UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                                    FORM 10-Q

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 1995

                                    OR

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the transition period                to                   .
                          ---------------   ------------------

Commission File Number 0-14488

                                  Seitel, Inc.
               (Exact name of registrant as specified in charter)

        Delaware                                              76-0025431
-------------------------------                     ---------------------------
(State or other jurisdiction of                              (IRS Employer
 incorporation or organization)                          Identification Number)

50 Briar Hollow Lane
West Building, 7th Floor
Houston, Texas                                      77027
--------------------------------                   -------
(Address of principal executive                  (Zip Code)
offices)

                                 (713) 627-1990
               ---------------------------------------------------
              (Registrant's telephone number, including area code)

                                 Not Applicable
               ---------------------------------------------------
               Former name, former address and former fiscal year,
                          if changed since last report.

         Indicate by check mark whether the registrant (1) has filed all reports
         required to be filed by Section 13 or 15(d) of the Securities  Exchange
         Act of 1934 during the preceding 12 months (or for such shorter  period
         that the  registrant  was required to file such  reports),  and (2) has
         been subject to such filing requirements for the past 90 days.

                                    Yes  X                    No
                                        ---                      ---

         As of November 13, 1995 there were  9,340,157  shares of the  Company's
         common stock, par value $.01 per share, outstanding.



                                                                    Page 1 of 14

<PAGE>


                                      INDEX



PART I. FINANCIAL INFORMATION                                              Page
                

        Item 1. Financial Statements

        Consolidated  Balance  Sheets as of 
        September  30, 1995 and December 31, 1994 . . . . . . . . . . . . .  3

        Consolidated  Statements  of  Operations
        for  the  Three  Months  Ended September 30,
        1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . .  4

        Consolidated   Statements  of  Operations
        for  the  Nine  Months  Ended September 30,
        1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . .  5 

        Consolidated  Statements  of  Stockholders'  
        Equity for the Nine  Months Ended
        September 30, 1995 . . . . . . . . . . . . . . . . . . . . . . . .   6 

        Consolidated  Statements  of  Cash  Flows 
        for  the  Nine  Months  Ended  September 30,
        1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . .  7 

        Notes to Consolidated Interim 
        Financial Statements  . . . . . . . . . . . . . . . . . . . . . . .  8 

        Item 2. Management's  Discussion and
        Analysis of Financial Condition and
        Results of Operations  . . . . . . . . . . . . . . . . . . . . . .   9 

PART II. OTHER INFORMATION  . . . . . . . . . . . . . . . . . . . . . . . . 12 


                                                                    Page 2 of 14

<PAGE>


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

                                                                (Unaudited)
                                                               September 30,               December 31,
                                                                   1995                        1994
                                                               -----------                 -----------
<S>                                                            <C>                         <C>    

ASSETS

  Cash and equivalents                                            $    1,793                $    1,541
  Receivables
    Trade                                                             46,416                    37,098
    Notes and other                                                    1,299                       329
  Net data bank                                                      104,721                    95,801
  Net oil and gas properties                                          37,194                    21,389
  Net geophysical and other property and equipment                    10,054                    11,067
  Prepaid expenses, deferred charges and other assets                  2,896                     1,546
                                                                 -----------               -----------
TOTAL ASSETS                                                      $  204,373                $  168,771
                                                                 ===========               ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

  Accounts payable and accrued liabilities                         $  34,829                $   32,649
  Income taxes payable                                                   202                       933
  Bank debt
    Lines of Credit                                                   26,624                     5,085
    Term Loan                                                          2,628                     3,231
  Notes Payable                                                          297                         -
  Obligations under capital leases                                     4,041                     5,088
  Subordinated debentures                                              2,024                     3,523
  Deferred contractor payable                                          6,395                     9,698
  Contingent payables                                                  2,512                     3,152
  Deferred income taxes                                                5,996                     3,502
  Deferred revenue                                                       400                       581
                                                                 -----------               -----------
TOTAL LIABILITIES                                                     85,948                    67,442
                                                                 -----------               -----------
CONTINGENCIES AND COMMITMENTS

