EAGLE GEOPHYSICAL INC, S-1/A, 1997-07-31

EAGLE GEOPHYSICAL INC
S-1/A, 1997-07-31
OIL & GAS FIELD EXPLORATION SERVICES

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 31, 1997

REGISTRATION NO. 333-28303
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

AMENDMENT NO. 4

TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

EAGLE GEOPHYSICAL, INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<C> <C> <C>
DELAWARE 1382 76-0522659
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>

50 BRIAR HOLLOW LANE
6TH FLOOR WEST
HOUSTON, TEXAS 77027
(713) 881-2800
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)

JAY N. SILVERMAN, PRESIDENT
EAGLE GEOPHYSICAL, INC.
50 BRIAR HOLLOW LANE
6TH FLOOR WEST
HOUSTON, TEXAS 77027
(713) 881-2800
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

Copies to:

<TABLE>
<C> <C>
N. L. STEVENS III
W. MARK YOUNG JOSEPH W. ARMBRUST
GARDERE WYNNE SEWELL & RIGGS, L.L.P. BROWN & WOOD LLP
333 CLAY AVENUE, SUITE 800 ONE WORLD TRADE CENTER
HOUSTON, TEXAS 77002 NEW YORK, NEW YORK 10048
(713) 308-5500 (212) 839-5300
</TABLE>

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

================================================================================
<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL
THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

SUBJECT TO COMPLETION -- DATED JULY 31, 1997

PROSPECTUS
- --------------------------------------------------------------------------------
5,880,000 SHARES
EAGLE GEOPHYSICAL, INC.
[EAGLE GEOPHYSICAL, INC. LOGO] COMMON STOCK
- --------------------------------------------------------------------------------
Of the 5,880,000 shares of common stock, $0.01 par value (the "Common Stock"),
offered hereby, 4,000,000 shares are being sold by Eagle Geophysical, Inc. (the
"Company") and 1,880,000 shares are being sold by a selling stockholder (the
"Selling Stockholder"). The Company will not receive any of the proceeds from
the sale of the shares of Common Stock by the Selling Stockholder. See
"Principal and Selling Stockholders."

Prior to this offering (the "Offering"), there has been no public market for the
Common Stock of the Company. It is currently estimated that the initial public
offering price will be between $14.00 and $16.00 per share. See "Underwriting"
for a discussion of the factors to be considered in determining the initial
public offering price. The Common Stock has been approved for quotation on The
Nasdaq Stock Market's National Market (the "Nasdaq National Market") under the
symbol "EGEO" upon notice of issuance.

SEE "RISK FACTORS" ON PAGES 8 TO 13 FOR A DISCUSSION OF CERTAIN MATERIAL FACTORS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE COMMON STOCK
OFFERED HEREBY.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
=======================================================================================================================
Underwriting Proceeds to
Price to Discounts and Proceeds to Selling
Public Commissions(1) Company(2) Stockholder
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share.............................. $ $ $ $
- -----------------------------------------------------------------------------------------------------------------------
Total(3)............................... $ $ $ $
=======================================================================================================================
</TABLE>

(1) The Company, the parent corporation of the Selling Stockholder, the Selling
Stockholder, certain officers, directors and employees of the Company and
certain corporations beneficially owned by such officers, directors and
employees of the Company (the "Additional Selling Stockholders") have agreed
to indemnify the several Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended. See
"Underwriting."

(2) Before deducting expenses payable by the Company estimated to be $950,000.

(3) The Company, the Selling Stockholder and the Additional Selling Stockholders
have granted the Underwriters 30-day over-allotment options to purchase, in
the aggregate, up to 882,000 additional shares of the Common Stock on the
same terms and conditions set forth above. If such options are exercised in
full, the total Price to Public will be $ , the total Underwriting
Discounts and Commissions will be $ , the total Proceeds to Company
will be $ and the total Proceeds to Selling Stockholder and
Additional Selling Stockholders will be $ . See "Underwriting."
- --------------------------------------------------------------------------------
The shares of Common Stock are offered by the several Underwriters subject to
delivery by the Company and the Selling Stockholder (and, if applicable, the
Additional Selling Stockholders) and acceptance by the Underwriters, to prior
sale and to withdrawal, cancellation or modification of the offer without
notice. Delivery of the shares to the Underwriters is expected to be made at the
office of Prudential Securities Incorporated, One New York Plaza, New York, New
York, on or about , 1997.

<TABLE>
<S> <C>
PRUDENTIAL SECURITIES INCORPORATED SIMMONS & COMPANY
INTERNATIONAL
</TABLE>

, 1997
<PAGE> 3
Photo #1 AIRBOAT
The Company's use of radio frequency telemetry data acquisition systems allows
for seismic data collection in logistically challenging swamp and marsh
environments.

Photo #2 ROAD
The radio telemetry field recording box (called a seismic acquisition remote,
or "SAR") uses radio frequency transmission rather than cable connections to
deliver seismic data from the field to the recording system, thus allowing
surveys where there are numerous topographical obstructions such as highways,
rivers and towns.

Photo #3 TRUCK
The central recording system, located in the "Dog House," collects seismic data
via radio signal from the SAR's. Since the data is transmitted after every shot,
the potential for lost or corrupt data is greatly limited.

Photo #4 DOGHOUSE
The seismic observer stationed in the "Dog House" is provided with total and
continuous control of every aspect of the recording process.

Graphic -- map of U.S. Gulf Coast showing locations of onshore and offshore 3D
geophysical surveys

Back Cover of the Prospectus -- Photo #5 VESSELS
The Company has considerable experience in dual vessel techniques employing
GPS-based synchronization techniques and wide bandwidth transmission systems
for greater 3D survey coverage in congested offshore areas with dense marine
traffic, production platforms and other obstructions.

_______________

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK, INCLUDING
PURCHASES OF THE COMMON STOCK TO STABILIZE ITS MARKET PRICE, PURCHASES OF THE
COMMON STOCK TO COVER SOME OR ALL OF A SHORT POSITION IN THE COMMON STOCK
MAINTAINED BY THE UNDERWRITERS AND THE IMPOSITION OF PENALTY BIDS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements,
including the notes thereto, appearing elsewhere in this Prospectus. Unless
otherwise indicated, all information in this Prospectus assumes an initial
public offering price of $15.00 per share, the midpoint of the price range set
forth on the cover page of this Prospectus, and that the Underwriters'
over-allotment options will not be exercised. All references to the Common Stock
give effect to the 3,400-for-one stock split effected May 22, 1997. This
Prospectus contains certain forward-looking statements that involve risk and
uncertainties. The Company's actual results could differ materially from the
results anticipated in these forward-looking statements as a result of certain
of the factors set forth under "Risk Factors" and elsewhere in this Prospectus.
Unless the context indicates otherwise, certain technical and other terms used
in this Prospectus have the meanings assigned to them in the Glossary appearing
elsewhere herein.

Eagle Geophysical, Inc. currently owns 19.0% of the outstanding shares of
Energy Research International. Prior to or contemporaneously with the
consummation of the Offering, Eagle Geophysical, Inc. will acquire the remaining
81.0% of the outstanding shares of Energy Research International in exchange for
600,000 shares of Common Stock of Eagle Geophysical, Inc. Such acquisition is a
condition to the consummation of the Offering, and the Offering will not be
consummated unless such acquisition is completed. Unless the context indicates
otherwise, all references herein to the "Company" mean Eagle Geophysical, Inc.
and its subsidiaries, including Energy Research International, assuming the
consummation of such acquisition, and all pro forma financial data given is for
such combined entity unless specified otherwise.

THE COMPANY

Eagle Geophysical, Inc. (the "Company") is a highly-focused international
oilfield service company engaged in the acquisition of seismic information, with
a specialization in the acquisition of high definition three-dimensional ("3D")
seismic data in logistically difficult wetland environments and in congested
offshore areas. Seismic data is used by oil and gas companies in the exploration
for new oil and gas reserves and the development of existing reserves. The
Company was formed to combine the onshore seismic data acquisition business
conducted by Seitel Geophysical, Inc. ("SGI") with the offshore seismic data
acquisition business conducted by Energy Research International ("ERI") and its
operating subsidiaries (the "Horizon Companies"), both of which were commenced
in 1993.

The Company's crews and equipment have been configured for the technically
and logistically demanding operations they conduct. The Company operates three
onshore 1,850 channel Opseis(R) radio telemetry seismic data acquisition crews
in the U.S. Gulf Coast region and four towed-streamer seismic data acquisition
vessels, primarily in the North Sea and the U.S. Gulf of Mexico. The Company is
currently pursuing opportunities to expand its wetland seismic data acquisition
activities internationally, primarily into Latin America, though the Company has
not yet entered into any contracts to provide onshore data acquisition services
internationally. The Company's wetland crews and equipment, which use radio
signals rather than traditional cables to collect seismic data, are specifically
designed to work in environmentally sensitive and operationally challenging
swamp and marsh environments, where the Company has completed over fifty-five 3D
surveys since 1993. Because these Opseis systems use radio signals to transmit
data, they can be operated more efficiently than cable-based systems,
particularly in wetland areas and highly populated areas where there are
numerous topographic obstructions, such as rivers, bays, highways and towns.
These systems also excel in environmentally sensitive areas where physical
intrusion must be minimized.

The Company believes that it has developed particular expertise in both the
front-end planning and the execution of complex onshore 3D surveys. Front-end
planning involves obtaining permits from the numerous land and mineral owners
required in large onshore 3D acquisition projects and refining such projects to
capitalize on the capabilities of the Company's radio telemetry systems. The
Company believes that the combination of its superior permitting, planning and
project management skills and the capabilities of the Company's equipment to
acquire data around obstacles and areas where permission from land owners cannot
be obtained provides the Company with a competitive advantage in seeking data
acquisition work in the wetland regions of the U.S. Gulf Coast.
3
<PAGE> 5

The Company also operates four seismic data acquisition vessels under
charter or lease, each of which is currently configured to tow either two or
three streamers. These vessels are well equipped to work in congested offshore
areas with dense marine traffic, production platforms and other obstructions,
where vessels towing more streamers are ill-suited to work due to their lack of
maneuverability. The configuration of the Company's vessels is also optimal for
conducting small and medium sized high definition seismic surveys around
offshore platforms. These surveys may be used by oil and gas companies to
delineate the extent of or enhance the production from existing fields. The
Company plans to expand the streamer towing capacity of one of its vessels from
three to between four and six streamers at the end of 1997, significantly
increasing the vessel's data acquisition capabilities. This will enable the
Company to further increase flexibility and efficiency in its offshore seismic
data acquisition operations. The Company believes that the greater financial
resources available to its offshore operations following the Offering will
better enable it to satisfy existing customer demand for its services and to
mobilize its seismic acquisition vessels to new geographic markets, such as
Latin America, Africa and Southeast Asia, as opportunities arise outside its
primary areas of operation in the U.S. Gulf of Mexico and the North Sea.

Approximately 52% of the Company's 1996 pro forma combined revenues was
derived from its onshore operations, and the remaining 48% of revenues was
derived from offshore operations. All onshore revenues in 1996 were attributable
to 3D data acquisition activities. Offshore revenues in 1996 were attributable
approximately 85% to 3D data acquisition activities and 15% to two-dimensional
("2D") data acquisition activities. See "Description of Business -- Business
Strategies" for a discussion of the Company's business objectives.

INDUSTRY OVERVIEW

Seismic data is used by oil and gas companies to identify and image
underground geological structures likely to trap hydrocarbons, both to aid in
the exploration for new hydrocarbon reservoirs and to enhance production from
existing reservoirs. A seismic data acquisition project generally consists of
designing and planning the survey, obtaining permission from mineral and land
owners to perform the survey (if on land) and acquiring the seismic data. Such
data, when processed, is then used to produce computer generated three-
dimensional images or two-dimensional cross sections of subsurface geologic
formations. These cross sections and images are then used by oil and gas
companies to evaluate the potential for successful drilling for or production of
oil and gas.

Historically, 2D surveys were the primary technique used to acquire seismic
data. However, advances in computer technology in the last five to ten years
have made 3D seismic data, which provides a more comprehensive geophysical
image, a practical and capable oil and gas exploration and development tool. 3D
seismic data is proving to be more accurate and effective than 2D data at
identifying potential hydrocarbon-bearing geological formations. The use of 3D
seismic data to identify locations to drill both exploration and development
wells has improved the economics of finding and producing oil and gas. The
success and acceptance of 3D seismic data has in turn created increased demand
for 3D seismic surveys in recent years. The Company anticipates that demand for
3D seismic data will continue to increase both in the Company's current primary
areas of operations and in other areas internationally.

RELATIONSHIP WITH SEITEL, INC.

The Company, formed in December 1996, is a combination of the onshore
seismic data acquisition business conducted by SGI, which is a wholly-owned
subsidiary of Seitel, Inc. ("Seitel"), and the offshore seismic data acquisition
business conducted by the Horizon Companies. After consummation of the Offering,
Seitel will retain indirect ownership of 18.9% of the outstanding shares of
Common Stock (16.5% if the Underwriters' over-allotment options are exercised in
full). In 1996, seismic data acquisition services provided to Seitel and its
subsidiaries accounted for approximately 52% of the Company's pro forma combined
revenues. The Company currently has contracts with Seitel and its subsidiaries
to perform certain specific seismic data acquisition projects, representing 28%
of the Company's backlog as of July 10, 1997. The Company anticipates that
Seitel will continue to be a significant customer after the Offering. See
"Certain Transactions."
4
<PAGE> 6

THE OFFERING

Common Stock Offered by the Company..... 4,000,000 shares

Common Stock Offered by the Selling
Stockholder............................. 1,880,000 shares

Common Stock to be Outstanding after the
Offering................................ 8,025,000 shares(1)

Use of Proceeds......................... The net proceeds to the Company
from the Offering will be used to
repay $35.4 million of debt and
capital lease obligations of the
Company, including certain debt
owed to or guaranteed by Seitel,
approximately $5.0 million will be
deposited as additional security
for a capital lease obligation that
the Company does not intend to
repay, and the remaining $14.5
million of such proceeds will be
used to fund a portion of the
capital expenditures required to
increase the streamer capacity of
one of the offshore seismic data
acquisition vessels operated by the
Company. See "Use of Proceeds."

Nasdaq National Market Symbol........... EGEO

Risk Factors............................ For a discussion of certain factors
relevant to an investment in the
Common Stock, see "Risk Factors."
- ---------------

(1) Does not include 705,500 shares issuable upon exercise of stock options to
be granted to management, employees and directors effective upon
consummation of the Offering, all of which will have an exercise price per
share equal to the initial public offering price set forth on the cover page
of this Prospectus. See "Management -- Independent Directors Stock Option
Plan" and "-- Stock Option Plan."

5
<PAGE> 7

SUMMARY SELECTED PRO FORMA AND HISTORICAL FINANCIAL DATA
The Summary Selected Financial Data below has been taken or derived from
the audited consolidated financial statements and the unaudited consolidated
condensed financial statements of Eagle Geophysical, Inc. (referred to herein as
"Eagle" for periods prior to the acquisition of the remaining interest in ERI)
and ERI, the parent corporation of the Horizon Companies, or the unaudited pro
forma consolidated financial statements of the Company, included elsewhere in
this Prospectus. This summary financial data should be read in conjunction with
Eagle's Consolidated Financial Statements, ERI's Consolidated Financial
Statements, the Pro Forma Consolidated Financial Statements and the accompanying
notes contained elsewhere in this Prospectus. See also "Management's Discussion
and Analysis of Financial Condition and Results of Operations."
The following unaudited pro forma consolidated balance sheet as of March
31, 1997 and the consolidated statements of operations for the year ended
December 31, 1996 and the three month periods ended March 31, 1996 and 1997 give
effect to certain transactions that will take place upon the closing of the
Offering, including the acquisition by the Company, accounted for as a purchase
transaction, of the remaining 81% of the outstanding shares of ERI in exchange
for the issuance by the Company of 600,000 shares of Common Stock (the "ERI
Acquisition") and the application of the net proceeds of the Offering to repay
certain indebtedness of the Company, as if such transactions had taken place on
March 31, 1997 in the case of the unaudited pro forma consolidated balance sheet
and January 1, 1996 in the case of the unaudited pro forma consolidated
statements of operations.
PRO FORMA FINANCIAL DATA

<TABLE>
<CAPTION>
FOR THE QUARTER
ENDED MARCH 31,
-------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1996 1996 1997
----------------------------------------------------------- -------------- --------------
EAGLE ENERGY PRO FORMA PRO FORMA PRO FORMA
GEOPHYSICAL, RESEARCH COMBINED AS COMBINED AS COMBINED AS
INC. INTERNATIONAL ADJUSTMENTS(1) ADJUSTED(2) ADJUSTED(1)(2) ADJUSTED(1)(2)
------------ ------------- -------------- ----------- -------------- --------------
(HISTORICAL) (HISTORICAL) (UNAUDITED) (UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenue.......................... $48,136 $43,607 $ (828) $90,915 $12,890 $23,179
------- ------- ------- ------- ------- -------
Expenses:
Operating expenses(3).......... 34,917 37,601 (828) 71,690 11,466 16,110
Depreciation and
amortization................. 3,409 4,615 1,323(4) 9,347 2,024 3,010
Selling, general and
administrative expenses...... 2,680 2,619 1,133(5) 6,432 1,111 1,250
Interest expense, net.......... 531 1,649 (1,529)(6) 651 110 34
------- ------- ------- ------- ------- -------
Total expenses............. 41,537 46,484 99 88,120 14,711 20,404
------- ------- ------- ------- ------- -------
Income (loss) before provision
for income taxes............... 6,599 (2,877) (927) 2,795 (1,821) 2,775
Provision (benefit) for income
taxes.......................... 2,420 -- (506) 1,914 108 494
------- ------- ------- ------- ------- -------
Net income (loss)(7)............. $ 4,179 $(2,877) $ (421) $ 881 $(1,929) $ 2,281
======= ======= ======= ======= ======= =======
Earnings (loss) per share(7)..... $ 1.23 $ .11 $ (.24) $ .28
======= ======= ======= =======
Weighted average shares
outstanding.................... 3,400
=======
Pro forma shares outstanding..... 8,025 8,025 8,025
======= ======= =======
Statement of Cash Flow Data:
Operating activities............. $ 4,640 $ 4,315 $ 9,857 $(2,022) $ 6,399
Investing activities............. (7,928) (3,113) (11,041) (253) (7,258)
Financing activities............. 3,230 (1,313) 1,917 2,252 1,341
Other Financial Data:
EBITDA(8)........................ $10,539 $ 3,387 $12,793 $ 313 $ 5,819
</TABLE>

<TABLE>
<CAPTION>
AS OF MARCH 31, 1997
----------------------------------
PRO FORMA
PRO FORMA COMBINED
COMBINED(1) AS ADJUSTED(1)(2)
----------- -----------------
(UNAUDITED)
<S> <C> <C>
Balance Sheet Data:

Cash and cash equivalents................................. $ 1,304 $21,204
Total assets.............................................. 85,490 99,581
Total debt, capital lease obligations and due to
affiliate............................................... 49,239 14,489
Stockholders' equity...................................... 18,833 67,741
</TABLE>

- ---------------

(1) Reflects pro forma adjustments for the ERI Acquisition and adjustments to
reflect the consummation of the Offering and the sale of 25,000 shares of
Common Stock, at the initial public offering price, to Jay N. Silverman,
President of the Company, for a note.
(2) Reflects the combination of the adjustments and the historical financial
statements.
(3) As used herein, operating expenses exclude depreciation and amortization.
(4) Reflects the amortization of goodwill associated with the acquisition of ERI
over a 15-year estimated useful life.
(5) Represents identifiable additions to selling, general and administrative
expenses the Company estimates it will incur when operating as a public
registrant.
(6) Reflects a reduction in interest expense as a result of the application of
estimated net proceeds from the Offering to reduce debt and capital lease
obligations.
(7) Excludes the effect of a $600,000 extraordinary gain for early
extinguishment of debt on ERI's historical 1996 financial statements.

(8) EBITDA represents earnings before interest expense, taxes, depreciation and
amortization. EBITDA is used by management of the Company as a supplemental
financial measurement in the evaluation of its business and should not be
considered as an alternative to net income as an indicator of the operating
performance of the Company or as an alternative to cash flow as a measure of
liquidity. EBITDA is presented here to provide additional information about
the Company. See Note 8 to Selected Pro Forma Financial Information.

6
<PAGE> 8

SUMMARY SELECTED PRO FORMA AND HISTORICAL FINANCIAL DATA -- (CONTINUED)

HISTORICAL FINANCIAL DATA

<TABLE>
<CAPTION>
AS OF AND FOR
THE THREE MONTHS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, ENDED MARCH 31,
--------------------------------------------- -----------------
1993 1994 1995 1996 1996 1997
------------ -------- -------- -------- ------- -------
(UNAUDITED) (IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
EAGLE GEOPHYSICAL, INC.(1)
Statement of Operations Data:
Revenue.............................................. $ 5,650 $25,721 $29,275 $48,136 $ 5,974 $12,981
------- ------- ------- ------- ------- -------
Expenses:
Operating expenses(2).............................. 3,596 20,070 20,986 34,917 4,336 9,286
Depreciation and amortization...................... 409 1,817 2,471 3,409 657 1,302
Selling, general and administrative................ 108 1,673 2,874 2,680 361 450
Interest expense, net.............................. 147 384 408 531 136 158
------- ------- ------- ------- ------- -------
Total expenses................................. 4,260 23,944 26,739 41,537 5,490 11,196
------- ------- ------- ------- ------- -------
Income before provision for income taxes............. 1,390 1,777 2,536 6,599 484 1,785
Provision for income taxes........................... 509 651 933 2,420 178 655
------- ------- ------- ------- ------- -------
Net income........................................... $ 881 $ 1,126 $ 1,603 $ 4,179 $ 306 $ 1,130
======= ======= ======= ======= ======= =======
Earnings per share(3)................................ $ .26 $ .33 $ .47 $ 1.23 $ .09 $ .33
======= ======= ======= ======= ======= =======
Weighted average shares outstanding.................. 3,400 3,400 3,400 3,400 3,400 3,400
======= ======= ======= ======= ======= =======
Statement of Cash Flow Data:
Operating activities................................. $ 1,939 $ 603 $ 633 $ 4,640 $(3,012) $ 6,481
Investing activities................................. (4,791) (234) (289) (7,928) (232) (6,710)
Financing activities................................. 2,877 (365) (315) 3,230 3,233 229
Other Financial Data:
EBITDA............................................... $ 1,946 $ 3,978 $ 5,415 $10,539 $ 1,277 $ 3,245
Consolidated Balance Sheet Data:
Cash and cash equivalents............................ $ 25 $ 29 $ 58 $ -- $ 47 $ --
Total assets......................................... 7,063 14,413 17,960 26,721 20,997 35,792
Total debt and capital lease obligations............. 3,989 8,034 5,932 10,902 5,832 17,800
Stockholder's equity................................. 881 2,007 3,610 7,789 3,916 8,919
</TABLE>

- ---------------

(1) Eagle was incorporated in December 1992 and had no material operations in
1992.

(2) As used herein, operating expenses exclude depreciation and amortization.

(3) Had the sale pursuant to the Offering of shares of Common Stock (841 in 1996
and 1,333 in 1997) at $15 per share occurred at the beginning of 1996 and
1997, and the net proceeds therefrom been used to repay long-term debt,
earnings per share would have been $1.07 for the year ended December 31,
1996 and $.28 for the three-month period ended March 31, 1997.

<TABLE>
<CAPTION>
AS OF AND FOR
THE THREE MONTHS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, ENDED MARCH 31,
--------------------------------------------- -----------------
1993(1) 1994 1995 1996 1996 1997
------------ -------- -------- -------- ------- -------
(UNAUDITED) (IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
ENERGY RESEARCH INTERNATIONAL
Statement of Operations Data:
Revenue.............................................. $ 9,591 $19,457 $29,423 $43,607 $ 6,916 $10,632
------- ------- ------- ------- ------- -------
Expenses:
Operating expenses(2).............................. 8,360 16,360 27,075 37,601 7,130 7,258
Depreciation....................................... 78 1,683 3,856 4,615 1,036 1,377
Selling, general and administrative................ 690 1,703 2,196 2,619 467 517
Interest expense, net.............................. 90 528 1,456 1,649 406 536
------- ------- ------- ------- ------- -------
Total expenses................................. 9,218 20,274 34,583 46,484 9,039 9,688
------- ------- ------- ------- ------- -------
Income (loss) before provision for income taxes and
extraordinary item................................. 373 (817) (5,160) (2,877) (2,123) 944
Provision for income taxes........................... 63 11 -- -- -- --
------- ------- ------- ------- ------- -------
Income (loss) before extraordinary item.............. 310 (828) (5,160) (2,877) (2,123) 944
Extraordinary item................................... -- -- -- 600 -- --
------- ------- ------- ------- ------- -------
Net income (loss).................................... $ 310 $ (828) $(5,160) $(2,277) $(2,123) $ 944
======= ======= ======= ======= ======= =======
Statement of Cash Flow Data:
Operating activities................................. $ 1,376 $ 990 $ (1) $ 4,315 $ 771 $ (620)
Investing activities................................. (1,154) (7,556) (2,758) (3,113) (21) (548)
Financing activities................................. -- 6,629 2,830 (1,313) (981) 1,112
Other Financial Data:
EBITDA............................................... $ 541 $ 1,394 $ 152 $ 3,387 $ (681) $ 2,857
Consolidated Balance Sheet Data:
Cash................................................. $ 155 $ 266 $ 373 $ 813 $ 306 $ 1,304
Total assets......................................... 7,884 28,920 28,040 28,057 25,113 30,421
Total debt and capital lease obligations............. -- 21,712 24,543 21,072 23,333 23,236
Stockholders' equity (deficit)....................... 307 (491) (5,626) (11,231) (7,694) (9,935)
</TABLE>

- ---------------

(1) ERI was incorporated in May 1993 and commenced operations in July 1993,
and no prior operations are included in the 1993 data above.

(2) As used herein, operating expenses excludes depreciation.

7
<PAGE> 9

RISK FACTORS

An investment in the securities offered hereby involves a high degree of
risk. Prospective investors should carefully consider the risk factors described
below, in addition to the other information set forth in this Prospectus, in
connection with an investment in the securities offered hereby.

All statements, other than statements of historical facts, included in this
Prospectus that address activities, events or developments that the Company
expects, believes or anticipates will or may occur in the future are based on
certain assumptions and analyses made by the Company in light of its experience
and its perception of historical trends, current conditions, expected future
developments and other factors it believes are appropriate in the circumstances.
Such statements are subject to a number of assumptions, risks and uncertainties,
including the risk factors discussed below, general economic and business
conditions, the business opportunities (or lack thereof) that may be presented
to and pursued by the Company, changes in laws or regulations and other factors,
many of which are beyond the control of the Company. Prospective investors are
cautioned that any such statements are not guarantees of future performance and
that actual results or developments may differ materially from those projected
in such forward-looking statements.

ABSENCE OF COMBINED OPERATING HISTORY. The Company is a combination of the
businesses conducted by SGI and the Horizon Companies (the "Combined
Businesses"). The Combined Businesses have been operating separately and neither
the historical results of their separate operations nor their pro forma
financial information is necessarily indicative of the results that would have
been achieved had the Combined Businesses been operated on an integrated basis
or the results that may be realized in the future. In addition, prior to the
Offering, Eagle has been a subsidiary of Seitel and has relied on Seitel for
certain financial, management, administrative and other resources. See "Certain
Transactions." A number of significant changes will occur in the funding and
operations of the Company in connection with the consummation of the Offering.
These changes include the contemplated establishment of the Company's bank
revolving credit facility and its own incentive compensation and stock option
plans. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Management." These changes may have a substantial
impact on the financial position and future results of operations of the
Company. As a result, the historical financial information included in this
Prospectus does not necessarily reflect the financial position and results of
operations of the Company in the future or what the financial position and
results of operations of the Company would have been had it been operated as a
combined stand-alone entity during the periods presented.

Although certain members of management of the Company have extensive
experience in providing onshore and offshore seismic data acquisition services
and in managing businesses that provide such services, there can be no assurance
that the Company will be able to integrate the Combined Businesses into a
combined entity on an economically efficient basis or that the Company's
management group will be able to manage effectively the combined entity and
implement the Company's business strategies. See "Management."

INFLUENCE OF SEITEL ON THE COMPANY. Approximately 52% of the pro forma
combined revenues of the Company for the year ended December 31, 1996 were
derived from seismic data acquisition services provided to Seitel and its
subsidiaries. Such revenues, in the case of Eagle, are based on prices charged
to unaffiliated parties for similar work. Such revenues are not necessarily
indicative of the revenues Eagle would have earned had it provided these
services to unrelated third parties. The Horizon Companies charged Seitel for
these services at an amount believed by management of the Horizon Companies to
be equal to amounts it would have charged unrelated third parties for such
services. The loss of Seitel as a customer would have a material adverse effect
on the Company's financial condition and results of operations. There can be no
assurance that Seitel will enter into any material contracts with the Company
for seismic data acquisition services in the future. See "Description of
Business -- Customers," "Certain Transactions," Note G to Consolidated Financial
Statements of Eagle and Note E to Consolidated Financial Statements of ERI.

In the past, Seitel has guaranteed certain indebtedness of the Company and
has made loans to the Company. Of the approximately $54.9 million estimated net
proceeds to the Company from the Offering, approximately $7.7 million will be
used to repay debt owed by the Company to Seitel and an additional

8
<PAGE> 10

approximately $16.7 million will be used to repay debt of the Company that has
been guaranteed by Seitel. Such funds will not be available to the Company for
other uses such as capital expenditures, funding acquisitions or working
capital. The Company's borrowing costs may increase in the future as a result of
having to obtain financing based on its own creditworthiness. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

Upon completion of the Offering, Seitel will indirectly own 18.9% of the
outstanding Common Stock (16.5% if the underwriters' over-allotment options are
exercised in full). In addition, Paul A. Frame, the President and Chief
Executive Officer and a director of Seitel, will serve as a director of the
Company, will serve as Chairman of the Executive Committee of the Board of
Directors of the Company, will be actively involved in the management of the
Company with respect to marketing and expansion of the Company's business and
will receive stock options to acquire shares of Common Stock from the Company.
See "Management -- Stock Option Plan." Consequently, in addition to its current
position as a significant customer of the Company, Seitel will be able to
exercise significant influence over the management of the Company. Such
influence will extend to matters such as the election of directors of the
Company, the approval of matters submitted for stockholder approval and
responding to any potential takeover of the Company.

Mr. William Lurie is also currently a director of Seitel. Mr. Lurie, who is
Chairman of the Board of Directors of the Company, will retire from the Seitel
board at or prior to the consummation of the Offering. Mr. Jay Silverman, who is
the President and Chief Executive Officer and a director of the Company, is
currently an executive officer of Seitel. Mr. Silverman will cease to be an
executive officer of Seitel upon consummation of the Offering. A substantial
portion of Mr. Silverman's present personal assets is comprised of common stock
and other equity interests in Seitel. Mr. Silverman is not under any obligation
to reduce his economic interests in Seitel as he assumes his role as Chief
Executive Officer of the Company.

POTENTIAL CONFLICTS OF INTEREST. Conflicts of interest may arise in the
future between Seitel and the Company in a number of areas relating to their
past and ongoing relationships, including potential acquisitions of businesses
or properties, other business opportunities, the election of new or additional
directors, the payment of dividends, incurrence of indebtedness, tax matters,
financial commitments, registration rights and issuances and sales of capital
stock of the Company. Although the Company and Seitel do not currently compete
against each other in any material respect, there can be no assurance that
Seitel and the Company will not in the future compete against each other. Any
officer or director of Seitel who serves as a director of the Company, such as
Mr. Frame, may have conflicts of interest in addressing business opportunities
and strategies as to which Seitel's and the Company's interests differ. Although
the Company intends to follow the procedures provided by the Delaware General
Corporation Law regarding conflicts of interest with respect to agreements and
transactions between Seitel and the Company, the Company has not adopted any
formal procedures to ensure that conflicts of interest will not occur or to
resolve any such conflicts of interest that do occur. See "Certain
Transactions." There can be no assurance that any such conflicts of interest
will be resolved in favor of the Company.

The Company and Seitel have entered into a number of agreements for the
purpose of defining their ongoing relationship and providing for an orderly
separation of the companies. See "Certain Transactions." These agreements were
negotiated in the context of a parent-subsidiary relationship and are therefore
not the result of negotiations between independent parties. In addition, the
Company did not retain separate legal counsel from the counsel retained by
Seitel in connection with the negotiation of these agreements. It is the
intention of the Company and Seitel that such agreements and the transactions
provided for therein, taken as a whole, should accommodate the parties'
interests in a manner that is fair to both parties, while continuing certain
mutually beneficial arrangements. The parties intend that such agreements and
transactions provide fair market value to them on terms no less favorable to the
Company than would otherwise be available from unaffiliated parties. Because of
the complexity of the various relationships between the Company and Seitel,
however, there can be no assurance that each of such agreements, or the
transactions provided for therein, will be effected on terms at least as
favorable to the Company as could have been obtained from unaffiliated third
parties.

9
<PAGE> 11

DEPENDENCE UPON ENERGY INDUSTRY SPENDING. Demand for the Company's services
depends upon the level of capital expenditures by oil and gas companies for
exploration, production and development activities. These activities depend in
part on oil and gas prices, expectations about future prices, the cost of
exploring for, producing and delivering oil and gas, the sale and expiration
dates of leases in the United States and abroad, the discovery rate of new oil
and gas reserves, local and international political, regulatory and economic
conditions and the ability of oil and gas companies to obtain capital. In
addition, a decrease in oil and gas expenditures could result from such factors
as unfavorable tax and other legislation or uncertainty concerning national
energy policies. Beginning in 1982, a sharp decline in oil and gas prices led to
a worldwide reduction in oil and gas exploration activities. This decline
resulted in a significant reduction in the overall demand for seismic services.
Since reaching a high in 1981, the number of companies providing seismic
services has declined dramatically. Notwithstanding recent increases in oil and
gas exploration activity, no assurance can be given that current levels of oil
and gas activities will be maintained or that demand for the Company's services
will reflect the level of such activities. Decreases in oil and gas activities
could have a significant adverse effect upon the demand for the Company's
services and the Company's results of operations.

RISKS IN INTERNATIONAL OPERATIONS. Approximately 25% of the Company's pro
forma combined 1996 revenues were derived from operations outside the U.S., and
the Company is subject to the risks inherent in doing business internationally.
In addition, the Company intends to expand its international operations. Since
the Company has an established presence in the North Sea through the Horizon
Companies, the Company does not view its offshore operations in the North Sea as
being subject to undue risks of this type. However, as the Company expands the
scope and extent of its onshore and offshore operations outside of their current
locations in the U.S. Gulf Coast, the North Sea and the Gulf of Mexico, these
risks may become more significant. Such risks include the possibility of
unfavorable changes in tax or other laws, partial or total expropriation,
currency exchange rate fluctuations and restrictions on currency repatriation,
the disruption of operations from labor and political disturbances, insurrection
or war, and the effect of requirements of partial local ownership of operations
in certain countries. See "Description of Business -- Geographic Operations."

OPERATING RISKS. The Company's crews often conduct operations in extreme
weather, in difficult terrain that is not easily accessible and under other
hazardous conditions. Accordingly, its operations are subject to risks of injury
to personnel and loss of equipment. Each of the Company's vessels is taken out
of service for approximately two to four weeks each year, generally at different
off-season times of the year, for routine maintenance and service. Fixed costs,
including costs associated with operating leases, labor costs and depreciation,
account for a significant portion of the Company's costs and expenses. As a
result, low productivity resulting from weather interruptions, equipment
failures or other causes can result in significant operating losses,
particularly when the Company is performing its services under a turnkey
contract. For example, one of the Company's vessels suffered an engine failure
in the fourth quarter of 1996, which adversely affected the Company's 1996 pro
forma combined results of operations. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations." In addition, while the
Company has insurance policies that protect it against liabilities that may be
incurred in the ordinary course of its business, the Company is unable to insure
fully against all possible loss or liability. For example, no insurance is
available at a cost deemed reasonable by the Company for war, nationalization,
expropriation or other extreme events. The Company does not carry business
interruption insurance with respect to its operations.

SUBSTANTIAL COMPETITION. The offshore and onshore seismic data acquisition
business is highly competitive. The Company believes that it has five major
competitors for its offshore seismic data acquisition business worldwide and six
major competitors for its wetland seismic data acquisition business in the U.S.
Gulf Coast region. Competitive factors include price, experience, availability,
technological expertise, performance and reputation for dependability. Certain
of the Company's major competitors operate more data acquisition crews than the
Company, provide integrated data acquisition, processing and interpretation
services, have substantially greater revenues than the Company or are
subsidiaries or divisions of major industrial enterprises having far greater
financial and other resources than the Company and more extensive relationships
with major integrated and multinational oil and gas companies. Such resources
may enable these competitors to maintain technological and certain other
advantages relating to costs that may provide them with an advantage over the
Company in bidding for contracts. In addition, certain competitors having
greater financial resources than the

10
<PAGE> 12

Company may take an economic interest in the seismic data acquired or in oil and
gas exploration and development projects in exchange for the services they
perform for their customers. See "Description of Business -- Competition."

CONCENTRATION OF CREDIT RISK. The Company generally provides services to a
relatively small group of key customers that account for a significant
percentage of the accounts receivable of the Company at any given time. The
Company's key customers vary over time, but have historically included Seitel
and its subsidiaries. The Company extends credit to various companies in the oil
and gas industry, including its key customers, for the acquisition of seismic
data, which results in a concentration of credit risk. See "Description of
Business -- Customers." This concentration of credit risk may be affected by
changes in the economic or other conditions of the Company's key customers and
may accordingly impact the Company's overall credit risk. Historical credit
losses incurred on receivables by the Company have been immaterial.

CAPITAL INTENSIVE BUSINESS; OBSOLESCENCE OF TECHNOLOGY. The Company
competes in a capital intensive industry. The development of seismic data
acquisition equipment has been characterized by rapid technological advancements
in recent years and this trend may continue. There can be no assurance that
manufacturers of seismic equipment will not develop new systems that have
competitive advantages over systems now in use that either render the Company's
current equipment obsolete or require the Company to make significant capital
expenditures to maintain its competitive position. The Company's strategy is to
upgrade its vessels and data acquisition systems as often as necessary to
maintain its competitive position. However, to do so may require large
expenditures of capital. There can be no assurance that the Company will have
the capital necessary to upgrade its equipment to maintain its competitive
position or that any required financing therefor will be available on favorable
terms. If the Company is unable to raise the capital necessary to update its
data acquisition systems to the extent necessary, it may be materially and
adversely affected. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources" and
"Description of Business."

The Company's ability to compete is highly dependent upon, among other
things, its ability to provide seismic data of a competitive quality. Because of
the significant technological changes that have already taken place with respect
to 3D seismic data acquisition and those that may occur in the future, the
Company is, like other seismic companies, generally dependent on its ability to
keep pace with changes and improvements in data acquisition technologies and to
acquire advanced equipment and vessels. Any significant technological
developments affecting seismic surveying could adversely affect the Company.
Over time, the value of and demand for seismic vessels and onshore seismic data
acquisition equipment can be expected to fluctuate, depending upon a variety of
factors including alternative types, sizes and technical abilities of competing
vessels and equipment.

RELIANCE ON KEY SUPPLIERS. The Company is dependent on Georex, Inc., a
subsidiary of Compagnie Generale de Geophysique, S.A. ("CGG"), which is a
competitor of the Company, for additions to and replacements for its Opseis
seismic data acquisition systems, and Opseis is a registered trademark of CGG.
The Company is also dependent on Input/Output, Inc. and Syntron, Inc., a
subsidiary of GeoScience Corporation, for additions to and replacements for its
offshore seismic data acquisition systems. Although these companies are not the
only suppliers of seismic data acquisition systems, they are the Company's
primary suppliers. In addition, the Company considers the Opseis system to be
the state-of-the-art seismic data equipment for performing 3D seismic surveys in
marshes and swamps. In the event of any disruption in the supply of repair
services or replacement parts from the Company's primary suppliers, the Company
may be unable to obtain such services or parts from other sources and would have
to acquire other equipment that may be less advanced technologically. Although
the Company believes it will be able to obtain systems from its primary
suppliers in the future, should it be unable to do so, the Company's anticipated
revenues or operating margins could be reduced significantly and the amount of
cash needed for capital expenditures could be increased significantly.

ENVIRONMENTAL AND OTHER REGULATIONS. The Company's operations are
materially affected by government regulation in the form of international
conventions, national, state and local laws and regulations in force in the
jurisdictions in which the Company operates, as well as in the country or
countries of registration of the

11
<PAGE> 13

Company's vessels. The Company is required by various governmental and
quasi-governmental agencies to obtain certain permits, licenses and certificates
with respect to its operations. In particular, the United States Oil Pollution
Act of 1990 sets forth technical and operational requirements for vessels
operating in the U.S. Gulf of Mexico. The Company believes that it possesses all
permits, licenses and certificates material to the operation of its business.
The modification of existing laws or regulations or the adoption of new laws or
regulations curtailing drilling for oil and gas or imposing more stringent
restrictions on seismic operations could adversely affect the Company.

RELIANCE ON KEY PERSONNEL. The Company's operations are dependent on the
efforts of Messrs. Paul A. Frame, Director and Chairman of the Executive
Committee, Jay N. Silverman, President, and Gerald M. Harrison, Executive Vice
President. If any of these key persons becomes unable to continue in his present
role, or if the Company is unable to attract and retain other skilled employees,
the Company's business could be adversely affected. The Company will have
employment agreements with automatic renewal features with Messrs. Silverman and
Harrison. The Company will have a bonus agreement with Mr. Frame that will
expire December 31, 1999. See "Management."

ABSENCE OF PUBLIC MARKET AND DETERMINATION OF OFFERING PRICE. Prior to the
Offering, there has been no public market for the Common Stock, and there can be
no assurance that an active public market for the Company's Common Stock will
develop, or if a trading market does develop, that it will continue after the
Offering. Consequently, the initial public offering price of the Common Stock
will be determined by negotiations among the Company and the representatives of
the several Underwriters (the "Representatives") and may bear no relation to the
market price for the Common Stock after the Offering. See "Underwriting" for
factors to be considered in determining the initial public offering price. There
can be no assurance that the price so determined will be representative of the
current or future market value of the Common Stock offered hereby. The Common
Stock has been approved for quotation on the Nasdaq National Market upon notice
of issuance.

IMMEDIATE AND SUBSTANTIAL DILUTION. Purchasers of the Common Stock offered
hereby will experience immediate and substantial dilution of approximately $9.03
per share in the pro forma net tangible book value per share of Common Stock
from the initial public offering price set forth on the cover page of this
Prospectus. See "Dilution."

POTENTIAL EFFECT OF SHARES ELIGIBLE FOR FUTURE SALE ON PRICE OF COMMON
STOCK. Upon completion of the Offering, the Company will have 8,025,000 shares
of Common Stock outstanding. The 5,880,000 shares to be sold in the Offering
(6,762,000 shares if the Underwriters' over-allotment options are exercised in
full) will be freely tradeable in the public market without restriction or
further registration under the Securities Act of 1933, as amended (the
"Securities Act"), except for any shares purchased by affiliates of the Company.
The Selling Stockholder (which will beneficially own 18.9% of the outstanding
shares of Common Stock after the Offering) and the executive officers, directors
and the other current stockholders of the Company (who will beneficially own
approximately 7.8% of the outstanding shares of Common Stock after the Offering
and who will hold options exercisable at the initial public offering price for
an additional 600,000 shares of Common Stock) have agreed that, for a period of
180 days from the date of this Prospectus, they will not, directly or
indirectly, offer, sell, offer to sell, contract to sell, pledge, grant any
option to purchase or otherwise sell or dispose (or announce any offer, sale,
offer of sale, contract of sale, pledge, grant of any option to purchase or
other sale or disposition) of any shares of Common Stock or other capital stock
of the Company or any securities convertible into or exchangeable for any shares
of Common Stock or other capital stock of the Company without the prior written
consent of Prudential Securities Incorporated, on behalf of the Underwriters.
Prudential Securities Incorporated may, in its sole discretion, at any time and
without notice, release all or any portion of the shares of Common Stock subject
to such agreement. The Company has granted certain registration rights to Seitel
with respect to the shares of Common Stock it will retain after the Offering
that will effectively allow Seitel to sell up to 50% of such shares
approximately one year after the Offering and the balance two years after the
Offering and to participate as a selling stockholder, subject to certain
limitations, in future public offerings of Common Stock by the Company. See
"Certain Transactions -- Registration Rights Agreement" and "Shares Eligible for
Future Sale."

12
<PAGE> 14

Prior to the Offering, there has been no public market for the Common
Stock, and no prediction can be made as to the effect, if any, that the sale of
shares or the availability of shares for sale will have on the market price of
the Common Stock prevailing from time to time. Nevertheless, sales of
substantial amounts of the Common Stock in the public market could adversely
affect prevailing market prices and the ability of the Company to raise equity
capital in the future. See "Shares Eligible for Future Sale" and "Underwriting."

ANTI-TAKEOVER EFFECTS OF CERTAIN PROVISIONS OF THE CERTIFICATE OF
INCORPORATION, BY-LAWS AND DELAWARE GENERAL CORPORATION LAW. Certain provisions
of the Company's Certificate of Incorporation and By-Laws and of the Delaware
General Corporation Law may tend to deter potential unsolicited offers or other
efforts to obtain control of the Company that are not approved by the Board of
Directors. Such provisions may therefore deprive the stockholders of
opportunities to sell shares of Common Stock at prices higher than prevailing
market prices. See "Description of Capital Stock -- Certain Anti-Takeover
Effects of Certain Provisions of the Certificate of Incorporation, By-laws and
Delaware General Corporation Law."

13
<PAGE> 15

THE COMPANY

The Company is a highly-focused international oilfield service company
engaged in the acquisition of seismic information, with a specialization in the
acquisition of high definition 3D seismic data in logistically difficult wetland
environments and in congested offshore areas. The Company was formed in December
1996 to combine the onshore seismic data acquisition business conducted by SGI
with the offshore seismic data acquisition business conducted by the Horizon
Companies, both of which were commenced in 1993.

Prior to the Offering, ERI, the holding company of the Horizon Companies,
was owned 19.0% by the Company and 81.0% by certain members of management of the
Horizon Companies ("Horizon Management"). Contemporaneously with the
consummation of the Offering, the Company will issue 600,000 shares of its
Common Stock to Horizon Management in exchange for the remaining 81.0% of the
issued and outstanding shares of ERI, whereby ERI and the Horizon Companies will
become wholly-owned subsidiaries of the Company. The Horizon Companies are not
in any way associated with Horizon Resources, Inc., a Delaware corporation based
in Houston, Texas, or any of its affiliated companies.

After consummation of the Offering, Seitel will retain indirect ownership
of 18.9% of the outstanding shares of Common Stock (16.5% if the Underwriters'
over-allotment options are exercised in full), and Horizon Management will
collectively own 7.5% of the outstanding shares of Common Stock (4.9% if the
Underwriters' over-allotment options are exercised in full).

The executive office of the Company is located at 50 Briar Hollow Lane, 6th
Floor West, Houston, Texas 77027, and its phone number at that address is (713)
881-2800.

14
<PAGE> 16

USE OF PROCEEDS

The net proceeds to be received by the Company from the sale of the
4,000,000 shares of Common Stock offered by the Company hereby are estimated to
be $54.9 million after deducting underwriting discounts and commissions and
estimated offering expenses, assuming an initial public offering price of $15.00
per share (the midpoint of the price range set forth on the cover page of this
Prospectus). The Company intends to use the net proceeds approximately as
follows: (i) $35.4 million to repay indebtedness as set forth in the table
below; (ii) $5.0 million to be deposited with the Royal Bank of Scotland ("RBS")
as additional security for the capital lease obligation relating to the
Company's offshore seismic data acquisition vessel Simon Labrador; and (iii)
$14.5 million to fund a portion of the capital expenditures required to increase
the streamer capacity of the Simon Labrador. The Company operates the Simon
Labrador under a capital lease with Simon-Horizon Limited ("Simon"), which in
turn leases the vessel from RBS under a capital lease. Pursuant to the
arrangement between the Company and Simon, the Company is required to use its
best endeavors to obtain the release of Simon from all obligations in connection
with the lease of this vessel. The Company is currently negotiating with RBS to
enter into a capital lease for the vessel directly with RBS, the effect of which
would be to release Simon from its obligations with respect to the vessel. The
current state of negotiations suggests that RBS will require the Company to
deposit approximately $5 million as additional security to release Simon from
its obligations and enter into a capital lease with the Company directly. If RBS
will not enter into a lease for this vessel directly with the Company or will
not agree to other arrangements that will release Simon from its obligations
with respect to this vessel, or if Simon does not waive its right to be released
from such obligations, the Company will be required to exercise its purchase
option under the capital lease, which would currently require a payment of
approximately $12.5 million. If the Company is required to exercise such
purchase option and is unable to obtain financing for such purchase price, the
Company would be required to apply funds set aside for capital expenditures or
other funds from operations or borrow funds under the Company's proposed $20
million credit facility to pay such purchase price. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."

Pending use thereof, the Company intends to invest the net proceeds from
the Offering in short term, investment grade or government securities. The
Company will not receive any of the proceeds from the sale of the Common Stock
being sold by the Selling Stockholder and the Additional Selling Stockholders.
See "Principal and Selling Stockholders."

The following table sets forth certain information concerning the
indebtedness to be paid with a portion of the net proceeds of the Offering:

<TABLE>
<CAPTION>
PRINCIPAL
OUTSTANDING AT ANNUAL
NAME OF LENDER JUNE 30, 1997(1) INTEREST RATE MATURITY DATE
-------------- ---------------- --------------- --------------
<S> <C> <C> <C>
The Bank of N.T. Butterfield & Son Ltd.(2).... $ 7,867,000 8.50% On demand-
September 1997
NationsBanc Leasing Corporation of North
Carolina(1)(3).............................. 13,438,000 7.73%-8.06% August 1999-
April 2002
Compass Bank.................................. 1,074,000 7.61% June 1998
MetLife Capital Corporation................... 264,000 7.52% March 1999
MetLife Capital, Limited Partnership.......... 1,658,000 5.00%-6.00% July 1997-
July 1999
GE Capital Fleet Services..................... 268,000 5.00%-6.00% July 1997-
March 1999
Teledyne Industries, Inc.(4).................. 490,000 11.25%-12.00% September
1997-October
1997
Input/Output, Inc.(5)......................... 2,659,000 10.00% September 1999
Seitel, Inc.(6)............................... 7,657,000 5.35%-9.50% On demand-
December 2001
-----------
Total............................... $35,375,000
===========
</TABLE>

15
<PAGE> 17

- ---------------

(1) Does not include accrued interest, but does include prepayment penalties,
which are immaterial in amount except with respect to NationsBanc Leasing
Corporation of North Carolina. The prepayment penalty for the NationsBanc
Leasing Corporation indebtedness is estimated to be approximately $200,000.

(2) The exchange rate of British pounds to U.S. dollars assumed for purposes of
calculating these amounts is $1.70 per pound. This indebtedness is comprised
of a revolving credit facility with an outstanding balance of $7,667,000 and
a term loan with an outstanding balance of $200,000. The revolving credit
facility and the term loan bear interest at the rate of LIBOR plus 2.0%. The
revolving credit facility is payable on demand, and the term loan matures in
September 1997.

(3) This indebtedness is comprised of four term loans with outstanding principal
amounts of $4,988,000, $1,016,000, $6,718,000, and $516,000, with fixed
interest rates of 8.0%, 8.06%, 7.98%, and 7.73%, respectively, maturing July
2001, August 1999, April 2002, and March 2000, respectively. The proceeds of
these loans were used to acquire one Opseis seismic data acquisition system
and related equipment and various offshore seismic data acquisition
equipment.

(4) This indebtedness is comprised of two promissory notes with outstanding
principal amounts of $160,000 and $330,000, bearing interest at 11.25% and
12.00%, respectively, and maturing September and October 1997, respectively.
The proceeds of these loans were used to acquire offshore seismic data
acquisition equipment.

(5) Capital lease of offshore seismic data acquisition equipment.

(6) This indebtedness is comprised of term loans of $2,679,000 and $2,000,000
owed to Seitel by ERI maturing December 2001 and July 1998, respectively and
intercompany advances of $2,978,000 by Seitel to Eagle. Interest on the
$2,679,000 loan accrues at a variable rate of interest equal to 5.35% until
December 31, 1997, increasing to 8.0% from January 1, 1998 through December
31, 1998, and then at the prime rate of interest plus 1% from January 1,
1999 through December 31, 2001. Interest on the $2,000,000 loan accrues at
the prime rate of interest plus 1%. The proceeds of these loans were used to
repay $2,000,000 of existing indebtedness of ERI and to pay consideration
upon the repurchase by ERI of certain of its shares from Seitel. The
intercompany advances relate to amounts advanced on behalf of Eagle for
expenses incurred with respect to third party projects and taxes and
allocable overhead with respect to third-party projects. These advances are
payable on demand and bear interest at a rate equal to Seitel's cost of
funds, which is currently 7.25%.

16
<PAGE> 18

CAPITALIZATION

The following table sets forth Eagle's capitalization at March 31, 1997 on
an historical basis and the Company's capitalization at March 31, 1997 on a pro
forma combined basis to reflect the ERI Acquisition. The pro forma combined as
adjusted gives effect to (i) the sale by the Company of 4,000,000 shares of the
Common Stock offered hereby at an assumed initial public offering price and the
application of the net proceeds therefrom for planned repayments of indebtedness
as of March 31, 1997, (ii) the sale of 25,000 shares to the President of the
Company at the assumed initial public offering price for a note and (iii) the
planned dividend to Seitel, Inc. See "Dividend Policy." The data set forth below
should be read in conjunction with the other financial information presented
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
MARCH 31, 1997
-------------------------------------
PRO FORMA
PRO FORMA COMBINED
ACTUAL COMBINED AS ADJUSTED(1)
------- --------- --------------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C>
Current portion of long-term debt, capital lease
obligations and due to affiliate........................ $ 4,952 $18,752 $ 4,618
======= ======= =======
Long-term obligations(2):
Long-term debt.......................................... 12,933 12,933 --
Capital lease obligations............................... 1,319 12,875 9,871
Due to affiliate........................................ -- 4,679 --
------- ------- -------
Total long-term obligations..................... 14,252 30,487 9,871
------- ------- -------
Stockholders' equity(3):
Preferred stock, $0.01 par value; authorized 5,000,000
shares; no shares issued and outstanding............. -- -- --
Common stock, $0.01 par value; authorized 25,000,000
shares; issued and outstanding: 3,400,000 shares
actual; 4,025,000 shares pro forma combined;
8,025,000 shares pro forma combined as adjusted...... 34 40 80
Additional paid-in capital................................ 7,755 18,038 68,169
Retained earnings (deficit)(4)............................ 1,130 1,130 (133)
Note receivable from stockholder.......................... -- (375) (375)
------- ------- -------
Total stockholders' equity...................... 8,919 18,833 67,741
------- ------- -------
Total capitalization............................ $23,171 $49,320 $77,612
======= ======= =======
</TABLE>

- ---------------

(1) Adjusted to reflect the Offering and the application of the net proceeds to
reduce indebtedness of $34,750,000 as of March 31, 1997. However, as of June
30, 1997, the Company's total long-term obligations and due to affiliate,
which is to be repaid from a portion of the proceeds of the Offering, was
$35,375,000. Upon the application of the net proceeds from the Offering, the
current portion of long-term debt, capital lease obligations and due to
affiliate is expected to be $5,660,000 and total long-term obligations is
expected to be $9,496,000.

(2) See Note 3 under "Use of Proceeds."

(3) Excludes 704,450 shares of Common Stock issuable upon exercise of stock
options to be granted to management, employees and directors effective upon
consummation of the Offering, all of which will have an exercise price per
share equal to the initial public offering price set forth on the cover page
of this Prospectus. See "Management -- Independent Directors Stock Option
Plan" and " -- Stock Option Plan."

(4) The "pro forma combined as adjusted" balance reflects a $133,000 after tax
prepayment penalty on the early extinguishment of debt.

17
<PAGE> 19

DIVIDEND POLICY

Prior to the ERI Acquisition and the Offering, Eagle has been a
wholly-owned, indirect subsidiary of Seitel. The revenues of Eagle generated by
work performed for Seitel and its other subsidiaries were based on prices
charged to unaffiliated third parties for similar work and included a profit.
Because Eagle was a wholly-owned subsidiary of Seitel, the profits generated by
such intercompany work were eliminated from Seitel's financial statements upon
consolidation. Upon consummation of the ERI Acquisition and the Offering, Eagle
will no longer be a wholly-owned subsidiary of Seitel. Because Seitel does not
intend to fund any payables to the Company which resulted from such intercompany
work and which are still outstanding at the time the Offering is completed, the
Company declared a dividend on July 22, 1997, to its sole stockholder, a wholly-
owned, indirect subsidiary of Seitel, to eliminate any remaining intercompany
receivables from Seitel. This dividend of Eagle's receivable from Seitel for
profits attributable to work performed by Eagle for Seitel and its subsidiaries
since inception to the date of consummation of the Offering, less taxes and
allocable overhead attributable to such intercompany work, will be paid
immediately prior to the consummation of the Offering. As of June 30, 1997, the
amount of such net intercompany receivable was approximately $6.5 million. See
"Certain Transactions."

The Company does not currently intend to declare or pay dividends on the
Common Stock after the Offering and expects that after the Offering it will
retain funds generated by operations for the development and growth of the
Company's business. The Company's future dividend policy will be determined by
the Company's Board of Directors on the basis of various factors, including,
among other things, the Company's financial condition, cash flows from
operations, the level of its capital expenditures, its future business
prospects, the requirements of Delaware law and any restrictions imposed by the
Company's credit facilities. The Company anticipates that the proposed working
capital line of credit will impose restrictions on the Company's ability to pay
dividends.

18
<PAGE> 20

DILUTION

Purchasers of the Common Stock offered hereby will experience an immediate
and substantial dilution in the pro forma net tangible book value of the Common
Stock from the initial public offering price. As of March 31, 1997, the pro
forma net tangible deficit per share of the Common Stock was $0.25, after giving
effect to the ERI Acquisition. Net tangible book value per share represents the
Company's total tangible assets less total liabilities divided by the total
number of shares of Common Stock outstanding. After further giving effect to the
sale by the Company of the 4,000,000 shares of Common Stock to be sold by the
Company in the Offering (at an assumed initial public offering price of $15.00
per share, and after deducting underwriting discounts and commissions and
estimated expenses of the Offering to be paid by the Company), and the
application of the net proceeds as set forth for planned repayments of
indebtedness, the Company's as adjusted pro forma net tangible book value per
share of Common Stock as of March 31, 1997 would have been $5.97, representing
an immediate increase of $6.22 in pro forma net tangible book value per share to
existing stockholders and an immediate dilution of $9.03 per share to persons
purchasing shares in the Offering. The following table illustrates this dilution
per share of Common Stock:

<TABLE>
<S> <C> <C>
Assumed initial public offering price....................... $15.00
------
Pro forma net tangible deficit per share before the
Offering............................................... $(0.25)
------
Increase per share attributable to new investors.......... 6.22
------
Adjusted pro forma net tangible book value per share after
the Offering.............................................. 5.97
------
Dilution per share to new investors......................... $ 9.03
======
</TABLE>

The following table sets forth, on a pro forma basis as of March 31, 1997,
the difference between existing stockholders and new investors with respect to
the number of shares of Common Stock purchased from the Company and the total
cash consideration and average price per share paid to the Company (based upon
an assumed initial offering price of $15.00 per share for new investors) without
giving effect to underwriting discounts and commissions and offering expenses:

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
------------------- --------------------- PRICE
NUMBER(1) PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders(2)................. 4,025,000 50.2% $18,833,000 23.9% $ 4.68
New investors............................ 4,000,000 49.8% 60,000,000 76.1% $15.00
--------- ------ ----------- ------
8,025,000 100.0% $78,833,000 100.0%
========= ====== =========== ======
</TABLE>

- ---------------

(1) The number of shares disclosed for the existing stockholders includes
1,880,000 shares being sold by the Selling Stockholder in the Offering. The
number of shares disclosed for the new investors does not include the
1,880,000 shares being purchased by the new investors from the Selling
Stockholder in the Offering.

(2) The total consideration paid by existing stockholders represents the
combined stockholders' equity after the ERI Acquisition and before the
Offering. See "Pro Forma Financial Information."

19
<PAGE> 21

SELECTED PRO FORMA FINANCIAL INFORMATION

The unaudited pro forma consolidated financial statements summarized below
and included elsewhere in this Prospectus are derived from the historical
consolidated financial statements of Eagle and ERI included elsewhere in this
Prospectus.

The unaudited pro forma consolidated balance sheet as of March 31, 1997 and
the consolidated statements of operations for the year ended December 31, 1996
and the three month periods ended March 31, 1996 and 1997 give effect to certain
transactions which will take place upon the closing of the Offering, including
the acquisition by the Company, accounted for as a purchase transaction, of the
remaining 81% of the outstanding shares of ERI in exchange for the issuance by
the Company of 600,000 shares of Common Stock and the application of the net
proceeds of the Offering to repay certain indebtedness of the Company, as if the
transactions had taken place on March 31, 1997 in the case of the unaudited pro
forma consolidated balance sheet and January 1, 1996 in the case of the
unaudited pro forma consolidated statements of operations.

The unaudited pro forma consolidated statements of operations may not be
indicative of actual results that would have been achieved had the transactions
to be effected at the closing of the Offering actually been completed as of the
dates indicated. In addition, the unaudited pro forma consolidated financial
statements are not necessarily indicative of the results of future operations of
the Company and should be read in conjunction with Eagle and ERI's historical
and consolidated financial statements and notes thereto contained elsewhere in
this Prospectus.

