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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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Form 10-K



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

For the fiscal year ended December 31, 2006

OR



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

For the transition period from              to

Commission file number: 001-14003



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OMEGA PROTEIN CORPORATION

(Exact name of Registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|State of Nevada                                                |  | 76-0562134                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|2101 CityWest Blvd, Bldg. 3 Suite 500 Houston, Texas           |  | 77042                               
|(Address of principal executive offices)                       |  | (Zip Code)                          

Registrants telephone number, including area code: (713) 623-0060



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Securities registered pursuant to
Section 12(b) of the Act:



|                              |  |                                          
|----------------------------- |  | -----------------------------------------
|Title of each class           |  | Name of each exchange on which
registered
|Common Stock, $0.01 par value |  | New York Stock Exchange                  

Securities registered pursuant to Section 12(g) of the Act:    None.



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

Indicate by check mark if 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.  x

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. (Check one):

Large accelerated filer ̈Accelerated filer  x            Non-accelerated
filer ̈

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

The aggregate market value of the voting and non-voting
common equity held by non-affiliates of the registrant was approximately $61,005,000 as of June 30, 2006 (computed by reference to the quoted closing price of the registrants common stock on the New York Stock Exchange on June 30,
2006). Shares of common stock held by each officer and director and by each person who owns 10% or more of the outstanding stock have been excluded from this computation in that such persons may be deemed to be affiliates. This determination of
affiliate status is not necessarily a conclusive determination for other purposes.

On March 6, 2007, there were outstanding 16,368,594
shares of the Companys common stock, $0.01 par value.

Documents incorporated by reference: Portions of the registrants
definitive proxy statement for its 2007 annual meeting of stockholders, which will be filed with the Securities and Exchange Commission within 120 days after December 31, 2006, are incorporated by reference to the extent set forth in Part III
of this Form 10-K.



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Forward-looking statements in this Annual Report on Form 10-K, future filings by the Company with the Securities and
Exchange Commission (the Commission), the Companys press releases and oral statements by authorized officers of the Company are intended to be subject to the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Investors are cautioned that all forward-looking statements involve risks and uncertainty, including without limitation, the risks set forth under Item 1A Risk Factors. The Company believes that forward-looking statements made
by it are based on reasonable expectations; however, no assurances can be given that actual results will not differ materially from those contained in such forward-looking statements. Forward-looking statements involve statements that are predictive
in nature, which depend upon or refer to future events or conditions, or which include the words estimate, project, anticipate, expect, predict, believe, could,
hope, would, may and similar expressions.

PART I

Item 1. and 2.Business and Properties.

General

Omega Protein Corporation is the largest processor, marketer and distributor of fish meal
and fish oil products in the United States. As used herein, the term Omega or the Company refers to Omega Protein Corporation or to Omega Protein Corporation and its consolidated subsidiaries, as applicable. The
Companys principal executive offices are located at 2101 CityWest Boulevard, Building 3  Suite 500, Houston, Texas 77042 (Telephone: (713) 623-0060).

The Company produces and sells a variety of protein and oil products derived from menhaden, a species of wild herring-like fish found along the Gulf of Mexico and Atlantic coasts. The fish are not genetically modified
or genetically enhanced. The Company processes several grades of fish meal, as well as fish oil and fish solubles. The Companys fish meal products are primarily used as a protein ingredient in animal feed for swine, cattle, aquaculture and
household pets. Fish oil is utilized for animal and aquaculture feeds, industrial applications, additives to human food products and as dietary supplements. The Companys fish solubles are sold primarily to livestock feed manufacturers,
aquaculture feed manufacturers and for use as an organic fertilizer. See Company OverviewProductsFish Meal and Fish Oil.

The Company operates four menhaden processing plants: two in Louisiana, one in Mississippi and one in Virginia. The Company also operates a Health and Science Center in Reedville, Virginia, which provides 100-metric
tons per day fish oil processing capacity for the Companys food grade oils and industrial and feed grade oils. See Company OverviewMeal and Oil Processing Plants and Health and Science Center.

In August 2005, the Companys Moss Point, Mississippi fish processing facility and adjacent shipyard were severely damaged by Hurricane Katrina. In
September 2005, the Companys Cameron, Louisiana and Abbeville, Louisiana fish processing facilities were also severely damaged by Hurricane Rita. Each of these facilities was non-operational immediately after these weather events. The Moss
Point, Abbeville and Cameron facilities accounted for approximately 16%, 31% and 22%, respectively, of the Companys full year 2004 production tonnage, so as an immediate result of the two hurricanes, approximately 70% of the Companys
operating capacity was impaired and the Companys business, results of operations and financial condition were materially adversely affected. The Companys four plants, assuming that no hurricane damage had occurred, would have had an
aggregate annual processing capacity as of December 31, 2005 of approximately 950,000 tons of fish. The hurricane damages reduced the Companys annual aggregate processing capacity to approximately 850,000 tons as of December 31,
2006.

Operations at the Moss Point and Abbeville fish processing facilities and the shipyard were re-established in mid-October 2005, but
at reduced processing capabilities. These two facilities were returned to full operational status prior to the beginning of the Gulf fishing season in April 2006. Operations at the Cameron fish processing facility were re-established in June 2006,
but at reduced processing capabilities. The Cameron facility became fully operational in September 2006.



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The direct impact of the two hurricanes upon the Company was a loss of physical inventories and physical
damage to the plants. As of December 31, 2006, the Company estimated its cumulative hurricane damages at approximately $29.3 million, of which approximately at least $12.0 million is expected to be recovered under insurance policies and was
recorded as a receivable as of September 30, 2005. Of the $12.0 million, $2.0 million, $2.0 million and $6.4 million was received in the 4th quarter of 2005, 1st quarter of 2006 and 1st quarter of 2007, respectively. Therefore, the Company has
recognized a cumulative $17.3 million net loss through December 31, 2006 due to estimated damages in excess of insurance recoveries. Of the damage estimate, approximately $2.5 million was related to damaged fish meal inventory and
approximately $13.0 million was related to write-offs of inventory costs that had been allocated and deferred to future production that did not occur. During the second quarter of 2006, the Company salvaged additional fish meal that was previously
recognized as a loss from natural disaster of approximately $610,000. This meal was sold during the second quarter of 2006, which resulted in the Company recognizing revenue without corresponding cost of sales as the related costs were recorded as a
loss in the third quarter 2005. The Company did not maintain business interruption insurance for these types of deferred inventory costs due to its high cost and limited availability. See Company OverviewHurricane Damages.

In order to facilitate the insurance recovery process, on July 28, 2006, the Company filed a lawsuit against its property insurance
carriers, Lexington Insurance Company and RSUI Indemnity Company, in U.S. District Court for the Western District of Louisiana, alleging breach of contract and bad faith based on the insurance carriers failure to pay amounts due to the Company
under its property insurance policies for damages sustained from Hurricanes Katrina and Rita in the third quarter of 2005. The Company seeks recovery in a jury trial of all available damages to which it is entitled by law, legal interest on those
damages, the cost of the litigation and any other damages as the court deems appropriate. The total damages sought by the Company in the lawsuit are in excess of the amount the Company has remaining as a receivable relating to its initial recorded
hurricane claim from its property insurance carriers. Discovery in the lawsuit is ongoing and a trial date has been set for November 5, 2007. The Company believes collection of the recorded receivable is probable; however, an unfavorable
outcome of the proceeding could have a material impact on the Companys financial position and result of operations.

The 2006 oil
yield results were the poorest in recent Company history. For illustrative purposes, the Companys oil yields for the 2006 fishing season were lower by 28% compared to those in the 2005 fishing season and were lower by 24% compared to the
Companys 10 year oil yield average. The causes of lower fish oil yields are believed to relate to fish diet, weather and water temperature but are not generally well understood. The impact of these poor oil yields have resulted in
significantly higher per unit inventory costs and fewer volumes available for future sale. These higher unit costs and fewer volumes available for sale have adversely impacted financial results for the fourth quarter of 2006 and are expected to
adversely impact financial results for the first quarter of 2007, and to some extent, the second quarter of 2007.

All of the
Companys products contain healthy long-chain Omega-3 fatty acids. Omega-3 fatty acids are commonly referred to as essential fatty acids because the human body does not produce them. Instead, essential fatty acids must be obtained
from outside sources, such as food or special supplements. Long-chain Omega-3s are also commonly referred to as a good fat for their health benefits, as opposed to the bad fats that create or aggravate health conditions
through long-term consumption. Scientific research suggests that long-chain Omega-3s as part of a balanced diet may provide significant benefits for health issues such as cardiovascular disease, inflammatory conditions and other ailments.

Under its production process, the Company produces OmegaPure®, a taste-free, odorless refined fish oil which is the only marine source of long-chain Omega-3s directly affirmed
by the U.S. Food and Drug Administration (FDA) as a food ingredient that is Generally Recognized as Safe (GRAS). See Company OverviewProductsRefined Fish OilFood Grade Oils.

The Company operates through two material subsidiaries: Omega Protein, Inc. and Omega Shipyard, Inc. Omega Protein, Inc. is the Companys principal
operating subsidiary for its menhaden processing business and is the successor to a business conducted since 1913. Omega Shipyard, Inc. owns a drydock facility in Moss Point,



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Mississippi, which is used to provide shoreside maintenance for the Companys fishing fleet and, subject to outside demand and excess capacity,
occasionally for third-party vessels. Revenues from shipyard work for third-party vessels in 2006 were not material. The Company also has a number of other immaterial direct and indirect subsidiaries.

Until April 1998, the Company, including its predecessors, was a wholly-owned subsidiary of Zapata Corporation (Zapata). In April 1998, the
Company completed an initial public offering of its common stock. Immediately following the initial public offering, Zapata owned approximately 60% of the Companys outstanding common stock. On December 8, 2005, Zapata announced that its
Board of Directors had authorized Zapatas management to seek a buyer for its then 58% equity ownership interest in the Company.

On
November 28, 2006, the Company purchased 9,268,292 shares of the Companys common stock from Zapata at a purchase price of $5.125 per share, or an aggregate purchase price of $47.5 million. The Company financed the purchase of the shares
from Zapata with a senior secured financing facility from Albeco Finance LLC, an affiliate of Cerberus Capital Management, L.P. Concurrent with the purchase, Zapatas two representatives, Avram A. Glazer and Leonard DiSalvo, resigned from
Omegas Board of Directors. Immediately following the purchase by the Company, Zapata owned approximately 33% of the Companys outstanding common stock. For a more detailed description of the terms of the purchase by the Company, see the
Companys Current Reports on Form 8-K filed with the SEC on September 12, 2006 and December 1, 2006.

On December 4,
2006, Zapata sold the remaining 5,232,708 shares of the Companys common stock held by Zapata to certain purchasers in a private transaction. As a result of the sale by Zapata, Zapata no longer owns any shares of the Companys common
stock. For a more detailed description of the terms of the sale by Zapata, see the Companys Current Report on Form 8-K filed with the SEC on December 5, 2006.

Available Information

The Company files annual, quarterly and current reports and other information
with the Securities and Exchange Commission (SEC). The Companys annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to these reports filed under the Securities and Exchange Act of
1934 (Exchange Act), as well as Section 16 filings by officers and directors, are available free of charge at the Companys website at www.omegaproteininc.com or at the SECs website at www.sec.gov and are
posted as soon as reasonably practicable after they are filed with the SEC. The Company will provide a copy of these documents to stockholders upon request. Information on the Companys website or any other website is not incorporated by
reference into this report and does not constitute part of this report.

In addition, the public may read and copy any materials filed by
the Company with the SEC at the SECs Public Reference Room at 100 F. Street, NE., Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an
Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov.

The Companys Corporate Governance Guidelines, Code of Business Conduct and Ethics, Code of Ethics for Financial Professionals, as well as the
Charters for the Boards Audit Committee, Compensation Committee, Corporate Governance Committee and Scientific Committee, are available at the Companys website. These Guidelines, Codes and Charters are not incorporated by reference into
this report and do not constitute part of this report. The Company will provide a copy of these documents to stockholders upon request.

Geographic
Information

The Company operates within one industry segment, menhaden fishing, for the production and sale of fish meal, fish solubles
and fish oil. Export sales of fish oil and fish meal were approximately $56 million,



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$33 million, and $39 million in 2006, 2005 and 2004, respectively. Such sales were made primarily to the Mexican, European and Canadian markets. In
2006, 2005 and 2004, sales to one customer were approximately $13.0 million, $8.5 million and $8.8 million, respectively. This customer differed from year to year.

The following table shows the geographical distribution of revenues (in thousands) based on location of customers:



|                        |  |                          |         |         |       |   |          |      |         |  |       |          |  |         |         |  |       |  
|----------------------- |  | ------------------------ | ------- | ------- | ----- | - | -------- | ---- | ------- |  | ----- | -------- |  | ------- | ------- |  | ----- | -
|                        |  | Years Ended December 31, |        
|                        |  | 2006                     |         |         | 2005  |   |          | 2004 |        
|                        |  | Revenues                 |         | Percent |       |   | Revenues |      | Percent |  |       | Revenues |  | Percent |        
|U.S.                    |  | $                        | 83,341  |         | 59.6  | % |          | $    | 77,257  |  | 70.3  | %        |  | $       | 80,521  |  | 67.3  | %
|Mexico                  |  |                          | 8,530   |         | 6.1   |   |          |      | 9,781   |  | 8.9   |          |  |         | 13,281  |  | 11.1  |  
|Europe                  |  |                          | 14,403  |         | 10.3  |   |          |      | 2,418   |  | 2.2   |          |  |         | 11,366  |  | 9.5   |  
|Canada                  |  |                          | 9,928   |         | 7.1   |   |          |      | 7,033   |  | 6.4   |          |  |         | 5,863   |  | 4.9   |  
|Asia                    |  |                          | 16,500  |         | 11.8  |   |          |      | 11,429  |  | 10.4  |          |  |         | 7,059   |  | 5.9   |  
|South & Central America |  |                          | 7,132   |         | 5.1   |   |          |      | 1,978   |  | 1.8   |          |  |         | 1,555   |  | 1.3   |  
|                        |  |                          |         |         |       |   |          |      |         |  |       |          |  |         |         |  |       |  
|Total                   |  | $                        | 139,834 |         | 100.0 | % |          | $    | 109,896 |  | 100.0 | %        |  | $       | 119,645 |  | 100.0 | %
|                        |  |                          |         |         |       |   |          |      |         |  |       |          |  |         |         |  |       |  

Company Overview

Business. Omega is the largest U.S. producer of protein-rich meal and oil derived from marine sources. The Companys products are produced from menhaden (a herring-like fish found in commercial
quantities), and includes regular grade and value-added specialty fish meals, crude and refined fish oils and fish solubles.

Fishing. During 2006, the Company owned a fleet of 61 fishing vessels and 32 spotter aircraft for use in its fishing operations and also leased additional aircraft where necessary to facilitate operations. During the 2006
fishing season in the Gulf of Mexico, which runs from mid-April through October, the Company operated 30 fishing and carry vessels and 28 spotter aircraft. The fishing area in the Gulf is generally located along the Gulf Coast, with a concentration
off the Louisiana and Mississippi coasts. The fishing season along the Atlantic coast begins in early May and usually extends into December. During the 2006 season, the Company operated 11 fishing vessels and 7 spotter aircraft along the
Mid-Atlantic coast, concentrated primarily in and around Virginia and North Carolina. The remaining fleet of fishing vessels and spotter aircraft are not routinely operated during the fishing season and are back-up to the active fleet, used for
other transportation purposes, inactive or in the process of refurbishment in the Companys shipyard.

Menhaden usually school in
large, tight clusters and are commonly found in warm, shallow waters. Spotter aircraft locate the schools and direct the fishing vessels to them. The principal fishing vessels transport two 40-foot purse boats, each carrying several fishermen and
one end of a 1,500-foot net. The purse boats encircle the school and capture the fish in the net. The fish are then pumped from the net into refrigerated holds of the fishing vessel or onto a carry vessel, and then are unloaded at the Companys
processing plants. Carry vessels do not engage in active fishing but instead carry fish from the Companys offshore fishing vessels to its plants. Utilization of carry vessels increases the amount of time that certain of the
Companys fishing vessels remain offshore fishing productive waters and therefore increases the Companys fish catch per vessel employed. The carry vessels have reduced crews and crew expenses and incur less maintenance cost than the
actual fishing vessels.

The Companys principal raw material is menhaden, a species of fish that inhabits coastal and inland tidal
waters in the United States. Menhaden are undesirable for direct human consumption due to their small size, prominent bones and high oil content. Certain state agencies, as well as interstate compacts, impose resource depletion restrictions on
menhaden pursuant to fisheries management legislation or regulations and may impose additional legislation or regulations in the future. For example, in February 2007, the Commonwealth of Virginia



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established an annual cap for a five year period beginning in 2006 on the Companys menhaden landings from the Chesapeake Bay in an amount equal to the
Companys average annual landings over a five year period from 2001 to 2005 (approximately 109,020 metric tons). The Virginia restrictions also allow the Company a credit whereby any under-harvest in a particular year below the 109,020 metric
ton cap would be added to increase the cap for the following year, up to a maximum of 122,740 metric tons per year. See Item 1 and 2. Business and PropertiesCompany OverviewRegulation. To date, the Company has not experienced
any material adverse impact on its fish catch or results of operations as a result of these restrictions.

Meal and Oil Processing
Plants. The Company operates four meal and oil processing plants, two in Louisiana, one in Mississippi and one in Virginia, where the menhaden are processed into three general products types: fish meal, fish oil and fish solubles. The
Companys processing plants are located in coastal areas near the Companys fishing fleet. Annual volume processed varies depending upon menhaden catch. Each plant maintains a dedicated dock to unload fish, fish processing equipment and
storage facility. The fish are unloaded from the fishing vessels into storage boxes and then conveyed into steam cookers. The fish are then passed through presses to remove most of the oil and water. The solid portions of the fish are dried and
ground into fish meal. The liquid that is produced in the cooking and pressing operations contains oil, water, dissolved protein and some fish solids. This liquid is decanted to remove the solids and is put through a centrifugal oil and water
separation process. The separated fish oil is a finished product called crude oil. The separated water and protein mixture is further processed through evaporators to recover the soluble protein, which can be sold as a finished product or added to
the solid portions of the fish for processing into fish meal.

Shipyard. The Company owns a 49.4 acre shipyard facility in Moss
Point, Mississippi which includes two dry docks, each with a capacity of 1,300 tons. The shipyard is used for routine maintenance and vessel refurbishment on the Companys fishing vessels and occasionally for shoreside maintenance services to
third-party vessels if excess capacity exists.

Health and Science Center. In October 2004, the Company completed construction
and commenced operation of a new Health and Science Center that provides 100-metric tons per day fish oil processing capacity. The new center is located adjacent to the Companys Reedville, Virginia processing plant. The food-grade facility
includes state-of-the-art processing equipment and controls that will allow the Company to refine, bleach, fractionate and deodorize its menhaden fish oil and has more than tripled the Companys previous refined fish oil production capacity for
food grade oils and industrial and feed grade oils. The facility also provides the Company with automated packaging and on-site refrigerated storage capacity and has a lipids analytical laboratory to enhance the development of Omega-3 oils and food
products.

New Technology and Innovation Center.In December 2006, the
Company completed construction of the new OmegaPure Technology and Innovation Center located in Houston, Texas to further develop its OmegaPure®food grade Omega-3 product line. The new facility has food science application labs, as well as analytical, sensory and pilot plant capabilities. The new facility also has a lipids
research lab where the Company plans to continue to develop new Omega-3 products that have improved functionality and technical characteristics.

Hurricane Damages. In August 2005, the Companys Moss Point, Mississippi fish processing facility and adjacent shipyard were severely damaged by Hurricane Katrina. In September 2005, the Companys Cameron, Louisiana and
Abbeville, Louisiana fish processing facilities were also severely damaged by Hurricane Rita. Each of these facilities was non-operational immediately after these weather events. The Moss Point, Abbeville and Cameron facilities accounted for
approximately 16%, 31% and 22%, respectively, of the Companys full year 2004 production tonnage, so as an immediate result of the two hurricanes, approximately 70% of the Companys operating capacity was impaired and the Companys
business, results of operations and financial condition were materially adversely affected.

Operations at the Moss Point and Abbeville
fish processing facilities and the shipyard were re-established in mid-October 2005, but at reduced processing capabilities. These two facilities were returned to full operational



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status prior to the beginning of the Gulf fishing season in April 2006. Operations at the Cameron fish processing facility were re-established in June 2006,
but at reduced processing capabilities. The Cameron plant became fully operational in September 2006.

The Company maintains insurance
coverage for a variety of these damages, most notably property, inventory and vessel insurance. The nature and extent of the insurance coverage varies by line of policy and the Company has recorded insurance recoveries as an account receivable based
on the preliminary discussions with insurers and adjusters. The Company anticipates that further recoveries could be available, but such additional recoveries will require further analysis and discussions with the Companys insurance carriers
and the resolution of the lawsuit filed by the Company against its property insurance carriers described below. Such recoveries, if any, would be recognized in future periods once collections of such amounts are deemed probable. The Company does not
maintain business interruption insurance in any material amounts due to its high cost and limited availability.

The direct impact of the
two hurricanes upon the Company was a loss of physical inventories and physical damage to the plants. As of December 31, 2006, the Company estimated its cumulative hurricane damages at approximately $29.3 million, of which approximately at
least $12.0 million is expected to be recovered under insurance policies and was recorded as a receivable as of September 30, 2005. Of the $12.0 million, $2.0 million, $2.0 million and $6.4 million was received in the 4th quarter of 2005, 1st
quarter of 2006 and 1st quarter of 2007, respectively. Therefore, the Company has recognized a cumulative $17.3 million net loss through December 31, 2006 due to estimated damages in excess of insurance recoveries. Of the damage estimate,
approximately $2.5 million was related to damaged fish meal inventory and approximately $13.0 million was related to write-offs of inventory costs that had been allocated to future production that did not occur. Not included in the amounts
listed are the replacement capital costs of property and equipment, which did not have any book basis and were destroyed in the hurricanes.

The Company did not maintain business interruption insurance for these types of deferred inventory costs due to its high cost and limited availability. During the second quarter of 2006, the Company salvaged additional fish meal that was
previously recognized as a loss from natural disaster of approximately $610,000. This meal was sold during the second quarter 2006, which resulted in the Company recognizing revenue without corresponding cost of sales as the related costs were
recorded as a loss in the third quarter 2005. See Item 8. Financial Statements and Supplementary DataNote 12 Hurricane Losses for additional information on the components of the hurricane related losses. A substantial portion of
the amounts listed are based upon estimates and assumptions. Actual amounts, when available, could differ materially from those estimates and changes to those estimates could have a material effect on the Companys future financial statements.

In order to facilitate the insurance recovery process, on July 28, 2006, the Company filed a lawsuit against its property insurance
carriers, Lexington Insurance Company and RSUI Indemnity Company, in U.S. District Court for the Western District of Louisiana, alleging breach of contract and bad faith based on the insurance carriers failure to pay amounts due to the Company
under its property insurance policies for damages sustained from Hurricanes Katrina and Rita in the third quarter of 2005. The Company seeks recovery in a jury trial of all available damages to which it is entitled by law, legal interest on those
damages, the cost of the litigation and any other damages as the court deems appropriate. The total damages sought in the lawsuit by the Company are in excess of the amount the Company has remaining as a receivable relating to its initial recorded
hurricane claim from its property insurance carriers. Discovery in the lawsuit is ongoing and a trial date has been set for November 5, 2007. The Company believes collection of the remaining recorded receivable is probable; however, an
unfavorable outcome of the proceeding could have a material impact on the Companys financial position and result of operations.

The
Company anticipates that further recoveries could be available, but such additional recoveries will require further estimation, analysis and discussions with the Companys insurance carriers and adjusters and resolution of the lawsuit described
above. Additional amounts will be recognized when the collection of such amounts are deemed probable.



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As of December 31, 2006, the Companys four active processing plants, assuming that no
hurricane damages had occurred, would have had an aggregate annual capacity to process approximately 950,000 tons of fish.The previously described hurricane damages reduced the annual aggregate processing capacity to approximately 850,000
tons as of December 31, 2006. The Company anticipates that the decrease in annual processing capacity will have no effect on the Companys ability to process in the future because the Company has historically operated at processing levels
substantially below maximum capacity. Operations at the Cameron fish processing facility were re-established in June 2006, but at reduced processing capabilities. The reduced capacity has not had a significant impact on the processing of the Cameron
fish catch since operations were re-established. The Cameron facility became fully operational in September 2006.

Because of the damages
to the Companys Cameron, Louisiana facility caused by Hurricane Rita, the Company began its 2006 fishing season by operating its full contingent of 30 Gulf of Mexico fishing and carry vessels out of its two operating facilities in Abbeville,
Louisiana and Moss Point, Mississippi. These activities substantially increased the number of vessels at the Abbeville and Moss Point plants to a level that the Company had not operated previously. Although these two facilities had adequate
processing capacity, the Companys fishing efforts were diminished because increased unloading time due to additional vessels reduced the number of vessels on the fishing grounds during the most optimal fishing times. During June 2006, 10
vessels were shifted to the Cameron facility when it became operational.

Products. The Company sells three general types of
products: fish meal, fish oil and fish solubles.

Fish Meal. Fish meal, the principal product made from menhaden, is sold
primarily as a high-protein feed ingredient. It is used as a protein supplement in feed formulated for pigs and other livestock, aquaculture and household pets. Each use requires certain standards to be met regarding quality and protein content,
which are determined by the freshness of the fish and by processing conditions such as speed and temperatures. The Company produces fish meal of several different types:

Special Select. Special Select is a premium grade low temperature processed fish meal. The quality control guidelines are
very stringent, producing a higher protein level and higher digestibility and a lower total volatile nitrogen (TVN) and histamine count. These guidelines require that only the freshest fish and the most gentle drying process be used.
Special Select is targeted for monogastrics, including baby pigs, turkey poults, pets, shrimp and trout.

SeaLac. SeaLac is similar to Special Select in its freshness (low TVN) and gentle drying (high digestibility). During the processing however, the Company removes some of the soluble protein. This step allows the
amount of rumen undegradable protein to be maximized while still maintaining excellent digestibility. This product is made specifically for dairy and beef cattle, sheep, goats and other ruminants requiring bypass protein.

FAQ Meal. FAQ (Fair Average Quality) Meal, the Companys commodity grade fish meal, guarantees a protein content of at
least 60%. This product typically is used in protein blends for poultry, catfish, pets and other animals.

Fish Oil. The
Company produces crude unrefined fish oil, refined fish oil and food grade oils.

Unrefined Fish Oil. Unrefined fish oil (also
referred to as crude fish oil) is the Companys basic fish oil product. This grade of fish oil has not undergone any portion of the refining process. The Companys markets for crude fish oil have changed over the past decade. In the early
1990s, the Companys main crude fish oil market, which accounted for greater than 90% of the Companys production, was the manufacturers of hydrogenated oils for human consumption such as margarine and shortening. In 2004, the
Company estimates that approximately 70% of its crude fish oil was sold as a feed ingredient to the aquaculture industry. The growth of the worldwide aquaculture industry has resulted in increasing demand for fish oils in order to improve feed
efficiency, nutritional value, survivability and health of farm-raised fish species.



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Refined Fish Oil. The Companys refined fish oils come in three basic grades and also
includes crude fish oils of special quality or that may require custom packaging or special additives. Refined oils also include industrial grade oils which are used in a variety of industrial applications.

Feed Grade Oils. Feed grade menhaden oil is processed and refined to offer a high
Omega-3 oil for use in premium pet, aquaculture and livestock feeds, as well as agricultural and attractant applications. The processing reduces oxidation while enhancing Omega-3 fatty acids for incorporation in the final feed to enhance skin and
coat conditioning, reproductive performance, and immunity. Both kosher and organic products are available. The Companys refined feed grade fish oils are sold in three basic grades under the name Virginia Prime. Virginia Prime
Silver is fish oil that has been fractionated. Virginia Prime GoldTMfish oil is fractionated, alkali refined
and then bleached. Virginia Prime Platinum fish oil is fractionated, alkali refined, bleached and then deodorized.

SeaCideTM. SeaCideTMis a
unique blend of refined menhaden oil, cottonseed oil and an organic emulsifier developed for use against target pests and fungal diseases that occur in a variety of field crops, orchards, vineyards and greenhouse operations. SeaCideTMis an all natural organic alternative to chemical insecticides and fungicides, is less phytotoxic than petroleum based oils,
is compatible with most fertilizers, and is versatile enough for use on virtually any crop.

OmegaEquis.OmegaEquis is a specialty
feed additive product for the equine market that supplies omega-3 fatty acids to horses. OmegaEquis is Virginia Prime Gold that has been fractionated, alkali refined, bleached and then flavored in order to enhance palatability.

Industrial Grade Oils.The Companys industrial grade menhaden oils are refined and processed to enhance the unique fatty acid range, making
them desirable for a number of drying and lubricating applications including coolant transfer, chemical raw material, drying and rustproofing paints, drilling fluids and leather treatment chemicals. The industrial grade oils are sold under the names
Virginia Prime Silver and Virginia Prime Gold.

Food Grade
Oils. The Company has developed a process to fully refine menhaden oil to remove flavor, odor, color and pro-oxidants and offer a naturally high, long-chain Omega-3 content. The Companys main product in this grade is OmegaPure®. Food applications for OmegaPure®are designed to deliver a stable, odorless, flavorless source of Omega-3 fatty acids to enhance human nutrition. These applications include mainstream consumer foods, medical care foods and dietary supplements. OmegaPure®is also kosher-certified.

Omega-3 fatty acids exist in two forms: long-chain and short-chain. Short-chain Omega-3s (or alpha-linolenic acid (ALA)), are generally
found in canola oil, soy beans and flaxseed, and generally require ten to twenty times as much concentration in the diet to approach the same benefit levels as long-chain Omega-3s. Long-chain Omega-3 fatty acids are found in marine sources and
consist of two main types: eicosapentaenoic acid (EPA) and docosahexaenoic acid (DHA). EPA is a fatty acid that generally reduces inflammatory responses and has been linked to the alleviation of symptoms from asthma,
arthritis, psoriasis and other inflammatory conditions. DHA is a major structural fatty acid in the brain and the eyes retina. DHA is important for proper brain and eye development in infants and both EPA and DHA have been shown to support
cardiovascular health in adults.

As result of the completion of its Health and Science Center in Reedville, Virginia, in October 2004, the
Company is the only fully-integrated fish oil processing operation in the United States that both directly conducts fishing operations and also manufactures highly refined EPA and DHA from these marine resources. With the completion of this new
facility, the Company can control the purity and quality of its product from harvesting all the way through manufacturing and shipment.

Various scientific studies have linked consumption of Omega-3 fatty acids to a number of nutritional and health benefits, such as heart health, treatment of arthritis and other inflammatory diseases, improving brain and



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eye function and treatment of depression. For example, in September 2004, the FDA announced that scientific evidence indicates that long-chain Omega-3 fatty
acids may be beneficial in reducing coronary heart disease.

In addition, the American Heart Association (AHA) issued a
Scientific Statement in November 2002, entitled Fish Consumption, Fish Oil, Omega-3 Fatty Acids, and Cardiovascular Disease. The Scientific Statement outlines the findings of a comprehensive report that examined the cardiovascular health
benefit of Omega-3 fatty acids from fish sources, specifically DHA and EPA. The report concluded that consumption of such Omega-3 fatty acids, either through diet or supplements, may reduce the incidence of cardiovascular disease. The statement
referred to studies that have indicated the following to be associated with the intake of Omega-3 fatty acids: decreased risk of sudden death and arrhythmia, decreased thrombosis (blood clot), decreased triglyceride levels, decreased growth of
atherosclerotic plaque, improved arterial health and lower blood pressure. The Scientific Statement concludes that Omega-3 fatty acids have been shown in epidemiological and clinical trials to reduce the incidence of heart disease.

Menhaden oil currently is the only marine source of long-chain Omega-3s directly affirmed by the FDA as a Generally Recognized As Safe (or
GRAS) food ingredient for direct human consumption. The FDA has approved menhaden oil use in 29 different food categories such as margarine, salad dressings, condiments, yogurt, ice cream, cheese, prepared meats, sauces, soups, crackers,
cookies, cereals and bakery products.

In 2005, the U.S. Department of Agriculture and the Department of Health and Human Services released
the 2005 Dietary Guidelines for Americans. The Guidelines, which are issued every five years, represent the federal governments most current science-based advice to promote human health and reduce the risk of chronic diseases through nutrition
and physical activity. The previous Dietary Guidelines issued in 2000 recognized that certain fish contain Omega-3 fatty acids that are being studied to determine if they offer protection against heart disease, but did not specifically identify
these Omega-3 fatty acids as EPA and DHA. The 2005 Dietary Guidelines specifically mentioned EPA and DHA and stated the limited evidence suggests an association between consumption of fatty acids in fish and reduced risks of mortality from
cardiovascular disease for the general population.

In 2006, the Company completed its new technical center in Houston,
TexasThe OmegaPure Technology and Innovation Center. The technical center has food science application labs, as well as analytical, sensory and pilot plant capabilities. The technical center also has a lipids research lab where the Company
plans to continue to develop new Omega-3 products that have improved functionality and technical characteristics.

Fish
Solubles. Fish solubles are a liquid protein product used as an additive in fish meal and are also marketed as an independent product to animal feed formulators and the fertilizer industry. The Companys soluble-based products are:

Neptune Fish Concentrate. This aqua grade liquid protein is composed of low molecular weight,
water-soluble compounds such as free amino acids, peptides and nucleotides that are attractants for a variety of aquaculture feeds. The product is utilized in both shrimp and finfish diets to improve attractability and thus consumption and
conversion. Neptune Fish Concentrate also can be added directly to grow-out ponds as a fertilizer to help feed plankton and other natural food sources.

OmegaGrow. OmegaGrow is a liquid soil or foliar-applied fertilizer for plant nutrition. OmegaGrow is
approved for organic uses by the Organic Materials Review Institute (OMRI). OmegaGrow is a free-flowing product that has been filtered through an 80-mesh screen and can be applied by sprayers or through irrigation systems.

OmegaGrow Plus. OmegaGrow Plus is a liquid foliar-applied fertilizer for plant nutrition that also
helps to control insect and fungus problems. This product has additional oil content of 25% to 30% which is greater than the 7% to 10% oil content typically found in OmegaGrow. These higher levels are detrimental to soft-bodied insects, as
well as fungal diseases in citrus and vegetable crops. OmegaGrow Plus can be used as a replacement for petroleum-based oil sprays.



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Distribution System. The Companys distribution system of warehouses, tank storage
facilities, vessel loading facilities, trucks, barges and railcars allows the Company to service customers throughout the United States and also foreign locations. The Company owns and leases warehouses and tank storage space for storage of its
products, generally at terminals along the Mississippi River and Tennessee River. The Company generally contracts with third-party trucking, vessel, barge and railcar companies to transport its products to and from warehouses and tank storage
facilities and directly to its customers.

