$400 Million Senior Bridge Loan Presentation

EX-99.1 2 dex991.htm $400 MILLION SENIOR BRIDGE LOAN PRESENTATION $400 Million Senior Bridge Loan Presentation

$400MM Senior Bridge Loan

November 28, 2006

Disclaimer

The following information contains forward-looking statements within the meaning of the Private

Securities Litigation Reform Act of 1995. These forward-looking statements are based on

Management’s current expectations and beliefs, as well as a number of assumptions concerning

future events.

These statements are based on certain assumptions and analyses made by Management in light of

its experience and its perception of historical trends, current conditions and expected future

developments as well as other factors it believes are appropriate in the circumstances. However,

whether actual results and developments will conform with Management’s expectations and

predictions is subject to a number of risks and uncertainties, general economic, market or business

conditions; the opportunities (or lack thereof) that may be presented to and pursued by Seitel;

competitive actions by competitors; changes in laws or regulations; and other factors, many of which

are beyond the control of Seitel.

You are cautioned not to put undue reliance on such forward-looking statements because actual

results may vary materially from those expressed or implied, as more fully discussed in our safe

harbor statements found in our SEC filings, including, without limitation, the discussion under the

heading “Risk Factors”

in the company’s annual report on Form 10-K. All forward-looking statements

are based on information available to Management on this date and Seitel assumes no obligation to,

and expressly disclaims any obligation to, update or revise any forward looking statements, whether

as a result of new information, future events or otherwise.

This material also contains certain non-GAAP financial measures as defined under the Securities and

Exchange Commission rules. To comply with these rules, we have provided a reconciliation of such

non-GAAP financial measures in Appendix I attached to this presentation.

Agenda

Transaction Overview

Steven Shekane

Morgan Stanley

Syndication Process

ValueAct

Capital

Greg Spivy

ValueAct

Capital

Introduction

Robert Monson

Chief Executive Officer

Investment Highlights

Industry

Company

Financials

William Restrepo

Chief Financial Officer

Q&A

Appendices

Transaction Overview

Steven Shekane

Morgan Stanley

Sources and Uses

November

2006,

ValueAct

Capital

(“ValueAct”)

announced

that

entered

into

definitive

merger

agreement

acquire

Seitel,

Inc.

(“Seitel”

the

“Company”)

for

$765MM,

8.2x

LTM

Cash

EBITDA

$93.3MM

As part of the transaction, the Company will issue $400MM of Senior Notes. Proceeds will be

used

purchase

outstanding

equity

not

held

ValueAct,

retire

existing

debt

and

pay

associated

fees including early repayment costs

Notes:

(1)

$20MM capacity (undrawn at closing)

(2)

Cash balance estimated

(3)

Includes

ValueAct

and

management

rollover

fair

market

value

(4)

Estimated as of 2/15/07

100.0

16.4

26.3

12.6

44.7

0.0

894.6

146.6

235.6

112.4

400.0

0.0

Total Sources of Funds

New Equity

Rollover Equity

(3)

Cash

(2)

Senior Notes

Revolver

(1)

100.0

3.5

5.8

21.1

26.3

43.3

894.6

31.1

51.8

189.0

235.6

387.0

Total Uses of Funds

Fees and Other Expenses

Early Repayment Cost

(4)

Retire Debt

Rollover Equity

Purchase of Equity

Sources and Uses of Funds

(%)

($MM)

Sources

(%)

Uses

($MM)

Pro Forma Capitalization

Notes:

(1)

Contributed

equity

sum

cash

ValueAct

has

previously

invested

($127.2MM

from

9/30/04

6/30/06),

cash

ValueAct

will

spend

purchase

new equity ($146.6MM) and management rollover equity ($1.3MM). Previously invested amounts shown at historical cost in accordance with step

acquisition accounting

(2)

Calculated using LTM 9/30/06 cash EBITDA of $93.3MM

(3)

$20MM capacity (undrawn at closing)

Capital Leases

3.1

Revolver

(3)

0.0

Total Capitalization

678.5

7.3

100.0

Total Debt

403.4

4.3

59.5

Senior Unsecured Notes

400.0

4.3

58.9

Total First Lien Debt

3.1

0.0

0.5

Pro Forma Capitalization

Amount ($MM)

EBITDA Multiple

(2)

(x)

% of Capitalization

Equity will account for almost half of Seitel’s

pro forma capitalization

ValueAct

has contributed cash of $273.8MM

(1)

Contributed

Equity

(1)

275.1

2.9

40.5

Notes Payable

0.3

0.0

Syndication Process

Syndication Timetable

Tuesday, December

Commitment Deadline

Late January –

Early February

Expected Bond Transaction

November 2006

December 2006

January 2007

February 2007

Indicates Holiday

November 2006 –

February 2007

ValueAct

Capital

Greg Spivy

ValueAct

Capital

ValueAct

Capital

Investment partnership with $4.8Bn of assets under management formed in 2000 to acquire

significant ownership stakes in public and private companies

Concentrated portfolio of 15-20 core positions in public and private companies

Active

investment

strategy

across

all

core

positions,

whether

control

“influential”

minority

ownership position

Built current Seitel

position to 39% on a fully-diluted basis over a two year period dating back to its

emergence from bankruptcy; assumed two director seats in March 2006

Company’s strategic review was triggered by existing, restrictive debt terms, including a capital

expenditures covenant that they had outgrown

are

bullish

long-term

demand

for

natural

gas

and

believe

Seitel’s

North

American

onshore

seismic data library has significant strategic value

New senior-level management in place since emerging from bankruptcy two years ago are very

disciplined, cost-conscious and cash-flow focused and have the company perfectly positioned to

capitalize on its valuable database, superior technology offering and a top-notch sales and

operating team

Introduction

Robert Monson

Chief Executive Officer

Seismic Data

Allows oil and gas companies to use waves of sound to visualize the

Earth’s subsurface and “map”

geologic structures to determine the location

of oil and gas reservoirs

Helps companies decide how to optimize the millions of dollars they invest

in exploration, production, and drilling operations

Can significantly decrease the risk of drilling a non-producing well

One of the most essential components of successful oil and gas

exploration and production

Seismic data is critical for successful oil and gas exploration and

production

Seitel

is a leading seismic data organization serving the oil and gas

industry primarily onshore in North America

Since its inception in 1982, the Company has created one of the largest

onshore seismic libraries in North America

Seitel

has a strong business position

The Company’s data remains relevant for a long period of time resulting in

strong free cash flow and a high return on investment in data

Proven 3D Data Library Growth

Seitel has significantly grown its 3D data library and has become one of the most

comprehensive providers of seismic data in North America

$200

$400

$600

$800

$1,000

$1,200

1993

1995

1997

1999

2001

2003

2005

US Offshore

US Onshore

Canada

3D Data Library Gross Investment

(1)

Notes:

(1)

As of 9/30/06

Reconciliation of non-GAAP measures to the most comparable GAAP measures can be found in Appendix I attached to this presentation

Financial Momentum

$84.5

$85.2

$102.7

$126.4

$93.3

$72.3

$54.7

$49.8

$0.0

$50.0

$100.0

$150.0

2003

2004

2005

LTM 9/30/06

Cash EBITDA

Cash Revenue

Notes:

(1)

Cash

revenue

cash

resales

and

solutions

revenue

(2)

Cash

EBITDA

less

acquisition

revenue

(used

fund

new

seismic

data

shoots)

and

non-cash

items

(including

non-cash

revenue)

plus

non-cash

operating

expenses

(employee

restricted

grants)

(3)

Includes

Non-recurring

Public

company

cash

expenses

approximately

$6.6MM,

$1.4MM,

$2.0MM

and

$2.4MM

2003,

2004,

2005

and

LTM

period

ended

September

and

non-recurring

non-cash

expenses

$0.9MM

and

$1.9MM

2005

and

LTM

period

ended

September

Reconciliation

non-GAAP

measures

the

most

comparable

GAAP

measures

can

found

Appendix

attached

this

presentation

2003 –

9/30/06 CAGR

Cash Revenue

(1)

15.8%

Cash EBITDA

(2)(3)

25.6%

Investment Highlights

Strong

Management

Team

Investment Highlights

Strong Industry

Fundamentals

Leading Market

Position

Stable Long-Term

Cash Returns

Low Capex

“Pure

Play”

Library

One of the largest 2D and 3D onshore seismic data libraries in North America

#1 or #2 market position in each key region

Attractive and difficult-to-replicate asset

Diversified

Customer Base

Recurring revenue model generates significant free cash flow

Data expected to generate revenues for 10+ years

Proven, consistent return on investment

69% of LTM revenue came from fully amortized data greater than four years old

Capital efficient data expansion with customers committing to fund

approximately 70% of acquisition capex

Minimize

capital

requirements

sourcing

seismic

acquisition

as-

required basis (no crews or equipment)

Long-standing, diversified customer relationships (privates, independents,

majors)

Limited

reliance

any

one

customer

top

data

users

vary

each

year

No customer accounts for more than 4% of sales

Declining reserve life and replacement creating exploration pressure

Increased

E&P

capex

with

increasing

North

America

Historically high commodity prices and rig counts

Senior management team averages 20+ years of experience in the oil and gas

services industry

Leading Market Position –

Key Basins

10,173

Square

Miles

Rank by Library Size

Canada

Note:

Square mileage figures include data in process of being acquired

38.9%

26.8%

26.5%

Library by Location

S. LA / Mississippi

Canada

Rockies 6.3%

Texas

Gulf Coast

N. LA

1.5%

6,952

Square

Miles

Rank by Library Size

Texas Gulf Coast

7,012

Square

Miles

Rank by Library Size

S. LA / Mississippi

399

Square

Miles

Rank by Library Size

Northern Louisiana

1,639

Square

Miles

Rank by Library Size

Rockies

(Years After Investment)

Return

initial

investment

the

age

the

survey

well

the

industry

cycle

First year after investment has historically yielded average returns close to 30%, followed by

a gradual decline period which flattens out after 10 years

Returns on our older data vintages have benefited from the current environment

Stable Long-Term Cash Returns

Notes:

(1)

Resales

and

investment

are

for

onshore

data

the

and

Canada,

well

data

Canada

only

Reconciliation of non-GAAP measures to the most comparable GAAP measures can be found in Appendix I attached to this presentation

Average Return –

Vintages 1994 –

2005

(1)

Low Capex

“Pure Play”

Library

Seitel uses third party providers to shoot seismic data (no equipment or crews)

Before

data

collected,

customers

commit

fund

approximately

70%

acquisition

capex

Capex

leverage enables cash resale growth to exceed investment growth

$100

$200

$300

$400

$500

$600

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Cum. 3D Onshore Total Resales

Cum. 3D Onshore Net Investment

Notes:

Resales

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

Reconciliation of non-GAAP measures to the most comparable GAAP measures can be found in Appendix I attached to this presentation

Diversified Customer Base

Global

Large Independents

Privates and Small

Independents

Diversified Customer Base

(cont’d)

Over 1,600 customers, ranging from small, private independent oil and gas companies to

several of the largest companies in the oil and gas industry

The Company does not rely on a specific group of customers to generate recurring revenue

2004

Percent of

Total Revenue

2005

Percent of

Total Revenue

Customer A

Customer B

Customer C

Customer D

Customer E

Customer F

Customer G

Customer H

Customer I

Customer J

Subtotal

6.6

5.0

4.6

3.4

3.0

2.2

2.1

2.0

1.9

1.8

32.6

Customer K

Customer L

Customer E

Customer M

Customer N

Customer O

Customer P

Customer Q

Customer R

Customer S

Subtotal

4.0

3.4

2.7

2.4

2.2

28.5

2.2

2.3

2.4

3.4

3.5

Strong Industry Fundamentals

Seitel is positioned to benefit from several, attractive long-term oil and gas

industry trends, including

Sustained demand for oil and gas

Challenges in supply side and geopolitical concerns

Historically high commodity prices and North America rig counts

Increased exploration expenditures

M&A / mineral lease turnover resulting in relicensing of

data

While Seitel benefits from long-term trends for oil and gas, the Company

also benefits from several specific long-term seismic industry trends,

including

Advanced drilling technology

Seismic technology advancements

Strong Management Team

The executive team averages 20+ years of experience in the oil and gas services industry