<TABLE>
<CAPTION>
FOR THE QUARTER
FOR THE YEAR ENDED MARCH 31,
ENDED DECEMBER 31, 1996 -------------------------------
----------------------------------------------------------- 1996 1997
PRO FORMA -------------- --------------
EAGLE ENERGY COMBINED PRO FORMA PRO FORMA
GEOPHYSICAL, RESEARCH AS COMBINED AS COMBINED AS
INC. INTERNATIONAL ADJUSTMENTS(1) ADJUSTED(2) ADJUSTED(1)(2) ADJUSTED(1)(2)
------------ ------------- -------------- ----------- -------------- --------------
(HISTORICAL) (HISTORICAL) (UNAUDITED) (UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenue......................... $48,136 $43,607 $ (828) $90,915 $12,890 $23,179
------- ------- ------- ------- ------- -------
Expenses:
Operating expenses(3)......... 34,917 37,601 (828) 71,690 11,466 16,110
Depreciation and
amortization................ 3,409 4,615 1,323(4) 9,347 2,024 3,010
Selling, general and
administrative expenses..... 2,680 2,619 1,133(5) 6,432 1,111 1,250
Interest expense, net......... 531 1,649 (1,529)(6) 651 110 34
------- ------- ------- ------- ------- -------
Total expenses............ 41,537 46,484 99 88,120 14,711 20,404
------- ------- ------- ------- ------- -------
Income (loss) before provision
for income taxes.............. 6,599 (2,877) (927) 2,795 (1,821) 2,775
Provision (benefit) for income
taxes......................... 2,420 -- (506) 1,914 108 494
------- ------- ------- ------- ------- -------
Net income (loss)(7)............ $ 4,179 $(2,877) $ (421) $ 881 $(1,929) $ 2,281
======= ======= ======= ======= ======= =======
Earnings (loss) per share(7).... $ 1.23 $ .11 $ (.24) $ .28
======= ======= ======= =======
Weighted average shares
outstanding................... 3,400
=======
Pro forma shares outstanding.... 8,025 8,025 8,025
======= ======= =======
Statement of Cash Flow Data:
Operating activities............ $ 4,640 $ 4,315 $ 9,857 $(2,022) $ 6,399
Investing activities............ (7,928) (3,113) (11,041) (253) (7,258)
Financing activities............ 3,230 (1,313) 1,917 2,252 1,341
Other Financial Data:
EBITDA(8)....................... $10,539 $ 3,387 $12,793 $ 313 $ 5,819
</TABLE>

<TABLE>
<CAPTION>
AS OF MARCH 31, 1997
-----------------------------
PRO FORMA
PRO FORMA COMBINED AS
COMBINED(1) ADJUSTED(1)(2)
----------- --------------
(UNAUDITED)
<S> <C> <C>
Balance Sheet Data:
Cash and cash equivalents................................. $ 1,304 $21,204
Total assets.............................................. 85,490 99,581
Total debt, capital lease obligations and due to
affiliate............................................... 49,239 14,489
Stockholders' equity...................................... 18,833 67,741
</TABLE>

- ---------------

(3) As used herein, operating expenses exclude depreciation and amortization.

(4) Reflects the amortization of goodwill associated with the acquisition of ERI
over a 15-year estimated useful life.

(5) Represents identifiable additions to selling, general and administrative
expenses the Company estimates it will incur when operating as a public
registrant.

(6) Reflects a reduction in interest expense as a result of the application of
estimated net proceeds from the Offering to reduce debt and capital lease
obligations.

(7) Excludes the effect of a $600,000 extraordinary gain for early
extinguishment of debt on ERI's historical 1996 financial statements.

(8) EBITDA represents earnings before interest expense, taxes, depreciation and
amortization. Although EBITDA is not a measure of performance calculated in
accordance with generally accepted accounting principles, management
believes that securities analysts use EBITDA as a measure to evaluate
oilfield service companies. The Company believes that EBITDA may provide
additional information about the Company's ability to meet its future
requirements for debt service, capital expenditures and working capital,
although such future cash outlays are not included in the determination of
EBITDA. The amount and trends in EBITDA should not be considered as
alternatives to net income as an indicator of the Company's operating
performance or as an alternative to cash flow as a better measure of the
Company's profitability or liquidity. Because EBITDA excludes some, but not
all, items that affect net income and its computation may vary among
companies, the EBITDA calculation presented above may not be comparable to
similarly titled measures of other companies.

20
<PAGE> 22

SELECTED FINANCIAL INFORMATION

The selected financial information set forth below for Eagle has been
derived from the audited Consolidated Financial Statements and the unaudited
consolidated condensed financial statements of Eagle. Such Consolidated
Financial Statements for the years ended December 31, 1994, 1995 and 1996 have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report included elsewhere herein. The selected financial
information set forth below for ERI has been derived from the audited
Consolidated Financial Statements and the unaudited consolidated condensed
financial statements of ERI. Such Consolidated Financial Statements for the
years ended December 31, 1994, 1995 and 1996 have been audited by KPMG,
independent public accountants, as indicated in their report included elsewhere
herein. The financial information set forth below as of March 31, 1997 and for
the three month periods ended March 31, 1996 and 1997, is derived from Eagle and
ERI's unaudited consolidated condensed financial statements, which, in the
opinion of management of the individual companies, include all adjustments
necessary for a fair presentation of the financial condition and results of
operations of Eagle and ERI for such periods. The results of operations for
interim periods are not necessarily indicative of a full year's operations. This
information should be read in conjunction with the Consolidated Financial
Statements of Eagle and ERI, the notes related thereto and Management's
Discussion and Analysis of Financial Condition and Results of Operations
included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
AS OF AND FOR THE
AS OF AND FOR THE YEARS ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
------------------------------------ -----------------
1993 1994 1995 1996 1996 1997
------ ------- ------- ------- ------- -------
(UNAUDITED) (IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
EAGLE GEOPHYSICAL, INC.(1)

Statement of Operations Data:
Revenue................................................... $5,650 $25,721 $29,275 $48,136 $ 5,974 $12,981
------ ------- ------- ------- ------- -------
Expenses:
Operating expenses(2)................................... 3,596 20,070 20,986 34,917 4,336 9,286
Depreciation and amortization........................... 409 1,817 2,471 3,409 657 1,302
Selling, general and administrative..................... 108 1,673 2,874 2,680 361 450
Interest expense, net................................... 147 384 408 531 136 158
------ ------- ------- ------- ------- -------
Total expenses...................................... 4,260 23,944 26,739 41,537 5,490 11,196
------ ------- ------- ------- ------- -------
Income before provision for income taxes.................. 1,390 1,777 2,536 6,599 484 1,785
Provision for income taxes................................ 509 651 933 2,420 178 655
------ ------- ------- ------- ------- -------
Net income................................................ $ 881 $ 1,126 $ 1,603 $ 4,179 $ 306 $ 1,130
====== ======= ======= ======= ======= =======
Earnings per share(3)..................................... $ .26 $ .33 $ .47 $ 1.23 $ .09 $ .33
====== ======= ======= ======= ======= =======
Weighted average shares outstanding....................... 3,400 3,400 3,400 3,400 3,400 3,400
====== ======= ======= ======= ======= =======
Consolidated Balance Sheet Data:
Cash and cash equivalents................................. $ 25 $ 29 $ 58 $ -- $ 47 $ --
Total assets.............................................. 7,063 14,413 17,960 26,721 20,997 35,792
Total debt and capital lease obligations.................. 3,989 8,034 5,932 10,902 5,832 17,800
Stockholders' equity...................................... 881 2,007 3,610 7,789 3,916 8,919
</TABLE>

- ---------------

(1) Eagle was incorporated in December 1992 and had no material operations in
1992.

(2) As used herein, operating expenses exclude depreciation and amortization.

<TABLE>
<CAPTION>
AS OF AND FOR THE
AS OF AND FOR THE YEARS ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
------------------------------------- -----------------
1993(1) 1994 1995 1996 1996 1997
------- ------- ------- ------- ------- -------
(UNAUDITED) (IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
ENERGY RESEARCH INTERNATIONAL

Statement of Operations Data:
Revenue................................................... $9,591 $19,457 $29,423 $43,607 $ 6,916 $10,632
------ ------- ------- ------- ------- -------
Expenses:
Operating expenses(2)................................... 8,360 16,360 27,075 37,601 7,130 7,258
Depreciation............................................ 78 1,683 3,856 4,615 1,036 1,377
Selling, general and administrative..................... 690 1,703 2,196 2,619 467 517
Interest expense, net................................... 90 528 1,456 1,649 406 536
------ ------- ------- ------- ------- -------
Total expenses...................................... 9,218 20,274 34,583 46,484 9,039 9,688
------ ------- ------- ------- ------- -------
Income (loss) before provision for income taxes and
extraordinary item...................................... 373 (817) (5,160) (2,877) (2,123) 944
Provision for income taxes................................ 63 11 -- -- -- --
------ ------- ------- ------- ------- -------
Income (loss) before extraordinary item................... 310 (828) (5,160) (2,877) (2,123) 944
Extraordinary item........................................ -- -- -- 600 -- --
------ ------- ------- ------- ------- -------
Net income (loss)......................................... $ 310 $ (828) $(5,160) $(2,277) $(2,123) $ 944
====== ======= ======= ======= ======= =======
Consolidated Balance Sheet Data:
Cash...................................................... $ 155 $ 266 $ 373 $ 813 $ 306 $ 1,304
Total assets.............................................. 7,884 28,920 28,040 28,057 25,113 30,421
Total debt and capital lease obligations.................. -- 21,712 24,543 21,072 23,333 23,236
Stockholders' equity (deficit)............................ 307 (491) (5,626) (11,231) (7,694) (9,935)
</TABLE>

- ---------------

(1) ERI was incorporated in May 1993 and commenced operations in July 1993, and
no prior operations are included in the 1993 data above.

(2) As used herein, operating expenses excludes depreciation.

21
<PAGE> 23

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The following discussion provides general information for, and the results
of operations of, the onshore operations that were conducted by Eagle and the
offshore operations that were conducted by the Horizon Companies prior to the
consummation of the Offering. The primarily forward-looking discussion of
liquidity and capital resources of the combined entity gives effect to the
Offering and the intended use of proceeds. See "Use of Proceeds." The following
discussion should be read in connection with Eagle's Consolidated Financial
Statements, ERI's Consolidated Financial Statements, the Company's Pro Forma
Combined Financial Statements and the related Notes thereto included elsewhere
in this Prospectus. All such financial statements have been prepared in
accordance with generally accepted accounting principles in the United States.
The following information contains certain forward-looking statements. For a
discussion of certain limitations inherent in forward-looking statements, see
the second paragraph under "Risk Factors."

GENERAL

The Company's revenues are generated from the sale of onshore and offshore
seismic data acquisition services. The Company focuses its onshore operations in
logistically difficult wetland environments along the U.S. Gulf Coast, and
focuses its offshore operations in congested areas in the North Sea and the U.S.
Gulf of Mexico. The Company generally provides its onshore seismic data
acquisition services under fixed fee contracts with its customers. The Company
provides its offshore seismic data acquisition services under either distance-
or time-based contracts (or a combination of both methods) or turnkey contracts
that provide for a fixed fee. The Company generally does not retain rights to
the data acquired. Onshore operations accounted for approximately 52% of the
Company's pro forma combined revenues for the year ended December 31, 1996, with
offshore operations accounting for the remaining 48% of pro forma combined
revenues.

ONSHORE OPERATIONS

With respect to its onshore operations, the Company's prices, and therefore
its revenues, vary depending primarily on demand for the Company's services, the
number of acquisition crews of the Company, the acquisition capacity of each
crew, the utilization rates of the Company's crews and the complexity and
difficulty of the projects undertaken by each crew. The Company began its
onshore operations in 1993 with one crew operating a 1,300 channel Opseis radio
telemetry system. The Company added a second 1,300 channel Opseis onshore crew
in May 1994, and incrementally upgraded the channel capacity of both crews in
1995 and 1996 to a total of 1,850 channels per crew. The Company added a third
1,850 channel Opseis crew in January 1997. Thus, the Company has increased the
number of crews operated and the acquisition capacities of its crews from year
to year for the periods presented in the financial statements, which has
contributed substantially to the increased revenues from year to year.

Revenues for less complex, easier to perform seismic acquisition projects
tend to be lower than revenues for more complex, difficult to perform projects,
even when the projects take the same amount of time for a crew to perform. The
mix of more and less complex projects results in variations from year to year
for revenues attributable to each crew. The projects performed by the Company's
two onshore crews operating in 1996 were weighted more heavily towards complex
projects than in 1995, resulting in substantially increased revenues per crew
over 1995 levels. The Company anticipates that the mix of project complexity for
its onshore crews in 1997 will more closely approximate 1995 levels.

OFFSHORE OPERATIONS

Similar to the Company's onshore operations, prices and revenues with
respect to offshore operations vary depending primarily on demand, the number of
vessels operated by the Company, the acquisition capacity of each vessel,
utilization rates and the complexity and difficulty of the projects undertaken
by each vessel. In 1994, the Company operated one vessel for the entire year,
one vessel for six months, and two other vessels for two and four months,
respectively. In 1995, the Company operated three vessels for the entire year
and one vessel for four months, and in 1996 the Company operated three vessels
for the entire year and one vessel for nine months. Two of these vessels were
upgraded from two to three streamers in mid-1996. Thus, the Company has
increased the number of vessels operated and the acquisition capacities of its
vessels from year

22
<PAGE> 24

to year for the periods presented in the financial statements, which has
contributed substantially to the increased revenues from year to year.

In April 1997, one of the Simon Labrador's streamers suffered a mechanical
failure and was damaged. The Company estimates that the cost of repairing such
damage is unlikely to exceed $175,000. The Company believes that any damage in
excess of its $250,000 insurance deductible would be covered by the Company's
insurance. The Company estimates that the net income earned by the Company on
the project that was being performed when such damage occurred was approximately
$350,000 less than the Company had expected for that project. This decrease was
the result of the project taking longer to complete after such damage since the
vessel was operating with two instead of three streamers, the vessel earning a
reduced dayrate as a result of operating with fewer streamers and the Company
incurring the estimated cost of repair.

On July 16, 1997, an incident caused by a shrimping vessel damaged the
streamers deployed behind the Abshire Tide and the Discoverer in the Gulf of
Mexico. Based on initial estimates of the damage, the Company anticipates that
the cost to repair the streamers will be less than $500,000, and that any repair
costs in excess of the Company's $250,000 deductible will be covered by the
Company's insurance. This incident did not cause any material interruption to
the operations of these vessels, and the Company does not believe that this
incident will have a material effect on its results of operations.

The Company currently intends to increase the streamer capacity of the
Simon Labrador beginning in the fourth quarter of 1997 and carrying over into
the first quarter of 1998 at an estimated capital cost of approximately $18
million, a portion of which will be funded from the proceeds of the Offering.
This vessel will be taken out of service for a period of approximately 90 days
to accomplish these modifications, during which period this vessel would have
earned revenues of approximately $2.7 million. The Company anticipates that
revenues and income generated by this vessel will increase as a result of these
upgrades.

Because the Company derives a portion of its offshore revenues from sales
internationally, the Company is subject to risks relating to fluctuations in
currency exchange rates. The Company's costs and revenues from offshore
operations have historically been evenly divided between the U.S. dollar and the
British pound. The Company's financial statements are prepared using the U.S.
dollar as the functional currency, and, therefore, fluctuations in the exchange
rate between the U.S. dollar and the British pound affect the Company's costs
and revenues. Historically, fluctuations in exchange rates have not had a
material impact on the Company's results of operations, and the Company does not
currently engage in any currency hedging activities. As the Company expands its
operations into new geographic markets, such as Latin America, Africa and
Southeast Asia, which may involve more extensive currency risks, the Company
intends to protect itself against foreign currency fluctuations by generally
attempting to match foreign currency revenues and expenses in order to balance
its net position of receivables and payables denominated in foreign currencies,
by endeavoring to require its customers to pay for services in U.S. dollars and,
to a lesser extent, by purchasing foreign exchange contracts and other foreign
exchange instruments and implementing other procedures to counteract currency
fluctuations.

RESULTS OF OPERATIONS

The following discussion of the Results of Operations is divided into a
discussion of the Company's onshore operations, which were conducted by Eagle,
and the Company's offshore operations, which were conducted by the Horizon
Companies prior to the consummation of the Offering. These discussions are
presented based on the revenues and expenses of the separate companies prior to
the ERI Acquisition, which will occur contemporaneously with the Offering. The
revenues of Eagle include intercompany profits from work performed for Seitel
and its subsidiaries. See "Risk Factors -- Influence of Seitel, Inc. on the
Company," "Certain Transactions" and Note G to Eagle's Consolidated Financial
Statements.

The ERI Acquisition has been accounted for in the Pro Forma Combined
Financial Statements under the purchase method of accounting. As a result, the
assets and liabilities of ERI have been recorded at their estimated fair values
as of the date of this Prospectus. The purchase price in excess of such net
assets has been recorded as goodwill and will be amortized over a 15-year
period. Accordingly, the Company's depreciation and amortization will increase
by approximately $1.3 million per year in future periods as a result of
amortization of this goodwill. The Company expects the principal effects of the
ERI Acquisition on future

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results of operations to be this increase in depreciation and amortization costs
associated with goodwill and the decrease in interest expense resulting from the
repayment of debt with the proceeds of the Offering. See "-- Liquidity and
Capital Resources."

ONSHORE OPERATIONS

First Quarter 1997 Compared to First Quarter 1996

Revenue increased 117.3% from $6.0 million in the first quarter of 1996 to
$13.0 million in the first quarter of 1997, primarily due to the addition of a
third Opseis crew in January 1997. In the first quarter of 1997, Eagle operated
three crews, whereas in the first quarter of 1996, Eagle operated two crews.
Additionally, the surveys performed by the Company's crews in the 1997 period
were in more difficult logistical and environmental areas, providing higher
contract prices per crew, than the surveys performed in the 1996 period.
Although the surveys performed by the Company's onshore crews during 1996 were
generally more logistically demanding than in prior years, the surveys performed
in the first quarter of 1996 were not as logistically demanding as the surveys
performed during the last three quarters of 1996.

Operating costs (excludes depreciation and amortization) increased 114.2%
from $4.3 million in the first quarter of 1996 to $9.3 million in the first
quarter of 1997, primarily due to the addition of the third crew in the 1997
period. Operating margin percentage (revenues less operating costs, as a
percentage of revenues) increased slightly from 27.4% to 28.5% in the first
quarter of 1997.

Depreciation and amortization increased 98.2% from $0.7 million in the
first quarter of 1996 to $1.3 million in the first quarter of 1997, resulting
from operating three crews in the 1997 period versus two in the 1996 period and
from depreciation of marine seismic equipment purchased by Eagle in July 1996
and leased to the Horizon Companies. Selling, general and administrative
expenses increased 24.7% from $0.4 million in the first quarter of 1996 to $0.5
million in the first quarter of 1997, primarily due to the addition of
administrative staff to support the expanded operations. Net interest expense
increased from $0.1 million in the 1996 period to $0.2 million in the 1997
period due to financing costs associated with the third crew.

1996 Compared to 1995

Onshore revenues increased 64.4% from $29.3 million for 1995 to $48.1
million for 1996. This increase in revenue was primarily due to increased
production from the two crews operating in 1996 and higher prices due to these
crews performing a greater proportion of higher definition seismic data
acquisition services than in 1995 and performing seismic data acquisition
services in logistically and environmentally more difficult areas than in 1995.
The Company increased the channel capacity of both crews during 1996 by
approximately 20% over their 1995 channel capacity. This enabled each crew to
acquire more seismic data, resulting in higher revenues.

Operating costs (excludes depreciation and amortization) increased 66.4%
from $21.0 million for 1995 to $34.9 million for 1996, reflecting the higher
costs associated with performing services in logistically and environmentally
difficult areas. These higher costs were primarily attributable to additional
subcontract service and labor costs. Operating margin percentage changed only
slightly from 28.3% for 1995 to 27.5% for 1996.

Depreciation and amortization increased 38.0% from $2.5 million in 1995 to
$3.4 million in 1996, primarily as a result of depreciation related to
additional equipment costs from the increased channel capacity of both crews in
addition to new capital purchases of geophones for both crews during 1996.
Selling, general and administrative expenses decreased slightly, from $2.9
million in 1995 to $2.7 million in 1996, primarily due to cost saving measures
implemented in 1996. Net interest expense increased from $0.4 million in 1995 to
$0.5 million in 1996, reflecting additional financing costs for equipment
purchases made during 1996.

1995 Compared to 1994

Onshore revenue increased 13.8% from $25.7 million for 1994 to $29.3
million for 1995. This increase resulted from two acquisition crews operating
for all of 1995 compared to 1994 when one crew was in

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operation for the entire year and the second acquisition crew, which was added
in May 1994, was in operation for only eight months during the year.

Operating costs (excludes depreciation and amortization) increased 4.6%
from $20.1 million for 1994 to $21.0 million for 1995 due to the increase in
revenues from 1994 to 1995. Operating margin percentage increased from 22.0% for
1994 to 28.3% for 1995. The improved operating margin resulted from the
expansion of the crews' channel capacity, which yielded a higher return on
revenues.

Depreciation and amortization increased from $1.8 million in 1994 to $2.5
million in 1995, reflecting the depreciation for the two crews operating for a
full year in 1995 compared with one crew operating for a full year and one for a
partial year in 1994. The Company's selling, general and administrative expenses
increased from $1.7 million in 1994 to $2.9 million in 1995 due primarily to
variable compensation expenses related to the increased level of business as
well as legal fees associated with a contract dispute with a customer. Net
interest expense increased 6.3% from 1994 to 1995 due to financing costs
associated with additional equipment purchases.

OFFSHORE OPERATIONS

First Quarter 1997 Compared to First Quarter 1996

Revenue increased 53.7% from $6.9 million in the first quarter of 1996 to
$10.6 million in the first quarter of 1997, primarily due to improved vessel
utilization in the 1997 period. In the first quarter of 1997, the Simon Labrador
operated in the Falkland Islands for the entire quarter, whereas in the first
quarter of 1996, this vessel operated in the North Sea and had lower earnings
due to seasonal weather conditions. Additionally, the Discoverer and Abshire
Tide operated for the entire first quarter of 1997, whereas in the first quarter
of 1996, they were in startup mode in the U.S. Gulf of Mexico and therefore
operated for only a part of the quarter.

Operating expenses (excludes depreciation and amortization) increased
slightly from $7.1 million in the first quarter of 1996 to $7.2 million in the
first quarter of 1997. Operating margins increased from negative 3.1% to 31.7%
due to the increase in revenue.

Depreciation increased 32.9% from $1.0 million in the first quarter of 1996
to $1.4 million in the first quarter of 1997, resulting from operating four
vessels in the 1997 period versus three in the 1996 period and from the purchase
of additional capital equipment in late 1996 with corresponding depreciation
beginning in 1997. Selling, general and administrative expenses increased
slightly due to additional legal and administrative costs. Interest expense
increased from $0.4 million in the 1996 period to $0.5 million in the 1997
period due to financing costs associated with additional working capital
requirements.

No provision was made for United States and United Kingdom income taxes in
either quarter due to operating losses and operating loss carry-forwards from
the offshore operations.

1996 Compared to 1995

Offshore revenues increased 48.2% from $29.4 million in 1995 to $43.6
million in 1996, primarily due to additional months of vessel operations coupled
with vessel streamer upgrades. In 1996, three vessels operated for the entire
year and one vessel for nine months, whereas in 1995, three vessels operated for
the entire year and one vessel for four months. Additionally, the streamer
capabilities of two of the vessels were upgraded in mid-1996 from two to three
streamers, providing expanded revenue capacity. In the fourth quarter of 1996,
one vessel was inactive due to a major engine failure that resulted in reduced
revenues of approximately $1.8 million and adversely affected operating margins.

Operating costs (excludes depreciation and amortization) increased 38.9%
from $27.1 million in 1995 to $37.6 million 1996. This increase was primarily
due to company growth, increased vessel operations and the additional streamer
capacity of the vessels in service. Operating margins improved from 8.0% in 1995
to 13.8% in 1996 due to more profitable contracts and improved vessel
utilization. A significantly unprofitable contract in the Gulf of Mexico
contributed to the lower operating margins in 1995.

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Depreciation increased 19.7% from $3.9 million in 1995 to $4.6 million in
1996, primarily due to additional vessels and equipment upgrades put into
service in 1996. Selling, general and administrative expenses increased 19.3%
from $2.2 million in 1995 to $2.6 million in 1996, primarily due to additional
legal costs of $0.1 million incurred by ERI in connection with Seitel's
investment in ERI and additional personnel costs of $0.2 million to accommodate
ERI's growth. Net interest expense increased from $1.5 million in 1995 to $1.6
million in 1996 due to the increased borrowing by the Company.

No provision was made for United States and United Kingdom income taxes in
either 1996 or 1995 due to operating losses from the offshore operations.

1995 Compared to 1994

Revenue increased 51.2% from $19.5 million for 1994 to $29.4 million for
1995 due to additional vessel capacity in service in 1995. In 1995 three vessels
operated for the entire year and one vessel operated for four months, whereas
during 1994 one vessel operated for the entire year, one vessel operated for six
months, one vessel operated for four months and one vessel operated for two
months.

Operating costs (excludes depreciation and amortization) increased 65.5%
from $16.4 million in 1994 to $27.1 million in 1995 due to the additional vessel
capacity in 1995 and the costs associated with the startup of these additional
vessels. Operating margins decreased from 15.9% in 1994 to 8.0% in 1995,
primarily due to a significantly unprofitable contract in the U.S. Gulf of
Mexico.

Depreciation increased from $1.7 million in 1994 to $3.9 million in 1995 as
a result of equipment purchases made in mid- to late-1994 to equip the new
vessels placed in service during 1994. Selling, general and administrative
expenses increased 28.9% from $1.7 million for 1994 to $2.2 million for 1995.
During 1994, Horizon Management, who owned stock of ERI, elected to receive
reduced salaries. Net interest expense increased from $0.5 million to $1.5
million due to additional working capital requirements and additions to ERI's
vessel fleet.

LIQUIDITY AND CAPITAL RESOURCES

Prior to the Offering, Eagle has been a wholly-owned subsidiary of Seitel.
In the past, Seitel has guaranteed certain indebtedness of Eagle and has made
loans to Eagle. Therefore, the historical liquidity and capital resources of
Eagle may not be indicative of the Company's future liquidity and capital
resources.

The revenues of Eagle generated by work performed for Seitel and its other
subsidiaries were based on prices charged to unaffiliated third parties for
similar work and included a profit. Because Eagle was a wholly-owned subsidiary
of Seitel, the profits generated by such intercompany work were eliminated from
Seitel's financial statements upon consolidation. Upon consummation of the ERI
Acquisition and the Offering, Eagle will no longer be a wholly-owned subsidiary
of Seitel. Because Seitel does not intend to fund any payables to the Company
which resulted from such intercompany work and which are still outstanding at
the time the Offering is completed, the Company declared a dividend on July 22,
1997, to its sole stockholder, a wholly-owned, indirect subsidiary of Seitel, to
eliminate any remaining intercompany receivables from Seitel. This dividend of
Eagle's receivable from Seitel for profits attributable to work performed by
Eagle for Seitel and its subsidiaries since inception to the date of
consummation of the Offering, less taxes and allocable overhead attributable to
such intercompany work, will be paid immediately prior to the consummation of
the Offering. As of June 30, 1997, the amount of such net intercompany
receivable was approximately $6.5 million. See "Certain Transactions."

The Company's pro forma working capital as of March 31, 1997, after giving
effect to the consummation of the ERI Acquisition and the application of the net
proceeds from this Offering, was $18.3 million. See "Use of Proceeds." The pro
forma indebtedness of the Company as of such date consisted of a capital lease
obligation totaling approximately $12.2 million relating to the capital lease of
the vessel Simon Labrador.

The Company will repay $35.4 million of existing indebtedness with a
portion of the net proceeds of the Offering, which will significantly decrease
the Company's interest expenses and will eliminate the Company's obligation to
make payments on the principal of such debt in the future. See "Use of
Proceeds." This will

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allow the Company to apply the cash generated from operations towards its
capital requirements rather than to service such debt.

The Company currently plans to expand its existing data acquisition
capabilities through the expansion of the streamer towing capacity of one of its
vessels beginning in the fourth quarter of 1997 and carrying over into the first
quarter of 1998, at a capital cost of approximately $18 million. A portion of
this capital expenditure will be funded from the net proceeds of the Offering.
See "Use of Proceeds." The Company anticipates that the portion of this capital
expenditure not funded from the net proceeds of the Offering will be funded from
cash from operations and additional borrowing. In 1998, the Company intends to
charter and equip one additional offshore seismic vessel, at a capital cost of
approximately $20 to $30 million. The Company intends to fund these capital
costs with a combination of cash from operations and additional debt or equity
financing.

The Company operates the Simon Labrador under a capital lease with Simon,
which in turn leases the vessel from RBS under a capital lease. Pursuant to the
arrangement between the Company and Simon, the Company is required to use its
best endeavors to obtain the release of Simon from all obligations in connection
with the lease of this vessel. The Company is currently negotiating with RBS to
enter into a capital lease for the vessel directly with RBS, the effect of which
would be to release Simon from its obligations with respect to the vessel. The
current state of negotiations suggests that RBS will require the Company to
deposit $5 million as additional security to release Simon from its obligations
and enter into a capital lease with the Company directly. If RBS will not enter
into a lease for this vessel directly with the Company or will not agree to
other arrangements that will release Simon from its obligations with respect to
this vessel, or if Simon does not waive its right to be released from such
obligations, the Company will be required to exercise its purchase option under
the capital lease, which would currently require a payment of approximately
$12.5 million. If the Company is required to exercise such purchase option and
is unable to obtain financing for such purchase price, the Company would be
required to apply funds set aside for capital expenditures or other funds from
operations towards such purchase price.

The Company is also currently pursuing opportunities to expand its wetland
seismic data acquisition activities internationally, primarily into Latin
America. Any such expansion will likely require the addition of another onshore
crew at a capital cost of approximately $5 to $7 million. The Company currently
intends to fund any such required capital costs with a combination of cash from
operations and additional debt financing.

The Company is continually evaluating the practical applications of new
seismic technology and equipment in order to maintain its competitive
technological position; however, the Company does not have any current
arrangement or agreement to acquire or employ any such new technology. The
Company may revise its plans with respect to capital expenditures in response to
future changes in the seismic data acquisition industry in general and the
demand for its services in particular, its results of operations, its other
capital requirements and other relevant factors.

As of March 31, 1997, the Company had capital commitments to purchase
approximately $1.4 million of additional marine seismic data acquisition
equipment as part of its scheduled routine replacement of existing equipment. As
of June 30, 1997, the Company had purchased approximately $1.1 million of such
equipment, which was financed with vendor financing, $330,000 of which the
Company intends to repay with a portion of the net proceeds of the Offering. See
"Use of Proceeds." The purchase price of the balance of such equipment will be
funded with cash from operations and vendor financing.

In the past, Seitel has guaranteed certain indebtedness of the Company and
has made loans to the Company. All of such debt owed to Seitel is being repaid
with a portion of the net proceeds of the Offering. The Company's borrowing
costs may increase in the future as a result of having to obtain financing based
on its own creditworthiness.

The Company has obtained a commitment from Bank One, Texas, N.A. with
respect to a $20,000,000 revolving credit facility to be secured by the
Company's accounts receivable. The amount the Company may borrow under the
revolving credit facility will be limited to a borrowing base that will be equal
to 90% of eligible U.S. and U.K. investment grade accounts receivable, 100% of
receivables secured by acceptable letters of credit and 80% of eligible
investment grade foreign receivables, non-graded U.S. receivables and other

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eligible receivables approved by the bank. Interest only will be payable monthly
or at the end of LIBOR interest periods, and the credit facility will be payable
in full in three years. Mandatory prepayments will be required if borrowings
exceed the borrowing base. Interest will accrue under the credit facility at the
bank's base rate or at LIBOR plus a spread of 1.375% if the Company's debt to
net worth ratio is less than 1 to 1, and 1.625% if such ratio is equal to or
greater than 1 to 1. The Company expects to finalize such credit agreement
before or shortly after consummation of the Offering. However, the bank's
commitment is subject to negotiation of definitive loan agreements, and there
can be no assurance that the Company will enter into such arrangement, or that
any credit facility the Company does obtain will be on these terms.

The Company believes that its planned capital expenditures and operating
requirements through the end of 1997 will be funded from a portion of the net
proceeds of this Offering and the Company's cash flow from operations. The
Company anticipates that its cash flow from operations will be sufficient to
fund its operating requirements for the foreseeable future, and that any
additional capital expenditures will be funded from the Company's cash flow from
operations and additional debt or equity financing. If the Company is not able
to obtain additional financing, it will be unable to make such capital
expenditures and the Company's financial position and results of operations may
be materially and adversely affected as a result.

SEASONALITY

The onshore and offshore seismic data acquisition operations of the Company
are subject to seasonal fluctuation, with the greatest volume of data
acquisition occurring during the summer and fall. This is due primarily to
adverse weather conditions, which are more prevalent in the winter and spring.

NEW ACCOUNTING PRONOUNCEMENTS

In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings per Share," effective for
interim and annual periods after December 15, 1997. This statement replaces
primary earnings per share with a newly defined basic earnings per share and
modifies the computation of diluted earnings per share. The application of this
statement will not have any impact on earnings per share for the three years
ended December 31, 1996, as there were no common stock equivalent shares
outstanding.

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DESCRIPTION OF BUSINESS

GENERAL

INDUSTRY OVERVIEW

Historically, 2D surveys were the primary technique used to acquire seismic
data. However, advances in computer technology in the last five to ten years
have made 3D seismic data, which provides a more comprehensive geophysical
image, a practical and capable oil and gas exploration and development tool. 3D
seismic data is proving to be more accurate and effective than 2D data at
identifying potential hydrocarbon-bearing geological formations. The use of 3D
seismic data to identify locations to drill both exploration and development
wells has improved the economics of finding and producing oil and gas. This in
turn has created increased demand for 3D seismic surveys in recent years.

Seismic data is acquired on land by deploying thousands of seismic sensors,
called geophones, over a portion of the area to be covered by the seismic
survey. An energy source, such as subsurface dynamite or truck mounted
vibrators, is used to generate seismic waves that move through the geological
formations under the area and are reflected by various subsurface strata back to
the surface, where they are detected by the geophones. The geophones and energy
sources must be deployed over the survey area, which will cover many square
miles, in a specified configuration. For 2D data, the ideal configuration of
geophones and energy sources is a straight line with an energy source and small
groups of geophones, or geophone stations, placed evenly every few hundred feet
along the line. For 3D data, the ideal configuration is generally a grid of
perpendicular lines spaced a few hundred to a few thousand feet apart, with
geophone stations spaced evenly every few hundred feet along one set of parallel
lines, and energy sources spaced evenly every few hundred feet along the
perpendicular lines. This configuration must be carefully designed to provide
optimal imaging of the targeted geological structures while taking into account
surface obstructions such as water wells and oil and gas wells, pipelines and
areas where permission to enter upon the land cannot be obtained. Typically,
between four and six geophone stations are connected by relatively short wires
to electronic field recording boxes, which collect the seismic data from those
geophones. These boxes are in turn connected to a central recording unit that
records the data from all of the deployed geophones. Once the network of
geophones and field recording boxes is deployed over a portion of the area to be
surveyed, one of the energy sources is activated, the reflected seismic waves
are detected by the geophones, the signals from the geophones are collected and
digitized by the recording boxes, and the boxes send the seismic data to the
central recording system. The geophones and recording boxes from one end of the
single line in the case of 2D data, or one end of the multiple lines being
recorded in the case of 3D data, are then removed from that end of the line or
lines, and are moved to locations at the other end of the line or lines. An
energy source again generates seismic waves that are recorded, and the process
is repeated, moving one step of a few hundred feet at a time, until the entire
area to be surveyed has been covered.

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Conventional land-based seismic data acquisition systems use cumbersome
cables, which can be many miles long, to connect the recording boxes to the
central recording unit. The Company's radio telemetry systems, on the other
hand, use radio signals to transmit seismic data to the central recording unit.
Radio signals can go over and through obstructions that cables must go around,
which makes the Company's data acquisition systems more efficient in wetland
environments where there are numerous geographic obstacles. In addition, by
eliminating these lengthy cables, the Company's data acquisition systems are
less intrusive on the environment, making them better suited for work in
ecologically sensitive areas.

Each geophone station in an onshore seismic data acquisition system,
whether a traditional cable system or a radio telemetry system, requires a
separate channel in the recording system. The number of channels required for a
particular seismic data acquisition project will depend on the number of "live"
geophone stations that are required to collect data for each discharge from an
energy source. Generally, the higher the resolution of the data to be acquired,
the more live channels that are required in conducting the survey. Most advanced
3D surveys being conducted by the Company's wetland crews utilize between 1,000
and 1,400 live channels. In order to operate efficiently, an onshore acquisition
system should have more total channels than are required to record the seismic
waves from any given energy source discharge. This allows additional geophones
and recording boxes to be deployed along the geophone lines in advance, which
can increase efficiency in acquiring data, and allows for a certain portion of
the system to undergo repairs and maintenance without interrupting data
acquisition activities.

The conventional method of acquiring offshore seismic data involves
releasing acoustic energy, normally generated by a burst of compressed air, into
the water. The energy, in the form of a pressure wave, travels through the water
into the sea bed and is reflected from various subsurface strata back to
hydrophones towed behind the seismic acquisition vessel. Hydrophones are
sensitive pressure sensors, many thousands of which are deployed in towed
streamer arrays behind the seismic vessel. The reflected energy is detected by
the hydrophones in the streamers, and the data from the hydrophones is
transmitted by wire or optical fibers to sophisticated recording equipment on
the vessel. Navigation and positioning equipment, including global positioning
systems ("GPS"), lasers and acoustic and azimuth devices, are used to accurately
determine the positions of the vessel, energy sources and streamer arrays as
they traverse the survey area. A recording of seismic data is made at regular
intervals over the sea bed as the vessel traverses the survey area along
predetermined paths. To acquire 2D data, independent lines of data are acquired
and recorded. To acquire 3D data, a dense grid of lines of data is acquired and
recorded. The density of data required for 3D data is most efficiently achieved
by using multiple energy sources and streamers. However, some geological
structures can be better imaged by limiting the lateral distance from the
streamers to the energy source, and in these situations fewer streamers are more
effective at collecting the data. Vessels towing fewer streamers are generally
more maneuverable than vessels towing more streamers, and are therefore better
suited to conduct 3D surveys in congested areas offshore with dense marine
traffic and numerous obstacles such as drilling rigs, supply vessels and
platforms. Conversely, vessels towing more streamers are generally more
efficient at conducting larger, wide-swathe 3D surveys in open water.

Similar to onshore seismic data acquisition systems, the channel capacity
of offshore seismic data acquisition systems is governed by the number of
hydrophone groups deployed in the streamers, the number of digitizing modules
available, and the capability of the onboard recording system. The vessels
operated by the Company have either 1,024 or 1,440 channels and can be
incrementally upgraded by adding a combination of additional hydrophone groups,
digitizing modules and more recording capacity as appropriate for the specific
requirements of a seismic data acquisition project.

After the raw seismic data has been acquired, it is sent to a data
processing facility where it is processed using sophisticated computer hardware
and software. The processed data can then be manipulated and viewed on computer
workstations by geoscientists to map the structures of the subsurface to
determine if formations exist where hydrocarbons are likely to have accumulated
and where such formations are located.

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BUSINESS OVERVIEW

The Company performs seismic data acquisition services for its customers,
which include major and independent oil companies and seismic data marketing
companies, on a contract basis. Historically, the Company generally has not
retained any interest in the data it acquires for its customers, although in the
future the Company may perform its services in exchange for an ongoing interest
in the data in response to customer proposals. The Company's geotechnical staff
works closely with its customers to design seismic surveys to meet the
customers' specific requirements while working within the confines imposed by
permits, topographical obstructions and manmade structures. The Company applies
its experience and expertise with its knowledge of the capabilities of its
equipment to optimize its customer's seismic surveys within these confines. The
Company performs limited processing of seismic data for quality control purposes
and delivers the seismic data it acquires to third-party processors selected by
its customers for complete processing.

The Company's crews and equipment have been configured for the technically
complex and logistically demanding operations they conduct. The Company operates
three onshore 1,850 channel Opseis radio telemetry seismic data acquisition
crews in the U.S. Gulf Coast region and four towed-streamer seismic data
acquisition vessels, primarily in the North Sea and the U.S. Gulf of Mexico. The
Company's wetland crews and equipment, which use radio signals rather than
traditional cables to collect seismic data, are specifically designed to work in
environmentally sensitive and operationally challenging swamp and marsh
environments. Because these systems use radio signals to transmit data, they can
be operated more efficiently than cable-based systems, particularly in wetland
areas and highly populated areas where there are numerous topographic
obstructions, such as rivers, bays, highways and towns. These systems also excel
in environmentally sensitive areas where physical intrusion must be minimized.

The Company believes that it has developed particular expertise in both the
front-end planning and the execution of complex onshore 3D surveys. Front-end
planning involves obtaining permits from the numerous land and mineral owners
required in large onshore 3D acquisition projects and refining such projects to
capitalize on the capabilities of the Company's radio telemetry systems. The
Company believes it has developed expertise in the execution of complex 3D
acquisition projects, including its ability to efficiently manage the surveying,
drilling and permit compliance for the thousands of geophone and source points
required in large 3D acquisition projects. The Company believes that the
combination of its superior permitting, planning and project management skills
and the capabilities of the Company's equipment to acquire data around obstacles
and areas where permission from land owners cannot be obtained provides the
Company with a competitive advantage in seeking data acquisition work in the
wetland regions of the U.S. Gulf Coast.

The Company operates four seismic data acquisition vessels under charter or
lease, each of which is currently configured to tow either two or three
streamers. These vessels are well equipped to work in congested offshore areas
with dense marine traffic, production platforms and other obstructions, where
vessels towing more streamers are ill-suited to work due to their lack of
maneuverability. The configuration of the Company's vessels is also optimal for
conducting small and medium sized high definition seismic surveys around
offshore platforms. These surveys may be used by oil and gas companies to
delineate the extent of or enhance the production from existing fields.

Approximately 52% of the Company's 1996 pro forma revenues was derived from
its onshore operations, and the remaining approximately 48% of revenues was
derived from offshore operations. All onshore revenues in 1996 were attributable
to 3D data acquisition activities. Offshore revenues in 1996 were attributable
approximately 85% to 3D data acquisition activities and approximately 15% to 2D
data acquisition activities.

BUSINESS STRATEGIES

The Company's objective is to increase stockholder value by enhancing its
market position as a specialized provider of seismic acquisition services
through the following business strategies:

BUILD ON STRONG INDUSTRY REPUTATION. The Company believes that it has a
strong industry reputation within its specialized wetland and offshore markets
for providing high quality seismic data to its customers in a

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timely and cost-efficient manner through the use of advanced seismic
technologies. The Company plans to capitalize on its strong industry reputation
to expand its customer base within its niche markets.

CONTINUE TO FOCUS ON WETLAND REGIONS. The Company believes that the focused
application of radio telemetry technology is key to the Company's current and
future success in wetland and populated areas. The Company's wetland crews and
equipment have been configured to optimize performance in these areas. The
Company intends to continue to focus its onshore seismic data acquisition
activities in wetland and populated regions, where it has completed over
fifty-five 3D surveys.

ENHANCE OFFSHORE ACQUISITION CAPABILITIES. The Company plans to expand the
streamer towing capacity of one of its vessels from three to between four and
six streamers at the end of 1997, significantly increasing the vessel's data
acquisition capabilities. This will enable the Company to further increase
flexibility and efficiency in its offshore seismic data acquisition operations.

ACQUIRE ADDITIONAL EQUIPMENT. The Company intends to charter additional
offshore seismic vessels and acquire additional onshore equipment to meet
customer demand. The Company believes that sufficient customer demand currently
exists to add another seismic data acquisition vessel to its fleet and to add
more wetland seismic acquisition crews. The Company will evaluate the
acquisition of additional equipment and crews as its resources permit and as
customer demand dictates.

EXPAND INTERNATIONALLY. The Company is currently pursuing opportunities to
expand its wetland seismic data acquisition activities internationally,
primarily into Latin America, though the Company has not yet entered into any
contracts to provide onshore data acquisition services internationally. The
Company believes that demand for seismic data acquisition services will continue
to grow in this and other regions internationally. The Company intends to take
advantage of the international reputation and experience, including the previous
onshore operating experience, of the Horizon Companies as it expands its wetland
activities internationally. The Company believes that the greater financial
resources available to its offshore operations following the Offering will
better enable it to satisfy existing customer demand and to mobilize its seismic
acquisition vessels to new geographic markets, such as Latin America, Africa and
Southeast Asia, as opportunities arise outside its primary areas of operation in
the U.S. Gulf of Mexico and the North Sea.

ONSHORE SEISMIC OPERATIONS

The Company acquires onshore seismic data using seismic recording crews
employed by the Company and operating equipment owned or leased by the Company.
Onshore seismic crews generally range in size from 40 to 60 persons, depending
on the terrain involved and the complexity of the project. The equipment
utilized by Company crews includes the Opseis recording systems, which are made
up of radio telemetry field recording boxes (called seismic acquisition remotes,
or "SARs"), a truck-based central recording unit, trailer-based mobile
maintenance and repair facilities and equipment, and various spare parts, along
with geophones, trailers used for transporting the system from project to
project, vibroseis trucks, and off-road trucks, swamp buggies, all terrain
vehicles ("ATVs"), conventional boats and air boats used to deploy geophones and
SARs. The Company subcontracts the surveying services used to determine the
exact placement of geophones and energy sources and the drilling services for
dynamite shot holes. Company crews deploy and maintain the geophones and SARs,
oversee the operation of the energy sources and operate all of the recording
system components relating to seismic data recording activities.

The Company currently operates three onshore acquisition crews, each
utilizing an 1,850 channel 24 bit Opseis 3D seismic data acquisition system. The
Company believes that these systems are the best currently available for
conducting complex 3D seismic surveys in difficult and environmentally sensitive
wetland environments. These systems use radio signals to transmit seismic data
from the SARs to the central recording system and are therefore more efficient
in swamps and marshes and in areas of numerous man-made obstacles than systems
that use cables to transmit data. The SARs are waterproof and are designed to be
used in a wet environment.

Prior to acquiring onshore seismic data in the field, the specifications of
the survey must be designed to optimize the imaging of the targeted geologic
strata, permits must be obtained from the mineral owners of the

32
<PAGE> 34

survey area and permits to enter onto the land must be obtained from surface
owners or lessees whose property will be traversed in the acquisition
operations. The specifications of the seismic surveys are generally designed by
the Company's customers, with varying degrees of input from the Company. A
typical 3D survey conducted by the Company in the U.S. Gulf Coast region will
require permits from hundreds or even thousands of mineral and land owners.
Although some customers obtain these permits themselves, many contract with the
Company, as part of the acquisition project, to obtain these permits. The
Company has developed proprietary computer software to track which permits have
been obtained and the conditions imposed by the various permits. Once permitted,
surveys frequently require modifications to take into account surface
obstructions, such as water wells and oil and natural gas wells, highways, towns
and areas where permits cannot be obtained. The Company combines its experience
in conducting onshore surveys in areas with many obstructions with its knowledge
of the capabilities of its radio telemetry systems to modify surveys after
permitting to optimize the quality of the data obtained within the physical
limitations imposed. The Company believes that the combination of its superior
permitting, planning and project management skills and the capabilities of the
Company's equipment to acquire data around obstacles and areas where permission
from land owners cannot be obtained provides the Company with a competitive
advantage in seeking data acquisition work in the wetland regions of the U.S.
Gulf Coast.

OFFSHORE SEISMIC OPERATIONS

The Company acquires offshore seismic data using seismic crews employed by
the Company and operating chartered or leased vessels that have been modified
and outfitted with a full complement of data acquisition, recording, navigation
and communications equipment owned or leased by the Company. The Company's
seismic crews generally range in size from 12 to 20 persons, excluding the
ship's captain and vessel crew. Seismic crews live aboard the ship during their
tours of duty and work staggered shifts to permit continuous operations. Company
crews direct the positioning of the vessel using sophisticated navigation
equipment, deploy and retrieve streamers and energy sources and operate all of
the systems relating to seismic activities. Company crews are not responsible
for the vessels or for vessel crews, who are employees of the vessel owner or a
contract operator. Each vessel has an equipment complement consisting of
recording instrumentation, digital recording streamers, location systems,
multiple navigation systems, and, except for the recording vessel Abshire Tide,
a seismic energy source and control system. Seismic reflections detected by the
hydrophones on the streamers are digitized and partially processed before they
are transmitted to recording instruments for storage on magnetic media.

Two of the Company's vessels, the Discoverer and the Abshire Tide,
currently work together as a single seismic data acquisition crew in the U.S.
Gulf of Mexico. The subsalt surveys currently being recorded in the U.S. Gulf of
Mexico require a greater distance between the energy source and the hydrophones,
or longer offset, than ordinary surveys. This can be accomplished either by a
single vessel towing very long streamers, or by two vessels working in tandem
towing shorter streamers. When vessels work in tandem, only one vessel is
required to have an energy source. Vessels working together can also
"undershoot" obstructions such as platforms and drilling rigs, where the energy
source is discharged on one side of the obstruction and the hydrophone streamers
are towed on the other side of the obstruction.

33
<PAGE> 35

The following table sets forth certain information as of June 30, 1997
concerning the seismic vessels operated by the Company. As of such date, all of
these vessels were operating or mobilizing to committed projects.

<TABLE>
<CAPTION>
LAST TOTAL DATA
SIGNIFICANT LENGTH BEAM STREAMER ACQUISITION CHARTER/LEASE CURRENT
VESSEL NAME UPGRADE (FEET) (FEET) CAPABILITY SYSTEM EXPIRATION LOCATION
----------- ----------- ------ ------ ---------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Simon Labrador....... 1991 263 55 3 Syntron 2001(1) North Sea
1,440 Channel
16 Bit
Discoverer(2)........ 1996 236 52 3 Syntron 1998(3) Gulf of
1,440 Channel Mexico
16 Bit
Abshire Tide(2)...... 1996 194 40 3 Syntron 1997(4) Gulf of
1,440 Channel Mexico
16 Bit
Pacific Horizon...... 1996 251 41 2 Input/Output 2001(5) North Sea
1,024 Channel
24 Bit
</TABLE>

- ---------------

(1) The Simon Labrador is leased under a capital lease expiring in 2001, with a
ten-year renewal option. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."

(2) The Discoverer and Abshire Tide work in tandem as a single seismic crew.

(3) Pursuant to a one year extension option, this charter can be extended to
1999.

(4) The Company is currently negotiating to extend the term of this charter for
one year.

(5) This charter can be terminated by the Company on one-month's notice.

The Company believes that maintaining a combination of short-term vessel
charters with long-term capital leases and other arrangements provides
flexibility to manage the risks associated with the fixed costs of charters by
adjusting the size of its fleet according to market demand while also providing
stability in the Company's vessel fleet. The Company generally believes that
chartering vessels maintains vessel and financial flexibility and reduces to
some extent the Company's exposure to technological change and obsolescence of
the vessels. Although several of the Company's vessels are under short-term
charters, the Company believes that there is a sufficient supply of suitable
vessels available for charter at acceptable rates that can be outfitted or
modified within a reasonable period of time to meet its needs for such vessels.
All of the vessels in the Company's vessel fleet are operated under charter
agreements or leases expiring from 1997 to 2001, with provisions for extensions
ranging from a month to ten years.

The Company generally operates its offshore seismic data vessels on a
24-hours-a-day, seven-days-a-week basis. Each of the Company's vessels is taken
out of service for approximately two to four weeks each year, generally at
different off-season times of the year, for routine maintenance and service.

The Company intends to upgrade the seismic data acquisition capabilities of
the Simon Labrador in late 1997 or early 1998 to increase its streamer
capability from three to between four and six streamers and to upgrade its data
acquisition system from a 16 bit to a 24 bit resolution system. This upgrade
will significantly increase the seismic data acquisition capabilities of the
Simon Labrador, which will enable the Company to further increase efficiency in
difficult operational and technically demanding areas. This vessel will be taken
out of service for a period of approximately 90 days to accomplish these
modifications, during which period this vessel would have earned revenues of
approximately $2.7 million. In addition, the Company is evaluating the potential
charter of an additional seismic acquisition vessel in mid-1998, subject to
financing and sustained customer demand, to further increase its offshore
seismic data acquisition capabilities.

CAPITAL EXPENDITURES

The Company has numerous competitors for both its onshore and offshore
seismic data acquisition business, and substantial financial and other resources
are required to maintain the state-of-the-art technology necessary to permit
effective competition in bidding for contracts. Seismic data acquisition
technology has

34
<PAGE> 36

progressed rapidly over recent years, and the Company expects this trend to
continue. Sophisticated seismic data acquisition equipment and related crew
training are very costly. For example, the cost of equipping a crew with a
state-of-the-art system, such as the 1,850 channel Opseis systems the Company
currently operates onshore (including training and ancillary equipment), ranges
from approximately $5.0 to $7.0 million, the largest component of which is
attributable to the SARs. Similarly, the cost of equipping a modern seismic data
acquisition vessel with between four and six streamers would range from
approximately $20.0 to $30.0 million plus vessel charter costs. The Company's
strategy is to update its onshore and offshore data acquisition systems to
maintain its competitive position. This may require large capital expenditures
in addition to the Company's planned capital expenditures. There can be no
assurance that the Company will have or otherwise be able to obtain the capital
necessary to upgrade its equipment or to acquire any additional required
equipment.

The Company currently intends to expand the data acquisition capabilities
of the seismic acquisition vessel Simon Labrador in late 1997 or early 1998 at
an estimated capital cost of approximately $18.0 million. This upgrade will
significantly expand the seismic data acquisition capabilities of this vessel by
increasing its streamer capacity from three to between four and six streamers
and updating its recording equipment from a 16 bit system to a 24 bit system.
The Company also intends to charter and equip an additional seismic acquisition
vessel during 1998 at a projected cost ranging from $20.0 to $30.0 million. As
the Company expands its onshore operations internationally, it is likely that
the Company will need to acquire additional onshore acquisition systems at an
estimated capital cost of approximately $5.0 to $7.0 million per crew. The
Company anticipates that the funds for such expenditures will come from a
portion of the net proceeds of the Offering, cash from operations and additional
bank financing. However, there can be no assurance that funds from operations
will be sufficient, or that additional bank financing will be available on terms
acceptable to the Company. The Company may revise its plans in response to
future changes in the oil and gas industry in general and in the demand for its
services in particular, its results of operations, its other capital
requirements and other factors. See "Risk Factors -- Capital Intensive Business;
Rapid Obsolescence of Technology," "Use of Proceeds," "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources" and "Description of Business -- Competition."

KEY SUPPLIERS

The Company acquires its Opseis seismic data acquisition systems from
Georex, Inc., a subsidiary of CGG. The Company acquires its offshore seismic
data acquisition systems primarily from Input/Output, Inc. and Syntron, Inc., a
subsidiary of GeoScience, Inc. Although these companies are not the only
suppliers of seismic data acquisition systems, they are the Company's primary
suppliers, and the Company is dependent on these suppliers with respect to
additions and repairs to its current systems. In addition, the Company considers
the Opseis system to be the state-of-the-art seismic data equipment for
performing 3D surveys in marshes and swamps. See "Risk Factors -- Reliance on
Key Suppliers."

GEOGRAPHIC OPERATIONS

ONSHORE. During 1996, onshore 3D seismic data acquisition contract revenues
were $47.3 million, or 52.0% of the Company's pro forma combined revenues. For
the first three months of 1997, onshore 3D seismic data acquisition contract
revenues were $12.5 million, or 54.1% of the Company's pro forma combined
revenues. The revenues in both 1996 and the first three months of 1997 were
generated from surveys conducted in the U.S. Gulf Coast region. The Company
expects in the near term to continue to focus its onshore surveys in this
region, although the Company intends to seek opportunities for contract revenues
in other areas, primarily Latin America, where oil and gas exploration and
production activities exist.

OFFSHORE. During 1996, offshore seismic data acquisition contract revenues
were $43.6 million, or 48.0% of the Company's pro forma combined revenues. These
revenues were generated primarily from surveys conducted in the North Sea and
the U.S. Gulf of Mexico. For the first three months of 1997, offshore seismic
data acquisition contract revenues were $10.6 million, or 45.9% of the Company's
pro forma combined revenues. These revenues were generated primarily from
surveys conducted in the Falkland Islands and the U.S. Gulf of Mexico. The
Company expects in the near term to continue to focus its offshore surveys in
the

35
<PAGE> 37

North Sea and the U.S. Gulf of Mexico, although the Company may take advantage
of opportunities for contract revenues in other areas of the world where
offshore oil and gas exploration and production activities exist.

SALES AND MARKETING

MARKETING. The Company's services traditionally have been marketed by the
Company's principal executive officers. After the Offering, the Company intends
to maintain this marketing approach in order to preserve long-term relationships
established by the Company's executive officers. As the Company's geographical
and technical capabilities expand, the Company currently intends to continue to
implement its marketing efforts from its principal offices in Houston, Texas and
Sevenoaks, England.

ONSHORE SEISMIC DATA ACQUISITION CONTRACTS. When the Company acquires
seismic data onshore, its customer specifies the area to be surveyed, directs
the scope and extent of the survey and retains ownership of the data obtained.
The Company generally contracts to acquire onshore seismic data under contracts
that provide for a fixed fee for performing the survey. These contracts are
often awarded on a competitive bid basis. Under fixed fee contracts, the Company
generally bears the risk of delays that are beyond its control. See "Risk
Factors -- Operating Risks." The Company frequently seeks to pass some of this
risk to the customer by negotiating for the customer to pay standby charges for
delays not caused by the Company, such as adverse weather. The Company's
contracts generally provide for progress payments unless the Company anticipates
completing the survey in a short time period.

OFFSHORE SEISMIC DATA ACQUISITION CONTRACTS. When the Company acquires
offshore seismic data, the customer directs the scope and extent of the survey
and retains ownership of the data obtained. Contracts for offshore seismic data
acquisition, which are often awarded on a competitive bid basis, are either
distance- or time-based contracts (or a combination of both methods) or turnkey
contracts that provide for a fixed fee. Under the distance method, payments are
based upon the number of seismic lines or kilometers of data collected. When
operating on a time basis, payments are based on agreed rates per unit of time,
which may be expressed in periods ranging from hours to months. Under both of
these methods, most of the risk of business interruption (except for
interruption caused by failure of the Company's equipment) is borne by the
customer, except in winter months when the Company assumes greater
responsibility for weather-related interruption. For both of these types of
contracts, progress payments are generally required unless it is expected that
the survey can be completed in a brief period of time. Turnkey contracts
generally provide more profit potential for the Company, but involve more risk
due to the potential for weather-related and other types of delays. See "Risk
Factors -- Operating Risks." Before entering into these types of contracts, the
Company attempts to evaluate the cost and associated risk involved through an
analysis of the likelihood of weather-related delays, the size of the survey and
the expected period of time required to complete the survey.

MULTI-CLIENT DATA. The Company has generally performed its seismic data
acquisition services for its customers on a contract basis without retaining any
interest in the data it acquires for its customers. The Company has begun to
receive more requests from its customers to perform its services for lower fees
but where the Company would retain certain rights to the data it acquires. If
the Company were to retain such rights, it would be permitted to license the
data to multiple clients, which could potentially result in higher returns than
if the Company were to perform its services for a higher fixed fee, but also
presents the risk of a lower return. The Company may in the future perform its
services in exchange for an ongoing interest in the acquired data in response to
customer proposals.

BACKLOG. The Company's backlog represents commitments for seismic data
acquisition services from both its onshore and offshore seismic data acquisition
businesses. All backlog consists of commitments believed to be firm. However,
backlog estimates are based on a number of assumptions and estimates, including
assumptions as to exchange rates between the U.S. dollar and the British pound
and other currencies and estimates of the percentage of completion of contracts.
Contracts for services are occasionally varied or modified by mutual consent and
in certain instances may be canceled by the customers on short notice without
penalty. Consequently, the Company's backlog as of any particular date may not
be indicative of the Company's actual operating results for any succeeding
fiscal period.

36
<PAGE> 38

As of July 10, 1997, the Company estimates that its total backlog was
approximately $68 million. Backlog for its onshore crews was approximately $39
million in future gross revenues from existing customer commitments, and backlog
for its offshore seismic acquisition crews was approximately $29 million in
future gross revenues from existing customer commitments. Of these backlog
amounts, approximately $10 million of the onshore backlog and approximately $9
million of the offshore backlog is attributable to work to be performed for
Seitel and its subsidiaries.

COMPETITION

The acquisition of onshore and offshore seismic data for oil and gas
companies is highly competitive worldwide. Competition for available seismic
surveys is based on a number of competitive factors, including crew
availability, price, performance, dependability and technology.

As a result of changing technology and capital requirements, the seismic
industry, both for onshore and offshore seismic data acquisition services, has
consolidated substantially since the early 1980s, thereby reducing the number of
competitors in the industry. Although dozens of companies perform onshore
seismic data acquisition services, only a few companies compete actively to
perform complex 3D surveys in the difficult wetland regions along the U.S. Gulf
Coast. The Company's primary competitors in the wetland onshore seismic data
acquisition business in the U.S. Gulf Coast region are Acadian Geophysical
Services, Inc., Boone Geophysical, Inc. (a subsidiary of Venture Seismic, Inc.),
Geco-Prakla (a subsidiary of Schlumberger Limited), Signature Geophysical
Services, Inc., Veritas DGC, Inc. and Western Atlas Inc. The Company's primary
competitors in the offshore seismic data acquisition business are Compagnie
Generale de Geophysique, S.A., Geco-Prakla, Petroleum Geo-Services ASA, Veritas
DGC, Inc. and Western Atlas Inc.

CUSTOMERS

ONSHORE. The Company's major customers for its onshore operations include
primarily independent oil and gas companies and seismic data marketing
companies. For the year ended December 31, 1996, Seitel and its subsidiaries
accounted for approximately 57% and Fina Oil and Chemical Company accounted for
approximately 20% of Eagle's consolidated gross revenues from onshore
operations. For the year ended December 31, 1995, Seitel and its subsidiaries
accounted for approximately 53% and Broughton Associates, J.V. accounted for
approximately 22% of Eagle's consolidated gross revenues from onshore
operations, and for the year ended December 31, 1994, Seitel and its
subsidiaries accounted for approximately 56% and Greenhill Petroleum Corporation
accounted for approximately 28% of Eagle's consolidated gross revenues from
onshore operations.

OFFSHORE. The Company's major customers for its offshore operations include
primarily multi-national oil and gas companies, foreign national oil and gas
companies, and seismic data marketing companies. For the year ended December 31,
1996, Seitel and its subsidiaries accounted for approximately 46% and Clyde
Petroleum Exploratie BV accounted for approximately 26% of ERI's consolidated
gross revenues from offshore operations. For the year ended December 31, 1995,
Seitel and its subsidiaries accounted for approximately 8% and Amerada Hess Ltd.
and British Gas Exploration and Production Ltd. accounted for approximately 37%
and 26%, respectively, of ERI's consolidated gross revenues from offshore
operations, and for the year ended December 31, 1994, Seitel and its
subsidiaries accounted for approximately 21% and British Gas Exploration and
Production Ltd., Amerada Hess Ltd. and Chevron Europe Ltd. accounted for
approximately 16%, 13% and 10%, respectively, of ERI's consolidated gross
revenues from offshore operations.

Due to the nature of the Company's operations, it is likely that
significant portions of future consolidated revenues may continue to be
attributable to a few customers, although it is possible that the identity of
such customers will change from period to period. See "Risk Factors -- Influence
of Seitel, Inc. on the Company."

