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.

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   X   

The aggregate market value of the voting stock held by non-affiliates of the registrant at March 28, 2001 was approximately $417,106,588. For these purposes, the term "affiliate" is deemed to mean officers and directors of the registrant. On such date, the closing price of the Common Stock on the New York Stock Exchange was $17.40 and there were a total of 25,009,034 shares of Common Stock outstanding.

     Seitel, Inc. (the "Company") is a leading provider of seismic data and related geophysical services and expertise to the petroleum industry. The Company owns and licenses what it believes to be the largest nonproprietary seismic data library in North America and initiates new seismic data through multi-client shoots with oil and gas companies. In September 2000, the Company announced its intention to create a product that will enable its clients to access and interact, via the Internet, with the one petabyte of seismic data currently owned and marketed by Seitel. The Company, through its wholly-owned subsidiary DDD Energy, Inc., explores, finds, develops, produces and sells oil and natural gas reserves. See Note P to the Company's Consolidated Financial Statements for financial information relating to industry segments.

     The Company markets seismic information to the oil and natural gas industry in two ways: sales from the largest data library in North America and sales of new multi-client seismic data surveys, including two-dimensional ("2D"), three-dimensional ("3D") and multi-component, in both the onshore and offshore segments. The Company has a strong market position in the United States and Canadian seismic data library markets owing to its 1.1 million linear miles of two-dimensional and 19,200 square miles of three-dimensional seismic data.

     The Company initiates data surveys utilizing the multi-client approach. There are two types of data initiation: data acquired with underwriter commitments and data that are initiated via a speculative shoot. The Company has stated that it will not perform high-risk speculative data initiation because the Company believes that would put its shareholders at unnecessary financial risk. The Company prefers the multi-client underwriting approach whereby at least 65%-75% of the cost of the survey is covered before the data initiation takes place.

     The Company actively markets data from its library for resale under non-exclusive, non-transferable license agreements to the oil and gas industry. The Company combines an aggressive marketing strategy with geophysical expertise. The Company's marketing philosophy is that seismic data, like most other products, must be sold aggressively as opposed to waiting passively for customer purchases. The Company has 24 dedicated marketing specialists that maximize sales opportunities by monitoring petroleum industry exploration and development activities through close interaction with oil and gas companies on a daily basis. In addition, the Company has 15 experienced geoscientists that design seismic programs with our clients to assure customer satisfaction and quality control. The Company's customers may not transfer a seismic data license; accordingly, if a new company would like to view the data, they must purchase a license generating additional revenue for the Company.

     The Company's data library is concentrated in most of the North American major oil and natural gas producing areas. The main areas of focus include the onshore, offshore and transition zone of the U.S. Gulf of Mexico extending from Texas to Florida, onshore East Texas and the Rocky Mountain region. In addition, the Company's international seismic surveys are concentrated in Western Canada and the Continental Shelf offshore the United Kingdom and Ireland.

     Three-dimensional seismic data provides a graphic geophysical depiction of the earth's subsurface from two horizontal dimensions and one vertical dimension, rendering a more detailed picture than 2D data, which presents a cross-sectional view from one vertical and one horizontal dimension. The more comprehensive geophysical information provided by 3D surveys significantly enhances an interpreter's ability to evaluate the probability of the existence and location of oil and gas deposits. The proper use of 3D surveys can significantly increase drilling success rates and, correspondingly, significantly lower exploration and development finding costs. However, the cost to create 3D seismic data is significantly more than the cost to create 2D seismic data, particularly for onshore data. As a result, 2D data remains economically more efficient for preliminary, broad-scale exploration evaluation and to determine the location for and to help design 3D surveys. The 3D surveys can then be used for more site-specific analysis to maximize actual drilling potential.

     The Company has expanded its seismic activities to include multi-component data, more specifically 3D/4-C data. In a standard 3D seismic survey, the reflections of only pressure waves are measured and recorded. A 3D/4-C survey measures and records not only pressure waves but also shear waves. Whereas pressure waves are affected by the fluids in rock formation, shear waves are not. By measuring and recording both pressure waves and shear waves, a 3D/4-C survey can improve analysis of rock formations.

     In September 2000, the Company announced its intention to create a product that will enable its clients to access and interact, via the Internet, with the Company's seismic data. During 2000, the Company made acquisitions of rights to certain software that will aid in the development of this product.

