The company traces its origins to Zapata Oil, founded in 1953 by future-U.S. President George H. W. Bush, along with his business partners John Overbey, Hugh Liedtke, Bill Liedtke, and Thomas J. Devine. Overbey was a ‘landman’, skilled in scouting oil fields and obtaining drilling rights cheaply. Bush and Thomas J. Devine were oil-wildcatting associates. Their joint activities culminated in the establishment of Zapata Oil. The initial $1 million investment for Zapata was provided by the Liedtke brothers and their circle of investors, by Bush's father Prescott Bush and his maternal grandfather George Herbert Walker, and their family's circle of friends. Hugh Liedtke was named president, Bush was vice president; Overbey soon left.
According to a CIA internal memo dated November 29, 1975, Zapata Petroleum began in 1953 through Bush's joint efforts with Thomas J. Devine, a CIA staffer who had resigned his agency position that same year to go into private business, but who continued to work for the CIA under commercial cover. Devine would later accompany Bush to Vietnam in late 1967 as a "cleared and witting commercial asset" of the agency, acted as his informal foreign affairs advisor, and had a close relationship with him through 1975.
In 1954, Zapata Off-Shore Company was formed as a subsidiary of Zapata Oil, with Bush as president of the new company. He raised some startup money from Eugene Meyer, publisher of the Washington Post, and his son-in-law, Phillip Graham.
Zapata Off-Shore accepted an offer from an inventor, R. G. LeTourneau, for the development of a mobile but secure drilling rig. Zapata advanced him $400,000, which was to be refundable if the completed rig did not function, followed by an additional $550,000 together with 38,000 shares of Zapata Off-Shore common stock when it did.
The U.S. government began to auction off mineral rights to the Caribbean, the Gulf of Mexico, and the Central American coast in 1954, and in the late 1950s and early 1960, Zapata Off-Shore concentrated its business in these areas. In 1958, drilling contracts with the seven largest U.S. oil producers included wells 40 miles (64 km) north of Isabela, Cuba, near the island Cay Sal.
In January 1959, the Cuban Revolution overthrew the Cuban government of Fulgencio Batista, and Bush bought control of Zapata Off-Shore, funded with $800,000, splitting Zapata Corporation into two independent companies with the Liedtkes still in control of Zapata Petroleum. Bush moved his offices and family that year from Midland, Texas to Houston for access to the Caribbean through the Houston Ship Channel. But although Zapata Offshore had only a few drilling rigs, Bush set up operations also in the Gulf of Mexico, the Persian Gulf, Trinidad, Borneo, and Medellín, Colombia, and the Kuwait Shell Petroleum Development Company was among the company's clients.
In 1960, Jorge Díaz Serrano of Mexico was put in touch with Bush by Dresser Industries. Dresser was owned by Prescott Bush's Yale friends Roland and W. Averell Harriman, and had been George H.W. Bush's first employer upon his graduation from Yale, giving him his start in both the oil business and the defense contractor business. Serrano and Bush created a new company, Perforaciones Marinas del Golfo, aka Permargo, in conjunction with Edwin Pauley of Pan American Petroleum, with whom Zapata had a previous offshore contract. The deal with Permargo is not mentioned in Zapata's annual reports, and SEC records are missing. In 1988, a Bush spokesman claimed that the deal lasted only from March to September 1960. However, Zapata sold the oil-drilling rig Nola I to Pemargo in 1964.
Zapata's filing records with the U.S.Securities and Exchange Commission are intact for the years 1955–1959, and again from 1967 onwards. However, records for the years 1960–1966 are missing. The commission's records officer stated that the records were inadvertently placed in a session file to be destroyed by a federal warehouse, and that a total of 1,000 boxes were pulped in this procedure. The destruction of records occurred either in October 1983 (according to the records officer), or in 1981 shortly after Bush became Vice President of the United States (according to, Wison Carpenter, a record analyst with the commission).
During the Bay of Pigs invasion and the Cuban Missile Crisis, Zapata allowed its oil rigs to be used as listening posts. In 1988, Barron's said Zapata was "a part time purchasing front for the [Central Intelligence Agency]."
In 1962, Bush was joined in Zapata Off-Shore by Robert Gow. By 1963, Zapata Off-Shore had four operational oil-drilling rigs—Scorpion (1956), Vinegaroon (1957), Sidewinder, and (in the Persian Gulf) Nola III.
By 1964, Zapata Off-Shore had a number of subsidiaries, including: Seacat-Zapata Offshore Company (Persian Gulf), Zapata de Mexico, Zapata International Corporation, Zapata Mining Corporation, Zavala Oil Company, Zapata Overseas Corporation, and a 41% share of Amata Gas Corporation.
In 1964, Bush ran for the United States Senate, and lost; he continued as president of Zapata Off-Shore until 1966, when he sold his interest to his business partner, Robert Gow, and ran for the U.S. House of Representatives.
On September 9, 1965, Hurricane Betsy struck the coast of Louisiana sinking the oil rig Maverick. No lives were lost, however, $8 million in Zapata assets were lost. A helicopter flew Bush over the area for several days until debris was located. After evidence was submitted to Lloyd's of London for the loss, they paid Zapata for the claim.
In 1966, William Stamps Farish III, age 28, joined the board of Zapata.