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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(MARK ONE)



|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005.
|- | ---------------------------------------------------------------------------------------------------------------------------------



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
|- | -----------------------------------------------------------------------------------------

COMMISSION FILE NUMBER 0-23383

OMNI ENERGY SERVICES CORP.

(Exact name of registrant as specified in our charter)



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

REGISTRANTS TELEPHONE NUMBER, INCLUDING AREA CODE:

(337) 896-6664

SECURITIES REGISTERED
PURSUANT TO SECTION 12(b) OF THE ACT:

NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

COMMON STOCK, $0.01 PAR VALUE PER
SHARE

Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act.    Yes ̈No  x

Indicate by check mark whether the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange
Act.    Yes ̈No  x

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  x    No ̈

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ̈

Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act.

Large accelerated filer ̈Accelerated filer ̈Non-accelerated filer   x

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Act).    Yes ̈No  x

The aggregate market value of
the voting stock held by non-affiliates of the registrant at June 30, 2005, based on the closing price of common stock on the Nasdaq National Market for such date, was $26,578,908.

The number of shares of the Registrants common stock, $0.01 par value per share, outstanding at March 28, 2006 was 16,132,568.

DOCUMENTS INCORPORATED BY REFERENCE

The information required by Part III of this Form 10-K is incorporated by reference from the registrants definitive proxy statement involving the election of directors at the annual meeting of the shareholders to be held in 2006,
which definitive proxy statement will be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year to which this Form 10-K relates.



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OMNI ENERGY SERVICES CORP.

ANNUAL REPORT ON FORM 10-K FOR

THE YEAR ENDED DECEMBER 31, 2005

TABLE OF CONTENTS



|              |  |                                                                                                             |  |     
|------------- |  | ----------------------------------------------------------------------------------------------------------- |  | ----
|              |  |                                                                                                             |  | PAGE
|              |  | PART I                                                                                                      |  |     
|              |  |                                                                                                            
|Item 1.       |  | Business                                                                                                    |  | 3   
|Item 1A.      |  | Risk Factors                                                                                                |  | 15  
|Item1B.       |  | Unresolved Staff Comments                                                                                   |  | 18  
|Item 2.       |  | Properties                                                                                                  |  | 19  
|Item 3.       |  | Legal Proceedings                                                                                           |  | 19  
|Item 4.       |  | Submission of Matters To a Vote of Security Holders                                                         |  | 20  
|              |  |                                                                                                            
|              |  | PART II                                                                                                     |  |     
|              |  |                                                                                                            
|Item 5.       |  | Market for Registrants Common Stock, Related Stockholder Matters and Issuer Purchases of Equity Securities |  | 21  
|Item 6.       |  | Selected Financial Data                                                                                     |  | 22  
|Item 7.       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                       |  | 24  
|Item 7A.      |  | Quantitative and Qualitative Disclosures About Market Risk                                                  |  | 41  
|Item 8.       |  | Financial Statements and Supplementary Data                                                                 |  | 42  
|Item 9.       |  | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure                        |  | 84  
|Item 9A.      |  | Controls and Procedures                                                                                     |  | 84  
|Item 9B.      |  | Other                                                                                                       |  | 84  
|              |  |                                                                                                            
|              |  | PART III                                                                                                    |  |     
|              |  |                                                                                                            
|              |  | In accordance with paragraph (3) of General Instruction G to Form 10-K, Part III of this Report is omitted  |  | 85  
|              |  |                                                                                                            
|              |  | PART IV                                                                                                     |  |     
|              |  |                                                                                                            
|Item 15.      |  | Exhibits and Financial Statement Schedules                                                                  |  | 86  
|              | 
|SIGNATURES    |  | 87                                                                                                         
|EXHIBIT INDEX |  | 88                                                                                                         



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OMNI ENERGY SERVICES CORP.

Unless otherwise indicated by the context, references herein to the Company, OMNI, we, our or
us mean OMNI Energy Services Corp., a Louisiana corporation, and its subsidiaries. Certain terms used herein relating to our operations and the oil and natural gas services industry are defined in ITEMS 1 AND 2. BUSINESS AND
PROPERTIES.

FORWARD LOOKING INFORMATION

Certain of the statements contained in all parts of this document (including the portion, if any, to which this Form 10-K is attached), including, but not limited to, those relating to our acquisition plans, the effect of changes in
strategy and business discipline, future tax matters, future general and administrative expenses, future growth and expansion, expansion of our operations, review of acquisitions, expansion and improvement of our capabilities, integration of new
technology into operations, credit facilities, redetermination of our borrowing base, attraction of new members to the management team, future compensation programs, new alliances, future capital expenditures (or funding thereof) and working
capital, sufficiency of future working capital, borrowings and capital resources and liquidity, projected rates of return, retained earnings and dividend policies, projected cash flows from operations, future, outcome, effects or timing of any legal
proceedings or contingencies, the impact of any change in accounting policies on our financial statements, realization of post-closing price adjustments with respect to the Trussco acquisition, managements assessment of internal control over
financial reporting, the identification of material weaknesses in internal control over financial reporting and any other statements regarding future operations, financial results, opportunities, growth, business plans and strategy and other
statements that are not historical facts are forward looking statements. These forward-looking statements reflect our current view of future events and financial performance. When used in this document, the words budgeted,
anticipate, estimate, expect, may, project, believe, intend, plan, potential, forecast, might, predict,
should and similar expressions are intended to be among the statements that identify forward-looking statements. These forward-looking statements speak only as of their dates and should not be unduly relied upon. We undertake no
obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. Such statements involve risks and uncertainties, including, but not limited to, those set forth under
ITEM 1A.RISK FACTORS and other factors detailed in this document and our other filings with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual outcomes may vary materially from those indicated. All subsequent written and oral forward-looking statements attributable to the Company or to persons acting on its behalf are expressly qualified in their
entirety by reference to these risks and uncertainties.

PART I



|ITEM 1. | BUSINESS
|------- | --------

GENERAL

OMNI Energy Services Corp. is an integrated oilfield service company specializing in providing a range of (i) onshore seismic drilling, operational support, permitting, and survey services; and
(ii) dock-side and offshore hazardous and non-hazardous oilfield waste management and environmental cleaning services, including tank and vessel cleaning and safe vessel entry, for oil and gas companies operating in the Gulf of Mexico. At
December 31, 2005 we operated in two business divisionsSeismic Drilling and Environmental Services. As more fully described herein, we sold our Aviation Transportation Services segment effective June 30, 2005. This division provided
helicopter transportation services to oil and gas companies operating in the shallow waters of the Gulf of Mexico as well as helicopter support services to our Seismic Drilling Division. Subsequent to December 31, 2005, we acquired Preheat,
Inc. (Preheat), a premier provider of rental equipment and specialized environmental services principally to drilling contractors operating in the Gulf of Mexico.



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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. We were formed as a Louisiana corporation on September 11,
1997 to acquire all of the outstanding common units of OMNI Geophysical, L.L.C.

SEISMIC DRILLING. The principal market of
our Seismic Drilling division is the marsh, swamp, shallow water and contiguous dry land areas along the Gulf of Mexico (the Transition Zone), primarily in Louisiana and Texas, where we are a leading provider of seismic drilling support
services. In 1997, we commenced operations in the mountainous regions of the western United States, and 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
company that currently can both provide an integrated range of seismic drilling, permitting, and survey services in all of the varied terrain of the Transition Zone and simultaneously support operations for multiple, large-scale seismic projects. In
2002, we acquired all of the assets of AirJac Drilling, a division of Veritas Land DGC. With this acquisition, we became the largest domestic provider of seismic drilling support services to geophysical companies.

ENVIRONMENTAL SERVICES. We provide dock-side and offshore hazardous and non-hazardous oilfield waste management and environmental cleaning
services, including drilling rig, tank and vessel cleaning, safe vessel entry, naturally occurring radioactive material (NORM) decontamination, platform abandonment services, pipeline flushing, gas dehydration, and hydro blasting. Demand
for our dock-side vessel and tank cleaning and non-hazardous waste treatment businesses are primarily driven by drilling and well-site abandonment activity in the shallow waters of the Gulf of Mexico, as reflected by the drilling rig count. Much of
the cleaning and waste treatment is from residual waste created in the drilling process.

AVIATION TRANSPORTATION. We
operated our Aviation Transportation Services segment for approximately six months during 2005. Within our Aviation Transportation Services segment, we operated a fleet of 20 company-owned and leased helicopters, and one fixed-wing aircraft, from
bases or heliports located along the Gulf Coast regions of Louisiana. Our land-based aviation customers were primarily geophysical companies operating in various regions of the United States. Our offshore aviation customers included oil and gas
companies operating primarily in the shallow waters of the Gulf of Mexico. Our aviation services were utilized by oil and gas exploration and production companies and other offshore service companies for routine offshore transportation and, to
transport personnel during medical and safety emergencies and to evacuated personnel during the threat of hurricane and other adverse weather conditions.

We maintained an inventory of aviation maintenance parts, turbine engines and other miscellaneous flight equipment used in connection with providing aviation services to our customers. As part of our expansion
program, we acquired American Helicopters, Inc. in 2003.

Effective June 30, 2005 we sold the equipment and related assets of our
Aviation Transportation Services segment for a cash price of $11.0 million.

EQUIPMENT LEASING. We completed the acquisition
of Preheat, Inc. effective February 10, 2006. Preheat is a premier provider of rental equipment and specialized environmental services principally to drilling contractors operating in the Gulf of Mexico. Preheat has a vast fleet of rental
equipment including pressure washers, reverse osmosis machines and steam cleaners. In addition to the oilfield rental equipment, Preheat offers wellhead installation, stress relieving services and environmental pit cleaning services to drilling
contractors. Preheat operates from locations in Belle Chasse and Broussard, Louisiana and Freer, Texas.



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INDUSTRY OVERVIEW

SEISMIC DRILLING. Seismic data generally consists of computer-generated three-dimensional (3-D) images or two-dimensional (2-D) cross sections of subsurface geologic formations
and is used in the exploration of new hydrocarbon reserves and as a tool for enhancing production from existing reservoirs. Onshore seismic data is acquired by recording subsurface seismic waves produced by an energy source, usually dynamite, at
various points (source points) at a project site. Historically, 2-D surveys were the primary technique used to acquire seismic data. However, advances in computer technology have made 3-D seismic data, which provides a more comprehensive
geophysical image, a practical and capable oil and gas exploration and development tool. 3-D seismic data has proven to be more accurate and effective than 2-D data at identifying potential hydrocarbon-bearing geological formations. The use of 3-D
seismic data to identify locations to drill both exploration and development wells has improved the economics of finding and producing oil and gas reserves, which in turn has created increased demand for 3-D seismic surveys and seismic support
services.

Oil and gas companies generally contract with independent geophysical companies to acquire seismic data. Once an area is chosen
for seismic analysis, permits and landowner consents are obtained, either by us, by the geophysical company or by special permitting agents. The geophysical company then determines the layout of the source and receiving points. For 2-D data, the
typical configuration of source and receiving points is a straight line with a source point and small groups of specialized sensors (geophones) or geophone stations placed evenly every few hundred feet along the line. For 3-D data, the
configuration is generally a grid of perpendicular lines spaced a few hundred to a few thousand feet apart, with geophone stations spaced evenly every few hundred feet along one set of parallel lines, and source points spaced evenly every few
hundred feet along the perpendicular lines. This configuration is designed by the geophysical company to provide the best imaging of the targeted geological structures while taking into account surface obstructions such as water wells, oil and gas
wells, pipelines and areas where landowner consents cannot be obtained. A survey team then marks the source points and geophone locations, and the source points are drilled and loaded with dynamite.

After the source points have been drilled and loaded and the network of geophones and field recording boxes deployed over a portion of the project area,
the dynamite is detonated at a source point. Seismic waves generated by the blast move through the geological formations under the project area and are reflected by various subsurface strata back to the surface where they are detected by geophones.
The signals from the geophones are collected and digitized by recording boxes and transmitted to a central recording system. In the case of 2-D data, the geophones and recording devices from one end of the line are then shuttled, or rolled
forward, to the other end of the line and the process is repeated. In the case of 3-D data, numerous source points, typically located between the first two lines of a set of three or four parallel lines of geophone stations, are activated in
sequence. The geophone stations and recording boxes from the first of those lines are then rolled forward to form the next line of geophone stations. The process is repeated, moving a few hundred feet at a time, until the entire area to be analyzed
has been covered.

After the raw seismic data has been acquired, it is sent to a data processing facility. The processed data can then be
manipulated and viewed on computer workstations by geoscientists to map the subsurface structures to identify formations where hydrocarbons are likely to have accumulated and to monitor the movement of hydrocarbons in known reservoirs. Domestically,
seismic drilling and survey services are typically contracted to companies, such as OMNI, as geophysical companies have found it more economical to outsource these services and focus their efforts and capital on the acquisition and interpretation of
seismic data.

ENVIRONMENTAL SERVICES. We provide specialized environmental cleaning and maintenance equipment and trained
personnel to oil and gas companies operating in the Gulf Coast region of the United States. We also assist production operators in the maintenance and replacement of anodes, mist extractors, valves, glycol systems, chemical electric units and fire
tubes. Our customer list includes more than 225 major and independent oil and gas companies operating in the Gulf of Mexico, and one customer accounted for more than 10% of this business units revenues. The demand for our environmental
services is directly impacted by



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offshore drilling and production activity in the Gulf of Mexico. Our dock side services are dependent upon the movement of vessels from offshore production
platforms or drilling rigs which operate twenty-four hours a day, seven days a week, 365 days a year.

We charge for our environmental
services on a time and materials basis. Our ability to successfully secure and maintain future environmental services for our customers is dependent upon our ability to provide quick, safe and efficient maintenance and cleaning services at a
competitive price. Project backlogs are maintained for NORM decontamination, abandonment and decommissioning and scheduled offshore maintenance.

EQUIPMENT LEASING. With our acquisition of Preheat in February 2006, we have expanded the list of equipment and services which we offer to customers. We now have a vast fleet of rental equipment including pressure washers,
reverse osmosis systems and steam cleaners available for rent to drilling contractors operating in the Gulf of Mexico region. Additionally, services offered by Preheat include wellhead installation and stress relieving. As a complement to our
environmental services division, Preheat offers environmental pit cleaning services.

Preheat charges for its rental equipment on a daily
basis. Wellhead installations and stress relieving are billed on a per job basis. Our ability to successfully secure and maintain future rental and service opportunities with Preheat customers is dependent upon our ability to continue to
provide high-quality, dependable rental equipment and reliable services to these customers at a competitive price.

DESCRIPTION OF OPERATIONS

We provide an integrated range of services including (i) onshore seismic drilling, operational support, permitting and surveying
to geophysical companies operating in logistically difficult and environmentally sensitive terrain in the United States, and (ii) dock-side and offshore hazardous and non-hazardous oilfield waste management and environmental cleaning services,
including tank and vessel cleaning and safe vessel entry for oil and gas companies operating in the Gulf of Mexico. With the acquisition of Preheat in February 2006, we now have available an extensive fleet of oilfield rental equipment for our
customers.

SEISMIC DRILLING. Our primary activity is the drilling and loading of source points for seismic analysis. Once
the geophysical company has plotted the various source points and a survey crew has marked their locations, our drill crews are deployed to drill and load the source points.

In the Transition Zone, we use water pressure rotary drills mounted on various types of vehicles to drill the source holes. The nature, accessibility and
environmental sensitivity of the terrain surrounding the source point determine the type of vehicle used. Transition Zone source holes are generally drilled to depths of 40 to 180 feet, depending on the nature of the terrain and the needs of the
geophysical company. We generally use ten-foot sections of drill pipe that are carried with the drilling unit. Our Transition Zone vehicles are typically manned with a driver and one or two helpers. The driver is responsible for maneuvering the
vehicle into position and operating the drilling unit, while the helper sets and guides the drill into position, attaches the drilling units water source, if drilling in dry areas, and loads the drill pipe sections used in the drilling
process. Once the hole has been drilled to the desired depth, it is loaded with dynamite, which is carried onboard our vehicles in special containers. The explosive charge is set at the bottom of the drill hole and then tested to ensure that the
connection has remained intact. Once the charge has been tested, the hole is plugged in accordance with local, state and federal regulations and marked so that the geophysical company can identify it for detonation at a later date. This process is
repeated throughout the survey area until all source points have been drilled and loaded.

In seismic rock drilling, we use compressed air
rotary/hammer drills to drill holes that are typically shallower than Transition Zone holes. Rock drills are manned by a two-man or three-man crew and are transported to and from locations by hand, surface vehicle or helicopter. Once the hole has
been drilled to the desired depth, it is loaded with explosives, which are delivered to the job site in an explosive magazine carried by hand, vehicle or helicopter.



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OPERATIONAL SUPPORT. We are able to coordinate a variety of related services to customers
performing 3-D seismic data acquisition projects that produce significant economies of scale and value. Our substantial base of experience gained from years of work supporting 3-D seismic projects enables us to provide significant pre-job planning
information to the customer during job design analysis. Typical 3-D seismic data acquisition projects in the field involve large amounts of equipment, personnel and logistics coordination. Coordination of movements between permitting, drilling,
survey and recording crews is of critical importance to timely, safe and cost effective execution of the job. We have a pool of senior field supervisors, who have broad seismic industry experience and are able to coordinate the activities of drill
crews, permit agents and survey teams with the recording crews to achieve improved results. These personnel also have the ability to recommend changes to the customer field representatives in the manner of executing the job in the field to improve
performance and reduce costs. By having the ability to perform significant field coordination, we are able to streamline field decision making and information flow and reduce customer overhead costs that otherwise would be required to perform these
supervisory tasks. We also have one of the industrys leading Health, Safety and Environmental (HSE) programs. The involvement of our experienced personnel monitoring HSE field practices greatly reduces customer involvement in this
area. By offering the only integrated combination of seismic drilling, permit acquisition, seismic survey and operational support, in addition to an equipment fleet that is one of the largest in terms of number of units and most diverse in the
industry, we provide significant operational advantages to the customer.

PERMITTING. We maintain a Geophysical Permit
Acquisition Division. Our staff of contract permit agents first conducts research in public land title records to determine ownership of the lands located in the seismic projects. The permit agents then contact, negotiate and acquire permits
and landowner consents for the survey, drilling and recording crews to conduct their operations. Throughout the seismic data acquisition process, the permit agents assist the crews in the field with landowner relations and permit restrictions in
order to reduce field-crew downtime for noncompliance with landowner requests. Our permit services are enhanced with the assistance of a proprietary database software program specifically designed for efficient management of seismic projects.

SURVEY. Once all permits and landowner consents for a seismic project have been obtained and the geophysical company has
determined the placement of source and receiving points, contract survey crews are sent into the field to plot each source and receiving point prior to drilling. We employ both GPS (global positioning satellite) equipment, which is more efficient
for surveying in open areas, and conventional survey equipment, which is generally used to survey wooded areas. We have successfully integrated both types of equipment in order to complete projects throughout the varied terrain of the Transition
Zone and elsewhere. In addition, the contract survey crews have access to our extensive fleet of specialized transportation equipment, as opposed to most other survey companies, which must rent this equipment.

FABRICATION AND MAINTENANCE. At our Carencro facilities, we perform all routine repairs and maintenance for our Transition Zone and
highland drilling equipment. We design and fabricate aluminum marsh all terrain vehicles (ATVs), a number of our support boats and pontoon boats, and the drilling units that we use on all of our Transition Zone equipment. We purchase airboats
directly from the manufacturer and then modify the airboats to install the drilling equipment. We have also designed and built a limited number of highland drilling units by installing our drilling equipment on tractors bought directly from the
manufacturer. We also fabricate rock-drilling equipment and have the capability of fabricating other key equipment, such as swamp ATVs. Because of our ability to fabricate and maintain much of our equipment, we do not believe that we are
dependent on any one supplier for our drilling equipment or parts.

ENVIRONMENTAL SERVICES. We are an environmental and
maintenance service contractor working primarily for onshore and offshore oil and gas companies. Our environmental services unit (Trussco, Inc.) provides equipment and personnel to perform environmental cleaning services including drilling rig, tank
and vessel cleaning, NORM decontamination, platform abandonment services, pipeline flushing, hydro blasting and gas dehydration services. We operate in the onshore, dockside and offshore regions of the Gulf of Mexico where



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we are considered to be the leading provider of such environmental services. Our cleaning operations are performed at six locations along the Louisiana Gulf
Coast.

EQUIPMENT LEASING. As mentioned above, we acquired Preheat in February 2006. Preheat has a vast fleet of rental
equipment including pressure washers, reverse osmosis systems and steam cleaners available for rent to drilling contractors in the Gulf of Mexico region. Additionally, the services offered by Preheat include wellhead installation and stress
relieving. As a complement to our environmental services division, Preheat offers environmental pit cleaning services. The rental and services operations are serviced from three locations.

TRANSITION ZONE TRANSPORTATION AND DRILLING EQUIPMENT. Because of the varied terrain throughout the Transition Zone and the prevalence of
environmentally sensitive areas, we employ a wide variety of drilling vehicles. We believe that we are the only company currently operating in the Transition Zone that owns and operates all of the following types of equipment:



|                                                  |  |                                        
|------------------------------------------------- |  | ---------------------------------------
|TYPES OF EQUIPMENT                                |  | NUMBER OF UNITS AS OF DECEMBER 31, 2005
|Highland Drilling Units(1)                        |  | 73                                     
|Water Buggies                                     |  | 58                                     
|Aluminum Marsh ATVs                              |  | 23                                     
|Stainless Steel Marsh ATVs(2)                    |  | 8                                      
|Airboat-Drilling Units                            |  | 40                                     
|Swamp ATVs                                       |  | 30                                     
|Pullboats                                         |  | 21                                     
|Pontoon Boats                                     |  | 15                                     
|Jack-Up Rigs                                      |  | 1                                      
|Skid-Mounted Drilling Units(3)                    |  | 20                                     
|Heli-portable and Seismic Rock Drilling Equipment |  | 20                                     

---

|(1) | Sixteen of these drilling units are currently dedicated to seismic rock drilling operations outside of the Transition Zone.
|--- | ---------------------------------------------------------------------------------------------------------------------------

|(2) | This equipment is currently held for sale (See Note 1 Property, Plant and Equipment to the Consolidated Financial Statements).
|--- | --------------------------------------------------------------------------------------------------------------------------------

|(3) | One of these drilling units is currently located outside of the Transition Zone.
|--- | --------------------------------------------------------------------------------

Because of our extensive fleet of Transition Zone transportation and seismic drilling equipment, much of which we fabricated, we believe that we are the only company that currently can provide an integrated range of
seismic drilling and survey services in all of the varied terrain of the Transition Zone and simultaneously support operations for multiple, large-scale seismic projects.

HIGHLAND DRILLING UNITS AND WATER BUGGIES. We currently own and operate 73 highland drilling units for seismic drilling in dry land areas, 16 of which are currently dedicated to our seismic rock drilling
operations outside of the Transition Zone. These units generally consist of a tractor-like vehicle with a drilling unit mounted on the rear of the vehicle. This highland drilling unit can be driven over land from point to point and is accompanied by
a unit referred to as a water buggy (of which we own 58) that carries water required for water pressure rotary drills. This type of vehicle is used around the world for this type of terrain.

MARSH ATVS. The environmentally sensitive wetlands along the U.S. Gulf Coast contain water grasses on dry land and in shallow water and
areas mixed with open water are referred to as marsh areas. Marsh ATVs, which are amphibious vehicles supported by pontoons that are surrounded by tracks, are used to provide seismic drilling services in the marsh areas. The pontoons enable
the marsh ATV to float while the tracks propel the vehicle through the water and over dry marsh areas. Each marsh ATV is equipped with a drilling unit and a backhoe for digging a small hole to collect water necessary for drilling.



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Some marsh areas have sufficient surrounding water to support drilling without an external water source,
but often water must be pumped into the area from a remote water source or a portable supply must be carried by the marsh ATV.

We own and
operate 31 marsh ATVs, of which eight are made of stainless steel and 23 are made of aluminum. All of the stainless steel marsh ATVs are currently held for sale. The aluminum ATVs are lighter than steel vehicles and are
specifically designed for the environmentally sensitive areas typically found in marsh terrain. Landowner consents will often require the use of aluminum ATVs in an effort to reduce the environmental impact of seismic drilling. The aluminum
marsh ATV is the most widely accepted marsh vehicle for drilling operations in all Louisianas state and federal refuges. We fabricated our own aluminum marsh ATVs at our facilities in Carencro, Louisiana.

AIRBOAT DRILLING UNITS. We own and operate 40 airboat-drilling units. An airboat-drilling unit consists of a drilling unit fabricated and
installed on a large, three-engine airboat. Because of their better mobility, airboat-drilling units are used in shallow waters and all marsh areas where sufficient water is present.

SWAMP ATVS AND PULLBOATS. Wooded lowlands typically covered with water are referred to as the swamp areas of the Transition
Zone. Our swamp ATVs are used to provide drilling services in these areas. Swamp ATVs are smaller, narrower versions of the marsh ATVs. The smaller unit is needed in swamp areas due to the dense vegetation typical in this terrain.
Because of its smaller size, the swamp ATV uses a skid-mounted drilling unit installed in a pullboat, a non-motorized craft towed behind the swamp ATV. We own and operate 30 swamp ATVs and 21 pullboats. Swamp ATVs are also used in
connection with survey operations in swamp areas.

PONTOON BOATS. We own and operate 15 pontoon boats that are used in shallow or
protected inland bays and lakes and shallow coastal waters. Each pontoon boat uses a skid-mounted drilling unit installed on board.

JACK-UP RIGS. When a seismic survey requires source points to be drilled in deeper inland bays or lakes or in deeper coastal waters, we use jack-up rigs equipped with one of our skid-mounted drilling units. Seismic activity in water
deeper than approximately 20 feet is generally conducted by using offshore seismic techniques that do not include the drilling and loading of source points. We currently have one jack-up rig.

SKID-MOUNTED DRILLING UNITS. A skid-mounted drilling unit is a drilling unit mounted on I-beam supports, which allows the drilling unit to be
moved easily between pullboats, pontoon boats, jack-up rigs and other equipment we operate based on customer needs. We manufacture our skid-mounted drilling units at our facilities in Carencro, Louisiana and we own 20 of these units. One of the
units is located outside of the Transition Zone.

HELI-PORTABLE AND SEISMIC ROCK DRILLING EQUIPMENT. We have 20 heli-portable and
man-portable drilling units dedicated to seismic rock drilling. We also have the ability to manufacture our own heli-portable and man-portable seismic rock-drilling units, and often export and provide servicing of heli-portable and man-portable
drilling units.

MISCELLANEOUS. We own and operate 88 single engine airboats and 21 outboard powered boats, which we use to ferry
personnel and supplies to locations throughout the Transition Zone. We also maintain a fleet of five tractor-trailer trucks and numerous other trucks, trailers and vehicles to move our equipment and personnel to projects throughout the Transition
Zone.



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##### Index to Financial Statements

ENVIRONMENTAL EQUIPMENT. The following table sets forth the type and quantity of our key equipment
operated by our Environmental division.



|                                       |  |                                        
|-------------------------------------- |  | ---------------------------------------
|TYPES OF EQUIPMENT                     |  | NUMBER OF UNITS AS OF DECEMBER 31, 2005
|Offshore Tool House Cleaning Packages  |  | 4                                      
|Offshore Skid Cleaning Packages        |  | 12                                     
|Dockside & Land Tank Cleaning Packages |  | 11                                     
|Air Compressors                        |  | 30                                     
|Steam / Degas Generators               |  | 4                                      
|Liquid Vacuum Truck (60BBL)            |  | 2                                      
|Wet / Dry Vacuum Truck (80BBL)         |  | 3                                      
|Trailer Mounted Vacuum Units           |  | 2                                      
|Water Blasters (10K40K)               |  | 3                                      
|15 BBL Cutting Boxes (Disposal)        |  | 19                                     
|NORM Pipe Decontamination System       |  | 1                                      

EQUIPMENT LEASING. The following table sets for the type of and quantity of our key
equipment available for rental in our equipment rental division as a result of our acquisition of Preheat in early 2006:



|                       |  |                
|---------------------- |  | ---------------
|TYPES OF EQUIPMENT     |  | NUMBER OF UNITS
|Pressure Washers       |  | 375            
|Wellhead Units         |  | 23             
|Stress Relieving Units |  | 7              
|Reverse Osmosis Units  |  | 12             
|Water Blasters         |  | 13             
|Vacuum Units           |  | 115            
|Pit Cleaning Units     |  | 5              
|Mud Savers             |  | 36             
|Oilfield Fans          |  | 109            

MATERIALS AND EQUIPMENT

The principal materials and equipment used in our seismic drilling operations, which include drills, heli-portable and man-portable drills, drill casings, drill bits, engines, gasoline and diesel fuel, dynamite,
aluminum and steel plate, welding gasses, trucks and other vehicles, are currently in adequate supply from many sources. We do not depend upon any single supplier or source for such materials.

Environmental cleaning equipment and materials such as compressors, pressure washers, diaphragm pumps, electric generators, water blasters, vacuum
trucks, hoses, personnel protection equipment, and cleaning agents are readily available from many sources throughout the Gulf of Mexico Region. We do not depend upon any single supplier or source for such materials.

SAFETY AND QUALITY ASSURANCE

We maintain a stringent
safety assurance program to reduce the possibility of accidents. Our Quality, Health, Safety and Environmental (QHSE) department establishes guidelines to ensure compliance with all applicable state and federal safety regulations and
provides training and safety education, including first aid and CPR training through orientations for new employees. Our QHSE manager reports directly to our Chief Executive Officer and supervises six QHSE field advisors and one instructor who
provides Occupational Safety and Health Act (OSHA) mandated training. In addition, Preheat also employs one QHSE field advisor. We believe that our safety program and commitment to quality are vital to attracting and retaining customers
and employees.



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Each drilling crew is supervised at the project site by a field supervisor and, depending on the
projects requirements, an assistant supervisor and powderman who is in charge of all explosives. For large projects or when required by a customer, a separate advisor from our QHSE department is also located at the project site. Management is
provided with daily updates for each project and believes that our daily review of field performance together with the on-site presence of supervisory personnel helps ensure high quality performance for all of our projects.

Environmental employees work in many facilities, most which have site specific requirements. Our crews attend pre-job meetings to formulate job specific
work plans. These plans are monitored and audited by our supervisors and in-house QHSE Advisors.

We have implemented an extensive program
that provides training for these adverse conditions. In addition to our internal requirements, our employee training is conducted in accordance with federal, state, and customer requirements.

CUSTOMERS, MARKETING AND CONTRACTING

CUSTOMERS. Historically, our customers have primarily been geophysical companies, although in many cases the oil and gas company participates in determining which drilling, permitting, survey or aviation company will be used on our
seismic projects. A few customers have historically generated a large portion of our seismic drilling revenue. For example, our largest customers (those which individually accounted for more than 10% of revenue in a given year, listed
alphabetically) collectively accounted for 71% (Quantum Geophysical, Seismic Exchange and Veritas DGC), 50% (PGS, Quantum Geophysical, Seismic Exchange and Veritas DGC), and 38% (Quantum Geophysical and Veritas DGC), of revenue for fiscal 2003, 2004
and 2005, respectively, all of which relate to the drilling division. While we expect oil and gas companies utilizing our environmental and newly acquired rental equipment services will eventually comprise a greater share of our revenue base, we
currently derive a significant amount of our revenue from a small number of large geophysical companies and independent oil and gas operators. The loss of one of these significant customers, if not offset by sales to new or other existing customers,
could have a material adverse effect on our business and operations.

The majority of our customers are engaged in the oil and gas
industry. This concentration of customers may impact our overall exposure to credit risk, either positively or negatively, in that customers may be similarly affected by changes in economics and industry conditions. We do not generally require
collateral in support of trade receivables, but we do maintain reserves for credit losses. Actual losses have historically been within expectations.

MARKETING. Our Seismic Drilling services have traditionally been marketed by our principal executive officers. We believe that this marketing approach helps us preserve long-term relationships established by
our executive officers. Even as our geographical and service capabilities expand, we intend to continue implementing these marketing efforts in both the Transition Zone and in the Rocky Mountain region from our principal offices in Carencro,
Louisiana. Our Environmental services are marketed from offices in Louisiana and Texas using eight sales representativesfive dockside and three corporate. Preheats equipment and services are marketed from offices in Louisiana and Texas.

CONTRACTINGSEISMIC DRILLING. We generally contract with our customers for seismic drilling services on a unit-price basis,
either on a per hole or per foot basis. These contracts are often awarded after a competitive bidding process. We price our contracts based on detailed project specifications provided by the customer, including the number,
location and depth of source holes and the projects completion schedule. As a result, we are generally able to make a relatively accurate determination prior to pricing a contract of the type and amount of equipment required to complete the
contract on schedule.



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Because of unit-price contracting, we sometimes bear a portion of the risk of production delays that are
beyond our control, such as those caused by adverse weather. We often bill the customer standby charges if our operations are delayed due to delays in permitting or surveying or for other reasons within the geophysical companys control.

CONTRACTINGPERMITTING SERVICES. We contract with our customers for permitting services on a day rate or per project basis.
Under the per project basis, revenue is recognized when certain percentages of the permitting process are completed. Contracts are often awarded to us only after competitive bidding. In the case of the per project basis, we determine the price after
we have taken into account such factors as the number of permit agents, the number of permits and the detailed project specification provided by the customer.

CONTRACTINGSURVEY SERVICES. We contract with our customers for seismic survey services on a day rate or per mile basis. Under the per mile basis, revenue is recognized when the source or receiving point
is marked by one of our survey crews. Contracts are often awarded to us only after competitive bidding. In each case, the price is determined after we have taken into account such factors as the number of surveyors and other personnel, the type of
terrain and transportation equipment, and the precision required for the project based on detailed project specifications provided by the customer.

CONTRACTINGENVIRONMENTAL SERVICES. We generally bill for our environmental cleaning and maintenance services on a time and materials basis. Our customer list includes more than 225 major and independent oil and gas companies
operating in the Gulf of Mexico. Our success in securing projects is often dependent on our ability to immediately provide personnel that operate in a quick, safe and efficient manner at a competitive price.

CONTRACTINGEQUIPMENT LEASING. We generally bill our customers for equipment leasing on a monthly basis. Equipment is generally leased to our
customers on a per day rate. Our customer list includes major and independent oil and gas companies operating in the Gulf of Mexico. Our success is dependent upon maintaining our fleet of quality equipment and having the equipment
available to our customers on short notice.

COMPETITION

SEISMIC DRILLING. The principal competitive factors for seismic drilling services are price and the ability to meet customer schedules, although other factors including safety, capability, reputation and
environmental sensitivity are also considered by customers when deciding upon a provider of seismic drilling services. We have a limited number of competitors in the Transition Zone and numerous smaller competitors in the highland areas in which we
operate. We believe that no other company operating in the Transition Zone owns a fleet of Transition Zone seismic drilling equipment as varied or as large as ours. Our extensive and diverse equipment base allows us to provide drilling services to
our customers throughout the Transition Zone with the most efficient and environmentally appropriate equipment. We believe there are numerous competitors offering rock and heli-portable drilling in the Rocky Mountain region and internationally. We
believe we are the largest provider of seismic drilling services in the United States.

PERMITTING SERVICES. Our competitors include
a number of larger, well-established companies with a number of permit agents comparable to us.

SURVEY SERVICES. Our competitors
include a number of larger, well-established companies with a number of crews comparable to us.

ENVIRONMENTAL SERVICES. We have
several competitors offering identical environmental services to those offered by Trussco. Some of these competitors are larger and have more financial resources than we have available. Our ability to compete effectively is dependent upon our
ability to have personnel available when needed at competitive prices.



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EQUIPMENT LEASING. We have several competitors offering similar equipment rental and services to
those offered by Preheat. Some of the competitors are larger and have more financial resources than we have available. Our ability to effectively compete is dependent upon having the desired rental equipment available to meet the customers
needs. In addition, it is imperative that the desired services can be performed for customers in a timely fashion at competitive prices. We feel that our recently acquired equipment and services are among the best in the market.

SEASONALITY AND WEATHER RISKS

SEISMIC
DRILLING. Our Seismic Drilling operations are subject to seasonal variations in weather conditions and daylight hours. Since our activities take place outdoors, the average number of hours worked per day, and therefore the number of holes
drilled or surveyed per day, generally is less in winter months than in summer months, due to an increase in rainy, foggy and cold conditions and a decrease in daylight hours. Furthermore, demand for seismic data acquisition activity by oil and gas
companies at the end of the fourth quarter and in the first quarter is generally lower than at other times of the year. As a result, our revenue and gross profit during the fourth quarter and the first quarter of each year typically are lower than
the second and third quarters for this business unit. Operations may also be affected by rainy weather, lightning, hurricanes and other storms prevalent along the Gulf Coast throughout the year and by seasonal climatic conditions in the Rocky
Mountain area. In addition, prolonged periods of dry weather result in slower drill rates in marsh and swamp areas as water in the quantities needed to drill is more difficult to obtain and equipment movement is impeded. Adverse weather conditions
and dry weather can also increase maintenance costs for our equipment and decrease the number of vehicles available for operations.

BACKLOG

Our backlog represents those seismic drilling and survey projects for which a customer has hired us and has scheduled a start date for
the project. Projects currently included in our backlog are subject to termination or delay without penalty at the option of the customer, which could substantially reduce the amount of backlog currently reported. Backlog levels vary during the year
depending on the timing of the completion of certain contracts and when we are awarded new contracts.

