Edgar Filing: OMNI ENERGY SERVICES CORP

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Quarterly period ended June 30, 2004

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period _______ to

COMMISSION FILE NUMBER 0-23383

OMNI ENERGY SERVICES CORP.
(Exact name of registrant as specified in its charter)

LOUISIANA
(State or other jurisdiction of 72-1395273
incorporation or organization) (I.R.S. Employer Identification No.)
4500 N.E. EVANGELINE THRUWAY
CARENCRO, LOUISIANA 70520
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (337) 896-6664

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes [ ] No [X]

Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

As of August 19, 2004 there were 11,559,190 shares of the Registrant's
common stock, $0.01 par value per share, outstanding.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

OMNI ENERGY SERVICES CORP.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

June 30, December 31,
2004 2003
------- ------------
(unaudited) (Note 1)

ASSETS
CURRENT ASSETS:
Cash and cash equivalents.............. $ 681 $ 572
Trade receivable, net.................. 12,375 7,002
Other receivables...................... 103 2,272
Parts and supplies inventory........... 4,036 3,289
Prepaid expenses....................... 2,831 3,058
Deferred income taxes.................. 2,000 2,000
------- -------
Total current assets............... 22,026 18,193
------- -------
PROPERTY AND EQUIPMENT:
Land................................... 648 362
Buildings and improvements............. 5,585 4,636
Drilling, field and support equipment.. 29,840 26,877
Aviation equipment..................... 15,426 10,224
Shop equipment......................... 425 425
Office equipment....................... 2,048 1,573
Vehicles............................... 4,886 2,476
------- -------
58,858 46,573
Less: accumulated depreciation......... 21,289 19,463
------- -------
Total property and equipment....... 37,569 27,110
------- -------
OTHER ASSETS:
Goodwill............................... 2,349 2,129
Intangible assets, net................. 4,170 1,720
Other.................................. 3,046 1,137
------- -------
Total other assets................. 9,565 4,986
------- -------
Total assets....................... $69,160 $50,289
======= =======

The accompanying notes are an integral part of these financial statements.

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OMNI ENERGY SERVICES CORP.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

June 30, December 31,
2004 2003
----------- ------------
(unaudited) (Note 1)

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt ................................... $ 3,299 $ 2,051
Accounts payable ....................................................... 9,697 5,326
Accrued expenses ....................................................... 2,827 1,627
Notes payable, insurance ............................................... 846 2,314
Convertible debentures, net of discount of $1,871 ...................... 13,179 ---
-------- --------
Total current liabilities .......................................... 29,848 11,318
-------- --------
LONG-TERM LIABILITIES:
Line of credit ......................................................... 5,260 4,633
Other long-term liabilities ............................................ 252 328
Long-term debt, less current maturities ................................ 16,711 9,624
-------- --------
Total long-term liabilities ........................................ 22,223 14,585
-------- --------
Total liabilities ................................................. 52,071 25,903
-------- --------
COMMITMENTS & CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, no par value, 5,000,000 shares authorized; 29 and 12,100
shares issued and outstanding, respectively, liquidation preference
of $1,000 per share ............................................... 29 12,100
Common stock, $.01 par value, 45,000,000 shares authorized; 11,394,641
and 9,569,729 issued and 11,123,295 and 9,207,929 outstanding,
respectively ...................................................... 114 96
Treasury stock, 271,346 and 361,800 shares acquired at cost ............. (529) (706)
Preferred stock dividends declared ...................................... 2 484
Additional paid-in capital .............................................. 64,584 57,870
Accumulated deficit ..................................................... (47,111) (45,458)
-------- --------
Total stockholders' equity ......................................... 17,089 24,386
-------- --------
Total liabilities and stockholders' equity ......................... $ 69,160 $ 50,289
======== ========

The accompanying notes are an integral part of these financial statements.

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OMNI ENERGY SERVICES CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2004 2003 2004 2003
--------- -------- --------- ---------
(Unaudited) (Unaudited)

Operating revenue ............................... $ 13,592 $ 10,409 $ 25,088 $ 16,616
Operating expenses .............................. 10,076 7,537 19,565 12,695
-------- -------- -------- --------
Gross profit .................................... 3,516 2,872 5,523 3,921
General and administrative expenses ............. 3,443 1,232 4,920 2,291
-------- -------- -------- --------
Operating income ................................ 73 1,640 603 1,630
Interest expense ................................ 1,193 237 1,609 447
Other expense, net .............................. 118 86 147 81
-------- -------- -------- --------
Income (loss) before taxes ...................... (1,238) 1,317 (1,153) 1,102
Income tax benefit .............................. --- 225 --- 325
-------- -------- -------- --------
Net income (loss) ............................... (1,238) 1,542 (1,153) 1,427
Preferred stock dividends ....................... (5) --- (490) ---
-------- -------- -------- --------
Net income (loss) applicable to common and common
equivalent shares ............................... $ (1,243) $ 1,542 $ (1,643) $ 1,427
======== ======== ======== ========
Net income (loss) per common share:
Basic ...................................... $ (0.11) $ 0.18 $ (0.16) $ 0.16
Diluted .................................... $ (0.11) $ 0.18 $ (0.16) $ 0.16
Weighted average common shares outstanding:
Basic ...................................... 11,044 8,740 10,502 8,740
Diluted .................................... 11,044 8,742 10,502 8,740

The accompanying notes are an integral part of these financial statements.

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OMNI ENERGY SERVICES CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY AND COMPREHENSIVE LOSS
FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND JUNE 30, 2004
(IN THOUSANDS, EXCEPT PER SHARE DATA)

PREFERRED STOCK COMMON STOCK TREASURY
---------------------- --------------------- STOCK
SHARES AMOUNT SHARES AMOUNT AMOUNT
-------- -------- -------- -------- --------

BALANCE, December 31, 2003 ................. 12,100 $ 12,100 9,570 $ 96 $ (706)
-- stock option and warrant exercises ...... -- -- 1,340 13 --
-- redemption of preferred stock ........... (9,761) (9,761) -- -- --
-- preferred stock dividends paid........... -- -- -- -- --
-- preferred stock dividends declared....... -- -- -- -- --
-- warrant discount......................... -- -- -- -- --
Comprehensive income:
-- net income .............................. -- -- -- -- --
-- foreign currency translation adjustments -- -- -- -- --
-------- -------- -------- -------- --------
Total comprehensive income ................. -- -- -- -- --
-------- -------- -------- -------- --------
BALANCE, March 31, 2004 .................... 2,339 $ 2,339 10,910 $ 109 $ (706)
-------- -------- -------- -------- --------
-- issuance treasury shares ................ -- -- -- -- 177
-- stock option and warrant exercises ...... -- -- 484 5 --
-- redemption of preferred stock ........... (2,310) (2,310) -- -- --
-- preferred stock dividends paid........... -- -- -- -- --
-- preferred stock dividends declared....... -- -- -- -- --
-- warrant discount & beneficial conversion
feature.................................. -- -- -- -- --
Comprehensive loss:
-- net loss................................ -- -- -- -- --
-- foreign currency translation adjustments -- -- -- -- --
-------- -------- -------- -------- --------
Total comprehensive loss ................... -- -- -- -- --
-------- -------- -------- -------- --------
BALANCE, June 30, 2004 ..................... 29 $ 29 11,394 $ 114 $ (529)
-------- -------- -------- ======== ========

PREFERRED ACCUMULATED
STOCK ADDITIONAL OTHER
DIVIDEND PAID-IN COMPREHENSIVE ACCUMULATIVE
DECLARED CAPITAL LOSS DEFICIT TOTAL
--------- ---------- ------------- ------------ --------

BALANCE, December 31, 2003 ........................... $ 484 $ 57,882 $ (12) $(45,458) $ 24,386
-- stock option and warrant exercises ................ -- 3,885 -- -- 3,898
-- redemption of preferred stock ..................... -- -- -- -- (9,761)
-- preferred stock dividends paid..................... (830) -- -- -- (830)
-- preferred stock dividends declared................. 485 -- -- (485) --
-- warrant discount................................... -- 1,000 -- -- 1,000
Comprehensive income:
-- net income ........................................ -- -- -- 85 85
-- foreign currency translation adjustments .......... -- -- 10 (10) --
-------- -------- -------- -------- --------
Total comprehensive income ........................... -- -- 10 75 85
-------- -------- -------- -------- --------
BALANCE, March 31, 2004 .............................. $ 139 $ 62,767 $ (2) $(45,868) $ 18,778
-------- -------- -------- -------- --------
-- issuance of treasury shares ....................... -- 297 -- -- 474
-- stock option and warrant exercises ................ -- 13 -- -- 18
-- redemption of preferred stock ..................... -- -- -- -- (2,310)
-- preferred stock dividends paid..................... (142) -- -- -- (142)
-- preferred stock dividends declared................. 5 -- -- (5) --
-- warrant discount and beneficial conversion feature -- 1,509 -- -- 1,509
Comprehensive loss:
-- net loss.......................................... -- -- -- (1,238) (1,238)
-- foreign currency translation adjustments ......... -- (2) 2 -- --
-------- -------- -------- -------- --------
Total comprehensive loss ............................. -- -- 2 (1,238) (1,238)
-------- -------- -------- -------- --------
BALANCE, June 30, 2004 ............................... $ 2 $ 64,584 $ -- $(47,111) $ 17,089
======== ======== ======== ======== ========

The accompanying notes are an integral part of these financial statements.

