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


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

          For the quarterly period ended June 30, 1999
                                         -------------
                OR

-----
|   |     TRANSITION  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES
-----     EXCHANGE ACT OF 1934
          For the transition period        to       .
                                    ------    ------
          Commission File Number 0-14488
                                 -------


                                  SEITEL, INC.
               (Exact name of registrant as specified in charter)

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

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

                                 (713) 881-8900
                                 --------------
              (Registrant's telephone number, including area code)

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

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

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

As of August 12,  1999  there were  24,285,795  shares of the  Company's  common
stock, par value $.01 per share, outstanding.


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--------------------------------------------------------------------------------


<PAGE>


                                                                           Page
                                                                           ----
PART I.            FINANCIAL INFORMATION

           Item 1.  Financial Statements

           Consolidated Balance Sheets as of
           June 30, 1999 (Unaudited) and December 31, 1998................   3

           Consolidated Statements of Income  (Unaudited) for the
           Three Months Ended June 30, 1999 and 1998......................   4

           Consolidated Statements of Income  (Unaudited) for the
           Six Months Ended June 30, 1999 and 1998........................   5

           Consolidated Statements of Stockholders' Equity (Unaudited)
           for the Six Months Ended June 30, 1999.........................   6

           Consolidated Statements of Cash Flows (Unaudited)
           for the Six Months Ended June 30, 1999 and 1998................   7

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

           Item 2.  Management's Discussion and Analysis of
                    Financial Condition and Results of Operations.........  12

           Item 3.  Quantitative and Qualitative Disclosures
                    about Market Risk.....................................  17

PART II.   OTHER INFORMATION..............................................  17
<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
                                                          (Unaudited)
                                                           June 30,    December 31,
                                                              1999         1998
                                                           ---------    ---------
<S>                                                        <C>          <C>
ASSETS

   Cash and equivalents                                    $   2,776    $   3,161
   Receivables
     Trade, net of allowance                                  48,973       59,244
     Notes and other                                             561          581
   Net data bank                                             314,074      262,950
   Net oil and gas properties                                158,651      148,977
   Net other property and equipment                            2,451        2,294
   Investment in marketable securities                         2,050         --
   Investment in affiliate                                        --       15,544
   Prepaid expenses, deferred charges and other assets         5,126        3,016
                                                           ---------    ---------

   TOTAL ASSETS                                            $ 534,662    $ 495,767
                                                           =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY

   Accounts payable and accrued liabilities                $  44,177    $  71,555
   Income taxes payable                                          232        1,056
   Debt
     Senior Notes                                            203,000       65,000
     Line of credit                                           12,312       85,500
     Term loans                                                   98          172
   Obligations under capital leases                               --           18
   Contingent payables                                           274          274
   Deferred income taxes                                      29,508       28,039
   Deferred revenue                                            1,532        6,566
                                                           ---------    ---------
TOTAL LIABILITIES                                            291,133      258,180
                                                           ---------    ---------

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
     24,285,795 and 23,804,508 at June 30, 1999
     and December 31,1998, respectively                          243          238
   Additional paid-in capital                                147,843      141,826
   Retained earnings                                         106,362      107,102
   Treasury stock, 175,818 shares at cost at
     June 30, 1999 and December 31, 1998                      (2,977)      (2,977)
   Notes receivable from officers and employees               (7,410)      (8,651)
   Accumulated other comprehensive income (loss)                (532)          49
                                                           ---------    ---------
TOTAL STOCKHOLDERS' EQUITY                                   243,529      237,587
                                                           ---------    ---------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                 $ 534,662    $ 495,767
                                                           =========    =========
</TABLE>

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

SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
                                                                      Three Months
                                                                     Ended June 30,
                                                                  --------------------
                                                                    1999        1998
                                                                  --------    --------
<S>                                                               <C>         <C>
REVENUE                                                           $ 34,127    $ 36,976


EXPENSES

   Depreciation, depletion and amortization                         15,048      17,726
   Cost of sales                                                     1,187       1,350
   Selling, general and administrative expenses                      7,278       6,472
                                                                  --------    --------
                                                                    23,513      25,548
                                                                  --------    --------

INCOME FROM OPERATIONS                                              10,614      11,428

Interest expense, net                                               (2,860)     (1,402)
Equity in earnings of affiliate                                         --          84
                                                                  --------    --------

Income before provision for income taxes                             7,754      10,110
Provision for income taxes                                           2,879       3,741
                                                                  --------    --------

NET INCOME                                                        $  4,875    $  6,369
                                                                  ========    ========

Net income per share:

   Basic                                                          $    .20    $    .28
                                                                  ========    ========
   Diluted                                                        $    .20    $    .28
                                                                  ========    ========

Weighted average number of common and
   common equivalent shares:

   Basic                                                            23,809      22,592
                                                                  ========    ========
   Diluted                                                          24,844      23,115
                                                                  ========    ========
</TABLE>

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

SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
                                                                       Six Months
                                                                     Ended June 30,
                                                                  --------------------
                                                                    1999        1998
                                                                  --------    --------
<S>                                                               <C>         <C>
REVENUE                                                           $ 72,008    $ 67,903

