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                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 JUNE 30, 1997

                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                                      (Zip Code)
      executive offices)

                                 (713) 881-8900
                                 --------------
              (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 August 12, 1997 there were 10,812,938  shares of the Company's common
stock, par value $.01 per share, outstanding.


--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

                                      INDEX


                                                                            Page
PART I.  FINANCIAL INFORMATION                                              ----

     Item 1.   Financial Statements

               Consolidated Balance Sheets as of
               June 30, 1997 (Unaudited) and December 31, 1996.................3

               Consolidated Statements of Operations (Unaudited)
               for the Three Months Ended June 30, 1997 and 1996...............4

               Consolidated Statements of Operations (Unaudited)
               for the Six Months Ended June 30, 1997 and 1996.................5

               Consolidated Statements of Stockholders' Equity (Unaudited)
               for the Three Months Ended June 30, 1997........................6

               Consolidated Statements of Cash Flows (Unaudited)
               for the Three Months Ended June 30, 1997 and 1996...............7

               Notes to Consolidated Interim Financial Statements..............9

     Item 2.   Management's Discussion and Analysis of
               Financial Condition and Results of Operations..................11

PART II.  OTHER INFORMATION...................................................14






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

                                                                     (Unaudited)
                                                                       June 30,           December 31,
                                                                         1997                 1996
                                                                     -----------           ----------
<S>                                                                <C>                   <C>
ASSETS
   Cash and equivalents                                            $       3,795         $      3,340
   Receivables
     Trade                                                                57,164               52,509
     Notes and other                                                       5,429                6,618
   Net data bank                                                         146,574              126,998
   Net oil and gas properties                                             95,250               86,572
   Net geophysical and other property and equipment                       19,858               14,022
   Investment in affiliate                                                   914                  914
   Advances to oil and gas operators                                       4,540                1,235
   Prepaid expenses, deferred charges and other assets                     3,077                2,471
                                                                     -----------           ----------

   TOTAL ASSETS                                                    $     336,601         $    294,679
                                                                     ===========           ==========

LIABILITIES AND STOCKHOLDERS'EQUITY
   Accounts payable and accrued liabilities                        $      32,087         $     25,130
   Income taxes payable                                                      156                  302
   Debt
     Senior Notes                                                         75,000               75,000
     Line of credit                                                       11,000                    -
     Term Loans                                                           14,889                9,025
   Obligations under capital leases                                        2,465                2,463
   Contingent payables                                                       274                  274
   Deferred income taxes                                                  12,427                9,793
   Deferred revenue                                                       18,004               17,051
                                                                     -----------           ----------
TOTAL LIABILITIES                                                        166,302              139,038
                                                                     -----------           ----------

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 10,627,446
     and 10,362,102 at June 30, 1997 and December 31,
     1996, respectively                                                      106                  104
   Additional paid-in capital                                            110,739              105,544
   Retained earnings                                                      60,673               51,185
   Treasury stock, 409 shares at cost at
     June 30, 1997 and December 31, 1996                                      (4)                  (4)
   Notes receivable from officers and employees                           (1,205)              (1,205)
   Cumulative translation adjustment                                         (10)                  17
                                                                     -----------           ----------
TOTAL STOCKHOLDERS' EQUITY                                               170,299              155,641
                                                                     -----------           ----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                         $     336,601         $    294,679
                                                                     ===========           ==========
</TABLE>

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


<PAGE>

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

                                                                   Three Months Ended June 30,
                                                                  ----------------------------
                                                                      1997             1996
                                                                  ----------        ----------

<S>                                                              <C>              <C>        
REVENUE                                                          $    34,673      $    27,180

EXPENSES:
   Depreciation, depletion and amortization                           11,560           10,111
   Cost of sales                                                       7,389            4,399
   Selling, general and administrative expenses                        6,296            5,346
   Net interest expense                                                  984              727
                                                                   ---------        ---------
                                                                      26,229           20,583
                                                                   ---------        ---------

Income from continuing operations before provision
   for income taxes                                                    8,444            6,597

Provision for income taxes                                             3,040            2,441
                                                                   ---------        ---------

Income from continuing operations                                      5,404            4,156
Loss on disposal of discontinued operations, net of
   income tax benefit of $580                                              -             (988)
                                                                   ---------        ---------