EMPLOYEES

At June 30, 1997, the Company employed approximately 330 full-time
personnel. The Company has not experienced any material work stoppages related
to union activities and considers the relations with its employees to be good.

37
<PAGE> 39

PROPERTIES

The Company occupies eight leased facilities that are principally used for
general administrative functions, maintenance, storage and warehouse space.
Three of these facilities are located in Texas, one is located in Louisiana and
four are located in England. These properties range in size from approximately
1,000 to approximately 9,000 square feet, the terms of the leases range from
month-to-month to leases that expire in 2001 and the leases provide for annual
rents ranging from approximately $12,000 to approximately $182,000. The
Company's annual lease expense under these leases totals approximately $500,000.
The Company will sublease one of these properties, which serves as the Company's
executive offices, from Seitel and its subsidiaries under a sublease that will
expire in August 2000 and which will provide for annual rental of approximately
$85,000, which amount is included in the $500,000 total lease expense referred
to above. See "Certain Transactions."

ENVIRONMENTAL MATTERS/GOVERNMENTAL REGULATION

The Company's operations are subject to a variety of laws and regulations,
including laws and regulations relating to the protection of the environment.
Such laws and regulations govern various aspects of operations, including the
handling of explosives and the discharge of explosives into the environment, the
entry onto and restoration of wetlands, the removal and cleanup of materials
that may harm the environment or otherwise relating to the protection of the
environment (both onshore and offshore) and the access to private and public
lands to perform seismic surveys. The Company is required to invest financial
and managerial resources to comply with such laws and related permit
requirements in its operations and anticipates that it will continue to do so in
the future. Although such expenditures historically have not been material to
the Company, the fact that such laws or regulations are changed frequently makes
it impossible for the Company to predict the cost or impact of such laws and
regulations on its future operations.

The adoption of laws and regulations that have the effect of limiting
exploration or production activities by oil and gas companies could adversely
affect the Company's operations by reducing the demand for its services. Certain
import and export regulations may also limit the Company's ability to operate in
certain areas.

In addition, the Company's offshore operations are influenced by licensing
activities and lease sales of governmental authorities. The timing and extent of
licensing and leasing of areas for exploration and production influences the
level of seismic data acquisition activity within a particular country.

LEGAL PROCEEDINGS

The Company is involved in or threatened with various legal proceedings
from time to time arising in the ordinary course of business. Management of the
Company does not believe that any liabilities resulting from any such current
proceedings will have a material adverse effect on its consolidated operations
or financial position.

38
<PAGE> 40

MANAGEMENT

The following table sets forth the executive officers and directors of the
Company and their ages as of June 30, 1997:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
William L. Lurie....................... 66 Chairman of the Board of Directors
Jay N. Silverman....................... 44 President, Chief Executive Officer and
Director
Gerald M. Harrison..................... 43 Executive Vice President and Director
George Purdie.......................... 41 Senior Vice President -- Offshore Operations
and Director
Richard W. McNairy..................... 56 Vice President -- Chief Financial Officer and
Secretary
Neil A.M. Campbell..................... 42 Vice President -- International Finance
Paul A. Frame.......................... 50 Director
</TABLE>

WILLIAM L. LURIE is the Chairman of the Board of Directors of the Company.
Mr. Lurie has been a director and a member of the Audit Committee of Seitel
since November 1995 and a member of the Compensation Committee of Seitel since
July 1996. Mr. Lurie will retire from such positions with Seitel prior to
consummation of the Offering. He has been Co-Chairman of The Foundation for the
Prevention & Early Resolution of Conflicts since April 1996. He was President of
Prevention and Early Resolution of Conflicts, a consulting firm, from 1994 until
April 1996. Mr. Lurie has been a Director of Minerals Technologies, Inc., a
mining and minerals company listed on the New York Stock Exchange, since 1993
and is a member of its Compensation Committee. He was Executive Consultant to
the Chairman of The Business Roundtable from 1993 to 1994 and President of The
Business Roundtable from 1984 to 1993. Prior to that time, Mr. Lurie was Vice
President -- General Counsel of International Paper Company, a global paper and
forest products company listed on the New York Stock Exchange. He has been a
Director of Intersystems, Inc., a manufacturing company listed on the American
Stock Exchange, since November 1995.

JAY N. SILVERMAN is the President and Chief Executive Officer and a
Director of the Company. Mr. Silverman has served as President of Eagle
Geophysical Onshore, Inc., the Company's onshore crew operations subsidiary,
since its formation in December 1996, and served as President of SGI from July
1993 until May 1997. From July 1993 until February 1996, he was Seitel's Vice
President of Operations, and from August 1990 to July 1993, he was Seitel's
Manager of Field Operations. From January 1988 to July 1990, Mr. Silverman was
Vice President of Operations of East Coast Drilling and Boring, Inc., a private
drilling company. Between August 1976 and January 1988, Mr. Silverman served as
Crew Chief, Operations Supervisor and Manager for Western Geophysical Company.

GERALD M. HARRISON is the Executive Vice President and a Director of the
Company. Mr. Harrison has been Chairman and Managing Director of the Horizon
Companies since 1993. From 1991 to 1993, Mr. Harrison was Managing Director of
Simon-Horizon Limited and President and Chairman of Simon-Horizon Inc.,
predecessors of the Horizon Companies. From 1988 to 1990, Mr. Harrison was
Operations Director of Simon-Horizon Limited, overseeing both onshore and
offshore seismic operations. Between 1980 and 1988, Mr. Harrison served as Field
Crew Manager and Manager of Domestic and International Operations for
predecessor companies of the Horizon Companies.

GEORGE PURDIE is the Senior Vice President -- Offshore Operations and a
Director of the Company. Mr. Purdie has been Operations Director of the Horizon
Companies since 1993, and from 1990 to 1993 was Operations Director of
Simon-Horizon Limited. From 1980 to 1989, he served in various onshore and
offshore field management posts for predecessor companies of the Horizon
Companies.

RICHARD W. MCNAIRY is the Vice President -- Chief Financial Officer and
Secretary of the Company. Mr. McNairy served as Vice President and Chief
Financial Officer of Veritas DGC Inc. from February 1994 through March 1997,
prior to which he was corporate controller of Halliburton Energy Services Group
for three years and Vice President-Finance for its geophysical services
subsidiary for the preceding two years.

39
<PAGE> 41

Prior to 1989 and since 1974, he was employed in various financial and
operational management capacities with predecessor companies acquired by
Halliburton.

NEIL A.M. CAMPBELL is the Vice President -- International Finance of the
Company. Mr. Campbell has been Finance Director, Chief Financial Officer, and
Company Secretary of the Horizon Companies since 1993. Mr. Campbell served as
Finance Director and Company Secretary of Simon-Horizon Limited from 1990 to
1993, and as Chief Accountant and Company Secretary of Simon-Horizon Limited and
its predecessors from 1987 to 1990. Mr. Campbell served in various accounting
positions for predecessors of the Horizon Companies from 1984 to 1987, and in
various accounting positions for British Petroleum from 1972 to 1984.

PAUL A. FRAME has been a Director of the Company since its formation in
December 1996. Mr. Frame has been Chief Executive Officer of Seitel since July
1992, President of Seitel since January 1987 and a director of Seitel since May
1986. Mr. Frame was Executive Vice President of Seitel from January 1985 through
January 1987 and was Vice President of Marketing of Seitel from August 1984
through January 1985.

All directors are elected to serve until the next annual meeting of
stockholders and until their successors are elected and qualified. Executive
officers are generally elected annually by the Board of Directors to serve,
subject to the discretion of the Board of Directors, until their successors are
elected or appointed.

COMPENSATION OF DIRECTORS

Each director who is not also an officer of the Company (an "Outside
Director") will receive an annual director's fee of $25,000 plus meeting fees of
$2,500 for each meeting of the Board of Directors or committee thereof in which
such director participates. If such Outside Director serves as Chairman of the
Board of Directors, such director will receive an annual director's fee of
$50,000 plus meeting fees. Outside Directors will also be reimbursed for
reasonable out-of-pocket expenses incurred in connection with attendance of
meetings of the Board of Directors or committees thereof.

The Company has established a Deferred Compensation Plan for Directors
whereby each Outside Director may elect to defer cash compensation for annual
director's fees or meeting fees to a date subsequent to such director's death,
retirement, disability or termination of services as a director. Earnings with
respect to such deferred compensation may be calculated, at the election of the
director, as if the amount deferred had been invested in Common Stock or as if
the amount deferred had been invested in an account bearing interest at the
prime rate minus 1.5%.

INDEPENDENT DIRECTORS STOCK OPTION PLAN

The Company has adopted an Independent Directors Stock Option Plan (the
"Directors Option Plan"). The purposes of the Directors Option Plan are to
promote ownership of a greater proprietary interest in the Company by
independent directors of the Company, thereby aligning such Directors' interests
more closely with the interests of the stockholders of the Company, and to
assist the Company in attracting and retaining highly qualified persons to serve
as independent directors. The maximum number of shares of Common Stock that may
be subject to awards granted under the Directors Option Plan is 100,000 shares,
which may be authorized and unissued shares, treasury shares, or shares acquired
by the Company for purposes of the Directors Option Plan. Shares of Common Stock
which are attributable to awards which have expired, terminated or been
cancelled or forfeited during any calendar year will be available for issuance
or use in connection with future awards.

The Directors Option Plan generally provides for an automatic grant of
options to independent directors upon their initial election to serve as a
director of the Company and upon each successive reelection to the Board of
Directors. Upon each such election or reelection, options to purchase 5,000
shares will be automatically granted to each independent director. The exercise
price for such options will be equal to the closing price of the Common Stock on
the date of such election or reelection. The options will become exercisable one
year after the date of grant and will expire at the earlier of five years after
the date of grant,

40
<PAGE> 42

12 months after the optionee ceases to serve as a director due to death,
disability or retirement after age 65, or 60 days after the optionee ceases to
serve as a director for any other reason.

Pursuant to the Directors Option Plan, the Company will grant Mr. Lurie,
the Chairman of the Board of Directors, effective as of the date of the
consummation of the Offering, options to purchase 25,000 shares of Common Stock
at an exercise price equal to the initial public offering price set forth on the
cover page of this Prospectus. This grant will be in lieu of the grant of
options generally provided under the Directors Option Plan upon initial election
to the Board. These options will vest in cumulative installments of one-third of
the number of shares subject thereto on each of the first, second, and third
anniversaries of the date of grant, and will expire on the tenth anniversary of
the date of grant, subject to earlier expiration 12 months after Mr. Lurie
ceases to be a director.

An independent director for purposes of the Directors Option Plan is a
director who receives no compensation from the Company and its subsidiaries
other than annual directors fees, meeting fees, reimbursement of expenses and
options under the Directors Option Plan and has not, during the three months
prior to any grant, been an employee of the Company or any of its subsidiaries.
Mr. Lurie is the only current director of the Company eligible to receive grants
of options under the Directors Option Plan.

The Directors Option Plan will be administered by the Board of Directors,
provided that any action by the Board shall be taken only if approved by a
majority of the directors of the Company who are not then eligible to receive
grants of options under the plan. The Directors Option Plan may be amended,
altered, suspended, discontinued or terminated by the Board without stockholder
approval, unless such approval is required by law or regulation or applicable
rules of the Nasdaq National Market or any other stock market on which the
Common Stock is then quoted or listed. The Directors Option Plan will expire ten
years after adoption or such earlier date as the number of shares reserved for
issuance thereunder becomes insufficient for the automatic grants of options
provided therein. The Board may terminate the Directors Option Plan at any time
in its sole discretion. No options may be granted under the Directors Option
Plan after it is terminated. The termination of the Directors Option Plan, or
any amendment thereto, shall not affect any shares previously issued to an
option holder or any option previously granted under the Directors Option Plan.

Options to be granted under the Directors Option Plan will be nonqualified
stock options. An option holder will not recognize taxable income on the grant
of options under the Directors Option Plan, but will recognize taxable ordinary
income upon exercise of the options equal to the amount that the fair market
value of the underlying stock on the date of exercise exceeds the aggregate
exercise price. The income tax treatment of any gain or loss realized upon a
holder's disposition of shares received upon exercise of the options will depend
on the timing of such disposition. If the holder holds the shares received upon
exercise for at least one year from the date of exercise, the difference, if
any, between the amount realized from such sale and the holder's tax basis
(generally the aggregate exercise price plus the amount of income recognized
upon exercise of the options) will be taxed as long-term capital gain or loss.
If the holder disposes of such shares in less than one year, the gain or loss
will generally be taxed as short-term capital gain or loss.

The Company is entitled to a deduction for federal income tax purposes with
respect to the exercise of options under the Directors Option Plan (but not the
disposition of shares acquired upon exercise) in an amount equal to the ordinary
income recognized by the option holder, to the extent it is reasonable
compensation.

INDEPENDENT DIRECTORS; BOARD COMMITTEES

Nasdaq National Market rules require that a Nasdaq listed company have two
or more independent directors on its board of directors. Mr. Lurie, Chairman of
the Board of Directors, will not be employed by the Company and will retire from
his position as an independent director of Seitel at or prior to consummation of
the Offering. Therefore, he will qualify as an independent director. The Company
is in the process of identifying other potential independent directors, and the
Board of Directors intends to appoint at least one additional independent
director within 90 days after consummation of the Offering.

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<PAGE> 43

Nasdaq National Market rules also require that listed companies have an
established audit committee, the majority of the members of which are
independent directors. The Board of Directors intends to establish an audit
committee within 90 days after consummation of the Offering when the additional
independent directors are appointed to the Board of Directors. The audit
committee will recommend to the Board the appointment of the independent public
accountants to serve as auditors for the Company, and will discuss and review
the scope and fees of the prospective annual audit and review the results with
the auditors, review compliance with existing major accounting and financial
policies of the Company, review the adequacy of the financial organization of
the Company and consider comments by the auditors regarding controls and
accounting procedures and management's response to those comments.

The Company also intends to establish a compensation committee, all of the
members of which will be outside directors as such term is defined in Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). The
compensation committee will meet periodically to determine the compensation of
certain of the Company's executive officers and other significant employees and
the Company's personnel policies and will administer the Stock Option Plan and
other executive compensation plans and arrangements. The compensation committee
will also be empowered to approve compensation payable to the Company's
executive officers for the purposes of Section 162(m) of the Code, which limits
the deductability of compensation in excess of $1 million if not approved
pursuant to the provisions of such section and the regulations thereunder. In
the event compensation payable by the Company to an executive officer is in
excess of $1 million in any year and has not been approved as required by
Section 162(m), the compensation in excess of $1 million may not be deductible
by the Company for federal income tax purposes.

The Company has established an Executive Committee, which consists of
Messrs. Frame (Chairman) and Lurie. The Executive Committee has the authority to
exercise all of the powers of the Board of Directors in the management of the
business and affairs of the Company, subject to certain limitations under the
Delaware General Corporation Law.

EXECUTIVE COMPENSATION

The Company was incorporated in December 1996 and began operations in
January 1997. No salaries were paid during 1996 by the Company. Compensation to
be paid to the Company's chief executive officer and the four other most highly
compensated executive officers during 1997 is disclosed below under
"-- Employment Agreements."

EMPLOYMENT AGREEMENTS

The Company will enter into employment agreements with certain of its
executive officers, the terms of which are described below.

The Company intends to enter into employment agreements with Messrs.
Silverman and McNairy that provide for annual base salaries of $260,000 and
$150,000, respectively. The employment agreement with Mr. Silverman will also
provide for a quarterly bonus equal to 25.0% of his base salary if the gross
margin (revenues less all expenses except for depreciation, amortization,
interest, taxes and overhead) for the onshore operations for such quarter is at
least 17% and an incentive bonus of 4% or 5% of the Company's pre-tax profits
(which percentage varies based on the Company's profit margin). The Company
calculates all bonuses without taking into account the expenses of the bonuses
paid to its officers and directors. Mr. Silverman, who received total cash
compensation in 1996 of $726,336 from SGI under his former employment
arrangement, would have received total cash compensation in 1996 of $613,080
under the above-described employment agreement based on the Company's pro forma
combined results for 1996. The employment agreement with Mr. McNairy will
provide for an incentive bonus equal to one-third of the base annual salary. Mr.
Silverman's employment agreement will be for an original term of three years,
and will automatically renew for successive one-year terms unless either party
gives notice otherwise at least 90 days prior to expiration of the then-current
term. Mr. McNairy's employment agreement will be for a term of two years. The
employment agreement with Mr. Silverman will contain a covenant not to compete
during his employment with the Company or its subsidiaries, and for one year
thereafter if the Company terminates his employment for cause or he terminates

42
<PAGE> 44

his employment without cause. In the event the Company terminates Mr.
Silverman's employment without cause, as such term will be defined in his
employment agreement, the Company will be required to pay Mr. Silverman
severance payments each year for two years equal to the average of his total
cash compensation for the previous three years, to vest all options previously
granted to Mr. Silverman that are not then vested, and to forgive outstanding
indebtedness owed by Mr. Silverman to the Company relating to his purchase of
25,000 shares of Common Stock to the extent the value of such shares at the date
of such termination is less than the outstanding indebtedness. See "Certain
Transactions." The terms of the employment agreement between Mr. Silverman and
the Company cannot be considered to have been determined through arms-length
negotiations.

Each of Messrs. Harrison, Purdie and Campbell have existing employment
agreements with the Horizon Companies, which employment agreements will be
amended upon consummation of the ERI Acquisition and the Offering. Such
employment agreements, as amended, will provide for base annual salaries of
$221,000 (L134,000) for Mr. Harrison and $205,000 (L124,000) for Messrs. Purdie
and Campbell. These employment agreements require the Company and the employee
to give twenty-four months advance notice of termination (other than for
termination with cause). If the Company terminates the employment of Messrs.
Harrison, Purdie or Campbell other than in accordance with the terms of such
agreement (i.e., without giving twenty-four months advance notice, other than
for termination with cause), the options granted to such employee set forth
under "-- Stock Option Plan" will become fully vested, and the Company may be
liable to such employee for breach of contract. The employment agreements
provide for an annual incentive bonus equal to 50.0% of the annual base salary
if performance criteria established by the Company are met (which criteria for
the year to end December 31, 1997 are that the operating profit margin (revenues
less cost of sales, expressed as a percentage of revenues) from the Company's
offshore operations equal or exceed 24.0%, and provide for an additional
incentive bonus of between 2.0% and 3.0% of the net after-tax profits of the
Company from its offshore operations in excess of 5.0% of gross revenues from
offshore operations. The employment agreements also provide for a bonus of 3% of
the excess, if any, of net after-tax profits of the Company's offshore business
for a fiscal year over the greater of (i) net after-tax profits of the Company's
offshore business for the prior fiscal year or (ii) 5% of the gross revenues of
the Company's offshore business for the prior fiscal year, if the Company's
gross revenues from its offshore business increase by at least 20% as compared
to the prior fiscal year and the net after-tax profits of the Company's offshore
business equal or exceed 5% of gross revenues from its offshore business.

In addition to the employment agreements with the Company's executive
officers described above, the Company will enter into a bonus agreement with Mr.
Frame, who will serve as a director of the Company and as Chairman of the
Executive Committee of the Board of Directors. In addition to his other duties
as a director of the Company, Mr. Frame will be responsible for strategic
planning, marketing, and domestic and international growth of the Company's
business. The Board of Directors of Seitel has agreed to allow Mr. Frame, who is
the President and Chief Executive Officer of Seitel, to devote 20% of his time
to the Company until December 31, 1999. Pursuant to the bonus agreement, the
Company will pay Mr. Frame bonuses each year during the term of the bonus
agreement equal to 1% of the increase in the Company's gross revenues for such
year over the Company's gross revenues for the prior year (excluding revenues
attributable to mergers and acquisitions in the year of such merger or
acquisition unless it is the final year of the term of the bonus agreement) and
4% of the Company's net after tax profits in excess of its 1996 pro forma
combined net after-tax profits of $0.8 million. The bonus agreement with Mr.
Frame will be for a fixed term expiring December 31, 1999. Mr. Frame will also
receive annual director's fees and meeting fees as an outside director. The
terms of the bonus agreement between Mr. Frame and the Company cannot be
considered to have been determined through arms-length negotiations.

STOCK OPTION PLAN

The Company has adopted a Stock Option Plan (the "Option Plan"), the
purpose of which is to provide directors, officers and other key employees and
consultants of the Company and its subsidiaries with additional incentives by
providing them with the opportunity to increase their ownership interests in the
Company. The maximum number of shares of Common Stock that may be subject to
awards granted under the Option Plan

43
<PAGE> 45

is 1,100,000 shares, which may be authorized and unissued shares, treasury
shares or shares acquired by the Company for purposes of the Option Plan. Shares
of Common Stock that are attributable to awards that have expired, terminated or
been cancelled or forfeited during any calendar year will be available for
issuance or use in connection with future awards.

The Compensation Committee or such other committee of the Board of
Directors as may be appointed by the Board (the "Committee") will be empowered
to administer the Option Plan. The Board has not yet established a Compensation
Committee, and therefore the Option Plan will be administered initially by the
Board of Directors as a whole.

Options granted under the Option Plan will be either incentive stock
options within the meaning of Section 422 of the Code or non-qualified stock
options, as designated at the time of the grant of the options. If options
granted under the Option Plan are not designated as incentive stock options or
nonqualified stock options, they will be deemed to be incentive stock options to
the extent they comply with the requirements of the Code applicable for
incentive stock option treatment and as non-qualified options to the extent they
do not satisfy such requirements.

Any employee of the Company or a subsidiary, including directors who are
not eligible to receive grants of options under the Directors Option Plan, will
be eligible to receive grants of options under the Option Plan. Actual
participation in the Option Plan will be determined in the sole discretion of
the Committee.

The exercise price for incentive stock options under the Option Plan shall
not be less than 100% of the fair market value per share on the date of grant of
such option. In the event that an incentive stock option is granted under the
Option Plan to any person who, at the time such incentive stock option is
granted, owns more than 10.0% of the total combined voting power of classes of
shares of the Company or of any subsidiary of the Company (a 10.0% stockholder),
then the exercise price of the incentive stock options shall not be less than
110% of the fair market value of the shares on the date such option is granted.
Fair market value as used in the Option Plan means the closing sales price of
Common Stock per share as reported in the Wall Street Journal as of the date of
the grant. Pursuant to the terms of the Option Plan, there are no restrictions
applicable to the exercise price of non-qualified stock options. Payment for the
shares acquired upon exercise of an option under the Option Plan shall be made
in cash or other property deemed acceptable by the Committee.

Options granted under the Option Plan will be exercisable at such times,
under such conditions (including, without limitation, performance criteria with
respect to the Company and/or the optionee), in such amounts and during such
period or periods as the Committee determines on the date of the grant of such
options. Such options, however, shall not be exercisable after the expiration of
ten years from the date such option is granted. In the case of an incentive
stock option granted to a more than 10.0% stockholder, such incentive stock
options shall not be exercisable after the expiration of five years from the
date such incentive stock options are granted.

The aggregate fair market value (determined as of the time an incentive
stock option is granted) of the stock with respect to which incentive stock
options are exercisable for the first time by any participant during any
calendar year, under the Option Plan and all of the Company's other plans, may
not exceed $100,000. Any options granted in excess of this limit will be
non-qualified options.

In general, if an optionee ceases to be an employee or director of the
Company or its subsidiaries for reasons other than disability or death, he or
she will have, with respect to incentive stock options, until the earlier of
three months from the date of such termination or the date the option expires to
exercise the option, to the extent the optionee was entitled to exercise the
option on the date of termination. If an optionee is unable to continue to
perform services for the Company or any of its subsidiaries as a result of
disability, he or she will have until the earlier of 12 months from the date of
such disability or the date the option expires to exercise the option, in whole
or in part, to the extent the optionee was entitled to exercise the option on
such date. In addition, the optionee must have been an employee since the date
of grant and must be an employee on the date of disability to take advantage of
this provision. These same rules apply to the exercise of options in the event
of the death of an optionee. Unless provided otherwise in a specific option
grant, an option granted

44
<PAGE> 46

under the Option Plan may not be sold, pledged, assigned, hypothecated,
transferred or disposed of in any manner other than by will or by the laws of
descent and distribution or pursuant to a qualified domestic relations order as
defined in the Code or Title I of the Employee Retirement Income Security Act of
1974, as amended, or the rules thereunder, and will not be assignable by
operation of law or subject to execution, attachment or similar process.

The Option Plan will expire ten years after the date of consummation of the
Offering. The Board may terminate the Option Plan at any time in its sole
discretion. No options may be granted under the Option Plan after it is
terminated. The termination of the Option Plan, or any amendment thereto, shall
not affect any shares previously issued to a participant or any option
previously granted under the Option Plan.

The Option Plan will not be qualified under the provisions of Section
401(a) of the Code, and it is not intended to be subject to any of the
provisions of the Employee Retirement Income Security Act of 1974, as amended.

The Board of Directors has approved the grant, effective as of the date of
consummation of the Offering, of options to acquire a total of 680,500 shares
under the Option Plan to directors, officers and employees of the Company. The
options that will be granted under the Option Plan, other than the options
granted to Mr. Frame, will vest in cumulative installments of one-third of the
number of shares subject thereto on each of the first, second and third
anniversaries of the grant date and will expire on the tenth anniversary of the
date of the grant. Mr. Frame's options will vest on the fifth anniversary of the
date of grant or, if earlier, in cumulative installments of one-third of the
total shares subject thereto when the Company's gross revenues reach $150
million, $175 million and $200 million, respectively, if the Company's after tax
profit is at least 4% of gross revenues upon attainment of such revenue targets.
The options granted to Mr. Frame will expire 10 years from the date of grant.
The exercise price of each such option will be equal to the initial public
offering price per share set forth on the cover page of this Prospectus.
Included in these options are stock options to be granted to directors and
executive officers of the Company in the amounts set forth below:

<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME OF OFFICER/DIRECTOR COVERED BY OPTIONS
------------------------ ------------------
<S> <C>
Mr. Silverman.......................................... 150,000
Mr. Frame.............................................. 100,000
Mr. Harrison........................................... 75,000
Mr. Purdie............................................. 75,000
Mr. Campbell........................................... 75,000
Mr. McNairy............................................ 25,000
</TABLE>

Certain options granted under the Option Plan are intended to be incentive
stock options within the meaning of Section 422 of the Code. An option holder
will not recognize taxable income upon the grant of incentive stock options
under the Option Plan. In addition, an option holder will not recognize taxable
income with respect to the excess of the fair market value of stock received on
exercise of an incentive stock option over the exercise price under the Option
Plan. The income tax treatment of any gain or loss recognized upon an option
holder's disposition of shares received upon exercise of incentive stock options
granted under the Option Plan depends on the timing of the disposition. If the
option holder holds the shares received upon exercise of such incentive stock
options for the longer of two years from the date such incentive stock option
was granted or one year from the date of exercise, the difference (if any)
between the amount realized from the sale of such shares and the holder's tax
basis (i.e., generally the exercise price) will be taxed as long-term capital
gain or loss.

If an option holder disposes of the shares acquired upon exercise of an
incentive stock option before the end of the applicable holding periods
described above (i.e., he or she makes a "disqualifying disposition"), such
holder may be deemed to be in receipt of taxable income in the year of the
disqualifying disposition, depending on the selling price. If the selling price
exceeds the fair market value of the stock on the date of exercise, the excess
of the fair market value on the date of exercise over the exercise price will be
taxable to the holder as ordinary income, and the excess of the selling price
over the fair market value on the date of

45
<PAGE> 47

exercise will be taxable to the holder as capital gain. If the selling price
exceeds the exercise price but not the fair market value of the stock on the
date of exercise, the excess of the selling price over the exercise price will
be taxable to the holder as ordinary income. If the selling price is less than
the exercise price, the difference will be treated as capital loss.

The Company is not entitled to a deduction for federal income tax purposes
with respect to the grant or exercise of incentive stock options under the
Option Plan or the disposition of shares acquired upon exercise of incentive
stock options if the applicable holding periods have been met. In the event of a
disqualifying disposition, however, the Company will be entitled to a federal
income tax deduction in an amount equal to the ordinary income recognized by the
holder, to the extent it is reasonable compensation.

Options granted under the Option Plan that are not incentive stock options
within the meaning of Section 422 of the Code will be non-qualified stock
options. An option holder will not realize taxable income upon the grant of
non-qualified stock options. An option holder will recognize taxable ordinary
income upon the exercise of non-qualified stock options equal to the amount that
the fair market value of the underlying stock on the date of exercise exceeds
the aggregate exercise price. The income tax treatment of any gain or loss
realized upon an option holder's disposition of shares received upon exercise of
non-qualified stock options depends on the timing of the disposition. If the
option holder holds the shares received upon exercise of such non-qualified
stock options for at least one year from the date of exercise, the difference
(if any) between the amount realized from the sale of such shares and the
holder's tax basis (i.e., generally the exercise price plus the amount of
ordinary income recognized by the holder on exercise of the option) will be
taxed as long-term capital gain or loss. If an option holder disposes of the
shares acquired upon exercise of a non-qualified stock option within one year
from the date of exercise of the option, such holder will generally recognize
short term capital gain or loss.

The Company is entitled to a deduction for federal income tax purposes with
respect to the exercise of nonqualified stock options, but not the disposition
of shares acquired upon exercise of such non-qualified stock options, in an
amount equal to the ordinary income recognized by the option holder, to the
extent it is reasonable compensation.

HORIZON PENSION PLAN

The Horizon Pension Plan (the "Pension Plan") provides defined retirement
benefits to employees of Horizon Exploration Ltd. who are members. The Pension
Plan operates in accordance with UK Pensions Legislation and is approved by the
UK Inland Revenue, and in accordance with a Trust Deed, the Trustees are
responsible for its management. The Trustees under the Pension Plan are Messrs.
Harrison, Purdie and Campbell and one other employee of Horizon Exploration Ltd.
The Trustees have appointed independent advisors, administrators and investment
managers, auditors and solicitors to assist them in administering the Pension
Plan.

The Pension Plan originated in 1975 and was most recently revised in July
1993, when Horizon Exploration Ltd. became independent of the Simon Group.

The benefits provided by the Pension Plan are precisely defined in the
Trust Deed. Generally, the Pension Plan provides an income, at the normal
retirement age of 60, of one sixtieth of final salary for every year in the
Pension Plan, up to a maximum of forty-sixtieths. Recent UK legislation requires
the retirement income to be increased annually at the rate of 5% or the UK
retail price index, whichever is the lower, on benefits accruing from April
1997. Retirement income for benefits accrued prior to this date may be increased
at the Trustees' discretion.

All UK employees of Horizon Exploration Ltd. and Exploration Holdings Ltd.,
also a subsidiary of ERI, who are at least 20 years of age are eligible to join
the Pension Plan. Current membership is 116 out of 139 eligible employees plus
four retirees. During the next five years, one existing employee should reach
retirement age.

According to the most recent review of the value of the Pension Plan Fund
by an independent actuary employed by the Pension Plan's independent advisors,
which was completed in early 1997 and which

46
<PAGE> 48

determined such value as of April 1996, such fund is sufficient to meet existing
accrued benefits. The current funding levels are 10.2% from the employer and
3.5% from the employee, and these levels were deemed adequate to meet the
anticipated benefits and obligations of the Pension Plan in the most recent plan
review. The funding level is, by UK legislation, subject to review no less
frequently than every three years.

The Company is not bound to accept any Trustee recommendations on the
future level of Company contributions, and the Trustees are not bound to accept
any Company recommendations on the future level of employee contributions.
However, the Trustees, in a role of stewardship, are obliged to monitor funding
levels and maintain them at adequate levels while insuring that, in the event
future funding is not available, the Pension Plan can be wound up and meet its
then current liabilities.

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<PAGE> 49

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth the following information as of June 30,
1997, with respect to the beneficial ownership of the Company's Common Stock by
(i) each stockholder known by the Company to own beneficially more than 5.0% of
the outstanding Common Stock, (ii) each director and executive officer of the
Company, (iii) all executive officers and directors of the Company as a group,
(iv) the Selling Stockholder and (v) the Additional Selling Stockholders. Except
as otherwise indicated below, each of the persons named in the table has sole
voting and investment power with respect to all shares of Common Stock
beneficially owned by him as set forth opposite his name.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO OFFERING(1) AFTER OFFERING(1)
---------------------- ----------------------
NUMBER OF NUMBER OF SHARES NUMBER OF
NAME AND ADDRESS SHARES PERCENTAGE BEING OFFERED SHARES PERCENTAGE
---------------- --------- ---------- ---------------- --------- ----------
<S> <C> <C> <C> <C> <C>
EHI Holdings, Inc.(2)(3).............. 3,400,000 84.5% 1,880,000 1,520,000 18.9%
50 Briar Hollow Lane,
7th Floor West
Houston, Texas 77027
Gerald M. Harrison(3)(4).............. 188,000 4.7% -- 188,000 2.3%
George Purdie(3)(5)................... 188,000 4.7% -- 188,000 2.3%
Neil A.M. Campbell(3)(6).............. 188,000 4.7% -- 188,000 2.3%
David Burns(3)(7)..................... 36,000 * -- 36,000 *
William L. Lurie(8)................... -- -- -- -- --
Paul A. Frame(2)(9)................... -- -- -- -- --
Jay N. Silverman(10).................. 25,000 * -- 25,000 *
Richard W. McNairy(11)................ -- -- -- -- --
All executive officers and directors
as a group (7 persons)(3)........... 589,000 14.6% -- 589,000 7.3%
</TABLE>

- ---------------

(*) Less than 1.0%

(1) Beneficial ownership includes shares over which the indicated beneficial
owner exercises voting and/or investment power.

(2) EHI Holdings, Inc. is a wholly-owned, indirect subsidiary of Seitel, Inc.
Mr. Frame is a Director and is Chief Executive Officer of Seitel, Inc. As a
result of this relationship, Mr. Frame may be deemed to be the beneficial
owner of the shares owned by EHI Holdings, Inc., although Mr. Frame
disclaims any such beneficial ownership, and no such beneficial ownership
is reflected in this table.

(3) In the event the Underwriters exercise in full the over-allotment options
to purchase up to 882,000 shares of Common Stock, the Company will sell
602,000 shares, the Selling Stockholder will sell 100,000 shares, and
Oliveira Limited (Gerald Harrison), Dormera Limited (George Purdie),
Balmedie Limited (Neil Campbell) and Larlane Limited (David Burns) (the
"Additional Selling Stockholders") will sell 56,400 shares, 56,400 shares,
56,400 shares and 10,800 shares, respectively, of Common Stock in
connection with the Underwriters' exercise of such over-allotment options.
See "Underwriting."

(4) Includes 188,000 shares of Common Stock to be acquired in connection with
the ERI Acquisition. These shares are owned of record by Oliveira Limited,
which is beneficially owned by Mr. Harrison. Does not include 75,000 shares
of Common Stock issuable upon exercise of options to be granted to Mr.
Harrison upon consummation of the Offering, none of which are exercisable
until one year after grant. See "Management -- Stock Option Plan."

(5) Includes 188,000 shares of Common Stock to be acquired in connection with
the ERI Acquisition. These shares are owned of record by Dormera Limited,
which is beneficially owned by Mr. Purdie. Does not include 75,000 shares
of Common Stock issuable upon exercise of options to be granted to Mr.
Purdie upon consummation of the Offering, none of which are exercisable
until one year after grant. See "Management -- Stock Option Plan."

48
<PAGE> 50

(6) Includes 188,000 shares of Common Stock to be acquired in connection with
the ERI Acquisition. These shares are owned of record by Balmedie Limited,
which is beneficially owned by Mr. Campbell. Does not include 75,000 shares
of Common Stock issuable upon exercise of options to be granted to Mr.
Campbell upon consummation of the Offering, none of which are exercisable
until one year after grant. See "Management -- Stock Option Plan."

(7) Includes 36,000 shares of Common Stock to be acquired in connection with
the ERI Acquisition. These shares are owned of record by Larlane Limited,
which is beneficially owned by Mr. Burns. Does not include 75,000 shares of
Common Stock issuable upon exercise of options to be granted to Mr. Burns
upon consummation of the Offering, none of which are exercisable until one
year after grant. See "Management -- Stock Option Plan."

(8) Does not include 25,000 shares of Common Stock issuable upon exercise of
stock options to be granted to Mr. Lurie upon consummation of the Offering,
none of which are exercisable until one year from the date of grant. See
"Management -- Non-employee Directors Stock Option Plan."

(9) Does not include 100,000 shares of Common Stock issuable upon exercise of
stock options to be granted to Mr. Frame, upon consummation of the
Offering, which will vest on the fifth anniversary of the date of grant or,
if earlier, in cumulative installments of one-third of the total shares
subject thereto when the Company's gross revenues reach $150 million, $175
million and $200 million, respectively, if the Company's after tax profit
is at least 4% of gross revenues upon attainment of such revenue targets.
See "Management -- Stock Option Plan."

(10) Includes 25,000 shares of Common Stock that Mr. Silverman has purchased
from the Company for a promissory note. See "Certain Transactions." Does
not include 150,000 shares of Common Stock issuable upon exercise of stock
options to be granted to Mr. Silverman upon consummation of the Offering,
none of which are exercisable until one year from the date of grant. See
"Management -- Stock Option Plan."

(11) Does not include 25,000 shares of Common Stock issuable upon exercise of
stock options to be granted to Mr. McNairy upon consummation of the
Offering, none of which are exercisable until one year from the date of
grant. See "Management -- Stock Option Plan."

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CERTAIN TRANSACTIONS

Seitel founded SGI in 1993, and founded Eagle in 1996 to acquire all of the
operations and assets of SGI. Seitel is therefore the founder of the Company.
Prior to the ERI Acquisition and the Offering, Eagle has been an indirect,
wholly-owned subsidiary of Seitel. As the sole stockholder, Seitel was
responsible for providing Eagle with financial, management, administrative and
other resources. Furthermore, Seitel had exercised substantial control over the
operation of Eagle. Accordingly, Eagle has no history of operating as an
independent entity.

Prior to the Offering, Seitel provided Eagle with significant management
functions and services, including treasury, accounting, tax, internal audit,
legal, human resources and other support services. Eagle was charged and/or
allocated expenses of $1.2 million, $0.7 million and $0.6 million for the years
ended December 31, 1996, 1995 and 1994, respectively, and $0.3 million for the
three months ended March 31, 1997. The costs of these services were directly
charged and/or allocated using methods that Eagle's management believed were
reasonable. Such charges and allocations are not necessarily indicative of the
costs Eagle would have incurred to obtain these services had it been a separate
entity. Neither Seitel nor the Company has conducted any study or obtained any
estimates from third parties to determine what the cost of obtaining such
services from third parties may have been. See Note G to Eagle's Consolidated
Financial Statements.

Prior to the Offering, Seitel has advanced expenses on behalf of Eagle with
respect to its third-party work, including amounts attributable to taxes and
allocable overhead relating to such third-party work. As of June 30, 1997, Eagle
owed Seitel approximately $3.0 million for such expenses. This intercompany
balance accrues interest at a rate equal to Seitel's cost of funds, which is
currently 7.25%. Pursuant to the Master Separation Agreement described below,
the Company will repay Seitel the then current amount of such advances relating
to third-party work at the time of closing of the Offering with a portion of the
net proceeds therefrom.

Prior to the Offering, a significant portion of the total seismic data
acquisition services performed by Eagle were provided to Seitel. Revenues for
these services were based on prices charged to unaffiliated third parties for
similar work. The revenues to Eagle provided by work performed for Seitel were
$14.3 million in 1994, or 55.5% of Eagle's total revenues, $15.4 million for
1995, or 52.6% of Eagle's total revenues, $27.2 million for 1996, or 56.5% of
Eagle's total revenues, and $8.1 million for the three months ended March 31,
1997, or 62.3% of Eagle's total revenues from onshore services for such period.
Such revenues are not necessarily indicative of the revenues Eagle would have
earned had it provided these services to unrelated third parties.

In July 1996, Seitel acquired 50.0% of the outstanding shares of ERI from
Oliveira Limited, Dormera Limited, and Balmedie Limited, companies beneficially
owned by Messrs. Harrison, Purdie and Campbell, respectively. Messrs. Harrison,
Purdie and Campbell guaranteed the obligations of these companies for any breach
of the representations, warranties and covenants made by such companies in
connection with such transaction, which obligations will survive until July
1998. In connection with this acquisition, Seitel loaned $2 million to ERI,
which debt will be repaid to Seitel from a portion of the net proceeds of the
Offering. See

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"Use of Proceeds." In November 1996, ERI repurchased a portion of these shares
from Seitel, as a result of which Seitel's ownership was reduced to 19.0% of the
outstanding shares of ERI. ERI issued a note for $2.7 million to Seitel in
consideration of such repurchase of shares, which note will be repaid to Seitel
from the net proceeds of the Offering. See "Use of Proceeds." Seitel contributed
these shares of ERI to the Company in May 1997. Therefore, from July 1996 until
the consummation of the Offering, Seitel has held an equity interest in ERI, the
parent corporation of the Horizon Companies. Prior to the Offering, a
significant portion of the total seismic data acquisition services performed by
the Horizon Companies were provided to Seitel. See Note E to Consolidated
Financial Statements of ERI. The Horizon Companies charged Seitel for these
services at an amount believed by management of the Horizon Companies to be
equal to amounts it would have charged unrelated third parties for such
services. The revenues to the Horizon Companies provided by work performed for
Seitel in 1996 were $20.0 million, or 46.0% of the Horizon Companies' total
revenues for that year, and $5.4 million for the three months ended March 31,
1997, or 50.8% of ERI's total revenues from offshore services for such period.

Contemporaneously with the consummation of the Offering, the Company will
issue an aggregate of 600,000 shares of Common Stock to Oliveira Limited,
Dormera Limited, Balmedie Limited, and Larlane Limited (the "Sellers") in
exchange for the 81.0% of the outstanding shares of ERI owned by such entities.
Messrs. Harrison, Purdie, and Campbell, who will be directors or executive
officers of the Company after the Offering, and David Burns, who will be an
employee of the Company after the Offering, are the beneficial owners of
Oliveira Limited, Dormera Limited, Balmedie Limited, and Larlane Limited,
respectively. Messrs. Harrison, Purdie, Campbell and Burns have guaranteed the
obligations of the Sellers for any breach of the representations, warranties and
covenants made by the Sellers in connection with such transaction, which
obligations will survive until one year after the date of consummation of the
Offering. Messrs. Harrison, Purdie, Campbell and Burns and the Sellers have
agreed not to sell or otherwise dispose of the acquired shares of Common Stock
for one year after consummation of the ERI acquisition or more than 50% of such
shares of Common Stock prior to two years after consummation of the ERI
Acquisition, except for dispositions pursuant to the exercise (if any) of the
over-allotment options granted to the Underwriters by the Sellers in the
Offering or pledges of such shares of Common Stock pursuant to bona fide lending
transactions (subject to the lock-up agreements with the Underwriters).

On July 23, 1997, Jay Silverman purchased 25,000 shares of Common Stock
from the Company at the initial public offering price per share set forth on the
cover page of this Prospectus for a promissory note. Interest will accrue under
such promissory note at a fixed rate of 6.0% per annum. Interest only will be
payable thereunder for three years, and thereafter Mr. Silverman will repay such
promissory note in 60 equal monthly installments of principal and interest. Such
promissory note is secured by a pledge of the 25,000 shares of Common Stock in
favor of the Company. See "Management -- Employment Agreements."

The Company and Seitel intend to enter into a number of agreements for the
purpose of defining their continuing relationship. These agreements were
negotiated in the context of a parent-subsidiary relationship and therefore are
not the result of negotiations between independent parties. It is the intention
of the Company and Seitel that such agreements and the transactions provided for
therein, taken as a whole, should accommodate the parties' interests in a manner
that is fair to both parties, while continuing certain mutually beneficial
arrangements. The parties intend that such agreements and transactions provide
fair market value to them on terms no less favorable to the Company than would
otherwise be available from unaffiliated parties. Because of the complexity of
the various relationships between the Company and Seitel, however, there can be
no assurance that each of such agreements, or the transactions provided for
therein, will be effected on terms at least as favorable to the Company as could
have been obtained from unaffiliated third parties. The Company intends to
follow the procedures provided by the Delaware General Corporation Law, which
include a vote to affirm any such future agreements by a majority of the
Company's directors who are not employees, officers or directors of Seitel.
There can be no assurance that any such arrangements or transactions will be the
same as those that would be negotiated between independent parties.

The following is a summary of certain prospective arrangements between the
Company and Seitel.

MASTER SEPARATION AGREEMENT. The Master Separation Agreement will provide
for the Company and Seitel to enter into a Sublease, a Registration Rights
Agreement, a Tax Indemnity Agreement, an Employee

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Benefits Allocation Agreement and an Administrative Services Agreement. In
addition, the Master Separation Agreement will require the Company to repay $7.7
million of indebtedness owed by the Company and its subsidiaries to Seitel and
to repay $16.7 million of indebtedness owed by the Company and its subsidiaries
to third parties guaranteed by Seitel (or obtain the release of Seitel's
guaranty) contemporaneously with the consummation of the Offering. See "Use of
Proceeds." Under the Master Separation Agreement, Seitel and its subsidiaries
and the Company and its subsidiaries will indemnify each other with respect to
liabilities arising in connection with the operations of their respective
businesses prior to and after the date of consummation of the Offering,
including liabilities under the Securities Act with respect to the Offering. The
Master Separation Agreement will also provide for continued access by the
Company to historical financial and operational information relating to the
Company and its subsidiaries maintained by Seitel.
SUBLEASE. The Sublease between the Company and Seitel will provide for the
Company to lease its principal corporate offices, comprising approximately 7,600
square feet, from Seitel for a term of three years at an annual rent of
approximately $85,000. The Sublease will also provide for the Company to utilize
certain shared office equipment, such as phone systems and central computer
systems, for an additional charge.
REGISTRATION RIGHTS AGREEMENT. Pursuant to the Registration Rights
Agreement, the Company will agree to register the offer and sale by Seitel on a
delayed and continuous basis from time to time of the shares of Common Stock
owned by Seitel after the Offering (1,520,000 shares, or 1,420,000 if the
Underwriters' over-allotment options are exercised in full) at the expense of
the Company. The Company will agree to file a shelf registration statement
within 370 days after consummation of the Offering and to use its best efforts
to secure the effectiveness of such shelf registration statement as soon as
possible thereafter. Seitel will agree in the Registration Rights Agreement not
to sell more than 50.0% of such shares pursuant to such registration prior to
the date two years after the consummation of the Offering. In addition, the
Company will grant Seitel the right to participate as a selling stockholder in
future underwritten public offerings of the Company's Common Stock, subject to
certain restrictions. The Company and Seitel will each agree to indemnify the
other against, or to contribute to losses arising out of, certain liabilities in
connection with any such registration, including liabilities under the
Securities Act.
TAX INDEMNITY AGREEMENT. Prior to the Offering, Eagle has been a member of
the Seitel affiliated group and has filed its tax returns on a consolidated
basis with such group. After the Offering, the Company will no longer be a
member of the Seitel affiliated group. The Company and Seitel will enter into a
Tax Indemnity Agreement to define their respective rights and obligations
relating to federal, state and other taxes for periods before and after the
Offering. Pursuant to the Tax Indemnity Agreement, Eagle will be required to pay
Seitel (to the extent not already paid) its share of federal income taxes prior
to the date of consummation of the Offering, and the Company shall be
responsible for federal income taxes from its operations on and after the date
of consummation of the Offering. Any subsequent refunds, additional taxes or
penalties or other adjustments relating to Eagle's federal income taxes for
periods prior to the date of consummation of the Offering shall be for the
benefit of or be borne by Seitel. Similar provisions apply under the Tax
Indemnity Agreement to other taxes, such as state and local income taxes.
EMPLOYEE BENEFITS ALLOCATION AGREEMENT. Seitel and the Company intend to
enter into an Employee Benefits Allocation Agreement pursuant to which the
Company will agree to establish its own 401(k) plan, into which Seitel will
transfer those assets that are currently held in Seitel's 401(k) plan for the
benefit of Company employees. In addition, the Employee Benefits Allocation
Agreement will provide for the Company to establish its own health and
disability insurance and related plans to provide insurance coverage to Company
employees after the consummation of the Offering. The Company will assume all
obligations of Seitel with respect to vacation and severance for Company
employees, and the parties will agree to indemnify each other with respect to
their obligations under the Employee Benefits Allocation Agreement.
ADMINISTRATIVE SERVICES AGREEMENT. Seitel and the Company intend to enter
into an Administrative Services Agreement pursuant to which Seitel will provide
the Company with administrative services, primarily accounting services, at up
to the same levels as provided prior to the Offering. Seitel will provide these
services for a 90-day transition period to allow the Company adequate time to
build an internal administrative staff. The Company will pay Seitel for these
services at Seitel's actual cost of providing these services.

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DESCRIPTION OF CAPITAL STOCK

The Company has authorized capital stock consisting of 25,000,000 shares of
Common Stock, $0.01 par value, and 5,000,000 shares of Preferred Stock, $0.01
par value. Prior to the Offering, there were outstanding 4,025,000 shares of
Common Stock (including the effects of the sale of shares of Common Stock to Mr.
Silverman and the ERI Acquisition) and no shares of Preferred Stock.

COMMON STOCK

All outstanding shares of Common Stock are, and the shares of Common Stock
offered by the Company hereby when issued and paid for will be, fully paid and
nonassessable. All holders of Common Stock have full voting rights and are
entitled to one vote for each share held of record on all matters submitted to a
vote of the stockholders. Votes may not be cumulated in the election of
directors. Stockholders have no preemptive or subscription rights. The Common
Stock is neither redeemable nor convertible, and there are no sinking fund
provisions. Holders of Common Stock are entitled to dividends when, as and if
declared by the Board of Directors from funds legally available therefor and are
entitled, upon liquidation, to share ratably in all assets remaining after
payment of liabilities. See "Dividend Policy." The rights of holders of Common
Stock will be subject to any preferential rights of any Preferred Stock that may
be issued in the future.

The transfer agent and registrar for the Common Stock is Chase Mellon
Security Services.

PREFERRED STOCK

The Board of Directors of the Company is authorized (without any further
action by the stockholders) to issue Preferred Stock in one or more series and
to fix voting rights, liquidation preferences, dividend rates, conversion
rights, redemption rights and terms, including sinking fund provisions, and
certain other rights and preferences of any series established by the Board of
Directors, and to increase or decrease the number of shares within each such
series. The Board of Directors may issue Preferred Stock for such consideration
and on such terms as it deems desirable. Satisfaction of any dividend
preferences of outstanding Preferred Stock would reduce the amount of funds
available for the payment of dividends on Common Stock. Also, holders of
Preferred Stock would normally be entitled to receive a preference payment in
the event of any liquidation, dissolution or winding-up of the Company before
any payment is made to the holders of Common Stock. In addition, under certain
circumstances, the issuance of Preferred Stock may render more difficult or tend
to discourage a merger, tender offer or proxy contest, the assumption of control
by a holder of a large block of the Company's securities or the removal of
incumbent management. The Board of Directors of the Company, without stockholder
approval, may issue Preferred Stock with voting and conversion rights which
could adversely affect the holders of Common Stock. The Company has no present
intention to issue any shares of Preferred Stock.

CERTAIN ANTI-TAKEOVER EFFECTS OF CERTAIN PROVISIONS OF THE CERTIFICATE OF
INCORPORATION, BY-LAWS AND
DELAWARE GENERAL CORPORATION LAW

The Certificate of Incorporation contains certain provisions, some of which
are described below, that in addition to the authorization of the Preferred
Stock may reduce the likelihood of a change in management or voting control of
the Company without the consent of the Company's Board of Directors. These
provisions could have the effect of delaying, deterring or preventing tender
offers or takeover attempts that some or a majority of the Company's
stockholders might consider to be in the stockholders' best interest, including
offers or attempts that might result in a premium over the market price for the
Common Stock.

Stockholder Action. Unless limited by the Certificate of Incorporation of a
corporation, the Delaware General Corporation Law permits stockholder action
without a meeting, without prior notice and without a vote upon the written
consent of the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted. The
Certificate of Incorporation prohibits stockholder action without a meeting,
except when there are ten or fewer stockholders. The affirmative vote of holders
of at least 80.0% of the Company's outstanding voting stock will be required to
amend this provision.

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Fair Price Provision. The Certificate of Incorporation includes a "fair
price" provision that requires the affirmative vote of the holders of at least
80.0% of the outstanding voting stock of the Company to approve a merger with,
or disposition of assets or the issuance of securities having a fair market
value of $5.0 million or more to, an interested stockholder (as defined below),
a liquidation proposed by an interested stockholder or the reclassification of
the Company's securities or a similar transaction that increases the interested
stockholder's proportionate ownership in the Company. An "interested
stockholder" is anyone who owns or controls, directly, indirectly or together
with others, 10.0% or more of the Company's voting stock. However, a transaction
with an interested stockholder will not require stockholder approval if a
majority of disinterested directors (as defined in the Certificate of
Incorporation) approves the transaction or if the transaction involves the
distribution to the stockholders of cash or other consideration that satisfies
the "fair price" criteria set forth in the Certificate of Incorporation, which
generally require that all stockholders receive equal treatment, an adequate
price and adequate disclosure. The fair price provision of the Certificate of
Incorporation may not be amended without the affirmative vote of at least 80.0%
of all shares entitled to vote.

Evaluation Factors. The Certificate of Incorporation contains a provision
that allows the Board of Directors to evaluate factors other than the price
offered when considering a proposed acquisition of the Company. The Certificate
of Incorporation permits the Board of Directors to consider the social, legal
and economic effects of the proposed acquisition upon the Company's employees,
suppliers, customers and the communities in which the Company operates. The
Board of Directors can also consider any other factors it deems relevant,
including not only the consideration offered in the proposed transaction
relative to the market price of the Common Stock but also the value of the
Company in a freely negotiated transaction and in relation to the estimate by
the Board of Directors of the future value of the Company as an independent
entity. The affirmative vote of the holders of two-thirds or more of the
outstanding voting stock of the Company will be required to amend this
provision.

Anti-Takeover Legislation. Section 203 of the Delaware General Corporation
Law (the "DGCL") provides that, subject to certain exceptions specified therein,
a corporation shall not engage in any business combination with any "interested
stockholder" for a three-year period following the date that such stockholder
becomes an interested stockholder unless (i) prior to such date, the board of
directors of the corporation approved either the business combination or the
transaction which resulted in the stockholder becoming an interested
stockholder, (ii) upon consummation of the transaction that resulted in the
stockholder becoming an interested stockholder, the interested stockholder owned
at least 85.0% of the voting stock of the corporation outstanding at the time
the transaction commenced (excluding certain shares), or (iii) on or subsequent
to such date, the business combination is approved by the board of directors of
the corporation and at an annual or special meeting of stockholders by the
affirmative vote of at least two-thirds of the outstanding voting stock that is
not owned by the interested stockholder. Section 203 of the DGCL provides that,
except as specified, an interested stockholder is defined to include (x) any
person that is the owner of 15.0% or more of the outstanding voting stock of the
corporation at any time within three years immediately prior to the relevant
date, and (y) the affiliates and associates of any such person.

Under certain circumstances, Section 203 of the DGCL makes it more
difficult for a person who would be an "interested stockholder" to effect
various business combinations with a corporation for a three-year period,
although the stockholder may elect to exclude a corporation from the
restrictions imposed thereunder. The Certificate of Incorporation does not
exclude the Company from the restrictions imposed under Section 203 of the DGCL,
and therefore the Company will be subject to the provisions of Section 203. The
provisions of Section 203 of the DGCL may encourage companies interested in
acquiring the Company to negotiate in advance with the Board of Directors of the
Company, since the stockholder approval requirement would be avoided if a
majority of the directors then in office approve, prior to the time the
stockholder becomes an interested stockholder, either the business combination
or the transaction that results in the stockholder becoming an interested
stockholder.

LIMITATIONS ON LIABILITY OF DIRECTORS AND INDEMNIFICATION OF DIRECTORS AND
OFFICERS

The Certificate of Incorporation limits the liability of directors to the
extent allowed by the Delaware General Corporation Law. Specifically, directors
will not be held liable to the Company or its stockholders for

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an act or omission in such capacity as a director, except for liability as a
result of (i) a breach of the duty of loyalty to the Company or its
stockholders, (ii) actions or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, (iii) payment of an
improper dividend or improper repurchase of the Company's stock under Section
174 of the Delaware General Corporation Law, or (iv) actions or omissions
pursuant to which the director will receive an improper personal benefit.

The principal effect of the limitation of liability provision is that a
stockholder is unable to prosecute an action for monetary damages against a
director of the Company unless the stockholder can demonstrate one of the
specified bases for liability. This provision, however, does not eliminate or
limit director liability arising in connection with causes of action brought
under the federal securities laws.

The Certificate of Incorporation does not eliminate the directors' duty of
care. The inclusion of this provision in the Certificate of Incorporation may,
however, discourage or deter stockholders or management from bringing a lawsuit
against directors for a breach of their fiduciary duties, even though such an
action, if successful, might otherwise have benefited the Company and its
stockholders. This provision should not affect the availability of equitable
remedies such as injunction or rescission based upon a director's breach of the
duty of care. The affirmative vote of the holders of two-thirds or more of the
outstanding voting stock of the Company will be required to amend this
provision.

The Certificate of Incorporation and By-laws provide that the Company is
generally required to indemnify its directors and officers for all judgments,
fines, settlements, legal fees and other expenses incurred in connection with
pending or threatened legal proceedings because of the director's or officer's
position with the Company or another entity that the director or officer serves
at the Company's request, subject to certain conditions, and to advance funds to
its directors and officers to enable them to defend against such proceedings. To
receive indemnification, the director or officer must have been successful in
the legal proceeding or acted in good faith and in what was reasonably believed
to be a lawful manner and in the Company's best interest. The affirmative vote
of the holders of two-thirds or more of the outstanding voting stock of the
Company will be required to amend this provision.

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SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, the Company will have 8,025,000 shares of
Common Stock outstanding. The 5,880,000 shares to be sold in the Offering
(6,762,000 shares if the Underwriters' over-allotment options are exercised in
full) will be freely tradeable in the public market without restriction or
further registration under the Securities Act, except for any shares purchased
by affiliates of the Company. The Selling Stockholder (which will beneficially
own 18.9% of the outstanding shares of Common Stock after the Offering) and the
executive officers, directors and the remaining stockholders of the Company (who
will beneficially own approximately 7.8% of the outstanding shares of Common
Stock after the Offering and who will hold options exercisable at the initial
public offering price for an additional 600,000 shares of Common Stock) have
agreed that, for a period of 180 days from the date of this Prospectus, they
will not, directly or indirectly, offer, sell, offer to sell, contract to sell,
pledge, grant any option to purchase or otherwise sell or dispose (or announce
any offer, sale, offer of sale, contract of sale, pledge, grant of any option to
purchase or other sale or disposition) of any shares of Common Stock or other
capital stock of the Company or any securities convertible into or exchangeable
for any shares of Common Stock or other capital stock of the Company without the
prior written consent of Prudential Securities Incorporated, on behalf of the
Underwriters. Prudential Securities Incorporated may, in its sole discretion, at
any time and without notice, release all or any portion of the shares of Common
Stock subject to such agreement. These contractual restrictions cover 2,145,000
shares (1,865,000 shares if the Underwriters' over-allotment options are
exercised in full).

All of the currently outstanding shares of Common Stock of the Company that
are not being sold in the Offering are "restricted securities" within the
meaning of Rule 144 under the Securities Act. In general, under Rule 144 as
currently in effect, a person (or persons whose shares are required to be
aggregated) who has beneficially owned, for at least one year, shares of Common
Stock that have not been registered under the Securities Act or that were
acquired from an "affiliate" of the Company, is entitled to sell within any
three-month period a number of shares of Common Stock that does not exceed the
greater of (a) 1.0% of the then-outstanding shares of Common Stock (80,250
shares upon completion of the Offering) and (b) the average weekly reported
trading volume in the Common Stock during the four calendar weeks preceding such
sale. Sales under Rule 144 also are subject to certain notice and manner-of-sale
requirements and the availability of current public information about the
Company. A person (or persons whose shares are aggregated) who has not been an
"affiliate" of the Company (in general, a person who is not a director, officer
or principal stockholder of the Company) during the three months prior to resale
and who has beneficially owned restricted securities for at least two years is
entitled to sell such restricted securities under Rule 144 without regard to the
requirements discussed above. Of the 2,145,000 shares of Common Stock of the
Company that are restricted securities within the meaning of Rule 144, 1,520,000
shares will be eligible for sale on December 18, 1997 and 600,000 shares will be
eligible for sale one year from the consummation of the Offering, pursuant to
Rule 144 and subject to the volume, manner of sale and other limitations of Rule
144.

In connection with the ERI Acquisition, the Company will issue 600,000
shares of Common Stock to the Additional Selling Stockholders. The Additional
Selling Stockholders have agreed not to dispose of any of such shares for one
year after the consummation of the ERI Acquisition, and not to dispose of more
than 50% of such shares prior to two years after such consummation, other than
sales pursuant to exercise (if any) of the over-allotment options granted to the
Underwriters by the Additional Selling Stockholders in the Offering or pledges
pursuant to bona fide lending transactions (subject to the lock-up agreements
with the Underwriters).

The Company has agreed to register the offer and sale by Seitel on a
delayed and continuous basis from time to time of the shares of Common Stock
owned by Seitel after the Offering (1,520,000 shares, or 1,420,000 if the
Underwriters' over-allotment options are exercised in full) at the expense of
the Company. The Company has agreed to file a shelf registration statement
within 370 days after consummation of the Offering and to use its best efforts
to secure the effectiveness of such shelf registration statement as soon as
possible thereafter and maintain the effectiveness of such registration
statement for a period of two years thereafter. Seitel has agreed in the
Registration Rights Agreement not to sell more than 50.0% of such shares
pursuant to such registration prior to the date two years after the consummation
of the Offering. In addition, the Company has granted Seitel the right to
participate as a selling stockholder in future underwritten public offerings of
the Company's Common Stock, subject to certain restrictions.

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The Company intends to grant, effective as of the date of consummation of
the Offering, options to purchase up to 705,500 shares of Common Stock to its
officers, directors and employees, none of which are currently exercisable. See
"Management -- Independent Directors Stock Option Plan" and "-- Stock Option
Plan." Except for the options granted to Mr. Frame, one third of such options
will become exercisable one year from the consummation of the Offering, and
another one third of such options will become exercisable on the second and
third anniversaries of the consummation of the Offering. Mr. Frame's options
will vest on the fifth anniversary of the date of grant or, if earlier, in
cumulative installments of one-third of the total shares subject thereto when
the Company's gross revenues reach $150 million, $175 million and $200 million,
respectively, if the Company's after tax profit is at least 4% of gross revenues
upon attainment of such revenue targets. In addition, 494,500 shares remain
available under the Option Plan and the Directors Option Plan for the grant of
future options. The Company intends to file a registration statement on Form S-8
registering its sale of any shares pursuant to the exercise of such options to
such officers, directors, and employees, and the resale of shares obtained upon
such exercise by officers and directors prior to the date any such options
become exercisable.

