For the Quarterly period ended September 30, 2000

or

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period ____________to___________

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

As of October 26, 2000 there were 16,008,755 shares of the Registrant's common stock, $0.01 par value per share, outstanding.

OMNI ENERGY SERVICES CORP.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2000 AND DECEMBER 31, 1999
(Thousands of dollars except per share data)

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

OMNI ENERGY SERVICES CORP.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2000 AND DECEMBER 31, 1999
(Thousands of dollars except per share data)

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

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

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

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

These financial statements have been prepared without audit as permitted by the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in the financial statements have been condensed or omitted pursuant to such rules and regulations. However, the management of OMNI Energy Services Corp. (the "Company") believes that this information is fairly presented. These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the financial statements contained in the Company's Annual Report on Form 10-K for the year ended December 31, 1999 and "Management's Discussion and Analysis of Financial Condition and Results of Operations."

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of only normal, recurring adjustments, necessary to fairly present the financial results for the interim periods presented.

Certain reclassifications have been made to the prior year's financial statements in order to conform with the classifications adopted for reporting in fiscal 2000.

The Company has suffered recurring losses from operations and has a net working capital deficiency, including significant current debt maturities, that previously raised substantial doubts about its ability to continue as a going concern. As more fully explained below and in subsequent portions of this report, Omni recently completed an equity infusion and renegotiated its loan agreements, the terms of which have substantially improved its prospects. The terms of the Company's primary secured credit agreements (see Note 3) contain, among other provisions, requirements for maintaining defined levels of EBITDA, working capital and tangible net worth and cash flow coverage. Each agreement, including the Company's subordinated notes (see Note 3), contains cross-default provisions for these covenants. At December 31, 1999 and September 30, 2000, the Company was in violation of certain of its covenants under these agreements. The Company has received waivers from the creditors via amendments to the loan agreements which waived financial covenant violations through September 30, 2000. As more fully explained below, these agreements were renegotiated, effective October 31, 2000, which cured these covenant violations as of the effective date.

During the most recent quarter, the Company had been attempting to refinance its current credit agreements and raise additional capital. Effective October 31, 2000 the company raised approximately $4.3 million in cash in exchange for 6,960,000 shares of common stock. The purchasers of the common stock received options to acquire an additional 2,827,500 shares of common stock at an exercise price of $0.75 per share. In early November the company sold 800 shares of Preferred Stock Series A for $0.8 million in cash. The Company recently received a commitment from its subordinated debt holder to convert $4.55 million in such debt to Series A Preferred Stock. The conversion is expected to occur prior to year end. In conjunction with this equity transaction, the Company was successful in extending the maturity dates of approximately $13 million in secured indebtedness until the first quarter of 2002. The principal amortization on the term portion of this indebtedness was modified to a 7-year basis. The proceeds from these equity transactions will be used to pay down $1.3 million of term indebtedness, provide funds for an expected acquisition and to provide additional working capital.

Net assets of discontinued operation of $(.8) million at September 30, 2000 consists of $4.0 million in assets, $3.0 million in liabilities, and a $1.8 million loss related asset impairment charges.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.

NOTE 2. EARNINGS PER SHARE

Basic Earnings Per Share (EPS) excludes dilution and is determined by dividing income available to common stockholders by the weighted average number of shares of common stock outstanding during the periods presented. Diluted EPS reflects the potential dilution that could occur if options and other contracts to issue shares of common stock were exercised or converted into common stock.

The Company had 880,705 and 810,917 options outstanding in the three and nine months ended September 30, 2000, respectively, and 1,404,602 and 1,349,964 options outstanding in the three and nine months ended September 30, 1999, respectively, that were excluded from the calculation of diluted EPS because they are antidilutive. On the same basis, warrants to purchase 3,315,036 and 2,400,030 shares of common stock were also excluded for the three months and nine months ended September 30, 2000.

NOTE 3. LONG-TERM DEBT

The Company's primary credit facility is with Hibernia National Bank (the "Hibernia Facility"). The Hibernia Facility, which was amended October 30, 2000, currently provides the Company with a $7.5 million term loan and a $5.0 million revolving line of credit to finance working capital requirements. The loans bear interest at prime plus 3% and have a final maturity of January 31, 2002. As of September 30, 2000, the Company had approximately $13 million outstanding under the Hibernia Facility.

