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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 17, 1997

REGISTRATION NO. 333-40507
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 2

FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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MITCHAM INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)

TEXAS 5008 76-0210849
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)

BILLY F. MITCHAM, JR.
POST OFFICE BOX 1175
44000 HIGHWAY 75 SOUTH
HUNTSVILLE, TEXAS 77342
(409) 291-2277
(Name, address, including zip code and telephone number, including
area code, of Registrant's principal executive offices and agent for service)
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Copies to:

SABRINA A. MCTOPY ALAN P. BADEN
NORTON, JACOBS, KUHN & MCTOPY, L.L.P. VINSON & ELKINS L.L.P.
1111 BAGBY, SUITE 2450 2300 FIRST CITY TOWER
HOUSTON, TEXAS 77002-2546 1001 FANNIN STREET
(713) 659-1131 HOUSTON, TEXAS 77002-6760
(713) 758-2222

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

If the only securities being registered on this Form are being offered
pursuant to dividend or reinvestment plans, please check the following box. [ ]

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, other than securities offered only in connection with dividend or interest
reinvestment plans, 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. [ ]
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CALCULATION OF REGISTRATION FEE

=============================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------------------

Common Stock, $.01 par value ("Common
Stock")............................. 2,093,000 $21.375 $44,737,875 $19,583(3)
=============================================================================================================================

(1) Includes 273,000 shares subject to an option granted to the Underwriters to
cover over-allotments, if any.

(2) Last reported sale price of Common Stock on the Nasdaq National Market on
December 16, 1997.

(3) This amount was paid with the filing of the initial registration statement
and the maximum aggregate offering price has been reduced to reflect a
decrease in the last reported sale price of the Common Stock since the
initial filing.

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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.
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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 DECEMBER 17, 1997

PROSPECTUS

1,820,000 SHARES

LOGO

COMMON STOCK
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Of the shares of common stock, $.01 par value (the "Common Stock"), offered
hereby, 1,800,000 shares are being sold by Mitcham Industries, Inc. (the
"Company") and 20,000 shares are being sold by certain selling shareholders (the
"Selling Shareholders"). The Company will not receive any of the proceeds from
the sale of shares by the Selling Shareholders. The Common Stock is traded on
the Nasdaq National Market under the symbol "MIND." On December 16, 1997, the
last reported sale price of the Common Stock on the Nasdaq National Market was
$21.375 per share. See "Price Range of Common Stock."

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SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
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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.

PRICE TO UNDERWRITING PROCEEDS TO PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2) SELLING SHAREHOLDERS
-------- ------------ ----------- --------------------

Per Share................... $ $ $ $
Total(3).................... $ $ $ $

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(1) The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933. See "Underwriting."

(2) Before deducting expenses payable by the Company estimated to be $300,000.

(3) The Company has granted to the Underwriters a 30-day option to purchase up
to an additional 273,000 shares of Common Stock on the same terms and
conditions as set forth above, solely to cover over-allotments, if any. If
such option is exercised in full, the total Price to Public, Underwriting
Discount, Proceeds to Company and Proceeds to Selling Shareholders will be
$ , $ , $ and $ , respectively. See
"Underwriting."

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The shares of Common Stock are being offered by the several Underwriters
subject to prior sale, when, as and if issued to and accepted by the
Underwriters. The Underwriters reserve the right to reject orders in whole or in
part. It is expected that delivery of the shares of Common Stock will be made
against payment therefor in New York, New York on or about , 1997.
---------------------
JEFFERIES & COMPANY, INC.
RAUSCHER PIERCE REFSNES, INC.
GAINES, BERLAND INC.
, 1997
3

[PICTURES OF AN I/O SYSTEM TWO, A SERCEL SYSTEM, EARTH VIBRATORS AND A PELTON
VIBRATOR CONTROL SYSTEM.]

THE COMPANY LEASES, ON A SHORT-TERM BASIS, A FULL COMPLEMENT OF EQUIPMENT
USED FOR SEISMIC DATA ACQUISITION, INCLUDING INPUT/OUTPUT AND SERCEL DATA
ACQUISITION EQUIPMENT, EARTH VIBRATORS AND PELTON VIBRATOR CONTROL ELECTRONICS.

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK, INCLUDING
OVER-ALLOTMENT AND OTHER STABILIZING TRANSACTIONS AND THE IMPOSITION OF PENALTY
BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP MEMBERS
(IF ANY) OR THEIR RESPECTIVE AFFILIATES MAY ENGAGE IN PASSIVE MARKET MAKING
TRANSACTIONS IN THE COMMON STOCK ON THE NASDAQ NATIONAL MARKET IN ACCORDANCE
WITH RULE 103 OF REGULATION M. SEE "UNDERWRITING."
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PROSPECTUS SUMMARY

The following summary should be read in conjunction with, and is qualified
in its entirety by, the more detailed information and Consolidated Financial
Statements (including the Notes thereto) appearing elsewhere in this Prospectus
and incorporated herein by reference. The term "Company" refers to Mitcham
Industries, Inc. and its wholly-owned subsidiary, Mitcham Canada Ltd., an
Alberta corporation. Unless otherwise indicated, all financial and share
information set forth in this Prospectus assumes no exercise of the
Underwriters' over-allotment option.

THE COMPANY
GENERAL

Mitcham Industries, Inc. leases and sells geophysical and other equipment
used primarily by seismic service companies in performing seismic data
acquisition surveys on land and in transition zones (marsh and shallow water
areas). The Company conducts its operations on a worldwide basis and is the
leading independent seismic equipment lessor in North and South America. Demand
for seismic services has increased significantly in the past several years due
to advances in technology and the impact such advances have had on increasing
drilling success rates, thereby reducing the overall costs of finding oil and
gas. As a result, the Company and many seismic contractors have significantly
expanded their seismic equipment fleets. From January 31, 1994 through October
31, 1997, the Company's equipment lease pool, at cost, increased from
approximately $957,000 to $44.3 million, and the number of advanced seismic data
acquisition recording channels in the equipment lease pool increased from 510
channels to 14,538 channels. The Company's sales of new and used seismic
equipment have also increased significantly.

The Company owns a variety of technologically advanced equipment acquired
from the leading seismic manufacturers. The Company's lease pool includes many
types of equipment used in seismic data acquisition, including all components of
land and transition zone seismic data acquisition systems, geophones and cables,
earth vibrators, peripheral equipment and survey and other equipment. A
substantial portion of the Company's lease equipment is provided by two
manufacturers, Input/Output, Inc. ("I/O") and the Sercel subsidiaries of
Compagnie Generale de Geophysique ("Sercel"). The Company believes that most of
the advanced seismic data acquisition systems in use worldwide are either I/O or
Sercel systems. In the last two years, the Company has significantly diversified
its equipment lease pool. At October 31, 1997, approximately 53% of the
Company's equipment lease pool, on a cost basis, consisted of advanced digital
recording channels, with the remainder consisting of peripheral and other
equipment.

The Company leases its equipment on a short-term basis, generally for three
to nine months, to seismic contractors who need additional capacity to complete
a seismic survey. In doing so, the Company enables its customers to achieve
operating and capital investment efficiencies. Demand for short-term seismic
equipment leases is affected by many factors including: (i) the highly variable
size and technological demands of individual seismic surveys, (ii) seasonal
weather patterns and sporadic demand for seismic services in certain regions,
(iii) rapidly changing technology and (iv) costs of seismic equipment. The
Company believes these factors allow seismic contractors to use short-term
seismic equipment leasing as a cost-effective alternative to purchasing
additional equipment. The Company's equipment lease rates vary according to an
item's expected useful life, utilization and initial cost. For example, monthly
lease rates for seismic recording channel boxes range between 6% and 8% of the
original cost of the equipment.

A typical seismic crew uses a wide variety of equipment to perform seismic
data acquisition surveys. The Company's customers may lease a small amount of
equipment to expand an existing crew's capabilities or a complete seismic data
acquisition system to equip an entire crew. The Company believes that it
achieves high utilization of its equipment and operational efficiencies due to
the large number of equipment items it has available for lease, which provides
the flexibility to meet customers' needs. The Company's lease pool utilization
for the nine months ended October 31, 1997 was approximately 71%. Due to the
varying operating conditions created by seasonal weather patterns, the Company
estimates its maximum lease pool utilization is approximately 75-80%.
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5

Certain of the Company's leases contain a purchase option, allowing the
customer to apply a portion of the lease payments to the eventual purchase of
the equipment. Additionally, the Company sells a broad range of used seismic
equipment on a worldwide basis and, in certain markets, acts as a sales
representative or distributor for new seismic equipment.

The Company has supply and exclusive lease referral agreements with several
leading seismic equipment manufacturers including I/O, Sercel and Pelton
Company, Inc. ("Pelton"). The Company believes that these agreements provide it
with a significant competitive advantage. Under these agreements, the Company is
the exclusive worldwide short-term leasing representative for certain products,
except in the case of the I/O Agreement, which limits the Company's exclusivity
to the Western Hemisphere. Additional agreements exist with certain of these
manufacturers allowing the Company to act as sales representative or distributor
for such manufacturer's products in selected markets. These agreements have
varying terms and expire in 1998 through 2000, subject to modification or
extension.

THE INDUSTRY

Seismic surveys are a principal source of information used by oil and gas
companies to identify geological conditions that are favorable for the
accumulation of oil and gas and to evaluate the potential for successful
drilling, development and production of oil and gas. Seismic technology has been
used by the oil and gas industry since the 1920's and has advanced significantly
with improvements in computing and electronic technologies. In recent years, the
oil and gas industry has significantly expanded its use of 3-D seismic, which
provides a more comprehensive subsurface image and is believed to have
contributed to improved drilling success rates, particularly in mature oil and
gas basins such as those in North America. Additionally, 2-D seismic data
continues to be used in many areas where 3-D data acquisition is cost
prohibitive or logistical access is limited.

Recent industry advances include the use of high resolution 2-D,
three-component geophones ("3C-3D"), which enhance the 3-D image, and time lapse
("4-D") seismic, where surveys are periodically reacquired to allow the
monitoring of a producing oil and gas field for optimal production and reserve
recovery. These and other technical advances have contributed to increased
drilling success rates and reduced oil and gas finding costs and consequently,
have increased demand for seismic data acquisition equipment and services.

With the expanded use of seismic technology, particularly 3-D seismic, the
size of data acquisition surveys has increased substantially in the past several
years. Demand for higher resolution data, larger surveys and more rapid
completion of such surveys is requiring seismic acquisition companies to use
data acquisition systems with a greater number of seismic recording channels.
Additionally, in many areas, such as North America, the size of seismic surveys
varies significantly, requiring frequent changes in the configuration of
equipment and crews used for seismic surveys. As a result of these advances,
seismic survey channel count has increased from smaller 2-D surveys, which
typically averaged 120 channels, to larger 3-D surveys which today average
approximately 1,500 channels and often use 3,000 or more channels. The Company
believes that many seismic service companies will continue to meet changes in
equipment needs by leasing incremental equipment to expand crew size as
necessary to meet specific survey requirements, and thereby reduce the
substantial capital expenditures necessary to purchase such equipment.

BUSINESS STRATEGY

The Company's business strategy is to meet the expanding needs of users of
seismic equipment through its leasing and support services. To accomplish this,
the Company has identified the following major objectives:

- Enlarge and diversify the seismic equipment lease pool. Due to the
increasing demand for seismic services and the expanding size and
variability of seismic surveys, the Company intends to continue to
increase the size and diversity of its equipment lease pool. The Company
believes that the availability of a larger and more diverse seismic
equipment lease pool will encourage seismic survey companies to lease,
rather than purchase, such equipment, due to the capital and operating
efficiencies provided by short-term leases. The Company is also
evaluating the feasibility of broadening its equipment lease pool to
include certain marine seismic equipment.
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6

- Expand international operations. Historically, the Company's activities
outside North America have consisted of equipment sales, with a limited
amount of leasing activities. In fiscal 1998, the Company's leasing
activities in South America and other international locations have
increased significantly. The Company believes that it will be able to
expand its international leasing activities as its equipment lease pool
expands and as its customers' operations continue to grow in
international markets. The Company receives referrals from Sercel and
other manufacturers on a worldwide basis. The Company believes that its
alliances with manufacturers will help it to further penetrate
international markets, where such manufacturers are well-recognized and
have well-developed business relationships.

- Develop and enhance alliances with major seismic equipment
manufacturers. The Company's alliances with leading seismic equipment
manufacturers such as I/O and Sercel allow it to expand its equipment
lease pool on favorable terms and increase customer referrals. The
Company believes such alliances improve its relations with customers and
provide a significant competitive advantage. The Company has exclusive
short-term lease agreements with four manufacturers and is seeking to
expand the scope of existing alliances, as well as develop additional
arrangements.

- Pursue additional business development opportunities. The Company
regularly evaluates opportunities to expand its business activities
within the oil service industry, particularly in the seismic sector. For
example, the Company is evaluating a joint venture with a seismic
acquisition company and a seismic data processing company to pursue
multi-client seismic activities in selected areas of North America.
Multi-client seismic data would be acquired and owned by the joint
venture and marketed to numerous oil and gas companies for use in their
exploration and production operations.

RECENT DEVELOPMENTS

In October 1997, the Company entered into a non-binding letter of intent to
acquire all of the issued and outstanding capital stock of North American
Western Data Services, Inc. ("Western Data"), which leases and sells geophysical
surveying equipment to companies engaged in the seismic services industry. The
total consideration to be paid by the Company is approximately $3 million,
subject to adjustment in certain instances, payable approximately 92% in shares
of Common Stock and 8% in cash. No assurance can be given as to whether the
acquisition of Western Data will be completed. Consummation of the transaction
is subject to satisfactory completion by the Company of its due diligence
review, execution of a definitive agreement and other customary conditions.
---------------

The Company's principal offices are located at 44000 Highway 75 South,
(Post Office Box 1175), Huntsville, Texas, 77342, and its telephone number is
(409) 291-2277.

THE OFFERING

Common Stock Offered by the Company....... 1,800,000 Shares

Common Stock Offered by the Selling
Shareholders.............................. 20,000 Shares

Common Stock Outstanding before the
Offering(1)............................... 7,510,759 Shares

Common Stock Outstanding after the
Offering(1)............................... 9,310,759 Shares

Use of Proceeds........................... To purchase additional equipment
for the Company's lease pool and
for general corporate purposes,
including working capital. See
"Use of Proceeds."

Nasdaq National Market Symbol............. MIND
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(1) Based on the number of shares of Common Stock outstanding as of October 31,
1997. Does not include (i) 271,880 shares of Common Stock issuable upon the
exercise of options granted and an additional 39,000 shares that may be
granted in the future under stock option plans and (ii) 394,113 shares of
Common Stock issuable upon the exercise of certain warrants. See
"Description of Capital Stock and Other Securities."
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7

SUMMARY HISTORICAL CONSOLIDATED FINANCIAL AND OPERATING DATA

The following table sets forth certain historical consolidated financial
and operating data of the Company for each of the three fiscal years ended
January 31, 1997, which was derived from the Company's consolidated audited
financial statements. Also set forth below is selected financial data for the
nine months ended and as of October 31, 1996 and 1997, which was derived from
the unaudited consolidated financial statements of the Company. In the opinion
of management of the Company, the unaudited consolidated financial statements
include all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of the financial data for such period. The
results of operations for the nine months ended October 31, 1996 and 1997 are
not necessarily indicative of results for a full fiscal year. The data should be
read in conjunction with the Consolidated Financial Statements (including the
Notes thereto) and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included elsewhere herein.

NINE MONTHS ENDED
FISCAL YEAR ENDED JANUARY 31, OCTOBER 31,
---------------------------------- -------------------
1995 1996 1997 1996 1997
--------- --------- ---------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND CHANNELS)

STATEMENT OF OPERATIONS DATA:
Revenues:
Leases of seismic equipment.................... $2,424 $5,157 $ 8,345 $ 5,356 $10,901
Sales of seismic equipment..................... 2,860 2,135 6,345 2,007 15,391
------ ------ ------- ------- -------
Total revenues......................... 5,284 7,292 14,690 7,363 26,292
Costs and expenses:
Seismic equipment subleases.................... 245 251 203 111 238
Sales of seismic equipment..................... 2,027 1,085 4,197 1,261 12,666
General and administrative..................... 924 1,344 1,808 1,199 2,189
Provision for doubtful accounts................ 35 627 1,346 418 709
Depreciation................................... 363 1,331 3,112 1,951 3,919
------ ------ ------- ------- -------
Total costs and expenses............... 3,594 4,638 10,666 4,940 19,721
------ ------ ------- ------- -------
Operating income................................. 1,690 2,654 4,024 2,423 6,571
Interest income (expense), net................... (209) (21) (240) (170) 232
Other income..................................... 60 38 367 219 586
------ ------ ------- ------- -------
Income before income taxes....................... 1,541 2,671 4,151 2,472 7,389
Provision for income taxes....................... 541 958 1,449 854 2,503
------ ------ ------- ------- -------
Net income....................................... $1,000 $1,713 $ 2,702 $ 1,618 $ 4,886
====== ====== ======= ======= =======
Earnings per share, fully diluted................ $ 0.66 $ 0.50 $ 0.59 $ 0.36 $ 0.66
====== ====== ======= ======= =======
Weighted average shares outstanding (fully
diluted)....................................... 1,514 3,403 4,581 4,489 7,406
OTHER DATA:
EBITDA (1)....................................... $2,113 $4,023 $ 7,503 $ 4,593 $11,076
Capital expenditures............................. $4,496 $5,991 $15,710 $ 8,890 $31,548
Seismic equipment lease pool, at cost (at period
end)........................................... $5,395 $9,580 $21,745 $18,589 $44,250
Number of recording channels (at period end)..... 2,454 3,702 7,954 6,764 14,538

OCTOBER 31, 1997
-------------------------
ACTUAL AS ADJUSTED(2)
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(IN THOUSANDS)

BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 3,819 $
Total assets................................................ 58,108
Total debt, including current portion....................... -- --
Total shareholders' equity.................................. 38,954

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(1) EBITDA represents income before interest, taxes, depreciation and
amortization. EBITDA is frequently used by securities analysts and is
presented here to provide additional information about the Company's
operations. EBITDA is not a measurement presented in accordance with
generally accepted accounting principles. EBITDA should not be considered in
isolation or as a substitute for net income, cash flow provided by operating
activities or other income or cash flow data prepared in accordance with
generally accepted accounting principles or as a measure of a company's
profitability or liquidity.

(2) As adjusted to reflect receipt by the Company of estimated net proceeds from
the issuance of 1,800,000 shares of Common Stock and the application of such
proceeds. See "Use of Proceeds" and "Capitalization."
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

The discussion in this Prospectus contains forward-looking statements that
involve risks and uncertainties. The Company's actual future results could
differ significantly from those discussed herein. Factors that could cause or
contribute to such differences include, but are not limited to, those discussed
in "Prospectus Summary," "Risk Factors," "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and "Business," as well as
those discussed elsewhere in this Prospectus. Statements contained in this
Prospectus that are not historical facts are forward-looking statements that are
subject to the safe harbor created by the Private Securities Litigation Reform
Act of 1995.

RISK FACTORS

In evaluating an investment in the Common Stock being offered hereby,
prospective investors should consider carefully, among other things, the
following risk factors.

POSSIBLE ADVERSE EFFECT OF VOLATILITY OF OIL AND GAS INDUSTRY AND DEMAND FOR
SERVICES

Demand for the Company's services depends upon the level of spending by oil
and gas companies for exploration, production and development activities, as
well as on the number of crews conducting land and transition zone seismic data
acquisition worldwide, and especially in North America. Fluctuations in the
price of oil and gas in response to relatively minor changes in the supply and
demand for oil and gas continue to have a major effect on these activities and
thus, on the demand for the Company's services. Although published industry
sources indicate that the number of seismic crews has decreased in the last five
years, the Company believes that utilization of 3-D seismic equipment has
increased. There can be no assurance of an increased demand for additional 3-D
seismic equipment or as to the level of future demand for the Company's
services. See "Business."

DEPENDENCE UPON ADDITIONAL LEASE CONTRACTS

The Company's seismic equipment leases typically have a term of three to
nine months and provide gross revenues that recover only a portion of the
Company's capital investment. The Company's ability to generate lease revenues
and profits is dependent upon obtaining additional lease contracts after the
termination of an original lease. However, lessees are under no obligation to,
and frequently do not, continue to lease seismic equipment after the expiration
of a lease. Although the Company has been successful in obtaining additional
lease contracts with other lessees after the termination of the original leases,
there can be no assurance that it will continue to do so. The Company's failure
to obtain additional or extended leases beyond the initial term would have a
material adverse effect on its operations and financial condition. See
"Business -- Business and Operations."

DEPENDENCE ON KEY PERSONNEL

The Company's success is dependent on, among other things, the services of
certain key personnel, including specifically Billy F. Mitcham, Jr., the
Chairman of the Board, President and Chief Executive Officer of the Company. Mr.
Mitcham's employment agreement has an initial term through January 15, 2002, and
is automatically extended on a year-to-year basis until terminated by either
party giving 30 days notice prior to the end of the current term (subject to
earlier termination upon certain stated events). The agreement prohibits Mr.
Mitcham from engaging in any business activities that are competitive with the
Company's business and from diverting any of the Company's customers to a
competitor, for two years after the termination of his employment. The Company
has obtained a $1.0 million key employee life insurance policy payable to the
Company in the event of Mr. Mitcham's death. The loss of the services of Mr.
Mitcham could have a material adverse effect on the Company. In particular, the
Exclusive Lease Referral Agreement with I/O (the "I/O Agreement") is terminable
at such time as Mr. Mitcham is no longer the President of the Company and the
Exclusive Equipment Lease Agreement with Sercel is terminable at such time as he
is no longer employed by the Company in a senior management capacity. See
"Management -- Employment Agreement with Billy F. Mitcham, Jr."

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9

CUSTOMER CONCENTRATION AND CREDIT LOSSES

The Company typically leases and sells significant amounts of seismic
equipment to a relatively small number of customers, the composition of which
changes from year to year as leases are initiated and concluded and customers'
equipment needs vary. Therefore, at any one time, a large portion of the
Company's revenues may be derived from a limited number of customers, and its
ability to maintain profitability includes risks associated with the
creditworthiness and profitability of those customers. In the fiscal years ended
January 31, 1995, 1996 and 1997, the single largest customer accounted for
approximately 16%, 18% and 15%, respectively, of the Company's total revenues.
The termination of any large seismic lease could have a material adverse effect
on the Company's operations if the Company does not replace such business on a
timely basis. See "Business -- Customers; Sales and Marketing."

TECHNOLOGICAL OBSOLESCENCE

The Company has a substantial capital investment in seismic data
acquisition equipment. In addition, under the I/O Agreement, the Company is
required to make an additional investment in seismic and other peripheral
equipment. The Company believes that the technology represented by the equipment
in service and that which it is required to purchase from I/O will not become
obsolete prior to the Company's recovery of its initial investment. However,
there can be no assurance that manufacturers of seismic equipment will not
develop alternative systems that would have competitive advantages over seismic
systems now in use, thus having a potentially adverse effect on the Company's
ability to profitably lease its existing seismic equipment. In the past, the
Company has been successful in avoiding material losses caused by technological
obsolescence by selling its older seismic equipment to seismic contractors and
other parties. However, there can be no assurance that the Company will be able
to sell its older seismic equipment in the future. See "Business -- Key Supplier
Agreements."

VULNERABILITY TO WEATHER CONDITIONS AND SEASONAL RESULTS

The first and fourth quarters of the Company's fiscal year have
historically accounted for and are expected to continue to account for a greater
portion of the Company's revenues than do the second and third quarters of its
fiscal year. This seasonality in revenues is primarily due to the increased
seismic survey activity in Canada from October through March, which affects the
Company due to its significant Canadian operations. This seasonal pattern may
cause the Company's results of operations to vary significantly from quarter to
quarter. Accordingly, period to period comparisons are not necessarily
meaningful and should not be relied on as indicative of future results. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Seasonality" and "Business -- Business and Operations -- Seismic
Equipment Leasing."

DEPENDENCE UPON KEY SUPPLIERS

The Company has and relies upon agreements with I/O, Sercel, Pelton, a
manufacturer and supplier of vibrator control electronics, and StrucTec Systems,
L.L.C. ("StrucTec"), a manufacturer of replacement battery packs and battery
chargers, to purchase seismic equipment that the Company leases and sells to its
customers and, to a lesser extent, to receive lease referrals. The termination
of these agreements for any reason, including any failure by the Company to meet
the minimum purchase requirements under the I/O Agreement, could materially
adversely affect the Company's business. While the Company does not anticipate
any difficulty in obtaining seismic equipment from its suppliers based upon past
experience, any such occurrence could have a material adverse effect upon the
Company's business, financial condition and results of operations. See
"Business -- Key Supplier Agreements."

COMPETITION

Competition in the leasing of seismic equipment is fragmented, and the
Company is aware of several companies that engage in seismic equipment leasing.
The Company believes that its competitors, in general, do not have as extensive
a seismic equipment lease pool as does the Company. The Company also believes

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that its competitors do not have similar exclusive lease referral agreements
with suppliers. Competition exists to a lesser extent from seismic data
acquisition firms that may lease equipment that is temporarily idle. Under the
I/O Agreement, I/O and its subsidiary, Global Charter Corporation ("Global")
retain the right to continue to (i) lease channel boxes in certain situations
where the Company and a prospective lessee cannot or do not enter into a lease,
as more fully described in the I/O Agreement, (ii) lease channel boxes with a
purchase option in North and South America and (iii) lease channel boxes outside
of North and South America.

The Company has several competitors engaged in seismic equipment leasing
and sales, including seismic equipment manufacturers, companies providing
seismic surveys and oil and gas exploration companies that use seismic
equipment, many of which have substantially greater financial resources than the
Company. There are also several smaller competitors who, in the aggregate,
generate significant revenue from the sale of seismic survey equipment. See
"Business -- Key Supplier Agreements."

NO ANTICIPATED DIVIDENDS

The Company has never paid cash dividends on its Common Stock and does not
presently anticipate paying any cash dividends on the Common Stock in the
foreseeable future. In addition, the loan agreement between the Company and its
commercial lender restricts the payment of dividends. See "Dividend Policy."

POSSIBLE ADVERSE EFFECT OF ANTI-TAKEOVER PROVISIONS; ISSUANCE OF PREFERRED STOCK

Certain provisions of the Company's Articles of Incorporation and the Texas
Business Corporation Act may tend to delay, defer or prevent a potential
unsolicited offer or takeover attempt that is not approved by the Board of
Directors that the Company's shareholders might consider to be in their best
interest, including an attempt that might result in shareholders receiving a
premium over the market price for their shares. Because the Board of Directors
is authorized to issue preferred stock with such preferences and rights as it
determines, it may afford the holders of any series of preferred stock
preferences, rights or voting powers superior to those of the holders of Common
Stock. Although the Company has no shares of preferred stock outstanding and no
present intention to issue any shares of its preferred stock, there can be no
assurance that the Company will not do so in the future. See "Description of
Capital Stock and Other Securities."

LIMITATION ON DIRECTORS' LIABILITY

The Company's Articles of Incorporation provide, as permitted by governing
Texas law, that a director of the Company shall not be personally liable to the
Company or its shareholders for monetary damages for breach of fiduciary duty as
a director, with certain exceptions. These provisions may discourage
shareholders from bringing suit against a director for breach of fiduciary duty
and may reduce the likelihood of derivative litigation brought by shareholders
on behalf of the Company against a director. See "Description of Capital Stock
and Other Securities -- Limitation on Directors' Liability."

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USE OF PROCEEDS

The net proceeds to the Company from the sale of the Common Stock being
offered hereby (assuming a public offering price of $ per share and after
deducting underwriting discounts and estimated expenses of the Offering) are
estimated to be approximately $ million, ($ million if the Underwriters'
over-allotment option is exercised in full). The Company will not receive any
proceeds from the sale of shares by the Selling Shareholders. Approximately $
million of the net proceeds will be used to purchase additional seismic
equipment for the Company's lease pool which the Company has ordered from
manufacturers and for which the Company has obtained future lease commitments.
The remaining net proceeds will be used for working capital and other general
corporate purposes, including additional equipment purchases, and may be used in
a potential investment in a joint venture to conduct multi-client seismic data
acquisition activities. See "Business -- Business Strategy." Pending such
application of the net proceeds of this Offering, the Company will invest the
net proceeds in investment-grade short-term interest-bearing securities.

PRICE RANGE OF COMMON STOCK

The Common Stock is traded on the Nasdaq National Market under the symbol
"MIND." Prior to April 26, 1996, the Common Stock was traded on the Nasdaq
SmallCap Market.

The following table sets forth, for the periods indicated, the high and low
bid prices of the Company's Common Stock as reported on the Nasdaq SmallCap
Market and the high and low sales prices as reported on the Nasdaq National
Market, as applicable, after April 26, 1996.

HIGH LOW
---- ---

Fiscal Year Ended January 31, 1996:
First Quarter............................................. $ 3 1/8 $ 2 5/16
Second Quarter............................................ 4 2 5/16
Third Quarter............................................. 4 3/4 3 5/8
Fourth Quarter............................................ 5 5/8 3 3/4
Fiscal Year Ended January 31, 1997:
First Quarter............................................. $ 8 $ 5 1/8
Second Quarter............................................ 8 5 3/4
Third Quarter............................................. 6 1/2 5 3/8
Fourth Quarter............................................ 9 7/8 5 7/8
Fiscal Year Ended January 31, 1998:
First Quarter............................................. $ 9 1/4 $ 6 1/8
Second Quarter............................................ 15 3/8 6 5/8
Third Quarter............................................. 29 5/8 14 1/2
Fourth Quarter (through December 16, 1997)................ 33 1/8 17 7/8

On December 16, 1997, the last reported sale price for the Common Stock on
the Nasdaq National Market was $21.375. As of October 31, 1997, there were 86
shareholders of record of the Common Stock.

DIVIDEND POLICY

The Company has not paid any cash dividends on the Common Stock since its
inception, and the Board of Directors does not contemplate the payment of cash
dividends in the foreseeable future. It is the present policy of the Board of
Directors to retain earnings, if any, for use in developing and expanding the
Company's business. In addition, the Company's bank loan agreement restricts the
payment of dividends. In the future, payment of dividends by the Company will
also depend on the Company's financial condition, results of operations and such
other factors as the Board of Directors may consider. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

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CAPITALIZATION

The following table sets forth the capitalization of the Company at October
31, 1997 and as adjusted to reflect the sale by the Company of 1,800,000 shares
of Common Stock and the application of the estimated net proceeds therefrom, as
described under "Use of Proceeds." This table should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Company's Consolidated Financial Statements and Notes
thereto that are included elsewhere in this Prospectus.

OCTOBER 31, 1997
----------------------
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS)

Long-term debt, including current portion................... $ -- $ --
Shareholders' equity:
Preferred stock, $1.00 par value; 1,000,000 shares
authorized; none issued and outstanding................ -- --
Common stock, $.01 par value; 20,000,000 shares
authorized; 7,510,759 shares issued and outstanding and
9,310,759 shares as adjusted(1)........................ 75 93
Additional paid-in capital................................ 27,607
Retained earnings......................................... 11,264 11,264
Cumulative translation adjustment......................... 8 8
------- -------
Total shareholders' equity........................... 38,954
------- -------
Total capitalization............................ $38,954 $
======= =======

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

(1) Does not include (i) 271,880 shares of Common Stock issuable upon the
exercise of options granted and an additional 39,000 shares that may be
granted in the future under stock option plans and (ii) 394,113 shares of
Common Stock issuable upon the exercise of certain warrants. See
"Description of Capital Stock and Other Securities."

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SELECTED CONSOLIDATED FINANCIAL DATA

The following table sets forth certain historical financial and operating
data of the Company for each of the five fiscal years ended and as of January
31, 1997, which was derived from the Company's audited consolidated financial
statements. Also set forth below is selected financial data for the nine months
ended and as of October 31, 1996 and 1997, which was derived from the unaudited
consolidated financial statements of the Company. In the opinion of management
of the Company, the unaudited consolidated financial statements include all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of the financial data for such period. The results of
operations for the nine months ended October 31, 1996 and 1997 are not
necessarily indicative of results for a full fiscal year. The data should be
read in conjunction with the Consolidated Financial Statements (including the
Notes thereto) and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included elsewhere herein.

NINE MONTHS
ENDED
FISCAL YEAR ENDED JANUARY 31, OCTOBER 31,
-------------------------------------------- -----------------
1993 1994 1995 1996 1997 1996 1997
------ ------ ------ ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND CHANNELS)

STATEMENT OF OPERATIONS DATA:
Revenues:
Leases of seismic equipment....................... $1,266 $1,601 $2,424 $ 5,157 $ 8,345 $ 5,356 $10,901
Sales of seismic equipment........................ 1,156 2,926 2,860 2,135 6,345 2,007 15,391
------ ------ ------ ------- ------- ------- -------
Total revenues.............................. 2,422 4,527 5,284 7,292 14,690 7,363 26,292
Costs and expenses:
Seismic equipment subleases....................... 915 896 245 251 203 111 238
Sales of seismic equipment........................ 796 1,772 2,027 1,085 4,197 1,261 12,666
General and administrative........................ 655 655 924 1,344 1,808 1,199 2,189
Provision for doubtful accounts................... -- 38 35 627 1,346 418 709
Depreciation...................................... 29 62 363 1,331 3,112 1,951 3,919
------ ------ ------ ------- ------- ------- -------
Total costs and expenses.................... 2,395 3,423 3,594 4,638 10,666 4,940 19,721
------ ------ ------ ------- ------- ------- -------
Operating income.................................... 27 1,104 1,690 2,654 4,024 2,423 6,571
Interest income (expense), net...................... (4) (16) (209) (21) (240) (170) 232
Other income........................................ 19 20 60 38 367 219 586
------ ------ ------ ------- ------- ------- -------
Income before income taxes.......................... 42 1,108 1,541 2,671 4,151 2,472 7,389
Provision for income taxes.......................... 7 405 541 958 1,449 854 2,503
------ ------ ------ ------- ------- ------- -------
Net income.......................................... $ 35 $ 703 $1,000 $ 1,713 $ 2,702 $ 1,618 $ 4,886
====== ====== ====== ======= ======= ======= =======
Earnings per share, fully diluted................... $ 0.03 $ 0.51 $ 0.66 $ 0.50 $ 0.59 $ 0.36 $ 0.66
====== ====== ====== ======= ======= ======= =======
Weighted average shares outstanding (fully
diluted).......................................... 1,380 1,380 1,514 3,403 4,581 4,489 7,406
OTHER DATA:
EBITDA(1)........................................... $ 75 $1,186 $2,113 $ 4,023 $ 7,503 $ 4,593 $11,076
Capital expenditures................................ $ 28 $ 900 $4,496 $ 5,991 $15,710 $ 8,890 $31,548
Seismic equipment lease pool, at cost (at period
end).............................................. $ 82 $ 957 $5,395 $ 9,580 $21,745 $18,589 $44,250
Number of recording channels (at period end)........ -- 510 2,454 3,702 7,954 6,764 14,538

JANUARY 31, OCTOBER 31,
-------------------------------------------- ------------------
1993 1994 1995 1996 1997 1996 1997
------ ------ ------ ------- ------- ------- --------
(IN THOUSANDS)

BALANCE SHEET DATA:
Cash and cash equivalents.......................... $ 127 $ 639 $ 874 $ 637 $ 301 $ 3,330 $ 3,819
Total assets....................................... 15 2,427 8,199 12,239 24,293 23,252 58,108
Total debt, including current portion.............. 60 635 690 2,020 4,611 3,848 --
Total shareholders' equity......................... 274 977 6,176 8,048 15,242 13,736 38,954

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

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

The following discussion is intended to assist in understanding the
Company's historical financial position at January 31, 1995, 1996 and 1997, and
October 31, 1997, and results of operations and cash flows for each of the three
years in the period ended January 31, 1997 and the unaudited nine-month periods
ended October 31, 1996 and 1997. The Company's consolidated historical financial
statements and notes thereto included elsewhere in this Prospectus contain
detailed financial information that should be referred to in conjunction with
the following discussion.