William Restrepo

Executive VP,

CFO and

Secretary

21 Years

Kevin Callaghan

Executive VP and

COO

34 Years

Robert Simon

President of Seitel

Data

26 Years

Garis Smith

President of

Olympic Seismic

25 Years

Robert Monson

Director,

President and

CEO

21 Years

Marcia Kendrick

Senior VP, CAO

and Treasurer

13 Years

Richard Kelvin

Senior VP of

Seitel Solutions

and Matrix

Operations

17 Years

Industry

Seismic Sector Landscape

Oil and

Gas

Companies

Competitor

Data

Seitel

Client Data

Basic Processing and Data Management

Data Acquisition Equipment (Marine Vessels, Land Crews and Equipment)

Research

Data Owners

Drilling Prospect Generation

Seitel

occupies an attractive position in the seismic sector

Minimal capital intensity (no equipment or crews)

Higher cash revenue stability / predictability

High-End Processing and Reprocessing

Data Interpretation Products and Services

Petroleum and Natural Gas Consumption

Worldwide demand for oil and gas continues

to accelerate

Changing supply growth due to capacity

constraints, significant production decline

rates, political instability (58% of world’s

natural gas supply is located in Iran, Russia

and Qatar) and slow infrastructure

development

Resulting tightness driving commodity pricing

and, consequently, exploration activity

Return to North America

Source: Economist Intelligence Unit

Source: Energy Information Administration (EIA), International Energy Outlook 2006

U.S. Rotary Rigs in Operation

306

376

264

128

197

217

137

157

165

194

564

560

496

720

939

691

872

1,025

1,186

464

300

600

900

1,200

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Crude Oil

Natural Gas

Source: Energy Information Administration (EIA), Annual Energy Review 2005

Global and China / India Petroleum Consumption

2,000

4,000

6,000

8,000

10,000

India

China

55,000

60,000

65,000

70,000

75,000

80,000

85,000

Global

Natural Gas Consumption

22.5

27.6

27.4

29.6

32.7

73.4

92.5

95.5

116.5

134.3

0.0

16.0

32.0

48.0

64.0

80.0

96.0

112.0

128.0

144.0

160.0

1990

2002

2003

2010E

2015E

North America

Global

Exploration & Production Spending

Nearly half of the U.S. oil and gas supply will need to be replaced by production from new

fields by 2010, requiring significant E&P capital investment

Attractive commodity prices, steadily growing demand and supply-side constraints will

continue to drive E&P spending

In 2006, it is estimated that 36.5%, or approximately $82.6 billion out of the $226.2 billion

total, of worldwide E&P spending will be in the U.S. and Canada

U.S. and Canadian E&P spending were estimated to increase by 30.9% and 23.6%,

respectively, in 2005, significantly outpacing the 19.1% growth in worldwide E&P spending

$48.4

$23.4

$56.4

$26.2

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

U.S.

Canada

2005

2006

Source:

Wall Street research

$5.7

$6.3

$7.7

$10.1

$12.6

$5.9

$5.7

$4.7

$4.8

0.0

4.0

8.0

12.0

16.0

1999

2000

2001

2002

2003

2004

2005

2006E

2007E

1,000

2,000

3,000

4,000

Global Seismic Spending

North American Onshore Rig Count

Seismic Spending

The seismic market is poised to benefit from increased spending due to an increased drilling

forecast for North America

Global Seismic Spending

Source:

Spears

Oilfield

Market

Report,

Wall

Street

research,

and

Baker

Hughes

Rig

Report,

November

2006

Company

Business Model

Generate high returns on seismic data investment through predictable, multiple license sales

over an extended period

Continue to expand seismic data library with a target of approximately 40% annualized return on

investment during the initial two years

Participate in the right seismic surveys, on time and under budget with at least 70%

customer underwriting

Purchase existing databases

Trade existing library data licenses for ownership of new data

Apply data processing technologies to expand licensing opportunities

Repeat data licensing sales

High quality data with large number of potential clients

Dynamic environment for land leases and mineral rights

Maintain expert and motivated workforce

Survey expertise

Marketing and sales experience

Data management leadership

Attractive Land Database

Easier

basins

for

smaller

E&P

companies

penetrate

result

dynamic

environment with more data licensing opportunities

Wider customer base

M&A and new company creation

Turnover of mineral rights

Replication unlikely

Economically unattractive: over 60 crew years required to replicate and

approximately $3-4Bn in replacement costs

In the U.S., very long lead time to plan and execute onshore seismic data

acquisition due to regulatory, environmental and political reasons

Very little overlap in onshore data

Multiple Sales of Seismic Data

Data retains its value over time as there is no limit to the number of times or clients

to whom Seitel can license data

Multi-Licensing

of Existing Data

Exploration

New Discovery

New Technologies

New Value

In Old Fields

M&A Activity

Fields Changing Hands,

Spin Off Companies

New Seismic Processing

Technologies

New Value In

Processed Data

New Pipelines and

Infrastructure

New Fields Become

Economically

Viable

2005 Resales

by Data Vintage –

Onshore 3D

Notes:

(1)

Investment net of client underwriting

(2)

Resales

and

investment

are

for

onshore

data

the

and

Canada,

well

data

Canada

only

Reconciliation of non-GAAP measures to the most comparable GAAP measures can be found in Appendix I attached to this presentation

Resales

of data acquired more than five years ago is a significant portion of total

resales

Pre -

2001

2001 -

2005

Net Investment

(1)(2)

2005 Resales

(2)

Financials

William Restrepo

Chief Financial Officer

Sources of Cash Generation

Revenues from data

management, processing,

data reproduction and

delivery services

4% of total LTM revenues

Solutions

Seitel

focuses on generating cash from licensing existing data from its library and

delivering it to customers

LTM Revenue

Solutions

Acquisition

Cash Resales

Trades

Other

License existing library of 2D

and 3D seismic data

Newly acquired data

available to license after

expiration of exclusivity

No limits on number of times

a piece of data can be

licensed

Client purchases data

license for cash

66% of total LTM revenues

Cash Resales

Sources of Library Growth

New data acquisition

Client commits to fund 70%

of the capex

with cash or by

transferring ownership in

existing seismic data

Seitel retains ownership of

data

Client receives a license to

the data with limited

exclusivity period –

typically

for 6 months

New Surveys

Purchase of existing seismic

data

Seitel purchases data only

when such data can be

purchased at a reasonable

cost

Purchases

Seitel grants non-exclusive

license to portion of data

library in exchange for

ownership of client’s seismic

data

Data added can be

marketed for cash sales in

future

Revenue recognized when

data to be licensed is

selected

Trades are valued at the fair

price of the data received or

delivered, whichever is more

readily determinable

Trades

LTM Revenue by Source

U.S. 3D onshore and Canada provided 83% of LTM seismic resales and are

growing at a rapid pace

2D and 3D offshore continue to contribute to revenue

LTM Revenue by Source

Notes:

LTM as of 9/30/06

Reconciliation of non-GAAP measures to the most comparable GAAP measures can be found in Appendix I attached to this presentation

66%

22%

Solutions

Acquisition

Cash Resales

Trades

Other

LTM Resales Breakdown

11%

24%

59%

U.S. 3D Offshore

Canada

U.S. 2D Data

U.S. 3D Onshore

31%

66%

Data Library by Net Book

Value as of 9/30/06

U.S. 3D Offshore

U.S. 3D Onshore

Canada

($MM)

Capital Expenditures Summary

Cash Capex

Net to Seitel

Other Non-Cash

Trades

Cash Underwriting

Less

Total Capex

Other PP&E

Total Seismic

Purchases

Trades

New Surveys

Actual

10.8

(50.4)

(1.8)

(13.0)

(35.6)

61.2

1.1

60.1

2.5

13.0

44.6

2003

18.2

(46.1)

(0.1)

(10.7)

(35.3)

64.3

1.1

63.2

1.8

10.7

50.7

2004

36.1

(50.4)

0.0

(13.3)

(37.1)

86.5

1.2

85.3

16.6

13.3

55.4

LTM

(1)

22.8

(32.4)

0.0

(11.1)

(21.4)

55.2

1.0

54.3

10.2

11.1

33.0

2005

Note:

(1)

Last twelve months as of 9/30/06

26.2

28.0

31.6

23.8

27.4

46.5

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

94/95

96/97

98/99

00/01

02/03

04/05

Average Annual Return on Investment –

First 2 Years

Given the long-term oil and gas industry trends, Seitel is at the beginning of an upward structural

shift in the financial performance of its underlying data portfolio

The Company believes that its library is well positioned to increase its average return on

investment given the shift in underlying industry conditions

During 2005, the Company experienced an upward shift in the returns realized on its existing

data library vs. historical averages

(%)

(1)

Notes:

(1)

Based on run rate for 2005

Reconciliation of non-GAAP measures to the most comparable GAAP measures can be found in Appendix I attached to this presentation

Quick Capital Investment Payback

Over the past 12 years Seitel has returned its net capital investment on average in approximately 3.6 years

Given management’s success in pursuing high ROI projects over the most recent periods and the positive

trends in the oil and gas industry, the payback period over the past three years averaged approximately 2.5

years

Notes:

(1)

Includes all onshore 3D data and 2D data for Canada

(2)

Based on current run rate

Reconciliation of non-GAAP measures to the most comparable GAAP measures can be found in Appendix I attached to this presentation

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Average

1.1

4.8

1.5

14.1

15.1

78.4

51.0

105.5

38.9

27.7

20.8

31.9

32.6

0.5

6.5

2.3

4.4

5.6

2.8

5.3

3.7

4.4

3.2

2.1

(2)

3.6

Investment Year

Net Investment ($MM)

(1)

Estimated Payback

Period (in years)

7.5

5.2

4.8

4.7

Solutions

118.8

97.5

80.3

79.8

Cash Resales

Financial Summary

Actual

142.3

114.1

107.2

96.8

EBITDA

(1)

52.4

15.7

(61.0)

(15.8)

Operating Income / (Loss)

180.5

149.2

137.7

131.5

Total Revenue

Revenue

2005

2004

2003

($MM)

78.8

76.5

77.9

73.7

Margin (%)

38.2

35.1

30.5

34.6

Cost of Sales and SG&A

89.8

98.4

168.2

112.6

D&A

40.5

23.8

37.2

36.2

Underwriting

90.6

132.4

120.1

95.6

Total Licensing Revenue

13.6

22.7

15.3

10.8

Non-Cash Licensing Revenue

Licensing

LTM Ended 9/30/06

Notes:

(1)

Includes Non-recurring / Public company cash expenses of approximately $6.6MM, $1.4MM, $2.0MM and $2.4MM in 2003, 2004, 2005 and LTM

period ended September 30 and non-recurring non-cash expenses of $0.9MM and $1.9M in 2005 and LTM period ended September 30

Reconciliation of non-GAAP measures to the most comparable GAAP measures can be found in Appendix I attached to this presentation

Cash EBITDA

(13.6)

(22.7)

(15.3)

(10.8)

Less: Non-Cash Licensing Revenue

5.2

4.7

–

Plus: Non-Cash Operating Expenses

Actual

93.3

72.3

54.7

49.8

Cash EBITDA

(40.5)

(23.8)

(37.2)

(36.2)

Less: Acquisition Revenue

142.3

114.1

107.2

96.8

EBITDA

(2)

PF LTM

(1)

2005

2004

2003

($MM)

34.4

42.3

8.5

27.4

Free Cash Flow

403.4

188.6

194.7

267.4

Total Debt

38.3

23.9

25.2

9.6

Cash Interest Expense

4.3x

Debt / Cash EBITDA

2.4x

Cash EBITDA / Interest

1.5x

(Cash EBITDA –

Cash Capex) / Interest Expense

(3)

Notes:

(1)

For period ended 9/30/06

(2)

Includes Non-recurring / Public company cash expenses of approximately $6.6MM, $1.4MM, $2.0MM and $2.4MM in 2003, 2004,

2005 and LTM period ended September 30 and non-recurring non-cash expenses of $0.9MM and $1.9MM in 2005 and LTM period

ended September 30

(3)