-5-

OMNI ENERGY SERVICES CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(THOUSANDS OF DOLLARS)

Six months ended June 30,
-------------------------
2004 2003
--------- --------
(Unaudited) (Note 1)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ......................................................... $ (1,153) $ 1,427
Adjustments to reconcile net income (loss) to net cash provided by
operating activities-
Depreciation and amortization ............................................. 2,380 2,158
Accrued compensation on incentive awards .................................. 918 ---
Accretion of bond discount ................................................ 638 ---
Gain on fixed asset disposition ........................................... (65) (58)
Changes in operating assets and liabilities-
Decrease (increase) in assets, net of acquisition:
Receivables- ............................................................
Trade ................................................................. (2,155) (1,065)
Other ................................................................. 532 297
Inventory ............................................................... (747) (172)
Prepaid expenses ........................................................ 543 916
Assets held for sale .................................................... --- 185
Other ................................................................... (141) (294)
Increase (decrease) in liabilities, net of acquisition-
Accounts payable and accrued expenses ................................... 2,743 1,338
Other long-term liabilities ............................................. (80) (505)
-------- -------
Net cash provided by operating activities ............................. 3,413 4,227
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, net of cash received ........................................ (6,983) ---
Proceeds from disposal of fixed assets .................................... 407 338
Purchase of fixed assets, net ............................................. (3,745) (1,599)
-------- -------
Net cash used in investing activities ................................. (10,321) (1,261)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of convertible debentures, net of
financing fees .......................................................... 14,158 ---
Redemption of preferred stock ............................................. (12,071) ---
Payment of preferred stock dividends ...................................... (972) ---
Proceeds from exercises of options and warrants............................ 3,916 ---
Proceeds from the issuance of long-term debt, net of financing fees........ 4,709 ---
Principal payments on long-term debt ...................................... (3,350) (2,738)
Borrowings on line of credit .............................................. 49,251 21,898
Payments on line of credit................................................. (48,624) (20,599)
-------- -------
Net cash provided by (used in) financing activities ..................... 7,017 (1,439)
-------- -------
NET INCREASE IN CASH ......................................................... 109 1,527
Cash and cash equivalents, at beginning of period ............................ 572 704
-------- -------
Cash and cash equivalents, at end of period .................................. $ 681 $ 2,231
======== =======
SUPPLEMENTAL CASH FLOW DISCLOSURES:

Cash paid for interest ....................................................... $ 654 $ 447
======== =======
NON-CASH TRANSACTIONS:

Equipment acquired under capital lease ....................................... $ 2,065 $ ---
======== =======
Bond Discount and beneficial conversion feature .............................. $ 2,509 $ ---
======== =======
Non-cash transfer of assets from other receivable to equipment ............... $ 1,661 $ ---
======== =======
Transfer of equipment to other receivable pending insurance settlement ....... $ 324 $ ---
======== =======
Net non-cash increase in deferred compensation liability and related
deferred compensation expense............................................... $ 1,370 $ ---
======== =======
Non-cash transfer of deposit to acquisition costs ............................ $ 150 $ ---
======== =======

The accompanying notes are an integral part of these financial statements.

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OMNI ENERGY SERVICES CORP.
NOTES TO FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The financial statements included herein, which have not been audited pursuant
to the rules and regulations of the Securities and Exchange Commission, reflect
all adjustments which, in the opinion of management, are necessary for a fair
presentation of our financial position, results of operations and cash flows for
the interim periods on a basis consistent with the annual audited statements.
All such adjustments are of a normal recurring nature. The results of operations
for interim periods are not necessarily indicative of the results that may be
expected for any other interim period of a full year. Certain information,
accounting policies and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are adequate to
make the information presented not misleading. These financial statements should
be read in conjunction with the Company's audited financial statements included
in the Company's Annual Report on Form 10-K, as amended, for the year ended
December 31, 2003 filed with the Securities and Exchange Commission.

Changes in Estimates

Effective January 1, 2004, we changed the estimated residual value of our fleet
of aircraft from 10% to 30% for aircraft over five years of age and from 10% to
40% for aircraft five years of age or less. We believe the revised residual
values more properly match costs over the useful lives and salvage value of
these assets.

Decreased depreciation expense was recorded for the Company's fleet of aircraft
as a result of management's first quarter 2004 change in the fleet's estimated
residual value. The effect of that change to select items in the financial
statements is shown in the table below (in thousands of dollars, except per
share amounts):

Three Months Ended Six Months Ended
June 30, 2004 June 30, 2004
Increase Increase
------------------ -----------------

Effect of change in estimated residual value to
decrease net loss ............................... $ 65 $ 130
Effect of change net loss per common Share:
Basic............................................ $0.01 $0.01
Diluted.......................................... $0.01 $0.01

NOTE 2. EARNINGS PER SHARE

Basic Earnings Per Share ("Basic EPS") excludes dilution and is determined by
dividing income applicable to common stockholders by the weighted average number
of shares of common stock outstanding during the periods presented. The
potential dilution that could occur if options, warrants and convertible
securities to issue shares of common stock were exercised or converted into
common stock is hereinafter referred to as Diluted Earnings Per Share ("Diluted
EPS").

-7-

As of June 30, 2004 and June 30, 2003, we had options and warrants outstanding
to purchase 2,420,762 and 3,115,786 shares of common stock, respectively, that
were excluded from the calculation of Diluted EPS because they were
antidilutive. For the Basic and Diluted EPS calculation as of June 30, 2004, we
also had preferred stock convertible into 7,733 shares of common stock and
debentures convertible into 2,099,990 shares of common stock and convertible
promissory notes convertible into 319,149 shares of common stock that were
excluded from the calculation because they were antidilutive. At June 30, 2003,
we also had preferred stock that was contingently convertible into 4,560,000
shares of common stock was excluded from the calculation of Diluted EPS.

The following table reconciles net earnings available to common and common
equivalent shares for the Basic EPS calculation to net earnings available to
common and common equivalent shares for the Diluted EPS calculation as of June
30, 2004 and 2003, respectively:

Three Months Ended Six Months Ended
June 30, 2004 June 30, 2004
-------------------- --------------------
(in thousands)
Dollars Shares Dollars Shares
------- ------ -------- ------

Basic EPS net loss applicable to common and
common equivalent shares ................. $(1,243) 11,044 $(1,643) 10,502
Add Options ................................. --- --- --- ---
------- ------ ------- ------
Diluted EPS net loss applicable to common and
common equivalent shares ................. $(1,243) 11,044 $(1,643) 10,502
======= ====== ======= ======

Three Months Ended Six Months Ended
June 30, 2003 June 30, 2003
-------------------- --------------------
(in thousands)
Dollars Shares Dollars Shares
------- ------ ------- ------

Basic EPS net loss applicable to
common and common equivalent shares......... $ 1,542 8,740 $ 1,427 8,740
Add Options................................... --- 2 --- ---
------- ------ ------- ------
Diluted EPS net loss applicable to
common and common equivalent shares......... $ 1,542 8,742 $ 1,427 8,740
======= ====== ======= ======

NOTE 3. LONG-TERM DEBT

Line of Credit and Term Debt

In December 2003, we entered into a $11.0 million senior credit facility with a
bank that includes a $8.0 million working capital revolving line of credit (the
"Line") and a $3.0 million term loan. The proceeds were used to repay term debt,
refinance our then existing revolving line of credit and provide working
capital. In connection with the acquisition of Trussco, Inc. and Trussco
Properties, L.L.C. (collectively "Trussco") on June 30, 2004, the Line was
increased to $12.0 million. (See Note 7)

Availability under the Line is the lower of: (i) $12.0 million or (ii) the sum
of eligible accounts receivable, as defined under the agreement, plus the lesser
of: $2.0 million or 80% of the appraised orderly liquidation value of eligible
inventory of parts and supplies. The Line accrues interest at the prime interest
rate plus 1.5% (5.75% at June 30, 2004) and matures on December 31, 2006. The
Line is collateralized by accounts receivable and inventory. As of June 30,
2004, we had $5.3 million outstanding under the Line and $2.7 million
outstanding on the term loan. Our availability under the Line was $4.0 million
at June 30, 2004.

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At June 30, 2004 and December 31, 2003, long-term debt consists of the following
(in thousands):

JUNE 30, DECEMBER 31,
2004 2003
-------- ------------
(unaudited)

Notes payable to a finance company, variable interest rate at LIBOR plus 5.0%
(6.36% and 6.12% at June 30, 2004 and December 31, 2003 respectively)
maturing July 31, 2006, secured by various property and equipment .......................... $ 958 $ 1,145
Notes payable to a bank with interest payable at Prime plus 1.5% (5.75% and 5.5% at June 30,
2004 and December 31, 2003 respectively) maturing July 31, 2023, secured by real estate .... 1,413 1,633
Notes payable to a bank with interest payable at Prime plus 1.75% (6.00% and 5.75% at June
30, 2004 and December 31, 2003 respectively) maturing December 31, 2006, secured by
various property and equipment ............................................................. 2,750 3,000
Notes payable to a finance company with interest at 8% maturing January 1, 2007, secured by
various aircraft ........................................................................... 1,304 1,838
Notes payable to a finance company with interest at 10.25% maturing May 15, 2008, secured by
an aircraft ................................................................................ 188 207
Notes payable to a bank with interest at 8.13%, maturing June 20, 2009, secured by aircraft.... 253 ---
Notes payable to a finance company with interest at 8%, maturing February 10, 2013, secured
by real estate ............................................................................. 223 ---
Convertible promissory notes payable to certain former stockholders of Trussco, Inc. with
interest at 5% maturing in June 2007 .......................................................... 3,000 ---
Other Debt .................................................................................... 177 ---
Capital lease payable to a leasing companies secured by vehicles .............................. 1,115 491
Capital lease payable to a finance company secured by various aircraft ........................ 8,629 3,361
------- -------
Total ...................................................................................... 20,010 11,675
Less: Current maturities ...................................................................... 3,299 2,051
------- -------
Long-term debt, less current maturities ....................................................... $16,711 $ 9,624
======= =======

Our senior secured credit facility contains customary financial covenants
requiring, among other things, minimum levels of tangible net worth, debt to
EBITDA ratios, and limitations on annual capital expenditures and certain
customer concentrations. As of June 30, 2004, we were in compliance with these
covenants and we expect to maintain compliance throughout 2004.

Convertible Debentures

Pursuant to a Securities Purchase Agreement dated February 12, 2004, we sold (i)
$10,000,000 in principal amount of 3-year, 6.5% fixed rate, Convertible
Debentures (the "Debentures") that are convertible into shares of Common Stock
at an initial conversion price of $7.15 per share, (ii) 1-year Common Stock
Series A Warrants to purchase an aggregate of 700,000 shares of Common Stock at
an initial exercise price of $7.15 per share, and (iii) 5-year Common Stock
Series B Warrants to purchase an aggregate of 390,000 shares of Common Stock at
an initial exercise price of $8.50 per share. The Warrants are not exercisable
for a period of six months and one day after the issue date of such warrants and
in no event will the exercise prices of such warrants be less than $6.15 per
share. In accordance with Accounting Principles Board (APB) Opinion No. 14, the
warrants were valued at a fair market value of $1.0 million using the Black
Scholes model. The value of these warrants are recorded as a debt discount with
a corresponding credit to paid in capital at June 30, 2004. These sales of the
Debentures were made pursuant to a private placement in reliance on Section 4(2)
of the Securities Act of 1933.

Additionally, on April 15, 2004, pursuant to a Securities Purchase Agreement, we
sold (i) $5,050,000 in principal amount of 3-year, 6.5% fixed rate, Convertible
Debentures (collectively with the aforementioned February 12, 2004 issuance
hereinafter referred to as the "Debentures") that are convertible into shares of
Common Stock at an initial conversion price of $7.20 per share, and (ii) 1-year
Common Stock Series A Warrants to purchase an aggregate of

-9-

151,500 shares of Common Stock at an initial exercise price of $9.00 per share.
The Warrants are not exercisable for a period of six months and one day after
the issue date of such warrants and in no event will the exercise prices of such
warrants be less than $7.11 per share. In accordance with Accounting Principles
Board (APB) Opinion No. 14, the warrants were valued at a fair market value of
$.08 million using the Black Scholes model. A beneficial conversion option was
also recorded of $0.7 million. The value of the warrants and beneficial
conversion option are recorded as debt discount with a corresponding credit to
paid in capital at June 30, 2004. These sales of the Debentures were made
pursuant to a private placement in reliance on Section 4(2) of the Securities
Act of 1933.

