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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).

Item 1.    FINANCIAL STATEMENTS

SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

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

SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)

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

(Index)

SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited)
(In thousands)

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

(Index)

SEITEL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands, except share amounts)

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

(Index)

SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In thousands)

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

(Index)

     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 accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Certain reclassifications have been made to the amounts in the prior year's financial statements to conform to the current year's presentation. Operating results for the three months ended March 31, 2003 are not necessarily indicative of the results that may be expected for the year ending December 31, 2003. These unaudited financial statements should be read in conjunction with the financial statements and notes thereto for the year ended December 31, 2002 contained in the Company's Annual Report filed on Form 10-K with the Securities and Exchange Commission.

     The Company is presently negotiating with the holders of its Senior Notes ("Noteholders") to implement a restructuring of the Senior Notes; however, there can be no assurance that such negotiations will be successful or that they will result in a modification under which the Company can operate. If the Company is unable to obtain such long-term modifications, the Noteholders could elect to accelerate the debt. Based on the Company's present financial condition, if such debt were to be accelerated, the Company would be unable to satisfy its obligations under the Senior Notes without additional or replacement sources of financing. It is likely that the Company would not be able to obtain such financing on satisfactory terms or at all. A restructuring or acceleration of the Senior Notes would likely result in the Company filing for protection under Chapter 11 of the U.S. Bankruptcy Code.  The Company is unable to predict the terms or timing of any restructuring, and there can be no assurance that a restructuring will be successfully concluded.

     Due to the level of the Company's debt and the Company's non-compliance with certain covenants, (i) a substantial portion of the Company's cash flow from operations must be dedicated to debt service and payments of such obligations and, to the extent so used, will not be available for operational purposes, (ii) the Company's ability to obtain additional financing in the future may be limited, and (iii) the Company's flexibility in reacting to changes in the operating environment and economic conditions may be limited. In connection with the conclusion of the matters described in the preceding paragraph, the Company may be forced to take actions such as reducing or delaying capital expenditures, reducing costs and selling assets.

     As a result of the Company's present financial condition and the possibility that the Company may be unable to satisfy its future obligations, customers of the Company may refuse to enter into large data licensing agreements and contractors may refuse to provide services to the Company without receiving payment in advance. A significant loss of customers or agreements with contractors would have a material adverse effect on the financial condition of the Company.

(Index)

     Contractual Obligations:     As of March 31, 2003, the Company had approximately $279.3 million of outstanding debt and lease obligations, with aggregate contractual cash obligations summarized as follows (in thousands):

NOTE B-REVENUE RECOGNITION

     Revenue from the creation of new seismic data is recognized using the proportional performance method based upon costs incurred and work performed to date as a percentage of total estimated costs and work required. Management believes that this method is the most reliable and representative measure of progress for its data creation projects. The duration of most data creation projects is generally less than one year. Under these projects, the Company creates new seismic data designed in conjunction with its customers and specifically suited to the geology of the area using the most appropriate technology available. The contracts typically result in one or more customers underwriting a significant portion of the direct creation costs in exchange for a license or licenses to use the resulting data. Customers make periodic payments throughout the creation period which generally correspond to costs incurred and work performed. These payments are non-refundable. The creation p rocess generally occurs in the following stages: permitting, surveying, drilling, recording and processing. At each stage, the customers receive legally enforceable rights and access to, and the benefits of, the results of all work performed. The customers also receive access to and use of the newly acquired and processed data. The customers may have exclusive access to the work performed and exclusive use of the newly acquired and processed data for a limited term, which is generally nine months or less, after final delivery of the processed data. The customers' access to and use of the results of the work performed and of the newly acquired, processed data is governed by a license agreement which is a separate agreement from the acquisition contract. The Company's acquisition contracts require the customer either to have a license agreement in place or to execute one at the time the acquisition contract is signed. The Company maintains sole ownership of the newly acquired data, which is added to its librar y, and is free to license the data to other customers when the original customers' exclusivity period ends.

     Revenue from Data Licenses

     The Company licenses data from its seismic data library to customers under four basic forms of contracts.

     Under the first form of contract, the customer licenses and selects data from the data library at the time the contract is entered into.

     Under the second form of contract, referred to as a "review and possession" contract, the customer obtains the right to review a certain quantity of data for a limited period of time. During the review period, the customer may select specific data from that available for review to hold long-term under its license agreement. Any data not selected for long-term licensing must be returned to the Company at the end of the review period.

