We have audited the accompanying statements of net assets available for benefits of the Seitel, Inc. 401(k) Plan as of December 31, 2001 and 2000, and the related statement of changes in net assets available for benefits for the year ended December 31, 2001. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 2001 and 2000, and the changes in its net assets available for benefits for the year ended December 31, 2001, in conformity with accounting principles generally accepted in the United States.

Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2001, is presented for purposes of additional analysis and is not a required part of the financial statements but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole.

                                                                                    /s/ ERNST & YOUNG LLP

Houston, Texas
July 12, 2002

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The following description of the Seitel, Inc. 401(k) Plan (the "Plan") is provided for general information only. Participants should refer to the Summary Plan Description for a more complete description of the Plan's provisions, a copy of which is available from Seitel, Inc. (the "Company").

The Plan is a defined contribution plan which covers employees of the Company. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA").

Effective October 12, 2001, the Company amended the Plan to state that participants are eligible to participate in the Plan following the completion of one month of service and no age limit. Prior to the amendment, employees were eligible to participate in the Plan following the completion of one-half year of service and attainment of age 21, as defined by the Plan.

The Plan allows participants to contribute up to 17% of their eligible annual compensation on a pre-tax basis, subject to certain limits prescribed by law.

The Company may make a discretionary matching contribution in an amount not to exceed 100% of the first 100% of the participant's compensation contributed to the Plan. During 2001, the Company elected to make a matching contribution equal to 25% of the participant's contribution.

The Company may also make a discretionary profit-sharing contribution to the Plan for each eligible participant. Participants who are credited with 1,000 hours of service during the Plan year and are employed on the last day of the Plan year or terminated due to death, disability, or attainment of age 65 are eligible for the profit-sharing contribution. This amount will be allocated to the participant's accounts based on the ratio of participant compensation to total compensation of all participants eligible for a share of the profit sharing contribution. During 2001, the Company made no profit-sharing contribution.

Participants direct the investment allocation of all contributions.

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Participants are immediately vested in their contributions plus actual earnings thereon. Vesting in the participant's employer contributions account, including actual earnings thereon, is based upon years of continuous service. A participant vests 20% each year and is 100% vested after five years of credited service. Forfeitures of nonvested company matching contributions will be used to reduce future employer contributions to the Plan. Forfeitures of profit-sharing contributions will be reallocated among remaining participants at the end of the Plan year in the proportion that the compensation paid to each participant during the plan year bears to the compensation paid to all such participants, subject to limitations.

Participant benefits are payable to participants or to a designated beneficiary in the event of retirement, death, disability, or termination of employment. In-service distributions may be made from any of the participant's vested account balance upon attainment of age 59 1/2 or for financial hardship in accordance with the Plan. Benefit payments are made in the form of a lump sum payment, annuity payments, or some combination of the two.

Certain administrative expenses are paid by the Company.

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The accompanying financial statements of the Plan have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States. Benefit payments to participants are recorded upon distribution.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates that affect the amounts reported in the financial statements and accompanying notes and schedule. Actual results could differ from those estimates.

Investments in mutual funds and common stocks are stated at fair value, based on quotations obtained from national security exchanges. Investments in common collective trust funds are based on quoted market values as determined by the issuer based on the fair value of the underlying investments. Participant loans are stated at cost, which approximates fair value.

Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.

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At July 11, 2002, based on the last sale price of the Company's common stock of $.72 per share reported on the composite transactions of the New York Stock Exchange, the value of the 105,695 shares of the Company's common stock held in the Plan at December 31, 2001 would be $76,100.

Individual investments that represent 5% or more of the Plan's net assets are as follows:

During 2001, the Plan's investments (including investments bought, sold, and held during the year) depreciated in value as follows:

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Schedule H, Line 4(i) - Schedule of Assets (Held At End of Year)

EIN: 76-0025431 PN: 001

December 31, 2001

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