NET INCOME                                                       $     5,404      $     3,168
                                                                   =========        =========

Earnings per share:
   Primary
     Income from continuing operations                           $       .50      $       .41
     Loss on disposal of discontinued operations                           -             (.10)
                                                                   ---------        ---------
     Net income                                                  $       .50      $       .31
                                                                   =========        =========
   Assuming full dilution
     Income from continuing operations                           $       .49      $       .41
     Loss on disposal of discontinued operations                           -             (.10)
                                                                   ---------        ---------
     Net income                                                  $       .49      $       .31
                                                                   =========        =========

Weighted average number of common and common
   equivalent shares:
   Primary                                                            10,891           10,258
                                                                   =========        =========
   Assuming full dilution                                             10,923           10,273
                                                                   =========        =========
</TABLE>


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



<PAGE>

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

                                                                       Six Months Ended June 30,
                                                                     ----------------------------
                                                                        1997              1996
                                                                     -----------      -----------

<S>                                                                  <C>              <C>        
REVENUE                                                              $    61,892      $    47,446

EXPENSES:
   Depreciation, depletion and amortization                               21,668           18,157
   Cost of sales                                                          12,431            7,669
   Selling, general and administrative expenses                           11,014            8,849
   Net interest expense                                                    2,023            1,311
                                                                       ---------        ---------
                                                                          47,136           35,986
                                                                       ---------        ---------

Income from continuing operations before provision
   for income taxes                                                       14,756           11,460

Provision for income taxes                                                 5,268            4,240
                                                                       ---------        ---------

Income from continuing operations                                          9,488            7,220
Loss on disposal of discontinued operations, net
   of income tax benefit of $580                                               -             (988)
                                                                       ---------        ---------

NET INCOME                                                           $     9,488      $     6,232
                                                                       =========        =========

Earnings per share:
   Primary
     Income from continuing operations                               $       .88      $       .72
     Loss on disposal of discontinued operations                               -             (.10)
                                                                       ---------        ---------
     Net income                                                      $       .88      $       .62
                                                                       =========        =========
   Assuming full dilution
     Income from continuing operations                               $       .87      $       .71
     Loss on disposal of discontinued operations                               -             (.10)
                                                                       ---------        ---------
     Net income                                                      $       .87      $       .61
                                                                       =========        =========

Weighted average number of common and common
   equivalent shares:
   Primary                                                                10,839           10,131
                                                                       =========        =========
   Assuming full dilution                                                 10,888           10,248
                                                                       =========        =========
</TABLE>


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




<PAGE>
SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share amounts)
<TABLE>
<CAPTION>
                                                                                                                                   
                                                                                                                Notes              
                                                        Common Stock   Additional           Treasury Stock   Receivable   Cumulative
                                                     -----------------   Paid-In  Retained  -------------- from Officers Translation
                                                      Shares    Amount   Capital  Earnings  Shares  Amount  & Employees  Adjustments
                                                     ---------  ------   -------  --------  ------  ------  -----------  -----------

<S>                                                  <C>        <C>     <C>       <C>        <C>    <C>       <C>             <C>   
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         -      -       -            -            -
   Net proceeds from issuance of common stock          770,364      7      7,280         -      -       -            -            -
   Tax reduction from exercise of stock options              -      -      1,879         -      -       -            -            -
   Conversion 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)
   Net proceeds from issuance of common stock          445,939      4      6,894         -      -       -            -            -
   Tax reduction from exercise of stock options              -      -      1,900         -      -       -            -            -
   Conversions and exchanges of subordinated           165,296      2      1,416         -      -       -            -            -
     debentures
   Payments received on notes receivable from
     officers and employees                                  -      -          -         -      -       -          156            -
   Foreign currency translation adjustment                   -      -          -         -      -       -            -           (2)
   Net income                                                -      -          -     8,679      -       -            -            -
                                                    ----------   ----    -------   -------   ----    ----      -------         ----
Balance, December 31, 1995                           9,436,854     94     85,821    35,936   (414)     (4)      (1,395)         (74)
   Net proceeds from issuance of common stock          578,869      7     11,142         -      5       -            -            -
   Acquisition of equity interest in affiliate         132,075      1      3,499         -      -       -            -            -
   Tax reduction from exercise of stock options              -      -      3,204         -      -       -            -            -
   Conversions and exchanges of subordinated           214,304      2      1,878         -      -       -            -            -
     debentures
   Payments received on notes receivable from
     officers and employees                                  -      -          -         -      -       -          190            -
   Foreign currency translation adjustment                   -      -          -         -      -       -            -           91
   Net Income                                                -      -          -    15,249      -       -            -            -
                                                    ----------   ----    -------   -------   ----    ----      -------         ----
Balance, December 31, 1996                          10,362,102    104    105,544    51,185   (409)     (4)      (1,205)          17
   Net proceeds from issuance of common stock          265,344      2      3,447         -      -       -            -            -
   Tax reduction from exercise of stock options              -      -      1,748         -      -       -            -            -
   Foreign currency translation adjustment                   -      -          -         -      -       -            -          (27)
   Net Income                                                -      -          -     9,488      -       -            -            -
                                                    ----------   ----    -------   -------   ----    ----      -------         ----

