TAX CONFERENCE

The recently enacted "American Jobs Creation Act" gives significant tax breaks to a number of U.S. industries--including shipping.

MARINE LOG and BLANK ROME will present a senior level seminar CHANGES IN U.S. TAXATION OF SHIPPING INCOME in Stamford, Conn. on April 5 & 6, 2004

Make sure you know how the new tax rules work!

February 16, 2005

Maritrans benefits from strong spot market

"We are pleased to have provided operating earnings growth in the fourth quarter, during a time where we took significant steps to position the company for enhanced industry leadership and renewed growth," said Jonathan Whitworth, CEO of Maritrans, Inc., commenting on annual and fourth quarter results for the U.S.-flag petroleum transportation specialist released yesterday.

"Based on a comprehensive strategic review, conducted over a nine month period," said Whitworth, "we identified opportunities for stimulating earnings and fleet growth in both the near-term as well as in the long-term. As a direct result of this effort, we refined our fleet deployment strategy, which enabled shareholders to benefit from a strong spot market. Simultaneously, we formulated and have begun to implement a strategic plan aimed at accelerating growth."

Net income for the quarter ended December 31, 2004 was $1.4 million, or $0.17 diluted earnings per share, on revenues of $40.0 million. This compares with net income of $3.2 million, or $0.38 diluted earnings per share, on revenues of $32.4 million for the quarter ended December 31, 2003. Results for the quarter ended December 31, 2003 included a bad debt reserve reversal, net of related taxes, equivalent to approximately $0.33 diluted earnings per share. Operating income for the quarter ended December 31, 2004 was $3.0 million compared to $1.1 million for the quarter ended December 31, 2003.

The increase in operating income for the quarter ended December 31, 2004, was due to strength in both of the company's primary markets. High refinery utilization by Maritrans' Delaware River refinery customers resulted in strong demand for the Company's crude-oil lightering services. Additionally, Maritrans lightered incremental barrels for a customer who previously used chartered tonnage for its crude delivery requirements. Maritrans also earned higher average rates on vessels that it had in the clean product spot market.

In the latter part of 2004 the company took steps to increase the proportion of its fleet that was available to trade in the spot market.

Net income for the year ended December 31, 2004 was $9.8 million, or $1.16 diluted earnings per share, on revenues of $149.7 million. Net income for the year ended December 31, 2004 included an income tax reserve reversal of $1.7 million during the third quarter of 2004, equivalent to $0.20 diluted earnings per share.

For the year ended December 31, 2003, the company reported net income of $18.7 million, or $2.22 diluted earnings per share, on revenues of $138.2 million. Net income for the year ended December 31, 2003 included the effect of a $7.7 million income tax reserve reversal, equivalent to $0.92 diluted earnings per share, in addition to a $4.5 million bad debt reserve reversal, net of related taxes, equivalent to $0.33 diluted earnings per share.

Operating income for the year ended December 31, 2004 was $14.5 million compared to $14.8 million for the year ended December 31, 2003.

Operating results in 2004 were affected by higher capital expenditures related to the company's double-hull rebuilding program as two vessels were out of service being rebuilt during the year and by weather related delays caused by three significant storms in the third quarter of 2004.

On a Time Charter Equivalent ("TCE") basis, a measure where direct voyage costs are deducted from revenue, TCE revenue was $30.4 million for the quarter ended December 31, 2004 compared to $27.2 million for the quarter ended December 31, 2003. TCE revenue was $119.5 million for the year ended December 31, 2004 compared to $114.5 million for the year ended December 31, 2003, an increase of $5.1 million or 4 percent. TCE revenue is a non-GAAP financial measure and a reconciliation of TCE revenue to revenue calculated in accordance with GAAP is attached.

In the fourth quarter, the company experienced higher overall utilization than in the fourth quarter of 2003. Utilization for the fourth quarter of 2004 was 79.1 percent compared to 78.3 percent in the fourth quarter of 2003. Vessel utilization for the year ended December 31, 2004 was 80.7 percent compared to 84.2 percent for the year ended December 31, 2003.