     Under the third form of contract, referred to as a "library card" contract, the customer initially receives only access to data. The customer may then select specific data, from the collection of data to which it has access, to hold long-term under its license agreement. The lengths of the selection periods under the library card contracts vary.

(Index)

     Under the fourth form of contract, referred to as a "review only" contract, the customer obtains rights to review a certain quantity of data for a limited period of time, but does not obtain the right to select specific data to hold long-term.

     The usage of all data delivered to the customer, whether for review only or to hold long-term, is governed by a license agreement, which is a separate agreement from the contracts that are described above. The Company's contracts require the customer either to have a license agreement in place or to execute one at the time the contract is signed. The license agreement governs all data delivered to the customer during the term. Payment terms under the contracts vary from 30 days to 18 months depending on the size of the transaction. All payments due are non cancelable and all payments made are non-refundable. The customer has access to all available data covered by the contracts on the date the contract is executed. If the contract allows licensing of data that is not currently available, revenue is deferred until such time that the data is available for licensing. The contracts permit selection of the data in its present form and the Company is under no obligation to make any enhancements, modifications or additions to the data unless specific terms to the contrary are included, in which case revenue with respect to such data would be deferred until performance is met. Copies of the data are available to the customer immediately upon request.

     The Company recognizes revenue from licensing of seismic data when the Company has contracted with the customer for a fixed sales price; a licensing agreement is in place; the customer has selected specific data under the terms of the contract or the contract has expired without full selection having occurred; and collectibility of the sales price is reasonably assured. The Company recognizes revenue for the particular data selected as each specific selection of data is made by the customer. If selections are not completed by the expiration date of the contract, the Company recognizes any remaining revenue under that contract. In each case (selection or expiration), the earnings process is complete. The Company does not recognize revenue for amounts billed in advance of being earned until these conditions are met. For revenue that is deferred, the Company defers the direct costs (primarily commissions) related to the revenues. Revenue from licensing of seismic data is presented net of revenue shared with other entities.

     Revenue from Non-Monetary Data Exchanges

     In certain cases, the Company grants its customer a non-exclusive license to selected data from its library in exchange for ownership of seismic data from the customer. The data that the Company receives is distinct from the data that it is licensing to the customer. Because the Company receives ownership of distinct seismic data to be added to its library, and this data may be relicensed by the Company on a continuing basis, in exchange for a data license, the exchange is not a "like-kind" exchange, which would be accounted for at historical cost. Once data selection is completed, the exchange represents the culmination of the earnings process with the customer and is not merely an exchange between two seismic companies. These exchanges are referred to as non-monetary data exchanges.

     The Company records a data library asset for the seismic data acquired at the time the contract is entered into and recognizes revenue on the transaction in accordance with its policy on revenue from data licenses, that is, when the data is selected by the customer. The data license to the customer is in the form of one of the four basic forms of contracts discussed above. These transactions are valued at the fair value of the data received or delivered, whichever is more readily determinable.

     The Company determines fair value of data exchanged by first determining the value of the license granted to the customer. It does so by evaluating the range of cash transactions by the Company for licenses of similar data during the prior six months for licenses in the United States and for the prior twelve months for licenses in Canada. In evaluating the range of cash transactions, the Company does not consider transactions that are disproportionately high or low. The Company then also considers the value of the data received from the customer. In determining the value of the data received, the Company considers the age, quality, current demand and future marketability of the data as well as the cost that would be required to create the data. In the United States, the Company applies a limitation on the value it assigns per square mile on the data exchanged. In Canada, in the event of a difference greater than 2% between the value of the license granted and the value of the d ata received, the Company assigns the lower value to the exchange. In significant exchanges ($500,000 or more), the Company also obtains an opinion from an independent third party in order to confirm the Company's valuation of the data received. The Company obtains these opinions on an annual basis, usually in connection with the preparation of its annual financial statements.

(Index)

     For the three months ended March 31, 2003 and 2002, the Company recorded seismic data library assets from non-monetary exchanges of seismic data of $3,109,000, and $3,025,000, respectively. Revenue on a significant portion of the non-monetary data exchange transactions was initially deferred in accordance with the Company's accounting policy. As a result of data selections by customers, the Company recognized revenue of $3,632,000, and $4,378,000 for the three months ended March 31, 2003 and 2002, respectively, from non-monetary data exchanges.

     Revenue from Solutions

     Revenue from Solutions is recognized as the services for reproduction and delivery of seismic data are provided to customers.

