This announcement is being made in compliance with NASDAQ Marketplace Rule 5250(b)(2), which requires separate disclosure of an audit opinion that contains a going concern qualification. This announcement does not represent any changes or amendment to the Zion’s 2009 financial statements or to the Form 10-K which was filed with the Securities and Exchange Commission on March 16, 2010.

Upon release of the 2009 annual results, Zion’s Chief Executive Officer, Richard J. Rinberg, commented: “During 2009, Zion’s staff were successful in significantly moving Zion’s business forward. We completed three offerings, comprised of a follow-on offering and two rights offerings, raising total gross proceeds in excess of $45 million. We were awarded a preliminary petroleum exploration permit (the Issachar-Zebulun permit) on approximately 165,000 acres onshore Israel. We drilled the Ma’anit-Rehoboth #2 well to a depth of 17,913 feet (5,460 meters) and recovered a small quantity of crude oil. We also drilled the Elijah #3 well to a depth of approximately 10,938 feet (3,334 meters). In September, we switched the listing of ZN common stock and common stock purchase warrants from the NYSE Amex to the NASDAQ Global Market.”

For additional information regarding the 2009 results, please refer to the Company’s latest Form 10-K which is available on the SEC’s website www.sec.gov and at Zion’s website www.zionoil.com.

Zion Oil & Gas, a Delaware corporation, explores for oil and gas in Israel in areas located on-shore 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.

The Company’s financial statement information is summarized below:

(US$ In thousands, except for per share income)

FORWARD LOOKING STATEMENTS: Statements in this press release that are not historical fact, including statements regarding Zion’s operations and 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” 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. 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.

Zion’s home page may be found at: www.zionoil.com

Contact:

Zion Oil & Gas, Inc.
6510 Abrams Rd., Suite 300
Dallas, TX 75231

Mike Williams, tel: 214-221-4610
Email:

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:
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Richard Rinberg, Zion’s Chief Executive Officer, and Bill Ottaviani, Zion’s President and Chief Operating Officer, presented to investment professionals attending the ‘by invitation only’ event. Amongst others, conference attendees included representatives from Bank of America, Morgan Stanley and Credit Suisse. A link to the presentation, an audio webcast with slides, has been posted on Zion’s homepage and can be accessed by visiting www.zionoil.com.

Zion’s common stock trades on the NASDAQ Global Market under the symbol “ZN” and Zion’s warrants trade under the symbol “ZNWAW”.

Zion Oil & Gas, a Delaware corporation, explores for oil and gas in Israel in areas located on-shore 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 homepage may be found at: www.zionoil.com

Contact:
Zion Oil & Gas, Inc.
Mike Williams, 214-221-4610

On Wednesday of this week, Israel’s Channel 10 TV sent a reporting team to interview ‘Zion Oil & Gas’ and film at the Ma’anit site. I understand that a TV program on ‘Oil and Gas in Israel’ is scheduled for broadcast tonight (Friday) on Channel 10 in Israel.

As I mentioned last week, Zion has been featured or mentioned in various articles in the business press recently, as ‘Oil & Gas in Israel’ continues to be a ‘hot topic’ that is attracting very great interest in Israel.

Please note that there will not be a weekly update next week as both Bill Ottaviani (Zion’s President and Chief Operating Officer) and I will be in New York, presenting Zion Oil & Gas at the NASDAQ-Oppenheimer Israeli Equities Conference.

………………………………………………………

Here is this week’s operations update:

 

The Ma’anit-Rehoboth #2 Well

As reported previously, following the rig mobilization, we are in the process of getting ready to re-enter this well to conduct production testing on several geologic intervals. As you can see in the picture above (taken on Wednesday, February 17th), the rig mast has been raised.

As I write, final preparations are being made to re-enter the well, but I expect that by the time that you read this report, we will have re-entered the well and started operations.

Logistical arrangements for all of our planned work activities are just about completed, as we start to receive project equipment and finalize our service schedules.

In keeping with past practice, we will employ local companies when appropriate, which helps grow the petroleum industry within Israel and, as needed, we will also bring in the multinational firms that offer specialized services and equipment attuned to our particular needs. We expect to use the services of Baker-Hughes and Weatherford and, for the first time in our operations, we plan to use Schlumberger Oilfield Services.

Schlumberger is a well-known and respected name within the international petroleum industry, especially noted for their capabilities in well testing operations and that is exactly the purpose we plan to use them for, at our Ma’anit-Rehoboth #2 well.

In 1912, Conrad Schlumberger conceived the revolutionary idea of ‘logging’ – using electrical measurements to map subsurface rock bodies. The use of the word ‘logging’ derives from the written record by the captain of a ship in his daily log.