Historically, approximately 35% to 40% of Omegas FAQ grade fish meal was sold on a
two-to-twelve-month forward contract basis. The balance of FAQ grade fish meal and other products was substantially sold on a spot basis through purchase orders. In 2002, the Company began a similar forward sales program for its specialty grade
meals and crude fish oil due to increasing demand for these products. During 2003, 2004 and 2005, approximately 50%, 43% and 70%, respectively, of the Companys specialty meals and crude fish oil had been sold on a forward contract basis. Prior
to the beginning of the Companys 2006 fishing season, approximately 64% and 86% of the Companys 2006 forecasted fish meal and crude fish oil had either been sold or sold forward on a contract basis. The percentage of fish meal and crude
fish oil sold on a forward contract basis will fluctuate from year to year based upon perceived market availability.

The Companys
annual revenues are highly dependent on annual fish catch, production yields and inventories and, in addition, inventory is generally carried over from one year to the next year. The Company determines the level of inventory to be carried over based
on prevailing market prices of the products and anticipated customer usage and demand during the off-season. Thus, production volume does not necessarily correlate with sales volume in the same year and sales volumes will fluctuate from quarter to
quarter. The Companys fish meal products have a useable life of approximately one year from date of production. Practically, however, the Company attempts to empty its warehouses of the previous seasons products by the second or third
month of the new fishing season. The Companys crude fish oil products do not lose efficacy unless exposed to oxygen and, therefore, their storage life typically is longer than that of fish meal.

Customers and Marketing.Most of the Companys marine protein products are sold directly to approximately 600 customers by the
Companys agriproducts sales department, while a smaller amount is sold through independent sales agents. Product inventory was $48.9 million on December 31, 2006 versus $37.0 million as of December 31, 2005.

The Companys fish meal is sold primarily to domestic feed producers for utilization as a high-protein ingredient for the swine, aquaculture, dairy
and pet food industries. Fish oil sales primarily involve export markets where the fish oil is used for aquaculture feeds and is refined for use as a hydrogenated edible oil.

The Companys products are sold both in the U.S. and internationally. International sales consist mainly of fish oil sales to Norway, Canada, Chile,
China, Japan and Mexico. The Companys sales in these foreign markets are denominated in U.S. dollars and not directly affected by currency fluctuations. Such sales could be adversely affected by changes in demand resulting from fluctuations in
currency exchange rates.

A number of countries in which the Company currently sells products impose various tariffs and duties, none of
which have a significant impact on the Companys foreign sales. Certain of these duties have been reduced in recent years for certain countries under the North American Free Trade Agreement and the Uruguay Round Agreement of the General
Agreement on Tariffs and Trade. In all cases, the Companys products are shipped to its customers either by FOB shipping point or CIF terms, and therefore, the customer is responsible for any tariffs, duties or other levies imposed on the
Companys products sold into these markets.

During the off season, the Company fills purchase orders from the inventory it has
accumulated during the fishing season or in some cases, by re-selling meal purchased from other suppliers. Prices for the Companys products tend to be lower during the fishing season when product is more abundant than in the off season.
Throughout the entire year, prices are often significantly influenced by supply and demand in world markets for



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competing products, primarily other global sources of fish meal and oil, and also soybean meal for its fish meal products, and vegetable oils for its fish
oil products when used as an alternative.

Quality Control. The Company believes that maintaining high standards of quality in
all aspects of its manufacturing operations play an important part in its ability to attract and retain customers and maintain its competitive position. To that end, the Company has adopted strict quality control systems and procedures designed to
test the quality aspects of its products, such as protein content and digestibility. The Company regularly reviews, updates and modifies these systems and procedures as appropriate.

Purchases and Sales of Third-Party Meal and Oils. Omega has from time to time purchased fish meal and fish oil from other domestic and
international manufacturers. These purchase and resale transactions have been ancillary to the Companys base manufacturing and sales business.

Part of the Companys business plan involves expanding its purchase and resale of other manufacturers fish meal and fish oil products. During 2003, 2004 and 2005, the Companys fish catch and resultant
product inventories were reduced, primarily due to adverse weather conditions, and the Company further expanded its purchase and resales of other fish meals and oils (primarily Panamanian, Peruvian and Mexican fish meal and U.S. menhaden oil).
Although operating margins from these activities are less than the margins typically generated from the Companys base domestic production, these operations provide the Company with a source of fish meal and oil to sell into other markets, some
of which, the Company has not historically had a presence. During 2003, the Company purchased products totaling approximately 12,500 tons, or approximately 5% of total volume 2003 sales. During 2004, the Company purchased products totaling
approximately 17,800 tons, or approximately 8% of total volume 2004 sales. During 2005, the Company purchased products totaling approximately 16,600 tons, or approximately 8% of total volume 2005 sales. During 2006, the Company purchased products
totaling approximately 14,600 tons, or approximately 7% of total volume 2006 sales.

Insurance.The Company maintains insurance
against physical loss and damage to its assets, coverage against liabilities to third parties it may incur in the course of its operations, as well as workers compensation, United States Longshoremens and Harbor Workers
Compensation Act and Jones Act coverage. Assets are insured at replacement cost, market value or assessed earning power. The Companys limits for liability coverage are statutory or $50 million. The $50 million limit is comprised of several
excess liability policies, which are subject to deductibles, underlying limits, annual aggregates and exclusions. The Company believes its insurance coverage to be in such form, against such risks, for such amounts and subject to such deductibles
and self-retentions as are prudent and normal for its operations. Over recent years, the Company has elected to increase its deductibles and self-retentions in order to achieve lower insurance premium costs. These higher deductibles and
self-retentions have resulted in greater costs to the Company in the case of Hurricanes Katrina and Rita and will expose the Company to greater risk of loss if additional future claims occur. In addition, the Companys cost of insurance for
property damage has increased materially and may further increase materially in future years as insurers recoup losses paid and to be paid out in connection with the Katrina and Rita hurricanes by charging higher premiums. The Company does not
maintain business interruption insurance due to its high cost and limited availability.

Competition. The Company competes with
a smaller domestic privately-owned menhaden fishing company and with international marine protein and oil producers, including Mexican sardine processors and South American anchovy and mackerel processors. In addition, but to a lesser extent, the
Companys marine protein and oil business is also subject to significant competition from producers of vegetable and other animal protein products and oil products such as Archer Daniels Midland and Cargill. Many of these competitors have
significantly greater financial resources and more extensive and diversified operations than those of the Company.

Omega competes on
price, quality and performance characteristics of its products, such as protein level and amino acid profile in the case of fish meal. The principal competition for the Companys fish meal and fish



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solubles is from other global production of marine proteins as well as other protein sources such as soybean meal and other vegetable or animal protein
products. The Company believes, however, that these other non-marine sources are not complete substitutes because fish meal offers nutritional values not contained in such other sources. Other globally produced fish oils provide the primary market
competition for the Companys fish oil, as well as soybean and rapeseed oil, from time to time.

Fish meal prices have historically
borne a relationship to prevailing soybean meal prices (more weakly correlated in recent years), while prices for fish oil are generally influenced by prices for vegetable fats and oils, such as rape, soybean and palm oils. Thus, the prices for the
Companys products are established by worldwide supply and demand relationships over which the Company has no control and tend to fluctuate significantly over the course of a year and from year to year.

Regulation.The Companys operations are subject to federal, state and local laws and regulations relating to the locations and periods
in which fishing may be conducted as well as environmental and safety matters. At the state and local level, certain state and local government agencies have enacted legislation or regulations which prohibit, restrict or regulate menhaden fishing
within their jurisdictional waters.

The Companys menhaden fishing operations are also subject to regulation by two interstate
compact commissions created by federal law: the Atlantic States Marine Fisheries Commission (ASMFC) which consists of 15 states along the Atlantic Coast, and the Gulf States Marine Fisheries Commission which consists of 5 states along
the Gulf of Mexico. In 2005, the ASMFC recommended precautionary restrictions on the Chesapeake Bay menhaden harvest, despite its finding that menhaden are not overfished and that overfishing is not occurring on a coast wide basis, in order to
determine whether localized depletion was occurring in Chesapeake Bay.

In February 2007 the Commonwealth of Virginia declined to adopt an
ASMFC recommended plan but instead adopted its own restrictions whereby the Companys Chesapeake Bay menhaden harvest would be capped for a five year period at a recent five-year average (2001 to 2005) of 109,020 metric tons per year. The
Virginia restrictions also allow for a credit whereby any under-harvest in a particular year below the 109,020 metric ton cap would be added to increase the cap for the following year, up to a maximum of 122,740 metric tons per year. The
Company supported Virginias proposal and voluntarily complied with its limitations in 2006. This compliance had no effect on the Companys Chesapeake Bay harvest in 2006 and is not expected to have any material adverse effect on its
Chesapeake Bay harvest in 2007. As a result of the underharvest in 2006, the 2007 Chesapeake Bay catch limit will be 122,740 metric tons.

The Company, through its operation of fishing vessels, is subject to the jurisdiction of the U.S. Coast Guard, the National Transportation Safety Board and the U.S. Customs Service. The U.S. Coast Guard and the National Transportation
Safety Board set safety standards and are authorized to investigate vessel accidents and recommend improved safety standards. The U.S. Customs Service is authorized to inspect vessels at will.

The Companys operations are subject to federal, state and local laws and regulations relating to the protection of the environment, including the
federal Clean Water Act, which imposes strict controls against the discharge of pollutants in reportable quantities, and along with the Oil Pollution Act, imposes substantial liability for the costs of oil removal, remediation and damages. The
Companys operations also are subject to the federal Clean Air Act, as amended; the federal Comprehensive Environmental Response, Compensation, and Liability Act, which imposes liability, without regard to fault, on certain classes of persons
that contributed to the release of any hazardous substances into the environment; and the federal Occupational Safety and Health Act (OSHA). The implementation of continuing safety and environmental regulations from these
authorities could result in additional requirements and procedures for the Company, and it is possible that the costs of these requirements and procedures could be material.

The OSHA hazard communications standard, the Environmental Protection Agency community right-to-know regulations under Title III of the federal Superfund
Amendment and Reauthorization Act and



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similar state statutes require the Company to organize information about hazardous materials used or produced in its operations. Certain of this information
must be provided to employees, state and local governmental authorities and local citizens. Numerous other environmental laws and regulations, along with similar state laws, also apply to the operations of the Company, and all such laws and
regulations are subject to change.

The Company has made, and anticipates that it will make in the future, expenditures in the ordinary
course of its business in connection with environmental matters. Such expenditures have not been material in the past, and while they are expected to increase in the future, such increases are not expected to be material to the Companys
overall business. However, there is no assurance that environmental laws and regulations enacted in the future will not require material expenditures or otherwise adversely affect the Companys operations.

The Company continually monitors regulations which affect fish meal and fish oil in the United States and in those foreign jurisdictions where it sells
its products. In some cases, particularly in Europe, regulators have mandated various environmental contaminant levels which, on occasion, certain of the Companys products do not meet. In those instances, the Company has either negotiated a
lower price with the customer for that product lot or has sold the product lot in another market where the regulatory standards are met. To date, such regulations have not had a material adverse effect on the Companys business, but it is
possible they may do so in the future.

The Companys harvesting operations are subject to the Shipping Act of 1916 and the
regulations promulgated thereunder by the Department of Transportation, Maritime Administration which require, among other things, that the Company be incorporated under the laws of the U.S. or a state, the Companys chief executive officer be
a U.S. citizen, no more of the Companys directors be non-citizens than a minority of the number necessary to constitute a quorum and at least 75% of the Companys outstanding capital stock (including a majority of the Companys
voting capital stock) be owned by U.S. citizens. If the Company fails to observe any of these requirements, it will not be eligible to conduct its harvesting activities in U.S. jurisdictional waters. Such a loss of eligibility would have a material
adverse effect on the Companys business, results of operations and financial condition.

To protect against such loss of eligibility,
the Companys Articles of Incorporation (i) contain provisions limiting the aggregate percentage ownership by non-citizens of each class of the Companys capital stock to no more than 25% of the outstanding shares of each such class
(the Permitted Percentage) so that any purported transfer to non-citizens of shares in excess of the Permitted Percentage will be ineffective as against the Company for all purposes (including for purposes of voting, dividends and any
other distribution, upon liquidation or otherwise), (ii) provide for a dual stock certificate system to determine such ownership pursuant to which certificates representing shares of Company Common Stock bear legends that designate such
certificates as either citizen or non-citizen depending on the citizenship of the owner, and (iii) permit the Companys Board of Directors to make such determinations as may reasonably be necessary to ascertain such
ownership and implement restrictive limitations on those shares that exceed the Permitted Percentage (the Excess Shares). For example, the Companys Board is authorized, among other things, to redeem for cash (upon written notice)
any Excess Shares in order to reduce the aggregate ownership by non-citizens to the Permitted Percentage.

Employees

At December 31, 2006, during the Companys off-season, the Company employed approximately 567 persons. At August 31, 2006, during the peak
of the Companys 2006 fishing season, the Company employed approximately 1048 persons. Approximately 170 employees at the Companys Reedville, Virginia plant are represented by an affiliate of the United Food and Commercial Workers Union.
The union agreement for the Reedville employees has a three-year term which expires in April 2008. During the past five years Omega has not experienced any strike or work stoppage which has had a material impact on its operations. The Company
considers its employee relations to be generally satisfactory.



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Executive Officers of the Company

The names, ages and current offices of the executive officers of the Company are set forth below. Also indicated is the date when each such person commenced serving as an executive officer of the Company.



|                                 |  |                                                                        |  |                             
|-------------------------------- |  | ---------------------------------------------------------------------- |  | ----------------------------
|Name and Age                     |  | Office                                                                 |  | Date BecameExecutive Officer
|Joseph L. von Rosenberg III (48) |  | Chief Executive Officer, President and Director                        |  | July 1997                   
|                                 |  |                                                                       
|Robert W. Stockton (56)          |  | Executive Vice President, Chief Financial Officer                      |  | July 1997                   
|                                 |  |                                                                       
|John D. Held (44)                |  | Executive Vice President, General Counsel and Secretary                |  | January 2002                
|                                 |  |                                                                       
|J. Scott Herbert (41)            |  | Vice PresidentAgriproducts                                            |  | September 2002              
|                                 |  |                                                                       
|Thomas R. Wittmann (57)          |  | Vice PresidentOperations                                              |  | October 2002                
|                                 |  |                                                                       
|Richard W. Weis (49)             |  | Vice PresidentBusiness Development                                    |  | January 2005                
|                                 |  |                                                                       
|Albert A. Riley (58)             |  | Vice PresidentRefined Oils                                            |  | September 2002              
|                                 |  |                                                                       
|Michael E. Wilson (56)           |  | Vice PresidentMarine Operations and President of Omega Shipyard, Inc. |  | July 1998                   

A description of the business experience during the past five years for each of the executive
officers of Omega is set forth below.

Joseph L. von Rosenberg III has served as President, Chief Executive Officer and a Director
of the Company since July 1997.

Robert W. Stocktonhas served as Executive Vice President and Chief Financial Officer of the
Company since July 1997. He has also served as Secretary from January 2000 to September 2002.

John D. Held has served as the
Companys General Counsel since March 2000, as Vice President of the Company from April 2002 to September 2002, as Senior Vice President and Secretary since September 2002 and as Executive Vice President since June 2005. Prior thereto,
Mr. Held was Senior Vice President, General Counsel and Secretary of American Residential Services, Inc., a then public company engaged in the consolidation of the air-conditioning, plumbing and electrical service industries. Prior thereto,
Mr. Held practiced law for several years with a large law firm in Houston, Texas.

J. Scott Herbert has served as Vice
PresidentAgriproducts of the Company since September 2002. Prior thereto, Mr. Herbert served as Vice PresidentFeed Ingredient Marketing of the Companys principal subsidiary, Omega Protein, Inc., since March 1998, and as
Director of Fish Meal Sales and in various other sales capacities with the Company since 1992.

Thomas R. Wittmannhas served as
Vice PresidentOperations since October 2002. Prior thereto, Mr. Wittmann served as the General Manager of the Companys Abbeville, Louisiana facility since 1997 and served in various other Company positions since 1985.

Richard W. Weishas served as the Companys Vice PresidentBusiness Development since January 2005. From May 2002 until January 2004,
Mr. Weis served as Vice PresidentBusiness Development for Flavors of North America, Inc., a manufacturer of flavors for the food and beverage industries. From 2000 to May 2002, Mr. Weis was a self-employed consultant in the flavor
industry. From 1993 through 2000, Mr. Weis was President of Alex Fries, Inc., a Land OLakes, Inc. subsidiary that produced custom flavor systems for the food and beverage industries. Mr. Weis also served as Vice President and Chief
Operating Officer of Alex Fries, Inc. from 1987 to 1993.



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Albert A. Riley has served as Vice PresidentRefined Oils of the Company since September
2002. Prior thereto, Mr. Riley served as Vice PresidentRefined Oils of the Companys principal subsidiary, Omega Protein, Inc., since May 2000 and as Business Development ManagerIndustrial Oils of Omega Protein, Inc., from
September 1999 to April 2000. From July 1999 to September 1999, Mr. Riley served as a consultant to the Company. Prior thereto, Mr. Riley was a financial planner with Lincoln Financial.

Michael E. Wilson has served as President of the Companys wholly-owned subsidiary, Omega Shipyard, Inc., since June 1997. Since July 1998,
he has also served as the Companys Vice PresidentMarine Operations and prior thereto, served as the Companys Coordinator of Marine Engineering & Maintenance. Mr. Wilson joined the Company in 1985 and served in various
operating capacities until 1996.

Properties

The Companys material properties are described below. The Company believes its facilities are adequate and suitable for its current level of operations.

Plants.The Company owns its plants in Reedville, Virginia, Moss Point, Mississippi and Abbeville, Louisiana (except for certain portions of the Abbeville facility which are leased from unaffiliated third
parties). The Company also owns its Health and Science Center in Reedville, Virginia, as well as its Morgan City, Louisiana property which was formerly operated as a plant. The Company leases from unaffiliated third parties the real estate on which
its Cameron, Louisiana plant is located.

The Companys Moss Point, Abbeville and Cameron plants were severely damaged in the third
quarter 2005 by Hurricanes Katrina and Rita. See Company OverviewHurricane Damages.

Warehouse and
Storage.The Company owns, as well as leases from unaffiliated third parties, warehouses and tank space for storage of its products, generally at terminals located along the Mississippi River and Tennessee River. Information regarding the
Companys material storage facilities is set forth below:



|                        |  |                                                    |  |            
|----------------------- |  | -------------------------------------------------- |  | -----------
|Location                |  | Approximate Fish Mealand Fish Oil Storage Capacity |  | Owned/Lease
|Reedville, Virginia     |  | 29,950 tons                                        |  | Owned      
|Abbeville, Louisiana    |  | 14,500 tons                                        |  | Owned      
|Moss Point, Mississippi |  | 18,400 tons                                        |  | Owned      
|Morgan City, Louisiana  |  | 10,000 tons                                        |  | Owned      
|St. Louis, Missouri     |  | 10,000 tons                                        |  | Owned      
|Avondale, Louisiana     |  | 25,800 tons                                        |  | Leased     
|Cameron, Louisiana      |  | 13,900 tons                                        |  | Leased     
|East Dubuque, Illinois  |  | 11,000 tons                                        |  | Leased     
|Norfolk, Virginia       |  | 2,600 tons                                         |  | Leased     

Shipyard.The Company owns a 49.4 acre shipyard facility in Moss Point, Mississippi
which includes two dry docks, each with a capacity of 1,300 tons. The shipyard is used for routine maintenance and vessel refurbishment on the Companys fishing vessels and occasionally for shoreside maintenance services to third-party vessels
if excess capacity exists.

The shipyard facility was severely damaged in the third quarter 2005 by Hurricane Katrina. See Company
OverviewHurricane Damages.

Administrative and Executive Offices.The Company leases administrative and executive
office space from an unaffiliated third party in Houston, Texas. The Company also leases the property for its Omega Pure Technology and Innovation Center from an unaffiliated third party in Houston, Texas.



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|Item 1A. | Risk Factors
|-------- | ------------

The Company
cautions investors that the following risk factors, and those factors described elsewhere in this report, other filings by the Company with the SEC from time to time and press releases issued by the Company, could affect the Companys actual
results which could differ materially from those expressed in any forward-looking statements made by or on behalf of the Company.

The
risks described below are not the only ones facing the Company. The Companys business is also subject to other risks and uncertainties that affect many other companies, such as competition, technological obsolescence, labor relations
(including risks of strikes), general economic conditions and geopolitical events. Additional risks not currently known to the Company or risks that the Company currently believes are immaterial may also impair the Companys business, results
of operations and financial results.

Risks Relating to the Companys Business and Industry:

The Company is dependent on a single natural resource and may not be able to catch the amount of menhaden that it requires to operate
profitably.The Companys primary raw material is menhaden. The Companys business is totally dependent on its annual menhaden harvest in ocean waters along the U.S. Atlantic and Gulf coasts. The Companys ability to meet its raw
material requirements through its annual menhaden harvest fluctuates from year to year and month to month, due to natural conditions over which the Company has no control. These natural conditions, which include varying fish population, adverse
weather conditions and fish disease, may prevent the Company from catching the amount of menhaden required to operate profitably.

The Companys operations are geographically concentrated in the Gulf of Mexico where they are susceptible to regional adverse weather patterns such as hurricanes.Three of the Companys four operating plants are located in
the Gulf of Mexico (two in Louisiana and one in Mississippi), a region which has historically been subject to a late summer/early fall hurricane season. The Companys Virginia facility has in the past also at times been adversely affected by
hurricanes. All three of the Companys Gulf of Mexico plants were severely damaged within a one-month span by Hurricanes Katrina and Rita in August and September 2005. Immediately after the second hurricane, approximately 70% of the
Companys 2004 production capacity was impaired and the Companys business, results of operations and financial condition were materially adversely affected. Additional future weather related disruptions could, if they occur, also have a
material adverse effect on the Companys business, results of operations and financial condition. In addition, the Companys costs of insurance for property damage have increased as insurers recoup losses paid and to be paid out in
connection with the Katrina and Rita hurricanes by charging higher premiums.

The costs of energy may materially impact
the Companys business. The Company has experienced substantially higher costs for energy in recent years, particularly in 2005 and 2006 and expects these higher costs to continue into 2007. The Companys business is materially
dependent on diesel fuel for its vessels and natural gas for its operating facilities. The costs of these commodities, which are beyond the Companys control, may have an adverse material impact on the Companys business, results of
operations and financial condition.

Fluctuation in oil yields derived from the Companys fish catch
could impact the Companys ability to operate profitably.The oil yield, or the percentage of oil derived from the menhaden fish, while it is relatively high compared to many species of fish, has fluctuated over the years and
from month to month due to natural conditions relating to fish biology over which the Company has no control. The oil yield has at times materially impacted the amount of fish oil that the Company has been able to produce from its available fish
catch and it is possible that oil yields in the future could also adversely impact the Companys ability to operate profitably.

The Companys 2006 oil yield results have been the poorest in its recent history.For illustrative purposes, the Companys oil yields for the 2006 fishing season are lower by 28% compared to those in the



17



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2005 fishing season and are lower by 24% compared to the Companys 10 year oil yield average. The Company believes that the causes of lower fish oil
yields relate to fish diet, weather and water temperature but such causes are not generally well understood. The impact of these poor oil yields have resulted in significantly higher per unit inventory costs and fewer volumes available for future
sale. These higher unit costs and fewer volumes available for sale have adversely impacted financial results for the fourth quarter of 2006 and are expected to adversely impact future financial results in the first quarter of 2007, and to some
extent, the second quarter of 2007.

Laws or regulations that restrict or prohibit menhaden or purse seine fishing
operations could adversely affect the Companys ability to operate. The adoption of new laws or regulations at federal, regional, state or local levels that restrict or prohibit menhaden or purse seine fishing operations, or stricter
interpretations of existing laws or regulations, could materially adversely affect the Companys business, results of operations and financial condition. In addition, the impact of a violation by the Company of federal, regional, state or local
law or regulation relating to its fishing operations, the protection of the environment or the health and safety of its employees could have a material adverse affect on the Companys business, results of operations and financial condition.

One example of potentially restrictive regulation involves an addendum to a fisheries management plan recommended by a
regional regulatory commission in August 2005. The Commonwealth of Virginia has declined to adopt the regulatory commissions recommended plan but has instead adopted its own restrictions whereby the Companys Chesapeake Bay menhaden
harvest would be capped for a five year period at a recent five-year average (2001 to 2005) of 109,020 metric tons per year. The Virginia restrictions also allow for a credit whereby any under-harvest in a particular year below the 109,020 metric
ton cap would be added to increase the cap for the following year, up to a maximum of 122,740 metric tons per year. The Company supported Virginias proposal and voluntarily complied with its limitations in 2006. This compliance had no effect
on the Companys Chesapeake Bay harvest in 2006 and is not expected to have a material adverse effect on the Chesapeake Bay harvest in 2007. As a result of the 2006 Chesapeake Bays underharvest, the 2007 Chesapeake Bay catch limit will be
122,740 metric tons. For more information, see Items 1 and 2. Business and PropertiesCompany OverviewRegulation.

The Companys fish catch may be impacted by restrictions on its spotter aircraft. If the Companys spotter aircraft are prohibited or restricted from operating in their normal manner during the
Companys fishing season, the Companys business, results of operations and financial condition could be adversely affected. For example, as a direct result of the September 11, 2001 terrorist attacks, the Secretary of Transportation
issued a federal ground stop order that grounded certain aircraft (including the Companys fish-spotting aircraft) for approximately nine days. This loss of spotter aircraft coverage severely hampered the Companys ability to locate
menhaden fish during this nine-day period and thereby reduced its amount of saleable product.

Worldwide supply and
demand relationships, which are beyond the Companys control, influence the prices that the Company receives for many of its products and may from time to time result in low prices for many of the Companys products.Prices for many of
the Companys products are subject to, or influenced by, worldwide supply and demand relationships over which the Company has no control and which tend to fluctuate to a significant extent over the course of a year and from year to year. The
factors that influence these supply and demand relationships are world supplies of fish meal made from other fish species, animal proteins and fats, palm oil, rapeseed oil, soy meal and oil, and other edible oils.

New laws or regulation regarding contaminants in fish oil or fish meal may increase the Companys cost of production or cause the
Company to lose business. It is possible that future enactment of increasingly stringent regulations regarding contaminants in fish meal or fish oil by foreign countries or the United States may adversely affect the Companys business,
results of operations and financial condition. More stringent regulations could result in: (i) the Companys incurrence of additional capital expenditures on contaminant reduction technology in order to meet the requirements of those
jurisdictions, and possibly higher production costs for Companys products, or (ii) the Companys withdrawal from marketing its products in those jurisdictions.



18



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Risks Relating to the Companys Ongoing Operations:

The Company has a substantial amount of indebtedness, which may adversely affect its ability to operate its business, remain in
compliance with debt covenants and make payments on its debt. As of December 31, 2006, the aggregate amount of the Companys outstanding indebtedness under its senior secured financing facility and its loan agreements under the Title
XI Fisheries Finance Program was approximately $75.2 million. The Companys outstanding indebtedness could have important consequences for you, including the following:



| |  |  | it may be more difficult for the Company to satisfy its obligations with respect to its senior secured financing facility with Ableco Finance LLC and its loan
agreements under the Title XI Fisheries Finance Program, and any failure to comply with the obligations of any of the agreements governing such indebtedness, including financial and other restrictive covenants, could result in an event of default
under such agreements;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the covenants contained in the Companys debt agreements limit its ability to borrow money in the future for acquisitions, capital expenditures or to meet its
operating expenses or other general corporate obligations;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the amount of the Companys interest expense may increase because certain of its borrowings are at variable rates of interest, which, if interest rates
increase, could result in higher interest expense;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the Company will need to use a portion of its cash flows to pay principal and interest on its debt, which will reduce the amount of money the Company has for
operations, working capital, capital expenditures, expansion, acquisitions or general corporate or other business activities;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the Company may have a higher level of debt than some of its competitors, which could put it at a competitive disadvantage;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------



| |  |  | the Company may be more vulnerable to economic downturns and adverse developments in its industry or the economy in general; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------



| |  |  | the Companys debt level could limit its flexibility in planning for, or reacting to, changes in its business and the industry in which it operates.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------

The Companys ability to meet its expenses and debt obligations will depend on its future
performance, which will be affected by financial, business, economic, regulatory and other factors. The Company will not be able to control many of these factors, such as economic conditions and governmental regulation. The Company cannot be certain
that its earnings will be sufficient to allow it to pay the principal and interest on its existing or future debt and meet its other obligations. If the Company does not have enough money to service its existing or future debt, it may be required to
refinance all or part of its existing or future debt, sell assets, borrow more money or raise equity. The Company may not be able to refinance its existing or future debt, sell assets, borrow more money or raise equity on terms acceptable to it, if
at all.

Three of the Companys four operating plants were severely damaged by Hurricanes Katrina and Rita and the
Company has had to undertake substantial rebuilding efforts. As an immediate result of the two hurricanes, approximately 70% of the Companys operating capacity was impaired. Operations at the Moss Point and Abbeville fish processing
facilities and the shipyard were re-established in mid-October 2005, but at reduced processing capabilities. These two facilities were returned to full operational status prior to the beginning of the Gulf fishing season in April 2006. Operations at
the Cameron fish processing facility were re-established in June 2006, but at reduced processing capabilities. The Cameron facility became fully operational in September 2006. The costs of the rebuilding efforts have been substantial and not all
costs will be covered by insurance due to deductibles, exclusions and other policy limitations.

The Companys
strategy to expand into the functional food grade oils market may be unsuccessful.The Companys attempts to expand its fish oil sales into the market for refined, functional food grade fish oils for human consumption may not be successful.
The Companys expectations regarding



19



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future demand for Omega-3 fatty acids may prove to be incorrect or, if future demand does meet the Companys expectations, it is possible that
purchasers could utilize Omega-3 sources other than the Companys products.

The Companys quarterly operating
results will fluctuate as its business is seasonal in nature.The Companys menhaden harvesting and processing business is seasonal in nature. The Company generally has higher sales during the menhaden harvesting season (which includes the
second and third quarter of each fiscal year) due to increased product availability, but prices during the fishing season tend to be lower than during the off-season. As a result, the Companys quarterly operating results have fluctuated in the
past and may fluctuate in the future. In addition, from time to time the Company defers sales of inventory based on worldwide prices for competing products that affect prices for its products, which may affect comparable period comparisons.

The Companys business is subject to significant competition, and some competitors have significantly greater
financial resources and more extensive and diversified operations than the Company.The marine protein and oil business is subject to significant competition from producers of vegetable and other animal protein products and oil products such as
Archer Daniels Midland and Cargill. In addition the Company competes with a smaller domestic privately-owned menhaden fishing company and international marine protein and oil producers, including Scandinavian herring processors and South American
anchovy and sardine processors. Many of these competitors have significantly greater financial resources and more extensive and diversified operations than the Company.

The Companys foreign customers are subject to disruption typical to foreign countries. The Companys sales of its
products in foreign countries are subject to risks associated with foreign countries such as changes in social, political and economic conditions inherent in foreign operations, including:



| |  |  | Changes in the law and policies that govern foreign investment and international trade in foreign countries;
| | - |  | ------------------------------------------------------------------------------------------------------------



| |  |  | Changes in U.S. laws and regulations relating to foreign investment and trade;
| | - |  | ------------------------------------------------------------------------------



| |  |  | Changes in tax or other laws;
| | - |  | -----------------------------



| |  |  | Partial or total expropriation;
| | - |  | -------------------------------



| |  |  | Current exchange rate fluctuations;
| | - |  | -----------------------------------



| |  |  | Restrictions on current repatriation; or
| | - |  | ----------------------------------------



| |  |  | Political disturbances, insurrection or war.
| | - |  | --------------------------------------------

In addition, it is possible that the Company, at any one time, could have a significant amount of its revenues generated by sales in a particular country which would concentrate the Companys susceptibility to
adverse events in that country.

The Company may undertake acquisitions that are unsuccessful and the Companys
inability to control the inherent risks of acquiring businesses could adversely affect its business, results of operations and financial condition operations. In the future the Company may undertake acquisitions of other businesses, located
either in the United States or in other countries, although there can be no assurances that this will occur. There can be no assurance that the Company will be able (i) to identify and acquire acceptable acquisition candidates on favorable
terms, (ii) to profitably manage future businesses it may acquire, or (iii) to successfully integrate future businesses it may acquire without substantial costs, delays or other problems. Any of these outcomes could have a material adverse
effect on the Companys business, results of operations and financial condition.

The Companys failure to
comply with federal U.S. citizenship ownership requirements may prevent it from harvesting menhaden in the U.S. jurisdictional waters. The Companys harvesting operations are subject to the Shipping Act of 1916 and the regulations
promulgated thereunder by the



20



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Department of Transportation, Maritime Administration which require, among other things, that the Company be incorporated under the laws of the U.S. or a
state, the Companys chief executive officer be a U.S. citizen, no more of the Companys directors be non-citizens than a minority of a number necessary to constitute a quorum and at least 75% of the Companys outstanding capital
stock (including a majority of its voting capital stock) be owned by U.S. citizens. If the Company fails to observe any of these requirements, the Company will not be eligible to conduct its harvesting activities in U.S. jurisdictional waters which
would have a material adverse effect on the Companys business, results of operations and financial condition.

The
Company may not be able to recruit, train and retain qualified marine personnel in sufficient numbers. The Companys business is dependent on its ability to recruit, train and retain qualified marine personnel in sufficient numbers such as
vessel captains, vessel engineers and other crewmembers. To the extent that the Company is not successful in recruiting, training and retaining these employees in sufficient numbers, its productivity may suffer. If the Company were unable to secure
a sufficient number of workers during periods of peak employment, the lack of personnel could have an adverse effect on the Companys business, results of operations and financial condition.The impact of Hurricanes Katrina and Rita has
exacerbated the difficulties of recruiting and retaining qualified marine personnel in the Gulf Coast area.

The Company
participates in the United States H2B Visa Program whereby foreign nationals are permitted to enter the United States temporarily and engage in seasonal, non-agricultural employment. The Company utilizes its H2B Visa workers for a portion of its
fishing vessel crews and plant personnel. Changes in the H2B Visa Program, the termination of that program, or caps on the number of workers available under that program, could have a material adverse effect upon the Companys ability to secure
a sufficient number of workers during periods of peak employment.

The Companys Senior Secured Financing Facility
and other Fisheries Finance Program loan agreements contain covenants and restrictions that may limit the Companys financial flexibility.The Companys Senior Secured Financing Facility with Abelco Finance LLC and the Companys
loan agreements under the Title XI Fisheries Finance Program contain various covenants and restrictions such as prohibitions on dividends and stock repurchases without the lenders consent. The Senior Secured Financing Facility also contains
various financial covenants that provide, for example, that the Company may not report two quarters of consecutive net losses, and that the Company must maintain a certain ratio of earnings to fixed charges.