STOCKHOLDERS' EQUITY
  Preferred stock, par value $.01 per share; authorized
    5,000,000 shares; none issued                                          -                        -
  Common stock, par value $.01 per share; authorized
    20,000,000 shares; issued and outstanding 9,336,905 and
    8,825,619 at September 30, 1995 and December 31, 1994,
    respectively                                                          93                        88
  Additional paid-in capital                                          84,117                    75,611
  Retained earnings                                                   35,754                    27,257
  Treasury stock, 414 shares at cost at September 30, 1995 and
    December 31, 1994                                                     (4)                       (4)
  Notes receivable from officers and employees                        (1,463)                   (1,551)
  Cumulative translation adjustment                                      (72)                      (72)
                                                                 -----------               -----------
TOTAL STOCKHOLDERS' EQUITY                                           118,425                   101,329
                                                                 -----------               -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                        $  204,373                $  168,771
                                                                 ===========               ===========
</TABLE>

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


                                                                    Page 3 of 14

<PAGE>


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

                                                                 Three Months Ended September 30,
                                                                 --------------------------------
                                                                     1995                1994
                                                                 ------------        ------------
<S>                                                              <C>                 <C> 

REVENUE                                                           $   20,757          $    18,789

EXPENSES:
  Depreciation, depletion and amortization                             5,926                6,142
  Cost of sales                                                        6,441                5,098
  Selling, general and administrative expenses                         4,311                3,521
  Net interest expense                                                   616                  840
                                                                 -----------         ------------
                                                                      17,294               15,601
                                                                 -----------         ------------

Income before provision for income taxes and
  extraordinary item                                                   3,463                3,188

Provision for income taxes                                             1,281                1,116
                                                                 -----------         ------------

Income before extraordinary item                                       2,182                2,072

Extraordinary charge on early extinguishment
  of debt, net income tax benefit of $163                                  -                 (304)
                                                                 -----------         ------------

NET INCOME                                                        $    2,182          $     1,768
                                                                 ===========         ============
                                                              
Earnings per share:
  Primary:
    Income before extraordinary item                              $      .22          $       .25
    Extraordinary item                                                     -                 (.04)
                                                                 ===========         ============
    Net income                                                    $      .22          $       .21
                                                                 ===========         ============

  Assuming full dilution:
    Income before extraordinary item                              $      .22          $       .23
    Extraordinary item                                                     -                 (.03)
                                                                 ===========         ============
    Net income                                                    $      .22          $       .20
                                                                 ===========         ============  

Weighted average number of common and common equivalent shares:
  Primary                                                              9,940                8,387
                                                                 ===========         ============   
  Assuming full dilution                                              10,235                9,602
                                                                 ===========         ============
</TABLE>



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


                                                                    Page 4 of 14

<PAGE>


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

                                                                Nine Months Ended September 30,
                                                                --------------------------------
                                                                    1995                1994
                                                                ------------        ------------
<S>                                                             <C>                 <C>    
REVENUE                                                           $   66,450          $   47,540

EXPENSES:
  Depreciation, depletion and amortization                            20,404              18,963
  Cost of sales                                                       17,121               7,351
  Selling, general and administrative expenses                        13,101               9,681
  Net interest expense                                                 2,337               2,434
                                                                ------------        ------------
                                                                      52,963              38,429
                                                                ------------        ------------

Income before provision for income taxes and
  extraordinary item                                                  13,487               9,111

Provision for income taxes                                             4,990               3,189
                                                                ------------        ------------

Income before extraordinary item                                       8,497               5,922

Extraordinary charge on early extinguishment
    of debt, net of income tax benefit of $163                             -                (304)
                                                                ------------        ------------

NET INCOME                                                        $    8,497          $    5,618
                                                                ============        ============
  
Earnings per share:
  Primary
    Income before extraordinary item                              $      .86          $      .80
    Extraordinary item                                                     -                (.04)
                                                                ============        ============
    Net income                                                    $      .86          $      .76
                                                                ============        ============

  Assuming full dilution
    Income before extraordinary item                              $      .85          $      .72
    Extraordinary item                                                     -                (.03)
                                                                ============        ============  
    Net income                                                    $      .85          $      .69
                                                                ============        ============

Weighted average number of common and common equivalent shares:
  Primary                                                              9,853               7,421
                                                                ============        ============ 
  Assuming full dilution                                              10,105               8,794
                                                                ============        ============ 
</TABLE>