OVERVIEW

The Company leases and sells seismic equipment primarily to seismic data
acquisition companies and oil and gas companies conducting land and transition
zone seismic surveys worldwide. The Company provides short-term leasing of
seismic equipment to meet a customer's requirements and offers maintenance and
support during the lease term. All leases at October 31, 1997 were for a term of
one year or less. Seismic equipment held for lease is carried at cost, net of
accumulated depreciation.

For the years ended January 31, 1995, 1996 and 1997, revenues from foreign
customers totaled $1.8 million, $3.8 million and $6.8 million, respectively.
While most of the Company's transactions with foreign customers are denominated
in United States dollars, some of the Company's transactions with Canadian
customers are denominated in Canadian dollars. The Company has not been subject
to material gains or losses resulting from currency fluctuations and has not
engaged in currency hedging activities.

SEASONALITY

Historically, seismic equipment leasing has been susceptible to weather
patterns in certain geographic regions. There is some seasonality to the
Company's lease revenues from customers operating in Canada, where a significant
percentage of the seismic survey activity occurs in the winter months, from
October through March. During the months in which the weather is warmer, certain
areas are not accessible to trucks, earth vibrators and other heavy equipment
because of the unstable terrain. This seasonal leasing activity by the Company's
Canadian customers has historically resulted in increased lease revenues in the
Company's first and fourth fiscal quarters. See "Business -- Business and
Operations -- Seismic Equipment Leasing."

RESULTS OF OPERATIONS

Nine Months Ended October 31, 1997 Compared with Nine Months Ended October 31,
1996

Revenues of $26.3 million for the nine months ended October 31, 1997
increased 257% over revenues of $7.4 million for the same prior year period.
Leasing services generated revenues of $10.9 million for the nine months ended
October 31, 1997, a $5.5 million, or 104% increase, compared to leasing revenues
for the same prior year period. This increase reflected additions to the
equipment lease pool throughout fiscal 1997 and the first three quarters of
fiscal 1998. Seismic equipment sales for the nine months ended October 31, 1997
were $15.4 million, an increase of $13.4 million, or 667%, from $2.0 million for
the same prior year period. The increase in sales was due primarily to the
exercise of lease purchase option contracts in the period totaling $12.0
million.

The Company's sublease costs increased by $127,000, or 114%, and
depreciation, which related primarily to equipment available for lease,
increased by $2.0 million, or 101%, due to the increase in the equipment lease
pool, resulting in an increase in net leasing revenues of $3.5 million.

Gross margins on seismic equipment sales were 18% and 37% for the nine
months ended October 31, 1997 and 1996, respectively. Gross margins decreased
substantially in the nine months ended October 31, 1997 because the Company sold
primarily newer equipment when customers exercised purchase options on leased
equipment that had only recently been purchased and added to the Company's
equipment lease pool. In

13
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the same prior year period and in the past, the Company sold primarily older,
fully depreciated equipment, yielding significantly greater margins.

General and administrative expenses increased $990,000, or 83%, for the
nine months ended October 31, 1997, as compared to the same prior year period.
Although general and administrative expenses increased due in part to increased
personnel costs and costs associated with the office in Canada, general and
administrative expenses decreased as a percentage of total revenues from 16% to
8% between the two periods.

The Company's provision for doubtful accounts expense increased to $709,000
for the nine months ended October 31, 1997 from $418,000 in the same prior year
period. The increase was a result of additional provisions for the allowance
account in connection with the bankruptcy filing of one of the Company's
customers, Grant Geophysical, Inc. ("Grant"). The provision for doubtful
accounts expense was 3% of total revenues in the nine months ended October 31,
1997, as compared to 6% of total revenues in the same prior year period. As of
October 31, 1997, the Company's allowance for doubtful accounts was $891,000.
See "--Liquidity and Capital Resources."

Net income for the nine months ended October 31, 1997 was $4.9 million,
which increased by $3.3 million, or 202%, as compared to the same prior year
period.

Fiscal Year Ended January 31, 1997 Compared with Fiscal Year Ended January 31,
1996

Revenues for fiscal 1997 of $14.7 million represented an increase of $7.4
million, or 101%, over fiscal 1996 revenues of $7.3 million. Leasing services
generated revenues of $8.3 million for fiscal 1997, an increase of $3.2 million,
or 62%, as compared to $5.2 million for fiscal 1996. This increase reflected
additions to the equipment lease pool throughout fiscal 1997 to meet lease
demand. Seismic equipment sales for fiscal 1997 were $6.3 million, an increase
of $4.2 million, or 197%, as compared to $2.1 for fiscal 1996. The increase in
sales was due primarily to the exercise of various lease purchase options
throughout the year totaling $3.5 million.

The Company's sublease costs decreased by $48,000, or 19%, and
depreciation, which related primarily to equipment available for lease,
increased by $1.8 million, or 134%, due to the increase in the equipment lease
pool, resulting in an increase in net leasing revenues of $1.5 million.

Gross margins on seismic equipment sales were 34% and 49% for fiscal 1997
and 1996, respectively. Gross margins decreased substantially in the fiscal year
ended January 31, 1997 because the Company sold primarily newer equipment when
customers exercised purchase options on leased equipment that had only recently
been purchased and added to the Company's equipment lease pool. In the same
prior year period and in the past, the Company sold primarily older, fully
depreciated equipment, yielding significantly greater margins.

General and administrative expenses increased $464,000, or 35%, in fiscal
1997 as compared to fiscal 1996 and were 12% and 18% of total revenues for
fiscal 1997 and 1996, respectively. This decrease in general and administrative
expenses as a percentage of total revenues was the result of overhead expenses
remaining relatively constant as revenues increased, offset in part by increases
in legal and accounting expenses associated with being a public company.

The Company's provision for doubtful accounts expense increased from
$627,000 in fiscal 1996 to $1.3 million in fiscal 1997. The increase was a
result of additional provisions for the allowance account. Of the increase,
approximately $500,000 was attributable to the bankruptcy filing of Grant. The
provision for doubtful accounts expense was 9% of total revenues in fiscal 1997
and fiscal 1996. As of January 31, 1997, the Company's allowance for doubtful
accounts was $1.5 million. See "-- Liquidity and Capital Resources."

Net income for fiscal 1997 was $2.7 million, which increased by $989,000,
or 58%, as compared to fiscal 1996.

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Fiscal Year Ended January 31, 1996 Compared with Fiscal Year Ended January 31,
1995

Revenues for fiscal 1996 of $7.3 million represented an increase of $2.0
million, or 38%, over fiscal 1995 revenues of $5.3 million. Leasing services
generated revenues of $5.2 million for fiscal 1996, an increase of $2.7 million,
or 113%, as compared to fiscal 1995. The majority of this increase was
attributable to additions of lease pool equipment throughout fiscal 1996 to meet
lease demand. Seismic equipment sales for the year ended January 31, 1996 were
$2.1 million, a decrease of $725,000, or 25%, from fiscal 1995.

The Company's sublease costs increased by $6,000, or 2%, and depreciation,
which related primarily to equipment available for lease, increased by $968,000,
or 267%, due to the increase in the equipment lease pool, resulting in an
increase in net leasing revenues of $1.8 million.

Gross margins on seismic equipment sales were 49% and 29% for fiscal 1996
and 1995, respectively. The margin for fiscal 1996 was significantly higher
because of a few high-margin transactions related to older more
fully-depreciated equipment.

General and administrative expenses increased $420,000, or 45%, in fiscal
1996 as compared to fiscal 1995 and were 18% and 17% of total revenues for
fiscal 1996 and 1995, respectively. The increase was due primarily to increased
personnel costs and higher legal and accounting expenses associated with being a
public company.

The Company's provision for doubtful accounts expense increased from
$35,000 in fiscal 1995 to $627,000 in fiscal 1996. The increase reflected the
write-off of amounts due from a leasing customer which became severely past due
and were ultimately settled for $272,000 less than the amounts owed, and
additional allowances provided for amounts due from a second leasing customer
with an outstanding receivable of $459,000 at January 31, 1996, the majority of
which was past due at that date. The latter outstanding receivable was
ultimately collected in full. The provision for doubtful accounts expense was 9%
of total revenues in fiscal 1996 as compared to 1% of total revenues in fiscal
1995. As of January 31, 1996, the Company's allowance for doubtful accounts was
$347,000.

Net income for fiscal 1996 was $1.7 million, which increased by $713,000,
or 71%, as compared to fiscal 1995.

LIQUIDITY AND CAPITAL RESOURCES

As of October 31, 1997, the Company had net working capital of
approximately $2.0 million and $5.0 million of availability under its bank
credit facilities. Net cash provided by operating activities for the nine months
ended October 31, 1997 decreased by $374,000, as compared to the same prior year
period, primarily as a result of an increase in trade accounts receivable. At
October 31, 1997, the Company had trade accounts receivable of $2.9 million that
were more than 90 days past due, with four customers owing an aggregate of $1.5
million of such amount. As of such date, the Company's allowance for doubtful
accounts was $891,000. In addition, at such date, the Company had receivables
due from one customer of approximately $539,000, $449,000 of which was more than
12 months past due.

Grant's plan of reorganization was approved by the bankruptcy court on
September 30, 1997. As of October 31, 1997, the Company had received payments
from Grant totaling $1.2 million, which represents final settlement on the
amounts owed the Company representing post-bankruptcy petition claims of
approximately $1.6 million. The Company expects to collect one-half of
pre-bankruptcy petition claims, which total approximately $755,000, prior to
fiscal year end. All of the approximately $750,000 that will not be collected
from Grant has been written off. The Company is currently leasing seismic
equipment to Grant.

During March 1997, the Company completed a public offering of 3,450,000
shares of Common Stock, of which 2,875,000 shares were sold by the Company and
575,000 shares were sold by selling shareholders. The net proceeds to the
Company from the offering (after deducting underwriting discounts and
commissions and expenses of the offering) were approximately $18.2 million. The
net proceeds were used to purchase additional 3-D seismic data acquisition
equipment, to pay outstanding debt to its commercial lender under a revolving
line of credit and a term loan and for certain other purposes.

15
17

Prior to December 8, 1997, the Company had a $5.0 million line of credit
with Bank One, Texas, N.A. ("Bank One"). At October 31, 1997, the Company had
not drawn any amounts under that line of credit. As of December 8, 1997, the
Company replaced the previous line of credit with a working capital revolving
line of credit of up to $15 million from Bank One (the "New Revolver"). Interest
on advances under the New Revolver will be payable monthly at a variable rate
which is based upon either, at the Company's option, LIBOR or Bank One's base
lending rate. The LIBOR rate, if elected, will range between LIBOR plus 1.75%
and LIBOR plus 2.75% depending upon the debt service coverage ratio the Company
maintains. Similarly, the Bank One base lending rate, if elected, will range
between the base rate minus 0.25% and the base rate plus 0.25%, again depending
upon the Company's debt service coverage ratio. Additionally, the Company will
owe Bank One each fiscal quarter a fee equal of 0.25% of the average daily
unused portion of the New Revolver calculated for the previous quarter. Advances
will be limited to the total of 80% of eligible accounts receivable and 50% of
all eligible lease pool equipment. The New Revolver contains restrictions, among
others, on the ability of the Company to incur indebtedness and pay dividends
and requires the Company to meet certain financial covenants, including a
minimum tangible net worth, a debt service coverage ratio, aging of accounts
receivable and net income. The New Revolver will expire on December 8, 1999, at
which time the unpaid principal amount of the New Revolver will be due and
payable in full.

As of October 31, 1997, capital expenditures for fiscal 1998 totaled
approximately $31.5 million. The Company has budgeted capital expenditures of
$18.3 million for the remainder of fiscal 1998 and approximately $25 million for
fiscal 1999. Included in these budgeted amounts is approximately $27 million of
seismic equipment which the Company has ordered from manufacturers and for which
the Company has obtained future lease commitments. At October 31, 1997, the
Company had satisfied or exceeded the minimum purchase requirements for the
period ended May 1998 under the I/O Agreement, and had exceeded the minimum
purchase requirements under its Exclusive Equipment Lease Agreement with Sercel.
The remaining $4.7 million of seismic equipment required to be purchased under
the I/O Agreement through May 2000 is included in the Company's fiscal 1998 and
1999 budgeted capital expenditures. See "Business -- Key Supplier Agreements."
Management believes that the net proceeds of this Offering, cash provided by
operations and funds available from its commercial lender will be sufficient to
fund its operations and budgeted capital expenditures for the remainder of
fiscal 1998 and 1999.

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BUSINESS

GENERAL

The Company owns a variety of technologically advanced equipment acquired
from the leading seismic manufacturers. The Company's lease pool includes many
types of equipment used in seismic data acquisition, including all components of
land and transition zone seismic data acquisition systems, geophones and cables,
earth vibrators, peripheral equipment and survey and other equipment. A
substantial portion of the Company's lease equipment is provided by two
manufacturers, Input/Output, Inc. and the Sercel subsidiaries of Compagnie
Generale de Geophysique. The Company believes that most of the advanced seismic
data acquisition systems in use worldwide are either I/O or Sercel systems. In
the last two years, the Company has significantly diversified its equipment
lease pool. At October 31, 1997, approximately 53% of the Company's equipment
lease pool, on a cost basis, consisted of advanced digital recording channels,
with the remainder consisting of peripheral and other equipment.

The Company has supply and exclusive lease referral agreements with several
leading seismic equipment manufacturers including I/O, Sercel and Pelton. The
Company believes that these agreements provide it with a significant competitive
advantage. Under these agreements, the Company is the exclusive worldwide short-
term leasing representative for certain products, except in the case of the I/O
Agreement, which limits the

17
19

Company's exclusivity to the Western Hemisphere. Additional agreements exist
with certain of these manufacturers allowing the Company to act as sales
representative or distributor for such manufacturer's products in selected
markets. These agreements have varying terms and expire in 1998 through 2000,
subject to modification or extension. See "-- Key Supplier Agreements."

BUSINESS STRATEGY

SEISMIC TECHNOLOGY AND THE INDUSTRY

Seismic surveys are a principal source of information used by oil and gas
companies to identify geological conditions that are favorable for the
accumulation of oil and gas and to evaluate the potential for successful
drilling, development and production of oil and gas. Seismic technology has been
used by the oil and gas industry since the 1920's and has advanced significantly
with improvements in computing and electronic technologies. In recent years, the
oil and gas industry has significantly expanded its use of 3-D seismic which
provides a more comprehensive subsurface image and is believed to have
contributed to improved drilling success rates, particularly in mature oil and
gas basins such as those in North America. Additionally, 2-D seismic data
continues to be used in many areas where 3-D data acquisition is cost
prohibitive or logistical access is limited.

Oil and gas exploration companies utilize seismic data generated from the
use of digital seismic systems and peripheral equipment in determining optimal
locations for drilling oil and gas wells, in the development of oil and gas
reserves, and in reservoir management for the production of oil and gas. A
complete digital seismic

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data acquisition system generally consists of (i) a central electronics unit
that records and stores digital data ("CEU"), (ii) seismic recording channel
boxes that contain from one to six seismic channels ("channel boxes"), (iii)
geophones, or seismic sensors, (iv) energy sources including dynamite,
compressed air guns or earth vibrators that create the necessary acoustic wave
to be recorded and (v) other peripheral, or accessory, equipment. Peripheral
equipment includes geophysical cables that transmit digital seismic data from
the channel boxes to the CEU, survey equipment, drilling equipment for shot
holes and other equipment.

In seismic data acquisition, an acoustic wave is discharged at or below the
earth's surface through the discharge of compressed air, the detonation of small
explosive charges or the use of vibrators. As the acoustic wave travels through
the earth, portions are reflected by variations in the underlying rock layers
and the reflected energy is captured by the geophones, which are situated at
intervals along paths from the point of acoustical impulse. The resulting
signals are then transmitted to the channel boxes, which convert the reflected
energy wave from analog to digital data and transmit this data via cable to the
CEU. The CEU stores the seismic data on magnetic tape for processing. The
digital data is then input into a specialized seismic processing system that
uses sophisticated computer software programs to enhance the recorded signal and
produce an image of the subsurface strata. By interpreting seismic data, oil and
gas exploration companies create detailed maps of exploration prospects and oil
and gas reservoirs.

In the past, the 2-D seismic survey was the standard data acquisition
technique used to describe geologic formations over a broad area. 2-D seismic
data can be visualized as a single vertical plane of subsurface information.
Data gathered from a 3-D seismic survey is best visualized as a cube of
information that can be sliced into numerous planes, providing different views
of a geologic structure with much higher resolution than is available with
traditional 2-D seismic survey techniques. 3-D seismic surveys require much
larger data acquisition systems. By using a greater number of channels and
flexible configuration, 3-D seismic data provides more extensive and detailed
information regarding the subsurface geology than does 2-D data. As a result,
3-D data allows the geophysicists interpreting the data to more closely select
the optimal location of a prospective drillsite or oil and gas reservoir.

In the exploration and development process, oil and gas companies establish
requirements for seismic data acquisition programs based on their technical
objectives. Because of the expense associated with drilling oil and gas wells,
decisions whether or where to drill are critical to the overall process. Because
3-D seismic data increase drilling success rates and reduce costs, the Company
believes that oil and gas companies are increasingly requiring 3-D seismic
surveys in their activities. As a result of the increasing requirements for this
higher resolution data, which in turn requires additional channels to collect
and transmit the data, seismic data acquisition systems have been expanding in
size during the past several years.

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BUSINESS AND OPERATIONS

Seismic Equipment Leasing. The Company typically purchases new and used
seismic equipment for short-term (less than one year) lease to its customers,
which primarily include seismic service companies. After the termination of the
original equipment lease, the Company enters into additional short-term leases
with other customers, often leasing such equipment multiple times until the end
of its useful life or its sale. The Company's equipment leasing services
generally include the lease of the various components of seismic data
acquisition systems and related equipment to meet a customer's job
specifications. Such specifications frequently vary as to the number of required
recording channels, geophones, energy sources (e.g., earth vibrators) and other
equipment. The Company's customers generally lease seismic equipment to meet
shortages of recording channels and related equipment for specific surveys.
Typically, the Company does not lease all of the channel boxes and other
peripheral equipment required for seismic surveys, although it has the
capability to lease equipment for an entire seismic system and, from time to
time, will do so.

The Company currently has an equipment lease pool comprising a total of
approximately 14,500 seismic recording channels (each channel being capable of
electronically converting seismic data from analog to digital format and
transmitting the digital data), geophones and cables, earth vibrators,
peripheral equipment and survey and other equipment. All of the Company's lease
pool equipment is manufactured by leading seismic equipment manufacturers and is
widely used in the seismic industry.

The Company's equipment leases generally have terms of three to nine months
and are typically renewable on a month-to-month basis. The Company offers
maintenance of its leased equipment during the lease term for malfunctions due
to failure of material and parts and will provide replacement equipment as
necessary. In addition, the Company provides telephone support services to
answer its lease customers' questions.

The Company's equipment lease rates vary according to an item's expected
useful life, utilization and initial cost. For example, monthly lease rates for
seismic recording channel boxes range between 6% and 8% of the original cost of
the equipment. Lease payments are due and payable on the first day of each month
of the lease term. The lessee must also obtain and keep in force insurance for
the replacement value of the equipment and a specified minimum amount of general
liability and casualty insurance on the leased equipment during the term of the
lease. Before equipment is delivered, the lessee must provide certification that
the Company has been named an additional insured and loss payee on its policies.
The lessee is responsible for all maintenance and repairs of leased equipment
other than those arising from normal wear and tear. All taxes (other than U.S.
federal income taxes) and assessments are the contractual obligation of the
lessee. To the extent foreign taxes are not paid by the lessee, the relevant
foreign taxing authority might seek to collect such taxes from the Company. To
date, no such collection action has been taken against the Company.

A majority of the Company's leasing revenues have historically come from
North American operations. Within North America, a significant portion of the
Company's total revenues are attributable to Canadian operations. Management
believes that the United States and Canada will continue to be the focal points
of the Company's seismic equipment leasing operations for the foreseeable
future, although the Company is pursuing an expanded presence in other
international locations such as South America and the Far East.

Historically, seismic equipment leasing has been susceptible to weather
patterns in certain geographic regions. There is some seasonality to the
Company's lease operations in Canada, where a significant percentage of the
seismic survey activity usually occurs in the winter season, from October
through March. During the months in which the weather is warmer, certain areas
are not accessible to trucks, earth vibrators and other heavy equipment because
of the unstable terrain. In the United States, most of the seismic survey work
is not usually affected by weather. As a result of weather conditions, the
Company attempts to manage its equipment lease pool to meet seasonal demands.
Equipment leased in Canada during the winter months may be moved to the United
States in the warmer months.

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Seismic Equipment Sales. The Company's equipment sales business serves a
diverse base of industry, governmental, university and research customers. The
Company typically buys used equipment for resale and new equipment in response
to specific customer orders. On occasion, the Company will also hold equipment
of third parties and sell such equipment on consignment.

KEY SUPPLIER AGREEMENTS

The I/O Agreement

Under the I/O Agreement, which was originally entered into in February
1994, the Company is the exclusive third-party recipient of requests from I/O
customers and others to lease, on a short-term basis, channel boxes and certain
peripheral equipment in North and South America through May 31, 2000. The
Company may also acquire certain equipment from I/O at favorable prices based
upon the volume of channel boxes purchased. Subject to certain exceptions, I/O
may not recommend or suggest any competitor of the Company as a potential lessor
of I/O channel boxes in North and South America. As a manufacturer of complete
data acquisition systems that are compatible only with I/O channel boxes, I/O
typically receives inquiries to lease I/O channel boxes from customers desiring
to expand the capacities of their systems on a short-term basis.

A condition of the I/O Agreement is that the Company must purchase an
aggregate of $13.25 million of I/O 3-D channel boxes on or before May 31, 2000
in the following stated installments: (i) by November 30, 1996, at least $3.0
million, (ii) from January 1, 1997 through May 31, 1997, at least $1.25 million
and (iii) in each of the years from June 1, 1997 through May 31, 1998, June 1
through May 31, 1999, and June 1, 1999 through May 31, 2000, at least $3.0
million. As of October 31, 1997, the Company had purchased I/O equipment
totaling $8.6 million under the I/O Agreement, thereby exceeding its purchase
requirements through May 1998.

Under the I/O Agreement, I/O must inform the Company by telephone,
facsimile or letter of the identity of the third party prospective lessee and
the terms, if any, that have been discussed regarding a proposed lease. The
Company may then contact the prospective lessee and negotiate the terms of a
proposed lease of channel boxes. If the Company (i) is unable to lease the
channel boxes due to a shortage in its lease fleet, (ii) cannot agree with a
prospective lessee on the terms of a proposed lease within 72 hours of the
lessee's introduction to the Company or (iii) otherwise chooses not to lease to
a prospective lessee, then I/O may lease channel boxes to the prospective
lessee. I/O has indicated that the 72-hour time period may be extended as long
as the Company and a prospective lessee are engaged in good faith negotiations
and neither of them has terminated such negotiations.

Leases of channel boxes with purchase options are specifically excluded
from the I/O Agreement. Therefore, I/O may continue to enter into leases with
purchase options in North and South America during the term of the I/O
Agreement. I/O may also continue to sell channel boxes during the term of the
I/O Agreement.

The Company primarily purchases new channel boxes from I/O, but from time
to time purchases channel boxes from I/O's existing lease fleet. All of the new
channel boxes purchased from I/O have a warranty which covers, with certain
exceptions, defects in workmanship for six months and defects in materials and
parts for 12 months. Used channel boxes acquired from I/O's existing lease fleet
will be refurbished by I/O and have a warranty which covers, with certain
exceptions, defects in workmanship for three months.

The I/O Agreement is subject to termination by I/O upon the occurrence of
(i) the Company's failure to comply with the terms of the I/O Agreement after
having received written notice of its non-compliance, (ii) the Company's
discontinuance as a going concern, (iii) the Company's default in the payment of
any obligations to I/O after having received notice that payment is due, (iv)
the Company's insolvency or bankruptcy, (v) Billy F. Mitcham, Jr. no longer
owning at least 250,000 shares of Common Stock of the Company, (vi) Billy F.
Mitcham, Jr. no longer remaining as the President of the Company, (vii) any
transfer

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of the I/O agreement by merger, consolidation, or liquidation or (viii) the
Company's assignment, or attempted assignment of its rights under the agreement.

The Sercel Lease Agreement

In September 1996, the Company entered into the Exclusive Equipment Lease
Agreement with Sercel (the "Sercel Lease Agreement"), under which the Company
acts as Sercel's exclusive worldwide short-term leasing representative and
Sercel must refer to the Company all requests it receives (other than requests
from its affiliates) to lease its 3-D data acquisition equipment and other field
equipment, through December 31, 1999. Subject to the exceptions discussed below,
Sercel may not recommend or suggest any competitor of the Company as a potential
lessor of such data acquisition equipment. In addition, the Company may not
engage in financing leases and leases for a duration of more than one year.

A condition of the Sercel Lease Agreement is that the Company purchase an
aggregate of $10.2 million of Sercel data acquisition and other field equipment
on or before December 31, 1999. At October 31, 1997, the Company had exceeded
its purchase requirements under the Sercel Lease Agreement.

Sercel must inform the Company of the identity of the third party
prospective lessee and the terms, if any, that have been discussed regarding a
proposed lease. If the Company either (i) is unable to lease the Sercel
equipment due to a shortage in its lease fleet, (ii) cannot agree with a
prospective lessee on the terms of a proposed lease within five business days of
the lessee's introduction to the Company or (iii) otherwise chooses not to lease
to a prospective lessee, then Sercel may lease its equipment to the prospective
lessee.

The agreement is subject to termination by Sercel (i) at any time upon (a)
Sercel's reasonable belief that the Company has violated or intends to violate
the Foreign Corrupt Practices Act of 1977, as amended, (b) the Company's refusal
or inability to certify that it is in compliance with laws applicable to its
activities or (c) the Company's insolvency, voluntary or involuntary bankruptcy,
assignment for the benefit of creditors or discontinuance as a going concern and
(ii) upon 90 days prior written notice if the Company no longer employs Billy F.
Mitcham, Jr. in a senior management capacity.

The Sercel Sales Agreement

Through Mitcham Canada Ltd., the Company's wholly-owned subsidiary formed
in September 1996, the Company entered into the Commercial Representation
Agreement (the "Sercel Sales Agreement") with Georex, Inc. ("Georex"), a
wholly-owned subsidiary of Sercel, under which the Company is Sercel's
designated sales representative in Canada for its data acquisition and other
field equipment through September 19, 1999, subject to earlier termination after
September 20, 1998, on 90 days prior notice. If not sooner terminated, the
agreement will automatically be extended for successive one-year periods after
September 19, 1999. Under the agreement, the Company is entitled to receive a
commission on all Sercel equipment and spare parts sold in Canada.

In November 1996, in connection with the Sercel Sales Agreement and the
Sercel Lease Agreement, the Company established an office in Calgary, Alberta,
Canada to sell, service and lease Sercel equipment and to lease and service
equipment of other manufacturers. The Company is prohibited from selling certain
seismic equipment that competes with Sercel equipment during the term of the
agreement and for six months thereafter, except that the Company may sell
individual components that compete with components of Sercel equipment, such as
I/O channel boxes and Pelton vibrator control electronics, as well as any
seismic equipment previously used in its lease fleet.

The Sercel Sales Agreement is subject to termination by Georex upon (i)
Georex's reasonable belief that the Company has violated or intends to violate
the Foreign Corrupt Practices Act of 1977, as amended, (ii) the Company's
refusal or inability to certify that it is in compliance with laws applicable to
its activities or (iii) the Company's insolvency, voluntary or involuntary
bankruptcy, assignment for the benefit of creditors or discontinuance as a going
concern.

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Other Agreements

In May 1996, the Company entered into an exclusive lease referral agreement
(the "Pelton Agreement") with Pelton. The Company believes Pelton is the leading
manufacturer and supplier of vibrator control electronics. The terms of the
Pelton Agreement regarding exclusive lease referrals and favorable prices are
substantially similar to those of the I/O Agreement, except that the Company has
the exclusive referral rights with respect to Pelton's vibrator control
electronics worldwide, through December 31, 1998. Thereafter, such agreement is
automatically extended until terminated by either party upon three months prior
written notice.

In October 1997, the Company entered into the Exclusive Lease
Representative and Distributor Agreement with StrucTec (the "StrucTec
Agreement"), which manufactures and distributes replacement batteries and
battery packs for seismic data acquisition equipment of several manufacturers.
Under the StrucTec Agreement, through October 29, 1999, the Company is the
exclusive worldwide short-term leasing representative and distributor of
replacement batteries, battery packs and certain other peripheral equipment
manufactured by StrucTec. The Company is also the exclusive worldwide
distributor of StrucTec products, except that StrucTec may continue to sell its
products to seismic equipment manufacturers.

The Company is also engaged in discussions with other seismic equipment
manufacturers regarding terms pursuant to which the Company would act as an
exclusive lease or sales representative with respect to their equipment.

CUSTOMERS; SALES AND MARKETING

The Company's major lease customers are seismic data acquisition companies
and major and independent oil and gas companies. The Company typically has a
small number of lease customers, the composition of which changes yearly as
leases are negotiated and concluded and equipment needs vary. As of October 31,
1997, the Company had 26 lease customers with active leases of various lengths.
Customers of the Company's used and new seismic equipment sales and service
business include its lease customers, foreign governments, universities,
engineering firms and research organizations worldwide.

The Company participates in both domestic and international trade shows and
expositions to inform the oil and gas industry of its products and services. In
addition to advertising in major geophysical trade journals, direct advertising
in the form of a biannual listing of equipment offerings is mailed to over 3,000
oil and gas industry participants. The Company believes this mailing generates
significant seismic equipment lease and sales revenues. In addition, the Company
advertises its alliances with each of I/O, Sercel and Pelton in several major
geophysical trade journals. The Company also maintains a web site on which it
lists its seismic equipment for sale and lease.

The Company works with a network of representatives in several
international markets, including Europe, the Far East and the Commonwealth of
Independent States. These agents generate equipment sales and, to a lesser
extent, equipment leasing business for the Company and are compensated on a
commission basis. The Company also expends resources in the areas of customer
service, product support and the maintenance of customer relationships. In
November 1996, the Company established an office in Calgary, Alberta, Canada
from which it leases and sells seismic equipment.

COMPETITION

Competition in seismic equipment leasing is fragmented, and the Company is
aware of several companies that engage in seismic equipment leasing. The Company
believes that its competitors, in general, do not have as extensive a seismic
equipment lease pool as does the Company. The Company also believes that its
competitors do not have similar exclusive lease referral agreements with
suppliers. Competition exists to a lesser extent from seismic data acquisition
firms that may lease equipment that is temporarily idle. Under the I/O
Agreement, I/O and its subsidiary, Global Charter Corporation, retain the right
to continue to (i) lease channel boxes in certain situations where the Company
and a prospective lessee cannot or do not enter into a lease, as more fully
described in the I/O Agreement, (ii) lease channel boxes with a purchase option
in North and South America and (iii) lease channel boxes outside of North and
South America. Global owns and

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operates a lease fleet of rental seismic equipment, including 3-D channel boxes.
Global leases seismic equipment subject to purchase options and arranges the
financing for such leases. The Company does not believe those equipment leases
compete with the Company's seismic equipment leases, as the Company does not
typically engage in lease/purchase arrangements for I/O seismic equipment. See
"Risk Factors -- Competition."

The Company competes for seismic equipment leases on the basis of (i) price
and delivery, (ii) availability of both peripheral seismic equipment and
complete data acquisition systems which may be configured to meet a customer's
particular needs and (iii) length of lease term. The Company competes in the
used equipment sales market with a broad base of seismic equipment owners,
including seismic service companies which use and eventually dispose of seismic
equipment, many of which have substantially greater financial resources than the
Company. The Company believes there is one competitor in the used seismic
equipment sales business that generates comparable revenues from such sales, as
well as numerous, smaller competitors who, in the aggregate, generate
significant revenue from such sales.

SUPPLIERS

The Company has several suppliers of seismic equipment for its lease fleet.
The Company currently acquires the majority of the 3-D channel boxes for its
lease fleet from I/O and Sercel and acquires the majority of its vibrator
control electronics from Pelton. The Company believes that I/O and Sercel
manufacture most of the land-based seismic systems and equipment in use. Other
suppliers of peripheral seismic equipment include OYO Geospace Corporation
(geophones, cables and seismic cameras), Charge-Air Compression Systems
(compressors), Steward Cable (cables), Trace Exploration (seismic vibrators),
Mark Products (geophones and cables) and Mertz, Inc. (seismic vibrators). From
time to time, the Company purchases new and used peripheral seismic equipment
from various other manufacturers. Management believes that its current
relationships with its suppliers are satisfactory.

EMPLOYEES

As of October 31, 1997, the Company had 26 employees, none of whom is
covered by a collective bargaining agreement. Twenty employees are involved in
sales, management and administration and six work in field operations. The
Company considers its employee relations to be satisfactory.

PROPERTIES

The Company owns its corporate office and warehouse facilities in
Huntsville, Texas. Its headquarters facility consists of 25,000 square feet of
office and warehouse space on approximately six acres. The Company also leases
approximately 10,000 square feet of office and warehouse space at its facilities
in Calgary, Alberta, Canada.

LEGAL PROCEEDINGS

The Company is not a party to any legal proceedings.

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MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information with respect to the
directors and executive officers of the Company:

NAME AGE POSITION
---- --- --------

Billy F. Mitcham, Jr...... 49 Chairman of the Board of Directors, President and Chief
Executive Officer
Paul C. Mitcham........... 33 Vice President -- Operations and Director
William J. Sheppard....... 49 Vice President -- International Operations and Director
Roberto Rios.............. 39 Vice President -- Finance, Secretary, Treasurer and Director
Gordon M. Greve........... 62 Director
Randal Dean Lewis......... 54 Director
John F. Schwalbe.......... 53 Director

Billy F. Mitcham, Jr. has been Chairman of the Board of Directors,
President and Chief Executive Officer of the Company since its founding in 1987.
He has more than 20 years of experience in the geophysical industry. From 1979
to 1987, he served in various management capacities with Mitcham Associates,
Inc., a seismic equipment leasing company. From 1975 to 1979, Mr. Mitcham served
in various capacities with Halliburton Services, an oilfield services company.

Paul C. Mitcham is Vice President -- Operations and a director of the
Company and has been employed by the Company in various management positions
since 1989. Prior to 1989, he worked in various field positions in the
geophysical industry. Paul C. Mitcham is the brother of Billy F. Mitcham, Jr.

William J. Sheppard was elected Vice President -- International Operations
and a director of the Company in 1994. Mr. Sheppard has more than 25 years of
experience in the geophysical industry. From 1987 until 1994, Mr. Sheppard was
the President of Alberta Supply Company, a Canadian seismic equipment sales and
services company.

Roberto Rios was elected Vice President -- Finance, Secretary and Treasurer
and a director of the Company in 1994. From 1990 through 1994, Mr. Rios held
several senior-level positions, including Vice President and General Manager,
with ADVO, Incorporated, a publicly-traded nationwide direct mail distribution
company. From 1980 through 1989, he held several financial positions, including
Controller, of The Shoppers' Guide, a company that produces a direct mail
advertising guide and that is a subsidiary of Harte-Hanks Communications, Inc.,
a multimedia company. Mr. Rios is a Certified Public Accountant and a member of
the American Institute of Certified Public Accountants.

Gordon M. Greve was elected a director of the Company in 1995. He held
various management positions with Amoco Corporation from 1977 through 1994 and
has more than 30 years of experience in the geophysical industry. With Amoco, he
served as the Acting Vice President of Exploration Technology and Services from
February through September 1994. He was manager of exploration from 1991 through
1994 and a manager in geophysics from 1986 to 1991. Mr. Greve served as the
President of the Society of Exploration Geophysicists for the 1995-1996 term.

