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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 March 31, 1998
                                         --------------
                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 May 11, 1998 there were 22,556,682  shares of the Company's  common stock,
par value $.01 per share, outstanding.


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<PAGE>


                                      INDEX


                                                                            Page
                                                                            ----
PART I.   FINANCIAL INFORMATION

          Item 1.   Financial Statements

          Consolidated Balance Sheets as of
          March 31, 1998 (Unaudited) and December 31, 1997..................  3

          Consolidated Statements of Income and
          Comprehensive Income (Unaudited) for the
          Three Months Ended March 31, 1998 and 1997........................  4

          Consolidated Statements of Stockholders' Equity (Unaudited)
          for the Three Months Ended March 31, 1998.........................  5

          Consolidated Statements of Cash Flows (Unaudited)
          for the Three Months Ended March 31, 1998 and 1997................  6

          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>

<TABLE>
SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
<CAPTION>
                                                                 (Unaudited)
                                                                  March 31,     December 31,
                                                                    1998           1997
                                                                  ---------      ---------
     <S>                                                         <C>            <C>
     ASSETS
        Cash and equivalents                                      $   2,729      $   4,881
        Receivables
          Trade                                                      45,083         44,563
          Notes and other                                             1,726          2,121
        Net data bank                                               194,349        180,936
        Net oil and gas properties                                  120,344        112,915
        Net other property and equipment                              2,438          2,349
        Investment in affiliate                                      15,227         15,054
        Prepaid expenses, deferred charges and other assets           3,174          2,863
                                                                  ---------      ---------

        TOTAL ASSETS                                              $ 385,070      $ 365,682
                                                                  =========      =========

     LIABILITIES AND STOCKHOLDERS' EQUITY
        Accounts payable and accrued liabilities                  $  36,248      $  28,014
        Payable to affiliate                                         11,100         12,500
        Income taxes payable                                          2,120          1,242
        Debt
          Senior Notes                                               75,000         75,000
          Line of credit                                             18,000         15,000
          Term loans                                                    375            477
        Obligations under capital leases                                 66             89
        Contingent payables                                             274            274
        Deferred income taxes                                        19,406         18,050
        Deferred revenue                                             10,234          7,763
                                                                  ---------      ---------
     TOTAL LIABILITIES                                              172,823        158,409
                                                                  ---------      ---------

     CONTINGENCIES AND COMMITMENTS

     STOCKHOLDERS' EQUITY
        Preferred stock, par value $.01 per share; authorized
          5,000,000 shares; none issued                                  --             --
        Common stock, par value $.01 per share; authorized
          50,000,000 shares; issued and outstanding
          22,553,682 and 22,548,408 at March 31, 1998
          and December 31,1997, respectively                            226            225
        Additional paid-in capital                                  128,488        128,406
        Retained earnings                                            87,607         82,742
        Treasury stock, 175,818 shares at cost at
          March 31, 1998 and December 31, 1997                       (2,977)        (2,977)
        Notes receivable from officers and employees                 (1,109)        (1,109)
        Accumulated other comprehensive income (loss)                    12            (14)
                                                                  ---------      ---------
     TOTAL STOCKHOLDERS' EQUITY                                     212,247        207,273
                                                                  ---------      ---------

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                   $ 385,070      $ 365,682
                                                                  =========      =========
</TABLE>


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


<PAGE>


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

                                                                            Three Months Ended
                                                                                 March 31,
                                                                          ----------------------
                                                                            1998          1997
                                                                          --------      --------

     <S>                                                                  <C>           <C>     
     REVENUE                                                              $ 30,927      $ 27,219


     EXPENSES
        Depreciation, depletion and amortization                            15,156        10,108
        Cost of sales                                                        1,129         5,042
        Selling, general and administrative expenses                         5,950         4,718
                                                                          --------      --------
                                                                            22,235        19,868
                                                                          --------      --------

     INCOME FROM OPERATIONS                                                  8,692         7,351

     Interest expense, net                                                    (995)       (1,039)
     Equity in earnings of affiliate                                            41            --
                                                                          --------      --------