Balance, June 30, 1997 (unaudited)                  10,627,446  $ 106   $110,739  $ 60,673   (409)  $  (4)    $ (1,205)       $ (10)
                                                    ==========   ====    =======   =======   ====    ====      =======         ====
</TABLE>



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


<PAGE>

SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
                                                                      Six Months Ended June 30,
                                                                    ----------------------------
                                                                       1997              1996
                                                                    ----------       -----------
<S>                                                               <C>              <C>          
Cash flows from operating activities:
   Cash received from customers                                   $     58,067     $      43,789
   Proceeds from volumetric production payment                               -            20,000
   Cash paid to suppliers and employees                                (24,875)          (23,363)
   Interest paid                                                        (2,595)           (1,724)
   Interest received                                                       484               439
   Income taxes paid                                                       (40)             (800)
                                                                    ----------       -----------
     Net cash provided by operating activities                          31,041            38,341
                                                                    ----------       -----------

Cash flows from investing activities:
   Cash invested in seismic data                                       (28,355)          (14,008)
   Cash invested in oil and gas properties                             (14,416)          (32,479)
   Cash paid to acquire property and equipment                          (7,960)           (3,100)
   Cash from disposal of property and equipment                             28                59
   Collections on loans made                                               269                94
                                                                    ----------       -----------
     Net cash used in investing activities                             (50,434)          (49,434)
                                                                    ----------       -----------

Cash flows from financing activities:
   Borrowings under line of credit agreements                           32,000                 -
   Principal payments under line of credit                             (21,000)                -
   Borrowings under term loan                                            7,925               433
   Principal payments on term loans                                     (2,061)             (571)
   Principal payments on capital lease obligations                        (372)             (640)
   Payments on notes receivable from officers and employees                  -                45
   Proceeds from issuance of senior notes                                    -            22,500
   Proceeds from issuance of common stock                                3,451             1,970
   Costs of debt and equity transactions                                    (2)              (36)
                                                                    ----------       -----------
     Net cash provided by financing activities                          19,941            23,701
                                                                    ----------       -----------

Effect of exchange rate changes                                            (93)             (182)
                                                                    ----------       -----------

Net increase in cash and equivalents                                       455            12,426

Cash and cash equivalents at beginning of period:
   Continuing operations                                                 3,340             6,242
   Discontinued operations                                                   -               234
                                                                    ----------       -----------
     Total cash and equivalents at beginning of period                   3,340             6,476
                                                                    ----------       -----------

Cash and cash equivalents at end of period:
   Continuing operations                                                 3,795            18,902
   Discontinued operations                                                   -                 -
                                                                    ----------       -----------
     Total cash and equivalents at end of period                  $      3,795     $      18,902
                                                                    ==========       ===========
</TABLE>