Prior to maturity of the Debentures, the holders of the Debentures have the
right to require the repayment or conversion of up to an aggregate of $13.17
million of the Debentures (the "Put Option"). We registered 5,012,237 shares
effective June 30, 2004 covering the resales of Common Stock that maybe issuable
pursuant to the conversion of the Debentures and the exercise of the Put Option
and all associated warrants, including additional shares that may be issuable
due to adjustments for conversion price upon the Debenture conversion, payment
of interest with shares and/or the exercise of warrants due to subdivision or
combination of our common stock. Pursuant to the Debenture agreement, the
registration of the related common stock triggered the ability of the Debentures
holders to exercise the Put Option in ten consecutive and equal monthly
installments beginning August 1, 2004. Accordingly the debentures, net of debt
discount, have been classified as a current liability in the accompanying
Consolidated Balance Sheet at June 30, 2004. Upon receipt of the Debenture
holders' intent to exercise a Put Option, we have the irrevocable option to
deliver cash or, if certain conditions set forth in the Debentures are
satisfied, Common Stock with respect to such Put Option. If we elect to pay the
Put Option with Common Stock, the underlying shares will be valued at a 12.5%
discount to the average trading price of our Common Stock for the applicable
pricing period, as defined in the Debenture (See Note 9).

Total proceeds of $14.2 million received from the sales, after expenses, dated
February 12, 2004 and April 15, 2004 was $9.5 million and $4.7 million,
respectively. Of the total proceeds received for these private placements, $8.2
million was used to redeem Series A Preferred Stock in March 2004 (See Note 5)
and the balance used for working capital purposes.

The original issue discount for the February 12, 2004 and April 15, 2004
debentures was $1.0 million and $0.8 million, respectively. We recorded a $0.7
million in beneficial conversion option for the April 15, 2004 Debentures. The
Debentures are being amortized using the effective interest method over the
period in which the debentures can be put to the company. A total of $0.6
million is included in interest expense for the six months ended June 30, 2004.

NOTE 4. LITIGATION

On February 13, 2004, we commenced litigation against Steven Stull, a former
director, Advantage Capital Partners ("ACP") and their respective insurers in
the Civil District Court for the Parish of Orleans in the State of Louisiana.
The suit requests the court to determine our right under the Company's Articles
of Incorporation, as amended, to redeem the Series A 8% Convertible Preferred
Stock rather than to convert the shares into common stock. Furthermore, to the
extent the court determines we did not have a right to redeem, rather than
convert, the Series A Preferred Stock, the suit requests the court to determine
that the Unanimous Consent of the Board of Directors entered into on November 7,
2000 which, among other things, reduced the conversion price of the Series A
Preferred Stock from $2.50 to $0.75 (pre-split) per share, is null and void and
without effect because it was accomplished by the defendants in violation of
fiduciary duties and/or public policy and Louisiana law. We are seeking a
declaration that we have the right to redeem, rather than convert, Series A
Preferred Stock. Alternatively, we seek (a) a declaration that the Unanimous
Consent entered into on November 7, 2000 is null and void and without effect; or
(b) damages back against Mr. Stull and the Advantage Capital Partners as a
complete set-off to any additional dollars owed by us to the Advantage Capital
Partners as a result of the November 7, 2000 actions.

On March 26, 2004, ACP and its affiliates filed a lawsuit in the United States
District Court, Eastern District of Louisiana against us and certain of our
executive officers. ACP and its affiliates are alleging that (i) the Company and
the officers misrepresented material facts and failed to disclose material facts
related to its intention to redeem the Series A Preferred Stock and Series B
Preferred Stock of the Company, and (ii) the officers of the Company breached
their fiduciary duties. This lawsuit presents risks inherent in litigation
including continuing expenses, risks of loss, additional claims, and attorney
fee liability. ACP claims that (i) we and the officers misrepresented material
facts and failed to disclose material facts related to its intention to redeem
our Series A and Series B Convertible Preferred Stock, and (ii) the officers of
the Company breached their fiduciary duties. They are claiming damages of
approximately $30 million. We have agreed to indemnify our officers in this
matter. Our costs and legal expenses related to this lawsuit are not currently
determinable. This lawsuit presents risks inherent in litigation including
continuing expenses, risks of loss, additional claims, and attorney fee
liability. We believe that the claims or litigation arising therefrom will have
no material impact on us or our business and all disputes surrounding securities
matters will likely be covered by our insurance. However, if this lawsuit is
decided against us, and if it exceeds our insurance coverage, it could aversely
affect our financial condition, results of operations and cash flows (see Note
4).

-10-

NOTE 5. PREFERRED STOCK

During the years ended December 31, 1999, 2000 and 2001, we privately placed
with an affiliate, subordinated debentures totaling $7.5 million, $3.4 million
and $1.5 million, respectively. The debentures matured five years from their
date of issue and accrued interest at various rates ranging from a fixed rate of
12% per annum to a variable rate of interest starting at 12% per annum and
escalating to 20% per annum. In October 2000, we agreed to convert $4.6 million
of the subordinated debentures into our Series A Preferred Stock. In May 2001,
we agreed to pay the affiliate $3.0 million cash plus issue to the affiliate
$4.6 million of the Company's Series B Preferred Stock in full satisfaction of
all of the remaining outstanding subordinated debentures including accrued
interest of $1.8 million. This transaction resulted in the affiliate agreeing to
forgive $1.0 million of indebtedness, which was reflected as a capital
contribution from the affiliate, rather than as income in our financial
statements.

In connection with the original issuance of the subordinated debentures, we
issued to the affiliate detachable warrants to purchase 1,912,833 shares of our
common stock, of which 293,055 were transferred in 2003 to settle certain
litigation (See Note 4) and 858,678 were cancelled. The balance of 761,100 was
exercised in the first quarter of 2004 at an exercise price of $2.25.

The Series A Preferred Stock has an 8% cumulative dividend rate, was convertible
into our common stock with a conversion rate of $2.25 per share, was redeemable
at our option at $1,000 per share plus accrued dividends, contained a
liquidation preference of $1,000 per share plus accrued dividends, had voting
rights on all matters submitted to a vote of our stockholders, had separate
voting rights with respect to matters that would affect the rights of the
holders of the Preferred Stock, and had aggregate voting rights of the affiliate
limited to 49% of our total outstanding common and preferred shares with voting
rights. In respect to the Series A Preferred Stock, the affiliate had agreed to
waive its conversion rights until our EBITDA (as defined) reached a mutually
agreed upon level. The affiliate previously agreed that dividends would not
accrue after June 30, 2003, until our EBITDA reached a mutually agreed upon
level. During the third quarter of 2003, we agreed with the holders of the
preferred stock that our EBITDA had reached an acceptable level for the
resumption of conversion rights and the accrual of dividends. Pursuant to our
senior secured credit agreements, the dividends could be paid "in kind" (in
shares of like preferred stock) or in cash. In February 2004, we issued $10
million of 6.5% Subordinated Convertible Debentures. The proceeds were used to
redeem $8.2 million of the Series A Preferred Stock outstanding, including
accrued dividends. The remaining 25 shares of Series A Preferred Stock were
redeemed in April 2004 for $0.03 million. At June 30, 2004 there are no Series A
Preferred Stock shares outstanding.

In May 2001, we committed to issue 4,600 shares of Series B Preferred Stock to
an affiliate of ours in satisfaction of all outstanding principal and interest
owed under the subordinated debt agreements. These shares were issued in March
2002. The Series B Preferred Stock has an 8% cumulative dividend rate, is
convertible into our common stock with an initial conversion rate of $3.75 per
share, is redeemable at our option at $1,000 per share plus accrued dividends,
contains a liquidation preference of $1,000 per share plus accrued dividends and
has no voting rights until such time as it becomes convertible. The affiliate
previously agreed that dividends would not accrue after June 30, 2003 until our
EBITDA reached a mutually agreed upon level. During the third quarter of 2003 we
agreed with the holders of the preferred stock that our EBITDA had reached an
acceptable level for the resumption of conversion rights and the accrual of
dividends. Pursuant to our senior secured credit agreements, the dividends can
be paid "in kind" (in shares of like preferred stock) or in cash. During the
first quarter of 2004, we redeemed 2,286 shares of the Series B Preferred Stock
for $2.4 million, including accrued dividends. In April 2004, we redeemed 2,285
shares of the total of 2,314 shares of the Series B Preferred Stock outstanding
for $2.5 million, including accrued dividends. At June 30, 2004, 29 shares of
Series B Preferred Stock remain outstanding.

-11-

NOTE 6. SEGMENT INFORMATION

The following shows industry segment information for our four operating
segments, Drilling, Aviation, Survey, and Permitting for the three months and
six months ended June 30, 2004 and 2003 (in thousands). As described in Note 7,
effective June 30, 2004 we acquired Trussco, Inc. and Trussco Properties LLC,
(collectively herein referred to as "Trussco") which will require a seperate
operating segment. The following also shows the identifiable assets of Trussco:

Three months ended June 30, Six months ended June 30,
--------------------------- -------------------------
2004 2003 2004 2003
--------- --------- --------- ---------

Operating revenues:
Drilling ............................... $ 8,289 $ 8,881 $ 15,794 $ 14,169
Aviation ............................... 5,005 1,038 8,305 1,778
Survey ................................. --- --- --- ---
Permitting ............................. 298 490 989 669
-------- -------- -------- --------
Total ................................ $ 13,592 $ 10,409 $ 25,088 $ 16,616
======== ======== ======== ========

Gross profit:
Drilling ............................... $ 1,284 $ 2,845 $ 2,459 $ 3,735
Aviation ............................... 2,309 160 3,158 418
Survey ................................. (9) (15) (21) (37)
Permitting ............................. 37 102 134 140
Other (Corporate) ...................... (105) (220) (207) (335)
-------- -------- -------- --------
Total ................................ $ 3,516 $ 2,872 $ 5,523 $ 3,921

General and administrative expenses ....... 3,443 1,232 4,920 2,291
Interest and other expense, net ........... 1,311 323 1,756 528
-------- -------- -------- --------
Income before taxes ....................... $ (1,238) $ 1,317 $ (1,153) $ 1,102
======== ======== ======== ========

Capital Expenditures:
Drilling ............................... $ 5 $ 34 $ 50 $ 34
Aviation ............................... 1,790 435 3,620 1,550
Survey ................................. --- --- --- ---
Permitting ............................. --- --- --- ---
Corporate .............................. 37 5 75 15
-------- -------- -------- --------
Total ................................ $ 1,832 $ 474 $ 3,745 $ 1,599
======== ======== ======== ========

June 30, June 30,
2004 2003
-------- --------

Identifiable Assets:
Drilling ............................... $ 21,455 $ 21,576
Aviation ............................... 22,948 7,773
Survey ................................. 1,497 1,013
Permitting ............................. 114 157
Trussco ................................ 11,977 ---
Corporate (Note 7) ..................... 11,169 11,951
-------- --------
Total ................................ $ 69,160 $ 42,470
======== ========

-12-

NOTE 7. ACQUISITION

On November 20, 2003, we purchased all of the issued and outstanding stock of
American Helicopters, Inc. for the aggregate acquisition cost of $5.4 million,
including $4.6 million in cash and the assumption of current and long-term
liabilities of $0.6 million and $0.2 million, respectively. American
Helicopters, Inc. operates 17 helicopters from base locations in Louisiana and
Texas and is headquartered in Angleton, Texas. The results of American
Helicopters, Inc.'s operations have been included in our consolidated financial
statements since the acquisition date.