Due to increasing demand for our
seismic drilling services our backlog as of December 31, 2005 was approximately $40.4 million compared to $33.0 million at December 31, 2004. Backlog at December 31, 2005 includes seismic drilling and survey projects in the Transition
Zone in addition to seismic rock drilling projects.

Our permitting and environmental divisions (with the exception of NORM
decontamination), historically, have not measured backlog due to the nature of our business and our contracts, which are generally cancelable by either party with thirty days written notice. Backlog for NORM decontamination projects is maintained
but is not considered to be material.

GOVERNMENTAL REGULATION

SEISMIC DRILLING. Our operations and properties are subject to and affected by various types of governmental regulations, including laws and regulations governing the entry into and restoration of wetlands, the
handling of explosives and numerous other federal, state and local laws and regulations. To date, our cost of complying with such laws and regulations has not been material. However, such laws and regulations frequently change and it is not possible
for us to accurately predict the cost or impact such laws and regulations may have on our future operations.

Furthermore, we depend on the
demand for our services by the oil and gas industry and are affected by tax legislation, price controls and other laws and regulations relating to the oil and gas industry in general. The adoption of laws and regulations curtailing exploration and
development drilling for oil and gas in our areas of



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##### Index to Financial Statements

operations for economic, environmental or other policy reasons would adversely affect our operations by limiting the demand for our services. We cannot
determine to what extent our future operations and earnings may be affected by new legislation, new regulations or changes in existing regulations.

EXPLOSIVES. Because we use dynamite in our operations, we are subject to various local, state and federal laws and regulations concerning the handling and storage of explosives and are specifically regulated by the Bureau of Alcohol,
Tobacco and Firearms of the U.S. Department of Justice and the Department of Homeland Security. We must take daily inventories of the dynamite and blasting caps that we keep for our seismic drilling and are subject to random checks by state and
federal officials. We are licensed by the Louisiana State Police as an explosives handler. Any loss or suspension of these licenses would result in a material adverse effect on our results of operations and financial condition. We believe that we
are in compliance with all material laws and regulations with respect to our handling and storage of explosives.

ENVIRONMENTAL. Our
operations and properties are subject to a wide variety of increasingly complex and stringent federal, state and local environmental laws and regulations, including those governing discharges into the air and water, the handling and disposal of
solid and hazardous wastes, the remediation of soil and groundwater contaminated by hazardous substances and the health and safety of employees. In addition, certain areas where we operate are federally protected or state protected wetlands or
refuges where environmental regulation is particularly strict. These laws may provide for strict liability for damages to natural resources and threats to public health and safety, rendering a party liable for environmental damage
without regard to negligence or fault on the part of such party. Sanctions for noncompliance may include revocation of permits, corrective action orders, administrative or civil penalties and criminal prosecution. Certain environmental laws provide
for strict, joint and several liability for remediation of spills and other releases of hazardous substances, as well as damage to natural resources. In addition, we may be subject to claims alleging personal injury or property damage as a result of
alleged exposure to hazardous substances. Such laws and regulations may also expose us to liability for the conduct of, or conditions caused by, others, or for our acts that were in compliance with all applicable laws at the time such acts were
performed.

The Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, and similar laws provide for
responses to and liability for releases of hazardous substances into the environment. Additionally, the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act, the Safe Drinking Water Act, the Emergency Planning and Community
Right to Know Act, each as amended, and similar state or local counterparts to these federal laws, regulate air emissions, water discharges, hazardous substances and wastes, and require public disclosure related to the use of various hazardous
substances. Compliance with such environmental laws and regulations may require the acquisition of permits or other authorizations for certain activities and compliance with various standards or procedural requirements. We believe that our
facilities are in substantial compliance with current regulatory standards.

WORKER SAFETY. Laws and regulations relating to
workplace safety and worker health, primarily OSHA and regulations promulgated thereunder, govern our operations. In addition, various other governmental and quasi-governmental agencies require us to obtain certain permits, licenses and certificates
with respect to our operations. The kind of permits, licenses and certificates required in our operations depend upon a number of factors. We believe that we have all permits, licenses and certificates necessary to the conduct of our existing
business.

INSURANCE

SEISMIC
DRILLING. Our operations are subject to the inherent risks of inland marine activity, heavy equipment operations and the transporting and handling of explosives, including accidents resulting in personal injury, the loss of life or property,
environmental mishaps, mechanical failures and collisions. We maintain insurance coverage against certain of these risks, which we believe are reasonable and customary in the industry. We also maintain insurance coverage against property damage
caused by fire, flood, explosion and similar



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##### Index to Financial Statements

catastrophic events that may result in physical damage or destruction to our equipment or facilities. All policies are subject to deductibles and other
coverage limitations. We believe our insurance coverage is adequate. Historically, we have not experienced an insured loss in excess of our policy limits; however, there can be no assurance that we will be able to maintain adequate insurance at
rates which we consider commercially reasonable, nor can there be any assurance such coverage will be adequate to cover all claims that may arise.

ENVIRONMENTAL SERVICES. Our operations involve a high degree of operational risk, particularly of personal injury and damage or loss of equipment. Failure or loss of our equipment could result in property damages, personal injury,
environmental pollution and other damage for which we could be liable. We maintain insurance against risk that we believe is consistent with industry standards and required by our customers. Although we believe that our insurance protection is
adequate and we have not experienced a loss in excess of our policy limits, we may not be able to maintain adequate insurance rates that we consider commercially reasonable, or ensure that our coverage will be adequate to cover all claims that may
arise.



|ITEM 1A. | RISK FACTORS
|-------- | ------------

You should carefully consider the following risk factors, in addition to the other
information set forth or incorporated by reference herein. Each of these risk factors could adversely affect our business, operating results and financial condition, and also adversely affect the value of an investment in our common stock.

INDUSTRY VOLATILITY MAY ADVERSELY AFFECT OUR RESULTS OF OPERATIONS.

The demand for our services depends on the level of capital expenditures by oil and gas companies for developmental construction and these expenditures are critical to our operations. The levels of such capital
expenditures are influenced by the following factors:



| |  |  | oil and gas prices and industry perceptions of future price levels;
| | - |  | -------------------------------------------------------------------



| |  |  | the cost of exploring for, producing and delivering oil and gas;
| | - |  | ----------------------------------------------------------------



| |  |  | the ability of oil and gas companies to generate capital;
| | - |  | ---------------------------------------------------------



| |  |  | the sale and expiration dates of leases in the United States;
| | - |  | -------------------------------------------------------------



| |  |  | the availability of current geophysical data;
| | - |  | ---------------------------------------------



| |  |  | the discovery rate of new oil and gas reserves; and
| | - |  | ---------------------------------------------------



| |  |  | local and international political and economic conditions.
| | - |  | ----------------------------------------------------------

The cyclical nature of the oil and gas industry has a significant effect on our revenues and profitability. Historically, prices of oil and gas, as well as the level of exploration and developmental activity, have fluctuated substantially.
This has, in the past, and may, in the future, adversely affect our business. We are unable to predict future oil and gas prices or the level of oil and gas industry activity. A prolonged low level of activity in the oil and gas industry will likely
depress development activity, adversely affecting the demand for our products and services and our financial condition and results of operations.

OUR
GROWTH AND GROWTH STRATEGY INVOLVES RISKS.

We have grown over the last several years through internal growth and acquisitions of other
companies. It will be important for our future success to manage our rapid growth and this will demand increased responsibility for management personnel. The following factors could present difficulties to us:



| |  |  | the lack of sufficient executive-level personnel;
| | - |  | -------------------------------------------------



| |  |  | the successful integration of the operations of Preheat including the integration of a management team with us;
| | - |  | ---------------------------------------------------------------------------------------------------------------



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##### Index to Financial Statements

| |  |  | increased levels of debt and administrative burdens; and
| | - |  | --------------------------------------------------------



| |  |  | increased logistical problems of large, expansive operations.
| | - |  | -------------------------------------------------------------

If we do not manage these potential difficulties successfully, they could have a material adverse effect on our financial condition and results of operations.

WE HAVE INCURRED NET LOSSES IN PREVIOUS YEARS.

For 2005, we had net income from our continuing
operations. However, our recent financial history, including the year ended December 31, 2005, reflects annual net losses, of which our current net loss is attributable mainly to discontinued operations. We hope to continue generating increased
revenues and profits from our continuing operations; however, any such increase may not be sustainable or indicative of future results of operations. We do intend to continue investing in internal expansion, infrastructure, integration of acquired
companies and into our operations and our marketing and sales efforts.

THE DANGERS INHERENT IN OUR OPERATIONS AND THE POTENTIAL LIMITS ON INSURANCE
COVERAGE FOR CERTAIN RISKS COULD EXPOSE US TO POTENTIALLY SIGNIFICANT LIABILITY COSTS.

Our operations, and to a significant degree our
seismic operations, are subject to risks or injury to personnel and loss of equipment. Our crews often conduct operations in extreme weather, in difficult terrain that is not easily accessible, and under other hazardous conditions. We maintain what
we believe is prudent insurance protection. However, we cannot assure that our insurance will be sufficient or effective under all circumstances. A successful claim for which we are not fully insured may have a material adverse effect on our
revenues and profitability. Moreover, we do not carry business interruption insurance with respect to our operations.

WE OPERATE IN A HIGHLY
COMPETITIVE INDUSTRY.

We compete with several other providers of seismic drilling, permitting, survey and environmental services.
Competition among seismic contractors historically has been, and will continue to be, intense. Competitive factors have in recent years included price, crew experience, equipment availability, technological expertise and reputation for quality and
dependability. Our revenues and earnings may be affected by the following factors:



| |  |  | changes in competitive prices and availability of trained personnel;
| | - |  | --------------------------------------------------------------------



| |  |  | fluctuations in the level of activity and major markets;
| | - |  | --------------------------------------------------------



| |  |  | general economic conditions; and
| | - |  | --------------------------------



| |  |  | governmental regulation.
| | - |  | ------------------------

Additionally, in certain
geographical areas, some of our competitors operate more crews than we do and may have substantially greater financial and other resources. These operators could enjoy an advantage over us if the competitive environment for contract awards shifts to
one characterized principally by intense price competition.

SEASONALITY AND ADVERSE WEATHER CONDITIONS IN THE REGIONS IN WHICH WE OPERATE MAY ADVERSELY
AFFECT OUR OPERATIONS.

Our operations are directly affected by the weather conditions in the Gulf of Mexico. Due to seasonal
differences in weather patterns, we may operate more days in the spring, summer and fall periods and less in the winter months. The seasonality of oil and gas industry activity in the Gulf Coast region also affects our operations. Due to exposure to
weather, we generally experience higher drilling activity in the spring, summer



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##### Index to Financial Statements

and fall months with the lowest activity in winter months, especially with respect to our operations in the mountainous regions of the western United States.
The rainy weather, hurricanes and other storms prevalent in the Gulf of Mexico and along the Gulf Coast throughout the year may also affect our operations. As a result, full-year results are not likely to be a direct multiple of any particular
quarter or combination of quarters.

WE ARE DEPENDENT ON KEY PERSONNEL.

Our success depends on, among other things, the continued active participation of our executive officers and certain of our other key operating personnel.
Our officers and personnel have extensive experience in the domestic and international oilfield services industry. The loss of the services of any one of these persons could impact adversely our ability to implement our expansion strategy.

WE MAY INCUR ADDITIONAL EXPENDITURES TO COMPLY WITH GOVERNMENTAL REGULATIONS.

Our seismic and environmental operations are subject to extensive governmental regulation, violations of which may result in civil and criminal penalties,
injunctions and cease and desist orders. These laws and regulations govern, among other things, operations in wetlands, the handling of explosives and hazardous and non-hazardous waste. Although our cost of compliance with such laws has to date been
immaterial, such laws are changed frequently. Accordingly, it is impossible to predict the cost or impact of such laws on our future operations. We are also required by various governmental agencies to obtain certain permits, licenses and
certificates. To date, we believe that we possess all permits, licenses and certificates material to the operation of our business. The loss by us of any of the licenses required for our operation could have a material adverse effect on our
operations.

We depend on demand for our services from the oil and gas industry, and this demand may be affected by changing tax laws and
oil and gas regulations. As a result, the adoption of laws that curtail oil and gas production in our areas of operation may adversely affect us. We cannot determine to what extent our operations may be affected by any new regulations or changes in
existing regulations.

ONE STOCKHOLDER HAS SUBSTANTIAL CONTROL OVER OUR AFFAIRS.

Dennis R. Sciotto beneficially owns approximately 35% of our outstanding common stock. Mr. Sciotto represents and controls The Dennis R. Sciotto
Family Trust and was appointed to the Board of Directors by the holders of the Series C Preferred Stock on June 13, 2005 pursuant to the Securities Purchase Agreement dated May 17, 2005. As a result, Mr. Sciotto has the ability to
substantially influence our management and affairs and all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions, such as a merger, consolidation or sale of substantially all
of our assets. This may have the effect of delaying, deferring or preventing a change in control, or impeding a merger or consolidation.

FUTURE
TECHNOLOGICAL ADVANCES COULD IMPAIR OPERATING ASSETS OR REQUIRE SUBSTANTIAL UNBUDGETED CAPITAL EXPENDITURES.

We compete in providing
services in a capital intensive business. The development of seismic data acquisition and processing equipment has been characterized by rapid technological advancements in recent years, and this trend may continue. Manufacturers of seismic
equipment may develop new systems that have competitive advantages over systems now in use that could render our current equipment obsolete or require us to make significant unplanned capital expenditures to maintain our competitive position. Under
such circumstances, there can be no assurance that we would be able to obtain necessary financing on favorable terms.

OUR SEISMIC DRILLING OPERATIONS
DEPEND ON A FEW SIGNIFICANT CUSTOMERS.

We derive a significant amount of our revenue from a small number of geophysical companies. Our
inability to continue to perform services for a number of our large existing customers, if not offset by sales to new or other existing customers could have a material adverse effect on our business and operations. For example, our largest customers
(those which individually accounted for more than 10% of revenue in a given



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##### Index to Financial Statements

year, listed alphabetically) collectively accounted for 71% (Quantum Geophysical, Seismic Exchange, and Veritas DGC), 50% (PGS, Quantum Geophysical, Seismic
Exchange, and Veritas DGC), and 38% (Quantum Geophysical and Veritas DGC) of revenue for fiscal 2003, 2004 and 2005, respectively.

WE ARE NOT ABLE TO
GUARANTEE THAT OUR BACKLOG WILL BE TIMELY CONVERTED INTO REVENUE IN ANY PARTICULAR FISCAL PERIOD.

Our backlog represents those seismic
drilling and survey projects for which a customer has hired us and has scheduled a start date for the project. Backlog levels vary during the year depending on the timing of the completion of certain contracts and when we are awarded new contracts.
Projects currently included in our backlog are subject to termination or delay without penalty at the option of the customer, which could substantially reduce the amount of backlog currently reported, and consequently, the conversion of that backlog
into revenue.

UNFAVORABLE RESULTS OF LITIGATION COULD HAVE A MATERIAL ADVERSE IMPACT ON OUR FINANCIAL STATEMENTS.

As discussed in Note 8 to the Consolidated Financial Statements, we are subject to a variety of claims and lawsuits. Adverse outcomes in some or all of
the pending cases may result in significant monetary damages or injunctive relief against us. We are also subject to a variety of other claims and suits that arise from time to time in the ordinary course of our business. Management currently
believes that resolving all of these matters, individually or in the aggregate, will not have a material adverse impact on our financial position or results of operations. The litigation and other claims are subject to inherent uncertainties and
managements view of these matters may change in the future. There exists the possibility of a material adverse impact on our financial position and the results of operations for the period in which the effect of an unfavorable final outcome
becomes probable and reasonably estimable.

IF WE BREACH ANY OF THE MATERIAL FINANCIAL COVENANTS UNDER OUR VARIOUS INDEBTEDNESS, OR IF AN EVENT OF
DEFAULT IS DECLARED WITH RESPECT TO ANY SUCH INDEBTEDNESS, OUR DEBT SERVICE OBLIGATIONS COULD BE ACCELERATED.

If we breach any of the
material financial covenants under our various indebtedness, or if an event of default is declared with respect to any such indebtedness, our substantial debt service obligations could be accelerated. In the event of any such simultaneous
acceleration, we would not be able to repay all of the indebtedness.

THE MARKET PRICE OF OUR COMMON STOCK IS HIGHLY VOLATILE.

The market price of our common stock has been and is expected to continue to be highly volatile. Factors, including announcements of technological
innovations by us or other companies, regulatory matters, new or existing products or procedures, concerns about our financial position, operating results, litigation, government regulation, developments or disputes relating to agreements, patents
or proprietary rights, may have a significant impact on the market price of our common stock. In addition, potential dilutive effects of future sales of shares of common stock by our shareholders and by us could have an adverse effect on the market
price of our common stock.

EMPLOYEES

As of December 31, 2005, we had 258 employees, including 203 operating personnel and 55 corporate, administrative and management personnel. These employees are not unionized or employed pursuant to any collective bargaining agreement
or any similar agreement. We believe our relations with our employees are generally good. With the acquisition of Preheat in February 2006, we currently have approximately 400 employees.



|ITEM 1B. | UNRESOLVED STAFF COMMENTS
|-------- | -------------------------

NONE.



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##### Index to Financial Statements

|ITEM 2. | PROPERTIES
|------- | ----------

FACILITIES. Our corporate headquarters are located on 34 acres of land
situated in Carencro, Louisiana. The building provides approximately 20,000 square feet of office space. It is located adjacent to our primary repair and maintenance facilities. Our environmental unit operates from land and dock-side bases located
along the Louisiana Gulf Coast.

SEISMIC DRILLING FACILITIES. Our primary fabrication and maintenance facilities are situated
in a building located adjacent to our corporate headquarters. The building provides approximately 28,000 square feet of covered maintenance and fabrication space.

ENVIRONMENTAL SERVICES FACILITIES. The primary executive offices for our Environmental Services Unit are located in the Carencro, Louisiana facility. Our primary operations and offshore cleaning support
facility is located in Carencro, Louisiana. We maintain six leased facilities along the Louisiana Gulf Coast to support our cleaning and maintenance operations. These locations include Cameron, Intracoastal City, Morgan City, Fourchon and Venice,
Louisiana. Fourchon is Louisianas largest and busiest deep water port. Our NORM decontamination site is located in a separate facility also in Intracoastal City, Louisiana.

As a result of Hurricanes Katrina and Rita in the third quarter of 2005, we sustained damage to our Gulf Coast environmental facilities. Damages to our
facilities and to the municipal infrastructure caused interruptions in services from these facilities. With the exception of our facility in Venice, Louisiana, all of our facilities were operational by the end of the fourth quarter of 2005. The
Venice facility remains closed awaiting repairs to the municipal infrastructure and resumption of municipal services.

EQUIPMENT
LEASING FACILITIES. Our primary operations facilities for our Equipment Leasing Unit are located in leased facilities in Broussard and Belle Chasse, Louisiana. We also maintain a leased satellite location in Freer, Texas.



|ITEM 3. | LEGAL PROCEEDINGS
|------- | -----------------

We are involved in various legal and other proceedings that are incidental to
the conduct of our business. We believe that none of these proceedings, if adversely determined, would have a material effect on our financial condition, results of operations or cash flows. In addition, we are subject to the proceedings discussed
below.

On January 25, 2005, we filed suit in United States District Court, Western District of Louisiana against the holders of our
6.5% Subordinated Convertible Debentures (the Debentures) and other third parties (collectively, the Debenture Holders). In the suit, we alleged that the Debenture Holders violated Section 16(b) of the Securities
Exchange Act of 1934, as amended and we sought the disgorgement of profits realized by the Debenture Holders from their purchases and sales of our common stock.

On May 18, 2005, in connection with the completion of a new $50.0 million senior credit facility, we entered into settlement and debt extinguishment agreements (Debenture Settlement Agreements) with
each of the Debenture Holders in exchange for our dismissal of the lawsuit filed against the Debenture Holders (see Note 4 to the Consolidated Financial Statements). Under the terms of the Debenture Settlement Agreements, we agreed to (i) pay
the Debenture Holders approximately $4.0 million cash; (ii) immediately issue the Debenture Holders 2.0 million shares of our common stock at an agreed upon value of $3.4 million; and, (iii) issue the Debenture Holders approximately
$4.3 million of unsecured, subordinated promissory notes (Subordinated Debenture Notes). We recorded a gain of $0.2 million at the close of these transactions. The Subordinated Debenture Notes were scheduled to be paid quarterly, with
interest in arrears, over 36 months in level payments with interest accruing at the rate of 8% per annum. Execution of the Debenture Settlement Agreements extinguished the terms of the original Debentures and released all parties from any
future claims.



19



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##### Index to Financial Statements

On August 26, 2005, we entered into a settlement agreement and mutual release (Agreement and
Release) with two of the three holders of the Subordinated Debenture Notes. Under terms of the Agreement and Release, we paid $1.5 million in cash from the proceeds of a new $25.0 million multiple draw term credit facility, and issued 750,000
shares of our common stock in full satisfaction of the applicable Subordinated Debenture Notes. At December 31, 2005, the remaining Subordinated Debenture Note had a balance of approximately $0.9 million.

On December 7, 2005, the Fourth Circuit Court of Appeal for the State of Louisiana granted our writ application for supervisory review and rendered
a judgment granting our Motion for Partial Summary Judgment seeking a declaratory judgment against Steven T. Stull, a former director, and Advantage Capital Partners, et. al (ACP). On February 13, 2004, we commenced litigation
against Mr. Stull and ACP, and their respective insurers seeking a declaratory judgment confirming our right to redeem, rather than convert, its shares of Series A and Series B 8% Convertible Preferred Stock under our Articles of Incorporation,
as amended, and other applicable operative documents and agreements. The Court determined that we had the right to redeem, rather than convert both the Series A and Series B preferred stock within 30 days after receiving the notices of conversion
from ACP.

On December 20, 2005, the United States District Court for the Eastern District of Louisiana granted our Motion to Dismiss
a lawsuit filed by ACP and its affiliates against us and certain of our executive officers. In the lawsuit filed on March 26, 2004, ACP and its affiliates alleged that (i) we and the executive officers misrepresented material facts and
failed to disclose material facts related to the intention to redeem our Series A Preferred and Series B Preferred, and (ii) our officers breached their fiduciary duties. The Court held that ACP had failed to satisfy the pleading requirements
for alleging fraud under federal securities laws.



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

NONE.



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##### Index to Financial Statements

PART II



|ITEM 5. | MARKET FOR REGISTRANTS COMMON STOCK, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|------- | -----------------------------------------------------------------------------------------------------------

Our Common Stock is traded on the Nasdaq National Market under the symbol OMNI. The following table sets forth the range of high and low sales prices of our Common Stock as reported by the Nasdaq National
Market for the periods indicated.



|               |  |      |      |     |   |     
|-------------- |  | ---- | ---- | --- | - | ----
|               |  | HIGH |      | LOW
|2005           |  |      |      |     |   |     
|First quarter  |  | $    | 2.84 |     | $ | 1.21
|Second quarter |  | $    | 2.66 |     | $ | 1.43
|Third quarter  |  | $    | 5.35 |     | $ | 2.01
|Fourth quarter |  | $    | 4.22 |     | $ | 2.30
|               |  |     
|2004           |  |      |      |     |   |     
|First quarter  |  | $    | 9.00 |     | $ | 4.76
|Second quarter |  | $    | 7.80 |     | $ | 4.22
|Third quarter  |  | $    | 5.35 |     | $ | 2.95
|Fourth quarter |  | $    | 4.94 |     | $ | 1.65

On March 28, 2006, the reported last sales price of our common stock as reported by the Nasdaq
National Market was $4.38. As of March 23, 2006, we had approximately 6,100 stockholders of record.

We have never paid cash dividends
on our Common Stock. We intend to retain future earnings, if any, to meet our working capital requirements and to finance the future operations of our business. Therefore, we do not plan to declare or pay cash dividends to holders of our Common
Stock in the foreseeable future. In addition, certain of our credit arrangements contain provisions that limit our ability to pay cash dividends on our Common Stock.

ISSUER PURCHASES OF EQUITY SECURITIES

There were no stock repurchases during the year ended
December 31, 2005.

EQUITY COMPENSATION PLAN INFORMATION

The following table gives information about our Common Stock that may be issued upon the exercise of options, warrants and rights under all of our existing equity compensation plans as of December 31, 2005:



|                                                       |  |                                                                                                     |  |                                                                                 |      |                                                                                                                                                       |         |                                                     |          
|------------------------------------------------------ |  | --------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------- | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------- | ------- | --------------------------------------------------- | ---------
|PLAN CATEGORY                                          |  | (A) NUMBER OF SECURITIES TO BE ISSUED UPON THE EXERCISE
OF OUTSTANDING OPTIONS, WARRANTS AND RIGHTS |  | (B) WEIGHTED AVERAGE EXERCISE PRICE
OF OUTSTANDING OPTIONS, WARRANTS AND RIGHTS |      | (C) NUMBER OF SECURITIES REMAINING AVAILABLE
FOR FUTURE ISSUANCE UNDER EQUITY COMPENSATION PLANS (EXCLUDING SECURITIES REFLECTED IN COLUMNS (A) & (B) |         | (D) TOTAL OFSECURITIES REFLECTEDIN COLUMNS(A) &
(C)
|Equity Compensation Plans Approved by Stockholders     |  | 1,593,107                                                                                           |  | $                                                                               | 2.70 |                                                                                                                                                       | 906,893 |                                                     | 2,500,000
|Equity Compensation Plans Not Approved by Stockholders |  | 43,743                                                                                              |  | $                                                                               | 2.32 |                                                                                                                                                       | 56,257  |                                                     | 100,000  
|                                                       |  |                                                                                                     |  |                                                                                 |      |                                                                                                                                                       |         |                                                     |          
|Total                                                  |  | 1,636,850                                                                                           |  | $                                                                               | 2.69 |                                                                                                                                                       | 963,150 |                                                     | 2,600,000
|                                                       |  |                                                                                                     |  |                                                                                 |      |                                                                                                                                                       |         |                                                     |          



21



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##### Index to Financial Statements

PLAN NOT APPROVED BY STOCKHOLDERS

In January 1999, we approved the Amended OMNI Energy Services Corp. 1999 Stock Option Plan (the Option Plan) to provide for the grant of options to purchase shares of our Common Stock to non-officer
employees of our Company and our subsidiaries in lieu of year-end cash bonuses. The Option Plan is intended to increase stockholder value and advance our interests by providing an incentive to employees and by increasing employee awareness of us in
the marketplace. Under the Option Plan, we may grant options to any of our employees with the exception of our officers. The options become exercisable immediately with respect to one-half of the shares, and the remaining one-half shall be
exercisable one year following the date of the grant. The exercise price of any stock option granted may not be less than the fair market value of the Common Stock on the effective date of the grant. A total of 100,000 shares of Common Stock are
authorized, of which 56,257 remain available for issuance at December 31, 2005.



|ITEM 6. | SELECTED FINANCIAL DATA
|------- | -----------------------

The selected financial data as of and for the five years ended
December 31, 2005 are derived from our audited consolidated financial statements. The following information should be read in conjunction with Managements Discussion and Analysis of Financial Condition and Results of
Operations and the consolidated financial statements and notes thereto included elsewhere in this document. Our selected historical results are not necessarily indicative of results expected in future periods. The per share data gives
retroactive effect to the one for three reverse stock split effective July 3, 2002.

The financial statements for the year ended
December 31, 2001 were audited by Arthur Andersen LLP (Andersen), who has ceased operations.

We sold our Aviation
Transportation Services segment effective June 30, 2005. In order to enhance the comparability of the amounts from year to year, the financial information related to the results of operations for the years ended December 31, 2001 through
December 31, 2004 have been adjusted to present the operations of the Aviation Transportation Services segment as discontinued operations.



22



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##### Index to Financial Statements

SELECTED FINANCIAL DATA



|                                                                                  |  |                                       |        |   |      |   |        |      |  |   |        |   |  |      |         |   |  |   |        |  
|--------------------------------------------------------------------------------- |  | ------------------------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | - |  | ---- | ------- | - |  | - | ------ | -
|                                                                                  |  | YEAR ENDED DECEMBER 31,               |       
|                                                                                  |  | 2001                                  |        |   | 2002 |   |        | 2003 |  |   | 2004   |   |  | 2005 |        
|                                                                                  |  | (In thousands, except per share data) |       
|INCOME STATEMENT DATA:                                                            |  |                                       |        |   |      |   |        |      |  |   |        |   |  |      |         |   |  |   |        |  
|Operating revenue                                                                 |  | $                                     | 19,839 |   |      | $ | 24,592 |      |  | $ | 31,555 |   |  | $    | 39,064  |   |  | $ | 43,350 |  
|Operating expenses                                                                |  |                                       |        |   |      |   |        |      |  |   |        |   |  |      |         |   |  |   |        |  
|Direct costs                                                                      |  |                                       | 15,005 |   |      |   | 17,178 |      |  |   | 21,586 |   |  |      | 28,510  |   |  |   | 27,515 |  
|Depreciation and amortization                                                     |  |                                       | 3,328  |   |      |   | 3,270  |      |  |   | 3,355  |   |  |      | 4,282   |   |  |   | 4,627  |  
|General and administrative expense                                                |  |                                       | 2,436  |   |      |   | 3,186  |      |  |   | 3,718  |   |  |      | 9,464   |   |  |   | 8,497  |  
|                                                                                  |  |                                       |        |   |      |   |        |      |  |   |        |   |  |      |         |   |  |   |        |  
|Total operating expenses                                                          |  |                                       | 20,769 |   |      |   | 23,634 |      |  |   | 28,659 |   |  |      | 42,256  |   |  |   | 40,639 |  
|Asset impairment and other charges                                                |  |                                       | 632    |   |      |   |       |      |  |   |       |   |  |      |        |   |  |   |       |  
|                                                                                  |  |                                       |        |   |      |   |        |      |  |   |        |   |  |      |         |   |  |   |        |  
|Operating income (loss)                                                           |  |                                       | (1,562 | ) |      |   | 958    |      |  |   | 2,896  |   |  |      | (3,192  | ) |  |   | 2,711  |  
|Interest expense                                                                  |  |                                       | 1,223  |   |      |   | 799    |      |  |   | 943    |   |  |      | 3,288   |   |  |   | 2,836  |  
|(Gain) loss on debenture conversion inducement and debt extinguishment            |  |                                       |       |   |      |   |       |      |  |   |       |   |  |      | 729     |   |  |   | (758   | )
|Other expense (income), net                                                       |  |                                       | (7,929 | ) |      |   | (115   | )    |  |   | (114   | ) |  |      | 290     |   |  |   | (835   | )
|                                                                                  |  |                                       |        |   |      |   |        |      |  |   |        |   |  |      |         |   |  |   |        |  
|Income (loss) before income taxes                                                 |  |                                       | 5,144  |   |      |   | 274    |      |  |   | 2,067  |   |  |      | (7,499  | ) |  |   | 1,468  |  
|Income tax benefit                                                                |  |                                       |       |   |      |   | 400    |      |  |   | 1,092  |   |  |      |        |   |  |   | 508    |  
|                                                                                  |  |                                       |        |   |      |   |        |      |  |   |        |   |  |      |         |   |  |   |        |  
|Net income (loss) from continuing operations                                      |  |                                       | 5,144  |   |      |   | 674    |      |  |   | 3,159  |   |  |      | (7,499  | ) |  |   | 1,976  |  
|Income (loss) from discontinued operations, net of taxes                          |  |                                       | 520    |   |      |   | 534    |      |  |   | 324    |   |  |      | (6,756  | ) |  |   | (3,978 | )
|Loss on disposal of discontinued operations assets, net of taxes                  |  |                                       |       |   |      |   |       |      |  |   |       |   |  |      |        |   |  |   | (2,271 | )
|                                                                                  |  |                                       |        |   |      |   |        |      |  |   |        |   |  |      |         |   |  |   |        |  
|Net income (loss)                                                                 |  |                                       | 5,664  |   |      |   | 1,208  |      |  |   | 3,483  |   |  |      | (14,255 | ) |  |   | (4,273 | )
|Dividends and accretion of preferred stock                                        |  |                                       | (726   | ) |      |   | (484   | )    |  |   | (484   | ) |  |      | (490    | ) |  |   | (249   | )
|Non-cash charge attributable to beneficial conversion features of preferred stock |  |                                       |       |   |      |   |       |      |  |   |       |   |  |      |        |   |  |   | (745   | )
|                                                                                  |  |                                       |        |   |      |   |        |      |  |   |        |   |  |      |         |   |  |   |        |  
|Net income (loss) available to common stockholders                                |  | $                                     | 4,938  |   |      | $ | 724    |      |  | $ | 2,999  |   |  | $    | (14,745 | ) |  | $ | (5,267 | )
|                                                                                  |  |                                       |        |   |      |   |        |      |  |   |        |   |  |      |         |   |  |   |        |  
|Basic Income (loss) per common share:                                             |  |                                       |        |   |      |   |        |      |  |   |        |   |  |      |         |   |  |   |        |  
|Income (loss) from continuing operations                                          |  | $                                     | 0.49   |   |      | $ | 0.02   |      |  | $ | 0.30   |   |  | $    | (0.73   | ) |  | $ | 0.07   |  
|Income (loss) from discontinued operations                                        |  |                                       | 0.06   |   |      |   | 0.06   |      |  |   | 0.04   |   |  |      | (0.62   | ) |  |   | (0.30  | )
|Loss on disposal of discontinued operations assets                                |  |                                       |       |   |      |   |       |      |  |   |       |   |  |      |        |   |  |   | (0.17  | )
|                                                                                  |  |                                       |        |   |      |   |        |      |  |   |        |   |  |      |         |   |  |   |        |  
|Net Income (loss) available to common stockholders                                |  | $                                     | 0.55   |   |      | $ | 0.08   |      |  | $ | 0.34   |   |  | $    | (1.35   | ) |  | $ | (0.40  | )
|                                                                                  |  |                                       |        |   |      |   |        |      |  |   |        |   |  |      |         |   |  |   |        |  
|Diluted Income (loss) per common share:                                           |  |                                       |        |   |      |   |        |      |  |   |        |   |  |      |         |   |  |   |        |  
|Income (loss) from continuing operations                                          |  | $                                     | 0.45   |   |      | $ | 0.02   |      |  | $ | 0.28   |   |  | $    | (0.73   | ) |  | $ | 0.07   |  
|Income (loss) from discontinued operations                                        |  |                                       | 0.05   |   |      |   | 0.06   |      |  |   | 0.03   |   |  |      | (0.62   | ) |  |   | (0.29  | )
|Loss on disposal of discontinued operations assets                                |  |                                       |       |   |      |   |       |      |  |   |       |   |  |      |        |   |  |   | (0.16  | )
|                                                                                  |  |                                       |        |   |      |   |        |      |  |   |        |   |  |      |         |   |  |   |        |  
|Net income (loss) available to common stockholders                                |  | $                                     | 0.50   |   |      | $ | 0.08   |      |  | $ | 0.31   |   |  | $    | (1.35   | ) |  | $ | (0.38  | )
|                                                                                  |  |                                       |        |   |      |   |        |      |  |   |        |   |  |      |         |   |  |   |        |  
|Number of Weighted Average Shares:                                                |  |                                       |        |   |      |   |        |      |  |   |        |   |  |      |         |   |  |   |        |  
|Basic                                                                             |  |                                       | 9,015  |   |      |   | 8,739  |      |  |   | 8,772  |   |  |      | 10,884  |   |  |   | 13,251 |  
|Diluted                                                                           |  |                                       | 9,844  |   |      |   | 8,745  |      |  |   | 11,362 |   |  |      | 10,884  |   |  |   | 13,683 |  



23



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##### Index to Financial Statements

|                                                                          |  |                         |        |   |      |   |        |      |  |   |        |   |  |      |         |   |  |   |         |  
|------------------------------------------------------------------------- |  | ----------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | - |  | ---- | ------- | - |  | - | ------- | -
|                                                                          |  | DECEMBER 31,            |       
|                                                                          |  | 2001                    |        |   | 2002 |   |        | 2003 |  |   | 2004   |   |  | 2005 |        
|BALANCE SHEET DATA:                                                       |  |                         |        |   |      |   |        |      |  |   |        |   |  |      |         |   |  |   |         |  
|Total assets                                                              |  | $                       | 38,448 |   |      | $ | 41,325 |      |  | $ | 50,289 |   |  | $    | 65,913  |   |  | $ | 43,758  |  
|Long-term debt, less current maturities                                   |  |                         | 9,289  |   |      |   | 8,340  |      |  |   | 9,624  |   |  |      | 12,952  |   |  |   | 15,801  |  
|Preferred Stock                                                           |  |                         | 11,616 |   |      |   | 12,100 |      |  |   | 12,100 |   |  |      | 29      |   |  |   | 806     |  
|Total Equity                                                              |  |                         | 18,560 |   |      |   | 19,781 |      |  |   | 24,386 |   |  |      | 4,864   |   |  |   | 11,135  |  
|                                                                          | 
|                                                                          |  | YEAR ENDED DECEMBER 31, |       
|                                                                          |  | 2001                    |        |   | 2002 |   |        | 2003 |  |   | 2004   |   |  | 2005 |        
|STATEMENT OF CASH FLOW DATA: (for continuing and discontinued operations) |  |                         |        |   |      |   |        |      |  |   |        |   |  |      |         |   |  |   |         |  
|Net cash provided by (used in) operating activities                       |  | $                       | 6,355  |   |      | $ | 5,015  |      |  | $ | 5,664  |   |  | $    | 5,550   |   |  | $ | 2,894   |  
|Net cash provided by (used in) investing activities                       |  |                         | (155   | ) |      |   | (1,901 | )    |  |   | (4,158 | ) |  |      | (12,647 | ) |  |   | 11,474  |  
|Net cash provided by (used in) financing activities                       |  |                         | (5,284 | ) |      |   | (3,643 | )    |  |   | (1,638 | ) |  |      | 7,568   |   |  |   | (15,237 | )



|ITEM 7. | 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, as amended (the
Securities Act) and Section 21E of the Securities Exchange Act of 1934, as amended (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 headings Cautionary Statements, Risk Factors, and
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 and analysis should be read in conjunction with our consolidated financial statements and accompanying notes contained herein.