Investment Risks.Investment risks specifically related to the Companys common stock include:

The limited liquidity for the Companys common stock could affect your ability to sell your shares at a satisfactory price.The Companys common stock is relatively illiquid. As of December 31, 2006, the Company had approximately 16.2 million shares of common stock outstanding. The average daily trading volume in the common stock during the prior 60
calendar days ending on that date was approximately 22,400 shares. A more active public market for the Companys common stock, however, may not develop, which would continue to adversely affect the trading price and liquidity of the common
stock. Moreover, a thin trading market for the common stock causes the market price for the common stock to fluctuate significantly more than the stock market as a whole. Without a large float, the Companys common stock is less liquid than the
stock of companies with broader public ownership and, as a result, the trading prices of the common stock may be more volatile. In addition, in the absence of an active public trading market, you may be unable to liquidate your investment in the
Company at a satisfactory price.

Issuance of shares in connection with financing transactions or under stock incentive
plans will dilute current stockholders.Pursuant to the Companys stock incentive plans, the Companys management is authorized to grant stock awards to its employees, directors and consultants. You will incur dilution upon exercise of
any outstanding stock awards. In addition, if the Company raises additional funds by issuing



21



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additional common stock, or securities convertible into or exchangeable or exercisable for common stock, further dilution to its existing stockholders will
result, and new investors could have rights superior to existing stockholders.

The number of shares of the
Companys common stock eligible for future sale could adversely affect the market price of its stock.The Company has reserved approximately 4.6 million shares of common stock for issuance under outstanding stock options, and the
Company had outstanding options to purchase approximately 4.5 million shares of its common stock with a weighted average exercise price of $7.78 per share as of December 31, 2006. These shares of common stock are registered for resale on
currently effective registration statements. In addition, the Company has registered the resale of 5,232,708 shares of common stock that were sold by Zapata to certain purchasers in a private transaction on a currently effective registration
statement. Certain of the Companys officers and directors have also entered into Rule 10b5-1 sales plans with brokers unaffiliated with the Company whereby they have committed to sell automatically and without discretion a predetermined number
of shares of the Companys common stock over a period of time according to their own individual criteria. The Company may issue additional restricted securities or register additional shares of common stock under the Securities Act in the
future. The issuance of a significant number of shares of common stock upon the exercise of stock options, or the availability for sale, or sale, of a substantial number of the shares of common stock eligible for future sale under effective
registration statements, under Rule 144 or otherwise, could adversely affect the market price of the common stock.

The
Companys Articles of Incorporation and Bylaws, Nevada Law, and Federal Law have provisions that discourage corporate takeovers and could prevent stockholders from realizing a premium on their investment.Certain provisions of the
Companys Articles of Incorporation and Bylaws, as well as the Nevada Corporation Law, to which the Company is subject, could delay or frustrate the removal of incumbent directors and could make difficult a merger, tender offer or proxy contest
involvement the Company, even if such events could be viewed as beneficial by its stockholders. The Companys Board of Directors is empowered to issue preferred stock in one or more series without stockholder action. Any issuance of this
blank-check preferred stock could materially limit the rights of holders of the Companys common stock and render more difficult or discourage an attempt to obtain control of the Company by means of a tender offer, merger, proxy contest or
otherwise. In additional, the Articles of Incorporation and Bylaws contain a number of provisions which could impede a takeover or change in control of the Company, including, among other things, staggered terms for members of its Board of
Directors, the requiring of two-thirds vote of stockholders to amend certain provisions of the Articles of Incorporation or the inability to take action by written consent or to call special stockholder meetings. Certain provisions of the Nevada
Corporation Law could also discourage takeover attempts that have not been approved by the Companys Board of Directors. In addition, federal law requires that at least 75% of the Companys outstanding capital stock be owned by U.S.
citizens which will discourage takeover attempts by potential foreign purchasers.

The Company has not paid dividends and
does not expect to pay dividends in the near future.The Company has never declared or paid any cash dividends on its common stock since it became a public company in April 1998 and has no intention to do so in the near future. Any determination
as to payment of dividends will be made at the discretion of the Companys Board of Directors and will depend upon the Companys operating results, financial condition, capital requirements, general business conditions and such other
factors that the Board of Directors deems relevant. In addition, the payment of cash dividends is not permitted by the terms of the Companys Senior Secured Financing Facility with Abelco Finance LLC.



|Item 1B. | Unresolved Staff Comments.
|-------- | --------------------------

None.



22



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|Item 3. | Legal Proceedings.
|------- | ------------------

The Company is
defending various claims and litigation arising from operations which arise in the ordinary course of the Companys business. In the opinion of management, any losses resulting from these matters will not have a material adverse affect on the
Companys results of operations, cash flows or financial position.



|Item 4. | Submission of Matters to a Vote of Security Holders.
|------- | ----------------------------------------------------

No matter was submitted to a vote of Omegas stockholders during the fourth quarter of 2006.



23



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PART II



|Item 5. | Market for the Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
|------- | -----------------------------------------------------------------------------------------------------------------

The following performance graph compares the Companys cumulative total stockholder return on its Common Stock with the cumulative total return on
(i) the Russell 2000 Index, and (ii) a peer group stock index (the Peer Group Index) which consists of three publicly traded companies in the agriproducts industry. The companies that comprise the Peer Group Index are Archer
Daniels Midland Company, ConAgra, Inc. and Tyson Foods, Inc.

The cumulative total return computations set forth in the Performance Graph
assume the investment of $100 in Common Stock, the Russell 2000 Index, and the Peer Group Index on December 31, 2001. Any dividends are assumed to be reinvested.

LOGO



|                          |  |          |        |   |          |   |          |  |          |        |          |   |          |  |   |        |  |   |       
|------------------------- |  | -------- | ------ | - | -------- | - | -------- |  | -------- | ------ | -------- | - | -------- |  | - | ------ |  | - | ------
|                          |  | 12/31/01 |        |   | 12/31/02 |   | 12/31/03 |  | 12/31/04 |        | 12/31/05 |   | 12/31/06
|Omega Protein Corporation |  | $        | 100.00 | * |          | $ | 129.51   |  | $        | 253.11 |          | $ | 281.97   |  | $ | 220.00 |  | $ | 253.44
|Peer Group Index          |  | $        | 100.00 | * |          | $ | 99.94    |  | $        | 116.30 |          | $ | 152.43   |  | $ | 138.89 |  | $ | 177.25
|Russell 2000              |  | $        | 100.00 | * |          | $ | 78.42    |  | $        | 114.00 |          | $ | 133.94   |  | $ | 138.40 |  | $ | 162.02

---

|* | $100 invested on December 31, 2001 including reinvestment of dividends
|- | ----------------------------------------------------------------------

The Performance Graph and related description shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the Securities Act), or under the Exchange Act,
except to the extent that the Company specifically incorporates this information by reference. In addition the Performance Graph and the related description shall not be deemed soliciting material or to be filed with the SEC
or subject to Regulation 14A or 14C.



24



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Omegas common stock is listed on the New York Stock Exchange (NYSE) under the symbol
OME. The daily high and low sales prices for the common stock, as reported in the consolidated transactions reporting system for each quarterly period ending on the date indicated, are shown in the following table. No dividends were paid
during the period set forth in the table.



|                 |  |              |      |              |   |              |  |              |      |              |   |              |  |              |      |              |   |      |  |   |      |  |   |     
|---------------- |  | ------------ | ---- | ------------ | - | ------------ |  | ------------ | ---- | ------------ | - | ------------ |  | ------------ | ---- | ------------ | - | ---- |  | - | ---- |  | - | ----
|                 |  | Dec. 31,2006 |      | Sep. 30,2006 |   | Jun. 30,2006 |  | Mar. 31,2006 |      | Dec. 31,2005 |   | Sep. 30,2005 |  | Jun. 30,2005 |      | Mar. 31,2005
|High sales price |  | $            | 7.91 |              | $ | 6.72         |  | $            | 6.54 |              | $ | 6.70         |  | $            | 7.49 |              | $ | 8.10 |  | $ | 7.15 |  | $ | 9.46
|Low sales price  |  |              | 6.30 |              |   | 5.06         |  |              | 5.41 |              |   | 5.43         |  |              | 5.91 |              |   | 6.18 |  |   | 5.85 |  |   | 6.01

On March 6, 2007, the closing price of Omegas common stock, as reported by the NYSE,
was $6.68 per share. As of March 6, 2007, there were approximately 38 holders of record of Omegas common stock. This number does not include any beneficial owners for whom shares may be held in a nominee or street
name.

Omega has never declared any dividends since it became a public company in April 1998. Omega intends to retain earnings, if any, and
does not anticipate declaring or paying dividends on its common stock in the foreseeable future. Any future determination as to payment of dividends will be made at the discretion of the Board of Directors of Omega and will depend upon the
Companys operating results, financial condition, capital requirements, general business conditions and such other factors that the Board of Directors deems relevant. In addition, the payment of cash dividends is not permitted by the terms of
the Companys Senior Secured Financing Facility with Abelco Finance LLC. See Item 7Managements Discussion and Analysis of Financial Conditional and Results of OperationsLiquidity and Capital Resources.

In 2006, the Company repurchased the number of shares of Common Stock during the periods and on the dates indicated below:



|                      |  |                                 |     |  |                             |       |                                                                              |     |                                                                                                          |   |    
|--------------------- |  | ------------------------------- | --- |  | --------------------------- | ----- | ---------------------------------------------------------------------------- | --- | -------------------------------------------------------------------------------------------------------- | - | ---
|                      |  | Total Number ofShares Purchased |     |  | Average Price Paidper Share |       | Total Number ofShares Purchasedas Part of PubliclyAnnounced Plansor
Programs |     | Maximum Number(or ApproximatelyDollar Value) ofShares that MayYet Be PurchasedUnder the Plans
orPrograms
|October 1  31, 2006  |  | 0                               |     |  |                             | N/A   |                                                                              | N/A |                                                                                                          |   | N/A
|November 1  30, 2006 |  | 9,268,292                       | (1) |  | $                           | 5.125 |                                                                              | 0   |                                                                                                          | $ | 0  
|December 1  31, 2006 |  | 0                               |     |  |                             | N/A   |                                                                              | N/A |                                                                                                          |   | N/A
|Total                 |  | 9,268,292                       |     |  | $                           | 5.125 |                                                                              | 0   |                                                                                                          |   | N/A

---

|(1) | On November 28, 2006, the Company purchased 9,268,292 shares of the Companys common stock from its then majority shareholder, Zapata, in a privately negotiated
transaction at a purchase price of $5.125 per share, or an aggregate purchase price of $47.5 million. See Item 1. and 2.Business and PropertiesGeneral.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Information relating to compensation plans under which the Companys equity securities are authorized for issuance are set forth in Part III,
Item 12 of this Annual Report on Form 10-K.



25



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|Item 6. | Selected Financial Data.
|------- | ------------------------

The
following table sets forth certain selected historical consolidated financial information for the periods presented and should be read in conjunction with the Consolidated Financial Statements of the Company included in Item 8 of this Report
and the related notes thereto and with Managements Discussion and Analysis of Financial Condition and Results of Operations included in Item 7 of this Report.



|                                     |  |                                          |         |      |   |         |      |  |      |         |      |   |         |  |   |        
|------------------------------------ |  | ---------------------------------------- | ------- | ---- | - | ------- | ---- |  | ---- | ------- | ---- | - | ------- |  | - | -------
|                                     |  | Years Ended December 31,                
|                                     |  | 2006                                     |         | 2005 |   |         | 2004 |  | 2003 |         | 2002
|                                     |  | (in thousands, except per share amounts)
|INCOME STATEMENT DATA:               |  |                                          |         |      |   |         |      |  |      |         |      |   |         |  |   |        
|Revenues                             |  | $                                        | 139,834 |      | $ | 109,896 |      |  | $    | 119,645 |      | $ | 117,926 |  | $ | 117,008
|Operating income (loss)              |  |                                          | 7,956   |      |   | (10,887 | )    |  |      | 5,288   |      |   | 9,529   |  |   | 18,669 
|Net income (loss)                    |  |                                          | 4,572   |      |   | (7,186  | )    |  |      | 3,202   |      |   | 5,798   |  |   | 12,169 
|Per share income (loss) basic        |  |                                          | 0.19    |      |   | (0.29   | )    |  |      | 0.13    |      |   | 0.24    |  |   | 0.51   
|Per share income (loss) diluted      |  |                                          | 0.18    |      |   | (0.29   | )    |  |      | 0.12    |      |   | 0.22    |  |   | 0.48   
|CASH FLOW DATA:                      |  |                                          |         |      |   |         |      |  |      |         |      |   |         |  |   |        
|Capital expenditures                 |  |                                          | 20,318  |      |   | 17,590  |      |  |      | 22,907  |      |   | 14,930  |  |   | 7,765  
|BALANCE SHEET DATA (end of period):  |  |                                          |         |      |   |         |      |  |      |         |      |   |         |  |   |        
|Working capital                      |  | $                                        | 71,076  |      | $ | 79,120  |      |  | $    | 73,137  |      | $ | 80,937  |  | $ | 71,851 
|Property and equipment, net          |  |                                          | 100,776 |      |   | 93,965  |      |  |      | 97,766  |      |   | 85,231  |  |   | 80,713 
|Total assets                         |  |                                          | 200,718 |      |   | 200,227 |      |  |      | 190,162 |      |   | 186,168 |  |   | 179,027
|Current maturities of long-term debt |  |                                          | 2,467   |      |   | 2,443   |      |  |      | 1,661   |      |   | 1,566   |  |   | 1,270  
|Long-term debt                       |  |                                          | 72,693  |      |   | 27,658  |      |  |      | 15,943  |      |   | 17,605  |  |   | 14,239 
|Stockholders equity                 |  |                                          | 101,090 |      |   | 142,367 |      |  |      | 149,667 |      |   | 145,217 |  |   | 135,036



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|Item 7. | Managements Discussion and Analysis of Financial Condition and Results of Operations.
|------- | --------------------------------------------------------------------------------------

The following is a discussion of the Companys financial condition and results of operations. This discussion should be read in conjunction with the
Consolidated Financial Statements of the Company appearing under Item 8 herein. Certain amounts applicable to the prior periods have been reclassified to conform to the classifications currently followed. Such reclassifications do not affect
earnings or stockholders equity.

General

Business.Omega is the largest U.S. producer of protein-rich meal and oil derived from marine sources. The Companys products are produced from menhaden (a herring-like fish found in commercial quantities), and include
regular grade and value-added specialty fish meals, crude and refined fish oils and fish solubles. The Companys fish meal products are used as nutritional feed additives by animal feed manufacturers and by commercial livestock producers. The
Companys crude fish oil is sold to food producers and feed manufacturers, and its refined fish oil products are used in food production and certain industrial applications. Fish solubles are sold as protein additives for animal feed and as
fertilizers.

Fishing.The Companys harvesting season generally extends from May through December on the mid-Atlantic coast
and from April through October on the Gulf coast. During the off-season and the first few months of each fishing season, the Company fills purchase orders from the inventory it has accumulated during the previous fishing season or in some cases, by
re-selling meal purchased from other suppliers.

On August 29, 2005, the Companys Moss Point, Mississippi fish processing
facility and adjacent shipyard were severely damaged by Hurricane Katrina. On September 25, 2005, the Companys Cameron, Louisiana and Abbeville, Louisiana fish processing facilities were also severely damaged by Hurricane Rita. Each of
these facilities was non-operational immediately after these weather events. Operations at the Moss Point fish processing facility, the Abbeville fish processing facility and the shipyard were re-established in mid-October, 2005, but at reduced
processing capabilities. These two facilities were returned to full operational status prior to the beginning of the Gulf fishing season in April 2006. Operations at the Cameron fish processing facility were re-established in June 2006, but at
reduced processing capabilities. The Cameron facility became fully operational in September 2006.

The direct impact of the two hurricanes
upon the Company was a loss of physical inventories and physical damage to the plants. The interruption of processing capabilities caused the Company to address the impact of abnormal downtime of its processing facilities, which resulted in the
immediate recognition of costs which would ordinarily have been captured as inventory costs. The amounts of these losses are more fully described in Notes 2, 3, 4, 5 and 12 to the Consolidated Financial Statements.

The fish catch is processed into three general types of products; fish meal, fish oil and fish solubles at the Companys four meal and oil
processing plants, two in Louisiana, one in Mississippi and one in Virginia.



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Harvesting and Production.The following table summarizes the Companys harvesting and
production for the indicated periods:



|                      |  |                          |  |         |  |        
|--------------------- |  | ------------------------ |  | ------- |  | -------
|                      |  | Years Ended December 31,
|                      |  | 2006                     |  | 2005    |  | 2004   
|Fish catch (tons) (1) |  | 541,059                  |  | 522,399 |  | 534,761
|                      |  |                          | 
|Production (tons):    |  |                          |  |         |  |        
|Fish meal             |  |                          |  |         |  |        
|Regular grade         |  | 19,250                   |  | 30,944  |  | 29,016 
|Special Select        |  | 116,831                  |  | 82,452  |  | 84,060 
|Sea-Lac               |  | 10,864                   |  | 22,751  |  | 25,862 
|Oil                   |  |                          |  |         |  |        
|Crude                 |  | 39,963                   |  | 53,140  |  | 51,060 
|Refined               |  | 9,907                    |  | 6,335   |  | 6,447  
|Solubles              |  | 5,962                    |  | 6,439   |  | 5,492  
|                      |  |                          |  |         |  |        
|Total Production      |  | 202,777                  |  | 202,061 |  | 201,937
|                      |  |                          |  |         |  |        

---

|(1) | Fish catch has been converted to tons using the National Marine Fisheries Service (NMFS) fish catch conversion ratio of 670 pounds per 1,000 fish.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------

The Companys harvesting and processing business is seasonal and fluctuates from year to year and month to month due to
natural conditions over which the Company has no control. For example, the 2006 oil yield results were the poorest in recent Company history. For illustrative purposes, the Companys oil yields for the 2006 fishing season were lower by 28%
compared to those in the 2005 fishing season and were lower by 24% compared to the Companys 10 year oil yield average. The causes of lower fish oil yields are believed to relate to fish diet, weather and water temperature but are not generally
well understood. The impact of these poor oil yields in 2006 has resulted in significantly higher per unit inventory costs and fewer volumes available for future sale. These higher costs and fewer volumes available for sale have adversely impacted
financial results for the fourth quarter of 2006 and are expected to adversely impact financial results for the first quarter of 2007, and to some extent, the second quarter of 2007.

In addition, in late 2005, the Companys Gulf Coast facilities were rendered inoperable due to Hurricanes Katrina and Rita. Two of the three
facilities regained operational status prior to the end of the 2005 fishing season and the other facility did not regain its operational status until the 2006 season. These hurricane damages adversely affected the Companys business, results of
operations and financial condition.

Markets.Pricing for the Companys products has been volatile in the past several years
and is attributable mainly to the international availability, or the perceived international availability, of fish meal and fish oil inventories. In an effort to reduce price volatility and to generate higher, more consistent profit margins, the
Company has implemented a quality control program designed to increase its capability of producing higher quality fish meal products and, in conjunction therewith, enhanced it sales efforts to penetrate premium product markets. Since 2000, the
Companys sales volumes of specialty meal products have increased approximately 32%. Future volumetric growth in specialty meal sales will be dependant upon increased harvesting efforts and market demand. Additionally, the Company is attempting
to introduce its refined fish oil into the food market. The Company has made sales, which to date have not been material, of its refined fish oil, trademarked OmegaPure®, to food manufacturers in the United States and Canada at prices that provide substantially improved margins over the
margins that can be obtained from selling non-refined crude fish oil. The Company cannot estimate, however, the size of the actual domestic or international markets for Omega Pure or how long it may take to develop these markets.

During 2002, the Company developed a business plan to expand its purchase and resale of other manufacturers fish meal and fish oil products and
engaged a full-time consultant to implement the Companys



28



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business plan which focused initially on the purchase and resale of Mexican fish meal and fish oil. In 2002, revenues generated from these types of
transactions represented less than 2% of total Company revenues. During 2003, 2004 and again in 2005, the Companys fish catch and resultant product inventories were reduced, primarily due to adverse weather conditions. The Company supplemented
its inventories and subsequent sales by purchasing other fish meal and oil products. Although operating margins from these activities are less than the margins typically generated from the Companys base domestic production, these operations
provide the Company with a source of fish meal and oil to sell into other markets where the Company has not historically had a presence. The Company purchased products totaling approximately 14,600, 16,555 and 17,800 tons, or approximately 7%, 8%
and 8% of total volume sales for the fiscal year ended December 31, 2006, 2005 and 2004, respectively.

Historically, approximately
35% to 40% of Omegas FAQ fish meal was sold on a two-to-twelve-month forward contract basis. The balance of regular grade and other products was substantially sold on a spot basis through purchase orders. The Company began a similar forward
sales program for its specialty grade meals and crude fish oil for 2002 due to increasing demand for these products. During 2004, 2005 and 2006 approximately 43%, 70% and 70% respectively, of its specialty meals and crude fish oil had been sold on a
forward contract basis. The Companys annual revenues are highly dependent on both annual fish catch and inventories and, in addition, inventory is generally carried over from one year to another year. The Company determines the level of
inventory to be carried over based on prevailing market prices of the products and anticipated customer usage and demand during the off season. Thus, production volume does not necessarily correlate with sales volume in the same year and sales
volumes will fluctuate from quarter to quarter and month to month. The Companys fish meal products have a useable life of approximately one year from date of production. Practically, however, the Company typically attempts to empty its
warehouses of the previous seasons products by the second or third month of the new fishing season. The Companys crude fish oil products do not lose efficacy unless exposed to oxygen and therefore, their storage life typically is longer
than that of fish meal.

The following table sets forth the Companys revenues by product (in millions) and the approximate percentage
of total revenues represented thereby, for the indicated periods:



|               |  |                          |       |         |       |   |          |      |         |  |       |          |  |         |       |  |       |  
|-------------- |  | ------------------------ | ----- | ------- | ----- | - | -------- | ---- | ------- |  | ----- | -------- |  | ------- | ----- |  | ----- | -
|               |  | Years Ended December 31, |      
|               |  | 2006                     |       |         | 2005  |   |          | 2004 |        
|               |  | Revenues                 |       | Percent |       |   | Revenues |      | Percent |  |       | Revenues |  | Percent |      
|Regular Grade  |  | $                        | 17.0  |         | 12.1  | % |          | $    | 19.4    |  | 17.7  | %        |  | $       | 20.7  |  | 17.3  | %
|Special Select |  |                          | 63.4  |         | 45.3  |   |          |      | 48.5    |  | 44.1  |          |  |         | 49.5  |  | 41.4  |  
|SeaLac         |  |                          | 9.2   |         | 6.6   |   |          |      | 17.7    |  | 16.1  |          |  |         | 18.6  |  | 15.6  |  
|Crude Oil      |  |                          | 38.3  |         | 27.4  |   |          |      | 17.3    |  | 15.7  |          |  |         | 24.3  |  | 20.3  |  
|Refined Oil    |  |                          | 9.3   |         | 6.7   |   |          |      | 5.3     |  | 4.8   |          |  |         | 4.7   |  | 3.9   |  
|Fish Solubles  |  |                          | 2.2   |         | 1.6   |   |          |      | 1.7     |  | 1.6   |          |  |         | 1.8   |  | 1.5   |  
|Other          |  |                          | 0.4   |         | 0.3   |   |          |      |        |  |      |          |  |         |      |  |      |  
|               |  |                          |       |         |       |   |          |      |         |  |       |          |  |         |       |  |       |  
|Total          |  | $                        | 139.8 |         | 100.0 | % |          | $    | 109.9   |  | 100.0 | %        |  | $       | 119.6 |  | 100.0 | %
|               |  |                          |       |         |       |   |          |      |         |  |       |          |  |         |       |  |       |  

Critical Accounting Policies and Estimates

The preparation of financial statements requires management to make estimates and assumptions that affect amounts reported therein, including estimates
about the effects of matters or future events that are inherently uncertain. The most significant of these requiring difficult or complex judgments in any particular period involve the costing of inventory, including inventory
lower-of-cost-or-market analyses and the Companys accounting for various losses on self-insurance retentions.

Hurricane Losses

On August 29, 2005, the Companys Moss Point, Mississippi fish processing facility and adjacent shipyard were severely damaged by Hurricane
Katrina. On September 25, 2005, the Companys Cameron, Louisiana and



29



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Abbeville, Louisiana fish processing facilities were also severely damaged by Hurricane Rita. Each of these facilities was non-operational immediately after
these weather events. Operations at the Moss Point fish processing facility, the Abbeville fish processing facility and the shipyard were re-established in mid-October, 2005, but at reduced processing capabilities. These two plants became fully
operational prior to the start of the 2006 Gulf fishing season. Operations at the Cameron fish processing facility were re-established in June 2006, but at reduced processing capabilities. The Cameron facility became fully operational in September
2006.

The direct impact of the two hurricanes upon the Company was a loss of physical inventories and physical damage to the plants. The
interruption of processing capabilities caused the Company to address the impact of abnormal downtime of its processing facilities, which resulted in the immediate recognition of costs which would ordinarily have been captured as inventory costs.
The amounts of these losses are more fully described in Notes 2, 3, 4, 5 and 12 to the Consolidated Financial Statements.

The Company
maintains insurance coverage for a variety of these damages, most notably property, inventory and vessel insurance. The nature and extent of the insurance coverage varies by line of policy and the Company has recorded insurance recoveries as
long-term receivables within other assets based on estimates of probable recoveries. The Company anticipates that further recoveries could be available, but such additional recoveries will require further analysis and discussions with the
Companys insurance carriers and adjusters and the resolution of the lawsuit filed by the Company against its property insurance carriers described in Note 1 to the Consolidated Financial Statements. Such recoveries, if any, would be recognized
in future periods once they are deemed probable. The Company does not maintain business interruption insurance in any material amounts.

Revenue
Recognition

The Company derives revenue principally from the sales of a variety of protein and oil products derived from menhaden. The
Company recognizes revenue for the sale of its products when title and rewards of ownership to its products are transferred to the customer.

Impairment
of Long-Lived Assets

The Company evaluates at each balance sheet date the continued appropriateness of the carrying value of its
long-lived assets including its long-term receivables and property, plant and equipment in accordance with Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment or Disposals of Long-Lived
Assets. The Company reviews long-lived assets for impairment when events or changes in circumstances indicate that the carrying amount of any such assets or grouping of assets may not be recoverable. The Company has grouped certain assets
together (primarily marine vessels) for impairment testing on a fleet basis. If indicators of impairment are present, management would evaluate the undiscounted cash flows estimated to be generated by those assets or grouping of assets compared to
the carrying amount of those items. The net carrying value of assets or grouping of assets not recoverable is reduced to fair value. The Company considers continued operating losses, or significant and long-term changes in business conditions, to be
its primary indicators of potential impairment.

Property, Equipment and Depreciation

Property and equipment additions are recorded at cost. Depreciation of property and equipment is computed by the straight-line method at rates expected to
amortize the cost of property and equipment, net of salvage value, over their estimated useful lives. Estimated useful lives, determined at the date of acquisition, of new assets acquired are based primarily on the review of existing property and
equipment. Estimated useful lives are as follows:



|                                                       |  |                     
|------------------------------------------------------ |  | --------------------
|                                                       |  | Useful Lives (years)
|Fishing vessels and fish processing plants             |  | 15  20             
|Machinery, equipment, furniture and fixtures and other |  | 3  10              



30



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Replacements and major improvements are capitalized; maintenance and repairs are charged to expense as
incurred. Upon sale or retirement, the costs and related accumulated depreciation are eliminated from the accounts. Any resulting gains or losses are included in the statement of operations. The Company capitalizes interest as part of the
acquisition cost of a qualifying asset.

Interest is capitalized only during the period of time required to complete and prepare the asset
for its intended use.

Inventories

Inventory is stated at the lower of cost or market. The Companys fishing season runs from mid-April to the first of November in the Gulf of Mexico and from the beginning of May into December in the Atlantic. Government regulations
generally preclude the Company from fishing during the off-seasons.

The Companys inventory cost system considers all costs
associated with an annual fish catch and its processing, both variable and fixed, including both costs incurred during the off-season and during the fishing season. The Companys costing system allocates cost to inventory quantities on a per
unit basis as calculated by a formula that considers total estimated inventoriable costs for a fishing season (including off-season costs) to total estimated fish catch and the relative fair market value of the individual products produced. The
Company adjusts the cost of sales, off-season costs and inventory balances at the end of each quarter based on revised estimates of total inventoriable costs and fish catch. The Companys lower-of-cost-or-market-value analyses at year-end and
at interim periods compares total estimated per unit production cost of the Companys expected production to the projected per unit market prices of the products. The impairment analyses involve estimates of, among other things, future fish
catches and related costs, and expected commodity prices for the fish products. These estimates, which management believes are reasonable and supportable, involve estimates of future activities and events which are inherently imprecise and from
which actual results may differ materially. Revisions in such estimates or actual results could materially impact the Companys results of operation and financial position.

Any costs incurred during abnormal down time related to activity at the Companys plants are charged to expense as incurred.

During the off-seasons, in connection with the upcoming fishing seasons, the Company incurs costs (i.e., plant and vessel related labor, utilities, rent,
repairs and depreciation) that are directly related to the Companys infrastructure. These costs accumulate in inventory and are applied as elements of the cost of production of the Companys products throughout the fishing season ratably
based on the Companys monthly fish catch and the expected total fish catch for the season.

Insurance

The Company carries insurance for certain losses relating to its vessels and Jones Act liabilities for employees aboard its vessels. The Company provides
reserves for those portions of the annual aggregate deductible for which the Company remains responsible by using an estimation process that considers Company-specific and industry data as well as managements experience, assumptions and
consultation with counsel, as these reserves include estimated settlement costs. Managements current estimated range of liabilities related to such cases is based on claims for which management can estimate the amount and range of loss. For
those claims where there may be a range of loss, the Company has recorded an estimated liability inside that range, based on managements experience, assumptions and consultation with counsel. The process of estimating and establishing reserves
for these claims is inherently uncertain and the actual ultimate net cost of a claim may vary materially from the estimated amount reserved. There is some degree of inherent variability in assessing the ultimate amount of losses associated with
these claims due to the extended period of time that transpires between when the claim might occur and the full settlement of such claims. This variability is generally greater for Jones Act claims by vessel employees. The Company continually
evaluates loss estimates associated with claims and



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losses as additional information becomes available and revises its estimates. Although management believes estimated reserves related to these claims are
adequately recorded, it is possible that actual results could significantly differ from the recorded reserves, which could materially impact the Companys results of operations, financial position and cash flow.

With respect to health insurance, the Company is primarily self-insured. The Company purchases individual stop loss coverage with a large deductible. As
a result, the Company is primarily self-insured for claims and associated costs up to the amount of the deductible, with claims in excess of the deductible amount being covered by insurance. Expected claims estimates are based on health care trend
rates and historical claims data; actual claims may differ from those estimates. The Company continually evaluates its claims experience related to this coverage with information obtained from its risk management consultants.

Assumptions used in preparing these insurance estimates are based on factors such as claims settlement patterns, claim development trends, claim
frequency and severity patterns, inflationary trends and data reasonableness. Together these factors will generally affect the analysis and determination of the best estimate of the projected ultimate claim losses. The results of these
evaluations are used to both analyze and adjust the Companys insurance loss reserves.

Pension

The Company estimates income or expense related to its pension plan based on actuarial assumptions, including assumptions regarding discount rates and
expected returns on plan assets. The Company determines the discount rates of return on high-quality fixed-income investments currently available and expected to be available during the period to maturity of its pension obligations. Based on
historical data and discussions with its actuary, Omega determines its expected return on plan assets based on the expected long-term rate of return on its plan assets and the market-related value of its plan assets. Changes in these assumptions can
result in significant changes in estimated pension income or expense. The Company will revise its assumptions on an annual basis based upon changes in current interest rates, return on plan assets and the underlying demographics of the workforce.
These assumptions are reasonably likely to change in future periods and may have a material impact on future earnings.

Results of Operation

The following table sets forth as a percentage of revenues, certain items of the Companys operations for each of the indicated
periods.



|                                             |  |                          |   |  |       |   |  |       |  
|-------------------------------------------- |  | ------------------------ | - |  | ----- | - |  | ----- | -
|                                             |  | Years Ended December 31, |  
|                                             |  | 2006                     |   |  | 2005  |   |  | 2004  |  
|Revenues                                     |  | 100.0                    | % |  | 100.0 | % |  | 100.0 | %
|Cost of sales                                |  | 83.4                     |   |  | 83.7  |   |  | 87.1  |  
|                                             |  |                          |   |  |       |   |  |       |  
|Gross profit                                 |  | 16.6                     |   |  | 16.3  |   |  | 12.9  |  
|Selling, general and administrative expenses |  | 9.8                      |   |  | 11.7  |   |  | 8.3   |  
|Loss resulting from natural disaster, net    |  | 1.1                      |   |  | 14.3  |   |  |      |  
|Loss (gain) on disposal of assets            |  |                         |   |  | 0.2   |   |  | 0.2   |  
|                                             |  |                          |   |  |       |   |  |       |  
|Operating income (loss)                      |  | 5.7                      |   |  | (9.9  | ) |  | 4.4   |  
|Interest income                              |  | 0.4                      |   |  | 0.6   |   |  | 0.5   |  
|Interest expense                             |  | (1.8                     | ) |  | (1.1  | ) |  | (0.8  | )
|Other income (expense)                       |  | (0.2                     | ) |  |      |   |  | (0.2  | )
|                                             |  |                          |   |  |       |   |  |       |  
|Income (loss) before income taxes            |  | 4.1                      |   |  | (10.4 | ) |  | 3.9   |  
|Provision (benefit) for income taxes         |  | 0.8                      |   |  | (3.9  | ) |  | 1.2   |  
|                                             |  |                          |   |  |       |   |  |       |  
|Net (loss) income                            |  | 3.3                      |   |  | (6.5  | ) |  | 2.7   |  
|                                             |  |                          |   |  |       |   |  |       |  



32



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2006  2005

Revenues. Revenues increased $29.9 million, or 27.2%, from $109.9 million in 2005 as compared to $139.8 million in 2006. The increase in revenues was due to higher sales prices of 17.3%
and 12.9% for the Companys fish meal and fish oil, respectively, and higher sales volumes of 86.8% for the Companys fish oil. The increase in revenues was partially offset by sales volumes of the Companys fish meal, which decreased
by 10.2% in 2006 as compared to the 2005 fish meal sales volumes. Considering fish meal, fish oil and fish solubles sales activities in total, the Company experienced a $17.9 million increase in revenues due to increased sales prices and a $11.9
million increase in revenue caused by increased sales volumes, when comparing 2006 to 2005.

Cost of Sales. Cost
of sales, including depreciation and amortization, for 2006 was $116.6 million, a $24.7 million increase, or 26.8%, as compared to 2005. Cost of sales as a percentage of revenues was 83.4% for 2006 as compared to 83.7% for 2005. The 0.3%
decrease in cost of sales as percentage of revenue was primarily due to increased sales prices, as noted above, largely offset by increased per unit production costs due to high energy prices, increased repair costs and decreased fish oil yields in
2006 as compared to 2005.

Gross Profit. Gross profit increased $5.3 million, or 29.5%, from $17.9 million in
2005 to $23.2 million in 2006. As a percentage of revenues, the Companys gross profit margin increased 0.3% in 2006 as compared to 2005. The slight increase in gross profit was primarily due to increased sales prices offset by increased per
unit production costs as discussed above.