The following table summarizes the estimated fair values of the assets acquired
and liabilities assumed at the date of acquisition. The allocation of the
purchase price is subject to refinement in the future as acquired asset and
liability values become finalized (in thousands):

UNAUDITED FINANCIAL DATA:
(in thousands)

NOVEMBER 19,
2003
BALANCE SHEET DATA --------

Current assets ............ $ 2,129
Property and equipment..... 3,322
Current Liabilities ....... (598)
Long-term liabilities ..... (213)
-------
Cash purchase price.... $ 4,640
=======

On June 30, 2004, we purchased all of the issued and outstanding stock of
Trussco, Inc. and all of the membership interest in Trussco Properties, L.L.C.
for the aggregate acquisition cost of $11.9 million, including $7.3 million in
cash, $3.0 million in 5% convertible promissory notes payable to certain
stockholders ("Stockholder Notes") maturing in June 2007, and the assumption of
approximately $1.6 million in debt and other liabilities. The Stockholder Notes
can be prepaid at any time and are convertible at a price of $9.40 per share.
Trussco is a leading provider of dock-side and offshore tank, vessel, boat and
barge cleaning services principally to major and independent oil and gas
companies operating in the Gulf of Mexico. The acquisition will increase our
revenue and customer base and offers cross-selling opportunities with our
aviation transportation division. Correspondingly, $2.5 million was allocated to
intangible assets attributable to customer lists, goodwill and other
industry-specific intangible assets. The results of Trussco operations will be
included in our consolidated financial statements from the date of the
acquisition.

The following table summarizes the estimated fair values of the assets acquired
and liabilities assumed at the date of acquisition. The property and equipment
and intangible assets are being amortized over five years and will not result in
any residual value. The final allocation of the purchase price to intangible
assets and goodwill, if any, has not been completed. The allocation of the
purchase price is subject to refinement as acquired asset and liability values
are being finalized (in thousands):

UNAUDITED FINANCIAL DATA:
(in thousands)

JUNE 30,
2004
BALANCE SHEET DATA -------

Current assets (including cash of $356) ............ $ 3,643
Property and equipment.............................. 5,814
Other assets ....................................... 19
Intangible assets .................................. 2,500
Assumption of Debt ................................. (1,637)
Stockholder Notes .................................. (3,000)
-------
Cash purchase price $ 7,339
=======

The unaudited pro forma results summarized below reflects our consolidated pro
forma results of operations as if American Helicopters, Inc. and Trussco were
acquired on January 1, 2003 and January 1, 2004. (in thousands):

-13-

UNAUDITED PRO FORMA RESULTS

THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2004 2003 2004 2003
---------- ---------- ---------- ----------

Revenue .......................................................... $ 18,122 $18,315 $ 34,562 $31,122
Gross Profit ..................................................... $ 4,875 $ 5,256 $ 8,273 $ 7,121
Net income (loss) applicable to common and common equivalent
shares ........................................................ $ (1,149) $ 2,318 $ (657) $ 1,563
Net income (loss) per common share:
Basic ......................................................... $ (0.10) $ 0.27 $ (0.13) $ 0.18
Diluted ....................................................... $ (0.10) $ 0.27 $ (0.13) $ 0.18

NOTE 8. STOCK BASED COMPENSATION

We account for employee stock-based employee compensation using the intrinsic
value method prescribed in Accounting Principles Board (APB) Opinion No. 25,
"Accounting for Stock Issued to Employees" ("Opinion No. 25"). Accordingly, the
provisions of Statement of Financial Accounting Standards ("SFAS") No. 123,
"Accounting for Stock-Based Compensation," permits the continued use of the
method prescribed by Opinion No. 25 but requires additional disclosures,
including pro forma calculations of earnings and net earnings per share as if
the fair value method of accounting prescribed by SFAS No. 123 had been applied.
No stock-based compensation costs are reflected in net income (loss), other than
compensation expense recorded on awards to certain executive officers (see Note
9), as all options granted under the plans had an exercise price equal to the
market value of the underlying common stock on the date of grant. As required by
SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and
Disclosure," which amended SFAS No. 123, the following table illustrates the
effect on net income and earnings per share if the Company had applied the fair
value recognition provisions of SFAS No. 123 to stock-based compensation. The
pro forma data presented below is not representative of the effects on reported
amounts for future years.

Three Months Ended June 30 Six Months Ended June 30
-------------------------- ------------------------
2004 2003 2004 2003
-------- ---------- ---------- ---------

Net income (loss) applicable to common and common equivalent shares -
as reported ......................................................... $(1,243) $ 1,542 $ (1,643) $ 1,427

Add: stock-based employee compensation expense included in
reported net loss, net of related tax effects of $0 ................. 918 --- 918 ---

Less: total stock-based employee compensation expense determined
under fair value based method for all awards granted to employees,
net of related tax effect of $0 ..................................... (1,118) (17) (1,301) (34)
------- --------- --------- ---------
Net income (loss) applicable to common and common equivalent
shares - pro forma ................................................ $(1,443) $ 1,525 $ (2,026) $ 1,393
======= ========= ========= =========
Net income (loss) per common share - as reported:
Basic ............................................................... $ (0.11) $ 0.18 $ (0.16) $ 0.16
Diluted ............................................................. $ (0.11) $ 0.18 $ (0.16) $ 0.16
Net income (loss) per common share - pro forma:
Basic ............................................................... $ (0.13) $ 0.17 $ (0.19) $ 0.16
Diluted ............................................................. $ (0.13) $ 0.17 $ (0.19) $ 0.16

-14-

NOTE 9. EXECUTIVE COMPENSATION AGREEMENTS

On June 30, 2004, we amended Restricted Stock Incentive Agreements with certain
executive management into Amended and Restated Incentive Agreements
(collectively referred to hereinafter as the "Incentive Agreements") that award
stock and/or cash on various vesting dates. Under the terms and conditions of
the Incentive Agreements, two executive officers received 40,454 shares and
50,000 shares, respectively. The stock will be held in escrow, registered in the
name of the executive officers, until it vests 100% on November 4, 2004. A tax
equalization payment was also paid to the two executive officers totaling $0.1
million at June 30, 2004. The awards were valued at fair market value at a price
of $5.05 per share at June 30, 2004 and recorded, in full, as compensation
expense of $0.5 million.

The Incentive Agreements also grant these executive officers the right to
receive two cash payments each equal to the fair market value of 60,673 shares
and 75,000 shares of our common stock, respectively, on the first business day
following our annual stockholders' meeting in 2005 and in 2006. The amounts of
such stock-based awards to the executive officers on each vesting date may be
paid in cash or, at the sole option of the Compensation Committee, in additional
shares, provided such shares are available for issuance pursuant to the terms of
the Fourth Amended and Restated OMNI Energy Services Corp. Stock Incentive Plan
(hereinafter the "Plan"). At June 30, 2004, we had recorded $0.4 million in
compensation expense under the Incentive Agreements, with a corresponding
deferred liability of $1.4 million. The awards are accounted for under FIN 28
"Accounting for Stock Appreciation Right and Other Variable Stock Option or
Award Plans" as a variable plan which requires that compensation will be
measured at the end of each period at the quoted market price of a share of our
common stock. The change in the quoted market price will be reflected in future
periods until vested as an adjustment of accrued compensation and compensation
expense in the periods in which the changes occur.

We also entered into Stock-Based Award Incentive Agreements (hereinafter "SBA")
with certain executive officers on June 30, 2004. The SBA shall become fixed:
(a) on the date of the Employee's termination of employment (for any reason
other than resignation or termination for cause), (b) 90 days after the
executive's death or disability or (c) upon a Change in Control. The executive
managers were awarded 45% and 55%, respectively, of: (1) 10% of the fair market
value (hereinafter "FMV"), defined as the average closing price per share on the
NASDAQ National Market over the five prior trading days times the number of
issued and outstanding shares of the Company, of a share of the Company's common
stock greater than or equal to $1.00 but less than $1.50, plus (2) 15% of the
FMV of a share of the Company's common stock greater than or equal to $1.50 but
less than $2.50, plus (3) 20% of the FMV of a share of the Company's common
stock greater than or equal to $2.50 but less than $10.00, plus (4) 15% of the
FMV of a share of the Company's common stock greater than or equal to $10.00 but
less than $20.00, plus (5) 10% of the FMV of a share of the Company's common
stock greater than or equal to $20.00. The grant terminates on December 31, 2008
or upon termination of employment, whichever occurs last. No compensation
expense was recorded at June 30, 2004 because the award is contingent on future
events none of which is considered probable at June 30, 2004.

In addition, we entered into employment contracts with certain key executive
management effective until December 31, 2008 with automatic extensions for
additional, successive one year periods commencing January 1, 2009, unless
either party gives notice of non-renewal as provided for under the terms of the
employment contracts.

In connection with the Trussco acquisition (See Note 7), we also entered into
employment contracts with certain Trussco managers effective until December 31,
2006 with automatic extensions for additional, successive one year periods
commencing January 1, 2007, unless either party gives notice of non-renewal as
provided for under the terms of the employment contracts.

NOTE 10. SUBSEQUENT EVENTS

On July 28, 2004, we received notices from Manchester Securities Corporation,
Provident Premier Master Fund, Ltd., Gemini Master Fund, Ltd. and Portside
Growth and Opportunity Fund exercising their Put Option for approximately $1.3
million (plus accrued interest) of the Debentures (Note 3). Under the terms of
the Put Option, we have the irrevocable option to deliver cash or shares of
common stock with respect to the Put Option. We elected to use cash to redeem
this portion of the Debentures.

In July of 2004, we received $16.6 million of senior aviation equipment
financing commitments. The proceeds will be used to provide working capital and
complete certain strategic business opportunities currently under consideration.

