10-Q

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

[ X ]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
	ACT OF 1934
	For the quarterly period ended March 31, 2002
	OR
[    ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
	ACT OF 1934
Commission File Number 0-14488

SEITEL, INC.
(Exact name of registrant as specified in charter)
Delaware	76-0025431
(State or other jurisdiction of	(IRS Employer
incorporation or organization)	Identification Number)
50 Briar Hollow Lane, 7th Floor West	77027
Houston, Texas	(Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code:	(713) 881-8900

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 [   ]

As of May 13, 2002, there were 25,375,683 shares of the Company's common stock, par value $.01 per share outstanding.

Explanatory Note

Restatement of Financial Statements

          Historically, Seitel recognized revenue from the licensing of seismic data when it had a contract with its customer for a fixed sales price, a licensing agreement was in place, the seismic data was available for use by the customer, and collectibility of the sales price was reasonably assured. Under certain contracts, although a licensing agreement was in place, collectibility was reasonably assured, and access to the seismic data available was delivered to the customer, the customer was given time to select specific data from the data available to it to be held long-term under its licensing agreement. Under those contracts, delivery of data to the customer was, therefore, not required until a specific selection was made. In other cases, the customer was delivered seismic data to review and could select from among that data the specific data it wanted to hold long-term. With each of these types of contracts, specific data selections could be mad e over the term of the contract, which is typically two years. The accounting model described above has been consistently followed by the Company for these types of contracts and has also been followed by others in the seismic industry on similar types of data licensing contracts. In February 2002, following a SAB 101 restatement by an industry colleague, the Company evaluated the application of SAB 101 and determined it was appropriate to change its revenue recognition policies for certain data licensing contracts to recognize revenue at the time of data selection. During April 2002, the Company consulted with the Staff of the Securities and Exchange Commission ("SEC") at the Staff's request regarding their interpretation of the appropriate application of SAB 101. Based upon SAB 101, effective January 1, 2000, the Company recognizes revenue under certain seismic data licensing contracts upon selection by the customer of specific seismic data. As a result, we revised our 2000 and first through third q uarter 2001 financial statements to adopt the selection method for certain data licensing contracts.

          The financial statements also reflect revisions for the amount and timing of revenue recognized under certain data acquisition contracts. In 2000 and 2001, the Company entered into certain acquisition contracts under which both the Company and the customer jointly participated in the acquisition services. Consequently, the Company did not assume the sole risk of service throughout the acquisition process. The Company recognized revenue under these contracts consistent with its revenue recognition policies for acquisition contracts. Under these contracts, the Company has now determined that revenue previously recognized for amounts funded by customers should be used to reduce the Company's recorded cost of creating the seismic data. The Company continues to have sole ownership of the newly created data.

          While the above revisions reduced reported revenue and net income for the nine months ended September 30, 2001, and the year ended December 31, 2000, they had no effect on the cash received by the Company during those periods.

          Accordingly, the Company restated its financial statements for the nine month period ended September 30, 2001 and the year ended December 31, 2000 and its quarterly financial statements for the first three quarters of 2001 and 2000, including the three month period ended March 31, 2001.

          This Form 10-Q includes in Item I of Part I such restated financial statements and related notes thereto for the three month period ended March 31, 2001, and other information relating to such restated financial statements. Except for Items 1 and 2 of Part I, no other information included in the original report on Form 10-Q is amended by this restatement as it pertains to the three month period ended March 31, 2001.

          For current information regarding risks, uncertainties and other factors that may affect the Company's future performance, please see "Risk Factors" included in Item 7 of Part I of the Company's Annual Report on Form 10-K and any amendments thereto for the year ended December 31, 2001.

INDEX

			Page
PART I.	FINANCIAL INFORMATION
	Item 1.	Financial Statement
	Consolidated Balance Sheets as of
	March 31, 2002 (Unaudited) and December 31, 2001		4
	Consolidated Statements of Operations (Unaudited) for the
	Three Months Ended March 31, 2002 and 2001 (Restated)		5
	Consolidated Statements of Stockholders' Equity
	for the year ended December 31, 2001 and the
	Three Months Ended March 31, 2002 (Unaudited)		6
	Consolidated Statements of Cash Flows (Unaudited)
	for the Three Months Ended March 31, 2002 and 2001 (Restated)		7
	Notes to Consolidated Interim Financial Statements		8
	Item 2.	Management's Discussion and Analysis of
		Financial Condition and Results of Operations	16
	Item 3.	Quantitative and Qualitative Disclosures
		about Market Risk	21
PART II.	OTHER INFORMATION		21

PART I - FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)

				(Unaudited)
				March 31,			December 31,
				2002			2001
ASSETS
	Cash and equivalents		$	13,211		$	25,223
	Receivables
		Trade (net)		41,323			59,243
		Notes and other		5,442			4,245
	Net seismic data library			465,150			455,845
	Net oil and gas properties			89,224			89,370
	Net other property and equipment			20,023			12,498
	Investment in marketable securities			1,185			2,501
	Deferred tax asset			2,027			-
	Prepaid expenses, deferred charges and other assets			13,178			12,544
	TOTAL ASSETS		$	650,763		$	661,469
LIABILITIES AND STOCKHOLDERS' EQUITY
	Accounts payable and accrued liabilities		$	45,870		$	49,205
	Income taxes payable			240			2,646
	Debt
		Senior Notes		255,000			255,000
		Line of credit		-			1,319
		Term Loans		11,051			9,375
	Obligations under capital leases			6,778			2,656
	Deferred income taxes			-			351
	Deferred revenue			91,811			97,330
TOTAL LIABILITIES				410,750			417,882
CONTINGENCIES AND COMMITMENTS
STOCKHOLDERS' EQUITY
	Preferred stock, par value $.01 per share; authorized
		5,000,000 shares; none issued		-			-
	Common stock, par value $.01 per share; authorized
		50,000,000 shares; issued and outstanding
		25,811,601 and 25,810,603 at March 31, 2002
		and December 31, 2001, respectively		258			258
	Additional paid-in capital			166,465			166,456
	Retained earnings			87,996			91,624
	Treasury stock 735,918 shares at cost at
		March 31, 2002 and December 31, 2001		(9,072	)		(9,072	)
	Notes receivable from officers and employees			(3,483	)		(3,776	)
	Accumulated other comprehensive loss			(2,151	)		(1,903	)
TOTAL STOCKHOLDERS' EQUITY				240,013			243,587
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY			$	650,763		$	661,469

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

SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)

			Three Months Ended March 31,
			2002			2001
						(Restated)
REVENUE (1)		$	25,156		$	38,324
EXPENSES
	Depreciation, depletion and amortization		14,634			16,360
	Cost of sales		1,014			1,473
	Selling, general and administrative expenses		10,991			10,792
			26,639			28,625
INCOME (LOSS) FROM OPERATIONS			(1,483	)		9,699
Interest expense and other, net			(4,183	)		(3,015	)
Income (loss) before provision for income taxes			(5,666	)		6,684
Provision (benefit) for income taxes			(2,038	)		2,653
NET INCOME (LOSS)		$	(3,628	)	$	4,031
Net income (loss) per share:
	Basic	$	(.14	)	$	.16
	Diluted	$	(.14	)	$	.15
Weighted average number of common and
	common equivalent shares:
	Basic		25,075			24,781
	Diluted		25,075			26,278

(1) Non-cash revenue and the percentage of total revenue for the three months ended March 31, 2002 and 2001 are $4,406,000 (17.5%) and $4,363,000 (11.4%), respectively.

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

SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share amounts)
																		Notes
																		Receivable			Accumulated
				Common Stock				Additional				Treasury Stock						from			Other
								Paid-In		Retained								Officers &			Comprehensive
				Shares		Amount		Capital		Earnings		Shares			Amount			Employees			Income (Loss)
Balance, December 31, 2000				25,306,517	$	253	$	159,543	$	106,617		(635,918	)	$	(7,667	)	$	(4,965	)	$	(191	)
	Net proceeds from issuance
		of common stock		504,086		5		6,398		-		-			-			-			-
	Tax reduction from exercise
		of stock options		-		-		515		-		-			-			-			-
	Treasury stock purchased			-		-		-		-		(100,000	)		(1,405	)		-			-
	Payments received on
		notes receivable from
		officers and employees		-		-		-		-		-			-			1,189			-
	Net loss			-		-		-		(14,993	)	-			-			-			-
	Foreign currency translation
		adjustments		-		-		-		-		-			-			-			(1,733	)
	Unrealized gain on marketable
		securities net of income
		tax expense of $14		-		-		-		-		-			-			-			21
Balance, December 31, 2001				25,810,603	$	258	$	166,456	$	91,624		(735,918	)	$	(9,072	)	$	(3,776	)	$	(1,903	)
	Net proceeds from issuance
		of common stock		998		-		9		-		-			-			-			-
	Payments received on
		notes receivable from
		officers and employees		-		-		-		-		-			-			293			-
	Net loss			-		-		-		(3,628	)	-			-			-			-
	Foreign currency translation
		adjustments		-		-		-		-		-			-			-			107
	Unrealized gain on marketable
		securities net of income
		tax expense of $82		-		-		-		-		-			-			-			332
		Reclassification adjustment for
			gain included in income, net
			of tax expense of $170	-		-		-		-		-			-			-			(687	)
Balance, March 31, 2002
	(unaudited)			25,811,601	$	258	$	166,465	$	87,996		(735,918	)	$	(9,072	)	$	(3,483	)	$	(2,151	)

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

SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In thousands)
					Three Months Ended March 31,
					2002				2001
									(Restated)
Cash flows from operating activities:
Reconciliation of net income to net cash provided by operating activities:
	Net income (loss)			$	(3,628	)	$		4,031
	Depreciation, depletion and amortization				14,635				16,372
	Deferred income tax benefit				(2,320	)			(153		)
	Non-cash sales				(4,406	)			(4,363		)
	Gain on sale of marketable security				(482	)			-
	Decrease (increase) in receivables				16,381				(4,743		)
	Increase in other assets				(230	)			(1,161		)
	Decrease in deferred revenue				(4,166	)			(2,886		)
	Decrease in accounts payable and other liabilities				(3,417	)			(11,216		)
			Net cash provided by (used in) operating activities		12,367				(4,119		)
Cash flows from investing activities:
		Cash invested in seismic data			(20,258	)				(20,066	)
		Cash invested in oil and gas properties			(1,884	)				(5,649	)
		Cash paid to acquire property and equipment			(4,071	)				(808	)
		Net proceeds from sale of oil and gas properties			-					78
		Net proceeds from sale of marketable security			1,356					-
			Net cash used in investing activities		(24,857	)				(26,445	)
Cash flows from financing activities:
	Borrowings under line of credit agreement				8,635					37,930
	Principal payments under line of credit				(9,962	)				(14,930	)
	Borrowings on term loan				2,522					-
	Principal payments on term loans				(842	)				-
	Principal payments under capital lease obligations				(385	)				(26	)
	Proceeds from issuance of common stock				9					4,332
	Costs of debt and equity transactions				(380	)				-
	Loans to officers, employee and director				(65	)				-
	Payments on notes receivable from officers and employees				700					840
			Net cash provided by financing activities		232					28,146
Effect of exchange rate changes					246					(525	)
Net decrease in cash and equivalents					(12,012	)				(2,943	)
Cash and cash equivalents at beginning of period					25,223					10,216
Cash and equivalents at end of period				$	13,211			$		7,273

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest (net of amounts capitalized)	$	5,054	$	5,092
Income taxes	$	2,697	$	6,825
Supplemental schedule of non-cash investing and
financing activities:
Additions to seismic data library	$	3,053	$	14,316
Capital lease obligations incurred	$	4,507	$	-

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

SEITEL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited)
March 31, 2002

NOTE A-BASIS OF PRESENTATION

          The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Certain reclassifications have been made to the amounts in the prior year's financial statements to conform to the current year's presentation. Operating results for the three months ended March 31, 2002 are not necessarily indicative of the results that may be expected for the year ending December 31, 2002. For further information, refer to the financial statements and notes thereto for the year e nded December 31, 2001 contained in the Company's Annual Report filed on Form 10-K and any amendments thereto with the Securities and Exchange Commission.