RECENT DEVELOPMENTS

On
February 14, 2006, we completed the acquisition of Preheat, Inc. (Preheat) pursuant to a Stock Purchase and Sale Agreement dated December 29, 2005 between us and the shareholders of Preheat. We purchased 100% of the outstanding
common stock of Preheat for a purchase price of $22.5 million consisting of $16 million in cash plus the issuance of 900,000 shares of our common stock and $4 million in buyer promissory notes. In addition, we assumed $1.6 million of certain
long-term debt of Preheat. As a condition of closing, Preheat was required to have on hand excess working capital of at least $4.5 million.

RECLASSIFICATION OF FINANCIAL STATEMENTS

Effective June 30, 2005, we sold our Aviation Transportation Services
segment. The income statements for the years ended December 31, 2001, 2002, 2003, 2004 and 2005 have been revised to properly present the comparative information related to the Aviation Transportation Services segment. For these periods, the
activities of the Aviation Transportation Services segment has been presented as discontinued operations.

GENERAL

DEMAND FOR OUR SERVICES. We receive our revenues from customers in the energy industry. Demand for our services is principally impacted by
conditions affecting geophysical companies engaged in the acquisition of 3-D seismic data and oil and gas companies operating primarily in the shallow waters of the Gulf of Mexico. The level of activity for our services is primarily influenced by
the level of capital expenditures by oil and gas companies.



24



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##### Index to Financial Statements

A number of factors affect the decision of oil and gas companies to pursue the acquisition of seismic
data and the exploration for oil and gas, including (i) prevailing and expected oil and gas demand and prices; (ii) the cost of exploring for, producing and developing oil and gas reserves; (iii) the discovery rate of new oil and gas
reserves; (iv) the availability and cost of permits and consents from landowners to conduct seismic activity; (v) local and international political and economic conditions; (vi) governmental regulations; and (vii) the
availability and cost of capital. The ability to finance the acquisition of seismic data in the absence of oil and gas companies interest in obtaining the information is also a factor, as some geophysical companies will acquire seismic data on
a speculative basis.

SEASONALITY AND WEATHER RISKS. Our operations are subject to seasonal variations in weather conditions and
daylight hours as our activities take place outdoors. On average, fewer hours are worked per day and fewer holes are generally drilled or surveyed per day in winter months than in summer months due to an increase in rainy, foggy, and cold conditions
and a decrease in daylight hours.

RESULTS OF OPERATIONS

The following discussion provides information related to the results of our operations.

As discussed below
in Discontinued Operations, we sold our Aviation Transportation Services segment effective June 30, 2005. In order to enhance the comparability of the amounts reflected for the periods below, the financial information related to the
results of operations for the years ended December 31, 2004 and 2005 has been revised to present the activities of the Aviation Transportation Services segment as discontinued operations. For more information regarding the discontinued
operations of the Aviation Transportation Services segment refer to Note 13 of Consolidated Financial Statements, included herein.

Year
Ended December 31, 2004 Compared To The Year Ended December 31, 2005:



|                                                                                  |  |                         |         |   |      |   |        |  
|--------------------------------------------------------------------------------- |  | ----------------------- | ------- | - | ---- | - | ------ | -
|                                                                                  |  | YEAR ENDED DECEMBER 31, |        
|                                                                                  |  | 2004                    |         |   | 2005 |  
|                                                                                  |  | (In thousands)          |        
|Operating revenue                                                                 |  | $                       | 39,064  |   |      | $ | 43,350 |  
|Operating expenses                                                                |  |                         |         |   |      |   |        |  
|Direct costs                                                                      |  |                         | 28,510  |   |      |   | 27,515 |  
|Depreciation and amortization                                                     |  |                         | 4,282   |   |      |   | 4,627  |  
|General and administrative expenses                                               |  |                         | 9,464   |   |      |   | 8,497  |  
|                                                                                  |  |                         |         |   |      |   |        |  
|Total operating expenses                                                          |  |                         | 42,256  |   |      |   | 40,639 |  
|                                                                                  |  |                         |         |   |      |   |        |  
|Operating income (loss)                                                           |  |                         | (3,192  | ) |      |   | 2,711  |  
|Interest expense                                                                  |  |                         | 3,288   |   |      |   | 2,836  |  
|(Gain) loss on debenture conversion inducement and debt extinguishment            |  |                         | 729     |   |      |   | (758   | )
|Other (income) expense                                                            |  |                         | 290     |   |      |   | (835   | )
|                                                                                  |  |                         |         |   |      |   |        |  
|Income (loss) before taxes                                                        |  |                         | (7,499  | ) |      |   | 1,468  |  
|Income tax benefit                                                                |  |                         |        |   |      |   | 508    |  
|                                                                                  |  |                         |         |   |      |   |        |  
|Net income (loss) from continuing operations                                      |  |                         | (7,499  | ) |      |   | 1,976  |  
|Loss from discontinued operations                                                 |  |                         | (6,756  | ) |      |   | (3,978 | )
|Loss on disposal of discontinued operations assets                                |  |                         |        |   |      |   | (2,271 | )
|                                                                                  |  |                         |         |   |      |   |        |  
|Net loss                                                                          |  |                         | (14,255 | ) |      |   | (4,273 | )
|Preferred stock dividends                                                         |  |                         | (490    | ) |      |   | (249   | )
|Non-cash charge attributable to beneficial conversion features of preferred stock |  |                         |        |   |      |   | (745   | )
|                                                                                  |  |                         |         |   |      |   |        |  
|Net loss available to common stockholders                                         |  | $                       | (14,745 | ) |      | $ | (5,267 | )
|                                                                                  |  |                         |         |   |      |   |        |  



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##### Index to Financial Statements

Operating revenues increased 11%, or $4.3 million, from $39.1 million to $43.4 million for the years
ended December 31, 2004 and 2005, respectively, of which $8.8 million of this increase was due to the June 30, 2004 acquisition of Trussco. Drilling revenues decreased from $30.4 million for the year ended December 31, 2004 to $25.9
million for the year ended December 31, 2005 due to permitting and weather-related delays. Operating revenues are expected to increase in 2006, as the demand for, and range of, our services continue to improve.

Direct costs decreased 4%, or $1.0 million, from $28.5 million in 2004 to $27.5 million in 2005. Operating payroll costs increased $0.9 million from
$12.8 million to $13.7 million for the years ended December 31, 2004 and 2005, respectively. Payroll costs from the Trussco acquisition accounted for a $2.9 million increase while the drilling division accounted for a $2.0 million decrease.
Repairs and maintenance expenses decreased $0.7 million from 2004 to 2005, with $0.8 million of the decrease related to the drilling division offset by $0.1 million related to Trussco. Explosives expense decreased $0.4 million primarily as a result
of the decreased drilling activity in 2005. Contract services decreased $1.9 million company-wide, of which our drilling division accounted for $2.0 million of the decrease with an offsetting increase of $0.1 million related to Trussco. In 2004, we
contracted third parties exclusively to provide services for heliportable drilling in the Rocky Mountains where we no longer provide these specialized drilling services. In 2004, we also contracted third parties to provide airboat drilling services
during a period when most of our available employees were working on other projects. Rental and lease expenses increased $0.6 million from 2004 to 2005, with a $0.2 million decrease related to the drilling division offset by a $0.8 million increase
related to Trussco. Field office expenses and insurance expenses increased $0.5 million collectively, due to the Trussco acquisition. While operating expenses are expected to continue to increase in 2006 as operating revenues increase, we expect
these expenses to remain consistent as a percentage of revenues.

Depreciation and amortization costs increased $0.3 million, from $4.3
million in 2004 to $4.6 million in 2005. Depreciation expense increased $0.2 million due to the increase in revenue-producing assets, primarily from the acquisition of Trussco in June 2004. Additionally, amortization expense increased by $0.1
million resulting primarily from amortization of intangible assets related to the Trussco acquisition.

General and administrative expenses
decreased $1.0 million from $9.5 million for 2004 to $8.5 million for 2005. Of this decrease, $2.8 million relates to professional services, offset by a $1.6 million increase attributable to the Trussco acquisition. Other general and administrative
expense increased by $0.2 million. General and administrative expenses are expected to increase slightly in 2006.

During 2004, we recorded
asset impairment charges of $4.2 million related to the revaluation of certain aviation equipment, prepaid repairs and assets held for sale resulting in a charge to expense of $0.6 million, $3.0 million and $0.6 million, respectively. There was no
impairment charge required to be recorded in 2005. This 2004 impairment charge, which relates entirely to the Aviation Transportation Services Segment, is included in the loss from discontinued operations.

Interest expense was $2.8 million for the year ended December 31, 2005 compared to $3.3 million for the year ended December 31, 2004. The
decrease was partially attributable to decreased levels of debt including the convertible debentures. Interest expense allocated to loss from discontinued operations amounted to $0.9 million and $1.9 million for the year ended December 31, 2005
and 2004, respectively. We expect to manage our senior debt facility as we explore strategic business opportunities.

In 2005, we recorded
a $0.8 million accounting gain in connection with the early extinguishment of a portion of our debt compared to a $0.7 million loss during 2004. An additional loss of $0.7 million is included in loss from discontinued operations for 2005 compared to
$0.3 million for 2004.

Other (income) expense increased from an expense of $0.3 million to income of $0.8 million. This increase in income
was partially attributable to costs incurred as a result of financing transactions that did not close in 2004 coupled with a $0.8 million gain on sale of assets in 2005.



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##### Index to Financial Statements

During 2004, the entire amount of the net operating loss carryforward generated was fully reserved as it
was determined that more likely than not this increase in deferred tax asset would not be realized in the near future. In 2005, an income tax benefit was recognized in the amount of $0.5 million to establish the deferred tax asset balance to its
estimated realizable amount.

As previously discussed, we sold our Aviation Transportation Services segment effective June 30, 2005.
Accordingly, we recorded a loss from discontinued operations of $4.0 million net of tax benefit, for the year ended December 31, 2005 compared to $6.8 million for the year ended December 31, 2004. Included in the 2004 loss from
discontinued operations is the asset impairment charge of $4.2 million mentioned above. Additionally, we recorded a loss of $2.3 million on the sale of our Aviation Transportation Services segment.

Preferred stock dividends were $0.5 million and $0.2 million, respectively, for the years ended December 31, 2004 and 2005. Furthermore, we recorded
a non-cash charge (deemed dividend) attributable to the beneficial conversion feature associated with the Series C 9% Convertible Preferred Stock issued during 2005.

Year Ended December 31, 2003 Compared To The Year Ended December 31, 2004:



|                                                                |  |                         |        |   |      |   |         |  
|--------------------------------------------------------------- |  | ----------------------- | ------ | - | ---- | - | ------- | -
|                                                                |  | YEAR ENDED DECEMBER 31, |       
|                                                                |  | 2003                    |        |   | 2004 |  
|                                                                |  | (In thousands)          |       
|Operating revenue                                               |  | $                       | 31,555 |   |      | $ | 39,064  |  
|Operating expenses                                              |  |                         |        |   |      |   |         |  
|Direct costs                                                    |  |                         | 21,586 |   |      |   | 28,510  |  
|Depreciation and amortization                                   |  |                         | 3,355  |   |      |   | 4,282   |  
|General and administrative expenses                             |  |                         | 3,718  |   |      |   | 9,464   |  
|                                                                |  |                         |        |   |      |   |         |  
|Total operating expenses                                        |  |                         | 28,659 |   |      |   | 42,256  |  
|Operating income (loss)                                         |  |                         | 2,896  |   |      |   | (3,192  | )
|Interest expense                                                |  |                         | 943    |   |      |   | 3,288   |  
|Loss on debenture conversion inducement and debt extinguishment |  |                         |       |   |      |   | 729     |  
|Other (income) expense                                          |  |                         | (114   | ) |      |   | 290     |  
|                                                                |  |                         |        |   |      |   |         |  
|Income (loss) before taxes                                      |  |                         | 2,067  |   |      |   | (7,499  | )
|Income tax benefit                                              |  |                         | 1,092  |   |      |   |        |  
|                                                                |  |                         |        |   |      |   |         |  
|Net income (loss) from continuing operations                    |  |                         | 3,159  |   |      |   | (7,499  | )
|Income (loss) from discontinued operations                      |  |                         | 324    |   |      |   | (6,756  | )
|                                                                |  |                         |        |   |      |   |         |  
|Net income (loss)                                               |  |                         | 3,483  |   |      |   | (14,255 | )
|Preferred stock dividends                                       |  |                         | (484   | ) |      |   | (490    | )
|                                                                |  |                         |        |   |      |   |         |  
|Net income (loss) available to common stockholders              |  | $                       | 2,999  |   |      | $ | (14,745 | )
|                                                                |  |                         |        |   |      |   |         |  

Operating revenues increased 24%, or $7.5 million, from $31.6 million to $39.1 million for the
years ended December 31, 2003 and 2004, respectively, of which $8.7 million of this increase was due to the June 30, 2004 acquisition of Trussco. Drilling revenues decreased slightly from $31.6 million for the year ended December 31,
2003 to $30.6 million for the year ended December 31, 2004 due to permitting and weather-related delays.

Direct costs increased 32%,
or $6.9 million, from $21.6 million in 2003 to $28.5 million in 2004. Operating payroll expenses increased $2.3 million from $6.2 million to $8.5 million for the years ended December 31, 2003 and 2004, respectively. Payroll costs from the
Trussco acquisition accounted for $2.3 million of the increase while the drilling division accounted for a $0.6 million decrease. Repairs and maintenance expenses decreased $0.3 million from 2003 to 2004, with $0.5 million of the decrease related to
the drilling division offset by $0.3 million related to Trussco. Explosives expense increased $1.7 million due to an increase in the cost of explosives



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##### Index to Financial Statements

and downhole costs on jobs performed in 2004. Contract services increased $0.8 million company-wide, of which our drilling division accounted for $1.3
million of the increase with an offsetting decrease of $0.6 million form our permitting division. In 2004, we contracted third parties exclusively to provide services for heliportable drilling in the Rocky Mountains where we no longer provide these
specialized drilling services. In 2004, we also contracted third parties to provide airboat drilling services during a period when most of our available employees were working on other projects. Shop expenses increased $0.4 million from 2003 to 2004
as a result of the Trussco acquisition. Other direct costs increased $2.3 million, of which Trussco accounted for $1.0 million.

Depreciation and amortization costs increased 26%, or $0.9 million, from $3.4 million in 2003 to $4.3 million in 2004. Depreciation expense increased $0.4 million due to the increase in revenue-producing assets, primarily from the
acquisitions of Trussco in June 2004. Additionally, amortization expense increased by $0.5 million resulting primarily from amortization of intangible assets related to the Trussco acquisition.

General and administrative expenses increased $5.8 million from $3.7 million for 2003 to $9.5 million for 2004. Of this increase, $2.2 million is
attributable to the Trussco acquisition, $2.4 million is related to professional services and $0.4 million is related to payroll increases. Other general and administrative expense increased by $0.8 million.

During 2004, we recorded asset impairment charges of $4.2 million related to the revaluation of certain aviation equipment, prepaid repairs and assets
held for sale resulting in a charge to expense of $0.6 million, $3.0 million and $0.6 million, respectively. There was no impairment charge required to be recorded in 2003. This 2004 impairment charge, which relates entirely to the Aviation
Transportation Services Segment, is included in the loss from discontinued operations.

Interest expense was $3.3 million for the year
ended December 31, 2004 compared to $0.9 million for the year ended December 31, 2003. The increase was partially attributable to increased levels of debt including the convertible debentures coupled with increased interest rates between
the periods. Also, $1.3 million of the increase related to amortization of deferred loan costs and $0.7 million related to the amortization of debt discounts originally recorded in conjunction with the convertible debentures in early 2004. Interest
expense allocated to loss from discontinued operations amounted to $1.9 million and $0.5 million for the year ended December 31, 2004 and 2003, respectively.

We recorded a $1.0 million accounting loss in connection with the inducement for early extinguishment of a portion of our convertible debentures during 2004. Of that loss, $0.3 million is included in loss from
discontinued operations. There was no such charge in 2003.

Other expense (income) decreased from income of $0.1 million to expense of $0.3
million. This increase in expense was due to costs incurred as a result of financing transactions that did not close.

In 2003, we reversed
$1.6 million of the allowance for deferred taxes previously reserved of which $0.5 million was allocated to discontinued operations. There were no taxes recorded in 2004 due to the significant net operating loss incurred. During 2004, the entire
amount of the net operating loss carryforward generated was fully reserved as it was determined that more likely than not this increase in deferred tax asset would not be realized in the future.

As previously discussed, we sold our Aviation Transportation Services segment on June 30, 2005. In order to enhance the comparability of the amounts
from year to year, the financial information related to the results of operations for the years ended December 31, 2003 and 2004 has been adjusted to present the activities of the Aviation Transportation Services segment as discontinued
operations. The income, net of tax benefit, related to those discontinued operations was $0.3 million for the year ended December 31, 2003 and the loss related to the discontinued operations was $6.8 million for the year ended December 31,
2004. Included in the 2004 loss from discontinued operations is the asset impairment charge of $4.2 million mentioned above.



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##### Index to Financial Statements

Accretion of preferred stock and preferred stock dividends remained constant at $0.5 million for the
years ended December 31, 2003 and 2004.

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 2005, we had approximately $0.2 million in cash on hand and approximately $2.4 million available on our revolving line of credit.
This compares to approximately $1.0 million in cash on hand and no availability on our revolving line of credit at December 31, 2004. At December 31, 2005, we had a working capital deficit of approximately $0.02 million as compared to a
working capital deficit of approximately $22.1 million at December 31, 2004. Our increase in working capital is the result of restructuring and settlement of certain debt obligations during 2005.

Cash provided by continuing operating activities was $3.2 million, $6.0 million and $6.0 million in the years ended December 31, 2005, 2004 and
2003, respectively. The largest contributing factors in 2003 were a result of non-cash transactions and a decrease in prepaid expenses and other current assets. In 2004, the largest contributing factors were a result of non-cash transactions, an
increase in accounts payable and accrued expenses and a decrease in prepaid expenses and other current assets. In 2005, the largest contributing factors were a result of non-cash transactions, an increase in receivables and a decrease in prepaid
expenses and other current assets and accounts payable and accrued expenses.

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 2004, we acquired Trussco, Inc., purchased approximately $6.4 million of aircraft
accounted for as capital leases, and purchased approximately $0.8 million of new vehicles accounted for as capital leases. For the year ended December 31, 2005, we acquired $0.1 million of new vehicles and approximately $0.1 million in aviation
support equipment as well as $0.2 million in equipment and approximately $0.3 million in facility improvements. In 2005, we sold the assets of our Aviation Transportation Services segment. Proceeds from the sale were used to repay capital lease
obligations related to that division. In 2006, we plan to continue to explore strategic business opportunities, renew our rolling stock and expand and upgrade our facilities and equipment to improve efficiency of our operations.

During the quarter ended March 31, 2005, we repaid approximately $3.3 million of our debt primarily related to our equipment notes, capital leases
and real estate loans. Furthermore, we extinguished three capital leases totaling $2.9 million as a result of our disposition of three helicopters.

During the quarter ended June 30, 2005, we finalized a new $50.0 million senior credit facility, which we also refer to as the Term A Loan. The proceeds from the Term A Loan were used to re-finance certain long-term debt, provide
working capital and establish funding necessary to complete various strategic transactions which are under consideration. During the year ended December 31, 2005, a portion ($9.35 million) of the $11.0 million proceeds from the sale of the
Aviation Transportation Services segment were used to repay a portion of the Term A Loan as well as a $3.4 million repayment from proceeds of the Term B Loan discussed below. At December 31, 2005, the balance owed on the facility was $4.5
million.

During the quarter ended September 30, 2005, we completed a new $25 million multiple draw term credit facility, which we
also refer to as our Term B Loan. The proceeds from the Term B Loan were used to (i) reduce indebtedness under our Term A Loan; (ii) retire certain Subordinated Notes; (iii) retire certain Subordinated Debt; and, (iv) provide
working capital and funds necessary for potential strategic transactions. At December 31, 2005, the balance owed on the Term B Loan was $9.0 million.

Loan closing costs of $3.6 million were incurred during the year ended December 31, 2005 related to the Term A and Term B Loans and a total of $0.5 million was incurred during the year ended December 31,
2005 related to our various credit facilities.



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##### Index to Financial Statements

LONG-TERM DEBT

At December 31, 2004 and 2005, long-term debt consists of the following:



|                                                                                                                                                                                             |  |                |         |   |      |   |        |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ------- | - | ---- | - | ------ | -
|                                                                                                                                                                                             |  | DECEMBER 31,   |        
|                                                                                                                                                                                             |  | 2004           |         |   | 2005 |  
|                                                                                                                                                                                             |  | (In thousands) |        
|Notes payable to a finance company, variable interest rate at LIBOR plus 5.0% (7.42% at December 31, 2004) maturing July 31, 2006,
secured by various property and equipment, repaid in full |  | $              | 867     |   |      | $ |       |  
|Notes payable to a bank with interest payable at Prime plus 1.75% (8.25% at December 31, 2005 and 6.75% at December 31, 2004)
maturing July 31, 2023, secured by real estate                 |  |                | 1,392   |   |      |   | 1,354  |  
|Notes payable to a finance company with interest at 10.24%, maturing May 18, 2008, secured by an aircraft, repaid in full                                                                    |  |                | 168     |   |      |   |       |  
|Notes payable to a finance company with interest at 6.26%, maturing March 17, 2006, secured by various aircraft, repaid in
full                                                              |  |                | 1,697   |   |      |   |       |  
|Notes payable to a bank with interest at 8.13%, maturing June 20, 2009, secured by aircraft, repaid in full                                                                                  |  |                | 238     |   |      |   |       |  
|Notes payable to a finance company with interest at 8%, maturing February 10, 2013, secured by real estate                                                                                   |  |                | 214     |   |      |   | 195    |  
|Notes payable to a bank with interest at 12% at December 31, 2004, maturing May 31, 2005, secured by various property and equipment,
repaid in full                                          |  |                | 6,500   |   |      |   |       |  
|Convertible promissory notes payable to certain former stockholders of Trussco, Inc. with interest at 5%, maturing in June
2007                                                              |  |                | 3,000   |   |      |   | 1,000  |  
|Capital lease payable to leasing companies secured by vehicles                                                                                                                               |  |                | 1,198   |   |      |   | 729    |  
|Capital lease payable to finance companies                                                                                                                                                   |  |                | 9,100   |   |      |   | 941    |  
|Subordinated promissory note to a former debenture holder with a fixed interest rate of 8%, maturing May 13, 2008,
unsecured                                                                 |  |                |        |   |      |   | 913    |  
|Term B notes payable to a finance company, variable interest rate at LIBOR plus 8.0% (12.41% at December 31, 2005) maturing
August 29, 2010, secured by various property and equipment       |  |                |        |   |      |   | 9,000  |  
|Term A notes payable to a finance company, variable interest rate at LIBOR plus 6.5% (10.80% at December 31, 2005), maturing May 18,
2010, secured by various equipment                      |  |                |        |   |      |   | 4,540  |  
|Other debt                                                                                                                                                                                   |  |                | 86      |   |      |   | 52     |  
|                                                                                                                                                                                             |  |                |         |   |      |   |        |  
|Total                                                                                                                                                                                        |  |                | 24,460  |   |      |   | 18,724 |  
|Less: current maturities                                                                                                                                                                     |  |                | (6,095  | ) |      |   | (2,926 | )
|Less: long-term debt of discontinued operations                                                                                                                                              |  |                | (11,228 | ) |      |   |       |  
|                                                                                                                                                                                             |  |                |         |   |      |   |        |  
|Long-term debt, less current maturitiescontinuing operations                                                                                                                                |  | $              | 7,137   |   |      | $ | 15,798 |  
|                                                                                                                                                                                             |  |                |         |   |      |   |        |  

LINE OF CREDIT

We have a working capital revolving line of credit agreement (the Line). Availability under the Line is the lower of: (i) $15.0 million or (ii) the eligible accounts receivable, as defined under
the agreement. The Line accrues interest at the prime interest rate plus 1.5% (9.25% at December 31, 2005) and matures in May 2010. The Line is collateralized by accounts receivable and is subject to certain customer concentration limitations.
As of December 31, 2005, we had $4.8 million outstanding under the Line. The weighted-average interest rate on borrowings under our revolving lines of credit was 6.0% and 7.7% for the years ended December 31, 2004 and 2005, respectively.
Due to the lock-box arrangement and the subjective acceleration clause of the Line agreement, the debt under the Line has been classified as a current liability as of December 31, 2004 and 2005, as



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##### Index to Financial Statements

required by Emerging Issues Task Force (EITF) No. 95-22, Balance Sheet Classification of Borrowings Outstanding under Revolving
Credit Agreements that include both a Subjective Acceleration Clause and a Lock-Box Arrangement.

SENIOR SECURED

On October 21, 2004, we completed a $6.5 million senior secured loan (Bridge Loan) with Beal Bank, SSB. The Bridge Loan accrued interest
at the rate of 12% per annum, matured January 15, 2005, and was collateralized by specific seismic assets, certain Trussco equipment and three Bell helicopters. The proceeds were used to repay debt, pay the October Put Option on the
Convertible Debentures discussed below and for working capital purposes.

On January 21, 2005, we entered into a forbearance agreement
with Beal Bank, SSB, which increased the interest rate from 12% to 17% and extended the maturity of the Bridge Loan to March 15, 2005. On May 2, 2005, we entered into a second agreement to extend the maturity date to May 31, 2005. The
Bridge Loan restricted the payment of dividends and contained customary financial covenants requiring, among other things, minimum levels of tangible net worth, debt to earnings before interest, taxes, depreciation and amortization
(EBITDA) ratios, and limitations on annual capital expenditures and certain customer concentrations. This loan was repaid in full with proceeds from the Senior Credit Facility (see below) on May 18, 2005.

CAPITAL LEASES

During the year ended
December 31, 2005, we had several capital leases for aircraft which generally had lease terms of 60 months at inception of the lease. Aircraft leases either contain a bargain purchase option at the end of the lease or a balloon amount due that
can be refinanced over 36 months. From time to time, we acquired an aircraft through cash flows from operations or through the Line which was then sold to a financing company and leased back to us. These sales and lease back transactions were
recorded as a capital lease and gains and losses incurred on the sale are deferred and amortized over the life of the lease term or the asset, whichever is shorter. These leases were paid in full from proceeds of our Term A Loan in the third quarter
of 2005.

We also lease several vehicles used in our seismic drilling operations under 40-month capital leases.

CONVERTIBLE DEBENTURES

Pursuant to a Securities
Purchase Agreement dated February 12, 2004, we issued (i) $10,000,000 in principal amount of 3-year, 6.5% fixed rate, Convertible Debentures (the Initial Debentures) that were 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 were not exercisable for a period of six months and one day after the issue date of such warrants and in no event would
the exercise prices of such warrants be less than $6.15 per share. In accordance with APB Opinion No. 14, the warrants were valued at a fair market value of $0.9 million using the Black Scholes model. The value of these warrants was recorded as
debt discount with a corresponding amount recorded to paid in capital at the date of issuance. The 1-year Series A warrants expired during 2005.

On April 15, 2004, in accordance with the Securities Purchase Agreement, we issued (i) $5,050,000 in principal amount of 3-year, 6.5% fixed rate, Convertible Debentures (collectively with the Initial Debentures, hereinafter
referred to as the Debentures) that were convertible into shares of common stock at an initial conversion price of $7.20 per share, and (ii) 5-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 were not exercisable for a period of six months and one day after the issue date of such warrants and in no event would the



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##### Index to Financial Statements

exercise prices of such warrants be less than $7.11 per share. In accordance with APB Opinion No. 14, the warrants were valued at a fair market value of
$0.2 million using the Black Scholes model. The value of the warrants and beneficial conversion feature were recorded as a debt discount with a corresponding amount recorded to paid in capital at the date of issuance.

Total proceeds of $14.2 million were received from the issue of these Debentures, after expenses. Of the total proceeds received, $8.2 million was used
to redeem the Series A Preferred Stock and dividends in February 2004, $4.9 million was used to redeem the Series B Preferred Stock and dividends in March and April 2004 and the balance used for working capital purposes (See Note 9 to the
Consolidated Financial Statements).

The debt discounts for the February 12, 2004 and April 15, 2004 debentures were $0.9 million
and $0.2 million, respectively. The debt discounts are being amortized to interest expense using the effective interest method over the period in which the debentures can be put to us. A total of $0.9 million is included in interest expense and $0.2
million loss on extinguished related to the amortization of the debt discounts for the year ended December 31, 2004. Since the Debentures were in default at December 31, 2004, the entire amount of the debt discount was charged to expense
during 2004.

Prior to maturity of the Debentures, the holders of the Debentures had 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 common stock that may have been 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 non-cumulative and equal
monthly installments equal to 8.75% of the face value of the Debentures ($1,316,875) beginning August 1, 2004. Accordingly the Debentures, net of debt discount, were classified as a current liability in the Consolidated Balance Sheet at
December 31, 2004. We received, and redeemed for cash, notices from the holders of the Debentures exercising their Put Option for August, September and October 2004. Upon receipt of the Debenture Holders intent to exercise a Put Option,
we had the irrevocable option to deliver cash or, if certain conditions set forth in the Debentures were satisfied, shares of our common stock. If we elected to pay the Put Option with common stock, the underlying shares would have been 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 agreement. The number of shares we would have delivered was equal to the value of the Put Option installment due divided
by the fair market value of our common stock for the applicable pricing period discounted at 12.5%. We did not redeem for cash or stock notices received from the Debenture Holders exercising their Put Option for the months of November and December
2004 and January, February, March and April 2005.

As provided for in the terms of the applicable Securities Purchase Agreements, the
Debenture holders received Put Option payments of $1.3 million in principal, plus accrued interest, each on August 5, 2004, on September 9, 2004 and on October 25, 2004. In accordance with APB Opinion No. 26 Early
Extinguishment of Debt, we recorded $0.2 million as a loss on extinguishment of debt in 2004 as a result of the early extinguishment of these portions of the Debentures. (See Note 4 to the Consolidated Financial Statements).

On October 8, 2004, we entered into an Amendment and Conditional Waiver Agreement (the Amendment) with the holders of the Debentures.
Under the terms of the Amendment, the Debenture holders granted us, among other things, the right to pre-pay in cash all, but not less than all, of the outstanding Debentures held by each holder on or prior to November 15, 2004. In exchange for
such right, we agreed to allow the holders of the Debentures to convert $2,000 of the principal amount of the April 15, 2004 Debentures into 200,000 shares of common stock at a revised conversion price of $0.01 per share. As a result of this
conversion and in accordance with the requirements of Statement of Financial Accounting Standards (SFAS) No. 84, Induced Conversions of Convertible Debt, an amendment to APB Opinion No. 26, we recorded $0.9
million in debt conversion expense in 2004.



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##### Index to Financial Statements

On January 25, 2005, we filed suit in United States District Court, Western District of Louisiana
against the holders of the Debentures and other third parties (collectively, the Debenture Holders). In the suit, we alleged that the Debenture Holders violated Section 16(b) of the Securities Exchange Act of 1934, and we sought the
disgorgement of profits realized by the Debenture Holders from their purchases and sales of our common stock.

On May 18, 2005, we
entered into settlement agreements (Debenture Settlement Agreements) with each of the Debenture Holders in exchange for our dismissal of the lawsuit filed against the Debenture Holders (see Note 4 to the Consolidated Financial
Statements). Under the terms of the Debenture Settlement Agreements, we agreed to (i) pay the Debenture Holders approximately $4.0 million cash; (ii) immediately issue the Debenture Holders 2.0 million shares of our common stock at an
agreed upon value of $3.4 million; and, (iii) issue the Debenture Holders approximately $4.3 million of unsecured, subordinated promissory notes (Subordinated Debenture Notes). The Company recorded a gain of $0.2 million at the
close of these transactions. The Subordinated Debenture Notes were scheduled to be paid quarterly, with interest in arrears, over 36 months in level payments with interest accruing at the rate of 8% per annum. Execution of the Debenture
Settlement Agreements extinguished the terms of the original Debentures and released all parties from any future claims.

On August 26,
2005, we entered into a settlement agreement and mutual release (Agreement and Release) with two of the three holders of the Subordinated Debenture Notes. Under terms of the Agreement and Release, we paid $1.5 million in cash from the
proceeds of a new $25.0 million multiple draw term credit facility, and issued 750,000 shares of our common stock in full satisfaction of the applicable Subordinated Debenture Notes. At December 31, 2005, the remaining Subordinated Debenture
Note had a balance of approximately $0.9 million.

SENIOR CREDIT FACILITY

On May 18, 2005, we completed a $50 million equipment term financing facility, and increased our Line to $15 million from its previous level of $12
million. Under the terms of the Term A Loan, funding will be limited to the lesser of $50 million and the sum of (i) 85% of the orderly liquidation value of our aviation fleet; (ii) 75% of the orderly liquidation value of our seismic
drilling and environmental equipment; and (iii) 50% of the fair market value of certain real estate. Proceeds from the Term A Loan were used to refinance certain long-term debt, provide working capital and establish funding necessary to
complete various strategic transactions under consideration. The Term A Loan restricts the payment of cash dividends and contains customary financial covenants requiring, among other things, minimum levels of tangible net worth, debt to EBITDA
ratios and limitations on annual capital expenditures. The Term A Loan matures in May 2010 and will be repaid in equal payments of up to a 50% balloon at maturity date, with interest, paid in arrears and accruing at the initial annual interest rate
of 30-day LIBOR plus 6.5% (10.80% at December 31, 2005). Upon the completion of the sale of the aviation transportation services segment, the total borrowing base under the Term A Loan was reduced to $30.0 million. Proceeds from the sale of the
Aviation Transportation Services segment were used to pay approximated $9.35 million on the Term A Loan during July 2005, leaving an outstanding balance of approximately $8.6 million. Additionally, a portion of the proceeds from the Term B Loan
(discussed below) were used to reduce the balance of the Term A Loan to approximately $5.0 million in August 2005.

JUNIOR CREDIT FACILITY

On August 29, 2005, we completed a $25 million multiple draw term credit facility. Under the terms of the Term B Loan, borrowings
will be done through advances at our request in minimum amounts of $2 million. Quarterly payments in the amount of $0.175 million, plus interest, will begin on April 1, 2008 and the Loan matures in August 2010 and accrues interest at the rate
of LIBOR plus 8% (12.41% at December 31, 2005). The Term B Loan restricts the payment of cash dividends and contains customary financial covenants requiring, among other things, minimum levels of tangible net worth, debt to EBITDA ratios and
limitations on annual capital expenditures. The proceeds from the Term B Loan were used to (i) reduce the current outstanding balance under our Term A Loan by $3.4 million; (ii) retire approximately $3.3 million of 8% Subordinated
Debenture Notes with a payment of $1.5 million cash and the issuance of 750,000 shares of our common stock; (iii) retire



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##### Index to Financial Statements

$2 million of certain Subordinated Notes with a payment of $1 million cash and the issuance of 200,000 shares of common stock; and (iv) provide working
capital and funds necessary for potential strategic transactions.

TRUSSCO NOTES

On June 30, 2004, we purchased Trussco for an aggregate acquisition price 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 into shares of our common stock at a price of $9.40 per share.

On May 18, 2005, we entered into early debt
extinguishment agreements (Debt Extinguishment Agreements) with respect to $2.0 million of the Stockholder Notes and $1.0 million of the Earnout Note more fully described in Note 8 to the Consolidated Financial Statements contained
herein. Under the terms of the Debt Extinguishment Agreements, we (i) immediately issued 0.2 million shares of our common stock; and (ii) paid certain holders of the Stockholder Notes $1.0 million on or before August 16, 2005, in
full and complete satisfaction of $2.0 million of the Stockholder Notes and $1.0 million of the contingent Earnout Note. We recognized a gain on debt extinguishment of $0.3 million upon closing the transaction.

At December 31, 2005, we had $1.0 million of Stockholder Notes outstanding bearing interest at 5% and maturing in June 2007. At December 31,
2005, we also had outstanding a $2.0 million contingent Earnout Note payable, none of which had been earned. Based upon current estimates, the amounts due and payable by the end of the term of the Earnout Notes, if any, will be immaterial. See
Trussco Earnout in Commitments and Contingencies below.