     The Company has developed fully-integrated 3D seismic technology and operations, which extend from its expansive 2D seismic library from which to best design the parameters for 3D surveys, its large and growing 3D and multi-component data library, a processing center and proprietary computer technology coupled with extensive geophysical application expertise to effectively interpret 3D seismic data.

     In addition to licensing its seismic data to customers, the Company also utilizes its seismic expertise to participate directly in oil and gas projects. The Company participates in these projects as a working interest owner, sharing costs and revenues of oil and gas exploration and production projects with other oil and gas companies. The Company's strategy is to combine its 3D and 2D seismic expertise and related geophysical expertise with the geological, engineering and drilling expertise and land positions of oil and gas companies in exploration and development programs. The Company believes that this combination will result in higher drilling success rates, thereby allowing the Company to participate in oil and gas exploration and development on a relatively low cost and low risk basis, and to build an asset base of oil and gas reserves which complement its seismic data library.

     Since its formation in 1993, the Company's wholly-owned exploration and production subsidiary, DDD Energy, Inc. ("DDD Energy"), has entered into and maintained cost and revenue-sharing relationships with more than 100 oil and gas companies and, in doing so, has received the benefit of these oil and gas companies' land, geological, engineering and drilling staffs. DDD Energy has conducted 2,200 square miles of advanced 3D surveys, located primarily in the Gulf Coast areas of onshore Texas, Louisiana, Alabama and Mississippi, as well as California and Arkansas. DDD Energy's working interest in these projects ranges from approximately 10% to 90%, with an average working interest of approximately 31%. The majority of the well locations pinpointed by the surveys that have already been completed and interpreted should be drilled during the next three years. DDD Energy exclusively utilizes the Company's processing and interpretation technology and operations to provide optimum quality control and confidentiality for the exploration and production programs in which DDD Energy participates.

     From March 1993 through December 31, 2000, DDD Energy has participated in the drilling of 325 wells, 224 of which were commercially productive for a 69% success rate.

     In November 1999, the Company filed a registration statement with the Securities and Exchange Commission ("SEC") to accomplish the spin-off of DDD Energy through an initial public offering. The proposed offering was delayed due to market conditions and management changes. The Company continues to explore opportunities to maximize the value of DDD Energy's properties.

     The Company markets its seismic data to major and independent oil and gas companies. The Company generally sells its oil and gas to numerous customers through the operators of its oil and gas properties. During 2000, one customer accounted for 12% of the Company's revenue. No one customer accounted for as much as 10% of the Company's revenues during the years 1999 or 1998. The Company does not believe that the loss of any customer would have a material adverse impact on its seismic or oil and gas business.

     The creation and resale of seismic data are highly competitive in North America. There are a number of independent oil-service companies that create and market data, and numerous oil and gas companies create seismic data and maintain their own seismic data libraries. The Company's largest competitors, most of whom are engaged in acquiring seismic data as well as a data library, are Baker Hughes, Petroleum Geo-Services, Schlumberger, TGS Nopec, Veritas DGC and Compagnie Generale de Geophysique. In addition, the Company has positioned itself to take advantage of the increased outsourcing trend by exploration and production companies for their seismic data services. The Company believes it can compete favorably because of the expansiveness of its data library base, the expertise of its marketing staff and the technical proficiency and exploration experience of its geoscientists. These resources enable the Company to provide high-quality service and to create and market high-grade data.

     In the oil and gas exploration and production business, there are numerous oil and gas companies competing for the acquisition of mineral properties. The Company believes it can participate effectively in the exploration for and development of natural gas and crude oil reserves because of its fully-integrated seismic resources and geophysical expertise combined with the geological and engineering experience and land positions of the Company's oil and gas company partners.

     The Company's results of operations can fluctuate from quarter to quarter. The fluctuations are caused by a number of factors.

     With respect to the Company's seismic licensing revenue, the Company's results are influenced by oil and gas industry capital expenditure budgets and spending patterns. These budgets are not necessarily spent in either equal or progressive increments during the year, with spending patterns affected by individual oil and gas company requirements as well as industry-wide conditions. As a result, the Company's seismic data revenue does not necessarily flow evenly or progressively on a sequential quarterly basis during the year. In addition, certain weather-related events may delay the creation of seismic data for the Company's library during any given quarter. Although the majority of the Company's seismic resales are under $500,000 per sale, occasionally a single data resale from the Company's library, including those resulting from the merger and acquisition of the Company's oil and gas company customers, can be as large as $5 million or more. Such large resales can materially impact the Company's results during the quarter in which they occur, creating an impression of a trend of increasing revenue that may not be achieved in subsequent periods.

