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

                                 NOT APPLICABLE
                                 --------------
               Former name, former address and former fiscal year,
                          if changed since last report.

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

                              ----                  ----
                       Yes     X               No
                              ----                  ----

As of May 14, 1997 there were 10,398,509  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
               March 31, 1997 (Unaudited) and December 31, 1996................3

               Consolidated Statements of Operations (Unaudited)
               for the Three Months Ended March 31, 1997 and 1996..............4

               Consolidated Statements of Stockholders' Equity (Unaudited)
               for the Three Months Ended March 31, 1997.......................5

               Consolidated Statements of Cash Flows (Unaudited)
               for the Three Months Ended March 31, 1997 and 1996..............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>


SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share And Per Share Amounts)
<TABLE>
<CAPTION>
                                                               (Unaudited)
                                                                 March 31,         December 31,
                                                                   1997               1996
                                                                ---------           ---------
<S>                                                             <C>              <C>    
ASSETS
   Cash and equivalents                                         $   4,824        $    3,340
   Receivables
     Trade                                                         45,461            52,509
     Notes and other                                                5,185             6,618
   Net data bank                                                  133,265           126,998
   Net oil and gas properties                                      91,025            86,572
   Net geophysical and other property and equipment                21,224            14,022
   Investment in affiliate                                            914               914
   Advances to oil and gas operators                                4,822             1,235
   Prepaid expenses, deferred charges and other assets              4,364             2,471
                                                                 --------          --------

   TOTAL ASSETS                                                 $ 311,084        $  294,679
                                                                 ========          ========

LIABILITIES AND STOCKHOLDERS' EQUITY
   Accounts payable and accrued liabilities                     $  23,916         $  25,130
   Income taxes payable                                               156               302
   Debt
     Senior Notes                                                  75,000            75,000
     Line of credit                                                 5,000                 -
     Term Loans                                                    15,911             9,025
   Obligations under capital leases                                 2,400             2,463
   Contingent payables                                                274               274
   Deferred income taxes                                           10,907             9,793
   Deferred revenue                                                17,580            17,051
                                                                 --------          --------
TOTAL LIABILITIES                                                 151,144           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 10,385,170
     and 10,362,102 at March 31, 1997 and December 31,
     1996, respectively                                               104               104
   Additional paid-in capital                                     105,797           105,544
   Retained earnings                                               55,269            51,185
   Treasury stock, 409 shares at cost at
     March 31, 1997 and December 31, 1996                              (4)               (4)
   Notes receivable from officers and employees                    (1,205)           (1,205)
   Cumulative translation adjustment                                  (21)               17
                                                                 --------          --------
TOTAL STOCKHOLDERS' EQUITY                                        159,940           155,641
                                                                 --------          --------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                      $ 311,084         $ 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 March 31,
                                                         -------------------------
                                                           1997             1996
                                                         ---------       ---------

<S>                                                      <C>             <C>      
REVENUE                                                  $ 27,219        $  20,266


EXPENSES
   Depreciation, depletion and amortization                10,108            8,046
   Cost of sales                                            5,042            3,270
   Selling, general and administrative expenses             4,718            3,503
   Net interest expense                                     1,039              584
                                                          -------          -------
                                                           20,907           15,403
                                                          -------          -------

Income before provision for income taxes                    6,312            4,863

Provision for income taxes                                  2,228            1,799
                                                          -------          -------

NET INCOME                                               $  4,084        $   3,064
                                                          =======          =======

Earnings per share:
   Primary                                               $    .38        $     .31
                                                          =======          =======
   Assuming full dilution                                $    .38        $     .30
                                                          =======          =======

Weighted average number of common and 
   common equivalent shares:
   Primary                                                 10,873           10,036
                                                          =======          =======
   Assuming full dilution                                  10,890           10,241
                                                          =======          =======
</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
                                                                                                            Receivable
                                                    Common Stock      Additional            Treasury Stock     from      Cumulative
                                                 -------------------   Paid-In    Retained  --------------   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          -      -      -            -        -
   Conversion and exchanges of subordinated 
     debentures                                    165,296        2      1,416          -      -      -            -        -
   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 
     debentures                                    214,304        2      1,878          -      -      -            -        -
   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       23,068        -        253          -      -      -            -        -
   Foreign currency translation adjustment               -        -          -          -      -      -            -      (38)
   Net Income                                            -        -          -      4,084      -      -            -        -
                                                -----------    -----   -------    -------   ----    ---       ------    ----

