<PAGE>
Reflecting the effects of the provision for asset impairment and the lower
fish catch, year-to-date fiscal 1995 revenues of $61.3 million and operating
loss of $8.6 million compared unfavorably to fiscal 1994 revenues of $62.3
million and operating income of $6.0 million. Fiscal 1995 sales volume of fish
oil was 6% higher than the fiscal 1994 sales volume while fiscal 1995 fish
meal sales volume declined 3% as compared to fiscal 1994. Year-to-date, fiscal
1995 fish oil prices have averaged $301 per ton versus $317 per ton in fiscal
1994. Likewise, fiscal 1995 fish meal prices have averaged $347 per ton versus
$353 per ton in fiscal 1994.
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-month and nine-month periods
ended June 30, 1995 and 1994 are presented in the following table by major
category, in thousands.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
-------------------- -------------------
1995 1994 1995 1994
--------- --------- -------- ---------
<S> <C> <C> <C> <C>
REVENUES
Gathering & Processing.............. $ 4,420 $ 7,255 $ 14,010 $ 18,458
NGL Marketing....................... 8,089 34,702 43,819 101,998
--------- --------- -------- ---------
$ 12,509 $ 41,957 $ 57,829 $ 120,456
========= ========= ======== =========
OPERATING RESULTS
Gathering & Processing.............. $ 203 $ (164) $ 357 $ 148
NGL Marketing....................... 35 147 63 696
Selling & Administrative............ (277) (456) (902) (1,540)
--------- --------- -------- ---------
$ (39) $ (473) $ (482) $ (696)
========= ========= ======== =========
</TABLE>
For the third quarter of fiscal 1995, gathering and processing revenues were
lower than the prior year as a result of the negative impact of lower natural
gas prices, while operating results improved, reflecting increased processing
margins. However, marketing revenues and operating income have declined in
fiscal 1995 as compared to 1994, due to the Company's decision to reduce its
natural gas trading activities.
A comparison of average daily volumes of gas, measured in millions of cubic
feet, gathered and processed during the three-month and nine-month periods
ended June 30, 1995 and 1994 is shown below.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
------------------- -----------------
AVERAGE DAILY VOLUMES
(MMCF) 1995 1994 1995 1994
--------------------- --------- --------- -------- --------
<S> <C> <C> <C> <C>
Gathering................................. 57.0 47.7 53.5 44.9
Processing................................ 26.5 25.0 26.6 21.9
</TABLE>
In April 1995, Zapata announced that the Company was considering the sale of
its natural gas gathering and processing 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.
Oil and Gas--Revenues of $2.5 million and operating income of $310,000 for
the third quarter of fiscal 1995 compared favorably to the corresponding
fiscal 1994 period's revenues of $3.0 million and operating loss of $18.7
million. The fiscal 1994 period loss included an $18.8 million property
valuation provision. Although
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