NOTE C-SEISMIC DATA LIBRARY

     The Company's seismic data library consists of seismic surveys that are offered for license to customers on a non-exclusive basis. Costs associated with creating, acquiring or purchasing the seismic data library are capitalized and such costs are amortized on the income forecast method subject to a maximum amortization period determined based on the type of data.

Costs of Seismic Data Library

     For purchased seismic data, the Company capitalizes the purchase price of the acquired data.

     For data acquired through a non-monetary data exchange, the Company capitalizes an amount equal to the fair value of the data received by the Company or the fair value of the license granted to the customer, whichever is more clearly determinable. In the case of any single non-monetary exchange where the fair value recorded is in excess of $500,000, the Company also obtains an opinion from a third party to support the amount capitalized with respect to such data.

     For internally created data, the capitalized costs include costs paid to third parties for the acquisition of data and related permitting, surveying and other activities associated with the data creation activity. In addition, the Company capitalizes certain internal costs related to processing the created data. Such costs include salaries and benefits of the Company's processing personnel and certain other costs incurred for the benefit of the processing activity. The Company believes that the internal processing costs capitalized are not greater than, and generally are less than, those that would be incurred and capitalized if such activity were performed by a third party. Capitalized costs for internal data processing were $552,000 and $418,000 for the three months ended March 31, 2003 and 2002, respectively.

Data Library Amortization

     Effective January 1, 2002 (see "Change in Accounting Principle" below), the Company amortizes its seismic data library using the greater of the amortization that would result from the application of the income forecast method or a straight-line basis over the useful economic life of the data.

     The actual rate of amortization depends on the location of specific seismic surveys licensed and selected by the Company's customers during the year. Effective January 1, 2003, the Company assigns a specific amortization rate to each of fourteen separately identified segments of its seismic data library based on its estimate of future sales from each segment. The amortization rates vary by segment and range from a low of 37% to a high of 86% with a weighted average rate of 50% based on the net book value of each segment compared with the net book value of the entire seismic data library as of December 31, 2002.

     The Company applies the income forecast method by forecasting the ultimate revenue expected to be derived from a particular data library segment over the estimated useful economic life of each survey comprising part of such segment. That forecast is made by the Company annually and reviewed quarterly. If, during any such review and update, the Company determines that the ultimate revenue for a library segment is expected to be significantly different than the original estimate of total revenue for such library segment, the Company revises the amortization rate attributable to future revenue from each survey in such segment. In addition, in connection with such reviews and updates, the Company evaluates the recoverability of its seismic data library, and if required under Statement of Financial Accounting Standard ("SFAS") No. 144, "Accounting for the Impairment and Disposal of Long-Lived Assets," records an impairment charge with respect to such data. See discussion on "Se ismic Data Library Impairment" below.

(Index)

     The greater of the income forecast or straight-line amortization policy is applied quarterly on a cumulative basis at the individual survey level. Under this policy, the Company first records amortization using the income forecast method. The cumulative income forecast amortization is then compared with the cumulative straight-line amortization. If the cumulative straight-line amortization is higher for any specific survey, additional amortization expense is recorded, resulting in accumulated amortization being equal to the cumulative straight-line amortization. This requirement is applied regardless of future-year revenue estimates for the library segment of which the survey is a part and does not consider the existence of deferred revenue with respect to the library segment or to any survey. As discussed below in "Revision of Useful Life of Data Library," the Company revised its useful life estimate in the fo urth quarter of 2002 from ten years to five years with respect to offshore data and from ten years to seven years with respect to onshore data.

Change in Accounting Principle 

     In the second quarter of 2002, the Company changed its accounting policy for amortizing its created seismic data library from the income forecast method to the greater of the income forecast method or the straight-line method over the useful economic life of the data (described above) and reported the adoption of the new method as a cumulative effect of a change in accounting principle retroactive to January 1, 2002. The Company changed its accounting policy in an effort to increase the transparency of its methodology and to be more consistent with other industry competitors. Accordingly, the Company recorded a pre-tax charge of $17.2 million (after-tax charge of $11.2 million) as of January 1, 2002.

Revision of Useful Life

     In the fourth quarter of 2002, the Company reevaluated its estimate of the useful life of its seismic data library and revised the estimated useful life of its seismic data library to reduce the useful life of offshore data from ten to five years and onshore data from ten to seven years. In making this decision, the Company considered a number of factors, including, among others, the impairment charges it reported in 2002, the additional amortization charges the Company recorded during the first three quarters of 2002 pursuant to its new amortization policy and seismic industry conditions. With respect to each survey in the data library, the useful life policy is applied from the time such survey is available for licensing to customers generally, since some data in the library may not be licensed until an exclusivity period (usually nine months or less) has lapsed.

