"When"
will Oil Be Found in Israel?
"How to invest in Zion Oil"
"Now is the time to favor Zion"
An angel's view of the Ma'anit-Rehoboth
drillsite.

(See very bottom of
page for John Brown's Testimony)
Zion Oil and Gas, Inc.
may be found on the NASDAQ
under the symbol
ZN
@
http://www.nasdaq.com/
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Zion Oil & Gas Newsletter
Dear Shareholder and/or Friend of Zion
Since my last update to you (on June 24, 2010) we have made much progress on
the drilling front. In addition,
today, we have made an announcement about management restructuring and an
addition to Zion's Board.
As you can read
here,
we announced that Kent S. Siegel, a member of Zion's Board of directors
since November 2003,
has been appointed as Chief Financial Officer and Senior Vice President. Mr.
Siegel replaces Sandra Green, who has resigned from the Company by mutual
and amicable agreement. I thanked Sandy for her many years of dedicated
work
and wished her well for the future.
In addition, Patti Beals has been appointed Chief Accounting Officer and
Ilan Sheena has been
appointed Vice President and Managing Director of Zion's offices in
Caesarea, Israel. Also, we are
welcoming to the Zion Board, Marc Singer who brings a wealth of business
experience to Zion.




As you can
read below, we have successfully concluded the acquisition of field seismic
in both our
Asher-Menashe License area and our Issachar-Zebulun Permit area. The raw
data that has been collected
is now being processed for interpretation, both here in Israel and in
Houston, Texas.
I am pleased to report that the data acquired does seem to be of good
quality. This was not easy to achieve,
as in the Asher-Menashe license area, there are some major roads. One night,
we arranged for the police to
stop the flow of traffic, so that the traffic 'noise' would not affect the
seismic acquisition.
Even with the latest computer technology, the data processing will take a
number of weeks to produce results
and then the resulting information will need to be carefully built into our
geologic computer model by Zion's geologists.
(As a Zion director commented:"If it was easy, then anyone could do
it...").
As a result, we should be able to have a much better picture of any geologic
structures under our
exploration areas and therefore make better decisions regarding our future
exploration plans.
RIGHTS OFFERING
The current rights offering was originally scheduled to terminate on June
30, 2010. However, as preliminary results indicated that the offering had
not been fully subscribed, we decided to extend the offering by
approximately two weeks, in order to allow more time for subscriptions to be
submitted. The new scheduled termination date for the rights offering is
Thursday, July 15, 2010.
Although, to date, we have raised significant amounts from the rights
offering, we believe that the
uncertain market conditions in the past weeks may have impacted negatively
on our rights offering.
We want to move forward with further work without delay, so we would like to
secure the maximum funds possible.
Almost certainly there will not be a further extension. After the
termination date of Thursday, July 15, 2010,
we plan to close the offering and issue the shares as soon as practicable,
most likely within two weeks following the close.
If you want to read the press release regarding the extension of the
termination date of Zion's rights offering, please click
here.
Christians United for Israel
As previously noted, Zion Oil & Gas will be sponsoring the "Night to Honor
Israel" banquet at the
Fifth Annual Washington-Israel Summit of Christians United for Israel (CUFI).
However, this year,
Zion will also be sponsoring CUFI's Ambassadors' Reception.
The Summit will take place in Washington, D.C. during July 20th to 22nd and
the banquet will take
place on Wednesday evening, July 21, 2010. Pastor John Hagee and Israel's
Ambassador to the U.S.,
Michael Oren, are scheduled to speak at the banquet.
It is expected that John Brown, Zion's Founder and Chairman, will be
interviewed by Pastor John Hagee
during the Summit and that the interview will be broadcast on the Daystar
Television Network during the "Night to Honor Israel". In addition, CUFI
will broadcast a video about Zion at the banquet's pre-event, and the
banquet's proceedings
will be telecast by live-feed over the Daystar Television network. If you
want to read the press release, please click
here.
In addition to beginning our well site construction, we have almost finalized the selection of vendors who will provide
"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
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Zion Oil & Gas Newsletter
Dear Shareholder and/or Friend of Zion
As Zion's annual meeting is scheduled to take place on Monday, June 14,
2010, in Israel, we are distributing this email one day earlier than normal.
This will give those who are not attending the meeting and have not yet
voted, a chance to vote. You can vote either by returning your prepaid
voting card, by telephone or by way of the Internet.
For
everyone with an interest in Israel and its energy resources, we are living
through momentous times!
Recently, 'Oil & Gas in Israel' has been featured in Israel's business news
as almost a daily headline event. For example:
On June 2, 2010, Israel's business press reported that the estimated natural
gas reserves in the Tamar offshore license have been increased... again.
They have nearly doubled since the first estimates were published in
2009 and represent approximately 35 years of Israel's natural gas needs at
projected 2012 demand rates.
On June 3, 2010, Israel's business press reported that initial seismic
analysis indicated that the Leviathan prospect, offshore Israel, is
estimated at double the size of the Tamar discovery.
Clearly the prediction of the United States Geological Survey's report in
April 2010 that estimated the undiscovered oil and gas resources of the
Levant Basin at a mean of 1.7 Billion barrels of recoverable oil and 122
Trillion cubic feet of recoverable gas in the Levant Basin is beginning to
unfold before our very eyes.
As all of Zion's exploration areas fall within the Levant Basin... we are
very optimistic regarding our petroleum exploration areas, onshore
Israel.
(You can read the USGS Report if you
click here.)
Zion Oil & Gas, Inc. was established 10 years ago, at a time when the idea
of 'Oil in Israel' was seen as 'very unlikely' (to say the least),
as the last major discovery in Israel was the Heletz field (onshore southern
Israel) in 1955. Subsequently, Heletz produced more than 17 million barrels
of oil.
Now, we have seen a massive gas discovery offshore and even, in December
2009, an announcement of an onshore gas discovery, in another company's
license area, just to the south of Zion's license area.
The year 1955 was also the one in which Frank Sinatra first sang, "Love &
Marriage go together like a Horse & Carriage". From our perspective, where
there is 'Gas', there is likely to be 'Oil'. We all know the term 'Oil &
Gas'...
When Zion's Founder and Chairman of the Board, John Brown, heard the recent
news regarding the offshore gas deposits, he pointed to Isaiah 60:5:
"Then you will see this and
rejoice, and your heart will be thrilled with joy, because the riches of the
sea
will be brought to you. The wealth
of the nations will come to you."
A NEW ZION FILM - to watch the film, please click here
RIGHTS OFFERING
Under the rights offering
(see
www.zionoil.com/investor-center)
Zion stockholders, at the close of business
on May 6, 2010, were issued, at no charge, the following
ONE subscription right for every TWO shares of stock owned (as of the close
of business on May 6, 2010).
Each subscription right entitles the holder to purchase one share of Zion
stock at a price of $5.00,
irrespective of the market price at the time of purchase.
The subscription rights may be exercised at any time prior to the end of
June 2010.
However, after 5:00 pm EDT on June 30, 2010, unexercised subscriptions
rights will expire with no residual value.
Please note that if you want to exercise your rights and you hold your stock
in a brokerage account, then you will
need to contact your broker to determine when and how you can exercise your
rights, as each individual
brokerage firm has their own timeline and procedures for processing
subscriptions.
As detailed in the press release, we plan to use the proceeds from the
rights offering: (a) to purchase
a 51% interest in a new yet to be established company (Zion Drilling, Inc.
that will own a 2,000 horsepower drilling rig),
(b) to drill further 'deep' exploration wells on Zion's licenses in Israel
(in continuation of Zion's oil and gas exploration efforts) and (c) for
general corporate purposes.
This opportunity is only available
until June 30, 2010, in less than 20 days.
With regard to 'Operations', we are now preparing for the next well, as you can read.
Our geologists will then interpret this imagery as a basis for determining
if all the
necessary geological elements are in place for creating a drilling
prospect.
Ma'anit-Joseph #3 Well (M-J #3)
As previously noted, we have implemented a bidding process for key equipment
and services needed for the M-J #3 well and that early indications of
response from our selected vendors have been very favorable. The bidding
process is now closed and we are extremely pleased with the results.
To cite a few metrics regarding the process, we created (8) equipment and
service categories targeting (39) companies - both local and international.
These categories included casing, casing hardware, wellheads, drill bits,
cementing service, mud and drilling fluids service, wireline and logging
service, and equipment rentals. A total of (47) bid packages were issued
and (38) offers received...a very respectable 81% positive response rate.
We are now working through each category of bids, focusing first on those
that are most time-sensitive so that we have the equipment or service we
need, on location, when the well is spud. Several purchase orders for this
critical equipment have already been placed.
We continue to be encouraged by the pace in which "permitting" for the new
well is occurring. As noted last time, permitting a well in Israel is a
lengthy and time consuming process. Yet, we feel that we are 'on track' in
working with the various regulatory agencies to ensure that we are fully
compliant with the law and that we properly address the legitimate issues of
other concerned stakeholders in the project.
With vendor selection and well permitting moving along according to plan, we
now turn our attention to construction of the well site itself. To this
end, we are using the same philosophy we did in our bidding process for well
equipment and services. That is, we will seek out the best contractors that
are capable of doing the job to our specifications and who offer the best
overall value to Zion.
Ultimately, we want to position ourselves to begin well site construction
immediately after the final permit is 'in hand' that allows construction
activity to begin. Our expectation is that this timing will occur sometime
in July. Site construction can last about one month.
Overall,
work continues at a steady and productive pace in getting ready for a summer
2010 spud date of the Ma'anit-Joseph #3 well.
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.
We have decided to acquire approximately 32 kilometers of additional field
seismic data (in Zion's Asher-Menashe License area) that will help us to
resolve certain questions regarding the geology of the area surrounding the
Elijah #3 well. GII will perform this seismic acquisition work following the
work being done for us in the Issachar-Zebulun permit area.
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 (see above) which is to
be drilled a short distance away.
It
is important to note that while the M-J #3 well is just a short distance
from the M-R #2 well, the geologic target for the M-J #3 well is completely
different than the zones tested in M-R #2. We are drilling to the deep
"Permian" structure in M-J #3; whereas the various intervals tested in M-R
#2 were shallower and comprised of younger, Triassic, age rocks. As such,
the results of testing the M-R #2 well are not correlative to what we expect
should we reach and test the Permian in the M-J #3 well.
|
PLEASE VOTE YOUR ZION STOCK TODAY |
"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
Contact Information
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Zion Oil & Gas Newsletter
Dear Shareholder and/or Friend of
Zion...
The past two weeks have seen various Zion Oil & Gas matters move forward
significantly, as we:
(i) reported that the Israeli
Petroleum Commissioner awarded Zion Oil & Gas a one-year extension on each
of its petroleum exploration licenses, the Joseph License and the Asher-Menashe
License. (After the initial grant, it is 'normal
procedure' in Israel for license extensions to be granted only in
'one-year' extensions, for a total of four one year extensions.)
(ii) signed an agreement with Aladdin Middle East Ltd extending the drilling
contract to our planned next well, the Ma'anit-Joseph #3,
(iii) signed an agreement with Kibbutz Ma'anit granting us access to Kibbutz
land and permission to drill the Ma'anit-Joseph #3 well, and
(iv) signed an Agreement with the Geophysical Institute of Israel (GII) to
acquire a total of approximately 64 kilometers of two-dimensional seismic
lines located within our Issachar-Zebulun Permit area and our Asher-Menashe
License area.
On a national level, according to the latest rankings of the (politically
independent) Swiss Institute for Management Development (IMD), Israel's