At September 30, 2000, the Company also had approximately $2.9 million in outstanding debt pursuant to agreements with The CIT Group (CIT), consisting of two asset-based financing loans (the "CIT Loans"). Of the principal outstanding under the CIT Loans, approximately $2.3 million bears interest at LIBOR plus 3.75% and the remaining portion of the CIT Loans bear interest at LIBOR plus 3.0%. The maturity dates of these notes have been extended to March 2002. These loans are collateralized by various seismic drilling units, support equipment and aircraft.

See Note 1 for a discussion of the Company's compliance with certain loan covenants under these agreements as of the financial statement date and amendments to these loan agreements which were subsequently completed.

In the year ended December 31, 1999, the Company privately placed a total of $7.5 million in subordinated debentures with an affiliate of the Company. Notes with a principal of $5.0 million bear interest at 12% per annum and mature on March 1, 2004. An additional $2.5 million of notes bear interest at 12.5% per annum until December 31, 1999, at which time the rate will increase by 0.5% per month not to exceed 20% per annum. This portion of the notes mature on March 1, 2005, with interest payable March 1 of each year. In connection with these debentures, the Company issued warrants to purchase up to 1,937,500 shares of the Company's common stock at an exercise price of $5.00, $3.00 and $2.00 per share for 1,600,000 shares, 300,000 shares and 37,500 shares, respectively. The warrants in relation to the 1,600,000 shares vest equally over four years commencing in 1999 until 2002, unless the debentures are paid in full, in which case, those warrants that have not become exercisable will become void. All warrants that become exercisable will expire on March 1, 2004. The warrants for the remaining 337,500 shares vest immediately and expire on March 1, 2005. The fair value of all warrants is included as paid-in-capital and the effective interest rate over the term of the debt, including the coupon and the amortization of the fair value of the warrants, is approximately 19%. In May and June 2000 the Company privately placed an additional $0.4 million and $0.6 million, respectively, in subordinated debentures with an affiliate of the Company. The notes bear interest at 12.5% per annum through June 30, 2000, at which time the rate increases by 0.5% per month not to exceed 20% per annum. The notes mature on June 1, 2005 and July 1, 2005, respectively, with interest payable July 1 of each year. In connection with these debentures, the Company issued warrants to purchase up to 400,000 shares of the Company's common stock at an exercise price of $1.50, which vest immediately and expire on July 1, 2005. In July 2000 the Company privately placed approximately $0.3 million in subordinated debentures with an affiliate of the Company. The note bears interest at 12.5% per annum until July 31, 2000, at which time the rate will increase by 0.5% per month not to exceed 20% per annum. This note matures on August 1, 2005, with interest payable July 1 of each year. In connection with this debenture, the Company issued warrants to purchase up to 333,333 shares of the Company's common stock at an exercise price of $0.75. The warrants vest immediately and expire on August 1, 2005. In addition, in July 2000 the Company entered into a series of transactions with an affiliate that enabled the Company to factor, with recourse to the Company, substantially all of the trade receivables of a major customer totaling approximately $1 million, which had become ineligible under the terms of the Company's revolving credit facility with Hibernia National Bank. These transactions included the forgiveness of $1 million in principal on the oldest subordinated debt owed by the Company to the affiliate in exchange for the Company transferring ownership rights and title to the affiliate of approximately $1 million in trade receivables of the major customer. Contemporaneously therewith, the Company placed $1.0 million in new subordinated debt with the affiliate. The Company incurred a fixed interest rate charge of 1.5% on the $1 million in principal advanced against the trade receivables transferred and will incur interest at the prime rate of interest plus two percentage points on the balance outstanding until such time as the trade receivables have been fully paid by the major customer. The Company has guaranteed repayment of the trade receivables and expects that the trade receivables will be fully collected by the end of the fourth quarter. The subordinated note bears interest at 12.5% per annum until July 31, 2000, at which time the rate will increase by 0.5% per month, not to exceed 20% per annum. This note matures on August 1, 2005, with interest payable July 1 of each year. In connection with this debenture, the Company issued warrants to purchase up to 1,333,333 shares of the Company's common stock at an exercise price of $0.75. The warrants vest immediately and expire on August 1, 2005. In September 2000 the Company privately placed approximately $0.8 million in subordinated debentures with an affiliate of the Company. The note bears interest at 12.5% per annum until September 30, 2000, at which time the rate will increase by 0.5% per month not to exceed 20% per annum. This note matures on October 1, 2005, with interest payable September 1 of each year. In connection with this debenture, the Company issued warrants to purchase up to 1,066,667 shares of the Company's common stock at an exercise price of $0.75. The warrants vest immediately and expire on October 1, 2005. The amount of the notes included in subordinated debt in the accompanying balance sheet at September 30, 2000 is $9.0 million.