Seismic Data Library Impairment

     As events or conditions require, the Company evaluates the recoverability of its seismic data library in accordance with SFAS No. 144. The Company evaluates its seismic data library for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable.

     Prior to the fourth quarter of 2002, the Company evaluated its seismic data library in the following components: (a) Gulf of Mexico offshore data, (b) Gulf Coast onshore data, (c) Rocky Mountain region data (including U.S. areas outside the Gulf Coast), (d) Canadian data, and (e) international data outside of North America.

(Index)

     In the fourth quarter of 2002, the Company reevaluated the level which constitutes the lowest level of independently identifiable cash flows. In its reevaluation, the Company considered the results of the comprehensive forecasting process that had been undertaken by management in the fourth quarter of 2002, recent sales trends and management's expectations relative to its ability to attribute revenues to lower survey aggregation levels. The results of management's analysis indicated that the Company could reasonably forecast the future sales at levels lower than previously practicable. Accordingly, in the fourth quarter of 2002, the Company refined its impairment evaluation methodology to evaluate its seismic data library in components based on the Company's operations and geological and geographical trends, and as a result, established the following data library segments for purposes of evaluating impairments: (I) G ulf of Mexico offshore comprised of the following components: (a) multi-component data, (b) value-added products, (c) ocean bottom cable data, (d) shelf data, and (e) deep water data; (II) North American onshore comprised of the following components: (a) Texas Gulf Coast, (b) North, East and West Texas, (c) South Louisiana and Mississippi, (d) North Louisiana, (e) Rocky Mountains, (f) North Dakota, (g) other United States, (h) Canada and (i) value-added products, and (III) international data outside North America. The Company believes that these library components constitute the lowest levels of independently identifiable cash flows.

     In accordance with SFAS No. 144, the impairment evaluation is based first on a comparison of the undiscounted future cash flows with the carrying value of each library component. If the undiscounted cash flows are equal to or greater than the carrying value of such component, no impairment is recorded. If undiscounted cash flows are less than the carrying value of any component, the forecast of future cash flows related to such component is discounted to fair value and compared with such component's carrying amount. The difference is recorded as an impairment loss equal to the difference between the library component's carrying amount and the discounted future value of the expected revenue stream.

     For purposes of evaluating potential impairment losses, the Company estimates the future cash flows attributable to a library component by evaluating historical revenue trends, oil and gas prospectivity in particular regions, general economic conditions affecting its customer base and expected changes in technology. The cash flow estimates exclude expected future revenues attributable to non-monetary data exchanges and future data creation projects.

     The estimation of future cash flows is highly subjective, inherently imprecise and can change materially from period to period based on the factors described in the preceding paragraph, among others. Accordingly, if conditions change in the future, the Company may record impairment losses relative to its seismic data library, which could be material to any particular reporting period.

NOTE D-DISCONTINUED OPERATIONS

     In June 2002, the Company's Board of Directors unanimously adopted a plan to dispose of the Company's oil and gas operations by sale. Accordingly, the Company's consolidated financial statements report the oil and gas operations as discontinued operations. During 2002, the Company sold a majority of its oil and gas assets. Remaining oil and gas assets consist of six properties in which the Company has a working interest. The remaining carrying value of these properties is $150,000, and the Company continues to market such oil and gas assets for sale.

     Revenue from the discontinued operations was $81,000 and $2,643,000 for the three months ended March 31, 2003 and 2002, respectively. Pre-tax losses from the discontinued operations were $237,000 and $876,000 for the three months ended March 31, 2003 and 2002, respectively.

     The Company uses the full-cost method of accounting for its oil and gas operations.

(Index)

     Senior Notes:    The Company has outstanding unsecured Senior Notes (the "Senior Notes") totaling $255 million at March 31, 2003.  The financial covenants in the Senior Notes include, among other restrictions, maintenance of minimum net worth and limitations on total debt, interest coverage, liens, debt issuance, dividends and disposition of assets.   As a result of the Company's restatement of its financial statements prior to January 1, 2002, the impairment and sale, at a substantial loss, of its oil and gas properties and poor financial results in the first quarter of 2002, the Company was not in compliance with, among other things, the limitation on total debt, minimum net worth, interest coverage and limitation on restricted payments and investments covenants in its Senior Notes. Effective June 21, 2002, the Company entered into a standstill agreement (the "Standstill") with the Noteholders pursuant to which the Noteholders agreed to not exercise remedies available to them under the Senior Notes as a result of existing defaults. The Standstill has been amended and extended and, subject to certain conditions, presently expires on June 2, 2003.