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

<PAGE>

SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited), continued
(In thousands)
<TABLE>
<CAPTION>
                                                                                 Six Months Ended June 30,
                                                                                --------------------------
                                                                                   1997            1996
                                                                                ---------       ----------
<S>                                                                           <C>             <C>         
Reconciliation of net income to net cash provided by operating
   activities:
Net income                                                                    $     9,488     $      6,232
Adjustments to reconcile net income to net cash provided by
   operating activities:
   Depreciation, depletion and amortization                                        22,537           18,619
   Loss from discontinued operations, net of tax                                        -              988
   Deferred income tax provision                                                    2,634            2,120
   Amortization of deferred revenue                                                (4,086)               -
   Discount on note receivable                                                        (53)               -
   Gain on sale of property and equipment                                             (16)             (22)
   Increase in receivables                                                         (4,080)          (6,227)
   Increase in other assets                                                        (4,398)          (2,021)
   Proceeds from volumetric production payment                                          -           20,000
   Increase in other liabilities                                                    9,015              595
                                                                                ---------       ----------
     Total adjustments                                                             21,553           34,052

Net cash provided by (used in) operating activities of:
   Continuing operations                                                           31,041           40,284
   Discontinued operations                                                              -           (1,943)
                                                                                ---------       ----------
                                                                              $    31,041     $     38,341
                                                                                =========       ==========
</TABLE>


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


<PAGE>

SEITEL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited)
June 30, 1997

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 six months
ended June 30, 1997 are not  necessarily  indicative  of the results that may be
expected for the year ending December 31, 1997. For further  information,  refer
to the financial  statements  and notes thereto for the year ended  December 31,
1996.


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.  The  following  is a  reconciliation  of the
weighted average number of shares used in the earnings per share computation (in
thousands):
<TABLE>
<CAPTION>

                                           Three Months Ended            Six Months Ended
                                         ----------------------       ----------------------
                                                June 30,                     June 30,
                                            1997        1996             1997        1996
                                         ----------  ----------       ----------  ----------
<S>                                          <C>          <C>             <C>          <C>  
Primary:
-------
Weighted average shares outstanding          10,439       9,702           10,404       9,595
Common stock equivalents                        452         556              435         536
                                         ----------  ----------       ----------  ----------
Weighted average shares used
    for earnings per share                   10,891      10,258           10,839      10,131
                                         ==========  ==========       ==========  ==========

Fully Diluted:
-------------
Weighted average shares outstanding          10,439       9,702           10,404       9,595
Common stock equivalents                        484         571              484         653
                                         ----------  ----------       ----------  ----------
Weighted average shares used
    for earnings per share                   10,923      10,273           10,888      10,248
                                         ==========  ==========       ==========  ==========
</TABLE>
<PAGE>

     In February 1997, the Financial  Accounting Standards Board ("FASB") issued
Statement of Financial  Accounting  Standards  ("SFAS") No. 128 - "Earnings  per
Share"  effective for interim and annual periods after  December 15, 1997.  This
statement replaces primary earnings per share ("EPS") with a newly defined basic
EPS and modifies the computation of diluted EPS. Basic earnings per common share
is computed by dividing net income by the weighted  average  number of shares of
common stock outstanding during the period. Diluted earnings per common share is
computed  by dividing  net income by the  weighted  average  number of shares of
common  stock  during the period  plus the effect of dilutive  potential  common
shares. If the provisions of SFAS No. 128 had been adopted in the second quarter
of 1997 and 1996,  the pro forma EPS would have been $.52 and $.91 per share for
basic and $.50 and $.88 per share for diluted for the  three-month and six-month
periods ended June 30, 1997, respectively, and $.33 and $.65 per share for basic
and $.31 and $.62 per  share  for  diluted  for the  three-month  and  six-month
periods ended June 30, 1996, respectively.


NOTE C-DATA BANK

     Costs incurred in the creation of proprietary  seismic data,  including the
direct and incremental costs of Company personnel engaged in project  management
and design,  are capitalized.  Seismic data costs are amortized for each project
in the proportion that its revenue for a period relates to management's estimate
of 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 for two-dimensional  seismic data and within seven years
of inception for three-dimensional  seismic data, 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 purchase.  On a periodic  basis,  the carrying  value of seismic data 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,  including  directly related overhead costs and interest costs related
to its unevaluated properties and certain properties under development which are
not currently being amortized,  are  capitalized.  For the six months ended June
30, 1997 and 1996,  general and  administrative  costs of $686,000 and $506,000,
respectively,  have  been  capitalized  to oil and gas  properties.  For the six
months ended June 30, 1997 and 1996,  interest  costs of $974,000 and  $642,000,
respectively, 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 six months of 1997,  capital  lease  obligations  totaling
     $374,000 were  incurred  when the Company  entered into leases for property
     and equipment.