Includes estimated interest expense for the $400MM senior unsecured notes

Reconciliation of non-GAAP measures to the most comparable GAAP measures can be found in Appendix I attached to this

presentation

Quarterly 2005 and 2006 Financial Results

0.6

19.9

21.3

27.6

24.5

14.5

15.6

17.6

Cash EBITDA

0.8

0.6

3.2

0.7

0.4

Plus: Non-Cash Operating Expenses

(6.0)

(5.7)

1.8

(3.7)

0.6

(10.0)

(9.6)

Less: Non-Cash Licensing Revenue

(12.2)

(13.4)

(10.6)

(4.3)

(3.6)

(3.4)

(12.4)

Less: Acquisition Revenue

16.4

16.5

12.0

7.4

(2.6)

4.9

6.0

Operating Income / (Loss)

8.4

9.0

8.9

11.9

7.7

7.4

8.1

Cost of Sales and SG&A

21.0

23.0

23.8

22.0

19.4

23.7

33.3

D&A

45.9

48.5

44.7

41.4

24.6

36.0

47.3

Total Revenue

1.4

2.5

2.3

1.3

1.2

1.6

1.1

Solutions

12.2

13.4

10.6

4.3

3.6

3.4

12.4

Underwriting

32.3

32.6

31.8

35.7

19.7

31.0

33.8

Total Licensing Revenue

6.0

5.7

(1.8)

3.7

(0.6)

10.0

9.6

Non-Cash Licensing Revenue

26.3

27.0

33.6

32.0

20.3

21.0

24.2

Cash Resales

Licensing

Revenue

($MM)

2006

2005

EBITDA

(1)

37.5

39.6

35.8

29.4

16.8

28.6

39.2

43.3

43.9

61.8

59.3

59.1

43.4

37.2

Margin (%)

Notes:

(1)

Includes Non-recurring / Public company expenses

Reconciliation of non-GAAP measures to the most comparable GAAP measures can be found in Appendix I attached to this presentation

Q&A

Appendix I

Reconciliation of Certain Non-GAAP Measures to GAAP

Reconciliation of Data Library Capital Investment for U.S. 3D and Canadian 2D and 3D Data to

Total Capital Investment (Page 15)

Add:

Cumulative Total Capital Investment

Cumulative 3D Data Library Capital Investment

(1)

Total Capital Investment

Amounts funded by customers and netted

against capital costs

Other Seismic Data (principally international,

U.S. 2D and foreign currency changes)

3D Data Library Capital Investment

(1)

Cumulative Total Capital Investment

Cumulative 3D Data Library Capital Investment

(1)

Total Capital Investment

Amounts funded by customers and netted

against

capital costs

Other Seismic Data (principally international,

U.S.

and foreign currency changes)

3D Data Library Capital Investment

(1)

Note:

(1)

Includes U.S. 3D onshore and offshore data and Canadian 2D and 3D data. Also includes certain amounts funded by customers and netted against

the capital costs as a result of the Company and the customer jointly participating in the acquisition process

284.8

158.2

52.2

–

(1.6)

53.7

1996

1994

1992

and Prior

1999

629.4

483.8

116.3

–

(33.6)

149.9

2000

699.0

550.1

69.7

(7.6)

10.9

66.4

2001

839.2

723.6

140.2

(13.1)

(20.2)

173.5

892.1

788.5

52.9

(4.3)

(7.8)

65.0

2002

971.0

833.6

78.8

–

33.7

45.1

2003

2005

1,104.2

972.1

59.8

(6.3)

8.5

57.6

1,044.5

914.5

73.5

(1.5)

(5.9)

80.9

2004

124.4

–

124.4

–

124.4

–

1993

131.8

3.9

7.4

–

3.5

3.9

193.8

76.1

62.0

–

(10.2)

72.2

1995

232.7

104.5

38.9

–

10.6

28.4

1998

513.0

333.8

139.1

–

10.4

128.7

1997

373.9

205.1

89.1

–

42.1

46.9

Nine Months

Ended 9/30/06

1,183.5

1,052.7

79.3

(0.9)

(0.4)

80.6

($MM)

Reconciliation of Cash EBITDA to Operating Income (Loss) (Pages 16 and 44)

Cash EBITDA

Add:

Acquisition revenue

Non-monetary exchanges

Revenue deferred

Recognition of revenue previously deferred

Less:

Depreciation and amortization

Impairment of seismic data library

Non-cash operating expenses

Operating income (loss), as reported

49.8

36.2

10.6

(51.4)

51.6

(82.6)

(30.0)

(15.8)

2003

54.7

37.2

12.3

(44.2)

47.1

(168.2)

–

(61.0)

2004

72.3

23.8

9.4

(46.9)

60.2

(98.4)

(4.7)

15.7

2005

93.3

40.5

8.1

(46.4)

51.9

(89.8)

(5.2)

52.4

Debt / Cash EBITDA (x)

4.3x

Debt / Operating Income (x)

7.7x

Cash EBITDA / Interest (x)

2.4x

Operating Income / Interest (x)

1.4x

(Cash

EBITDA

–

Cash

CAPEX)

Interest

Expense

(x)

1.5x

CAGR Cash EBITDA (%)

25.6%

CAGR Operating Income (%)

54.8%

LTM

9/30/2006

47.7

19.5

7.0

(33.7)

45.6

(76.4)

–

(1.5)

8.3

Nine Months

9/30/2005

68.8

36.2

5.7

(33.2)

37.4

(67.8)

(2.0)

45.0

Nine Months

9/30/2006

($MM)

(Operating Income

–

CAPEX)

Interest

Expense

(x)

(0.9x)

Reconciliation of Cash Revenue to Total Revenue (Page 16)

Cash resales, Solutions and Other Revenue

Other revenue components:

CAGR Total Revenue (%)

Acquisition revenue

Non-monetary exchanges

Revenue deferred

Recognition of revenue previously deferred

Total revenue, as reported

CAGR Cash Revenue (%)

84.5

36.2

10.6

(51.4)

51.6

131.5

2003

85.2

37.2

12.3

(44.2)

47.1

137.7

2004

102.7

23.8

9.4

(46.9)

60.2

149.2

2005

126.4

40.5

8.1

(46.4)

51.9

180.5

15.8%

12.2%

LTM

9/30/2006

($MM)

Reconciliation

U.S.

Onshore

and

Canadian

and

Average

Return

Resale

Revenue

Net Investment by Vintage to Average Return of Total Revenue on Gross Investment by Vintage

(Page 20)

Average Return (%)

Years After Investment

Resale Revenue on

Net Investment

Total Revenue on

Gross Investment

Reconciliation of U.S. 3D Onshore and Canadian 2D and 3D Total Resales to Total Revenue (Page

21)

Total

resales

–

U.S.

onshore

and

Canadian

and

(1)

Other revenue components:

Other resale revenue (principally offshore and U.S. 2D)

Acquisition revenue

Solutions and other revenue

Geophysical services revenue

Total revenue

Cumulative

resales

–

U.S.

onshore

and

Canadian

and

Cumulative total revenue

Total

resales

–

U.S.

onshore

and

Canadian

and

(1)

Other revenue components:

Other resale revenue (principally offshore and U.S. 2D)

Acquisition revenue

Solutions and other revenue

Geophysical services revenue

Total revenue

Cumulative

resales

–

U.S.

onshore

and

Canadian

and

Cumulative total revenue

1994

29.6

23.1

2.2

11.8

69.7

3.0

112.5

3.0

1995

38.3

12.9

2.2

13.9

69.6

5.3

182.1

2.3

1996

37.5

23.4

3.1

20.0

87.7

9.0

269.8

3.7

1997

27.2

41.5

3.5

15.2

101.9

23.5

371.7

14.5

1998

20.6

79.4

1.3

–

125.9

48.1

497.6

24.6

1999

18.4

46.6

1.4

–

109.7

91.4

607.3

43.3

1993

22.0

14.8

3.3

2.8

42.8

–

2000

29.7

48.9

33.5

1.9

113.9

–

140.3

721.2

2001

24.6

62.7

25.8

2.1

115.2

–

203.0

836.4

2002

23.9

99.5

23.5

2.8

149.8

–

302.5

986.2

2003

11.4

79.2

36.2

4.7

131.5

–

381.7

1,117.7

2004

11.7

83.9

37.2

4.8

137.7

–

465.7

1,255.4

2005

15.2

105.0

23.8

5.2

149.2

–

570.7

1,404.6

Note:

(1)

Includes resale revenue related to value added products

($MM)

Reconciliation of U.S. 3D Onshore and Canadian 2D and 3D Total Net Investment to Total

Investment (Page 21)

Note:

(1)

Includes net investment related to value added products

Net

investment

–

U.S.

onshore

and

Canadian

and

(1)

Add:

Other seismic data net investment (principally offshore, U.S. 2D

and foreign currency changes)

Acquisition revenue

Total investment in seismic data library

Cumulative

net

investment

–

onshore

and

Canadian

and

(1)

Cumulative total investment

1993

1.0

0.5

5.9

7.4

1.0

131.8

1994

4.8

34.1

23.1

62.0

5.8

193.8

1995

1.5

24.5

12.9

38.9

7.3

232.7

1996

10.9

17.9

23.4

52.2

18.2

284.9

1997

10.3

37.3

41.5

89.1

28.5

374.0

1998

53.7

6.0

79.4

139.1

82.2

513.1

1992 and Prior

124.4

–

Net

investment

–

U.S.

onshore

and

Canadian

and

(1)

Add:

Other seismic data net investment (principally offshore, U.S. 2D

and foreign currency changes)

Acquisition revenue

Total investment in seismic data library

Cumulative

net

investment

–

onshore

and

Canadian

and

(1)

Cumulative total investment

1999

68.9

0.8

46.6

151.1

629.4

116.3

2000

33.1

3.1

33.5

184.2

699.1

69.7

2001

112.2

2.2

25.8

296.4

839.3

140.2

2002

27.0

2.3

23.5

323.5

892.2

52.9

2003

21.3

36.2

344.8

971.0

78.8

2004

28.1

8.2

37.2

372.9

1,044.5

73.5

2005

28.1

7.9

23.8

401.0

1,104.3

59.8

($MM)

Reconciliation of Net Investment for U.S. 3D Onshore and Canadian 2D and 3D

Data to Net Book Value at 12/31/05 (Page 35)

Add:

Less:

Net

investment

seismic

data

–

U.S.

onshore

and

Canadian

and

396.4

Acquisition

revenue

–

onshore

359.3

Other

seismic

data

investment

(principally

offshore,

U.S.

and

value

added

products)

348.6

Impairment charges

(112.9)

Accumulated amortization

(879.4)

111.9

Net seismic data library at 12/31/05, as reported

($MM)

Reconciliation of Resales for U.S. 3D Onshore and Canadian 2D and 3D Data to

Total Revenue (Page 35)

Notes:

(1)

Does not include resale revenue related to value added products.

2005

Total

resales

–

U.S.

onshore

and

Canadian

and

(1)

Other revenue components:

Other resale revenue (principally offshore and U.S. 2D)

Acquisition revenue

Solutions and other revenue

Total revenue, as reported

100.8

19.3

23.8

5.2

149.2

($MM)

Total resales

Other revenue components:

Acquisition revenue

Solutions and other revenue

Total revenue, as reported

132.4

40.5

7.5

180.5

LTM 9/30/06

Reconciliation of Total Resales to Total Revenue (Page 39):

% of LTM Total Revenue

Reconciliation of U.S. 3D Onshore and Canada % of Total Resales to Total Revenue (Page 39)

% of LTM Resales

U.S. 3D Onshore and Canada

Revenue Reconciliation

($MM)

Reconciliation

U.S.

