Seitel Announces Fourth Quarter and Full Year 2017 Results

HOUSTON–(BUSINESS WIRE)–Seitel, Inc., a leading provider of onshore seismic data to the oil and
gas industry in North America, today reported results for the fourth
quarter and year ended December 31, 2017.

Fourth Quarter Highlights –

• Total revenue was $21.9 million compared to $35.0 million in Q4 2016.
• Cash resales totaled $16.3 million compared to $28.3 million in Q4
  2016.
• Cash flows from (used in) operating activities were $(3.9) million
  compared to $1.4 million in Q4 2016.
• Cash EBITDA was $12.2 million compared to $21.0 million in Q4 2016.

Full Year Highlights –

• Total revenue was $90.3 million compared to $94.5 million in 2016.
• Cash resales totaled $59.7 million compared to $59.4 million in 2016.
• Cash flows from operating activities were $40.4 million compared to
  $30.5 million in 2016.
• Cash EBITDA was $41.5 million compared to $39.4 million in 2016.

Total revenue for the fourth quarter of 2017 was $21.9 million,
consisting of acquisition underwriting revenue of $4.6 million, resale
licensing revenue of $16.8 million and solutions and other revenue of
$0.5 million. This compares to total revenue of $35.0 million in the
fourth quarter of 2016, consisting of acquisition underwriting revenue
of $4.0 million, resale licensing revenue of $30.3 million and solutions
and other revenue of $0.7 million. Cash resales, a component of resale
licensing revenue, were $16.3 million in the fourth quarter of 2017
compared to cash resales of $28.3 million in the fourth quarter of 2016.

Total revenue for the year ended December 31, 2017 was $90.3 million
compared to $94.5 million for the same period last year. Acquisition
underwriting revenue was $22.8 million in 2017 compared to $21.5 million
in 2016. New data acquisition activity in 2017 was focused in the
EagleFord/Woodbine, Permian and Louisiana Cotton Valley areas in the U.S
and in the Montney and Duvernay areas in Canada. Total resale licensing
revenue was $65.4 million in 2017 compared to $71.0 million in 2016.
Cash resales were $59.7 million compared to $59.4 million in 2016.
Solutions and other revenue was $2.1 million in both 2017 and 2016.

“Our cash resales increased modestly year over year as we saw a more
consistent spending pattern quarter to quarter by E&P companies in
licensing seismic data from our library in 2017,” commented Rob Monson,
president and chief executive officer. “Improved fundamentals have
fostered steady price growth in crude oil in the second half of 2017 and
into early 2018. As a result, North America E&P capital spending is
expected to increase 15% to 20% in 2018. We believe our clients will
remain judicious with capital spending in 2018 with cash flows remaining
the leading determinant of overall budget decisions.

“We continued to spend our net cash capex judiciously in 2017 as we grew
our library by about 2,500 square miles. We added approximately 400
square miles from new data acquisition and 2,100 square miles through
purchases of existing data,” stated Monson. “We will continue to pace
our level of capital spending with our cash flows and our clients’ needs
as the recovery continues.”

Our net loss was $2.1 million for the fourth quarter of 2017 compared to
net income of $4.1 million for the fourth quarter of 2016. The change
between quarters was primarily due to a decrease in total revenues,
partially offset by a decrease in selling, general and administrative
(“SG&A”) expenses and a decrease in income tax expense. Our net loss was
$31.5 million for the year ended December 31, 2017 compared to a net
loss of $24.4 million for the year ended December 31, 2016. The increase
in loss between years was primarily due to a decrease in total revenues
and a decrease in income tax benefits.

We did not have a significant impact from the enactment of U.S. tax
reform in December 2017 because we have a full valuation allowance
against our U.S. federal net deferred tax asset. We recognized a benefit
of $2.4 million in the fourth quarter of 2017 related to U.S. tax reform
as a result of the realizability of our alternative minimum tax credit.