     During the continuance of the Standstill, various existing covenants are suspended and replaced with certain enumerated covenants, including the requirement that the Company receive Noteholder approval to make certain investments or payments out of the ordinary course of business, incur additional debt, create liens or sell assets. The Standstill may terminate prior to June 2, 2003 if, among other things, (i) there is an event of default by the Company under the Standstill or any subsequent defaults under the existing Senior Notes; (ii) the Company defaults on the payment of any non-excluded debt of $5,000,000 or more; (iii) the Company does not have all documentation in place to implement a restructuring of the Senior Notes by May 30, 2003; or (iv) on five business days' notice, the holders of a majority of the unpaid principal of the Notes determine to terminate the Standstill for any reason or for no reason.

     The Company is negotiating with the Noteholders to implement a restructuring of the Senior Notes; however, there can be no assurance that such negotiations will be successful or that they will result in a modification under which the Company can operate. If the Company is unable to obtain such long-term modifications, the Noteholders could elect to accelerate the debt. Based on the Company's present financial condition, if such debt were to be accelerated, the Company would be unable to satisfy its obligations under the Senior Notes without additional or replacement sources of financing. It is likely that the Company would not be able to obtain such financing on satisfactory terms or at all. A restructuring or acceleration of the Senior Notes likely would result in the Company filing for protection under Chapter 11 of the U.S. Bankruptcy Code.

     Term Loans:    The Company is not in compliance with the minimum net worth, leverage ratio and interest coverage covenants of a term loan obtained by its wholly owned subsidiary, Seitel Data, Ltd. The lender has issued a notice of default but has not accelerated the debt. The Company has made all principal and interest payments due to date on this loan.

     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. For the three months ended March 31, 2003 and 2002, the Company did not have any potentially dilutive securities. A weighted average quarter-to-date number of options and warrants to purchase 5,482,000 and 6,733,000 shares of common stock were outstanding during the first quarter of 2003 and 2002, respectively, but were not included in the computation of diluted per share income because they were antidilutive.

(Index)

     The Company accounts for employee stock-based compensation using the intrinsic value method prescribed by Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees." APB Opinion No. 25 generally does not require compensation costs to be recorded on options which have exercise prices at least equal to the market price of the stock on the date of grant. Accordingly, no compensation cost has been recognized for the Company's stock-based plans. Had compensation cost for the Company's stock-based compensation plans been determined based on the fair value at the grant dates for awards under those plans consistent with the optional accounting method prescribed by SFAS No. 123, "Accounting for Stock-Based Compensation" and expensed pro-rata over the vesting period of the awards, the Company's net loss and loss per share would have been reduced to the pro forma amounts indicated below (in thou sands, except per share data):

     The Company had restricted cash at March 31, 2003 and December 31, 2002 of $50,000 and $4.5 million, respectively, of which $4.4 million at December 31, 2002 was held in an escrow account pursuant to the Noteholder consent entered into in connection with the sale of the Company's oil and gas assets. The Company used these escrowed funds for the payment of interest to the Noteholders during the first quarter of 2003 upon receipt of written consent by the Noteholders.

     During the three months ended March 31, 2003 and 2002, the Company had non-cash additions to its seismic data library totaling $3,159,000 and $3,053,000, respectively. Of these amounts, $3,109,000 and $3,025,000 resulted from non-monetary exchanges during the three months ended March 31, 2003 and 2002, respectively. The balance of $50,000 and $28,000 for the three months ended March 31, 2003 and 2002, respectively, resulted from certain data creation costs which were offset against amounts due from the customer for data license fees. The offset amounts are also included in non-cash sales in the Consolidated Statements of Cash Flows.

     The Company has sought reimbursement from the former executives and such executives have each sued the Company seeking damages for breach of employment contracts, wrongful termination, defamation and other matters. A jury verdict substantially in favor of one of the former executives has been rendered although judgment on such verdict, and the amount awarded pursuant thereto, has not yet become final (see "Litigation" below).