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


                                                                    Page 5 of 14


<PAGE>



SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share amounts)
<TABLE>
<CAPTION>
                                                                                                               Notes
                                                                                                            Receivables
                                                  Common Stock     Additional               Treasury Stock     from      Cumulative
                                              ------------------    Paid-in    Retained   -----------------   Officers   Translation
                                               Shares    Amount     Capital    Earnings    Shares   Amount  & Employees  Adjustment
                                              --------- --------  ----------  ----------  -------- --------  ----------  ----------
<S>                                           <C>       <C>       <C>         <C>         <C>      <C>       <C>         <C>
BALANCE, DECEMBER 31, 1991                    5,438,250 $     55  $   22,555  $    8,741         - $      -  $        -  $        -

Proceeds from issuance of common stock           28,902        -         181           -         -        -           -           -
Sale of common stock through private offering   400,000        4       2,146           -         -        -      (2,150)          -
Cash dividends                                        -        -           -        (275)        -        -           -           -
Stock dividends                                 109,320        1         790        (791)        -        -           -           -
Foreign currency translation adjustment               -        -           -           -         -        -           -        (164)
Net income                                            -        -           -       4,550         -        -           -           -
                                              --------- --------  ----------  ----------  -------- --------  ----------  ----------
BALANCE, DECEMBER 31, 1992                    5,976,472       60      25,672      12,225         -        -      (2,150)       (164)

Proceeds from issuance of common stock           10,916        -          37           -         -        -           -           -
Payments received on notes receivable from
  officers and employees                              -        -           -           -      (414)      (4)        111           -
Foreign currency translation adjustment               -        -           -           -         -        -           -          79
Net income                                            -        -           -       5,717         -        -           -           -
                                              --------- --------  ----------  ----------  -------- --------  ----------  ----------

BALANCE, DECEMBER 31, 1993                    5,987,388       60      25,709      17,942      (414)      (4)     (2,039)        (85)

Sale of Common stock through public offering  1,061,200       11      31,906           -         -        -           -           -
Proceeds from issuance of common stock          770,364        7       7,280           -         -        -           -           -
Tax reduction from exercise of stock options          -        -       1,879           -         -        -           -           -
Conversions and exchanges of subordinated
  debentures                                  1,006,667       10       8,837           -         -        -           -           -
Payments received on notes receivable from
  officers and employees                              -        -           -           -         -        -         488           -
Foreign currency translation adjustment               -        -           -           -         -        -           -          13
Net income                                            -        -           -       9,315         -        -           -           -
                                              --------- --------  ----------  ----------  -------- --------  ----------  ----------

BALANCE, DECEMBER 31, 1994                    8,825,619       88      75,611      27,257      (414)      (4)     (1,551)        (72)

Proceeds from issuance of common stock          349,760        3       5,453           -         -        -           -           -
Tax reduction from exercise of stock options          -        -       1,670           -         -        -           -           -
Conversions and exchanges of subordinated
  debentures                                    161,526        2       1,383           -         -        -           -           -
Payments received on notes receivable from
  officers and employees                              -        -           -           -         -        -          88           -
Net income                                            -        -           -       8,497         -        -           -           -
                                              --------- --------  ----------  ----------  -------- --------  ----------  ----------
BALANCE SEPTEMBER 30, 1995 (Unaudited)        9,336,905 $     93  $   84,117  $   35,754      (414)$     (4)  $  (1,463)  $     (72)
                                              ========= ========  ==========  ==========  ======== ========  ==========  ========== 



</TABLE>

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


                                                                    Page 6 of 14


<PAGE>



SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
                                                                 Nine Months Ended September 30,
                                                                --------------------------------
                                                                    1995                1994
                                                                ------------        ------------
<S>                                                             <C>                 <C>
Cash flows from operating activities:
  Cash received from customers                                    $   55,547          $   38,602
  Cash paid to suppliers and employees                               (26,981)            (13,069)
  Interest paid                                                         (978)             (2,214)
  Interest received                                                       81                 167
  Income taxes paid                                                   (2,452)               (220)
                                                                ------------        ------------
    Net cash provided by operating activities                         25,217              23,266
                                                                ------------        ------------

Cash flows from investing activities:
  Cash invested in seismic data                                      (32,653)            (30,861)
  Cash invested in oil and gas properties                            (15,606)            (12,736)
  Cash paid to acquire property and equipment                           (935)               (478)
  Advances made to oil and gas joint venture partner                  (1,142)                  -
                                                                ------------        ------------ 
    Net cash used in investing activities                            (50,336)            (44,075)
                                                                ------------        ------------ 

