8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

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

Date of Report (Date of earliest event reported): November 29, 2005 (November 29, 2005)

SEITEL, INC.

(Exact name of registrant as specified in its charter)

Delaware (State of Incorporation)	0-14488 (Commission File Number)	76-0025431 (IRS Employer Identification No.)
10811 S. Westview Circle Building C, Suite 100 Houston, Texas 77043 (Address of Registrant's principal executive offices) (713) 881-8900 (Registrant's telephone number, including area code) Not Applicable (Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:

≅   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

≅   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

≅   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

≅   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Section 7 - Regulation FD

Item 7.01.        Regulation FD Disclosure.

Seitel, Inc. (the "Company") is furnishing herewith information it intends to present in analyst meetings to be held on November 29 - December 7, 2005.  This information, which is incorporated by reference into this Item 7.01 from Exhibit 99.1 attached hereto, is not deemed to be "filed" for purposes of Section 18 of the Exchange Act of 1934, as amended, and is not incorporated by reference into any Company filing, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Section 9 - Financial Statements and Exhibits

Item 9.01.        Financial Statements and Exhibits

            (a)        Financial Statements of Businesses Acquired.

                        None.

            (b)        Pro Forma Financial Information.

                        None.

            (c)        Exhibits.

                        99.1     Presentation by Seitel, Inc. on November 29 - December 7, 2005.

[signature on following page]

SIGNATURE

            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 hereunto duly authorized.

Dated:  November 29, 2005                                                                SEITEL, INC.

                                                                                                          By:  /s/ Robert D. Monson                         

                                                                                                          Robert D. Monson

                                                                                                          President and Chief Executive Officer

 

EXHIBIT INDEX

Exhibit No.	Description
99.1	Presentation by Seitel, Inc. on November 29 - December 7, 2005.

EX-99.1

Exhibit 99.1

Seitel, Inc.

Investor Presentation

November 2005

Forward-Looking Information

Cautionary Statements Concerning Forward-Looking Information

This material contains certain forward-looking statements, which are subject to many factors that could cause actual results to differ materially from our expectations reflected in the forward-looking statements.  These factors are described in our documents filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K.  Except as required by law, we undertake no obligation to publicly update or revise such forward-looking statements.

This material also contains certain non-GAAP financial measures as defined under the Securities and Exchange Commission rules.  To comply with these rules, we have provided a reconciliation of such non-GAAP financial measures at the end of this material and also in our website under Investor Relations, where a copy of this presentation including the reconciliations has been posted.

Executive Summary

Seitel's library value and data licensing revenue have grown continuously since 1982 providing strong cash generation and high return on investment

• Seitel owns the largest commercial land seismic library in North America

  • Seismic data is critical to the exploration programs of our customers

• The seismic industry has started to benefit from strong commodity prices, which have encouraged oil & gas companies to ramp up exploration efforts

• The company's financial results are rapidly moving in the right direction in line with the industry environment

  • Cash flow highly levered to growth in data licensing due to low variable costs

• Market capitalization has grown from $127.9 million at its lowest on October 28, 2004 to $249.0 million on November 15, 2005

Company Overview

Company Overview

Seitel's large seismic information database ranks the company as one of the top providers of seismic IP to the oil & gas industry in North America

• Owns the largest 3D and 2D onshore seismic data library in North America

• Seitel's business model is based on:

  • expanding its library of seismic data, while exceeding target of 40% annualized ROI

  • direct investment in data and not on equipment and crews

  • onshore focus for new investment

  • multiple license sales over long time horizon

  • using its data management and marketing expertise to access customer databases

  • augmenting value of the data by applying the latest developments in seismic technology

Main Areas of Focus

Business Model

Add seismic data to the library cost effectively and generate high returns on investment through multiple licensing sales over a long number of years

• Continuous expansion of the seismic data library with a target of at least 40% annualized return on investment during the initial two years

  • Shoot the right seismic surveys, on time and under budget

  • Purchase existing databases

  • Trade library data licenses for ownership of data

• Multiple data licensing sales

  • High quality data with large number of potential clients

  • Dynamic environment for land leases and mineral rights

• Expert and motivated workforce

  • Survey expertise

  • Marketing and sales experience

  • Data management leadership

Land Database Unique Strategy

• Easier basins for smaller E&P companies to penetrate result in a more dynamic environment with more data licensing opportunities

  • wider customer base

  • M&A and new company creation

  • turnover of mineral rights

• Replication unlikely

  • economically unattractive: utilization of idle crew capacity less of a factor on land than in marine environment

  • in the US, very long lead time to plan and execute onshore seismic data acquisition due to regulatory, environmental and political reasons

• Unique asset

  • very little overlap in onshore data

Multiple Sales of Seismic Data

• Data retains its value over time, as there is no limit to the number of times or clients to whom Seitel can license data

 

Diversified Customer Base

• Over 1,000 customers, ranging from independent oil and gas companies and private prospecting individuals to several of the largest companies in the oil and gas industry

2003	Percent of Total Revenue (%)	2004	Percent of Total Revenue (%)
Manti Resources		Encana
Falcon Bay Energy		Manti Resources
Smith Production		Esenjay
EOG Resources		Smith Production
Devon Energy		Progress
Anadarko Petroleum		Kerr McGee
Centurion Exploration		Burlington
El Paso		Centurion Exploration
Dominion Resources		Goodrich
Samuel Gary		Samuel Gary
Subtotal	40.2	Subtotal	29.8

Seismic Industry Dynamics

Overview of 3D Data Library

• Starting in 1993 Seitel's 3D data library has grown at a fast pace to become one of the most comprehensive libraries of North American seismic data.

