Seitel Announces Third Quarter 2016 Results

Seitel, Inc., a leading provider of seismic data to the oil and gas
industry, today reported results for the third quarter ended
September 30, 2016.

Third Quarter Highlights -

• Total revenue was $23.3 million compared to $31.2 million in Q3 2015.
• Cash resales totaled $9.3 million compared to $4.0 million in Q3 2015.
• Cash flows from operating activities were $24.4 million compared to
  $21.7 million in Q3 2015.
• Cash EBITDA was $5.1 million compared to ($0.6) million in Q3 2015.
• Net loss was $5.4 million compared to $4.1 million in Q3 2015.

First Nine Months Highlights -

• Total revenue was $59.5 million compared to $86.3 million in 2015.
• Cash resales totaled $31.1 million compared to $31.4 million in 2015.
• Cash flows from operating activities were $29.1 million compared to
  $67.7 million in 2015.
• Cash EBITDA was $18.4 million compared to $16.1 million in 2015.
• Net loss was $28.5 million compared to $14.0 million in 2015.

“Although market conditions continued to be challenging in the first
nine months of this year, we posted $9.3 million in cash resales for the
third quarter, more than double that of last year’s third quarter. This
brings our year-to-date cash resales to $31.1 million, about flat with
last year’s first nine months, while our cash EBITDA increased by over
$2 million due to reduced operating costs,” commented Rob Monson, chief
executive officer and president. “We are beginning to see several
indications that the environment is improving for both us and our
clients - commodity prices have reached levels that have resulted in rig
count growth, land turnover activity has increased and there has been a
flattening of petroleum inventory levels. However, seismic spending is
likely to continue to fluctuate quarter to quarter; therefore, we remain
cautious in our near-term outlook. We continue to effectively manage our
capital and overhead costs and strive to operate at close to breakeven
cash flow.”

Total revenue for the third quarter of 2016 was $23.3 million,
consisting of acquisition underwriting revenue of $7.6 million, resale
licensing revenue of $15.1 million and Solutions and other revenue of
$0.5 million. This compares to total revenue of $31.2 million in the
third quarter of 2015, consisting of acquisition underwriting revenue of
$16.5 million, resale licensing revenue of $14.2 million and solutions
and other revenue of $0.6 million. The decrease in total revenue between
quarters was primarily due to lower acquisition underwriting revenue
resulting from a planned reduction in new data acquisition projects as a
result of the prolonged downturn in the energy industry. Cash resales, a
component of resale licensing revenue, were $9.3 million in the third
quarter of 2016 compared to cash resales of $4.0 million in the third
quarter of 2015.

Total revenue for the nine months ended September 30, 2016 was $59.5
million compared to $86.3 million for the same period last year.
Acquisition underwriting revenue was $17.5 million for the first nine
months of 2016 compared to $38.7 million in the first nine months of
2015. This decrease was primarily attributable to the planned reduction
in activity discussed above. Most of our new data acquisition activity
in the first nine months of 2016 occurred in the U.S., with a focus in
the Permian Basin as well as activity in Northern Louisiana. Total
resale licensing revenue was $40.7 million in the first nine months of
2016 compared to $45.9 million in the first nine months of 2015. For the
first nine months of 2016, cash resales were $31.1 million compared to
$31.4 million in the first nine months of 2015. Solutions and other
revenue is primarily driven by the level of seismic revenue and was $1.4
million in the first nine months of 2016 compared to $1.7 million in the
first nine months of 2015.

Our net loss was $5.4 million for the third quarter of 2016 compared to
a net loss of $4.1 million for the third quarter of 2015 and was a net
loss of $28.5 million in the first nine months of 2016 compared to a net
loss of $14.0 million in the first nine months of 2015. The increases in
losses between periods were primarily due to a reduction in revenues
partially offset by lower amortization of our seismic data library.
Lower selling, general and administrative (“SG&A”) expenses in the first
nine months of 2016 also partially offset the increase in loss between
the nine month periods.

Cash flows from operating activities were $24.4 million in the third
quarter of 2016 compared to $21.7 million in the third quarter of 2015.
The increase between the periods was primarily due to higher collections
on cash resales as a result of increased cash resales in the second and
third quarters of 2016 compared to the same quarters in 2015, partially
offset by lower collections on acquisition billings as a result of
reduced acquisition underwriting revenue in 2016. Cash flows from
operating activities were $29.1 million for the first nine months of
2016 compared to $67.7 million for the first nine months of 2015. The
decrease between periods was primarily due to the first nine months of
2015 including significant collections from cash resale activity in the
fourth quarter of 2014 as well as lower acquisition underwriting revenue
in 2016.

