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TEM 2.        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS



LIQUIDITY AND CAPITAL RESOURCES
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     At June 30, 1994, Zapata's financial condition remained stronger than that
of any time in recent history.  Long-term debt of $70.3 million compares very
favorably to working capital of $65.8 million and stockholders' investment of
$183.5 million.  Additionally, the Company owns approximately 673,000 shares of
Tidewater Inc. ("Tidewater") common stock.

     In November 1993, Zapata purchased the natural gas compression business of
Energy Industries, Inc. and certain other affiliated companies as well as
certain real estate used by the business (collectively, "Energy Industries").
Energy Industries is engaged in the business of renting, fabricating, selling,
installing and servicing natural gas compressor packages.  Total consideration
paid for the purchase and for a related noncompetition agreement (collectively,
the "Energy Industries Acquisition") was $90.2 million.  The purchase price
consisted of $74.5 million and 2.7 million shares of the Company's common stock
valued at $5.80 per share, which approximated the average trading price prior to
closing of the acquisition (number of shares and per share value have been
adjusted to reflect the May 1994 one-for-five reverse stock split of Zapata's
outstanding common stock).

     To fund the cash portion of the purchase price, Zapata used the proceeds
from the June 1993 sale of 3.5 million shares of its Tidewater common stock.  In
November 1993, Zapata sold an additional 3.75 million shares of its Tidewater
common stock in an underwritten public offering for a net price of $20.75 per
share or $77.8 million.  In December 1993, most of the proceeds from this sale
were used to prepay $68.5 million of the Company's 13% senior indebtedness owed
to Norex Drilling Ltd., along with accrued interest, and to pay a negotiated
prepayment premium of $3.5 million.  In March 1994, Zapata sold 375,175
additional shares of Tidewater stock for a net price of $21.34 per share
generating $8.0 million.

     As of June 30, 1994, the Company's weighted-average interest rate had been
reduced to 9.9% as a result of the Norex debt prepayment.  Additionally, a
portion of such interest is deferred and added to principal in accordance with
certain loan provisions.  Mandatory principal payments for the next twelve
months total $3.0 million; no significant amount of debt matures prior to fiscal
1996.  Depending upon certain conditions, most of the principal payments due in
1996 may be either converted into shares of Zapata common stock or exchanged for
shares of Zapata's Tidewater common stock as provided for in the Norex loan
agreements.

     While the Company considers its current liquidity position to be adequate,
it has entered into discussions with several financial institutions with the
intent of establishing committed lines of credit to fund future growth.
Following the acquisition of Energy Industries, Zapata believes that its cash
flow from operations will be sufficient to meet operating needs and its
financial commitments.  In connection with the December debt prepayment, the
Norex debt agreement was amended to remove or lessen various restrictions on the
Company.

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