Onshore

and

Canadian

and

Average

Annual

Return

Resale

Revenue on Net Investment by Vintage in first two years to Average Return of Total

Revenue on Gross Investment by Vintage in first two years (Page 41)

Average Return (%)

Resale Revenue on

Net Investment

Total Revenue on

Gross Investment

Investment

1994/1995

1996/1997

1998/1999

2000/2001

2002/2003

2004/2005

26.2

28.0

31.6

23.8

27.4

46.5

37.4

40.5

39.8

32.9

39.3

48.6

Reconciliation of U.S. 3D Onshore and Canadian 2D and 3D Net Investment by

Year to Total Investment by Year (Page 42)

Note:

(1)

Includes net investment related to value added products

Add:

Acquisition revenue

Total investment in seismic data library

Net

investment

–

U.S.

onshore

and

Canadian

and

based

when

data

available

for

resale

(1)

Other seismic data net investment and timing differences

(principally offshore, U.S. 2D and foreign currency changes)

1994

1.1

37.8

23.1

62.0

1995

4.8

21.2

12.9

38.9

1996

1.5

27.3

23.4

52.2

1997

14.1

33.5

41.5

89.1

1998

15.1

44.6

79.4

139.1

Net

investment

–

U.S.

onshore

and

Canadian

and

based

when

data

available

for

resale

(1)

Acquisition revenue

Total investment in seismic data library

2004

20.8

37.2

73.5

15.5

2005

31.9

23.8

59.8

4.1

1999

78.4

46.6

116.3

(8.7)

2000

51.0

33.5

69.7

(14.8)

2001

105.5

25.8

140.2

8.9

2002

38.9

23.5

52.9

(9.5)

2003

27.7

36.2

78.8

14.9

Other seismic data net investment and timing differences

(principally offshore, U.S. 2D and foreign currency changes)

Add:

($MM)

Reconciliation of EBITDA to Income (Loss) from

Continuing Operations (Pages 43 and 44)

EBITDA

Less:

Interest expense, net

Depreciation and amortization

Impairment of seismic data library

Reorganization items

Add:

Foreign currency gains

Gain on extinguishment of liabilities

Income tax benefit (expense)

EBITDA Margin (%)

Income (loss) from continuing

operations Margin (%)

2003

96.8

(20.0)

(82.6)

(30.0)

(6.0)

4.1

0.7

(2.2)

(39.1)

73.7%

(29.7%)

Income (loss) from continuing

operations, as reported

LTM

9/30/06

142.3

(20.4)

(89.9)

0.9

2.0

34.9

78.8%

19.3%

–

Nine Months

9/30/05

84.7

(17.6)

(76.4)

1.1

4.9

(3.2)

–

Nine Months

9/30/06

112.8

(14.8)

(67.8)

–

1.2

2.1

33.4

–

2005

114.1

(23.2)

(98.4)

1.0

4.8

(1.8)

76.5%

(1.2%)

–

(168.2)

2004

107.2

(24.4)

(12.5)

2.4

–

3.3

(92.2)

77.9%

(67.0%)

–

($MM)

Reconciliation of Non-Cash Operating Expenses to Total

Cost of Sales and SG&A Expenses (Page 44)

Non-Cash Operating Expenses

Plus: Cash operating expenses

Total Cost of Sales and SG&A

expenses

Less: Gain on sale of seismic data

2004

30.5

2003

34.6

2005

4.7

30.4

35.1

LTM

9/30/06

5.2

33.1

38.2

Nine Months

9/30/05

1.5

21.7

23.2

Nine Months

9/30/06

2.0

24.5

26.3

(0.2)

($MM)

Reconciliation of EBITDA to Income (Loss) from Continuing

Operations (Page 45)

Less:

Add:

EBITDA

Interest expense, net

Depreciation and amortization

Foreign currency gains (loss)

Income (loss) from continuing

operations, as reported

Income tax benefit (expense)

1Q05

39.2

(6.0)

(33.3)

(0.2)

(0.0)

2Q05

28.6

(6.0)

(23.7)

(0.6)

(0.7)

1.0

3Q05

16.8

(5.6)

(19.4)

2.0

(2.4)

3.9

4Q05

29.4

(5.7)

(22.0)

(0.2)

1.4

(0.1)

1Q06

35.8

(4.9)

(23.8)

(0.2)

6.8

(0.2)

2Q06

39.6

(5.0)

(23.0)

1.3

12.6

(0.2)

3Q06

37.5

(4.9)

(21.0)

(0.0)

14.0

2.5

($MM)

Reconciliation of Cash EBITDA to Operating Income (Loss)

(Page 45)

Add:

Less:

Cash EBITDA

Acquisition revenue

Non-monetary exchanges

Revenue deferred

(13.2)

Recognition of revenue previously deferred

Depreciation and amortization

(22.0)

Non-cash operating expenses

Operating income (loss), as reported

Cash EBITDA Margin %

Operating Margin %

1Q05

17.6

12.4

0.6

(12.7)

21.6

(33.3)

(0.4)

6.0

37.2%

12.7%

2Q05

15.6

3.4

6.2

(12.1)

15.8

(23.7)

(0.4)

4.9

43.4%

13.7%

3Q05

14.5

3.6

0.1

(8.9)

8.2

(19.4)

(0.7)

(2.6)

59.1%

(10.7)%

4Q05

24.5

4.3

2.4

14.5

(3.2)

7.4

59.3%

17.8%

1Q06

27.6

10.6

2.1

(14.9)

11.0

(23.8)

(0.6)

12.0

61.8%

26.8%

2Q06

21.3

13.4

2.2

(13.1)

16.5

(23.0)

(0.8)

16.5

43.9%

34.0%

3Q06

19.9

12.2

1.4

(5.2)

9.8

(21.0)

(0.6)

16.4

43.3%

35.7%

($MM)

Reconciliation of Non-Cash Operating Expenses to Total Cost of Sales and

SG&A Expenses (Page 45)

Non-Cash Operating Expenses

Plus: Cash Operating Expenses

Total Cost of Sales and SG&A expenses

0.4

7.0

7.4

2Q05

0.7

7.0

7.7

3Q05

3.2

8.7

11.9

4Q05

0.6

8.3

8.9

1Q06

0.8

8.2

9.0

2Q06

0.6

7.8

8.4

3Q06

0.4

7.7

8.1

1Q05

($MM)

Reconciliation of US 3D Onshore, Canada 2D and 3D and Offshore

NBV to Total NBV as of 9/30/06

Add:

Net book value of US 3D Onshore, Canada 2D and 3D and Offshore as of 9/30/06

121.9

US 2D and International Data

0.5

Net seismic data library at 9/30/06, as reported

122.4

($MM)

Appendix II

Definition of Key Terms

Definition of Key Terms

Cash

EBITDA

represents

EBITDA

less

acquisition

revenue

which

used

fund

new

seismic

data

shoots,

non-cash

items

including

non-cash

resales

(included

GAAP

revenue)

and

non-cash

operating

expenses

(employee

restricted

grants)

Cash

resales

represent

new

contracts

for

data

licenses

from

Seitel’s

library,

payable

cash

Cash

revenue

represents

cash

resales

and

solutions

revenue

EBITDA

represents

GAAP

revenue

less

cost

sales

and

selling,

general

and

administrative

expenses

Net

investment

represents

gross

investment

seismic

data,

net

customer

underwriting

Resale

revenue,

total

resales,

represents

the

amount

non-exclusive

data

license

revenue

earned

on data added to Seitel’s

library

Return

initial

investment

represents

resale

revenue

for

seismic

survey

divided

net

investment

for

such

survey.

Return

initial

investment

may

shown

annually

after

the

initial

investment

year

cumulatively.

Return

investment

can

also

calculated

for

groups

data

such

vintages,

geographical

areas

investment

method,

i.e.,

acquisitions,

purchases

trades

Vintage

refers

the

year

which

data

added

Seitel’s

library

and

available

for

resale

Seitel’s

customers

Solutions revenue

represents revenue from data management, processing, data reproduction and

delivery services

LOGO

$400MM Senior Bridge Loan

November 28, 2006

LOGO


Seitel, Inc.

Table of Contents


		Page
	Table of Contents	2

1.	Logistics
1.1	Form of Commitment Letter	4
1.2	Timetable — Commitment and Closing	5
1.3	Contact List — Seitel	6
1.4	Contact List — ValueAct Capital	7
1.5	Contact List — Morgan Stanley	8
1.6	Contact List — UBS	10
1.7	Contact List — Deutsche Bank	12

2.	Transaction Details
2.1	Transaction Summary	15
2.2	Transaction Sources and Uses	16
2.3	Capital Structure	17
2.4	Summary of Bridge Loan Facility	18
2.5	Financial Overview	19
2.6	Investment Highlights	22
2.7	Industry Overview	28
2.8	Company Overview	35
2.9	Value Act Capital	39
2.10	Bridge Term Sheet	40
2.11	GAAP Reconciliation	50

LOGO


Seitel, Inc.

Section 1

Logistics

LOGO


Seitel, Inc.		1 Logistics

1.1 Form of Commitment Letter

Date: November 28, 2006

MORGAN STANLEY

SENIOR FUNDING,

INC.

1585 Broadway

New York, New York

10036

DEUTSCHE BANK

TRUST COMPANY

AMERICAS

DEUTSCHE BANK

AG CAYMAN

ISLANDS BRANCH

DEUTSCHE BANK

SECURITIES INC

60 Wall Street

New York, New York

10005

UBS LOAN FINANCE

LLC

677 Washington

Boulevard

Stamford, Connecticut

06901

UBS SECURITIES

LLC

299 Park Avenue

New York, New York

10171

Attn: Matthew Kaitz, Fax: 212-404-9764

RE: Seitel, Inc. $400,000,000 Senior Bridge Loan

Ladies and Gentlemen,

In reference to the $400,000,000 Senior Bridge Loan for Seitel, Inc. (the “Borrower”), the terms of which are outlined in the Summary of Bridge Loan Facility Terms, we are pleased to commit:

$ MM to the $400,000,000 Senior Bridge Loan

Our commitment is based on our independent credit analysis of the Borrower and their respective subsidiaries, without reliance upon Morgan Stanley Senior Funding, Inc., Deutsche Bank Securities Inc, and UBS Securities LLC (collectively, the “Joint Lead Arrangers”), the Borrowers or any of their respective affiliates or any other person, and based solely on other documents and information as we have deemed appropriate. We acknowledge and agree that the Borrowers and the Joint Lead Arrangers reserve the right to allocate commitments at their sole discretion.

We confirm that we have not marketed or discussed this transaction in the secondary market, and will not do so until specific notice is provided by the Joint Lead Arrangers.

For and on behalf of participating institution,


Authorized Signature:

By:

Title:

Institution Name:

LOGO


Seitel, Inc.		1 Logistics

1.2 Timetable — Commitment and Closing

Nov 2006–Feb 2007


S	M	T	W	T	F	S	S	M	T	W	T	F	S	S	M	T	W	T	F	S	S	M	T	W	T	F	S
Nov 2006							Dec 2006							Jan 2007							Feb 2007
			1	2	3	4						1	2		1	2	3	4	5	6					1	2	3
5	6	7	8	9	10	11	3	4	5	6	7	8	9	7	8	9	10	11	12	13	4	5	6	7	8	9	10
12	13	14	15	16	17	18	10	11	12	13	14	15	16	14	15	16	17	18	19	20	11	12	13	14	15	16	17
19	20	21	22	23	24	25	17	18	19	20	21	22	23	21	22	23	24	25	26	27	18	19	20	21	22	23	24
26	27	28	29	30			24	25	26	27	28	29	30	28	29	30	31				25	26	27	28
							31

	Indicates Key Date

	Indicates Holiday

Key Dates and Events


Date		Event
Tuesday, November 28		• Launch Bridge Syndication

Tuesday, December 12		• Commitment Deadline

Early January		• SEC Approval of Proxy

Mid - Late January		• Shareholder Proxy Review

Late January - Early February		• Shareholder Vote and Approval

Late January - Early February		• Expected Bond Offering and Transaction Close

LOGO


Seitel, Inc.		1 Logistics

1.3 Contact List — Seitel

Contact Details


Name/Title	Office	E-mail
Robert Monson Chief Executive Officer	Tel: 713-881-8900 Fax: 713-881-2817	rmonson@seitel-inc.com

William Restrepo Chief Financial Officer	Tel: 713-881-8900 Fax: 713-881-8955	wrestrepo@seitel-inc.com

