Greetings and welcome to Diana Shipping Incorporated Second Quarter 2012 Conference Call and Webcast. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Edward Nebb, Investor Relations Advisor for Diana Shipping. Thank you. Sir, you may begin.

Thank you, Dan, and welcome everyone and welcome to the Diana Shipping Inc. 2012 second quarter conference call. The members of the Diana Shipping management team who are with us today include Mr. Simeon Palios, Chairman and Chief Executive Officer; Mr. Anastassis Margaronis, President; Mr. Andreas Michalopoulos, Chief Financial Officer; Mr. Ioannis Zafirakis, Executive Vice President and Secretary; and Ms. Maria Dede, Chief Accounting Officer. Before management begins their remarks, let me briefly summarize the Safe Harbor notice. Certain statements made during this conference call which are not statements of historical fact are forward-looking statements pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act. Such forward-looking statements are based on assumptions, expectations, projections, intentions and beliefs, as to future events that may not prove to be accurate. For a description of the risks, uncertainties, and other factors that may cause future results to differ materially from the forward-looking statements, please refer to the company’s filings with the Securities and Exchange Commission. And with that, let me turn the call over to Mr. Simeon Palios, Chairman and CEO.

Thank you, Ed. Good morning and thank you for joining us today. Diana Shipping Inc. continued to operate in a steady and prudent manner despite the challenging conditions that have prevailed in our industry for some time. The company delivered reliable revenues and profits, continued to expand our fleet and maintain a sound capital structure. During the quarter we announced the delivery of the newly built Philadelphia, a Newcastlemax dry bulk carrier that was contracted in 2010. In addition, in March 2012, we agreed to purchase the Melia, a Panamax dry bulk carrier. Built in 2005, it will join our fleet in May 2012. Just last week we agreed to acquire a new-building Post-Panamax dry built by Tsuneishi Group (Zhoushan) Shipbuilding Inc. The vessel, to be named Amphitrite, is expected to be delivered to the company later this month. With the delivery of the Amphitrite, we will operate a total of 29 dry bulk carriers. We also have 2 Ice Class Panamax vessels under construction, which would bring the vessels of our fleet to 31 vessels. Considering that we own 21 vessels at the commenced our carrier and fleet investment strategy in 2008, this represents significant progress in the growth of our fleet. We continue to manage our fleet in a responsible manner that promotes a balance of time-charter maturities and produces a predictable revenue stream. Currently, our fixed revenue days are 69% for 2012. The vast majority of our vessels are chartered for periods ranging from 2013 through 2015 and beyond. We continue to enjoy excellent relationships with many of the industry’s strongest and most respected charterers. Now let me briefly summarize our financial performance for the second quarter of 2012. Net income to Diana Shipping Inc. was US$17.4 million for the 2012 second quarter compared to US$27.7 million…

Thank you, Simeon, and many thanks to all who have joined us in this mid-summer call to listen to what will unfortunately be rather depressing news for the near term outlook of the dry bulk sector. In order to get a general idea of how the dry bulk freight market has performed over the second quarter of 2012, we will take the usual look at the various dry bulk indices. The Baltic Dry Index stood on April 2, 2012, at 934 points, and closed yesterday at 878. The Baltic Cape Index moved from 1427 to 1181 over the same period, while the Baltic Panamax Index started the quarter at 1051 and closed yesterday at 954 points. This is pretty grim picture indeed. But let's look at the macroeconomic considerations. According to the IMF, global growth is expected to come in 3.9% for 2013, down from its previous estimate of 4.1%. This forecast for 2012 remains unchanged at 3.5%. Advanced economies are expected to grow 1.4% this year and 1.9% in 2013, while emerging economies are expected to grow by 5.6% this year and 5.9% in 2013. The U.S. economy rose at an annual rate of 1.9% during the first quarter of 2012, compared to 3% during the fourth quarter last year. According to Maersk Broker, Europe stagnated in the first three months of this year but avoided recession due to growth in the German economy. Japan’s economy expanded at an annualized rate of 4.7% in the first quarter this year, and consumer spending was the biggest contributor to this growth. According to the OECD leading indicators, growth in most major economies is set to slow down in coming months with only Brazil expected to experience in the rate of growth. Leading indicators for developing economies signal slowdowns or growth that…