SERIES C 9% CONVERTIBLE PREFERRED STOCK

On May 17, 2005, we entered into a Securities Purchase Agreement with certain of our affiliates and executive officers to issue up to $5.0 million of
Series C 9% Convertible Preferred Stock (the Series C Preferred) in conjunction with the completion of the Term A Loan more fully described above. Our Series C Preferred is convertible into our common stock at a conversion price of $1.95
per share and includes detachable warrants to purchase up to 6,550,000 additional shares of our common stock at exercise prices ranging between $1.95 and $3.50 per share. The transactions contemplated by the Securities Purchase Agreement closed in
two tranches. On May 17, 2005, the closing date of the first tranche, we issued an aggregate of 3,500 shares of Series C Preferred and warrants to acquire 4,585,000 shares of our common stock, in exchange for $3,500,000. The second tranche
closed on August 29, 2005, at which time the remainder of the Series C Preferred and warrants were issued generating proceeds of $1.5 million and we granted the remaining 1,965,000 warrants.

As mentioned above, the Term A Loan and the Term B Loan restrict the payment of cash dividends. Consequently, a portion of the 9% dividend obligation
related to the Series C Preferred has been satisfied through the issuance of payment-in-kind (PIK) dividends. The PIK dividends are paid through the issuance of additional shares of Series C Preferred. These additional shares of
preferred stock do not have warrants attached to them. During the year ended December 31, 2005, 128 shares of Series C Preferred were issued as PIK dividends at par.

RELATED PARTY TRANSACTIONS

During the three year period ended December 31, 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. In May 2001, we
agreed to



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##### Index to Financial Statements

pay the affiliate $3.0 million cash plus issue to the affiliate $4.6 million of the Companys Series B Preferred in 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 (See Note 9
to the Consolidated Financial Statement for the accounting for preferred stock). In February 2004 and April 2004, we issued $10 million and $5.05 million, respectively, of 6.5% Subordinated Convertible Debentures (See Note 4 to the Consolidated
Financial Statements). The proceeds were used to redeem $8.2 million (7,475 shares) of the Series A Preferred Stock outstanding, including accrued dividends. The remaining 25 shares of Series A Preferred were redeemed in April 2004 for $0.03
million. At December 31, 2004 there are no Series A Preferred outstanding. During the first quarter of 2004, we redeemed 2,286 shares of the Series B Preferred 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 outstanding for $2.5 million, including accrued dividends. At December 31, 2005, 29 shares of Series B Preferred Stock remain outstanding.

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 warrants were transferred in 2003 to settle certain litigation (See Note 9 to the Consolidated Financial Statements) and 858,678 warrants were cancelled in 2003. The balance of 761,100 warrants was exercised in the
first quarter of 2004 at an exercise price of $2.25.

During 2003, we entered into an agreement to facilitate the private placement of
approximately 1,650,000 shares of our common stock owned by an affiliate and certain investors. The sale of the stock covered by this agreement closed in the fourth quarter of 2003, resulting in our receipt of $0.4 million cash which is reflected as
a reduction in our general and administrative expenses in the accompanying Consolidated Financial Statements.

During 2003, in order to
facilitate a settlement of ongoing litigation between certain of our affiliates, we agreed to re-price and extend the maturity dates of certain warrants owned by the defendant affiliates but transferred in settlement of the litigation to the
plaintiff affiliates. The exercise prices of the transferred warrants ranged from $2.25$6.00 per share. The maturity dates of the transferred warrants ranged from November 1, 2004 to July 1, 2005. The transferred warrants were
re-priced at $1.54 per share and the maturity dates were extended to November 1, 2006. Our statement of operations includes a non-recurring charge of approximately $0.1 million representing the differences in the fair market value of the
originally issued warrants and the re-priced warrants. In 2004 all re-priced warrants were exercised.

On May 17, 2005, we entered
into a Securities Purchase Agreement with certain of our affiliates and executive officers to issue up to $5.0 million of Series C Preferred in conjunction with the completion of the Term A Loan more fully described above. Our Series C Preferred is
convertible into our common stock at a conversion price of $1.95 per share and includes detachable warrants to purchase up to 6,550,000 additional shares of our common stock at exercise prices ranging between $1.95 and $3.50 per share. The
transactions contemplated by the Securities Purchase Agreement closed in two tranches. On May 17, 2005, the closing date of the first tranche, we issued an aggregate of 3,500 shares of Series C Preferred Stock and warrants to acquire 4,585,000
shares of our common stock, in exchange for $3,500,000. The second tranche closed on August 29, 2005, at which time the remainder of the Series C Preferred and warrants were issued generating proceeds of $1.5 million and we granted the
remaining 1,965,000 warrants.

The Term A Loan and the Term B Loan restrict the payment of cash dividends. Consequently, the dividend
obligation related to the Series C Preferred has been satisfied through the issuance of PIK dividends. The PIK dividends are paid through the issuance of additional shares of Series C Preferred. These additional shares of preferred stock do not have
warrants attached to them. During the year ended December 31, 2005, 128 shares of Series C Preferred were issued as PIK dividends at par.



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##### Index to Financial Statements

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

USE OF ESTIMATES

The discussion and analysis of financial condition and results of operation are
based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an on-going basis, based on historical experience and on various other assumptions that we
believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.

ACCOUNTS RECEIVABLE

We extend credit to customers and other parties in the normal course of
business. We regularly review outstanding receivables, and provide for estimated losses through an allowance for doubtful accounts. In evaluating the level of established reserves, we make judgments regarding the parties ability to make
required payments, economic events and other factors. As the financial condition of these parties change, circumstances develop or additional information becomes available, adjustments to the allowance for doubtful account may be required. Due to
the nature of our industry, we may periodically have concentration of credit risks. As a result, adjustments to the allowance for doubtful accounts may be significant.

INVENTORY

We have made significant investments in inventory to service our equipment. On a routine
basis, we use judgments in determining the level of reserves required to state inventory at the lower of cost or market. Technological innovations, market activity levels and the physical condition of products primarily influence our estimates.
Changes in these or other factors may result in adjustments to the carrying value of inventory.

INCOME TAXES

Deferred tax assets and liabilities are recognized for differences between the book basis and tax basis of our net assets. In providing for deferred
taxes, we consider current tax regulations, estimates of future taxable income and available tax planning strategies. We have established reserves to reduce our net deferred tax assets to estimated realizable value. If tax regulations change,
operating results or the ability to implement tax planning strategies vary, adjustments to the carrying value of our net deferred tax assets and liabilities may be required. In making this determination, we have considered future income in assessing
the ultimate recoverability of the recognized net deferred tax asset.

We record liabilities for environmental obligations when remedial
efforts are probable and the costs can be reasonably estimated. Our estimates are based on currently enacted laws and regulations. As more information becomes available or environmental laws and regulations change, such liabilities may be required
to be adjusted. Additionally, in connection with acquisitions, we obtain indemnifications from the seller related to environmental matters. If the indemnifying parties do not fulfill their obligations, adjustments of recorded amounts may be
required.

We maintain insurance coverage for various aspects of our business and operations. We retain a portion of losses that occur
through the use of deductibles and, to a limited extent, self-funded insurance programs. We regularly review estimates of reported and unreported claims and provide for losses through insurance reserves. As claims develop and additional information
becomes available, adjustments to loss reserves may be required.



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STOCK BASED COMPENSATION

We account for employee stock-based 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 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. 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 we had applied the fair value recognition provisions
of SFAS No. 123 to stock-based compensation is presented in Note 1 of the accompanying Consolidated Financial Statements included herein.

DISCONTINUED OPERATIONS

In accordance with SFAS No. 144 Accounting for the Impairment and Disposal of
Long-Lived Assets(SFAS No. 144), we are accounting for the Brazoria market as a separate unit within American Helicopters, Inc. and have accounted for our exit from this market as discontinued operations in 2004.
Effective June 30, 2005, we sold the equipment and related assets of our Aviation Transportation Services segment for a cash price of $11.0 million. The proceeds were used to repay advances under our Term A Loan and for additional working
capital. See Note 13 to the Consolidated Financial Statements included herein.

In order to facilitate comparability between the periods,
the revenues and expenses of the Aviation Transportation Services segment have been reclassified to income (loss) on discontinued operations in the accompanying financial information for the years ended December 31, 2001 through 2005. There was
no effect on net income (loss) as a result of the reclassifications.

IMPAIRMENT OF LONG-LIVED ASSETS AND ASSETS HELD FOR SALE

We review our long lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be
recoverable in accordance with SFAS No. 144. If the carrying amount of the asset, including any intangible assets associated with that asset, exceeds its estimated undiscounted net cash flow, before interest, we will recognize an impairment
loss equal to the difference between its carrying amount and its estimated fair value.

Assets held for sale are recorded at the lower of
their net book value or their net realizable value, which is determined based upon an estimate of their fair market value less the cost of selling the assets. An impairment is recorded to the extent that the amount that was carried on the books is
in excess of the net realizable value. Assets held for sale at December 31, 2005 are comprised of eight marsh buggies. Three helicopters held for sale at December 31, 2004 totaling $3.5 million were disposed of during the three months
ended March 31, 2005 generating proceeds of $573,000 and the extinguishment of lease obligations of approximately $2.9 million. An impairment loss of $0.6 million related to these helicopters was recognized during the year ended
December 31, 2004 and there was no gain or loss recorded upon their disposition.

During the quarter ended June 30, 2005, the
aviation-related improvements at the Mouton Cove facility were deemed to be impaired as a result of the sale of our Aviation Transportation Services segment. A charge was recorded against operations in the amount of $0.5 million reflecting the
impairment of the value of that facility. The facility was not included in the sale of our Aviation Transportation Services segment.

COMMITMENTS AND
CONTINGENCIES

On June 30, 2004, we amended Restricted Stock Incentive Agreements with certain executive officers into Amended and
Restated Incentive Agreements (collectively referred to hereinafter as the Incentive Agreements)



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##### Index to Financial Statements

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. The stock was held in escrow, registered in the name of the executive officers, until it vested 100% on November 4, 2004. Tax equalization payments were also paid to the two executive officers totaling $0.1 million at
June 30, 2004. The awards were fair valued at a per share price of $5.05 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 common stock, 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). Such shares were not available
until November 30, 2004, when the number of shares available under the Plan was increased after approval by the stockholders. From June 30, 2004 until November 30, 2004, the awards were accounted for under FASB Interpretation (FIN)
No. 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 and the change in the value of the incentive awards be charged to expense. As such, the awards were revalued at the end of each reporting period at the quoted market price of a share of our common stock. At
November 30, 2004, the market value of a share of our common stock was $2.93 resulting in compensation expense under variable accounting of $0.5 million to be recognized through that date. Effective November 30, 2004, the Company amended
these incentive agreements to provide for 100% vesting of the restricted stock and have put into escrow the number of shares of common stock to settle the award. Accordingly the previous unvested portion of the award was charged to expense which
totaled $0.8 million and was recorded as compensation expense as of December 31, 2004.

We also entered into Stock-Based Award
Incentive Agreements (hereinafter SBA) with certain executive officers on June 30, 2004. The SBA shall become computed and payable: (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. If no payments have been made, the right terminates on December 31, 2008 or upon termination of employment for resignation or cause, whichever occurs first. The intrinsic value of
this award at December 31, 2005 is $6.7 million but no compensation expense has been recorded at December 31, 2005 because the award is contingent on future events, none of which are considered probable at December 31, 2005.

In addition, we entered into employment contracts with certain key executive management effective until various dates ranging from
December 31, 2006 through February 2009 with automatic extensions for additional, successive one year periods, unless either party gives notice of non-renewal as provided for under the terms of the employment contracts.

In connection with the Trussco acquisition, we entered into employment contracts with three former Trussco stockholders 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. During 2005, two of these
employment contracts were terminated.



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TRUSSCO EARNOUT

In connection with the acquisition of Trussco, we issued to certain former stockholders of Trussco a promissory note (Earnout Note) that will earn interest at a rate of 5% per annum of the amount
owed. Under the terms of the Earnout Note, we agree to pay these stockholders on or before June 30, 2007, the lesser of (i) the amount of $3 million, or (ii) the sum of the product of 3.12 times Trusscos average annual EBITDA
(earnings before interest, taxes, depreciation and amortization) for the 36-month period ending December 31, 2006, less the sum of $9 million, plus the long-term and former stockholder debt existing as of June 30, 2004 of Trussco that we
assumed, which totaled $1.5 million.

On May 18, 2005, we entered into early Debt Extinguishment Agreements on $2.0 million of the
Stockholder Notes and $1.0 million of the Earnout Note more fully described in Note 8 of our Consolidated Financial Statements contained herein. Under the terms of the Debt Extinguishment Agreements, in full and complete satisfaction of $2.0 million
of the Stockholder Notes and $1.0 million of the Earnout Note, we agreed to (i) immediately issue 0.2 million shares of our common stock; and, (ii) pay certain holders of the Stockholder Notes $1.0 million on or before August 16,
2005, in full and complete satisfaction of $2.0 million of the Stockholder Notes and $1.0 million of the Earnout Note. At December 31, 2005, we had a $2.0 million contingent Earnout Note payable, none of which had been earned. Based upon
current estimates, the amounts due and payable by the end of the term of the Earnout Notes, if any, will be immaterial.

CONTRACTUAL DEBT OBLIGATIONS

We have the following contractual debt obligations as of December 31, 2005:



|                          |  |                        |        |                  |   |           |  |               |       |  |   |      
|------------------------- |  | ---------------------- | ------ | ---------------- | - | --------- |  | ------------- | ----- |  | - | -----
|                          |  | PAYMENTS DUE BY PERIOD
|                          |  | TOTAL                  |        | LESS THAN 1 YEAR |   | 1-3 YEARS |  | AFTER 4 YEARS
|                          |  | (In thousands)        
|Long-term debt            |  | $                      | 17,054 |                  | $ | 2,273     |  | $             | 8,209 |  | $ | 6,572
|Capital lease obligations |  |                        | 1,670  |                  |   | 653       |  |               | 1,007 |  |   | 10   
|Line of credit            |  |                        | 4,750  |                  |   | 4,750     |  |               |      |  |   |     
|Insurance notes           |  |                        | 1,692  |                  |   | 1,692     |  |               |      |  |   |     
|                          |  |                        |        |                  |   |           |  |               |       |  |   |      
|Total Contractual Cash    |  | $                      | 25,166 |                  | $ | 9,368     |  | $             | 9,216 |  | $ | 6,582
|                          |  |                        |        |                  |   |           |  |               |       |  |   |      

We have the following operating lease commitments as of December 31, 2005:



|                 |  |                        |     |      |   |      |  |   |    
|---------------- |  | ---------------------- | --- | ---- | - | ---- |  | - | ---
|                 |  | PAYMENTS DUE BY PERIOD
|                 |  | 2006                   |     | 2007 |   | 2008
|                 |  | (In thousands)        
|Operating leases |  | $                      | 376 |      | $ | 278  |  | $ | 164
|                 |  |                        |     |      |   |      |  |   |    

We believe that cash flow generated from operations in 2006 will be sufficient to fund our working
capital needs, satisfy our debt service requirements and contractual commitments, and fulfill our un-financed capital expenditure needs for at least the next twelve months.

OFF BALANCE SHEET ARRANGEMENTS

As mentioned above, we have various vehicle and facilities leases
which are classified as operating leases for reporting purposes. The total future commitments under these leases is $0.8 million.



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RECENTLY ISSUED UNIMPLEMENTED ACCOUNTING PRONOUNCEMENTS

On December 16, 2004, as amended on April 14, 2005, the Financial Accounting Standards Board (FASB) issued SFAS No. 123
(revised 2004), Share-Based Payment (SFAS No. 123(R)). SFAS No. 123(R) will require companies to measure all employee stock-based compensation awards using a fair value method and record such expense in its
consolidated financial statements. In addition, the adoption of SFAS No. 123(R) requires additional accounting and disclosure related to the income tax and cash flow effects resulting from share-based payment arrangements. SFAS No. 123(R)
is effective beginning as of the first interim reporting period for fiscal years beginning after December 15, 2005. Based upon current estimates, we believe that the charge to earnings in 2006 related to SFAS No. 123 (R) will be
approximately $0.3 million.

In December 2004, SFAS No. 153, Exchanges of Nonmonetary Assetsan amendment of APB Opinion
No. 29 Accounting for Nonmonetary Transactions, (SFAS No. 153) is effective for fiscal years beginning after June 15, 2005. This Statement addresses the measurement of exchange of nonmonetary assets and
eliminates the exception from fair value measurement for nonmonetary exchanges of similar productive assets in paragraph 21(b) of APB Opinion No. 29, and replaces it with an exception for exchanges that do not have commercial substance. The
adoption of SFAS No. 153 is not expected to have an impact on our consolidated financial statements.

In May 2005, the FASB issued
SFAS No. 154, Accounting Changes and Error Corrections, a replacement of APB Opinion No. 20 and FASB Statement No. 30 (SFAS No. 154). This statement changes the requirements for accounting for and
reporting of a change in accounting principle. This statement applies to all voluntary changes in accounting principle. It also applies to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not
include specific transition provisions. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. Adoption of SFAS No. 154 is not expected to have an effect on
our consolidated financial statements.

SUBSEQUENT EVENTS

On February 14, 2006, we completed the acquisition of Preheat, Inc. (Preheat) pursuant to a Stock Purchase and Sale Agreement dated December 29, 2005 between us and the shareholders of Preheat.
We purchased 100% of the outstanding common stock of Preheat for a purchase price of $22.5 million consisting of $16 million in cash plus the issuance of 900,000 shares of our common stock and $4 million in buyer promissory notes. In addition, we
assumed $1.6 million of certain long-term debt of Preheat. As a condition of closing, Preheat was required to have on hand at closing excess working capital in excess of $4.5 million.



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##### Index to Financial Statements

|ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|-------- | ----------------------------------------------------------

INTEREST RATE RISK

We are exposed to interest rate risk due to changes in interest rates, primarily in the United States. Our policy is to manage interest rates through the
use of a combination of fixed and floating rate debt. We currently do not use any derivative financial instruments to manage our exposure to interest rate risk. The table below provides information about the future maturities of principal for
outstanding debt instruments at December 31, 2005 subject to interest rate risk. All instruments described are non-traded instruments and approximated fair value.



|                      |  |                        |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|--------------------- |  | ---------------------- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | - |  | ---- | ----- | - |  | - | ----- | -
|                      |  | 2006                   |       |   | 2007 |   |       | 2008 |  |   | 2009  |   |  | 2010 |      
|                      |  | (dollars in thousands) |      
|Long-term debt        |  |                        |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Fixed Rate            |  | $                      | 1,038 |   |      | $ | 1,838 |      |  | $ | 782   |   |  | $    | 62    |   |  | $ | 110   |  
|Average interest rate |  |                        | 5.3   | % |      |   | 5.4   | %    |  |   | 8.3   | % |  |      | 7.9   | % |  |   | 8.0   | %
|Variable Rate         |  | $                      | 1,888 |   |      | $ | 1,891 |      |  | $ | 2,486 |   |  | $    | 2,157 |   |  | $ | 6,472 |  
|Average interest rate |  |                        | 10.7  | % |      |   | 10.7  | %    |  |   | 11.8  | % |  |      | 12.3  | % |  |   | 11.7  | %
|Short-term debt       |  |                        |       |   |      |   |       |      |  |   |       |   |  |      |       |   |  |   |       |  
|Fixed Rate            |  | $                      | 1,692 |   |      |   |      |      |  |   |      |   |  |      |      |   |  |   |      |  
|Average interest rate |  |                        | 4.7   | % |      |   |      |      |  |   |      |   |  |      |      |   |  |   |      |  
|Variable Rate         |  | $                      | 4,750 |   |      |   |      |      |  |   |      |   |  |      |      |   |  |   |      |  
|Average interest rate |  |                        | 9.3   | % |      |   |      |      |  |   |      |   |  |      |      |   |  |   |      |  

INTEREST RATE EXPOSURE

Our exposure to changes in interest rates primarily results from our long-term debt with both fixed and floating interest rates. The debt on our consolidated financial statements at December 31, 2005 with fixed
interest rates totals $2.2 million. At December 31, 2005, 87% of our consolidated long-term debt was subject to variable interest rates. The detrimental effect of a hypothetical 100 basis point increase in interest rates would be to increase
net loss before provision for income taxes by approximately $0.2 million for the year ended December 31, 2005.

FOREIGN CURRENCY RISKS

We transact 100% of our business in U.S. dollars, thus we are not subject to foreign currency exchange risks.



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##### Index to Financial Statements

|ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|------- | -------------------------------------------

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



|                                                                                                     |  |     
|---------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                     |  | PAGE
|Reports of Independent Registered Public Accounting Firms                                            |  | 43  
|Consolidated Balance Sheets as of December 31, 2004 and 2005                                         |  | 45  
|Consolidated Statements of Operations for the Years Ended December 31, 2003, 2004 and 2005           |  | 46  
|Consolidated Statements of Stockholders Equity for the Years Ended December 31, 2003, 2004 and 2005 |  | 47  
|Consolidated Statements of Cash Flows for the Years Ended December 31, 2003, 2004 and 2005           |  | 49  
|Notes to Consolidated Financial Statements                                                           |  | 51  



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of

OMNI Energy Services Corp.

We have audited the accompanying
consolidated balance sheets of OMNI Energy Services Corp. as of December 31, 2004 and 2005 and the related consolidated statements of operations, stockholders equity and cash flows for the years then ended. These financial statements are
the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we
express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our
opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of OMNI Energy Services Corp. as of December 31, 2004 and 2005, and the consolidated results of its operations and
its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.

/s/ Pannell
Kerr Forster of Texas, P.C.

Houston, Texas

March 6,
2006



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##### Index to Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

OMNI Energy Services Corp.

We have audited the accompanying consolidated statements of operations, stockholders equity and cash flows for the year then ended
December 31, 2003 of OMNI Energy Services Corp. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial
reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of
the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the results of operations of OMNI
Energy Services Corp. and its cash flows for the year ended December 31, 2003 in conformity with U.S. generally accepted accounting principles.

/s/
FITTS, ROBERTS & CO., P.C.

Houston, Texas

March 12, 2004, except as to Notes 1, 11, and 13 as they

relate to 2003 for which the date is July 29, 2005



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##### Index to Financial Statements

OMNI ENERGY SERVICES CORP.

CONSOLIDATED BALANCE SHEETS



|                                                                                                                                                                                                                                                                           |  |                        |         |   |      |   |         |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------- | ------- | - | ---- | - | ------- | -
|                                                                                                                                                                                                                                                                           |  | DECEMBER 31,           |        
|                                                                                                                                                                                                                                                                           |  | 2004                   |         |   | 2005 |  
|                                                                                                                                                                                                                                                                           |  | (Dollars in thousands) |        
|ASSETS                                                                                                                                                                                                                                                                     |  |                        |         |   |      |   |         |  
|CURRENT ASSETS:                                                                                                                                                                                                                                                            |  |                        |         |   |      |   |         |  
|Cash and cash equivalents                                                                                                                                                                                                                                                  |  | $                      | 1,043   |   |      | $ | 174     |  
|Trade receivables, net                                                                                                                                                                                                                                                     |  |                        | 7,824   |   |      |   | 8,094   |  
|Other receivables                                                                                                                                                                                                                                                          |  |                        | 62      |   |      |   | 1,882   |  
|Parts and supplies inventory                                                                                                                                                                                                                                               |  |                        | 2,093   |   |      |   | 1,787   |  
|Prepaid expenses and other current assets                                                                                                                                                                                                                                  |  |                        | 2,739   |   |      |   | 2,458   |  
|Deferred tax asset                                                                                                                                                                                                                                                         |  |                        | 1,492   |   |      |   | 2,000   |  
|Current assets of discontinued operations                                                                                                                                                                                                                                  |  |                        | 6,766   |   |      |   | 295     |  
|Assets held for sale                                                                                                                                                                                                                                                       |  |                        | 108     |   |      |   | 108     |  
|Assets held for sale of discontinued operation                                                                                                                                                                                                                             |  |                        | 3,834   |   |      |   |        |  
|                                                                                                                                                                                                                                                                           |  |                        |         |   |      |   |         |  
|Total current assets                                                                                                                                                                                                                                                       |  |                        | 25,961  |   |      |   | 16,798  |  
|                                                                                                                                                                                                                                                                           |  |                        |         |   |      |   |         |  
|PROPERTY, PLANT AND EQUIPMENT                                                                                                                                                                                                                                              |  |                        |         |   |      |   |         |  
|Property, plant and equipment, net                                                                                                                                                                                                                                         |  |                        | 18,965  |   |      |   | 14,922  |  
|Property, plant and equipment of discontinued operations, net                                                                                                                                                                                                              |  |                        | 10,839  |   |      |   |        |  
|                                                                                                                                                                                                                                                                           |  |                        |         |   |      |   |         |  
|Total property, plant and equipment, net                                                                                                                                                                                                                                   |  |                        | 29,804  |   |      |   | 14,922  |  
|                                                                                                                                                                                                                                                                           |  |                        |         |   |      |   |         |  
|OTHER ASSETS:                                                                                                                                                                                                                                                              |  |                        |         |   |      |   |         |  
|Goodwill                                                                                                                                                                                                                                                                   |  |                        | 2,006   |   |      |   | 2,924   |  
|Customer intangible assets, net                                                                                                                                                                                                                                            |  |                        | 1,620   |   |      |   | 1,520   |  
|Licenses, permits and other intangible assets, net                                                                                                                                                                                                                         |  |                        | 5,142   |   |      |   | 3,934   |  
|Loan closing costs, net                                                                                                                                                                                                                                                    |  |                        | 521     |   |      |   | 3,197   |  
|Other assets                                                                                                                                                                                                                                                               |  |                        | 243     |   |      |   | 463     |  
|Other non-current assets of discontinued operations                                                                                                                                                                                                                        |  |                        | 616     |   |      |   |        |  
|                                                                                                                                                                                                                                                                           |  |                        |         |   |      |   |         |  
|                                                                                                                                                                                                                                                                           |  |                        | 10,148  |   |      |   | 12,038  |  
|                                                                                                                                                                                                                                                                           |  |                        |         |   |      |   |         |  
|TOTAL ASSETS                                                                                                                                                                                                                                                               |  | $                      | 65,913  |   |      | $ | 43,758  |  
|                                                                                                                                                                                                                                                                           |  |                        |         |   |      |   |         |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                                                                                       |  |                        |         |   |      |   |         |  
|CURRENT LIABILITIES:                                                                                                                                                                                                                                                       |  |                        |         |   |      |   |         |  
|Accounts payable                                                                                                                                                                                                                                                           |  | $                      | 7,967   |   |      | $ | 5,374   |  
|Accrued expenses                                                                                                                                                                                                                                                           |  |                        | 2,379   |   |      |   | 1,382   |  
|Current maturities of long-term debt                                                                                                                                                                                                                                       |  |                        | 6,095   |   |      |   | 2,926   |  
|Insurance notes payable                                                                                                                                                                                                                                                    |  |                        | 2,500   |   |      |   | 1,692   |  
|Line of credit                                                                                                                                                                                                                                                             |  |                        | 9,162   |   |      |   | 4,750   |  
|Convertible debentures                                                                                                                                                                                                                                                     |  |                        | 11,097  |   |      |   |        |  
|Current maturities of long-term debt, discontinued operations                                                                                                                                                                                                              |  |                        | 5,513   |   |      |   |        |  
|Current liabilities of discontinued operations                                                                                                                                                                                                                             |  |                        | 3,384   |   |      |   | 698     |  
|                                                                                                                                                                                                                                                                           |  |                        |         |   |      |   |         |  
|Total current liabilities                                                                                                                                                                                                                                                  |  |                        | 48,097  |   |      |   | 16,822  |  
|                                                                                                                                                                                                                                                                           |  |                        |         |   |      |   |         |  
|LONG-TERM LIABILITIES:                                                                                                                                                                                                                                                     |  |                        |         |   |      |   |         |  
|Long-term debt, less current maturities                                                                                                                                                                                                                                    |  |                        | 7,137   |   |      |   | 15,798  |  
|Other long-term liabilities                                                                                                                                                                                                                                                |  |                        | 100     |   |      |   | 3       |  
|Long-term debt of discontinued operations, less current maturities                                                                                                                                                                                                         |  |                        | 5,715   |   |      |   |        |  
|                                                                                                                                                                                                                                                                           |  |                        |         |   |      |   |         |  
|Total long-term liabilities                                                                                                                                                                                                                                                |  |                        | 12,952  |   |      |   | 15,801  |  
|                                                                                                                                                                                                                                                                           |  |                        |         |   |      |   |         |  
|Total liabilities                                                                                                                                                                                                                                                          |  |                        | 61,049  |   |      |   | 32,623  |  
|                                                                                                                                                                                                                                                                           |  |                        |         |   |      |   |         |  
|COMMITMENTS AND CONTINGENCIES                                                                                                                                                                                                                                              |  |                        |         |   |      |   |         |  
|STOCKHOLDERS EQUITY:                                                                                                                                                                                                                                                      |  |                        |         |   |      |   |         |  
|Convertible 8% Preferred stock, no par value, 5,000,000 shares authorized; 29 shares of Series B issued and outstanding at December 31,
2004 and 2005 and 5,128 shares of Series C issued and outstanding at December 31, 2005, liquidation preference of $1,000 per share |  |                        | 29      |   |      |   | 806     |  
|Common stock, $.01 par value, 45,000,000 shares authorized; 11,679,565 and 15,272,121 issued and 11,408,219 and 15,136,448 outstanding at
December 31, 2004 and 2005, respectively                                                                                         |  |                        | 117     |   |      |   | 153     |  
|Treasury stock, 271,346 and 135,673 shares, at cost, at December 31, 2004 and 2005, respectively                                                                                                                                                                           |  |                        | (529    | ) |      |   | (264    | )
|Preferred stock dividends declared                                                                                                                                                                                                                                         |  |                        | 2       |   |      |   | 123     |  
|Additional paid-in capital                                                                                                                                                                                                                                                 |  |                        | 65,448  |   |      |   | 75,787  |  
|Accumulated deficit                                                                                                                                                                                                                                                        |  |                        | (60,203 | ) |      |   | (65,470 | )
|                                                                                                                                                                                                                                                                           |  |                        |         |   |      |   |         |  
|Total stockholders equity                                                                                                                                                                                                                                                 |  |                        | 4,864   |   |      |   | 11,135  |  
|                                                                                                                                                                                                                                                                           |  |                        |         |   |      |   |         |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                                                                                 |  | $                      | 65,913  |   |      | $ | 43,758  |  
|                                                                                                                                                                                                                                                                           |  |                        |         |   |      |   |         |  

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



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##### Index to Financial Statements

OMNI ENERGY SERVICES CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS



|                                                                                 |  |                                       |        |   |      |   |         |      |  |   |        |  
|-------------------------------------------------------------------------------- |  | ------------------------------------- | ------ | - | ---- | - | ------- | ---- |  | - | ------ | -
|                                                                                 |  | YEAR ENDED DECEMBER 31,               |       
|                                                                                 |  | 2003                                  |        |   | 2004 |   |         | 2005 | 
|                                                                                 |  | (In thousands, except per share data) |       
|Operating revenue                                                                |  | $                                     | 31,555 |   |      | $ | 39,064  |      |  | $ | 43,350 |  
|Operating expenses:                                                              |  |                                       |        |   |      |   |         |      |  |   |        |  
|Direct costs                                                                     |  |                                       | 21,586 |   |      |   | 28,510  |      |  |   | 27,515 |  
|Depreciation and amortization                                                    |  |                                       | 3,355  |   |      |   | 4,282   |      |  |   | 4,627  |  
|General and administrative expenses                                              |  |                                       | 3,718  |   |      |   | 9,464   |      |  |   | 8,497  |  
|                                                                                 |  |                                       |        |   |      |   |         |      |  |   |        |  
|Total operating expenses                                                         |  |                                       | 28,659 |   |      |   | 42,256  |      |  |   | 40,639 |  
|                                                                                 |  |                                       |        |   |      |   |         |      |  |   |        |  
|Operating income (loss)                                                          |  |                                       | 2,896  |   |      |   | (3,192  | )    |  |   | 2,711  |  
|Interest expense                                                                 |  |                                       | 943    |   |      |   | 3,288   |      |  |   | 2,836  |  
|(Gain) loss on debenture conversion inducement and debt extinguishment           |  |                                       |       |   |      |   | 729     |      |  |   | (758   | )
|Other (income) expense                                                           |  |                                       | (114   | ) |      |   | 290     |      |  |   | (835   | )
|                                                                                 |  |                                       |        |   |      |   |         |      |  |   |        |  
|Income (loss) before income taxes                                                |  |                                       | 2,067  |   |      |   | (7,499  | )    |  |   | 1,468  |  
|Income tax benefit                                                               |  |                                       | 1,092  |   |      |   |        |      |  |   | 508    |  
|                                                                                 |  |                                       |        |   |      |   |         |      |  |   |        |  
|Net income (loss) from continuing operations                                     |  |                                       | 3,159  |   |      |   | (7,499  | )    |  |   | 1,976  |  
|Gain (loss) from discontinued operations, net of taxes                           |  |                                       | 324    |   |      |   | (6,756  | )    |  |   | (3,978 | )
|Loss on disposal of discontinued operations assets, net of taxes                 |  |                                       |       |   |      |   |        |      |  |   | (2,271 | )
|                                                                                 |  |                                       |        |   |      |   |         |      |  |   |        |  
|Net income (loss)                                                                |  |                                       | 3,483  |   |      |   | (14,255 | )    |  |   | (4,273 | )
|Dividends on preferred stock                                                     |  |                                       | (484   | ) |      |   | (490    | )    |  |   | (249   | )
|Non-cash charge attributable to beneficial conversion feature of preferred stock |  |                                       |       |   |      |   |        |      |  |   | (745   | )
|                                                                                 |  |                                       |        |   |      |   |         |      |  |   |        |  
|Net income (loss) available to common stockholders                               |  | $                                     | 2,999  |   |      | $ | (14,745 | )    |  | $ | (5,267 | )
|                                                                                 |  |                                       |        |   |      |   |         |      |  |   |        |  
|Basic income (loss) per common share:                                            |  |                                       |        |   |      |   |         |      |  |   |        |  
|Income (loss) from continuing operations                                         |  | $                                     | 0.30   |   |      | $ | (0.73   | )    |  | $ | 0.07   |  
|Income (loss) from discontinued operations                                       |  |                                       | 0.04   |   |      |   | (0.62   | )    |  |   | (0.30  | )
|Loss on disposal of discontinued operations assets, net of taxes                 |  |                                       |       |   |      |   |        |      |  |   | (0.17  | )
|                                                                                 |  |                                       |        |   |      |   |         |      |  |   |        |  
|Net income available to common stockholders                                      |  | $                                     | 0.34   |   |      | $ | (1.35   | )    |  | $ | (0.40  | )
|                                                                                 |  |                                       |        |   |      |   |         |      |  |   |        |  
|Diluted income (loss) per common share:                                          |  |                                       |        |   |      |   |         |      |  |   |        |  
|Income (loss) from continuing operations                                         |  | $                                     | 0.28   |   |      | $ | (0.73   | )    |  | $ | 0.07   |  
|Income (loss) from discontinued operations                                       |  |                                       | 0.03   |   |      |   | (0.62   | )    |  |   | (0.29  | )
|Loss on disposal of discontinued operations assets, net of taxes                 |  |                                       |       |   |      |   |        |      |  |   | (0.16  | )
|                                                                                 |  |                                       |        |   |      |   |         |      |  |   |        |  
|Net income (loss) available to common stockholders                               |  | $                                     | 0.31   |   |      | $ | (1.35   | )    |  | $ | (0.38  | )
|                                                                                 |  |                                       |        |   |      |   |         |      |  |   |        |  
|Number of weighted average shares:                                               |  |                                       |        |   |      |   |         |      |  |   |        |  
|Basic                                                                            |  |                                       | 8,772  |   |      |   | 10,884  |      |  |   | 13,251 |  
|Diluted                                                                          |  |                                       | 11,362 |   |      |   | 10,884  |      |  |   | 13,683 |  

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



46



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##### Index to Financial Statements