     Income before provision for income taxes                                7,738         6,312
     Provision for income taxes                                              2,873         2,228
                                                                          --------      --------

     NET INCOME                                                              4,865         4,084

     Other comprehensive income, net of tax:
        Foreign currency translation adjustments,
          net of income tax expense of $8 and $0                                26           (38)
                                                                          --------      --------
     Comprehensive income                                                 $  4,891      $  4,046
                                                                          ========      ========

     Net income per share:
        Basic                                                             $    .22      $    .20
                                                                          ========      ========
        Diluted                                                           $    .21      $    .19
                                                                          ========      ========


     Weighted average number of common and common equivalent shares:
        Basic                                                               22,552        20,736
                                                                          ========      ========
        Diluted                                                             22,968        21,746
                                                                          ========      ========
</TABLE>


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


<PAGE>




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

<S>                              <C>          <C>      <C>         <C>         <C>       <C>           <C>             <C>   
Balance, December 31, 1996       10,362,102   $ 104    $ 105,544   $ 51,185       (409)  $    (4)      $  (1,205)      $   17

   Net proceeds from issuance
       of common stock              912,472       8       17,318         --                   --              --           --
   Two-for-one stock split       11,273,834     113         (113)        --       (409)       --              --           --
   Tax reduction from exercise
       of stock options                  --      --        5,657         --         --        --              --           --
   Treasury stock purchased              --      --           --         --   (175,000)   (2,973)             --           --
   Payments received on notes
       receivable from officers
       and employees                     --      --           --         --         --        --              96           --
   Foreign currency translation
       adjustment                        --      --           --         --         --        --              --          (31)
   Net income                            --      --           --     31,557         --        --              --           --
                                 ----------   -----    ---------   --------   --------   -------       ---------       ------

Balance, December 31, 1997       22,548,408     225      128,406     82,742   (175,818)   (2,977)         (1,109)         (14)

   Net proceeds from
       issuance of
       common stock                   5,274       1           82         --         --        --              --           --
   Foreign currency translation
       adjustment                        --      --           --         --         --        --              --           26
   Net income                            --      --           --      4,865         --        --              --           --
                                 ----------   -----    ---------   --------   --------   -------       ---------       ------

Balance, March 31, 1998
       (unaudited)               22,553,682   $ 226    $ 128,488   $ 87,607   (175,818)  $(2,977)      $  (1,109)      $   12
                                 ==========   =====    =========   ========   ========   =======       =========       ======
</TABLE>





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


<PAGE>



<TABLE>
SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
<CAPTION>

                                                                           Three Months Ended
                                                                                 March 31,
                                                                          ----------------------
                                                                            1998          1997
                                                                          --------      --------
     <S>                                                                  <C>           <C> 
     Cash flows from operating activities:
        Cash received from customers                                      $ 33,809      $ 34,695
        Cash paid to suppliers and employees                                (2,651)      (14,822)
        Interest paid                                                         (298)         (323)
        Interest received                                                       33           136
        Income taxes paid                                                     (646)          (40)
                                                                          --------      --------
          Net cash provided by operating activities                         30,247        19,646
                                                                          --------      --------

     Cash flows from investing activities:
        Cash invested in seismic data                                      (23,435)      (14,910)
        Cash invested in oil and gas properties                            (11,593)       (8,059)
        Cash paid to acquire property and equipment                           (299)       (7,067)
        Cash from disposal of property and equipment                            --            28
        Collections on loans made                                               --           154
                                                                          --------      --------
          Net cash used in investing activities                            (35,327)      (29,854)
                                                                          --------      --------

     Cash flows from financing activities:
        Borrowings under line of credit agreement                            6,000        27,000
        Principal payments under line of credit                             (3,000)      (22,000)
        Borrowings under term loans                                             --         7,564
        Principal payments on term loans                                      (102)         (678)
        Principal payments under capital lease obligations                     (23)         (363)
        Proceeds from issuance of common stock                                  84           255
        Costs of debt and equity transactions                                   (1)           (2)
                                                                          --------      --------
          Net cash provided by financing activities                          2,958        11,776
                                                                          --------      --------

