----

 

**UNITED STATESSECURITIES 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, 2006

 

OR

 

[    ]

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

 

Commission File Number: 0-14488

 

**SEITEL, INC.**

(Exact name of registrant as specified in its charter)
   
Delaware

76-0025431

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)
      
10811 S. Westview Circle Drive
   
Building C, Suite 100

Houston, Texas

77043

(Address of principal executive offices)

(Zip Code)
      
Registrant's telephone  number, including area code:

(713) 881-8900

 

Indicate by check markwhether the registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements for thepast 90 days.

 

Yes

[X]

No

[  ]

 

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, or anon-accelerated filer.  See definition of "accelerated filer and largeaccelerated filer" in Rule 12b-2 of the Exchange Act.  (Check one):

 

Large accelerated filer

[  ]

Accelerated filer

[X]

Non-accelerated filer

[  ]

 

Indicateby check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act).

 

Yes

[  ]

No

[X]

Indicate by check mark whether theregistrant has filed all documents and reports required to be filed by Section12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to thedistribution of securities under a plan confirmed by a court.

 

Yes

[X]

No

[  ]

As of July 31, 2006,there were 155,343,662 shares of the Company's common stock, par value $.01 pershare outstanding.
**** **INDEX** 

   
Page
PART I.

FINANCIAL  INFORMATION

    

Item 1.

Financial Statements

3

   

Condensed  Consolidated Balance Sheets as of

June 30, 2006  (Unaudited) and December 31, 2005

3

   

Condensed  Consolidated Statements of Operations (Unaudited)

for the  Three Months Ended June 30, 2006 and 2005

4

   

Condensed  Consolidated Statements of Operations (Unaudited)

for the Six  Months Ended June 30, 2006 and 2005

5

   

Condensed  Consolidated Statements of Comprehensive Income (Loss) (Unaudited)  

for the  Three and Six Months Ended June 30, 2006 and 2005

6

   

Condensed  Consolidated Statements of Stockholders' Equity

for the Six Months			Ended June 30, 2006 (Unaudited) 

7

   

Condensed Consolidated  Statements of Cash Flows (Unaudited)

for the Six  Months Ended June 30, 2006 and 2005

8

   

Notes to Condensed  Consolidated Interim Financial Statements

9

    

Item 2.

Management's  Discussion and Analysis of

Financial  Condition and Results of Operations

26

    

Item 3.

Quantitative  and Qualitative Disclosures About Market Risk

35

    

Item 4.

Controls and			Procedures 

35

   
PART II.

OTHER  INFORMATION

    

Item 1.

Legal  Proceedings

36

    

Item 1.A.

Risk Factors 

36

    

Item 2.

Unregistered Sales of			Equity Securities and Use of Proceeds 

36

    

Item 4.

Submission  of Matters to a Vote of Security Holders

36

    

Item 6.

Exhibits

37

   

Signatures

38
 *(INDEX)***PART I - FINANCIAL INFORMATION****Item 1.     FINANCIAL STATEMENTS******SEITEL, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS*(In thousands, except share and per share amounts)* 

(Unaudited)

June 30,

December 31,

2006

2005

ASSETS

     Cash and cash equivalents

$

88,328

$

78,097

     Restricted cash

102

85

     Receivables

         Trade, net of  allowance for doubtful accounts of

            $1,035 and  $900, respectively

43,668

27,385

         Notes and  other, net of allowance for doubtful accounts

            of $275 and  $275, respectively

1,146

509

     Net seismic data  library, net of accumulated amortization

         of $927,802  and $879,365, respectively

123,778

111,946

     Net property and equipment, net of  accumulated depreciation

         and amortization of $28,257and $27,552,  respectively

8,622

9,456

     Oil and gas  operations held for sale

358

194

     Investment in  marketable securities

74

54

     Prepaid expenses,  deferred charges and other 

14,008

13,071

     Deferred income  taxes

5,611

5,874

     TOTAL ASSETS

$

285,695

$

246,671

     

LIABILITIES AND  STOCKHOLDERS' EQUITY

     LIABILITIES

         Accounts  payable and accrued liabilities

$

38,383

$

25,666

         Income taxes  payable

43

276

         Oil and gas  operations held for sale

148

40

         Debt

            Senior  Notes

185,522

185,272

            Notes  payable

361

378

         Obligations  under capital leases

3,065

2,950

         Deferred  revenue

47,945

43,250

     TOTAL LIABILITIES

275,467

257,832

     

COMMITMENTS AND  CONTINGENCIES 

     

STOCKHOLDERS' EQUITY

         Preferred  stock, par value $.01 per share; authorized

             5,000,000  shares; none issued

-

-

         Common stock,  par value $.01 per share; authorized

             400,000,000  shares; issued and outstanding 155,387,831 shares

             at June 30,  2006 and 153,604,345 shares at December 31, 2005

1,554

1,536

         Additional  paid-in capital

239,363

241,289

         Retained  deficit

(236,869

)

(256,227

)

         Deferred  compensation - restricted stock

-

(2,944

)

         Notes  receivable from officers and employees for stock purchases 

-

(1

)

         Accumulated  other comprehensive income

6,180

5,186

     TOTAL  STOCKHOLDERS' EQUITY (DEFICIT)

10,228

(11,161

)

TOTAL LIABILITIES AND  STOCKHOLDERS' EQUITY

$

285,695

$

246,671

  The accompanying notes are an integral part of these condensed consolidated financial statements. *(INDEX)*SEITEL, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)*(In thousands, except per share amounts)* 

Three Months Ended June 30,

2006

2005

                     
REVENUE

$

48,542

$

35,961

                     
EXPENSES

       Depreciation and amortization

23,034

23,665

       Loss on sale of seismic data

26

-

       Cost of sales

55

49

       Selling, general and administrative expenses

8,906

7,318

32,021

31,032

                     
INCOME FROM OPERATIONS

16,521

4,929

                     
Interest expense, net

(4,989

)

(6,029

)

Foreign currency exchange gains (losses)

1,295

(625

)

Loss on sale of security

-

(11

)

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