3D Data Library

    

Cumulative Growth of 3D Data Library

  

Note:  Reconciliation of non-GAAP financial measures to GAAP financial measures is provided at the end of this presentation.

Key Competitors

• Strong position in key E&P basins provides comparative advantage

• Presence in all key North American onshore areas of interest

Strong Presence in Active Basins

• Traditional strong position in Louisiana onshore with unmatched coverage in the growing Northern Louisiana area

• Broad based presence in Texas and the Rockies

• Our expansion into Canada has resulted in the largest commercially available library in the Canadian market, both in size and in coverage of all areas of development and exploration

• Extensive offshore data ownership in the Western Gulf of Mexico

 

 

Longevity of Seismic Data Revenue Generation

- Resales and investment are for 3D onshore data in the US and Canada, as well as 2D data in Canada only

- Small vintages smoothed over 2 year periods

• Return on initial investment is related to the age of the survey as well as the industry cycle

• First year after investment has historically yielded an average return of 40% or more versus initial investment, followed by a gradual decline period which flattens out after 10 years

• Some of the variation in return is explained by industry cycles, which affect pricing and volume

• The last three data points have improved as our older vintages have benefited from the current environment

Onshore 3D - Investment and Resales versus Data Vintage

 

Note:

-          Total resales Nine Months 2005

-          Investment net of client underwriting

-          Resales and investment are for 3D onshore data in the US and Canada, as well as 2D data in Canada only

-          Reconciliation of above resales to total GAAP revenue and of above net investment to GAAP Net Book Value is provided at the end of this presentation

Effectiveness of Cumulative Investment

• Seitel's data resales have grown steadily through the energy cycles

• Since 2002 data resales increasing faster than investment as ROI focus has increased

Resales and investment are for 3D onshore data in the US and Canada, as well as 2D data in Canada only.

Note:  Reconciliation of non-GAAP financial measures to GAAP financial measures is provided at the end of this presentation.

3D Onshore Library Activity

Financial Overview

Growth in Total Licensing Revenue

Note:  Reconciliation of non-GAAP financial measures to GAAP financial measures is provided at the end of this presentation.

Cash Resales:  Four Quarters of YOY Growth

Quarterly Financial Results

 

Note:  Reconciliation of non-GAAP financial measures to GAAP financial measures is included at the end of this presentation.

Cash Margin and Cash Balances

Additional Financial Details

Phases of Revenue Generation

2004 Revenue by Source

• US 3D onshore and Canada provided 92% of 2004 revenue and are growing at a rapid pace

• Solutions revenue which includes data management is now 4% of total revenue and provides a significant growth opportunity

• 2D and 3D offshore continue to contribute while tapering off gradually

Conservative Accounting for Data Library

Conservative accounting policy for data implemented in 2004

• Straight line amortization of 4 years maximum as compared to 7 years before latest change

• One and a half years of resale revenue in library net book value

• Significant portion of our revenue comes from fully amortized data

• Change in policy resulted in a catch up that will continue to impact our amortization through the end of the year

2005 Capital Investment

• As compared to prior years, investment in 2005 had a higher proportion of cash purchases for existing data than of data acquired from new surveys

• Client prefunding % refers to the proportion of costs for new surveys paid by clients

• For purchases of existing data Seitel pays 100%

 

Note:  Reconciliation of non-GAAP financial measures to GAAP financial measures is provided at the end of this presentation.

Capital Investment Breakdown

$ millions	2003	2004	EST 2005
New Data Surveys	43.6	50.7	33.5
Data Trades/ Purchases	17.6	13.6	31.6
Total Capital Investment	61.2	64.3	65.1
- less non-cash additions	(13.0)	(10.7)	(9.4)
Cash  used -  Investing Activities	48.2	53.5	55.7
- less client pre-funding	(35.6)	(35.3)	(21.8)
Net Operating Cash Used	12.6	18.2	33.9

Data Library Net Book Value

 

Note:  Reconciliation of non-GAAP financial measures to GAAP financial measures is provided at the end of this presentation.

Summary of Historical Cash Margin

 

Note:  Reconciliation of non-GAAP financial measures to GAAP financial measures is provided at the end of this presentation.

Consolidated Balance Sheet

 

Reconciliation of Certain non-GAAP Measures to GAAP

Reconciliation of Certain non-GAAP Measures to GAAP

 

Reconciliation of Certain non-GAAP Measures to GAAP

 

Reconciliation of Certain non-GAAP Measures to GAAP

 

Reconciliation of Certain non-GAAP Measures to GAAP

Reconciliation of Certain non-GAAP Measures to GAAP

 

Reconciliation of Certain non-GAAP Measures to GAAP

Reconciliation of Certain non-GAAP Measures to GAAP

 

Reconciliation of Certain non-GAAP Measures to GAAP

 

Reconciliation of Certain non-GAAP Measures to GAAP

Reconciliation of Certain non-GAAP Measures to GAAP

 

Reconciliation of Certain non-GAAP Measures to GAAP

Reconciliation of Certain non-GAAP Measures to GAAP

 

Reconciliation of Certain non-GAAP Measures to GAAP

Reconciliation of Certain non-GAAP Measures to GAAP

 

Reconciliation of Certain non-GAAP Measures to GAAP

Reconciliation of Certain non-GAAP Measures to GAAP

 

Reconciliation of Certain non-GAAP Measures to GAAP

 

Reconciliation of Certain non-GAAP Measures to GAAP