     Effect of exchange rate changes                                           (30)          (84)
                                                                          --------      --------

     Net increase (decrease) in cash and equivalents                        (2,152)        1,484

     Cash and cash equivalents at beginning of period                        4,881         3,340
                                                                          --------      --------

     Cash and equivalents at end of period                                $  2,729      $  4,824
                                                                          ========      ========
</TABLE>





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


<PAGE>


<TABLE>
SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited), continued
(In thousands)
<CAPTION>
                                                                             Three Months Ended 
                                                                                  March 31,
                                                                          ----------------------
                                                                            1998          1997
                                                                          --------      --------
     <S>                                                                  <C>           <C>
     Reconciliation of net income to net cash 
          provided by operating activities:
     Net income                                                           $  4,865      $  4,084
     Adjustments to reconcile net income to net cash 
          provided by operating activities:
        Depreciation, depletion and amortization                            15,156        10,485
        Deferred income tax provision                                        1,356         1,114
        Equity in earnings of affiliate                                        (41)           --
        Amortization of deferred revenue                                        --        (2,253)
        Discount on note receivable                                             --           (26)
        Gain on sale of property and equipment                                  --           (16)
        Decrease (increase) in receivables                                    (113)        8,278
        Increase in other assets                                              (350)       (6,240)
        Increase in accounts payable and other liabilities                   9,374         4,220
                                                                          --------      --------
          Total adjustments                                                 25,382        15,562
                                                                          --------      --------

     Net cash provided by operating activities                            $ 30,247      $ 19,646
                                                                          ========      ========



     Supplemental schedule of non-cash investing activities:
        Capital lease obligations incurred                                $     --      $    300
                                                                          ========      ========
</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)
March 31, 1998

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 three
months ended March 31, 1998 are not  necessarily  indicative of the results that
may be expected for the year ending December 31, 1998. For further  information,
refer to the financial  statements and notes thereto for the year ended December
31, 1997.

     In accordance with Statement of Financial Accounting Standards ("SFAS") No.
130, "Reporting  Comprehensive  Income," the Company has reported  comprehensive
income  for the  quarters  ended  March  31,  1998 and 1997.  Accumulated  other
comprehensive income consists of foreign currency translation adjustments.

NOTE B-EARNINGS PER SHARE

     In accordance  with SFAS No. 128,  "Earnings per Share," basic earnings per
share  is  computed  based  on the  weighted  average  shares  of  common  stock
outstanding during the periods.  Diluted earnings per share is computed based on
the weighted  average shares of common stock plus the assumed issuance of common
stock for all potentially diluted securities. Earnings per share computations to
reconcile basic and diluted net income for the three months ended March 31, 1998
and 1997 consist of the following (in thousands except per share amounts):
<TABLE>
<CAPTION>

                                                                            Three Months Ended 
                                                                                  March 31,
                                                                          ----------------------
                                                                            1998          1997
                                                                          --------      --------

     <S>                                                                  <C>           <C>     
     Net income                                                           $  4,865      $  4,084
                                                                          ========      ========

     Basic weighted average shares                                          22,552        20,736
     Effect of dilutive securities: (1)<F1>
        Options and warrants                                                   416         1,010
                                                                          --------      --------
     Diluted weighted average shares                                        22,968        21,746
                                                                          ========      ========
     Per share income:
        Basic                                                             $    .22      $    .20
        Diluted                                                           $    .21      $    .19
                                                                            
------------------ 

<FN>
(1)<F1>   A weighted average  quarter-to-date  number of options and warrants to
          purchase 2,468,000 and 176,000 shares of common stock were outstanding
          during the first quarter of 1998 and 1997, respectively,  but were not
          included in the  computation of diluted per share income because their
          exercise  prices were  greater  than the average  market  price of the
          common shares.
</FN>
</TABLE>
<PAGE>


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 its 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  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  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 three months
ended March 31, 1998 and 1997,  exploration  and  development  related  overhead
costs of $421,000 and $322,000,  respectively,  have been capitalized to oil and
gas  properties.  For the three months  ended March 31, 1998 and 1997,  interest
costs of $608,000 and $479,000,  respectively,  have been capitalized to oil and
gas properties.