2.   During the first six months of 1996,  the Company  issued 214,304 shares of
     its common stock upon the  conversion  and exchange of $1,989,000 of its 9%
     convertible subordinated  debentures.  In connection with these conversions
     and exchanges,  unamortized  bond issue costs totaling  $109,000 during the
     first six months of 1996 were charged to additional paid-in-capital.

<PAGE>

NOTE F-ACCOUNTING FOR SALES OF STOCK BY SUBSIDIARY COMPANIES

     The Company  recognizes gains or losses on sales of stock by its subsidiary
companies  when such  sales are not made as part of a larger  plan of  corporate
reorganization.  Such gains or losses are based upon the difference  between the
book value of the Company's  investment in the subsidiary  immediately after the
sale and the historical book value of the Company's investment immediately prior
to the sale.

     On August 11, 1997,  the Company's  wholly-owned  seismic data  acquisition
crew subsidiary, Eagle Geophysical, Inc. ("Eagle"),  completed an initial public
offering  of  4,000,000  shares  of its  common  stock.  The  Company  also sold
1,880,000  of its  3,400,000  shares of Eagle  common stock in the offering as a
selling stockholder. As a result of the offering, the Company now owns 1,520,000
shares of Eagle Common Stock,  or 18.9% of the  outstanding  shares of Eagle. In
addition to certain debt repayments by Eagle,  the Company received net proceeds
of $29,722,800 from its participation in the offering. In addition,  the Company
granted  the  underwriters  of the  offering  30-day  over-allotment  options to
purchase up to 100,000 additional shares of Eagle common stock from the Company,
which if exercised in full, will provide  additional net proceeds to the Company
of $1,581,000.  If the underwriters  exercise all of the over-allotment  options
granted  to them in  connection  with the  offering,  the  Company  will  retain
1,420,000 shares of Eagle common stock, or 16.4% of the then outstanding  shares
of Eagle.

     In connection with the Eagle offering, in May 1997, the Company contributed
its  19%  ownership   interest  in  Energy  Research   International  to  Eagle.
Contemporaneously with the offering,  Eagle acquired the remaining 81% of Energy
Research International.


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

RESULTS OF OPERATIONS

     Total revenue increased 28% and 30% during the second quarter and first six
months of 1997,  respectively,  as compared to the second  quarter and first six
months of 1996. Revenue primarily consists of revenue generated from the seismic
business and oil and gas production.

     Seismic  revenue  increased from  $23,419,000  during the second quarter of
1996 to  $29,330,000  during  the  second  quarter  of 1997 and  increased  from
$41,300,000  during the first six months of 1996 to $48,612,000 during the first
six months of 1997. These increases are primarily attributable to an increase in
demand for both three-dimensional and two-dimensional seismic data.

     Oil and gas revenue increased from $3,761,000 in the second quarter of 1996
to $5,343,000 in the second quarter of 1997 and increased from $6,146,000 in the
first six months of 1996 to $13,280,000  in the first six months of 1997.  These
increases  in oil  and  gas  revenue  are  primarily  due to  higher  production
resulting  from more wells being on line during the 1997  periods  (111 wells at
June 30, 1997) as compared to the 1996 periods (82 wells at June 30, 1996).  Net
production  of oil and gas increased  from 65,000  barrels and 897 million cubic
feet (mmcf) for the second  quarter of 1996 to 97,500 barrels and 1,684 mmcf for
the second quarter of 1997. Net production of oil and gas increased from 132,000
barrels  and 1,497 mmcf for the first six months of 1996 to 214,000  barrels and
3,633 mmcf for the first six months of 1997.  Average oil prices were $23.36 and
$15.82 per barrel for the second  quarters of 1996 and 1997,  respectively,  and
$20.32  and  $15.62  per  barrel  for the  first  six  months  of 1996 and 1997,
respectively.  Average gas prices  received by the Company  were $2.40 and $2.17
per mcf for the second  quarters of 1996 and 1997,  respectively,  and $2.19 and
$2.66 per mcf for the first six months of 1996 and 1997, respectively.
<PAGE>