In October 2000 the Company privately placed approximately $0.3 million in subordinated debentures with an affiliate of the Company. The note bears interest at 12.5% per annum until October 31, 2000, at which time the rate will increase by 0.5% per month not to exceed 20% per annum. This note matures on November 1, 2005, with interest payable October 1 of each year. In connection with this debenture, the Company issued warrants to purchase up to 400,000 shares of the Company's common stock at an exercise price of $0.75. The warrants vest immediately and expire on October 1, 2005.

NOTE 4. PREFERRED STOCK

In December 1999 and February and April 2000, the Company received from an affiliate of the Company $1,000,000, $500,000, and $350,000, respectively, pursuant to the preferred stock subscription agreements for an aggregate of 1,850 shares of preferred stock that was issued on April 26, 2000. The Company issued an additional 300 shares of the preferred stock to the affiliate in May 2000 for $300,000. The funds were used for debt service and to fund operations The preferred stock has an 8% cumulative dividend rate, is convertible into common stock with an initial conversion rate of $2.50, is redeemable at the option of the Company at par plus unpaid dividends, contains a liquidation preference of $1,000 per share and has voting rights only with respect to matters that would reduce the ranking of the stock compared to other classes of stock. Please see Note 1 regarding a Preferred Stock subscription which was completed subsequent to the financial statement date, and an anticipated debt conversion.

NOTE 5. COMPREHENSIVE INCOME

In 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No. 130, "Reporting Comprehensive Income", which requires an entity to report and display comprehensive income and its components. Comprehensive income is as follows (thousands of dollars):

NOTE 6. SEGMENT INFORMATION

The following shows industry segment information for its two operating segments, Drilling and Survey, for the three and nine month periods ended September 30, 2000 and 1999:

NOTE 7. RECENT PRONOUNCEMENTS

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," which established accounting and reporting standards that every derivative instrument be recorded in the balance sheet as either an asset or a liability measured at its fair value. In June 1999, the FASB delayed SFAS No. 133's effective date by one year to fiscal years beginning after June 15, 2000, with earlier application permitted. Management believes the implementation of SFAS No. 133 will not have a material effect on its results of operations, financial position or financial statement disclosures as the Company historically has not used these instruments.

NOTE 8. CONCENTRATION OF CREDIT RISK

The Company's account receivables includes unsecured amounts of approximately $0.6 million from a customer who has recently filed for Chapter 11 bankruptcy. The Company currently has specific reserves totaling approximately $0.6 million related to those receivables. The receivable and the reserve offset each other in the net accounts receivable number presented on the balance sheet.

NOTE 9. ASSET IMPAIRMENT

As a result of the continuing market decline, certain of the company's assets have become impaired due to poor utilization or the likelihood that their carrying values will not be realized through future revenue streams. The company made a provision for this impairment during the most recent quarter in the amount of $9.4 million. The principal component of this charge was an $8 million writeoff of goodwill and other deferred charges. The goodwill, aggregating $7.5 million ($4.9 million related to the drilling and line cutting segments and $2.6 million related to the survey segment), arose from acquisitions completed in 1997 and 1998 of survey, drilling and line-cutting businesses. Based on historical and projected undiscounted revenue and expense trends, the company does not believe that these units will generate sufficient activity to realize the carrying value of the goodwill. A $1.4 million charge was made to the carrying value of certain of the company's transition zone drill units due to management's intention to dispose of these units at a loss during the first half of 2001 because of their condition or utilization trends. A portion of this charge relates to estimated costs to refurbish individual units so they may be utilized in the future.

