Zapata Energy Corporation
TSX VENTURE : ZCO

Zapata Energy Corporation

May 26, 2006 12:55 ET

Zapata Cash Flow $5.7 Million in First Quarter 2006

CALGARY, ALBERTA--(CCNMatthews - May 26, 2006) - Zapata Energy Corporation (TSX VENTURE:ZCO) announced its financial and operating results today for the three-month period ended March 31, 2006.



------------------------------------------------------------------------
------------------------------------------------------------------------
OPERATIONAL AND FINANCIAL HIGHLIGHTS
------------------------------------------------------------------------
Three months ended March 31
------------------------------------------------------------------------
(000s unless otherwise noted) 2006 2005 Change
------------------------------------------------------------------------
FINANCIAL
Gross revenue 13,072 12,884 1%
Cash flow from operations 5,679 6,119 (7%)
Per share (basic) 0.69 0.76 (9%)
Per share (diluted) 0.67 0.72 (8%)
Net income 1,104 2,086 (47%)
Per share (basic) 0.13 0.26 (48%)
Per share (diluted) 0.13 0.25 (47%)
Capital expenditures 11,769 4,010 193%
Bank debt 27,150 26,350 3%
------------------------------------------------------------------------
OPERATIONS
Production sales
Natural gas (mcf/d) 8,931 9,322 (4%)
Oil (bbls/d) 1,528 1,490 3%
NGL (bbls/d) 142 171 (17%)
Total (boe/d @ 6 mcf: 1 bbl) 3,159 3,215 (2%)
Average pricing
Natural gas ($/mcf) 7.86 6.89 14%
Oil ($/bbl) 45.62 47.84 (5%)
NGL ($/bbl) 37.47 44.52 (16%)
Combined ($/boe) 45.98 44.53 3%
Netbacks
Natural gas ($/mcf) 3.98 3.61 10%
Oil ($/bbl) 22.57 24.72 (9%)
NGL ($/bbl) 23.00 32.70 (30%)
Combined ($/boe) 23.22 23.66 (2%)
------------------------------------------------------------------------
------------------------------------------------------------------------


Highlights of the first quarter:

- Reached $13.1 million in gross sales revenue

- Earned net income of $1.1 million

- Invested $11.8 million into its capital program

- Achieved average production sales of 3,159 barrels of oil equivalent per day (boe/d)

- Drilled 17 (11.9 net) wells, resulting in nine (8.9 net) oil wells, seven (2.6 net) gas wells and one (0.4 net) abandonment

Outlook

Zapata anticipates a strong second quarter as the benefits of its active capital program at the beginning of 2006 begin to be reflected in the results. Increased production sales and high oil prices are expected to result in growth for Zapata in all key metrics. The Corporation is working to counter the effects of reduced natural gas prices through its balanced production mix of roughly 50 percent oil and 50 percent gas and its current emphasis on drilling for oil. Zapata anticipates increased cash flow in the second quarter based on current commodity prices and production levels averaging 3,400 boe/d.

Shareholders and future shareholders are invited to attend the Corporation's annual and special meeting on June 8, 2006 at 3 p.m. at the Petroleum Club - Devonian Room, 319-5th Avenue SW Calgary, Alberta.

Zapata is a junior oil and gas production company operating in western Canada and trades on the TSX Venture Exchange under the symbol "ZCO".

This press release may include forward-looking statements which are statements other than of historical fact, such as information regarding drilling potential and production forecasts. Factors that could cause actual results to differ materially from our expectations include exploration and development risks, commodity prices and operating hazards. A barrel of oil equivalent (boe), derived by converting gas to oil in the ratio of six thousand cubic feet of gas to one barrel of oil, may be misleading, particularly if used in isolation. A boe conversion is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

The TSX Venture Exchange has neither approved nor disapproved of the information contained herein.

Contact Information