     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  $8,498,000  during the second
quarter of 1996 to  $8,286,000  during the second  quarter of 1997 and decreased
from  $15,488,000  to  $14,184,000  for the first  six  months of 1996 and 1997,
respectively.  As a percentage of revenue from licensing seismic data, data bank
amortization  was  48%  and  41%  for the  second  quarter  of  1996  and  1997,
respectively,  and 49%  and 42% for the  first  six  months  of 1996  and  1997,
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.  The  remaining  depreciation,  depletion and
amortization  of $1,613,000 and  $3,274,000 for the second  quarters of 1996 and
1997,  respectively,  and  $2,669,000 and $7,484,000 for the first six months of
1996 and 1997, respectively,  relates to depletion of oil and gas property costs
and depreciation of fixed assets.  The increases  between the periods are due to
increased oil and gas production and additional property and equipment.

     Cost of sales  consists  of expenses  associated  with the  acquisition  of
seismic data for non-affiliated  parties,  seismic resale support services,  and
oil and gas  production.  Cost of sales  increased from $4,399,000 to $7,389,000
for the second quarter of 1996 and 1997,  respectively,  and from  $7,669,000 to
$12,431,000  for the first six  months  of 1996 and  1997,  respectively.  These
increases  in cost of sales for the  second  quarter  and first half of 1997 are
primarily  due to an increase in the  corresponding  revenue  from these  areas.
Revenues from these areas  increased from  $9,239,000 to $13,850,000  during the
second quarter of 1996 and 1997, respectively, and increased from $15,036,000 to
$26,536,000 during the first six months of 1996 and 1997, respectively.

     The Company's selling, general and administrative expenses increased during
the 1997  periods  as  compared  to the 1996  periods  primarily  as a result of
variable  expenses related to the increased volume of business.  As a percentage
of total revenue,  these  expenses  decreased from 20% for the second quarter of
1996 to 18% for the second quarter of 1997, and decreased from 19% for the first
six months of 1996 to 18% for the first six months of 1997.

     Net  interest  expense  increased  from  $727,000 to $984,000 in the second
quarters  of 1996 and 1997,  respectively,  and  increased  from  $1,311,000  to
$2,023,000 in the first six months of 1996 and 1997, respectively, primarily due
to borrowings made under the Company's  revolving line of credit during the 1997
periods. Additionally, $75 million was outstanding on the Company's Senior Notes
for all of the first six months of 1997,  whereas  in 1996,  $52.5  million  was
outstanding until April 9, 1996 when the amount increased to $75 million.

     On August 11, 1997, the Company's seismic data acquisition crew subsidiary,
Eagle  Geophysical,  Inc.  ("Eagle"),  completed an initial  public  offering of
4,000,000  shares of its common  stock.  The Company also sold  1,880,000 of its
3,400,000 shares of Eagle common stock in the offering as a selling stockholder.
As a result of the  offering,  the  Company now owns  1,520,000  shares of Eagle
common stock, or 18.9% of the outstanding shares of Eagle.  Beginning August 11,
1997,  the  financial  results  of Eagle will no longer be  consolidated  in the
Company's  consolidated  financial  statements;  however,  the Company's  equity
interest  in Eagle will be  included  in the  Company's  consolidated  financial
statements.

LIQUIDITY AND CAPITAL RESOURCES

     As a result of its sale of 1,880,000 shares of Eagle common stock on August
11, 1997 (see  above),  the Company  received net  proceeds of  $29,722,800.  In
addition,  the Company  granted the  underwriters  of the Eagle public  offering
30-day  over-allotment  options to purchase up to 100,000  additional  shares of
Eagle common stock from the Company,  which,  if exercised in full, will provide
additional net proceeds to the Company of $1,581,000. The value of the Company's
remaining equity interest in Eagle is $25,840,000,  based on 1,520,000 shares at
the  initial  public  offering  price of $17 per  share (or  $24,140,000  if the
over-allotment  options  are  exercised  in full).  These  shares are subject to
certain trading restrictions.

