Filed
pursuant to Rule 433
Registration
Statement No. 333-164563
Zion Oil
& Gas Newsletter
May 28,
2010
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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
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
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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.com
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