Kevin Callaghan Chief Operating Officer, Executive Vice President	Tel: 713-881-8900 Fax: 713-898-8291	kcallaghan@seitel-inc.com

Marcia Kendrick Chief Accounting Officer	Tel: 713-881-8900 Fax: 713-881-2839	mkendrick@seitel-inc.com

LOGO


Seitel, Inc.		1 Logistics

1.4 Contact List — ValueAct Capital

Contact Details


Name/Title	Office	E-mail
Boston

Peter Kamin Partner	Tel: 617-531-5431 Fax: 617-531-5450	pkamin@valueact.com

Ryan Birtwell	Tel: 617-531-5434 Fax: 617-531-5450	rbirtwell@valueact.com

San Francisco

Greg Spivy Partner	Tel: 415-249-1209 Fax: 415-362-5727	gspivy@valueact.com

Allison Bennington General Counsel	Tel: 415-249-1230 Fax: 415-362-5727	abennington@valueact.com

LOGO


Seitel, Inc.		1 Logistics

1.5 Contact List — Morgan Stanley

Contact Details


Name/Title	Office	E-mail
Financial Sponsors

Kristin Horne Managing Director – San Francisco	Tel: 415-576-2051 Fax: 415-591-4612	kristin.horne@morganstanley.com

Scott Cullerton Associate – San Francisco	Tel: 415-576-8962 Fax: 415-591-4573	scott.cullerton@morganstanley.com

Global Energy Banking

Carl Giesler Executive Director – Houston	Tel: 713-512-4427 Fax: 713-512-4414	carl.giesler@morganstanley.com

Steven Pattyn Analyst – Houston	Tel: 713-512-6627 Fax: 713-512-6990	steve.pattyn@morganstanley.com

Andrew Whitcomb Analyst – Houston	Tel: 713-512-6639 Fax: 713-512-6986	andrew.whitcomb@morganstanley.com

Leveraged Finance

Hank D’Alessandro Head of US Sponsors Leveraged Finance Managing Director – New York	Tel: 212-761-1051 Fax: 212-507-2399	henry.d’alessandro@morganstanley.com

John Wotowicz Managing Director – Houston	Tel: 713-512-6600 Fax: 713-512-6996	john.wotowicz@morganstanley.com

Steve Shekane Vice President – New York	Tel: 212-761-1552 Fax: 212-507-5428	steven.shekane@morganstanley.com

Richard Vratanina Associate – New York	Tel: 212-761-5843 Fax: 212-507-2531	richard.vratanina@morganstanley.com

Wes Kimmel Analyst – New York	Tel: 212-761-5496 Fax: 212-507-3387	wesley.kimmel@morganstanley.com

LOGO


Seitel, Inc.		1 Logistics

1.5 Contact List — Morgan Stanley (cont’d)

Contact Details


Name/Title	Office	E-mail
CFX
Todd Singer Executive Director – New York	Tel: 212-761-2755 Fax: 212-507-4254	todd.singer@morganstanley.com

Loan Syndicate

Richard Beaudoin Executive Director – New York	Tel: 212-761-3044 Fax: 212 507-0790	richard.beaudoin@morganstanley.com

Matthew Kaitz Analyst - New York	Tel: 212-761-2565 Fax: 212 404-9764	matthew.kaitz@morganstanley.com

High Yield Syndicate

Steven Seltzer Managing Director – New York	Tel: 212-761-1968 Fax: 212-507-5777	steven.seltzer@morganstanley.com

John Whitehouse Analyst - New York	Tel: 212-761-1937 Fax: 212 404-9864	john.whitehouse.III@morganstanley.com

Liability Management

Arthur Rubin Executive Director – New York	Tel: 212-761-1864 Fax: 646-225-5606	arthur.rubin@morganstanley.com

Francesco Cipollone Analyst – New York	Tel: 212-761-1941 Fax: 212-507-6349	francesco.cipollone@morganstanley.com

Ratings Advisory

Scott Beicke Vice President – New York	Tel: 212-761-8666 Fax: 212-507-6637	scott.beicke@morganstanley.com

LOGO


Seitel, Inc.		1 Logistics

1.6 Contact List — UBS

Contact Details


Name/Title	Office	E-mail
Global Energy Group

Stephen Trauber Vice Chairman, Managing Director and Global Head of Energy – Houston	Tel: 713-331-4630 Fax: 713-331-4655	stephen.trauber@ubs.com

Chip Van Os Director – Houston	Tel: 713-331-4650 Fax: 713-331-4656	chip.vanos@ubs.com

Brian Henry Associate Director – Houston	Tel: 713-331-4640 Fax: 713-331-4656	brian.henry@ubs.com

Chris Transier Analyst – Houston	Tel: 713-331-4643 Fax: 713-331-4656	chris.transier@ubs.com

Alternative Capital Group

Craig Wadler Managing Director – Los Angeles	Tel: 310-556-6756 Fax: 310-552-5956	craig.wadler@ubs.com

Schuyler Hewes Director – Los Angeles	Tel: 310-556-6721 Fax: 310-556-6706	schuyler.hewes@ubs.com

Leveraged Finance

Christopher Abbate Executive Director	Tel: 212-821-6924 Fax: 212-821-6449	christopher.abbate@ubs.com

Maryana Olman Associate Director	Tel: 212-821-6655 Fax: 212-821-5766	maryana.olman@ubs.com

Nick Pike Analyst	Tel: 212-821-3594 Fax: 212-821-6136	nick.pike@ubs.com

LOGO


Seitel, Inc.		1 Logistics

1.6 Contact List — UBS (cont’d)

Contact Details


Name/Title	Office	E-mail
Loan Syndication

Jim Boland Managing Director	Tel: 203-719-8986 Tel: 212-821-2371 (NY) Fax: 203-719-8620	james.boland@ubs.com

John McNulty Director	Tel: 203-719-6679 Fax: 203-719-8620	john-j.mcnulty@ubs.com

High Yield Capital Markets

Brett Matkins Executive Director	Tel: 203-719-1648 Fax: 203-719-1099	brett.matkins@ubs.com

Peter Thomson Analyst	Tel: 203-719-3337 Fax: 203-719-1099	peter.thomson@ubs.com

Credit Underwriting

Tom Howard Executive Director	Tel: 203-719-8537 Fax: 203-719-6510	tom.howard@ubs.com

Bobby Grant Associate	Tel: 203-719-2344 Fax: 203-719-6510	bobby.grant@ubs.com

Ratings Advisory

Craig Fitt Managing Director	Tel: 212-821-5212 Fax: 212-821-3062	craig.fitt@ubs.com

Legal

Warren Jervey Director	Tel: 203-719-5493 Fax: 203-719-5627	warren-l.jervey@ubs.com

LOGO


Seitel, Inc.		1 Logistics

1.7 Contact List — Deutsche Bank

Contact Details


Name/Title	Office	E-mail
Leveraged Finance

Thomas Cole Managing Director; Group Head of Leveraged Finance – New York	Tel: 212-250-2570 Fax: 212-797-4872	thomas.cole@db.com

Stephen Cunningham Managing Director – New York	Tel: 212- 250-3038 Fax: 212-797-4872	stephen-p.cunningham@db.com

Milwood Hobbs Vice President – New York	Tel: 212-250-3077 Fax: 212-797-4872	milwood.hobbs@db.com

Joshua Pearl Associate – New York	Tel: 212-250-3263 Fax: 212-797-4655	joshua.pearl@db.com

Caleb Moore Analyst – New York	Tel: 212-250-3626 Fax: 212-797-4655	caleb.moore@db.com

High Yield Debt Capital Markets

Mark Fedorcik Managing Director – New York	Tel: 212-250-5653 Fax: 212-797-4870	mark.fedorcik@db.com

Lex Malas Managing Director – New York	Tel: 212-250-3846 Fax: 212-797-4867	lex.malas@db.com

Brian C. Goldberg Vice President – New York	Tel: 212-250-0883 Fax: 212-797-4869	brian-c.goldberg@db.com

Mason Parker Associate – New York	Tel: 212-250-6888 Fax: 212-797-4869	mason.parker@db.com

Senior Debt Capital Markets

Kevin Sherlock Managing Director – New York	Tel: 212-250-5455 Fax: 212-469-2856	kevin.sherlock@db.com

Sandeep Desai Associate – New York	Tel: 212-250-0796 Fax: 212-797-4877	sandeep.desai@db.com

Hedge Fund Sponsor Coverage

Kristoffer Mack Managing Director – Chicago	Tel: 212-250-5172 Fax: 212-797-0059	kristoffer.mack@db.com

LOGO


Seitel, Inc.		1 Logistics

1.7 Contact List — Deutsche Bank (cont’d)

Contact Details


Name/Title	Office	E-mail
Industrials

Tom Krasnewich Managing Director – Chicago	Tel: 312-537-1859 Fax: 312-537-1307	tom.krasnewich@db.com

Bimbola Adisa Associate – Chicago	Tel: 312-537-1518 Fax: 312-537-1257	bimbola.adisa@db.com

Energy, Utilities & Chemicals

Mitch Cox Managing Director – Houston	Tel: 832-239-4658 Fax: 832-239-4692	mitch.cox@db.com

John Marinelli Director – Houston	Tel: 832-239-4661 Fax: 832-239-4692	john.r.marinelli@db.com

Jason Martinez Vice President – Houston	Tel: 832-239-4666 Fax: 832-239-4691	jason.martinez@db.com

Robert Priske Associate – Houston	Tel: 832-239-4670 Fax: 832-239-4691	robert.priske@db.com

Thomas Streeter Analyst – Houston	Tel: 832-239-4677 Fax: 832-239-4691	thomas.streeter@db.com

LOGO


Seitel, Inc.		1 Logistics

Section 2.

Transaction Details

LOGO


Seitel, Inc.		2 Transaction Details

2.1 Transaction Summary

On November 1, 2006, ValueAct Capital (“ValueAct”) announced that it will acquire Seitel, Inc. (“Seitel”, “SELA” or the “Company”) for $765MM. Seitel is a leading provider of seismic data to the oil and gas industry and has one of the largest proprietary libraries of onshore seismic data in North America. The Company also has a diverse customer base ranging from supermajors to large independents to small private prospectors.

Under the terms of the agreement, each share of Seitel common stock, other than shares held by ValueAct Capital, will be converted into the right to receive $3.70 in cash, without interest. ValueAct Capital currently beneficially owns approximately 39 percent of Seitel’s outstanding common stock on a fully diluted basis.

In conjunction with the merger, the Company has engaged Morgan Stanley, UBS, and Deutsche Bank (collectively, the “Joint Lead Arrangers”) to arrange (i) a $20MM Senior Secured Credit Facility and (ii) $400MM of Senior Notes. The financing commitment also includes a $400MM Senior Bridge Facility. The Company is currently rated B2 / B and preliminary expectation is that the Senior Notes will be rated one notch below at B3 / B-.

Pro forma for the financing, leverage will be 4.3x, based on Cash EBITDA of $93.3MM for the LTM period ended September 30, 2006. 40.5% of the Company’s pro forma capitalization will be in the form of equity. Based on the offer price of $3.70/share Seitel has an aggregate value of approximately $765MM which translates to 8.2x multiple of Cash EBITDA for the LTM period ended September 30, 2006.

