<PAGE>
Reflecting the effects of generally lower natural gas prices, Energy
Industries' compressor rental rates and used equipment sales were negatively
impacted during the second quarter of fiscal 1995. As a result, Energy
Industries' operating income during the second quarter of fiscal 1995 compared
unfavorably to the second quarter fiscal 1994.
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 that 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 (collectively, "Cimarron"), which were
acquired early in fiscal 1993. 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 three- and six-month periods
ended March 31, 1995 and 1994 are presented in the following table by major
category, in thousands.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
-----------------------------------------------
1995 1994 1995 1994
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues
Gathering & Processing $ 4,284 $ 5,123 $ 8,589 $11,203
NGL Marketing 16,005 29,905 36,731 67,296
------- ------- ------- -------
$20,289 $35,028 $45,320 $78,499
======= ======= ======= =======
Operating Results
Gathering & Processing $ 68 $ (246) $ 155 $ 312
NGL Marketing (30) 14 28 549
Selling & Administrative (311) (552) (626) (1,084)
------- ------- ------- -------
$ (273) $ (784) $ (443) $ (223)
======= ======= ======= =======
</TABLE>
For the second quarter of fiscal 1995, gathering and processing revenues
were lower than the prior year as a result of the negative impact of
significantly lower natural gas prices, while operating results improved,
reflecting increased processing margins. However, marketing revenues and
operating income declined in fiscal 1995 as compared to 1994, reflecting the
Company's decision to reduce its natural gas trading activities.
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