EXPENSES

   Depreciation, depletion and amortization                         32,787      32,882
   Cost of sales                                                     2,479       2,479
   Selling, general and administrative expenses                     14,482      12,422
                                                                  --------    --------
                                                                    49,748      47,783
                                                                  --------    --------

INCOME FROM OPERATIONS                                              22,260      20,120

Interest expense, net                                               (5,023)     (2,397)
Equity in earnings (loss) of affiliate                                 (91)        125
Impairment due to dividend distribution
   of affiliate stock                                               (7,794)         --
                                                                  --------    --------

Income before provision for income taxes                             9,352      17,848
Provision for income taxes                                           3,727       6,614
                                                                  --------    --------

NET INCOME                                                        $  5,625    $ 11,234
                                                                  ========    ========

Net income per share:

   Basic                                                          $    .24    $    .50
                                                                  ========    ========
   Diluted                                                        $    .23    $    .49
                                                                  ========    ========


Weighted average number of common and
   common equivalent shares:

   Basic                                                            23,720      22,572
                                                                  ========    ========
   Diluted                                                          24,318      23,041
                                                                  ========    ========
</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  Accumulated
                                        Common Stock       Additional            Treasury Stock      from        Other
                         Comprehensive------------------    Paid-In   Retained   ---------------  Officers &  Comprehensive
                             Income     Shares    Amount    Capital   Earnings   Shares   Amount   Employees    Income
                            --------  ----------  ------    -------    -------   -------  ------   --------   ----------
<S>                        <C>        <C>        <C>       <C>        <C>       <C>       <C>     <C>        <C>

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                     106,067       1        983          -         -       -          -            -
   Tax reduction from
     exercise
     of stock options                          -       -        344          -         -       -          -            -
   Sale of common stock to
     officers and employees              794,300       8      8,183          -         -       -     (8,191)           -
   Acquisition of oil and
     gas properties                      355,733       4      3,910          -         -       -          -            -
   Payments received on
     notes receivable from
     officers and employees                    -       -          -          -         -       -        649            -
   Net income              $  24,360           -       -          -     24,360         -       -          -            -
   Foreign currency
     translation
     adjustments net of
     income tax expense
     of $67                       63           -       -          -          -         -       -          -           63
                            --------
   Comprehensive income    $  24,423
                            ========  ----------  ------    -------    -------   -------  ------   --------   ----------

Balance, December 31, 1998            23,804,508 $   238   $141,826   $107,102  (175,818)$(2,977) $  (8,651) $        49

   Net proceeds from
     issuance
     of common stock                     481,287       5      5,138          -         -       -          -            -
   Tax reduction from
     exercise
     of stock options                          -       -        879          -         -       -          -            -
   Payments received on
     notes receivable from
     officers and employees                    -       -          -          -         -       -      1,241            -
   Distribution of Eagle
     Geophysical, Inc.
     shares                                    -       -          -     (6,365)        -       -          -            -
   Net income              $   5,625           -       -          -      5,625         -       -          -            -
   Foreign currency
     translation
     adjustments net of
     income tax expense
     of $8                       (69)          -       -          -          -         -       -          -          (69)
   Unrealized loss on
     marketable securities
     net of income tax
     benefit of $512            (512)          -       -          -          -         -       -          -         (512)
                            --------
   Comprehensive income    $   5,044
                            ========  ----------  ------    -------    -------   -------  ------   --------   ----------
Balance, June 30, 1999
     (unaudited)                      24,285,795 $   243   $147,843   $106,362  (175,818)$(2,977) $  (7,410) $      (532)
                                      ==========  ======    =======    =======   =======  ======   ========   ==========
</TABLE>

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

SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                       Six Months
                                                                     Ended June 30,
                                                                  --------------------
                                                                    1999        1998
                                                                  --------    --------
<S>                                                               <C>         <C>
Cash flows from operating activities:

   Cash received from customers                                   $  70,882   $  66,402
   Cash paid to suppliers and employees                             (18,962)    (10,737)
   Interest paid                                                     (1,683)     (2,341)
   Interest received                                                    327          44
   Income taxes paid                                                 (1,766)     (2,483)
                                                                  ---------   ---------
     Net cash provided by operating activities                       48,798      50,885
                                                                  ---------   ---------

Cash flows from investing activities:

   Cash invested in seismic data                                    (92,291)    (72,864)
   Cash invested in oil and gas properties                          (22,360)    (24,204)
   Cash paid to acquire property and equipment                         (616)       (497)
   Cash from disposal of property and equipment                          --          14
   Investment in marketable securities                               (3,043)         --
                                                                  ---------   ---------
     Net cash used in investing activities                         (118,310)    (97,551)
                                                                  ---------   ---------

Cash flows from financing activities:

   Borrowings under line of credit agreement                         40,282      54,063
   Principal payments under line of credit                         (113,470)    (10,313)
   Principal payments on term loans                                     (74)       (196)
   Principal payments on capital lease obligations                      (18)        (41)
   Proceeds from issuance of senior notes                           138,000          --
   Proceeds from issuance of common stock                             5,175         934
   Costs of debt and equity transactions                             (2,034)         (1)
   Payments on notes receivable from officers and employees           1,241          --
                                                                  ---------   ---------
     Net cash provided by financing activities                       69,102      44,446
                                                                  ---------   ---------