NOTE B-REVENUE RECOGNITION

          Revenue from Data Acquisition

          Revenue from the creation of new seismic data under the Company's acquisition contracts is recognized using the percentage-of-completion method of accounting based upon costs incurred to date as a percentage of total estimated costs. Under these contracts, the Company creates new seismic data designed in conjunction with its customers and specifically suited to the geology of the area using the most appropriate technology available. The contracts typically require one or more customers to pay between 65% and 75% of the creation costs in exchange for the right to use the resulting data. Customers make periodic payments throughout the creation period, which generally correspond to costs to be incurred. These payments are non-refundable once the costs of creation are incurred. The creation process generally occurs in the following stages: permitting, surveying, drilling, recording and processing. At each stage, the customers receive legally enforceable rights and access to, and the benefits of, the results of all work performed. The customers also receive access to and use of the newly acquired, processed data. The customers may have exclusive access to the work performed and exclusive use of the newly acquired, processed data for a limited term, which is generally less than nine months after final delivery of the processed data. The customers' access to and use of the results of the work performed and of the newly acquired, processed data is governed by a long-term (generally twenty years or more) license agreement, which is a separate agreement from the acquisition contract. The Company's acquisition contracts require the customer either to have a license agreement in place or to execute one at the time the acquisition contract is signed. The Company maintains sole ownership of the newly acquired data, which is added to its library, and is free to license the data to other customers when the original customers' exclusivity ends.< /P>

          Revenue from Data Licenses

          The Company licenses data from its seismic data library to customers under four basic forms of contracts.

          Under the first, the customer licenses and selects data from the data library at the time of contracting.

          Under the second, called review and possession contracts, the customer obtains the right to review a certain quantity of data for a limited period of time. During the review period, the customer may select specific data from that available for review to hold long-term under its license agreement. Any data not selected for long-term licensing must be returned to the Company at the end of the review period.

          Under the third, called library card contracts, the customer initially receives only access to data. The customer may then select specific data, from the collection of data to which it has access, to hold long-term under its license agreement. The lengths of the selection periods under the library card contracts vary.

          Under the fourth, called review only contracts, the customer obtains rights to review a certain quantity of data for a limited period of time, but does not obtain the right to select specific data to hold long-term.

          The usage of all data delivered to the customer, whether for review only or to hold long-term, is governed by a license agreement, which is a separate agreement from the contracts. The Company's contracts require the customer either to have a license agreement in place or to execute one at the time the contract is signed. The term of the license agreement is generally twenty years or more and governs all data delivered to the customer during the term. Payment terms under the contracts are typically less than eighteen months. All payments due are non-cancelable and all payments made are non-refundable. The customer has complete access to all available data covered by the contracts on the date the contract is executed. The contracts permit selection of the data in its present form and the Company is under no obligation to make any enhancements, modifications or additions to the data. The customers' rights under the contracts are non-transferabl e without payment of an additional fee. Copies of the data are available to the customer immediately upon request.

          Revenue from licensing of seismic data is recognized when the Company has contracted with the customer for a fixed sales price; a licensing agreement is in place; the customer has selected specific data under the terms of the contract or the contract has expired without full selection having occurred; and collectibility of the sales price is reasonably assured. The Company recognizes revenue for the particular data selected as each specific selection of data is made by the customer. If selections are not completed by the expiration date of the contract, the Company then recognizes any remaining revenue under that contract. In each case (selection or expiration), the earnings process is complete. The Company does not recognize revenue for amounts billed in advance of being earned until these conditions are met. For revenue that is deferred, the Company defers the direct costs related to the revenues. Revenue from licensing of seismic data is pr esented net of revenue shared with other entities.

          Revenue from Non-Cash Data Licenses

          In certain cases, the Company grants its customer a non-exclusive license to specific, selected data or access to data to be used in its operations (not for resale) in exchange for ownership of seismic data from the customer. Where the customer receives access to data, the customer may then select specific data to hold under a long-term license; the lengths of the selection periods vary, but are generally three to five years. The Company records a data library asset for the seismic data acquired at the time the contract is entered into and defers revenue recognition on the transaction until the customer selects the data. These transactions are accounted for as non-monetary exchanges and are valued at the fair value of the data received or delivered, whichever is more readily determinable. The Company determines fair value for the data exchanged by first determining the value of the license granted to the customer. It does so by look ing at the range of cash transactions by the Company for licenses of similar data during either the prior six months (for licenses in the United States) or the prior twelve months (for licenses in Canada). In looking at the range of cash transactions, the Company does not consider transactions that are disproportionately high or low. The Company then also considers the value of the data received from the customer. In determining the value of the data received, the Company considers the age, quality, current demand and future marketability of the data as well as the cost that would be required to create the data. In significant exchanges, the Company also engages an independent third party to confirm for fairness the Company's valuation of the data received. In the United States, the Company applies a cap on the value it will assign per square mile on the data exchanged. In Canada, in the event of a difference greater than 2% between the value of the license granted and the value of the data received, t he Company assigns the lower value to the exchange. In 2001, the Company obtained third party fairness opinions on all non-cash exchanges valued at $800,000 or more. Effective January 1, 2002, the Company will obtain third party fairness opinions on all non-cash exchanges of $500,000 or more.

          In its non-cash exchanges, the Company is selling its customer licenses to data from the Company's data library. In exchange it receives ownership of data, that it does not own or to which it does not have full marketing rights. Although the customer may also retain a license to the data it is transferring to the Company, the data licensed by the Company from its library is distinct from the data received from the customer. Thus, in exchange for a license to data, the Company receives ownership of distinct data to be added to its library and, therefore, the exchange is not a "like-kind" exchange.

          For the three months ended March 31, 2002 and 2001, the Company recorded seismic data library assets of $3,025,000 and $12,565,000, respectively, from non-monetary exchanges of seismic data, including exchanges in which the Company and the customer issued cash payments.

          For the three months ended March 31, 2002 and 2001, the Company recognized revenue of $4,378,000 and $2,611,000, respectively from non-monetary exchanges of seismic data, including exchanges in which the Company and the customer issued cash payments as well as non-monetary transactions from previous quarters in which the customer made selections in the current quarter.

          Revenue from Oil and Gas Operations

          The Company uses the sales method of accounting for its oil and gas revenue. Under this method, revenue is recognized based on actual volumes of oil and gas sold to purchasers. The volumes of oil and gas sold may differ from the volumes to which the Company is entitled based on its interests in the properties, which historically, has not been significant.

          Revenue from Data Technology Services

          To date, revenue from the Company's data technology services has not been significant. Such revenue is recognized as the services are provided.

NOTE C-SEISMIC DATA LIBRARY

          Costs incurred in the creation of proprietary seismic data, including the direct and incremental costs of the Company's seismic segment personnel engaged in project management and design, are capitalized. The Company uses the greater of the income forecast method or the ten-year straight-line method to amortize the costs of seismic data programs it creates. Under the income forecast method, seismic data costs are amortized based on the proportion of revenue for a period to total revenue, as estimated by management. The Company also purchases existing seismic data programs from other companies. The costs of purchased seismic data programs are generally amortized on a straight-line basis over ten years, however, the costs of a significant purchase (greater than 5% of the net book value of the seismic data library) are amortized using the greater of the income forecast method or ten-year straight-line method.

          On a periodic basis, the Company evaluates the performance of all of its seismic data programs. The Company evaluates its revenue trends, as well as industry revenue trends, in order to estimate future revenue from seismic data sales. When economic conditions indicate, the Company may reduce its estimates of future revenue, causing the amortization rate to rise and operating results to decline. The Company also reviews the carrying value of seismic data to assess whether there has been a permanent impairment of value. The primary indicator of impairment of value is reduced sales over an extended period of time. When indicated by continuous, reduced sales over three years or more, the Company compares the net book value of the seismic data to forecasted, undiscounted cash flows. When appropriate, indicated impairments are recorded based on the excess of net book value over fair value.

NOTE D-OIL AND GAS PROPERTIES

          The Company accounts for its oil and gas exploration and production activities using the full-cost method of accounting. Under this method, all costs associated with acquisition, exploration and development of oil and gas reserves are capitalized, including salaries, benefits and other internal costs of the exploration and production segment directly attributable to these activities. Costs associated with production and general corporate activities are expensed in the period incurred. For the three months ended March 31, 2002 and 2001, exploration and development related overhead costs of $574,000 and $569,000, respectively, have been capitalized to oil and gas properties. Interest costs related to unproved properties and certain properties under development are also capitalized to oil and gas properties. For the three months ended March 31, 2002 and 2001, interest costs of $324,000 and $579,000, respectively, have been capitalized to oil and g as properties.

          No gains or losses are recognized upon the sale of oil and gas properties unless a significant portion of the Company's proved oil and gas reserves are sold (generally greater than 25 percent). Instead, proceeds from the sale of oil and gas properties are accounted for as a reduction of capitalized costs. During the three months ended March 31, 2001, the Company sold various producing oil and gas wells and associated leaseholds for proceeds, net of revenue and costs, totaling $78,000. There were no such sales during the three months ended March 31, 2002.

          Depreciation, depletion and amortization ("DD&A") expense is calculated quarterly using the units-of-production method based upon production and estimates of proved reserves. Estimated future development costs and site restoration, dismantlement and abandonment costs, net of salvage values, are included in the amortization base. Capitalized costs associated with the acquisition and evaluation of unproved properties and certain properties under development are not included in the amortization base until these costs are evaluated.

          Capitalized costs of oil and gas properties, net of accumulated DD&A and deferred income taxes, are limited to the present value, discounted at 10 percent, of future net cash flows from estimated proved oil and gas reserves, based on current economic and operating conditions, plus the lower of cost or fair value of unproved properties, adjusted for the effects of related income taxes. If capitalized costs exceed this limit, the excess is charged to impairment of oil and gas properties. At March 31, 2002, the Company's capitalized costs of oil and gas properties exceeded the limitation thereon by $2,468,000 based on quarter-end oil and gas prices; however, an impairment was not recorded at that time because price increases through May 8, 2002 indicated that capitalized costs were not impaired. Given the volatility of oil and gas prices, it is reasonably possible that the Company's estimate of discounted future net cash flows from proved oil an d gas reserves could change in the near term. If oil and gas prices decline significantly in the future, even if only for a short period of time, it is possible that additional impairments of oil and gas properties could occur.

          Substantially all of the Company's exploration and development activities are conducted jointly with others and, accordingly, the Company's oil and gas property balance reflects only its proportionate interest in such activities.

NOTE E-RESTATEMENT OF FINANCIAL STATEMENTS

          Effective for the fiscal year ended December 31, 2001, the Company determined that the timing and amount of reported revenue from certain data licensing contracts and certain data acquisition contracts warranted revision to the reported results for the nine months ended September 30, 2001 and the year ended December 31, 2000. As a result, the financial statements for the three months ended March 31, 2001 have been restated.