LOGO


Seitel, Inc.		2 Transaction Details

2.2 Transaction Sources and Uses

The following table summarizes the estimated sources and uses for the transaction:

Sources and Uses of Funds


Sources	$MM	%	Uses	$MM	%
Revolver⁽¹⁾	0.0	0.0	Purchase of Equity	387.0	43.3
Senior Notes	400.0	44.7	Rollover Equity	235.6	26.3
Cash ⁽²⁾	112.4	12.6	Retire Debt	189.0	21.1
Rollover Equity ⁽³⁾	235.6	26.3	Early Repayment Cost ⁽⁴⁾	51.8	5.8
New Equity	146.6	16.4	Fees & Other Expenses	31.1	3.5
Total Sources of Funds	894.6	100.0	Total Uses of Funds	894.6	100.0

Notes

$20MM capacity (undrawn at closing)

Cash balance estimated

Includes ValueAct and management rollover at fair market value

Estimated as of 2/15/07

LOGO


Seitel, Inc.		2 Transaction Details

2.3 Capital Structure

The following table outlines the Company’s estimated pro forma capital structure:

Pro Forma Capitalization


	Amount $MM	EBITDA Multiple⁽¹⁾	% of Capitalization
Revolver⁽²⁾	0.0
Capital Leases	3.1
*Total First Lien Debt*	*3.1*	*0.0x*	*0.5*	%
Notes Payable	0.3	0.0x	0.0	%
Senior Unsecured Notes	400.0	4.3x	58.9	%
*Total Debt*	*403.4*	*4.3x*	*59.5*	%
Contributed Equity⁽³⁾	275.1	2.9x	40.5	%
*Total Capitalization*	*678.5*	*7.3x*	*100.0*	%

Notes

Calculated using LTM 9/30/06 cash EBITDA of $93.3MM

$20MM capacity (undrawn at closing)

Contributed equity is sum of cash ValueAct has previously invested ($127.2MM from 9/30/04 to 6/30/06), cash ValueAct will spend to purchase new equity ($146.6MM) and management rollover equity ($1.3MM). Previously invested amounts shown at historical cost in accordance with step acquisition accounting

LOGO


Seitel, Inc.		2 Transaction Details

2.4 Summary of Bridge Loan Facility


Bridge Loan Facility		The following description is a summary of the material terms of the Bridge Loan Facility. This summary does not purport to be complete. This summary is subject to and is qualified by all provisions of the Interim Loan Agreement and other Loan Documents.


High Yield Bridge

Amount and Type:		$400MM Senior Increasing Rate Bridge Loans and Rollover Notes

Borrower:		Seitel, Inc.

Purpose:		To fund the acquisition of Seitel, Inc. by ValueAct

Arrangers:		Morgan Stanley Senior Funding, Inc., Deutsche Bank Securities, Inc., and UBS Securities, LLC

Security:		- Unsecured obligations if corporate ratings are at least B3 / B-, each with a stable outlook - 2nd lien on all collateral securing the senior secured credit facility if corporate ratings are below B3 / B-, each with a stable outlook

Guarantors:		All domestic subsidiaries

Maturity:		One year. If the loan is not refinanced prior to the end of one year, the Bridge Loans will exchange into Rollover Notes or Extended Term Loans, which have a 6-year maturity



Interest Rate:	Rating	Greater Of:	Quarterly Step-Up:	Cash Cap:	Total Cap:

	B3 /B-(stable/stable)	L + 475 bps, or 10.00%	0.50%	12.50%	13.00%

	Below B3 /B- (stable/stable)	L + 575 bps, or 11.00%	0.50%	13.50%	14.00%



Mandatory Prepayments:		The Borrower will mandatorily prepay the Bridge Loans at 100% of their principal amount plus accrued interest to the prepayment date with: (i) The net proceeds from the Permanent Financing (ii) The net proceeds from the issuance of any other debt or equity securities (with exceptions to be determined) (iii) The net proceeds from asset sales (with exceptions to be determined) (iv) 50% of Excess Cash Flow (to be defined in the loan documentation) of the Borrower and its subsidiaries

Change of Control:		Put at 101%

Financial Covenants:		Financial maintenance covenants, including: (i) Maximum Leverage (ii) Minimum Interest Coverage (iii) Maximum Capex

Takeout Financing:		Morgan Stanley, Deutsche Bank, and UBS will act as the joint bookrunners on any takeout financing

Securities Demand:		Immediate; subject to total cap

Conditions Precedent:		Usual and customary, to include: (i) Consummation of the Transaction on satisfactory terms (ii) Termination of Existing Credit Agreement (iii) Execution and delivery of Facility Documentation (iv) Delivery of customary certificates, opinions of counsel and other closing documentation (v) Payment of fees and expenses (vi) Accuracy of representations and warranties (vii) Absence of Default (viii) Minimum equity contribution (ix) Minimum LTM Cash EBITDA

Reps and Warranties:		Customary and Standard

Event of Default:		Customary and Standard

LOGO


Seitel, Inc.		2 Transaction Details

2.5 Financial Overview

Seitel considers a variety of performance measures in evaluating and managing its financial condition and operating performance. Certain of these performance measures are non-GAAP financial measures. One of the most important drivers of the Company’s cash generation and its return on investment is the level of cash resales. Cash resales are the portion of Seitel’s revenue that represents new contracts for data licenses from the Company’s library payable in cash. Based on historical results of surveys, Seitel expects cash resales to generally follow a consistent trend over time, resulting in a high level of visibility into the performance of additions to the Company’s data library. EBITDA is defined as GAAP revenue less cost of sales and operating expenses. Cash EBITDA represents EBITDA less acquisition revenue which is used to fund new seismic data shoots, non-cash items including non-cash resales (included in GAAP revenue) and non-cash operating expenses (employee restricted share grants).

Financial Summary


	Fiscal Year Ended,									9 Mos. Ended						LTM Ended
	Dec. 31, 2003			Dec. 31, 2004			Dec. 31, 2005			Sept. 30, 2005			Sept. 30, 2006			Sept. 30, 2006

Licensing Revenue from the Library
Cash Resales	$	79.8		$	80.3		$	97.5		$	65.5		$	86.9		$	118.8
Non-Monetary Exchanges		10.6			12.3			9.4			7.0			5.7			8.1
Revenue Deferred		(51.4	)		(44.2	)		(46.9	)		(33.7	)		(33.2	)		(46.4	)
Recognition of Revenue Previously Deferred		51.6			47.1			60.2			45.6			37.3			51.9
Total Licensing Revenue		90.6			95.6			120.1			84.4			96.7			132.4
Underwriting Revenue		36.2			37.2			23.8			19.5			36.2			40.5
Solutions Revenue		4.7			4.8			5.2			3.9			6.2			7.5
Total Revenue		131.5			137.7			149.2			107.8			139.1			180.5

D&A		(112.6	)		(168.2	)		(98.4	)		(76.4	)		(67.8	)		(89.8	)
Cost of Sales and SG&A		(34.6	)		(30.5	)		(35.1	)		(23.2	)		(26.3	)		(38.2	)
Operating Income / (Loss)		(15.8	)		(61.0	)		15.7			8.3			45.0			52.4

EBITDA		96.8			107.2			114.1			84.7			112.8			142.3
Less: Acquisition Revenue⁽¹⁾		(36.2	)		(37.2	)		(23.8	)		(19.5	)		(36.2	)		(40.5	)
Less: Non-Cash Revenue⁽²⁾		(10.8	)		(15.3	)		(22.7	)		(18.9	)		(9.9	)		(13.6	)
Plus: Non-Cash Operating Expenses⁽³⁾		—			—			4.7			1.5			2.0			5.2
Cash EBITDA⁽⁴⁾	$	49.8		$	54.7		$	72.3		$	47.7		$	68.8		$	93.3

LOGO


Seitel, Inc.		2 Transaction Details

2.5 Financial Overview (cont’d)

Financial Summary


	Fiscal Year Ended,			9 Mos. Ended		LTM Ended
	Dec. 31, 2003	Dec. 31, 2004	Dec. 31, 2005	Sept. 30, 2005	Sept. 30, 2006	Sept. 30, 2006
Selected Balance Sheet Data:
Net Seismic Library	247.5	151.2	111.9	122.8	122.4	122.4
Trade Receivables	37.5	41.2	27.4	32.5	34.1	34.1

Notes

1.	Capex for seismic data acquisition funded directly by clients

2.	Non-cash trades of clients’ existing data in return for data licenses and timing of revenue recognition

3.	Non-cash expenses include charges related to restricted stock and non-cash compensation expense

4.	Includes non-recurring and public company expenses

LOGO


Seitel, Inc.		2 Transaction Details

2.5 Financial Overview (cont’d)

Capital Expenditures Summary

($MM)


	Fiscal Year Ended,									9 Mos. Ended						LTM Ended
	Dec. 31, 2003			Dec. 31, 2004			Dec. 31, 2005			Sept. 30, 2005			Sept. 30, 2006			Sept. 30, 2006
Acquisition	$	44.6		$	50.7		$	33.0		$	26.9		$	49.4		$	55.4
Non-Cash Trades		13.0			10.7			11.1			6.6			8.9			13.3
Purchases		2.5			1.8			10.2			10.0			16.4			16.6
Total Seismic CAPEX		60.1			63.2			54.3			43.6			74.6			85.3
Other PP&E		1.1			1.1			1.0			0.7			0.9			1.2
Total CAPEX		61.2			64.3			55.2			44.2			75.5			86.5
Less:
Cash Underwriting⁽¹⁾		(35.6	)		(35.3	)		(21.4	)		(17.6	)		(33.3	)		(37.1	)
Non-Cash Trades⁽²⁾		(13.0	)		(10.7	)		(11.1	)		(6.6	)		(8.9	)		(13.3	)
Other Non-cash		(1.8	)		(0.1	)		—			—			—			—
		(50.4	)		(46.1	)		(32.4	)		(24.2	)		(42.2	)		(50.4	)
Net Cash CAPEX	$	10.8		$	18.2		$	22.8		$	20.1		$	33.4		$	36.1

3D Data Library Square Miles and Net Book Value


	Square Miles ⁽³⁾	% of Total	NBV ⁽⁴⁾		% of Total	% of Revenue⁽⁵⁾
	Square Miles ⁽³⁾	% of Total	NBV ⁽⁴⁾		% of Total	2005	LTM⁽⁴⁾
Gulf Coast Texas	6,832	25.4	$	22,948	19.3	28.3	26.4
Southern Louisiana / Mississippi	6,616	24.6		42,525	35.7	24.3	38.4
Rockies	1,554	5.8		9,785	8.2	4.1	3.3
Other U.S. ⁽⁶⁾	1,773	6.6		5,461	4.6	4.6	5.5
Total U.S. Onshore	16,775	62.4		80,719	67.8	61.2	73.6
Canada ⁽⁷⁾	10,104	37.6		38,264	32.2	38.8	26.4
Total Onshore	26,879	100.0		118,983	100.0	100.0	100.0
Conventional	9,536	90.5		2,960	100.0	97.8	98.7
Multi-Component	996	9.5		—	0.0	2.2	1.3
Total U.S. Offshore	10,532	100.0		2,960	100.0	100.0	100.0

Worldwide Total	37,411			121,943

Notes

Capex for seismic data acquisition funded directly by clients

Non-cash trades of clients’ existing data in return for data licenses

As of October 31, 2006

As of September 30, 2006

Excludes U.S. 2D and international revenue and solutions revenue

Excludes U.S. 2D data and international data

Includes 2D and 3D data

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Seitel, Inc.		2 Transaction Details

2.6 Investment Highlights

As a result of long-term oil and gas industry trends discussed below, Seitel believes it is at the beginning of an upward structural shift in the financial performance of its underlying data portfolio. The Company believes that its library is well positioned to increase its average return on investment given the shift in underlying industry conditions. During 2005, the Company experienced an upward shift in the returns realized on its existing data library, with both purchased and created data selling better as a percentage of initial investment versus historical averages.

Leading Market Position

Seitel is widely recognized as one of the pioneers in licensing a proprietary library of intellectual property that is critical to the oil and gas exploration process. As a result of its strong market position, Seitel has developed a well-recognized brand name which has been instrumental in growing its data library and securing additional clients. The Company has achieved a leading position by successfully developing strong client relationships and by identifying and aggressively marketing the long-term intrinsic value of its data library. In addition, the Company continues to deploy advanced techniques to refresh and enhance the overall quality of its data. Seitel continues to expand its network of clients and continues to use its solutions orientation to build its brand name.