Effect of exchange rate changes                                          25          48
                                                                  ---------   ---------

Net increase in cash and equivalents                                   (385)     (2,172)

Cash and equivalents at beginning of period                           3,161       4,881
                                                                  ---------   ---------
Cash and equivalents at end of period                             $   2,776   $   2,709
                                                                  =========   =========
</TABLE>

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



SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited), CONTINUED
(IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                             Six Months
                                                                           Ended June 30,
                                                                        --------------------
                                                                          1999         1998
                                                                        --------    --------
<S>                                                                     <C>         <C>
Reconciliation of net income to net cash provided by
   operating activities:

Net income                                                              $  5,625    $ 11,234
Adjustments to reconcile net income to net cash provided by
   operating activities:

   Impairment due to dividend distribution of
     affiliate stock                                                       7,794          --
   Depreciation, depletion and amortization                               32,787      32,882
   Deferred income tax provision                                           1,938       3,192
   Non-cash sales                                                         (6,363)         --
   Equity in loss (earnings) of affiliate                                     91        (125)
   Gain on sale of property and equipment                                     --         (11)
   Decrease (increase) in receivables                                     10,291      (5,465)
   Decrease (increase) in other assets                                      (288)        371
   Increase (decrease) in accounts payable and other liabilities          (3,077)      8,807
                                                                        --------    --------
     Total adjustments                                                    43,173      39,651
                                                                        --------    --------

Net cash provided by operating activities                               $ 48,798    $ 50,885
                                                                        ========    ========

Supplemental schedule of non-cash investing
   and financing activities:

   Dividend distribution of affiliate stock                             $  6,365    $     --
                                                                        ========    ========
</TABLE>

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


SEITEL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1999

NOTE A-BASIS OF PRESENTATION

         The accompanying  unaudited financial  statements have been prepared in
accordance with generally accepted  accounting  principles for interim financial
information and with the  instructions of Regulation S-X.  Accordingly,  they do
not include all of the  information  and notes  required by  generally  accepted
accounting  principles  for  complete  financial  statements.  In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included.  Certain reclassifications
have been  made to the  amounts  in the prior  year's  financial  statements  to
conform to the current year's presentation. Operating results for the six months
ended June 30, 1999 are not  necessarily  indicative  of the results that may be
expected for the year ending December 31, 1999. For further  information,  refer
to the financial  statements  and notes thereto for the year ended  December 31,
1998  contained  in the  Company's  Annual  Report  filed on Form  10-K with the
Securities and Exchange Commission.

         The Company accounts for its marketable equity securities in accordance
with  Statement of  Financial  Accounting  Standards  No. 115,  "Accounting  for
Certain  Investments in Debt and Equity Securities."  Management  determines the
appropriate  classification of marketable securities at the time of purchase and
reevaluates   such  designation  at  each  balance  sheet  date.  The  Company's
marketable securities are categorized as  available-for-sale  and are carried at
fair value, with unrealized holding gains and losses, net of taxes, reflected in
accumulated other  comprehensive  income included in stockholders'  equity until
realized.  For the  purpose of  computing  realized  gains and  losses,  cost is
identified on a specific identification basis.

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 dilutive  securities.  Earnings per share computations
to  reconcile  basic and diluted  net income for the three and six months  ended
June 30, 1999 and 1998 consist of the following  (in thousands  except per share
amounts):
<TABLE>
<CAPTION>
                                               Three Months Ended             Six Months Ended
                                                   June 30,                       June 30,
                                               -----------------             -----------------
                                                1999      1998                1999       1998
                                               -------   -------             -------   -------

<S>                                            <C>       <C>                 <C>       <C>
Net income                                     $ 4,875   $ 6,369             $ 5,625   $11,234
                                               =======   =======             =======   =======

Basic weighted average shares                   23,809    22,592              23,720    22,572
Effect of dilutive securities: (1)<F1>
   Options and warrants                          1,035       523                 598       469
                                               -------   -------             -------   -------
Diluted weighted average shares                 24,844    23,115              24,318    23,041
                                               =======   =======             =======   =======
Per share income:

   Basic                                       $   .20   $   .28             $   .24   $   .50
   Diluted                                     $   .20   $   .28             $   .23   $   .49

-------------------
<FN>
(1)<F1>  During the second  quarter of 1999 and 1998 and the first six months of
         1999 and 1998,  a weighted  average  number of options and  warrants to
         purchase  342,000,  2,196,000,  265,000 and 2,424,000  shares of common
         stock were  outstanding,  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.  Substantially all (greater than 87%) of
the costs  incurred to develop the  Company's  data bank have been for  programs
created by the Company.  The Company uses the income forecast method to amortize
the costs of seismic data programs it creates. Under the income forecast method,
seismic  data costs are  amortized in the  proportion  that revenue for a period
relates  to  management's  estimate  of  ultimate  revenues.   Since  inception,
management  has   established   guidelines   regarding  its  annual  charge  for
amortization.  Under these  guidelines,  seismic  data created by the Company is
amortized in a set period of time based on historical  experience  with both the
timing  and  amount  of  revenue.  Management  estimates  that 90% of the  costs
incurred in the creation of seismic data is amortized  within five years of such
data becoming available for resale for  two-dimensional  seismic data and within
seven years of such data  becoming  available  for resale for  three-dimensional
seismic  data.  If  anticipated  sales  fall  below  the  benchmark  guidelines,
amortization is accelerated. Depending on actual sales performance, the costs of
the  Company's  seismic data are fully  amortized  within 20 years or less.  The
Company also purchases existing seismic data programs from other companies.  The
costs  of  purchased  seismic  data  programs  are  generally   amortized  on  a
straight-line basis over ten years; however, the costs of a significant purchase
(greater than 5% of the net book value of the data bank),  are  amortized  using
the greater of the income forecast method or ten-year straight-line method.