          The revisions to revenue recognition under the seismic data licensing agreements are based upon the Securities and Exchange Commission's Staff Accounting Bulletin No. 101 (SAB 101), "Revenue Recognition in Financial Statements. The effect of these revisions is to defer revenue previously recognized under certain seismic data licensing agreements until selection of specific data is made by the customer. The deferral in revenue resulted in an increase in deferred revenue. Associated with the deferral of the revenue on these contracts, the Company also deferred the direct costs related to the revenue, which resulted in an increase in prepaid expenses. The Company also recognized a reduction in amortization expense, which is recorded as an adjustment to accumulated amortization, and in income tax expense, which is recorded as an adjustment to deferred taxes. The total effects of all revisions to revenue recognition related to the seismic dat a licensing arrangements for the three months ended March 31, 2001 are summarized in the table on the following page.

          The revisions also reflect adjustments for the amount and timing of revenue previously recognized under certain data acquisition contracts. In 2001, the Company entered into certain acquisition contracts under which both the Company and the customer jointly participated in the acquisition services. Consequently, the Company did not assume the sole risk of service throughout the acquisition process. The Company recognized revenue under these contracts consistent with its revenue recognition policy for acquisition contracts. The Company has determined that revenue previously recognized for amounts funded by customers under these contracts should be used to reduce the Company's recorded cost of creating the seismic data. The Company continues to have sole ownership of the newly created data. The reduction of revenue resulting from these revisions also reduced the Company's amortization expense, which is recorded as an adjustment to accumulated am ortization, and income tax expense, which is recorded as an adjustment to deferred taxes. The total effects of all revisions to revenue recognition related to certain data acquisition contracts for the three months ended March 31, 2001 are summarized in the table on the following page.

          Accordingly, such financial statements have been restated as follows:

		Three Months Ended March 31, 2001 (Unaudited)
		(in '000's except per share amounts)
					Adjustments			Adjustments
					for			for
					Data			Data
		As			Licensing			Acquisition			As
		Reported			Agreements			Contracts			Restated
Statements of Operations Data:
Revenue	$	48,978		$	(8,905	)	$	(1,749	)	$	38,324	(1)
Depreciation, depletion & amortization		21,207			(3,949	)		(898	)		16,360
Cost of sales		1,473			-			-			1,473
SG&A expense		11,368			(620	)		44			10,792
Income (loss) from operations		14,930			(4,336	)		(895	)		9,699
Interest expense and other, net		(3,015	)		-			-			(3,015	)
(Provision) benefit for income taxes		(4,398	)		1,431			314			(2,653	)
Net income (loss)	$	7,517		$	(2,905	)	$	(581	)	$	4,031
Net income (loss) per share:
Basic	$	0.30		$	(.12	)	$	(.02	)	$	.16
Diluted	$	0.29		$	(.11	)	$	(.03	)	$	.15

(1) Non-cash revenue and the percentage of total revenue are $4,363,000 and 11.4%, respectively.

NOTE F-FINANCING ARRANGEMENTS

          The financial covenants in the Senior Notes and the parent company Revolving Line of Credit Agreements include, among other restrictions, maintenance of minimum net worth and limitations on total debt, interest coverage, liens, debt issuance and disposition of assets. As a result of the restatement of its financial statements, the Company was not in compliance with the limitation on total debt covenant in the Senior Note Agreements dated December 28, 1995 and February 12, 1999 and the leverage ratio covenant in the Revolving Line of Credit Agreement at September 30, 2001. In addition, as a result of the restatement of its financial statements and the impairment of oil and gas properties recorded in the fourth quarter of 2001, the Company was not in compliance with these same financial covenants in these agreements at December 31, 2001. The Company received an amendment from the Senior Note holders that waived noncompliance with the limitation on total debt covenant in the third and fourth quarters of 2001 and increased the ratio of debt to total capitalization through March 31, 2003, after which date the original financial covenants will again be imposed.

          However, as a result of increased interest expense and decreased revenue in the first quarter of 2002, the Company, was not in compliance with the interest coverage covenant as of March 31, 2002 in the Senior Note Agreements dated December 28, 1995, February 12, 1999 and October 15, 2001 and the Revolving Line of Credit Agreement. Additionally, as of March 31, 2002, the Company was not in compliance with the limitation on restricted payments and investments covenant in the Senior Note Agreement dated February 12, 1999 and the leverage ratio covenant in the Revolving Line of Credit Agreement. The Company has received waivers from the Senior Note holders for the covenants it was not in compliance with; such waivers continue through May 24, 2002. The Company is now seeking additional amendments from the Senior Note holders and the lenders on the Revolving Line of Credit with respect to those financial covenants.  If the Compa ny is unable to obtain such amendments, the Senior Note holders could elect to accelerate the debt.

          The Company has no borrowings under the Revolving Line of Credit as of March 31, 2002. With the existing covenant violations, the Company may not borrow under the Revolving Line of Credit. The Company has begun discussions with the lenders on the Revolving Line of Credit to amend the covenants to bring the Company back into compliance and to permit borrowings under the line of credit facility.

          On August 28, 2001, the Company's wholly owned subsidiary, Seitel Data, Ltd., obtained a term loan totaling $10 million for the purchase of certain seismic data which secures the debt. The term of the loan is three years, with maturity on October 1, 2004. The loan bears interest at the rate of LIBOR plus 2.9%. This term loan has similar financial covenants to the Company's Revolving Line of Credit. As discussed above, the Company was not in compliance with the leverage ratio covenant and the interest coverage covenant at March 31, 2002 and the leverage ratio covenant at September 30, 2001 and December 31, 2001. The Company is in discussions with the lender to amend the covenants to bring them back into compliance.

NOTE G-EARNINGS PER SHARE

          In accordance with Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share," basic earnings per share is computed based on the weighted average shares of common stock outstanding during the periods. Diluted earnings per share is computed based on the weighted average shares of common stock plus the assumed issuance of common stock for all potentially dilutive securities. The computations for basic and diluted net income per share for the three months ended March 31, 2002 and 2001 consist of the following (in thousands except per share amounts):

			Three Months Ended March 31,
			2002			2001
						(Restated)
Net income (loss)		$	(3,628	)	$	4,031
Basic weighted average shares			25,075			24,781
Effect of dilutive securities: (1)
	Options and warrants		-			1,497
Diluted weighted average shares			25,075			26,278
Per share income (loss):
	Basic	$	(.14	)	$	.16
	Diluted	$	(.14	)	$	.15

(1) A weighted average quarter-to-date number of options and warrants to purchase 6,733,000 and 122,000 shares of common stock were outstanding during the first quarter of 2002 and 2001, respectively, but were not included in the computation of diluted per share income because they were antidilutive.

NOTE H-STATEMENT OF CASH FLOW INFORMATION

          During the three months ended March 31, 2002 and 2001, the Company had non-cash additions to its seismic data library totaling $3,053,000 and $14,316,000, respectively. Of these amounts, $3,025,000 and $12,565,000 resulted from non-exclusive licensing of data in exchange for ownership of data during the three months ended March 31, 2002 and 2001, respectively. The balance of $28,000 and $1,751,000 for the three months ended March 31, 2002 and 2001, respectively, resulted from non-cash additions related to certain data creation costs, which were offset from amounts due from the customer for data license fees. This remaining balance is also included in non-cash sales in the Consolidated Statements of Cash Flows.

NOTE I-RECENT ACCOUNTING PRONOUNCEMENTS

          In June 2001, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards No. 141, "Business Combinations," effective for business combinations effected after June 30, 2001 and No. 142, "Goodwill and Other Intangible Assets," effective for fiscal years beginning after December 15, 2001. Under the new rules, goodwill and intangible assets deemed to have indefinite lives are no longer amortized but are subject to annual impairment tests in accordance with the Statements. Other intangible assets continue to be amortized over their useful lives. The Company adopted the new rules on accounting for goodwill and other intangible assets in the first quarter of 2002. The adoption did not have an impact on the Company's financial position or results of operations.

          In July, 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 143, "Accounting for Asset Retirement Obligations." This statement addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. This Statement applies to all entities. It applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and (or) the normal operation of a long-lived asset, except for certain obligations of lessees. This Statement is effective for financial statements issued for fiscal years beginning after June 15, 2002. The Company does not believe the adoption of this standard will have a material effect on the financial position or results of operations of the Company.

          In August 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," effective for fiscal years beginning after December 15, 2001. This statement supercedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," and provides a single accounting model for long-lived assets to be disposed of. The Company adopted this standard in the first quarter of 2002. The adoption did not have an impact on the Company's financial position or results of operations.

NOTE J-INDUSTRY SEGMENTS

          Segment information has been prepared in accordance with SFAS NO. 131, "Disclosures About Segments of an Enterprise and Related Information." In 2002, the Company began disclosing its data technology services segment as a separate reportable segment as a result of meeting certain quantitative thresholds specified in SFAS No. 131. Selected financial information for the three months ended March 31, 2001 has been restated to reflect this new segment. Selected financial information as of and for the three months ended March 31, 2002 and 2001 is as follows (in thousands):

				Data			Exploration
				Technology			and			Total
		Seismic		Services			Production			Segments
As of and for the three months ended
March 31, 2002
Revenue from external purchasers	$	22,460	$	53		$	2,643		$	25,156
Intersegment revenue		-		51			-			51
Depreciation, depletion and amortization		11,920		685			2,029			14,634
Cost of sales		9		87			969			1,065
Selling, general and administration expense		5,639		3,049			970			9,658
Segment operating income (loss)		4,892		(3,717	)		(1,325	)		(150	)
Capital expenditures (a)		20,913		8,277			2,387			31,577
Assets		528,837		16,621			93,914			639,372
As of and for the three months ended
March 31, 2001
(Restated)
Revenue from external purchasers	$	30,194	$	53		$	8,077		$	38,324
Depreciation, depletion and amortization		13,527		117			2,716			16,360
Cost of sales		144		27			1,302			1,473
Selling, general and administrative expense		5,944		608			1,351			7,903
Segment operating income (loss)		10,579		(699	)		2,708			12,588
Capital expenditures (a)		44,025		181			4,524			48,730
Assets		471,971		1,485			151,613			625,069

(a) Includes other ancillary equipment.

			Three months ended March 31,
			2002			2001
						(Restated)
Income (loss) before income taxes:
	Total reportable segment operating income (loss)	$	(150	)	$	12,588
	Corporate selling general and administrative expense		(1,333	)		(2,889	)
	Interest expense and other, net		(4,183	)		(3,015	)
	Income (loss) before income taxes	$	(5,666	)	$	6,684

NOTE K-COMPREHENSIVE INCOME

          The components of Other Comprehensive Income (Loss) for the three months ended March 31, 2002 and 2001 are as follows (in thousands):

				Three Months Ended March 31,
				2002			2001
Net income (loss)			$	(3,628	)	$	4,031
Unrealized gains (losses) on securities held as available for sale:
	Unrealized net holding gains (losses), net of income tax
		expense (benefit) of $82 and $(135), respectively,
		arising during period		332			(207	)
	Less: Reclassification adjustment for gains included in
		income, net of tax expense of $170		(687	)		-
Foreign currency translation adjustments				107			(294	)
Change in fair value of outstanding hedge positions, net of
	income tax expense of $39			-			48
Comprehensive income (loss)			$	(3,876	)	$	3,578

NOTE L-SUBSEQUENT EVENTS

          In February 2002, the Board of Directors of the Company accepted the resignation of Herbert M. Pearlman as Chairman of the Board and appointed Paul A. Frame the new Chairman.  In connection with Mr. Pearlman's resignation as Chairman of the Board, the Company is negotiating a restructuring of his employment agreement, pursuant to which in April 2002 the Company issued Mr. Pearlman 250,000 shares of Company stock valued at $2,277,500 and made payments of $1,521,499 for the associated tax liability. Mr. Pearlman remains an employee of the Company. The timing of the recognition of the charge related to both the issuance of these shares and the corresponding cash payment will be determined when negotiations with Mr. Pearlman are concluded and his employment agreement is restructured. The Company expects negotiations to continue during the second quarter of 2002.

