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     Net cash used in operating activities during the first nine months of
fiscal 1994 totalled $2.9 million as compared to $11.8 million used in the
corresponding period in fiscal 1993.  The lower use of cash in 1994 was
attributable to the positive contribution from the Company's compression
operations, reduced interest expense and lower fees associated with Zapata's
senior debt.    During the third quarter, cash and restricted cash balances
declined by $16.4 million as a result of an increase in non-cash working capital
and capital expenditures.

     Due to the significant transactions which occurred during the first nine
months of fiscal years 1993 and 1994, a more meaningful cash flow comparison can
be made if investing activities are combined with financing activities.  On a
combined basis, these activities used $603,000 during the 1994 period and
generated $471,000 during the 1993 period.  This difference can be attributed to
increased capital expenditures and to the redemption of preferred stock.
 
     On April 27, 1994, Zapata's stockholders approved a one-for-five reverse
stock split of the Company's outstanding common stock effective May 3, 1994 that
reduced the number of common shares outstanding from approximately 158.3 million
to approximately 31.7 million.  The number of authorized shares remained at
165.0 million and par value of the common stock was unchanged.  All references
to earnings per share and average number of shares outstanding have been
restated to reflect the reverse stock split.  Additionally Zapata's Board of
Directors declared a common stock dividend of $0.035 per share totalling
approximately $1.1 million to be paid in July to stockholders of record on June
30, 1994.

     As of  June 30, 1994, Zapata redeemed one-half of the approximately 45,000
outstanding shares of the Company's $6 Cumulative Preferred Stock (Preferred
Stock) at $100 per share.  The Company presently intends to redeem the balance
of its outstanding Preferred Stock in 1995.  Under terms of the Preferred Stock,
Zapata can redeem a maximum of 22,500 shares of the stock in a calendar year.

     In July 1994 Zapata announced that it will separate its marine protein
operations from its energy-related businesses.  Alternatives for a sale of the
marine protein operations or a spin-off of the business to the stockholders of
Zapata are being considered.  The Company's Board of Directors believes that the
interest of Zapata's stockholders would best be served by completely separating
the two businesses.

     In the first quarter of fiscal 1994, Zapata was required to adopt Statement
of Financial Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income
Taxes."  The adoption of SFAS 109 changed Zapata's method of accounting for
income taxes from the deferred method to an asset and liability approach.  The
impact of  adopting SFAS 109 was to give recognition to previously generated tax
credit carryforward items by recording a net deferred tax asset of $11.6 million
and increasing capital in excess of par value by $15.3 million.

RESULTS OF OPERATIONS
- - ---------------------

     The Company's net loss of $9.6 million for the third quarter of fiscal 1994
compared unfavorably to the net income of $10.5 million for the same period in
fiscal 1993.  The current quarter loss was attributable to an $18.8 million
pretax write-down of the Company's oil and gas properties in the Gulf of Mexico
that was required as a result of low gas prices and a revision in estimated
future costs.  The 1993 period benefitted from a $32.9 million pretax gain from
the sale of 3.5 million shares of Tidewater common stock.
 

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