         In certain cases,  the Company grants seismic licenses to third parties
for data to be used in  their  operations  (not  for  resale)  in  exchange  for
exclusive ownership of seismic data from the third party. The Company recognizes
revenue  for the  licenses  granted  and  records a data  library  asset for the
seismic data  acquired.  These  transactions  are accounted for as  non-monetary
exchanges  and are valued at the fair  market  value of such  licenses  based on
values  realized  in cash  transactions  with other  third  parties  for similar
seismic data.  During the first six months of 1999, the Company licensed seismic
data valued at  $6,363,000  in exchange for the purchase of seismic data for its
library.

NOTE D-OIL AND GAS PROPERTIES

         The Company  accounts for its oil and gas  exploration  and  production
activities  using the full-cost  method of  accounting.  Under this method,  all
costs  associated with  acquisition,  exploration and development of oil and gas
reserves,  including  directly related overhead costs and interest costs related
to its unevaluated properties and certain properties under development which are
not currently being amortized,  are  capitalized.  For the six months ended June
30, 1999 and 1998,  general and  administrative  costs of $973,000 and $821,000,
respectively,  have  been  capitalized  to oil and gas  properties.  For the six
months  ended  June  30,  1999  and  1998,  interest  costs  of  $1,582,000  and
$1,184,000, respectively, have been capitalized to oil and gas properties.

         On July 26, 1999,  the Company sold its 18.75%  working  interest in 11
oil and gas wells, one salt water disposal well and  approximately  16,000 acres
of leasehold and options to lease for approximately $13.7 million.

NOTE E-INVESTMENT IN EAGLE GEOPHYSICAL, INC.

         On April 22, 1999, the Board of Directors of Seitel,  Inc.  declared to
its common  stockholders  a dividend  consisting of the 1,520,000  shares of the
common stock of Eagle  Geophysical,  Inc.  ("Eagle")  owned by the Company.  The
dividend was declared at the rate of approximately  0.064 shares of Eagle common
stock for each  share of  Seitel,  Inc.  common  stock  owned as of the close of
business on the record date of May 18, 1999.

         The fair market  value of the common stock of Eagle held by the Company
on the date this dividend was declared was lower than the carrying  value of the
stock on the Company's  balance  sheet;  therefore,  a non-cash,  non-recurring,
pre-tax impairment,  net of bonus effect, of $7,794,000 was recorded for the six
months ended June 30, 1999.

<PAGE>

NOTE F-INDUSTRY SEGMENTS

         SFAS NO. 131,  "Disclosures About Segments of an Enterprise and Related
Information,"  established  standards for reporting  information about operating
segments in annual  financial  statements and requires  selected  information in
interim financial reports.  Selected financial information for the three and six
months ended June 30, 1999 and 1998 is as follows (in thousands):
<TABLE>
<CAPTION>
                                                  Exploration
                                                      and          Total
                                      Seismic      Production     Segments
                                      --------      --------      --------
THREE MONTHS ENDED JUNE 30, 1999

<S>                                   <C>           <C>           <C>
Revenue from external purchasers      $ 29,540      $  4,587      $ 34,127
Depreciation, depletion
  and amortization                      12,702         2,057        14,759
Cost of sales                               66         1,121         1,187
Segment operating income                16,772         1,409        18,181
Capital expenditures (a)<F1>            23,414         4,426        27,840
Assets                                 365,473       163,988       529,461

THREE MONTHS ENDED JUNE 30, 1998

Revenue from external purchasers      $ 31,777      $  5,199      $ 36,976
Depreciation, depletion
  and amortization                      14,104         3,399        17,503
Cost of sales                               31         1,319         1,350
Segment operating income                17,642           481        18,123
Capital expenditures (a)<F1>            37,946        11,131        49,077
Assets (b)<F2>                         317,292       156,623       473,915

SIX MONTHS ENDED JUNE 30, 1999

Revenue from external purchasers      $ 63,462      $  8,546      $ 72,008
Depreciation, depletion
  and amortization                      28,080         4,138        32,218
Cost of sales                              131         2,348         2,479
Segment operating income                35,251         2,060        37,311
Capital expenditures (a)<F1>            79,203        14,125        93,328
Assets                                 365,473       163,988       529,461

SIX MONTHS ENDED JUNE 30, 1998

Revenue from external purchasers      $ 58,093      $  9,810      $ 67,903
Depreciation, depletion
  and amortization                      26,076         6,374        32,450
Cost of sales                              112         2,367         2,479
Segment operating income                31,905         1,069        32,974
Capital expenditures (a)<F1>            63,332        21,582        84,914
Assets (b)<F2>                         317,292       156,623       473,915

