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The Board of Directors
Zapata Corporation
September 20, 1995
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Schroder Wertheim, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, secondary distributions of
listed and unlisted securities, private placements and valuations for estate,
corporate and other purposes. Schroder Wertheim is a full service securities
firm and in the course of our normal trading activities we may from time to time
effect transactions and hold positions in securities of Zapata and Enterra.
Schroder Wertheim acted as financial advisor to Zapata regarding the Company's
negotiations with Enterra and will receive a fee which is contingent upon
consummation of the Transaction. Schroder Wertheim rendered investment banking
services to Zapata in another transaction for which the firm received a
customary fee and has also been engaged as Zapata's financial advisor to assist
in the potential divestiture of Zapata's wholly owned subsidiary, Cimaron Gas
Holding Company, and its subsidiaries.
In connection with the Opinion set forth herein, we have, among other things:
(i) reviewed the Draft Purchase Agreement and the Glazer Letter;
(ii) reviewed the unaudited financial statements of EI for the (i) twelve
months ended December 31, 1992, (ii) ten months ended October 31, 1993,
(iii) eleven months ended September 30, 1994, (iv) eight months ended May
31, 1995, (v) eleven months ended August 31, 1995, all of which were
prepared by Zapata management;
(iii) reviewed the pro forma unaudited financial statements of EI for the (i)
twelve months ended October 31, 1993, (ii) twelve months ended September
30, 1994, (iii) eight months ended May 31, 1994, and (iv) eleven months
ended August 31, 1994, all of which were prepared by Zapata management;
(iv) reviewed and discussed, with the management of Zapata and EI, certain
financial information prepared by management, including the historical
pro forma financial results referred to above, and EI management's
projections for future periods, as well as the current financial
condition and business prospects of EI;
(v) compared certain financial data for EI under the proposed terms of the
Transaction with that of certain publicly traded companies which we
deemed to be reasonably comparable to EI;
(vi) compared the financial terms, to the extent publicly available, of
certain recent acquisition transactions which we deemed to be reasonably
comparable to the proposed financial terms of the Transaction;
(vii) actively solicited the interest of potential buyers, held discussions,
both in person and via telephone, with potential buyers regarding their
interest in acquiring EI, and reviewed written acquisition proposals
relating to EI;
(viii) visited EI's facilities in Corpus Christi, Texas; and
(ix) performed such other financial studies, analyses, inquiries and
investigations as we deemed appropriate.
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