Randal Dean Lewis was elected a director of the Company in 1995. Mr. Lewis
is the interim Dean of the Business School at Sam Houston State University and
he has served in this capacity since 1995. From 1987 to 1995, Mr. Lewis was the
Associate Dean and Professor of Marketing at Sam Houston State University. Prior
to 1987, Mr. Lewis held a number of executive positions in the banking and
finance industries.

John F. Schwalbe was elected a director of the Company in 1994. Mr.
Schwalbe has been a Certified Public Accountant in private practice since 1978,
with primary emphasis on tax planning, consultation and compliance.

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EMPLOYMENT AGREEMENT WITH BILLY F. MITCHAM, JR.

Billy F. Mitcham, Jr.'s employment agreement with the Company is for a term
of five years, beginning January 15, 1997, which term is automatically extended
for successive one-year periods unless either party gives written notice of
termination at least 30 days prior to the end of the current term. The agreement
provides for an annual salary of $150,000 and a bonus at the discretion of the
Board of Directors. It may be terminated prior to the end of the initial term or
any extension thereof if Mr. Mitcham dies; if it is determined that Mr. Mitcham
has become disabled (as defined); if Mr. Mitcham gives three months prior notice
of resignation; if the Company's Board of Directors gives Mr. Mitcham notice of
termination "without cause"; or if the Board of Directors determines that Mr.
Mitcham has breached the employment agreement in any material respect, has
appropriated a material business opportunity of the Company or has engaged in
fraud or dishonesty with respect to the Company's business or is convicted of or
indicted for any felony criminal offense or any crime punishable by
imprisonment. If Mr. Mitcham terminates his employment within 60 days following
(i) a material reduction in his duties and responsibilities (without his
consent) or (ii) a reduction in, or failure by the Company to pay when due, any
portion of his salary, he will be entitled to payments equal to $450,000,
payable ratably over the 24 months following such termination. For a period of
two years after the termination of the agreement, Mr. Mitcham is prohibited from
engaging in any business activities that are competitive with the Company's
business and from diverting any of the Company's customers to a competitor. The
Company has no employment agreements with any of its other executive officers.
See "Risk Factors -- Dependence on Key Personnel."

CERTAIN TRANSACTIONS AND RELATIONSHIPS

Effective September 20, 1993, the Company and Billy F. Mitcham, Jr. entered
into a Voting Agreement (the "Voting Agreement") with Billy F. Mitcham, Sr.,
Paul C. Mitcham and two trusts established for the benefit of Mr. Mitcham, Jr.'s
sons. Under the Voting Agreement, the holders of shares subject thereto have
agreed that Mr. Mitcham, Jr. has the authority to vote an additional 279,490
shares of Common Stock. Mr. Mitcham, Jr. has voting control of an aggregate of
534,490 shares, or 7.1%, of Common Stock, as of October 31, 1997, and will have
voting control of an aggregate of 484,490 shares, or 5.2%, after the Offering.
The Voting Agreement will terminate on the earlier of the agreement of the
parties, the transfer by the parties of their shares or the expiration of 25
years. See "Principal and Selling Shareholders."

Since April 1994, the Company has engaged Billy F. Mitcham, Sr. under a
consulting agreement. Mr. Mitcham, Sr. has been involved in the energy industry
since 1952 and was formerly the owner and the President of Mitcham Associates,
Inc., which was previously engaged in the leasing and sale of seismic equipment.
Mr. Mitcham, Sr. has served as an industry expert and consultant for the Company
since 1987. The agreement calls for monthly payments to Mr. Mitcham, Sr. of
$5,500. The Company paid Mr. Mitcham, Sr. a total of $66,000 under the agreement
in fiscal 1997. The consulting agreement prohibits Mr. Mitcham, Sr. from
providing consulting services to, and from contacting or soliciting in an effort
to provide services to, any competitor of the Company for two years after the
termination of his engagement. The current term of the agreement expires January
31, 1999, subject to earlier termination on the occurrence of certain stated
events, and is renewable for successive one-year terms at the Company's option.
The Company believes Mr. Mitcham, Sr. could successfully compete with the
Company, given his contacts and extensive knowledge of the seismic leasing
industry. For the above reasons, the Company believes the terms of Mr. Mitcham,
Sr.'s consulting agreement are no less favorable than could be obtained from an
unaffiliated third party with similar experience.

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PRINCIPAL AND SELLING SHAREHOLDERS

The following table sets forth certain information with respect to
beneficial ownership of Common Stock as of October 31, 1997 by (i) each of the
Company's directors; (ii) each Selling Shareholder; (iii) each person who is
known by the Company to own beneficially more than 5% of the Common Stock; and
(iv) all executive officers and directors as a group.

SHARES OWNED SHARES OWNED
BEFORE OFFERING NUMBER OF AFTER OFFERING
NAME AND ADDRESS OF --------------------- SHARES ------------------
BENEFICIAL OWNER(1) NUMBER PERCENT OFFERED NUMBER PERCENT
------------------- -------- ------- --------- ------- -------

Billy F. Mitcham, Jr.................... 676,062(2) 8.8% 20,000(3) 626,062 6.6%
Paul C. Mitcham......................... 129,430(4) 1.7% -- 129,430 1.4%
Billy F. Mitcham III Trust.............. 45,981(5) * 10,000 35,981 *
Benjamin R. Mitcham Trust............... 45,981(5) * 10,000 35,981 *
Roberto Rios............................ 34,422(6) * -- 34,422 *
William J. Sheppard..................... 32,422(7) * -- 32,422 *
Gordon M. Greve......................... 2,000(8) * -- 2,000 *
387 Horse Thief Lane
Durango, Colorado 81301
Randal Dean Lewis....................... 1,000(8) * -- 1,000 *
College of Business Administration
P. O. Box 2056
Sam Houston State University
Huntsville, Texas 77341
John F. Schwalbe........................ 3,000(8) * -- 3,000 *
10700 Richmond Avenue #219
Houston, Texas 77042
All executive officers and directors as
a group (7 persons)................... 748,906(9) 10% 20,000(3) 728,906 7.7%
FMR Corp................................ 446,500(10) 5.9% -- 446,500 4.8%
82 Devonshire Street
Boston, Massachusetts 02109
Wellington Management Company, LLP...... 385,000(11) 5.1% -- 385,000 4.1%
75 State Street
Boston, Massachusetts 02109

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

* Less than 1%

(1) The business address of each shareholder is the same as the address of the
Company's principal executive offices, unless otherwise indicated.

(2) Includes an aggregate of 279,490 shares of Common Stock owned by Billy F.
Mitcham, Sr. (115,040 shares), Paul C. Mitcham (89,930 shares) and two
trusts established for the benefit of Mr. Mitcham, Jr.'s sons (74,520
shares), and as to which shares Mr. Mitcham, Jr. has the right to vote
under the Voting Agreement. Also includes shares underlying currently
exercisable options to purchase an aggregate of 141,572 shares of Common
Stock, as follows: Billy F. Mitcham, Jr. (38,880 shares), Billy F. Mitcham,
Sr. (45,750 shares), Paul C. Mitcham (39,500 shares) and the two trusts
(17,442 shares).

(3) Represents the shares being sold by the indicated Selling Shareholders, as
to which Billy F. Mitcham, Jr. has the right to vote under the Voting
Agreement.

(4) Includes shares underlying currently exercisable options to purchase 39,500
shares.

(5) Includes shares underlying currently exercisable warrants to purchase 8,721
shares.

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29

(6) Includes shares underlying currently exercisable options to purchase 30,000
shares and a currently exercisable warrant to purchase 2,422 shares.

(7) Represents shares underlying currently exercisable options and warrants.

(8) Represents shares underlying currently exercisable options.

(9) Includes shares underlying currently exercisable options and warrants to
purchase an aggregate of 212,416 shares of Common Stock, as follows: the
141,572 shares referred in footnote (2) above, Roberto Rios (32,422
shares), William J. Sheppard (32,422 shares), Gordon M. Greve (2,000
shares), Randal Dean Lewis (1,000 shares) and John F. Schwalbe (3,000
shares).

(10) Based solely on information contained in a Schedule 13G, dated February 14,
1997, filed by FMR Corp. with the Securities and Exchange Commission (the
"Commission").

(11) Based solely upon information contained in a Schedule 13G, dated February
12, 1997, filed by Wellington Management Company, LLP with the Commission.

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DESCRIPTION OF CAPITAL STOCK AND OTHER SECURITIES

The authorized capital stock of the Company consists of 20,000,000 shares
of Common Stock, par value $.01 per share, and 1,000,000 shares of Preferred
Stock, par value $1.00 per share. As of October 31, 1997, there were outstanding
7,510,759 shares of Common Stock, no shares of Preferred Stock, options to
purchase up to 271,880 shares of Common Stock, and warrants to purchase up to
394,113 shares of Common Stock. Upon completion of this Offering, there will be
9,310,759 issued and outstanding shares of Common Stock.

The following description of the Company's capital stock and other
securities and selected provisions of its Amended and Restated Articles of
Incorporation (the "Amended Articles") and Restated Bylaws is a summary and is
qualified in its entirety by the Company's Amended Articles and Restated Bylaws,
copies of which have been filed with the Commission.

COMMON STOCK

Holders of the Common Stock are entitled to one vote per share for the
election of directors and other corporate matters. Holders of Common Stock are
not entitled to cumulative voting rights in connection with the election of
directors. Therefore, the holders of a majority of the shares voting for the
election of directors may elect all the directors. The Amended Articles permit
actions to be taken by the shareholders of the Company without a meeting, by
written consent, including a written consent signed by less than all of the
shareholders of the Company. Section 9.10A of the Texas Business Corporation Act
("TBCA") requires that prompt notice of the taking of any action by shareholders
without a meeting by less than unanimous written consent be given to all
shareholders who did not consent in writing to the action.

Subject to the rights of any outstanding shares of Preferred Stock, the
holders of Common Stock are entitled to dividends in such amounts and at such
times as may be declared by the Board of Directors of the Company out of funds
legally available therefor. Upon liquidation or dissolution, holders of the
Common Stock are entitled to share ratably in all assets remaining available for
distribution to them after payment or provision for all liabilities and any
preferential rights of any Preferred Stock then outstanding. The Common Stock
carries no preemptive rights. All outstanding shares of Common Stock are, and
the shares of Common Stock to be sold by the Company in the Offering will be,
upon payment therefor as contemplated herein, validly issued, fully paid and
nonassessable securities of the Company.

WARRANTS

As of October 31, 1997, there were outstanding warrants to acquire an
aggregate of 394,113 shares of Common Stock at exercise prices from $3.50 to
$28.12 per share, at a weighted average price of $8.75 per share, expiring on
various dates through October 28, 2002.

The warrants contain provisions providing for appropriate adjustment in the
event of any merger, consolidation, recapitalization, reclassification, stock
dividend, stock split or similar transaction. The warrants contain net issuance
provisions permitting the holder thereof to elect to exercise the warrants in
whole or in part and instruct the Company to withhold from the shares issuable
upon exercise a number of shares, valued at the current fair market value on the
date of exercise, to pay the exercise price. Such net exercise provision has the
effect of requiring the Company to issue shares of Common Stock without a
corresponding increase in capital. A net exercise of the warrants will have the
same dilutive effect on the interests of the Company's shareholders as will a
cash exercise.

OPTIONS

As of October 31, 1997, there were outstanding options to acquire an
aggregate of 271,880 shares of Common Stock, 204,130 of which are currently
exercisable. Such options were exercisable at prices ranging from $2.88 per
share to $22 per share, at a weighted average exercise price of $7.88 per share,
expiring on various dates through October 3, 2007.

29
31

PREFERRED STOCK

The Board of Directors of the Company is empowered, without approval of the
Company's shareholders, to cause shares of Preferred Stock to be issued in one
or more series and to establish the number of shares to be included in each such
series and the designations, preferences, limitations and relative rights,
including voting rights, of the shares of any series. Because the Board of
Directors has the power to establish the preferences and rights of each series,
it may afford the holders of any series of Preferred Stock preferences, powers
and rights, voting or otherwise, senior to the rights of holders of Common
Stock. This includes, among other things, voting rights, conversion privileges,
dividend rates, redemption rights, sinking fund provisions and liquidation
rights which shall be superior to the Common Stock. The issuance of shares of
Preferred Stock could have the effect of delaying or preventing a change in
control of the Company. No shares of Preferred Stock will be outstanding at the
consummation of this Offering, and the Board of Directors has no current plans
to issue any shares of Preferred Stock.

BUSINESS COMBINATION LAW

The Company is subject to Part Thirteen of the TBCA, known as the "Business
Combination Law." The Business Combination Law prohibits certain mergers, sales
of assets, reclassifications and other transactions between shareholders
beneficially owning 20% or more of the outstanding stock of an "issuing public
corporation" (such shareholders being defined as affiliated shareholders) for a
period of three years following the affiliated shareholder acquiring shares
representing 20% or more of the corporation's voting power, unless two-thirds of
the unaffiliated shareholders approve the transactions at a meeting held no
earlier than six months after the shareholder acquires that ownership. However,
the provisions requiring such a vote of shareholders will not apply to any
transaction with an affiliated shareholder if the transaction or the purchase of
shares by the affiliated shareholder is approved by the board of directors
before the affiliated shareholder acquires beneficial ownership of 20% of the
shares or if the affiliated shareholder was an affiliated shareholder prior to
December 31, 1996, and continued as such through the date of the transaction.

An "issuing public corporation" is defined as a corporation organized under
the laws of Texas that has: (i) 100 or more shareholders, (ii) any class or
series of its voting shares registered under the Exchange Act of 1934, as
amended, or similar or successor statute or (iii) any class or series of its
voting shares qualified for trading in a national market system. The Business
Combination Law also contains an opt-out provision that allows a corporation to
elect out of the statute by adopting a by-law or charter amendment prior to
December 31, 1997, but the Company does not intend to do so.

Under certain circumstances, the Business Combination Law makes it more
difficult for an affiliated shareholder to effect various business combinations
with a corporation for a three-year period. The provisions of the Business
Corporation Law may encourage companies interested in acquiring the Company to
negotiate in advance with the Board of Directors of the Company, since the
shareholder approval requirement would be avoided if a majority of the directors
then approve, before the shareholder becomes an affiliated shareholder, either
the business combination or the transaction that results in the shareholder
becoming an affiliated shareholder.

LIMITATION ON DIRECTORS' LIABILITY

The Amended Articles limit the liability of the Company's directors to the
Company or its shareholders (in their capacity as directors but not in their
capacity as officers) to the fullest extent permitted by Texas law.
Specifically, directors of the Company will not be personally liable for
monetary damages for an act or omission in the director's capacity as a director
except for liability (i) for any breach of the director's duty of loyalty to the
Company or its shareholders, (ii) for acts or omissions not in good faith that
constitute a breach of duty of the director to the Company or that involve
intentional misconduct or a knowing violation of law, (iii) for any transaction
from which the director derived an improper personal benefit or (iv) an act or
omission for which the liability of the director is expressly provided for by an
applicable statute.

The inclusion in the Company's Amended Articles of the limitation of the
personal liability of the Company's directors to the Company may have the effect
of reducing the likelihood of derivative litigation

30
32

against those directors, and may deter shareholders or management from bringing
a lawsuit against those directors for breach of their duty of care, even though
such an action, if successful, might otherwise have benefitted the Company and
its shareholders.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is North American
Transfer Co. Its address is 147 West Merrick Road, Freeport, New York 11520.

31
33

UNDERWRITING

Subject to the terms and conditions set forth in the Underwriting
Agreement, the Company and the Selling Shareholders have agreed to sell to the
Underwriters named below (the "Underwriters"), for whom Jefferies & Company,
Inc., Rauscher Pierce Refsnes, Inc. and Gaines, Berland Inc. are acting as
representatives (the "Representatives"), and the Underwriters have severally
agreed to purchase the number of shares of Common Stock set forth opposite their
respective names in the table below at the public offering price less the
underwriting discount set forth on the cover page of this Prospectus:

NUMBER OF
UNDERWRITER SHARES
----------- ---------

Jefferies & Company, Inc....................................
Rauscher Pierce Refsnes, Inc................................
Gaines, Berland Inc.........................................

---------
Total............................................. 1,820,000
=========

The Underwriting Agreement provides that the obligation of the Underwriters
to purchase the shares of Common Stock is subject to certain conditions. The
Underwriters are committed to purchase all of the shares of Common Stock offered
(other than those covered by the over-allotment option described below), if any
are purchased.

The Underwriters propose to offer the Common Stock to the public initially
at the public offering price set forth on the cover page of this Prospectus and
to certain dealers at such price less a concession not in excess of $
per share. The Underwriters may allow, and such dealers may reallow, a discount
not in excess of $0.10 per share to certain other dealers. After the public
offering of Common Stock, the public offering price and concessions to selected
dealers and the reallowance to other dealers may be changed by the
Representatives.

The Company has granted the Underwriters an option, exercisable for 30 days
from the date of this Prospectus, to purchase up to 273,000 additional shares of
Common Stock at the public offering price, less the underwriting discount. To
the extent such option is exercised, each Underwriter will become obligated,
subject to certain conditions, to purchase additional shares of Common Stock
proportionate to such Underwriter's initial commitment as indicated in the
preceding table. The Underwriters may exercise such right of purchase only for
the purpose of covering overallotments, if any, made in connection with the
shares of Common Stock.

The Company, the directors and executive officers of the Company and the
Selling Shareholders have agreed not to offer for sale, sell or otherwise
dispose of any shares for Common Stock, or any securities convertible into or
exchangeable for shares of Common Stock, for a period of 180 days from the date
of this Prospectus, without the prior written consent of Jefferies & Company,
Inc.

The Representatives have informed the Company and the Selling Shareholders
that they do not expect the Underwriters to confirm sales of shares of Common
Stock offered by this Prospectus to any accounts over which they exercise
discretionary authority.

The Representatives have advised the Company that, pursuant to Regulation M
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
certain persons participating in the Offering may engage in transactions,
including stabilizing bids, syndicate covering transactions or the imposition of
penalty bids, which may have the effect of stabilizing or maintaining the market
price of the Common Stock at a level above that which might otherwise prevail in
the open market. A "stabilizing bid" is a bid for or the purchase of the Common
Stock on behalf of the Underwriters for the purpose of fixing or maintaining the
price of the Common Stock. A "syndicate covering transaction" is the bid for or
the purchase of the Common Stock on behalf of the Underwriters to reduce a short
position incurred by the Underwriters in connection with the

32
34

Offering. A "penalty bid" is an arrangement permitting the Representatives to
reclaim the selling concession otherwise accruing to an Underwriter or syndicate
member in connection with the Offering if the Common Stock originally sold by
such Underwriter or syndicate member is purchased by the Representatives in a
syndicate covering transaction and has therefore not been effectively placed by
such Underwriter or syndicate member. The Representatives have advised the
Company that such transactions may be effected on the Nasdaq National Market or
otherwise and, if commenced, may be discontinued at any time.

In connection with the Offering, certain Underwriters and selling group
members (if any) who are qualified market makers on The Nasdaq Stock Market may
engage in passive market making transactions in the Common Stock on The Nasdaq
Stock Market in accordance with Rule 103 of Regulation M during the business day
prior to the pricing of the Offering before the commencement of offers or sales
of the Common Stock. Passive market makers must comply with applicable volume
and price limitations and must be identified as such. In general, a passive
market maker must display its bid at a price not in excess of the highest
independent bid for such security, if all independent bids are lowered below the
market maker's bid, however, such bid must then be lowered when certain purchase
limits are exceeded.

The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain civil liabilities that may be incurred in
connection with the Offering, including liabilities under the Securities Act of
1933 (the "Securities Act"), or to contribute to payments the Underwriters may
be required to make in respect thereof.

LEGAL MATTERS

Certain legal matters with respect to the Common Stock offered hereby will
be passed upon for the Company by Norton, Jacobs, Kuhn & McTopy, L.L.P. and for
the Underwriters by Vinson & Elkins L.L.P., Houston, Texas. Carl L. Norton owns
16,000 shares of Common Stock. The Norton Family Trust, of which Carl L. Norton
is a beneficiary, and Sabrina A. McTopy own warrants to acquire an additional
aggregate of 118,230 shares of Common Stock. Carl L. Norton and Sabrina A.
McTopy are partners in Norton, Jacobs, Kuhn & McTopy, L.L.P.

EXPERTS

The Consolidated Financial Statements of the Company as of January 31, 1996
and 1997 and for each of the years in the three-year period ended January 31,
1997 included in this Prospectus have been audited by Hein + Associates LLP,
independent certified public accountants, as set forth in their report appearing
elsewhere herein, and is included herein in reliance upon such report and upon
the authority of such firm as experts in accounting and auditing.

AVAILABLE INFORMATION

The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act with respect to the Common Stock offered by this
Prospectus. This Prospectus does not contain all of the information set forth in
such Registration Statement, certain parts of which were omitted in accordance
with the rules and regulations of the Commission. For further information with
respect to the Company and to the securities offered hereby, reference is made
to such Registration Statement, including the exhibits thereto. Statements
contained in this Prospectus as to the contents of any contract or other
document are not necessarily complete, and in each instance reference is made to
the copy of such contract or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference.

The Company is subject to the informational requirements of the Exchange
Act and in accordance therewith files periodic reports, proxy and information
statements and other information filed with the Commission. Reports, proxy
statements, and other information filed by the Company with the Commission are
available at the web site that the Commission maintains at http://www.sec.gov.
and can be inspected and

33
35

copied at the public reference facilities maintained by the Commission at its
principal offices at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington D.C. 20549 and at the regional offices of the Commission located at 7
World Trade Center, New York, New York, 10048, and the Chicago Regional Office,
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material may also be obtained from the Public
Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Common Stock is quoted on the Nasdaq National Market
and such reports, proxy and information statements and other information
concerning the Company are available at the offices of the Nasdaq National
Market located at 1735 K Street, N.W., Washington, D.C. 20006.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed with the Commission by the Company are
incorporated herein by reference:

(1) The Company's Annual Report on Form 10-KSB for the year ended
January 31, 1997;

(2) The Company's Quarterly Report on Form 10-QSB for the quarter
ended April 30, 1997;

(3) The Company's Quarterly Report on Form 10-QSB/A for the quarter
ended July 31, 1997;

(4) The Company's Quarterly Report on Form 10-QSB for the quarter
ended October 31, 1997;

(5) The Company's Current Report on Form 8-K, dated February 24, 1997;

(6) The Company's Proxy Statement, dated May 12, 1997, for the
Company's 1997 Annual Meeting of Shareholders; and

(7) The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A, effective December 19, 1994.

All documents filed by the Company pursuant to Section 13(a), 13(c), 14, or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of this Offering shall be deemed to be incorporated by reference
herein and to be a part hereof from the date of filing such documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document that also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.

THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM A COPY OF
THIS PROSPECTUS IS DELIVERED, UPON THE WRITTEN OR ORAL REQUEST BY SUCH PERSON, A
COPY OF ANY OR ALL OF THE FOREGOING DOCUMENTS INCORPORATED HEREIN BY REFERENCE,
EXCEPT THAT EXHIBITS TO SUCH DOCUMENTS WILL NOT BE PROVIDED UNLESS THEY ARE
SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH DOCUMENTS. WRITTEN OR TELEPHONE
REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO THE COMPANY AT 44000 HIGHWAY 75
SOUTH, (POST OFFICE BOX 1175), HUNTSVILLE, TEXAS 77342, ATTENTION: ROBERTO RIOS,
TELEPHONE NUMBER (409) 291-2277.

34
36

INDEX TO FINANCIAL STATEMENTS

PAGE
----

Independent Auditor's Report................................ F-2
Consolidated Balance Sheets as of January 31, 1996 and 1997
and October 31, 1997 (unaudited).......................... F-3
Consolidated Statements of Income for the Years Ended
January 31, 1995, 1996 and 1997 and the Nine Months Ended
October 31, 1996 and 1997 (unaudited)..................... F-4
Consolidated Statements of Changes in Shareholders' Equity
for the Years Ended January 31, 1995, 1996 and 1997 and
the Nine Months Ended October 31, 1997 (unaudited)........ F-5
Consolidated Statements of Cash Flows for the Years Ended
January 31, 1995, 1996 and 1997 and the Nine Months Ended
October 31, 1996 and 1997 (unaudited)..................... F-6
Notes to Consolidated Financial Statements.................. F-7

F-1
37

INDEPENDENT AUDITOR'S REPORT

Board of Directors and Shareholders
Mitcham Industries, Inc.
Huntsville, Texas

We have audited the accompanying consolidated balance sheets of Mitcham
Industries, Inc. and Subsidiary as of January 31, 1996 and 1997, and the related
consolidated statements of income, changes in shareholders' equity and cash
flows for each of the years in the three year period ended January 31, 1997.
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 audits 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 Mitcham Industries, Inc. and
Subsidiary as of January 31, 1996 and 1997, and the results of their operations
and their cash flows for each of the years in the three year period ended
January 31, 1997, in conformity with generally accepted accounting principles.

/s/ HEIN + ASSOCIATES LLP

Hein + Associates LLP

Houston, Texas
March 12, 1997

F-2
38

MITCHAM INDUSTRIES, INC.

CONSOLIDATED BALANCE SHEETS

ASSETS

JANUARY 31,
-------------------------- OCTOBER 31,
1996 1997 1997
----------- ----------- -----------
(UNAUDITED)

Current assets:
Cash.............................................. $ 637,000 $ 301,000 $ 3,819,000
Accounts receivable, net of allowance for doubtful
accounts of $347,000, $1,500,000 and $891,000
at January 31, 1996 and 1997 and October 31,
1997, respectively............................. 2,277,000 3,598,000 10,366,000
Installment trade receivables..................... 193,000 1,141,000 3,894,000
Inventory......................................... 206,000 473,000 1,527,000
Prepaid expenses and other current assets......... 274,000 100,000 93,000
Income taxes recoverable.......................... -- -- 177,000
----------- ----------- -----------
Total current assets...................... 3,587,000 5,613,000 19,876,000
Seismic equipment lease pool, net of accumulated
depreciation...................................... 8,115,000 17,963,000 37,450,000
Property and equipment, net of accumulated
depreciation...................................... 472,000 619,000 782,000
Other assets........................................ 65,000 98,000 --
----------- ----------- -----------
Total assets.............................. $12,239,000 $24,293,000 $58,108,000
=========== =========== ===========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Notes payable to bank............................. $ 400,000 $ 999,000 $ --
Current installments of long-term debt............ 447,000 938,000 --
Accounts payable.................................. 491,000 1,941,000 16,040,000
Income taxes payable.............................. 311,000 267,000 --
Deferred income taxes payable..................... 544,000 902,000 113,000
Accrued liabilities and other current
liabilities.................................... 474,000 685,000 1,744,000
----------- ----------- -----------
Total current liabilities................. 2,667,000 5,732,000 17,897,000
----------- ----------- -----------
Long-term debt:
Long-term debt, net of current installments....... 1,155,000 2,674,000 --
Capital lease obligations, net of current
portion........................................ 18,000 -- --
Deferred income taxes............................... 351,000 645,000 1,257,000
----------- ----------- -----------
Total liabilities......................... 4,191,000 9,051,000 19,154,000
Commitments and contingencies
Shareholders' equity:
Preferred stock, $1.00 par value; 1,000,000 shares
authorized; none issued and outstanding........ -- -- --
Common stock, $.01 par value; 20,000,000 shares
authorized; 3,221,000, 4,474,880 and 7,510,759
shares, respectively, issued and outstanding... 32,000 45,000 75,000
Additional paid-in capital........................ 4,340,000 8,819,000 27,607,000
Retained earnings................................. 3,676,000 6,378,000 11,264,000
Cumulative translation adjustment................. -- -- 8,000
----------- ----------- -----------
Total shareholders' equity................ 8,048,000 15,242,000 38,954,000
----------- ----------- -----------
Total liabilities and shareholders'
equity.................................. $12,239,000 $24,293,000 $58,108,000
=========== =========== ===========

The accompanying Notes are an integral part of these financial statements.

F-3
39

MITCHAM INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF INCOME

NINE MONTHS
YEARS ENDED JANUARY 31, ENDED OCTOBER 31,
------------------------------------- ------------------------
1995 1996 1997 1996 1997
---------- ---------- ----------- ---------- -----------
(UNAUDITED)

Revenues:
Leases of seismic equipment.... $2,424,000 $5,157,000 $ 8,345,000 $5,356,000 $10,901,000
Sales of seismic equipment..... 2,860,000 2,135,000 6,345,000 2,007,000 15,391,000
---------- ---------- ----------- ---------- -----------
Total revenues.............. 5,284,000 7,292,000 14,690,000 7,363,000 26,292,000
---------- ---------- ----------- ---------- -----------
Costs and expenses:
Seismic equipment subleases.... 245,000 251,000 203,000 111,000 238,000
Sales of seismic equipment..... 2,027,000 1,085,000 4,197,000 1,261,000 12,666,000
General and administrative..... 924,000 1,344,000 1,808,000 1,199,000 2,189,000
Provision for doubtful
accounts.................... 35,000 627,000 1,346,000 418,000 709,000
Depreciation................... 363,000 1,331,000 3,112,000 1,951,000 3,919,000
---------- ---------- ----------- ---------- -----------
Total costs and expenses.... 3,594,000 4,638,000 10,666,000 4,940,000 19,721,000
---------- ---------- ----------- ---------- -----------
Operating income................. 1,690,000 2,654,000 4,024,000 2,423,000 6,571,000
Other income (expense):
Interest, net.................. (209,000) (21,000) (240,000) (170,000) 232,000
Other, net..................... 60,000 38,000 367,000 219,000 586,000
---------- ---------- ----------- ---------- -----------
Total other income
(expense)................. (149,000) 17,000 127,000 49,000 818,000
---------- ---------- ----------- ---------- -----------
Income before income taxes....... 1,541,000 2,671,000 4,151,000 2,472,000 7,389,000
Provision for income taxes....... 541,000 958,000 1,449,000 854,000 2,503,000
---------- ---------- ----------- ---------- -----------
Net income....................... $1,000,000 $1,713,000 $ 2,702,000 $1,618,000 $ 4,886,000
========== ========== =========== ========== ===========
Earnings per common and common
equivalent share:
Primary..................... $ 0.66 $ 0.52 $ 0.60 $ 0.37 $ 0.67
Assuming full dilution...... 0.66 0.50 0.59 0.36 0.66
========== ========== =========== ========== ===========
Shares used in computing earnings
per common and common
equivalent share:
Primary..................... 1,514,000 3,306,000 4,522,000 4,431,000 7,330,000
Assuming full dilution...... 1,514,000 3,403,000 4,581,000 4,489,000 7,406,000
========== ========== =========== ========== ===========

The accompanying Notes are an integral part of these financial statements.

F-4
40

MITCHAM INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

COMMON STOCK ADDITIONAL CUMULATIVE
------------------- PAID-IN RETAINED TRANSLATION
SHARES AMOUNT CAPITAL EARNINGS ADJUSTMENT TOTAL
--------- ------- ----------- ----------- ----------- -----------

Balances, February 1, 1994........... 1,380,000 $14,000 $ -- $ 963,000 $ -- $ 977,000
Issuance of common stock, net of
offering expenses................ 1,790,000 18,000 4,181,000 -- -- 4,199,000
Net income......................... -- -- -- 1,000,000 1,000,000
--------- ------- ----------- ----------- ------- -----------
Balances, January 31, 1995........... 3,170,000.. 32,000 4,181,000 1,963,000 -- 6,176,000
Compensation on stock options
issued to employees.............. -- -- 37,000 -- -- 37,000
Issuance of common stock upon
exercise of warrants............. 51,000 -- 122,000 -- -- 122,000
Net income......................... -- -- -- 1,713,000 -- 1,713,000
--------- ------- ----------- ----------- ------- -----------
Balances, January 31, 1996........... 3,221,000 32,000 4,340,000 3,676,000 -- 8,048,000
Issuance of common stock upon
exercise of warrants............. 1,254,000 13,000 4,479,000 -- -- 4,492,000
Net income......................... -- -- -- 2,702,000 -- 2,702,000
--------- ------- ----------- ----------- ------- -----------
Balances, January 31, 1997........... 4,475,000 45,000 8,819,000 6,378,000 -- 15,242,000
Issuance of common stock, net of
offering expenses (unaudited).... 2,875,000 29,000 18,138,000 -- -- 18,167,000
Issuance of common stock upon
exercise of warrants and options
(unaudited)...................... 161,000 1,000 650,000 -- -- 651,000
Cumulative translation adjustment
(unaudited)...................... -- -- -- -- 8,000 8,000
Net income (unaudited)............. -- -- -- 4,886,000 -- 4,886,000
--------- ------- ----------- ----------- ------- -----------
Balances, October 31, 1997,
(unaudited)........................ 7,511,000 $75,000 $27,607,000 $11,264,000 $ 8,000 $38,954,000
========= ======= =========== =========== ======= ===========

The accompanying Notes are an integral part of these financial statements.

F-5
41

MITCHAM INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

NINE MONTHS ENDED
YEARS ENDED JANUARY 31, OCTOBER 31,
---------------------------------------- --------------------------
1995 1996 1997 1996 1997
----------- ----------- ------------ ----------- ------------
(UNAUDITED)

Cash flows from operating activities:
Net income................................... $ 1,000,000 $ 1,713,000 $ 2,702,000 $ 1,618,000 $ 4,886,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation............................... 363,000 1,331,000 3,112,000 1,951,000 3,919,000
Provision for doubtful accounts, net of
chargeoffs............................... (3,000) 257,000 1,153,000 268,000 (609,000)
Loss on disposal of assets................. 12,000 -- -- -- --
Deferred income taxes...................... 467,000 284,000 608,000 666,000 (177,000)
Trade accounts receivable.................. (1,404,000) (742,000) (3,422,000) (1,158,000) (8,912,000)
Accounts payable and other current
liabilities.............................. 71,000 554,000 193,000 (193,000) 4,513,000
Other, net................................. (46,000) (171,000) (126,000) (540,000) (1,382,000)
----------- ----------- ------------ ----------- ------------
Net cash provided by (used in)
operating activities................ 460,000 3,226,000 4,220,000 2,612,000 2,238,000
----------- ----------- ------------ ----------- ------------
Cash flows from investing activities:
Purchases of seismic equipment held for
lease...................................... (1,938,000) (5,321,000) (14,011,000) (5,750,000) (20,624,000)
Purchases of property and equipment.......... (22,000) (444,000) (231,000) (131,000) (279,000)
Proceeds from sale of lease pool equipment
and property and equipment................. -- 846,000 2,603,000 -- 7,976,000
----------- ----------- ------------ ----------- ------------
Net cash used in investing
activities.......................... (1,960,000) (4,919,000) (11,639,000) (5,881,000) (12,927,000)
----------- ----------- ------------ ----------- ------------
Cash flows from financing activities:
Proceeds from short-term borrowings.......... 1,413,000 400,000 1,000,000 -- --
Payments on short-term borrowings............ (4,242,000) (256,000) (401,000) (400,000) (1,937,000)
Proceeds from long-term debt................. 500,000 1,372,000 3,126,000 3,126,000 --
Payments on long-term debt and capitalized
lease obligations.......................... (97,000) (182,000) (1,134,000) (834,000) (2,674,000)
Capitalized stock issuance costs and deferred
financing charges.......................... (25,000) -- -- -- --
Proceeds from issuance of common stock, net
of offering expenses....................... 4,186,000 122,000 4,492,000 4,070,000 18,818,000
----------- ----------- ------------ ----------- ------------
Net cash provided by financing
activities.......................... 1,735,000 1,456,000 7,083,000 5,962,000 14,207,000
----------- ----------- ------------ ----------- ------------
Net increase (decrease) in cash................ 235,000 (237,000) (336,000) 2,693,000 3,518,000
Cash, beginning of period...................... 639,000 874,000 637,000 637,000 301,000
----------- ----------- ------------ ----------- ------------
Cash, end of period............................ $ 874,000 $ 637,000 $ 301,000 $ 3,330,000 $ 3,819,000
=========== =========== ============ =========== ============
Supplemental cash flow information:
Cash paid for:
Interest................................... $ 196,000 $ 78,000 $ 385,000 $ 289,000 $ 143,000
Taxes...................................... 800 384,000 865,000 515,000 2,835,000
=========== =========== ============ =========== ============
Equipment acquired under capital lease....... $ 36,000 $ -- $ -- $ -- $ --
Equipment purchases in accounts payable...... -- 226,000 1,468,000 3,009,000 10,645,000
Equipment purchased with vendor financing.... 2,500,000 -- -- -- --
=========== =========== ============ =========== ============

The accompanying Notes are an integral part of these financial statements.