Our Quarterly Report on Form 10-Q for the quarter ended June 30, 2004 was due to
be filed, by extension, on August 23, 2004. The filing of this Form 10-Q was not
timely made.

On February 12, 2004 and April 15, 2004 we entered into the Securities Purchase
Agreements and Debentures described above. In connection therewith, we entered
into an Amended and Restated Registration Rights Agreement (the "Registration
Rights Agreement") pursuant to which we agreed to file and maintain a
registration statement with respect to certain underlying shares of common stock
(the "Registration Statement"). In accordance with and pursuant to the terms of
the Registration Rights Agreement, the Registration Statement was filed and was
declared effective by the SEC on June 30, 2004. As a result of the late filing
of our Form 10-Q for the quarter ended June 30, 2004, as of August 24, 2004 our
Registration Statement is no longer effective. Accordingly, we are in technical
default of the Registration Rights Agreement. Pursuant to the Registration
Rights Agreement, if this default continues for seven business days following
delivery of written notice of such default to the Company, the Company must make
payments to each holder of the Debentures equal to 1.5% of the aggregate amount
of principal and interest outstanding on the Debentures for each 30 days in
which a default occurs.

In addition, the Debentures define an "Event of Default" to mean, among other
things, a breach, in a material respect, of any material term of the
Registration Rights Agreement that continues for a period of ten business days
after written notice thereof to the Company from the holder. As a result of the
late filing of our Form 10-Q, there will be an Event of Default under the
Debentures if the required notice is given and passage of time occurs as
provided above.

Upon the occurrence of an Event of Default, holders have the right, upon written
notice to the Company, to require the Company to redeem all or a portion of
their Debentures for cash at the prices indicated in the Debentures. The notice
given by the holder must specify a date at least three business days following
the day that the notice is delivered to the Company. The Company must pay the
Mandatory Redemption Price (as defined in the Debentures) no later than the
fifth business day after the payment date specified in the notice.

We are making every effort to cure these defaults, or seek a waiver from the
holders with respect thereto, as soon as possible.

On August 25, 2004, the Company received a letter from the NASDAQ staff
indicating that the Company has failed to timely file its Form 10-Q for the
second quarter of 2004 and therefore is not in compliance with the NASDAQ
listing requirements. If necessary, the Company intends to request a hearing
before the NASDAQ Listings Qualifications Panel to review the staff
determination. The Company's securities would remain listed pending any hearing.

-15-

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Management's Discussion and Analysis of Financial Condition and Results of
Operations contains certain "forward looking statements" within the meaning of
Section 27A of the Securities Act of 1933 (the "Securities Act") and Section 21E
of the Securities Exchange Act of 1934 (the "Exchange Act"), which reflect
management's best judgment based on factors currently known. Actual results
could differ materially from those anticipated in these "forward looking
statements" as a result of a number of factors, including but not limited to
those discussed under the heading "Forward-Looking Statements." "Forward looking
statements" provided by us pursuant to the safe harbor established by the
federal securities laws should be evaluated in the context of these factors.

This discussion should be read in conjunction with the financial statements and
the accompanying notes and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included in the Company's Annual Report on
Form 10-K, as amended, for the year ended December 31, 2003 filed with the
Securities and Exchange Commission.

RECENT DEVELOPMENTS

Our Quarterly Report on Form 10-Q for the quarter ended June 30, 2004 was due to
be filed, by extension, on August 23, 2004. The filing of this Form 10-Q was not
timely made.

In addition, the Debentures define an "Event of Default" to mean, among other
things, a breach, in a material respect, of any material term of the
Registration Rights Agreement that continues for a period of ten business days
after written notice thereof to the Company from the holder. As a result of the
late filing of our Form 10-Q, there will be an Event of Default under the
Debentures if the breach of the Registration Rights Agreement continues as
provided above.

We are making every effort to cure these defaults, or seek a waiver from the
holders with respect thereto, as soon as possible.

GENERAL

OMNI Energy Services Corp. is a leading oilfield service company specializing in
providing an integrated range of (i) onshore seismic drilling, permitting,
survey and helicopter support services to geophysical companies operating in
logistically difficult and environmentally sensitive terrain and (ii) helicopter
transportation services to oil and gas companies operating primarily in the
shallow waters of the Gulf of Mexico. We operate in two business divisions:
Seismic Drilling and Aviation Services.

The principal region in which our Seismic Drilling division operates is the
marsh, swamp, shallow water and contiguous dry land areas along the U.S. Gulf
Coast (the "Transition Zone"), primarily in Louisiana and Texas, where we are
the leading provider of seismic drilling support services. In 2003, we initiated
seismic drilling activities in various Transition Zone regions of Mexico.

We own and operate a fleet of specialized seismic drilling and transportation
equipment for use in the Transition Zone. We believe we are the only domestic
company that currently can both provide an integrated range of seismic drilling,
permitting, survey and helicopter support services in all of the varied terrain
of the Transition Zone and simultaneously support operations for multiple,
large-scale seismic projects. In February 2002, we acquired all of the assets of
AirJac Drilling, a division of Veritas Land DGC. This acquisition created the
largest domestic provider of seismic drilling services to geophysical companies.

We operate a fleet of 28 company-owned, leased and customer-owned helicopters,
and one fixed-wing aircraft, from bases or heliports located in the Gulf Coast
regions of Louisiana and Texas. Our land-based aviation customers are primarily
geophysical companies operating in various regions of the United States. Our
offshore aviation customers include oil and gas companies operating primarily in
the shallow waters of the Gulf of Mexico. We maintain and operate certain
customer-owned aircraft providing air medical transportation services for
hospitals and medical programs in approximately 15 counties in Texas. The
aircraft dedicated to this operation are specifically outfitted to accommodate
emergency patients and emergency medical equipment. We also maintain an
inventory of aviation maintenance parts, turbine engines and other miscellaneous
flight equipment used in connection with providing aviation services to our
customers. In November 2003, we acquired American Helicopters, Inc. ("AHI")
establishing us as a leading provider of helicopter transportation services in
the Gulf of Mexico.

-16-

We were founded in 1987, as OMNI Drilling Corporation, to provide drilling
services to the geophysical industry. In July 1996, OMNI Geophysical, L.L.C.
acquired substantially all of the assets of OMNI Geophysical Corporation, the
successor to the business of OMNI Drilling Corporation. OMNI Energy Services
Corp. ("OMNI") was formed as a Louisiana corporation on September 11, 1997.

On June 30, 2004, we acquired Trussco, a leading provider of dockside and
offshore tank, rig, structure and vessel cleaning for oil and gas companies
operating primarily in the Gulf of Mexico, expanding our core business segments
and providing us with integration opportunities with aviation transportation
services.

Seasonal Trends and Weather Risks. Our operations are subject to seasonal
variations in weather conditions and available daylight hours. Since both
drilling and aviation activities take place outdoors, on average we experience
lower flight hours in winter months than in summer months, due to an increase in
rain, fog, and cold conditions and a decrease in daylight hours. These winter
conditions also generally result in fewer hours worked per day and fewer holes
drilled or surveyed per day during that season.

Three months ended June 30, Six months ended June 30,
RESULTS OF OPERATIONS (unaudited) 2004 2003 2004 2003
--------- --------- --------- --------

Operating revenue ........................ $ 13,592 $ 10,409 $ 25,088 $ 16,616
Operating expenses ....................... 10,076 7,537 19,565 12,695
-------- -------- -------- --------
Gross profit ............................. 3,516 2,872 5,523 3,921
General and administrative expenses ...... 3,443 1,232 4,920 2,291
-------- -------- -------- --------
Operating income ......................... 73 1,640 603 1,630
Interest expense ......................... 1,193 237 1,609 447
Other expense, net ....................... 118 86 147 81
-------- -------- -------- --------
Income before income taxes ............... (1,238) 1,317 (1,153) 1,102
Income tax benefit ....................... --- 225 --- 325
-------- -------- -------- --------
Net income (loss) ........................ (1,238) 1,542 (1,153) 1,427
Preferred stock Dividends ................ (5) --- (490) ---
-------- -------- -------- --------
Net income applicable to common and common
equivalent shares ........................ $ (1,243) $ 1,542 $ (1,643) $ 1,427
======== ======== ======== ========

THREE MONTHS ENDED JUNE 30, 2004 COMPARED TO THREE MONTHS ENDED JUNE 30, 2003

Operating revenues increased 31% or $3.2 million, from $10.4 million for the
three months ended June 30, 2003 to $13.6 million for the three months ended
June 30, 2004. This increase was due primarily to our expanded role in aviation
transportation to oil and gas companies operating in the shallow waters of the
Gulf of Mexico. Revenues related to the drilling, survey and permitting
divisions decreased $0.8 million, to $8.6 million for the three months ended
June 30, 2004 from $9.4 million for the three months ended June 30, 2003. The
months of April through June 2004 experienced record rainfall of over 50 inches
in Louisiana and the Gulf region, which resulted in approximately 59 weather
days for our drilling operations. Aviation revenues increased $4.0 million from
$1.0 million to $5.0 million for the three months ended June 30, 2004 compared
to the same period in 2003 as a result of an increase of 5,027 flight hours from
1,288 to 6,315 flight hours, due primarily from our acquisition of American
Helicopters in November 2003 and the W&T contract that we began in April 2004,
providing transportation services to offshore platforms operated by them in the
shallow, offshore waters of the Gulf of Mexico.

Operating expenses increased 35%, or $2.6 million, from $7.5 million for the
three months ended June 30, 2003 to $10.1 million for the three months ended
June 30, 2004. Increases in payroll costs in all divisions accounted for
approximately 30% of this increase as operating payroll expense increased from
$3.1 million to $3.8 million for the three months ended June 30, 2003 and 2004,
respectively. The average number of field personnel we employed increased from
161 for the three months ended June 30, 2003 to 190 for the three months ended
June 30, 2004, as a result of our acquisition of AHI. Also, explosives expense
increased $0.4 million due to an increase in the cost of explosives on jobs
performed in 2004 versus 2003. We currently utilize third party contactors to
perform all

-17-

permitting services and some drilling services. Third party contract services
increased $0.6 million from the second quarter of 2003 to the second quarter of
2004, as a result of utilizing the contractors on a very large job in the second
quarter of 2004. Fuel expense increased $0.3 million from $0.4 million for the
three months ended June 30, 2003, which is consistent with the aviation revenue
increase. Finally, an increase in other general operating expense of $0.6
million from the second quarter of 2003 to the second quarter of 2004, was
primarily due to increased personnel and base operations resulting from the AHI
acquisition.

Although gross profit increased $0.6 million from $2.9 million to $3.5 million
for the second quarter of 2003 and 2004, respectively, our gross profit margins
declined from 27.6% in 2003 to 25.9% in 2004. Increased revenue and
profitability in our aviation division was offset by lower margins and decreased
activity due to record rainfall and consequently, increased weather days, in our
drilling division.

