Filed
pursuant to Rule 433
Registration
Statement No. 333-164563
Zion Oil
& Gas Newsletter
March 5,
2010
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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 Wellsite
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.
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
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.
A
pre-site assessment field trip was conducted last month by Zion’s geological
team and members of GII. As you can see from the photo, doing field
work can, at times, be a fairly messy business. The purpose of the
site visit was to assess the general area where seismic data is to be collected
and identify potential natural barriers (e.g. waterways) or other impediments
(man-made structures) that could impact the seismic acquisition
process.
With the
pre-site assessment completed, detailed planning can now commence for the actual
field work. The timing for the field work has been pushed back by a number of
weeks, as the seismic crew for GII are currently out of Israel and not scheduled
to return until mid-summer 2010.
"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
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
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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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