The Company made a provision of $1.8 million to increase the loss on the disposal of the aviation business which is reported as a discontinued operation. Negotiations are currently in progress to return a substantial number of aircraft which are operated under the provisions of a long term lease. The provision is the estimate of the aggregate costs that will be incurred in terminating the Company's obligations under that lease.

NOTE 10. ACQUISITIONS

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

This discussion should be read in conjunction with the financial statements and the accompanying notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the Company's Annual Report on Form 10-K for the year ended December 31, 1999.

Demand. Demand for the Company's services is principally impacted by conditions affecting geophysical companies engaged in the acquisition of 3-D seismic data. The level of activity among geophysical companies is primarily influenced by the level of capital expenditures by oil and gas companies for seismic data acquisition activities. A number of factors affect the decision of oil and gas companies to pursue the acquisition of seismic data, including (i) prevailing and expected oil and gas demand and prices; (ii) the cost of exploring for, producing and developing oil and gas reserves; (iii) the discovery rate of new oil and gas reserves; (iv) the availability and cost of permits and consents from landowners to conduct seismic activity; (v) local and international political and economic conditions; (vi) governmental regulations; and (vii) the availability and cost of capital. The ability to finance the acquisition of seismic data in the absence of oil and gas companies' interest in obtaining the information is also a factor as some geophysical companies will acquire seismic data on a speculative basis.

Within the last decade, improvements in drilling and production techniques and the acceptance of 3-D imaging as an exploration tool resulted in significantly increased seismic activity throughout the Transition Zone. Due to this increased demand, the Company significantly increased its capacity, primarily through acquisition, as measured by drilling units, support equipment and employees. The additional capacity and related increase in work force led to significant increases in the Company's revenue and generally commensurate increases in operating expenses and selling, general and administrative expenses through the second quarter of 1998. Beginning in mid-1998, seismic activity in the areas in which the Company operates decreased substantially, resulting in corresponding reductions in demand for the Company's services and adversely affected results of operations. For the three months ended September 30, 1999 and 2000, the Company's operating revenues and loss from continuing operations were $5.7 million and $2.2 million, and $2.4 million and $2.8 million, respectively.

The Company curtailed its expansion strategy in the last half of 1998 in response to industry conditions and the short-term outlook. Management is continuing its efforts to adjust its operation to current market conditions by downsizing its operations. In November 1999, the Company adopted a plan to dispose of its aviation division; the Company is continuing to pursue this disposition. In a series of negotiations during 1999 and 2000, the Company requested and received from its primary secured lenders reductions in principal amortization and extension of maturity dates, until March 31, 2000 and subsequently September 30, 2000. Effective October 31, 2000 the loan maturity dates were extended until the first quarter of 2002. As of September 30, 2000 and December 31, 1999, the Company was not in compliance with certain financial covenants of the Company's long-term debt agreements. The Company obtained waivers of these covenant violations through September 30, 2000. Please see Notes 1 and 3 for actions management recently completed in connection with raising additional working capital and strengthening Omni's financial position.

Risks from Seasonality and Adverse Weather. Results of operations for interim periods are not necessarily indicative of the operating results that may be expected for the full fiscal year. The Company's operations are subject to seasonal variations in weather conditions and daylight hours. Since the Company's activities take place outdoors, fewer hours are worked per day, aviation flight hours decline and fewer holes are generally drilled or surveyed per day, on average, in winter months than in summer months. This occurs due to an increase in rainy, foggy, and cold conditions and a decrease in daylight hours.

Operating revenues decreased 62%, or $3.5 million, from $5.7 million for the three months ended September 30, 1999 to $2.2 million for the three months ended September 30, 2000. As a result of the decline in seismic activity, drilling revenues decreased $2.0 million to $2.1 million for the three months ended September 30, 2000; likewise, survey revenues decreased 93% from the three months ended September 30, 1999 to $0.1 million for the three months ended September 30, 2000.

Operating expenses decreased 54%, or $3.4 million, from $6.3 million for the three months ended September 30, 1999 to $2.9 million for the three months ended September 30, 2000. Declines in payroll costs accounted for 59% of this decrease as operating payroll expense decreased from $3.2 million to $1.2 million for the quarters ended September 30, 1999 and 2000, respectively. The significant decrease in seismic activity has resulted in a corresponding decrease in the amount of personnel employed by the Company, as the average number of field employees has declined to 92 for the three months ended September 30, 2000 compared to 277 for the three months ended September 30, 1999. Also as a result of the lower activity levels in the third quarter of 2000 as compared to the third quarter of 1999, repairs and maintenance, explosives, and contract services decreased $0.8 million from $1.1 million to $0.3 million for the three months ended September 30, 1999 and 2000, respectively.