Selling, general and administrative expenses. Selling, general and
administrative expenses increased $0.8 million, or 5.9%, from $12.9 million in 2005 to $13.7 million in 2006. The increase was primarily due to costs incurred to relocate certain administrative offices from Louisiana to Texas, consulting costs
and costs associated with the new Technical Center.

Loss resulting from natural disaster. Loss resulting from
natural disaster, resulting from damages incurred at its Moss Point, Mississippi fish processing facility and adjacent shipyard from Hurricane Katrina, and damages incurred at its Cameron and Abbeville, Louisiana fish processing facilities from
Hurricane Rita, decreased $14.2 million from $15.7 million in 2005 to $1.5 million in 2006. The losses incurred in 2006 represent costs in excess of the original estimated involuntary conversion loss recorded at December 31, 2005.

Loss on disposal of assets. Loss on disposal of assets decreased $140,000 from a loss of $149,000 in 2005 to a
loss of $9,000 in 2006. The decrease was the result of losses on the disposal of miscellaneous assets in 2005.

Operating income
(loss). As a result of the factors discussed above, the Companys operating income (loss) increased $18.9 million from $(10.9) million in 2005 to $8.0 million in 2006. As a percentage of revenues, operating income (loss)
increased 15.6% from (9.9)% in 2005 to 5.7% in 2006.

Interest income. Interest income increased by $7,000 from
$615,000 in 2005 to $622,000 in 2006. The increase was primarily due to higher returns on the Companys cash and cash equivalents offset by decreased average cash balances.

Interest expense. Interest expense increased $1.3 million from $1.3 million in 2005 to $2.6 million in 2006. The increase in
interest expense was primarily due to interest associated with the additional $14 million in debt which was incurred in October 2005 in connection with Fisheries Finance Program financing and the $47.5 million of debt incurred in October 2006,
at a higher interest rate than previously experienced, in connection with the common stock repurchase and retirement.

Other income
(expense), net. Other income (expense), net decreased by $317,000 from $73,000 in 2005 to ($244,000) in 2006. The decrease in other income (expense), net was primarily the result of a gain recognized in 2005 associated with the
involuntary conversion of a piece of equipment resulting from a fire.



33



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Provision (benefit) for income taxes. The Company recorded a $1.2 million
provision for income taxes in 2006 representing an effective tax rate of 20.8% for income taxes compared to 37.2% in 2005. This decrease in the effective tax rate is primarily as a result of the partial exclusion of income on foreign sales, interest
income exempt from income tax, income tax credits attributable to post-hurricane wages and a state income tax benefit on current year pre-tax income resulting from interest expense. The Company believes that it is more probable than not that the
recorded estimated deferred tax asset benefits and state operating loss carry-forwards will be realized. The statutory tax rate of 34% for U.S. federal taxes was in effect for the respective periods.

2005  2004

Revenues.Revenues decreased $9.7 million, or 8.1%, from $119.6 million in 2004 as compared to $109.9 million in 2005. The decrease in revenues was due to lower sales volumes of 6.7% and 26.5% for the Companys fish meal and fish oil,
respectively. The decrease in revenue was offset by 2005 sales prices of the Companys fish meal and fish oil which increased by 4.4% and 5.6%, respectively, as compared to the 2004 sales prices. Considering both fish meal and fish oil sales
activities, the Company experienced a $14.2 million decrease in revenues due to reduced sales volumes, offset by an increase of $4.0 million in sales caused by increased sales prices, when comparing 2005 to 2004.

Cost of Sales. Cost of sales, including depreciation and amortization, for 2005 was $92.0 million, a $12.3 million decrease or 11.8%
as compared to 2004. Cost of sales as a percentage of revenues was 83.7% for 2005 as compared to 87.1% for 2004. The 3.4% decrease in cost of sales as percentage of revenue was primarily due to increased sales prices, as noted above, in 2005 as
compared to 2004 and decreased per unit product costs in 2005 as compared to 2004 due to increased production during the period the Gulf of Mexico plants were operational in 2005.

Gross Profit. Gross profit increased $2.5 million, or 16.2%, from $15.4 million in 2004 to $17.9 million in 2005. As a percentage of
revenues the Companys gross profit margin increased 3.4% in 2005 as compared to 2004. The increase in gross profit was primarily due to the 11.8% decrease in cost of sales as a result of the factors discussed above.

Selling, general and administrative expenses.Selling, general and administrative expenses increased $3.0 million, or 30.3%, from $9.9
million in 2004 to $12.9 million in 2005. The increase was primarily due to increased expenditures related to the Companys governmental relations program, increased audit fees, increases in employee-related costs and expenses, marketing
expenditures and expenses associated with abandoned acquisition activity.

Loss resulting from natural disaster.For the year
ended December 31, 2005, the Company incurred losses, net of insurance receivable, of $15.7 million relating to damages incurred at its Moss Point, Mississippi fish processing facility and adjacent shipyard from Hurricane Katrina, and damages
incurred at its Cameron and Abbeville, Louisiana fish processing facilities from Hurricane Rita.

Loss on disposal of assets.
Loss on disposal of assets decreased $38,000 from a loss of $187,000 in 2004 to a loss of $149,000 in 2005. The decrease was the result of losses on the disposal of miscellaneous assets in 2005.

Operating income (loss).As a result of the factors discussed above, the Companys operating income (loss) decreased $16.2 million
from $5.3 million in 2004 to a loss of $10.9 million in 2005. As a percentage of revenues, operating income (loss) decreased 14.3% from 4.4% in 2004 to (9.9)% in 2005.

Interest income.Interest income increased by $21,000 from $594,000 in 2004 to $615,000 in 2005. The increase was primarily due to higher returns on the Companys cash and cash equivalents.

Interest expense.Interest expense increased $290,000 from $965,000 in 2004 to $1,255,000 in 2005. The increase in interest
expense was primarily due to interest associated with the addition $14 million in debt which was incurred in October 2005.



34



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Other income (expense), net.Other income (expense), net increased by $294,000 from
($221,000) in 2004 to $73,000 in 2005. The increase in other income (expense), net was primarily the result of a gain associated with the involuntary conversion of a piece of equipment resulting from a fire.

Provision (benefit) for income taxes.The Company recorded a $4.3 million benefit for income taxes in 2005 representing an effective tax
rate of 37.2% for income taxes compared to 31.8% in 2004. This increase in the effective tax rate is due to the tax benefit on foreign sales exclusions and net state tax benefits. The Company believes that it is more probable than not that the
recorded estimated deferred tax asset benefits and state operating loss carry-forwards will be realized. The statutory tax rate of 34% for U.S. federal taxes was in effect for the respective periods.

Liquidity and Capital Resources

Historically, the
Companys primary sources of liquidity and capital resources have been cash flows from operations, bank credit facilities and term loans from various lenders provided pursuant to the U.S. Maritime Administrations Fisheries Finance Program
(FFP), which is offered through National Marine Fisheries Services (NMFS) under Title XI of the Marine Act of 1936 (Title XI). These sources of cash flows have been used for operations, capital expenditures,
payment of long-term debt and (in 2006) the purchase and retirement of shares of the Companys common stock.

At December 31,
2006, the Company had an unrestricted cash balance of $8.0 million, down $18.4 million from December 31, 2005. This decrease was due primarily to increased capital expenditures for damages associated with Hurricanes Katrina and Rita and for
equipment purchases and replacements, vessel refurbishments and improvements in fish oil refining technology, increased costs of sales associated with increased sales volumes and the poorest fish oil yields in recent Company history and costs
associated with the purchase and retirement of shares of the Companys common stock held by Zapata (described below). The Companys annual revenues and its resulting liquidity are highly dependent on annual fish catch, production yields,
selling prices for its products and inventories available for sale. While the Companys fish catch and selling prices for its products increased in 2006 over 2005, those increases were offset by very poor fish oil yields, which resulted in
significantly higher per unit inventory costs and lower volumes of fish oil available for future sale. These higher costs and lower volumes of fish oil available for sale are expected to adversely impact financial results in the first quarter of
2007, and to some extent, the second quarter of 2007.

The aggregate amount of the Companys outstanding indebtedness at
December 31, 2006 was approximately $75.2 million compared to approximately $30.1 million at December 31, 2005. As a result, the Company has a highly leveraged financial structure, limiting its financial flexibility. In particular, the
Company will be required to use a portion of its cash flows to pay principal and interest on its debt, which will reduce the amount of money the Company has for operations, capital expenditures, expansion, acquisitions or general corporate or other
business activities. In addition, the covenants contained in the Companys debt agreements limit its ability to borrow money in the future for acquisitions, capital expenditures or to meet the Companys operating expenses or other general
corporate obligations. See Risk FactorsThe Company has a substantial amount of indebtedness, which may adversely affect its ability to operate its business, remain in compliance with debt covenants and make payments on its debt.

Source of Capital: Operations

Net
cash flow from operating activities increased from approximately $(4.1) million for the year ended December 31, 2005 to $3.8 million for the year ended December 31, 2006. The increase in operating cash flow is primarily attributable to the
increase in net income as described above in -Results of Operations and is partially offset by increased inventory balances.



35



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Source of Capital: Debt

Net financing activities provided (used) cash of ($4.0) million and $12.9 million during the years ended December 31, 2006 and 2005, respectively. The year 2006 included approximately $48.6 million in borrowings,
of which $47.5 million was used to purchase and retire 9,268,292 shares of the Companys common stock held by Zapata (the Zapata Shares), $3.3 million in debt issuance and treasury stock acquisition costs, $3.6 million in principal
repayments of debt and $1.8 million in proceeds from stock options exercised. The year 2005 included $1.5 million used for payments of debt obligations and $0.4 million in proceeds from stock options exercised, which was offset by $14.0 million
in proceeds from Title XI debt.

Under Title IX, as administered under the FFP, the Company has secured loans through lenders with terms
generally ranging between 12 and 20 years at interest rates between 6% and 8% per annum which are enhanced with a government guaranty to the lender for up to 80% of the financing. The Companys current Title XI borrowings are secured by
liens on 17 fishing vessels and mortgages on the Companys Reedville, Virginia and Abbeville, Louisiana plants. In 1996, Title XI borrowing was modified to permit use of proceeds from borrowings obtained through this program for shore-side
construction.

In September 2004, the FFP approved the Companys financing application in an amount not to exceed $14.0 million (the
Approval Letter). Borrowings under the Approval Letter are required to be used to finance and/or refinance approximately 73% of the actual depreciable cost of the Companys future fishing vessel refurbishments and capital
expenditures relating to shore-side fishing assets, for a term not to exceed 15 years from inception at interest rates determined by the U.S. Treasury. Final approval for all such future projects requires individual approval through the Secretary of
Commerce, National Oceanic and Atmospheric Administration, and NMFS. Borrowings under the FFP are required to be evidenced by security agreements, undertakings, and other documents deemed in the sole discretion of the NMFS as necessary to accomplish
the intent and purpose of the Approval Letter. The Company is required to comply with customary NMFS covenants as well as certain special covenants. The Company closed on a $14.0 million FFP loan on October 17, 2005.

On December 1, 2005, pursuant to the Title XI program, the FFP approved a second financing application made by the Company in the amount of $16.4
million (the Second Approval Letter). In May 2006, the Company submitted a $6.5 million financing request under the Second Approval Letter (the Pending Loan). The Company expects to receive the $6.5 financing in the first
quarter of 2007. As of December 31, 2006, the Company had approximately $27.7 million of borrowings outstanding under Title XI and was in compliance with all of the covenants contained therein.

On October 20, 2006, the Company, certain of its subsidiaries and Abelco Finance LLC (Ableco), A3 Fund Management LLC, an affiliate
of Abelco, and Wachovia Bank, National Association (collectively, the Lenders) entered into the financing agreement (the Financing Agreement) pursuant to which the Lenders agreed to provide the Company with a senior secured
financing facility (the Financing Facility) in the maximum amount of $65 million (i) to acquire the Zapata Shares, (ii) to fund the Companys ongoing working capital and other general corporate requirements and
(iii) to pay the fees and expenses related to the financing. The Financing Facility consists of (a) a revolving credit facility (the Revolving Credit Facility) of up to $30 million outstanding at any time, including a $5
million subfacility for the issuance of letters of credit, and (b) a term loan facility of $35 million (the Term Loan Facility). On October 20, 2006, the Company drew down the $35 million term loan and approximately $13.6
million of revolving loans, and approximately $3.3 million in letters of credit were issued pursuant to the letter of credit subfacility in order (i) to fund the purchase price for the Zapata Shares, (ii) to provide collateral for the
letters of credit outstanding under the former bank credit facility and (iii) to pay fees and expenses related to the financing. The Financing Facility is secured by a first priority lien on all of the Companys assets, other than vessels,
real estate and other assets pledged to secure loans made to the Company under the FFP, including the Pending Loan. The Companys prior $20 million revolving credit agreement with Bank of America, N.A. was terminated in connection with the
Companys entry into the Financing Facility.



36



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Aggregate revolving credit loans and letters of credit under the Revolving Credit Facility are limited to
an amount at any time outstanding not to exceed the lesser of (i) $30 million and (ii) the result of (a) 3.5 times the Companys trailing 12-month EBITDA (as defined in the Financing Agreement), less (b) the aggregate
outstanding principal amount of the term loan and any other secured indebtedness, plus (c) the amount of the Companys unrestricted cash and marketable securities, minus (d) in the event the Company and the collateral agent agree that
the lien on certain vessels owned by the Company should be released, $6 million. Loans under the Revolving Credit Facility bear interest at a rate per annum equal to LIBOR plus 3.25% and the term loan bears interest at a rate per annum equal to
LIBOR plus 4.25%, each subject to adjustment as provided below. The interest rate on all loans will be reduced by 0.25% at any time the Companys Leverage Ratio (as defined in the Financing Agreement) is equal to or less than 2.65x. If,
following such rate reduction, the Companys Leverage Ratio exceeds 2.65x, the interest rate on the loans will be increased by 0.25%.

During the term of the Financing Facility, the Company will be required to comply with the following financial covenants:



| |  |  | EBITDA for the twelve months ending December 31, 2006, March 31, 2007, June 30, 2007, September 30, 2007 and each fiscal quarter
thereafter of $21 million, $19 million, $20 million, $22 million, and $23 million, respectively.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Fixed charge coverage ratio of 1.25x for the twelve months ending each March 31, June 30, September 30, and December 31.
| | - |  | ------------------------------------------------------------------------------------------------------------------------



| |  |  | Ratio of total net debt to EBITDA for the twelve months ending March 31, 2007, June 30, 2007, September 30, 2007 and each fiscal quarter
thereafter of 3.25x, 3.1x, 2.65x and 2.1x, respectively.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In addition, the Company will not be permitted to have capital
expenditures in excess of $12 million for each of the years ending December 31, 2007 through 2011. New liens securing future FFP loans (other than the Pending Loan) are limited to $10 million in the aggregate during the year ending
October 19, 2007 and $6 million during each 12-month period thereafter; provided that if during any such 12-month period the Company does not incur the full amount of such future loans, the Company may increase the amount of such future
loans it may incur during the following 12-month period by 50% of the shortfall. The Financing Facility will terminate on October 19, 2011. For a more detailed description of the terms and conditions of the Financing Facility and Financing
Agreement, see the Companys Current Report on Form 8-K filed with the SEC on October 24, 2006.

As of December 31, 2006,
the Company had $35.0 million outstanding under the Term Loan Facility, $12.5 million outstanding under the Revolving Credit Facility and approximately $3.3 million in letters of credit issued primarily in support of workers compensation
insurance programs. As of December 31, 2006, the Company had $6.5 million available under the Revolving Credit Facility and the Company was in compliance with all of the covenants under the Financing Facility. The Company has no off-balance
sheet arrangements other than normal operating leases and standby letters of credit.

Use of Capital: Operations

Net investing activities used cash of $18.2 million and $15.2 million for the years ended December 31, 2006 and 2005, respectively. In addition to
any future capital expenditures related to the hurricanes, the Companys investing activities consist mainly of capital expenditures for equipment purchases, replacements, vessel refurbishments, and fish oil refining processes. The Company made
capital expenditures of approximately $20.3 million and $17.6 million, for the years ended December 31, 2006 and 2005, respectively. The Company anticipates making approximately $8 million in capital expenditures in 2007 primarily for the
refurbishment of vessels and plant assets and for the repair of certain equipment. Investing activities also includes the receipt of $2.0 million from an insurance company relating to hurricanes Katrina and Rita for the years ending
December 31, 2006 and 2005.



37



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The Company believes that the existing cash, cash equivalents, short-term investments and funds available
through the Financing Facility and/or Title XI indebtedness described above will be sufficient to meet its working capital and capital expenditure requirements through at least the next twelve months. In addition, the Company expects to receive
insurance proceeds from hurricane damages to assist in meeting its capital expenditures. As of December 31, 2005, the Company had an insurance receivable related to hurricane damage recoveries of approximately $10 million. In conjunction with
the Company filing a lawsuit against its property insurance carriers as noted in Note 4Other Assets, $1.6 million of the receivable was reclassified from current assets to long-term assets given the Company expects the recovery of the
receivable to take place in 2008. On February 23, 2007, the Company received a third advance from its insurance provider of $6.4 million.

Use of
Capital: Acquisitions

The Company from time to time considers potential transactions including, but not limited to, enhancement of
physical facilities to improve production capabilities and the acquisition of other businesses. Certain of the potential transactions reviewed by the Company would, if completed, result in its entering new lines of business (generally including
certain businesses to which the Company sells its products such as pet food manufacturers, aquaculture feed manufacturers, fertilizer companies and organic foods manufacturers and distributors), although historically, reviewed opportunities have
been generally related in some manner to the Companys existing operations or which would have added new protein products to the Companys product lines. Although the Company does not explicitly budget for acquisitions and, as of the date
hereof, does not have any commitment with respect to a material acquisition, it could enter into such agreement in the future. Depending on the size of the acquisition, the Company would expect to finance the transaction using internally generated
cash flows and its Financing Facility, or, if necessary, equity or debt financings. The Company cannot assure you that such financings will be available on acceptable terms, if at all.

Use of Capital: Contractual Obligations

The following tables aggregate information about the
Companys contractual cash obligations and other commercial commitments (in thousands) as of December 31, 2006:



|                                   |  |                        |         |                 |   |             |  |             |        |              |   |        |  |   |       
|---------------------------------- |  | ---------------------- | ------- | --------------- | - | ----------- |  | ----------- | ------ | ------------ | - | ------ |  | - | ------
|                                   |  | Payments Due by Period
|Contractual Cash Obligations       |  | Total                  |         | Less than1 year |   | 1 to 3years |  | 4 to 5years |        | After 5years
|Long Term Debt                     |  | $                      | 75,160  |                 | $ | 2,465       |  | $           | 4,795  |              | $ | 51,805 |  | $ | 16,095
|Interest on long term debt         |  |                        | 33,294  |                 |   | 6,239       |  |             | 11,964 |              |   | 10,615 |  |   | 4,476 
|Operating Leases                   |  |                        | 8,979   |                 |   | 1,904       |  |             | 2,797  |              |   | 1,553  |  |   | 2,725 
|Pension Funding                    |  |                        | 7,014   |                 |   | 2,247       |  |             | 2,188  |              |   | 1,233  |  |   | 1,346 
|Standby Letters of Credit (1)      |  |                        | 3,300   |                 |   | 3,300       |  |             |       |              |   |       |  |   |      
|                                   |  |                        |         |                 |   |             |  |             |        |              |   |        |  |   |       
|Total Contractual Cash Obligations |  | $                      | 127,747 |                 | $ | 16,155      |  | $           | 21,744 |              | $ | 65,206 |  | $ | 24,642
|                                   |  |                        |         |                 |   |             |  |             |        |              |   |        |  |   |       

---

|(1) | As of December 31, 2006, the Company had $3.3 million in standby letters of credit under the $5 million credit subfacility of the Financing Facility.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------

Recently Issued Accounting Standards

For
additional information on changes in accounting principles and new accounting principles, see Note 1 to the consolidated financial statements included in Item 8Financial Statements and Supplementary Data.

Seasonal and Quarterly Results

The Companys
menhaden harvesting and processing business is seasonal in nature. The Company generally has higher sales during the menhaden harvesting season (which includes the second and third quarter of



38



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each year) due to increased product availability, but prices during the fishing season tend to be lower than during the off-season. As a result, the
Companys quarterly operating results have fluctuated in the past and may fluctuate in the future. In addition, from time to time the Company defers sales of inventory based on worldwide prices for competing products that affect prices for the
Companys products which may affect comparable period comparisons. Quarterly financial data contained in Note 17 to the Companys Consolidated Financial Statements included in Item 8 of this report are incorporated herein by
reference.



|Item 7A. | Quantitative and Qualitative Disclosure About Market Risk.
|-------- | ----------------------------------------------------------

In the normal course of business, the financial condition of the Company is exposed to minimal market risk associated with interest rate movements on the Companys borrowings. A one percent increase or decrease
in the levels of interest rates on variable rate debt would not result in a material change to the Companys results of operations.

Although the Company sells products in foreign countries, all of the Companys revenues are billed and paid for in US dollars. As a result, management does not believe that the Company is exposed to any significant foreign country
currency exchange risk, and the Company does not utilize market risk sensitive instruments to manage its exposure to this risk.



|Item 8. | Financial Statements and Supplementary Data.
|------- | --------------------------------------------



39



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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Omega Protein
Corporation:

We have completed integrated audits of Omega Protein Corporations consolidated financial statements and of its internal
control over financial reporting as of December 31, 2006, in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are presented below.

Consolidated financial statements and financial statement schedule

In our opinion, the consolidated financial statements listed in the index appearing under
Item 15(a)(1) present fairly, in all material respects, the financial position of Omega Protein Corporation and its subsidiaries at December 31, 2006 and 2005, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 2006 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule referred to in Item 15(a)(2)
presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the
Companys management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements 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. An audit of financial statements
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, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Notes 1 and 11 to the consolidated
financial statements, the Company changed the manner in which it accounts for share based compensation effective January 1, 2006 and the manner in which it accounts for defined benefit pension plans effective December 31, 2006.

Internal control over financial reporting

Also, in
our opinion, managements assessment, included in Managements Report on Internal Control Over Financial Reporting appearing under item 9A, that the Company maintained effective internal control over financial reporting as of
December 31, 2006 based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), is fairly stated, in all material respects, based on
those criteria. Furthermore, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2006, based on criteria established in Internal ControlIntegrated
Framework issued by the COSO. The Companys management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our
responsibility is to express opinions on managements assessment and on the effectiveness of the Companys internal control over financial reporting based on our audit. We conducted our audit of internal control over financial
reporting 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 effective internal control over
financial reporting was maintained in all material respects. An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, evaluating managements assessment, testing and
evaluating the design and operating effectiveness of internal control, and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures that
(i) pertain to the maintenance of records that, in reasonable detail,



40



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accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management
and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial
statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

PricewaterhouseCoopers LLP

Houston, Texas

March 12, 2007



41



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OMEGA PROTEIN CORPORATION

CONSOLIDATED BALANCE SHEETS



|                                                                                                                                                                                                  |  |                  |         |   |                  |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | ------- | - | ---------------- | - | ------- | -
|                                                                                                                                                                                                  |  | December 31,2006 |         |   | December 31,2005 |  
|                                                                                                                                                                                                  |  | (in thousands)   |        
|ASSETS                                                                                                                                                                                            |  |                  |         |   |                  |   |         |  
|Current assets:                                                                                                                                                                                   |  |                  |         |   |                  |   |         |  
|Cash and cash equivalents                                                                                                                                                                         |  | $                | 7,993   |   |                  | $ | 26,362  |  
|Receivables, net                                                                                                                                                                                  |  |                  | 19,632  |   |                  |   | 23,941  |  
|Amounts due from former majority owner                                                                                                                                                            |  |                  |        |   |                  |   | 105     |  
|Inventories                                                                                                                                                                                       |  |                  | 60,045  |   |                  |   | 46,860  |  
|Prepaid expenses and other current assets                                                                                                                                                         |  |                  | 2,089   |   |                  |   | 1,122   |  
|                                                                                                                                                                                                  |  |                  |         |   |                  |   |         |  
|Total current assets                                                                                                                                                                              |  |                  | 89,759  |   |                  |   | 98,390  |  
|Other assets, net                                                                                                                                                                                 |  |                  | 6,080   |   |                  |   | 1,579   |  
|Deferred tax assets, net                                                                                                                                                                          |  |                  | 4,103   |   |                  |   | 6,293   |  
|Property, plant and equipment, net                                                                                                                                                                |  |                  | 100,776 |   |                  |   | 93,965  |  
|                                                                                                                                                                                                  |  |                  |         |   |                  |   |         |  
|Total assets                                                                                                                                                                                      |  | $                | 200,718 |   |                  | $ | 200,227 |  
|                                                                                                                                                                                                  |  |                  |         |   |                  |   |         |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                              |  |                  |         |   |                  |   |         |  
|Current liabilities:                                                                                                                                                                              |  |                  |         |   |                  |   |         |  
|Current maturities of long-term debt                                                                                                                                                              |  | $                | 2,467   |   |                  | $ | 2,443   |  
|Accounts payable                                                                                                                                                                                  |  |                  | 2,456   |   |                  |   | 3,849   |  
|Accrued liabilities                                                                                                                                                                               |  |                  | 13,760  |   |                  |   | 12,202  |  
|Deferred tax liabilities, net                                                                                                                                                                     |  |                  |        |   |                  |   | 776     |  
|                                                                                                                                                                                                  |  |                  |         |   |                  |   |         |  
|Total current liabilities                                                                                                                                                                         |  |                  | 18,683  |   |                  |   | 19,270  |  
|Long-term debt, net of current maturities                                                                                                                                                         |  |                  | 72,693  |   |                  |   | 27,658  |  
|Pension liabilities, net                                                                                                                                                                          |  |                  | 8,252   |   |                  |   | 10,932  |  
|                                                                                                                                                                                                  |  |                  |         |   |                  |   |         |  
|Total liabilities                                                                                                                                                                                 |  |                  | 99,628  |   |                  |   | 57,860  |  
|                                                                                                                                                                                                  |  |                  |         |   |                  |   |         |  
|Commitments and contingencies                                                                                                                                                                     |  |                  |         |   |                  |   |         |  
|                                                                                                                                                                                                  |  |                 
|Stockholders equity:                                                                                                                                                                             |  |                  |         |   |                  |   |         |  
|Preferred stock, $0.01 par value; 10,000,000 authorized shares; none issued                                                                                                                       |  |                  |        |   |                  |   |        |  
|Common Stock, $0.01 par value; 80,000,000 authorized shares; 16,209,527 and 25,447,409 shares issued and 16,209,527 and 25,034,309 shares
outstanding at December 31, 2006 and 2005, respectively |  |                  | 162     |   |                  |   | 255     |  
|Capital in excess of par value                                                                                                                                                                    |  |                  | 95,961  |   |                  |   | 116,512 |  
|Retained earnings                                                                                                                                                                                 |  |                  | 11,895  |   |                  |   | 35,253  |  
|Accumulated other comprehensive loss                                                                                                                                                              |  |                  | (6,928  | ) |                  |   | (7,618  | )
|Common stock in treasury, at cost0 and 413,100 shares at December 31, 2006 and 2005, respectively                                                                                                |  |                  |        |   |                  |   | (2,035  | )
|                                                                                                                                                                                                  |  |                  |         |   |                  |   |         |  
|Total stockholders equity                                                                                                                                                                        |  |                  | 101,090 |   |                  |   | 142,367 |  
|                                                                                                                                                                                                  |  |                  |         |   |                  |   |         |  
|Total liabilities and stockholders equity                                                                                                                                                        |  | $                | 200,718 |   |                  | $ | 200,227 |  
|                                                                                                                                                                                                  |  |                  |         |   |                  |   |         |  



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



42



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OMEGA PROTEIN CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS



|                                                                         |  |                                          |         |   |      |   |         |      |  |   |         |  
|------------------------------------------------------------------------ |  | ---------------------------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                         |  | Years Ended December 31,                 |        
|                                                                         |  | 2006                                     |         |   | 2005 |   |         | 2004 | 
|                                                                         |  | (in thousands, except per share amounts) |        
|Revenues                                                                 |  | $                                        | 139,834 |   |      | $ | 109,896 |      |  | $ | 119,645 |  
|Cost of sales                                                            |  |                                          | 116,638 |   |      |   | 91,985  |      |  |   | 104,237 |  
|                                                                         |  |                                          |         |   |      |   |         |      |  |   |         |  
|Gross profit                                                             |  |                                          | 23,196  |   |      |   | 17,911  |      |  |   | 15,408  |  
|Selling, general and administrative expenses                             |  |                                          | 13,683  |   |      |   | 12,906  |      |  |   | 9,933   |  
|                                                                         |  |                                          |        
|Loss resulting from natural disaster, net (see Note 12Hurricane Losses) |  |                                          | 1,548   |   |      |   | 15,743  |      |  |   |        |  
|Loss on disposal of assets                                               |  |                                          | 9       |   |      |   | 149     |      |  |   | 187     |  
|                                                                         |  |                                          |         |   |      |   |         |      |  |   |         |  
|Operating income (loss)                                                  |  |                                          | 7,956   |   |      |   | (10,887 | )    |  |   | 5,288   |  
|                                                                         |  |                                          |        
|Interest income                                                          |  |                                          | 622     |   |      |   | 615     |      |  |   | 594     |  
|Interest expense                                                         |  |                                          | (2,560  | ) |      |   | (1,255  | )    |  |   | (965    | )
|Other income (expense), net                                              |  |                                          | (244    | ) |      |   | 73      |      |  |   | (221    | )
|                                                                         |  |                                          |         |   |      |   |         |      |  |   |         |  
|Income (loss) before income taxes                                        |  |                                          | 5,774   |   |      |   | (11,454 | )    |  |   | 4,696   |  
|                                                                         |  |                                          |        
|Provision (benefit) for income taxes                                     |  |                                          | 1,202   |   |      |   | (4,268  | )    |  |   | 1,494   |  
|                                                                         |  |                                          |         |   |      |   |         |      |  |   |         |  
|Net income (loss)                                                        |  | $                                        | 4,572   |   |      | $ | (7,186  | )    |  | $ | 3,202   |  
|                                                                         |  |                                          |         |   |      |   |         |      |  |   |         |  
|Basic earnings (loss) per share                                          |  | $                                        | 0.19    |   |      | $ | (0.29   | )    |  | $ | 0.13    |  
|                                                                         |  |                                          |         |   |      |   |         |      |  |   |         |  
|Weighted average common shares outstanding                               |  |                                          | 24,322  |   |      |   | 24,974  |      |  |   | 24,514  |  
|                                                                         |  |                                          |         |   |      |   |         |      |  |   |         |  
|Diluted earnings (loss) per share                                        |  | $                                        | 0.18    |   |      | $ | (0.29   | )    |  | $ | 0.12    |  
|                                                                         |  |                                          |         |   |      |   |         |      |  |   |         |  
|Weighted average common shares and potential common shares outstanding   |  |                                          | 25,200  |   |      |   | 24,974  |      |  |   | 26,429  |  
|                                                                         |  |                                          |         |   |      |   |         |      |  |   |         |  



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



43



---

OMEGA PROTEIN CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                                                   |  |                          |         |   |      |   |         |      |  |   |         |  
|-------------------------------------------------------------------------------------------------- |  | ------------------------ | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                                                   |  | Years Ended December 31, |        
|                                                                                                   |  | 2006                     |         |   | 2005 |   |         | 2004 | 
|                                                                                                   |  | (in thousands)           |        
|Cash flow (used in) provided by operating activities:                                              |  |                          |         |   |      |   |         |      |  |   |         |  
|Net income (loss)                                                                                  |  | $                        | 4,572   |   |      | $ | (7,186  | )    |  | $ | 3,202   |  
|Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: |  |                          |         |   |      |   |         |      |  |   |         |  
|Depreciation and amortization                                                                      |  |                          | 13,069  |   |      |   | 13,301  |      |  |   | 11,066  |  
|Involuntary conversion from natural disaster                                                       |  |                          | 1,094   |   |      |   | 8,324   |      |  |   |        |  
|Loss on disposal of assets, net                                                                    |  |                          | 9       |   |      |   | 149     |      |  |   | 187     |  
|Provisions for losses on receivables                                                               |  |                          | 10      |   |      |   | 30      |      |  |   | 11      |  
|Share based compensation                                                                           |  |                          | 166     |   |      |   |        |      |  |   |        |  
|Deferred income taxes                                                                              |  |                          | 655     |   |      |   | (4,268  | )    |  |   | 1,494   |  
|Changes in assets and liabilities:                                                                 |  |                          |         |   |      |   |         |      |  |   |         |  
|Receivables                                                                                        |  |                          | 2,299   |   |      |   | (11,946 | )    |  |   | 5,830   |  
|Amounts due from former majority owner                                                             |  |                          | 105     |   |      |   |        |      |  |   | 3       |  
|Inventories                                                                                        |  |                          | (13,185 | ) |      |   | (6,418  | )    |  |   | (37     | )
|Prepaid expenses and other current assets                                                          |  |                          | (565    | ) |      |   | 393     |      |  |   | 5       |  
|Other assets                                                                                       |  |                          | (2,990  | ) |      |   | (528    | )    |  |   | 328     |  
|Accounts payable                                                                                   |  |                          | (1,393  | ) |      |   | 1,320   |      |  |   | (855    | )
|Accrued liabilities                                                                                |  |                          | 1,558   |   |      |   | 1,969   |      |  |   | (1,325  | )
|Pension liability, net                                                                             |  |                          | (1,630  | ) |      |   | 817     |      |  |   | 696     |  
|Other, net                                                                                         |  |                          | (2      | ) |      |   | (61     | )    |  |   | 20      |  
|                                                                                                   |  |                          |         |   |      |   |         |      |  |   |         |  
|Total adjustments                                                                                  |  |                          | (800    | ) |      |   | 3,082   |      |  |   | 17,423  |  
|                                                                                                   |  |                          |         |   |      |   |         |      |  |   |         |  
|Net cash provided by (used in) operating activities                                                |  |                          | 3,772   |   |      |   | (4,104  | )    |  |   | 20,625  |  
|                                                                                                   |  |                          |         |   |      |   |         |      |  |   |         |  
|Cash flow provided by (used in) investing activities:                                              |  |                          |         |   |      |   |         |      |  |   |         |  
|Proceeds from disposition of assets                                                                |  |                          | 166     |   |      |   | 364     |      |  |   | 74      |  
|Proceeds from insurance company, hurricanes                                                        |  |                          | 2,000   |   |      |   | 2,000   |      |  |   |        |  
|Capital expenditures                                                                               |  |                          | (20,318 | ) |      |   | (17,590 | )    |  |   | (22,907 | )
|                                                                                                   |  |                          |         |   |      |   |         |      |  |   |         |  
|Net cash used in investing activities                                                              |  |                          | (18,152 | ) |      |   | (15,226 | )    |  |   | (22,833 | )
|                                                                                                   |  |                          |         |   |      |   |         |      |  |   |         |  
|Cash flow (used in) provided by financing activities:                                              |  |                          |         |   |      |   |         |      |  |   |         |  
|Principal payments of long term debt                                                               |  |                          | (3,553  | ) |      |   | (1,503  | )    |  |   | (1,567  | )
|Debt issuance costs                                                                                |  |                          | (2,342  | ) |      |   |        |      |  |   |        |  
|Proceeds from borrowings                                                                           |  |                          | 48,612  |   |      |   | 14,000  |      |  |   |        |  
|Purchase and retirement of common stock                                                            |  |                          | (47,500 | ) |      |   |        |      |  |   |        |  
|Treasury stock acquisition costs                                                                   |  |                          | (996    | ) |      |   |        |      |  |   |        |  
|Proceeds from stock options exercised                                                              |  |                          | 1,793   |   |      |   | 425     |      |  |   | 1,163   |  
|                                                                                                   |  |                          |         |   |      |   |         |      |  |   |         |  
|Net cash (used in) provided by financing activities                                                |  |                          | (3,986  | ) |      |   | 12,922  |      |  |   | (404    | )
|                                                                                                   |  |                          |         |   |      |   |         |      |  |   |         |  
|Effect of exchange rate changes on cash and cash equivalents                                       |  |                          | (3      | ) |      |   | 13      |      |  |   | (5      | )
|                                                                                                   |  |                          |         |   |      |   |         |      |  |   |         |  
|Net decrease in cash and cash equivalents                                                          |  |                          | (18,369 | ) |      |   | (6,395  | )    |  |   | (2,617  | )
|Cash and cash equivalents at beginning of year                                                     |  |                          | 26,362  |   |      |   | 32,757  |      |  |   | 35,374  |  
|                                                                                                   |  |                          |         |   |      |   |         |      |  |   |         |  
|Cash and cash equivalents at end of year                                                           |  | $                        | 7,993   |   |      | $ | 26,362  |      |  | $ | 32,757  |  
|                                                                                                   |  |                          |         |   |      |   |         |      |  |   |         |  
|Supplemental cash flow information:                                                                |  |                          |         |   |      |   |         |      |  |   |         |  
|Cash paid (received) during the year for:                                                          |  |                          |         |   |      |   |         |      |  |   |         |  
|Interest                                                                                           |  | $                        | 2,126   |   |      | $ | 1,153   |      |  | $ | 1,236   |  
|Income taxes                                                                                       |  | $                        |        |   |      | $ |        |      |  | $ | (500    | )

In 2006, 2005 and 2004, approximately 8,400, 0 and 2,700 shares, respectively, of the
Companys common stock were issued to Directors in a non cash transaction as payment in lieu of Board retainer and per diem fees. Expenses were recognized on these non cash transactions of $51,000, $0, and $21,000 for 2006, 2005, and 2004,
respectively.