(Index)

Litigation

     The Noteholders, holding an aggregate principal amount of $255 million of unsecured Notes, have made demand upon the Company and certain of its former and current officers and directors for money damages arising from certain alleged negligent actions and/or misrepresentations of those officers and directors. The Noteholders allege that their claims include that: (a) officers and directors of the Company negligently misrepresented the value of the Company's business at the time of the issuance of the Notes; (b) officers and directors of the Company negligently omitted and failed to disclose to the Noteholders accounting and other business practices that materially overstated the value of the Company's business at the time of the issuance of the Notes; and (c) officers and directors of the Company negligently failed to discover accounting and other business practices that materially overstated the value of the Company and report such matters to the Noteholders, in violati on of fiduciary and other duties owed to the Noteholders. The Noteholders allege that money damages arising from the foregoing claims are not fully quantified, but will exceed $20 million and will include, without limitation, the lost value of the Noteholders' investment in the Senior Notes. Notice of the demand has been provided by the Company to its insurance carriers. The Noteholders have not commenced litigation with respect to their alleged claims. The Noteholders are Principal Life Insurance Company, Principal Life Insurance Company, on behalf of one or more separate accounts, CGU Life Insurance Company of America, Wind River Corporation, Allstate Life Insurance Company, Allstate Life Insurance Company of New York, Massachusetts Mutual Life Insurance Company, C.M. Life Insurance Company, MassMutual Asia Limited, Provident Life and Accident Insurance Company, The Paul Revere Life Insurance Company, The Guardian Insurance & Annuity Company, Inc., Fort Dearborn Life Insurance Company, The Guardian L ife Insurance Company of America, Berkshire Life Insurance Company of America, MONY Life Insurance Company, MONY Life Insurance Company of America, Phoenix Life Insurance Company, Connecticut General Life Insurance Company, Life Insurance Company of North America, Nationwide Life Insurance Company, Nationwide Life and Annuity Insurance Company, United of Omaha Life Insurance Company, Reliastar Life Insurance Company, Reliastar Life Insurance Company f/k/a Northern Life Insurance Company, Reliastar Life Insurance Company of New York, Security Connecticut Life Insurance Company, Trustmark Life Insurance Co., American Investors Life Insurance Company, Lonestar Partners, L.P., Pan-American Life Insurance Company, Oxford Life Insurance Company, United Life Insurance Company, SunAmerica Life Insurance Company, Republic Western Insurance Company, Cohanzick High Yield Partner, L.P., and Cohanzick Credit Opportunities Fund Ltd.

     The Company and certain of its former and current officers and directors have been named as defendants in eleven lawsuits brought as class actions alleging violations of the federal securities laws, all of which were consolidated by an Order entered August 7, 2002, under Cause No. 02-1566, styled In re Seitel, Inc. Securities Litigation, in the United States District Court for the Southern District of Texas. The Court appointed a lead plaintiff and lead counsel for plaintiffs, who subsequently filed a consolidated amended complaint, which added the Company's auditors, Ernst & Young LLP, as a defendant. The consolidated amended complaint alleges that during a proposed class period of May 5, 2000 through April 1, 2002, the defendants violated sections 10(b) and 20(a) of the Securities and Exchange Act of 1934 by overstating revenues in violation of generally accepted accounting principles. The plaintiffs seek an unspecified amount of actual and exemplary damages, cos ts of court, pre- and post-judgment interest and attorneys' and experts' fees. The Company intends to vigorously defend these consolidated lawsuits. The Company and the individual defendants have filed motions to dismiss the consolidated amended complaint. No discovery has been conducted.