economy is No. 1 in the world for resilience to
economic cycles.
This is a direct result of the actions taken by Israel's Finance Ministry
and the Bank of Israel, as they both acted very prudently in the recent
world economic crises.
Israel was also ranked No. 1 for its expenditure
in research and development as a percentage of gross domestic product and in
the innovative capacity of firms to generate new products, processes and
services.
In the business-efficiency category, Israel scored very highly in
availability of skilled labor, finance skills, entrepreneurship of managers
and venture capital.
All we need now is... to recover oil & gas onshore Israel...
So, here is a report of Zion's work during the past two weeks:
Rights Offering
Under the rights offering (see
www.zionoil.com/investor-center)
Zion stockholders, at the close of business on May 6, 2010, were
issued, at no charge, the following
ONE subscription right for every
TWO shares of stock owned (as of the close of business
on May 6, 2010).
Each subscription right entitles the holder to purchase one share of
Zion stock at a price of $5.00, irrespective of the market price at the
time of purchase.
The subscription rights may be exercised at any time prior to the end of
June 2010. However, after 5:00 pm EDT on June 30, 2010,
unexercised subscriptions rights just expire with no residual value.
Please note that if you want to exercise your rights and you
hold your stock in a brokerage account, then you will need to contact
your broker to determine when and how you can exercise your rights, as
each individual brokerage firm has their own timeline and procedures for
processing subscriptions.
As detailed in the press release, we plan to use the proceeds from the
rights offering: (a) to purchase a 51% interest in a new company (Zion
Drilling, Inc. that will own a 2,000 horsepower drilling rig), (b) to
drill further 'deep' exploration wells on Zion's licenses in Israel (in
continuation of Zion's oil and gas exploration efforts) and (c) for
general corporate purposes.
As stock prices have been so volatile recently, perhaps I should mention
that subscribing in the rights offering directly helps Zion with its
work in Israel. Whereas, purchasing Zion stock by way of the stock
exchange (e.g. NASDAQ) means that the money goes to the seller and so
does not directly help Zion with its work.
The United States
Geological Survey (USGS Survey)
As previously reported, the USGS report (issued April 8, 2010)
"Assessment of Undiscovered Oil and Gas Resources of the Levant Basin
Province, Eastern Mediterranean" has attracted much media attention in
Israel. (You can review the USGS Survey by clicking
here.)
You may be interested to know that the term "Levant" first appeared in
English some 500 years ago and originally meant "Mediterranean lands to
the East" as in the French "soleil levant" (i.e. rising Sun). It
referred to the Eastern direction of the rising Sun from the perspective
of those who first used it.
The USGS Survey estimates a mean of 1.7 BILLION barrels of recoverable
oil and 122 TRILLION cubic feet of recoverable gas in the Levant
Basin... and that has caught everyone's eye, as the value of the
undiscovered oil and gas assessed in the USGS Survey amounts to
approximately US$ 650 Billion...
and of course all of Zion's exploration areas fall within the Levant
Basin...
With regard to 'Operations', we are now preparing for the next well, as
you can read.
Ma'anit-Joseph #3 Well (M-J #3)
Further to our ongoing exploration work on the Ma'anit geological
structure, we are moving forward with the required permitting and
planning for the M-J #3 well (targeted for the 'deep' Permian geologic
structure). (Deut. 33:13-16)
We are well underway in the process of assembling the various product
and service suppliers needed to drill this new well. As reported last
time, we instituted a bidding and selection process designed to ensure
that we use the best available resources, offering Zion the most
favorable overall value. Based on early vendor indications, we
anticipate a strong response to our RFQs (Request For Quotes)
and have already begun receiving price quotes. All price quotes are
expected by month-end and the final vendor selection will follow shortly
thereafter.
Permitting for the new well continues to proceed favorably with the
recent achievement of a very significant milestone: agreement with
Kibbutz Ma'anit granting us access to Kibbutz land where we desire to
drill the MJ-3 well.
In Israel, 'permitting a well' is a very lengthy and
complicated process, as permits are required from various authorities,
including the: Water, Fire, Health, Military, District Planning
Commission, Environmental Protection, Israel Land, National
Infrastructure, Civil Aviation and National Transport Authorities... and
of course, the owner of the land.
With the Kibbutz agreement now secured, we are fine-tuning the well site
layout and beginning preliminary plans for construction of the site.
The layout and construction of the well site is a project in of itself,
as it involves the careful placement of storage containers, offices and
living quarters, equipment and liquid storage facilities, power units,
and piping all efficiently arranged around the drilling rig and large
liquid containment ("mud") pits while allowing adequate space for the
safe movement of personnel and heavy equipment.
As the M-J #3 well site is near residential and commercial areas, we are
working diligently with local and governmental groups, to ensure the
site will meet (or in some cases exceed) all applicable environmental
and safety requirements.
Actual well site construction can begin once we have received all
necessary permits. Depending on weather and equipment availability, we
anticipate site construction to be completed within one month after
being started. Given the progress we are making in both planning and
permitting for the M-J #3 well, we remain optimistic that drilling will
begin this summer.
Elijah #3 Well
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.
We have decided to acquire approximately 32 kilometers of additional
field seismic data (in Zion's Asher-Menashe License area) that will help
us to resolve certain questions regarding the geology of the area
surrounding the Elijah #3 well. In order to perform this seismic
acquisition work, we recently signed an agreement with the Geophysical
Institute of Israel (GII). The seismic acquisition is scheduled to take
place in summer 2010.
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 (see above) which
is to be drilled a short distance away.
The Issachar-Zebulun Permit Area
Zion and GII have signed an agreement for GII to acquire approximately
32 kilometers of seismic data in Zion's Issachar-Zebulun Permit area.
Zion will use this seismic data in search of geologic prospects that we
hope can be matured into new well candidates.
Permitting for seismic acquisition is well underway with field work now
scheduled to begin in June.
2010 Annual Meeting of Stockholders - in just
two weeks time...
The annual meeting is scheduled to take place at the Dan Caesarea Hotel
in Caesarea, Israel at 2:00 p.m. (local time) on Monday, June 14, 2010.
If you are planning to attend the meeting in person and would like to
reserve a room at the Dan Caesarea Hotel, please contact Ora Weisman in
our Israel office at
ora@zionoil.com
to take advantage of a special room rate offered only to Zion
shareholders.
IMPORTANT NOTE: In prior years, the SEC allowed brokers to vote the
shares of stockholders who held shares at the broker but did not express
an opinion regarding how they wished to vote their shares. The new
rules do not allow your shares to be voted on certain items without you
personally voting your shares,
so please vote your shares.
You can vote either by returning your prepaid voting card, by telephone
or by way of the Internet.
Your vote really does count, so please take a very few
minutes in order to exercise your right as a Zion Oil & Gas
stockholder.
"In
your good pleasure, make Zion prosper..."
Psalm 51:18
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Zion Oil & Gas Newsletter
Dear
Shareholder and/or Friend of Zion...
This past week, Israel has been in the news (again) as the 31 members of the
group of rich nations, the OECD (Organisation for Economic Cooperation and
Development) unanimously voted to invite Israel to join.
OECD's mission is to enhance cooperation among members while meeting high
international economic standards; membership will surely boost Israel's
economic standing and help attract investment to Israel.
The Israeli Finance Minister called the move "historic".
We believe that the day will arrive when Zion Oil's work will also be deemed
"historic" and are steadily working towards that day.
Here is a report of Zion's work during the past two weeks:
ONE subscription right for every TWO shares of stock owned.
Each subscription right entitles the holder to purchase one share of Zion stock at a price of $5.00,The USGS report
(issued April 8, 2010)"Assessment of Undiscovered Oil and Gas
Resources of the Levant Basin Province, Eastern Mediterranean"
has attracted much media attention in Israel.
(You can review the USGS Survey by clicking
With regard to 'Operations', we are now preparing for the next well, as you
can read.
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 (see below) which is to be drilled a
short distance away.
Ma'anit-Joseph
#3 Well (M-J #3)
Further to our ongoing exploration work on the Ma'anit geological structure,
we are quickly moving forward with permitting and planning for the M-J #3
well (targeted for the 'deep' Permian geologic structure). (Deut. 33:13-16)
Our new well design is now
finalized and we have begun the process of assembling the various product
and service suppliers needed to drill this new well. To date we have issued
(9) Requests for Quotations ("RFQs") to dozens of vendors addressing all the
major components needed to drill and test a well: tubulars, mud system,
wireline services, well testing, cementing, etc. The early indication is
that most vendors will participate in our RFQ process and seem quite eager
to do business with us in Israel. We have 'cast a wide net' in soliciting
price quotes and will carefully analyze the results, when received, to
ensure that we use the best available resources offering Zion the most
favorable overall value.
Permitting for the new well continues to move at a very good pace with
progress being made on all fronts. We continue to move forward with both
local and governmental groups in assessing needs and working towards
mutually agreeable outcomes.
Barring any unforeseen delays or complications, we remain on track to "spud"
(i.e. begin drilling) the well
in the summer of 2010.
Elijah #3 Well
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.
We have decided to acquire additional field seismic data that will help us
to resolve certain questions regarding the geology of the area surrounding
the Elijah #3 well. The timing for this work is scheduled to take place in
mid-summer 2010.
The Issachar-Zebulun Permit Area
Zion and the Geophysical Institute of Israel (GII) have signed an agreement
for GII, on behalf of Zion, to acquire approximately 30 kilometers of
seismic data in Zion's Issachar-Zebulun Permit area. Permitting for seismic
acquisition is already underway and the timing for the field work is
scheduled to coincide with the seismic field work for the Elijah #3 project
area.
2010 Annual Meeting of Stockholders -
in just one month...
The annual meeting is scheduled to take place at the Dan Caesarea Hotel in
Caesarea, Israel at 2:00 p.m. (local time) on Monday, June 14,
2010. If you are planning to attend the meeting in person and would like to
reserve a room at the Dan Caesarea Hotel, please contact Ora Weisman in our
Israel office at
ora@zionoil.com
to take advantage of a special room rate offered only to
Zion shareholders.
IMPORTANT NOTE: In prior years, the SEC allowed brokers to vote the
shares of stockholders who held shares at the broker but did not express
an opinion regarding how they wished to vote their shares. The new
rules do not allow your shares to be voted on certain items without you
personally voting your shares, so please vote your shares.
You can vote either by returning your prepaid voting card, by telephone
or by way of the Internet.
Your vote really does
count, so please take a very few minutes in order to exercise your right
as a Zion Oil & Gas stockholder.
"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, 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 AME (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).
|
|
Contact Information |
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Zion Oil & Gas Newsletter
Dear Shareholder and/or Friend of Zion...
During the past two weeks, Israel celebrated its 62nd birthday and, almost
to the day, Zion Oil & Gas
celebrated its 10th birthday.
According to Harvard University Professor of Economic History, David Landes,
"In the last 50 years, only one country in the world has moved from being
a third world economy to a first world economy...and that is Israel!"
At Zion Oil, we believe that we may be able to help Israel's economy (soon,
we hope) by discovering significant quantities of oil and gas onshore in
Israel.
We are not completely alone in our belief that there are significant
quantities of oil and gas waiting to be discovered. You can read below the
latest estimates of the United States Department of the Interior (Geological
Survey Department) and also the thoughts of Hal Lindsey in his recent weekly
report.
In any event, our daily efforts continue steadily and with determined focus.
So, here is the report of Zion's work during the past two weeks:

