Attached files
| file | filename |
|---|---|
| 8-K - ZION OIL & GAS INC | v164303_8k.htm |
Zion Oil
& Gas Newsletter
October
30, 2009
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Dear
Shareholder and/or Friend of Zion...
Here is
an update of our progress during the past week.
The
diagram above is to show you, in a picture, Zion's plans to test its
well.
As yet,
no hydrocarbons have been 'Produced to Surface'.
Please
read below Zion's plans to test its well.
The
Ma'anit-Rehoboth #2 Well
Here is a
summary of the current situation concerning this well, together with comments
taken from the independent log analysis that was carried out. The log analysis
comments are rather technical, but do present a fair summary of how matters
presently stand.
We
drilled the Ma'anit-Rehoboth #2 well to a depth of 17,913 feet (5,460 meters)
and on October 2, 2009 released the drilling rig for use on the Elijah #3 well
and temporarily suspended drilling operations on the Ma'anit-Rehoboth #2 well,
until a smaller rig would become available for completion operations on the
seven zones that warrant completion testing.
Four of
the zones are in the upper (Triassic) part of the hole and were seen in the
Ma'anit #1 well and three of the zones are in the deeper hole drilled in the
Ma'anit-Rehoboth #2 well.
Our
latest estimate of the likely arrival time of a suitable rig at the Ma'anit site
is December 2009. We have tried to accelerate matters, but the rig we want to
use requires some maintenance work, so we will have to wait. The good news is
that 'completion testing' work on our well, with the rig now planned, should
save Zion approximately $250,000 in cost, as compared with the cost of the
original rig that we wanted to use. Waiting is difficult, but at least we will
be saving some money by doing so.
With
regard to our log analysis, an independent log analyst noted that the
Ma'anit-Rehoboth #2 well does have a specified amount of potential “net
pay”.
The
analyst was careful to comment that the results of his analysis (including
porosity, water saturation data, “net pay” and “net reservoir” determination or
tabulated reservoir properties across the logged interval) should not be
considered 'quantitative' due to the effects of borehole washouts on the input
logging measurements used for his analysis.
He noted
that the existence of any hydrocarbon-bearing, open-hole fracture porosity in
the formations inferred from the effects of borehole washout on the conventional
wireline log data analyzed was tenuous at best, as such reservoir properties are
impossible to identify or quantify directly from conventional log data
alone.
The
analyst recommended testing the seven zones. Each recommended zone contains both
'potential net pay' and 'natural open fractures'. He commented that we cannot be
certain that any particular test will be successful and we, as the operator,
should decide how to test these zones.
We
decided to test the lower three zones together, as one, and we set a packer at
15,778 feet (4,809 meters) inside the 7 5/8” casing, to isolate the
tubing string from the casing and provide a conduit for any produced
hydrocarbons. We then ran a string of 2 7/8” tubing in the well and
using downhole seals, plugged into the packer.
Currently,
there is water in the tubing and heavy water (designed to hold back formation
pressure) below the packer. We need the small rig to try and “bring in the well”... an
operation that we could not accomplish efficiently with the very large, powerful
and expensive 2,000 horsepower drilling rig.
Please
note that, all the information that we have presented is based on initial
indications only. At present, no determination can be made as
to whether the drilling has resulted in the discovery of a hydrocarbon
reservoir and/or the extent of the reservoir, and/or its commercial
viability.
You will
appreciate that, until such time as we recover hydrocarbons at the surface (or
not), we are not able to give any estimates of what (if anything) we believe we
may recover.
We are
making every effort to test this well as soon as possible. I know that our
shareholders and friends are anxiously waiting to
learn the outcome. I can assure you that those of us who work for Zion (both day
and night...) also want to see the testing carried out, without further
delay.
As the
Book of Ecclesiastes says, “The end of the matter is better than its beginning,
and patience is better than pride” (Ecc. 7:8)
We have
taken years to reach this point, let us not lose faith due to a few weeks of
unavoidable delay (Nahum 1:7).
