
LR2
LR2
LR2
LR2
LR2
LR2
LR2
LR2
LR2
LR2
LR2
LR2
LR2
LR2
MR
MR
MR

Scrubber
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Not Yet Installed
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Not Yet Installed (5)
Not Yet Installed (5)
Not Yet Installed (5)

Total owned, finance leased
and bareboat charter-in fleet
DWT

9,223,160

(1) This vessel operates in the Scorpio Handymax Tanker Pool, or SHTP. SHTP is a Scorpio Pool and is operated by

Scorpio Commercial Management S.A.M., or SCM. SHTP and SCM are related parties to the Company.

(2) This vessel operates in the Scorpio MR Pool, or SMRP. SMRP is a Scorpio Pool and is operated by SCM. SMRP is a

related party to the Company.

(3) This vessel operates in the Scorpio LR1 Pool, or SLR1P. SLR1P is a Scorpio Pool and is operated by SCM. SLR1P is

a related party to the Company.

(4) This vessel operates in the Scorpio LR2 Pool, or SLR2P. SLR2P is a Scorpio Pool and is operated by SCM. SLR2P is

a related party to the Company.

(5) In April 2017, we sold and leased back this vessel, on a bareboat basis, for a period of up to eight years for $8,800 per
day. The sales price was $29.0 million and we have the option to purchase this vessel beginning at the end of the fifth
year of the agreement through the end of the eighth year of the agreement, at market based prices. Additionally, a
deposit of $4.35 million was retained by the buyer and will either be applied to the purchase price of the vessel if a
purchase option is exercised, or refunded to us at the expiration of the agreement.

Chartering Strategy

Generally, we operate our vessels in commercial pools operated by related entities, on time charters or in the spot
market. The overall mix of how our vessels are employed varies from time to time based on many factors including our
view of the future market conditions.

Commercial Pools

Time Charters

Time charters give us a fixed and stable cash flow for a known period of time. Time charters also mitigate in part
the seasonality of the spot market business, which is generally weaker in the second and third quarters of the year. In the
future, we may opportunistically look to enter our vessels into time charter contracts. We may also enter into time charter
contracts with profit sharing agreements, which enable us to benefit if the spot market increases.

Spot Market

A spot market voyage charter is generally a contract to carry a specific cargo from a load port to a discharge port
for an agreed freight per ton of cargo or a specified total amount. Under spot market voyage charters, we pay voyage
expenses such as port, canal and bunker costs. Spot charter rates are volatile and fluctuate on a seasonal and year-to-year
basis. Fluctuations derive from imbalances in the availability of cargoes for shipment and the number of vessels available
at any given time to transport these cargoes. Vessels operating in the spot market generate revenue that is less predictable
but may enable us to capture increased profit margins during periods of improvements in tanker rates. We also consider
short-term time charters (with initial terms of less than one year) as spot market voyages.

Management of our Fleet

Commercial and Technical Management

Our vessels are commercially managed by SCM and technically managed by SSM pursuant to the terms and
conditions set forth under a revised master agreement which was effective as from January 1, 2018 (the “Revised Master
Agreement”). The Revised Master Agreement may be terminated by either party upon 24 months’ notice, unless terminated
earlier in accordance with the provisions of the Revised Master Agreement. In the event of the sale of one or more vessels,
a notice period of three months and a payment equal to three months of management fees will apply, provided that the
termination does not amount to a change in control, including a sale of all or substantially all of our vessels, in which case a
payment equal to 24 months of management fees will apply. SCM and SSM are related parties of ours. We expect that
additional vessels that we may acquire in the future will also be managed under the Revised Master Agreement or on
substantially similar terms.

SCM’s services include securing employment, in the spot market and on time charters, for our vessels. SCM also
manages the Scorpio Pools. When our vessels are operating in one of the Scorpio Pools, SCM, the pool manager, charges
fees of $300 per vessel per day with respect to our LR1 vessels, $250 per vessel per day with respect to our LR2 vessels, and
$325 per vessel per day with respect to each of our Handymax and MR vessels, plus 1.50% commission on gross revenues
per charter fixture. These are the same fees that SCM charges other vessel owners in these pools, including third-party
owned vessels. For commercial management of our vessels that are not operating in any of the Scorpio Pools, we pay SCM a
fee of $250 per vessel per day for each LR1 and LR2 vessel and $300 per vessel per day for each Handymax and MR vessel,
plus 1.25% commission on gross revenues per charter fixture. In September 2018, we entered into an agreement with SCM
whereby SCM reimbursed a portion of the commissions that SCM charges our vessels to effectively reduce such
commissions to 0.85% of gross revenue per charter fixture, effective from September 1, 2018 and ending on June 1, 2019.

SSM’s services include day-to-day vessel operations, performing general maintenance, monitoring regulatory and
classification society compliance, customer vetting procedures, supervising the maintenance and general efficiency of
vessels, arranging the hiring of qualified officers and crew, arranging and supervising drydocking and repairs, purchasing
supplies, spare parts and new equipment for vessels, appointing supervisors and technical consultants and providing
technical support. We pay SSM an annual fee of $175,000 plus additional amounts for certain itemized services per vessel
to provide technical management services for each of our owned vessels.

Amended Administrative Services Agreement

We have an Amended Administrative Services Agreement with Scorpio Services Holding Limited (“SSH”), or
our Administrator, for the provision of administrative staff and office space, and administrative services, including
accounting, legal compliance, financial and information technology services. SSH is a related party to us. We reimburse
our Administrator for the reasonable direct or indirect expenses it incurs in providing us with the administrative services
described above. The services provided to us by our Administrator may be sub-contracted to other entities within Scorpio.

On September 29, 2016, we agreed to amend the then current administrative services agreement with SSH to
eliminate the fee equal to 1% of the gross purchase or sale price that was payable upon the consummation of any such
purchase or sale. This fee was eliminated for all vessel purchase or sale agreements entered into after September 29, 2016.
During the year ended December 31, 2020, no fees were paid to SSH for the sale or purchase of vessels.

Further, pursuant to our Amended Administrative Services Agreement, our Administrator, on behalf of itself and
other members of Scorpio, has agreed that it will not directly own product or crude tankers ranging in size from 35,000 dwt
to 200,000 dwt.

Our Amended Administrative Services Agreement may be terminated by us upon two years’ notice.

The International Oil Tanker Shipping Industry

All the information and data presented in this section, including the analysis of the oil tanker shipping industry,
has been provided by Drewry. The statistical and graphical information contained herein is drawn from Drewry’s
database and other sources. According to Drewry: (i) certain information in Drewry’s database is derived from estimates
or subjective judgments; (ii) the information in the databases of other maritime data collection agencies may differ from
the information in Drewry’s database; and (iii) while Drewry has taken reasonable care in the compilation of the
statistical and graphical information and believes it to be accurate and correct, data compilation is subject to limited audit
and validation procedures.

Oil Tanker Demand

In broad terms, demand for oil products traded by sea is primarily affected by global and regional economic
conditions, as well as other factors such as changes in the location of productive capacity, and variations in regional prices.
Demand for shipping capacity is a product of the physical quantity of the cargo (measured, depending on the cargo in terms
of tons or cubic metrics), together with the distance the cargo is carried. Demand cycles move broadly in line with
developments in the global economy, with growth rate of demand for products slowing significantly and becoming
negative in some years in the period immediately after the onset of the global economic downturn in late 2008, before
recovering gradually from 2011 with general improvement in the global macro-economic environment. Low crude prices
between 2015 and 2017 induced greater consumption, which led to increased seaborne trade of crude oil as well as refined
products. Growth in seaborne trade slowed in 2018 because of inventory drawdown in crude as well as refined products. In
2019, decline in seaborne trade was on account of lower refinery runs and weaker economic growth. Refineries underwent
maintenance in 1H19 to prepare for LSFO and MGO demand related with IMO 2020 regulations on the control of Sulphur
emission, while refinery runs were lower in 2H19 due to weaker economic growth.

The outbreak of COVID-19 severely affected the demand for crude oil and refined petroleum products in 2020 as
several major economies enforced lockdowns to contain the spread of the virus and mitigate the damage caused by the
pandemic. Accordingly, the world seaborne tanker trade, including crude oil, oil products, and chemicals fell 8.5% to 3,109
million tons. The decline in trade from 3,396 million tons in 2019 was mainly led by a steep fall of 8.5% and 9.9% in both
crude oil and oil products trade to a total of 1,886 million tons and 934 million tons respectively in 2020 due to demand
destruction following mobility restrictions enforced by state authorities in several major economies and can be seen as an
outlier. Oil demand and trade started recovering gradually in 2H20 with easing lockdown restriction in major parts of the
world. Moreover, several countries have authorized emergency use of various COVID-19 vaccines, and the widespread
availability of these vaccines would play a key role in containing the pandemic, which will support the seaborne trade and
tanker demand.

In 2020, 3,109 million tons of crude oil, products and vegetable oils/chemicals were moved by sea. Of this, crude
shipments constituted 1,886 million tons of cargo, products 934 million tons, with the balance made up of other bulk
liquids, including vegetable oils, chemicals and associated products.

World Seaborne Tanker Trade

Crude Oil

Refined Products

Veg Oils/
Chemicals

Total

Year
2002 ...................................
2003 ...................................
2004 ...................................
2005 ...................................
2006 ...................................
2007 ...................................
2008 ...................................
2009 ...................................
2010 ...................................
2011 ...................................
2012 ...................................
2013 ...................................
2014 ...................................
2015 ...................................
2016 ...................................
2017 ...................................
2018 ...................................
2019* .................................
2020* .................................
CAGR (2015-2020) ...........
CAGR (2010-2020) ...........

Mill T
1,756
1,860
1,963
1,994
1,996
2,008
2,014
1,928
1,997
1,941
1,988
1,920
1,904
1,974
2,050
2,109
2,096
2,061
1,886
(0.9)%
(0.6)%

% Y-o-Y Mill T
519
0.3 %
550
5.9 %
599
5.6 %
646
1.6 %
677
0.1 %
723
0.6 %
765
0.3 %
777
(4.2)%
810
3.6 %
860
(2.8)%
859
2.4 %
904
(3.4)%
914
(0.9)%
963
3.7 %
3.9 %
999
2.9 % 1,043
(0.6)% 1,055
(1.7)% 1,036
934
(8.5)%
(0.6)%
1.4 %

0.3 %
6.0 %
8.8 %
8.0 %
4.7 %
6.8 %
5.8 %
1.6 %
4.3 %
6.3 %
(0.2)%
5.3 %
1.1 %
5.3 %
3.8 %
4.3 %
1.1 %
(1.8)%
(9.9)%

% Y-o-Y Mill T
122
129
141
156
166
176
179
202
217
228
240
252
252
266
267
283
293
300
289
1.7%
2.9%

7.0 %
5.9 %
9.5 %
10.5 %
6.5 %
5.9 %
1.8 %
12.9 %
7.4 %
5.1 %
5.3 %
5.1 %
(0.1)%
5.4 %
0.6 %
5.8 %
3.4 %
2.4 %
(3.6)%

% Y-o-Y Mill T
2,396
2,538
2,703
2,797
2,839
2,907
2,957
2,907
3,024
3,029
3,087
3,077
3,070
3,202
3,317
3,435
3,443
3,396
3,109
(0.6)%
0.3 %

% Y-o-Y
0.6 %
5.9 %
6.5 %
3.5 %
1.5 %
2.4 %
1.7 %
(1.7)%
4.0 %
0.2 %
1.9 %
(0.3)%
(0.2)%
4.3 %
3.6 %
3.6 %
0.2 %
(1.4)%
(8.5)%

* Provisional estimate
Source: GTIS, Drewry

The volume of oil moved by sea was affected by the economic recession in 2008 and 2009, but since then,
renewed growth in the world economy and in oil demand has had a positive impact on seaborne trade. Oil demand has
benefited from economic growth in Asia, especially in China, where oil consumption increased by a compound average
growth rate (CAGR) of 4.5% between 2010 and 2020 to touch 13.8 million barrels per day (mbpd). Low per capita oil
consumption in developing countries, such as China and India, compared with the developed world provides scope for
higher oil consumption in these economies. Conversely, oil consumption in developed OECD economies has been in
decline for much of the last decade, but in 2015, this trend was reversed for the United States (U.S.) and some European
countries primarily due to the positive impact of lower oil prices on demand for products such as gasoline. Oil demand in
OECD economies declined at a CAGR of 1.9% from 46.4 mbpd in 2015 to 42.2 mbpd in 2020. Excluding 2020 when
COVID-19 severely affected crude oil demand, crude oil consumption during 2015-19 increased at a CAGR of 0.7% to
47.7 mbpd in OECD countries. Provisional data suggests that oil demand of OECD America increased 1.1 mbpd during
2015-2019 to 25.7 mbpd due to improved demand in the US, Canada, and Mexico. In 2020, oil consumption for OECD
countries declined 11.6% yoy to 42.2 mbpd.

World Oil Consumption: 1992-2020*
(Million bpd)

* Provisional estimate
Source: IEA, Drewry

Provisional estimates suggest that world oil demand in 2020 was 91.2 mbpd, a decline of 8.8% yoy from 2019,
and between 2010 and 2020, world oil demand grew at a CAGR of 0.3%. Excluding the outlier year of 2020, world oil
demand grew at a CAGR of 1.4% during 2010-2019. Even though global oil demand was hampered in 2020, we expect it
to bounce back strongly in 2021 as the global economy revives. According to the IMF, the global economy is projected to
grow at 5.5% in 2021 after shrinking 3.5% in 2020, while China, the key growth driver of tankers, is expected to grow
8.1% in 2021 after growing at 2.3% in 2020

Oil Product Exports & Imports

Products trades have received a boost in the last decade as a result of developments in E&P activity in the U.S. As
a result of the development of shale oil deposits, domestic crude oil production increased at a CAGR of 9.5% between
2008 and 2015 to 9.4 mbpd. Horizontal drilling and hydraulic fracturing have triggered a shale oil revolution and rising
crude oil production has also ensured the availability of cheaper feedstocks to local refineries. As a result, the U.S. has
become a major net exporter of products.

Oil Product Exports - Major Growth Regions
(Million bpd)

Source: JODI, Drewry

In a short span of time, the U.S. has become the largest exporter of refined products in the world, with supplies
from U.S. Gulf Coast terminals heading to most parts of the globe. By way of illustration, U.S. product exports to Latin
America have grown 2.2x between 2010 and 2019 to 1.7 mbpd. Most of these exports were carried by MR product tankers,
which constitute about 55% of global product tanker fleet capacity and have been the mainstay of seaborne trade in refined
petroleum products. However, lower crude oil prices in 2015 and 2016 adversely impacted U.S. shale oil producers, and
accordingly, crude production in the region was on the decline from May 2015 to September 2016. Nevertheless, the
production cut by OPEC members from January 2017 came as a relief for domestic producers and U.S. crude production
continued to increase; the U.S. became the largest crude producer in the world in September 2018. U.S. crude production
increased at a CAGR of 6.7% during 2015-19 to 12.2 mbpd. U.S. crude oil production declined 7.7% yoy in 2020 to 11.3
mbpd following the sharp decline in crude oil prices amid weak global oil demand due to the pandemic.

The shift in the location of global oil production is also being accompanied by a shift in the location of global
refinery capacity and throughput. In short, capacity and throughput are moving from the developed to the developing
world. Between 2010 and 2019, the total OECD refining throughput registered a marginal increase of 0.4% CAGR to 38.1
mbpd, largely because of cutbacks in OECD Europe, but the throughput in OECD Americas during the same period grew
at a CAGR of 0.7% to 19.1 mbpd. Refinery throughput of OECD countries declined 13.1% yoy to 33.1 mbpd in 2020
mainly because of the pandemic which hit global oil demand and higher inventory levels. In 2020, refining throughput of
OECD countries accounted for 44.5% of global refinery throughput.

Asia (excluding China) and the Middle East added about 2.57 mbpd refinery capacity during 2018-2020, a
substantial part of which is destined for international markets. Nearly 0.55 mbpd of new refining capacity in the Middle
East and another 0.45 mbpd in Asia (excluding China) came online in 2019, taking the combined new refining capacity in
the Middle East and Asia (excluding China) to 1.0 mbpd. China’s refining capacity increased 1.1 mbpd in 2019 and 0.31

mbpd in 2020. In the Middle East and Asia (excluding China) refining capacity increased 0.57 mbpd and 0.16 mbpd
respectively in 2020, but net refining capacity declined 0.02 mbpd in OECD America and 0.04 mbpd in non-OECD Europe
during the same period. As a result of these developments, countries such as India, China and Saudi Arabia have
consolidated their positions as major exporters of products. Export-oriented refineries in India and the Middle East,
coupled with the closure of refining capacity in the developed world, have promoted long-haul shipments to cater to the
demand for products.

Export-oriented refineries in India and the Middle East, coupled with the closure of refining capacity in the

developed world, have promoted long-haul shipments to meet product demand.

Oil Product Imports - Major Growth Regions
(Million bpd)

Current Tanker Fleet

Source: JODI, Drewry

Crude oil is transported in uncoated vessels, which range upwards in size from 55,000 dwt. Products are carried
predominantly in coated ships and include commodities such as gas oil, gasoline, jet fuel, kerosene and naphtha (often
referred to as ‘clean products’), and fuel oil and vacuum gas oil (often referred to as ‘dirty products’). In addition, some
product tankers are also able to carry bulk liquid chemicals and edible oils and fats if they have the appropriate
International Maritime Organization (IMO) certification. These vessels are classified as product/chemical tankers, and as
such, they represent a swing element in supply, having the ability to move between trades depending on market conditions.
Clean petroleum products are therefore carried by non-IMO product tankers and IMO certified product/chemical tankers.
IMO tankers will also carry, depending on their tank coatings, a range of other products including organic and inorganic
bulk liquid chemicals, vegetable oils and animal fats and special products such as molasses.

Global tanker fleet expanded 2.4% yoy (based on capacity) in the last one year mainly supported by high
deliveries and muted demolitions. As of February 28, 2021, the total oil tanker fleet (crude, products and product/chemical
tankers) consisted of 5,354 ships with a combined capacity of 604.8 mdwt.

The Oil Tanker Fleet - February 28, 2021

Deadweight Tons
(Dwt)

Number of
Vessels

% of
Fleet

Capacity
(m Dwt)

% of
Fleet

Vessel Type
Crude Tankers(1)
VLCC/ULCC .........................................
Suezmax .................................................
Aframax .................................................
Panamax .................................................
Handymax ..............................................
Handy.....................................................
Handy.....................................................
Total Fleet .............................................

Product Tankers
Long Range 3 (LR3) ..............................
Long Range 2 (LR2) ..............................
Long Range 1 (LR1) ..............................
Medium Range 2 (MR2) ........................
Medium Range 1 (MR1) ........................
Handy.....................................................
Total Fleet .............................................

Product/Chemical Tankers(2)
Long Range 3 (LR3) ..............................
Long Range 2 (LR2) ..............................
Long Range 1 (LR1) ..............................
Medium Range 2 (MR2) ........................
Medium Range 1 (MR1) ........................
Handy.....................................................
Total Fleet .............................................

Product & Product/Chemical Fleet
Long Range 3 (LR3) ..............................
Long Range 2 (LR2) ..............................
Long Range 1 (LR1) ..............................
Medium Range 2 (MR2) ........................
Medium Range 1 (MR1) ........................
Handy.....................................................
Total Fleet .............................................

200,000+
120-199,999
80-119,999
55-79,999
40-54,999
25-39,999
10-24,999

120-199,999
80-119,999
55-79,999
40-54,999
25-39,999
10-24,999

Crude, Product and Product/Chemical Tanker Fleet
VLCC/ULCC .........................................
Suezmax/LR3 ........................................
Aframax/LR2 .........................................
Panamax/LR1 ........................................
Handy/Medium Range ...........................
Handy/Medium Range ...........................
Handy/Handymax ..................................
Total Fleet .............................................

200,000+
120-199,999
80-119,999
55-79,999
40-54,999
25-39,999
10-54,999

(1) Included shuttle tankers and tankers on storage duties
(2) Excludes pure chemical tankers

Source: Drewry

835
606
668
81
7
5
52
2,254

21
385
350
443
117
178
1,494

—
3
34
1,237
294
38
1,606

21
388
384
1,680
411
216
3,100

835
627
1,056
465
1,687
416
268
5,354

37.0
26.9
29.6
3.6
0.3
0.2
2.3
100.0

1.4
25.8
23.4
29.7
7.8
11.9
100.0

—
0.2
2.1
77.0
18.3
2.4
100.0

0.7
12.5
12.4
54.2
13.3
7.0
100.0

15.6
11.7
19.7
8.7
31.5
7.8
5.0
100.0

257.4
94.5
73.0
5.6
0.3
0.2
0.8
431.8

3.3
42.3
25.7
20.8
4.0
2.6
98.7

—
0.3
2.5
60.0
11.0
0.6
74.4

3.3
42.6
28.2
80.8
14.9
3.1
172.9

257.4
97.8
115.6
33.8
81.1
15.1
4.0
604.8

59.6
21.9
16.9
1.3
0.1
—
0.2
100.0

3.4
42.8
26.1
21.1
4.0
2.6
100.0

—
0.4
3.3
80.7
14.8
0.8
100.0

1.9
24.6
16.3
46.7
8.6
1.8
100.0

42.6
16.2
19.1
5.6
13.4
2.5
0.7
100.0

The world product tanker fleet as on February 28, 2021, consisted of 3,100 vessels with a combined capacity of
173.0 mdwt. The breakdown of the fleet by type (crude, product and product/chemical) and by size, together with the
orderbook for newbuilding tankers as on February 28, 2021, is illustrated in the table below.

The World Tanker Orderbook(1) - February 28, 2021

Vessel Type

Deadweight Existing Fleet

Orderbook

Orderbook
% Fleet

2021

2022

2023

(Dwt)

m Dwt No

Dwt No

m Dwt No

m Dwt

Crude Tankers(1)
VLCC/ULCC ............................ 200,000+
Suezmax ................................... 120-199,999
Aframax .................................... 80-119,999
Panamax ................................... 55-79,999
Handymax................................. 40-54,999
Handy ....................................... 25-39,999
Handy ....................................... 10-24,999
Total Fleet................................

Product Tankers
Long Range 3 (LR3) ................ 120-199,999
Long Range 2 (LR2) ................ 80-119,999
Long Range 1 (LR1) ................ 55-79,999
Medium Range 2 (MR2) .......... 40-54,999
Medium Range 1 (MR1) .......... 25-39,999
Handy ....................................... 10-24,999
Total Fleet................................

Product/Chemical Tankers(2)
Long Range 3 (LR3) ................ 120-199,999
Long Range 2 (LR2) ................ 80-119,999
Long Range 1 (LR1) ................ 55-79,999
Medium Range 2 (MR2) .......... 40-54,999
Medium Range 1 (MR1) .......... 25-39,999
Handy ....................................... 10-24,999
Total Fleet................................

Product & Product/Chemical Fleet
Long Range 3 (LR3) ................ 120-199,999
Long Range 2 (LR2) ................ 80-119,999
Long Range 1 (LR1) ................ 55-79,999
Medium Range 2 (MR2) .......... 40-54,999
Medium Range 1 (MR1) .......... 25-39,999
Handy ....................................... 10-24,999
Total Fleet................................

835.0
606.0
668.0
81.0
7.0
5.0
52.0
2,254.0

21.0
385.0
350.0
443.0
117.0
178.0
1,494.0

—
3.0
34.0
1,237.0
294.0
38.0
1,606.0

21.0
388.0
384.0
1,680.0
411.0
216.0
3,100.0

Crude, Product and Product/Chemical Tanker Fleet
VLCC/ULCC ............................ 200,000+
Suezmax/LR3 ........................... 120-199,999
Aframax/LR2 ............................ 80-119,999
Panamax/LR1 ........................... 55-79,999
Handy/Medium Range ............. 40-54,999
Handy/Medium Range ............. 25-39,999
Handy/Handymax ..................... 10-54,999
Total Fleet................................

835.0
627.0
1,056.0
465.0
1,687.0
416.0
268.0
5,354.0

257.4
94.5
73.0
5.6
0.3
0.2
0.8
431.8

72.0
53.0
51.0
1.0
—
—
—
177.0

21.9
8.6
8.2
8.7
5.8
7.6
1.2
0.1
— —
— —
— —
7.9

36.0

3.3
42.3
25.7
20.8
4.0
2.6
98.7

—
0.3
2.5
60.0
11.0
0.6
74.4

3.3
42.6
28.2
80.8
14.9
3.1
172.9

257.4
97.8
115.6
33.8
81.1
15.1
4.0
604.8

12.0
36.0
—
25.0
—
10.0
83.0

—
—
1.0
83.0
13.0
—
97.0

12.0
36.0
1.0
108.0
13.0
10.0
180.0

72.0
65.0
87.0
2.0
108.0
13.0
10.0
357.0

57.1
1.4
4.0
9.4
— —
5.6
1.3
— —
5.6
0.2
5.6
6.9

— —
— —
2.9
0.1
6.7
4.1
0.5
4.4
— —
6.0
4.7

1.4
4.0
0.1
5.4
0.5
0.2
11.6

21.9
9.7
9.8
0.1
5.4
0.5
0.2
47.6

57.1
9.3
0.3
6.4
3.2
4.6
5.8

8.6
10.4
8.2
0.4
6.4
3.1
3.7
6.7

8.5
8.7
7.9
1.2
—
—
—
8.3

43.4
9.5
—
6.0
—
6.3
7.0

—
—
3.1
6.9
4.1
—
6.3

43.4
9.5
0.3
6.7
3.0
5.1
6.7

8.5
9.9
8.5
0.4
6.7
3.0
4.0
7.9

Included shuttle tankers and tankers on storage duties

(1)
(2) Product and product/chemical tankers only, excludes pure chemical tankers

Source: Drewry

29.0
14.0
25.0

8.9
2.2
2.8

— —
— —
— —
13.9
68

38.0
37.0
24.0
1.0
—
—
—
100

24.0

11.0

— — 6.0
8.0
2.7
— —
0.6
— —
0.2
3.5

11.0
—
—
25.0

10.0
45.0

— —
— —
0.1
1.0
2.7
55.0
0.4
12.0
— —
3.2

68.0

—
—
—
25.0
1.0
—
26.0

— — 6.0
8.0
2.7
—
0.1
36.0
3.3
1.0
0.4
—
0.2
51.0
6.7

24.0
1.0
66.0
12.0
10.0
113.0

29.0
14.0
49.0
1.0
66.0
12.0
10
181.0

38.0
8.9
43.0
2.2
32.0
5.5
1.0
0.1
36.0
3.3
1.0
0.4
0.2
0
20.6 151.0

11.5
5.7
2.7
0.1
—
—
—
20

0.7
0.9
—
0.6
—
—
2.2

—
—
—
1.3
—
—
1.3

0.7
0.9
—
1.8
—
—
3.4

11.5
6.4
3.6
0.1
1.8
—
—
23.4

5.0
2.0
2.0

—
—
—
9

6.0
4.0

3.0
—
—
13.0

—
—
—
3.0
—
—
3.0

6.0
4.0
—
6.0
—
—
16.0

5.0
8.0
6.0
—
6.0
—
0
25.0

1.5
0.3
0.2

—
—
—
2

0.7
0.4
—
0.2
—
—
1.3

—
—
—
0.1
—
—
0.1

0.7
0.4
—
0.3
—
—
1.4

1.5
1.0
0.7
—
0.3
—
—
3.5

As of February 28, 2021, the orderbook for product and product/chemical tankers of above 10,000 dwt comprised
180 vessels with combined capacity of 11.6 mdwt, equivalent to 6.7% of the existing fleet in capacity terms. Based on the
total orderbook and scheduled deliveries, nearly 6.6 mdwt is expected to be delivered in the remaining months of 2021,
followed by 3.5 mdwt in 2022 and the remaining 1.4 mdwt in 2023. In recent years however the orderbook has been
affected by the non-delivery of vessels (sometimes referred to as ‘slippage’). Some of this slippage resulted from delays,
either through mutual agreement or through shipyard problems, while others were due to vessel cancellations. Slippage is
likely to remain an issue going forward, and as such, it will have a moderating effect on growth in the product tanker fleet
over the next three years. In 2020, deliveries were the lowest in five years due to disruption in yard operations in Asian
countries following the outbreak of COVID-19 and weak refined products demand.

Two other important factors are likely to affect product tanker supply in the future. The first is the requirement to
retrofit Ballast Water Management Systems (BWTS) to existing vessels. In February 2004, the IMO adopted the
International Convention for the Control and Management of Ships’ Ballast Water and Sediments. The IMO Ballast Water
Management (BWM) Convention contains an environmentally protective numeric standard for the treatment of a ship’s
ballast water before it is discharged. This standard, detailed in Regulation ‘D-2’ of the BWM Convention, sets out the
numbers of organisms allowed in specific volumes of treated discharge water. The IMO ‘D-2’ standard is also the standard
that has been adopted by the U.S. Coast Guard’s ballast water regulations and the U.S. EPA’s Vessel General Permit. The
BWM Convention also contains an implementation schedule for the installation of IMO member state type approved
treatment systems in existing ships and in new vessels, requirements for the development of vessel ballast water
management plans, requirements for the safe removal of sediments from ballast tanks, and guidelines for the testing and type
approval of ballast water treatment technologies. In July 2017, the IMO extended the regulatory requirement of compliance
to the BWM Convention from September 8, 2017 to September 8, 2019. Vessels trading internationally will have to comply
with the BWM Convention upon their next special survey after that date. As an example for an LR2 tanker, the estimated
retrofit cost could be in the range of US$1.3 to US$1.8 million per vessel, including labour. Expenditure of this kind has
become another factor impacting the decision to scrap older vessels after BWM Convention came into force in 2019.

The second factor that is likely to impact future vessel supply is the drive to control sulphur emission from ships.
Heavy fuel oil (HFO) has been the main fuel of the shipping industry for many years. It is relatively inexpensive and
widely available, but it is ‘dirty’ from an environmental point of view. The sulfur content of HFO consumed by ships has
been about 3.5% until the end of 2019. It is the reason that maritime shipping accounts for 8% of global emissions of sulfur
dioxide (SO2), an important source for acid rain, as well as respiratory diseases. In some port cities, such as Hong Kong,
shipping is the largest single source of SO2 emissions, as well as emissions of particulate matter (PM), which are directly
tied to the sulfur content of the fuel. One estimate suggests that PM emissions from maritime shipping led to 87,000
premature deaths worldwide in 2012.

The IMO, the governing body of international shipping, has made a decisive effort to diversify the industry away
from HFO into cleaner fuels with less harmful effects on the environment and human health. Effective in 2015, ships
operating within the Emission Control Areas (ECAs) covering the Economic Exclusive Zone of North America, the Baltic
Sea, the North Sea, and the English Channel are required to use marine gas oil with allowable sulfur content up to 0.1%.

In order to reduce the emission of air pollutants from ships in key areas of China, the Ministry of Transport issued
stricter emission control area regulations in their territorial waters. Beginning on 1 January 2020, ships entering inland
waterways, including the Yangtze River and Xijiang River have to adhere to a strict requirement of 0.1% sulphur content.
From 1 January 2022, ships will be required to comply with the 0.1% sulphur content requirement when entering the
Hainan coastal ECA. In the meantime, China is considering adopting more stringent emission control requirements, such as
to implement the 0.1% sulphur content limit requirement in all coastal waters beginning January 1, 2025.

The IMO implemented the emission control regulation globally with effect from January 1, 2020. It stipulates that
ships sailing outside ECAs will switch to an alternative fuel with permitted sulphur content up to 0.5% or will retrofit
scrubbers in order to reduce emissions. This has created demand for Very Low Sulphur Fuel Oil (VLSFO) with 0.5%
sulphur content. The price of low Sulphur fuel oil is considerably higher compared to HFO with 3.5% sulphur content.
Some owners of large vessels have also opted for scrubber retrofitting on existing ships. As such the emission regulation
may be another factor hastening the eventual demolition of older ships. Within the context of the wider market, increased
vessel scrapping is a positive development as it helps to counterbalance new ship deliveries and moderates fleet growth.

Starting 2020, high and low sulfur fuel demand (originating from the shipping industry) reported significant
variation. The fuel price spread largely oscillated between US$300 and US$350 per metric ton during the initial days and
hovered around US$190-200 per tonne in February 2020. Despite the initial speculation, the shipping industry did not see
any systemic shortage of the new low sulfur fuel, which came out as a relief. The premium commanded by low sulphur fuel
reduced to around US$120 per ton by January 2021 as the availability of compliant fuel is not an issue due to reduced
demand and increased supply across major bunkering ports. The narrowing premium diluted shipowners’ incentive to
invest in scrubbers and prolonged the period for the return on investment for those who had already invested in scrubbers.
Overall, installation of scrubbers and new fuel regulations turned out to be a non-event in the backdrop of COVID-19 and
low fuel prices.

As of February 28, 2021, 28.0% of the existing tanker fleet based on capacity (includes crude, product and
product/chemical Tanker Fleet) are either already fitted with scrubbers or are awaiting scrubber retrofit. VLCC/ULCC
constitutes the largest proportion with 41.2%, followed by Suezmax/LR3 (26.2%) and Aframax/LR2 (18.9%). Altogether,
169.3 mdwt (1,007 vessels) of tanker capacity have either scrubber installed on them or will have scrubber retrofitted in
coming years. Vessels moving out of trade to retrofit scrubbers impede supply growth and support freight rates.

IMO 2030, IMO 2050 and Sea cargo charter

In addition to the recently implemented emission control regulations, the IMO has been devising strategies to
reduce greenhouse gases (“GHG”) and carbon emissions from ships. According to the latest announcement, IMO plans to
initiate measures to reduce CO2 emissions by at least 40% by 2030 and 70% by 2050 from the levels in 2008. It also plans
to introduce measures to reduce GHG emissions by 50% by 2050 from the 2008 levels. These are likely to be achieved by
setting energy efficiency requirements and encouraging ship owners to use alternative fuels such as biofuels, and electro-
/synthetic fuels such as hydrogen or ammonia, and may also include limiting the speed of the ships. However, there is still
uncertainty regarding the exact measures that the IMO will undertake to achieve these targets. Although the current
macroeconomic environment is the main deterrent, IMO-related uncertainty is also a factor discouraging ship owners from
ordering newbuild vessels, as these vessels may have a high environmental compliance cost in the future. Some shipowners
are ahead of the curve by having ordered LNG-fueled ships in order to comply with stricter regulations that may be
announced in future.

In November 2020, Marine Environment Protection Committee (“MEPC”) approved a draft for the new
mandatory regulations to cut the carbon intensity of existing ships. Formal adoption of the proposal for GHG and CO2
emissions reduction action plan is expected in June 2021. It will be a combination of technical and operational measures
which will be monitored by the flag administration and corrective actions will be required in the event of constant non-
compliance. The draft amendments would require the IMO to review the effectiveness of the implementation of the Carbon
Intensity Indicator (“CII”) and Energy Efficiency Existing Ship Index (“EEXI”) requirements, by 1 January 2026 at the
latest. EEXI is a technical measure and would apply to ships above 400 GT. It indicates the energy efficiency of the ship
compared to a baseline and is based on a required reduction factor (expressed as a percentage relative to the Energy
Efficiency Design Index baseline). On the other hand, CII is an operational measure which specifies carbon intensity
reduction requirements for vessels with 5,000 GT and above. The CII determines the annual reduction factor needed to
ensure continuous improvement of the ship’s operational carbon intensity within a specific rating level. The operational
carbon intensity rating would be given on a scale of A, B, C, D or E indicating a major superior, minor superior, moderate,
minor inferior, or inferior performance level, respectively. The performance level would be recorded in the ship’s Ship
Energy Efficiency Management Plan (SEEMP). A ship rated D or E for three consecutive years would have to submit a
corrective action plan to show how the required index (C or above) would be achieved. Further, the European Union has
endorsed a binding target of at least 55% domestic reduction in economy-wide GHG reduction by 2030 compared to 1990.
EU shipowners are required to comply with this regulation.

The Sea Cargo Charter, applicable to bulk ship charterers, is a global framework that allows for the integration of
climate considerations into chartering decisions to favor climate-aligned maritime transport. At present, 18 charterers are
signatories to the charter and have vowed to make the details of their shipping carbon footprint public.

We expect these regulations to affect old tonnage more, which would need to slow steam or carry out energy

efficiency improvements to remain viable. Very old tonnage will however become uneconomical.

Energy Transition

Traditionally, fossil fuel-based energy sources such as oil, natural gas and coal have propelled the global
economy, but their share has been declining over the past few years from 86.9% in 2011 to 84.3% in 2019 with the share of
oil remaining stagnant at around 33% during the period. However, the energy transition from fossil fuel-based to renewable
sources of energy is currently underway which has received a boost from the accelerated sales of electric vehicles (“EVs”),
even though their share in total sales was a meager 2.5% in 2019. As the cost of EVs becomes competitive against internal
combustion engine vehicles, and charging infrastructure is developed across the world, sales of EVs are expected to gain
momentum, reducing the demand for gasoline and diesel in the long run. The demand for naphtha and jet fuel is likely to
remain robust and will be the key driver of global trade in crude and refined petroleum products.

The Oil Tanker Freight Market

Tanker charter hire rates and vessel values for all tankers are influenced by the supply-demand dynamics of the
tanker market. Also, in general terms, time charter rates are less volatile than spot rates as they reflect the fact that the
vessel is fixed for a longer period of time. In the spot market, rates will reflect the immediate underlying conditions in
vessel supply and demand, and are thus prone to more volatility. The trend in spot rates since 2002 for the main vessel
classes is shown in the table below.

Crude Tanker - Spot (TCE) Rates: 2002-2021*

Year

2002 .........................
2003 .........................
2004 .........................
2005 .........................
2006 .........................
2007 .........................
2008 .........................
2009 .........................
2010 .........................
2011 .........................
2012 .........................
2013 .........................
2014 .........................
2015 .........................
2016 .........................
2017 .........................
2018 .........................
2019 .........................
2020 .........................
Jan-21 ......................
Feb-21 .....................

Caribs
USAC
40-70,000 DWT
16,567
28,833
42,158
34,933
28,792
30,100
36,992
13,450
17,950
8,817
12,408
13,475
21,383
23,725
13,133
8,942
7,892
17,892
19,300
2,600
5,800

(US$/Day)

NW Europe
NW Europe
70-100,000 DWT

22,800
41,883
55,408
57,517
47,067
41,975
56,408
19,883
27,825
10,500
9,100
11,427
23,360
37,509
24,333
7,643
9,181
23,041
17,661
(4,840 )
(2,480 )

West Africa
Caribs/USES
150-160,000 DWT
19,325
37,367
64,792
40,883
40,142
35,392
52,650
20,242
19,658
12,758
14,275
13,308
23,567
38,350
21,592
11,255
11,075
24,350
23,058
1,200
1,300

AG
Japan
280-300,000 DWT
21,667
49,342
95,258
59,125
51,142
45,475
89,300
29,483
40,408
8,700
12,275
12,325
24,625
67,928
42,183
22,617
20,825
41,667
56,308
5,000
(1,700 )

*Up to February 2021
Source: Drewry, Note - These rates do not account for vessel triangulation

Product Tanker - Spot (TCE) Rates: 2011-2021*

Year

2011 .........................
2012 .........................
2013 .........................
2014 .........................
2015 .........................
2016 .........................
2017 .........................
2018 .........................
2019 .........................
2020 .........................
Jan-21 ......................
Feb-21 .....................

Baltic
UK Continent
25-39,999 DWT
NA
NA
NA
NA
NA
NA
8,966
8,367
11,777
12,690
1,006
7,767

(US$/Day)

UKC
USAC
40-54,999 DWT
9,720
8,064
9,474
9,435
18,769
8,508
7,442
6,196
10,739
13,117
4,512
6,592

Arabian Gulf
Japan
55-79,999 DWT
3,723
6,379
7,576
10,523
23,685
12,290
7,225
8,002
14,252
19,949
3,398
2,124

Arabian Gulf
Japan
80-119,000 DWT
7,528
8,106
8,505
14,163
28,783
15,006
7,936
9,411
18,698
27,777
5,346
(848)

*Up to February 2021, NA implies not available
Source: Baltic, Drewry, Note - These rates do not account for vessel triangulation

Product tanker rates were weak during 2010-2013 due to lower demand and excess supply. Freight rates in the
tanker sector started to improve in the second half of 2014 as result of low growth in vessel supply and rising vessel
demand. In the products sector, a number of factors combined to push up rates, including:

•

Increased trade due to higher stocking activity and improved demand for oil products

• Longer voyage distances because of refining capacity additions in Asia

•

Product tankers also carrying crude encouraged by firm freight rates for dirty tankers

• Lower bunker prices contributing to higher net earnings

Freight rates remained firm throughout 2015 and in the first half of 2016, leading to greater revenue and improved
profitability for ship-owners. However, in the second half of 2016, tanker freight rates declined sharply as a result of the
increased tanker supply outweighing the demand for tankers. A spate of newbuilding deliveries in 2017 aggravated the
situation further for ship-owners and the average one-year spot charter rate declined further. The situation worsened further
and TCE rates were below breakeven rates on key routes for the first nine months of 2018. However, towards end-2018,
the vessel earnings began to improve as supply growth was moderating in the wake of record high demolitions and reduced
new vessel ordering. Increase in product tanker freight rates in 2019 was driven by slow fleet growth and a spike in diesel
trade before IMO 2020 regulations came into effect on 1 January 2020. Product tanker freight rates surged to multi-year
highs on trickle-down effect from crude tanker market in October 2019 as well as US sanctions on Cosco Shipping Tanker
(Dalian) Co, geopolitical tensions and tight supply resulted.

However, in 2020 the tanker market underwent an unprecedented turbulence due to the outbreak of COVID-19.
The sudden demand destruction due to lockdown measures and limited availability of onshore storage led to a surge in
demand for tankers for floating storage of crude oil as well as refined products. Accordingly, TCE rates of oil tankers
rallied across vessel classes in March and April 2020; for instance, average spot TCE rates for MR tankers shot up 131%
from US$19,289/day in February 2020 to US$44,618/day in April 2020. However, reduced crude oil production and
refinery runs since May 2020 and gradual recovery in demand led to continuous decline in vessel earnings in the latter half
of the year as several vessels locked in floating storage rejoined the trading fleet. On a yearly basis though, TCE rates for
MR vessels increased 74.1% yoy on average in 2020, while for LR vessels it declined 15% yoy during the same period.

With the virus spreading globally, the weak demand for refinery products led to an increase in both onshore and
offshore stocking activity in early 2020 as the increasing use of product tankers as storage facilities coupled with global
port congestions resulted in a surge in product tanker rates in March and April. At the end of February 2021, 2.23 mdwt of
non-IMO coated tankers comprising nearly 2.2% of the product tanker fleet was used for offshore storage. This figure was
lower than the 6 mdwt (about 6.2% of the product tanker fleet) of non-IMO coated tankers deployed for floating storage at
the peak of the contango opportunities in the oil market in April 2020, indicating a declining trend in on-the-water storage
of crude oil. Product tankers coming out from floating storage increase vessel supply and have an adverse impact of spot
rates.

Oil Tanker Newbuilding Prices

Newbuilding prices increased significantly between 2003 and 2007 primarily as a result of increased tanker
demand and limited shipbuilding capacity. Thereafter, prices weakened in the face of a poor freight market and lower
levels of new ordering. In late 2013, prices started to recover and they continued to edge up slowly during 2014 before
falling marginally in late 2015. Moreover, newbuilding prices fell further in 2016 because of excess capacity available at
shipyards, accompanied with low steel prices. New orders declined on account of diminishing earnings potential of oil
tankers, and mandatory compliance to Tier III emission for ships ordered on or after January 1, 2016, as well as owners’
limited access to cost-effective capital.

Newbuild prices remained stable throughout 2017. However, asset values of newbuilds increased 3-13% in 2019
as they benefited from high charter rates across vessel classes. Newbuild prices declined in 2020 due to lower orders and
weak market prospects. Excess shipbuilding capacity has also kept newbuilding prices in check over past 10 years.

Oil Tankers: Newbuilding Prices: 2002-2021*

(In millions of U.S. Dollars)

37,000(1)
DWT

50,000(1)
DWT

75,000(1)
DWT

110,000(1)
DWT

75,000(2)
DWT

110,000(2)
DWT

160,000(2)
DWT

300,000(2)
DWT

24.5
28.5
34.0
37.5
40.5
46.0
40.0
31.0
33.0
31.5
30.0
31.0
33.0
32.0
30.0
31.0
31.4
32.0
31.4
31.0
31.0

32.7

26.5
30.5
39.0
42.0
47.5
54.0
46.5
36.0
36.0
36.0
33.0
35.0
37.0
35.5
32.0
33.0
35.3
36.0
34.8
34.0
34.0

36.6

33.0
36.5
43.0
45.0
52.0
66.0
59.0
44.5
48.0
46.0
44.0
45.0
47.5
47.0
41.0
41.0
41.4
45.0
44.2
43.0
43.0

45.2

38.0
42.0
59.0
61.0
67.0
80.0
73.5
54.0
59.0
54.8
50.0
53.5
56.0
53.5
47.0
46.0
48.8
51.0
50.2
49.0
50.0

54.2

31.0
34.5
41.0
43.0
50.0
64.0
57.0
42.5
44.6
44.6
42.4
42.1
44.9
45.0
39.0
38.2
40.8
43.0
42.2
41.0
41.0

43.2

36.0
40.0
57.0
59.0
65.0
78.0
71.5
52.0
57.0
52.8
48.0
51.5
54.0
51.5
45.0
44.0
46.8
49.0
48.2
47.0
48.0

52.2

44.0
52.0
68.0
71.0
78.0
90.0
87.0
62.0
67.0
61.7
56.5
59.0
65.0
63.0
54.0
55.0
58.7
61.0
58.6
57.0
59.0

62.9

66.0
73.0
105.0
120.0
128.0
146.0
142.0
101.0
105.0
99.0
92.0
93.5
97.0
94.0
83.0
81.0
88.0
92.7
88.8
87.0
89.0

98.4

(1) Coated tankers
(2) Uncoated tankers
*Up to February 2021
Source: Drewry

Year End

Long-term average ...

Second-hand Prices

Second-hand values primarily, albeit with a lag, reflect prevailing and expected charter rates. During extended
periods of high charter rates, vessel values tend to appreciate and vice versa. However, vessel values are also influenced by
other factors, including the age and shipyard of the vessel. Prices for young vessels, those about up to five-years old, are
also influenced by newbuilding prices, while prices for old vessels, near the end of their useful economic life, those around
at or in excess of 25 years, are influenced by the value of scrap steel.

The table below illustrates the movements of prices for second-hand oil tankers from 2002 to February 2021. In
late 2013, prices for all modern tankers increased as a result of improvement in freight rates and positive market sentiment,
and further gains were recorded in 2014 and 2015. However, in 2016, second-hand prices saw a double-digit decline on
account of weakening freight rates. For illustration, the second-hand price of a five-year old LR vessel of 95,000 dwt
capacity fell 35% from US$46 million in 2015 to US$30 million in 2016. However, the market saw increased demand for
modern second-hand vessels in 2017 and 2018, in anticipation of a recovery in the freight market and buyers trying to take
advantage of historically low asset prices. As such, second-hand modern product tanker prices increased in the range of 3-
10% in 2018. Second-hand prices of crude and product tankers increased steeply in 2019 in tandem with a surge in charter
rates. With the surge in product tanker and crude tanker freight rates due to higher demand for floating storage driven by
the pandemic, second-hand prices of product and crude tankers increased between 5.4% and 14.7% in April 2020
compared to the average second-hand prices in full-year 2019. However, second-hand asset prices declined in the
remainder of 2020 on account of the steep decline in freight rates.

Year End

Oil Tanker Second-hand Prices for 5 year old vessels: 2002-2021*

(In millions of U.S. Dollars)

37,000(1)
DWT

45,000(1)
DWT

75,000(1)
DWT

95,000(1)
DWT

75,000(2)
DWT

95,000(2)
DWT

150,000(2)
DWT

300,000(2)
DWT

15.5
24.5
36.0
40.0
40.0
40.0
36.0
21.0
21.5
24.0
21.0
25.0
23.0
26.0
20.0
21.0
23.0
24.7
24.3
24.5
24.0
26.2

21.5
29.5
42.0
45.5
47.5
52.0
42.0
24.0
24.0
27.0
24.0
29.0
24.0
27.0
22.0
24.0
27.0
28.8
28.0
27.5
27.5
30.7

23.0
26.0
40.0
48.5
50.0
61.0
48.0
34.5
37.0
34.0
27.0
33.0
35.5
38.0
30.0
29.0
31.0
33.2
32.6
31.0
31.0
35.9

31.5
39.0
59.0
60.0
65.0
70.5
57.0
40.0
44.0
35.5
29.5
35.0
44.0
48.0
32.0
32.0
34.0
39.5
40.0
35.0
35.0
43.6

(1) Coated tankers
(2) Uncoated tankers
*Up to February 2021
Source: Drewry

21.0
24.0
38.0
46.5
48.0
59.0
46.0
32.5
35.0
32.0
25.0
31.0
33.5
36.0
28.0
27.0
29.0
31.2
30.6
29.0
29.0
33.9

29.5
37.0
57.0
58.0
63.0
68.5
55.0
38.0
42.0
33.5
27.5
33.0
42.0
46.0
30.0
30.0
32.0
37.5
38.0
33.0
33.0
41.6

39.0
47.0
73.0
75.0
77.0
87.0
77.0
53.0
58.0
45.5
40.0
42.0
57.0
60.0
42.0
40.0
44.0
49.7
49.2
45.0
43.0
54.8

55.0
70.0
112.0
110.0
115.0
130.0
110.0
77.5
85.5
58.0
57.0
60.0
76.0
80.0
60.0
62.0
64.0
70.8
70.4
65.0
65.0
79.3

Environmental and Other Regulations in the Shipping Industry

Government regulation and laws significantly affect the ownership and operation of our fleet. We are subject to
international conventions and treaties, national, state and local laws and regulations in force in the countries in which our
vessels may operate or are registered relating to safety and health and environmental protection including the storage,
handling, emission, transportation and discharge of hazardous and non-hazardous materials and the remediation of
contamination and liability for damage to natural resources. Compliance with such laws, regulations and other requirements
entails significant expense, including vessel modifications and implementation of certain operating procedures.

A variety of government and private entities subject our vessels to both scheduled and unscheduled inspections.
These entities include the local port authorities (applicable national authorities such as the United States Coast Guard
(“USCG”), harbor master or equivalent), classification societies, flag state administrations (countries of registry) and
charterers, particularly terminal operators. Certain of these entities require us to obtain permits, licenses, certificates and
other authorizations for the operation of our vessels. Failure to maintain necessary permits or approvals could require us to
incur substantial costs or result in the temporary suspension of the operation of one or more of our vessels.

Increasing environmental concerns have created a demand for vessels that conform to stricter environmental
standards. We are required to maintain operating standards for all of our vessels that emphasize operational safety, quality
maintenance, continuous training of our officers and crews and compliance with United States and international regulations.
We believe that the operation of our vessels is in substantial compliance with applicable environmental laws and regulations
and that our vessels have all material permits, licenses, certificates or other authorizations necessary for the conduct of our
operations. However, because such laws and regulations frequently change and may impose increasingly stricter
requirements, we cannot predict the ultimate cost of complying with these requirements, or the impact of these requirements
on the resale value or useful lives of our vessels. In addition, a future serious marine incident that causes significant adverse
environmental impact could result in additional legislation or regulation that could negatively affect our profitability.

International Maritime Organization

The International Maritime Organization, or the IMO, the United Nations agency for maritime safety and the
prevention of pollution by vessels, has adopted the International Convention for the Prevention of Pollution from Ships,
1973, as modified by the Protocol of 1978 relating thereto, collectively referred to as MARPOL 73/78 and herein as
“MARPOL,” the SOLAS Convention, and the International Convention on Load Lines of 1966 (the “LL Convention”).
MARPOL establishes environmental standards relating to oil leakage or spilling, garbage management, sewage, air
emissions, handling and disposal of noxious liquids and the handling of harmful substances in packaged forms. MARPOL
is applicable to drybulk, tanker and LNG carriers, among other vessels, and is broken into six Annexes, each of which
regulates a different source of pollution. Annex I relates to oil leakage or spilling; Annexes II and III relate to noxious
liquid substances carried in bulk and harmful substances carried in packaged form, respectively; Annexes IV and V relate
to sewage and garbage management, respectively; and Annex VI, lastly, relates to air emissions. Annex VI was separately
adopted by the IMO in September of 1997; new emissions standards, titled IMO-2020, took effect on January 1, 2020.

In 2012, the IMO’s Marine Environmental Protection Committee, or the “MEPC,” adopted a resolution amending
the International Code for the Construction and Equipment of Ships Carrying Dangerous Chemicals in Bulk, or the “IBC
Code.” The provisions of the IBC Code are mandatory under MARPOL and the SOLAS Convention. These amendments,
which entered into force in June 2014 and took effect on January 1, 2021, pertain to revised international certificates of
fitness for the carriage of dangerous chemicals in bulk and identifying new products that fall under the IBC Code. All our
vessels complying have been issued new certificates accordingly

Air Emissions

In September of 1997, the IMO adopted Annex VI to MARPOL to address air pollution from vessels. Effective May
2005, Annex VI sets limits on sulfur oxide and nitrogen oxide emissions from all commercial vessel exhausts and prohibits
“deliberate emissions” of ozone depleting substances (such as halons and chlorofluorocarbons), emissions of volatile
compounds from cargo tanks, and the shipboard incineration of specific substances. Annex VI also includes a global cap on
the sulfur content of fuel oil and allows for special areas to be established with more stringent controls on sulfur emissions, as
explained below. Emissions of “volatile organic compounds” from certain vessels, and the shipboard incineration (from
incinerators installed after January 1, 2000) of certain substances (such as polychlorinated biphenyls, or PCBs) are also
prohibited. We believe that all our vessels are currently compliant in all material respects with these regulations.

The MEPC adopted amendments to Annex VI regarding emissions of sulfur oxide, nitrogen oxide, particulate
matter and ozone depleting substances, which entered into force on July 1, 2010. The amended Annex VI seeks to further
reduce air pollution by, among other things, implementing a progressive reduction of the amount of sulfur contained in any
fuel oil used on board ships. On October 27, 2016, at its 70th session, the MEPC agreed to implement a global 0.5% m/m
sulfur oxide emissions limit (reduced from 3.50%) starting from January 1, 2020. This limitation can be met by using low-
sulfur compliant fuel oil, alternative fuels, or certain exhaust gas cleaning systems. Ships are now required to obtain bunker
delivery notes and International Air Pollution Prevention (“IAPP”) Certificates from their flag states that specify sulfur
content. Additionally, at MEPC 73, amendments to Annex VI to prohibit the carriage of bunkers above 0.5% sulfur on
ships were adopted and took effect March 1, 2020. These regulations subject ocean-going vessels to stringent emissions
controls, and may cause us to incur substantial costs.

Sulfur content standards are even stricter within certain ECAs. As of January 1, 2015, ships operating within an
ECA were not permitted to use fuel with sulfur content in excess of 0.1% m/m. Amended Annex VI establishes procedures
for designating new ECAs. Currently, the IMO has designated four ECAs, including specified portions of the Baltic Sea
area, North Sea area, North American area and United States Caribbean area. Ocean-going vessels in these areas will be
subject to stringent emission controls and may cause us to incur additional costs. Other areas in China are subject to local
regulations that impose stricter emission controls. 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 U.S.
Environmental Protection Agency (“EPA”) or the states where we operate, compliance with these regulations could entail
significant capital expenditures or otherwise increase the costs of our operations.

Amended Annex VI also establishes new tiers of stringent nitrogen oxide emissions standards for marine diesel
engines, depending on their date of installation. At the MEPC meeting held from March to April 2014, amendments to
Annex VI were adopted which address the date on which Tier III Nitrogen Oxide (NOx) standards in ECAs will go into
effect. Under the amendments, Tier III NOx standards apply to ships that operate in the North American and U.S.
Caribbean Sea ECAs designed for the control of NOx produced by vessels with a marine diesel engine installed and
constructed on or after January 1, 2016. Tier III requirements could apply to areas that will be designated for Tier III NOx

in the future. At MEPC 70 and MEPC 71, the MEPC approved the North Sea and Baltic Sea as ECAs for nitrogen oxide
for ships built on or after January 1, 2021. The EPA promulgated equivalent (and in some senses stricter) emissions
standards in 2010. As a result of these designations or similar future designations, we may be required to incur additional
operating or other costs.

As determined at the MEPC 70, the new Regulation 22A of MARPOL Annex VI became effective as of March 1,
2018 and requires ships above 5,000 gross tonnage to collect and report annual data on fuel oil consumption to an IMO
database, with the first year of data collection having commenced on January 1, 2019. The IMO intends to use such data as
the first step in its roadmap (through 2023) for developing its strategy to reduce greenhouse gas emissions from ships, as
discussed further below.

As of January 1, 2013, MARPOL made mandatory certain measures relating to energy efficiency for ships. All
ships are now required to develop and implement Ship Energy Efficiency Management Plans, (“SEEMPS”), and new ships
must be designed in compliance with minimum energy efficiency levels per capacity mile as defined by the Energy
Efficiency Design Index (“EEDI”). Under these measures, by 2025, all new ships built will be 30% more energy efficient
than those built in 2014. Additionally, MEPC 75 adopted amendments to MARPOL Annex VI which brings forward the
effective date of the EEDI’s “phase 3” requirements from January 1, 2025 to April 1, 2022 for several ship types, including
gas carriers, general cargo ships, and LNG carriers.

As part of the wider push towards both the IMO’s 2030 and 2050 greenhouse gas targets, MEPC has agreed draft
regulations relating to the Energy Efficiency Existing Ship Index (“EEXI”), to be confirmed at MEPC 76 (June 2021).
Once the regulation is approved in the upcoming MEPC 76, the regulations will enter into force from 1st January 2023.
The requirements include: (1) a technical requirement to reduce carbon intensity based on EEXI, and (2) operational
carbon intensity reduction requirements, based on a new operational carbon intensity indicator (“CII”). The attained EEXI
is required to be calculated for ships of 400 gross tonnage and above, in accordance with different values set for ship types
and categories. With respect to the CII, the draft amendments would require ships of 5,000 gross tonnage to document and
verify their actual annual operational CII achieved against a determined required annual operational CII. Any vessels that
will not meet these new requirements will need to adopt energy-saving/emission reducing technology, through retrofits, to
reach compliant levels. This creates a vast array of implications for the tanker industry going forward. Recycling of older
ships could accelerate as the investments to comply with regulations are not feasible. One of the most efficient ways of
reducing emissions is reducing power, this would in turn limit vessel speed and with that supply.

We may incur costs to comply with these revised standards. Additional or new conventions, laws and regulations
may be adopted that could require the installation of expensive emission control systems and could adversely affect our
business, results of operations, cash flows and financial condition.

Safety Management System Requirements

The SOLAS Convention was amended to address the safe manning of vessels and emergency training drills. The
Convention of Limitation of Liability for Maritime Claims (“LLMC”) sets limitations of liability for a loss of life or
personal injury claim or a property claim against ship owners. We believe that our vessels are in substantial compliance
with the SOLAS Convention and LLMC standards.

Under Chapter IX of the SOLAS Convention, or the International Safety Management Code for the Safe
Operation of Ships and for Pollution Prevention (the “ISM Code”), our operations are also subject to environmental
standards and requirements. The ISM Code requires the party with operational control of a vessel to develop an extensive
safety management system that includes, among other things, the adoption of a safety and environmental protection policy
setting forth instructions and procedures for operating its vessels safely and describing procedures for responding to
emergencies. We rely upon the safety management system that we and our technical management team have developed for
compliance with the ISM Code. The failure of a vessel owner or bareboat charterer to comply with the ISM Code may
subject such party to increased liability, may decrease available insurance coverage for the affected vessels and may result
in a denial of access to, or detention in, certain ports.

The ISM Code requires that vessel operators obtain a safety management certificate for each vessel they operate.
This certificate evidences compliance by a vessel’s management with the ISM Code requirements for a safety management
system. No vessel can obtain a safety management certificate unless its manager has been awarded a document of
compliance, issued by each flag state, under the ISM Code. We have obtained applicable documents of compliance for our
offices and safety management certificates for all of our vessels for which the certificates are required by the IMO. The
document of compliance and safety management certificates are renewed as required.

Regulation II-1/3-10 of the SOLAS Convention governs ship construction and stipulates that ships over 150
meters in length must have adequate strength, integrity and stability to minimize risk of loss or pollution. Goal-based
standards amendments in SOLAS regulation II-1/3-10 entered into force in 2012, with July 1, 2016 set for application to
new oil tankers and bulk carriers. The SOLAS Convention regulation II-1/3-10 on goal-based ship construction standards
for bulk carriers and oil tankers, which entered into force on January 1, 2012, requires that all oil tankers and bulk carriers
of 150 meters in length and above, for which the building contract is placed on or after July 1, 2016, satisfy applicable
structural requirements conforming to the functional requirements of the International Goal-based Ship Construction
Standards for Bulk Carriers and Oil Tankers (“GBS Standards”).

Amendments to the SOLAS Convention Chapter VII apply to vessels transporting dangerous goods and require
those vessels be in compliance with the International Maritime Dangerous Goods Code (“IMDG Code”). Effective January
1, 2018, the IMDG Code includes (1) updates to the provisions for radioactive material, reflecting the latest provisions
from the International Atomic Energy Agency, (2) new marking, packing and classification requirements for dangerous
goods, and (3) new mandatory training requirements. Amendments which took effect on January 1, 2020 also reflect the
latest material from the UN Recommendations on the Transport of Dangerous Goods, including (1) new provisions
regarding IMO type 9 tank, (2) new abbreviations for segregation groups, and (3) special provisions for carriage of lithium
batteries and of vehicles powered by flammable liquid or gas.

The IMO has also adopted the International Convention on Standards of Training, Certification and Watchkeeping
for Seafarers (“STCW”). As of February 2017, all seafarers are required to meet the STCW standards and be in possession
of a valid STCW certificate. Flag states that have ratified the SOLAS Convention and STCW generally employ the
classification societies, which have incorporated the SOLAS Convention and STCW requirements into their class rules, to
undertake surveys to confirm compliance.

The IMO’s Maritime Safety Committee and MEPC, respectively, each adopted relevant parts of the International
Code for Ships Operating in Polar Water (the “Polar Code”). The Polar Code, which entered into force on January 1, 2017,
covers design, construction, equipment, operational, training, search and rescue as well as environmental protection matters
relevant to ships operating in the waters surrounding the two poles. It also includes mandatory measures regarding safety
and pollution prevention as well as recommendatory provisions. The Polar Code applies to new ships constructed after
January 1, 2017, and after January 1, 2018, ships constructed before January 1, 2017 are required to meet the relevant
requirements by the earlier of their first intermediate or renewal survey.

Furthermore, recent action by the IMO’s Maritime Safety Committee and United States agencies indicates that
cybersecurity regulations for the maritime industry are likely to be further developed in the near future in an attempt to
combat cybersecurity threats. For example, cyber-risk management systems must be incorporated by ship-owners and
managers by 2021. This might cause companies to create additional procedures for monitoring cybersecurity, which could
require additional expenses and/or capital expenditures. The impact of such regulations is hard to predict at this time.

Pollution Control and Liability Requirements

The IMO has negotiated international conventions that impose liability for pollution in international waters and
the territorial waters of the signatories to such conventions. For example, the IMO adopted the BWM Convention in 2004.
The BWM Convention entered into force on September 8, 2017. The BWM Convention requires ships to manage their
ballast water to remove, render harmless, or avoid the uptake or discharge of new or invasive aquatic organisms and
pathogens within ballast water and sediments. The BWM Convention’s implementing regulations call for a phased
introduction of mandatory ballast water exchange requirements, to be replaced in time with mandatory concentration limits,
and require all ships to carry a ballast water record book and an international ballast water management certificate.

On December 4, 2013, the IMO Assembly passed a resolution revising the application dates of the BWM
Convention so that the dates are triggered by the entry into force date and not the dates originally in the BWM Convention.
This, in effect, makes all vessels delivered before the entry into force date “existing vessels” and allows for the installation
of ballast water management systems on such vessels at the first International Oil Pollution Prevention (“IOPP”) renewal
survey following entry into force of the convention. The MEPC adopted updated guidelines for approval of ballast water
management systems (G8) at MEPC 70. At MEPC 71, the schedule regarding the BWM Convention’s implementation
dates was also discussed and amendments were introduced to extend the date existing vessels are subject to certain ballast
water standards. Those changes were adopted at MEPC 72. Ships over 400 gross tons generally must comply with a “D-1
standard,” requiring the exchange of ballast water only in open seas and away from coastal waters. The “D-2 standard”
specifies the maximum amount of viable organisms allowed to be discharged, and compliance dates vary depending on the
IOPP renewal dates. Depending on the date of the IOPP renewal survey, existing vessels must comply with the D-2

standard on or after September 8, 2019. For most ships, compliance with the D-2 standard will involve installing on-board
systems to treat ballast water and eliminate unwanted organisms. Ballast water management systems, which include
systems that make use of chemicals, biocides, organisms or biological mechanisms, or which alter the chemical or physical
characteristics of the ballast water, must be approved in accordance with IMO Guidelines (Regulation D-3). As of October
13, 2019, MEPC 72’s amendments to the BWM Convention took effect, making the Code for Approval of Ballast Water
Management Systems, which governs assessments of ballast water management systems, mandatory rather than
permissive, and formalized an implementation schedule for the D-2 standard. Under these amendments, all ships must meet
the D-2 standard by September 8, 2024. Costs of compliance with these regulations may be substantial. Additionally, in
November 2020, MEPC 75 adopted amendments to the BWM Convention which would require a commissioning test of
the ballast water management system for the initial survey or when performing an additional survey for retrofits. This
analysis will not apply to ships that already have an installed BWM system certified under the BWM Convention. These
amendments are expected to enter into force on June 1, 2022.

Once mid-ocean exchange ballast water treatment requirements become mandatory under the BWM Convention,
the cost of compliance could increase for ocean carriers and may have a material effect on our operations. However, many
countries already regulate the discharge of ballast water carried by vessels from country to country to prevent the
introduction of invasive and harmful species via such discharges. The U.S., for example, requires vessels entering its
waters from another country to conduct mid-ocean ballast exchange, or undertake some alternate measure, and to comply
with certain reporting requirements.

The IMO adopted the International Convention on Civil Liability for Oil Pollution Damage of 1969, as amended
by different Protocols in 1976, 1984, and 1992, and amended in 2000 (“CLC”). Under the CLC and depending on whether
the country in which the damage results is a party to the 1992 Protocol to the CLC, a vessel’s registered owner may be
strictly liable for pollution damage caused in the territorial waters of a contracting state by discharge of persistent oil,
subject to certain exceptions. The 1992 Protocol changed certain limits on liability expressed using the International
Monetary Fund currency unit, the Special Drawing Rights. The limits on liability have since been amended so that the
compensation limits on liability were raised. The right to limit liability is forfeited under the CLC where the spill is caused
by the shipowner’s actual fault and under the 1992 Protocol where the spill is caused by the shipowner’s intentional or
reckless act or omission where the shipowner knew pollution damage would probably result. The CLC requires ships over
2,000 tons covered by it to maintain insurance covering the liability of the owner in a sum equivalent to an owner’s liability
for a single incident. We have protection and indemnity insurance for environmental incidents. P&I Clubs in the
International Group issue the required Bunkers Convention “Blue Cards” to enable signatory states to issue certificates. All
of our vessels are in possession of a CLC State issued certificate attesting that the required insurance coverage is in force.

The IMO also adopted the International Convention on Civil Liability for Bunker Oil Pollution Damage (the
“Bunker Convention”) to impose strict liability on ship owners (including the registered owner, bareboat charterer,
manager or operator) for pollution damage in jurisdictional waters of ratifying states caused by discharges of bunker fuel.
The Bunker Convention requires registered owners of ships over 1,000 gross tons to maintain insurance for pollution
damage in an amount equal to the limits of liability under the applicable national or international limitation regime (but not
exceeding the amount calculated in accordance with the LLMC). With respect to non-ratifying states, liability for spills or
releases of oil carried as fuel in a ship’s bunkers typically is determined by the national or other domestic laws in the
jurisdiction where the events or damages occur.

Ships are required to maintain a certificate attesting that they maintain adequate insurance to cover an incident. In
jurisdictions, such as the United States where the CLC or the Bunker Convention have not been adopted, various legislative
schemes or common law govern, and liability is imposed either on the basis of fault or on a strict-liability basis.

Anti-Fouling Requirements

In 2001, the IMO adopted the International Convention on the Control of Harmful Anti-fouling Systems on Ships,
or the “Anti-fouling Convention.” The Anti-fouling Convention, which entered into force on September 17, 2008, prohibits
the use of organotin compound coatings to prevent the attachment of mollusks and other sea life to the hulls of vessels.
Vessels of over 400 gross tons engaged in international voyages will also be required to undergo an initial survey before
the vessel is put into service or before an International Anti-fouling System Certificate is issued for the first time; and
subsequent surveys when the anti-fouling systems are altered or replaced.

In November 2020, MEPC 75 approved draft amendments to the Anti-fouling Convention to prohibit anti-fouling
systems containing cybutryne, which would apply to ships from January 1, 2023, or, for ships already bearing such an anti-
fouling system, at the next scheduled renewal of the system after that date, but no later than 60 months following the last
application to the ship of such a system. These amendments may be formally adopted at MEPC 76 in 2021.

We have obtained Anti-fouling System Certificates for all of our vessels that are subject to the Anti-fouling

Convention.

Compliance Enforcement

Noncompliance with the ISM Code or other IMO regulations may subject the ship owner or bareboat 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. The USCG and European Union authorities have indicated that vessels not in
compliance with the ISM Code by applicable deadlines will be prohibited from trading in U.S. and European Union ports,
respectively. As of the date of this report, each of our vessels is ISM Code certified. However, there can be no assurance
that such certificates will be maintained in the future. The IMO continues to review and introduce new regulations. It is
impossible to predict what additional regulations, if any, may be passed by the IMO and what effect, if any, such
regulations might have on our operations.

United States Regulations

The U.S. Oil Pollution Act of 1990 and the Comprehensive Environmental Response, Compensation and Liability Act

The U.S. Oil Pollution Act of 1990 (“OPA”) established an extensive regulatory and liability regime for the
protection and cleanup of the environment from oil spills. OPA affects all “owners and operators” whose vessels trade or
operate within the U.S., its territories and possessions or whose vessels operate in U.S. waters, which includes the U.S.’s
territorial sea and its 200 nautical mile exclusive economic zone around the U.S. The U.S. has also enacted the
Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), which applies to the discharge of
hazardous substances other than oil, except in limited circumstances, whether on land or at sea. OPA and CERCLA both
define “owner and operator” in the case of a vessel as any person owning, operating or chartering by demise, the vessel.
Both OPA and CERCLA impact our operations.

Under OPA, vessel owners and operators are “responsible parties” and are jointly, severally and strictly liable
(unless the spill results solely from the act or omission of a third party, an act of God or an act of war) for all containment
and clean-up costs and other damages arising from discharges or threatened discharges of oil from their vessels, including
bunkers (fuel). OPA defines these other damages broadly to include:

(i)

injury to, destruction or loss of, or loss of use of, natural resources and related assessment costs;

(ii) injury to, or economic losses resulting from, the destruction of real and personal property;

(iii) loss of subsistence use of natural resources that are injured, destroyed or lost;

(iv) net loss of taxes, royalties, rents, fees or net profit revenues resulting from injury, destruction or loss of real or

personal property, or natural resources;

(v) lost profits or impairment of earning capacity due to injury, destruction or loss of real or personal property or

natural resources; and

(vi) net cost of increased or additional public services necessitated by removal activities following a discharge of
oil, such as protection from fire, safety or health hazards, and loss of subsistence use of natural resources.