Cash flows from financing activities:
  Borrowings under lines of credit agreements                         66,524              44,208
  Principal payments under lines of credit                           (44,985)            (55,271)
  Principal payments on term loan                                       (603)               (505)
  Principal payments on notes payable                                    (33)                  -
  Principal payments on capital lease obligations                     (1,057)               (327)
  Proceeds from issuance of common stock                               5,499              41,235
  Costs of debt and equity transactions                                  (62)             (2,080)
  Payments on receivables from officers and employees                     88                 474
                                                                ------------        ------------
    Net cash provided by financing activities                         25,371              27,734
                                                                ------------        ------------ 

Effect of exchange rate changes                                            -                   3
                                                                ------------        ------------
Net increase in cash and equivalents                                     252               6,928
Cash and cash equivalents at beginning of period                       1,541               1,759
                                                                ============        ============
Cash and cash equivalents at end of period                        $    1,793      $        8,687
                                                                ============        ============ 

Reconciliation of net income to net cash provided by operating activities:
Net income                                                        $    8,497      $        5,618
Adjustments to reconcile net income to net cash provided by
  operating activities:
  Depreciation, depletion and amortization                            20,834              19,573
  Non-cash sales                                                      (1,404)             (2,775)
  Increase in receivables                                             (9,146)            (10,560)
  Increase in other assets                                            (1,683)               (764)
  Increase in other liabilities                                        8,119              12,174
                                                                ------------        ------------  
    Total adjustments                                                 16,720              17,648
                                                                ============        ============
Net cash provided by operating activities                         $   25,217      $       23,266
                                                                ============        ============
</TABLE>

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


                                                                    Page 7 of 14

<PAGE>


SEITEL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited)
September 30, 1995

NOTE A-BASIS OF PRESENTATION

         The accompanying  unaudited financial  statements have been prepared in
accordance with generally accepted  accounting  principles for interim financial
information and with the  instructions of Regulation S-X.  Accordingly,  they do
not include all of the  information  and notes  required by  generally  accepted
accounting  principles  for  complete  financial  statements.  In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included.  Certain reclassifications
have been  made to the  amounts  in the prior  year's  financial  statements  to
conform to the  current  year's  presentation.  Operating  results  for the nine
months ended  September 30, 1995 are not  necessarily  indicative of the results
that  may be  expected  for the year  ending  December  31,  1995.  For  further
information,  refer to the financial  statements  and notes thereto for the year
ended December 31, 1994.

NOTE B-EARNINGS PER SHARE

         Earnings  per  share  is  based  on  the  weighted  average  number  of
outstanding  shares of common stock  during the  respective  periods,  including
common  equivalent  shares  applicable to assumed  exercise of stock options and
warrants  when such common stock  equivalents  are  dilutive,  and the Company's
other potentially dilutive securities.

         Earnings per share was  determined by dividing net income,  as adjusted
below, by applicable shares outstanding (in thousands):
<TABLE>
<CAPTION>

                                         Three Months Ended         Nine Months Ended
                                           September 30,               September 30,
                                       ---------------------      ---------------------
                                         1995         1994          1995         1994
                                       --------     --------      --------     --------
<S>                                    <C>          <C>           <C>          <C> 

Net income as reported                 $  2,182     $  1,768      $  8,497     $  5,618
Interest eliminated on
  assumed conversion of 9%
  convertible subordinated
  debentures                                 24          137            72          441
                                       --------     --------      --------    ---------
Total income used for fully
  diluted earnings per share           $  2,206     $  1,905      $  8,569     $  6,059
                                       ========     ========      ========    =========
                                      
Weighted average number of
  common and common
  equivalent shares                       9,940        8,387         9,853        7,421
                                       ========     ========      ========    =========
Weighted average number of
  common shares-assuming
  full dilution                          10,235        9,602        10,105        8,794
                                       ========     ========      ========    ========= 
</TABLE>

NOTE C-DATA BANK

         Costs  incurred  in  the  creation  of  proprietary  seismic  data  are
capitalized.  Seismic data costs are  amortized for each seismic data program in
the proportion  that the program's  revenue for a period relates to management's
estimate of the program's  ultimate  revenue.  Since  inception,  management has
established guidelines regarding its annual charge for amortization. Under these
guidelines, 90% of the cost incurred in the creation of proprietary seismic data
is amortized within five years of inception, and the final 10% is amortized on a
straight-line basis over fifteen years. Costs of existing seismic data libraries
purchased  by the  Company  are fully  amortized  within  ten years from date of


                                                                    Page 8 of 14

<PAGE>

purchase.  On a periodic basis,  the carrying value of each seismic data program
is compared to its estimated  future revenue and, if appropriate,  is reduced to
its estimated net realizable value.

