<PAGE>
As a result of Zapata's decision to sell 3.5 million shares of its Tidewater
common stock, Zapata changed the method of accounting for its investment in
Tidewater from the equity to the cost method of accounting, effective January
1, 1993. Consequently, Zapata's equity interest in Tidewater's results has not
been included as equity income since December 31, 1992. Instead, Tidewater's
dividends to Zapata have been included in other income when declared.
During 1993, revenues and expenses were significantly higher than those
reported for the corresponding 1992 period. The increase resulted from the
inclusion of the activities of Cimarron which was acquired during the first
quarter of fiscal 1993. Cimarron's natural gas liquids trading business
typically generates high revenues, high expenses and low margins. Revenues of
$206.5 million for fiscal 1993 (including $186.3 million in revenues from
Cimarron) were significantly higher than the $30.1 million of revenues reported
for fiscal 1992.
Natural Gas Services Operations--Compression
In November 1993, Zapata purchased Energy Industries, a participant in all
segments of the natural gas compression industry. Additionally, in April 1994
Energy Industries acquired 41 additional compressors for $2.0 million. Energy
Industries operates one of the ten largest rental fleets of natural gas
compressor packages in the United States. Its compressor fleet is located in
Texas, Louisiana, Arkansas, Oklahoma and New Mexico, as well as offshore in the
Gulf of Mexico.
The major segments of Energy Industries' natural gas compression revenues and
operating results for the eleven-month period ended September 30, 1994, in
thousands, are identified below.
<TABLE>
<CAPTION>
ELEVEN MONTHS
ENDED SEPTEMBER
30, 1994
------------------
OPERATING
REVENUES RESULTS
-------- ---------
<S> <C> <C>
Compressor Rental...................................... $16,252 $4,866
Fabrication and Sales.................................. 27,560 5,384
Parts and Service ..................................... 19,608 3,958
Other.................................................. 9,102 1,492
Selling and Administrative............................. -- (7,730)
------- ------
$72,522 $7,970
======= ======
</TABLE>
Natural gas compressor package rental utilization is affected by the number
and age of producing oil and gas wells, the volume of natural gas consumed and
natural gas prices. Rental rates are determined by the demand for compressor
packages and vary by size and horsepower of a compressor package. Utilization
of the Company's rental units has improved during fiscal 1994 to a level that
now exceeds the reported industry average due primarily to a greater emphasis
being placed on rental operations and to the changes in the size of the
compressor packages in the rental fleet. Energy Industries' utilization, rental
rates and fleet size as of September 30, 1994 are set forth in the following
table.
<TABLE>
<CAPTION>
SEPTEMBER 30,
1994
-------------
<S> <C>
FLEET UTILIZATION:
Horsepower................................................ 82.6%
MONTHLY RENTAL RATE, BASED ON:
Horsepower................................................ $16.61
FLEET SIZE:
Number of units........................................... 706
Horsepower................................................ 113,786
</TABLE>
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