Balance, March 31, 1997 (unaudited)             10,385,170   $  104   $105,797   $ 55,269   (409)  $ (4)     $(1,205)$    (21)
                                                ===========    =====  ========    =======   ====    ===       ======     ====
</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>

                                                                  Three Months Ended March 31,
                                                                  ----------------------------
                                                                     1997             1996
                                                                  -------------    -----------
<S>                                                                <C>             <C>       
Cash flows from operating activities:
   Cash received from customers                                    $    34,695     $   22,979
   Cash paid to suppliers and employees                                (14,822)       (10,813)
   Interest paid                                                          (323)           (82)
   Interest received                                                       136            119
   Income taxes paid                                                       (40)             -
                                                                     ---------      ---------
     Net cash provided by operating activities                          19,646         12,203
                                                                     ---------      ---------

Cash flows from investing activities:
   Cash invested in seismic data                                       (14,910)        (7,365)
   Cash invested in oil and gas properties                              (8,059)        (2,944)
   Cash paid to acquire property and equipment                          (7,067)          (550)
   Cash from disposal of property and equipment                             28             59
   Collections on loans made                                               154             58
                                                                     ---------      ---------
     Net cash used in investing activities                             (29,854)       (10,742)
                                                                     ---------      ---------

Cash flows from financing activities:
   Borrowings under line of credit agreement                            27,000              -
   Principal payments under line of credit                             (22,000)             -
   Borrowings under term loans                                           7,564            433
   Principal payments on term loans                                       (678)          (278)
   Principal payments under capital lease obligations                     (363)          (314)
   Proceeds from issuance of common stock                                  255             27
   Costs of debt and equity transactions                                    (2)           (26)
                                                                     ---------      ---------
     Net cash provided by (used in) financing activities                11,776           (158)
                                                                     ---------      ---------

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

Net increase in cash and equivalents                                     1,484          1,303

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 equivalents at end of period:
  Continuing operations                                                  4,824          7,394
  Discontinued operations                                                    -            385
                                                                     =========      =========
    Total cash and equivalents at end of period                    $     4,824     $    7,779
                                                                     =========      =========
</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>

                                                                             Three Months Ended March 31,
                                                                              -------------------------
                                                                                 1997           1996
                                                                              ----------     ----------
<S>                                                                           <C>            <C>       
Reconciliation of net income to net cash provided by operating activities:
Net income                                                                    $    4,084     $    3,064
Adjustments to reconcile net income to net cash provided by
     operating activities:
   Depreciation, depletion and amortization                                       10,485          8,344
   Deferred income tax provision                                                   1,114            899
   Amortization of deferred revenue                                               (2,253)             -
   Discount on note receivable                                                       (26)             -
   Gain on sale of property and equipment                                            (16)           (22)
   Decrease in receivables                                                         8,278          3,269
   Decrease (increase) in other assets                                            (6,240)           230
   Increase (decrease) in other liabilities                                        4,220         (2,851)
                                                                               ---------      ---------
     Total adjustments                                                            15,562          9,869
                                                                               ---------      ---------
Net cash provided by (used in) operating activities of:
   Continuing operations                                                          19,646         12,933
   Discontinued operations                                                             -           (730)
                                                                               ---------      ---------
                                                                              $   19,646     $   12,203
                                                                               =========      =========
</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, 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 three
months ended March 31, 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
                                            -------------------------------------------------
                                              March 31, 1997               March 31, 1996
                                            --------------------         --------------------
                                                         Fully                        Fully
                                            Primary     Diluted          Primary     Diluted
                                            --------    --------         --------    --------
<S>                                          <C>         <C>               <C>         <C>  
Weighted average shares outstanding          10,368      10,368            9,487       9,487
Common stock equivalents                        505         522              549         754
                                             ------      ------           ------      ------
Weighted average shares used
    for earnings per share                   10,873      10,890           10,036      10,241
                                             ======      ======           ======      ======
</TABLE>


         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 first  quarter of 1997 and 1996,  the pro forma EPS would have been $.39 per
share for basic and $.38 per share for diluted for the first quarter of 1997 and
$.32 per share for basic and $.31 per share for diluted for the first quarter of
1996.
<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, 1997 and 1996,  exploration  and  development  related  overhead
costs of $322,000 and $236,000,  respectively,  have been capitalized to oil and
gas  properties.  For the three months  ended March 31, 1997 and 1996,  interest
costs of $479,000 and $268,000,  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 quarter of 1997,  capital lease obligations  totaling
          $300,000  were  incurred  when the  Company  entered  into  leases for
          property and equipment.