     Because Eagle will no longer be consolidated in the Company's  consolidated
financial  statements,  the amount of the Company's term loans  ($14,889,000  at
June 30, 1997) will be reduced to $616,000 as of August 12, 1997, and the amount
of the Company's capital lease obligations ($2,465,000 at June 30, 1997) will be
reduced to  $117,000  as of August  12,  1997.  The  Company  will also  receive
repayment  of debts owed  directly  to it by Eagle,  plus  advances  and accrued
interest until final payment,  which is estimated to be before the end of August
1997. The Company received  $7,831,000 towards this debt repayment on August 12,
1997.
<PAGE>

     On December 28, 1995,  the Company  completed a private  placement of three
series  of   unsecured   Senior  Notes   totaling   $75  million.   The  Company
contemporaneously  issued  its Series A Notes and  Series B Notes,  which  total
$52.5 million and bear interest at a fixed rate of 7.17%.  On April 9, 1996, the
Company  issued its Series C Notes,  which total $22.5 million and bear interest
at a fixed rate of 7.48%.  The Series A Notes mature on December  30, 2001,  and
require annual principal payments of $8.333 million beginning December 30, 1999.
The  Series B and  Series C Notes  mature on  December  30,  2002,  and  require
combined annual principal  payments of $10 million beginning  December 30, 1998.
Interest  on all  series of the notes is  payable  semi-annually  on June 30 and
December 30.

     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 1, 1997, the Company increased its $25,000,000  unsecured  revolving
line of credit  facility to  $50,000,000.  The facility bears interest at a rate
determined  by the ratio of the  Company's  debt to cash  flow from  operations.
Pursuant to the interest rate pricing structure, funds can currently be borrowed
at LIBOR plus 3/4%, the bank's  prevailing prime rate, or the sum of the Federal
Funds  effective rate for such day plus 1/2%.  The facility  matures on July 22,
1999. As of August 12, 1997,  the balance  outstanding  on the revolving line of
credit  amounted  to  $3,000,000  bearing  an  interest  rate  of  6.418%.  This
$3,000,000  balance will be paid in full upon maturity of the  underlying  LIBOR
advance on August 18, 1997.

     From July  1995 to April  1997,  the  Company  and two of its  wholly-owned
subsidiaries  obtained four separate three-year term loans totaling  $1,077,000.
Two of the loans bear  interest  at the rate of  8.413%,  and two at the rate of
7.9%. The proceeds were used for the purchase of certain  property and equipment
which  secures  the  debt.   Monthly   principal  and  interest  payments  total
approximately  $34,000. The balance outstanding on the loans at August 12, 1997,
was $616,000.

     During 1994,  the Company  entered  into a five year capital  lease for the
purchase of a seismic data  processing  center.  Monthly  principal and interest
payments total approximately  $6,000. The balance outstanding under this capital
lease obligation was $117,000 at August 12, 1997.

     In June 1996, a  wholly-owned  subsidiary  of the Company sold a volumetric
production  payment for $19 million to certain limited  partnerships.  Under the
terms of the  production  payment  agreements,  the  Company  conveyed a mineral
property interest of approximately 7.6 billion cubic feet of certain natural gas
and approximately  363,000 barrels of other hydrocarbons to the purchasers.  The
Company  retains  responsibility  for its working  interest share of the cost of
operations. The proceeds of the sale were applied toward the acquisition cost of
certain oil and gas properties.  The Company accounted for the proceeds received
in the transaction as deferred revenue which is being amortized into revenue and
income as natural gas and other  hydrocarbons  are produced and delivered during
the term of the volumetric production payment agreements.

     From  January  1, 1997  through  August  12,  1997,  the  Company  received
$6,781,000  from the exercise of common stock purchase  warrants and options and
the Company's  401(k) stock purchases.  In connection with these exercises,  the
Company will also receive approximately $3,129,000 in tax savings.
<PAGE>

     In February 1996,  the Company called for the March 31, 1996  redemption of
its 9% convertible subordinated debentures,  thereby eliminating future interest
and sinking fund payments.  All remaining  outstanding  debentures  converted to
common stock.