Industry Leading Data Library

The Company is uniquely positioned to capitalize on the secular trends in the North American oil and gas exploration market given the size and coverage of its seismic data library. Seitel believes that its data library is one of the largest onshore seismic data libraries available, including strong coverage of the key oil and gas producing basins in North America. Seitel’s large portfolio of seismic data has allowed the Company to become the data provider of choice for many oil and gas exploration companies. The Company’s distinct competitive advantage is driven by its ability to:

•

Provide clients with opportunities to select data from a large library;

•

Offer flexibility in payment options (i.e., clients can pay in cash or exchange their own proprietary seismic data for a license to access Seitel’s data);

•

Combine client data with Seitel data to create a more relevant profile of a potential production site;

•

Provide value-added feedback to clients in designing new seismic data surveys based on Seitel’s many years of experience;

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Seitel, Inc.		2 Transaction Details

2.6 Investment Highlights (cont’d)

•

Generate client trust by participating in joint data creation projects with full alignment of objectives;

•

Retain and grow valuable client relationships;

•

Pursue flexible data acquisition strategies such as non-monetary trades while maintaining capital for data acquisitions; and

•

Develop an active sense for future high demand geographic areas.

Over the long term, the Company’s strategic position will continue to strengthen as its data library grows.

Defensible Market Position

With one of the largest onshore seismic data libraries in the active North American oil and gas basins, the Company has an established competitive position within this rapidly growing market. Since 1993, the Company has invested over $1 billion to build its 3D onshore data library. The Company believes that the current replacement cost of its seismic library significantly exceeds its original investment. Today, the Company’s broad geographic coverage and strong presence in the active North American onshore oil and gas basins coupled with its tremendous domain expertise creates high barriers to replication and a defensible market position. Competitors will generally not shoot over the same areas already in Seitel’s library. In addition, current regulatory, environmental and political influences would make it virtually impossible for a new entrant into the market to replicate the size of the Company’s data library in its areas of coverage.

Stable, Long Term Cash Returns

Seitel offers a compelling economic model that generates significant free cash flows and a strong, consistent return on investment. Seitel derives revenue from the non-exclusive licensing of its data. Importantly, data within the Company’s library can be licensed on a non-exclusive basis multiple times over a span of many years. The Company has proven its ability to sell data surveys for decades after their creation, sometimes earning more revenue in later years than when the data was first created. As such, the Company’s existing data library creates a strong base of “core” revenue that provides strong free cash flows and significant, predictable long-term earnings potential. In addition, each data survey added to the library enhances the Company’s data portfolio and its ability to generate revenue from several active basins, which creates strong diversification within its data library. For 2004 and 2005, Seitel achieved an average return on investment in excess of 40% on new data acquired. Seitel’s recurring revenue model is further

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Seitel, Inc.		2 Transaction Details

2.6 Investment Highlights (cont’d)

enhanced by its proven ability in maintaining and growing its client base. Seitel’s cash resales of data are also highly predictable and have a relatively low sensitivity to rig count and gas prices.

Average Return – Vintages 1994 – 2005 ⁽¹⁾

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Notes

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

Low Cost / Capex “Pure Play” Library

In order to remain profitable through all business cycles, Seitel maintains a low cost operating structure by maintaining an efficient base of assets and employees. The Company does not own seismic acquisition equipment or employ seismic acquisition crews, but rather, engages third-party contractors with qualified equipment on an as-required basis to shoot new data. Management believes this approach results in substantially less volatility in cash flows by allowing Seitel to respond more quickly to changes in the demand and minimizing ongoing capital requirements. Seitel imposes strict capital investment thresholds with targeted underwriting levels.

Diversified Customer Base

The Company has established strong relationships with over 1,600 clients in the oil and gas industry, ranging from most of the global oil and gas majors such as BP, Chevron, ExxonMobil and Shell to large independent oil and gas companies, such as Anadarko, Chesapeake Energy and Devon Energy, to smaller companies and private prospecting individuals. In addition to its ability to attract top-tier clients, the Company has a proven ability to maintain

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Seitel, Inc.		2 Transaction Details

2.6 Investment Highlights (cont’d)

and grow its client relationships due to the quality of its data, the breadth of its coverage in the major active onshore basins in North America and its longstanding commitment to client service. The Company’s strong relationships with its clients also create access to additional data surveys and sales opportunities. Seitel’s large list of referenceable clients provides it with the scale and the experience required to attract new clients, serve existing clients and expand its already sizeable library. For the year ended, December 31, 2005, the Company’s top client and its top ten clients represented 4% and 28.5% of revenue, respectively.

Strong Industry Fundamentals

Seitel is positioned to benefit from several, attractive long-term secular oil and gas industry trends, including:

•

Sustained demand for oil and gas. The worldwide demand for oil and gas continues to increase significantly, led by the demonstrated increases in demand from China, India and other developing countries.

•

High commodity prices. While demand has increased, the supply of oil and gas has remained relatively flat, creating a pronounced increase in the prices of oil and gas that is expected to continue indefinitely as new production capabilities struggle to keep up with greater demand.

•

Increased exploration expenditures. The Company is at the forefront of a prolonged period of increased exploration spending in the North American oil and gas market. Many exploration and production companies are moving from development to exploration spending to increase reserves that have been depleted from an extended period of development.

•

Advanced drilling technology. Exploration technology and drilling methods have improved significantly since the 1990s. These methods have made the development of existing oil and gas fields formerly impeded by geologic barriers or other reasons, commercially and economically viable. With the advent and success of these new technologies, development companies continue to re-examine oil and gas fields in proven regions with increased regularity, creating demand for seismic data.

•

Seismic data advancements. Similar to new technologies and techniques in exploration, new advances in processing and interpreting seismic data have increased the usefulness of data and as a result increased the viability of exploring domestic oil and gas

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Seitel, Inc.		2 Transaction Details

2.6 Investment Highlights (cont’d)

fields. The improvement in data quality oftentimes justifies re-examining oil and gas fields that have already been analyzed using prior techniques.

•

United States’ dependence on foreign oil and gas. While long recognized as a potential danger, recent geopolitical events and continued instability in the Middle East have created a renewed, more powerful desire by the United States to reduce its dependence on foreign supply of oil and gas.

The combination of long-term oil and gas industry trends, expected increase in North American exploration activity and technological advances in seismic data processing creates a strong, long-term demand environment for the Company’s existing data library.

Strong Management Team

Seitel’s executive and senior management team is comprised of individuals with significant experience in the oil and gas services industry and has established relationships with end-users of these services. The Company is led by Rob Monson (President and CEO). The management team also includes William Restrepo (Chief Financial Officer), Kevin Callaghan (Chief Operating Officer), Robert Simon (President Seitel Data), Garis Smith (President Olympic Seismic) and Marcia Kendrick (Chief Accounting Officer) all of whom have extensive industry experience. Mssrs. Monson and Restrepo joined Seitel after the Company emerged from bankruptcy in 2004 and instilled a professional and disciplined management approach. Seitel’s management depth has positioned the Company to expand significantly without adding management talent. The Company’s management team understands the competitive environment and the opportunities for the Company to increase its market share.

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Seitel, Inc.		2 Transaction Details

2.6 Investment Highlights (cont’d)

Senior Management Team


Name	Position	Age
Robert D. Monson	Director, President and CEO	51

William Restrepo	Executive VP, CFO and Secretary	47

Kevin P. Callaghan	Executive VP and COO	54

Robert J. Simon	President Seitel Data	51

Garis C. Smith	President Olympic Data	57

Marcia H. Kendrick	Chief Accounting Officer	46

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Seitel, Inc.		2 Transaction Details

2.7 Industry Overview

Oil and gas companies use seismic surveys to identify geological formations that may contain oil or gas. Demand for seismic data and related geophysical services is dependent upon capital spending by oil and gas companies for exploration, production, development and field management activities, which, in turn, is driven by present and expected future prices for crude oil and natural gas. Significant increases in oil and gas prices, high oil company profits and heightened concern among energy companies about securing new reserves to replace those being depleted led to strong exploration activity in 2004 and 2005, a trend that is expected to continue over the long term.

Oil and Gas Market

The oil and gas market consists of the exploration, development, production, refining, storage, transportation and marketing of oil and gas. The U.S. is one of the world’s largest consumers of energy, with total consumption of approximately a quarter of the world’s supply. In 2005, the U.S. oil and gas market grew by 29.9%, reaching $819.3 billion and representing a compound annual growth rate (CAGR) of 16.6% since 2001. By 2008, the U.S. oil and gas market is estimated to grow to $902.6 billion, representing a CAGR of 3.3% since 2005.

U.S. Oil and Gas Market P-One Short

$Bn

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Source Datamonitor, 2006

Oil and Gas Services and Drilling Industry

Oil and gas service and drilling companies rely on oil and gas producers for their revenues. Generally, oil and gas producers allocate funds for property acquisition, exploration and development of new properties, and actual production when planning their budget. Projected exploration and production

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Seitel, Inc.		2 Transaction Details

2.7 Industry Overview (cont’d)

(E&P) capital expenditures are used as the basis for estimating future industry revenue trends. According to Standard & Poor’s, the high demand for energy is expected to be prolonged with “upstream” spending, or expenditures on E&P, remaining at high levels through 2030. Based on a December 2005 Wall Street survey, worldwide “upstream” expenditures are expected to be $198.1 billion in 2005 and grow by over 14% to $226.2 billion in 2006. Moreover, due to the E&P industry adoption of a cautious and disciplined response to trends in oil and gas prices, actual E&P expenditures have historically exceeded initial plans by significant amounts. In a December 2005 survey of 196 oil and gas companies, 35% of companies noted they would increase their E&P budgets should the price of oil increase by $12.00 per barrel and 49% of respondents indicated they would raise their spending budgets if natural gas prices increased $3.00 per thousand cubic feet (mcf). With current oil and gas prices of $60.32 per barrel and $7.54 per mcf respectively ⁽¹⁾, there is upside potential to current spending forecasts.

Global Initial vs. Actual E&P Spending Growth

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Source Wall Street research

It is estimated that U.S. and Canadian E&P spending increased 30.9% and 23.6%, respectively, in 2005, significantly outpacing the 19.1% growth in worldwide E&P spending. In 2006, it is estimated that 36.5%, or approximately $82.6 billion out of the $226.2 billion total, of worldwide E&P spending will be in the U.S. and Canada.

Notes

Bloomberg as of 11/27/06

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Seitel, Inc.		2 Transaction Details

2.7 Industry Overview (cont’d)

2006E Worldwide E&P Spending by Region

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Source Wall Street research

Two major factors that drive the growth in E&P spending include depletion of oil and gas reserves and increases in commodity prices.

Depletion Drives E&P Spending. One of the most important issues affecting the oil and gas market is the depletion of oil and gas worldwide, and, as seen in the charts below, there are no signs that demand for oil and gas will decline. According to the Annual Energy Outlook 2006, natural gas is projected to be the fastest growing component of worldwide primary energy consumption.


Oil Consumption		Oil Consumption
North America		Global
Billions of Barrels		Billions of Barrels



Source	Energy Information Administration (EIA): International Energy Annual 2004, International Energy Outlook 2006	Source	Energy Information Administration (EIA): International Energy Annual 2004, International Energy Outlook 2006

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Seitel, Inc.		2 Transaction Details

2.7 Industry Overview (cont’d)


Natural Gas Consumption		Natural Gas Consumption
North America		Global
Trillion Cubic Feet		Trillion Cubic Feet



Source	Energy Information Administration (EIA): International Energy Annual 2004, International Energy Outlook 2006	Source	Energy Information Administration (EIA): International Energy Annual 2004, International Energy Outlook 2006

According to the Energy Information Administration (EIA), global energy demand is expected to increase approximately 58% between 2003 and 2025. Extensive capital investment in U.S. and worldwide E&P will be required to meet growing demand.

Commodity Prices Drive E&P Spending. The attractive commodity price environment over the last few years has also been a catalyst for the increase in E&P spending. With commodity prices at record levels, a greater number of prospects are becoming economically attractive. Throughout 2004 and 2005, oil prices reached unprecedented levels due, in part, to concerns over supply stability in the Middle East and Russia, rising demand in China and India, and little spare production capacity. Additionally, an active hurricane season pushed oil prices to nearly $70.00 per barrel in the third quarter of 2005 and gas prices also increased from an average commercial price of $9.27 per mcf in 2004 to $11.30 per mcf in 2005. The higher than expected oil and gas prices initially resulted in many oil and gas companies focusing their efforts on development drilling to produce existing reserves. However, sustained prices have encouraged increased exploration.

Seismic Spending. According to a Wall Street survey of 196 oil and gas companies, 50% of those companies plan to increase their spending on seismic data in 2006 while only 7% foresee a decrease. However, an increasing amount of seismic spending is related to production related activities.