     With respect to revenue from the Company's oil and gas operations, bringing a small number of high-production wells on line in a given quarter can materially impact the results of that quarter since many of the wells in which the Company participates experience high initial flow rates for the first 60 to 90 days of production and then taper off to a lower, steady rate for the remainder of their lives. If several of these wells are brought on line in a quarter, the results for that quarter will appear unusually strong, and then later, when production decreases to its long-term, steady rate, the Company's results may not be able to sustain the trend of increased performance indicated by the strong results of the previous quarter. The Company's oil and gas exploration and production operations also can be impacted by certain weather-related events as well as by mechanical and equipment problems or shortages and other factors, which may delay the hookup of successfully completed wells and delay the resultant production revenue. Also, due to the high percentage of gas reserves in the Company's portfolio and the seasonal variations in gas prices, the Company's results from its oil and gas operations also are subject to significant fluctuations due to variations in commodity prices. In addition, some producing wells may be required to go off line periodically for pipeline and other maintenance. The Company does not believe that these fluctuations in quarterly results are indicative of the Company's long-term prospects and financial performance.

     See Note Q to the Company's Consolidated Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations.

     As of December 31, 2000, the Company and its subsidiaries had 128 full-time employees. None of the Company's employees are covered by collective bargaining agreements. Of these employees, 89 are related to the seismic operations and 22 are related to the oil and gas operations. The balance provides accounting and administrative support for all operations. The Company has employment contracts with three of its senior corporate executives.

     The following organization chart gives an overview of the structure of the Company:

     The Company, through its wholly-owned subsidiary DDD Energy, participates in oil and gas exploration and development efforts. For estimates of the Company's net proved and proved developed oil and gas reserves as of December 31, 2000, see Note S to the Company's Consolidated Financial Statements. There are numerous uncertainties inherent in estimating quantities of proved reserves and in projecting future rates of production and timing of development expenditures, including many factors beyond the control of the producer. The reserve data set forth in Note S to the Company's Consolidated Financial statements represents only estimates. Reservoir engineering is a subjective process of estimating underground accumulations of natural gas and liquids, including crude oil, condensate and natural gas liquids that cannot be measured in an exact manner. The accuracy of any reserve estimate is a function of the amount and quality of available data and of engineering and geological interpretation and judgment. As a result, estimates of different engineers normally vary. In addition, results of drilling, testing and production subsequent to the date of an estimate may justify revision of such estimate. Accordingly, reserve estimates are often different from the quantities ultimately recovered. The meaningfulness of such estimates is highly dependent upon the accuracy of the assumptions upon which they were based.

     In general, the volume of production from oil and gas properties owned by the Company declines as reserves are depleted. Except to the extent that the Company acquires additional properties containing proved reserves or conducts successful exploration and development activities, or both, the proved reserves of the Company will decline as reserves are produced. Volumes generated from future activities of the Company are therefore highly dependent upon the level of success in finding or acquiring additional reserves and the costs incurred in so doing.

     The following table sets forth the number of productive oil and gas wells (including producing wells and wells capable of production) in which the Company owned an interest as of December 31, 2000. Gross oil and gas wells include three with multiple completions. All but one of the wells are operated by the Company's oil and gas company partners. A "gross" well is a well in which the Company owns a working interest. "Net" wells refer to the sum of the fractional working interests owned by the Company in gross wells.

     The following table sets forth the number of net wells drilled in the last three fiscal years in which the Company participated.

     As of December 31, 2000, the Company was participating in the drilling of 1 gross and .33 net wells.

     The following table sets forth certain information regarding the Company's developed and undeveloped lease acreage as of December 31, 2000. "Gross" acres refer to the number of acres in which the Company owns a working interest. "Net" acres refer to the sum of the fractional working interests owned by the Company in gross acres.

     The following table describes for each of the last three fiscal years, crude oil (including condensate and natural gas liquids) and natural gas production for the Company, average production costs and average sales prices. All such production comes from the U.S. Gulf Coast region. The Company has not filed any different estimates of its December 31, 2000 reserves with any federal agencies.

     The Company's Common Stock is traded on the New York Stock Exchange. The following table sets forth the high and low sales prices for the Common Stock for 2000 and 1999 as reported by the New York Stock Exchange.