NOTE D-OIL AND GAS PROPERTIES

         The Company  accounts for its oil and gas  exploration  and  production
activities  using the full-cost  method of  accounting.  Under this method,  all
costs  associated with  acquisition,  exploration and development of oil and gas
reserves are capitalized, including directly related overhead costs and interest
costs  related  to its  unevaluated  properties  and  certain  properties  under
development  which are not currently being amortized.  For the nine months ended
September 30, 1995 and 1994,  general and  administrative  costs of $628,000 and
$524,000, respectively, have been capitalized to oil and gas properties. For the
nine months ended  September  30,  1995,  interest  costs of $543,000  have been
capitalized to oil and gas properties.

NOTE E-SUPPLEMENTAL CASH FLOW INFORMATION

Significant non-cash investing and financing activities are as follows:

          1.   During the first nine months of 1995 and 1994, the Company issued
               161,526 and 197,403  shares,  respectively,  of its common  stock
               upon the conversion  and exchange of $1,499,000  and  $1,832,000,
               respectively,  of its 9% convertible subordinated debentures.  In
               connection with these conversions and exchanges, unamortized bond
               issue costs totaling  $95,000 and $128,000  during the first nine
               months  of 1995 and 1994,  respectively,  have  been  charged  to
               additional paid-in-capital.

          2.   During  the  first  nine  months of 1995 and  1994,  the  Company
               licensed  seismic  data  valued  at  $1,404,000  and  $2,775,000,
               respectively,  in exchange  for the  purchase of seismic data for
               its library.

          3.   During  the first  nine  months of 1995 and 1994,  capital  lease
               obligations totaling $10,000 and $5,517,000,  respectively,  were
               incurred  when the Company  entered  into leases for property and
               equipment.

          4.   During  the first  nine  months  of 1995,  the  Company  acquired
               $330,000  of  property  and  equipment  by  incurring  a directly
               related note payable.

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

RESULTS OF OPERATIONS
---------------------

         Total revenue  increased 10% and 40% during the third quarter and first
nine months of 1995,  respectively,  as compared to the third  quarter and first
nine months of 1994.  Revenue primarily consists of revenue generated from three
niche-energy  businesses  -  seismic,   exploration  and  production,   and  gas
marketing.  Seismic  revenue  was  $16,001,000  for the  third  quarter  of 1995
compared to $17,996,000  for the third quarter of 1994. This decrease in seismic
revenue is primarily due to the Company's 3D seismic  recording crew  performing
more work for the Company's oil and gas  subsidiary  during the third quarter of
1995 (for which no  revenues  are  recognized)  rather  than for  outside  third
parties.  Seismic  revenue for the nine months ended  September  30,  1995,  was
$52,991,000  compared to  $46,040,000  for the nine months ended  September  30,
1994.   This  increase  is   attributable   to  increases  in  sales  from  both
two-dimensional  (2D)  and  three-dimensional  (3D)  seismic  data.  Oil and gas
revenue  increased from $381,000  during the third quarter of 1994 to $1,871,000
during the third  quarter of 1995 and increased  from $871,000  during the first
nine  months of 1994 to  $3,631,000  during the first nine  months of 1995.  The
increases in oil and gas revenue are due to more wells being on line in the 1995
periods as compared to the 1994  periods.  At September  30, 1995, a total of 61
wells were  producing as compared to a total of 12 wells at September  30, 1994.


                                                                    Page 9 of 14

<PAGE>

Gas marketing  revenue  increased from $323,000 for the third quarter of 1994 to
$2,884,000  for the third  quarter of 1995 and  increased  from $513,000 for the
nine months ended  September  30, 1994 to  $9,826,000  for the nine months ended
September 30, 1995.  These increases are due to the increased volume of business
in this area.

