<PAGE>
The following table sets forth certain information with respect to the
developed and undeveloped acreage of the Company as of September 30, 1993:
<TABLE>
<CAPTION>
DEVELOPED(1) UNDEVELOPED(2) TOTAL
--------------------- -------------------- ---------------------
GROSS(3) NET(4) GROSS(3) NET(4) GROSS(3) NET(4)
---------- --------- --------- -------- ------------ -------
<S> <C> <C> <C> <C> <C> <C>
ACREAGE
United States
Offshore.............. 7,460 4,109 38,115 19,051 45,575 23,160
Foreign
Bolivia............... 5,120 1,280 1,262,560 337,804 1,267,680 339,084
------ ----- --------- ------- --------- -------
Total................. 12,580 5,389 1,300,675 356,855 1,313,255 362,244
====== ===== ========= ======= ========= =======
</TABLE>
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(1) Developed acreage is acreage spaced or assignable to productive wells.
(2) Undeveloped acreage is acreage on which wells have not been drilled
or completed to a point that would permit the production of commercial
quantities of oil and gas, regardless of whether such acreage contains
proved reserves. All of the Company's undeveloped acreage is held
under leases which are currently held by production.
(3) A "gross acre" is an acre in which a working interest is owned. The
number of gross acres represents the sum of acres in which a working
interest is owned.
(4) A "net acre" is deemed to exist when the sum of the fractional working
interests in gross acres equals one. The number of net acres is the sum of
the fractional working interests in gross acres expressed in whole numbers
or fractions thereof.
Drilling Activity. Other than the $12.2 million workover and recompletion
program with respect to the Company's Wisdom gas field, the Company did not
participate in any domestic exploratory or development drilling during the years
ended September 30, 1991, 1992 and 1993. However, since September 30, 1993, the
Company has participated in drilling an exploratory well in its Bolivian
operation which has achieved total depth. Testing and completion operations are
currently underway.
Bolivian Joint Venture. In 1987, the Company wrote off its remaining
investment in its oil and gas properties in Bolivia (held by a joint venture in
which the Company has a 25% interest), and all cash proceeds received by the
Company thereafter have been recognized as revenues. The write-off resulted
from the failure of the Bolivian state-owned petroleum company to honor its
commitment to pay the joint venture for gas deliveries on a timely basis and to
remit past-due payments on an agreed schedule. The Bolivian properties continue
to be operated by the joint venture, which began receiving payments with respect
to current and past-due invoices on June 30, 1991. The Company received cash
payments with respect to its 25% interest in the joint venture of $2.3 million
during the quarter ended September 30, 1991, $10.1 million during fiscal 1992
and $3.2 million during fiscal 1993. These amounts, which were recorded as
revenues in fiscal 1991, 1992 and 1993, respectively, include the collection of
past-due amounts and may not be indicative of future cash flows from the
Company's Bolivian interest. Based on the Bolivian oil and gas company's
performance under renegotiated contracts and improved operating conditions,
Zapata returned to the accrual method of accounting for its Bolivian oil and gas
operations beginning in October 1993; outstanding receivables related to
production from prior months will continue to be recognized as revenue when
received.
The Company's inability to obtain full payment for gas produced in Bolivia
prior to 1987 led it to file an insurance claim in 1987. The claims and related
litigation were settled by the payment to the Company of $12.8 million in cash,
net of expenses, in March 1991. The Company's interest in the joint venture and
its right to recover amounts due for past and current production in Bolivia were
not affected by the settlement.
Marketing. The revenues generated by the Company's exploration and
production operations are highly dependent upon the prices of, and demand for,
natural gas, and, to a lesser extent, oil. For the last several years,
prices
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