Cash flows from (used in) operating activities were $(3.9) million in
the fourth quarter of 2017 compared to $1.4 million in the fourth
quarter of 2016. The decrease in cash flows between the periods was
primarily due to the fact that the fourth quarter of 2017 included
income tax payments whereas the fourth quarter of 2016 included over
$3.5 million of tax refunds. The decrease between periods was also
partially due to lower collections of acquisition underwriting revenue
as a result of invoice timing. Cash flows from operating activities were
$40.4 million for the year ended December 31, 2017 compared to $30.5
million for the year ended December 31, 2016. The increase between
periods was primarily due to 2017 including higher collections due to
increased cash resale activity beginning in the fourth quarter of 2016,
partially offset by payments made in 2017 related to 2016 annual
incentive compensation (2016 included no such payments) and lower
collections of acquisition underwriting revenue as a result of invoice
timing. As mentioned for the fourth quarter periods, the year-to-date
2016 period also included receipt of income tax refunds whereas the 2017
period included income tax payments.

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 $12.2 million in the fourth quarter of
2017 compared to $21.0 million in the same period last year. The
decrease between periods was primarily the result of lower cash resales,
partially offset by lower SG&A expenses. Cash EBITDA was $41.5 million
for the year ended December 31, 2017 compared to $39.4 million for the
year ended December 31, 2016. The increase between years was primarily
the result of lower SG&A expenses.

SG&A expenses were $4.6 million in the fourth quarter of 2017 compared
to $8.1 million in the fourth quarter of 2016 and $20.3 million for the
year ended December 31, 2017 compared to $24.1 million in the same
period last year. In both the quarterly and annual periods, we had a
decrease in variable compensation, consisting of commissions and annual
incentive compensation, resulting from an overall reduction in total
revenues and from our 2017 Cash EBITDA results not achieving the full
target goals established at the beginning of the year. In 2016, we
exceeded our Cash EBITDA target goals; therefore, annual incentive
compensation was higher in 2016 than 2017. Additionally, 2016 included
termination benefits related to layoffs of personnel while such amounts
were minimal in 2017.

For the year ended December 31, 2017, gross capital expenditures were
$34.6 million, of which $24.8 million related to new data acquisition
projects primarily located in the Eagle Ford/Woodbine, Permian and
Louisiana Cotton Valley areas in the U.S. and in the Montney and
Duvernay areas in Canada. Capital expenditures also included $7.2
million related to purchases of seismic data and data processing costs.
Our net cash capital expenditures totaled $10.1 million for the year
ended December 31, 2017. Our current backlog of capital expenditures
relates to new data acquisition projects located in the Permian,
Niobrara, Montney and Duvernay areas and totals $10.9 million, of which
we have obtained cash underwriting of $8.5 million. We expect the
majority of our $2.4 million committed net cash capital expenditures to
be incurred in 2018 with the remainder to be incurred in 2019.

CONFERENCE CALL

Seitel will hold its annual conference call to discuss fourth quarter
and full year results for 2017 on Thursday, February 15, 2018 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 5290944. A replay of the call will
be available until February 22, 2018 by dialing 800-585-8367, Conference
ID 5290944, 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 approximately 47,000 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 has also expanded
into Mexico through the reprocessing of existing 2D seismic data for
licensing to oil and gas companies. Seitel serves a market which
includes over 1,500 companies in the oil and gas industry.

FORWARD-LOOKING STATEMENTS

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 are not guarantees of future performance, but
represent our present belief, 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. 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 or project future results based on such forward-looking
statements or present or prior earnings levels. Except as required by
applicable law, we disclaim any duty to 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.

INFORMATION RELATED TO FINANCIAL MEASURES

We report our financial results in accordance with U.S. generally
accepted accounting principles (“GAAP”), but believe that certain
non-GAAP financial measures, such as cash EBITDA and net cash capital
expenditures, provide useful supplemental information to investors
regarding the company’s operating and financial performance and are
useful for period-over-period comparisons. Non-GAAP financial measures
should be considered as a supplement to, and not as a substitute for, or
superior to, the financial measures prepared in accordance with GAAP.
Non-GAAP financial measures included in this press release are 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)

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 $16.3 million in the fourth quarter of 2017 compared to
$28.3 million in the fourth quarter of 2016 and $59.7 million for the
year ended December 31, 2017 compared to $59.4 million for the year
ended December 31, 2016.

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

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):

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 2017 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):

Contacts

Seitel, Inc.
Marcia Kendrick, 713-881-8900
mkendrick@seitel.com