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

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

     Total revenue was $30,927,000 and $27,219,000 in the first quarters of 1998
and 1997,  respectively,  representing  an  increase of 14%.  Revenue  primarily
consists of revenue generated from the marketing of seismic data and oil and gas
production.  Additionally,  the  first  quarter  of  1997  includes  revenue  of
$4,900,000 related to proprietary seismic data acquisition services performed by
Eagle Geophysical, Inc. ("Eagle") which was spun-off on August 11, 1997.

     Revenue  from the  marketing  of seismic data  increased  from  $14,382,000
during the first  quarter  of 1997 to  $26,316,000  during the first  quarter of
1998.  The  increase  is  primarily  attributable  to an  increase in demand for
high-resolution  seismic data,  which is being used  increasingly in oil and gas
exploration and development efforts.

     Oil and gas revenue  decreased from $7,937,000  during the first quarter of
1997 to $4,611,000 during the first quarter of 1998. The decrease in oil and gas
revenue  was  caused by both  lower  production  volumes  and prices in the 1998
quarter.   The  production  decline  from  certain  of  the  Company's  shallow,
short-lived  producing properties has not yet been offset by production from new
wells coming  on-line.  First quarter 1998 production  volumes were  essentially
flat with the fourth quarter of 1997 volumes.  Net volume and price  information
for the Company's oil and gas production for the first quarters of 1998 and 1997
is summarized in the following table:

                                                         Quarter Ended
                                                           March 31,
                                                    ----------------------
                                                      1998          1997
                                                    --------      --------

  Natural gas volumes (mmcf)                           1,357         1,949
  Average natural gas price ($/mcf)                 $   2.40      $   3.09
  Crude oil/condensate volumes (mbbl)                     93           116
  Average crude oil/condensate price ($/bbl)        $  13.67      $  15.45
<PAGE>
     Depreciation,  depletion and amortization  consists  primarily of data bank
amortization  and depletion of oil and gas  properties.  Data bank  amortization
increased from $5,898,000 during the first quarter of 1997 to $11,972,000 during
the first  quarter of 1998. As a percentage  of revenue from  licensing  seismic
data, data bank  amortization was 46% and 43% for the first quarters of 1998 and
1997,  respectively.  These changes between periods 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.

     Depletion of oil and gas properties was $3,597,000 for the first quarter of
1997 compared to $2,975,000  for the first  quarter of 1998,  which  amounted to
$1.36 and $1.55, respectively, per mcfe of gas produced during such periods. The
increase in the rate reflects the amount of exploration  and  development  costs
incurred increasing at a higher rate than the proven reserve base.

     Cost of sales consists of expenses  associated  with oil and gas production
and seismic resale  support  services,  as well as  geophysical  services in the
first  quarter of 1997.  The decrease in cost of sales from  $5,042,000  for the
first quarter of 1997 to  $1,129,000  for the first quarter of 1998 is primarily
due  to  the  first  quarter  1997  including  cost  of  sales  associated  with
geophysical  services  of  $3,625,000  whereas in 1998 there are none due to the
spin-off of Eagle in 1997.  Oil and gas  production  costs  amounted to $.55 per
mcfe of gas produced in the first  quarter of 1998  compared to $.49 per mcfe in
1997.

     The Company's selling,  general and administrative  expenses increased from
$4,718,000  during  the first  quarter  of 1997 to  $5,950,000  during the first
quarter  of 1998  primarily  as a result of  variable  expenses  related  to the
increased  volume of business  and the addition of employees to meet the demands
of the increased  level of activities.  As a percentage of total revenue,  these
expenses  were 17% in the first  quarter of 1997 and 19% in the first quarter of
1998.