          In addition, in April 2002, the Company entered into an employment agreement with Kevin S. Fiur, Chief Operating Officer and Executive Vice President. In connection therewith, the Company issued Mr. Fiur 50,000 shares of the Company's common stock valued at $445,000 and made payments of $297,285 for the associated tax liability. The Company recorded these amounts as compensation expense in the second quarter of 2002.

          In April 2002, the Company sold three onshore producing properties for approximately $7.3 million.

Item 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
	AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

          Total revenue was $25,156,000 and $38,324,000 in the first quarters of 2002 and 2001, respectively. Revenue primarily consists of revenue generated from the marketing of seismic data and oil and gas production.

          Revenue from the seismic division was $22,460,000 in the first quarter of 2002 compared to $30,194,000 in the first quarter of 2001. The decrease in revenue was primarily due to a decrease in licensing of existing data from the Company's data library. First quarter 2002 sales declined due to the combination of lower than expected energy commodity prices, reported losses among our client base companies due to fourth quarter 2001 impairments of oil and gas properties and the uncertain and negative business climate in the energy industry in the aftermath of Enron.

          Net volume and price information for the Company's oil and gas production for the first quarters of 2002 and 2001 is summarized in the following table:

		Quarter Ended
		March 31,
		2002		2001
Natural gas volumes (mmcf)		750		762
Average natural gas price ($/mcf)	$	2.33	$	8.01
Crude oil/condensate volumes (mbbl)		45		70
Average crude oil/condensate price ($/bbl)	$	19.66	$	27.45

          Oil and gas revenue was $2,643,000 in the first quarter of 2002 compared to $8,077,000 in the first quarter of 2001. The decrease in oil and gas revenue was primarily attributable to lower market prices in the 2002 quarter as compared to the first quarter of 2001.

          Depreciation, depletion and amortization consists primarily of data bank amortization and depletion of oil and gas properties. Data bank amortization was $11,636,000 in the first quarter of 2002 compared to $13,308,000 in the first quarter of 2001. The amount of seismic data amortization fluctuates based on the level of seismic marketing revenue. As a percentage of revenue from licensing seismic data, data bank amortization was 52% and 45% for the first quarters of 2002 and 2001, respectively. This percentage varies based upon the mix of data to which the revenue relates. The increase in the percentage was primarily due to higher straight-line amortization on purchased data libraries which had lower revenue when compared to the first quarter of 2001. See Note C for a discussion of the Company's seismic data amortization policy.

          Depletion of oil and gas properties was $1,950,000 in the first quarter of 2002 compared to $2,640,000 in the first quarter of 2001, which amounted to $1.91 and $2.23, respectively, per mcfe of gas produced during such periods. The rate per mcfe varies with the estimate of proved oil and gas reserves of the Company at each quarter end, as well as evaluated property costs. The decrease in the rate was primarily due to a decrease in evaluated property costs between 2002 and 2001 resulting from the oil and gas impairments recorded in 2001.

          Cost of sales primarily consists of expenses associated with oil and gas production, third party seismic resale support services and data technology services. Oil and gas production costs amounted to $969,000, or $.95 per mcfe of gas produced in the first quarter of 2002 compared to $1,302,000 or $1.10 per mcfe of gas produced in the first quarter of 2001. The decrease in this rate was primarily due to lower production taxes in 2002 due to lower oil and gas prices.

          The Company's selling, general and administrative expenses were $10,991,000 in the first quarter of 2002 compared to $10,792,000 in the first quarter of 2001. This increase was primarily due to an increase in fixed costs due to the growth of the Company, including overhead costs associated with its wholly owned subsidiary, Seitel Solutions, and international business development. This increase was partially offset by a reduction of variable expenses, including commissions based on revenue and compensation tied to pre-tax profits.

          The net increase in interest expense and other was primarily due to an increase in interest expense related to the Series G, H and I Senior Notes issued in October and December 2001 that was partially offset by a decrease in interest expense related to the Company's Revolving Line of Credit, as no balances were outstanding during the first quarter of 2002.

          The Company's effective income tax rate was 36% for the first quarter of 2002 compared to 40% for the first quarter of 2001. The decrease in the effective income tax rate is primarily due to the mix of estimated earnings for 2002 between U.S. and foreign locations.

Liquidity and Capital Resources

          The Company's cash provided by (used in) operations was $12,367,000 and $(4,119,000) for the three months ended March 31, 2002 and 2001, respectively. The increase from 2001 to 2002 was primarily attributable to increased collections from customers.

          The Company has a $75 million unsecured revolving line of credit facility that matures on June 29, 2004. The facility bears interest at a rate determined by the ratio of the company's debt to EBITDA (earnings before interest, taxes, depreciation, depletion and amortization). Pursuant to the interest rate pricing structure, the interest rate would be set at LIBOR plus 1.75% or the bank's prevailing prime rate plus 0.75%. As of May 13, 2002, no amounts were outstanding and the Company had no availability on this revolving line of credit.

          The Company's wholly owned subsidiary, Olympic Seismic Ltd. ("Olympic"), has a revolving credit facility which allows it to borrow up to $5 million (Canadian dollars) by way of prime based loans, bankers' acceptances, or letters of credit. Prime based loans and bankers' acceptances bear interest at the rate of the bank's prime rate plus 0.35% per annum and 0.50% per annum, respectively. Letter of credit fees are based on scheduled rates in effect at the time of issuance. The facility is secured by Olympic's assets, but is not guaranteed by Seitel, Inc. or any of its other subsidiaries. Available borrowings under the facility are determined as $2 million (Canadian dollars) plus 75% of trade receivables less than 90 days old, the total not to exceed $5 million (Canadian dollars). The facility is subject to repayment upon demand and is available from time to time at the Bank's sole discretion. As of May 13, 2002, no amounts were outstan ding on this revolving line of credit. Olympic is not a party to any of the debt issued by Seitel, Inc.

          On October 15, 2001, the Company completed the first funding, totaling $82 million, of a private placement of three series of unsecured Senior Notes totaling $107 million. The second funding, for an additional $25 million, was completed on December 27, 2001. The Series G Notes total $20 million, bear interest at a fixed rate of 7.04% and mature on October 15, 2006. The Series H Notes total $50 million, bear interest at a fixed rate of 7.19% and mature on October 15, 2008. The Series I Notes total $37 million, bear interest at a fixed rate of 7.34% and mature on October 15, 2011. Interest on the Series G, H and I Notes is payable semi-annually on April 15 and October 15. As of May 13, 2002, the balance outstanding on the Series G, H and I Notes was $107 million.

          On February 12, 1999, the Company completed a private placement of three series of unsecured Senior Notes totaling $138 million. The Series D Notes total $20 million, bear interest at a fixed rate of 7.03% and mature on February 15, 2004, with no principal payments due until maturity. The Series E Notes total $75 million, bear interest at a fixed rate of 7.28% and mature on February 15, 2009, with annual principal payments of $12.5 million beginning February 15, 2004. The Series F Notes total $43 million, bear interest at a fixed rate of 7.43% and mature on February 15, 2009, with no principal payments due until maturity. Interest on the Series D, E and F Notes is payable semi-annually on February 15 and August 15. As of May 13, 2002, the balance outstanding on the Series D, E and F Notes was $138 million.

          On December 28, 1995, the Company completed a private placement of three series of unsecured Senior Notes totaling $75 million. The Company contemporaneously issued its Series A Notes and Series B Notes, which total $52.5 million and bear interest at a fixed rate of 7.17%. On April 9, 1996, the Company issued its Series C Notes, which total $22.5 million and bear interest at a fixed rate of 7.48%. The Series A Notes matured on December 30, 2001. The Series B and Series C Notes mature on December 30, 2002, and require combined annual principal payments of $10 million, which began on December 30, 1998. Interest on the Series B and C Notes is payable semi-annually on June 30 and December 30. As of May 13, 2002, the balance outstanding on the Series A, B, and C Notes was $10 million.

          The financial covenants in the Senior Notes and the parent company Revolving Line of Credit Agreements include, among other restrictions, maintenance of minimum net worth and limitations on total debt, interest coverage, liens, debt issuance and disposition of assets. As a result of the restatement of its financial statements, the Company was not in compliance with the limitation on total debt covenant in the Senior Note Agreements dated December 28, 1995 and February 12, 1999 and the leverage ratio covenant in the Revolving Line of Credit Agreement at September 30, 2001. In addition, as a result of the restatement of its financial statements and the impairment of oil and gas properties recorded in the fourth quarter of 2001, the Company was not in compliance with these same financial covenants in these agreements at December 31, 2001. The Company received an amendment from the Senior Note holders that waived noncompliance with the limitation on to tal debt covenant in the third and fourth quarters of 2001 and increased the ratio of debt to total capitalization through March 31, 2003, after which date the original financial covenants will again be imposed.

          However, as a result of increased interest expense and decreased revenue in the first quarter of 2002, the Company, was not in compliance with the interest coverage covenant as of March 31, 2002 in the Senior Note Agreements dated December 28, 1995, February 12, 1999 and October 15, 2001 and the Revolving Line of Credit Agreement. Additionally, as of March 31, 2002, the Company was not in compliance with the limitation on restricted payments and investments covenant in the Senior Note Agreement dated February 12, 1999 and the leverage ratio covenant in the Revolving Line of Credit Agreement. The Company has received waivers from the Senior Note holders for the covenants it was not in compliance with; such waivers continue through May 24, 2002. The Company is now seeking additional amendments from the Senior Note holders and the lenders on the Revolving Line of Credit with respect to those financial covenants.  If the Company is unable to obt ain such amendments, the Senior Note holders could elect to accelerate the debt, and there is no assurance that the Company could obtain replacement financing.

          The Company has no borrowings under the Revolving Line of Credit as of May 13, 2002. With the existing covenant violations, the Company may not borrow under the Revolving Line of Credit. The Company has begun discussions with the lenders on the Revolving Line of Credit to amend the covenants to bring the Company back into compliance and to permit borrowings under the line of credit facility.

          On August 28, 2001, the Company's wholly owned subsidiary, Seitel Data, Ltd., obtained a term loan totaling $10 million for the purchase of certain seismic data which secures the debt. The term of the loan is three years, with maturity on October 1, 2004. The loan bears interest at the rate of LIBOR plus 2.9%. Monthly principal payments total $208,000. The balance outstanding on this loan on May 13, 2002 was $8,333,000. This term loan has similar financial covenants to the Company's Revolving Line of Credit. As discussed above, the Company was not in compliance with the leverage ratio covenant and the interest coverage covenant at March 31, 2002 and the leverage ratio covenant at September 30, 2001 and December 31, 2001. The Company is in discussions with the lender to amend the covenants to bring them back into compliance.

          During 2001 and 2002, the Company entered into capital leases for the purchase of computer and data technology center furniture and equipment. The lease agreements are for terms of approximately two years. Monthly principal and interest payments total $360,000. The balance outstanding under these capital leases was $6,585,000 on May 13, 2002.

          On January 14, 2002, the Company's wholly owned subsidiary, SEIC Business Trust (the "Trust"), entered into a demand reducing credit facility to borrow $4 million (Canadian dollars) by way of prime based loans. Payments of $166,670 (Canadian dollars) are due on the last day of each month. The funds were drawn down on January 30, 2002 to finance the purchase of seismic data. The loans bear interest at the bank's prime rate plus 0.50%. The facility is secured by the Trust's assets and guaranteed by Olympic Seismic Ltd. and SEIC Holdings Ltd. The balance outstanding on this loan on May 13, 2002 was $2,246,000.