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



44



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OMEGA PROTEIN CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY



|                                                      |  |                |   |  |                               |     |   |                   |   |         |                                             |  |   |                      |   |  |                           |        |   |  |   |        |   |  |   |         |  
|----------------------------------------------------- |  | -------------- | - |  | ----------------------------- | --- | - | ----------------- | - | ------- | ------------------------------------------- |  | - | -------------------- | - |  | ------------------------- | ------ | - |  | - | ------ | - |  | - | ------- | -
|                                                      |  | Common Stock   |   |  | Capital inExcess of Par Value |     |   | Retained Earnings |   |         | AccumulatedOtherComprehensive Income (Loss) |  |   | TreasuryStock Amount |   |  | TotalStockholders Equity |       
|                                                      |  | Shares         |   |  | Amount                        |     |   |                   |   |         |                                            
|                                                      |  | (in thousands) |  
|Balance at December 31, 2003                          |  | 24,802         |   |  | $                             | 248 |   |                   | $ | 113,690 |                                             |  | $ | 39,237               |   |  | $                         | (5,923 | ) |  | $ | (2,035 | ) |  | $ | 145,217 |  
|Issuance of common stock                              |  | 457            |   |  |                               | 5   |   |                   |   | 1,194   |                                             |  |   |                     |   |  |                           |       |   |  |   |       |   |  |   | 1,199   |  
|Tax benefit from exercise of stock options            |  |                |   |  |                               |     |   |                   |   | 919     |                                             |  |   |                     |   |  |                           |       |   |  |   |       |   |  |   | 919     |  
|Comprehensive income:                                 |  |                |   |  |                               |     |   |                   |   |         |                                             |  |   |                      |   |  |                           |        |   |  |   |        |   |  |   |         |  
|Net income                                            |  |               |   |  |                               |    |   |                   |   |        |                                             |  |   | 3,202                |   |  |                           |       |   |  |   |       |   |  |   | 3,202   |  
|Other comprehensive loss:                             |  |                |   |  |                               |     |   |                   |   |         |                                             |  |   |                      |   |  |                           |        |   |  |   |        |   |  |   |         |  
|Minimum pension liability, net of tax benefit of $446 |  |               |   |  |                               |    |   |                   |   |        |                                             |  |   |                     |   |  |                           | (865   | ) |  |   |       |   |  |   | (865    | )
|Foreign translation adjustment, net of tax benefit    |  |               |   |  |                               |    |   |                   |   |        |                                             |  |   |                     |   |  |                           | (5     | ) |  |   |       |   |  |   | (5      | )
|                                                      |  |                |   |  |                               |     |   |                   |   |         |                                             |  |   |                      |   |  |                           |        |   |  |   |        |   |  |   |         |  
|Total comprehensive income (loss)                     |  |               |   |  |                               |    |   |                   |   |        |                                             |  |   | 3,202                |   |  |                           | (870   | ) |  |   |       |   |  |   | 2,332   |  
|                                                      |  |                |   |  |                               |     |   |                   |   |         |                                             |  |   |                      |   |  |                           |        |   |  |   |        |   |  |   |         |  
|Balance at December 31, 2004                          |  | 25,259         |   |  | $                             | 253 |   |                   | $ | 115,803 |                                             |  | $ | 42,439               |   |  | $                         | (6,793 | ) |  | $ | (2,035 | ) |  | $ | 149,667 |  
|Issuance of common stock                              |  | 188            |   |  |                               | 2   |   |                   |   | 362     |                                             |  |   |                     |   |  |                           |       |   |  |   |       |   |  |   | 364     |  
|Tax benefit from exercise of stock options            |  |               |   |  |                               |    |   |                   |   | 347     |                                             |  |   |                     |   |  |                           |       |   |  |   |       |   |  |   | 347     |  
|Comprehensive income (loss):                          |  |                |   |  |                               |     |   |                   |   |         |                                             |  |   |                      |   |  |                           |        |   |  |   |        |   |  |   |         |  
|Net loss                                              |  |               |   |  |                               |    |   |                   |   |        |                                             |  |   | (7,186               | ) |  |                           |       |   |  |   |       |   |  |   | (7,186  | )
|Other comprehensive loss:                             |  |                |   |  |                               |     |   |                   |   |         |                                             |  |   |                      |   |  |                           |        |   |  |   |        |   |  |   |         |  
|Minimum pension liability, net of tax benefit of $432 |  |               |   |  |                               |    |   |                   |   |        |                                             |  |   |                     |   |  |                           | (838   | ) |  |   |       |   |  |   | (838    | )
|Foreign translation adjustment, net of tax benefit    |  |               |   |  |                               |    |   |                   |   |        |                                             |  |   |                     |   |  |                           | 13     |   |  |   |       |   |  |   | 13      |  
|                                                      |  |                |   |  |                               |     |   |                   |   |         |                                             |  |   |                      |   |  |                           |        |   |  |   |        |   |  |   |         |  
|Total comprehensive loss                              |  |               |   |  |                               |    |   |                   |   |        |                                             |  |   | (7,186               | ) |  |                           | (825   | ) |  |   |       |   |  |   | (8,011  | )
|                                                      |  |                |   |  |                               |     |   |                   |   |         |                                             |  |   |                      |   |  |                           |        |   |  |   |        |   |  |   |         |  
|Balance at December 31, 2005                          |  | 25,447         |   |  | $                             | 255 |   |                   | $ | 116,512 |                                             |  | $ | 35,253               |   |  | $                         | (7,618 | ) |  | $ | (2,035 | ) |  | $ | 142,367 |  
|Issuance of common stock                              |  | 444            |   |  |                               | 4   |   |                   |   | 1,407   |                                             |  |   |                     |   |  |                           |       |   |  |   |       |   |  |   | 1,411   |  
|Purchase and retirement of common stock               |  | (9,681         | ) |  |                               | (97 | ) |                   |   | (22,504 | )                                           |  |   | (27,930              | ) |  |                           |       |   |  |   | 2,035  |   |  |   | (48,496 | )
|Tax benefit from exercise of stock options            |  |               |   |  |                               |    |   |                   |   | 546     |                                             |  |   |                     |   |  |                           |       |   |  |   |       |   |  |   | 546     |  
|Comprehensive income (loss):                          |  |                |   |  |                               |     |   |                   |   |         |                                             |  |   |                      |   |  |                           |        |   |  |   |        |   |  |   |         |  
|Net income                                            |  |               |   |  |                               |    |   |                   |   |        |                                             |  |   | 4,572                |   |  |                           |       |   |  |   |       |   |  |   | 4,572   |  
|Other comprehensive income (loss):                    |  |                |   |  |                               |     |   |                   |   |         |                                             |  |   |                      |   |  |                           |        |   |  |   |        |   |  |   |         |  
|Minimum pension liability, net of tax benefit of $357 |  |               |   |  |                               |    |   |                   |   |        |                                             |  |   |                     |   |  |                           | 693    |   |  |   |       |   |  |   | 693     |  
|Foreign translation adjustment, net of tax benefit    |  |               |   |  |                               |    |   |                   |   |        |                                             |  |   |                     |   |  |                           | (3     | ) |  |   |       |   |  |   | (3      | )
|                                                      |  |                |   |  |                               |     |   |                   |   |         |                                             |  |   |                      |   |  |                           |        |   |  |   |        |   |  |   |         |  
|Total comprehensive income                            |  |               |   |  |                               |    |   |                   |   |        |                                             |  |   | 4,572                |   |  |                           | 690    |   |  |   |       |   |  |   | 5,262   |  
|                                                      |  |                |   |  |                               |     |   |                   |   |         |                                             |  |   |                      |   |  |                           |        |   |  |   |        |   |  |   |         |  
|Balance at December 31, 2006                          |  | 16,210         |   |  | $                             | 162 |   |                   | $ | 95,961  |                                             |  | $ | 11,895               |   |  | $                         | (6,928 | ) |  |   |       |   |  | $ | 101,090 |  
|                                                      |  |                |   |  |                               |     |   |                   |   |         |                                             |  |   |                      |   |  |                           |        |   |  |   |        |   |  |   |         |  



The accompanying notes are in integral part of the consolidated financial statements.



45



---

OMEGA PROTEIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|NOTE 1. | SIGNIFICANT ACCOUNTING POLICIES SUMMARY OF OPERATIONS AND BASIS OF PRESENTATION
|------- | -------------------------------------------------------------------------------

Business Description

Omega Protein Corporation (Omega or the Company)
produces and markets a variety of products produced from menhaden (a herring-like species of fish found in commercial quantities in the U.S. coastal waters of the Atlantic Ocean and Gulf of Mexico), including regular grade and value-added specialty
fish meals, crude and refined fish oils and fish solubles. The Companys fish meal products are primarily used as a protein ingredient in animal feed for swine, cattle, aquaculture and household pets. Fish oil is utilized for animal and
aquaculture feeds, industrial applications, as well as for additives to human food products and dietary supplements. The Companys fish solubles are sold primarily to livestock feed manufacturers, aquaculture feed manufacturers and for use as
an organic fertilizer.

Consolidation

The consolidated financial statements include the accounts of Omega and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

Financial Statement Preparation

The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the Companys financial statements and the accompanying notes and the reported amounts of revenues and expenses during the reporting period. Actual amounts, when available, could
differ from those estimates and those differences could have a material affect on the financial statements.

The Company has reclassified
certain amounts previously reported to conform with the presentation at December 31, 2006.

Hurricane Losses

On August 29, 2005, the Companys Moss Point, Mississippi fish processing facility and adjacent shipyard were severely damaged by Hurricane
Katrina. On September 25, 2005, the Companys Cameron, Louisiana and Abbeville, Louisiana fish processing facilities were also severely damaged by Hurricane Rita. Each of these facilities was non-operational immediately after these weather
events. Operations at the Moss Point fish processing facility, the Abbeville fish processing facility and the shipyard were re-established in mid-October, 2005, but at reduced processing capabilities. These two plants became fully operational prior
to the start of the 2006 Gulf fishing season. Operations at the Cameron fish processing facility were re-established in June 2006, but at reduced processing capabilities. The Cameron facility became fully operational in September 2006.

The direct impact of the two hurricanes upon the Company was a loss of physical inventories and physical damage to the plants. The interruption of
processing capabilities caused the Company to address the impact of abnormal downtime of its processing facilities, which resulted in the immediate recognition of costs which would ordinarily have been captured as inventory costs. The amounts of
these losses are more fully described in Notes 2, 3, 4, 5 and 12.

The Company maintains insurance coverage for a variety of these damages,
most notably property, inventory and vessel insurance. The nature and extent of the insurance coverage varies by line of policy and the Company has recorded insurance recoveries as long-term receivables within other assets based on estimates of
probable recoveries. The Company anticipates that further recoveries could be available, but such additional



46



---

OMEGA PROTEIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



recoveries will require further analysis and discussions with the Companys insurance carriers and the resolution of the lawsuit filed by the Company
against its property insurance carriers described below. Such recoveries, if any, would be recognized in future periods once they are deemed probable. The Company does not maintain business interruption insurance in any material amounts.

In order to facilitate the insurance recovery process, on July 28, 2006, the Company filed a lawsuit against its property insurance carriers,
Lexington Insurance Company and RSUI Indemnity Company, in U.S. District Court for the Western District of Louisiana, alleging breach of contract and bad faith based on the insurance carriers failure to pay amounts due to the Company under its
property insurance policies for damages sustained from Hurricanes Katrina and Rita in the third quarter of 2005. The Company seeks recovery in a jury trial of all available damages to which it is entitled by law, legal interest on those damages, the
cost of the litigation and any other damages as the court deems appropriate. The total damages sought by the Company in the lawsuit are in excess of the amount the Company has remaining as a receivable relating to its initial recorded hurricane
claim from its property insurance carriers. Discovery in the lawsuit is ongoing and a trial date has been set for November 5, 2007. The Company believes the remaining recorded receivable is fully collectible; however, an unfavorable outcome of
the proceeding could have a material impact on the Companys financial position and result of operations.

Revenue Recognition

The Company derives revenue principally from the sales of a variety of protein and oil products derived from menhaden. The Company
recognizes revenue for the sale of its products when title and rewards of ownership to its products are transferred to the customer.

Cash and Cash
Equivalents

The Company considers cash in banks and short-term investments with original maturities of three months or less as cash
and cash equivalents.

Allowances for Doubtful Accounts

The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of the Companys customers to make required payments. The Company considers the following factors when
determining if collection is reasonably assured: customer credit worthiness, past transaction history with the customer, and changes in customer payment terms. If the Company has no previous experience with the customer, the Company typically
obtains reports from credit organizations to ensure that the customer has a history of paying its creditors. The Company may also request financial information, including financial statements or other documents (e.g., bank statements), or may obtain
a letter of credit from the customer to ensure that the customer has the means of making payment. If the financial condition of the Companys customers were to deteriorate, adversely affecting their ability to make payments, additional
allowances would be required.

Inventories

Inventory is stated at the lower of cost or market. The Companys fishing season runs from mid-April to the first of November in the Gulf of Mexico and from the beginning of May into December in the Atlantic.
Government regulations generally preclude the Company from fishing during the off-seasons.

The Companys inventory cost system
considers all costs associated with an annual fish catch and its processing, both variable and fixed, including both costs incurred during the off-season and during the fishing season. The Companys costing system allocates cost to inventory
quantities on a per unit basis as calculated by a



47



---

OMEGA PROTEIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



formula that considers total estimated inventoriable costs for a fishing season (including off-season costs) to total estimated fish catch and the relative
fair market value of the individual products produced. The Company adjusts the cost of sales, off-season costs and inventory balances at the end of each quarter based on revised estimates of total inventoriable costs and fish catch. The
Companys lower-of-cost-or-market-value analyses at year-end and at interim periods compare the total estimated per unit production cost of the Companys expected production to the projected per unit market prices of the products. The
impairment analyses involve estimates of, among other things, future fish catches and related costs, and expected commodity prices for the fish products as well as projected purchase commitments from customers. These estimates, which management
believes are reasonable and supportable, involve estimates of future activities and events which are inherently imprecise and from which actual results may differ materially.

Any costs incurred during abnormal downtime related to activity at the Companys plants are charged to expense as incurred.

During the off-seasons, in connection with the upcoming fishing seasons, the Company incurs costs (i.e., plant and vessel related labor, utilities, rent,
repairs, and depreciation) that are directly related to the Companys infrastructure. These costs accumulate in inventory and are applied as elements of the cost of production of the Companys products throughout the fishing season ratably
based on the Companys monthly fish catch and the expected total fish catch for the season.

Insurance

The Company carries insurance for certain losses relating to its vessels and Jones Act liabilities for employees aboard its vessels. The Company provides
reserves for those portions of the annual aggregate deductible for which the Company remains responsible by using an estimation process that considers Company-specific and industry data as well as managements experience, assumptions and
consultation with counsel, as these reserves include estimated settlement costs. Managements current estimated range of liabilities related to such cases is based on claims for which management can estimate the amount and range of loss. For
those claims where there may be a range of loss, the Company has recorded an estimated liability inside that range, based on managements experience, assumptions and consultation with counsel. The process of estimating and establishing reserves
for these claims is inherently uncertain and the actual ultimate net cost of a claim may vary materially from the estimated amount reserved. There is some degree of inherent variability in assessing the ultimate amount of losses associated with
these claims due to the extended period of time that transpires between when the claim might occur and the full settlement of such claims. This variability is generally greater for Jones Act claims by vessel employees. The Company continually
evaluates loss estimates associated with claims and losses as additional information becomes available and revises its estimates. Although management believes estimated reserves related to these claims are adequately recorded, it is possible that
actual results could significantly differ from the recorded reserves, which could materially impact the Companys results of operations, financial position and cash flow.

The Company is primarily self-insured for health insurance. The Company purchases individual stop loss coverage with a large deductible. As a result, the
Company is primarily self-insured for claims and associated costs up to the amount of the deductible, with claims in excess of the deductible amount being covered by insurance. Expected claims estimates are based on health care trend rates and
historical claims data; actual claims may differ from those estimates. The Company evaluates its claims experience related to this coverage with information obtained from its risk management consultants.

Assumptions used in preparing these insurance estimates are based on factors such as claims settlement patterns, claim development trends, claim
frequency and severity patterns, inflationary trends and data



48



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OMEGA PROTEIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



reasonableness. Together these factors will generally affect the analysis and determination of the best estimate of the projected ultimate claim
losses. The results of these evaluations are used to both analyze and adjust the Companys insurance loss reserves.

Advertising Costs

The costs of advertising are expensed as incurred in accordance with Statement of Position 93-7 Reporting on Advertising
Costs.

Research and Development

Costs incurred in research and development activities are expensed as incurred.

Accounting for the Impairment of Long-Lived Assets

The Company evaluates at each balance sheet date for continued appropriateness of the carrying value of its long-lived assets
including its long-term receivables and property, plant and equipment in accordance with Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment or Disposals of Long-Lived Assets. The
Company reviews long-lived assets for impairment when events or changes in circumstances indicate that the carrying amount of any such assets or grouping of assets may not be recoverable. The Company has grouped certain assets together (primarily
marine vessels) for impairment testing on a fleet basis. If indicators of impairment are present, management evaluates the undiscounted cash flows estimated to be generated by those assets or grouping of assets compared to the carrying amount of
those items. The net carrying value of assets or grouping of assets not recoverable is reduced to fair value. The Company considers continued operating losses, or significant and long-term changes in business conditions, to be its primary indicators
of potential impairment.

Income Taxes

The Company utilizes the liability method to account for income taxes. This method requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of existing temporary differences between the
financial reporting and tax reporting basis of assets and liabilities, and operating loss and tax credits carryforwards for tax purposes. The Company records a valuation allowance to reduce the deferred tax assets to the amount that is more likely
than not to be realized. The Company believes that the deferred tax assets recorded as of December 31, 2006 are realizable through future reversals of existing taxable temporary differences and future taxable income. If the Company were to
subsequently determine that it would be able to realize deferred tax assets in the future in excess of the net recorded amount, an adjustment to deferred tax assets would increase earnings for the period in which such determination was made. The
Company will continue to assess the adequacy of the valuation allowance on a quarterly basis. Any changes to the estimated valuation allowance could be material to the consolidated financial condition and results of operations.

Property, Equipment and Depreciation

Property
and equipment additions are recorded at cost. Depreciation of property and equipment is computed by the straight-line method at rates expected to amortize the cost of property and equipment, net of salvage value, over their estimated useful lives.
Estimated useful lives, determined at the date of acquisition, of new assets acquired are based primarily on the review of existing property and equipment. Estimated useful lives are as follows:



|                                                       |  |                    
|------------------------------------------------------ |  | -------------------
|                                                       |  | Useful Lives(years)
|Fishing vessels and fish processing plants             |  | 15  20            
|Machinery, equipment, furniture and fixtures and other |  | 3  10             



49



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OMEGA PROTEIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Replacements and major improvements are capitalized and amortized over a period of 5 to 15 years,
maintenance and repairs are charged to expense as incurred. Upon sale or retirement, the costs and related accumulated depreciation are eliminated from the accounts. Any resulting gains or losses are included in the statement of operations. The
Company capitalizes interest as part of the acquisition cost of a qualifying asset.

Interest is capitalized only during the period of time
required to complete and prepare the asset for its intended use. For the years ended December 31, 2006 and 2005, the Company capitalized approximately $0 and $180,000, respectively, of interest.

Pension Plans

As of December 31, 2006,
the Company adopted FAS No. 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans. This statement requires the recognition of the overfunded or underfunded status of a defined benefit
postretirement plan as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. The statement also changes financial reporting by
requiring an employer to measure the funded status of a plan as of the date of its year-end statement of financial position. The Companys policy is to fund U.S. pension plans at amounts not less than the minimum requirements of the Employee
Retirement Income Security Act of 1974 and generally for obligations under its foreign plans to deposit funds with trustees under insurance policies.

In 2002, the Board of Directors authorized a plan to freeze the Companys pension plan in accordance with ERISA rules and regulations so that new employees, hired after July 31, 2002, will not be eligible to
participate in the pension plan and further benefits will no longer accrue for existing participants. The freezing of the pension plan had the effect of vesting all existing participants in their pension benefits in the plan.

Comprehensive loss

Comprehensive loss is
defined as change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources, including foreign currency translation adjustments and minimum pension liability adjustments. The
Company presents comprehensive loss in its consolidated statements of stockholders equity. The change in equity for minimum pension liability adjustment results from an increase in the minimum pension liability and an increase in prepaid
pension cost presented net of tax.

The components of accumulated other comprehensive loss included in shareholders equity are as
follows:



|                                                  |  |                         |        |   |      |   |        |  
|------------------------------------------------- |  | ----------------------- | ------ | - | ---- | - | ------ | -
|                                                  |  | Years EndedDecember 31, |       
|                                                  |  | 2006                    |        |   | 2005 |  
|                                                  |  | (in thousands)          |       
|Cumulative Translation Adjustments                |  | $                       | (33    | ) |      | $ | (30    | )
|Minimum Pension Liability Adjustments, net of tax |  |                         | (6,895 | ) |      |   | (7,588 | )
|                                                  |  |                         |        |   |      |   |        |  
|Accumulated Other Comprehensive Loss              |  | $                       | (6,928 | ) |      | $ | (7,618 | )
|                                                  |  |                         |        |   |      |   |        |  

Foreign Currency Translation

The Companys Mexican operations use the local currency as the functional currency. Assets and liabilities of those operations are translated into
U.S. dollars using period-end exchange rates; income and expenses are translated using the average exchange rates for the reporting period. Translation adjustments are deferred in accumulated other comprehensive income (loss), a separate component
of stockholders equity.



50



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OMEGA PROTEIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts receivable. The
Companys customer base generally remains consistent from year to year. The Company performs ongoing credit evaluations of its customers and generally does not require material collateral. The Company maintains reserves for potential credit
losses and such losses have historically been within managements expectations.

At December 31, 2006 and 2005, the Company had
cash deposits concentrated primarily in one major bank. In addition, the Company had Certificates of Deposit and commercial quality grade investments A2P2 rated or better with companies and financial institutions. As a result of the foregoing, the
Company believes that credit risk in such investments is minimal.

Earnings per Share

Basic earnings per common share (EPS) were computed by dividing net earnings by the weighted average number of common shares outstanding during the
reporting period. Diluted EPS reflects the dilution that could occur if securities or contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the
Company. Diluted earnings per common share was computed by dividing net earnings by the sum of the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if the dilutive
potential common shares (in this case, exercise of the Companys employee stock options) had been issued during each period as discussed in Note 7.

Purchase and Retirement of Common Stock

The Company accounts for the retirement of treasury shares under the par
value method. Under this method, the excess of the cost of treasury stock over its par value is charged to retained earnings.

Recently Issued
Accounting Standards

In December 2004, the FASB revised its SFAS No. 123 (SFAS No. 123R), Accounting
for Stock-Based Compensation. The revision establishes standards for the accounting of transactions in which an entity exchanges its equity instruments for goods or services, particularly transactions in which an entity obtains employee
services in share-based payment transactions. The revised statement requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. The cost
is to be recognized over the period during which the employee is required to provide service in exchange for the award. In addition, the revised statement amends SFAS No. 95, Statement of Cash Flows, to require that excess tax
benefits be reported as a financing cash flow rather than as a reduction of taxes paid. The Company adopted the provisions effective January 1, 2006. Based on the options not vested as of December 31, 2005, the adoption of SFAS
No. 123R did not have a material impact on the Companys current financial condition, results of operations or cash flows. See Note 11Benefit Plans for the impact of this statement on our consolidated results.

In February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial Instrumentsan Amendment of FASB Statements
No. 133 and 140. This statement amends SFAS No. 133 and SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities (SFAS No. 140). This statement
resolves issues addressed in SFAS No. 133 Implementation Issue No. D1, Application of Statement 133 to Beneficial Interests in Securitized Financial Assets and permits fair value



51



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OMEGA PROTEIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation and clarifies which
interest-only strips and principal-only strips are not subject to the requirements of SFAS No. 133. SFAS No. 140 is also amended to eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial
instrument that pertains to a beneficial interest other than another derivative financial instrument. This statement is effective for all financial instruments acquired or issued after the beginning of an entitys first fiscal year that begins
after September 15, 2006. The Company does not expect this statement to have any impact on its consolidated financial statements.

In
July 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxesan Interpretation of FASB Statement No. 109 (FIN 48), which clarifies the accounting and disclosure for
uncertain tax positions in accordance with SFAS No. 109, Accounting for Income Taxes. FIN 48 addresses the recognition, measurement, classification and disclosure issues related to the recording of financial statement benefits for
income tax positions that have some degree of uncertainty. This interpretation is effective as of the beginning of an entitys first fiscal year that begins after December 15, 2006. Tax positions taken in prior years are being evaluated
under FIN No. 48 and the Company anticipates decreasing the opening balance of retained earnings as of January 1, 2007 between $0.6 million and $1.2 million for tax benefits previously recognized under historical practice.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS No. 157 defines fair value, establishes a framework
for measuring fair value, and expands disclosure about fair value measurements. The statement is effective for financial statements issued for fiscal years beginning after November 15, 2007. The Company is currently evaluating the effect, if
any, that the adoption of SFAS 157 will have, if any, on its consolidated results of operations, financial position and related disclosures.

In September 2006, the FASB issued SFAS No. 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans. This statement requires the recognition of the overfunded or underfunded status of a
defined benefit postretirement plan as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. The statement also changes
financial reporting by requiring an employer to measure the funded status of a plan as of the date of its year-end statement of financial position. SFAS No. 158 requires initial recognition of the funded status of a defined benefit
postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after December 15, 2006. The requirement to measure plan assets and benefit obligations as of the date of the employers fiscal year-end
statement of financial position is effective for fiscal years ending after December 15, 2008. The Company adopted the measurement and recognition of the funded status of a defined benefit postretirement plan and provided the required
disclosures provision of this pronouncement in the fourth quarter of 2006.

In September 2006, the SEC issued Staff Accounting Bulletin
(SAB) No. 108 in order to eliminate the diversity of practice surrounding how public companies quantify financial statement misstatements. In SAB 108, the SEC staff established an approach that requires quantification of financial
statement misstatements based on the effects of the misstatements on each of the companys financial statements and the related financial statement disclosures. The adoption of SAB 108 did not impact the Companys financial statements.

Stock-Based Compensation

Effective January 1, 2006, the Company adopted SFAS No. 123R, Share-Based Payment, using the modified prospective application transition method. Prior to January 1, 2006, the Company accounted for its stock-based
employee compensation plans under the recognition and measurement principles of Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees and followed the



52



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OMEGA PROTEIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



disclosure-only provisions of SFAS No. 123 and SFAS No. 148, Accounting for Stock-Based CompensationTransition and Disclosurean
Amendment of FASB Statement No. 123. No stock-based employee compensation cost related to stock options was reflected in net earnings, as all options granted under those plans had an exercise price equal to or greater than the market
value of the underlying common stock on the grant date. Accordingly, share-based compensation related to stock options was only included as a pro forma disclosure in the notes to the consolidated financial statements.

Under the modified prospective application transition method, compensation cost for the period includes the portion vesting in the period for
(1) all share-based compensation arrangements granted prior to, but not vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS No. 123 and (2) all share-based
compensation arrangements granted subsequent to January 1, 2006, based on the grant date fair value estimated in accordance with the provisions of SFAS No. 123R. Under this transition method, no cumulative effect of change in accounting
principle was required for the Company, and results for prior periods have not been restated. SFAS No. 123R also requires that excess tax benefits be reported as a financing cash inflow rather than an operating cash inflow. See Note 11- Benefit
Plans, for additional information on SFAS No. 123R.

NOTE 2. ACCOUNTS RECEIVABLE

Accounts receivable as of December 31, 2006 and 2005 are summarized as follows:



|                                     |  |                |        |   |      |   |        |  
|------------------------------------ |  | -------------- | ------ | - | ---- | - | ------ | -
|                                     |  | 2006           |        |   | 2005 |  
|                                     |  | (in thousands) |       
|Trade                                |  | $              | 11,703 |   |      | $ | 11,407 |  
|Insurance                            |  |                | 1,090  |   |      |   | 1,704  |  
|Insurance2005 hurricanes            |  |                | 6,352  |   |      |   | 10,000 |  
|Employee                             |  |                | 39     |   |      |   | 42     |  
|Income tax                           |  |                | 309    |   |      |   | 383    |  
|Other                                |  |                | 339    |   |      |   | 595    |  
|                                     |  |                |        |   |      |   |        |  
|Total accounts receivable            |  |                | 19,832 |   |      |   | 24,131 |  
|Less allowance for doubtful accounts |  |                | (200   | ) |      |   | (190   | )
|                                     |  |                |        |   |      |   |        |  
|Receivables, net                     |  | $              | 19,632 |   |      | $ | 23,941 |  
|                                     |  |                |        |   |      |   |        |  

As of December 31, 2005, the Company had an insurance receivable related to hurricane damage
recoveries of approximately $10 million. In conjunction with the Company filing a lawsuit against its property insurance carriers as noted in Note 4Other Assets, $1.6 million of the receivable was reclassified from current assets to long-term
assets given the Company expects the recovery of the receivable to take place in 2008. On February 23, 2007, the Company received a third advance from its insurance provider of $6.4 million.



53



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OMEGA PROTEIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



NOTE 3. INVENTORY

Inventory as of December 31, 2006 and 2005 is summarized as follows:



|                                                             |  |                |        |      |   |       
|------------------------------------------------------------ |  | -------------- | ------ | ---- | - | ------
|                                                             |  | 2006           |        | 2005
|                                                             |  | (in thousands)
|Fish meal                                                    |  | $              | 34,719 |      | $ | 14,742
|Fish oil                                                     |  |                | 13,490 |      |   | 21,552
|Fish solubles                                                |  |                | 680    |      |   | 672   
|Unallocated inventory cost pool (including off-season costs) |  |                | 5,882  |      |   | 5,926 
|Other materials & supplies                                   |  |                | 5,274  |      |   | 3,968 
|                                                             |  |                |        |      |   |       
|Total inventory                                              |  | $              | 60,045 |      | $ | 46,860
|                                                             |  |                |        |      |   |       

Inventory at December 31, 2006 and December 31, 2005 is stated at the lower of cost or
market. The elements of the unallocated inventory cost pool at December 31, 2006 include plant and vessel related labor, utilities, rent, repairs and depreciation, to be allocated to inventories produced through the remainder of the 2007
season.

As a result of hurricanes Katrina and Rita, the Company sustained damage to its Gulf of Mexico fish meal storage facilities and
materials and supplies warehouses. The Company recognized a $2.5 million fish meal inventory write-off and $1.6 million materials and supplies write-off for the year ended December 31, 2005. (See Note 12Hurricane Losses)

The hurricanes also affected the Companys 2005 Gulf of Mexico fishing season due to the closure of its three fish processing facilities in the Gulf
of Mexico region. As a result of these closures and their impact on fishing, the Company has recognized a $13.0 million unallocated inventory cost pool write-off for the year ended December 31, 2005. (See Note 12Hurricane Losses)

NOTE 4. OTHER ASSETS

Other assets as
of December 31, 2006 and 2005 are summarized as follows:



|                                                                |  |                |       |      |   |      
|--------------------------------------------------------------- |  | -------------- | ----- | ---- | - | -----
|                                                                |  | 2006           |       | 2005
|                                                                |  | (in thousands)
|Fish nets, net of accumulated amortization of $1,871 and $1,347 |  | $              | 929   |      | $ | 639  
|Insurance receivable, net of allowance for doubtful accounts    |  |                | 768   |      |   | 475  
|Insurance receivable2005 hurricanes                            |  |                | 1,648 |      |   |     
|Title XI debt issuance costs                                    |  |                | 416   |      |   | 337  
|Other debt issuance costs                                       |  |                | 2,270 |      |   |     
|Deposits                                                        |  |                | 49    |      |   | 128  
|                                                                |  |                |       |      |   |      
|Total other assets, net                                         |  | $              | 6,080 |      | $ | 1,579
|                                                                |  |                |       |      |   |      

Amortization expense for fishing nets amounted to $699,000, $680,000 and $899,000 for the years
ended December 31, 2006, 2005 and 2004, respectively.