     On March 28, 2001, the closing price for the Common Stock was $17.40. To the best of the Company's knowledge, there are approximately 1,006 record holders of the Company's Common Stock as of March 28, 2001.

     The following table summarizes certain historical consolidated financial data of the Company and is qualified in its entirety by the more detailed consolidated financial statements and notes thereto included in Item 8 hereof.

     The following table sets forth selected financial information (in thousands) for the periods indicated, and should be read in conjunction with the discussion of Results of Operations below.

     Income before special items was $24,730,000, $14,446,000 and $24,484,000 for the years ended December 31, 2000, 1999 and 1998, respectively. Special items for the year ended December 31, 2000, include a pre-tax restructuring charge of $4,394,000 related to reduction of management incentive bonus compensation and a pre-tax charge of $958,000 related to expenses incurred in connection with the delayed DDD Energy, Inc. initial public offering. Special items for the year ended December 31, 1999, include a pre-tax loss of $7,794,000 related to an impairment due to the dividend distribution of affiliate stock. Special items for the year ended December 31, 1998 include a pre-tax loss of $193,000 related to the decrease in the underlying equity of an affiliate.

     Seismic

     Most oil and gas companies consider seismic data an essential tool to generate and delineate drilling prospects for the oil and gas industry. Oil and gas companies are increasingly using seismic data in oil and gas exploration and development efforts to increase the probability of drilling success. By properly utilizing seismic data, oil and gas companies can significantly increase drilling success rates and reduce the occurrence of dry holes. By participating in multi-client surveys, oil and gas companies can share the cost of expensive surveys that they could not otherwise afford. Further, seismic data can increase recoveries of reserves from existing, mature oil fields by optimizing the drilling location of development wells and by revealing additional, or "step-out," locations that would not otherwise be apparent.

     The Company generates seismic revenue by licensing data from its existing data library and creating new data for customers. Revenue from the marketing of seismic data was $139,376,000, $109,671,000 and $125,863,000 during 2000, 1999 and 1998, respectively. The increase in revenue between 1999 and 2000 was due to a 59% increase in licensing of existing data from the Company's data library partially offset by a decrease in revenue from new seismic data creation. The increase in library sales occurred in the third and fourth quarters of 2000 as a result of increased capital expenditures for seismic library data by oil and gas companies. The current industry condition of declining production profiles by many oil and gas companies and a "prospect short" environment has made the demand for seismic library data strong. Additionally, library sales include revenue resulting from the merger and acquisition of some of the Company's oil and gas company customers. In these instances, the data was relicensed due to the nontransferability of the original license. The decrease in seismic data creation revenue between 1999 and 2000 was due to a management decision in May 1999 to focus the Company's marketing team on licensing existing data that would generate cash flow. Management continued this decision to limit data creation throughout 2000 resulting in decreased seismic data creation revenue. The Company's decision to reduce data creation in 1999 caused total seismic revenue to be lower in 1999 as compared to 1998. However, library sales in 1999 increased 36% over library sales in 1998. The Company anticipates that the demand for its seismic library data will remain strong. Additionally, new data creation revenue is expected to increase in 2001 as compared to 2000 based on customer demand.

     Data bank amortization amounted to $62,159,000, $49,375,000 and $57,117,000 for the years ended December 31, 2000, 1999 and 1998, respectively. 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 45%, 46% and 46% for 2000, 1999 and 1998, respectively. These changes between years 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. For a discussion of the Company's accounting policy related to seismic data amortization refer to Note A of the Company's Consolidated Financial Statements.

     The Company's (and its industry's) seismic revenue trends are evaluated and results are used in estimating future revenue expected to be received on its seismic data. When economic conditions indicate, the Company may reduce its estimates of future revenue, causing the amortization rate to rise and operating results to decline. If the Company perceives an impairment in value due to reduced, or a lack of, estimated future revenue, a write-down of the asset is recognized. In periods of upturn, the opposite may occur, except, however, the prior write-downs are not reversed. Management believes that the economic outlook for the Company's seismic business is stable and the possibility for significant improvement exists.

