Filed
pursuant to Rule 433
Registration
Statement No. 333-160871
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Zion Oil
& Gas Newsletter
November
6, 2009
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Dear
Shareholder and/or Friend of Zion...
This
week, before I update you regarding Zion's exploration operations, I want to
comment on the recent fluctuations in Zion's stock price.
Usually,
I don't comment on Zion's stock price, because we have no control over the
day-to-day fluctuations in the stock price; the price just reflects the actions
of those trading on that day. Zion stock is publicly traded, so anyone can buy
or sell stock, just as they wish.
To quote
Warren Buffett, "In the short run, the market is a voting machine but in the
long run it is a weighing machine."
All of us
at Zion are working towards long-term shareholder value. To be successful, we
must use Zion's capital wisely, control expenses and enable our experienced and
motivated staff to stay focused on our exploration efforts in Israel. By
focusing on our exploration efforts, we believe we are setting the stage for
increased shareholder value.
We have
survived and prospered during an economic crisis not seen for several decades -
something many companies did not. I believe that we have the people with the
'right stuff' to deal with the challenges that lie ahead and I am very
optimistic about Zion's future.
"Preserve
me, O G-d: for in thee do I put my trust"
Psalm
16:1
But we
know we have plenty of hard work ahead, so here is an update of our progress
during the past week.
The Ma'anit-Rehoboth #2
Well
Last
week, I gave you a summary regarding this well and can only repeat my words of
last week, as the situation remains largely unchanged.
"We
drilled the Ma'anit-Rehoboth #2 well to a depth of 17,913 feet (5,460 meters)
and on October 2, 2009 released the drilling rig for use on the Elijah #3 well
and temporarily suspended drilling operations on the Ma'anit-Rehoboth #2 well,
until a smaller rig would become available for completion operations on the
seven zones that warrant completion testing.
Four of
the zones are in the upper (Triassic) part of the hole and were seen in the
Ma'anit #1 well and three of the zones are in the deeper hole drilled in the
Ma'anit-Rehoboth #2 well.
Our
latest estimate of the likely arrival time of a 'suitable rig' at the Ma'anit
site is December 2009. We have tried to accelerate matters, but the rig we want
to use requires some maintenance work, so we will have to wait. The good news is
that 'completion testing' work on our well, with the rig now planned, should
save Zion approximately $250,000 in cost, as compared with the cost of the
original rig that we wanted to use. Waiting is difficult, but at least we will
be saving some money by doing so."
An
alternative wording for a 'suitable rig' (see above) is a 'workover
rig'.
A
workover rig (or well-servicing rig) is very similar to a drilling rig, but is
much smaller and much less expensive, as there is no need for the drilling rig's
mud system of pumps and tanks or elaborate pressure-control
equipment.
The
workover rig that we plan to use is currently undergoing maintenance work by its
owners. After completion of the maintenance work, we have been informed that the
rig will be carrying out some remedial work on a well in southern Israel and can
then travel to our Ma'anit-Rehoboth #2 well site in northern Israel. The current
estimate is December 2009, however, we are making every effort to obtain the rig
earlier than December.
Drilling Operations on the
Elijah #3 Well
In spite
of torrential rains this week, drilling operations are proceeding according to
plan. As I write, the dark clouds have disappeared and the sky is crystal clear
blue, as the rain has washed all the sand particles out of the air. The weather
in Israel (like the economy) is 'uncertain' at present, but the rig crews work
through all weathers and in all conditions. As our Drilling Manager, Jerry
Carlisle told me, "There is an old oil field saying, 'It only rains in the
reserve pit,' so we keep drilling no matter what."
The oil
industry started gaining real momentum towards the end of the 1800s. It lowered
the demand for whale oil and so put many sailors out of work. Because sailors
were used to working in all weather conditions and at extreme height on ships'
rigging, they were well suited to working on tall oilfield derricks. The sailors
brought with them many of their nautical expressions. For example, the drilling
derrick and equipment are called a 'rig', the derrick is called a 'mast', the
changing room is called a 'doghouse' and the record of events during drilling is
called a driller's log (from the 'log' kept by a ship's captain).
Fast
forward to the present, it has been eighteen days since we started drilling our
Elijah #3 well and, as of today, Friday, November 6, 2009, we have drilled to a
depth of approximately 3,115 feet (950 meters) and are making good
progress.
The Issachar-Zebulun Permit
Area
As noted
previously, we have sent all of the existing seismic to Texas for re-processing,
as there is extensive coverage over most of the license, however, there are 15
lines of existing data being interpreted in-house.
Rights
Offering
Our
rights offering began last month and you should have received your package (or
email) containing the documentation. If your stock is held in a brokerage
account, you should have received electronic notification. If you haven't
received anything, please contact us at the number shown below.
The
rights offering offers a maximum of 3.6 million shares of stock at $5.00 for
each share of stock. Should the rights offering be fully subscribed, Zion will
receive gross proceeds of $18 million.
Under the
rights offering, stockholders have the right to purchase twenty three (23)
shares of stock for every one hundred (100) shares of common stock owned on the
record date. This is identical to 0.23 subscription rights for each
share of common stock owned on the record date.
If you
were among the many hundreds of our stockholders who did not receive as many
$5.00 shares as you subscribed for in the earlier rights offering, this is your
'second chance' opportunity. This offer is open to everyone who was a
stockholder of record on October 19, 2009.
The
scheduled termination date for the rights offering is November 30, 2009 but we
may elect to terminate the offering prior to the scheduled expiration date by
giving two business days notice. Please note that Zion may also elect to extend
the rights offering beyond November 30, 2009.
We have
posted on the Investor Center section of the Zion website some Frequently Asked
Questions (and answers). Please click here to visit the Investor
Center.
"In your
good pleasure, make Zion prosper..."
Psalm
51:18
Thank you
for your support of Zion and Shalom from Israel
Richard
Rinberg
CEO of
Zion Oil & Gas, Inc.
www.zionoil.com
FORWARD
LOOKING STATEMENTS: Statements in this communication that are not historical
fact, including statements regarding Zion's planned operations, geophysical and
geological data and interpretation, anticipated attributes of geological strata
being drilled, drilling efforts and locations, the presence or recoverability of
hydrocarbons, timing and potential results thereof and plans contingent thereon
and rights offering are forward-looking statements as defined in the "Safe
Harbor" provisions of the Private Securities Litigation Reform Act of 1995.
These forward looking statements are based on assumptions that are subject to
significant known and unknown risks, uncertainties and other unpredictable
factors, many of which are described in Zion's periodic reports filed with the
SEC and are beyond Zion's control. These risks could cause Zion's actual
performance to differ materially from the results predicted by these
forward-looking statements. Zion can give no assurance that the expectations
reflected in these statements will prove to be correct and assumes no
responsibility to update these statements.
NOTICE:
Zion Oil & Gas, Inc. has filed a registration statement (including a
prospectus) with the SEC for the offering to which this communication relates.
Before you invest, you should read the prospectus in that registration statement
and other documents the issuer has filed with the SEC for more complete
information about Zion Oil & Gas and its offering. You may get these
documents for free by visiting EDGAR on the SEC website at www.sec.gov.
Alternatively, Zion Oil & Gas will send you the prospectus if you request it
by calling toll free 1-888-TX1-ZION (1-888-891-9466).
Contact
Information
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
More
information about Zion is available at www.zionoil.com or by contacting 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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