Thank you for your support of Zion, and
Shalom from Israel
Richard Rinberg
CEO of Zion Oil & Gas, Inc.
www.zionoil.com
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Zion Oil & Gas Newsletter
Dear Shareholder and/or Friend of Zion...
I am happy to announce some excellent news. This past week, Zion Oil & Gas
and Aladdin Middle East Ltd (AME)
signed a Memorandum of Understanding (MoU) that I
believe will not only be good for both
Zion Oil and AME, but also for the State of Israel.
The MoU outlines our plan to establish a subsidiary, tentatively named
"Zion Drilling, Inc.", for the purpose of purchasing and
operating AME's 2,000 horsepower drilling rig (currently located at Zion's
Ma'anit-Rehoboth #2 wellsite, in Israel).
Zion Drilling, Inc. will purchase AME's drilling rig for an initial payment
of US$ 7 million and a series of US$ 1 million additional payments that are
anticipated to coincide with our drilling seven additional wells in Israel
over the next few years. As the funds for the purchase of the rig are to be
provided by Zion Oil & Gas, our plans are subject to a number of events,
including due diligence, the raising of additional capital and the
establishment of Zion Drilling.
Towards that, I am pleased to tell you that, today, our US$ 50 million Shelf
Offering S-3 Registration Statement
was declared effective by the Securities and Exchange Commission. So,
through the S-3,
we now have the possibility of raising the additional funds required to
implement our plans.
The MoU provides that Zion Drilling, Inc. will be 51% owned by Zion Oil &
Gas and 49% owned by AME.
However, AME will be responsible for the daily operation of the rig.
Our goal in establishing Zion Drilling, Inc. is to continue to drill wells
in Israel without dependence on any outside third party. By implementing
this plan, we will secure control of a drilling rig for our planned future
operations and, as a consequence, raise our exploration business to a
completely new level.
With regard to the Ma'anit-Rehoboth #2 well, you can read below the results
of the completion work. We plan to temporarily suspend work on this well
although we may return to the well at some later stage. Although the results
of the completion work are not what we had hoped for, as we are not able to
announce a commercial discovery, we believe that we have laid an excellent
foundation for our next well, (named by us) the Ma'anit-Joseph #3 well.
We are currently in the process of obtaining the required permits for the
Ma'anit-Joseph #3 well, targeted to reach the Permian geological formation,
lying deep beneath the surface. (Deut. 33:13-16)
To date, we have not managed to reach the Permian geological layer, even
though it has been one of our main goals from the earliest days of the
project. But we are as determined as ever to reach that goal, hopefully, in
our next well. (Jer. 29:11)
To quote Chuck Davidson, CEO of Noble Energy, the Texas Company that found
the Tamar discovery (currently valued at > US$ 15 Billion) offshore Israel:
'There is no such thing as a sure thing in the energy exploration
business'.
Although this was the case during the Ma'anit-Rehoboth #2 well completion,
we are firmly resolved to use all the information and experience that
we gained and drill again into the Ma'anit structure. (Psalm 135:6)
There are a number of reasons why we are so very optimistic regarding the
possibility of finding oil & gas onshore in Israel:
(i) During operations, we recovered some crude oil from the Ma'anit-Rehoboth
#2 well and we also noted
(much more than expected amounts of) natural gas during the drilling phase.
(ii) Last week, the US Geological Survey (USGS) issued a report estimating
that there are 1.7 Billion barrels of recoverable oil and
122 trillion cubic feet of natural gas in the Levant Basin
Province. The USGS defines the Levant Basin Province as an 83,000
square kilometer area of the Eastern Mediterranean... a large proportion of
which is in Israel's economic zone (both offshore and onshore Israel). You
can review the map and read the full report
here.
(iii) This week, representatives of Russian energy giant GAZPROM
met with Dr. Mimran, Israel's National Infrastructure Ministry's
petroleum commissioner, to discuss the possible involvement of Gazprom with
Israel's offshore natural gas fields. The press also reported that: 'a
number of other Russian energy giants are showing interest in the Israeli
energy and infrastructure sector.'
(iv) Within the past two weeks, 'Globes'(one of Israel's leading
business publications) published an interview with Fred Zeidman, who has
been Chairman of the Board or a director of various Texas based oil & gas
drilling / exploration / refining companies. In 2002, President Bush
appointed him 'Chairman of the US Holocaust Memorial Council'.
Fred Zeidman made a number of comments regarding the (very bright) future
for oil exploration in Israel, including:
1. The prospects in Israel are 'brilliant'.
2. The (Tamar etc.) offshore findings were amazing and it is hard to
believe that there are no hydrocarbons onshore.
3. It could be that the onshore deposits will be found 'much deeper'. (This
comment was no surprise to us, of course.)
4. Royalties in Israel of 12.5% are reasonable.
His advice to investors is that investment in oil and gas can be
wonderful, but you need 'patience'.
However, the reward, once successful, is enormous.
We are certainly unhappy that we were not able to declare a commercial
discovery as a result of the recent completion operations. But our team
remain convinced that our license areas and our permit area will ultimately
deliver to us their deeply hidden treasure... in G-d's good time.
We have both the patience and the firm resolve... and now, we expect to soon
have the right tool to finish the job -
a 2,000 Horsepower drilling rig in Israel on a permanent basis.
"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
Contact Information
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Zion Oil & Gas Newsletter
Dear Shareholder and/or Friend of Zion...
My last update to you was on March 5, 2010.
During the past two weeks, we have continued our completion work on the
Ma'anit-Rehoboth #2 well. As you can read below, this includes setting
packers in the wellbore and perforating the formation by lowering
explosives into the well:
On March 16, 2010, Zion's
financials for the 2009 calendar year were filed with the SEC.
They are also available
through our website.


NRB Conference - March 2010
Also visiting the NRB conference was Tom Boulting of Charter Films Ltd. Tom is planning to film a documentary about John Brown and Zion Oil & Gas, Inc. with the title '49:1 The Zion Story' He has already established a website for the project at www.zionthemovie.com, including a trailer that you may be interested to watch.