F-6
42

MITCHAM INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION SUBSEQUENT TO JANUARY 31, 1997 IS UNAUDITED)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization -- Mitcham Industries, Inc. (the Company), is a Texas
corporation formed on January 29, 1987. The Company and its wholly-owned
Canadian subsidiary provide full-service equipment leasing, sales and services
to the seismic industry worldwide, primarily in North and South America.

The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned Canadian subsidiary. All intercompany
transactions and balances have been eliminated in consolidation.

Description of leasing arrangements -- The Company leases various types of
seismic equipment to seismic data acquisition companies. All leases at October
31, 1997 are for one year or less. Lease revenue is recognized ratably over the
term of the lease.

Equipment sold on the installment basis -- The Company periodically sells
seismic equipment on an installment basis. The terms of the sale agreements
generally require twelve payments, with two payments due upon delivery of the
equipment and the remaining payments due over the succeeding ten months. To the
extent a down payment equal to at least 16.5% of the sales price is not
received, the gross profit from the sale is deferred until sufficient payments
have been received to warrant full revenue recognition.

Lease/purchase transactions -- The Company periodically leases equipment
with an option to purchase. The percentage of the lease payments that may be
credited towards the purchase price is recorded as deferred revenues until the
customer exercises the option to purchase the equipment; at which time the
transaction is recorded as a sale.

Inventories -- Inventories consist primarily of used seismic equipment
purchased in bulk liquidation sales. Inventories are valued at the lower of cost
or market using the average cost method.

Seismic equipment held for lease -- Seismic equipment held for lease
consists primarily of remote signal conditioners (channel boxes) and peripheral
equipment and is carried at cost, net of accumulated depreciation. Depreciation
is computed on the straight-line method over the estimated useful lives of the
equipment, which is seven years for channel boxes and three to seven years for
other peripheral equipment.

Property and equipment -- Property and equipment is carried at cost, net of
accumulated depreciation. Depreciation is computed on the straight-line method
over the estimated useful lives of the property and equipment. The estimated
useful lives of equipment range from three to seven years. Buildings are
depreciated over 40 years and property improvements over 10 years.

Income taxes -- The Company accounts for its taxes under the liability
method, whereby the Company recognizes on a current and long-term basis,
deferred tax assets and liabilities which represent differences between the
financial and income tax reporting bases of its assets and liabilities.
Historically the Company has paid income taxes on the cash basis of accounting.
Beginning in fiscal 1998, the Company will no longer be eligible to report on
the cash basis of accounting for federal income tax reporting purposes.

Cash equivalents -- For purposes of presenting cash flows, the Company
considers all highly liquid investments with an original maturity of three
months or less to be cash equivalents.

Earnings per share -- Primary earnings per common and common equivalent
share and earnings per common and common equivalent share assuming full dilution
are computed on the weighted average number of shares outstanding adjusted for
the incremental shares attributed to outstanding options and warrants to
purchase common stock.

Use of estimates -- The preparation of the Company's financial statements
in conformity with generally accepted accounting principles requires the
Company's management to make estimates and assumptions that

F-7
43

MITCHAM INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

affect the amounts reported in these financial statements and accompanying
notes. Actual results could differ from these estimates.

Industry concentration -- The Company's revenues are derived from seismic
equipment leased to companies providing seismic acquisition services. The
seismic industry has rapidly expanded its 3-D seismic acquisition capabilities
over the past few years as this technology has gained broader market acceptance
from oil and gas exploration companies. With this expansion, many of the seismic
acquisition companies in North America, while experiencing rapid growth in 3-D
seismic acquisition revenues, have not experienced corresponding increases in
profitability and have become increasingly leveraged. Should the financial
performance of the companies in this industry not improve, the Company could be
exposed to additional credit risk and be subjected to declining demand for its
leasing services.

New accounting pronouncements -- The Financial Accounting Standards Board
(FASB) issued SFAS No. 121 entitled Impairment of Long-Lived Assets. SFAS No.
121, which became effective beginning February 1, 1996, provides that in the
event that facts and circumstances indicate that the cost of operating assets or
other assets may be impaired, an evaluation of recoverability would be
performed. If an evaluation is required, the estimated future undiscounted cash
flows associated with the asset would be compared to the carrying amount of the
asset to determine if a writedown to market value or discounted cash flow is
required. SFAS No. 121 did not have a material impact on its operating results
or financial condition of the Company upon implementation.

The FASB also issued SFAS No. 123, Accounting for Stock Based Compensation,
effective for fiscal years beginning after December 15, 1995. This statement
allows companies to choose to adopt the statement's new rules for accounting for
employee stock-based compensation plans. For those companies which choose not to
adopt the new rules, the statement requires disclosures as to what earnings per
share would have been if the new rules had been adopted. Management adopted the
disclosure requirements of this statement during fiscal 1997. See Note 12 for
further discussion.

The FASB also issued SFAS No. 128, entitled Earnings Per Share, during
February 1997. The new statement, which is effective for financial statements
issued after December 31, 1997, including interim periods, establishes standards
for computing and presenting earnings per share. The new statement requires
retroactive restatement of all prior-period earnings per share data presented.
The Company does not believe the new statement will have a material impact upon
previously presented earnings per share information.

The FASB also issued SFAS No. 130, Reporting Comprehensive Income and SFAS
No. 131, Disclosures About Segments of an Enterprise and Related Information.
SFAS No. 130 establishes standards for reporting and display of comprehensive
income, its components and accumulated balances. Comprehensive income is defined
to include all changes in equity except those resulting from investments by
owners and distributions to owners. Among other disclosures, SFAS No. 130
requires that all items that are required to be recognized under current
accounting standards as components of comprehensive income be reported in a
financial statement that displays with the same prominence as other financial
statements. SFAS No. 131 supersedes SFAS No. 14, Financial Reporting for
Segments of a Business Enterprise. SFAS No. 131 establishes standards on the way
that public companies report financial information about operating segments in
annual financial statements and requires reporting of selected information about
operating segments in interim financial statements issued to the public. It also
establishes standards for disclosures regarding products and services,
geographic areas and major customers. SFAS No. 131 defines operating segments as
components of a company about which separate financial information is available
that is evaluated regularly by the chief operating decision maker in deciding
how to allocate resources and in assessing performance.

SFAS Nos. 130 and 131 are effective for financial statements for periods
beginning after December 15, 1997 and require comparative information for
earlier years to be restated. Because of the recent issuance of these standards,
management has been unable to fully evaluate the impact, if any, the standards
may have on

F-8
44

MITCHAM INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

the future financial statement disclosures. Results of operations and financial
position, however, will be unaffected by implementation of these standards.

Foreign Currency Translation -- All balance sheet accounts of the Canadian
subsidiary are translated at the current exchange rate as of the end of the
accounting period. Income statement items are translated at average currency
exchange rates. The resulting translation adjustment is recorded as a separate
component of shareholders' equity.

Unaudited Interim Information -- The accompanying financial information as
of October 31, 1997 and for the nine month periods ended October 31, 1996 and
1997 has been prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. The financial statements
reflect all adjustments, consisting of normal recurring accruals, which are, in
the opinion of management, necessary to fairly present such information in
accordance with generally accepted accounting principles.

2. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

JANUARY 31,
-------------------- OCTOBER 31,
1996 1997 1997
-------- -------- -----------

Land............................................ $ 25,000 $ 25,000 $ 25,000
Building and improvements....................... 346,000 360,000 392,000
Furniture and fixtures.......................... 153,000 288,000 535,000
Autos and trucks................................ 37,0000 122,000 122,000
-------- -------- ---------
561,000 795,000 1,074,000
Less accumulated depreciation................... (889,000) (176,000) (292,000)
-------- -------- ---------
$472,000 $619,000 $ 782,000
======== ======== =========

3. NOTES PAYABLE TO BANK

On January 31, 1996, the Company executed a new line of credit with a bank.
The Company may borrow up to $1,000,000 under the line of credit which bears
interest at prime plus 0.5% (9% at January 31, 1997). Advances under the line of
credit are collateralized by accounts receivable and inventory. Borrowings under
the line were limited to 80% of eligible accounts receivable and 50% of eligible
inventory, as defined. This line was replaced by the credit facility discussed
in Note 4.

F-9
45

MITCHAM INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. LONG-TERM DEBT

Long-term debt consists of the following:

JANUARY 31,
------------------------ OCTOBER 31,
1996 1997 1997
---------- ---------- -----------

Note payable to a bank due in monthly installments of
$13,889 plus interest at 1% over its base lending
rate (10.5% and 10.75% at January 31, 1995 and
1996), due June 1997, collateralized by lease pool
equipment........................................... $ 234,000 $ -- $ --
Note payable to a bank, due in monthly installments of
$2,803, including interest at 9%, due September
1998, collateralized by land and a building......... 274,000 264,000 --
Note payable to a bank, due in monthly installments of
$833 plus interest at its base lending rate plus 1%
(9.75% at January 31, 1996), due September 2000,
collateralized by land and a building............... 48,000 -- --
Note payable to a bank under a $4,206,000 term loan
facility, due in monthly installments of $26,270,
including interest at 9.5%, through March 2000,
collateralized primarily by lease pool equipment and
an assignment of leases............................. 1,046,000 3,348,000 --
---------- ---------- -------
1,602,000 3,612,000 --
Less current maturities.......................... (447,000) (938,000) --
---------- ---------- -------
$1,155,000 $2,674,000 --
========== ========== =======

All long-term debt balances outstanding as of March 1997 were paid off with
the proceeds of the offering of common stock discussed in Note 14.

In January 1997, the Company established a second revolving line of credit
for up to $4.0 million (the "Equipment Revolver") to be used solely for
short-term financing of up to 75% of the seismic equipment purchased by the
Company for approved lease/purchase contracts, and a second term loan of $1.0
million (the "Second Term Loan") to be used solely for long-term financing of up
to 80% of the purchase price of other seismic equipment. Interest on the
Equipment Revolver and the Second Term Loan accrues at a floating rate of
interest equal to the bank's rate of interest ("Base Rate") plus 0.5%. Interest
on amounts advanced under the Equipment Revolver is payable monthly, and the
principal amount is due six months after the date of the initial advance;
provided, however, that if the lessee under a lease/purchase contract does not
purchase the seismic equipment subject to the lease, and there has been no
default (as defined) under the lease, then the Company may extend the maturity
date for an additional 18 months (the "Extended Term"). In such event, the
principal amount of and interest on the amount advanced under the Equipment
Revolver would be payable in ratable monthly installments over the Extended
Term. Interest on the principal amount of the Second Term Loan is payable in
ratable monthly installments over a two-year period through and including
January 1999. No advances had been made on either of these two credit facilities
at October 31, 1997.

As of December 8, 1997, the Company replaced the previous line of credit
with a working capital revolving line of credit of up to $15 million from Bank
One (the "New Revolver"). Interest on advances under the New Revolver will be
payable monthly at a variable rate which is based upon either, at the Company's
option, LIBOR or Bank One's base lending rate. The LIBOR rate, if elected, will
range between LIBOR plus 1.75% and LIBOR plus 2.75% depending upon the debt
service coverage ratio the Company maintains. Similarly, the Bank One base
lending rate, if elected, will range between the base rate minus 0.25% and the
base rate plus 0.25%, again depending upon the Company's debt service coverage
ratio. Additionally, the

F-10
46

MITCHAM INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Company will owe Bank One each fiscal quarter a fee equal of 0.25% of the
average daily unused portion of the New Revolver calculated for the previous
quarter. Advances will be limited to the total of 80% of eligible accounts
receivable and 50% of all eligible lease pool equipment. The New Revolver
contains restrictions, among others, on the ability of the Company to incur
indebtedness and pay dividends and requires the Company to meet certain
financial covenants, including a minimum tangible net worth, a debt service
coverage ratio, aging of accounts receivable and net income. The New Revolver
will expire on December 8, 1999, at which time the unpaid principal amount of
the New Revolver will be due and payable in full. The Company's subsidiary,
Mitcham Canada Ltd., has guaranteed full repayment of the New Revolver.

5. LEASES

The Company leases and subleases seismic equipment to customers under
operating leases with non-cancelable terms of one year or less. These leases are
generally renewable on a month-to-month basis. All taxes (other than U.S.
federal income taxes) and assessments are the contractual responsibility of the
lessee. To the extent the foreign taxes are not paid by the lessee, the relevant
foreign taxing authorities might seek to collect such taxes from the Company.
Under the terms of its lease agreements, any amounts paid by the Company to such
foreign taxing authorities may be billed and collected from the lessee. If the
Company is unable to collect the foreign taxes it paid on behalf of its lessees,
the Company may have foreign tax credits in the amounts paid which could be
applied against its U.S. income tax liability subject to certain limitations.
The Company is not aware of any foreign tax obligations as of October 31, 1997.

The Company leases seismic equipment from others under month-to-month
operating leases. Lease expense incurred by the Company in connection with such
leases amounted to $245,000, $251,000 and $203,000 for the years ended January
31, 1995, 1996 and 1997, respectively, and $111,000 and $238,000 for the nine
months ended October 31, 1996 and 1997, respectively.

A summary of the equipment held for lease to others is as follows:

JANUARY 31,
------------------------- OCTOBER 31,
1996 1997 1997
----------- ----------- ----------------

Remote signal conditioners (channel boxes)... $ 6,764,000 $13,274,000 $23,566,000
Other peripheral equipment................... 2,816,000 8,471,000 20,684,000
Less: accumulated depreciation............... (1,465,000) (3,782,000) (6,800,000)
----------- ----------- -----------
$ 8,115,000 $17,963,000 $37,450,000
=========== =========== ===========

F-11
47

MITCHAM INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. INCOME TAXES

The components of income tax expense are as follows:

JANUARY 31,
--------------------------------
1995 1996 1997
-------- -------- ----------

Current:
Federal........................................... $ 71,000 $698,000 $ 775,000
State............................................. 3,000 (24,000) 22,000
-------- -------- ----------
74,000 674,000 797,000
Deferred............................................ 467,000 284,000 652,000
-------- -------- ----------
$541,000 $958,000 $1,449,000
======== ======== ==========

The components of the Company's deferred tax liability are as follows:

JANUARY 31,
-----------------------
1996 1997
--------- -----------

Deferred tax asset -- allowance for doubtful accounts....... $ 123,000 $ 536,000
Deferred tax liabilities:
Conversion from accrual to cash method of accounting...... (667,000) (1,660,000)
Depreciation.............................................. (351,000) (423,000)
--------- -----------
Deferred tax liability, net............................... $(895,000) $(1,547,000)
========= ===========

The following is a reconciliation of expected to actual income tax expense:

YEARS ENDED JANUARY 31,
--------------------------------
1995 1996 1997
-------- -------- ----------

Federal income tax expense at 34%................... $524,000 $913,000 $1,411,000
State income taxes and nondeductible expenses....... 17,000 45,000 38,000
-------- -------- ----------
$541,000 $958,000 $1,449,000
======== ======== ==========

7. RELATED PARTY TRANSACTIONS

The Company completed transactions with companies controlled by a
shareholder of the Company or in which a shareholder of the Company has a
substantial ownership interest. The following is a summary of transactions with
these companies:

YEARS ENDED JANUARY 31,
----------------------------
1995 1996 1997
------- -------- -------

Office and warehouse rent expense....................... $48,000 $ 32,000 $ --
Equipment lease expense and purchases................... 11,000 28,000 --
Seismic equipment sales................................. -- -- --
Purchase of office and warehouse........................ -- 325,000 --

F-12
48

MITCHAM INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. SALES AND MAJOR CUSTOMERS

The components of sales revenue are as follows:

NINE MONTHS
YEARS ENDED JANUARY 31, ENDED OCTOBER 31,
------------------------------------ ------------------------
1995 1996 1997 1996 1997
---------- ---------- ---------- ---------- -----------

Sales -- seismic
equipment............... $2,860,000 $2,135,000 $2,809,000 $2,007,000 $ 3,424,000
Sales -- seismic equipment
under lease purchase
options................. -- -- 3,536,000 -- 11,967,000
---------- ---------- ---------- ---------- -----------
$2,860,000 $2,135,000 $6,345,000 $2,007,000 $15,391,000
========== ========== ========== ========== ===========

A summary of the Company's revenues from foreign customers by geographic
region is as follows:

YEARS ENDED JANUARY 31,
------------------------------------
1995 1996 1997
---------- ---------- ----------

Canada........................................... $ 346,000 $1,022,000 $3,287,000
UK/Europe........................................ 339,000 699,000 1,657,000
South America.................................... -- 949,000 1,271,000
Asia............................................. 885,000 943,000 393,000
Other............................................ 222,000 213,000 178,000
---------- ---------- ----------
Totals................................. $1,792,000 $3,826,000 $6,786,000
========== ========== ==========

One customer represented 16% and 18% of the Company's total revenues for
fiscal 1995 and 1996, respectively, and three customers represented 15%, 14% and
12%, respectively, of fiscal 1997 total revenues. Three customers represented
20%, 12% and 10%, respectively, of total revenues for the nine months ended
October 31, 1997. No other customer exceeded 10% of revenues for fiscal 1995,
1996 and 1997 and the nine months ended October 31, 1997.

9. CONCENTRATIONS OF CREDIT RISK

As of January 31, 1996 and 1997 and October 31, 1997, amounts due from
customers which exceeded 10% of accounts receivable amounted to an aggregate of
$1.1 million from three customers, $1.7 million from two customers, and $7.4
million from three customers, respectively.

One of the Company's significant customers filed for bankruptcy protection
during December 1996. Revenues derived from this customer amounted to 15% of
total revenues for the fiscal year ended January 31, 1997. As of that date,
amounts due from this customer totaled approximately $1.2 million. As of January
31, 1997, the Company's allowance for doubtful accounts was $1.5 million, which
amount was intended to fully reserve all amounts due from this customer and
provide for any potential loss associated with the Company's remaining trade
accounts receivable. For the nine months ended October 31, 1997, this customer
represented approximately 7% of the Company's revenues. Through October 1997,
the Company has received payments from this customer totaling $1.2 million,
which represents final settlement on the amounts owed the Company representing
post-bankruptcy petition claims of approximately $1.6 million. The Company
expects to collect one-half of pre-bankruptcy petition claims, which are
approximately $755,000 as of October 31, 1997. All of the approximately $750,000
that will not be collected from Grant has been written off. The Company's
allowance for doubtful accounts balance at October 31, 1997 is $891,000.

The Company maintains deposits with banks which exceed the Federal Deposit
Insurance Corporation (FDIC) insured limit and has a money market account
included in its cash balances which is not FDIC insured. Management believes the
risk of loss in connection with these accounts is minimal.

F-13
49

MITCHAM INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. SHAREHOLDERS' EQUITY

The Company has 1,000,000 shares of preferred stock authorized, none of
which are outstanding as of July 31, 1997. The preferred stock may be issued in
multiple series with various terms, as authorized by the Company's Board of
Directors. The Company has 20,000,000 shares of common stock authorized, of
which 7,510,759 are issued and outstanding as of October 31, 1997. Warrants to
acquire 892,750 shares of the Company's common stock at $3.50 per share issued
in connection with the Company's 1995 initial public offering were exercised
during fiscal 1997. During March 1997, the Company consummated a public offering
of its common stock, as more fully discussed in Note 14, in which it sold to
underwriters 2,875,000 shares of common stock.

The Company issued warrants to various shareholders during fiscal 1995 to
acquire 49,500 shares of the Company's common stock at $5.00 per share. The
number of shares and exercise price of the warrants were adjusted to 63,953 and
$3.87, respectively, during fiscal 1996 as a result of the anti-dilution
provisions of the warrants. Of these warrants, 49,113 remained unexercised at
October 31, 1997.

In July 1995, the Company issued warrants to acquire 35,000 shares of its
common stock to a public relations firm engaged by the Company. The warrants are
exercisable at $3.50 per share for a period of five years from their issuance
and 10,000 remain unexercised at October 31, 1997.

In January 1995, the Company issued warrants to acquire 85,000 units
(consisting of two shares of common stock and one warrant to purchase one share
of common stock at $4.20 per share) at $7.97 per unit to underwriters in
connection with the Company's initial public offering. The securities underlying
these warrants, as well as the common stock underlying currently outstanding
warrants, are subject to certain piggy-back registration rights. As of October
31, 1997, 5,000 of these warrants remained unexercised.

In August 1996, in exchange for services, the Company issued warrants to
its legal counsel to purchase 50,000 shares of its common stock for $6.43 per
share, exercisable for a period of four years from issuance. Of this amount,
warrants to acquire 40,000 shares are unexercised at October 31, 1997. In
December 1996, in exchange for services, the Company issued warrants to its
legal counsel to purchase 50,000 shares of its common stock at $9.28 per share,
exercisable beginning December 14, 1997 for a period of four years from their
issuance. In October 1997, in exchange for services, the Company issued warrants
to its legal counsel to purchase 25,000 shares of its common stock for $28.12
per share, exercisable beginning October 28, 1998 for a period of four years
from their issuance.

Warrants to acquire 200,000 shares of the Company's common stock were
issued to underwriters in connection with the Company's secondary offering in
March 1997. The warrants are exercisable at $8.40 per share for a period of two
years from their issuance and are unexercised at October 31, 1997.

11. COMMITMENTS AND CONTINGENCIES

Equipment purchases -- On February 22, 1994, the Company executed an
agreement with Input/Output, Inc. (I/O) under which I/O will notify the Company
of any inquiries it receives to lease I/O's channel boxes and other peripheral
equipment in North and South America and will allow the Company the opportunity
to provide such leasing. In the event the Company and a prospective customer are
unable to reach agreement on such leases in a 72-hour period, I/O shall have the
right to offer the equipment for lease to the prospective customer. Effective
June 1, 1996, the Company entered into an agreement with I/O to amend the terms
of and extend the Exclusive Lease Referral Agreement through May 31, 2000. Under
the I/O Agreement as amended, the Company must purchase an aggregate of $13.25
million of I/O equipment as follows: $3.0 million of I/O equipment between June
1 and November 30, 1996 (the "Renewal purchase"), with a minimum of $1.5 million
to be purchased by August 31, 1996. Thereafter, from January 1, 1997 through May
31, 1997, the Company must purchase at least an aggregate of $1.25 million of
I/O equipment. In each of the years from June 1, 1997 through May 31, 1997, June
1 through May 31, 1999 and June 1, 1999 through May 31, 2000, the Company must
purchase at least an aggregate of $3.0 million of I/O equipment (of

F-14
50

MITCHAM INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

an aggregate additional $10.25 million after the $3.0 million Renewal Purchase
is made). As of October 31, 1997, the Company believes it has fulfilled the
terms of the agreement, including the minimum purchase commitments through such
date.

In September 1996, the Company entered into two agreements with the Sercel
subsidiaries of Compagnie Generale de Geophysique ("Sercel"). One agreement, the
Exclusive Equipment Lease Agreement provides that until December 31, 1999, the
Company will be Sercel's short-term leasing representative throughout the world
and that Sercel will refer to the Company all requests it receives from its
customers to lease its 3-D data acquisition equipment and other field equipment.
The second agreement, the Commercial Representation Agreement, provides that
until September 19, 1999, subject to certain termination after September 19,
1998, the Company will be Sercel's exclusive sales agent in Canada. In
connection with entering into this agreement, the Company established an office
in Calgary, Alberta, Canada in November 1996. As of October 31, 1997, the
Company believes it has fulfilled the terms of the agreement, including the
minimum purchase commitments.

These agreements are subject to termination under certain circumstances
including, among others, non-payment of amounts due, insolvency of the Company,
and the current President of the Company no longer being employed.

Employment Agreement -- Effective January 15, 1997, the Company entered
into an employment agreement with the Company's President for a term of five
years, beginning January 15, 1997, which term is automatically extended for
successive one-year periods unless either party gives written notice of
termination at least 30 days prior to the end of the current term. The agreement
provides for an annual salary of $150,000, subject to increase by the Board of
Directors. It may be terminated prior to the end of the initial term or any
extension thereof if the President dies; if it is determined that the President
has become disabled; if the Board of Directors determines that the President has
breached the employment agreement in any material respect, has appropriated a
material business opportunity of the Company or has engaged in fraud or
dishonesty with respect to the Company's business that is punishable by
imprisonment. If the President's employment is terminated by the Company prior
to the end of the initial five-year term other than for a reason enumerated
above, the President will be entitled to payments equal to $450,000, payable
ratably over the 24 months following such termination. For a period of two years
after the termination of the agreement, the President is prohibited from
engaging in any business activities that are competitive with the Company's
business and from diverting any of the Company's customers to a competitor.

Consulting agreements -- The Company has a contract with the father of the
Company's President, to provide sales consulting services. The agreement calls
for payments of $5,500 per month through April 1999, subject to earlier
termination on the occurrence of certain events.

12. STOCK OPTION PLANS

The Company has a stock option plan under which options to purchase a
maximum of 400,000 shares of common stock may be issued to officers, employee
directors, key employees and consultants of the Company. The stock option plan
provides both for the grant of options intended to qualify as "incentive stock
options" under the Internal Revenue Code of 1986, as amended (the Code), as well
as options that do not so qualify.

F-15
51

MITCHAM INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Activity in the 1994 Stock Option Plan and Director Plan (as defined
below), for the years ended January 31, 1995, 1996 and 1997 and the nine months
ended October 31, 1997 was as follows:

WEIGHTED
AVERAGE
EXERCISE
NUMBER OF PRICE
SHARES PER SHARE
--------- ---------

Outstanding, January 31, 1994............................... -- $ --
Exercised................................................. -- --
Granted................................................... 183,250 5.00
Expired................................................... -- --
------- ------
Outstanding, January 31, 1995............................... 183,250 5.00
Exercised................................................. -- --
Granted................................................... 68,000 3.27
Expired................................................... -- --
------- ------
Outstanding, January 31, 1996............................... 251,250 4.54
Exercised................................................. -- --
Granted................................................... 43,500 5.87
Expired................................................... (1,000) --
------- ------
Outstanding, January 31, 1997............................... 293,750 4.73
Exercised................................................. (89,120) 4.68
Granted................................................... 67,750 21.52
Expired................................................... (500) 3.29
------- ------
Outstanding, October 31, 1997............................... 271,880 $ 8.91
======= ======

As of October 31, 1997, options to acquire 204,130 shares of the Company's
common stock were fully vested and exercisable at a weighted average exercise
price of $4.73 per share. The remaining options which have a weighted average
exercise price of $21.52 per share, will vest in fiscal 1999.

If not previously exercised, options outstanding at October 31, 1997, will
expire as follows: 39,880 options expire on May 9, 1999; 9,000 options expire on
August 14, 2001; 67,250 options expire on May 9, 2004; 1,000 options expire on
March 16, 2005; 2,000 options expire on June 8, 2005; 51,000 options expire on
December 4, 2005; 3,000 options expire on June 12, 2006; 31,000 options expire
on August 14, 2006; 3,000 options expire on June 11, 2007; and 64,750 expire on
October 3, 2007.

With respect to incentive stock options, no option may be granted more than
ten years after the effective date of the stock option plan or exercised more
than ten years after the date of grant (five years if the optionee owns more
than 10% of the common stock of the Company at the date of grant). Additionally,
with regard to incentive stock options, the exercise price of the option may not
be less than 100% of the fair market value of the common stock at the date of
grant (110% if the optionee owns more than 10% of the common stock of the
Company). Subject to certain limited exceptions, options may not be exercised
unless, at the time of exercise, the optionee is in the service of the Company.
As of October 31, 1997, options to purchase an aggregate of 262,880 shares of
common stock are issued and outstanding under the 1994 Stock Option Plan,
107,130 of which are exercisable at a price of $5.00 per share, 51,000 of which
are exercisable at $3.29 per share, 39,000 of which are exercisable at $5.75 per
share, 1,000 of which are exercisable at $6.00 per share and 64,750 of which are
exercisable at $22.00 per share.

The Company has a non-employee director stock option plan (the Director
Plan) which provides for the grant of options that do not qualify as "incentive
stock options" under the Code. Options granted under the Director Plan must have
an exercise price at least equal to the fair market value of the Company's
common

F-16
52

MITCHAM INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

stock on the date of grant. Pursuant to the Director Plan, options to purchase
1,000 shares of common stock are granted to each non-employee director upon his
election to the Board and every year thereafter so long as he is re-elected to
the Board of Directors. Options granted under the Director Plan are fully vested
one year after their grant and expire ten years after the date of the grant. As
of October 31, 1997 options to purchase an aggregate of 9,000 shares of common
stock are issued and outstanding under the Director Plan, 1,000 of which are
exercisable at $2.88 per share, 2,000 of which are exercisable at $3.13 per
share, 3,000 of which are exercisable at $5.75 per share and 3,000 of which are
exercisable at $11.13 per share.

The Company applies APB Opinion No. 25, Accounting for Stock Issued to
Employees, and related Interpretations in accounting for its plans. Accordingly,
no compensation cost has been recognized for its stock option plans. Had
compensation expense for the Company's stock-based compensation plans been
determined based on the fair value at the grant dates for awards under those
plans, consistent with the method of SFAS No. 123, the Company's net income and
income per common share would have been decreased to the pro forma amounts
indicated below:

YEARS ENDED JANUARY 31,
------------------------
1996 1997
---------- ----------

Net income
As reported............................................... $1,713,000 $2,702,000
Pro forma................................................. 1,657,000 2,443,000
Net income per common share (primary)
As reported............................................... $ .52 $ .60
Pro forma................................................. .50 .54

The fair value of each option grant was estimated on the date of grant
using the Black-Scholes option pricing model with the following assumptions;
risk free rates of 5.4% to 7%; volatility of 48.4%; no assumed dividend yield;
and expected lives of five to ten years.

13. FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company's financial instruments consist of trade receivables and
payables and notes payable to banks. The Company believes the carrying value of
these financial instruments approximate their estimated fair value.

14. PUBLIC OFFERINGS OF COMMON STOCK

During March 1997, the Company completed a public offering of a total of
3,450,00 shares of its common stock, of which 2,875,000 shares were sold by the
Company and 575,000 shares were sold by the selling shareholders. The net
proceeds to the Company from the offering (after deducting underwriting
discounts and commissions and estimated expenses of the offering) were
approximately $18.2 million.

The Company has filed a registration statement with the Securities and
Exchange Commission for an offering of 1,820,000 shares of its common stock, of
which 1,800,000 shares are being sold by the Company and 20,000 shares are being
sold by selling shareholders. The Company has granted an option to the
underwriters to purchase up to 273,000 shares on the same terms to satisfy
over-allotments in the sale of the 1,820,000 shares.

F-17
53

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN OR
INCORPORATED BY REFERENCE 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 OR ANY OF THE
UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER TO SELL OR SOLICITATION IS NOT AUTHORIZED OR IN
WHICH THE PERSON MAKING SUCH OFFER IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH SOLICITATION.

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

TABLE OF CONTENTS

PAGE
----

Prospectus Summary....................... 3
Risk Factors............................. 7
Use of Proceeds.......................... 10
Price Range of Common Stock.............. 10
Dividend Policy.......................... 10
Capitalization........................... 11
Selected Consolidated Financial Data..... 12
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................. 13
Business................................. 17
Management............................... 25
Certain Transactions and Relationships... 26
Principal and Selling Shareholders....... 27
Description of Capital Stock and Other
Securities............................. 29
Underwriting............................. 32
Legal Matters............................ 33
Experts.................................. 33
Available Information.................... 33
Incorporation of Certain Documents by
Reference.............................. 34
Index to Financial Statements............ F-1

1,820,000 SHARES

[MITCHAM INDUSTRIES, INC. LOGO]

COMMON STOCK

PROSPECTUS

JEFFERIES & COMPANY, INC.

RAUSCHER PIERCE REFSNES, INC.

GAINES, BERLAND INC.

, 1997
54

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth all expenses payable by the Company in
connection with the issuance and distribution of the shares of Common Stock
registered hereby, other than underwriting discounts and commissions. All
amounts shown are estimates, except the Commission and NASD filing and Nasdaq
listing fees.

Securities and Exchange Commission filing fee............... $ 19,583
NASD filing fee............................................. 6,963
Nasdaq listing fee.......................................... 17,500
Printing expenses........................................... 90,000
Legal fees and expenses..................................... 90,000
Accounting fees and expenses................................ 60,000
Blue Sky fees and expenses.................................. 2,500
Transfer Agent fees......................................... 1,500
Miscellaneous expenses...................................... 11,954
--------
TOTAL............................................. $300,000
========

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

* To be added by amendment

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Article Nine of the Company's Amended and Restated Articles of
Incorporation (the "Articles") eliminates or limits the personal liability of
directors for damages for an act or omission in the director's capacity as a
director, except for (i) a breach of a director's duty of loyalty to the Company
or its shareholders; (ii) an act or omission not in good faith that constitutes
a breach of duty of the director to the Company or that involves intentional
misconduct or a knowing violation of the law; (iii) a transaction from which a
director received an improper benefit, whether or not the benefit resulted from
an action taken within the scope of the directors' office; or (iv) an act or
omission for which the liability of a director is expressly provided for by an
applicable statute.

Article Eleven of the Articles makes mandatory the indemnification of
directors permitted under Section B of Article 2.02-1 of the Texas Business
Corporation Act ("TBCA") and permits the Company to advance the reasonable
expenses of a director upon compliance with the requirements of Sections K and L
thereof.

Article 2.02-1 of the TBCA provides as follows:

A. In this article:

(1) "Corporation" includes any domestic or foreign predecessor entity
of the corporation in a merger, consolidation, or other transaction in
which the liabilities of the predecessor are transferred to the corporation
by operation of law and in any other transaction in which the corporation
assumes the liabilities of the predecessor but does not specifically
exclude liabilities that are the subject matter of this article.

(2) "Director" means any person who is or was a director of the
corporation and any person who, while a director of the corporation, is or
was serving at the request of the corporation as a director, officer,
partner, venturer, proprietor, trustee, employee, agent, or similar
functionary of another foreign or domestic corporation, partnership, joint
venture, sole proprietorship, trust, employee benefit plan, or other
enterprise.

(3) "Expenses" include court costs and attorneys' fees.

II-1
55

(4) "Official capacity" means

(a) when used with respect to a director, the office of director in
the corporation, and

(b) when used with respect to a person other than a director, the
elective or appointive office in the corporation held by the officer or
the employment or agency relationship undertaken by the employee or
agent in behalf of the corporation, but

(c) in both Paragraphs (a) and (b) does not include service for any
other foreign or domestic corporation or any partnership, joint venture,
sole proprietorship, trust, employee benefit plan, or other enterprise.

(5) "Proceeding" means any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, arbitrative,
or investigative, any appeal in such an action, suit, or proceeding, and
any inquiry or investigation that could lead to such an action, suit, or
proceeding.

B. A corporation may indemnify a person who was, is or is threatened to be
a made a named defendant or respondent in a proceeding because the person is or
was a director only if it is determined in accordance with Section F of this
article that the person:

(1) conducted himself in good faith;

(2) reasonably believed:

(a) in the case of conduct in his official capacity as a director
of the corporation, that his conduct was in the corporation's
best interests; and

(b) in all other cases, that his conduct was at least not opposed
to the corporation's best interests; and

(3) in the case of any criminal proceeding, had no reasonable cause to
believe his conduct was unlawful.

