Unassociated Document
Filed
pursuant to Rule 433
Registration
Statement No. 333-164563
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
The
Elijah #3 site
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
The
Ma'anit-Rehoboth #2 Well Site, showing the well head
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
Area
Left to Right: Dr. Eliezer Kashai
(Zion's Vice President – Israeli Exploration), Stephen Pierce (Zion's
Exploration Manager), Dr. Uri Frieslander (GII), Gerald Brounstein (Zion's
outside counsel)
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.
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
PRESS
RELEASE
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