Thank you, Stacey, and good morning. I am pleased to be discussing today with you Diana’s operational results for the second quarter of 2012 and six months ended June 30, 2012. For the second quarter of 2012, net income for Diana Shipping Inc. amounted to $17.4 million and the EPS was $0.21. Time charter revenues decreased to $57.6 million compared to $64.6 million in 2011. And the decrease is attributable to decreased average time charter rates that we achieved for our vessels during the period compared with the second quarter of 2011. This decrease was partially offset by revenue derived from the vessels Arethusa, Leto and Los Angeles, Melia, and Philadelphia delivered in July 2011, January, February and May 2012 respectively. Ownership days were 2,472 for the second quarter of 2012 compared to 2,093 in the same period of 2011. Fleet utilization was 99.6% in the second quarter of 2012 compared to 98.6% in 2011. The daily time charter equivalent rate for the second quarter of 2012 was $22,266 compared to $30,597 for 2011. Other revenues for the second quarter of 2012 amounted to $0.6 million and consist of revenues derived from the management and administrative agreements between Diana Shipping Services SA and Diana Containerships Inc. Voyage expenses were $2.9 million for the quarter. Operating expenses amounted to $15.4 million and increased by 9%. This increase is attributable to the addition of new vessels in the fleet which resulted in the ownership days to increase by 18%. This increase was offset by decreases in all categories of operating expenses by mainly in repairs and maintenance. Daily operating expenses were $6,218 for the second quarter 2012, compared to $6,724 in 2011, representing a decrease of 8%. Depreciation and amortization of deferred charges amounted to $15.3 million. General and administrative expenses increased…

Gentlemen, I would like to make a correction. Our fixed revenue days are 96% for 2012 not 69% as erroneously stated before. Thank you.

We will be now pleased to respond to your questions, and we will turn the call to the operator who will instruct you as to the procedure for asking questions.

(Operator Instructions) Our first question comes from Michael Webber of Wells Fargo. Caller, please proceed with your question.

Just wanted to start off with a question around acquisitions which is always pertinent with you guys considering your cash position. Can you may be give us some color in terms of what you are seeing in the market in terms of a, vessel classes, and then b, whether we are talking single vessels or on-block deals. Obviously you guys have been busy earlier this year with kind of single vessel acquisitions. So maybe just a little bit of color about what we can expect through the back half of the year from you guys.

Well, Mike, we will be focusing again, as always, on Panamaxes, Camsarmaxes, Post-Panamaxes, Capes, and Newcastlemaxes. Our potential candidates come from three stages. The first stage comes from the newbuilders. The second is the re-sales and the third is, let’s say the maximum five-year second-hand ships. Now the newbuilding orders have to include all the goodies which we have accumulated on our inspections of secondhand tonnage, plus all the new technological improvements on the shipbuilding industry. Which is the long-stroke engine, the slow rpm, the electronic engine, the new hull structure, making the vessel more efficient. This statement, making the vessel more efficient is marginal but anyway it is a little bit more efficient. Now the re-sales, we have to focus on first class yards. And the maximum four to five year old second hand ships, also they have come from first calls yards. As regards the newbuilds, the delivery we should expect something in 2014. But we will continue our strategy in purchasing every 2, 2.5 months as we have been doing all along. You can understand that we are in a very good position and we will be trying to increase our leverage in the next two to three years again.

Sure. That makes sense. You mentioned the first class yards and looking for more modern designs and generally higher quality ships in terms of what you are seeing and what across your desk. Is there a higher concentration of those kinds of assets or do you really have to weed through 70% of the reports that come across your desk before you find something that might look attractive?

Well, I think that these last three months that have elapsed from the time we spoke together there are more ships available to purchase. Indeed there are much more ships available to purchase and better quality ships.

Interesting, interesting. Just changing gears quickly and forgive me, I didn’t see it anywhere in the release, but it doesn’t look like you guys bought back any stock in the quarter. Actually, share count looks like it inched up a little bit. Can you maybe give us some color around your thoughts there? With the stock obviously off a bit here and when you guys might think about allocating some of that cash towards equity and away from steel.

We are assessing that, as you can imagine, Mike, we are looking at that constantly and if need be we will not hesitate, in a steady manner obviously, and not to destroy everything we have done so far on liquidity and our public presence. But we are assessing that and if need be we will buyback steadily some shares.

Okay. That’s fair. One more from me and I will turn it over. I mean the cost lines look relatively in line but your G&A ticked up a little bit quarter-over-quarter and OpEx came in on a DBOE basis a little bit under our expectations. Can you first talk about what drove that modest uptick in G&A quarter-over-quarter and then maybe some annual guidance there, for both G&A and OpEx?

Yes, I think for operating expenses we were slightly better than expected as you say. This quarter I think this should come back to equilibrium during the next quarter and the same is true exactly for G&A. We are slightly higher this quarter. We had some, the 20-F filing, things likes that, which typically put you slightly higher but overall we are perfectly within our yearly budget and you should see those deviations alleviate throughout the year.

Okay. So that Q3 G&A line item should be a little bit closer to maybe 6 than 7 as it was in Q2?