OPA contains statutory caps on liability and damages; such caps do not apply to direct cleanup costs. Effective
November 12, 2019, the USCG adjusted the limits of OPA liability for a tank vessel, other than a single-hull tank vessel,
over 3,000 gross tons liability to the greater of $2,000 per gross ton or $19,943,400 (subject to periodic adjustment for
inflation). These limits of liability do not apply if an incident was proximately caused by the violation of an applicable U.S.
federal safety, construction or operating regulation by a responsible party (or its agent, employee or a person acting
pursuant to a contractual relationship), or a responsible party’s gross negligence or willful misconduct. The limitation on
liability similarly does not apply if the responsible party fails or refuses to (i) report the incident as required by law where
the responsible party knows or has reason to know of the incident; (ii) reasonably cooperate and assist as requested in
connection with oil removal activities; or (iii) without sufficient cause, comply with an order issued under the Federal
Water Pollution Act (Section 311 (c), (e)) or the Intervention on the High Seas Act.

CERCLA contains a similar liability regime whereby owners and operators of vessels are liable for cleanup,
removal and remedial costs, as well as damages for injury to, or destruction or loss of, natural resources, including the
reasonable costs associated with assessing the same, and health assessments or health effects studies. There is no liability if
the discharge of a hazardous substance results solely from the act or omission of a third party, an act of God or an act of

war. Liability under CERCLA is limited to the greater of $300 per gross ton or $5.0 million for vessels carrying a
hazardous substance as cargo and the greater of $300 per gross ton or $500,000 for any other vessel. These limits do not
apply (rendering the responsible person liable for the total cost of response and damages) if the release or threat of release
of a hazardous substance resulted from willful misconduct or negligence, or the primary cause of the release was a
violation of applicable safety, construction or operating standards or regulations. The limitation on liability also does not
apply if the responsible person fails or refused to provide all reasonable cooperation and assistance as requested in
connection with response activities where the vessel is subject to OPA.

OPA and CERCLA each preserve the right to recover damages under existing law, including maritime tort law.
OPA and CERCLA both require owners and operators of vessels to establish and maintain with the USCG evidence of
financial responsibility sufficient to meet the maximum amount of liability to which the particular responsible person may
be subject. Vessel owners and operators may satisfy their financial responsibility obligations by providing a proof of
insurance, a surety bond, qualification as a self-insurer or a guarantee. We comply and plan to comply going forward with
the USCG’s financial responsibility regulations by providing applicable certificates of financial responsibility.

The 2010 Deepwater Horizon oil spill in the Gulf of Mexico resulted in additional regulatory initiatives or
statutes, including higher liability caps under OPA, new regulations regarding offshore oil and gas drilling, and a pilot
inspection program for offshore facilities. However, several of these initiatives and regulations have been or may be
revised. For example, the U.S. Bureau of Safety and Environmental Enforcement’s (“BSEE”) revised Production Safety
Systems Rule (“PSSR”), effective December 27, 2018, modified and relaxed certain environmental and safety protections
under the 2016 PSSR. Additionally, the BSEE amended the Well Control Rule, effective July 15, 2019, which rolled back
certain reforms regarding the safety of drilling operations, and former U.S. President Trump has proposed leasing new
sections of U.S. waters to oil and gas companies for offshore drilling. The effects of these proposals and changes are
currently unknown, and recently, current U.S. President Biden signed an executive order temporarily blocking new leases
for oil and gas drilling in federal waters. Compliance with any new requirements of OPA and future legislation or
regulations applicable to the operation of our vessels could impact the cost of our operations and adversely affect our
business.

OPA specifically permits individual states to impose their own liability regimes with regard to oil pollution
incidents occurring within their boundaries, provided they accept, at a minimum, the levels of liability established under
OPA and some states have enacted legislation providing for unlimited liability for oil spills. Many U.S. states that border a
navigable waterway have enacted environmental pollution laws that impose strict liability on a person for removal costs
and damages resulting from a discharge of oil or a release of a hazardous substance. These laws may be more stringent than
U.S. federal law. Moreover, some states have enacted legislation providing for unlimited liability for discharge of
pollutants within their waters, although in some cases, states which have enacted this type of legislation have not yet issued
implementing regulations defining vessel owners’ responsibilities under these laws. The Company intends to comply with
all applicable state regulations in the ports where the Company’s vessels call.

We currently maintain pollution liability coverage insurance in the amount of $1 billion per incident for each of
our vessels. If the damages from a catastrophic spill were to exceed our insurance coverage, it could have an adverse effect
on our business and results of operations.

Other United States Environmental Initiatives

The U.S. Clean Air Act of 1970 (including its amendments of 1977 and 1990) (“CAA”) requires the EPA to
promulgate standards applicable to emissions of volatile organic compounds and other air contaminants. Our 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. The CAA also requires states to draft State Implementation Plans, or
SIPs, designed to attain national health-based air quality standards in each state. Although state-specific, SIPs may include
regulations concerning emissions resulting from vessel loading and unloading operations by requiring the installation of
vapor control equipment. Our vessels operating in such regulated port areas with restricted cargoes are equipped with vapor
recovery systems that satisfy these existing requirements.

The U.S. Clean Water Act (“CWA”) prohibits the discharge of oil, hazardous substances and ballast water in U.S.
navigable waters unless authorized by a duly-issued permit or exemption, and imposes strict liability in the form of
penalties for any unauthorized discharges. The CWA also imposes substantial liability for the costs of removal,
remediation and damages and complements the remedies available under OPA and CERCLA. In 2015, the EPA expanded
the definition of “waters of the United States” (“WOTUS”), thereby expanding federal authority under the CWA.
Following litigation on the revised WOTUS rule, in December 2018, the EPA and Department of the Army proposed a

revised, limited definition of “waters of the United States.” The proposed rule was published in the Federal Register on
February 14, 2019 and was subject to public comment. On October 22, 2019, the agencies published a final rule repealing
the 2015 Rule defining “waters of the United States” and recodified the regulatory text that existed prior to the 2015 Rule.
The final rule became effective on December 23, 2019. On January 23, 2020, the EPA published the “Navigable Waters
Protection Rule,” which replaces the rule published on October 22, 2019, and redefined “waters of the United States.” This
rule became effective on June 22, 2020, although the effective date has been stayed in at least one U.S. state pursuant to
court order. The effect of this rule is currently unknown.

The EPA and the USCG have also enacted rules relating to ballast water discharge, compliance with which
requires the installation of equipment on our vessels to treat ballast water before it is discharged or the implementation of
other port facility disposal arrangements or procedures at potentially substantial costs, and/or otherwise restrict our vessels
from entering U.S. waters. The EPA will regulate these ballast water discharges and other discharges incidental to the
normal operation of certain vessels within United States waters pursuant to the Vessel Incidental Discharge Act (“VIDA”),
which was signed into law on December 4, 2018 and replaces the 2013 Vessel General Permit (“VGP”) program (which
authorizes discharges incidental to operations of commercial vessels and contains numeric ballast water discharge limits for
most vessels to reduce the risk of invasive species in U.S. waters, stringent requirements for exhaust gas scrubbers, and
requirements for the use of environmentally acceptable lubricants) and current Coast Guard ballast water management
regulations adopted under the U.S. National Invasive Species Act (“NISA”), such as mid-ocean ballast exchange programs
and installation of approved USCG technology for all vessels equipped with ballast water tanks bound for U.S. ports or
entering U.S. waters. VIDA establishes a new framework for the regulation of vessel incidental discharges under the CWA,
requires the EPA to develop performance standards for those discharges within two years of enactment, and requires the
U.S. Coast Guard to develop implementation, compliance, and enforcement regulations within two years of EPA’s
promulgation of standards. Under VIDA, all provisions of the 2013 VGP and USCG regulations regarding ballast water
treatment remain in force and effect until the EPA and U.S. Coast Guard regulations are finalized. Non-military, non-
recreational vessels greater than 79 feet in length must continue to comply with the requirements of the VGP, including
submission of a Notice of Intent (“NOI”) or retention of a PARI form and submission of annual reports. We have submitted
NOIs for our vessels where required. Compliance with the EPA, U.S. Coast Guard and state regulations could require the
installation of ballast water treatment equipment on our vessels or the implementation of other port facility disposal
procedures at potentially substantial cost, or may otherwise restrict our vessels from entering U.S. waters.

European Union Regulations

In October 2009, the European Union amended a directive to impose criminal sanctions for illicit ship-source
discharges of polluting substances, including minor discharges, if committed with intent, recklessly or with serious
negligence and the discharges individually or in the aggregate result in deterioration of the quality of water. Aiding and
abetting the discharge of a polluting substance may also lead to criminal penalties. The directive applies to all types of
vessels, irrespective of their flag, but certain exceptions apply to warships or where human safety or that of the ship is in
danger. Criminal liability for pollution may result in substantial penalties or fines and increased civil liability claims.
Regulation (EU) 2015/757 of the European Parliament and of the Council of 29 April 2015 (amending EU Directive
2009/16/EC) governs the monitoring, reporting and verification of carbon dioxide emissions from maritime transport, and,
subject to some exclusions, requires companies with ships over 5,000 gross tonnage to monitor and report carbon dioxide
emissions annually, which may cause us to incur additional expenses.

The European Union has adopted several regulations and directives requiring, among other things, more frequent
inspections of high-risk ships, as determined by type, age, and flag as well as the number of times the ship has been
detained. The European Union also adopted and extended a ban on substandard ships and enacted a minimum ban period
and a definitive ban for repeated offenses. The regulation also provided the European Union with greater authority and
control over classification societies, by imposing more requirements on classification societies and providing for fines or
penalty payments for organizations that failed to comply. Furthermore, the EU has implemented regulations requiring
vessels to use reduced sulfur content fuel for their main and auxiliary engines. The EU Directive 2005/33/EC (amending
Directive 1999/32/EC) introduced requirements parallel to those in Annex VI relating to the sulfur content of marine fuels.
In addition, the EU imposed a 0.1% maximum sulfur requirement for fuel used by ships at berth in the Baltic, the North
Sea and the English Channel (the so called “SOx-Emission Control Area”). As of January 2020, EU member states must
also ensure that ships in all EU waters, except SOx-Emission Control Area, use fuels with a 0.5% maximum sulfur content.

On September 15, 2020, the European Parliament voted to include greenhouse gas emissions from the maritime
sector in the European Union’s carbon market from 2022. This will require shipowners to buy permits to cover these
emissions. Contingent on another formal approval vote, specific regulations are forthcoming and are expected to be
proposed by 2021.

International Labour Organization

The International Labour Organization (the “ILO”) is a specialized agency of the UN that has adopted the
Maritime Labour Convention 2006, (“MLC 2006”). A Maritime Labour Certificate and a Declaration of Maritime Labor
Compliance is required to ensure compliance with the MLC 2006 for all ships that are 500 gross tonnage or over and are
either engaged in international voyages or flying the flag of a Member and operating from a port, or between ports, in
another country. We believe that all our vessels are in substantial compliance with and are certified to meet MLC 2006.

Greenhouse Gas Regulation

Currently, the emissions of greenhouse gases from international shipping are not subject to the Kyoto Protocol to
the United Nations Framework Convention on Climate Change, which entered into force in 2005 and pursuant to which
adopting countries have been required to implement national programs to reduce greenhouse gas emissions with targets
extended through 2020. International negotiations are continuing with respect to a successor to the Kyoto Protocol, and
restrictions on shipping emissions may be included in any new treaty. In December 2009, more than 27 nations, including
the U.S. and China, signed the Copenhagen Accord, which includes a non-binding commitment to reduce greenhouse gas
emissions. The 2015 United Nations Climate Change Conference in Paris resulted in the Paris Agreement, which entered
into force on November 4, 2016 and does not directly limit greenhouse gas emissions from ships. The U.S. initially entered
into the agreement, but on June 1, 2017, the former U.S. President Trump announced that the United States intends to
withdraw from the Paris Agreement, and that withdrawal became effective on November 4, 2020. On January 20, 2021,
U.S. President Biden signed an executive order to rejoin the Paris Agreement.

At MEPC 70 and MEPC 71, a draft outline of the structure of the initial strategy for developing a comprehensive
IMO strategy on reduction of greenhouse gas emissions from ships was approved. In accordance with this roadmap, in
April 2018, nations at the MEPC 72 adopted an initial strategy to reduce greenhouse gas emissions from ships. The initial
strategy identifies “levels of ambition” to reducing greenhouse gas emissions, including (1) decreasing the carbon intensity
from ships through implementation of further phases of the EEDI for new ships; (2) reducing carbon dioxide emissions per
transport work, as an average across international shipping, by at least 40% by 2030, pursuing efforts towards 70% by
2050, compared to 2008 emission levels; and (3) reducing the total annual greenhouse emissions by at least 50% by 2050
compared to 2008 while pursuing efforts towards phasing them out entirely. The initial strategy notes that technological
innovation, alternative fuels and/or energy sources for international shipping will be integral to achieve the overall
ambition. These regulations could cause us to incur additional substantial expenses. Compliance with these regulations and
other changes in laws, regulations and obligations relating to climate change affects the propulsion options in subsequent
vessel designs and could increase our costs related to acquiring new vessels, operating and maintaining our existing vessels
and require us to install new emission controls, acquire allowances or pay taxes related to our greenhouse gas emissions or
administer and manage a greenhouse gas emissions program.

The EU made a unilateral commitment to reduce overall greenhouse gas emissions from its member states from
20% of 1990 levels by 2020. The EU also committed to reduce its emissions by 20% under the Kyoto Protocol’s second
period from 2013 to 2020. Starting in January 2018, large ships over 5,000 gross tonnage calling at EU ports are required
to collect and publish data on carbon dioxide emissions and other information. As previously discussed, regulations
relating to the inclusion of greenhouse gas emissions from the maritime sector in the European Unions’ carbon market are
also forthcoming.

In the United States, the EPA issued a finding that greenhouse gases endanger the public health and safety,
adopted regulations to limit greenhouse gas emissions from certain mobile sources, and proposed regulations to limit
greenhouse gas emissions from large stationary sources. However, in March 2017, former U.S. President Trump signed an
executive order to review and possibly eliminate the EPA’s plan to cut greenhouse gas emissions, and in August 2019, the
Administration announced plans to weaken regulations for methane emissions. On August 13, 2020, the EPA released rules
rolling back standards to control methane and volatile organic compound emissions from new oil and gas facilities.
However, U.S. President Biden recently directed the EPA to publish a proposed rule suspending, revising, or rescinding
certain of these rules. The EPA or individual U.S. states could enact environmental regulations that would affect our
operations.

Any passage of climate control legislation or other regulatory initiatives by the IMO, the EU, the U.S. or other
countries where we operate, or any treaty adopted at the international level to succeed the Kyoto Protocol or Paris
Agreement, that restricts emissions of greenhouse gases could require us to make significant financial expenditures which
we cannot predict with certainty at this time. Even in the absence of climate control legislation, our business may be
indirectly affected to the extent that climate change may result in sea level changes or certain weather events.

Vessel Security Regulations

Since the terrorist attacks of September 11, 2001 in the United States, there have been a variety of initiatives
intended to enhance vessel security such as the U.S. Maritime Transportation Security Act of 2002 (“MTSA”). To
implement certain portions of the MTSA, the USCG issued regulations requiring the implementation of certain security
requirements aboard vessels operating in waters subject to the jurisdiction of the United States and at certain ports and
facilities, some of which are regulated by the EPA.

Similarly, Chapter XI-2 of the SOLAS Convention imposes detailed security obligations on vessels and port
authorities and mandates compliance with the International Ship and Port Facility Security Code (“the ISPS Code”). The
ISPS Code is designed to enhance the security of ports and ships against terrorism. 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. Ships operating without a valid certificate may be detained, expelled from, or refused entry at port until they
obtain an ISSC. The various requirements, some of which are found in the SOLAS Convention, include, for example, on-
board installation of automatic identification systems to provide a means for the automatic transmission of safety-related
information from among similarly equipped ships and shore stations, including information on a ship’s identity, position,
course, speed and navigational status; on-board installation of ship security alert systems, which do not sound on the vessel
but only alert the authorities on shore; the development of vessel security plans; ship identification number to be
permanently marked on a vessel’s hull; a continuous synopsis record kept onboard showing a vessel’s history including the
name of the ship, the state whose flag the ship is entitled to fly, the date on which the ship was registered with that state,
the ship’s identification number, the port at which the ship is registered and the name of the registered owner(s) and their
registered address; and compliance with flag state security certification requirements.

The USCG regulations, intended to align with international maritime security standards, exempt non-U.S. vessels
from MTSA vessel security measures, provided such vessels have on board a valid ISSC that attests to the vessel’s
compliance with the SOLAS Convention security requirements and the ISPS Code. Future security measures could have a
significant financial impact on us. We intend to comply with the various security measures addressed by MTSA, the
SOLAS Convention and the ISPS Code.

The cost of vessel security measures has also been affected by the escalation in the frequency of acts of piracy
against ships, notably off the coast of Somalia, including the Gulf of Aden and Arabian Sea area. Substantial loss of
revenue and other costs may be incurred as a result of detention of a vessel or additional security measures, and the risk of
uninsured losses could significantly affect our business. Costs are incurred in taking additional security measures in
accordance with Best Management Practices to Deter Piracy, notably those contained in the BMP5 industry standard.

Inspection by Classification Societies

The hull and machinery of every commercial vessel must be classed by a classification society authorized by its
country of registry. The classification society certifies that a vessel is safe and seaworthy in accordance with the applicable
rules and regulations of the country of registry of the vessel and SOLAS Convention. Most insurance underwriters make it
a condition for insurance coverage and lending that a vessel be certified “in class” by a classification society which is a
member of the International Association of Classification Societies, the IACS. The IACS has adopted harmonized
Common Structural Rules, or the Rules, which apply to oil tankers and bulk carriers contracted for construction on or after
July 1, 2015. The Rules attempt to create a level of consistency between IACS Societies. All of our vessels are certified as
being “in class” by all the applicable Classification Societies (e.g., American Bureau of Shipping, Lloyd’s Register of
Shipping).

A vessel must undergo annual surveys, intermediate surveys, drydockings and special surveys. In lieu of a special
survey, a vessel’s machinery may be on a continuous survey cycle, under which the machinery would be surveyed
periodically over a five-year period. Every vessel is also required to be drydocked every 30 to 36 months for inspection of
the underwater parts of the vessel. If any vessel does not maintain its class and/or fails any annual survey, intermediate
survey, drydocking or special survey, the vessel will be unable to carry cargo between ports and will be unemployable and
uninsurable which could cause us to be in violation of certain covenants in our loan agreements. Any such inability to carry
cargo or be employed, or any such violation of covenants, could have a material adverse impact on our financial condition
and results of operations.

Risk of Loss and Liability Insurance

General

The operation of any cargo vessel includes risks such as mechanical failure, physical damage, collision, property
loss, cargo loss or damage and business interruption due to political circumstances in foreign countries, piracy incidents,
hostilities and labor strikes. In addition, there is always an inherent possibility of marine disaster, including oil spills and
other environmental mishaps, and the liabilities arising from owning and operating vessels in international trade. OPA,
which imposes virtually unlimited liability upon shipowners, operators and bareboat charterers of any vessel trading in the
exclusive economic zone of the United States for certain oil pollution accidents in the United States, has made liability
insurance more expensive for shipowners and operators trading in the United States market. We carry insurance coverage
as customary in the shipping industry. However, not all risks can be insured, specific claims may be rejected, and we might
not be always able to obtain adequate insurance coverage at reasonable rates.

Hull and Machinery Insurance

We procure hull and machinery insurance, protection and indemnity insurance, which includes environmental
damage and pollution insurance and war risk insurance, including war loss of hire and freight, demurrage and defense
insurance for our fleet. We generally do not maintain insurance against loss of hire (except for certain charters for which
we consider it appropriate), which covers business interruptions that result in the loss of use of a vessel.

Protection and Indemnity Insurance

Protection and indemnity insurance provided by mutual protection and indemnity associations, or P&I
Associations, covers our third-party liabilities in connection with our shipping activities. This includes third-party liability
and other related expenses of injury or death of crew, passengers and other third parties, loss or damage to cargo, claims
arising from collisions with other vessels, damage to other third-party property, pollution arising from oil or other
substances, and salvage, towing and other related costs, including wreck removal. Protection and indemnity insurance is a
form of mutual indemnity insurance, extended by protection and indemnity mutual associations, or “clubs.”

Our current protection and indemnity insurance coverage for pollution is $1 billion per vessel per incident. The 13
P&I Associations that comprise the International Group insure approximately 90% of the world’s commercial tonnage and
have entered into a pooling agreement to reinsure each association’s liabilities. The International Group’s website states
that the Pool provides a mechanism for sharing all claims in excess of US$10 million up to, currently, approximately
US$3.2 billion. In case of an ‘overspill’ claim, which would fall back on the collective membership and on the total
limitation of the liability of group membership, that amount may go up to approximately US$8.2 billion. As a member of a
P&I Association, which is a member of the International Group, we are subject to calls payable to the associations based on
our claim records as well as the claim records of all other members of the individual associations and members of the
shipping pool of P&I Associations comprising the International Group.

C. Organizational Structure

Please see Exhibit 8.1 to this annual report for a list of our current significant subsidiaries.

D. Property, Plants and Equipment

Our only material physical assets consist of our vessels which are owned through our separate, wholly-owned

subsidiaries. For a description of our fleet, see “Item 4. Information on the Company—B. Business Overview.”

ITEM 4A. UNRESOLVED STAFF COMMENTS

None.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following presentation of management’s discussion and analysis of results of operations and financial
condition should be read in conjunction with our consolidated financial statements, accompanying notes thereto and other
financial information appearing in “Item 18. Financial Statements.” You should also carefully read the following
discussion with the sections of this annual report entitled “Item 3. Key Information—D. Risk Factors,” “Item 4.
Information on the Company—B. Business Overview—The International Oil Tanker Shipping Industry,” and “Cautionary
Statement Regarding Forward-Looking Statements.” Our consolidated financial statements as of December 31, 2020 and
2019 and for the years ended December 31, 2020, 2019 and 2018 have been prepared in accordance with IFRS as issued
by the IASB. Our consolidated financial statements are presented in U.S. dollars ($) unless otherwise indicated. Any
amounts converted from another non-U.S. currency to U.S. dollars in this annual report are at the rate applicable at the
relevant date, or the average rate during the applicable period.

We generate revenues by charging customers for the transportation of their refined oil and other petroleum
products using our vessels. These services are generally provided under the following basic types of contractual
relationships:

• Voyage charters, which are charters for short intervals that are priced on current, or “spot,” market rates.

•

Time or bareboat charters, which are vessels chartered to customers for a fixed period of time at rates that are
generally fixed, but may contain a variable component based on inflation, interest rates, or current market
rates.

• Commercial Pools, whereby we participate with other shipowners to operate a large number of vessels as an
integrated transportation system, which offers customers greater flexibility and a higher level of service while
achieving scheduling efficiencies. Pools negotiate charters primarily in the spot market, but may also arrange
time charter agreements. The size and scope of these pools enable them to enhance utilization rates for pool
vessels by securing backhaul voyages and COAs (described below), thus generating higher effective TCE
revenues than otherwise might be obtainable in the spot market.

For all types of vessels in contractual relationships, we are responsible for crewing and other vessel operating
costs for our owned, finance leased or bareboat chartered-in vessels and the charterhire expense for vessels that we time or
bareboat charter-in.

The table below illustrates the primary distinctions among these different employment arrangements:

Typical contract length .......................
Hire rate basis(1) ...............................
Voyage expenses(2) ..........................
Vessel operating costs for owned,

finance leased, or bareboat
chartered-in vessels(3) ...................

Charterhire expense for time or

bareboat chartered-in vessels(3) ....

Voyage
Charter
Single voyage
Varies
We pay

Time
Charter

Bareboat
Charter

One year or more One year or more

Daily
Customer pays

Commercial
Pool
Varies
Varies
Pool pays

We pay

Customer pays

We pay

Off-hire(4) ......................................... Customer does not pay Customer does not pay Customer pays Pool does not pay

(1) “Hire rate” refers to the basic payment from the charterer for the use of the vessel.

(2) “Voyage expenses” refers to expenses incurred due to a vessel’s traveling from a loading port to a discharging port,
such as fuel (bunker) cost, port expenses, agent’s fees, canal dues and extra war risk insurance, as well as
commissions.

(3) “Vessel operating costs” and “Charterhire expense” are defined below under “—Important Financial and Operational

Terms and Concepts.”

(4) “Off-hire” refers to the time a vessel is not available for service due primarily to scheduled and unscheduled repairs or

drydockings. For time chartered-in vessels, we do not pay the charterhire expense when the vessel is off-hire.

As of March 30, 2021, all of our wholly owned, lease financed or bareboat chartered-in vessels were operating in

the Scorpio Pools.

Important Financial and Operational Terms and Concepts

We use a variety of financial and operational terms and concepts. These include the following:

Vessel revenues. Vessel revenues primarily include revenues from time charters, pool revenues and voyage
charters (in the spot market). Vessel revenues are affected by hire rates and the number of days a vessel operates. Vessel
revenues are also affected by the mix of business between vessels on time charter, vessels in pools and vessels operating on
voyage charter. Revenues from vessels in pools and on voyage charter are more volatile, as they are typically tied to
prevailing market rates.

Voyage charters. Voyage charters or spot voyages, are charters under which the customer pays a transportation
charge for the movement of a specific cargo between two or more specified ports. We pay all of the voyage expenses under
these charters.

Voyage expenses. Voyage expenses primarily include bunkers, port charges, canal tolls, cargo handling operations
and brokerage commissions paid by us under voyage charters. These expenses are subtracted from voyage charter revenues
to calculate TCE revenue, a non-IFRS measure, which is defined below.

Vessel operating costs. For our owned, lease financed and bareboat chartered-in vessels, we are responsible for
vessel operating costs, which include crewing, repairs and maintenance, insurance, spares and stores, lubricating oils,
communication expenses, and technical management fees. The three largest components of our vessel operating costs are
crewing, spares and stores and repairs and maintenance. Expenses for repairs and maintenance tend to fluctuate from
period to period because most repairs and maintenance typically occur during periodic drydocking. Please read
“Drydocking” below. We expect these expenses to increase as our fleet matures and to the extent that it expands.

Additionally, these costs include technical management fees that we paid to SSM, which is controlled by the
Lolli-Ghetti family. Pursuant to our Revised Master Agreement, SSM provides us with technical services, and we provide
them with the ability to subcontract technical management of our vessels with our approval.

Charterhire expense. Charterhire is the amount we pay the owner for time or bareboat chartered-in vessels. The
amount is usually for a fixed period of time at rates that are generally fixed, but may contain a variable component based
on inflation, interest rates, or current market rates. The method by which we accounted for charterhire for time or bareboat
chartered-in vessels changed in January 2019 upon the adoption of IFRS 16 - Leases, which is discussed below under the
heading “Critical Accounting Policies.”

The responsibility for vessel operating expenses for the different types of charter agreements are as follows:

• Time chartered-in vessels. The vessel’s owner is responsible for the vessel operating costs.

• Bareboat chartered-in vessels. The charterer is responsible for the vessel operating costs.

Drydocking. We periodically drydock each of our owned or finance leased vessels for inspection, repairs and
maintenance and any modifications to comply with industry certification or governmental requirements. Generally, each
vessel is drydocked every 30 months to 60 months. We capitalize a substantial portion of the costs incurred during
drydocking and amortize those costs on a straight-line basis from the completion of a drydocking to the estimated
completion of the next drydocking. We immediately expense costs for routine repairs and maintenance performed during
drydocking that do not improve or extend the useful lives of the assets. The number of drydockings undertaken in a given
period and the nature of the work performed determine the level of drydocking expenditures.

Depreciation. Depreciation expense typically consists of:

•

charges related to the depreciation of the historical cost of our owned, or lease financed vessels (less an
estimated residual value) over the estimated useful lives of the vessels;

charges related to the depreciation of our right of use assets (accounted for under IFRS 16) which is based
upon the straight-line depreciation of the right of use asset over the life of the lease or the useful life of the
asset, if a purchase obligation or a purchase option is reasonably certain to be exercised; and

charges related to the amortization of drydocking expenditures over the estimated number of years to the next
scheduled drydocking.

Time charter equivalent (TCE) revenue or rates. We report TCE revenues, a non-IFRS measure, because (i) we
believe it provides additional meaningful information in conjunction with voyage revenues and voyage expenses, the most
directly comparable IFRS measures, (ii) it assists our management in making decisions regarding the deployment and use of
our vessels and in evaluating their financial performance, (iii) it is a standard shipping industry performance measure used
primarily to compare period-to-period changes in a shipping company’s performance irrespective of changes in the mix of
charter types (i.e., spot charters, time charters and bareboat charters) under which the vessels may be employed between the
periods, and (iv) we believe that it presents useful information to investors. TCE revenue is vessel revenue less voyage
expenses, including bunkers and port charges. The TCE rate achieved on a given voyage is expressed in U.S. dollars/day and
is generally calculated by taking TCE revenue and dividing that figure by the number of revenue days in the period. For a
reconciliation of TCE revenue, deduct voyage expenses from revenue on our consolidated statements of income or loss.

Revenue days. Revenue days are the total number of calendar days our vessels were in our possession during a
period, less the total number of off-hire days during the period associated with major repairs or drydockings. Consequently,
revenue days represent the total number of days available for the vessel to earn revenue. Idle days, which are days when a
vessel is available to earn revenue, yet is not employed, are included in revenue days. We use revenue days to show
changes in net vessel revenues between periods.

Average number of vessels. Historical average number of owned or finance leased vessels consists of the average
number of vessels that were in our possession during a period. We use average number of vessels primarily to highlight
changes in vessel operating costs and depreciation and amortization.

Contract of affreightment. A contract of affreightment, or COA, relates to the carriage of specific quantities of
cargo with multiple voyages over the same route and over a specific period of time which usually spans a number of years.
A COA does not designate the specific vessels or voyage schedules that will transport the cargo, thereby providing both the
charterer and shipowner greater operating flexibility than with voyage charters alone. The charterer has the flexibility to
determine the individual voyage scheduling at a future date while the shipowner may use different vessels to perform these
individual voyages. As a result, COAs are mostly entered into by large fleet operators, such as pools or shipowners with
large fleets of the same vessel type. We pay the voyage expenses while the freight rate normally is agreed on a per cargo
ton basis.

Commercial pools. To increase vessel utilization and revenues, we participate in commercial pools with other
shipowners and operators of similar modern, well-maintained vessels. By operating a large number of vessels as an
integrated transportation system, commercial pools offer customers greater flexibility and a higher level of service while
achieving scheduling efficiencies. Pools employ experienced commercial charterers and operators who have close working
relationships with customers and brokers, while technical management is performed by each shipowner. Pools negotiate
charters with customers primarily in the spot market, but may also arrange time charter agreements. The size and scope of
these pools enable them to enhance utilization rates for pool vessels by securing backhaul voyages and COAs, thus
generating higher effective TCE revenues than otherwise might be obtainable in the spot market while providing a higher
level of service offerings to customers.

Operating days. Operating days are the total number of available days in a period with respect to the owned,
finance leased or bareboat chartered-in vessels, before deducting available days due to off-hire days and days in drydock.
Operating days is a measurement that is only applicable to our owned, finance leased or bareboat chartered-in vessels, not
our time chartered-in vessels.

Items You Should Consider When Evaluating Our Results

You should consider the following factors when evaluating our historical financial performance and assessing our

future prospects:

Our vessel revenues are affected by cyclicity in the tanker markets. The cyclical nature of the tanker industry
causes significant increases or decreases in the revenue we earn from our vessels, particularly those vessels we trade in the
spot market or in spot market-oriented pools. We employ a chartering strategy to capture upside opportunities in the spot
market while using fixed-rate time charters to reduce downside risks, depending on SCM’s outlook for freight rates, oil
tanker market conditions and global economic conditions. Historically, the tanker industry has been cyclical, experiencing
volatility in profitability due to changes in the supply of, and demand for, tanker capacity. The supply of tanker capacity is
influenced by the number and size of new vessels built, vessels scrapped, converted and lost, the number of vessels that are
out of service, and regulations that may effectively cause early obsolescence of tonnage. The demand for tanker capacity is
influenced by, among other factors:

•

global and regional economic and political conditions;

•

increases and decreases in production of and demand for crude oil and petroleum products;

increases and decreases in OPEC oil production quotas;

the distance crude oil and petroleum products need to be transported by sea; and

developments in international trade and changes in seaborne and other transportation patterns.

Tanker rates also fluctuate based on seasonal variations in demand. Tanker markets are typically stronger in the
winter months as a result of increased oil consumption in the northern hemisphere but weaker in the summer months as a
result of lower oil consumption in the northern hemisphere and refinery maintenance that is typically conducted in the
summer months. In addition, unpredictable weather patterns during the winter months in the northern hemisphere tend to
disrupt vessel routing and scheduling. The oil price volatility resulting from these factors has historically led to increased
oil trading activities in the winter months. As a result, revenues generated by our vessels have historically been weaker
during the quarters ended June 30 and September 30, and stronger in the quarters ended March 31 and December 31.

Our expenses were affected by the fees we pay SCM, SSM, and SSH for commercial management, technical
management and administrative services, respectively. SCM, SSM and SSH, companies controlled by the Lolli-Ghetti
family of which our founder, Chairman and Chief Executive Officer and our Vice President are members, provide
commercial, technical and administrative management services to us, respectively. We pay fees under our Revised Master
Agreement with SCM and SSM, for our vessels that operate both within and outside of the Scorpio Pools. The fees charged
to our vessels operating within the Scorpio Pools are identical to what SCM charges third-party owned vessels operating
within the Scorpio Pools. When our vessels are operating in one of the Scorpio Pools, SCM, the pool manager, charges fees
of $300 per vessel per day with respect to our LR1 vessels, $250 per vessel per day with respect to our LR2 vessels, and
$325 per vessel per day with respect to each of our Handymax and MR vessels, plus 1.50% commission on gross revenues
per charter fixture. For commercial management of our vessels that are not operating in any of the Scorpio Pools, we pay
SCM a fee of $250 per vessel per day for each LR1 and LR2 vessel and $300 per vessel per day for each Handymax and
MR vessel, plus 1.25% commission on gross revenues per charter fixture. Additionally, in September 2018, we entered into
an agreement with SCM whereby SCM reimbursed a portion of the commissions that SCM charged our vessels to
effectively reduce such commissions to 0.85% of gross revenue per charter fixture, effective from September 1, 2018 and
ending on June 1, 2019.

Pursuant to the Revised Master Agreement, the fixed annual technical management fee that we pay to SSM was
reduced from $250,000 per vessel to $175,000, effective January 1, 2018 and certain services previously provided as part
of the fixed fee are now itemized. The aggregate cost, including the costs that are now itemized, for the services provided
under the technical management agreement did not and are not expected to materially differ from the annual management
fee charged prior to the amendment.

We also reimburse our Administrator for the reasonable direct or indirect expenses it incurs in providing us with

the administrative services described in “Item 4 - Information on the Company”.

Our fleet growth during 2019 was driven by the Trafigura Transaction. During 2019, our expansion was driven
by the acquisition of subsidiaries of Trafigura, which have leasehold interests in 19 product tankers (15 MR and 4 LR2
product tankers) under bareboat chartered-in agreements with subsidiaries of an international financial institution. At
closing, four of the MR vessels were under construction and were delivered throughout 2020. The aggregate value of the
vessels was $803 million and we assumed the obligations under the bareboat charter agreements for the delivered vessels
of approximately $531.5 million and issued approximately 4.0 million shares of common stock at $29.00 per share to
Trafigura with an aggregate market value of $115.5 million for the delivered vessels. For the vessels under construction,
we issued approximately 0.6 million shares of common stock at $29.00 per share to Trafigura with an aggregate market
value of $17.1 million and assumed commitments on the bareboat chartered-in agreements of $138.8 million. Three of the
four MR vessels under construction were delivered in the first quarter of 2020, and the remaining MR was delivered in
September 2020.

Critical Accounting Policies

In the application of the accounting policies, we are required to make judgments, estimates and assumptions about
the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may
differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the
revision and future periods if the revision affects both current and future periods.

The significant judgments and estimates are as follows:

Vessel impairment

Impairment methodology

The carrying values of our vessels may not represent their fair market value at any point in time since the market
prices of second-hand vessels fluctuate with changes in charter rates and the cost of constructing new vessels. At each
reporting period end date, we review the carrying amounts of our vessels to determine whether there is any indication that
those vessels may have suffered an impairment loss. In this regard, we consider factors such as fluctuations in the
recoverable amount of our vessels below their carrying values, or sustained weakness in the product tanker market as
potential impairment indicators that necessitate the performance of a full impairment review.

Impairment losses are calculated as the excess of a vessel’s carrying amount over its recoverable amount. Under
IFRS, the recoverable amount is the higher of an asset’s (i) fair value less costs to sell, or market value, and (ii) value in
use. Fair value less costs to sell is defined by IFRS as “the amount obtainable from the sale of an asset or cash-generating
unit in an arm’s length transaction between knowledgeable, willing parties, less the costs of disposal.” When we calculate
value in use, we discount the expected future cash flows to be generated by our vessels to their net present value.

Our impairment evaluation is performed on an individual vessel basis when there are indications of impairment.
First, we assess the market value, taking into consideration vessel valuations from leading, independent and internationally
recognized ship brokers. We then compare that estimate of market value to each vessel’s carrying value and, if the carrying
value exceeds the vessel’s market value, or if we are experiencing sustained weakness in the product tanker market, an
indicator of impairment exists. An indicator of impairment prompts us to perform a calculation of the potentially impaired
vessel’s value in use, in order to appropriately determine the “higher of” the two values.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been adjusted. In developing estimates of future cash flows, we make
assumptions about future charter rates, vessel operating expenses, the estimated remaining useful lives of the vessels,
utilization rates, residual values and the discount rate. These assumptions are based on historical trends as well as future
expectations. Although management believes that the assumptions used to evaluate potential impairment are reasonable
and appropriate, such assumptions are highly subjective. Reasonable changes in the assumptions for the discount rate or
future charter rates could lead to a value in use for some of our vessels that is equal to or less than the carrying amount for
such vessels. All of the aforementioned assumptions have been highly volatile in both the current market and historically.

At December 31, 2020, we reviewed the carrying amount of our vessels and right of use assets for vessels to
determine whether there was an indication that these assets had suffered an impairment. First, we assessed the fair value
less the estimated costs to sell of our vessels taking into consideration vessel valuations from leading, independent and
internationally recognized ship brokers. We then compared the fair value less selling costs to each vessel’s carrying value
and, if the carrying value exceeded the vessel’s fair value less selling costs, an indicator of impairment exists. We also
considered sustained weakness in the product tanker market or other macroeconomic indicators (such as the COVID-19
pandemic) to be an impairment indicator. Based upon these factors, we determined that impairment indicators did exist at
December 31, 2020.

Once this determination was made, we prepared a value in use calculation where we estimated each vessel’s future
cash flows based on (i) our best estimate of forecasted vessel revenue through a combination of the latest forecast,
published time charter rates for the next three years and a 2.34% growth rate (which is based on published historical and
forecast inflation rates) in freight rates in each period through the vessel’s 15th year of useful life and reduced to match the
growth in expenses thereafter, (ii) our best estimate of vessel operating expenses and drydock costs, which are based on our
most recent forecasts for the next three years and a 2.34% (2.39% in 2019) growth rate in each period thereafter, and (iii)
the evaluation of other inputs such as the vessel’s remaining useful life, residual value and utilization rate. These cash
flows were then discounted to their present value using a pre-tax discount rate of 7.24%. The results of these tests were as
follows:

At December 31, 2020, our operating fleet consisted of 135 owned, finance leased or right of use vessels (“ROU

vessels”).

•

Seven of our owned, lease financed or ROU vessels in our fleet had fair values less selling costs greater than
their carrying amount.

121 of our owned, lease financed or ROU vessels in our fleet had fair values less selling costs lower than their
carrying amount.

• We did not obtain valuations from independent ship brokers for seven of our ROU vessels as they are not

required under the respective leases.

• We prepared a value in use calculation for all 135 vessels in our fleet, which resulted in an aggregate
impairment charge of $14.2 million on 13 MRs. The recoverable amounts per vessel were approximately
$27.0 million for one MR, $29.0 million for four MRs, $34.0 million for three MRs and $35.0 million for five
MRs.

The factors leading to this impairment charge and the sensitivities thereto, are described further below.

At December 31, 2019, we owned or finance leased 134 vessels in our fleet:

•

68 of our owned, finance leased or ROU vessels in our fleet had fair values less selling costs greater than their
carrying amount. As such, there were no indicators of impairment for these vessels.

56 of our owned, finance leased or ROU vessels in our fleet had fair values less selling costs lower than their
carrying amount.

• We did not obtain valuations from independent brokers for 10 of our ROU vessels as they were not required

under the respective leases.

• We prepared a value in use calculation for all 134 vessels in our fleet, which resulted in no impairment being

recognized.

Factors leading to the 2020 impairment charges of vessels and goodwill

The factors leading to the impairment charges recorded during the year ended December 31, 2020 were shaped by
the COVID-19 pandemic. Initially, the onset of the COVID-19 pandemic in March 2020 resulted in a sharp reduction of
economic activity and a corresponding reduction in the global demand for oil and refined petroleum products. This period of
time was marked by extreme volatility in the oil markets and the development of a steep contango in the prices of oil and
refined petroleum products. Consequently, an abundance of arbitrage and floating storage opportunities were created, which
resulted in record increases in spot TCE rates during the second quarter of 2020. These market dynamics led to a build-up of
global oil and refined petroleum product inventories. In June 2020, the underlying oil markets stabilized, and global
economies began to recover, albeit at a slow pace. These conditions led to the gradual unwinding of excess inventories and
thus a reduction in spot TCE rates. Spot TCE rates have remained subdued ever since, as the continuation of the unwinding
of inventories, coupled with tepid demand for oil, have had an adverse impact on the demand for our vessels.

The continued downward pressure on spot TCE rates led to corresponding reductions in published time charter
rates, which are the basis for our impairment calculations (as there are no comparable published longer term forecasts for
spot TCE rates). One-year published time charter rates were impacted more meaningfully than three-year published time
charter rates which implies that the market is pricing in short-term headwinds as the COVID-19 pandemic stretches into
2021, followed by a longer-term recovery once the COVID-19 pandemic subsides. The recovery that is implied in the
longer-term published time charter rates is of material benefit to our calculations given that our vessels have an average age
of just 5.2 years and an estimated useful life of 25 years. The thesis of a longer-term recovery is supported by factors such
as (i) the ongoing distribution of vaccines for the COVID-19 virus and subsequent forecasts for an economic recovery, (ii)
shifts in oil refinery capacity favorable to product shipping, and (iii) historically low newbuilding levels of product tankers
combined with an aging overall product tanker fleet.

In spite of these forecasts, the short-term headwinds that were observed in the one-year time charter rates caused
the recoverable amount of 13 of the MRs in our fleet, as determined by the value in use calculations, to be lower than their
carrying values by $14.2 million in aggregate. This dynamic also impacted the value in use calculations for the goodwill
that was previously allocated to the LR1 reportable segment which resulted in a goodwill impairment charge of $2.6
million. The aggregate value in use calculations in our LR2 reportable segment were sufficient to support the carrying
value of its allocated goodwill of $8.9 million, given the positive outlook for this vessel class.

Our Fleet—Illustrative comparison of excess of carrying amounts over estimated charter-free market value of
certain vessels

During the past few years, the market values of vessels have experienced particular volatility and as a result, the
charter-free market value, or basic market value, of certain of our vessels may have declined below the carrying amounts of
those vessels.

The table set forth below indicates the carrying amount of each of our vessels or right of use assets as of
December 31, 2020 and December 31, 2019 and the aggregate difference between the carrying amount and the market
value represented by such vessels or right of use assets (see footnotes to the table set forth below). This aggregate
difference represents the approximate analysis of the amount by which we believe we would record a loss if we sold those
vessels or right of use assets, in the current environment, on industry standard terms, in cash transactions and to a willing
buyer where we are not under any compulsion to sell, and where the buyer is not under any compulsion to buy. For
purposes of this calculation, we have assumed (i) that the vessels would be sold at a price that reflects our estimate of their
basic market values and (ii) for vessels that are under lease financing arrangements or are recorded as right of use assets
under IFRS 16 - Leases, the carrying value of the vessel at the date indicated, would be the price at which we would
purchase those vessels back from the lessor. Additionally, we have not obtained valuations for certain of our leased vessels
that are accounted for as right of use assets under IFRS 16 - Leases, however we have included their carrying amounts in
the table set forth below.

Our estimate of basic market value assumes that our vessels are all in good and seaworthy condition without need
for repair and if inspected would be certified in class without notations of any kind. Our estimates are based on information
available from various industry sources, including:

•

reports by industry analysts and data providers that focus on our industry and related dynamics affecting
vessel values;

news and industry reports of similar vessel sales;

news and industry reports of sales of vessels that are not similar to our vessels where we have made certain
adjustments in an attempt to derive information that can be used as part of our estimates;

approximate market values for our vessels or similar vessels that we have received from ship brokers, whether
solicited or unsolicited, or that ship brokers have generally disseminated;

offers that we may have received from potential purchasers of our vessels; and

vessel sale prices and values of which we are aware through both formal and informal communications with
shipowners, shipbrokers, industry analysts and various other shipping industry participants and observers.

As we obtain information from various industry and other sources, our estimates of basic market value are
inherently uncertain. In addition, vessel values and revenues are highly volatile; as such, our estimates may not be
indicative of the current or future basic market value of our vessels or prices that we could achieve if we were to sell them.

Carrying value as of,

Vessel Name
STI Amber
STI Topaz
STI Ruby
STI Garnet
STI Onyx
STI Fontvieille
STI Ville
STI Duchessa
STI Wembley
STI Opera
STI Texas City
STI Meraux
STI San Antonio
STI Venere
STI Virtus
STI Aqua
STI Dama
STI Benicia
STI Regina
STI St. Charles
STI Yorkville
STI Milwaukee
STI Battery
STI Brixton
STI Comandante
STI Pimlico
STI Hackney
STI Acton
STI Fulham
STI Camden
STI Finchley
STI Clapham
STI Poplar
STI Elysees
STI Madison
STI Park
STI Orchard
STI Sloane
STI Broadway
STI Condotti
STI Battersea
STI Memphis
STI Mayfair
STI Soho
STI Tribeca
STI Hammersmith
STI Rotherhithe
STI Rose
STI Gramercy
STI Veneto
STI Alexis
STI Bronx

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52

Year Built

December 31, 2020

2012
2012
2012
2012
2012
2013
2013
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2014
2015
2015
2015
2015
2015
2015
2015
2015

29.1 (1)
29.2 (1)
26.6 (1)
29.3 (1)
29.3 (1)
27.6 (1)
28.0 (1)
27.7 (1)
27.7 (1)
27.7 (1)
32.3 (1)
32.3 (1)
32.4 (1)
30.0 (1)
30.2 (1)
30.5 (1)
30.4 (1)
33.3 (1)
30.6 (1)
32.3 (1)
31.0 (1)
34.1 (1)
30.9 (1)
27.5 (1)
26.7 (1)
27.4 (1)
27.4 (1)
27.7 (1)
27.6 (1)
27.6 (1)
27.8 (1)
28.2 (1)
28.1 (1)
46.2 (1)
46.3 (1)
46.3 (1)
46.6 (1)
46.7 (1)
46.1 (1)
46.9 (1)
27.7 (1)
33.2 (1)
31.4 (1)
31.3 (1)
31.8 (1)
28.5 (1)
28.8 (1)
52.1 (1)
31.3 (1)
47.1 (1)
52.0 (1)
32.1 (1)

December 31, 2019
29.0
29.3
29.1
29.3
29.1
28.8
29.2
28.9
29.1
28.7
33.8
34.0
34.2
31.5
31.6
31.8
31.9
34.9
31.9
33.8
32.1
36.8
32.3
29.0
28.7
29.0
28.7
29.2
29.0
28.9
29.2
29.5
29.3
48.1
48.3
48.0
43.7
44.0
43.2
44.0
29.0
32.2
32.7
28.7
29.3
28.2
29.9
50.4
28.6
44.0
54.0
29.2

Vessel Name
STI Pontiac
STI Manhattan
STI Winnie
STI Oxford
STI Queens
STI Osceola
STI Lauren
STI Connaught
STI Notting Hill
STI Spiga
STI Seneca
STI Savile Row
STI Westminster
STI Brooklyn
STI Kingsway
STI Lombard
STI Carnaby
STI Black Hawk
STI Excel
STI Solidarity
STI Grace
STI Jermyn
STI Excelsior
STI Expedite
STI Exceed
STI Executive
STI Excellence
STI Experience
STI Express
STI Precision
STI Prestige
STI Pride
STI Providence
STI Sanctity
STI Solace
STI Stability
STI Steadfast
STI Supreme
STI Symphony
STI Gallantry
STI Goal
STI Nautilus
STI Guard
STI Guide
STI Selatar
STI Rambla
STI Galata
STI Bosphorus
STI Leblon
STI La Boca
STI San Telmo
STI Donald C Trauscht
STI Gauntlet
STI Gladiator
STI Gratitude
STI Esles II

53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107
108

Carrying value as of,

Year Built

December 31, 2020

2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2017
2017
2017
2017
2017
2017
2017
2017
2017
2017
2017
2018

34.5 (1)
31.8 (1)
47.9 (1)
48.1 (1)
32.0 (1)
34.2 (1)
47.9 (1)
47.6 (1)
35.3 (1)
51.4 (1)
34.8 (1)
52.2 (1)
35.3 (1)
31.9 (1)
52.8 (1)
53.3 (1)
52.9 (1)
34.6 (1)
33.9 (1)
40.1 (1)
45.4 (1)
48.1 (1)
34.8 (1)
35.1 (1)
34.8 (1)
37.9 (1)
37.8 (1)
35.5 (1)
38.1 (1)
38.0 (1)
37.9 (1)
37.8 (1)
37.8 (1)
41.2 (2)
41.4 (1)
42.4 (1)
41.0 (2)
38.6 (2)
41.2 (2)
39.9 (2)
39.9 (1)
40.0 (2)
39.7 (2)
39.9 (1)
48.1 (1)
48.9 (1)
35.4 (1)
32.9 (1)
35.9 (1)
36.0 (1)
34.3 (1)
34.7 (1)
42.1 (1)
42.3 (1)
42.4 (1)
34.9 (1)

December 31, 2019
33.6
32.8
44.7
44.7
29.1
33.5
44.7
44.4
31.9
49.7
33.4
50.7
32.0
28.9
50.7
51.5
50.9
31.7
34.5
37.6
45.6
46.6
35.9
35.9
35.9
39.1
39.0
36.5
36.7
36.7
36.8
39.2
36.7
41.1
42.8
40.1
42.7
40.2
42.9
41.5
41.6
41.7
41.5
41.6
47.1
47.9
34.3
34.4
34.9
34.8
36.9
37.0
43.9
44.1
41.2
37.4

Vessel Name
STI Jardins
STI Magic
STI Majestic
STI Mystery
STI Marvel
STI Magnetic
STI Millennia
STI Magister
STI Mythic
STI Marshall
STI Modest
STI Maverick
STI Lobelia
STI Lotus
STI Lily
STI Lavender
STI Miracle
STI Maestro
STI Mighty
STI Maximus
Style
Stone
Steel
Sky
Single
Silent
Star
STI Le Rocher
STI Larvotto
STI Beryl

109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138

Carrying value as of,

Year Built

December 31, 2020

2018
2019
2019
2019
2019
2019
2019
2019
2019
2019
2019
2019
2019
2019
2019
2019
2020
2020
2020
2020
2008
2008
2008
2007
2007
2007
2007
2013
2013
2013

35.0 (1)
37.1 (1)
37.1 (1)
37.1 (1)
37.1 (1)
37.1 (1)
37.1 (1)
37.1 (1)
37.2 (1)
37.2 (1)
37.2 (1)
37.6 (1)
52.1 (1)
52.0 (1)
52.1 (1)
52.1 (1)
38.2 (1)
38.1 (1)
38.4 (1)
39.6 (1)
0.5 (3)
0.5 (3)
0.5 (3)
0.6 (3)
N/A (5)
N/A (5)
N/A (5)
11.9 (3)
11.8 (3)
12.3 (3)

December 31, 2019
37.5
38.8
38.8
38.7
38.7
38.8
38.7
38.8
38.7
38.7
38.7
38.8
54.1
54.1
54.1
54.1
N/A (4)
N/A (4)
N/A (4)
N/A (4)
2.7
2.7
2.7
2.7
0.6
0.6
0.6
14.4
14.3
14.4

4,810.1

4,706.1

(1) As of December 31, 2020, the basic charter-free market value is lower than each vessel’s carrying value. We believe
that the aggregate carrying value of these vessels exceeded their aggregate basic charter-free market value by
approximately $591.1 million.

(2) As of December 31, 2020, the basic charter-free market value was higher than each vessel’s carrying value. We
believe that the aggregate carrying value of these vessels was lower than their aggregate basic charter-free market
value by approximately $13.8 million.

(3) This vessel is a leased vessel that is being accounted for as a ROU vessel under IFRS 16 - Leases. Accordingly, the
carrying value reflects the present value of the minimum lease payments plus initial direct costs at the commencement
date of the lease less straight-line depreciation over the life of the lease. Independent valuations were not obtained for
these vessels, however they were included as part of our impairment testing as described above.

(4) These vessels were leased during the year ended December 31, 2020.

(5) These vessels were leased vessels that were being accounted for as ROU vessels under IFRS 16 - Leases. The bareboat

charters on these vessels expired during the year ended December 31, 2020.

Sensitivities and benchmarking

The impairment test that we conduct is most sensitive to variances in the discount rate and future time charter

rates. Based on the sensitivity analysis performed for December 31, 2020:

• A 1.0% increase in the discount rate would result in 57 vessels being impaired for an aggregate $103.1 million

loss, comprised of: 46 MRs for $90.9 million; and 11 LR1s for $12.2 million.

• A 5% decrease in forecasted time charter rates, which is between $900 per day and $1,500 per day depending on
the vessel class, would result in 71 vessels being impaired for an aggregate $161.0 million loss, comprised of: 60
MRs for $140.3 million; and 11 LR1s vessels for $20.7 million.

Based on the sensitivity analysis performed for December 31, 2019:

• A 1.0% increase in the discount rate would result in 30 vessels being impaired for an aggregate $44.1 million loss,
comprised of: (i) 13 Handymax for $5.2 million; (ii) 11 MRs for $17.8 million; and (iii) six LR2s for $21.1
million.

• A 5% decrease in forecasted time charter rates would also result in 34 vessels being impaired for an aggregate
$76.1 million loss, loss comprised of: (i) 13 Handymax for $19.0 million; (ii) 15 MRs for $31.7 million; and (iii)
six LR2s for $25.4 million.

We also compared the results of our value in use calculations to various other scenarios, which can be summarized as follows:

•

If we assumed that the spot market rates that we earned in the final six months of 2020 persisted for the entirety of
2021 (i.e. a ‘protracted pandemic’ scenario), with a reversion to the published time charter rates in 2022, the
calculation would result in 40 vessels being impaired for an aggregate $59.1 million loss comprised of: 37 MRs
for $57.9 million; and three LR1s for $1.2 million.

If we used P10Y-year historical average TCE rates for our value in use calculations, the calculation would result
in 46 vessels being impaired for an aggregate $83.3 million loss comprised of: 41 MRs for $80.1 million; and four
LR1s for $3.0 million.

If we used P15Y-year historical average TCE rates for our value in use calculations, no impairment loss would be
recorded in any of our vessel classes.

If we used P20Y-year historical average TCE rates for our value in use calculations, no impairment loss would be
recorded in any of our vessel classes.

While the results of this scenario building exercise support our conclusions, it remains our belief that our base
case value in use calculations, through the use of independently published time charter rates, form an objective
approximation of forward looking cash flows based on the most recent available data in the market (which incorporates
market views on the trajectory of the COVID-19 pandemic, among other factors). Historical averages do not incorporate
such perspectives and are also based on time periods when vessel operating expenses were lower (as opposed to our
calculations, where we project gradual increases in vessel operating expenses).

We refer you to the discussion herein under “Item 3. Key Information—D. Risk Factors—Risks Related to our
Company,” including the risk factor entitled “Declines in charter rates and other market deterioration could cause us to
incur impairment charges.”

IFRS 16 - Leases

IFRS 16 - Leases, was issued by the International Accounting Standards Board on January 13, 2016. IFRS 16
applied to an entity’s first annual IFRS financial statements for a period beginning on or after January 1, 2019. IFRS 16
amended the definition of what constitutes a lease to be a contract that conveys the right to control the use of an identified
asset if the lessee has both (i) the right to obtain substantially all of the economic benefits from the use of the identified
asset, and (ii) the right to direct the use of the identified asset throughout the period of use. We have determined that our
existing pool and time chartered-out arrangements meet the definition of leases under IFRS 16, with the Company as
lessor, on the basis that the pool or charterer manages the vessels in order to enter into transportation contracts with their
customers, and thereby enjoys the economic benefits derived from such arrangements. Furthermore, the pool or charterer
can direct the use of a vessel (subject to certain limitations in the pool or charter agreement) throughout the period of use.

Moreover, under IFRS 16, we are also required to identify the lease and non-lease components of revenue and
account for each component in accordance with the applicable accounting standard. In time chartered-out or pool
arrangements, we have determined that the lease component is the vessel and the non-lease component is the technical
management services provided to operate the vessel. These components are accounted for as follows:

• All fixed lease revenue earned under these time chartered-out arrangements will be recognized on a straight-

line basis over the term of the lease.

• Lease revenue earned under our pool arrangements will be recognized as it is earned, since it is 100%

variable.

• The non-lease component will be accounted for as services revenue under IFRS 15 - Revenue from Contract
with Customers. This revenue will be recognized “over time” as the customer (i.e. the pool or the charterer) is
simultaneously receiving and consuming the benefits of the service.

The application of the above principles did not result in a material difference to the amount of revenue recognized

under our previous accounting policies for pool and time chartered-out arrangements.

IFRS 16 also amended the existing accounting standards to require lessees to recognize, on a discounted basis, the
rights and obligations created by the commitment to lease assets on the balance sheet, unless the term of the lease is 12
months or less.

As of December 31, 2020, we had 26 bareboat chartered-in vessels which are being accounted for under IFRS 16 -

Leases as right of use assets and related lease liabilities.

Revenue recognition

Revenue earned by our vessels is comprised of pool revenue, time charter revenue and voyage revenue.

(1) Pool revenue for each vessel is determined in accordance with the profit-sharing terms specified within each
pool agreement. In particular, the pool manager aggregates the revenues and expenses of all of the pool
participants and distributes the net earnings to participants based on:

•

the pool points attributed to each vessel (which are determined by vessel attributes such as cargo carrying
capacity, fuel consumption, and construction characteristics); and

the number of days the vessel participated in the pool in the period.

(2) Time charter agreements are when our vessels are chartered to customers for a fixed period of time at rates
that are generally fixed, but may contain a variable component based on inflation, interest rates, or current
market rates.

(3) Voyage charter agreements are charter hires, where a contract is made in the spot market for the use of a

vessel for a specific voyage for a specified charter rate.

Of these revenue streams, revenue generated from voyage charter agreements is within the scope of IFRS 15.
Revenue generated from pools and time charters is accounted for as revenue earned under operating leases. Accordingly,
the implementation of IFRS 15 did not have an effect on the revenue recognized from the pools or time charters however
these arrangements were impacted by IFRS 16 - Leases, which is effective for annual periods beginning on or after January 1,
2019 and is discussed further above.

The accounting for our different revenue streams is as follows:

Spot market revenue

For vessels operating directly in the spot market, we recognize revenue ‘over time’ as the customer (i.e. the
charterer) is simultaneously receiving and consuming the benefits of the vessel. In a spot market voyage, revenue is
recognized on a pro-rata basis commencing on the date that the cargo is loaded and concluding on the date of discharge.

Pool revenue

We recognize pool revenue based on quarterly reports from the pools which identify the number of days the vessel
participated in the pool, the total pool points for the period, the total pool revenue for the period, and the calculated share of
pool revenue for the vessel.

Time charter revenue

Time charter revenue is recognized as services are performed based on the daily rates specified in the time charter

contract.

Voyage expenses

Voyage expenses primarily include bunkers, port charges, canal tolls, cargo handling operations and brokerage
commissions paid by us under voyage charters. Voyage costs incurred in the fulfillment of a voyage charter are deferred
and amortized over the course of the charter commencing on the date that the cargo is loaded and concluding on the date of
discharge. Voyage costs are only deferred if they (i) relate directly to such charter, (ii) generate or enhance resources to be
used in meeting obligations under the charter and (iii) are expected to be recovered.

Vessel lives and residual value

The carrying value of each of our vessels represents its original cost at the time it was delivered or purchased less
depreciation and impairment. We depreciate our vessels to their residual value on a straight-line basis over their estimated
useful lives of 25 years. The estimated useful life of 25 years is management’s best estimate and is also consistent with
industry practice for similar vessels. The residual value is estimated as the lightweight tonnage of each vessel multiplied by
a forecast scrap value per ton. The scrap value per ton is estimated by taking into consideration the historical four-year
scrap market rate average, which we update annually.

An increase in the estimated useful life of a vessel or in its scrap value would have the effect of decreasing the
annual depreciation charge and extending it into later periods. A decrease in the useful life of a vessel or scrap value would
have the effect of increasing the annual depreciation charge.

When regulations place significant limitations over the ability of a vessel to trade on a worldwide basis, the
vessel’s useful life is adjusted to end at the date such regulations become effective. No such regulations have been
identified that would have impacted the estimated useful life of our vessels. The estimated salvage value of the vessels may
not represent the fair market value at any one time since market prices of scrap values tend to fluctuate.

Deferred drydock cost

We recognize drydock costs as a separate component of the vessels’ carrying amounts and amortize the drydock
cost on a straight-line basis over the estimated period until the next drydock. We use judgment when estimating the period
between when drydocks are performed, which can result in adjustments to the estimated amortization of the drydock
expense. If the vessel is disposed of before the next drydock, the remaining balance of the deferred drydock is written-off
and forms part of the gain or loss recognized upon disposal of vessels in the period when contracted. We expect that our
vessels will be required to be drydocked approximately every 30 to 60 months for major repairs and maintenance that
cannot be performed while the vessels are operating. Costs capitalized as part of the drydock include actual costs incurred
at the drydock yard and parts and supplies used in making such repairs. We only include in deferred drydocking costs those
direct costs that are incurred as part of the drydocking to meet regulatory requirements, or are expenditures that add
economic life to the vessel, increase the vessel’s earnings capacity or improve the vessel’s efficiency. Direct costs include
shipyard costs as well as the costs of placing the vessel in the shipyard. Expenditures for normal maintenance and repairs,
whether incurred as part of the drydocking or not, are expensed as incurred.

A. Operating Results

Results of Operations for the year ended December 31, 2020 compared to the year ended December 31, 2019

In thousands of U.S. dollars
Vessel revenue ....................................................................
Vessel operating costs .........................................................
Voyage expenses ................................................................
Charterhire ..........................................................................
Depreciation - owned or sale leaseback vessels ..................
Depreciation - right of use assets ........................................
Impairment of vessels .........................................................
Impairment of goodwill ......................................................
General and administrative expenses ..................................
Financial expenses ..............................................................
Gain on repurchase of Convertible Notes ...........................
Financial income .................................................................
Other income / (expenses), net ...........................................
Net income / (loss) .............................................................

2020
$ 915,892
(333,748)
(7,959)
—
(194,268)
(51,550)
(14,207)
(2,639)
(66,187)
(154,971)
1,013
1,249
1,499
$ 94,124

For the year ended
December 31,

Change
favorable /
(unfavorable)
211,567
$
(39,217)
(1,799)
4,399
(14,216)
(24,634)
(14,207)
(2,639)
(3,892)
31,264
1,013
(6,933)
1,908
142,614

2019
$ 704,325
(294,531 )
(6,160 )
(4,399 )
(180,052 )
(26,916 )
—
—
(62,295 )
(186,235 )
—
8,182
(409 )
$ (48,490 ) $

Percentage
Change

30 %
(13)%
(29)%
100 %
(8)%
(92)%
N/A
N/A
(6)%
17 %
N/A
(85)%
467 %
294 %

Net income / (loss). Net income for the year ended December 31, 2020 was $94.1 million, an increase of $142.6
million, or 294%, from the net loss of $48.5 million for the year ended December 31, 2019. The differences between the
two periods are discussed below.

Vessel revenue. Vessel revenue for the year ended December 31, 2020 was $915.9 million, an increase of $211.6
million, or 30%, from vessel revenue of $704.3 million for the year ended December 31, 2019. The daily TCE revenue (a
non-IFRS measure) per day increased to $19,655 during the year ended December 31, 2020 from $16,682 per day during
the year ended December 31, 2019. This increase was also driven by an increase in revenue days to 46,192 days from
41,852 days for the years ended December 31, 2020 and 2019, respectively. The increases in revenue and revenues days
are discussed below by reportable segment.

The following is a summary of our consolidated revenue by revenue type, in addition to TCE revenue per day and

total revenue days.

In thousands of U.S. dollars
Pool revenue by operating segment

For the year ended
December 31,

2020

2019

Change
favorable /
(unfavorable)

Percentage
Change

LR2 ..................................................................................
MR ..................................................................................
Handymax .......................................................................
LR1 ..................................................................................
Total pool revenue ..............................................................
Voyage revenue (spot market) ............................................
Time charter-out revenue ....................................................
Gross revenue .....................................................................
Voyage expenses ................................................................
TCE revenue(1) ....................................................................

$ 369,476
340,937
105,355
87,028
902,796
13,096
—
915,892
(7,959)
$ 907,933

$ 260,969
261,727
103,150
66,040
691,886
9,888
2,551
704,325
(6,160)
$ 698,165

Daily pool TCE by operating segment:(1)

LR2 pool ..........................................................................
MR pool ..........................................................................
Handymax pool ...............................................................
LR1 pool ..........................................................................
Consolidated daily pool TCE ..............................................
Voyage (spot market) - daily TCE ......................................
Time charter-out - daily TCE ..............................................
Consolidated daily TCE ......................................................

$ 27,048
16,306
14,854
21,594
19,761
12,871
—
19,655

$ 20,270
15,216
14,745
15,894
16,787
9,700
18,902
16,682

Pool revenue days per operating segment

LR2 ..................................................................................
MR ..................................................................................
Handymax .......................................................................
LR1 ..................................................................................
Total pool revenue days ......................................................
Voyage (spot market) revenue days ....................................
Time charter-out revenue days ...........................................
Total revenue days ..............................................................

13,660
20,908
7,074
4,030
45,672
520
—
46,192

12,865
17,116
6,990
4,098
41,069
655
128
41,852

108,507
79,210
2,205
20,988
210,910
3,208
(2,551)
211,567
(1,799)
209,768

6,778
1,090
109
5,700
2,974
3,171
(18,902)
2,973

795
3,792
84
(68)
4,603
(135)
(128)
4,340

42 %
30 %
2 %
32 %
30 %
32 %
(100)%
30 %
(29)%
30 %

33 %
7 %
1 %
36 %
18 %
33 %
(100)%
18 %

6 %
22 %
1 %
(2)%
11 %
(21)%
(100)%
10 %

(1) We report TCE revenues, a non-IFRS measure, because (i) we believe it provides additional meaningful information in
conjunction with voyage revenues and voyage expenses, the most directly comparable IFRS measures, (ii) it assists
our management in making decisions regarding the deployment and use of our vessels and in evaluating their financial
performance, (iii) it is a standard shipping industry performance measure used primarily to compare period-to-period
changes in a shipping company’s performance irrespective of changes in the mix of charter types (spot charters, time
charters and bareboat charters) under which the vessels may be employed between the periods, and (iv) we believe that
it presents useful information to investors.

Pool revenue. Pool revenue for the year ended December 31, 2020 was $902.8 million, an increase of $210.9
million, or 30% from $691.9 million for the year ended December 31, 2019. The increase in pool revenue was due to an
increase in pool TCE revenue per day across all of our reportable segments and an increase in pool revenue days to 45,672
for the year ended December 31, 2020 from 41,069 for the year ended December 31, 2019.

Supply and demand dynamics shifted favorably during the fourth quarter of 2019 and early in the first quarter of
2020, driven by the January 1, 2020 implementation date of the International Maritime Organization’s (“IMO”) low sulfur
emissions standards. The implementation of these standards impacted the trade flows of both crude and refined petroleum
products which, combined with favorable supply and demand dynamics, resulted in improvements in daily spot market
TCE rates.

Towards the end of the first quarter of 2020, travel restrictions and other preventive measures to control the spread
of the COVID-19 virus resulted in a precipitous decline in oil demand. Lack of corresponding production and refinery cuts
resulted in a supply glut of oil and refined petroleum products, which was exacerbated by extreme oil price volatility from
the Russia-Saudi Arabia oil price war. The oversupply of petroleum products and contango in oil prices led to record
floating storage and arbitrage opportunities of both crude and refined petroleum products. These market conditions, which
began in March 2020, had a disruptive impact on the supply and demand balance of product tankers, and resulted in
significant and prolonged spikes in spot TCE rates as vessel availability tightened. These market conditions persisted for
most of the second quarter of 2020 and began to abate in June 2020 as the underlying oil markets stabilized. These
conditions led to the gradual unwinding of excess inventories and thus a reduction in spot TCE rates. Spot TCE rates
remained subdued through the end of 2020, as the continuation of the unwinding of inventories, coupled with tepid demand
for oil, had an adverse impact on the demand for our vessels.

LR2 pool revenue. Pool revenue from LR2 vessels for the year ended December 31, 2020 was $369.5 million, an
increase of $108.5 million, or 42%, from $261.0 million for the year ended December 31, 2019. Daily pool TCE revenue
increased to $27,048 per day from $20,270 per day during the years ended December 31, 2020 and 2019, respectively. This
increase was driven by the favorable market conditions in the first half of 2020 where the strength in the market prior to the
onset of the COVID-19 pandemic was followed by the COVID-19 precipitated volatility in the commodities markets which
significantly benefited demand for our vessels. LR2s particularly benefited from these market conditions as the steep
contango in the oil markets led to the utilization of larger vessels such as LR2s and LR1s, for floating storage.
Additionally, the LR2 market remained relatively resilient to the general market headwinds during the second half of 2020
as increased volumes of naphtha were transported to the far east to meet increased demand of the petrochemical industry,
which use naphtha as a feedstock when prices relative to propane are favorable.

LR2 pool revenue days increased to 13,660 days from 12,865 days during the years ended December 31, 2020 and
2019, respectively, which was primarily due to the vessels acquired in the Trafigura Transaction which accounted for an
additional 1,016 pool revenue days during the year ended December 31, 2020. Additionally, LR2s were offhire for 1,440
days for drydock, ballast water treatment system and scrubber installations during the year ended December 31, 2020 and
for 1,240 offhire days during the year ended December 31, 2019.

MR pool revenue. MR pool revenue for the year ended December 31, 2020 was $340.9 million, an increase of
$79.2 million, or 30%, from $261.7 million for the year ended December 31, 2019. Pool revenue days increased to 20,908
days from 17,116 days during the years ended December 31, 2020 and 2019, respectively. The increase in revenue days
was driven by the vessels acquired in the Trafigura Transaction, which accounted for an additional 4,049 pool revenue days
during the year ended December 31, 2020.

MR pool daily TCE revenue also increased to $16,306 per day from $15,216 per day during the years ended
December 31, 2020 and 2019, respectively. This increase was driven by the favorable market conditions in the first half of
2020 where the strength in the market prior to the onset of the COVID-19 pandemic was followed by the COVID-19
precipitated volatility in the commodities markets which significantly benefited demand for our vessels. The daily TCE
rates earned by our vessels during the first half of 2020 offset the adverse market conditions experienced during the second
half of 2020 to result in a net overall improvement during the year. Additionally, MRs were offhire for 1,355 days for
drydock, ballast water treatment system and scrubber installations during the year ended December 31, 2020, and for 1,067
offhire days during the year ended December 31, 2019.