No prediction can be made as to the effect, if any, that future sales of
shares, or the availability of shares for future sale, will have on the
prevailing market price for the Common Stock. Sales of substantial amounts of
Common Stock, or the perception that such sales could occur, may adversely
affect prevailing market prices for the Common Stock and could impair the
Company's future ability to raise capital through an offering of equity
securities.

57
<PAGE> 59

UNDERWRITING

The Underwriters named below (the "Underwriters"), for whom Prudential
Securities Incorporated and Simmons & Company International are acting as
representatives (the "Representatives"), have severally agreed, subject to the
terms and conditions contained in the Underwriting Agreement, to purchase from
the Company and the Selling Stockholder the number of shares of Common Stock set
forth opposite their respective names:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------- ---------
<S> <C>
Prudential Securities Incorporated..........................
Simmons & Company International.............................

---------
Total............................................. 5,880,000
=========
</TABLE>

The Company and the Selling Stockholder are obligated to sell, and the
Underwriters are obligated to purchase, all of the shares of Common Stock
offered hereby if any are purchased.

The Underwriters, through their Representatives, have advised the Company
and the Selling Stockholder that they propose to offer the shares of Common
Stock initially at the initial public offering price set forth on the cover page
of this Prospectus; that the Underwriters may allow to selected dealers a
concession of $ per share; and that such dealers may reallow a concession
of $ per share to certain other dealers. After the public offering, the
offering price and the concessions may be changed by the Representatives.

The Company, the Selling Stockholder and the Additional Selling
Stockholders have granted to the Underwriters over-allotment options,
exercisable for 30 days from the date of this Prospectus, to purchase up to an
additional 882,000 shares of Common Stock at the initial public offering price
less the underwriting discounts and commissions as set forth on the cover page
of this Prospectus. Such additional shares will be purchased first from the
Additional Selling Stockholders (up to a total of 180,000 shares of Common
Stock), next from the Company (up to a total of 602,000 shares of Common Stock)
and then from the Selling Stockholder (up to a total of 100,000 shares of Common
Stock). The Underwriters may exercise such options solely for the purpose of
covering over-allotments incurred in the sale of the shares of Common Stock
offered hereby. To the extent such options to purchase are exercised, each
Underwriter will become obligated, subject to certain conditions, to purchase
approximately the same percentage of such additional shares as the number set
forth next to such Underwriter's name in the preceding table bears to 5,880,000
shares.

The Company, together with each of its executive officers and directors and
all of the Company's current stockholders, have agreed not to, directly or
indirectly, offer, sell, offer to sell, contract to sell, pledge, grant any
option to purchase or otherwise sell or dispose of (or announce any offer, sale,
offer of sale, contract of sale, pledge, grant of any option to purchase or
other sale or disposition) any shares of Common Stock or any securities
convertible into or exchangeable or exercisable therefor for a period of 180
days from the date of this Prospectus without the prior written consent of
Prudential Securities Incorporated, on behalf of the Underwriters, except for
shares offered pursuant to the Offering and issuances pursuant to the exercise
of options granted under employee benefit plans existing as of the date of
consummation of the Offering or pursuant to the terms of warrants of the Company
outstanding as of the date of consummation of the Offering. Prudential
Securities Incorporated may, in its sole discretion, at any time and without
notice, release all or any portion of the securities subject to lock-up
agreements.

The Company, the parent corporation of the Selling Stockholder, the Selling
Stockholder, certain officers, directors and employees of the Company and the
Additional Selling Stockholders have agreed to

58
<PAGE> 60

indemnify the several Underwriters or contribute to losses arising out of
certain liabilities, including liabilities under the Securities Act.

The Representatives have informed the Company that the Underwriters do not
intend to confirm sales to any accounts over which they exercise discretionary
authority.

Prior to the Offering, there has been no public market for the Common Stock
and no predictions can be made of the effect, if any, that the sale or
availability for sale of shares of additional Common Stock will have on the
market price of the Common Stock. Nevertheless, sales of substantial amounts of
such shares in the public market, or the perception that such sales could occur,
could materially and adversely affect the market price of the Common Stock and
could impair the Company's future ability to raise capital through an offering
of its equity securities.

The initial public offering price for the Common Stock will be determined
by negotiations between the Company and the Representatives and will not be
based upon any independent appraisal or valuation of the Company. Among the
factors to be considered in determining the initial public offering price are
the economic outlook for the industry in which the Company operates, the
Company's position in the industry, the Company's earnings prospects, the
Company's financial position, the ability and experience of the Company's
management, the prevailing conditions of the securities market at the time of
the Offering and the stock prices of publicly traded companies which the Company
and the Representatives believe to be comparable to the Company.

In connection with the Offering, certain Underwriters and selling group
members (if any) and their respective affiliates may engage in transactions that
stabilize, maintain or otherwise affect the market price of the Common Stock.
Such transactions may include stabilization transactions effected in accordance
with Rule 104 of Regulation M promulgated by the Securities and Exchange
Commission (the "Commission") pursuant to which such persons may bid for or
purchase Common Stock for the purpose of stabilizing its market price. The
Underwriters also may create a short position for the account of the
Underwriters by selling more Common Stock in connection with the Offering than
they are committed to purchase from the Company and the Selling Stockholder, and
in such case may purchase Common Stock in the open market following completion
of the Offering to cover all or a portion of such short position. The
Underwriters may also cover all or a portion of such short position, up to
882,000 shares of Common Stock, by exercising the Underwriters' over-allotment
option referred to above. In addition, Prudential Securities Incorporated, on
behalf of the Underwriters, may impose "penalty bids" under contractual
arrangements with the Underwriters whereby it may reclaim from an Underwriter
(or any selling group member participating in the Offering) for the account of
the other Underwriters, the selling concession with respect to Common Stock that
is distributed in the Offering but subsequently purchased for the account of the
Underwriters in the open market. Any of the transactions described in this
paragraph may result in the maintenance of the price of the Common Stock at a
level above that which might otherwise prevail in the open market. None of the
transactions described in this paragraph are required and, if they are
undertaken, they may be discontinued at any time.

LEGAL MATTERS

The validity of the issuance of the shares of Common Stock covered by this
Prospectus will be passed upon for the Company by Gardere Wynne Sewell & Riggs,
L.L.P., Houston, Texas, and for the Underwriters by Brown & Wood LLP, New York,
New York.

EXPERTS

The audited consolidated financial statements of Eagle and subsidiary
included in this prospectus and elsewhere in this registration statement, to the
extent and for the periods indicated in their report, have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said report.

59
<PAGE> 61

The audited consolidated financial statements of ERI and subsidiaries as of
December 31, 1995 and 1996 and for each of the years in the three years ended
December 1996 have been included in this prospectus and elsewhere in this
registration statement in reliance upon the report of KPMG, independent public
accountants, upon the authority of said firm as experts in accounting and
auditing.

ADDITIONAL INFORMATION

The Company has filed with the Commission a registration statement on Form
S-1 under the Securities Act with respect to the Common Stock offered hereby.
This Prospectus, which is part of the Registration Statement, does not contain
all of the information set forth in the Registration Statement and the exhibits
thereto. For further information concerning the Company and the Common Stock,
reference is made to the Registration Statement and to the exhibits and
schedules filed therewith, copies of which may be inspected at the Commission's
principal office, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C.
20549, or copies of which may be obtained from the Commission at such office
upon payment of the fees prescribed by the Commission. Copies of the
Registration Statement may also be inspected at the Commission's regional
offices at 7 World Trade Center, Suite 1300, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. In addition, the Common Stock will be listed on the Nasdaq National
Market, 1735 K Street, N.W., Washington, D.C. 20006-1500, where such material
may also be inspected and copied.

As a result of the Offering, the Company will become subject to the
information and periodic reporting requirements of the Securities Exchange Act
of 1934, as amended, and, in accordance therewith, will file periodic reports,
proxy statements and other information with the Commission. Such periodic
reports, proxy statements and other information will be available for inspection
and copying at the public reference facilities, regional offices and stock
exchange referred to above. In addition, these reports, proxy statements and
other information may also be obtained from the web site that the Commission
maintains at http://www.sec.gov. The summaries in this Prospectus of additional
information included in the Registration Statement or any exhibit thereto are
qualified in their entirety by reference to such information or exhibit filed
with the Commission.

The Company intends to furnish its stockholders with annual reports
containing audited financial statements certified by an independent public
accounting firm and quarterly reports for the first three quarters of each
fiscal year containing unaudited financial information.

60
<PAGE> 62

GLOSSARY

16 BIT, 24 BIT

The resolution available for the process of converting analog hydrophone or
geophone signals into digital form.

GEOPHONE

A type of seismic receiver placed on land or on the sea floor that records
seismic waves by detecting particle movement.

GLOBAL POSITIONING SYSTEM (GPS)

A satellite navigation and positioning system utilized in seismic
operations.

HIGH DEFINITION SURVEYS

Surveys designed to optimize the degree to which subsurface geology and
faulting can be resolved. In general, high definition surveys require a denser
grid of seismic data recordings to be made over a given area and closer
deployment of energy sources and geophones (if on land) or hydrophone streamers
(if offshore).

HYDROPHONE

An offshore seismic receiver that records seismic waves by detecting
pressure changes.

OFFSET

Offset is the distance along the surface between energy source and receiver
positions. Long offsets are generally required for imaging deep geological
targets and for subsalt recording in the Gulf of Mexico in order to record
seismic reflections from subsalt strata with less of the reflected signal
distortion normally associated with salt formations.

POSITIONING

The accurate computing of the geographical position of source and receiver
locations onshore and of the vessel and all equipment deployed in the water
during data collection. To produce accurate seismic images, the positions of
hydrophone groups and sources must be known within a few meters throughout the
survey.

RADIO TELEMETRY SYSTEM

A seismic data acquisition system using radio signals rather than cables to
transmit seismic data to the system's central recording equipment. Because these
systems use radio signals to transmit data, they can be operated more
efficiently than cable-based systems, particularly in wetland areas and highly
populated areas where there are numerous topographic obstructions, such as
rivers, bays, highways and towns. These systems also are well-suited to work in
environmentally sensitive areas where physical intrusion must be minimized.

SAR

A radio telemetry field recording box, or a seismic acquisition remote
(SAR). SARs collect seismic data from groups of geophones, or geophone stations,
digitize the seismic data from the geophones and transmit the digitized data to
the central recording equipment of the seismic data acquisition system using
radio waves.

SOURCE (OR ENERGY SOURCE)

A device that emits acoustic energy. The most common type of source for
offshore seismic operations is known as an airgun, which releases a burst of
compressed air into the water, thereby generating an acoustic

61
<PAGE> 63

shock wave. Airguns are towed behind the vessel slightly below the surface of
the water. Onshore energy sources include dynamite and truck mounted vibrators.

STREAMER

A streamer, used in offshore seismic data acquisition operations, consists
of a cable that is several kilometers in length, is filled with liquid to
provide near neutral buoyancy, and contains many hundreds of pressure sensitive
recording instruments, known as hydrophones. The hydrophones detect pressure
changes associated with reflected seismic energy and transmit this information,
as electrical signals, along the streamer to the recording vessel. A streamer is
normally towed behind the vessel slightly below the surface of the water.

SUBSALT

The geological strata beneath salt deposits. Many of the offshore 3D
seismic data acquisition projects currently being performed in the U.S. Gulf of
Mexico are designed to image subsalt strata. Because the salt deposits have a
tendency to distort seismic wave reflections, these projects require longer
offsets to reduce such distortion.

TWO-DIMENSIONAL (2D) SEISMIC DATA

Data acquired along a single line used to generate a cross sectional view
of subsurface geological strata. 2D data is less costly to acquire than 3D data,
but does not provide as detailed an image of the subsurface.

THREE-DIMENSIONAL (3D) SEISMIC DATA

Data generally acquired simultaneously along multiple parallel lines used
to generate a three dimensional picture of subsurface geological strata, rather
than a mere cross section. To provide this three dimensional picture, much more
data must be acquired than for a two dimensional cross section, so 3D data is
significantly more expensive than 2D data. However, the use of 3D data can
significantly improve drilling results, which can make 3D data more economically
efficient than 2D data.

VIBROSEIS TRUCK

A truck mounted vibration generator that can be used to create seismic
energy on dry land.

WETLAND ENVIRONMENTS

An area subject to constant or periodic immersion in water, such as a
swamp, marsh, rice field, shallow bay or lake. The coastal areas of the U.S.
Gulf Coast contain a high proportion of wetlands. Acquisition of seismic data in
these wetland environments requires specialized equipment and techniques.

62
<PAGE> 64

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
EAGLE GEOPHYSICAL, INC. Unaudited Pro Forma Consolidated
Financial Statements
Unaudited Pro forma Consolidated Balance Sheet as of March
31, 1997............................................... F-3
Unaudited Pro forma Consolidated Statement of Operations
for the three month period ended March 31, 1997........ F-4
Unaudited Pro forma Consolidated Statement of Operations
for the year ended
December 31, 1996...................................... F-5
Notes to the Unaudited Pro forma Consolidated Financial
Statements............................................. F-6

EAGLE GEOPHYSICAL, INC.
Report of Independent Public Accountants.................. F-8
Consolidated Balance Sheets -- December 31, 1995, 1996 and
unaudited March 31, 1997............................... F-9
Consolidated Statements of Operations for the years ended
December 31, 1994, 1995, 1996 and unaudited for the
three month periods ended
March 31, 1996 and 1997................................ F-10
Consolidated Statements of Stockholder's Equity for the
years ended
December 31, 1994, 1995, 1996 and unaudited for the
three month period ended
March 31, 1997......................................... F-11
Consolidated Statements of Cash Flows for the years ended
December 31, 1994, 1995, 1996 and unaudited for the
three month periods ended
March 31, 1996 and 1997................................ F-12
Notes to Consolidated Financial Statements................ F-13

ENERGY RESEARCH INTERNATIONAL
Report of Independent Auditors............................ F-21
Consolidated Balance Sheets -- December 31, 1995, 1996 and
unaudited
March 31, 1997......................................... F-22
Consolidated Statements of Operations for the years ended
December 31, 1994, 1995, 1996 and unaudited for the
three month periods ended
March 31, 1996 and 1997................................ F-23
Consolidated Statements of Stockholders' Equity (Deficit)
for the years ended
December 31, 1994, 1995, 1996 and unaudited for the
three month period ended
March 31, 1997......................................... F-24
Consolidated Statements of Cash Flows for the years ended
December 31, 1994, 1995, 1996 and unaudited for the
three month periods ended
March 31, 1996 and 1997................................ F-25
Notes to Consolidated Financial Statements................ F-26
</TABLE>

F-1
<PAGE> 65

PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS OF EAGLE GEOPHYSICAL, INC.

The accompanying unaudited pro forma consolidated financial statements are
derived from the historical consolidated financial statements of Eagle and ERI
included elsewhere in this Prospectus. The unaudited pro forma consolidated
financial statements are prepared to show the pro forma effects of the
acquisition of the remaining interests in the Horizon Companies (see Note A
hereto), the issuance of 4,000,000 shares of common stock of Eagle Geophysical,
Inc. to the public pursuant to the Offering and the application of the net
proceeds therefrom for planned repayments of indebtedness and the planned
dividend to Seitel, Inc. (see Note E hereto).

The unaudited pro forma consolidated balance sheet as of March 31, 1997 and
the unaudited pro forma consolidated statements of operations for the year ended
December 31, 1996 and the three month period ended March 31, 1997 give effect to
certain transactions that will take place upon the closing of the Offering as if
the transactions had taken place on March 31, 1997 in the case of the unaudited
pro forma consolidated balance sheet and January 1, 1996 in the case of the
unaudited pro forma consolidated statements of operations.

F-2
<PAGE> 66

EAGLE GEOPHYSICAL, INC.

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
ENERGY
EAGLE RESEARCH
GEOPHYSICAL, INC. INTERNATIONAL PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS AS ADJUSTED
----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents................................ $ -- $ 1,304 $ 54,850(B) $16,204
(39,950)(C)
Restricted cash.......................................... -- -- 5,000(C) 5,000
Costs and estimated earnings in excess of billings on
uncompleted contracts.................................. 530 -- -- 530
Receivables:
Trade.................................................. 9,708 4,064 (572)(D) 13,200
Other.................................................. 190 253 -- 443
Inventories.............................................. -- 1,410 -- 1,410
Due from affiliate....................................... 5,809 -- (5,809)(E) --
Prepaid expenses and other assets........................ 235 2,579 -- 2,814
-------- -------- -------- -------
Total current assets.............................. 16,472 9,610 13,519 39,601
PROPERTY AND EQUIPMENT, AT COST:
Geophysical equipment.................................... 28,515 32,248 (11,677)(A) 49,086
Furniture, fixtures and other............................ 121 240 -- 361
-------- -------- -------- -------
28,636 32,488 (11,677) 49,447
Less: Accumulated depreciation and amortization.......... (9,388) (11,677) 11,677(A) (9,388)
-------- -------- -------- -------
Net property and equipment........................ 19,248 20,811 -- 40,059
OTHER LONG-TERM ASSETS..................................... 72 -- 19,849(A) 19,921
-------- -------- -------- -------
TOTAL ASSETS...................................... $35,792 $ 30,421 $ 33,368 $99,581
======== ======== ======== =======

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of bank line............................. $ -- $ 7,232 $ (7,232)(C) $ --
Current portion of long-term debt........................ 2,606 400 (3,006)(C) --
Current portion of capital lease obligations............. 942 4,048 (2,492)(C) 2,498
Accounts payable......................................... 4,506 5,700 (572)(D) 9,634
Accrued liabilities...................................... 1,822 3,763 -- 5,585
Accrued capital lease interest........................... -- 858 -- 858
Billings in excess of costs and estimated earnings on
uncompleted contracts.................................. 565 -- -- 565
Due to affiliate......................................... 1,404 2,120 (1,404)(C) 2,120
-------- -------- -------- -------
Total current liabilities.............................. 11,845 24,121 (14,706) 21,260
DUE TO AFFILIATE........................................... -- 4,679 (4,679)(C) --
LONG-TERM DEBT............................................. 12,933 -- (12,933)(C) --
CAPITAL LEASE OBLIGATIONS.................................. 1,319 11,556 (3,004)(C) 9,871
DEFERRED INCOME TAXES...................................... 776 -- (67)(C) 709
-------- -------- -------- -------
Total liabilities................................. 26,873 40,356 (35,389) 31,840
-------- -------- -------- -------
STOCKHOLDERS' EQUITY
Common Stock, par value $0.01 per share; authorized
25,000,000 shares; issued and outstanding 3,400,000
shares actual, 8,025,000 shares pro forma as
adjusted............................................... 34 -- 6(A) 80
40(B)
Additional paid-in capital............................... 7,755 -- 55,185(B) 68,169
9,908(A)
(4,679)(E)
Retained earnings (deficit).............................. 1,130 (9,690) 9,690(A) (133)
(1,130)(E)
(133)(C)
Translation adjustment................................... -- (245) 245(A) --
Note receivable from stockholder......................... -- -- (375)(B) (375)
-------- -------- -------- -------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT).............. 8,919 (9,935) 68,757 67,741
-------- -------- -------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY........ $35,792 $ 30,421 $ 33,368 $99,581
======== ======== ======== =======
</TABLE>

F-3
<PAGE> 67

EAGLE GEOPHYSICAL, INC.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
ENERGY
EAGLE RESEARCH
GEOPHYSICAL, INC. INTERNATIONAL PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS AS ADJUSTED
----------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUE............................................. $12,981 $ 10,632 $ (434)(F) $ 23,179
OPERATING EXPENSES
Operating expenses (exclusive of depreciation and
amortization shown below)...................... 9,286 7,258 (434)(F) 16,110
Depreciation and amortization..................... 1,302 1,377 331(G) 3,010
Selling, general and administrative expenses...... 450 517 283(H) 1,250
Interest expense, net............................. 158 536 (660)(I) 34
------- -------- -------- --------
Total expenses............................ 11,196 9,688 (480) 20,404
------- -------- -------- --------
Income before provision for income taxes............ 1,785 944 46 2,775
Provision (benefit) for income taxes................ 655 -- (161)(J) 494
------- -------- -------- --------
NET INCOME.......................................... $ 1,130 $ 944 $ 207 $ 2,281
======= ======== ======== ========
Earnings per share.................................. $ .33 $ .28
======= ========
Weighted average number of common shares............ 3,400 4,625 8,025
======= ======== ========
</TABLE>

F-4
<PAGE> 68

EAGLE GEOPHYSICAL, INC.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
EAGLE ENERGY
GEOPHYSICAL, RESEARCH
INC. INTERNATIONAL PRO FORMA PRO FORMA
(HISTORICAL) (HISTORICAL) ADJUSTMENTS AS ADJUSTED
------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUE.............................................. $48,136 $43,607 $ (828)(K) $90,915
OPERATING EXPENSES
Operating expenses (exclusive of depreciation and
amortization shown below)....................... 34,917 37,601 (828)(K) 71,690
Depreciation and amortization...................... 3,409 4,615 1,323(L) 9,347
Selling, general and administrative expenses....... 2,680 2,619 1,133(O) 6,432
Interest expense, net.............................. 531 1,649 (1,529)(M) 651
------- ------- ------ -------
Total expenses.................................. 41,537 46,484 99 88,120
------- ------- ------ -------
Income (loss) before provision for income taxes...... 6,599 (2,877) (927) 2,795
Provision (benefit) for income taxes................. 2,420 -- (506) (N) 1,914
------- ------- ------ -------
NET INCOME (LOSS)(1)................................. $ 4,179 $(2,877) $ (421) $ 881
======= ======= ====== =======
Earnings per share................................... $ 1.23 $ .11
======= =======
Weighted average number of common shares............. 3,400 4,625 8,025
======= ====== =======
</TABLE>

- ---------------

(1) Excludes the effect of a $600,000 extraordinary gain for early
extinguishment of debt on ERI's historical 1996 financial statements.

F-5
<PAGE> 69

EAGLE GEOPHYSICAL, INC.

NOTES TO THE UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS

BASIS OF PRESENTATION

The accompanying pro forma consolidated financial statements have been
prepared to reflect certain adjustments to the historical consolidated financial
statements to give effect to the acquisition of the remaining interests in the
Horizon Companies and the net proceeds of the Offering. The adjustments are
based upon currently available information and certain estimates and
assumptions, and therefore the actual adjustments made to effect the
transactions may differ from the pro forma adjustments. The adjustments are
based on currently available information and certain estimates and assumptions,
primarily including the offering price of Eagle Geophysical, Inc. common stock.
Management believes the estimated offering price of Eagle's common stock is the
only assumption that could cause a significant change in the pro forma financial
statements, and has used the latest estimate of such offering price herein.
Actual adjustments made to effect the transactions may differ from the pro forma
adjustments; however, management believes the accompanying pro forma financial
statements reasonably present the effects of the transactions as contemplated.

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET AT MARCH 31, 1997

A.) Adjustments to reflect the acquisition of ERI including i) the exchange
of an 81% interest in ERI for 600,000 shares of Eagle Geophysical, Inc.
common stock valued at the assumed initial offering price and ii)
Seitel's contribution of its 19% ownership interest in ERI to the
Company at Seitel's carryover basis. The following table summarizes
elements of the ERI acquisition, which was accounted for by the Company
as a purchase transaction (in thousands):

<TABLE>
<S> <C>
Consideration:
Stock purchase price........................................ $ 9,000
Seitel's contributed 19% investment......................... 914
Liabilities assumed......................................... 40,356
Assets acquired............................................. (30,421)
--------
Goodwill.................................................. $ 19,849
--------
</TABLE>

Based on its initial assessment, management believes that there are no
other identifiable intangible assets to which any material purchase
price can be allocated.

B.) Reflects the issuance of 4,000,000 shares of Eagle Geophysical Inc.
common stock to the public at $15 per share pursuant to the Offering,
net of underwriting discounts, commissions and offering costs (which
total approximately $5,150,000), and the sale of 25,000 shares of
Common Stock, at the initial public offering price, to Jay N.
Silverman, President of the Company, for a note.

C.) Adjustment to reflect the application of $35,422,000 of the estimated
net proceeds from the Offering to reduce debt, capital lease and due to
affiliate obligations at March 31, 1997, including a prepayment penalty
on early extinguishment of debt which is estimated to be approximately
$200,000, and the related tax effect. Approximately $5 million will be
deposited in escrow as additional security for a capital lease
obligation that the Company does not intend to repay with the proceeds
of the Offering.

D.) Reflects the elimination of intercompany payables and receivables
between Eagle and ERI totaling $572,000.

E.) Reflects the elimination of due from affiliate of $5,809,000 between
Eagle and affiliates in the form of a dividend.

F-6
<PAGE> 70

EAGLE GEOPHYSICAL, INC.

NOTES TO THE UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE
QUARTER ENDED MARCH 31, 1997

F.) Adjustments to eliminate $434,000 in lease income between Eagle and
ERI.

G.) Reflects the amortization of goodwill associated with the acquisition
of ERI over a 15-year estimated useful life.

H.) Represents additions supported by contractual agreements to selling,
general and administrative (SG&A) expenses the Company estimates it
will incur when operating as a public registrant. Such incremental
expenses primarily include increases in personnel, contractual
employment arrangements, and directors' and officers' compensation and
insurance. (See Note O for additional discussion of increases in annual
SG&A amounts)

I.) Reflects a reduction in interest expense of $660,000 as a result of
the application of $35,017,000 of the estimated net proceeds from the
Offering to reduce debt and capital lease obligations and due to
affiliate obligations at March 31, 1997.

J.) Adjustments to the provision for income taxes related to the above
adjustments applicable to Eagle, computed using Eagle's statutory tax
rates and considering the applicable provisions of SFAS No. 109. No
adjustment was made to the provision for income taxes related to ERI's
adjustments as ERI was not required to record a tax provision during
the pro forma period. The Company does not anticipate repatriating any
of its earnings from foreign operations, so no accrual of additional
U.S. deferred taxes has been made for the acquired, non-U.S.
operations.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED
DECEMBER 31, 1996

K.) Adjustments to eliminate $828,000 in lease income between Eagle and
ERI.

L.) Reflects the amortization of goodwill associated with the acquisition
of ERI over a 15-year estimated useful life.

M.) Reflects a reduction in interest expense of $1,529,000 as a result of
the application of $23,565,000 of the estimated net proceeds from the
Offering to reduce debt and capital lease obligations.

N.) Adjustments to the provision for income taxes related to the above
adjustments applicable to Eagle, computed using Eagle's statutory tax
rates and considering the applicable provisions of SFAS No. 109. No
adjustment was made to the provision for income taxes related to ERI's
adjustments as ERI was not required to record a tax provision during
the pro forma period. The Company does not anticipate repatriating any
of its earnings from foreign operations, so no accrual of additional
U.S. deferred taxes has been made for the acquired, non-U.S.
operations.

O.) Represents additions supported by contractual agreements to SG&A
expenses the Company estimates it will incur when operating as a public
registrant. Such incremental expenses primarily include increases in
personnel ($420,900), contractual employment arrangements ($277,000),
directors' and officers' compensation and insurance ($340,000) and
other identifiable expenses ($95,000). The Company also projects it
will experience other increases in SG&A for professional services,
benefit plans, license and filing fees and similar expenses not
currently covered by contractual arrangements, which are estimated to
total approximately $468,500 annually.

F-7
<PAGE> 71

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Eagle Geophysical, Inc.:

We have audited the accompanying consolidated balance sheets of Eagle
Geophysical, Inc. (a Delaware corporation and wholly owned subsidiary of Seitel,
Inc.) and subsidiary as of December 31, 1995 and 1996, and the related
consolidated statements of operations, stockholder's equity and cash flows for
each of the three years in the period ended December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. 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 financial position of Eagle Geophysical, Inc. and
subsidiary as of December 31, 1995 and 1996, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1996, in conformity with generally accepted accounting principles.

/s/ ARTHUR ANDERSEN LLP

Houston, Texas

May 21, 1997

F-8
<PAGE> 72

EAGLE GEOPHYSICAL, INC.

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31, PRO FORMA
----------------- MARCH 31, MARCH 31,
1995 1996 1997 1997(1)
------- ------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents................................. $ 58 $ -- $ -- $ --
Receivables:
Trade, billed.......................................... 8,947 12,913 9,708 9,708
Costs and estimated earnings in excess of billings on
uncompleted contracts................................ 841 441 530 530
Other.................................................. 73 233 190 190
Due from affiliate........................................ -- -- 5,809 --
Prepaid expenses and other assets......................... 95 860 235 235
------- ------- ------- -------
Total current assets.............................. 10,014 14,447 16,472 10,663
PROPERTY AND EQUIPMENT, AT COST:
Geophysical equipment..................................... 12,531 20,200 28,515 28,515
Furniture, fixtures and other............................. 108 108 121 121
------- ------- ------- -------
12,639 20,308 28,636 28,636
Less: Accumulated depreciation and amortization........... (4,694) (8,103) (9,388) (9,388)
------- ------- ------- -------
Net property and equipment........................ 7,945 12,205 19,248 19,248
OTHER LONG-TERM ASSETS...................................... 1 69 72 72
------- ------- ------- -------
TOTAL ASSETS...................................... $17,960 $26,721 $35,792 $29,983
======= ======= ======= =======

LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt......................... $ 879 $ 2,556 $ 2,606 $ 2,606
Current portion of capital lease obligations.............. 1,239 1,033 942 942
Accounts payable.......................................... 2,515 4,623 4,506 4,506
Accrued liabilities....................................... 891 652 1,822 1,822
Billings in excess of costs and estimated earnings on
uncompleted contracts.................................. 596 78 565 565
Due to affiliate.......................................... -- -- 1,404 1,404
------- ------- ------- -------
Total current liabilities......................... 6,120 8,942 11,845 11,845
LONG-TERM DEBT.............................................. 1,540 6,039 12,933 12,933
CAPITAL LEASE OBLIGATIONS................................... 2,274 1,274 1,319 1,319
OTHER LONG-TERM LIABILITIES................................. 100 -- -- --
DUE TO AFFILIATE............................................ 3,662 1,965 -- --
DEFERRED INCOME TAXES....................................... 654 712 776 776
------- ------- ------- -------
TOTAL LIABILITIES................................. 14,350 18,932 26,873 26,873
------- ------- ------- -------
CONTINGENCIES AND COMMITMENTS
STOCKHOLDER'S EQUITY:
Common stock, par value $.01 per share; authorized
25,000,000 shares; issued and outstanding 3,400,000
shares at December 31, 1995 and 1996 and March 31,
1997................................................... 34 34 34 34
Additional paid-in capital................................ 3,576 7,755 7,755 3,076
Retained earnings......................................... -- -- 1,130 --
------- ------- ------- -------
TOTAL STOCKHOLDER'S EQUITY........................ 3,610 7,789 8,919 3,110
------- ------- ------- -------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY........ $17,960 $26,721 $35,792 $29,983
======= ======= ======= =======
</TABLE>

- ---------------

(1) The March 31, 1997 pro forma balance sheet reflects the dividend to be
distributed to the Company's sole shareholder. (See Note G)

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

F-9
<PAGE> 73

EAGLE GEOPHYSICAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
THREE MONTH
PERIODS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------- -----------------
1994 1995 1996 1996 1997
------- ------- ------- ------ -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUE(1)................................ $25,721 $29,275 $48,136 $5,974 $12,981
EXPENSES
Operating expenses (exclusive of
depreciation and amortization shown
below)(1)............................ 20,070 20,986 34,917 4,336 9,286
Depreciation and amortization........... 1,817 2,471 3,409 657 1,302
Selling, general and administrative
expenses............................. 1,673 2,874 2,680 361 450
Interest expense........................ 387 450 699 136 276
Interest income......................... (3) (42) (168) -- (118)
------- ------- ------- ------ -------
23,944 26,739 41,537 5,490 11,196
------- ------- ------- ------ -------
Income before provision for income
taxes................................... 1,777 2,536 6,599 484 1,785
Provision for income taxes................ 651 933 2,420 178 655
------- ------- ------- ------ -------
NET INCOME................................ $ 1,126 $ 1,603 $ 4,179 $ 306 $ 1,130
======= ======= ======= ====== =======
Earnings per share........................ $ .33 $ .47 $ 1.23 $ .09 $ .33
======= ======= ======= ====== =======
Weighted average number of common
shares.................................. 3,400 3,400 3,400 3,400 3,400
======= ======= ======= ====== =======
</TABLE>

- ---------------

(1) Includes revenue from affiliates of $14,281,000, $15,391,000, $27,217,000,
$2,882,000 and $8,081,000 for the years ended December 31, 1994, 1995, 1996
and for the unaudited three month periods ended March 31, 1996 and 1997,
respectively, and operating expenses related to such affiliate revenue of
$11,348,000, $10,845,000, $20,078,000, $2,039,000 and $5,948,000 for the
years ended December 31, 1994, 1995, 1996 and for the unaudited three month
periods ended March 31, 1996 and 1997, respectively.

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

F-10
<PAGE> 74

EAGLE GEOPHYSICAL, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(IN THOUSANDS)

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
---------------- PAID-IN RETAINED STOCKHOLDER'S
SHARES AMOUNT CAPITAL EARNINGS EQUITY
------ ------ ---------- --------- -------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1993............... 3,400 $34 $ 847 $ -- $ 881
Net income............................. -- -- 1,126 -- 1,126
----- --- ------ ------- -------
Balance, December 31, 1994............... 3,400 34 1,973 -- 2,007
Net income............................. -- -- 1,603 -- 1,603
----- --- ------ ------- -------
Balance, December 31, 1995............... 3,400 34 3,576 -- 3,610
Net income............................. -- -- 4,179 -- 4,179
----- --- ------ ------- -------
Balance, December 31, 1996............... 3,400 34 7,755 -- 7,789
UNAUDITED:
Net income............................. -- -- -- 1,130 1,130
----- --- ------ ------- -------
Balance, March 31, 1997.................. 3,400 $34 $7,755 $ 1,130 $ 8,919
===== === ====== ======= =======
</TABLE>

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

F-11
<PAGE> 75

EAGLE GEOPHYSICAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
THREE MONTH PERIODS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
--------------------------- -------------------
1994 1995 1996 1996 1997
------- ------- ------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income...................................... $ 1,126 $ 1,603 $ 4,179 $ 306 $ 1,130
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization................ 1,817 2,471 3,409 657 1,302
Gain on sale of property and equipment....... -- -- -- -- (14)
Deferred income tax provision................ 248 152 58 16 64
(Increase) decrease in receivables........... (3,623) (5,241) (3,726) (3,038) 3,159
Increase in other assets..................... (41) (49) (833) (235) (119)
Increase (decrease) in accounts payable and
other liabilities.......................... 1,076 1,697 1,553 (718) 959
------- ------- ------- ------- -------
Total adjustments....................... (523) (970) 461 (3,318) 5,351
------- ------- ------- ------- -------
Net cash provided by (used in) operating
activities............................ 603 633 4,640 (3,012) 6,481
------- ------- ------- ------- -------
Cash flows from investing activities:
Purchase of property and equipment.............. (234) (289) (7,928) (232) (6,737)
Cash received on disposal of property and
equipment.................................... -- -- -- -- 27
------- ------- ------- ------- -------
Net cash used in investing activities... (234) (289) (7,928) (232) (6,710)
------- ------- ------- ------- -------
Cash flows from financing activities:
Borrowings under term loans..................... -- -- 7,694 433 7,564
Principal payments on term loans................ (758) (812) (1,518) (225) (620)
Principal payments on capital leases............ (513) (1,299) (1,247) (308) (346)
Due to affiliate................................ 906 1,796 (1,699) 3,333 (6,369)
------- ------- ------- ------- -------
Net cash provided by (used in) financing
activities............................ (365) (315) 3,230 3,233 229
------- ------- ------- ------- -------
Net increase (decrease) in cash and cash
equivalents..................................... 4 29 (58) (11) --
Cash and cash equivalents at beginning of
period.......................................... 25 29 58 58 --
------- ------- ------- ------- -------
Cash and cash equivalents at end of period........ $ 29 $ 58 $ -- $ 47 $ --
======= ======= ======= ======= =======
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest..................................... $ 371 $ 408 $ 637 $ 90 $ 276
======= ======= ======= ======= =======
Income taxes................................. $ -- $ -- $ -- $ -- $ --
======= ======= ======= ======= =======
Noncash investing activities:
Capital lease obligations.................... $ 5,315 $ 10 $ 41 $ -- $ 300
======= ======= ======= ======= =======
</TABLE>

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

F-12
<PAGE> 76

EAGLE GEOPHYSICAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A -- SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS: Eagle Geophysical, Inc. (the "Company") is an
oilfield service company engaged in seismic data acquisition services, with a
specialization in the acquisition of high-resolution, three-dimensional seismic
data in logistically difficult wetland environments primarily in the U.S. Gulf
Coast region. Since its inception, the Company has been a wholly-owned
subsidiary of Seitel Inc. ("Seitel"), which has subsidiaries that have been
significant purchasers of the Company's services -- See Note G.

The Company's future operations are dependent on a variety of factors,
including, but not limited to, the level of exploration-industry spending by
third parties; the Company's ability to maintain its technologically competitive
position in its capital-intensive business; the Company's reliance on key
suppliers and customers; risks inherent in doing business internationally;
weather; and the Company's ability to manage operating risks. See "Risk Factors"
included elsewhere in this document.

USE OF ESTIMATES: The preparation of these consolidated financial
statements requires the use of certain estimates by management in determining
the Company's assets, liabilities, contingencies, revenues and expenses. One
such estimate relates to the percentage of revenue recognized based on the stage
of completion of seismic acquisition projects. Actual results could differ from
estimates.

BASIS OF PRESENTATION: The accompanying consolidated financial statements
include the accounts of Eagle Geophysical, Inc., indirectly a wholly-owned
subsidiary of Seitel, and the accounts of its wholly-owned subsidiary, Eagle
Geophysical Onshore, Inc., both of which were formed on December 18, 1996.
Effective December 31, 1996, substantially all of the net assets of its
predecessor, Seitel Geophysical, Inc., a wholly-owned subsidiary of Seitel, were
contributed to Eagle Geophysical Onshore, Inc. The Company's reported assets,
liabilities, revenues and expenses include the predecessor operations of Seitel
Geophysical, Inc. for all periods presented. The financial reporting basis of
the contributed net assets was carried forward to the Company's accounts, and
the net equity of Seitel Geophysical, Inc. for periods prior to December 31,
1996, is reflected in the Company's additional paid-in capital account.

PROPERTY AND EQUIPMENT: Property and equipment are carried at cost and
include assets under capital leases. Maintenance and repairs are charged to
expense as incurred and expenditures for major improvements are capitalized.
Gains and losses from retirement or replacement of property and equipment are
included in operations.

Depreciation and amortization of property and equipment and assets under
capital leases are provided over the estimated useful lives of the assets, which
range from three to five years, or the term of the lease using the straight-line
method.

INCOME TAXES: The Company is included in the consolidated federal income
tax return filed by Seitel. Under an informal agreement, Seitel and its
subsidiaries have computed their individual income tax provisions as though each
were filing a separate federal income tax return. The subsidiaries pay to Seitel
the amount of their respective current federal income tax liability or, to the
extent the consolidated group is able to utilize their separate company tax
losses or credits, receive reimbursement from Seitel without regard to any
alternative minimum tax liabilities incurred by Seitel.

REVENUE AND COST RECOGNITION: Revenue from the acquisition of seismic data
is recognized on the percentage-of-completion method based on the work effort
completed compared with the total work effort estimated for the contract.
Revenue received in advance of being earned is deferred until earned.

Operating expenses include all direct material and labor costs and indirect
costs related to the acquisition of seismic data such as supplies, tools and
repairs. Selling, general and administrative costs are charged to expense as
incurred. Provisions for estimated losses on uncompleted contracts are made in
the period in which such losses are determined. Changes in job performance, job
conditions and estimated profitability, including

F-13
<PAGE> 77

EAGLE GEOPHYSICAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

those arising from contract penalty provisions, and final contract settlements
may result in revisions to costs and income and are recognized in the period in
which the revisions are determined.

The asset, "costs and estimated earnings in excess of billings on
uncompleted contracts," represents revenue recognized in excess of amounts
billed. The liability, "billings in excess of costs and estimated earnings on
uncompleted contracts," represents billings in excess of revenue recognized.

EARNINGS PER SHARE: Earnings per share was based on the weighted average
number of outstanding shares of common stock during the respective years. There
were no common stock equivalent shares outstanding for any period -- See Note I.

In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share,"
effective for interim and annual periods after December 15, 1997. This statement
replaces primary earnings per share with a newly defined basic earnings per
share and modifies the computation of diluted earnings per share. The
application of this statement will not have any impact on earnings per share for
the three years ended December 31, 1996, as there were no common stock
equivalent shares outstanding.

STATEMENT OF CASH FLOWS: For purposes of the statement of cash flows, the
Company considers all highly liquid investments or debt instruments with
original maturity of three months or less to be cash equivalents.

INTERIM FINANCIAL DATA (UNAUDITED): The unaudited financial statements as
of March 31, 1997, and for the three month periods ended March 31, 1996 and 1997
and all related footnote information for these periods have been prepared on the
same basis as the audited financial statements and, in the opinion of
management, include all adjustments, consisting of normal and recurring
adjustments, necessary for a fair presentation of financial position and results
of operations and cash flows in accordance with generally accepted accounting
principles.

STOCK-BASED COMPENSATION: The Company anticipates that certain employees of
Eagle will be granted options or warrants to purchase Eagle or Seitel stock in
future periods. Some of these options or warrants may trigger compensation
expense in the Company's financial statements.

The Company plans to account for employee stock-based compensation using
the intrinsic value method prescribed in Accounting Principles Board (APB)
Opinion No. 25, "Accounting for Stock Issued to Employees." Accordingly, the
provisions of SFAS No. 123, "Accounting for Stock-Based Compensation," will not
affect the Company's reported results of operations and will be included as
separate pro forma disclosures only.

FAIR VALUE OF FINANCIAL INSTRUMENTS: The estimated fair value amounts have
been determined by the Company using available market data and valuation
methodologies. The book values of cash and equivalents, receivables and accounts
payable approximate their fair value as of December 31, 1995 and 1996, because
of the short-term maturity of these instruments. Based upon the rates available
to the Company, the fair value of the term loans approximates the carrying value
of this debt as of December 31, 1995 and 1996.

IMPAIRMENT OF LONG-LIVED ASSETS: In March 1995, the Financial Accounting
Standards Board issued SFAS No. 121, "Accounting for Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of." This statement requires
that long-lived assets be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying value of an asset may not be
realizable. The Company adopted SFAS No. 121 effective January 1, 1996; the
adoption of this statement did not have a material effect on the Company's
consolidated financial statements.

F-14
<PAGE> 78

EAGLE GEOPHYSICAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE B -- INCOME TAXES

The provision for income taxes for each of the three years ended December
31, 1996, consists of the following (in thousands):

<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ------
<S> <C> <C> <C>
Current -- Federal.......................................... $359 $695 $2,105
-- State............................................ 44 86 257
---- ---- ------
403 781 2,362
---- ---- ------
Deferred -- Federal......................................... 221 137 51
-- State........................................... 27 15 7
---- ---- ------
248 152 58
---- ---- ------
Tax provision -- Federal.................................... 580 832 2,156
-- State...................................... 71 101 264
---- ---- ------
$651 $933 $2,420
==== ==== ======
</TABLE>

The differences between U.S. Federal income taxes computed at the statutory
rate (34%) and the Company's income tax provisions are as follows (in
thousands):

<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ------
<S> <C> <C> <C>
Statutory Federal income tax................................ $604 $862 $2,244
State income tax, less Federal benefit...................... 47 67 174
Other, net.................................................. -- 4 2
---- ---- ------
Income tax expense.......................................... $651 $933 $2,420
==== ==== ======
</TABLE>

The components of the net deferred income tax liability reflected in the
Company's consolidated balance sheets at December 31, 1995 and 1996 were as
follows (in thousands):

<TABLE>
<CAPTION>
DEFERRED TAX ASSETS
(LIABILITIES)
AT DECEMBER 31,
--------------------
1995 1996
-------- --------
<S> <C> <C>
Deferred items related to state tax provision............... $ 24 $ 26
Accrued expense and other assets............................ 376 371
------- -------
Total deferred tax assets................................... 400 397
Less: valuation allowance................................... -- --
------- -------
Deferred tax assets, net of valuation allowance........... 400 397
------- -------

Depreciation and amortization............................... (1,054) (1,109)
------- -------
Total deferred tax liabilities.............................. (1,054) (1,109)
------- -------
Net deferred tax liability.................................. $ (654) $ (712)
======= =======
</TABLE>

F-15
<PAGE> 79

EAGLE GEOPHYSICAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE C -- COST AND BILLINGS ON UNCOMPLETED CONTRACTS

<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1995 1996
------ ------
(IN THOUSANDS)
<S> <C> <C>
Cost incurred and estimated earnings on uncompleted
contracts................................................. $4,898 $2,354
Billings on uncompleted contracts........................... 4,653 1,991
------ ------
$ 245 $ 363
====== ======
Included in accompanying balance sheets under the following
captions:
Costs and estimated earnings in excess of billings on
uncompleted contracts..................................... $ 841 $ 441
Billings in excess of costs and estimated earnings on
uncompleted contracts..................................... (596) (78)
------ ------
$ 245 $ 363
====== ======
</TABLE>

NOTE D -- LONG-TERM DEBT

The following is a summary of the Company's long-term debt at December 31,
1995 and 1996 (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1995 1996
------ -------
<S> <C> <C>
Term loans.................................................. $2,419 $ 8,595
Less: Current maturities.................................... (879) (2,556)
------ -------
Long-term debt.............................................. $1,540 $ 6,039
====== =======
</TABLE>

TERM LOANS: On July 15, 1993, the Company obtained a $4,300,000, five-year
term loan bearing interest at the rate of 7.61% for the purchase of a telemetry
seismic data acquisition system and auxiliary equipment. The debt is secured by
such equipment. Monthly principal and interest payments total approximately
$86,000. This term loan is guaranteed by Seitel.

On March 14, 1996, the Company obtained a $433,000, three-year term loan
bearing interest at the rate of 7.52% for the purchase of geophysical equipment.
The debt is secured by such equipment. Monthly principal and interest payments
total approximately $13,000. This term loan is guaranteed by Seitel.

On July 9, 1996, the Company obtained two term loans aggregating $7,264,000
for the purchase of land and marine seismic equipment which secures the debt.
The first loan is a $5,902,000, five year term loan bearing interest at the rate
of 8%. The second loan is a $1,362,000, three year term loan bearing interest at
the rate of 8.06%. Monthly principal and interest payments on both term loans
total approximately $163,000. These term loans are guaranteed by Seitel.

Certain of the borrowings described above contain requirements as to the
maintenance of minimum net worth and limitations on liens, total debt, debt
issuance and disposition of assets by Seitel.

Aggregate maturities of the Company's debt over the next five years are as
follows: $2,556,000 in 1997; $2,326,000 in 1998; $1,584,000 in 1999; $1,313,000
in 2000; and $816,000 in 2001.

F-16
<PAGE> 80

EAGLE GEOPHYSICAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE E -- LEASE OBLIGATIONS

Property and equipment in the accompanying consolidated balance sheets
includes the following assets held under capital leases (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1995 1996
------- -------
<S> <C> <C>
Geophysical equipment....................................... $ 5,298 $ 5,339
Accumulated amortization.................................... (1,555) (2,649)
------- -------
Assets under capital lease, net............................. $ 3,743 $ 2,690
======= =======
</TABLE>

The Company is allocated a portion of the office lease expense incurred by
Seitel under its operating lease for the corporate office based on the actual
cost of such office space pro-rated to the amount utilized by the Company.
Additionally, the Company also directly leases office space under operating
leases. Rental expense for 1994, 1995 and 1996 was approximately $60,000,
$98,000 and $142,000, respectively.

Future minimum lease payments for the five years subsequent to December 31,
1996 and in the aggregate are as follows (in thousands):

<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
------- ---------
<S> <C> <C>
1997........................................................ $1,106 $45
1998........................................................ 881 15
1999........................................................ 447 --
2000........................................................ 11 --
2001........................................................ 2 --
------ ---
Total minimum lease payments................................ 2,447 $60
===
Less amount representing interest........................... (140)
------
Present value of net minimum lease payments................. $2,307
======
</TABLE>

The capital leases have annual interest rates ranging from 5% to 7.52%.

NOTE F -- CONTINGENCIES AND COMMITMENTS

On September 30, 1996, the Company entered into an agreement for the
purchase of a telemetry seismic data acquisition system at a cost of
approximately $3,500,000. Payment was made upon delivery of the system in
January 1997.

The Company is involved in or threatened with various legal proceedings
from time to time arising in the ordinary course of business. Management of the
Company does not believe that any liabilities resulting from such proceedings
will have a material adverse effect on its consolidated operations or financial
position.

NOTE G -- RELATED PARTY TRANSACTIONS

The Company enters into various types of transactions with Seitel and its
subsidiaries. The Company performs seismic data acquisition services for
Seitel's seismic data library subsidiary and its exploration and production
subsidiary. During the years ended December 31, 1994, 1995, 1996 and for the
unaudited three month periods ended March 31, 1996 and 1997, the Company
recognized revenue of $14,281,000, $15,391,000, $27,217,000, $2,882,000 and
$8,081,000, respectively, for seismic data acquisition services performed for
Seitel's subsidiaries. Such revenues from affiliates are based on prices charged
to unaffiliated

F-17
<PAGE> 81

EAGLE GEOPHYSICAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

third parties for similar work. Gross margin recognized on work for affiliates
is limited in each reporting period to the total margin percentage earned on
work for unaffiliated parties.

The Company reimburses Seitel for direct and indirect costs of certain
Seitel employees who provide services to the Company and for other costs,
primarily general and administrative expenses, related to the Company's
operations. Seitel allocates indirect costs to the Company using a formula based
upon the ratio of the Company's levels of revenue, number of personnel or other
factors, as applicable, to the total consolidated Seitel levels for such
factors. Management of the Company believes that the use of such formula results
in a reasonable allocation of indirect costs. During the years ended December
31, 1994, 1995, 1996 and for the unaudited three month periods ended March 31,
1996 and 1997, the Company recorded general and administrative costs allocated
from Seitel of $613,000, $749,000, $1,217,000, $228,000 and $271,000,
respectively. Seitel funds the Company's direct operating costs through
intercompany advances and is reimbursed for such advances as the Company has
available cash. Amounts payable to or receivable from Seitel and its
subsidiaries bear or earn interest at the same rates which Seitel is charged or
receives. During the years ended December 31, 1994, 1995, 1996 and for the
unaudited three month period ended March 31, 1996, the Company recorded net
interest expense of $5,000, $21,000, $59,000 and $45,000, respectively, and net
interest income of $97,000 for the unaudited three month period ended March 31,
1997, related to the amounts payable to or receivable from Seitel and its
subsidiaries.

Prior to the consummation of the Offering (as defined in Note I), the
Company intends to declare a dividend to its sole shareholder, a wholly-owned,
indirect subsidiary of Seitel, of the Company's receivable from Seitel for work
performed by the Company for Seitel and its subsidiaries, which receivable has
been classified as a due from affiliate on the unaudited consolidated balance
sheet as of March 31, 1997.

The Company leases certain marine seismic equipment to Horizon Exploration
Limited, a marine seismic company wholly-owned by Energy Research International,
under a five-year operating rental agreement expiring June 30, 2001. During the
year ended December 31, 1996 and for the unaudited three month period ended
March 31, 1997, the Company recognized revenue of $828,000 and $434,000,
respectively, related to this lease. At December 31, 1996 and March 31, 1997,
the Company had a receivable of $138,000 and $572,000, respectively, related to
this lease.

The Company and Seitel intend to enter into a number of agreements for the
purpose of defining their continuing relationship. It is currently anticipated
that after the offering Seitel will account for its investment using the equity
method of accounting. Conflicts of interest may arise in the future between
Seitel and the Company in connection with these agreements and other areas of
their ongoing relationship. The following is a summary of certain prospective
arrangements between the Company and Seitel.

MASTER SEPARATION AGREEMENT. The Master Separation Agreement will provide
for the Company and Seitel to enter into a Sublease, a Registration Rights
Agreement, a Tax Indemnity Agreement and an Administrative Services Agreement.
In addition, the Master Separation Agreement will require the Company to repay
indebtedness owed by the Company and its subsidiaries to Seitel and indebtedness
owed by the Company and its subsidiaries to third parties guaranteed by Seitel
contemporaneously with the consummation of the offering. Under the Master
Separation Agreement, Seitel and its subsidiaries and the Company and its
subsidiaries will indemnify each other with respect to liabilities arising in
connection with the operations of their respective businesses prior to and after
the date of consummation of the Offering including liabilities under the
Securities Act with respect to the Offering. The Master Separation Agreement
will also provide for continued access by the Company to historical financial
and operational information relating to the Company and its subsidiaries
maintained by Seitel.

SUBLEASE. The Sublease between the Company and Seitel will provide for the
Company to lease its principal corporate offices, comprising approximately 7,600
square feet, from Seitel for a term of three years at

F-18
<PAGE> 82

EAGLE GEOPHYSICAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

an annual rent of approximately $85,000. The Sublease will also provide for the
Company to utilize certain shared office equipment, such as phone systems and
central computer systems, for an additional charge.

REGISTRATION RIGHTS AGREEMENT. Pursuant to the Registration Rights
Agreement, the Company will agree to register the offer and sale by Seitel on a
delayed and continuous basis from time to time of the shares of Common Stock
owned by Seitel after the Offering at the expense of the Company.

TAX INDEMNITY AGREEMENT. Prior to the offering, the Company has been a
member of the Seitel affiliated group and has filed its tax returns on a
consolidated basis with such group. After the offering, the Company will no
longer be a member of the Seitel affiliated group. The Company and Seitel will
enter into a Tax Indemnity Agreement to define their respective rights and
obligations relating to federal, state and other taxes for periods before and
after the offering. Pursuant to the Tax Indemnity Agreement, the Company will be
required to pay Seitel (to the extent not already paid) its share of federal
income taxes prior to the date of consummation of the Offering, and shall be
responsible for federal income taxes from its operations on and after the date
of consummation of the Offering. Any subsequent refunds, additional taxes or
penalties or other adjustments relating to the Company's federal income taxes
for periods prior to the date of consummation of the Offering shall be for the
benefit of or be borne by Seitel. Similar provisions apply under the Tax
Indemnity Agreement to other taxes, such as state and local income taxes.

ADMINISTRATIVE SERVICES AGREEMENT. Seitel and the Company intend to enter
into an Administrative Services Agreement pursuant to which Seitel will provide
the Company with administrative services, primarily accounting services, at up
to the same levels as provided prior to the Offering. Seitel will provide these
services for a 90-day transition period to allow the Company adequate time to
build an internal administrative staff. The Company will pay Seitel for these
services at Seitel's actual cost of providing these services.

EMPLOYMENT AGREEMENTS. The Company intends to enter into employment
agreements with certain of its executive officers in connection with its planned
initial Offering.

EMPLOYEE BENEFITS ALLOCATION AGREEMENT. The Company intends to enter into
an employee benefits allocation agreement with Seitel to govern certain matters
relating to employees of Seitel who will become employees of the Company.

NOTE H -- MAJOR CUSTOMERS

During each of the years ended December 31, 1994, 1995 and 1996, three
customers accounted for 10% or more of the Company's consolidated revenue as
follows:

<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Affiliated companies, wholly-owned subsidiaries of Seitel:
Seitel Data, Ltd. ........................................ 16% 14% 28%
DDD Energy, Inc. ......................................... 40% 39% 29%
Unaffiliated companies, one each year....................... 28% 22% 20%
</TABLE>

The Company extends credit to various companies in the oil and gas industry
for the acquisition of seismic data, which results in a concentration of credit
risk. This concentration of credit risk may be affected by changes in economic
or other conditions and may accordingly impact the Company's overall credit
risk. However, management believes that the risk is mitigated by the number,
size, reputation and diversified nature of the companies to which they extend
credit. Historical credit losses incurred on receivables by the Company have
been immaterial.

F-19
<PAGE> 83

EAGLE GEOPHYSICAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE I -- SUBSEQUENT EVENTS

COMMON STOCK: In May 1997, the Company amended its Certificate of
Incorporation to authorize the issuance of 25,000,000 shares of common stock and
changed the par value to $.01 per share. At the same time, the Company approved
a 3,400-for-one stock split. All share and per share information included in the
accompanying consolidated financial statements has been adjusted to give
retroactive effect to the split.

Prior to the Offering, the Company intends to sell 25,000 shares of Common
Stock at the initial public offering price to the president of the Company for a
note.

PREFERRED STOCK: In May 1997, the Company amended its Certificate of
Incorporation to authorize the issuance of 5,000,000 shares of preferred stock,
the terms and conditions to be determined by the Board of Directors in creating
any particular series.

STOCK OPTION PLAN: The Company intends to adopt a stock option plan prior
to the Offering, and 1,100,000 shares of common stock have been reserved for
issuance pursuant to such plan. Under the stock option plan, the Company may
grant both incentive stock options intended to qualify under Section 422 of the
Internal Revenue Code and options that are not qualified as incentive stock
options. Options will be granted at or above the market price of the Company's
stock on the date of grant. The Company intends to grant to directors, officers
and employees of the Company, effective as of the date of consummation of the
Offering, options to purchase a total of 680,500 shares of Common Stock at an
exercise price equal to the initial public offering price.

INDEPENDENT DIRECTORS STOCK OPTION PLAN: The Company intends to adopt an
independent directors stock option plan prior to the Offering, and 100,000
shares have been reserved for issuance pursuant to such plan. Under this plan,
options will automatically be granted to independent directors upon their
election and reelection as directors of the Company. Such options will be
granted at the fair market value of the Company's stock on the date of grant.
The Company intends to grant to the Chairman of the Board, effective as of the
date of the consummation of the Offering, options to purchase up to 25,000
shares of Common Stock at an exercise price equal to the initial public offering
price.

SEITEL CONTRIBUTION: In May 1997, Seitel contributed to the Company all of
the shares that it owns of Energy Research International, representing a 19%
ownership interest. Energy Research International is a holding company that
wholly owns two marine seismic companies. This contribution will be recorded at
Seitel's basis in such investment and will result in a $914,000 increase in the
Company's additional paid-in capital.

SECURITIES OFFERING, ERI ACQUISITION: The Company plans to file a
registration statement with the Securities and Exchange Commission for an
underwritten initial public offering of shares of common stock (the "Offering").
Contemporaneously with the offering, the Company will acquire the remaining 81%
of Energy Research International in exchange for 600,000 shares of common stock.
The acquisition will be accounted for by the Company as a purchase transaction
in which the Company shall record at its cost the acquired assets less
liabilities assumed, with the difference between the cost and the sum of the
fair values of tangible assets less liabilities assumed being recorded as
goodwill.

F-20
<PAGE> 84

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Shareholders of Energy Research International:

We have audited the consolidated balance sheets of Energy Research
International and consolidated subsidiaries as of December 31, 1996 and 1995,
and the related consolidated statements of operations, stockholders' equity and
cash flows for each of the years in the three-year period ended December 31,
1996. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

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

In our opinion, the financial statements appearing on pages F-22 through
F-32 present fairly, in all material respects, the financial position of Energy
Research International and consolidated subsidiaries as of December 31, 1996 and
1995, and the results of their operations and cash flows for each of the years
in the three-year period ended December 31, 1996, in conformity with generally
accepted accounting principles in the United States of America.

/s/ KPMG

Exeter, England
May 27, 1997

F-21
<PAGE> 85

ENERGY RESEARCH INTERNATIONAL

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
DECEMBER 31,
------------------ MARCH 31,
1995 1996 1997
------- ------- ---------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash...................................................... $ 373 $ 813 $ 1,304
Receivables
Trade.................................................. 3,741 3,702 4,064
Other.................................................. 297 323 253
Due from related party................................. 650 18 --
Prepaid expenses and other assets......................... 725 2,795 2,579
Inventories............................................... 1,331 1,585 1,410
------- ------- -------
Total current assets...................................... 7,117 9,236 9,610
Property and equipment, at cost:
Geophysical equipment..................................... 26,382 29,418 32,248
Furniture, fixtures and other............................. 169 246 240
------- ------- -------
26,551 29,664 32,488
Less: accumulated depreciation.............................. (5,628) (10,843) (11,677)
------- ------- -------
Net property and equipment................................ 20,923 18,821 20,811
------- ------- -------
TOTAL ASSETS................................................ $28,040 $28,057 $30,421
======= ======= =======

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Current portion of long-term debt......................... 800 600 400
Current portion of capital leases......................... 2,098 2,612 4,048
Bank borrowings........................................... 6,496 6,630 7,232
Accounts payable.......................................... 5,075 7,400 5,700
Accrued liabilities....................................... 3,007 5,158 3,763
Accrued capital lease interest............................ 1,041 821 858
Due to related party...................................... -- 158 2,120
------- ------- -------
Total current liabilities................................. 18,517 23,379 24,121
Long-term debt.............................................. 2,600 -- --
Due to related party........................................ -- 4,679 4,679
Obligations under capital leases............................ 12,549 11,230 11,556
------- ------- -------
TOTAL LIABILITIES........................................... 33,666 39,288 40,356
======= ======= =======
CONTINGENCIES AND COMMITMENTS
STOCKHOLDERS' DEFICIT
Common stock, $0.001 par value; Authorized shares
900,000,000; Issued and outstanding 1996 and March 31,
1997 61,728 shares; 1995 100,000 shares................ -- -- --
Retained (deficit)........................................ (5,678) (10,634) (9,690)
Translation adjustment.................................... 52 (597) (245)
------- ------- -------
TOTAL STOCKHOLDERS' DEFICIT................................. (5,626) (11,231) (9,935)
------- ------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT................. $28,040 $28,057 $30,421
======= ======= =======
</TABLE>

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

F-22
<PAGE> 86

ENERGY RESEARCH INTERNATIONAL

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
THREE MONTH
PERIODS ENDED
YEAR ENDED DECEMBER 31 MARCH 31,
------------------------------ -----------------
1994 1995 1996 1996 1997
-------- -------- -------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUE................................... $ 19,457 $ 29,423 $ 43,607 $ 6,916 $10,632
EXPENSES
Cost of sales (exclusive of depreciation
shown below)......................... (16,360) (27,075) (37,601) (7,130) (7,258)
Depreciation............................ (1,683) (3,856) (4,615) (1,036) (1,377)
Selling, general and administrative
expenses............................. (1,703) (2,196) (2,619) (467) (517)
Interest expense........................ (608) (1,462) (1,657) (406) (536)
Interest income......................... 80 6 8 -- --
-------- -------- -------- ------- -------
(20,274) (34,583) (46,484) (9,039) (9,688)
-------- -------- -------- ------- -------
Income (loss) before provision for income
taxes and extraordinary item............ (817) (5,160) (2,877) (2,123) 944
Provision for income taxes................ (11) -- -- -- --
-------- -------- -------- ------- -------
Income (loss) before extraordinary item... (828) (5,160) (2,877) (2,123) 944
Extraordinary credit on early
extinguishment of debt.................. -- -- 600 -- --
-------- -------- -------- ------- -------
NET INCOME (LOSS)......................... (828) (5,160) (2,277) (2,123) 944
-------- -------- -------- ------- -------
Income (loss) per share
Income (loss) before extraordinary
item................................. $ (8.28) $ (51.60) $ (30.22) $(21.23) $ 15.29
Extraordinary item...................... -- -- 6.30 -- --
-------- -------- -------- ------- -------
Net income (loss)......................... $ (8.28) $ (51.60) $ (23.92) $(21.23) $ 15.29
======== ======== ======== ======= =======

Weighted average number of common
shares.................................. *100,000 *100,000 95,216 100,000 61,728
======== ======== ======== ======= =======
</TABLE>

- ---------------

* Restated to reflect the stock split effective July 1996 (See NOTE I -- COMMON
STOCK).