In 1919, Marcel Schlumberger began working with his brother Conrad, in Paris and, in 1929, for the first time, they logged a well in California, USA. Fast forward 80 years and Schlumberger should soon be operating in Israel.

Well operations are expected to continue for approximately two months. Of course, many factors may cause operations either to be extended or to be accelerated. You can be assured that under all eventualities, we will take appropriate action, as and when required.

 

The Wellhead at the Elijah #3 Well

Operations at the 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 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

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.

Pre-site assessment is scheduled to begin this month with the actual field work anticipated to occur during April and May 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:
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Richard Rinberg, Zion’s Chief Executive Officer, and Bill Ottaviani, Zion’s President and Chief Operating Officer, are scheduled to present at the conference at 3:05 p.m. EST on February 23, 2010. A copy of the presentation will be made available on Zion’s website after that date.

Zion’s common stock trades on the NASDAQ Global Market under the symbol “ZN” and Zion’s warrants trade under the symbol “ZNWAW”.

Zion Oil & Gas, a Delaware corporation, explores for oil and gas in Israel in areas located on-shore 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 homepage may be found at: www.zionoil.com

Contact:
Zion Oil & Gas, Inc.
Mike Williams, 214-221-4610

On Monday, ‘Maariv‘ (one of the major daily Hebrew language newspapers in Israel) sent their reporter, Mordechai Chaimovitch, to visit both our Caesarea office and the Ma’anit-Rehoboth #2 and Elijah #3 well sites. They conducted some interviews, took many photographs and then followed up, on Tuesday, with a telephone interview with John Brown in Dallas.

Zion has been featured or mentioned in various articles in the business press recently, as ‘Oil & Gas in Israel’ continues to be a ‘hot topic’ that is attracting very great interest in Israel.

 

Left to Right: Mordechai Chaimovitch interviews
Rasim Yoruk (AME’s Assistant Drilling Manager)

………………………………………………………

Here is this week’s operations update.

Operations at the Elijah #3 Well

 

The Elijah #3 site. The mast of the drilling rig is laid down,
in preparation for a move to the Ma’anit-Rehoboth #2 well site.

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.

In last week’s update, I noted that we reached an impasse in our fishing operations at the Elijah #3 well, after achieving a good measure of progress in recovering the stuck drill pipe.

As a result of the impasse, we decided to temporarily suspend drilling activities at the Elijah #3 well, while we consider various options to resolve the challenge of drilling through the loosely consolidated Asher Volcanics to our target depth, as well as retrieving the stuck pipe. Almost certainly, we will need to import into Israel equipment and/or services that are not readily available here.

Rather than suspending all well operations and putting the drilling rig in stand-by mode in order to take the necessary time to formulate a revised plan at the Elijah #3 well, we decided to relocate the rig to the Ma’anit-Rehoboth #2 well for production testing (see summary below).

As you can see in the photographs above, we are currently in the process of demobilizing the rig and associated equipment from the Elijah #3 well site. The well site itself will remain in “ready mode” for future operations.

Based on our current geologic assessment, we remain encouraged about the hydrocarbon potential in this license area and look forward to the not-too-distant future when we return and complete the work that is already well underway.

The Ma’anit-Rehoboth #2 Well

 

The Ma’anit-Rehoboth #2 Well Site, showing the well head

We are now in the process of getting ready to re-enter this well to conduct production testing on several geologic intervals. As noted previously, the Ma’anit-Rehoboth #2 well was drilled to a depth of 17,913 feet (5,460 meters) and had been temporarily suspended since December 2009.

During a routine workover operation, prior to the well’s suspension, a small quantity of oil was recovered from the well, giving physical evidence to support our geologist’s contention that the well penetrated hydrocarbon bearing intervals.

The decision to mobilize the drilling rig from the Elijah #3 well to the Ma’anit-Rehoboth #2 well is a major undertaking, as we need to prepare the Ma’anit site and relocate many tons of equipment by a distance of approximately 25 kilometers. The project to move the rig requires approximately two weeks before the rig mast is erected again and well operations may begin anew.

We have finalized our testing procedures for the Ma’anit-Rehoboth #2 well and are now ordering the required equipment and services so that work may begin when the rig becomes operational. In the meantime, we continue to observe evidence of reservoir pressure and the presence of potential hydrocarbons at the surface and are anxiously awaiting the rig’s arrival at the Ma’anit-Rehoboth #2 well site, later this month.

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.

Pre-site assessment is scheduled to begin this month with the actual field work anticipated to occur during April and May 2010.

