Zapata Energy Corporation
TSX VENTURE : ZCO

Zapata Energy Corporation

June 01, 2005 19:32 ET

Zapata Energy Increases Production, Cash Flow in Q1 2005

CALGARY, ALBERTA--(CCNMatthews - June 1, 2005) - Zapata Energy Corporation (TSX VENTURE:ZCO) is pleased to report the following results for the quarter ended March 31, 2005.



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OPERATIONAL & FINANCIAL HIGHLIGHTS
($ thousands except per unit and operational amounts)
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Three Months Ended March 31
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2005 2004(1) % Change
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FINANCIAL
Revenue net of royalties and ARTC $ 12,884 $ 8,975 +44%
Cash Flow from operations 6,119 3,555 +72%
Per Share (basic) 0.76 0.44 +73%
Per Share (diluted) 0.72 0.42 +72%
Net Income 2,086 1,128 +85%
Per Share (basic) 0.26 0.14 +85%
Per Share (diluted) 0.25 0.13 +92%
Capital Expenditures 4,010 4,273 -6%
Bank Debt 26,350 20,000 +32%
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OPERATIONS
Production Sales
Natural Gas (mcf/d) 9,322 8,278 +13%
Oil (bbls/d) 1,490 987 +51%
NGL (bbls/d) 171 149 +15%
Combined (boe/d @ 6 mcf:1 bbl) 3,215 2,516 +28%
Average Pricing
Natural Gas ($/mcf) 6.89 6.68 +3%
Oil ($/bbl) 47.84 39.81 +20%
NGL ($/bbl) 44.52 35.49 +25%
Combined ($/boe) 44.53 39.69 +12%
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(1) Restated - see note 2 to the first quarter financial statements
for 2005


For the twelfth consecutive quarter, Zapata achieved increases from the prior year's production, gross revenue and cash flow from operations. Increased production, strong commodity prices and successful drilling and reactivations all contributed to Zapata's continuing growth.

Zapata participated in drilling 16 (3.03 net) wells in the quarter, resulting in 15 (2.03 net) gas wells and one (one net) oil well. Three wells have been drilled to date in the second quarter resulting in two (two net) gas wells and one (one net) oil well. Zapata is continuing to drill to increase its production with 23 (20.5 net) drilling locations planned for the summer and fall of 2005. Additionally, Zapata has three 3-D seismic programs planned for the summer to maximize potential on three of its four new oil pool discoveries. Zapata expects continuing record cash flows from growth in its production and strong commodity prices.

To maximize shareholder value, Zapata will concentrate on aggressively pursuing its summer drilling program to exploit its undeveloped land base and inventory of drill ready prospects rather than focusing on a sale or other alternatives. Management believes shareholders will receive increased benefit from proving up Zapata's reserves and significant upside potential.

Zapata will hold its annual general and special meeting on Tuesday, June 28, 2005 at the Strand/Tivoli Room of The Metropolitan Centre, 333-4th Avenue, SW, Calgary, Alberta at 3:00 PM.

Zapata's complete first quarter 2005 report, which includes management's discussion and analysis and financial statements, is available on the company's website and at http://www.sedar.com. 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.

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