As a result of Hurricanes Katrina and Rita (see Note 12Hurricane Losses),
the Company sustained damage to its three fish processing facilities and its shipyard located in the Gulf of Mexico region. Based on estimates, the Company believes its hurricane related insurance recoveries will total approximately at least



54



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OMEGA PROTEIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



$12 million and as a result, recorded a relating receivable as of September 30, 2005. During the 4thquarter of 2005 and the 1stquarter of 2006, the Company obtained two separate $2.0 million advances against this receivable from its primary property insurance carrier. In February 2007, the Company received an additional $6.4 million advance against this
receivable from its primary property insurance carrier. In order to facilitate the insurance recovery process, on July 28, 2006, the Company filed a lawsuit against its property insurance carriers, Lexington Insurance Company and RSUI Indemnity
Company, in U.S. District Court for the Western District of Louisiana, alleging breach of contract and bad faith based on the insurance carriers failure to pay amounts due to the Company under its property insurance policies for damages
sustained from Hurricanes Katrina and Rita in the third quarter of 2005. The Company seeks recovery in a jury trial of all available damages to which it is entitled by law, legal interest on those damages, the cost of the litigation and any other
damages as the court deems appropriate. The total damages sought by the Company in the lawsuit are in excess of the amount the Company has remaining as a receivable relating to its initial recorded hurricane claim from its property insurance
carriers. The Company believes the remaining recorded receivable is fully collectible; however, an unfavorable outcome of the proceeding could have a material impact on the Companys financial position and result of operations.

The Company anticipates that further recoveries could be available, but such additional recoveries will require further estimation, analysis and
discussions with the Companys insurance carriers and adjusters and resolution of the lawsuit described above. Additional amounts will be recognized when the collection of such amounts are deemed probable.

The Company carries insurance for certain losses relating to its vessels and Jones Act liability for employees aboard its vessels (collectively,
Vessel Claims Insurance). The typical Vessel Claims Insurance policy contains an annual aggregate deductible (AAD) for which the Company remains responsible, while the insurance carrier is responsible for all applicable
amounts which exceed the AAD. It is the Companys policy to accrue current amounts due and record amounts paid out on each claim. Once payments exceed the AAD, the Company records an insurance receivable for a given policy year, net of
allowance for doubtful accounts. As of December 31, 2006 and 2005 the allowance for doubtful insurance receivable accounts was $2.0 million.

NOTE
5. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment as of December 31, 2006 and 2005 are summarized as follows:



|                                             |  |                |          |   |      |   |          |  
|-------------------------------------------- |  | -------------- | -------- | - | ---- | - | -------- | -
|                                             |  | 2006           |          |   | 2005 |  
|                                             |  | (in thousands) |         
|Land                                         |  | $              | 7,630    |   |      | $ | 7,630    |  
|Plant assets                                 |  |                | 100,963  |   |      |   | 89,650   |  
|Fishing vessels                              |  |                | 94,268   |   |      |   | 90,880   |  
|Furniture and fixtures                       |  |                | 3,135    |   |      |   | 2,792    |  
|Construction in progress                     |  |                | 3,035    |   |      |   | 4,391    |  
|                                             |  |                |          |   |      |   |          |  
|Total property and equipment                 |  |                | 209,031  |   |      |   | 195,343  |  
|Less accumulated depreciation and impairment |  |                | (108,255 | ) |      |   | (101,378 | )
|                                             |  |                |          |   |      |   |          |  
|Property, plant and equipment, net           |  | $              | 100,776  |   |      | $ | 93,965   |  
|                                             |  |                |          |   |      |   |          |  

Depreciation expense for the years ended December 31, 2006, 2005 and 2004 was approximately
$12.2 million, $12.6 million and $10.1 million, respectively.

As a result of hurricanes Katrina and Rita, the Company sustained
damage to its property, plant and equipment at its Gulf of Mexico facilities. The Company recognized a $1.1 million and $8.3 million involuntary



55



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OMEGA PROTEIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



conversion loss of property, plant and equipment for the years ended December 31, 2006 and 2005, respectively. The involuntary conversion loss
recognized for the year ended December 31, 2006 is the result of costs incurred to repair property, plant and equipment in excess of the involuntary conversion loss previously recognized as of December 31, 2005. (See Note 12Hurricane
Losses).

NOTE 6. NOTES PAYABLE AND LONG-TERM DEBT

At December 31, 2006 and 2005, the Companys long-term debt consisted of the following:



|                                                                                                                                                                                                                 |  |                |        |   |      |   |        |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ------ | - | ---- | - | ------ | -
|                                                                                                                                                                                                                 |  | 2006           |        |   | 2005 |  
|                                                                                                                                                                                                                 |  | (in thousands) |       
|U.S. government guaranteed obligations (Title XI loan) collateralized by a first lien on certain vessels and certain plant
assets:                                                                               |  |                |        |   |      |   |        |  
|Amounts due in installments through 2016, interest from 6.49% to 7.60%                                                                                                                                           |  | $              | 27,343 |   |      | $ | 29,737 |  
|Amounts due in installments through 2014, interest at Eurodollar rates of 5.82% and 4.46% at December 31, 2006 and 2005, respectively,
plus 4.5%                                                                 |  |                | 317    |   |      |   | 359    |  
|Other debt at 6.25% at December 31, 2005                                                                                                                                                                         |  |                |       |   |      |   | 5      |  
|Ableco revolving credit facility, annual principal payments based on defined calculation, interest payable monthly based on LIBOR plus 3.25
basis points (8.6% as of December 31, 2006) maturing in October 2011 |  |                | 12,500 |   |      |   |       |  
|Ableco term loan, annual principal payments based on defined calculation, interest payable monthly based on LIBOR plus 4.25 basis points (9.6%
as of December 31, 2006) maturing in October 2011                 |  |                | 35,000 |   |      |   |       |  
|                                                                                                                                                                                                                 |  |                |        |   |      |   |        |  
|Total debt                                                                                                                                                                                                       |  |                | 75,160 |   |      |   | 30,101 |  
|Less current maturities                                                                                                                                                                                          |  |                | (2,467 | ) |      |   | (2,443 | )
|                                                                                                                                                                                                                 |  |                |        |   |      |   |        |  
|Long-term debt                                                                                                                                                                                                   |  | $              | 72,693 |   |      | $ | 27,658 |  
|                                                                                                                                                                                                                 |  |                |        |   |      |   |        |  

The Title XI loans are secured by liens on certain of the Companys fishing vessels and
mortgages on the Companys Reedville, Virginia and Abbeville, Louisiana plants. Loans are now available under similar terms pursuant to the Title XI program without intervening lenders.

In September 2004, the United States Department of Commerce Fisheries Finance Program (the FFP) approved the Companys financing
application in an amount not to exceed $14 million (the Approval Letter). Borrowings under the Approval Letter are to be used to finance and/or refinance approximately 73% of the actual depreciable cost of the Companys future
fishing vessel refurbishments and capital expenditures relating to shore-side fishing assets, for a term not to exceed 15 years from inception at interest rates determined by the U.S. Treasury. Final approval for all such future projects
requires individual approval through the Secretary of Commerce, National Oceanic and Atmospheric Administration, and National Marine Fisheries Service (National Marine Fisheries Service). Borrowings under the FFP are required to be
evidenced by security agreements, undertakings, and other documents deemed in the sole discretion of the National Marine Fisheries Service as necessary to accomplish the intent and purpose of the Approval Letter. The Company is required to comply
with customary National Marine Fisheries Service covenants as well as certain special covenants. In December 2004, the Company submitted a $4.9 million financing request against the $14 million approval, and subsequently amended that request to
include the entire $14 million. The Company closed on the $14 million FFP loan on October 17, 2005.



56



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OMEGA PROTEIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



On December 1, 2005, pursuant to the Title XI program, the United States Department of Commerce
approved a second financing application made by the Company in the amount of $16.4 million (the Second Approval Letter). In May 2006, the Company submitted a $6.5 million financing request under the Second Approval Letter. The Company
expects to receive the $6.5 financing in the first quarter of 2007. As of December 31, 2006, the Company had no borrowings outstanding under the Second Approval Letter.

The Company had a $20 million revolving credit agreement with Bank of America, N.A., which was terminated on October 20, 2006 in connection with the
Companys refinancing of that facility and entry into a new $65 million credit facility. As of December 31, 2006, the Company had no borrowings outstanding under the former bank credit facility. As of December 31, 2005, the Company
had outstanding letters of credit under the former bank credit facility totaling approximately $8.0 million issued primarily in support of workers compensation insurance programs and to purchase fish meal from a third party.

On October 20, 2006, the Company, certain of its subsidiaries and Abelco, A3 Fund Management LLC, an affiliate of Abelco, and Wachovia Bank,
National Association (collectively, the Lenders) entered into the financing agreement (the Financing Agreement) pursuant to which the Lenders agreed to provide the Company with a senior secured financing facility (the
Financing Facility) in the maximum amount of $65 million (i) to acquire the 9,268,292 shares of the Companys common stock held by Zapata (the Zapata Shares), (ii) to fund the Companys ongoing working
capital and other general corporate requirements and (iii) to pay the fees and expenses related to the financing. The Financing Facility consists of (a) a revolving credit facility (the Revolving Credit Facility) of up to $30
million outstanding at any time, including a $5 million subfacility for the issuance of letters of credit, and (b) a term loan facility of $35 million. The Financing Facility replaced the Companys existing $20 million former bank credit
facility. On October 20, 2006, the Company drew down the $35 million term loan and approximately $13.6 million of revolving loans, and approximately $3.3 million in letters of credit were issued pursuant to the letter of credit subfacility in
order (i) to fund the purchase price for the Zapata Shares, (ii) to provide collateral for the letters of credit outstanding under the former bank credit facility and (iii) to pay fees and expenses related to the financing. The
Financing Facility is secured by a first priority lien on all of the Companys assets, other than vessels, real estate and other assets pledged to secure loans made to the Company under the U.S. Maritime Administrations National Marine
Fisheries Finance Program (the NMFFP), including a pending $6.5 million loan from NMFFP (the Pending Loan).

Aggregate revolving credit loans and letters of credit under the Revolving Credit Facility are limited to an amount at any time outstanding not to exceed the lesser of (i) $30 million and (ii) the result of (a) 3.5 times the
Companys trailing 12-month EBITDA (as defined in the Financing Agreement), less (b) the aggregate outstanding principal amount of the term loan and any other secured indebtedness, plus (c) the amount of the Companys
unrestricted cash and marketable securities, minus (d) in the event the Company and the collateral agent agree that the lien on certain vessels owned by the Company should be released, $6 million. Loans under the Revolving Credit Facility bear
interest at a rate per annum equal to LIBOR plus 3.25% and the term loan bears interest at a rate per annum equal to LIBOR plus 4.25%, each subject to adjustment as provided below. The interest rate on all loans will be reduced by 0.25% at any time
the Companys Leverage Ratio (as defined in the Financing Agreement) is equal to or less than 2.65x. If, following such rate reduction, the Companys Leverage Ratio exceeds 2.65x, the interest rate on the loans will be increased by 0.25%.

During the term of the Financing Facility, the Company will be required to comply with the following financial covenants:



| |  |  | EBITDA for the twelve months ending December 31, 2006, March 31, 2007, June 30, 2007, September 30, 2007 and each fiscal quarter
thereafter of $21 million, $19 million, $20 million, $22 million, and $23 million, respectively.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



57



---

OMEGA PROTEIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



| |  |  | Fixed charge coverage ratio of 1.25x for the twelve months ending each March 31, June 30, September 30, and December 31.
| | - |  | ------------------------------------------------------------------------------------------------------------------------



| |  |  | Ratio of total net debt to EBITDA for the twelve months ending March 31, 2007, June 30, 2007, September 30, 2007 and each fiscal quarter
thereafter of 3.25x, 3.1x, 2.65x and 2.1x, respectively.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In addition, the Company will not be permitted to have capital
expenditures in excess of $12 million for each of the years ending December 31, 2007 through 2011. New liens securing future NMFFP loans (other than the Pending Loan) are limited to $10 million in the aggregate during the year ending
October 19, 2007 and $6 million during each 12-month period thereafter; provided that if during any such 12-month period the Company does not incur the full amount of such future loans, the Company may increase the amount of such future
loans it may incur during the following 12-month period by 50% of the shortfall. The Financing Facility will terminate on October 19, 2011.

As of December 31, 2006, the Company had approximately $3.3 million in letters of credit issued primarily in support of workers compensation insurance programs.

Annual Maturities

The annual maturities of long-term debt for the five years ending
December 31, 2011 and thereafter are as follows (in thousands):



|       |  |      |       |      |   |       |  |      |       |            |   |        |  |   |       
|------ |  | ---- | ----- | ---- | - | ----- |  | ---- | ----- | ---------- | - | ------ |  | - | ------
|2007   |  | 2008 |       | 2009 |   | 2010  |  | 2011 |       | Thereafter
|$2,467 |  | $    | 2,597 |      | $ | 2,198 |  | $    | 2,081 |            | $ | 49,724 |  | $ | 16,093

NOTE 7. EARNINGS PER SHARE INFORMATION

The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations (in thousands except share
and per share data) for the years ended December 31, 2006, 2005 and 2004.



|                                                |  |                               |       |                               |        |        |                               |                   |  |   |                     |   |        |        |  |                   |       |                     |  |        |       |  |        |  |   |     
|----------------------------------------------- |  | ----------------------------- | ----- | ----------------------------- | ------ | ------ | ----------------------------- | ----------------- |  | - | ------------------- | - | ------ | ------ |  | ----------------- | ----- | ------------------- |  | ------ | ----- |  | ------ |  | - | ----
|                                                |  | Years Ended December 31, 2006 |       | Years Ended December 31, 2005 |        |        | Years Ended December 31, 2004
|                                                |  | Income(Numerator)             |       | Shares(Denominator)           |        | Amount |                               | Income(Numerator) |  |   | Shares(Denominator) |   | Amount |        |  | Income(Numerator) |       | Shares(Denominator) |  | Amount
|Net income (loss)                               |  | $                             | 4,572 |                               |       |        |                               |                   |  | $ | (7,186              | ) |        |       |  |                   |       |                     |  | $      | 3,202 |  |       |  |   |     
|                                                |  |                               |       |                               |        |        |                               |                   |  |   |                     |   |        |        |  |                   |       |                     |  |        |       |  |        |  |   |     
|Basic EPS                                       |  |                               |       |                               |        |        |                               |                   |  |   |                     |   |        |        |  |                   |       |                     |  |        |       |  |        |  |   |     
|Income (loss) available to common stockholders |  |                               | 4,572 |                               | 24,322 |        | $                             | 0.19              |  |   | (7,186              | ) |        | 24,974 |  | $                 | (0.29 | )                   |  |        | 3,202 |  | 24,514 |  | $ | 0.13
|                                                |  |                               |       |                               |        |        |                               |                   |  |   |                     |   |        |        |  |                   |       |                     |  |        |       |  |        |  |   |     
|Effect of Dilutive stock option grants          |  |                               |      |                               | 878    |        |                               |                   |  |   |                    |   |        |       |  |                   |       |                     |  |        |      |  | 1,915  |  |   |     
|                                                |  |                               |       |                               |        |        |                               |                   |  |   |                     |   |        |        |  |                   |       |                     |  |        |       |  |        |  |   |     
|Diluted EPS                                     |  |                               |       |                               |        |        |                               |                   |  |   |                     |   |        |        |  |                   |       |                     |  |        |       |  |        |  |   |     
|Income (loss) available to common stockholders |  | $                             | 4,572 |                               | 25,200 |        | $                             | 0.18              |  | $ | (7,186              | ) |        | 24,974 |  | $                 | (0.29 | )                   |  | $      | 3,202 |  | 26,429 |  | $ | 0.12
|                                                |  |                               |       |                               |        |        |                               |                   |  |   |                     |   |        |        |  |                   |       |                     |  |        |       |  |        |  |   |     



58



---

OMEGA PROTEIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Options to purchase 2,510,000 shares of common stock at exercise prices ranging from $6.44 to $17.25
per share were outstanding during the year ended December 31, 2006, but were not included in the computation of diluted earnings per share because the exercise prices of the options were greater than the average market price of the shares
during that year.

Options to purchase 4,748,852 shares of common stock at exercise prices ranging from $1.65 to $17.25 per share were
outstanding during the year ended December 31, 2005, but were not included in the computation of diluted earnings per share because inclusion of these shares would have been antidilutive.

Options to purchase 2,057,800 shares of common stock at exercise prices ranging from $9.32 to $17.25 per share were outstanding during the year ended
December 31, 2004, but were not included in the computation of diluted earnings per share because the exercise prices of the options were greater than the average market price of the shares during that year.

NOTE 8. INCOME TAXES

The Companys provision
(benefit) for income taxes consisted of the following:



|                                     |  |                          |       |   |      |   |        |      |  |   |       |  
|------------------------------------ |  | ------------------------ | ----- | - | ---- | - | ------ | ---- |  | - | ----- | -
|                                     |  | Years Ended December 31, |      
|                                     |  | 2006                     |       |   | 2005 |   |        | 2004 | 
|                                     |  | (in thousands)           |      
|Current:                             |  |                          |       |   |      |   |        |      |  |   |       |  
|State                                |  | $                        |      |   |      | $ |       |      |  | $ |      |  
|U.S.                                 |  |                          |      |   |      |   |       |      |  |   |      |  
|Deferred:                            |  |                          |       |   |      |   |        |      |  |   |       |  
|State                                |  |                          | (140  | ) |      |   | (401   | )    |  |   | (20   | )
|U.S.                                 |  |                          | 1,342 |   |      |   | (3,867 | )    |  |   | 1,514 |  
|                                     |  |                          |       |   |      |   |        |      |  |   |       |  
|Provision (benefit) for income taxes |  | $                        | 1,202 |   |      | $ | (4,268 | )    |  | $ | 1,494 |  
|                                     |  |                          |       |   |      |   |        |      |  |   |       |  

As of December 31,2006, for federal income tax purposes, the Company had $24.6 million in net
operating losses expiring in 2007 through 2025, and approximately $1.2 million in alternative minimum tax credit carryforward.

The
following table reconciles the income tax provisions (benefits) computed using the U.S. statutory rate of 34% to the provisions reflected in the financial statements.



|                                     |  |                          |       |   |      |   |        |      |  |   |       |  
|------------------------------------ |  | ------------------------ | ----- | - | ---- | - | ------ | ---- |  | - | ----- | -
|                                     |  | Years Ended December 31, |      
|                                     |  | 2006                     |       |   | 2005 |   |        | 2004 | 
|                                     |  | (in thousands)           |      
|Taxes at statutory rate              |  | $                        | 1,969 |   |      | $ | (3,895 | )    |  | $ | 1,596 |  
|Foreign sales exempt income          |  |                          | (271  | ) |      |   | (148   | )    |  |   | (118  | )
|State taxes, net of federal benefit  |  |                          | (97   | ) |      |   | (265   | )    |  |   | (13   | )
|Employment tax credits               |  |                          | (379  | ) |      |   |       |      |  |   |      |  
|Other                                |  |                          | (20   | ) |      |   | 40     |      |  |   | 29    |  
|                                     |  |                          |       |   |      |   |        |      |  |   |       |  
|Provision (benefit) for income taxes |  | $                        | 1,202 |   |      | $ | (4,268 | )    |  | $ | 1,494 |  
|                                     |  |                          |       |   |      |   |        |      |  |   |       |  



59



---

OMEGA PROTEIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



A tax benefit of $546,000 and $347,000 for the exercise of stock options was not included in income
for financial reporting purposes and was credited directly to additional paid in capital as of December 31, 2006, and 2005, respectively.

The American Jobs Creation Act of 2004 (the Act) provides a deduction for income from qualified domestic production activities, which will be phased in from 2005 through 2010. In return, the Act also provides for a two-year
phase-out of the existing extra-territorial income exclusion (ETI) for foreign sales that was viewed to be inconsistent with international trade protocols by the European Union.

Under the guidance in FASB Staff Position No. FAS 109-1, Application of FASB Statement No. 109, Accounting for Income Taxes, to the Tax
Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004, the deduction will be treated as a special deduction as described in FASB Statement No. 109. As such, the special deduction has no
effect on deferred tax assets and liabilities existing at the enactment date. Rather, the impact of this deduction will be reported in the period in which the deduction is claimed on our tax return.

The Company has sufficient net operating loss carryforwards (NOLs) that will fully offset near term future taxable income. Because of the NOL
carryforward the Company will not be entitled to the special deduction because the deduction is based on taxable income after taking into account NOLs. Therefore, the Companys near term effective tax rate will not reflect any benefit for the
special deduction.

Temporary differences and tax credit carryforwards that gave rise to significant portions of deferred tax assets and
liabilities as of December 31, 2006 and 2005 are as follows:



|                                                |  |                |         |   |      |   |         |  
|----------------------------------------------- |  | -------------- | ------- | - | ---- | - | ------- | -
|                                                |  | 2006           |         |   | 2005 |  
|                                                |  | (in thousands) |        
|Deferred tax assets:                            |  |                |         |   |      |   |         |  
|Assets and accruals not yet deductible          |  | $              | 2,623   |   |      | $ | 1,087   |  
|                                                |  |               
|Alternative minimum tax credit carryforwards    |  |                | 1,205   |   |      |   | 1,205   |  
|Equity in loss of unconsolidated affiliates     |  |                | 122     |   |      |   | 122     |  
|Net operating loss carryforward                 |  |                | 8,352   |   |      |   | 10,382  |  
|Tax credit carryforward                         |  |                | 574     |   |      |   |        |  
|Pension liability                               |  |                | 3,552   |   |      |   | 3,909   |  
|State income tax                                |  |                | 1,298   |   |      |   | 1,157   |  
|Other                                           |  |                | 175     |   |      |   | 175     |  
|                                                |  |               
|Valuation allowance                             |  |                | (856    | ) |      |   | (1,011  | )
|                                                |  |                |         |   |      |   |         |  
|Total deferred tax assets                       |  |                | 17,045  |   |      |   | 17,026  |  
|                                                |  |                |         |   |      |   |         |  
|Deferred tax liabilities:                       |  |                |         |   |      |   |         |  
|                                                |  |               
|Property and equipment                          |  |                | (10,115 | ) |      |   | (9,595  | )
|Pension and other retirement benefits           |  |                | (747    | ) |      |   | (192    | )
|                                                |  |               
|Assets currently deductible                     |  |                | (1,678  | ) |      |   | (1,722  | )
|                                                |  |                |         |   |      |   |         |  
|Total deferred tax liabilities                  |  |                | (12,540 | ) |      |   | (11,509 | )
|                                                |  |                |         |   |      |   |         |  
|Net deferred tax asset                          |  | $              | 4,505   |   |      | $ | 5,517   |  
|                                                |  |                |         |   |      |   |         |  
|Deferred income tax assets non-current          |  | $              | 4,103   |   |      | $ | 6,293   |  
|Deferred income tax asset (liabilities) current |  |                | 402     |   |      |   | (776    | )
|                                                |  |                |         |   |      |   |         |  
|Net deferred tax asset                          |  | $              | 4,505   |   |      | $ | 5,517   |  
|                                                |  |                |         |   |      |   |         |  



60



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OMEGA PROTEIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The Companys ability to realize the entire benefit of its deferred tax asset requires that the
Company achieve certain future earning levels prior to the expiration of its NOL carryforwards. The Company could be required to record a valuation allowance for a portion or all of its deferred tax asset if market conditions deteriorate and future
earnings are below, or projected to be below, its current estimates.

NOTE 9. ACCRUED LIABILITIES

Accrued liabilities as of December 31, 2006 and 2005 are summarized as follows:



|                             |  |                |        |      |   |       
|---------------------------- |  | -------------- | ------ | ---- | - | ------
|                             |  | 2006           |        | 2005
|                             |  | (in thousands)
|Salaries and benefits        |  | $              | 4,023  |      | $ | 4,128 
|Insurance                    |  |                | 4,186  |      |   | 3,879 
|Taxes, other than income tax |  |                | 130    |      |   | 677   
|Trade creditors              |  |                | 4,664  |      |   | 3,243 
|Other                        |  |                | 757    |      |   | 275   
|                             |  |                |        |      |   |       
|Total accrued liabilities    |  | $              | 13,760 |      | $ | 12,202
|                             |  |                |        |      |   |       

NOTE 10. CERTAIN TRANSACTIONS AND ARRANGEMENTS BETWEEN THE COMPANY AND ZAPATA

In the past, the Company has provided to Zapata (the Companys former majority stockholder) payroll, pension and certain administrative services
billed at their approximate cost. In 2005, all of these services had been discontinued. During 2004, fees for these services totaled $11,600. The cost of such services was based on the estimated percentage of time that employees spend working on
Zapatas matters as a percent of total time worked.

Upon completion of the Companys initial public offering in 1998, the
Company and Zapata entered into certain agreements that included the Sublease, Registration Rights, Tax Indemnity and Administrative Services Agreements. The Sublease Agreement provided for the Company to lease its principal corporate offices in
Houston, Texas from Zapata and provided the Company with the ability to utilize telephone equipment worth approximately $21,000 for no additional charge. In May 2003, the Company directly assumed Zapatas obligations under the Sublease
Agreement with the third party landlord and terminated the Sublease Agreement with Zapata. The lease obligations assumed by the Company were identical to its sublease obligations to Zapata, and the transaction had no material effect on the Company.
The Registration Rights Agreement sets forth the rights and responsibilities of each party concerning certain registration filings and provides for the sharing of fees and expenses related to such filings. The Tax Indemnity Agreement requires the
Company to be responsible for federal, state and local income taxes from its operations. The Administrative Services Agreement allows the Company to provide certain administrative services to Zapata at the Companys estimated cost. In
connection with its repurchase of 9,268,292 shares of common stock from Zapata in November 2006, any remaining obligations under the above agreements were terminated.

On November 28, 2006, the Company repurchased and retired 9,268,292 shares of the Companys common stock at a purchase price of $5.125 per share from Zapata. The result of this transaction reduced
Zapatas ownership in the Company from approximately 58% to approximately 33%. In December 2006, Zapata subsequently reduced its equity ownership in the Company to 0% through sales of its remaining shares to third parties.



61



---

OMEGA PROTEIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The following represents intercompany activity for the periods presented (in thousands):



|                                                          |  |                          |      |   |  |   |      |  |   |      |  
|--------------------------------------------------------- |  | ------------------------ | ---- | - |  | - | ---- |  | - | ---- | -
|                                                          |  | Years Ended December 31, |     
|                                                          |  |                          | 2006 |   |  |   | 2005 |  |   | 2004 |  
|Beginning balance due from Zapata                         |  | $                        | 105  |   |  | $ | 105  |  | $ | 108  |  
|Administrative services provided by the Company to Zapata |  |                          |     |   |  |   |     |  |   | 12   |  
|Payments to the Company by Zapata                         |  | $                        | (105 | ) |  |   |     |  |   | (15  | )
|                                                          |  |                          |      |   |  |   |      |  |   |      |  
|Ending balance due from Zapata                            |  | $                        |     |   |  | $ | 105  |  | $ | 105  |  
|                                                          |  |                          |      |   |  |   |      |  |   |      |  

NOTE 11. BENEFIT PLANS

Defined Contribution Plan

All qualified employees of the Company are covered under the Omega
Protein 401(k) Savings and Retirement Plan (the Plan). Prior to 2001, the Company provided matching contributions to the Plan based on employee contributions and compensation. The Company suspended its matching contributions to the Plan
for 2001. In 2002, the Board of Directors authorized the reinstatement of the Companys matching cash contribution to the Plan, effective January 1, 2002, at levels previously in place prior to the suspension of the match in 2001. The
Companys matching contributions to the Plan were approximately $772,000, $715,000 and $660,000 during 2006, 2005 and 2004, respectively.

Pension Plan

The Company has a pension plan covering substantially all employees. Plan benefits are generally based
on an employees years of service and compensation level. The plan has adopted an excess benefit formula integrated with covered compensation. Participants are 100% vested in the accrued benefit after five years of service.

In 2002, the Board of Directors authorized a plan to freeze the Companys pension plan in accordance with ERISA rules and regulations so that new
employees, after July 31, 2002, will not be eligible to participate in the pension plan and further benefits will no longer accrue for existing participants. The freezing of the pension plan had the affect of vesting all existing participants
in their pension benefits in the plan.

On September 29, 2006, SFAS No. 158, Employers Accounting for Defined Benefit
Pension and Other Postretirement Plans was issued. SFAS 158 requires, among other things, the recognition of the funded status of the defined benefit pension plan. Each overfunded plan is recognized as an asset and each underfunded plan is
recognized as a liability. The initial impact of the standard due to unrecognized prior service costs or credits and net actuarial gains or losses as well as subsequent changes in the funded status is recognized as a component of accumulated
comprehensive loss in shareholders equity. Additional minimum pension liabilities (AML) and related intangible assets are also derecognized upon adoption of the new standard. SFAS 158 requires initial application for fiscal years ending
after December 15, 2006. The Companys adoption of SFAS 158, as of December 31, 2006, is described in the following table:



|                                     |  |                                                       |       |               |   |        |                    |  |                                                   |   |  |   |        |    
|------------------------------------ |  | ----------------------------------------------------- | ----- | ------------- | - | ------ | ------------------ |  | ------------------------------------------------- | - |  | - | ------ | ---
|($000s)                              |  | December 31,2006 Prior to AML andSFAS 158 Adjustments |       | AMLAdjustment |   |        | SFAS 158Adjustment |  | December 31, 2006Post AML and SFAS158 Adjustments |  
|Prepaid pension costs                |  | $                                                     | 2,197 |               | $ | (2,197 | )                  |  | $                                                 | 0 |  | $ | 0      |    
|Pension liabilities                  |  | $                                                     | 0     |               | $ | (8,252 | )                  |  | $                                                 | 0 |  | $ | (8,252 | )  
|Accumulated other comprehensive loss |  | $                                                     | 0     |               | $ | 10,448 |                    |  | $                                                 | 0 |  | $ | 10,448 | (1)



62



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OMEGA PROTEIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



---

|(1) | The above amount represents unrecognized actuarial losses yet to be recognized in the statement of financial position.
|--- | ----------------------------------------------------------------------------------------------------------------------

Amounts listed as minimum pension liability adjustments under the caption Comprehensive (Loss) Income on the Consolidated Statements of
Stockholders Equity of $0.7 million, ($0.8) million and ($0.9) million for 2006, 2005 and 2004, respectively, represent the change, net of tax, in the portion of the additional pension liability recorded under Accumulated Other
Comprehensive Loss on the Consolidated Balance Sheet. During 2007, The Company expects total net periodic benefit cost to be approximately $701,000. The amounts in accumulated other comprehensive loss that are expected to be recognized as a
component of net periodic benefit cost during the 2007 year are as follows (in thousands):



|                          |  |   |    
|------------------------- |  | - | ---
|Net Actuarial Loss (Gain) |  | $ | 814
|Prior Service Cost        |  | $ | 0  

The Companys funding policy is to make contributions as required by applicable regulations.
The Company uses a December 31 measurement date for its pension plan. The accumulated benefit obligation for the pension plan was $26.7 million and $27.0 million at December 31, 2006 and 2005, respectively.



63



---

OMEGA PROTEIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The following tables set forth the benefit obligations, fair value of plan assets, and the funded
status of the Companys pension plan; amounts recognized in the Companys financial statements, and the principal weighted average assumptions used:



|                                                                      |  |                         |        |   |      |   |         |  
|--------------------------------------------------------------------- |  | ----------------------- | ------ | - | ---- | - | ------- | -
|                                                                      |  | Years EndedDecember 31, |       
|                                                                      |  | 2006                    |        |   | 2005 |  
|                                                                      |  | (in thousands)          |       
|Accumulated Benefit Obligations                                       |  | $                       | 26,735 |   |      | $ | 27,000  |  
|                                                                      |  |                        
|Change in Benefit Obligation                                          |  |                         |        |   |      |   |         |  
|Benefit Obligation at beginning of year                               |  | $                       | 27,000 |   |      | $ | 26,071  |  
|Service Cost                                                          |  |                         |       |   |      |   |        |  
|Interest Cost                                                         |  |                         | 1,434  |   |      |   | 1,454   |  
|Plan Amendments                                                       |  |                         |       |   |      |   |        |  
|Actuarial (Gain) / Loss                                               |  |                         | 119    |   |      |   | 1,158   |  
|Benefits Paid                                                         |  |                         | (1,818 | ) |      |   | (1,683  | )
|                                                                      |  |                         |        |   |      |   |         |  
|Benefit Obligation at end of year                                     |  | $                       | 26,735 |   |      | $ | 27,000  |  
|                                                                      |  |                         |        |   |      |   |         |  
|Change in Plan Assets                                                 |  |                         |        |   |      |   |         |  
|Plan Assets at Fair Value at beginning of year                        |  | $                       | 16,068 |   |      | $ | 17,226  |  
|Actual Return on Plan Assets                                          |  |                         | 1,633  |   |      |   | 525     |  
|Contributions                                                         |  |                         | 2,600  |   |      |   |        |  
|Benefits Paid                                                         |  |                         | (1,818 | ) |      |   | (1,683  | )
|                                                                      |  |                         |        |   |      |   |         |  
|Plan Assets at Fair Value at end of year                              |  | $                       | 18,483 |   |      | $ | 16,068  |  
|                                                                      |  |                         |        |   |      |   |         |  
|Reconciliation of Prepaid (Accrued) and Total Amount Recognized       |  |                         |        |   |      |   |         |  
|Funded Status of Plan                                                 |  |                         | N/A    |   |      | $ | (10,932 | )
|Unrecognized Net (Gain) / Loss                                        |  |                         | N/A    |   |      |   | 11,498  |  
|Unrecognized Prior Service Cost                                       |  |                         | N/A    |   |      |   |        |  
|Unrecognized Prior Service Cost Net Transition (Asset)                |  |                         | N/A    |   |      |   |        |  
|                                                                      |  |                         |        |   |      |   |         |  
|Prepaid / (Accrued) Pension Cost                                      |  |                         | N/A    |   |      | $ | 566     |  
|                                                                      |  |                         |        |   |      |   |         |  
|Amounts Recognized in the Statement of Financial Position Consist of: |  |                         |        |   |      |   |         |  
|Prepaid Benefit Cost                                                  |  | $                       |       |   |      | $ |        |  
|Non-current Pension Liability                                         |  |                         | (8,252 | ) |      |   | (10,932 | )
|Intangible Asset                                                      |  |                         |       |   |      |   |        |  
|Accumulated Other Comprehensive Loss                                  |  |                         | 10,448 |   |      |   | 11,498  |  
|                                                                      |  |                         |        |   |      |   |         |  
|Net Amount Recognized                                                 |  | $                       | 2,196  |   |      | $ | 566     |  
|                                                                      |  |                         |        |   |      |   |         |  

The Company, in consultations with its actuarial firm, employs a building block approach in
determining the assumed long-term rate of return for plan assets. The Company reviews historical market data and long-term historical relationships between equities and fixed income in accordance with the widely-accepted capital market principle
that assets with higher volatility generally generate greater returns over the long run. The Company also evaluates current market factors such as inflation and interest rates before it determines long-term capital market assumptions. After taking
into account diversification of asset classes and the need to periodically re-balance asset classes, the Company establishes the assumed long-term portfolio rate of return by a building block approach. The Company also reviews peer data and
historical returns to check its long-term rate of return for reasonability and appropriateness.



