ABSTRACT
Exhibit 10.2 presents a comparison of spot rates and time charter rates for Very Large Crude Carriers (VLCC’s).
For intra-company oil movements, the Internal Revenue Service has allowed the use of Average Freight Rate Assessment (AFRA) to arrive at a cost for tax purposes. AFRA consists of a weighted average of all period and voyage charters. Exhibit 10.3 provides background information on AFFA and presents a set of calculations. Exhibit 10.4 graphically shows AFRA values over a multi-year period.