Handymax pool revenue. Handymax pool revenue for the year ended December 31, 2020 was $105.4 million, an
increase of $2.2 million, or 2%, from $103.2 million for the year ended December 31, 2019. Handymax pool revenue daily
TCE rates increased slightly to $14,854 per day from $14,745 per day during the years ended December 31, 2020 and
2019, respectively. Handymax vessels experienced a strong start to 2020 driven by the January 1, 2020 implementation

date of the IMO low sulfur emissions standards. The spike in daily TCE rates brought on by the COVID-19 pandemic
supported the handymax market, albeit to a lesser extent than the larger vessel classes, as smaller vessel classes are not
traditionally utilized for floating storage opportunities.

Pool revenue days increased to 7,074 days from 6,990 days during the years ended December 31, 2020 and 2019,
respectively, resulting in an aggregate increase of 84 pool revenue days. Handymax vessels were offhire for drydock and
ballast water treatment system installations for an aggregate of 394 pool revenue days during the year ended December 31,
2019 as compared to 43 days during the year ended December 31, 2020. Additionally, certain Handymax vessels were in
the spot market or on time charter during the year ended December 31, 2019 for an aggregate of 230 days, whereas these
vessels were in the pool for the entirety of the year ended December 31, 2020. These increases in days were offset by the
redelivery of three Handymax vessels upon the expiration of their leases during the year ended December 31, 2020,
resulting in an aggregate reduction of 522 pool revenue days.

LR1 pool revenue. Pool revenue from LR1 vessels for the year ended December 31, 2020 was $87.0 million, an
increase of $21.0 million, or 32%, from $66.0 million for the year ended December 31, 2019. LR1 pool daily TCE revenue
increased to $21,594 per day from $15,894 per day during the years ended December 31, 2020 and 2019, respectively. This
increase was offset by a decrease in pool revenue days to 4,030 days from 4,098 days during the years ended December 31,
2020 and 2019, respectively. This increase was driven by the favorable market conditions in the first half of 2020 where
the strength in the market prior to the onset of the COVID-19 pandemic was followed by the COVID-19 precipitated
volatility in the commodities markets which significantly benefited demand for our vessels. LR1s particularly benefited
from these market conditions as the steep contango in the oil markets led to the utilization of larger vessels such as LR2s
and LR1s, for floating storage. The daily TCE rates earned by our vessels during the first half of 2020 offset the adverse
market conditions experienced during the second half of 2020 to result in a net overall improvement during the year.

The LR1 vessels were offhire for 362 days for drydock, ballast water treatment system and scrubber installations
during the year ended December 31, 2020 and 219 offhire days during the year ended December 31, 2019. Additionally,
certain LR1 vessels were in the spot market or on time charter during the year ended December 31, 2019 for an aggregate
of 57 days, whereas these vessels were in the pool for the entirety of the year ended December 31, 2020

Voyage revenue (spot market). Voyage revenue (spot revenue) consists of spot market voyages and short-term
time charters. Voyage revenue for the year ended December 31, 2020 was $13.1 million, an increase of $3.2 million or
32.5%, from $9.9 million for the year ended December 31, 2019.

In thousands of U.S. dollars
LR2 ..............................................................................
MR ...............................................................................
Handymax ....................................................................
LR1 ..............................................................................
Total voyage revenue (spot market) .........................

For the year ended
December 31,

2020

2019

6,112
6,985
—
—
13,097

1,978
4,509
1,980
1,421
9,888

Change
favorable /
(unfavorable)
4,134
$
2,476
(1,980)
(1,421)
3,209

Percentage
Change

209.0 %
54.9 %
(100.0)%
(100.0)%
32.5 %

•

Spot market voyages: Seven MR and four LR2 product tankers operated in the spot market on voyage charters
for an aggregate 520 revenue days during the year ended December 31, 2020. These voyages earned $13.1
million in spot market revenue during that period. Seven Handymax, three MR and one LR2 product tanker
operated in the spot market on voyage charters for an aggregate 396 revenue days during the year ended
December 31, 2019. These voyages earned $5.6 million in spot market revenue during that period.

Short-term time charters: We consider short-term time charters (less than one year) as spot market voyages.
No vessels were employed on short-term time charters during the year ended December 31, 2020. We had
eight MR and four LR2 product tankers employed on short-term time charters for an aggregate 259 revenue
days during the year ended December 31, 2019. These charters earned $4.3 million in revenue during that
period.

Time charter-out revenue. There was no time charter-out revenue (representing time charters with initial terms of
one year or greater) for the year ended December 31, 2020. Time charter-out revenue was $2.6 million for the year ended
December 31, 2019. The decrease in time charter-out revenue was the result of the expiration of the time charters on an
LR2 and two Handymax vessels during the year ended December 31, 2019. Time charter-out revenue, by operating
segment, consisted of the following:

In thousands of U.S. dollars
MR ....................................................................................
Handymax .........................................................................
LR2 ...................................................................................
Total time charter-out revenue ......................................

For the year ended
December 31,

2020

2019

—
—
—
—

—
1,681
870
2,551

Change
favorable /
(unfavorable)
—
$
(1,681 )
(870 )
(2,551 )

Percentage
Change

— %
(100)%
(100)%
(100)%

The following table summarizes the terms of our time chartered-out vessels during the year ended December 31,

2019:

Name
STI Pimlico
STI Poplar
STI Rose

1
2
3

Year built
2014
2014
2015

Type
Handymax
Handymax
LR2

Delivery Date to
the Charterer
February-16
January-16
February-16

Charter
Expiration

March-19 (1) $
$
February-19
$
February-19

Rate ($/ day)
18,000
18,000
28,000

(1) Redelivery is plus 30 days or minus 10 days from the expiry date.

Vessel operating costs. Vessel operating costs for the year ended December 31, 2020 were $333.7 million, an
increase of $39.2 million, or 13%, from $294.5 million for the year ended December 31, 2019. Vessel operating days
increased to 49,562 days from 44,878 days for the years ended December 31, 2020 and 2019, respectively. These increases
are discussed below by operating segment.

The following table is a summary of our vessel operating costs by operating segment:

In thousands of U.S. dollars
Vessel operating costs

For the year ended
December 31,

2020

2019

Change
favorable /
(unfavorable)

Percentage

Change

MR ...............................................................................
LR2 ...............................................................................
Handymax ....................................................................
LR1 ...............................................................................
Total vessel operating costs .............................................

$ 147,847
107,710
47,790
30,396
$ 333,743

$ 117,274
97,346
50,750
29,161
$ 294,531

Vessel operating costs per day

MR ...............................................................................
LR2 ...............................................................................
Handymax ....................................................................
LR1 ...............................................................................
Consolidated vessel operating costs per day ....................

Operating days

MR ...............................................................................
LR2 ...............................................................................
Handymax ....................................................................
LR1 ...............................................................................
Total operating days ........................................................

6,520
7,007
6,710
6,921
6,734

22,675
15,372
7,123
4,392
49,562

6,312
6,829
6,621
6,658
6,563

18,578
14,255
7,665
4,380
44,878

(30,573 )
(10,364 )
2,960
(1,235 )
(39,212 )

(208 )
(178 )
(89 )
(263 )
(171 )

4,097
1,117
(542 )
12
4,684

(26)%
(11)%
6 %
(4)%
(13)%

(3)%
(3)%
(1)%
(4)%
(3)%

22 %
8 %
(7)%
— %
10 %

Total vessel operating costs for the year ended December 31, 2020 was $333.7 million, an increase of $39.2 million,
or 13% from $294.5 million for the year ended December 31, 2019. The increase in total vessel operating costs was due to an
increase in operating days to 49,562 for the year ended December 31, 2020 from 44,878 for the year ended December 31,
2019 and slight increases in daily vessel operating cost per day across all our operating segments to an average of $6,734 per
day during the year ended December 31, 2020 from an average of $6,563 during the year ended December 31, 2019. These
increases were largely driven by the impact of the implementation of worldwide travel restrictions in response to the COVID-
19 pandemic, which resulted in (i) increased travel costs and crew wages as the seafarers impacted by these restrictions were
repatriated and awarded extended stay bonuses, and (ii) increased spares, stores and repairs and maintenance costs, primarily
due to increased logistical costs to coordinate the delivery of supplies to the vessels.

MR vessel operating costs. Vessel operating costs for our MR segment were $147.8 million for the year ended
December 31, 2020, an increase of $30.6 million, or 26%, from $117.3 million for the year ended December 31, 2019.
Operating days increased by 4,097 days to 22,675 days from 18,578 days during the years ended December 31, 2020 and 2019,
respectively as a result of the vessels acquired in the Trafigura Transaction whereby 11 MRs were delivered on the closing date
in September 2019, and the four MRs under construction on the closing date were delivered throughout 2020. Operating costs
per day increased slightly to $6,520 per day from $6,312 per day, for the years ended December 31, 2020 and 2019,
respectively, as a result of the increased crewing and logistical expenses incurred in response to the COVID-19 pandemic.

LR2 vessel operating costs. Vessel operating costs for our LR2 segment were $107.7 million for the year ended
December 31, 2020, an increase of $10.4 million, or 11%, from $97.3 million for the year ended December 31, 2019. The
increase in operating costs was driven by an increase of 1,117 operating days during the year ended December 31, 2020,
which was primarily a result of four LR2 vessels acquired in the Trafigura Transaction. LR2 operating costs per day
increased to $7,007 per day from $6,829 per day for the years ended December 31, 2020 and 2019, respectively, due in part
to various miscellaneous repairs that were undertaken while certain vessels were drydocked, in addition to the increased
crewing and logistical expenses incurred in response to the COVID-19 pandemic.

Handymax vessel operating costs. Vessel operating costs for our Handymax segment were $47.8 million for the
year ended December 31, 2020, a decrease of $3.0 million, or 6%, from $50.8 million for the year ended December 31,
2019. Operating days decreased by 542 days to 7,123 from 7,665 days during the years ended December 31, 2020 and
2019, respectively which was a result of the expiration of the bareboat charter-in agreements on three Handymax vessels in
2020, resulting in a decrease of 560 operating days during the period. Daily operating costs for Handymax vessels
remained consistent increasing slightly to $6,710 per day during the year ended December 31, 2020 from $6,621 per day
during the year ended December 31, 2019.

LR1 vessel operating costs. Vessel operating costs for our LR1 segment for the year ended December 31, 2020
were $30.4 million, an increase of $1.2 million, or 4%, from $29.2 million for the year ended December 31, 2019. Daily
operating costs per day increased to $6,921 per day during the year ended December 31, 2020 from $6,658 per day during
the year ended December 31, 2019. The increase was due to the increased crewing and logistical expenses incurred in
response to the COVID-19 pandemic. Operating days for LR1 vessels owned or finance leased remained consistent at
4,392 and 4,380 days during the years ended December 31, 2020 and 2019, respectively.

Voyage expenses. Voyage expenses were $8.0 million for the year ended December 31, 2020, an increase of $1.8
million, or 29%, from $6.2 million for the year ended December 31, 2019. The increase was primarily the result of
implementation of the mix of vessels that traded in the spot between the two periods. A mix of Handymax, MR and LR1
vessels traded in the spot market during the year ended December 31, 2019, whereas mostly LR2s and MRs traded in the
spot market during the year ended December 31, 2020. LR2s, being our largest vessel class, consume more fuel than the
smaller vessels, which therefore had a corresponding impact on voyage expenses.

Charterhire expense. There was no charterhire expense for the year ended December 31, 2020. Charterhire
expense was $4.4 million for the year ended December 31, 2019. The decrease was driven by the adoption of IFRS 16 -
Leases on January 1, 2019. Under IFRS 16 - Leases, most chartered-in vessels are recorded as right of use assets, which are
depreciated on a straight-line basis (through depreciation expense) over the lease term, and corresponding lease liabilities
are amortized over that same period, with a portion of each payment allocated to principal and a portion allocated to
interest expense, with the remaining portion reducing the lease liability.

Depreciation - Owned and lease financed vessels. Depreciation expense for owned and lease financed vessels
was $194.3 million for the year ended December 31, 2020, an increase of $14.2 million, or 8%, from $180.1 million for the
year ended December 31, 2019. This increase was the result of the Company’s drydock, ballast water treatment system,
and scrubber installation expenditures that occurred throughout 2019 and 2020.

Depreciation - Right of use assets. Depreciation - right of use assets for the year ended December 31, 2020 was
$51.6 million. an increase of $24.6 million, or 92% from $26.9 million for the year ended December 31, 2019.
Depreciation expense – right of use assets reflects the straight-line depreciation expense recorded as a result of the
transition to IFRS 16 – Leases on January 1, 2019. Right of use asset depreciation expense increased as a result of the
Trafigura Transaction, whereby we acquired the leasehold interests in 19 vessels in September 2019 (11 MRs, four LR2s,
and four MRs then under construction). Three of the MRs under construction were delivered in the first quarter of 2020 and
one in the third quarter of 2020. All vessels acquired as part of the Trafigura Transaction are being accounted for as right of
use assets under IFRS 16 - Leases.

Impairment of vessels. Impairment of vessels for the year ended December 31, 2020 was $14.2 million. As
described in the preceding section entitled Vessel Impairment, indicators of impairment existed on our vessels at December
31, 2020. As a result of our impairment testing, the recoverable amounts for certain of the MRs in our fleet were below
their carrying amounts, which resulted in an aggregate impairment charge of $14.2 million.

Impairment of goodwill. Impairment of goodwill for the year ended December 31, 2020 was $2.6 million. The
recoverable amount of goodwill is tested in a similar manner by estimating the future cash flows of the reportable segments
to which the goodwill is allocated. Our assessment of the carrying value of goodwill that was allocated to our LR1
reportable segment, which arose from our acquisition of Navig8 Product Tankers Inc. in 2017, resulted in an impairment
charge to goodwill of $2.6 million.

General and administrative expenses. General and administrative expenses were $66.2 million for the year ended
December 31, 2020, an increase of $3.9 million, or 6%, from $62.3 million for the year ended December 31, 2019. The
change was primarily driven by an increase in compensation related expenses (amortization of restricted stock and
salaries).

Financial expenses. Financial expenses were $155.0 million for the year ended December 31, 2020, a decrease of

$31.3 million, or 17%, from $186.2 million for the year ended December 31, 2019.

Financial expenses for the year ended December 31, 2020 primarily consisted of (i) interest payable on debt of
$132.4 million, (ii) amortization of loan fees of $6.7 million, (iii) the loss on extinguishment of debt and write-off of
deferred financing fees of $4.1 million, (iv) accretion of our Convertible Notes due 2022 of $8.4 million and (v) accretion
of the premiums and discounts recorded as part of the purchase price allocation on the indebtedness assumed from Navig8
Product Tankers Inc. of $3.4 million.

Financial expenses for the year ended December 31, 2019 primarily consisted of (i) interest payable on debt of
$162.7 million, (ii) amortization of loan fees of $7.0 million, (iii) the write-off of deferred financing fees of $1.5 million,
(iv) accretion of our Convertible Notes due 2019 and Convertible Notes due 2022 of $11.4 million and (v) accretion of the
premiums and discounts recorded as part of the purchase price allocation on the indebtedness assumed from Navig8
Product Tankers Inc. of $3.6 million.

Interest expense decreased as a result of a decrease in LIBOR rates during the year ended December 31, 2020 as
compared to the year ended December 31, 2019. The decrease in interest expense was offset by an increase in interest
expense payable due to an increase in our average debt balance to $3.13 billion from $2.91 billion, which was driven by a
series of refinancings on certain of our vessels and the delivery of four vessels from the Trafigura transaction.

The loss on extinguishment of debt and write-off of deferred financing fees during the years ended December 31,

2020 and 2019, respectively, were as follows:

• During the year ended December 31, 2020, our loss on extinguishment of debt and write-off of deferred
financing fees was $4.1 million, which consisted of (i) $2.7 million of write-offs of deferred financing fees
related to the refinancing of existing indebtedness on certain vessels, (ii) $2.0 million of cash prepayment
fees, primarily from the CSSC Lease Financing, offset by (iii) $0.7 million of write-offs of the premium and
discounts related to the refinancing of existing indebtedness on certain vessels that were initially recorded as
part of the purchase price allocation on debt assumed from Navig8 Product Tankers Inc.

• During the year ended December 31, 2019, we wrote-off an aggregate of $1.5 million of deferred financing
fees, which consisted of (i) $1.2 million related to the initiatives to refinance the existing indebtedness on
certain of our vessels and (ii) $0.3 million related to the early redemption of our Senior Notes due 2019 in
March 2019.

Gain on repurchase of Convertible Notes. Gain on repurchase of Convertible Notes was $1.0 million for the year
ended December 31, 2020. The gain relates to the repurchase of $52.3 million face value of our Convertible Notes due
2022 at an average price of $894.12 per $1,000 principal amount, or $46.7 million. The carrying value of the debt portion
of the amount repurchased was $47.7 million in aggregate on the dates of repurchase.

Financial income. Financial income was $1.2 million for the year ended December 31, 2020, a decrease of $6.9
million, or 85%, from $8.2 million for the year ended December 31, 2019. Financial income primarily relates to interest
earned on our cash balance.

Results of Operations for the year ended December 31, 2019 compared to the year ended December 31, 2018

For a discussion of our results for the year ended December 31, 2019 compared to the year ended December 31,
2018, please see “Item 5 - Operating and Financial Review and Prospects - A. Operating Results - Results of Operations
for the Year Ended December 31, 2019 Compared to the Year Ended December 31, 2018” contained in our annual report
on Form 20-F for the year ended December 31, 2019, filed with the SEC on March 31, 2020.

B. Liquidity and Capital Resources

Our primary source of funds for our short-term and long-term liquidity needs will be the cash flows generated
from our vessels, which primarily operate in the Scorpio Pools, in the spot market or on time charter, in addition to cash on
hand. We believe that the Scorpio Pools reduce volatility because (i) they aggregate the revenues and expenses of all pool
participants and distribute net earnings to the participants based on an agreed upon formula and (ii) some of the vessels in
the pool are on time charter. Furthermore, spot charters provide flexibility and allow us to fix vessels at prevailing rates.

The cash flows we generate from our vessels have been, and continue to be impacted by the COVID-19 pandemic.
Initially, the onset of the COVID-19 pandemic resulted in a sharp reduction of economic activity and a corresponding
reduction in the global demand for oil and refined petroleum products. This period of time was marked by extreme
volatility in the oil markets and the development of a steep contango in the prices of oil and refined petroleum products.
Consequently, an abundance of arbitrage and floating storage opportunities opened up, which resulted in record increases
in spot TCE rates during the second quarter of 2020. These market dynamics led to a build-up of global oil and refined
petroleum product inventories. In June 2020, the underlying oil markets stabilized and global economies began to recover,
albeit at a slow pace. These conditions led to the gradual unwinding of excess inventories and thus a reduction in spot TCE
rates. Spot TCE rates have remained subdued ever since, as the continuation of the unwinding of inventories, coupled with
tepid demand for oil, have had an adverse impact on the demand for our vessels. We expect that the COVID-19 pandemic
will continue to cause volatility in the commodities markets. The scale and duration of these circumstances is unknowable
but could have a material impact on our earnings, cash flow and financial condition in 2021.

Additionally, certain of our credit facilities have scheduled maturities within 2021 and the first quarter of 2022.
The financing for one vessel under our KEXIM Credit Facility, two vessels under our ING Credit Facility, and two vessels
under our 2018 NIBC Credit Facility were scheduled to mature within 2021, but have since been refinanced. These
refinancings are described below within the section Long-Term Debt Obligations and Credit Arrangements. Additionally,
the financing for one vessel under our CITI / K-Sure Credit Facility is scheduled to mature in March 2022.

We currently project that we will have adequate financial resources to continue in operation and meet our
financial commitments (including but not limited to debt service obligations, obligations under sale and leaseback
arrangements, commitments under other leasing arrangements, and commitments under our scrubber and BWTS contracts)
for a period of at least twelve months from the date of this annual report.

A protracted extension of the adverse market conditions brought on by the COVID-19 pandemic could cause us to
breach the covenants under our financing arrangements and could have a material adverse effect on our business, results of
operations, cash flows and financial condition. These circumstances could cause us to seek covenant waivers from our
lenders and to pursue other means to raise liquidity, such as through the sale of vessels or in the capital markets, to meet
our obligations. A discussion and analysis of our key risks, including sensitivities thereto, can be found in “Item 3. Key
Information - D. Risk Factors” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk”.

We continuously evaluate potential transactions that we believe will be accretive to earnings, enhance shareholder
value or are in the best interests of the Company, which may include the pursuit of other business combinations, the
acquisition of vessels or related businesses, the expansion of our operations, repayment of existing debt, share repurchases,
short-term investments or other uses. Any funds received may be used by us for any corporate purpose. In connection with
any transaction, we may enter into additional financing arrangements, refinance existing arrangements or raise capital

through public or private debt or equity offerings of our securities. Any funds raised by us may be used for any corporate
purpose. There is no guarantee that we will grow the size of our fleet or enter into transactions that are accretive to our
shareholders.

As of December 31, 2020, our cash balance was $187.5 million, which was less than our cash balance of $202.3
million as of December 31, 2019. The changes in our cash balance are discussed below under the section entitled Cash
Flows. As of March 30, 2021 and December 31, 2020, we had approximately $3.146 billion and $3.087 billion in aggregate
outstanding indebtedness, respectively (which reflects the amounts payable under term loan facilities, lease financing
arrangements and right of use liabilities and excludes unamortized deferred financing fees or other premiums and
discounts). All of our credit facilities are described below under “Long-Term Debt Obligations and Credit Arrangements.”

As of December 31, 2020, our long-term liquidity needs were comprised of our debt repayment obligations for our
secured credit facilities, lease financing arrangements, obligations under our time and bareboat charter-in arrangements
(which are accounted for under IFRS 16- Leases), and our obligations for the purchase of exhaust gas cleaning systems or
“scrubbers” and ballast water treatment systems.

Equity Issuances

Trafigura Transaction

As part of the September 2019 Trafigura Transaction, we purchased all of the issued and outstanding shares of the
Trafigura subsidiaries that collectively held leasehold interests in 19 vessels for an aggregate value of $803 million. The
acquisition of the leasehold interests includes a finance lease arrangement with an international financial institution under a
bareboat contract arrangement. After the assumption of the present value of the finance lease arrangement of approximately
$670 million, we issued an aggregate of 4,572,873 of our common shares at a price of $29.00 per share as full
consideration for the acquisition of the Trafigura Subsidiaries.

Private Placements

In September 2019, we closed on private placements with Trafigura and SSH (a related party) for $35 million and

$15 million, respectively, in exchange for an aggregate of 1,724,137 of our common shares at $29.00 per share.

At the Market Share Issuance Program

In November 2019, we entered into an “at the market” offering program (the “ATM Program”) pursuant to which
we may sell up to $100 million of our common shares, par value $0.01 per share. As part of the ATM Program, we entered
into an equity distribution agreement dated November 7, 2019 (the “Sales Agreement”), with BTIG, LLC, as sales agent
(the “Agent”). In accordance with the terms of the Sales Agreement, we may offer and sell our common shares from time
to time through the Agent by means of ordinary brokers’ transactions on the NYSE at market prices, in block transactions,
or as otherwise agreed upon by the Agent and the Company.

During the year ended December 31, 2020, we sold an aggregate of 137,067 of our common shares under the

ATM Program at an average price of $18.79 per share for aggregate net proceeds of $2.6 million.

Securities Repurchase Programs

In May 2015, our Board of Directors authorized a Securities Repurchase Program to purchase up to an aggregate

of $250 million of our securities.

• Between July 1, 2020 and September 7, 2020, we repurchased $52.3 million face value of our Convertible

Notes due 2022 at an average price of $894.12 per $1,000 principal amount, or $46.7 million.

•

In September 2020, we acquired an aggregate of 1,170,000 of our common shares at an average price of
$11.18 per share for a total of $13.1 million. The repurchased shares are being held as treasury shares.

In September 2020, our Board of Directors authorized a new Securities Repurchase Program to purchase up to an
aggregate of $250 million of securities, which, in addition to our common shares, currently consist of our Senior Notes due
2025 (NYSE: SBBA), which were issued in May 2020, Convertible Notes due 2022, which were issued in May and July
2018, and Convertible Notes due 2025, which were issued in March 2021. The aforementioned repurchases of common stock
and our convertible notes were executed under the previous securities repurchase program which has since been terminated.
Any future purchases of our securities will be made under the new $250 million securities repurchase program and no
securities have been repurchased under this program during the year ended December 31, 2020 and through March 30, 2021.

2013 Equity Incentive Plan

For a description of issuances of our common shares pursuant to our 2013 Equity Incentive Plan, see “Item 6.

Directors, Senior Management and Employees - B. Compensation - 2013 Equity Incentive Plan.”

Cash Flows

The table below summarizes our sources and uses of cash for the periods presented:

In thousands of U.S. dollars
Cash flow data
Net cash inflow/(outflow)
Operating activities ...............................................................................................................
Investing activities ................................................................................................................
Financing activities ...............................................................................................................

Cash flow from operating activities

Fiscal year ended December 31, 2020 compared to fiscal year ended December 31, 2019

For the year ended
December 31,

2020

2019

419,381
(174,477)
(259,696)

$ 209,512
(206,973)
(393,888)

Operating cash flows are driven by our results of operations along with movements in working capital. The
following table sets forth the components of our operating cash flows for the years ended December 31, 2020 and
December 31, 2019:

In thousands of U.S. dollars
Vessel revenue(1) ................................................................
Vessel operating costs(1) .....................................................
Voyage expenses(1) ............................................................
Charterhire(1) ......................................................................
General and administrative expenses - cash(1)(2) ................
Financial expenses - cash(1)(3) .............................................
Change in working capital(4) ..............................................
Financial income - cash .....................................................
Other ..................................................................................
Operating cash flow .........................................................

For the year ended
December 31,

2020
$ 915,892
(333,748 )
(7,959 )
—
(37,681 )
(134,454 )
14,583
681
2,067
$ 419,381

2019
$ 704,325
(294,531)
(6,160)
(4,399)
(34,874)
(162,738)
116
7,645
128
$ 209,512

Change
favorable /
(unfavorable)
211,567
$
(39,217)
(1,799)
4,399
(2,807)
28,284
14,467
(6,964)
1,939
209,869

Percentage

Change

30 %
(13)%
(29)%
100 %
(8)%
17 %
(12,472)%
(91)%
1,515 %
100 %

(1) See “Item 5. Operating and Financial Review and Prospects- A. Operating Results” for information on these variations

for the years ended December 31, 2020 and 2019.

(2) Cash general and administrative expenses are general and administrative expenses from our consolidated statements of
income or loss excluding the amortization of restricted stock of $28.5 million and $27.4 million for the years ended
December 31, 2020 and 2019, respectively.

(3) Cash financial expenses represents interest payable on our outstanding indebtedness. These amounts are derived from
Financial expenses from our consolidated statements of income or loss excluding (i) the amortization of deferred
financing fees of $6.7 million and $7.0 million for the years ended December 31, 2020 and 2019, respectively, (ii) the
write-off of deferred financing fees and unamortized discounts on sale and leaseback facilities of $2.0 million and $1.5
million over these same periods, (iii) the accretion of our Convertible Notes due 2019 and Convertible Notes due 2022
of $8.4 million and $11.4 million over these same periods, and (iv) accretion of $3.4 million and $3.6 million related
to the premiums and discounts recorded as part of the initial purchase price allocation on the indebtedness assumed
from Navig8 Product Tankers Inc. during the years ended December 31, 2020 and 2019. Cash financial expenses
decreased primarily as a result of decreases in LIBOR rates during the year ended December 31, 2020 as compared to
the year ended December 31, 2019 as LIBOR rates underpin our variable rate borrowings. The decrease in interest
expense was offset by an increase in interest expense payable due to an increase in our average debt balance to $3.13
billion from $2.91 billion, which was driven by borrowings to partially finance the purchase and installation of
scrubbers, and a series of refinancings on certain of our vessels.

(4) The change in working capital in 2020 was primarily driven by decreases in accounts receivable, prepaid expenses and
other current assets and other assets offset by decreases in accounts payable and accrued expenses, as well as an increase
in inventories. The decrease in accounts receivable is due to timing. The end of 2019 marked a period of rising revenues
driven by the onset of the IMO’s low sulfur emission standard regulations, which served as a catalyst for the demand of
the seaborne transportation of refined petroleum products. Accounts receivable at December 31, 2019 reflects the
impact of these conditions. Conversely, the decreased accounts receivable balance at December 31, 2020 reflects the
adverse market conditions brought on by the COVID-19 pandemic, which materialized for our business during the
second half of 2020. The decreases in accrued expenses and accounts payable were driven by the timing of payments to
suppliers in addition to a reduction in accrued interest given the decrease in LIBOR rates from 2019 to 2020. The
remaining changes in working capital were also driven by the timing of the payments related to such items.

The change in working capital in 2019 was primarily driven by (i) increases in accrued expenses and accounts payable,
(ii) a decrease in prepaid expenses, offset by (iii) increases in other assets, accounts receivable and inventories. The
increases in accrued expenses and accounts payable were driven by the timing of payments to suppliers, an increase in
accrued short-term employee benefits and reduced by changes in the amount of accrued interest expense at December 31,
2019. The increase in accounts receivable is due to the timing of cash receipts, which benefited from both higher revenues
and the increase in vessels from the Trafigura Transaction in the fourth quarter of 2019 as compared to the fourth quarter
of 2018. The remaining changes in working capital were driven by the timing of the payments related to such items.

Cash flow from investing activities

The following table sets forth the components of our investing cash flows for the years ended December 31, 2020

and December 31, 2019:

In thousands of U.S. dollars
Acquisition of vessels and payments for vessels under

For the year ended
December 31,

2020

2019

Change
favorable /
(unfavorable)

Percentage
Change

construction(1) ..................................................................

—

(2,998 ) $

2,998

100%

Drydock, scrubber, ballast water treatment system and
other vessel related payments (owned, finance leased
and bareboat-in vessels)(2) ...............................................
Net cash outflow from investing activities ......................

(174,477)
(174,477)

(203,975 )
(206,973 )

29,498
32,496

14%
16%

(1) The amounts paid during the year ended December 31, 2019 represent initial direct costs associated with the
acquisition of leasehold interests in 19 product tankers from Trafigura in September 2019, which primarily consist of
legal and other professional fees incurred as part of this transaction.

(2) Drydock, scrubber, ballast water treatment system and other vessel related payments represent the cash paid in 2020
and 2019 for the drydocking of our vessels, payments made as part of the agreements to purchase and install scrubbers
and ballast water treatment systems and other vessel equipment.

In July 2018, we executed an agreement to purchase 55 ballast water treatment systems from an unaffiliated third-party
supplier for total consideration of $36.2 million. We paid $2.1 million and $23.5 million as installment payments
under this agreement during the years ended December 31, 2020 and 2019, respectively. Additionally, an aggregate of
$18.3 million and $27.5 million were paid during the years ended December 31, 2020 and 2019, respectively, as
installation costs.

From August 2018 through November 2018, we entered into agreements with two unaffiliated third-party suppliers to
retrofit a total of 77 of our tankers with scrubbers. In June and September 2019, we exercised options to retrofit an
additional 14 and seven of our vessels, respectively, with scrubbers for total consideration of $30.3 million. In April
2020, we reached an agreement to postpone the purchase and installation of scrubbers on 19 vessels. The installation
of these scrubbers is now expected to begin not earlier than 2021 and in February 2021 we signed an agreement to
retain the option to purchase these scrubbers through February 2023.

We paid $43.9 million and $69.6 million as installment payments under these agreements during the years ended
December 31, 2020 and 2019, respectively. Additionally, an aggregate of $68.2 million and $42.9 million were paid
during the years ended December 31, 2020 and 2019, respectively, as installation costs.

Thirty-four of our vessels were drydocked in accordance with their scheduled, class required special surveys and $42.0
million (which includes $5.4 million related to the installation of new equipment) was paid as part of these drydocks
during the year ended December 31, 2020.

Thirty-four of our vessels were drydocked in accordance with their scheduled, class required special surveys and $40.6
million (which includes $5.9 million related to the installation of new equipment) was paid as part of these drydocks
during the year ended December 31, 2019.

Cash flow from financing activities

Cash flows from financing activities primarily consist of: the issuance, repayment and costs related to our secured
and unsecured debt, sale and leaseback liabilities, and IFRS 16 lease liabilities; the issuance and costs related to our
common stock; the payment of dividends to our common shareholders; and, the activity within our Securities Repurchase
Program (defined below). The following table sets forth the components of our financing cash flows for the years ended
December 31, 2020 and December 31, 2019:

In thousands of U.S. dollars
Cash inflows
Drawdowns from our secured credit facilities(1) ...........
Proceeds from sale and leaseback liabilities(1) ..............
Issuance of Unsecured Senior Notes Due 2025(1) .........
Gross proceeds from issuance of common stock(2) .......
Decrease in restricted cash(3) .........................................
Total financing cash inflows .........................................

Cash outflows
Repayments on our secured credit facilities(1) ..............
Repayments under sale and leaseback liabilities(1) .......
Repayments under IFRS 16 lease liabilities (1) .............
Repayments and repurchases of convertible notes(1).....
Repayments of our senior notes(1) .................................
Dividend payments(4) ....................................................
Common stock repurchases(5) .......................................
Debt issuance costs(6) ....................................................
Equity issuance costs(2) .................................................
Increase in restricted cash(3) ..........................................
Total financing cash outflows .......................................

For the year ended
December 31,

2020

2019

Change
favorable /
(unfavorable)

Percentage
Change

$ 462,512
214,778
28,100
2,601
7,001
714,992

$ 97,613
10,976
—
50,000
—
158,589

(486,731 )
(259,591 )
(77,913 )
(46,737 )
(53,750 )
(23,302 )
(13,115 )
(13,523 )
(26 )
—
(974,688 )

(170,408)
(115,443)
(36,761)
(145,000)
(57,500)
(21,278)
(1)
(5,744)
(333)
(9)
(552,477)

364,899
203,802
28,100
(47,399)
7,001
556,403

(316,323)
(144,148)
(41,152)
98,263
3,750
(2,024)
(13,114)
(7,779)
307
9
(422,211)

374 %
1,857 %
N/A
(95)%
N/A
351 %

(186)%
(125)%
(112)%
68 %
7 %
(10)%
(1,311,400)%
(135)%
92 %
100 %
(76)%

Net cash outflow from financing activities ................

$ (259,696 ) $ (393,888) $

134,192

(34)%

(1) The following table sets forth the cash drawdowns and repayments on our secured credit facilities, unsecured debt, sale
and leaseback liabilities and IFRS 16 lease liabilities during the years ended December 31, 2020 and 2019. These
arrangements, and the activity noted in the table, are more fully described below in the section entitled “Item 5 -
Operating and Financial Review and Prospects - B. Liquidity and Capital Resources - Long Term Debt Obligations
and Credit Arrangements”.

In thousands of U.S. dollars
KEXIM Credit Facility .............................................
ABN AMRO Credit Facility .....................................
ING Credit Facility ...................................................
NIBC Credit Facility .................................................
2018 NIBC Credit Facility ........................................
2017 Credit Facility ..................................................
Credit Agricole Credit Facility .................................
ABN AMRO/K-Sure Credit Facility ........................
Citibank/K-Sure Credit Facility ................................
ABN AMRO / SEB Credit Facility ..........................
Hamburg Commercial Bank Credit Facility .............

2020

2019

Drawdowns

Repayments

Drawdowns

Repayments

(183,082)
(91,954)
(18,076)
—
(3,680)
(131,499)
(8,568)
(3,851)
(8,416)
(11,781)
(3,264)

—
—
—
—
—
—
—
—
—
—
42,150

(100,286)
(8,554)
(12,737)
(3,230)
—
(13,266)
(8,568)
(3,851)
(8,416)
(11,500)
—

—
—
77,985
—
3,125
—
—
—
—
6,312
1,429

Prudential Credit Facility ..........................................
2019 DNB / GIEK Credit Facility ............................
BNPP Sinosure Credit Facility .................................
2020 $225 Million Credit Facility ............................
Total Secured Credit Facilities ..............................
Unsecured Senior Notes due 2019 ............................
Convertible Notes due 2019 .....................................
Unsecured Senior Notes Due 2020 ...........................
Convertible Notes Due 2022 .....................................
Unsecured Senior Notes Due 2025 ...........................
Total Unsecured Senior Notes ...............................
Ocean Yield Lease Financing ...................................
CMBFL Lease Financing ..........................................
BCFL Lease Financing (LR2s) .................................
CSSC Lease Financing .............................................
BCFL Lease Financing (MRs) ..................................
2018 CMBFL Lease Financing .................................
$116.0 Million Lease Financing ...............................
AVIC Lease Financing .............................................
China Huarong Lease Financing ...............................
$157.5 Million Lease Financing ...............................
COSCO Lease Financing ..........................................
CSSC Scrubber Financing ........................................
2020 CMBFL Lease Financing .................................
2020 TSFL Sale and Leaseback ................................
2020 SPDBFL Lease Financing ...............................
Total Sale and Leaseback Liabilities .....................

2020

2019

Drawdowns
—
55,500
101,461
216,700
462,512
—
—
—
—
28,100
28,100
—
—
1,773
—
1,926
10,125
5,653
4,600
—
—
—
1,568
45,383
47,250
96,500
214,778

Repayments
(5,085)
(2,937)
(6,728)
(7,810)
(486,731)
—
—
(53,750)
(46,737)
—
(100,487)
(11,024)
(57,063)
(8,724)
(94,908)
(11,988)
(11,561)
(7,892)
(12,177)
(13,500)
(14,143)
(7,700)
(8,101)
(810)
—
—
(259,591)

Drawdowns
55,463
—
—
—
97,613
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
10,976
—
—
—
10,976

Repayments
—
—
—
—
(170,408)
(57,500)
(145,000)
—
—
—
(202,500)
(10,680)
(4,908)
(7,641)
(17,309)
(11,021)
(10,114)
(6,634)
(11,794)
(13,500)
(14,142)
(7,700)
—
—
—
—
(115,443)

IFRS 16 - Leases - 3 MRs .........................................
IFRS 16 - Leases - 7 Handymax ...............................
$670.0 Million Lease Financing ...............................
Total IFRS 16 Lease Liabilities .............................

—
—
—
—

(12,174)
(7,256)
(58,483)
(77,913) $

—
—
—
—

(6,816)
(11,416)
(18,529)
(36,761)

(2) We sold new shares of common stock in exchange for cash during the years ended December 31, 2020 and December 31,

2019 as follows:

• During the year ended December 31, 2020, we sold an aggregate of 137,067 of our common shares pursuant to

our ATM Program at an average price of $18.79 per share for aggregate net proceeds of $2.6 million.

•

In September 2019, we closed on private placements with Trafigura for $35 million and SSH, a related party, for
$15 million for an aggregate of $50.0 million, or 1,724,137 shares, at $29.00 per share.

(3) During the year end December 31, 2020, we refinanced the amounts borrowed under our 2017 Credit Facility and
CMBFL Lease Financing arrangement (as further described below). As a result of these transactions, $7.0 million of
restricted cash pursuant to the terms of these arrangements was released.

(4) Dividend payments to shareholders were $23.3 million and $21.3 million for the years ended December 31, 2020 and
2019, respectively. These dividends represent dividends of $0.40 per share (based on the number of shares outstanding
on each of the record dates) for each of the years ended December 31, 2020 and 2019.

(5) Common stock repurchases during the year ended December 31, 2020 represent the repurchase of 1,170,000 of our
common shares at an average price of $11.18 per share for a total of $13.1 million. During the year ended December 31,
2019, we repurchased 30 of our common shares in the open market at an average price of $17.10 per share.

(6) Debt issuance costs relate to costs incurred for our secured credit facilities and lease financing arrangements which are
described below in the section entitled “Item 5 - Operating and Financial Review and Prospects - B. Liquidity and
Capital Resources - Long Term Debt Obligations and Credit Arrangements”.

Long-Term Debt Obligations and Credit Arrangements

The following is a discussion of the key terms and conditions of our secured credit facilities, sale and leaseback

liabilities, IFRS 16 lease liabilities, Senior Notes due 2025 and our Convertible Notes due 2022.

Our secured credit facilities may be secured by, among other things:

•

a first priority mortgage over the relevant collateralized vessels;

a first priority assignment of earnings, insurances and charters from the mortgaged vessels for the specific
facility;

a pledge of earnings generated by the mortgaged vessels for the specific facility; and

a pledge of the equity interests of each vessel owning subsidiary under the specific facility.

Our debt and lease financing agreements may require us to comply with a number of covenants, including
financial covenants related to liquidity, consolidated net worth, maximum leverage ratios, loan to value ratios and collateral
maintenance, informational requirements, including the delivery of quarterly and annual financial statements and annual
projections, and restrictive covenants, including maintenance of adequate insurances; compliance with laws (including
environmental); compliance with the Employee Retirement Income and Security Act, or ERISA; maintenance of flag and
class of the vessels; restrictions on consolidations, mergers or sales of assets; approvals on changes in the manager of the
vessels; limitations on liens; limitations on additional indebtedness; prohibitions on paying dividends if a covenant breach
or an event of default has occurred or would occur as a result of payment of a dividend; prohibitions on transactions with
affiliates; and other customary covenants. Furthermore, our debt agreements contain customary events of default, including
cross-default provisions, as well as subjective acceleration clauses under which the debt could become due and payable in
the event of a material adverse change in our business.

The following is a table summarizing our indebtedness as of December 31, 2020 and March 30, 2021. The
balances set forth below reflect the amounts due under each facility or financing arrangement, and the amounts outstanding
under our unsecured borrowings. These balances do not reflect any unamortized deferred financing fees or
discounts/premiums attributable to the indebtedness assumed in a business combination that was recorded as part of the
purchase price allocation.

In thousands of U.S. dollars
KEXIM Credit Facility ....................................................................................
ING Credit Facility ..........................................................................................
2018 NIBC Credit Facility ...............................................................................
Credit Agricole Credit Facility ........................................................................
ABN AMRO / K-Sure Credit Facility .............................................................
Citibank / K-Sure Credit Facility .....................................................................
ABN / SEB Credit Facility ..............................................................................
Hamburg Commercial Credit Facility .............................................................
Prudential Credit Facility .................................................................................
2019 DNB / GIEK Credit Facility ...................................................................
BNPP Sinosure Credit Facility ........................................................................
2020 $225 Million Credit Facility ...................................................................
2021 $21.0 Million Credit Facility ..................................................................
Ocean Yield Lease Financing ..........................................................................
BCFL Lease Financing (LR2s) ........................................................................
CSSC Lease Financing ....................................................................................
CSSC Scrubber Lease Financing .....................................................................
BCFL Lease Financing (MRs) .........................................................................
2018 CMBFL Lease Financing ........................................................................
$116.0 Million Lease Financing ......................................................................
AVIC Lease Financing ....................................................................................
China Huarong Lease Financing ......................................................................
$157.5 Million Lease Financing ......................................................................
COSCO Lease Financing .................................................................................

Amount
outstanding at
December 31, 2020
15,931
$
191,348
31,066
82,160
41,827
86,818
97,856
40,315
50,378
52,563
94,733
208,890
—
138,508
86,197
134,308
4,443
77,748
124,993
103,801
119,732
110,250
123,800
68,750

Amount
outstanding at
March 30, 2021
—
$
70,347
—
80,018
40,864
84,714
94,769
39,492
48,991
50,785
96,648
203,640
21,000
135,775
87,473
131,576
3,463
80,073
121,720
103,400
116,400
116,042
120,264
66,825

In thousands of U.S. dollars
2020 CMBFL Lease Financing ........................................................................
2020 TSFL Sale and Leaseback .......................................................................
2020 SPDBFL Lease Financing ......................................................................
2021 AVIC Lease Financing ...........................................................................
2021 CMBFL Lease Financing ........................................................................
2021 TSFL Lease Financing ............................................................................
Unsecured Senior Notes Due 2025 ..................................................................
Convertible Notes Due 2022(1) .........................................................................
Convertible Notes Due 2025(2) .........................................................................
IFRS 16 - Leases - 3 MR .................................................................................
IFRS 16 - Leases - 7 Handymax ......................................................................
$670.0 Million Lease Financing ......................................................................
Total ................................................................................................................

Amount
outstanding at
December 31, 2020
44,573
47,250
96,500
—
—
—
28,100
151,229
—
36,936
2,247
593,291
3,086,541

Amount
outstanding at
March 30, 2021
43,763
46,420
94,876
44,200
58,800
57,663
41,725
89,141
138,188
35,094
—
582,071
3,146,220

(1) The balance of our Convertible Notes due 2022 shown in the table above represent their face value. The liability
components of the Convertible Notes due 2022 have been recorded within the current portion of long-term debt and
long-term debt on the consolidated balance sheet as of December 31, 2020.

(2) The balance of our Convertible Notes due 2025 shown in the table above represent their face value.

Secured Debt

KEXIM Credit Facility

In February 2014, we executed a senior secured term loan facility for $429.6 million, with a group of financial
institutions led by DNB Bank ASA and Skandinaviska Enskilda Banken AB (publ) and from KEXIM, a statutory juridical
entity established under The Export-Import Bank of Korea Act of 1969, as amended, in the Republic of Korea. We refer to
this facility as the KEXIM Credit Facility. This KEXIM Credit Facility includes commitments from KEXIM of $300.6
million, or the KEXIM Tranche, and a group of financial institutions led by DNB Bank ASA and Skandinaviska Enskilda
Banken AB (publ) of $129.0 million, or the Commercial Tranche.

Drawdowns under the KEXIM Credit Facility occurred in connection with the delivery of 18 newbuilding vessels

as specified in the loan agreement.

In addition to KEXIM’s commitment of up to $300.6 million, KEXIM also provided an optional guarantee for a
five-year amortizing note of $125.25 million, the proceeds of which reduced the $300.6 million KEXIM Tranche. These
notes were issued on July 18, 2014 and were repaid in full upon their maturity in September 2019.

This facility was repaid in full in January 2021 upon the maturity of the Commercial Tranche.

Repayments were made in ten equal consecutive semi-annual repayment installments in accordance with a 15-year
repayment profile under the Commercial Tranche and a 12-year repayment profile under the KEXIM Tranche (which
includes the KEXIM Notes). Repayments commenced in March 2015 for the KEXIM Tranche and in July 2015 for the
Commercial Tranche.

Borrowings under the KEXIM Tranche bear interest at LIBOR plus an applicable margin of 3.25%. Borrowings
under the Commercial Tranche bear interest at LIBOR plus an applicable margin of 3.25% from the effective date of the
agreement to the fifth anniversary thereof and 3.75% thereafter until the maturity date in respect of the Commercial
Tranche.

Our KEXIM Credit Facility contained certain financial covenants which required us to maintain:

• The ratio of net debt to total capitalization no greater than 0.60 to 1.00.

• Consolidated tangible net worth of no less than $1.0 billion plus (i) 25% of cumulative positive net income
(on a consolidated basis) for each fiscal quarter commencing on or after January 1, 2016 and (ii) 50% of the
net proceeds of any new equity issues occurring on or after January 1, 2016.

• Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel plus

$250,000 per each time chartered-in vessel.

• The minimum threshold for the aggregate fair market value of the vessels as a percentage of the then

aggregate principal amount in the facility shall at all times be no less than 155%.

During the year ended December 31, 2020, we made scheduled principal payments of $16.9 million on this credit
facility and refinanced the debt on twelve vessels that were collateralized under this facility resulting in unscheduled
principal repayments of $166.1 million in aggregate and the write-off of approximately $0.2 million of deferred financing
fees. During the year ended December 31, 2019, we refinanced the debt on five vessels that were collateralized under this
facility resulting in unscheduled principal repayments of $66.6 million in aggregate and the write-off of approximately $1.2
million of deferred financing fees. The outstanding amounts relating to this facility as of December 31, 2020 and 2019
were $15.9 million and $199.0 million respectively. We were in compliance with the financial covenants relating to this
facility as of those dates.

ABN AMRO Credit Facility

In July 2015, we executed a senior secured term loan facility with ABN AMRO Bank N.V. and DVB Bank SE for
up to $142.2 million. This facility was fully drawn in 2015 to partially finance the purchases of STI Savile Row, STI
Kingsway and STI Carnaby and to refinance the existing indebtedness on STI Spiga. We refer to this credit facility as our
ABN AMRO Credit Facility.

Repayments under the ABN AMRO Credit Facility were made in equal consecutive quarterly repayment
installments in accordance with a 15-year repayment profile. Borrowings under the ABN AMRO Credit Facility bore
interest at LIBOR plus an applicable margin of 2.15%. This facility was scheduled to mature during the third quarter of
2020, and the amounts borrowed were refinanced in June 2020 in advance of their maturity with the proceeds from the
2020 $225.0 Million Credit Facility (which is described below). As part of this transaction, we recorded a write-off of
approximately $0.1 million of deferred financing fees.

The outstanding amount relating to this facility as of December 31, 2019 was $92.0 million, and we were in

compliance with the financial covenants relating to this facility as of that date.

ING Credit Facility

In June 2015, we executed a senior secured term loan facility with ING Bank N.V., London Branch for a credit
facility of up to $52.0 million. We refer to this facility as the ING Credit Facility. In September 2015, we amended and
restated the facility to increase the borrowing capacity to $87.0 million, and in March 2016, we amended and restated the
facility to further increase the borrowing capacity to $132.5 million. In June 2018, we executed another agreement to
further increase the borrowing capacity to $171.2 million. In September 2019, we executed another agreement to further
increase the borrowing capacity to partially finance the purchase and installation of scrubbers on seven of the vessels
collateralized under this facility. In July and September 2020, we drew down an aggregate of $5.9 million under the
scrubber portion of this facility to partially finance the purchase and installation of scrubbers on four MRs and one LR2
that are currently part of this arrangement. The scrubber related borrowings are scheduled to mature upon the maturity
dates of the respective vessel tranche of the loan to which the scrubber relates.

In May 2020, we executed another agreement to further increase the borrowing capacity to $251.4 million. This
upsized portion of this facility of $72.1 million was fully drawn in May 2020, and the proceeds were used to refinance the
existing debt on five vessels (STI Broadway, STI Comandante, STI Brixton, STI Pimlico and STI Finchley), which were
previously financed under the KEXIM Credit Facility. We repaid the outstanding indebtedness of $60.2 million related to
these vessels under our KEXIM Credit Facility as part of this transaction.

Repayments on borrowings up to $132.5 million are being made in equal quarterly installments, in accordance
with a 15-year repayment profile, and a balloon installment payment due on the maturity dates of March 4, 2021 for STI
Lombard and STI Osceola and June 24, 2022 for STI Grace, STI Jermyn, STI Black Hawk and STI Pontiac. These
borrowings bear interest at LIBOR plus a margin of 1.95% per annum.

The 2018 upsized portion of the loan for STI Rotherhithe and STI Notting Hill were repaid in equal quarterly
installments of $1.0 million per quarter, in aggregate, for the first eight installments and will be repaid in equal quarterly
installments of $0.8 million per quarter, in aggregate, thereafter, with a balloon payment due upon the maturity date of June
24, 2022. These borrowings bear interest at LIBOR plus a margin of 2.40% per annum.

The May 2020 $72.1 million upsized portion of the loan has a final maturity of five years from the initial
drawdown date, May 2025, and is scheduled to be repaid in equal installments of approximately $2.1 million per quarter, in
aggregate, for the first twelve installments and approximately $2.0 million per quarter, in aggregate, thereafter, with a
balloon payment due at maturity. These borrowings bear interest at LIBOR plus a margin per annum.

In July 2020, we drew down on the scrubber portion of the facility (i) $2.2 million related to STI Lombard and STI
Osceola which is scheduled to be repaid in two quarterly principal payments of $0.7 million in aggregate, with the balance
due upon maturity in March 2021; and (ii) $1.1 million related to STI Pontiac which is scheduled to be repaid in quarterly
principal payments of $0.1 million with the balance due upon maturity in June 2022. In September 2020, we drew down on
the scrubber portion of the facility (i) $1.1 million related to STI Black Hawk which is scheduled to be repaid in quarterly
principal payments of $0.1 million with the balance due upon maturity in June 2022; and (ii) $1.5 million related to STI
Notting Hill which is scheduled to be repaid in quarterly principal payments of $0.2 million with the balance due upon
maturity in June 2022. These borrowings bear interest at LIBOR plus a margin per annum which corresponds to the margin
the respective vessel pays on its initial borrowing noted above.

Our ING Credit Facility includes financial covenants that require us to maintain:

• The ratio of net debt to total capitalization no greater than 0.60 to 1.00.

• Consolidated tangible net worth of not less than $1.0 billion plus (i) 25% of the positive consolidated net
income for each fiscal quarter commencing on or after January 1, 2016 and (ii) 50% of the net proceeds of
new equity issues occurring on or after January 1, 2016.

• Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel plus

$250,000 per each time chartered-in vessel.

• The aggregate of the fair market value of the vessels provided as collateral under the facility shall at all times
be no less than 160% of the then aggregate outstanding principal amount of the loans under the credit facility.

The outstanding amounts relating to this facility as of December 31, 2020 and 2019 were $191.3 million and

$131.4 million, respectively. We were in compliance with the financial covenants relating to this facility as of those dates.

In January 2021, we drew down $2.1 million from ING Credit Facility to partially finance the purchase and

installations of scrubbers on two LR2 product tankers.

In March 2021, we closed on the sale and leaseback of two vessels (STI Lombard and STI Osceola) under the
2021 AVIC Lease Financing for aggregate proceeds of $53.1 million. We repaid the outstanding indebtedness of $29.5
million related to these vessels on the ING Credit Facility as part of these transactions.

In March 2021 we closed on the sale and leaseback of the four Handymax vessels (STI Comandante, STI Brixton,
STI Pimlico and STI Finchley) under the 2021 CMBFL Lease Financing for aggregate proceeds of $58.8 million. We
repaid the outstanding indebtedness of $46.7 million related to these vessels on the ING Credit Facility as part of these
transactions.

In March 2021, we closed on the sale and leaseback of three MR vessels (STI Black Hawk, STI Notting Hill and
STI Pontiac) under the 2021 TSFL Lease Financing for aggregate proceeds of $57.7 million. We repaid the outstanding
indebtedness of $40.7 million related to these three vessels under the ING Credit Facility as part of these transactions

2018 NIBC Credit Facility

In June 2018, we executed an agreement with NIBC Bank N.V. for a $35.7 million term loan facility. We refer to
this facility as our 2018 NIBC Credit Facility. This facility was fully drawn in August 2018, and the proceeds were used to
refinance the existing indebtedness related to two MR product tankers (STI Memphis and STI Soho). Additionally, in
August 2019, we executed an agreement with NIBC to upsize the existing NIBC Credit Facility by $3.1 million in
aggregate, the proceeds of which were used to partially finance the purchase and installation of scrubbers on the two
vessels that are currently collateralized under this facility.

The loan facility was scheduled to mature in June 2021, bears interest at LIBOR plus a margin of 2.5% per annum
and was repaid in equal quarterly installments of $1.0 million, in aggregate (which included the scrubber portion), with a
balloon payment due upon maturity.

In February 2021, we closed on the sale and leaseback of two vessels (STI Memphis and STI Soho) under the 2021
AVIC Lease Financing for aggregate proceeds of $44.2 million. We repaid the outstanding indebtedness of $30.0 million
related to these vessels on the 2018 NIBC Credit Facility as part of these transactions.

Our 2018 NIBC Credit Facility included financial covenants that required us to maintain:

• The ratio of net debt to total capitalization no greater than 0.60 to 1.00.

• Consolidated tangible net worth of no less than $1.0 billion plus (i) 25% of the cumulative positive net
income (on a consolidated basis) for each fiscal quarter commencing on or after January 1, 2016 and (ii) 50%
of the net proceeds of new equity issuances occurring on or after January 1, 2016.

• Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel plus

$250,000 per each time chartered-in vessel.

• The aggregate of the fair market value of the vessels provided as collateral under the facility shall be 135%

through the third quarter of 2020 and 140% at all times thereafter.

The outstanding amounts relating to this facility were $31.1 million and $31.6 million as of December 31, 2020

and 2019, respectively. We were in compliance with the financial covenants relating to this facility as of those dates.

2017 Credit Facility

In March 2017, we executed a senior secured term loan facility with a group of financial institutions led by
Macquarie Bank Limited (London Branch) for up to $172.0 million, or the 2017 Credit Facility. The 2017 Credit Facility
consists of five tranches, including two commercial tranches of $15.0 million and $25.0 million, a KEXIM Guaranteed
Tranche of $48.0 million, a KEXIM Funded Tranche of $52.0 million, and a GIEK Guaranteed Tranche of $32.0 million.
The amounts outstanding under this facility were fully repaid in 2020 when these vessels were refinanced as part of the
2020 CMBFL Lease Financing, 2020 TSFL Lease Financing and 2020 SPDBFL Lease Financing arrangements, which are
described further below. As a result of these transactions, $5.0 million that was held on deposit in a debt service reserve
account in accordance with the terms of this facility was released when the facility was refinanced.

We repaid, in full, the outstanding balance during the year ended December 31, 2020. The outstanding amount as
of December 31, 2019 was $131.5 million. We were in compliance with the financial covenants relating to this facility as
of that date.

Credit Agricole Credit Facility

As part of the closing of the four LR1s that were acquired from Navig8 Product Tankers Inc. in June 2017, we
assumed the outstanding indebtedness under a senior secured term loan with Credit Agricole. STI Excel, STI Excelsior, STI
Expedite and STI Exceed are pledged as collateral under this facility. Repayments are being made in equal quarterly
installments of $2.1 million in aggregate in accordance with a 15-year repayment profile with a balloon payment due upon
maturity, which occurs between November 2022 and February 2023 (depending on the vessel). The facility bears interest at
LIBOR plus a margin of 2.75%.

Our Credit Agricole Credit Facility includes financial covenants that require us to maintain:

• The ratio of net debt to total capitalization no greater than 0.60 to 1.00.

• Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel and

$250,000 per each time chartered-in vessel.

• The aggregate of the fair market value of the vessels provided as collateral under the facility shall at all times
be no less than 135% of the then aggregate outstanding principal amount of the loans under the credit facility.

The amounts outstanding as of December 31, 2020 and 2019 were $82.2 million and $90.7 million (which
excludes fair value adjustments made as part of the initial purchase price allocation). We were in compliance with the
financial covenants relating to this facility as of those dates.

ABN AMRO / K-Sure Credit Facility

We assumed the outstanding indebtedness on a senior secured credit facility with ABN AMRO Bank N.V. and
Korea Trade Insurance Corporation, or K-Sure, as part of the September 2017 acquisition of Navig8 Product Tankers Inc.,
which we refer to as the ABN AMRO/K-Sure Credit Facility. Two LR1s (STI Precision and STI Prestige) are
collateralized under this facility and the facility consists of two separate tranches, a $11.5 million commercial tranche and a
$43.8 million K-Sure tranche.

The commercial tranche bears interest at LIBOR plus 2.75%, and the K-Sure tranche bears interest at LIBOR plus
1.80%. Repayments on the K-Sure tranche are being made in equal quarterly installments of $1.0 million in accordance
with a 12-year repayment profile from the date of delivery from the shipyard, with a balloon payment due upon maturity,
and the commercial tranche is being repaid via a balloon payment upon maturity in September and November 2022
(depending on the vessel). The K-Sure tranche fully matures in September and November 2028 (depending on the vessel),
and K-Sure has an option to require repayment upon the maturity of the commercial tranche if the commercial tranche is
not refinanced by its maturity dates.

Our ABN AMRO/K-Sure Credit Facility includes financial covenants that require us to maintain:

• The ratio of net debt to total capitalization no greater than 0.60 to 1.00.

• Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel and

$250,000 per each time chartered-in vessel.

Additionally, we have an aggregate of $0.5 million on deposit in a debt service reserve account as of December
31, 2020 in accordance with the terms and conditions of this facility. The funds deposited in this account are not freely
available and will be released upon maturity. The balance in this account has been recorded as non-current Restricted Cash
on our consolidated balance sheet as of December 31, 2020.

The amounts outstanding as of December 31, 2020 and 2019 were $41.8 million and $45.7 million (which
excludes fair value adjustments made as part of the initial purchase price allocation). We were in compliance with the
financial covenants relating to this facility as of those dates.

Citibank / K-Sure Credit Facility

We assumed the outstanding indebtedness under a senior secured credit facility with Citibank N.A., London
Branch, Caixabank, S.A., and K-Sure, as part of the September 2017 acquisition of Navig8 Product Tankers Inc., which we
refer to as the Citibank/K-Sure Credit Facility. Four LR1s (STI Excellence, STI Executive, STI Experience, and STI
Express) are collateralized under this facility. The facility consists of two separate tranches, a $25.1 million commercial
tranche and a $91.2 million K-Sure tranche, which represents the amounts assumed from Navig8 Product Tankers Inc.
(“NPTI”).

The commercial tranche bears interest at LIBOR plus 2.50%, and the K-Sure tranche bears interest at LIBOR plus
1.60%. Repayments on the K-Sure tranche are being made in equal quarterly installments of $2.1 million in accordance
with a 12-year repayment profile from the date of delivery from the shipyard, with a balloon payment due upon maturity,
and the commercial tranche is scheduled to be repaid via a balloon payment upon the maturity which occurs between
March and May 2022 (depending on the vessel). The K-Sure tranche fully matures between March and May 2028
(depending on the vessel), and K-Sure has an option to require repayment upon the maturity of the commercial tranche if
the commercial tranche is not refinanced by its maturity dates.

Our Citibank/K-Sure Credit Facility includes financial covenants that require us to maintain:

• The ratio of net debt to total capitalization no greater than 0.60 to 1.00.

• Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel and

$250,000 per each time chartered-in vessel.

Additionally, we have an aggregate of $4.0 million on deposit in a debt service reserve account as of December 31,
2020 in accordance with the terms and conditions of this facility. The funds deposited in this account are not freely
available and will be released upon maturity. The balance in this account has been recorded as non-current Restricted Cash
on our consolidated balance sheet as of December 31, 2020.

The amounts outstanding as of December 31, 2020 and 2019 were $86.8 million and $95.2 million (which
excludes fair value adjustments made as part of the initial purchase price allocation). We were in compliance with the
financial covenants relating to this facility as of those dates.

ABN AMRO / SEB Credit Facility

In June 2018, we executed a senior secured term loan facility with ABN AMRO Bank N.V. and Skandinaviska
Enskilda Banken AB for up to $120.6 million. We refer to this facility as our ABN AMRO / SEB Credit Facility. This loan
was fully drawn in June 2018, and the proceeds were used to refinance the existing indebtedness of $87.6 million under our
K-Sure Credit Facility relating to five vessels consisting of one Handymax product tanker (STI Hammersmith), one MR
product tanker (STI Westminster), and three LR2 product tankers (STI Connaught, STI Winnie and STI Lauren).

Additionally, in September 2019, we executed an agreement with the lenders under this facility to upsize the
credit facility by up to $6.3 million, which was fully drawn in 2020 with the proceeds used to partially finance the purchase
and installation of scrubbers on four of the vessels that are currently collateralized under this facility.

The ABN AMRO/SEB Credit Facility has a final maturity of June 2023 and bears interest at LIBOR plus a margin of
2.6% per annum. The original credit facility is scheduled to be repaid in equal quarterly installments of $2.9 million per
quarter, in aggregate, for the first eight installments and $2.5 million per quarter, in aggregate, thereafter, with a balloon
payment due upon maturity. The upsized portion of the credit facility is scheduled to be repaid in equal quarterly installments
of approximately $0.1 million per vessel through the maturity date of March 2023 for the upsized portion of the loan.

Our ABN AMRO / SEB Credit Facility includes financial covenants that require us to maintain:

• The ratio of net debt to total capitalization no greater than 0.65 to 1.00.

• Consolidated tangible net worth of no less than $1.266 billion plus (i) 25% of the cumulative positive net
income (on a consolidated basis) for each fiscal quarter commencing on or after January 1, 2018 and (ii) 50%
of the net proceeds of new equity issuances occurring on or after January 1, 2018.

• Minimum liquidity of not less than the greater of $25.0 million and $500,000 per each owned vessel plus

$250,000 per each time chartered-in vessel.

• The aggregate of the fair market value of the vessels provided as collateral under the facility shall be: 130%
from the date of the agreement and ending on the second anniversary thereof and 140% at all times thereafter.

The outstanding amounts related to this facility as of December 31, 2020 and 2019 were $97.9 million and $103.3

million, respectively. We were in compliance with the financial covenants relating to this facility as of those dates.

Hamburg Commercial Bank Credit Facility

In November 2019, we executed an agreement with Hamburg Commercial Bank AG for a senior secured term
loan facility for $43.65 million, of which, (i) $42.15 million (Tranche 1) was used to refinance the existing debt for STI
Veneto and STI Poplar, (which were previously financed under the KEXIM Credit Facility), and (ii) $1.4 million (Tranche
2) was used to finance the purchase and installation of a scrubber on STI Veneto. We refer to this facility as our Hamburg
Commercial Bank Credit Facility. Tranche 1 was drawn in December 2019 and Tranche 2 was drawn in April 2020.

Both tranches of the Hamburg Commercial Bank Credit Facility mature in November 2024, bear interest at
LIBOR plus a margin of 2.25% per annum and are scheduled to be repaid in equal quarterly installments of $0.8 million
per quarter, in aggregate, with a balloon payment due upon maturity.

Our Hamburg Commercial Bank Credit Facility includes financial covenants that require us to maintain:

• The ratio of net debt to total capitalization no greater than 0.60 to 1.00.

• Consolidated tangible net worth of no less than $1,000,000,000 plus (i) 25% of the cumulative positive net
income (on a consolidated basis) for each fiscal quarter commencing on or after December 31, 2018 and (ii)
50% of the net proceeds of new equity issuances occurring on or after December 31, 2018.

• Minimum liquidity of not less than the greater of $25.0 million and $500,000 per each owned vessel plus

$250,000 per each time chartered-in vessel.

• The aggregate of the fair market value of the vessels provided as collateral under the facility shall be: 134%

from the date of this facility.

The amounts outstanding as of December 31, 2020 and 2019 were $40.3 million and $42.2 million, respectively,

and we were in compliance with the financial covenants as of those dates.

Prudential Credit Facility

In November 2019, we executed an agreement with Prudential Private Capital for a senior secured term loan
facility for $55.5 million. The loan facility was fully drawn in December 2019, and the proceeds were used to refinance the
existing debt for STI Clapham, STI Camden and STI Acton, (which were previously financed under the KEXIM Credit
Facility). We refer to this facility as our Prudential Credit Facility.

The Prudential Credit Facility has a final maturity of December 2025 and bears interest at LIBOR plus a margin of
3.00% per annum. The loan will be repaid in monthly installments of $0.5 million per month, in aggregate, with a balloon
payment due upon maturity.

Our Prudential Credit Facility includes financial covenants that require us to maintain:

• The ratio of net debt to total capitalization no greater than 0.60 to 1.00.

• Consolidated tangible net worth of no less than $1,000,000,000 plus (i) 25% of the cumulative positive net
income (on a consolidated basis) for each fiscal quarter commencing on or after January 1, 2016 and (ii) 50%
of the net proceeds of new equity issuances occurring on or after January 1, 2016.

• Minimum liquidity of not less than the greater of $25.0 million and $500,000 per each owned vessel plus

$250,000 per each time chartered-in vessel.

• The aggregate of the fair market value of the vessels provided as collateral under the facility shall be: 125%

from the date of this facility.

The amounts outstanding as of December 31, 2020 and 2019 were $50.4 million and $55.5 million, respectively,

and we were in compliance with the financial covenants as of those dates.

2019 DNB / GIEK Credit Facility

In November 2019, we executed a $55.5 million term loan facility with DNB Bank ASA and the Norwegian
Export Credit Guarantee Agency (“GIEK”). The loan is comprised of two facilities: (i) an ECA facility of $47.2 million
(which is comprised of a $41.6 million tranche which is guaranteed by GIEK, or the “GIEK Tranche”, and a $5.6 million
commercial tranche or the “Commercial Bank Tranche”) and (ii) a commercial facility of $8.3 million, or the “Commercial
Facility”. These facilities are collectively referred to as the 2019 DNB/GIEK Credit Facility.

In March 2020, we drew down $31.9 million from this facility to refinance the existing debt on one of our vessels,
STI Sloane, that was previously financed under the KEXIM Credit Facility, and we repaid the outstanding indebtedness of
$17.4 million related to this vessel under our KEXIM Credit Facility as part of this transaction. In December 2020, we
drew down $23.7 million from this credit facility to refinance the existing indebtedness on an LR2 product tanker, STI
Condotti, which was previously financed under the KEXIM Credit Facility and repaid $15.9 million on the KEXIM Credit
Facility as part of this transaction.

The 2019 DNB/GIEK Credit Facility matures in July 2024. The GIEK tranche bears interest at LIBOR plus a
margin of 2.5%, and the Commercial Bank and Commercial Facility tranches bear interest at LIBOR plus a margin of 2.5%
per annum. The 2019 DNB/GIEK Credit Facility is scheduled to be repaid in equal quarterly installments of approximately
$1.8 million per quarter with a balloon payment due at maturity.

Our 2019 DNB/GIEK Credit Facility includes financial covenants that require us to maintain:

• The ratio of net debt to total capitalization no greater than 0.60 to 1.00.

• Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel and

$250,000 per each time chartered-in vessel.

• The aggregate of the fair market value of the vessels provided as collateral under the facility shall at all times
be no less than 130% of the then aggregate outstanding principal amount of the loans under the credit facility
through the second anniversary of the date of the agreement and 135% at all times thereafter.

The amount outstanding as of December 31, 2020 was $52.6 million, and we were in compliance with the

financial covenants as of that date.

BNPP Sinosure Credit Facility

In December 2019, we executed a senior secured term loan facility with BNP Paribas and Skandinaviska Enskilda
Banken AB for up to $134.1 million. The loan is split into two facilities, (i) a commercial facility for up to $67.0 million
(the “Commercial Facility”), and (ii) a Sinosure facility for up to $67.0 million (the “Sinosure Facility”), which was funded
by the lenders under the commercial facility and insured by the China Export & Credit Insurance Corporation (“Sinosure”).
These facilities are collectively referred to as the BNPP Sinosure Credit Facility.

In March 2020, we drew down $42.1 million from this facility to partially finance the purchase and installation of
scrubbers on 22 vessels. This borrowing is collateralized by two of our vessels (STI Park and STI Fulham) that were
previously financed under our KEXIM Credit Facility. We repaid the outstanding indebtedness of $28.8 million related to
these vessels under our KEXIM Credit Facility as part of this transaction.

In June 2020, we drew down $24.9 million from this facility to partially finance the purchase and installation of
scrubbers on 13 vessels. This borrowing is collateralized by one of our LR2 product tankers (STI Elysees), which was
previously financed under our KEXIM Credit Facility. We repaid the outstanding indebtedness of $17.8 million related to
this vessel under our KEXIM Credit Facility as part of this transaction.

In September 2020, we drew down $24.9 million from this facility to partially finance the purchase and
installation of scrubbers on 13 vessels. This borrowing is collateralized by one of our LR2 product tankers (STI Orchard),
which was previously financed under our KEXIM Credit Facility. We repaid the outstanding indebtedness of $16.2 million
related to this vessel under our KEXIM Credit Facility as part of this transaction.

In December 2020, we drew down $9.6 million from our BNPP Sinosure Credit Facility to partially finance the
purchase of scrubbers on five vessels. This borrowing is collateralized by a Handymax product tanker (STI Hackney),
which was previously financed under the KEXIM Credit Facility. We repaid $9.9 million on the KEXIM Credit Facility as
part of this transaction.