General and administrative expenses increased $2.2 million from $1.2 million for
the three months ended June 30, 2003 to $3.4 million for the three months ended
June 30, 2004. Approximately 50% of the increase or $1.0 million related to
executive compensation agreements recorded in the second quarter for awards in
2004 and those that vest through 2006 (see Note 9). Payroll costs and other
general administrative costs associated with our recent acquisition of American
Helicopters, as well as, professional fees related to additional activities for
Sarbanes Oxley Act of 2002 and related Securities and Exchange Commission
regulations, cost of defense against a former director and costs associated with
financing agreements accounted for the remainder.

Interest expense increased approximately $1.0 million from $0.2 million for the
three month period ended June 30, 2003 to $1.2 million for the three month
period ended June 30, 2004. Over 60% of this increase is accretion of original
issue discount of $0.5 million and a beneficial conversion option of $0.1
million on the 6.5% Debentures issued on February 12 and April 15, 2004. The
remaining increase is attributable to increased levels of debt between the
periods, resulting primarily from the acquisition of American Helicopters and
the financing on three additional aircraft acquired for our new offshore
aviation contract with W & T Offshore.

Due to our past history of operating losses, we recorded a valuation allowance
during the periods against our net deferred tax assets generated from our net
operating loss carry forwards, which resulted in our not reporting any income
tax expense or benefit during those periods. For the quarter ended June 30,
2003, the Company reversed $0.2 million of this related reserve due to the
Company's expectation of generating income in fiscal 2003. For the period ended
June 30, 2004, we did not record any income tax expense or benefit.

SIX MONTHS ENDED JUNE 30, 2004 COMPARED TO SIX MONTHS ENDED JUNE 30, 2003

Operating revenues increased 51%, or $8.5 million, from $16.6 million for the
six months ended June 30, 2003 to $25.1 million for the six months ended June
30, 2004. Revenues from our drilling and permitting operations increased $1.9
million principally as a result of an increased seismic and permitting activity.
Revenues from our aviation operations increased $6.5 million from $1.8 million
for the six months ended June 30, 2003 to $8.3 million for the same period in
2004. The increase is due to the acquisition of AHI in November 2003 and the W&T
contract that we began in April 2004, providing transportation services to
offshore platforms operated by them in the shallow, offshore waters of the Gulf
of Mexico.

Operating expenses increased 54%, or $6.9 million, from $12.7 million for the
six months ended June 30, 2003 to $19.6 million for the six months ended June
30, 2004. This increase is partially attributable to higher operating payroll
and payroll related costs, which increased $2.2 million from $5.5 million to
$7.7 million for the six month periods ended June 30, 2003 and 2004,
respectively. Our average number of field personnel increased from 187 employees
during the first half of 2003 to 280 employees during the first half of 2004. We
currently utilize third party contractors exclusively to perform permitting
services and occasionally to assist in drilling operations. Accordingly, third
party contract services increased $0.3 million during the first half of 2004 as
compared to the first half of 2003, and drilling contract services increased
$1.1 million for the same six-month period. Overall, repairs and maintenance
expenses increased $0.4 million, with corresponding increases in fuel and oil
expenses and explosives and down hole expenses of $0.4 million and $1.2 million,
respectively from the six months ended June 30, 2003 to the same period of 2004.
The increase in repairs and maintenance and fuel and oil expense are directly

-18-

attributable to increased aviation activity resulting from our acquisition of
AHI. Explosives expense increased due to an increase in the cost of explosives
on jobs performed in 2004 versus 2003.

Gross profit margins were 22% and 24% for the six months ended June 30, 2004 and
2003, respectively. The decline in the profit margins resulted from increased
revenue and profitability in our aviation division offset by lower margins and
decreased activity due to record rainfall and consequently, increased weather
days in our drilling division.

General and administrative expenses increased $2.6 million from $2.3 million for
the six months ended June 30, 2003 to $4.9 million for the six months ended June
30, 2004. Approximately 40% or $1.0 related to executive compensation agreements
recorded in the second quarter for awards in 2004 and those that vest through
2006 (see Note 9). Professional services increased $0.5 million from the six
month period ended June 30, 2003 to the same period in 2004 related to
additional activities for Sarbanes-Oxley Act of 2002 and related Securities and
Exchange Commission regulations costs of defense against a former director and
costs associated with financing agreements and acquisitions. Payroll related
expenses increased $0.7 million for the same period comparison due in part to
additional support staff for aviation operations.

Interest expense increased $1.2 million from $0.4 million for the six months
ended June 30, 2003 to $1.6 million for the six months ended June 30, 2004.
Accretion of original issue discount of $0.5 million and a beneficial conversion
option of $0.1 million accounts for 50% of the increase. The remaining increase
is attributable to increased levels of debt due to acquisitions.

Due to our recent history of operating losses, we recorded a valuation allowance
during the periods against our net operating loss carry-forwards, which resulted
in our not reporting any income tax expense or benefit during those periods. For
the quarter and six months ended June 30, 2003, the Company reversed $0.2
million and $0.3 million, respectively, of this reserve due to the Company's
expectation of generating income in fiscal 2003. For the six month period ended
June 30, 2004, we did not record any income tax expense or benefit.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

At June 30, 2004, we had approximately $0.7 million in cash compared to
approximately $0.6 million at December 31, 2003 and negative working capital of
approximately $(7.8) million at June 30, 2004, compared to working capital of
approximately $6.9 million at December 31, 2003. Our working capital decreased
due to the classification $13.2 million, net of discount 6.5% Debentures, net of
discount, as short-term debt due to the ability of the holder to require
repayment or conversion of the debt in 10 monthly put options (See Note 3). Our
availability under the line at June 30, 2004 was $4.0 million.

In July 2004, we received $16.6 million of senior aviation equipment financing
commitments. The proceeds will increase working capital and liquidity and will
be used to complete certain strategic business opportunities under
consideration.

Line of Credit and Term Debt

-19-

June 30, 2004) and matures on December 31, 2006. The Line is collateralized by
accounts receivable and inventory. As of June 30, 2004, we had $5.3 million
outstanding under the Line and $2.7 million outstanding on the term loan. Our
availability under the line was $4.0 million.

At June 30, 2004 and December 31, 2003, long-term debt consists of the following
(in thousands):

JUNE 30, DECEMBER 31,
2004 2003
------- ------------
(unaudited)

Notes payable to a finance company, variable interest rate at LIBOR plus 5.0%
(6.36% and 6.12% at June 30, 2004 and December 31, 2003 respectively)
maturing July 31, 2006, secured by various property and equipment .......................... $ 958 $ 1,145
Notes payable to a bank with interest payable at Prime plus 1.5% (5.75% and 5.5% at June 30,
2004 and December 31, 2003 respectively) maturing July 31, 2023, secured by real estate .... 1,413 1,633
Notes payable to a bank with interest payable at Prime plus 1.75% (6.00% and 5.75% at June
30, 2004 and December 31, 2003 respectively) maturing December 31, 2006, secured by
various property and equipment ............................................................. 2,750 3,000
Notes payable to a finance company with interest at 8% maturing January 1, 2007, secured by
various aircraft ........................................................................... 1,304 1,838
Notes payable to a finance company with interest at 10.25% maturing May 15, 2008, secured by
an aircraft ................................................................................ 188 207
Notes payable to a bank with interest at 8.13%, maturing June 20, 2009, secured by aircraft.... 253 ---
Notes payable to a finance company with interest at 8%, maturing February 10, 2013, secured
by real estate ............................................................................. 223 ---
Convertible promissory notes payable to certain former stockholders of Trussco, Inc. with
interest at 5% maturing in June 2007 ....................................................... 3,000 ---
Other Debt .................................................................................... 177 ---
Capital lease payable to a leasing companies secured by vehicles .............................. 1,115 491
Capital lease payable to a finance company secured by various aircraft ........................ 8,629 3,361
------- -------
Total ...................................................................................... 20,010 11,675
Less: Current maturities ...................................................................... 3,299 2,051
------- -------
Long-term debt, less current maturities ....................................................... $16,711 $ 9,624
======= =======

Our senior secured credit agreements contain customary financial covenants
requiring, among other things, minimum levels of tangible net worth, debt to
EBITDA ratios, and limitations on annual capital expenditures and certain
customer concentrations. As of June 30, 2004, we were in compliance with these
covenants and we expect to maintain compliance thoughout 2004.

Convertible Debentures

Pursuant to a Securities Purchase Agreement dated February 12, 2004, we sold (i)
$10,000,000 in principal amount of 3-year, 6.5% fixed rate, Convertible
Debentures (the "Debentures") that are convertible into shares of Common Stock
at an initial conversion price of $7.15 per share, (ii) 1-year Common Stock
Series A Warrants to purchase an aggregate of 700,000 shares of Common Stock at
an initial exercise price of $7.15 per share, and (iii) 5-year Common Stock
Series B Warrants to purchase an aggregate of 390,000 shares of Common Stock at
an initial exercise price of $8.50 per share. The Warrants are not exercisable
for a period of six months and one day after the issue date of such warrants and
in no event will the exercise prices of such warrants be less than $6.15 per
share. In accordance with Accounting Principles Board (APB) Opinion No. 14, the
warrants were valued by an independent valuation expert at a fair market value
of $1.0 million using the Black Scholes model. The value of these warrants are
recorded as debt discount with a corresponding credit to paid in capital at June
30, 2004. These sales of the Debentures were made pursuant to a private
placement in reliance on Section 4(2) of the Securities Act of 1933.

-20-

issuance hereinafter referred to as the "Debentures") that are convertible into
shares of Common Stock at an initial conversion price of $7.20 per share, and
(ii) 1-year Common Stock Series A Warrants to purchase an aggregate of 151,500
shares of Common Stock at an initial exercise price of $9.00 per share. The
Warrants are not exercisable for a period of six months and one day after the
issue date of such warrants and in no event will the exercise prices of such
warrants be less than $7.11 per share. In accordance with Accounting Principles
Board (APB) Opinion No. 14, the warrants were valued at a fair market value of
$0.8 million using the Black Scholes model. A beneficial conversion option was
also recorded of $0.7 million. The value of the warrants and beneficial
conversion option are recorded as debt discount with a corresponding credit to
paid in capital at June 30, 2004. These sales of the Debentures were made
pursuant to a private placement in reliance on Section 4(2) of the Securities
Act of 1933.

Total proceeds of $14.3 million received from the sales, after expenses, dated
February 12, 2004 and April 15, 2004 was $9.5 million and $4.8 million,
respectively. Of the total proceeds received for these private placements, $8.2
million was used to redeem Series A Preferred Stock in March 2004 (see Note 5)
and the balance used for working capital purposes.