C. Except to the extent permitted by Section E of this article, a director
may not be indemnified under Section B of this article in respect of a
proceeding:

(1) in which the person is found liable on the basis that personal
benefit was improperly received by him, whether or not the benefit resulted
from an action taken in the person's official capacity; or

(2) in which the person is found liable to the corporation.

D. The termination of a proceeding by judgment, order, settlement, or
conviction, or on a plea of nolo contendere or its equivalent is not of itself
determinative that the person did not meet the requirements set forth in Section
B of this article. A person shall be deemed to have been found liable in respect
of any claim, issue or matter only after the person shall have been so adjudged
by a court of competent jurisdiction after exhaustion of all appeals therefrom.

E. A person may be indemnified under Section B of this article against
judgments, penalties (including excise and similar taxes), fines, settlements,
and reasonable expenses actually incurred by the person in connection with the
proceeding; but if the person is found liable to the corporation or is found
liable on the basis that personal benefit was improperly received by the person,
the indemnification (1) is limited to reasonable expenses actually incurred by
the person in connection with the proceeding and (2) shall not be made in
respect of any proceeding in which the person shall have been found liable for
willful or intentional misconduct in the performance of his duty to the
corporation.

F. A determination of indemnification under Section B of this article must
be made:

(1) by a majority vote of a quorum consisting of directors who at the
time of the vote are not named defendants or respondents in the proceeding;

II-2
56

(2) if such a quorum cannot be obtained, by a majority vote of a
committee or the board of directors, designated to act in the matter by a
majority vote of all directors, consisting solely of two or more directors
who at the time of the vote are not named defendants or respondents in the
proceeding;

(3) by special legal counsel selected by the board of directors of a
committee of the board by vote as set forth in Subsection (1) or (2) of
this section, or if such a quorum cannot be obtained and such a committee
cannot be established, by a majority vote of all directors; or

(4) by the shareholders in a vote that excludes the shares held by
directors who are named defendants or respondents in the proceeding.

G. Authorization of indemnification and determination as to reasonableness
of expenses must be made in the same manner as the determination that
indemnification is permissible, except that if the determination that
indemnification is permissible is made by special legal counsel, authorization
of indemnification and determination as to reasonableness of expenses must be
made in the manner specified by Subsection (3) of Section F of this article for
the selection of special legal counsel. A provision obtained in the articles of
incorporation, the bylaws, a resolution of shareholders or directors, or an
agreement that makes mandatory the indemnification permitted under Section B of
this article shall be deemed to constitute authorization of indemnification in
the manner required by this section even though such provision may not have been
adopted or authorized in the same manner as the determination that
indemnification is permissible.

H. A corporation shall indemnify a director against reasonable expenses
incurred by him in connection with a proceeding in which he is a named defendant
or respondent because he is or was a director if he has been wholly successful,
on the merits or otherwise, in the defense of the proceeding.

I. If, in a suit for the indemnification required by Section H of this
article, a court of competent jurisdiction determines that the director is
entitled to indemnification under that section, that court shall order
indemnification and shall award to the director the expenses incurred in
securing the indemnification.

J. If, upon application of a director, a court of competent jurisdiction
determines, after giving any notice the court considers necessary, that the
director is fairly and reasonably entitled to indemnification in view of all the
relevant circumstances, whether or not he has met the requirements set forth in
Section B of this article or has been adjudged liable in the circumstances
described by Section C of this article, the court may order the indemnification
that the court determines is proper and equitable; but if the person is found
liable to the corporation or is found liable on the basis that personal benefit
was improperly received by the person, the indemnification shall be limited to
reasonable expenses actually incurred by the person in connection with the
proceeding.

K. Reasonable expenses incurred by a director who was, is, or is threatened
to be made a named defendant or respondent in a proceeding may be paid or
reimbursed by the corporation, in advance of the final disposition of the
proceeding and without any of the determinations specified in Sections F and G
of this article, after the corporation receives a written affirmation by the
director of his good faith belief that he has met the standard of conduct
necessary for indemnification under this article and a written undertaking by or
on behalf of the director to repay the amount paid or reimbursed if it is
ultimately determined that he has not met that standard or if it is ultimately
determined that indemnification of the director against expenses incurred by him
in connection with that proceeding is prohibited by Section E of this article. A
provision contained in the articles of incorporation, the bylaws, a resolution
of shareholders or directors, or an agreement that makes mandatory the payment
or reimbursement permitted under this section shall be deemed to constitute
authorization of that payment or reimbursement.

L. The written undertaking required by Section K of this article must be an
unlimited general obligation of the director but need not be secured. It may be
accepted without reference to financial ability to make repayment.

M. A provision for a corporation to indemnify or to advance expenses to a
director who was, is or is threatened to be made a named defendant or respondent
in a proceeding, whether contained in the articles of incorporation, the bylaws,
a resolution of shareholders or directors, an agreement, or otherwise, except in

II-3
57

accordance with Section R of this article, is valid only to the extent it is
consistent with this article as limited by the articles of incorporation, if
such a limitation exists.

N. Notwithstanding any other provision of this article, a corporation may
pay or reimburse expenses incurred by a director in connection with his
appearance as a witness or other participation in a proceeding at a time when he
is not a named defendant or respondent in the proceeding.

O. An officer of the corporation shall be indemnified as, and to the same
extent, provided by Sections H, I, and J of this article for a director and is
entitled to seek indemnification under those sections to the same extent as a
director. A corporation may indemnify and advance expenses to an officer,
employee, or agent of the corporation to the same extent that it may indemnify
and advance expenses to directors under this article.

P. A corporation may indemnify and advance expenses to persons who are or
were not officers, employees, or agents of the corporation but who are or were
serving at the request of the corporation as a director, officer, partner,
venturer, proprietor, trustee, employee, agent, or similar functionary of
another foreign or domestic corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan, or other enterprise to the same
extent that it may indemnify and advance expenses to directors under this
article.

Q. A corporation may indemnify and advance expenses to an officer,
employee, agent, or person identified in Section P of this article and who is
not a director such further extent, consistent with law, as may be provided by
its articles of incorporation, bylaws, general or specific action of its board
of directors, or contract or as permitted or required by common law.

R. A corporation may purchase and maintain insurance or another arrangement
on behalf of any person who is or was a director, officer, employee, or agent of
the corporation or who is or was serving at the request of the corporation as a
director, officer, partner, venturer, proprietor, trustee, employee, agent, or
similar functionary of another foreign or domestic corporation, partnership,
joint venture, sole proprietorship, trust, employee benefit plan, or other
enterprise, against any liability asserted against him and incurred by him in
such a capacity or arising out of his status as such a person, whether or not
the corporation would have the power to indemnify him against that liability
under this article. If the insurance or other arrangement is with a person or
entity that is not regularly engaged in the business of providing insurance
coverage, the insurance or arrangement may provide for payment of a liability
with respect to which the corporation would not have the power to indemnify the
person only if including coverage for the additional liability has been approved
by the shareholders of the corporation. Without limiting the power of the
corporation to procure or maintain any kind of insurance or other arrangement, a
corporation may, for the benefit of persons indemnified by the corporation, (1)
create a trust fund; (2) establish any form of self-insurance; (3) secure its
indemnity obligation by grant of a security interest or other lien on the assets
of the corporation; or (4) establish a letter of credit, guaranty, or surety
arrangement. The insurance or other arrangement may be procured, maintained, or
established within the corporation or with any insurer or other person deemed
appropriate by the board of directors regardless of whether all or part of the
stock or other securities of the insurer or other person are owned in whole or
part by the corporation. In the absence of fraud, the judgment of the board of
directors as to the terms and conditions of the insurance or other arrangement
and the identity of the insurer or other person participating in an arrangement
shall be conclusive and the insurance or arrangement shall not be voidable and
shall not subject the directors approving the insurance or arrangement to
liability, on any ground, regardless of whether directors participating in the
approval are beneficiaries of the insurance or arrangement.

S. Any indemnification of or advance of expenses to a director in
accordance with this article shall be reported in writing to the shareholders
with or before the notice or waiver of notice of the next shareholders' meeting
or with or before the next submission to shareholders of a consent to action
without a meeting pursuant to Section A, Article 9.10, of this Act and, in any
case, within the 12-month period immediately following the date of the
indemnification or advance.

T. For purposes of this article, the corporation is deemed to have
requested a director to serve an employee benefit plan whenever the performance
by him of his duties to the corporation also imposes duties on or otherwise
involves services by him to the plan or participants or beneficiaries of the
plan. Excise taxes assessed on a director with respect to an employee benefit
plan pursuant to applicable law are deemed fines.

II-4
58

Action taken or omitted by him with respect to an employee benefit plan in the
performance of his duties for a purpose reasonably believed by him to be in the
interest of the participants and beneficiaries of the plan is deemed to be for a
purpose which is not opposed to the best interests of the corporation.

U. The articles of incorporation of a corporation may restrict the
circumstances under which the corporation is required or permitted to indemnify
a person under Section H, I, J, O, P, or Q of this article.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits

EXHIBIT NO. DESCRIPTION
----------- -----------

1* -- Form of Underwriting Agreement
3.1 -- Amended and Restated Articles of Incorporation of Mitcham
Industries, Inc.(1) (Exhibit 3.1)
3.2 -- Amended and Restated Bylaws of Mitcham Industries,
Inc.(1) (Exhibit 3.2)
4.1 -- Copy of specimen stock certificate evidencing Common
Stock of Mitcham Industries, Inc.(2) (Exhibit 4.1)
5* -- Opinion of Norton, Jacobs, Kuhn & McTopy, L.L.P. as to
the legality of the securities being registered
10.1** -- Amendment No. 1 to the Commercial Representation
Agreement between Mitcham Canada, Ltd. and Georex, Inc.
10.2** -- Exclusive Lease Representative and Distributor Agreement
between Mitcham Industries, Inc. and StrucTec Systems,
L.L.C.
10.3* -- Second Amendment to Exclusive Lease Referral Agreement
between Mitcham Industries, Inc. and Pelton Company, Inc.
10.4* -- Letter Loan Agreement between Mitcham Industries, Inc.
and Bank One, Texas, National Association
10.5* -- Promissory Note in the original principal amount of
$15,000,000, made payable to the order of Bank One,
Texas, National Association
21** -- Subsidiaries of the Company (Exhibit 11)
23.1* -- Consent of Hein + Associates LLP
23.2* -- Consent of Norton, Jacobs, Kuhn & McTopy, L.L.P.
(included in Exhibit 5).
24** -- Power of Attorney

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

* Filed herewith

** Previously filed

(1) Incorporated by reference to the indicated exhibit number of the
Registrant's Registration Statement on Form SB-2 (File No. 33-81164-D),
filed with the SEC on July 5, 1994.

(2) Incorporated by reference to the indicated exhibit number of the
Registrant's Amendment No. 2 to the Registration Statement on Form SB-2,
filed with the SEC on November 9, 1994.

(b) Financial Statement Schedules

SCHEDULE DESCRIPTION
-------- -----------

Schedule II, including Independent Auditor's Report on Statement of Valuation and
Financial Statement Schedule Qualifying Accounts

II-5
59

ITEM 17. UNDERTAKINGS.

(a) The undersigned Registrant hereby undertakes that:

(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.

(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.

(b) 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.

(c) The registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefits plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference
in this Registration Statement shall be deemed to be in 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.

II-6
60

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, as
amended, the registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements of filing on Form S-3 and has duly authorized
this Amendment No. 2 to be signed on its behalf by the undersigned, thereto duly
authorized in the City of Huntsville, State of Texas, on December 16, 1997.

MITCHAM INDUSTRIES, INC.

By: /s/ BILLY F. MITCHAM, JR.
----------------------------------
Billy F. Mitcham, Jr.,
Chairman of the Board, President
and Chief Executive Officer

In accordance with the requirements of the Securities Act of 1933, as
amended, this Amendment No. 2 has been signed by the following persons in the
capacities indicated on December 16, 1997.

SIGNATURE TITLE/CAPACITY
--------- --------------

/s/ BILLY F. MITCHAM, JR. Chairman of the Board, President and Chief
- ----------------------------------------------------- Executive Officer
Billy F. Mitcham, Jr.

/s/ PAUL C. MITCHAM* Vice President -- Operations and Director
- -----------------------------------------------------
Paul C. Mitcham

/s/ ROBERTO RIOS Vice President -- Finance, Secretary,
- ----------------------------------------------------- Treasurer and Director
Roberto Rios

/s/ WILLIAM J. SHEPPARD* Vice President -- International Operations and
- ----------------------------------------------------- Director
William J. Sheppard

/s/ JOHN F. SCHWALBE* Director
- -----------------------------------------------------
John F. Schwalbe

/s/ RANDAL DEAN LEWIS* Director
- -----------------------------------------------------
Randal Dean Lewis

/s/ GORDON M. GREVE* Director
- -----------------------------------------------------
Gordon M. Greve

*By: /s/ BILLY F. MITCHAM, JR.
-------------------------------------------------
Billy F. Mitcham, Jr.,
Attorney-in-Fact

II-7
61

INDEPENDENT AUDITOR'S REPORT
ON FINANCIAL STATEMENT SCHEDULE

To the Board of Directors and Shareholders
Mitcham Industries, Inc.
Huntsville, Texas

We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements of Mitcham Industries, Inc. and Subsidiary
included in this Registration Statement and have issued our report thereon dated
March 12, 1997. Our audit was made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The financial statement schedule
listed in Item 16(b) herein (Schedule II -- Valuation and Qualifying Accounts)
is the responsibility of the Company's management and is presented for purpose
of complying with the Securities and Exchange Commission's rules and is not part
of the basic financial statements. The financial statement schedule has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects with
the financial data required to be set forth therein in relation to the basic
financial statements taken as a whole.

/s/ HEIN + ASSOCIATES LLP

Hein + Associates LLP

Houston, Texas
March 12, 1997

II-8
62

SCHEDULE II

MITCHAM INDUSTRIES, INC.

VALUATION AND QUALIFYING ACCOUNTS

COL. A COL. B COL. C(1) COL. D COL E
- --------------------------------- ------------------- --------------------- ------------- -------------
BALANCE AT ADDITIONS CHARGED TO DEDUCTIONS -- BALANCE AT
DESCRIPTION BEGINNING OF PERIOD COSTS AND EXPENSES DESCRIBE END OF PERIOD
----------- ------------------- --------------------- ------------- -------------

January 31, 1995
Allowance for doubtful
accounts....................... $ 93,000 $ 35,000 $ 38,000(A) $ 90,000
January 31, 1996
Allowance for doubtful
accounts....................... $ 90,000 $ 627,000 $370,000(A) $ 347,000
January 31, 1997
Allowance for doubtful
accounts....................... $347,000 $ 1,346,000 $193,000(A) $1,500,000

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

(A) Represents recoveries and uncollectible accounts written off.

Column C(2) has been omitted, as all answers would be "none."

II-9
63

INDEX TO EXHIBITS

EXHIBIT NO. DESCRIPTION
----------- -----------

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

* Filed herewith

** Previously filed

(1) Incorporated by reference to the indicated exhibit number of the
Registrant's Registration Statement on Form SB-2 (File No. 33-81164-D),
filed with the SEC on July 5, 1994.

(2) Incorporated by reference to the indicated exhibit number of the
Registrant's Amendment No. 2 to the Registration Statement on Form SB-2,
filed with the SEC on November 9, 1994.

   1
                                                                       EXHIBIT 1




                            MITCHAM INDUSTRIES, INC.
                             (A TEXAS CORPORATION)

   
                        1,820,000 SHARES OF COMMON STOCK
    


                             UNDERWRITING AGREEMENT


                                                          December________, 1997


Jefferies & Company, Inc.
Rauscher Pierce Refsnes, Inc.
Gaines, Berland Inc.
         As Representatives of
         the Several Underwriters

c/o Jefferies & Company, Inc.
Attn:  Syndicate Department
650 Fifth Avenue, 4th Floor
New York, New York   10019

Dear Sirs:

   
         Mitcham Industries, Inc., a Texas corporation (the "Company"), and
certain selling shareholders (the "Selling Shareholders") of the Company named
in Schedule I hereto, hereby confirm their agreement with you as
representatives (the "Representatives") of the underwriters named in Schedule
II hereto (the "Underwriters"), with respect to the issuance and sale by the
Company of an aggregate of 1,800,000 shares (the "Primary Shares") and the sale
by the Selling Shareholders of 20,000 shares (the "Shareholders' Shares") of
the Company's Common Stock, $.01 par value (the "Common Stock"), and the
purchase of the Primary Shares and the Shareholders' Shares by the
Underwriters, acting severally and not jointly.  The Company also has agreed to
sell up to 273,000 shares (the "Additional Shares") of Common Stock to cover
over-allotments, if any.  The Primary Shares, the Shareholders' Shares and the
Additional Shares are hereinafter collectively referred to as the "Shares."
    

         You have advised us that you desire to purchase the Shares and that
you propose to make a public offering of the Shares as soon as you deem
advisable after the Registration Statement referred to below becomes effective
upon the terms set forth in the Prospectus referred to below.

         The terms that follow, when used in this Agreement, shall have the
meanings indicated.  The term "the Effective Date" shall mean each date that
the Registration Statement and any post-effective amendment or amendments
thereto became or become effective and each date after the date hereof on which
a document incorporated by reference in the Registration Statement is filed.
"Preliminary
   2
Page 2


Prospectus" shall mean any preliminary prospectus referred to in Section
1(a)(i) below and any preliminary prospectus included in the Registration
Statement at the Effective Date that omits Rule 430A Information (as defined
below).  "Registration Statement" shall mean the registration statement
referred to in Section 1(a)(i) below, including incorporated documents,
exhibits and financial statements, as amended at the Representation Date (as
defined below) (or, if not effective at the Representation Date, in the form in
which it shall become effective) and, in the event any post- effective
amendment thereto becomes effective prior to the Closing Date (as defined in
Section 2 hereof), shall also mean such registration statement as so amended.
Such term shall include Rule 430A Information deemed to be included therein at
the Effective Date as provided by Rule 430A (as defined below).  If the Company
files an additional registration statement to register additional shares of
Common Stock pursuant to Rule 462(b) (defined below) (the "Additional
Registration Statement"), all references in this Underwriting Agreement to
"Registration Statement" shall mean the Additional Registration Statement, as
amended at the Effective Date, including the contents of the initial
registration statement incorporated by reference therein and including all
information (if any) deemed to be a part of the Additional Registration
Statement as of its effective time pursuant to Rule 430A(b).  The prospectus
constituting a part of the Registration Statement (including the Rule 430A
Information), as from time to time amended or supplemented, is hereinafter
referred to as the "Prospectus", except that if any revised prospectus shall be
provided to the Underwriters by the Company that differs from the prospectus on
file at the Securities and Exchange Commission (the "Commission") at the
Effective Date (whether or not such revised prospectus is required to be filed
by the Company pursuant to Rule 424 of the Act Regulations), the term
"Prospectus" shall refer to each such revised prospectus from and after the
time it is first provided to the Underwriters for such use.  "Rule 158", "Rule
415", "Rule 424", "Rule 430A", "Rule 462" and "Regulation S-K" refer to such
rules or regulation under the Securities Act of 1933, as amended (the "Act";
and the rules and regulations under the Act, the "Act Regulations").  "Rule
430A Information" means information with respect to the Shares and the offering
thereof permitted to be omitted from the Registration Statement when it becomes
effective pursuant to Rule 430A.  "Exchange Act" refers to the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Commission promulgated thereunder.  Any reference herein to the Registration
Statement, a Preliminary Prospectus or the Prospectus shall be deemed to refer
to and include the documents incorporated by reference therein pursuant to Item
12 of Form S-3 which were filed under the Exchange Act on or before the
Effective Date of the Registration Statement or the issue date of such
Preliminary Prospectus or the Prospectus, as the case may be; and any reference
herein to the terms "amend", "amendment" or "supplement" with respect to the
Registration Statement, any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include the filing of any document under the Exchange
Act after the Effective Date of the Registration Statement, or the issue date
of any Preliminary Prospectus or the Prospectus, as the case may be, deemed to
be incorporated therein by reference.

SECTION 1.  Representations and Warranties.

         (a)     The Company represents and warrants to the Underwriters as of
the date hereof (such date being referred to as the "Representation Date") and
as of the Closing Date, as follows:
   3
Page 3


                 (i)      the Company meets the requirements for use of Form
         S-3 under the Act and has filed with the Commission a registration
         statement on such Form (Registration No. 333-40507), including a
         related preliminary prospectus, and one or more amendments thereto,
         including the related preliminary prospectus, each of which has
         previously been furnished to the Underwriters, for the registration
         under the Act of the offering and sale of the Shares.  Such
         registration statement and any post-effective amendment thereto, each
         in the form heretofore delivered to you, have been declared effective
         by the commission in such form.  No other document with respect to
         such registration statement has heretofore been filed with the
         Commission and no stop order suspending the effectiveness of such
         registration statement has been issued and no proceeding for that
         purpose has been initiated or threatened by the Commission.  The
         Company will file with the Commission (A) prior to effectiveness of
         such registration statement, a further amendment to such registration
         statement (including the form of final prospectus), (B) after
         effectiveness of such registration statement, if applicable, an
         additional registration statement pursuant to Rule 462(b) or (C) after
         effectiveness of such registration statement or such additional
         registration statement, a final prospectus in accordance with  Rules
         430A and 424(b)(1) or (4) or Rule 434 of the Act Regulations.  The
         Company has included in such registration statement, as amended at the
         Effective Date, all information (other than Rule 430A Information in
         the case of clause (B)) required by the Act and the Act Regulations to
         be included in the Prospectus with respect to the Shares and the
         offering thereof.  As filed, such amendment and form of final
         Prospectus, or such final Prospectus, shall contain all Rule 430A
         Information, together with all other such required information, with
         respect to the Shares and the offering thereof and, except to the
         extent the Underwriters shall agree in writing to a modification,
         shall be in all substantive respects in the form furnished to the
         Underwriters prior to the date hereof;

                 (ii)     on the Effective Date, the Representation Date and
         the Closing Date, the Registration Statement did and will, and when
         the Prospectus is first filed (if required) in accordance with Rule
         424(b) the Prospectus will, comply in all material respects with the
         applicable requirements of the Act and the Act Regulations and the
         Exchange Act; on the Effective Date, the Representation Date and the
         Closing Date, the Registration Statement did not and will not contain
         any untrue statement of a material fact or omit to state any material
         fact required to be stated therein or necessary in order to make the
         statements therein not misleading; and, on the Effective Date, the
         Representation Date and the Closing Date, and on the date of any
         filing pursuant to Rule 424(b), the Prospectus did not and will not
         contain any untrue statement of a material fact or omit to state a
         material fact required to be stated therein or necessary in order to
         make the statements therein, in light of the circumstances under which
         they were made, not misleading; provided, that the Company makes no
         representation or warranty as to the information provided in writing
         to the Company by or on behalf of the Selling Shareholders or the
         Underwriters, expressly for use in the Registration Statement or
         Prospectus.  The Company agrees that the only information provided in
         writing by or on behalf of the Underwriters to the Company, expressly
         for use in the Registration Statement or the Prospectus, is that
         information contained in the table and the second, fifth, sixth,
         seventh and eighth paragraphs following the table in the section of
   4
Page 4

         the Prospectus entitled "Underwriting" and the last paragraph on the
         cover page of the Prospectus;

                 (iii)    no order preventing or suspending the use of any
         Preliminary Prospectus has been issued by the Commission, and each
         Preliminary Prospectus, at the time of filing thereof, conformed in
         all material respects to the requirements of the Securities Act and
         the rules and regulations of the Commission thereunder, and did not
         contain an untrue statement of a material fact or omit to state a
         material fact required to be stated therein or necessary to make the
         statements therein, in the light of the circumstances under which they
         were made, not misleading; provided, however, that this representation
         and warranty shall not apply to any statements or omissions made in
         reliance upon and in conformity with information furnished in writing
         to the Company by or on behalf of the Selling Shareholders or the
         Underwriters through Jefferies & Company, Inc.  expressly for use
         therein;

                 (iv)     the Company is a corporation duly organized and
         validly existing in good standing under the laws of the State of
         Texas, with full corporate power and authority to own, lease and
         operate its properties and to conduct its business as described in the
         Registration Statement and the Prospectus, and is duly registered and
         qualified to conduct its business and is in good standing in each
         jurisdiction where the nature or location of its properties (owned or
         leased) or the conduct of its business requires such registration or
         qualification, except where the failure so to register or qualify
         would not have a Material Adverse Effect.  As used herein, the term
         "Material Adverse Effect" shall mean an adverse effect on the
         financial condition, business, properties, net worth or results of
         operations of the Company or its Subsidiary (as hereinafter defined)
         that would be, singly or in the aggregate, material to the Company and
         the Subsidiary, taken as a whole, whether or not occurring in the
         ordinary course of business (a "Material Adverse Effect");

                 (v)      the only significant Subsidiary (as defined in the
         Act Regulations) of the Company is the Subsidiary listed on Schedule
         III hereto (the "Subsidiary").  The Subsidiary is a corporation duly
         organized and validly existing in good standing under the laws of its
         jurisdiction of incorporation with full corporate power and authority
         to own, lease and operate its properties and to conduct its business
         as described in the Registration Statement and in the Prospectus, and
         is duly registered and qualified to conduct its business and is in
         good standing in each jurisdiction where the nature or location of its
         properties (owned or leased) or the conduct of its business requires
         such registration or qualification, except where the failure so to
         register or qualify would not have a Material Adverse Effect;

                 (vi)     each of the Company and the Subsidiary has all
         necessary authorizations, approvals, orders, licenses, rights-of-way,
         operating rights, easements, certificates and permits of and from, and
         has made all declarations and filings with, all regulatory or
         governmental officials and bodies, all self-regulatory organizations
         and all courts and other tribunals ("Permits"), to own or lease its
         respective properties and to conduct its respective businesses
         described in the Prospectus and the Registration Statement, except
         where failure
   5
Page 5

         to have obtained or made the same would not have a Material Adverse
         Effect, and neither the Company nor the Subsidiary has received any
         notice of proceedings relating to the revocation or modification of
         any such Permits, if the failure to be so licensed or approved or if
         the subject of an unfavorable decision, ruling or finding, would have
         a Material Adverse Effect; the Company and the Subsidiary has
         fulfilled and performed all its current material obligations with
         respect to such Permits and no event has occurred that allows, or
         after notice or lapse of time, or both, would allow, revocation or
         termination thereof or result in any other material impairment of the
         rights of the holder of any such Permit except where the
         nonfulfillment or non- performance or event would not have a Material
         Adverse Effect; and the Company and the Subsidiary is in compliance
         with all applicable laws, rules, regulations, orders and consents, the
         violation of which would have a Material Adverse Effect.  The property
         and business of the Company and the Subsidiary conform in all material
         respects to the descriptions thereof contained in the Prospectus and
         the Registration Statement;

                 (vii)    the Company has the authorized capitalization set
         forth in the Prospectus under the heading "Description of Capital
         Stock," and

                 (viii)   all of the Company's authorized and outstanding
         capital stock has been duly authorized, validly issued and is fully
         paid and nonassessable and the capitalization of the Company conforms
         to the descriptions thereof and the statements made with respect
         thereto in the Registration Statement and the Prospectus as of the
         date set forth therein.  There are no outstanding securities
         convertible into or exchangeable for, and no outstanding options,
         warrants or other rights to purchase, any shares of the capital stock
         of the Company, nor any agreements or commitments to issue any of the
         same, except as described in the Registration Statement and the
         Prospectus, and there are no preemptive or other rights to subscribe
         for or to purchase, and no restrictions upon the voting or transfer
         of, any capital stock of the Company pursuant to the Company's Amended
         and Restated Certificate of Incorporation or Amended and Restated
         By-laws or any agreement or other instrument to which the Company is a
         party, except as described in the Registration Statement and the
         Prospectus;

                 (ix)     all the outstanding shares of capital stock of the
         Subsidiary have been duly authorized and are validly issued, fully
         paid and nonassessable and were not issued in violation of or subject
         to any preemptive or similar rights.  There are no outstanding
         securities convertible into or exchangeable for, and no outstanding
         options, warrants or other rights to purchase, any shares of the
         capital stock of any Subsidiary, nor any agreements or commitments to
         issue any of the same.  Except as otherwise set forth in the
         Registration Statement and the Prospectus, all outstanding shares of
         capital stock of the Subsidiary are owned by the Company, directly or
         indirectly through another Subsidiary, free and clear of any security
         interests, liens, encumbrances, equities or other claims;

                 (x)      each of the Company and the Subsidiary has good and
         indefeasible title to all real property and good and marketable title
         to all personal property owned by it, including those properties
         described in the Registration Statement and Prospectus, in each case
         free and
   6
Page 6

         clear of all liens, charges, encumbrances and restrictions, except
         such as are described in the Registration Statement and Prospectus or
         such as would not have a Material Adverse Effect.  Each of the Company
         and the Subsidiary has valid, subsisting and enforceable leases for
         the properties described in the Registration Statement and the
         Prospectus as leased by it with such exceptions as are described in
         the Registration Statement and the Prospectus or that in the aggregate
         would not have a Material Adverse Effect;

                 (xi)     the Company has all requisite power, authority,
         authorizations, approvals, orders, licenses, certificates and permits
         to enter into this Agreement and to carry out the provisions and
         conditions hereof, and to issue and deliver the Shares to the
         Underwriters as provided herein.  This Agreement has been duly
         authorized, executed and delivered by the Company;

                 (xii)    the Shares to be issued and sold by the Company have
         been duly and validly authorized for issuance by the Company, and the
         Company has full corporate power and authority to issue, sell and
         deliver the Shares; and, when such Shares are issued and delivered
         against payment therefor as provided by this Agreement, the Shares
         will have been validly issued, fully paid and nonassessable, and the
         issuance of such Shares will not be subject to any statutory
         preemptive rights or similar statutory rights or any other preemptive
         or similar rights.  All corporate action required to be taken by the
         Company for the authorization, issuance and sale of the Shares has
         been duly and validly taken;

                 (xiii)   Hein + Associates LLP are independent accountants
         with respect to the Company and the Subsidiary as required by the Act;

   
                 (xiv)    the consolidated financial statements and related
         notes and schedules included in the Registration Statement or in the
         Prospectus  present fairly the financial position of the Company and
         the Subsidiary, on the basis stated in the Registration Statement, as
         of the respective dates thereof and the consolidated statements of
         income, shareholders' equity and cash flows of the Company and the
         Subsidiary, for the respective periods covered thereby, in conformity
         with generally accepted accounting principles applied on a consistent
         basis throughout the entire period involved, except as otherwise
         disclosed in the Registration Statement and the Prospectus.  The
         selected financial information included in the Registration Statement
         or the Prospectus presents fairly the information shown therein and has
         been compiled on a basis consistent with that of the audited financial
         statements of the Company included therein.  The pro forma financial
         information in the Registration Statement or in the Prospectus complies
         in all material respects with the applicable accounting requirements of
         Article 11 of Regulation S-X promulgated by the Commission and presents
         fairly the information shown therein; the assumptions used in the
         preparation thereof are reasonable and the adjustments used therein are
         appropriate to give effect to the transactions or circumstances
         referred to therein.  No other financial statements or schedules
    
   7
Page 7

         of the Company and the Subsidiary are required by the Exchange Act,
         the Act or the Act Regulations to be included in the Registration
         Statement or Prospectus;

                 (xv)     the Shares conform in all material respects to the
         descriptions thereof in the Registration Statement and Prospectus;

                 (xvi)    since the respective dates as of which information is
         provided in the Registration Statement and Prospectus, except as
         otherwise specifically stated therein, there has been  no change or
         development with respect to the condition (financial or otherwise) or
         business of the Company and the Subsidiary, taken as a whole, whether
         or not arising in the ordinary course of business, that would have a
         Material Adverse Effect;

                 (xvii)   neither the Company nor any Subsidiary is in
         violation of its certificate of incorporation or by-laws or other
         organizational documents.  Neither the Company nor any Subsidiary is,
         nor with the passage of time or the giving of notice or both would be,
         in violation of any law, ordinance, administrative or governmental
         rule or regulation applicable to the Company or the Subsidiary, or of
         any judgment, order or decree of any court or governmental agency or
         body or of any arbitrator having jurisdiction over the Company or the
         Subsidiary, or in default in the performance or observance of any
         obligation, agreement, covenant or condition contained in any
         mortgage, loan agreement, note, bond, debenture, credit agreement or
         any other evidence of indebtedness or in any agreement, contract,
         indenture, lease or other instrument to which the Company or the
         Subsidiary is a party or by which it may be bound, or to which any of
         the property or assets of the Company or the Subsidiary is subject,
         the effect of which violation or default in performance or observance
         would have a Material Adverse Effect;

                 (xviii)  there is no action, suit or proceeding pending before
         or by any court, arbitrator or governmental agency or body or, to the
         Company's knowledge, threatened against the Company or the Subsidiary
         or to which any of their respective property is subject (A) that is
         required to be described in the Registration Statement or the
         Prospectus but is not described as required or (B) that, if adversely
         determined, could reasonably be expected to have a Material Adverse
         Effect.  There is no agreement, contract, indenture, lease or other
         document or instrument that is required to be described in the
         Registration Statement or Prospectus or to be filed as an exhibit to
         the Registration Statement that is not described or filed as required;

                 (xix)     except for the Selling Shareholders, no person has
         any right to the registration of any security of the Company by reason
         of the filing of the Registration Statement with the Commission or the
         consummation of the transactions contemplated hereby, which right has
         not been waived or lapsed;

                 (xx)     other than as set forth in the Registration Statement
         and the Prospectus, there are no legal or governmental proceedings
         pending to which the Company or the Subsidiary
   8
Page 8

         is a party or of which any property of the Company or subsidiary is
         the subject; and, to the best of the Company's knowledge, no such
         proceedings are threatened or contemplated by any Governmental Agency
         or threatened by others;

                 (xxi)    the Company is not an "investment company" within the
         meaning of the Investment Company Act of 1940 and is not subject to
         registration under such Act;

                 (xxii)   as of the date of the Prospectus, neither the Company
         nor the Subsidiary currently is planning any probable acquisitions for
         which disclosure of pro forma financial information would be required
         by the Act;

                 (xxiii)  except as disclosed in the Registration Statement and
         the Prospectus (or any amendment or supplement thereto), since the
         respective dates as of which information is given in the Registration
         Statement and the Prospectus (or any amendment or supplement thereto),
         except as otherwise stated therein, (A) neither the Company nor the
         Subsidiary (1) has issued any securities other than in connection with
         the exercise of any outstanding options, (2) incurred any material
         liability or obligations, direct or contingent, for borrowed money,
         (3) entered into any transaction, not in the ordinary course of
         business, that is material to the Company and the Subsidiary, taken as
         a whole, (4) entered into any transaction with an affiliate of the
         Company (as the term "affiliate" is defined in Rule 405 of the Act
         Regulations) that would otherwise be required to be disclosed in the
         Prospectus or the Registration Statement, or (5) declared or paid any
         dividend on its capital stock, or made any other distribution to its
         equity holders, (B) there has not been any material change in the
         capital stock or other equity, or material increase in the short-term
         or long-term debt, of the Company or the Subsidiary and (C) there has
         been no change or development with respect to the condition (financial
         or otherwise) or business of the Company and the Subsidiary, taken as
         a whole, whether or not arising in the ordinary course of business,
         that would have a Material Adverse Effect;

                 (xxiv)   each of the Company and the Subsidiary, directly or
         indirectly, maintains insurance covering its properties, operations,
         personnel and businesses; in the Company's reasonable judgment, such
         insurance provides coverage against such losses and risks as is
         adequate in accordance with customary industry practice to protect the
         Company and its businesses; neither the Company nor the Subsidiary has
         received notice from any insurer or agent of such insurer that
         substantial capital improvements or other expenditures will have to be
         made in order to continue such insurance; all such insurance is
         outstanding and duly in force;

                 (xxv)    the Company has not distributed and, prior to the
         later to occur of (A) the Closing Date and (B) completion of the
         distribution of the Shares, will not distribute without your prior
         consent any offering material in connection with the offering and sale
         of the Shares other than the Registration Statement, the Prospectus or
         other materials, if any, permitted by the Act;
   9
Page 9

                 (xxvi)   prior to the Closing Date, the Shares will be duly
         authorized for listing on the Nasdaq National Market upon official
         notice of issuance;

                 (xxvii)  neither the Company nor the Subsidiary is involved in
         any labor dispute or, to the knowledge of the Company, is any dispute
         threatened, other than disputes that would not have a Material Adverse
         Effect;

                 (xxviii)         neither the Company nor the Subsidiary nor,
         to the best of either of their knowledge, any employee or agent of the
         Company or the Subsidiary, has made any payment of funds of the
         Company or the Subsidiary or received or retained any funds of a
         character required to be disclosed in the Prospectus;

                 (xxix)   the Company and the Subsidiary have filed (or have
         obtained extensions thereto) all federal, state and local or foreign
         tax returns that are required to be filed, which returns are complete
         and correct in all material respects, and have paid all taxes shown on
         such returns and all assessments with respect thereto to the extent
         that the same have become due, except those taxes that are being
         contested or protested in good faith by the Company or its Subsidiary
         or which the failure to file or pay would not have a Material Adverse
         Effect;

                 (xxx)    except for the shares of capital stock of the
         Subsidiary and the Company's other subsidiary listed on Schedule III,
         neither the Company nor the Subsidiary owns any shares of stock or any
         other securities of any corporation or has any equity interest in any
         firm, partnership, association or other entity other than as reflected
         in the consolidated financial statements included in the Registration
         Statement and the Prospectus;

                 (xxxi)   neither the execution or delivery of this Agreement,
         the offer, issuance, sale or delivery of the Shares nor the
         consummation by the Company of the terms of this Agreement (A)
         requires the consent, approval, authorization or order of any court or
         governmental agency or body, except such as have been obtained under
         the Act and such as may be required under the state securities or blue
         sky laws of any jurisdiction in connection with the purchase and
         distribution of the Shares by the Underwriters or such as may be
         required by the National Association of Securities Dealers, Inc. (the
         NASD") and such other approvals as have been obtained, (B) will
         conflict with, result in a breach of, or constitute a default under
         the terms of any indenture, agreement, lease or other instrument to
         which the Company or the Subsidiary is a party or by which any of them
         or any of their respective properties may be bound, or will result in
         the creation or imposition of any lien, charge or encumbrance upon any
         property or assets of the Company or the Subsidiary pursuant to the
         terms of any agreement or instrument to which any of them is a party
         or by which any of them may be bound or to which any of the property
         or assets of any of them is subject, (C) will conflict with or violate
         any law, order, statute, regulation, consent or memorandum of
         understanding applicable to the Company or the Subsidiary of any
         court, regulatory body, administrative agency, governmental body or
         arbitrator having jurisdiction over the Company or the Subsidiary (in
         the case of (B) or (C) above, where such conflict, breach, default or
   10
Page 10

         violation, individually or in the aggregate, would have  a Material
         Adverse Effect), or (D) will conflict with or violate the certificate
         of incorporation or by-laws or other organizational documents of the
         Company or any subsidiary;

                 (xxxii) the Company has not taken, directly or indirectly, any
         action designed to cause or result in or that has constituted or that
         might reasonably be expected to constitute, the stabilization or
         manipulation of the price of the shares of Common Stock to facilitate
         the sale or resale of the Shares;

                 (xxxiii)         the Company and the Subsidiary (A) are in
         compliance with any and all applicable federal, state, local and
         foreign laws and regulations relating to the protection of human
         health and safety, the environment or hazardous or toxic substances or
         wastes, pollutants or contaminants ("Environmental Laws"), (B) have
         received all permits, licenses or other approvals required of them
         under applicable Environmental Laws to conduct their business and (C)
         are in compliance with all terms and conditions of any such permit,
         license or approval, except where such noncompliance with
         Environmental Laws, failure to receive required permits, licenses or
         approvals or failure to comply with the terms and conditions of such
         permits, licenses or approvals would not have a Material Adverse
         Effect; and

                 (xxxiv)  there are no costs or liabilities, to the Company's
         knowledge after due inquiry, associated with the effect of
         Environmental Laws on the business, operations and properties of the
         Company and its Subsidiary that would have a Material Adverse Effect.