Operating expenses increased to $135.2 million in the year ended December 31, 2004 from $124.5 million in the year ended December 31, 2003 primarily because of increases in operations and general and administrative costs.

Operations costs increased due to significantly higher fuel costs compared to 2003 and to higher port charges incurred with more West Cost moves.

General and administrative costs increased as a result of additional litigation expenses, increased audit fees, primarily related to additional services necessary to comply with Section 404 of the Sarbanes-Oxley Act of 2002, increased shoreside headcount, employment related expenses and higher non-vessel related insurance premiums.

FLEET AND MARKET REPORT

Maritrans owns and operates a fleet of 15 units consisting of four oil tankers and 11 oceangoing married tug/barge units. While historically Maritrans has had a majority of its fleet deployed on contract business, in the third quarter of 2004 the company made a decision to deploy more of its fleet in the spot market in an effort to take advantage of the higher spot rate environment. The company intends to maintain a similar spot market exposure in 2005 to that of the fourth quarter of 2004.

The stronger spot market in the fourth quarter of 2004 was driven primarily by the combination of increased demand for the company's transportation services and reduced supply of Jones Act vessels. During the fourth quarter, inventory level reductions, cold weather, reduced imports, increased activity on the West Coast and growth in the economy all increased demand for the company's services. In addition, two competitor Jones Act vessels in the 160,000 to 400,000 barrel size range either reached their OPA retirement dates or were scrapped in 2004.

"During 2004 we worked diligently to refine our fleet deployment strategy, aimed at achieving the optimal balance between spot and contract coverage," commented Whitworth. "By acting quickly and decisively and deploying more of our fleet in the spot market, we were able to capitalize on a strong rate environment and improve our results in the second half of the year. The success we have had increasing the number of vessels in the spot market to 35 percent by the end of the fourth quarter has transformed Maritrans into the largest spot owner in the Jones Act trade in our vessel size range. In the fourth quarter, Maritrans' vessels represented approximately 50 percent of the number of vessels operating in the U.S. spot market. As we move forward, we will continue to strive for an appropriate spot and contract mix in order to realize the full earnings potential of our fleet, while providing our shareholders with an appropriate level of earnings stability."

DOUBLE-HULL REBUILDING PROGRAM

During 2004, Maritrans continued to successfully implement its double hull rebuilding program. In the third quarter of 2004, the M214 rejoined the Maritrans fleet. The M214 has been given the highest rating (CAP 1) by ABS Consulting. ABS' Condition Assessment Program evaluates a vessel's operation, machinery, maintenance, and structure using the ABS Safe Hull Criteria. The CAP 1 rating given to the M214 signifies that the rebuilt vessel is considered equivalent to a newly- built vessel.

Maritrans has successfully rebuilt five of its original nine single-hull barges to double-hull structure. At the end of 2004, approximately 64 percent of the Company's fleet capacity was double-hulled which compares favorably to the Jones Act fleet average of 45 percent.

In the third quarter of 2004, the company began rebuilding the OCEAN 193, which is expected to cost approximately $26 million. The rebuild will include the insertion of a midbody which will increase its cargo-carrying capacity by approximately 30,000 barrels. The barge is expected to re-enter the fleet as the M209, in the second quarter of 2005. At that time, Maritrans will have approximately 70 percent of its fleet's capacity upgraded to a double-hull structure.

Simultaneously, in the third quarter of 2004, refurbishment began on the tugboat ENTERPRISE which currently works with the M209. The refurbishment is expected to be completed in the first half of 2005, at a cost of approximately $4.5 million.

Maritrans intends to convert its remaining single-hull barges and continues to evaluate converting its two single-hull tank ships into double-hull vessels. Maritrans estimates that the total cost of its barge rebuilding program will exceed $200 million, of which $106 million had been spent through December 31, 2004.

DIVIDEND

Maritrans' Board of Directors declared a quarterly dividend of $0.11 per share, payable on March 16, 2005, to shareholders of record on March 2, 2005. The ex-dividend date will be February 28, 2005.

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