The original issue discount for the February 12, 2004 and April 15, 2004
debentures was $0.8 million and $1.0 million, respectively. We recorded a $0.7
million in beneficial conversion option for the April 15, 2004 Debentures. The
Debentures are being amortized using the effective interest method over the
period in which the Debentures can be put to us. A total of $0.6 million is
included in interest expense for the six months ended June 30, 2004.

On July 28, 2004, we received notices from Manchester Securities Corporation,
Provident Premier Master Fund, Ltd., Gemini Master Fund, Ltd. and Portside
Growth and Opportunity Fund exercising their Put Option for approximately $1.3
million (plus accrued interest) of the Debentures. (Note 3) Under the terms of
the Debenture agreement, upon receipt of a debenture holder's intent to exercise
the Put Option, we have the irrevocable option to deliver cash or shares of
common stock with respect to the Put Option. We elected to use cash to redeem
this portion of the Debentures.

Capital Resources

Historically, our capital requirements have primarily related to the purchase or
fabrication of new seismic drilling equipment and related support equipment,
additions to our aviation fleet and new business acquisitions. In 2003, we
acquired American Helicopters Inc., including approximately $3.5 million of
aircraft accounted for as capital leases, and approximately $0.2 million of new
vehicles accounted for as capital leases. Thus far in 2004, we have acquired
approximately $1.3 million of aircraft accounted for as capital leases and
approximately $0.8 million of new vehicles accounted for as a capital lease.
For the remainder of 2004, we expect to continue renewing our rolling stock,
expanding our aviation fleet and continuing to pursue various strategic
acquisitions.

CRITICAL ACCOUNTING POLICIES

We account for employee stock-based compensation using the intrinsic value
method prescribed in APB Opinion No. 25, "Accounting for Stock Issued to
Employees" ("Opinion No. 25"). Accordingly, the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation," permits the continued use of the method prescribed by Opinion No.
25, but requires additional disclosures, including pro forma calculations of
earnings and net earnings per share as if the fair value method of accounting
prescribed by SFAS No. 123 had been applied. No stock-based compensation costs
are reflected in net income (loss), other than compensation expense recorded on
awards to certain executive officers (See Note 9), as all options granted under
the plans had an exercise price equal to the market value of the underlying
common stock on the date of grant. As required by SFAS No. 148, "Accounting for
Stock-Based Compensation -- Transition and Disclosure," which amended SFAS No.
123, a table illustrating the effect on net income and earnings per share if the
Company had applied the fair value recognition provisions of SFAS No. 123 to
stock-based compensation is presented in Note 8 of the accompanying financial
statements.

Aside from the change in estimated residual values of our aircraft, there have
been no changes to the Company's accounting policies as disclosed in our Form
10-K, as amended, for the year ended December 31, 2003.

-21-

LEGAL PROCEEDINGS

On February 13, 2004, we commenced litigation against a former director,
Advantage Capital Partners ("ACP") and their respective insurers in the Civil
District Court for the Parish of Orleans in the State of Louisiana. On March 26,
2004, ACP and its affiliates filed a lawsuit in the United States District
Court, Eastern District of Louisiana against us and certain of our executive
officers. This lawsuit presents risks inherent in litigation including
continuing expenses, risks of loss, additional claims, and attorney fee
liability. We believe that the claims or litigation arising therefrom will have
no material impact on us or our business and all disputes surrounding securities
matters will likely be covered by our insurance. However, if this lawsuit is
decided against us, and if it exceeds our insurance coverage, it could adversely
affect our financial condition, results of operations and cash flows (Note 4).

-21-

FORWARD-LOOKING STATEMENTS

This Quarterly Report contains certain "forward-looking statements" within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act. All statements other than statements of historical fact included in this
report regarding our financial position and liquidity, our strategic
alternatives, future capital needs, business strategies and other plans and
objectives of our management for future operations and activities, are
forward-looking statements. These statements are based on certain assumptions
and analyses made by our management in light of our experience and our
perception of historical trends, current conditions, expected future
developments and other factors it believes are appropriate under the
circumstances. Such forward-looking statements are subject to uncertainties that
could cause our actual results to differ materially from such statements. Such
uncertainties include but are not limited to: the volatility of the oil and gas
industry, including the level of offshore exploration, production and
development activity; changes in competitive factors affecting our operations;
operating hazards, including the significant possibility of accidents resulting
in personal injury, property damage or environment damage; the effect on our
performance of regulatory programs and environmental matters; seasonality of the
offshore industry in the Gulf of Mexico; and our dependence on certain
customers. These and other uncertainties related to our business are described
in detail in our other public filings. Although we believe that the expectations
reflected in such forward-looking statements are reasonable, it can give no
assurance that such expectations will prove to be correct. You are cautioned not
to place undue reliance on these forward-looking statements, which speak only as
of the date hereof. We undertake no obligation to update any of our
forward-looking statements for any reason.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no significant changes in our market risks since the year ended
December 31, 2003. For more information, please read the consolidated financial
statements and notes thereto included in our Annual Report on Form 10-K, as
amended, for the year ended December 31, 2003 filed with the Securities and
Exchange Commission.

ITEM 4. CONTROLS AND PROCEDURES

As required by paragraph (b) of Rules 13a-15 and 15d-15 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), our principal executive
officer and principal financial officer have evaluated our disclosure controls
and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under
the Exchange Act) as of the end of our second fiscal quarter of 2004 (the
"Evaluation Date"). Based on this evaluation, such officers have concluded that,
as of the Evaluation Date, our disclosure controls and procedures are effective
in alerting them on a timely basis to material information relating to us
(including its consolidated subsidiaries) required to be included in our
periodic filings under the Exchange Act.

There have not been changes in our internal control over financial reporting
that occurred during our last fiscal quarter that have materially affected, or
are reasonable likely to materially affect our internal control over financial
reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On February 13, 2004, we commenced litigation against a former director,
Advantage Capital Partners ("ACP") and their respective insurers in the Civil
District Court for the Parish of Orleans in the State of Louisiana. The suit
requests the court to determine our right under the Company's Articles of
Incorporation, as amended, to redeem the Series A 8% Convertible Preferred Stock
rather than to convert the shares into common stock. Furthermore, to the extent
the court determines we did not have a right to redeem, rather than convert, the
Series A Preferred Stock, the suit requests the court to determine that the
Unanimous Consent of the Board of Directors entered into on

-22-

November 7, 2000 which, among other things, reduced the conversion price of the
Series A Preferred Stock from $2.50 to $0.75 (pre-split) per share, is null and
void and without effect because it was accomplished by the defendants in
violation of fiduciary duties and/or public policy and Louisiana law. We are
seeking a declaration that we have the right to redeem, rather than convert,
Series A Preferred Stock. Alternatively, we seek (a) a declaration that the
Unanimous Consent entered into on November 7, 2000 is null and void and without
effect; or (b) damages back against Mr. Stull and the Advantage Capital Partners
as a complete set-off to any additional dollars owed by us to the Advantage
Capital Partners as a result of the November 7, 2000 actions.

On March 26, 2004, ACP and its affiliates filed a lawsuit in the United States
District Court, Eastern District of Louisiana against us and certain of our
executive officers. ACP and its affiliates are alleging that (i) the Company and
the officers misrepresented material facts and failed to disclose material facts
related to its intention to redeem the Series A Preferred Stock and Series B
Preferred Stock of the Company, and (ii) the officers of the Company breached
their fiduciary duties. This lawsuit presents risks inherent in litigation
including continuing expenses, risks of loss, additional claims, and attorney
fee liability. ACP claims that (i) we and the officers misrepresented material
facts and failed to disclose material facts related to its intention to redeem
our Series A and Series B Convertible Preferred Stock, and (ii) the officers of
the Company breached their fiduciary duties. They are claiming damages of
approximately $30 million. We have agreed to indemnify our officers in this
matter. Our costs and legal expenses related to this lawsuit are not currently
determinable. This lawsuit presents risks inherent in litigation including
continuing expenses, risks of loss, additional claims, and attorney fee
liability. We believe that the claims or litigation arising therefrom will have
no material impact on us or our business and all disputes surrounding
securities matters will likely be covered by our insurance. However, if this
lawsuit is decide against us and if it exceeds our insurance coverage, it could
adversely affect our financial condition, results of operations and cash flows
(Note 4).

ITEM 2. CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY
SECURITIES

On April 15, 2004, pursuant to a Securities Purchase Agreement, we sold (i)
$5,050,000 in principal amount of 3-year, 6.5% fixed rate, Convertible
Debentures (collectively with aforementioned February 12, 2004 issuance
hereinafter referred to as the "Debentures") that are convertible into shares of
Common Stock at an initial conversion price of $7.20 per share, and (ii) 1-year
Common Stock Series A Warrants to purchase an aggregate of 151,500 shares of
Common Stock at an initial exercise price of $9.00 per share. The Warrants are
not exercisable for a period of six months and one day after the issue date of
such warrants and in no event will the exercise prices of such warrants be less
than $7.11 per share. In accordance with Accounting Principles Board (APB)
Opinion No. 14, the warrants were valued at a fair market value of $0.8 million
using a Black Scholes model. The value of these warrants are included in paid in
capital at June 30, 2004. A beneficial conversion option was also recorded of
$0.7 million. The value of the warrants and beneficial conversion option are
included in paid in capital at June 30, 2004. These sales of the debentures were
made pursuant to a private placement in reliance on Section 4(2) of the
Securities Act of 1933.

Prior to maturity of the Debentures, the holders of the Debentures have the
right to require the repayment or conversion of up to an aggregate of $13.17
million of the Debentures (the "Put Option"). We registered 5,012,237 shares
effective June 30, 2004 covering the resales of Common Stock that may be
issuable pursuant to the conversion of the Debentures and the exercise of the
Put Option and all associated warrants, including additional shares that may be
issuable due to adjustments for conversion price upon the Debenture conversion,
payment of interest with shares and/or the exercise of warrants due to
subdivision or combination of our common stock. Pursuant to the Debenture
agreement, the registration of the related common stock triggered the ability of
the Debentures holders to exercise the Put option in ten consecutive and equal
monthly installments beginning August 1, 2004. Upon receipt of the Debenture
holders' intent to exercise a Put Option, we have the irrevocable option to
deliver cash or, if certain conditions set forth in the Debentures are
satisfied, Common Stock with respect to such Put Option. If we elect to pay the
Put Option with Common Stock, the underlying shares will be valued at a 12.5%
discount to the average trading price of our Common Stock for the applicable
pricing period, as defined in the Debentures (See Note 9).

Total proceeds of $4.8 million was received from the sale, after expenses, dated
April 15, 2004. Of the total proceeds received for this private placement and
the previous private placement on February 12, 2004, $8.2 million was used to
redeem Series A Preferred Stock in March 2004 (Note 5) and the balance used for
working capital purposes.