         (b)     Each Selling Shareholder, severally and not jointly,
represents and warrants to the Underwriters as of the Representation Date and
as of the Closing Date, as follows:

                 (i)      Such Selling Shareholder now has, and on the Closing
         Date will have, valid title to the Shares to be sold by the Selling
         Shareholder pursuant to this Agreement, free and clear of any security
         interests, liens, encumbrances, equities or other claims, including,
         without limitation, any restrictions or transfer (except for
         restrictions imposed by applicable federal or state securities laws)
         other than as specified on the certificate(s) representing such
         Shares.

                 (ii)     Such Selling Shareholder now has, and on the Closing
         Date will have, full legal right, power and authorization, and any
         approval required by law (except such as may be required under the Act
         or such as may be required by the NASD or under state securities of
         blue sky laws governing the purchase and distribution of the Shares),
         to sell, assign, transfer and deliver the Shares to be sold by the
         Selling Shareholders pursuant to this Agreement in the manner provided
         in this Agreement, and upon delivery of and payment for such Shares
         hereunder, the several Underwriters will acquire valid title to such
         Shares free and clear of any adverse claims, assuming that the
         Underwriters have acquired such Shares for value, in good faith and
         without notice of any adverse claim.
   11
Page 11

                 (iii)    This Agreement, the Power of Attorney and the Custody
         Agreement referred to in (vii) below have been duly authorized,
         executed and delivered by or on behalf of such Selling Shareholder.

                 (iv)     Neither the execution and delivery of this Agreement,
         the Power of Attorney or the Custody Agreement by or on behalf of the
         Selling Shareholder nor the consummation of the transactions herein
         contemplated by or on behalf of such Selling Shareholder requires  any
         consent, approval, authorization or order of, or filing or
         registration with, any court, regulatory body, administrative agency
         or other governmental body, agency or official (except such as may be
         required under the Act or such as may be required by the NASD or under
         state securities or blue sky laws governing the purchase and
         distribution of the Shares) or conflicts or will conflict with or
         constitutes or will constitute a breach of, or default under, or
         violates or will violate, any agreement, indenture or other instrument
         to which the Selling Shareholder is a party or by which the Selling
         Shareholder is or may be bound or to which any of the Selling
         Shareholder's  property or assets is subject, or any statute, law,
         rule, regulation, ruling, judgment, injunction, order or decree
         applicable to the Selling Shareholder or to any property or assets of
         the Selling Shareholder, which breach, default or violation would
         impair the Selling Shareholder's ability to perform under this
         Agreement and would have any adverse impact on the Company or the
         Underwriters under this Agreement.

                 (v)      The information with respect to the Selling
         Shareholder contained in the section entitled "Selling Shareholders"
         in the Prospectus does not and will not on the Closing  Date contain
         an untrue statement of a material fact or omit to state any material
         fact required to be stated therein or necessary to make the statements
         therein, in light of the circumstances under which they were made, not
         misleading.

                 (vi)     Such Selling Shareholder has not taken, directly or
         indirectly, any action designed to or that might reasonably be
         expected to cause or result in stabilization or manipulation of the
         price of the Common Stock to facilitate the sale or resale of the
         Shares, except for the lock-up arrangements described in the
         Prospectus.

                 (vii)    Certificates in negotiable form representing all of
         the Shares to be sold by such Selling Shareholder hereunder have been
         placed in custody under a Custody Agreement, in the form heretofore
         furnished to you (the "Custody Agreement"), duly executed and
         delivered by such Selling Stockholder to Norton, Jacobs, Kuhn &
         McTopy, L.L.P. ("NJKM"), as custodian (the "Custodian"), and such
         Selling Stockholder has duly executed and delivered a Power of
         Attorney, in the form heretofore furnished to you (the "Power of
         attorney"), appointing Billy F. Mitcham, Jr. and Robert Rios and each
         of them as such Selling Shareholder's attorney-in- fact (the
         "Attorney-in-Fact") with authority to execute and deliver this
         Agreement on behalf of such Selling Shareholder, to determine the
         purchase price to be paid by the Underwriters to the Selling
         Shareholders, to authorize the delivery of the Shares to be sold by
         such Selling Shareholder hereunder and otherwise to act on behalf
   12
Page 12

         of such Selling Shareholder in connection with the transactions
         contemplated by this Agreement and the Custody Agreement.

   
                 (viii)   The Shares represented by the certificates held in
         custody for such Selling Shareholder under the Custody Agreement are
         subject to the interests of the Underwriters hereunder; the
         arrangements made by such Stockholder for such custody, and the
         appointment by such Selling Shareholder of the Attorney-in-Fact by the
         Power of Attorney, are to that extent irrevocable except as otherwise
         provided herein and therein; the obligations of the Selling
         Shareholders hereunder shall not be terminated by operation of law,
         whether by the death or incapacity of any individual Selling
         Shareholder or, in the case of an estate or trust, by the death or
         incapacity of any executor or trustee or the termination of such
         estate or trust, or in the case of a partnership or corporation, by
         the dissolution of such partnership or corporation, or by the
         occurrence of any other event; if any individual Selling Shareholder
         or any such executor or trustee should die or become incapacitated, or
         if any such estate or trust should be terminated, or if any such
         partnership or corporation should be dissolved, or if any other such
         event should occur, before the delivery of the Shares hereunder,
         certificates representing the Shares shall be delivered by or on
         behalf of the Selling Shareholder in accordance with the terms and
         conditions of this Agreement and of the Custody Agreement; and actions
         taken by the Attorney-in-Fact pursuant to the Powers of Attorney shall
         be as valid as if such death, incapacity, termination, dissolution or
         other event had not occurred, regardless of whether or not the
         Custodian, the Attorney-in-Fact, or either of them, shall have
         received notice of such death, incapacity, termination, dissolution or
         other event.
    

                 (ix)     In order to document the Underwriters' compliance
         with the reporting and withholding provisions of the Tax Equity and
         Fiscal Responsibility Act of 1982 with respect to the transactions
         herein contemplated, such Selling Shareholder will deliver to you
         prior to or at the First Time of Delivery (as hereinafter defined) a
         properly completed and executed United States Treasury Department Form
         W-9 (or other applicable form or statement specified by Treasury
         Department regulations in lieu thereof).

         (c)     Any certificate signed by any officer of the Company or the
Selling Shareholders delivered to the Underwriters or to counsel for the
Underwriters pursuant to the terms of this Agreement shall be deemed a
representation and warranty by the Company or the Selling Shareholders, as the
case may be, to each Underwriter as to the matters covered thereby.

SECTION 2.  Sale and Delivery to the Underwriters; Closing.

         (a)     Subject to the terms and conditions set forth herein, and
subject to adjustments as you may determine to avoid fractional shares:

                 (i)      the Company agrees to sell to each Underwriter,
         severally and not jointly, and, on the basis of the representations
         and warranties herein contained and subject to the terms and
         conditions herein set forth, each Underwriter, severally and not
         jointly, agrees to
   13
Page 13

   
         purchase from the Company, at a purchase price of _____________ per
         share (the "Initial Price"), the aggregate number of Primary Shares
         that bears that same proportion to the aggregate number of Primary
         Shares to be issued and sold by the Company as the number of shares set
         forth opposite the name of such Underwriter in Schedule II (or such
         number of Primary Shares increased as provided in Section 9 hereof)
         bears to the aggregate number of Shares to be sold by the Company and
         the Selling Shareholders.  The Company will have no obligation to sell
         to the Underwriters any of such Primary Shares that are being issued
         and sold by the Company hereunder unless the Underwriters purchase all
         of the Primary Shares hereunder; and
    

   
                 (ii)     the Selling Shareholders agree, severally and not
         jointly, to sell to each Underwriter, severally and not jointly, and,
         on the basis of the representations and warranties herein contained and
         subject to the terms and conditions herein set forth, each Underwriter,
         severally and not jointly, agrees to purchase from the Selling
         Shareholders at the Initial Price, the aggregate number of
         Shareholders' Shares that bears the same proportion to the aggregate
         number of Shareholders' Shares to be sold by the Selling Shareholder as
         the number of Shareholders' Shares set forth opposite the name of such
         Underwriter in Schedule II hereto (or such number of Shareholders'
         Shares increased as provided in Section 9 hereof) bears to the
         aggregate number of Shares to be sold by the Company and the Selling
         Shareholders, and the Selling Shareholders will have no obligation to
         sell to the Underwriters any of the Shareholders' Shares to be sold by
         the Selling Shareholders hereunder unless the Underwriters purchase all
         of such Shareholders' Shares hereunder.
    

         (b)     The Company grants to the Underwriters an option to purchase
all or any part of the Additional Shares at the Initial Price.  Additional
Shares shall be purchased from the Company, severally and not jointly, for the
accounts of the Underwriters in proportion to the number of  Primary Shares set
forth in Schedule II hereto opposite the name of such Underwriter.  Such option
may be exercised only to cover over-allotments in the sale of the Primary
Shares by the Underwriters and may be exercised in whole or in part at any time
on or before 12:00 noon, New York City time, on the business day before the
Primary Shares Closing Date (as hereinafter defined), and only once thereafter
within 30 days after the date of the Prospectus, in each case upon written or
telegraphic notice, or oral or telephonic notice confirmed by written or
facsimile notice, by the Underwriters to the Company no later than 12:00 noon,
New York City time, on the business day before the Primary Shares Closing Date
or at least two business days before the Additional Shares Closing Date (as
hereinafter defined), as the case may be, setting forth the number of
Additional Shares to be purchased and the time and date (if other than the
Primary Shares Closing Date) of such purchase.

         (c)     Payment of the purchase prices for, and delivery of, the
Primary Shares and the Shareholders Shares to be purchased by the Underwriters
shall be made at the offices of Jefferies & Company, Inc., 39 Broadway, New
York, New York 10006, or at such other place as shall be agreed upon by the
Underwriters and the Company, at 10:00 A.M., New York City time, on the third
or fourth business day following the date of the Registration Statement becomes
effective (or, if the Company elected to rely upon Rule 430A, the fourth
business day after the date of execution of this
   14
Page 14

Agreement), or such other time not later than ten business days after such date
as shall be agreed upon by the Underwriters and the Company ( such time and
date of payment and delivery being herein called the "Primary Shares Closing
Date").  Payment shall be made to the Company and the Selling Shareholders, as
the case may be, by wire transfer in same day funds payable to the order of the
Company or the Selling Shareholders, as applicable, against delivery to the
Underwriters of the Primary Shares or Shareholders' Shares.

         (d)     Payment of the purchase price for, and delivery of, the
Additional Shares to be purchased by the Underwriters shall be made at the
office as set forth above or at such other place as shall be agreed upon by the
Underwriters and the Company at the time and on the date (which may be the same
as, but in no event shall be earlier than, the Primary Shares Closing Date)
specified in the notice referred to in Section 2(b) (such time and date of
delivery and payment being herein called the "Additional Shares Closing Date").
The Primary Shares Closing Date and the Additional Shares Closing Date are
called, individually, the "Closing Date" and together, the "Closing Dates."
Payment shall be made to the Company by wire transfer in same day funds payable
to the order of the Company against delivery to the Underwriters of the
Additional Shares.

         (e)     Certificates representing the Shares shall be issued in such
denominations and registered in such names as the Underwriters may request in
writing at least two business days before the Primary Shares Closing Date or,
in the case of Additional Shares, on the day of notice of exercise of the
option as described in Section 2(b).  The certificates representing the Shares
will be made available for examination and packaging by the Underwriters not
later than 1:00 P.M., New York City time, on the last business day prior to the
Primary Shares Closing Date (or the Additional Shares Closing Date in the case
of the Additional Shares) at such place as is designated by the Underwriters.

SECTION 3.  Covenants of the Company.   The Company covenants with each of the
Underwriters as follows:

         (a)     the Company will use its best efforts to cause the
Registration Statement, if not effective at the Representation Date, and any
amendment thereof, to become effective, as promptly as possible after the
filing thereof.  The Company will not file any amendment to the Registration
Statement or any amendment or supplement to the Prospectus to which the
Underwriters shall reasonably object in writing after a reasonable opportunity
to review such amendment or supplement.  Subject to the foregoing sentences in
this clause (a), if the Registration Statement has become or becomes effective
pursuant to Rule 430A, or filing of the Prospectus or supplement to the
Prospectus is otherwise required under Rule 424(b), the Company will cause the
Prospectus, properly completed, or such supplement thereto to be filed with the
Commission pursuant to the applicable paragraph of Rule 424(b) within the time
period prescribed and will provide evidence satisfactory to the Underwriters of
such timely filing.  The Company will promptly advise the Underwriters (i) when
the Registration Statement, if not effective at the Representation Date, and
any amendment thereto, shall have become effective, (ii) when the Prospectus,
and any supplement thereto, shall have been filed (if required) with the
Commission pursuant to Rule 424(b), (iii) when any amendment to the
Registration Statement shall have been filed or become effective, (iv) of any
   15
Page 15

request by the Commission for any amendment of the Registration Statement or
supplement to any Prospectus or for any additional information, (v) of the
receipt by the Company of any notification of, or if the Company otherwise has
knowledge of, the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the institution or threatening
of any proceeding for that purpose and (vi) of the receipt by the Company of
any notification with respect to the suspension of the qualification of the
Shares for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose.  The Company will use its best efforts to prevent
the issuance of any such stop order and, if issued, to obtain as soon as
possible the lifting thereof;

         (b)     if, at any time when a Prospectus relating to the Shares is
required to be delivered under the Act or the Act Regulations, any event occurs
as a result of which the Prospectus as then amended or supplemented would
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
or if it shall be necessary to amend the Registration Statement or amend or
supplement the Prospectus to comply with the Act or the Act Regulations, the
Company promptly will prepare and file with the Commission, subject to the
second sentence of paragraph (a) of this Section 3, an amendment or supplement
that will correct such statement or omission or effect such compliance;

         (c)     the Company consents to the use of the Prospectus in
accordance with the provisions of the Act and with the securities or blue sky
laws of the jurisdictions in which the Shares are offered by the Underwriters
and by all dealers to whom Shares may be sold, both in connection with the
offering and sale of the Shares and for such period of time thereafter as the
Prospectus is required by the Act to be delivered in connection with the sales
by any Underwriter or dealer.  The Company will comply with all requirements
imposed upon it by the Act, as now and hereafter amended, so far as necessary
to permit the continuance of sales of or dealing in the Shares in accordance
with the provisions hereof and the Prospectus;

         (d)     as soon as practicable, the Company will make generally
available to its security holders and to the Underwriters a consolidated
earnings statement or statements of the Company and the Subsidiary covering a
twelve-month period beginning after the Effective Date that will satisfy the
provisions of Section 11(a) of the Act and Rule 158 under the Act Regulations;

         (e)     the Company will furnish to the Representatives, without
charge, four signed copies of the Registration Statement (including exhibits
thereto and all documents incorporated by referenced therein) and, so long as
delivery of a prospectus by an Underwriter or dealer may be required by the
Act, or the Act Regulations, as many copies of the Prospectus and all
amendments and supplements thereto as the Underwriters may reasonably request;

         (f)     during the period of five years hereafter, the Company will
furnish to you, as soon as practicable after the end of each fiscal year, a
copy of its annual report to shareholders for such year; and the Company will
furnish to you (i) as soon as available, a copy of each report or definitive
proxy statement of the Company filed with the Commission under the Exchange Act
or mailed to
   16
Page 16

the shareholders, and (ii) from time to time, such other information concerning
the Company as you may reasonably request, provided that prior to the Company's
furnishing any such other information that is non-public, you shall enter into
an agreement, in such form as the Company shall reasonably request, with
respect to the confidentiality of such information;

         (g)     the Company will not, and will cause each of its executive
officers and directors to enter into agreements with the Underwriters in the
form set forth in Exhibit A to the effect that they will not, for a period of
180 days following the date of the Prospectus, without prior written consent of
Jefferies & Company, Inc., offer, sell or contract to sell, or otherwise
dispose of, directly or indirectly, or announce the offering of, any shares of
Common Stock or any securities convertible into, or exchangeable for, shares of
Common Stock; provided, however, that the Company may issue and sell Common
Stock pursuant to any stock bonus plan, stock grant plan or stock option plan
in effect as of the date of the Prospectus;

         (h)     the Company will comply with all the provisions of any
undertakings contained in the Registration Statement;

         (i)     the Company will apply the net proceeds from the offering and
sale of the Shares to be sold by the Company in accordance with the description
set forth in the "Use of Proceeds" section of the Prospectus;

         (j)     the Company will cooperate with the Underwriters and their
counsel in connection with endeavoring to obtain and maintain the qualification
or registration, or exemption from qualification, of the Shares for offer and
sale under the applicable securities laws of such states and other
jurisdictions of the United States as the Underwriters may designate; provided,
that in no event shall the Company be obligated to qualify to do business in
any jurisdiction where it is not now so qualified or to take any action that
would subject it to taxation or general service of process in any jurisdiction
where it is not now so subject; and

         (k)     the Company will cause the Shares to be duly listed on the
Nasdaq National Market.

SECTION 4.  Covenants of the Selling Shareholders.   The Selling Shareholders
covenant with each of the Underwriters as follows:

         (a)     The Selling Shareholders shall cooperate to the extent
reasonably necessary to cause the Registration Statement, if not effective at
the Representation Date, and any amendment thereof, to become effective, as
promptly as possible after the filing thereof.

         (b)     Without prejudice to any rights the Selling Shareholders may
have against the Company, the Selling Shareholders shall pay all federal and
other taxes, if any, on the transfer or sale of the Shares being sold by the
Selling Shareholders to the Underwriters.
   17
Page 17

         (c)     The Selling Shareholders shall do or perform all things
required to be done or performed by the Selling Shareholders prior to the
Primary Shares Closing Date to satisfy all conditions precedent to delivery of
and the payment for the Shares to be sold by the Selling Shareholders pursuant
to this Agreement.

         (d)     The Selling Shareholders will not at any time, directly or
indirectly, take any action intended, or that might reasonably be expected, to
cause or result in, or that will cause, stabilization of the price of the
shares of Common Stock to facilitate the sale or resale of any of the Shares.

         (e)     The Selling Shareholders will advise the Representatives
promptly, and if requested by the Representatives will confirm such advice in
writing, of any change in the information relating to the Selling Shareholders
contained in the Registration Statement under the caption "Selling
Shareholders."

SECTION 5.  Payment of Expenses.   The Company will pay, or reimburse if paid
by the Underwriters, all actual and reasonable costs and expenses incident to
the performance of the obligations of the Company and the Selling Shareholders
under this Agreement, including (i) the fees, disbursements and expenses of
counsel and accountants for the Company and the Selling Shareholders and all
other expense in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus, the Prospectus, and any
amendments or supplements thereto, and the mailing and delivery of copies
thereof to the Underwriters and dealers; (ii) the cost of reproducing the
Agreement Among Underwriters, this Agreement, the Selling Agreement, any Dealer
Agreements, the Underwriters' Questionnaire and the Blue Sky Memorandum (in
both preliminary and final form); (iii) all expenses in connection with
qualification of the Shares for offering and sale under state securities laws
as provided in Section 3(j) hereof, including filing and registration fees and
the fees, disbursements and expenses of counsel for the Underwriters in
connection with such qualification and in connection with Blue Sky surveys;
(iv) the filing fees incident to securing any required review by the NASD; (v)
the cost of preparing stock certificates; (vi) all fees of the Company's
transfer agent and registrar; (vii) any fees for including the Shares on the
Nasdaq National Market; and (viii) all other costs and expenses incident to the
performances of its obligations hereunder that are not otherwise specifically
provided for in this Section.

         If this Agreement is terminated by the Underwriters because of any
failure or refusal on the part of the Company or the Selling Shareholders to
comply with the terms or fulfill any of the conditions of this Agreement, the
Company shall reimburse the Underwriters for all of their reasonable
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters.  The Company shall not in any event be liable to
any of the Underwriters for consequential damages including loss of anticipated
profits from the transactions covered by this Agreement.

SECTION 6.  Conditions of the Underwriters' Obligation.   The obligation of the
Underwriters to purchase the Shares hereunder is subject to the continued
accuracy of the representations and warranties of the Company and the Selling
Shareholders herein contained, to the accuracy of the
   18
Page 18

statements of the Company and the Selling Shareholders made in any certificates
pursuant to the provision hereof, to the performance by the Company and the
Selling Shareholders of its obligations hereunder and to the following further
conditions:

         (a)     the Registration Statement shall have come effective, and you
shall have received notice thereof, not later than _____ p.m., Washington D.C.
time, on the date hereof, or such later time and date as shall be approved by
the Representatives and the Company and shall remain effective at the Closing
Date.  No stop order suspending the effectiveness of the Registration Statement
shall have been issued under the Act or proceedings therefor initiated or
threatened by the Commission.  No order suspending the effectiveness of the
Registration Statement or the qualification or registration of the Shares under
the securities or blue sky laws of any jurisdiction shall be in effect or
proceedings therefor initiated or threatened by the Commission or the
authorities of any such jurisdiction.  If the Company has elected to rely upon
Rule 430A, the price of the Shares and any price-related or other information
previously omitted from the effective Registration Statement pursuant to Rule
430A shall have been transmitted to the Commission for filing pursuant to Rule
424(b) within the prescribed time period, and, prior to the Closing Date, the
Company shall have provided evidence satisfactory to the Underwriters of such
timely filing, or a post-effective amendment providing such information shall
have been promptly filed and declared effective in accordance with the
requirement of Rule 430A;

         (b)     subsequent to the execution and delivery of this Agreement,
there shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting particularly the business, properties,
condition (financial or other) or results of operations of the Company and the
Subsidiary, taken as a whole, which, in the reasonable judgment of the
Underwriters, materially impairs the investment quality of the Shares and
constitutes a Material Adverse Effect; (ii) any material loss or interference
with the business or properties of the Company or the Subsidiary from fire,
explosion, flood or other casualty, whether or not covered by insurance, or
from any labor dispute or any court or legislative or other governmental
action, order or decree, that is not set forth in the Registration Statement
and the Prospectus, if in the reasonable judgment of the Underwriters any such
development makes it impracticable or inadvisable to proceed with completion of
the sale of and payment for the Shares; (iii) any suspension or limitation of
trading in securities generally on the New York Stock Exchange or The Nasdaq
National Market, or any setting or minimum prices for trading on such exchange
or system, or any suspension of trading of any securities of the Company on any
exchange or system or in the over-the-counter market; (iv) any banking
moratorium declared by federal or New York authorities; or (v) any outbreak or
escalation of major hostilities in which the United States is involved, any
declaration of war by Congress or any other substantial national or
international calamity or emergency if, in the reasonable judgment of the
Underwriters, the effect of any such outbreak, escalation, declaration,
calamity or emergency makes it impractical or inadvisable to proceed with
completion of the sale of and payment for the Shares;

         (c)     since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there shall have been no
litigation or other proceeding instituted
   19
Page 19

against the Company or the Subsidiary or any of their respective officers or
directors in their capacities as such, before or by any federal, state or local
court, commission, regulatory body, administrative agency or other governmental
body, domestic or foreign, or arbitrator, in which litigation or proceeding an
unfavorable ruling, decision or finding would have a Material Adverse Effect;

         (d)     each of the representations and warranties of each Selling
Shareholder contained herein shall be true and correct at the Closing Date, as
if made at the Closing Date, and all covenants and agreements contained herein
to be performed on the part of each Selling Shareholder, and all conditions
contained herein to be fulfilled or complied with by each Selling Shareholder
at or prior to the Closing Date, shall have been duly performed, fulfilled or
complied with, and the Representatives shall have received a certificate to
such effect, dated the Closing Date and signed by or on behalf of the Selling
Shareholders;

         (e)     the Underwriters shall have received an opinion from Norton,
Jacobs, Kuhn & McTopy, L.L.P., counsel for the Company, satisfactory in form
and substance to counsel for the Underwriters, dated as of each Closing Date,
to the effect set forth in Exhibit B;

         (f)     the Underwriters shall have received a favorable opinion,
dated as of each Closing Date, of Vinson & Elkins L.L.P., counsel for the
Underwriters, with respect to such matters as may be reasonably requested by
the Underwriters, and you shall have provided such counsel with such papers and
information as they may reasonably request to enable them to provide such
opinion;

         (g)     on the Primary Shares Closing Date, the Underwriters shall
have received an opinion from legal counsel for the Selling Shareholders,
satisfactory in form and substance to counsel for the Underwriters, dated as of
the Primary Shares Closing Date, to the effect set forth in Exhibit C;

         (h)     the following conditions contained in clauses (i), (ii) and
(iii) of this Section 6(h) shall have been satisfied on and as of each Closing
Date and the Company shall have furnished to the Underwriters a certificate of
the Company, signed by the President and the principal financial or accounting
officer of the Company, dated such Closing Date to the effect that the signers
or such certificate have carefully examined the Registration Statement, the
Prospectus, any supplement or amendment to the Prospectus, and this Agreement
and that:

                 (i)      the representations and warranties of the Company in
         this Agreement are true and correct in all material respects on and as
         of the Closing Date with the same effect as if made on the Closing
         Date and the Company has complied with all the agreements and
         satisfied all the conditions under this Agreement on its part to be
         performed or satisfied at or prior to the Closing Date;

                 (ii)     no stop order suspending the effectiveness of the
         Registration Statement has been issued and no proceedings for that
         purpose have been instituted or, to the Company's knowledge,
         threatened; and
   20
Page 20


                 (iii)    since the date of the most recent financial
         statements included in the Prospectus, there has been no change to the
         financial condition of the Company that would have a Material Adverse
         Effect.

         (i)     At the Representation Date and at each Closing Date, Hein +
Associates LLP shall have furnished to the Underwriters and the Company and the
Selling Shareholders a letter or letters, dated respectively as of the date of
this Agreement and each Closing Date, in form and substance satisfactory to the
Underwriters, containing statements and information of the type customarily
included in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial and statistical information
pertaining to the Company and the Subsidiary in the Registration Statement and
the Prospectus.

         (j)     At the Representation Date, the Company shall have furnished
to the Underwriters a letter substantially in the form of Exhibit A hereto from
each executive officer and director of the Company and the Selling
Shareholders, addressed to the Underwriters, in which each such person agrees
not to offer, sell or contract to sell, or otherwise dispose of, directly or
indirectly, or announce an offering of, any shares of Common Stock beneficially
owned by such person or any securities convertible into, or exchangeable for,
shares of Common Stock for a period of 180 days following the date of the
Prospectus without the prior written consent of Jefferies & Company, Inc.

         (k)     At the Closing Date, counsel for the Underwriters shall have
been furnished with such information, certificates and documents as they may
reasonably require for the purpose of enabling them to pass upon the issuance
and sale of the Shares as contemplated herein and related proceedings, or to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained, or otherwise in
connection with the offering contemplated hereby; and all opinions and
certificates mentioned above or elsewhere in this Agreement shall be reasonably
satisfactory in form and substance to the Underwriters and counsel for the
Underwriters.

If any condition specified in this Section 6 shall have not been fulfilled in
all material respects when and as required to be fulfilled, this Agreement may
be terminated by the Underwriters by notice to the Company and such termination
shall be without liability of any party to any other party except as provided
in Section 5.

SECTION 7.  Indemnification and Contribution.

         (a)     The Company agrees to indemnify, defend and hold harmless each
Underwriter and its respective officers, shareholders, employees, directors and
agents and any person who controls any Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act from and against any
loss expense, damage, liability or claim (including the reasonable cost of
investigating such claim) that, jointly or severally, any such Underwriter or
any such officer, shareholder, employee, director, agent or controlling person
may incur under the Act, the Exchange Act or otherwise, as such expenses are
incurred, insofar as such loss, expense, damage, liability or
   21
Page 21

claim arises out of or is based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or in the
Registration Statement as amended by any post-effective amendment thereof) or
any omission or alleged omission to state a material fact required to be stated
in such Registration Statement or necessary to make the statements made therein
not misleading or any untrue statement or alleged untrue statement of a
material fact contained in a Prospectus (the term Prospectus for the purpose of
this Section 7 being deemed to include any Preliminary Prospectus, the
Prospectus, the Prospectus as amended or supplemented and any document filed
under the Exchange Act and incorporated by reference into the Prospectus) or
any omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
the Company will not be liable in any such case to the extent any such loss,
expense, damage, liability or claim arises out of or is based upon any untrue
statement or omission or alleged untrue statement or omission that has been
made therein or omitted therefrom in reliance upon and in conformity with the
information provided in writing to the Company by or on behalf of the Selling
Shareholders or any Underwriter, expressly for use in the Registration
Statement or the Prospectus; and provided, further that with respect to any
untrue statement or omission or alleged untrue statement or omission made in
any Preliminary Prospectus the indemnity agreement contained in this Section
7(a) shall not inure to the benefit of any such indemnified Underwriter or its
respective officers, shareholders, employees, directors and agents, and the
Company shall not be liable to any such indemnified Underwriter or its
respective officers, shareholders, employees, directors and agents, from whom
the person asserting any such losses, claims, expense, damage, or liabilities
purchased the Shares concerned, to the extent that any such loss, claim,
expense, damage or liability of such indemnified Underwriter or its respective
officers, shareholders, employees, directors, and agents results from the fact
that there was not sent or given to such person at or prior to the written
confirmation of the sale of such shares to such person, a copy of the
Prospectus, as the same may be amended or supplemented, and the untrue
statement or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact in such Preliminary Prospectus was corrected
in such Prospectus and the Company had previously furnished copies thereof to
such indemnified Underwriter on a timely basis to permit the Prospectus (as the
same may be amended or supplemented) to be sent or given.  The Company agrees
that the only such information provided in writing by or on behalf of any
Underwriter to the Company, expressly for use in the Registration Statement or
the Prospectus, is that information contained in the table and the second,
fifth, sixth, seventh and eighth paragraphs following the table in the section
of the Prospectus entitled "Underwriting" and the last paragraph on the cover
page of the Prospectus.  The foregoing indemnity agreement shall be in addition
to any liability that the Company may otherwise have.

         (b)     The Selling Shareholders agree to indemnify, defend and hold
harmless each Underwriter and its respective officers, shareholders, employees
and directors and any person who controls any Underwriter within the meaning of
Section 15 of the Act from and against any loss, expense, liability or claim
(including the reasonable cost of investigating such claim) that, jointly or
severally, any such Underwriter or any such officer, shareholder, employee,
director or controlling person may incur under the Act, the Exchange Act or
otherwise, as such expenses are incurred,
   22
Page 22

insofar as such loss, expense, liability or claim arises out of or is based
upon any untrue statement or alleged untrue statement of a material fact
supplied by the Selling Shareholders for use in the Registration Statement (or
in the Registration Statement as amended by any post-effective amendment
thereof) or any omission or alleged omission to state a material fact required
to be stated in such Registration Statement or necessary to make the statements
made therein not misleading or any untrue statement or alleged untrue statement
of a material fact contained in a Prospectus (the term Prospectus for the
purpose of this Section 7 being deemed to include any Preliminary Prospectus,
the Prospectus, the Prospectus as amended or supplemented and any document
filed under the Exchange Act and incorporated by reference into the Prospectus)
or any omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that with respect to any untrue statement or omission or alleged untrue
statement or omission made in any Preliminary Prospectus, the indemnity
agreement contained in this Section 7(b) shall not inure to the benefit of any
such indemnified Underwriter or its respective officers, shareholders,
employees and directors, and the Selling Shareholders shall not be liable to
any such indemnified Underwriter or its respective officers, shareholders,
employees and directors, from whom the person asserting any such losses,
claims, damage, or liabilities purchased the Shares concerned, to the extent
that any such loss, claim, damage or liability of such indemnified Underwriter
or its respective officers, shareholders, employees and directors results from
the fact that there was not sent or given to such person at or prior to the
written confirmation of the sale of such shares to such person, a copy of the
Prospectus, as the same may be amended or supplemented, and the untrue
statement or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact in such Preliminary Prospectus was corrected
in such Prospectus and the Company had previously furnished copies thereof to
such indemnified Underwriter on a timely basis to permit the Prospectus (as the
same may be amended or supplemented) to be sent or given, and provided further,
that the liability of the Selling Shareholders pursuant hereto shall not exceed
an amount equal to the net proceeds received by the Selling Shareholders from
the sale of its Shares hereunder to the Underwriter.  The Underwriters agree
that the only information provided in writing by or on behalf of the Selling
Shareholders expressly for use in the Registration Statement is that
information contained in the section of the Prospectus entitled "Selling
Shareholders."