          On April 30, 2002, Olympic Seismic Ltd. ("Olympic") entered into a sale leaseback agreement on a building and land located in Calgary, Alberta, Canada. Proceeds of the sale were $3.6 million (Canadian dollars). The proceeds were used to pay off Olympic's revolving line of credit and for general corporate purposes. The term of the lease is a 20-year capital lease with lease payments of: $336,000 (Canadian dollars) in years 1-5; $370,860 (Canadian dollars) in years 6-10; $409,500 (Canadian dollars) in years 11-15; and $452,340 (Canadian dollars) in years 16-20.

          The Company may offer from time to time in one or more series (i) unsecured debt securities, which may be senior or subordinated, (ii) preferred stock and (iii) common stock, or any combination of the foregoing, up to an aggregate of $41,041,600 pursuant to an effective "shelf" registration statement filed with the SEC. In addition, under another effective "shelf" registration statement filed with the SEC, the Company may offer up to an aggregate of $200,000,000 of the following securities, in any combination, from time to time in one or more series: (i) unsecured debt securities, which may be senior or unsubordinated; (ii) preferred stock; (iii) common stock, and (iv) trust preferred securities. Until the Company receives waivers or amendments from its lenders as discussed above, the Company will not offer or sell securities under such registration statements.

          In April 2002, the Company sold three onshore producing properties for approximately $7.3 million.

          The Company's Board of Directors approved a stock repurchase program in 1997 of up to $25 million. As of May 13, 2002, the Company has repurchased a total of 1,110,100 shares of its common stock at a cost of $12,529,000 since 1997 under this plan.

          During the first three months of 2002, capital expenditures for seismic data, oil and gas property and other property and equipment amounted to $20,897,000, $1,804,000 and $8,578,000, respectively. Of the seismic data additions, $17,844,000 were cash additions and $3,053,000 were non-cash additions. These capital expenditures, as well as taxes, interest expenses, cost of sales and general and administrative expenses, were funded by operations, current cash balances, proceeds from term loan and capital lease obligations.

          The Company reviews and revises its capital expenditure budget periodically based on the amount of capital expected to be available from operating or other sources. Based on the assumption that the Company's debt will not be accelerated, the Company currently anticipates capital expenditures for the remainder of 2002 to total approximately $71 million, of which approximately $58 million will be for seismic data library additions, approximately $11 million will be for oil and gas exploration and development efforts and approximately $2 million will be for computer equipment and data technology center related purchases. Of the remaining estimated seismic data additions, the Company estimates that $40 million will be cash additions and $18 million will be non-cash additions. The Company believes its current cash balances and revenue from operating sources, should be sufficient to fund the currently anticipated 2002 capital expenditures requirements as well as for general and administrative expenses and debt repayments. If these sources are not sufficient to cover the Company's anticipated expenditures or if the Company were to increase its planned capital expenditures for 2002, the Company could seek to obtain additional debt or equity financing during 2002; however, there can be no assurance that the Company would be able to accomplish any such debt or equity financing on satisfactory terms. If such debt or equity financing is not available on satisfactory terms, the Company could reduce its current capital budget or general and administrative expenses, and fund expenditures with cash flow generated from operating sources.

Recent Accounting Pronouncements

          In July 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 143, "Accounting for Asset Retirement Obligations." This statement addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. This statement applies to all entities. It applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and (or) the normal operation of a long-lived asset, except for certain obligations of lessees. This Statement is effective for financial statements issued for fiscal years beginning after June 15, 2002. The Company does not believe the adoption of this standard will have a material impact on the Company's financial position or results of operations.

Information Regarding Forward Looking Statements

          This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Statements contained in this Report about Seitel's future outlook, prospects and plans, including those that express belief, expectation, estimates or intentions, as well as those that are not statements of historical fact, are forward looking. These statements represent Seitel's reasonable belief and are based on Seitel's current expectations and assumptions with respect to future events. While Seitel believes its expectations and assumptions are reasonable, they involve risks and uncertainties beyond Seitel's control that could cause the actual results or outcome to differ materially from the expected results or outcome. Such factors include any significant change in the oil and gas business or the economy generally, changes in the exploration budgets of t he Company's seismic data and related services customers, actual customer demand for the Company's seismic data and related services, the extent of the Company's success in acquiring oil and gas properties and in discovering, developing and producing reserves, the timing and extent of changes in commodity prices for natural gas, crude oil and condensate and natural gas liquids and conditions in the capital markets and equity markets during the periods covered by the forward looking statements, and the effect on our reported operating results and stock price as a result of the Company's restatement of financial statements. The forward-looking statements contained in this Report speak only as of the date hereof, and Seitel disclaims any duty to update these statements. The foregoing and other risk factors are identified in the Company's Annual Report on Form 10-K and any amendments thereto filed with the Securities and Exchange Commission for the year ended December 31, 2001.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

          The Company is exposed to market risk, including adverse changes in commodity prices, interest rates and foreign currency exchange rates. Refer to the Company's Form 10-K and any amendments thereto for the year ended December 31, 2001 for a detailed discussion of these risks. The Company has not had any significant changes in the market risk exposures since December 31, 2001.

PART II - OTHER INFORMATION

Items 1., 2., 3., 4., and 5.  Not applicable.

Item 6.  Exhibits and Report on Form 8-K
	(a)	Exhibits
		10.1	Employment Agreement effective as of January 1, 2002 between the Company and Kevin S. Fiur
		10.2	Amendment No. 3 to Employment Agreement dated effective as of January 28, 2002 between the Company and Paul A. Frame

SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.
			SEITEL, INC.
Dated:    May	14,	2002	/s/	Paul A. Frame
				Paul A. Frame
				President
Dated:    May	14,	2002	/s/	Debra D. Valice
				Debra D. Valice
				Chief Financial Officer
Dated:    May	14,	2002	/s/	Marcia H. Kendrick
				Marcia H. Kendrick
				Chief Accounting Officer

	EXHIBIT INDEX
Exhibit	Title	Page
		Number
10.1	Employment Agreement effective as of January 1, 2002 between the Company and Kevin S. Fiur	24
10.2	Amendment No. 3 to Employment Agreement dated effective as of January 28, 2002 between the Company and Paul A. Frame	38

EX-10.1

Exhibit 10.1

EMPLOYMENT AGREEMENT

          THIS AGREEMENT made effective as of January 1, 2002, by and between Seitel, Inc., a Delaware corporation (hereinafter called the "Company"), and Kevin Fiur (hereinafter called "Executive");

W I T N E S S E T H:

          WHEREAS, the Company desires to induce Executive to enter into an employment arrangement with the Company in order that the Company may continue to have the benefit of Executive's services from and after the date hereof and has agreed to provide compensation and benefits to Executive in consideration of Executive's agreement to remain employed by the Company; and

          WHEREAS, Executive desires to enter into an employment arrangement with the Company and to perform services for the Company for the compensation and benefits described herein;

          NOW, THEREFORE, in consideration of the premises and the agreements hereinafter contained, the parties hereto agree as follows:

          1.          Employment; Employment Term. The Company hereby agrees to employ Executive and Executive agrees to continue his employment with the Company effective as of the date hereof. Executive shall be Executive Vice President and Chief Operating Officer with such duties and responsibilities as are usually incident to the offices of such positions and such other duties and responsibilities as may be assigned to Executive from time to time by the Chief Executive Officer of the Company. The initial term of employment under this Agreement shall commence upon the date hereof and shall expire on December 31, 2006. If, however, neither the Executive nor the Company provides written notice to the other before October 1, 2002, the term shall be automatically extended through December 31, 2007. Furthermore, unless one party provides written notice to the other before October 1, 2003, the term sh all be automatically extended through December 31, 2008, and, unless one party provides another notice to the other before October 1, 2004, then the term shall be automatically extended through December 31, 2009. The term shall not extend past December 31, 2009 without the written agreement of the Executive and the Company. The end of the term of this Agreement is hereafter referred to as the "Termination Date," and the term of this Agreement is hereafter referred to as the "Employment Period."

          The employment of Executive shall be subject to the other terms and conditions of this Agreement. Executive agrees to devote his full time, attention and energies to, and use his best efforts, ability and fidelity in the performance of the duties attaching to such employment; provided, however, that it shall not be a violation of this Agreement for Executive to serve on the boards of directors of such proprietary or not for profit organizations as are approved by the Company's Chief Executive Officer. Executive shall perform his duties at the principal executive offices of the Company and/or Seitel Solutions, subject to reasonable travel in the course of carrying out his responsibilities under this Agreement.

          2.          Salary Compensation. Effective as of January 1, 2002, and during the remainder of the Employment Term, the Company hereby agrees to pay as current salary compensation to Executive in the following amounts for the following years on an annualized basis but payable in semi-monthly installments (the "Base Salary").

Year	Salary
2002	$550,000
2003	$600,000
2004	$660,000
2005	$725,000
2006	$750,000

          For 2007 and thereafter, the Executive's salary shall be reviewed annually by the Chief Executive Officer of the Company with a view to consideration of appropriate merit increases. For 2007 and thereafter, the Executive's salary must be increased each year by a minimum of six percent (6%) of the prior year's salary unless revenues of the Company have decreased by fifty percent (50%) or more in any calendar year compared to the preceding calendar year, provided that such decrease is not attributable, in part or in whole, to a change in accounting principles of revenue recognition which are (i) adopted as the Company's business policy or (ii) imposed by applicable law.

          3.          Bonuses.

                    (a)          Retention Bonus. In consideration of Executive's agreement to continue in service with the Company in the capacity of Chief Operating Officer since April 2001, Executive shall receive a Retention Bonus, payable upon execution of this Agreement by Executive, of (i) 50,000 shares of common stock of the Company ("Executive Stock") which shall be valued at the closing price on the New York Stock Exchange of such Executive Stock on the date the Executive Stock is issued and (ii) 250,000 Company stock warrants and/or options.

                    The Executive Stock shall be paid to the Executive as soon as practicable after the execution of this Agreement. Executive shall also receive an additional amount of cash, subject to withholding, which shall be sufficient to pay Executive's income and payroll tax liability with respect to such Executive Stock and the additional amount of cash. The payments made to the Executive pursuant to this Section 3(a) shall be computed as subject to federal tax at the rate of 38.6% plus the Executive's share of Medicare at the rate of 1.45%. The tax and withholding for the purpose of this Section 3(a) shall be based on the amount of the value attributed to the Executive Stock and the amount of the cash payment made pursuant to this Section 3(a).

                    The options and warrants granted pursuant to this Section 3(a) shall have an exercise price equal to the fair market value of the closing price on the New York Stock Exchange of Company stock on the date the options and/or warrants are granted, shall be exercisable upon vesting as provided below, and shall expire ten years after the date of grant. The warrants and/or options shall vest as follows: 62,500 on the date of execution of this Agreement; 62,500 on January 1, 2003; 62,500 on January 1, 2004; and 62,500 on January 1, 2005. Unvested options or warrants shall be forfeited upon the Executive's termination of employment except as otherwise specified in Section 12.

                    (b)          Income from Operations Bonus. For the purposes of this Section 3(b), the term "Income from Operations" means the Company's net income before any deduction for (i) interest expense (to the extent such expense does not exceed $19,000,000), income tax expense, prepaid finance expense, and offering expense, all as determined in accordance with generally accepted accounting principles; (ii) any unusual or extraordinary losses that are unlikely to recur on a regular basis; (iii) any impairments; and (iv) any non-cash charges (other than depreciation and other regularly recurring non-cash expenses). For each fiscal and partial fiscal year ending during the Employment Term, Executive shall be awarded an Income from Operations Bonus of two percent (2%) of the Income from Operations of the Company and its subsidiaries for each fiscal quarter. The Income from Operations Bonus is to be awarded within thirty (30) days of the end of each fiscal quarter. As of the close of each fiscal year and after any restatement of the earnings reported by the Company for a fiscal year, the Income from Operations Bonus for such fiscal year shall be re-determined on the basis of the entire fiscal year, including any restatement of earnings to the extent that the adjustments reflected in the restatement affect Income from Operations as defined above. If the re-determined bonus is less than the sum of the Executive's quarterly bonus awards for that fiscal year, future Income from Operations Bonuses to be paid to the Executive will be reduced by the difference. If the re-determined bonus is greater than the sum of the Executive's quarterly bonus awards for that fiscal year, the difference will be paid to the Executive on or as soon as practicable after the scheduled date for payment of the Income from Operations Bonus for that fiscal year. The calculation of the Income from Operations Bonus shall be verified annually by the Company's independent auditors, and subject to adjustment, if necessary, if amounts paid are not consistent with the independent verification.