The Annual Meeting Of Shareholders

We will be sending out formal notices later in the year, but you may be interested to note in your diary that Zion’s Annual Meeting of Shareholders is scheduled to take place, in Israel, on Monday, June 14, 2010.

This may be an opportunity for you to visit Israel, attend Zion’s Annual Meeting and enjoy a trip to the Holy Land.

“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:
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Zion drilled the Ma’anit-Rehoboth #2 well 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 a small quantity of crude oil has been recovered and analyzed.

Zion completed drilling the Ma’anit-Rehoboth #2 well in September 2009 and decided, based on the best information then available, to move its drilling rig to begin drilling its Elijah #3 well. Zion’s intention was to attempt to test and complete the Ma’anit-Rehoboth #2 well with a small workover rig. In December 2009, as planned, the Company brought in a small workover rig to conduct swabbing operations on the Ma’anit-Rehoboth #2 well.

Due in part to personnel transitions and a shortage of adequate equipment in Israel to conduct satisfactory completion operations on the Ma’anit-Rehoboth #2 well, the Company was not planning to resume testing operations on the Ma’anit-Rehoboth #2 well until sometime in March or April of 2010.

However, given previously reported operational challenges on the Elijah #3 well, Bill Ottaviani, Zion’s newly appointed President and Chief Operating Officer, decided that a temporary suspension of operations at the Elijah #3 was a prudent course of action in order to expedite production testing at the Ma’anit-Rehoboth #2 well.

Mr. Ottaviani commented, “Following the drilling of our Ma’anit-Rehoboth #2 well, we have continued to observe evidence of reservoir pressure and the presence of hydrocarbons at the surface. Our geologists have identified several potential hydrocarbon-bearing intervals from the diagnostic data acquired when the Ma’anit-Rehoboth #2 well was drilled. We are currently fine-tuning our plans for production testing these intervals and are looking forward to resuming operations at the Ma’anit-Rehoboth #2 well. As we have stated in the past, 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. ”

Zion’s Chief Executive Officer, Richard Rinberg, said today that, “We have every expectation to resume activity on the Elijah #3 well in the not-too-distant future, once we conclude on the best course of action for this well. Based on our current geologic assessment, we remain excited about the hydrocarbon potential in this license area and look forward to ‘making hole’ once again at this location. While we temporarily step back from one well to reconfigure our next steps, we are quickly ramping-up activity at another, as we continue to implement our multi-well strategy.”

Zion’s common stock trades on the NASDAQ Global Market under the symbol “ZN” and Zion’s warrants trade under the symbol “ZNWAW”.

Zion Oil & Gas, a Delaware corporation, explores for oil and gas in Israel in areas located on-shore 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.

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.

Zion’s homepage may be found at: www.zionoil.com

Contact:
Zion Oil & Gas, Inc.
Mike Williams, 214-221-4610

 

Bill Ottaviani

You can read the details in the press release, but I’ll mention that Bill Ottaviani is a Petroleum Engineer with an MBA who has spent 25 years working for Chevron.

As I noted in the press release:

“Bill Ottaviani joins Zion with a proven industry track record and will greatly strengthen our managerial and operational competence. Bill is a first class oil and gas professional who has the experience, the ability and the specific skill-set to provide Zion with fundamental operational and technical direction, help us to implement our multi-well strategy and achieve success with our operations.”

The past week has been eventful, as you can read below. The path of true love and drilling oil and gas wells is seldom smooth it seems.

On Wednesday, there was good news for Israel, as a new natural gas discovery was announced, off the coast of Israel, in the ‘Mira’ and ‘Sarah’ prospects. The two finds of ‘up to 6 trillion cubic feet (TCF)’ of natural gas may be worth as much as $6 billion, using current market evaluations.

One headline noted: ‘Israel has significant offshore gas potential’. Zion’s job is to show the onshore potential by having an oil and gas discovery onshore… and as soon as possible…

 

Left to Right: Richard Rinberg (Zion’s CEO), Sandra Green (Zion’s CFO), Cetin Mumcuoglu (AME’s General Manager), Murat Bumin (AME’s Business Development Manager), Dogan Layiktez (AME Executive), John Brown (Zion’s Founder and Chairman).

In the latter part of the week, we were happy to greet the management team from Aladdin Middle East Ltd (AME), who visited Israel from Ankara, Turkey, so that we could hold discussions regarding Zion’s future drilling plans. Our meetings were both enjoyable and productive.

………………………………………………………

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 and that we were working through the problem and were ‘cautiously optimistic’ about resuming drilling soon.

