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Zion
Oil & Gas Newsletter
July 23, 2010
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Dear
Shareholder and/or Friend of Zion
Since my
last update to you (on July 9, 2010) we have made much progress with the site
construction for the Ma’anit-Joseph #3 well, especially the concrete platform on
which the drilling rig will stand. Due to the very heavy loads involved, a solid
and stable base is of the highest importance, as the safety of everyone working
at the wellsite is at risk if the drilling rig is not 100% stable.
Certainly
BP’s recent catastrophe with deepwater drilling in the Gulf of Mexico has
underlined the need for stringent safety standards.
As
previously noted, we successfully concluded the acquisition of field seismic in
both our Asher-Menashe License area and our Issachar-Zebulun Permit area and the
raw data is currently being processed for interpretation, both in Israel and in
Houston, Texas. The data processing will take a number of weeks to produce
results.
Our
recent rights offering ended on July 15, 2010 and you can read the relevant
press release if you click here.
The press
release indicated a preliminary amount of approximately $11.5 million in valid
subscriptions, however, the final amount was, in fact, approximately $12.4
million.
Although
we raised significant amounts from the rights offering, we believe that the
uncertain and adverse market conditions in the past weeks may have impacted
negatively on the rights offering. The amounts raised in the rights offering
will allow us to further our exploration and drilling program significantly
although it will not by itself be sufficient to start the drilling
subsidiary.
However,
on the plus side, we are now able to move forward with drilling the new
planned well without delay, so we look forward to an August 2010 spud
date for the M-J #3 well and eagerly anticipate drilling this well ‘deep to the
Permian’ as planned.
We intend
to issue the shares from the rights offering as soon as practicable, most likely
within the next two weeks.
Christians United for
Israel
This past
week, Zion Oil & Gas sponsored both the "Night to Honor Israel" banquet and
CUFI's Ambassadors' Reception, at the Fifth Annual Washington-Israel Summit of
Christians United for
Israel (CUFI).
The
Summit took place in Washington, D.C. during July 20th to 22nd and both Pastor
John Hagee and Israel's Ambassador to the U.S., Michael Oren, spoke at the
banquet on Wednesday evening, July 21, 2010.
During
the Summit, John Brown, Zion's Founder and Chairman, was interviewed by Pastor
John Hagee and the interview was broadcast on the Daystar Television Network
during the "Night to Honor Israel".
In
addition, I introduced and CUFI broadcast a video about Zion at the banquet's
pre-event, and the banquet's proceedings were telecast by live-feed over the
Daystar Television network.
There was
much interest shown in Zion’s work in Israel.
Installation
of Conductor Pipe
Fully
Installed Conductor Pipe
With
regard to 'Operations', here is the latest news:
Ma'anit-Joseph #3 Well (M-J
#3)
Well site
construction has been the primary activity ongoing at the Ma’anit-Joseph #3 well
for the past two weeks. This activity involves significant amount of
excavation, grading, sublayering, and compaction of soil and other materials to
provide a solid, sustainable base for all equipment used during the drilling
operation.
We are
also building a large cement pad to serve as the drilling rig base, which must
be constructed to exacting specifications so that the rig can be properly
balanced and positioned when mobilized to the completed site. Other
well site construction activity includes the excavation of mud return pits which
will be lined with a protective, non-permeable layer to prevent the possible
seepage of drill fluids into the soil and local ground waters.
In
addition to all the earth moving activities ongoing at the well site, we have
also started preliminary drilling work. This work involves the
drilling of a shallow hole and installation of a short length of casing known as
the conductor pipe. (The drill rig is not needed to drill this
shallow hole which is approximately 60 feet.) This conductor pipe
serves as a ‘guide’ for the drill bit when the actual drilling rig spuds the
well. The spud date incidentally is still on track for next month,
August 2010.
The
Issachar-Zebulun Permit Area
As
previously reported, on June 16, 2010, field acquisition of new 2-dimensional
seismic in the Jordan River Valley section of our Issachar-Zebulun permit area
was successfully concluded. Approximately 30 km of new seismic data was
collected on Zion's behalf by the Geophysical Institute of Israel
(GII).
This data
is now being "processed" by a geophysical consultant in the United States into
usable graphic imagery that can then be "interpreted" by our geologists in their
investigation for future drilling prospects. The processing and
interpretation of this data is expected to be finalized by October
2010.
Elijah #3
Well
As
previously noted, the Elijah #3 well was drilled to a depth of approximately
10,938 feet (3,334 meters) when the drill string became stuck within the Asher
Volcanics section of the hole. After recovering a significant portion of the
stuck drill pipe, progress in recovering the remainder of the pipe slowed and
the decision was made to temporarily suspend drilling operations pending further
analysis of the situation.
On June
30, 2010, GII successfully concluded field acquisition of approximately 25 km of
new 2-dimensional seismic data within the Elijah #3 project area. This
data will help us to resolve certain questions regarding the geology of the area
surrounding this well.
As with
the seismic data collected in the Issachar-Zebulun permit area, this data will
also need to be processed and subsequently interpreted. In this case,
however, we are not looking for new prospects but instead looking for greater
clarity in the geology that underlies our Elijah-3 well.
Processing
of the Elijah #3 seismic data is now underway and is being done by both GII and
a geophysical consultant in the United States.
Ma'anit-Rehoboth
#2 Well (M-R #2)
This well
is currently temporarily suspended for possible future use as an offset well to
the Ma'anit-Joseph #3 (M-J #3) well which is to be drilled a short distance
away.
It is
important to note that we are drilling to the deep "Permian" structure in the
M-J #3 well; whereas the various intervals tested in the M-R #2 well consisted
of shallower and younger age rocks. As such, and despite the relative
proximity of these two wells, the results of the M-R #2 well tests are not
correlative to what we expect in the Permian of the M-J #3
well.
"In
your good pleasure, make Zion prosper..."
Psalm
51:18
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, the procurement of needed drilling permits, drilling efforts and
locations, the presence or recoverability of hydrocarbons, the sufficiency of
cash reserves, ability to raise additional capital, timing and potential results
thereof and plans contingent thereon 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.
Contact
Information
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
More
information about Zion is available at www.zionoil.com or by contacting Michael
Williams at Zion Oil & Gas, Inc., 6510 Abrams Rd., Suite 300, Dallas,
TX 75231; telephone 1-214-221-4610; email:
dallas@zionoil.com