         Depreciation,  depletion and  amortization  consists  primarily of data
bank  amortization.  Refer  to  Note  C  for  a  description  of  the  Company's
amortization policy. Data bank amortization decreased from $5,846,000 during the
third  quarter  of 1994 to  $5,149,000  during  the  third  quarter  of 1995 and
increased from  $18,027,000 to $18,529,000 for the first nine months of 1994 and
1995, respectively. As a percentage of revenue from licensing seismic data, data
bank  amortization  was 44% and 48% for the  third  quarter  of 1995  and  1994,
respectively,  and 44% and 48% for the  first  nine  months  of 1995  and  1994,
respectively.  These  changes are primarily due to the mix of sales of 2D and 3D
data amortized at varying  percentages  based on each data program's current and
expected future revenue stream.

         Cost of sales consists of expenses  associated  with the acquisition of
seismic data for non-affiliated  parties,  seismic resale support services,  oil
and gas production,  and gas marketing activities. The increase in cost of sales
from  $5,098,000  to  $6,441,000  for  the  third  quarter  of  1994  and  1995,
respectively,  and from  $7,351,000 to $17,121,000  for the first nine months of
1994 and  1995,  respectively,  is due to the  Company's  increasing  volume  of
business in these areas. Revenues from these areas increased from $6,231,000, to
$8,835,000  during  the  third  quarter  of 1994  and  1995,  respectively,  and
increased from  $9,033,000 to  $23,621,000  during the first nine months of 1994
and 1995, respectively.

         The Company's selling,  general and  administrative  expenses increased
during the 1995 periods as compared to the 1994 periods primarily as a result of
the addition of new  employees,  marketing  expenses and incentive  compensation
directly  related  to the  increased  volume of  business,  as well as  expenses
related to the Company's  expansions in the 3D seismic data, gas marketing,  and
oil and gas exploration and production  areas. As a percentage of total revenue,
these  expenses were 21% and 20% for the third quarter of 1995 and for the first
nine months of 1995, respectively, and were 19% and 20% for the third quarter of
1994, and for the first nine months of 1994, respectively.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

         The  Company  filed a  registration  statement  on Form S-3 (the "Shelf
Registration  Statement") in June 1994 to offer from time to time in one or more
series (i) unsecured debt securities, which may be senior or subordinated,  (ii)
preferred  stock,  par value $0.01 per share,  and (iii) common stock, par value
$.01 per share,  or any  combination of the foregoing,  at an aggregate  initial
offering price not to exceed $75,000,000.  The Shelf Registration  Statement was
declared  effective by the Securities and Exchange  Commission on June 30, 1994.
In August,  1994, the Company completed a public offering of 1,061,200 shares of
its common  stock  priced at $32 per share  pursuant  to the Shelf  Registration
Statement. The net proceeds from the offering (after underwriting commission and
offering  expenses) totaled  $31,917,000.  After this sale of common stock at an
initial  aggregate  offering  price  of  $33,958,400,   the  Company  may  offer
additional  securities  in the future for up to an  aggregate  initial  offering
price of $41,041,600 pursuant to the Shelf Registration Statement.

         On May 4, 1995,  the Company  increased its revolving line of credit to
$25,000,000,  added a LIBOR interest rate option and extended the maturity.  The
increased  revolving line of credit bears interest at the prevailing  prime rate
or  LIBOR  plus  2% (the  "LIBOR  rate"),  is  collateralized  by both  accounts
receivable  and the seismic data library and is available for general  corporate
purposes.  The Company may borrow up to  $10,000,000  on the  revolving  line of
credit based on seismic data library  collateral and up to $25,000,000  based on
accounts  receivable  collateral,  the total of which cannot exceed $25,000,000.
The banking  facility was effective as of December 31, 1994, and matures June 1,
1997.  The  balance  outstanding  on the  revolving  line of credit  amounted to
$21,500,000 at November 13, 1995, of which  $13,500,000 is borrowed at the LIBOR
rate of 7.8125%,  $3,500,000  is borrowed  at the LIBOR rate of  $7.84375%,  and
$4,500,000 is borrowed at the LIBOR rate of 7.875%. The banking facility imposes
certain financial covenants upon the Company which include covenants relating to
leverage,  net worth and working  capital,  as well as certain  restrictions  on
dividends,  liens,  additional debt or lease  obligations and the acquisition or
disposition of major assets.  Such covenants are not anticipated to restrict the
Company's ability to borrow funds under the facility.