     The Company has been named as a nominal defendant in seven stockholder derivative actions filed in various courts: Almekinder v. Frame, Valice, Pearlman, Craig, Lerner, Stieglitz, Zeidman, Hoffman, and Seitel, Inc., No. H-02-2960, In the United States District Court for the Southern District of Texas; Basser v. Frame, Valice, Kendrick, Pearlman, Fiur, Zeidman, Stieglitz, Craig, Lerner, and Seitel, Inc., No. H-02-1874, In the United States District Court for the Southern District of Texas; Berger v. Frame, Pearlman, Valice, Craig, Stieglitz, Lerner, Zeidman, Fiur, and Seitel, Inc., No. 19534-NC, In the Court of Chancery, State of Delaware, Castle County; Chemical Valley & North Central West Virginia Carpenters Pension Plan v. Frame, Valice, Hoffman, Pearlman, Craig, Lerner, Stieglitz, Zeidman, Fiur, and Seitel, Inc., No. 02-CV-3343, In the United States District Court for the Southern District of Texas; Couture v. Frame, Valice, Craig, Lerner, S tieglitz, Zeidman, Hoffman, and Seitel, Inc., No. 20002-37065, In the 80th Judicial District Court, Harris County, Texas; Talley v. Frame, Valice, Pearlman, Craig, Lerner, Stieglitz, Zeidman, Hoffman, and Seitel, Inc., In the 151st Judicial District Court, Harris County, Texas; and Zambie v. Frame, Pearlman, Valice, Craig, Zeidman, Lerner, Stieglitz, Fiur, Ernst & Young LLP, and Seitel, Inc., In the 333rd Judicial District Court, Harris County, Texas. The plaintiffs generally allege that the defendants breached and conspired to breach fiduciary duties to the Company's shareholders by failing to maintain adequate accounting controls and by using improper accounting and auditing practices and procedures. Certain of the plaintiffs also assert causes of action for mismanagement, waste of corporate assets and unjust enrichment. The Zambie case also alleges professional negligence against Ernst & Young LLP. The plaintiffs seek judgments for unspecified amounts of compensatory da mages, including return of salaries and other payments to the defendants, exemplary damages, attorneys' fees, experts' fees and costs. The Company's Board of Directors appointed a special litigation committee to conduct an independent investigation of the allegations asserted in the derivative lawsuits. The special litigation committee completed its investigation and its report has been delivered to the Company. The Company filed its motion to dismiss in Delaware Chancery court on March 20, 2003. The parties have agreed to stay the Texas state court cases pending the outcome of the Texas federal court derivative cases. The federal court derivative cases have been consolidated, and the Company has moved to stay the cases pending resolution by the Delaware court.

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     The Company sued its former chairman of the board in Seitel, Inc. v. Pearlman, C.A. No. H.-02-1843, In the United States District Court in the Southern District of Texas. The Company sought a declaratory judgment with respect to the employment agreement between Mr. Pearlman and the Company, and asserted various other claims. Mr. Pearlman filed counterclaims with respect to such employment agreement and asserted various causes of action. On May 9, 2003, the parties reached a settlement in the matter. Pursuant to the settlement, all parties to the litigation are to execute releases in favor of the other parties, all suits are to be dismissed and the Company agreed to reimburse Mr. Pearlman for certain out of pocket costs incurred and to make certain payments both immediately and over a ten year period in respect of his former employment which has been terminated in all respects. Substantially all amounts paid or payable by the Company have been accrued and the settlement did not have a material impact on the Company's results of operations for the first quarter of 2003, and performance by the Company under the settlement will not have a material impact on reported results in any future period. 

     The Company was sued by its former chief financial officer in Valice v. Seitel, in the 55th Judicial District Court of Harris County, No. 2002-30195. Ms. Valice filed suit against the Company alleging a breach of her employment contract by virtue of her termination and alleging that a press release announcing her termination was defamatory. The Company filed a counter claim against Ms. Valice seeking to recover unearned advances she received from the Company and amounts due on two notes that were accelerated pursuant to their respective terms. The case was tried in the 152nd Judicial District Court of Harris County beginning March 10, 2003. On March 18, 2003 the jury returned its verdict in the case, finding that the Company did not have cause to terminate her contract under its terms and awarded her $4,240,580 in damages; it also found defamation occurred and awarded her $159,436.50 in compensatory and $621,293 in punitive damages. The jury also ruled in favor of th e Company, finding that the plaintiff breached her fiduciary duties to the Company and its shareholders and awarded the Company $621,293 in damages. It also found for the Company on the two stock notes and awarded it $396,007.50, the balance due plus interest accrued since August 6, 2002, the date of the acceleration and demand for payment was made. The requests of each party for attorneys' fees will be determined by the court. No judgment has as yet been entered by the court on the verdict and the Company intends to vigorously pursue all available post verdict relief in this matter, and is seeking a judgment notwithstanding the verdict as to those parts of the verdict favorable to plaintiff.

    The Company has been sued by its former chief executive officer in Frame v. Seitel, in the 113th Judicial District Court of Harris County, No. 2002-35891. Mr. Frame filed suit against the Company alleging a breach of his employment contract by virtue of his asserted termination and alleging that a press release announcing his termination was defamatory. He also seeks a declaratory judgment that certain funds he received from the Company were proper and do not have to be repaid. The Company has answered and asserted various defenses. The Company also has filed a counter suit to recover the approximately $4,200,000 in corporate funds that the Company believes he inappropriately converted for his personal use and benefit and over $800,000 due on two notes that were accelerated pursuant to their respective terms. The Company intends to vigorously defend the suit and pursue its counterclaim. Discovery is underway althou gh Mr. Frame has filed a motion to abate the case pending finalization of certain other matters. The Company is opposing Mr. Frame's motion to abate.