     Oil and Gas

     Net volume and price information for the Company's oil and gas production for the years ended December 31, 2000, 1999 and 1998 is summarized in the following table:

     Oil and gas revenue was $24,435,000, $19,036,000 and $18,994,000 during 2000, 1999 and 1998, respectively. The increase in oil and gas revenue from 1999 to 2000 was due to higher market prices in 2000 offset by lower production volumes. The decline in oil and gas production was primarily due to the effect of the sale of a group of wells in August 2000 and July 1999, as well as normal production declines on several of the Company's older wells. Production from new wells drilled in 2000 partially offset these declines. The increase in oil and gas revenue from 1998 to 1999 was primarily attributable to higher average oil prices received by the Company, partially offset by lower oil and gas production. The decline in oil and gas production between 1998 and 1999 was primarily due to normal production declines experienced on several of the Company's older wells. Additionally, in July 1999, the Company sold its interest in 11 oil and gas wells, five of which were producing.

     Depletion of oil and gas properties was $10,376,000, $9,093,000 and $11,872,000 for the years ended December 31, 2000, 1999 and 1998, respectively, which amounted to $1.67, $1.17 and $1.39, respectively, per mcfe of gas produced during such periods. The rate per mcfe varies with the estimate of proved oil and gas reserves of the Company at each quarter end, as well as evaluated property costs. The increase in the rate from 1999 to 2000 was primarily due to lower proved reserve volumes in 2000 as compared to 1999, primarily resulting from the sale of proved reserves and revisions to estimated reserve volumes. The decrease in the rate between 1998 and 1999, was primarily due to higher estimated reserve volumes in 1999 as a result of new discoveries of reserves.

     Oil and gas production costs amounted to $.78, $.61 and $.55, per mcfe of gas produced during 2000, 1999 and 1998, respectively. The increase in the rate between 1999 and 2000 was primarily due to higher workover costs incurred during 2000 and higher production taxes in 2000 due to higher oil and gas prices. The increase in the rate from 1998 to 1999 is primarily attributable to an increase in compression costs for the Company's East Texas Smackover properties.

     Corporate and Other

     The Company's selling, general and administrative expenses were $34,790,000 in 2000, $28,587,000 in 1999 and $26,599,000 in 1998. The increase from 1999 to 2000 was primarily due to an increase in fixed costs due to the growth of the Company, as well as an increase in variable expenses related to increased revenue. These increases were partially offset by a decrease in management's incentive compensation resulting from the restructuring that occurred in June 2000. The increase from 1998 to 1999 was primarily due to legal and other non-recurring expenses incurred during 1999 and an increase in costs resulting from the Company's expansion in Canada. These increases were partially offset by a reduction of variable expenses, including commissions on revenue and compensation tied to pre-tax profits. As a percentage of total revenue, selling, general and administrative expenses were 21% in 2000, 22% in 1999 and 18% in 1998.

     During the year ended December 31, 2000, the Company charged to expense costs totaling $958,000 that had been incurred in connection with the proposed initial public offering of its wholly-owned subsidiary, DDD Energy. The offering was delayed due to market conditions and management changes.

     On June 23, 2000, the Company announced that its management incentive bonus compensation contracts had been restructured to reduce bonuses on pre-tax profits to 8.5% from 17.5%. In connection with the restructuring, the Company issued 375,000 restricted shares of its Common Stock to three members of management and made cash payments totaling $1,771,000. As a result, the Company recorded a restructuring charge in 2000 totaling $4,394,000 ($3,743,000, net of tax) to reflect the cost of the shares issued and the cash payments made. In addition, the Company will, subject to continued employment, make (i) four annual payments of $187,500, net of taxes, to Herbert Pearlman, Chairman of the Board of Directors, beginning January 1, 2001; (ii) four annual payments of $125,000, net of taxes, to Paul Frame, President and Chief Executive Officer, beginning January 1, 2001; and (iii) payments totaling $1.4 million, net of taxes, to David Lawi payable over four years beginning January 1, 2001. The agreements provide that the Company will pay withholding taxes of 35% relating to these payments. The Company will also make annual payments of $850,000 to Horace Calvert beginning July 1, 2000 through May  31, 2004, subject to continued employment. These payments will be charged to expense over the period earned. Selling, general and administrative expenses for 2000 include $1,425,000 related to these payments. The decrease is management's compensation as a result of the restructuring was $4,204,000 before deduction of the $1,425,000 payments.