                                                                   Page 10 of 14

<PAGE>

         On June 14, 1995,  DDD Energy,  Inc.  ("DDD  Energy"),  a  wholly-owned
subsidiary of the Company,  received a loan  facility from the Company's  banks.
Under the terms of this  facility,  DDD Energy has a reducing  revolving line of
credit,  the amount of which is determined by the banks'  semi-annual  review of
DDD Energy's oil and gas reserves securing the facility.  The master note amount
pursuant to the  facility is  $75,000,000,  but  amounts  outstanding  under the
facility are limited to the oil and gas reserve  borrowing base, and are subject
to interest,  at the Company's  option,  at either the prevailing  prime rate or
LIBOR plus 2% (the "LIBOR rate"). The borrowing base, determined as of September
1, 1995,  amounted  to  $8,400,000,  reducing by  $160,000  per month  beginning
October 1, 1995.  The balance  outstanding  on the  reducing  revolving  line of
credit amounted to $8,080,000 at November 13, 1995, and is borrowed at the LIBOR
rate of  7.875%.  Funds  available  under  the  facility  will be used to  repay
advances from the Company and for reserve acquisitions and development drilling.
The facility matures on June 1, 1997 and is guaranteed by the Company.

         On July 15, 1993, a wholly-owned  subsidiary of the Company  obtained a
$4,300,000,  five year term loan  bearing  interest at the rate of 7.61% for the
purchase  of a 3D  seismic  recording  system.  The  debt  is  secured  by  such
equipment.  Monthly principal and interest payments began on August 1, 1993. The
balance outstanding on the term loan at November 13, 1995, was $2,489,000.

         From January 1, 1995 through  November 13, 1995,  the Company  received
$5,515,000  from the exercise of common stock purchase  warrants and options and
the Company's 401(k) stock purchases.  In connection with the warrant and option
exercises,  the  Company  will  also  receive  approximately  $1,670,000  in tax
savings.

         In October  1994,  the  Company  called for  redemption  of its 12-1/2%
subordinated  debentures,  thereby  eliminating future interest and sinking fund
payments.  The Company's 9% convertible  debentures,  amounting to $2,009,000 at
November 9, 1995, require semi-annual  interest payments (March 31 and September
30) and,  beginning March 31, 1997, annual sinking fund payments equal to 10% of
the principal amount of the debentures then outstanding.

         During 1994 and 1995,  the Company  entered into  capital  leases which
relate to the purchase of a second 3D seismic  recording system and seismic data
processing center.  These lease agreements are for terms of three to five years.
Monthly  principal  and interest  payments  total  approximately  $125,000.  The
balance  outstanding  under these capital lease  obligations  was  $3,919,000 at
November 13, 1995.

         The Company  has  entered  into  payment  arrangements  with one of its
contractors for seismic  acquisition  services which require the Company to make
payments  only  when  sales  on  the  related   seismic  project  are  collected
(contingent payables), or allow the Company to make payments as sales of related
seismic projects are collected until July 1, 1996, at which time any outstanding
balance would be due (deferred  contractor  payable).  In connection  with these
arrangements,  the Company had  $1,266,000 in receivables at September 30, 1995,
which will be paid to the  contractor  upon  collection.  Accordingly,  the same
amount,  $1,266,000, was included in the Company's regular accounts payable. The
Company has a verbal  payment  arrangement  with the contractor on certain other
seismic  acquisition  projects  pursuant to which payments to the contractor are
made only when sales of the related seismic projects are collected. At September
30, 1995, accounts receivable included $1,100,000  dedicated to payment pursuant
to this verbal  arrangement,  while regular  accounts  payable included the full
balance due the contractor of $8,076,000.  Amounts owed to this  contractor bear
interest  at the prime  rate or the prime rate plus 1%,  except  for  contingent
payables which bear no interest.  Management  anticipates  that sales from these
projects will pay in full the amounts owed to the contractor.

         During  the first  nine  months of 1995,  cash  from  operations,  bank
borrowings and proceeds from the exercise of common stock purchase  warrants and
options  funded the third party seismic data creation costs borne by the Company
and oil and gas exploration and  development  costs, as well as taxes,  interest
expenses,  cost of sales and general and  administrative  expenses.  The Company
believes its revenues from  operating  sources and proceeds from the exercise of
warrants and options,  combined  with its available  lines of credit,  should be
sufficient  to  fund  all  of  its  internal   operations  and  related  capital


                                                                   Page 11 of 14

<PAGE>

expenditures  for 1995. To the extent these sources are not  sufficient to cover
the  Company's  expenses,  it would be necessary  for the Company to arrange for
additional debt or equity financing.  There can be no assurance that the Company
would  be able  to  accomplish  any  such  debt or  equity  financing  on  terms
satisfactory to it.

