2001 Maritime

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February 27, 2001

Polar Tankers exercises option for fifth tanker, and options two more
Litton Industries today announced that Polar Tankers Inc. of Long Beach, Calif., a subsidiary of Phillips Petroleum Co., has exercised an option with Litton's Avondale Industries Inc. subsidiary for the fifth double-hulled, crude-oil carrier.

The option is valued at $205.5 million escalated to delivery.

Litton Avondale was awarded a contract to build the first of three 125,000 DWT crude-oil carriers in 1997, all of which are currently under construction. An option for a fourth ship was exercised in October 2000.

Along with the award of the fifth option, Litton and Polar Tankers agreed to new contract terms regarding delivery dates for the ships and entered into an agreement for options for a sixth and seventh ship.The option for the sixth ship is subject to exercise during the third quarter of 2001 and the seventh ship during the fourth quarter of 2001.

Delivery of the first ship, the Polar Endeavour, is scheduled for April 2001. The second ship, the Polar Resolution, will be christened in New Orleans on March 3 and is scheduled for delivery in December 2001. The third, fourth and fifth ships are scheduled for delivery in August 2002, September 2003 and August 2004, respectively.

"The Millennium Class tanker program is an exciting project for us. Avondale is proud to work with Polar Tankers to build the first OPA '90-compliant, new construction ships in America," said Thomas M. Kitchen, Litton Avondale president.

The Millennium Class "next-generation" tankers being built at Litton Avondale are the first new crude-oil carriers being built for the Alaskan trade in compliance with the Federal Oil Pollution Act of 1990. The Millennium Class tankers are being built to meet and/or exceed existing and proposed environmental regulations and will set new standards for innovation and environmental protection.

In addition to being built with double hulls that exceed regulatory minimums, the tankers incorporate double, independent engine rooms, twin propellers and twin rudders for greater maneuverability.

The Millennium Class vessels will have all cargo, fuel and lubricating oils isolated from the ship's side by ballast tanks or void spaces. The vessels will meet pending air-emissions regulations for engines. The ships are also being painted with tin-free anti-fouling paint in anticipation of pending regulations.

The crude carriers are 272.69 m long by 46.2 m wide by 26.3 m deep (894.7 x 151.6 x 86.29 feet). The ships will hold just over 1 million barrels of cargo at full capacity.