The Ma'anit-Rehoboth #2 Wellsite on Thursday March 18, 2010
|
The Ma'anit-Rehoboth #2 Well
Since the previous report, we have been working towards the first production test of this well. We have "conditioned" the hole with clean, filtered fluid (a potassium chloride solution that is compatible with the reservoir rock), successfully perforated the first test interval of approximately 20 meters (see the sample illustrations above), acidized the interval, rigged up Schlumberger Oilfield Services Company, and ran in the hole with their production testing tools. By the time this report is published, the first production test should be underway. During the acidizing operations, we used a 15%
hydrochloric acid solution designed to dissolve any rock
debris Surface pressures observed during the acidizing operation suggest that the job successfully achieved its objectives and that we are now ready to production test the flow potential of the first interval.
To begin the production test, we first create a
pressure differential in the wellbore. We do this by
estimating the pressure in the rock formation of the
test interval and then reduce the hydrostatic
pressure in the production pipe (run in the wellbore
to near the test interval) to a much lower pressure.
This is done by evacuating the fluid column in the production pipe using nitrogen gas which is possible since the production pipe can be physically isolated from the wellbore. When we are ready to begin the test, we open the production pipe to the test interval and the large pressure imbalance creates the energy for any fluids and gases in the rock to flow to the wellbore and, ideally, to the surface.
We have measuring devices in the well and at the
surface, in order to obtain a very accurate reading
on pressures and flow rates that will ultimately be
used to estimate the amount of producible
hydrocarbons within the reservoir rock, if any.
Following this initial test, we will move down hole,
where we will test an interval in what is now the
'open hole' section of the well. The timing for
this next test will depend largely on the outcome of
the first test.
Operations at the Elijah #3 Well (No change from previous report.) 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 and to relocate the rig to the Ma'anit-Rehoboth #2 well We are currently assessing various options that should enable us to proceed with the 'next steps' for this well. The Issachar-Zebulun Permit Area As reported previously, Zion and the Geophysical Institute of Israel (GII) have signed an Agreement for GII, on behalf of Zion, to acquire approximately 30 kilometers of seismic data in Zion's Issachar-Zebulun Permit area. The timing for the field work is scheduled to take place mid-summer 2010. |
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Zion Oil & Gas Newsletter
Dear Shareholder and/or Friend of Zion...
Last week, both Bill Ottaviani (Zion's President and Chief Operating
Officer) and I visited New York,
in order to present Zion Oil & Gas at the 'NASDAQ-Oppenheimer 14th Annual
Israeli Equities Conference'.
We presented to investment professionals attending the 'by invitation only'
event. Amongst others, conference attendees included representatives from
Bank of America, Credit Suisse and Morgan Stanley.
We believe that the presentation, an audio webcast with slides, was
successful and have posted a link
to it on Zion's homepage
(www.zionoil.com)
so that you can review and enjoy it.
Please note that, due to the ever increasing demands on management time,
from now on, we will
send you an update email once every two weeks, instead of every week. Of
course, if there is anything
urgent to report, we will issue a press release or a 'breaking news' email
to you.
But, as always, our petroleum exploration work will continue at an unabated
pace...
every single working day.
...............................................................
So, here is this week's operations update:

The
Ma'anit-Rehoboth #2 Well
Since the previous report, I am pleased to note that we have restarted rig
operations on this well, as you can see in the pictures above (photographed
on Thursday, March 4, 2010).
Apart from the rig crew of Aladdin Middle East, the Metsada wireline truck
is onsite as is the Weatherford team and their equipment.
Our plan is to test several geologic intervals for the presence of
producible hydrocarbons. These various 'intervals of interest' were
previously identified through the use of open-hole diagnostic tools when the
well was drilled.
Now that we have the drilling rig back on the hole, we can "complete" the
well.
In the past days, we completed some of the initial down-hole preparatory
work that was needed before we can production test the first geologic
interval. This preparatory work included milling out the plug used to
isolate the open-hole section of the well and validating that the cement
bond quality between the casing and rock formation is adequate for testing.
Without a good cement bond, that effectively isolates the zone we wish to
test, we risk not being able to accurately evaluate the productivity of that
particular zone. To assess if the cement bond is adequate, we used an
electronic down-hole tool (aptly named a 'Cement Bond Logging Tool') that
confirmed that we do have sufficient bond quality. This is good news as it
means that we do not need to perform a remedial cementing operation and can
proceed to the next phase of the testing operation for this first interval.
The next phase includes perforating the zone of interest and testing the
well for hydrocarbon flow. To 'perforate', we use shaped explosive charges
that are run into the well on a perforating 'gun' - a long hollow cylinder.
The charges are spaced out equally along this cylinder, across the zone of
interest, and detonated from the surface. The energy from the exploding
charges penetrates (or perforates) the casing and into the rock formation.
This action creates a passageway for any hydrocarbons in the rock to find
their way to the wellbore. The pressure drop from the higher pressure rock
to the lower pressure wellbore allows any hydrocarbons present to flow from
the rock to the well. We plan to use sophisticated equipment from
Schlumberger Oilfield Services to measure pressures and flow rates, both
inside and outside the well, all critical data needed to assess a well's
long term production capabilities.
Logistical planning and coordination continues to be a significant challenge
in Israel, as we have to import much of the equipment needed for our well
operations. For the most part, we have been securing our needed resources
for this well work on a 'just in time' basis. Now that we do not
have to perform a remedial cementing operation, we find ourselves in a
situation where we may need to wait on some needed equipment to continue our
work without interruption.
Our suppliers have been working very hard to ensure they meet our tight
timing needs, but sometimes delays are inevitable. Should we encounter such
a delay, we don't anticipate it to be very long and will be doing everything
possible to stay on our planned schedule to complete the full testing
program in April 2010.

"In
your good pleasure, make Zion prosper..."
Psalm 51:18
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Zion Oil & Gas Newsletter
February 19, 2010
Dear Shareholder
and/or Friend of Zion...
On Wednesday of this week, Israel's Channel 10 TV sent a reporting team to
interview 'Zion Oil & Gas' and film at the Ma'anit site. I understand that a
TV program on 'Oil and Gas in Israel' is scheduled for broadcast tonight
(Friday) on Channel 10 in Israel.
As I mentioned last week, Zion has been featured or mentioned in various
articles in the business press recently, as 'Oil & Gas in Israel' continues
to be a 'hot topic' that is attracting very great interest in Israel.
Please note that there will not be a weekly update next week as both Bill
Ottaviani (Zion's President and Chief Operating Officer) and I will be in
New York, presenting Zion Oil & Gas at the NASDAQ-Oppenheimer Israeli
Equities Conference.
...............................................................
Here is this week's operations update:

The Wellhead at the Elijah #3 Well
"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
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Zion Oil & Gas Newsletter
Dear Shareholder and/or Friend of Zion...
On Monday, 'Maariv' (one of the major daily Hebrew
language newspapers in Israel) sent their reporter, Mordechai Chaimovitch,
to visit both our Caesarea office and the Ma'anit-Rehoboth #2 and Elijah #3
well sites. They conducted some interviews, took many photographs and then
followed up, on Tuesday, with a telephone interview with John Brown in
Dallas.
Zion has been featured or mentioned in various articles in the business
press recently, as 'Oil & Gas in Israel' continues to be a 'hot topic' that
is attracting very great interest in Israel.
Left
to Right: Mordechai Chaimovitch interviews
Rasim Yoruk (AME's Assistant Drilling
Manager)
The Ma'anit-Rehoboth #2 Well Site, showing the well head
We are now in the process of getting ready to re-enter this
well to conduct production testing on several geologic intervals. As noted
previously, the Ma'anit-Rehoboth #2 well was drilled to a depth of 17,913
feet (5,460 meters) and had been temporarily suspended since December 2009.
During a routine workover operation, prior to the well's suspension, a small
quantity of oil was recovered from the well, giving physical evidence to
support our geologist's contention that the well penetrated hydrocarbon
bearing intervals.
The decision to mobilize the drilling rig from the Elijah #3 well to the
Ma'anit-Rehoboth #2 well is a major undertaking, as we need to prepare the
Ma'anit site and relocate many tons of equipment by a distance of
approximately 25 kilometers. The project to move the rig requires
approximately two weeks before the rig mast is erected again and well
operations may begin anew.
We have finalized our testing procedures for the Ma'anit-Rehoboth #2 well
and are now ordering the required equipment and services so that work may
begin when the rig becomes operational. In the meantime, we continue to
observe evidence of reservoir pressure and the presence of potential
hydrocarbons at the surface and are anxiously awaiting the rig's arrival at
the Ma'anit-Rehoboth #2 well site, later this month.
The Issachar-Zebulun Permit Area
The Annual
Meeting Of Shareholders
We will be sending out formal notices later in the year, but you may be
interested to note in your diary that
Zion's Annual Meeting of Shareholders is scheduled to take place, in
Israel, on
Monday, June 14, 2010.
This may be an opportunity for you to visit Israel, attend Zion's Annual
Meeting and enjoy a trip to the Holy Land.
"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.comFORWARD 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 sufficiency of cash reserves 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
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Zion Oil & Gas Newsletter
Dear Shareholder and/or Friend of Zion...
On Monday, February 1st,
I was extremely happy to welcome to Zion,
Mr. William (Bill) Ottaviani,
Zion's newly appointed President and Chief Operating Officer.

You can read the details in the press release, but I'll mention that Bill Ottaviani
As I noted in the press release:
"Bill Ottaviani joins Zion with a proven industry track record and will greatly strengthen our managerial and operational competence. Bill is a first class oil and gas professional who has the experience, the ability and the specific skill-set to provide Zion with fundamental operational and technical direction, help us to implement our multi-well strategy and achieve success with our operations."
The past week has been eventful, as you can read below. The path of true love and drilling oil and gas wells is seldom smooth it seems.
On Wednesday, there was good news for Israel, as a new natural gas discovery was announced, off the coast of Israel, in the 'Mira' and 'Sarah' prospects. The two finds of 'up to 6 trillion cubic feet (TCF)' of natural gas may be worth as much as $6 billion, using current market evaluations.
One headline noted: 'Israel has significant offshore gas potential'. Zion's job is to show the onshore potential by having an oil and gas discovery onshore... and as soon as possible...