Cash EBITDA, a non-GAAP measure, generally defined as cash resales and
solutions revenue less cash operating expenses (excluding severance and
various non-routine items), was $5.1 million in the third quarter of
2016 compared to ($0.6) million in the same period last year. The
increase from the third quarter of 2015 was primarily the result of
higher cash resales. Cash EBITDA was $18.4 million in the first nine
months of 2016 compared to $16.1 million in the first nine months of
last year. The increase from the first nine months of 2015 to 2016 was
primarily due to lower routine cash SG&A expenses.

SG&A expenses were $5.4 million in the third quarter of 2016 compared to
$5.3 million in the third quarter of last year. The increase between the
quarterly periods was primarily due to a $0.7 million increase in
severance and other non-routine costs, partially offset by savings of
$0.5 million in routine overhead costs. SG&A expenses were $16.0 million
in the first nine months of 2016 compared to $17.2 million in the same
period last year. The decrease between the nine month periods primarily
consisted of a $2.7 million decrease in routine overhead costs partially
offset by an increase in non-routine costs of $1.7 million. The
reductions in routine overhead costs in the 2016 periods were primarily
due to an approximate 40% reduction in headcount since the beginning of
2015 through attrition and layoffs, with the most recent layoff
occurring in August 2016. Non-routine costs were primarily made up of
termination benefits related to layoffs of personnel of $0.6 million and
$1.5 million for the three and nine months ended September 30, 2016,
respectively.

We expect our total capital expenditures for the year will be
approximately $25.6 million and that our net cash capital expenditures
will be approximately $2.0 million. In the first nine months of 2016,
our acquisition underwriting revenue exceeded our gross capital costs by
$30,000 primarily due to a revision to the previous estimated costs
related to one of our new data acquisition surveys resulting in a
reduction of the gross costs of approximately $2.5 million. Gross
capital expenditures for the first nine months of 2016 were $20.0
million, of which $16.1 million related to new data acquisition. Our
current backlog of capital expenditures related to acquisition programs
is $14.1 million, of which we have obtained cash underwriting of $14.4
million. We expect approximately $3.0 million of these capital
expenditures to be incurred in 2016 with the remainder being incurred in
2017.

CONFERENCE CALL

Seitel will hold its quarterly conference call to discuss third quarter
results for 2016 on Thursday, November 10, 2016 at 9:00 a.m. Central
Time (10:00 a.m. Eastern Time). The dial-in number for the call is
800-374-2540, Conference ID 71378765. A replay of the call will be
available until November 17, 2016 by dialing 800-585-8367, Conference ID
71378765 and will be available following the conference call at the
Investor Relations section of the company's website at http://www.seitel.com.

ABOUT SEITEL

Seitel is a leading provider of onshore seismic data to the oil and gas
industry in North America. Seitel's data products and services are
critical in the exploration for and development of oil and gas reserves
by exploration and production companies. Seitel has ownership in an
extensive library of proprietary onshore and offshore seismic data that
it has accumulated since 1982 and that it licenses to a wide range of
exploration and production companies. Seitel believes that its library
of 3D onshore seismic data is one of the largest available for licensing
in North America and includes leading positions in oil, liquids-rich and
natural gas unconventional plays as well as conventional areas. Seitel
has ownership in over 44,000 square miles of 3D onshore data, over
10,000 square miles of 3D offshore data and approximately 1.1 million
linear miles of 2D seismic data concentrated in the major active North
American oil and gas producing regions. Seitel serves a market which
includes over 1,600 companies in the oil and gas industry.