<FN>
(a)<F1>  Includes other ancillary equipment.
(b)<F2>  Balance as of December 31, 1998.
</FN>
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
                                                            Three Months Ended                     Six Months Ended
                                                                 June 30,                              June 30,
                                                        -------------------------          ----------------------------
                                                           1999            1998              1999              1998
                                                        ---------      ----------          -----------      -----------
<S>                                                     <C>            <C>                 <C>              <C>
Income from continuing operations before
     income taxes:

     Total reportable segment operating income          $  18,181      $   18,123          $    37,311      $    32,974
     Selling general and administrative expense            (7,278)         (6,472)             (14,482)         (12,422)
     Interest expense, net                                 (2,860)         (1,402)              (5,023)          (2,397)
     Equity in earnings (loss) of affiliate                     -              84                  (91)             125
     Impairment due to dividend distribution of
       affiliate stock                                          -               -               (7,794)               -
     Eliminations and other                                  (289)           (223)                (569)            (432)
                                                                                           -----------      -----------
                                                        ---------      ----------
     Income from continuing operations before
       income taxes                                     $   7,754      $   10,110          $     9,352      $    17,848
                                                        =========      ==========          ===========      ===========
</TABLE>


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

OVERVIEW

         The Company's  income from core seismic  marketing and  exploration and
production  operations  was  $4,875,000  for the  second  quarter  of  1999  and
$10,750,000 for the six months ended June 30, 1999 as compared to $6,314,000 for
the second  quarter of 1998 and  $11,152,000  for the six months  ended June 30,
1998.  Additionally,  in the first six months of 1999,  the  Company  recorded a
non-cash,  non-operating  loss on the dividend  distribution  of affiliate stock
totaling  $5,066,000,  net of tax,  along with  equity in loss of  affiliate  of
$59,000,  net of tax, bringing net income for the six months ended June 30, 1999
to  $5,625,000.  In the second quarter and first six months of 1998, the Company
recorded its equity in the earnings of affiliate of $55,000 and $82,000,  net of
tax, respectively, bringing second quarter 1998 net income to $6,369,000 and the
first six months of 1998 net income to $11,234,000.

RESULTS OF OPERATIONS

         Total revenue was $34,127,000 and $36,976,000 in the second quarters of
1999 and 1998,  respectively,  and  $72,008,000 and $67,903,000 in the first six
months of 1999 and 1998,  respectively.  Revenue  primarily  consists of revenue
generated from the marketing of seismic data and oil and gas production.

         Revenue  from the  marketing  of seismic  data was  $29,540,000  in the
second  quarter of 1999 compared to  $31,777,000  in the second quarter of 1998.
During  the  second  quarter  of  1999,  the  Company   reduced  the  amount  of
expenditures  made in creating new seismic data which  resulted in a decrease in
revenue  associated  with the  creation  of new data.  The  decline in  creation
revenue was mostly  offset by an increase in licensing of existing data from the
Company's  data  library.  Revenue  from  the  marketing  of  seismic  data  was
$63,462,000 in the first six months of 1999 compared to $58,093,000 in the first
six months of 1998.  The increase  for the six month period is primarily  due to
more data being  available  for licensing  because of the increased  size of the
Company's data library.  The Company's data library has increased  significantly
since the second quarter of 1998 due to the creation of seismic data during 1998
and the  first six  months of 1999 and the  purchase  of the Amoco  Canada  data
library in February  1999.  These  increases  are  primarily  attributable  to a
continued  increase in demand for  high-resolution  seismic data, which is being
used increasingly in oil and gas exploration and development efforts.

<PAGE>

         Oil and gas  revenue  was  $4,587,000  in the  second  quarter  of 1999
compared to $5,199,000 in the second  quarter of 1998 and was  $8,546,000 in the
first six months of 1999 compared to $9,810,000 in the first six months of 1998.
The decreases in oil and gas revenue were  primarily  caused by lower gas prices
during the first six months of 1999.  Net volume and price  information  for the
Company's oil and gas production for the second quarters and first six months of
1999 and 1998 are summarized in the following table:
<TABLE>
<CAPTION>
                                                           Quarter Ended                         Six Months Ended
                                                             June 30,                                June 30,
                                                  ---------------------------             ---------------------------
                                                     1999              1998                  1999              1998
                                                  ---------        ----------             ---------        ----------

<S>                                               <C>              <C>                    <C>              <C>
Natural gas volumes (mmcf)                            1,446             1,564                 3,076             2,921
Average natural gas price ($/mcf)                 $    2.16        $     2.45             $    2.00        $     2.43
Crude oil/condensate volumes (mbbl)                      97               105                   181               198
Average crude oil/condensate price ($/bbl)        $   14.45        $    12.17             $   12.44        $    12.87
</TABLE>

         In July 1999,  the Company  sold its  interest in 11 oil and gas wells,
five of  which  were  currently  producing.  The  Company  anticipates  that the
majority of loss in  production  from these  wells will be offset by  production
from new wells anticipated to come on-line in the third quarter.