In the latter part of the
week, we were happy to greet the management team from Aladdin Middle East
Ltd (AME),
who visited Israel from Ankara, Turkey, so that we could hold discussions
regarding Zion's future drilling plans.
Our meetings were both enjoyable and productive.
...............................................................
Here is this week's operations update.
Drilling Operations at the Elijah #3 Well

In last week's update, I noted
that we had drilled the Elijah #3 to a depth of approximately 10,938 feet
(3,334 meters)
and that the drill string was stuck within the Asher Volcanics section of
the hole and that we were working through
the problem and were 'cautiously optimistic' about resuming drilling soon.
After achieving initial success in retrieving a significant portion of the
stuck pipe, progress slowed to the point where
we felt it best to pause and reassess how best to address the challenge of
recovering the pipe and resume drilling through the Asher Volcanics to our
target depth. To that end, we felt it prudent to temporarily
suspend drilling activity at the
Elijah #3 well, while we consider the various options in front of us. These
options include, in part, a resumption of fishing operations using a
modified recovery system or sidetracking the stuck pipe by directionally
drilling a new bore hole
adjacent to the current hole (taking advantage, of course, of the three
kilometers already drilled).
Each option under consideration requires time to procure the necessary equipment and services to execute the new operation (since much of what is needed is unavailable here in Israel).
Rather than putting everything in "standby" mode for several weeks while
waiting to resume work on the Elijah #3 well,
we decided to move the rig and its ancillary equipment to the Ma'anit-Rehoboth
#2 well, in order to begin production
testing operations as soon as possible (see summary below).
We have every expectation to resume activity on the Elijah #3 well in the not-too-distant future. Based on our current geologic assessment, we remain excited about the hydrocarbon potential in this region and look forward to 'making hole' once again at this location. However, the fact that the Elijah #3 well sits on a volcanic section does complicate our decision making process.
The Ma'anit-Rehoboth #2 well was drilled to a depth of 17,913 feet (5,460 meters). The well penetrated a number of geologic formations that have been preliminarily deemed to have hydrocarbon potential and we retrieved a small quantity of crude oil.
In last week's report I noted the chemical composition of the oil indicated that it was not, as we expected, from the Triassic geological period, but from the Cretaceous geological period and similar in nature to that recovered by others in the Dead Sea area. While the full implication of this assessment is still uncertain, the good news is that Israel has a very large extent of late Cretaceous source rock suggesting a possible correlation to the potential quantities of oil that may lie underneath Israel's continental shelf.
Since we completed drilling the well, we have observed evidence of reservoir pressure and the presence of potential hydrocarbons at the surface. Now we are positioning ourselves to see what evidence lies within the rocks themselves.
As noted in the Elijah #3 summary above, we are in the process of mobilizing the drilling rig from that well to the Ma'anit-Rehoboth #2 well. While we are not planning to do any further drilling at this time at the Ma'anit-Rehoboth #2 well, the added horsepower that this rig provides gives us greater operational flexibility to perform certain completions/testing work that may not be possible with other, smaller workover rigs.
Our geologists have identified several potential hydrocarbon-bearing intervals from the diagnostic data acquired when this well was drilled. We are currently fine-tuning our plans for production testing these intervals and, subject to equipment availability, should begin well operations in approximately two weeks time.
Ironically, the temporary suspension of operations at the Elijah #3 well allows us to start the testing procedures at the Ma'anit-Rehoboth #2 well much sooner than our previously anticipated schedule.
So while we temporarily step back from one well to reconfigure our next steps, we quickly ramp-up activity at another, as we continue on our unwavering quest for the 'treasure hidden deep beneath the Promised Land'.
The Issachar-Zebulun Permit Area
This past week, Zion and the Geophysical Institute of Israel (GII) signed an Agreement for GII, on behalf of Zion, to acquire approximately 30 kilometers of field seismic, in Zion's Issachar-Zebulun Permit area. The field work is scheduled to begin in mid-April 2010 and last until mid-May 2010.
"In your good pleasure, make Zion prosper..."
Psalm 51:18
Thank you for your support of Zion, and
Richard Rinberg
CEO of Zion Oil & Gas, Inc.
www.zionoil.comFORWARD 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 sufficiency of cash reserves 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
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Zion Oil & Gas Newsletter
January 29, 2010
Dear Shareholder and/or Friend of Zion...
On Sunday, January 24, 2010, the Jerusalem Post ran an article on William "Tex" Moncrief, a Texas billionaire wildcatter. In particular, one quote from "Tex" Moncrief caught my eye:
"Sometimes, when you don't find what you're looking for, you have to just keep on going."
No argument from me, as that's just what Zion Oil & Gas is about. However, I do believe that we are now beginning to find what we are looking for.
The past week has been eventful, both for the rig crew and support staff at the rig site and the administrative staff at Zion's offices.
As you can read below, we have almost concluded (successfully, we hope and believe) the fishing operation at the Elijah #3 site, seen more crude oil at the Ma'anit-Rehoboth #2 well site, agreed to terms for the field seismic acquisition on the Issachar-Zebulun Permit area and planned for the future by filing 'shelf offering' documentation with the SEC. Please read on for more details and explanation.
Here is this week's operations update
Drilling Operations at the Elijah #3 Well

In last week's update, I noted that we had drilled the Elijah #3 to a depth of approximately 10,938 feet (3,334 meters) and that the drill string was stuck within the Asher Volcanics section of the hole.
I also explained that, in order to free the pipe, we had implemented a fishing procedure with specially constructed tools suited to our specific requirements.
Last week, we had initial success with a 'back off' operation (unscrewing the stuck pipe with a 'string shot' - an explosive cord) and then, this past week, we ran 'wash pipe' (large diameter pipe) in order to 'wash over' the remaining fish in the hole.
At the current rate of penetration through the Asher Volcanics, we expect that, very early next week, we will be able to access the fish and begin its retrieval from the hole, so we are now 'cautiously optimistic' that, next week, we will be able to resume drilling towards our target depths.
I am reminded of a phrase that I heard many years ago: "Success is defined by how high you bounce, when you hit the bottom."
Our drill pipe became stuck near the bottom of the well, but we are working through the problem and expect to resume drilling... hopefully to the success that we believe will come... in G-d's good time. (Ecclesiastes 3:1)
The Ma'anit-Rehoboth #2 Well

Left
to Right: Dr. Eli Tannenbaum, Dr. Eliezer Kashai (Zion's Vice
President - Israeli Exploration),
Stephen Pierce (Zion's Exploration Manager)
The Ma'anit-Rehoboth #2 well was drilled to a depth of 17,913 feet (5,460 meters). The well penetrated a number of geologic formations that have been preliminarily deemed to have hydrocarbon potential and we retrieved a small quantity of crude oil.
As you can see in the photograph above, Dr. Eli Tennenbaum met with our senior geologists and delivered the preliminary analysis of the samples recovered at the Ma'anit-Rehoboth #2 well. The samples were confirmed to be crude oil.
The chemical composition of the oil indicated that it was not, as we expected, oil from the Triassic geological period, but from the Cretaceous geological period and similar in nature to that recovered by others in the Dead Sea area.
Our geologists are now working on their analysis of the possible alternatives for the migration of the Cretaceous oil from Cretaceous source rocks into Triassic reservoir rocks.
The good news is that Israel has a very large extent of late Cretaceous source rock, so this is positive for the potential quantities of oil that may be hidden underneath Israel's continental shelf.
The current working hypothesis of our geologists is that the oil matured offshore Israel and migrated both horizontally and vertically to structurally higher but older Triassic rock, onshore Israel. As both oil and gas are lighter than water, they always migrate vertically, but in our license area, the oil seems to have also migrated horizontally.
As I mentioned last week, since we completed drilling the well, we periodically open a surface valve to release pressure that builds up in the well. This past week one of our staff opened a surface valve and (again) found that there was crude oil and possible condensate.
To repeat, we are unsure as to whether we have made a discovery of any hydrocarbon reservoir or, if such a reservoir exists, whether it would be commercially viable, but this well does give us constant cause for optimism.
The Issachar-Zebulun Permit Are
On Sunday, January 24, 2010, we held a meeting with Dr. Uri Frieslander of the Geophysical Institute of Israel (GII), in order to agree the remaining details regarding our planned field seismic acquisition of approximately 30 kilometers of field seismic, in the Issachar-Zebulun Permit area.
Due to GII's schedule, the field work is now scheduled to begin in mid-April 2010 and last until mid-May 2010.
We have agreed the contract details and I have signed the contract. I am now waiting for GII's authorized signatory to sign on GII's behalf. I have been told by GII that he will sign the contract on Sunday, January 31, 2010.
Below this update you can read the press release that we issued on Thursday, January 28, 2010, just after we filed a registration statement for a 'shelf offering', with the U.S. Securities and Exchange Commission (SEC). This is part of our forward-looking 'strategic planning'.
After being declared effective by the SEC, the shelf registration statement will allow Zion, should it be needed (and subject, of course, to market conditions then prevailing) to sell its securities to a maximum of $50 million in gross proceeds. Details as to any such sales, if they occur, would be included in reports subsequently filed with the SEC.
The good news is that, once the registration statement is declared effective, Zion will have tremendous flexibility. So, until we have a firm need, we don't have to define either the stock price or the quantity of stock being offered.
To quote from the press release:
"Zion Oil does not currently have any commitments or specific plans to sell securities."
"Zion intends to use the net proceeds from any sale of securities under the shelf registration statement for Zion's multi-well drilling plan, including costs associated with drilling operations, drilling equipment, completion operations, production equipment, seismic acquisition or general corporate purposes."
We continue to attract attention in interest in our work. On January 24th, GLOBES (Israel's premier business daily) ran a large (and positive, I believe) article on Zion Oil & Gas, Inc.
I can tell you
that I am really looking forward to next week, as I believe that we
will see the fruition of the last few weeks' work and the end to the
frustration of the stuck pipe in the Elijah #3 well. Such is life.
"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.
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
ZION OIL FILES SHELF REGISTRATION STATEMENT
Dallas, Texas and Caesarea, Israel - January 28, 2010 - Zion Oil & Gas, Inc. (NASDAQ GM: ZN) announced today that it has filed a Form S-3 shelf registration statement with the Securities and Exchange Commission (SEC). When declared effective by the SEC, Zion will have the option to offer and sell, from time to time in one or more offerings, up to $50 million of common stock, debt securities, warrants to purchase any of these securities, or any combination of such securities. The securities may be offered in one or more offerings, and at prices subject to prevailing market conditions to be set forth in a supplemental prospectus filing with the SEC at the time of such offering, should such an offering occur. Zion Oil does not currently have any commitments or specific plans to sell securities.
Zion intends to use the net proceeds from any sale of securities under the shelf registration statement for Zion's multi-well drilling plan, including costs associated with drilling operations, drilling equipment, completion operations, production equipment, seismic acquisition or general corporate purposes.
A registration statement relating to these securities has been filed with the SEC, but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This press release shall not constitute an offer to sell or a solicitation of an offer to buy the securities, nor shall there be any sale of these securities in any jurisdiction in which an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. Any offer of these securities will be made solely by means of the prospectus included in the registration statement and any prospectus supplement that may be issued with respect to such offering.
A copy of the final prospectus and prospectus supplement relating to any offering under the registration statement will be filed with the SEC and may be obtained, when available, by contacting Zion Oil & Gas, Inc., Attn: Investor Relations, 6510 Abrams Road, Suite 300, Dallas, Texas 75231, telephone number 214-221-4610.
About Zion Oil & Gas, Inc.
Zion Oil & Gas, a Delaware corporation, explores for oil and gas in Israel in areas located onshore between Haifa and Tel Aviv. It currently holds two petroleum exploration licenses, the Joseph and the Asher-Menashe Licenses, between Netanya in the south and Haifa in the north, covering a total of approximately 162,000 acres and the Issachar-Zebulun Permit Area, adjacent to and to the east of Zion's Asher-Menashe license area, covering approximately 165,000 acres. Zion's total petroleum exploration rights area is approximately 327,000 acres.
Zion's common stock trades on the NASDAQ Global Market exchange under the symbol "ZN" and Zion's warrants trade under the symbol "ZNWAW".
FORWARD LOOKING STATEMENTS: Statements in this press release that are not historical fact, including statements regarding Zion's operations and planned operations are forward-looking statements as defined in the "Safe Harbor" provision 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, including, without limitation, the ability to cause the shelf registration statement declared effective by the SEC. 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:
Brittany Russell
Zion Oil & Gas, Inc.
6510 Abrams Rd., Suite 300
Dallas, TX 75231
(1) 214-221-4610
Email: brittany@zionoil.com
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Zion Oil & Gas Newsletter
Dear Shareholder and/or Friend of Zion...
Last week, I wrote that I am not going to continually repeat information that has already been sent to you and that when there is 'no news to report', I will write just that.
Well, for this week's update, there is news... some good and some less so.
But, as Winston Churchill wrote, "Attitude is a little thing that makes a big difference", so we are moving forward without becoming disheartened by the past week's (hopefully temporary) setback.
At Zion, we are convinced
that we will ultimately surmount all problems, because we are applying a
solid professional approach to the job and because we have deep and enduring
faith in our work.
Jeremiah (32:17) understood much when he said: "Lord G-d... you have made the heaven and the earth by your great power and stretched out arm, and there is nothing too hard for you."
...............................................................
Here is this week's operations update.
Drilling Operations at the Elijah #3 Well