A total of $101.5 million has been drawn, and there is $32.6 million of remaining availability under the BNPP
Sinosure Credit Facility. The BNPP Sinosure Credit Facility is split into 70 tranches each of which represent the lesser of
85% of the purchase and installation price of 70 scrubbers, or $1.9 million per scrubber (not to exceed 65% of the fair
value of the collateral vessels). The Sinosure Facility and the Commercial Facility bear interest at LIBOR plus a margin of
1.80% and 2.80% per annum, respectively. In January 2021, we signed an agreement to extend the availability period under
this loan facility to June 15, 2022 from March 15, 2021. Based on the amounts drawn as of December 31, 2020, the
Sinosure Facility is scheduled to be repaid in 10 semi-annual installments of $5.1 million in aggregate (which may increase
to $6.7 million once the loan is fully drawn, with separate repayment periods as each tranche of the loan is drawn) and the
Commercial Facility is scheduled to be repaid at the final maturity date of the facility, or October 2025.

Our BNPP Sinosure Credit Facility includes financial covenants that require us to maintain:

• The ratio of net debt to total capitalization no greater than 0.60 to 1.00.

• Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel and

$250,000 per each time chartered-in vessel.

• The aggregate of the fair market value of the vessels provided as collateral under the facility shall at all times
be no less than 130% of the then aggregate outstanding principal amount of the loans under the credit facility
through December 31, 2022 and 135% at all times thereafter.

The outstanding amount as of December 31, 2020 was $94.7 million, and we were in compliance with the

financial covenants as of that date.

In March 2021, we drew down $1.9 million from our BNPP Sinosure Credit Facility to partially finance the

purchase and installation of a scrubber on a MR product tanker.

2020 $225.0 Million Credit Facility

In May 2020, we executed the 2020 $225.0 Million Credit Facility with a group of European financial institutions.
In June 2020 we drew down $101.2 million from this facility to refinance the existing debt on four LR2s (STI Savile Row,
STI Spiga, STI Kingsway and STI Carnaby) that were previously financed under the ABN AMRO Credit Facility (which
was scheduled to mature during the third quarter of 2020). We repaid the outstanding indebtedness of $87.7 million under
our ABN AMRO Credit Facility as part of this transaction.

In September 2020, we drew down $43.7 million from this facility to refinance the existing debt on two LR1s (STI
Pride and STI Providence) that were previously financed under our CMBFL Lease Financing arrangement. We repaid
$54.0 million on our CMBFL Lease Financing arrangement as part of this transaction. In connection with this repayment,
approximately $2.0 million was released from restricted cash that was previously held in a deposit account under the terms
and conditions of our CMBFL Lease Financing Arrangement.

In October and November 2020, we drew down an aggregate of $71.8 million from this facility to refinance the
existing debt on three LR2 product tankers, STI Nautilus, STI Guard, and STI Gallantry, all of which were previously
financed under the CSSC Lease Financing arrangement. We repaid $81.7 million on the CSSC Lease Financing and CSSC
Scrubber Lease Financing arrangements, and a $1.6 million prepayment fee was paid as part of these transactions.

The remaining availability of $2.2 million under the 2020 $225.0 Million Credit Facility to partially finance the

purchase and installation of scrubbers on two LR2s was terminated in December 2020.

This facility has a final maturity of five years from the closing date of the loan, bears interest at LIBOR plus a
margin, and is scheduled to be repaid in equal installments of approximately $5.3 million per quarter, in aggregate, with a
balloon payment due at maturity.

Our 2020 $225.0 Million Credit Facility includes financial covenants that require us to maintain:

• The ratio of net debt to total capitalization no greater than 0.65 to 1.00.

• Consolidated tangible net worth of no less than $1.4 billion.

• Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel and

$250,000 per each time chartered-in vessel.

The outstanding amount as of December 31, 2020 was $208.9 million, and we were in compliance with the

financial covenants as of that date.

2021 $21.0 Million Credit Facility

In February 2021, we drew down $21.0 million on a term loan facility with a European financial institution (the
“2021 $21.0 Million Credit Facility”). The proceeds of this loan facility were used to refinance the outstanding debt on an
LR2 product tanker, STI Madison, that was previously financed under our KEXIM Credit Facility. We repaid the
outstanding indebtedness of $15.9 million related to this vessel on the KEXIM Credit Facility in January 2021 upon its
maturity. The loan facility has a final maturity of December 2022, bears interest at LIBOR plus a margin of 2.65% per
annum, and is scheduled to be repaid in equal quarterly installments of approximately $0.6 million, with a balloon payment
due upon maturity.

Our 2021 $21.0 Million Credit Facility includes financial covenants that require us to maintain:

• The ratio of net debt to total capitalization no greater than 0.60 to 1.00.

• Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel plus

$250,000 per each time chartered-in vessel.

• The aggregate of the fair market value of the vessels provided as collateral under the facility shall at all times
be no less than 140% of the then aggregate outstanding principal amount of the loans under the credit facility.

Lease financing arrangements

The below summarizes the key terms of our lease financing arrangements. For each arrangement, we have
evaluated whether, in substance, these transactions are leases or merely a form of financing. As a result of this evaluation,
we have concluded that each agreement is a form of financing on the basis that each transaction is a sale and leaseback
transaction which does not meet the criteria for a sale under IFRS 15. Accordingly, the cash received in the transfer has
been accounted for as a liability under IFRS 9, and each arrangement has been recorded at amortized cost using the
effective interest method, with the corresponding vessels being recorded at cost, less accumulated depreciation, on our
consolidated balance sheet.

The obligations set forth below are secured by, among other things, assignments of earnings and insurances and
stock pledges and account charges in respect of the subject vessels. All of the financing arrangements contain customary
events of default, including cross-default provisions as well as subjective acceleration clauses under which the lessor could
cancel the lease in the event of a material adverse change in the Company’s business.

Ocean Yield Lease Financing

We assumed the obligations under a lease financing arrangement with Ocean Yield ASA for four LR2 tankers
(STI Sanctity, STI Steadfast, STI Supreme, and STI Symphony) in connection with the September 2017 acquisition of
Navig8 Product Tankers Inc. Under this arrangement, each vessel is subject to a 13-year bareboat charter, which expires
between February and August 2029 (depending on the vessel). Charterhire, which is paid monthly in advance, includes a
fixed payment in addition to a quarterly adjustment based on prevailing LIBOR rates.

Monthly principal payments are approximately $0.2 million per vessel gradually increasing to $0.3 million per
vessel per month until the expiration of the agreement. The interest component of the leases approximates LIBOR plus
5.40%. We also have purchase options to re-acquire each of the vessels during the bareboat charter period, with the first of
such options exercisable beginning at the end of the seventh year from the delivery date of the subject vessel.

We are subject to certain terms and conditions, including financial covenants, under this arrangement which are

summarized as follows:

• The ratio of net debt to total capitalization no greater than 0.60 to 1.00.

• Consolidated tangible net worth no less than $1.0 billion plus (i) 25% of the cumulative positive net income
(on a consolidated basis) for each fiscal quarter commencing on or after January 1, 2016 and (ii) 50% of the
net proceeds of new equity issues occurring on or after January 1, 2016.

• Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel and

$250,000 per each time chartered-in vessel.

The amounts due under this arrangement (which excludes fair value adjustments made as part of the initial
purchase price allocation) were $138.5 million and $150.0 million as of December 31, 2020 and 2019, respectively. We
were in compliance with the financial covenants as of those dates.

CMBFL Lease Financing

We assumed the obligations under a lease financing arrangement with CMB Financial Leasing Co. Ltd, or
CMBFL, in connection with the September 2017 acquisition of Navig8 Product Tankers Inc., for two LR1 tankers (STI
Pride and STI Providence). Under this arrangement, each vessel was subject to a seven-year bareboat charter, which was
scheduled to expire in July or August 2023 (depending on the vessel). Charterhire under the arrangement was comprised of
a fixed, quarterly repayment amount of $0.6 million per vessel plus a variable component calculated at LIBOR plus 3.75%.

We have purchase options to re-acquire each of the subject vessels during the bareboat charter period, with the

first of such options exercisable on the third anniversary from the delivery date of the respective vessel.

In September 2020, we exercised a purchase option and repaid $54.0 million on our CMBFL Lease Financing
arrangement as part of the refinancing of the existing debt on STI Pride and STI Providence. In connection with this
repayment, approximately $2.0 million was released from restricted cash that was previously held in a deposit account
under the terms and conditions of our CMBFL Lease Financing Arrangement.

Bank of Communications Financial Leasing LR2 financing, or the BCFL Lease Financing (LR2s)

We assumed the obligations of a lease financing arrangement with Bank of Communications Finance Leasing Co
Ltd., or BCFL, for three LR2 tankers (STI Solace, STI Solidarity, and STI Stability) as part of the September 2017
acquisition of Navig8 Product Tankers Inc. Under the arrangement, each vessel is subject to a 10-year bareboat charter,
which expires in July 2026. Charterhire under the arrangement is determined in advance, on a quarterly basis and is
calculated by determining the payment based off of the then outstanding balance, the time to expiration and an interest rate
of LIBOR plus 3.50%. Using the forward interest swap curve at December 31, 2020, future monthly principal payments are
estimated to be $0.2 million per vessel gradually increasing to $0.3 million per vessel per month until the expiration of the
agreement. We have purchase options to re-acquire each of the subject vessels during the bareboat charter period, with the
first of such options exercisable at the end of the fourth year from the delivery date of the respective vessel. There is also a
purchase obligation for each vessel upon the expiration of the agreement.

In April 2020, we executed an agreement to increase the borrowing capacity of our BCFL Lease Financing
arrangements (LR2s) by up to $1.9 million per vessel to partially finance the purchase and installation of scrubbers on the
above vessels. The agreement will be for a fixed term of three years at the rate of up to $1,910 per vessel per day to be
allocated to principal and interest.

In July 2020, we drew down $1.9 million to partially finance the purchase and installation of a scrubber on one
vessel, and in January 2021, we drew down $3.8 million to partially finance the purchase and installation of scrubbers on
two vessels.

Additionally, we have an aggregate of $0.8 million on deposit in a deposit account as of December 31, 2020 in
accordance with the terms and conditions of this facility. The funds deposited in this account are not freely available and
will be released upon maturity. The balance in this account has been recorded as non-current Restricted Cash on our
consolidated balance sheet as of December 31, 2020.

The amounts due under this arrangement (which excludes fair value adjustments made as part of the initial
purchase price allocation) were $86.2 million and $93.1 million as of December 31, 2020 and 2019, respectively. We were
in compliance with the financial covenants as of those dates.

CSSC Lease Financing and CSSC Scrubber Lease Financing

We assumed the obligations under a lease financing arrangement with CSSC (Hong Kong) Shipping Company
Limited, or CSSC, for eight LR2 tankers (STI Gallantry, STI Nautilus, STI Guard, STI Guide, STI Goal, STI Gauntlet, STI
Gladiator and STI Gratitude) as part of the September 2017 acquisition of Navig8 Product Tankers Inc.

Under the arrangement, each vessel is subject to a 10-year bareboat charter which expire throughout 2026 and
2027 (depending on the vessel). Charterhire under the arrangement is comprised of a fixed repayment amount of $0.2
million per month per vessel plus a variable component calculated at LIBOR plus 4.60%. We have purchase options to re-
acquire each of the subject vessels during the bareboat charter period, with the first of such options exercisable at the end
of the fourth year from the delivery date of the respective vessel. There is also a purchase obligation for each vessel upon
the expiration of the agreement.

Additionally, in September 2019, we executed an agreement with CSSC to increase the borrowing capacity by up
to $12.5 million to partially finance the purchase and installation of scrubbers on the eight LR2s. In December 2019, $11.0
million was borrowed under this arrangement to partially finance the purchase and installation of seven scrubbers, and in
August 2020, we drew down $1.6 million to partially finance the purchase and installation of a scrubber on one vessel. The
upsized portion of the lease financing bears interest at LIBOR plus a margin of 3.8% per annum, matures two years from
the date of the drawdown and is being repaid in monthly installment payments of approximately $0.3 million in aggregate
after the repayments noted below.

In October and November 2020, we repaid $81.7 million on the CSSC Lease Financing and CSSC Scrubber Lease
Financing arrangements, and we paid a $1.6 million prepayment fee when we refinanced the existing debt on STI Nautilus,
STI Guard, and STI Gallantry.

Our CSSC Lease Financing arrangement includes a financial covenant that requires the fair market value of each
vessel that is leased under this facility to at all times be no less than 125% of the applicable outstanding balance for such
vessel.

The amounts due under the non-scrubber portion of the arrangement (which excludes fair value adjustments made
as part of the initial purchase price allocation) were $134.3 million and $229.2 million as of December 31, 2020 and 2019,
respectively. The amounts due under the scrubber portion of the arrangement (which reflect fair value adjustments made as
part of the purchase price allocation) were $4.4 million and $11.0 million as of December 31, 2020 and 2019, respectively.
We were in compliance with the financial covenants under these arrangements as of those dates.

Bank of Communications Financial Leasing MR financing, or the BCFL Lease Financing (MRs)

In September 2017, we entered into finance lease agreements to sell and lease back five 2012 built MR product
tankers (STI Amber, STI Topaz, STI Ruby, STI Garnet and STI Onyx) with Bank of Communications Finance Leasing Co
Ltd., or BCFL, for a sales price of $27.5 million per vessel. The financing for STI Topaz, STI Ruby and STI Garnet closed
in September 2017, the financing for STI Onyx closed in October 2017, and the financing for STI Amber closed in
November 2017. Each agreement is for a fixed term of seven years at a bareboat rate of $9,025 per vessel per day, and we
have three consecutive one-year options to extend each charter beyond the initial term. Furthermore, we have the option to
purchase these vessels beginning at the end of the fifth year of the agreements through the end of the tenth year of the
agreements. A deposit of $5.1 million per vessel was retained by the buyers and will either be applied to the purchase price
of the vessel if a purchase option is exercised, or refunded to us at the expiration of the agreement (as applicable).

In April 2020, we executed an agreement to increase the borrowing capacity of our BCFL Lease Financing
arrangements (MRs) by up to $1.9 million per vessel to partially finance the purchase and installation of scrubbers on the
above vessels. The agreement will be for a fixed term of three years at the rate of up to $1,910 per vessel per day to be
allocated to principal and interest.

In July 2020, we drew down $1.9 million to partially finance the purchase and installation of a scrubber on one
vessel and in January 2021, we drew down $5.8 million to partially finance the purchase and installation of scrubbers on
three vessels.

Our BCFL Lease Financing (MRs) includes a financial covenant that requires us to maintain that the aggregate of
the fair market value of each vessel leased under the facility plus the aforementioned $5.1 million deposit shall at all times
be no less than 100% of the then outstanding balance plus the aforementioned $5.1 million deposit.

The aggregate outstanding balances under this arrangement were $77.7 million and $87.8 million as of December

31, 2020 and 2019, respectively. We were in compliance with the financial covenants as of those dates.

2018 CMBFL Lease Financing

In July 2018, we executed an agreement to sell and leaseback six MR product tankers (STI Battery, STI
Milwaukee, STI Tribeca, STI Bronx, STI Manhattan, and STI Seneca) to CMB Financial Leasing Co., Ltd. The borrowing
amount under the arrangement is $141.6 million in aggregate and the sales closed in August 2018.

Each agreement is for a fixed term of eight years, and the Company has options to purchase the vessels at the start
of the fourth year of each agreement. The lease bears interest at LIBOR plus a margin of 3.2% per annum and is being
repaid in quarterly principal installments of $0.4 million per vessel. Each agreement also has a purchase obligation at the
end of the eighth year, which is equal to the outstanding principal balance at that date.

In December 2019, we amended and restated the agreement to increase the borrowing capacity to partially finance
the purchase and installation of scrubbers on the six MRs that are currently part of the agreement. In May 2020, we drew
down an aggregate of $10.1 million under the scrubber portion of our 2018 CMBFL Lease Financing to partially finance
the purchase and installation of scrubbers on the six MRs that are currently part of this arrangement. The upsized portion of
the lease financing has a final maturity of 3.5 years after the first drawdown, bears interest at LIBOR plus a margin of
3.10% per annum, and are scheduled to be repaid in quarterly principal payments of approximately $0.1 million per vessel.

We are subject to certain terms and conditions, including financial covenants, under this arrangement which are

summarized as follows:

• The ratio of net debt to total capitalization no greater than 0.60 to 1.00.

• Minimum liquidity of not less than the greater of $25.0 million and $500,000 per each owned vessel plus

$250,000 per each time chartered-in vessel.

• The fair market value of each vessel leased under the facility shall at all times be no less than 115% of the

outstanding balance for such vessel.

The amounts outstanding, which include the scrubber and non-scrubber portions, were $125.0 million and $126.4
million as of December 31, 2020 and 2019, respectively. We were in compliance with the financial covenants under these
arrangements as of those dates.

$116.0 Million Lease Financing

In August 2018, we executed an agreement to sell and leaseback two MR product tankers (STI Gramercy and STI
Queens) and two LR2 product tankers (STI Oxford and STI Selatar) in two separate transactions to an international
financial institution. We refer to this sale and leaseback as the $116.0 Million Lease Financing. The net borrowing amount
(which reflects the selling price less deposits and commissions to the lessor) under the arrangement was $114.8 million in
aggregate, consisting of $23.8 million per MR and $33.7 million per LR2.

Under the terms of these agreements, the Company will bareboat charter-in the vessels for a period of seven years
at $7,935 per day for each MR and $11,040 per day for each LR2 (which includes both the principal and interest
components of the lease). In addition, we have purchase options beginning at the end of the third year of each agreement,
and a purchase obligation for each vessel upon the expiration of each agreement.

In April 2020, we executed agreements to increase the borrowing capacity of four vessels under our $116.0
Million Lease Financing by up to $1.9 million per vessel to partially finance the purchase and installation of scrubbers on
these vessels. Each agreement will be for a fixed term of three years at the rate of up to $1,910 per vessel per day to be
allocated to principal and interest.

In July 2020, we drew down $5.7 million on these agreements to partially finance the purchase and installation of
scrubbers on three vessels. In January 2021, we drew down $1.9 million on these agreements to partially finance the
purchase and installation of scrubbers on one vessel.

We are subject to certain terms and conditions, including a financial covenant that requires us to maintain that the
aggregate of the fair market value of each vessel leased under the facility plus the aforementioned deposits shall at all times
be no less than 111% of the then outstanding balance plus the aforementioned deposits. The LR2 tankers in this facility are
grouped for purposes of this test.

The amounts outstanding, which include the scrubber and non-scrubber portions, were $103.8 million and $106.0
million as of December 31, 2020 and 2019, respectively. We were in compliance with the financial covenants as of those
dates.

AVIC Lease Financing

In July 2018, we executed an agreement to sell and leaseback three MR product tankers (STI Ville, STI Fontvieille
and STI Brooklyn) and two LR2 product tankers (STI Rose and STI Rambla) to AVIC International Leasing Co., Ltd. The
borrowing amounts under the arrangement are $24.0 million per MR and $36.5 million per LR2 ($145.0 million in
aggregate). These transactions closed in August and September 2018.

Each agreement is for a fixed term of eight years, and the Company has options to purchase the vessels beginning
at the end of the second year of each agreement. The leases bear interest at LIBOR plus a margin of 3.7% per annum and
will be repaid in quarterly principal installments of $0.5 million per MR and $0.8 million per LR2. Each agreement also
has a purchase obligation at the end of the eighth year, which is equal to the outstanding principal balance at that date.

Additionally, in February 2020, we executed an agreement to upsize the AVIC Lease Financing arrangement to
finance the purchase and installation of scrubbers on the two MRs and two LR2 product tankers that are part of this
arrangement. The upsized portion of the lease financing was used, and is expected to be used to finance up to the lesser of
80% of the purchase and installation price of the scrubbers or 80% of the appreciated value of the vessel. In December
2020, we drew down $4.6 million from the upsized portion of this arrangement to partially finance the purchase and
installation of scrubbers on three vessels that are currently part of this arrangement, one MR and two LR2s. The upsized
portion of the lease financing has a final maturity of three years after the first drawdown, bears interest at LIBOR plus a
margin of 4.20% per annum and is scheduled to be repaid in quarterly principal payments of approximately $0.4 million, in
aggregate, for all three vessels.

We are subject to certain terms and conditions, including financial covenants, under this arrangement which are

summarized as follows:

• The ratio of net debt to total capitalization no greater than 0.70 to 1.00.

• Consolidated tangible net worth of no less than $650.0 million.

• The fair market value of each grouped vessels (MRs or LR2s) leased under the facility shall at all times be no

less than 110% of the outstanding balance for such grouped vessels (MRs or LR2s).

The outstanding amounts, which include the scrubber and non-scrubber portions, were $119.7 million and $127.3
million as of December 31, 2020 and 2019, respectively, and we were in compliance with the financial covenants as of
those dates.

China Huarong Shipping Lease Financing

In August 2018, we closed on the sale and leaseback of six 2014 built MR product tankers, (STI Opera, STI
Virtus, STI Venere, STI Aqua, STI Dama, and STI Regina) to China Huarong Shipping Financial Leasing Co., Ltd. The
borrowing amount under the arrangement is $144.0 million in aggregate.

Each agreement is for a fixed term of eight years, and the Company has options to purchase the vessels beginning
at the end of the third year of each agreement. The leases bear interest at LIBOR plus a margin of 3.5% per annum and will
be repaid in equal quarterly principal installments of $0.6 million per vessel. Each agreement also has a purchase obligation
at the end of the eighth year, which is equal to the outstanding principal balance at that date.

In September 2020 we received a commitment to upsize this arrangement by $2.0 million per vessel to partially
finance the purchase and installation of scrubbers on these vessels. In January 2021, we executed the agreements on five of
the vessels (STI Virtus, STI Venere, STI Aqua, STI Dama, and STI Regina). Borrowings under the upsized portion bear
interest at LIBOR plus a margin of 3.5% per annum and are scheduled to be repaid in equal quarterly installments for three
years from the date of drawdown. We drew down $10 million under the upsized portion of this arrangement in January
2021 to partially finance the purchase and installation of scrubbers on five of the vessels.

We are subject to certain terms and conditions under this arrangement, including the financial covenant that the
Company will maintain consolidated tangible net worth of no less than $650.0 million. Additionally, during the scrubber
loan period (between its drawdown date and maturity date), each vessel shall maintain a fair market value of no less than
115% of the total principal outstanding balance for such vessel.

The outstanding amounts were $110.3 million and $123.8 million as of December 31, 2020 and 2019,

respectively. We were in compliance with the financial covenants as of those dates.

$157.5 Million Lease Financing

In October 2018, we sold and leased back six MR product tankers (STI San Antonio, STI Benicia, STI St. Charles,
STI Yorkville, STI Mayfair and STI Duchessa) and one LR2 product tanker (STI Alexis) to an international financial
institution. The borrowing amount under the arrangement was $157.5 million in aggregate, and these sales closed in
October 2018.

Each agreement is for a fixed term of seven years, and we have options to purchase the vessels beginning at the
end of the third year of each agreement. The leases bear interest at LIBOR plus a margin of 3.0% per annum and are
scheduled to be repaid in equal quarterly principal installments of $0.5 million per MR and $0.6 million for the LR2. Each
agreement also has a purchase obligation at the end of the seventh year (which is equal to the outstanding principal balance
at that date). We are subject to certain terms and conditions, including financial covenants, under this arrangement which
are summarized as follows:

• The ratio of net debt to total capitalization no greater than 0.60 to 1.00.

• Minimum liquidity of not less than the greater of $25.0 million and $500,000 per each owned vessel plus

$250,000 per each time chartered-in vessel.

• The fair market value of each vessel leased under the facility shall at all times be no less than 115% of the

outstanding balance for such vessel.

The outstanding amounts were $123.8 million and $137.9 million as of December 31, 2020 and 2019,

respectively, and we were in compliance with the financial covenants as of those dates.

COSCO Lease Financing

In September 2018, we executed an agreement to sell and leaseback two Handymax product tankers (STI
Battersea and STI Wembley) and two MR product tankers (STI Texas City and STI Meraux) to Oriental Fleet International
Company Limited (“COSCO Shipping”). The amounts borrowed under the arrangement were $21.2 million for the
Handymax vessels and $22.8 million for the MR vessels ($88.0 million in aggregate).

Each agreement is for a fixed term of eight years, and we have options to purchase the vessels beginning at the
end of the second year of each agreement. The facility bears interest at LIBOR plus a margin of 3.6% per annum and is
being repaid in quarterly installments of $0.5 million per vessel. Each agreement also has a purchase obligation at the end
of the eighth year, which is equal to the outstanding principal balance at that date. We are subject to certain terms and
conditions, including financial covenants, under this arrangement which are summarized as follows:

• The ratio of total liabilities (less cash and cash equivalents) to total assets no greater than 0.65 to 1.00.

• Consolidated tangible net worth of no less than $1.0 billion plus (i) 25% of the cumulative positive net
income (on a consolidated basis) for each fiscal quarter commencing on or after January 1, 2018 and (ii) 50%
of the net proceeds of new equity issuances occurring on or after January 1, 2018.

• The fair market value of each vessel leased under the facility shall at all times be no less than 110% of the

outstanding balance for such vessel.

The outstanding amounts were $68.8 million and $76.5 million as of December 31, 2020 and 2019, respectively,

and we were in compliance with the financial covenants as of those dates.

2020 CMBFL Lease Financing

In September 2020, we executed an agreement with CMB Financial Leasing Co., Ltd to sell and leaseback two
MR product tankers (STI Leblon and STI Bosphorus). The aggregate borrowing amount under the arrangement was $45.4
million, which was drawn in September 2020. A portion of the proceeds were utilized to repay $30.1 million of the
outstanding indebtedness relating to these two vessels under our 2017 Credit Facility.

annum and will be repaid in equal quarterly principal installments of $0.4 million per vessel. Each agreement also has a
purchase option at the end of the seventh year (which is equal to the outstanding principal balance at that date). We are
subject to certain terms and conditions, including financial covenants, under this arrangement which are summarized as
follows:

• The ratio of net debt to total capitalization no greater than 0.60 to 1.00.

• Minimum liquidity of not less than the greater of $25.0 million and $500,000 per each owned vessel plus

$250,000 per each time chartered-in vessel.

• The fair market value of each vessel leased under the facility shall at all times be no less than 120% of the

outstanding balance for such vessel.

The amount outstanding was $44.6 million as of December 31, 2020, and we were in compliance with the

financial covenants as of that date.

2020 TSFL Lease Financing

In November 2020, we executed an agreement with Taiping & Sinopec Financial Leasing Co., Ltd. (“2020 TSFL
Lease Financing”) to sell and leaseback two MR product tankers (STI Galata and STI La Boca). The aggregate borrowing
amount under the arrangement was $47.3 million, which was drawn in November 2020. A portion of the proceeds were
utilized to repay $29.3 million of the outstanding indebtedness relating to these two vessels under our 2017 Credit Facility.

Each agreement is for a fixed term of seven years and we have options to purchase the vessels beginning on the
third anniversary of the delivery date of each agreement. The leases bear interest at LIBOR plus a margin of 3.2% per annum
and will be repaid in equal quarterly principal installments of $0.4 million per vessel. Each agreement also has a purchase
obligation at the end of the seventh year (which is equal to the outstanding principal balance at that date). We are subject to
certain terms and conditions, including financial covenants, under this arrangement which are summarized as follows:

• The ratio of net debt to total capitalization no greater than 0.65 to 1.00.

• Consolidated tangible net worth of no less than $1.0 billion.

• The fair market value of each vessel leased under the facility shall at all times be no less than 115% of the

outstanding balance for such vessel.

The amount outstanding was $47.3 million as of December 31, 2020, and we were in compliance with the

financial covenants as of that date.

2020 SPDBFL Lease Financing

In November 2020, we executed an agreement with SPDB Financial Leasing Co., Ltd to sell and leaseback four
MR product tankers (STI Donald C Trauscht, STI Esles II, STI San Telmo, and STI Jardins). The aggregate borrowing
amount under the arrangement was $96.5 million, which was drawn in November and December 2020. A portion of the
proceeds were utilized to repay $62.9 million of the outstanding indebtedness relating to these vessels under our 2017
Credit Facility. In connection with these repayments, approximately $5.0 million was released from restricted cash that was
previously held in a debt service reserve account under the terms and conditions of the 2017 Credit Facility.

The agreements for STI Donald C. Trauscht and STI San Telmo are for a fixed term of seven years. The
agreements for STI Esles and STI Jardins are for a fixed term of eight years. Each of the agreements have options to
purchase the vessels beginning on the third anniversary of the delivery date of each agreement. The leases bear interest at
LIBOR plus a margin of 3.05% per annum and will be repaid in equal quarterly principal installments of $0.4 million per
vessel. Each agreement also has a purchase obligation at the end of their term (which is equal to the outstanding principal
balance at that date). Additionally, coinciding with the first payment dates in the first quarter of 2021, we were required to
deposit with the lessor 3% of the borrowing amount, or $2.9 million in aggregate. We are subject to certain terms and
conditions, including financial covenants, under this arrangement which are summarized as follows:

• The ratio of net debt to total capitalization no greater than 0.70 to 1.00.

• Consolidated tangible net worth of no less than $650.0 million.

• The fair market value of each vessel leased under the facility shall at all times be no less than 115% of the

outstanding balance for such vessel.

The amount outstanding was $96.5 million as of December 31, 2020, and we were in compliance with the

financial covenants as of that date.

2021 AVIC Lease Financing

In February 2021, we closed on the sale and leaseback of two vessels (STI Memphis and STI Soho) with AVIC
International Leasing Co., Ltd. for aggregate proceeds of $44.2 million (the “2021 AVIC Lease Financing”). We repaid the
outstanding indebtedness of $30.0 million related to these vessels on the 2018 NIBC Credit Facility (which is described
more fully later in this report) as part of these transactions. In March 2021, we closed on the sale and leaseback of two
additional vessels (STI Lombard and STI Osceola) under the 2021 AVIC Lease Financing for aggregate proceeds of $53.1
million. We repaid the outstanding indebtedness of $29.6 million related to these vessels on the ING Credit Facility as part
of these transactions.

Under the 2021 AVIC Lease Financing, each vessel is subject to a nine-year bareboat charter-in agreement. The
lease financings bear interest at LIBOR plus a margin of 3.45% per annum and are scheduled to be repaid in equal
aggregate quarterly repayments of approximately $1.8 million. Each agreement contains purchase options to re-acquire
each of the subject vessels beginning on the second anniversary date from the delivery date of the respective vessel, with a
purchase obligation upon the expiration of each agreement. Additionally, we are required to deposit with the lessor 1% of
the borrowing amount, or $1.0 million in aggregate.

Our 2021 AVIC Lease Financing includes financial covenants that require us to maintain:

• Net debt to total capitalization shall not equal or exceed 70%.

• Net worth shall always exceed $650.0 million.

• The aggregate of the fair market value of the vessels provided as collateral under the lease financing shall at
all times be no less than 115% of the then aggregate outstanding principal amount on or before the third
anniversary date of the delivery of the vessel and 120% thereafter.

2021 CMBFL Lease Financing

In March 2021, we received a commitment to sell and leaseback four Handymax vessels (STI Comandante, STI
Brixton, STI Pimlico and STI Finchley) and one MR vessel (STI Westminster) from CMB Financial Leasing Co. Ltd, or
CMBFL (the “2021 CMBFL Lease Financing”). The borrowing amount under the arrangement will be up to $79.1 million
in aggregate. In March 2021, we closed on the sale and leaseback of the four aforementioned Handymax vessels under the
2021 CMBFL Lease Financing for aggregate proceeds of $58.8 million. We repaid the outstanding indebtedness related to
these vessels of $46.7 million on the ING Credit Facility as part of these transactions. The agreement for the sale and
leaseback of the remaining vessel was executed in March 2021 and is expected to close in April 2021.

Under the 2021 CMBFL Lease Financing, each vessel is subject to a seven-year bareboat charter-in agreement.
The lease financings bear interest at LIBOR plus a margin of 3.25% per annum for the Handymax vessels and 3.20% for
the MR vessel. Each agreement contains purchase options to re-acquire each of the subject vessels beginning on the third
anniversary date from the delivery date of the respective vessel, with a purchase option for each vessel upon the expiration
of each agreement.

Our 2021 CMBFL Lease Financing includes financial covenants that require us to maintain:

• The ratio of net debt to total capitalization no greater than 0.60 to 1.00.

• Minimum liquidity of not less than the greater of $25.0 million and $500,000 per each owned vessel plus

$250,000 per each time chartered-in vessel.

• The fair market value of each vessel leased under the facility shall at all times be no less than 120% of the

outstanding balance for such vessel.

2021 TSFL Lease Financing

Under the 2021 TSFL Lease Financing, each vessel is subject to a seven-year bareboat charter-in agreement. The
lease financings bear interest at LIBOR plus a margin of 3.2% per annum and are scheduled to be repaid in equal quarterly
principal installments of approximately $0.4 million per vessel. Each agreement contains purchase options to re-acquire
each of the subject vessels beginning on the second anniversary date from the delivery date of the respective vessel, with a
purchase option for each vessel upon the expiration of each agreement.

Our 2021 TSFL Lease Financing includes financial covenants that require us to maintain:

• The ratio of net debt to total capitalization no greater than 0.65 to 1.00.

• Consolidated tangible net worth of no less than $1.0 billion.

• The fair market value of each vessel leased under the facility shall at all times be no less than 115% of the

outstanding balance for such vessel.

Unsecured debt

Senior Notes Due 2020

On May 12, 2014, we issued $50.0 million in aggregate principal amount of 6.75% Senior Notes due May 2020,
or our “Senior Notes Due 2020,” and on June 9, 2014, we issued an additional $3.75 million aggregate principal amount of
Senior Notes Due 2020 when the underwriters partially exercised their option to purchase additional Senior Notes Due
2020 on the same terms and conditions. The net proceeds from the issuance of the Senior Notes Due 2020 were $51.8
million after deducting the underwriters’ discounts, commissions and offering expenses.

In May 2020, our Senior Notes due 2020 matured, and the outstanding principal balance of $53.8 million was

repaid in full.

Senior Notes due 2025

In May 2020, we issued $28.1 million aggregate principal amount of the Senior Notes due 2025 in an underwritten
public offering. This amount includes $3.1 million related to the partial exercise of the underwriters’ option to purchase
additional Senior Notes due 2025 under the same terms and conditions. The aggregate net proceeds were approximately
$26.5 million after deducting underwriting commissions and offering expenses.

Additionally, in January 2021, we entered into the Distribution Agreement with B. Riley Securities, Inc., as sales
agent or the Agent, under which we may offer and sell, from time to time, up to an additional $75.0 million aggregate
principal amount of our Senior Notes due 2025 or the Additional Notes.

Any Additional Notes sold will be issued under that certain indenture pursuant to which we previously issued
$28.1 million aggregate principal amount of the Senior Notes due 2025 on May 29, 2020 (the “Initial Notes”). The
Additional Notes will have the same terms as (other than date of issuance), form a single series of debt securities with and
have the same CUSIP number and be fungible with, the Initial Notes immediately upon issuance, including for purposes of
notices, consents, waivers, amendments and any other action permitted under the Indenture. The Senior Notes due 2025 are
listed on the New York Stock Exchange (the “NYSE”) under the symbol “SBBA.”

100

The Senior Notes due 2025 bear interest at a coupon rate of 7.00% per year, payable quarterly in arrears on the
30th day of March, June, September, and December of each year. Coupon payments commenced on June 30, 2020. We
may redeem the Senior Notes due 2025 in whole or in part, at our option, at any time (i) on or after June 30, 2022 and prior
to June 30, 2023, at a redemption price equal to 102% of the principal amount to be redeemed, (ii) on or after June 30,
2023 and prior to June 30, 2024, at a redemption price equal to 101% of the principal amount to be redeemed, and (iii) on
or after June 30, 2024 and prior to maturity, at a redemption price equal to 100% of the principal amount to be redeemed,
in each case plus accrued and unpaid interest to, but excluding, the redemption date.

The Senior Notes due 2025 are a senior unsecured obligation and rank equally with all of our existing and future
senior unsecured and unsubordinated debt, are effectively subordinated to our existing and future secured debt, to the
extent of the value of the assets securing such debt, and are structurally subordinated to all existing and future debt and
other liabilities of our subsidiaries. No sinking fund is provided for the Senior Notes due 2025. The Senior Notes due 2025
were issued in minimum denominations of $25.00 and integral multiples of $25.00 in excess thereof and are listed on the
NYSE under the symbol “SBBA.”

The Senior Notes due 2025 require us to comply with certain covenants, including financial covenants, restrictions
on consolidations, mergers or sales of assets and prohibitions on paying dividends or returning capital to equity holders if a
covenant breach or an event of default has occurred or would occur as a result of such payment. Prior to June 30, 2022, we
may repurchase in whole, but not in part, the Senior Notes due 2025 at a redemption price equal to 104% of the principal
amount of the Senior Notes due 2025 to be repurchased, plus accrued and unpaid interest to, but excluding, the date of
redemption upon the occurrence of certain change of control events.

The financial covenants under our Senior Notes due 2025 include:

• Net borrowings shall not equal or exceed 70% of total assets.

• Net worth shall always exceed $650.0 million.

The outstanding balance was $28.1 million as of December 31, 2020, and we were in compliance with the

financial covenants relating to the Senior Notes due 2025 as of that date.

Convertible Notes due 2022

In May 2018 and July 2018, we exchanged $188.5 million and $15.0 million, respectively, in aggregate principal
amount of our Convertible Notes due 2019 for $188.5 million and $15.0 million, respectively, in aggregate principal
amount of newly issued Convertible Notes due 2022. The Convertible Notes due 2022 issued in July 2018 have identical
terms, are fungible with and are part of the series of Convertible Notes due 2022 issued in May 2018. Interest is payable
semi-annually in arrears on November 15 and May 15 of each year, beginning on November 15, 2018. The Convertible
Notes due 2022 will mature on May 15, 2022, unless earlier converted or repurchased in accordance with their terms.

The conversion rate of the Convertible Notes due 2022 was initially 25 common shares per $1,000 principal
amount of Convertible Notes due 2022 (equivalent to an initial conversion price of approximately $40.00 per share of the
Company’s common stock), and is subject to adjustment upon the occurrence of certain events as set forth in the indenture
governing the Convertible Notes due 2022 (such as the payment of dividends).

The table below details the dividends issued during the years ended December 31, 2020 and December 31, 2019

and up to March 30, 2021 and the corresponding effect on the conversion rate of the Convertible Notes due 2022:

Record Date
March 13, 2019
June 5, 2019
September 10, 2019
November 25, 2019
March 2, 2020
June 1, 2020
September 9, 2020
November 23, 2020
March 2, 2021

Dividends per share
0.10
0.10
0.10
0.10
0.10
0.10
0.10
0.10
0.10

$
$
$
$
$
$
$
$
$

Share Adjusted
Conversion Rate(1)
25.4799
25.5767
25.6637
25.7401
25.8763
26.0200
26.2463
26.4810
26.6617

(1) Per $1,000 principal amount of the Convertible Notes.

101

The Convertible Notes due 2022 are freely convertible at the option of the holder on or after January 1, 2019 and
prior to the close of business on the business day immediately preceding the maturity date, and could be converted at any
time prior to the close of business on the business day immediately preceding January 1, 2019 only under the following
circumstances:

•

during any calendar quarter commencing after the calendar quarter ending on March 31, 2018 (and only
during such calendar quarter), if the last reported sale price of the common stock for at least 15 trading days
(whether or not consecutive) during a period of 25 consecutive trading days ending on the last trading day of
the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each
applicable trading day;

during the five-business day period after any five consecutive trading day period, or the Measurement Period,
in which the trading price (as defined in the indenture) per $1,000 principal amount of Convertible Notes due
2022 for each trading day of the Measurement Period was less than 98% of the product of the last reported
sale price of our common stock and the conversion rate on each such trading day; or

upon the occurrence of specified corporate events as defined in the indenture (e.g. consolidations, mergers, a
binding share exchange or the transfer or lease of all or substantially all of our assets).

Upon conversion of the Convertible Notes due 2022, holders will receive shares of the Company’s common stock.

The Convertible Notes due 2022 are not redeemable by the Company.

The Convertible Notes due 2022 require us to comply with certain covenants such as restrictions on
consolidations, mergers or sales of assets. Additionally, if we undergo a fundamental change (as defined in the indenture),
holders may require us to repurchase for cash all or any portion of their notes at a fundamental change repurchase price
equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest to, but excluding,
the fundamental change repurchase date.

Upon the May and July 2018 issuances, we determined the initial carrying values of the liability components of
the Convertible Notes due 2022 to be $154.3 million and $12.2 million, respectively, based on the fair value of a similar
liability that does not have any associated conversion feature. We utilized recent pricing (with adjustments made to align
the tenor) on our (i) Senior Notes due 2019 (which were repaid in March 2019), (ii) Senior Notes due 2020 and (iii) the
pricing on recently issued unsecured bonds in the shipping sector as the basis for this determination. The difference
between the fair value of the liability component and the face value of the Convertible Notes due 2022 is being amortized
over the term of the Convertible Notes due 2022 under the effective interest method and recorded as part of financial
expenses. The residual value (the conversion feature) of $34.2 million and $2.8 million, respectively, were recorded to
Additional paid-in capital upon issuance.

Between July 1, 2020 and September 30, 2020, we repurchased $52.3 million face value of our Convertible Notes
due 2022 at an average price of $894.12 per $1,000 principal amount, or $46.7 million. As a result of these repurchases, we
reduced the liability component of the Convertible Notes due 2022 by $47.7 million and we recorded a $1.0 million gain
on repurchase of Convertible Notes within the consolidated statement of income or loss.

The carrying values of the liability component of the Convertible Notes due 2022 (consisting of both the May
2018 and July 2018 issuances) as of December 31, 2020 and 2019, respectively, were $140.7 million and $180.1 million.
We incurred $5.5 million of coupon interest and $8.4 million of non-cash accretion during the year ended December 31,
2020. We incurred $6.1 million of coupon interest and $8.6 million of non-cash accretion during the year ended December 31,
2019. We were in compliance with the covenants related to the Convertible Notes due 2022 as of those dates.

On March 2, 2021, the conversion rate of the Convertible Notes due 2022 was adjusted to reflect the payment of a
cash dividend on March 15, 2021 to all shareholders of record as of March 2, 2021. The new conversion rate for the
Convertible Notes due 2022 is 26.6617 of the Company’s common shares representing an increase of the prior conversion
rate of 0.1806 for each $1,000 principal amount of the Convertible Notes due 2022.

On March 25, 2021 we exchanged $62.1 million in aggregate principal amount of the Convertible Notes due 2022

for new 3.00% Convertible Senior Notes due 2025. This transaction is described below.

Convertible Notes due 2025

102

holders of the Convertible Notes due 2022, which we refer to as the March 2021 Exchange Offer. Simultaneously with the
March 2021 Exchange Offer, we issued and sold $76.1 million in aggregate principal amount of Convertible Notes due
2025 pursuant to separate, privately negotiated, agreements with certain investors in a private offering, which we refer to as
the March 2021 Convertible Notes Offering.

The conversion rate of the Convertible Notes due 2025 is initially 26.6617 common shares per $1,000 principal
amount of Convertible Notes due 2025 (equivalent to an initial conversion price of approximately $37.507 per common
share), and is subject to adjustment upon the occurrence of certain events as set forth in the indenture governing the
Convertible Notes due 2025 (such as the payment of dividends).

Commencing on the issue date of the Convertible Notes due 2025, principal will accrete on the principal amount,
compounded semi-annually, at a rate equal to 5.5202% per annum, which principal amount, together with any accretions
thereon, is the “Accreted Principal Amount”. The Accreted Principal Amount at maturity will equal 125.4% of par, which
together with the 3.00% interest rate, compounds to a yield-to-maturity of 8.25%.

The Convertible Notes due 2025 are freely convertible at the option of the holder and prior to the close of business
on the 5th business day immediately preceding the maturity date. Upon conversion of the Convertible Notes due 2025,
holders will receive shares of our common stock.

We may, subject to certain exceptions, redeem the Convertible Notes due 2025 for cash, if at any time the per
share volume-weighted average price of our common shares equals or exceeds 125.4% of the conversion price then in
effect on (i) each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on,
and including, the trading day immediately before the applicable redemption date; and (ii) the trading day immediately
before such date of the redemption notice.

The Convertible Notes due 2025 require us to comply with certain covenants such as restrictions on
consolidations, mergers or sales of assets. Additionally, if we undergo a fundamental change (as defined in the indenture),
holders may require us to repurchase for cash all or any portion of their notes at a fundamental change repurchase price
equal to 100% of the Accreted Principal Amount of the notes to be repurchased, plus accrued and unpaid interest to, but
excluding, the fundamental change repurchase date.

As of the date of this annual report, we have outstanding $138.2 million in aggregate principal amount of

Convertible Notes due 2025.

IFRS 16 - lease liabilities

On January 1, 2019, we adopted IFRS 16 - Leases, which amended the existing accounting standards to require
lessees to recognize the rights and obligations created by the commitment to lease assets on the balance sheet, on the basis
of the present value of the lease payments that are not paid at the transition date (or commencement date going forward),
discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, an incremental
borrowing rate, unless the term of the lease is 12 months or less. Upon transition, a lessee shall apply IFRS 16 to its leases
either retrospectively to each prior reporting period presented (the ‘full retrospective approach’) or retrospectively with the
cumulative effect of initially applying IFRS 16 recognized at the date of initial application (the ‘modified retrospective
approach’).

We applied the modified retrospective approach upon transition.

The below summarizes the key terms of our lease financing arrangements recorded as Right of use liabilities.

IFRS 16 - Leases - 3 MRs

The transition to IFRS 16 did result in the recognition of right-of-use assets and corresponding liabilities relating
to the three bareboat chartered-in vessel commitments (STI Beryl, STI Le Rocher and STI Larvotto). The bareboat contracts
for these three vessels were entered into in April 2017, are scheduled to expire in April 2025, and have a fixed lease
payment of $8,800 per vessel per day. We have the option to purchase these vessels beginning at the end of the fifth year of

103

the agreement through the end of the eighth year of the agreement, at market-based prices. Additionally, a deposit of $4.35
million was retained by the buyer and will either be applied to the purchase price of the vessel if a purchase option is
exercised, or refunded to us at the expiration of the agreement. Based on the analysis of the purchase options, we
determined the lease terms to be eight years, from the commencement date through the expiration date of each lease. A
weighted average incremental borrowing rate of approximately 6.0% was applied at the date of initial application of IFRS
16 on this arrangement. The impact of the application of this standard on the opening balance sheet as of January 1, 2019
was the recognition of a $48.5 million right of use asset, a $50.7 million lease liability (“IFRS 16 - Leases - 3 MRs”) and a
$2.2 million reduction in retained earnings - a basic loss per share of $(0.05) and a diluted loss per share of $(0.06).

The IFRS 16 - Leases - 3 MRs obligations are secured by, among other things, assignments of earnings and
insurances and stock pledges and account charges in respect of the subject vessels and contain customary events of default,
including cross-default provisions as well as subjective acceleration clauses under which the lessor could cancel the lease
in the event of a material adverse change in our business.

In April 2020, we executed agreements to increase the borrowing capacity of the three vessels under our IFRS 16 -
Leases - 3 MRs obligation by up to $1.9 million per vessel to partially finance the purchase and installation of scrubbers on
these vessels. Each agreement will be for a fixed term of three years at the rate of up to $1,910 per vessel per day to be
allocated to principal and interest. As of December 31, 2020, there have been no borrowings under these agreements.

The aggregate outstanding balances of these lease liabilities were $36.9 million and $44.2 million as of December

31, 2020 and 2019, respectively.

IFRS 16 - Leases - 7 Handymax

In March 2019, we entered into new bareboat charter-in agreements on seven previously bareboat chartered-in
vessels. Three of these vessels (Silent, Single and Star I) were bareboat chartered-in for one year, and the remaining four
vessels (Steel, Sky, Stone I and Style) are bareboat chartered-in for two years. The daily bareboat rate under all seven
agreements is $6,300 per day. At the commencement date of the leases, we determined our one and two-year incremental
borrowing rates to be 5.81% and 5.73%, respectively. We recognized a $24.2 million right of use asset and a corresponding
$24.2 million lease liability (“IFRS 16 - Leases - 7 Handymax”) at the commencement date of these leases.

In March 2020, we extended the terms of the bareboat agreements for three Handymax vessels, Silent and Single
to June 2020 and Star I to July 2020, at the rate of $6,300 per day. These extensions were determined to be lease
modifications under IFRS 16 - Leases. Accordingly, we recognized right of use assets of $1.6 million and corresponding
lease liabilities of $1.6 million based upon our incremental borrowing rate of 4.03%. The bareboat charters on Silent and
Single expired in June 2020, and Star I expired in July 2020.

The IFRS 16 - Leases - 7 Handymax obligations are secured by, among other things, assignments of earnings and
insurances and stock pledges and account charges in respect of the subject vessels and contain customary events of default,
including cross-default provisions.

The aggregate outstanding balances of these lease liabilities were $2.2 million and $12.8 million as of December

31, 2020 and 2019, respectively.

Trafigura Transaction - $670 Million Lease Financing

On September 26, 2019, we acquired subsidiaries of Trafigura, which have leasehold interests in 19 product
tankers under bareboat charter agreements (“Agreements”) with subsidiaries of an international financial institution for
aggregate consideration of $803.0 million. Of the 19 vessels, 15 (consisting of 11 MRs and four LR2s) were delivered on
September 26, 2019, and four MRs were under construction. The consideration exchanged consisted of:

•

For the delivered vessels on September 26, 2019, the assumption of the obligations under the Agreements of
$531.5 million and the issuance of 3,981,619 shares of common stock at $29.00 per share to a nominee of
Trafigura with an aggregate market value of $115.5 million.

For the four vessels under construction on September 26, 2019, the assumption of the commitments on the
Agreements of $138.8 million and the issuance of 591,254 shares of common stock at $29.00 per share to a
nominee of Trafigura with an aggregate market value of $17.1 million. Three vessels under construction were
delivered in the first quarter of 2020, and the remaining vessel was delivered in September 2020.

104

On the date of the Trafigura Transaction, certain terms of the Agreements were modified (“Modified Agreements”
and, collectively, “$670.0 Million Lease Financing”). Under IFRS 16- Leases the Modified Agreements did not meet the
criteria to qualify as separate leases and were measured accordingly as lease modifications. The Modified Agreements each
have a term of eight years from the latter of the date of the Trafigura Transaction or the delivery date of the respective
vessel, and we have purchase options beginning after the first year of each agreement, limited to eight vessels until after the
third anniversary date. Based on the analysis of the purchase options, we determined the lease terms to be eight years from
the commencement date of the Modified Agreements, through the expiration date of each lease, at which time we have
assumed that the exercise of the purchase options to be reasonably certain.

The Modified Agreements bear interest at LIBOR plus a margin of 3.50% per annum and are being repaid in equal
monthly installments of approximately $0.2 million per month per vessel. Additionally, an aggregate prepayment of $18
million ($0.8 million for each MR and $1.5 million for each LR2) is being made in equal monthly installments over the
first 12 months of each Modified Agreement.

Commencing with the date of the Trafigura Transaction, the following vessels were leased under the Modified
Agreements: STI Magic, STI Majestic, STI Mystery, STI Marvel, STI Magnetic, STI Millennia, STI Magister, STI Mythic,
STI Marshall, STI Modest, STI Maverick, STI Miracle, STI Maestro, STI Mighty, STI Maximus, STI Lobelia, STI Lotus, STI
Lily and STI Lavender. The Modified Agreements commenced upon delivery for (i) STI Miracle and STI Maestro in
January 2020; (ii) STI Mighty in March 2020; and (iii) STI Maximus in September 2020. The Modified Agreements are
secured by, among other things, assignments of earnings and insurances and stock pledges and account charges in respect
of the subject vessels and contain customary events of default, including cross-default provisions as well as subjective
acceleration clauses under which the lessor could cancel the lease in the event of a material adverse change in our business.
The leased vessels are required to maintain a fair value, as determined by an annual appraisal from an approved third-party
broker, of 111% of the outstanding principal balance as of the last banking day of the year. At December 31, 2020 we made
an unscheduled payment of $0.9 million with respect to one of the vessels to maintain compliance with this covenant.

The Trafigura Transaction was accounted for as an asset acquisition in accordance with the early adoption of
amendments to the definition of a business in IFRS 3 - Business Combinations effective for annual reporting periods
beginning on or after January 1, 2020, and the obligations assumed under the leasehold interests were accounted for under
IFRS 16 - Leases. Accordingly, we recorded lease liabilities and corresponding right of use assets for the delivered vessels
upon the closing date of the Trafigura Transaction. The right of use assets were measured based on (i) the present value of
the minimum lease payments under each lease (which assumes the exercise of the purchase options at expiration) of $531.5
million, (ii) the value of the equity issued for each lease (as an initial direct cost) of $115.5 million, and (iii) other initial
direct costs of $2.5 million.

Additionally, we recorded lease liabilities and corresponding right of use assets upon the delivery of the four MR
vessels that were delivered during the year ended December 31, 2020: STI Miracle, STI Maestro, STI Mighty and STI
Maximus. The right of use assets for these four vessels were measured based on (i) the present value of the minimum lease
payments under each lease (which assumes the exercise of the purchase options at expiration) of $138.8 million, (ii) the
value of the equity issued for each lease (as an initial direct cost) of $17.1 million, and (iii) other initial direct costs of $3.0
million (which includes costs incurred as part of the transaction and capitalized costs incurred as part of the construction of
each vessel).

The aggregate outstanding balances of these lease liabilities were $593.3 million and $513.0 million as of
December 31, 2020 and 2019, respectively. We were in compliance with the financial covenants under these agreements as
of those dates.

Capital Expenditures

Vessel acquisitions and payments for vessels under construction

During the years ended December 31, 2020, 2019 and 2018, our vessel acquisitions and payments for vessels
under construction consisted of purchases of vessels (or assumptions of leases) from third parties including Trafigura,
vessels delivered under construction contracts with various shipyards, installment payments, capitalized interest and other
costs for vessels under construction. We made cash payments to acquire the vessels part of the Trafigura Transaction
vessels of $3.0 million during the year ended December 31, 2019 and of $26.1 million for certain vessels under
construction during the year ended December 31, 2018.

105

We did not enter into any agreements to construct vessels during the years ended December 31, 2020, 2019 and
2018 but we did have vessels delivered during those periods under contracts that were entered into prior to 2018. During
the year ended December 31, 2019, we assumed the leasehold obligations on 19 vessels as part of the Trafigura Transaction
four of which were under construction as of December 31, 2019. The leases commenced upon delivery from the shipyard
on two vessels in January 2020, one in March 2020, and one in September 2020.

The table set forth below lists the vessels that were acquired or delivered during the years ended December 31,

2020, 2019 and 2018:

Constructed/ During the years ended December 31,

Name
STI Miracle
STI Maestro
STI Mighty
STI Maximus
STI Magic
STI Majestic
STI Mystery
STI Marvel
STI Magnetic
STI Millennia
STI Magister
STI Mythic
STI Magister
STI Modest
STI Maverick
STI Lobelia
STI Lotus
STI Lily
STI Lavender
STI Esles II
STI Jardins

Vessel Type
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
MR
LR2
LR2
LR2
LR2
MR
MR

Acquired
Acquired
Acquired
Acquired
Acquired
Acquired
Acquired
Acquired
Acquired
Acquired
Acquired
Acquired
Acquired
Acquired
Acquired
Acquired
Acquired
Acquired
Acquired
Acquired
Constructed
Constructed

2019

2018

2020
January
January
March
September

September
September
September
September
September
September
September
September
September
September
September
September
September
September
September

January
January

(2)
(2)
(2)
(2)
(2)
(2)
(2)
(2)
(2)
(2)
(2)
(2)
(2)
(2)
(2)
(2)
(2)
(2)
(2)
(1)

(1)

(1) This was a newbuilding vessel delivered under a construction contract entered into prior to 2017.
(2) This vessel was acquired from Trafigura as part of the Trafigura Transaction and is classified as a Right of

use asset.

We had no orders for new or secondhand vessels as of December 31, 2020 and as of March 30, 2021.

Sales of vessels

We did not sell any vessels during the years ended December 31, 2020, 2019 and 2018.

Drydock

During the years ended December 31, 2020, 2019, and 2018, we completed the following drydocks, as described

below:

Drydock
Costs in thousands of U.S.
dollars
Drydock in-progress at

Handymax
Off-hire
days

Vessels

Cost

MR
Off-hire
days

Vessels

Cost

Vessels

LR1
Off-hire
days

Cost

Vessels

LR2
Off-hire
days

Cost

Vessels

Total
Off-hire
days

Cost

December 31, 2017 ...............
Costs incurred in 2018 ................
Drydock completed in 2018 ........
Drydock in-progress at

December 31, 2018 ...............
Costs incurred in 2019 ................
Drydock completed in 2019(1) .....
Drydock in-progress at

December 31, 2019 ...............
Costs incurred in 2020 ................
Drydock completed in 2020(1) .....
Drydock in-progress at

December 31, 2020 ...............

—

—
86
—

$
86
15,642
362 15,195

533
1,284
1,817

951

943

—
2,994
1,920

1,074
16,699
14,439

3,334
11,088
14,413

$ —

—

—
—
—

—
3,123
1,712

1,411

—

262

1,399

—
384
—

384
8,130
3,975

4,539
18,406
21,380

1,575

2,431

—
3,464
1,920

1,544
40,471
33,609

8,406
33,901
39,322

1,565

2,985

(1)

Drydock completed in 2019 includes 11 offhire days from drydocks which commenced in 2018. Drydock completed in 2020 includes 433 offhire days from drydocks which commenced in 2019.
Offhire days include offhire days for installations of BWTS and / or scrubbers.

106

As our fleet matures and expands, our drydock expenses will likely increase. Ongoing costs for compliance with
environmental regulations and society classification survey costs are a component of our vessel operating costs. With the
exception of the recent ratification of the ballast water treatment convention as described in “Item 3. Key Information - D.
Risk Factors”, we are not currently aware of any regulatory changes or environmental liabilities that we anticipate will
have a material impact on our results of operations or financial condition.

Ballast Water Treatment Systems and Scrubbers

In July 2018, we executed an agreement to purchase 55 ballast water treatment systems from an unaffiliated third-
party supplier for total consideration of $36.2 million. These systems are expected to be installed over the next five years,
as each respective vessel under the agreement is due for its International Oil Pollution Prevention, or IOPP, renewal survey.

We expect to retrofit the substantial majority of our vessels with exhaust gas cleaning systems, or scrubbers. The
scrubbers will enable our ships to use high sulfur fuel oil, which is less expensive than low sulfur fuel oil, in certain parts of
the world. From August 2018 through November 2018, we entered into agreements with two separate suppliers to retrofit a
total of 77 of our tankers with such systems for total consideration of $116.1 million (which excludes installation costs).
These systems are expected to be installed from 2019 through 2023. We also obtained options to retrofit additional tankers
under these agreements.

In June and September 2019, we exercised the option to retrofit 14 and 7 additional vessels, respectively, with
scrubbers for total consideration of $30.3 million. During 2020, 46 of our vessels were fitted with scrubbers and 22 were
fitted with BWTS.

The following table summarizes Ballast Water Treatment Systems activity for the years ended December 31, 2020

and 2019:

Ballast Water Treatment Systems

Costs in thousands of U.S. dollars
Costs incurred in 2019(1) ....................
BWTS completed in 2019(2)...............
BWTS in-progress at

Handymax
Off-hire
days

Vessels

Cost
$ 24,638
23,817

MR
Off-hire
days

Cost
$ 14,902

Vessels

LR1
Off-hire
days

Cost

Vessels

LR2
Off-hire
days

Total
Off-hire
days

Vessels

Cost
$
197

5,910
4,769

Cost
$ 45,450
42,894

362

686

14,308 —

—

1,245

—
—

—
—
—

—

740

1,141
13,491
14,627

1,663

2,556
30,922
33,303

175

December 31, 2019 ......................
Costs incurred in 2020(1) ....................
BWTS completed in 2020(2)...............
BWTS in-progress at

December 31, 2020 ......................

821
1,940
2,761

886

594
15,491
15,915 —

—

170

(1)

(2)

Includes capitalized interest of $0.2 million and $1.1 million in 2020 and 2019, respectively.

Offhire days include offhire days for drydock and/or installations of scrubbers.

The following table summarizes scrubber installation activity for the years ended December 31, 2020 and 2019:

Scrubber

Costs in thousands of U.S. dollars
Costs incurred in 2019(1) ....................
Scrubber completed in 2019 -

notional drydock(2) .......................
Scrubber completed in 2019(3) ...........
Scrubber in-progress at

December 31, 2019 ......................
Costs incurred in 2020(1) ....................
Scrubber completed in 2020 -

notional drydock(2) .......................
Scrubber completed in 2020(3) ...........
Scrubber in-progress at

December 31, 2020 ......................

Vessels

Cost

Vessels

Handymax
Off-hire
days

—

—
—

—

MR
Off-hire
days

Cost
$ 43,928

Vessels

LR1
Off-hire
days

Cost
$

8,368

LR2
Off-hire
days

Vessels

Cost
$ 46,492

Vessels

Total
Off-hire
days

Cost
$ 98,788

2,250
892 37,042

220

450
7,336

792

2,100
40,271

1,905

4,800
84,649

$ —
—

$ 4,636
$ 53,802

582
$ 13,841

$ 4,121
$ 67,706

$
9,339
$ 135,349

—

—
—

3,000
1,338 52,329

258

$ —

$ 3,109

600
13,084

739

1,911

3,300
67,026

3,507

6,900
132,439

$ 1,501

5,349

(1)

(2)

Includes capitalized interest of $1.2 million and $1.8 million in 2020 and 2019, respectively.

For a newly installed scrubber, a notional component of approximately 10% is allocated from the scrubber’s cost. The notional scrubber cost is estimated by us, based on the expected costs that we
expect will incur for this equipment at the next scheduled drydock date and relates to the replacement of certain components and maintenance of other components. This notional scrubber cost is
carried separately from the cost of the scrubber. Subsequent costs are recorded at actual cost incurred. The notional component of the scrubber is depreciated on a straight-line basis to the next
estimated drydock date and the remaining cost is depreciated over the remaining useful life of the vessel.

(3)

Offhire days include offhire days for drydock and/or installations of BWTS.

107

Amounts in thousands of US dollars
Less than 1 month ..............................................................
1-3 months .........................................................................
3 months to 1 year ..............................................................
1-5 years .............................................................................
5+ years ..............................................................................
Total ...................................................................................

March 30, 2021
154
5,417
6,936
17,884
—
30,391

These amounts reflect only those firm commitments as of March 31, 2021 and exclude installation costs and
potential payments under any purchase options that may be declared in the future. Furthermore, the timing of these
payments are subject to change as installation times are finalized.

C. Research and Development, Patents and Licenses, Etc.

Not applicable.

D. Trend Information

See “Item 4. Information on the Company - B. Business Overview - The International Oil Tanker Shipping

Industry.”

E. Off-Balance Sheet Arrangements

As of December 31, 2020, we were committed to purchasing scrubbers and ballast water treatment systems.
Additionally, we provided five guarantees in respect of the payment obligations of a related party bunker provider (who is
engaged in the procurement of bunkers on behalf of the Company and the Scorpio Pools) toward its physical suppliers. The
maximum amount under these guarantees was $16.0 million in aggregate.

See “Item 5. Operating and Financial Review and Prospects - B. Liquidity and Capital Resources” and “Item 7.

Major Shareholders and Related Party Transactions - B. Related Party Transactions” for further information.

F. Tabular Disclosure of Contractual Obligations

The following table sets forth our total contractual obligations at December 31, 2020:

3 to 5
years

Less than
1 year

In thousands of U.S. dollars
Secured credit facilities(1) .............................................................. $ 177,587 $
Principal obligations under sale and leaseback liabilities(1) ..........
Principal obligations under IFRS 16 - lease liabilities(1) ...............
Estimated interest payments on secured bank loans(2) ..................
Estimated interest payments on sale and leaseback liabilities(2) ...
Estimated interest payments on IFRS 16 - lease liabilities(2) ........
Technical management fees(3) .......................................................
Commercial management fees(4) ...................................................
Ballast Water Treatment System purchase commitments(5) ..........
Exhaust Gas Cleaning System purchase commitments(6) .............
Convertible notes(7) .......................................................................
Convertible notes - estimated interest payments(8) ........................
Senior unsecured notes(9) ..............................................................
Senior unsecured notes - estimated interest payments(10) ..............
Total ............................................................................................. $ 517,193 $ 1,171,280 $ 959,016 $

1 to 3
years
467,389 $ 348,909 $
262,683
110,730
29,692
89,542
41,335
—
—
2,495
9,983
151,229
2,268
—
3,934

132,821
56,678
23,399
52,655
23,700
16,646
17,426
141
9,636
—
4,537
—
1,967

372,145
97,373
14,598
69,062
25,878
—
—
—
—
—
—
28,100
2,951

More than
5 years

—
513,205
367,693
—
31,700
30,072
—
—
—
—
—
—
—
—
942,670

(1) Represents principal payments due on our secured credit facilities, sale and leaseback liabilities and IFRS 16 - lease
liabilities, as described above in “Item 5. Operating and Financial Review and Prospects - B. Liquidity and Capital
Resources - Long-Term Debt Obligations and Credit Arrangements”. These payments are based on amounts
outstanding as of December 31, 2020.

108

(2) Represents estimated interest payments on our secured credit facilities, sale and leaseback liabilities and IFRS 16 -
lease liabilities. These payments were estimated by taking into consideration: (i) the margin on each financing
arrangement and (ii) the forward interest rate curve calculated from interest swap rates, as published by a third party,
as of December 31, 2020.

The forward curve was calculated as follows as of December 31, 2020:

Year 1 .................................................
Year 2 .................................................
Year 3 .................................................
Year 4 .................................................
Year 5 .................................................
Year 6 .................................................
Year 7 .................................................
Year 8 .................................................
Year 9 .................................................
Year 10 ...............................................

0.21%
0.21%
0.36%
0.61% (A)
0.81%
1.10% (A)
1.32%
1.41% (A)
1.57% (A)
1.71%

(A) Third party published interest swap rates were unavailable. As such, we interpolated these rates using the averages of

the years in which swap rates were published.

Interest was then estimated using the rates mentioned above multiplied by the amounts outstanding under our various
financing arrangements using the balance as of December 31, 2020 and taking into consideration the scheduled
amortization of such arrangements going forward until their respective maturities. As of December 31, 2020, the
weighted-average margin on our variable rate financing was (i) 2.32% on our secured credit facilities, (ii) 3.73% on
our sale and leaseback liabilities, and (iii) 3.50% on our IFRS 16 - lease liabilities. Additionally, the following sale and
leaseback liabilities and IFRS 16 - lease liabilities do not have a variable interest component: BCFL Lease Financing
(MRs); $116.0 Million Lease Financing; the scrubber portion of BCFL Lease Financing (LR2s); IFRS 16 - Leases - 3
MR; and IFRS 16 - Leases - 7 Handymax. Accordingly, the interest portion of these liabilities are calculated using the
implied interest rate in these agreements.

(3) Our technical manager, SSM, charges fees for its services pursuant to a Revised Master Agreement. Pursuant to this
agreement, the fixed annual technical management fee is $175,000, and certain other services are itemized. The
aggregate cost, including the costs that are itemized, are approximately $250,000 per year. Under the terms of the
Revised Master Agreement, the termination fees are subject to a notice period of three months and a payment equal to
three months of management fees which would be due and payable upon the sale of a vessel, so long as such
termination does not amount to a change of control of the Company, including a sale of all or substantially all vessels,
in which case, a payment equal to 24 months of management fees will apply.

(4) We pay our commercial manager, SCM, $250 per vessel per day for LR2 vessels, $300 per vessel per day for
LR1/Panamax and Aframax vessels, $325 per vessel per day for MR and Handymax vessels plus a 1.50% commission
on gross revenue for vessels that are in one of the Scorpio Pools. When the vessels are not in the pools, SCM charges
fees of $250 per vessel per day for LR1/Panamax and LR2/Aframax vessels, $300 per vessel per day for Handymax
and MR vessels plus a 1.25% commission on gross revenue. In September 2018, we entered into an agreement with
SCM whereby SCM’s commission on our vessels was effectively reduced to 0.85% of gross revenue per charter
fixture, from September 1, 2018 and ending on June 1, 2019.

These fees are subject to a notice period of three months and a payment equal to three months of management fees
which would be due and payable upon the sale of a vessel, so long as such termination does not amount to a change of
control of the Company, including a sale of all or substantially all vessels, in which case, a payment equal to 24
months of management fees will apply.

(5) Represents obligations as of December 31, 2020 under our agreements to purchase ballast water treatment systems as
described in the section above entitled “Item 5. Operating and Financial Review and Prospects - B. Liquidity and
Capital Resources - Capital Expenditures”. These amounts exclude installation costs and are subject to change as
installation times are finalized.

(6) Represents obligations as of December 31, 2020 under our agreement to purchase exhaust gas cleaning systems
(‘scrubbers’) as described in the section above entitled “Item 5. Operating and Financial Review and Prospects - B.
Liquidity and Capital Resources - Capital Expenditures”. These amounts reflect only those firm commitments as of
December 31, 2018 and exclude installation costs and potential payments under any purchase options that may be
declared in the future. Furthermore, the timing of these payments are subject to change as installation times are finalized.

109

(7) Represents the principal due at maturity on our Convertible Notes due 2022 as of December 31, 2020.

(8) Represents estimated coupon interest payments on our Convertible Notes due 2022 as of December 31, 2020. The

Convertible Notes due 2022 bear interest at a coupon rate of 3.00% per annum and mature in May 2022.

(9) Represents the principal due at maturity on our Senior Notes Due 2020 as of December 31, 2020.

(10) Represents estimated coupon interest payments on our Senior Notes Due 2020 as of December 31, 2020. The Senior

Notes Due 2020 bore interest at a coupon rate of 6.75% per annum and matured in May 2020.

G. Safe Harbor

See “Cautionary Statement Regarding Forward-Looking Statements” at the beginning of this annual report.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Directors and Senior Management

Set forth below are the names, ages and positions of our directors and executive officers as of the date of this
annual report. Our Board of Directors is elected annually, and each director elected holds office for a three-year term or
until his or her successor shall have been duly elected and qualified, except in the event of his or her death, resignation,
removal or the earlier termination of his or her term of office. The terms of our Class I directors expire at the 2023 annual
meeting of shareholders, the terms of our Class II directors expire at the 2021 annual meeting of shareholders, and the
terms of our Class III directors expire at the 2022 annual meeting of shareholders. Officers are elected from time to time by
vote of our Board of Directors and hold office until a successor is elected. The business address for each director and
executive officer is the address of our principal executive office which is Scorpio Tankers Inc., 9, Boulevard Charles III,
Monaco 98000.

Certain of our officers participate in business activities not associated with us. As a result, they may devote less
time to us than if they were not engaged in other business activities and may owe fiduciary duties to both our shareholders
as well as shareholders of other companies to which they may be affiliated, including other Scorpio companies. This may
create conflicts of interest in matters involving or affecting us and our customers and it is not certain that any of these
conflicts of interest would be resolved in our favor. While there are no formal requirements or guidelines for the allocation
of our officers’ time between our business and the business of members of Scorpio, their performance of their duties is
subject to the ongoing oversight of our Board of Directors.

Name
Emanuele A. Lauro
Robert Bugbee
Cameron Mackey
Brian Lee
Filippo Lauro
Fan Yang
Alexandre Albertini
Ademaro Lanzara
Marianne Økland
Jose Tarruella
Reidar Brekke
Merrick Rayner

Age
42
60
52
54
44
32
44
78
58
49
59
65

Position

Chairman, Class I Director, and Chief Executive Officer

President and Class II Director

Chief Operating Officer and Class III Director
Chief Financial Officer
Vice President
Secretary

Class III Director
Class I Director
Class III Director
Class II Director
Class II Director
Class I Director

Biographical information concerning the directors and executive officers listed above is set forth below.

