Harbinger Group Inc.
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HRG GROUP, INC. filed this Form POS AM on 02/22/1994
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     There are numerous uncertainties inherent in estimating quantities of
proved reserves, including many factors beyond the control of the producer.  The
reserve data set forth herein represent only estimates.  Reserve engineering is
a subjective process of estimating underground accumulations of crude oil and
natural gas that cannot be measured in an exact manner, and the accuracy of any
reserve estimate is a function of the quality of available data and of
engineering and geological interpretation and judgment.  As a result, estimates
of different engineers often vary.  In addition, results of drilling, testing
and production subsequent to the date of an estimate may justify revision of
such estimate.  Accordingly, reserve estimates are often different from the
quantities of crude oil and natural gas that are ultimately recovered.  The
meaningfulness of such estimates is highly dependent upon the accuracy of the
assumptions upon which they were based.     
     Significant Property.  At September 30, 1993, the Company owned interests
in six separate producing properties, all of which were located in federal
waters in the Gulf of Mexico offshore Texas and Louisiana.  The Company owns
100% of the working interest in a single property, the Wisdom gas field,
consisting of three blocks on the Outer Continental Shelf, East Breaks 109, 110
and 154, located approximately 100 miles south of Galveston, Texas.  This
property includes a production platform from which nine development wells have
been drilled.  The development was completed during fiscal 1988.  During fiscal
1993, the Wisdom gas field provided approximately 75% of the Company's U.S. gas
production and as of September 30, 1993, the Wisdom field represented
approximately 83% of the Company's remaining proved U.S. gas reserves.  None of
the other five properties individually accounted for more than 10% of the
Company's total proved reserves as of September 30, 1993.     
     In May 1992, the Company completed a $12.2 million workover and
recompletion program on its Wisdom natural gas field, which included the
workover or recompletion of five wells on the Company's TEQUILA production
platform, located on the East Breaks 110 block.  While the field's natural
decline in deliverability continues, the program temporarily increased the
production capability of the property.     
     In April 1993, one of the wells in the Wisdom gas field was shut-in when it
started producing sand.  Prior to the failure, this well was capable of
producing 6.5 MMcf per day.  After some minor repairs, the well was temporarily
returned to production at a significantly reduced level.  Indications are that
the sand production was due to a mechanical failure in the well and that a
workover/recompletion of the well will be required before production can be
further restored.  Efforts to restore production from this well will be
influenced by the evaluation process regarding the well failure discussed 
     In early September 1993, an additional well in the Wisdom gas field ceased
production as a result of an influx of sand and water.  Immediately prior to the
time the well ceased producing, this well was capable of producing approximately
5.5 MMcf per day.  After some minor repairs, the well was temporarily returned
to production at a significantly reduced level. While the ultimate cause of the
influx of sand and water is not known at this time, indications suggest that a
mechanical failure was the cause and that the production should be able to be
restored.  The Company currently estimates that a workover/recompletion of this
well will cost approximately $2.5 million.  Efforts to restore production
commenced in February 1994 and may take up to two months to complete.  The
workover/recompletion of the well had been delayed because of the lack of
workover rig availability.  Based upon the results of the initial efforts, the
Company will consider whether to pursue the systematic workover/recompletion of
additional wells in the Wisdom gas field.  The Company currently estimates that
each additional workover/recompletion will cost approximately $2.5 million.     
     Until such time that repairs to the above wells or certain other non-
producing wells in the Wisdom gas field can be effected and production restored,
revenues from domestic oil and gas operations will be based on significantly
lower production quantities than in prior years.  In December 1993, the Wisdom
gas field was producing a total of approximately 3.0 MMcf per day.  Zapata's
domestic natural gas production for the first three months of fiscal 1994 was
one-third of the fiscal 1993 periods's level of production due to the production
difficulties at the Wisdom gas field.  No assurances can be given that these
well failures will be able to be repaired or that the cause or causes of the
failures will not also affect additional wells in the Company's Wisdom gas


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