Yes, you should have between -- I mean as usual between 6,300 to 6,500 depending on the obviously the vessels we buy etcetera, but that should not move that much from there.

Our next question comes from [Justine Yagerman] of Deutsche Bank. Caller, please proceed with your question.

Josh Katzeff on for Justine. Just wanted to follow up on Mike’s questions on kind of the current S&P market. When we talk to other owners we hear that there are a lot of people (inaudible) inspecting vessels out there. But maybe, can you talk about your competition actually on bidding on ships and go you have any sense of how many people you are going up against.

Well, if there is a second hand vessel today, let's say five year old ship and you are inspecting here, you are going to have approximately eight people interested in the ship. But, Josh, you have to understand that it’s a different matter when you buy for a single ship. It’s a different matter when you buy for an entity. Here there is a program. So the difference is that here is dynamic money as opposed to static. And that’s the beauty of being in the stock market. Do you understand what I mean?

I think so. Just moving on. Just maybe a bit more broadly in the Cape sector. I guess maybe a month or so ago we heard some talk about some major owners potentially idling ships. Are you hearing about any kind wide scale idling or are people kind of currently operating their ships?

Some of the ships that we have on charter have been known to wait for the next employment ordered by the head charter (inaudible). But we are not aware of a large number of ships being laid up or idled in bulk carrier industry yet. I mean it’s mainly delays to pickup next employment which can be seen around the world. That’s all.

Got it. And just looking at kind of the recent charters done on the Panamaxes, and I guess can you walk us through exactly how you decide whether to fix the ship on a one-year or a two-year charter?

It depends on the whole portfolio approach that we have. And you understand that we have to introduce with new vessels or the vessels that it is opening as regards the charter as such into the whole picture and see where we have another vessel opening or note opening at the same time in the cycle. And we are positioning the vessels in such a manner to always have a vessel to fix in every period. So when we fix for a year or two years, or three years, you should not take it as Diana taking a position what the market is going to do. This is the beauty of our strategy, hedging our risk, that we don’t have to call the market. We are happy with the average of the market and this is what we are going to continue be doing by physically hedging the charters of our vessel.

Got it. And just one more quick question before I turn it over. I guess with regard to leverage and how you think about that. I mean should we just be expecting Diana to increase its leverage through its acquisitions, just maybe, I guess 50% leverage on new vessel purchases?

Exactly. That’s what we have stated in the past and we feel that’s a safe assumption to make.

Our next question comes from Brandon Oglenski of Barclays Capital. Caller, please proceed with your question?

Maybe if I can follow up from one of the last questions there. When we look at the Arethusa in the release, it looks like you have put that on a pretty short duration charter. Can you maybe speak specifically to that vessel and why you are going a little bit shorter on the term that maybe you would have on other vessels?

No, it is not a matter that we have put Arethusa for a shorter period than other vessels. We thought it was a good idea to have another vessel opening before the end of the year and this is what we did in order to keep the portfolio approach intact as we have suggested earlier. It doesn’t mean anything.

Okay. And it looks like the Salt Lake City, you mentioned is on dry-dock right now. Should we assume that that’s coming off in the next few days and what would that mean for the dry-docking schedule for the second half of the year?

Yes, Salt Lake ship in few days is going to be of hire and you can see the expected date on our website of delivery of that vessel to the new charterers. But the previous charterers have agreed to compensate the company for the earlier delivery of the vessel.

Apart from Salt Lake City, the other vessels up until the end of the year that are due for dry-docking are in the third quarter, motor vessel Protefs and motor vessel Norfolk. And intermediate survey for motor vessel Protefs and special survey for motor vessel Norfolk. And for the fourth quarter, we have an intermediate survey for motor vessel Melia, Nirefs, and Alcyon. So three vessels for the fourth quarter. So that’s the schedule more or less until the end of the year.

Okay, and the expense, because I think you have covered everything out pretty well on the call here. But is there anything specifically that you can do to address maybe some further cost reductions. I mean looks like you have held expenses pretty much where we thought they would be. But any further items that you can drive there?

I think we are extremely efficient in the way we deal with our expenses. And you must take into account that together with those expenses come a full preventive maintenance program that we have for our vessels and that ensures that they are performing as expected and as best as possible to our charterers. So to your answer, we feel comfortable with our expenses and the way we deal with them, very comfortable.

(Operator Instructions) It appears we have no further questions at this time. I would now like to turn the floor back to management for closing becomes.

As always we appreciate your interest in and support of Diana Shipping. We look forward to speak with you in the months ahead. Thank you.

This concludes today’s teleconference. You may disconnect your lines at this time and thank you for your participation.