                    (c)          Pre-Tax Income Bonus. For each fiscal and partial fiscal year ending during the Employment Term, Executive shall have the opportunity to receive a Pre-Tax Income Bonus in accordance with the terms of this Section 3(c). Any Pre-Tax Income Bonus for a fiscal year shall be paid within thirty (30) days of the end of such fiscal year. The target Pre-Tax Income Bonus for each fiscal year shall be as follows.

Year	Target Pre-Tax Income Bonus
2002	$400,000
2003	$400,000
2004	$440,000
2005	$475,000
2006	$500,000

                    For fiscal years after 2006, the target Pre-Tax Income Bonus shall be recommended by the Company's Chief Executive Officer for approval by the Company's Board of Directors or the Compensation Committee of the Board of Directors no later than 90 days after the commencement of each fiscal year. Such target Pre-Tax Income Bonus shall be at least six percent (6%) more than the target Pre-Tax Income Bonus for the prior year. The actual Pre-Tax Income Bonus for a fiscal year shall be based on the amount of the Company's actual Pre-Tax Income relative to a target amount of Pre-Tax Income. The Chief Executive Officer shall recommend for approval by the Company's Board of Directors or the Compensation Committee of the Board of Directors no later than 90 days after the commencement of each fiscal year beginning with 2003, the target amount of Pre-Tax Income for the fiscal year a nd the schedule of Pre-Tax Income Bonus to be paid upon the achievement of various levels of Pre-Tax Income above and below the target amount. Notwithstanding the foregoing, the actual Pre-Tax Income Bonus paid to Executive shall not be less than $400,000 in 2002 and $350,000 in 2003, and shall be paid quarterly.

                    For purposes of this Section 3(c), "Pre-Tax Income" means income before provision for income taxes as determined for the Company's financial accounting purposes, but determined without taking into account any charge associated with any restricted stock units, stock appreciation rights, or other awards granted in lieu of options.

                    (d)          Deferral of Bonus. To the extent that the total compensation payable to the Executive in any taxable year of the Company, other than the Income from Operations Bonus and the Pre-Tax Income Bonus described in Sections 3(b) and 3(c) above, (the "Bonuses") will not exceed $1,500,000, such Bonuses shall be currently payable as awarded until the total compensation (excluding the Retention Bonus described in Section 3(a) above) that will be payable to the Executive in such year equals $1,500,000. Any remaining portion of such Bonuses that would otherwise be payable in such year shall not be paid currently but shall instead be credited to a deferred compensation account for the Executive under a deferred compensation plan to be established by the Company. The deferred amounts shall be credited with earnings (i) if awarded pri or to the establishment of such plan, with interest on the last day of each month at a rate equal to 7 percent per annum and (ii) thereafter in accordance with the terms of such plan. The Company shall establish with an independent trustee an irrevocable grantor trust (referred to as a "rabbi trust") and deposit and hold in such trust amounts equal to the deferred amounts and earnings thereon. The terms of such rabbi trust shall provide that the assets held in it may only be used to pay the deferred compensation obligations of the Company to the Executive or, in the event of the insolvency of the Company, the Company's creditors. The deferred amounts credited to the Executive and earnings thereon shall become payable in a lump sum to the Executive within 15 days following his termination of employment with the Company. Notwithstanding the preceding provisions of this Section 3(d), if the Company obtains approval by its shareholders of a plan that would enable to Company to pay the Bonuses in the form of "performance-based compensation" within the meaning of section 162(m) of the Internal Revenue Code of 1986, as amended (or any similar successor provision), or if the deduction disallowance provisions of such section (or any similar successor provision) should cease to apply to the Bonuses, then the mandatory deferral provisions of this section 3(d) shall cease to apply to any Bonuses subsequently awarded to the Executive.

          4.          Savings Plan and Stock Purchase Plan. Executive shall participate in the Seitel, Inc. 401(k) Plan and Stock Purchase Plan on the same terms and conditions as are applicable to other salaried employees of the Company.

          5.          Automobile Allowance. During the Employment Term, Executive shall be entitled to a monthly automobile allowance up to $750.00, or such greater amount as may be prescribed by the Chief Executive Officer of the Company.

          6.          Other Benefits. Except as is specifically provided herein to the contrary, Executive shall be entitled to participate as of the date hereof in all other benefit plans, programs or practices generally applicable to salaried employees and to those special benefit programs, plans and practices applicable to executives, such as, and not by way of limitation, the Company's director and officers indemnity agreement, the salary continuation plan, incentive compensation plan, deferred compensation plan, supplemental income trust and various club membership initiation fees and monthly allowances. Any options or similar rights granted to the Executive or any loan to Executive made or guaranteed by the Company before the date hereof shall continue to be governed by the terms of the option, loan, or other applicable agreement. If the Company maintains a policy covering errors and omissions of officers, the Company shall cause Executive's errors and omissions to be covered under such policy during and after termination of employment on terms and conditions at least as favorable as those applied to any other officer or former officer. In addition to any payments or benefits provided under the terms of this Agreement, the Company's Chief Executive Officer may, with the approval of the Company's Board of Directors or the Compensation Committee of the Board of Directors, provide such additional payments or benefits to the Executive as the Chief Executive Officer and the Board of Directors determine to be appropriate.

          7.          Gross-Up Payment.

                    (a)          In the event any payments or benefits under this Agreement or any benefit plan or program of the Company are subject to the tax (the "Excise Tax") imposed by Sections 4999 and/or 280G of the Internal Revenue Code of 1986, as amended (the "Code") or any similar tax that may hereinafter be imposed) the Company shall pay to the Executive an additional amount or amounts (each, a "Gross Up Payment") such that the net amount or amounts retained by the Executive, after deduction of any Excise Tax on any of the above described payments or benefits and any federal, state and local income and payroll tax and Excise Tax upon the payments provided for by this Section 7, shall be equal to the amount of such payments or benefits prior to the imposition of such Excise Tax.

                    (b)          For purposes of determining the amount of a Gross Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Gross Up Payment is payable and, if applicable, state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the date the Gross Up Payment is payable, net of the maximum reduction in federal income taxes which could be obtained from any available deduction of such state and local taxes. If the Parties are unable to agree as to the amount of the Gross Up Payment, then such amount shall be determined by an independent public accounting firm or other tax professional selected by the Executive but reasonably acceptable to the Company. The determination of such accounting firm or tax professional shall be conclusive and binding upon the Parties absent fraud or manifest error. The Company shall pay all of the fees and expenses of such public accounting firm or tax professional.

                    (c)          In the event that the amount of the Excise Tax is subsequently determined to be less than the amount taken into account in calculating a Gross Up Payment hereunder, the Executive shall repay to the Company (to the extent actually paid to the Executive), at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross Up Payment attributable to such reduction (plus the portion of the Gross Up Payment attributable to the Excise Tax and federal and state and local income tax imposed on the Gross Up Payment being repaid by the Executive, but only to the extent that such repayment results in a reduction in, or a refund of, the aggregate Excise Tax and/or federal and state and local income tax imposed for all tax years on the Gross Up Payment being repaid by the Executive) plus interest on th e amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In no event, however, shall this paragraph require the Executive to repay to the Company amounts that have been paid to the Internal Revenue Service or United States Treasury that have not been refunded to the Executive by them nor to repay interest on such amounts in excess of interest received from them.

                    (d)          In the event that the amount of the Excise Tax is determined (including any determination by the Internal Revenue Service) to exceed the amount taken into account in calculating a Gross Up Payment hereunder (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross Up Payment), the Company shall make an additional Gross Up Payment in respect of such excess (plus any interest or penalty payable with respect to such excess) at the time that the amount of such excess is finally determined.

                    (e)          Each Gross Up Payment shall be payable, and shall be paid, by the Company on the date on which the Executive becomes entitled to the payment or benefits giving rise to such Gross Up Payment.

          8.          Perquisites. Effective as of the date hereof and during the Employment Term, the Company shall afford to Executive perquisites consistent with the level of compensation and responsibility of Executive, such perquisites to be continued uninterrupted except to the extent that the Board of Directors determines that prospective adjustment to perquisite policy is appropriate for similarly situated employees.

          9.          Annual Paid Vacation. Executive shall be entitled to not less than four weeks of paid vacation annually.

          10.         Change of Control: For the purpose of this Agreement, a "Change of Control" shall be deemed to have occurred if:

                    (a)          any "person," including a "group" as determined in accordance with Section 12(d)(3) of the Securities Exchange Act of 1934 (the "Exchange Act"), is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the Company's then outstanding securities;

                    (b)          as a result of, or in connection with, any tender offer or exchange offer, merger or other business combination, sale of assets or contested election, or any combination of the foregoing transactions (a "Transaction"), the persons who were directors of the Company before the Transaction shall cease to constitute a majority of the Board of Directors of the Company or any successor to the Company;

                    (c)          the Company is merged or consolidated with another corporation and as a result of such merger or consolidation less than 70% of the outstanding voting securities of the surviving or resulting corporation shall then be owned in the aggregate by the former stockholders of the Company (for purposes of this determination, all securities of the surviving or resulting corporation owned by either affiliates within the meaning of the Exchange Act or any party to such merger or consolidation shall be treated as owned by persons other than former stockholders of the Company);

                    (d)          a tender offer or exchange offer is made and consummated for the ownership of securities of the Company representing 30% or more of the combined voting power of the Company's then outstanding voting securities; or

                    (e)          the Company transfers substantially all of its assets to another corporation which is not a wholly owned subsidiary of the Company.

          Provided, however, that unless the Board of Directors of the Company determines otherwise prior to the date of any event described in the clauses (a) through (e) above, a "Change of Control" shall not be considered to have occurred solely as a result of the direct or indirect beneficial ownership by the employees or members of the Board of Directors of the Company of the assets or securities of the Company.

          11.         Disability. For purposes of this Agreement, "Disability" shall mean the absence of Executive from Executive's duties with the Company on a full-time basis for 180 consecutive business days as a result of incapacity due to mental or physical illness which is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to Executive or Executive's legal representative, such agreement as to acceptability not to be withheld unreasonably.

          12.         Termination of Employment.

                    (a)          By the Company for Due Cause.

                              (i)          Nothing herein shall prevent the Company from terminating Executive for Due Cause in which event the Employment Term shall end and Executive shall continue to receive salary and benefit coverages provided for in this Agreement only through the period ending with the date of such termination as provided in this Section 12(a). Any other rights and benefits Executive may have under other employee benefit plans and programs of the Company, generally, shall be determined in accordance with the terms of such plans and programs. The term "Due Cause" as used herein, shall mean (x) Executive has committed a willful, serious act, such as embezzlement, against the Company intending to unjustly enrich himself at the expense of the Company or has been convicted of a felony involvi ng moral turpitude or (y) Executive, in carrying out his duties hereunder, has been found guilty of (1) willful, gross neglect or (2) willful, gross misconduct resulting in either case in material harm to the Company.