In last week's update, I
noted that we had drilled the Elijah #3 to a depth of approximately 10,938
feet (3,334 meters)
and were still in the Asher Volcanic Complex.
Very shortly after the update was released, it became apparent that the drill string became stuck in the hole.
Although the well was cased from the surface down to 6,706 feet (2,044 meters), it appears that some of the formation of the uncased hole had 'crumbled' into the hole and caused the drill string to become stuck.
This sort of problem with volcanics is well known and we had previously taken steps to prevent such an occurrence (such as increasing the weight and the viscosity of the drilling mud).
However, the prevention could never be 100% guaranteed and, unlucky for us, the event actually happened.
In order to free the stuck drill string, we tried a number of different techniques that are, in such a situation, 'best practice' oil and gas procedures.
These had little effect, so we implemented a 'fishing' procedure with specially constructed tools suited to our specific requirements. In the oilfield, 'fishing' is the term used to describe the process by which equipment stuck in the well is retrieved. It is part 'art' and part 'science' and requires both skill and patience... and sometimes a little luck... to achieve success.
For example, we tried
'jarring' - jolting the pipe in the well, by imparting sharp jolts to the
pipe.
However, this procedure did not free the stuck pipe.
Having determined where the pipe was stuck, we then performed a 'back off' operation by unscrewing the stuck pipe with a 'string shot' (an explosive cord).
As I write this update, we have achieved initial success with the 'back off' operation, are rigging up to run 'wash pipe' and will attempt to 'wash over' the remaining fish in the hole.
'Wash pipe' is large diameter pipe with a cutting edge that can be used to wash over the fish. Drilling mud can then be pumped though the washpipe to clear debris from around the fish to prepare it for a fishing tool that can then retrieve the fish from the hole.
We remain 'cautiously optimistic' that we will soon get past the current obstacles and can then resume drilling towards our target depths.
The Ma'anit-Rehoboth #2 Well

The Ma'anit-Rehoboth #2
well was drilled to a depth of 17,913 feet (5,460 meters).
The well penetrated a number of geologic formations that have been
preliminarily deemed to have hydrocarbon potential and we retrieved a small
quantity of crude oil.
The analysis of that oil is expected early next week and should provide us with insight as to the quality (but not the quantity) of the oil retrieved. It should also help us to understand the geological source of the oil and this, in turn can help us to evaluate the recommendations by our engineering staff regarding further testing and completion procedures.
Since we completed drilling the well, we periodically open a surface valve to release pressure that has been built up in the well. This past week one of our staff opened a surface valve and found that there was a smell of oil and a thin layer of oily matter floating on top of the white foam that came out under pressure.
Our site geologist ran some tests on samples that were taken from the well and found that the samples 'fluoresced' - that is, they shone a faint green color under ultra violet light. This is an indicator that hydrocarbons were present in the sample. Our site geologist preliminarily determined that the sample may be a hydrocarbon condensate and sent it for chemical analysis.
At this stage, we are unsure as to whether we have made a discovery of any hydrocarbon reservoir or, if such a reservoir exists, whether it would be commercially viable. It may be several months before we are able to arrive at any conclusive determinations. However, what happened this week certainly gives us cause for optimism.
The Issachar-Zebulun Permit Area
No additional news to report this week.
We
have been reprocessing all of the existing seismic and are planning to
acquire, in March 2010, approximately 30 kilometers of field seismic, in the
permit area.
........................................
You may be interested to know that, during the week, the business press in Israel has been full of oil and gas related articles. It certainly is a hot topic in Israel at present.
Finally, early this past week I met with a representative of Aladdin Middle
East Ltd and continued discussions regarding the drilling of additional
wells for us, in order to progress and implement our multi-well program. In
early February, some senior Aladdin Middle East Ltd executives plan to visit
Israel. I mention this because there has been some recent publicity
regarding the poor diplomatic relations between Turkey and Israel. In
contrast, I would describe the relations between Zion Oil and Aladdin Middle
East Ltd as 'excellent'.
Psalm 51:18
Thank you for your support of Zion, and
Shalom from Israel
Richard Rinberg
CEO of Zion Oil & Gas, Inc.
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Contact Information
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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.comhone: 1-888-891-9466
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Zion Oil & Gas Newsletter
January 15, 2010
Dear Shareholder and/or Friend of Zion...
There has been quite some discussion by our staff regarding Zion's weekly updates, as not every week contains 'news to report' on every part of our exploration license and permit areas.
The general feeling was that if there is nothing new to report then we should simply state that fact. There will be weeks with much to report and there will be weeks with little to nothing new to report.
Turning to the Book of Ecclesiastes (1:9-10), there is the well known comment:
Is there anything of which one can say, "Look! This is something new"?
So,
I am not going to continually repeat information that has already been sent
to you.
Where there is 'no news to report this week', I will write just that.
But you can be certain that we are doing
our best to move Zion's exploration program forward... every day of
every week.
...............................................................
This
past week, Zion's Founder and Chairman, John Brown, visited Israel together
with Bill Ottaviani, a Petroleum Engineer who spent 25 years (1982 to 2007)
working for Chevron Corporation in various countries and then two years
(2007-2009) as Chief Operating Officer of Rex Energy, helping to build up
Rex Energy in the USA. John Brown invited Bill Ottaviani to visit Israel as
a prospective candidate for Zion's Board and to review our operations and
help advise us regarding some of the recommendations currently under
technical evaluation.
Also, this week, we were visited by a team from 'Halman-Aldubi Group'
one of Israel's leading institutional
Investment Management groups. Halman-Aldubi is the only company in
Israel that deals with the
management of provident funds on behalf of the public and is completely
independent.
There was some Israeli Oil & Gas news released in Israel, this week. On
Wednesday, January 13, 2010,
the Jerusalem Post noted that Prime Minister Binyamin Netanyahu has
ordered work to begin, this month,
on a natural gas pipeline that will run from Dor Beach, south of Haifa,
up to the oil refineries in Haifa.
The significance of the Israeli government continuing to build the
onshore natural gas pipeline infrastructure
is that, in the event that we are successful in finding and producing
commercial quantities of natural gas,
the supply and distribution of that natural gas should be possible
through the onshore pipeline system.
..............................................
Here is this week's operations update.
Drilling Operations at the Elijah #3 Well

The Elijah #3 site
L to R: Bill Ottaviani,
Richard Rinberg (Zion's CEO), John Brown (Zion's Founder and Chairman),
Eyal Shuker (Investment Manager at Halman-Aldubi), Sandra Green (Zion's CFO)
and two analysts from Halman-Aldubi
The Elijah #3 well has been cased from the surface down to 6,706 feet (2,044 meters).
For the period from 'spudding' the well (that is 'beginning drilling operations') to December 31, 2009, we drilled to a depth of approximately 9,186 feet (2,800 meters), at an average rate of penetration of approximately 131 feet (40 meters) per day.
As of this morning, the Elijah #3 well has been drilled to a depth of approximately 10,938 feet (3,334 meters).
Both last week and this week, we have been drilling in the Asher Volcanic Complex, composed of tuffs, weathered basalts, non-weathered basalts, red shales and red and tan mudstones.
The Ma'anit-Rehoboth #2 Well

The Ma'anit-Rehoboth #2 Well Site, showing the well head
No additional news to report this week.
The Ma'anit-Rehoboth #2 well was drilled to a depth of 17,913 feet (5,460 meters). The well penetrated a number of geologic formations that have been preliminarily deemed to have hydrocarbon potential and we retrieved a small quantity of crude oil. We are awaiting analysis of that oil and are evaluating recommendations by our engineering staff regarding further testing and possible completion procedures.