Gross profit margins were (11)% and (32)% for the three months ended September 30, 1999 and 2000, respectively. The variance is attributable to substantially lower domestic revenues relative to the fixed costs of the Company's Drilling segment.

General and administrative expenses decreased $0.7 million from $1.9 million for the three months ended September 30, 1999 to $1.2 million for the three months ended September 30, 2000, a 37% decrease. Payroll costs decreased $0.5 million from $0.9 million for the third quarter of 1999 to $0.4 million for the third quarter of 2000. These decreases are due primarily to lower personnel levels as the average number of administrative employees declined to 28 for the three months ended September 30, 2000, from 63 for the three months ended September 30, 1999. Travel and entertainment decreased $0.1 million due to the decreased activity levels.

Asset impairment charges were $9.4 million in the three months ended September 30, 2000(see note 9).

Interest expense increased $0.1 million from $0.7 million for the three month period ended September 30, 1999 to $0.8 million for the three month period ended September 30, 2000, due to higher average interest rates during the periods.

Due to the loss for the period ended September 30, 1999, the Company recorded an income tax benefit of $1.0 million. The Company continued to record a valuation allowance during the period ended September 30, 2000 against the Company's net operating loss carry forwards.

Operating revenues decreased 61%, or $12.3 million, from $20.2 million for the nine months ended September 30, 1999 to $7.9 million for the nine months ended September 30, 2000. As a result of the decline in seismic activity, drilling and survey revenues decreased $8.9 million to $6.5 million and $3.5 million to $1.3 million, respectively, for the nine months ended September 30, 2000. The Company's South American joint venture had revenues of $2.4 million for the nine months ended September 30, 1999; there were no similar revenues for the nine months ended September 30, 2000.

Operating expenses decreased 51%, or $10.9 million, from $21.4 million for the nine months ended September 30, 1999 to $10.5 million for the nine months ended September 30, 2000. Declines in payroll costs accounted for 61% of this decrease as operating payroll expense decreased from $11.7 million to $4.6 million for the nine months ended September 30, 1999 and 2000, respectively. The significant decrease in seismic activity has resulted in a corresponding decrease in the amount of personnel employed by the Company, as the average number of field employees has declined to 134 for the nine months ended September 30, 2000 compared to 228 for the nine months ended September 30, 1999. Also as a result of the lower activity levels in the first nine months of 2000 as compared to the first nine months of 1999, repairs and maintenance, explosives and rentals and leases decreased $2.2 million, from $4.0 million to $1.8 million for the nine months ended September 30, 1999 and 2000, respectively.

Gross profit margins were (6)% and (33)% for the nine months ended September 30, 1999 and 2000, respectively. The variance is primarily attributable to substantially lower domestic revenues relative to the fixed costs of the Company's Drilling segment.

General and administrative expenses decreased $3.1 million from $6.9 million for the nine months ended September 30, 1999 to $3.8 million for the nine months ended September 30, 2000, a 45% decrease. Payroll costs decreased $1.8 million from $3.4 million for the first nine months of 1999 to $1.6 million for the first nine months of 2000. These decreases are due primarily to lower personnel levels as the average number of administrative employees declined to 33 for the nine months ended September 30, 2000, from 72 for the nine months ended September 30, 1999. Travel and entertainment, rentals and leases, communications, and office and supply expenses decreased $0.6 million, from $1.1 million for the nine months ended September 30, 1999 to $0.5 million for the nine months ended September 30, 2000, due to the decreased activity levels.

Asset impairment charges was $9.4 million for the nine months ended September 30, 2000 (see Note 9).

Interest expense increased $0.2 million from $2.0 million for the nine month period ended Sept 30, 1999 to $2.2 million for the nine month period ended September 30, 2000, due to higher average interest rates for the periods.

Due to the loss for the nine month period ended September 30, 1999, the Company recorded an income tax benefit of $2.7 million. The Company continued to record a valuation allowance during the nine month period ended September 30, 2000 against the Company's net operating loss carryforwards.

