Unassociated Document
Filed
pursuant to Rule 433
Registration
Statement No. 333-160871
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Zion Oil
& Gas Newsletter
September
18, 2009
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Dear
Shareholder and/or Friend of Zion...
The
Ma'anit-Rehoboth #2 well site
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.
The main
reserve pit at the site of the Elijah #3 well
Operations at the site of
the Elijah #3 Well
This past
week we continued the site preparation work. As you can see in the above
photograph, the main reserve pit has been dug and lined. The concrete foundation
for the heavy rig components has been poured and the site will be fully ready to
receive the drilling rig within approximately the next ten days.
Rights
Offering
As you
can read in the September 15, 2009, Press Release below, Zion has filed with the
Securities and Exchange Commission (SEC) an amendment to the registration
statement which was filed in July 2009, with respect to a proposed Rights
Offering to our common stockholders.
As
amended, the proposed Rights Offering will offer a maximum of 3.6 million shares
of stock at $5.00 for
each share of stock. Should the rights offering be fully subscribed, the company
will receive gross proceeds of $18 million.
Under the
newly amended rights offering, stockholders have the right to purchase twenty
three (23) shares of stock for every one hundred (100) shares of common stock
owned on the (to be determined) record date. This is identical to
0.23 subscription rights for each share of common stock owned on the record
date.
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."
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.
"In
your good pleasure, make Zion prosper..."
Psalm
51:18
Thank you
for your support of Zion
and
Shalom
from Israel and Shana Tovah
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, 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
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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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