Emanuele A. Lauro, Chairman and Chief Executive Officer

Emanuele A. Lauro, the Company’s founder, has served as Chairman and Chief Executive Officer since the closing
of our initial public offering in April 2010. He also co-founded and serves as Chairman and Chief Executive Officer of Eneti
Inc. (NYSE: NETI), which was formed in 2013 and of Hermitage Offshore Services Ltd. (OTC: HOFSQ) since December
2018. Mr. Emanuele Lauro joined Scorpio in 2003 and has continued to serve there in a senior management position since
2004. Under his leadership, Scorpio has grown from an owner of three vessels in 2003 to become a leading operator and
manager of more than 250 vessels in 2021. Over the course of the last several years, Mr. Emanuele Lauro has founded and
developed all of the Scorpio Pools in addition to several other ventures such as Scorpio Logistics, which owns and operates

110

specialized assets engaged in the transshipment of dry cargo commodities and invests in coastal transportation and port
infrastructure developments in Asia and Africa since 2007. He is the President of the Monaco Chamber of Shipping and is
also a member of the Advisory Board of Fordham University. In addition, Mr. Emanuele Lauro served as director of the
Standard Club from May 2013 to January 2019. He has a degree in international business from the European Business
School, London. Mr. Emanuele Lauro is the brother of our Vice President, Mr. Filippo Lauro.

Robert Bugbee, President and Director

Robert Bugbee has served as a Director and President since the closing of our initial public offering in April 2010.
He has more than 36 years of experience in the shipping industry. Mr. Bugbee also co-founded and serves as President and
Director of Eneti Inc. since July and April 2013, respectively, and of Hermitage Offshore Services Ltd. since December
2018. He joined Scorpio in March 2009 and has continued to serve there in a senior management position. Prior to joining
Scorpio, Mr. Bugbee was a partner at Ospraie Management LLP between 2007 and 2008, a company which advises and
invests in commodities and basic industries. From 1995 to 2007, he was employed at OMI Corporation, or OMI, a NYSE-
listed tanker company which was sold in 2007. While at OMI, Mr. Bugbee served as President from January 2002 until the
sale of the company, and before that served as Executive Vice President since January 2001, Chief Operating Officer since
March 2000, and Senior Vice President from August 1995 to June 1998. Mr. Bugbee joined OMI in February 1995. Prior
to this, he was employed by Gotaas-Larsen Shipping Corporation since 1984. During this time, Mr. Bugbee took a two year
sabbatical beginning 1987 for the M.I.B. Program at the Norwegian School for Economics and Business Administration in
Bergen. He has a B.A. (Honors) from London University.

Cameron Mackey, Chief Operating Officer and Director

Cameron Mackey has served as the Company’s Chief Operating Officer since the closing of our initial public
offering in April 2010 and as a Director since May 2013. Mr. Mackey also serves as Chief Operating Officer of Eneti Inc.
since July 2013 and of Hermitage Offshore Services Ltd. since December 2018 where he has also served as a director since
July 2019. He joined Scorpio in March 2009, where he continues to serve in a senior management position. Prior to joining
Scorpio, Mr. Mackey was an equity and commodity analyst at Ospraie Management LLC from 2007 to 2008. Prior to that,
he was Senior Vice President of OMI Marine Services LLC from 2004 to 2007, where he was also in Business
Development from 2002 to 2004. Mr. Mackey has been employed in the shipping industry since 1994 and, earlier in his
career, was employed in unlicensed and licensed positions in the merchant navy, primarily on tankers in the international
fleet of Mobil Oil Corporation, where he held the qualification of Master Mariner. He has an M.B.A. from the Sloan
School of Management at the Massachusetts Institute of Technology, a B.S. from the Massachusetts Maritime Academy
and a B.A. from Princeton University.

Brian Lee, Chief Financial Officer

Brian Lee has served as Chief Financial Officer since the closing of our initial public offering in April 2010. He
joined Scorpio in April 2009, where he continues to serve in a senior management position. He has been employed in the
shipping industry since 1998. Prior to joining Scorpio, he was the Controller of OMI from 2001 until the sale of the
company in 2007. Mr. Lee has an M.B.A. from the University of Connecticut and has a B.S. in Business Administration
from the University at Buffalo, State University of New York.

Filippo Lauro, Vice President

Mr. Filippo Lauro has served as an executive officer of the Company with the title of Vice President since May
2015. He also serves as Vice President of Eneti Inc. since June 2016 and of Hermitage Offshore Services Ltd. since
December 2018. Mr. Filippo Lauro joined Scorpio in 2010 and has continued to serve there in a senior management
position. Prior to joining Scorpio, he was the founder of and held senior executive roles in several private companies,
primarily active in real estate, golf courses and resorts development. Mr. Filippo Lauro is the brother of our Chairman and
Chief Executive Officer, Mr. Emanuele Lauro.

Fan Yang, Secretary

Ms. Fan Yang has served as our Secretary since December 2018. She joined Scorpio in February 2018, serving as
Secretary since December 2018, and also serves as secretary of Eneti Inc. and Hermitage Offshore Services Ltd. She is
admitted as a solicitor of England and Wales. Prior to joining Scorpio, Ms. Yang was in private practice in London at
Travers Smith LLP and Freshfields Bruckhaus Deringer LLP, and led a law reform project at the Law Commission, an
independent body that makes recommendations for the reform of the law of England and Wales to Parliament. She has a
BA in Law from the University of Cambridge.

111

Ademaro Lanzara, Director

Ademaro Lanzara has served on our Board of Directors since the closing of our initial public offering in April
2010 and is our lead independent director. Mr. Lanzara has served as Chairman of Alkemia Capital Partners Sgr SpA,
Padova since June 2018. Mr. Lanzara previously served as the Chairman of NEM Sgr SpA, Vicenza from November 2013
to June 2018, as the Chairman of BPV Finance (International) Plc Dublin from 2008 to May 2018, as the deputy Chairman
and Chairman of the Audit and Compliance Committee of Cattolica Life DAC, Dublin from 2011 to July 2017 and as
Chairman of BPVI Fondi Sgr SpA, Milano from April 2012 to November 2013. From 1963 to 2006, Mr. Lanzara held a
number of positions with BNL spa Rome, a leading Italian banking group, including Deputy Group CEO, acting as the
Chairman of the Credit Committee and Chairman of the Finance Committee. He also served as Chairman and/or director of
a number of BNL controlled banks or financial companies in Europe, the United States and South America. He formerly
served as a director of each of Istituto dell’Enciclopedia Italiana fondata da Giovanni Treccani Spa, Rome, Italy, the
Institute of International Finance Inc. in Washington DC, Compagnie Financiere Edmond de Rothschild Banque, in Paris,
France, ABI-Italian Banking Association in Rome, Italy, FITD-Interbank deposit Protection Fund, in Rome, Italy, ICC
International Chamber of Commerce Italian section, Rome, Italy and Co-Chairman Round Table of Bankers and Small and
Medium Enterprises, European Commission, in Brussels, Belgium. Mr. Lanzara has an economics degree (graduated
magna cum laude) from the University of Naples, a law degree from the University of Naples and completed the Program
for Management Development (PMD) at Harvard Business School.

Alexandre Albertini, Director

Alexandre Albertini has served on our Board of Directors since the closing of our initial public offering in April
2010. Mr. Albertini has more than 21 years of experience in the shipping industry. He has been employed by Marfin
Management SAM, a drybulk ship management company, since 1997 and has served as its CEO since October 2010.
Marfin operates Handymax to Ultramax dry cargo vessels, providing services such as technical and crew management as
well as insurance, legal, financial, and information technology. In 2017, Mr. Albertini founded Factor8 Shipping SARL, a
drybulk commercial management company managing on average 15 vessels. He also serves as President of Ant. Topic srl,
a vessel and crewing agent based in Trieste, Italy. Mr. Albertini serves on the board of a private company in addition to
various trade associations; BIMCO, Monaco Chamber of Shipping and since January 2016 has been a Director of The
Steamship Mutual Underwriting Association (Bermuda) Limited.

Marianne Økland, Director

Marianne Økland has served on the Company’s Board of Directors since April 2013. She is also an independent
director on the Professional Welsh Rugby Board responsible for the Welsh national teams and the four professional
regional teams and a non-executive director and Chair of the Audit Committee at Hermitage Offshore Services Ltd.
Between 2010 and 2019, she held various non-executive director positions at IDFC Limited, IDFC Alternatives (India),
Islandsbanki (Iceland), the National Bank of Greece and NLB (Slovenia). She was also a member of the Audit Committee
of the National Bank of Greece, and the Chair of the Audit Committee of each of IDFC Limited and NLB (Slovenia). In
addition, Ms. Økland served as Managing Director of Avista Partners, a London based consultancy company that provides
advisory services and raises capital, from 2009 to 2018. Between 1993 and 2008, she held various investment banking
positions at JP Morgan Chase & Co. and UBS where she focused on debt capital raising and structuring. Ms. Økland has
led many transactions for large Nordic banks and insurance companies, and worked on some of the most significant
mergers and acquisitions in these sectors. Between 1988 and 1993, she headed European operations of Marsoft, a Boston,
Oslo and London based consulting firm that advises banks and large shipping, oil and raw material companies on shipping
strategies and investments. Ms. Økland holds a M.Sc. degree in Finance and Economics from the Norwegian School of
Economics and Business Administration where she also worked as a researcher and taught mathematics and statistics.

Jose Tarruella, Director

Jose Tarruella has served on our Board of Directors since May 2013. He is the founder and Chairman of Taorfi
Gestion s.l., a company specializing in advertising and public relations, since February 2018. Mr. Tarruella is also the
founder and Chairman of Camino de Esles s.l., a high-end restaurant chain with franchises throughout Madrid, Spain, since
2007. Prior to forming Taorfi Gestion and Camino de Esles, Mr. Tarruella was a Director in Group Tragaluz, which owns
and operates restaurants throughout Spain. Mr. Tarruella also acted as a consultant for the Spanish interests of Rank Group
plc (LSE: RNK.L) a leading European gaming-based entertainment business. He has been involved in corporate relations
for Esade Business School in Madrid. He earned an International MBA from Esade Business School in Barcelona and an
MA from the University of Navarre in Spain.

112

Reidar C. Brekke, Director

Reidar C. Brekke has served on the Company’s Board of Directors since December 2016. Mr. Brekke has over 21
years’ experience in the international energy, container logistics and transportation sector. He also serves as a member of
the Board of Directors of Performance Shipping Inc. (NASDAQ: PSHG), a position he has held since June 2010, and as
partner of Brightstar Capital Partners, a middle market private equity firm. From December 2012 to August 2018, Mr.
Brekke served as a board member and President of Intermodal Holdings LP, a New York based portfolio company that
invests in and operates marine containers. From 2008 to 2012, Mr. Brekke served as President of Energy Capital Solution
Inc., a company that provides strategic and financial advisory services to international shipping, logistics and energy
related companies. From 2003 to 2008, he served as Manager of Poten Capital Services LLC, a registered broker-dealer
specialized in the maritime sector. Prior to 2003, Mr. Brekke served as Chief Financial Officer, then President and Chief
Operating Officer, of SynchroNet Marine, a logistics service provider to the global container transportation industry. He
also held various senior positions with AMA Capital Partners LLC (formerly American Marine Advisers), a merchant
banking firm focused on the maritime and energy industries. Furthermore, Mr. Brekke has been an adjunct professor at
Columbia University’s School of International and Public Affairs - Center for Energy, Marine Transportation and Public
Policy. Mr. Brekke graduated from the New Mexico Military Institute in 1986 and has an MBA from the University of
Nevada, Reno.

Merrick Rayner, Director

Merrick Rayner has served on our Board of Directors since September 2017. Mr. Rayner has 42 years of
experience in the tanker business. From 1974 to 2003, Mr. Rayner was a broker at H. Clarkson & Company Limited
shipbrokers, with experience in both the deep-sea tanker chartering business as well as new and second hand vessel sale
and purchase. From 1987 to 1989, Mr. Rayner served as Director of Clarkson Sale and Purchase Division. From 1989 until
leaving H. Clarkson & Company Limited in 2003, he was a director of the company, and also served as a director of
Clarkson Research Studies from 1992 until 2003. In 2003, Mr. Rayner joined E.A. Gibson’s shipbrokers as a broker, where
he developed the company’s time charter and projects group. He also served as a director of Gibson’s from 2012 until his
retirement in 2016. Mr. Rayner currently resides in the United Kingdom.

B. Compensation

We paid an aggregate compensation of $33.2 million, $32.5 million and $25.8 million to our senior executive

officers in 2020, 2019, and 2018, respectively. Executive management remuneration was as follows during these periods:

In thousands of U.S. dollars
Short-term employee benefits (salaries) .......................................................
Share-based compensation(1) .........................................................................
Total .............................................................................................................

For the year ended December 31,
2020
2018
2019
$ 10,989
22,217
$ 33,206

10,821
21,712
32,533

5,436
20,316
25,752

(1) Represents the amortization of restricted stock issued under our equity incentive plans. See Note 14 to our

Consolidated Financial Statements included herein for further description.

Each of our non-employee directors receive cash compensation in the aggregate amount of $60,000 annually, plus
an additional fee of $10,000 for each committee on which a director serves plus an additional fee of $25,000 for each
committee for which a director serves as Chairman, per year, plus an additional fee of $35,000 to the lead independent
director, per year, plus $2,000 for each meeting, plus reimbursements for actual expenses incurred while acting in their
capacity as a director. During each of the years ended December 31, 2020 and 2019, we paid aggregate cash compensation
of $0.9 million and $0.9 million to our directors, respectively. Our officers and directors are also eligible to receive awards
under our equity incentive plan which is described below under “—2013 Equity Incentive Plan.”

We believe that it is important to align the interests of our directors and management with that of our shareholders.
In this regard, we have determined that it will generally be beneficial to us and to our shareholders for our directors and
management to have a stake in our long-term performance. We expect to have a meaningful component of our
compensation package for our directors and management consisted of equity interests in us in order to provide them on an
on-going basis with a meaningful percentage of ownership in us.

113

There are no material post-employment benefits for our executive officers or directors. By law, our employees in
Monaco are entitled to a one-time payment of up to two months’ salary upon retirement if they meet certain minimum
service requirements.

2013 Equity Incentive Plan

In April 2013, we adopted an equity incentive plan, which was amended in March 2014 and which we refer to as
the 2013 Equity Incentive Plan, under which directors, officers, employees, consultants and service providers of us and our
subsidiaries and affiliates are eligible to receive incentive stock options and non-qualified stock options, stock appreciation
rights, restricted stock, restricted stock units and unrestricted common stock. We initially reserved a total of 500,000
common shares for issuance under the 2013 Equity Incentive Plan which was increased by an aggregate of 2,237,151
common shares through December 31, 2017 and subsequently revised as follows:

The following is the reloading of additional common shares in 2018, 2019 and 2020 under the 2013 Equity

Incentive Plan:

Date of Reload
February 2018
June 2018

December 2018
February 2019
July 2019

December 2019

June 2020

December 2020

1
2
3
4
5
6
7
8

Common Shares
Reserved

512,244
210,140
1,383,248
86,977
134,893
529,624
362,766
367,603

Par Value
$ 0.01 per share
$ 0.01 per share
$ 0.01 per share
$ 0.01 per share
$ 0.01 per share
$ 0.01 per share
$ 0.01 per share
$ 0.01 per share

All other terms of the 2013 Equity Incentive Plan remained unchanged.

Under the terms of the 2013 Equity Incentive Plan, stock options and stock appreciation rights granted under the
2013 Equity Incentive Plan will have an exercise price equal to the fair market value of a common share on the date of
grant, unless otherwise determined by the plan administrator, but in no event will the exercise price be less than the fair
market value of a common share on the date of grant. Options and stock appreciation rights will be exercisable at times and
under conditions as determined by the plan administrator, but in no event will they be exercisable later than ten years from
the date of grant.

The plan administrator may grant shares of restricted stock and awards of restricted stock units subject to vesting,
forfeiture and other terms and conditions as determined by the plan administrator. Following the vesting of a restricted
stock unit, the award recipient will be paid an amount equal to the number of vested restricted stock units multiplied by the
fair market value of a common share on the date of vesting, which payment may be paid in the form of cash or common
shares or a combination of both, as determined by the plan administrator. The plan administrator may grant dividend
equivalents with respect to grants of restricted stock units.

Adjustments may be made to outstanding awards in the event of a corporate transaction or change in capitalization
or other extraordinary event. In the event of a “change in control” (as defined in the 2013 Equity Incentive Plan), unless
otherwise provided by the plan administrator in an award agreement, awards then outstanding will become fully vested and
exercisable in full.

Our Board of Directors may amend or terminate the 2013 Equity Incentive Plan and may amend outstanding
awards, provided that no such amendment or termination may be made that would materially impair any rights, or
materially increase any obligations, of a grantee under an outstanding award. Shareholder approval of plan amendments
will be required under certain circumstances. Unless terminated earlier by our Board of Directors, the 2013 Equity
Incentive Plan will expire ten years from the date the plan was adopted.

The following paragraphs summarize our grants of restricted stock during the years ended December 31, 2020,
2019, and 2018. The vesting periods of these grants are determined by the plan administrator and generally range from one
to five years. Additionally, vesting of these grants is generally subject to a grantee’s continued employment with the
Company through the vesting date unless the grantee is terminated without cause or due to the grantee’s death or disability.

114

In March 2018, we issued 500,245 shares of restricted stock to our employees and 12,000 shares to our
independent directors for no cash consideration. The share price on the issuance date was $22.15 per share. The vesting
schedule of the restricted stock issued to our employees is as follows:

Number of restricted
shares

123,518
21,750
21,479
123,518
21,750
21,480
123,519
21,751
21,480
500,245

Vesting date
September 4, 2020
November 4, 2020

March 1, 2021
September 3, 2021
November 5, 2021

March 1, 2022
September 2, 2022
November 4, 2022

March 1, 2023

The vesting schedule of the restricted shares issued to our independent directors is (i) one-third of the shares
vested on March 1, 2019, (ii) one-third of the shares vested on March 2, 2020, and (iii) one-third of the shares vested on
March 1, 2021.

In September 2018, we issued 198,141 shares of restricted stock to our employees and 12,000 shares to our
independent directors for no cash consideration. The share price on the issuance date was $19.75 per share. The vesting
schedule of the restricted stock issued to our employees is (i) one-third of the shares vest on June 9, 2021, (ii) one-third of
the shares vest on June 9, 2022, and (iii) one-third of the shares vest on June 8, 2023. The vesting schedule of the restricted
stock issued to our independent directors is (i) one-third of the shares vested on June 10, 2019, (ii) one-third of the shares
vested on June 10, 2020, and (iii) one-third of the shares vest on June 9, 2021.

In December 2018, we issued 1,103,248 shares of restricted stock to our employees and 60,000 shares to our
independent directors for no cash consideration. The share price on the issuance date was $19.55 per share. The vesting
schedule of the restricted stock issued to our employees is (i) one-third of the shares vest on September 23, 2021, (ii) one-
third of the shares vest on September 26, 2022, and (iii) one-third of the shares vest on September 25, 2023. The vesting
schedule of the restricted stock issued to our independent directors is (i) one-third of the shares vested on September 25,
2019, (ii) one-third of the shares vested on September 24, 2020, and (iii) one-third of the shares vest on September 23, 2021.

In June 2019, we issued 112,750 shares of restricted stock to our employees and 107,500 to SSH employees for no
cash consideration. The share price on the issuance date was $24.93 per share. The vesting schedule of the restricted stock
issued to both our employees and SSH employees is (i) one-third of the shares vest on June 6, 2022, (ii) one-third of the
shares vest on June 5, 2023 and (iii) one-third of the shares vest on June 4, 2024.

In July 2019, we issued 230,170 shares of restricted stock to our employees for no cash consideration. The share
price on the issuance date was $26.23 per share. The vesting schedule of the restricted stock issued to our employees is (i)
one-third of the shares vest on May 24, 2022, (ii) one-third of the shares vest on May 23, 2023, and (iii) one-third of the
shares vest on May 22, 2024.

In December 2019, we issued 60,000 shares of restricted stock to our independent directors for no cash
consideration. The share price on the issuance date was $33.90 per share. The vesting schedule of the restricted stock
issued to our independent directors is (i) one-third of the shares vested on December 4, 2020, (ii) one-third of the shares
vest on December 3, 2021, and (iii) one-third of the shares vest on December 2, 2022.

In January 2020, we issued 469,680 shares of restricted stock to certain of our employees for no cash
consideration. The share price on the issuance date was $36.73 per share. The vesting schedule for these restricted shares is
(i) one-third of the shares vest on September 8, 2022, (ii) one-third of the shares vest on September 7, 2023, and (iii) one-
third of the shares vest on September 5, 2024.

In September 2020, we issued 220,500 shares of restricted stock to certain of our employees for no cash
consideration. The share price on the issuance date was $11.15 per share. The vesting schedule for these restricted shares is
(i) one-third of the shares vest on June 5, 2023, (ii) one-third of the shares vest on June 4, 2024, and (iii) one-third of the
shares vest on June 4, 2025.

115

In September 2020, we issued 141,900 shares of restricted stock to certain SSH employees for no cash
consideration. The share price on the issuance date was $11.15 per share. The vesting schedule of the restricted stock
issued to SSH employees is (i) one-third of the shares vest on June 5, 2023, (ii) one-third of the shares vest on June 4,
2024, and (iii) one-third of the shares vest on June 4, 2025.

In December 2020, we issued 90,000 shares of restricted stock to our independent directors and 3,000 to an SSH
employee for no cash consideration. The share price on the issuance date was $11.36 per share. The vesting schedule of the
restricted stock issued to independent directors is (i) one-third of the shares vest on December 3, 2021, (ii) one-third of the
shares vest on December 2, 2022, and (iii) one-third of the shares vest on December 1, 2023. The vesting schedule of
restricted stock issued to the SSH employee is (i) one-third of the shares vest on June 5, 2023, (ii) one-third of the shares
vest on June 4, 2024, and (iii) one-third of the shares vest on June 4, 2025.

Employment Agreements

We have entered into employment agreements with the majority of our executives. These employment agreements
remain in effect until terminated in accordance with their terms upon not less than between 24 months’ and 36 months’
prior written notice, depending on the terms of the employment agreement applicable to each executive. Pursuant to the
terms of their respective employment agreements, our executives are prohibited from disclosing or unlawfully using any of
our material confidential information.

Upon a change in control of us, the annual bonus provided under the employment agreement becomes a fixed
bonus of between 150% and 250% of the executive’s base salary, and the executive may receive an assurance bonus equal
to the fixed bonus, depending on the terms of the employment agreement applicable to each executive.

Any such executive may be entitled to receive upon termination an assurance bonus equal to such fixed bonus and
an immediate lump-sum payment in an amount equal to three times the sum of the executive’s then current base salary and
the assurance bonus, and he will continue to receive all salary, compensation payments and benefits, including additional
bonus payments, otherwise due to him, to the extent permitted by applicable law, for the remaining balance of his then-
existing employment period. If an executive’s employment is terminated for cause or voluntarily by the employee, he shall
not be entitled to any salary, benefits or reimbursements beyond those accrued through the date of his termination, unless
he voluntarily terminated his employment in connection with certain conditions. Those conditions include a change in
control combined with a significant geographic relocation of his office, a material diminution of his duties and
responsibilities, and other conditions identified in the employment agreement.

C. Board Practices

Our Board of Directors currently consists of nine directors, six of whom have been determined by our Board of
Directors to be independent under the rules of the NYSE and the rules and regulations of the SEC. Our Board of Directors
has an Audit Committee, a Nominating and Corporate Governance Committee, a Compensation Committee and a
Regulatory and Compliance Committee, each of which is comprised of certain of our independent directors, who are
Messrs. Alexandre Albertini, Ademaro Lanzara, Jose Tarruella, Reidar Brekke, Mrs. Marianne Økland and Mr. Merrick
Rayner. The Audit Committee, among other things, reviews our external financial reporting, engages our external auditors
and oversees our internal audit activities, procedures and the adequacy of our internal controls. In addition, provided that
no member of the Audit Committee has a material interest in such transaction, the Audit Committee is responsible for
reviewing transactions that we may enter into in the future with other members of Scorpio that our board believes may
present potential conflicts of interests between us and Scorpio. The Nominating and Corporate Governance Committee is
responsible for recommending to the Board of Directors nominees for director appointments and directors for appointment
to board committees and advising the board with regard to corporate governance practices. The Compensation Committee
oversees our equity incentive plan and recommends director and senior employee compensation. The Regulatory and
Compliance Committee oversees our operations to minimize environmental impact by the constant monitoring and
measuring of progress of our vessels. Our shareholders may also nominate directors in accordance with procedures set
forth in our bylaws.

D. Employees

As of December 31, 2020 and 2019, we had 25 and 22 shore-based employees, respectively. SSM and SCM were

responsible for our commercial and technical management.

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E. Share Ownership

The following table sets forth information regarding the share ownership of our common stock as of March 30, 2021
by our directors and executive officers, including the restricted shares issued to our executive officers and to our independent
directors as well as distributions of dividends from Eneti, a related party, and shares purchased in the open market.

Name
Emanuele A. Lauro(1) ................................................................................................
Robert Bugbee(2) .......................................................................................................
Cameron Mackey(3) ...................................................................................................
Brian M. Lee(4) ..........................................................................................................
All other executive officers and directors individually .............................................

No. of Shares
770,710
2,135,105
715,062
659,120
*

% Owned(5)

1.33%
3.68%
1.23%
1.13%
*

(1) Includes 748,196 unvested shares of restricted stock from the 2013 Equity Incentive Plan.

(2) Includes 748,196 unvested shares of restricted stock from the 2013 Equity Incentive Plan and assuming the full

exercise of call options on 1,235,000 common shares.

(3) Includes 529,255 unvested shares of restricted stock from the 2013 Equity Incentive Plan.

(4) Includes 378,119 unvested shares of restricted stock from the 2013 Equity Incentive Plan.

(5) Based on 58,093,147 common shares outstanding as of March 30, 2021.

* The remaining executive officers and directors individually each own less than 1% of our outstanding shares of

common stock.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS.

A. Major shareholders.

The following table sets forth information regarding beneficial ownership of our common stock for owners of

more than five percent of our common stock, of which we are aware as of March 30, 2021.

Name
Scorpio Holdings Limited ...........................................................................................
Blackrock Inc. .............................................................................................................

No. of Shares

% Owned(3)

3,556,735(1)
2,956,640(2)

6.1 %
5.1 %

(1) This information is derived from a Schedule 13D/A filed with the SEC on December 23, 2020 and from Reports on

Form 6-K filed with the SEC on March 22, 2021 and March 24, 2021.

(2) This information is derived from a Schedule 13G filed with the SEC on February 2, 2021.

(3) Based on 58,093,147 common shares outstanding as of March 30, 2021.

As of March 29, 2021, we had 151 shareholders of record, 51 of which were located in the United States and held
an aggregate of 55,132,128 shares of our common stock, representing 94.9% of our outstanding shares of common stock.
However, one of the U.S. shareholders of record is Cede & Co., a nominee of The Depository Trust Company, which held
52,956,066 shares of our common stock, as of that date.

Additionally, Eneti currently owns 2,155,140 common shares of the Company, representing approximately 3.71%
of our outstanding common shares as of March 30, 2021, which it acquired through transactions directly with the
Company.

B. Related Party Transactions

Management of Our Fleet

Revised Master Agreement

On September 29, 2016, we agreed to amend our master agreement, or the Master Agreement, with SCM and
SSM under a deed of amendment, or the Deed of Amendment. Pursuant to the terms of the Deed of Amendment, on
November 15, 2016, we entered into definitive documentation to memorialize the agreed amendments to the Master
Agreement, or the Amended and Restated Master Agreement.

117

On February 22, 2018, we entered into definitive documentation to memorialize agreed amendments to the
Amended and Restated Master Agreement under a deed of amendment, or the Amendment Agreement. The Amended and
Restated Master Agreement as amended by the Amendment Agreement, or the Revised Master Agreement, is effective as
from January 1, 2018.

Pursuant to the Revised Master Agreement, the fixed annual technical management fee was reduced from
$250,000 per vessel to $175,000, and certain services previously provided as part of the fixed fee are now itemized. The
aggregate cost, including the costs that are now itemized, for the services provided under the technical management
agreement have not, and are not expected to materially differ from the annual management fee charged prior to the
amendment.

The independent members of our Board of Directors unanimously approved the revised technical management

agreement described in the preceding paragraph.

Commercial and Technical Management

Our vessels are commercially managed by SCM and technically managed by SSM pursuant to the aforementioned
Revised Master Agreement (described above), which may be terminated by either party upon 24 months’ notice, unless
terminated earlier in accordance with the provisions of the Revised Master Agreement. In the event of the sale of one or
more vessels, a notice period of three months and a payment equal to three months of management fees will apply,
provided that the termination does not amount to a change in control, including a sale of all or substantially all of our
vessels, in which case a payment equal to 24 months of management fees will apply. SCM and SSM are related parties of
ours. We expect that additional vessels that we may acquire in the future will also be managed under the Revised Master
Agreement or on substantially similar terms.

SCM’s services include securing employment for our vessels in the spot market and on time charters. SCM also
manages the Scorpio Pools. When our vessels are in the Scorpio Pools, SCM, the pool manager, charges fees of $300 per
vessel per day with respect to our LR1/Panamax vessels and Aframax vessels, $250 per vessel per day with respect to our
LR2 vessels, and $325 per vessel per day with respect to each of our Handymax and MR vessels, plus 1.50% commission
on gross revenues per charter fixture. These are the same fees that SCM charges other vessels in these pools, including
third-party owned vessels. For commercial management of our vessels that do not operate in any of the Scorpio Pools, we
pay SCM a fee of $250 per vessel per day for each LR1/Panamax and LR2/Aframax vessel and $300 per vessel per day for
each Handymax and MR vessel, plus 1.25% commission on gross revenues per charter fixture. In September 2018, we
entered into an agreement with SCM whereby SCM reimbursed a portion of the commissions that SCM charges the
Company’s vessels to effectively reduce such to 0.85% of gross revenue per charter fixture, effective from September 1,
2018 and ending on June 1, 2019.

SSM’s services include day-to-day vessel operation, performing general maintenance, monitoring regulatory and
classification society compliance, customer vetting procedures, supervising the maintenance and general efficiency of
vessels, arranging the hiring of qualified officers and crew, arranging and supervising drydocking and repairs, purchasing
supplies, spare parts and new equipment for vessels, appointing supervisors and technical consultants and providing
technical support. Prior to January 1, 2018, we paid SSM $685 per vessel per day to provide technical management
services for each of our vessels. This fee was based on contracted rates that were the same as those charged to other third
party vessels managed by SSM at the time the management agreements were entered into. Effective January 1, 2018, the
fixed annual technical management fee was reduced from $250,000 per vessel to $175,000, and certain services previously
provided as part of the fixed fee are now itemized, as noted above.

Amended Administrative Services Agreement

We have an Amended Administrative Services Agreement with SSH or our Administrator, for the provision of
administrative staff and office space, and administrative services, including accounting, legal compliance, financial and
information technology services. SSH is a related party to us. We reimburse our current Administrator for the reasonable
direct or indirect expenses it incurs in providing us with the administrative services described above. The services provided
to us by our Administrator may be sub-contracted to other entities within Scorpio.

Prior to September 29, 2016, we paid SSH a fee for arranging vessel purchases and sales, on our behalf, equal to
1% of the gross purchase or sale price, payable upon the consummation of any such purchase or sale. This fee was
eliminated for all vessel purchase or sale agreements entered into after September 29, 2016. During the years ended
December 31, 2020 and 2019, no fees were paid to SSH for the sale or purchase of vessels. For the year ended December 31,

118

2018, we paid SSH an aggregate fee of $0.7 million in connection with the purchase and delivery of STI Esles II and STI
Jardins. The agreements to acquire the aforementioned vessels were entered into prior to the September 29, 2016
amendments to the Master Agreement and Administrative Services Agreement.

Tanker pools

To increase vessel utilization and thereby revenues, we participate in commercial pools with other shipowners of
similar modern, well-maintained vessels. By operating a large number of vessels as an integrated transportation system,
commercial pools offer customers greater flexibility and a higher level of service while achieving scheduling efficiencies.
Pools employ experienced commercial charterers and operators who have close working relationships with customers and
brokers, while technical management is performed by each shipowner. The managers of the pools negotiate charters with
customers primarily in the spot market, but may also arrange time charter agreements. The size and scope of these pools
enable them to enhance utilization rates for pool vessels by securing backhaul voyages and COAs, thus generating higher
effective TCE revenues than otherwise might be obtainable in the spot market while providing a higher level of service
offerings to customers. When we employ a vessel in the spot charter market, we generally place such vessel in a tanker
pool managed by our commercial manager that pertains to that vessel’s size class. The earnings allocated to vessels
(charterhire expense for the pool) are aggregated and divided on the basis of a weighted scale, or Pool Points, which reflect
comparative voyage results on hypothetical benchmark routes. The Pool Point system generally favors those vessels with
greater cargo-carrying capacity and those with better fuel consumption. Pool Points are also awarded to vessels capable of
carrying clean products and to vessels capable of trading in certain ice conditions. We currently participate in four pools:
the Scorpio LR2 Pool, the Scorpio LR1 Pool, the Scorpio MR Pool and the Scorpio Handymax Tanker Pool.

SCM is responsible for the commercial management of participating vessels in the pools, including the marketing,
chartering, operating and bunker (fuel oil) purchases of the vessels. The Scorpio LR2 Pool is administered by Scorpio LR2
Pool Ltd., the Scorpio LR1 Pool is administered by Scorpio LR1 Pool Ltd, the Scorpio MR Pool is administered by Scorpio
MR Pool Ltd. and the Scorpio Handymax Tanker Pool is administered by Scorpio Handymax Tanker Pool Ltd. Our
founder, Chairman and Chief Executive Officer and Vice President are members of the Lolli-Ghetti family which owns a
majority of the issued and outstanding stock of Scorpio LR2 Pool Ltd., Scorpio LR1 Pool Ltd., Scorpio MR Pool Ltd., and
Scorpio Handymax Tanker Pool Ltd., or the Pool Entities. Taking into account the recommendations of a pool committee
and a technical committee, each of which is comprised of representatives of each pool participant, the Pool Entities set the
respective pool policies and issue directives to the pool participants and SCM. The pool participants remain responsible for
all other costs including the financing, insurance, manning and technical management of their vessels. The earnings of all
of the vessels are aggregated and divided according to the relative performance capabilities of the vessel and the actual
earning days for which each vessel is available.

Our Relationship with Scorpio and its Affiliates

Scorpio is owned and controlled by the Lolli-Ghetti family, of which Messrs. Emanuele Lauro and Filippo Lauro
are members. Annalisa Lolli-Ghetti is majority owner of Scorpio (of which our administrator and commercial and technical
managers are members) and beneficially owns approximately 6.64% of our common shares. We are not affiliated with any
other entities in the shipping industry other than those that are members of Scorpio.

In addition, Mr. Emanuele Lauro, Mr. Robert Bugbee and other members of our senior management have an

indirect minority equity interest in SSH, our Administrator, a member of Scorpio.

SCM and SSM, our commercial manager and technical manager, respectively, are also members of Scorpio. For
information regarding the details regarding our relationship with SCM, SSM and SSH, please see “– Management of our
Fleet.”

Our Board of Directors consists of nine individuals, six of whom are independent directors. Three of the
independent directors form the board’s Audit Committee and, pursuant to the Audit Committee charter, are required to
review all potential conflicts of interest between us and related parties, including Scorpio. Our three non-independent
directors and all of our executive officers serve in senior management positions in certain other companies within Scorpio.

119

In October 2018, we raised net proceeds of approximately $319.6 million in an underwritten public offering of
18.2 million shares of common stock (including 2.0 million shares of common stock issued when the underwriters partially
exercised their overallotment option to purchase additional shares) at a public offering price of $18.50 per share. Eneti and
Scorpio Services Holding Limited, or SSH, each a related party, purchased 5.4 million common shares and 0.5 million
common shares, respectively, at the public offering price.

In September 2019, we closed on a private placement with SSH for $15 million, in exchange for an aggregate of

517,241 of our common shares at $29.00 per share.

Transactions with Related Parties

Transactions with entities controlled by the Lolli-Ghetti family (herein referred to as related parties) in the

consolidated statements of income and balance sheet are as follows:

In thousands of U.S. dollars
Pool revenue(1)

For the year ended December 31,
2018
2019
2020

Scorpio MR Pool Limited ....................................................................
Scorpio LR2 Pool Limited ...................................................................
Scorpio Handymax Tanker Pool Limited ............................................
Scorpio LR1 Pool Limited ...................................................................
Voyage revenue(2) .......................................................................................
Voyage expenses(3) .....................................................................................
Vessel operating costs(4) ..............................................................................
Administrative expenses(5) ..........................................................................

$ 340,937
369,476
105,355
87,028
2,334
(3,507)
(33,896)
(13,876)

$ 261,727
260,893
103,150
66,009
—
(2,414)
(31,732)
(12,975)

225,181
188,890
82,782
46,823
—
(1,290)
(34,272)
(12,475)

(1) These transactions relate to revenue earned in the Scorpio Pools. The Scorpio Pools are related parties. When our
vessels are in the Scorpio Pools, SCM, the pool manager, charges fees of $300 per vessel per day with respect to our
LR1/Panamax and Aframax vessels, $250 per vessel per day with respect to our LR2 vessels, and $325 per vessel per
day with respect to each of our Handymax and MR vessels, plus a commission of 1.50% on gross revenue per charter
fixture. These are the same fees that SCM charges other vessels in these pools, including third party vessels. In
September 2018, we entered into an agreement with SCM whereby SCM reimbursed a portion of the commissions that
SCM charges the Company’s vessels to effectively reduce such to 0.85% of gross revenue per charter fixture, effective
from September 1, 2018 and ending on June 1, 2019.

(2) These transactions relate to revenue earned in the spot market on voyages chartered through SSH, a related party

affiliate.

(3) Related party expenditures included within voyage expenses in the consolidated statements of income or loss consist

of the following:

• Expenses due to SCM, a related party, for commissions related to the commercial management services provided
by SCM under the commercial management agreement for vessels that are not in one of the Scorpio Pools. SCM’s
services include securing employment, in the spot market and on time charters, for our vessels. When not in one of
the Scorpio Pools, each vessel pays (i) flat fees of $250 per day for LR1/Panamax and LR2/Aframax vessels and
$300 per day for Handymax and MR vessels and (ii) commissions of 1.25% of their gross revenue per charter
fixture. These expenses are included in voyage expenses in the consolidated statements of income or loss. In
September 2018, we entered into an agreement with SCM whereby SCM reimbursed a portion of the commissions
that SCM charges the Company’s vessels to effectively reduce such to 0.85% of gross revenue per charter fixture,
effective from September 1, 2018 and ending on June 1, 2019.

• Bunkers of $3.6 million were purchased from a related party bunker provider (who was engaged in the
procurement of bunkers on our behalf) during the year ended December 31, 2020. These bunkers were purchased
when our vessels were operating in the spot market, outside of the Scorpio Pools. Approximately $2.9 million of
these purchases were consumed during the spot market voyages, and the remaining unconsumed portion was
considered a working capital contribution to the pool (see below for a description on the accounting for working
capital contributions to the Scorpio Pools) when the vessels re-joined the pools. Bunkers of $0.8 million were
purchased from this provider during the year ended December 31, 2019, of which, $0.3 million were consumed
during the period.

120

• Voyage expenses of $4,925, $4,357 and $25,747 charged by a related party port agent during the years ended
December 31, 2020, 2019 and 2018 respectively. SSH has a majority equity interest in a port agent that provides
supply and logistical services for vessels operating in its regions.

(4) Related party expenditures included within vessel operating costs in the consolidated statements of income or loss

consist of the following:

• Technical management fees of $31.9 million, $30.0 million, and $30.1 million charged by SSM, a related party,
during the years ended December 31, 2020, 2019 and 2018 respectively. SSM’s services include day-to-day vessel
operations, performing general maintenance, monitoring regulatory and classification society compliance,
customer vetting procedures, supervising the maintenance and general efficiency of vessels, arranging the hiring
of qualified officers and crew, arranging and supervising drydocking and repairs, purchasing supplies, spare parts
and new equipment for vessels, appointing supervisors and technical consultants, and providing technical support.
SSM administers the payment of salaries to our crew on our behalf. The crew wages that were administered by
SSM (and disbursed through related party subcontractors of SSM) were $146.0 million, $138.9 million, and
$125.8 million during the years ended December 31, 2020, 2019 and 2018 respectively. SSM’s annual technical
management fee is a fixed fee of $175,000 per vessel plus certain itemized expenses pursuant to the technical
management agreement.

•

Insurance related expenses of $2.6 million incurred through a related party insurance broker during the year ended
December 31, 2018. The amounts recorded reflect the amortization of the policy premiums, which are paid
directly to the broker, who then remits the premiums to the underwriters. In 2016, an Executive Officer of the
Company acquired a minority interest, which in 2018 increased to a majority interest, in an insurance broker
which arranges hull and machinery and war risk insurance for certain of our owned and leased vessels. This
broker has arranged such policies for the Company since 2010 and the extent of the coverage and the manner in
which the policies are priced did not change as a result of this transaction. In September 2018, the Executive
Officer disposed of their interest in the insurance broker in its entirety to an unaffiliated third party.

• Vessel operating expenses of $2.0 million, $1.7 million and $1.6 million charged by a related party port agent
during the years ended December 31, 2020, 2019 and 2018, respectively. SSH has a majority equity interest in a
port agent that provides supply and logistical services for vessels operating in its regions.

(5) We have an Amended Administrative Services Agreement with SSH for the provision of administrative staff and
office space, and administrative services, including accounting, legal compliance, financial and information
technology services. SSH is a related party to us. The services provided to us by SSH may be sub-contracted to other
entities within Scorpio. The expenses incurred under this agreement were recorded in general and administrative
expenses in the consolidated statement of income or loss and were as follows:

• The expense for the year ended December 31, 2020 of $13.9 million included (i) administrative fees of $12.6
million charged by SSH, (ii) restricted stock amortization of $1.2 million, which relates to the issuance of an
aggregate of 315,950 shares of restricted stock to SSH employees for no cash consideration pursuant to the 2013
Equity Incentive Plan, and (iii) the reimbursement of expenses of $19,772 to SSH and $45,539 to SCM.

• The expense for the year ended December 31, 2019 of $13.0 million included (i) administrative fees of $11.4
million charged by SSH, (ii) restricted stock amortization of $1.1 million, which relates to the issuance of an
aggregate of 221,900 shares of restricted stock to SSH employees for no cash consideration pursuant to the 2013
Equity Incentive Plan and (iii) the reimbursement of expenses of $0.2 million to SSH and $0.2 million to SCM.

• The expense for the year ended December 31, 2018 of $12.5 million included (i) administrative fees of $11.1
million charged by SSH, (ii) restricted stock amortization of $1.3 million, which relates to the issuance of an
aggregate of 114,400 shares of restricted stock to SSH employees for no cash consideration pursuant to the 2013
Equity Incentive Plan and (iii) the reimbursement of expenses of $46,535.

121

We had the following balances with related parties, which have been included in the consolidated balance sheets:

In thousands of U.S. dollars
Assets:
Accounts receivable (due from the Scorpio Pools)(1) ............................................................
Accounts receivable and prepaid expenses (SSM)(2) ............................................................
Other assets (pool working capital contributions)(3) .............................................................
Liabilities:
Accounts payable and accrued expenses (owed to the Scorpio Pools) .................................
Accounts payable and accrued expenses (SSM) ...................................................................
Accounts payable and accrued expenses (SSH) ...................................................................
Accounts payable and accrued expenses (related party port agent) ......................................
Accounts payable and accrued expenses (SCM) ..................................................................

As of December 31,
2019
2020

26,413
4,259
73,161

74,412
1,624
49,094

945
935
404
355
58

3,717
2,667
353
361
14

(1) Accounts receivable due from the Scorpio Pools relate to hire receivables for revenues earned and receivables from
working capital contributions. The amounts as of December 31, 2020 and 2019 include $1.1 million and $24.3 million,
respectively, of working capital contributions made on behalf of our vessels to the Scorpio Pools. Upon entrance into
such pools, all vessels are required to make working capital contributions of both cash and bunkers. Additional
working capital contributions can be made from time to time based on the operating needs of the pools. These amounts
are accounted for and repaid as follows:

•

For vessels in the Scorpio LR2 Pool, Scorpio LR1 Pool, Scorpio MR Pool and Scorpio Handymax Tanker Pool,
the initial contribution amount is repaid, without interest, upon a vessel’s exit from the pool no later than six
months after the exit date. Bunkers on board a vessel exiting the pool are credited against such repayment at the
actual invoice price of the bunkers. For all owned or lease financed vessels we assume that these contributions
will not be repaid within 12 months and are thus classified as non-current within other assets on the consolidated
balance sheets. The Scorpio MR Pool Limited amended the terms of the pool agreement with its participants
during 2020. Prior to 2020, working capital contributions are repaid, without interest, when such vessel has earned
sufficient net revenues to cover the value of such working capital contributed. Accordingly, we classified $23.6
million of working capital as current (within accounts receivable) at December 31, 2019.

(2) Accounts receivable and prepaid expenses from SSM primarily relate to advances made for vessel operating expenses

(such as crew wages) that will either be reimbursed or applied against future costs.

(3) Represents the non-current portion of working capital receivables as described above.

Fees paid to SSH for arranging vessel purchases and sales prior to September 29, 2016 were capitalized as part of
the carrying value of the related vessel for a vessel purchase and are included as part of the gain or loss on sale for a vessel
disposal.

• During the years ended December 31, 2020 and 2019, no fees were paid to SSH for the sale or purchase of

vessels.

• During the year ended December 31, 2018, we paid SSH an aggregate fee of $0.7 million in connection with the
purchase and delivery of STI Esles II and STI Jardins. The agreements to acquire the aforementioned vessels were
entered into prior to the September 29, 2016 amendments to the Administrative Services Agreement.

Follow-on Offerings of Common Shares

In October 2018, we closed on the sale of 18.2 million newly issued shares of our common stock in an
underwritten public offering at an offering price of $18.50 per share. We received aggregate net proceeds of $319.6 million
after deducting underwriters’ discounts and offering expenses. Of the 18.2 million common shares issued, 5.4 million and
0.54 million shares were issued to Eneti, a related party, and SSH at the offering price.

Private Placement

In September 2019, we closed on a private placement with SSH for $15.0 million, in exchange for an aggregate of

517,241 of our common shares at $29.00 per share, as described in Note 14.

122

Other agreements

Starting in October 2019, we provided guarantees in respect of the payment obligations of a related party bunker
provider (who is engaged in the procurement of bunkers on behalf of the Company and the Scorpio Pools) toward its
physical suppliers. No amounts were paid to this provider under these guarantees during the year ended December 31,
2020. The maximum amount under these guarantees was $16.0 million in aggregate as of December 31, 2020.

C. INTERESTS OF EXPERTS AND COUNSEL

Not applicable.

ITEM 8. FINANCIAL INFORMATION

A. Consolidated Statements and Other Financial Information

See “Item 18. Financial Statements.”

Legal Proceedings

In March 2021, we received notice of a lawsuit alleging the delivery of cargo, valued at $13.6 million, to the
incorrect receiver. While we are indemnified by the charterer for this claim, we cannot be certain of the ultimate outcome
of this matter, and hence the net impact on our financial results, if any, cannot be reasonably estimated.

To our knowledge, we are not currently a party to any other lawsuit that, if adversely determined, would have a
material adverse effect on our financial position, results of operations or liquidity. As such, we do not believe that pending
legal proceedings, taken as a whole, should have any significant impact on our financial statements. From time to time in
the future we may be subject to legal proceedings and claims in the ordinary course of business, principally personal injury
and property casualty claims. While we expect that these claims would be covered by our existing insurance policies, those
claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources. We have not
been involved in any legal proceedings which may have, or have had, a significant effect on our financial position, results
of operations or liquidity, nor are we aware of any proceedings that are pending or threatened which may have a significant
effect on our financial position, results of operations or liquidity.

Dividend Policy

The declaration and payment of dividends is subject at all times to the discretion of our Board of Directors. The
timing and amount of dividends, if any, depends on, among other things, our earnings, financial condition, cash
requirements and availability, fleet renewal and expansion, restrictions in our loan agreements and finance lease
arrangements, the provisions of Marshall Islands law affecting the payment of dividends and other factors.

We are a holding company with no material assets other than the equity interests in our wholly-owned
subsidiaries. As a result, our ability to pay dividends, if any, depends on our subsidiaries and their ability to distribute funds
to us. Our credit facilities and finance lease arrangements have restrictions on our ability, and the ability of certain of our
subsidiaries, to pay dividends in the event of a default or breach of covenants under the agreements. Under such
circumstances, we or our subsidiaries may not be able to pay dividends so long as we are in default or have breached
certain covenants of a credit facility or finance lease arrangement without our lender’s consent or waiver of the default or
breach. In addition, Marshall Islands law generally prohibits the payment of dividends (i) other than from surplus (retained
earnings and the excess of consideration received for the sale of shares above the par value of the shares) or (ii) when a
company is insolvent or (iii) if the payment of the dividend would render the company insolvent.

In addition, we may incur expenses or liabilities, including extraordinary expenses, decreases in revenues,
including as a result of unanticipated off-hire days or loss of a vessel, or increased cash needs that could reduce or
eliminate the amount of cash that we have available for distribution as dividends.

Any dividends paid by us will be income to a United States shareholder. Please see “Item 10. Additional
Information - E. Taxation” for additional information relating to the United States federal income tax treatment of our
dividend payments, if any are declared in the future.

123

For the years ended December 31, 2020, 2019 and 2018, we paid aggregate dividends to our shareholders in the
amount of $23.3 million, $21.3 million and $15.1 million, respectively. We have paid the following dividends per share in
respect of the periods set forth below:

Date Paid
March 27, 2018 ..............................................................................
June 28, 2018 ..................................................................................
September 27, 2018 ........................................................................
December 13, 2018.........................................................................
March 28, 2019 ..............................................................................
June 27, 2019 ..................................................................................
September 27, 2019 ........................................................................
December 13, 2019.........................................................................
March 13, 2020 ..............................................................................
June 15, 2020 ..................................................................................
September 29, 2020 ........................................................................
December 14, 2020.........................................................................
March 15, 2021 ..............................................................................

Dividends per Share
0.10
0.10
0.10
0.10
0.10
0.10
0.10
0.10
0.10
0.10
0.10
0.10
0.10

$
$
$
$
$
$
$
$
$
$
$
$
$

B. Significant Changes

There have been no significant changes since the date of the annual consolidated financial statements included in
this report, other than as described in Note 23 - Subsequent Events to our consolidated financial statements included herein.

ITEM 9. OFFER AND THE LISTING

A. Offer and Listing Details

Please see “Item 9. Offer and Listing - C. Markets.”

B. Plan of Distribution

Not applicable.

C. Markets

Since our initial public offering, our shares of common stock have traded on the NYSE under the symbol

“STNG.” Our Senior Notes Due 2025 are listed for trading on the NYSE under the symbol “SBBA.”

D. Selling Shareholders

Not applicable.

E. Dilution

Not applicable.

F. Expenses of the Issue

Not applicable.

ITEM 10. ADDITIONAL INFORMATION

A. Share Capital

Not applicable.

B. Memorandum and Articles of Association

Our amended and restated articles of incorporation have been filed as Exhibit 3.1 to Amendment No. 2 to our
Registration Statement on Form F-1 (Registration No. 333-164940), filed with the SEC on March 18, 2010. Our amended
and restated bylaws are filed as Exhibit 1.2 to our Annual Report on Form 20-F filed with the SEC on June 29, 2010. In
June 2014, after receiving shareholder approval, we amended our amended and restated articles of incorporation to increase

124

our authorized common stock to 400,000,000 from 250,000,000. This amendment to our amended and restated articles of
incorporation is filed as Exhibit 3.1 to our Annual Report on Form 20-F filed with the SEC on March 31, 2015. In June
2018, after receiving shareholder approval, we amended our amended and restated articles of incorporation to increase our
authorized common stock to 750,000,000 from 400,000,000. This amendment to our amended and restated articles of
incorporation is filed as Exhibit 3.1 to the Form 6-K filed with the SEC on June 1, 2018. The share numbers in this
paragraph have not been retroactively adjusted to reflect the below reverse stock split.

On January 18, 2019, we effected a one-for-ten reverse stock split. Our shareholders approved the reverse stock
split including a change in authorized common shares at the special meeting of shareholders held on January 15, 2019.
Pursuant to this reverse stock split, the total number of authorized common shares was reduced to 150,000,000 shares and
common shares outstanding were reduced from 513,975,324 shares to 51,397,470 shares (which reflects adjustments for
fractional share settlements). The par value was not adjusted as a result of the reverse stock split. The amended and restated
articles of incorporation to effect the reverse stock split and change in authorized common shares from 750,000,000 to
150,000,000 is included as Exhibit 3.1 to the Form 6-K filed with the SEC on January 18, 2019. The information contained
in these exhibits is incorporated by reference herein.

Below is a summary of the description of our capital stock, including the rights, preferences and restrictions
attaching to each class of stock. Because the following is a summary, it does not contain all information that you may find
useful. For more complete information, you should read our amended and restated articles of incorporation, as amended
(the “Articles of Incorporation”) and amended and restated bylaws (the “Bylaws”), which are incorporated by reference
herein.

Purpose

Our purpose, as stated in our Articles of Incorporation, is to engage in any lawful act or activity for which
corporations may now or hereafter be organized under the BCA. Our Articles of Incorporation and Bylaws do not impose
any limitations on the ownership rights of our shareholders.

Authorized capitalization

Under our Articles of Incorporation, we have authorized 175,000,000 registered shares, consisting of 150,000,000
common shares, par value $0.01 per share, of which 58,093,147 shares were issued and outstanding as of March 30, 2021
and 25,000,000 preferred shares, par value $0.01 per share, of which no shares are issued and outstanding.

Description of Common Shares

Each outstanding common share entitles the holder to one vote on all matters submitted to a vote of shareholders.
Subject to preferences that may be applicable to any outstanding preferred shares, holders of our common shares are
entitled to receive ratably all dividends, if any, declared by our Board of Directors out of funds legally available for
dividends. Upon our dissolution or liquidation or the sale of all or substantially all of our assets, after payment in full of all
amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any, the
holders of our common shares are entitled to receive pro rata our remaining assets available for distribution. Holders of our
common shares do not have conversion, redemption or pre-emptive rights to subscribe to any of our securities. The rights,
preferences and privileges of holders of our common shares are subject to the rights of the holders of any preferred shares,
which we may issue in the future.

Description of Preferred Shares

Our Articles of Incorporation authorize our Board of Directors to establish one or more series of preferred stock
and to determine, with respect to any series of preferred stock, the terms and rights of that series, including the designation
of the series, the number of shares of the series, the preferences and relative, participating, option or other special rights, if
any, and any qualifications, limitations or restrictions of such series, and the voting rights, if any, of the holders of the
series.

Directors

Our directors are elected by a plurality of the votes cast by shareholders entitled to vote. There is no provision for

cumulative voting.

125

Our Articles of Incorporation require our Board of Directors to consist of at least one member. Our Board of
Directors consists of nine members. Our Bylaws may be amended by the vote of a majority of our entire Board of
Directors.

Directors are elected annually on a staggered basis, and each shall serve for a three-year term and until his or her
successor shall have been duly elected and qualified, except in the event of his or her death, resignation, removal, or the
earlier termination of his or her term of office. Our Board of Directors, as advised by our Compensation Committee, has
the authority to fix the amounts which shall be payable to the members of the Board of Directors for attendance at any
meeting or for services rendered to us.

Shareholder Meetings

Under our Bylaws, annual meetings of shareholders will be held at a time and place selected by our Board of
Directors. The meetings may be held in or outside of the Republic of the Marshall Islands. Special meetings may be called
at any time by a majority of our Board of Directors, the chairman of our Board of Directors or an officer of the Company
who is also a director. Our Board of Directors may set a record date between 15 and 60 days before the date of any meeting
to determine the shareholders that will be eligible to receive notice and vote at the meeting. One or more shareholders
representing at least one-third of the total voting rights of our total issued and outstanding shares present in person or by
proxy at a shareholder meeting shall constitute a quorum for the purposes of the meeting.

Dissenters’ Rights of Appraisal and Payment

Under the BCA, our shareholders have the right to dissent from various corporate actions, and receive payment of
the fair market value of their shares. In the event of any further amendment of our Articles of Incorporation, a shareholder
also has the right to dissent and receive payment for his or her shares if the amendment alters certain rights in respect of
those shares. The dissenting shareholder must follow the procedures set forth in the BCA to receive payment. In the event
that we and any dissenting shareholder fail to agree on a price for the shares, the BCA procedures involve, among other
things, the institution of proceedings in the high court of the Republic of the Marshall Islands or in any appropriate court in
any jurisdiction in which our shares are primarily traded on a local or national securities exchange.

Shareholders’ Derivative Actions

Under the BCA, any of our shareholders may bring an action in our name to procure a judgment in our favor, also
known as a derivative action, provided that the shareholder bringing the action is a holder of common shares both at the
time the derivative action is commenced and at the time of the transaction to which the action relates.

Limitations on Liability and Indemnification of Officers and Directors

The BCA authorizes corporations to limit or eliminate the personal liability of directors to corporations and their
shareholders for monetary damages for certain breaches of directors’ fiduciary duties. Our Bylaws include a provision that
eliminates the personal liability of directors for actions taken as a director to the fullest extent permitted by law.

Our Bylaws provide that we must indemnify our directors and officers to the fullest extent authorized by law. We
are also expressly authorized to advance certain expenses (including attorney’s fees and disbursements and court costs) to
our directors and officers and carry directors’ and officers’ insurance providing indemnification for our directors, officers
and certain employees for some liabilities. We believe that these indemnification provisions and this insurance are useful to
attract and retain qualified directors and executive officers.

The limitation of liability and indemnification provisions in our Bylaws may discourage shareholders from
bringing a lawsuit against directors for breach of their fiduciary duties. These provisions may also have the effect of
reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful,
might otherwise benefit us and our shareholders. In addition, shareholders’ investment may be adversely affected to the
extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification
provisions.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers
and controlling persons pursuant to the foregoing provisions, or otherwise, we have been informed that in the opinion of
the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

126

There is currently no pending material litigation or proceeding involving any of our directors, officers or

employees for which indemnification is sought.

Anti-Takeover Effect of Certain Provisions of our Amended and Restated Articles of Incorporation and Amended
and Restated Bylaws

Several provisions of our Articles of Incorporation and Bylaws, which are summarized below, may have anti-
takeover effects. These provisions are intended to avoid costly takeover battles, lessen our vulnerability to a hostile change
of control and enhance the ability of our Board of Directors to maximize shareholder value in connection with any
unsolicited offer to acquire us. However, these anti-takeover provisions, which are summarized below, could also
discourage, delay or prevent (i) the merger or acquisition of us by means of a tender offer, a proxy contest or otherwise that
a shareholder may consider in its best interest and (ii) the removal of incumbent officers and directors.

Blank Check Preferred Stock

Under the terms of our Articles of Incorporation, our Board of Directors has authority, without any further vote or
action by our shareholders, to issue up to 25 million shares of blank check preferred stock. Our Board of Directors may
issue preferred shares on terms calculated to discourage, delay or prevent a change of control of us or the removal of our
management.

Election and Removal of Directors

Our Articles of Incorporation prohibit cumulative voting in the election of directors. Our Bylaws require parties
other than the Board of Directors to give advance written notice of nominations for the election of directors. Our Articles of
Incorporation also provide that our directors may be removed for cause upon the affirmative vote of not less than two-
thirds of the outstanding shares of our capital stock entitled to vote for those directors. These provisions may discourage,
delay or prevent the removal of incumbent officers and directors.

Limited Actions by Shareholders

Our Articles of Incorporation and our Bylaws provide that any action required or permitted to be taken by our
shareholders must be effected at an annual or special meeting of shareholders or by the unanimous written consent of our
shareholders. Our Bylaws provide that, unless otherwise prescribed by law, only a majority of our Board of Directors, the
chairman of our Board of Directors or an officer of the Company who is also a director may call special meetings of our
shareholders and the business transacted at the special meeting is limited to the purposes stated in the notice. Accordingly,
a shareholder may be prevented from calling a special meeting for shareholder consideration of a proposal over the
opposition of our Board of Directors and shareholder consideration of a proposal may be delayed until the next annual
meeting.

Advance notice requirements for shareholder proposals and director nominations

Our Bylaws provide that shareholders seeking to nominate candidates for election as directors or to bring business
before an annual meeting of shareholders must provide timely notice of their proposal in writing to the corporate secretary.
Generally, to be timely, a shareholder’s notice must be received at our principal executive offices not less than 150 days
nor more than 180 days prior to the one-year anniversary of the immediately preceding annual meeting of shareholders.
Our Bylaws also specify requirements as to the form and content of a shareholder’s notice. These provisions may impede
shareholders’ ability to bring matters before an annual meeting of shareholders or make nominations for directors at an
annual meeting of shareholders.

Classified Board of Directors

As described above, our Articles of Incorporation provide for the division of our Board of Directors into three
classes of directors, with each class as nearly equal in number as possible, serving staggered three-year terms. Accordingly,
approximately one-third of our Board of Directors will be elected each year. This classified board provision could
discourage a third party from making a tender offer for our shares or attempting to obtain control of us. It could also delay
shareholders who do not agree with the policies of our Board of Directors from removing a majority of our Board of
Directors for two years.

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Business combinations

Although the BCA does not contain specific provisions regarding “business combinations” between companies
organized under the laws of the Marshall Islands and “interested shareholders,” we have included these provisions in our
Articles of Incorporation. Specifically, our Articles of Incorporation prohibit us from engaging in a “business combination”
with certain persons for three years following the date the person becomes an interested shareholder. Interested
shareholders generally include:

•

any person who is the beneficial owner of 15% or more of our outstanding voting stock; or

any person who is our affiliate or associate and who held 15% or more of our outstanding voting stock at any
time within three years before the date on which the person’s status as an interested shareholder is
determined, and the affiliates and associates of such person.

Subject to certain exceptions, a business combination includes, among other things:

•

certain mergers or consolidations of us or any direct or indirect majority-owned subsidiary of ours;

any sale, lease, exchange, mortgage, pledge, transfer or other disposition of our assets or of any subsidiary of
ours having an aggregate fair market value equal to 10% or more of either the aggregate fair market value of
all of our assets, determined on a combined basis, or the aggregate value of all of our outstanding stock;

certain transactions that result in the issuance or transfer by us of any stock of ours to the interested
shareholder;

any transaction involving us or any of our subsidiaries that has the effect of increasing the proportionate share
of any class or series of stock, or securities convertible into any class or series of stock, of ours or any such
subsidiary that is owned directly or indirectly by the interested shareholder or any affiliate or associate of the
interested shareholder; and

any receipt by the interested shareholder of the benefit directly or indirectly (except proportionately as a
shareholder) of any loans, advances, guarantees, pledges or other financial benefits provided by or through us.

These provisions of our Articles of Incorporation do not apply to a business combination if:

•

before a person became an interested shareholder, our Board of Directors approved either the business
combination or the transaction in which the shareholder became an interested shareholder;

upon consummation of the transaction which resulted in the shareholder becoming an interested shareholder,
the interested shareholder owned at least 85% of our voting stock outstanding at the time the transaction
commenced, other than certain excluded shares;

at or following the transaction in which the person became an interested shareholder, the business
combination is approved by our Board of Directors and authorized at an annual or special meeting of
shareholders, and not by written consent, by the affirmative vote of the holders of at least two-thirds of our
outstanding voting stock that is not owned by the interested shareholder;

the shareholder was or became an interested shareholder prior to the closing of our initial public offering in
2010;

a shareholder became an interested shareholder inadvertently and (i) as soon as practicable divested itself of
ownership of sufficient shares so that the shareholder ceased to be an interested shareholder; and (ii) would
not, at any time within the three-year period immediately prior to a business combination between us and
such shareholder, have been an interested shareholder but for the inadvertent acquisition of ownership; or

the business combination is proposed prior to the consummation or abandonment of and subsequent to the
earlier of the public announcement or the notice required under our Articles of Incorporation which (i)
constitutes one of the transactions described in the following sentence; (ii) is with or by a person who either
was not an interested shareholder during the previous three years or who became an interested shareholder
with the approval of the board; and (iii) is approved or not opposed by a majority of the members of the
Board of Directors then in office (but not less than one) who were directors prior to any person becoming an
interested shareholder during the previous three years or were recommended for election or elected to succeed
such directors by a majority of such directors. The proposed transactions referred to in the preceding sentence
are limited to:

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(i) a merger or consolidation of us (except for a merger in respect of which, pursuant to the BCA, no vote of

our shareholders is required);

(ii) a sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of
transactions), whether as part of a dissolution or otherwise, of assets of us or of any direct or indirect
majority-owned subsidiary of ours (other than to any direct or indirect wholly-owned subsidiary or to us)
having an aggregate fair market value equal to 50% or more of either the aggregate fair market value of
all of our assets determined on a consolidated basis or the aggregate fair market value of all the
outstanding shares; or

(iii) a proposed tender or exchange offer for 50% or more of our outstanding voting stock.

Registrar and Transfer Agent

The registrar and transfer agent for our common shares is Computershare Trust Company, N.A.

Listing

Our common shares are listed on the NYSE under the symbol “STNG.”

C. Material Contracts

We refer you “Item 6. Directors, Senior Management and Employees-B. Compensation-2013 Equity Incentive
Plan” and “Item 7. Major Shareholders and Related Party Transactions-B. Related Party Transactions” for a discussion of
the contracts that we consider to be both material and outside the ordinary course of business during the two-year period
immediately preceding the date of this annual report. Certain of these material agreements that are to be performed in
whole or in part at or after the date of this annual report are attached as exhibits to this annual report.

Other than as set forth above, there were no material contracts, other than contracts entered into in the ordinary
course of business, to which we were a party during the two-year period immediately preceding the date of this annual
report.

D. Exchange Controls

Under Marshall Islands law, there are currently no restrictions on the export or import of capital, including foreign
exchange controls or restrictions that affect the remittance of dividends, interest or other payments to non-resident holders
of our common shares.

E. Taxation

United States Federal Income Tax Considerations

In the opinion of Seward & Kissel LLP, the following are the material United States federal income tax
consequences to us of our activities and to United States Holders and Non-United States Holders, each as defined below, of
the ownership of common shares. The following discussion of United States federal income tax matters is based on the
Code, judicial decisions, administrative pronouncements, and existing and proposed regulations issued by the United States
Department of the Treasury, or the Treasury Regulations, all of which are subject to change, possibly with retroactive
effect. The discussion below is based, in part, on the description of our business in this Report and assumes that we conduct
our business as described herein. References in the following discussion to the “Company,” “we,” “our” and “us” are to
Scorpio Tankers Inc. and its subsidiaries on a consolidated basis.

United States Federal Income Taxation of Operating Income: In General

We earn and anticipate that we will continue to earn substantially all our income from the hiring or leasing of
vessels for use on a time charter basis, from participation in a pool or from the performance of services directly related to
those uses, all of which we refer to as Shipping Income.

Unless exempt from United States federal income taxation under the rules of Section 883 of the Code, or Section
883, as discussed below, a foreign corporation such as us will be subject to United States federal income taxation on its
Shipping Income that is treated as derived from sources within the United States, which we refer to as “United States
Source Shipping Income.” For United States federal income tax purposes, “United States Source Shipping Income”
includes 50% of shipping income that is attributable to transportation that begins or ends, but that does not both begin and
end, in the United States.

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Shipping Income attributable to transportation exclusively between non-United States ports will be considered to
be 100% derived from sources entirely outside the United States. Shipping Income derived from sources outside the United
States will not be subject to any United States federal income tax.

Shipping Income attributable to transportation exclusively between United States ports is considered to be 100%
derived from United States sources. However, we are not permitted by United States law to engage in the transportation of
cargoes that produces 100% United States Source Shipping Income.

Unless exempt from tax under Section 883, our gross United States Source Shipping Income would be subject to a

4% tax imposed without allowance for deductions, as described more fully below.

Exemption of Operating Income from United States Federal Income Taxation

Under Section 883 and the Treasury Regulations thereunder, a foreign corporation will be exempt from United

States federal income taxation on its United States Source Shipping Income if:

(1) it is organized in a “qualified foreign country,” which is one that grants an “equivalent exemption” from tax
to corporations organized in the United States in respect of each category of shipping income for which
exemption is being claimed under Section 883; and

(2) one of the following tests is met:

(A) more than 50% of the value of its shares is beneficially owned, directly or indirectly, by “qualified
shareholders,” which as defined includes individuals who are “residents” of a qualified foreign country,
which we refer to as the “50% Ownership Test”; or

(B) its shares are “primarily and regularly traded on an established securities market” in a qualified foreign

country or in the United States, to which we refer as the “Publicly-Traded Test”.

The Republic of the Marshall Islands, the jurisdiction where we and our ship-owning subsidiaries are
incorporated, has been officially recognized by the IRS as a qualified foreign country that grants the requisite “equivalent
exemption” from tax in respect of each category of shipping income we earn and currently expect to earn in the future.
Therefore, we will be exempt from United States federal income taxation with respect to our United States Source Shipping
Income if we satisfy either the 50% Ownership Test or the Publicly-Traded Test.

For our 2020 taxable tax year, we intend to take the position that we satisfy the Publicly-Traded Test and we
anticipate that we will continue to satisfy the Publicly-Traded Test for future taxable years. However, as discussed below,
this is a factual determination made on an annual basis. We do not currently anticipate a circumstance under which we
would be able to satisfy the 50% Ownership Test.

Publicly-Traded Test

The Treasury Regulations under Section 883 provide, in pertinent part, that shares of a foreign corporation will be
considered to be “primarily traded” on an established securities market in a country if the number of shares of each class of
stock that are traded during any taxable year on all established securities markets in that country exceeds the number of
shares in each such class that are traded during that year on established securities markets in any other single country. Our
common shares, which constitute our sole class of issued and outstanding stock, are “primarily traded” on the NYSE.

Under the Treasury Regulations, our common shares will be considered to be “regularly traded” on an established
securities market if one or more classes of our stock representing more than 50% of our outstanding stock, by both total
combined voting power of all classes of stock entitled to vote and total value, are listed on such market, to which we refer
as the “Listing Threshold.” Since our common shares are listed on the NYSE, we expect to satisfy the Listing Threshold.

It is further required that with respect to each class of stock relied upon to meet the Listing Threshold, (i) such
class of stock is traded on the market, other than in minimal quantities, on at least 60 days during the taxable year or one-
sixth of the days in a short taxable year, or the “Trading Frequency Test”; and (ii) the aggregate number of shares of such
class of stock traded on such market during the taxable year is at least 10% of the average number of shares of such class of
stock outstanding during such year or as appropriately adjusted in the case of a short taxable year, or the “Trading Volume
Test.” We currently satisfy and anticipate that we will continue to satisfy the Trading Frequency Test and Trading Volume
Test. Even if this were not the case, the Treasury Regulations provide that the Trading Frequency Test and Trading Volume
Test will be deemed satisfied if, as is the case with our common shares, such class of stock is traded on an established
securities market in the United States and such class of stock is regularly quoted by dealers making a market in such stock.

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Notwithstanding the foregoing, the Treasury Regulations provide, in pertinent part, that a class of stock will not be
considered to be “regularly traded” on an established securities market for any taxable year during which 50% or more of
the vote and value of the outstanding shares of such class are owned, actually or constructively under specified attribution
rules, on more than half the days during the taxable year by persons who each own 5% or more of the vote and value of
such class of outstanding shares, to which we refer as the “5% Override Rule.”

For purposes of being able to determine the persons who actually or constructively own 5% or more of the vote
and value of our common shares, or “5% Shareholders,” the Treasury Regulations permit us to rely on those persons that
are identified on Schedule 13G and Schedule 13D filings with the SEC as owning 5% or more of our common shares. The
Treasury Regulations further provide that an investment company which is registered under the Investment Company Act
of 1940, as amended, will not be treated as a 5% Shareholder for such purposes.