The original issue discount for the April 15, 2004 Debentures was $0.8 million.
We recorded a $0.7 million in beneficial conversion option for the April 15,
2004 Debentures. The Debentures are being amortized using the effective interest
method over the period in which the Debentures can be put to us. A total of $0.6
million is included interest expense at June 30, 2004.

-23-

On July 28, 2004, we received notices from Manchester Securities Corporation,
Provident Premier Master Fund, Ltd., Gemini Master Fund, Ltd. and Portside
Growth and Opportunity Fund exercising their Put Option for approximately $1.3
million (plus accrued interest) of the Debentures. (Note 3) Under the terms of
the Debenture agreement, upon receipt of a debenture holder's intent to exercise
the Put Option, we have the irrevocable option to deliver cash or shares of
common stock with respect to the Put Option. We elected to use cash to redeem
this portion of the Debentures.

The following table provides information about purchases by the Company and its
affiliated purchasers during the three months ended June 30, 2004 of equity
securities that are registered by the Company pursuant to Section 12 of the
Exchange Act.

ISSUER PURCHASES OF EQUITY SECURITIES

TOTAL NUMBER OF MAXIMUM NUMBER OF
SHARES PURCHASED SHARES THAT MAY
TOTAL NUMBER OF AS PART OF PUBLICLY YET BE PURCHASED
SHARES PRICE PAID ANNOUNCED PLANS UNDER THE PLANS OR
PERIOD PURCHASED (1) PER SHARE OR PROGRAMS (2) PROGRAMS
---------------------- --------------- ------------------ ------------------- ------------------

04/01/04 - 04/30/04
Series A Preferred 25 $ 1,000 25 ---
Series B Preferred 2,285 $ 1,000 2,285 29
05/01/04 - 05/31/04
Series A Preferred --- --- --- ---
Series B Preferred --- --- --- ---
06/01/04 - 06/30/04
Series A Preferred --- --- --- ---
Series B Preferred --- --- --- ---
TOTAL
Series A Preferred 25 $ 1,000 25 ---
Series B Preferred 2,285 $ 1,000 2,285 29

(1) We repurchased an aggregate of 25 and 2,285 shares of our Series A
Preferred Stock and Series B Preferred Stock respectively, pursuant to the
terms and conditions of the preferred stock (see Note 5).

(2) Our Board of Directors approved the repurchase up to 7,500 Series A
Preferred Stock and 4,600 Series B Preferred Stock having a value of up to
$12.1 million, plus accrued dividends in the aggregate, pursuant to the
terms and conditions of the preferred stock (see Note 5).

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Our annual meeting of stockholders was held at our principal executive offices
at 4500 NE Evangeline Thruway, Carencro, Louisiana on Thursday, June 17, 2004.
As disclosed in our proxy statement filed with the SEC the following were the
items submitted for consideration and the corresponding outcome of the
stockholder vote:

1. All six directors submitted were elected to the Board of Directors
for the ensuing year by a total of 9,358,638 of the total votes cast
of 10,191,047. There were no abstentions and no broker non-votes.
There were 832,409 votes against for all nominees.

2. The increase in the number of shares issuable under the Amended and
Restated OMNI Energy Services Corp. Stock Incentive Plan was not
approved by a total of 1,816,812 of the total votes cast of
2,990,077, including 25,117 abstentions. There were 7,200,970 broker
non-votes.

3. The Securities Purchase Agreements were not approved by a total of
1,684,328 of the total votes cast of 2,990,077, including 38,389
abstentions. There were 7,200,970 broker non-votes.

-24-

No other business was submitted before the meeting.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

2.1 Stock Purchase and Sale Agreement (Employee-Shareholders) dated May 26,
2004, by and between the Company and Trussco, Inc. and Trussco Properties
(filed as Exhibit 2.1 to our Form 8-K, as amended on June 14, 2004, File
No. 000-23383, originally filed with the Commission on June 10, 2004).

2.2 Stock Purchase and Sale Agreement (Non-Employee-Shareholders) dated May
26, 2004, by and between the Company and Trussco, Inc. and Trussco
Properties (filed as Exhibit 2.2 to our Form 8-K, as amended on June 14,
2004, File No. 000-23383, originally filed with the Commission on June
10, 2004).

4.1 Form of 6.5% Convertible Debenture, dated as of April 15, 2004, among the
Company and certain accredited investors (with attached schedule of
parties and terms thereto) (filed as Exhibit 4.1 to our Form 8-K, File
No. 000-23383, originally filed with the Commission on April 19, 2004).

4.2 Form of Warrant to Purchase Common Stock, dated as of April 5, 2004,
among the Company and certain accredited investors exercisable at $9.00
per share (with attached schedule of parties and terms thereto) (filed as
Exhibit 4.2 to our Form 8-K, File No. 000-23383, originally filed with
the Commission on April 19, 2004).

4.3 Omnibus Amendment, dated as of April 15, 2004, by and among the Company
and certain accredited investors listed therein (filed as Exhibit 4.3 to
our Form 8-K, File No. 000-23383, originally filed with the Commission on
April 19, 2004).

10.1 Securities Purchase Agreement, dated as of April 15, 2004, by and among
the Company and certain accredited investors listed therein (filed as
Exhibit 10.1 to our Form 8-K, File No. 000-23383, originally filed with
the Commission on April 19, 2004).

10.2 Amendment No. 1 to Registration Rights Agreement, dated as of April 12,
2004, by and among the Company and certain accredited investors listed
therein (filed as Exhibit 10.2 to our Form 8-K, File No. 000-23383,
originally filed with the Commission on April 19, 2004).

10.3 Amended and Restated Registration Rights Agreement, dated as of April 15,
2004, by and among the Company and certain accredited investors listed
therein (filed as Exhibit 10.3 to our Form 8-K, File No. 000-23383,
originally filed with the Commission on April 19, 2004).

10.4* Employment Agreement of James C. Eckert dated July 1, 2004

10.5* James C. Eckert Stock Based Award Incentive Agreement dated June 30,
2004

10.6* James C. Eckert Amended & Restated Incentive Agreement dated August 12,
2004

10.7* Employment Agreement of G. Darcy Klug dated July 1, 2004

10.8* G. Darcy Klug Stock Based Award Incentive Agreement dated June 30, 2004

10.9* G. Darcy Klug Amended & Restated Incentive Agreement dated August 12,
2004

10.10* James C. Eckert Incentive Agreement dated December 1, 2003

10.11* G. Darcy Klug Incentive Agreement dated December 1, 2003

31.1 Section 302 Certification of Chief Executive Officer

31.2 Section 302 Certification of Chief Financial Officer

32.1 Section 906 Certification of Chief Executive Officer

32.2 Section 906 Certification of Chief Financial Officer

*Management Compensatory Agreements

(b) Reports on Form 8-K

The Company filed a Current Report on Form 8-K on April 16, 2004 regarding
litigation filed April 5, 2004 against the Company and certain executive
officers.

The Company filed a Current Report on Form 8-K on April 19, 2004 regarding
the Securities Purchase Agreement dated April 15, 2004.

The Company filed a Current Report on Form 8-K on June 10, 2004 regarding
certain stock purchase agreements dated May 26, 2004 for the acquisition
of Trussco, Inc. and Trussco Properties, L.L.C.

The Company filed an Amendment No. 1 on a Current Report on Form 8-K on
June 14, 2004 to include exhibits inadvertently omitted from the Current
Report on Form 8-K filed on June 10, 2004.

We also furnished information to the SEC on a Current Report on Form 8-K on
May 18, 2004 under Item 12, Results of Operations and Financial Condition.
Current Reports on Form 8-K under Item 12 are not considered to be "filed" for
purposes of Section 18 of the Exchange Act and are not subject to the
liabilities of that section, but are filed to provide full disclosure under
Regulation FD.

-25-

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on our behalf by the
undersigned thereunto duly authorized.

OMNI ENERGY SERVICES CORP.

Dated: August 25, 2004 /s/ James C. Eckert
--------------------------------------
James C. Eckert
President and Chief Executive Officer
(Principal Executive Officer)

Dated: August 25, 2004 /s/ Deborah C. DeRouen
---------------------------------------
Deborah C. DeRouen
Chief Accounting Officer
(Principal Financial Officer)

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EXHIBIT INDEX

Exhibit Description of Exhibit

2.1 Stock Purchase and Sale Agreement (Employee-Shareholders) dated May 26,
2004, by and between the Company and Trussco, Inc. and Trussco
Properties (filed as Exhibit 2.1 to our Form 8-K, as amended on June
14, 2004, File No. 000-23383, originally filed with the Commission on
June 10, 2004).

2.2 Stock Purchase and Sale Agreement (Non-Employee-Shareholders) dated May
26, 2004, by and between the Company and Trussco, Inc. and Trussco
Properties (filed as Exhibit 2.2 to our Form 8-K, as amended on June
14, 2004, File No. 000-23383, originally filed with the Commission on
June 10, 2004).

4.1 Form of 6.5% Convertible Debenture, dated as of April 15, 2004, among
the Company and certain accredited investors (with attached schedule of
parties and terms thereto) (filed as Exhibit 4.1 to our Form 8-K, File
No. 000-23383, originally filed with the Commission on April 19, 2004).

4.2 Form of Warrant to Purchase Common Stock, dated as of April 5, 2004,
among the Company and certain accredited investors exercisable at $9.00
per share (with attached schedule of parties and terms thereto) (filed
as Exhibit 4.2 to our Form 8-K, File No. 000-23383, originally filed
with the Commission on April 19, 2004).

4.3 Omnibus Amendment, dated as of April 15, 2004, by and among the Company
and certain accredited investors listed therein (filed as Exhibit 4.3
to our Form 8-K, File No. 000-23383, originally filed with the
Commission on April 19, 2004).

10.3 Amended and Restated Registration Rights Agreement, dated as of April
15, 2004, by and among the Company and certain accredited investors
listed therein (filed as Exhibit 10.3 to our Form 8-K, File No.
000-23383, originally filed with the Commission on April 19, 2004).

10.4* Employment Agreement of James C. Eckert dated July 1, 2004

10.5* James C. Eckert Stock Based Award Incentive Agreement dated
June 30, 2004

10.6* James C. Eckert Amended & Restated Incentive Agreement dated
August 12, 2004

10.7* Employment Agreement of G. Darcy Klug dated July 1, 2004

10.8* G. Darcy Klug Stock Based Award Incentive Agreement dated
June 30, 2004

10.9* G. Darcy Klug Amended & Restated Incentive Agreement dated
August 12, 2004

10.10* James C. Eckert Incentive Agreement dated December 1, 2003

10.11* G. Darcy Klug Incentive Agreement dated December 1, 2003

31.1 Section 302 Certification of Chief Executive Officer

31.2 Section 302 Certification of Chief Financial Officer

32.1 Section 906 Certification of Chief Executive Officer

32.2 Section 906 Certification of Chief Financial Officer

*Management Compensatory Agreements