Drilling
Operations on the Elijah #3 Well
When
drilling started, it began slowly, as we were drilling boulders and
very hard formations before we could get much weight on the drill
bit.
However,
as we continued working and drilled deeper, the drilling became easier and
progress became much more satisfactory.
Today,
Friday, October 30, 2009 we have drilled to a depth of approximately 1,800 feet
(550 meters) and are making good progress. We anticipate working on the Elijah
#3 well for the next six months
The
Issachar-Zebulun Permit Area
We are
well into our scientific work on this area and have sent all of the existing
seismic to Texas for re-processing, as there is extensive coverage over most of
the license.
Rights
Offering
Our
rights offering has begun and we have already distributed the documentation. If
you have not already received your package or email, you should within next
week. If your stock is held in a brokerage account, if you haven't already
received electronic notification, you should, within a very few
days.
The
rights offering offers a maximum of 3.6 million shares of stock at $5.00 for
each share of stock. Should the rights offering be fully subscribed, Zion will
receive gross proceeds of $18 million.
Under the
rights offering, stockholders have the right to purchase twenty three (23)
shares of stock for every one hundred (100) shares of common stock owned on the
record date. This is identical to 0.23 subscription rights for each
share of common stock owned on the record date.
If you
were among the many hundreds of our stockholders who did not receive as many
$5.00 shares as you subscribed for in the earlier rights offering, this is your
'second chance' opportunity. This offer is open to everyone who was a
stockholder of record on October 19, 2009.
The
scheduled termination date for the rights offering is November 30, 2009 but we
may elect to terminate the offering prior to the scheduled expiration date by
giving two business days notice. Please note that Zion may also elect to extend
the rights offering beyond November 30, 2009.
We have
posted on the Investor Center section of the Zion website some Frequently Asked
Questions (and answers).
Please
click here to visit the Investor Center:
http://www.zionoil.com/investor-center
"In your
good pleasure, make Zion prosper..."
Psalm
51:18
Thank you
for your support of Zion and Shalom from Israel
Richard
Rinberg
CEO of
Zion Oil & Gas, Inc.
www.zionoil.com
FORWARD
LOOKING STATEMENTS: Statements in this communication that are not historical
fact, including statements regarding Zion's planned operations, geophysical and
geological data and interpretation, anticipated attributes of geological strata
being drilled, drilling efforts and locations, the presence or recoverability of
hydrocarbons, timing and potential results thereof and plans contingent thereon
and rights offering are forward-looking statements as defined in the "Safe
Harbor" provisions of the Private Securities Litigation Reform Act of 1995.
These forward looking statements are based on assumptions that are subject to
significant known and unknown risks, uncertainties and other unpredictable
factors, many of which are described in Zion's periodic reports filed with the
SEC and are beyond Zion's control. These risks could cause Zion's actual
performance to differ materially from the results predicted by these
forward-looking statements. Zion can give no assurance that the expectations
reflected in these statements will prove to be correct and assumes no
responsibility to update these statements.
NOTICE
Zion Oil
& Gas, Inc. has filed a registration statement (including a prospectus) with
the SEC for the offering to which this communication relates. Before you invest,
you should read the prospectus in that registration statement and other
documents the issuer has filed with the SEC for more complete information about
Zion Oil & Gas and its offering. You may get these documents for free by
visiting EDGAR on the SEC website at www.sec.gov. Alternatively, Zion Oil &
Gas will send you the prospectus if you request it by calling toll free
1-888-TX1-ZION (1-888-891-9466).
Contact
Information
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
More
information about Zion is available at www.zionoil.com or by contacting Kim
Kaylor at Zion Oil & Gas, Inc., 6510 Abrams Rd., Suite 300, Dallas, TX
75231; telephone 1-214-221-4610; email: dallas@zionoil.com
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~