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tem 2.              MANAGEMENT'S DISCUSSION AND ANALYSIS
               OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

BUSINESS

     In April 1995, Zapata announced that the Company was considering the sale 
of its two natural gas services businesses: the natural gas compression 
operation and the natural gas gathering and processing operation. The decision 
to consider exiting the energy industry was based on the belief that businesses 
outside the energy industry may provide better opportunities for the Company to
pursue. The decision to consider redirecting operations away from the energy 
industry does not imply a decision to liquidate Zapata. The Company is 
evaluating opportunities to reinvest the stockholders' capital.

     In August 1995, Zapata announced that it had acquired 31% of the 
outstanding common stock of Envirodyne Industries, Inc. ("Envirodyne"), a 
manufacturer of food packaging and food service supplies for $18.8 million. This
acquisition is the first major step in the transformation of Zapata away from
the energy business and into food-related businesses. Zapata is evaluating
acquiring additional shares or proposing a merger with, or acquisition of,
Envirodyne in the future. Zapata is also looking at other opportunities in food-
related areas.

     In June 1995, Zapata announced that it had entered into an agreement to 
sell the assets of its natural gas compression division for $130 million. The 
agreement is subject to the signing of a definitive agreement and certain 
governmental approvals. The Company is currently negotiating the terms of the 
agreement, however, no assurances can be made that this transaction will be
completed. The Company's consolidated financial statements have been restated to
reflect the natural gas compression operations as a discontinued operation. Due
to the preliminary nature of the decision process regarding the possible sale of
the natural gas gathering and processing operation, the financial statement
impact of the ultimate disposition of this business cannot be determined at this
time.

     Zapata has decided to retain the marine protein operations which had 
previously been reported as a discontinued operation. In April 1995, the Company
announced the cancellation of the sale of the marine protein division. Zapata 
had previously announced that an agreement to sell its marine protein operations
had been reached. However, the acquisition group failed to close the 
transaction. The Company has concluded that the value of the marine protein 
operations could be more effectively realized by retaining these operations as 
part of Zapata's ongoing operations, rather than pursuing another sale 
transaction. As a result, marine protein's net assets and results of operations 
for all periods have been reclassified from discontinued operations to 
continuing operations.

     In July 1995, Zapata completed the sale of its remaining U.S. offshore oil 
and gas properties. The Company received cash, a production payment entitling 
Zapata to a share of future revenues derived from the properties and other 
contract considerations. The Company currently plans to retain its Bolivian oil 
and gas operations.

LIQUIDITY AND CAPITAL RESOURCES

     At June 30, 1995, Zapata's long-term debt of $34.4 million compared
favorably to working capital of $100.6 million and stockholders' equity of
$143.2 million. In April 1995, Zapata used the proceeds of $12.7 million from
the sale of its remaining 673,077 shares of Tidewater Inc.

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