Harbinger Group Inc.
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SEC Filings

10-K
HRG GROUP, INC. filed this Form 10-K on 12/21/1995
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                               ZAPATA CORPORATION
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
NOTE 15. OIL AND GAS OPERATIONS (UNAUDITED)--(CONTINUED)
 
    3. The resulting future gross cash inflows have been reduced by the
  estimated future costs to develop and produce the proved reserves at year-
  end cost levels.
 
    4. Income tax payments have been computed at statutory rates based on the
  net future cash inflows, the remaining tax basis in oil and gas properties
  and permanent differences between book and tax income and tax credits or
  other tax benefits available related to the oil and gas operations.
 
    5. The resulting after-tax future net cash flows are discounted to
  present value amounts by applying a 10% annual discount factor.
 
  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. 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. In 1994 Zapata participated in
drilling two exploratory wells in its Bolivian operation. In 1995, Zapata
participated in drilling an additional exploratory well. 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. 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.
 
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