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

F-23
<PAGE> 87

ENERGY RESEARCH INTERNATIONAL

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
TOTAL
COMMON STOCK RETAINED TRANSLATION STOCKHOLDERS'
SHARES AMOUNT (DEFICIT) ADJUSTMENTS (DEFICIT)
------- ------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1993.............. 100,000 $ -- $ 310 $ (3) $ 307
Net loss.............................. -- -- (828) -- (828)
Translation adjustment................ -- -- -- 30 30
------- ------- -------- ----- --------
Balance, December 31, 1994.............. 100,000 -- (518) 27 (491)
Net loss.............................. -- -- (5,160) -- (5,160)
Translation adjustment................ -- -- -- 25 25
------- ------- -------- ----- --------
Balance, December 31, 1995.............. 100,000 -- (5,678) 52 (5,626)
Net loss.............................. -- -- (2,277) -- (2,277)
Translation adjustment................ -- -- -- (649) (649)
Repurchase of and retirement
of own stock....................... (38,272) -- (2,679) -- (2,679)
------- ------- -------- ----- --------
Balance, December 31, 1996.............. 61,728 -- (10,634) (597) (11,231)
Unaudited:
Net income............................ -- -- 944 -- 944
Translation adjustment................ -- -- -- 352 352
------- ------- -------- ----- --------
Balance, March 31, 1997................. 61,728 $ -- $ (9,690) $(245) $ (9,935)
======= ======= ======== ===== ========
</TABLE>

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

F-24
<PAGE> 88

ENERGY RESEARCH INTERNATIONAL

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
THREE MONTH PERIODS
YEAR ENDED DECEMBER 31 ENDED MARCH 31,
--------------------------- -------------------
1994 1995 1996 1996 1997
------- ------- ------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)............................. $ (828) $(5,160) $(2,277) $(2,123) $ 944
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities:
Depreciation................................ 1,683 3,856 4,615 1,036 1,377
Extraordinary credit on early extinguishment
of debt.................................. -- -- (600) -- --
(Increase)/decrease in receivables.......... (673) 141 645 1,779 (274)
(Increase)/decrease in other assets......... 662 (224) (2,324) (272) 391
(Decrease)/increase in accounts payable and
other liabilities........................ 146 1,386 4,256 351 (3,058)
------- ------- ------- ------- -------
Total adjustments................... 1,818 5,159 6,592 2,894 (1,564)
------- ------- ------- ------- -------
Net cash provided by (used in)
operating activities.............. 990 (1) 4,315 771 (620)
------- ------- ------- ------- -------
Cash flows from investing activities:
Purchase of property and equipment.......... (7,556) (2,758) (3,113) (21) (548)
------- ------- ------- ------- -------
Net cash used in investing
activities........................ (7,556) (2,758) (3,113) (21) (548)
------- ------- ------- ------- -------
Cash flows from financing activities:
Borrowings under bank facility.............. 4,629 1,867 134 (107) 602
Borrowings under term loans................. 2,000 2,000 2,000 -- --
Principal payments on term loans............ -- (600) (2,800) (200) (200)
Principal payments on capital leases........ -- (437) (805) (674) (1,252)
Increase in amounts due to related party.... -- -- 158 -- 1,962
------- ------- ------- ------- -------
Net cash provided by/(used in)
financing activities.............. 6,629 2,830 (1,313) (981) 1,112
------- ------- ------- ------- -------
Increase (decrease) in cash................... 63 71 (111) (231) (56)
Cash at beginning of period................... 157 266 373 373 813
------- ------- ------- ------- -------
220 337 262 142 757
Translation differences....................... 46 36 551 164 547
------- ------- ------- ------- -------
Cash at end of period......................... $ 266 $ 373 $ 813 $ 306 $ 1,304
======= ======= ======= ======= =======
Supplemental disclosures of cash flow
information:
Cash paid during the year for:
Interest................................. $ 202 $ 589 $ 1,877 $ 425 $ 564
Income taxes............................. $ 11 $ -- $ -- $ -- $ --
Non-cash investing activities:
Capital lease obligations................ $15,083 $ -- $ -- $ -- $ 3,660
Non-cash financing activities:
Note payable issued for repurchase of own
stock (NOTE I -- COMMON STOCK)......... $ -- $ -- $ 2,679 $ -- $ --
</TABLE>

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

F-25
<PAGE> 89

ENERGY RESEARCH INTERNATIONAL

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996

NOTE A -- SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS: Energy Research International (the "Company"), a
limited liability company incorporated in the Cayman Islands, is the holding
Company of an international group of companies involved in the acquisition of
offshore seismic data. The Company was incorporated in May 1993 to acquire
through a subsidiary substantially all of the offshore seismic business
operations of Simon Petroleum Technology. The Company's future operations are
dependent on a variety of factors, including dependence upon energy industry
spending, its ability to maintain its technologically competitive position and
its ability to minimise its operating risks, among others.

ACCOUNTING: The consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States
and translated into U.S. dollars.

BASIS OF CONSOLIDATION: The accompanying consolidated financial statements
include the accounts of Energy Research International and the accounts of its
subsidiaries, all of which are wholly-owned. All material intercompany accounts
have been eliminated in consolidation.

PROPERTY AND EQUIPMENT: Property and equipment are carried at cost and
include assets under capital leases which are carried at the lower of cost or
present value of future minimum lease payments at the inception of the lease.
Maintenance and repairs are charged to expense as incurred and expenditures for
major improvements are capitalized. Gains and losses from retirement or
replacement of property and equipment are included in operations.

Depreciation and amortization of property and equipment and assets under
capital leases are provided over the estimated useful lives of the assets, which
range from five to seven years, or the term of the lease using the straight-line
method.

TRANSLATION OF FOREIGN CURRENCIES: The Company maintains its books and
records in United Kingdom pounds sterling, the functional unit of currency.
Transactions in other currencies are recorded using the rate of exchange at the
date of the transaction. Monetary assets and liabilities denominated in other
currencies are translated using the rate of exchange at the balance sheet date
and the gains or losses on translation are included in the income statement.

For consolidation purposes, the assets and liabilities of non United
Kingdom subsidiary undertakings are translated at the closing exchange rates.
Income statements of such undertakings are consolidated at the average rates of
exchange during the year. Exchange differences arising on these translations are
included in the cumulative translation account in stockholders'
equity/(deficit).

INCOME TAXES: The Company files income tax returns in the United Kingdom
and the United States; it is exempt from tax in the Cayman Islands.

REVENUE AND COST RECOGNITION: Revenue from the acquisition of seismic data
is recognized on either a distance or time method based upon the contractual
terms. Under the distance method, revenue is based upon the number of seismic
lines or kilometers of data collected; under the time method revenue is based on
agreed rates per unit of time.

Cost of sales includes all direct materials and labor costs and indirect
costs related to the acquisition of seismic data such as supplies, tools and
repairs. Selling, general and administrative costs are charged to expense as
incurred.

INVENTORIES: Inventories which consist primarily of spare parts for
equipment are stated at the lower of cost or market value on a first-in,
first-out basis.

F-26
<PAGE> 90

ENERGY RESEARCH INTERNATIONAL

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NON-EXCLUSIVE SEISMIC SURVEYS: All costs incurred in acquiring and
processing non-exclusive seismic data are charged to the income statement as
they arise. Costs for the years ended December 31, 1994, 1995 and 1996 were
$Nil, $5,397,000 and $Nil, respectively.

PENSION COSTS: The Company provides for the cost of retirement benefits for
employees of its United Kingdom subsidiaries. The cost of providing these
benefits is charged to the income statement over the employees' estimated years
of service.

LOSSES PER SHARE: Losses per share were based on the weighted average
number of outstanding shares of common stock during the respective years. There
were no common stock equivalent shares outstanding for any period. In July 1996,
the Board of Directors declared a one thousand-for-one common stock split. The
calculation of losses per share for 1994 and 1995 is based upon the weighted
average number of shares outstanding which have been restated to reflect the one
thousand-for-one common stock split in 1996 and is on a basis consistent with
the weighted average number of outstanding shares during 1996.

In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 128 "Earning per Share,"
effective for interim and annual periods after December 31, 1997. This statement
replaces primary earnings per share with a newly defined basic earnings per
share and modifies the computation of diluted earnings per share. The
application of this statement will not have any impact on losses per share for
the three years ended December 31, 1996 as there were no common stock equivalent
shares outstanding.

INTERIM FINANCIAL DATA (UNAUDITED): The unaudited consolidated financial
statements as of March 31, 1997, and for the three month periods ended March 31,
1996 and 1997 and all related footnote information for these periods have been
prepared on the same basis as the audited consolidated financial statements and,
in the opinion of management, include all adjustments, consisting of normal and
recurring adjustments, necessary for a fair presentation of financial position
and results of operations and cash flows in accordance with generally accepted
accounting principles.

FAIR VALUE OF FINANCIAL INSTRUMENTS: SFAS No. 107 "Disclosures About Fair
Value of Financial Instruments", requires disclosure of the fair value of
certain financial instruments. The estimated fair value amounts have been
determined by the Company using available market data and valuation
methodologies. The book values of cash and equivalents, receivables and accounts
payable approximate their fair value as of December 31, 1995 and 1996 because of
the short term maturity of these instruments. Based upon the rates available to
the Company, the fair value of the term loans approximates the carrying value of
this debt at December 31, 1995 and 1996.

IMPAIRMENT OF LONG-LIVED ASSETS: In March 1995, the Financial Accounting
Standards Board issued SFAS No. 121, "Accounting for Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of". This statement requires
that long-lived assets be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying value of an asset may not be
realizable. The Company adopted SFAS No. 121, effective January 1, 1996; the
adoption of this statement did not have a material effect on the Company's
consolidated financial statements.

NOTE B -- INCOME TAXES

The provision for income taxes for each of the three years ended December
31, 1996 comprised of the following (in thousands):

<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Current -- overseas withholding tax......................... $11 $-- $--
=== === ===
</TABLE>

F-27
<PAGE> 91

ENERGY RESEARCH INTERNATIONAL

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

No income taxes are payable for the three year period ended December 31,
1996 in the United Kingdom and the United States as the Company incurred
operating losses during this period.

The components of deferred tax asset/(liability) at December 31, 1995 and
1996 were as follows (in thousands):

<TABLE>
<CAPTION>
1995 1996
---- ------
<S> <C> <C>
Deferred tax assets:
Net operating loss carry forward (no expiry date)........... $506 $1,378
Other....................................................... 14 172
---- ------
Total deferred tax assets................................... 520 1,550
Less: valuation allowance................................... 100 1,158
---- ------
Deferred tax assets, net of valuation allowance............. 420 392
---- ------
Deferred tax liabilities:
Depreciation................................................ (420) (392)
---- ------
Total deferred tax liabilities.............................. (420) (392)
---- ------
Net deferred tax asset/(liability).......................... $ -- $ --
==== ======
</TABLE>

The valuation allowances recorded at December 31, 1995 and 1996 have been
provided against the Company's deferred tax assets based on management's
estimate of the recoverability of future tax benefits, which considered the
Company's recent operating results as well as other factors. In accordance with
the provisions of SFAS No. 109, "Accounting for Income Taxes," only the portion
of such tax assets that was, more likely than not, expected to be realized was
recorded at each balance sheet date.

NOTE C -- DEBT

The following is a summary of the Company's debt at December 31, 1995 and
1996 (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31ST
----------------
1995 1996
------ ------
<S> <C> <C>
Bank Borrowings............................................. $6,496 $6,630
Term Debt -- Current Portion................................ 800 600
Term Debt -- Long Term Portion.............................. 2,600 --
------ ------
Total Debt........................................ $9,896 $7,230
====== ======
</TABLE>

BANK BORROWING: On August 23, 1994, the Company entered into a revolving
banking facility ("the Facility") of L4,560,000 (December 31, 1995 $7,080,000,
December 31, 1996 $7,804,000) of which at December 31, 1995 and December 31,
1996 $6,496,000 and $6,630,000 was outstanding respectively. The Facility is
interest bearing at the rate of 8.25% per annum, variable at three months LIBOR
plus 2%. The Facility is secured by property and equipment and working capital
and is repayable on demand.

TERM LOAN: On February 27, 1995, the Company obtained a $2,000,000 term
loan over thirty months bearing interest at the rate of 8.25% per annum variable
at three month LIBOR plus 2% per annum. The loan was obtained to purchase marine
seismic data acquisition equipment, and is repayable on a quarterly basis at the
amount of $200,000 plus accrued interest. At December 31, 1995, $800,000 was
current and $600,000 was long term. At December 31, 1996, $600,000 was current
with no long term balance. The loan is secured in the same manner as the
Facility described above.

On August 31, 1995, the Company obtained a $2,000,000 term loan bearing
interest at prime rate plus 1% per annum. On June 28, 1996, the loan was
extinguished for $1.4 million (see Note H -- EARLY EXTINGUISHMENT OF DEBT). On
June 28, 1996 the Company obtained a loan from Seitel, Inc. which is disclosed
in NOTE E -- RELATED PARTY TRANSACTIONS.

F-28
<PAGE> 92

ENERGY RESEARCH INTERNATIONAL

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE D -- COMMITMENTS AND CONTINGENCIES

Capital lease: Property and equipment in the accompanying consolidated
balance sheets includes the following assets held under capital leases (in
thousands):

<TABLE>
<CAPTION>
DECEMBER 31ST
------------------
1995 1996
------- -------
<S> <C> <C>
Geophysical Vessel and Equipment............................ $14,969 $16,498
Accumulated Depreciation.................................... (2,809) (5,159)
------- -------
Assets under Capital Lease, Net............................. $12,160 $11,339
======= =======
</TABLE>

The interest rate of the above vessel lease is 4.946%.

The Company also holds various operating leases, of which the principal
ones are in respect of vessel time charters, office/warehousing space and
certain geophysical equipment leased from Eagle Geophysical, Inc. (see NOTE
E -- RELATED PARTY TRANSACTIONS). Operating lease expenses for 1994, 1995 and
1996 were approximately $2,907,000, $859,000 and $2,082,000 respectively.

Future minimum lease payments for the five years subsequent to December 31,
1996 and in the aggregate are as follows (in thousands):

<TABLE>
<CAPTION>
CAPITAL LEASES OPERATING LEASES
-------------- ----------------
<S> <C> <C>
1997.................................................... $ 3,239 $ 2,338
1998.................................................... 3,419 2,522
1999.................................................... 3,625 2,271
2000.................................................... 3,839 2,104
2001.................................................... 1,315 1,276
------- -------
Total Minimum Lease Payments.................. 15,437 $10,511
=======
Less Amount Representing Interest....................... (1,595)
-------
Present Value of Net Minimum Lease Payments............. $13,842
=======
</TABLE>

Legal proceedings: The Company is involved in or threatened with various
legal proceedings from time to time arising in the ordinary course of business.
Management of the Company does not believe that any liabilities resulting from
any such current proceedings will have a material adverse effect on its
consolidated operations or financial position.

NOTE E -- RELATED PARTY TRANSACTIONS

In July 1996, Seitel, Inc. acquired 50% of the issued and outstanding
shares of the Company from the directors of the Company who owned 97% of the
outstanding shares; in addition Seitel, Inc. advanced the Company by way of loan
$2 million to repay existing debt, due and payable on July 3, 1998, bearing
interest at prime plus 1%. In November 1996, the Company repurchased from
Seitel, Inc. 38,272 shares for $2,679,000, thereby reducing Seitel, Inc.'s share
ownership to 19%. The repurchase price was paid by delivery of a promissory note
to Seitel, Inc. bearing interest equal to 5.35% until December 31, 1997
increasing to 8.0% from January 1, 1998 through December 31, 1998 and then at
the prime rate of interest plus 1% from January 1, 1999 through December 31,
2001, the date of repayment. The total amount due to Seitel, Inc. at December
31, 1996 is $4,679,000 and is included in the Company's consolidated balance
sheet as due to related party.

In May 1997, Seitel, Inc. contributed its shares in the Company to Eagle
Geophysical, Inc., indirectly a wholly-owned subsidiary of Seitel, Inc.

F-29
<PAGE> 93

ENERGY RESEARCH INTERNATIONAL

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company performs seismic data acquisition services for Seitel, Inc.
During the years ended December 31, 1994, 1995 and 1996 the Company recognized
revenue for services rendered to Seitel, Inc. of $4,027,000, $2,238,000, and
$20,049,000, respectively.

A subsidiary of the Company leases certain marine seismic equipment from
Eagle Geophysical, Inc. under a five year operating rental agreement expiring
June 30, 2001. During 1996, the Company recorded costs of $828,000 related to
this lease. At December 31, 1996, the Company had a payable of $138,000 related
to this item.

NOTE F -- CONCENTRATION OF RISK

During the years ended December 31, 1994, 1995 and 1996, the Company had a
concentration of revenues in four or less customers.

During the year ended December 31, 1994, 60% of revenues were accounted for
by Seitel, Inc. (21%), Chevron UK Ltd. (10%), Amerada Hess Ltd. (13%) and
British Gas Exploration and Production Ltd (16%).

During the year ended December 31, 1995, 63% of revenues were accounted for
by Amerada Hess Ltd. (37%) and British Gas Exploration and Production Ltd (26%).

During the year ended December 31, 1996, 72% of revenues were accounted for
by Seitel, Inc. (46%) and Clyde Petroleum Exploratie BV (26%).

NOTE G -- FOREIGN OPERATIONS

Substantially all of the Company's operations are outside of the Cayman
Islands. The Company's principal operations are in Europe and the United States.

Financial information by geographic area is as follows (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
Operating revenues:
Europe and other Areas.................................... $15,428 $25,375 $22,217
United States............................................. 4,029 4,048 21,390
------- ------- -------
Total operating revenues.............................. $19,457 $29,423 $43,607
======= ======= =======
Operating Income:
Europe and other Areas.................................... $ 63 $ 3,646 $(1,469)
United States............................................. 153 (6,288) 1,390
------- ------- -------
Total operating income................................ 216 (2,642) (79)
General corporate expenses............................ (505) (1,062) (1,149)
Net interest expense.................................. (528) (1,456) (1,649)
------- ------- -------
Loss before provision for income taxes and
extraordinary items................................ $ (817) $(5,160) $(2,877)
======= ======= =======
Identifiable Assets:
Europe and other Areas.................................... $21,903 $20,893 $20,499
United States............................................. 5,833 6,135 6,266
------- ------- -------
Total Identifiable assets............................. $27,736 $27,028 $26,765
Corporate assets...................................... 1,184 1,012 1,292
------- ------- -------
Total assets.......................................... $28,920 $28,040 $28,057
======= ======= =======
</TABLE>

During the year ended December 31, 1994, 1995 and 1996 there were no
intercompany revenues or operating incomes.

F-30
<PAGE> 94

ENERGY RESEARCH INTERNATIONAL

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE H -- EARLY EXTINGUISHMENT OF DEBT

In July 1996, in connection with Seitel, Inc. acquiring a 50% interest in
the shares of the Company, the Company repaid a promissory note to a third party
which was funded by a new loan from Seitel, Inc. in the amount of $2 million.
The promissory note amounting to $2 million was redeemed for $1.4 million and as
a result the Company recorded a credit of $600,000 which has been reflected in
the Company's consolidated statement of operations as an extraordinary item for
the year ended December 31, 1996.

NOTE I -- COMMON STOCK

<TABLE>
<CAPTION>
1995 1996
-------- --------
<S> <C> <C>
Authorized: 900,000,000 shares, at par value $0.001 per
share..................................................... $900,000 $900,000
-------- --------
Issued and outstanding: December 31, 1996
61,728 shares; December 31, 1995 100,000 shares........... $ 100 $ 62
-------- --------
</TABLE>

In July 1996 the directors of the Company then owning 97% of the
outstanding shares of the Company sold 50% of the outstanding shares of the
Company to Seitel, Inc.

In July 1996 the Board of Directors declared a one thousand-for-one common
stock split. In these consolidated financial statements all per share amounts
and numbers of shares have been restated to reflect the stock split.

In November 1996, the Company repurchased from Seitel, Inc. 38,272 shares
for an aggregate repurchase price of $2,679,000. The purchase price per share of
the stock in the repurchase transaction was equal to the purchase price in the
transaction in July 1996 in which Seitel acquired 50% of the outstanding shares
of ERI from the then-current shareholders of ERI. The July 1996 purchase price
was determined by arms-length negotiations between Seitel and such shareholders.

NOTE J -- PENSION PLAN

The Company provides for the cost of retirement benefits for employees of
its United Kingdom subsidiaries. The Plan known as the Horizon Pension Plan
provides retirement benefits as defined in the Trust Deed and is managed by
Trustees.

The following table sets forth the plan and funded status at December 31,
1995 and 1996 (in thousands):

<TABLE>
<CAPTION>
1995 1996
------ ------
<S> <C> <C>
Actuarial present value of benefit obligation:
Vested benefit obligation................................. $2,885 $4,098
Accumulated benefit obligation............................ 2,885 4,098
Projected benefit obligation.............................. 3,476 4,939
Plan assets at fair value................................... 4,360 5,969
------ ------
Plan assets in excess of projected benefit obligation....... 884 1,030
Unrecognized net transition asset........................... (705) (700)
Unrecognized net loss....................................... -- 79
------ ------
Prepaid pension cost........................................ $ 179 $ 409
====== ======
</TABLE>

Plan assets are invested in a unitised mixed managed fund. At December 31,
1996 approximately 86% of the fund was invested in UK and international equities
and the balance invested in fixed interest securities or held as cash deposits.

F-31
<PAGE> 95

ENERGY RESEARCH INTERNATIONAL

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Net pension cost for 1995 and 1996 included the following components (in
thousands):

<TABLE>
<CAPTION>
1995 1996
------ ------
<S> <C> <C>
Service cost................................................ $ 338 $ 379
Interest cost............................................... 249 330
Actual return on plan assets................................ (489) (627)
Net amortization and deferral............................... 83 118
------ ------
Net pension cost............................................ $ 181 $ 200
====== ======
</TABLE>

The major assumptions used in computing the net pension cost were:

<TABLE>
<CAPTION>
1995 1996
---- ----
<S> <C> <C>
Discount rate............................................... 9.0% 9.0%
Expected long term rate of return on plan assets............ 9.5% 9.5%
Rate of increase in compensation levels..................... 6.5% 6.5%
</TABLE>

NOTE K -- SUBSEQUENT EVENTS (UNAUDITED)

Eagle Geophysical, Inc. intends to file a registration statement with the
Securities and Exchange Commission for an underwritten initial public offering
of shares of common stock. Eagle Geophysical, Inc. currently owns 19% of the
outstanding shares of the Company and prior to or contemporaneously with the
consummation of the offering by Eagle Geophysical, Inc. of its common stock
pursuant to such registration statement, Eagle Geophysical, Inc. will acquire
the remaining 81% of the outstanding shares of the Company, such acquisition
being a condition to the consummation of the offering.

In July 1997, an incident caused by a shrimping vessel damaged the
streamers deployed behind the Abshire Tide and the Discoverer in the Gulf of
Mexico. Based on initial estimates of the damage, the Company anticipates that
the cost to repair the streamers will be less than $500,000. The incident did
not cause any material interruption to the operations of these vessels.

The Company believes that for each incident any damage in excess of its
$250,000 insurance deductible would be covered by the Company's insurance.

F-32
<PAGE> 96

================================================================================

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDER, THE ADDITIONAL SELLING
STOCKHOLDERS OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO BUY ANY SECURITY OTHER THAN
THE SHARES OF COMMON STOCK OFFERED BY THIS PROSPECTUS, NOR DOES IT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO BUY THE SHARES OF COMMON STOCK
BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.

UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE COMPANY'S COMMON STOCK OFFERED HEREBY, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

---------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 8
The Company........................... 14
Use of Proceeds....................... 15
Capitalization........................ 17
Dividend Policy....................... 18
Dilution.............................. 19
Selected Pro Forma Financial
Information......................... 20
Selected Financial Information........ 21
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 22
Description of Business............... 29
Management............................ 39
Principal and Selling Stockholders.... 48
Certain Transactions.................. 50
Description of Capital Stock.......... 53
Shares Eligible for Future Sale....... 56
Underwriting.......................... 58
Legal Matters......................... 59
Experts............................... 59
Additional Information................ 60
Glossary.............................. 61
Index to Financial Statements......... F-1
</TABLE>

================================================================================

5,880,000 Shares

[EAGLE GEOPHYSICAL, INC. LOGO]

EAGLE
GEOPHYSICAL, INC.

Common Stock

---------------------
PROSPECTUS
---------------------

PRUDENTIAL SECURITIES INCORPORATED

SIMMONS & COMPANY
INTERNATIONAL

, 1997

================================================================================
<PAGE> 97

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The Registrant estimates that expenses in connection with the Offering
described in this Registration Statement will be as follows. All of the amounts
except the SEC registration fee, NASD fee and the Nasdaq National Market listing
fee are estimates.

<TABLE>
<CAPTION>
ITEM AMOUNT
---- --------
<S> <C>
SEC registration fee........................................ $ 30,750
NASD fee.................................................... 10,500
Nasdaq National Market listing fee.......................... 39,005
Legal fees and expenses..................................... 300,000
Accounting fees and expenses................................ 250,000
Printing expenses........................................... 275,000
Fees and expenses for qualification under state securities
laws (including legal fees)............................... 5,000
Transfer agent's and registrar's fees and expenses.......... 15,000
Miscellaneous............................................... 24,745
--------
Total............................................. $950,000
========
</TABLE>

- ---------------

* None of this amount is to be borne by the Selling Stockholder.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Registrant is incorporated under the laws of Delaware. Section 145 of
the Delaware General Corporation Law provides that a Delaware corporation may
indemnify any person against expenses, fines and settlements actually and
reasonably incurred by any such person in connection with a threatened, pending
or completed action, suit or proceeding in which he is involved by reason of the
fact that he is or was a director, officer, employee or agent of such
corporation, provided that (i) he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and (ii) with respect to any criminal action or proceeding, he had
no reasonable cause to believe his conduct was unlawful. If the action or suit
is by or in the name of the corporation, the corporation may indemnify any such
person against expenses actually and reasonably incurred by him in connection
with the defense or settlement of such action or suit if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interest of the corporation, except that no indemnification may be made in
respect to any claim, issue or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance of his
duty to the corporation, unless and only to the extent that the Delaware Court
of Chancery or the court in which the action or suit is brought determines upon
application that, despite the adjudication of liability but in light of the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses as the court deems proper.

As permitted by the Delaware General Corporation Law, the Registrants'
Certificate of Incorporation provides that the directors and officers of the
Registrant shall be indemnified by the Registrant against certain liabilities
that those persons may incur in their capacities as directors or officers. The
Certificate of Incorporation eliminates the liability of directors of the
Registrant, under certain circumstances, to the maximum extent permitted by the
Delaware General Corporation Law. See "Description of Capital Stock -- Special
Provisions of the Certificate of Incorporation and By-laws" included in the
Prospectus.

The Underwriting Agreement to be filed as Exhibit 1.1 hereto contains
reciprocal agreements of indemnity between the Registrant and the underwriters
as to certain liabilities, including liabilities under the Securities Act of
1933, as amended (the "Securities Act"), and in certain circumstances provides
for indemnification of the Registrant's directors and officers.

II-1
<PAGE> 98

Additionally, pursuant to an employment agreement between Mr. Silverman and
the Registrant and an employment agreement between Mr. McNairy and the
Registrant, the Registrant shall, to the maximum extent not prohibited by law,
indemnify Mr. Silverman and Mr. McNairy if Mr. Silverman or Mr. McNairy is made,
or threatened to be made, a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, including an action by or in the right of the Registrant to
procure a judgment in its favor (collectively, a "Proceeding"), by reason of the
fact that Mr. Silverman or Mr. McNairy is or was a director or officer of the
Registrant, or is or was serving in any capacity at the request of the
Registrant for any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, against judgments, fines, penalties,
excise taxes, amounts paid in settlement and costs, charges and expenses
(including attorneys' fees and disbursements) paid or incurred in connection
with any such Proceeding. The Registrant anticipates that it may enter into
similar contractual indemnification arrangements with its other executive
officers and directors.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

During the previous three years, the Registrant has issued and sold the
following securities without registration under the Securities Act (none of
which sales were underwritten):

The Company was formed in December 1996, at which time it issued 1,000 of
its shares of Common Stock for a cash purchase price of $1.00 per share to the
Selling Stockholder. Such issuance of shares was exempt from registration under
the Securities Act pursuant to Section 4(2) thereof as a transaction by the
issuer not involving any public offering.

On May 22, 1997, the Company effected a stock split pursuant to which the
1,000 outstanding shares of Common Stock were subdivided into 3,400,000 shares
of Common Stock. All such shares were issued to the Selling Stockholder as sole
stockholder of the Company. Such issuance was exempt from registration under the
Securities Act pursuant to Section 3(a)(9) thereof as securities exchanged by
the issuer with its existing security holders exclusively where no commission or
other remuneration was given directly or indirectly for soliciting such
exchange.

On July 23, 1997, Jay N. Silverman, President of the Company, purchased
25,000 shares of Common Stock from the Company at the initial public offering
price for a promissony note. This issuance of shares was exempt from
registration under the Securities Act pursuant to Section 4(2) thereof as a
transaction by the issuer not involving any public offering.

Pursuant to an agreement dated June 2, 1997, contemporaneously with the
consummation of the Offering, the Company will issue an aggregate of 600,000
shares of Common Stock to Oliveira Limited, Dormera Limited, Balmedie Limited,
and Larlane Limited in exchange for the 81.0% of the outstanding shares of
Energy Research International owned by such entities. Gerald Harrison, George
Purdie, Neil Campbell, and David Burns, all of whom will be directors, officers
or employees of the Company after the consummation of the Offering, are the
beneficial owners of Oliveira Limited, Dormera Limited, Balmedie Limited, and
Larlane Limited, respectively. This issuance of shares will be exempt from
registration under the Securities Act pursuant to Section 4(2) thereof as a
transaction by the issuer not involving any public offering.

II-2
<PAGE> 99

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
1.1** -- Form of Underwriting Agreement
2.1** -- Stock Purchase Agreement dated June 2, 1997, among Gerald
Harrison, George Purdie, Neil Campbell, David Burns,
Oliveira Limited, Dormera Limited, Balmedie Limited,
Larlane Limited and Registrant
3.1** -- Certificate of Incorporation, as amended
3.2** -- Amended and Restated Bylaws
4.1** -- Specimen Certificate for Registrant's common stock, par
value $0.01
5.1** -- Opinion of Gardere Wynne Sewell & Riggs, L.L.P.
10.1.1** -- Loan and Security Agreement dated July 9, 1996, between
Seitel Geophysical, Inc., as Debtor, and Nationsbanc
Leasing Corporation of North Carolina, as Secured Party
10.1.2** -- Assumption and Consent dated December 31, 1996, among
Seitel Geophysical, Inc., Eagle Geophysical, Inc.,
Nationsbanc Leasing Corporation of North Carolina and
Seitel, Inc.
10.2** -- Loan and Security Agreement dated February 6, 1997,
between Eagle Geophysical, Inc., as Debtor, and
Nationsbanc Leasing Corporation of North Carolina, as
Secured Party
10.3** -- Conditional Sales Agreement dated February 19, 1997,
between Input/Output, Inc. and Horizon Exploration
Limited ("HEL")
10.4.1** -- Installment Note ($306,180) by HEL in favor of Teledyne
Brown Engineering Marine Products
10.4.2** -- Promissory Note ($330,000) by HEL in favor of Teledyne
Industries, Inc.
10.5.1** -- Loan and Security Agreement dated February 22, 1996,
between Seitel Geophysical, Inc. and MetLife Capital
Corporation
10.5.2** -- Assignment and Assumption Agreement dated December 31,
1996 between Seitel Geophysical, Inc. and Eagle
Geophysical, Inc.
10.6.1** -- Master Equipment Lease Agreement dated May 20, 1994,
between Seitel Geophysical, Inc. and MetLife Capital,
Limited Partnership, as amended
10.6.2** -- Assignment and Assumption Agreement dated December 31,
1996 between Seitel Geophysical, Inc. and Eagle
Geophysical, Inc.
10.7.1** -- Master Lease Agreement dated February 16, 1994 between
McCullagh Leasing (a unit of GE Capital Fleet Services)
and Seitel Geophysical, Inc., as amended
10.7.2** -- Partial Assignment dated April 8, 1997 among Seitel
Geophysical, Inc., Eagle Geophysical, Inc. and GE Capital
Fleet Services
10.8** -- Term Credit and Security Agreement dated July 15, 1993,
between Seitel Geophysical, Inc. and Compass Bank (f/k/a
Central Bank of the South), as amended
10.9.1** -- Bareboat Charter by Way of Subdemise dated July 15, 1994,
between Simon-Horizon Limited ("Simon") and HEL
10.9.2** -- Management Agreement dated December 19, 1990 between
Simon and Ervik Marine Services A/S ("Ervik")
10.9.3** -- Side Letter Agreement dated December 19, 1990, between
Simon and Ervik
10.9.4** -- Assignment Agreement Relating to a Ship Management
Agreement dated December 19, 1990 (as amended) dated July
15, 1990, between Simon and HEL
10.9.5** -- Deed of Assignment of Insurances dated July 15, 1994,
between HEL and Simon
10.9.6** -- Deed of Continuing Inter-Company Cross Guarantee and
Indemnity dated July 15, 1994, by Horizon Seismic Inc.,
Exploration Holdings Limited and HEL in favor of Simon,
Simon Petroleum Technology Limited and Simon Engineering
Plc
</TABLE>

II-3
<PAGE> 100

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
10.9.7** -- Sublease Contract Number 1 dated July 15, 1994, between
Simon and HEL
10.9.8** -- Sublease Contract Number 2 dated July 15, 1994, between
Simon and HEL
10.9.9** -- Agreement dated July 15, 1994, among Simon, Simon
Petroleum Technology Limited, Simon Engineering Plc and
HEL
10.9.10** -- Charterparty by way of Sub-Demise dated December 20,
1996, between Royal Bank of Scotland and Simon
10.9.11** -- Addendum to Charterparty dated March 31, 1992, between
Royal Bank of Scotland and Simon
10.9.12** -- Quadripartite Agreement dated August 18, 1994, among
Simon, Royal Bank of Scotland (Industrial Leasing)
Limited, HEL and Simon Engineering plc
10.9.13** -- Master Leasing Agreement dated July 15, 1994 between
Simon and HEL
10.10** -- Contribution and Assumption Agreement dated December 31,
1996, between Seitel Geophysical, Inc. and Eagle
Geophysical, Inc.
10.11.1** -- Agreement to Extend the Charterparty of "Pacific Horizon"
dated July 11, 1994, by and between J. Marr Limited and
HEL
10.11.2** -- Deed of Novation m.v. "Pacific Horizon" dated July 11,
1994, by and among Simon, J. Marr Limited and HEL
10.11.3** -- Pacific Horizon Charter dated February 4, 1981, between
J. Marr and Son, Limited and HEL
10.12** -- Employment Agreement between Exploration Holdings Limited
("EHL") and Gerald Harrison, as amended
10.13** -- Employment Agreement between EHL and George Purdie, as
amended
10.14** -- Employment Agreement between EHL and Neil A.M. Campbell,
as amended
10.15** -- Form of Employment Agreement Amendment between EHL and
each of Messrs. Harrison, Purdie and Campbell
10.16 -- Form of Employment Agreement between Eagle Geophysical,
Inc. and Jay Silverman
10.17** -- Employment Agreement between Eagle Geophysical, Inc. and
Richard McNairy
10.18** -- Commercial Lease dated March 10, 1994, between Ron Chase
dba Chase Properties and Eagle Geophysical, Inc./Seitel
Geophysical, Inc.
10.19** -- Modification and Ratification of Lease dated April 24,
1996, between Ron Chase dba Chase Properties and Eagle
Geophysical, Inc./Seitel Geophysical, Inc.
10.20** -- Lease dated May 28, 1996, between Partnership of
Perkins-Guidry-Beazley-Ostteen and Seitel Geophysical,
Inc.
10.21 -- Form of Sublease between Seitel, Inc. and its
subsidiaries and Eagle Geophysical, Inc.
10.22 -- Form of Master Separation Agreement between Seitel, Inc.
and Eagle Geophysical, Inc.
10.23** -- Form of Registration Rights Agreement between EHI
Holdings, Inc. and Eagle Geophysical, Inc.
10.24 -- Form of Tax Indemnity Agreement between Seitel, Inc. and
Eagle Geophysical, Inc.
10.25** -- Form of Administrative Services Agreement between Seitel,
Inc. and Eagle Geophysical, Inc.
10.26** -- Amended and Restated Promissory Note ($2,000,000) dated
July 3, 1996 by Energy Research International ("ERI") in
favor of Seitel, Inc.
10.27** -- Promissory Note ($2,679,040) dated November 15, 1996 by
ERI in favor of Seitel, Inc.
10.28** -- Form of Bonus Agreement between Eagle Geophysical, Inc.
and Paul A. Frame
10.29** -- Outside Directors Deferred Compensation Plan
10.30** -- Independent Directors Stock Option Plan
10.31** -- Stock Option Plan
</TABLE>

II-4
<PAGE> 101

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
10.32.1 -- Promissory Note payable by Jay Silverman to Eagle
Geophysical, Inc. dated July 23, 1997
10.32.2 -- Subscription Agreement between Eagle Geophysical, Inc.
and Jay N. Silverman dated July 23, 1997
10.32.3 -- Security Agreement -- Pledge between Eagle Geophysical,
Inc. and Jay N. Silverman dated July 23, 1997
10.33.1** -- The Bank of N.T. Butterfield Term Loan Facility dated
February 27, 1995
10.33.2** -- The Bank of N.T. Butterfield & Son Limited Facility
Letter dated August 23, 1994
10.33.3** -- The Bank of N.T. Butterfield & Son Limited Amendment
Letter No. 1 dated February 3, 1995
10.33.4** -- The Bank of N.T. Butterfield & Son Limited Amendment
Letter No. 2 dated February 19, 1996
10.33.5** -- The Bank of N.T. Butterfield & Son Limited Letter dated
May 10, 1996
10.33.6** -- The Bank of N.T. Butterfield & Son Limited Letter dated
May 19, 1997
10.34.1** -- Abshire Tide Blanket Time Charter dated February 9, 1996,
between Tidewater Marine, Inc. and Horizon Seismic Inc.
10.34.2** -- Letter Agreement dated February 12, 1996 relating to
Abshire Tide Blanket Time Charter
10.34.3** -- Tidewater Marine letter to Horizon Seismic, Inc. dated
September 19, 1996 regarding the letter agreement dated
February 12, 1996 governing the Time Charter of the MV
Abshire Tide
10.34.4** -- Tidewater Marine letter to Horizon Seismic, Inc. dated
March 25, 1996 regarding the letter agreement dated
February 12, 1996 governing the Time Charter of the MV
Abshire Tide
10.35.1** -- Supplemental Security Agreement No. One dated February
22, 1996 between Seitel Geophysical, Inc. and MetLife
Capital Corporation
10.35.2** -- Term Promissory Note ($433,000) dated March 14, 1996, by
Seitel Geophysical, Inc. in favor of MetLife Capital
Corporation
10.36** -- Service Agreement for MV Discoverer dated April 12, 1994,
between Horizon Seismic, Inc. and Shanghai Bureau of
Marine Geological Survey, as amended
10.37** -- Underlease dated April 21, 1997, between Payless
Properties Limited and HEL
10.38** -- Lease Agreement between Pincay Oaks, Inc. and HEL
10.39** -- Lease dated February 1, 1997, between Tuscan Property
Developments Limited and HEL
10.40** -- Set-off and Charge dated August 30, 1994, between HEL and
The Bank of N.T. Butterfield & Son Limited
10.41** -- Deed relating to 6 Pembroke Road Sevenoaks Kent dated
August 25, 1993, between Marley Waterproofing Limited and
HEL
10.42** -- Debenture dated August 12, 1994, between HEL and The Bank
of N.T. Butterfield & Son Limited
10.43** -- Chattel Mortgage between HEL and The Bank of N.T.
Butterfield & Son Limited
10.44** -- Form of Employment Agreement between Eagle Geophysical
and David Burns.
10.45** -- Operating Lease of Marine Seismic Equipment dated as of
July 1, 1996, between Seismic Geophysical, Inc. and HEL
10.46** -- Assignment between HEL and The Bank of NT Butterfield &
Sons Limited
10.47** -- Letter of Hypothecation and Pledge dated August 30, 1994,
between Seismic Exploration Ltd. and The Bank of N.T.
Butterfield & Son Limited
10.48** -- Lease Agreement dated January 7, 1997, between DigiCOURSE
INC. and HEL
10.49** -- Lease Agreement dated March 27, 1997, between DigiCOURSE
INC. and HEL
10.50** -- Initial Definitive Trust Deed -- Horizon Pension Plan
10.51** -- Operating Lease dated February 3, 1997, between Eagle
Geophysical, Inc. and HEL
</TABLE>

II-5
<PAGE> 102

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
10.52** -- Contribution Agreement dated as of May 30, 1997, between
Seitel, Inc. and Eagle Geophysical, Inc.
10.53** -- Assignment of Life Insurance dated December 9, 1993
insuring G.M. Harrison.
10.54** -- Lease dated December 12, 1995, between Newington Bricks
Limited and HEL
10.55** -- Lease dated August 25, 1993, between Marley Waterproofing
Limited and HEL
10.56** -- Master Agreement for Geophysical Services by and between
Eagle Geophysical Onshore, Inc. and Seitel Data, Ltd.
10.57** -- Master Agreement for Geophysical Services by and between
Eagle Geophysical Onshore, Inc. and DDD Energy, Ltd.
10.58 -- Form of Employee Benefits Allocation Agreement between
Seitel, Inc. and Eagle Geophysical, Inc.
23.1 -- Consent of Arthur Andersen LLP, Independent Public
Accountants
23.2 -- Consent of KPMG, Independent Public Accountants
23.3** -- Consent of Gardere Wynne Sewell & Riggs, L.L.P.
(contained in exhibit 5.1 opinion)
27** -- Financial data schedule
</TABLE>

- ---------------

** Previously filed

(b) Financial Statement Schedules

The following financial statement schedules are included in Part II of the
Registration Statement:

None

All other schedules are omitted because they are inapplicable or the
requested information is shown in the financial statements or noted therein.

ITEM 17. UNDERTAKINGS.

(a) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

(b) The undersigned Registrant hereby undertakes to provide to the
representatives of the underwriters at the closing specified in the Underwriting
Agreement certificates in such denominations and registered in such names as
required by the representatives of the underwriters to permit prompt delivery to
each purchaser.

(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

II-6
<PAGE> 103

(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

(d) If the Underwriters do not exercise their option to purchase additional
shares of Common Stock to cover over-allotments, if any, or if such option is
partially exercised, the Registrant hereby undertakes to file a post-effective
amendment to the Registration Statement deregistering all such shares as to
which such option shall not have been exercised.

II-7
<PAGE> 104

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 4 to Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Houston, State of Texas, on the 31st day of July, 1997

EAGLE GEOPHYSICAL, INC.

By: /s/ JAY N. SILVERMAN
-----------------------------------------
Jay N. Silverman
President and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

* Chairman of the Board of July 31, 1997
- ----------------------------------------------------- Directors
William L. Lurie

/s/ JAY N. SILVERMAN President, Chief Executive July 31, 1997
- ----------------------------------------------------- Officer and Director (Principal
Jay N. Silverman Executive Officer)

* Executive Vice President and July 31, 1997
- ----------------------------------------------------- Director
Gerald M. Harrison

* Senior Vice July 31, 1997
- ----------------------------------------------------- President -- Offshore Operations
George Purdie and Director

/s/ RICHARD W. MCNAIRY Vice President -- Chief July 31, 1997
- ----------------------------------------------------- Financial Officer and Secretary
Richard W. McNairy (Principal Financial and
Accounting Officer)

/s/ PAUL A. FRAME Director July 31, 1997
- -----------------------------------------------------
Paul A. Frame

*By: /s/ JAY N. SILVERMAN
------------------------------------------------
Jay N. Silverman
Attorney-in-Fact

</TABLE>

II-8
<PAGE> 105

INDEX TO EXHIBITS

<PAGE> 106

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
10.9.9** -- Agreement dated July 15, 1994, among Simon, Simon
Petroleum Technology Limited, Simon Engineering Plc and
HEL
10.9.10** -- Charterparty by way of Sub-Demise dated December 20,
1996, between Royal Bank of Scotland and Simon
10.9.11** -- Addendum to Charterparty dated March 31, 1992, between
Royal Bank of Scotland and Simon
10.9.12** -- Quadripartite Agreement dated August 18, 1994, among
Simon, Royal Bank of Scotland (Industrial Leasing)
Limited, HEL and Simon Engineering plc
10.9.13** -- Master Leasing Agreement dated July 15, 1994 between
Simon and HEL
10.10** -- Contribution and Assumption Agreement dated December 31,
1996, between Seitel Geophysical, Inc. and Eagle
Geophysical, Inc.
10.11.1** -- Agreement to Extend the Charterparty of "Pacific Horizon"
dated July 11, 1994, by and between J. Marr Limited and
HEL
10.11.2** -- Deed of Novation m.v. "Pacific Horizon" dated July 11,
1994, by and among Simon, J. Marr Limited and HEL
10.11.3** -- Pacific Horizon Charter dated February 4, 1981, between
J. Marr and Son, Limited and HEL
10.12** -- Employment Agreement between Exploration Holdings Limited
("EHL") and Gerald Harrison, as amended
10.13** -- Employment Agreement between EHL and George Purdie, as
amended
10.14** -- Employment Agreement between EHL and Neil A.M. Campbell,
as amended
10.15** -- Form of Employment Agreement Amendment between EHL and
each of Messrs. Harrison, Purdie and Campbell
10.16 -- Form of Employment Agreement between Eagle Geophysical,
Inc. and Jay Silverman
10.17** -- Employment Agreement between Eagle Geophysical, Inc. and
Richard McNairy
10.18** -- Commercial Lease dated March 10, 1994, between Ron Chase
dba Chase Properties and Eagle Geophysical, Inc./Seitel
Geophysical, Inc.
10.19** -- Modification and Ratification of Lease dated April 24,
1996, between Ron Chase dba Chase Properties and Eagle
Geophysical, Inc./Seitel Geophysical, Inc.
10.20** -- Lease dated May 28, 1996, between Partnership of
Perkins-Guidry-Beazley-Ostteen and Seitel Geophysical,
Inc.
10.21 -- Form of Sublease between Seitel, Inc. and its
subsidiaries and Eagle Geophysical, Inc.
10.22 -- Form of Master Separation Agreement between Seitel, Inc.
and Eagle Geophysical, Inc.
10.23** -- Form of Registration Rights Agreement between EHI
Holdings, Inc. and Eagle Geophysical, Inc.
10.24 -- Form of Tax Indemnity Agreement between Seitel, Inc. and
Eagle Geophysical, Inc.
10.25** -- Form of Administrative Services Agreement between Seitel,
Inc. and Eagle Geophysical, Inc.
10.26** -- Amended and Restated Promissory Note ($2,000,000) dated
July 3, 1996 by Energy Research International ("ERI") in
favor of Seitel, Inc.
10.27** -- Promissory Note ($2,679,040) dated November 15, 1996 by
ERI in favor of Seitel, Inc.
10.28** -- Form of Bonus Agreement between Eagle Geophysical, Inc.
and Paul A. Frame
10.29** -- Outside Directors Deferred Compensation Plan
10.30** -- Independent Directors Stock Option Plan
10.31** -- Stock Option Plan
10.32.1 -- Promissory Note payable by Jay Silverman to Eagle
Geophysical, Inc. dated July 23, 1997
</TABLE>

<PAGE> 107

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
10.32.2 -- Subscription Agreement between Eagle Geophysical, Inc.
and Jay N. Silverman dated July 23, 1997
10.32.3 -- Security Agreement -- Pledge between Eagle Geophysical,
Inc. and Jay N. Silverman dated July 23, 1997
10.33.1** -- The Bank of N.T. Butterfield Term Loan Facility dated
February 27, 1995
10.33.2** -- The Bank of N.T. Butterfield & Son Limited Facility
Letter dated August 23, 1994
10.33.3** -- The Bank of N.T. Butterfield & Son Limited Amendment
Letter No. 1 dated February 3, 1995
10.33.4** -- The Bank of N.T. Butterfield & Son Limited Amendment
Letter No. 2 dated February 19, 1996
10.33.5** -- The Bank of N.T. Butterfield & Son Limited Letter dated
May 10, 1996
10.33.6** -- The Bank of N.T. Butterfield & Son Limited Letter dated
May 19, 1997
10.34.1** -- Abshire Tide Blanket Time Charter dated February 9, 1996,
between Tidewater Marine, Inc. and Horizon Seismic Inc.
10.34.2** -- Letter Agreement dated February 12, 1996 relating to
Abshire Tide Blanket Time Charter
10.34.3** -- Tidewater Marine letter to Horizon Seismic, Inc. dated
September 19, 1996 regarding the letter agreement dated
February 12, 1996 governing the Time Charter of the MV
Abshire Tide
10.34.4** -- Tidewater Marine letter to Horizon Seismic, Inc. dated
March 25, 1996 regarding the letter agreement dated
February 12, 1996 governing the Time Charter of the MV
Abshire Tide
10.35.1** -- Supplemental Security Agreement No. One dated February
22, 1996 between Seitel Geophysical, Inc. and MetLife
Capital Corporation
10.35.2** -- Term Promissory Note ($433,000) dated March 14, 1996, by
Seitel Geophysical, Inc. in favor of MetLife Capital
Corporation
10.36** -- Service Agreement for MV Discoverer dated April 12, 1994,
between Horizon Seismic, Inc. and Shanghai Bureau of
Marine Geological Survey, as amended
10.37** -- Underlease dated April 21, 1997, between Payless
Properties Limited and HEL
10.38** -- Lease Agreement between Pincay Oaks, Inc. and HEL
10.39** -- Lease dated February 1, 1997, between Tuscan Property
Developments Limited and HEL
10.40** -- Set-off and Charge dated August 30, 1994, between HEL and
The Bank of N.T. Butterfield & Son Limited
10.41** -- Deed relating to 6 Pembroke Road Sevenoaks Kent dated
August 25, 1993, between Marley Waterproofing Limited and
HEL
10.42** -- Debenture dated August 12, 1994, between HEL and The Bank
of N.T. Butterfield & Son Limited
10.43** -- Chattel Mortgage between HEL and The Bank of N.T.
Butterfield & Son Limited
10.44** -- Form of Employment Agreement between Eagle Geophysical
and David Burns.
10.45** -- Operating Lease of Marine Seismic Equipment dated as of
July 1, 1996, between Seismic Geophysical, Inc. and HEL
10.46** -- Assignment between HEL and The Bank of NT Butterfield &
Sons Limited
10.47** -- Letter of Hypothecation and Pledge dated August 30, 1994,
between Seismic Exploration Ltd. and The Bank of N.T.
Butterfield & Son Limited
10.48** -- Lease Agreement dated January 7, 1997, between DigiCOURSE
INC. and HEL
10.49** -- Lease Agreement dated March 27, 1997, between DigiCOURSE
INC. and HEL
10.50** -- Initial Definitive Trust Deed -- Horizon Pension Plan
10.51** -- Operating Lease dated February 3, 1997, between Eagle
Geophysical, Inc. and HEL
10.52** -- Contribution Agreement dated as of May 30, 1997, between
Seitel, Inc. and Eagle Geophysical, Inc.
</TABLE>

<PAGE> 108

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
10.53** -- Assignment of Life Insurance dated December 9, 1993
insuring G.M. Harrison.
10.54** -- Lease dated December 12, 1995, between Newington Bricks
Limited and HEL
10.55** -- Lease dated August 25, 1993, between Marley Waterproofing
Limited and HEL
10.56** -- Master Agreement for Geophysical Services by and between
Eagle Geophysical Onshore, Inc. and Seitel Data, Ltd.
10.57** -- Master Agreement for Geophysical Services by and between
Eagle Geophysical Onshore, Inc. and DDD Energy, Ltd.
10.58 -- Form of Employee Benefits Allocation Agreement between
Seitel, Inc. and Eagle Geophysical, Inc.
23.1 -- Consent of Arthur Andersen LLP, Independent Public
Accountants
23.2 -- Consent of KPMG, Independent Public Accountants
23.3** -- Consent of Gardere Wynne Sewell & Riggs, L.L.P.
(contained in exhibit 5.1 opinion)
27** -- Financial data schedule
</TABLE>

- ---------------

** Previously filed

<PAGE> 1
EXHIBIT 10.16

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of
________ ___, 1997, by and between EAGLE GEOPHYSICAL, INC., a Delaware
corporation (the "Company"), and JAY N. SILVERMAN (the "Executive").

The Company desires to employ the Executive and the Executive desires
to accept employment with the Company, on the terms and conditions of this
Agreement.

Accordingly, the parties agree as follows:

1. Employment, Duties and Acceptance.

1.1 Employment by the Company and Duties. The Company
hereby agrees to employ the Executive for a term commencing on the effective
date (the "IPO Date") of the initial public offering of the Company's common
stock (the "IPO"), and expiring at the end of the day three (3) years from the
IPO Date (such date, or later date to which this Agreement is extended in
accordance with the terms hereof, the "Termination Date"), unless earlier
terminated as provided in Section 4 or unless extended as provided herein (the
"Term"). The Term shall be automatically extended commencing on the
Termination Date and on each Termination Date thereafter (each such date being
a "Renewal Date"), so as to terminate one (1) year from such Renewal Date,
unless and until at least ninety (90) days prior to a Renewal Date either party
hereto gives written notice to the other that the Term should not be further
extended after the next Renewal Date, in which event the Termination Date shall
be the Renewal Date following such notice. Notwithstanding the foregoing or
anything herein to the contrary, this Agreement shall terminate and the parties
shall have no further rights or obligations with respect hereto if the IPO is
not effective on or before December 31, 1997. During the Term, the Executive
shall serve in the capacity of President of the Company, and shall also serve
in those offices and directorships of subsidiary corporations or entities of
the Company to which he may from time to time be appointed or elected. During
the Term, the Executive shall devote all reasonable efforts and all of his
business time and services to the Company, subject to the direction of the
Board of Directors of the Company (the "Board"). The Executive shall not
engage in any other business activities except for passive investments in
corporations or partnerships not engaged in the Company Business (as
hereinafter defined) pursuant to Section 3 hereof.

1.2 Acceptance of Employment by the Executive. The
Executive hereby accepts such employment and shall render the services and
perform the duties described above.

2. Compensation and Other Benefits.

2.1 Annual Salary. The Company shall pay to the
Executive an annual salary at a rate of not less than two hundred sixty
thousand dollars ($260,000) per year (the "Annual Salary"), subject to increase
at the sole discretion of the Board; provided, however, that the Annual Salary
shall be increased effective as of January 1 of each year during the Term at a

<PAGE> 2
minimum by a percentage equal to the percentage increase in the Consumer Price
Index (Urban - Houston Metropolitan Area) for the previous calendar year. The
Annual Salary shall be payable in accordance with the payroll policies of the
Company as from time to time in effect, but in no event less frequently than
once each month, less such deductions as shall be required to be withheld by
applicable law and regulations.

2.2 Incentive Bonuses.

2.2.1 Base Incentive Bonus. The Executive shall
receive an incentive bonus, if earned, with respect to each fiscal quarter
ending during the Term (the "Base Incentive Bonus"), equal to twenty-five
percent (25%) of the Annual Salary in effect during such quarter; provided,
however, that the Base Incentive Bonus for a fiscal quarter shall only be
payable if the Gross Margin (as hereinafter defined) for such fiscal quarter
equals or exceeds 17%.

2.2.2 Additional Incentive Bonus. The Executive
shall receive an additional incentive bonus, if earned, with respect to the
fiscal years ending during the Term (the "Additional Incentive Bonus");
provided, however, that an Additional Incentive Bonus for a fiscal year shall
only be payable if the Company earns Pre-Tax Profits (as hereinafter defined)
for such fiscal year. The Base Incentive Bonus and Additional Incentive Bonus
are hereinafter collectively referred to as the "Incentive Bonuses."

2.2.3 Definitions.

"Chief Financial Officer" means the chief
financial officer of the Company.

"Code" means the Internal Revenue Code of
1986, as amended.

"Gross Margin" means the amount of revenues
less all expenses except for depreciation, amortization, interest, taxes and
overhead of the Onshore Business calculated by the Chief Financial Officer
applying such accounting principles and assumptions as may be reasonable.

"Pre-Tax Profits" means the amount of pre-tax
profits of the Company calculated by the Chief Financial Officer applying
generally accepted accounting principles and such other accounting principles
and assumptions as may be reasonable.

"Onshore Business" means the onshore seismic
data acquisition business conducted by the Company and any company or other
entity that is a direct or indirect wholly owned subsidiary of the Company
(including any profits allocated to the Company or any such subsidiary through
its participation in or ownership of an interest in a partnership, venture,
corporation or other entity).

2.2.4 Calculation of Additional Incentive Bonus.
If the Company earns Pre-Tax Profits for a fiscal year, the Executive shall
receive an Additional Incentive Bonus equal to the Applicable Percentage set
forth in the table below of the Pre-Tax Profits.

-2-
<PAGE> 3

<TABLE>
<CAPTION>
Pre-Tax Profits
(percent of gross revenues) Applicable Percentage
---------------------------------- ---------------------
<S> <C>
greater than 0%, but less than 10% 4%

equal to or greater than 10% 5%
</TABLE>

2.2.5 Payment of Incentive Bonuses. The Chief
Financial Officer shall calculate the Gross Margin and Pre-Tax Profits, if any,
and any Base Incentive Bonus and Additional Incentive Bonus payable to the
Executive in connection therewith, shall certify such calculations and shall
deliver such calculations to the Executive and the Chairman of the Compensation
Committee of the Company (for his review and approval) as soon as reasonably
practicable after the end of each fiscal quarter, in the case of the Base
Incentive Bonus, and the end of each fiscal year, in the case of the Base
Incentive Bonus and Additional Incentive Bonus, but in any event within
seventy-five (75) days following the end of the applicable fiscal period. Any
Base Incentive Bonus and Additional Incentive Bonus payable hereunder shall be
paid by the Company to the Executive within fifteen (15) days of delivery of
such calculations by the Chief Financial Officer and in any event within ninety
(90) days following the end of the applicable fiscal period.

2.2.6 Proration of Bonuses.

2.2.6.1 For purposes of determining the Base
Incentive Bonus payable to Executive hereunder attributable to the Company's
fiscal quarter ending September 30, 1997, the amount of such bonus will equal
twenty-five percent (25%) of the Annual Salary in effect during such quarter
multiplied by a fraction, the numerator of which is the number of days during
the period beginning on the IPO Date and ending on the last day of such quarter
(such period being referred to herein as the "Calculation Period") and the
demoninator of which is the total number of days in such quarter; provided,
however, that the Base Incentive Bonus for the fiscal quarter ending September
30, 1997 shall only be payable if the Gross Margin during the Calculation
Period equals or exceeds 17%.

2.2.6.2 Executive shall be entitled to a
payment of a Base Incentive Bonus for the fiscal quarter of the Company during
which the Termination Date occurs (the "Termination Quarter"), calculated in
accordance with this subsection 2.2.6.2. For purposes of determining the Base
Incentive Bonus payable to Executive hereunder attributable to the Termination
Quarter, the amount of such bonus will equal twenty-five percent (25%) of the
Annual Salary in effect at the beginning of the Termination Quarter multiplied
by a fraction, the numerator of which is the number of days during the period
beginning on the first day of the Termination Quarter and ending on the
Termination Date and the demoninator of which is the number of days in the
Termination Quarter; provided, however, that the Base Incentive Bonus for the
Termination Quarter shall only be payable if the Gross Margin during the
Termination Quarter equals or exceeds 17%.

-3-

<PAGE> 4

2.2.6.3 For purposes of determining the
Additional Incentive Bonus payable to Executive hereunder attributable to the
Company's fiscal year ending December 31, 1997, the amount of Pre-Tax Profits
and gross revenues used for the calculation pursuant to subsection 2.2.4 above
will be only those Pre-Tax Profits and gross revenues attained by the Company
during the period beginning on the IPO Date and ending on December 31, 1997.

2.2.6.4 Executive shall be entitled to a
payment of an Additional Incentive Bonus for any fiscal year of the Company
during which the Termination Date occurs (the "Termination Year"), calculated
in accordance with this subsection 2.2.6.4. For purposes of determining the
Additional Incentive Bonus payable to Executive hereunder attributable to the
Termination Year, the amount of the Additional Incentive Bonus will be equal to
the amount otherwise determined pursuant to subsection 2.2.4 for the
Termination Year multiplied by a fraction, the numerator of which is the number
of days from the beginning of the Termination Year to the Termination Date and
the denominator of which is 365.

2.3 Grant of Option. The Company agrees to grant the
Executive, pursuant to the terms of the Company's Option Plan (the "Option
Plan") created in connection with the IPO, options to acquire one hundred fifty
thousand (150,000) shares of the Company's common stock (the "Options"), at an
exercise price equal to the offering price of the common stock of the Company
sold pursuant to the IPO (the "IPO Price"). The options shall vest over a
period of three years, with Options to acquire 50,000 shares vesting on each of
the first three anniversaries of the IPO Date, subject to the terms of the
Option Plan. The Company agrees to use all reasonable efforts, consistent with
the foregoing, to ensure that the maximum number of Options permitted by
applicable law meet all requirements for treatment as Incentive Stock Options
under the Code, and that the grant of the Options meets the requirements of
Rule 16b-3, promulgated under Section 16 of the Securities Exchange Act of
1934, as amended.