                              (ii)          Notwithstanding the foregoing, no termination of Executive's employment by the Company shall be treated as for Due Cause or be effective until and unless all of the steps described in Subsections (1) through (4) below have been complied with:

                                        (1)          Written notice of intention to terminate for Due Cause, including the basis for such termination, has been given by the Company within 60 days after the Board of Directors of the Company learns of the act, failure or event (or latest in a series of acts, failures or events) constituting " Due Cause";

                                        (2)          The Executive has been given 60 days following such notice in which to correct such act, failure or event (or, in the case of conviction of a felony, to respond to such notice), and if the Executive corrects such act, failure or event, the Board of Directors may not terminate the Executive's employment under this Section 12(a);

                                        (3)          The Board of Directors of the Company has voted (at a meeting of the Board duly called and held as to which termination of Executive is an agenda item) to terminate Executive for Due Cause after Executive has been given the 60 day correction period referred to above and has been afforded at least 20 days notice of the meeting and an opportunity to present his position in writing and in person; and

                                        (4)          The Board of Directors of the Company has given a Notice of Termination to Executive within 20 days after such Board meeting. The Company may suspend Executive with pay at any time during the period commencing with the giving of notice to Executive under clause (1) above until final Notice of Termination is given under this clause (4). Upon the giving of notice as provided in this clause (4) above, no further payments shall be due Executive.

                    (b)          By Death or Disability.

                              (i)          In the event of the death of Executive during the Employment Term, the Company shall pay to Executive's estate or beneficiaries all payments payable by the Company in accordance with Section 12(d) hereof, but offset by the proceeds from any life insurance policy to the extent attributable to Company contributions to such policy. The Company shall also provide continued medical coverage to the Executive's covered dependents on the terms set forth in Section 12(d). Notwithstanding the terms of the preceding sentence to the contrary, all outstanding, unexercised and unexpired warrants and options on the date of Executive's death shall be fully vested and immediately exercisable for the remainder of their original term and the Executive Stock shall be fully vested. Any death benefit under life insurance or other benefit programs covering Executive shall be determined and paid in accordance with the provisions of such policies and programs.

                              (ii)          If Executive's employment is terminated by reason of Disability, the Company shall pay to Executive all payments payable by the Company in accordance with Section 12(d) hereof, but offset by payments made to the Executive under any disability insurance policy or program to the extent provided by the Company. The Company shall also provide continued medical coverage to the Executive and the Executive's covered dependents on the terms set forth in Section 12(d). Notwithstanding the terms of the preceding sentence to the contrary, all outstanding, unexercised and unexpired warrants and options on the date Executive's employment is terminated by reason of Disability shall be fully vested and immediately exercisable for the remainder of their original term. In addition, the Company shall carry an insurance policy for Executive that, in the event Executive's employment is terminated by reason of Disability, pays the issuer of the insurance policy on the life of Executive an amount of cash necessary, with the addition of the anticipated portion of the future premiums otherwise to be paid by the Executive, to make the policy "fully paid up" so that the policy would be self-sustaining without further payments by either the Company or the Executive.

                    (c)          Voluntarily By Executive. If Executive terminates his employment with the Company voluntarily, other than as provided for in Sections 12(e) or 12(f), Executive shall continue to receive salary and benefit coverages provided for in this Agreement only through the period ending with the date of such termination. Any other rights and benefits Executive may have under other employee benefit plans and programs of the Company, generally, shall be determined in accordance with the terms of such plans and programs. The Executive will also have the opportunity, if the Company desires to retain the Executive as a consultant, to receive the Consulting Payments as described in Section 12(j).

                    (d)          By Company Other Than For Due Cause. If Executive's employment under this Agreement is terminated by the Company for any reason other than as provided in Section 12(a) hereof, the Company shall (i) within 30 days after Executive's employment is terminated pursuant to this Section 12(d), pay to Executive a lump sum amount equal to the greater of (x) three times the yearly compensation ("yearly compensation" means the highest total of base salary, commissions, and bonuses in any of the prior three years [excluding the Retention Bonus and treating the Pre-Tax Income Bonus as the higher of the target or actual Pre-Tax Income Bonus for such year]) or (y) the yearly compensation (as defined in Section 12(d)(i)(x) above) multiplied by the years, whole and partial, remaining in the Employment Period; (ii) pe rmit Executive's and Executive's dependents continued participation (on the same terms and conditions as would be applicable had Executive remained actively employed) in Company medical plans previously available to Executive for a period of two years following such termination; (iii) cause all outstanding, unexercised and unexpired options and warrants to be fully vested and immediately exercisable for the remainder of their original term and cause the Executive Stock to be fully vested; and (iv) immediately pay to the issuer of the insurance policy on the life of Executive an amount of cash necessary, with the addition of the anticipated portion of the future premiums otherwise to be paid by the Executive, to make the policy "fully paid up" so that the policy would be self-sustaining without further payments by either the Company or the Executive. In addition, the Company shall pay in a cash lump sum to Executive upon such termination an amount equal to the benefits under the Savings Plan described in Se ction 4 hereof that are not fully vested and nonforfeitable as of such termination. The Executive will also have the opportunity to receive the Consulting Payments as described in Section 12(j).

                    (e)          By Executive For Good Reason. Anything herein to the contrary notwithstanding, if the Company (i) demotes Executive to a lesser position than provided in Section 1; (ii) causes a material change in the nature or scope of the authorities, powers, functions, duties, or responsibilities attached to Executive's position as provided in Section 1; (iii) decreases Executive's salary below the level provided for by the terms of Section 2 (taking into account increases made from time to time in accordance with Section 2) or changes the formula for determining the Income from Operations Bonus in a manner that would be adverse to Executive; (iv) materially reduces Executive's benefits under any executive compensation or employee benefit plan, program, or arrangement of the Company (other than a change made prior to a Change o f Control that affects all of the Company's senior executive officers alike) from the level in effect upon Executive's commencement of participation on or after the date hereof; (v) moves Executive's office from the Company's principal executive office; (vi) fails to obtain the assumption in writing of the obligation to perform this Agreement by any successor to all or substantially all of the assets of the Company within 60 days after a merger, consolidation, sale, or similar transaction; or (vii) commits any other material breach of this contract, then, such action (or inaction) by the Company, unless consented to in writing by Executive, shall be basis for termination of employment by Executive for Good Reason. Notwithstanding the preceding sentence, within 60 days of learning of the action (or inaction) described herein as the basis for a constructive termination of employment, Executive shall (unless he gives written consent thereto) advise the Company in writing, that the action (or inaction) constitu tes a basis for termination of his employment pursuant to this Section 12(e) in which event the Company shall have 60 days in which to correct such action or inaction and if the Company does so correct such action (or inaction) Executive shall not be entitled to terminate his employment under this Section 12(e) as a result of such action (or inaction). If the Company fails to correct such action or inaction within such 60-day period, Executive may terminate his employment for Good Reason within 30 days of the expiration of such period. If Executive's employment under this Agreement is terminated by the Executive for Good Reason, the Company shall provide to the Executive the payments, benefits, and consulting opportunity described in Section 12(d).

                    (f)          Following Change of Control of the Company. In the event of a Change of Control of the Company (as defined in Section 10) and for a period of two years thereafter, if Executive's employment is voluntarily terminated by the Executive for Good Cause (at his discretion), Executive shall receive the payments, benefits, and consulting opportunity described in Section 12(d). For the purposes of this Section 12(f), "Good Cause" means (i) any change in the person or persons to whom the Executive is required to report, (ii) any change that makes it more difficult (in the reasonable opinion of the Executive) for the Executive to fulfill his duties under this Agreement, (iii) any material change in the capitalization of the Company, (iv) any change that will materially reduce the salary and/or bonuses to be earned pursuant to Sec tions 2 or 3 of this Agreement, or (v) the decision by the Executive to terminate employment for any reason during the 30-day period beginning on the first anniversary of the Change of Control.

                    (g)          Expiration of Employment Period. Upon the expiration of the Employment Period on December 31, 2009, the Executive shall be entitled to the payments and benefits described in items (ii), (iii), and (iv) of Section 12(d). The Executive will also have the opportunity to receive the Consulting Payment as described in Section 12(j).

                    (h)          Company Benefits Upon Termination. Executive shall also be entitled in all events upon termination to receive the benefits to which he is entitled, if any, under the Company's plans and programs referenced herein or otherwise in effect from time to time.

                    (i)          Effect on Agreement. Termination of employment or the Employment Term as used herein shall not constitute a termination of this Agreement and the provisions hereof shall survive until the respective rights of the Company and Executive have been discharged.

                    (j)          Consulting Payments. If (i) Executive's employment is terminated during the Employment Term for any reason other than by the Company for Due Cause, by the Executive pursuant to Section 12(c), or upon the Executive's death or Disability or if (ii) the Employment Period extends to the Termination Date, the Company, in addition to any other payments set forth in this Section 12, will pay the Executive 100 percent of his "yearly compensation" (as defined in Section 12(d)) for each of two additional years (the "Consulting Payments"), provided Executive performs the Consulting Services. For the purposes of this Section 12(j), Consulting Services shall mean that the Executive will be available to act as a consultant to the Company for up to 50 percent of the Executive's work related time (as compared to his final year of employment). The total amount of the Consulting Payments shall be paid to the Executive ratably over such two-year period in semi-monthly installments. Executive shall not be entitled to the Consulting Payments if (x) he refuses to perform the Consulting Services requested by the Company, although there is no requirement that the Company request such services for the Executive to be entitled to said payment; or (y) he violates any of the provisions of the Confidential and Proprietary Information or the Non-Compete provisions set forth in Sections 13 and 14 herein.

          13.         Confidential and Proprietary Information. Executive recognizes that Company's business involves the handling of confidential information of both Company and its clients and requires a confidential relationship between Company and its clients and also between Company and Executive. Company's business requires the greatest practical protection and confidential treatment of various information, trade secrets, data and other knowledge of both Company's clients and Company which will be conceived or learned by Executive in the course of his employment. Accordingly, Executive agrees to keep secret all confidential information, trade secrets and proprietary information acquired by him during his employment concerning the business and affairs of the Company (the "Information") and further agrees for the period of this employment and at all times following the termination of his employment, f or any reason, not to disclose any such Information to any person, firm or corporation other than as directed by Company, unless and until such Information becomes publicly known outside of Company (other than through any violation by the Executive of his obligation hereunder) or Executive is under subpoena or otherwise compelled by law to disclose the Information. Executive also agrees, upon request by Company, to execute a confidentiality and nondisclosure agreement containing terms reasonably designed to protect the confidentiality of material information relating to the Company.

          14.         Executive's Non-Compete.

                    (a)          In connection with its business, Company has developed and refined (and will in the future develop and refine) numerous techniques, procedures, methods, and data used in connection with its business. In addition, Company has developed (and will in the future develop) substantial goodwill with its customers, clients, and generally within the geophysical and energy exploration industry. This goodwill is of extreme importance to the future financial success of Company because of the highly specialized nature of Company's business. During Executive's association with Company, Executive has or will become familiar with the nature of Company's business and with these special techniques, procedures, methods and data and will become associated with and participate in Company's goodwill.

                    (b)          Therefore, for so long as Executive is associated with Company as an officer, director, employee or consultant and for a period of twelve (12) months after the date when Executive ceases to be associated with Company in any such capacity ("Separation Date"), Executive shall not, directly or indirectly, for his own account or the account of others, as an officer, director, stockholder, owner, partner, employee, promoter, consultant, manager, advisor or otherwise, engage in or solicit the same business as Company is engaged in on the Separation Date, within a two hundred (200) mile radius of (i) Houston, Texas, (ii) New Orleans, Louisiana, or (iii) any other city in which Company has an office on the Separation Date. In addition, Executive agrees that, for so long as Executive is associated with Company as an officer, director, employee or consultant, and for a period of two (2) years after the Separation Date, Executive shall not, directly or indirectly, solicit or induce, or attempt to solicit or induce, any employee to leave Company for any reason whatsoever; provided, however, that this nonsolicitation covenant shall not apply to any person who was recruited by Executive and subsequently hired by Company. Notwithstanding the foregoing, this Section 14 shall not apply if Executive terminated his employment with Company for Good Cause following a Change of Control in accordance with Section 12(f), provided, however, that this Section 14 shall apply during any period for which Executive receives the Consulting Payments described in Section 12(j).