After achieving initial success in retrieving a significant portion of the stuck pipe, progress slowed to the point where we felt it best to pause and reassess how best to address the challenge of recovering the pipe and resume drilling through the Asher Volcanics to our target depth. To that end, we felt it prudent to temporarily suspend drilling activity at the Elijah #3 well, while we consider the various options in front of us. These options include, in part, a resumption of fishing operations using a modified recovery system or sidetracking the stuck pipe by directionally drilling a new bore hole adjacent to the current hole (taking advantage, of course, of the three kilometers already drilled).

Each option under consideration requires time to procure the necessary equipment and services to execute the new operation (since much of what is needed is unavailable here in Israel).

Rather than putting everything in “standby” mode for several weeks while waiting to resume work on the Elijah #3 well, we decided to move the rig and its ancillary equipment to the Ma’anit-Rehoboth #2 well, in order to begin production testing operations as soon as possible (see summary below).

We have every expectation to resume activity on the Elijah #3 well in the not-too-distant future. Based on our current geologic assessment, we remain excited about the hydrocarbon potential in this region and look forward to ‘making hole’ once again at this location. However, the fact that the Elijah #3 well sits on a volcanic section does complicate our decision making process.

The Ma’anit-Rehoboth #2 Well

 

The Ma’anit-Rehoboth #2 Well Site, showing the well head

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.

In last week’s report I noted the chemical composition of the oil indicated that it was not, as we expected, 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. While the full implication of this assessment is still uncertain, the good news is that Israel has a very large extent of late Cretaceous source rock suggesting a possible correlation to the potential quantities of oil that may lie underneath Israel’s continental shelf.

Since we completed drilling the well, we have observed evidence of reservoir pressure and the presence of potential hydrocarbons at the surface. Now we are positioning ourselves to see what evidence lies within the rocks themselves.

As noted in the Elijah #3 summary above, we are in the process of mobilizing the drilling rig from that well to the Ma’anit-Rehoboth #2 well. While we are not planning to do any further drilling at this time at the Ma’anit-Rehoboth #2 well, the added horsepower that this rig provides gives us greater operational flexibility to perform certain completions/testing work that may not be possible with other, smaller workover rigs.

Our geologists have identified several potential hydrocarbon-bearing intervals from the diagnostic data acquired when this well was drilled. We are currently fine-tuning our plans for production testing these intervals and, subject to equipment availability, should begin well operations in approximately two weeks time.

Ironically, the temporary suspension of operations at the Elijah #3 well allows us to start the testing procedures at the Ma’anit-Rehoboth #2 well much sooner than our previously anticipated schedule.

So while we temporarily step back from one well to reconfigure our next steps, we quickly ramp-up activity at another, as we continue on our unwavering quest for the ‘treasure hidden deep beneath the Promised Land’.

The Issachar-Zebulun Permit Area

This past week, Zion and the Geophysical Institute of Israel (GII) signed an Agreement for GII, on behalf of Zion, to acquire approximately 30 kilometers of field seismic, in Zion’s Issachar-Zebulun Permit area. The field work is scheduled to begin in mid-April 2010 and last until mid-May 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
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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:
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William (Bill) Ottaviani, a Petroleum Engineer, has spent 25 years (1982 to 2007) working for Chevron Corporation in various countries, including Angola, Indonesia and the USA, and two years (2007-2009) as Chief Operating Officer of Rex Energy. He earned a Masters in Business Administration from California State University and a Bachelor of Science degree (with High Distinction) in Petroleum and Natural Gas Engineering from Pennsylvania State University.

During his career, Mr. Ottaviani was awarded multiple Chevron and US Department of Energy Recognition Awards for performance achievements. When working for Chevron’s subsidiary, Caltex Pacific Indonesia, Bill was awarded the company’s highest recognition, earning the President’s Award for his work in successfully negotiating a $1.5 Billion gas contract. He is a member of the Society of Petroleum Engineers.

Zion’s Chief Executive Officer, Richard Rinberg, said today that, “Bill Ottaviani joins Zion with a proven industry track record and will greatly strengthen our managerial and operational competence. Bill is a first class oil and gas professional who has the experience, the ability and the specific skill-set to provide Zion with fundamental operational and technical direction, help us to implement our multi-well strategy and achieve success with our operations.”

Zion’s common stock trades on the NASDAQ Global Market under the symbol “ZN” and Zion’s warrants trade under the symbol “ZNWAW”.

Zion Oil & Gas, a Delaware corporation, explores for oil and gas in Israel in areas located on-shore 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.

FORWARD LOOKING STATEMENTS: Statements in this communication that are not historical fact, including statements regarding Zion’s planned operations, 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.

Zion’s homepage may be found at: www.zionoil.com

Contact:
Zion Oil & Gas, Inc.
Brittany Russell, 214-221-4610