         Depreciation,  depletion and  amortization  consists  primarily of data
bank   amortization  and  depletion  of  oil  and  gas  properties.   Data  bank
amortization  was  $12,702,000  during the second  quarter of 1999  compared  to
$14,104,000  during the second  quarter of 1998 and was  $28,080,000  during the
first six months of 1999 compared to $26,076,000  during the first six months of
1998. The amount of seismic data  amortization  fluctuates based on the level of
seismic  marketing  revenue.  As a percentage of revenue from licensing  seismic
data, data bank amortization was 44% and 45% for the second quarters of 1999 and
1998,  respectively,  and was 45% for the first six months of 1999 and 1998. See
Note C for a discussion of the Company's seismic data amortization policy.

         Depletion  of oil and gas  properties  was  $2,057,000  for the  second
quarter of 1999 compared to  $3,399,000  for the second  quarter of 1998,  which
amounted to $1.01 and $1.55, respectively,  per mcfe of gas produced during such
periods.  For the six months ended June 30, 1999 and 1998,  depletion of oil and
gas properties was $4,138,000 and  $6,374,000,  respectively,  which amounted to
$.99 and $1.55, respectively,  per mcfe of gas produced during such periods. The
decreases  in the  rate are due to the  significant  increase  in the  Company's
proved reserves as of January 1, 1999 as determined by the Company's independent
reserve  engineers  resulting  from both new  discoveries  in 1998 and  positive
revisions to previous reserve estimates.

         Cost  of  sales  consists  of  expenses  associated  with  oil  and gas
production  and seismic resale support  services.  Oil and gas production  costs
amounted  to $.55 and $.56 per mcfe of gas  produced  in the second  quarter and
first six months of 1999,  respectively,  compared  to $.60 and $.58 per mcfe in
the same periods in 1998.  The  decrease in this rate is primarily  due to lower
workover costs in the second quarter of 1999 as compared to 1998.

         The  Company's  selling,   general  and  administrative  expenses  were
$7,278,000  and  $14,482,000  during the second  quarter and first six months of
1999,  respectively,  compared to $6,472,000 and  $12,422,000  during the second
quarter and first six months of 1998, respectively. The increase between periods
is primarily due to increased  costs  resulting from the Company's  expansion in
Canada  and growth in the  domestic  United  States.  As a  percentage  of total
revenue,  these  expenses were 21% and 20% for the second  quarter and first six
months of 1999, respectively,  and 18% for both the second quarter and first six
months of 1998.

         Net  interest  expense  was  $2,860,000  and  $5,023,000  in the second
quarter and first six months of 1999,  respectively,  compared to $1,402,000 and
$2,397,000 in the second quarter and first six months of 1998, respectively. The
increase  was  primarily  due to the addition of $138 million of senior notes on
February  12, 1999 at an average  interest  rate of 7.3%.  Additionally,  in the
second  quarter of 1999,  the  increase  was  partially  offset by a decrease in
interest  expense on the Company's line of credit as borrowings  under this line
of credit  were less in the second  quarter  of 1999 than in the same  period in
1998.

         On April 22, 1999,  the Board of Directors of Seitel,  Inc.  declared a
dividend to its common  stockholders  consisting of the 1,520,000  shares of the
common stock of Eagle  Geophysical,  Inc. owned by the Company.  The fair market
value of the common stock of Eagle held by the Company on the date this dividend
was  declared was lower than the  carrying  value of the stock on the  Company's
balance sheet; therefore, a non-cash, non-recurring,  pre-tax impairment, net of
bonus effect, of $7,794,000 was recorded for the six months ended June 30, 1999.

         The Company's  effective income tax rate was 37% and 40% for the second
quarter and first six months of 1999, respectively, compared to 37% for both the
second  quarter  and first six months of 1998.  The  increase  in the  effective
income tax rate for the six months  ended June 30, 1999 was due to the makeup of
the income  tax  expense  for the  period.  Income tax  expense in the first six
months of 1999  consisted  of two items:  (1) income tax  expense on income from
core operations at the Company's  estimated annual tax rate of 38% offset by (2)
income  tax  benefit  on the  non-recurring  loss on  dividend  distribution  of
affiliate  stock at the tax rate of 35%. The net of these two items  resulted in
the  higher  effective  tax  rate.  The  Company's  effective  tax  rate for the
remainder of 1999 is estimated to be approximately 38%.

LIQUIDITY AND CAPITAL RESOURCES

         The  Company's  cash  flow  from   operations  was   $48,798,000,   and
$50,885,000 for the six months ended June 30, 1999 and 1998,  respectively.  The
decrease from 1998 to 1999 was primarily due to an increase in collections  from
customers offset by an increase in payments to suppliers.

         The  Company  has a $75  million  unsecured  revolving  line of  credit
facility that matures on March 16, 2001.  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%.  Certain  restrictions  exist that
limit the amount of borrowings that the Company can make under this facility. As
of August 12, 1999,  the balance  outstanding  on the  revolving  line of credit
amounted to $7,074,000 bearing an average interest rate of 7.2%

         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 $8.3 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 which began on December 30,
1998.  Interest on all series of the notes is payable  semi-annually  on June 30
and December 30.