          15.         Remedies. In the event of any breach of Executive's covenants contained in Paragraph 13 or 14, Company would suffer immediate and irreparable harm for which Company would not have an adequate remedy at law. Accordingly, Executive understands that in the event of any breach of Executive's covenants contained in Paragraph 13 or 14, Company shall be entitled to injunctive relief as well as any and all other applicable remedies at law or in equity available to Company.

          16.         Prohibition Against Assignment. The right of Executive to benefits under this Agreement shall not be assigned, transferred, pledged or encumbered in any way and any attempt at assignment, transfer, pledge, encumbrance or other disposition of such benefits shall be null and void and without effect.

          17.         Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Company, its successors and assigns, and Executive, his heirs, executors, administrators and legal representatives.

          18.         Entire Agreement. This Agreement constitutes the entire understanding between the parties hereto with respect to the subject matter hereof, and may be modified only by a writing executed by the parties hereto. The waiver by either party to this Agreement of a breach of any provision thereof by the other party shall not operate or be construed as a waiver of any subsequent breach of such party. This Agreement supersedes any and all other agreements, either oral or in writing, between the parties hereto with respect to the employment of the Executive by the Company, and contains all of the covenants and agreements between the parties with respect to such employment in any manner whatsoever.

          19.         Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas without giving effect to any choice of law provisions thereof, and, in any action by the Executive or the Company arising out of or relating to this Agreement, venue shall be in Harris County, Texas.

          20.         Legal Fees. Any and all reasonable legal fees and expenses incurred by the Executive in seeking to enforce any rights to benefits provided by this Agreement shall be promptly paid by the Company if the Executive is successful in whole or in part in obtaining or enforcing said rights to benefits, whether by judgment or settlement or otherwise. Any and all reasonable legal fees and expense incurred by the Executive in negotiating and establishing this Agreement shall be promptly paid by the Company.

          21.         Severability. The invalidity or enforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.

          22.         Amendment. This Agreement may be amended only by mutual consent of the parties hereto evidenced in writing.

          23.         Notices. Any notice required or permitted to be given under this Agreement shall be sufficient if in writing and if given to Executive, sent by certified or registered mail to Executive's residence, with a copy to George Bostick at Sutherland Asbill & Brennan LLP, 1275 Pennsylvania Ave., NW, Washington, DC 20004, and Clayton Clark at Clark, Depew, and Tracey, 440 Louisiana, Suite 1600, Houston, TX 77002, or, if given to the Company, sent to the principal executive offices of the Company, with a copy to Cynthia Moulton at Franklin, Cardwell & Jones, 600 Travis, Houston, Texas 77002.

          24.         Representation.

                     (a)          Executive hereby represents and warrants to the Company that Executive is not aware of any presently existing fact, circumstance or event (including, without limitation, any contractual or other legal constraint) which would preclude or restrict him from entering into this Agreement or providing to the Company the services contemplated by this Agreement, or which would give rise to any breach of any term or provision hereof.

                     (b)          The Company hereby represents and warrants to Executive that (i) it has received all authorizations necessary for the execution of this Agreement on the terms and conditions set forth herein and (ii) there are no regulatory approvals that are necessary for the execution and performance of this Agreement by the Company, and (iii) its entering this Agreement and the performance of its obligations under this Agreement will not violate any agreement between the Company and any other person, firm or organization or any law or governmental regulation.

          IN WITNESS WHEREOF, the parties have executed this Agreement (in multiple copies) effective as of the day and year first above written.

SEITEL, INC.

By:

Name:

Title:

 Date:

KEVIN FIUR

Date:

EX-10.2

Exhibit 10.2 

SEITEL, INC./PAUL FRAME

EMPLOYMENT AGREEMENT AMENDMENT NO. 3

          THIS EMPLOYMENT AGREEMENT AMENDMENT (this "Agreement") is between Seitel, Inc., (the "Company"), a Delaware corporation with its principal place of business in Houston, Texas, and Paul A. Frame (the "Employee," and collectively with the Company, the "Parties"), and is an amendment to that certain Employment Agreement between the Company and the Employee dated effective January 1, 1991 (the "Original Employment Agreement"), as amended by that certain Employment Agreement Amendment dated effective as of January 1, 1998 and by that certain Employment Agreement Amendment No. 2 dated effective June 26, 2000 (the Original Employment Agreement, as so amended, is referred to herein as the "Employment Agreement").

Recitals

          WHEREAS, the Company and the Employee entered into the Original Employment Agreement effective as of January 1, 1991, to govern the terms of the Employee's employment by the Company;

          WHEREAS, the Company and the Employee entered into amendments to the Original Employment Agreement effective January 1, 1998 ("Amendment No. 1"), and effective June 26, 2000 ("Amendment No.2"), respectively, to amend certain terms of the Original Employment Agreement;

          WHEREAS, the Employee and the Company are entering into this Agreement to further amend the Employment Agreement as set forth herein;

          NOW, THEREFORE, in consideration of the above and the mutual covenants and agreements set forth herein, the Parties do hereby agree as follows:

          1.          Term.  Section 6 of Amendment No. 2 is deleted and Section 2 of the Employment Agreement is hereby amended by deleting the existing Section 2 and replacing it with the following:

          "2.          Term: The term of this Agreement shall begin on January 1, 1991 and shall terminate on December 31, 2009 (the "Termination Date"). The term of this Agreement is hereafter sometimes referred to as the "Employment Period." If the Employment Period reaches the Termination Date, Employer will pay Employee for two (2) additional years the compensation then applicable, which shall include for purposes of this payment the Base Salary, together with the average of all Pre-Tax Profits Bonus and Sales Bonus payments paid to Employee for the prior three (3) years as calculated under Section 3 of this Agreement, as amended by Amendment No. 2 to this Agreement (the "Severance Payment"). The Severance Payment will be paid provided Employee is available to act as a consultant to Employer for up to fifty percent (50%) of Employee's work-related time (as compared to his final year of employment ) (hereinafter "Consulting Services"). Employer shall have no obligation to pay Employee any Severance Payment if Employee:

          (i)          refuses to perform the Consulting Services requested by Employer, although there is no requirement that Employer request such services for Employee to be entitled to said payment; or

          (ii)          violates any of the provisions of the Confidential and Proprietary Information or the Non-Compete provisions set forth in Sections 14 and 15 herein."

          2.          Duties:          Section 5 of the Employment Agreement is hereby amended by deleting the existing Section 5 and replacing it with the following:

         "5.          Duties: The Employee is employed as Chief Executive Officer, President and Chairman of the Board of the Company. His duties shall be consistent with the responsibilities of such offices, as same are directed by the Company's Board of Directors. Employee shall be responsible for all day-to-day operations related to such offices and shall perform the activities related to such offices as assigned to him by the Company's Board of Directors. Employee shall not be required to relocate his residence to perform his duties under this Agreement."

          3.          Termination:          Section 13 of the Employment Agreement is hereby amended by deleting the existing paragraph 13(b) and replacing it with the following paragraph 13(b), and adding new paragraph 13(c):

          "(b)          Termination by Employee For Good Reason. Anything herein to the contrary notwithstanding, if the Company (i) demotes Employee to a lesser position than provided in Section 5; (ii) causes a change in the nature or scope of the authorities, powers, functions, duties, or responsibilities attached to Employee's position as provided in Section 5; (iii) decreases Employee's salary below the level provided for by the terms of Section 3 (taking into account increases made from time to time in accordance with such Section 3); (iv) reduces Employee's benefits under any employee compensation or employee benefit plan, program, or arrangement of the Company (other than a change made prior to a change in control that affects all of the Company's senior officers alike) from the level in effect upon Employee's commencement of participation on or after the date hereof; (v) moves Employee's office from the Company's principal employee office; (vi) fails to obtain the assumption in writing of the obligation to perform this Agreement by any successor to all or substantially all of the assets of the Company within 60 days after a merger, consolidation, sale, or similar transaction unless such assumption occurs by operation of law; or (vii) commits any other material breach of this contract, then, such action (or inaction) by the Company, unless consented to in writing by Employee, shall constitute a basis for termination by the Employee for "Good Reason." Notwithstanding the preceding sentence, within 60 days of learning of the action (or inaction) described herein as the basis for a constructive termination of employment, Employee shall (unless he gives written consent thereto) advise the Company in writing, that the action (or inaction) constitutes a basis for termination of his employment pursuant to this Section 13(b) in which event the Company shall have 60 days in which to correct such acti on or inaction and if the Company does so correct such action (or inaction) Employee shall not be entitled to terminate his employment under this Section 13(b) as a result of such action (or inaction). If the Company fails to correct such action or inaction within such 60-day period, Employee may terminate his employment for Good Reason within 30 days of the expiration of such period. In the event Employee terminates his employment for Good Reason, or in the event of a wrongful termination of Employee, all monies due to Employee through the term of this Agreement, including the Severance Payment, shall be paid by Employer in a lump sum amount within thirty (30) days of Employee's termination. Employee shall have no obligation to mitigate his loss or any occasioned damages as a result of such termination, or perform any services, including Consulting Services, to receive such payment.

          (c)          Termination by Employee without Good Reason. If Employee terminates this Agreement during the Employment Period other than pursuant to Section 13(b), Employer will pay Employee 100% of his then current Base Salary, Pre-Tax Profits Bonus and Sales Bonus for two additional years, provided Employee performs the Consulting Services (the "Termination Payment"). Employer shall have no obligation to pay Employee any Termination Payment if Employee:

          (i)          refuses to perform the Consulting Services requested by Employer, although there is no requirement that Employer request such services for Employee to be entitled to said payment; or

          (ii)          violates any of the provisions of the Confidential and Proprietary Information or the Non-Compete provisions set forth in Sections 14 and 15 herein."

          4.          Amendment of Employment Agreement. This Agreement is executed as and shall constitute an amendment to the Employment Agreement and shall be construed in connection with and as a part of the Employment Agreement. Except as specifically amended by this Agreement, all of the terms and provisions of the Employment Agreement shall remain in full force and effect. In the event of any conflict between the terms of the Employment Agreement and the terms of this Agreement, the terms of this Agreement shall apply.

          5.          Miscellaneous.

          (a)          Controlling Law. The execution, validity, interpretation and performance of this Agreement shall be determined and governed by the laws of the State of Texas, and, in any action by the Company enforce this Agreement, venue may be had in Harris County, Texas.

          (b)          Entire Agreement. The Employment Agreement, as amended by this Agreement, contains the entire agreement of the Parties. The Employment Agreement and this Agreement may not be changed orally or by action or inaction, but only by an agreement in writing signed by the Party against whom enforcement of any waiver, change, modification, extension or discharge is sought.

          (c)          Severability. If any provision of this Agreement is rendered or declared illegal or unenforceable by reason of any existing or subsequently enacted legislation or by decree of a court of last resort, the Parties shall promptly meet and negotiate substitute provisions for those rendered or declared illegal or unenforceable, but all remaining provisions of this Agreement shall remain in full force and effect.

          (d)          Execution. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which shall constitute one instrument.

          EXECUTED to be effective as of the 28^th day of January, 2002.

SEITEL, INC.

By:                                                  

Name:

Title:

 /s/ Paul A. Frame                           

PAUL A. FRAME