64



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OMEGA PROTEIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



A change in the assumed discount rate creates a deferred actuarial gain or loss. Generally, when the
assumed discount rate decreases compared to the prior measurement date, a deferred actuarial loss is created. When the assumed discount rate increases compared to the prior measurement date, a deferred actuarial gain is created. Actuarial gains and
losses also are created when actual results differ from assumptions. The net of the deferred gains and losses are amortized to pension expense over the average service life of the remaining plan participants, when it exceeds certain thresholds
defined in SFAS No. 87. This approach to amortization of gains and losses has the effect of reducing the volatility of pension expense attributable to investment returns and liability experience. Over time, it is not expected to reduce or
increase the pension expense relative to an approach that immediately recognizes losses and gains.

As a result of the annual review of
assumptions, the Companys expected return on plan assets remained consistent at 8.5% and the discount rate increased from 5.50% to 5.80%. The Company uses the Citigroup Pension Liability Index as a proxy for determining the discount rate
applied to its pension plans, with a slight downward adjustment of 0.05%. The use of the Citigroup Pension Liability Index as a proxy is considered to be appropriate because of the comparability of the Companys pension plans expected
future cash flows to the expected future cash flows of the Citigroup Pension Liability Index.



|                                                                         |  |                          |   |  |                          |   |  |      |  
|------------------------------------------------------------------------ |  | ------------------------ | - |  | ------------------------ | - |  | ---- | -
|                                                                         |  |                          |   |  | Years Ended December 31, |  
|                                                                         |  |                          |   |  | 2006                     |   |  | 2005 |  
|Assumptions                                                              |  |                          |   |  |                          |   |  |      |  
|                                                                         |  |                          |  
|Weighted average assumptions used to determine benefit obligations       |  |                          |   |  |                          |   |  |      |  
|Discount Rate                                                            |  |                          |   |  | 5.80                     | % |  | 5.50 | %
|Long-Term Rate of Return                                                 |  |                          |   |  | 8.50                     | % |  | 8.50 | %
|Salary Scale up to age 50                                                |  |                          |   |  | N/A                      |   |  | N/A  |  
|Salary Scale over age 50                                                 |  |                          |   |  | N/A                      |   |  | N/A  |  
|                                                                         | 
|                                                                         |  | Years Ended December 31, |  
|                                                                         |  | 2006                     |   |  | 2005                     |   |  | 2004 |  
|Weighted average assumptions used to determine net periodic benefit cost |  |                          |   |  |                          |   |  |      |  
|Discount Rate                                                            |  | 5.50                     | % |  | 5.75                     | % |  | 6.25 | %
|Long-Term Rate of Return                                                 |  | 8.50                     | % |  | 8.50                     | % |  | 8.50 | %
|Salary Scale up to age 50                                                |  | N/A                      |   |  | N/A                      |   |  | N/A  |  
|Salary Scale over age 50                                                 |  | N/A                      |   |  | N/A                      |   |  | N/A  |  

Components of net periodic benefit cost:



|                                                     |  |                          |        |   |      |   |        |      |  |   |        |  
|---------------------------------------------------- |  | ------------------------ | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                                     |  | Years Ended December 31, |       
|                                                     |  | 2006                     |        |   | 2005 |   |        | 2004 | 
|                                                     |  | (in thousands)           |       
|Service cost                                         |  | $                        |       |   |      | $ |       |      |  | $ |       |  
|Interest cost                                        |  |                          | 1,434  |   |      |   | 1,454  |      |  |   | 1,467  |  
|Expected return on plan assets                       |  |                          | (1,371 | ) |      |   | (1,398 | )    |  |   | (1,415 | )
|Amortization of transition asset and other deferrals |  |                          | 906    |   |      |   | 761    |      |  |   | 644    |  
|                                                     |  |                          |        |   |      |   |        |      |  |   |        |  
|Net periodic pension cost                            |  | $                        | 969    |   |      | $ | 817    |      |  | $ | 696    |  
|                                                     |  |                          |        |   |      |   |        |      |  |   |        |  



65



---

OMEGA PROTEIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Plan Assets

The Companys pension plan weighted-average asset allocations at December 31, 2006 and 2005, by asset category are as follows:



|                |  |                             |   |  |        |   |  |        |   |  |        |  
|--------------- |  | --------------------------- | - |  | ------ | - |  | ------ | - |  | ------ | -
|                |  | Plan Assets at December 31, |  
|Asset Category  |  | 2006                        |   |  | 2005   |  
|                |  | Actual                      |   |  | Target |   |  | Actual |   |  | Target |  
|Equity          |  | 57.9                        | % |  | 60.0   | % |  | 61.0   | % |  | 61.0   | %
|Debt securities |  | 34.4                        |   |  | 40.0   |   |  | 38.0   |   |  | 39.0   |  
|Real estate     |  | 6.9                         |   |  |       |   |  |       |   |  |       |  
|Other           |  | 0.8                         |   |  |       |   |  | 1.0    |   |  |       |  
|                |  |                             |   |  |        |   |  |        |   |  |        |  
|Total           |  | 100.0                       | % |  | 100.0  | % |  | 100.0  | % |  | 100.0  | %
|                |  |                             |   |  |        |   |  |        |   |  |        |  

Plan assets are well diversified and managed by independent investment advisors, who are in turn
overseen and monitored by an investment advisor engaged by the Investment Committee. The Plans investment objective is long-term capital appreciation with a prudent level of risk. The Plans Investment Committee periodically completes
asset performance studies with the goal of maintaining an optimal asset allocation in order to meet future Plan benefit obligations. The investment objectives of the Plan assets have a long-term focus and the Plan is invested in accordance with
prudent investment practices that emphasize long-term investment fundamentals.

Equity securities do not include any of the Companys
common stock at December 31, 2006 and 2005, respectively.

Projected Benefit Payments for the years ending December 31, 2007
 2016



|     |        |      |   |       |  |      |       |      |   |             |  |   |       |  |   |      
|---- | ------ | ---- | - | ----- |  | ---- | ----- | ---- | - | ----------- |  | - | ----- |  | - | -----
|2007 |        | 2008 |   | 2009  |  | 2010 |       | 2011 |   | 2012  2016
|     | $1,658 |      | $ | 1,770 |  | $    | 1,823 |      | $ | 1,849       |  | $ | 1,868 |  | $ | 9,376

Expected Contributions during 2007

The Company expects to make contributions of $2.2 million to the pension plan in 2007.

Stock Option Plans

On January 26, 1998, the 1998 Long-Term Incentive Plan of the Company
(the 1998 Incentive Plan) was approved by the Companys Board. The 1998 Incentive Plan provides for the grant of any or all of the following types of awards: stock options, stock appreciation rights, stock awards and cash awards.
These options generally vest ratably over three years from the date of grant and expire ten years from the date of grant.

On
January 26, 1998, the Non-Management Director Stock Option Plan (the Directors Plan) was approved by the Board. The Directors Plan provides that the initial Chairman of the Board be granted options to purchase 568,200 shares of the
Common Stock and each other initial non-employee director of the Company will be granted options to purchase 14,200 shares of Common Stock at a price determined by the Board.

On June 27, 2000, the 1998 Incentive Plan and the Director Plan were amended and restated in their entirety and renamed the 2000 Long-Term Incentive
Plan (2000 Incentive Plan), and the 2000 Incentive Plan was approved by the Companys stockholders. Under the 2000 Incentive Plan, the Company is authorized to issue



66



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OMEGA PROTEIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



shares of Common Stock pursuant to Awards granted in various forms, including incentive stock options (intended to qualify under Section 422
of the Internal Revenue Code of 1986, as amended), non-qualified stock options, and other similar stock-based Awards. The substantive changes from the 1998 Incentive Plan and the Directors Plan in the amendment and restatement of the 2000 Incentive
Plan were (a) the 2000 Incentive Plan allows annual option grant awards of 10,000 shares to each non-employee Director and (b) the 2000 Incentive Plan allows for the aggregate number of option shares available for issuance under the plan
to equal 25% of the number of shares of common stock outstanding at any time with an absolute maximum of no more than 15 million shares available for awards at any time. Reference is made to the Companys 2000 proxy statement for a
complete summary of all the differences among the three plans.

On April 13, 2006 the Board of Directors approved the establishment of
the Omega Protein Corporation 2006 Incentive Plan (2006 Incentive Plan) which was subsequently approved by the Companys stockholders and became effective on June 7, 2006. Reference is made to the Companys 2006 proxy
statement for a complete summary of material differences among the plans.

The Company granted stock options in 2004, 2005 and 2006 under
the 2000 Incentive Plan and 2006 Incentive Plan in the form of non-qualified stock options. See Stock-Based Compensation regarding the method the Company utilizes to record compensation expense for employee stock options. The Company
establishes the exercise price based on the fair market value of the Companys stock (as defined in the relevant plan) at the date of grant. Each quarter, the Company reports the potential dilutive impact of stock option in its diluted earnings
per common share using the treasury-stock method. Out-of-the-money stock options (i.e., the average stock price during the period is below the strike price of the stock option) are not included in diluted earnings per common share.

Stock-Based Compensation

Prior to
January 1, 2006, the Company accounted for its stock option plans under the recognition and measurement principles of Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees and
adopted the disclosure-only provisions of SFAS No. 123, Accounting for Stock-Based Compensation and SFAS No. 148, Accounting for Stock-Based CompensationTransition and Disclosurean Amendment of FASB Statement
No. 123. No stock-based employee compensation cost related to stock options was reflected in net earnings, as all options granted under those plans had an exercise price equal to or greater than the market value of the underlying common
stock on the grant date. Accordingly, share-based compensation related to stock options was only included as a pro forma disclosure in the financial statement footnotes.

Effective January 1, 2006, the Company adopted SFAS No. 123R, Share-Based Payment, using the modified prospective application transition method. Under this transition method, compensation cost in
2006 includes the portion vesting in the period for (1) all share-based payments granted prior to, but not vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of
SFAS No. 123 and (2) all share-based payments granted subsequent to January 1, 2006, based on the grant date fair value estimated in accordance with the provisions of SFAS No. 123R. Under the modified prospective application
transition method, no cumulative effect of change in accounting principle charge is required for the Company, and results for prior periods have not been restated. See below for the pro forma disclosures related to the years ended December 31,
2005 and 2004. SFAS No. 123R also requires excess tax benefits be reported as a financing cash inflow rather than an operating cash inflow.

Net earnings for the year ended December 31, 2006 includes approximately $166,000 ($109,000 after tax), of share-based compensation costs and is included in selling, general and administrative expenses in the



67



---

OMEGA PROTEIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



statement of operations and comprehensive income for the year ended December 31, 2006. As of December 31, 2006, there was approximately $501,000 of
total unrecognized compensation cost related to nonvested share-based compensation that is expected to be recognized over a weighted-average period of 3 years. Based on current grants, total share-based compensation cost for fiscal year 2007 is
expected to be approximately $203,000.

On February 27, 2006, the Company granted options to an employee under its 2000 Long-Term
Incentive Plan for the purchase of 10,000 shares of common stock at an exercise price of $6.27 per share, which vest in equal one-third portions in 2007, 2008 and 2009. On May 18, 2006, the Company granted options to an employee under its 2000
Long-Term Incentive Plan for the purchase of 7,500 shares of common stock at an exercise price of $5.93 per share, which vest in equal one-third portions in 2007, 2008, and 2009.

The following table shows options granted and outstanding to the Companys independent directors and employees as of December 31, 2006:



|                     |  |                             |      |                                                       |         |                 |                  
|-------------------- |  | --------------------------- | ---- | ----------------------------------------------------- | ------- | --------------- | -----------------
|Date of Option Grant |  | Exercise Priceon Grant Date |      | Options Granted andOutstandingas of December 31, 2006 |         | Date of Vesting
|June 7, 2006         |  | $                           | 5.76 |                                                       | 40,000  |                 | December 8, 2006 
|July 26, 2006        |  | $                           | 5.11 |                                                       | 15,000  |                 | July 26, 2009    
|November 30, 2006    |  | $                           | 7.25 |                                                       | 14,200  |                 | June 2, 2007     
|December 28, 2006    |  | $                           | 7.54 |                                                       | 125,000 |                 | December 28, 2009

There were 435,100 stock option exercises during the year ended December 31, 2006. A summary
of option activity under the plans for years 2006, 2005 and 2004 is as follows (options in thousands):



|                                               |  |                                  |   |      |                               |      |                                  |       |   |                               |   |                                  |  |       |                               |  |   |      
|---------------------------------------------- |  | -------------------------------- | - | ---- | ----------------------------- | ---- | -------------------------------- | ----- | - | ----------------------------- | - | -------------------------------- |  | ----- | ----------------------------- |  | - | -----
|                                               |  | 2006                             |   | 2005 |                               | 2004
|                                               |  | Number ofSharesUnderlyingOptions |   |      | WeightedAverageExercisePrices |      | Number ofSharesUnderlyingOptions |       |   | WeightedAverageExercisePrices |   | Number ofSharesUnderlyingOptions |  |       | WeightedAverageExercisePrices
|Outstanding at beginning of year               |  | 4,750                            |   |      | $                             | 7.35 |                                  | 4,960 |   |                               | $ | 7.13                             |  | 5,134 |                               |  | $ | 6.62 
|Granted                                        |  | 212                              |   |      | $                             | 6.90 |                                  | 98    |   |                               | $ | 6.86                             |  | 431   |                               |  | $ | 9.92 
|Exercised                                      |  | (436                             | ) |      | $                             | 2.88 |                                  | (188  | ) |                               | $ | 2.20                             |  | (454  | )                             |  | $ | 2.56 
|Forfeited                                      |  | (24                              | ) |      | $                             | 5.67 |                                  | (120  | ) |                               | $ | 5.95                             |  | (151  | )                             |  | $ | 11.66
|                                               |  |                                  |   |      |                               |      |                                  |       |   |                               |   |                                  |  |       |                               |  |   |      
|Outstanding at end of year                     |  | 4,502                            |   |      | $                             | 7.78 |                                  | 4,750 |   |                               | $ | 7.36                             |  | 4,960 |                               |  | $ | 7.14 
|                                               |  |                                  |   |      |                               |      |                                  |       |   |                               |   |                                  |  |       |                               |  |   |      
|Exercisable at end of year                     |  | 4,337                            |   |      | $                             | 7.80 |                                  | 4,731 |   |                               | $ | 7.37                             |  | 4,463 |                               |  | $ | 6.97 
|                                               |  |                                  |   |      |                               |      |                                  |       |   |                               |   |                                  |  |       |                               |  |   |      
|Weighted-average fair value of options granted |  |                                  |   |      | $                             | 3.11 |                                  |       |   |                               |   |                                  |  |       |                               |  |   |      



|                                            |  |                                            |      
|------------------------------------------- |  | ------------------------------------------ | -----
|                                            |  | December 31, 2006Aggregate Intrinsic Value
|                                            |  | (in thousands)                            
|Options outstanding as of December 31, 2006 |  | $                                          | 9,494
|Options exercisable as of December 31, 2006 |  | $                                          | 9,426
|Options exercised during 2006               |  | $                                          | 1,606



68



---

OMEGA PROTEIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The following table further describes the Companys stock options outstanding as of
December 31, 2006.



|                         |  |                                |  |                                          |  |                                |       |                                |           |                                |   |      
|------------------------ |  | ------------------------------ |  | ---------------------------------------- |  | ------------------------------ | ----- | ------------------------------ | --------- | ------------------------------ | - | -----
|                         |  | Options Outstanding            |  | Options Exercisable                     
|Range of Exercise Prices |  | NumberOutstandingat 12/31/2006 |  | WeightedAverageRemainingContractual Life |  | WeightedAverageExercise Prices |       | NumberExercisableat 12/31/2006 |           | WeightedAverageExercise Prices
|$1.65 to $3.50           |  | 1,553,584                      |  | 3.5 years                                |  | $                              | 2.19  |                                | 1,553,584 |                                | $ | 2.19 
|$3.95 to $4.70           |  | 166,834                        |  | 5.8 years                                |  | $                              | 4.27  |                                | 166,834   |                                | $ | 4.27 
|$5.03 to $7.55           |  | 299,700                        |  | 9.1 years                                |  | $                              | 6.71  |                                | 134,333   |                                | $ | 5.96 
|$7.76 to $10.58          |  | 794,200                        |  | 5.0 years                                |  | $                              | 9.16  |                                | 794,200   |                                | $ | 9.16 
|$12.38 to $12.75         |  | 1,649,400                      |  | 1.1 years                                |  | $                              | 12.73 |                                | 1,649,400 |                                | $ | 12.73
|$16.06 to $17.25         |  | 38,400                         |  | 1.3 years                                |  | $                              | 16.37 |                                | 38,400    |                                | $ | 16.37
|                         |  |                                |  |                                          |  |                                |       |                                |           |                                |   |      
|                         |  | 4,502,118                      |  |                                          |  |                                |       |                                | 4,336,751 |                                |   |      
|                         |  |                                |  |                                          |  |                                |       |                                |           |                                |   |      



|                                          |  |                             |   |  |                                       |     
|----------------------------------------- |  | --------------------------- | - |  | ------------------------------------- | ----
|                                          |  | Year EndedDecember 31, 2006 |   |  | Weighted AverageGrant-Date Fair Value
|Nonvested options as of January 1, 2006   |  | 18,000                      |   |  | $                                     | 4.66
|Granted                                   |  | 211,700                     |   |  | $                                     | 3.11
|Vested                                    |  | (40,999                     | ) |  | $                                     | 2.68
|Forfeited                                 |  | (23,334                     | ) |  | $                                     | 2.87
|                                          |  |                             |   |  |                                       |     
|Nonvested options as of December 31, 2006 |  | 165,367                     |   |  | $                                     | 3.28
|                                          |  |                             |   |  |                                       |     

The fair value of the Companys stock options is the estimated present value at grant date
using the Black-Scholes option pricing model with the following weighted average assumptions for the year ended December 31, 2006: expected dividend yield of 0%; expected volatility of 44.83%; risk-free interest rate of 4.76%; and an expected
term of 5 years. The expected dividend yield is based on the Companys annual dividend payout at grant date. Expected volatility is based on the historical volatility of the Companys stock for a period approximating the expected
life. The risk-free interest rate is based on the U.S. treasury yield in effect at the time of grant and has a term equal to the expected life. The expected term of the options represents the period of time the options are expected to be
outstanding.

On May 5, 2005, the Company accelerated the vesting of all unvested, out-of-the-money, explicit service period stock
options granted under the Companys 2000 Long-Term Incentive Plan. The purpose of accelerating vesting was to eliminate future compensation expense that the Company would otherwise recognize in its Statement of Operations with respect to these
accelerated stock options upon the adoption by the Company of SFAS No. 123R. A stock option was considered out-of-the-money if the stock option exercise price was greater than $6.04, which was the closing price of the Companys
common stock on the New York Stock Exchange on May 5, 2005. As a result of this action, stock options to purchase 390,000 shares of the Companys common stock became immediately exercisable. The vesting created a modification of stock
options; however, there was no impact on the fair value of the options. The weighted average exercise price of all the accelerated stock options was $9.98.



69



---

OMEGA PROTEIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



For purposes of pro forma disclosures, the estimated fair value of stock options is assumed to be
amortized to expense over the stock options vesting periods. The pro forma effects of recognizing compensation expense under the fair value method on net income and net earnings per common share for the years ended December 31, 2005 and
2004, were as follows (in thousands, except per share amounts):



|                                                                                                                                          |  |      |        |   |      |   |       |  
|----------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------ | - | ---- | - | ----- | -
|                                                                                                                                          |  | 2005 |        |   | 2004 |  
|Net income (loss), as reported                                                                                                            |  | $    | (7,186 | ) |      | $ | 3,202 |  
|Add: Stock-based employee compensation expense included in reported net income, net of related tax benefits                               |  |      |       |   |      |   |      |  
|Deduct: Stock-based employee compensation expense determined under the fair value based method for all awards, net of related tax
effects |  |      | (1,261 | ) |      |   | (578  | )
|                                                                                                                                          |  |      |        |   |      |   |       |  
|Pro forma net earnings (loss)                                                                                                             |  | $    | (8,477 | ) |      | $ | 2,624 |  
|                                                                                                                                          |  |      |        |   |      |   |       |  
|Net earnings (loss) per common share:                                                                                                     |  |      |        |   |      |   |       |  
|Basicas reported                                                                                                                         |  | $    | (0.29  | ) |      | $ | 0.13  |  
|                                                                                                                                          |  |      |        |   |      |   |       |  
|Basicpro forma                                                                                                                           |  | $    | (0.34  | ) |      | $ | 0.11  |  
|                                                                                                                                          |  |      |        |   |      |   |       |  
|Dilutedas reported                                                                                                                       |  | $    | (0.29  | ) |      | $ | 0.12  |  
|                                                                                                                                          |  |      |        |   |      |   |       |  
|Dilutedpro forma                                                                                                                         |  | $    | (0.34  | ) |      | $ | 0.10  |  
|                                                                                                                                          |  |      |        |   |      |   |       |  

NOTE 12. HURRICANE LOSSES

On August 29, 2005, the Companys Moss Point, Mississippi fish processing facility and adjacent shipyard were severely damaged by Hurricane Katrina. On September 24, 2005, the Companys Cameron,
Louisiana and the Abbeville, Louisiana fish processing facilities were also severely damaged by Hurricane Rita. For the years ended December 31, 2006 and 2005, the following amounts have been recognized in the Companys statement of
operations:



|                                                    |  |                |       |      |   |         |  
|--------------------------------------------------- |  | -------------- | ----- | ---- | - | ------- | -
|                                                    |  | 2006           |       | 2005 |  
|                                                    |  | (in thousands) |      
|Damaged fish meal inventory                         |  | $              |      |      | $ | 2,496   |  
|Write-off of other materials and supplies           |  |                |      |      |   | 1,648   |  
|Write-off of unallocated inventory cost pool        |  |                |      |      |   | 12,978  |  
|Involuntary conversion of property and equipment    |  |                | 1,094 |      |   | 8,324   |  
|Idle plant costs incurred                           |  |                |      |      |   | 1,038   |  
|Clean-up costs incurred                             |  |                | 454   |      |   | 1,259   |  
|Estimated insurance recoveries                      |  |                |      |      |   | (12,000 | )
|                                                    |  |                |       |      |   |         |  
|Estimated damages in excess of insurance recoveries |  | $              | 1,548 |      | $ | 15,743  |  
|                                                    |  |                |       |      |   |         |  

Not included in the amounts listed in the above table are the replacement capital costs of
property and equipment, which did not have any book basis and were destroyed in the hurricanes.

NOTE 13. COMMITMENTS AND CONTINGENCIES

Operating Lease Payable

The Company has
noncancellable operating leases, primarily for land and building, that expire over 1 to 11 years.



70



---

OMEGA PROTEIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Future minimum payments under non-cancelable operating lease obligations for the five years ending
December 31, 2010 and thereafter are as follows (in thousands):



|       |  |        |  |        |  |      |  |      |  |           
|------ |  | ------ |  | ------ |  | ---- |  | ---- |  | ----------
|2007   |  | 2008   |  | 2009   |  | 2010 |  | 2011 |  | Thereafter
|$1,904 |  | $1,619 |  | $1,177 |  | $775 |  | $779 |  | $2,725    

Rental expense for operating leases was $1.9 million, $0.5 million, and $0.4 million in 2006,
2005, and 2004, respectively.

Litigation

The Company is defending various claims and litigation arising from its operations which arise in the ordinary course of the Companys business. In the opinion of management, and based on advice of legal counsel,
it is believed that any existing litigation involving the Company will not materially affect its financial condition, cash flows or future results of operations.

Insurance

The Company carries insurance with coverages and coverage limits that it believes to be appropriate for
the business. Although there can be no assurance that such insurance is sufficient to protect the Company against all contingencies, management believes that its insurance protection is reasonable in view of the nature and scope of the
Companys operations. Should the Companys insurers become insolvent, the Company is responsible for payment of all outstanding claims associated with the insurers policies.

Environmental Matters

The Company is subject
to various possible claims and lawsuits regarding environmental matters. Management believes that costs, if any, related to these matters will not have a material adverse effect on the results of operations, cash flows or financial position of the
Company.

Indemnification

The
Companys Articles of Incorporation and By-Laws limit the liability of the Companys officers and directors to the fullest extent permitted by Nevada law. Nevada provides that directors of Nevada coporations may be relieved of monetary
liabilities for breach of their fiduciary duties as directors, except under certain circumstances, including (i) acts or omissions which involve intentional misconduct, fraud or a knowing violation of law or (ii) the willful or grossly
negligent payment of unlawful distributions.

The Companys Articles of Incorporation and By-Laws generally require the Company to
indemnify its directors and officers to the fullest extent permitted by Nevada law. The Companys Articles of Incorporation and By-Laws also require the Company to advance expenses to its directors and its officers to the fullest extent
permitted by Nevada law upon reciept of an undertaking by or on behalf of such director or officer to repay such amount if it should be ultimately determined that they are not entitled to indemnification by the Company. The Company also has entered
into indemnification agreements with all of its directors and certain of its officers which provides for the indemnification and advancement of expenses by the Company. The Company also maintains director and officer liability insurance with respect
to liabilities arising out of certain matters, including matters arising under the securities laws. This insurance is subject to limitations, conditions and deductibles set forth in the respective insurance policy.



71



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OMEGA PROTEIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Purchase Obligation

As of December 31, 2006, the Company had a contract to purchase fish oil totaling approximately $1,871,000.

NOTE
14. INDUSTRY SEGMENT AND GEOGRAPHIC INFORMATION

The Company operates within one industry segment, menhaden fishing, for the production
and sale of fish meal, fish solubles and fish oil. Export sales of fish oil and fish meal were approximately $56 million, $33 million, and $39 million in 2006, 2005, and 2004, respectively. Such sales were made primarily to Mexican, Asian and
Canadian markets. In 2006, 2005, and 2004, sales to one customer were approximately $13.0 million, $8.5 million, and $8.8 million, respectively. This customer differed from year to year.

The following table shows the geographical distribution of revenues (in thousands) based on location of customers:



|                        |  |                          |         |         |       |   |          |      |         |  |       |          |  |         |         |  |       |  
|----------------------- |  | ------------------------ | ------- | ------- | ----- | - | -------- | ---- | ------- |  | ----- | -------- |  | ------- | ------- |  | ----- | -
|                        |  | Years Ended December 31, |        
|                        |  | 2006                     |         |         | 2005  |   |          | 2004 |        
|                        |  | Revenues                 |         | Percent |       |   | Revenues |      | Percent |  |       | Revenues |  | Percent |        
|U.S.                    |  | $                        | 83,341  |         | 59.6  | % |          | $    | 77,257  |  | 70.3  | %        |  | $       | 80,521  |  | 67.3  | %
|Mexico                  |  |                          | 8,530   |         | 6.1   |   |          |      | 9,781   |  | 8.9   |          |  |         | 13,281  |  | 11.1  |  
|Europe                  |  |                          | 14,403  |         | 10.3  |   |          |      | 2,418   |  | 2.2   |          |  |         | 11,366  |  | 9.5   |  
|Canada                  |  |                          | 9,928   |         | 7.1   |   |          |      | 7,033   |  | 6.4   |          |  |         | 5,863   |  | 4.9   |  
|Asia                    |  |                          | 16,500  |         | 11.8  |   |          |      | 11,429  |  | 10.4  |          |  |         | 7,059   |  | 5.9   |  
|South & Central America |  |                          | 7,132   |         | 5.1   |   |          |      | 1,978   |  | 1.8   |          |  |         | 1,555   |  | 1.3   |  
|                        |  |                          |         |         |       |   |          |      |         |  |       |          |  |         |         |  |       |  
|Total                   |  | $                        | 139,834 |         | 100.0 | % |          | $    | 109,896 |  | 100.0 | %        |  | $       | 119,645 |  | 100.0 | %
|                        |  |                          |         |         |       |   |          |      |         |  |       |          |  |         |         |  |       |  

NOTE 15. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

The following disclosures of the estimated fair value of financial instruments are made in accordance with the requirements of SFAS No. 107,
Disclosure About Fair Value of Financial Instruments. The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies and are described in the following paragraphs.

Fair value estimates are subject to certain inherent limitations. Estimates of fair value are made at a specific point in time, based on
relevant market information and information about the financial instrument. The estimated fair values of financial instruments presented below are not necessarily indicative of amounts the Company might realize in actual market transactions.
Estimates of fair value are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

The carrying amounts of cash and cash equivalents, accounts receivables, accounts payable, and accrued expenses approximate fair value because of the
short maturity of these items. The carrying amounts of notes payable outstanding under the Companys credit facility approximate fair value because the interest rates on these instruments change with market interest rates. At December 31,
2006, the Company had $12.5 million in borrowings under its new credit facility.



72



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OMEGA PROTEIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The carrying values and respective fair market values of the Companys long-term debt are
presented below. The fair value of the Companys long-term debt is estimated based on the quoted market prices available to the Company for issuance of similar debt with similar terms at year end 2006.



|                            |  |                         |        |      |   |       
|--------------------------- |  | ----------------------- | ------ | ---- | - | ------
|                            |  | Years EndedDecember 31,
|                            |  | 2006                    |        | 2005
|Long-term Debt:             |  |                         |        |      |   |       
|Carrying Value              |  | $                       | 75,160 |      | $ | 30,101
|Estimated Fair Market Value |  | $                       | 75,475 |      | $ | 30,595

NOTE 16. QUARTERLY FINANCIAL DATA (UNAUDITED)

Seasonal and Quarterly Results

The following table presents certain unaudited operating
results for each of the Companys preceding eight quarters. The Company believes that the following information includes all adjustments (consisting only of normal recurring adjustments) that the Company considers necessary for a fair
presentation, in accordance with generally accepted accounting principles. The operating results for any interim period are not necessarily indicative of results for any other period.



|                               |  |                                          |        |              |   |                    |  |   |                  |   |  |   |        |  
|------------------------------ |  | ---------------------------------------- | ------ | ------------ | - | ------------------ |  | - | ---------------- | - |  | - | ------ | -
|                               |  | Quarters Ended 2006                      |       
|                               |  | March 31, 2006                           |        | June 30,2006 |   | September 30, 2006 |  |   | December 31,2006 |  
|                               |  | (in thousands, except per share amounts) |       
|Revenues (1)                   |  | $                                        | 28,303 |              | $ | 33,338             |  | $ | 52,089           |   |  | $ | 26,104 |  
|Gross profit (1)               |  |                                          | 6,992  |              |   | 5,336              |  |   | 7,341            |   |  |   | 3,527  |  
|Operating income (loss) (1)    |  |                                          | 3,416  |              |   | 1,473              |  |   | 2,956            |   |  |   | 111    |  
|Net income (loss) (1)          |  |                                          | 2,526  |              |   | 630                |  |   | 1,812            |   |  |   | (396   | )
|Earnings (loss) per share (2): |  |                                          |        |              |   |                    |  |   |                  |   |  |   |        |  
|Basic                          |  |                                          | 0.10   |              |   | 0.03               |  |   | 0.07             |   |  |   | (0.02  | )
|Diluted                        |  |                                          | 0.10   |              |   | 0.02               |  |   | 0.07             |   |  |   | (0.02  | )
|                               | 
|                               |  | Quarters Ended 2005                      |       
|                               |  | March 31, 2005                           |        | June 30,2005 |   | September 30, 2005 |  |   | December 31,2005 |  
|                               |  | (in thousands, except per share amounts) |       
|Revenues (1)                   |  | $                                        | 23,831 |              | $ | 27,510             |  | $ | 31,418           |   |  | $ | 27,137 |  
|Gross profit (1)               |  |                                          | 3,056  |              |   | 3,817              |  |   | 7,386            |   |  |   | 3,652  |  
|Operating income (loss) (1)    |  |                                          | 278    |              |   | 764                |  |   | (9,201           | ) |  |   | (2,728 | )
|Net income (loss) (1)          |  |                                          | 107    |              |   | 659                |  |   | (6,140           | ) |  |   | (1,812 | )
|Earnings (loss) per share (2): |  |                                          |        |              |   |                    |  |   |                  |   |  |   |        |  
|Basic                          |  |                                          | 0.00   |              |   | 0.03               |  |   | (0.25            | ) |  |   | (0.07  | )
|Diluted                        |  |                                          | 0.00   |              |   | 0.03               |  |   | (0.25            | ) |  |   | (0.07  | )

---

|(1) | Revenues, gross profit, operating income (loss), and net income (loss) are rounded to thousands each quarter. Therefore, the sum of the quarterly amounts may not equal the annual
amounts reported.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Earnings per share are computed independently for each quarter and the full year based upon respective average shares outstanding. Therefore, the sum of the quarterly earnings per
share amounts may not equal the annual amounts reported.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



73



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OMEGA PROTEIN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The Companys menhaden harvesting and processing business is seasonal in nature. The Company
generally has higher sales during the menhaden harvesting season (which includes the second and third quarter of each year) due to increased product availability, but prices during the fishing season tend to be lower than during the off-season. As a
result, the Companys quarterly operating results have fluctuated in the past and may fluctuate in the future. In addition, from time to time the Companys defers sales of inventory based on worldwide prices for competing products that
affect prices for the Companys products which may affect comparable period comparisons.



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OMEGA PROTEIN CORPORATION



|Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
|------- | -------------------------------------------------------------------------------------

None.



|Item 9A. | Controls and Procedures
|-------- | -----------------------

(a)
Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, the Company conducted an evaluation of
the effectiveness of its disclosure controls and procedures, as that phrase is defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934. The evaluation was carried out under the supervision and with the
participation of management, including the Companys Chief Executive Office (CEO) and Chief Financial Officer (CFO).

Based on and as of the date of that evaluation, the Companys CEO and CFO have concluded that (i) the Companys disclosure controls and procedures are designed to ensure that information required to be discussed by the
Company in the reports that the Company files or submits to the Securities and Exchange Commission (SEC) under the Securities Exchange Act of 1934, is recorded, processed, summarized and reported within the time periods specified in the
SECs rules and forms, and that such information is accumulated and communicated to the Companys management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure, and (ii) that the
Companys disclosure controls and procedures are effective.

Notwithstanding the foregoing, there can be no assurance that the
Companys disclosure controls and procedures will detect or uncover all failures of persons within the Company and its consolidated subsidiaries to disclose material information otherwise required to be set forth in the Companys periodic
reports. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even
effective disclosure controls and procedures can only provide reasonable, not absolute, assurance of achieving their control objectives.

(b) Managements Report on Internal Control Over Financial Reporting

Management is responsible for establishing and
maintaining adequate internal control over financial reporting, and for performing an assessment of the effectiveness of internal control over financial reporting as of December 31, 2006. Internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Companys system of
internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company
are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
Companys assets that could have a material affect on the financial statements.

Management performed an assessment of the
effectiveness of the Companys internal control over financial reporting as of December 31, 2006 based upon criteria in a report entitled Internal ControlIntegrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Based on that assessment and those criteria, management determined that the Companys internal control over financial reporting was effective as of December 31, 2006.