         On February  12,  1999,  the Company  completed a private  placement of
three series of unsecured Senior Notes totaling $138 million. The Series D Notes
total $20 million, bear interest at a fixed rate of 7.03% and mature on February
15, 2004,  with no principal  payments  due until  maturity.  The Series E Notes
total $75 million, bear interest at a fixed rate of 7.28% and mature on February
15, 2009, with annual principal payments of $12.5 million beginning February 15,
2004.  The Series F Notes total $43  million,  bear  interest at a fixed rate of
7.43% and mature on February  15,  2009,  with no  principal  payments due until
maturity. Interest on all series of the notes is payable semi-annually beginning
on August 15, 1999. The Company used a majority of the proceeds to repay amounts
then  outstanding  under its  revolving  lines of credit and the  remainder  for
capital expenditures.

         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 January 1, 1999,  through  August 12, 1999,  the Company  received
$5,175,000 from the exercise of common stock purchase  warrants and options.  In
connection  with these  exercises,  the Company will also receive  approximately
$879,000 in tax savings.

         On July 26, 1999, the Company's  wholly-owned  subsidiary,  DDD Energy,
Inc., sold its 18.75% working  interest in 11 oil and gas wells,  one salt water
disposal well and  approximately  16,000 acres of leasehold and options to lease
for  approximately  $13.7 million.  The Company  temporarily used these funds to
reduce its borrowings under its line of credit.

         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 six months of 1999,  gross seismic data bank additions
and  capitalized  oil and gas  exploration  and  development  costs  amounted to
$79,126,000 and $13,811,000 respectively. These capital expenditures, as well as
taxes, interest expenses, cost of sales and general and administrative expenses,
were funded by  operations,  proceeds from the exercise of common stock purchase
warrants and options,  borrowings  under the Company's  revolving line of credit
and proceeds from the issuance of senior notes.

         Currently,   the  Company  anticipates  capital  expenditures  for  the
remainder of 1999 to total approximately $60 million.  Such expenditures include
approximately  $50 million for the creation of  proprietary  seismic  data,  and
approximately  $10 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 1999 capital  expenditures,  along with  expenditures for operating and
general and  administrative  expenses.  If these  sources are not  sufficient to
cover the Company's anticipated  expenditures or if the Company were to increase
its  planned  capital  expenditures  for 1999,  the  Company  could  arrange for
additional  debt or  equity  financing  during  1999;  however,  there can be no
assurance  that the Company would be able to accomplish  any such debt or equity
financing  on  satisfactory  terms.  If such  debt or  equity  financing  is not
available on  satisfactory  terms,  the Company could reduce its current capital
budget or any proposed  increases to its capital budget,  and fund  expenditures
with cash flow generated from operating sources.

RECENT ACCOUNTING PRONOUNCEMENTS

         In June 1998, the Financial  Accounting Standards Board issued SFAS No.
133,  "Accounting for Derivative  Instruments and Hedging Activities" as amended
by SFAS No. 137. The Statement  establishes  accounting and reporting  standards
requiring  that  every  derivative   instrument  (including  certain  derivative
instruments  embedded in other  contracts)  be recorded in the balance  sheet as
either an asset or liability  measured at its fair value. The Statement requires
that changes in the derivative's fair value be recognized  currently in earnings
unless  specific  hedge  accounting  criteria are met.  Special  accounting  for
qualifying  hedges  allows a  derivative's  gains and  losses to offset  related
results on the hedged item in the income statement,  and requires that a company
must formally document,  designate, and assess the effectiveness of transactions
that receive  hedge  accounting.  Statement  133 is  effective  for fiscal years
beginning after June 15, 2000 and cannot be applied retroactively. Statement 133
must  be  applied  to (a)  derivative  instruments  and (b)  certain  derivative
instruments  embedded  in  hybrid  contracts  that  were  issued,  acquired,  or
substantively  modified after December 31, 1997 (and, at the Company's election,
before  January 1, 1998 or January 1, 1999).  The Company has not yet quantified
the impact of adopting  Statement 133.  However,  the Company  anticipates  that
application of the statement will not have a material effect on its consolidated
financial statements.

YEAR 2000

         Many currently  installed  computer  systems and software  products are
coded to accept only two-digit entries in the date code field.  Beginning in the
year 2000,  these date code  fields  will need to accept  four-digit  entries to
distinguish  21st century dates from 20th century dates.  As a result,  computer
systems and software  used by many  companies  may need to be upgraded to comply
with such "Year 2000"  requirements.  Significant  uncertainty exists concerning
the potential effects  associated with such compliance,  but systems that do not
properly  recognize such  information  could generate  erroneous data or cause a
system to fail.

         Compliance  Program.  In order to  address  the Year  2000  issue,  the
Company  appointed  the Chief  Operating  Officer  ("COO")  to  assure  that key
automated systems and related  processors would remain functional  through 2000.
The COO and the Company's  Information  Systems Manager addressed the project by
reviewing  the  information  technology  ("IT") and  non-information  technology
systems to determine whether they were Year 2000 compliant.  Also, they prepared
a formal  questionnaire for all significant  suppliers,  customers,  and service
providers to determine  the extent to which the Company was  vulnerable to those
third parties' failure to remediate the Year 2000 problem.