OMNI ENERGY SERVICES CORP.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY



|                                                                 |  |                        |   |  |              |         |                |        |            |        |   |        |  |   |      |  
|---------------------------------------------------------------- |  | ---------------------- | - |  | ------------ | ------- | -------------- | ------ | ---------- | ------ | - | ------ |  | - | ---- | -
|                                                                 |  | PREFERRED STOCK        |   |  | COMMON STOCK |         | TREASURY STOCK |       
|                                                                 |  | SHARES                 |   |  | AMOUNT       |         |                | SHARES |            | AMOUNT |   | AMOUNT | 
|                                                                 |  | (Dollars in thousands) |  
|BALANCE, December 31, 2002                                       |  | 12,100                 |   |  | $            | 12,100  |                |        | 9,101,778  |        | $ | 91     |  | $ | (706 | )
|Stock option exercised for cash                                 |  |                       |   |  |              |        |                |        | 467,951    |        |   | 5      |  |   |     |  
|Preferred stock dividends declared                              |  |                       |   |  |              |        |                |        |           |        |   |       |  |   |     |  
|Comprehensive income:                                            |  |                        |   |  |              |         |                |        |            |        |   |        |  |   |      |  
|Net income                                                      |  |                       |   |  |              |        |                |        |           |        |   |       |  |   |     |  
|Foreign currency translation adjustments                        |  |                       |   |  |              |        |                |        |           |        |   |       |  |   |     |  
|                                                                 |  |                        |   |  |              |         |                |        |            |        |   |        |  |   |      |  
|Total comprehensive income                                       |  |                        |   |  |              |         |                |        |            |        |   |        |  |   |      |  
|BALANCE, December 31, 2003                                       |  | 12,100                 |   |  |              | 12,100  |                |        | 9,569,729  |        |   | 96     |  |   | (706 | )
|Issuance of common stock for services                           |  |                       |   |  |              |        |                |        | 69,930     |        |   | 1      |  |   |     |  
|Issuance of common stock warrants for services                  |  |                       |   |  |              |        |                |        |           |        |   |       |  |   |     |  
|Convertible debenture warrants recorded as debt discount        |  |                       |   |  |              |        |                |        |           |        |   |       |  |   |     |  
|Debenture conversion inducement                                 |  |                       |   |  |              |        |                |        | 200,000    |        |   | 2      |  |   |     |  
|Stock based compensation                                        |  |                       |   |  |              |        |                |        |           |        |   |       |  |   |     |  
|Stock option and warrant exercised for cash                     |  |                       |   |  |              |        |                |        | 1,839,906  |        |   | 18     |  |   |     |  
|Preferred stock dividends declared                              |  |                       |   |  |              |        |                |        |           |        |   |       |  |   |     |  
|Preferred stock dividends paid                                  |  |                       |   |  |              |        |                |        |           |        |   |       |  |   |     |  
|Redemption of preferred stock                                   |  | (12,071                | ) |  |              | (12,071 | )              |        |           |        |   |       |  |   |     |  
|Issuance of treasury shares for stock based compensation        |  |                       |   |  |              |        |                |        |           |        |   |       |  |   | 177  |  
|Comprehensive income:                                            |  |                        |   |  |              |         |                |        |            |        |   |        |  |   |      |  
|Net loss                                                        |  |                       |   |  |              |        |                |        |           |        |   |       |  |   |     |  
|Foreign currency translation adjustments                        |  |                       |   |  |              |        |                |        |           |        |   |       |  |   |     |  
|                                                                 |  |                        |   |  |              |         |                |        |            |        |   |        |  |   |      |  
|Total comprehensive loss                                         |  |                        |   |  |              |         |                |        |            |        |   |        |  |   |      |  
|BALANCE, December 31, 2004                                       |  | 29                     |   |  |              | 29      |                |        | 11,679,565 |        |   | 117    |  |   | (529 | )
|Issuance of common stock for services                           |  |                       |   |  |              |        |                |        | 284,000    |        |   | 3      |  |   |     |  
|Stock based compensation                                        |  |                       |   |  |              |        |                |        | 30,000     |        |   |       |  |   |     |  
|Stock options and warrants exercised for cash                   |  |                       |   |  |              |        |                |        | 283,556    |        |   | 3      |  |   |     |  
|Preferred stock dividends declared                              |  |                       |   |  |              |        |                |        |           |        |   |       |  |   |     |  
|Preferred stock dividends paid                                  |  | 128                    |   |  |              | 128     |                |        |           |        |   |       |  |   |     |  
|Issuance of preferred stock and warrants, net of offering costs |  | 5,000                  |   |  |              | 649     |                |        |           |        |   |       |  |   |     |  
|Beneficial conversion feature associated with preferred stock   |  |                       |   |  |              |        |                |        |           |        |   |       |  |   |     |  
|Issuance of treasury shares for stock based compensation        |  |                       |   |  |              |        |                |        |           |        |   |       |  |   | 265  |  
|Issuance of common stock in payment of debt                     |  |                       |   |  |              |        |                |        | 995,000    |        |   | 10     |  |   |     |  
|Issuance of common stock in payment of convertible debentures   |  |                       |   |  |              |        |                |        | 2,000,000  |        |   | 20     |  |   |     |  
|Comprehensive income:                                            |  |                        |   |  |              |         |                |        |            |        |   |        |  |   |      |  
|Net loss                                                        |  |                       |   |  |              |        |                |        |           |        |   |       |  |   |     |  
|                                                                 |  |                        |   |  |              |         |                |        |            |        |   |        |  |   |      |  
|Total comprehensive loss                                         |  |                        |   |  |              |         |                |        |            |        |   |        |  |   |      |  
|BALANCE, December 31, 2005                                       |  | 5,157                  |   |  | $            | 806     |                |        | 15,272,121 |        | $ | 153    |  | $ | (264 | )
|                                                                 |  |                        |   |  |              |         |                |        |            |        |   |        |  |   |      |  



47



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##### Table of Contents

##### Index to Financial Statements

OMNI ENERGY SERVICES CORP.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY(Continued)



|                                                                 |  |                                   |      |   |                            |   |        |                                       |  |   |                     |   |  |       |         |   |  |   |         |  
|---------------------------------------------------------------- |  | --------------------------------- | ---- | - | -------------------------- | - | ------ | ------------------------------------- |  | - | ------------------- | - |  | ----- | ------- | - |  | - | ------- | -
|                                                                 |  | PREFERRED STOCK DIVIDEND DECLARED |      |   | ADDITIONAL PAID-IN CAPITAL |   |        | ACCUMULATIVE OTHER COMPREHENSIVE LOSS |  |   | ACCUMULATED DEFICIT |   |  | TOTAL |        
|                                                                 |  | (Dollars in thousands)            |     
|BALANCE, December 31, 2002                                       |  | $                                 |     |   |                            | $ | 56,831 |                                       |  | $ | (78                 | ) |  | $     | (48,457 | ) |  | $ | 19,781  |  
|Stock options exercised for cash                                |  |                                   |     |   |                            |   | 1,051  |                                       |  |   |                    |   |  |       |        |   |  |   | 1,056   |  
|Preferred stock dividends declared                              |  |                                   | 484  |   |                            |   |       |                                       |  |   |                    |   |  |       | (484    | ) |  |   |        |  
|Comprehensive income:                                            |  |                                   |      |   |                            |   |        |                                       |  |   |                     |   |  |       |         |   |  |   |         |  
|Net income                                                      |  |                                   |     |   |                            |   |       |                                       |  |   |                    |   |  |       | 3,483   |   |  |   | 3,483   |  
|Foreign currency translation adjustments                        |  |                                   |     |   |                            |   |       |                                       |  |   | 66                  |   |  |       |        |   |  |   | 66      |  
|                                                                 |  |                                   |      |   |                            |   |        |                                       |  |   |                     |   |  |       |         |   |  |   |         |  
|Total comprehensive income                                       |  |                                   |      |   |                            |   |        |                                       |  |   |                     |   |  |       |         |   |  |   | 3,549   |  
|                                                                 |  |                                   |      |   |                            |   |        |                                       |  |   |                     |   |  |       |         |   |  |   |         |  
|BALANCE, December 31, 2003                                       |  |                                   | 484  |   |                            |   | 57,882 |                                       |  |   | (12                 | ) |  |       | (45,458 | ) |  |   | 24,386  |  
|Issuance of common stock for services                           |  |                                   |     |   |                            |   | 340    |                                       |  |   |                    |   |  |       |        |   |  |   | 341     |  
|Issuance of common stock warrants for services                  |  |                                   |     |   |                            |   | 157    |                                       |  |   |                    |   |  |       |        |   |  |   | 157     |  
|Convertible debenture warrants recorded as debt discount        |  |                                   |     |   |                            |   | 1,110  |                                       |  |   |                    |   |  |       |        |   |  |   | 1,110   |  
|Debenture conversion inducement                                 |  |                                   |     |   |                            |   | 939    |                                       |  |   |                    |   |  |       |        |   |  |   | 941     |  
|Stock based compensation                                        |  |                                   |     |   |                            |   | 795    |                                       |  |   |                    |   |  |       |        |   |  |   | 795     |  
|Stock options and warrants exercised for cash                   |  |                                   |     |   |                            |   | 3,930  |                                       |  |   |                    |   |  |       |        |   |  |   | 3,948   |  
|Preferred stock dividends declared                              |  |                                   | 490  |   |                            |   |       |                                       |  |   |                    |   |  |       | (490    | ) |  |   |        |  
|Preferred stock dividends paid                                  |  |                                   | (972 | ) |                            |   |       |                                       |  |   |                    |   |  |       |        |   |  |   | (972    | )
|Redemption of preferred stock                                   |  |                                   |     |   |                            |   |       |                                       |  |   |                    |   |  |       |        |   |  |   | (12,071 | )
|Issuance of treasury shares for stock based compensation        |  |                                   |     |   |                            |   | 295    |                                       |  |   |                    |   |  |       |        |   |  |   | 472     |  
|Comprehensive income:                                            |  |                                   |      |   |                            |   |        |                                       |  |   |                     |   |  |       |         |   |  |   |         |  
|Net loss                                                        |  |                                   |     |   |                            |   |       |                                       |  |   |                    |   |  |       | (14,255 | ) |  |   | (14,255 | )
|Foreign currency translation adjustments                        |  |                                   |     |   |                            |   |       |                                       |  |   | 12                  |   |  |       |        |   |  |   | 12      |  
|                                                                 |  |                                   |      |   |                            |   |        |                                       |  |   |                     |   |  |       |         |   |  |   |         |  
|Total comprehensive loss                                         |  |                                   |      |   |                            |   |        |                                       |  |   |                     |   |  |       |         |   |  |   | (14,243 | )
|                                                                 |  |                                   |      |   |                            |   |        |                                       |  |   |                     |   |  |       |         |   |  |   |         |  
|BALANCE, December 31, 2004                                       |  |                                   | 2    |   |                            |   | 65,448 |                                       |  |   |                    |   |  |       | (60,203 | ) |  |   | 4,864   |  
|Issuance of common stock for services                           |  |                                   |     |   |                            |   | 267    |                                       |  |   |                    |   |  |       |        |   |  |   | 270     |  
|Stock based compensation                                        |  |                                   |     |   |                            |   | 9      |                                       |  |   |                    |   |  |       |        |   |  |   | 9       |  
|Stock options and warrants exercised for cash                   |  |                                   |     |   |                            |   | 526    |                                       |  |   |                    |   |  |       |        |   |  |   | 529     |  
|Preferred stock dividends declared                              |  |                                   | 249  |   |                            |   |       |                                       |  |   |                    |   |  |       | (249    | ) |  |   |        |  
|Preferred stock dividends paid                                  |  |                                   | (128 | ) |                            |   |       |                                       |  |   |                    |   |  |       |        |   |  |   |        |  
|Issuance of preferred stock and warrants, net of offering costs |  |                                   |     |   |                            |   | 3,788  |                                       |  |   |                    |   |  |       |        |   |  |   | 4,437   |  
|Beneficial conversion feature associated with preferred stock   |  |                                   |     |   |                            |   | 745    |                                       |  |   |                    |   |  |       | (745    | ) |  |   |        |  
|Issuance of treasury shares for stock based compensation        |  |                                   |     |   |                            |   | (265   | )                                     |  |   |                    |   |  |       |        |   |  |   |        |  
|Issuance of common stock in payment of debt                     |  |                                   |     |   |                            |   | 2,089  |                                       |  |   |                    |   |  |       |        |   |  |   | 2,099   |  
|Issuance of common stock in payment of convertible debentures   |  |                                   |     |   |                            |   | 3,180  |                                       |  |   |                    |   |  |       |        |   |  |   | 3,200   |  
|Comprehensive income:                                            |  |                                   |      |   |                            |   |        |                                       |  |   |                     |   |  |       |         |   |  |   |         |  
|Net loss                                                        |  |                                   |     |   |                            |   |       |                                       |  |   |                    |   |  |       | (4,273  | ) |  |   | (4,273  | )
|                                                                 |  |                                   |      |   |                            |   |        |                                       |  |   |                     |   |  |       |         |   |  |   |         |  
|Total comprehensive loss                                         |  |                                   |      |   |                            |   |        |                                       |  |   |                     |   |  |       |         |   |  |   | (4,273  | )
|                                                                 |  |                                   |      |   |                            |   |        |                                       |  |   |                     |   |  |       |         |   |  |   |         |  
|BALANCE, December 31, 2005                                       |  | $                                 | 123  |   |                            | $ | 75,787 |                                       |  | $ |                    |   |  | $     | (65,470 | ) |  | $ | 11,135  |  
|                                                                 |  |                                   |      |   |                            |   |        |                                       |  |   |                     |   |  |       |         |   |  |   |         |  

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



48



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##### Table of Contents

##### Index to Financial Statements

OMNI ENERGY SERVICES CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                                                   |  |                         |        |   |           |   |         |      |  |   |         |  
|-------------------------------------------------------------------------------------------------- |  | ----------------------- | ------ | - | --------- | - | ------- | ---- |  | - | ------- | -
|                                                                                                   |  | YEAR ENDED DECEMBER 31, |       
|                                                                                                   |  | 2003                    |        |   | 2004      |   |         | 2005 | 
|                                                                                                   |  | (revised)               |        |   | (revised) |   |         |      | 
|                                                                                                   |  | (In thousands)          |       
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                              |  |                         |        |   |           |   |         |      |  |   |         |  
|Income (loss) from continuing operations                                                           |  | $                       | 3,159  |   |           | $ | (7,499  | )    |  | $ | 1,976   |  
|Income (loss) from discontinued operations                                                         |  |                         | 324    |   |           |   | (6,756  | )    |  |   | (6,249  | )
|                                                                                                   |  |                         |        |   |           |   |         |      |  |   |         |  
|                                                                                                   |  |                         | 3,483  |   |           |   | (14,255 | )    |  |   | (4,273  | )
|                                                                                                   |  |                         |        |   |           |   |         |      |  |   |         |  
|Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities |  |                         |        |   |           |   |         |      |  |   |         |  
|Depreciation and amortization                                                                      |  |                         | 3,355  |   |           |   | 4,282   |      |  |   | 4,627   |  
|(Gain) loss on property, plant and equipment disposals                                             |  |                         | (108   | ) |           |   | (44     | )    |  |   | (826    | )
|Stock based compensation expense                                                                   |  |                         | 124    |   |           |   | 1,268   |      |  |   | 8       |  
|Accretion of convertible debenture discount                                                        |  |                         |       |   |           |   | 672     |      |  |   |        |  
|Amortization of loan closing costs                                                                 |  |                         | 348    |   |           |   | 1,099   |      |  |   | 417     |  
|Foreign currency translation adjustments                                                           |  |                         | 66     |   |           |   | 12      |      |  |   |        |  
|Gain (loss) on debenture conversion inducement and extinguishment of debt                          |  |                         |       |   |           |   | 729     |      |  |   | (758    | )
|Minority interest                                                                                  |  |                         | (221   | ) |           |   |        |      |  |   |        |  
|Common stock and common stock warrants issued for services                                         |  |                         |       |   |           |   |        |      |  |   | 270     |  
|Deferred taxes                                                                                     |  |                         | (1,092 | ) |           |   |        |      |  |   | (508    | )
|Changes in operating assets and liabilities:                                                       |  |                         |        |   |           |   |         |      |  |   |         |  
|Trade receivables                                                                                  |  |                         | (1,131 | ) |           |   | 611     |      |  |   | (270    | )
|Other receivables                                                                                  |  |                         | 394    |   |           |   | 40      |      |  |   | (782    | )
|Parts and supplies inventory                                                                       |  |                         | (270   | ) |           |   | (310    | )    |  |   | 306     |  
|Prepaid expenses and other current assets                                                          |  |                         | 1,910  |   |           |   | 2,029   |      |  |   | 2,685   |  
|Other assets                                                                                       |  |                         | (661   | ) |           |   | 585     |      |  |   | (301    | )
|Accounts payable and accrued expenses                                                              |  |                         | 152    |   |           |   | 2,717   |      |  |   | (3,589  | )
|Other long term liabilities                                                                        |  |                         |       |   |           |   | (227    | )    |  |   | (97     | )
|                                                                                                   |  |                         |        |   |           |   |         |      |  |   |         |  
|Net cash provided by (used in) operating activities of continuing operations                       |  |                         | 6,025  |   |           |   | 5,964   |      |  |   | 3,158   |  
|                                                                                                   |  |                         |        |   |           |   |         |      |  |   |         |  
|Net cash provided by (used in) operating activities of discontinued operations                     |  |                         | (361   | ) |           |   | (414    | )    |  |   | (264    | )
|                                                                                                   |  |                         |        |   |           |   |         |      |  |   |         |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                              |  |                         |        |   |           |   |         |      |  |   |         |  
|Acquisitions, net of cash received                                                                 |  |                         |       |   |           |   | (7,768  | )    |  |   |        |  
|Proceeds from disposal of property, plant and equipment                                            |  |                         | 435    |   |           |   | 450     |      |  |   | 685     |  
|Purchase of property, plant and equipment                                                          |  |                         | (137   | ) |           |   | (786    | )    |  |   | (591    | )
|                                                                                                   |  |                         |        |   |           |   |         |      |  |   |         |  
|Net cash provided by (used in) investing activities of continuing operations                       |  |                         | 298    |   |           |   | (8,104  | )    |  |   | 94      |  
|                                                                                                   |  |                         |        |   |           |   |         |      |  |   |         |  
|Net cash provided by (used in) investing activities of discontinued operations                     |  |                         | (4,456 | ) |           |   | (4,543  | )    |  |   | 11,380  |  
|                                                                                                   |  |                         |        |   |           |   |         |      |  |   |         |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                              |  |                         |        |   |           |   |         |      |  |   |         |  
|Proceeds from issuance of long-term debt                                                           |  |                         | 152    |   |           |   | 6,727   |      |  |   | 26,956  |  
|Principal payments on long-term debt                                                               |  |                         | (2,264 | ) |           |   | (5,894  | )    |  |   | (27,254 | )
|Borrowings (payments) on line of credit, net                                                       |  |                         | 1,654  |   |           |   | 4,529   |      |  |   | (4,412  | )
|Proceeds from issuance of convertible debentures                                                   |  |                         |       |   |           |   | 14,159  |      |  |   |        |  
|Proceeds from issuance of preferred stock and associated warrants                                  |  |                         |       |   |           |   |        |      |  |   | 4,677   |  
|Repayment of convertible debentures                                                                |  |                         |       |   |           |   | (3,062  | )    |  |   | (3,404  | )
|Redemption of preferred stock and dividends                                                        |  |                         |       |   |           |   | (13,043 | )    |  |   |        |  
|Loan closing costs                                                                                 |  |                         | 44     |   |           |   | (1,230  | )    |  |   | (3,229  | )
|Deferred organizational costs                                                                      |  |                         |       |   |           |   |        |      |  |   | (240    | )
|Proceeds from issuance of common stock for exercise of stock options and warrants                  |  |                         | 931    |   |           |   | 3,948   |      |  |   | 530     |  
|                                                                                                   |  |                         |        |   |           |   |         |      |  |   |         |  
|Net cash provided by (used in) financing activities of continuing operations                       |  |                         | 517    |   |           |   | 6,134   |      |  |   | (6,376  | )
|                                                                                                   |  |                         |        |   |           |   |         |      |  |   |         |  
|Net cash provided by (used in) financing activities of discontinued operations                     |  |                         | (2,155 | ) |           |   | 1,434   |      |  |   | (8,861  | )
|                                                                                                   |  |                         |        |   |           |   |         |      |  |   |         |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                               |  |                         | (132   | ) |           |   | 471     |      |  |   | (869    | )
|CASH, at beginning of year                                                                         |  |                         | 704    |   |           |   | 572     |      |  |   | 1,043   |  
|                                                                                                   |  |                         |        |   |           |   |         |      |  |   |         |  
|CASH, at end of year                                                                               |  | $                       | 572    |   |           | $ | 1,043   |      |  | $ | 174     |  
|                                                                                                   |  |                         |        |   |           |   |         |      |  |   |         |  



49



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##### Table of Contents

##### Index to Financial Statements

OMNI ENERGY SERVICES CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS(Continued)



|                                                                          |  |                         |       |           |   |       |  |   |       
|------------------------------------------------------------------------- |  | ----------------------- | ----- | --------- | - | ----- |  | - | ------
|                                                                          |  | YEAR ENDED DECEMBER 31,
|                                                                          |  | 2003                    |       | 2004      |   | 2005 
|                                                                          |  | (revised)               |       | (revised) |   |      
|                                                                          |  | (In thousands)         
|Supplemental cash flow disclosures:                                       |  |                         |       |           |   |       |  |   |       
|Cash paid for interest                                                    |  | $                       | 978   |           | $ | 2,101 |  | $ | 3,589 
|                                                                          |  |                         |       |           |   |       |  |   |       
|Cash paid for taxes                                                       |  | $                       |      |           | $ |      |  | $ |      
|                                                                          |  |                         |       |           |   |       |  |   |       
|Supplemental non-cash disclosures:                                        |  |                         |       |           |   |       |  |   |       
|Equipment acquired under capital lease                                    |  | $                       | 3,689 |           | $ | 3,750 |  | $ | 56    
|                                                                          |  |                         |       |           |   |       |  |   |       
|Premium financed with insurance carrier                                   |  | $                       | 2,908 |           | $ | 3,302 |  | $ | 2,405 
|                                                                          |  |                         |       |           |   |       |  |   |       
|Common stock and common stock warrants issued for services                |  | $                       |      |           | $ | 498   |  | $ |      
|                                                                          |  |                         |       |           |   |       |  |   |       
|Transfer of inventory and property and equipment to assets held for sale  |  | $                       |      |           | $ | 3,942 |  | $ | 51    
|                                                                          |  |                         |       |           |   |       |  |   |       
|Convertible debenture warrants recorded as a debt discount                |  | $                       |      |           | $ | 1,110 |  | $ |      
|                                                                          |  |                         |       |           |   |       |  |   |       
|Transfer of discontinued operations assets to assets held for sale        |  | $                       |      |           | $ |      |  | $ | 11,000
|                                                                          |  |                         |       |           |   |       |  |   |       
|Common stock issuance for extinguishment of convertible debentures        |  | $                       |      |           | $ |      |  | $ | 3,200 
|                                                                          |  |                         |       |           |   |       |  |   |       
|Issuance of long-term debt for extinguishment of convertible debentures   |  | $                       |      |           | $ |      |  | $ | 4,293 
|                                                                          |  |                         |       |           |   |       |  |   |       
|Common stock issuance for extinguishment of long-term debt                |  | $                       |      |           | $ |      |  | $ | 2,099 
|                                                                          |  |                         |       |           |   |       |  |   |       
|Issuance of short-term debt for extinguishment of long-term debt          |  | $                       |      |           | $ |      |  | $ | 1,000 
|                                                                          |  |                         |       |           |   |       |  |   |       
|Beneficial conversion feature associated with issuance of preferred stock |  | $                       |      |           | $ |      |  | $ | 744   
|                                                                          |  |                         |       |           |   |       |  |   |       
|Exchange of assets held for sale for extinguishment of capital leases     |  | $                       |      |           | $ |      |  | $ | 2,891 
|                                                                          |  |                         |       |           |   |       |  |   |       
|Transfer of inventory to prepaid aviation repairs                         |  | $                       |      |           | $ |      |  | $ | 328   
|                                                                          |  |                         |       |           |   |       |  |   |       
|Dividends declared but not paid                                           |  | $                       |      |           | $ |      |  | $ | 121   
|                                                                          |  |                         |       |           |   |       |  |   |       
|Preferred stock issued as dividends paid-in-kind                          |  | $                       |      |           | $ |      |  | $ | 128   
|                                                                          |  |                         |       |           |   |       |  |   |       
|Assets transferred from assets held for sale to other receivables         |  | $                       |      |           | $ |      |  | $ | 116   
|                                                                          |  |                         |       |           |   |       |  |   |       

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



50



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##### Table of Contents

##### Index to Financial Statements

OMNI ENERGY SERVICES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|-- | ------------------------------------------

NATURE OF BUSINESS
AND CURRENT OPERATING ENVIRONMENT

We are a leading, integrated oilfield service company specializing in providing a range of
(i) onshore seismic drilling, operational support, and permitting, survey and (ii) dock-side and offshore hazardous and non-hazardous oilfield waste management and environmental cleaning services, including tank and vessel cleaning and
safe vessel entry, for oil and gas companies operating primarily in the Gulf of Mexico.

At December 31, 2005, we operated in two
business divisionsSeismic Drilling and Environmental Services. The principal market of our Seismic Drilling division is the marsh, swamps, shallow water and contiguous dry areas along the Gulf of Mexico (the Transition Zone),
primarily in Louisiana and Texas, where we are the leading provider of seismic drilling support services.

Our Environmental Services
division provides 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.

We receive our revenues principally from customers in the energy industry. In recent years, the seismic market has remained depressed due primarily to
the excess capacity of available seismic data in the market. This volatile market has impacted our ability, as well as that of our customers and others in the industry, to change their forecasts and budgets in response to future uncertainties of
commodity pricing. These fluctuations can rapidly impact our cash flows as supply and demand factors impact the number and size of seismic projects available.

We adjust our operations to current market conditions by downsizing, when necessary, our operations through closure of certain operating locations, disposing of excess equipment and reducing our corporate overhead
structure (See Note 13). Recently, we have experienced an increase in bidding activity. During this same time we continue our efforts to renegotiate our loan agreements with our senior lenders.

In November 2003, we acquired American Helicopters, Inc. (AHI). AHI operated 17 helicopters from base locations in Louisiana and Texas.

In June 2004, we acquired Trussco, Inc. and Trussco Properties, L.L.C. (collectively Trussco). 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.

We sold our Aviation Transportation Services segment (which included AHI) effective June 30, 2005. This division provided helicopter transportation services to oil and gas companies operating in the shallow
waters of the Gulf of Mexico as well as helicopter support services to our Seismic Drilling Division. (See Note 13 for information related to our discontinued Aviation Transportation Services segment). Subsequent to December 31, 2005, we
acquired Preheat, Inc. (Preheat), a premier provider of rental equipment and specialized environmental services principally to drilling contractors operating in the Gulf of Mexico.

RECLASSIFICATIONS

The consolidated financial
statements have been revised to present the operations of our Aviation Transportation Services segment as discontinued operations. There was no effect on net equity or net income (loss) as a result of the reclassification. Additionally, in 2005, we
have separately disclosed the operating,



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##### Index to Financial Statements

investing and financing portions of the cash flows attributable to our discontinued operations, which in prior periods were reported on a combined basis as a
single amount.

PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION

The consolidated financial statements include the accounts of OMNI Energy Services Corp., a Louisiana corporation, and subsidiaries in which we have a greater than 50% ownership. All material intercompany accounts and
transactions have been eliminated upon consolidation. Certain prior year amounts have been reclassified to be consistent with current year financial statement presentation.

USE OF ESTIMATES

The preparation of financial statements in conformity with U. S. generally accepted
accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the reporting period. The more significant estimates include asset impairment reserves, useful lives for depreciation and amortization, salvage values of depreciable equipment, valuation of warrants and
options, allowance for doubtful accounts receivables and the utilization of deferred tax assets. Actual results could differ from those estimates.

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 consistent with
industry practice and provides comparability with our industry peers.

As a result of managements first quarter 2004 change in the
aviation fleets estimated residual salvage values of each of its aircraft, depreciation expense for 2004 and prospectively will decrease. The pro forma effect of this change in estimate is shown in the table below and reflects what net loss
would have been had the changes in estimate not occurred:



|                                                       |  |                                       |         |   |                   |   |        |  
|------------------------------------------------------ |  | ------------------------------------- | ------- | - | ----------------- | - | ------ | -
|                                                       |  | YEAR ENDED                            |        
|                                                       |  | DECEMBER 31, 2004                     |         |   | DECEMBER 31, 2005 |  
|                                                       |  | (In thousands, except per share data) |        
|Net loss available to common stockholders, as reported |  | $                                     | (14,745 | ) |                   | $ | (5,267 | )
|Effect of change in estimate                           |  |                                       | (260    | ) |                   |   | (130   | )
|                                                       |  |                                       |         |   |                   |   |        |  
|Net loss available to common stockholders, Pro forma   |  | $                                     | (15,005 | ) |                   | $ | (5,397 | )
|                                                       |  |                                       |         |   |                   |   |        |  
|Net loss per common shareas reported:                 |  |                                       |         |   |                   |   |        |  
|Basic                                                  |  | $                                     | (1.35   | ) |                   | $ | (0.40  | )
|Diluted                                                |  | $                                     | (1.35   | ) |                   | $ | (0.38  | )
|Net loss per common sharepro forma:                   |  |                                       |         |   |                   |   |        |  
|Basic                                                  |  | $                                     | (1.38   | ) |                   | $ | (0.41  | )
|Diluted                                                |  | $                                     | (1.38   | ) |                   | $ | (0.39  | )

Effective April 1, 2005, we changed the amortization periods of the intangibles acquired as
part of the acquisition of all the issued and outstanding common shares of Trussco, Inc. and all the membership interests in Trussco Properties, L.L.C. (collectively Trussco) from five years to various periods ranging from three to 20
years based on a valuation supported by a fairness opinion issued by an independent third party. We believe the revised amortization periods more properly match costs over the useful lives of these assets consistent with industry practice.



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##### Index to Financial Statements

As a result of the second quarter 2005 change in the amortization periods of the Trussco intangibles,
amortization expense for 2005 decreased. The pro forma effect of this change in estimate is shown in the table below and reflects what net loss would have been had the changes in estimate not occurred (in thousands of dollars, except per share
amounts):



|                                                       |  |                                      |        |  
|------------------------------------------------------ |  | ------------------------------------ | ------ | -
|                                                       |  | YEAR ENDEDDECEMBER 31, 2005          |       
|                                                       |  | (In thousands, except pershare data) |       
|Net loss available to common stockholders, as reported |  | $                                    | (5,267 | )
|Effect of change in estimate                           |  |                                      | (600   | )
|                                                       |  |                                      |        |  
|Net loss available to common stockholders, pro forma   |  | $                                    | (5,867 | )
|                                                       |  |                                      |        |  
|Net loss per common shareas reported:                 |  |                                      |        |  
|Basic                                                  |  | $                                    | (0.40  | )
|Diluted                                                |  | $                                    | (0.38  | )
|Net loss per common sharepro forma:                   |  |                                      |        |  
|Basic                                                  |  | $                                    | (0.44  | )
|Diluted                                                |  | $                                    | (0.43  | )

REVENUE RECOGNITION

We recognize revenue as service is rendered. Revenue from our drilling operations is recognized on a per hole basis. Once we have drilled and loaded a source point, revenue from the drilling of such source point is
recognized. Similarly, revenue is recognized from our seismic survey operations either on a day rate or per mile basis. Under the per mile basis, revenue is recognized when the source or receiving point is marked by one of our survey crews.
Permitting is recognized on a per day basis as services are rendered. Our aircraft, which were usually either chartered with a monthly guaranteed rate or for a guaranteed minimum number of hours per day, generated revenue pursuant to a fixed hourly
rate. See Note 13 for information related to our discontinued Aviation Transportation Services segment operations. Environmental revenue is recognized upon completion of each cleaning project. From time to time, we may offer discounts from our
standard service rates for volume and competitive reasons. These discounts are recorded as a reduction of revenues.

CASH AND CASH EQUIVALENTS

We consider highly liquid investments with an original maturity of 90 days or less to be cash equivalents.

ACCOUNTS RECEIVABLE

Trade and other receivables are
stated at net realizable value. We grant short-term credit to our customers, primarily geophysical and oil and gas operating companies. We regularly review outstanding trade receivables and provide for estimated losses through our allowance for
doubtful accounts when it is determined that an amount is not collectible.

INVENTORIES

Inventories consist of parts and supplies used for our drilling operations. All inventories are valued at lower of average cost or market. Parts and
supplies are charged to expense when it is determined that such items have no value or when their service hours have expired.



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PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost less accumulated depreciation. We provide for depreciation expense on a straight line basis over each assets estimated useful life depreciated to their estimated
salvage values as follows:



|                                               |  |             |  |               |  
|---------------------------------------------- |  | ----------- |  | ------------- | -
|ASSET CLASSIFICATION                           |  | USEFUL LIFE |  | SALVAGE VALUE |  
|Buildings and improvements                     |  | 25 years    |  |              |  
|Drilling, field and support equipment          |  | 5-10 years  |  | 10            | %
|Aviation equipment (over five years of age)    |  | 10 years    |  | 30            | %
|Aviation equipment (five years of age or less) |  | 10 years    |  | 40            | %
|Shop equipment                                 |  | 10 years    |  |              |  
|Office equipment                               |  | 5 years     |  |              |  
|Vehicles                                       |  | 4-5 years   |  |              |  
|Environmental                                  |  | 5 years     |  |              |  

Additions to property and equipment and major replacements are capitalized. Gains and losses on
dispositions, maintenance, repairs and minor replacements are charged to expense as incurred. Capitalized drilling equipment, which is fabricated, is comprised of direct and indirect costs incurred during fabrication. Costs include materials and
labor consumed during fabrication. Interest is also capitalized during the fabrication period. There was no interest capitalized for the years ended December 31, 2003, 2004 and 2005. Included in property and equipment at December 31, 2005
is approximately $0.9 million of vehicles purchased under capital lease obligations, net of accumulated depreciation of approximately $0.8 million.

Assets held for sale are recorded at the lower of their net book value or their net realizable value which is determined based upon an estimate of their fair market value less the cost of selling the assets. An impairment is recorded to the
extent that the amount that was carried on the books is in excess of the net realizable value. Assets held for sale at December 31, 2005 are eight marsh buggies.

IMPAIRMENT OF LONG-LIVED ASSETS

We review our long lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with Statement of Financial Accounting Standards (SFAS) No. 144 Accounting for the Impairment and Disposal of
Long-Lived Assets. If the carrying amount of the asset, including any intangible assets associated with that asset, exceeds its estimated undiscounted net cash flow, before interest, we will recognize an impairment loss equal to the
difference between its carrying amount and its estimated fair value. During the fourth quarter of 2004, we re-assessed the carrying values of our aviation fleet by obtaining an appraisal from a reputable third party appraiser and compared these
appraised values to the net book values that we had recorded. As a result of our analysis, as of December 31, 2004 we recorded an impairment of approximately $3.0 million of unamortized prepaid repairs, an impairment of $0.6 million on our
aviation fleet and a writedown of $0.6 million related to helicopters held for sale. These impairment charges are included in loss from discontinued operations. During 2005, the aviation-related improvements at the Mouton Cove facility were deemed
to be impaired as a result of the sale of our Aviation Transportation Services segment. A charge was recorded against operations in the amount of $0.5 million reflecting the impairment of the value of that facility. Such charge is included in loss
from discontinued operations. The facility was not included in the sale of our Aviation Transportation Service segment.

GOODWILL AND OTHER INTANGIBLE
ASSETS

Goodwill represents the excess of the purchase price of acquisitions over the fair value of the net assets acquired. We account
for goodwill in accordance with SFAS No. 142, Goodwill and Other Intangible Assets. Under SFAS No. 142, goodwill and intangible assets with indefinite lives are no longer amortized but are



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##### Index to Financial Statements

reviewed annually (or more frequently if impairment indicators arise) for impairment. Separable intangible assets that are not deemed to have indefinite
lives will continue to be amortized over their useful lives. The amortization provisions of SFAS No. 142 apply to goodwill and intangible assets acquired after June 30, 2001. As of December 31, 2004, and 2005, we have goodwill of $2.0
million and $2.9 million, respectively. We periodically assessed the recoverability of the unamortized balance based on expected future profitability and undiscounted future cash flows of the acquisitions and their contribution to our overall
operation. In conjunction with the acquisition of AirJac during 2002, we recorded a customer intangible of $1.9 million which is being amortized over a period of 20 years; with the acquisition of AHI in 2003, we recorded intangibles of $0.3 million
which was being amortized over a period of 5 years subsequently charged against discontinued operations; with the acquisition of Trussco in 2004, we recorded an intangibles of $3.9 million which are being amortized over various time periods ranging
from three to 20 years. We recorded $0.1 million in amortization expense related to the intangible assets for the year ended December 31, 2003, and $0.7 million in each 2004 and 2005.

INCOME TAXES

We provide for deferred taxes in
accordance with SFAS No. 109, Accounting for Income Taxes, which requires an asset and liability approach for measuring deferred taxes and liabilities due to temporary differences existing at year-end using currently enacted rates
(See Note 10). A valuation allowance is provided when necessary to reduce deferred tax assets to amounts expected to be realized.

STOCK BASED
COMPENSATION

At December 31, 2005, we had two stock-based employee compensation plans, which are described more fully in Note 9.
We account for employee stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees (APB
No. 25). Accordingly, the provisions of SFAS No. 123, Accounting for Stock-Based Compensation, permits the continued use of the method prescribed by APB 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 8), 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.



|                                                                                                                                               |  |                                      |       |   |      |   |         |      |  |   |        |  
|---------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------ | ----- | - | ---- | - | ------- | ---- |  | - | ------ | -
|                                                                                                                                               |  | YEAR ENDED DECEMBER 31,              |      
|                                                                                                                                               |  | 2003                                 |       |   | 2004 |   |         | 2005 | 
|                                                                                                                                               |  | (In thousands except per share data) |      
|Net income (loss) available to common stockholdersas reported                                                                                 |  | $                                    | 2,999 |   |      | $ | (14,745 | )    |  | $ | (5,267 | )
|Add: stock-based employee compensation expense (gain) included in net (income) loss, net of tax                                                |  |                                      |      |   |      |   | 1,411   |      |  |   | 8      |  
|Less: total stock-based employee compensation expense determined under fair value based method for all awards granted to employees, net of
tax |  |                                      | (416  | ) |      |   | (2,204  | )    |  |   | (785   | )
|                                                                                                                                               |  |                                      |       |   |      |   |         |      |  |   |        |  
|Net income (loss) available to common stockholderspro forma                                                                                   |  | $                                    | 2,583 |   |      | $ | (15,538 | )    |  | $ | (6,044 | )
|                                                                                                                                               |  |                                      |       |   |      |   |         |      |  |   |        |  
|Net income (loss) available to common stockholdersas reported:                                                                                |  |                                      |       |   |      |   |         |      |  |   |        |  
|Basic                                                                                                                                          |  | $                                    | 0.34  |   |      | $ | (1.35   | )    |  | $ | (0.40  | )
|Diluted                                                                                                                                        |  | $                                    | 0.31  |   |      | $ | (1.35   | )    |  | $ | (0.38  | )
|Net income (loss) available to common and stockholderspro forma:                                                                              |  |                                      |       |   |      |   |         |      |  |   |        |  
|Basic                                                                                                                                          |  | $                                    | 0.29  |   |      | $ | (1.43   | )    |  | $ | (0.46  | )
|Diluted                                                                                                                                        |  | $                                    | 0.27  |   |      | $ | (1.43   | )    |  | $ | (0.44  | )



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The weighted average fair value at date of grant for options granted during 2003 was $2.31 per option.
The fair value of options granted is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions: (a) dividend yield of 0.00%; (b) expected volatility of 148%; (c) average risk-free
interest rate of 2.51%; and (d) expected life of 9.2 years.