The Issachar-Zebulun Permit Area
No additional news to report this week.
We
have been reprocessing all of the existing seismic and are planning to
acquire, in March 2010,
approximately 30 kilometers of field seismic, in the permit area.
........................................
Finally, I'll note that we have begun preliminary discussions with Aladdin
Middle East Ltd regarding the
drilling of an additional well, in order to progress and implement our
multi-well program.
"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.
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Contact Information
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Zion Oil & Gas Newsletter
January 8, 2010
Here is my first update to you, in 2010, so:
May 2010 bring you health, happiness and success.
All of us share the same deep desire to achieve success with our goal to find oil and gas onshore Israel.

In my home, hangs the above portrait of Theodor Herzl - the Founder of the modern State of Israel. On the metal frame is engraved, in Hebrew, the words he wrote in 1902: 'Im tirtsu, ein zo agada' (If you will it, it is no dream.)
Everything worthwhile starts with the desire to reach beyond the present, for something worth the huge effort and struggle.
Herzl also wrote: 'Dream and deed are not as different as many think. All the deeds of men are dreams at first...'
I hope that this year we will see the realization of our hopes and dreams in finding oil and gas onshore Israel.
We have excellent equipment, we have an expert team and we have the determination to succeed.
So, here is this week's operations update.
Drilling Operations at the Elijah #3 Well

The 2,000 horse power drilling rig, at the Elijah #3 sit
Our
update to
you on Friday, December 18, 2009,
I noted that
the
Elijah #3 well has been cased from the surface down to 6,706 feet (2,044
meters)
and, as of this afternoon, we are testing the blowout preventer system in
preparation to drill deeper
(presently in Upper Jurassic carbonates) as planned.
For the period from 'spudding' the well (that is
'beginning drilling operations') to December 31, 2009, we drilled to a depth
of approximately 9,186 feet (2,800 meters), at an average rate of
penetration of approximately 131 feet (40 meters) per day. We have made good
progress and are 'on schedule'.
During the past three weeks, we continued drilling at an excellent rate and as of this morning, the Elijah #3 well has been drilled to a depth of 10,210 feet (3,112 meters).
We
are currently drilling in the Asher Volcanic Complex, composed of tuffs,
weathered basalts,
non-weathered basalts, red shales and red and tan mudstones.
The Ma'anit-Rehoboth #2 Well

The Ma'anit-Rehoboth #2 Well Site, showing the well head
The last update (on December 18, 2009) is valid, but for ease of reference, here are the main details regarding this well:
By mid-September 2009, we had drilled the Ma'anit-Rehoboth #2 well to a depth of 17,913 feet (5,460 meters). The well penetrated a number of geologic formations that have been preliminarily deemed to have hydrocarbon potential.
We used a workover rig for swabbing operations and retrieved a small quantity of crude oil that came from the open hole section below the last casing point at 15,830 feet (4,825 meters). A sample of the crude oil is being analyzed as part of the overall technical evaluation now underway.
We are unsure as to whether we have made a discovery of any hydrocarbon reservoir (and even if we have, we know nothing regarding its possible commercial viability).
We continue to evaluate the steps that we can or should take in order to test the identified zones of interest individually. At this stage, it is critical that we use the correct equipment and utilize personnel with the proper training and expertise.
To that end we are carefully evaluating recommendations by our engineering staff and the availability of certain specialist equipment in Israel. So we thank you, in anticipation, for your patience while we work through the various recommendations.
As there is a great deal of technical evaluation work to be completed and we need to source some specialist equipment and services, it is currently anticipated that we will not resume testing procedures on the Ma'anit-Rehoboth #2 well until after March 2010.
The Issachar-Zebulun Permit Area
We have been reprocessing all of the existing seismic and I note that there is extensive coverage over most of the license.
However, in addition, we have been negotiating to sign a contract and have now verbally agreed with the Geophysical Institute of Israel to acquire, in March 2010, approximately 30 kilometers of field seismic, in the permit area.
Reprocessing the existing seismic will help us to better define the geological structures, while the 30 kilometers of newly acquired seismic line will help us to better define the Jordan Valley River stratigraphy.
In
conclusion, we have much work ahead of us in 2010, but are optimistic that
we are 'closing in' on our goal.
Psalm 51:18
Thank you for your support of Zion, and
Shalom from Israel
Richard Rinberg
CEO of Zion Oil & Gas, Inc.
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.
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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
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Dear Shareholder and/or Friend of Zion...
I am pleased to report that, on Monday of
this week, we were able to successfully complete our rights offering. We
offered stockholders 3.6 million shares of Zion's common stock at a
subscription price of $5.00 per share.
As you can read in the press release (Click
Here For Link To Press Release)
that we issued on Tuesday, December 1, 2009, preliminary results indicated
that subscriptions were received for over $37 million, significantly greater
than the maximum available of $18 million.
As soon as we can, we will return the
oversubscription money and issue the stock subscribed for. There is
significant administration involved, so this will take a number of days.
The rights offering gross proceeds of $18
million (before offering related cost and expenses) will provide us with the
financial and operating flexibility to significantly further our exploration
and drilling program.
We should soon be in a position to pinpoint
the location of our next proposed drilling location and are planning seismic
acquisition in the field, on our Issachar-Zebulun permit area, in March
2010.
In the meantime, our other work
continues...


We drilled the Ma'anit-Rehoboth #2 well to
a depth of 17,913 feet (5,460 meters).
As you can see in the photographs above
(taken yesterday, Thursday, December 3, 2009) the workover rig is on
location and adjacent to the well head. When I visited the Ma'anit site to
take the photographs shown above, I found
Aladdin Middle East's Drilling Manager, Rasim Yoruk, taking his own
photographs. He feels a great connection to the site, as it is the first
well he has drilled in Israel and he wants to keep a complete personal
record of the operations at the site. Such is the deep personal connection
that we all feel about our work.
As previously noted, the completion procedures have been agreed and the
workover rig contract signed.
Starting next week, we intend to begin swabbing and completion testing
operations and are looking
forward to getting back to work at the Ma'anit-Rehoboth #2 well site.
Drilling Operations at the Elijah #3 Well

The Elijah #3 well has been cased from the surface down to 3,461 feet (1,055
meters).
Thank you for your support of Zion,
Shalom from Israel
Richard Rinberg
CEO of Zion Oil & Gas, Inc.
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Dear Shareholder and/or Friend of Zion...

Please read below Zion's plans to test its well.

Rights Offering
Thank you for your support of Zion and
Shalom from Israel
Richard Rinberg
CEO of Zion Oil & Gas, Inc.
www.zionoil.com
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Dear Shareholder and/or Friend of Zion...
Here is an update of our progress during
the past week.
Operations on the Ma'anit-Rehoboth #2 Well
In last week's update (dated September 25,
2009) I wrote:
"We have decided, for the present, not
to drill any deeper in this well and are now analyzing and establishing the
priorities of the seven zones that warrant completion testing. The well
bore is in excellent condition and it is also possible that we will drill
this well deeper in the future. Next week, I will comment further."
The Ma'anit-Rehoboth #2 well was planned as
a deep well in order to test the Permian geological formation and the
original planned target depth was 5,500 meters (18,040 feet).
During the planning of the well, our
geologists, basing their opinion on the available seismic and other data,
believed that drilling to the planned target depth of 5,500 meters (18,040
feet) would result in us testing the Permian geological layer.
In September 2009, when our drilling
reached a depth of 5,460 meters (17,913 feet), we had reached a depth less
than 1% away from the original target depth.
However, during drilling, it became
apparent that we were, in fact, drilling into a 'fault line'. (This means
that the rock on one side of the fracture had moved with respect to the rock
on the other side.) To make matters more complicated, there did not seem to
have been just one fault line but more likely a 'fault zone'.
Due to the presence of the fault zone, the
geological formation in which we were drilling required much more analysis.
After carrying out that analysis, we
decided that, almost certainly, we were still in the Triassic geological
layer and could not determine how much further we would have to drill to
reach the Permian geological layer.
In the light of the uncertainty regarding the depth of the Permian
geological layer at our well site and knowing that we have found seven zones
that warrant completion testing, we decided that the prudent course, for the
present, was to stop drilling on this well and (i) test the seven zones
mentioned, as well as (ii) carry out further analysis on the geology, using
the drilling and logging data obtained in the last weeks. However, at a
later stage, if we decide to, we can drill this well deeper.
Not only did we have the benefit of our
internal experts, Dr. Druckman, Dr. Kashai and Stephen Pierce who between
them have over 100 years of professional experience, but we also received
input from external organizations and experts, such as the 'The Geophysical
Institute of Israel' and Dr. Dorit Korengrin and Dr. Brian Conway of 'The
Geological Survey of Israel'.
The
Geophysical Institute of Israel specializes in the application of
geophysical methods for mapping the structure and characteristics of the
subsurface; their website address is:
http://www.gii.co.il/index.php?page_id=1&lang_action=change_lang&to_lang=en
The Geological Survey of Israel is
involved in earth science research and development; their website address
is:
http://www.gsi.gov.il/eng/
Preparations at the site of the Elijah #3 Well
This coming week, we plan to
start rigging down (at the Ma'anit site) and start moving the drilling
rig and equipment to the site of the Elijah #3 well.
We have initiated our security on the area and equipment has now started
to arrive on site.
We have set the 'conductor pipe'; that is, a short length of pipe, driven into the ground. Conductor pipe is run because the initial shallow section of the well is drilled in unconsolidated soil rather than consolidated strata (i.e. solid formations) encountered deeper.
We estimate that we will start drilling in approximately the middle of October 2009.