     The Company's interest expense was $13,168,000 in 2000, $11,791,000 in 1999 and $5,963,000 in 1998. The increase from 1999 to 2000 was primarily due to the Series D, E and F Senior Notes totaling $138 million being outstanding for the entire year in 2000, whereas in 1999, they were only outstanding for 101/2 months. The increase between 1998 and 1999 was primarily due to the addition of $138 million of senior notes on February 12, 1999 at an average interest rate of 7.3% partially offset by lower interest expense on the Company's revolving line of credit due to lower amounts being borrowed throughout 1999.

     Interest income was $962,000 in 2000, $714,000 in 1999 and $423,000 in 1998. The increase between 1999 and 2000 was primarily due to fluctuation in cash balances available for investment. The increase from 1998 to 1999 was primarily attributable to interest income received on the notes receivable from officers and employees entered into in October 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. ("Eagle") owned by the Company. The fair market value of the common stock of Eagle held by the Company on the date the 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 year ended December 31, 1999.

    The Company's effective income tax rate was 36.6%, 43.2% and 35.9% for the years ended December 31, 2000, 1999 and 1998, respectively. The decrease in the effective income tax rate from 1999 to 2000 was primarily due to lower taxes on foreign earnings in 2000. The increase in the effective income tax rate from 1998 to 1999 was primarily a result of Canadian operations, which were taxed at a higher rate than the U.S. rate, representing a larger percentage of pre-tax profits than in prior years.

     The Company's cash flow from operations was $93,487,000, $74,494,000 and $97,493,000 for the years ended December 31, 2000, 1999 and 1998, respectively. The increase from 1999 to 2000 was primarily attributable to an increase in cash received from customers resulting from the increase in revenue partially offset by an increase in interest expense and taxes paid. The decrease from 1998 to 1999 was primarily attributable to (i) a decrease in cash received from customers due to the decrease in revenue in 1999, (ii) an increase in payments to suppliers in 1999 and (iii) an increase in interest expense paid due to the issuance of $138 million senior notes in 1999.

     The Company has a $75 million unsecured revolving line of credit facility whose maturity was extended to June 15, 2001. Under the terms of the extension, the facility bears interest at a rate of LIBOR plus 1.25%, the bank's prevailing prime rate, or the sum of the Federal Funds effective rate for such day plus 1/2%. The balance outstanding on this revolving line of credit as of March 28, 2001 was $60 million bearing an average interest rate of 6.23%. The Company is currently in negotiations to establish a new line of credit facility upon expiration of the current facility.

     On November 9, 1999, the Company's wholly-owned subsidiary, Olympic Seismic Ltd. ("Olympic"), entered into revolving credit facilities which allow it to borrow up to $5 million (Canadian dollars) by way of prime based loans, bankers' acceptances, or letters of credit. Prime based loans and bankers' acceptances bear interest at the rate of the bank's prime rate plus 0.35% per annum and 0.50% per annum, respectively. Letter of credit fees are based on scheduled rates in effect at the time of issuance. The facility is secured by Olympic's assets, but is not guaranteed by Seitel, Inc. or any of its other subsidiaries. Borrowings under the facility are limited to 75% of trade receivables less than 90 days old. The facility is subject to repayment upon demand and is available from time to time at the Bank's sole discretion. As of March 28, 2001, no amounts were outstanding on this revolving line of credit. Olympic is not a party to any of the debt issued by Seitel, Inc.

     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 the Series D, E and F Notes is payable semi-annually on February 15 and August 15. As of March 28, 2001, the balance outstanding on the Series D, E and F Notes was $138 million.

     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 which began on 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 the Series A, B and C Notes is payable semi-annually on June 30 and December 30. As of March 28, 2001, the balance outstanding on the Series A, B, and C Notes was $28,333,000.

     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 and (iii) common stock, or any combination of the foregoing, up to an aggregate of $41,041,600 pursuant to an effective "shelf" registration statement filed with the SEC. In addition, under another effective "shelf" registration statement filed with the SEC, the Company may offer up to an aggregate of $200,000,000 of the following securities, in any combination, from time to time in one or more series: (i) unsecured debt securities, which may be senior or unsubordinated; (ii) preferred stock; (iii) common stock, and (iv) trust preferred securities.

     From January 1, 2000, through March 28, 2001, the Company received $14,386,000 from the exercise of common stock purchase warrants and options. In connection with these exercises, the Company will also receive approximately $2,257,000 in tax savings.