         Company's   State  of  Readiness.   A  review  and  assessment  of  the
information  technology and non-information  technology systems was completed as
of January 31, 1999 and did not identify any material systems which are not Year
2000  compliant.  The Company  prepared and sent a formal  questionnaire  to all
significant  suppliers,  customers and service providers to determine the extent
to which the Company is vulnerable to those third parties'  failure to remediate
the Year 2000 problem.  The Company  requested that these  companies  respond no
later than June 30,  1999.  As of August 12,  1999,  the  Company  has  received
written  assurances  of  Year  2000  compliance  from  approximately  37% of its
suppliers,  customers  and service  providers.  Companies who have not responded
have been sent second requests to respond to the questionnaire.  The Company has
received oral  assurances of Year 2000 compliance from many of the third parties
with whom it has  relationships.  The Company  believes that its operations will
not be  significantly  disrupted even if third parties with whom the Company has
relationships are not Year 2000 compliant.

         Costs to Address Year 2000 Compliance Issues. The Company believes that
it will not be required to make any  material  expenditures  to address the Year
2000 problem as it relates to its existing  systems.  To date, costs incurred to
address Year 2000  compliance have been internal in nature and have been charged
to income as  incurred.  Such  costs  have been  funded  from cash  provided  by
operating activities. However, uncertainty exists concerning the potential costs
and effects associated with any Year 2000 compliance, and the Company intends to
continue  to  make  efforts  to  ensure  that  third  parties  with  whom it has
relationships  are Year  2000  compliant.  The  Company  is not  aware of any IT
projects that have been delayed due to the Year 2000 compliance program.

         Risk of Non-Compliance  and Contingency Plan. The goal of the Year 2000
project has been to ensure that all of the critical systems and processes, which
are under the direct control of the Company, remain functional. However, because
certain  systems and processes may be  interrelated  with systems outside of the
control of the Company,  there can be no assurance that all implementations will
be  successful.  The principal  area of risk to the Company is thought to be the
contracting  of  seismic  acquisition  crews and  vessels.  A likely  worst case
scenario is that despite the Company's efforts,  there could be a failure of the
global positioning system used by seismic acquisition crews and vessels that the
Company  contracts  which  could  result  in  the  temporary  cessation  of  the
acquisition of seismic data. However, the Company believes that the risk of such
occurrence is low based upon its  discussions  concerning  Year 2000  compliance
with  third  party  seismic  contractors.  As part  of the  Year  2000  project,
contingency plans will be developed to respond to any potential failures as they
may  be  identified.  There  can  be no  assurance  that  unexpected  Year  2000
compliance problems of either the Company or its vendors,  customers and service
providers  would not  materially  and adversely  affect the Company's  business,
financial  condition or operating results.  The Company will continue throughout
1999 to consider the likelihood of a material  business  interruption due to the
Year 2000 issue.

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.  Among the 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.  The foregoing and other risk factors are identified in the
Company's  Annual  Report on Form 10-K filed with the  Securities  and  Exchange
Commission for the year ended December 31, 1998.


ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company is exposed to market  risk,  including  adverse  changes in
commodity prices,  interest rates and foreign currency exchange rates.  Refer to
the  Company's  Form 10-K for the year ended  December  31,  1998 for a detailed
discussion of these risks. The following  information  discusses  changes in the
Company's market risk exposures since December 31, 1998.

COMMODITY PRICE RISK

         During 1999, the Company has entered into natural gas swaps in order to
hedge a portion of anticipated  natural gas  production.  As of August 12, 1999,
the Company had open  commodity  price  hedges  totaling  3,515,000  mmbtu at an
average price of $2.51 per mmbtu.

INTEREST RATE RISK

         In February  1999, the Company  completed a private  placement of three
series of unsecured  Senior Notes  totaling $138 million at an average  interest
rate of 7.3%.  The Series D Notes total $20  million,  bear  interest at a fixed
rate of 7.03% and mature on February  15, 2004,  with no principal  payments due
until maturity.  The Series E Notes total $75 million,  bear interest at a fixed
rate of 7.28% and mature on February 15, 2009, with annual principal payments of
$12.5 million beginning February 15, 2004. The Series F Notes total $43 million,
bear interest at a fixed rate of 7.43% and mature on February 15, 2009,  with no
principal payments due until maturity. The carrying value and fair value of this
debt are the same.

                           PART II - OTHER INFORMATION

ITEMS 1., 2., 3., 4., AND 5. Not applicable.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits

          10.1 Seitel,  Inc.  Amended and Restated 1998 Employee  Stock Purchase
               Plan

     (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:  August  12,  1999               /s/  Paul A. Frame
                                        ----------------------------------------
                                             Paul A. Frame
                                             President

Dated:  August  12,  1999               /s/  Debra D. Valice
                                       -----------------------------------------
                                             Debra D. Valice
                                             Chief Financial Officer

Dated:  August  12,  1999               /s/  Marcia H. Kendrick
                                        ----------------------------------------
                                             Marcia H. Kendrick
                                             Chief Accounting Officer

<PAGE>

                                     EXHIBIT
                                      INDEX

---------------   ------------------------------------------------  -----------
Exhibit           Title                                                Page
                                                                      Number
---------------   ------------------------------------------------  -----------

10.1              Seitel, Inc. Amended and Restated 1998                20
                       Employee Stock Purchase Plan