This press release contains “forward-looking statements” within the
meaning of the federal securities laws, which involve risks and
uncertainties. Statements contained in this press release about our
future outlook, prospects, strategies and plans, and about industry
conditions, demand for seismic services and the future economic life of
our seismic data are forward-looking, among others. All
statements that express belief, expectation, estimates or intentions, as
well as those that are not statements of historical fact, are
forward-looking. The words “believe,” “expect,” “anticipate,”
“estimate,” “project,” “propose,” “plan,” “target,” “foresee,” “should,”
“intend,” “may,” “will,” “would,” “could,” “potential” and similar
expressions are intended to identify forward-looking statements.
Forward-looking statements represent our present belief and are based on
our current expectations and assumptions with respect to future events
and their potential effect on us. While we believe our expectations and
assumptions are reasonable, they involve risks and uncertainties beyond
our control that could cause the actual results or outcome to differ
materially from the expected results or outcome reflected in our
forward-looking statements. In light of these risks, uncertainties and
assumptions, the forward-looking events discussed in this press release
may not occur. Such risks and uncertainties include, without limitation,
actual customer demand for our seismic data and related services, the
timing and extent of changes in commodity prices for natural gas, crude
oil and condensate and natural gas liquids, conditions in the capital
markets during the periods covered by the forward-looking statements,
the effect of economic conditions, our ability to obtain financing on
satisfactory terms if internally generated cash flows are insufficient
to fund our capital needs, the impact on our financial condition as a
result of our debt and our debt service, our ability to obtain and
maintain normal terms with our vendors and service providers, our
ability to maintain contracts that are critical to our operations,
changes in the oil and gas industry or the economy generally and changes
in the capital expenditure budgets of our customers. For additional
information regarding known material factors that could cause our actual
results to differ, please see our filings with the Securities and
Exchange Commission (“SEC”), including our Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

The forward-looking statements contained in this press release speak
only as of the date hereof and readers are cautioned not to place undue
reliance on such forward-looking statements. Except as required by
federal and state securities laws, we undertake no obligation to
publicly update or revise any forward-looking statements, whether as a
result of new information, future events or any other reason. All
forward-looking statements attributable to Seitel, Inc. or any person
acting on its behalf are expressly qualified in their entirety by the
cautionary statements contained or referred to herein, in our Annual
Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current
Reports on Form 8-K and future reports filed with the SEC.

This press release also includes certain non-GAAP financial measures
as defined under SEC rules. Non-GAAP financial measures include cash
EBITDA, for which the most comparable GAAP measure is cash flows from
operating activities and net cash capital expenditures, for which the
most comparable GAAP measure is total capital expenditures.
Reconciliations of each non-GAAP financial measure to its most
comparable GAAP measure are included at the end of this press release.

(Tables to follow)

SEITEL, INC. AND SUBSIDIARIES   CONDENSED CONSOLIDATED BALANCE SHEETS   (In thousands, except share and per share amounts)
			(Unaudited)
			September 30, 2016					December 31, 2015
ASSETS
Cash and cash equivalents			$	60,874				$	52,675
Receivables, net				10,880					17,304
Net seismic data library				128,089					161,363
Net property and equipment				1,913					2,603
Prepaid expenses, deferred charges and other				2,512					2,183
Intangible assets, net				2,462					5,528
Goodwill				183,771					179,792
Deferred income taxes				71					39
TOTAL ASSETS			$	390,572				$	421,487
LIABILITIES AND STOCKHOLDER’S EQUITY
LIABILITIES
Accounts payable and accrued liabilities			$	23,261				$	23,650
Income taxes payable				173					-
Senior Notes				246,556					245,696
Obligations under capital leases				1,599					1,661
Deferred revenue				18,673					25,903
Deferred income taxes				1,002					2,361
TOTAL LIABILITIES				291,264					299,271
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER’S EQUITY
Common stock, par value $.001 per share; 100 shares authorized,
issued and outstanding				-					-
Additional paid-in capital				400,564					400,505
Retained deficit				(287,308	)				(258,766	)
Accumulated other comprehensive loss				(13,948	)				(19,523	)
TOTAL STOCKHOLDER’S EQUITY				99,308					122,216
TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY			$	390,572				$	421,487

SEITEL, INC. AND SUBSIDIARIES   CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)   (In thousands)
			Three Months Ended September 30,										Nine Months Ended September 30,
			2016					2015					2016					2015
REVENUE			$	23,255				$	31,242				$	59,545				$	86,290
EXPENSES:
Depreciation and amortization				18,933					24,627					58,839					68,114
Cost of sales				22					37					55					164
Selling, general and administrative				5,386					5,293					16,013					17,150
				24,341					29,957					74,907					85,428
INCOME (LOSS) FROM OPERATIONS				(1,086	)				1,285					(15,362	)				862
Interest expense, net				(6,298	)				(6,381	)				(18,988	)				(19,020	)
Foreign currency exchange gains (losses)				(20	)				(138	)				143					(1,559	)
Other income				572					-					582					5
Loss before income taxes				(6,832	)				(5,234	)				(33,625	)				(19,712	)
Benefit for income taxes				(1,389	)				(1,179	)				(5,083	)				(5,735	)
NET LOSS			$	(5,443	)			$	(4,055	)			$	(28,542	)			$	(13,977	)