     In August 2000, the Company's wholly-owned subsidiary, DDD Energy, Inc., sold its working interest in eight producing oil and gas wells and associated leasehold for proceeds of $16.9 million or approximately $12.8 million, net of revenues and costs. Additionally, the Company received $100,000 related to other oil and gas property sales during 2000. The Company used these funds to reduce its borrowings under its line of credit.

     In November 1999, the Company filed a registration statement with the SEC to accomplish the spin-off of DDD Energy through an initial public offering. The offering was delayed due to market conditions and management changes. The Company is continuing to evaluate how to best maximize the value of DDD Energy's properties, including (i) proceeding with the deferred spin-off through an initial public offering, (ii) sale or other disposition of some or all of DDD Energy's properties, (iii) continuing to operate the properties to realize value through additional exploration and production, or (iv) some combination of these alternatives.

     During 2000, the Company repurchased 330,400 shares of its common stock in the open market at a cost of $4,849,000, pursuant to a stock repurchase program authorized by the Board of Directors in 1997. The Board has authorized expenditures of up to $25 million towards the repurchase of its common stock. As of March 28, 2001, the Company has repurchased a total of 1,010,100 shares of its common stock at a cost of $11,124,000 since 1997 under this plan.

     During 2000, gross seismic data bank additions and capitalized oil and gas exploration and development costs amounted to $77,288,000 and $14,767,000 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 sale of oil and gas properties, and proceeds from the exercise of common stock purchase warrants and options.

     Currently, the Company anticipates capital expenditures for 2001 to total approximately $133 million, of which approximately $109 million will be for seismic data bank additions, approximately $3 million will be for computer equipment purchases and approximately $21 million will be 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 currently anticipated 2001 capital expenditures, along with expenditures for operating and general and administrative expenses and debt repayments. 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 2001, the Company could arrange for additional debt or equity financing during 2001; 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.

     In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133, as amended by SFAS No. 137, is required to be adopted on January 1, 2001. 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 formally document, designate, and assess the effectiveness of transactions that receive hedge accounting treatment. The Company adopted SFAS No. 133 on January 1, 2001. The adoption of SFAS No. 133 did not have a material impact on the Company's financial position or results of operations.

     Our business could be adversely affected by low exploration, development and production spending by oil and gas companies and by low oil and gas prices.

     Our seismic business depends upon exploration, development and production spending by oil and gas companies. Low oil and gas prices could result in decreased exploration, development and production spending by oil and gas companies, which could affect our seismic data business. Although oil and gas prices have been strong, any future decline could result in decreased revenues from our oil and gas exploration and production business.

     We invest significant amounts of money in acquiring and processing seismic data for our data library with only partial underwriting of the costs by customers.

     We invest significant amounts of money in acquiring and processing new seismic data to add to our data library, which is generally funded by current and future data licensing fees. The amounts of these future data licensing fees are uncertain and depend on a variety of factors, including the market prices of oil and gas, customer demand for seismic data in our library, availability of similar data from competitors and governmental regulations affecting oil and gas exploration. Many of these factors are beyond our control. In addition, the timing of these sales can vary greatly from period to period. Technological or regulatory changes or other developments could adversely affect the value of the data.

     Because our business is concentrated in the U.S. Gulf Coast and Canada, it could be adversely affected by developments in the oil and gas business that affect these areas.

     Most of the seismic data in our seismic data library covers areas along the U.S. Gulf Coast, offshore in the U.S. Gulf of Mexico or in Canada. Also, most of our existing interests in oil and gas properties are located along the coast of the U.S. Gulf of Mexico. Because of this geographic concentration, our results of operations could be adversely affected by events relating primarily to one of these regions even if conditions in the oil and gas industry worldwide were favorable. Some examples of possible events that would adversely affect the U.S. Gulf Coast region would be changes in governmental regulations adversely affecting offshore drilling in the U.S. Gulf of Mexico, shortages of drilling or other necessary equipment in this region, or increases in gas transportation costs from this region to the Northeastern U.S., where much of the gas produced in this region is consumed.

     The amounts we amortize from our data library each period may fluctuate, and these fluctuations can affect our reported results of operations.

     We amortize the cost of our seismic data library based in part on our estimates of future sales of data. These estimates may vary from period to period depending upon market developments and our expectations. Substantial changes in amortization rates can have a significant effect on our reported results of operations.

     Drilling hazards and dry holes could affect our oil and gas activities.

