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| 8-K - ZION OIL & GAS INC | v200466_8k.htm |
Zion Oil
& Gas Newsletter
October
29, 2010
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Dear
Shareholder and/or Friend of Zion
Since my
last update to you at on October 15th, we have been in continuous drilling
operations at our Ma'anit-Joseph #3 wellsite and have made good progress. As you
can read below, we are currently at a depth of 2,210 meters (7,251 feet) and
preparing to run open hole logs and the next casing string in the
hole.
Visit by the Ministry of
National Infrastructures to Zion's Ma'anit-Joseph #3
wellsite
Dr.
Victor Bariudin (Senior Coordinator Oil & Gas Production at Ministry of
National Infrastructures) visits the Ma'anit-Joseph #3 wellsite on October 25,
2010.
Dr.
Victor Bariudin is shown center of the photo and Richard Rinberg (Zion Oil's
CEO) is on the right.
On
Monday, October 25, 2010, Dr. Victor Bariudin ('Senior Coordinator - Oil &
Gas Production' at the Ministry of National Infrastructures) visited our
Ma'anit-Joseph #3 wellsite. I am happy to report that we received only positive
comments from him, such as "a
very professional and neat wellsite".
Dr.
Victor Bariudin viewing the Blow Out Preventer (BOP) under the rig, at the
Ma'anit-Joseph #3 wellsite
Dr.
Bariudin was very interested in 'safety matters' and especially the Blow Out
Preventer (BOP) system. Our Wellsite Manager, Rasim Yoruk, gave a full report
and explanation regarding our safety procedures and Dr. Bariudin commented that
our systems looked "very good,
indeed".
Zion's
"Issachar-Zebulun Permit" - The Preliminary Results of the recent Seismic
Acquisition
Seismic
Acquisition on the Issachar-Zebulun Permit - June 2010
In August
2009, Zion was awarded an exclusive petroleum exploration permit (named by us,
the “Issachar-Zebulun Permit”) on approximately 165,000 acres onshore
Israel.
The
Permit area is adjacent to and to the east of our Asher-Menashe License and is
in the area that was formerly within Issachar’s and Zebulun’s ancient biblical
tribal areas.
A permit
allows us to conduct, on an exclusive basis, preliminary investigations to
ascertain the prospects for discovering petroleum in the area covered by the
permit. Unlike a license area, where test drilling may take place, no
test drilling is allowed on a permit area.
After
some initial investigations by our geologists, in May 2010, we contracted with
the Geophysical Institute of Israel (GII) to acquire approximately 29 kilometers
of field seismic on our Issachar-Zebulun Permit. Please refer to our press
release of May 25th and previous updates to you for the details.
In June
2010, field acquisition of the seismic was successfully completed and since
then, we have been processing and interpreting the collected data for use in our
proprietary geologic model of the area.
Although
the processing and interpretation is ongoing, we do have some very early results
and conclusions, as follows:
(i) We
have identified some 'interesting' geologic structures and consequently do have
new geologic "leads".
(ii) In
order to validate the "leads" and, hopefully, upgrade them to drilling
"prospects", we will need to investigate the five criteria of a petroleum
system: Source, Reservoir, Seal, Migration and Trap.
(iii)
This validation process of the newly discovered geologic leads may require the
acquisition of additional seismic and other geologic data.
So, at
this early stage, we are progressing well with our work on this permit area and
look forward to further work, so that, hopefully, we can define one or more
drilling prospects on this area and apply for a license for the area currently
covered by the permit. You may be interested to know that the
Hebrew name "Issachar" almost certainly derives from the two Hebrew words:
"Yesh Sachar", which in
English means: "There is a
reward"...
Or if you
prefer, as it says in Deuteronomy 33:19:
"They
will summon peoples to the mountain and there offer sacrifices of
righteousness;
they will feast
on the abundance of the seas, on the treasures
hidden in the sand."
Drilling Operations at the
Ma'anit-Joseph #3 Wellsite
The
Ma'anit-Joseph #3 wellsite at dawn
This
photograph was taken by Aaron Kahn, our geologist in charge of Zion's mudlog
unit
On August
26, 2010, drilling operations began on the Ma'anit-Joseph #3 well, in our Joseph
License area, onshore Northern Israel.
Aside
from the normal and routine operational issues that arise from time to time
during drilling, we have made steady hole during the past two
weeks. As of October 29, 2010 we completed the drilling of the
12-1/4” hole to a depth of 2,210 meters (7,251 feet).
We are
now preparing to run our next set of open hole correlation logs, set and cement
9-5/8” casing, and then begin drilling our longest section of the hole which
will be drilled with an 8-1/2” bit. This next section of the well
will be drilled to approximately 4,380 meters (14,370 feet) which we anticipate
should put us into rock layers of the Middle Triassic age. The final
drilling leg will then be a 6-1/8” hole that is planned to take us into the
Permian zone, which is our ultimate target for this well.
As we
continue drilling operations in the upper section of the hole, we are already
making preparations for production testing our target Permian zone in the first
quarter of 2011. To this end, we are working with several companies
in preparing test procedures and identifying needed equipment & services for
this work.
We are
currently behind our original drilling schedule, due primarily to the fishing
incident described in the last report. We continue to look for
opportunities to make up the lost time, but not at the expense of well quality
and always keeping “safety” as a top priority.
Rights
Offering (scheduled to expire on November 15,
2010)
As you
may know, Zion is holding a Rights Offering for every stockholder who held Zion
stock on September 28, 2010.
We have
mailed to all eligible stockholders a copy of the prospectus supplement which
was filed with the SEC on September 29, 2010, subscription materials and other
items necessary for exercising the rights. Shareholders who hold their shares in
a bank or broker name should have received the rights offering material from
their bank or broker.
Under the
rights offering, Zion has distributed (at no cost to stockholders)
non-transferable subscription rights to holders of Zion's common stock on the
close of business on the record date of September 28, 2010, to purchase their
pro rata portion of approximately 3.8 million Units of Zion's securities Unit at
a purchase price of $5.00 per Unit.
ONE
UNIT = ONE SHARE (of Zion's common stock) + ONE WARRANT
The
Warrant will allow the purchase of an additional share of Zion's common stock at
an exercise price of $4.00 and will be exercisable
for a two year period beginning after the offering expires.
You may
wish to review the Frequently Asked Questions (FAQs) on our website
at:
www.zionoil.com/investor-center
The Rights Offering is
scheduled to expire on
November 15,
2010
so if you
do wish to participate, please do so without delay.
"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, anticipated attributes of
geological strata being drilled, the presence or recoverability of hydrocarbons,
the sufficiency of cash reserves, ability to raise additional capital, the
successful establishment of the drilling subsidiary and the negotiation and
execution of definitive agreements with the current owner of the drilling rig
with respect thereto, 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.
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).