                           PART II - OTHER INFORMATION
                           ---------------------------


Item 1. Legal Proceedings.
--------------------------

There have been no material  developments in the legal  proceedings  reported in
Item 1. of the Company's 10-Q for the quarter ended June 30, 1995.

Items 2., 3., and 5.   Not applicable.
-------------------

Item 4. Submission of Matters to a Vote of Security Holders.
------------------------------------------------------------

         The Company's Annual Meeting of Stockholders was held on July 18, 1995.
Matters voted upon at the Annual Meeting,  and the results of those votes are as
follows:

1.    The election of eight directors to serve until the 1995 Annual Meeting.

      Name                         No. of Votes For        No. of Votes Withheld
      --------------------      --------------------       ---------------------

      Paul A. Frame                  8,271,622                    58,158
      Horace A. Calvert              8,270,624                    59,156
      Herbert M. Pearlman            8,223,022                   106,758
      David S. Lawi                  8,224,023                   105,757
      James C. Rives, Jr.            8,271,624                    58,156
      William Lerner                 8,224,024                   105,756
      Walter M. Craig, Jr.           8,224,124                   105,656
      John E. Stieglitz              8,224,124                   105,656

2.    Approval of the Seitel, Inc. 1995 Shareholder Value Incentive Bonus Plan.

       No. of Votes For         No. of Votes Against      No. of Votes Abstained
      --------------------     ------------------------   ----------------------
          5,758,710                     70,662                    36,598

3.    Approval of certain amendments to the Seitel, Inc. 1993 Incentive Stock
      Option Plan.

       No. of Votes For         No. of Votes Against      No. of Votes Abstained
      --------------------     ------------------------   ----------------------
          6,561,667                  1,702,025                    66,088

4.    Approval  of the  appointment  of the  public  accounting  firm of  Arthur
      Andersen  LLP  to  act  as  the  Company's  independent  Certified  Public
      Accountants for the year of 1995.

       No. of Votes For         No. of Votes Against      No. of Votes Abstained
      --------------------     ------------------------   ----------------------
          8,282,324                     22,922                    24,534


                                                                   Page 12 of 14

<PAGE>


Item 6.  Exhibits and Reports on Form 8-K.
------------------------------------------

(a)    10.1    First  Amendment  to  Restated  Credit  and  Security   Agreement
               effective as of September 14, 1995 among the Company, Seitel Data
               Corp. (Company's  wholly-owned  subsidiary),  Seitel Geophysical,
               Inc. (Company's wholly-owned  subsidiary),  Seitel Offshore Corp.
               (Company's  wholly-owned  subsidiary),   Exsol,  Inc.  (Company's
               wholly-owned   subsidiary),   and  Bank   One,   Texas   National
               Association and Compass Bank - Houston


(b)            Not applicable


                                                                   Page 13 of 14

<PAGE>


                                   SIGNATURES


Pursuant to the  requirements  of the  Securities  and Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                      SEITEL, INC.



Dated:   November 13, 1995            /s/ Paul A. Frame
                                      -----------------------
                                      Paul A. Frame
                                      President and Chief Executive Officer





Dated:   November 13, 1995            /s/ Debra D. Valice
                                      -----------------------
                                      Debra D. Valice
                                      Chief Financial Officer





Dated:   November 13, 1995            /s/ Marcia H. Kendrick
                                      -----------------------
                                      Marcia H. Kendrick
                                      Chief Accounting Officer


                                                                   Page 14 of 14

<PAGE>





                               EXHIBIT INDEX                               

10.1      First Amendment to Restated Credit and Security Agreement effective as
          of September 14, 1995 among the Company,  Seitel Data Corp. (Company's
          wholly-owned   subsidiary),   Seitel   Geophysical,   Inc.  (Company's
          wholly-owned    subsidiary),    Seitel   Offshore   Corp.   (Company's
          wholly-owned  subsidiary),  and Exsol,  Inc.  (Company's  wholly-owned
          subsidiary) and Bank One, Texas National  Association and Compass Bank
          - Houston

27        Financial Data Schedule for the third quarter of 1995.