Managements assessment of the effectiveness of the Companys internal control over financial reporting as of December 31, 2006 has
been audited by PricewaterhouseCoopers LLP, an independent registered public



75



---

accounting firm, as stated in their report which appears herein. (See Item 8. Financial Statements and Supplementary Data).

(c) Changes in Internal Control Over Financial Reporting

There were no changes in the Companys internal control over financial reporting during the three-month period ended December 31, 2006 that have materially affected, or are reasonably likely to materially
affect, the Companys internal control over financial reporting.



|Item 9B. | Other Information.
|-------- | ------------------

In July 2006, the
Company submitted its Section 303A Annual Written Affirmation to the New York Stock Exchange for the Companys fiscal year ended December 31, 2005 and had no qualifications to that Certification.

The Certifications of the Companys Chief Executive Officer and Chief Financial Officer for the fiscal year ended December 31, 2006 required
under Section 302 of the Sarbanes-Oxley Act of 2002 are attached as exhibits to this Annual Report on Form 10-K.

PART III



|Item 10. | Directors, Executive Officers and Corporate Goverance.
|-------- | ------------------------------------------------------

Pursuant to General Instruction G of Form 10-K, the information called for by Item 10 of Part III of Form 10-K is incorporated by reference to the information set forth in the Companys definitive proxy
statement relating to its 2007 Annual Meeting of Stockholders (the 2006 Proxy Statement) to be filed pursuant to Regulation 14-A under the Exchange Act, in response to Items 401, 405 and 407 (c)(3), (d)(4) and (d)(5) of Regulation S-K
under the Securities Act of 1933 and the Exchange Act (Regulation S-K). Reference is also made to the information appearing in Item 1 of Part I of this Annual Report on Form 10-K under the caption Business and
PropertiesExecutive Officers of the Registrant.

The Company adopted a Code of Business Conduct and Ethics, which applies to
all employees, officers and directors of the Company. The Code meets the requirements of a code of ethics as defined by Item 406 of Regulation S-K, and applies to the Companys Chief Executive Officer, Chief Financial Officer
(who is both the Companys principal financial and principal accounting officer), Controller as well as all other employees, as indicated above. The Code of Business Conduct and Ethics also meets the requirements of a code of business conduct
and ethics under NYSE listing standards.

In addition to the above Code, the Company has adopted a Code of Ethics for Financial
Professionals which applies to the Chief Executive Officer, Chief Financial Officer, Controller and all other Company professionals worldwide serving in a finance, accounting, treasury, tax or investor relations role.

Both the Code of Business Conduct and Ethics and the Code of Ethics for Financial Professionals are posted on the Companys website at
www.omegaproteininc.com. The Company will provide a copy of the Code of Business Conduct and Ethics and Code of Ethics for Financial Professionals to any person upon request. The Company intends to disclose any amendments to the Codes, as well as
any waivers to the Codes for executive officers or directors, on its website.

None of these codes, nor the Companys website, is
incorporated by reference in this report or constitutes part of this report.



76



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|Item 11. | Executive Compensation.
|-------- | -----------------------

Pursuant to
General Instruction G of Form 10-K, the information called for by Item 11 of Part III of Form 10-K is incorporated by reference to the information set forth in the 2007 Proxy Statement in response to Item 402 of Regulation S-K and
paragraphs (e)(4) and (e)(5) of Item 407 of Regulation S-K; provided, however, that the disclosure required by paragraph (e)(5) of Item 407 of Regulation S-K will be deemed furnished in this Annual Report on Form 10-K and will not be
deemed incorporated by reference into any filing under the Securities Act or the Exchange Act as a result as a result of furnishing the disclosure in this manner.



|Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|-------- | -----------------------------------------------------------------------------------------------

Pursuant to General Instruction G of Form 10-K, the information called for by Item 12 of Part III of Form 10-K is incorporated by reference to
the information set forth in the 2007 Proxy Statement in response to Items 201(d) and 403 of Regulation S-K.



|Item 13. | Certain Relationships and Related Transactions,and Director Independence.
|-------- | -------------------------------------------------------------------------

Pursuant to General Instruction G of Form 10-K, the information called for by Item 13 of Part III of Form 10-K is incorporated by reference to
the information set forth in the 2007 Proxy Statement in response to Items 404 and 407(a) of Regulation S-K.



|Item 14. | Principal Accounting Fees and Services.
|-------- | ---------------------------------------

Pursuant to General Instruction G of Form 10-K, the information called for by Item 14 of Part III of Form 10-K is incorporated by reference to the information set forth in the 2007 Proxy Statement.



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OMEGA PROTEIN CORPORATION

PART IV



|Item 15. | Exhibits, Financial Statement Schedules.
|-------- | ----------------------------------------



| |  |        |  |                                                                                                                                                                                                                                                        |  |   
| |  | ------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | --
| |  | (a)(1) |  | The Companys consolidated financial statements listed below have been filed as part of this report:                                                                                                                                                   |  |   
| |  |        |  | Report of Independent Registered Public Accounting Firm                                                                                                                                                                                                |  | 40
| |  |        |  | Consolidated balance sheets as of December 31, 2006 and 2005                                                                                                                                                                                           |  | 42
| |  |        |  | Consolidated statements of operations for the years ended December 31, 2006, 2005 and 2004                                                                                                                                                             |  | 43
| |  |        |  | Consolidated statements of cash flows for the years ended December 31, 2006, 2005 and 2004                                                                                                                                                             |  | 44
| |  |        |  | Consolidated statements of stockholders equity for the years ended December 31, 2006, 2005 and 2004                                                                                                                                                   |  | 45
| |  |        |  | Notes to consolidated financial statements                                                                                                                                                                                                             |  | 46
| |  |        | 
| |  | (a)(2) |  | Financial Statement Schedule.                                                                                                                                                                                                                          |  |   
| |  |       
| |  |        |  | Filed herewith as a financial statement schedule is the schedule supporting Omegas consolidated financial statements
listed under this Item, and the Report of Independent Registered Public Accounting Firm located in (a) (1) with respect thereto.



| | (a)(3)      Exhibits | 
| | -------------------- | 



| |  |        |  |   |  |                                                                                                                                                                                                           
| |  | ------ |  | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 2.1*   |  |  |  | Agreement and Plan of Merger between Marine Genetics, Inc. and Omega Protein Corporation (Omega or the Company) (Exhibit 2.1 to Omega Registration Statement on Form S-1
[Registration No. 333-44967])
| |  |        | 
| |  | 3.1*   |  |  |  | Articles of Incorporation of Omega (Exhibit 3.1 to Omega Registration Statement on Form S-1[Registration No. 333-44967])                                                                                  
| |  |        | 
| |  | 3.2*   |  |  |  | By-Laws of Omega (Exhibit 3.2 to Omega Registration Statement on Form S-1 [Registration No. 333-44967])                                                                                                   
| |  |        | 
| |  | 4.2*   |  |  |  | Form of Common Stock Certificate (Citizen) (Exhibit 4.1 to Omega Registration Statement on Form S-1 [Registration No. 333-44967])                                                                         
| |  |        | 
| |  | 4.3*   |  |  |  | Form of Common Stock Certificate (Non-Citizen) (Exhibit 4.2 to Omega Registration Statement on Form S-1 [Registration No. 333-44967])                                                                     
| |  |        | 
| |  | 4.4*   |  |  |  | Registration Rights Agreement dated as of December 1, 2006 between Omega Protein Corporation and certain purchasers (Exhibit 10.1 to Omega Current Report on Form 8-K filed December 5,
2006)             
| |  |        | 
| |  | 10.1* |  |  |  | Form of Amended and Restated Indemnification Agreement for all Officers and Directors (Exhibit 10.1 to Omega Quarterly Report on Form 10-Q for quarter ended June 30, 2003)                               
| |  |        | 
| |  | 10.2* |  |  |  | Omega Protein Corporation 2000 Long-Term Incentive Plan (Appendix A to Omega Proxy Statement on Schedule 14A dated May 3, 2000)                                                                           
| |  |        | 
| |  | 10.3* |  |  |  | Omega Protein Corporation 2006 Incentive Plan (Appendix A to Omega Proxy Statement on Schedule 14A dated April 26, 2006)                                                                                  
| |  |        | 
| |  | 10.4* |  |  |  | Omega Protein Corporation Annual Incentive Compensation Plan dated April 8, 1998 (Exhibit 10.11 to Omega Annual Report on Form 10-K for the year ended December 31, 2001)                                 
| |  |        | 
| |  | 10.5* |  |  |  | Omega Protein, Inc. Executive Medical Plan dated August 1993 (Exhibit 10.16 to Omega Annual Report on Form 10-K for the year ended December 31, 2002)                                                     



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OMEGA PROTEIN CORPORATION



| |  |        |  |   |  |                                                                                                                                                                                                                                                                                                      
| |  | ------ |  | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 10.6*  |  |  |  | Lease dated July 1, 1992 with Ardoin Limited Partnership (Exhibit 10.12 to Omega Registration Statement on Form S-1 [Registration No. 333-44967])                                                                                                                                                    
| |  |        | 
| |  | 10.7*  |  |  |  | Amendment One Lease Extension dated February 22, 2006 to Lease Agreement dated July 1, 2002 between the Ardoin Limited Partnership and Omega Protein, Inc. (formerly known as Zapata
Haynie Corporation) (Exhibit 10.1 to Omega Current Report on Form 8-K filed February 28, 2006).                 
| |  |        | 
| |  | 10.8*  |  |  |  | Lease Agreement dated November 25, 1997 with O. W. Burton, Jr., individually and as trustee of the Trust of Anna Burton (Exhibit 10.13 to Omega Registration Statement on Form S-1
[Registration No. 333-44967])                                                                                     
| |  |        | 
| |  | 10.9*  |  |  |  | Commercial Lease Agreement dated January 1, 1971 with Purvis Theall and Ethlyn Cessac (Exhibit 10.15 to Omega Registration Statement on Form S-1 [Registration No.
333-44967])                                                                                                                       
| |  |        | 
| |  | 10.10* |  |  |  | Lease Agreement dated January 4, 1994 with the City of Abbeville, Louisiana (Exhibit 10.16 to Omega Registration Statement on Form S-1 [Registration No. 333-44967])                                                                                                                                 
| |  |        | 
| |  | 10.11* |  |  |  | Lease Agreement between Beltway/290 Investors, L.P. and Omega Protein, Inc., dated as of March 22, 2006 (Exhibit 10.1 to Omega Current Report on Form 8-K filed March 28,
2006)                                                                                                                      
| |  |        | 
| |  | 10.12* |  |  |  | Lease Guaranty Agreement dated as of March 22, 2006 of Omega Protein Corporation (Exhibit 10.2 to Omega Current Report on Form 8-K filed March 28, 2006)                                                                                                                                             
| |  |        | 
| |  | 10.13* |  |  |  | Lease Amendment and Option to Purchase, effective as of August 1, 2006, between Ivy and Dola Richard and Omega Protein, Inc. (Exhibit 10.1 to Omega Quarterly Report on Form 10-Q for
the quarter ended June 30, 2006)                                                                               
| |  |        | 
| |  | 10.14* |  |  |  | United States Guaranteed Promissory Note dated March 31, 1993 in favor of Bear, Stearns Securities Corporation (Exhibit 10.20 to Omega Registration Statement on Form S-1 [Registration
No. 333-44967])                                                                                              
| |  |        | 
| |  | 10.15* |  |  |  | Amendment to No. 1 to Promissory Note dated March 31, 1993 to the United States of America pursuant to the provisions of Title XI of the Marine Act of 1936 in favor of Bear, Stearns
Securities Corporation (Exhibit 10.21 to Omega Registration Statement on Form S-1 [Registration No. 333-44967])
| |  |        | 
| |  | 10.16* |  |  |  | Amendment to No. 1 to First Preferred Ship Mortgage dated March 31, 1993 to the United States of America (Exhibit 10.22 to Omega Registration Statement on Form S-1 [Registration No.
333-44967])                                                                                                    
| |  |        | 
| |  | 10.17* |  |  |  | Supplement No. 5 to First Preferred Fleet Mortgage dated March 31, 1993 in favor of Chemical Bank, as Trustee (Exhibit 10.23 to Omega Registration Statement on Form S-1 [Registration No.
333-44967])                                                                                               
| |  |        | 
| |  | 10.18* |  |  |  | Amendment No. 1 to Guaranty Deed of Trust dated March 31, 1993 for the benefit of the United States of America (Exhibit 10.24 to Omega Registration Statement on Form S-1 [Registration No.
333-44967])                                                                                              
| |  |        | 
| |  | 10.19* |  |  |  | Supplement No. 2 to Security Agreement dated March 31, 1993 in favor of the United States of America (Exhibit 10.25 to Omega Registration Statement on Form S-1 [Registration
No. 333-44967])                                                                                                        
| |  |        | 
| |  | 10.20* |  |  |  | Indemnity Agreement Regarding Hazardous Materials dated March 31, 1993 in favor of the United States of America (Exhibit 10.26 to Omega Registration Statement on Form S-1 [Registration No.
333-44967])                                                                                             



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OMEGA PROTEIN CORPORATION



| |  |        |  |   |  |                                                                                                                                                                                                                                                                        
| |  | ------ |  | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 10.21* |  |  |  | United States Guaranteed Promissory Note dated September 27, 1994 in favor of Sun Bank of Tampa Bay (Exhibit 10.27 to Omega Registration Statement on Form S-1 [Registration No.
333-44967])                                                                           
| |  |        | 
| |  | 10.22* |  |  |  | Promissory Note to the United States of America dated September 27, 1994 pursuant to the provisions of Title XI of the Marine Act of 1936 in favor of Sun Bank of Tampa Bay (Exhibit 10.28 to
Omega Registration Statement on Form S-1 [Registration No. 333-44967])   
| |  |        | 
| |  | 10.23* |  |  |  | First Preferred Ship Mortgage dated September 27, 1994 to the United States of America (Exhibit 10.29 to Omega Registration Statement on Form S-1 [Registration No. 333-44967])                                                                                        
| |  |        | 
| |  | 10.24* |  |  |  | Collateral Mortgage and Collateral Assignment of Lease dated September 27, 1994 in favor of the United States of America (Exhibit 10.30 to Omega Registration Statement on Form S-1 [Registration
No. 333-44967])                                                      
| |  |        | 
| |  | 10.25* |  |  |  | Collateral Mortgage Note dated September 27, 1994 in favor of the United States of America (Exhibit 10.31 to Omega Registration Statement on Form S-1 [Registration No.
333-44967])                                                                                    
| |  |        | 
| |  | 10.26* |  |  |  | Collateral Pledge Agreement dated September 27, 1994 in favor of the United States of America (Exhibit 10.32 to Omega Registration Statement on Form S-1 [Registration
No. 333-44967])                                                                                 
| |  |        | 
| |  | 10.27* |  |  |  | Guaranty Agreement dated September 27, 1994 in favor of the United States of America (Exhibit 10.33 to Omega Registration Statement on Form S-1 [Registration No.
333-44967])                                                                                          
| |  |        | 
| |  | 10.28* |  |  |  | Title XI Financial Agreement dated September 27, 1994 with the United States of America (Exhibit 10.34 to Omega Registration Statement on Form S-1 [Registration No. 333-44967])                                                                                       
| |  |        | 
| |  | 10.29* |  |  |  | Security Agreement dated September 27, 1994 in favor of the United States of America (Exhibit 10.35 to Omega Registration Statement on Form S-1 [Registration No.
333-44967])                                                                                          
| |  |        | 
| |  | 10.30* |  |  |  | United States Guaranteed Promissory Note dated October 30, 1996 in favor of Coastal Securities (Exhibit 10.36 to Omega Registration Statement on Form S-1 [Registration
No. 333-44967])                                                                                
| |  |        | 
| |  | 10.31* |  |  |  | Promissory Note to the United States of America dated October 30, 1996, pursuant to the provisions of Title XI of the Marine Act of 1936, in favor of Coastal Securities (Exhibit 10.37 to Omega
Registration Statement on Form S-1 [Registration No. 333-44967])      
| |  |        | 
| |  | 10.32* |  |  |  | Guaranty Agreement dated October 30, 1996 in favor of the United States of America (Exhibit 10.38 to Omega Registration Statement on Form S-1 [Registration No. 333-44967])                                                                                            
| |  |        | 
| |  | 10.33* |  |  |  | Title XI Financial Agreement dated October 30, 1996 with the United States of America (Exhibit 10.39 to Omega Registration Statement on Form S-1 [Registration No.
333-44967])                                                                                         
| |  |        | 
| |  | 10.34* |  |  |  | Certification and Indemnification Agreement Regarding Environmental Matters dated October 30, 1996 in favor of the United States of America (Exhibit 10.40 to Omega Registration Statement on
Form S-1 [Registration No. 333-44967])                                   
| |  |        | 
| |  | 10.35* |  |  |  | Deed of Trust dated October 30, 1996 for the benefit of the United States of America (Exhibit 10.41 to Omega Registration Statement on Form S-1 [Registration No.
333-44967])                                                                                          
| |  |        | 
| |  | 10.36* |  |  |  | Deed of Trust dated December 20, 1999 for the benefit of the United States of America (Exhibit 10.45 to Omega Annual Report on Form 10-K for the year ended December 31,
2001)                                                                                         
| |  |        | 
| |  | 10.37* |  |  |  | Promissory Notes to the United States of America dated December 20, 1999, pursuant to the provisions of Title XI of the Marine Act of 1936, in favor of Hibernia National Bank (Exhibit 10.46
to Omega Annual Report on Form 10-K for the year ended December 31, 2001)



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| |  |         |  |   |  |                                                                                                                                                                                                                                                                          
| |  | ------- |  | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 10.38*  |  |  |  | Security Agreement dated December 20, 1999 in favor of the United Stated of America (Exhibit 10.47 to Omega Annual Report on Form 10-K for the year ended December 31, 2001)                                                                                             
| |  |         | 
| |  | 10.39*  |  |  |  | Title XI Financial Agreement dated December 20, 1999 with the United States of America (Exhibit 10.48 to Omega Annual Report on Form 10-K for the year ended December 31,
2001)                                                                                          
| |  |         | 
| |  | 10.40*  |  |  |  | Guaranty Agreement dated December 20, 1999 in favor of the United States of America (Exhibit 10.49 to Omega Annual Report on Form 10-K for the year ended December 31, 2001)                                                                                             
| |  |         | 
| |  | 10.41*  |  |  |  | Certification and Indemnification Agreement Regarding Environmental Matters dated December 20, 1999 in favor of the United States of America (Exhibit 10.50 to Omega Annual Report on Form 10-K
for the year ended December 31, 2001)                                    
| |  |         | 
| |  | 10.42*  |  |  |  | Preferred Ship Mortgages dated December 20, 1999 in favor of the United States of America (Exhibit 10.51 to Omega Annual Report on Form 10-K for the year ended December 31,
2001)                                                                                       
| |  |         | 
| |  | 10.43*  |  |  |  | Deed of Trust dated October 19, 2001 for the benefit of the United States of America (Exhibit 10.52 to Omega Annual Report on Form 10-K for the year ended December 31,
2001)                                                                                            
| |  |         | 
| |  | 10.44*  |  |  |  | Promissory Note to the United States of America dated October 19, 2001, pursuant to the provisions of Title XI of the Marine Act of 1936, in favor of Hibernia National Bank (Exhibit 10.53
to Omega Annual Report on Form 10-K for year ended December 31, 2001)        
| |  |         | 
| |  | 10.45*  |  |  |  | Security Agreement dated October 19, 2001 in favor of the United States of America (Exhibit 10.54 to Omega Annual Report on Form 10-K for the year ended December 31, 2001)                                                                                              
| |  |         | 
| |  | 10.46*  |  |  |  | Title XI Financial Agreement dated October 19, 2001 with the United States of America (Exhibit 10.55 to Omega Annual Report on Form 10-K for the year ended December 31,
2001)                                                                                           
| |  |         | 
| |  | 10.47*  |  |  |  | Guaranty Agreement dated October 19, 2001 in favor of the United States of America (Exhibit 10.56 to Omega Annual Report on Form 10-K for the year ended December 31, 2001)                                                                                              
| |  |         | 
| |  | 10.48*  |  |  |  | Certification and Indemnification Agreement Regarding Environmental Matters dated October 19, 2001 in favor of the United States of America (Exhibit 10.57 to Omega Annual Report on Form
10-K for the year ended December 31, 2001)                                     
| |  |         | 
| |  | 10.49*  |  |  |  | Preferred Ship Mortgages dated October 19, 2001 in favor of the United States of America (Exhibit 10.58 to Omega Annual Report on Form 10-K for the year ended December 31, 2001)                                                                                        
| |  |         | 
| |  | 10.50* |  |  |  | Amended and Restated Executive Agreement dated as of September 21, 2004 by and between the Company and Joseph L. von Rosenberg III (Exhibit 10.1 to Omega Current Report on Form 8-K filed
September 24, 2004)                                                           
| |  |         | 
| |  | 10.51* |  |  |  | First Amendment dated as of February 23, 2006 to Amended and Restated Executive Employment Agreement dated as of September 21, 2004 by and between the Company and Joseph L. von
Rosenberg III (Exhibit 10.3 to Omega Current Report on Form 8-K filed February 24, 2006)
| |  |         | 
| |  | 10.52* |  |  |  | Amended and Restated Executive Agreement dated as of September 21, 2004 by and between the Company and Robert W. Stockton (Exhibit 10.2 to Omega Current Report on Form 8-K filed September 24,
2004)                                                                    
| |  |         | 
| |  | 10.53* |  |  |  | Amended and Restated Executive Agreement dated as of September 21, 2004 by and between the Company and John D. Held (Exhibit 10.3 to Omega Current Report on Form 8-K filed September 24,
2004)                                                                          
| |  |         | 
| |  | 10.54* |  |  |  | Change of Control Agreement dated as of September 1, 2000 between Omega and Scott Herbert (Exhibit 10.1 to Omega Quarterly Report on Form 10-Q for the quarter ended September 30,
2002)                                                                                 



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| |  |         |  |   |  |                                                                                                                                                                                                                                          
| |  | ------- |  | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 10.55* |  |  |  | Employment Agreement dated as of October 1, 2002 between Omega and Thomas R. Wittmann (Exhibit 10.2 to Omega Quarterly Report on Form 10-Q for the quarter ended September 30,
2002)                                                     
| |  |         | 
| |  | 10.56* |  |  |  | Form of Stock Option Agreement under the 1998 Long-Term Incentive Plan (Exhibit 10.66 to Omega Annual Report on Form 10-K for the year ended December 31, 2005)                                                                          
| |  |         | 
| |  | 10.57* |  |  |  | Form of Stock Option Agreement for Employees under the 2000 Long-Term Incentive Plan (Exhibit 10.67 to Omega Annual Report on Form 10-K for the year ended December 31, 2005)                                                            
| |  |         | 
| |  | 10.58* |  |  |  | Form of Stock Option Agreement for Senior Management under the 2000 Long-Term Incentive Plan (Exhibit 10.68 to Omega Annual Report on Form 10-K for the year ended December 31,
2005)                                                    
| |  |         | 
| |  | 10.59* |  |  |  | Form of Stock Option Agreement for Independent Directors under the 2000 Long-Term Incentive Plan (Exhibit 10.69 to Omega Annual Report on Form 10-K for the year ended December 31,
2005)                                                
| |  |         | 
| |  | 10.60* |  |  |  | Form of Stock Option Agreement dated June 7, 2006 for each Independent Director (Exhibit 10.1 to Omega Current Report on Form 8-K filed June 9, 2006)                                                                                    
| |  |         | 
| |  | 10.61*  |  |  |  | Deed of Trust dated December 29, 2003 for the benefit of the United States of America (Exhibit 10.65 to Omega Annual Report on Form 10-K for year ended December 31, 2003)                                                               
| |  |         | 
| |  | 10.62*  |  |  |  | Promissory Note to the United States of America dated December 29, 2003 (Exhibit 10.66 to Omega Annual Report on Form 10-K for year ended December 31, 2003)                                                                             
| |  |         | 
| |  | 10.63*  |  |  |  | Security Agreement dated December 29, 2003 in favor of the United States of America (Exhibit 10.67 to Omega Annual Report on Form 10-K for year ended December 31,
2003)                                                                 
| |  |         | 
| |  | 10.64*  |  |  |  | Title XI Financial Agreement dated December 29, 2003 with the United States of America (Exhibit 10.68 to Omega Protein Annual Report on Form 10-K for year ended December 31,
2003)                                                      
| |  |         | 
| |  | 10.65*  |  |  |  | Guaranty Agreement dated December 29, 2003 in favor of the United States of America (Exhibit 10.69 to Omega Protein Annual Report on Form 10-K for year ended December 31,
2003)                                                         
| |  |         | 
| |  | 10.66*  |  |  |  | Certification and Indemnification Agreement Regarding Environmental Matters dated December 29, 2003 in favor of the United States of America (Exhibit 10.70 to Omega Protein Annual Report on Form
10-K for year ended December 31, 2003)
| |  |         | 
| |  | 10.67*  |  |  |  | Preferred Ship Mortgages dated December 29, 2003 in favor of the United States of America (Exhibit 10.71 to Omega Protein Annual Report on Form 10-K for year ended December 31,
2003)                                                   
| |  |         | 
| |  | 10.68*  |  |  |  | Lease Agreement between BMC Software Texas, L.P. and Omega Protein Corporation dated as of August 18, 2005 (Exhibit 10.1 to Omega Protein Current Report on Form 8-K dated August 17,
2005)                                              
| |  |         | 
| |  | 10.69*  |  |  |  | First Amendment to Lease Agreement between BMC Software Texas, L.P. and Omega dated as of September 15, 2005 (Exhibit 10.1 to Omega Current Report on Form 8-K dated September 15,
2005)                                                 
| |  |         | 
| |  | 10.70*  |  |  |  | Deed of Trust dated October 17, 2005 for the benefit of the United States of America (Exhibit 10.1 to Omega Current Report on Form 8-K dated October 17, 2005)                                                                           
| |  |         | 
| |  | 10.71*  |  |  |  | Promissory Note to the United States of America Dated October 17, 2005 (Exhibit 10.2 to Omega Current Report on Form 8-K dated October 17, 2005)                                                                                         



82



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OMEGA PROTEIN CORPORATION



| |  |        |  |   |  |                                                                                                                                                                                                                                                                                                                                                                                             
| |  | ------ |  | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 10.72* |  |  |  | Security Agreement dated October 17, 2005 in favor of the United States of America (Exhibit 10.3 to Omega Current Report on Form 8-K dated October 17, 2005)                                                                                                                                                                                                                                
| |  |        | 
| |  | 10.73* |  |  |  | Title XI Financial Agreement dated October 17, 2005 with the United States of America (Exhibit 10.4 to Omega Current Report on Form 8-K dated October 17, 2005)                                                                                                                                                                                                                             
| |  |        | 
| |  | 10.74* |  |  |  | Guaranty Agreement dated October 17, 2005 in favor of the United States of America (Exhibit 10.5 to Omega Current Report on Form 8-K dated October 17, 2005)                                                                                                                                                                                                                                
| |  |        | 
| |  | 10.75* |  |  |  | Certification and Indemnification Agreement Regarding Environmental Matters dated October 17, 2005 in favor of the United States of America (Exhibit 10.6 to Omega Current Report on Form 8-K
dated October 17, 2005)                                                                                                                                                                       
| |  |        | 
| |  | 10.76* |  |  |  | Preferred Ship Mortgages dated October 17, 2005 in favor of the United States of America (Exhibit 10.7 to Omega Current Report on Form 8-K dated October 17, 2005)                                                                                                                                                                                                                          
| |  |        | 
| |  | 10.77* |  |  |  | Approval Letter dated as of December 1, 2005 and executed on December 6, 2005 by Omega Protein, Inc., the Company and United States Department of Commerce, Acting by National Oceanic and
Atmospheric Administration, National Marine Fisheries Service (Exhibit 10.1 to Omega Current Report on Form 8-K dated December 6, 2005)                                                          
| |  |        | 
| |  | 10.78* |  |  |  | Stock Purchase Agreement dated as of September 8, 2006, between Zapata Corporation and Omega Protein Corporation (Exhibit 10.1 to Omega Quarterly Report on Form 10-Q for the quarter ended
September 30, 2006)                                                                                                                                                                             
| |  |        | 
| |  | 10.79* |  |  |  | Escrow Agreement dated as of September 8, 2006, among Zapata Corporation, Omega Protein Corporation and Manufacturers and Traders Trust Company (Exhibit 10.2 to Omega Quarterly Report
on Form 10-Q for the quarter ended September 30, 2006)                                                                                                                                              
| |  |        | 
| |  | 10.80* |  |  |  | Letter Agreement dated October 18, 2006, between Omega Protein Corporation and Zapata Corporation (Exhibit 10.1 to Omega Current Report on Form 8-K filed October 24, 2006)                                                                                                                                                                                                                 
| |  |        | 
| |  | 10.81* |  |  |  | Financing Agreement dated as of October 19, 2006, among Omega Protein Corporation, Omega Protein, Inc., Omega Shipyard, Inc., Omega International Distribution Company, Omega International
Marketing Company, Protein Finance Company, Ableco Finance LLC, Wachovia Bank, National Association, and A3 Funding SP (Exhibit 10.2 to Omega Current Report on Form 8-K filed October 24, 2006)
| |  |        | 
| |  | 10.82* |  |  |  | Security Agreement dated as of October 19, 2006, made by Omega Protein Corporation, Protein Finance Company, Omega International Marketing Company, Omega International Distribution Company and
Omega Shipyard, Inc. in favor of Ableco Finance LLC (Exhibit 10.3 to Omega Current Report on Form 8-K filed October 24, 2006)                                                              
| |  |        | 
| |  | 10.83* |  |  |  | Pledge and Security Agreement dated as of October 19, 2006, made by Omega Protein Corporation, Protein Finance Company, Omega International Marketing Company, Omega International
Distribution Company and Omega Shipyard, Inc. in favor of Ableco Finance LLC (Exhibit 10.4 to Omega Current Report on Form 8-K filed October 24, 2006)                                                   
| |  |        | 
| |  | 10.84* |  |  |  | First Preferred Fleet Mortgage made October 19, 2006 by Omega Protein, Inc., a Virginia corporation to Omega Master Vessel Trust 2006 (Exhibit 10.5 to Omega Current Report on Form 8-K filed
October 24, 2006)                                                                                                                                                                             
| |  |        | 
| |  | 21     |  |  |  | Schedule of Subsidiaries                                                                                                                                                                                                                                                                                                                                                                    
| |  |        | 
| |  | 23.1   |  |  |  | Consent of PricewaterhouseCoopers LLP                                                                                                                                                                                                                                                                                                                                                       
| |  |        | 
| |  | 31.1   |  |  |  | Certification of Chief Executive Officer pursuant to Rule 13a-15(e)/Rule 15d-15(e)                                                                                                                                                                                                                                                                                                          
| |  |        | 
| |  | 31.2   |  |  |  | Certification of Chief Financial Officer pursuant to Rule 13a-15(e)/Rule 15d-15(e)                                                                                                                                                                                                                                                                                                          



83



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OMEGA PROTEIN CORPORATION



| |  |      |  |   |  |                                                                                                   
| |  | ---- |  | - |  | --------------------------------------------------------------------------------------------------
| |  |      | 
| |  | 32.1 |  |  |  | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
| |  |      | 
| |  | 32.2 |  |  |  | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

---

|* | Incorporated by reference
|- | -------------------------

| | Management Contract or Compensatory Plan or arrangement required to be filed as an exhibit pursuant to the requirements of Item 15(b) of Form 10-K and Item 601 of
Regulation S-K.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(c) Financial Statement Schedule of Valuation and Qualifying Accounts

SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS



|                                       |  |                               |           |                             |   |               |  |                        |        |  |   |          
|-------------------------------------- |  | ----------------------------- | --------- | --------------------------- | - | ------------- |  | ---------------------- | ------ |  | - | ---------
|Description                            |  | Balance atBeginning of Period |           | Charged toCosts andExpenses |   | Deductions(A) |  | Balance atEnd ofPeriod
|December 31, 2004:                     |  |                               |           |                             |   |               |  |                        |        |  |   |          
|Allowance for doubtful accounts        |  | $                             | 2,512,780 |                             | $ | 10,775        |  | $                      |       |  | $ | 2,523,555
|Deferred tax asset valuation allowance |  | $                             | 435,000   |                             | $ | 11,000        |  | $                      |       |  | $ | 446,000  
|December 31, 2005:                     |  |                               |           |                             |   |               |  |                        |        |  |   |          
|Allowance for doubtful accounts        |  | $                             | 2,523,555 |                             | $ | 30,000        |  | $                      |       |  | $ | 2,553,555
|Deferred tax asset valuation allowance |  | $                             | 446,000   |                             | $ | 565,000       |  | $                      |       |  | $ | 1,011,000
|December 31, 2006:                     |  |                               |           |                             |   |               |  |                        |        |  |   |          
|Allowance for doubtful accounts        |  | $                             | 2,553,555 |                             | $ | 30,000        |  | $                      | 20,416 |  | $ | 2,563,139
|Deferred tax asset valuation allowance |  | $                             | 1,011,000 |                             | $ | 870,000       |  | $                      |       |  | $ | 1,881,000

---

|(A) | Allowance for Doubtful Accountsuncollectible accounts written off.
|--- | -------------------------------------------------------------------



84



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OMEGA PROTEIN CORPORATION

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 its behalf by the undersigned, thereunto duly authorized on March 12, 2007.



OMEGA PROTEIN CORPORATION(Registrant)By:

/s/    ROBERT W.
STOCKTONRobert W. StocktonExecutive Vice President andChief Financial Officer


KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes
and appoints Joseph L. von Rosenberg III or Robert W. Stockton, or either of them, his or her true and lawful attorneys in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and
stead, any and all capacities, to sign his or her name to the Companys Form 10-K for the year ended December 31, 2006 and any or all amendments, and to file the same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or either of them, or their or his or her substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.

Pursuant to the requirements of the Securities 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/    JOSEPH VON ROSENBERG
III Joseph L. von Rosenberg III |  | Chairman of the Board, President and Chief Executive Officer                                     |  | March 12, 2007
|                                                            |  |                                                                                                 
|/s/    ROBERT W.
STOCKTON Robert W. Stockton                |  | Executive Vice President andChief Financial Officer (Principal Financial and Accounting Officer) |  | March 12, 2007
|                                                            |  |                                                                                                 
|/s/    GARY L.
ALLEE Gary L. Allee                          |  | Director                                                                                         |  | March 12, 2007
|                                                            |  |                                                                                                 
|/s/    GARY R.
GOODWIN Gary R. Goodwin                      |  | Director                                                                                         |  | March 12, 2007
|                                                            |  |                                                                                                 
|/s/    PAUL M.
KEARNS Paul M. Kearns                        |  | Director                                                                                         |  | March 12, 2007
|                                                            |  |                                                                                                 
|/s/    WILLIAM E. M.
LANDS William E. M. Lands              |  | Director                                                                                         |  | March 12, 2007
|                                                            |  |                                                                                                 
|/s/    HARRY O. NICODEMUS
IV Harry O. Nicodemus IV          |  | Director                                                                                         |  | March 12, 2007



85