2.4 Vacation Policy. The Executive shall be entitled to
a paid vacation of four weeks during each year of the Term.

2.5 Participation in Employee Benefit Plans. The Company
agrees to permit the Executive during the Term, if and to the extent eligible,
to participate in any group life, hospitalization or disability insurance plan,
health program, pension plan, similar benefit plan or other so called "fringe
benefits" of the Company (collectively, "Benefits") which may be available to
other executives of the Company on terms no less favorable to the Executive
than the terms offered to such other executives. The Company agrees to use its
best efforts to obtain immediate coverage for the Executive upon the
commencement of the Term under its existing or newly adopted medical expense
and hospitalization plan for employees without premium surcharge and without
exclusions for disclosed preexisting conditions. The Company shall obtain a
ten year level term life insurance policy insuring the life of the Executive in
the amount of one million dollars, with beneficiaries designated pursuant to
the Executive's instructions. The Company also shall provide disability
insurance for the Executive, which shall provide for payments based on
60% of the total compensation paid to the Executive for the prior fiscal
year upon his disability. For purposes of the foregoing sentence, the
total compensation of the Executive shall be no less than the Annual Salary
and no more than one million dollars. The Executive shall cooperate
with the Company in applying

-4-

<PAGE> 5

for such coverage, including submitting to a physical exam and providing all
relevant health and personal data.

2.6 General Business Expenses. The Company shall pay or
reimburse the Executive for all expenses reasonably and necessarily incurred by
the Executive during the Term in the performance of the Executive's services
under this Agreement. Such payment shall be made upon presentation of such
documentation as the Company customarily requires of its senior executive
employees prior to making such payments or reimbursements.

2.7 Company Car and Cellular Telephone. The Company
shall pay the Executive a car allowance of nine hundred and no/100 Dollars
($900.00) per month, which the Executive may apply, in his discretion, to the
cost associated with purchasing or leasing and insuring an automobile of the
Executive's choice. The Executive may use the automobile for personal as well
as business purposes. The Company shall also furnish the Executive with a
cellular telephone of his choice and the Company shall pay all charges in
connection with the use thereof, other than charges for calls not related to
the Executive's duties hereunder.

2.8 Company Loan to the Executive.

2.8.1 Loan and Purchase of Shares. The Executive
shall purchase twenty-five thousand (25,000) shares of the Company's common
stock (the "Executive Shares") at the IPO Price (as estimated by the Company)
prior to the IPO. The Company shall loan (the "Loan") to the Executive an
amount equal to the total purchase price of such shares (25,000 multiplied by
the estimated IPO Price) (the "Loan Amount"). After the IPO, the purchase
price of the Executive Shares shall be adjusted to the actual IPO Price, and
the Loan Amount shall be adjusted to reflect such IPO Price. The Loan Amount
shall accrue interest at the rate of 6% per annum, which interest shall be
payable quarterly by the Executive to the Company as such interest accrues.
The principal of the Loan shall be payable in sixty (60) equal monthly payments
beginning on the third anniversary of the date of the Loan. All amounts
payable in connection with the Loan shall be payable by the Executive to the
Company on or before the fifth day of the month in which such payment is due.
In any event, all outstanding principal and interest payable pursuant to the
Loan shall be payable by the Executive to the Company on or before the eighth
anniversary of the date of the Loan. The Company shall have a contractual
right of set-off of any amounts payable by the Company to the Executive for any
and all liabilities or obligations of the Executive to the Company.

2.8.2 Pledge and Acceleration. The Loan shall be
secured by a pledge of the Executive Shares, and the Executive shall deliver to
the Company an executed Security Agreement - Pledge (in a form reasonably
satisfactory to the Company and the Executive), an executed Stock Power and the
Executive Shares contemporaneously with the Loan and the acquisition of the
Executive Shares. The Loan shall be fully recourse against the Executive;

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provided, however, that if the Executive is terminated by the Company without
Cause (as hereinafter defined), including constructive termination without
Cause pursuant to Section 4.6 hereof, the Loan shall become recourse only to
the Executive Shares, and upon any default by the Executive in repayment of the
Loan, any proceeds from the sale of the Executive Shares in excess of the
amounts owed by the Executive to the Company shall be paid by the Company to
the Executive, pursuant to the terms of the Security Agreement - Pledge.
Notwithstanding the payment terms set forth in Section 2.8.1 hereof, all unpaid
principal and accrued and unpaid interest under the Loan shall become
immediately due and payable upon the occurrence of (i) the termination of the
Executive's employment hereunder with Cause pursuant to Section 4.2 hereof, or
(ii) the termination of this Agreement by the Executive pursuant to Section 4.4
hereof.

2.9 Section 162(m) Compensation Deferral.
Notwithstanding anything herein to the contrary, if the total compensation
payable to the Executive by the Company during any year would cause the Company
to lose the federal income tax deduction for any portion of such compensation
under Section 162(m) of the Code: (a) the amount of compensation payable by the
Company to the Executive during such year shall be reduced to the maximum
amount for which the Company may receive a current deduction under Section
162(m) of the Code, and (b) the excess of such compensation shall be deferred
and paid by the Company to the Executive (without interest) at such time
(whether during the Term or after the expiration of the Term) as the Company
may pay such deferred compensation to the Executive and receive a corresponding
federal income tax deduction under Section 162(m) of the Code.

2.10 Excess Parachute Savings Clause. Notwithstanding
anything herein to the contrary, if any portion of the amount payable to the
Executive by the Company under this Section 2 or any other provision of this
Agreement, or any other amount payable to the Executive pursuant to any other
agreement with or plan of the Company that would constitute a "parachute
payment" (in the aggregate, the "Total Payments"), would constitute an "excess
parachute payment," then the payments to be made to the Executive under this
Agreement shall be reduced, without any further action by the Company or the
Executive, such that the value of the Total Payments that Executive is entitled
to receive shall be One Dollar ($1.00) less than the maximum amount which the
Executive may receive without becoming subject to the tax imposed by Section
4999 of the Code, or which the Company may pay without loss or deduction under
Section 280G(a) of the Code. For purposes of this Agreement, the terms "excess
parachute payment" and "parachute payment" shall have the meanings assigned to
them in Section 280G of the Code, and such "parachute payments" shall be valued
as provided therein.

2.11 Increase of Executive's Responsibilities. If, by
virtue of merger, consolidation or acquisition, (i) there is a substantial
increase in the assets or revenues of the Company and a corresponding
substantial increase in the responsibilities of the Executive or (ii) there is
a direct and material adverse effect on the bonuses otherwise payable to
Executive pursuant to this agreement, the Company agrees to evaluate whether an
adjustment to the compensation payable to the Executive pursuant to this
Agreement is appropriate to properly compensate the Executive.

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3. Non-Competition, Confidentiality and Company Property.

3.1 Covenants Against Competition. The Executive
acknowledges that (i) the Company is currently engaged in the business of
owning, managing and operating seismic data acquisition equipment and hiring
and managing crews to operate such equipment, which equipment and crews are
contracted or hired for the purpose of performing geological surveys and
acquiring seismic data onshore and offshore (the "Company Business"); (ii) his
work for the Company will give him access to trade secrets of and confidential
information concerning the Company; and (iii) the agreements and covenants
contained in this Agreement are essential to protect the business and goodwill
of the Company. Accordingly, the Executive covenants and agrees as follows:

3.1.1 Non-Compete. As an independent covenant, and
in order to enforce the provision of Sections 3.1.2 through 3.1.6 hereof and
the other provisions of this Agreement, the Executive agrees that he shall not
during the Restricted Period (as hereinafter defined) within a two hundred
(200) mile radius of any office maintained by the Company within one year prior
to the end of the Term, including, without limitation, the office address
specified from time to time pursuant to Section 7.2 hereof and any field
offices, directly or indirectly (except in the Executive's capacity as an
officer of the Company), (i) engage or participate in the Company Business;
(ii) enter the employ of, or render any other services to, any person engaged
in the Company Business except as permitted hereunder; or (iii) become
interested in any such person in any capacity, including, without limitation,
as an individual, partner, shareholder, lender, officer, director, principal,
agent or trustee except as permitted hereunder; provided, however, that the
Executive may own, directly or indirectly, solely as an investment, securities
of any person traded on any national securities exchange or listed on the
National Association of Securities Dealers Automated Quotation System if the
Executive is not a controlling person of, or a member of a group which
controls, such person and the Executive does not, directly or indirectly, own
5% or more of any class of equity securities, or securities convertible into or
exercisable or exchangeable for 5% or more of any class of equity securities,
of such person. As used herein, and in Sections 3.1.2 and 3.1.6 the
"Restricted Period" shall mean a period commencing on the date hereof and
terminating upon the first to occur of (a) the date on which the Company
terminates or is deemed to terminate the Executive's employment without Cause
(as hereinafter defined), (b) the date the Executive terminates or is deemed to
terminate his employment pursuant to Section 4.6 hereof or (c) the date of
termination of this Agreement; provided, however, that if the Company shall
have terminated the Executive's employment for Cause and such Cause in fact
exists or if the Executive shall have terminated his employment with the
Company in breach of the terms of this Agreement, the Restricted Period shall
end one (1) year following the termination of the Executive's employment
hereunder.

3.1.2 Customers. As an independent covenant, the
Executive also agrees to refrain during the Restricted Period, without written
permission from the Company, from diverting, taking, soliciting and/or
accepting on his own behalf or on the behalf of another person, firm, or
company, the business of any past or present customer of the Company, its
divisions, subsidiaries and/or other affiliated entities, or any identified
prospective or potential customer of the Company, its divisions, subsidiaries
and/or affiliated entities, whose identity became known to the Executive
through his employment by the Company.

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3.1.3 Confidential Information.

3.1.3.1 The Executive acknowledges that the
Company has a legitimate and continuing proprietary interest in the protection
of its confidential information and that it has invested substantial sums and
will continue to invest substantial sums to develop, maintain and protect
confidential information. The Company agrees to provide the Executive access
to confidential information in conjunction with the Executive's duties,
including, without limitation, information of a technical and business nature
regarding the Company's past, current or anticipated business that may
encompass financial information, financial figures, trade secrets, customer
lists, details of client or consultant contracts, pricing policies, operational
methods, marketing plans or strategies, product development techniques or
plans, business acquisition plans, Company employee information, organizational
charts, new personnel acquisition plans, technical processes, designs and
design projects, inventions and research projects, ideas, discoveries,
inventions, improvements, trade secrets, design specifications, writings and
other works of authorship. In exchange, as an independent covenant, the
Executive agrees not to make any unauthorized use, publication, or disclosure,
during or subsequent to his employment by the Company, of any Intellectual
Property of a confidential or trade secret nature, generated or acquired by him
during the course of his employment, except to the extent that the disclosure
of Intellectual Property Information is necessary to fulfill his
responsibilities as an employee of the Company. The Executive understands that
confidential matters and trade secrets include information not generally known
by or available to the public about or belonging to the Company, its divisions,
subsidiaries, and related affiliates, or belonging to other companies to whom
the Company, its divisions, subsidiaries, and related affiliates, may have an
obligation to maintain information in confidence, and that authorization for
public disclosure may only be obtained through the Company's written consent.

3.1.3.2 The Executive further agrees not to
disclose to the Company, or induce any personnel of the Company to use, any
confidential information, trade secret, or confidential material belonging to
others.

3.1.3.3 The Executive agrees that the
covenants set forth in Sections 3.1.3.1 and 3.1.3.2 are independent covenants
and indefinite obligations binding upon the Executive both during and after the
termination of the Executive's relationship with the Company.

3.1.4 Property of the Company. All memoranda,
notes, lists, records, engineering drawings, technical specifications and
related documents and other documents or papers (and all copies thereof)
relating to the Company, including such items stored in computer memories,
microfiche or by any other means, made or compiled by or on behalf of the
Executive after the date hereof, or made available to the Executive after the
date hereof relating to the Company, its affiliates or any entity which may
hereafter become an affiliate thereof, shall be the property of the Company,
and shall be delivered to the Company promptly upon the termination of the
Executive's employment with the Company or at any other time upon request;
provided, however, that the Executive's address books, diaries, chronological
correspondence files and rolodex files shall be deemed to be property of the
Executive.

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3.1.5 Original Material. The Executive agrees that
any inventions, discoveries, improvements, ideas, concepts or original works of
authorship relating directly to the Company Business, including without
limitation information of a technical or business nature such as ideas,
discoveries, designs, inventions, improvements, trade secrets, know-how,
manufacturing processes, product formulae, design specifications, writings and
other works of authorship, computer programs, financial figures, marketing
plans, customer lists and data, business plans or methods and the like, which
relate in any manner to the actual or anticipated business or the actual or
anticipated areas of research and development of the Company and its divisions,
subsidiaries, affiliates, or related entities, whether or not protectable by
patent or copyright, that have been originated, developed or reduced to
practice by the Executive alone or jointly with others during the Executive's
employment with the Company shall be the property of and belong exclusively to
the Company. The Executive shall promptly and fully disclose to the Company
the origination or development by the Executive of any such material and shall
provide the Company with any information that it may reasonably request about
such material. Either during the subsequent to the Executive's employment,
upon the request and at the expense of the Company or its nominee, and for no
remuneration in addition to that due the Executive pursuant to his employment
by the Company, but at no expense to him, the Executive agrees to execute,
acknowledge, and deliver to the Company or its attorneys any and all
instruments which, in the judgment of the Company or its attorneys, may be
necessary or desirable to secure or maintain for the benefit of the Company
adequate patent, copyright, and other property rights in the United States and
foreign countries with respect to any such inventions, improvements, ideas,
concepts, or original works of authorship embraced within this Agreement.

3.1.6 Employees of the Company and its Affiliates.
As an independent covenant, the Executive agrees to refrain during the
restricted Period from inducing or attempting to influence any employee of the
Company, its divisions, subsidiaries and/or affiliated entities to terminate
his employment.

3.1.7 Company's Interest. The Executive further
agrees that these covenants are made to protect the legitimate business
interests of the Company, including interests in the Company's property
described in and pursuant to Section 3.1.4 and Section 3.1.5, and not to
restrict his mobility or to prevent him from utilizing his general technical
skills. The Executive understands as a part of these covenants that the
Company intends to exercise whatever legal recourse against him for any breach
of this Agreement and, in particular, for any breach of these covenants.

3.2 Rights and Remedies Upon Breach. If the Executive
breaches, any of the provisions contained in Section 3.1 of this Agreement (the
"Restrictive Covenants"), the Company shall have the following rights and
remedies, each of which rights and remedies shall be independent of the others
and severally enforceable, and each of which is in addition to, and not in lieu
of, any other rights and remedies available to the Company under law or in
equity:

3.2.1 Specific Performance. The right and remedy
to have the Restrictive Covenants specifically enforced by any court of
competent jurisdiction, it being agreed that any breach of the Restrictive
Covenants would cause irreparable injury to the Company and that money damages
would not provide an adequate remedy to the Company.

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3.2.2 Accounting. The right and remedy to require
the Executive to account for and pay over to the Company all compensation,
profits, monies, accruals, increments or other benefits derived or received by
the Executive as the result of any action constituting a breach of the
Restrictive Covenants.

3.3 Severability of Covenants. The Executive
acknowledges and agrees that the Restrictive Covenants are reasonable and valid
in duration and geographical scope and in all other respects. If any court
determines that any of the Restrictive Covenants, or any part thereof, is
invalid or unenforceable, the remainder of the Restrictive Covenants shall not
thereby be affected and shall be given full effect without regard to the
invalid portions.

3.4 Court Review. If any court determines that any of
the Restrictive Covenants, or any part thereof, is unenforceable because of the
duration or geographical scope of, or scope of activities restrained by, such
provision, such court shall have the power to reduce the duration or scope of
such provision, as the case may be, and, in its reduced form, such provision
shall then be enforceable.

3.5 Enforceability in Jurisdictions. The Company and the
Executive intend to and hereby confer jurisdiction to enforce the Restrictive
Covenants upon the courts of any jurisdiction within the geographical scope of
such Restrictive Covenants. If the courts of any one or more of such
jurisdictions hold the Restrictive Covenants unenforceable by reason of the
breadth of such scope or otherwise, it is the intention of the Company that
such determination not bar or in any way affect the right of the Company to the
relief provided above in the courts of any other jurisdiction within the
geographical scope of such Restrictive Covenants, as to breaches of such
Restrictive Covenants in such other respective jurisdictions, such Restrictive
Covenants as they relate to each jurisdiction being, for this purpose,
severable into diverse and independent covenants.

4. Termination.

4.1 Termination Upon Death. If the Executive dies during
the Term, this Agreement shall terminate; provided, however, that in any such
event, the Company shall pay to the Executive's estate any portion of the
Annual Salary and any fully-earned Incentive Bonuses that shall have been
earned by the Executive prior to the termination but not yet paid, any Benefits
that have vested in the Executive at the time of such termination as a result
of his participation in any of the Company's benefit plans shall be paid to the
Executive, or to his estate or designated beneficiary, in accordance with the
provisions of such plan; and the Company shall reimburse the Executive, or his
estate, for any expenses with respect to which the Executive is entitled to
reimbursement pursuant to Section 2.6 of this Agreement, and the Executive's
right to indemnification, payment or reimbursement pursuant to Section 6 of
this Agreement shall not be affected by such termination and shall continue in
full force and effect, both with respect to proceedings that are threatened,
pending or completed at the date of such termination and with respect to
proceedings that are threatened, pending or completed after that date.

4.2 Termination With Cause. The Company has the right,
at any time during the Term, subject to all of the provisions hereof,
exercisable by serving notice, effective on or

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after the date of service of such notice as specified therein, to terminate the
Executive's employment under this Agreement and discharge the Executive with
Cause. If such right is exercised, the Company's obligation to the Executive
shall be limited solely to the payment of unpaid Annual Salary accrued,
together with earned but unpaid Incentive Bonuses, if any, and Benefits vested
up to the effective date specified in the Company's notice of termination. As
used in this Agreement, the term "Cause" shall mean and include (i) chronic
alcoholism or controlled substance abuse as determined by a doctor mutually
acceptable to the Company and the Executive, (ii) an act of proven fraud or
dishonesty on the part of the Executive with respect to the Company or its
subsidiaries; (iii) knowing and material failure by the Executive to comply
with material applicable laws and regulations relating to the business of the
Company or its subsidiaries; (iv) the Executive's material and continuing
failure to perform (as opposed to unsatisfactory performance) his duties
hereunder or a material breach by the Executive of this Agreement except, in
each case, where such failure or breach is caused by the illness or other
similar incapacity or disability of the Executive; or (v) conviction of a crime
involving moral turpitude or a felony. Prior to the effectiveness of
termination for Cause under subclause (i), (ii), (iii) or (iv) above, the
Executive shall be given 30 days' prior notice from the Board specifically
identifying the reasons which are alleged to constitute Cause for any
termination hereunder and an opportunity to be heard by the Board in the event
the Executive disputes such allegations.

4.3 Termination Without Cause. The Company has the
right, at any time during the Term, subject to all of the provisions hereof,
exercisable by serving notice, effective on or after the date of service of
such notice as specified therein, to terminate the Executive's employment under
this Agreement and discharge the Executive without Cause. If the Executive is
terminated during the Term without Cause (including any termination which is
deemed to be a constructive termination without Cause under Section 4.6
hereof), the Company's obligation to the Executive shall be limited solely to
(i) loss of the Company's recourse against the Executive for amounts owed in
connection with the Loan (pursuant to Section 2.8 hereof), (ii) vesting of all
stock options granted to the Executive by the Company, and (iii) the payment,
at the times and upon the terms provided for herein, of (a) two times the
average of the total compensation paid by the Company to the Executive for the
three previous years (or, if this Agreement has been in effect for less than
three years at the time of such termination, the total compensation earned by
the Executive during such period divided by the number of days in the Term and
then multiplied by 730) and (b) any unpaid Incentive Bonuses and Benefits
awarded or accrued up to the date of termination. In the event of a
termination by the Company without Cause within 180 days after a Change of
Control (as hereinafter defined), including a constructive termination without
Cause pursuant to Section 4.6, the amounts due to the Executive pursuant to
this Section 4.3 shall be due and payable in one lump-sum payment within 60
days after such termination. In all other cases, any amounts due to the
Executive pursuant to this Section 4.3 shall be due and payable in twenty-four
(24) equal monthly payments beginning thirty (30) days after the date of
termination.

4.4 Termination by the Executive. Any termination of
this Agreement by the Executive during the Term, except such termination as is
deemed to be a constructive termination without Cause by the Company under
Section 4.6 of this Agreement, shall be deemed to be a breach of the terms of
this Agreement for the purposes of Section 3.1.1 hereof and shall entitle

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the Company to discontinue payment of all Annual Salary, Incentive Bonuses and
Benefits not earned and payable prior to the date of such termination.

4.5 Termination upon Disability. If during the Term the
Executive becomes physically or mentally disabled, whether totally or
partially, as evidenced by the written statement of a competent physician
licensed to practice medicine in the United States who is mutually acceptable
to the Company and the Executive or his closest relative if he is not then able
to make such a choice, so that the Executive is unable substantially to perform
his services hereunder for (i) a period of four consecutive months, or (ii) for
shorter periods aggregating six months during any twelve-month period, the
Company may at any time after the last day of the four consecutive months of
disability or the day on which the shorter periods of disability equal an
aggregate of six months, by written notice to the Executive, terminate the
Executive's employment hereunder and discontinue payments of the Annual Salary,
Incentive Bonuses and Benefits accruing from and after the date of such
termination. The Executive shall be entitled to the full compensation payable
to him hereunder for periods of disability shorter than the periods specified
in clauses (i) and (ii) of the previous sentence.

4.6 Constructive Termination Without Cause.
Notwithstanding any other provision of this Agreement, the Executive's
employment under this Agreement may be terminated during the Term by the
Executive, which shall be deemed to be constructive termination by the Company
without Cause, if one of the following events shall occur without the consent
of the Executive: (i) a failure to elect or reelect or to appoint or reappoint
the Executive to the office of President of the Company or other material
change by the Company of the Executive's functions, duties or responsibilities
which change would reduce the ranking or level, dignity, responsibility,
importance or scope of the Executive's position with the Company from the
position and attributes thereof described in Section 1 above; (ii) the
assignment or reassignment by the Company of the Executive to a location not
within 35 miles of the Company's current location; (iii) the liquidation,
dissolution, consolidation or merger of the Company, or transfer of all or
substantially all of its assets, other than a transaction in which a successor
corporation with a net worth substantially the same as or greater than that of
the Company assumes this Agreement and all obligations and undertakings of the
Company hereunder; (iv) a reduction in the Executive's fixed salary or change
by the Company without the consent of the Executive in the method of
determining the Executive's annual bonus that results in a reduction of such
annual bonus; (v) the failure of the Company to continue to provide the
Executive with office space, related facilities and secretarial assistance that
are commensurate with the Executive's responsibilities to and position with the
Company; (vi) the notification by the Company of the Company's intention not to
observe or perform one or more of the obligations of the Company under this
Agreement; (vii) the failure by the Company to indemnify, pay or reimburse the
Executive at the time and under the circumstances required by Section 6 of this
Agreement; or (viii) the occurrence of any other material breach of this
Agreement by the Company or any of its subsidiaries. Any such termination
shall be made by written notice to each member of the Board, specifying the
event relied upon for such termination and given within 60 days after such
event. Any constructive termination shall be effective 60 days after the date
the Chairman of the Board has been given such written notice setting forth the
grounds for such termination with specificity; provided, however, that the
Executive shall not be entitled to terminate this Agreement in respect of any
of the grounds set forth above if within 60 days

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after such notice the action constituting such ground for termination has been
cured and is no longer continuing. A constructive termination by the Company
without Cause shall terminate the Restrictive Period hereunder.

4.7 Change of Control. For the purposes hereof, a
"Change of Control of the Company" shall be deemed to have occurred if after
the IPO Date (i) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Act, directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power of the Company's then
outstanding securities without the prior approval of at least a majority of the
members of the Board in office immediately prior to such person attaining such
percentage interest; (ii) there occurs a proxy contest or a consent
solicitation, or the Company is a party to a merger, consolidation, sale of
assets, plan of liquidation or other reorganization not approved by at least a
majority of the members of the Board in office, as a consequence of which
members of the Board in office immediately prior to such transaction or event
constitute less than a majority of the Board thereafter; or (iii) during any
period of two consecutive years, other than as a result of an event described
in clause (ii) of this Section 4.7, individuals who at the beginning of such
period constituted the Board (including for this purpose any new director whose
election or nomination for election by the Company's stockholders was approved
by a vote of at least a majority of the directors then still in office who were
directors at the beginning of such period) cease for any reason to constitute
at least a majority of the Board.

5. Insurance. The Company may, from time to time, apply for and
take out, in its own name and at its own expense, naming itself or one or more
of its affiliates as the designated beneficiary (which it may change from time
to time), policies for life, health, accident, disability or other insurance
upon the Executive in any amount or amounts that it may deem necessary or
appropriate to protect its interest. The Executive agrees to aid the Company
in procuring such insurance by submitting to medical examinations and by
filling out, executing and delivering such applications and other instruments
in writing as may reasonably be required by an insurance company or companies
to which any application or applications for insurance may be made by or for
the Company.

6. Indemnification.

6.1 The Company shall, to the maximum extent not
prohibited by law, indemnify the Executive if he is made, or threatened to be
made, a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, including
an action by or in the right of the Company to procure a judgment in its favor
(collectively, a "Proceeding"), by reason of the fact that the Executive is or
was a director or officer of the Company, or is or was serving in any capacity
at the request of the Company for any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, against judgments,
fines, penalties, excise taxes, amounts paid in settlement and costs, charges
and expenses (including attorneys' fees and disbursements) paid or incurred in
connection with any such Proceeding.

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6.2 The Company shall, from time to time, reimburse or
advance to the Executive the funds necessary for payment of expenses, including
attorneys' fees and disbursements, incurred in connection with any Proceeding
in advance of the final disposition of such Proceeding; provided, however,
that, if required by the Texas Business Corporation Act, such expenses incurred
by or on behalf of the Executive may be paid in advance of the final
disposition of a Proceeding only upon receipt by the Company of an undertaking,
by or on behalf of the Executive, to repay any such amount so advanced if it
shall ultimately be determined by final judicial decision from which there is
no further right of appeal that the Executive is not entitled to be indemnified
for such expenses.

6.3 The right to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 6
shall not be deemed exclusive of any other rights which the Executive may now
or hereafter have under any law, by law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office.

6.4 The right to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 6
shall continue as to the Executive after he has ceased to be a director or
officer and shall inure to the benefit of the heirs, executors and
administrators of the Executive.

6.5 The Company shall purchase and maintain director and
officer liability insurance on such terms and providing such coverage as the
Board determines is appropriate, and the Executive shall be covered by such
insurance on the same basis as the other directors and executive officers of
the Company.

6.6 The right to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 6
shall be enforceable by the Executive in any court of competent jurisdiction.
The burden of proving that such indemnification or reimbursement or advancement
of expenses is not appropriate shall be on the Company. Neither the failure of
the Company (including its board of directors, independent legal counsel, or
its stockholders) to have made a determination prior to the commencement of
such action that such indemnification or reimbursement or advancement of
expenses is proper in the circumstances nor an actual determination by the
Company (including its board of directors, independent legal counsel, or its
stockholders) that the Executive is not entitled to such indemnification or
reimbursement or advancement of expenses shall constitute a defense to the
action or create a presumption that the Executive is not so entitled. The
Executive shall also be indemnified for any expenses incurred in connection
with successfully establishing his right to such indemnification or
reimbursement or advancement of expenses, in whole or in part, in any such
proceeding.

6.7 If the Executive serves (i) another corporation of
which a majority of the shares entitled to vote in the election of its
directors is held by the Company, or (ii) any employee benefit plan of the
Company or any corporation referred to in clause (i), in any capacity, then he
shall be deemed to be doing so at the request of the Company.

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<PAGE> 15
6.8 The right to indemnification or reimbursement or
advancement of expenses shall be interpreted on the basis of the applicable law
in effect at the time of the occurrence of the event or events giving rise to
the applicable Proceeding.

7. Other Provisions.

7.1 Certain Definitions. As used in this Agreement, the
following terms have the following meanings unless the context otherwise
requires:

(i) "affiliate" with respect to the Company means any
other person controlled by or under common control with the
Company but shall not include any stockholder or director of
the Company, as such.

(ii) "person" means any individual, corporation,
partnership, firm, joint Company, association, joint-stock
company, trust, unincorporated organization, governmental or
regulatory body or other entity.

(iii) "subsidiary" means any corporation 50% or more
of the voting securities of which are owned directly or
indirectly by the Company.

7.2 Notices. Any notice or other communication required
or permitted hereunder shall be in writing and shall be delivered personally,
telegraphed, telexed, sent by facsimile transmission or sent by certified,
registered or express mail, postage prepaid. Any such notice shall be deemed
given when so delivered personally, telegraphed, telexed or sent by facsimile
transmission or, if mailed, on the date of actual receipt thereof, as follows:

(i) if to the Company, to:

Eagle Geophysical, Inc.
50 Briar Hollow Lane
West Building, 6th Floor
Houston, Texas 77027
Attention: Chairman, Board of Directors

with a copy to:

Gardere Wynne Sewell & Riggs, L.L.P.
333 Clay Avenue, Suite 800
Houston, Texas 77002
Attention: N. L. Stevens III

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<PAGE> 16
(ii) if to the Executive, to:

Jay N. Silverman
50 Briar Hollow Lane
West Building, 6th Floor
Houston, Texas 02777

Any party may change its address for notice hereunder by notice to the other
party hereto.

7.3 Entire Agreement. This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements, written or oral, with respect thereto.

7.4 Waivers and Amendments. This Agreement may be
amended, superseded, canceled, renewed or extended, and the terms and
conditions hereof may be waived, only by a written instrument signed by the
parties or, in the case of a waiver, by the party waiving compliance. No delay
on the part of any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof Nor shall any waiver on the part of any party
of any such right, power or privilege hereunder, nor any single or partial
exercise of any right, power or privilege hereunder, preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder.

7.5 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Texas (without giving
effect to the choice of law provisions thereof) where the employment of the
Executive shall be deemed, in part, to be performed and enforcement of this
Agreement or any action taken or held with respect to this Agreement shall be
taken in the courts of appropriate jurisdiction in Houston, Texas.

7.6 Assignment. This Agreement, and any rights and
obligations hereunder, may not be assigned by the Executive and may be assigned
by the Company (subject to Section 4.6 (iii) hereof) only to a successor by
merger or purchasers of substantially all of the assets of the Company.

7.7 Counterparts. This Agreement may be executed in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all of which together shall constitute one and the same
instrument.

7.8 Headings. The headings in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.

7.9 No Presumption Against Interest. This Agreement has
been negotiated, drafted, edited and reviewed by the respective parties, and
therefore, no provision arising directly or indirectly herefrom shall be
construed against any party as being drafted by said party.

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<PAGE> 17
7.10 Validity Contest. The Company shall promptly pay any
and all legal fees and expenses incurred by the Executive from time to time as
a direct result of the Company's contesting the due execution, authorization,
validity or enforceability of this Agreement.

7.11 Dispute Resolution. If any dispute arises out of or
relates to this Agreement, or the breach thereof, Executive and the Company
agree to promptly negotiate in good faith to resolve such dispute. If the
dispute cannot be settled by the parties through negotiation, Executive and the
Company agree to try in good faith to settle the dispute by mediation under the
Commercial Mediation Rules of the American Arbitration Association before
resorting to arbitration, litigation or any other dispute resolution procedure.
If the parties are unable to settle the dispute by mediation as provided in the
preceding sentence, any claim, controversy or dispute arising out of or
relating to this Agreement, or the breach thereof, shall be settled by binding
arbitration before a panel of three arbitrators in accordance with the
Commercial Arbitration Rules of the American Arbitration Association. The
arbitration shall be conducted in Houston, Harris County, Texas, or such other
location to which the parties mutually agree. The decision of the
arbitrator(s) shall be final and binding and judgment upon the award rendered
may be entered in any court having jurisdiction thereof. The costs of
mediation and arbitration may be awarded to either party by the mediator or the
arbitrators and absent such award shall be borne equally by the parties.

7.12 Binding Agreement. This Agreement shall inure to the
benefit of and be binding upon the Company and its respective successors and
assigns and the Executive and his legal representatives.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

EXECUTIVE

---------------------------------------
Jay N. Silverman

COMPANY

EAGLE GEOPHYSICAL, INC.

By:
-----------------------------------

Name:
-----------------------------

Title:
-----------------------------

-17-

<PAGE> 1
EXHIBIT 10.21

SUBLEASE AGREEMENT

by and between

Seitel, Inc. and its subsidiaries
(collectively, "Sublessor")

and

Eagle Geophysical, Inc.
("Subtenant")

and

50 B.H., Inc.
("First Landlord")

dated as of the ____ day of _________, 1997
<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I. Sublease of Subleased Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1 Subleased Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2 Habendum Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

ARTICLE II. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

ARTICLE III. Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

ARTICLE IV. Additional Expenses; Services; Parking . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 4.1 Additional Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 4.2 Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 4.3 Parking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

ARTICLE V. Use of Premises; Construction of Improvements . . . . . . . . . . . . . . . . . . . . . . 4
Section 5.1 Use of Subleased Premises and Common Areas . . . . . . . . . . . . . . . . . . 4
Section 5.2 Construction of Improvements . . . . . . . . . . . . . . . . . . . . . . . . . 4

ARTICLE VI. Assumption Agreement and Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 6.1 Assumption of Assumed Provisions . . . . . . . . . . . . . . . . . . . . . . . 4
Section 6.2 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 6.3 Superior Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 6.4 Evidence of Performance of Assumed Provisions . . . . . . . . . . . . . . . . . 5
Section 6.5 No Preferential Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

ARTICLE VII. Limitation of Liability and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 7.1 Indemnity and Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 7.2 Release from Acts and Omissions of First Landlord and Third Parties . . . . . . 6
Section 7.3 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 7.4 Casualty or Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 7.5 Asbestos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

ARTICLE VIII. Condition of Subleased Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

ARTICLE IX. No Subleasing by Subtenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

ARTICLE X. Furniture and Fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>

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<PAGE> 3
<TABLE>
<S> <C>
ARTICLE XI. Events of Default and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 11.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 11.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 11.3 No Surrender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 11.4 Liability of Subtenant Upon Termination . . . . . . . . . . . . . . . . . . . 9
Section 11.5 Liability of Subtenant Upon Repossession . . . . . . . . . . . . . . . . . . . 10
Section 11.6 Additional Obligations of Subtenant Upon Default . . . . . . . . . . . . . . . 10
Section 11.7 No Obligation to Relet . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 11.8 Sublessor's Right to Remedy Defaults . . . . . . . . . . . . . . . . . . . . . 10
Section 11.9 Tenant's Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

ARTICLE XII. Miscellaneous Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 12.1 Texas Law to Apply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 12.2 Parties Bound . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 12.3 Legal Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 12.4 Prior Agreements Superseded . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 12.5 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 12.6 Nonwaiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 12.7 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 12.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 12.9 Surrender of Subleased Premises . . . . . . . . . . . . . . . . . . . . . . . 12
Section 12.10 No Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 12.11 No Filing of Lease or Memorandum . . . . . . . . . . . . . . . . . . . . . . 13
Section 12.11 Signage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

ARTICLE XIII. Security Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

ARTICLE XIV. Joinder by First Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>

EXHIBITS

Exhibit "A" - Floor Plan of 50 Briar Hollow Lane, 6th Floor West

Exhibit "B" - Parking Space Allocation

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<PAGE> 4
SUBLEASE AGREEMENT

THIS SUBLEASE AGREEMENT ("Sublease") is made as of the ____ day of
__________, 1997, among Seitel, Inc., a Delaware corporation ("Seitel"), Seitel
Gas & Energy, Inc., a Delaware corporation and wholly owned subsidiary of
Seitel ("SG&E"), and Seitel Management, Inc., a Delaware corporation and wholly
owned subsidiary of Seitel ("Seitel Management," and collectively with Seitel
and SG&E, "Sublessor"), Eagle Geophysical, Inc., a Delaware corporation
("Subtenant"), and 50 B.H., Inc. ("First Landlord").

Recitals

A. By Lease Agreement dated February 27, 1992 by and between
Seitel and First Landlord, First Landlord leased to Sublessor certain space in
50 Briar Hollow, West Building (the "Building"), an office building located at
50 Briar Hollow Lane, Houston, Harris County, Texas.

B. Said Lease Agreement has been amended from time to time
including, without limitation, by that certain First Amendment to Lease
Agreement dated effective July 12, 1993, that certain Second Amendment to Lease
Agreement dated effective February 2, 1994, that certain Third Amendment to
Lease Agreement dated effective April 24, 1995, and an agreement terminating
such lease as of August 31, 1997, each by and between First Landlord and Seitel
(collectively, the "Amendments"). Said Lease Agreement, as amended from time
to time including by the Amendments, and as it may be further amended from time
to time, is herein referred to as the "Seitel Leases."

C. By Lease Agreement dated April 24, 1995, and an agreement
terminating such lease as of August 31, 1997, by and between SG&E and First
Landlord, First Landlord leased to SG&E certain space in the Building (as so
amended, the "SG&E Leases").

D. By Lease Agreement dated July ___, 1997, by and between Seitel
Management and First Landlord, First Landlord leased to Seitel Management,
effective September 1, 1997, the space in the Building previously leased by
Seitel and SG&E under the Seitel Leases and the SG&E Leases (the "Seitel
Management Lease").

E. The Seitel Leases, the SG&E Leases, and the Seitel Management
Lease are herein called the "First Leases." The portion of the Building leased
to Sublessor under the First Leases is herein called the "Leased Premises."

F. Sublessor, Subtenant and First Landlord desire that Sublessor
sublease to Subtenant approximately 7,581 rentable square feet of space on the
6th floor of the Building ("Subleased Premises"), the Subleased Premises being
depicted on the Floor Plan of the 6th floor of the Building attached hereto as
Exhibit "A."
<PAGE> 5
Agreement

In consideration of the Recitals, the covenants set forth herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Sublessor, Subtenant and First Landlord hereby agree as
follows:

ARTICLE I.

Sublease of Subleased Premises

Section 1.1 Subleased Premises. Sublessor, in consideration of the
rents, covenants, agreements and conditions herein set forth which Subtenant
hereby agrees shall be paid, kept and performed, does hereby sublease unto
Subtenant, and Subtenant does hereby rent and sublease from Sublessor, the
Subleased Premises, containing approximately 7,581 square feet of net rentable
area, subject to all encumbrances and other matters affecting the Subleased
Premises.

Section 1.2 Habendum Clause. TO HAVE AND TO HOLD the Subleased
Premises, together with all and singular the rights and privileges appurtenant
thereunto attaching or in anywise belonging, exclusively unto Subtenant and its
successors and assigns (to the extent permitted herein), for the term set forth
in Article II hereof, subject to termination as herein provided and all
encumbrances and other matters affecting the Subleased Premises and subject to
and upon the covenants, agreements, terms, provisions and limitations herein
set forth.

ARTICLE II.

Term

The term of this Sublease shall commence on the date of the Closing of
Subtenant's initial public offering of its common stock. The date upon which
the term of this Sublease commences shall be herein called the "Commencement
Date." This Sublease shall terminate, unless sooner terminated pursuant to the
provisions hereof, on the earlier of (i) August 31, 2000, (ii) termination of
any of the First Leases (unless such termination was caused by a default by
Subtenant under this Sublease or any of the Assumed Provisions, as hereinafter
defined), or (iii) termination of Sublessor's right to possession of the Leased
Premises under the First Leases (unless such termination was caused by a
default by Subtenant under this Sublease or any of the Assumed Provisions).

ARTICLE III.

Rent

The rent for the Subleased Premises shall be payable in advance on the
Commencement Date and on the first day of each month thereafter throughout the
term of this Sublease. Each

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<PAGE> 6
monthly installment shall be in the amount of Seitel's total monthly rental
payments under the First Leases multiplied by a fraction, the numerator of
which is the square footage within the Subleased Premises and the denominator
of which is the total square footage of the Leased Premises under the First
Leases. Such rent shall include any and all adjustments and escalation
payments Seitel is obligated to pay under the First Leases. All unpaid rent
under the Sublease shall be due upon termination of this Sublease. The rent
payable hereunder shall be payable to Seitel, without notice or demand and
without deduction, abatement or setoff, in lawful money of the United States,
at the address of Seitel set forth in the notice provision of this Sublease.
If the Commencement Date or the last date of the term of this Sublease should
be on any day other than the first or last date of a calendar month,
respectively, then the rent for such month shall be made on a pro rata basis
for the part of such month included within the term of this Sublease. All past
due installments of rent shall bear interest at the highest non-usurious rate
permitted by law from the date due until paid and, at Sublessor's option, shall
be subject to a late charge in the amount of five percent (5%) of the amount
past due if the same is more than five (5) days past due.

ARTICLE IV.

Additional Expenses; Services; Parking

Section 4.1 Additional Expenses. In addition to paying rent as set
forth in Article III, Subtenant shall pay its pro rata share of any additional
costs and expenses incurred by Seitel under the First Leases or otherwise
relating to the Leased Premises as a whole, and shall pay all of any additional
costs and expenses (such as overtime a/c or heat) incurred by Seitel with
respect to the Subleased Premises. Any such sums shall be due within five days
of the date of an invoice therefor submitted by the Sublessor to Subtenant.

Section 4.2 Services.

(a) Phone System. Subtenant currently utilizes Sublessor's telephone
system and related equipment. During the Term, Subtenant shall continue to use
such phone system and related equipment and shall pay Sublessor therefor a
monthly fee of $1,100 payable with each rent payment hereunder. Such equipment
shall remain the property of Sublessor, and shall be returned to Sublessor upon
termination of this Sublease. In the event Subtenant requires additional phone
equipment during the Term, such equipment shall be acquired directly by
Subtenant at Subtenant's cost, which additional equipment shall be the property
of Subtenant. Subtenant shall pay, within five (5) days of invoice, all long
distance charges incurred by Subtenant billed to Sublessor, and Subtenant's pro
rata share, based on the number of phone extensions allocated to Sublessor, of
local phone charges billed to Sublessor.

(b) Computer Network. Subtenant currently utilizes Sublessor's local
area network and related file servers and network computers. During the Term,
Subtenant may continue to use such network and related equipment for a monthly
fee of $225 plus $25 per user payable with each rent payment hereunder.
Subtenant may at any time during the term, upon sixty (60) days advance written
notice, terminate its use of Sublessor's computer network and related
equipment, and upon such termination such usage fee shall cease. Sublessor
shall not be obligated to provide

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<PAGE> 7
such access to its computer network and related equipment if Subtenant's usage
thereof increases above levels of usage prior to the effective date of this
Sublease and such increase is determined by Sublessor, in its sole discretion,
to interfere with Sublessor's use of such network and related equipment.
Sublessor may terminate such access upon thirty (30) days advance written
notice in such event. Subtenant may also utilize the services, on an as
available basis, of Sublessor's Network Administrator for a fee of $60 per
hour, billed in minimum amounts of one hour and in half hour increments
thereafter. Subtenant will pay such fees within five (5) days of invoice
therefor.

Section 4.3 Parking. Subtenant shall be entitled to the use of six
(6) reserved parking spaces, as designated on Exhibit "B" hereto. Subtenant
shall not be required to pay any additional fees for the use of such parking
spaces.

ARTICLE V.

Use of Premises; Construction of Improvements

Section 5.1 Use of Subleased Premises and Common Areas. The
Subleased Premises shall be used by Subtenant solely for office space and for
no other purposes. Subtenant will not suffer or permit the use of the
Subleased Premises, or any part thereof, in any manner that would violate any
provision of the First Leases. Subtenant agrees that its use of any common
areas in or about the Building will not interfere with Sublessor's use thereof,
and that Subtenant will not do or permit to be done any act which would
prohibit or hinder Sublessor's use thereof.

Section 5.2 Construction of Improvements. Subtenant shall make no
alterations, installations, additions or improvements in or to the Subleased
Premises without the prior written consent of Sublessor and, if required under
the First Leases, First Landlord. Any such alterations, installations,
additions or improvements shall be made at Subtenant's sole cost and expense,
must be made in compliance with the terms of the First Leases, and may only be
made by persons authorized pursuant to the terms of the First Leases. The
removal of such alterations, installations, additions or improvements upon
termination of this Sublease shall be governed by the provisions of Article X
of this Sublease.

ARTICLE VI.

Assumption Agreement and Covenants

Section 6.1 Assumption of Assumed Provisions. The Subtenant hereby
assumes and agrees with Sublessor and First Landlord to fully and timely comply
with, observe, perform and discharge, all of the provisions of the First Leases
respecting the Subleased Premises which are to be observed or performed during
the term hereof by the Sublessor as tenant under the First Leases, except the
provisions of the First Leases concerning payment of rent. All of the
provisions of the First Leases respecting the Subleased Premises which are to
be observed, performed or discharged during the term hereof by Subtenant as
provided in the immediately

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<PAGE> 8
preceding sentence are herein collectively called the "Assumed Provisions."
None of the rights, titles or interests of Sublessor under the First Leases are
assigned to Subtenant.

Section 6.2 Indemnity. All of the Assumed Provisions are
incorporated into this Sublease as fully as if completely rewritten herein.
The Subtenant agrees to be bound to the Sublessor and First Landlord by all of
the Assumed Provisions, in so far as they relate to the Subleased Premises, to
assume toward Sublessor and First Landlord and perform all of the obligations
and responsibilities under the Assumed Provisions and to indemnify and hold
harmless Sublessor and First Landlord from and against any liability, cost,
expense, damage or claim (including attorneys' fees and court costs) relating
to any obligation, duty or responsibility assumed by Subtenant hereunder,
including without limitation, any liability, cost, expense, damage or claim
incurred by Sublessor as tenant under the First Leases relating to any
obligation, duty or responsibility assumed by Subtenant hereunder.

Section 6.3 Superior Matters. This Sublease, and all of Subtenant's
rights and estates hereunder, are and shall always be subject and subordinate
to the First Leases and all encumbrances and other matters affecting the
Building and the land on which the Building is situated. Subtenant
acknowledges that it has received a copy of the First Leases as they currently
exist, has had an opportunity to review the same, and is familiar with the
Assumed Provisions and rental payments it is undertaking pursuant to this
Sublease.

Section 6.4 Evidence of Performance of Assumed Provisions. At any
time that Subtenant is obligated to deliver to First Landlord any payment,
evidence of performance of any of the Assumed Provisions or any other receipt,
notice or other matter, Subtenant shall deliver evidence of any such payment or
true and correct copies thereof to Seitel on or prior to the date any such item
is to be delivered to First Landlord.

Section 6.5 No Preferential Rights. Subtenant acknowledges that
Sublessor is a major tenant of the Building and that the First Leases contain a
number of provisions which grant to Sublessor, as such major tenant,
concessions, privileges, credits, allowances or other preferential rights,
which are intended to be for the benefit of Sublessor only, and which are not
intended to be passed on to Subtenant. Consequently, notwithstanding anything
contained in this Sublease to the contrary, Subtenant agrees that it shall not
have any of the rights granted to Sublessor under the First Leases including,
without limitation, lease concessions, moving credits or allowances,
preferential rights to lease additional space in the Building, rights to expand
to additional space in the Building, rights to renew all or any portion of the
First Leases, rights to receive any allowance for tenant finish or renovation
set out in the First Leases, or any other right not directly applicable to the
Subleased Premises.

-5-
<PAGE> 9
ARTICLE VII.

Limitation of Liability and Indemnity

Section 7.1 Indemnity and Release.

(a) Except for injury to any person, or damage to the property of
any person, proximately caused by the gross negligence or willful misconduct of
Sublessor or agents or employees of Sublessor, Subtenant shall indemnify and
save Sublessor and its agents and employees harmless from and against all
claims (including attorneys' fees and court costs) arising from any act or
omission of Subtenant or Subtenant's agents, employees or contractors, or
arising from any injury to any person or damage to the property of any person
occurring during the term of this Sublease in or about the Leased Premises or
the Subleased Premises. Subtenant agrees to use and occupy the Subleased
Premises at its own risk and hereby releases Sublessor, and agents or employees
of Sublessor from all claims for any damage or injury to the full extent
permitted by law, unless such damage or injury is proximately caused by the
gross negligence or willful misconduct of Sublessor or the agents or employees
of Sublessor.

(b) Except for injury to any person, or damage to the property of
any person, proximately caused by the gross negligence or willful misconduct of
First Landlord or agents or employees of First Landlord, Subtenant shall
indemnify and save First Landlord and its agents and employees harmless from
and against all claims (including attorneys' fees and courts costs) arising
from any act or omission of Subtenant or Subtenant's agents, employees or
contractors, or arising from any injury to any person or damage to the property
of any person occurring during the term of this Sublease in or about the Leased
Premises or the Subleased Premises. Subtenant agrees to use and occupy the
Subleased Premises at its own risk and hereby releases First Landlord, and
agents or employees of First Landlord from all claims for any damage or injury
to the full extent permitted by law, unless such damage or injury is
proximately caused by the gross negligence or willful misconduct of First
Landlord or the agents or employees of First Landlord.

Section 7.2 Release from Acts and Omissions of First Landlord and
Third Parties. Subtenant agrees that under no circumstances shall Sublessor be
liable to Subtenant, nor shall the obligations of Subtenant hereunder be
impaired or the performance thereof excused, because of any failure or delay on
the part of the First Landlord in furnishing the services and repairs which the
First Landlord is obligated to furnish or make pursuant to the terms of the
First Leases. Subtenant further agrees that neither Sublessor nor First
Landlord shall be responsible or liable to Subtenant or its employees, agents,
customers or invitees for bodily injury (fatal or nonfatal) or property damage
occasioned by the acts or omissions of any other tenant of the Building or such
tenant's employees, agents, contractors, customers or invitees.

Section 7.3 Insurance. Subtenant shall secure and maintain in force
comprehensive general liability insurance, including contractual liability
specifically applying to the provisions of this Sublease and completed
operations liability with limits of not less than $5,000,000.00 with respect to
bodily injury or death to any number of persons in any one accident or
occurrence and with respect to property damage in any one accident or
occurrence. All insurance maintained in accordance with the provisions of this
Section 7.3 shall be issued by companies reasonably

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<PAGE> 10
satisfactory to Sublessor, and carried in the names of First Landlord,
Sublessor and Subtenant, as their respective interests may appear. All
liability insurance policies shall name Sublessor and First Landlord as
additional named insureds and shall include contractual liability endorsements.
Subtenant shall furnish Sublessor with duplicate originals or copies certified
as being true and correct of all insurance policies required under this Section
7.3, and shall furnish and maintain with Sublessor, at all times, a certificate
of the insurance carrier certifying that such insurance shall not be canceled
without at least fifteen (15) days advance written notice to Sublessor. If
Subtenant fails to maintain such insurance, Sublessor, at its election but
without obligation to do so, may procure such insurance as may be necessary to
comply with these requirements, and Subtenant agrees to repay the cost of same
to Sublessor on demand, with interest thereon at the maximum rate permitted by
law from the date of expenditure until paid. The obligations of Subtenant
under this Article VII and the other provisions of this Sublease shall be in
addition to, and not in lieu of, the obligations of Subtenant under the Assumed
Provisions.

Section 7.4 Casualty or Condemnation. If the Subleased Premises are
damaged by fire or other casualty or are condemned or taken in any manner for a
public use, and this Sublease and the First Leases are not terminated as a
result of such occurrence, it shall be solely the obligation of First Landlord
pursuant to the terms of the First Leases, and not of Sublessor, to repair,
restore or rebuild the Subleased Premises, and Subtenant shall not be entitled
to any award for any such condemnation.

Section 7.5 Asbestos. Subtenant acknowledges that it is aware that
some fireproofing and other materials used in the Building may contain
asbestos. Notwithstanding any provisions in this Sublease to the contrary, no
repairs, alteration, renovation, construction or decoration which requires the
moving of ceiling tiles and/or the disturbance of any spray-on fireproofing
material or structural members of the Building may be made by Subtenant without
the express prior written consent of First Landlord. Subtenant hereby releases
Sublessor and First Landlord from any and all liability, cost, expense or claim
which may be suffered by or asserted against Sublessor or First Landlord in
connection with the presence of any asbestos or asbestos-containing materials
situated in or around the Subleased Premises or elsewhere in the Building.

ARTICLE VIII.

Condition of Subleased Premises

Subtenant shall accept possession of the Subleased Premises, and the
fixtures and appurtenances therein, on the Commencement Date in its then
present condition. Accordingly, Sublessor shall have no obligation whatsoever
to make or construct any improvements within the Subleased Premises. Subtenant
shall maintain the Subleased Premises, and the fixtures and appurtenances
therein, in good order, repair and condition at all times.

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<PAGE> 11
ARTICLE IX.

No Subleasing by Subtenant

Subtenant shall not voluntarily or involuntarily assign, sublease or
otherwise transfer, mortgage, encumber or hypothecate all or any portion of its
interest under this Sublease or the Subleased Premises, or allow any other
person to occupy all or any part of the Subleased Premises, without the prior
written consent of Sublessor and First Landlord. If Sublessor and First
Landlord consent to any such action by Subtenant, Subtenant shall pay Sublessor
all sums collected in connection with such action in excess of the sums payable
by Subtenant under this Sublease within ten (10) days following receipt thereof
by Subtenant. No assignment, subletting, mortgaging, encumbering,
hypothecation or other action or transfer by Subtenant shall relieve or release
Subtenant from any of its obligations under this Sublease or any of the Assumed
Provisions.

ARTICLE X.

Furniture and Fixtures

Subtenant may from time to time, and shall at the termination of this
Sublease, remove its trade fixtures, office supplies and movable office
furniture and equipment not attached to the Building provided: (1) Subtenant is
not in default of any obligation or covenant under this Sublease at the time of
such removal; and (2) Subtenant promptly repairs all damage caused by such
removal. All other property at the Subleased Premises and any alteration,
installation, addition or improvement in or to the Subleased Premises
(including wall-to-wall carpeting, paneling or other wall covering) and any
other article attached or affixed to the floor, walls or ceiling of the
Subleased Premises shall remain the property of Sublessor and shall remain upon
and be surrendered with the Subleased Premises as part thereof at the
termination of this Sublease (or at the termination of Subtenant's right to
possession of the Subleased Premises), Subtenant hereby waiving all rights to
any payment or compensation therefor.

ARTICLE XI.

Events of Default and Remedies

Section 11.1 Events of Default. Each of the following acts or
omissions of Subtenant or occurrences shall constitute an "Event of Default":

(i) Failure or refusal by Subtenant to timely pay
rent or any other sum when due hereunder;

(ii) Failure to perform or observe any other
covenant or condition of this Sublease by Subtenant to be performed or
observed;

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<PAGE> 12
(iii) Abandonment or vacating of the Subleased
Premises or any significant portion thereof;

(iv) The filing or execution or occurrence of any
of the following; provided, however, in the case of any such filing or
execution or occurrence which is involuntary with respect to
Subtenant, such filing or execution or occurrence is not vacated
within thirty (30) days after the occurrence thereof: a petition in
bankruptcy or other insolvency proceeding by or against Subtenant; or
petition or answer seeking relief under any provision of the United
States Bankruptcy Code, or an assignment for the benefit of creditors
or composition, or a petition or other proceeding by or against the
Subtenant for the appointment of a trustee, receiver or liquidator of
Subtenant or any property of Subtenant or a proceeding by any
government authority for the dissolution or liquidation of Subtenant;
or

(v) The termination or any occurrence giving rise
to a right of termination of any of the First Leases or termination of
Sublessor's right to possession or any occurrence giving rise to a
right of termination of possession of the Leased Premises under the
First Leases caused (in whole or in part) by the default of Subtenant
under this Sublease or any of the Assumed Provisions.

Section 11.2 Remedies. This Sublease and the term and estate hereby
granted and the demise hereby made are subject to the limitation that if and
whenever any Event of Default shall occur, and so long as such Event of Default
remains uncured, Sublessor may, at its option, in addition to all other rights
and remedies given hereunder or by law or equity, do either of the following:

(i) Terminate this Sublease, in which event
Subtenant shall immediately surrender possession of the Subleased
Premises to Sublessor; or

(ii) Enter upon and take possession of the
Subleased Premises and remove Subtenant and all other occupants
therefrom, with or without having terminated the Sublease.

Section 11.3 No Surrender. Exercise by Sublessor of any one or more
remedies hereunder granted or otherwise available shall not be deemed to be an
acceptance or surrender of the Subleased Premises by Subtenant, whether by
agreement or by operation of law, it being understood that such surrender can
be effected only by the written agreement of Sublessor and Subtenant.

Section 11.4 Liability of Subtenant Upon Termination.

(a) If Sublessor elects to terminate this Sublease by reason of an
Event of Default, then, notwithstanding such termination, Subtenant shall be
liable for and shall pay to Sublessor the sum of all rent and other
indebtedness accrued to the date of such termination, plus, as damages, an
amount equal to the then present value of the rent reserved hereunder for the
remaining portion of the term of this Sublease (had such term not been
terminated by Sublessor

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<PAGE> 13
prior to the date of expiration stated in Article II), less the then present
value of the fair rental value of the Subleased Premises for such period. All
present values shall be based on a three percent (3%) per annum discount rate.

(b) If Sublessor elects to terminate this Sublease by reason of an
Event of Default, in lieu of exercising the rights of Sublessor under the
preceding subparagraph, Sublessor may instead hold Subtenant liable for all
rent and other indebtedness accrued to the date of such termination, plus such
rent and other indebtedness as would otherwise have been required to be paid by
Subtenant to Sublessor during the period following termination of the term of
this Sublease measured from the date of such termination by Sublessor until the
date of expiration stated in Article II (had Sublessor not elected to terminate
this Sublease on account of such Event of Default) diminished by any "Net Sums"
(as hereinafter defined) thereafter received by Sublessor through reletting the
Subleased Premises during said period. Actions to collect amounts due by
Subtenant provided for in this Section may be brought from time to time by
Sublessor during the aforesaid period, on one or more occasions, without the
necessity of Sublessor's waiting until expiration of such period; and in no
event shall Subtenant be entitled to any excess of rent (or rent plus other
sums) obtained by reletting over and above the rent provided for in this
Sublease. As used herein, the term "Net Sums" refers to all rent, if any,
received by Sublessor through reletting the Subleased Premises following
termination of this Sublease or termination of Subtenant's right to possession
of the Subleased Premises, reduced by any expenses incurred by Sublessor as
provided in Section 11.6.

Section 11.5 Liability of Subtenant Upon Repossession. If Sublessor
elects to repossess the Subleased Premises without terminating this Sublease,
then Subtenant shall be liable for and shall pay to Sublessor all rent and
other indebtedness accrued to the date of such repossession, plus rent required
to be paid by Subtenant to Sublessor during the remainder of the term of this
Sublease (had such term not been terminated by Sublessor prior to the date of
expiration stated in Article II), diminished by any Net Sums thereafter
received by Sublessor through reletting the Subleased Premises during said
period. In no event shall Subtenant be entitled to any excess of any rent
obtained by reletting over and above the rent herein reserved. Actions to
collect amounts due by Subtenant as provided in this Section 11.5 may be
brought from time to time, on one or more occasions, without the necessity of
Sublessor's waiting until the expiration of the term of this Sublease.

Section 11.6 Additional Obligations of Subtenant Upon Default. In
case of an Event of Default, Subtenant shall also be liable for and shall pay
to Sublessor, in addition to any sum provided to be paid above, (a) broker's
fees incurred by Sublessor in connection with reletting the whole or any part
of the Subleased Premises; (b) the cost of removing and storing Subtenant's or
other occupants' property; (c) the cost of repairing the Subleased Premises
into the condition called for by the terms of this Sublease; and (d) all
expenses incurred by Sublessor in enforcing Sublessor's remedies, including
reasonable attorneys' fees. Past due rent and other past due payments shall
bear interest from maturity at the highest non-usurious interest rate permitted
by law until paid.

Section 11.7 No Obligation to Relet. In the event of termination of
this Sublease or repossession of the Subleased Premises for an Event of
Default, Sublessor shall not have any obligation to relet or attempt to relet
the Subleased Premises, or any portion thereof, or to collect

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<PAGE> 14
rental after reletting; but Sublessor shall have the option to relet or attempt
to relet. In the event of reletting, Sublessor may relet the whole or any
portion of the Subleased Premises for any period, to any tenant, and for any
use and purpose.

Section 11.8 Sublessor's Right to Remedy Defaults. If Subtenant
should fail to make any payment or cure any default hereunder within the time
herein permitted, Sublessor, without being under any obligation to do so and
without thereby waiving such default, may make such payment and/or remedy such
other default for the account of Subtenant (and enter the Subleased Premises
for such purpose), and thereupon Subtenant shall be obligated to, and hereby
agrees to, pay Sublessor, upon demand, all costs, expenses and disbursements
(including reasonable attorneys' fees) incurred by Sublessor in taking such
remedial action together with interest on all such sums at the highest
non-usurious rate permitted by law from the date of such demand until payment.

Section 11.9 Tenant's Remedies. In the event of any default by
Sublessor, Subtenant's exclusive remedies shall be an action for damages and/or
for declaratory or injunctive relief (Subtenant hereby waiving the benefit of
any laws granting it a prejudgment lien upon the property of Sublessor and/or
upon rent due Sublessor), but prior to any such action Subtenant will give
Sublessor written notice specifying such default with particularity, and
Sublessor shall thereupon have thirty (30) days (plus such additional
reasonable period as may be required in the exercise by Sublessor of due
diligence) in which to cure any such default. Unless and until Sublessor fails
to so cure any default after such notice, Subtenant shall not have any remedy
or cause of action by reason thereof. All obligations of Sublessor hereunder
will be construed as covenants, not conditions; and all such obligations will
be binding upon Sublessor only during the period of its possession of the
Subleased Premises and not thereafter.

ARTICLE XII.

Miscellaneous Provisions

Section 12.1 Texas Law to Apply. THIS SUBLEASE SHALL BE CONSTRUED
UNDER AND IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, AND ALL
OBLIGATIONS OF THE PARTIES CREATED HEREUNDER ARE PERFORMABLE IN HARRIS COUNTY,
TEXAS.

Section 12.2 Parties Bound. Subject to the provisions of Article IX,
this Sublease shall be binding on and inure to the benefit of the parties
hereto and their respective heirs, executors, administrators, legal
representatives, successors and assigns.

Section 12.3 Legal Construction. In case any one or more of the
provisions contained in this Sublease shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provision hereof and this
Sublease shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.

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<PAGE> 15
Section 12.4 Prior Agreements Superseded. This Sublease constitutes
the sole and only agreement of the parties hereto with respect to the Subleased
Premises and supersedes any prior understandings or written or oral agreements
between the parties respecting the within subject matter.

Section 12.5 Attorneys' Fees. If any action at law or in equity,
including an action for declaratory relief, is brought to enforce or interpret
the provisions of this Sublease, the prevailing party shall be entitled to
recover reasonable attorneys' fees from the other party, which fees may be set
by the court in the trial of such action or may be enforced in a separate
action brought for that purpose, and which fees shall be in addition to any
other relief which may be awarded.