Cash resales represent new contracts for data licenses from our library,
including data currently in progress, payable in cash. We believe cash
resales are an important measure of our operating performance and are
useful in assessing overall industry and client activity. Cash resales
are likely to fluctuate quarter to quarter as they do not require the
longer planning and lead times necessary for new data creation. Cash
resales were $9.3 million in the third quarter of 2016 compared to $4.0
million in the third quarter of 2015 and $31.1 million in the first nine
months of 2016 compared to $31.4 million in the first nine months of
2015.

The following table summarizes the components of Seitel's revenue (in
thousands):

			Three Months Ended September 30,									Nine Months Ended September 30,
			2016				2015					2016				2015
Total acquisition underwriting revenue			$	7,625			$	16,498				$	17,486			$	38,683
Resale licensing revenue:
Cash resales				9,314				4,045					31,147				31,352
Non-monetary exchanges				1,618				24					1,840				7,948
Revenue recognition adjustments				4,215				10,096					7,685				6,613
Total resale licensing revenue				15,147				14,165					40,672				45,913
Total seismic revenue				22,772				30,663					58,158				84,596
Solutions and other				483				579					1,387				1,694
Total revenue			$	23,255			$	31,242				$	59,545			$	86,290

Cash EBITDA represents cash generated from licensing data from our
seismic library net of recurring cash operating expenses. We believe
this measure is helpful in determining the level of cash from operations
we have available for debt service and funding of capital expenditures
(net of the portion funded or underwritten by our customers). Cash
EBITDA includes cash resales plus all other cash revenues other than
from data acquisitions, less cost of goods sold and cash selling,
general and administrative expenses (excluding severance and other
non-routine costs). The following is a quantitative reconciliation of
this non-GAAP financial measure to the most directly comparable GAAP
financial measure, cash flows from operating activities (in thousands):

			Three Months Ended September 30,											Nine Months Ended September 30,
			2016					2015						2016					2015
Cash EBITDA			$	5,126				$	(602	)				$	18,385				$	16,120
Add (subtract) other components not included in cash EBITDA:
Cash acquisition underwriting revenue				7,571					16,496						17,408					38,517
Revenue recognition adjustments from contracts payable in cash				4,538					9,207						6,890					7,935
Severance and other non-routine costs				(754	)				(50	)					(1,860	)				(137	)
Interest expense, net				(6,298	)				(6,381	)					(18,988	)				(19,020	)
Amortization of deferred financing costs				294					304						922					889
Decrease in allowance for doubtful accounts				-					-						(21	)				-
Other cash operating income				-					-						3					5
Current income tax benefit (expense)				(35	)				297						(44	)				31
Changes in operating working capital				13,935					2,428						6,436					23,389
Net cash provided by operating activities			$	24,377				$	21,699					$	29,131				$	67,729

Net cash capital expenditures represent total capital expenditures less
cash underwriting revenue from our clients and non-cash additions to the
seismic data library. We believe this measure is important as it
reflects the amount of capital expenditures funded from our operating
cash flow. The following table summarizes our actual capital
expenditures for the nine months ended September 30, 2016 and our
estimate for the year ending December 31, 2016 and shows how net cash
capital expenditures (a non-GAAP financial measure) are derived from
total capital expenditures, the most directly comparable GAAP financial
measure (in thousands):

			Nine Months Ended September 30, 2016					Estimate for Remainder of 2016					Estimate for 2016
New data acquisition			$	16,104				$	3,200				$	19,304
Cash purchases and data processing				1,098					2,200					3,298
Non-monetary exchanges				2,640					-					2,640
Property and equipment and other				176					200					376
Total capital expenditures				20,018					5,600					25,618
Less:
Non-monetary exchanges				(2,640	)				-					(2,640	)
Cash underwriting				(17,408	)				(3,600	)				(21,008	)
Net cash capital expenditures			$	(30	)			$	2,000				$	1,970

View source version on businesswire.com: http://www.businesswire.com/news/home/20161109006157/en/

Source: Business Wire
(November 9, 2016 - 4:05 PM EST)

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