In the event the 5% Override Rule is triggered, the Treasury Regulations provide that the 5% Override Rule will
nevertheless not apply if we can establish that within the group of 5% Shareholders, there are sufficient qualified
shareholders for purposes of Section 883 to preclude non-qualified shareholders in such group from owning 50% or more
of our common shares for more than half the number of days during the taxable year. In order to benefit from this
exception to the 5% Override Rule, we must satisfy certain substantiation requirements in regards to the identity of our 5%
Shareholders.

We believe that we currently satisfy the Publicly-Traded Test and intend to take this position on our United States
federal income tax return for the 2020 taxable year. However, there are factual circumstances beyond our control that could
cause us to lose the benefit of the Section 883 exemption. For example, if we trigger the 5% Override Rule for any future
taxable year, there is no assurance that we will have sufficient qualified 5% Shareholders to preclude nonqualified 5%
Shareholders from owning 50% or more of our common shares for more than half the number of days during such taxable
year, or that we will be able to satisfy the substantiation requirements in regards to our 5% Shareholders.

United States Federal Income Taxation in Absence of Section 883 Exemption

If the benefits of Section 883 are unavailable, our United States source shipping income would be subject to a 4%
tax imposed by Section 887 of the Code on a gross basis, without the benefit of deductions, which we refer to as the “4%
Gross Basis Tax Regime,” to the extent that such income is not considered to be “effectively connected” with the conduct
of a United States trade or business, as described below. Since under the sourcing rules described above, no more than 50%
of our shipping income would be treated as being United States source shipping income, the maximum effective rate of
United States federal income tax on our shipping income would never exceed 2% under the 4% Gross Basis Tax Regime.

To the extent our United States source shipping income is considered to be “effectively connected” with the
conduct of a United States trade or business, as described below, any such “effectively connected” United States source
shipping income, net of applicable deductions, would be subject to United States federal income tax, currently imposed at a
rate of 21%. In addition, we would generally be subject to the 30% “branch profits” tax on earnings effectively connected
with the conduct of such trade or business, as determined after allowance for certain adjustments, and on certain interest
paid or deemed paid attributable to the conduct of our United States trade or business.

Our United States Source Shipping Income would be considered “effectively connected” with the conduct of a

United States trade or business only if:

• we have, or are considered to have, a fixed place of business in the United States involved in the earning of

United States Source Shipping Income; and

•

substantially all of our United States Source Shipping Income is attributable to regularly scheduled
transportation, such as the operation of a vessel that follows a published schedule with repeated sailings at
regular intervals between the same points for voyages that begin or end in the United States.

We do not currently have, intend to have, or permit circumstances that would result in having, any vessel sailing
to or from the United States on a regularly scheduled basis. Based on the foregoing and on the expected mode of our
shipping operations and other activities, it is anticipated that none of our United States source shipping income will be
“effectively connected” with the conduct of a United States trade or business.

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United States Federal Income Taxation of Gain on Sale of Vessels

If we qualify for exemption from tax under Section 883 in respect of the shipping income derived from the
international operation of our vessels, then a gain from the sale of any such vessel should likewise be exempt from United
States federal income tax under Section 883. If, however, our shipping income from such vessels does not for whatever
reason qualify for exemption under Section 883, then any gain on the sale of a vessel will be subject to United States
federal income tax if such sale occurs in the United States. To the extent possible, we intend to structure the sales of our
vessels so that the gain therefrom is not subject to United States federal income tax. However, there is no assurance we will
be able to do so.

United States Federal Income Taxation of United States Holders

The following is a discussion of the material United States federal income tax considerations relevant to an
investment decision by a United States Holder, as defined below, with respect to our common shares. This discussion does
not purport to deal with the tax consequences of owning common shares to all categories of investors, some of which may
be subject to special rules. This discussion only addresses considerations relevant to those United States Holders who hold
the common shares as capital assets, that is, generally for investment purposes. You are encouraged to consult your own
tax advisors concerning the overall tax consequences arising in your own particular situation under United States federal,
state, local or foreign law of the ownership of common shares.

As used herein, the term United States Holder means a beneficial owner of common shares that is an individual
United States citizen or resident, a United States corporation or other United States entity taxable as a corporation, an estate
the income of which is subject to United States federal income taxation regardless of its source, or a trust if (i) a court
within the United States is able to exercise primary jurisdiction over the administration of the trust and one or more United
States persons have the authority to control all substantial decisions of the trust or (ii) it has in place an election to be
treated as a United States person for U.S. federal income tax purposes.

If a partnership holds our common shares, the tax treatment of a partner will generally depend upon the status of
the partner and upon the activities of the partnership. If you are a partner in a partnership holding common shares, you are
encouraged to consult your tax advisor.

Distributions

Subject to the discussion of passive foreign investment companies below, any distributions made by us with
respect to our common shares to a United States Holder will generally constitute dividends to the extent of our current or
accumulated earnings and profits, as determined under United States federal income tax principles. Distributions in excess
of such earnings and profits will be treated first as a nontaxable return of capital to the extent of the United States Holder’s
tax basis in his common shares on a dollar-for-dollar basis and thereafter as capital gain. Because we are not a United
States corporation, United States Holders that are corporations will generally not be entitled to claim a dividends received
deduction with respect to any distributions they receive from us. Dividends paid with respect to our common shares will
generally be treated as “passive category income” for purposes of computing allowable foreign tax credits for United States
foreign tax credit purposes.

Dividends paid on our common shares to a United States Holder who is an individual, trust or estate, or a United
States Non-Corporate Holder, will generally be treated as “qualified dividend income” that is taxable to such United States
Non-Corporate Holder at preferential tax rates provided that (1) the common shares are readily tradable on an established
securities market in the United States (such as the NYSE, on which our common shares are traded); (2) we are not a
passive foreign investment company for the taxable year during which the dividend is paid or the immediately preceding
taxable year (which, as discussed below, we believe we have not been, we believe we are not and do not anticipate being in
the future); (3) the United States Non-Corporate Holder has owned the common shares for more than 60 days in the 121-
day period beginning 60 days before the date on which the common shares become ex-dividend; and (4) the United States
Non-Corporate Holder is not under an obligation to make related payments with respect to positions in substantially similar
or related property. Any distributions out of earnings and profits we pay which are not eligible for these preferential rates
will be taxed as ordinary income to a United States Non-Corporate Holder.

Special rules may apply to any “extraordinary dividend”—generally, a dividend in an amount which is equal to or in
excess of 10% of a shareholder’s adjusted tax basis (or fair market value in certain circumstances) or dividends received
within a one-year period that, in the aggregate, equal or exceed 20% of a shareholder’s adjusted tax basis (or fair market value
upon the shareholder’s election) in his common shares—paid by us. If we pay an “extraordinary dividend” on our common
shares that is treated as “qualified dividend income,” then any loss derived by a United States Non-Corporate Holder from the
sale or exchange of such common shares will be treated as long-term capital loss to the extent of such dividend.

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Sale, Exchange or Other Disposition of Common Shares

Assuming we do not constitute a passive foreign investment company for any taxable year, a United States Holder
generally will recognize taxable gain or loss upon a sale, exchange or other disposition of our common shares in an amount
equal to the difference between the amount realized by the United States Holder from such sale, exchange or other
disposition and the United States Holder’s tax basis in such shares. Such gain or loss will be treated as long-term capital
gain or loss if the United States Holder’s holding period is greater than one year at the time of the sale, exchange or other
disposition. Such capital gain or loss will generally be treated as United States source income or loss, as applicable, for
United States foreign tax credit purposes. Long-term capital gains of United States Non-Corporate Holders are currently
eligible for reduced rates of taxation. A United States Holder’s ability to deduct capital losses is subject to certain
limitations.

Passive Foreign Investment Company Status and Significant Tax Consequences

Special United States federal income tax rules apply to a United States Holder that holds shares in a foreign
corporation classified as a “passive foreign investment company”, or a PFIC, for United States federal income tax
purposes. In general, we will be treated as a PFIC with respect to a United States Holder if, for any taxable year in which
such Holder holds our common shares, either:

•

at least 75% of our gross income for such taxable year consists of passive income (e.g., dividends, interest,
capital gains and rents derived other than in the active conduct of a rental business); or

at least 50% of the average value of our assets during such taxable year produce, or are held for the
production of, passive income.

For purposes of determining whether we are a PFIC, we will be treated as earning and owning our proportionate
share of the income and assets, respectively, of any of our subsidiary corporations in which we own at least 25% of the
value of the subsidiary’s stock. Income earned, or deemed earned, by us in connection with the performance of services
would not constitute passive income. By contrast, rental income would generally constitute “passive income” unless we
were treated under specific rules as deriving our rental income in the active conduct of a trade or business.

Based on our current operations and future projections, we do not believe that we have been, are, nor do we expect
to become, a PFIC with respect to any taxable year. Although there is no legal authority directly on point, our belief is
based principally on the position that, for purposes of determining whether we are a PFIC, the gross income we derive or
are deemed to derive from the time chartering and voyage chartering activities of our wholly-owned subsidiaries should
constitute services income, rather than rental income. Accordingly, such income should not constitute passive income, and
the assets that we own and operate in connection with the production of such income, in particular, the vessels, should not
constitute assets that produce or are held for the production of passive income for purposes of determining whether we are
a PFIC. Therefore, based on our current operations and future projections, we should not be treated as a PFIC with respect
to any taxable year. There is substantial legal authority supporting this position, consisting of case law and IRS
pronouncements concerning the characterization of income derived from time charters and voyage charters as services
income for other tax purposes. However, there is also authority that characterizes time charter income as rental income
rather than services income for other tax purposes. It should be noted that in the absence of any legal authority specifically
relating to the statutory provisions governing PFICs, the IRS or a court could disagree with our position. Furthermore,
although we intend to conduct our affairs in a manner to avoid being classified as a PFIC with respect to any taxable year,
we cannot assure you that the nature of our operations will not change in the future.

As discussed more fully below, if we were to be treated as a PFIC for any taxable year, a United States Holder
would be subject to different United States federal income taxation rules depending on whether the United States Holder
makes an election to treat us as a “Qualified Electing Fund,” which election we refer to as a “QEF election.” As an
alternative to making a QEF election, a United States Holder should be able to make a “mark-to-market” election with
respect to our common shares, as discussed below. In addition, if we were to be treated as a PFIC for any taxable year, a
United States Holder will generally be required to file an annual report with the IRS for that year with respect to such
Holder’s common shares.

Taxation of United States Holders Making a Timely QEF Election

If a United States Holder makes a timely QEF election, which United States Holder we refer to as an Electing
Holder, the Electing Holder must report for United States federal income tax purposes his pro rata share of our ordinary
earnings and net capital gain, if any, for each of our taxable years during which we are a PFIC that ends with or within the

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taxable year of the Electing Holder, regardless of whether distributions were received from us by the Electing Holder. No
portion of any such inclusions of ordinary earnings will be treated as “qualified dividend income.” Net capital gain
inclusions of United States Non-Corporate Holders would be eligible for preferential capital gain tax rates. The Electing
Holder’s adjusted tax basis in the common shares will be increased to reflect taxed but undistributed earnings and profits.
Distributions of earnings and profits that had been previously taxed will result in a corresponding reduction in the adjusted
tax basis in the common shares and will not be taxed again once distributed. An Electing Holder would not, however, be
entitled to a deduction for its pro rata share of any losses that we incur with respect to any taxable year. An Electing Holder
would generally recognize capital gain or loss on the sale, exchange or other disposition of our common shares. A United
States Holder would make a timely QEF election for our shares by filing one copy of IRS Form 8621 with his United
States federal income tax return for the first year in which he held such shares when we were a PFIC. If we were to be
treated as a PFIC for any taxable year, we would provide each United States Holder with all necessary information in order
to make the QEF election described above.

Taxation of United States Holders Making a “Mark-to-Market” Election

Alternatively, if we were to be treated as a PFIC for any taxable year and, as we anticipate will be the case, our
common shares are treated as “marketable stock,” a United States Holder would be allowed to make a “mark-to-market”
election with respect to our common shares, provided the United States Holder completes and files IRS Form 8621 in
accordance with the relevant instructions and related Treasury Regulations. If that election is made, the United States
Holder generally would include as ordinary income in each taxable year the excess, if any, of the fair market value of the
common shares at the end of the taxable year over such Holder’s adjusted tax basis in the common shares. The United
States Holder would also be permitted an ordinary loss in respect of the excess, if any, of the United States Holder’s
adjusted tax basis in the common shares over its fair market value at the end of the taxable year, but only to the extent of
the net amount previously included in income as a result of the mark-to-market election. A United States Holder’s tax basis
in his common shares would be adjusted to reflect any such income or loss amount. Gain realized on the sale, exchange or
other disposition of our common shares would be treated as ordinary income, and any loss realized on the sale, exchange or
other disposition of the common shares would be treated as ordinary loss to the extent that such loss does not exceed the
net mark-to-market gains previously included by the United States Holder.

Taxation of United States Holders Not Making a Timely QEF or Mark-to-Market Election

Finally, if we were to be treated as a PFIC for any taxable year, a United States Holder who does not make either a
QEF election or a “mark-to-market” election for that year, whom we refer to as a Non-Electing Holder, would be subject to
special rules with respect to (1) any excess distribution (i.e., the portion of any distributions received by the Non-Electing
Holder on the common shares in a taxable year in excess of 125% of the average annual distributions received by the Non-
Electing Holder in the three preceding taxable years, or, if shorter, the Non-Electing Holder’s holding period for the
common shares), and (2) any gain realized on the sale, exchange or other disposition of our common shares. Under these
special rules:

•

the excess distribution or gain would be allocated ratably over the Non-Electing Holder’s aggregate holding
period for the common shares;

the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which
we were a PFIC, would be taxed as ordinary income and would not be “qualified dividend income”; and

the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in
effect for the applicable class of taxpayer for that year, and an interest charge for the deemed tax deferral
benefit would be imposed with respect to the resulting tax attributable to each such other taxable year.

United States Federal Income Taxation of Non-United States Holders

A beneficial owner of common shares (other than a partnership) that is not a United States Holder is referred to

herein as a Non-United States Holder.

If a partnership holds common shares, the tax treatment of a partner will generally depend upon the status of the
partner and upon the activities of the partnership. If you are a partner in a partnership holding common shares, you are
encouraged to consult your tax advisor.

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Dividends on Common Stock

A Non-United States Holder generally will not be subject to United States federal income tax or withholding tax
on dividends received from us with respect to his common shares, unless that income is effectively connected with the
Non-United States Holder’s conduct of a trade or business in the United States. If the Non-United States Holder is entitled
to the benefits of a United States income tax treaty with respect to those dividends, that income is subject to United States
federal income tax only if it is attributable to a permanent establishment maintained by the Non-United States Holder in the
United States.

Sale, Exchange or Other Disposition of Common Shares

Non-United States Holders generally will not be subject to United States federal income tax or withholding tax on

any gain realized upon the sale, exchange or other disposition of our common shares, unless:

•

the gain is effectively connected with the Non-United States Holder’s conduct of a trade or business in the
United States (and, if the Non-United States Holder is entitled to the benefits of a United States income tax
treaty with respect to that gain, that gain is attributable to a permanent establishment maintained by the Non-
United States Holder in the United States); or

the Non-United States Holder is an individual who is present in the United States for 183 days or more during
the taxable year of disposition and other conditions are met.

If the Non-United States Holder is engaged in a United States trade or business for United States federal income
tax purposes, dividends on the common shares, and gains from the sale, exchange or other disposition of such shares, that
are effectively connected with the conduct of that trade or business will generally be subject to regular United States
federal income tax in the same manner as discussed in the previous section relating to the taxation of United States
Holders. In addition, if you are a corporate Non-United States Holder, your earnings and profits that are attributable to the
effectively connected income, subject to certain adjustments, may be subject to an additional “branch profits” tax at a rate
of 30%, or at a lower rate as may be specified by an applicable United States income tax treaty.

Backup Withholding and Information Reporting

In general, dividend payments, or other taxable distributions, made within the United States to you will be subject
to information reporting requirements if you are a non-corporate United States Holder. Such payments or distributions may
also be subject to backup withholding if you are a non-corporate United States Holder and you:

•

fail to provide an accurate taxpayer identification number;

are notified by the IRS that you have failed to report all interest or dividends required to be shown on your
United States federal income tax returns; or

in certain circumstances, fail to comply with applicable certification requirements.

Non-United States Holders may be required to establish their exemption from information reporting and backup

withholding by certifying their status on an appropriate IRS Form W-8.

If you are a Non-United States Holder and you sell your common shares to or through a United States office of a
broker, the payment of the proceeds is subject to both United States backup withholding and information reporting unless
you certify that you are a non-United States person, under penalties of perjury, or you otherwise establish an exemption. If
you sell your common shares through a non-United States office of a non-United States broker and the sales proceeds are
paid to you outside the United States, then information reporting and backup withholding generally will not apply to that
payment. However, United States information reporting requirements, but not backup withholding, will apply to a payment
of sales proceeds, even if that payment is made to you outside the United States, if you sell your common shares through a
non-United States office of a broker that is a United States person or has some other contacts with the United States. Such
information reporting requirements will not apply, however, if the broker has documentary evidence in its records that you
are a non-United States person and certain other conditions are met, or you otherwise establish an exemption.

Backup withholding is not an additional tax. Rather, you generally may obtain a refund of any amounts withheld
under backup withholding rules that exceed your United States federal income tax liability by filing a refund claim with the
IRS.

135

Individuals who are United States Holders (and to the extent specified in applicable Treasury Regulations, certain
individuals who are Non- United States Holders and certain United States entities) who hold “specified foreign financial
assets” (as defined in Section 6038D of the Code) are required to file IRS Form 8938 with information relating to the asset
for each taxable year in which the aggregate value of all such assets exceeds $75,000 at any time during the taxable year or
$50,000 on the last day of the taxable year (or such higher dollar amount as prescribed by applicable Treasury regulations).
Specified foreign financial assets would include, among other assets, our common shares, unless the shares are held
through an account maintained with a United States financial institution. Substantial penalties apply to any failure to timely
file IRS Form 8938, unless the failure is shown to be due to reasonable cause and not due to willful neglect. Additionally,
in the event an individual United States Holder (and to the extent specified in applicable Treasury Regulations, an
individual Non- United States Holder or a United States entity) that is required to file IRS Form 8938 does not file such
form, the statute of limitations on the assessment and collection of United States federal income taxes of such holder for the
related tax year may not close until three years after the date that the required IRS Form 8938 is filed. United States
Holders (including United States entities) and Non- United States Holders are encouraged to consult their own tax advisors
regarding their reporting obligations under this legislation.

F. Dividends and Paying Agents

Not applicable.

G. Statement by Experts

Not applicable.

H. Documents on Display

We file reports and other information with the SEC. These materials, including this annual report and the

accompanying exhibits are available from http://www.sec.gov.

Shareholders may also visit the Investor Relations section of our website at www.scorpiotankers.com or request a
copy of our filings at no cost, by writing or telephoning us at the following address: Scorpio Tankers Inc., 9, Boulevard
Charles III Monaco 98000, +377-9798-5716. The information on our website is not incorporated by reference into this
annual report.

I. Subsidiary Information

Not applicable.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

We are exposed to the impact of interest rate changes primarily through our unhedged variable-rate borrowings.
Significant increases in interest rates could adversely affect our operating margins, results of operations and our ability to
service our debt. From time to time, we will use interest rate swaps to reduce our exposure to market risk from changes in
interest rates. The principal objective of these contracts is to minimize the risks and costs associated with our variable-rate
debt and are not for speculative or trading purposes.

Based on the floating rate debt at December 31, 2020 and 2019, a one-percentage point increase in the floating
interest rate would increase interest expense by $26.8 million and $26.6 million per year, respectively. The following table
presents the due dates for the principal payments on our fixed and floating rate debt:

As of December 31,

In thousands of U.S. dollars
Principal payments floating rate debt (unhedged) .......
Principal payments fixed rate debt ...............................
Total principal payments on outstanding debt ........

2021
334,207
32,879
367,086

136

2022 - 2023
775,272
216,759
992,031

2024 - 2025

694,573
151,954
846,527

Thereafter
880,898
—
880,898

Spot Market Rate Risk

The cyclical nature of the tanker industry causes significant increases or decreases in the revenue that we earn
from our vessels, particularly those vessels that operate in the spot market or participate in pools that are concentrated in
the spot market such as the Scorpio Pools. We currently do not have any vessels employed on time charter contracts.
Additionally, we have the ability to remove our vessels from the pools on relatively short notice if attractive time charter
opportunities arise. A $1,000 per day increase or decrease in spot rates for all of our vessel classes would have increased or
decreased our operating income by $46.2 million and $41.7 million for the years ended December 31, 2020 and 2019,
respectively.

Foreign Exchange Rate Risk

Our primary economic environment is the international shipping market. This market utilizes the US dollar as its
functional currency. Consequently, virtually all of our revenues and the majority of our operating expenses are in US
dollars. However, we incur some of our combined expenses in other currencies, particularly the Euro. The amount and
frequency of some of these expenses (such as vessel repairs, supplies and stores) may fluctuate from period to period.
Depreciation in the value of the US dollar relative to other currencies will increase the US dollar cost of us paying such
expenses. The portion of our business conducted in other currencies could increase in the future, which could expand our
exposure to losses arising from currency fluctuations.

There is a risk that currency fluctuations will have a negative effect on our cash flows. We have not entered into
any hedging contracts to protect against currency fluctuations. However, we have some ability to shift the purchase of
goods and services from one country to another and, thus, from one currency to another, on relatively short notice. We may
seek to hedge this currency fluctuation risk in the future.

Bunker Price Risk

Our operating results are affected by movement in the price of fuel oil consumed by the vessels – known in the
industry as bunkers. The price and supply of fuel is unpredictable and fluctuates based on events outside our control,
including geopolitical developments, supply and demand for oil and gas, actions by OPEC and other oil and gas producers,
war and unrest in oil producing countries and regions, regional production patterns and environmental concerns. Further,
fuel may become much more expensive in the future, which may reduce our profitability. We do not hedge our exposure to
bunker price risk.

Inflation

We do not expect inflation to be a significant risk to direct expenses in the current and foreseeable economic

environment.

See Note 22 to our Consolidated Financial Statements included herein for additional information.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

137

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

PART II

None.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS

None.

ITEM 15. CONTROLS AND PROCEDURES

A. Disclosure Controls and Procedures

We carried out an evaluation under the supervision, and with the participation of our management, including our
Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of December 31, 2020. Based upon
that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and
procedures were effective as of December 31, 2020 to provide reasonable assurance that (1) information required to be
disclosed by us in the reports that we file under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the SEC’s rules and forms, and (2) that such information is accumulated and communicated to
our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosures.

There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including
the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even
effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.

B. Management’s Annual Report on Internal Control Over Financial Reporting

In accordance with Rule 13a-15(f) and 15d-15(f) of the Exchange Act, the management of the Company is
responsible for the establishment and maintenance of adequate internal controls over financial reporting for the Company.
Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. The Company’s system of internal control over financial reporting includes those policies and
procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and
that receipts and expenditures of the Company are being made only in accordance with authorizations of management and
directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.
Management has performed an assessment of the effectiveness of the Company’s internal controls over financial reporting
as of December 31, 2020 based on the provisions of Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission, or COSO, in 2013. Based on our assessment, management
determined that the Company’s internal controls over financial reporting was effective as of December 31, 2020 based on
the criteria in Internal Control—Integrated Framework issued by COSO (2013).

C. Attestation Report of the Registered Public Accounting Firm

The effectiveness of Company’s internal control over financial reporting, at December 31, 2020, has been audited
by PricewaterhouseCoopers Audit, an independent registered public accounting firm, as stated in their report which appears
herein.

D. Changes in Internal Control Over Financial Reporting

There were no changes in internal control over financial reporting (as defined by Rules 13a-15(f) and 15d-15(f)
under the Exchange Act) that occurred during the year ended December 31, 2020 that have materially affected, or are
reasonably likely to materially affect, the Company’s internal control over financial reporting.

138

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

Our Board of Directors has determined that Mr. Reidar Brekke, who serves on the Audit Committee, qualifies as

an “audit committee financial expert” and that he is “independent” in accordance with SEC rules.

ITEM 16B. CODE OF ETHICS

We have adopted a Code of Conduct and Ethics applicable to the Company’s officers, directors, employees and
agents, which complies with applicable guidelines issued by the SEC. Our Code of Conduct and Ethics as in effect on the
date hereof, has been filed as an exhibit to this annual report and is also available on our website at
www.scorpiotankers.com. The information on our website is not incorporated by reference into this annual report.

ITEM 16C. PRINCIPAL ACCOUNTING FEES AND SERVICES

A. Audit Fees

Our principal accountant for fiscal years ended December 31, 2020 and 2019 was PricewaterhouseCoopers Audit

and the audit fee for those periods was $689,600 and $855,582, respectively.

During 2020 and 2019, our principal accountant, PricewaterhouseCoopers Audit, or its affiliates, provided
additional services related to the reviews of our published interim financial results and related comfort letters, the May
2020 offering of our Senior Notes due 2025, and the September 2019 Trafigura Transaction. The aggregate fees for these
services were $221,000 and $148,000 for the years ended December 31, 2020 and 2019, respectively.

B. Audit-Related Fees

None

C. Tax Fees

None

D. All Other Fees

None

E. Audit Committee’s Pre-Approval Policies and Procedures

Our Audit Committee pre-approves all audit, audit-related and non-audit services not prohibited by law to be
performed by our independent auditors and associated fees prior to the engagement of the independent auditor with respect
to such services.

F. Audit Work Performed by Other Than Principal Accountant if Greater Than 50%

Not applicable.

ITEM 16D. EXEMPTIONS FROM LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

In May 2015, our Board of Directors authorized a securities repurchase program to purchase up to an aggregate of

$250 million of our securities.

• Between July 1, 2020 and September 7, 2020, we repurchased $52.3 million face value of our Convertible

Notes due 2022 at an average price of $894.12 per $1,000 principal amount, or $46.7 million.

•

139

In September 2020, our Board of Directors authorized a new securities repurchase program to purchase up to an
aggregate of $250 million of our securities, which, in addition to our common shares, currently consist of our Senior Notes
due 2025 (NYSE: SBBA), which were issued in May 2020, Convertible Notes due 2022, which were issued in May and
July 2018, and Convertible Notes due 2025, which were issued in March 2021. The aforementioned repurchases of
common stock and our convertible notes were executed under the previous securities repurchase program, which has since
been terminated. Any future repurchases of our securities will be made under the new $250 million securities repurchase
program. No securities have been repurchased under this program during the year ended December 31, 2020 and through
March 30, 2021.

There were 58,093,147 common shares outstanding as of March 30, 2021.

ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

None.

ITEM 16G. CORPORATE GOVERNANCE

Pursuant to an exception for foreign private issuers, we, as a Marshall Islands company, are not required to
comply with the corporate governance practices followed by U.S. companies under the NYSE listing standards. We believe
that our established practices in the area of corporate governance are in line with the spirit of the NYSE standards and
provide adequate protection to our shareholders. In this respect, we have voluntarily adopted NYSE required practices,
such as (i) having a majority of independent directors, (ii) establishing audit, compensation and nominating committees and
(iii) adopting a Code of Ethics.

There are two significant differences between our corporate governance practices and the practices required by the
NYSE. The NYSE requires that non-management directors meet regularly in executive sessions without management. The
NYSE also requires that all independent directors meet in an executive session at least once a year. Marshall Islands law
and our Bylaws do not require our non-management directors to regularly hold executive sessions without management.
During 2020 and through the date of this annual report, our non-management directors met in executive session three
times. The NYSE requires companies to adopt and disclose corporate governance guidelines. The guidelines must address,
among other things: director qualification standards, director responsibilities, director access to management and
independent advisers, director compensation, director orientation and continuing education, management succession and an
annual performance evaluation. We are not required to adopt such guidelines under Marshall Islands law and we have not
adopted such guidelines.

ITEM 16H. MINE SAFETY DISCLOSURE

Not applicable.

140

PART III

ITEM 17. FINANCIAL STATEMENTS

See “Item 18. Financial Statements.”

ITEM 18. FINANCIAL STATEMENTS

The financial information required by this Item is set forth beginning on page F-1 and is filed as part of this annual

report.

ITEM 19. EXHIBITS

Exhibit
Number
1.1
1.2
1.3
1.4
2.1
2.2
2.3
2.4
2.5
2.6

2.7

2.8

4.1
4.2
4.2(a)
4.3
4.3(a)
4.3(b)
8.1
11.1
11.2
11.3
12.1
12.2
13.1

Description

Amended and Restated Articles of Incorporation of the Company(1)
Amended and Restated Bylaws of the Company(3)
Articles of Amendment to the Amended and Restated Articles of Incorporation of the Company(8)
Articles of Amendment to the Amended and Restated Articles of Incorporation of the Company(12)
Form of Stock Certificate(12)
Form of Senior Debt Securities Indenture(4)
Form of Subordinated Debt Securities Indenture(4)
Base Indenture, dated May 12, 2014, by and between the Company and Deutsche Bank Trust Company(7)
Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act

Indenture, dated May 14, 2018, by and between the Company and Deutsche Bank Trust Company Americas,
as trustee, relating to the Company’s 3.00% Convertible Notes due 2022(11)
Indenture, dated March 25, 2021, by and between the Company and Deutsche Bank Trust Company Americas,
as trustee, relating to the Company’s 3.00% Convertible Notes due 2025

Fourth Supplemental Indenture, dated May 29 2020, by and between the Company and Deutsche Bank Trust

Company Americas, as trustee, relating to the Company’s 7.00% Senior Notes due 2025(13)

2013 Amended and Restated Equity Incentive Plan(6)
Administrative Services Agreement between the Company and Liberty Holding Company Ltd.(2)
Deed of Amendment between the Company, SSH, SCM and SSM dated September 29, 2016(9)
Master Agreement between the Company, SSM and SCM dated January 24, 2013(5)
Amended and Restated Master Agreement between the Company, SSM and SCM dated November 15, 2016(9)
Amended and Restated Master Agreement between the Company, SSM and SCM dated February 21, 2018(10)
Subsidiaries of the Company
Code of Conduct and Ethics(10)
Whistleblower Policy(6)
Whistleblower Policy - Environmental(6)
Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer
Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section

906 of the Sarbanes-Oxley Act of 2002

13.2

Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section

906 of the Sarbanes-Oxley Act of 2002

Consent of Independent Registered Public Accounting Firm
Consent of Drewry Shipping Consultants, Ltd.
Consent of Seward & Kissel LLP

15.1
15.2
15.3
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema
101.CAL XBRL Taxonomy Extension Schema Calculation Linkbase
101.DEF XBRL Taxonomy Extension Schema Definition Linkbase
101.LAB XBRL Taxonomy Extension Schema Label Linkbase
101.PRE XBRL Taxonomy Extension Schema Presentation Linkbase

(1) Filed as an Exhibit to the Company’s Amended Registration Statement on Form F-1/A (Amendment No. 1) (File No.

333-164940) on March 10, 2010, and incorporated by reference herein.

141

(2) Filed as an Exhibit to the Company’s Amended Registration Statement on Form F-1/A (Amendment No. 2) (File No.

333-164940) on March 18, 2010, and incorporated by reference herein.

(3) Filed as an Exhibit to the Company’s Annual Report filed on Form 20-F on June 29, 2010, and incorporated by

reference herein.

(4) Filed as an Exhibit to the Company’s Registration Statement on Form F-3 (File No. 333-173929) on May 4, 2011, and

incorporated by reference herein.

(5) Filed as an Exhibit to the Company’s Annual Report on Form 20-F on March 29, 2013, and incorporated by reference

herein.

(6) Filed as an Exhibit to the Company’s Annual Report on Form 20-F on March 31, 2014, and incorporated by reference

herein.

(7) Filed as an Exhibit to the Company’s Report on Form 6-K on May 13, 2014, and incorporated by reference herein.

(8) Filed as an Exhibit to the Company’s Annual Report on Form 20-F on March 31, 2015, and incorporated by reference

herein.

(9) Filed as an Exhibit to the Company’s Annual Report on Form 20-F on March 16, 2017, and incorporated by reference

herein.

(10) Filed as an Exhibit to the Company’s Annual Report on Form 20-F on March 23, 2018, and incorporated by reference

herein.

(11) Filed as an Exhibit to the Company’s Report on Form 6-K on May 16, 2018, and incorporated by reference herein.

(12) Filed as an Exhibit to the Company’s Report on Form 6-K on January 18, 2019, and incorporated by reference herein.

(13) Filed as an Exhibit to the Company’s Report on Form 6-K on May 29, 2020, and incorporated by reference herein.

142

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and has duly caused and
authorized the undersigned to sign this annual report on its behalf.

Dated: March 31, 2021

Scorpio Tankers Inc.
(Registrant)

/s/ Emanuele Lauro

Emanuele Lauro
Chief Executive Officer

143

SCORPIO TANKERS INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm .........................................................................................
Consolidated Balance Sheets as of December 31, 2020 and December 31, 2019 ........................................................
Consolidated Statements of Income or Loss for the years ended December 31, 2020, 2019 and 2018 ........................
Consolidated Statements of Changes in Shareholders’ Equity for the years ended

Page
F-2
F-4
F-5

December 31, 2020, 2019 and 2018 ..........................................................................................................................
Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018 ..............................
Notes to Consolidated Financial Statements .................................................................................................................

F-6
F-7
F-9

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Scorpio Tankers Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Scorpio Tankers Inc. and its subsidiaries (the
“Company”) as of December 31, 2020 and 2019, and the related consolidated statements of operations, of changes in
shareholders’ equity and of cash flows for each of the three years in the period ended December 31, 2020, including the
related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s
internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control -
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2020 in conformity with International Financial Reporting Standards as
issued by the International Accounting Standards Board. Also in our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in
Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for
leases in 2019.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting,
included in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 15B. Our
responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal
control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained
in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial
statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our
opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and
procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and

F-2

that receipts and expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or
disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging,
subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the
consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below,
providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Impairment Assessment – Vessels (including Right of Use Assets for Vessels)

As described in Notes 5 and 6 to the consolidated financial statements, as of December 31, 2020 the carrying value of
Vessels and drydock was approximately $4.0 billion and the carrying value of Right of use assets for vessels was
approximately $0.8 billion. As of December 31, 2020, the Company’s operating fleet consisted of 135 vessels, which are
either owned or leased (finance or operating). As further described in Notes 1 and 7, management evaluates the carrying
values of its vessels and drydock, and right of use assets for vessels (collectively, the “vessels”) to determine whether there
is any indication that those values have suffered an impairment loss. If any such indication exists, management conducts an
impairment test (on an individual vessel basis) by comparing the carrying value of each vessel to the higher of its (i) fair
value less selling costs and (ii) value in use. Management determines fair value less selling costs by considering
independent broker valuations. In estimating value in use, management estimates each vessel’s future cash flows, which are
discounted to their present value. The discounted cash flow analysis requires management to develop estimates and
assumptions related to forecasted vessel revenue, vessel operating expenses, drydock costs, utilization rate, remaining
useful lives, residual values and discount rate.

The principal considerations for our determination that performing procedures relating to impairment assessment – vessels
(including right of use assets for vessels) is a critical audit matter are the significant judgments by management when
developing the value in use using the discounted cash flow technique. This in turn led to a high degree of auditor judgment,
subjectivity, and effort in performing procedures and evaluating audit evidence obtained related to each vessel’s future cash
flows and significant assumptions. In addition, the audit effort involved the use of professionals with specialized skill and
knowledge to assist in performing these procedures and evaluating the audit evidence obtained.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our
overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls
relating to management’s vessel impairment assessments. These procedures also included, among others, testing
management’s process for developing the fair value estimates; evaluating the appropriateness of the value in use model
used by management; testing the completeness and accuracy of underlying data used in the model; and evaluating the
reasonableness of significant assumptions related to future cash flows and discount rate. Evaluating the reasonableness of
management’s assumptions related to future cash flows and discount rate involved evaluating whether the assumptions
used were reasonable considering (i) the current and past performance of the vessels, (ii) the consistency with external
market and industry data and (iii) whether these assumptions were consistent with evidence obtained in other areas of the
audit. Professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of the value
in use model and evaluating the reasonableness of the discount rate assumption.

/s/ PricewaterhouseCoopers Audit

Neuilly-sur-Seine, France
March 31, 2021

We have served as the Company’s auditor since 2013.

F-3

Scorpio Tankers Inc. and Subsidiaries

Consolidated Balance Sheets
December 31, 2020 and 2019

In thousands of U.S. dollars
Assets
Current assets
Cash and cash equivalents .......................................................................
Accounts receivable .................................................................................
Prepaid expenses and other current assets ...............................................
Inventories ...............................................................................................
Total current assets ................................................................................
Non-current assets
Vessels and drydock ................................................................................
Right of use assets for vessels ..................................................................
Other assets ..............................................................................................
Goodwill ..................................................................................................
Restricted cash .........................................................................................
Total non-current assets ........................................................................
Total assets .............................................................................................
Current liabilities
Current portion of long-term bank debt ...................................................
Sale and leaseback liability ......................................................................
IFRS 16 - lease liability ...........................................................................
Accounts payable .....................................................................................
Accrued expenses ....................................................................................
Total current liabilities ..........................................................................
Non-current liabilities
Long-term bank debt and bonds ..............................................................
Sale and leaseback liability ......................................................................
IFRS 16 - lease liability ...........................................................................
Total non-current liabilities ..................................................................
Total liabilities ........................................................................................
Shareholders’ equity
Issued, authorized and fully paid-in share capital:
Common stock, $0.01 par value per share; 150,000,000 and

150,000,000 shares authorized; 58,093,147 and 58,202,400
outstanding shares as of December 31, 2020 and December 31,
2019, respectively. ................................................................................
Additional paid-in capital ........................................................................
Treasury shares ........................................................................................
Accumulated deficit .................................................................................
Total shareholders’ equity ....................................................................
Total liabilities and shareholders’ equity.............................................

As of

Notes

December 31,
2020

December 31,
2019

2
4
3

5
6
8
7
9

12
12
6
10
11

12
12
6

14
14
14
14

187,511
33,017
12,430
9,261
242,219

4,002,888
807,179
92,145
8,900
5,293
4,916,405
5,158,624

172,705
131,736
56,678
12,863
32,193
406,175

971,172
1,139,713
575,796
2,686,681
3,092,856

202,303
78,174
13,855
8,646
302,978

4,008,158
697,903
131,139
11,539
12,293
4,861,032
5,164,010

235,482
122,229
63,946
23,122
41,452
486,231

999,268
1,195,494
506,028
2,700,790
3,187,021

656
2,850,206
(480,172)
(304,922)
2,065,768
5,158,624

646
2,842,446
(467,057)
(399,046)
1,976,989
5,164,010

The accompanying notes are an integral part of these consolidated financial statements.

F-4

Scorpio Tankers Inc. and Subsidiaries

Consolidated Statements of Operations
For the years ended December 31, 2020, 2019 and 2018

In thousands of U.S. dollars except per share and share data
Revenue

Notes

For the year ended December 31,
2018
2019

2020

Vessel revenue ........................................................................

915,892 $

704,325 $

585,047

Operating expenses

Vessel operating costs ............................................................
Voyage expenses ....................................................................
Charterhire ..............................................................................
Depreciation - owned or sale and leaseback vessels ..............
Depreciation - right of use assets for vessels ..........................
Impairment of vessels .............................................................
Impairment of goodwill ..........................................................
General and administrative expenses .....................................
Merger transaction related costs .............................................
Total operating expenses ........................................................
Operating income / (loss) .........................................................
Other (expense) and income, net

Financial expenses ..................................................................
Gain / (loss) on repurchase/exchange of convertible notes ....
Financial income ....................................................................
Other income and (expenses), net ..........................................
Total other expense, net ..........................................................
Net income / (loss) ....................................................................
Attributable to:

5
5
7
7
18

19
12

(333,748)
(7,959)
—

(194,268)
(51,550)
(14,207)
(2,639)
(66,187)

—

(670,558)
245,334

(294,531)
(6,160)
(4,399)
(180,052)
(26,916)

—
—

(62,295)

—

(574,353)
129,972

(154,971)
1,013
1,249
1,499
(151,210)
94,124 $

(186,235)

—
8,182
(409)
(178,462)
(48,490) $

(280,460 )
(5,146 )
(59,632 )
(176,723 )
—
—
—
(52,272 )
(272 )
(574,505 )
10,542

(186,628 )
(17,838 )
4,458
(605 )
(200,613 )
(190,071 )

Equity holders of the parent ................................................

94,124 $

(48,490) $

(190,071 )

Earnings / (Loss) per share

Basic ...................................................................................
Diluted ................................................................................
Basic weighted average shares outstanding ........................
Diluted weighted average shares outstanding .....................

21
21
21
21

$
$

1.72 $
1.67 $

54,665,898
56,392,311

49,857,998
49,857,998

(0.97) $
(0.97) $

(5.46 )
(5.46 )
34,824,311
34,824,311

There are no items of other comprehensive income or loss

The accompanying notes are an integral part of these consolidated financial statements.

F-5

Scorpio Tankers Inc. and Subsidiaries

Consolidated Statements of Changes in Shareholders’ Equity
For the years ended December 31, 2020, 2019 and 2018

In thousands of U.S. dollars except share data
Balance as of January 1, 2018 ...............................................
Adoption of accounting standards (IFRS 15) .......................
Net loss for the period ...........................................................
Net proceeds from follow-on offerings of common stock ....
Issuance of restricted stock, net of forfeitures ......................
Amortization of restricted stock, net of forfeitures ...............
Dividends paid, $0.40 per share (1) ........................................
Purchase of treasury shares ...................................................
Equity component of issuance of Convertible Notes due

2022 (see Note 12) ............................................................
Balance as of December 31, 2018 .......................................

Adoption of accounting standards (IFRS 16) .......................
Net loss for the period ...........................................................
Reverse stock split - impact of fractional shares and

change in total par value ...................................................
Issuance of restricted stock, net of forfeitures ......................
Amortization of restricted stock, net of forfeitures ...............
Net proceeds from private placement of common stock ......
Shares issued as consideration for the Trafigura

Transaction ........................................................................
Dividends paid, $0.40 per share (1) ........................................
Purchase of treasury shares ...................................................
Equity issuance costs .............................................................
Balance as of December 31, 2019 .......................................

Net income for the period......................................................
Issuance of restricted stock, net of forfeitures ......................
Amortization of restricted stock, net of forfeitures ...............
Dividends paid, $0.40 per share (1) ........................................
Net proceeds from issuance of common shares

pursuant to at the market program ....................................
Purchase of treasury shares ...................................................
Equity issuance costs .............................................................
Balance as of December 31, 2020 .......................................

Number of
shares
outstanding(2)
$ 32,650,755 $ 3,766 $ 2,283,591 $ (443,816) $

Additional
paid-in
capital

Treasury
shares

Share
capital

Accumulated
deficit

Total

—
—
18,216,216
1,881,826
—
—
(1,351,235)

—
—
1,822
188
—
—
—

—
—
317,810

(188)

25,547
(15,127)

—

—
—
—
—
—
—
(23,240)

(158,240) $ 1,685,301
4
(190,071)
319,632
—
25,547
(15,127)
(23,240)

4
(190,071)
—
—
—
—
—

—

36,966

—

51,397,562 $ 5,776 $ 2,648,599 $ (467,056) $

—

36,966
(348,307) $ 1,839,012

—
—

(5,198 )

5,196

5
—
17

(5)

27,421
49,983

—
—

—
—
—
—

132,568
(21,278)

46
—
—
—
—
(38)
646 $ 2,842,446 $ (467,057) $

—
—
(1)
—

(62)
507,920
—
1,724,137

4,572,873
—
(30)
—

58,202,400 $

—
923,680
—
—

—
9
—
—

—
(9)

28,506
(23,302)

—
—
—
—

137,067
(1,170,000)
—

58,093,147 $

2,574
—
(9)
656 $ 2,850,206 $ (480,172) $

—
(13,115)
—

(2,249)
(48,490)

—
—
—
—

(2)
—
27,421
50,000

—
—
—
—

132,614
(21,278)
(1)
(38)
(399,046) $ 1,976,989

94,124
—
—
—

94,124
—
28,506
(23,302)

—
—
—

2,575
(13,115)
(9)
(304,922) $ 2,065,768

(1) The Company’s policy is to distribute dividends from available retained earnings first and then from additional paid in capital.

The accompanying notes are an integral part of these consolidated financial statements.

F-6

Scorpio Tankers Inc. and Subsidiaries

Consolidated Statements of Cash Flows
For the years ended December 31, 2020, 2019 and 2018

In thousands of U.S. dollars
Operating activities
Net income / (loss) ......................................................................
Depreciation - owned or sale and leaseback vessels ...................
Depreciation - right of use assets ................................................
Amortization of restricted stock..................................................
Impairment of goodwill and vessels ...........................................
Amortization of deferred financing fees .....................................
Write-off of deferred financing fees and unamortized discounts
on sale and leaseback facilities ................................................
Accretion of Convertible Notes ..................................................
Accretion of fair value measurement on debt assumed in

business combinations .............................................................
(Gain) / Loss on repurchase / exchange of Convertible Notes ....

Changes in assets and liabilities:
(Increase) / decrease in inventories .............................................
Decrease / (increase) in accounts receivable ...............................
Decrease in prepaid expenses and other current assets ...............
Increase in other assets ...............................................................
(Decrease) / increase in accounts payable ...................................
(Decrease) / increase in accrued expenses ..................................

Net cash inflow from operating activities ...............................
Investing activities
Acquisition of vessels and payments for vessels under

construction .............................................................................

Drydock, scrubber, ballast water treatment system and other

vessel related payments (owned, finance leased and
bareboat-in vessels) .................................................................
Net cash outflow from investing activities ..............................
Financing activities
Debt repayments .........................................................................
Issuance of debt ..........................................................................
Debt issuance costs .....................................................................
Refund of debt issuance costs due to early debt repayment ........
Principal repayments on IFRS 16 lease liabilities.......................
Decrease / (increase) in restricted cash .......................................
Repurchase / repayment of Convertible Notes ...........................
Gross proceeds from issuance of common stock ........................
Equity issuance costs ..................................................................
Dividends paid ............................................................................
Repurchase of common stock .....................................................
Net cash (outflow) / inflow from financing activities .............
(Decrease) / increase in cash and cash equivalents ................
Cash and cash equivalents at January 1, .....................................
Cash and cash equivalents at December 31, ...........................
Supplemental information:
Interest paid (which includes $1.4 million, $2.8 million and
$0.2 million of interest capitalized during the years ended
December 31, 2020, 2019 and 2018, respectively) .................

F-7

Notes

For the year ended December 31,
2018
2019
2020

5
5
14
7
12

12
12

94,124
194,268
51,550
28,506
16,846
6,657

2,025
8,413

3,422
(1,013)
404,798

(615)
19,957
1,424
856
(5,094)
(1,945)
14,583
419,381

(48,490) $ (190,071 )
176,723
180,052
—
26,916
25,547
27,421
—
—
10,541
7,041

1,466
11,375

3,615
—
209,396

(346)
(8,458)
1,816
(7,177)
4,019
10,262
116
209,512

13,212
13,225

3,779
17,838
70,794

1,535
(4,298 )
2,227
(1,226 )
(1,382 )
(9,860 )
(13,004 )
57,790

—

(2,998)

(26,057 )

(174,477)
(174,477)

(203,975)
(206,973)

(26,680 )
(52,737 )

(800,072)
705,390
(13,523)
—
(77,913)
7,001
(46,737)
2,601
(26)
(23,302)
(13,115)
(259,696)
(14,792)
202,303
$ 187,511

(343,351)
108,589
(5,744)
—
(36,761)
(9)
(145,000)
50,000
(333)
(21,278)
(1)
(393,888)
(391,349)
593,652
$ 202,303

(865,594 )
1,007,298
(23,056 )
2,826
—
(897 )
—
337,000
(17,073 )
(15,127 )
(23,240 )
402,137
407,190
186,462
$ 593,652

$ 132,329

$ 182,707

$ 155,304

Additionally, we completed the following non-cash transactions during the years ended December 31, 2020, 2019 and
2018:

•

September 2019 acquisition of leasehold interests in 19 vessels from Trafigura Maritime Logistics Pte. Ltd.
(“Trafigura”) in exchange for $803 million and the assumption of $670.0 million of obligations under the bareboat
charter agreements (of which, $531.5 million was recorded in September 2019 and the remaining obligations of
$138.8 million were recorded in 2020 upon the delivery of four of the vessels from the shipyard). This transaction
is described in Note 6.

• Throughout 2020, we took delivery of four MRs as part of the Trafigura Transaction (defined below), which
included the assumption of obligations under bareboat charter-in agreements of $138.8 million (whose obligations
are recorded as part of the Company’s $670.0 Million Lease Financing). This transaction is described in Note 5.

• May and July 2018 exchange of an aggregate of $203.5 million in aggregate principal amount of our Convertible
Notes due 2019 for an aggregate of $203.5 million in aggregate principal amount of our newly issued Convertible
Notes due 2022. This transaction is described in Note 12.

• The 2019 recognition of a $24.2 million right of use assets and a corresponding $24.2 million lease liabilities (the
obligations under these agreements are described as “IFRS 16 - Leases - seven Handymax”) at the commencement
date of seven bareboat charter-in agreements.

• The 2020 modifications of certain leases under the IFRS 16 - 7 Handymax lease arrangement resulting in the

increase of the lease liability relating to these vessels of $1.6 million.

• As described in Note 4, due to a change in the terms of the agreement with the Scorpio MR Pool, approximately
$23.6 million of accounts receivable were reclassified to non-current other assets on our consolidated balance
sheet.

These transactions represent the significant non-cash transactions incurred during the years ended December 31, 2020,
2019 and 2018.

The accompanying notes are an integral part of these consolidated financial statements.

F-8

Notes to the consolidated financial statements

1. General information and significant accounting policies

Company

Scorpio Tankers Inc. and its subsidiaries (together “we”, “our” or the “Company”) are engaged in the seaborne
transportation of refined petroleum products in the international shipping markets. Scorpio Tankers Inc. was incorporated
in the Republic of the Marshall Islands on July 1, 2009. On April 6, 2010, we closed on our initial public offering, and our
common stock currently trades on the New York Stock Exchange under the symbol “STNG.”

Our fleet, as of December 31, 2020, consisted of 135 owned, finance leased or bareboat chartered-in product

tankers (18 Handymax, 63 MR, 12 LR1 and 42 LR2).

Our vessels are commercially managed by Scorpio Commercial Management S.A.M., or SCM, which is majority
owned by the Lolli-Ghetti family of which Mr. Emanuele Lauro, our Chairman and Chief Executive Officer, and Mr.
Filippo Lauro, our Vice President, are members. SCM’s services include securing employment for our vessels in pools, in
the spot market, and on time charters.

Our vessels are technically managed by Scorpio Ship Management S.A.M., or SSM, which is majority owned by
the Lolli-Ghetti family. SSM facilitates vessel support such as crew, provisions, deck and engine stores, insurance,
maintenance and repairs, and other services necessary to operate the vessels such as drydocks and vetting/inspection under
a technical management agreement.

We also have an administrative services agreement with Scorpio Services Holding Limited, or SSH, which is
majority owned by the Lolli-Ghetti family. The administrative services provided under this agreement primarily include
accounting, legal compliance, financial, information technology services, and the provision of administrative staff and
office space, which are contracted to subsidiaries of SSH. We pay our managers fees for these services and reimburse them
for direct or indirect expenses that they incur in providing these services.

Basis of accounting

The consolidated financial statements incorporate the financial statements of Scorpio Tankers Inc. and its
subsidiaries. The consolidated financial statements have been presented in United States dollars, or USD or $, which is the
functional currency of Scorpio Tankers Inc. and all its subsidiaries, and have been authorized for issue by the Board of
Directors on March 30, 2021. The consolidated financial statements have been prepared in accordance with International
Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board.

All inter-company transactions, balances, income and expenses were eliminated on consolidation.

Going concern

The financial statements have been prepared in accordance with the going concern basis of accounting as

described further in the “Liquidity risk” section of Note 22.

Significant Accounting Policies

The following is a discussion of our significant accounting policies that were in effect during the years ended

December 31, 2020, 2019 and 2018.

Leases - IFRS 16

IFRS 16, Leases, was issued by the International Accounting Standards Board on January 13, 2016. IFRS 16
applies to an entity’s first annual IFRS financial statements for a period beginning on or after January 1, 2019. IFRS 16
amends the definition of what constitutes a lease to be a contract that conveys the right to control the use of an identified
asset if the lessee has both (i) the right to obtain substantially all of the economic benefits from the use of the identified
asset, and (ii) the right to direct the use of the identified asset throughout the period of use. We have determined that our
existing pool and time charter-out arrangements meet the definition of leases under IFRS 16, with the Company as lessor,
on the basis that the pool or charterer manages the vessels in order to enter into transportation contracts with their
customers, and thereby enjoys the economic benefits derived from such arrangements. Furthermore, the pool or charterer
can direct the use of a vessel (subject to certain limitations in the pool or charter agreement) throughout the period of use.

F-9

Moreover, under IFRS 16, we are also required to identify the lease and non-lease components of revenue and
account for each component in accordance with the applicable accounting standard. In time charter-out or pool
arrangements, we have determined that the lease component is the vessel and the non-lease component is the technical
management services provided to operate the vessel. These components are accounted for as follows:

• All fixed lease revenue earned under these time charter-out arrangements is recognized on a straight-line basis

over the term of the lease.

• Lease revenue earned under our pool arrangements is recognized as it is earned, since it is 100% variable.

• The non-lease component is accounted for as services revenue under IFRS 15 - Revenue from Contracts with
Customers. This revenue will be recognized “over time” as the customer (i.e. the pool or the charterer) is
simultaneously receiving and consuming the benefits of the service.

The application of the above principles did not result in a material difference to the amount of revenue recognized

under previous accounting policies for pool and time-out charter arrangements.

IFRS 16 - Leases also amends the existing accounting standards to require lessees to recognize, on a discounted
basis, the rights and obligations created by the commitment to lease assets on the balance sheet, unless the term of the lease
is 12 months or less. Upon transition, a lessee shall apply IFRS 16- Leases to its leases either retrospectively to each prior
reporting period presented (the ‘full retrospective approach’) or retrospectively with the cumulative effect of initially
applying IFRS 16 - Leases recognized at the date of initial application (the ‘modified retrospective approach’). We applied
the modified retrospective approach upon transition, which resulted in the recognition of right-of-use assets and
corresponding liabilities, on the basis of the discounted remaining future minimum lease payments, relating to the existing
bareboat chartered-in vessel commitments for three bareboat chartered-in vessels, which are scheduled to expire in April
2025. The impact of the application of this standard on the opening balance sheet as of January 1, 2019 was the recognition
of a $48.5 million right of use asset, a $50.7 million operating lease liability and a $2.2 million reduction in retained
earnings relating to these three vessels.

We have elected certain practical expedients available under IFRS 16 - Leases, specifically as they relate to (i) the
reassessment of whether a contract is, or contains, a lease at the date of initial application, and (ii) leases whose terms end
within 12 months of the date of initial application.

Revenue recognition

IFRS 15, Revenue from Contracts with Customers, was issued by the International Accounting Standards Board
on May 28, 2014. IFRS 15 amended the existing accounting standards for revenue recognition and is based on principles
that govern the recognition of revenue at an amount an entity expects to be entitled when products or services are
transferred to customers. IFRS 15 applied to an entity’s first annual IFRS financial statements for a period beginning on or
after January 1, 2018.

Revenue earned by our vessels is comprised of pool revenue, time charter revenue and voyage revenue.

(1) Pool revenue for each vessel is determined in accordance with the profit sharing terms specified within each
pool agreement. In particular, the pool manager aggregates the revenues and expenses of all of the pool
participants and distributes the net earnings to participants based on:

•

the pool points attributed to each vessel (which are determined by vessel attributes such as cargo carrying
capacity, fuel consumption, and construction characteristics); and

the number of days the vessel participated in the pool in the period.

(3) Voyage charter agreements are charter hires, where a contract is made in the spot market for the use of a

vessel for a specific voyage for a specified charter rate.

Of these revenue streams, revenue generated in the spot market from voyage charter agreements is within the
scope of IFRS 15. Revenue generated from pools and time charters is accounted for as revenue earned under operating
leases. Accordingly, the implementation of IFRS 15 did not have an effect on the revenue recognized from the pools or
time charters however these arrangements were impacted by IFRS 16 - Leases, which is effective for annual periods
beginning on or after January 1, 2019 and is discussed further above.

F-10

The accounting for our different revenue streams is as follows:

Spot market revenue

For vessels operating in the spot market, we recognize revenue ‘over time’ as the customer (i.e. the charterer) is
simultaneously receiving and consuming the benefits of the vessel. Under IFRS 15, the performance obligation has been
identified as the transportation of cargo from one point to another. Therefore, in a spot market voyage under IFRS 15,
revenue is recognized on a pro-rata basis commencing on the date that the cargo is loaded and concluding on the date of
discharge.

Pool revenue

We recognize pool revenue based on quarterly reports from the pools which identifies the number of days the
vessel participated in the pool, the total pool points for the period, the total pool revenue for the period, and the calculated
share of pool revenue for the vessel.

Time charter revenue

Time charter revenue is recognized as services are performed based on the daily rates specified in the time charter

contract.

Voyage expenses

Voyage expenses primarily include bunkers, port charges, canal tolls, cargo handling operations and brokerage
commissions paid by us under voyage charters. Under IFRS 15, voyage costs incurred in the fulfillment of a voyage charter
are deferred and amortized over the course of the charter commencing on the date that the cargo is loaded and concluding
on the date of discharge. Voyage costs are only deferred if they (i) relate directly to such charter, (ii) generate or enhance
resources to be used in meeting obligations under the charter, and (iii) are expected to be recovered.

Vessel operating costs

Vessel operating costs, which include crewing, repairs and maintenance, insurance, stores, lubricating oil
consumption, communication expenses, and technical management fees, are expensed as incurred for vessels that are
owned, finance leased or bareboat chartered-in.

Earnings / (Loss) per share

Basic earnings / (loss) per share is calculated by dividing net income / (loss) attributable to equity holders of the
parent by the weighted average number of common shares outstanding. Diluted earnings / (loss) per share is calculated by
adjusting the net income / (loss) attributable to equity holders of the parent and the weighted average number of common
shares used for calculating basic income / (loss) per share for the effects of all potentially dilutive shares. Such dilutive
common shares are excluded when the effect would be to increase earnings per share or reduce a loss per share.

In the years ended December 31, 2020, 2019 and 2018, there were potentially dilutive items as a result of our (i)
2013 Equity Incentive Plan (see Note 14), (ii) our convertible senior notes due 2019, or Convertible Notes due 2019, and
(iii) our convertible senior notes due 2022, or Convertible Notes due 2022, (as described in Note 12).

We apply the if-converted method when determining diluted earnings / (loss) per share. This requires the
assumption that all potential ordinary shares with respect to our Convertible Notes due 2019 and Convertible Notes due
2022 have been converted into ordinary shares at the beginning of the period or, if not in existence at the beginning of the
period, the date of the issue of the financial instrument or the granting of the rights by which they are granted. Under this
method, once potential ordinary shares are converted into ordinary shares during the period, the dividends, interest and
other expense associated with those potential ordinary shares will no longer be incurred. The effect of conversion,
therefore, is to increase income (or reduce losses) attributable to ordinary equity holders as well as the number of shares in
issue. Conversion will not be assumed for purposes of computing diluted earnings per share if the effect would be anti-
dilutive.

The impact of potentially dilutive items on the calculations of earnings / (loss) per share are set forth in Note 21.

F-11

Charterhire expense

In a time or bareboat charter-in arrangement, we pay to lease a vessel for a fixed period of time at rates that are
generally fixed, but may contain a variable component based on inflation, interest rates, profit sharing or current market
rates. In a time charter-in arrangement, the vessel’s owner is responsible for crewing and other vessel operating costs,
whereas these costs are the responsibility of the charterer in a bareboat charter-in arrangement. Prior to the adoption of
IFRS 16, the costs associated with these arrangements were recorded as charterhire expense.

As of December 31, 2020, we had 26 bareboat chartered-in vessels which are being accounted for under IFRS 16,
Leases as right of use assets and related lease liabilities. Under IFRS 16, there is no charterhire expense for these vessels as
the right of use assets are depreciated on a straight-line basis (through depreciation expense) over the lease term, and the
lease liability is amortized over that same period (with a portion of each payment allocated to principal and a portion
allocated to interest expense). We recorded charterhire expense during the year ended December 31, 2019 for certain
vessels that were bareboat chartered-in for terms that were less than 12 months upon the date of transition to IFRS 16.

Prior to the application of IFRS 16, costs in respect of operating leases were charged to the consolidated statement
of income or loss on a straight-line basis over the lease term. IFRS 16, Leases, required the recognition of right-of-use
assets and corresponding liabilities for all leases, unless the underlying asset is of low value and / or the lease term is less
than 12 months.

Foreign currencies

The individual financial statements of Scorpio Tankers Inc. and each of its subsidiaries are presented in the
currency of the primary economic environment in which we operate (its functional currency), which in all cases is U.S.
dollars. For the purpose of the consolidated financial statements, our results and financial position are also expressed in
U.S. dollars.

In preparing the financial statements of Scorpio Tankers Inc. and each of its subsidiaries, transactions in
currencies other than the U.S. dollar are recorded at the rate of exchange prevailing on the dates of the transactions. At the
end of each reporting period, monetary assets and liabilities denominated in other currencies are translated into the
functional currency at rates ruling at that date. All resultant exchange differences have been recognized in the consolidated
statements of income or loss. The amounts charged to the consolidated statements of income or loss during the years ended
December 31, 2020, 2019 and 2018 were not significant.

Segment reporting

During the years ended December 31, 2020, 2019 and 2018, we owned, lease financed or chartered-in vessels
spanning four different vessel classes, Handymax, MR, LR1 and LR2, all of which earn revenues in the seaborne
transportation of refined petroleum products in the international shipping markets. Each vessel within these segments also
exhibits similar long-term financial performance and similar economic characteristics to the other vessels within the
respective vessel class, thereby meeting the aggregation criteria in IFRS. We have therefore chosen to present our segment
information by vessel class using the aggregated information from the individual vessels.

Segment results are evaluated based on reported net income or loss from each segment. The accounting policies

applied to the reportable segments are the same as those used in the preparation of our consolidated financial statements.

It is not practical to report revenue or non-current assets on a geographical basis due to the global nature of the

shipping market.

Vessels and drydock

Our fleet is measured at cost, which includes the cost of work undertaken to enhance the capabilities of the

vessels, less accumulated depreciation and impairment losses.

Depreciation is calculated on a straight-line basis to the estimated residual value over the anticipated useful life of
the vessel from the date of delivery. We estimate the useful lives of our vessels to be 25 years. Vessels under construction
are not depreciated until such time as they are ready for use. The residual value is estimated as the lightweight tonnage of
each vessel multiplied by scrap value per ton. The scrap value per ton is estimated taking into consideration the historical
four-year average scrap market rates available at the balance sheet date with changes accounted for in the period of change
and in future periods.

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The vessels are required to undergo planned drydocks for replacement of certain components, major repairs and
maintenance of other components, which cannot be carried out while the vessels are operating, approximately every 30
months or 60 months depending on the nature of work and external requirements. These drydock costs are capitalized and
depreciated on a straight-line basis over the estimated period until the next drydock. In deferred drydocking, we only
include direct costs that are incurred as part of the drydocking to meet regulatory requirements, or are expenditures that add
economic life to the vessel, increase the vessel’s earnings capacity or improve the vessel’s efficiency. Direct costs include
shipyard costs as well as the costs of placing the vessel in the shipyard. Expenditures for normal maintenance and repairs,
whether incurred as part of the drydocking or not, are expensed as incurred.

For an acquired or newly built vessel, a notional drydock component is allocated from the vessel’s cost. The
notional drydock cost is estimated by us, based on the expected costs related to the next drydock, which is based on
experience and past history of similar vessels, and carried separately from the cost of the vessel. Subsequent drydocks are
recorded at actual cost incurred. The drydock component is depreciated on a straight-line basis to the next estimated
drydock. The estimated amortization period for a drydock is based on the estimated period between drydocks. When the
drydock expenditure is incurred prior to the expiry of the period, the remaining balance is expensed.

During the years ended December 31, 2020 and 2019, we made investments in exhaust gas cleaning systems, or
scrubbers, and ballast water treatment systems, or BWTS. The costs of these systems will primarily be depreciated over the
estimated remaining useful life of each vessel, which is our estimate of the useful life of this equipment based on
experience with such systems. Additionally, for a newly installed scrubber, a notional component is allocated from the
scrubber’s cost. The notional scrubber cost is estimated by us, based on the expected related costs that we will incur for this
equipment at the next scheduled drydock date and relates to the replacement of certain components and maintenance of
other components. This notional scrubber cost is carried separately from the cost of the scrubber. Subsequent costs will be
recorded at actual cost incurred. The notional component of the scrubber is depreciated on a straight-line basis to the next
estimated drydock date.

Asset acquisitions

In October 2018, the International Accounting Standards Board (“IASB”) issued amendments to the definition of
a business in IFRS 3 - Business Combinations. The amendments are intended to assist entities to determine whether a
transaction should be accounted for as a business combination or as an asset acquisition. The amendments to IFRS 3 are
effective for annual reporting periods beginning on or after January 1, 2020 and apply prospectively, however earlier
application was permitted.

As part of these amendments, the IASB introduced an optional fair value concentration test. The purpose of this
test is to permit a simplified assessment of whether an acquired set of activities and assets is a business or an asset. Entities
may elect whether or not to apply the concentration test on a transaction-by-transaction basis. The concentration test is met
if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of
similar identifiable assets. The test is based on gross assets, not net assets, as the IASB concluded that whether a set of
activities and assets includes a substantive process does not depend on how the set is financed. In addition, certain assets
are excluded from the gross assets considered in the test. If the test is met, the set of activities and assets is determined not
to be a business and no further assessment is needed. If the test is not met, or if an entity elects not to apply the test, a
detailed assessment must be performed applying the original requirements in IFRS 3.

We early adopted these amendments to IFRS 3 in 2019, and applied them to our September 2019 transaction to
acquire the leasehold interests in 19 product tankers from Trafigura Maritime Logistics Pte. Ltd. (“Trafigura”). We refer to
this transaction as the “Trafigura Transaction”.

We have accounted for the Trafigura Transaction as an asset acquisition under the amended guidance set forth
under IFRS 3, Business Combinations as substantially all of the fair value of the gross assets acquired was concentrated in
a group of similar identifiable assets.

Moreover, the leasehold interests acquired as part of the Trafigura Transaction qualified as leases under IFRS 16.

This transaction is further described in Note 6.

Impairment of goodwill

Goodwill arising from our 2017 acquisition of Navig8 Product Tankers Inc. has been allocated to the cash
generating units within each of the respective reportable segments that are expected to benefit from the synergies of the

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Merger (LR2s and LR1s). Goodwill is not amortized and is tested annually (or more frequently, if impairment indicators
arise) by comparing the aggregate carrying amount of the cash generating units within the reportable segment, plus the
allocated goodwill, to their recoverable amounts.

The recoverable amount of goodwill is measured by the value in use of the cash generating units within the
reportable segment. In assessing value in use, the estimated future cash flows of the reportable segment are discounted to
their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the reportable segment for which the estimates of future cash flows have not been adjusted.

If the recoverable amount is determined to be less than the aggregate carrying amount of the assets in each
respective operating segment, plus goodwill, then goodwill is reduced to the lower of the recoverable amount or zero. An
impairment loss is recognized as an expense immediately. This test was performed in connection with the assessment of the
carrying amount of our vessels and related drydock costs and, as further described in Note 7, resulted in an impairment
charge to the goodwill that was previously allocated to the LR1 segment of $2.6 million at December 31, 2020.

Impairment of vessels and drydock, vessels under construction and right of use assets for vessels

At each balance sheet date, we review the carrying amount of our vessels and drydock, vessels under construction
and right of use assets for vessels to determine whether there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable amount of the vessels and drydock, vessels under
construction and right of use assets for vessels is estimated in order to determine the extent of the impairment loss (if any).
We treat each vessel and the related drydock as a cash generating unit.

Recoverable amount is the higher of the fair value less cost to sell (determined by taking into consideration two
independent broker valuations) and value in use. In assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of the cash generating unit is estimated to be less than its carrying amount, the carrying
amount of the cash-generating unit is reduced to its recoverable amount. An impairment loss is recognized as an expense
immediately. As described in Note 7, our impairment testing at December 31, 2020 resulted in an aggregate impairment
charge of $14.2 million as the recoverable amounts of 13 of the MRs in our fleet were less than their carrying amounts.

Where an impairment loss subsequently reverses, the carrying amount of the cash generating unit is increased to
the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been recognized for the cash generating unit in the prior
years. A reversal of impairment is recognized as income immediately.

Inventories

Inventories consist of lubricating oils and other items including stock provisions, and are stated at the lower of
cost and net realizable value. Cost is determined using the first in first out method. Stores and spares are charged to vessel
operating costs when purchased. Lubricating oil consumption was $9.8 million, $10.3 million, and $9.3 million for the
years ended December 31, 2020, 2019, and 2018, respectively. Lubricating oil consumption is recorded to vessel operating
costs.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are
assets that necessarily take a substantial period of time (for example, the time period necessary to construct a vessel) to get
ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready
for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on

qualifying assets is deducted from the borrowing costs eligible for capitalization.

All other borrowing costs are recognized in the consolidated statement of income or loss in the period in which

they are incurred.

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Financial instruments

IFRS 9, Financial instruments, sets out requirements for recognizing and measuring financial assets, financial
liabilities and some contracts to buy or sell non-financial items. Financial assets and financial liabilities are recognized in
our balance sheet when we become a party to the contractual provisions of the instrument.

Financial assets

All financial assets are recognized and derecognized on a trade date where the purchase or sale of a financial asset
is under a contract whose terms require delivery within the timeframe established by the market concerned, and are initially
measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit or
loss, which are initially measured at fair value.

Financial assets are classified into the following specified categories: financial assets “at fair value through profit or
loss”, or FVTPL, “at fair value through other comprehensive income” or at amortized cost on the basis of the Company’s
business model for managing financial assets and the contractual cash flow characteristics of the financial asset.

Income is recognized on an effective interest basis for debt instruments other than those financial assets classified

as at FVTPL.

Financial assets at amortized cost

Financial assets are measured at amortized cost if both of the following conditions are met:

•

the financial asset is held within a business model whose objective is to hold financial assets in order to
collect contractual cash flows; and

the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments
of principal and interest on the principal amount outstanding.

Financial assets at fair value through other comprehensive income

Financial assets are measured at fair value through other comprehensive income if both of the following

conditions are met:

•

the financial asset is held within a business model whose objective is achieved by both collecting contractual
cash flows and selling financial assets; and

the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments
of principal and interest on the principal amount outstanding.

Financial assets at FVTPL

Financial assets are classified as at FVTPL where the financial asset is held for trading.

A financial asset is classified as held for trading if:

•

it has been acquired principally for the purpose of selling in the near future; or

it is a part of an identified portfolio of financial instruments that we manage together and has a recent actual
pattern of short-term profit-taking; or

it is a derivative that is not designated and effective as a hedging instrument.

Financial assets at FVTPL are stated at fair value, with any resultant gain or loss recognized in the statement of
income or loss. The net gain or loss recognized in income or loss incorporates any dividend or interest earned on the
financial asset. Fair value is determined in the manner described in Note 22.

Accounts receivable

Amounts due from the Scorpio Pools and other receivables that have fixed or determinable payments and are not
quoted in an active market are classified as accounts receivable. Accounts receivable without a significant financing
component are initially measured at their transaction price and subsequently measured at amortized cost, less any

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impairment (as discussed below). Interest income is recognized by applying the effective interest rate, except for short-term
receivables when the recognition of interest would be immaterial.

Impairment of financial assets

IFRS 9 introduced the ‘expected credit loss’ (ECL) model to determine and recognize impairments. ECLs are a
probability-weighted estimate of credit losses and are measured as the present value of all cash shortfalls (i.e. the difference
between cash flows due to the entity in accordance with the contract and cash flows that we expect to receive). ECLs are
discounted at the effective interest rate of the financial asset. Under IFRS 9, credit losses are recognized earlier than under
IAS 39.