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

     On  March  16,  1998,  the  Company  increased  its  $50,000,000  unsecured
revolving line of credit facility to $75,000,000. 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
March 16, 2001.  As of May 11, 1998,  the balance  outstanding  on the revolving
line of credit amounted to $36,000,000 bearing an interest rate of 6.44%.

     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 may 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,  up to an aggregate of $41,041,600  pursuant to an
effective "shelf" registration  statement filed with the Securities and Exchange
Commission.

     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 May 11, 1998, was
$334,000.
<PAGE>
     The Company owns  1,520,000  shares of Eagle common stock.  As of March 31,
1998, the market value of the Company's  remaining  equity interest in Eagle was
$24,510,000,  based on the March 31, 1998 closing  price of $16.125 per share as
quoted by NASDAQ. These shares are subject to certain trading restrictions.

     From January 1, 1998,  through May 11, 1998, the Company received  $111,000
from the  exercise  of  common  stock  purchase  warrants  and  options  and the
Company's 401(k) stock purchases.

     During December 1997, the Company  repurchased 175,000 shares of its common
stock in the open market at a cost of $2,973,000, pursuant to a stock repurchase
program authorized by the Board of Directors on December 12, 1997. The Board has
authorized  expenditures  of up to $25  million  towards the  repurchase  of its
common stock.

     During the first three months of 1998,  gross  seismic data bank  additions
and  capitalized  oil and gas  exploration  and  development  costs  amounted to
$25,386,000 and $10,404,000,  respectively.  These capital expenditures, as well
as taxes,  interest  expenses,  cost of sales  and  general  and  administrative
expenses, were funded by operations and borrowings under the Company's revolving
line of credit.

     Currently,  the Company anticipates capital  expenditures for the remainder
of  1998  to  total  approximately  $131  million.   Such  expenditures  include
approximately  $105 million for the creation of  proprietary  seismic data,  and
approximately  $26 million for oil and gas exploration and development  efforts.
The Company believes its current cash balances,  revenues from operating sources
and proceeds  from the exercise of common stock  purchase  warrants and options,
combined with its available revolving line of credit and project financing where
applicable,  should be sufficient to fund the 1998 capital  expenditures,  along
with  expenditures  for  operating  and  general  and  administrative  expenses.
Additionally,  the Company could arrange for additional debt or equity financing
during 1998;  however,  there can be no assurance that the Company would be able
to accomplish any such debt or equity financing on satisfactory terms.

Recent Accounting Pronouncements
--------------------------------

     In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information." Under the
new standard,  companies  will be required to report certain  information  about
operating  segments  in  consolidated  statements.  Operating  segments  will be
determined  based on the method by which  management  organizes its business for
making operating decisions and assessing performance. The standard also requires
that companies report certain information about their products and services, the
geographic areas in which they operate, and their major customers.  SFAS No. 131
is effective for financial  statements for periods  beginning after December 15,
1997.

     The American Institute of Certified Public Accountants has issued Statement
of Position ("SOP") 98-5, "Reporting on the Costs of Start-Up Activities." Under
this SOP, all costs of start-up  activities and  organizational  costs are to be
expensed as incurred.  SOP 98-5 is effective  for fiscal years  beginning  after
December 15, 1998, although earlier implementation is permitted. As of March 31,
1998,  the Company had not adopted this SOP;  however,  the Company  anticipates
that  the  application  of this  SOP will  not  have a  material  effect  on its
consolidated financial statements.

<PAGE>
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. through 6.   Not applicable.
-------------------

<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:    May  13,  1998                     /s/  Paul A. Frame
                                             -----------------------------------
                                                  Paul A. Frame
                                                  President




Dated:    May  13,  1998                     /s/  Debra D. Valice
                                             -----------------------------------
                                                  Debra D. Valice
                                                  Chief Financial Officer




Dated:    May  13,  1998                     /s/  Marcia H. Kendrick
                                             -----------------------------------
                                                  Marcia H. Kendrick
                                                  Chief Accounting Officer