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     The Company is a party to a suit for geophysical trespass entitled Joy Resources, Inc. v. Seitel Data, Ltd., Cause No. 01-02-00828-CV, in the 1st Court of Appeals, Houston, Texas. The plaintiff is appealing a final judgment by the trial court holding that the plaintiff is not entitled to recover an injunction or to recover damages against the Company. The plaintiffs assert that the Company obtained seismic data about mineral interests leased by the plaintiff by placing seismic equipment on property adjacent to the property leased by the plaintiff. The trial court held that no cause of action exists where the seismic equipment is not located on the property leased by the plaintiff. The briefing has been completed in this matter, and oral argument in the 1st Court of Appeals in Houston, Texas was on May 6, 2003. The Company intends to vigorously represent its interests in this appeal.

     The Company and its subsidiary, Seitel Data, Ltd., are parties to a class action lawsuit for geophysical trespass entitled Juan O. Villarreal v. Grant Geophysical, Inc., et al., Cause No. DC-00-214, in the 229th District Court of Starr County, Texas. The plaintiffs have sued a number of defendants, including Seitel, Inc. and Seitel Data, Ltd. The plaintiffs allege that certain defendants conducted unauthorized 3-D seismic exploration of the mineral interests, and sold the information obtained to other defendants. The plaintiffs seek an unspecified amount of damages. All of the defendants have obtained summary judgments dismissing the plaintiffs' claims, and the case is now on appeal before the San Antonio Court of Appeals under Cause No. 04-02-00674-CV. The Company intends to vigorously represent its interests in this appeal.

     The Company is a party to a suit entitled Bank One, N.A. v. Paul Frame and Seitel, Inc., Cause No. 2002-43070, in the 133^rd Judicial District of Harris County, Texas. The plaintiff has sued on a corporate guarantee of a note executed by the plaintiff in favor of Paul Frame. The plaintiff alleges that Mr. Frame has defaulted on the note in the amount of $540,000. The Company asserts that (i) the Board of Directors did not authorize Mr. Frame to sign guarantees and that although the original guarantee was signed by an authorized individual other than Mr. Frame, the original guarantee was extinguished because the original note was novated, (ii) subsequent guarantees were not authorized by the Board of Directors because they were signed by Mr. Frame and were not brought to the Board of Directors' attention, and (iii) any subsequent guarantee was improperly accepted by the Bank. The Company intends to vigorously defend the suit.

     The Company has sued its former in-house counsel and law firm in Seitel, Inc. v. Cynthia Moulton and Franklin Cardwell and Jones, P.C., Cause No. 2003-09151 in the 127^th Judicial District Court of Harris County, Texas. The suit alleges negligence, breach of fiduciary duty and breach of contract surrounding the settlement of a personal lawsuit against the former chief executive officer and other aspects of representation. The Company seeks recovery for fees paid and related expenses. Initial pleadings were filed on February 21, 2003. Discovery has not yet commenced.

     On March 27, 2003 the Company was served with a complaint filed by the General Electric Credit Corporation of Tennessee ("GE") in the District Court No. 333^rd of Harris County, Texas, styled General Electric Credit Corporation of Tennessee, as Plaintiff v. N360X, LLC and Seitel, as Defendants. The complaint alleges that the Company, as guarantor, and its wholly owned subsidiary N360X, LLC as lessee, have defaulted on an agreement for the lease of a jet aircraft. GE has accelerated the obligation and has demanded payment of $3,320,432.49 that GE claims is due pursuant to the lease. The Company has not yet filed its answer. The case is in its early stages and no discovery has yet been conducted. The Company has accrued $1.5 million as an estimate of the deficiency that would result if the Plantiff's claims were to be sustained, the aircraft sold and the proceeds of such sale were to be applied to the payments otherwise due under the lease.

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     The Company and its subsidiaries, DDD Energy, Inc. ("DDD") and Endeavor Exploration, LLC ("Endeavor") have received a demand letter from an attorney representing a former DDD and Endeavor employee. The amount claimed is $1,200,000 pursuant to a purported employment contract. The Company has responded to the demand in writing and has disputed the validity of the claim. No suit has been filed as of May 7, 2003.

     In addition to the lawsuits described above, the Company is involved from time to time in ordinary, routine claims and lawsuits incidental to its business. In the opinion of management, uninsured losses, if any, resulting from the ultimate resolutions of these matters should not be material to the Company's financial position or results of operation.