The Company has suffered recurring losses from operations and has a net working capital deficiency, including significant current debt maturities, that previously raised substantial doubts about its ability to continue as a going concern. As more fully explained below and in subsequent portions of this report, Omni recently completed an equity infusion and renegotiated its loan agreements with terms which have substantially improved its prospects. The terms of the Company's primary secured credit agreements(see Note 3) contain, among other provisions, requirements for maintaining defined levels of EBITDA, working capital and tangible net worth and cash flow coverage. Each agreement, including the Company's subordinated notes (see Note 3), contains cross-default provisions for these covenants. At December 31, 1999 and September 30, 2000, the Company was in violation of certain of its covenants under these agreements. The Company has received waivers from the creditors via amendments to the loan agreements which waived financial covenant violations through September 30, 2000. As more fully explained below, these agreements were renegotiated, effective October 31, 2000, which cured these covenant violations as of the effective date.

During the most recent quarter, the Company had been attempting to refinance its current credit agreements and raise additional capital. Effective October 31, 2000 the company raised approximately $4.3 million in cash in exchange for 6,960,000 shares of common stock. The purchasers of the common stock received options to acquire an additional 2,827,500 shares of common stock at an exercise price of $0.75 per share. In early November the company sold 800,000 shares of Preferred Stock Series A for $0.8 million in cash. In conjunction with this equity transaction, the Company was successful in extending the maturity dates of approximately $13 million in secured indebtedness until the first quarter of 2002. The principal amortization on the term portion of this indebtedness was modified to a 7 year basis. The proceeds from these equity transactions will be used to pay down $1.3 million of term indebtedness, provide funds for an expected acquisition and to provide additional working capital.

At September 30, 2000, the Company had approximately $0.2 million cash balance compared to approximately $0.1 million at December 31, 1999. The Company had a $(4.2) million working capital deficit at September 30, 2000, compared to $(9.8) million at December 31, 1999. The increase in working capital is primarily due to the decreases in the current portion of long-term debt.

The Company's primary credit facility is the Hibernia Facility. The Hibernia Facility, which was amended in October 2000, currently provides the Company with a $7.5 million term loan and a $5.0 million revolving line of credit to finance working capital requirements. The loans bear interest at prime plus 3% and have a final maturity of January 31, 2002. As of September 30, 2000, the Company had approximately $13.0 million outstanding under the Hibernia Facility.

At September 30, 2000, the Company also has approximately $2.9 million in outstanding debt pursuant to agreements with CIT, consisting of two asset-based financing loans. Of the principal outstanding under the CIT Loans, approximately $2.3 million bears interest at LIBOR plus 3.75% and the remaining portion bear interest at LIBOR plus 3.0%. The notes and related agreements were amended in October 2000 and mature in March 2002. These loans are secured by certain seismic drilling units, support equipment and aircraft.