The weighted average fair value at date of grant for options granted
during 2004 was $4.00 per option. The fair value of options granted is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions: (a) dividend yield of 0.00%; (b) average expected volatility
66%; (c) average risk-free interest rate of 2.97%; and (d) expected life of 6.5 years.

The weighted average fair value at date
of grant for options granted during 2005 was $2.15 per option. The fair value of options granted is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions: (a) dividend yield of 0.00%;
(b) expected volatility of 75%; (c) average risk-free interest rate of 3.81%; and (d) expected life of 6.5 years.

AVIATION OVERHAUL AND
REPAIR COSTS

Major overhaul of Federal Aviation Administration component parts for our owned aircraft are capitalized as prepaid
repairs, as incurred, and amortized over service hours flown. Routine repairs and maintenance are expensed, as incurred. See Note 13 for information related to our discontinued Aviation Transportation Services segment operations.

EARNINGS PER SHARE

We account for our earnings per
share (EPS) in accordance with SFAS No. 128, Earnings Per Share, which establishes the requirements for presenting EPS. SFAS No. 128 requires the presentation of basic and diluted EPS
on the face of the income statement. Basic earnings per share begins with income (loss) applicable to common stockholders (net income (loss) less preferred stock dividends) and is based on the weighted average number of common shares outstanding
during each period presented. Diluted EPS assumes the exercise of all stock options and warrants having exercise prices less than the average market price of the common stock using the treasury stock method. In computing basic loss per share we
consider dividends and accretion on the Series A Preferred, Series B Preferred and Series C Preferred as a reduction of net income from operations in computing basic net income (loss) per share. For the purpose of diluted earnings per common share,
and only if such calculation results in dilution, preferred stock dividends will not reduce earnings; however, the weighted average common shares outstanding would increase representing the amount of common shares into which such preferred stock is
currently convertible. During the year ended December 31, 2005, we reported a net loss, thus the effects of dilutive securities were anti-dilutive, rendering basic and diluted loss per share the same. Convertible preferred stock, convertible
debt instruments, warrants, and options to purchase common stock are included as common stock equivalents only when dilutive.

RECENTLY ISSUED
UNIMPLEMENTED ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board (FASB) issued SFAS No. 123 (revised
2004), Share-Based Payment (SFAS No. 123(R)). SFAS No. 123(R) will require companies to measure all employee stock-based compensation awards using a fair value method and record such expense in its
consolidated financial statements. In addition, the adoption of SFAS No. 123(R) requires additional accounting and disclosure related to the income tax and cash flow effects resulting from share-based payment arrangements. SFAS No. 123(R)
is effective beginning as of the first interim or annual reporting period beginning after December 15, 2005. We are in the process of determining the impact of the requirements of SFAS No. 123(R). We believe it is likely that the financial
statement impact from the implementation of the requirements of SFAS No. 123(R) will significantly impact our future results of operations and we continue to evaluate it to determine the degree of significance.



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##### Index to Financial Statements

Based upon current estimates, we believe that a charge to earnings in 2006 related to SFAS No. 123 (R) will be approximately $0.3 million.

In December 2004, SFAS No. 153, Exchanges of Nonmonetary Assetsan amendment of Accounting Principles Board
(APB) Opinion No. 29 is effective for fiscal years beginning after June 15, 2005. This Statement addresses the measurement of exchange of nonmonetary assets and eliminates the exception from fair value measurement for
nonmonetary exchanges of similar productive assets in paragraph 21(b) of APB Opinion No. 29, Accounting for Nonmonetary Transactions and replaces it with an exception for exchanges that do not have commercial substance. The adoption
of SFAS No. 153 is expected to have no impact on our consolidated financial statements.

In May 2005, the FASB issued SFAS
No. 154, Accounting Changes and Error Corrections, a replacement of APB Opinion No. 20 and FASB Statement No. 30. This statement changes the requirements for accounting for and reporting of a change in accounting
principle. This statement applies to all voluntary changes in accounting principle. It also applies to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions.
SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. Adoption of SFAS No. 154 is not expected to have an effect on our consolidated financial statements.



|2. | VALUATION ALLOWANCE ACCOUNTS
|-- | ----------------------------

The allowance for
uncollectible accounts consists of the following:



|                                                      |  |                                |    |                              |   |                                    |  |   |                          |   |  |   |  
|----------------------------------------------------- |  | ------------------------------ | -- | ---------------------------- | - | ---------------------------------- |  | - | ------------------------ | - |  | - | -
|DESCRIPTION                                           |  | BALANCE AT BEGINNING OF PERIOD |    | ADDITIONS CHARGED TO EXPENSE |   | WRITE-OFF OF UNCOLLECTIBLE AMOUNTS |  |   | BALANCE AT END OF PERIOD
|                                                      |  | (In thousands)                
|December 31, 2005Allowance for uncollectible accounts |  | $                              |   |                              | $ |                                   |  | $ |                         |   |  | $ | 
|                                                      |  |                                |    |                              |   |                                    |  |   |                          |   |  |   |  
|December 31, 2004Allowance for uncollectible accounts |  | $                              | 45 |                              | $ |                                   |  | $ | (45                      | ) |  | $ | 
|                                                      |  |                                |    |                              |   |                                    |  |   |                          |   |  |   |  



|3. | PROPERTY, PLANT AND EQUIPMENT
|-- | -----------------------------

Property, Plant and
Equipment consists of the following at December 31:



|                                                                    |  |                |         |   |      |   |         |  
|------------------------------------------------------------------- |  | -------------- | ------- | - | ---- | - | ------- | -
|                                                                    |  | DECEMBER 31,   |        
|                                                                    |  | 2004           |         |   | 2005 |  
|                                                                    |  | (In thousands) |        
|Land                                                                |  | $              | 647     |   |      | $ | 647     |  
|Building and improvements                                           |  |                | 5,621   |   |      |   | 5,259   |  
|Drilling, field and support equipment                               |  |                | 29,794  |   |      |   | 28,727  |  
|Aviation equipment                                                  |  |                | 11,030  |   |      |   |        |  
|Shop equipment                                                      |  |                | 431     |   |      |   | 439     |  
|Office equipment                                                    |  |                | 1,849   |   |      |   | 1,835   |  
|Vehicles                                                            |  |                | 3,690   |   |      |   | 2,680   |  
|                                                                    |  |                |         |   |      |   |         |  
|                                                                    |  |                | 53,062  |   |      |   | 39,587  |  
|Less: accumulated depreciation                                      |  |                | (23,258 | ) |      |   | (24,665 | )
|                                                                    |  |                |         |   |      |   |         |  
|Total property, plant and equipment, net                            |  |                | 29,804  |   |      |   | 14,922  |  
|Less: property, plant and equipment of discontinued operations, net |  |                | (10,839 | ) |      |   |        |  
|                                                                    |  |                |         |   |      |   |         |  
|Property, plant and equipment, netcontinuing operations            |  | $              | 18,965  |   |      | $ | 14,922  |  
|                                                                    |  |                |         |   |      |   |         |  



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During 2005, some of our facilities and equipment were damaged as a result of Hurricanes Katrina and
Rita. As a result of the storms, we incurred damages principally to equipment and vehicles with a cost of approximately $0.6 million. The damage to the equipment was covered by insurance and the proceeds from the insurance policies are included in
the consolidated financial statements at December 31, 2005 in other receivables.



|4. | LONG-TERM DEBT AND LINE OF CREDIT
|-- | ---------------------------------

Long-term debt
consists of the following at December 31:



|                                                                                                                                                                                             |  |                |         |   |      |   |        |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ------- | - | ---- | - | ------ | -
|                                                                                                                                                                                             |  | DECEMBER 31,   |        
|                                                                                                                                                                                             |  | 2004           |         |   | 2005 |  
|                                                                                                                                                                                             |  | (In thousands) |        
|Notes payable to a finance company, variable interest rate at LIBOR plus 5.0% (7.42% at December 31, 2004) maturing July 31, 2006,
secured by various property and equipment, repaid in full |  | $              | 867     |   |      | $ |       |  
|Notes payable to a bank with interest payable at Prime plus 1.75% (8.25% at December 31, 2005 and 6.75% at December 31, 2004)
maturing July 31, 2023, secured by real estate                 |  |                | 1,392   |   |      |   | 1,354  |  
|Notes payable to a finance company with interest at 10.24%, maturing May 18, 2008, secured by an aircraft, repaid in full                                                                    |  |                | 168     |   |      |   |       |  
|Notes payable to a finance company with interest at 6.26%, maturing March 17, 2006, secured by various aircraft, repaid in
full                                                              |  |                | 1,697   |   |      |   |       |  
|Notes payable to a bank with interest at 8.13%, maturing June 20, 2009, secured by aircraft, repaid in full                                                                                  |  |                | 238     |   |      |   |       |  
|Notes payable to a finance company with interest at 8%, maturing February 10, 2013, secured by real estate                                                                                   |  |                | 214     |   |      |   | 195    |  
|Notes payable to a bank with interest at 12% at December 31, 2004, maturing May 31, 2005, secured by various property and equipment,
repaid in full                                          |  |                | 6,500   |   |      |   |       |  
|Convertible promissory notes payable to certain former stockholders of Trussco, Inc. with interest at 5%, maturing in June
2007                                                              |  |                | 3,000   |   |      |   | 1,000  |  
|Capital lease payable to leasing companies secured by vehicles                                                                                                                               |  |                | 1,198   |   |      |   | 729    |  
|Capital lease payable to finance companies                                                                                                                                                   |  |                | 9,100   |   |      |   | 941    |  
|Subordinated promissory note to a former debenture holder with a fixed interest rate of 8%, maturing May 13, 2008,
unsecured                                                                 |  |                |        |   |      |   | 913    |  
|Term B notes payable to a finance company, variable interest rate at LIBOR plus 8.0% (12.41% at December 31, 2005) maturing
August 29, 2010, secured by various property and equipment       |  |                |        |   |      |   | 9,000  |  
|Term A notes payable to a finance company, variable interest rate at LIBOR plus 6.5% (10.80% at December 31, 2005), maturing May 18,
2010, secured by various equipment                      |  |                |        |   |      |   | 4,540  |  
|Other debt                                                                                                                                                                                   |  |                | 86      |   |      |   | 52     |  
|                                                                                                                                                                                             |  |                |         |   |      |   |        |  
|Total                                                                                                                                                                                        |  |                | 24,460  |   |      |   | 18,724 |  
|Less: current maturities                                                                                                                                                                     |  |                | (6,095  | ) |      |   | (2,926 | )
|Less: long-term debt of discontinued operations                                                                                                                                              |  |                | (11,228 | ) |      |   |       |  
|                                                                                                                                                                                             |  |                |         |   |      |   |        |  
|Long-term debt, less current maturitiescontinuing operations                                                                                                                                |  | $              | 7,137   |   |      | $ | 15,798 |  
|                                                                                                                                                                                             |  |                |         |   |      |   |        |  



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##### Index to Financial Statements

Annual maturities of long-term debt during each of the years ended December 31, are as follows (in
thousands):



|                        |  |                |       
|----------------------- |  | -------------- | ------
|YEAR ENDED DECEMBER 31, |  |               
|                        |  | (In thousands)
|2006                    |  | $              | 2,926 
|2007                    |  |                | 3,729 
|2008                    |  |                | 3,268 
|2009                    |  |                | 2,219 
|2010 and thereafter     |  |                | 6,582 
|                        |  |                |       
|                        |  | $              | 18,724
|                        |  |                |       

The estimated fair value of long-term debt is determined based on borrowing rates currently
available to us for notes with similar terms and average maturities and approximates the carrying value as of December 31, 2004 and 2005.

REVOLVING LINE OF CREDIT

We have a working capital revolving line of credit agreement (the Line) with a bank.
Availability under the Line is the lower of: (i) $15.0 million or, (ii) the eligible accounts receivable. The Line accrues interest at the prime interest rate plus 1.5% (9.25% at December 31, 2005) and matures in May 2010. The Line is
collateralized by accounts receivable and is subject to certain customer concentration limitations. As of December 31, 2005, we had $4.7 million outstanding under the Line. The weighted-average interest rate on borrowings under the Line was
6.0% and 7.7% for the years ended December 31, 2004 and 2005, respectively. Due to the lock-box arrangement and the subjective acceleration clause of the Line agreement, the debt under the Line has been classified as a current liability as of
December 31, 2004 and 2005, as required by EITF No. 95-22, Balance Sheet Classification of Borrowings Outstanding under Revolving Credit Agreements that include both a Subjective Acceleration Clause and a Lock-Box
Arrangement.

SENIOR SECURED

On October 21, 2004, we completed a $6.5 million senior secured loan (Bridge Loan) with Beal Bank, SSB. The Bridge Loan accrued interest at the rate of 12% per annum, matured January 15, 2005, and was
collateralized by specific seismic assets, certain Trussco equipment and three Bell helicopters. The proceeds were used to repay debt, pay the October Put Option on the Convertible Debentures discussed below and for working capital purposes.

On January 21, 2005, we entered into a forbearance agreement with Beal Bank, SSB, which increased the interest rate from 12% to 17%
and extended the maturity of the Bridge Loan to March 15, 2005. On May 2, 2005, we entered into a second agreement to extend the maturity date to May 31, 2005. The Bridge Loan restricted the payment of dividends and contained
customary financial covenants requiring, among other things, minimum levels of tangible net worth, debt to earnings before interest, taxes, depreciation and amortization (EBITDA) ratios, and limitations on annual capital expenditures and
certain customer concentrations. This loan was repaid in full with proceeds from the Senior Credit Facility (see below) on May 18, 2005.

SENIOR
CREDIT FACILITY

On May 18, 2005, we completed a $50 million equipment term financing (Term A Loan) and increased our
Line to $15 million from its previous level of $12 million (with the Term A Loan, collectively referred to herein as the Senior Credit Facility). Under the terms of the Term A Loan, funding will be limited to the lesser of $50 million
and the sum of (i) 85% of the orderly liquidation value of our aviation fleet; (ii) 75% of the



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##### Index to Financial Statements

orderly liquidation value of our seismic drilling and environmental equipment; and (iii) 50% of the fair market value of certain real estate. Proceeds
from the Term A Loan were used to refinance certain long-term debt, provide working capital and establish funding necessary to complete various strategic transactions under consideration. The Term A Loan matures in May 2010 and will be repaid
quarterly in equal payments up to a 50% balloon at maturity date, with interest paid in arrears and accruing at the annual interest rate of 30-day LIBOR plus 6.5% (10.80% at December 31, 2005). The Term A Loan restricts the payment of cash
dividends and contains customary financial covenants requiring, among other things, minimum levels of tangible net worth, debt to EBITDA ratios and limitations on annual capital expenditures. In conjunction with the disposition of the Aviation
Transportation Services segment (See Note 13), effective June 2005, the borrowing base was reduced to $30.0 million. Proceeds from the sale of the Aviation Transportation Services segment were used to repay approximately $9.35 million on the Term A
Loan during July 2005, leaving an outstanding balance at that time of approximately $8.6 million. As described below, a portion of the Junior Credit Facility was used to pay approximately $3.4 million toward the balance of the Term A Loan, leaving a
remaining balance of $4.5 million at December 31, 2005 after a scheduled principal payment in the fourth quarter.

JUNIOR CREDIT FACILITY

On August 29, 2005, we completed a $25 million multiple draw term credit facility (Term B Loan). Under the terms of
the Term B Loan, funding will be done through advances at our request in minimum amounts of $2 million. Quarterly payments in the amount of $0.2 million, plus interest, will begin on April 1, 2008. In the event that we no longer have any senior
term debt outstanding, the annual principal amortization of the Term B Loan will be increased to 7.5% of the advances outstanding under the Term B Loan beginning December 31, 2006. The Term B Loan matures in August 2010 and will accrue interest
at the rate of 90-day LIBOR plus 8% (12.41% at December 31, 2005). The Term B Loan restricts the payment of cash dividends and contains customary financial covenants requiring, among other things, minimum levels of tangible net worth, debt to
EBITDA ratios and limitations on annual capital expenditures. The proceeds from the Term B Loan were used to (i) reduce the current outstanding balance under our Term A Loan by approximately $3.4 million to a balance of $5.0 million;
(ii) retire approximately $3.3 million of 8% Subordinated Notes with a payment of $1.5 million cash and the issuance of 750,000 shares of our common stock; (iii) retire $2 million of certain Subordinated Debt with a payment of $1
million cash and the issuance of 200,000 shares of our common stock; and (iv) provide working capital and funds necessary for potential strategic transactions.

CAPITAL LEASES

Prior to December 31, 2005, we had several capital leases for aircraft which
generally had lease terms of 60 months at inception of the lease. Aircraft leases either contained a bargain purchase option at the end of the lease or a balloon amount due that can be refinanced over 36 months. From time to time, we acquired an
aircraft through cash flows from operations or through the Line which was then sold to a financing company and leased back to us. These sales and lease back transactions were recorded as a capital lease and gains and losses incurred on the sale are
deferred and amortized over the life of the lease term or the asset, whichever is shorter. These leases were paid in full with proceeds from the Term A Loan (see above). As set forth in Note 13, we sold the equipment and related assets of our
Aviation Transportation Services segment for a cash price of $11.0 million effective June 30, 2005. The aviation assets which were held under capital lease at December 31, 2004 were sold in that transaction. During May 2005, proceeds from
the borrowings under the Term A Loan were used to repay certain aviation leases outstanding at that time.

We also lease several vehicles
used in our seismic drilling and environmental operations under 40-month capital leases.



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##### Index to Financial Statements

Total cost and accumulated depreciation of aircraft and vehicles held under capital leases is as follows:



|                               |  |                |        |   |      |   |       |  
|------------------------------ |  | -------------- | ------ | - | ---- | - | ----- | -
|                               |  | DECEMBER 31,   |       
|                               |  | 2004           |        |   | 2005 |  
|                               |  | (In thousands) |       
|Aircraft                       |  | $              | 10,009 |   |      | $ |      |  
|Vehicles                       |  |                | 2,117  |   |      |   | 1,694 |  
|                               |  |                |        |   |      |   |       |  
|                               |  |                | 12,126 |   |      |   | 1,694 |  
|Less: Accumulated amortization |  |                | (1,154 | ) |      |   | (795  | )
|                               |  |                |        |   |      |   |       |  
|Capitalized cost, net          |  | $              | 10,972 |   |      | $ | 899   |  
|                               |  |                |        |   |      |   |       |  

Depreciation expense for the years ended December 31, 2003, 2004 and 2005 was approximately
$0.3 million, $0.7 million and $0.6 million, respectively, for all assets held under capital lease.

Following is a schedule of future
minimum lease payments for capital leases as of December 31, 2005:



|                                            |  |                |       |  
|------------------------------------------- |  | -------------- | ----- | -
|YEAR ENDED DECEMBER 31,                     |  |                |      
|                                            |  | (In thousands) |      
|2006                                        |  | $              | 787   |  
|2007                                        |  |                | 481   |  
|2008                                        |  |                | 587   |  
|2009                                        |  |                | 38    |  
|2010 and thereafter                         |  |                | 10    |  
|                                            |  |                |       |  
|Total minimum lease payments                |  |                | 1,903 |  
|Less: Amount representing interest          |  |                | (233  | )
|                                            |  |                |       |  
|Present value of net minimum lease payments |  | $              | 1,670 |  
|                                            |  |                |       |  

Subsequent to December 31, 2005, the capital leases on vehicles were paid off through a
sale/leaseback transaction with a third party leasing company. The capital leases were replaced with twenty-four (24) month operating leases expiring in the first quarter of 2008.

TRUSSCO NOTES

On June 30, 2004, we purchased all of the issued and outstanding stock of
Trussco, Inc. and all of the membership interests in Trussco Properties, L.L.C. (collectively Trussco) for an aggregate acquisition price 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 into shares of our
common stock at a price of $9.40 per share.

On May 18, 2005, in connection with the completion of the Term A Loan, we entered into
early debt extinguishment agreements (Debt Extinguishment Agreements) with respect to $2.0 million of the Stockholder Notes and $1.0 million of the Earnout Note more fully described in Note 8. Under the terms of the Debt Extinguishment
Agreements, we were required to (i) issue 0.2 million shares of our common stock; and (ii) pay certain holders of the Stockholder Notes $1.0 million on or before August 16, 2005, in full and complete satisfaction of $2.0 million
of the Stockholder Notes and $1.0 million of the contingent Earnout Note. The Company recognized a gain on debt extinguishment of $0.3 million upon closing the transaction.

On August 29, 2005, in accordance with the Debt Extinguishment Agreements, we paid $1.0 million in cash from the proceeds of the Term B Loan, and
issued 0.2 million shares of our common stock in full satisfaction of



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##### Index to Financial Statements

$2.0 million of the Stockholder Notes. In addition, we recorded an additional gain on extinguishment of $0.3 million in accordance with the terms of the
agreements.

At December 31, 2005, we have $1.0 million of Stockholder Notes outstanding bearing interest at 5% and maturing in June 2007. We also
have $2.0 million of contingent Earnout Notes payable at December 31, 2005, none of which have been earned. Based upon current estimates, the amounts due and payable by the end of the term of the Earnout Note, if any, will be immaterial.

INSURANCE NOTES PAYABLE

A portion of
our property and casualty insurance premiums are financed through certain short-term installment loan agreements. The insurance notes are payable in monthly installments through September 2006 and accrue interest at rates ranging between 4.6% to
5.0%.

CONVERTIBLE DEBENTURES

Pursuant
to a Securities Purchase Agreement dated February 12, 2004, we issued (i) $10,000,000 in principal amount of 3-year, 6.5% fixed rate, Convertible Debentures (the Initial Debentures) that were 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 were not exercisable for a period of six months and one day after the issue date of such warrants and in no
event would the exercise prices of such warrants be less than $6.15 per share. In accordance with APB Opinion No. 14, the warrants were valued at a fair market value of $0.9 million using the Black Scholes model. The value of these warrants was
recorded as debt discount with a corresponding amount recorded to paid in capital at the date of issuance. The 1-year Series A warrants expired during 2005.

On April 15, 2004, in accordance with the Securities Purchase Agreement, we issued (i) $5,050,000 in principal amount of 3-year, 6.5% fixed rate, Convertible Debentures (collectively with the Initial
Debentures, hereinafter referred to as the Debentures) that were convertible into shares of common stock at an initial conversion price of $7.20 per share, and (ii) 5-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 were not exercisable for a period of six months and one day after the issue date of such warrants and in no event would the exercise prices of such warrants
be less than $7.11 per share. In accordance with APB Opinion No. 14, the warrants were valued at a fair market value of $0.2 million using the Black Scholes model. The value of the warrants and beneficial conversion feature were recorded as a
debt discount with a corresponding amount recorded to paid in capital at the date of issuance.

Total proceeds of $14.2 million were
received from the issue of these Debentures, after expenses. Of the total proceeds received, $8.2 million was used to redeem the Series A Preferred Stock and dividends in February 2004, $4.9 million was used to redeem the Series B Preferred Stock
and dividends in March and April 2004 and the balance used for working capital purposes (See Note 9).

The debt discounts for the
February 12, 2004 and April 15, 2004 debentures were $0.9 million and $0.2 million, respectively. The debt discounts are being amortized to interest expense using the effective interest method over the period in which the debentures can be
put to us. A total of $0.9 million is included in interest expense and $0.2 million loss on extinguished related to the amortization of the debt discounts for the year ended December 31, 2004. Since the Debentures were in default at
December 31, 2004, the entire amount of the debt discount was charged to expense during 2004.

Prior to maturity of the Debentures,
the holders of the Debentures had 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



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##### Index to Financial Statements

5,012,237 shares effective June 30, 2004 covering the common stock that may have been 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 non-cumulative and equal
monthly installments equal to 8.75% of the face value of the Debentures ($1,316,875) beginning August 1, 2004. Accordingly the Debentures, net of debt discount, were classified as a current liability in the Consolidated Balance Sheet at
December 31, 2004. We received, and redeemed for cash, notices from the holders of the Debentures exercising their Put Option for August, September and October 2004. Upon receipt of the Debenture Holders intent to exercise a Put Option,
we had the irrevocable option to deliver cash or, if certain conditions set forth in the Debentures were satisfied, shares of our common stock. If we elected to pay the Put Option with common stock, the underlying shares would have been 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 agreement. The number of shares we would have delivered was equal to the value of the Put Option installment due divided
by the fair market value of our common stock for the applicable pricing period discounted at 12.5%. We did not redeem for cash or stock notices received from the Debenture Holders exercising their Put Option for the months of November and December
2004 and January, February, March and April 2005.

As provided for in the terms of the applicable Securities Purchase Agreements, the
Debenture holders received Put Option payments of $1.3 million in principal, plus accrued interest, each on August 5, 2004, on September 9, 2004 and on October 25, 2004. In accordance with APB Opinion No. 26 Early
Extinguishment of Debt, we recorded $0.2 million as a loss on extinguishment of debt in 2004 as a result of the early extinguishment of these portions of the Debentures.

On October 8, 2004, we entered into an Amendment and Conditional Waiver Agreement (the Amendment) with the holders of the Debentures.
Under the terms of the Amendment, the Debenture holders granted us, among other things, the right to pre-pay in cash all, but not less than all, of the outstanding Debentures held by each holder on or prior to November 15, 2004. In exchange for
such right, we agreed to allow the holders of the Debentures to convert $2,000 of the principal amount of the April 15, 2004 Debentures into 200,000 shares of common stock at a revised conversion price of $0.01 per share. As a result of this
conversion and in accordance with the requirements of Statement of Financial Accounting Standards (SFAS) No. 84, Induced Conversions of Convertible Debt, an amendment to APB Opinion No. 26, we recorded $0.9
million in debt conversion expense in 2004.

On January 25, 2005, we filed suit in United States District Court, Western District of
Louisiana against the holders of the Debentures and other third parties (collectively, the Debenture Holders). In the suit, we alleged that the Debenture Holders violated Section 16(b) of the Securities Exchange Act of 1934, and we
sought the disgorgement of profits realized by the Debenture Holders from their purchases and sales of our common stock.

On May 18,
2005, we entered into settlement agreements (Debenture Settlement Agreements) with each of the Debenture Holders in exchange for our dismissal of the lawsuit filed against the Debenture Holders. Under the terms of the Debenture
Settlement Agreements, we agreed to (i) pay the Debenture Holders approximately $4.0 million cash; (ii) immediately issue the Debenture Holders 2.0 million shares of our common stock at an agreed upon value of $3.4 million; and,
(iii) issue the Debenture Holders approximately $4.3 million of unsecured, subordinated promissory notes (Subordinated Debenture Notes). We recorded a gain of $0.2 million at the close of these transactions. The Subordinated
Debenture Notes were scheduled to be paid quarterly, with interest in arrears, over 36 months in level payments with interest accruing at the rate of 8% per annum. Execution of the Debenture Settlement Agreements extinguished the terms of the
original Debentures and released all parties from any future claims.

On August 26, 2005, we entered into a settlement agreement and mutual
release (Agreement and Release) with two of the three holders of the Subordinated Debenture Notes. Under terms of the Agreement and Release,



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we paid $1.5 million in cash from the proceeds of a new $25.0 million multiple draw term credit facility, and issued 750,000 shares of our common stock in
full satisfaction of the applicable Subordinated Debenture Notes. At December 31, 2005, the remaining Subordinated Debenture Note had a balance of approximately $0.9 million.



|5. | INTANGIBLE ASSETS
|-- | -----------------

Intangible assets consist of the
following at December 31:



|                                            |  |                       |       |                          |   |                       |  |                          |       |  |   |      
|------------------------------------------- |  | --------------------- | ----- | ------------------------ | - | --------------------- |  | ------------------------ | ----- |  | - | -----
|                                            |  | 2004                  |       | 2005                    
|                                            |  | GROSS CARRYING AMOUNT |       | ACCUMULATED AMORTIZATION |   | GROSS CARRYING AMOUNT |  | ACCUMULATED AMORTIZATION
|                                            |  | (In thousands)       
|Aviation hull and component overhaul system |  | $                     | 295   |                          | $ | 59                    |  | $                        |      |  | $ |     
|Customer lists(a)                           |  |                       | 1,920 |                          |   | 300                   |  |                          | 1,920 |  |   | 400  
|Trademark/tradename(a)                      |  |                       |      |                          |   |                      |  |                          | 2,900 |  |   | 942  
|Non-compete agreements(a)                   |  |                       |      |                          |   |                      |  |                          | 240   |  |   | 72   
|Trussco licenses and permits(a)             |  |                       | 5,713 |                          |   | 571                   |  |                          | 800   |  |   | 120  
|                                            |  |                       |       |                          |   |                       |  |                          |       |  |   |      
|Total amortizable intangible assets         |  | $                     | 7,928 |                          | $ | 930                   |  | $                        | 5,860 |  | $ | 1,534
|                                            |  |                       |       |                          |   |                       |  |                          |       |  |   |      
|Goodwill                                    |  | $                     | 2,130 |                          | $ | 124                   |  | $                        | 3,048 |  | $ | 124  
|Acquisition costs                           |  |                       |      |                          |   |                      |  |                          | 1,128 |  |   |     
|                                            |  |                       |       |                          |   |                       |  |                          |       |  |   |      
|Total unamortizable intangible assets       |  | $                     | 2,130 |                          | $ | 124                   |  | $                        | 4,176 |  | $ | 124  
|                                            |  |                       |       |                          |   |                       |  |                          |       |  |   |      

---

|(a) | During 2005, as indicated in Note 1, we changed the amortizable lives and allocation of costs of intangible assets related to the acquisition of Trussco, Inc.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------



|                        |  |                                |     |                                          |   |      
|----------------------- |  | ------------------------------ | --- | ---------------------------------------- | - | -----
|YEAR ENDED DECEMBER 31, |  | AGGREGATE AMORTIZATION EXPENSE |     | ESTIMATED AGGREGATE AMORTIZATION
EXPENSE
|                        |  | (In thousands)                
|2003                    |  | $                              | 100 |                                          | $ |     
|2004                    |  |                                | 730 |                                          |   |     
|2005                    |  |                                | 663 |                                          |   |     
|2006                    |  |                                |    |                                          |   | 458  
|2007                    |  |                                |    |                                          |   | 408  
|2008                    |  |                                |    |                                          |   | 358  
|2009                    |  |                                |    |                                          |   | 334  
|Thereafter              |  |                                |    |                                          |   | 2,768

Goodwill, net, of $2.0 million is attributable to our previous acquisition of Gulf Coast Resources
and $0.9 million is attributable to our acquisition of Trussco, Inc. at December 31, 2005.



|6. | RELATED PARTY TRANSACTIONS
|-- | --------------------------

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. 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 in satisfaction of all of the remaining outstanding subordinated debentures



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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 the accompanying financial statements (See Note 9 regarding the accounting for preferred stock). In February and April 2004, we issued $10 million and $5.05 million, respectively,
of the Debentures (See Note 4). The proceeds were used to redeem $8.2 million (7,475 shares) of the Series A Preferred outstanding, including accrued dividends. The remaining 25 shares of Series A Preferred were redeemed in April 2004 for $0.03
million. At December 31, 2004 there are no Series A Preferred shares outstanding. During the first quarter of 2004, we redeemed 2,286 shares of the Series B Preferred 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 outstanding for $2.5 million, including accrued dividends. At December 31, 2005, 29 shares of Series B Preferred remain outstanding.

In connection with the original issuance of the Debentures, we issued to the affiliate detachable warrants to purchase 1,912,833 shares of our common
stock, of which 293,055 shares were transferred in 2003 to settle certain litigation (See Note 9) and 858,678 shares were cancelled. The balance of 761,100 shares was exercised during the first quarter of 2004 at an exercise price of $2.25.

During 2003, we entered into an agreement to facilitate the private placement of approximately 1,650,000 shares of our common stock owned
by an affiliate and certain investors. The sale of the stock covered by this agreement closed during the fourth quarter of 2003, resulting in our receipt of $0.4 million cash which was recorded as a reduction of our general and administrative
expenses during 2003.

During 2003, in order to facilitate a settlement of ongoing litigation between certain of our affiliates, we agreed
to re-price and extend the maturity dates of certain warrants owned by the defendant affiliates but transferred in settlement of the litigation to the plaintiff affiliates. The exercise prices of the transferred warrants ranged from $2.25 to $6.00
per share. The maturity dates of the transferred warrants ranged from November 1, 2004 to July 1, 2005. The transferred warrants were re-priced at $1.54 per share and the maturity dates were extended to November 1, 2006. Accordingly,
during 2003 we recorded a non-cash charge of approximately $0.1 million representing the differences in the fair market value of the originally issued warrants and the re-priced warrants. In 2004 all re-priced warrants were exercised.

On May 17, 2005, we entered into a Securities Purchase Agreement with certain of our affiliates and executive officers to issue up to $5.0 million
of Series C 9% Convertible Preferred Stock (the Series C Preferred) in conjunction with the completion of the Senior Credit Facility more fully described above. Our Series C Preferred is convertible into our common stock at a conversion
price of $1.95 per share and includes detachable warrants to purchase up to 6,550,000 additional shares of our common stock at exercise prices ranging between $1.95 and $3.50 per share. The transactions contemplated by the Securities Purchase
Agreement closed in two tranches. On May 17, 2005, the closing date of the first tranche, we issued an aggregate of 3,500 shares of Series C Preferred and warrants to acquire 4,585,000 shares of our common stock, in exchange for $3,500,000. The
second tranche closed on August 29, 2005, at which time the remainder of the Series C Preferred and warrants were issued generating proceeds of $1.5 million and we granted the remaining 1,965,000 warrants.

As mentioned above, the Term A Loan and the Term B Loan restrict the payment of cash dividends. Consequently, a portion of the 9% dividend obligation
related to the Series C Preferred has been satisfied through the issuance of payment-in-kind (PIK) dividends. The PIK dividends are paid through the issuance of additional shares of Series C Preferred. These additional shares of
preferred stock do not have warrants attached to them. During the year ended December 31, 2005, 128 shares of Series C Preferred were issued as PIK dividends at par.

During the three month periods ended March 31, 2005 and December 31, 2004, two of our executives deferred receipt of salary totaling $120,000
and $37,000 respectively. Beginning in the quarter ended June 30,



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##### Index to Financial Statements

2005, we paid $120,000 toward this liability. At December 31, 2005 and 2004, the total amount owed to these two executives was $0 and $37,000,
respectively,



|7. | VENDOR, CUSTOMER AND CREDIT CONCENTRATION
|-- | -----------------------------------------

During
the year ended December 31, 2003, three customers associated with the drilling division, accounted for 71% (43%, 16% and 12%, respectively) of our total revenues. Included in accounts receivable as of December 31, 2003, are amounts
receivable from these customers totaling approximately 60% (20%, 7% and 33%, respectively) of total accounts receivable.

During the year
ended December 31, 2004, four customers associated with the drilling division, accounted for 50% (15%, 13%, 11% and 11%, respectively) of our total revenues. Included in accounts receivable as of December 31, 2004, are amounts receivable
from these customers totaling approximately 44% (0%, 19%, 20% and 5%, respectively) of total accounts receivable.

During the year ended
December 31, 2005, two customers associated with the drilling division, accounted for 38% (20% and 18%, respectively) of our total revenues. Included in accounts receivable as of December 31, 2005, are amounts receivable from these
customers totaling approximately 37% (33% and 4%, respectively) of total accounts receivable.

During the year ended December 31,
2005, one vendor associated with the drilling division accounted for 15% of our total direct costs. Included in accounts payable as of December 31, 2005 are amounts payable to this vendor totaling approximately 28% of total accounts payable.



|8. | COMMITMENTS AND CONTINGENCIES
|-- | -----------------------------

OPERATING LEASES

Total rental expense inclusive of equipment leased on a short-term basis, was $0.4 million, $0.9 million and $1.6 million for the years ended
December 31, 2003, 2004 and 2005, respectively.

We have the following operating lease commitments under non-cancelable lease terms,
as of December 31, 2005:



|                 |  |                        |     |      |   |      |  |   |    
|---------------- |  | ---------------------- | --- | ---- | - | ---- |  | - | ---
|                 |  | PAYMENTS DUE BY PERIOD
|                 |  | 2006                   |     | 2007 |   | 2008
|                 |  | (In thousands)        
|Operating leases |  | $                      | 376 |      | $ | 278  |  | $ | 164
|                 |  |                        |     |      |   |      |  |   |    

INSURANCE

Trussco, Inc. maintains a self-insurance program for a portion of its health care and workers compensation costs. Self-insurance costs are accrued based upon the aggregate of the liability for reported claims
and the estimated liability for claims incurred but not reported. As of December 31, 2005, the Company had $0.1 million of accrued liabilities related to health care and workers compensation claims.