Section 12.6 Nonwaiver. Neither acceptance of rent by Sublessor nor
failure by Sublessor to complain of any action, non-action or default of
Subtenant shall constitute a waiver of any of Sublessor's rights hereunder.
Waiver by Sublessor of any right for any default of Subtenant shall not
constitute a waiver of any right for either a subsequent default of the same
obligation or any other default. Receipt by Sublessor of Subtenant's keys to
the Subleased Premises shall not constitute an acceptance of surrender of the
Subleased Premises. Failure by Subtenant to complain of any action, non-action
or default by Sublessor shall not constitute a waiver of any of Subtenant's
rights hereunder. Waiver by Subtenant of any right for any default of
Sublessor shall not constitute a waiver of any right for either a subsequent
default of the same obligation or any other default.

Section 12.7 Brokers. Each party hereto acknowledges that no broker
has been employed with respect to this Sublease. Sublessor hereby agrees to
defend, indemnify and hold harmless Subtenant, and Subtenant hereby agrees to
defend, indemnify and hold harmless Sublessor, from and against any claim by
third parties for brokerage, commission, finder's or other fees relative to
this Sublease or the subleasing of the Subleased Premises to Subtenant, and any
court costs, attorneys' fees or other costs or expenses arising therefrom,
which are alleged to be due by authorization of the indemnifying party.

Section 12.8 Notices. Any notice provided or permitted to be given
under this Sublease must be in writing and may be served (i) by depositing same
in the United States mail, addressed to the party to be notified, postage
prepaid and registered or certified with return receipt requested; (ii) by
delivering the same in person to such party; or (iii) by prepaid telegram or
telex. Notice shall be effective upon receipt. For purposes of notice, the
addresses of the parties shall be as follows:

If to Sublessor, to: Seitel Management, Inc.
50 Briar Hollow Lane, 7th Floor West
Houston, Texas 77027
Attention: Debra D. Valice

If to Subtenant, to: Eagle Geophysical, Inc.
50 Briar Hollow Lane, 6th Floor West
Houston, Texas 77027
Attention: Richard W. McNairy

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<PAGE> 16
Either party may change its address for notice by giving written notice thereof
to the other party in accordance with the foregoing provisions of this Section
12.8.

Section 12.9 Surrender of Subleased Premises. Upon termination or
expiration of this Sublease for any reason whatsoever, Subtenant shall
peaceably quit, deliver up and surrender the Subleased Premises to Sublessor
(i) free of all claims and encumbrances and (ii) in good order, repair and
condition and in the same condition as the Subleased Premises will be on the
Commencement Date, ordinary wear and tear excepted. Upon such termination or
expiration, Sublessor may, without further notice, enter upon, re-enter,
possess and repossess itself of the Subleased Premises by force, summary
proceedings, ejectment or otherwise, and may dispossess or remove Subtenant
from the Subleased Premises. If Subtenant does not surrender possession of the
Subleased Premises at the end of the term of this Sublease, such action shall
not extend such term, Subtenant shall be a tenant at sufferance, and during
such time of occupancy Subtenant shall pay to Sublessor, as damages, an amount
equal to twice the amount of rent that was payable immediately prior to the end
of such term, as well as all actual damages suffered by Sublessor as a result
of such holding over. Sublessor shall not be deemed to have accepted a
surrender of the Subleased Premises by Subtenant, or to extend such term, other
than by execution of a written agreement specifically so stating.

Section 12.10 No Partnership. This Sublease shall create a
landlord-tenant relationship only between Sublessor and Subtenant. In no event
shall this Sublease create or be deemed to create a partnership, joint venture
or any other type of relationship.

Section 12.11 No Filing of Lease or Memorandum. Neither this
Sublease nor any memorandum hereof shall be filed for record without the
written consent of Sublessor, First Landlord and Subtenant.

Section 12.11 Signage. Sublessor will install, at Subtenant's
request and at Subtenant's sole cost, a sign designating the name of Subtenant
which meets all requirements and specifications of the First Landlord and all
of the rules and regulations governing the Building and which otherwise meets
the approval of Sublessor, within view of leaving the elevator on the floor of
the Building on which the Subleased Premises are located, and on the entry door
of the Subleased Premises.

ARTICLE XIII.

Security Deposit

Within five (5) days after the Commencement Date, Subtenant shall
deposit with Sublessor as a security deposit an amount equal to one month's
rent. Subtenant shall not be entitled to any interest on such deposit.
Sublessor may, but shall not be obligated to, apply such deposit, without
notice to Subtenant and in Sublessor's sole discretion, towards the
satisfaction of any of Subtenant's obligations hereunder if Subtenant does not
timely satisfy such obligations. Subtenant shall promptly upon request of
Sublessor replenish the amount of such deposit upon any application thereof by
Sublessor. Sublessor shall return any unapplied amount of such deposit within
30 days of termination of this Sublease.

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<PAGE> 17

ARTICLE XIV.

Joinder by First Landlord

First Landlord, by execution hereof, hereby gives its express written
permission to Sublessor's subletting the Subleased Premises to Subtenant on the
terms and conditions set forth in this Sublease and waives and releases any
right or option it may have to cancel and terminate the First Leases as to the
Subleased Premises arising out of the subleasing of the Subleased Premises to
Subtenant contemplated by this Sublease. First Landlord acknowledges that this
Sublease, and its execution by the parties hereto, complies with the provisions
of each of the First Leases. In the event of any conflict between the
provisions of this Sublease and the provisions of any of the First Leases, the
provisions of this Sublease shall control.

WITNESS THE EXECUTION HEREOF on the ____ day of ________, 1997, but
effective as of the Commencement Date.

SEITEL, INC.

By: _________________________________
Name: __________________________
Title: __________________________

"SUBLESSOR"

SEITEL GAS & ENERGY, INC.

By: _________________________________
Name: __________________________
Title: __________________________

"SUBLESSOR"

SEITEL MANAGEMENT, INC.

By: _________________________________
Name: __________________________
Title: __________________________

"SUBLESSOR"

EAGLE GEOPHYSICAL, INC.

By: _________________________________
Name: __________________________
Title: __________________________

"SUBTENANT"

50 B.H., INC.

By: _________________________________
Name: __________________________
Title: __________________________

"FIRST LANDLORD"

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<PAGE> 1
EXHIBIT 10.22

MASTER SEPARATION AGREEMENT

THIS MASTER SEPARATION AGREEMENT (this "Separation Agreement") is
entered into as of _______________, 1997, by and between SEITEL, INC., a
Delaware corporation ("Seitel"), and EAGLE GEOPHYSICAL, INC., a Delaware
corporation ("Eagle").

RECITALS

A. Seitel, a public company whose common shares are traded on the
New York Stock Exchange, owns indirectly 100% of the common stock of Eagle.

B. The Board of Directors of Seitel (the "Seitel Board") has
determined, subject to its further consideration and the satisfaction of
certain conditions, to separate the ownership of a majority of its equity
ownership of Eagle and its subsidiaries from Seitel and the Seitel Group (as
hereinafter defined), by means of an initial public offering by Eagle and
Seitel of 5,880,000 shares of Eagle common stock (the "IPO") pursuant to a
Registration Statement (the "IPO Registration Statement") filed by Eagle with
the SEC on June 2, 1997, as amended.

C. Subsequent to the execution of this Separation Agreement but
prior to or contemporaneously with the IPO, Eagle, which currently owns 19% of
the common stock of Energy Research International, a Cayman Islands corporation
("ERI"), will acquire the remaining 81% of the common stock of ERI (at which
time ERI shall become a wholly-owned subsidiary of Eagle), in exchange for the
current holders of such 81% of the common stock of ERI receiving 600,000 newly
issued shares of common stock in Eagle.

D. The parties hereto have determined that it is necessary and
desirable to set forth the principal corporate transactions determined by
Seitel and Eagle to be appropriate to effect the IPO and to set forth other
agreements and undertakings by and between Seitel and Eagle that will govern
certain other matters following the IPO.

ARTICLE I

DEFINITIONS

1.01 General. As used in this Separation Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):

Administrative Services Agreement means the separate Administrative
Services Agreement, of even date herewith, between Seitel and Eagle.

Affiliate means an Eagle Affiliate or a Seitel Affiliate, as the case
may be.

Business Day means any day other than a Saturday, a Sunday or a day on
which banking institutions located in the State of Texas are authorized or
obligated by law or executive order to close.
<PAGE> 2
Closing Date means the date on which the shares of Eagle Common Stock
offered in the IPO are paid for by and delivered to the underwriters of the
IPO.

Code means the Internal Revenue Code of 1986, as amended.

Confidential Information means as to the Seitel Group, information
concerning a member of the Eagle Group which was obtained by a member of the
Seitel Group prior to the Closing Date or furnished to it by a member of the
Eagle Group pursuant to this Separation Agreement or the Operative Agreements
and as to the Eagle Group, information concerning a member of the Seitel Group
which was obtained by a member of the Eagle Group prior to the Closing Date or
furnished to it by a member of the Seitel Group pursuant to this Separation
Agreement or the Operative Agreements.

Control means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through ownership of voting securities, by contract or otherwise.

Eagle means Eagle Geophysical, Inc., a Delaware corporation.

Eagle Affiliate means a Person that directly, or indirectly through
one or more intermediaries, Controls or is Controlled by Eagle, provided,
however, that for purposes of this Separation Agreement none of the following
Persons shall be considered Eagle Affiliates: (i) Seitel or any Seitel
Affiliate, and (ii) any corporation less than 51% of whose voting stock is
directly or indirectly owned by Eagle, any partnership less than 51% of whose
interests in profits and losses is directly or indirectly owned by Eagle, and
any corporation (regardless of the percentage of its ownership) where the
ownership by Eagle and its Subsidiaries was made as a venture capital or a
portfolio (as opposed to operational) investment or where the equity ownership
resulted from a default on a loan to such corporation.

Eagle Business means the onshore seismic data acquisition business
conducted by Seitel Geophysical, Inc., a wholly owned subsidiary of Seitel
prior to December 31, 1996, the onshore seismic data acquisition business
conducted by Eagle from January 1, 1997 and the offshore seismic data
acquisition business conducted by Horizon Seismic, Inc. and Horizon
Exploration, Ltd. and any affiliates thereof before and after the Closing Date.

Eagle Common Stock means the common stock, par value $.01 per share, of
Eagle.

Eagle Group means collectively, Eagle and the Eagle Affiliates, or any
one or more of such companies.

Effective Date means the date on which the IPO Registration Statement
is declared effective by the SEC.

Employee Benefits Allocation Agreement means the separate Employee
Benefits Allocation Agreement, of even date herewith, between Seitel and Eagle.

ERI shall have the meaning given in the recitals to this Separation
Agreement.

2
<PAGE> 3
Exchange Act means the Securities Exchange Act of 1934, as amended,
together with the rules and regulations promulgated thereunder.

Group means the Seitel Group or the Eagle Group.

Indemnifiable Losses means all losses, Liabilities, damages, claims,
demands, judgments or settlements of any nature or kind, known or unknown,
fixed, accrued, absolute or contingent, liquidated or unliquidated, including,
without limitation, all reasonable costs and expenses (including, without
limitation, attorneys' fees, and defense and accounting costs) as such costs
are incurred relating thereto, suffered by an Indemnitee.

Indemnifying Party means a Person who or which is obligated under this
Separation Agreement to provide indemnification.

Indemnitee means a Person who or which is entitled to indemnification
under this Separation Agreement.

Indemnity Payment means an amount that an Indemnifying Party is
required to pay to an Indemnitee pursuant to Article III.

Insurance Proceeds means those monies received by an insured from an
insurance carrier or paid by an insurance carrier on behalf of the insured, in
either case, to the extent mutually agreed upon by Eagle and Seitel, net of any
applicable premium adjustment.

IPO shall have the meaning given in the recitals to this Separation
Agreement.

IPO Registration Statement shall have the meaning given in the recitals
to this Separation Agreement.

Liabilities means all debts, liabilities and obligations, whether
absolute or contingent, matured or unmatured, liquidated or unliquidated,
accrued or unaccrued, known or unknown, whenever arising, and whether or not
the same would properly be reflected on a balance sheet, including all costs
and expenses relating thereto.

Master Agreement means the Master Agreement for Geophysical Services
and applicable Job Supplements thereto entered into from time to time between
Eagle and any member of the Seitel Group pursuant to which Eagle agrees to
conduct geophysical surveys for the benefit of such member of the Seitel Group.

Nasdaq National Market means the Nasdaq Stock Market's National
Market.

Offering Documents means collectively, (A) the IPO Registration
Statement, (B) any Prospectus subject to completion or any Prospectus filed
with the SEC under Rule 424 of the Securities Act used, in each case, in
connection with the offering of the Eagle Common Stock under the IPO
Registration Statement, (C) any other filing made with the SEC by a member of
the Eagle Group or (D) any amendment or supplement to any of the documents
described in clauses (A) through (C) above.

3
<PAGE> 4
Operative Agreements means collectively the Administrative Services
Agreement, the Employee Benefits Allocation Agreement, the Registration Rights
Agreement, the Sublease, the Tax Indemnity Agreement and any other agreements
between a member of the Seitel Group and a member of the Eagle Group relating
to the separation of the Groups.

Person means an individual, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization or a government or any
department or agency thereof.

Prospectus means the prospectus forming a part of the IPO Registration
Statement.

Representative means with respect to any Person, any of such Person's
directors, officers, employees, agents, consultants, advisors, accountants and
attorneys.

SEC means the Securities and Exchange Commission.

Seitel Affiliate means a Person that directly, or indirectly through
one or more intermediaries, Controls or is Controlled by Seitel; provided,
however, that for purposes of this Separation Agreement none of the following
Persons shall be considered Seitel Affiliates: (i) Eagle, and any Eagle
Affiliate, and (ii) any corporation less than 51% of whose voting stock is
directly or indirectly owned by Seitel, (iii) any partnership less than 51% of
whose interests in profits and losses is directly; or indirectly owned by
Seitel, and (iv) any corporation (regardless of the percentage of its
ownership) where the ownership by Seitel and its Subsidiaries was made as a
venture, capital or a portfolio (as opposed to operational) investment or where
the equity ownership resulted from a default on a loan to such corporation.

Seitel Board shall have the meaning given in the recitals to this
Separation Agreement.

Seitel Business means any businesses conducted by any member of the
Seitel Group in the past, at the date hereof or in the future.

Seitel Group means collectively, Seitel and the Seitel Affiliates, or
any one or more of such companies.

Securities Act means the Securities Act of 1933, as amended, together
with the rules - and regulations promulgated thereunder.

Sublease means the separate Sublease Agreement, of even date herewith,
between Seitel and Eagle.

Subsidiary means with respect to any specified Person, any corporation
or other legal entity of which such Person or any of its subsidiaries Controls
or owns, directly or indirectly, more than 50% of the stock or other equity
interest entitled to vote on the election of members to the board of directors
or similar governing body; provided, however, that for purposes of this
Separation Agreement, Eagle and the Eagle Subsidiaries shall not be deemed to
be Subsidiaries of Seitel or any of the Seitel Subsidiaries.

Tax means as defined in the Tax Indemnity Agreement.

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Tax Indemnity Agreement means the separate Tax Indemnity Agreement,
between Seitel and Eagle.

Third-party Claim means any claim, suit, arbitration, inquiry,
proceeding or investigation by or before any court, any governmental or other
regulatory or administrative agency or commission or any arbitration tribunal
asserted by a Person who is not a member of the Seitel Group or the Eagle
Group.

1.02 References to Time. All references in this Separation
Agreement to times of the day shall be to local time in Houston, Texas.

ARTICLE II

CERTAIN TRANSACTIONS PRIOR TO AND IN CONNECTION WITH THE IPO

2.01 Declaration of Dividend. Prior to the Effective Date, Eagle
shall declare a dividend to be paid at the close of business on the business
day immediately preceding the Closing Date (the Dividend Payment Date). The
dividend will be a dividend of all receivables of Eagle as of the Dividend
Payment Date from all members of the Seitel Group for profits of Eagle
attributable to work performed by Eagle for such members of the Seitel Group to
and including the Dividend Payment Date, less taxes and allocable overhead
attributable to such intercompany work. Such receivables shall include amounts
attributable to contracts then being performed, based on percent completion.
Eagle shall set the record date for determining shareholders entitled to
payment of such dividend to be a date (1) not less than ten nor more than 60
days prior to the Dividend Payment Date, and (2) as of which the only
stockholder of record shall be EHI Holdings, Inc.

2.02 The Eagle Board. Except as Eagle and Seitel may otherwise
agree, as of the Effective Date, the current members of Eagle's board of
directors will be: (i) William L. Lurie, Chairman; (ii) Paul A. Frame; (iii)
Jay N. Silverman; (iv) Gerald M. Harrison and (v) George Purdie. Seitel and
Eagle shall take all appropriate actions to cause such individuals to be
elected to such positions.

2.03 IPO.

(a) Eagle, after consultation with Seitel, shall file
such amendments to the IPO Registration Statement as may be necessary in order
to cause the same to become and remain effective.

(b) Seitel and Eagle shall consult with each other
regarding the timing, pricing and other material matters with respect to the
IPO.

(c) Eagle shall prepare, and Eagle shall file and seek to
make effective, an application for listing of the Eagle Common Stock on the
Nasdaq National Market, subject to official notice of issuance.

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(d) Seitel shall cooperate in the preparation of the
Prospectus and the IPO Registration Statement and in Eagle's performance of its
other obligations under this Section 2.03.

(e) Eagle shall pay its own direct expenses relating to
the IPO (including the fees of its advisors and counsel), all of the fees and
reimbursable expenses of the underwriters relating to the IPO (except for the
underwriters' discount on shares of Eagle sold by Seitel as a selling
stockholder under the IPO Registration Statement), as well as all of the costs
of producing, printing, mailing and otherwise distributing the Prospectus.

2.04 Financial Matters.

(a) Repayment of Intercompany Advances. Within five (5)
business days after the Closing Date, Eagle shall repay Seitel all amounts
advanced by Seitel on behalf of Eagle prior to the Closing Date with respect to
third-party work, plus accrued interest on the outstanding balance thereof at
an interest rate equal to Seitel's cost of funds.

(b) Repayment of Other Debt Owed to Seitel. Within five
(5) business days after the Closing Date, Eagle shall repay Seitel all other
amounts owed by any member of the Eagle Group to any member of the Seitel
Group, including all outstanding principal and accrued interest under the
Amended and Restated Promissory Note made by ERI payable to Seitel in the
original principal amount of $2,000,000 dated July 3, 1996 and all outstanding
principal and accrued interest under the Promissory Note made by ERI payable to
Seitel in the original principal amount of $2,679,040 dated November 15, 1996.

(c) Repayment of Third Party Debt Guaranteed by Seitel.
Within five (5) business days after the Closing Date, Eagle shall repay all
amounts owed by any member of the Eagle Group to any third party that is
guaranteed by any member of the Seitel Group or with respect to which any
member of the Seitel Group has any liability, including the approximately $13.4
million owed to NationsBanc Leasing of North Carolina, the approximately $1.1
million owed to Compass Bank, the approximately $264,000 owed to MetLife
Capital Corporation, the approximately $1.7 million owed to MetLife Capital,
Limited Partnership, and the approximately $268,000 owed to GE Capital Fleet
Services, all as set forth in the IPO Registration Statement. In lieu of
repaying any such debt, Eagle may, within five (5) business days after the
Closing Date, obtain written confirmation from the lender of such debt of such
lender's intent to release all obligated members of the Seitel Group from any
and all liabilities with respect to such debt, so long as Eagle either obtains
such release within 30 days after the Closing Date or repays such debt within
such 30 day period.

(d) Other Obligations. Prior to the Closing Date, Seitel
shall advise Eagle as to all other outstanding guarantees, letter of credit
obligations, performance or surety bonds, comfort letters and other similar
obligations of any member of the Seitel Group relating to the Eagle Business.
Eagle shall, within 30 days after the Closing Date, obtain the release of all
members of the Seitel Group from all such obligations or liabilities, unless
otherwise agreed in writing by Eagle and Seitel.

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2.05 Execution and Delivery of Operative Agreements.
Contemporaneously with the execution and delivery of this Separation Agreement,
Eagle and the appropriate member(s) of the Seitel Group shall execute and
deliver each of the Operative Agreements.

ARTICLE III

SURVIVAL, ASSUMPTION AND INDEMNIFICATION

3.01 Survival of Agreements. All covenants and agreements of the
parties, hereto contained in this Separation Agreement shall survive the
Closing Date.

3.02 Assumption and Indemnification.

(a) Subject to Section 3.02(c), from and after the
Closing Date, Seitel shall assume, and shall indemnify, defend and hold
harmless each member of the Eagle Group, each of their Representatives and each
of the heirs, executors, successors and assigns of any of the foregoing from
and against:

(i) all Liabilities of the Seitel Group under
this Separation Agreement or any of the Operative Agreements;

(ii) all Indemnifiable Losses of any such member
or Representative relating to, arising out of or due to,
directly or indirectly, the Seitel Business, any individual
employed by any member of the Seitel Group on the Closing Date
or the Seitel Group's Representatives, whether relating to or
arising out of occurrences prior to, on or after the Closing
Date;

(iii) all Indemnifiable Losses of any such member
or Representative relating to, arising out of or due to any
untrue statement or alleged untrue statement of a material
fact contained in any Offering Document or the omission or
alleged omission to state in any of the Offering Documents a
material fact required to be stated therein or necessary to
make the statements therein not misleading, but only insofar
as any such statement or omission was made with respect to (A)
a matter of historical fact relating to a member of the Seitel
Group or (B) a matter of historical fact relating to a member
of the Eagle Group (other than ERI, its subsidiaries,
shareholders, officers, directors, employees, assets or
business) relating to periods prior to the Closing Date or (C)
the present or future intentions of Seitel or any member of
the Seitel Group, which information is or was furnished by
Seitel or its Representatives specifically for use in
connection with the preparation of the Offering Documents; and

(iv) all Indemnifiable Losses of any such member
or Representative relating to, arising out of or due to any
untrue statement or alleged untrue statement of a material
fact contained in any Exchange Act report by Seitel or the
omission or alleged omission to state in any such report a
material fact required to be stated therein or necessary to
make the statements therein not misleading; provided that
Seitel will not be liable in any such case to the extent that
any such

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Indemnifiable Losses arise out of or are based upon any such
untrue statement or alleged untrue statement or omission or
alleged omission made in any such report in reliance upon and
in conformity with information furnished to Seitel by or on
behalf of Eagle or its Representatives specifically for use in
connection with the preparation of the report.

(b) Subject to Section 3.02(c), from and after the
Closing Date, Eagle shall assume, and shall indemnify, defend and hold harmless
each member of the Seitel Group, each of their Representatives and each of the
heirs, executors, successors and assigns of any of the foregoing from and
against:

(i) all Liabilities of the Eagle Group under this
Separation Agreement or any of the Operative Agreements;

(ii) all Indemnifiable Losses of any such member
or Representative relating to, arising out of or due to,
directly or indirectly, the Eagle Business, any individual
employed by any member of the Eagle Group on the Closing Date
or the Eagle Group's Representatives, whether relating to or
arising out of occurrences prior to, on or after the Closing
Date;

(iii) all Indemnifiable Losses of any such member
or Representative relating to, arising out of or due to any
untrue statement or alleged untrue statement of a material
fact contained in any Offering Document or the omission or
alleged omission to state in any of the Offering Documents a
material fact required to be stated therein or necessary to
make the statements therein not misleading; provided that
Eagle will not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is
based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made with respect to
(A) a matter of historical fact relating to a member of the
Seitel Group or (B) a matter of historical fact relating to a
member of the Eagle Group (other than ERI, its subsidiaries,
shareholders, officers, directors, employees, assets or
business) relating to periods prior to the Closing Date or (C)
the present or future intentions of Seitel or any member of
the Seitel Group, which information is or was furnished by
Seitel or its Representatives specifically for use in
connection with the preparation of the Offering Documents; and

(iv) all Indemnifiable Losses of any such member
or Representative relating to, arising out of or due to any
untrue statement or alleged untrue statement of a material
fact contained in any Exchange Act report by Seitel or the
omission or alleged omission to state in any such report a
material fact required to be stated therein or necessary to
make the statements therein not misleading, but only insofar
as any such statement or omission was made in reliance upon
and in conformity with information furnished to Seitel by or
on behalf of Eagle or its Representatives specifically for use
in connection with the preparation of the report.

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(c) This Section 3.02 shall not be applicable to any
Indemnifiable Losses or Liabilities related to matters that are specifically
governed by the indemnification provisions of any Operative Document (which
matters shall be governed by the specific indemnification provisions of the
applicable Operative Document) or to any Indemnifiable Losses or Liabilities
related to Eagle Business performed for the Seitel Group after the date hereof
which is otherwise governed by any Master Agreement. In the event any person
is an employee or Representative of both the Eagle Group and the Seitel Group,
then for purposes of Sections 3.2(a)(ii) and 3.2(b)(ii), the Group for whom
such person is acting when the action or omission or other event giving rise to
the Indemnifiable Loss occurs shall be the Indemnifying Party.

(d) If an Indemnitee realizes a Tax benefit or detriment
by reason of having incurred an Indemnifiable Loss for which such Indemnitee
receives an Indemnity Payment from an Indemnifying Party or by reason of
receiving an Indemnity Payment, then such Indemnitee shall pay to such
Indemnifying Party an amount equal to the Tax benefit, or such Indemnifying
Party shall pay to such Indemnitee an additional amount equal to the Tax
detriment (taking into account any Tax detriment resulting from the receipt of
such additional amounts), as the case may be. If, in the opinion of counsel to
an Indemnifying Party reasonably satisfactory in form and substance to the
affected Indemnitee, there is a substantial likelihood that the Indemnitee will
be entitled to a Tax benefit by reason of an Indemnifiable Loss, the
Indemnifying Party promptly shall notify the Indemnitee and the Indemnitee
promptly shall take any steps (including the filing of such returns, amended
returns or claims for refunds consistent with the claiming of such Tax benefit)
that, in the reasonable judgment of the Indemnifying Party, are necessary and
appropriate to obtain any such Tax benefit. If, in the opinion of counsel to
an Indemnitee reasonably satisfactory in form and substance to the affected
Indemnifying Party, there is a substantial likelihood that the Indemnitee will
be subjected to a Tax detriment by reason of an Indemnification Payment, the
Indemnitee promptly shall notify the Indemnifying Party and the Indemnitee
promptly shall take any steps (including the filing of such returns or amended
returns or the payment of Tax underpayments consistent with the settlement of
any Liability for Taxes arising from such Tax detriment) that, in the
reasonable judgment of the Indemnitee, are necessary and appropriate to settle
any Liabilities for Taxes arising from such Tax detriment. If, following a
payment by an Indemnitee or an Indemnifying Party pursuant to this Section
3.02(d) in respect of a Tax benefit or detriment, there is an adjustment to the
amount of such Tax benefit or detriment, then each of Seitel and Eagle shall
make appropriate payments to the other, including the payment of interest
thereon at the federal statutory rate then in effect, to reflect such
adjustment.

(e) The amount which an Indemnifying Party is required to
pay to any Indemnitee pursuant to this Section 3.02 shall be reduced (including
retroactively) by any Insurance Proceeds and other amounts actually recovered
by such Indemnitee in reduction of the related Indemnifiable Loss, it being
understood and agreed that each of Seitel and Eagle shall use its best efforts
to collect any such proceeds or other amounts to which it or any of its
Subsidiaries is entitled, without regard to whether it is the Indemnifying
Party hereunder. If an Indemnitee receives an Indemnity Payment in respect of
an Indemnifiable Loss and subsequently receives Insurance Proceeds or other
amounts in respect of such Indemnifiable Loss, then such Indemnitee shall pay
to such Indemnifying Party an amount equal to the difference between (i) the
sum of the amount of such Indemnity Payment and the amount of such Insurance
Proceeds or other amounts actually received and (ii) the amount of such
Indemnifiable Loss, adjusted (at such time as appropriate adjustment can be
determined) in each case to reflect any premium adjustment attributable to such
claim.

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3.03 Procedure for Indemnification.

(a) If any Indemnitee receives notice of the assertion of
any Third-party Claim with respect to which an Indemnifying Party is obligated
under this Separation Agreement to provide indemnification, such Indemnitee
shall give such Indemnifying Party notice thereof promptly after becoming aware
of such Third-party Claim; provided, however, that the failure of any
Indemnitee to give notice as provided in this Section 3.03 shall not relieve
any Indemnifying Party of its obligations under this Article III, except to the
extent that such Indemnifying Party is actually prejudiced by such failure to
give notice. Such notice shall describe such Third-party Claim in reasonable
detail.

(b) An Indemnifying Party, at such Indemnifying Party's
own expense and through counsel chosen by such Indemnifying Party (which
counsel shall be reasonably satisfactory to the Indemnitee), may elect to
defend any Third-party Claim. If an Indemnifying Party elects to defend a
Third-party Claim, then, within ten Business Days after receiving notice of
such Third-party Claim (or sooner, if the nature of such Third-party Claim so
requires), such Indemnifying Party shall notify the Indemnitee of its intent to
do so, and such Indemnitee shall cooperate in the defense of such Third-party
Claim. After notice from an Indemnifying Party to an Indemnitee of its
election to assume the defense of a Third-party Claim, such Indemnifying Party
shall not be liable to such Indemnitee under this Article III for any legal or
other expenses subsequently incurred by such Indemnitee in connection with the
defense thereof; provided, however, that such Indemnitee shall have the right
to employ one law firm as counsel to represent such Indemnitee (which firm
shall be reasonably acceptable to the Indemnifying Party) if, in such
Indemnitee's reasonable judgment, either a conflict of interest between such
Indemnitee and such Indemnifying Party exists in respect of such claim or there
may be defenses available to such Indemnitee which are different from or in
addition to those available to such Indemnifying Party, and in that event (i)
the reasonable fees and expenses of such separate counsel shall be paid by such
Indemnifying Party (it being understood, however, that the Indemnifying Party
shall not be liable for the expenses of more than one separate counsel with
respect to any Third-party Claim (even if against multiple Indemnitees)) and
(ii) each of such Indemnifying Party and such Indemnitee shall have the right
to conduct its own defense in respect of such claim. If an Indemnifying Party
elects not to defend against a Third-party Claim, or fails to notify an
Indemnitee of its election as provided in this Section 3.03 within the period
of ten Business Days described above, such Indemnitee may defend, compromise
and settle such Third-party Claim; provided, however, that no such Indemnitee
may compromise or settle any such Third-party Claim without the prior written
consent of the Indemnifying Party, which consent shall not be withheld
unreasonably. Notwithstanding the foregoing, the Indemnifying Party shall not,
without the prior written consent of the Indemnitee, (i) settle or compromise
any Third-party Claim or consent to the entry of any judgment which does not
include as an unconditional term thereof the delivery by the claimant or
plaintiff to the Indemnitee of a written release from all Liability in respect
of such Third-party Claim or (ii) settle or compromise any Third-party Claim in
any manner that may adversely affect the Indemnitee.

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3.04 Remedies Cumulative. The remedies provided in this Article
III shall be cumulative and shall not preclude assertion by any Indemnitee of
any other rights or the seeking of any other remedies against any Indemnifying
Party.

3.05 Effect on Underwriting Documents. Notwithstanding anything to
the contrary that may be contained in the underwriting agreements relating to
the IPO or this Separation Agreement: (i) the provisions of Section 3.02(a) and
(b) shall govern and control the indemnification arrangements, and any claims
or losses arising hereunder, between the Seitel Group on the one hand and the
Eagle Group on the other with respect to liabilities arising under the IPO
Registration Statement; and (ii) the provisions of such underwriting agreements
shall govern and control the indemnification arrangements, and any claims or
losses arising thereunder, between the Eagle Group and the Seitel Group on the
one hand and the underwriters under the IPO Registration Statement on the
other.

ARTICLE IV

CERTAIN ADDITIONAL COVENANTS

4.01 Continuing Contractual Agreements. Except as may be otherwise
provided in this Separation Agreement, to the extent that any member of either
Group is now providing or selling, or in the future may provide or sell, to any
member of the other Group any services, benefits or products pursuant to any
written or oral agreement or understanding whatsoever, such agreement or
understanding shall not be deemed altered, amended or terminated as a result of
this Separation Agreement or the consummation of the transactions contemplated
hereby; and without limiting the generality of the foregoing, such agreements
and understandings, already in existence, shall remain in full force and effect
without modification or amendment of any kind by virtue of this Separation
Agreement.

4.02 Solicitation of Employees. For a period of one (1) year from
the date of this Separation Agreement, no member of either Group shall
knowingly solicit for proposed employment any Person who at the time is known
by such member to be currently an employee of the other Group, without the
consent of the President of that employee's employer.

4.03 Software. Any computer software shall remain the property of
the Group that purchased, licensed or developed it, subject to the further
provisions of this Section 4.03. To the extent either Group has used or
enhanced such software, such Group shall have the right to continue to use such
software in its business operations. If any software purchased or licensed
from a third party has been used or is in the future usable by either Group,
the parties shall work together in good faith to obtain any required consent of
the licenser to permit use of such software by any Group that wishes to use it,
and the cost of obtaining such consent shall be allocated between the Groups in
proportion to the benefit to each Group from the use of such software, taking
into account both past use and expected future use. If such consent cannot be
promptly and reasonably obtained, any Group may continue to use such software
provided such Group furnishes the other Group (i) the written opinion of
experienced outside legal counsel to the effect that such continued use does
not constitute a clear violation of the terms of the license agreement and (ii)
an indemnification in form reasonably satisfactory to the other Group for any
Liabilities caused by such use. If either or both Groups wish to add a new
module or other

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enhancement to any software being used by both Groups, the parties will, in
good faith, agree to an allocation of the cost thereof in proportion to the
expected use of such module or enhancement, provided that enhancements made by
a Group on internally developed software shall be the property of the Group
that paid for the major portion of development costs. Except as provided in
the preceding sentences, neither Group shall be obligated to pay anything to
the other Group for the use of any software. If the parties cannot reach
agreement after a reasonable time and effort on the allocation of costs as
provided herein, the parties shall promptly submit the issue to an experienced,
independent, mutually acceptable software consultant, whose determination of
such allocation shall be final and binding on both parties; the fees and
expenses of such consultant shall be borne equally by the parties. The parties
shall work together in good faith to develop an inventory of software that may
be affected by Section 4.03 as promptly as practicable; provided that it is
understood that this Section 4.03 shall not apply to any software that is
purchased, licensed or originally developed after the Closing Date. The terms
of this Section 4.03 are intended to allocate costs between the parties hereto,
and nothing contained in this Section 4.03 shall be construed to modify any of
the terms of the agreements between a software licensor and the Eagle Group or
the Seitel Group.

4.04 Further Assurances. In addition to the actions specifically
provided for elsewhere in this Separation Agreement and in the Tax Indemnity
Agreement, each of the parties hereto shall use its best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things,
reasonably necessary, proper or advisable under applicable laws, regulations
and agreements to consummate and make effective the transactions contemplated
by this Separation Agreement. Without limiting the foregoing, each party
hereto shall cooperate with the other parties, and execute and deliver, or use
its best efforts to cause to be executed and delivered, all instruments,
including instruments of conveyance, assignment and transfer, and to make all
filings with, and to obtain all consents, approvals or authorizations of, any
governmental or regulatory authority or any other Person under any permit,
license, agreement, indenture or other instrument, and take all such other
actions as such party may reasonably be requested to take by any other party
hereto from time to time, consistent with the terms of this Separation
Agreement, in order to effectuate the provisions and purposes of this
Separation Agreement.

4.05 Publicity. Seitel shall take all necessary action to ensure
that the members of the Seitel Group, and Eagle shall take all necessary action
to ensure that the members of the Eagle Group, shall take all reasonably
diligent action to discontinue the use of any existing printed material
implicitly or explicitly showing any parent-subsidiary relationship between
Seitel and Eagle or any members of their respective Groups as promptly after
the Closing Date as practicable and in any event no later than six months after
the Closing Date, except as otherwise provided in any Operative Agreement.
After the Closing Date, neither party hereto shall permit any member of its
respective Group to otherwise represent to third parties that it has a
parent-subsidiary relationship with the other Group.

ARTICLE V

ACCESS TO INFORMATION

5.01 Provision of Corporate Records. Prior to or as promptly as
practicable after the Closing Date, Seitel shall use reasonable efforts to
accommodate Eagle with respect to the

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delivery to Eagle of all corporate books and records of the Eagle Group and
copies of all corporate books and records of the Seitel Group directly relating
to the Eagle Assets, the Eagle Business or the Liabilities of the Eagle Group,
including in each case copies of all active agreements, active litigation files
and government filings. From and after the Closing Date, all books, records
and copies so delivered shall be the property of Eagle.

5.02 Access to Information. From and after the Closing Date, each
of Seitel and Eagle shall afford to the other, and shall cause the members of
their respective Groups to so afford, reasonable access and duplicating rights
during normal business hours to all information within such party's possession
relating to such other party's businesses, Assets or Liabilities, insofar as
such access is reasonably required by such other party. Without limiting the
foregoing, information may be requested under this Section 5.02 for audit,
accounting, claims, litigation and Tax purposes, as well as for purposes of
fulfilling disclosure and reporting obligations, as Eagle may reasonably
request and which are directly related to the Eagle Business.

5.03 Production of Witnesses. After the Closing Date, each of
Seitel and Eagle shall use reasonable efforts, and shall cause the members of
their respective Groups to use reasonable efforts, to make available to the
other, upon written request, its directors, officers, employees and agents as
witnesses to the extent that any such Person may reasonably be required (giving
consideration to business demands of such Persons) in connection with any
legal, administrative or other proceedings in which the requesting party may
from time to time be involved.

5.04 Reimbursement. Each Group providing information or witnesses
under Sections 5.01, 5.02 or 5.03 to the other Group shall be entitled to
receive from the recipient, upon the presentation of invoices therefor, payment
for all out-of-pocket costs and expenses (including reasonable attorneys and
accountants fees and expenses) as may be reasonably incurred in providing such
information or witnesses.

5.05 Retention of Records. Except as otherwise required by law or
agreed in writing, or as otherwise provided in the Tax Indemnity Agreement,
each of Seitel and Eagle shall use reasonable efforts to accommodate the other
with respect to retention and provision of copies of any significant
information in such party's possession or under its control relating to the
business, assets or Liabilities of the other party.

5.06 Confidentiality. From and after the Closing Date, each of
Seitel and Eagle shall hold, and shall cause its Affiliates and Representatives
to hold, the Confidential Information in strict confidence and shall not
release or disclose such Confidential Information to any other Person, except
its Representatives, who shall be bound by the provisions of this Section 5.06;
provided, however, that Seitel and Eagle and their Affiliates may disclose such
Confidential Information to the extent that (a) disclosure is required by
judicial or administrative process or, in the opinion of such party's counsel,
by other requirements of law or any regulatory body, or (b) such party can show
that such Confidential Information is or was (i) available to such party from a
third party and the recipient party was not aware that such third party was
obligated to not disclose such Confidential Information, (ii) available to such
party on a nonconfidential basis prior to its disclosure by the other party,
(iii) in the public domain other than by the breach of this Agreement or (iv)
lawfully acquired on a nonconfidential basis or independently developed by, or
on behalf of, such party. If either party to this Agreement or its Affiliate
or Representative

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becomes legally required to disclose any Confidential Information subject to
this Section, such party will promptly notify the other party and use
reasonable efforts to cooperate with the other party so that it may seek a
protective order or other appropriate remedy and/or waive compliance with this
Section. In the event that such protective order or other remedy is not
obtained, or that the other party waives compliance with this Section, such
party or its Affiliate or Representative will furnish only that portion of the
Confidential Information which it is advised by counsel is legally required and
will exercise its reasonable efforts to obtain reliable assurance that
confidential treatment will be accorded such Confidential Information.

ARTICLE VI

MISCELLANEOUS

6.01 Termination. Notwithstanding any other provision hereof, this
Separation Agreement may be terminated if the IPO is abandoned, which decision
can be made at any time by and in the sole discretion of the Board of Directors
of Seitel without the approval of Eagle.

6.02 Complete Agreement. This Separation Agreement, the Exhibits
and Schedules hereto and the agreements (including the Operative Agreements)
and other documents referred to herein and therein shall constitute the entire
agreement between the parties hereto with respect to the subject matter hereof
and shall supersede all previous negotiations, commitments and writings with
respect to such subject matter.

6.03 Authority. Each of the parties hereto represents to the other
that (i) it has the power and authority to execute, deliver and perform this
Separation Agreement, (ii) the execution, delivery and performance of this
Separation Agreement by it has been duly authorized by all necessary corporate
action, (iii) it has duly and validly executed the Agreement, (iv) this
Separation Agreement is a valid and binding obligation, enforceable against it
in accordance with its terms subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and general equity principles.

6.04 Expenses. Except as otherwise provided in this Separation
Agreement and the Operative Agreements, all costs and expenses of any party
hereto in connection with the preparation, execution, delivery and
implementation of this Separation Agreement and in connection with the
consummation of the transactions contemplated by this Separation Agreement
shall be paid by the party for whose benefit such costs and expenses are
incurred, with any costs and expenses that cannot be allocated on the foregoing
basis to be divided equally between the parties hereto.

6.05 Governing Law. This Separation Agreement shall be governed by
and construed in accordance with the laws of the State of Texas (other than the
laws regarding choice of laws and conflicts of laws) as to all matters,
including matters of validity, construction, effect, performance and remedies.

6.06 Notices. All notices, requests, claims, demands and other
communications hereunder (collectively, "Notices") shall be in writing and
shall be given (and shall be deemed to have been duly given upon receipt) by
delivery in person, by cable, telegram, telex, telecopy

14
<PAGE> 15
or other standard form of telecommunications, or by registered or certified
mail, postage prepaid, return receipt requested, addressed as follows:

If to Seitel:

Seitel, Inc.
50 Briar Hollow Lane
West Building, 7th Floor
Houston, Texas 77027
Attention: Paul A. Frame, President

If to Eagle:

Eagle Geophysical, Inc.
50 Briar Hollow Lane
West Building, 6th Floor
Houston, Texas 77027
Attention: Jay N. Silverman, President

or to such other address as any party hereto may have furnished to the other
parties by a notice in writing in accordance with this Section 6.06.

6.07 Amendment and Modification. This Separation Agreement may be
amended or modified in any material respect only by a written agreement signed
by both of the parties hereto.

6.08 Successors and Assigns; No Third-Party Beneficiaries. This
Separation Agreement and all of the provisions hereof shall be binding upon and
inure to the benefit of the parties hereto, their successors and permitted
assigns, and the members of their respective Groups, but neither this
Separation Agreement nor any of the rights, interests and obligations hereunder
shall be assigned by either party hereto without the prior written consent of
the other party (which consent shall not be unreasonably withheld). Except for
the provisions of Sections 3.02 and 3.03 relating to Indemnities, which are
also for the benefit of the Indemnitees, this Separation Agreement is solely
for the benefit of the parties hereto and their Subsidiaries and Affiliates and
is not intended to confer upon any other Persons any rights or remedies
hereunder.

6.09 Counterparts. This Separation Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

6.10 No Waiver. No failure by either party to take any action or
assert any right hereunder shall be deemed to be a waiver of such right in the
event of the continuation or repetition of the circumstances giving rise to
such right, unless expressly waived in writing by the party against whom the
existence of such waiver is asserted.

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<PAGE> 16
6.11 Interpretation. The Article and Section headings contained in
this Separation Agreement are solely for the purpose of reference, are not part
of the agreement of the parties hereto and shall not in any way affect the
meaning or interpretation of this Separation Agreement.

6.12 Legal Enforceability. Any provision of this Separation
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction. Each party
acknowledges that money damages would be an inadequate remedy for any breach of
the provisions of this Separation Agreement and agrees that the obligations of
the parties hereunder shall be specifically enforceable.

SEITEL, INC.

By: ______________________________
Paul A. Frame, President

EAGLE GEOPHYSICAL, INC.

By: _______________________________
Jay N. Silverman, President

<PAGE> 1

TAX INDEMNIFICATION AGREEMENT

BETWEEN

SEITEL, INC.

AND

EAGLE GEOPHYSICAL, INC.

DATED: _______________, 1997
<PAGE> 2
EXHIBIT 10.24

TAX INDEMNIFICATION AGREEMENT

This Tax Indemnification Agreement (the "Agreement"), dated as of this
___ day of _________________, 1997, by and between Seitel, Inc. ("Seitel"), a
Delaware corporation, and Eagle Geophysical, Inc. ("Eagle"), a Delaware
corporation, is entered into in connection with a Master Separation Agreement
(the "Separation Agreement") dated as of the ______ day of ____________, 1997,
by and between Seitel and Eagle.

WHEREAS, Seitel and Eagle have entered into the Separation Agreement
pursuant to which the ownership of Eagle and the Eagle Businesses will be
separated from Seitel and the Seitel Businesses by means of an initial public
offering by Eagle of its common stock (the "IPO") pursuant to a Registration
Statement (the "IPO Registration Statement") filed by Eagle with the SEC;

WHEREAS, after the Effective Date it is anticipated that the Seitel
Group will own less than 20% Post-Closing of the issued and outstanding shares
of Eagle and thereafter neither Eagle nor any of the Eagle Post-Closing
Affiliates will file Tax Returns as a member of the Seitel Group; and

WHEREAS, Seitel and Eagle desire to set forth their agreement on the
proper allocation among Seitel and Eagle and their subsidiaries of their
respective liabilities for Taxes.

NOW, THEREFORE, in consideration of their mutual promises, Seitel and
Eagle agree as follows:

ARTICLE I

DEFINITIONS

As used in this Agreement, the following terms shall have the
following meanings (such meanings to be equally applicable to both the singular
and the plural forms of the terms defined):

"Code" means the Internal Revenue Code of 1986, as amended, or any
successor thereto, as in effect for the taxable period in question.

"Consolidated Group" means the group of corporations that immediately
prior to the Effective Date are members of the affiliated group of corporations
(within the meaning of Section 1504 of the Code) of which Seitel is the common
parent.

"Eagle Pre-Closing Affiliate" means any corporation, partnership or
other entity directly or indirectly controlled by Eagle on or before the
Effective Date.

"Eagle Post-Closing Affiliate" means any corporation, partnership or
other entity directly or indirectly controlled by Eagle after the Effective
Date.
<PAGE> 3
"Eagle Businesses" means the present and future subsidiaries,
divisions and business of any member of Eagle and the Eagle Post-Closing
Affiliates.

"Effective Date" means the date upon which the IPO Registration
Statement is declared effective.

"Final Determination" shall mean the final resolution of liability for
any Tax for a taxable period, including any related interest or penalties, (i)
by Internal Revenue Service Form 870 or 870-AD (or any successor forms
thereto), on the date of acceptance by or on behalf of the Internal Revenue
Service ("IRS"), or by a comparable form under the laws of other jurisdictions;
except that a Form 870 or 870-AD or comparable form that reserves (whether by
its terms or by operation of law) the right of the taxpayer to file a claim for
refund and/or the right of the Taxing Authority to assert a further deficiency
shall not constitute a Final Determination; (ii) by a decision, judgment,
decree, or other order by a court of competent jurisdiction, which has become
final and unappealable; (iii) by a closing agreement or accepted offer in
compromise under Section 7121 or 7122 of the Code, or comparable agreements
under the laws of other jurisdictions; (iv) by any allowance of a refund or
credit in respect of an overpayment of Tax, but only after the expiration of
all periods during which such refund may be recovered (including by way of
offset) by the Tax imposing jurisdiction; or (v) by any other final
disposition, including by reason of the expiration of the applicable statute of
limitations.

"Pre-Closing Straddle Period" is defined in Section 2.04.

"Representative" means with respect to any person or entity, any of
such person's or entity's directors, officers, employees, agents, consultants,
advisors, accountants, attorneys, and representatives.

"Seitel Affiliate" means any corporation, partnership or other entity
directly or indirectly controlled by Seitel, other than Eagle or any Eagle
Affiliate.

"Seitel Businesses" means the present and future subsidiaries,
divisions and business of any member of the Seitel Group, other than the
present and future subsidiaries, divisions and business of Eagle or any Eagle
Post-Closing Affiliates. Seitel Businesses shall include all former
subsidiaries, divisions and businesses, other than the Eagle Businesses.

"Seitel Group" means the group of corporations that immediately after
the Effective Date are members of the affiliated group of corporations of which
Seitel is the common parent (within the meaning of section 1504 of the Code).

"Straddle Period" is defined in Section 2.04.

"Tax" or "Taxes" means (A) all forms of taxation, whenever created or
imposed, and whenever imposed by a national, municipal, governmental, state,
federal or other body, whether domestic or foreign (a "Taxing Authority"), and
without limiting the generality of the foregoing, shall include net income,
alternative or add-on minimum tax, gross income, sales, use, ad valorem, gross
receipts, value added, franchise, profits, license, transfer, recording,
withholding,

2
<PAGE> 4
payroll, employment, excise, severance, stamp, occupation, premium, property,
windfall profit, custom duty, or other tax, governmental fee or other like
assessment or charge of any kind whatsoever, together with any related
interest, penalties, or other additions to tax, or additional amounts imposed
by any such Taxing Authority, (B) liability for the payment of any amounts of
the type described in (A) as a result of being a member of an affiliated,
consolidated, combined or unitary group for any period, including any liability
arising pursuant to Treas. Reg. Section 1.1502-6, or as a result of being a
party to any agreement or arrangement whereby liability for payment of such
amounts was determined or taken into account with reference to the liability of
another party, and (C) liability for the payment of any amounts of the type
described in (A) as a result of any express or implied obligation to indemnify
any other person.

"Taxing Authority" is defined under the term "Taxes".

"Tax Return" means any return, filing, questionnaire or other document
required to be filed, including requests for extensions of time, filings made
with estimated Tax payments, claims for refund and amended returns that may be
filed, for any taxable period with any Taxing Authority in connection with any
Tax (whether or not a payment is required to be made with respect to such
filing).

"Tax Schedule" is defined in Section 2.04.

ARTICLE II

PREPARATION AND FILING OF TAX RETURNS

Section 2.01. Income Included. All Tax Returns required to be filed by
or on behalf of any member of the Consolidated Group relating to taxable
periods ending before or including the Effective Date and filed after the date
of this Agreement shall include the income attributable to such taxable periods
(including, for Federal income Tax purposes, any deferred income triggered into
income by Treas. Reg. Section 1.1502.13 and Treas. Reg. Section 1.1502-14 and
any excess loss accounts taken into income under Treas. Reg. Section 1.1502.19)
of Eagle and the Eagle Pre-Closing Affiliates in the Consolidated Group's
consolidated Federal income Tax Returns (or under any similar rules applicable
to any state, local or other Tax Returns filed on a consolidated basis) for all
periods through the Effective Date. The income of Eagle and such Eagle
Pre-Closing Affiliates will be apportioned to the period up to and including
the Effective date and the period after the Effective Date by closing the books
of Eagle and such Eagle Pre-Closing Affiliates as of the end of the Effective
Date.

Section 2.02. Pre-Effective Date Tax Returns. Except as otherwise
provided in Section 2.04, Seitel shall timely prepare and file, or cause to be
timely prepared and filed, all Tax Returns required to be filed by or on behalf
of any member of the Consolidated Group relating to taxable periods ending
before or including the Effective Date. Eagle shall provide Seitel any
Tax-related information reasonably requested by Seitel relating to any taxable
periods ending on or before the Effective Date.

Section 2.03. Post-Effective Date Tax Returns. Eagle shall prepare and
file, or cause to be prepared and filed, all Tax Returns for Eagle and any
Eagle Post-Closing Affiliate for taxable

3
<PAGE> 5
periods beginning after the Effective Date. Seitel shall prepare and file, or
cause to be prepared and filed, all Tax Returns for the Seitel Group for
taxable periods beginning after the Effective Date.

Section 2.04. Straddle Period Returns.

(a) Eagle shall prepare and file on a timely
basis any Tax Returns (but not including any Federal income Tax Return) of
Eagle and any Eagle Pre-Closing Affiliate for any taxable period beginning
before and ending after the Effective Date (a "Straddle Period").

(b) All other Tax Returns for a Straddle
Period required to be filed by any member of the Consolidated Group other than
Eagle or any Eagle Pre-Closing Affiliate shall be prepared and filed by Seitel.

ARTICLE III

PAYMENT OF TAXES

Section 3.01. Taxable Periods Prior to the Effective Date. All Taxes
of the Consolidated Group for all taxable periods ending before or including
the Effective Date shall be allocated among the members of the Consolidated
Group on the basis of the percentage of the total Tax which the Tax of each
member, if computed on a separate return basis without giving effect to
intercompany income, would bear to the total amount of the Taxes for all
members of the Consolidated Group computed on a separate return basis, in
accordance with Section 1552(a)(2) of the Code and the Regulations thereunder.

Section 3.02. Tax Deficiencies and Refunds. If as a result of any
audit, amendment or other change in a Tax Return as filed by the Consolidated
Group or any member thereof with respect to any taxable period ending before or
including the Effective Date, there is an additional amount of Taxes due and
payable, or a refund of Taxes previously paid (whether by payment, credit,
offset against other Taxes due or otherwise), any such deficiency shall be paid
by, and any such refund shall be payable to, Seitel.

Section 3.03. Foreign Tax Returns and Taxes. Notwithstanding any
provision of this Agreement to the contrary, Seitel and Eagle shall be
responsible for the filing of the Tax Returns for Seitel and the Seitel
Affiliates and for Eagle and the Eagle Post-Closing Affiliates, respectively,
for jurisdictions outside the United States that are due with respect to all
taxable periods, and shall be responsible for the payment of all Taxes due or
payable in connection with each of their respective Tax Returns.

Section 3.04. Liability for Taxes with Respect to Post-Effective Date
Taxable Periods. The Seitel Group shall pay all Taxes of the Seitel Group and
shall be entitled to receive and retain all refunds of Taxes of the Seitel
Group with respect to taxable periods beginning after the Effective Date which
are attributable to the Seitel Businesses. Eagle shall pay all taxes of Eagle
and any Eagle Post-Closing Affiliate and shall be entitled to receive and
retain all refunds of

4
<PAGE> 6
taxes of Eagle and any Eagle Post-Closing Affiliate for all periods beginning
after the Effective Date which are attributable to the Eagle Businesses.

Section 3.05. Straddle Period Payments. Seitel shall be
responsible for (and shall pay) any Taxes shown to be due thereon to the extent
attributable to the portion of such taxable period ending on and including the
Effective Date, and Eagle shall be responsible for the balance of such Taxes
due on a Tax Return described in Section 2.04(a). Any Taxes for a Straddle
Period with respect to Eagle or any Eagle Pre-Closing Affiliate shall be
apportioned based on the actual operations of Eagle and any Eagle Pre-Closing
Affiliate during the portion of such period ending on the Effective Date (the
"Pre-Closing Straddle Period") and the portion of such period beginning on the
date following the Effective Date. For purposes of Section 2.04(a), each
portion of such period shall be deemed to be a taxable period. With respect to
any Taxes for the Straddle Period described in Section 2.04(a), Eagle shall
deliver to Seitel copies of any such Tax Returns prior to the filing thereof in
the event that Seitel is responsible for the payment of any Taxes shown to be
due thereon and Eagle shall present Seitel with a schedule detailing the
computation of the portion, if any, of the Pre-Closing Straddle Period Tax for
which Seitel is responsible (the "Tax Schedule"). Within ten (10) business
days after Eagle presents Seitel with the Tax Schedule, Seitel shall pay the
amount of such Pre-Closing Straddle Period Tax. In the event Seitel disputes
Eagle's computation of the Pre-Closing Straddle Period Tax, Seitel shall be
relieved of its obligation to pay, in the first instance, any such disputed
amount. If upon such resolution it is determined that any of such disputed
amount is payable by Seitel and such amount has not been paid by Seitel, then
Seitel shall promptly pay to Eagle such amount.

Section 3.06. Carrybacks. Eagle shall not be entitled to any refund of
any Tax obtained by the Consolidated Group (or any member of the Consolidated
Group), including any refund obtained as a result of the carryback of losses or
credits of Eagle or any Eagle Post-Closing Affiliate from any taxable period
beginning after the Effective Date to any taxable period ending before or
including the Effective Date. The application of any such carrybacks by Eagle
and/or any other current or former member of the Consolidated Group shall be in
accordance with the Code and the Treasury Regulations promulgated thereunder.
Notwithstanding this Section 3.05, Eagle and any Eagle Post-Closing Affiliate
shall have the right, in its sole discretion, to make any election, including
the election under Section 172(b)(3) of the Code, which would eliminate or
limit the carryback of any loss or credit to any taxable period ending before
or including the Effective Date.

Section 3.07. Retention of Carryovers. Seitel may elect to retain
the net operating loss carryovers and capital loss carryovers of Eagle and the
Eagle Pre-Closing Affiliates under Treas. Reg. Section 1.1502-20(g). At
Seitel's request, Eagle and the Eagle Pre-Closing Affiliates will join with
Seitel in filing any necessary elections under Treas. Reg. Section
1.1502-20(g).

Section 3.08. Post-Closing Elections. At Seitel's request, Eagle and
the Eagle Pre-Closing Affiliates shall make and/or join with Seitel in making
any Tax elections reasonably requested by Seitel after the Effective Date, if
the making of such election does not have a material adverse impact on Eagle or
any Eagle Pre-Closing Affiliate for any post-Effective Date Tax period.

5
<PAGE> 7
ARTICLE IV

COOPERATION AND EXCHANGE OF INFORMATION

Section 4.01. Cooperation. Eagle shall cooperate (and shall cause any
Eagle Post-Closing Affiliate to cooperate) fully at such time and to the extent
reasonably requested by Seitel in connection with the preparation and filing of
any Tax Return or the conduct of any audit, dispute, proceeding, suit or action
concerning any issues or any other matter contemplated hereunder relating to
any taxable period ending before or including the Effective Date. Such
cooperation shall include, without limitation, (i) the retention and provision
on demand of copies of books, records, documentation or other information
relating to any such Tax Return until the later of (x) the expiration of the
applicable statute of limitation (giving effect to any extension, waiver, or
mitigation thereof) and (y) in the event any claim has been made under this
Agreement for which such information is relevant, until a Final Determination
with respect to such claim; (ii) the execution of any document that may be
necessary or reasonably helpful in connection with the filing of any such Tax
Return, or in connection with any audit, proceeding, suit or action addressed
in the preceding sentence; and (iii) the use of the parties' reasonable best
efforts to obtain any documentation from a governmental authority or a third
party that may be necessary or helpful in connection with the foregoing. Each
party shall make its employees and facilities available on a mutually
convenient basis to facilitate such cooperation.

Section 4.02. Contest Provisions. Seitel shall have full
responsibility and discretion in the handling of any Tax controversy,
including, without limitation, an audit, a protest to the Appeals Division of
the IRS, and litigation in Tax Court or any other court of competent
jurisdiction involving a Tax Return of the Consolidated Group or the Seitel
Group.

ARTICLE V

MISCELLANEOUS

Section 5.01. Tax Indemnification.

(a) Seitel shall indemnify and hold harmless Eagle and each Eagle
Pre-Closing Affiliate from and against any liability, cost or expense,
including, without limitation, any fine, penalty, interest, charge or
accountant's fee, for any Tax required under this Agreement to be paid by
Seitel or any member of the Consolidated Group other than Eagle or an Eagle
Pre-Closing Affiliate.

(b) Eagle shall indemnify and hold harmless Seitel and each member of
the Seitel Group from and against any liability, cost or expense, including
without limitation, any fine, penalty, interest, charge or accountant's fee,
for any Tax required under this Agreement to be paid by Eagle or any Eagle
Post-Closing Affiliate.

Section 5.02. Breach. Seitel shall indemnify and hold harmless Eagle
and each Eagle Pre-Closing Affiliate and Eagle shall indemnify and hold
harmless each member of the Seitel Group from and against any payment required
to be made under this Agreement as a result of the breach

6
<PAGE> 8
by a member of the Seitel Group or by Eagle or an Eagle Pre-Closing Affiliate,
as the case may be, of any obligation under this Agreement.

Section 5.03. Resolution of Certain Disputes.

(a) Disagreements between Seitel and Eagle with respect to amounts
that either claims is owed by the other (or by an Affiliate of the other) under
this Agreement, or other matters under this Agreement that are not resolved by
mutual agreement, shall be resolved by arbitration pursuant to this Section
5.03.

(b) Selection of the Arbitrator. Any arbitrator selected pursuant to
this Section 5.03(b) shall have at least ten years of experience in the field
of corporate taxation, shall be an attorney licensed to practice law in any
state of the United States or a certified public accountant licensed to
practice in any state of the United States and shall not be or have been
employed by or affiliated with either party. The parties shall first attempt to
agree on a mutually satisfactory arbitrator. If the parties are unable to agree
on a mutually satisfactory arbitrator within 30 days after either party
notifies the other in writing of a disagreement requiring arbitration pursuant
to this Section 5.03 (15 days in the case of a disagreement with respect to
Section 4.01 or Section 4.02), each party shall select an arbitrator. The two
arbitrators thus selected shall agree on and select a third arbitrator. If the
two arbitrators cannot agree on such third arbitrator within 30 days (15 days
in the case of a disagreement with respect to Section 4.01 or Section 4.02),
the parties shall each select a different arbitrator and renew the foregoing
procedure. If the position of an arbitrator is vacated, the person or persons
who originally selected the arbitrator to fill such position shall select a new
arbitrator to fill the position, unless the parties agree to continue the
arbitration with the remaining arbitrators. When used hereinafter, the term
"arbitrator" shall refer to the three arbitrators so selected when appropriate
and a decision of a majority of such arbitrators shall constitute a decision by
the arbitrator in the appropriate context.

(1) The arbitration shall be conducted under the auspices of the
American Arbitration Association.

(2) Each party within 30 days after engagement of the arbitrator (15
days in the case of a disagreement with respect to Section 4.01 or Section
4.02) shall submit to the arbitrator a written statement of the party's
position (including where relevant the total net amount it asserts is owed by
it or is due to it) regarding the total amount in dispute.

(3) The arbitrator shall base his decision on the following standards.
In the case of a factual dispute between the parties, the arbitrator shall make
a determination of the correct facts. In the case of a dispute regarding a
legal issue, including the proper application of the Tax laws or the proper
interpretation of this Agreement, the arbitrator shall make a determination in
accordance with his best legal judgment. Upon making determinations with
respect to all factual and legal issues in dispute, the arbitrator shall
determine the amount due by one party to the other or such other matter with
respect to the matter subject to the arbitration. Where relevant, as to each
matter in dispute, the arbitrator shall find in favor of the party whose
statement submitted pursuant to paragraph (2) above proposed the amount closest
to the amount so determined.

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<PAGE> 9
(4) The arbitrator shall render a written decision stating only the
result of such decision as soon as practicable. The arbitrator shall also
orally explain the bases of such decision to both parties as soon as
practicable. If and only if both parties request, the arbitrator shall state
the bases of such decision in writing. Where relevant, as to each matter in
dispute, the arbitrator's decision shall be in an amount equal to one of the
total amounts asserted by one of the parties in the written statements
submitted pursuant to paragraph (2) above. The arbitrator shall not, and is not
authorized to, render a decision in any other amount.