         (c)     Each Underwriter agrees to indemnify, defend and hold harmless
the Selling Shareholders, the Company and their respective officers,
shareholders, employees and directors and any person who controls either of
them within the meaning of Section 15 of the Act or Section 20 of the Exchange
Act from and against any loss, expense, damage, liability or claim (including
the reasonable cost of investigating such claim) that the Selling Shareholders,
the Company or any such officer, shareholder, employee, director or controlling
person may incur under the Act, the Exchange Act or otherwise to the same
extent as the provisions of Section 7(a) above, but only insofar as such loss,
expense, damage, liability or claim arises out of or is based upon any untrue
statement or omission or alleged untrue statement or omission made in reliance
or in conformity with information relating to such Underwriter furnished in
writing to the Company by or on behalf of such Underwriter, expressly for use
in the Registration Statement or the Prospectus.  The Selling Shareholders and
the Company agree that the only information provided in writing by or on behalf
   23
Page 23

of the Underwriters to the Company, expressly for use in the Registration
Statement or the Prospectus, is that information contained in the table and the
second, fifth, sixth, seventh and eighth paragraphs following the table in the
section of the Prospectus entitled "Underwriting" and the last paragraph on the
cover page of the Prospectus.

         (d)     If any action is brought against an indemnified party under
this Section 7, the indemnified party or parties shall promptly notify the
indemnifying party in writing of the institution of such action (provided that
the failure to give such notice shall not relieve the indemnifying party of any
liability that it may have pursuant to this Agreement, unless and to the extent
the indemnifying party did not otherwise learn of such action and such failure
has resulted in the forfeiture of substantive rights or defenses by the
indemnifying party) and the indemnifying party shall assume the defense of such
action, including the employment of counsel and payment of reasonable expenses.
The indemnified party or parties shall have the right to employ its or their
own counsel in any such case, but the fees and expenses of such counsel shall
be at the expense of the indemnified party or parties unless (i) the employment
of such counsel shall have been authorized in writing by the indemnifying party
in connection with the defense of such action, (ii) the indemnifying party
shall not have employed counsel reasonably satisfactory to the indemnified
party to take charge of the defense of such action within a reasonable time
after notice of the institution of such action or (iii) the named parties to
any such proceeding (including any impleaded parties) include both an
indemnified party and an indemnifying party and representation of both parties
by the same counsel would be inappropriate due to actual or potential differing
interests between the named parties (in which case the indemnifying party shall
not have the right to direct the defense of such action on behalf of the
indemnified party or parties), in any of which events such fees and expenses
shall be borne by the indemnifying party and paid as incurred; provided that
the indemnifying party shall only be responsible for the fees and expenses of
one counsel for the indemnified party or parties hereunder.  Anything in this
paragraph to the contrary notwithstanding, the indemnifying party shall not be
liable for any settlement of any such claim or action effected without its
written consent, which consent shall not be unreasonably withheld.

         (e)     If the indemnification provided for in this Section 7 is
unavailable to an indemnified party under subsection (a), (b) or (c) of this
Section 7 in respect of any losses, damages, expenses, liabilities or claims
referred to therein, then each applicable indemnifying party shall contribute
to the amount paid or payable by such indemnified party as a result of such
losses, damages, expenses, liabilities or claims (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Selling Shareholders on the one hand and the Underwriters on the other hand
from the offering of the Shares or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and the Selling Shareholders
on the one hand and the Underwriters on the other hand in connection with the
statements or omissions that resulted in such losses, damages, expenses,
liabilities or claims, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Selling Shareholders on
the one hand and the Underwriters on the other hand shall be deemed to be in
the same proportion as the total proceeds from the offering (net of
underwriting discounts
   24
Page 24

and commissions but before deducting expenses) received by the Company and the
Selling Shareholders bear to the total underwriting discounts and commissions
received by the Underwriters.  The relative fault of the Company and the
Selling Shareholders on the one hand and of the Underwriters on the other hand
shall be determined by reference to, among other things, whether the untrue
statement or alleged untrue statement of a material fact or omission or alleged
omission relates to information supplied by the Company, the Selling
Shareholders or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.  The amount paid or payable by a party as a result of
the losses, damages, expenses, liabilities and claims referred to above shall
be deemed to include any legal or other fees or expenses reasonably incurred by
such party in connection with investigating or defending any claim or action.

         (f)     The Company, the Selling Shareholders and the Underwriters
agree that it would not be just and equitable if contribution pursuant to this
Section 7 were determined by pro rata allocation or by any other method of
allocation that does not take account of the equitable considerations referred
to in Section 7(e) above.  Notwithstanding the provisions of this Section 7,
(i) no Underwriter shall be required to contribute any amount in excess of the
underwriting discount received by it by reason of such untrue statement or
alleged untrue statement or omission or alleged omission, (ii) the Selling
Shareholders shall not be required to contribute any amount in excess of the
gross proceeds received by the Selling Shareholders from the sale of the shares
pursuant to this Agreement, and (iii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.

SECTION 8.  Representations, Warranties and Agreements to Survive Delivery.
The respective indemnity and contribution agreements contained in Section 7,
and the covenants, representations and warranties of the Company and the
Selling Shareholders contained in this Agreement or contained in certificates
of officers of the Company and the Selling Shareholders submitted pursuant
hereto, shall remain in full force and effect, regardless of any investigation,
or statement as to the results thereof, made by or on behalf of any Underwriter
or any of its respective officers, employees, directors, shareholders, agents
or any person who controls any Underwriters, or by or on behalf of the Company
or the Selling Shareholders or any of the officers or directors or any
controlling person of the Company or the Selling Shareholders, as the case may
be, and will survive delivery of and payment for the Shares.

SECTION 9.  Default of Underwriters.   If any Underwriter or Underwriters
default in their obligations to purchase Shares hereunder on either the Primary
Shares Closing Date or the Additional Shares Closing Date and the aggregate
number of Shares that such defaulting Underwriter or Underwriters agreed but
failed to purchase does not exceed 10% of the total number of Shares that the
Underwriters are obligated to purchase on such Closing Date, the
Representatives may make arrangements satisfactory to the Company and the
Selling Shareholders for the purchase of such Shares by other persons,
including any of the Underwriters, but if no such arrangements are made by such
Closing Date the non-defaulting Underwriters shall be obligated severally, in
proportion to
   25
Page 25

their respective commitments hereunder, to purchase the Shares that such
defaulting Underwriters agreed but failed to purchase on such Closing Date.  If
any Underwriter or Underwriters so default and the aggregate number of Shares
with respect to which such default or defaults occur exceeds 10% of the total
number of Shares that the Underwriters are obligated to purchase on such
Closing Date and arrangements satisfactory to the Representatives and the
Company and the Selling Shareholders for the purchase of such Shares by other
persons are not made within 36 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter, the
Company or the Selling Shareholders, except as provided in this Section 9
(provided that if such default occurs with respect to the Additional Shares
after the Primary Shares Closing Date, this Agreement will not terminate as to
the Primary Shares).  As used in this Agreement, the term "Underwriter"
includes any person substituted for an Underwriter under this Section.  Nothing
herein will relieve a defaulting Underwriter from liability for its default.

SECTION 10.  Notices.   All notices and other communications hereunder will be
in writing and shall be deemed to have been duly given if mailed or transmitted
by standard form of telecommunication.  Notices to the Underwriters shall be
directed to the Underwriters in care of:

                                  Jefferies & Company, Inc.
                                  11100 Santa Monica Boulevard
                                  Los Angeles, California   90071
                                  Attention:  Jerry Gluck, Esq.

with a copy to:                   Alan P. Baden
                                  Vinson & Elkins L.L.P.
                                  2300 First City Tower
                                  1001 Fannin Street
                                  Houston, Texas   77002-6760

or, if sent to the Company, directed to:

                                  Mitcham Industries, Inc.
                                  P. O. Box 1175
                                  44000 Highway 75 South
                                  Huntsville, Texas   77342
                                  Attention:  Billy F. Mitcham, Jr.

with a copy to:                   Sabrina A. McTopy
                                  Norton, Jacobs, Kuhn & McTopy, L.L.P.
                                  1111 Bagby, Suite 2450
                                  Houston, Texas   77002-2546

or, if sent to the Selling Shareholders, directed to:
   26
Page 26

                           10700 Richmond Avenue #219
                              Houston, Texas 77042


SECTION 11.  Parties.   This Agreement shall inure to the benefit of and be
binding upon the Underwriters, the Company and the Selling Shareholders and
their respective successors and legal representatives.  Nothing expressed or
mentioned in this Agreement is intended or shall be construed to provide any
person, firm or corporation, other than the Underwriters and the Company and
the Selling Shareholders and their respective successors and legal
representatives and the controlling persons, officers, employees, directors and
shareholders referred to in Sections 7 and 8 and their respective heirs and
legal representatives, any legal or equitable right, remedy or claim under or
in respect of this Agreement or any provision herein or therein contained.
This Agreement and all conditions and provisions hereof are intended to be for
the sole and exclusive benefit of the Underwriters, the Company and the Selling
Shareholders and their respective successors and legal representatives, and
such controlling persons, shareholders, officers and directors and their
respective heirs and legal representatives, and for the benefit of no other
person, firm or corporation.  No purchaser of Shares from any Underwriter shall
be deemed to be a successor by reason merely of such purchase.

SECTION 12.  Governing Law and Time.   This Agreement shall be governed and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in such State.  Specified times of day
refer to New York time, unless otherwise specified.

SECTION 13.  Counterparts.   This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
   27
Page 27

If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement among
the Company and the Underwriters in accordance with its terms.

                                       Very truly yours,

                                       MITCHAM INDUSTRIES, INC.


                                       By:
                                          --------------------------------------
                                       Name:  Billy F. Mitcham, Jr.
                                       Title: President, Chief Executive Officer
                                              and Chairman of the Board


                                       SELLING SHAREHOLDERS


                                       By:
                                          --------------------------------------
                                       Name:  Billy F. Mitcham, Jr.
                                       Title: As Attorney-In-Fact Acting On 
                                              Behalf of the Selling Shareholders
                                              Billy F. Mitcham III Trust and
                                              Benjamin R. Mitcham Trust



The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.

JEFFERIES & COMPANY, INC.
RAUSCHER PIERCE REFSNES, INC.
GAINES, BERLAND INC.

As Representatives of the Several Underwriters

JEFFERIES & COMPANY, INC.


By:
   ----------------------------------------------
Name:
     --------------------------------------------
Title:
      -------------------------------------------
   28
                                   SCHEDULE I

                              SELLING SHAREHOLDERS


Billy F. Mitcham III Trust                                        10,000 Shares

Benjamin R. Mitcham Trust                                         10,000 Shares
   29
                                  SCHEDULE II

                                  UNDERWRITERS

                                                                Number of
                Name of Underwriter                           Primary Shares
                                                             to be Purchased
- ------------------------------------------------------      -----------------
   30
                                  SCHEDULE III

                                  SUBSIDIARIES


Significant Subsidiary - Mitcham Canada Ltd.

   
Other Subsidiary - Mitcham Acquisition Ore, Inc., a Texas corporation wholly
         owned by the Company, organized on December __, 1997.  For the purpose
         of an anticipated tax-free reorganization under Section 368(a)(2)(c)
         of the Internal Revenue Code of 1986, as amended, with North American
         Western Data System, Inc., as disclosed in the Prospectus under
         "Recent Developments."
    
   31
                                   EXHIBIT A

                           ___________________, 1997



Jefferies & Company, Inc.
Rauscher Pierce Refsnes, Inc.
Gaines, Berland Inc.
c/o Jefferies & Company, Inc.
11100 Santa Monica Boulevard
Los Angeles, California   90025

Dear Sirs:

         The undersigned understands that Jefferies & Company, Inc., Rauscher
Pierce Refsnes, Inc., and Gaines, Berland Inc., as Representatives of the
several underwriters (the "Underwriters"), are entering into an Underwriting
Agreement with Mitcham Industries, Inc. (the "Company"), providing for the
public offering (the "Public Offering") of the Company's common stock, par
value $0.01 per share (the "Common Stock"), pursuant to the Company's
Registration Statement on Form S-3 (Reg. No. 333-40507) (the "Registration
Statement").

         In order that the Company may pursue the Public Offering, the
undersigned, during the period commencing the date hereof and ending ___ days
after the date of the final prospectus relating to the Public Offering:

                 (i)      agrees not to (x) offer, pledge, sell, contract to
         sell, sell any option or contract to purchase, purchase any option or
         contract to sell, grant any option, right or warrant to purchase, or
         otherwise transfer or dispose of, directly or indirectly, any shares
         of Common Stock or any securities convertible into or exercisable or
         exchangeable for Common Stock (including, without limitation, shares
         of Common Stock or securities convertible into or exercisable or
         exchangeable for Common Stock which may be deemed to be beneficially
         owned by the undersigned in accordance with the rules and regulations
         of the Securities and Exchange Commission by virtue of the
         undersigned's power to dispose, or direct the disposition of, such
         shares or securities) or (y) enter into any swap or other arrangement
         that transfers all or a portion of the economic consequences
         associated with the ownership of any Common Stock (regardless of
         whether any of the transactions described in clause (x) or (y) is to
         be settled by the delivery of Common Stock, or such other securities,
         in cash or otherwise), without the prior written consent of Jefferies
         & Company, Inc., provided that the foregoing restrictions shall not
         apply to intra-family transfers and transfers for estate planning
         purposes;

                 (ii)     agrees not to make any demand for, or exercise any
         right with respect to, the registration of any shares of Common Stock
         or any securities convertible into





                                      A-1
   32
         or exercisable or exchangeable for Common Stock, without the prior
         written consent of Jefferies & Company, Inc.;

                 (iii)    authorizes the Company to cause the transfer agent to
         decline to transfer and/or to note stop transfer restrictions on the
         transfer books and records of the Company with respect to any shares
         of Common Stock and any securities convertible into or exercisable or
         exchangeable for Common Stock for which the undersigned is the record
         holder and, in the case of any such shares or securities for which the
         undersigned is the beneficial but not the record holder by virtue of
         the undersigned's power to dispose, or direct the disposition of, such
         shares or securities, agrees to use reasonable efforts to cause the
         record holder to cause the transfer agent to decline to transfer
         and/or to note stop transfer restrictions on such books and records
         with respect to such shares or securities.

         It is understood and agreed that the restrictions set forth herein are
not applicable to the shares of Common Stock being sold by the undersigned in
the Public Offering, if any.

         The undersigned hereby represents and warrants that the undersigned
has full power and authority to enter into the agreements set forth herein, and
that, upon request, the undersigned will execute any additional documents
necessary or desirable in connection with the enforcement hereof.  All
authority herein conferred or agreed to be conferred shall survive the death or
incapacity of the undersigned and any obligations of the undersigned shall be
binding upon the heirs, personal representatives, successors, and assigns of
the undersigned.

                                       Very truly yours,


                                       ----------------------------------------
                                                        (Name)
- ---------------------------                             

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

- ---------------------------
        (Address) 

- ---------------------------
   (Social Security No.)

Number of shares of Common Stock owned:
                                       ----------------

Certificate Numbers:
                    ----------------

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

Number of shares of Common Stock issuable upon exercise of stock options:
                                                                         -------





                                      A-2
   33
                                   EXHIBIT B


         (i)     each of the Company and the Subsidiary has been duly
incorporated and is validly existing as a corporation in good standing under
the laws of the State of Texas and the province of Alberta, Canada,
respectively, with corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Registration
Statement and the Prospectus;

         (ii)    each of the Company and the Subsidiary is duly registered and
qualified to conduct its business and is in good standing in each jurisdiction
where the nature or location of its properties (owned or leased) or the conduct
of its business requires such registration or qualification, except where the
failure so to register or qualify would not have a Material Adverse Effect;

         (iii)   each outstanding share of Common Stock has been duly and
validly authorized and issued and is fully paid and nonassessable, and has not
been issued and is not owned or held in violation of any preemptive right of
shareholders.  The Company owns all of the shares of capital stock of the
Subsidiary and such shares have been duly and validly authorized and issued,
are fully paid and non-assessable, and to such counsel's knowledge are owned
directly or indirectly by the Company, free and clear of all liens, claims,
security interests, restrictions, shareholders' agreements, voting trusts and
any other encumbrances whatsoever.  There is no commitment, plan or arrangement
to issue, and no outstanding option, warrant or any security or other
instrument which by its terms is convertible into, exercisable for or
exchangeable for capital stock of the Company, except as described in the
Prospectus.  There is outstanding no security or other instrument which by its
terms is convertible into, exercisable for or exchangeable for capital stock of
the Company or the Subsidiary, except as described in the Prospectus;

         (iv)    to such counsel's knowledge, there is no pending or threatened
action, suit or proceeding before any court or governmental agency, authority
or body or any arbitrator involving the Company or the Subsidiary required to
be disclosed in the Prospectus that is not adequately disclosed in the
Prospectus;

         (v)     to such counsel's knowledge, there is no contract or other
document of a character which is required to be filed as an exhibit to the
Registration Statement which has not been filed or incorporated by reference as
an exhibit as required;

         (vi)    the Registration Statement has become effective under the Act;
any required filing of the Prospectus, and any supplements thereto, pursuant to
Rule 424(b) has been made in the manner and within the time period  required by
Rule 424(b); to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued, and no proceedings
for that purpose have been instituted or threatened;

         (vii)   the statements in the Registration Statement and Prospectus,
insofar as they are descriptions of contracts, agreements or other legal
documents, are accurate in all material respects and present fairly the
information required to be shown;





                                      B-1
   34
         (viii)  this Agreement has been duly authorized, executed and
delivered by the Company and the Company has full corporate power and authority
to enter into this Agreement; no consent, approval, authorization or order of
any court or governmental agency or body is required in connection with the
execution and delivery of this Agreement or for the issuance and sale by the
Company of the Shares, except such as have been obtained under the Act;

         (ix)    neither the execution and delivery of this Agreement, nor the
consummation of the transactions herein contemplated, will result in a breach
of, or constitute a default under, (a) the terms of any indenture or other
agreement or instrument (i) to which the Company or the Subsidiary is a party
or by which either is bound and (ii) that is either filed as an exhibit to the
Registration Statement or is identified to such counsel as being material to
the Company and the Subsidiary, taken as a whole, and listed on a schedule to
such counsel's opinion, (b) any law, statute, rule, order, regulation or decree
of any court, regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over the Company or any Subsidiary of which such
counsel is aware and that is known by such counsel to be applicable to the
Company or any Subsidiary (in any case under (a) or (b) where such conflict,
breach or default would have a Material Adverse Effect and other than Federal
or state securities or blue sky laws, as to which such counsel need not express
an opinion in this subparagraph) or (c) the certificate of incorporation or
by-laws of the Company;

         (x)     the Shares have been duly and validly authorized by the
Company for issuance, and the Company has full corporate power and authority to
issue, sell and deliver the Shares; and, when the Shares are issued and
delivered against payment therefor as provided by this Agreement, the Shares
will have been validly issued and will be fully paid and nonassessable, and the
issuance of such Shares will not be subject to any statutory preemptive rights
or similar statutory rights; the certificates for the Shares are in due and
proper form under Texas law and the by-laws of the Company and conform with the
form of certificates duly authorized by the Board of Directors of the Company;
the Shares, when issued, will conform in all material respect to the
description thereof contained in the Prospectus and the Registration Statement
under the caption "Description of Capital Stock";

         (xi)    neither the Company nor the Subsidiary is an "investment
company" as defined under the Investment Company Act or subject to registration
under such Act; and

         (xii)   the Registration Statement and the Prospectus (except the
financial statements, supporting schedules and other information of a financial
nature included therein, as to which such counsel does not express any opinion)
comply as to form in all material respects with the requirements of the Act and
the applicable Act Regulations.

         In passing upon the form of the Registration Statement and the
Prospectus, such counsel has necessarily assumed the correctness and
completeness of the statements made therein.  Such counsel is not passing upon
and does not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement or the
Prospectus (except to the extent set forth in subparagraph (vi) and the last
sentence of subparagraph (ix)), and such counsel has not independently verified
the accuracy, completeness or fairness of such statements (except as
aforesaid).  Without limiting the foregoing, such counsel assumes no
responsibility for and has not independently verified the accuracy,
completeness or fairness of the financial statements and other





                                      B-2
   35
financial data included in the Registration Statement and has not examined the
financial or reserve records from which such statements and data are derived.
Such counsel notes that, although certain portions of the Registration
Statement have been included therein on the authority of "experts" within the
meaning of the Act, such counsel is not an expert with respect to any portion
of the Registration Statement.  However, such counsel shall state that such
counsel has participated in conferences with officers and other representatives
of the Company, representatives of the independent accountants of the Company,
and with the underwriters' representatives and counsel, at which the contents
of the Registration Statement and Prospectus and related matters were
discussed.  Such counsel has also reviewed certain corporate documents
furnished to them by the Company.  Based on such participation and review
(relying as to materiality to a certain extent upon the officers and the other
representatives of the Company), and subject to the limitations described
above, such counsel shall state that no information has come to such counsel's
attention that causes them to believe that the Registration Statement, at the
time it became effective or as of the Closing Date, contained or contains an
untrue statement of a material fact or omitted or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or that the Prospectus, as of its date or as of the Closing
Date, included or includes an untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.

         The opinions of such counsel relate solely to, are based solely upon
and are limited exclusively to the laws of the State of Texas and the federal
laws of the United States of America, to the extent applicable.





                                      B-3
   36
                                   EXHIBIT C


         (i)     the Agreement has been duly executed and delivered by or on
behalf of the Selling Shareholder;

         (ii)    to such counsel's knowledge, the Selling Shareholder has full
power and authority to sell, assign, transfer and deliver the Shares;

         (iii)   to such counsel's knowledge, the execution and delivery of the
Agreement by or on behalf of the Selling Shareholder and the sale of the Shares
pursuant to the terms thereof will not conflict with or violate, result in a
breach of or constitute a default under the terms or provisions of any
agreement, indenture, mortgage or other instrument to which the Selling
Shareholder is a party or by which it or any of its assets or property is bound
and which has been identified to such counsel as being material to the Selling
Shareholder and its subsidiaries, taken as a whole, or any court order or
decree or any laws, rule, or regulation (except such as may be required under
the Act or such as may be required by the NASD or under state securities or
blue sky laws governing the purchase and distribution of the Shares) applicable
to the Selling Shareholder or to any of the property or assets of the Selling
Shareholder, which breach, default or violation would impair the Selling
Shareholder's ability to sell the Shares pursuant to the terms of the
Agreement; and

         (iv)    upon delivery of the Shares that the Selling Shareholder has
agreed to sell pursuant to the Agreement and payment therefor as contemplated
therein and assuming the Underwriters are acquiring the Shares in good faith
without notice of any adverse claims, the Underwriters will acquire valid title
to such Shares free and clear of any adverse claims.





                                      C-1

   1
   
                                                                       EXHIBIT 5
    

              [NORTON, JACOBS, KUHN & MCTOPY, L.L.P. LETTERHEAD]



   
                               December 16, 1997
    


Mitcham Industries, Inc.
44000 Highway 75 South
Huntsville, Texas 77342

Gentlemen:

   
         We have acted as counsel for Mitcham Industries, Inc., a Texas
corporation (the "Company"), with respect to certain legal matters in
connection with the Registration Statement on Form S-3, Registration 
No. 333-40507 (the "Registration Statement"), filed by the Company in connection
with the registration under the Securities Act of 1933, as amended (the "Act")
of up to 2,093,000 shares of its Common Stock, par value $0.01 per share (the
"Shares")  consisting of up to 2,073,000 Shares offered by the Company and up
to 20,000 Shares offered by certain shareholders of the Company.  In connection
with this opinion, we have examined such certificates, documents and
instruments as we have considered necessary and appropriate.
    

         Based upon the foregoing, it is our opinion that the Shares have been
duly authorized for issuance and, when issued and delivered as described in the
Underwriting Agreement (the "Underwriting Agreement"), the form of which is
filed as Exhibit 1 to the Registration Statement, will be validly issued, fully
paid and non-assessable.

         We hereby consent to the filing of this opinion with the Securities
and Exchange Commission as Exhibit 5 to the Registration Statement and further
consent to the statements made in the Registration Statement regarding our firm
and the use of our name under the heading "Legal Matters" in the Prospectus
constituting a part of such Registration Statement.  In giving this consent, we
do not admit we are in the category of persons whose consent is required under
Section 7 of the Act and the rules and the regulations thereunder.
   2
Mitcham Industries, Inc.
December 17, 1997
Page 2


         We are licensed to practice in the State of Texas only and do not
express any opinion as to matters governed by the laws of any jurisdiction
other than the laws of the State of Texas or the laws of the United States of
America.

                               Very truly yours,

                               NORTON, JACOBS, KUHN & MCTOPY, L.L.P.


   
                               /s/ NORTON, JACOBS, KUHN & MCTOPY, L.L.P.

   1
   
                                                                 EXHIBIT 10.3
    

                                SECOND AMENDMENT
                                       TO
                       EXCLUSIVE LEASE REFERRAL AGREEMENT

   
         This Second Amendment (the "Amendment")  to the Exclusive Lease
Referral Agreement entered into on May 14, 1996, between Mitcham Industries,
Inc. a Texas corporation, ("Mitcham") and Peleton Company, Inc., an Oklahoma
corporation ("Peleton") (the "Agreement") is entered into on this 24th day of
November, 1997.  For good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Mitcham and Peleton do hereby
agree as follows:
    

         1.   Section 11 of the Agreement is amended by this Amendment to
              read in its entirety  as follows:

              "11.     TERM.  This Agreement shall be effective beginning
May 14, 1996 (the "Effective Date") and will remain in effect through December
31, 1998 (the "Term").  Thereafter, it shall continue to be effective until
terminated by either party giving the other three months prior notice."

         2.   All other terms and conditions of the Agreement remain unmodified.

         3.   The Agreement is ratified and confirmed as being in full force
and effect in accordance with its terms and provisions, as amended by this
Amendment.


IN WITNESS WHEREOF, this Amendment has been executed on behalf of the parties
by their duly authorized representatives as of the date first written above.

MITCHAM:                                   PELTON:

Mitcham Industries, Inc.                   Pelton Company, Inc.

   
 /s/ BILLY F. MITCHAM, JR.                 /s/ KIM L. MITCHELL
- ----------------------------------         ----------------------------------
By:  Billy F. Mitcham, Jr.                 By: Kim L. Mitchell
    
                                           
Title:  President, Chief Executive         Title: Chairman and President
         Officer and Chairman of
         the Board

   1
   
                                                                    EXHIBIT 10.4
    

                      [BANK ONE, TEXAS, N.A. LETTERHEAD]

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

                             LETTER LOAN AGREEMENT

                                December 8, 1997


Mitcham Industries, Inc.
P. O. Box 1175
Huntsville, Texas  77342-1175

Ladies and Gentlemen:

         This Letter Loan Agreement (the "Loan Agreement") will serve to set
forth the terms of the financing transactions by and between Mitcham
Industries, Inc., a Texas corporation ("Borrower"), and BANK ONE, TEXAS,
NATIONAL ASSOCIATION ("Bank"):

         1.      LOAN.  Subject to the terms and conditions set forth in this
Loan Agreement and the other agreements, instruments and documents at any time
evidencing, securing, governing, guaranteeing and/or pertaining to the
Indebtedness, as hereinafter defined (collectively, together with this Loan
Agreement, referred to hereinafter as the "Loan Documents"), Bank and Borrower
hereby agree as follows:

                 (a)      Revolving Line of Credit.  Subject to the terms and
         conditions set forth herein, Bank agrees to lend to Borrower, on a
         revolving basis from time to time during the period commencing on the
         date hereof and continuing through and including 11:00 a.m. (Houston,
         Texas time) on December 8, 1999, (the "Termination Date"), such
         amounts as Borrower may request hereunder (the "Revolving Line of
         Credit"); provided, however, the total principal amount outstanding at
         any time shall not exceed the lesser of (i) an amount equal to the
         Borrowing Base (as hereinafter defined), or (ii) $15,000,000.00 (the
         "Committed Sum").  If at any time the aggregate principal amount
         outstanding under the Revolving Line of Credit shall exceed an amount
         equal to the Borrowing Base, Borrower agrees to immediately repay to
         Bank such excess amount, plus all accrued but unpaid interest thereon.
         Subject to the terms and conditions hereof, Borrower may borrow, repay
         and reborrow hereunder.  All sums advanced hereunder, together with
         all accrued but unpaid interest thereon, shall be due and payable in
         full on the Termination Date.
   2
         As used in this Loan Agreement, the term "Borrowing Base" shall have
         the meaning set forth hereinbelow:

         An amount equal to eighty (80%) of the Borrower's Eligible Accounts,
         plus fifty percent (50%) of all equipment leased by Borrower to
         companies or other entities whose principal place of business is
         located in the United States or Canada.

         As used herein, the term "Eligible Accounts" shall mean at any time,
         an amount equal to the aggregate net invoice or ledger amount owing on
         all trade accounts receivable of Borrower for goods sold or leased or
         services rendered in the ordinary course of business, in which the
         Bank has a perfected, first priority lien, after deducting (without
         duplication): (i) each such account that is unpaid ninety (90) days or
         more after the original invoice date thereof, (ii) the amount of all
         discounts, allowances, rebates, credits and adjustments to such
         accounts (iii) the amount of all contra accounts, setoffs, defenses or
         counterclaims asserted by or available to the account debtors, (iv)
         all accounts with respect to which goods are placed on consignment or
         subject to a guaranteed sale or other terms by reason of which payment
         by the account debtor may be conditional, (v) the amount billed for or
         representing retainage, if any, until all prerequisites to the
         immediate payment of retainage have been satisfied, (vi) all accounts
         owing by account debtors for which there has been instituted a
         proceeding in bankruptcy or reorganization under the United States
         Bankruptcy Code or other law, whether state or federal, now or
         hereafter existing for relief of debtors, (vii) all accounts owing by
         any affiliates of Borrower, (viii) all accounts in which the account
         debtor is the United States or any department, agency or
         instrumentality of the United States, except to the extent an
         acknowledgment of assignment to Bank of such account in compliance
         with the Federal Assignment of Claims Act and other applicable laws
         has been received by Bank, (ix) all accounts due Borrower by any
         account debtor whose principal place of business is located outside
         the United States of America and its territories, unless such accounts
         are secured by ExIm Bank or guaranteed by a letter of credit in a form
         and issued by an institution acceptable to Bank in its sole
         discretion, (x) all accounts subject to any provision prohibiting
         assignment or requiring notice of or consent to such assignment, (xi)
         that portion of all account balances owing by any single account
         debtor which exceeds twenty-five percent 25% of the aggregate of all
         accounts otherwise deemed eligible hereunder which are owing to
         Borrower by all account debtors, and (xii) any other accounts deemed
         unacceptable by Bank in its sole and absolute discretion; provided,
         however, if more than twenty percent (20%) of the then balance owing
         by any single account debtor does not qualify as an Eligible Account
         under the foregoing





                                       2
   3
         provisions, then the aggregate amount of all accounts owing by such
         account debtor shall be excluded from Eligible Accounts.

The advances under the Revolving Line of Credit shall be collectively called
the "Loan".  The term "Indebtedness", as used herein, shall mean the Loan and
all other indebtedness owing from time to time to Bank by Borrower.

         2.      PROMISSORY NOTE.  The Loan shall be evidenced by one
promissory note (herein called, together with any renewals, extensions and
increases thereof, the "Note") of even date herewith, duly executed by
Borrower, in the stated principal amount of Fifteen Million and No/100 Dollars
($15,000,000.00) and in form and substance acceptable to Bank.  Interest on the
Note shall accrue at the rate set forth therein.  The principal of and interest
on the Note shall be due and payable in accordance with the terms and
conditions set forth in the Note and in this Loan Agreement.

         3.      GUARANTORS.  As a condition precedent to the Bank's obligation
under this Loan Agreement to make the Loan to Borrower, Borrower agrees to
cause all current and future subsidiaries of Borrower (whether one or more, the
"Guarantors") to each execute and deliver to Bank contemporaneously herewith an
unlimited guaranty agreement, in form and substance satisfactory to Bank.

         4.      REPRESENTATIONS AND WARRANTIES.  Borrower hereby represents
and warrants, and upon each request for an advance under the Revolving Line of
Credit further represents and warrants, to Bank as follows:

                 (a)      Existence.  Borrower is a corporation duly organized,
         validly existing and in good standing under the laws of the State of
         Texas and all other states where it is doing business, and has all
         requisite power and authority to execute and deliver this Loan
         Agreement and the other Loan Documents.

                 (b)      Binding Obligations.  The execution, delivery, and
         performance of this Loan Agreement and all of the other Loan Documents
         by Borrower have been duly authorized by all necessary corporate
         action by Borrower, and constitute legal, valid and binding
         obligations of Borrower, enforceable in accordance with their
         respective terms, except as limited by bankruptcy, insolvency or
         similar laws of general application relating to the enforcement of
         creditors' rights and except to the extent specific remedies may
         generally be limited by equitable principles.

                 (c)      No Consent.  The execution, delivery and performance
         of this Loan Agreement and the other Loan





                                       3
   4
         Documents, and the consummation of the transactions contemplated
         hereby and thereby, do not (i) conflict with, result in a violation
         of, or constitute a default under (A) any provision of Borrower's
         articles of incorporation or bylaws or any agreement or other
         instrument binding upon Borrower, or (B) any law, governmental
         regulation, court decree or order applicable to Borrower, or (ii)
         require the consent, approval or authorization of any third party.

                 (d)      Financial Condition.  Each financial statement of
         Borrower supplied to the Bank, including those dated
         _________________, 19____ was prepared in accordance with generally
         accepted accounting principles, consistently applied, in effect on the
         date such statements were prepared and truly discloses and fairly
         presents Borrower's financial condition as of the date of each such
         statement, and there has been no material adverse change in such
         financial condition or results of operations of Borrower subsequent to
         the date of the most recent financial statement supplied to the Bank.

                 (e)      Litigation.  There are no actions, suits or
         proceedings, pending or, to the knowledge of Borrower, threatened
         against or affecting Borrower or the properties of Borrower, before
         any court or governmental department, commission or board, which, if
         determined adversely to Borrower, would have a material adverse effect
         on the financial condition, properties, or operations of Borrower.

                 (f)      Taxes; Governmental Charges.  Borrower has filed all
         federal, state and local tax reports and returns required by any law
         or regulation to be filed by it and has either duly paid all taxes,
         duties and charges indicated due on the basis of such returns and
         reports, or made adequate provision for the payment thereof, and the
         assessment of any material amount of additional taxes in excess of
         those paid and reported is not reasonably expected.