Under the general model to ECLs under IFRS 9, loss allowances are measured in two different ways:

•

12-month ECLs: 12-month ECLs are the expected credit losses that may result from default events on a
financial instrument that are possible within the 12 months after the reporting date. 12-month ECLs are
utilized when a financial asset has a low credit risk at the reporting date or has not had a significant increase
in credit risk since initial recognition.

Lifetime ECLs: these are ECLs that result from all possible default events over the expected life of a financial
instrument. Lifetime ECLs are determined when an impaired financial asset has been purchased or originated
or when there has been a significant increase in credit risk since initial recognition

IFRS 9 also permits operational simplifications for trade receivables, contract assets and lease receivables because
they are often held by entities that do not have sophisticated credit risk management systems (i.e. the ‘simplified model’).
These simplifications eliminate the need to calculate 12- month ECLs and to assess when a significant increase in credit
risk has occurred. Under the simplified approach:

•

For trade receivables or contract assets that do not contain a significant financing component, the loss
allowance is required to be measured at initial recognition and throughout the life of the receivable at an
amount equal to lifetime ECL.

For finance lease receivables, operating lease receivables, or trade receivables or contract assets that do
contain a significant financing component, IFRS 9 permits an entity to choose as its accounting policy to
measure the loss allowance using the general model or the simplified model (i.e. at an amount equal to
lifetime expected credit losses).

We measure loss allowances for all trade and lease receivables under the simplified model using the lifetime ECL
approach. When estimating ECLs, we consider reasonable and supportable information that is available without undue cost
or effort at the reporting date about past events, current conditions and forecasts of future economic conditions.

The application of the ECL requirements under IFRS 9 have not resulted in the recognition of an impairment charge
under the new impairment model. This determination was made on the basis that most of our vessels operate in the Scorpio
Pools and we have never experienced a historical credit loss of amounts due from the Scorpio Pools. This determination also
considers reasonable and supportable information about current conditions and forecast future economic conditions.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly-liquid
investments with original maturities of three months or less, that are readily convertible to a known amount of cash and are
subject to an insignificant risk of changes in value. The carrying value of cash and cash equivalents approximates fair value
due to the short-term nature of these instruments.

Restricted cash

We placed deposits in debt service reserve accounts under the terms and conditions set forth under our 2017 Credit
Facility, Citibank/K-Sure Credit Facility, ABN AMRO/K-Sure Credit Facility, and the lease financing arrangements with
Bank of Communications Financial Leasing (LR2s). Funds held in these accounts were either released upon the full
repayment of these facilities or will be released upon the maturity of such facilities and have accordingly been accounted for
as non-current restricted cash on our consolidated balance sheet. The activity within these accounts (which is adjusted from
time to time based on prevailing interest rates) is recorded as financing activities on our consolidated statements of cash flows.

F-16

Financial liabilities

Financial liabilities are classified as either financial liabilities at amortized cost or financial liabilities at FVTPL.

There were no financial liabilities recorded at FVTPL during the years ended December 31, 2020 or December 31, 2019.

Financial liabilities at amortized cost

Financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Other

financial liabilities are subsequently measured at amortized cost using the effective interest method.

Financial liabilities at FVTPL

Financial liabilities not classified at amortized cost are classified as FVTPL.

Financial liabilities at FVTPL are stated at fair value, with any resultant gain or loss recognized in the Statement
of Income or Loss. The net gain or loss recognized in the statement of income or loss incorporates any interest paid on the
financial liability. Fair value is determined in the manner described in Note 22.

Effective interest method

The effective interest method is a method of calculating the amortized cost of a financial asset and a financial
liability. It allocates interest income and interest expense over the relevant period. The effective interest rate is the rate that
discounts estimated future cash flows (including all fees or points paid or received that form an integral part of the effective
interest rate, transaction costs and other premiums or discounts) over the expected life of the financial asset and financial
liability, or, where appropriate, a shorter period.

Convertible debt instruments

In June 2014, we completed an offering for $360.0 million in aggregate principal amount of convertible senior
notes due 2019, or the Convertible Notes due 2019, in a private offering to qualified institutional buyers pursuant to Rule
144A under the Securities Act of 1933 (as further described in Note 12). In May 2018 and July 2018, we exchanged $188.5
million and $15.0 million (out of $348.5 million outstanding), respectively, in aggregate principal amount of our
Convertible Notes due 2019 for $188.5 million and $15.0 million, respectively, in aggregate principal amount of the
Company’s new 3.0% Convertible Senior Notes due 2022 (the “Convertible Notes due 2022”), the terms of which are
described in Note 12. These exchanges were executed with certain holders of the Convertible Notes due 2019 via separate,
privately negotiated agreements.

Under International Accounting Standard 32, or IAS 32, we must separately account for the liability and equity
components of convertible debt instruments in a manner that reflects the issuer’s economic interest cost. Under this
methodology, the instrument is split between its liability and equity components upon initial recognition. The fair value of
the liability is measured first, by estimating the fair value of a similar liability that does not have any associated equity
conversion option. This becomes the liability’s carrying amount at initial recognition, which is recorded as part of Debt on
the consolidated balance sheet. The equity component (the conversion feature) is assigned the residual amount after
deducting the amount separately determined for the liability component from the fair value of the instrument as a whole
and is recorded as part of Additional paid-in capital within stockholders’ equity on the consolidated balance sheet. Issuance
costs are allocated proportionately between the liability and equity components.

The value of the equity component is treated as an original issue discount for purposes of accounting for the
liability component of the Convertible Notes due 2019 and Convertible Notes due 2022. Accordingly, we are required to
record non-cash interest expense as a result of the amortization of the discounted carrying value of the convertible notes to
their face amount over the term of the Convertible Notes due 2019 and Convertible Notes due 2022. IAS 32 therefore
requires interest to include both the current period’s amortization of the debt discount and the instrument’s coupon interest.
On July 1, 2019, the Convertible Notes due 2019 matured, and we repaid the outstanding balance of $142.7 million.
Between July 1, 2020 and September 30, 2020, we repurchased $52.3 million face value of our Convertible Notes due 2022
at an average price of $894.12 per $1,000 principle amount, or $46.7 million. As a result of these repurchases, we reduced
the liability component of the Convertible Notes due 2022 by $47.7 million, and we recorded a $1.0 million gain on
repurchase of Convertible Notes within the consolidated statement of income or loss.

F-17

Derivative financial instruments

Derivatives are initially recognized at fair value at the date a derivative contract is entered into and are
subsequently remeasured to their fair value at each balance sheet date. A derivative with a positive fair value is recognized
as a financial asset whereas a derivative with a negative fair value is recognized as a financial liability. The resulting gain
or loss is recognized in income or loss immediately unless the derivative is designated and effective as a hedging
instrument, in which event the timing of the recognition in income or loss depends on the nature of the hedging
relationship.

A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the

instrument is more than 12 months, and it is not expected to be realized or settled within 12 months.

There were no derivative instruments or transactions during the years ended December 31, 2020, 2019 and 2018.

Lease Financing

During the years ended December 31, 2020, 2019, and 2018, we entered into sale and leaseback transactions in
which certain of our vessels were sold to a third party and then leased back to us under bareboat chartered-in arrangements.
In these transactions, the criteria necessary to recognize a sale of these vessels were not met under IFRS 16. Accordingly,
these transactions have been accounted for as financing arrangements, with the liability under each arrangement recorded at
amortized cost using the effective interest method and the corresponding vessels recorded at cost, less accumulated
depreciation, on our consolidated balance sheet. All of these arrangements are further described in Note 12.

Equity instruments

An equity instrument is any contract that evidences a residual interest in our assets after deducting all of its

liabilities. Equity instruments issued by us are recorded at the proceeds received, net of direct issue costs.

We had 58,093,147 and 58,202,400 registered shares authorized, issued and outstanding with a par value of $0.01
per share at December 31, 2020 and December 31, 2019, respectively. These shares provide the holders with the same
rights to dividends and voting rights.

Provisions

Provisions are recognized when we have a present obligation as a result of a past event, and it is probable that we
will be required to settle that obligation. Provisions are measured at our best estimate of the expenditure required to settle
the obligation at the balance sheet date and are discounted to present value where the effect is material.

Dividends

A provision for dividends payable is recognized when the dividend has been declared in accordance with the

terms of the shareholder agreement.

Restricted stock

The restricted stock awards granted under our 2013 Equity Incentive Plan as described in Note 14 contain only
service conditions and are classified as equity settled. Accordingly, the fair value of our restricted stock awards was
calculated by multiplying the average of the high and low share price on the grant date and the number of restricted stock
shares granted that are expected to vest. In accordance with IFRS 2 “Share Based Payment,” the share price at the grant
date serves as a proxy for the fair value of services to be provided by the individual under the plan.

Compensation expense related to the awards is recognized ratably over the vesting period, based on our estimate
of the number of awards that will eventually vest. The vesting period is the period during which an individual is required to
provide service in exchange for an award and is updated at each balance sheet date to reflect any revisions in estimates of
the number of awards expected to vest as a result of the effect of service vesting conditions. The impact of the revision of
the original estimate, if any, is recognized in the consolidated statement of income or loss such that the cumulative expense
reflects the revised estimate, with a corresponding adjustment to equity reserves.

F-18

Critical accounting judgments and key sources of estimation uncertainty

The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates
are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the
revision and future periods if the revision affects both current and future periods.

The significant judgments and estimates are as follows:

Revenue recognition

Our revenue is primarily generated from time charters, spot voyages, or pools (see Note 16 for the components of our
revenue generated during the years ended December 31, 2020, 2019 and 2018). Revenue recognition for time charters and
pools is generally not as complex or as subjective as voyage charters (spot voyages). Time charters are for a specific period of
time at a specific rate per day. For long-term time charters, revenue is recognized on a straight-line basis over the term of the
charter. Pool revenues are determined by the pool managers from the total revenues and expenses of the pool and allocated to
pool participants using a mechanism set out in the time charter agreement between the vessel owner and the pool.

We generated revenue from spot voyages during the years ended December 31, 2020 and December 31, 2019. We
recognize spot market revenue ‘over time’ as the customer (i.e. the charterer) is simultaneously receiving and consuming
the benefits of the vessel. Under IFRS 15, the performance obligation has been identified as the transportation of cargo
from one point to another. Therefore, in a spot market voyage under IFRS 15, revenue is recognized on a pro-rata basis
commencing on the date that the cargo is loaded and concluding on the date of discharge. Under IFRS 15, voyage costs
incurred in the fulfillment of a voyage charter are deferred and amortized over the course of the charter commencing on the
date that the cargo is loaded and concluding on the date of discharge. Voyage costs are only deferred if they (i) relate
directly to such charter, (ii) generate or enhance resources to be used in meeting obligations under the charter and (iii) are
expected to be recovered.

Vessel impairment

We evaluate the carrying amounts of our vessels, vessels under construction and right of use assets for vessels to
determine whether there is any indication that those vessels have suffered an impairment loss. If any such indication exists,
the recoverable amount of vessels is estimated in order to determine the extent of the impairment loss (if any).

Recoverable amount is the higher of fair value less costs to sell (determined by taking into consideration two
independent broker valuations) and value in use. In assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset for which the estimates of future cash flows have not been adjusted. The projection of cash flows
related to vessels is complex and requires us to make various estimates including future freight rates, earnings from the
vessels and discount rates. All of these items have been historically volatile. As part of our process of assessing fair value
less selling costs of the vessel, we obtain vessel valuations for our operating vessels from leading, independent and
internationally recognized ship brokers on an annual basis or when there is an indication that an asset or assets may be
impaired. We generally do not obtain vessel valuations for vessels under construction. If an indication of impairment is
identified, the need for recognizing an impairment loss is assessed by comparing the carrying amount of the vessels to the
higher of the fair value less selling costs and the value in use. Likewise, if there is an indication that an impairment loss
recognized in prior periods no longer exists or may have decreased, the need for recognizing an impairment reversal is
assessed by comparing the carrying amount of the vessels to the latest estimate of recoverable amount.

At December 31, 2020, we reviewed the carrying amount of our vessels and right of use assets for vessels to
determine whether there was an indication that these assets had suffered an impairment. First, we assessed the fair value less
the cost to sell of our vessels taking into consideration vessel valuations from leading, independent and internationally
recognized ship brokers. We then compared the fair value less selling costs to each vessel’s carrying value and, if the carrying
value exceeded the vessel’s fair value less selling costs, an indicator of impairment exists. We also considered sustained
weakness in the product tanker market or other macroeconomic indicators (such as the COVID-19 pandemic) to be an
impairment indicator. Based upon these factors, we determined that impairment indicators did exist at December 31, 2020.

F-19

Once this determination was made, we prepared a value in use calculation where we estimated each vessel’s future
cash flows based on (i) our best estimate of forecasted vessel revenue through a combination of the latest forecast,
published time charter rates for the next three years and a 2.34% growth rate (which is based on published historical and
forecast inflation rates) in freight rates in each period through the vessel’s 15th year of useful life and reduced to match the
growth in expenses thereafter, (ii) our best estimate of vessel operating expenses and drydock costs, which are based on our
most recent forecasts for the next three years and a 2.34% growth rate in each period thereafter, and (iii) the evaluation of
other inputs such as the vessel’s remaining useful life, residual value and utilization rate. These cash flows were then
discounted to their present value using a pre-tax discount rate of 7.24%. The results of these tests were as follows:

At December 31, 2020, our operating fleet consisted of 135 owned, finance leased or right of use vessels (“ROU

vessels”).

•

Seven of our owned, lease financed or ROU vessels in our fleet had fair values less selling costs greater than
their carrying amount.

121 of our owned, lease financed or ROU vessels in our fleet had fair values less selling costs lower than their
carrying amount.

• We prepared a value in use calculation for all 135 vessels in our fleet which resulted in an aggregate
impairment charge of $14.2 million on 13 MRs. The recoverable amounts were approximately $27.0 million
for one MR, $29.0 million for four MRs, $34.0 million for three MRs and $35.0 million for five MRs.

The factors leading to this impairment charge and the sensitivities thereto, are described in Note 7.

Vessel lives and residual value

When regulations place significant limitations over the ability of a vessel to trade on a worldwide basis, the
vessel’s useful life is adjusted to end at the date such regulations become effective. No such regulations have been
identified that would have impacted the estimated useful life of our vessels. The estimated salvage value of the vessels may
not represent the fair value at any one time since market prices of scrap values tend to fluctuate.

Deferred drydock cost

We recognize drydock costs as a separate component of each vessel’s carrying amount and amortize the drydock
cost on a straight-line basis over the estimated period until the next drydock. We use judgment when estimating the period
between when drydocks are performed, which can result in adjustments to the estimated amortization of the drydock
expense. If the vessel is disposed of before the next drydock, the remaining balance of the deferred drydock is written-off
and forms part of the gain or loss recognized upon disposal of vessels in the period when contracted. We expect that our
vessels will be required to be drydocked approximately every 30 to 60 months for major repairs and maintenance that
cannot be performed while the vessels are operating. Costs capitalized as part of the drydock include actual costs incurred
at the drydock yard and parts and supplies used in making such repairs.

Adoption of new and amended IFRS and IFRIC interpretations from January 1, 2020

Standards and Interpretations issued and adopted in 2020

• Amendments to IAS 1 and IAS 8 - Definition of Material:

• Amendments to IFRS 9, IAS 39 and IFRS 7 - Interest Rate Benchmark Reform

The adoption of these standards did not have a significant impact on these consolidated financial statements.

F-20

Standards and Interpretations issued yet not adopted

Additionally, at the date of authorization of these consolidated financial statements, the following Standards which
have not been applied in these consolidated financial statements were issued but not yet effective. We do not expect that
the adoption of these standards in future periods will have a significant impact on our financial statements.

• Annual Improvements to IFRS Standards 2018-2020, which are summarized as follows:

IFRS 9 Financial Instruments - The amendment clarifies which fees an entity includes when it applies
the ‘10 per cent’ test in paragraph B3.3.6 of IFRS 9 in assessing whether to derecognize a financial
liability. An entity includes only fees paid or received between the entity (the borrower) and the lender,
including fees paid or received by either the entity or the lender on the other’s behalf.

IFRS 16 Leases - The amendment to Illustrative Example 13 accompanying IFRS 16 removes from the
example the illustration of the reimbursement of leasehold improvements by the lessor in order to resolve
any potential confusion regarding the treatment of lease incentives that might arise because of how lease
incentives are illustrated in that example.

• Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 - Interest Rate Benchmark Reform - Phase 2 -
To introduce a practical expedient for modifications required by the reform, clarify that hedge accounting is
not discontinued solely because of the IBOR (interbank offer rate) reform, and introduce disclosures that
allow users to understand the nature and extent of risks arising from the IBOR reform to which the entity is
exposed and how the entity manages those risks as well as the entity’s progress in transitioning from IBORs
to alternative benchmark rates. The effective date is January 1, 2021.

• Amendments to IFRS 3 - Reference to the Conceptual Framework - To update reference to the Conceptual
Framework without significantly changing the requirements in the standard. The effective date is January 1,
2022.

• Amendments to IAS 16 - Property, Plant and Equipment - Proceeds before Intended Use - To prohibit
deducting from the cost of an item of property, plant and equipment any proceeds from selling items
produced while bringing that asset to the location and condition necessary for it to be capable of operating in
the manner intended by management and instead requires the recognition of the proceeds from selling such
items, and the cost of producing those items, in profit or loss. The effective date is January 1, 2022.

• Amendments to IAS 37 - Onerous Contracts - Cost of Fulfilling a Contract - To specify that the ‘cost of
fulfilling’ a contract comprises the ‘costs that relate directly to the contract’ and that costs that relate to a
contract can either be incremental costs of fulfilling that contract or an allocation of other costs that relate
directly to fulfilling contracts. The effective date is January 1, 2022.

• Amendments to IAS 1 - Classification of Liabilities as Current or Non-Current - To promote consistency in
applying the requirements to determine whether debt and other liabilities with an uncertain settlement date
should be classified as current or non-current. The effective date is January 1, 2023, but there is uncertainty to
its EU endorsement date.

2. Cash and cash equivalents

The following table depicts the components of our cash as of December 31, 2020 and 2019:

In thousands of U.S. dollars
Cash at banks ......................................................................................................
Cash on vessels ...................................................................................................

At December 31,

2020
$ 185,879
1,632
$ 187,511

2019
$ 201,040
1,263
$ 202,303

Cash and cash equivalents included $20.0 million of short-term deposits with original maturities of less than 3

months at December 31, 2020.

F-21

3. Prepaid expenses and other assets

The following is a table summarizing our prepaid expenses and other current assets as of December 31, 2020 and

2019:

In thousands of U.S. dollars
SSM - prepaid vessel operating expenses ...........................................................
Prepaid interest ...................................................................................................
Third party - prepaid vessel operating expenses .................................................
Prepaid insurance ...............................................................................................
Other prepaid expenses .......................................................................................

At December 31,

2020

2019

3,975
4,035
1,757
574
2,089
12,430

1,624
6,596
2,123
760
2,752
13,855

4. Accounts receivable

The following is a table summarizing our accounts receivable as of December 31, 2020 and 2019:

In thousands of U.S. dollars
Scorpio LR2 Pool Limited ..................................................................................
Scorpio MR Pool Limited ..................................................................................
Scorpio Handymax Tanker Pool Limited ...........................................................
Scorpio LR1 Pool Limited ..................................................................................
Scorpio Commercial Management S.A.M. .........................................................
Receivables from the related parties ...................................................................

Insurance receivables ..........................................................................................
Freight and time charter receivables ...................................................................
Other receivables ................................................................................................

At December 31,

2020

2019

10,698
9,751
3,597
2,367
284
26,697

5,259
—
1,061
33,017

17,689
44,739
2,984
9,000
—
74,412

1,322
962
1,478
78,174

Scorpio MR Pool Limited, Scorpio LR2 Pool Limited, Scorpio Handymax Tanker Pool Limited and Scorpio LR1
Pool Limited are related parties, as described in Note 15. Amounts due from the Scorpio Pools relate to income receivables
and receivables for working capital contributions, which are expected to be collected within one year. The amounts
receivable from the Scorpio Pools as of December 31, 2020 and 2019 include $1.1 million and $24.3 million, respectively,
of working capital contributions made on behalf of our vessels to the Scorpio Pools.

During 2020, the Scorpio MR Pool Limited amended the terms of the pool agreement with its participants.
Pursuant to this amendment, working capital contributions are repaid, without interest, upon a vessel’s exit from the pool.
Bunkers on board a vessel exiting the pool are credited against such repayment at the actual invoice price of the bunkers.
Accordingly, for all owned vessels, we assume that these contributions will not be repaid within 12 months and are now
considered as non-current within Other Assets on the consolidated balance sheets. Approximately $23.6 million of
accounts receivable were reclassified to non-current other assets on our consolidated balance sheet as of December 31,
2020. For time chartered-in vessels we classify the amounts as current (within accounts receivable) or non-current (within
Other Assets) according to the expiration of the contract.

Prior to the effective date of the amendment, working capital contributions were repaid, without interest, when
sufficient net revenues became available to cover such amounts and were accordingly classified as current (within accounts
receivable).

Insurance receivables primarily represent amounts collectible on our insurance policies in relation to vessel repairs.

Freight and time charter receivables represent amounts collectible from customers for our vessels operating on

time charter or in the spot market.

We consider that the carrying amount of accounts receivable approximates their fair value due to the short
maturity thereof. Accounts receivable are non-interest bearing. Our accounts receivable mostly consist of accounts
receivable from the Scorpio Pools. We have never experienced a historical credit loss of amounts due from the Scorpio
Pools and all amounts are considered current. Accordingly there is no reserve for expected credit losses.

F-22

5. Vessels

Operating vessels and drydock

In thousands of U.S. dollars
Cost

Vessels

Drydock

Total

As of January 1, 2020 .................................................................
Additions(1) .................................................................................
Write-offs(2) ................................................................................
As of December 31, 2020 ...........................................................

4,611,945
162,404
(847)
4,773,502

$ 108,523
40,801
(16,850)
132,474

4,720,468
203,205
(17,697)
4,905,976

Accumulated depreciation and impairment

As of January 1, 2020 .................................................................
Charge for the period ..................................................................
Impairment loss ..........................................................................
Write-offs(2) ................................................................................
As of December 31, 2020 ...........................................................

(665,586)
(170,409)
(14,207)
847
(849,355)

(46,724)
(23,859)
—
16,850
(53,733)

(712,310)
(194,268)
(14,207)
17,697
(903,088)

Net book value

As of December 31, 2020 ..........................................................

3,924,147

78,741

4,002,888

Cost

As of January 1, 2019 .................................................................
Additions(1) .................................................................................
Write-offs(2) ................................................................................
As of December 31, 2019 ...........................................................

4,469,102
145,150
(2,307)
4,611,945

86,352
45,271
(23,100)
108,523

4,555,454
190,421
(25,407)
4,720,468

Accumulated depreciation and impairment

As of January 1, 2019 .................................................................
Charge for the period ..................................................................
Write-offs(2) ................................................................................
As of December 31, 2019 ...........................................................

(506,443)
(161,450)
2,307
(665,586)

(51,222)
(18,602)
23,100
(46,724)

(557,665)
(180,052)
25,407
(712,310)

Net book value

As of December 31, 2019 ..........................................................

3,946,359

61,799

4,008,158

(1) Additions in 2020 and 2019 primarily relate to the drydock, BWTS, and scrubber costs incurred on certain of our

vessels.

(2) Represents the write-offs of fully depreciated equipment and notional drydock costs on certain of our vessels.

The following is a summary of the items that were capitalized during the year ended December 31, 2020:

In thousands of U.S.
dollars
Handymax........................... $
MR ......................................
LR1 .....................................
LR2 .....................................

Drydock

1,284 $

11,088
3,123
18,406
33,901 $

Notional
component
of scrubber(1)

Total
drydock
additions
1,284
14,088
3,723
21,706
40,801

— $

3,000
600
3,300
6,900 $

Scrubber

BWTS

— $

1,932 $

50,425
13,032
63,818

15,247
—
13,507

$ 127,275 $ 30,686 $

Other
equipment
157
1,419
211
1,246
3,033

Capitalized
interest

— $

Total
vessel
additions
2,089
67,720
13,453
79,142
1,410 $ 162,404

629
210
571

The following is a summary of the items that were capitalized during the year ended December 31, 2019:

In thousands of U.S.
dollars
Drydock
Handymax.......................... $ 15,642
16,699
MR .....................................
—
LR1 ....................................
8,130
LR2 ....................................
$ 40,471

Notional
component
of scrubber(1)
—
$
2,250
450
2,100
4,800

Total
drydock
additions

Scrubber

BWTS
— $ 24,398
15,642 $
14,503
40,925
18,949
—
7,721
450
10,230
5,486
43,590
45,271 $ 92,236 $ 44,387

Other
equipment

Capitalized
Interest

782 $

2,440
590
1,901
5,713 $

240 $

Total
vessel
additions
25,420
59,020
1,152
8,508
197
1,225
52,202
2,814 $ 145,150

(1)

For a newly installed scrubber, a notional component of approximately 10% is allocated from the scrubber’s cost. The notional scrubber cost is
estimated by us, based on the expected related costs that we will incur for this equipment at the next scheduled drydock date and relates to the
replacement of certain components and maintenance of other components. This notional scrubber cost is carried separately from the cost of the
scrubber. Subsequent costs are recorded at actual cost incurred. The notional component of the scrubber is depreciated on a straight-line basis to the
next estimated drydock date.

F-23

2020 Activity

We did not take delivery of any owned vessels during the year ended December 31, 2020, though we did take
delivery of four vessels under bareboat charters, as described in Note 6. At December 31, 2020, there were no orders
outstanding for newbuilding vessels.

Ballast Water Treatment Systems

In July 2018, we executed an agreement to purchase 55 ballast water treatment systems, or BWTS, from an
unaffiliated third-party supplier for total consideration of $36.2 million. These systems have been and are expected to be
installed from 2019 through 2023, as each respective vessel under the agreement is due for its International Oil Pollution
Prevention, or IOPP, renewal survey. Costs capitalized for these systems include the cost of the base equipment that the
Company has contracted to purchase in addition to directly attributable installation costs, costs incurred for systems that
were installed during the period, and installation costs incurred in advance of installations that are expected to occur in
subsequent periods. We estimate the useful life of these systems to be for the duration of each vessel’s remaining useful life
and are depreciating the equipment and related installation costs on this basis.

Exhaust Gas Cleaning Systems or Scrubbers

We commenced a program to retrofit the substantial majority of our vessels with exhaust gas cleaning systems, or
scrubbers. The scrubbers will enable our ships to use high sulfur fuel oil, which is less expensive than low sulfur fuel oil, in
certain parts of the world. From August 2018 through November 2018, we entered into agreements with two separate
suppliers to retrofit a total of 77 of our tankers with such systems for total consideration of $116.1 million (which excludes
installation costs). We also obtained options to retrofit additional tankers under these agreements.

In June and September 2019, we exercised the option to retrofit an additional 14 and seven of our vessels,
respectively, with scrubbers for total consideration of $30.3 million. In April 2020, we reached an agreement to postpone
the purchase and installation of scrubbers on 19 vessels. The installation of these scrubbers is now expected to begin not
earlier than 2021. In February 2021 we signed an agreement to retain the option to purchase these scrubbers through
February 2023. This agreement is described in Note 23.

During the year ended December 31, 2020, we retro-fitted a total of 46 of our vessels with scrubbers and 22
vessels with BWTS. During the year ended December 31, 2019, we retro-fitted a total of 32 of our vessels with scrubbers
and 28 vessels with BWTS.

Costs capitalized for these systems include the base equipment and systems purchased, and installation costs
incurred. We estimate the useful life of these systems to be for the duration of each vessel’s remaining useful life, with the
exception of approximately 10% of the equipment cost, which is estimated to require replacement at each vessel’s next
scheduled drydock. This amount has been allocated as a notional component upon installation. The carrying value of the
equipment, related installation costs, and notional component will be depreciated on this basis.

The following table is a timeline of future expected payments and dates for our commitments to purchase

scrubbers and BWTS as of December 31, 2020 (1):

As of December 31,

Amounts in thousands of US dollars
Less than 1 month ............................................
1-3 months ........................................................
3 months to 1 year ............................................
1-5 years ...........................................................
5+ years ............................................................
Total .................................................................

2020

154
141
9,483
12,479
—
22,257

(1) These amounts are subject to change as installation times are finalized. The amounts presented exclude installation

costs.

F-24

Collateral agreements

The below table is a summary of vessels with an aggregate carrying value of $4.8 billion at December 31, 2020
which have been pledged as collateral under the terms of our secured debt and lease financing arrangements, which
includes right of use assets that are accounted for under IFRS 16 (and are further described in Note 6), along with the
respective borrowing or lease financing facility (which are described in Note 12) as of December 31, 2020:

Credit Facility
$116.0 Million Lease Financing
$157.5 Million Lease Financing

STI Oxford, STI Selatar, STI Gramercy, STI Queens
STI Alexis, STI Benicia, STI Duchessa, STI Mayfair, STI San Antonio, STI St.

Charles, STI Yorkville

Vessel Name

$670.0 Million Lease Financing

STI Lobelia, STI Lotus, STI Lily, STI Lavender, STI Magic, STI Majestic, STI

Mystery, STI Marvel, STI Magnetic, STI Millenia, STI Magister, STI Mythic, STI
Marshall, STI Modest, STI Maverick, STI Miracle, STI Maestro, STI Mighty, STI
Maximus

2018 CMB Lease Financing
2018 NIBC Credit Facility
2019 DNB / GIEK Credit Facility
2020 $225.0 Million Credit Facility

STI Milwaukee, STI Battery, STI Tribeca, STI Bronx, STI Manhattan, STI Seneca,
STI Soho, STI Memphis
STI Condotti, STI Sloane
STI Pride, STI Providence, STI Nautilus, STI Gallantry, STI Guard, STI Spiga,

STI Savile Row, STI Kingsway, STI Carnaby

STI Galata, STI La Boca
STI Bosphorus, STI Leblon
STI San Telmo, STI Donald C Trauscht, STI Esles II, STI Jardins

2020 TSFL Lease Financing
2020 CMB Lease Financing
2020 SPDB-FL Lease Financing
ABN AMRO / K-Sure Credit Facility STI Precision, STI Prestige
ABN AMRO / SEB Credit Facility
AVIC Lease Financing
BCFL Lease Financing (LR2s)
BCFL Lease Financing (MRs)
BNPP Sinosure Credit Facility
China Huarong Lease Financing
Citi / K-Sure Credit Facility
COSCO Shipping Lease Financing
Credit Agricole Credit Facility
CSSC Lease Financing
Hamburg Commercial Credit Facility STI Poplar, STI Veneto
ING Credit Facility

STI Hammersmith, STI Westminster, STI Winnie, STI Lauren, STI Connaught
STI Fontvieille, STI Ville, STI Brooklyn, STI Rose, STI Rambla
STI Solace, STI Solidarity, STI Stability
STI Amber, STI Topaz, STI Ruby, STI Garnet, STI Onyx
STI Elysees, STI Fulham, STI Hackney, STI Orchard, STI Park
STI Opera, STI Venere, STI Virtus, STI Aqua, STI Dama, STI Regina
STI Excellence, STI Executive, STI Experience, STI Express
STI Battersea, STI Wembley, STI Texas City, STI Meraux
STI Exceed, STI Excel, STI Excelsior, STI Expedite
STI Goal, STI Guide, STI Gauntlet, STI Gladiator, STI Gratitude

STI Black Hawk, STI Rotherhithe, STI Pontiac, STI Osceola, STI Notting Hill,

STI Jermyn, STI Lombard, STI Grace, STI Brixton, STI Broadway, STI
Comandante, STI Finchley, STI Pimlico

KEXIM Credit Facility
Ocean Yield Lease Financing
Prudential Credit Facility
IFRS 16 - Leases - 3 MR
IFRS 16 - Leases - 7 Handymax

STI Madison
STI Sanctity, STI Steadfast, STI Supreme, STI Symphony
STI Acton, STI Camden, STI Clapham
STI Beryl, STI Larvotto, STI Le Rocher
Sky, Steel, Stone I, Style

6. Right of use assets and related lease liabilities

On January 1, 2019, we adopted IFRS 16 - Leases, which amended the existing accounting standards to require lessees
to recognize the rights and obligations created by the commitment to lease assets on the balance sheet, on the basis of the
present value of the lease payments that are not paid at the transition date (or commencement date going forward), discounted
using the interest rate implicit in the lease or, if that rate cannot be readily determined, an incremental borrowing rate, unless the
term of the lease is 12 months or less. Upon transition, a lessee shall apply IFRS 16 to its leases either retrospectively to each
prior reporting period presented (the ‘full retrospective approach’) or retrospectively with the cumulative effect of initially
applying IFRS 16 recognized at the date of initial application (the ‘modified retrospective approach’).

We applied the modified retrospective approach upon transition. Accordingly, the standard did not impact the
accounting for the existing time chartered-in vessels which expired in the first quarter of 2019. We had bareboat charter-in
commitments on 10 vessels under fixed rate bareboat agreements and 19 vessels under variable rate bareboat agreements
during the years ended December 31, 2020 and December 31, 2019 which were accounted for under IFRS 16 and are
described below.

F-25

IFRS 16 - Leases - 3 MRs

The transition to IFRS 16 did result in the recognition of right-of-use assets and corresponding liabilities relating
to three bareboat chartered-in vessel commitments (STI Beryl, STI Le Rocher and STI Larvotto). The bareboat contracts for
these three vessels were entered into in April 2017, are scheduled to expire in April 2025, and have a fixed lease payment
of $8,800 per vessel per day. We have the option to purchase these vessels beginning at the end of the fifth year of the
agreement through the end of the eighth year of the agreement, at market-based prices. Additionally, a deposit of $4.35
million was retained by the buyer and will either be applied to the purchase price of the vessel if a purchase option is
exercised, or refunded to us at the expiration of the agreement. Based on the analysis of the purchase options, we
determined the lease terms to be eight years, from the commencement date through the expiration date of each lease. A
weighted average incremental borrowing rate of approximately 6.0% was applied at the date of initial application of IFRS
16 on this arrangement. The impact of the application of this standard on the opening balance sheet as of January 1, 2019
was the recognition of a $48.5 million right of use asset, a $50.7 million lease liability (“IFRS 16 - Leases - 3 MRs”) and a
$2.2 million reduction in retained earnings - a basic loss per share of $(0.06) and a diluted loss per share of $(0.06).

The aggregate outstanding balances of these lease liabilities were $36.9 million and $44.2 million as of December 31,

2020 and 2019, respectively.

IFRS 16 - Leases - 7 Handymax

In March 2019, we entered into new bareboat charter-in agreements on seven previously bareboat chartered-in
vessels. Three of these vessels (Silent, Single and Star I) were bareboat chartered-in for one year, and the remaining four
vessels (Steel, Sky, Stone I and Style) are bareboat chartered-in for two years. The daily bareboat rate under all seven
agreements is $6,300 per day. We determined the lease terms to be from the commencement date through the expiration
date of each lease. At the commencement date of the leases, we determined our one and two-year incremental borrowing
rates to be 5.81% and 5.73%, respectively. We recognized a $24.2 million right of use asset and a corresponding $24.2
million lease liability (“IFRS 16 - Leases - 7 Handymax”) at the commencement date of these leases.

The aggregate outstanding balances of these lease liabilities were $2.2 million and $12.8 million as of December 31,

2020 and 2019, respectively.

Trafigura Transaction - $670.0 Million Lease Financing

•

F-26

•

For the four vessels under construction on September 26, 2019, the assumption of the estimated commitments
on the Agreements of $138.8 million and the issuance of 591,254 shares of common stock at $29.00 per share
to a nominee of Trafigura with an aggregate market value of $17.1 million. Three vessels under construction
were delivered in the first quarter of 2020, and the remaining vessel was delivered in September 2020, with
aggregate final commitments on the Modified Agreements (see below) of $138.8 million.

The Modified Agreements bear interest at LIBOR plus a margin of 3.50% per annum and is being repaid in equal
monthly installments of approximately $0.2 million per month per vessel. Additionally, an aggregate prepayment of $18.0
million ($0.8 million for each MR and $1.5 million for each LR2) is being made in equal monthly installments over the
first 12 months of each Modified Agreement.

The Trafigura Transaction was accounted for as an asset acquisition in accordance with the early adoption of
amendments to the definition of a business in IFRS 3 - Business Combinations effective for annual reporting periods
beginning on or after January 1, 2020, and the obligations assumed under the leasehold interests were accounted for under
IFRS 16, Leases. Accordingly, we recorded lease liabilities and corresponding right of use assets for the delivered vessels
upon the closing date of the Trafigura Transaction. The right of use assets were measured based on (i) the present value of
the minimum lease payments under each lease (which assumes the exercise of the purchase options at expiration) of $531.5
million, (ii) the value of the equity issued for each lease (as an initial direct cost) of $115.5 million, and (iii) other initial
direct costs of $2.5 million.

Additionally, we recorded lease liabilities and corresponding right of use assets upon the delivery of the four MR
vessels that were delivered during the year ended December 31, 2020; STI Miracle, STI Maestro, STI Mighty and STI
Maximus. The right of use assets for these four vessels were measured based on (i) the present value of the minimum lease
payments under each lease (which assumes the exercise of the purchase options at expiration) of $138.8 million, (ii) the
value of the equity issued for each lease (as an initial direct cost) of $17.1 million, and (iii) other initial direct costs of $3.0
million (which includes costs incurred as part of the transaction and capitalized costs incurred as part of the construction of
each vessel).

F-27

The following is the activity of the ‘Right of use assets for vessels’ starting with the recognition of the assets on

January 1, 2019 through December 31, 2020:

In thousands of U.S. Dollars
Cost

Vessels

Drydock (1)

Total

As of January 1, 2020 ...........................................................................
Additions ...............................................................................................
Fully depreciated assets ........................................................................
As of December 31, 2020 .....................................................................

$ 705,857
156,226
(8,393 )
853,690

18,962
4,600
—
23,562

$ 724,819
160,826
(8,393)
877,252

Accumulated depreciation and impairment

As of January 1, 2020 ...........................................................................
Charge for the period ............................................................................
Fully depreciated assets ........................................................................
As of December 31, 2020 .....................................................................

(25,374 )
(46,655 )
8,393
(63,636 )

(1,542)
(4,895)
—
(6,437)

(26,916)
(51,550)
8,393
(70,073)

Net book value

As of December 31, 2020 ....................................................................

$ 790,054

17,125

$ 807,179

(1) Drydock costs for ‘Right of use assets for vessels’ are depreciated over the shorter of the lease term or the period until
the next scheduled drydock. On this basis, the drydock costs for these vessels is being depreciated separately. $4.6
million of notional drydock costs were allocated from the right of use assets recorded for the four MR vessels
delivered during 2020 as part of the Trafigura Transaction.

In thousands of U.S. Dollars
Cost

Vessels

Drydock (1)

Total

As of January 1, 2019 .......................................................................
Additions ..........................................................................................
As of December 31, 2019 .................................................................

48,466
657,391
705,857

2,635
16,327
18,962

51,101
673,718
724,819

Accumulated depreciation and impairment

As of January 1, 2019 .......................................................................
Charge for the period ........................................................................
As of December 31, 2019 .................................................................

—
(25,374)
(25,374)

—
(1,542 )
(1,542 )

—
(26,916)
(26,916)

Net book value

As of December 31, 2019 ................................................................

$ 680,483

17,420

$ 697,903

(1) Drydock costs for ‘Right of use assets for vessels’ are depreciated over the shorter of the lease term or the period until
the next scheduled drydock. On this basis, the drydock costs for these vessels is being depreciated separately. The
costs related to the vessels at transition of $2.6 million were recorded as ‘Other non-current assets’ as of December 31,
2018 and were reclassified to ‘Right of use assets for vessels’ upon the adoption of IFRS 16 - Leases, on January 1,
2019. $16.3 million of notional drydock costs were allocated from the acquisition price of the vessels in the Trafigura
Transaction.

The following table summarizes the payments made for the years ended December 31, 2020 and 2019 relating to

lease liabilities accounted for under IFRS 16 - Leases:

In thousands of U.S. dollars
Interest expense recognized in consolidated statements of income or loss ...............................
Principal repayments recognized in consolidated cash flow statements ...................................
Net decrease in accrued interest expense ..................................................................................
Net increase in prepaid interest expense ...................................................................................
Total payments on lease liabilities under IFRS 16 - Leases ......................................................

For the year ended
December 31,

2020
$ 28,458
77,913
(206)
(382)
$ 105,783

2019
$ 11,354
36,761
17
1,066
$ 49,198

F-28

The undiscounted remaining future minimum lease payments under bareboat charter-in arrangements that are
accounted as lease liabilities under IFRS 16 - Leases as of December 31, 2020 are $763.5 million. The obligations under
these agreements will be repaid as follows:

In thousands of U.S. dollars
Less than 1 year ...............................................................................................................................
1 - 5 years ........................................................................................................................................
5+ years ...........................................................................................................................................
Total .................................................................................................................................................
Discounting effect (1) ........................................................................................................................
Lease liability ..................................................................................................................................

As of
December 31, 2020
80,378
$
285,316
397,765
763,459
(130,985)
632,474

(1) Represents estimated interest payments using applicable implicit or imputed interest rates in each lease agreement. For
leases with implicit rates which include a variable component tied to a benchmark, such as LIBOR, the payments were
estimated by taking into consideration: (i) the margin on each lease and (ii) the forward interest rate curve calculated
from interest swap rates, as published by a third party, as of December 31, 2020.

During the years ended December 31, 2019 and 2018, our charterhire expense for operating leases was $4.4
million and $59.6 million, respectively. These lease payments include payments for the non-lease elements in our time
chartered-in arrangement that expired in January 2019. We did not incur charterhire expenses during the year ended
December 31, 2020.

Vessels recorded as Right of use assets derive income from subleases through time charter-out and pool
arrangements. For the years ended December 31, 2020 and 2019, sublease income of $165.8 million and $78.8 million,
respectively, is included in Vessel revenue.

7. Carrying values of vessels, vessels under construction, right of use assets for vessels and goodwill

At each balance sheet date, we review the carrying amounts of our goodwill, vessels and related drydock costs and
right of use assets for vessels to determine if there is any indication that these amounts have suffered an impairment loss. If
such indication exists, the recoverable amount of the vessels, right of use assets and related drydock costs is estimated in
order to determine the extent of the impairment loss (if any). Recoverable amount is the higher of fair value less costs to
sell and value in use. As part of this evaluation, we consider certain indicators of potential impairment, such as market
conditions including forecast time charter rates and values for second-hand product tankers, discounted projected vessel
operating cash flows, and the Company’s overall business plans.

Goodwill arising from our September 2017 acquisition of Navig8 Product Tankers Inc. has been allocated to the
cash generating units within each of the respective operating segments that are expected to benefit from the synergies of
this transaction (LR2s and LR1s). The carrying values of goodwill allocated to these segments were $8.9 million for the
LR2 segment and $2.6 million for the LR1 segment. Goodwill is not amortized and is tested annually (or more frequently,
if impairment indicators arise) by comparing the aggregate carrying amount of the cash generating units in each respective
operating segment, plus the allocated goodwill, to their recoverable amounts. Recoverable amount is the higher of the fair
value less cost to sell (determined by taking into consideration vessel valuations from leading and internationally
recognized ship brokers for each vessel within each segment) and value in use. In assessing value in use, the estimated
future cash flows of the operating segment are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the operating segment for which the
estimates of future cash flows have not been adjusted. This test was performed in connection with the assessment of the
carrying amount of our vessels and related drydock costs and, as further described below, resulted in an impairment charge
to the goodwill that was previously allocated to the LR1 segment at December 31, 2020 of $2.6 million

At December 31, 2020, we reviewed the carrying amount of our vessels and right of use assets for vessels to
determine whether there was an indication that these assets had suffered an impairment. First, we assessed the fair value less
the cost to sell of our vessels taking into consideration vessel valuations from leading, independent and internationally
recognized ship brokers. We then compared the fair value less selling costs to each vessel’s carrying value and, if the carrying
value exceeded the vessel’s fair value less selling costs, an indicator of impairment exists. We also considered sustained
weakness in the product tanker market or other macroeconomic indications (such as the COVID-19 pandemic) to be an
impairment indicator. Based upon these factors, we determined that impairment indicators did exist at December 31, 2020.

F-29

Once this determination was made, we prepared a value in use calculation where we estimated each vessel’s future
cash flows. These estimates were primarily based on (i) our best estimate of forecasted vessel revenue through a
combination of the latest forecast, published time charter rates for the next three years and a 2.34% growth rate (which is
based on published historical and forecast inflation rates) in freight rates in each period through the vessel’s 15th year of
useful life and reduced to match the growth in expenses thereafter, (ii) our best estimate of vessel operating expenses and
drydock costs, which are based on our most recent forecasts for the next three years and a 2.34% (2.39% in 2019) growth
rate in each period thereafter, and (iii) the evaluation of other inputs such as the vessel’s remaining useful life, residual
value and utilization rate. These cash flows were then discounted to their present value using a pre-tax discount rate of
7.24% (7.41% in 2019). The results of these tests were as follows:

At December 31, 2020, our operating fleet consisted of 135 owned, finance leased or right of use vessels (“ROU

vessels”).

•

Seven of our owned, lease financed or ROU vessels in our fleet had fair values less selling costs greater than
their carrying amount.

121 of our owned, lease financed or ROU vessels in our fleet had fair values less selling costs lower than their
carrying amount.

• We did not obtain valuations from independent ship brokers for seven of our ROU vessels as they are not

required under the respective leases.

• We prepared a value in use calculation for all 135 vessels in our fleet which resulted in an aggregate
impairment charge of $14.2 million on 13 MRs. The recoverable amounts per vessel were approximately $27.0
million for one MR, $29.0 million for four MRs, $34.0 million for three MRs and $35.0 million for five MRs.

The factors leading to this impairment charge and the sensitivities thereto, are described further below.

At December 31, 2019, we owned or finance leased 134 vessels in our fleet:

•

68 of our owned, finance leased or ROU vessels in our fleet had fair values less selling costs greater than their
carrying amount. As such, there were no indicators of impairment for these vessels.

56 of our owned, finance leased or ROU vessels in our fleet had fair values less selling costs lower than their
carrying amount.

• We did not obtain valuations from independent brokers for 10 of our ROU vessels as they were not required

under the respective leases.

• We prepared a value in use calculation for all 134 vessels in our fleet, which resulted in no impairment being

recognized.

Factors leading to the 2020 impairment charges of vessels and goodwill

F-30

shifts in oil refinery capacity favorable to product shipping, and (iii) historically low newbuilding levels of product tankers
combined with an aging overall product tanker fleet.

Sensitivities and benchmarking

The impairment test that we conduct is most sensitive to variances in the discount rate and future time charter

rates. Based on the sensitivity analysis performed for December 31, 2020:

• A 1.0% increase in the discount rate would result in 57 vessels being impaired for an aggregate $103.1

million loss, comprised of: 46 MRs for $90.9 million; and 11 LR1s for $12.2 million.

• A 5% decrease in forecasted time charter rates, which is between $900 per day and $1,500 per day depending
on the vessel class, would result in 71 vessels being impaired for an aggregate $161.0 million loss, comprised
of: 59 MRs for $140.2 million; and 11 LR1s vessels for $20.7 million.

Based on the sensitivity analysis performed for December 31, 2019:

• A 1.0% increase in the discount rate would result in 30 vessels being impaired for an aggregate $44.1 million
loss, comprised of: (i) 13 Handymax for $5.2 million; (ii) 11 MRs for $17.8 million; and (iii) six LR2s for
$21.1 million.

• A 5% decrease in forecasted time charter rates would result in 34 vessels being impaired for an aggregate
$76.1 million, loss comprised of: (i) 13 Handymax for $19.0 million; (ii) 15 MRs for $31.7 million; and (iii)
six LR2s for $25.4 million.

We also compared the results of our value in use calculations to various other scenarios, which can be summarized

as follows:

•

If we assumed that the spot market rates that we earned in the final six months of 2020 persisted for the
entirety of 2021 (i.e. a ‘protracted pandemic’ scenario), with a reversion to the published time charter rates in
2022, the value in use calculations would result in 40 vessels being impaired for an aggregate $59.1 million
loss, comprised of: 37 MRs for $57.9 million; and three LR1s for $1.2 million.

If we used 10-year historical average TCE rates for our value in use calculations, the calculation would result
in 46 vessels being impaired for an aggregate $83.3 million loss, comprised of: 41 MRs for $80.1 million; and
four LR1s for $3.0 million.

If we used 15-year historical average TCE rates for our value in use calculations, no impairment loss would
be recorded in any of our vessel classes.

If we used 20-year historical average TCE rates for our value in use calculations, no impairment loss would
be recorded in any of our vessel classes.

Capitalized interest

In accordance with IAS 23 “Borrowing Costs,” applicable interest costs are capitalized during the period that
ballast water treatment systems and scrubbers for our vessels are constructed and installed. For the years ended December
31, 2020 and 2019, we capitalized interest expense for the respective vessels of $1.4 million and $2.8 million, respectively.
The capitalization rate used to determine the amount of borrowing costs eligible for capitalization was 3.6% and 6.3% for

F-31

each of the years ended December 31, 2020 and 2019, respectively. We cease capitalizing interest when the vessels reach
the location and condition necessary to operate in the manner intended by management.

There were no vessels under construction during the years ended December 31, 2020 and December 31, 2019.

8. Other non-current assets

The following table sets forth the components of our Other non-current assets as of December 31, 2020 and 2019:

In thousands of U.S. dollars
Scorpio LR2 Pool Ltd. pool working capital contributions(1) ...................................................
Scorpio MR Pool Ltd. pool working capital contributions(1) ....................................................
Scorpio Handymax Tanker Pool Ltd. pool working capital contributions(2) .............................
Scorpio LR1 Pool Ltd. pool working capital contributions(1) ...................................................
Working capital contributions to Scorpio Pools .......................................................................

Seller’s credit on sale leaseback vessels(3) ................................................................................
Deposits for exhaust gas cleaning system (‘scrubbers’)(4) ........................................................
Investment in BWTS supplier(5) ................................................................................................
Capitalized loan fees(6) ..............................................................................................................
Equity consideration issued for the leasehold interests acquired from Trafigura for certain

vessels under construction(7) ..................................................................................................
Deposits for BWTS(5) ................................................................................................................

At December 31,
2019
2020
$ 35,700
—
6,794
6,600
49,094

35,700
25,200
5,661
6,600
73,161

10,192
5,617
1,751
1,424

—
—
92,145

9,624
35,846
1,751
4,039

18,086
12,699
$ 131,139

(1) Upon entrance into the Scorpio LR2, LR1 and MR Pools, all vessels are required to make initial working capital
contributions of both cash and bunkers. Initial working capital contributions are repaid, without interest, upon a
vessel’s exit from the pool. Bunkers on board a vessel exiting the pool are credited against such repayment at the
actual invoice price of the bunkers. For all owned vessels, we assume that these contributions will not be repaid within
12 months and are thus classified as non-current within Other Assets on the consolidated balance sheets. For time
chartered-in vessels we classify the amounts as current (within accounts receivable) or non-current (within Other
Assets) according to the expiration of the contract. The Scorpio MR Pool amended its terms to the above during 2020.
Prior to this amendment, any contributions were repaid, without interest, when such vessel earned sufficient net
revenues to cover the value of such working capital contributed. Accordingly, such amounts were classified as current
(within accounts receivable) in prior periods.

(2) Upon entrance into the Scorpio Handymax Tanker Pool, all vessels are required to make initial working capital
contributions of both cash and bunkers. Initial working capital contributions are repaid, without interest, upon a
vessel’s exit from each pool no later than six months after the exit date. Bunkers on board a vessel exiting the pool are
credited against such repayment at the actual invoice price of the bunkers. For all owned vessels, we assume that these
contributions will not be repaid within 12 months and are thus classified as non-current within Other Assets on the
consolidated balance sheets. For time chartered-in vessels we classify the amounts as current (within Accounts
Receivable) or non-current (within Other Assets) according to the expiration of the contract.

(3) The seller’s credit on vessels sold and leased back represents the present value of the deposits of $4.35 million per
vessel ($13.1 million in aggregate) that was retained by the buyer as part of the 2017 sale and operating leaseback
transactions for STI Beryl, STI Le Rocher and STI Larvotto, which is described in Note 6. This deposit will either be
applied to the purchase price of the vessel if a purchase option is exercised or refunded to us at the expiration of the
agreement. The present value of this deposit has been calculated based on the interest rate that is implied in the lease,
and the carrying value will accrete over the life of the lease, through interest income, until expiration. We recorded
$0.5 million and $0.5 million as interest income as part of these agreements during each of the years ended December
31, 2020 and 2019, respectively.

(4) From August 2018 through September 2019, we entered into agreements with two separate suppliers to retrofit a total
of 98 of our tankers with scrubbers for total consideration of $146.6 million (which excludes installation costs).
Deposits paid for these systems are reflected as investing cash flows within the consolidated statement of cash flows.
In April 2020, we reached an agreement to postpone the purchase and installation of scrubbers on 19 of our vessels.
The installation of these remaining scrubbers is now expected to begin not earlier than 2021. In February 2021, we
signed an agreement to retain the option to purchase these scrubbers through February 2023. This agreement is
described in Note 23.

F-32

(5)

In July 2018, we executed an agreement to purchase 55 BWTS from an unaffiliated third-party supplier for total
consideration of $36.2 million. These systems were expected to be installed over the subsequent five years, as each
respective vessel under the agreement comes due for its International Oil Pollution Prevention, or IOPP, renewal
survey. Upon entry into this agreement, we also obtained a minority equity interest in this supplier for no additional
consideration. We have determined that of the total consideration of $36.2 million, $1.8 million is attributable to the
minority equity interest.

Since July 2018, aggregate deposits of $32.8 million have been made, of which $31.0 million has been reclassified to
“Vessels” upon the installation of these systems. The remaining $1.8 million of this amount has been recorded as the
aforementioned minority equity interest, which is being accounted for as a financial asset under IFRS 9. Deposits paid
for these systems are reflected as investing cash flows within the consolidated statement of cash flows. Under the
terms of the agreement, we were granted a put option, exercisable after one year following the date of the agreement,
whereby we can put the shares back to the supplier at a predetermined price. The supplier was also granted a call
option, exercisable two years following the date of the agreement, whereby it can buy the shares back from us at a
predetermined price, which is greater than the strike price of the put option. Given that the value of this investment is
contractually limited to the strike prices set forth in these options, we have recorded the value of the investment at the
put option strike price, or $1.8 million in aggregate. The difference in the aggregate value of the investment, based on
the spread between the exercise prices of the put and call options, is $0.6 million. We consider this value to be a Level
3 fair value measurement, as this supplier is a private company, and the value has been determined based on
unobservable market data (i.e. the proceeds that we would receive if we exercised our put option in full).

(6) Represents upfront loan fees on credit facilities that are expected to be used to partially finance the purchase and
installation of scrubbers or refinance the indebtedness on certain vessels. These fees are reclassified as deferred
financing fees (net of Debt) when the tranche of the loan to which the vessel relates is drawn.

(7) On September 26, 2019, we acquired subsidiaries of Trafigura as part of the Trafigura Transaction, which have
leasehold interests in 19 product tankers under bareboat charter agreements with subsidiaries of an international
financial institution. Of the 19 vessels, 15 were delivered on September 26, 2019, and four were under construction.
For the four vessels under construction, we issued 591,254 shares of common stock at $29.00 per share to Trafigura
with an aggregate market value of $17.1 million and assumed commitments on the bareboat charter agreements of
approximately $138.8 million upon each vessel’s delivery from the shipyard. The value of the equity issued of $17.1
million plus certain initial direct costs of approximately $0.6 million (which is a pro-rated portion of the legal and
professional fees incurred as part of the Trafigura Transaction) and $0.4 million of fees relating to the leases on these
four vessels under construction were recorded within “Other Non-current assets” as of December 31, 2019. These
amounts were reclassified to Right of Use Assets as each vessel was delivered from the shipyard throughout 2020.

9. Restricted Cash

Restricted cash as of December 31, 2020 and 2019 primarily represents debt service reserve accounts that were
maintained as part of the terms and conditions of our 2017 Credit Facility, Citibank/K-Sure Credit Facility, ABN
AMRO/K-Sure Credit Facility, and the lease financing arrangements with Bank of Communications Financial Leasing
(LR2s). The funds in these accounts are expected to be applied against the principal balance of these facilities upon
maturity. The activity within these accounts (which is adjusted from time to time based on prevailing interest rates) is
recorded as financing activities on our consolidated statements of cash flows. These facilities, and any related activity in
the restricted cash balances, are further described in Note 12.

F-33

10. Accounts payable

The following table sets forth the components of our accounts payable as of December 31, 2020 and 2019:

In thousands of U.S. dollars
Scorpio Ship Management S.A.M. (SSM) ..........................................................................
Scorpio Services Holding Limited (SSH) ...........................................................................
Scorpio MR Pool Limited ...................................................................................................
Scorpio LR2 Pool Limited ..................................................................................................
Scorpio Commercial Management S.A.M. (SCM) .............................................................
Amounts due to a port agent - related party ........................................................................
Scorpio Handymax Tanker Pool Limited ...........................................................................
Scorpio LR1 Pool Limited ..................................................................................................
Accounts payable to related parties ....................................................................................

At December 31,

2020

2019

902
404
230
338
58
42
2
—
1,976

2,454
353
19
—
14
58
116
325
3,339

Suppliers .............................................................................................................................

10,887
12,863

19,783
23,122

The majority of accounts payable are settled with a cash payment within 90 days. No interest is charged on

accounts payable. We consider that the carrying amount of accounts payable approximates fair value.

11. Accrued expenses

The following table sets forth the components of our accrued expenses as of December 31, 2020 and 2019:

In thousands of U.S. dollars
Accrued expenses to a related party port agent ...................................................................
Scorpio MR Pool Limited ...................................................................................................
Scorpio Ship Management S.A.M. (SSM) ..........................................................................
Scorpio LR1 Pool Limited ..................................................................................................
Scorpio LR2 Pool Limited ..................................................................................................
Scorpio Handymax Tanker Pool Limited ...........................................................................
Accrued expenses to related parties ....................................................................................

Suppliers .............................................................................................................................
Accrued short-term employee benefits ...............................................................................
Accrued interest ..................................................................................................................
Other accrued expenses ......................................................................................................

At December 31,

2020

2019

313
375
33
—
—
—
721

15,938
11,231
4,282
21
32,193

302
1,361
213
874
794
229
3,773

22,170
9,728
5,739
42
41,452

12. Current and long-term debt

The following is a breakdown of the current and non-current portion of our debt outstanding as of December 31,

2020 and December 31, 2019:

In thousands of U.S. dollars
Current portion of bank debt(1) ...........................................................................................
Finance lease(2) ...................................................................................................................
Current portion of long-term debt ......................................................................................

2020
172,705
131,736
304,441

2019
235,482
122,229
357,711

At December 31,

Non-current portion of bank debt and bonds(3) ..................................................................
Finance lease(4) ...................................................................................................................

971,172
1,139,713
$ 2,415,326

999,268
1,195,494
$ 2,552,473

(1) The current portion at December 31, 2020 was net of unamortized deferred financing fees of $1.8 million. The current

portion at December 31, 2019 was net of unamortized deferred financing fees of $1.2 million.

F-34

(2) The current portion at December 31, 2020 was net of unamortized deferred financing fees of $0.9 million. The current

portion at December 31, 2019 was net of unamortized deferred financing fees of $0.8 million.

(3) The non-current portion at December 31, 2020 was net of unamortized deferred financing fees of $12.0 million. The

non-current portion at December 31, 2019 was net of unamortized deferred financing fees of $7.6 million.

(4) The non-current portion at December 31, 2020 was net of unamortized deferred financing fees of $7.8 million. The

non-current portion at December 31, 2019 was net of unamortized deferred financing fees of $7.1 million.

The following is a rollforward of the activity within debt (current and non-current), by facility, for the year ended

December 31, 2020:

In thousands of U.S. dollars
KEXIM Credit Facility ................................. $
ABN AMRO Credit Facility ........................
ING Credit Facility .......................................
2018 NIBC Credit Facility ...........................
2017 Credit Facility ......................................
Credit Agricole Credit Facility.....................
ABN AMRO / K-Sure Credit Facility .........
Citibank / K-Sure Credit Facility .................
ABN / SEB Credit Facility ...........................
Hamburg Commercial Bank Credit

Facility ......................................................
Prudential Credit Facility .............................
2019 DNB / GIEK Credit Facility ...............
BNPP Sinosure Credit Facility.....................
2020 $225.0 Million Credit Facility ............
Ocean Yield Lease Financing ......................
CMBFL Lease Financing(4) ..........................
BCFL Lease Financing (LR2s) ....................
CSSC Lease Financing(5) ..............................
CSSC Scrubber Lease Financing .................
BCFL Lease Financing (MRs) .....................
2018 CMBFL Lease Financing ....................
$116.0 Million Lease Financing ..................
AVIC Lease Financing .................................
China Huarong Lease Financing ..................
$157.5 Million Lease Financing ..................
COSCO Lease Financing .............................
2020 CMBFL Lease Financing ....................
2020 TSFL Lease Financing ........................
2020 SPDB-FL Lease Financing .................
IFRS 16 - Leases - 7 Handymax

(See Note 6)(2)...........................................
IFRS 16 - Leases - 3 MR (See Note 6) ........
$670.0 Million Lease Financing

(see Note 6)(3) ...........................................
Unsecured Senior Notes Due 2020 ..............
Unsecured Senior Notes Due 2025 ..............
Convertible Notes due 2022 .........................

Less: deferred financing fees .......................
Total .............................................................. $

Carrying
Value as of
December 31,
2019

Activity

Carrying
Value as of
December 31,
2020

Other
Activity(1)

Balance as of
December 31, 2020
consists of:

Current

15,932 $ 15,932 $

199,014 $
91,954
131,439
31,621
131,499
88,466
43,726
91,086
103,325

Drawdowns Repayments
— $
—
77,985
3,125
—
—
—
—
6,312

(183,082) $
(91,954)
(18,076)
(3,680)
(131,499)
(8,568)
(3,851)
(8,416)
(11,781)

42,150
55,463
—
—
—
148,235
56,473
90,384
233,727
10,976
87,810
126,429
106,040
127,309
123,750
137,943
76,450
—
—
—

12,778
44,192

1,429
—
55,500
101,461
216,700
—
—
1,773
—
1,568
1,926
10,125
5,653
4,600
—
—
—
45,383
47,250
96,500

1,643
—

(3,264)
(5,085)
(2,937)
(6,728)
(7,810)
(11,024)
(57,063)
(8,724)
(94,908)
(8,101)
(11,988)
(11,561)
(7,892)
(12,177)
(13,500)
(14,143)
(7,700)
(810)
—
—

(12,174)
(7,256)

— $
—
—
—
—
778
712
1,808
—

—
—
—
—
—
188
590
541
(1,870)
—
—
—
—
—
—
—
—
—
—
—

—
—

Non-
Current
—
—
141,035
—
—
72,839
37,414
77,781
85,509

37,023
44,832
45,450
84,590
187,889
126,334
—
74,879
125,519
523
64,748
111,986
94,409
106,405
96,750
109,657
61,050
41,331
43,929
90,005

—
29,269

—
191,348
31,066
—
80,676
40,587
84,478
97,856

40,315
50,378
52,563
94,733
208,890
137,399
—
83,974
136,949
4,443
77,748
124,993
103,801
119,732
110,250
123,800
68,750
44,573
47,250
96,500

2,247
36,936

—
50,313
31,066
—
7,837
3,173
6,697
12,347

3,292
5,546
7,113
10,143
21,001
11,065
—
9,095
11,430
3,920
13,000
13,007
9,392
13,327
13,500
14,143
7,700
3,242
3,321
6,495

2,247
7,667

513,004
53,750
—
180,050
3,139,043 $
(16,596)
3,122,447 $

138,770
—
28,100
—
845,803 $
(15,233 )
830,570 $

(58,483)
(53,750)
—
(47,750)
(925,735) $
—
(925,735) $

—
—
—
8,413
11,160 $
9,358
20,518 $

46,764
—
—
—

593,291
—
28,100
140,713

546,527
—
28,100
140,713
3,070,271 $ 363,775 $ 2,706,496
(19,815 )
3,047,800 $ 361,119 $ 2,686,681

(22,471)

(2,656)

(1)

Relates to non-cash accretion or amortization of (i) obligations which were assumed as part of the acquisition of Navig8 Product Tankers Inc. and
recorded at fair value (described below), and (ii) accretion of our Convertible Notes due 2022.

(2) Drawdowns related to this arrangement represents the non-cash entry to record lease liabilities of $1.6 million when certain of these leases were

modified in 2020.

(3) Drawdowns related to this arrangement represents the non-cash entry to record lease liabilities of $138.8 million on the commencement date of the

leases for four vessels that were acquired as part of the Trafigura Transaction and delivered from the shipyard throughout 2020.

(4) Other activity for this arrangement consists of (i) accretion of the discount; and (ii) the write-off of the discount of $0.4 million related to the

refinancing of existing indebtedness on certain vessels.

(5) Other activity for this arrangement consists of (i) the write-off of the premium of $1.1 million related to the refinancing of existing indebtedness on

certain vessels and (ii) amortization of the premium on the remaining vessels that were not refinanced.

F-35

Secured Bank Debt

Each of our secured credit facilities contains financial and restrictive covenants, which require us to, among other
things, comply with certain financial tests (described below); deliver quarterly and annual financial statements and annual
projections; comply with restrictive covenants, including maintaining adequate insurances; comply with laws (including
environmental laws and ERISA); and maintain flag and class of our vessels. Other such covenants may, among other
things, restrict consolidations, mergers or sales of our assets; require us to obtain lender approval on changes in our vessel
manager; limit our ability to place liens on our assets; limit our ability to incur additional indebtedness; prohibit us from
paying dividends if there is a covenant breach under the loan or an event of default has occurred or would occur as a result
of payment of such dividend; or prohibit our transactions with affiliates. Furthermore, our debt agreements contain
customary events of default, including cross-default provisions, as well as subjective acceleration clauses under which the
debt could become due and payable in the event of a material adverse change in the Company’s business.

These secured credit facilities may be secured by, among other things:

•

a first priority mortgage over the relevant collateralized vessels;

a first priority assignment of earnings, insurances and charters from the mortgaged vessels for the specific
facility;

a pledge of earnings generated by the mortgaged vessels for the specific facility; and

a pledge of the equity interests of each vessel owning subsidiary under the specific facility.

Each of our secured credit facilities are described below.

KEXIM Credit Facility

Drawdowns under the KEXIM Credit Facility occurred in connection with the delivery of 18 newbuilding vessels

as specified in the loan agreement.

This facility was repaid in full in January 2021 upon the maturity of the Commercial Tranche.

Our KEXIM Credit Facility contained certain financial covenants which required us to maintain:

• The ratio of net debt to total capitalization no greater than 0.60 to 1.00.

F-36

• Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel plus

$250,000 per each time chartered-in vessel.

• The minimum threshold for the aggregate fair market value of the vessels as a percentage of the then

aggregate principal amount in the facility shall at all times be no less than 155%.

During the year ended December 31, 2020, we made scheduled principal payments of $16.9 million on this credit
facility and refinanced the debt on twelve vessels that were collateralized under this facility resulting in unscheduled
principal repayments of $166.1 million in aggregate and the write-off of approximately $0.2 million of deferred financing
fees. During the year ended December 31, 2019, we refinanced the debt on five vessels that were collateralized under this
facility resulting in unscheduled principal repayments of $66.6 million in aggregate and the write-off of approximately $1.2
million of deferred financing fees. The outstanding amounts relating to this facility as of December 31, 2020 and 2019
were $15.9 million and $199.0 million, respectively. We were in compliance with the financial covenants relating to this
facility as of those dates.

ABN AMRO Credit Facility

The outstanding amount relating to this facility as of December 31, 2019 was $92.0 million, and we were in

compliance with the financial covenants relating to this facility as of that date.

ING Credit Facility

Repayments on borrowings up to $132.5 million are being made in equal quarterly installments, in accordance
with a 15-year repayment profile, and a balloon installment payment due on the maturity dates of March 4, 2021 for STI
Lombard and STI Osceola and June 24, 2022 for STI Grace, STI Jermyn, STI Black Hawk, and STI Pontiac. These
borrowings bear interest at LIBOR plus a margin of 1.95% per annum.

F-37

Our ING Credit Facility includes financial covenants that require us to maintain:

• The ratio of net debt to total capitalization no greater than 0.60 to 1.00.

• Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel plus

$250,000 per each time chartered-in vessel.

The outstanding amounts relating to this facility as of December 31, 2020 and 2019 were $191.3 million and

$131.4 million, respectively. We were in compliance with the financial covenants relating to this facility as of those dates.

2018 NIBC Credit Facility

Our 2018 NIBC Credit Facility included financial covenants that required us to maintain:

• The ratio of net debt to total capitalization no greater than 0.60 to 1.00.

• Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel plus

$250,000 per each time chartered-in vessel.

• The aggregate of the fair market value of the vessels provided as collateral under the facility shall be: 135%

through the third quarter of 2020 and 140% at all times thereafter.

The outstanding amounts relating to this facility were $31.1 million and $31.6 million as of December 31, 2020

and 2019, respectively. We were in compliance with the financial covenants relating to this facility as of those dates.

F-38

2017 Credit Facility

Credit Agricole Credit Facility

Our Credit Agricole Credit Facility includes financial covenants that require us to maintain:

• The ratio of net debt to total capitalization no greater than 0.60 to 1.00.

• Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel and

$250,000 per each time chartered-in vessel.

The carrying values of the indebtedness related to this facility (which includes the discount recorded to write the
value down to its fair value as part of the purchase price allocation of the acquisition) as of December 31, 2020 and 2019
were $80.7 million and $88.5 million. We were in compliance with the financial covenants relating to this facility as of
those dates.

ABN AMRO/K-Sure Credit Facility

F-39

Our ABN AMRO/K-Sure Credit Facility includes financial covenants that require us to maintain:

• The ratio of net debt to total capitalization no greater than 0.60 to 1.00.

• Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel and

$250,000 per each time chartered-in vessel.

Additionally, we have an aggregate of $0.5 million on deposit in a debt service reserve account as of December 31,
2020 in accordance with the terms and conditions of this facility. The funds deposited in this account are not freely
available and will be released upon maturity. The balance in this account has been recorded as non-current Restricted Cash
on our consolidated balance sheet as of December 31, 2020.

The carrying values of the indebtedness related to this facility (which includes the discount recorded to write the
value down to its fair value as part of the purchase price allocation of the acquisition) as of December 31, 2020 and 2019
were $40.6 million and $43.7 million, respectively. We were in compliance with the financial covenants relating to this
facility as of those dates.

Citibank/K-Sure Credit Facility

Our Citibank/K-Sure Credit Facility includes financial covenants that require us to maintain:

• The ratio of net debt to total capitalization no greater than 0.60 to 1.00.

• Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel and

$250,000 per each time chartered-in vessel.

F-40

The carrying values of the indebtedness related to this facility (which includes the discount recorded to write the
value down to its fair value as part of the purchase price allocation of the acquisition) as of December 31, 2020 and 2019
were $84.5 million and $91.1 million, respectively. We were in compliance with the financial covenants relating to this
facility as of those dates.

ABN AMRO / SEB Credit Facility

The ABN AMRO/SEB Credit Facility has a final maturity of June 2023 and bears interest at LIBOR plus a margin
of 2.6% per annum. The original credit facility is scheduled to be repaid in equal quarterly installments of $2.9 million per
quarter, in aggregate, for the first eight installments and $2.5 million per quarter, in aggregate, thereafter, with a balloon
payment due upon maturity. The upsized portion of the credit facility is scheduled to be repaid in equal quarterly
installments of approximately $0.1 million per vessel through the maturity date of March 2023 for the upsized portion of
the loan.