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Seitel, Inc.		2 Transaction Details

2.7 Industry Overview (cont’d)

Global Seismic Spending (1999—2007E)

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Source Spears Oilfield Market Report, Wall Street research, and Baker Hughes Rig Report, November 3, 2006

Onshore Drilling. Land drilling has been one of the strongest areas of growth in the current cycle. The up-cycle in land drilling, which originally peaked in July 2001 and recommenced in March 2002, continues. In U.S. land drilling, this ongoing boom has led to significant increases in rig counts, a direct measure of drilling activity that typically rises in response to high energy prices. According to Baker Hughes, as of November 3, 2006, the total active onshore rig count in the U.S. was 1,649 rigs – 18% higher than the average of 1,396 rigs in the fourth quarter of 2005. Additionally, market utilization in 2006 reached 94% compared to the 95% registered at the prior peak cycle in 2001, indicating the industry is operating close to capacity.

U.S. Land Drilling (1998—2006 YTD)

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Source Baker Hughes & Reedhycalog Rig Census, 2005

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Seitel, Inc.		2 Transaction Details

2.7 Industry Overview (cont’d)

Competition

Competitive Landscape. Seitel competes with several geophysical companies that create, market, and license seismic data and maintain their own seismic data libraries. Additionally, the Company competes with oil and gas companies that create their own seismic data libraries rather than outsourcing their seismic data activities. The Company believes it can compete favorably in the current environment due to the breadth of its data library, the expertise of its marketing staff, the technical proficiency of its geoscientists and the employment of a business model that does not require capital investment in, or ownership of, field crews. Below is a summary of select seismic companies.

Summary of Select Seismic Companies


Company	Headquarters	Revenue ($MM)⁽¹⁾	Business Description
WesternGeco	United Kingdom	2,150	Provides geophysical information and services worldwide including reservoir imaging, monitoring and development services, and owns one of the largest data libraries in the world

Petroleum Geo-Services	Norway	1,520	Provides geophysical services worldwide on a proprietary basis and from its own library

General Geophysics	France	1,117	Provides geophysical services worldwide on a proprietary basis and from its own library. Also provides seismic products

Veritas DGC	Houston, TX	822	Provides geophysical services worldwide on a proprietary basis and from its own library

TGS Nopec Geophysical	Norway	347	Provides 2D and 3D multi-client geoscientific data, associated products and services to the oil and gas industry worldwide

Pulse Data	Calgary, Canada	52	Specializes in the acquisition, marketing and licensing of non-exclusive seismic data in Western Canada

Notes

Acquisition revenue, net investment and resales returns were shifted forward one year. Thus, data created in 1993 was shown here as being created in 1994 as that is when it became available for resale. The associated resale revenues were also shifted to 1994

Competitors. Seitel has presence in all North American onshore areas of interest, including the Gulf Coast of Texas, Louisiana, Mississippi, the Rockies and Canada. As indicated in the chart below, Seitel has the largest or second largest seismic database in each of these key E&P basins, providing the Company with a significant comparative advantage over its competitors since there is little overlap in onshore data. Competing companies that shoot

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Seitel, Inc.		2 Transaction Details

2.7 Industry Overview (cont’d)

onshore multi-client surveys generally do not replicate land data as this practice does not make economic sense. Advances in acquisition technology have not resulted in clear improvements in survey quality for onshore data. In addition, the cost per square mile of shooting land surveys is expensive due to the fragmentation of the land, the difficulty of obtaining permits and numerous environmental issues. Management estimates replicating Seitel’s data library would require 60 plus crew years and $3-4 billion. As a result, assuming that it were possible to repeat a survey over existing data, the economics would likely make it unfeasible.

Key Competitors by Size of Database


Principal Onshore Regions with 3D	Ranking by Estimated Size of Database
Principal Onshore Regions with 3D	First	Second	Third
Gulf Coast Texas	Seitel / WesternGeco	—	Veritas

S. Louisiana / Mississippi	Seitel / WesternGeco	—	Seismic Exchange

N. Louisiana	Seitel	—	—

Rockies	Veritas	Seitel	WesternGeco

Onshore Canada	Seitel	Veritas	Pulse

Source

Management estimates based on internal information and competitors’ data gathered from publicly available sources

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Seitel, Inc.		2 Transaction Details

2.8 Company Overview


LTM Revenue by Source	Data Library by Net Book	LTM Resales Breakdown
	Value as of 9/30/06

Note

LTM as of 9/30/06

Seitel is a leading seismic data company. Seitel is widely recognized as one of the pioneers in licensing a proprietary library of seismic data and since its inception in 1982, the Company has created one of the largest data libraries of its kind. Seismic data is critical to the oil and gas exploration process due to its proven ability to significantly increase the success rate of locating commercial oil and gas deposits. The Company’s data remains relevant for a long period of time as demonstrated by the fact that Seitel continues to license data that was added to its library in the early 1990s. The longevity of the Company’s data has allowed it to create a portfolio of data that delivers strong income over a long period of time with virtually no additional costs, generating exceptional free cash flow and providing the Company with a compelling return on its investment in data. For 2004 and 2005, Seitel achieved an average return on investment in excess of 40% on new data acquired. For the LTM period ended September 30, 2006 the Company posted revenue, EBITDA, and Cash EBITDA of $180.5 million, $142.3 million and $93.3 million, respectively.

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Seitel, Inc.		2 Transaction Details

2.8 Company Overview (cont’d)

2005 Resales by Data Vintage — Onshore 3D

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Notes

Investment net of client underwriting

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

The Company effectively combines one of the largest, most diverse data libraries with deep geophysical domain expertise, proven client-oriented data management solutions, longstanding client relationships and effective sales and marketing capabilities. While these capabilities are strong on an individual basis, the effective combination of each capability onto a single platform is the driving force behind the Company’s ability to leverage its investment in seismic data. Seitel’s capabilities provide a compelling opportunity to continue to grow the business and to increase its already strong competitive position.

Seitel’s data is used by oil and gas companies to assist in the exploration, development and management of oil and gas reserves. The size and geographic diversity of the Company’s data is a key competitive differentiator and a tremendous barrier to entry. Since its inception, the Company has invested over $1 billion to create one of the largest libraries of onshore seismic data available for the United States and Canada, including strong positions in the key oil and gas regions with increased production activity and exploration potential. In addition, Seitel also owns a library of offshore data covering parts of the U.S. Gulf of Mexico shelf and certain deep water areas in the western and central U.S. Gulf of Mexico.

In recent years, the Company has applied new data processing technologies to its existing data to create new stand-alone products. By providing more information, these products increase the effectiveness of client’s exploration efforts. The Company’s ability to reprocess existing data creates additional

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Seitel, Inc.		2 Transaction Details

2.8 Company Overview (cont’d)

revenue opportunities from existing seismic data with minimal investment, resulting in an exceptional return on investment. Seitel has increased its investment in its data processing capabilities and believes that significant opportunities remain to apply more sophisticated technologies to large segments of its existing library.

Several macro trends suggest that the oil and gas industry is at the beginning of a long-term focus on exploration. The long-term demand for oil and gas, high commodity prices and the increasing desire of the United States to reduce its reliance on foreign supply of oil and gas have created a permanent shift in the attractiveness of exploring for oil and gas in North America. Since seismic data is essential to oil and gas exploration, the Company believes that this environment will continue to provide demand for its data. In addition to broad geopolitical trends, advances in seismic data collection and oil and gas drilling methods and equipment have increased the viability and attractiveness of this market. The combination of these trends has created strong, long-term demand for the Company’s existing data library and also creates the ability to significantly expand the library in its current geographical areas as well as extend coverage into other areas.

Seitel has built a diversified client base with over 1,600 clients, ranging from most of the global oil and gas majors such as BP, Chevron, ExxonMobil and Shell to large independent oil and gas companies, such as Anadarko, Chesapeake Energy and Devon Energy, and private prospecting individuals. In 2005, no client accounted for more than 4% of the Company’s revenues and the top ten clients accounted for approximately 28.5% of revenue. Many of the Company’s largest clients have been clients for decades, demonstrating the strength of the Company’s data library and its ability to develop lasting relationships.

The Company’s strong client relationships are a direct result of its commitment to client service. Seitel has developed one of the most powerful and effective sales and marketing organizations in the North American seismic data market. When combined with the Company’s vast data library, this overall value proposition represents one of the Company’s most significant competitive advantages and has been instrumental in the Company’s success. Seitel’s team of sales representatives average 16 years of experience and have a proven ability to effectively develop and maintain strong client relationships. The Company has created a unique, entrepreneurial culture among its sale representatives through a focus on performance and shared financial success, which creates tremendous

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Seitel, Inc.		2 Transaction Details

2.8 Company Overview (cont’d)

loyalty to the Company and a strong sales orientation. With the ability to resell data over a long time period, the Company’s existing data library creates a strong base of “core” revenue that provides strong free cash flow and significant long-term earnings potential. In addition to strong core earnings, the Company has the ability to continue to grow as it adds data to its library. The Company is also uniquely positioned to benefit from secular shifts in the oil and gas exploration market, allowing it to drive strong revenue growth and profitability.

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Seitel, Inc.		2 Transaction Details

2.9 Value Act Capital

ValueAct Capital, an investment partnership with $4.8 billion of assets under management, was formed in June 2000 to acquire significant ownership stakes in public and private companies. ValueAct Capital has a concentrated investment portfolio of 15 - 20 core positions in public and private companies. They take an active investment strategy across all core positions, whether they hold a control position or a significant minority stake. ValueAct Capital invests in companies they believe to be fundamentally undervalued and sources these investments primarily by targeting companies that are out of favor, or may be undergoing significant transition. ValueAct Capital’s goal in each investment is to work productively with management and/or the company’s board to implement strategies that maximize returns on invested capital. ValueAct Capital utilizes any value-enhancing strategy that may be available and invests primarily in companies operating in the United States.

ValueAct’s investments include information technology companies Gartner, Inc., telephony company Avaya, Inc., database company Axciom Corp., life sciences company MDS, Inc., Valeant Pharmaceuticals, direct marketer Catalina Marketing Corp., oilfield services company Hanover Compressor, Inc., and news and information company Reuters Group, PLC.

In addition to its existing cash investment of $127MM in Seitel, ValueAct will contribute $147MM of new equity, more than doubling its investment in Seitel.

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Seitel, Inc.		2 Transaction Details

2.10 Bridge Term Sheet


$400,000,000 SENIOR BRIDGE FACILITY: SUMMARY OF TERMS AND CONDITIONS
Borrower:		Merger Co. and, upon consummation of the Merger, the Surviving Corporation.

Bridge Joint Lead Arrangers and Joint Book Runners:		Morgan Stanley, DBSI and UBS Securities.

Bridge Administrative Agent:		Morgan Stanley.

Bridge Lenders:		Morgan Stanley, DB Cayman and UBS and a syndicate of financial institutions and institutional lenders arranged by the Initial Lenders.

Bridge Facility:		Senior Increasing Rate Loans (the “*Bridge Loans*”) made pursuant to the Bridge Financing Documentation between the Borrower and the Bridge Lenders.

Use of Proceeds:		The proceeds of the Bridge Loans, along with borrowings under the Senior Bank Financing and proceeds of the Equity Contribution, will be used (i) to finance, in part, the Transaction (including without limitation the Refinancing) and (ii) to pay costs and expenses in connection with the Transaction.

Principal Amount:		Up to $400 million.

Interest Rate:		Interest on the Bridge Loans shall be paid at the Applicable Interest Rate (as defined below) and payable quarterly in arrears. “*Applicable Interest Rate” shall initially mean (i) if the corporate ratings of the Borrower on the Closing Date are at least B3 by Moody’s and B- by S&P (in each case with at least a stable outlook) (such ratings being the “Expected Ratings*”) the greater of (x) sum of three-month LIBOR as of the Closing Date plus 4.75% per annum and (y) 10.00% per annum and (ii) if the corporate ratings of the Borrower on the Closing Date are other than Expected Ratings, the

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Seitel, Inc.		2 Transaction Details