         5.      CONDITIONS PRECEDENT TO ADVANCES.  Bank's obligation to make
any advance under this Loan Agreement and the other Loan Documents shall be
subject to the conditions precedent that, as of the date of such advance and
after giving effect thereto (i) all   representations and warranties made to
Bank by Borrower and any of the Guarantors in this Loan Agreement and the other
Loan Documents shall be true and correct, as of and as if made on such date,
(ii) no material adverse change in the financial condition of Borrower or any
of the Guarantors since the effective date of the most recent financial
statements furnished to Bank by Borrower or any of the Guarantors shall have
occurred and be continuing, (iii) no





                                       4
   5
event has occurred and is continuing, or would result from the requested
advance, which with notice or lapse of time, or both, would constitute an Event
of Default, (iv) Bank's receipt of all Loan Documents appropriately executed by
Borrower and all other proper parties, and (v) Bank has received a notice of
borrowing with respect to such requested advance.

         6.      AFFIRMATIVE COVENANTS.  Until (i) the Note and all other
obligations and liabilities of Borrower under this Loan Agreement and the other
Loan Documents are fully paid and satisfied, and (ii) Bank has no further
commitment to lend hereunder, Borrower agrees and covenants that it will,
unless Bank shall otherwise consent in writing:

                 (a)      Records; Right of Inspection.  Maintain its books and
         records in accordance with generally accepted accounting principles,
         applied on a consistent basis, and permit Bank to visit its properties
         and installations to examine, audit and make and take away copies or
         reproductions of Borrower's books and records, at all reasonable
         times.

                 (b)      Right to Additional Information.  Furnish Bank with
         such additional information and statements, lists of assets and
         liabilities, tax returns, and other reports with respect to Borrower's
         financial condition and business operations as Bank may reasonably
         request from time to time.

                 (c)      Taxes.  Pay and discharge when due all of its
         indebtedness and obligations, including without limitation, all
         assessments, taxes, governmental charges, levies and liens, of every
         kind and nature, imposed upon Borrower or its properties, income, or
         profits, prior to the date on which penalties would attach, and all
         lawful claims that, if unpaid, might become a lien or charge upon any
         of Borrower's properties, income, or profits; provided, however,
         Borrower will not be required to pay and discharge any such
         assessment, tax, charge, levy, lien or claim so long as (i) the
         legality of the same shall be contested in good faith by appropriate
         judicial, administrative or other legal proceedings, and (ii) Borrower
         shall have established on its books adequate reserves with respect to
         such contested assessment, tax, charge, levy, lien or claim in
         accordance with generally accepted accounting principles, consistently
         applied.

                 (d)      Compliance with Laws.  Conduct its business in an
         orderly and efficient manner consistent with good business practices,
         and perform and comply with all statutes, rules, regulations and/or
         ordinances imposed by any governmental unit upon Borrower or its
         businesses,





                                       5
   6
         operations and properties (including without limitation, all
         applicable environmental statutes, rules, regulations and ordinances).

                 (e)      Insurance.  Maintain insurance, including but not
         limited to, fire insurance, comprehensive property damage, public
         liability, worker's compensation, business interruption and other
         insurance deemed necessary or otherwise required by Bank.

                 (f)      Notice of Litigation.  Promptly after the
         commencement thereof, notify Bank of all actions, suits and
         proceedings before any court or any governmental department,
         commission or board affecting Borrower or any of its properties.

                 (g)      Notice of Change in Financial Condition. Promptly
         inform Bank of (i) any and all material adverse changes in Borrower's
         financial condition, and (ii) all claims made against Borrower which
         could materially affect the financial condition of Borrower.

                 (h)      Notice of Indebtedness.  Promptly inform Bank of the
         creation, incurrence or assumption by Borrower of any actual or
         contingent liabilities not permitted under this Loan Agreement.

                 (i)      Evidence of Tax Payments.  Upon demand of Bank,
         provide Bank with evidence of payment of all assessments, taxes,
         charges, levies, liens and claims on or against Borrower's properties,
         income or profits, and authorize the appropriate governmental official
         to deliver to Bank at any time a written statement of any assessments,
         taxes, charges, levies, liens and claims against Borrower's
         properties, income or profits.

                 (j)      Additional Documentation.  Execute and deliver, or
         cause to be executed and delivered, any and all other agreements,
         instruments or documents which Bank may reasonably request in order to
         give effect to the transactions contemplated under this Loan Agreement
         and the other Loan Documents.

         7.      NEGATIVE COVENANTS.  Until (i) the Note and all other
obligations and liabilities of Borrower under this Loan Agreement and the other
Loan Documents are fully paid and satisfied, and (ii) the Bank has no further
commitment to lend hereunder, Borrower will not, without the prior written
consent of Bank:

                 (a)      Nature of Business.  Make any material change in the
         nature of its business as carried on as of the date hereof.





                                       6
   7
                 (b)      Liquidation, Mergers, Consolidations.  Liquidate,
         merge or consolidate with or into any other entity.

                 (c)      Sale of Assets.  Sell, transfer or otherwise dispose
         of any of its assets or properties, other than in the ordinary course
         of business.

                 (d)      Liens.  Create, incur or assume any lien or
         encumbrance on any of its assets or properties, including without
         limitations, the Collateral.

                 (e)      Indebtedness.  Create, incur or assume any
         indebtedness for borrowed money or issue or assume any other note,
         debenture, bond or other evidences of indebtedness, or guarantee any
         such indebtedness or such evidences of indebtedness of others, other
         than (i) borrowings that do not exceed $1,000,000.00 in the aggregate
         principal balance during each fiscal year of Borrower, (ii) borrowings
         from Bank, or (iii) borrowings outstanding on the date hereof and
         disclosed in writing to Bank.

                 (f)      Change in Management.  Permit a change in the
         position of President held by Billy F.  Mitcham, Jr.

                 (g)      Loans.  Make any loans to any person or entity,
         including any Affiliate (as defined below) of Borrower, except
         advances or extension of credit in the form of accounts receivable
         incurred in the ordinary course of business.

                 (h)      Transaction with Affiliates.  Enter into any
         transaction, including, without limitation, the purchase, sale or
         exchange of property or the rendering of any service, with any
         Affiliate (as hereinafter defined) of Borrower, except in the ordinary
         course of and pursuant to the reasonable requirements of Borrower's
         business and upon fair and reasonable terms no less favorable to
         Borrower than would be obtained in a comparable arm's-length
         transaction with a person or entity not an Affiliate of Borrower.

         As used herein, the term "Affiliate" means any individual or entity
directly or indirectly controlling, controlled by, or under common control
with, another individual or entity.

         8.      FINANCIAL COVENANTS.  Until (i) the Note and all other
obligations and liabilities of Borrower under this Loan Agreement and the other
Loan Documents are fully paid and satisfied, and (ii) the Bank has no further
commitment to lend hereunder, Borrower will maintain the following financial
covenants on a consolidated basis:





                                       7
   8
                 (a)      Tangible Net Worth.  Borrower will maintain, at all
         times, its Tangible Net Worth at not less than $33,500,000.00, which
         Tangible Net Worth shall increase each fiscal quarter by an amount
         equal to fifty percent (50%) of Borrower's net income for such
         quarter.

                 (b)      Debt Service.  Borrower will maintain, as of the last
         day of each fiscal quarter, a ratio (the "Debt Service Coverage
         Ratio") of (a) net income after taxes plus depreciation, amortization
         and other non-cash expenses for the 12 month period ending with such
         fiscal quarter, less Distributions for such 12 month period, to (b)
         current maturities of long-term debt (including an amount equal to
         one-third (1/3) of the outstanding balance under the Revolving Line of
         Credit) plus, without duplication, interest expense for such quarter,
         of not less than 1.25 to 1.0.

                 (c)      Dividends.  Following the occurrence and continuance
         of an Event of Default, or if an Event of Default would result from
         such distribution or dividend, Borrower agrees not to declare or pay
         any dividends on any shares of Borrower's capital stock, make any
         other distributions with respect to any payment on account of the
         purchase, redemption, or other acquisition or retirement of any shares
         of Borrower's capital stock, or make any other distribution, sale,
         transfer or lease of any of Borrower's assets other than in the
         ordinary course of business, unless any such amounts are directly
         utilized for the payment of principal or interest on indebtedness and
         obligations owing from time to time by Borrower to Bank.  Borrower
         shall not pay any dividends on any shares of Borrower's capital stock,
         make any other distributions with respect to any payment on account of
         the purchase, redemption, or other acquisition or retirement of any
         shares of Borrower's capital stock to Borrower's Affiliates at any
         time, regardless of the existence of an Event of Default.

                 (d)      Accounts Receivable.  Borrower's accounts receivable
         greater than 90 days from date of invoice shall not exceed 40% of
         Borrower's total accounts receivable; provided, however, that any
         overdue accounts receivable owed by a "Qualified Bankrupt Account
         Debtor" (as such term is defined below) shall, solely for purposes of
         this loan covenant, be excluded from the foregoing calculation.  For
         purposes hereof, the term "Qualified Bankrupt Account Debtor" shall
         mean an account debtor of the Borrower, which account debtor is in
         Chapter 11 bankruptcy or other similar reorganization proceeding,
         where, based upon the good-faith judgment of the Borrower and its
         bankruptcy legal counsel, the





                                       8
   9
         prospects for ultimate recovery of a substantial majority of such
         account debtor's account receivable outstanding balance is reasonably
         likely.

                 (e)      Net Loss.  Borrower shall not sustain a net loss for
         any two consecutive calendar quarters as shown by the financial
         statements required under Section 9(b) and (c) hereof.

As used herein, the term "Tangible Net Worth" means, as of any date, Borrower's
total assets excluding all intangible assets, less total liabilities excluding
any indebtedness owing by Borrower which has been subordinated by written
agreement to all indebtedness now or hereafter owing by Borrower to Lender,
such agreement to be in form and substance acceptable to Lender.  As used
herein, "Distributions" shall mean all dividends and other distributions made
by Borrower to its shareholders or partners, as the case may be, other than
salary, bonuses and other compensation for services.  Unless otherwise
specified, all accounting and financial terms and covenants set forth above are
to be determined according to generally accepted accounting principles,
consistently applied.  "Affiliate" means any individual or entity directly or
indirectly controlling, controlled by, or under common control with, another
individual or entity.

         9.      REPORTING REQUIREMENTS.  Until (i) the Note and all other
obligations and liabilities of Borrower under this Loan Agreement and the other
Loan Documents are fully paid and satisfied, and (ii) the Bank has no further
commitment to lend hereunder Borrower will, unless Bank shall otherwise consent
in writing, furnish to Bank:

                 (a)      Notice of Default.  As soon as possible and in any
         event within ten (10) days after the occurrence of each Event of
         Default, as defined herein, or each event which, with the giving of
         notice or lapse of time or both, would constitute an Event of Default,
         continuing on the date of such statement, the written statement of the
         President and/or the Chief Financial Officer of Borrower setting forth
         the details of such Event of Default or event and the action which
         Borrower proposes to take with respect thereto.

                 (b)      Interim Financial Statements.  As soon as available,
         and in any event within forty- five (45) days after the end of each
         quarter of each fiscal year of Borrower, a balance sheet and income
         statement of Borrower as of the end of such fiscal quarter, all in
         form and substance and in reasonable detail satisfactory to Bank and
         duly certified (subject to year-end review adjustments) by the
         President and/or Chief Financial Officer of Borrower (i) as being true
         and correct in all material aspects to the best of his or her
         knowledge and





                                       9
   10
         (ii) as having been prepared in accordance with generally accepted
         accounting principles, consistently applied.

                 (c)      Annual Financial Statements.  As soon as available
         and in any event within one hundred twenty (120) days after the end of
         each fiscal year of Borrower, a balance sheet and income statement of
         Borrower as of the end of such fiscal year, in each case audited by
         independent public accountants of recognized standing acceptable to
         Bank, together with a certificate of such accountants to Bank stating
         that in the course of the regular audit of the business of Borrower,
         which audit was conducted by such accountants in accordance with
         generally accepted standards, such accountants obtained no knowledge
         that an Event of Default or an event which, with notice or lapse of
         time or both, would constitute an Event of Default, has occurred and
         is continuing, or if, in the opinion of such accountants, an Event of
         Default or such an event has occurred and is continuing, a statement
         as to the nature thereof.

                 (d)      Compliance Certificate.  Within forty-five (45) days
         after the end of each fiscal quarter of Borrower, a certificate from
         the President or Chief Financial Officer of Borrower stating that
         Borrower is in full compliance with all of its obligations under this
         Loan Agreement and the other Loan Documents and is not in default of
         any term or provision hereof or thereof, and demonstrating compliance
         with all financial ratios and covenants set forth in this Loan
         Agreement.

                 (e)      Borrowing Base Certificate.  Within forty-five (45)
         days after the end of each month, a borrowing base certificate signed
         by the President or Chief Financial Officer of Borrower, in form and
         substance satisfactory to Bank, along with such supporting
         documentation as Bank may request.

                 (f)      Accounts Aging.  Within forty-five (45) days after
         the end of each  month, a current aging analysis of Borrower's
         accounts receivable, in form and substance satisfactory to Bank.
         Borrower shall provide Bank with a current aging analysis of
         Borrower's accounts payable, in term and substance satisfactory to
         Bank, within ten (10) days of each request therefor by Bank.

                 (g)      Additional Information.  Borrower shall provide Bank
         with such other information respecting the business, properties or
         condition of the operations, financial or otherwise, of Borrower as
         Bank may from time to time request, including but not limited to
         periodic listing of Borrower's inventory.





                                       10
   11
                 (h)      Equipment Location.  Borrower shall provide Bank with
         a report stating the location of all equipment owned by Borrower
         within forty-five (45) days after the end of each fiscal quarter of
         Borrower.

                 (i)      Additional Information.  Borrower shall provide Bank
         with such other information respecting the business, properties or
         condition of the operations, financial or otherwise, of Borrower as
         Bank may from time to time request, including but not limited to
         periodic listing of Borrower's inventory.


         10.     EVENTS OF DEFAULT.  Each of the following shall constitute an
"Event of Default" under this Loan Agreement:

                 (a)      The failure, refusal or neglect of Borrower to make
         any payment of principal or interest on the Indebtedness, or any
         portion thereof, as the same shall become due and payable.

                 (b)      The failure of Borrower to timely and properly
         observe, keep or perform any covenant, agreement, warranty or
         condition required herein or in any of the other Loan Documents and,
         with respect to the covenants contained in Subparagraphs 9(a)-(e),
         such failure continues for a period of thirty (30) days after the
         occurrence thereof.

                 (c)      The occurrence of an event of default under any of
         the other Loan Documents or under any other agreement now existing or
         hereafter arising between Bank and Borrower.

                 (d)      Any representation contained herein or in any of the
         other Loan Documents made by Borrower or any Guarantor is false or
         misleading in any material respect.

                 (e)      The occurrence of any event which permits the
         acceleration of the maturity of any indebtedness owing by Borrower to
         any third party under any agreement or understanding.

                 (f)      If Borrower or any Guarantor: (i) becomes insolvent,
         or makes a transfer in fraud of creditors, or makes an assignment for
         the benefit of creditors, or admits in writing its inability to pay
         its debts as they become due; (ii) generally is not paying its debts
         as such debts become due; (iii) has a receiver, trustee or custodian
         appointed for, or take possession of, all or substantially all of the
         assets of such party, either in a proceeding brought by such party or
         in a proceeding





                                       11
   12
         brought against such party and such appointment is not discharged or
         such possession is not terminated within sixty (60) days after the
         effective date thereof or such party consents to or acquiesces in such
         appointment or possession; (iv) files a petition for relief under the
         United States Bankruptcy Code or any other present or future federal
         or state insolvency, bankruptcy or similar laws (all of the foregoing
         hereinafter collectively called "Applicable Bankruptcy Law") or an
         involuntary petition for relief is filed against such party under any
         Applicable Bankruptcy Law and such involuntary petition is not
         dismissed within sixty (60) days after the filing thereof, or an order
         for relief naming such party is entered under any Applicable
         Bankruptcy Law, or any composition, rearrangement, extension,
         reorganization or other relief of debtors now or hereafter existing is
         requested or consented to by such party; (v) fails to have discharged
         within a period of sixty (60) days any attachment, sequestration or
         similar writ levied upon any property of such party; or (vi) fails to
         pay within thirty (30) days any final money judgment against such
         party.

                 (g)      The liquidation, dissolution, merger or consolidation
         of Borrower or any Guarantor (excluding any merger of any Guarantor
         with and into Borrower).

Nothing contained in this Loan Agreement shall be construed to limit the events
of default enumerated in any of the other Loan Documents and all such events of
default shall be cumulative.

         11.     REMEDIES.  Upon the occurrence of any one or more of the
foregoing Events of Default, (a) the entire unpaid balance of principal of the
Note and all other Indebtedness, together with all accrued but unpaid interest
thereon, and all other Indebtedness shall, at the option of Bank, become
immediately due and payable without further notice, demand, presentation,
notice of dishonor, notice of intent to accelerate, notice of acceleration,
protest or notice of protest of any kind, all of which are expressly waived by
Borrower, and (b) Bank may, at its option, cease further advances under any of
the Note; provided, however, concurrently and automatically with the occurrence
of an Event of Default under subparagraph (f) in the immediately preceding
paragraph (i) further advances under the Note shall cease, and (ii) the Note
and all other Indebtedness shall, without any action by Bank, become due and
payable, without further notice, demand, presentation, notice of dishonor,
notice of acceleration, notice of intent to accelerate, protest or notice of
protest of any kind, all of which are expressly waived by Borrower.  All rights
and remedies of Bank set forth in this Loan Agreement and in any of the other
Loan Documents may also be exercised by Bank, at its option to be





                                       12
   13
exercised in its sole discretion, upon the occurrence of an Event of Default.

         12.     RIGHTS CUMULATIVE.  All rights of Bank under the terms of this
Loan Agreement shall be cumulative of, and in addition to, the rights of Bank
under any and all other agreements between Borrower and Bank (including, but
not limited to, the other Loan Documents), and not in substitution or
diminution of any rights now or hereafter held by Bank under the terms of any
other agreement.

         13.     WAIVER AND AGREEMENT.  Neither the failure nor any delay on
the part of Bank to exercise any right, power or privilege herein or under any
of the other Loan Documents shall operate as a waiver thereof, nor shall any
single or partial exercise of such right, power or privilege preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege.  No waiver of any provision in this Loan Agreement or in any of the
other Loan Documents and no departure by Borrower therefrom shall be effective
unless the same shall be in writing and signed by Bank, and then shall be
effective only in the specific instance and for the purpose for which given and
to the extent specified in such writing.  No modification or amendment to this
Loan Agreement or to any of the other Loan Documents shall be valid or
effective unless the same is signed by the party against whom it is sought to
be enforced.

         14.     BENEFITS.  This Loan Agreement shall be binding upon and inure
to the benefit of Bank and Borrower, and their respective successors and
assigns, provided, however, that Borrower may not, without the prior written
consent of Bank, assign any rights, powers, duties or obligations under this
Loan Agreement or any of the other Loan Documents.

         15.     NOTICES.  All notices, requests, demands or other
communications required or permitted to be given pursuant to this Agreement
shall be in writing and given by (i) personal delivery, (ii) expedited delivery
service with proof of delivery, or (iii) United States mail, postage prepaid,
registered or certified mail, return receipt requested, sent to the intended
addressee at the address set forth on the signature page hereof (if to Bank, to
the attention of the Corporate Banking I Group) and shall be deemed to have
been received either, in the case of expedited delivery service, as of the date
of first attempted delivery at the address and in the manner provided herein,
or in the case of mail, upon deposit in a depository receptacle under the care
and custody of the United States Postal Service.  Either party shall have the
right to change its address for notice hereunder to any other location within
the continental United States by notice to the other party of such new address
at least thirty (30) days prior to the effective date of such new address.





                                       13
   14
         16.     CONSTRUCTION.  This Loan Agreement and the other Loan
Documents have been executed and delivered in the State of Texas, shall be
governed by and construed in accordance with the laws of the State of Texas,
and shall be performable by the parties hereto in Houston, Harris County,
Texas.

         17.     INVALID PROVISIONS.  If any provision of this Loan Agreement
or any of the other Loan Documents is held to be illegal, invalid or
unenforceable under present or future laws, such provision shall be fully
severable and the remaining provisions of this Loan Agreement or any of the
other Loan Documents shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its
severance.

         18.     EXPENSES.  Borrower shall pay all costs and expenses
(including, without limitation, reasonable attorneys' fees) in connection with
(i) the preparation of this Loan Agreement and the other Loan Documents, and
any and all extensions, renewals, amendments, supplements, extensions or
modifications thereof, (ii) any action required in the course of administration
of the indebtedness and obligations evidenced by the Loan Documents, and (iii)
any action in the enforcement of Bank's rights upon the occurrence of Event of
Default.

         19.     ENTIRE AGREEMENT.  This Loan Agreement (together with the
other Loan Documents) contains the entire agreement among the parties regarding
the subject matter hereof and supersedes all prior written and oral agreements
and understandings among the parties hereto regarding same.

         20.  CONFLICTS.  In the event any term or provision hereof is
inconsistent with or conflicts with any provisions of the other Loan Documents,
the terms and provisions contained in this Loan Agreement shall be controlling.

         21.     COUNTERPARTS.  This Loan Agreement may be separately executed
in any number of counterparts, each of which shall be an original, but all of
which, taken together, shall be deemed to constitute one and the same
agreement.

         If the foregoing correctly sets forth our mutual agreement, please so
acknowledge by signing and returning this Loan Agreement to the undersigned.

                                       Very truly yours,
                                       
                                       BANK ONE, TEXAS, N.A.
                                       
                                       
   
                                       By: /s/ JOHN E. ELAM
                                          -------------------------------------
                                       Name:   John E. Elam
                                            -----------------------------------
                                       Title:  Vice President
                                             ----------------------------------
    
                                       
                                       
                                       


                                       14
   15
                                       Bank's Address:
                                       910 Travis
                                       Houston, Texas  777002
                                       Attn:  Corporate Banking I Group
                                       
ACCEPTED AS OF THE DATE                
FIRST WRITTEN ABOVE.                   
                                       
BORROWER:                              
                                       
MITCHAM INDUSTRIES, INC.,              
a Texas corporation                    
                                       
                                       
   
By: /s/ BILLY F. MITCHAM, JR.                                   
   -----------------------------------
Name:   Billy F. Mitcham, Jr.                               
     ---------------------------------     
Title:  President and CEO                               
      --------------------------------
    
                                       
Borrower's Address:                    

P. O. Box 1175
Huntsville, Texas  77342-1175





                                       15

   1
   
                                                                    EXHIBIT 10.5
    

                                PROMISSORY NOTE


15,000,000.00                                                   December 8, 1997

         FOR VALUE RECEIVED, on or before December 8, 1999 ("Maturity Date"),
the undersigned and if more than one, each of them, jointly and severally
(hereinafter referred to as "Borrower"), promises to pay to the order of BANK
ONE, TEXAS, NATIONAL ASSOCIATION ("Bank") at its offices in Houston, Harris
County, Texas, at 910 Travis, Houston, Texas 77002, the principal amount of
FIFTEEN MILLION AND NO/100 DOLLARS ($15,000,000.00) ("Total Principal Amount"),
or such amount less than the Total Principal Amount which is outstanding from
time to time if the total amount outstanding under this Promissory Note
("Note") is less than the Total Principal Amount, together with interest on
such portion of the Total Principal Amount which has been advanced to Borrower
from the date advanced until paid at a fluctuating rate per annum which shall
from day to day be equal to the lesser of (a) the Maximum Rate (as hereinafter
defined), or (b) a rate ("Contract Rate"), calculated on the basis of the
actual days elapsed but computed as if each year consisted of 360 days, equal
to, at Borrower's option, either (A): the sum of (i) the one month London
Interbank Offered Rate as announced on page 5 of the Telerate Screen, or such
other nationally recognized rate quoting service selected by Bank ("LIBOR")
plus (ii) an additional percentage which shall be determined based on the
Borrower's Debt Service Coverage Ratio (as defined in the Loan Agreement) for
the preceding fiscal quarter of Borrower, in accordance with Schedule I
attached hereto and incorporated by reference herein for all purposes (the
"LIBOR Rate"), or (B): the sum of (i) the Bank One Base Rate of Interest ("Base
Rate") as established from time to time by Bank (which may not be the lowest,
best or most favorable rate of interest which Bank may charge on loans to its
customer) plus (ii) an additional percentage which shall be determined based on
the Borrower's Debt Service Coverage Ratio (as defined in the Loan Aer, in
accordance with Schedule I (the "Bank One Rate").

         Borrower shall notify Bank in writing of its choice of either the
LIBOR Rate or the Bank One Rate for the next fiscal quarter of Borrower within
three Business Days of the end of the preceding fiscal quarter; if Borrower
fails to so notify Bank, then the interest rate that applied for the previous
fiscal quarter shall continue to apply.  Each change in the LIBOR Rate or the
Bank One Rate, as applicable, shall become effective without notice to Borrower
on the effective date of each change in the Maximum Rate, LIBOR, or the Base
Rate, as the case may be; provided, however, that if at any time the Contract
Rate shall exceed the Maximum Rate, thereby causing the interest on this Note
to be limited to





PROMISSORY NOTE - PAGE 1
   2
the Maximum Rate, then any subsequent reduction in LIBOR or the Base Rate shall
not reduce the rate of interest on this Note below the Maximum Rate until the
total amount of interest accrued on this Note equals the amount of interest
which would have accrued on this Note if the Contract Rate had at all times
been in effect.

         In addition to the interest due hereunder, Borrower shall pay to Bank,
on the first day of each fiscal quarter of Borrower, a fee equal to 0.25% of
the average daily difference between the Total Principal Amount and the amount
outstanding hereunder calculated for the quarter preceding the date of such fee
payment.

         The principal of and all accrued but unpaid interest on this Note
shall be due and payable as follows:

         (a) interest shall be due and payable monthly as it accrues,
commencing on the 1st day of January, 1998 and continuing on the 1st day of
each successive month thereafter during the term of this Note; and

         (b)  the outstanding principal balance of this Note, together with all
accrued but unpaid interest, shall be due and payable on the Maturity Date.

         To the extent that any interest is not paid on or before the fifth day
after it becomes due and payable, Bank may, at its option, add such accrued
interest to the principal of this Note.  Notwithstanding anything herein to the
contrary, upon an Event of Default (as hereinafter defined) or at maturity
whether by acceleration or otherwise, all principal of this Note shall, at the
option of Bank, bear interest at the Maximum Rate until paid.

         This Note evidences obligations and indebtedness from time to time
owing by Borrower to Bank pursuant to that certain Loan Agreement of even date
herewith by and between Borrower and Bank ("Loan Agreement").

This Note, the Loan Agreement and all other documents evidencing, securing,
governing, guaranteeing and/or pertaining to this Note, including but not
limited to those documents described above, are hereinafter collectively
referred to as the "Loan Documents."  The holder of this Note is entitled to
the benefits and security provided in the Loan Documents.

         Under the Loan Agreement, Borrower may request advances and make
payments hereunder from time to time, provided that it is understood and agreed
that the aggregate principal amount outstanding from time to time hereunder
shall not at any time exceed the Committed Sum (as defined in the Loan
Agreement).  The unpaid balance of this Note shall increase and decrease with
each





PROMISSORY NOTE - PAGE 2
   3
new advance or payment hereunder, as the case may be.  This Note shall not be
deemed terminated or canceled prior to the Maturity Date, although the entire
principal balance hereof may from time to time be paid in full.  Borrower may
borrow, repay and reborrow hereunder.  All regularly scheduled payments of the
indebtedness evidenced by this Note and by any of the other Loan Documents
shall be applied first to any accrued but unpaid interest then due and payable
hereunder or thereunder and then to the principal amount then due and payable.
All non-regularly scheduled payments shall be applied to such indebtedness in
such order and manner as the holder of this Note may from time to time
determine in its sole discretion.  All payments and prepayments of principal of
or interest on this Note shall be made in lawful money of the United States of
America in immediately available funds, at the address of Bank indicated above,
or such other place as the holder of this Note shall designate in writing to
Borrower.  If any payment of principal of or interest on this Note shall become
due on a day which is not a Business Day (as hereinafter defined), such payment
shall be made on the next succeeding Business Day and any such extension of
time shall be included in computing interest in connection with such payment.
As used herein, the term "Business Day" shall mean any day other than a
Saturday, Sunday or any other day on which national banking associations are
authorized to be closed.  The books and records of Bank shall be prima facie
evidence of all outstanding principal of and accrued and unpaid interest on
this Note.

         Borrower agrees that no advances under this Note shall be used for
personal, family or household purposes, and that all advances hereunder shall
be used solely for business, commercial, investment or other similar purposes.

         Borrower agrees that upon the occurrence of any one or more of the
following events of default ("Event of Default"):

                 (a)      failure of Borrower to pay any installment of
         principal of or interest on this Note or on any other indebtedness of
         Borrower to Bank when due; or

                 (b)  the occurrence of any event of default specified in any
         of the other Loan Documents; or

                 (c)  the bankruptcy or insolvency of, the assignment for the
         benefit of creditors by, or the appointment of a receiver for any of
         the property of, or the liquidation, termination, dissolution or death
         or legal incapacity of, any party liable for the payment of this Note,
         whether as maker, endorser, guarantor, surety or otherwise;





PROMISSORY NOTE - PAGE 3
   4
the holder of this Note may, at its option, without further notice or demand,
(i) declare the outstanding principal balance of and accrued but unpaid
interest on this Note at once due and payable, (ii) refuse to advance any
additional amounts under this Note, (iii) pursue any and all other rights,
remedies and recourses available to the holder hereof, including but not
limited to any such rights, remedies or recourses under the Loan Documents, at
law or in equity, or (iv) pursue any combination of the foregoing.

         The failure to exercise the option to accelerate the maturity of this
Note or any other right, remedy or recourse available to the holder hereof upon
the occurrence of an Event of Default hereunder shall not constitute a waiver
of the right of the holder of this Note to exercise the same at that time or at
any subsequent time with respect to such Event of Default or any other Event of
Default.  The rights, remedies and recourses of the holder hereof, as provided
in this Note and in any of the other Loan Documents, shall be cumulative and
concurrent and may be pursued separately, successively or together as often as
occasion therefore shall arise, at the sole discretion of the holder hereof.
The acceptance by the holder hereof of any payment under this Note which is
less than the payment in full of all amounts due and payable at the time of
such payment shall not (i) constitute a waiver of or impair, reduce, release or
extinguish any right, remedy or recourse of the holder hereof, or nullify any
prior exercise of any such right, remedy or recourse, or (ii) impair, reduce,
release or extinguish the obligations of any party liable under any of the Loan
Documents as originally provided herein or therein.

         This Note and all of the other Loan Documents are intended to be
performed in accordance with, and only to the extent permitted by, all
applicable usury laws.  If any provision hereof or of any of the other Loan
Documents or the application thereof to any person or circumstance shall, for
any reason and to any extent, be invalid or unenforceable, neither the
application of such provision to any other person or circumstance nor the
remainder of the instrument in which such provision is contained shall be
affected thereby and shall be enforced to the greatest extent permitted by law.
It is expressly stipulated and agreed to be the intent of the holder hereof to
at all times comply with the usury and other applicable laws now or hereafter
governing the interest payable on the indebtedness evidenced by this Note.  If
the applicable law is ever revised, repealed or judicially interpreted so as to
render usurious any amount called for under this Note or under any of the other
Loan Documents, or contracted for, charged, taken, reserved or received with
respect to the indebtedness evidenced by this Note, or if Bank's exercise of
the option to accelerate the maturity of this Note, or if any prepayment by
Borrower results in Borrower having paid any interest in excess of that
permitted by law, then it is the express intent of Borrower and Bank that all





PROMISSORY NOTE - PAGE 4
   5
excess amounts theretofore collected by Bank be credited on the principal
balance of this Note (or, if this Note and all other indebtedness arising under
or pursuant to the other Loan Documents have been paid in full, refunded to
Borrower), and the provisions of this Note and the other Loan Documents
immediately be deemed reformed and the amounts thereafter collectable hereunder
and thereunder reduced, without the necessity of the execution of any new
document, so as to comply with the then applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder or thereunder.
All sums paid, or agreed to be paid, by Borrower forrance, detention, taking,
charging, receiving or reserving of the  indebtedness of Borrower to Bank under
this Note or arising under or pursuant to the other Loan Documents shall, to
the maximum extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of such indebtedness until
payment in full so that the rate or amount of interest on account of such
indebtedness does not exceed the usury ceiling from time to time in effect and
applicable to such indebtedness for so long as such indebtedness is
outstanding.  To the extent federal law permits Bank to contract for, charge or
receive a greater amount of interest, Bank will rely on federal law instead of
V.T.C.A., Finance Code, Chapter 303, as amended, for the purpose of determining
the Maximum Rate.  Additionally, to the maximum extent permitted by applicable
law now or hereafter in effect, Bank may, at its option and from time to time,
implement any other method of computing the Maximum Rate under such Chapter
303, as amended, or under other applicable law by giving notice, if required,
to Borrower as provided by applicable law now or hereafter in effect.
Notwithstanding anything to the contrary contained herein or in any of the
other Loan Documents, it is not the intention of Bank to accelerate the
maturity of any interest that has not accrued at the time of such acceleration
or to collect unearned interest at the time of such acceleration.

         In no event shall V.T.C.A., Finance Code, Chapter 346 (which regulates
certain revolving loan accounts and revolving tri-party accounts) apply to this
Note.  To the extent that V.T.C.A., Finance Code, Chapter 303, as amended, is
applicable to this Note, the "indicated rate ceiling" specified in such article
is the applicable ceiling; provided that, if any applicable law permits greater
interest, the law permitting the greatest interest shall  apply.

         If this Note is placed in the hands of an attorney for collection, or
is collected in whole or in part by suit or through probate, bankruptcy or
other legal proceedings of any kind, Borrower agrees to pay, in addition to all
other sums payable hereunder, all costs and expenses of collection, including
but not limited to reasonable attorneys' fees.





PROMISSORY NOTE - PAGE 5
   6
         Borrower and any and all endorsers and guarantors of this Note
severally waive presentment for payment, notice of nonpayment, protest, demand,
notice of protest, notice of intent to accelerate, notice of acceleration and
dishonor, diligence in enforcement and indulgences of every kind and without
further notice hereby agree to renewals, extensions, exchanges or releases of
collateral, taking of additional collateral, indulgences or partial payments,
either before or after maturity.

         THIS NOTE HAS BEEN EXECUTED UNDER, AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS, EXCEPT AS SUCH LAWS ARE
PREEMPTED BY APPLICABLE FEDERAL LAWS.


                                                   BORROWER:


                                                   MITCHAM INDUSTRIES, INC.
                                                   a Texas corporation


                                                   By: 
                                                      ---------------------
                                                   Name: 
                                                        -------------------
                                                   Title: 
                                                         ------------------





PROMISSORY NOTE - PAGE 6
   7
                                   Schedule I





=====================================================================================================
      IF DEBT SERVICE COVERAGE RATIO IS LESS THAN:                LIBOR                     BASE RATE
                                                                   PLUS                        PLUS
- -----------------------------------------------------------------------------------------------------
                                                                                      
                          2.25x                                   1.75%                      -0.25%
- -----------------------------------------------------------------------------------------------------
                          2.00x                                   2.00%                      -0.25%
- -----------------------------------------------------------------------------------------------------
                          1.75x                                   2.25%                       0.00%
- -----------------------------------------------------------------------------------------------------
                          1.50x                                   2.50%                       0.25%
- -----------------------------------------------------------------------------------------------------
                          1.25x                                   2.75%                       0.25%
=====================================================================================================







PROMISSORY NOTE - PAGE 7

   1
                                                                   EXHIBIT 23.1

              CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

     We consent to the use of our reports on the consolidated financial 
statements and related financial statement schedule as of January 31, 1996 and
1997 and for each of the years in the three year period ended January 31, 1997,
dated March 12, 1997, in this Registration Statement on Form S-3 and to the
reference to our firm under the heading "Experts."

/s/ HEIN + ASSOCIATES LLP
- ------------------------------------
    HEIN + ASSOCIATES LLP

Houston, Texas
December 16, 1997