On Wednesday of this week, as you can see in the photographs, Chris Mitchell, the Middle East Bureau Chief of CBN NEWS visited us, in order to interview John Brown and visit the site of the Ma'anit-Rehoboth #2 well.
Thank you for your support of Zion and
Shalom from Israel
Richard Rinberg
CEO of Zion Oil & Gas, Inc.
www.zionoil.com
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Dear Shareholder and/or Friend of Zion...
This past week, we have made good progress
on a number of fronts, as you will read below.
Drilling Operations on the Ma'anit-Rehoboth #2 Well
As I noted last week, after some
operational difficulties, we decided to continue with
directional drilling, just in case there was any remaining junk in
the hole (caused by the previous failure of a drill bit). However, the
directional drilling team could not get the drill bit to maintain the
required angle, so we took a (carefully) calculated risk and started to
drill vertically.
I am pleased to report that, this past
week, we have been successful in drilling to a depth of
approximately 17,913 feet (5,460 meters).
Our original target depth was approximately
18,044 feet (5,500 meters),
so this week we were drilling within the last 'one percent' of our
originally proposed target depth.
In
oil and gas exploration,
probably the most difficult decision that one makes is on the question of
'when to stop drilling'. There is
always the risk of catastrophic failure of the
drill string and so losing the entire hole...
and the risks (and costs) increase exponentially the deeper the hole.
In light of all the information that we now
have, we decided to stop drilling any deeper and
analyze and prioritize the seven zones that warrant completion testing.
There were a number of factors that
influenced our decision not to drill deeper, including the fact that we have
been drilling for almost a month with a long section of 'open hole', (that
is, a long section without casing to protect the hole). The longer one
drills without casing, the more chance there is of losing the hole
completely, as the sides may cave into the well.
So, this week, we reamed the hole to the
bottom (that is, we slightly enlarged the wellbore) and,
as I write, are pulling the drill string out of the hole.
Next week, we will probably run a velocity
survey and possibly some more wire line logs
(for example resistivity and gamma ray logs), before we decide on the order
and procedure regarding the completion testing.
In the meantime, the 2,000 horsepower
drilling rig can soon
be 'rigged down', moved to the site of the
Elijah #3 well and then 'rigged up' again - this will take approximately two
weeks.
We will use a much smaller rig for completion operations on the
Ma'anit-Rehoboth #2 well.
In conclusion, the drilling phase of the
Ma'anit-Rehoboth #2 well has been successfully concluded
and we can now move on to the testing phase for that well.
Operations at the site of the
Elijah #3 Well
After the filing, I commented:
"As we near completion of the drilling
phase of the Ma'anit-Rehoboth #2 well (in Zion's Joseph license) and prepare
the site for drilling the Elijah #3 well (in Zion's Asher-Menashe license),
we are already considering a subsequent #4 well.
As a result, we decided to increase
the number of shares available in the proposed rights offering."
SEE Highlighted area below
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. Obviously, this offer is open to everyone
who is a stockholder of record on the (as yet undetermined) record date.
Rosh Hashanah
This update is being distributed on the eve
of 'Rosh Hashanah 5770', that is, the Jewish New Year of the year 5770.
Traditionally, this is a time of year when all work ceases for the holiday
in Israel (as all our operations will)
and we consider the past year... and also look forward to the coming year.
When I look back at the past twelve months,
I can only be amazed at how we were able to overcome the
many challenges in order to reach this day. As this Jewish year ends, we
have completed the drilling phase of the
Ma'anit-Rehoboth # 2 well and are almost ready to begin drilling operations
on the Elijah #3 well.
In the next few months, we will carry out
completion testing operations on the Ma'anit-Rehoboth #2 well and,
we all hope, will be able to announce successful testing of that well. We
plan to drill the Elijah #3 well and
carry out scientific investigation work on our Issachar-Zebulun permit area.
We will also be looking to permit and start drilling a further well. There
is much to be done!
In the meantime, I will take this
opportunity to offer you the traditional greeting of
'Shana Tovah Umetukah' - a very happy and sweet year ahead - for you
and your loved ones.
Thank you for your support of Zion
Shalom from Israel and Shana Tovah
Richard Rinberg
CEO of Zion Oil & Gas, Inc.
www.zionoil.com
Dallas, Texas and Caesarea, Israel - September 15, 2009 - Zion Oil & Gas,
Inc. (NASDAQ GM: ZN) announced today that it has filed an amendment, with
the Securities and Exchange Commission, to the registration statement that
it originally filed on July 30, 2009, with respect to a proposed rights
offering to its common stockholders.
In the amendment, Zion increased the number of shares of its common stock
that can be purchased in the rights offering from 2.0 million shares to 3.6
million shares. Each whole subscription right will entitle the holder to
purchase one share of common stock for $5.00.
Zion's Chief Executive Officer, Richard Rinberg, commented today that, "As
we near completion of the drilling phase of the Ma'anit-Rehoboth #2 well (in
Zion's Joseph license) and prepare the site for drilling the Elijah #3 well
(in Zion's Asher-Menashe license), we are already considering a subsequent
#4 well. As a result, we decided to increase the number of shares available
in the proposed rights offering."
Under the newly proposed rights
offering, stockholders would have the right to purchase
twenty three (23) shares of stock for every one hundred (100) shares of
common stock
owned on the (to be determined) record date.
This is identical to 0.23 subscription rights for each share of common stock
owned on the record date.
Stockholders who fully exercise
their rights will be entitled to subscribe for additional shares of common
stock,
if available, that were not subscribed for by other rights holders.
Should the rights offering be fully subscribed, the company expects to
receive gross proceeds of $18 million.
The proceeds from the rights offering will be used for Zion's multi-well
drilling program.
The record, commencement and initial expiration dates for the offering will
be determined at the time
that the registration statement relating to the rights offering becomes
effective.
A registration statement relating to these securities has been filed with
the Securities and Exchange Commission
but has not yet become effective. These securities may not be sold, nor may
offers to buy be accepted,
prior to the time the registration statement becomes effective.
Zion Oil & Gas, a Delaware corporation, explores for oil and gas in Israel
in areas located on-shore between
Haifa and Tel Aviv. It currently holds two petroleum exploration licenses,
the Joseph and the Asher-Menashe Licenses, between Netanya, in the south,
and Haifa, in the north, covering a total of approximately 162,000 acres and
the Issachar-Zebulun Permit Area, adjacent to and to the east of Zion's
Asher-Menashe license area,
covering approximately 165,000 acres. Zion's total petroleum exploration
rights area is approximately 327,000 acres.
Zion's homepage may be found at: www.zionoil.com
Contact:
Zion Oil & Gas, Inc.
6510 Abrams Rd., Suite 300
Dallas, TX 75231
(1) 214-221-4610
Email: dallas@zionoil.com
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Dear Shareholder and/or Friend of Zion...

This week's update will be shorter than normal as, this past
week, Zion's Founder and Chairman of the Board,
John Brown,
Chief
Executive Officer, Richard Rinberg, President and
Chief Operating Officer, Glen Perry and
Chief
Financial Officer, Sandra Green, were all in New York
City, in order to ring the opening bell at the NASDAQ market
site in Times Square, as Zion switched the listing of its
stock and warrants to
NASDAQ.
On September 2, 2009, Zion participated in NASDAQ's opening
bell-ringing ceremony, at which Zion began to be traded on
NASDAQ's Global Market. You can watch a video of the
ceremony on Zion's website, or by clicking the link here:
Drilling Operations on the Ma'anit-Rehoboth #2 Well
Operations on the site of the proposed Elijah #3 Well
This past week we continued with site preparation work
(especially compacting the site to ensure
rig stability) and
are progressing on schedule. We believe that, at the
appropriate time, we will be able
to move from the
Ma'anit-Rehoboth #2 well to the site of the Elijah #3 well
in a satisfactory and smooth manner.
Thank you for your support of Zion
Shalom from Israel
Richard Rinberg
CEO
of Zion Oil & Gas, Inc.
www.zionoil.com
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Zion Oil & Gas Newsletter
Drilling Operations on the Ma'anit-Rehoboth #2 Well
This week, I want to share with you a
number of photographs taken during the past week. The photographs,
together with my comments, will update you regarding some of our work during
the past seven days.
An important part of our geological work
during drilling is to continually examine the rock cuttings from the well
bore
(brought up to the surface by the circulating
drilling mud) and
match that physical evidence against the 'expected' rock cuttings. In our
database of scientific information, we maintain a computer model of the
expected rock strata.
As more information is gathered, the
computer model is amended and in the event of a material difference
between the 'actual' and the 'expected', it may be highly desirable to
obtain further information by 'logging'.
You may remember (from our previous
logging) that the definition of 'logging' is:
'to test and evaluate the well, using electrical wireline
well logs'.
The 'sonde' is lowered down the hole on a 'wireline'
and various measurements are recorded.
The 'sonde' is a cylinder filled with
instruments that can sense the electrical, radioactive and
sonic properties of the rocks (and their fluids) and the diameter of the
wellbore.
The 'wireline' is an armored cable with
steel cables surrounding conductor cables in insulation.
It is reeled out from a drum in the back of the logging truck.
The data from the sonde is transmitted up
the cable to instruments in the logging truck and recorded.
Using state-of-the-art Baker Atlas
logging equipment, we
are able to obtain very high-quality data.
This past week, we logged an interval of approximately 500 meters; from a
depth of
approximately 4,825 meters down to approximately 5,325 meters.
Here are the photographs:

Carrying out a logging tool


...then, up the ramp...

..and down into the Well

Outside the
Baker Hughes (Baker Atlas) Logging Unit

Inside the Baker Hughes (Baker Atlas) Logging Unit

Glen Perry examining one of the logs
The logging will enable us to make
decisions based on scientific evaluation rather than hunches and
guesstimates.
So, this past week, we are still at a
depth of approximately 17,470 feet (5,325 meters),
close to our final target of approximately 18,040 feet (5,500 meters).
NASDAQ Stock Exchange
"In your good pleasure, make Zion prosper..."
Thank you for your support of Zion
Shalom from Israel
Richard Rinberg
CEO of Zion Oil & Gas, Inc.
www.zionoil.com
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
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Zion Oil & Gas Newsletter