(5) The arbitrator's decision shall be final and binding on the
parties. No appeal to any court is contemplated by this Agreement and each
party, to the maximum extent permissible by law, waives and relinquishes all
rights and entitlements to appeal such decision.

(6) The arbitrator shall determine a fair allocation of the costs
of the arbitration proceeding (including each party's legal fees) as between
the parties.

Section 5.04. Notices. Any notice, demand, claim or other
communication under this Agreement shall be in writing and shall be deemed
given upon delivery if delivered personally, upon mailing if sent by certified
mail, return receipt requested, postage prepaid, or upon completion of
transmission if sent by telecopy or facsimile, to the parties at the following
address:

Seitel at:

Seitel, Inc.
50 Briar Hollow Lane West
7th Floor
Houston, Texas 77027

Facsimile: 713/627-1020
Telephone: 713/881-2875

Attn: Chief Financial Officer

Eagle at:

Eagle Geophysical, Inc.
50 Briar Hollow Lane West
6th Floor
Houston, Texas 77027

Facsimile: 713/627-1114
Telephone: 713/881-8998

Attn: Chief Financial Officer

8
<PAGE> 10
Section 5.05. Complete Agreement. This Agreement and the applicable
provisions of the Separation Agreement constitute the entire agreement of the
parties concerning the subject matter hereof, and supersedes all other
agreements, whether or not written, in respect of any Tax between or among any
member or members of the Seitel Group, on the one hand, and Eagle and any Eagle
Pre-Closing Affiliate, on the other hand. This Agreement may not be amended
except by an agreement in writing, signed by the parties hereto. In the event
and to the extent that there shall be a conflict between the provisions of this
Agreement and the Separation Agreement, the provisions of this Agreement shall
control.

Section 5.06. Governing Law. This Agreement shall be governed by and
construed in accordance with, the laws of the State of Texas.

Section 5.07. Successors and Assigns. A party's rights and obligations
under this Agreement may not be assigned without the prior written consent of
the other party. All of the provisions of this Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns.

Section 5.08. No Third-Party Beneficiaries. This Agreement is solely
for the benefit of the parties to this Agreement and their respective
subsidiaries and should not be deemed to confer upon third parties any remedy,
claim, liability, reimbursement, claim of action or other right in excess of
those existing without this Agreement.

Section 5.09. Legal Enforceability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of the prohibition or
unenforceability without invalidating the remaining provisions. Any prohibition
or unenforceability of any provision of this Agreement in any jurisdiction
shall not invalidate or render unenforceable the provision in any other
jurisdiction.

Section 5.10. Expenses. Unless otherwise expressly provided in this
Agreement or in the Separation Agreement, each party shall bear any and all
expenses that arise from their respective obligations under this Agreement. In
the event either party to this Agreement brings an action or proceeding for the
breach or enforcement of this Agreement, the prevailing party in such action or
proceeding, whether or not such action or proceeding proceeds to final
judgment, shall be entitled to recover as an element of its costs, and not as
damages, such reasonable attorneys' fees as may be awarded in the action or
proceeding in addition to whatever other relief to which the prevailing party
may be entitled.

Section 5.11. Confidentiality. Each party shall hold and cause its
Representatives to hold in strict confidence, unless compelled to disclose by
judicial or administrative process or, in the opinion of its counsel, by other
requirements of law, all information (other than any such information relating
solely to the business or affairs of such party) concerning the other parties
hereto furnished it by such other party or its Representatives pursuant to this
Agreement (except to the extent that such information can be shown to have been
(a) previously known by the party to which it was furnished, (b) in the public
domain through no fault of such party, or (c) later lawfully acquired from
other sources by the party to which it was furnished), and each party shall not
release or disclose such information to any other person, except its auditors,
attorneys, financial advisors, bankers and other consultants and advisors who
shall be advised of the

9
<PAGE> 11
provisions of this Section. Each party shall be deemed to have satisfied its
obligation to hold confidential information concerning or supplied by the other
party if it exercises the same care as it takes to preserve confidentiality for
its own similar information.

This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signature thereto
and hereto were upon the same instrument.

IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.

SEITEL, INC.

By:
---------------------------------

EAGLE GEOPHYSICAL, INC.

By:
--------------------------------

<PAGE> 1
EXHIBIT 10.32.1

PROMISSORY NOTE

U.S.$400,000.00 July 23, 1997

FOR VALUE RECEIVED, after date, without grace, in the manner, on the
dates and in the amounts so herein stipulated, the undersigned, JAY N.
SILVERMAN ("Borrower"), PROMISES TO PAY TO THE ORDER OF EAGLE GEOPHYSICAL,
INC., a Delaware corporation ("Lender"), 50 Briar Hollow Lane, 6th Floor West,
Houston, Harris County, Texas 77027, the sum of FOUR HUNDRED THOUSAND DOLLARS
AND NO/100'S ($400,000.00) in lawful money of the United States of America,
which shall be legal tender in payment of all debts and dues, public and
private, at the time of payment, and to pay interest on the unpaid principal
amount until maturity at a fixed rate of six percent (6%) per annum.

This Note is payable as follows:

Payments of accrued interest shall be payable monthly on the
last day of each month beginning on September 30, 1997 through and
including September 30, 2000;

Equal monthly payments of interest and principal, based on a
60 month amortization, shall be payable monthly on the last day of
each month beginning on October 31, 2000 through and including
August 31, 2005; and

On September 30, 2005, the entire balance of principal and
accrued interest shall be due and payable.

It is agreed that time is of the essence of this Note. In the event
of default in the payment of any installment of principal or interest when due
or in the event of any other default hereunder, Lender may accelerate and
declare this Note immediately due and payable without notice and opportunity to
cure. Any failure to exercise this option shall not constitute a waiver by
Lender of the right to exercise the same at any other time.

In the event of default in the making of any payment herein provided,
either of principal or interest, or in the event this Note is declared due,
interest shall accrue at the maximum non-usurious interest rate permitted by
applicable law from time to time in effect as such law may be interpreted,
amended, revised, supplemented or enacted (the "Maximum Rate").

Borrower hereby agrees to pay all expenses incurred, including
reasonable attorneys' fees, all of which shall become a part of the principal
hereof, if this Note is placed in the hands of an

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attorney for collection or if collected by suit or through any probate,
bankruptcy or any other legal proceedings.

Interest charges will be calculated on amounts advanced hereunder on
the actual number of days these amounts are outstanding on the basis of a
365-day or 366-day year, as is applicable. It is the intention of the parties
hereto to comply with all applicable usury laws; accordingly, it is agreed that
notwithstanding any provision to the contrary in this Note, or in any of the
documents securing payment hereof or otherwise relating hereto, no such
provision shall require the payment or permit the collection of interest in
excess of the Maximum Rate. If any excess of interest in such respect is
provided for, or shall be adjudicated to be so provided for, in this Note or in
any of the documents securing payment hereof or otherwise relating hereto, then
in such event (1) the provisions of this paragraph shall govern and control,
(2) neither Borrower, endorsers or guarantors, nor their heirs, legal
representatives, successors or assigns nor any other party liable for the
payment hereof, shall be obligated to pay the amount of such interest to the
extent that it is in excess of the Maximum Rate, (3) any such excess which may
have been collected shall be either applied as a credit against the then unpaid
principal amount hereof or refunded to Borrower, and (4) the provisions of this
Note and any documents securing payment of this Note shall be automatically
reformed so that the effective rate of interest shall be reduced to the Maximum
Rate. For the purpose of determining the Maximum Rate, all interest payments
with respect to this Note shall be amortized, prorated and spread throughout
the full term of the Note so that the effective rate of interest on account of
this Note is uniform throughout the term hereof.

Borrower agrees that the Maximum Rate to be charged or collected
pursuant to this Note shall be the applicable indicated rate ceiling as defined
in TEX. REV. CIV. STAT. ANN. Art. 5069-1.04, provided that Lender may rely on
other applicable laws, including without limitation laws of the United States,
for calculation of the Maximum Rate if the application thereof results in a
greater Maximum Rate. Except as provided above, the provisions of this Note
shall be governed by the laws of the State of Texas.

Each maker, surety, guarantor and endorser waives demand, grace,
notice, presentment for payment, notice of intention to accelerate the maturity
hereof, notice of acceleration of the maturity hereof and protest, and agrees
that this Note may be renewed, and the time of payment extended from time to
time, without notice and without releasing any of the foregoing.

Borrower may prepay this Note, in whole or in part, at any time prior
to maturity without penalty, and interest shall cease on any amount prepaid.
Any partial prepayment shall be applied toward the payment of the principal
installments last maturing on the Note, that is, in the inverse order of
maturity, without reducing the amount or time of payment of the remaining
installments.

Borrower agrees that all disputes in any way relating to, arising
under, connected with, or incident to this Note, and over which the United
States federal courts have subject matter jurisdiction, shall be litigated, if
at all, exclusively in the United States District Court for the Southern
District of Texas, Houston Division, and, if necessary, the corresponding
appellate courts. Borrower further agrees that all disputes in any way
relating to, arising under, connected

________
Initials
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<PAGE> 3
with, or incident to this Agreement, and over which the United States federal
courts do not have subject matter jurisdiction, shall be litigated, if at all,
exclusively in the Courts of the State of Texas, in Harris County, and, if
necessary, the corresponding appellate courts. Borrower hereby submits itself
to the personal jurisdiction of, and consents to venue in, any such court, and
hereby waives any claim it may otherwise have that such court lacks personal
jurisdiction over it, or that such court is an inconvenient forum, with respect
to any matter or proceeding arising out of this Note. Borrower further agrees
to voluntarily appear and to enter a general appearance in any proceeding
arising out of this Note which is brought in any such court. Borrower agrees
that service of process in any matter or proceeding relating hereto may be
effected upon it by certified or registered mail to the address specified in
the first paragraph of this Note or such other address as Borrower may
designate in writing to Lender from time to time.

The proceeds from this Note will be used by Borrower to purchase
25,000 shares of common stock of Lender, $.01 par value (the "Stock"), pursuant
to that certain Subscription Agreement of even date herewith, by and between
Borrower and Lender, and this Note is secured by a pledge of the Stock
pursuant to that certain Security Agreement- Pledge of even date herewith.

/s/ JAY N. SILVERMAN
----------------------------------------
Jay N. Silverman

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<PAGE> 1
EXHIBIT 10.32.2

SUBSCRIPTION AGREEMENT

This Subscription Agreement (this "Agreement") is made and entered
into as of this 23rd day of July, 1997, by and between EAGLE GEOPHYSICAL, INC.,
a Delaware corporation ("Eagle"), and JAY N. SILVERMAN ("Silverman"), and
relates to the subscription by Silverman for 25,000 shares of common stock of
Eagle.

NOW, THEREFORE, in consideration of the mutual promises contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:

1. ISSUANCE OF STOCK AND PAYMENT.

(a) Subscription. Eagle agrees to sell to Silverman, and
Silverman agrees to purchase from Eagle, 25,000 shares (the "Shares")
of common stock of Eagle (the "Stock"), at a per share price of $16,
for an aggregate purchase price of $400,000 (the "Purchase Price"),
subject to the provisions of Section 1(c) hereof.

(b) Payment of Purchase Price. Silverman shall deliver
the Purchase Price by executing a promissory note in the original
principal amount of $400,000 (the "Note") payable to Eagle
concurrently with the execution and delivery hereof.

(c) Purchase Price Adjustment. In the event the initial
public offering price of the Stock in connection with the Registration
Statement on Form S-1 (Registration No. 333-28303) filed with the
Securities and Exchange Commission by Eagle is determined to be less
than $16.00 per share of Stock, the Purchase Price shall be adjusted
downward accordingly, and the principal amount of the Note shall be
credited in an amount equal to the difference between the Purchase
Price as defined in Section 1(a) hereof and the adjusted Purchase
Price, which shall be based upon the actual initial public offering
price per share.

2. DELIVERY OF SHARE CERTIFICATE. Promptly upon receipt of the
Purchase Price, Eagle shall issue a share certificate or certificates
representing the Shares to Silverman and shall promptly deliver such
certificate or certificates to Silverman.

3. REPRESENTATIONS AND WARRANTIES OF EAGLE. In order to induce
Silverman to purchase the Shares and to otherwise consummate the transactions
contemplated by this Agreement, Eagle represents and warrants as follows:

(a) Status of Eagle. Eagle is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware, and has full corporate
<PAGE> 2
power to carry on its business as the same is now conducted and to own
or lease its assets as the same are now being owned or leased.

(b) Silverman's Title upon Consummation. Upon
consummation of the transactions contemplated by this Agreement in
accordance with the terms hereof, Silverman shall be vested with good
and marketable title to the Shares, free and clear of any liens,
claims, charges or other encumbrances or restrictions whatsoever,
except as set forth in Eagle's Certificate of Incorporation, as
amended, or Eagle's Amended and Restated Bylaws or otherwise arising
by operation of law. The Shares, when issued and delivered pursuant
to this Agreement, will be validly issued, fully paid and
nonassessable.

(c) Authority for Agreement. Eagle has the full right,
power and authority to enter into this Agreement and to perform its
obligations hereunder. This Agreement has been duly and validly
executed and delivered by Eagle and constitutes a valid and binding
obligation of Eagle, enforceable against Eagle in accordance with its
terms, subject to the effect of bankruptcy, insolvency,
reorganization, arrangement, moratorium or other similar laws relating
to or affecting the rights of creditors generally or upon general
principles of equity and the availability of injunctive relief or
other equitable remedies, whether enforcement is considered at law or
in equity (hereinafter the "Bankruptcy and Equitable Exceptions").

(d) Litigation, Etc. There is no action, proceeding or
investigation pending or (to the knowledge of Eagle) threatened (or
any reasonable basis therefor known to Eagle) which (i) questions the
validity of this Agreement or any of the transactions contemplated
hereby or (ii) if adversely determined, could reasonably be expected
to result, either in any case or in the aggregate, in a material
adverse effect on the business of Eagle. Eagle has no material
contingent or undisclosed liabilities as of the date hereof.

4. REPRESENTATIONS AND WARRANTIES OF SILVERMAN. In order to
induce Eagle to issue and sell the Shares to Silverman and to otherwise
consummate the transactions contemplated by this Agreement, Silverman
represents and warrants as follows:

(a) Acquisition for Own Account. Silverman is acquiring
the Shares for his own account, for investment and not with a view to
the sale or distribution thereof or with any present intention of
distributing or selling the same, or dividing the Shares with other
persons.

(b) Securities Law Restrictions. Silverman will not
sell, assign, transfer, pledge or otherwise dispose of any of the
Shares except in accordance with the provisions of applicable state
and federal securities laws.

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<PAGE> 3
(c) No Public Solicitation. Eagle has not offered the
Shares to Silverman by means of advertising or other form of public
solicitation.

(d) Investment Risk. Silverman has such knowledge and
experience in financial business matters as to be capable of
evaluating the merits and risks of investment in the Shares.
Silverman acknowledges that Eagle is a combination of Seitel
Geophysical, Inc. and Energy Research International and its operating
subsidiaries with no operating history and that his investment in the
Shares is highly speculative and involves a high degree of risk;
Silverman further acknowledges that he is capable of sustaining a loss
of the Purchase Price paid for the Shares. This representation does
not constitute a waiver by Silverman of any liability on the part of
Eagle for its breach of any representations, warranties, conditions or
covenants contained herein.

(e) Information Provided. Silverman has had the
opportunity to ask questions of, and receive satisfactory answers
from, the executive management of Eagle regarding Eagle and the
Shares, including the terms and conditions of this Agreement and the
proposed business plan of Eagle and related matters. Silverman has
had the opportunity to obtain the information necessary to satisfy
himself concerning the answers so obtained. Nothing contained herein
shall be interpreted to relieve the responsibility of Eagle to provide
adequate and accurate disclosure in the representations and warranties
contained in this Agreement.

(f) Accredited Investor. Silverman is an "accredited
investor" as said term is defined in Rule 501 of Regulation D under
the Securities Act of 1933, as amended (the "Securities Act"), in that
he is an executive officer of Eagle.

(g) Legend, Etc. Silverman acknowledges and agrees that
(i) the certificates representing the Shares will contain the legend
referred to in Section 5 hereof, (ii) the Shares are not registered
under the Securities Act or any other federal or state law, (iii)
Silverman will have no right to require such registration and must
bear the economic risks of their investment for an indefinite period
of time and are capable of bearing such risk, and (iv) the Shares are
a nonliquid investment and there is not now and there may never be any
public market for the Shares and Silverman cannot now and may never be
able to avail himself of the benefits of Rule 144 adopted by the
Securities and Exchange Commission with respect to the resale of the
Shares.

(h) Authority for Agreement. Silverman has the full
right, power and authority to enter into this Agreement and to perform
his obligations hereunder. This Agreement has been duly and validly
executed and delivered by Silverman and constitutes a valid and
binding obligation of Silverman, enforceable against Silverman in
accordance with its terms, subject to the Bankruptcy and Equitable
Exceptions.

(i) No Other Representations. Eagle and its directors,
officers and employees have made no representations, promises or
projections regarding the future financial

3
<PAGE> 4
status or competitive success of Eagle or its operations. Silverman
understands that except as set forth herein, Eagle makes no
representations or warranties whatsoever, and disclaims all liability
and responsibility for any representation, warranty, statement or
information made or communicated (orally or in writing) to Silverman
other than as specifically set forth herein.

5. STOCK LEGEND. Each stock certificate evidencing the Shares,
including any such stock certificates representing Shares issued to subsequent
transferees as permitted hereunder, shall be stamped or otherwise imprinted
with a legend in substantially the following form:

"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED
EXCEPT BY OPERATION OF LAW UNLESS (1) A REGISTRATION STATEMENT WITH
RESPECT TO SUCH SHARES SHALL BE EFFECTIVE UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR (2) THE CORPORATION SHALL HAVE RECEIVED AN
OPINION OF COUNSEL SATISFACTORY TO IT THAT NO VIOLATION OF SUCH ACT
WILL BE INVOLVED IN SUCH TRANSFER, OR (3) THE CORPORATION SHALL HAVE
RECEIVED A "NO ACTION" LETTER FROM THE SECURITIES AND EXCHANGE
COMMISSION COVERING SUCH TRANSFER."

6. MISCELLANEOUS.

(a) Notices. All notices, requests and other
communications hereunder shall be deemed to have been duly given if in
writing and either delivered personally, sent by facsimile
transmission or by air courier service, or mailed by postage prepaid
registered or certified U.S. mail, return receipt requested, to the
addresses designated below or such other addresses as may be
designated in writing by notice given hereunder, and shall be
effective upon personal delivery or facsimile transmission thereof or
72 hours following deposit in the U.S. mail or 24 hours following
deposit with an air courier service:

IF TO EAGLE: Eagle Geophysical, Inc.
50 Briar Hollow Lane, 6th Floor West
Houston, Texas 77027
Attn: Richard W. McNairy
Telephone: (713) 627-1990
Facsimile: (713) 627-1027

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<PAGE> 5
IF TO SILVERMAN: Jay N. Silverman
Eagle Geophysical, Inc.
50 Briar Hollow Lane, 6th Floor West
Houston, Texas 77027
Telephone: (713) 627-1990
Facsimile: (713) 627-1020

(b) Governing Law. This Agreement shall be construed and
governed in accordance with the laws of the State of Texas, without
giving effect to any conflict of law rules or provisions.

(c) Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same Agreement.

(d) Entire Agreement. Except as otherwise specifically
provided herein, this Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof.
No modification, amendment or waiver of any provision hereof shall be
binding upon any party hereto unless it is in writing and executed by
all of the parties hereto or, in the case of a waiver, by the party
waiving compliance.

(e) Waiver. The waiver by any party hereto of any
breach, default, misrepresentation or breach of warranty or covenant
hereunder, whether intentional or not, shall not be deemed to extend
to any prior or subsequent breach, default, misrepresentation or
breach of warranty or covenant hereunder and shall not affect in any
way any rights arising by virtue of any such prior or subsequent
occurrence.

(f) Severability. In the event any one or more of the
provisions contained in this Agreement or any application thereof
shall be finally determined by a court of competent jurisdiction to be
invalid, illegal or unenforceable in any respect, any other
application thereof and the validity, legality, or enforceability of
the remaining provisions of this Agreement shall not in any way be
affected or impaired thereby.

(g) Rule 405 Employee Benefit Plan. This Agreement is
intended to be an Employee Benefit Plan within the meaning of Rule 405
under the Securities Act.

(h) Expenses. Each party hereto shall pay all costs and
expenses incurred or to be incurred by it in negotiating and preparing
this Agreement and in closing and effectuating the transactions
contemplated hereby.

(i) Section Headings. The section headings contained
herein are for reference purposes only and shall not in any way affect
the meaning or interpretation of this Agreement.

5
<PAGE> 6
(j) Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the legal representatives,
successors and permissible assigns of the parties hereto, whether so
expressed or not, except as specifically otherwise provided.

IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written, with the intention of being
legally bound hereby.

EAGLE GEOPHYSICAL, INC.

BY: /s/ RICHARD W. MCNAIRY
------------------------------------
RICHARD W. MCNAIRY,
VICE PRESIDENT-
CHIEF FINANCIAL OFFICER

/s/ JAY N. SILVERMAN
--------------------------------------
JAY N. SILVERMAN

<PAGE> 1
10.32.3

SECURITY AGREEMENT - PLEDGE

BY AND BETWEEN

JAY N. SILVERMAN
("Debtor")

AND

EAGLE GEOPHYSICAL, INC.
("Secured Party")

DATED EFFECTIVE THE 23RD DAY OF JULY, 1997

<PAGE> 2
SECURITY AGREEMENT - PLEDGE

Jay N. Silverman (the "Debtor"), and Eagle Geophysical, Inc., a Delaware
corporation (the "Secured Party"), agree as follows:

Section 1. General Terms

1.1 Secured Obligations. Debtor hereby grants to Secured Party a
security interest in the property described in Section 1.2 of this Agreement
(the "Collateral") to secure the performance and payment of all obligations and
indebtedness of Debtor to Secured Party arising under or in connection with (i)
that certain Promissory Note in the original principal amount of $400,000
executed by Debtor in favor of Secured Party of even date herewith (the "Note")
and, (ii) this Agreement (all of the foregoing described in this Section 1
being the "Secured Indebtedness").

1.2 The Collateral. The Collateral of this Agreement is 25,000
shares of Common Stock of Secured Party issued in the name of Debtor currently
in the possession of, and to be delivered in the future to, Secured Party
("Pledged Stock"). "Collateral" as used in this Agreement includes the
Pledged Stock and, without limitation, any stock rights, rights to subscribe,
liquidating dividends, stock dividends, property, cash distributions, dividends
paid in stock, new securities, cash dividends or other property which Debtor
may hereafter become entitled to receive on account of the Collateral. In the
event Debtor receives any such property, Debtor will immediately deliver same
to Secured Party to be held by Secured Party in the same manner as the property
originally deposited as Collateral. The Collateral of this Agreement also
includes the proceeds of any and all property described above including goods
and intangible personal property.

Section 2. Representations and Warranties

Debtor represents, warrants and agrees that:

2.1 Validity, Enforceability. This Agreement has been duly executed
and delivered by Debtor and constitutes a legal, valid and binding obligation
of Debtor, enforceable against Debtor in accordance with its terms, except as
the same may be limited by bankruptcy, insolvency or other similar laws
affecting creditors' rights generally and by general equity principles.

2.2 Ownership of Collateral. Debtor is the legal and equitable owner
of the Collateral free and clear of all other liens, security interests,
charges and encumbrances of every kind and nature. The Collateral is duly
authorized, validly issued, fully paid and non-assessable; Debtor has legal
title to the Collateral and good right and lawful authority to pledge, assign
and deliver the Collateral in the manner hereby done or contemplated; and no
consent or approval of any governmental body or regulatory authority, or any
securities exchange, is or will be necessary for the rights created under this
Agreement to be valid as to the Collateral.

2.3 Defending the Collateral. Debtor will defend the Collateral and
its proceeds against the claims and demands of all third persons.

2.4 Secured Party's Duty. Secured Party's duty with reference to the
Collateral shall be solely to use reasonable care in the custody and
preservation of Collateral in Secured Party's possession.
<PAGE> 3
2.5 Waiver. Demand, notice, protest and all demands and notices of
any action taken by Secured Party under this Agreement or in connection with
any indebtedness of Debtor to Secured Party, are hereby waived, and any
indulgence of Secured Party, substitution for, exchange of or release of
Collateral, in whole or in part, or addition or release of any person liable on
the Collateral is hereby assented and consented to by Debtor.

2.6 Non-liability of Secured Party. Secured Party shall not be
responsible in any way for any depreciation in the value of the Collateral, nor
shall any duty or responsibility whatsoever rest upon Secured Party to take
necessary steps to preserve rights against prior parties or to enforce
collection of the Collateral by legal proceedings or otherwise, the sole duty
of Secured Party being to receive collections, remittances and payments on such
Collateral as and when made and received by Secured Party, and at Secured
Party's option, applying the amount or amounts so received, after deduction of
any collection costs incurred, as payment upon the Secured Indebtedness, or
holding same for the account and order of Debtor.

2.7 Payment of Charges by Debtor. Debtor shall pay prior to
delinquency all taxes, charges, liens and assessments against the Collateral.
Upon Debtor's failure to pay, Secured Party at its option may pay any tax,
charge, lien or assessment and shall be the sole judge of the legality or
validity thereof and the amount necessary to discharge the same. Such payment
shall become part of the Secured Indebtedness and shall be paid to Secured
Party by Debtor immediately and without demand, with interest thereon from the
date of payment by Secured Party at the maximum non-usurious rate of interest
permitted by applicable law with respect to Debtor.

Section 3. Events of Default

Debtor shall be in default under this Agreement upon the happening of
any of the following events or conditions (herein called an "Event of
Default"):

(1) Debtor's failure to pay when due any of the Secured Indebtedness.

(2) Default by Debtor in the punctual performance of any of the
obligations, covenants, terms or provisions contained or referred to in this
Agreement or in any instrument evidencing the Secured Indebtedness, including
without limitation, the Note.

(3) Sale or encumbrance of any of the Collateral, or the making of
any levy, seizure or attachment thereof or thereon.

(4) Debtor's insolvency; the appointment of a receiver for all or any
part of the property of Debtor; an assignment for the benefit of creditors of
Debtor; the calling of a meeting of creditors of Debtor; or the commencement of
any proceeding under any bankruptcy or insolvency laws by or against Debtor or
any guarantor or surety for Debtor.

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<PAGE> 4
Section 4. Rights Exclusive of Default

4.1 Assignment by Secured Party Permitted. This Agreement, Secured
Party's rights hereunder or the indebtedness hereby secured may be assigned
from time to time, and in any such case the Assignee shall be entitled to all
of the rights, privileges and remedies granted in this Agreement to Secured
Party. Debtor may not assign any of its rights or obligations hereunder
without the prior written consent of Secured Party.

4.2 Agents; Delivering to Secured Party. Secured Party shall have
the right to appoint one or more agents for the purpose of retaining physical
possession of the certificates or instruments representing or evidencing the
Collateral. For the better perfection of the Secured Party's rights in and to
the Collateral and to facilitate implementation of such rights, Debtor shall,
insofar as possible, cause all the certificates, documents and other
instruments evidencing, representing or otherwise comprising the Collateral, to
be delivered directly to the Secured Party, as the Secured Party shall from
time to time direct, immediately upon any of the same becoming part of the
Collateral. Secured Party is hereby authorized to execute, on behalf of the
Debtor, all documents reasonably necessary to effect the delivery of the
Collateral directly to Secured Party. Secured Party shall have the right at
any time and from time to time (whether before or after an Event of Default) to
retain as Collateral all payments, dividends and distributions regarding the
Collateral otherwise payable or distributable to Debtor.

4.3 Exercise of Voting and/or Consensual Rights; Cash Dividends. (a)
(i) The Debtor shall be entitled to exercise any and all voting and/or
consensual rights and powers relating or pertaining to the Collateral or any
part thereof for any purpose not inconsistent with the terms of this Agreement,
until (x) occurrence of an Event of Default or an event which, with the giving
of notice or lapse of time, or both, would become an Event of Default shall
have occurred and be continuing, and (y) written notification to Debtor by the
Secured Party that Secured Party intends to exercise the rights granted to
Debtor under this Section 4.3(a)(i).

(ii) Until an Event of Default or an event which,
with the giving of notice or lapse of time, or both, would become an Event of
Default shall have occurred and be continuing and written notification to
Debtor by the Secured Party that Secured Party intends to exercise the rights
granted to Debtor under this Section 4.3(a)(ii), the Debtor shall be entitled
to receive and retain any and all cash dividends or other cash payments paid on
the Collateral. However, any and all stock and/or liquidating dividends,
distributions in property, or cash returns of capital or other distributions
made on or in respect of the Collateral, whether resulting from a subdivision,
combination or reclassification of the capital stock or received in exchange
for Collateral or any part thereof or as a result of any merger,
reorganization, consolidation, acquisition or other exchange of assets, and any
and all cash and other property received in

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<PAGE> 5
redemption of or in exchange for any Collateral (either at maturity, upon call
for redemption or otherwise), shall be and become a part of the Collateral and,
if received by the Debtor, shall be held in trust for the benefit of the
Secured Party and shall forthwith be delivered to the Secured Party or its
designated agent to be held subject to the terms of this Agreement. Debtor
agrees to execute any additional documents, including the proper instruments of
assignment or stock power, with respect to Collateral delivered to Secured
Party.

(b) (i) Upon the occurrence and during the continuance
of an Event of Default or an event which, with the giving of notice or the
lapse of time, or both, would become an Event of Default, and upon the giving
of the notice referred to in Section 4.3(a)(i), all rights of the Debtor to
exercise the voting and/or consensual rights and powers which it is entitled to
exercise pursuant to Section 4.3(a)(i) prior to such notice shall cease.

(ii) Upon the giving of the notice referred to in
Section 4.3(a)(ii), all rights of the Debtor to receive cash dividends or other
payments which it is authorized to receive and retain pursuant to Section
4.3(a)(ii) prior to such notice shall cease.

(iii) Upon the occurrence of an Event of Default
and the giving of notice referred to in Section 4.3(a)(i) or upon the giving of
notice referred to in Section 4.3(a)(ii), all such rights referred to in
Sections 4.3(a)(i) and 4.3(a)(ii), as the case may be, shall thereupon become
vested in the Secured Party, who shall have the sole and exclusive right and
authority to exercise such voting and/or consensual rights and powers and/or to
receive and retain the dividends. Any and all money and other property paid
over to or received by the Secured Party pursuant to the provisions of this
subsection (b) shall be retained by the Secured Party as part of the Collateral
and be applied in accordance with the provisions hereof.

(c) For the foregoing purposes in this Section 4.3 Debtor
hereby names, constitutes and appoints Secured Party as Debtor's proxy in the
Debtor's name, place and stead to vote any and all of the securities, as such
proxy may elect, for and in the name, place and stead of Debtor, as to all
matters coming before shareholders, such proxy to be irrevocable and being
coupled with an interest. The rights, powers and authority of said proxy shall
remain in full force and effect, and shall not be rescinded, revoked,
terminated, amended or otherwise modified until all the Secured Indebtedness
has been fully satisfied.

Section 5. Rights in the Event of Default

Upon the occurrence of an Event of Default and at any time thereafter,
and in addition to the rights granted pursuant to Section 4:

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(a) Secured Party may declare all obligations secured hereby
immediately due and payable.

(b) Secured Party shall have the rights and remedies provided in the
Texas Business and Commerce Code in force at the date of execution of this
Agreement and under other applicable laws of each state having jurisdiction
over the Collateral or any part thereof.

(c) In addition to the rights and remedies referred to above, Secured
Party may, in its discretion, sell, assign and deliver all or any part of the
Collateral at any broker's board or at public or private sale without notice or
advertisement, and bid and become purchaser at any public sale or at any
Broker's Board.

(d) Secured Party shall have the right to transfer legal and
beneficial title to such number of shares of the Pledged Stock to Secured Party
as may be necessary to satisfy the damages arising from such default. The
value of a share of Pledged Stock for the purposes of this paragraph (d) only
shall be equal to the average closing price for the Secured Party's Common
Stock on the preceding five business days as reported on the Nasdaq National
Market System.

(e) If notice to Debtor is required by the Texas Business and
Commerce Code or other applicable law of public or private sale of Collateral,
Secured Party may fulfill said notice requirement by giving written notice to
Debtor ten (10) days prior to the date of public sale of the Collateral or
prior to the date after which private sale of the Collateral will be made, by
mailing such notice to Debtor at the address designated in this Agreement.
Secured Party shall apply the proceeds of any disposition of Collateral
available for satisfaction of Secured Indebtedness first to costs of sale or
collection, then to the amount owed to Secured Party, with any balance to be
held as Collateral until termination of this Agreement.

(f) Secured Party may at any time demand, sue for, collect or make
any compromise or settlement with reference to the Collateral as Secured Party,
in its sole discretion, chooses. Secured Party may delay exercising or omit to
exercise any right or remedy under this Agreement without waiving that or any
other past, present or future right or remedy, except in writing signed by
Secured Party.

(g) Secured Party may remedy any default and may waive any default
without waiving the default remedied or without waiving any other prior or
subsequent default.

(h) The remedies of Secured Party hereunder are cumulative, and the
exercise of any one or more of the remedies provided for herein shall not be
construed as a waiver of any of the other remedies of Secured Party.

(i) SECURED PARTY MAY ENFORCE ITS RIGHTS UNDER THIS AGREEMENT WITHOUT
RESORT TO PRIOR JUDICIAL PROCESS OR JUDICIAL HEARING, AND DEBTOR EXPRESSLY
WAIVES, RENOUNCES AND KNOWINGLY RELINQUISHES ANY LEGAL RIGHT WHICH MIGHT
OTHERWISE REQUIRE SECURED PARTY TO ENFORCE

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<PAGE> 7
ITS RIGHTS BY JUDICIAL PROCESS. IN SO PROVIDING FOR A NON-JUDICIAL REMEDY,
DEBTOR RECOGNIZES AND CONCEDES THAT SUCH A REMEDY IS CONSISTENT WITH THE USAGE
OF THE TRADE, IS RESPONSIVE TO COMMERCIAL NECESSITY AND IS THE RESULT OF
BARGAINING AT ARMS LENGTH. NOTHING IN THIS AGREEMENT IS INTENDED TO PREVENT
DEBTOR OR SECURED PARTY FROM RESORTING TO JUDICIAL PROCESS AT EITHER PARTY'S
OPTION.

(j) Debtor agrees that in performing any act under this Agreement
that time shall be of the essence and that Secured Party's acceptance of a
partial or delinquent payment or payments, or the failure of Secured Party to
exercise any right or remedy shall not be a waiver of any obligation of Debtor
or any right of Secured Party or constitute a waiver of any other similar
default subsequently occurring.

(k) Debtor hereby agrees to cooperate fully with Secured Party in
order to permit Secured Party to sell, whether at foreclosure or at other
private sale, the Collateral as permitted hereunder. Specifically, Debtor
agrees to comply fully with the securities laws of the United States of America
and applicable state securities laws and to take such action as may be
necessary to permit Secured Party to sell or otherwise transfer the securities
pledged hereunder in compliance with such laws. Without limiting the
foregoing, Debtor, at its own expense, upon request of Secured Party, agrees to
cause and/or obtain such registration, filings, statements, rulings, consents
and other matters as Secured Party may request.

(l) Debtor hereby appoints Secured Party as its attorney-in-fact to
complete, execute and file with the United States Securities and Exchange
Commission one or more notices of proposed sale of securities pursuant to Rule
144 under the Securities Act of 1933 and/or any similar filings or notices with
any applicable state agencies, and said attorney-in-fact shall have the full
power and authority to do, take and perform every act necessary to be done in
the exercise of that right as fully as Debtor might or could do if personally
present. This power shall be irrevocable during the term of this Agreement and
deemed coupled with an interest. The rights pursuant to said attorney-in-fact
herein granted shall commence and be in full force and effect from the date of
this agreement and shall remain in full force and effect and shall not be
rescinded, revoked, terminated, amended or otherwise modified until the
termination of this Agreement.

(m) Because of applicable securities laws, including without
limitation, the Securities Act of 1933, the Texas Securities Act and other
applicable state securities laws, there may be legal restrictions or
limitations affecting attempts of Secured Party to dispose of the Collateral in
enforcement of its rights and remedies hereunder. Secured Party is hereby
authorized by Debtor, but not obligated, upon an Event of Default, to sell all
or any part of the Collateral as permitted hereunder at private sale, subject
to investment letters or in any other manner which will not require the
Collateral or any part thereof, to be registered in accordance with the
Securities Act of 1933, as amended, or the rules and regulations promulgated
thereunder, or any other applicable

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<PAGE> 8
securities law or regulation. Debtor specifically agrees that under these
circumstances such a sale is a commercially reasonable method of disposition of
the Collateral. Secured Party is also hereby authorized by Debtor, but not
obligated, to take such actions, give such notices, obtain such rulings and
consents, and do such other things as Secured Party may deem appropriate in the
event of a sale or disposition of any of the Collateral. Debtor acknowledges
that Secured Party may, in its reasonable discretion, approach a restricted
number of potential purchasers and that a sale under such circumstances may
yield a lower price for the Collateral or any part or parts thereof than would
otherwise be obtainable if the same were registered and sold in the open
market. Debtor agrees that such private sale shall constitute a commercially
reasonable method of disposing of the Collateral in view of the time, expense,
and potential liability to the parties of such transactions of registration of
the Collateral in accordance with applicable securities laws.

Section 6. Miscellaneous

6.1 Pronouns. The pronouns used in this instrument are in the
masculine gender but shall be construed as feminine or neuter as occasions may
require.

6.2 Parties. "Secured Party" and "Debtor" as used in this instrument
include the successors, representatives, receivers, and assigns of those
parties.

6.3 Section Headings. The section headings appearing in this
instrument have been inserted for convenience only and shall be given no
substantive meaning or significance whatever in construing the terms and
provisions of this instrument.

6.4 Defined Terms. Terms used in this instrument which are defined
in the Texas Business and Commerce Code are used with the meanings as therein
defined.

6.5 Applicable Law, Place of Payment. The law governing this secured
transaction shall be that of the State of Texas in force at the date of this
instrument, and all payments and obligations hereunder shall be made and
performed in Harris County, Texas.

6.6 Notices. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given if delivered personally or by courier,
or mailed by first class mail, postage prepaid, return receipt requested, or
sent by facsimile, as follows:

(1) If to the Debtor:

Mr. Jay Silverman
50 Briar Hollow Lane, 6th Floor West
Houston, Texas 77027
Facsimile: (713) 881-2801

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<PAGE> 9
(2) If to Secured Party:

Eagle Geophysical, Inc.
50 Briar Hollow Lane, 6th Floor West
Houston, Texas 77027
Facsimile: (713) 881-2801
Attn: Mr. Richard W. McNairy

or to such other address as either party shall have specified by notice in
writing to the other party. All such notices, requests, demands and
communications shall be deemed to have been received on the earlier of the date
of delivery or on the fifth business day after the mailing thereof.

6.7 Severability. In the event any of the provisions contained in
this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such provision shall not affect the validity,
legality or enforceability of any other terms or provisions of this Agreement
and, to the extent permitted by applicable law, a valid, legal and enforceable
provision substantially similar to the invalid, illegal or unenforceable
provision shall be substituted in lieu thereof.

6.8 Waiver of Rights. In the event that Debtor is not the Borrower
or Maker as defined in the Note, Debtor waives any right to require Secured
Party to file suit against the Borrower or Maker or take any other action
against Borrower or Maker or Borrower's or Maker's property as a prerequisite
to Secured Party's taking any action or bringing any suit against Debtor under
this Security Agreement.

EXECUTED effective the 23rd day of July, 1997.

DEBTOR:

/s/ JAY N. SILVERMAN
----------------------------------------
JAY N. SILVERMAN

SECURED PARTY:

EAGLE GEOPHYSICAL, INC.

BY: /s/ RICHARD W. MCNAIRY
-------------------------------------
RICHARD W. MCNAIRY, Vice
President-Chief Financial Officer

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<PAGE> 1
EXHIBIT 10.58

EMPLOYEE BENEFITS ALLOCATION AGREEMENT

This EMPLOYEE BENEFITS ALLOCATION AGREEMENT, dated _______________,
1997, is between Seitel Inc. ("Seitel"), a Delaware corporation, and Eagle
Geophysical, Inc. ("Eagle"), a Delaware corporation.

WHEREAS, Seitel, a public company whose common shares are traded on
the New York Stock Exchange, owns indirectly 100% of the common stock of Eagle.

WHEREAS, the Board of Directors of Seitel has determined, subject to
its further consideration and the satisfaction of certain conditions, to
separate the ownership of a majority of its equity ownership of Eagle and its
subsidiaries from Seitel by means of an initial public offering by Eagle and
Seitel of 5,880,000 shares of Eagle common stock (the "IPO") pursuant to a
Registration Statement filed by Eagle with the SEC on June 2, 1997, as amended.

WHEREAS, the parties hereto have determined that it is necessary and
desirable to make certain agreements regarding employee benefit plans and
related matters in connection with the IPO.

NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties hereto agree as follows:

ARTICLE I
DEFINITIONS; HEADINGS

SECTION 1 - DEFINITIONS. As used in this Agreement, the following
terms shall have the following meanings, unless a different meaning clearly is
required by the context:

(a) Administrative Services Agreement. The transition management
Administrative Services Agreement, dated _____ _________, 1997, between Seitel
and Eagle entered into pursuant to the terms of the Master Separation
Agreement.

(b) Action or Claim. Any "Third-party Claim" as defined in the
Master Separation Agreement, together with any assessment of, or claim for,
taxes or a statutory penalty. For purposes hereof, the term "Action" or
"Claim" always is deemed to include, but is not limited to, a Qualification or
ERISA Claim.

(d) COBRA. Continuation health coverage maintained under Section
4980B of the Code and Sections 601 to 607 of ERISA, and any successor
provisions thereto.

(e) Code. The Internal Revenue Code of 1986, as amended, and any
predecessor or successor thereto.

(f) Employee or Active Employee. An individual maintained on an
entity's payroll system (including, but not limited to, an individual on
approved leave of absence and an individual in receipt of or entitled to
worker's compensation or employer-provided long term

<PAGE> 2
disability benefits) and, to the extent required by the context, such an
individual's dependents and beneficiaries.

(g) ERISA. The Employee Retirement Income Security Act of 1974, as
amended from time to time.

(h) Filing. The requirement to timely file a form related to an
employee benefit plan, including but not limited to Internal Revenue Service
("IRS") Form 5500; to timely distribute a notice related to an employee benefit
plan, including, but not limited to, a COBRA notice or a summary plan
description; and to timely pay a fee or premium.

(i) IPO. The initial public offering described in the recitals to
this Agreement.

(j) Master Separation Agreement. The Master Separation Agreement of
even date herewith between Seitel and Eagle.

(k) Policy Claim. A routine claim for benefits under a medical,
dental, disability or group life insurance program.

(l) Qualification or ERISA Claim. Any Action or Claim arising from,
or related to, the failure of a benefit plan that is intended to be
tax-qualified under the provisions of Section 401(a), et seq., of the Code to
satisfy the requirements for qualification, in form or in operation; any Action
or Claim arising from, or related to, the failure of an employee benefit plan
to comply with applicable requirements of ERISA (including, for this purpose,
Section 4975 of the Code); and any Action or Claim arising from, or related to,
the failure to make a Filing.

SECTION 2 - HEADINGS. The headings in this Agreement are for
convenience of reference only and are not to be construed as a part of the
Agreement.

ARTICLE II
DEFINED CONTRIBUTION 401(K) PLAN

SECTION 1 - IDENTIFICATION OF EXISTING PLAN. The Seitel, Inc. 401(k)
Plan is maintained in the United States for employees and former employees of
Seitel and its related participating employers.

SECTION 2 - VESTING; FUNDING. Effective as of the close of business
on the Closing Date, each individual who is an active employee of Eagle and who
is a participant in the Seitel, Inc. 401(k) Plan shall be vested in the benefit
accrued by him as of the Closing Date to the maximum extent allowed for based
on his compensation and service through such date. On such date as determined
by Seitel, but prior to the asset transfer described in Section 3 of this
Article II, Seitel shall contribute, or cause to be contributed, to the Seitel,
Inc. 401(k) Plan any contributions required to be made under such plan on
behalf of participants who are employees of Eagle.

SECTION 3 - ESTABLISHMENT OF NEW 401(K) PLAN AND ASSET TRANSFER. On
or before July 1, 1997, Eagle shall adopt a defined contribution plan. Such
plan (the "Eagle Geophysical, Inc. 401(k) Plan") shall be effective as of July
1, 1997. At such administratively feasible date

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<PAGE> 3
following the Closing Date as is determined by Seitel, there shall be a
transfer from the Seitel, Inc. 401(k) Plan to the Eagle Geophysical, Inc.
401(k) Plan of the account balances of individuals who were participants in the
Seitel, Inc. 401(k) Plan and who are eligible to become participants in the
Eagle Geophysical, Inc. 401(k) Plan. Such transfers may be made in cash or in
kind or in a combination of both, in Seitel's sole discretion. Prior to such
transfer, Seitel shall continue to administer the Seitel, Inc. 401(k) Plan in
the interests of such participants as well as all other participants in the
Seitel, Inc. 401(k) Plan. It shall be provided that no further 401(k) employee
and matching contributions shall be made after the final _______________, 1997
payroll deposit is made by or on behalf of a participant who is or is scheduled
to become an active employee of Eagle as of the close of business on the
Closing Date and provided, further, that no loans may be obtained on or after
_______________, 1997 from the 401(k) Plan by such participants.

SECTION 4 - ALLOCATION OF RESPONSIBILITIES. Eagle shall be solely
responsible for all Filings for, and the defense of any Claim with respect to,
the plan adopted by it pursuant to Article II and Seitel shall be solely
responsible for all Filings for, and the defense of any Qualification or ERISA
Claim with respect to, the Seitel, Inc. 401(k) Plan.

ARTICLE III
MEDICAL, DENTAL, DISABILITY AND GROUP LIFE INSURANCE BENEFITS

Eagle shall establish as soon as administratively feasible after the
Closing Date, and in any event on or before ___________, 1997, medical, dental,
disability and group life insurance (which includes life and accidental death
and dismemberment benefits) programs for the benefit of Eagle's active
employees that provide coverage to such employees that is substantially similar
to the coverage provided for such active employees immediately prior thereto,
including coverage without any pre-existing condition limitation for
individuals currently insured under Seitel's insurance and annual out-of-pocket
expenses that had been satisfied or paid by such employees under similar
programs maintained by Seitel prior to the Closing Date. Eagle shall be solely
responsible for all Filings and Policy Claims for the programs established by
it pursuant to this Article III, and Seitel shall be solely responsible for all
Filings and, to the extent consistent with the terms of the programs sponsored
by Seitel, Policy Claims and the defense (including the settlement or payment)
of all medical, dental, disability and group life insurance Claims made by a
covered participant or his or her beneficiary relating to events that occurred
prior to the close of business on the Closing Date under an insurance program
sponsored by Seitel. Eagle shall be solely responsible for all Filings and
Policy Claims made by a covered participant who is an Eagle employee or his or
her beneficiary relating to events that occur after the close of business on
the Closing Date under an insurance program sponsored by Seitel but prior to
the establishment of Eagle's programs pursuant to this Article III (provided,
however, that Seitel shall use its reasonable efforts to administer such
Claims), and Eagle shall pay to Seitel the proportionate share of premiums
under such programs relating to periods after the Closing Date and prior to the
establishment of Eagle's programs for such Eagle employees and related
beneficiaries. Eagle shall cooperate with Seitel in any manner reasonably
requested by Seitel or its employees or agents to enable Seitel to complete
such Filings and handle such Policy Claims. In addition, Eagle shall reimburse
Seitel for any costs or expenses incurred by Seitel in connection with such
programs that properly are allocable to Eagle (which shall specifically exclude
any increased premiums incurred by Seitel as a result of the demographic shift
in the insured population as a result of Eagle employees being removed from
such programs).

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<PAGE> 4
ARTICLE IV
SEVERANCE PAY; VACATION PAY

SECTION 1 - SEVERANCE PAY. Although the parties are of the belief
that the IPO does not necessarily give rise to the payment of severance pay (or
salary continuation, unemployment compensation or similar pay), in the event
that on or after the close of business on the Closing Date, a Claim for any
such pay is made by an employee of Eagle, the defense of such Claim, as well as
any payment or settlement of such Claim, shall be solely the responsibility of
Eagle.

SECTION 2 - VACATION PAY. Effective as of the close of business on
the Closing Date, Eagle shall continue in effect any vacation pay plans
maintained for the benefit of their employees immediately prior thereto. In
the event that on or after the close of business on the Closing Date, a Claim
for vacation pay is made by an employee of Eagle, the defense of such Claim, as
well as any payment or settlement of such Claim, shall be solely the
responsibility of Eagle.

ARTICLE V
CAFETERIA PLAN

Eagle shall adopt cafeteria plan documents in a form furnished to
Eagle with respect to the Eagle employees who, prior to the Closing Date, were
eligible and/or participating in the Seitel, Inc. Cafeteria Plan that provided
for the pre-tax payment of medical and dental insurance premiums. The plan set
forth in such document ("Eagle Geophysical, Inc. Cafeteria Plan") shall become
effective as soon as administratively feasible after the Closing Date and in no
event later than _______________, 1997.

ARTICLE VI
EMPLOYMENT; EMPLOYMENT RELATED MATTERS; OTHER BENEFITS

SECTION 1 - EMPLOYMENT. Effective as of the close of business on the
Closing Date, Eagle shall continue to employ all individuals who were employees
of Eagle as a wholly-owned subsidiary of Seitel immediately prior thereto,
together with any Seitel employees who are transferring to Eagle at the request
of Eagle unless any such individual declines employment with Eagle. Nothing
herein shall be construed to be a guarantee of employment, and Eagle may
terminate an individual's employment or adjust such individual's compensation
at any time and for any reason.

SECTION 2 - EMPLOYMENT RELATED MATTERS. Eagle shall be solely
responsible for the defense of any Claim made by, on behalf of, or with respect
to, (i) any employee thereof, (ii) any former employee of Eagle, or (iii) any
individual described in Section 1 hereof, including the settlement or payment
of such a Claim, that arises out of, or relates to, such individual's
employment with (or failure to be employed by) Eagle or an employee benefit
matter that is not covered elsewhere by the terms of this Agreement. Such
Claims include, but are not limited to, employment discrimination, harassment,
wrongful discharge and COBRA Claims.

SECTION 3 - OTHER BENEFITS. Except as otherwise expressly provided in
this Agreement, Eagle shall be solely responsible for the provision of all
employee benefits to its employees and

4
<PAGE> 5
former employees and for any Filings and the defense of any Claim, including
any settlement or payment or such Claim, related to any such benefit provided
by it or the failure to provide or maintain any particular benefit.

ARTICLE VII
CERTAIN BENEFITS ADMINISTRATION MATTERS

SECTION 1 - PURPOSE; RELATIONSHIP TO ADMINISTRATIVE SERVICES
AGREEMENT. The Administrative Services Agreement provides that Seitel shall
consult with Eagle with respect to employee benefits and certain related
matters. The purpose of this Article VII is to bind the parties to share in
certain employee benefits responsibilities that are necessary or appropriate in
view of other agreements reached herein and the fact that, for a portion of
1997, the parties are members of a controlled group of corporations, within the
meaning of Section 414(b) of the Code. To the extent inconsistent, the
provisions hereof override the provisions of the Administrative Services
Agreement.

SECTION 2 - FORM 5310 FILINGS. Unless expressly instructed in writing
otherwise by Eagle, Seitel shall make the IRS Form 5310 filings with the IRS
necessary to effectuate the transfers contemplated by Article II.

SECTION 3 - APPLICATION FOR DETERMINATION. Eagle shall file the
application for determination with the IRS with respect to the newly adopted
Code Section 401(k) plan described in Article II.

SECTION 4 - DISCRIMINATION TESTING; DISTRIBUTIONS. Eagle shall supply
to Seitel within sixty (60) days of a request from Seitel all information
reasonably requested by Seitel to undertake discrimination testing under
Sections 401(a)(4), 401(k), 401(m), and 410(b) of the Code (or other applicable
sections of the Code) for the portion of 1997 during which the parties were
members of a controlled group of corporations within the meaning of Section
414(b) of the Code. Seitel shall share the discrimination test findings with
Eagle, to the extent relevant to Eagle. At such times as are determined by
Seitel, Eagle shall make distributions from their employee benefit plan to
their employees or take other corrective actions determined by Seitel upon
notice from Seitel to Eagle that such distributions or other actions are
necessary to satisfy any discrimination test for the portion of 1997 during
which the parties were members of a controlled group of corporations. Nothing
herein shall be construed to require Seitel to undertake discrimination testing
on Eagle's behalf nor shall any of Seitel's findings or any notice provided
pursuant to the immediately preceding sentence create any responsibility or
liability on the part of Seitel.

SECTION 5 - COOPERATION WITH RESPECT TO PLAN ADMINISTRATION. Seitel
and Eagle shall cooperate with each other, and shall provide, or cause to be
provided, to each other information reasonably requested within sixty (60) days
of the request, in order to efficiently administer and account properly for the
employee benefit plans maintained by them and the undertakings contemplated
herein, including for example, but not limited to, information necessary to
effectuate the provisions of Article II, Section 3 hereof.

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<PAGE> 6
SECTION 6 - OTHER MATTERS. Except as otherwise provided in this
Agreement, unless requested by Eagle and agreed to by Seitel, or unless
initiated by Seitel and agreed to by Eagle, Seitel shall not be responsible for
employee benefits matters including, but not limited to, Filings, on behalf of
Eagle's employees, former employees, or their beneficiaries.

SECTION 7 - EXTENT OF SEITEL'S RESPONSIBILITY. The employee benefit
services provided to Eagle by Seitel pursuant to this Article VII and the
Administrative Services Agreement are ministerial and are for the sake of
administrative conveniences only. In providing such services, Seitel shall not
be responsible for the accuracy, completeness or timeliness of any advice or
service or any return, report, filing or other document that it provides,
prepares or assists in preparing except to the extent that any inaccuracy,
incompleteness or untimeliness arises solely from Seitel's gross negligence or
willful misconduct. The parties expressly acknowledge that with respect to any
employee benefit plan or arrangement established, maintained, or assumed by
Eagle, neither Seitel nor any of its directors, officers, employees, agents and
affiliates (and the heirs, executors, successors and assigns of any of the
foregoing) is or shall be a fiduciary. In accordance with the indemnification
provisions of Article VIII, Eagle shall indemnify, defend and hold harmless
Seitel and its directors, officers, employees, agents and affiliates (and the
heirs, executors, successors and assigns of any of the foregoing) from and
against any matter arising out of, or due to, an allegation or determination
that Seitel or any other person specified herein is a fiduciary or has
fiduciary responsibility with respect to any such employee benefit plan or
arrangement.

SECTION 8 - COMMON PROJECTS. The parties acknowledge that certain
employee benefit arrangements and responsibilities including, but not limited
to, discrimination testing, may involve a commonality of interests and,
accordingly, of projects and necessary services. To the extent that such
common projects are performed by Seitel and Seitel cannot ascertain the precise
amount of time spent in providing services to a particular party, its fees and
expenses (the amount of which shall be determined under the Administrative
Services Agreement) shall be apportioned on an equitable basis between Seitel
and Eagle. In general, the total fees and expenses for any such common project
shall be divided evenly between Seitel and Eagle unless Seitel determines and
Eagle agrees that, due to such factors as the amount and complexity of the data
involved, a different apportionment is more equitable.

SECTION 9 - OUTSIDE CONSULTANTS. The parties acknowledge that the
employee benefit arrangements made by them pursuant to this Agreement
including, but not limited to, this Article VII, may require the services of
outside consultants including, for example, attorneys and accountants. The
parties shall attempt to negotiate separate fee arrangements with outside
consulting, legal and accounting firms, even though some firms' services may
relate to projects common to both parties. However if, notwithstanding the
foregoing, Seitel receives an invoice from such a firm that clearly relates to
such a common project, Seitel, with Eagle's consent and assistance, shall
apportion on an equitable basis the firm's fees and expenses between the
affected parties and bill each affected party accordingly. In general, the
total fees and expenses reflected on the invoice shall be divided evenly
between Seitel and Eagle unless Seitel determines that, due to such factors as
the amount and complexity of the data involved, a different apportionment is
more equitable.

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<PAGE> 7
SECTION 10 - EXECUTIVE COMPENSATION. All executive compensation
arrangements have been addressed outside of this Agreement. All matters
relating to executive compensation will be handled in this manner.

ARTICLE VIII
INDEMNIFICATION

SECTION 1 - IN GENERAL. The party hereto to whom certain
responsibilities and liabilities have been allocated hereunder (the
"Indemnifying Party") shall indemnify, defend and hold harmless the other party
(the "Indemnitee"), including the Indemnitee's respective directors, officers,
employees, agents and affiliates (and the heirs, executors, successors and
assigns of any of the foregoing) from and against any and all losses,
liabilities, claims, damages, obligations, payments, costs and expenses,
matured or unmatured, absolute or contingent, accrued or unaccrued, liquidated
or unliquidated, known or unknown (including, without limitation, the costs and
expenses of any and all Actions, threatened Actions, demands, assessments,
judgments, settlements and compromises relating thereto and attorneys' fees and
any and all expenses whatsoever reasonably incurred in investigating, preparing
or defending against any such Actions or threatened Actions) arising out of or
due to the failure or alleged failure of the Indemnifying Party to pay, perform
or otherwise discharge in due course any of its responsibilities or
liabilities.

SECTION 2 - INDEMNIFICATION OF FIDUCIARIES. Seitel (directly or
through one or more subsidiaries) shall indemnify, defend and hold harmless
each individual who is both an employee of Seitel or Eagle and a trustee or
other fiduciary of an employee benefit plan (and his heirs, executors,
successors and assigns) from and against any and all losses, liabilities,
claims, damages, obligations, payments, costs and expenses, matured or
unmatured, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, known or unknown (including, without limitation, the costs and
expenses of any and all Actions, threatened Actions, demands, assessments,
judgments, settlements and compromises relating thereto and attorneys' fees and
any and all expenses whatsoever reasonably incurred in investigating, preparing
or defending against any such Actions or threatened Actions) directly arising
out of, or directly related to, the plan transfer contemplated by Article II
hereof.

SECTION 3 - LIMITATIONS ON, AND PROCEDURES FOR, INDEMNIFICATION. The
limitations on, and procedures for, indemnification set forth in the Master
Separation Agreement are incorporated herein by reference.

ARTICLE IX
MISCELLANEOUS

SECTION 1 - COMPLETE AGREEMENT; CONSTRUCTION. This Agreement, and the
agreements and documents referred to herein, shall constitute the entire
agreement between the parties with respect to the subject matter hereof and
shall supersede all previous negotiations, commitments and writings with
respect to such subject matter. Notwithstanding any other provisions in this
Agreement or the Master Separation Agreement to the contrary, in the event and
to the extent that there shall be a conflict between the provisions of the
Master Separation Agreement and this Agreement, the provisions of this
Agreement shall control.

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SECTION 2 - EXPENSES. Except as otherwise set forth in this
Agreement, each party hereto shall pay its respective costs and expenses in
connection with the preparation, execution, delivery and implementation of this
Agreement and with the consummation of the transactions contemplated by this
Agreement.

SECTION 3 - GOVERNING LAW. Subject to applicable federal law, this
Agreement shall be governed by and construed in accordance with the laws of the
State of Texas, without regard to the principles of conflicts of laws thereof.

SECTION 4 - NOTICES. All notices and other communications hereunder
shall be in writing and shall be delivered by hand or mailed by registered or
certified mail (return receipt requested) to the parties at the following
addresses (or at such other addresses for a party as shall be specified by like
notice) and shall be deemed given on the date on which such notice is received:

TO SEITEL: 50 Briar Hollow Lane
7th Floor West
Houston, TX 77027

TO EAGLE: 50 Briar Hollow Lane
6th Floor West
Houston, Texas 77027

SECTION 5 - AMENDMENTS. This Agreement may not be modified or amended
except by an agreement in writing signed by the parties hereto.

SECTION 6 - SUCCESSORS AND ASSIGNS. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
and their respective successors and permitted assigns.

SECTION 7 - TERMINATION. This Agreement may be terminated in the
event that the Master Separation Agreement is terminated and the IPO abandoned
prior to the Closing Date. In the event of such termination, no party shall
have any liability of any kind to the other party.

SECTION 8 - NO THIRD PARTY BENEFICIARIES. Except as provided in
Section 2 of Article VIII ("Indemnification of Fiduciaries"), this Agreement is
solely for the benefit of the parties hereto and their respective subsidiaries
and shall not be deemed to confer upon third parties including, but not limited
to, employees any remedy, claim, liability, reimbursement, claim of action or
other right in excess of those existing without reference to this Agreement.

SECTION 9 - LEGAL ENFORCEABILITY. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.

SECTION 10 - SATISFACTION OF CERTAIN CLAIMS. Notwithstanding any
other provision of this Agreement, in the event that a Claim relating to any
employee benefit plan or arrangement

8
<PAGE> 9
described in this agreement is successfully made by a person who is not a party
hereto (or a subsidiary or affiliate thereof) and Seitel or, with respect to
any plan or arrangement maintained by Eagle, Eagle determines that such Claim
may be satisfied from assets of such plan or arrangement, the Claim, at
Seitel's or, if applicable, Eagle's discretion, may be satisfied from such
assets.

SECTION 11 - FURTHER ASSURANCES. The parties hereto agree to execute
such documents and assurances as are necessary or appropriate to give effect to
the terms and conditions of this Agreement.

IN WITNESS WHEREOF, the parties, acting through their duly authorized
officers, have caused this Agreement to be duly executed as of the day and year
first above written.

SEITEL, INC.

By:
-------------------------------------
Paul A. Frame, President

EAGLE GEOPHYSICAL, INC.

By:
-------------------------------------
Jay N. Silverman, President

<PAGE> 1

EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our
report and to all references to our Firm included in or made a part of this
registration statement.

/s/ ARTHUR ANDERSEN LLP

Houston, Texas

July 31, 1997

<PAGE> 1

EXHIBIT 23.2

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

The Board of Directors
Energy Research International

We consent to the use of our report dated May 27, 1997 included in the
registration statement on Form S-1 of Eagle Geophysical, Inc. with respect to
the consolidated balance sheets of Energy Research International and
subsidiaries as of December 31, 1996 and 1995, and the related consolidated
statements of operations, stockholders' equity/(deficit) and cash flows for each
of the years in the three year period ended December 31, 1996.

/s/ KPMG

Exeter, England

July 31, 1997