Management is not aware of any significant workers compensation claims or any significant claims incurred but not reported as of December 31,
2005.

SERIES A AND SERIES B PREFERRED STOCK LITIGATION

On December 7, 2005, the Fourth Circuit Court of Appeal for the State of Louisiana granted our writ application for supervisory review and rendered a judgment granting our Motion for Partial Summary Judgment



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##### Index to Financial Statements

seeking a declaratory judgment against Steven T. Stull, a former director, and Advantage Capital Partners, et. al (ACP). On February 13,
2005, we commenced litigation against Mr. Stull and ACP, and their respective insurers seeking a declaratory judgment confirming our right to redeem, rather than convert, its shares of Series A and Series B 8% Convertible Preferred Stock under
our Articles of Incorporation, as amended and other applicable operative documents and agreements. The Court determined that we had the right to redeem, rather than convert both the Series A and Series B preferred stock within 30 days after
receiving the notices of conversion from ACP.

On December 20, 2005, the United States District Court for the Eastern District of
Louisiana granted our Motion to Dismiss a lawsuit filed by ACP and its affiliates against us and certain of our executive officers. In the lawsuit filed on March 26, 2004, ACP and its affiliates alleged that (i) we and the executive
officers misrepresented material facts and failed to disclose material facts related to the intention to redeem our Series A Preferred and Series B Preferred, and (ii) our officers breached their fiduciary duties. The Court held that ACP had
failed to satisfy the pleading requirements for alleging fraud under federal securities laws.

DEBENTURE LITIGATION

On January 25, 2005, we filed suit in United States District Court, Western District of Louisiana against the holders of the Debentures and other
third parties (collectively, the Debenture Holders). In the suit we alleged that the Debenture Holders violated Section 16(b) of the Securities Exchange Act of 1934 and we sought the disgorgement of profits realized by the Debenture
Holders from their purchases and sales of our common stock.

On May 18, 2005, we entered into settlement agreements (Settlement
Agreements) with each of the Debenture Holders in exchange for our dismissal of the lawsuit filed against the Debenture Holders (See Note 4). Under the terms of the Debenture Settlement Agreements, we agreed to (i) pay the Debenture
Holders approximately $4.0 million cash; (ii) immediately issue the Debenture Holders 2.0 million shares of our common stock at an agreed upon value of $3.4 million; and (iii) issue the Debenture Holders approximately $4.3 million of
unsecured, subordinated promissory notes (Subordinated Debenture Notes). We recorded a gain on debt extinguishment of approximately $0.2 million upon closing of these transactions. The Subordinated Debenture Notes were scheduled to be
paid quarterly, with interest in arrears, over 36 months in level payments with interest accruing at the rate of 8% per annum. Execution of the Debenture Settlement Agreements extinguished the terms of the original Debentures and released all
parties from any future claims.

On August 26, 2005, we entered into a settlement agreement and mutual release (Agreement and
Release) with two of the three holders of the Subordinated Debenture Notes. Under terms of the Agreement and Release, we paid $1.5 million in cash from the proceeds of a new $25.0 million multiple draw term credit facility, and issued 750,000
shares of our common stock in full satisfaction of the applicable Subordinated Debenture Notes. At December 31, 2005, the remaining Subordinated Debenture Note had a balance of approximately $0.9 million.

In the normal course of our business, we become involved in various litigation matters including, among other things, claims by third parties for alleged
property damages, personal injuries and other matters. While we believe we have meritorious defenses against these claims, management has used estimates in determining our potential exposure and has recorded reserves in our financial statements
related thereto where appropriate. It is possible that a change in our estimates of that exposure could occur, but we do not expect such changes in estimated costs will have a material effect on our financial position or results of operations.

EMPLOYMENT AGREEMENTS

On
June 30, 2004, we amended Restricted Stock Incentive Agreements with certain executive officers and executed 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



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##### Index to Financial Statements

was held in escrow, registered in the name of the executive officers, until it vested 100% on November 4, 2004. Tax equalization payments were also paid
to the two executive officers totaling $0.1 million at June 30, 2004. The awards were valued at their 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 common stock, 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). Such shares were not available until November 30, 2004, when the number of shares available under the Plan was approved by the stockholders to be increased. From June 30, 2004 until
November 30, 2004 the awards were accounted for under FASB Interpretation (FIN) No. 28 Accounting for Stock Appreciation Right and Other Variable Stock Option or Award Plans as a variable plan, which requires that
compensation be measured at the end of each reporting period at the quoted market price of a share of our common stock and the change in the market value of the incentive awards be charged to expense. As such, the awards were revalued at the end of
each reporting period at the quoted market price of a share of our common stock and the period over period change charged to expense. At November 30, 2004, the market value of a share of our common stock was $2.93 per share resulting in
compensation expense under variable accounting of $0.5 million to be recognized through that date. Effective November 30, 2004, the Company amended these incentive agreements to provide for 100% vesting of the restricted stock award and we have
put into escrow the number of shares of common stock to settle the award. Accordingly, the previously unvested portion of the award was charged to expense which, along with the previously recognized $0.5 million, totaled $0.8 million which was
recorded as compensation expense as of December 31, 2004.

We also entered into Stock-Based Award Incentive Agreements (hereinafter
SBA) with certain executive officers on June 30, 2004. The SBA shall become computed and payable: (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. If no payments have been made, the right terminates on December 31, 2008 or upon termination of employment for resignation or cause, whichever occurs first. The intrinsic value of this award at December 31, 2005 is
$6.7 million but no compensation expense has been recorded at December 31, 2005 because the award is contingent on future events none of which are considered probable at December 31, 2005.

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 12), we entered into employment contracts with three former Trussco stockholders effective through
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. During 2005,
two of these employment contracts were terminated.



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TRUSSCO INC. EARNOUT

In connection with the acquisition of Trussco, we issued to certain former shareholders of Trussco a promissory note (Earnout Note) that will earn interest at a rate of 5% per annum of the amount
owed. Under the terms of the Earnout Note, we agreed to pay these shareholders on or before June 30, 2007, the lesser of (i) the amount of $3.0 million, or (ii) the sum of the product of 3.12 times Trusscos average annual EBITDA
(earnings before interest, taxes depreciation and amortization) for the 36 month period ending December 31, 2006 less the sum of $9.0 million plus $1.5 million of Trussco long-term and former shareholder debt existing as of June 30, 2004
that we assumed.

At December 31, 2005, we have $1.0 million of Stockholder Notes outstanding bearing interest at 5% and maturing in
June 2007. We also have $2.0 million of contingent Earnout Notes payable at December 31, 2005, none of which have been earned. Based upon current estimates, the amounts due and payable by the end of the term of the Earnout Note, if any, will be
immaterial.

OTHER CONTINGENCIES

We
record liabilities for environmental obligations when remedial efforts are probable and the costs can be reasonably estimated. Our estimates are based on currently enacted laws and regulations. As more information becomes available or environmental
laws and regulations change, such liabilities may be required to be adjusted. Additionally, in connection with acquisitions, we obtain indemnifications from the seller related to environmental matters. If the indemnifying parties do not fulfill
their obligations, adjustments of recorded amounts may be required.

We maintain insurance coverage for various aspects of our business and
operations. We retain a portion of losses that occur through the use of deductibles and, to a limited extent, self-funded insurance programs. We regularly review estimates of reported and unreported claims and provide for losses through insurance
reserves. As claims develop and additional information becomes available, adjustments to loss reserves may be required.



|9. | STOCKHOLDERS EQUITY
|-- | --------------------

COMMON STOCK

We currently have 45,000,000 shares of our $0.01 par value common stock authorized; of these authorized shares, there were 11,679,565 and 15,272,121
issued at December 31, 2004 and 2005, respectively. In 2001, we repurchased 361,800 shares of treasury stock, of which during 2004, 90,454 shares were re-issued and during 2005, 135,673 shares were re-issued leaving 135,673 outstanding at
December 31, 2005.

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 which is convertible into common stock of the company at a conversion price of $0.75 per share. 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 in satisfaction of all of the remaining outstanding subordinated debentures including accrued interest of $1.8 million. The Series B Preferred are convertible into common stock of the
company at a conversion price of $1.25 per share. This transaction resulted in the affiliate agreeing to forgive $1.0 million of indebtedness, which has been reflected as a capital contribution from the affiliate rather than as income in the
accompanying financial statements. The Preferred Stock earns dividends at a rate of 8% of which dividends of $484,000 and $490,000 were recorded during the years ended December 31, 2003 and 2004, respectively. In February 2004, we issued



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$10 million of 6.5% Subordinated Convertible Debentures (See Note 4). The proceeds were used to redeem $8.2 million (7,475 shares) of the Series A Preferred
outstanding, including accrued dividends of $0.7 million. The remaining 25 shares of Series A Preferred were redeemed in April 2004 for $0.03 million. At December 31, 2005 there are no Series A Preferred shares outstanding. During the first
quarter of 2004, we redeemed 2,286 shares of the Series B Preferred for $2.4 million, including accrued dividends of $0.1 million. In April 2004, we redeemed 2,285 shares of the total of 2,314 shares of the Series B Preferred outstanding for $2.5
million, including accrued dividends of $0.2 million. At December 31, 2005, 29 shares of Series B Preferred remain outstanding and are convertible into 7,733 shares of our common stock.

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 shares were transferred during 2003 to settle certain litigation and 858,678 shares were cancelled. The balance of 761,100 shares was exercised in the first quarter of 2004 at an exercise price of $2.25 per share.

On May 17, 2005, we entered into a Securities Purchase Agreement with certain of our affiliates and executive officers to issue up to
$5.0 million of Series C Preferred in conjunction with the completion of the Senior Credit Facility more fully described in Note 4. Our Series C Preferred is convertible into shares of our common stock at a conversion price of $1.95 per share and
includes detachable warrants to purchase up to 6,550,000 additional shares of our common stock at exercise prices ranging between $1.95 and $3.50 per share. The conversion prices of our Series C Preferred and the warrant exercise prices were
supported by a fairness opinion issued by a third party. The transactions contemplated by the Securities Purchase Agreement closed in two tranches. On May 17, 2005, we issued an aggregate of 3,500 shares of Series C Preferred and warrants to
acquire 4,585,000 shares of our common stock, in exchange for $3.3 million, net of offering costs of $0.2 million. The proceeds of the issuance were allocated to the warrants and preferred stock based on the relative fair value of each instrument.
The value attributed to the warrants was $2.9 million ($2.7 million net of offering costs) and was recorded as additional paid in capital while $0.6 million was the attributed value to the preferred stock. In addition, the conversion terms of the
preferred stock result in a beneficial conversion feature valued at approximately $0.7 million. As a result of the terms of conversion, we recorded a one time charge to retained earnings for this amount representing a deemed dividend to the
preferred stockholders with the offset recorded in additional paid in capital.

On August 29, 2005, the remainder of the Series C
Preferred and warrants were issued generating gross proceeds of $1.5 million. The proceeds of the issuance of the second tranche were allocated to the warrants and preferred stock based on the relative fair value of each instrument. The entire value
of $1.5 million was attributed to the fair value of the warrants and was recorded as additional paid in capital. In addition, the conversion terms of the preferred stock issued in the second tranche resulted in no beneficial conversion feature.

The Term A Loan and the Term B Loan restrict the payment of cash dividends. Consequently, the dividend obligation related to the Series C
Preferred has been satisfied through the issuance of PIK dividends. The PIK dividends are paid through the issuance of additional shares of Series C Preferred. These additional shares of preferred stock do not have warrants attached to them. During
the six months ended December 31, 2005, 128 shares of Series C Preferred were issued as PIK dividends. In addition, the conversion terms of the preferred stock issued as PIK dividends resulted in an immaterial beneficial conversion feature. As
a result of these PIK dividends, we recorded a one time charge to retained earnings representing a dividend to the preferred stockholders with the offset recorded in additional paid in capital.

At December 31, 2005, 5,128 shares of Series C Preferred remain outstanding and are convertible into 2,629,744 shares of our common stock.



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EARNINGS PER SHARE

Basic earning per share (EPS) is determined by dividing income (loss) available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted EPS
reflects the potential dilution that could occur if options and other contracts to issue shares of common stock were exercised or converted into common stock. We had 193,146, 63,003 and 683,208 options outstanding for the years ended
December 31, 2003, 2004 and 2005, respectively, that were excluded from the calculation of diluted EPS as they were antidilutive. In addition, warrants to purchase up to 1,241,500 and 2,021,363 shares of common stock were also excluded for the
years ended December 31, 2004 and 2005, respectively. Additionally, debentures convertible into 1,123,264 and 585,552 shares of common stock and the Stockholder Notes convertible into 319,149 and 186,826 shares of common stock were excluded in
the calculation for 2004 and 2005, respectively. Preferred stock convertible into 7,733 and 2,637,477 shares of common stock were excluded from the calculation for 2004 and 2005, respectively.

The following table sets forth the computation of basic and diluted weighted average shares outstanding:



|                               |  |                         |  |        |  |       
|------------------------------ |  | ----------------------- |  | ------ |  | ------
|                               |  | Year Ended December 31,
|                               |  | 2003                    |  | 2004   |  | 2005  
|                               |  | (In thousands)         
|Shares:                        |  |                         |  |        |  |       
|Basic shares outstanding       |  | 8,772                   |  | 10,884 |  | 13,251
|Effect of dilutive securities: |  |                         |  |        |  |       
|Stock options                  |  | 111                     |  |       |  | 62    
|Warrants                       |  | 199                     |  |       |  | 370   
|Preferred stock                |  | 2,280                   |  |       |  |      
|                               |  |                         |  |        |  |       
|Dilutive shares outstanding    |  | 11,362                  |  | 10,884 |  | 13,683
|                               |  |                         |  |        |  |       

Due to the Company incurring a net loss for the year ended December 31, 2004, basic and
diluted weighted average shares used in the calculation of earnings per share are the same due to the effects of potential dilutive securities being anti-dilutive.

STOCK BASED COMPENSATION

During 2004, we entered into Incentive Agreements with our executive officers that provides for,
among other things, the issuance of restricted common stock. Additionally, we entered into a SBA with certain executive officers that provides for payments, based on the market value of our outstanding common stock, in the event of death or change
of control, for a period beginning on June 30, 2004 and expires on December 31, 2008 (See Note 8).

In September 1997, we
adopted the Stock Incentive Plan (the Incentive Plan) to provide long-term incentives to our key employees, officers, directors who are our employees, and our consultants and advisors and non-employee directors (Eligible
Persons). Under the incentive plan, we may grant incentive stock options, non-qualified stock options, restricted stock, other stock-based awards, or any combination thereof to Eligible Persons. Options generally vest over a four-year period
and expire if unused after ten years. The exercise price of any stock option granted may not be less than the fair market value of the common stock on the date of grant. A total of 2,500,000 shares of common stock have been authorized under the
Incentive Plan, of which 906,893 remain available for issuance at December 31, 2005.

In January 1999, we approved the Stock Option
Plan (the Option Plan) to provide for the grant of options to purchase shares of our common stock to non-officer employees of our Company and our subsidiaries in lieu of year-end cash bonuses. The Option Plan is intended to increase
shareholder value and advance our interests by providing an incentive to employees and by increasing employee awareness of us in the marketplace. Under the



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##### Index to Financial Statements

Option Plan, we may grant options to any of our employees with the exception of our officers. The options become exercisable immediately with respect to
one-half of the shares, and the remaining one-half shall be exercisable one year following the date of the grant. The exercise price of any stock option granted may not be less than the fair market value of the common stock on the effective date of
the grant. A total of 100,000 shares of common stock are authorized, of which 56,257 remain available for issuance at December 31, 2005.

A summary of our employee stock options as of December 31, 2003, 2004 and 2005, and changes during the years then ended, which give retroactive effect to the one for three reverse stock split effective July 3, 2002, are presented
below:



|                             |  |                                 |      |                        |           |  
|---------------------------- |  | ------------------------------- | ---- | ---------------------- | --------- | -
|                             |  | WEIGHTED AVERAGE EXERCISE PRICE |      | INCENTIVE PLAN OPTIONS |          
|Balance at December 31, 2002 |  |                                 | 3.03 |                        | 854,492   |  
|                             |  |                                 |      |                        |           |  
|Exercisable                  |  |                                 | 3.61 |                        | 432,399   |  
|                             |  |                                 |      |                        |           |  
|Granted                      |  |                                 | 2.31 |                        | 489,500   |  
|Exercised                    |  |                                 | 1.88 |                        | (119,998  | )
|Forfeited                    |  |                                 | 5.80 |                        | (54,854   | )
|                             |  |                                 |      |                        |           |  
|Balance at December 31, 2003 |  |                                 | 2.74 |                        | 1,169,140 |  
|                             |  |                                 |      |                        |           |  
|Exercisable                  |  |                                 | 3.10 |                        | 598,729   |  
|                             |  |                                 |      |                        |           |  
|Granted                      |  |                                 | 4.00 |                        | 177,500   |  
|Exercised                    |  |                                 | 2.04 |                        | (152,312  | )
|Forfeited                    |  |                                 | 6.28 |                        | (125,036  | )
|                             |  |                                 |      |                        |           |  
|Balance at December 31, 2004 |  |                                 | 2.63 |                        | 1,069,292 |  
|                             |  |                                 |      |                        |           |  
|Exercisable                  |  |                                 | 2.51 |                        | 741,135   |  
|                             |  |                                 |      |                        |           |  
|Granted                      |  |                                 | 2.16 |                        | 477,900   |  
|Exercised                    |  |                                 | 1.92 |                        | (283,556  | )
|Forfeited                    |  |                                 | 2.37 |                        | (325,809  | )
|                             |  |                                 |      |                        |           |  
|Balance at December 31, 2005 |  | $                               | 2.69 |                        | 937,827   |  
|                             |  |                                 |      |                        |           |  
|Exercisable                  |  | $                               | 2.77 |                        | 592,011   |  
|                             |  |                                 |      |                        |           |  

The following table summarizes information about employee stock options outstanding at
December 31, 2005:



|                |  |                     |  |                                  |  |                           |      |                    |         |                           |   |     
|--------------- |  | ------------------- |  | -------------------------------- |  | ------------------------- | ---- | ------------------ | ------- | ------------------------- | - | ----
|                |  | OPTIONS OUTSTANDING |  | OPTIONS EXERCISABLE             
|EXERCISE PRICES |  | NUMBER OUTSTANDING  |  | WGTD. AVG. REMAINING CONTR. LIFE |  | WGTD. AVG. EXERCISE PRICE |      | NUMBER EXERCISABLE |         | WGTD. AVG. EXERCISE PRICE
|$1.30  $  5.21 |  | 932,161             |  | 7.6                              |  | $                         | 2.67 |                    | 586,345 |                           | $ | 2.74
|$5.22  $10.42  |  | 5,666               |  | 7.8                              |  | $                         | 6.26 |                    | 5,666   |                           | $ | 6.26
|                |  |                     |  |                                  |  |                           |      |                    |         |                           |   |     
|                |  | 937,827             |  | 7.6                              |  | $                         | 2.69 |                    | 592,011 |                           | $ | 2.77
|                |  |                     |  |                                  |  |                           |      |                    |         |                           |   |     



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##### Index to Financial Statements

A summary of our warrants as of December 31, 2003, 2004 and 2005, and changes during the years then
ended, which give retroactive effect to the one for three reverse stock split effective July 3, 2002, are presented below:



|                             |  |                                 |      |          |            |  
|---------------------------- |  | ------------------------------- | ---- | -------- | ---------- | -
|                             |  | WEIGHTED AVERAGE EXERCISE PRICE |      | WARRANTS |           
|Balance at December 31, 2002 |  |                                 | 2.45 |          | 2,121,661  |  
|                             |  |                                 |      |          |            |  
|Exercisable                  |  |                                 | 2.45 |          | 2,121,661  |  
|                             |  |                                 |      |          |            |  
|Granted                      |  |                                 | 1.54 |          | 293,055    |  
|Exercised                    |  |                                 | 2.09 |          | (347,952   | )
|Forfeited                    |  |                                 | 3.73 |          | (293,055   | )
|                             |  |                                 |      |          |            |  
|Balance at December 31, 2003 |  |                                 | 2.16 |          | 1,773,709  |  
|                             |  |                                 |      |          |            |  
|Exercisable                  |  |                                 | 2.16 |          | 1,773,709  |  
|                             |  |                                 |      |          |            |  
|Granted                      |  |                                 | 7.75 |          | 1,341,500  |  
|Exercised                    |  |                                 | 2.16 |          | (1,687,594 | )
|Forfeited                    |  |                                 | 2.25 |          | (54,166    | )
|                             |  |                                 |      |          |            |  
|Balance at December 31, 2004 |  |                                 | 7.62 |          | 1,373,449  |  
|                             |  |                                 |      |          |            |  
|Exercisable                  |  |                                 | 7.65 |          | 1,273,449  |  
|                             |  |                                 |      |          |            |  
|Granted                      |  |                                 | 2.17 |          | 6,550,000  |  
|Exercised                    |  |                                 | 0.00 |          |           |  
|Forfeited                    |  |                                 | 7.15 |          | (700,000   | )
|                             |  |                                 |      |          |            |  
|Balance at December 31, 2005 |  | $                               | 2.73 |          | 7,223,449  |  
|                             |  |                                 |      |          |            |  
|Exercisable                  |  | $                               | 2.73 |          | 7,223,449  |  
|                             |  |                                 |      |          |            |  



|10. | INCOME TAXES
|--- | ------------

The components of deferred tax assets
and liabilities as of December 31 are as follows:



|                                |  |                |        |   |      |   |        |  
|------------------------------- |  | -------------- | ------ | - | ---- | - | ------ | -
|                                |  | DECEMBER 31,   |       
|                                |  | 2004           |        |   | 2005 |  
|                                |  | (In thousands) |       
|Deferred Tax Assets:            |  |                |        |   |      |   |        |  
|Allowance for doubtful accounts |  | $              | 134    |   |      | $ | 188    |  
|Net operating loss carryforward |  |                | 17,439 |   |      |   | 17,042 |  
|                                |  |                |        |   |      |   |        |  
|Total deferred tax assets       |  |                | 17,573 |   |      |   | 17,230 |  
|Deferred Tax Liabilities:       |  |                |        |   |      |   |        |  
|Property and equipment          |  |                | (5,403 | ) |      |   | (4,690 | )
|Customer intangible             |  |                | (474   | ) |      |   | (1,082 | )
|Less: Valuation Allowance       |  |                | (9,696 | ) |      |   | (9,458 | )
|                                |  |                |        |   |      |   |        |  
|Net Deferred Tax Asset          |  | $              | 2,000  |   |      | $ | 2,000  |  
|                                |  |                |        |   |      |   |        |  



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##### Index to Financial Statements

The income tax expense (benefit) for the years ended December 31, consisted of the following:



|                                    |  |                         |        |   |      |   |        |      |  |   |      |  
|----------------------------------- |  | ----------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ---- | -
|                                    |  | YEAR ENDED DECEMBER 31, |       
|                                    |  | 2003                    |        |   | 2004 |   |        | 2005 | 
|                                    |  | (In thousands)          |       
|Current benefit                     |  | $                       |       |   |      | $ |       |      |  | $ |     |  
|Deferred benefit (expense)          |  |                         | (2,518 | ) |      |   | 4,450  |      |  |   | (238 | )
|Less: change in valuation allowance |  |                         | 4,118  |   |      |   | (4,450 | )    |  |   | 238  |  
|                                    |  |                         |        |   |      |   |        |      |  |   |      |  
|Total tax benefit                   |  |                         | 1,600  |   |      | $ |       |      |  | $ |     |  
|                                    |  |                         |        |   |      |   |        |      |  |   |      |  

The reconciliation of Federal statutory and effective income tax rates for the years ended
December 31, is shown below:



|                       |  |                         |    |  |      |   |  |      |  
|---------------------- |  | ----------------------- | -- |  | ---- | - |  | ---- | -
|                       |  | YEAR ENDED DECEMBER 31, |   
|                       |  | 2003                    |    |  | 2004 |   |  | 2005 |  
|Statutory federal rate |  | 34                      | %  |  | 34   | % |  | 34   | %
|State taxes            |  | 3                       |    |  | 3    |   |  | 3    |  
|Valuation allowance    |  | (83                     | )  |  | (37  | ) |  | (37  | )
|                       |  |                         |    |  |      |   |  |      |  
|Total                  |  | (46                     | )% |  | 0    | % |  | 0    | %
|                       |  |                         |    |  |      |   |  |      |  

As of December 31, 2005, for tax purposes, we had net operating loss carryforwards (NOLs) of
approximately $46.0 million. The NOLs will expire commencing 2018. We account for income taxes under the provision of SFAS No. 109, which requires recognition of future tax benefits (NOLs and other temporary differences), subject to a valuation
allowance based on more likely than not that such asset will be realized. In determining whether it is more-likely-than-not that we will realize such tax asset, SFAS No. 109 requires that all negative and positive evidence be considered (with
more weight given to evidence that is objective and verifiable) in making the determination. SFAS No. 109 indicated that forming a conclusion that a valuation allowance is not needed is difficult when there is negative
evidence such as cumulative losses in recent years; therefore we determined that it was required by the provision of SFAS No. 109 to maintain a valuation allowance of $9.5 million for all of the recorded net deferred tax assets. In 2003,
we reversed $1.6 million, of this related allowance due to our expectation of generating taxable income in the future. Future adjustments to the valuation allowance may be required if and when circumstances change.



|11. | SEGMENT INFORMATION
|--- | -------------------

SFAS No. 131,
Disclosures About Segments of an Enterprise and Related Information, which requires that companies disclose segment data based on how management makes decisions about allocating resources to segments and measuring their
performance. At December 31, 2005, we conducted our operations principally in two segmentsSeismic Drilling, and Environmental Services, all of which operate exclusively in North America. The Aviation Transportation Services segment was
sold during 2005 (See Note 13) and its operations are presented as discontinued operations. The Seismic Drilling division is comprised of three segmentsDrilling, Survey and Permitting. The Environmental Services division operates as stand
alone segment, as did the Aviation Transportation division. All remaining assets, primarily our corporate offices, warehouses and underlying real estate, are located in North America.

The segment classified as Corporate includes all other operating activities to support the executive office, capital structure and costs of being a
public registrant. These costs are not allocated to the business segments by management when determining segment profit or loss.

Drilling
revenue is derived primarily from drilling and loading of the source points for seismic analysis. Aviation revenue was derived through transport of geophones and recorders used to collect the seismic data



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between receiving points, transport heli-portable drilling units into remote or otherwise inaccessible terrain, transport people and equipment to offshore
oil and gas platforms and rigs. Survey revenue is recorded after the customer has determined the placement of source and receiving points, and after survey crews are sent into the field to plot each source and receiving point prior to drilling.
Permitting revenue is derived from services provided in conjunction with obtaining permits from landowners. Environmental revenue is earned from tank and vessel cleaning. The following table shows segment information (net of intercompany
transactions) as adjusted for discontinued operations for the years ended December 31, 2003, 2004 and 2005:



|                                           |  |                |        |   |          |   |        |               |  |           |        |  |       |        |   |  |   |        |  
|------------------------------------------ |  | -------------- | ------ | - | -------- | - | ------ | ------------- |  | --------- | ------ |  | ----- | ------ | - |  | - | ------ | -
|                                           |  | DRILLING       |        |   | AVIATION |   |        | ENVIRONMENTAL |  | CORPORATE |        |  | TOTAL |       
|                                           |  | (In thousands) |       
|2005                                       |  |                |        |   |          |   |        |               |  |           |        |  |       |        |   |  |   |        |  
|Operating revenues                         |  | $              | 25,909 |   |          | $ |       |               |  | $         | 17,441 |  | $     |       |   |  | $ | 43,350 |  
|Operating income (loss)                    |  |                | 3,781  |   |          |   |       |               |  |           | 2,179  |  |       | (3,249 | ) |  |   | 2,711  |  
|Interest expense                           |  |                |       |   |          |   |       |               |  |           |       |  |       | 2,836  |   |  |   | 2,836  |  
|Depreciation and amortization              |  |                | 3,295  |   |          |   |       |               |  |           | 1,332  |  |       |       |   |  |   | 4,627  |  
|Loss from discontinued operations          |  |                |       |   |          |   | (3,978 | )             |  |           |       |  |       |       |   |  |   | (3,978 | )
|Loss on disposal of discontinued segment   |  |                |       |   |          |   | (2,271 | )             |  |           |       |  |       |       |   |  |   | (2,271 | )
|Identifiable assets                        |  |                | 16,671 |   |          |   | 295    |               |  |           | 13,540 |  |       | 13,252 |   |  |   | 43,758 |  
|Capital expenditures                       |  |                | 106    |   |          |   | 140    |               |  |           | 539    |  |       |       |   |  |   | 785    |  
|                                           |  |                |        |   |         
|2004                                       |  |                |        |   |          |   |        |               |  |           |        |  |       |        |   |  |   |        |  
|Operating revenues                         |  | $              | 30,398 |   |          | $ |       |               |  | $         | 8,666  |  | $     |       |   |  | $ | 39,064 |  
|Operating income (loss)                    |  |                | 2,430  |   |          |   |       |               |  |           | 597    |  |       | (6,219 | ) |  |   | (3,192 | )
|Interest expense                           |  |                |       |   |          |   |       |               |  |           |       |  |       | 3,288  |   |  |   | 3,288  |  
|Depreciation and amortization              |  |                | 3,332  |   |          |   |       |               |  |           | 950    |  |       |       |   |  |   | 4,282  |  
|Loss from discontinued operations          |  |                |       |   |          |   | (6,756 | )             |  |           |       |  |       |       |   |  |   | (6,756 | )
|Identifiable assets                        |  |                | 21,502 |   |          |   | 22,077 |               |  |           | 13,264 |  |       | 9,070  |   |  |   | 65,913 |  
|Capital expenditures(1)                    |  |                | 162    |   |          |   | 6,612  |               |  |           | 21     |  |       | 103    |   |  |   | 6,898  |  
|                                           |  |                |        |   |         
|2003                                       |  |                |        |   |          |   |        |               |  |           |        |  |       |        |   |  |   |        |  
|Operating revenues                         |  | $              | 31,555 |   |          | $ |       |               |  | $         |       |  | $     |       |   |  | $ | 31,555 |  
|Operating income (loss)                    |  |                | 5,288  |   |          |   |       |               |  |           |       |  |       | (2,392 | ) |  |   | 2,896  |  
|Interest expense                           |  |                |       |   |          |   |       |               |  |           |       |  |       | 943    |   |  |   | 943    |  
|Depreciation and amortization              |  |                | 3,355  |   |          |   |       |               |  |           |       |  |       |       |   |  |   | 3,355  |  
|Income (loss) from discontinued operations |  |                | (367   | ) |          |   | 691    |               |  |           |       |  |       |       |   |  |   | 324    |  
|Identifiable assets                        |  |                | 22,557 |   |          |   | 16,923 |               |  |           |       |  |       | 10,809 |   |  |   | 50,289 |  
|Capital expenditures(1)                    |  |                | 99     |   |          |   | 358    |               |  |           |       |  |       | 37     |   |  |   | 494    |  

---

|(1) | Net of assets obtained in acquisitions (See Note 12).
|--- | -----------------------------------------------------



|12. | ACQUISITIONS
|--- | ------------

AMERICAN HELICOPTERS, INC.

On November 20, 2003, we purchased American Helicopters, Inc. (AHI) for an aggregate acquisition price of $5.4 million including $4.6
million of cash and the assumption of $0.8 million of certain liabilities. AHI operated 17 helicopters from base locations in Louisiana and Texas and was headquartered in Angleton, Texas. The infrastructure received through this acquisition
significantly increased our ability to provide aviation services to oil and gas companies operating in the offshore waters in the Gulf of Mexico. The results of AHIs operations have been included in our consolidated financial statements since
the acquisition date.



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The following table summarizes the estimated fair values of the assets acquired and liabilities assumed
for the acquisition of AHI at the date of acquisition:

BALANCE SHEET DATA



|                                       |  |                |       |  
|-------------------------------------- |  | -------------- | ----- | -
|                                       |  | (In thousands) |      
|Current assets, including cash of $542 |  | $              | 2,129 |  
|Property, plant, and equipment         |  |                | 3,322 |  
|Current Liabilities                    |  |                | (598  | )
|Long-term liabilities                  |  |                | (213  | )
|                                       |  |                |       |  
|Cash purchase price                    |  | $              | 4,640 |  
|                                       |  |                |       |  

In 2004, we made an adjustment to the purchase price for additional liabilities assumed since the
date of acquisition totaling $0.2 million, which increased the total cash purchase price to $4.8 million. The adjustment increased property and equipment with an offsetting amount to current liabilities. Additional fees of $0.3 million associated
with the acquisition were capitalized to intangibles and are being amortized over 5 years.

Effective June 30, 2005, we sold the
equipment and assets related to our Aviation Transportation Services segment. See Note 13 for information related to our discontinued Aviation Transportation Services segment.

TRUSSCO, INC.

On June 30, 2004, we purchased all of the issued and outstanding stock of
Trussco, Inc. and all of the membership interests in Trussco Properties, L.L.C. (collectively Trussco) for an aggregate acquisition price 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 into shares of our
common stock 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, $3.9 million was allocated to intangible assets attributable to customer lists and other
industry-specific intangible assets. The results of Trussco operations are included in our consolidated financial statements since the date of the acquisition.

In connection with the acquisition of Trussco, we issued to certain former shareholders of Trussco a promissory note (Earnout Note) that will earn interest at a rate of 5% per annum of the amount
owed. Under the terms of the Earnout Note, we agreed to pay these shareholders on or before June 30, 2007, the lesser of (i) the amount of $3.0 million, or (ii) the sum of the product of 3.12 times Trusscos average annual EBITDA
(earnings before interest, taxes depreciation and amortization) for the 36 month period ending December 31, 2006 less the sum of $9.0 million plus $1.5 million of Trussco long-term and former shareholder debt existing as of June 30, 2004
that we assumed.

On May 18, 2005, we entered into debt extinguishment agreements with respect to $2.0 million of the Stockholder
Notes (See Note 4) and $1.0 million of the Earnout Note. Under the terms of the Debt Extinguishment Agreements, we were required to (i) issue 0.2 million shares of our common stock; and (ii) pay certain holders of the Stockholder
Notes $1.0 million on or before August 16, 2005, in full and complete satisfaction of $2.0 million of the Stockholder Notes and $1.0 million of the Earnout Note. We recognized a gain on debt extinguishment of $0.3 million upon closing this
transaction.

On August 29, 2005, in accordance with the Debt Extinguishment Agreements, we paid $1.0 million in cash from the
proceeds of the Term B Loan, and issued 0.2 million shares of our common stock in full satisfaction of



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$2.0 million of the Stockholder Notes. In addition, the Company recorded an additional gain on extinguishment of $0.3 million in accordance with the terms of
the agreements.

At December 31, 2005, we have $1.0 million of Stockholder Notes outstanding bearing interest at 5% and maturing in
June 2007. We also have $2.0 million of contingent Earnout Notes payable at December 31, 2005, none of which have been earned.

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 periods ranging from zero to twenty years with
no residual value.



|                                       |  |                |        |  
|-------------------------------------- |  | -------------- | ------ | -
|                                       |  | (In thousands) |       
|Current assets, including cash of $427 |  | $              | 3,618  |  
|Property and equipment                 |  |                | 3,695  |  
|Other assets                           |  |                | 19     |  
|Intangible assets                      |  |                | 4,644  |  
|Current Liabilities                    |  |                | (1,460 | )
|Assumption of Debt                     |  |                | (177   | )
|Stockholder Notes                      |  |                | (3,000 | )
|                                       |  |                |        |  
|Cash purchase price                    |  | $              | 7,339  |  
|                                       |  |                |        |  

In July 2004, we incurred fees for merchant banking services provided during the Trussco
acquisition. The fees were earned upon signing of final documents and the receipt of title to assets. The total fee included $0.5 million cash, increasing the cash purchase price to $7.8 million, 69,930 shares of restricted stock and 5-year common
stock warrants to purchase 100,000 shares of common stock at an exercise price of $7.15. The restricted stock was valued at the common stock price on July 1, 2004 of $4.89 per share, or $0.3 million. The warrants are not exercisable for a
period of one-year after the issue date of such warrants. In accordance with APB Opinion No. 14, the warrants were valued at a fair market value of $0.2 million using the Black Scholes option pricing model. The total value of fees of $1.0
million were capitalized as part of the allocation of the purchase price and assigned to intangibles associated with the Trussco acquisition and are being amortized over 5 years.