     2.   During the first  three  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 three months of 1996
          have been charged to additional paid-in capital.

<PAGE>

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

RESULTS OF OPERATIONS
---------------------
         
     Total revenue increased 34% during the first quarter of 1997 as compared to
the first quarter of 1996.  Revenue primarily consists of revenue generated from
the seismic business and oil and gas production.

     Seismic revenue increased from $17,881,000 during the first quarter of 1996
to  $19,282,000  during the first  quarter of 1997.  The  increase is  primarily
attributable  to an  increase  in  demand  for  three-dimensional  seismic  data
resulting  in  an  increase  in  proprietary  data  acquisition   performed  for
non-affiliated  parties by the Company's  crew  subsidiary and licensing of data
from the Company's data library.

     Oil and gas revenue  increased from $2,385,000  during the first quarter of
1996 to $7,937,000 during the first quarter of 1997. The increase in oil and gas
revenue is primarily due to higher production resulting from more wells being on
line in the first  quarter of 1997 (99 wells at March 31,  1997) as  compared to
the first  quarter of 1996 (79 wells at March 31, 1996).  Net  production of oil
and gas increased  from 67,000 barrels and 600 million cubic feet (mmcf) for the
first quarter of 1996 to 116,500 barrels and 1,949 mmcf for the first quarter of
1997. Average oil prices received by the Company decreased from $17.36 to $15.45
per barrel for the first  quarter of 1996 and 1997,  respectively.  Average  gas
prices  received  by the Company  increased  from $1.88 to $3.09 per mcf for the
first quarter of 1996 and 1997, respectively.

     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  $6,990,000  during  the first
quarter of 1996 to $5,898,000  during the first quarter of 1997. As a percentage
of revenue from licensing  seismic data, data bank  amortization was 43% and 49%
for the  first  quarter  of 1997 and 1996,  respectively.  These  decreases  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 $4,210,000
relates to  depletion of oil and gas property  costs and  depreciation  of fixed
assets.  The  increase  from  $1,056,000  during  the first  quarter  of 1996 to
$4,210,000  during  the first  quarter of 1997 is due to  increased  oil and gas
production and additional property and equipment.



<PAGE>


         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.  The increase in cost of sales from $3,270,000 for the first
quarter of 1996 to $5,042,000  for the first quarter of 1997 is primarily due to
an increase in the  corresponding  revenue from these areas.  Revenue from these
areas increased from $5,784,000  during the first quarter of 1996 to $12,686,000
during the first quarter of 1997.

         The Company's selling,  general and  administrative  expenses increased
from $3,503,000  during the first quarter of 1996 to $4,718,000 during the first
quarter  of 1997  primarily  as a result of  variable  expenses  related  to the
increased volume of business.  As a percentage of total revenue,  these expenses
were 17% for both the first quarter of 1996 and 1997.

         Net interest  expense  increased  from $584,000 in the first quarter of
1996 to  $1,039,000  in the first  quarter of 1997  primarily  due to additional
amounts  outstanding on the Company's  senior Notes in 1997 as compared to 1996.
During the first quarter of 1996, $52.5 million was outstanding, whereas, during
the first quarter of 1997, $75 million was outstanding.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
         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.
<PAGE>

         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 May 14, 1997, the balance outstanding on the revolving line
of credit amounted to $10,000,000 bearing an interest rate of 6.44%.

         On February 6, 1997, a wholly-owned  subsidiary of the Company obtained
two term loans  aggregating  $7,564,000  for the  purchase of a third 3D seismic
recording  system and other  related  equipment.  The first loan has a principal
amount of $558,000,  is for a term of three years and bears interest at the rate
of 7.73%.  Monthly  principal and interest  payments total $17,000.  The balance
outstanding  on this loan at May 14,  1997 is  $558,000.  The second  loan has a
principal  amount of $7,006,000,  is for a term of five years and bears interest
at the rate of 7.98%. Monthly principal and interest payments on the second term
loan total  $142,000.  The balance  outstanding  on this loan at May 14, 1997 is
$7,006,000.

