Zapata Energy Corporation

Zapata Energy Corporation

November 18, 2009 09:00 ET

Zapata Energy Corporation: Increasing Cash Flows and Profit Mark Third Quarter

CALGARY, ALBERTA--(Marketwire - Nov. 18, 2009) - Zapata Energy Corporation (TSX VENTURE:ZCO) is pleased to provide a third quarter financial update.

Zapata recorded its third consecutive quarterly increase in cash flow from operations achieving $4.8 million in cash flow ($19.2 million annualized - $1.15 per share basic), 23% higher than the $3.9 million recorded in the second quarter. This strong performance was due to the Corporation's solid oil production base and improving oil prices.

These same drivers resulted in net income for the third quarter of $0.8 million.

Overall production was 2,478 boe/d (53% oil). To improve margins approximately 300 boe/d of gas is currently shut-in which will be brought back on when gas prices warrant.

Meanwhile, Zapata is focused on its oil resource program with the strong cash flow funding its drilling and exploration programs. All ten wells of the previously announced program have been drilled with 9 completed for oil and one abandonment. Four of the new wells were on production in October, producing at a combined rate between 200 and 230 bbl/d. The remaining five wells are being equipped and tied in. This process has been delayed by the recent temporary cessation of license granting by the ERCB. With the success of the program, the low drilling costs and rig availability, an additional 5 wells are being planned for drilling before year end.

During the third quarter the company applied $2.8 million to reducing net debt.

The final phase of the Corporation's $4.0 million waterflood project was fully implemented in late September. To date, the flood is responding positively with noticeable production increases.

Zapata's third quarter financial statements and MD&A will be released by November 22, 2009.

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 term "cash flow from operations" which is expressed before changes in non-cash working capital, is used by the Corporation to analyze operating performance, leverage and liquidity. This term does not have any standardized meaning prescribed by GAAP and therefore might not be comparable with the calculation of a similar measure for other companies. The reconciliation between net earnings and cash flow from operations can be found in the consolidated statements of cash flows in the consolidated financial statements.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. The TSX Venture Exchange has neither approved nor disapproved of the information contained herein.

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