Our ABN AMRO / SEB Credit Facility includes financial covenants that require us to maintain:

• The ratio of net debt to total capitalization no greater than 0.65 to 1.00.

• Minimum liquidity of not less than the greater of $25.0 million and $500,000 per each owned vessel plus

$250,000 per each time chartered-in vessel.

The outstanding amounts related to this facility as of December 31, 2020 and 2019 were $97.9 million and $103.3

million, respectively. We were in compliance with the financial covenants relating to this facility as of those dates.

Hamburg Commercial Bank Credit Facility

In November 2019, we executed an agreement with Hamburg Commercial Bank AG for a senior secured term
loan facility for $43.65 million, of which, (i) $42.15 million (Tranche 1) was used to refinance the existing debt for STI
Veneto and STI Poplar, (which were previously financed under the KEXIM Credit Facility), and (ii) $1.4 million (Tranche 2)
was used to finance the purchase and installation of a scrubber on STI Veneto. We refer to this facility as our Hamburg
Commercial Bank Credit Facility. Tranche 1 was drawn in December 2019 and Tranche 2 was drawn in April 2020.

Our Hamburg Commercial Bank Credit Facility includes financial covenants that require us to maintain:

• The ratio of net debt to total capitalization no greater than 0.60 to 1.00.

• Minimum liquidity of not less than the greater of $25.0 million and $500,000 per each owned vessel plus

$250,000 per each time chartered-in vessel.

F-41

• The aggregate of the fair market value of the vessels provided as collateral under the facility shall be: 134%

from the date of this facility.

The amounts outstanding as of December 31, 2020 and 2019 were $40.3 million and $42.2 million, respectively,

and we were in compliance with the financial covenants as of those dates.

Prudential Credit Facility

Our Prudential Credit Facility includes financial covenants that require us to maintain:

• The ratio of net debt to total capitalization no greater than 0.60 to 1.00.

• Consolidated tangible net worth of no less than $1,000,000,000 plus (i) 25% of the cumulative positive net
income (on a consolidated basis) for each fiscal quarter commencing on or after January 1, 2016 and (ii) 50%
of the net proceeds of new equity issuances occurring on or after January 1, 2016.

• Minimum liquidity of not less than the greater of $25.0 million and $500,000 per each owned vessel plus

$250,000 per each time chartered-in vessel.

• The aggregate of the fair market value of the vessels provided as collateral under the facility shall be: 125%

from the date of this facility.

The amounts outstanding as of December 31, 2020 and 2019 were $50.4 million and $55.5 million, respectively,

and we were in compliance with the financial covenants as of those dates.

2019 DNB / GIEK Credit Facility

Our 2019 DNB/GIEK Credit Facility includes financial covenants that require us to maintain:

• The ratio of net debt to total capitalization no greater than 0.60 to 1.00.

F-42

• Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel and

$250,000 per each time chartered-in vessel.

The amount outstanding as of December 31, 2020 was $52.6 million, and we were in compliance with the

financial covenants as of that date.

BNPP Sinosure Credit Facility

Our BNPP Sinosure Credit Facility includes financial covenants that require us to maintain:

• The ratio of net debt to total capitalization no greater than 0.60 to 1.00.

• Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel and

$250,000 per each time chartered-in vessel.

• The aggregate of the fair market value of the vessels provided as collateral under the facility shall at all times
be no less than 130% of the then aggregate outstanding principal amount of the loans under the credit facility
through December 31, 2022 and 135% at all times thereafter.

F-43

The outstanding amount as of December 31, 2020 was $94.7 million, and we were in compliance with the

financial covenants as of that date.

2020 $225.0 Million Credit Facility

The remaining availability of $2.2 million under the 2020 $225.0 Million Credit Facility to partially finance the

purchase and installation of scrubbers on two LR2s was terminated in December 2020.

Our 2020 $225.0 Million Credit Facility includes financial covenants that require us to maintain:

• The ratio of net debt to total capitalization no greater than 0.65 to 1.00.

• Consolidated tangible net worth of no less than $1.4 billion.

• Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel and

$250,000 per each time chartered-in vessel.

The outstanding amount as of December 31, 2020 was $208.9 million, and we were in compliance with the

financial covenants as of that date.

Lease financing arrangements

F-44

Ocean Yield Lease Financing

We are subject to certain terms and conditions, including financial covenants, under this arrangement which are

summarized as follows:

• The ratio of net debt to total capitalization no greater than 0.60 to 1.00.

• Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel and

$250,000 per each time chartered-in vessel.

The carrying values of the amounts due under this arrangement (which reflect fair value adjustments made as part
of the initial purchase price allocation of the acquisition) were $137.4 million and $148.2 million as of December 31, 2020
and 2019, respectively. We were in compliance with the financial covenants as of those dates.

CMBFL Lease Financing

We have purchase options to re-acquire each of the subject vessels during the bareboat charter period, with the

first of such options exercisable on the third anniversary from the delivery date of the respective vessel.

Bank of Communications Financial Leasing MR financing, or the BCFL Lease Financing (MRs)

In September 2017, we entered into lease financing agreements to sell and lease back five 2012 built MR product
tankers (STI Amber, STI Topaz, STI Ruby, STI Garnet and STI Onyx) with Bank of Communications Finance Leasing Co
Ltd., or BCFL, for a sales price of $27.5 million per vessel. The financing for STI Topaz, STI Ruby and STI Garnet closed
in September 2017, the financing for STI Onyx closed in October 2017, and the financing for STI Amber closed in
November 2017. Each agreement is for a fixed term of seven years at a bareboat rate of $9,025 per vessel per day, and we
have three consecutive one-year options to extend each charter beyond the initial term. Furthermore, we have the option to
purchase these vessels beginning at the end of the fifth year of the agreements through the end of the tenth year of the
agreements. A deposit of $5.1 million per vessel was retained by the buyers and will either be applied to the purchase price
of the vessel if a purchase option is exercised, or refunded to us at the expiration of the agreement (as applicable).

F-45

The aggregate outstanding balances under this arrangement were $77.7 million and $87.8 million as of December 31,

2020 and 2019, respectively. We were in compliance with the financial covenants as of those dates.

Bank of Communications Financial Leasing LR2 financing, or the BCFL Lease Financing (LR2s)

The carrying values of the amounts due under this arrangement (which reflect fair value adjustments made as part
of the initial purchase price allocation of the acquisition) were $84.0 million and $90.4 million as of December 31, 2020
and 2019, respectively. We were in compliance with the financial covenants as of those dates.

CSSC Lease Financing and CSSC Scrubber Lease Financing

F-46

The carrying values of the amounts due under the non-scrubber portion of the arrangement (which reflect fair
value adjustments made as part of the initial purchase price allocation) were $136.9 million and $233.7 million as of
December 31, 2020 and 2019, respectively. The carrying values of the amounts due under the scrubber portion of the
arrangement (which reflect fair value adjustments made as part of the purchase price allocation) were $4.4 million and
$11.0 million as of December 31, 2020 and 2019, respectively. We were in compliance with the financial covenants under
these arrangements as of those dates.

China Huarong Lease Financing

The outstanding amounts were $110.3 million and $123.8 million as of December 31, 2020 and 2019,

respectively. We were in compliance with the financial covenants relating to this facility as of those dates.

$116.0 Million Lease Financing

F-47

2018 CMBFL Lease Financing

We are subject to certain terms and conditions, including financial covenants, under this arrangement which are

summarized as follows:

• The ratio of net debt to total capitalization no greater than 0.60 to 1.00.

• Minimum liquidity of not less than the greater of $25.0 million and $500,000 per each owned vessel plus

$250,000 per each time chartered-in vessel.

• The fair market value of each vessel leased under the facility shall at all times be no less than 115% of the

outstanding balance for such vessel.

AVIC Lease Financing

F-48

We are subject to certain terms and conditions, including financial covenants, under this arrangement which are

summarized as follows:

• The ratio of net debt to total capitalization no greater than 0.70 to 1.00.

• Consolidated tangible net worth of no less than $650.0 million.

• The fair market value of each grouped vessels (MRs or LR2s) leased under the facility shall at all times be no

less than 110% of the outstanding balance for such grouped vessels (MRs or LR2s).

COSCO Lease Financing

• The ratio of total liabilities (less cash and cash equivalents) to total assets no greater than 0.65 to 1.00.

• Consolidated tangible net worth of no less than $1.0 billion plus (i) 25% of the cumulative positive net
income (on a consolidated basis) for each fiscal quarter commencing on or after January 1, 2018 and (ii) 50%
of the net proceeds of new equity issuances occurring on or after January 1, 2018.

• The fair market value of each vessel leased under the facility shall at all times be no less than 110% of the

outstanding balance for such vessel.

The outstanding amounts were $68.8 million and $76.5 million as of December 31, 2020 and 2019, respectively,

and we were in compliance with the financial covenants as of those dates.

$157.5 Million Lease Financing

F-49

• The ratio of net debt to total capitalization no greater than 0.60 to 1.00.

• Minimum liquidity of not less than the greater of $25.0 million and $500,000 per each owned vessel plus

$250,000 per each time chartered-in vessel.

• The fair market value of each vessel leased under the facility shall at all times be no less than 115% of the

outstanding balance for such vessel.

The outstanding amounts were $123.8 million and $137.9 million as of December 31, 2020 and 2019,

respectively, and we were in compliance with the financial covenants as of those dates.

2020 CMBFL Lease Financing

Each agreement is for a fixed term of seven years, and we have options to purchase the vessels beginning on the
third anniversary of the delivery date of each agreement. The leases bear interest at LIBOR plus a margin of 3.2% per
annum and will be repaid in equal quarterly principal installments of $0.4 million per vessel. Each agreement also has a
purchase option at the end of the seventh year (which is equal to the outstanding principal balance at that date). We are
subject to certain terms and conditions, including financial covenants, under this arrangement which are summarized as
follows:

• The ratio of net debt to total capitalization no greater than 0.60 to 1.00.

• Minimum liquidity of not less than the greater of $25.0 million and $500,000 per each owned vessel plus

$250,000 per each time chartered-in vessel.

• The fair market value of each vessel leased under the facility shall at all times be no less than 120% of the

outstanding balance for such vessel.

The amount outstanding was $44.6 million as of December 31, 2020, and we were in compliance with the

financial covenants as of that date.

2020 TSFL Lease Financing

Each agreement is for a fixed term of seven years and we have options to purchase the vessels beginning on the
third anniversary of the delivery date of each agreement. The leases bear interest at LIBOR plus a margin of 3.2% per
annum and will be repaid in equal quarterly principal installments of $0.4 million per vessel. Each agreement also has a
purchase obligation at the end of the seventh year (which is equal to the outstanding principal balance at that date). We are
subject to certain terms and conditions, including financial covenants, under this arrangement which are summarized as
follows:

• The ratio of net debt to total capitalization no greater than 0.65 to 1.00.

• Consolidated tangible net worth of no less than $1.0 billion.

• The fair market value of each vessel leased under the facility shall at all times be no less than 115% of the

outstanding balance for such vessel.

F-50

The amount outstanding was $47.3 million as of December 31, 2020, and we were in compliance with the

financial covenants as of that date.

2020 SPDBFL Lease Financing

• The ratio of net debt to total capitalization no greater than 0.70 to 1.00.

• Consolidated tangible net worth of no less than $650.0 million.

• The fair market value of each vessel leased under the facility shall at all times be no less than 115% of the

outstanding balance for such vessel.

The amount outstanding was $96.5 million as of December 31, 2020, and we were in compliance with the

financial covenants as of that date.

Unsecured debt

Senior Notes Due 2020

In May 2020, our Senior Notes due 2020 matured, and the outstanding principal balance of $53.8 million was

repaid in full.

The outstanding balance was $53.8 million as of December 31, 2019, and we were in compliance with the

financial covenants relating to the Senior Notes due 2020 as of that date.

Convertible Notes Due 2019

In June 2014, we issued $360.0 million in aggregate principal amount of convertible senior notes due 2019, or the
“Convertible Notes due 2019,” in a private offering to qualified institutional buyers pursuant to Rule 144A under the
Securities Act.

In May 2018 and July 2018, we exchanged $188.5 million and $15.0 million (out of the $348.5 million
outstanding at the time), respectively, in aggregate principal amount of our Convertible Notes due 2019 for $188.5 million
and $15.0 million, respectively, in aggregate principal amount of the Company’s new 3.0% Convertible Senior Notes due
2022 (the “Convertible Notes due 2022”), the terms of which are described below. These exchanges were executed with
certain holders of the Convertible Notes due 2019 via separate, privately negotiated agreements. We recognized an
aggregate loss on these exchanges of $17.8 million.

F-51

On July 1, 2019, the Convertible Notes due 2019 matured, and we repaid the then outstanding balance of $142.7

million.

Senior Notes due 2025

In May 2020, we issued $28.1 million aggregate principal amount of 7.00% senior unsecured notes due June 30,
2025 or the Senior Notes due 2025 in an underwritten public offering. This amount includes $3.1 million related to the
partial exercise of the underwriters’ option to purchase additional Senior Notes due 2025 under the same terms and
conditions. The aggregate net proceeds were approximately $26.5 million after deducting underwriting commissions and
offering expenses.

The Senior Notes due 2025 bear interest at a coupon rate of 7.0% per year, payable quarterly in arrears on the 30th
day of March, June, September, and December of each year. Coupon payments commenced on June 30, 2020. We may
redeem the Senior Notes due 2025 in whole or in part, at our option, at any time (i) on or after June 30, 2022 and prior to
June 30, 2023, at a redemption price equal to 102% of the principal amount to be redeemed, (ii) on or after June 30, 2023
and prior to June 30, 2024, at a redemption price equal to 101% of the principal amount to be redeemed, and (iii) on or
after June 30, 2024 and prior to maturity, at a redemption price equal to 100% of the principal amount to be redeemed, in
each case plus accrued and unpaid interest to, but excluding, the redemption date.

The financial covenants under our Senior Notes due 2025 include:

• Net borrowings shall not equal or exceed 70% of total assets.

• Net worth shall always exceed $650.0 million.

The outstanding balance was $28.1 million as of December 31, 2020, and we were in compliance with the

financial covenants relating to the Senior Notes due 2025 as of that date.

Convertible Notes due 2022

As discussed above, in May 2018 and July 2018, we exchanged $188.5 million and $15.0 million, respectively, in
aggregate principal amount of our Convertible Notes due 2019 for $188.5 million and $15.0 million, respectively, in
aggregate principal amount of newly issued Convertible Notes due 2022. The Convertible Notes due 2022 issued in July
2018 have identical terms, are fungible with and are part of the series of Convertible Notes due 2022 issued in May 2018.
Interest is payable semi-annually in arrears on November 15 and May 15 of each year, beginning on November 15, 2018.
The Convertible Notes due 2022 will mature on May 15, 2022, unless earlier converted or repurchased in accordance with
their terms.

F-52

The table below details the dividends issued during the years ended December 31, 2020 and 2019, and the

corresponding effect on the conversion rate of the Convertible Notes due 2022:

Record Date
March 13, 2019
June 5, 2019
September 10, 2019
November 25, 2019
March 2, 2020
June 1, 2020
September 9, 2020
November 23, 2020

$
$
$
$
$
$
$
$

Dividends
per share

0.10
0.10
0.10
0.10
0.10
0.10
0.10
0.10

Share Adjusted
Conversion Rate(1)
25.4799
25.5767
25.6637
25.7401
25.8763
26.0200
26.2463
26.4810

(1) Per $1,000 principal amount of the Convertible Notes.

•

Upon conversion of the Convertible Notes due 2022, holders will receive shares of the Company’s common stock.

The Convertible Notes due 2022 are not redeemable by the Company.

F-53

The carrying values of the liability component of the Convertible Notes due 2022 (consisting of both the May
2018 and July 2018 issuances) as of December 31, 2020 and 2019, respectively, were $140.7 million and $180.1 million.
We incurred $5.5 million of coupon interest and $8.4 million of non-cash accretion during the year ended December 31,
2020. We incurred $6.1 million of coupon interest and $8.6 million of non-cash accretion during the year ended December
31, 2019. We were in compliance with the covenants related to the Convertible Notes due 2022 as of those dates.

Senior Notes Due 2019

In March 2017, we issued $50.0 million in aggregate principal amount of 8.25% Senior Notes due June 2019, or
our Senior Notes Due 2019, in an underwritten public offering and in April 2017, we issued an additional $7.5 million of
Senior Notes due 2019 when the underwriters fully exercised their option to purchase additional notes under the same
terms and conditions. During the year ended December 31, 2019, we redeemed the entire outstanding balance of the Senior
Notes due 2019 of $57.5 million.

13. Segment reporting

Information about our reportable segments for the years ended December 31, 2020, 2019 and 2018 is as follows:

For the year ended December 31, 2020

In thousands of U.S. dollars
Vessel revenue ................................................
Vessel operating costs ....................................
Voyage expenses ............................................
Depreciation - owned or finance leased

vessels ........................................................
Depreciation - right of use assets ...................
Impairment of vessels .....................................
Impairment of goodwill ..................................
General and administrative expenses .............
Financial expenses ..........................................
Gain on repurchase of Convertible Notes ......
Financial income ............................................
Other income and (expenses), net ..................
Segment income or loss ................................

LR1
$ 87,026
(30,396)
(60)

Handymax
$ 105,353
(47,791)
(402)

LR2

$ 375,594 $ 347,919
(147,851)
(107,710)
(4,018)
(3,479)

(20,557)
—
—
(2,639)
(1,180)
—
—
104
—
$ 32,298

(21,359)
(12,017)
—
—
(1,960)
—
—
9
—
21,833

(79,208)
(8,583)
—
—
(4,029)
—
—
51
—

$ 172,636 $

(73,144)
(30,950)
(14,207)
—
(6,060)
—
—
520
—
72,209

Reportable
segments
subtotal

Corporate
and
eliminations
$
—
—
—

Total
$ 915,892
(333,748)
(7,959)

—
—
—
—
(52,958)
(154,971)
1,013
565
1,499
(204,852) $

(194,268)
(51,550)
(14,207)
(2,639)
(66,187)
(154,971)
1,013
1,249
1,499
94,124

915,892
(333,748)
(7,959)

(194,268)
(51,550)
(14,207)
(2,639)
(13,229)
—
—
684
—
298,976

For the year ended December 31, 2019

vessels ........................................................
Depreciation - right of use assets ...................
General and administrative expenses .............
Financial expenses ..........................................
Financial income ............................................
Other expenses, net ........................................
Segment income or loss ................................

LR1
$ 67,461
(29,161)
(1,628)
—

Handymax
$ 106,811
(50,750)
(1,414)
(4,256)

(19,520)
—
(1,167)
—
360
—
$ 16,345

(19,119)
(11,678)
(2,192)
—
18
—
17,420

LR2

Reportable
segments
subtotal

$ 263,818 $ 266,235
(117,274)
(2,588)
(414)

(97,346)
(530)
271

(73,774)
(2,266)
(3,841)
—
32
—

$ 86,364 $

(67,639)
(12,972)
(4,951)
—
538
15
60,950

704,325
(294,531)
(6,160)
(4,399)

(180,052)
(26,916)
(12,151)
—
948
15
181,079

Corporate
and
eliminations
$

—
—
—
—

Total
$ 704,325
(294,531)
(6,160)
(4,399)

—
—
(50,144)
(186,235)
7,234
(424)
(229,569) $

(180,052)
(26,916)
(62,295)
(186,235)
8,182
(409)
(48,490)

F-54

For the year ended December 31, 2018

vessels ........................................................
General and administrative expenses .............
Merger transaction related costs.....................
Financial expenses ..........................................
Loss on exchange of convertible notes ..........
Financial income ............................................
Other expenses, net ........................................
Segment income or loss ................................

Handymax

LR2

Reportable
segments
subtotal

95,188
(48,249)
(440)
(19,223)

$ 203,414 $ 238,723
(111,294)
(890)
(32,526)

(91,975)
(3,225)
(7,883)

LR1
$ 47,722
(28,942)
(591)
—

(19,290)
(1,173)
—
—
—
111
—
(2,163) $

(18,190)
(2,195)
—
—
—
16
—
6,907

(72,610)
(3,790)
—
—
—
22
—

$ 23,953 $

(66,633)
(4,771)
—
—
—
515
—
23,124

Corporate
and
eliminations
$

—
—
—
—

Total
$ 585,047
(280,460)
(5,146)
(59,632)

—
(40,343)
(272)
(186,628)
(17,838)
3,794
(605)

(176,723)
(52,272)
(272)
(186,628)
(17,838)
4,458
(605)
(241,892) $ (190,071)

585,047
(280,460)
(5,146)
(59,632)

(176,723)
(11,929)
—
—
—
664
—
51,821

Revenue from customers representing greater than 10% of total revenue during the years ended December 31,

2020, 2019 and 2018, within their respective segments was as follows:

In thousands of U.S. dollars
Segment
MR ...........................................
LR2 ..........................................
Handymax ................................

Customer
Scorpio MR Pool Limited(1)
Scorpio LR2 Pool Limited(1)
Scorpio Handymax Tanker Pool Limited(1)

(1) These customers are related parties as described in Note 15.

14. Common shares

Reverse stock split

2020

For the year ended December 31,
2019
$ 340,937 $ 261,727 $ 225,181
188,890
260,893
369,476
105,355
82,782
103,150
$ 815,768 $ 625,770 $ 496,853

2018

On January 18, 2019, the Company effected a one-for-ten reverse stock split. All share and per share information
has been retroactively adjusted to reflect the reverse stock split. The par value was not adjusted as a result of the reverse
stock split.

Trafigura Transaction

As described in Note 6, in September 2019, we acquired the leasehold interests in 19 product tankers (four of

which were under construction) as part of the Trafigura Transaction. The consideration exchanged consisted of:

•

For the 15 delivered vessels, the assumption of the obligations under the Agreements of $531.5 million and
the issuance of 3,981,619 shares of common stock at $29.00 per share to a nominee of Trafigura with an
aggregate market value of $115.5 million.

For the four vessels under construction, the assumption of the commitments on the Agreements of $138.8
million and the issuance 591,254 shares of common stock at $29.00 per share to a nominee of Trafigura with
an aggregate market value of $17.1 million. Three of the vessels under construction were delivered in the first
quarter and one was delivered in September 2020.

Private Placement

In September 2019, we closed on private placements with Trafigura and SSH (a related party) for $35 million and

$15 million, respectively, in exchange for an aggregate of 1,724,137 of our common shares at $29.00 per share.

At the Market Share Issuance Program

F-55

to time through the Agent by means of ordinary brokers’ transactions on the NYSE at market prices, in block transactions,
or as otherwise agreed upon by the Agent and us. We intend to use the net proceeds from any sales under the Program for
general corporate and working capital purposes.

During the year ended December 31, 2020, we sold an aggregate of 137,067 of our common shares at an average
price of $18.79 per share for aggregate net proceeds of $2.6 million. There is $97.4 million of remaining availability under
the ATM Program as of December 31, 2020.

Follow-on Offerings of Common Shares

2013 Equity Incentive Plan

In April 2013, we adopted an equity incentive plan, which was amended in March 2014 and which we refer to as
the 2013 Equity Incentive Plan, under which directors, officers, employees, consultants and service providers of us and our
subsidiaries and affiliates are eligible to receive incentive stock options and non-qualified stock options, stock appreciation
rights, restricted stock, restricted stock units and unrestricted common stock. We initially reserved a total of 500,000
common shares for issuance under the 2013 Equity Incentive Plan which was increased by an aggregate of 1,286,971
common shares through December 31, 2016 and subsequently revised as follows:

•

In October 2017, we reserved an additional 950,180 common shares, par value $0.01 per share, for issuance
pursuant to the 2013 Equity Incentive Plan. All other terms of the 2013 Equity Incentive Plan remained
unchanged.

In February 2018, we reserved an additional 512,244 common shares, par value $0.01 per share, for issuance
pursuant to the 2013 Equity Incentive Plan. All other terms of the 2013 Equity Incentive Plan remained
unchanged.

In June 2018, we reserved an additional 210,140 common shares, par value $0.01 per share, for issuance
pursuant to the 2013 Equity Incentive Plan. All other terms of the 2013 Equity Incentive Plan remained
unchanged.

In December 2018, we reserved an additional 1,383,248 common shares, par value $0.01 per share, for
issuance pursuant to the 2013 Equity Incentive Plan. All other terms of the 2013 Equity Incentive Plan
remained unchanged.

In February 2019, we reserved an additional 86,977 common shares, par value $0.01 per share, for issuance
pursuant to the 2013 Equity Incentive Plan. All other terms of the 2013 Equity Incentive Plan remained
unchanged.

In July 2019, we reserved an additional 134,893 common shares, par value $0.01 per share, for issuance
pursuant to the 2013 Equity Incentive Plan. All other terms of the 2013 Equity Incentive Plan remained
unchanged.

In December 2019, we reserved an additional 529,624 common shares, par value $0.01 per share, for issuance
pursuant to the 2013 Equity Incentive Plan. All other terms of the 2013 Equity Incentive Plan remained
unchanged.

In June 2020, we reserved an additional 362,766 common shares, par value $0.01 per share, for issuance
pursuant to the 2013 Equity Incentive Plan. All other terms of the 2013 Equity Incentive Plan remained
unchanged.

In December 2020, we reserved an additional 367,603 common shares, par value $0.01 per share, for issuance
pursuant to the 2013 Equity Incentive Plan. All other terms of the 2013 Equity Incentive Plan remained
unchanged.

F-56

market value of a common share on the date of grant. Options and stock appreciation rights will be exercisable at times and
under conditions as determined by the plan administrator, but in no event will they be exercisable later than ten years from
the date of grant.

Our Board of Directors may amend or terminate the 2013 Equity Incentive Plan and may amend outstanding
awards, provided that no such amendment or termination may be made that would materially impair any rights, or
materially increase any obligations, of a grantee under an outstanding award. Shareholder approval of plan amendments
will be required under certain circumstances. Unless terminated earlier by our board of directors, the 2013 Equity Incentive
Plan will expire ten years from the date the plan was adopted.

Number of restricted
shares

123,518
21,750
21,479
123,518
21,750
21,480
123,519
21,751
21,480
500,245

Vesting date
September 4, 2020
November 4, 2020
March 1, 2021
September 3, 2021
November 5, 2021
March 1, 2022
September 2, 2022
November 4, 2022
March 1, 2023

The vesting schedule of the restricted stock issued to our independent directors is: (i) one-third of the shares
vested on March 1, 2019, (ii) one-third of the shares vested on March 2, 2020, and (iii) one-third of the shares vested on
March 1, 2021.

F-57

schedule of the restricted stock issued to our independent directors is (i) one-third of the shares vested on September 25,
2019, (ii) one-third of the shares vested on September 24, 2020, and (iii) one-third of the shares vest on September 23,
2021.

There were 276,369 shares eligible for issuance under the 2013 Equity Incentive Plan as of December 31, 2020.

The following is a summary of activity for awards of restricted stock during the years ended December 31, 2020

and 2019:

Outstanding and non-vested, December 31, 2018 ..........................
Granted ........................................................................................
Vested .........................................................................................
Forfeited ......................................................................................
Outstanding and non-vested, December 31, 2019 ..........................
Granted ........................................................................................
Vested .........................................................................................
Forfeited ......................................................................................
Outstanding and non-vested, December 31, 2020 ......................

F-58

Number of
Shares
3,359,887
510,420
(306,065)
(2,500)
3,561,742
925,080
(678,649)
(1,400)
3,806,773

Weighted Average
Grant Date Fair
Value

30.05
26.57
65.96
46.41
26.45
24.16
36.01
26.64
24.19

Compensation expense is recognized ratably over the vesting periods for each tranche using the straight-line

method.

Assuming that all the restricted stock will vest, the stock compensation expense in future periods, including that

related to restricted stock issued in prior periods will be:

In thousands of U.S. dollars
For the year ending December 31, 2021 ..................................................
For the year ending December 31, 2022 ..................................................
For the year ending December 31, 2023 ..................................................
For the year ending December 31, 2024 ..................................................
For the year ending December 31, 2025 ..................................................

Employees
20,622
12,596
5,595
1,607
123
40,543

Directors
1,291
488
107
—
—
1,886

Total

21,913
13,084
5,702
1,607
123
42,429

Dividend Payments

The following dividends were paid during the years ended December 31, 2020, 2019 and 2018.

Dividends
per share
$0.100
$0.100
$0.100
$0.100
$0.100
$0.100
$0.100
$0.100
$0.100
$0.100
$0.100
$0.100

Date Paid

March 27, 2018
June 28, 2018
September 27, 2018
December 13, 2018
March 28, 2019
June 27, 2019
September 27, 2019
December 13, 2019
March 13, 2020
June 15, 2020
September 29, 2020
December 14, 2020

2015 Securities Repurchase Program

In May 2015, our Board of Directors authorized a new Securities Repurchase Program to purchase up to an

aggregate of $250 million of our securities.

During the year ended December 31, 2019, we purchased an aggregate of 30 of our common shares that are being
held as treasury shares at an average price of $17.10 per share. During the year ended December 31, 2020, we acquired an
aggregate of 1,170,000 of our common shares at an average price of $11.18 per share for a total of $13.1 million. All
repurchased shares are being held as treasury shares.

Between July 1, 2020 and September 30, 2020 we repurchased $52.3 million face value of our Convertible Notes
due 2022 at an average price of $894.12 per $1,000 principal amount, or $46.7 million and we recorded a $1.0 million gain
on repurchase of Convertible Notes within the consolidated statement of income or loss.

New $250 Million Securities Repurchase Program

In September 2020, our Board of Directors authorized a new securities repurchase program to purchase up to an
aggregate of $250 million of securities, which, in addition to our common shares, currently consist of our Senior Notes due
2025 (NYSE: SBBA), which were issued in May 2020, Convertible Notes due 2022, which were issued in May and July
2018, and Convertible Notes due 2025. The aforementioned repurchases of common stock and our convertible notes were
executed under the previous securities repurchase program, which has since been terminated and any future repurchases of
our securities will be made under the new $250 million securities repurchase program.

There were 7,519,324 and 6,349,324 common shares held in treasury at December 31, 2020 and December 31,

2019, respectively.

F-59

We had $250.0 million remaining under our Securities Repurchase Program as of December 31, 2020. We expect
to repurchase any securities in the open market, at times and prices that are considered to be appropriate, but we are not
obligated under the terms of the program to repurchase any securities.

Shares outstanding

We currently have 175,000,000 registered shares authorized of which 150,000,000 are designated as common

shares with a par value of $0.01 and 25,000,000 are designated as preferred shares with a par value of $0.01.

As of December 31, 2020, we had 58,093,147 common shares outstanding. These shares provide the holders with

rights to dividends and voting rights.

15. Related party transactions

The Revised Master Agreement may be terminated by either party upon 24 months’ notice, unless terminated
earlier in accordance with the provisions of the Revised Master Agreement. In the event of the sale of one or more vessels,
a notice period of three months and a payment equal to three months of management fees will apply, provided that the
termination does not amount to a change in control, including a sale of all or substantially all of our vessels, in which case a
payment equal to 24 months of management fees will apply. SCM and SSM are related parties of ours. We expect that any
additional vessels that we may acquire in the future will also be managed under the Revised Master Agreement or on
substantially similar terms.

Transactions with entities controlled by the Lolli-Ghetti family (herein referred to as related parties) in the

consolidated statements of income or loss and balance sheets are as follows:

In thousands of U.S. dollars
Pool revenue(1)

For the year ended December 31,
2018
2019
2020

Scorpio MR Pool Limited ...............................................................................
Scorpio LR2 Pool Limited ..............................................................................
Scorpio Handymax Tanker Pool Limited ........................................................
Scorpio LR1 Pool Limited ..............................................................................
Voyage revenue(2) ...............................................................................................
Voyage expenses(3) .............................................................................................
Vessel operating costs(4) ......................................................................................
Administrative expenses(5) ..................................................................................

$ 340,937
369,476
105,355
87,028
2,334
(3,507)
(33,896)
(13,876)

$ 261,727
260,893
103,150
66,009
—
(2,414 )
(31,732 )
(12,975 )

$ 225,181
188,890
82,782
46,823
—
(1,290)
(34,272)
(12,475)

(1) These transactions relate to revenue earned in the Scorpio Pools. The Scorpio Pools are related parties. When our
vessels are in the Scorpio Pools, SCM, the pool manager, charges fees of $300 per vessel per day with respect to
our LR1/Panamax and Aframax vessels, $250 per vessel per day with respect to our LR2 vessels, and $325 per
vessel per day with respect to each of our Handymax and MR vessels, plus a commission of 1.50% on gross
revenue per charter fixture. These are the same fees that SCM charges other vessels in these pools, including third
party vessels. In September 2018, we entered into an agreement with SCM whereby SCM reimbursed a portion of
the commissions that SCM charges the Company’s vessels to effectively reduce such to 0.85% of gross revenue
per charter fixture, effective from September 1, 2018 and ending on June 1, 2019.

(2) These transactions relate to revenue earned in the spot market on voyages chartered through SSH, a related party

affiliate.

(3) Related party expenditures included within voyage expenses in the consolidated statements of income or loss

consist of the following:

F-60

their gross revenue per charter fixture. These expenses are included in voyage expenses in the consolidated
statements of income or loss. In September 2018, we entered into an agreement with SCM whereby SCM
reimbursed a portion of the commissions that SCM charges the Company’s vessels to effectively reduce such
to 0.85% of gross revenue per charter fixture, effective from September 1, 2018 and ending on June 1, 2019.

• Bunkers of $3.6 million were purchased from a related party bunker provider (who was engaged in the
procurement of bunkers on our behalf) during the year ended December 31, 2020. These bunkers were
purchased when our vessels were operating in the spot market, outside of the Scorpio Pools. Approximately
$2.9 million of these purchases were consumed during the spot market voyages, and the remaining
unconsumed portion was considered a working capital contribution to the pool (see below for a description on
the accounting for working capital contributions to the Scorpio Pools) when the vessels re-joined the pools.
Bunkers of $0.8 million were purchased from this provider during the year ended December 31, 2019, of
which, $0.3 million were consumed during the period.

• Voyage expenses of $4,925, $4,357 and $25,747 charged by a related party port agent during the years ended
December 31, 2020, 2019 and 2018 respectively. SSH has a majority equity interest in a port agent that
provides supply and logistical services for vessels operating in its regions.

(4) Related party expenditures included within vessel operating costs in the consolidated statements of income or loss

consist of the following:

• Technical management fees of $31.9 million, $30.0 million, and $30.1 million charged by SSM, a related
party, during the years ended December 31, 2020, 2019 and 2018 respectively. SSM’s services include day-
to-day vessel operations, performing general maintenance, monitoring regulatory and classification society
compliance, customer vetting procedures, supervising the maintenance and general efficiency of vessels,
arranging the hiring of qualified officers and crew, arranging and supervising drydocking and repairs,
purchasing supplies, spare parts and new equipment for vessels, appointing supervisors and technical
consultants, and providing technical support. SSM administers the payment of salaries to our crew on our
behalf. The crew wages that were administered by SSM (and disbursed through related party subcontractors
of SSM) were $146.0 million, $138.9 million, and $125.8 million during the years ended December 31, 2020,
2019 and 2018 respectively. SSM’s annual technical management fee is a fixed fee of $175,000 per vessel
plus certain itemized expenses pursuant to the technical management agreement.

•

Insurance related expenses of $2.6 million incurred through a related party insurance broker during the year
ended December 31, 2018. The amounts recorded reflect the amortization of the policy premiums, which are
paid directly to the broker, who then remits the premiums to the underwriters. In 2016, an Executive Officer
of the Company acquired a minority interest, which in 2018 increased to a majority interest, in an insurance
broker which arranges hull and machinery and war risk insurance for certain of our owned and leased vessels.
This broker has arranged such policies for the Company since 2010 and the extent of the coverage and the
manner in which the policies are priced did not change as a result of this transaction. In September 2018, the
Executive Officer disposed of their interest in the insurance broker in its entirety to an unaffiliated third party.

• Vessel operating expenses of $2.0 million, $1.7 million and $1.6 million charged by a related party port agent
during the years ended December 31, 2020, 2019 and 2018, respectively. SSH has a majority equity interest
in a port agent that provides supply and logistical services for vessels operating in its regions.

(5) We have an Amended Administrative Services Agreement with SSH for the provision of administrative staff and
office space, and administrative services, including accounting, legal compliance, financial and information
technology services. SSH is a related party to us. The services provided to us by SSH may be sub-contracted to
other entities within Scorpio. The expenses incurred under this agreement were recorded in general and
administrative expenses in the consolidated statement of income or loss and were as follows:

• The expense for the year ended December 31, 2020 of $13.9 million included (i) administrative fees of $12.6
million charged by SSH, (ii) restricted stock amortization of $1.2 million, which relates to the issuance of an
aggregate of 315,950 shares of restricted stock to SSH employees for no cash consideration pursuant to the
2013 Equity Incentive Plan, and (iii) the reimbursement of expenses of $19,772 to SSH and $45,539 to SCM.

• The expense for the year ended December 31, 2019 of $13.0 million included (i) administrative fees of $11.4
million charged by SSH, (ii) restricted stock amortization of $1.1 million, which relates to the issuance of an
aggregate of 221,900 shares of restricted stock to SSH employees for no cash consideration pursuant to the
2013 Equity Incentive Plan and (iii) the reimbursement of expenses of $0.2 million to SSH and $0.2 million
to SCM.

F-61

• The expense for the year ended December 31, 2018 of $12.5 million included (i) administrative fees of $11.1
million charged by SSH, (ii) restricted stock amortization of $1.3 million, which relates to the issuance of an
aggregate of 114,400 shares of restricted stock to SSH employees for no cash consideration pursuant to the
2013 Equity Incentive Plan and (iii) the reimbursement of expenses of $46,535.

We had the following balances with related parties, which have been included in the consolidated balance sheets:

In thousands of U.S. dollars
Assets:
Accounts receivable (due from the Scorpio Pools)(1) ..............................................................
Accounts receivable and prepaid expenses (SSM)(2) ..............................................................
Other assets (pool working capital contributions)(3) ...............................................................
Liabilities:
Accounts payable and accrued expenses (owed to the Scorpio Pools) ...................................
Accounts payable and accrued expenses (SSM) .....................................................................
Accounts payable and accrued expenses (SSH) .....................................................................
Accounts payable and accrued expenses (related party port agent) ........................................
Accounts payable and accrued expenses (SCM) ....................................................................

As of December 31,
2019
2020

26,413
4,259
73,161

74,412
1,624
49,094

945
935
404
355
58

3,717
2,667
353
361
14

(1) Accounts receivable due from the Scorpio Pools relate to hire receivables for revenues earned and receivables
from working capital contributions. The amounts as of December 31, 2020 and 2019 include $1.1 million and
$24.3 million, respectively, of working capital contributions made on behalf of our vessels to the Scorpio Pools.
Upon entrance into such pools, all vessels are required to make working capital contributions of both cash and
bunkers. Additional working capital contributions can be made from time to time based on the operating needs of
the pools. These amounts are accounted for and repaid as follows:

•

For vessels in the Scorpio LR2 Pool, Scorpio LR1 Pool, Scorpio MR Pool and Scorpio Handymax Tanker
Pool, the initial contribution amount is repaid, without interest, upon a vessel’s exit from the pool no later
than six months after the exit date. Bunkers on board a vessel exiting the pool are credited against such
repayment at the actual invoice price of the bunkers. For all owned or lease financed vessels we assume that
these contributions will not be repaid within 12 months and are thus classified as non-current within other
assets on the consolidated balance sheets. The Scorpio MR Pool Limited amended the terms of the pool
agreement with its participants during 2020. Prior to 2020, working capital contributions are repaid, without
interest, when such vessel has earned sufficient net revenues to cover the value of such working capital
contributed. Accordingly, we classified $23.6 million of working capital as current (within accounts
receivable) at December 31, 2019.

For time or bareboat chartered-in vessels we classify the initial contributions as current (within accounts
receivable) or non-current (within other assets) according to the expiration of the contract. Any additional
working capital contributions are repaid when sufficient net revenues become available to cover such
amounts.

(2) Accounts receivable and prepaid expenses from SSM primarily relate to advances made for vessel operating

expenses (such as crew wages) that will either be reimbursed or applied against future costs.

(3) Represents the non-current portion of working capital receivables as described above.

• During the years ended December 31, 2020 and 2019, no fees were paid to SSH for the sale or purchase of

vessels.

• During the year ended December 31, 2018, we paid SSH an aggregate fee of $0.7 million in connection with
the purchase and delivery of STI Esles II and STI Jardins. The agreements to acquire the aforementioned
vessels were entered into prior to the September 29, 2016 amendments to the Administrative Services
Agreement.

F-62

Follow-on Offerings of Common Shares

Private Placement

In September 2019, we closed on a private placement with SSH for $15.0 million, in exchange for an aggregate of

517,241 of our common shares at $29.00 per share, as described in Note 14.

Other agreements

Key management remuneration

The table below shows key management remuneration for the years ended December 31, 2020, 2019 and 2018:

For the year ended December 31,
2018
2019
2020
$ 10,989
22,217
$ 33,206

10,821
21,712
32,533

5,436
20,316
25,752

(1) Represents the amortization of restricted stock issued under our 2013 Equity Incentive Plan as described in Note 14.

For the purpose of the table above, key management are those persons who have authority and responsibility for

making strategic decisions, and managing operating, financial and legal activities.

There are no material post-employment benefits for our executive officers or directors. By law, our employees in
Monaco are entitled to a one-time payment of up to two months salary upon retirement if they meet certain minimum
service requirements.

F-63

16. Vessel revenue

During the years ended December 31, 2019 and 2018, we had three and five vessels that earned revenue through
long-term time-charter contracts (with initial terms of one year or greater), respectively. There were no vessels that earned
revenue through long-term time-charter contracts during the year ended December 31, 2020. The remaining vessels earned
revenue from the Scorpio Pools or in the spot market. The following table sets forth our revenue, by employment type, for
these periods:

In thousands of U.S. dollars
Pool revenue .................................................................................................
Time charter revenue ....................................................................................
Voyage revenue (spot market) ......................................................................

For the year ended December 31,
2019
2020
2018
$ 543,784
$ 691,886
$ 902,796
34,015
2,551
—
7,248
9,888
13,096

$ 915,892

$ 704,325

$ 585,047

IFRS 16 Lease Revenue

In accordance with IFRS 16 - Leases, we are required to identify the lease and non-lease components of revenue
and account for each component in accordance with the applicable accounting standard. In time charter-out or pool
arrangements, we have determined that the lease component is the vessel and the non-lease component is the technical
management services provided to operate the vessel. Each component is quantified on the basis of the relative stand-alone
price of each lease component and on the aggregate stand-alone price of the non-lease components.

These components will be accounted for as follows:

• All fixed lease revenue earned under these time charter-out arrangements is recognized on a straight-line basis

over the term of the lease.

• Lease revenue earned under our pool arrangements is recognized as it is earned, since it is 100% variable.

• The non-lease component is accounted for as services revenue under IFRS 15. This revenue is recognized
“over time” as the customer (i.e. the pool or the charterer) is simultaneously receiving and consuming the
benefits of the service.

The following table summarizes the lease and non-lease components of revenue from time charter-out and pool
revenue during the years ended December 31, 2020, 2019 and 2018. These figures are not readily quantifiable as the
Company’s contracts (with the Scorpio pools or under time charter-out arrangements) do not separate these components.
The Company does not view its pool and time charter-out revenue as two separate streams of revenue. Nevertheless, we
have estimated these amounts by reference to (i) third party, published time charter rates for the lease component, and (ii)
an approximation of the fair market value of vessel operating expenses for the non-lease component.

In thousands of U.S. dollars
Lease component of revenue from time charter-out and pool revenue ............
Non-lease component of revenue from time charter-out and pool revenue .....

For the year ended December 31,
2018
2019
2020
$ 296,151
$ 428,781
$ 548,988
265,656
353,808
281,648
$ 577,799
$ 694,437
$ 902,796

The following table summarizes the terms of our time chartered-out vessels that were in place during the years

ended December 31, 2020 and 2019.

Name
STI Pimlico ................
STI Poplar ..................
STI Rose ....................

Year built
2014
2014
2015

Type
Handymax
Handymax
LR2

1
2
3

Delivery Date
to the
Charterer
February-16
January-16
February-16

Charter
Expiration
March-19
February-19
February-19

Rate ($/ day)
18,000
18,000
28,000

$
$
$

Payments received include payments for the non-lease elements in these time chartered-out arrangements.

F-64

17. Crewing costs

The following table sets forth the components of our crew expenses, including crew benefits, during the years

ended December 31, 2020, 2019 and 2018, respectively.

In thousands of US dollars
Short term crew benefits (i.e. wages, victualing, insurance) .............................
Other crewing related costs ...............................................................................

For the year ended December 31,
2018
2019
2020
$ 150,743
$ 155,958
$ 173,912
19,534
20,728
24,375

$ 198,287

$ 176,686

$ 170,277

There are no material post-employment benefits for our crew.

18. General and administrative expenses

General and administrative expenses primarily represent employee benefit expenses, professional fees and

administrative fees payable to SSH under our administrative services agreement (as described in Note 15).

Employee benefit expenses (excluding crew) consist of:

In thousands of U.S. dollars
Short term employee benefits (salaries) ......................................................
Share based compensation (see Note 14) ....................................................

For the year ended December 31,
2018
2019
2020

18,099
28,506
46,605

16,776
27,421
44,197

9,605
25,547
35,152

19. Financial expenses

The following table sets forth the components of our financial expenses for the years ended December 31, 2020,

2019 and 2018:

In thousands of U.S. dollars
Interest expense on debt (including all lease financing arrangements)(1) ..........
Accretion of convertible notes (as described in Note 12) .................................
Amortization of deferred financing fees ...........................................................
Loss on extinguishment of debt and write-off of deferred financing fees(2) .....
Accretion of premiums and discounts on assumed debt(3) ................................
Total financial expenses ..................................................................................

For the year ended December 31,
2018
2019
2020
162,738 $ 145,871
132,423 $
13,225
8,413
10,541
6,657
13,212
4,056
3,779
3,422
186,235 $ 186,628
154,971 $

11,375
7,041
1,466
3,615

(1) The decrease in interest expense is primarily attributable to lower LIBOR rates. As a result of the COVID-19
pandemic, LIBOR rates decreased significantly during the year ended December 31, 2020. Additionally, we were able
to lower the weighted average margin on our variable rate debt through various refinancing initiatives commencing in
the fourth quarter of 2019 and throughout 2020. The combination resulted in lower interest expense for the year ended
December 31, 2020 compared to December 31, 2019 despite the increase in the average carrying value of our debt to
$3.13 billion from $2.91 billion as of December 31, 2020 and 2019, respectively.

The increase in interest expense during the year ended December 31, 2019 was result of the increase in the average
carrying value of our debt balance, from $2.81 billion during the year ended December 31, 2018 to $2.91 billion
during the year ended December 31, 2019, partially offset by the decrease in LIBOR during the year ended December
31, 2019 as compared to the year ended December 31, 2018. The increase in the average carrying value of our debt
balance was primarily due to the Trafigura Transaction and the assumption of $531.5 million of obligations under
leasing arrangements (which closed in September 2019 and thus did not impact the entire year ended December 31,
2019) combined with our scrubber financings.

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Interest payable during those periods was offset by interest capitalized of $1.4 million, $2.8 million and $0.2 million,
during the years ended December 31, 2020, 2019 and 2018 respectively.

(2) The loss on extinguishment of debt and write-off of deferred financing fees during the year ended December 31, 2020
include (i) $2.7 million of write-offs of deferred financing fees related to the refinancing of existing indebtedness on
certain vessels, (ii) $2.0 million of cash prepayment fees, primarily from the CSSC Lease Financing (as described in
Note 12), offset by (iii) $0.7 million of write-offs of the premium and discounts related to the refinancing of existing
indebtedness on certain vessels. The loss on extinguishment of debt and write-off of deferred financing fees during the
year ended December 31, 2019 includes write-offs of deferred financing fees of (i) $1.2 million related to the
refinancing of existing indebtedness on certain vessels, and (ii) $0.3 million related to the redemption of the Senior
Notes due 2019 (as described in Note 12). The loss on extinguishment of debt and deferred financing fees write-off
during the year ended December 31, 2018 includes write-offs of deferred financing fees of (i) $1.2 million related to
the exchange of our Convertible Notes due 2019 in May and July 2018 (as described in Note 12) and (ii) $12.0 million
related to the refinancing of the existing indebtedness on certain vessels.

(3) The accretion of premiums and discounts represent the accretion or amortization of the fair value adjustments relating

to the indebtedness assumed as part of the 2017 acquisition of Navig8 Product Tankers Inc.

20. Tax

Scorpio Tankers Inc. and its vessel-owning or leasing subsidiaries are incorporated in either the Republic of the
Marshall Islands or in Singapore. We are not subject to Marshall Islands’ income tax in accordance with the income tax
laws of the Marshall Islands and we are eligible for tax exemptions in accordance with the income tax laws of Singapore.
Based upon review of applicable laws and regulations, and after consultation with counsel, we do not believe we are
subject to material income taxes in any jurisdiction, including the United States of America. Therefore, we did not have
any income tax charges, benefits, or balances as of or for the periods ended December 31, 2020, 2019 and 2018.

21. Earnings / (loss) per share

The calculation of both basic and diluted loss per share is based on net loss attributable to equity holders of the

parent and weighted average outstanding shares of:

In thousands of U.S. dollars except for share data
Net income / (loss) attributable to equity holders of the parent - basic ........ $
Convertible notes interest expense ...........................................................
Convertible notes deferred financing amortization ..................................
Net income / (loss) attributable to equity holders of the parent - diluted ..... $

For the year ended December 31,
2018
2019
2020
(190,071)
—
—
(190,071)

(48,490) $
—
—
(48,490) $

94,124 $
—
—
94,124 $

Basic weighted average number of shares ...................................................
Effect of dilutive potential basic shares:

Restricted stock ........................................................................................
Convertible notes ......................................................................................

Diluted weighted average number of shares ................................................

54,665,898

49,857,998

34,824,311

1,726,413
—
1,726,413
56,392,311

—
—
—
49,857,998

—
—
—
34,824,311

Earnings / (Loss) Per Share:

Basic ......................................................................................................... $
Diluted ...................................................................................................... $

1.72 $
1.67 $

(0.97) $
(0.97) $

(5.46)
(5.46)

During the year ended December 31, 2020, the inclusion of potentially dilutive shares relating to our Convertible
Notes due 2022 (representing an aggregate of 4,004,702 shares of common stock) were excluded from the computation of
diluted earnings per share because their effect would have been anti-dilutive.

During the years ended December 31, 2019 and 2018, we incurred net losses and as a result, the inclusion of
potentially dilutive shares relating to unvested shares of restricted stock and our Convertible Notes due 2019 and
Convertible Notes due 2022 were excluded from the computation of diluted earnings per share because their effect would
have been anti-dilutive. Accordingly, interest expense, deferred financing amortization and the potentially dilutive
securities relating to the conversion of the Convertible Notes due 2019 and Convertible Notes due 2022 (representing

F-66

5,238,105, and 6,613,733 shares of common stock for the years ended December 31, 2019 and 2018, respectively) along
with the potentially dilutive impact of 3,561,742 and 3,359,887 unvested shares of restricted stock were excluded from the
computation of diluted earnings per share for the years ended December 31, 2019 and 2018, respectively.

22. Financial instruments - financial and other risks

Funding and capital risk management

We manage our funding and capital resources to ensure our ability to continue as a going concern while

maximizing the return to the shareholder through optimization of the debt and equity balance.

IFRS 13 requires classifications of fair value measures into Levels 1, 2 and 3. Level 1 fair value measurements are
those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 fair value
measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3 fair value measurements are
those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market
data (unobservable inputs).

The fair values and carrying values of our financial instruments at December 31, 2020 and 2019, respectively, are

shown in the table below.

Categories of Financial Instruments

Amounts in thousands of U.S. dollars
Financial assets
Cash and cash equivalents(1) ........................................
Restricted cash(2) ..........................................................
Accounts receivable(3) ..................................................
Investment in BWTS(4) ................................................
Working capital contributions to Scorpio Pools(5) .......
Seller’s credit on sale leaseback vessels(6) ...................

Financial liabilities
Accounts payable(7) ......................................................
Accrued expenses(7) .....................................................
Secured bank loans(8) ...................................................
Sale and leaseback liability(9) .......................................
IFRS 16 - lease liability(10) ...........................................
Senior Notes Due 2020(11) ............................................
Senior Notes Due 2025(11) ............................................
Convertible Notes due 2022(12) ....................................

As of December 31, 2020
Carrying
Value

Fair value

As of December 31, 2019
Carrying
Value

Fair value

187,511
5,293
33,017
1,751
73,161
10,192

12,863
32,193
976,505
1,290,390
634,707
—
28,774
145,647

187,511
5,293
33,017
1,751
73,161
10,192

202,303 $

12,293
78,174
1,751
49,094
9,624

202,303
12,293
78,174
1,751
49,094
9,624

12,863
32,193
976,505
1,271,449
632,473
—
28,100
151,229

23,122 $
41,452
1,001,087
1,317,709
571,748
54,562
—
250,305

23,122
41,452
1,001,087
1,317,709
569,974
53,750
—
203,500

(1) Cash and cash equivalents are considered Level 1 items as they represent liquid assets with short-term maturities.

(2) Restricted cash are considered Level 1 items due to the liquid nature of these assets.

(3) We consider that the carrying amount of accounts receivable approximate their fair value due to the relative short

maturity of these instruments.

(4) We consider the value of our minority interest in our BWTS supplier (as described in Note 8) to be a Level 3 fair value
measurement, as this supplier is a private company and the value has been determined based on unobservable market
data (i.e. the proceeds that we would receive if we exercised the put option set forth in the agreement in full).
Moreover, we consider that its carrying value approximates fair value given that the value of this investment is
contractually limited to the strike prices set forth in the put and call options prescribed in the agreement and the
difference between the two prices is not significant. The difference in the aggregate value of the investment, based on
the spread between the exercise prices of the put and call options is $0.6 million.

(5) Non-current working capital contributions to the Scorpio Pools are repaid, without interest, upon a vessel’s exit from
the pool. For all owned vessels, we assume that these contributions will not be repaid within 12 months and are thus
classified as non-current within Other Assets on the consolidated balance sheets. We consider that their carrying values
approximate fair value given that the amounts due are contractually fixed based on the terms of each pool agreement.

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(6) The seller’s credit on lease financed vessels represents the present value of the deposits of $4.35 million per vessel
($13.1 million in aggregate) that was retained by the buyer as part of the sale and operating leasebacks of STI Beryl,
STI Le Rocher and STI Larvotto. This deposit will either be applied to the purchase price of the vessel if a purchase
option is exercised or refunded to us at the expiration of the agreement. This deposit has been recorded as a financial
asset measured at amortized cost. The present value of this deposit has been calculated based on the interest rate that is
implied in the lease, and the carrying value will accrete over the life of the lease using the effective interest method,
through interest income, until expiration. We consider that its carrying value approximates fair value given that its
value is contractually fixed based on the terms of each lease.

(7) We consider that the carrying amounts of accounts payable and accrued expenses approximate the fair value due to the

relative short maturity of these instruments.

(8) The carrying value of our secured bank loans are measured at amortized cost using the effective interest method. We
consider that their carrying value approximates fair value because the interest rates on these instruments change with,
or approximate, market interest rates and the credit risk of the Company has remained stable. Accordingly, we
consider their fair value to be a Level 2 measurement. These amounts are shown net of $12.3 million and $8.8 million
of unamortized deferred financing fees as of December 31, 2020 and 2019, respectively.

(9) The carrying value of our obligations due under sale and leaseback arrangements are measured at amortized cost using
the effective interest method. With the exception of three fixed rate sale and leaseback arrangements, we consider that
their carrying value approximates fair value because the interest rates on these instruments change with, or
approximate, market interest rates and the credit risk of the Company has remained stable. The fair value of leases with
fixed payments are measured at the net discounted value of the remaining minimum lease payments using our
incremental borrowing rate at December 31, 2020. Accordingly, we consider their fair value to be a Level 2
measurement. The incremental borrowing rate did not materially differ from the implicit interest rate in these leases as
of December 31, 2019. These amounts are shown net of $8.7 million and $7.8 million of unamortized deferred
financing fees as of December 31, 2020 and 2019, respectively.

(10) The carrying value of our lease obligations that are being accounted for under IFRS 16 are measured at present value
of the minimum lease payments under each contract. These leases are mainly comprised of the leases acquired as part
of the Trafigura Transaction. We consider that their carrying value approximates fair value because the interest rates
on these leases change with, or approximate, market interest rates and the credit risk of the Company has remained
stable. The fair value of leases with fixed payments are measured at the net discounted value of the remaining
minimum lease payments using our incremental borrowing rate at December 31, 2020 and 2019. Accordingly, we
consider their fair value to be a Level 2 measurement.

(11) The carrying value of our Senior Notes Due 2025 and 2020 are measured at amortized cost using the effective interest
method. The carrying values shown in the table are the face value of the notes. The Senior Notes due 2025 are shown
net of $1.4 million of unamortized deferred financing fees on our consolidated balance sheet as of December 31, 2020.
The Senior Notes due 2020 are shown net of $0.5 million of unamortized deferred financing fees, respectively, on our
consolidated balance sheet as of December 31, 2019. Our Senior Notes Due 2025 are quoted on the NYSE under the
symbol ‘SBBA’. We consider its fair value to be Level 1 measurement due to its quotation on an active exchange.

(12) The carrying values of our Convertible Notes due 2022 shown in the table above are their face value. The liability
component of the Convertible Notes due 2022 has been recorded within Long-term debt on the consolidated balance
sheet as of December 31, 2020. The equity component of the Convertible Notes due 2022 has been recorded within
Additional paid-in capital on the consolidated balance sheet as of December 31, 2020. This instrument is quoted in
inactive markets and is valued based on quoted prices on the recent trading activity. Accordingly, we consider its fair
value to be a Level 2 measurement.

Financial risk management objectives

We identify and evaluate significant risks on an ongoing basis with the objective of managing the sensitivity of
our results and financial position to those risks. These risks include market risk, credit risk, liquidity risk and foreign
exchange risk.

The use of financial derivatives is governed by our policies as approved by the Board of Directors.

Market risk

Our activities expose us to the risks inherent with the tanker industry, which has historically been volatile, and

financial risks of changes in interest rates.

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Spot market rate risk

The cyclical nature of the tanker industry causes significant increases or decreases in the revenue that we earn
from our vessels, particularly those vessels that operate in the spot market or participate in pools that are concentrated in
the spot market such as the Scorpio Pools. Additionally, we have the ability to remove our vessels from the pools on
relatively short notice if attractive time charter opportunities arise. A $1,000 per day increase or decrease in spot rates for
all of our vessel classes would have increased or decreased our operating income by $46.2 million, $41.7 million and $43.7
million for the years ended December 31, 2020, 2019 and 2018, respectively.

Interest rate risk

The sensitivity analyses below have been determined based on the exposure to interest rates for non-derivative

instruments at the balance sheet date.

If interest rates had been 1% higher/lower and all other variables were held constant, our net loss for the year
ended December 31, 2020 would have decreased/increased by $26.7 million. This is mainly attributable to our exposure to
interest rate movements on our variable interest rate credit facilities, lease financing arrangements and leases being
accounted for under IFRS 16 as described in Notes 6 and 12.

If interest rates had been 1% higher/lower and all other variables were held constant, our net income for the year
ended December 31, 2019 would have decreased/increased by $23.1 million. This is mainly attributable to our exposure to
interest rate movements on our variable interest rate credit facilities, lease financing arrangements and leases being
accounted for under IFRS 16 as described in Notes 6 and 12.

If interest rates had been 1% higher/lower and all other variables were held constant, our net income for the year
ended December 31, 2018 would have decreased/increased by $22.8 million. This is mainly attributable to our exposure to
interest rate movements on our variable interest rate credit facilities and lease financing arrangements that were in place
during that year.

Credit risk

Credit risk is the potential exposure of loss in the event of non-performance by customers and derivative

instrument counterparties.

We only place cash deposits with major banks covered with strong and acceptable credit ratings.

Accounts receivable are generally not collateralized; however, we believe that the credit risk is partially offset by
the creditworthiness of our counterparties including the commercial manager. We did not experience any credit losses on
our accounts receivables portfolio in the years ended December 31, 2020, 2019 and 2018.

The carrying amount of financial assets recognized on our consolidated financial statements represents the
maximum exposure to credit risk without taking into account the value of any collateral obtained. We did not experience
any impairment losses on financial assets in the years ended December 31, 2020, 2019 and 2018.

We monitor exposure to credit risk, and believe that there is no substantial credit risk arising from counterparties.

Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in raising funds to meet commitments associated
with financial instruments. We manage liquidity risk by maintaining adequate reserves and borrowing facilities and by
continuously monitoring forecast and actual cash flows. Liquidity risks can manifest themselves when economic conditions
deteriorate or when we have significant maturities of our financial instruments.

Financing risks

The financing for one vessel under our KEXIM Credit Facility, two vessels under our ING Credit Facility, and
two vessels under our 2018 NIBC Credit Facility were scheduled to mature within 2021, but have since been refinanced.
These refinancings are described in Note 23. Additionally, the financing for one vessel under our CITI / K-Sure Credit
Facility is scheduled to mature in March 2022. While we believe our current financial position is adequate to address the
maturity of this instrument, a deterioration in economic conditions could cause us to pursue other means to raise liquidity,
such as through the sale of vessels, to meet this obligation.

F-69

Economic conditions and COVID-19 risks

Since the beginning of calendar year 2020, the outbreak of COVID-19 has spread throughout the world and has
resulted in numerous actions taken by governments and governmental agencies in an attempt to mitigate the spread of the
virus. These measures have resulted in a significant reduction in global economic activity and volatility in the global
financial and commodities markets (including oil).

Initially, the onset of the COVID-19 pandemic resulted in a sharp reduction of economic activity and a
corresponding reduction in the global demand for oil and refined petroleum products. This period of time was marked by
extreme volatility in the oil markets and the development of a steep contango in the prices of oil and refined petroleum
products. Consequently, an abundance of arbitrage and floating storage opportunities opened up, which resulted in record
increases in spot TCE rates during the second quarter of 2020. These market dynamics led to a build-up of global oil and
refined petroleum product inventories. In June 2020, the underlying oil markets stabilized and global economies began to
recover, albeit at a slow pace. These conditions led to the gradual unwinding of excess inventories and thus a reduction in
spot TCE rates. Spot TCE rates have remained subdued ever since, as the continuation of the unwinding of inventories,
coupled with tepid demand for oil, have had an adverse impact on the demand for our vessels.

We expect that the COVID-19 pandemic will continue to cause volatility in the commodities markets. The scale
and duration of these circumstances is unknowable but could have a material impact on our earnings, cash flow and
financial condition in 2021 and 2022. We currently project that we will have adequate financial resources to continue in
operation and meet our financial commitments (including but not limited to debt service obligations, obligations under sale
and leaseback arrangements, commitments under other leasing arrangements, and commitments under our scrubber and
BWTS contracts) for a period of at least twelve months from the date of approval of these consolidated financial
statements.

Accordingly, we continue to adopt the going concern basis in preparing our financial statements.

Remaining contractual maturity on secured and unsecured credit facilities, finance lease liabilities and IFRS-16 lease
liabilities

The following table details our remaining contractual maturity for our secured and unsecured credit facilities,
lease financing and IFRS-16 lease liabilities. The amounts represent the future undiscounted cash flows of the financial
liability based on the earliest date on which we can be required to pay. The table includes both interest and principal cash
flows.

As the interest cash flows are not fixed, the interest amount included has been determined by reference to the

projected interest rates as illustrated by the yield curves existing at the reporting date.

In thousands of U.S. dollars
Less than 1 month .............................................................................................................
1-3 months ........................................................................................................................
3 months to 1 year .............................................................................................................
1-3 years ...........................................................................................................................
3-5 years ...........................................................................................................................
5+ years ............................................................................................................................
Total ..................................................................................................................................

As of December 31,
2019
2020

34,615
109,849
328,880
1,158,802
969,016
942,670
$ 3,543,832

31,501
93,139
462,365
1,187,553
919,044
1,114,328
$ 3,807,930

All other current liabilities fall due within less than one month.

F-70

Foreign Exchange Rate Risk

Our primary economic environment is the international shipping market. This market utilizes the U.S. Dollar as its
functional currency. Consequently, virtually all of our revenues and the majority of our operating expenses are in U.S.
Dollars. However, we incur some of our combined expenses in other currencies, particularly the Euro. The amount and
frequency of some of these expenses (such as vessel repairs, supplies and stores) may fluctuate from period to period.
Depreciation in the value of the U.S. dollar relative to other currencies will increase the U.S. dollar cost of us paying such
expenses. The portion of our business conducted in other currencies could increase in the future, which could expand our
exposure to losses arising from currency fluctuations.

23. Subsequent events

At the Market Offering Program

In January 2021, we entered into a note distribution agreement, or the Distribution Agreement, with B. Riley
Securities, Inc., as sales agent, or the Agent, under which we may offer and sell, from time to time, up to an additional
$75.0 million aggregate principal amount of our 7.00% Senior Notes due 2025, or the Additional Notes.

Any Additional Notes sold will be issued under that certain indenture pursuant to which we previously issued
$28.1 million aggregate principal amount of 7.00% Senior Notes due 2025 or the Senior Notes due 2025, on May 29, 2020
or the Initial Notes. The Additional Notes will have the same terms as the Initial Notes (other than date of issuance), form a
single series of debt securities with the Initial Notes and have the same CUSIP number and be fungible with, the Initial
Notes immediately upon issuance, including for purposes of notices, consents, waivers, amendments and any other action
permitted under the aforementioned indenture. The Senior Notes due 2025 are listed on the NYSE under the symbol
“SBBA.”

Declaration of Dividend

On February 17, 2021, our Board of Directors declared a quarterly cash dividend of $0.10 per common share,

which was paid on March 15, 2021 to all shareholders of record as of March 2, 2021.

Convertible Notes due 2022

On March 2, 2021, the conversion rate of the 3.00% Convertible Notes due 2022, or the Convertible Notes due
2022, was adjusted to reflect the payment of a cash dividend on March 15, 2021 to all shareholders of record as of March 2,
2021. The new conversion rate for the Convertible Notes due 2022 is 26.6617 of the Company’s common shares
representing an increase of the prior conversion rate of 0.1806 for each $1,000 principal amount of the Convertible Notes
due 2022.

Drawdowns from existing facilities

In January 2021, we executed an agreement to extend the availability period for future drawdowns on our BNPP
Sinosure Credit Facility to June 15, 2022 from March 15, 2021. In March 2021, we drew down $1.9 million from our
BNPP Sinosure Credit Facility to partially finance the purchase and installation of a scrubber on a MR product tanker.

In January 2021, we drew down $10.0 million from our China Huarong Lease Financing to partially finance the

purchase and installations of scrubbers on five MR product tankers.

In January 2021, we drew down $2.1 million from our ING Credit Facility to partially finance the purchase and

installations of scrubbers on two LR2 product tankers.

F-71

In January 2021, we drew down an aggregate of $11.4 million, which consisted of (i) $3.8 million under the
BCFL Lease Financing (LR2s); (ii) $5.8 million under the BCFL Lease Financing (MRs) and (iii) $1.9 million under the
$116.0 Million Lease Financing to partially finance the purchase and installations of scrubbers on six product tankers.

2021 AVIC Lease Financing

In February 2021, we closed on the sale and leaseback of two vessels (STI Memphis and STI Soho) with AVIC
International Leasing Co., Ltd. for aggregate proceeds of $44.2 million (the “2021 AVIC Lease Financing”). We repaid the
outstanding indebtedness of $30.0 million related to these vessels on the 2018 NIBC Credit Facility as part of these
transactions. In March 2021, we closed on the sale and leaseback of two additional vessels (STI Lombard and STI Osceola)
under the 2021 AVIC Lease Financing for aggregate proceeds of $53.1 million. We repaid the outstanding indebtedness of
$29.6 million related to these vessels on the ING Credit Facility as part of these transactions.

Our 2021 AVIC Lease Financing includes financial covenants that require us to maintain:

• Net debt to total capitalization shall not equal or exceed 70%.

• Net worth shall always exceed $650.0 million.

2021 $21.0 Million Credit Facility

In February 2021, we drew down $21.0 million on a term loan facility with a European financial institution (the
“2021 $21.0 Million Credit Facility”). The proceeds of this loan facility were used to refinance the outstanding debt on an
LR2 product tanker, STI Madison, that was previously financed under our KEXIM Credit Facility. We repaid the
outstanding indebtedness of $15.9 million related to this vessel on the KEXIM Credit Facility in January 2021 upon its
maturity. The loan facility has a final maturity of December 2022, bears interest at LIBOR plus a margin of 2.65% per
annum, and is scheduled to be repaid in equal quarterly installments of approximately $0.6 million, with a balloon payment
due upon maturity.

Our 2021 $21.0 Million Credit Facility includes financial covenants that require us to maintain:

• The ratio of net debt to total capitalization no greater than 0.60 to 1.00.

• Minimum liquidity of not less than the greater of $25.0 million or $500,000 per each owned vessel plus

$250,000 per each time chartered-in vessel.

2021 CMBFL Lease Financing

In March 2021, we received a commitment to sell and leaseback four Handymax vessels (STI Comandante, STI
Brixton, STI Pimlico and STI Finchley) and one MR vessel (STI Westminster) from CMB Financial Leasing Co. Ltd, or
CMBFL (the “2021 CMBFL Lease Financing”). The borrowing amount under the arrangement will be up to $79.1 million
in aggregate. In March 2021, we closed on the sale and leaseback of the four aforementioned Handymax vessels under the
2021 CMBFL Lease Financing for aggregate proceeds of $58.8 million. We repaid the outstanding indebtedness of $46.7
million related to these vessels on the ING Credit Facility as part of these transactions. The agreement for the sale and
leaseback of the remaining vessel was executed in March 2021 and is expected to close in April 2021.

F-72

Our 2021 CMBFL Lease Financing includes financial covenants that require us to maintain:

• The ratio of net debt to total capitalization no greater than 0.60 to 1.00.

• Minimum liquidity of not less than the greater of $25.0 million and $500,000 per each owned vessel plus

$250,000 per each time chartered-in vessel.

• The fair market value of each vessel leased under the facility shall at all times be no less than 120% of the

outstanding balance for such vessel.

2021 TSFL Lease Financing

Our 2021 TSFL Lease Financing includes financial covenants that require us to maintain:

• The ratio of net debt to total capitalization no greater than 0.65 to 1.00.

• Consolidated tangible net worth of no less than $1.0 billion.

• The fair market value of each vessel leased under the facility shall at all times be no less than 115% of the

outstanding balance for such vessel.

Exhaust Gas Cleaning System (Scrubber) agreement

Amounts in thousands of US dollars
Less than 1 month ...................................................................................................
1-3 months ...............................................................................................................
3 months to 1 year ...................................................................................................
1-5 years ..................................................................................................................
5+ years ...................................................................................................................
Total ........................................................................................................................

March 30, 2021
154
5,417
6,936
17,884
—
30,391

Legal claim

F-73

March 2021 Exchange Offer and New Issuance of Convertible Notes

In March 2021, we completed the exchange of approximately $62.1 million in aggregate principal amount of
Convertible Notes due 2022 for approximately $62.1 million in aggregate principal amount of new 3.00% Convertible
Notes due 2025, or the Convertible Notes due 2025, pursuant to separate, privately negotiated, agreements with certain
holders of the Convertible Notes due 2022, which we refer to as the March 2021 Exchange Offer. Simultaneously with the
March 2021 Exchange Offer, we issued and sold $76.1 million in aggregate principal amount of Convertible Notes due
2025 pursuant to separate, privately negotiated, agreements with certain investors in a private offering, which we refer to as
the March 2021 Convertible Notes Offering.

As of the date of this annual report, we have outstanding $138.2 million in aggregate principal amount of

Convertible Notes due 2025.

F-74