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Omega Protein: Future Uncertain After Q2 Losses

US - Omega Protein Corporation, the leading producer of Omega-3 fish oil in the US, has reported a net loss of $3.3 million ($0.18 per share) for the second quarter of 2009.

Revenues for the second quarter ended June 30, 2009 were $41.8 million compared with revenues of $47.1 million for the comparable quarter in 2008. Omega Protein recorded operating loss of $3.9 million for the second quarter of 2009, versus operating income of $11.6 million for the second quarter of 2008.

For the six months ended June 30, 2009, the Company had revenues of $71.9 million, compared with $83.2 million in revenues for the first six months of 2008. Omega Protein recorded operating income of $0.4 million for the six months ended June 30, 2009, versus operating income of $15.7 million for the comparable period a year earlier.

The Company had net loss of $1.2 million ($0.06 per share) for the six months ended June 30, 2009, compared with net income of $8.6 million ($0.48 per share) for the six months ended June 30, 2008.

The Company's 2009 second quarter results reflect decreased revenues and gross profit margins primarily due to lower sales prices and increased per unit costs resulting from below average fish catch in the 2008 fishing season and higher costs of production due to increased energy, labor and repair costs, offset partially by increased sales volumes when compared to the 2008 second quarter.

The decreased sales prices are a result of the general constriction of global markets and, more particularly as it relates to fish oil, an inordinate reduction in demand from the Chilean aquaculture industry.

The company says there is a likelihood that it may not be able to remain in compliance with certain financial covenants for the remainder of 2009. If current conditions persist, it may be necessary for the Company to either amend its existing financial covenants in its existing bank credit facility, renegotiate the bank credit facility or take other actions such as the temporary deferral of capital projects, or prepayment of an amount of debt.

The result of each of these options is not readily apparent at this time but it is not expected to adversely effect the Company's consolidated financial position and results of operations. As a result of the current conditions in the financial markets, no assurances can be given that such options will be available on acceptable terms, if at all.

the Fish Site Editor

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