         On July 9, 1996, a wholly-owned  subsidiary of the Company obtained two
term loans  aggregating  $7,264,000  for the purchase of land and marine seismic
equipment which secures the debt. The first term loan has a principal  amount of
$5,902,000,  is for a term of five years and bears  interest  at the rate of 8%.
Monthly principal and interest payments total $120,000.  The balance outstanding
on this  loan at May 14,  1997  was  $5,160,000.  The  second  term  loan  has a
principal amount of $1,362,000,  is for a term of three years and bears interest
at the rate of 8.06%. Monthly principal and interest payments on the second term
loan total  $43,000.  The balance  outstanding  on this loan at May 14, 1997 was
$1,087,000. The majority of this equipment is under a five year rental agreement
expiring June 30, 2001, whereby the Company receives $138,000 per month.

         From 1993 to April  1997,  the  Company  and three of its  wholly-owned
subsidiaries obtained six separate term loans totaling $5,829,000, five of which
have a three year term and one which has a five year term. Two of the loans bear
interest  at the rate of  8.413%,  two at the  rate of 7.9%,  one at the rate of
7.61% and one at the rate of 7.52%.  The proceeds  were used for the purchase of
certain  property and equipment  which secures the debt.  Monthly  principal and
interest payments total approximately  $134,000.  The balance outstanding on the
loans at May 14, 1997, was $2,133,000.
<PAGE>
         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 will be
amortized  into  revenue  and income as natural gas and other  hydrocarbons  are
produced and  delivered  during the term of the  volumetric  production  payment
agreements.

         During 1994,  1995 and 1997,  the Company  entered  into three  capital
leases  which  relate to the  purchase  of a 3D seismic  recording  system and a
seismic data processing center. These lease agreements are for terms of three to
five  years.   Monthly  principal  and  interest  payments  total  approximately
$127,000.  The balance  outstanding  under these capital lease  obligations  was
$2,262,000 at May 14, 1997.

         During the first quarter of 1997,  the Company  received  $255,000 from
the exercise of common  stock  purchase  warrants and options and the  Company's
401(k) stock  purchases.  From April 1, 1997,  through May 14, 1997, the Company
received  $57,000 from the exercise of common  stock  options and the  Company's
401(k) stock purchases.

         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 quarter of 1997, gross seismic data bank additions and
capitalized  oil  and  gas   exploration  and  development   costs  amounted  to
$12,130,000 and $8,050,000, 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.

         Currently,  the Company  anticipates  capital  expenditures for 1997 to
total  approximately $80 million.  Such expenditures  include  approximately $50
million for the creation of  proprietary  seismic data,  and  approximately  $30
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,  should be sufficient to fund the 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.

<PAGE>

                           PART II - OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS.

        On May 25,  1995,  Seitel  Geophysical,  Inc.  ("SGI"),  a  wholly-owned
subsidiary of the Company,  filed suit in United States  District  Court for the
Eastern  District  of  Louisiana   against   Greenhill   Petroleum   Corporation
("Greenhill") for breach of contract.  This lawsuit was tried in late May, 1996,
and  judgment  was  entered  on June 10,  1996 in favor  of SGI for  damages  of
approximately  $940,000,   including  legal  fees,  expenses,  and  pre-judgment
interest. The trial court denied Greenhill's  counter-claims against SGI. On May
5, 1997,  the United  States Court of Appeals for the Fifth  Circuit  upheld the
trial  court's  judgment  and  modified  it to include  additional  pre-judgment
interest. The Court of Appeals remanded the case to the trial court to determine
the amount of such additional  pre-judgment interest.  Post-judgment interest of
5.62%,  which is based on the rate of one year Treasury Bills  immediately prior
to entry of the judgment, is accruing on the full amount of the judgment.

ITEMS 2., 3., 4., AND 5.   Not applicable.


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

(a)       Exhibits

          10.1      Second  Amendment to Revolving  Credit Agreement dated as of
                    July 22, 1996,  among  Seitel,  Inc. and The First  National
                    Bank of Chicago.

          10.2      Ratable Note in the amount of $20,000,000 among Seitel, Inc.
                    and Bank One, Texas, N.A. dated as of May 1, 1997.

          10.3      Ratable Note in the amount of $30,000,000 among Seitel, Inc.
                    and The First  National  Bank of Chicago  dated as of May 1,
                    1997.


(b)       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 14, 1997                             /s/  Paul A. Frame
                                               ---------------------------------
                                                     Paul A. Frame
                                                     President




Dated: May 14, 1997                             /s/  Debra D. Valice
                                                --------------------------------
                                                     Debra D. Valice
                                                     Chief Financial Officer




Dated: May 14, 1997                             /s/  Marcia H. Kendrick
                                                --------------------------------
                                                     Marcia H. Kendrick
                                                     Chief Accounting Officer