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The pro forma unaudited results summarized below reflects our consolidated pro forma results of
operations as if AHI and Trussco were acquired on January 1, 2003, with the entire results of the Aviation Transportation Segment presented as discontinued operations (See Note 13):



|                                                                              |  |                                           |        |      |   |         |  
|----------------------------------------------------------------------------- |  | ----------------------------------------- | ------ | ---- | - | ------- | -
|                                                                              |  | UNAUDITED RESULTS YEAR ENDED DECEMBER 31, |       
|                                                                              |  | 2003                                      |        | 2004 |  
|                                                                              |  | (In thousands, except per share data)     |       
|INCOME STATEMENT DATA                                                         |  |                                           |        |      |   |         |  
|Operating revenue                                                             |  | $                                         | 51,279 |      | $ | 48,536  |  
|Operating expenses                                                            |  |                                           | 47,021 |      |   | 51,259  |  
|Net income (loss) from continuing operations available to common stockholders |  |                                           | 3,635  |      |   | (7,884  | )
|Discontinued operations                                                       |  |                                           | 1,376  |      |   | (6,756  | )
|                                                                              |  |                                           |        |      |   |         |  
|Net income (loss) available to common stockholders                            |  | $                                         | 5,011  |      | $ | (14,640 | )
|                                                                              |  |                                           |        |      |   |         |  
|Basic income (loss) per common share:                                         |  |                                           |        |      |   |         |  
|Income (loss) from continuing operations available to common stockholders     |  | $                                         | 0.41   |      | $ | (0.72   | )
|Income (loss) from discontinued operations                                    |  |                                           | 0.16   |      |   | (0.62   | )
|                                                                              |  |                                           |        |      |   |         |  
|Net Income (loss) available to common stockholders                            |  | $                                         | 0.57   |      | $ | (1.34   | )
|                                                                              |  |                                           |        |      |   |         |  
|Diluted income (loss) per common share:                                       |  |                                           |        |      |   |         |  
|Income (loss) from continuing operations available to common stockholders     |  | $                                         | 0.35   |      | $ | (0.72   | )
|Income (loss) from discontinued operations                                    |  |                                           | 0.13   |      |   | (0.62   | )
|                                                                              |  |                                           |        |      |   |         |  
|Net income (loss) available to common stockholders                            |  | $                                         | 0.48   |      | $ | (1.34   | )
|                                                                              |  |                                           |        |      |   |         |  



|13. | DISCONTINUED OPERATIONS
|--- | -----------------------

On November 20, 2003,
we purchased AHI, resulting in the acquisition of thirteen (13) helicopters and four (4) leased helicopters at bases located in Louisiana and Texas. AHI was strategically targeted and purchased for the infrastructure of aircraft, fueling
stations, flight (customer) following and pilot and mechanic organizations.

We made the decision in July 2004, after owning AHI for
approximately eight months, to exit from the Texas location in Brazoria County, to begin the withdrawal of business activity with AHI customers in Texas, and to move all operations to our main operating facility in Louisiana. This strategy also fits
with the planned completion of the Intracoastal City (Mouton Cove) facility as a central operation base of operations. Our planned strategy is to certify all of our fleet under the OMNI Federal Aviation Agency 135 certificate and to market our
flight services to independent and major oil and gas customers. Our strategy is to service operators that require aircraft geared to crew change and larger passenger capacity, which allow for higher rates and use. The large operators work from
Master Service Agreements which meet our needs for higher, more fixed pricing and fixed unit structures. The plan encompassed relocation of personnel, the elimination of certain duplicate positions, and the negotiation of early release of operating
leases at the Brazoria County facility. The costs we incurred include travel and re-location costs for personnel who were relocated, costs associated with the transfer of aircraft to the 135 certificate, termination costs for personnel who were
eliminated, any costs incurred to obtain an early release of operating leases at the Brazoria County facility and other direct costs related to the exit of this business group. In September 2004, we surrendered the AHI 135 certificate.

Effective June 30, 2005, we sold the equipment and related assets of our Aviation Transportation Services segment for a cash price of $11.0
million. Accordingly, the disposition of the Aviation Transportation Services segment has been accounted for as a discontinued operation in the accompanying financial statements.



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Interest expense was allocated to the discontinued operations (Aviation Transportation Services segment)
in accordance with the provisions of the EITF No. 87-24 Allocation of Interest to Discontinued Operations.The total amounts of interest expense included in income (loss) from discontinued operations is $0.5 million, $1.9
million and $0.9 million for the years ended December 31, 2003, 2004 and 2005, respectively.

Accordingly, the table below presents
all revenues and expenses of the Aviation Transportation Services segment as income (loss) from discontinued operations:



|                                               |  |                         |       |   |      |   |        |      |  |   |        |  
|---------------------------------------------- |  | ----------------------- | ----- | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                               |  | YEAR ENDED DECEMBER 31, |      
|                                               |  | 2003                    |       |   | 2004 |   |        | 2005 | 
|                                               |  | (In thousands)          |      
|Revenue                                        |  | $                       | 5,143 |   |      | $ | 15,350 |      |  | $ | 4,900  |  
|                                               |  |                         |       |   |      |   |        |      |  |   |        |  
|Operating expenses:                            |  |                         |       |   |      |   |        |      |  |   |        |  
|Direct operating costs                         |  |                         | 3,353 |   |      |   | 11,418 |      |  |   | 4,629  |  
|Depreciation and amortization                  |  |                         | 547   |   |      |   | 1,127  |      |  |   | 521    |  
|General and administrative expenses            |  |                         | 604   |   |      |   | 1,943  |      |  |   | 987    |  
|                                               |  |                         |       |   |      |   |        |      |  |   |        |  
|Total operating expenses                       |  |                         | 4,504 |   |      |   | 14,488 |      |  |   | 6,137  |  
|Asset impairment                               |  |                         | 367   |   |      |   | 4,174  |      |  |   | 505    |  
|Interest expense                               |  |                         | 456   |   |      |   | 1,889  |      |  |   | 1,029  |  
|Loss on debt extinguishment                    |  |                         |      |   |      |   | 279    |      |  |   | 733    |  
|Other expense                                  |  |                         |      |   |      |   | 1,276  |      |  |   | (34    | )
|                                               |  |                         |       |   |      |   |        |      |  |   |        |  
|Total expenses                                 |  |                         | 5,327 |   |      |   | 22,106 |      |  |   | 8,370  |  
|                                               |  |                         |       |   |      |   |        |      |  |   |        |  
|Loss from discontinued operations              |  |                         | (184  | ) |      |   | (6,756 | )    |  |   | (3,470 | )
|Income taxes                                   |  |                         | 508   |   |      |   |       |      |  |   | (508   | )
|                                               |  |                         |       |   |      |   |        |      |  |   |        |  
|Net income (loss) from discontinued operations |  | $                       | 324   |   |      | $ | (6,756 | )    |  | $ | (3,978 | )
|                                               |  |                         |       |   |      |   |        |      |  |   |        |  

We have included in the loss from discontinued operations an allowance for doubtful accounts of
$0.2 million recorded as a result of contract termination negotiations associated with our exit of the Brazoria County, Texas market. The allowance is shown net against accounts receivable in the consolidated balance sheet at December 31, 2004.
As required by SFAS No. 146, the following table reflects the total amount incurred in connection with the other exit activity for the year ended December 31, 2004:



|                           |  |                              |   
|-------------------------- |  | ---------------------------- | --
|                           |  | YEAR ENDED DECEMBER 31, 2004
|                           |  | (In thousands)              
|Lodging and travel         |  | $                            | 53
|Severance and outplacement |  |                              | 30
|                           |  |                              |   
|Total exit costs           |  | $                            | 83
|                           |  |                              |   



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##### Index to Financial Statements

LOSS ON DISPOSAL OF AVIATION TRANSPORTATION SERVICES SEGMENT

As a result of the sale of the Aviation Transportation Services segment, we incurred a loss in the amount of $2.3 million. The table below presents the
assets of the Aviation Transportation Services segment as of December 31, 2005 which were removed from the balance sheet as a result of the sale:



|                                              |  |                |     |  |   |        |  
|--------------------------------------------- |  | -------------- | --- |  | - | ------ | -
|                                              |  | (In thousands) |    
|Inventory                                     |  |                |     |  | $ | 1,567  |  
|Other receivable                              |  |                |     |  |   | 411    |  
|Prepaid expenses                              |  |                |     |  |   | 411    |  
|Aircraft held for sale                        |  |                |     |  |   | 370    |  
|Property, plant and equipment                 |  |                |     |  |   | 11,079 |  
|Less: accumulated depreciation                |  |                |     |  |   | (1,708 | )
|Other assets, net of accumulated amortization |  |                |     |  |   |        |  
|Acquisition costs                             |  | $              | 13  |  |   |        |  
|Intangible assets                             |  |                | 207 |  |   |        |  
|Loan closing costs                            |  |                | 921 |  |   |        |  
|                                              |  |                |     |  |   |        |  
|                                              |  |                |     |  |   | 1,141  |  
|                                              |  |                |     |  |   |        |  
|Total book value of assets sold               |  |                |     |  | $ | 13,271 |  
|                                              |  |                |     |  |   |        |  

The loss on the disposal of the Aviation Transportation Services segment is calculated as follows
(in thousands):



|                                  |  |   |         |  
|--------------------------------- |  | - | ------- | -
|Proceeds from the sale            |  | $ | 11,000  |  
|Less: book value of assets sold   |  |   | (13,271 | )
|                                  |  |   |         |  
|Loss on sale of aviation division |  | $ | (2,271  | )
|                                  |  |   |         |  



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|14. | SUMMARIZED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
|--- | ------------------------------------------------------

The quarterly financial information presented below has been adjusted from information previously filed in order to present operations from our Aviation Transportation Services segment as discontinued operations.



|                                                   |  |                                      |        |   |         |   |        |              |  |   |             |   |  |   |        |  
|-------------------------------------------------- |  | ------------------------------------ | ------ | - | ------- | - | ------ | ------------ |  | - | ----------- | - |  | - | ------ | -
|                                                   |  | QUARTER ENDED                        |       
|2005                                               |  | MARCH 31                             |        |   | JUNE 30 |   |        | SEPTEMBER 30 |  |   | DECEMBER 31 |  
|                                                   |  | (In thousands except per share data) |       
|Operating revenues                                 |  | $                                    | 13,115 |   |         | $ | 9,463  |              |  | $ | 9,623       |   |  | $ | 11,149 |  
|Operating expenses                                 |  |                                      | 11,583 |   |         |   | 9,197  |              |  |   | 9,690       |   |  |   | 10,169 |  
|                                                   |  |                                      |        |   |         |   |        |              |  |   |             |   |  |   |        |  
|Operating income (loss)                            |  |                                      | 1,532  |   |         |   | 266    |              |  |   | (67         | ) |  |   | 980    |  
|Other (income) expense                             |  |                                      | 604    |   |         |   | 161    |              |  |   | 303         |   |  |   | 175    |  
|                                                   |  |                                      |        |   |         |   |        |              |  |   |             |   |  |   |        |  
|Income (loss) before taxes                         |  |                                      | 928    |   |         |   | 105    |              |  |   | (370        | ) |  |   | 805    |  
|Income taxes                                       |  |                                      |       |   |         |   |       |              |  |   | 508         |   |  |   |       |  
|                                                   |  |                                      |        |   |         |   |        |              |  |   |             |   |  |   |        |  
|Income (loss) from continuing operations           |  |                                      | 928    |   |         |   | 105    |              |  |   | 138         |   |  |   | 805    |  
|Loss from discontinued operations                  |  |                                      | (726   | ) |         |   | (2,136 | )            |  |   | (411        | ) |  |   | (705   | )
|Loss on disposal of discontinued operations assets |  |                                      |       |   |         |   | (2,271 | )            |  |   |            |   |  |   |       |  
|                                                   |  |                                      |        |   |         |   |        |              |  |   |             |   |  |   |        |  
|Income (loss)                                      |  |                                      | 202    |   |         |   | (4,302 | )            |  |   | (273        | ) |  |   | 100    |  
|Dividends and accretion of preferred stock         |  |                                      |       |   |         |   | (704   | )            |  |   | (80         | ) |  |   | (210   | )
|                                                   |  |                                      |        |   |         |   |        |              |  |   |             |   |  |   |        |  
|Net income (loss) available to common stockholders |  | $                                    | 202    |   |         | $ | (5,006 | )            |  | $ | (353        | ) |  | $ | (110   | )
|                                                   |  |                                      |        |   |         |   |        |              |  |   |             |   |  |   |        |  
|Basic income (loss) per common share:              |  |                                      |        |   |         |   |        |              |  |   |             |   |  |   |        |  
|Income (loss) from continuing operations           |  | $                                    | 0.08   |   |         | $ | (0.05  | )            |  | $ | 0.00        |   |  | $ | 0.04   |  
|Loss from discontinued operations                  |  |                                      | (0.06  | ) |         |   | (0.17  | )            |  |   | (0.03       | ) |  |   | (0.05  | )
|Loss on disposal of discontinued operations assets |  |                                      |       |   |         |   | (0.18  | )            |  |   |            |   |  |   |       |  
|                                                   |  |                                      |        |   |         |   |        |              |  |   |             |   |  |   |        |  
|Net income (loss) available to common stockholders |  | $                                    | 0.02   |   |         | $ | (0.40  | )            |  | $ | (0.03       | ) |  | $ | (0.01  | )
|                                                   |  |                                      |        |   |         |   |        |              |  |   |             |   |  |   |        |  
|Diluted income (loss) per common share:            |  |                                      |        |   |         |   |        |              |  |   |             |   |  |   |        |  
|Income (loss) from continuing operations           |  | $                                    | 0.08   |   |         | $ | (0.05  | )            |  | $ | 0.00        |   |  | $ | 0.04   |  
|Loss from discontinued operations                  |  |                                      | (0.06  | ) |         |   | (0.17  | )            |  |   | (0.02       | ) |  |   | (0.04  | )
|Loss on disposal of discontinued operations assets |  |                                      |       |   |         |   | (0.18  | )            |  |   |            |   |  |   |       |  
|                                                   |  |                                      |        |   |         |   |        |              |  |   |             |   |  |   |        |  
|Net income (loss) available to common stockholders |  | $                                    | 0.02   |   |         | $ | (0.40  | )            |  | $ | (0.02       | ) |  | $ | (0.00  | )
|                                                   |  |                                      |        |   |         |   |        |              |  |   |             |   |  |   |        |  



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|                                                   |  |                                       |       |   |         |   |        |              |  |   |             |   |  |   |        |  
|-------------------------------------------------- |  | ------------------------------------- | ----- | - | ------- | - | ------ | ------------ |  | - | ----------- | - |  | - | ------ | -
|                                                   |  | QUARTER ENDED                         |      
|2004                                               |  | MARCH 31                              |       |   | JUNE 30 |   |        | SEPTEMBER 30 |  |   | DECEMBER 31 |  
|                                                   |  | (In thousands, except per share data) |      
|Operating revenues                                 |  | $                                     | 8,062 |   |         | $ | 8,593  |              |  | $ | 11,276      |   |  | $ | 11,133 |  
|Operating expenses                                 |  |                                       | 8,017 |   |         |   | 10,212 |              |  |   | 11,932      |   |  |   | 12,095 |  
|                                                   |  |                                       |       |   |         |   |        |              |  |   |             |   |  |   |        |  
|Operating income (loss)                            |  |                                       | 45    |   |         |   | (1,619 | )            |  |   | (656        | ) |  |   | (962   | )
|Other (income) expense                             |  |                                       | 297   |   |         |   | 620    |              |  |   | 796         |   |  |   | 2,594  |  
|                                                   |  |                                       |       |   |         |   |        |              |  |   |             |   |  |   |        |  
|Income (loss) from continuing operations           |  |                                       | (252  | ) |         |   | (2,239 | )            |  |   | (1,452      | ) |  |   | (3,556 | )
|Income (loss) from discontinued operations         |  |                                       | 337   |   |         |   | 1,356  |              |  |   | (2,016      | ) |  |   | (6,433 | )
|                                                   |  |                                       |       |   |         |   |        |              |  |   |             |   |  |   |        |  
|Income (loss)                                      |  |                                       | 85    |   |         |   | (883   | )            |  |   | (3,468      | ) |  |   | (9,989 | )
|Dividends and accretion of preferred stock         |  |                                       | (485  | ) |         |   | (5     | )            |  |   |            |   |  |   |       |  
|                                                   |  |                                       |       |   |         |   |        |              |  |   |             |   |  |   |        |  
|Net income (loss) available to common stockholders |  | $                                     | (400  | ) |         | $ | (888   | )            |  | $ | (3,468      | ) |  | $ | (9,989 | )
|                                                   |  |                                       |       |   |         |   |        |              |  |   |             |   |  |   |        |  
|Basic income (loss) per common share:              |  |                                       |       |   |         |   |        |              |  |   |             |   |  |   |        |  
|Loss from continuing operations                    |  | $                                     | (0.07 | ) |         | $ | (0.20  | )            |  | $ | (0.13       | ) |  | $ | (0.31  | )
|Income (loss) from discontinued operations         |  |                                       | 0.03  |   |         |   | 0.12   |              |  |   | (0.18       | ) |  |   | (0.57  | )
|                                                   |  |                                       |       |   |         |   |        |              |  |   |             |   |  |   |        |  
|Net loss available to common stockholders          |  | $                                     | (0.04 | ) |         | $ | (0.08  | )            |  | $ | (0.31       | ) |  | $ | (0.88  | )
|                                                   |  |                                       |       |   |         |   |        |              |  |   |             |   |  |   |        |  
|Diluted income (loss) per common share:            |  |                                       |       |   |         |   |        |              |  |   |             |   |  |   |        |  
|Loss from continuing operations                    |  | $                                     | (0.07 | ) |         | $ | (0.20  | )            |  | $ | (0.13       | ) |  | $ | (0.31  | )
|Income (loss) from discontinued operations         |  |                                       | 0.03  |   |         |   | 0.12   |              |  |   | (0.18       | ) |  |   | (0.57  | )
|                                                   |  |                                       |       |   |         |   |        |              |  |   |             |   |  |   |        |  
|Net loss available to common stockholders          |  | $                                     | (0.04 | ) |         | $ | (0.08  | )            |  | $ | (0.31       | ) |  | $ | (0.88  | )
|                                                   |  |                                       |       |   |         |   |        |              |  |   |             |   |  |   |        |  

During the three months ended December 31, 2004, we recorded an impairment charge of
approximately $4.2 million of which approximately $3.0 million was the write off of unamortized aviation repairs and $1.2 million was an impairment charge on our aviation fleet. Furthermore, during the fourth quarter of 2004, we recorded a charge of
$0.8 million in unamortized loan costs, $0.9 million in connection with the early extinguishment of a portion of our convertible debentures and $0.4 million in other loan costs.



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RECLASSIFICATION OF PRIOR PERIOD INTERIM FINANCIAL STATEMENTS

Due to the reclassification as a result of the discontinued operations of our Aviation Transportation Services segment as described below and contained
herein of the Consolidated Financial Statements previously filed within Forms 10-Q for the quarterly period ended March 31, 2005, such financial statements contained in the Form 10-Q should no longer be relied upon.



|                                                    |  |                                       |        |                    |   |        |              |  |   |        |  
|--------------------------------------------------- |  | ------------------------------------- | ------ | ------------------ | - | ------ | ------------ |  | - | ------ | -
|                                                    |  | THREE MONTHS ENDED MARCH 31, 2005     |       
|                                                    |  | (In thousands, except per share data) |       
|                                                    |  | (as reported)                         |        | (reclassification) |   |        | (as revised) | 
|Operating revenues                                  |  | $                                     | 15,290 |                    | $ | (2,175 | )            |  | $ | 13,115 |  
|Operating expenses                                  |  |                                       | 14,013 |                    |   | (2,430 | )            |  |   | 11,583 |  
|                                                    |  |                                       |        |                    |   |        |              |  |   |        |  
|Net operating income (loss)                         |  |                                       | 1,277  |                    |   | 255    |              |  |   | 1,532  |  
|Interest expense and other                          |  |                                       | 1,075  |                    |   | (471   | )            |  |   | 604    |  
|                                                    |  |                                       |        |                    |   |        |              |  |   |        |  
|Income (loss) from continuing operations            |  |                                       | 202    |                    |   | 726    |              |  |   | 928    |  
|Loss from discontinued operations                   |  |                                       |       |                    |   | (726   | )            |  |   | (726   | )
|                                                    |  |                                       |        |                    |   |        |              |  |   |        |  
|Income                                              |  | $                                     | 202    |                    | $ |       |              |  | $ | 202    |  
|                                                    |  |                                       |        |                    |   |        |              |  |   |        |  
|Basic income (loss) per common share:               |  |                                       |        |                    |   |        |              |  |   |        |  
|Income (loss) from continuing operations            |  | $                                     | 0.02   |                    | $ | 0.06   |              |  | $ | 0.08   |  
|Loss from discontinued operations                   |  |                                       |       |                    |   | (0.06  | )            |  |   | (0.06  | )
|                                                    |  |                                       |        |                    |   |        |              |  |   |        |  
|Net Income (loss) applicable to common stockholders |  | $                                     | 0.02   |                    | $ |       |              |  | $ | 0.02   |  
|                                                    |  |                                       |        |                    |   |        |              |  |   |        |  
|Diluted income (loss) per common share:             |  |                                       |        |                    |   |        |              |  |   |        |  
|Income (loss) from continuing operations            |  | $                                     | 0.02   |                    | $ | 0.06   |              |  | $ | 0.08   |  
|Income (loss) from discontinued operations          |  |                                       |       |                    |   | (0.06  | )            |  |   | (0.06  | )
|                                                    |  |                                       |        |                    |   |        |              |  |   |        |  
|Net Income (loss) applicable to common stockholders |  | $                                     | 0.02   |                    | $ |       |              |  | $ | 0.02   |  
|                                                    |  |                                       |        |                    |   |        |              |  |   |        |  



|15. | SUBSEQUENT EVENTS
|--- | -----------------

On February 14, 2006, we
completed the acquisition of Preheat, Inc. (Preheat) pursuant to a Stock Purchase and Sale Agreement dated December 29, 2005 between us and the shareholders of Preheat. We purchased 100% of the outstanding common stock of Preheat
for a purchase price of $22.5 million consisting of $16 million in cash plus the issuance of 900,000 shares of our common stock and $4 million in buyer promissory notes. In addition, we assumed $1.6 million of certain long-term debt of Preheat. As a
condition of closing, Preheat was required to have on hand at closing excess working capital in excess of $4.5 million.



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|ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|------- | ------------------------------------------------------------------------------------

NONE.



|ITEM 9A. | CONTROLS AND PROCEDURES
|-------- | -----------------------

We maintain disclosure controls and procedures, as such term is defined
in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 as amended (the Exchange Act), that are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or
submit to the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified by the Commissions rules and forms, and that information
is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate, to allow timely decisions regarding required disclosure. We carried out an evaluation, under the supervision and with the
participation of our management, including our Chief Executive Officer and Interim Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by
this annual report. Based on that evaluation, such officers have concluded that the design and operation of these disclosure controls and procedures were effective.

During our fourth fiscal quarter, there have not been any changes in our internal controls over financial reporting (as defined in Rules 13a-13(f) and 15d-15(f) of the Exchange Act) that have materially affected, or
are reasonably likely to materially affect, our internal control over financial reporting.



|ITEM 9B. | OTHER
|-------- | -----

NONE.



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PART III

In accordance with paragraph (3) of General Instruction G to Form 10-K, Part III of this Report
is omitted because we will file a definitive proxy statement involving the election of directors with the Securities and Exchange Commission not later than 120 days after the close of the fiscal year pursuant to Regulation 14A.

Reference is made to the sections of such proxy statement entitled  Information About the Companys Directors, Board
Committees, Executive Officers and Key Managers, Annual Compensation, Principal Stockholders, Certain Relationships and Related Transactions and Principal Accounting Fees and
Services, which sections of such proxy statement are incorporated herein.



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PART IV



|ITEM 15. | EXHIBITS, AND FINANCIAL STATEMENT SCHEDULES
|-------- | -------------------------------------------

(a) The following financial statements, schedules
and exhibits are filed as part of this Report:



| | (1) | Financial Statements. Reference is made to Item 8 hereof.
| | --- | ---------------------------------------------------------

| | (2) | Financial Statement Schedules: None.
| | --- | ------------------------------------

| | (3) | Exhibits. See Index to Exhibits on page 75. We will furnish to any eligible shareholder, upon written request of such shareholder, a copy of any exhibit listed upon the payment of a
reasonable fee equal to our expenses in furnishing such exhibit.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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. (REGISTRANT)By:

/s/    JAMES C. ECKERTJames C. EckertPresident and Chief Executive Officer(Principal Executive Officer)Date: March 31, 2006


Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been
signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.



|                                                 |  |                                                                                            |  |               
|------------------------------------------------ |  | ------------------------------------------------------------------------------------------ |  | --------------
|SIGNATURE                                        |  | TITLE                                                                                      |  | DATE          
|                                                 |  |                                                                                           
|/s/    JAMES C.
ECKERT James C. Eckert           |  | President, Chief Executive Officer and Chairman of the Board (Principal Executive Officer) |  | March 31, 2006
|                                                 |  |                                                                                           
|/s/    G. DARCY
KLUG G. Darcy Klug               |  | Executive Vice President (Interim Principal Financial Officer)                             |  | March 31, 2006
|                                                 |  |                                                                                           
|/s/    GREGORY B.
MILTON Gregory B. Milton       |  | Chief Accounting Officer                                                                   |  | March 31, 2006
|                                                 |  |                                                                                           
|/s/    EDWARD E. COLSON
III Edward E. Colson III |  | Director                                                                                   |  | March 31, 2006
|                                                 |  |                                                                                           
|/s/    MICHAEL G.
DEHART Michael G. DeHart       |  | Director                                                                                   |  | March 31, 2006
|                                                 |  |                                                                                           
|/s/    BARRY E.
KAUFMAN Barry E. Kaufman         |  | Director                                                                                   |  | March 31, 2006
|                                                 |  |                                                                                           
|/s/    DENNIS R.
SCIOTTO Dennis R. Sciotto       |  | Director                                                                                   |  | March 31, 2006
|                                                 |  |                                                                                           
|/s/    RICHARD C.
WHITE Richard C. White         |  | Director                                                                                   |  | March 31, 2006



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OMNI ENERGY SERVICES CORP.

EXHIBIT INDEX



|               |  |                                                                                                                                                                                                                                                                                                                                                       
|-------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT NUMBER |  |                                                                                                                                                                                                                                                                                                                                                       
|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, originally filed with the Commission on June 10, 2004 and incorporated by reference herein).                                    
|               | 
|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, originally filed with the Commission on June 10, 2004 and incorporated by reference herein).                                
|               | 
|3.1            |  | Composite Articles of Incorporation of OMNI Energy Services Corp. (as of November 7, 2000) (filed as Exhibit 3 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2000
and incorporated by reference herein).                                                                                                                   
|               | 
|3.2            |  | Form of Articles of AmendmentArticles of Incorporation (filed as Exhibit 3.2 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2001 and incorporated by reference
herein).                                                                                                                                                    
|               | 
|3.3            |  | Form of Articles of AmendmentArticles of Incorporation (incorporated by reference to Exhibit 3.1 to our Form 8-K, originally filed with the Commission on May 24,
2005).                                                                                                                                                                             
|               | 
|3.4            |  | Bylaws of OMNI, as amended (incorporated by reference to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2001).                                                                                                                                                                                                                      
|               | 
|4.1            |  | See Exhibit 3.1, 3.2, 3.3 and 3.4 for provisions of our Articles of Incorporation and By-laws defining the rights of holders of Common Stock.                                                                                                                                                                                                         
|               | 
|4.2            |  | Specimen Common Stock Certificate (incorporated by reference to our Registration Statement on Form S-1 (Registration Statement No. 333-36561)).                                                                                                                                                                                                       
|               | 
|4.3            |  | Form of 6.5% Convertible Debenture dated as of February 12, 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, originally filed with the Commission on February 13, 2004 and incorporated by reference herein).                                     
|               | 
|4.4            |  | 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, originally filed with the Commission on April 19, 2004 and incorporated by reference herein).                                         
|               | 
|4.5            |  | Form of Warrant to Purchase Common Stock dated as of February 12, 2004 among the Company and certain accredited investors exercisable at $7.15 per share (with attached schedule of parties and
terms thereto) (filed as Exhibit 4.2 to our Form 8-K, originally filed with the Commission on February 13, 2004 and incorporated by reference herein).
|               | 
|4.6            |  | Form of Warrant to Purchase Common Stock dated as of February 12, 2004 among the Company and certain investors exercisable at $8.50 per share (with attached schedule of parties and terms
thereto) (filed as Exhibit 4.3 to our Form 8-K, originally filed with the Commission on February 13, 2004 and incorporated by reference herein).           



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|               |  |                                                                                                                                                                                                                                                                                                                                                                                      
|-------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT NUMBER |  |                                                                                                                                                                                                                                                                                                                                                                                      
|               | 
|4.7            |  | 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, originally filed with the Commission on April 19, 2004 and incorporated by reference herein).                                    
|               | 
|4.8            |  | 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, originally filed with the
Commission on April 19, 2004 and incorporated by reference herein).                                                                                                                         
|               | 
|4.9            |  | Amendment and Conditional Waiver Agreement, dated as of October 8, 2004, among OMNI Energy Services Corp., Provident Premier Master Fund Ltd., Portside Growth and Opportunity Fund, Manchester
Securities Corp., and Gemini Master Fund, Ltd. (filed as Exhibit 4.1 to our Form 8-K, originally filed with the Commission on October 12, 2004 and incorporated herein by reference).
|               | 
|4.10           |  | Form of Series A Warrant (incorporated by reference to Exhibit 4.1 to our Form 8-K, originally filed with the Commission on May 24, 2005).                                                                                                                                                                                                                                           
|               | 
|4.11           |  | Form of Series B Warrant (incorporated by reference to Exhibit 4.2 to our Form 8-K, originally filed with the Commission on May 24, 2005).                                                                                                                                                                                                                                           
|               | 
|4.12           |  | Form of Series C Warrant (incorporated by reference to Exhibit 4.2 to our Form 8-K, originally filed with the Commission on May 24, 2005).                                                                                                                                                                                                                                           
|               | 
|4.13           |  | Registration Rights Agreement, dated May 17, 2005, by and between OMNI Energy Services Corp. and certain investors identified therein (incorporated by reference to Exhibit 4.3 to our
Form 8-K, originally filed with the Commission on May 24, 2005).                                                                                                                              
|               | 
|4.14           |  | Amendment No. 1 to Registration Rights Agreement, dated July 16, 2005, by and between OMNI Energy Services Corp. and certain investors identified therein (incorporated by reference to
Exhibit 4.7 to our Registration Statement on Form S-1, as amended, (Registration Statement No. 333-129138)).                                                                                 
|               | 
|4.15           |  | Stock Purchase and Sale Agreement dated December 29, 2005, by and between OMNI Energy Services Corp. and the stockholders of Preheat, Inc., a Louisiana corporation (incorporated by reference
to Exhibit 10.1 to our Form 8-K, originally filed with the Commission on January 5, 2006).                                                                                            
|               | 
|4.16           |  | Registration Rights Agreement, dated as of November 11, 2005, between OMNI Energy Services Corp. and Fusion Capital Fund II, LLC (incorporated by reference to Exhibit 4.1 to our Form 8-K,
originally filed with Commission on November 15, 2005).                                                                                                                                  
|               | 
|4.17           |  | Registration Rights Agreement dated as of February 12, 2004, by and among the Company and certain accredited investors listed therein (filed as Exhibit 10.2 to our Form 8-K, originally filed
with the Commission on April 19, 2004 and incorporated herein by reference).                                                                                                          
|               | 
|4.18           |  | 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,
originally filed with the Commission on April 19, 2004 and incorporated herein by reference).                                                                                         
|               | 
|4.19           |  | 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, originally filed with the Commission on April 19, 2004 and incorporated herein by reference).                                                                                       
|               | 
|*10.1          |  | Form of Indemnity Agreement by and between us and each of our directors and executive officers (incorporated by reference to our Registration Statement on Form S-1 (Registration Statement No.
333-36561)).                                                                                                                                                                         



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|               |  |                                                                                                                                                                                                                                                                               
|-------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT NUMBER |  |                                                                                                                                                                                                                                                                               
|               | 
|*10.2          |  | Stock Incentive Plan (incorporated by reference to our Registration Statement on Form S-1 (Registration Statement No. 333-36561)).                                                                                                                                            
|               | 
|*10.3          |  | Fifth Amended And Restated OMNI Energy Services Corp. Stock Incentive Plan (incorporated by reference to our Proxy Statement for our November 30, 2004 stockholders meeting originally filed
with the Commission on November 1, 2004).                                        
|               | 
|*10.4          |  | Form of Stock Option Agreements under our Stock Incentive Plan (incorporated by reference to our Registration Statement on Form S-1 (Registration Statement No. 333-36561)).                                                                                                  
|               | 
|10.5           |  | Securities Purchase Agreement dated as of February 12, 2004, by and among the Company and certain accredited investors listed therein (filed as Exhibit 10.1 to our Form 8-K, originally
filed with the Commission on February 13, 2004 and incorporated herein by reference).
|               | 
|10.6           |  | 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, originally filed
with the Commission on April 19, 2004 and incorporated herein by reference).     
|               | 
|*10.7          |  | Employment Agreement of James C. Eckert dated July 1, 2004 (filed as Exhibit 10.4 to our Form 10-Q, originally filed with the Commission on August 25, 2004 and incorporated herein by
reference).                                                                            
|               | 
|*10.8          |  | James C. Eckert Stock Based Award Incentive Agreement dated June 30, 2004 (filed as Exhibit 10.5 to our Form 10-Q, originally filed with the Commission on August 25, 2004 and
incorporated herein by reference).                                                             
|               | 
|*10.9          |  | James C. Eckert Amended & Restated Incentive Agreement dated August 12, 2004 (filed as Exhibit 10.6 to our Form 10-Q, originally filed with the Commission on August 25, 2004 and
incorporated herein by reference).                                                          
|               | 
|*10.10         |  | Employment Agreement of G. Darcy Klug dated July 1, 2004 (filed as Exhibit 10.7 to our Form 10-Q, originally filed with the Commission on August 25, 2004 and incorporated herein by
reference).                                                                              
|               | 
|*10.11         |  | G. Darcy Klug Stock Based Award Incentive Agreement dated June 30, 2004 (filed as Exhibit 10.8 to our Form 10-Q, originally filed with the Commission on August 25, 2004 and incorporated
herein by reference).                                                               
|               | 
|*10.12         |  | G. Darcy Klug Amended & Restated Incentive Agreement dated August 12, 2004 (filed as Exhibit 10.4 to our Form 10-Q, originally filed with the Commission on August 25, 2004 and
incorporated herein by reference).                                                            
|               | 
|10.13          |  | Webster BankCredit and Security Agreement dated December 23, 2003 (filed Exhibit 10.18 to our Form 10-K, originally filed with the Commission on April 18, 2005 and
incorporated herein by reference).                                                                       
|               | 
|10.14          |  | Webster BankFirst Amendment to Credit and Security Agreement dated June 30, 2004 (filed as Exhibit 10.19 to our Form 10-K, originally filed with the Commission on
April 18, 2005 and incorporated herein by reference).                                                     
|               | 
|10.15          |  | Webster BankSecond Amendment to Credit and Security Agreement dated August 27, 2004 (filed as Exhibit 10.20 to our Form 10-K, originally filed with the Commission on
April 18, 2005 and incorporated herein by reference).                                                  
|               | 
|10.16          |  | Webster BankThird Amendment to Credit and Security Agreement dated October 22, 2004 (filed as Exhibit 10.21 to our form 10-K, originally filed with the Commission on April 18,
2005 and incorporated herein by reference).                                                  



90



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##### Table of Contents

##### Index to Financial Statements

|               |  |                                                                                                                                                                                                                                                           
|-------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT NUMBER |  |                                                                                                                                                                                                                                                           
|               | 
|10.17          |  | Beal Bank, SSBSecurity Agreement dated October 22, 2004 (filed as Exhibit 10.22 to our Form 10-K, originally filed with the Commission on April 18, 2005 and incorporated
herein by reference).                                                          
|               | 
|10.18          |  | Beal Bank, SSBForbearance Agreement dated January 21, 2005 (filed as Exhibit 10.23 to our Form 10-K, originally filed with the Commission on April 18, 2005 and
incorporated herein by reference).                                                       
|               | 
|10.19          |  | Beal Bank, SSBFirst Amendment to Forbearance Agreement dated March 15, 2005 (filed as Exhibit 10.24 to our Form 10-K, originally filed with the Commission on April 18,
2005 and incorporated herein by reference).                                      
|               | 
|10.20          |  | Common Stock Purchase Agreement, dated as of November 11, 2005, between OMNI Energy Services Corp. and Fusion Capital Fund II, LLC (incorporated by reference to Exhibit 10.1 to our
Form 8-K, originally filed with the Commission on November 15, 2005).
|               | 
|21.1           |  | Subsidiaries of OMNI Energy Services Corp.                                                                                                                                                                                                                
|               | 
|23.1           |  | Consent of Pannell Kerr Forster of Texas, P.C.                                                                                                                                                                                                            
|               | 
|23.2           |  | Consent of Fitts Roberts & Co.                                                                                                                                                                                                                            
|               | 
|31.1           |  | Section 302 Certification of Chief Executive Officer                                                                                                                                                                                                      
|               | 
|31.2           |  | Section 302 Certification of Interim Principal Financial Officer                                                                                                                                                                                          
|               | 
|31.3           |  | Section 302 Certification of Chief Accounting Officer                                                                                                                                                                                                     
|               | 
|32.1           |  | Section 906 Certification of Chief Executive Officer                                                                                                                                                                                                      
|               | 
|32.2           |  | Section 906 Certification of Interim Principal Financial Officer                                                                                                                                                                                          
|               | 
|32.3           |  | Section 906 Certification of Chief Accounting Officer                                                                                                                                                                                                     

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|* | Management contract or compensation plan or arrangement
|- | -------------------------------------------------------



91