     During  the first  half of 1997,  gross  seismic  data bank  additions  and
capitalized  oil  and  gas   exploration  and  development   costs  amounted  to
$33,742,000 and $14,935,000,  respectively.  These capital expenditures, as well
as taxes,  interest  expenses,  cost of sales  and  general  and  administrative
expenses,  were funded by operations,  borrowings under the Company's  unsecured
revolving line of credit and proceeds received from the exercise of common stock
purchase warrants and options.  Acquisitions of geophysical  equipment and other
property and equipment  were funded  partially by cash from  operations  and the
remainder  through  capital  lease  financing  and term loans.  The  geophysical
equipment and related  capital lease  financing and term loans will no longer be
consolidated with the Company's  consolidated  financial statements after August
11, 1997.

     Currently,  the Company anticipates capital  expenditures for the remainder
of  1997  to  total  approximately  $45  million.   Such  expenditures   include
approximately  $30 million for the creation of  proprietary  seismic  data,  and
approximately  $15 million for oil and gas exploration and development  efforts.
The Company believes its current cash balances,  revenues from operating sources
and  proceeds  from the sale of Eagle  common  stock and the  exercise of common
stock purchase warrants and options,  combined with its available revolving line
of credit, should be sufficient to fund the remaining 1997 capital expenditures,
along with expenditures for operating and general and  administrative  expenses.
Additionally,  the Company could arrange for additional debt or equity financing
during 1997;  however,  there can be no assurance that the Company would be able
to accomplish any such debt or equity financing on terms satisfactory to it.

Information Regarding Forward Looking Statements

     This  Quarterly  Report on Form 10-Q includes  forward  looking  statements
within the meaning of Section 27A of the  Securities Act of 1933 and Section 21E
of the Securities  Exchange Act of 1934.  Although the Company believes that its
expectations are based on reasonable assumptions,  it can give no assurance that
its goals will be achieved. Important factors that could cause actual results to
differ  materially from those in the forward looking  statements herein include,
but are not  limited to,  changes in the  exploration  budgets of the  Company's
seismic data and related  services  customers,  actual  customer  demand for the
Company's seismic data and related services, the extent of the Company's success
in acquiring oil and gas properties and in discovering, developing and producing
reserves,  the timing and extent of changes in commodity prices for natural gas,
crude oil and  condensate  and natural gas liquids and conditions in the capital
markets and equity  markets  during the periods  covered by the forward  looking
statements.


                           PART II - OTHER INFORMATION


Items 1., 2., 3., 4., and 6.   Not applicable.

Item 5.   OTHER INFORMATION.

     On August 11, 1997, the Company's seismic data acquisition crew subsidiary,
Eagle  Geophysical,  Inc.  ("Eagle"),  completed an initial  public  offering of
4,000,000  shares of its common  stock.  The Company also sold  1,880,000 of its
3,400,000 shares of Eagle common stock in the offering as a selling stockholder.
As a result of the  offering,  the  Company now owns  1,520,000  shares of Eagle
Common Stock, or 18.9% of the outstanding  shares of Eagle. The Company received
net proceeds of $29,722,800 from its participation in the offering. In addition,
the Company  granted the  underwriters  of the  offering  30-day  over-allotment
options to purchase up to 100,000  additional  shares of Eagle Common Stock from
the Company, which if exercised in full, will provide additional net proceeds to
the  Company  of   $1,581,000.   If  the   underwriters   exercise  all  of  the
over-allotment  options  granted to them in connection  with the  offering,  the
Company will retain 1,420,000 shares of Eagle Common Stock, or 16.4% of the then
outstanding shares of Eagle.

     Eagle  will  use a  portion  of its  proceeds  from the  offering  to repay
approximately  $16.6  million of  indebtedness  guaranteed  by the  Company  and
approximately $7.8 million of indebtedness owed to the Company.

<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:  August 13,  1997                          /s/Paul A. Frame
                                                  -----------------------------
                                                     Paul A. Frame
                                                     President




Dated:  August 13,  1997                          /s/Debra D. Valice
                                                  -----------------------------
                                                     Debra D. Valice
                                                     Chief Financial Officer




Dated:  August 13,  1997                          /s/Marcia H. Kendrick
                                                  -----------------------------
                                                     Marcia H. Kendrick
                                                     Chief Accounting Officer