     We may not discover commercial quantities of oil and gas when we participate in drilling wells. Our oil and gas operations could be adversely affected by the occurrence of drilling hazards. These include :

     Some of these hazards can cause personal injury and loss of life, severe damage to and destruction of property and equipment, environmental damage and suspension of operations. We usually do not act as operator in our oil and gas drilling business and depend on our partners to minimize these operating risks.

    We have recorded write-downs because of low oil and gas prices and may be required to do so again in the future. Future write-downs would result in a charge to our earnings and possible losses.

     Under SEC oil and gas accounting rules, we may have to write-down our assets if oil and gas prices decline significantly or if we have significant downward adjustments to our oil and gas reserves. We recorded a $9.6 million pre-tax, $6.2 million after tax, non-cash write-down of the carrying value of our proved oil and gas properties as of December 31, 1997 due to low oil and gas prices. If oil and gas prices fall significantly, or if we have significant downward reserve adjustments in the future, it is possible that additional write-downs will occur again. These write-downs would result in a charge to our earnings and possible losses, but would not impact cash flows from operating activities.

     Our debt agreements may limit our flexibility in responding to changing market conditions or in pursuing business opportunities.

     Our debt agreements contain restrictions and requirements relating to, among other things:

     These restrictions and requirements may limit our flexibility in responding to market conditions or in pursuing business opportunities that we believe would have a positive effect on our business.

     Extensive governmental regulation of our business affects our daily operations.

     Our seismic data customers are subject to extensive governmental regulation. In addition, our oil and gas exploration and production operations are subject to regulations. These regulations, among other things:

     New laws or regulations or changes to existing laws or regulations affecting the oil and gas industry could reduce customer demand for our seismic data or increase the operating costs of our oil and gas business.

     Loss of key personnel could adversely affect our business.

     We depend on a relatively small group of management and technical personnel. The loss of one or more of these individuals could have a material adverse effect on our business.

     Statements contained in this Report about Seitel's future outlook, prospects and plans, including those that express belief, expectation, estimates or intentions, as well as those that are not statements of historical fact, are forward looking. These statements represent Seitel's reasonable belief and are based on Seitel's current expectations and assumptions with respect to future events. While Seitel believes its expectations and assumptions are reasonable, they involve risks and uncertainties beyond Seitel's control that could cause the actual results or outcome to differ materially from the expected results or outcome. Such factors include any significant change in the oil and gas business or the economy generally, 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 forward-looking statements contained in this Report speak only as of the date hereof, and Seitel disclaims any duty to update these statements.

     The Company produces and sells natural gas, crude oil, condensate and natural gas liquids. The Company currently sells most of its oil and gas production under price sensitive or market contracts. As a result, the Company's financial results can be significantly affected as oil and gas prices fluctuate. The Company has a price risk management program that utilizes derivative financial instruments, principally natural gas swaps, to reduce the price risks associated with fluctuations in natural gas prices. However, these contracts also limit the benefits the Company would realize if prices increase. These financial instruments are designated as hedges and accounted for on the accrual basis, recognizing gains and losses in oil and gas production revenues when the associated production occurs. These contracts usually are placed with major derivative dealers that the Company believes are minimal credit risks. The Company defers and recognizes in income the net gains and losses on natural gas swaps designated as hedges of anticipated transactions, including accrued gains or losses upon maturity or termination of the contract, when the associated hedged gas is produced.

     During 1999, the Company entered into natural gas swaps in order to hedge a portion of anticipated natural gas production. During 1999, the Company recognized net hedging losses of $308,000. As of December 31, 1999, the Company had open commodity price hedges totaling 2,285,000 MMBtu at an average price of 2.51 per MMBtu. The estimated fair value of these open commodity price hedges as of December 31, 1999 was $(377,000). During 2000, the Company recognized net hedging losses of $1,692,000. As of December 31, 2000, the Company did not have any open commodity price hedges. The Company continually reviews and may alter its hedged positions. The Company's strategy is to seek arrangements with guaranteed minimum prices and flexibility to participate in improving commodity prices.

     The Company may enter into various financial instruments, such as interest rate swaps, to manage the impact of changes in interest rates. Currently, the Company has no open interest rate swap or interest rate lock agreements. Therefore, the Company's exposure to changes in interest rates primarily results from its short-term and long-term debt with both fixed and floating interest rates. The following table presents principal or notional amounts (stated in thousands) and related average interest rates by year of maturity for the Company's debt obligations and their indicated fair market value at December 31, 2000: