<PAGE>
Although utilization of the Company's compressor packages was higher
at December 31, 1994 as compared to that at December 31, 1993, compressor
utilization and rental rates have both been negatively impacted during the
current fiscal quarter by the effects of low natural gas prices.
In addition to operating a fleet of natural gas compressor packages
for rental purposes, Energy Industries designs, fabricates and sells natural gas
compressor packages to customer specifications. Energy Industries sells
compressor packages to natural gas producers, gatherers and transmission
companies which expect the long life of their associated reserves or pipeline to
justify the capital cost of acquiring, rather than renting, a natural gas
compressor package. Most of Energy Industries' natural gas compressor package
sales are for larger, high horsepower packages.
NATURAL GAS GATHERING, PROCESSING AND MARKETING - Zapata's natural gas
- -----------------------------------------------
gathering, processing and marketing operations are conducted through Cimarron
Gas Holding Company and its subsidiaries. Cimarron was acquired early in fiscal
1993 to serve as the vehicle for the Company's expansion into the natural gas
services market. As a division of Zapata, Cimarron's operations involve two
major categories of business activities: the gathering and processing of natural
gas and its constituent products and the marketing and trading of natural gas
liquids (NGL's).
Revenues and operating results for the first quarters of fiscal 1995
and 1994 are presented in the following table by major category, in thousands.
<TABLE>
<CAPTION>
Revenues Operating Results
------------------ --------------------
1995 1994 1995 1994
--------- ---------- ------- ----------
<S> <C> <C> <C> <C>
Gathering & Processing $ 4,305 $ 6,080 $ 36 $ 558
NGL Marketing 20,726 37,391 16 535
Selling & Administrative --- --- (222) (532)
--------- ---------- ------- ----------
$25,031 $43,471 $(170) $ 561
========= ========== ======= ==========
</TABLE>
For the first quarter of fiscal 1995, gathering and processing
revenues and operating income were lower than the prior-year results as the
negative impact of significantly lower natural gas prices more than offset
improved processing margins. Marketing revenues and operating income also
declined in the 1995 period reflecting the Company's decision to reduce its
natural gas trading activities.
Gas gathering is the collection of natural gas from various individual
wells, combining it into a single gas stream and delivering it into a major
transmission line for transportation to market. A gathering system sometimes
includes an associated processing plant for the removal of gas liquids,
depending on the content of liquefiable hydrocarbons in the gas streams and the
capabilities of transmission lines.
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