<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 15. OIL AND GAS OPERATIONS (UNAUDITED)--(CONTINUED)
Effective April 1, 1984, the Company changed from accrual to cash basis
revenue recognition for sales from its Bolivia properties in light of economic
and political conditions in Bolivia. On September 30, 1987, the Company wrote
off its remaining $17.2 million investment in its oil and gas properties in
Bolivia. However, 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 in
fiscal 1994. Additionally, in 1994 Zapata participated in drilling two
exploratory wells in its Bolivian operation. The standardized measure
information below excludes cash flow information relating to the Bolivian
properties prior to 1994.
The net present value of future cash flows, computed as prescribed by SFAS
No. 69, should not be construed as the fair value of Zapata's oil and gas
operations. The computation is based on assumptions that in some cases may not
be realistic and estimates that are subject to substantial uncertainties. Since
the discounted cash flows are based on proved reserves as defined by the SEC,
they are subject to the same uncertainties and limitations inherent in the
reserve estimates, which include among others, no consideration of probable
reserves and stable hydrocarbon prices at year-end levels. Additionally, the
timing of future production and cash flows, given the current state of the U.S.
natural gas market, is subject to significant uncertainty. The use of a 10%
discount factor by all companies does not provide a basis for quantifying
differences in risk with respect to oil and gas operations among different
companies. The computations also ignore the impact future exploration and
development activities may have on profitability.
STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS
RELATING TO PROVED RESERVES
<TABLE>
<CAPTION>
UNITED
STATES BOLIVIA TOTAL
-------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
1994
Estimated future cash flows Revenues from
hydrocarbon sales................................. $ 51,380 $44,473 $ 95,853
Production costs................................. 19,132 12,010 31,142
Development costs................................ 7,899 825 8,724
Dismantlement and abandonment.................... 7,924 7,924
-------- ------- --------
Future net cash flows before income taxes.......... 16,425 31,638 48,063
Estimated income tax payments...................... 941 10,165 11,106
-------- ------- --------
Future net cash flows.............................. 15,484 21,473 36,957
10% discount....................................... 1,570 10,142 11,712
-------- ------- --------
Standardized measure of discounted future net cash
flows............................................. $ 13,914 $11,331 $ 25,245
======== ======= ========
1993
Estimated future cash flows
Revenues from hydrocarbon sales.................. $104,889 $104,889
Production costs................................. 28,399 28,399
Development costs................................ 14,960 14,960
-------- --------
Future net cash flows before income taxes.......... 61,530 61,530
Estimated income tax payments...................... 11,283 11,283
-------- --------
Future net cash flows.............................. 50,247 50,247
10% discount....................................... 12,345 12,345
-------- --------
Standardized measure of discounted future net cash
flows............................................. $ 37,902 $ 37,902
======== ========
</TABLE>
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