Zapata to Acquire Significant Light Oil

Zapata has entered into an agreement to acquire a private oil and gas company for consideration of 0.4 Zapata shares for each PrivateCo-1 share. Total consideration is approximately 16.0 million Zapata shares and the assumption of approximately $11.3 million in net debt at the closing of the Acquisition.

The Acquisition is expected to close on or before July 15, 2010 and is subject to the approval of the shareholders of PrivateCo-1. Holders of approximately 75% of the common shares of PrivateCo-1 have agreed to enter into lock-up agreements with Zapata pursuant to which they have agreed to vote their shares in favour of the Acquisition and the board of directors of PrivateCo-1 has unanimously approved the Acquisition and recommended that the shareholders of PrivateCo-1 vote in favour of the Acquisition. Upon completion of the Acquisition, Zapata expects that one director of PrivateCo-1 will be joining the board of directors of Zapata.

The Agreement, among other things, provides for a mutual non-completion fee of up to $3.5 million in the event the Acquisition is not completed in certain circumstances. Completion of the Acquisition is subject to certain conditions and the receipt of all regulatory approvals, including the approval of the TSX Venture Exchange.

As a result of the Acquisition, Zapata is also pleased to announce an increase to the Company's capital budget and production guidance for 2010.


Through the Acquisition, Zapata will acquire high quality, long life, light oil and gas reserves, which include two high impact light oil core areas in Alberta and one in Southwest Manitoba. The producing properties are greater than 90 percent operated with high working interests, 3D & 2D seismic coverage, control of key producing infrastructure and are associated with nearly 80,000 acres of net undeveloped land.

Zapata has identified more than 125 gross (greater than 100 net) light oil horizontal drilling locations on PrivateCo-1's three core areas, with only 11 locations booked in PrivateCo-1's September 2009 reserves report. Zapata estimates the Total Petroleum Initially In Place(1) ("TPIIP") of these three light oil core areas is more than 190 million barrels (greater than 160 million barrels net) with cumulative oil recovery to date of less than five percent of TPIIP. Furthermore, Zapata sees the potential for increased horizontal well density and waterflooding.