In the year ended December 31, 1999, the Company privately placed a total of $7.5 million in subordinated debentures with an affiliate of the Company. Notes with a principal of $5.0 million bear interest at 12% per annum and mature on March 1, 2004. An additional $2.5 million of notes bear interest at 12.5% per annum until December 31, 1999, at which time the rate increases by 0.5% per month not to exceed 20% per annum. This portion of the notes mature on March 1, 2005, with interest payable March 1 of each year. In connection with these debentures, the Company issued warrants to purchase up to 1,937,500 shares of the Company's common stock at an exercise price of $5.00, $3.00 and $2.00 per share for 1,600,000 shares, 300,000 shares and 37,500 shares, respectively. The warrants in relation to the 1,600,000 shares vest equally over four years commencing in 1999 until 2002, unless the debentures are paid in full, in which case, those warrants that have not become exercisable will become void. All warrants that become exercisable will expire on March 1, 2004. The warrants for the remaining 337,500 shares vest immediately and expire on March 1, 2005. The fair value of all warrants is included as paid-in-capital and the effective interest rate over the term of the debt, including the coupon and the amortization of the fair value of the warrants, is approximately 19%. In May and June 2000 the Company privately placed an additional $0.4 million and $0.6 million, respectively, in subordinated debentures with an affiliate of the Company. The notes bear interest at 12.5% per annum through June 30, 2000, at which time the rate increases by 0.5% per month not to exceed 20% per annum. The notes mature on June 1, 2005 and July 1, 2005, respectively, with interest payable July 1 of each year. In connection with these debentures, the Company issued warrants to purchase up to 400,000 shares of the Company's common stock at an exercise price of $1.50, which vest immediately and expire on July 1, 2005. In July 2000 the Company privately placed approximately $0.3 million in subordinated debentures with an affiliate of the Company. The note bears interest at 12.5% per annum until July 31, 2000, at which time the rate will increase by 0.5% per month not to exceed 20% per annum. This note matures on August 1, 2005, with interest payable July 1 of each year. In connection with this debenture, the Company issued warrants to purchase up to 333,333 shares of the Company's common stock at an exercise price of $0.75. The warrants vest immediately and expire on August 1, 2005. In addition, in July 2000 the Company entered into a series of transactions with an affiliate that enabled the Company to factor, with recourse to the Company, substantially all of the trade receivables of a major customer totaling approximately $1 million, which had become ineligible under the terms of the Company's revolving credit facility with Hibernia National Bank. These transactions included the forgiveness of $1 million in principal on the oldest subordinated debt owed by the Company to the affiliate in exchange for the Company transferring ownership rights and title to the affiliate of approximately $1 million in trade receivables of the major customer. Contemporaneously therewith, the Company placed $1.0 million in new subordinated debt with the affiliate. The Company incurred a fixed interest rate charge of 1.5% on the $1 million in principal advanced against the trade receivables transferred and will incur interest at the prime rate of interest plus two percentage points on the balance outstanding until such time as the trade receivables have been fully paid by the major customer. The Company has guaranteed repayment of the trade receivables and expects that the trade receivables will be fully collected by the end of October 2000. The subordinated note bears interest at 12.5% per annum until July 31, 2000, at which time the rate will increase by 0.5% per month, not to exceed 20% per annum. This note matures on August 1, 2005, with interest payable July 1 of each year. In connection with this debenture, the Company issued warrants to purchase up to 1,333,333 shares of the Company's common stock at an exercise price of $0.75. The warrants vest immediately and expire on August 1, 2005. In September 2000 the Company privately placed approximately $0.8 million in subordinated debentures with an affiliate of the Company. The note bears interest at 12.5% per annum until September 30, 2000, at which time the rate will increase by 0.5% per month not to exceed 20% per annum. This note matures on October 1, 2005, with interest payable September 1 of each year. In connection with this debenture, the Company issued warrants to purchase up to 1,066,667 shares of the Company's common stock at an exercise price of $0.75. The warrants vest immediately and expire on October 1, 2005. The amount of the notes included in subordinated debt in the accompanying balance sheet at September 30, 2000 is $9.0 million.

In October 2000 the Company privately placed approximately $0.3 million in subordinated debentures with an affiliate of the Company. The note bears interest at 12.5% per annum until October 31, 2000, at which time the rate will increase by 0.5% per month not to exceed 20% per annum. This note matures on November 1, 2005, with interest payable October 1 of each year. In connection with this debenture, the Company issued warrants to purchase up to 400,000 shares of the Company's common stock at an exercise price of $0.75. The warrants vest immediately and expire on October 1, 2005.

In December 1999 and February and April 2000, the Company received from an affiliate of the Company $1,000,000, $500,000, and $350,000, respectively, pursuant to the preferred stock subscription agreements for an aggregate of 1,850 shares of preferred stock that was issued on April 26, 2000. The Company issued an additional 300 shares of the preferred stock to the affiliate in May 2000 for $300,000. The funds were used for debt service and to fund operations. The preferred stock has an 8% cumulative dividend rate, is convertible into common stock with an initial conversion rate of $2.50, is redeemable at the option of the Company at par plus unpaid dividends, contains a liquidation preference of $1,000 per share and has voting rights only with respect to matters that would reduce the ranking of the stock compared to other classes of stock.

In November 2000, Omni issued 800 shares of Series A Preferred Stock for cash of $800,000. This transaction, as well as an anticipated debt conversion, is more fully described in Note 1 to the quarterly financial statements.

The Company currently expects minimal capital expenditures for the remainder of 2000.

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

Pursuant to the requirements 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.

OMNI ENERGY SERVICES CORP.