I'm not big on breezy day-trader lingo, but if there's such a thing as a relief rally, Overseas Shipholding Group (NYSE:OSG) experienced one Tuesday. Everyone who follows the crude shipping space knows that tanker rates went out with the tide this past quarter, due to OPEC cuts, a busy refinery turnaround season, and tanker oversupply. Naturally, everyone expected Overseas' earnings to ebb.

Shorts, there's ebb on your face
Ebb they did -- but not by as much as analysts anticipated. A rollicking share buyback program may have had something to do with that, but all's fair in love, war ... and earnings-per-share figures that conform to GAAP accounting standards. EPS declined by only 64%? Break out the bubbly!

Overseas has been fortifying its fleet with various vessels, ranging from little lightering ships to Very Large Crude Carriers (that's industry terminology). As a result, revenue days were 25% higher than last year. Sales came in flat, however, because of those aforementioned weak spot market rates. VLCC rates were halved, and rates fell 20% fleetwide.

If you're wondering how we go from flat revenues to plunging profits, think about all the costs of maintaining or chartering in more ships. Costs in just about every category jumped, from voyage and charter hire expenses to general and administrative expenses, which were hoisted 61% on higher headcount. Overseas has also levered up its balance sheet a bit to pay for a massive share buyback, so interest payments were higher, too.

Since June of 2006, this company has bought back more than one-fifth of outstanding shares. That's enough to make even resident buyback guru Rich Duprey gasp like a film starlet. And he's a cop. The buying binge didn't let up this quarter -- Overseas snapped up more than 1.5 million shares. Amazingly, the repurchase authorization has not been maxed out yet.

If you agree that this tanker titan's net asset value is anywhere near management's $106-per-share estimate, then this share shrinkage ought to prove shrewd. If you're worried about the debt level, I'd note that Overseas still has a significantly stronger balance sheet than Teekay (NYSE:TK) or Frontline (NYSE:FRO), and it's nearly as nimble as Nordic American Tanker (NYSE:NAT).

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.